Brief of newspaper articles for the day bearing
relevance to Civil Services preparation
National
IMF cuts global growth forecast as China slows
Context:-
The International Monetary Fund (IMF) cut its global growth forecasts for the third time in less than a year.
Reasons behind the forecast:-
New figures from Beijing showed that the Chinese economy grew at its slowest rate in a quarter of a century in 2015
Plummeting oil prices
Weak commodity prices that are hammering Brazil and other emerging markets.
Measures to be taken:-
Nearterm fiscal policy should be more supportive of the recovery, especially through investments that would augment future productive capital.
Forecast for emerging economies:-
India and the rest of emerging Asia are projected to grow at a robust pace, although with some countries facing strong headwinds from China’s economic re balancing and global manufacturing weakness.
ARE YOU PREPARING IN THE RIGHT DIRECTION?
Test Yourself Through ForumIAS All India Free Mock Test – Prelims 2016
Click Here for Details & Registration
[2]. The Lancet turns spotlight on ending preventable stillbirths
Context:-
Stillbirths are reducing at a very slow rate across the world which has led to missing a specific Millennium Development Goal target.
Reasons for Still birth:-
Many disorders associated with stillbirths are potentially modifiable and often coexist — maternal infections, non-communicable diseases, nutrition, lifestyle factors and maternal age older than 35 years.
Indian Scenario:-
India continues to be at the top of the table in the rank for numbers of stillbirth in 2015, recording 5,92,100, followed by Nigeria, Pakistan, China and Ethiopia.
Cultural taboos and superstitions often take the blame in the case of stillbirth — in a recent study, 36 per cent of respondents blamed the mother for her lifestyle or diet, 29 per cent said the baby was never supposed to live and 25 per cent blamed it on witchcraft or evil spirits.
What needs to be done?
There is need for increased awareness, opening up the dialogue at policy and community levels, giving women adequate healthcare — from before conception to after birth— and calling for accountability for targeted interventions.
And all this would be possible only if there is political determination to reduce the number of lives lost to zero.
[3]. First flower in space is giant leap for zero-gravity gardening
Context:-
Scientists grow first flower in International Space station.
Zinnia Flower:-
The orange zinnia looks like a daisy and has a reputation for being one of the easiest flowers to grow on Earth. In space, it was a challenge getting it to sprout.
Veggie system:-
The flower is part of a wider attempt to grow food in orbit, using Nasa’s plant growth system Veggie, which was delivered to the ISS in April 2014.
The Veggie team has already enjoyed a successful lettuce harvest and plan to have tomatoes too by 2017. Ultimately, the hope is to make possible “a sustainable food supplement” for a future manned mission to Mars.
Problems Involved:-
Space gardening is plagued with problems, including high radiation levels and temperature extremes.
Fortunately, with the ISS in a low orbit, the Earth’s magnetic field shields plants from the worst radiation effects. Inside the station, the atmosphere can be tightly controlled.
Science & Technology
[1]. Photonics for faster communication
Context:-
Centre for Nano Science and Engineering (CeNSE) at the Indian Institute of Science (IISc) in Bengaluru are working on two projects in the area of photonic integrated circuits.
What are they building?
Researchers and scientists at CeNSE are building a next-generation, multi-crore processor. At its very core, each unit is still electrical; it has millions of transistors connected with copper lines.
What if the copper lines are replaced with photonic components? It would exponentially improve the power of microprocessors. Now, scientists from CeNSE, in a project supported by the DRDO, are trying to develop indigenous technology for high-speed optical interconnect technology.
What is Photonics?
Photonics is the science of light. It is the technology of generating, controlling, and detecting light waves and photons, which are particles of light. The characteristics of the waves and photons can be used to explore the universe, cure diseases, and even to solve crimes.
Economic Digest
[1]. Loosening fiscal policy is a trap
Context:-
The government has stated that there is no intention to deviate from its earlier fiscal deficit reduction plan.
Current year performance:-
The fiscal deficit was contained even while the government’s Plan expenditure, which roughly corresponds to capital spending, had gone up.
Suitable Circumstances:-
This situation has been greatly helped by the falling international crude oil prices – almost 70 per cent since June 2014.
Credit must also go to the government for having used this opportunity to speed up the roll-out of the direct benefits transfer scheme for cooking gas and to raise taxes on petroleum products to shore up its revenues.
This has certainly helped government to continue with the planned capital expenditure.
Revenue buoyancy in indirect taxes
Poor absorptive capacity of many ministries in spending funds allocated for many projects as also for schemes in the social sector.
Failed Measures:-
Some of the measures had not been prudent, particularly for recapitalising public sector banks with stressed assets as the release of funds is not strictly linked to the banks’ performance.
The disinvestment proceeds in the current year may fall short of its target of Rs 69,500 crore.
What should the government do for 2016-17?
It should stick to its promise of reducing the fiscal deficit to 3.5 per cent of GDP.
Advantages:-
Increases credibility.
Reducing the fiscal deficit does result in making more resources available in the financial system for the private sector to tap into, and perhaps at a lower cost.
At a time when the central bank has concerns over reducing interest rates for fear of stoking the inflation fire, it makes sense for the finance ministry to maintain fiscal integrity since that in itself is likely to put a downward pressure on interest rates.
Rein in the deficit and increase public investment:-
There are of course many economists who have argued that a little bit of relaxation in the promised fiscal deficit reduction plan should be tolerated because of the pressing need for increasing public investment at a time when the economy needs an investment boost and the private sector is too strained financially to be able to invest more in new or existing projects.
The illogic of the argument is that the Indian economy is no longer facing an either-or situation. It needs to do both – rein in the deficit and increase public investment.
IT’S TIME TO GAUGE YOUR COMPETITION
Test Yourself Through ForumIAS All India Free Mock Test – Prelims 2016
Click Here for Details & Registration
What can the government do?
Postponing the SPC recommendations:-
The recommendations of the Seventh Central Pay Commission could be postponed by a year with a clear directive that no arrears demand should arise from this decision.
The annual additional burden of the Pay Commission recommendations will be over Rs 1 lakh crore. Postponing its enforcement by a year would be an unpopular decision, but would also show that the government is tough on expenditure management.
Direct cash transfer in food and fertiliser subsidies:-
The finance ministry should go for bolder steps on ushering in reforms by streamlining food and fertiliser subsidies, which account for over 80 per cent of the government’s annual subsidies bill of Rs 2.4 lakh crore.
The use of the direct benefits transfer scheme for both the subsidies could help plug leakages and ensure that these are better targeted.
Privatisation plan:-
A bold privatisation plan, after creating an institutional framework to implement it, could be another initiative next year to mop up additional resources.
Conclusion:-
The short point is that it is possible to stay on the path of fiscal consolidation and yet find additional resources for ramping up the much-needed public investment.
Loosening the fiscal policy in the name of providing more resources for investment would be a trap as this could turn the government away from reforms. And the finance ministry should not fall into it.
Opinions & Editorials
[1]. Owning a friendship
Context:-
Article discusses about the Indo Israel relationship.
Barak-8 Missile:-
The “Barak-8” long-range surface-to-air missile was successfully tested somewhere in the Indian Ocean, from the Indian navy’s stealth destroyer, INS Kolkata.
The Barak-8 (“Lightening” in Hebrew), brimming with cutting-edge technology, is the product of a joint Indo-Israeli development endeavour.
No more discreet low profile relation:-
India no longer feels the need to keep its burgeoning ties with Israel discreetly low-profile.
The reason for such a relation in the past was to avoid angering India’s large Muslim minority; and as a concern for the considerable expatriate Indian community working in the Arab Gulf states.
India has refrained from voting against Israel in various UN bodies, as it did in the past, preferring to abstain from anti-Israel resolutions
Trade Relations:-
Strengthening bilateral ties entails potentially huge benefits for both parties.
Trade has grown more than 20-fold since formal diplomatic ties were established — from a meagre $200 million to almost $5 billion today.
Suitable climate for trade:-
The recent European decision to label Israeli merchandise produced beyond the pre-1967 frontiers has made Israeli concerns all the more tangible.
In contrast to Europe’s dark past of animosity towards the Jews, India’s history has virtually no record of any significant anti-Semitism.
The burgeoning Indian middle class with its increasing purchasing power and the fact that India will soon be the world’s third-largest economy, makes it a lucrative target for Israeli business, not only in its own right but as a strategic alternative to the EU, should further restrictions on Israeli products be imposed by Brussels
Indo Israel Maritime relations:-
Israel’s long-term strategic need to strengthen its navy… corresponds well with India’s desire to extend its maritime capabilities.
The prospect of enhanced trade with the East in general and India in particular clearly enhances the importance of the Indian Ocean theatre for Israel as a commercial maritime route.
But for Israel, commerce is not the only reason for the increased importance of the Indian Ocean. Indeed, given the spectre of a resurgent Iran unencumbered by international sanctions and its coffers replenished by the nuclear deal, the waters of the Indian Ocean have assumed critical significance for Israel’s security, as reflected by its recently expanded and modernised submarine fleet.
Conclusion:-
The potential for mutually beneficial collaboration between India and Israel spans virtually the entire spectrum of human endeavour — from national security on land, sea and air, through cutting-edge civilian technology in medicine, food production and communications, to cultural exchanges, enhancement of water management and rural development.
But beyond that, there appears to be a special affinity between the two peoples that transcends cordial government-to-government relations.
[2]. Poor Ganga
Context:-
The reason why cleaning or managing the Ganga has remained problematic since the mid 1980’s, is “bureaucratic quagmire”.
Reasons:-
Any proposal regarding the Ganga has to satisfy, and requires the active cooperation of no less than seven to nine departments, both at the Central and state levels.
As a result, despite thousands of crores being spent towards improving the Ganga’s condition, little ever gets done and no one is ever held responsible.
This non cooperation will not only impede the government’s plans of rejuvenating the Ganga but also smudge the policy clarity that businesses have been demanding in India.
ARE YOU PREPARING IN THE RIGHT DIRECTION?
Test Yourself Through ForumIAS All India Free Mock Test – Prelims 2016
Click Here for Details & Registration
[3]. The environmental cost of subsidies
Context:-
Impact of subsidies on environment.
Subsidised diesel:-
The idea to give a subsidy on diesel for farmers who use diesel-run pump-sets to irrigate their fields has led to a damaging impact on the environment.
The number of cars running on subsidized diesel has multiplied over the years and contributed to the deteriorating air quality.
The lowering of oil prices has allowed India to eliminate the subsidy on diesel.
Subsidized Electricity:-
Most Indian states provide electricity at very cheap rates.
The finances of distribution companies in many of these states are entirely wrecked.
To improve the situation, the Union government has recently announced a number of measures under the UDAY (Ujwal Discom Assurance Yojana) scheme, which won’t be successful unless the underlying causes—low tariffs, power thefts, large subsidy bills—are addressed.
The political economy sustains large-scale power theft in many parts of India.
The majority of farmers receive electricity either free or at dirt cheap rates.
Non-payment seldom invites punishment.
Minimum support for water intensive crops:-
Low power tariffs, subsidized diesel and the provision of minimum support price for certain water-intensive crops have together led to unrestrained exploitation of groundwater.
Subsidised Rail Travel:-
Any hike in passenger tariffs by the Indian Railways, for instance, is followed by an uproar by the opposition parties.
Since passenger trains don’t earn enough, they are cross-subsidized by revenues from freight trains.
The freight tariffs, as a result, are high and uncompetitive, which in turn has caused business to move to roads.
This diversion of traffic to road also leads to increase in pollution.
It is said that the energy consumption of Railways is about 75-90% less for freight traffic when compared to road. The carbon dioxide emission is about 80% less than road.
Free market opposes subsidies:-
The traditional opposition to subsidies has come from the proponents of free markets.
Subsidies distort markets and lead to inefficient outcomes.
Environmental impact:-
These examples show that subsidies also cause significant environmental damage.
In India, there is a significant overlap between people who advocate subsidies in the name of the poor and those who fight for the protection of the environment.
It is time they began looking at the harmful environmental impact of subsidies which can lead to correct pricing of resources.
[4]. Can rural India reap digital dividends?
Context:-
The Taobao villages in China show the extent to which the Internet can induce development.
What is it?
Taobao, a consumer-to-consumer portal established by Chinese e-commerce giant Alibaba, allows entrepreneurs to open online stores and sell their products to interested consumers.
A Taobao village is a cluster of rural e-tailers where at least 10% of village households engage in e-commerce.
In India:-
It’s worth looking at the potential benefits of such a model in India.
Benefits:-
Inclusive economy:-
Over half of India’s population depends for its livelihood on an agricultural sector that cannot support it adequately.
Structural reforms may improve the sector’s viability, but the only long-term solution is enabling the rural population’s access to other forms of economic activity. An e-retail model that aims at incorporating rural households could offer some utility here.
Creates Volume:-
E-commerce in India is almost entirely an urban phenomenon. Clustering rural retailers as the Taobao model does creates the volume necessary for incentivizing at least some portion of the logistical and financial support urban retailers enjoy.
Boosts traditional Crafts:-
It could have the secondary benefit of providing a boost to artisans who lack access to a wider market, making traditional crafts unsustainable.
Similar initiatives:-
E-commerce ventures structured along similar lines such as ITC e-choupal, Craftsvilla and Kerala’s Kudumbashree have had moderate success in the past.
Obstacles:-
Internet Access:-
The major obstacle, of course, is the lack of rural Internet access.
India has the ironic reputation of having the second largest number of Internet users and the largest offline population in the world.
Internet usage is highly skewed in favour of men and urban households compared to women and rural households.
Infant Industry Syndrome:-
The infant industry argument is an economic rationale for trade protectionism. The core of the argument is that nascent industries often do not have the economies of scale that their older competitors from other countries may have, and thus need to be protected until they can attain similar economies of scale.
Judging by the government’s Start-up India push, the infant industry syndrome is an occupational hazard in the Indian policy environment.
Rural e-commerce should not fall into the same trap. If the Internet has to become an effective catalyst for efficiency and innovation, competition is essential. Alibaba’s Taobao advanced so much on the efficiency frontier due to intense competition from eBay.
Digital india:-
The Digital India initiative aims at resolving this bottleneck. Its goal of connecting rural areas with high-speed Internet networks is laudable, as is its focus on digital literacy.
And to be successful—particularly in the context of the Taobao model—it must form robust linkages with other government initiatives that range from providing a cradle-to-grave digital identity to universal access to banking services.
Conclusion:-
The last thing the rural economy needs to add to the protectionism the agricultural sector enjoys is a subsidized, protected retail segment.
It is said that “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable…History teaches us that economic growth springs from better recipes, not just from more cooking.”
Technological change is an endogenous factor in growth and Internet is technology at its best.
By: ForumIAS Editorial Team
Leave a Reply