9 PM Daily Brief – July 15th,2020

Good evening dear reader.

Here is our 9pm current affairs brief for you today

9 PM for Main examination

GS-2

1. India – Changing paradigm in every dimension
2. Issue of Data protection in the backdrop of ban on Chinese apps

GS-3

3. Post-corona world – India needs Skill, scale and speed
4. Problems with unlocking of economy

9 PM for Preliminary examination

FACTLy

1.India – Changing paradigm in every dimension

Source – Indian Express

Syllabus – GS 2 – Effect of policies and politics of developed and developing countries on India’s interests

Context – India needs a new paradigm for trade, industry, and development which is needed not only to strengthen India vis-à-vis China, but to make the economy good for India’s poorer citizens too.

Ideology of Neoliberal School of Economics

Issues ignored by Neoliberal School of Economics

Pattern of trade – It involves which good are being exported and imported by respective nations.

For instance – India exports raw material to China and imports intermediate and final goods from China.

Volume of trade – It involves the Balance of payment concept which focuses on how much import and export is taking place between the two nations.

For instance – India and China has trade deficit of which presents India’s larger import from China compared to our export to China.

Growth trajectory of China and India post 1990s

Suggested solution

1. Promoting labour-intensive industries– The success of India’s industrial policy must be measured by the number and the spread of jobs created which can be done by laying focus on labour- intensive industries like MSME’s.
2. Skilling labour– Workforce has to learn while earning. To earn they must be engaged in industries that will employ them with whatever capabilities they presently have. And, to learn at the same time, they must stay on the job and they must be trained while they work.

Way Forward – Atmanirbhar Bharat is, thus, essential. Otherwise, “interdependence” with China will be a colonial-like interdependence which will make India not only economically weaker but also strategically vulnerable.

2.Issue of Data protection in the backdrop of ban on Chinese apps

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 recent ban on 59 apps by the Indian government amidst political tensions between India and China marks the watershed moment of ‘data nationalism’ in cyberspace.

Data protection:

• Data localization measure: The requirement for all mobile application firms to prove that data is not exported out of the country.
• Data nationalism: It is not just a short-term political phenomenon which is subject to flows of protectionist sentiments. It is the expression of a profound unease with the increasing globalization due to infinite internet.
• The Snowden and Cambridge Analytica episodes have prompted even democratic countries like Brazil, Germany and India to undertake data localization measures which include regulations and rules on storing data within the territorial jurisdiction of the country.

Performance in data localization: According to a recent study by the European Centre for International Political Economy.

Reactions of all stakeholders to data localization restrictions:

The ban on Chinese apps have different meanings for every stakeholder.

Implications for Chinese app ban:

• For local manufacturers: 
  • There is some evidence that stricter restrictions on cross-border data flow provide advantages to local firms to serve their clientele better in terms of both price and quality. For example-Indian start-ups such as Chingari have upped their ante indicating they are well positioned to replace Chinese apps.
  • Cost advantage for local: Data compliance costs imposed due to the data localization rules increase cost and reduce the quality and features of services provided by global firms to their consumers in those regions.
  • Capturing market share: Local firms tend to benefit and often compete well in garnering the market share of their local consumers.
• Consumers: 
  • This leads to consumers clustering around their local producers of services and often have limited choices for purchase
• Government:
  • Data fiduciaries argue that data localization provides local governments easier access to data of her residents.
  • Data localization may give domestic intelligence agencies of the home country increased data collection powers over their residents’ data through even coercion of residents.

Way Forward:

• There is a need for internet firms and governments to be transparent and respect the data protection and privacy laws of data.
• It’s time India enacts the data protection Bill to enforce lawfully the property rights of our residents and penalize deviators.

 3.Post-corona world – India needs Skill, scale and speed

Source – Indian Express

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

Context – The effects of the pandemic are expected to have a lasting impact on every sphere of activity, even as various nations are trying to revive their economies and protect livelihoods.

Atmanirbhar bharat – The twin objectives of the campaign are –

1. In-short run – Reviving different spheres of the economy.

• Insulating India from any future global economic downturn.

2. In the long run – It seeks to build capacities across sectors and promote local products. It seeks to make the Indian economy robust in the long run by scaling up manufacturing, accelerating infrastructure development, attracting investments and promoting a consumption-led growth.

Impact of Pandemic

1. On workplaces– Offices straddling multiple domains, particularly IT, are functioning with minimum staff strength. The uncertainty created by the pandemic is being seen by many as an opportunity to upgrade their knowledge and acquire new skills.
2. On laborforce–It has led to the worldwide closure of technical and vocational education and training (TVET) institutions, threatening the continuity of skill development, especially those needed for self-employment.

Suggested solution to complement AtmaNirbhar Campaign

1. Collaboration of PSU and private sector– PSUs and the private sector must not only play a complementary role in building a self-reliant India but collaborate wherever feasible. While, the private sector must massively step up investments R&D. PSUs too need to modernise in terms of technology.
2. Increasing Manufacturing’s share in GDP– In areas like hi-tech medical devices, equipment and labour- intensive goods India has to drastically increase manufacturing to cut down imports and save precious foreign exchange. This will also result in non-interdependence on other countries for critical goods.
3. Skilling youth – A host of skill sets — listening and communication, cross-cultural sensitivity, adaptability to changing work environments, emotional intelligence and social etiquette along with a good academic record — are important for those seeking employment in the emerging job scenario.

Way Forward – This is the time for 130 crore Indians to showcase the country’s collective resolve to overcome the setbacks caused by the pandemic. We need to forge ahead by harnessing India’s human resources and technological capabilities.

4.Problems with unlocking of economy

Source: The Indian Express

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

Context: Analyzing the effects of unlocking the economy due to COVID-19.

Lockdown:

• It was based on the assumption that lives were more important than livelihoods.
• Impact: It led to the impoverishment of enterprise and has not halted the spread of the epidemic.
• The decision to unlock the economy in phases poses a major conundrum for the government.

Issues that will arise due to Unlocking:

• Steps involved in unlocking the economy:
  • About public services: This is probably the most crucial element of unlocking the economy. There are questions on how does the government agree to allow public transport to function.
  • The truncated services have complex “standard operating procedures”(SOP) which deter travel. After opening up, the SOPs will lead to chaos as there would be millions of people on the move every day.
• Food Grains:
  • The PM announced extension of the free food grains to the poor for another three months which would cost the exchequer Rs 90,000 crore.
  • After 3 months: There are some question marks on the scheme such as Can one really withdraw the scheme given that most sectors in the economy would be getting back on their feet rather than walking?
  • Pressure to fiscal deficit: Retaining the scheme will add another Rs 90,000 crore or 0.45 per cent of GDP every three months.
• Moratorium provided by the RBI to borrowers for six months beginning in March:
  • Rising debt: The first-quarter corporate results were abysmal with negative growth in sales and a sharp drop in profits. This will get reflected in their ability to service their debt commitments. It is improbable that those who took the moratorium can actually start servicing their debt.
  • There is an increase in unemployment or under unemployment. The questions remain for how long this facility can be extended.
• Tweaking of NPA classification norms by RBI: It is in conjunction with the moratorium.
  • Restructuring: There are talks of restructuring loans but which part of the asset portfolio would qualify for the same.Whether it should be only the SMEs and also sectors that have been deeply impacted especially in the services sector such as hospitality, airlines, and entertainment.
  • Rising NPAs: Restructuring is a short-term measure and rising NPA is problematic for the system and the government because it would mean the provision of more capital to support public sector banks.
• Outcome of lending based on guarantees given by the government for SMEs and NBFCs.
  • Defaults in the region of 10-20% cannot be ruled out and hence an SME package of Rs 3 lakh crore of guarantees may have to be forgiven (waived off) and paid through the budget.
• Provision of liquidity to the system by central bank.:
  • To ensure liquidity: Central banks in the West have opted for quantitative easing in different forms while the RBI has used long-term repo operations and measures like facilities for NABARD, SIDBI, targeted long-term repo operations and open market operations.
  • Higher inflation expectation: Due to subdued production (supply) even in 2021-22 and the generation of excess demand across the world.
  • Affecting economic viability: There are question marks on loans that have been taken today at a variable rate, which will become more expensive in future.

Way Forward

• The government will find itself fiscally strained and could collect revenue through more taxes like the dividend distribution tax, surcharges on higher incomes or a COVID cess but this will be intrusive.
• The RBI will have to move away from the accommodative stance and rein in inflation.

9 PM for Preliminary examination

Click on “Factly articles for 15th July 2020”

https://factly.forumias.com/factly-articles-for-15th-july-2020/