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9 PM Daily Brief – 7th November 2016

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Page / NATIONAL(The Hindu)


[1]. At CoP 22, India will highlight climate impact on Himalayas

The Hindu

Context

India will host a special side event during the UN Climate Change Conference at Marrakech, Morocco, on the 12 Himalayan States that face the impact of a changing climate.

Backdrop

The Himalayas provide water to 1.3 billion people in Asia, but have been inadequately represented over the past three decades in climate change discussions.

  • Currently, the Himalayas are not spoken about even at discussions in international forums on mountain countries

Why there is a need to bring Himalayas to forefront of discussion?

  1. Himalaya – a major source of water to 1.3 billion people in Asia
  2. Himalaya are warming up faster than climate change.
  3. Recent happenings like a) Floods in Uttrakhand, Kashmir and Assam b) Earthquake in Nepal shows the devastating nature of Himalayas when coupled with climate change. These incidents have been acknowledged to have anthropogenic influence.
  4. Disasters due to Himalayan physiology accentuated by climate change can lead to most severe ones in mankind history
  5. The Himalayas is one of the biodiversity hotspots in the world. The conservation of biodiversity and saving it from the effect of climate change makes it even more important.

Representing the 12 states

Centre has asked the G.B. Pant Institute to represent the 12 Himalayan States at the Conference of the Parties (CoP22) of the UN Framework Convention on Climate Change (UNFCCC) being held between November 7 and 18

  • The Hindu Kush region was represented at UNFCCC by the Nepal-based International Centre for Integrated Mountain Development

 Agenda of the meet

At the CoP on November 17, the impact of climate change on disasters, biodiversity, livelihood, and agriculture will be highlighted.

  • Mitigation measures: Though the Himalayas are warming faster than the global average, they are not yet in focus. Plans to mitigate climate impact will be drawn up

UN conference on Climate change

The United Nations Climate Change Conferences are yearly conferences held in the framework of the United Nations Framework Convention on Climate Change (UNFCCC). They serve as the formal meeting of the UNFCCC Parties (Conference of the Parties, COP) to assess progress in dealing with climate change

  • The first UN Climate Change Conference was held in 1995 in Berlin

[2]. Trains to clock 160 kmph on way to Delhi from Mumbai, Howrah

The Hindu

Context

After the launch of the high-speed Gatimaan Express, Railways has undertaken a mammoth exercise to reduce the journey time between Delhi and Howrah and Mumbai by increasing the maximum speed of trains to 160 kph

Backdrop

The Railways recently introduced Gatimaan Express between Delhi and Agra that attains a peak speed of 160 kmph.

Estimated cost: The estimated cost of the project is Rs. 10,000 crore

 What has happened?

Railways has drawn up an action plan to increase the maximum speed to 160 kmph on the total 9,000-km main trunk routes across the country as part of the Mission Raftaar project.

  • To begin with, Railways has started work on two major busy routes of Delhi-Mumbai and Delhi-Howrah

Work to be done along the route to raise train speeds

  • Strengthening of the track
  • Upgrading of the signaling system
  • Fencing of vulnerable sections

Benefit of speed upgradation

Once these two major routes are upgraded for trains to run at 160 kmph, there will be scope for launching more passenger trains.

  • Reduction in waitlist: This will reduce the waiting list of passengers in some of the popular trains as many more such services with similar facilities will be on offer

Busy routes

The 1,400-km Delhi-Howrah and the 1,500-km Delhi-Mumbai rail corridors are among the two major busy routes of the Golden Quadrilateral of Indian Railways.

Other routes are Howrah-Chennai, Delhi-Chennai and Chennai-Mumbai

What is Mission Raftaar?

Under this project measures are being taken to raise average speed of both passenger carrying trains and freight carrying trains. The Mission is being spearheaded by a cross disciplinary mobility Directorate in the Railway Board. The average speed is reckoned as one of the key indicators of all the railway productivity and efficiency in operations and utilization of assets

Backdrop

  • Maximum speed of coaching trains has increased up to 130 kmph/160 kmph, but the average speed is hovering around 45 kmph
  • Maximum speed of freight trains has increased up to 75 kmph/100 kmph, but the average speed is hovering around 24 kmph
  • Average coaching train speeds have declined by 1 kmph (approx.) in last 5 years. Average freight train speeds have declined by 2 kmph (approx.) in last 5 years

Rationale behind raising average speed

Average speed as one of the key indicator of the overall railway productivity and efficiency in operations and utilization of assets. Hence, raising average speeds has been taken up as a mission area.


Editorial / OPINION


[1].Looking for a humane solution

The Hindu

Context: Article discusses the recent agreement between India and Sri Lanka on establishing a Joint Working Group on fisheries

Things agreed upon

  • A hotline between the Coast Guards of both countries
  • A meeting of the JWG once in three months
  • A meeting of the fisheries ministers every six months
  • Commitment that there would be no violence or loss of life of fishermen

 Author’s view

These measures are useful in getting Indian fishermen or their boats released from custody, but they are unlikely to have any immediate impact on the livelihood crisis facing the fishermen of northern Sri Lanka

 The Real issue

Author states that the real issue here is this:

  • How long trawlers from Tamil Nadu will continue to fish in Sri Lankan territorial waters, and how soon bottom trawling ends. No time frame has been set in this regard.

Sri Lankan fishermen’s stand

They are firm on an immediate end to all intrusions and are against seized Indian boats being released without legal process, even though they agree that the arrested fishermen should be released.

Backdrop: In talks between representatives of fishermen held a few days earlier, Tamil Nadu fishermen had asked for a three-year phase-out period for their trawlers, and a deal under which they would fish for 85 days a year until then. This was rejected outright by the Sri Lankan side, which holds that the Indian vessels cause serious economic and ecological damage

Long term solutions

Author presents an alternative solution,

  • Find a livelihood alternative for Tamil Nadu fishermen
  • Equipping them for deep sea fishing is an option

Immediate solutions

  • Understanding the tough situation: Tamil Nadu should show greater understanding of the plight of the Sri Lankan Tamil fishermen, who are economically weaker and yet to fully recover from a devastating war, and agree to a more reasonable phase-out period
  • Licensing system: Sri Lanka can also look at a licensing system under which fishermen from both sides can fish on specified days using sustainable methods and permissible equipment

Conclusion

Author concludes by saying that it is important that all sides recognize that there is a humanitarian dimension to the issue& treat it accordingly.

[2]. Gazing at a longer horizon

The Hindu

Context

National security doctrine, with political consensus, can prevent the unnecessary politicization of national security issues

Inherent lacuna

Author points out in first few paragraphs that there is an underlying gap in the strategic thinking and behavior of our country, which is,

  • India functions without a grand strategic blueprint

We all have heard about the phrase “strategic thinking” but do we really know what it actually means!

Strategic thinking: Strategic thinking goes beyond looking at what is and it involves imagining what could be (future perspective). It means to anticipate change and act accordingly by recognizing the imminent opportunities.

For more info: Please visit this link

So, what author means when he says that India lacks a strategic blueprint. It means that India lacks a long-term foreign & security policy oriented towards addressing the future thereby focusing only on the short term objectives. Moreover, political elements also dictate the direction in which the policy moves.

Author then goes on to illustrate his point,

Boxed up in South Asia

  • Too much attention to Pakistan: Author contends that by directing its diplomatic and political energy towards Pakistan India is getting increasingly tangled in the limited geopolitical space in South Asia thereby belittling its own stated global ambitions
  • Misplace attention to Balochistan: New Delhi’s outrage about human rights violations in Balochistan is suggestive of misplaced priorities. It is a sheer waste of India’s diplomatic energy, limited as it is due to the acute lack of diplomats in the Ministry of External Affairs (MEA
  • Heightened Chinese influence: Author points out that even as India is increasingly getting boxed up in the limited geo-strategic sphere of South Asia, its influence within it is steadily weakened by Chinese economic and military power.

Terror-fixated Foreign policy

  • Not the most pressing challenge: Author warns that India’s foreign policy increasingly seem to revolve around the issue of Pakistan-backed terrorism, and it leaves no stone unturned to talk about it at every major international forum. Further, getting statement from US backing India’s view is going to do nothing. Terrorism, in author’s view, is not the most pressing strategic threat that India is facing currently so diverting so much attention towards it, while relinquishing its long term interests, would be a mistake.
  • Relationship with China compromised: New Delhi’s disproportionate focus on terrorism has compromised India’s strategic relationship with China. China’s unwillingness to agree to India’s line on Pakistan-based terror has made Sino-Indian relations distressing than ever. Is it smart to damage an important, though complicated, relationship with China because Beijing is unwilling to buy our line on Pakistan?
  • Damaging the image: The undue focus on Pakistan-based terror has also damaged Mr. Modi’s global image as a leader focussed on governance, trade and growth. All attention has suddenly shifted to terrorism, instead of larger issues such as foreign direct investment, global partnerships, institutional reforms, economic diplomacy, etc.
  • Internationalizing the Kashmir issue: By going on about Pakistan-sponsored terrorism in Kashmir, New Delhi has managed to facilitate what it has traditionally cared to avoid: internationalizing the Kashmir issue

Messy Alliance behavior

Author states the multidirectional and impulsive foreign policy that India has followed over the past 2 years. He cites the example as to how India shifted from consolidating its relationship with China to closely co-operating with its rivals like Japan and US.

Signing of LEMOA (Logistics Exchange Memorandum of Agreement (LEMOA): As per author, signing of the LEMOA by India is a clear departure from its traditional policy of not getting into military alliances. Following questions deserve a careful thought,

  • Questions: What is New Delhi’s grand strategic rationale behind LEMOA, and does it in anyway compromise India’s traditional desire to maintain strategic autonomy?
  • Russian apprehensions: Author states that though India can ignore Chinese concerns but it cannot and should not ignore the concerns of its old ally, Russia because Russia has opened its door to Islamabad as can be seen by the recent joint military exercise between the two.
  • South-China Sea: Author points out that India’s recent efforts at counterbalancing China, especially through Vietnam, may also prove to be pointless as even Vietnam might not want to have an open fight with China. Loyalty, author warns, is not a time tested virtue in international politics and India should keep that in mind
  • NSG: Sustained and mature negotiations rather than public arguments with China over the issue of NSG membership with China are necessary

More on LEMOA: Find it here

Absence of long-term vision

Long-term thinking: Author states that long-term strategic thinking involves preparing for all alternative outcomes, apprehending the situations in advance and orienting foreign policy towards that end but that is not possible when even the foreign policy is affected to gain mileage in the upcoming assembly elections and when the latest ceasefire violations matter more.

Problems

Investment in long-term strategic planning is hindered by the following two problems,

  • Generalist defence ministry bureaucrats
  • An understaffed MEA

National security doctrine

Author says that India does not have a comprehensive national security doctrine which could help silence insurgencies, manage borders better or fight cross-border terror.

Present situation: At present the government, in the absence of overarching strategic guidance stick to ad hoc measures and firefighting, missing the big picture altogether

Solution:On the other hand, if there are well-articulated strategic doctrines or a grand strategic vision in place, institutions will learn to refer to them and adjust their policies accordingly, leading to a lot more coherence in the country’s strategic behavior

Developing a National Security Doctrine

A national security doctrine would require a great deal of political consultation, careful scenario building, and net assessment by experts. Such a carefully articulated national security doctrine, if generated by political consensus, can prevent the unnecessary politicization of national security issues as we have seen in the recent past

Conclusion

Author suggests that India should focus on the long game by investing in long-term strategic thinking which can only happen if and when the political class commits to institutional reform, intellectual investment and consensus building.

[3]. When the screen goes blank

The Hindu

Context

Article talks about the one day ban that was imposed on NDTV India over its Pathankot coverage

Basis of the ban

The Information & Broadcasting Ministry has invoked the Cable Television Networks (Amendment) Rules, 2015, on the ground that the channel broadcast “crucial information” which compromised national security.

  • These rules prohibit “live coverage of any anti-terrorist operation by security forces” and restrict media coverage to “periodic briefing” by a designated officer “till such operation concludes”
  • It is not clear if the channel’s broadcast was ‘live coverage’ or just ‘reportage’

 Powers of the ministry

The Ministry’s ban flows from its power under Section 20 of the Cable Television Networks (Regulation) Act.

  • The provision empowers the Central government to “regulate or prohibit the transmission or re-transmission of any channel or programme” if it is necessary or expedient to do so “in the interest of the sovereignty, integrity or security of India, friendly relations with any foreign State or public order, decency or morality.”
  • It should be noted that the above clauses are the replica of the reasonable restrictions to free speech under Article 19(2) of the Constitution.

A case of overreach

The 2015 rules are silent on whether it is mandatory for the government to designate an official spokesperson to give out information.

Definition of periodic: While the restriction on live coverage is categorical with the use of the word “shall”, there is no definition of the term “periodic”. What is periodic for the State may be inadequate for a 24×7 television channel.

  • Further, “briefing” implies sharing a carefully vetted statement, and not necessarily answering questions so reporting a carefully vetted statement should not be a problem as far as national security is concerned because such a statement would naturally be bereft of any sensitive information, if not then that is the folly of the government, not the media

Court’s word of caution

Right of the media: The right of the media to report news as it happens is constitutionally guaranteed under Article 19(1)(a) of the Constitution. This extends to viewers and readers who have a right to know. Of course the above rights are limited by reasonable restrictions.

Author presents us with following questions,

Q: Is the ban a reasonable restriction on this fundamental right?

Q: How did the channel’s coverage undermine the interests of the sovereignty and integrity of India, the security of the state, friendly relations with foreign states, which are the relevant constitutionally permissible restrictions on free speech?

Q: Who determines what constitutes a breach of national security?

Scope of reasonable restrictions

  • The scope of reasonable restrictions was examined by the Supreme Court in S. Rangarajan v. P. Jagjivan Ram. It noted that “the anticipated danger should not be remote, conjectural or far-fetched” implying that the danger should be clear and should actually exist i.e. should be present.
  • In Chintaman Rao v. State of Madhya Pradesh, the apex court had held that “reasonable restrictions” must not be “arbitrary” or “excessive”
  • In Shreya Singhal v. Union of India, the Supreme Court cautioned the authorities against any “insidious form of censorship which impairs a core value contained in Article 19(1)(a)” and has a “chilling effect on the freedom of speech and expression.”

Satisfying the test

In light of the above arguments, author questions as to whether the content broadcast by the channel satisfied the constitutional test of “Clear and present danger”?

  • If the information was already in the public domain, as the channel argues, what is the mechanism adopted by the committee that recommended the ban, to pick out NDTV alone? Arbitrary and excessive action can be struck down on the grounds of discrimination and malice as it would go againstArticle 14

 More questions

Q: Without the imposition of Emergency, will executive power to censor and stop transmission of news stand judicial scrutiny?

Q: Can the government be a judge in its own cause and based on its subjective interpretation, usurp the powers of courts to carry out punishment for violation of the law?

Q: Wouldn’t such practices undermine the doctrine of separation of powers, which is a basic structure of the Constitution?

Q: Have the principles of natural justice been adequately adhered to before trampling over the channel’s right to do its job under Article 19(1)(g)?

Conclusion

Author concludes by surmising that let the courts be the judge of what constitutes “national interest”. Executive should not be allowed to be the judge as per its own subjectivity


International (The Hindu)


[1]. Sri Lanka wants an end to bottom trawling

The Hindu

Context

Sri Lanka on Sunday urged India to “expeditiously” end unsustainable industrial-scale fishing in the coastal waters between the two countries.

Backdrop

Both sides have agreed to set up a Joint Working Group to resolve the fishermen issue

 A member of Sri Lankan Parliament has said

  • Indian trawlers were using heavy-duty fishing techniques in the coastal waters that must be ended at the “earliest”
  • With regards to Joint Working Group three tasks were delineated — of expeditiously working to end bottom trawling, facilitating joint patrolling of the coastal waters, and working towards release of arrested fishermen who strayed into each other’s waters
  • The agreement on the three-point agenda of the JWG would help end the long-standing issue of fishing in the coastal waters between the two countries.

The first JWG meet: The first Ministerial Meeting as per the JWG mechanism would be held on January 2, 2017

[2]. Army’s Demchok mission a success

The Hindu

Context

The Army has completed laying an irrigation pipeline for residents of villages in the Demchok region of Eastern Ladakh despite a face-off last week with Chinese troops over the work

Backdrop

In order to protest the laying of the pipeline, Chinese troops attempted to erect a fibre-reinforced plastic (FRP) hut on the border on 4th November. However, the Army and the Indo-Tibetan Border Police (ITBP) did not allow that.

  • Officials said the Army had fortified the area and prevented Chinese forces from further entering into Indian Territory
  • This was the first time since 2014 when the Chinese Army had come deep inside the Indian territory in Demchok

Chinese objection

Chinese side objected to the work saying that no construction was allowed on the border as per earlier agreement

Indian counter: the restriction applied only to defence constructions

 Project

The irrigation project was being built under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to link a village with a “hot spring”.


ECONOMY (The Hindu)


[1]. India to raise work permit issue with Canada, U.K.

The Hindu

Context

India will raise its concerns over restrictions on the movement of foreign skilled workers for short-term duration work with Britain and Canada, as these curbs are affecting the Indian IT industry.

As per NASSCOMM estimates,

  • Canada, the U.K., the U.S, Germany and Switzerland are the top five markets for Indian IT firms. The annual revenue of Indian IT firms from the U.K. and Canadian markets is about $18 billion and $3 billion respectively

Bilateral talks

Separate bilateral talks are to be held on November 7, with Canada and Britain, on various issues, and workers’ movement is one among them.

  • Canadian Minister of Immigration, Refugees and Citizenship, is slated to meet External Affairs Minister, Minister of State for Home Affairs, and representatives of Nasscom, the IT trade body
  • The Centre and Nasscom are expected to take up the issue of Canada’s plan to introduce a new short-duration work permit exemption for inter- and intra-company transferees and experts, among others, for work up to 30 days annually

IT industry’s view: The IT industry feels this 30-day limit does not serve a purpose as it is “too short a time frame” for the sector

Assessment exemption

  • Difficult to get LMIA exemption: Under the ‘specialised knowledge’ category to avail exemption from Labour Market Impact Assessment (LMIA) in Canada, the employer will have to demonstrate that the employee (foreign worker) has the specialised skill and the requisite proprietary knowledge to carry out a certain task.

 However, getting an LMIA exemption is difficult as about 20 per cent of applications are usually rejected

India’s stance on LMIA: Canada needs to set a clear and objective criteria around ‘specialised knowledge’ in the ‘LMIA exempt category’ that has seen rejection rate rise since these guidelines were introduced a couple of years ago

Reduced processing time

Nasscom has welcomed the Canadian government’s plans to bring down visa and work permit processing time to two weeks from 3-4 weeks as part of the ‘Global Skills Strategy’ to attract foreign talent

Discussions with UK

Discussions with the U.K. will be at the level of the India-U.K. CEO Forum and other official meetings on the sidelines of the talks between Prime Minister Narendra Modi and visiting British Prime Minister Theresa May

  • Immigration policy concerns: On the U.K. government’s recently announced changes in visa policy towards curbing immigration, India is likely to take up its concerns on the higher minimum salary threshold for intra-company transfers.

[2]. India can take a leaf out of Sheffield

The Hindu

Context

Disruptive transformation is taking place in the global manufacturing sector. This is led by new technologies that are developing rapidly and spreading through manufacturing hubs all over the world.

Authors’ contention

Author contends that in this scenario, India has the opportunity to become a key player in advanced manufacturing, provided we are able to reap the technology dividend along with our demographic dividend.

Advanced manufacturing

Advanced manufacturing is a broad term that includes new products and new processes.

  • ‘Smart’ and ‘intelligent’ manufacturing systems bring together both production and services
  • The concept applies to high-technology products as well as traditional manufacturing that may now be using more technology-intensive processes

Example: Moving of robotics towards more complex tasks where they work alongside human workers

Benefits of advanced manufacturing

  • Greater productivity
  • Better asset utilization
  • Increased flexibility and customer-focus
  • Better working conditions

 Advanced manufacturing & innovation in India

In India, high-tech manufacturing and innovation is taking place in various manufacturing hubs such as Pune and Bengaluru.

  • To align with the evolving global knowledge economy, India will need to strengthen these processes
  • To propel advanced manufacturing in alignment with global developments, India would need to also develop the right business ecosystem to promote innovation and entrepreneurship.

Low R&D ratio

  • R&D Expenditure: India’s R&D expenditure was estimated at $44 billion in 2014, the eighth largest in the world.
  • Growth in Patent applications: Between 2006-07 and 2012-13, patent applications went up by a compound annual growth rate of close to 12 per cent from 137,900 to 269,500

 Point of concern: Author points out that,however, we have a low ratio of R&D expenditure to GDP at 0.9 per cent

  • Private sector concerns: Also, a larger proportion is being undertaken by government agencies rather than the private sector

Behind in export of hi-tech manufactured goods

India also lags in the export of high technology manufactured goods, which comprise 8.6 per cent of its total manufactured exports in 2014, although this is double the share in 1990.

Way ahead

  • Greater engagement of the private sector in R&D for advanced manufacturing
  • Tie-ups with UK companieswhich will give shape to India becoming a key player in advanced manufacturing

India & UK

India and the U.K. have partnered for advanced manufacturing, a key focus outcome of Prime Minister Narendra Modi’s visit in November 2015.

  • The year 2016 was announced as the year of Education and Research, and it was decided to jointly take up projects for scientific and technological cooperation

Strengths of UK

The U.K. enjoys strengths relating to design, integration of science and engineering, and integrated automation solutions.

India’s strengths

Multiple language skills and software capabilities

 Areas of collaboration b/w India & UK

The areas of collaboration identified by lead agencies include,

  • Automation
  • Next-generation sensors for manufacturing, standards, materials design, and engineering-driven sustainable manufacturing

Learning from UK

  • Creating advanced manufacturing districts: The U.K. has recently commenced an initiative to create advanced manufacturing innovation districts which bring together research organisations, enterprises and incubators in urban centers
  • The first such district is coming up in Sheffield

 Lessons for India: If we, in India, consider a similar strategy, the U.K.’s advanced manufacturing research centers could be taken as a model


Indian Express


[1]. Over the barrel

 Indian Express

Context

In the article, author talks about the lack of data with which ease of doing business rankings are riddled vis-a-vis India and why India should not depend on this index as far as improving inherent business climate is concerned.

Backdrop

Recently World Bank published its Ease of doing business report wherein India has registered a growth of merely 1 place higher than where it was 2 years ago.

Reasons given by author for his stance

  • Limited data: The World Bank index is based on limited data: The World Bank report is based on data gathered from just Mumbai and Delhi which cannot be a reflection of the situations prevailing in the entire country
  • Disconnect: There is an apparent disconnectbetween the complexity of our polity and the simplicity of the Bank’s methodological approach. All the sub-indices, totaling 10 in number, upon the average of which the ranking is based, are only under partial control of the centre. In such a case government should not set unrealistic targets of improving the ranking by leaps and bounds.
  • Misrepresentation of numbers: Numbers are easy to misrepresent. They seldom tell the full story. World bank report makes assumptions upon which the derivation of its ranking order is based

Alternative: A desi “ease of doing business index”

Author suggests that instead India should work to develop an indigenous “ease of doing business index” based on the government’s prioritisation of sectors and businesses and the key factors required to attract investment into these priority sectors

  • Limiting the policy: The government should not tie its policy objectives onto generic and broad-based parameters developed by international institutions. It should contemplate instead the creation of its own indigenous index focused on improving business conditions for identified companies in priority sectors
  • Index based on progression: To increase the inflow of capital into labour intensive manufacturing and/ or energy related technologies, the government should develop an index that is influenced by progress on matters related to the digitisation of land records, availability of water, travel time from point of production to port of export, availability of skilled labour, rules relating to taxation, IPR and so forth
  • Independent & a fair index: This index should be developed by third party, non-partisan, non-government technocrats and its details should be in the public domain.
  • Periodic publication of data & subsequent monitoring: The data should be published periodically and the government should be monitored and evaluated against the progress made along the scale of this index.

Author presents us with a self-answered question,

Q: What should be the government’s priority for private sector investment?

A: Author answers that the emphasis should be on labour intensive manufacturing industries and clean energy

  • Author points that government should not focus on physical (housing, roads, ports, pipelines, etc) and social (education, water, health, etc) infrastructure or distribution and delivery systems (cash transfers) because whilst these are of crucial importance and in desperate need for investment,private sector will not invest in these sectors. This is because the return on investment will be low and the banks will not extend credit — at least not until they have recovered the loans made for such infrastructural projects during the period 2003-2011

Q: What are the major obstacles impeding the flow of capital into manufacturing and clean technology?

A: Three major impediments stand out.

  1. Land acquisition: This is because land records are imprecisely recorded and this entangles prospective investors in a web of agents, petty bureaucrats, lawyers and politicians
  2. Poor infrastructure: The inadequacy and poor quality of essential infrastructure (water, housing, electricity, roads etc). This adds to the costs of production and erodes competitiveness
  3. Other problems: The lacunae regarding intellectual property rights, fiscal stability and contract sanctity. This deters investors from investing in R&D and setting up technology centers

Conclusion

Author concludes by suggesting that World Bank’s index need not be completely ignored as it acts as a check against complacency but the indices like those prepared by the Bank should not be the pivot around which policy is framed; nor should they be the cause of distraction from the more important task of identifying and removing the obstacles in the way of significant and disproportionately impactful private sector investment.


Live Mint 


[1]. Poor people’s access to financial services on the rise in India

Live Mint

Context

A financial survey of four poor states of India—Odisha, Bihar, Madhya Pradesh and Uttar Pradesh—has revealed that access to formal banking outlets is not as difficult as had been in the past and an increasing number of people are being financially included

Who conducted the survey?

FinMark Trust of South Africa conducted this survey, the first of its kind, titled ‘FinScope Consumer Survey India’.

  • Part of PSIG: It is part of the Poorest State Inclusive Growth or PSIG programme, implemented by the Small Industries Development Bank of India with the support of the UK’s department for international development.
  • It will be made public on 8 November

Scope of the survey

Coverage: The survey has covered 16,000 households in these four states and drawn a larger picture by extrapolating the findings. One adult from each household was interviewed in the second half of 2015, beginning in July

One year old data: The data used in this survey is one-year old, but that does not lessen its basic findings as the Pradhan Mantri Jan Dhan Yojana, a national mission on financial inclusion, was firmly in place by that time

Observations of the report

  • Time taken: The average time taken to access formal financial services such as a bank branch, an ATM or a post office branch is not more than half an hour in these four states
  • The level of connectivity is also high, reflected by the number of adults using mobile phones.
  • Documentation: Documentation which is a key to access formal financial services, is not an issue anymore as 98% of the adults have some kind of identity proof
  • Stats:
  • 93% of the households in the four states are formally financially served
  • 86% of the households are served directly by the banks, the rest depend on the so-called business correspondents, who provide last-mile connectivity with the consumers on behalf of banks
  • Access to formal channels: Around 35% of the households have access to other formal channels such as non-banking financial companies, including microfinance institutions
  • Dependence on informal sources: Only 2% depend solely on informal sources such as money lenders

Access to formal banking services is independent of financial status of the families

Stats: While 90% of the households above the so-called poverty line have access to formal banking services, for the BPL (below poverty line) families, there is no dramatic drop in the figure—83%.

Credit borrowing

When it comes to credit,

  • Only 7% claim to borrow from banks
  • 3% from non-banking financial companies
  • 13% from informal sources
  • the remaining 77% do not borrow at all

Usage of other financial products

The survey has found that,

  • 28% of all households are insured formally
  • The major areas for insurance are life insurance (85%), health insurance (24%) and general insurance (15%)
  • There are families with access to more than one insurance product
  • Finally, 7% of the households are using banking channels to remit funds

Choice of financial products

The choice of financial products is independent of

  • Age
  • Level of education

But it is dependent on,

  • Gender: Around 70% of males are banking with the formal channel in contrast with 58% of females

Highest Banked population

  • Odisha has the highest banked population (78%) and the least exclusion (12%). If we include non-banks, about 88% of Odisha’s adult population has access to financial services
  • Bihar is at the other end of the spectrum—27% of its adult population is excluded.
  • The banked adult population in Uttar Pradesh is 78%—the level of Odisha—but its excluded population is higher than that of Odisha, 19%

Observation: The bank account penetration in these four states is far higher than the popular perception

Ground reality: Many such bank accounts are inactive.

  • Inactive accounts: A current or a savings account becomes inactive in the absence of at least one transaction in a year.
  • Stats:
    • About one in 10 adults (25.5 million) in these states has an inactive bank account
    • Only 66% (129 million) adults use their account at least once a month for withdrawing cash from a branch or an ATM, issue a cheque, or transfer funds through mobile or Internet banking
    • The use of accounts for payments or receiving income is pretty low. A few adults have also claimed to be using others accounts (that of a neighbor, friend, spouse or a family member) for transactions

 Demographic Data

As per 2011 census,

  • Total adult population: The estimated adult population of the four states is more than 266 million with Uttar Pradesh having a 46% share, almost double that of Bihar (24%) and four times that of Odisha (12%)
  • More females: There are more males than females, making for a ratio of 52:48
  • Rural households: The bulk of the population resides in rural pockets
  • Level of education: About seven out of 10 adults in these four states have some form of education
  • No formal education: The largest population of adults with no formal education is in Bihar (39%) and the least is in Odisha (19%).

 Source of households’ income

The biggest source of income for households is,

  • Salary and wages (47%)

Exception: Odisha being an exception, 65% of its households depend on farming for a livelihood and only 14% on wages

  • Bihar: 25% of the households in Bihar depend on agriculture and 54% on salary and wages. Close to 80% of the households use wood, coal or dung as the fuel for cooking and only 20% have access to liquefied petroleum gas or piped natural gas

Stats demonstrating socio-economic status

  • 82% of the households own a mobile handset, 43% a TV set, 16% a motorcycle/scooter/moped, 4% a DVD player, and 1% each a car/jeep and a landline telephone

Importance of the survey

Payment banks will be helped: Two small finance banks have already started operations. Eight more will do so in the next few months.

  • Also, there could be eight payments banks opening shop by April 2017
  • The findings of this survey will help them approach banking in India’s hinterland in a new light—savings, credit and remittances


Comments

6 responses to “9 PM Daily Brief – 7th November 2016”

  1. sukhjinder kaur Avatar
    sukhjinder kaur

    thanku forumIAS… especially for editorials.. i was having problems with editorials- how to read them for ias.. but you guys are savior.. u made it as simple as possible..

  2. Quasi Win Avatar
    Quasi Win

    thanks for all the hard work for bringing this out, but it’d definitely help if it was a bit more concise and short.

  3. Now plz don’t abandon it again

  4. ILP- KUNA3885 (thevagabond85) Avatar
    ILP- KUNA3885 (thevagabond85)

    kindly make it a little less verbose …. key points only

  5. UPSC or Teen Guna Lagaan Avatar
    UPSC or Teen Guna Lagaan

    really helpful…thnks teamforumias

  6. KARAN MEHAN Avatar
    KARAN MEHAN

    Thank you 🙂
    The editorials have been simplified to the extent possible. It helped.

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