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9 PM Daily NEWS Brief

9 PM Daily Brief – 14 January 2016

A brief of newspaper articles for the day bearing
relevance
to Civil Services preparation

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National 


[1]. Centre clears new crop insurance scheme

The Hindu

Context: Union government on Wednesday has approved the new crop insurance scheme

Important Features:

Premium amount for farmers

1) 2% – foodgrains and oilseeds

2) 5% – Horticulture and annual commercial crops

The remaining premium account will be subsidised by government with a share of 50:50 by union and the concerned state. There will be no upper limit for the subsidy borne by the government.

The name of scheme : Pradhan Mantri Fasal Bima Yojana

It has replaced: National Agriculture Insurance Scheme (NAIS) as well as the modified National NAIS.

Implementation: Kharif season this year. This season for Kharif crops the premium will be 2% while that for rabi crops it will be 1.5%.

Importance of the scheme:

With two consecutive drought years  and climatic variations bring damaging consequence for farmers government wants to enhance insurance coverage to more crops.

Earlier Insurance Schemes:

National Agriculture Insurance Scheme: Alternatively, known as Rashtriya Krish Bima Yojana. –  Launched for providing financial support to the farmers in the event of failure of crops as a result of natural calamities, pests and diseases.

Weather Based Crop Insurance Scheme: It insures farmers from anticipated exigencies of weather such as frost, rainfall, flood and humidity, which may result in damage to crop.

Modified National Agriculture Insurance Scheme: It provides for subsidized premiums and 25% upfront/immediate payment of claim. It is compulsory for farmer who has taken loan. Private sector is allowed to operate under the scheme and NIAS stands withdrawn where MNIAS is implemented.

 

[2]. High power body to lead “Namami Gange”

The Hindu

Context: Clean Ganga initiative of Government of India.

The News:

The Central government will be setting up a Special Purpose Vehicle (SPV) for its ambitious programme ‘Namami Gange’ or Clean Ganga initiative.

The Special Purpose Vehicle – Constitution:

It is proposed to form SPV on the lines of Delhi Metro Rail Corporation (DMRC) headed by a person of calibre and expertise in the field.

It is mandated to have Chief Secretaries of all state through which the Ganga passes as member of the board of this SPV as well as select Municipal Commissioners of big cities on the banks of Ganges,

Clean Ganga Project: Namami Gange Project

Ministries Involved:

Ministries of Water Resources,                     Urban Development,                                           Environment and Forests,

Roads and Highways                                      Rural Development and Sanitation.

Integrated Ganga Conservation Mission called “Namami Gange” has been proposed to be set up and a sum of Rs. 2,037 crores has been set aside for this purpose. In addition a sum of Rs. 100 crores has been allocated for developments of Ghats and beautification of River Fronts at Kedarnath, Haridwar, Kanpur, Varanasi, Allahabad, Patna and Delhi in the current financial year.


Economic Digest


[1]. Digital dividends not spreading rapidly, says World Bank

The Hindu

Context: Low and unevenly distributed ‘digital divided’ from growing Internet penetrations cross countries.

2016 World Development Report issue titled Digital Dividend – Key Findings:

World Development Report – Annual Report of World Bank .

The theme: Striking balance between positive outcomes of deepening digital economy and fact that the automation of jobs in some cases leading to inequalities in the labour market between high skill and low skill workers.

No. of Indian offline – 1.063 billions

India’s rank among the top five nations in terms of the total number of internet users. Other countries in top 5 are : US, Japan, China and Brazil.

40% of the world population is connected by Internet.

Challenges:

With nearly 20 percent of the world’s population unable to read and write, the spread of digital technologies alone is unlikely to spell the end of the global knowledge divide and may end up creating a new underclass.

With advent of big data there is a fear of encroachment of rights by government agencies through snooping and spying.

The Silver Lining:

There were numerous examples worldwide of success stories where the power of the Internet had been leveraged to improve, for example, the delivery of public services.

Several cases of NGOs partnering with the Indian government and such “digital citizen engagement” led to success with projects such as “I Change My City,” “I Paid A Bribe,” and the “Karnataka BVS.”

These cases notwithstanding, the delivery of services through the Internet ultimately depends on the regulation of the service sector itself. According to report India has the greatest restriction on service trade.

Conclusion: 

Digital technologies can be transformational but to be that it certain analogue components are necessary like in India appropriate business environment which shapes how firms adopt and use technology.

In this context, the World Bank said, “A poor business climate and vested interests often hold back digital adoption. Among online firms, the economics of the Internet may enable natural monopolies to exploit their dominant position, hurting consumers and suppliers.”

[2]. Less than 5% CPI unsustainable  

The Financial Express 

Context: Depreciating inflation, why CPI less than 5% is a dream and its effects on the economy.

The Question: Whether targeting Consumer Price Index inflation at 4% feasible based on our past experiences.

Inflation Scenario in India: 

a) Has always been unpredictable influenced by both internal as well as external factors.

b) A general rule has been that WPI and CPI moves together with difference being 2%. WPI is generally less as the prices at whole sale level are relatively low than the retail prices owing to long supply chain.

But the differential between the two indices has been increasing since FY 2013 and presently stands at above 5%.

Result: Consumer are complaining high prices which has eroded their purchasing power as well as demand for non- food products causing low growth in industry.

Producers have been affected by declining prices, which has impacted their profitability. While both raw material cost and final prices have declined, they have witnessed a sharper drop in prices of their products.

So, the question stands how to interpret the inflation?

Is inflation essential? Yes, an inflation of 2 – 3% is essential in India on annual basis for manufacturing to make profit and have that incentive to produce.

Why inflation less than 5% is a distant dream?

Historically, if we see the different indices of inflation as well as calculate it on the basis of new base year i.e. 2012 it has been found inflation has been always above 5% barring FY 2006.

The reasons for high inflation in India, in which even RBI can do nothing through its monetary policy are given as below:

a) Food products are of the biggest driver of CPI inflation. The productivity of agriculture has a direct bearing on it. The erratic climate and monsoon bringing in prospect of poor crop tend to drive CPI upwards.

b) Taking the same point as above certain years see an upward surge in inflation due to price shock in one food products as can be seen in case of pulses in FY-2015. Hence, a poor produce of one crop can have serious effect on inflation even when other produces are well off.

c) With farm productivity and interest in agriculture dwindling there is always a pressure on government to increase the Minimum Support Price (MSP), to protect the interest of farmers. This goes against the interest of consumers as the prices of food grains shoot up.

d) The deregulation in the prices of petroleum products, makes sure that any upward change will be reflected in upward surge in inflation both directly through fuel inflation and indirectly through transport and travel components. The prices of services like taxi fares also surge upwards.

e) In current scenario there has been an depreciation in value of rupees which increase the price of imported fuel. With government looking to target subsidy, the prices will tend to move upward only.

Conclusion: 

There is an expectation that CPI inflation will remain high due to uncertainty in global market as well as volatility of food products in domestic market. India should move away from global practise of targeting inflation between 2 – 4% which may not provide proper guidance to our monetary policy.

[3]. Rise and fall

The Indian Express

Context: The recent publishing of Index of Industrial Production (IIP) and Consumer Price Index inflation (CPI) has shown what policy challenges lie ahead.

The Scenario: 

IIP has decreased by 3.2% – lowest level in over four years due to weak performance of the manufacturing sector with most of industry seeing negative growth.

Worse still, the capital goods output — a barometer of investment — contracted by a remarkable 24.4 per cent in November compared to a growth of 7 per cent in November 2014.

Second, consumer price inflation surprised many observers to rise to 5.6 per cent for December, even though it remains within the RBI’s January target level of 6 per cent. Food price have been largely the driver of inflation.

The Concern:

The poor industrial performance should reflect lower inflation, but that is not the case. Also, while globally there is sharp fall in prices of commodity the CPI in India is relatively high and persistent.

The Policy Challenge:

There is a policy challenge both for the government as well as the RBI, which is:

If the government plans for higher expenditure to revive economy, it will skew the fiscal deficit there by increasing inflation and hence a pressure on RBI to raise interest rates. Also, any further fall in interest of rate by RBI can weaken the RBI grip on inflation due to increased liquidity in the market.

Conclusion:

The key here is the quality of expenditure. There is a need to crowd in private investments for capital expenditures. Another challenge is to reach out to rural India where the demand has completely collapsed.

 


Opinions & Editorials 


[1]. To talk or not to talk

The Hindu

Context:- Indian Pakistan Relationship, and their Foreign Secretary level talks

Historical Perspective of India Pakistan talks:-

  1. Former Prime Minister V. P. Singh approved for the first time foreign secretary level talks on the issue of Confidence Building Measures (CBMs) in 1990. And first time, CBMs was concluded on 1991.
  2. Former Prime Minister Mr. Gujral brought it under the umbrella framework of “Composite dialogue”.
  3. Former Prime Minister Atal Bihari Vajpayee initiated Delhi-Lahore bus service to strengthen relations between India and Pakistan. And later he also held Agra Summit with General Musharaf to boost relations.

Impact of Pathankot attacks:-.

Pathankot terrorist attacks have created a dilemma in India’s foreign policy, whether Indian Govt. should continue talks with Pakistan Government to strengthen relationship, or draw a red line to stop India-Pakistan talks.  It is evident that some elements in Pakistan are always against India-Pakistan relations and they always create situations of distrust by terrorist activities at the time of building up relationship.

 

[2]. What Free Basics did not intend to do 

The Hindu

Context:

Aggressive campaign of Free Basics by Facebook, and its impact on net neutrality

What is Internet.org of Facebook

It is a partnership between social networking services company Facebook and six companies (Samsung, Ericsson, MediaTek, Opera Software, Nokia and Qualcomm) that plans to bring affordable access to selected Internet services to less developed countries by increasing efficiency, and facilitating the development of new business models around the provision of Internet access.

Why criticized:

It has been criticized for violating net neutrality, and by handpicking internet services that are included, for discriminating against companies not in the list, including Facebook’s rivals.

Impact of Free Basic campaign:
Development of consensus that Internet is a right, and it should be provided by government.

Government’s Measures:

Government has National Optical Fibre Network policy to provide Broadband connectivity to Gram Panchayats.

 

[3]. Incremental steps not enough 

The Hindu

Context:-

Recent changes by Defence Acquisition Council in the Defence Procurement Procedure (DPP).

Purpose:-

  1. To boost indigenous defence procurement and encouraging better participation from the Indian private sector.
  2. To reduce India’s import dependence.

DPP Provisions are already discussed. Click Here  | Click Here 

Other Key Provisions of DPP:-

  1. Proposal to introduce a new category of acquisition termed Buy Indian (or IDDM –indigenous design development and manufacturing)
    (Criteria to be Buy Indian – Domestically designed equipment with 40% indigenous components or foreign designed equipment with 60% local components).
  2. Increase in offset threshold for foreign contracts from Rs. 300 to Rs. 2000 crore, (with 30% of contract value to be procured from within India)

Challenges to India’s Private Sector in Defence:

  1. Monopoly enjoyed by Defence Public Sector Units. – So, private players are not able to compete with them.
  2. Favours enjoyed by foreign suppliers – e.g. Foreign vendors enjoys upfront custom duty exemption, while excise duty exemption to local supplier is reimbursed after months.

 

[4]. Farm vision statement

The Indian Express

Context: The continuing phase of low growth in agricultural sector eroding profitability and productivity.

Farming and agriculture has been one of the world which has been victim of policy makers as their decision are more based on theory than on real world phenomenon. Also author states that India lack managerial framework that is required to bring transformation in agriculture sector.

Author acknowledges that India performs brilliantly when government has a will to do which has been reflected by success of green revolution, dairy revolutions etc.

The Issues in Agriculture:

  1. National flagship programmes like Digital India, Skill India and Make in India seems to ignore the agriculture sector even though half of the population are employed in it.
  2.  India’s “best” records of productivity lag other nations by a large margin.
  3. During the last two agricultural seasons, India’s farming (and, therefore, farmers) has been devastated by erratic climatic variations.
  4. India does not lack funds or skills. India needs an integrated, managerial framework for agriculture — state-led entrepreneurial risk-taking with respect to farming.
  5. Agriculture is a state subject. The solutions as well as actions with regard to agriculture tend to get political and fragmented.

What can be done?

A holistic national framework to address agricultural problems could derive structural lessons from the way India industrialised.

The holistic plan should encompass technology, risk, institutions, policy and skills, and the nation needs a forward-looking scheme that encompasses five pillars:

a) One, technology incubation — outcome-based technology policy encouraging research, innovation and incubation.

b) Two, risk institutions and financing — banks and financial institutions to help promote technology infusion, insurance and mechanisation.

c) Three, institutions of governance — promote farmer producer organisations to be agri SMEs/ MSMEs.

d) Four, policy for farming — focus on improving human and farm productivity.

3) Five, Skilling — agricultural technical training institutes.

To ensure the success of the Agriculture, it should be a collaboratively driven project with the states similar to the Jan DhanYojana, Atal Pension Yojana and Swachh Bharat Abhiyan

[5]. What works for women at work / The limits of gender mandate

The Indian Express | The Business Standard 

Context: Long term economic empowerment of women by improving their participation in paid work.

What has happened? 

Lack of adequate maternal leave and infant care available to mothers has been a major obstacle towards bringing women into work environments.

Realising this, the Ministry of Women and Child Development has decided to increase paid maternity leave from the current 12 weeks to 26 weeks for all women in both public and private employment.

Simultaneously, the Ministry of Labour has made it mandatory that all establishments employing 30 or more women or 50 workers in total have to provide crèche facilities (a crèche is a nursery where babies and young children are cared for during the working hours of the day) for their employees, either within the premises or within half a kilometre from the site.

The Problem

Now that we have the above measures to counter a major concern of working women (i.e. care of children/infants), it should mean a greater involvement of women in employment. But critics have argued that this alone is a toothless measure will not be able to achieve our overall aim. Their argument is that simply passing such laws will not work if they are not fully implemented. If it is properly implemented, it will mean that private employers will now be hesitant to employ women AT ALL in workplaces.

Besides, this measure is ineffectual as it does not cater to the majority of women (90%) who are in the unorganized sector. It has also failed to address the issue of unpaid work.

The current status, and factors that are maintaining the status-quo

It’s not that women in India don’t work, but the work most of them do is not classified as “paid” employment. This involves household chores, collecting wood/water from elsewhere, tending to livestock etc. Only about a quarter of all women have gainful employment. This results not only in a loss of GDP for the country, but also serves to lower the status of women in their households.

Among the many factors contributing to lack of women in gainful employment, some prominent ones are:

Gender gaps in education: When a woman does not have the same skill set as an educated/qualified man, the paying jobs available to her tend to be physically tough and with lesser wages. She has to compete with other unskilled men for these jobs, and loses out to them because they are physically more capable.

Uneven distribution of domestic work (double work/burden): In a household, the domestic duties tend to be skewed, and are not equally shared between the man and the woman. So, even if the woman manages to find gainful employment, she is still expected to do the cleaning and cooking once she returns. This is called “double burden” i.e. the woman being forced to work twice, once away from home and once at home. When the woman is no longer able to manage both jobs and has to quit one of the two, she always chooses to quit the outside employment.

Too much money in urban areas: The recent economic boom has ensured that just the man of the family can earn enough to feed and house the entire family in many cities. This means the woman has been able to give up her employment and focus only on family life. (Data shows that the number of women in paid/recognized employment has decreased in urban areas over the last decade).

Patriarchal attitudes and restriction on mobility: These include lingering attitudes that women should stay at home and do domestic work, concerns about time spent on commuting, safety of women during commuting and also at workplaces etc.

 

The bigger picture

The stark truth is that laws can rarely alter basic social prejudice. Public education and intervention must become more widespread if we are to talk about achieving our goals. Unpaid work must be recognized, or at least minimized. Domestic responsibilities must be redistributed between the man and the woman. The concerns of women’s safety have to be addressed. When all these measures are taken together AND implemented properly, only then can we envision a future where women are equal contributors to our society.

 


By: ForumIAS Editorial Team


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