Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Evolutionary phases through which the interpretation of Constitution by judiciary passed.
Context
The ways in which the Constitution of India is interpreted has undergone changes through four phases.
Constitution-An Ambitious political experiment
- Indian Constitution was an ambitious political experiment for the following reasons-
- Universal Adult Franchise: India began its journey with the universal adult franchise.
- Federalism: Federalism in a region consisting of over 550 princely States.
- The promise of Equality: The Constitution was a sort of social revolution in a deeply unequal society with the promise of equality.
- Unique constitutional design: it was equally a unique achievement in terms of constitutional design.
The first phase of interpretation-Focus on text
- A textualist approach-focusing on the plain meaning of the words: In its early years, the Supreme Court adopted a textualist approach, focusing on the plain meaning of the words used in the Constitution.
- K. Gopalan v. State of Madras (1950) was one of the early decisions in which the Court was called upon to interpret the fundamental rights under Part III.
- The leader of the Communist Party of India claimed that preventive detention legislation under which he was detained was inconsistent with Articles 19 (the right to freedom), 21 (the right to life) and 22 (the protection against arbitrary arrest and detention).
- Fundamental rights separate from each other: The Supreme Court decided in A. K. Gopalan case that each of those articles covered entirely different subject matter, and were to be read as separate codes rather than being read together.
- Unlimited Amendment Power: In its early years, the Court read the Constitution literally, concluding that there were no limitations on the Parliament’s power to amend the Constitution.
The second phase of interpretation-Focus on ‘basic structure’
- Appeals to the structure and coherence: Appeals to the text of the Constitution were gradually overtaken by appeals to the Constitution’s overall structure and coherence.
- Limited Amendment Power-Kesavananda Bharati case: In the leading case of Kesavananda Bharati v. State of Kerala(1973), the Court concluded that Parliament’s power to amend the Constitution did not extend to altering its “basic structure”.
- What is the “Basic Structure”: The basic structure is an open-ended list of features that lie within the exclusive control of the Court.
- When Parliament attempted to overturn this decision by amending the Constitution yet again, the Court, relying on structuralist justifications, decisively rejected that attempt.
- Key takeaways from Kesavananda Bharati case
- Limited Amendment Power: In this case, the Court pronounced that Parliament’s power to amend the Constitution is not unlimited.
- Fundamental rights as a cohesive bill of rights: In this phase, the Court also categorically rejected the Gopalan approach in favour of a structuralist one.
- Maneka Gandhi v. Union of India (1978): Through decision, in this case, the Court conceived of the fundamental rights as a cohesive bill of rights rather than a miscellaneous grouping of constitutional guarantees.
- Incremental interpretation of Right to Life: The right to life was incrementally interpreted to include a wide range of rights such as clean air, speedy trial, and free legal aid.
- Courts playing role in governance: The incremental interpretation of Article 21 paved the way for the Supreme Court to play an unprecedented role in the governance of the nation.
- What was common in the first two phases?
- Interpretation done by Constitutional Benches: That significant decisions involving the interpretation of the Constitution were entrusted to Constitution Benches (comprising five or more judges of court) and were carefully (even if incorrectly) reasoned.
- Little scope for precedential confusion: There was limited scope for precedential confusion, since matters which had been decided by Constitution Benches and which demanded reconsideration were referred to larger Constitution Benches.
Third Phase of interpretation-Eclecticism
- Different opinions on the same issues: In the third phase the Supreme Court started to give different opinions on the same issues-i.e. it engaged in eclecticism.
- Lesser reasoning: The Court often surrendered its responsibility of engaging in a thorough rights reasoning of the issues before it.
- Two factors underpinned this institutional failure.
- First-Change in the structure of the SC: The changing structure of the Court, which at its inception began with eight judges, grew to a sanctioned strength of 31; it is currently 34.
- It began to sit in panels of two or three judges, effectively transforming it into a “polyvocal” group of about a dozen sub-Supreme Courts.
- Second-expansion of own role by the SC-The Court began deciding cases based on a certain conception of its own role -whether as a sentinel of democracy or protector of the market economy.
- The focus of the judgement on the result rather than reason: This unique decision-making process sidelined reason-giving in preference to arriving at outcomes that match the Court’s perception.
- Consequences of the eclecticism
- Rise of doctrinal incoherence and inconsistency: The failure to give reasons contributed not only to methodological incoherence but also to serious doctrinal incoherence and inconsistency across the law.
- Conflicting decisions and interpretations: This approach can be best described as panchayati eclecticism, with different Benches adopting inconsistent interpretive approaches based on their conception of the Court’s role, and arriving at conclusions that were often in tension with one another.
- Decision detached from precedents and established methods: The imagery that panchayati eclecticism is meant to invoke is that of a group of wise men and women (applying the analogy, sub-Supreme Courts), taking decisions based on notions of fairness that are detached from precedent, doctrine and established interpretive methods.
Fourth phase- based on the purpose
- Purpose of enactment of the Constitution as critical: In the fourth phase, the Court has acknowledged as critical to its interpretive exercise the purpose for which the Constitution has been enacted.
- The realisation of revolutionary and transformative potential: The Court is now beginning to interpret the Constitution in accordance with its revolutionary and transformative potential.
- Renaissance in decisions: With about a dozen significant Constitution Bench decisions from the Supreme Court since September 2018, there has been a renaissance in decision-making by Constitution Benches.
- The most important decisions of this period include-
- Court’s decisions striking down Section 377 and the criminal offence of adultery.
- And including the office of the Chief Justice of India within the scope of the Right to Information Act.
Conclusion
With the interpretation process entering in the fourth phase-realising the purpose of enactment of the Constitution- Indian judiciary is on the right track, however, facets of phase 3 continue to linger on it. The Supreme Court must avoid getting in phase three mode to in order to realise the purpose it was entrusted with.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- PDS and issue of excess food stock with FCI.
Context
A substantial rise in consumer food price inflation to 14.12% in December 2019, the highest ever in the past six years, has driven the retail price inflation in this country.
Discrepancies in the fiscal deficit
- Policy dilemma for the RBI: Though the CPI was at 14.12% in December but with the core inflation rate still not overshooting the Reserve Bank of India’s (RBI) medium-term target of 4(+/- 2)%.
- Speculations hover as to whether the RBI monetary policy committee will go for another rate cut in the coming month.
- This is a policy dilemma for the central bank
- Why is the dilemma? The dilemma is because the moot issues regarding the government’s key economic estimates, such as the fiscal deficit, largely remain unresolved.
- Discrepancies flagged by the CAG: The CAG has stated that the current figures on deficit have been kept at a 1.5% to 2% low by not including the government’s off-budget borrowings from public accounts, such as the National Small Savings Fund (NSSF).
- According to media reports, such off-budget expenditure of the current government stands at ₹1.5 lakh crore in 2019–20.
- The major portion of off budged expenditure on food subsidy: About three-fourths of the incremental off-budget expenditure is on account of under-recoveries in food subsidies of the Food Corporation of India (FCI).
- Low allocation but high expenditure on food subsidy: For instance, the 2019–20 Union Budget had provisioned food subsidy at₹1.84 lakh crore.
- While the overdue of the FCI is already at₹1.86 lakh crore.
- For these burgeoning overdue, FCI’s off-budget borrowings from the NSSF have been on the rise.
Excessive stock by the government and rising inflation
- Issue of supply management: The issues of agricultural supply management are relegated to the background by the standard causality argument of “crop damages” caused by excessive rains and that the inflation will ease out once the new harvest comes in.
- This argument can hold some water for horticulture crops like onions that saw an almost 200% rise in price in November and December.
- Unable to explain inflation in wheat and other cereals: This argument may not find traction in explaining the price inflation of wheat and other cereals.
- holding the excessive cereal stock: With the government currently stocking much higher quantities of cereals at the FCI than the buffer norms.
- 45.8 million tonnes of wheat as against the buffer norm of 27.5 million tonnes and nearly double the amount of rice vis-à-vis the buffer norm of 13.5 million tonnes.
- India is now a cereal surplus economy.
- Why then the inflation in cereal prices? Is this artificially created by the government through its irrational stocking practice?
- Some fundamental concerns are triggered at this juncture.
- Concerns with excess stocks
- First-Higher stock means higher subsidy bill-With the economic costs of the FCI being 12 times or more than the allocation cost of the grains through the public distribution system-higher stocks would imply higher subsidy bills.
- Second–No benefit of the stock: In tandem with the first, ad hoc releasing of the stocks will not bring about any major changes in the situation.
- Third–Hiding fiscal deficit from the public: In this context, off-budget borrowing can serve various politically expedient purposes.
- It has enabled the government to showcase a consistently low share (below 1%) of subsidies in national income.
- Thereby diverted the public attention from two critical facts: the FCI’s tipping financials and the country’s (grossly) underestimated fiscal deficit.
Conclusion
The government must recall that the “illusion” of this acceptable limit of inflation potentially rests upon the savings of the common consumers, which is being unduly misemployed by the government.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Face recognition technique, its uses and related issue.
Context
Facial recognition technology is set to become an integral part of the law enforcement toolkit, but we should regulate this technology before it pervades our public spaces.
What are the issues with the use of facial recognition?
- Enormous possibilities for law enforcement agencies:
- Detectives have been using facial recognition to solve crimes for almost as long as the camera has been in existence.
- Use of AI for facial recognition: It is but a logical extension of the modern crime solver’s toolkit to use artificial intelligence (AI) on the most identifiable physical feature of people, their face.
- Screening faces within hours: An image captured at the scene of a crime can now be screened against photographs of entire populations for a match within a matter of hours.
- Uneasiness with being watched: The idea of being watched by devices linked to vast databases far out of sight makes liberal societies uneasy.
- Invasion of privacy: The intrusion that is causing alarm, however, has nothing to do with the technology itself, and everything to do with the all-pervasive surveillance it enables.
Should there be no rules governing it?
- Issue of accuracy: How accurately faces are identified by machines is a major point of concern. Deployed in law enforcement, false matches could possibly result in a miscarriage of justice.
- Judicial scrutiny: Even a low rate of error could mean evidence faces judicial rejection. It is in the judiciary’s interest, all the same, to let technology aid police-work.
- Racial bias: First up for addressal is the criticism that facial recognition is still not smart enough to read emotions or work equally well for all racial groups.
- With iterative use, it will improve.
- Mala fide use: Since such tools can be put to mala fide use as-rogue drones equipped with the technology, for example, should never be in a position to carry out an assassination.
- Nor should an unauthorized agent be able to spy on or stalk anyone.
- Caution in the developed countries: Apart from California, the European Union has also decided to exercise some caution before exposing people to it.
- Privacy as fundamental rights in India: India, which has recently accepted privacy as a fundamental right, would do well to tilt the Western way on this.
Conclusion
- We need regulations that restrict the use of facial recognition to the minimum required to serve justice and ease commercial operations. For the latter, customer consent should be mandatory.
- There will be some overlaps. Its use at an aerobridge to board an aircraft, for example, could serve the interests of both state security and the airline, but data-sharing could risk leakage.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- India-US ties, what are the issues that introduces friction in the ties between the two.
Context
Persistent in their efforts to remake their countries and their engagement with the world, Mr Modi and Mr Trump are shaking up the bilateral ties between the two countries, and the resultant flux could outlive their tenures.
The emergence of both the leaders on similar promises
- Improvements over the legacy of their predecessors: Both leaders continuously reiterate that their predecessors were incapable of protecting national interest.
- The compulsion to reframe the national interest: Such premises commits them both to reframe the national interest, and both have articulated it with clarity and force.
- For instance, Mr Modi, in Houston in September 2019 and Mr Trump in Davos this week, went great lengths to lay out figures that presented their respective regimes as the most effective guardians.
- Both have cultural and economic agenda: Both dispensations believe that “the people” had been given a raw deal by earlier regimes.
- Both have a cultural and economic agenda.
- National awakening: They are now leading a national reawakening, and working hard for the hard-working people.
- Both believe that cultural nationalism is a force for the good.
- Securing borders and entry barriers: Both believe that national borders need to be strengthened by stricter monitoring and setting new bars for entry.
- Renegotiating the treaties: Both leaders try to renegotiate the contract between the union and the States, and between citizens and the state within their respective countries.
- The supremacy of executive: They assert the supremacy of the executive over the legislature and the judiciary.
- Shared values: The notion of shared values of India and the U.S. has acquired a whole new meaning under Mr Trump and Mr Modi.
Politics and governance
- Hopes of status-quo in bilateral relations shattered: It was hoped that the stronger U.S.-India ties- that have autonomous drivers of convergence-would not be impacted by the nationalist politics of these two leaders.
- But both leaders have been remarkably true to their politics in their governance.
- Current tumult in the India-US ties: Shared values notwithstanding, national interests as perceived by these leaders have several points of divergence and therein lies in the current tumult in India-U.S. ties.
- Opposition to the “world order”: Mr Trump has been outspokenly confrontational with the “world order” that he says has worked against American interests.
- Dismantling the treaties: America under Mr Trump has wrecked treaties such as the Paris climate agreement and institutions such as the World Trade Organization and the United Nations, disrupting the “rule-based order”.
- India’s relations with Bangladesh: India’s spirited outreach in the neighbourhood is still playing out. India’s historically warm ties with Bangladesh have been frayed after CAA.
- India’s ambitions on the global level
- The seat at the UNSC: India under continues to push for more space for itself in global affairs by seeking a permanent seat in the UN Security Council and membership.
- NSG membership: India is also pushing for the membership of the Nuclear Suppliers Group.
- The US actions at global levels
- Expansion of the principle of the pre-emptive strike: America expanded the principle of pre-emptive strike to include the assassination of a senior official of Iran.
- Renegotiating the treaties: After dismantling the North American Free Trade Agreement, Mr Trump forced Mexico and Canada to accede to his demands in a new trade deal.
- The India-US relations and impact of U.S. relations with other countries
- Impact on India-US ties: India’s ties with the U.S. are impacted by America’s ties with India’s adversaries and neighbours, China and Pakistan.
- Hopes of alignment in the Indo-US ties: Mr Trump’s bluster against both had lit hope that there would finally be a near-complete alignment between India and the U.S. on strategy.
- US-Iran conflict: Despite Mr Trump’s avowed opposition to America’s endless wars in West Asia, the US is going against Iran headlong, which is not in India’s interest.
- Relations with Gulf Countries: Trump and Mr Modi share a strong bonding with the Gulf Cooperation Council kings, but their courses in the region are diverging.
- US-Pakistan coming closer once again: The American President’s impatience to get out of Afghanistan has already pushed his administration closer to Pakistan, which is now further necessitated by his adventurist Iran policy.
- The US disregard for China’s expansionist policies: Mr Trump has been singularly focused on one question-trade. He cares little about China’s expansionism and at any rate that is not a factor in his ties with other Asian countries.
India-US ties- Points of fission
- On the trade front: Mr Trump has bracketed India and China as two countries that have duped his predecessors to gain undue advantage. Which is far from seeing India as deserving special concessions to counterbalance China as old wisdom demanded.
- Ending GSP: The US ended India’s status under the World Trade Organization’s Generalized System of Preferences and took other punitive measures.
- India trying to decrease the trade surplus: By increasing hydrocarbon imports from the U.S., the government is trying to reduce India’s trade surplus.
- Restrictions on H1-B visa: The US has tightened the restrictions on the H1-B visa which is used by the Indian companies.
- Decreasing bipartisan support in the US: The mobilisation of Indian diaspora in America by the government has resulted in the inevitable blowback.
- Diaspora divided and bipartisan support waning: The diaspora has been divided, and the bipartisan support for India is now squandered. Progressive sections on the Democratic side and religious libertarians and evangelicals on the Trump side are both concerned over India’s actions back home.
Conclusion
Partnership with America is critical to India. India must take the steps to align the interest but whenever it diverges India must take measures to minimise its impact on India while furthering its interests.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Skybot F-850: Robot sent by Russia to dock with the International Space Station.
Mains level: Paper 3-Vyommitra, India's human spaceflight in 2022.
Context
The first gaganaut-Vyomamitra- to head for space in an Indian craft will not be human, but humanoid.
What Vyomamitra would do on spaceflight?
- Test the technological environment: Vyomamitra unveiled by ISRO will fly two missions to test the technological environment which human gaganauts will inhabit on India’s first demonstration of human spaceflight in 2022.
- She will test the systems and instruments that they would use.
- Vyomamitra cannot test the cabin ecosystem, as she would not be able to breathe the air.
- Other functions: Vyomamitra is perfectly capable of issuing commands, activating switches and, obviously, communicating with earth.
- Give company to human travellers: Her prototype has already chatted with people at the Isro event where she was introduced to the public, and future iterations will be able to give company to human travellers at the loneliest frontier.
A shift from sending animals to humanoids
- Performing roles previously performed by animals: Vyomamitra will be executing the pioneering role which has traditionally been given to animals – testing systems for survivability.
- Fruit flies and monkeys were the first beings to lift off, riding V2 rockets with devices monitoring their vital signs.
- Why using humanoid is more useful: Using a humanoid robot is more useful because it can be used to replicate the behavioural and operational responses of a human.
- Indeed, robots need not remain pioneers testing survivability, or assistants to the human crew, but are expected to crew missions that are too prolonged or too dangerous for a human pilot.
Opportunities and the future of AI-powered humanoid
- Russian robot in space: As India prepared for human flight, in August 2019, the Russian space agency Roscosmos sent up the anthropomorphic robot Skybot F-850 to dock with the International Space Station.
- The mission has been halted because of technical issues.
- Goals beyond survivability testing: If the nation which pioneered human spaceflight with Yuri Gagarin’s mission in 1961 is sending humanoid robots into space, survivability testing is not the only legitimate goal of missions powered by artificial intelligence and robotics.
- Opportunity to develop new technologies: Humanoid in space also provide opportunities to test and develop these technologies under circumstances that do not prevail on earth.
- The inputs, goals and skills learned are different and while AI on earth specifically focuses on creating systems which do not think like humans,
- Human-like AI system need of industry: The space industry would value systems that are human-like, to stand in for crew.
Conclusion
Vyomamitra represents the very first iteration of AI in space, and later generations could prove to be as essential for spaceflight as cryogenic engines.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- BRICS- challenges and areas of cooperation.
Context
India has invited the Brazilian President to be a guest of honour for Republic Day 2020. It is also a good opportunity for focusing on intra-BRICS partnership and trade.
Future of the BRICS
- To move towards multi-polarity: This was set up as a move towards greater multi-polarity; hence the spread across three continents and both hemispheres.
- Infirmities in the group: The BRICS combination accounts for about one-third of global output, but a glance at the GDP t and growth rates will show the infirmities of the group.
- Differences in GDP: In terms of GDP, China occupies the second position; India the fifth; Brazil the ninth; Russia the 11th; and South Africa the 35th.
- Differences in growth rate: In terms of growth rates, China grew at 6%; India at 4.5%, Russia 1.7%, Brazil 1.2% and South Africa 0.1%.
- Both politically and economically, Brazil and South Africa have been the laggards in recent years. But there are certain similarities as well.
- Similarities in the group: Each country has different economic and political leverage and its own burden of domestic and external issues.
- Decision-making structure: They all share the benefits of autonomous decision making.
- Non-affiliation: The members of the group have non-affiliation with any binding alliances.
- Informal structure: The group’s informal structure is an advantage for coordination among the most influential non-Western countries.
- Challenges to the survival of the group: The BRICS group can survive only if its members maximise their congruencies to the extent possible. Following are the challenges to the existence of the group-
- The growing intensity of Sino-Russian ties.
- The pro-American leanings in Brazil.
- The socio-economic difficulties of South Africa after nine years under the controversial Jacob Zuma.
- India’s many difficulties with China, including its abstention from the Regional Comprehensive Economic Partnership.
Achievement of the grouping
- New Development Bank: The main achievement of BRICS is the New Development Bank, with each country contributing equally to its equity.
- The bank has so far financed over 40 projects at a cost of $12 billion.
- The BRICS countries are also developing a joint payments mechanism to reduce foreign trade settlements in U.S. dollars.
- BASICS: An offshoot of the group, dealing with climate change, is BASIC (BRICS without Russia).
- BASICS met at the Spain conference last month and reiterated its support to the Paris Agreement.
- India’s lead role: India is taking the lead role in-
- Digital health, Digital forensics
- Film technology.
- Traditional medicine.
- Sustainable water management,
- Internships and fellowships.
Brazil-India relation
- Visa waiver for Indians: Brazil declared the decision to waive visa requirements for Indian citizens.
- Potential for investments: There is potential for Brazilian investments in the sectors of space and defence, agricultural equipment, animal husbandry, post-harvest technologies, and bio-fuels.
- Low two-way trade: The total two-way trade is at a paltry $8 billion, and the prospect of closer economic ties, however desirable, would require considerable optimism.
Conclusion
Both India and Brazil need to further deepen the ties and increase cooperation in various areas of cooperation. BRICS, despite the various challenges, need to focus on congruencies between them and work towards greater cooperation.
.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Suggestions for revival of the Indian economy, unemployment in rural and urban areas and ways to increase it by investing in various sectors.
Context
With the unemployment rate at 6.1 (2017-18), not just the future of the economy, the future of the country’s youth depends on the Budget.
Unemployment and other indicators of the economy
- Unemployment in urban youth: The unemployment rate for urban youth in the 15-29 years category is alarmingly high at 22.5%.
- These figures, however, are just one of the many problems, as pointed out by the Periodic Labour Force Survey.
- The decline in labour force participation: The Labour Force Participation Rate has come down to 46.5% for the ‘15 years and above’ age category.
- It is down to 37.7% for the urban youth. Even among those employed, a large fraction gets low wages and are stuck with ‘employment poverty’.
- The decline in investment: The aggregate investment stands at less than 30% of the GDP, a rate much lower than the 15-year average of 35%.
- The decline in capacity utilisation: The capacity utilisation in the private sector is down to 70%-75%.
Where the Budget should focus to reduce rural employment?
- Revive demand: The Budget should also focus on reviving demand to promote growth and employment.
- PM-KISAN and MGNREGA: Schemes like PM-KISAN and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) are good instruments to boost rural demand.
- Unutilised fund: a significant proportion of the budgetary allocation for PM-KISAN will go unutilised.
- Why income transfers through such schemes matter?
- Spend most of their income: Farmers and landless labourers spend most of their income. This means that income transfers to such groups will immediately increase demand.
- Consumes a wide range of goods: Further, rural India consumes a wide range of goods and services; so, if allocation and disbursement are raised significantly, most sectors of the economy will benefit.
- Immediate result: And such transfer will have the immediate payoff.
- Allocate to irrigation and infrastructure projects
- How allocation could matter: Rural unemployment can be reduced by raising budgetary allocation for irrigation projects and rural infrastructures like roads, cold storage and logistical chains.
- These facilities, along with a comprehensive crop insurance scheme, can drastically increase agricultural productivity and farmers’ income.
- The decrease in wastage and reduction in inflation shocks: Moreover, by integrating farms with mandis, such investments will reduce wastage of fruits and vegetables, thereby leading to a decrease in the frequency of inflationary shocks and their impact.
Where the Budget should focus to reduce urban unemployment?
- Focus on construction and related activities: In urban areas, construction and related activities are a source of employment for more than five crore people.
- Second only to agriculture: Across the country, the sector’s employment figures are second only to those of the agriculture sector.
- Construction as the backbone of other sectors: These projects, along with infrastructure, support 200-odd sectors, including core sectors like cement and steel.
- Problems with the construction sector:
- Construction sector at a halt due to legal disputes: Due to the crisis in the real estate and infrastructure sectors, construction activities have come to a grinding halt.
- At present, many real-estate projects are caught up in legal disputes-between home-buyers and developers; between lenders and developers; and between developers and law enforcement agencies like the Enforcement Directorate.
- Unsold inventories: The sector has an unsold inventory of homes, worth several lakh crores.
- Multiple authority as regulator and problem in liquidation: Multiple authorities -the Real Estate Regulatory Authority (RERA); the National Company Law Tribunal (NCLT); and the many consumer courts -have jurisdiction over disputes.
- Consequently, restructuring and liquidation of bad projects are very difficult, and in turn, is the main source of the problem of NPA faced by the NBFCs.
- What should be done to increase the demand in the construction sector?
- Raise the tax exemption limit: To revive demand for housing, the Budget can raise the limit for availing tax exemption on home loans.
- Use the bailout fund: The ₹25,000-crore fund set up by the centre to bailout 1,600 housing projects should be put to use immediately.
- The funds should be used to salvage all projects that are 80% complete and not under the liquidation process under the NCLT.
- Single adjudication authority: Several additional measures can also help. For example, there should be a single adjudication authority.
- NIP and its significance: The ₹102-lakh-crore National Infrastructure Pipeline (NIP) programme is a welcome step. If implemented successfully, it will boost the infrastructure investment over the next five years by 2%-2.5% of the GDP annually.
Problems with National Infrastructure Pipeline
- Problems of 60% investment: The problem is that more than 60% of the planned investment is expected from the private sector and the States.
- Regulatory certainty a must for the private sector: The government does not seem to realise that for private investment, regulatory certainty is as important as the cost of capital.
- Regulatory hurdles: Many infrastructure projects are languishing due to regulatory hurdles and contractual disputes between construction companies and government departments.
- The reason behind the non-availability of private capital: As a result of the regulatory hurdles infrastructure investment has come to be perceived as very risky.
- This is the major reason behind the non-availability of private capital for infrastructure.
- Role to be played by the Centre: This is a scenario, where the private sector has very little appetite for risky investments and State finances are shaky due to low GST collection.
- Responsibility of the Centre: The onus is on the Centre to ensure that the programme does not come a cropper. The budgetary support to infrastructure will have to be much more than the NIP projection at 11% of the GDP.
Way forward to revive the economy
- Focus on completing the incomplete projects:
- Bidding a lengthy process: Bidding and contracting for new roads, highways, railway tracks and urban development projects is a lengthy process.
- This is also the reason why several infrastructure-linked Ministries like those for civil aviation and roads have not been able to spend money allocated to them in the current fiscal year.
- Completing the projects a priority: Therefore, rather than earmarking budgetary support for new projects, the focus should be on projects that are currently under implementation so as to complete them as soon as possible.
- Funding should be front-loaded: That is, funding should be front-loaded. In addition to creating employment, timely completion of infrastructure projects will help increase the competitiveness of the economy.
- Address the distress in SMEs: The distress among Small and Medium Enterprises (SMEs) is another area of concern.
- GST anomaly and stuck money: For many products produced by these enterprises, the GST rates are higher for inputs than the final goods. Due to this anomaly, around ₹20,000 crore gets stuck with the government annually in the form of input tax credits.
- This has increased cost of doing business for SMEs, which employ over 11 crore people.
- Fill the vacancies in the Government jobs: According to some estimates, there are more than 22 lakh vacancies in various government departments.
- Focus on vocational training program: The government needs to provide affordable and good quality vocational training programmes.
- To stop the demographic dividend from becoming a national burden, there is a need to invest heavily in skilling of the youth.
- Besides, the Budget should give tax incentives to companies and industrial units to encourage them to provide internships and on-site vocational training opportunities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Introduction of Bt cotton, and various cropping patterns
Context
This year, India is expected to be the world’s largest cotton producer, surpassing China in output. However, India’s productivity (yield per unit area), is much lower than other major cotton-producing countries.
India’s experience with cotton
- India is the only country growing hybrids: India is the only country that grows cotton as hybrids and the first to develop hybrid cotton back in 1970.
- What are hybrids: Hybrids are made by crossing two parent strains having different genetic characters.
- Greater yields: These plants have more biomass than both parents, and capacity for greater yields.
- Require more inputs: They also require more inputs, including fertilizer and water.
- Expensive seed production: Though hybrid cottonseed production is expensive, requiring manual crossing, India’s low cost of manual labour makes it economically viable.
- Rest of the countries: All other cotton-producing countries grow cotton, not as hybrids but varieties for which seeds are produced by self-fertilization.
- Key issues with the use of hybrids
- Hybrid seed cannot be propagated over generations: A key difference between hybrids and varieties is that varieties can be propagated over successive generations by collecting seeds from one planting and using them for the next planting.
- Purchasing the seeds is must: Hybrid seeds have to be remade for each planting by crossing the parents. So for hybrids, farmers must purchase seed for each planting, but not for varieties.
- Pricing control to the companies: Using hybrids gives pricing control to the seed company and also ensures a continuous market.
- Increased yield used as justification for high prices: Increased yield from a hybrid is supposed to justify the high cost of hybrid seeds.
- However, for cotton, a different strategy using high-density planting (HDP) of compact varieties has been found to outperform hybrids at the field level.
Cotton planting strategies
- What other countries do?
- Compact and short-duration varieties: For over three decades, most countries have been growing cotton varieties that are compact and short duration.
- 5kg seeds/acre: These varieties are planted at high density (5 kg seeds/acre).
- These varieties have 5-10 bolls per plant.
- What is done in India?
- Low density and long duration: Hybrids in India are bushy, long duration and planted at a ten-fold lower density.
- 0.5 kg seeds/acre: Hybrids are planted at a lower density of 0.5kg/acre.
- Which strategy is more beneficial?
- The lower boll production by compact varieties (5-10 bolls per plant) compared to hybrids (20-100 bolls/plant) is more than compensated by the ten-fold greater planting density.
- Experience of Brazil: The steep increase in productivity for Brazil, from 400 to 1,000 kg/hectare lint between 1994 and 2000 coincides with the large-scale shift to a non-GM compact variety.
Why should India opt for short duration variety?
- Cotton being a dryland crop: Cotton is a dryland crop and 65% of the area under cotton in India is rain-fed.
- Advantage of short duration variety in the rain-fed area: Farmers with insufficient access to groundwater in these areas are entirely dependent on rain. Here, the shorter duration variety has a major advantage as it reduces dependence on irrigation and risk.
- Particularly late in the growing season when soil moisture drops following the monsoon’s withdrawal.
- This period is when bolls develop and water requirement is the highest.
- Productivity and input costs of the varieties: It has more than twice the productivity.
- Half the fertilizer (200 kg/ha for hybrids versus 100 kg/ha for varieties).
- Reduced water requirement.
- And less vulnerability to damage from insect pests due to a shorter field duration.
Impact of Policy
- Why India persisted with hybrids during 1980-2002
- Two phases of policy have contributed to this situation.
- The first phase- Before GM cotton: The answers lie with the agricultural research establishment.
- The second phase: The phase where the question of hybrids versus compact varieties could have been considered, was at the stage of GM regulation when Bt cotton was being evaluated for introduction into India.
- International experience not taken into account: It would not have been out of place to have evaluated the international experience, including the context of the introduction of this new technology.
- Agro-economic conditions were not taken into account: Importantly, agro-economic conditions where it would be used should have been a guiding factor.
- The narrow scope of evaluation: The scope of evaluation by the GM regulatory process in India was narrow, and did not take this into account.
- Consequently, commercial Bt hybrids have completely taken over the market, accompanied by the withdrawal of public sector cottonseed production.
Key takeaways
-
- Frist–Outcome of technology depends upon the context: Outcome of using a technology such as Bt is determined by the context in which it is deployed, and not just by the technology itself.
- Negative fallout: If the context is suboptimal and does not prioritise the needs of the principal stakeholders (farmers), it can have significant negative fallouts, especially in India with a high proportion being marginal and subsistence farmers.
- Second–Better consultation in policy: There is a need for better consultation in policy, be it agriculture as a whole or crop-wise.
- Socioeconomic consideration in GMO risk assessment: India is a signatory to international treaties on GMO regulation (the Convention on Biological Diversity, and the Cartagena Protocol on Biosafety), which specifically provide for the inclusion of socio-economic considerations in GMO risk assessment.
- However, socioeconomic and need-based considerations have not been a part of the GMO regulatory process in India.
Conclusion
Given the distress, the cotton-growing farmers are facing this is the right time to review the grounds on which Bt cotton was introduced in India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Climate change and India's SAPCCs. India acting at state level.
Context
The recent global climate summit, the annual Conference of the Parties (COP25), held in Madrid was a failure and that the multilateral process to address the climate crisis is broken. The growing global stalemate gives India the chance to focus on the State and sub-State levels.
COP 25 at Madrid and what future prospects
- Wealthy countries disowning responsibility: At several discussions on finance, ambition, transparency of support and pre-2020 action, wealthy countries were recalcitrant.
- Disavowing obligations: Although responsible for using the bulk of the carbon space in the atmosphere, they now disavow their obligations. With some even denying anthropogenic climate change.
- Complete severance of science from negotiations: At this stage, there is a complete severance of climate science from the negotiations and agreements at the global level.
- The question is, what can we do now?
- What can happen at the next COP?
- Hope of little change: The next COP will be held at Glasgow, U.K. (in late 2020) and there may be little change in the outcomes.
- The global political order may not alter much. The fact that we live in an unequal and unjust world is not going to change either.
- What else can happen on the global level?
- Right leader: The right political leaders could nudge action in a new direction.
- Green New Deal could pass: Younger members could be elected to the U.S. Congress and the Green New Deal could pass sometime in 2021.
- Growing activism: In the meantime, climate activism is increasing awareness and having some success in removing insurance and financial support for fossil fuel companies. But these kinds of changes will occur slowly.
- Participation of other stakeholders at next COP: At least one expert has called for a parallel action COP at future summits where sub-state actors, civil society groups, non-governmental organisations and academics can share ideas and nudge action.
The chance for India to develop climate change action at State and Sub-state level
- Chance to develop climate change action: The stalemate at the global level offers India the opportunity to focus earnestly on developing its climate change action at State and sub-State levels.
- Peripheral status of climate change: In the states, the environment and climate continue to be relegated to peripheral status.
- Damage to the environment: This neglect has led to the destruction of ecosystems, forests, water-bodies and biodiversity.
- Vulnerability and economic costs of the neglect: Numerous studies have shown the high economic and ecological costs and loss of lives due to extreme events.
- We do not need more data to stimulate action. As is also well recognised, India is extremely vulnerable to the effects of warming.
Progress made by the states so far
- The first round of SAPCCs: With support from bilateral agencies, States initially took different approaches in the first round of State Action Plans on Climate Change (SAPCCs).
- Some of them set up separate climate change cells while some collaborated with academic institutions.
- A few produced detailed action plans while others developed strategy documents.
- Still, others integrated improvements in energy efficiency (contributing to reducing emissions), while almost all focused on adaptation.
- The synergy between climate change and development:
- Attention to climate change offers co-benefits to India for development. For instance-
- Efficiency reduces pollution: Improving energy efficiency in industry reduces costs and local pollution.
- Transport and congestion: Improving public transport reduces congestion, pollution and improves access.
- Natural farming and fertilisers: Using natural farming methods reduces fossil fuel-based fertilizers, improves soil health and biodiversity.
- These examples show that there are synergies in the steps to be taken for good development and climate change.
- Next round of SAPCCs and strategies
- The next round of the SAPCCs is being drawn up, under recommendations from the Centre.
- Where should be the focus? The focus ought to be on integrating the response to climate change with the development plan in different departments.
- States together to contribute NDCs: Since the States together are to deliver the Nationally Determined Contributions (NDCs) that India has promised, it means that they require guidance from the Centre.
- Unfortunately, most State government departments are handling climate change as a fringe issue and do not seem to recognise its urgency.
Integration of various sectors for climate action
- Identification of sectors: Line departments for government schemes and programmes in key development sectors, such as agriculture, transport and water, should be identified for carefully integrating actions that respond to climate change.
- Integration at district level: This integration should also take place at district and sub-district levels. But only a demonstration of its success in some departments would show how this can be done.
- The realisation of climate as an important issue: But first and foremost, States need to get the signal that climate is an urgent issue.
- Funds for implementing SAPCCs
- How funds for implementing SAPCCs will be obtained is not clear.
- There will not be enough from the Green Climate Fund, Adaptation Fund and bilateral agencies to support all States unless new sources are found.
- Use of coal cess: The coal cess in India is a good initiative, and as others have pointed out, could be used for environment and climate-related expenses.
- Alternative sources: Alternative sources from high emissions’ industries and practices would be an option, but still probably insufficient.
Way forward
- Performance analysis of first SAPCCs: There is also needs to be a clear analysis of how the first round of action plans fared.
- Challenges and performance: What were the challenges and how did they perform?
- Reasons for success and failures: Which approaches and projects were successful and ought to be scaled up and what lessons do the failures offer?
- Finally, what institutional structure works best?
- Need for the greenhouse gas inventory: The country needs reliable greenhouse gas inventories.
- Individual research groups and the civil society initiative, GHG Platform India, have been producing such inventories.
- Such inventories would be useful in synchronising and co-ordinating State and Central mitigation programmes.
- Programmes with longer timelines: States must also develop their programmes with longer timelines.
- With mid-course correction based on lessons and successes that can be integrated into the next stage of the plan.
- If the second round of SAPCCs were treated as an entry point to long-term development strategy, the States and the country would be better prepared for climate change.
- Ultimately, climate should be part and parcel of all thinking on development.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Role of informal sector in Indian economy, How expansionary fiscal policy can help more than represented in the official data.
Context
That India is in the midst of a serious economic slowdown is no longer in question. The debates are now mostly about what to do about it.
Where is the GDP growth coming from?
Fall in consumption expenditure in absolute terms: The leaked National Sample Survey (NSS) consumer expenditure data -shows that real monthly per capita expenditure has in fact fallen in absolute terms between 2011-12 and 2017-18.
- 8 % decline in a rural area: In rural areas, consumption expenditure decreased by 8.8 per cent.
- 2% decline in an urban area: While in urban areas it increased by 2 per cent, leading to an all India decline of 3.7 per cent.
- Where is the growth coming from: If average consumer expenditure is down, then where is the GDP growth coming from?
- Consumer expenditure contribution: After all, according to National Accounts Statistics (NAS) consumer expenditure is around 60 per cent of the GDP.
- And given the other contributors to GDP-investment and government spending- are not growing spectacularly, consumer expenditure should be growing rather than decreasing.
- So, to get an overall 5 per cent growth rate, consumer expenditure should be growing at higher than 5 per cent.
- NSS vs. NAS- a genuine puzzle: How can consumption expenditure be going down in absolute terms according to the NSS estimates and be growing at more than 5 per cent according to the NAS?
- Variation in data a norm: That these two types of estimates of consumption expenditure do not match is well-known, and that is the case in other countries as well.
- The discrepancy at alarming proportions: In the 1970s, consumer expenditure according to NSS estimates was around 90 per cent of consumer expenditure according to NAS, but in 2017-18 it was only 32.3 per cent.
- Data from two different countries: It is as if we are looking at data from two different countries.
- One where the consumption expenditure growth is positive and propping up the GDP growth rate and the other where it is actually falling.
A few inferences that pertain to the state of the economy and the policy options.
- Reasons for the discrepancy between NSS data and NAS data.
- First- Presence of large informal sector:
- 50% contribution to GDP: Informal sector accounts for nearly half of the GDP and employs 85 per cent of the labour force.
- Guesswork on performance: In national income accounts, growth in the informal sector is estimated by extrapolating from the performance of the formal sector. Which is largely guesswork.
- Second- Making effects of the expansionary policy less pronounced:
- Expansionary fiscal policy more effective than appear to be: Because of the presence of the informal sector, expansionary fiscal policy will be more effective than what would appear from official statistics, as a big part of its impact will be felt in the informal sector.
- Why is it so? The reason is that a big segment of the population is located in the informal sector; they are poorer and tend to spend a much higher fraction of their income on consumption.
- This group has been seriously affected by the economic slowdown.
- Third-Results of expansionary policy would be apparent after a delay
- Apparent effects of policy much worse than what it would be: The effect of an expansionary policy on the budget deficit will look much worse than what it would be since the estimates of its effect on income expansion and tax collection will be largely based on the formal sector.
- Informal sector boosting the formal sector: Some of the income generated in the informal sector will boost demand in the formal sector through consumer demand for mass-consumption items (for instance, biscuits, as opposed to automobiles).
- Good medium-term pictures: Therefore, in the medium term, once the engine of the economy starts moving, the income expansion and deficit numbers will look better.
- Final-Tax cuts will achieve little
- Only 3-5% population affected: The tax cut will affect barely 3-5 per cent of the adult population.
- Contribution of taxes in GDP: Income tax revenues amount to around 5 per cent of the GDP and corporate income taxes around 3.3 per cent.
- Rich tends to save more: Most of the tax is paid by the richest among these groups (the top 5 per cent taxpayers contribute 60 per cent of individual income tax revenue), and the rich tend to spend a smaller fraction of their income (and save more).
- Little impact on GDP: Irrespective of the number of people affected, and even if they spend the entire increase in their income as a result of the tax cut, the overall economic impact will be small relative to the GDP.
- The futility of tax cut: Therefore, a tax cut for the rich would be less effective in raising spending compared to an equivalent amount being given to poorer groups who spend a much higher fraction of their incomes.
Conclusion
The government should not underestimate the role of the informal sector in the economy. To get the engine of the economy revving, an expansionary fiscal policy that harnesses the energy of the informal sector to boost aggregate demand is the order of the day.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Climate change and adoption of clean and sustainable energy to tackle with it.
Context
Significance of electricity in our life
- Interconnecting economic prosperity: Electrical energy is a juncture that inter-connects economic prosperity.
- Amplifies social equity.
- Ushers in a liveable environment for us.
- No development in its true sense is possible if we leave aside energy and specifically sustainable energy.
- It is almost indispensable for holistic and sustainable progress of any kind.
Burning of fossil fuel and climate change
- Singular reliance on fossil fuel: Ever since the industrial revolution, development has almost singularly relied on the burning of fossil fuels, emitting huge volumes of carbon dioxide into the atmosphere.
- 41% of electricity from coal: As per data by the World Coal Association, a little over 41% of all electricity generated is produced from coal.
- Problems with coal: Burning coal for electricity production leads to-
- High level of hazardous carbon emissions.
- Rising levels of pollution: water and air pollution during mining and air pollution during burning.
- Working condition of miners: Added to the disastrous working conditions of miners, coal cannot be regarded as a sustainable source of energy.
- Global warming and climate change: Despite increasing awareness, not much is being done to mitigate climate change.
- Rise over 1.5oC and Consequences: IPCC (Intergovernmental Panel on Climate Change) has reiterated that unless global temperature rise is not kept within 1.5 degrees Celsius, natural and human systems will be irreparably damaged.
- Rise over 2o C and Consequences: Even a slight increase in atmospheric temperature by 2 degrees Celsius will result in a substantial rise in sea levels.
- Consequences for human life: The rise in sea level would, in turn, translate into a whopping 10 million more people going homeless and another 50% people facing severe water scarcity.
- The aim of becoming carbon neutral: To join the efforts, many global public and private stakeholders have pledged their allegiance into becoming net-zero carbon emitters.
- But we are still far from achieving our objectives, as the IEA (International Energy Agency) recently reported that the Earth’s temperature rise will range between 1.8 degrees Celsius and 2.7 degrees Celsius soon.
Sustainable energy as a necessity
- Energy efficiency and energy management: As the world is evolving into an interconnected form of world-of work, life and more-energy efficiency and energy management have slowly come to be a central driving force.
- Sustainable energy a necessity: In order to power smart homes, industries, hospitals and other mission-critical operations, sustainable energy is no more a matter of choice, but of necessity.
- IoT to help achieve energy efficiency: Technology adoptions like IoT and connected services can greatly enhance energy efficiencies and many global behemoths are coming to terms with this reality.
- Demand for an alternative source of energy: Environmental factors, coupled with rising costs and stringent regulatory guidelines, are adding to the demand for alternative sources of energy.
- Alternate as well as sustainable: The alternate sources are expected not only to satiate the growing consumption needs but are proven to be a sustainable option in the long run.
Electricity 4.0
- Electricity 4.0: That is, sustainable methods of energy generation and efficient and cost-effective usage of produced energy.
- The sustainable energy need of the sustainable future: To lay the foundation stone for a sustainable future, there is a critical need to investigate how we create and consume energy.
- The answer lies in renewables becoming the dominant source of power, globally.
- A new form of energy mix: There is a growing need to build a new form of energy mix under Electricity 4.0, with renewable ways of electricity creation, at its very core. A new order where-
- Electrical internet of things (EIOT).
- Cloud computing.
- Artificial intelligence.
- And the tools of today’s digital era are fully leveraged to maximise energy efficiency.
Way forward
- Given that the major cause of global warming is Carbon Dioxide, so the first step to combat it would be-
- Electrifying the planet: The augmented proliferation of energy-efficient, electricity-based equipments that are prevalent now, such as e-mobility, electrical heating, innovative applications such as electric aviation fleets can be one way to do that.
- Scale up the production of renewable energy: The immediate need is to scale up the production of renewable electricity and build conducive public-policy frameworks to further this goal.
- Adoption of digital technology: It is imperative to adopt digital technology in order to optimise the efficiency of our energy consumption and electrical networks. Digital connectivity, software and artificial intelligence can well be dubbed as the fulcrum that will support our transition toward Industry 4.0.
- Concerted efforts from all stakeholders: To reduce carbon dioxide (CO2) emissions or to promote energy decarbonisation, concerted efforts are required from all stakeholders – the community, regions, government and the private sector.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Need to define the natural forests and effects of climate change on forests.
Context
Global warming, drought and El Niño may lead to increased forest fires.
The success story of India
- Reduced deforestation: India has succeeded in reducing deforestation to some extent through an effective Forest Conservation Act and large-scale afforestation programme.
- Comparison with other countries: India performed better when compared with other forest-rich tropical countries such as Brazil, Indonesia and the Democratic Republic of Congo.
- Without the Forest Conservation Act and its reasonably effective implementation, India would have lost significant extent of forest area.
- Increased afforestation: India has also been implementing significant scale afforestation, though the rates of afforestation have declined recently.
- Agro-forestry, involving raising fruit tree plantations contribute to some extent.
- Commercial plantations of eucalyptus, casuarina, teak, poplar, etc., have been raised by farmers for commercial purposes.
- The above steps have resulted in potentially reducing the pressure on natural forests.
Need to measure ‘natural forest’
- Increase in an area under forest: According to the latest biennial State of Forest Report (SFR) of the Forest Survey of India (FSI), an area under forests has been increasing.
- Natural forests not specifically measured: It is not clear what percentage of increase in forest area is due to changes in natural forests which are generally rich in biodiversity.
- The report doesn’t specify what percentage of change in area is due to commercial plantation and what percentage is contributed by horticulture or urban parks.
- Need to define ‘natural forest’: What will be of most concern to forest and biodiversity conservation is to understand the status of natural forest and biodiversity.
- India can use the same definition of forests but must estimate and report the area under natural forests and other forest plantation categories.
- India needs to define ‘natural forests’ first, further, this would involve additional staff time and resources.
- The resilience of natural forests to forest fires: Tropical forests rich in biodiversity are likely to be more resilient than monoculture dominated plantations or exotics.
- Vulnerability to forest fires varies from forests to forests: Studies by the Indian Institute of Science (IISc) have shown that degraded forests, fragmented forests and biodiversity-poor forests are more vulnerable to climate change.
Climate change and its impacts
- IPCC reports on large scale loss: The United Nations Intergovernmental Panel on Climate Change (IPCC) reports have repeatedly concluded that climate change will lead to large-scale loss of biodiversity, before the end of the current century or even earlier.
- Modelling studies by IISc.: Preliminary modelling studies by Indian Institute of Science (IISc) have shown that about 20% of forests will be impacted by climate change.
- No change to adapt: The modelling studies means that existing forest biodiversity and its structure and composition will not be able to adapt to the new climate and there could be mortality or forest dieback.
- The threat of forest fires: Further, warming, drought and El Niño will lead to increased forest fires, and may even be favourable to forest pests.
- Unfortunately, the models currently in use for assessing the impact of climate change are not suitable for the complex and highly diverse forest types that exist in India.
Conclusions
- Given that global warming will continue, India will have to brace itself to adapt to the impending impacts. In India, there is very limited research on climate change and its impacts on forests, putting our famed biodiversity-rich country status under threat.
- India needs to realistically assess, monitor and model climate change and its impacts and be prepared to adapt to impending climate change.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2-Foreign relations with Pakistan, Issues and need to resume the talks.
Context
Pakistan is changing significantly, which is good for itself and its neighbour as well.
Changing Pakistan
- Major stakeholders in favour of peace: The civil society, the political parties, and even the military establishment of Pakistan have come to favour peaceful and cooperative relations with India.
- Both the power-centre on the same page: Both Islamabad and Rawalpindi, Pakistan’s two centres of power, are now on the same page in seeking “honourable peace” with New Delhi on the basis of “sovereign equality”.
- Heavy price paid by Pakistan: There is a broad consensus in Pakistani society and polity that their country has paid a very heavy price by supporting the forces of Islamist extremism and terrorism.
- The futility of using terrorism as foreign policy: There is also consensus that using terrorism for achieving mistaken foreign policy ends in Afghanistan and India.
Conducive conditions for dialogues
- Four factors have influenced the welcome winds of change in Pakistan.
- First-Realisation that Pakistan has suffered a lot:
- Harm at home and to the global image: There is the across-the-board realisation that Pakistan has suffered a lot, both domestically and in terms of damage to its global image, by supporting religious extremism and terrorism.
- A large number of casualties: Terrorists have killed a shockingly large number of civilians -certainly far many more than in India. Several thousand soldiers have lost their lives in the army’s “war on terror”-more than the number of casualties in all the wars with India.
- The threat of FATF blacklisting: Furthermore, Islamabad is under relentless pressure from the Financial Action Task Force (FATF) to act decisively and irreversibly against terrorist organisations.
- Second-Decrease in religious radicalisation in Pakistan
- The decrease in the financial support to radicalism: What has contributed to the diminished importance of religious radicalism is also the shrinking inflow of petrodollars from Saudi Arabia and Gulf countries that promoted this agenda.
- The ideological influence of religious radicalisation on Pakistan’s civil society is clearly declining.
- Change in Saudi Government Policy: Export of Wahhabism is no longer a foreign policy priority of the Saudi Arabian government.
- Changing policies in UAE: The United Arab Emirates has gone a step further, under the leadership of Abu Dhabi’s Crown Prince Mohammed bin Zayed Al Nahyan, it is pursuing inter-religious tolerance with a zeal that has surprised Muslims and non-Muslims alike.
- Third-Interest of China
- Rise of China as an economic and security partner: The third factor is China, which has emerged as Pakistan’s most important economic and security partner.
- The China-Pakistan Economic Corridor (CPEC) and BRI: The flagship projects under Beijing’s BRI has begun to modernise Pakistan’s infrastructure spectacularly, but its security is which could be threatened by terrorism is also the concern for China.
- Connection with China’s Xinjiang Province: China has urged Pakistan’s ruling establishment to take firm steps to curb the activities of Islamist groups because they can easily foment trouble in China’s Muslim-majority Xinjiang province.
- India-China relation factor: Beijing is also engaged in a steady effort to improve relations with New Delhi, in recognition of India’s rising economic and geopolitical stature in Asia and globally.
- Possibility of India-China-Pakistan cooperation: China’s President Xi Jinping even mooted cooperation among China, India and Pakistan at Mamallapuram summit.
- Fourth-Military establishment in favour of peace.
- The military establishment seems to be fully convinced of the need for normalisation of India-Pakistan
- Opening of Kartarpur Sahib Corridor: The opening of the Kartarpur Sahib Corridor, perhaps the greatest confidence-building measure between the two countries since 1947, is almost entirely due to Gen. Bajwa’s personal commitment to the project.
- The economic crisis in Pakistan: Bajwa’s is also said to be convinced of the need to open the doors for economic and trade cooperation between the two countries given a serious economic crisis Pakistan is going through.
- Discussion on the Kashmir issue: The Pakistan Army may also be ready to discuss a solution to the Kashmir issue on the basis of a formula Gen. Pervez Musharraf had discussed with PMs Atal Bihari Vajpayee and Dr Manmohan Singh.
Conclusion
India needs to seize the opportunity to resume the talks with Pakistan on all the contentious issues and try to resolve the disputes so that the improved relations could help both the countries and the neighbouring countries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Trade war, Globalization and effects on Indian economy.
Context
Given its increased heft in the global economic order, India ought to be at the leading edge of the current debate of the future of capitalism.
The emergence of “stakeholder capitalism”
- Interests of all shareholder: Klaus Schwab, who founded the World Economic Forum 50 years ago, wants capitalists to look beyond their shareholders and consider the interests of all the stakeholders.
- Long overdue debate: Some hope that the debate on stakeholder capitalism is a long-overdue recognition of the capitalist excesses of recent decades.
- Generating value for customers: Last August, the Business Roundtable in the US, which brings together some of the top American corporates, said American companies must now generate value for customers.
- Invest in their employees.
- Deal fairly with suppliers and support the communities in which they operate even as they service their shareholders.
- Scepticism over “interests of all shareholders”: Sceptics say that this is a nice way of saying the right things, repackaging old ideas on corporate social responsibility and creating illusions about reforming capitalism.
- Cynics insist that it will be business as usual for the world’s capitalists.
- Reflection of deeper crisis: Beyond this divide between optimists and pessimists, the discourse on “stakeholder capitalism” is a reflection of the deeper crisis afflicting the global economy today.
Three major challenges according to WEF
- In its annual survey on global risks, the WEF has identified many challenges. Three of them stand out.
- First Challenge: Polarised politics
- In the US Trump is unlikely to be defensive.
- While the dominant sentiments see Trump as the very embodiment of nationalism and populism that are polarising politics around the world.
- Others point to the structural conditions that have bred these forces.
- America’s working-class whose wages haven’t risen in decades, whose jobs are less secure than ever rallied behind Trump.
- Politics in the US: Much the same happened in the British elections last year.
- Tory leader Boris Johnson won a sweeping mandate by breaking into the working-class strongholds of the Labour Party.
- Second Challenge: Trade war
- Trump had a long record of denouncing free trade.
- Many had hoped that Trump will moderate his anti-globalist rhetoric once in office.
- Attack on a core principle of globalisation: Trump has taken a pickaxe to the core principles of the globalised economic order – free trade, open borders and multilateralism.
- Renegotiating the treaties: The US has renegotiated a 25-year old trade agreement with America’s neighbours, Canada and Mexico.
- The threat of all-out-trade war with China: Trump’s threat of an all-out trade war with China over the last couple of years has led to an interim agreement.
- The agreement commits Beijing to reduce its trade surplus with the US by importing more.
- The trade deficit of the US with EU: At Davos, Trump is expected to turn his ire on the EU, which has a near $200 billion trade surplus with the US.
- Third challenge: Technology
- War in technology domain: The trade wars among the world’s major capitalist centres is accentuated by the technological revolution, especially in the digital domain.
- Need for coordination: The Davos report on global risks argues that the realisation of the full potential of new technologies depends on unprecedented coordination among all stakeholders.
- Digital fragmentation: What is emerging instead is “digital fragmentation” marked by the extension of geopolitical and geo-economic rivalries into the new domain.
- Digital issues have come to the front and centre of American arguments with Europe.
Conclusion
- India must find ways to take advantage of the new opportunities from the unfolding rearrangement of the global capitalist system.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- India-EU relations and scope and areas of cooperation.
Context
The EU-India Strategic Partnership has come a long way in recent years. The relationship is based on long-standing shared values and interests. There are numerous opportunities to unleash the full potential of EU-India cooperation.
India-EU Cooperation on Climate Change
- The EU has committed to becoming carbon neutral by 2050.
- But EU member states together only account for 9 per cent of global emissions.
- Need to engage with the rest of the world: EU-India cannot solve this problem unless they engage with the rest of the world to address it.
- India’s commitment, as one of the biggest democracies in the world, is a key part of the solution.
- The mixed outcome of the COP25 Climate Conference shows how much more remains to be done.
- Clean Energy and Climate Partnership (CECP): In 2016 Prime Minister Narendra Modi and European leaders agreed on an EU-India Clean Energy and Climate Partnership (CECP).
- EU and International Solar Alliance: In 2018, the EU joined efforts with the International Solar Alliance, headquartered in India.
Cooperation in trade
- Both are the members of WTO: India and EU both agree on the vital role of the World Trade Organisation (WTO) and the need to overcome the crisis of the dispute settlement system.
- Ministerial dialogue: The launch of a regular ministerial dialogue on economic, trade and investment issues could give additional impetus to the relations.
Cooperation on security
- Indian Navy vessels are now escorting World Food Programme ships in the framework of the EU Atlanta operation against piracy off the coast of Somalia.
- Cooperation on anti-terrorism: Counter-terrorism experts from Europe and India exchange experiences and best practices.
- As a result, an enhanced working relationship between our police officers is taking shape.
Digital economy and cyber
- Need to deepen cooperation: EU and India should deepen cooperation to protect fundamental freedoms in cyberspace and the free flow of data – and counter the drift towards high-tech “de-coupling”.
- India-EU does not want a split in cyberspace, forcing both to “choose sides” between competing systems and standards.
- India and EU both believe in fair competition, based on global standards, for 5G, AI, big data and the internet of things.
Conclusion
There is much that the EU and India have accomplished in recent years. But there is even more to be done to further strengthen our dynamic dialogue and cooperation in all areas of mutual interest and as players on the world stage.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- National accounting and problems in associated with the data collection and methods.
Context
As official statistics is a public good, giving information about the state of the economy and success of governance, it needs to be independent to be impartial.
GDP calculation and its significance
- What is GDP:
- Assigning a value to products and services: In effect, it adds apples and oranges, tractors and sickles, trade, transport, storage and communication, real estate, banking and government services through the mechanism of value.
- GDP covers all productive activity for producing goods and services, without duplication.
- The System of National Accounting (SNA): It is designed to measure production, consumption, and accumulation of income and wealth for assessing the performance of the economy.
- What is the significance of GDP data?
- Influence the market: GDP data influence markets, signalling investment sentiments, the flow of funds and balance of payments.
- The input-output relations impact productivity and allocation of resources.
- Demand and supply influences prices, exchange rates, wage rates, employment and standard of living, affecting all walks of life.
- Issues over the present series of GDP:
- Nominal GDP: The data on GDP are initially estimated at a current price known as nominal GDP.
- Real GDP: Nominal GDP minus the inflation effect is real GDP.
- Price Index: There is a way of adjusting inflation effect through an appropriate price index.
- Pricing series issue with the service sector: The present series encountered serious problems for the price adjustment, specifically for the services sector contributing about 60% of GDP.
- Absence of price index: There is an absence of appropriate price indices for most service sectors.
- What the absence of series means: The deflators used in the new series could not effectively separate out price effect from the current value to arrive at a real volume estimate at a constant price.
- Methodical issue: Replacing Annual Survey of Industries (ASI) with the Ministry of Corporate Affairs MCA21 posed serious data and methodological issues.
Need for the change in the approach of data collection
- The approach for the collection of data remains largely the same for long.
- Price and production indices are constructed using a fixed base Laspeyres Index.
- The yield rate for paddy is estimated by crop cutting experiments.
- The organisation of field surveys for collection of data on employment-unemployment, consumer expenditure, industrial output, assets and liabilities continue.
- Why data collection for yields need to change?
- Productivity and remunerative price of output are major concerns for agriculture.
- Data collection from diverse factors: It is necessary to collect data on factors such as soil conditions, moisture, temperature, water and fertilizer use determining yield, the impact of intermediary and forward trade on farm gate price and so on.
- Israel collects these data for analysis to support productivity.
- Need to leverage the e-governance: The initiative under e-governance enabled the capturing of huge data, which need to be collated for their meaningful use for the production of official statistics.
Data Logistics
- Need of data from the other areas: Along with GDP, we need data to assess-
- Inclusive growth.
- Fourth-generation Industrial Revolution riding on the Internet of things.
- Robotics-influencing employment and productivity.
- Environmental protection.
- Sustainable development and social welfare.
- How to deal with the data inconsistency
- We need systems which have the capability to sift through a huge volume of data seamlessly to look for reliability, validity, consistency and coherence.
- Such a system is possible through a versatile data warehouse as a component of big–data technology.
- Rangarajan Committee recommendation: Setting up of such system has been wanting as thoughtful and well-meaning key recommendations of the Rangarajan Commission and subsequent recommendations from 2006 onwards by successive National Statistical Commissions.
Way forward
- The need for a new system: The present national accounting and analytical framework miss out on many important dimensions of the economy.
- We need a new framework for analysis for such a complex system and evolutionary process.
- The system needs to take into account automation, robotisation and other labour-replacing technologies affecting profitability, structural change and general welfare.
- Need to find alternative avenues for the unemployed and jobs lost: In order to inject efficiency and stability, there is a need to have detailed data on how: markets clear, prices are formed, risks build-up, institutions function and, in turn, influence the lifestyle of various sections of the people.
- Knowing market microstructure: It is also needed to know in greater detail about market microstructure and optimality therein, the role of technology and advanced research, changing demand on human skills, and enterprise and organising ability.
- Monopoly must be contained: The loss caused to the economy through monopoly power, inefficient input-output mix, dumping, obsolete technology and product mix must be contained.
- Ensure distribution of wealth: The consensus macroeconomic framework of analysis assumes symmetric income distribution and does not get into the depth of structural issues.
- In the changed situation of availability of microdata, there is a need to build a system to integrate the micro with the macro, maintaining distributional characteristics.
Conclusion
Data is the new oil in the modern networked economy in pursuit of socio-economic development. The economics now is deeply rooted in data, measuring and impacting competitiveness, risks, opportunities and social welfare in an integrated manner, going much beyond macroeconomics. There is a need for commitment to producing these statistics transparently.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Lack of coverage of the public health system, Role of private sector and regulation.
Context
As the government tries to overhaul the public health system in India, its time to take into account the advent and the role played by the private sector and its implications.
The advent of the private sector
- Increase in the role of the private sector in the post-Independence era: Post-Independence, the private sector increased its footprint in India.
- Perpetual sub-optimal investments in public health allowed the private sector to capitalise, flourish, and increasingly gain the confidence of the masses.
- The private sector went from having about 1,400 enterprises in 1950 to more than 10 lakh in 2010-11.
- To doctors, this promised greater professional liberty, lesser restrictions, and higher incomes.
- After liberalisation, the greater focus shifted to the lucrative tertiary-care sector and led to an onslaught of sophisticated private health care in cities.
The dominance of the private sector and malpractices
- The scale of dominance: Private sector has over 70% of the health-care workforce and 80% of allopathic doctors, has meant that it is scarcely possible for a health-care provider to function in defiance of its norms.
- Pervasive malpractices: The pervasiveness of malpractices in this market has come to ensure that few could survive without condoning them.
- Nexus of the private players: Players in this market, in much of their malpractices, have also learnt to function as a harmonious family.
- Organised form to safeguard interest: The family plays its role in safeguarding its members, acquainting them with its norms and interests, and leveraging the power of its patriarchs to defend its interests in society.
- Standards of success dictated by the markets: It is little wonder that the market has also come to dictate the avenues of aggrandisement and yardsticks of professional success for health-care professionals.
- Benchmark of quality changed: Business finesse and social adroitness rather than clinical excellence and empathy become the touchstones of calibre in this market.
Failure of the government
- Absence of national system: The larger chunk of Indian health care (and health workforce) could not be brought under a “national system” having some form of overarching state control or involvement.
- If such a system existed it could avail of essential health care without most people having to rely on a vagarious market, except as a luxury.
- Example of the UK’s NHS: The National Health Service of the United Kingdom, remains the single largest health-care provider.
- NHS employs nearly the entire health-care workforce.
- NHS makes essential health care available to all practically free at the point of service.
- Consequences of the absence of such system: The absence ensures is that the profit-driven private sector, the minor component, caters mainly to the affluent lot as largely a matter of deliberate choice rather than desperate compulsion.
- Hopes of benefits of free-market belied: The Indian example, much like the United States’, bespeaks the failure of the idea that a free market will compel players to be more efficient.
- The exploitation of the loops by the private players: Rather than increasing efficiency, the players have found it expedient to scrupulously exploit the prevailing cracks in the system and employ devious methods in order to maximise profits.
Conclusion
- Health-care providers, just like others, are moulded by their social surroundings. When necessary controls are loosened, the connatural vices are let loose; when the habitat is conducive to values, the right traits develop.
- A system that starts off with health care as an overt tradable commodity it threatens the development of virtues in the system.
- On the other hand, a system founded on the concept of equity cultivates a totally different culture of patient care.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- 'Make in India' , its performance, and reasons for not delivering on the set goals.
Context
Five years after its launch its appropriate time to take the stock of the progress made by ‘Make in India’.
Three major objectives of the initiative
- First- Manufacturing growth rate at 12-14 %: The first objective is to increase the manufacturing sector’s growth rate to 12-14% per annum in order to increase the sector’s share in the economy.
- Second-100 million jobs: The second objective is to create 100 million additional manufacturing jobs in the economy by 2022.
- Third-increase manufacturing’s contribution to GDP to 25%: The third objective is to ensure that the manufacturing sector’s contribution to GDP is increased to 25% by 2022 (revised to 2025) from the current 16%.
Assessment of the progress made so far
- As the policy changes were intended to usher growth in three key variables of the manufacturing sector — investments, output, and employment growth.
- Progress on the investment front:
- Slow growth: The last five years witnessed slow growth of investment in the economy.
- This is more so when we consider capital investments in the manufacturing sector.
- The decline in gross fixed capital formation: Gross fixed capital formation of the private sector declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-14 (Economic Survey 2018-19).
- Gross Fixed Capital Formation is the measure of aggregate investment.
- Increase in private sector’s savings decrease in investment: Household savings have declined, while the private corporate sector’s savings have increased.
- This is a scenario where the private sector’s savings have increased, but investments have decreased, despite policy measures to provide a good investment climate.
- Progress on the output growth front:
- Double-digit growth only in two quarters: The monthly index of industrial production (IIP) pertaining to manufacturing has registered double-digit growth rates only on two occasions during the period April 2012 to November 2019.
- Below 3% for the most part: The data show that for a majority of the months, it was 3% or below and even negative for some months.
- The negative growth implies a contraction of the sector.
- Progress on the employment growth front:
- No progress: The employment, especially industrial employment, has not grown to keep pace with the rate of new entries into the labour market.
Problems with the policy
- The initiative had two major lacunae.
- First- Too much reliance on foreign capital: The bulk of these schemes relied too much on foreign capital for investments and global markets for produce.
- This created an inbuilt uncertainty, as domestic production had to be planned according to the demand and supply conditions elsewhere.
- Second-Lack of implementation: The policy implementers need to take into account the implications of implementation deficit in their decisions.
- The result of such a policy oversight is evident in a large number of stalled projects in India.
- The spate of policy announcements without having the preparedness to implement them is ‘policy casualness’.
- ‘Make in India’ has been plagued by a large number of under-prepared initiatives.
Three reasons why ‘Make in India’ failed to perform
- Too-much ambitious goals: It set out too ambitious growth rates for the manufacturing sector to achieve.
- Beyond capacity rate for the sector: An annual growth rate of 12-14% is well beyond the capacity of the industrial sector.
- Overestimation of implementation capacity: To expect to build capabilities for such a quantum jump is perhaps an enormous overestimation of the implementation capacity of the government.
- Dealing with too many sectors: The initiative brought in too many sectors into its fold.
- Lack of policy focus: Bringing in too many sectors under its fold led to a loss of policy focus.
- Lack of understanding of comparative advantages: Further, it was seen as a policy devoid of any understanding of the comparative advantages of the domestic economy.
- Ill-timed launch
- Given the uncertainties of the global economy and ever-rising trade protectionism, the initiative was spectacularly ill-timed.
Conclusion
- In order to revive the ‘Make in India’ there is a need to make necessary changes in the policy and root out the causes associated with the policy implementation.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Rationalization of subsidies on food in PDS and Fertilizers and need to reform them.
Context
As finance minister presents the budget the FM need to ensure transparency and to fully account for the food subsidy.
The excess buffer stock and need to reform
- A buffer stock norm and actual stock: A buffer stock norm is at 21.4 million tonnes (mt).
- Actual stock far exceeds the norm: The actual stocks of grains with the central pool stood at 75.5 mt.
- Which is 3.5 times what the government needs to hold.
- The economic cost of the excess stock: At its economic cost, the value of the excess stocks with the government stands at Rs 1.6 lakh crore.
- Potential for revenue: There is no better place to find revenue for the FM than to liquidate these stocks.
- Need for the reform in grain management system: Unless the grain management system is reformed, the inefficiency of the grain management system will keep on increasing and the nation will suffer.
Food subsidy reforms
- Link food prices to procurement price: It is the time to revise the central issue of price and link it to the procurement price-say at half the procurement price.
- Limit the population coverage: There is a need to limit this highly subsidised food of Rs 3/kg for rice and Rs 2/kg of wheat to say 40 per cent of the population.
- Move to DBT: The real fundamental reform would be to move towards direct cash transfers for the intended beneficiaries of food subsidy.
Fertiliser subsidy reforms
- Imbalance in the subsidisation: The real problem of this sector is the imbalance in the policy of fertiliser subsidisation.
- While urea (N) is subsidised to the extent of 75 per cent of its cost, phosphatic (P) and potassic (K) fertilisers are subsidised only to the tune of about 25 per cent of their cost.
- Consequences of this imbalance: The result is the highly imbalanced use of N, P and K on farmers’ fields. Which results in
- Giving a very low fertiliser-to-grain response ratio.
- Degrading the soil.
- Degrading underground water.
- Degrading the environment with excessive nitrogen use.
- Discouragement to natural farming: The current fertiliser subsidy discourages those who want to pursue natural farming as they don’t get subsidy anywhere near the amount chemical-based fertilisers do.
- Reforms: There are two ways in which the fertiliser subsidy regime can be reformed.
- Bring nitrogenous fertiliser under NBS: The solution to the imbalance in use is to bring nitrogenous fertilisers under the Nutrient Based Subsidy (NBS) scheme.
- Cash transfer based on per hectare basis: The second option is to move towards direct cash transfers for fertilisers on a per hectare basis, with some adjustment for irrigated tracts.
- 50,000 Crore saving: The above-mentioned reforms could result in the saving of Rs. 50,000 crores to the public exchequer.
Way forward
- Investing the savings where it matters the most: The savings from the reforms could be invested in-
- Better water management, especially drip irrigation.
- Infrastructure for agri-markets.
- Solar trees: The investments could also be made in setting up the solar trees in the farm to harvest solar power on farmer’s fields with buyback agreements for surplus production.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Potentials of UPI in increasing digital payments.
Context
UPI has brought digital payments to the common man and it has immense scope for growth.
Zero MDR rate
- Recently the finance minister made the announcement of the zero merchant discount rate (MDR) policy for payments through RuPay debit cards and Unified Payments Interface (UPI) instruments.
- What does it mean? This policy dictates that when a consumer pays a merchant using RuPay or UPI, the bank may not charge the merchant a commission on the sale value that it usually charges a merchant.
- Criticism of the move: Critics of this policy lament that it would begin to reverse the progress India has made in recent years to expand the digital payments network.
Some facts and figures
- Setting up of NPCI: In 2008 the National Payments Corporation of India (NPCI) was set up as an umbrella organization for operating retail payments and settlements in India.
- UPI: In 2016, NPCI introduced UPI.
- UPI has since registered 100 million users.
- UPI now clocks more than 1 billion transactions every month.
- Growth prospects for mobile payments: According to the NITI Aayog, mobile payments in India are expected to grow nearly 20-fold to $190 billion in the next three years.
- Digital payment for the common man: There are 1 billion mobile phone users in India.
- 420 million users have a feature phone, these users can use the *99# USSD service to dial into 13 different languages.
- Which would connect them to UPI and brings digital payments to the common man.
Need for innovation
- We are far behind: India is far behind china, where 55% of spending is done digitally, compared to only 11% in India.
- The outlook for future growth is mind-boggling.
- There is a need for innovation at three levels.
- First level-Adoption
- A better understanding of human behaviour, technology, use cases and dis-use cases will facilitate the 10x growth necessary in adoption rates to cover the entire population.
- Second level-Policy
- The government has the rare opportunity to develop a data-centric understanding of how the economy conducts itself and uses money, and can set taxes accordingly.
- Third level-Technology
- Voice for authentication: At the technology level, there is an opportunity to use voice as a means for authentication and conduct transactions across multiple local languages.
- Data analysis: Copious amounts of data from payment transactions can be analysed to understand user needs and develop personalized loans and financial solutions at scale.
Taking UPI to Global Level
- UPI in Singapore and UAE: The NCPI is gearing up to take UPI to other countries, beginning with Singapore and the United Arab Emirates.
- NCPI is working with its counterpart in Singapore, the Network for Electronic Transfers for Singapore, to bring UPI live in Singapore.
- The low hanging fruit is to provide payment solutions to Indians travelling abroad.
- Competition with global peers: The bigger and tougher game is to increase its usage among local people in countries outside India.
- This would put UPI in competition with the likes of PayPal and Skrill.
Conclusion
We have seen just the tip, albeit a very substantial tip, of the digital payments iceberg. In the coming years, young business leaders of today must learn to uncover the iceberg itself.
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