9 PM Daily Brief – July 14th,2020

Good evening dear reader.

Here is our 9pm current affairs brief for you today

9 PM for Main examination

GS-1

1. Changing Dynamics of Dalit Movement in India

GS-2

2. Police Reforms – Now or Never
3. Need of governance by the people
4. Reviving economy – Focussing on Infrastructure

GS-3

5. Revival of MSMEs

9 PM for Preliminary examination

FACTLy

1.Changing Dynamics of Dalit Movement in India

Source: The Hindu

Syllabus: GS-1 Social empowerment

Context:  Dalit issues are submerged in the broader discussions on economic vulnerabilities highlighted by COVID-19.

Who is a Dalit?

• The term Dalit was firstly used by Jyotirao Phule for the oppressed classes or untouchable castes of the Hindu.
• Dalit (broken down) is a social term for depressed class. Whereas schedule caste is a constitutional term mentioned in article 341 for depressed class.

Demographic Profile of Scheduled Castes

• According to 2011 Census of India, Scheduled Caste communities comprised 16.6% of the country’s population,
• Uttar Pradesh (21%), West Bengal (11%), Bihar (8%) and Tamil Nadu (7%) have the highest Scheduled Caste population.
• Literacy Rate:The literacy rate of SC women, about 42% in 2001, increased to 56.5% in 2011. Among SC males it went up from 66.6% to 75.2% in the same period.

Current Dalit movement in India

At present Dalits are more organised and connected and see themselves as a part of an assertive movement of social justice. The main concern is caste is getting reinforced, rather than annihilated and there are rising Dalit atrocities.

However, there are challenges to the current Dalit movement:

• Focus on caste-based issues: Caste-based issues have either become invisible or are only visible as part of the wider discourse.
• Poor representation of concerns: There are a large number of Scheduled Castes and Scheduled Tribes among the migrant labourers. However, during the Covid-19 pandemic, Dalit leaders have not been able to represent the concerns.
• Poor agendas: The movement is facing a crisis of agendas and social programmes.
• Poor leadership:There is a crisis with leadership. In States such as U.P., Bihar, Punjab and Rajasthan, Dalit assertions are mostly centred around the electoral politics of Dalit-Bahujan political groups and parties.
• Undermining reservation:The implementation of reservation policy has been a function of the political clout of Dalits and OBCs. The backward castes and classes gained when caste-based parties were in a position to put pressure on the governments.

Conclusion: The Dalit movement has to evolve new social strategies for its expansion in order to keep up with the changing times.

2.Police Reforms – Now or Never

Source – Indian Express

Syllabus – GS 2 – Important aspects of governance

Context – The brutal treatment of a father and son in police station in Tamil Nadu, resulting in their death and an encounter in Kanpur where a criminal wanted for the murder of eight policemen was killed by UP Police under strange circumstances have raised uncomfortable questions regarding policing in India.

Reasons for violation of laws by law upholders (Police) –

1. Nexus between criminals, politicians and police

2. Criminalisation of Politics– The number of members of parliament with criminal background has been going up with every successive election. It was, according to the Association of Democratic Reforms, 30 per cent in 2009, 34 per cent in 2014 and 43 per cent in 2019.

Suggested solutions

1. Preventing entry of criminals in legislature– A law which debars persons with serious criminal cases from entering the assemblies and the Parliament is the need of the hour.
2. Legislation against organized crime– A Central act on the lines of MCOCA should be enacted to curb the activities of organised criminal gangs.
3. Federal crime– The concept of federal crime, as recommended by the Second Administrative Reforms Commission, should be accepted and offences which have all-India ramifications or are trans-national in character, like those of terrorism and organised crimes, should be brought within its ambit.
4. Monitoring the activities of the mafia and criminal syndicates– An institution comprising representatives of the police/CBI/NIA, Intelligence Bureau, Income Tax department, Revenue Intelligence and Enforcement Directorate should be set up to monitor the activities of the mafia and criminal syndicates in the country and ensure stringent action against them.

Way Forward – We must, without further delay, build an environment where police become an instrument of service to the people so that security of people is ensured and any public protest against police can be prevented.

3.Need of governance by the people

Source: The Hindu

Syllabus: GS 2-Important aspects of governance, transparency and accountability, e-governance applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures

Context: Analyzing the stress occurred at the governance at all the levels i.e. global, national and local due to COVID-19 pandemic.

Background:

• Complexity of handling many subsystems: Breakdowns have occurred in many subsystems that had to be managed at the same time like health care, logistics, business, finance and administration.
• Solutions for one subsystem backfired on other subsystems:For example, lockdowns to manage the health crisis have led to economic distress.
• Stress on institutions for global governance: They have been put through a severe stress test by the global health and economic crises. The test has revealed a fundamental flaw in their design.

There is a mismatch in the design of governance institutions at the global level (and also in India) and the challenges for management by them.

How to handle such challenges of governance?

• Interconnected issues:
  • Systemic challenges: As listed in the global challenges in the 17 Sustainable Development Goals (SDGs) of the UN.
  • Interrelated: Environmental, economic and social issues cannot be separated from each other and solved by experts in silos or by agencies focused only on their own problems. A good solution to one can creates more problems for others.
  • Requirement: The solutions must fit the specific conditions of each country and of each locality within countries to fit the shape of the environment and the condition of society there.
  • For example: Solutions for environmental sustainability along with sustainable livelihoods cannot be the same in Kerala and Ladakh or in Mumbai and Tokyo.
  • The knowledge of different experts like the environment, the society and the economy must come together to fit realities on the ground.
• A case for local systems:
  • Local solutions: The local people must believe that the solution is right for them and not a solution thrust upon them by outside experts for the local people to support the implementation of solutions.
  • Active contributors: The local people must be active contributors of knowledge for, and active participants in, the creation of the solutions.
  • Governance by the people:
    • For example- Gandhiji and his economic advisers developed their solutions of local enterprises through observations and experiments on the ground (and not in theoretical seminars in capital cities).
    • Elinor Ostrom, the first woman to win the Nobel Prize in Economics, had developed the principles for self-governing communities from research on the ground in many countries including India.
  • Scientific explanations for the need of local systems solutions: The writer got an insight that several IAS officers who seemed to have more compassion for communities than their colleagues were involved at some time in their careers with the evolution of community-based public health and the self-help group movements. They had begun to see that the role of government is perhaps to ‘enable governance’.
• Role of district Collector: They are key IAS functionary in India’s governance.
  • Pre-independence:To collect revenues and to maintain law and order.
  • Post-independence:
    • India took up a large welfare role and they became the District ‘Deliverer’ of government largesse.
    • Role became complicated: When the numbers of government schemes multiplied of which some were designed by the central government and others by the State government.
    • The schemes were managed by their own ministries and departments in the capitals, with local functionaries of those departments as the points of contact with citizens.
    • Reasons for schemes not producing enough benefits:There are a large number of schemes that are operational. The citizens did not know about many schemes and it is hard to disentangle the schemes.

Way Forward

• Reason: A hypothesis is that those States and countries in which local governance was stronger like Kerala, Taiwan have done much better than others. This is worthy of research for insights into design principles for good governance systems.
• The government has to support and enable people to govern themselves to realize the vision of ‘government of the people, for the people, by the people’.

4.Reviving economy – Focussing on Infrastructure

Source – Financial Express

Syllabus – GS 2 – Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Context – The Covid-19 pandemic has brought global economic activity to a virtual halt. While the world was long expecting a recession, the pandemic has surely pulled the trigger.

Components of aggregate demand

Challenges in increasing Consumption, Exports and Investment

1. Sharp deceleration in credit supply– The NBFC sector, which played an important role in fueling India’s consumption growth, suffered from funding crunches, leading to further squeeze in credit supply and impacting consumption demand.
2. Job loss due to covid– Industry-wide job/pay-cuts with a growing sense of uncertainty over the future may limit consumer spending to non-discretionary items and force people towards precautionary savings.
3. Underutilization of existing capacity– Deteriorating economic scenario across the world with upcoming recession and underutilization of existing capacity will bring down the investment in new capacities by firms
4. Net-exports and trade war– Global trade has been undergoing several disruptions since 2009. Heightened trade tensions between the US and China, with the onset of the pandemic only makes matters worse. As for India, our limited share in global trade, along with a battered domestic and global outlook, provide little room for exports to contribute towards growth.

Suggested solution for revival of economy – Government Expenditure

1. Boosts Real growth– A study by S&P Global estimates 1% GDP spend on infrastructure can boost real growth by 2% while creating 1.3 million direct jobs.
2. Historic evidence– Historically, countries have used infrastructure to provide countercyclical support to the economy. Some of the most remarkable references are the New Deal in the US, Germany’s expansion post WWII debt reduction (1953) and more recently with China in the wake of the Global Financial Crisis.

Way Forward – Restructuring the existing institutions for infrastructure development purposes – IIFCL, IRFC, NIIF into one organization and floating special infrastructure bonds through this organization to accelerate the funding of the National Infrastructure Pipeline could aid a speedier recovery.

5.Revival of MSMEs

Source: The Indian Express

Syllabus: GS 3-Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context: Analyzing the government initiative announced in the stimulus package towards helping MSMEs for maintaining liquidity and ensuring greater credit availability.

Background:

• Aatma Nirbhar package: Government announced the emergency credit line, the subordinate debt provision and the equity infusion measure and the long-awaited reform to the MSME definition.
• MSMEs: There are approximately 6.3 crore MSMEs that employ 11 crore people.

Expectation of industry:

• A recent nationwide survey was conducted by the All India Manufacturing Organisation (AIMO):
  • 78% of small companies’ owners were not satisfied with the implementation of the package.
  • It also suggests that transmission on the ground is slow and moreover 85% of the sector may not benefit from it.
• In another survey carried out by FICCI-Dhruva Advisors:
  • 79% of respondents believed that the Emergency Credit Line Guarantee Scheme (ECLGS) has not yielded the desired results and 70% say that they haven’t availed the benefits of loans and interest moratorium.
  • As of July 4, Rs 1.14 lakh crore worth of loans have been sanctioned but only close to half has been disbursed.
• Before COVID:

• It is important to periodically assess and identify measures that could ease these challenges that have been exacerbated by the pandemic and provide relief to these businesses.

• There is a clear operationalization and implementation gap despite financial and regulatory support offered to the sector.
• The Global Alliance for Mass Entrepreneurship’s (GAME) National Task Force on MSMEs recommendations hold the promise of not just short-term survival but also of helping MSMEs thrive.
• Decline in credit growth to MSMEs: 
  • A clear sign of risk-averse bank lending that has only become worse. Lending to micro and small enterprises has contracted 3.4% and to medium enterprises has contracted 5.3%
  • The RBI has clarified that Member Lending Institutions (MLIs) shall assign zero percent risk weight on credit facilities extended under the scheme since these are backed by an unconditional and irrevocable guarantee by the government. Still a lag in loan disbursals is seen,

In light of these trends and drawing upon the GAME-sponsored task force recommendations, certain changes are needed.

 Changes to the current system of credit support proposed:

• Set aside credit for new-to-credit MSMEs:
  • Conditions: The current scheme is open only to MSMEs who have a Rs 25-crore loan outstanding and a turnover of up to Rs 100 crore.
  • Formalization: This implies that fresh borrowers cannot avail of this scheme. Such MSMEs need to be targeted to bring them into the formal credit ecosystem.
  • The Task Force has recommended that Rs 1 lakh crore be set aside for disbursing small ticket size loans of Rs 1 lakh to first-time MSME borrowers.
• Mandate a definite percentage of credit guaranteed loans to be released to micro and small businesses:
  • Micro-enterprises: They are Ninety-nine per cent of enterprises in the MSME sector which are largely informal. These 6.3 crore micro-enterprises comprise of one-person businesses/self-employed persons and units that employ less than 10 workers.
  • Small enterprises: They come next highest at an estimated 3.3 lakh.
  • A greater number of enterprises will be eligible for benefits enlisted for this sector after the upward revision in turnover limits of medium enterprises.
  • For ensuring these enterprises are not crowded out: Mandating a certain percentage of credit guaranteed loans to micro and small enterprises could offer them necessary succour.
• Bridging gap:Between the amounts sanctioned and disbursed by banks under the ECLGS.
  • Need disbursements: State-owned banks may be under pressure to show that the scheme has received a good response and hence are giving automatic sanctions to all eligible borrowers. Disbursements will depend on the actual credit needs of the borrower.
  • Another reason could be that a borrower can avail only 20 per cent of the outstanding loan amount. For those MSMEs that have repaid their loans, the window of fresh loans is very small. Such prescriptions need to be examined to ensure that MSMEs in genuine need of credit are not left out.
• Simple conveyance of scheme:
  • Scheme eligibility, application processes and benefits need to be conveyed more simply.
  • Though the CHAMPIONS portal has a comprehensive information base and exhaustive FAQs, these need to be disseminated in multiple languages through various channels.

9 PM for Preliminary examination

Click on “Factly articles for 14th July 2020”

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