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Daily Editorials for UPSC IAS Exam Preparation

A Report on Analysis of Job Creation in India: Daily Editorial

 

Context

  • India needs eight percent growth over the next 20 to 30 years to grow the Indian economy from a lower-middle income country to an upper-middle income country
  • The advantage to us is that India has a huge population of youth which if well utilised by providing jobs can reap rich dividends for India- if not, can become a nightmare and result in Social unrest.
  • India should also be generating more jobs than other countries- India needs to create 12-15 million jobs each year. But the Indian economy is pretty slow in job creation despite good GDP growth.
  • India’s rate of job creation is only two-thirds of the global average.
  • The employment elasticity of the Indian economy—the numbers of jobs it creates with economic growth—has been declining in the last few years.

In this context there were two recent reports, both produced jointly by the Confederation of Indian Industry (CII) and Boston Consulting Group (BCG) named –

  • “India: Growth And Jobs In The New Globalization”
  • “Future Of Jobs In India, Enterprises And Livelihoods”

The reports analysed the reasons for low job creation and suggested how more jobs can be generated. This editorial summarises the recommendations made by the report.

Challenges for job creation in India

In recent years, however, very few countries have achieved such a sustained period of high growth and job creation, other than China. And in light of developments the world over that are creating a ‘new growth paradigm’ driven by the ‘new globalisation’ the aforementioned task is even more formidable.

India faces challenges in achieving this growth and job creation target.

  • “Capitalization” of production systems, with increasing automation, is reducing jobs for workers and producing more wealth for owners of capital than for workers in production systems.
  • “Financializing” of economies, with even more money being made from purely financial assets, has turbo-charged the increase in inequalities in incomes and wealth around the world.
  • We are now witnessing a shift in this model of globalisation that shaped the economic growth models of several countries which followed the transition from agriculture to light manufacturing and rapid growth of exports, followed by the development of heavy industry and then services. This model which was sought to be emulated by countries India and Vietnam. Vietnam is being fundamentally disrupted today by the twin forces of growth in digital technologies, including manufacturing technologies collectively.
  • “Industry 4.0” automation technologies, more flexible, and less dependent on labour are enabling production systems to be localised within developed countries’ markets.

Focus Areas for reforms

We need a focused implementation of these policies as well as a special focus on ‘activating’ key leverage points, described below, which are critical to the success of the new paradigm of growth and jobs.

  1. Digital infrastructure will be as critical as physical infrastructure. This should cover all layers of the ‘technology stack’ (described in detail in the report)—high quality and ubiquitous broadband and low-cost smartphones, the India stack, societal platforms, and standards and norms for interoperability of digital systems that enterprises can leverage. (Digital India)
  2. Risk and growth capital for micro-entrepreneurs has to be scaled up rapidly, along with the rules and mechanisms for easy access to them. (Mudra Bank, Stand up India Scheme)
  3. The learning and skilling ecosystem has to move towards a ‘life-long learning system’ as new kinds of jobs emerge with very different skill profiles. This will ensure that the appropriate skills are provided to enable employment in the new development paradigm and there is a continuous mechanism in place to update these skills as required. (Skill India Mission)
  4. India should be developing life-long learning systems that will enable people to learn new skills “just-in-time” when the content of their work changes, which it will often in future when new technologies are applied and new industries emerge.
  5. Labour norms need to be revisited to ensure that they also cater to and support the new types of workers and their employers who will drive growth in this new paradigm. (Labour Reforms)
  6. Coordinated strategies to increase India’s share of exports (trade facilitation, branding and marketing, foreign direct investment (FDI) promotion, etc.) should continue to be implemented, especially in light manufacturing sectors where the opportunity is ripe.

Drivers of Job creation

  1. Small Enterprises: The quality of small enterprise associations and clusters must be substantially improved. Giving the example of Ola Cabs and OYO Rooms, the report says Government policies should aim to strengthen and enable digital technology platforms and communications networks to empower small and micro enterprises.
  • The Government must ease constraints on the growth of small enterprises and develop enterprise learning architectures which can help them to avail of shared services such as staffing, financing, quality management and so on.
  • Innovative business solutions of small enterprises must be recognized and scaled up.
  1. India must pursue more growth in manufacturing and build infrastructure.
  2. It must vigorously pursue other avenues too. India has a large growth opportunity in natural produce sectors—food, fruits, vegetables, dairy, poultry and fish.
    1. Rural and urban economies support each other through natural produce supply chains.
    2. Natural produce enterprises can generate jobs around the country.
  3. India has enormous and diverse assets of natural beauty, heritage and culture, spread across all its states. Therefore, another sector where India has huge, insufficiently tapped potential for widespread generation of livelihoods is tourism and hospitality
  4. Some other sectors with large potential for more enterprises and sources of livelihoods around the country are healthcare, renewable energy, water and sanitation.

Conclusion:

  • Government at all levels, Centre, states and district administrations, should be coordinated under the Prime Minister’s Office and Chief Ministers with systematic methods for policy formulation and stakeholder participation to drive jobs growth
  • A holistic thought process is needed that converges multiple policy sets through a systems approach to job creation. The systems approach will accelerate widespread job creation as well as boost GDP growth by 2-3 %
  • Job creation must be a principal metric in performance scorecards for governments at all levels to ensure adequate employment generation.

[su_box title=”Practice Questions” style=”bubbles” box_color=”#99bb41″ title_color=”#000000″ radius=”20″]

1. Identifying challenges in job creation for India, enumerate the focus areas for reforms that can increase job growth in India.

2. Jobs cannot be sprinkled into the economy from above; Indian policy towards economic reforms needs a paradigm shift in the new global order. Substantiate.

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Reforms required in higher education ; Choice based Credit System

Higher Education  paves the path for growth and is a generator of ultimate knowledge and innovation. India’s Higher education sector should come in pace with global standards benchmarks

Rising costs of higher education and the changing profile of education seekers, aided by technological innovation are leading to the creation of alternative models of knowledge dispensation. Central universities have the responsibility to lead the transformative processes of India’s higher education system.

Reforms that need to be brought in are : –

(1) Steps to create an eco-system for research and innovation : – The recently launched Pandit Madan Mohan Malviya National Mission on Teachers and Teaching will set performance standards and create world-class facilities for innovative teaching. There should be an increased stress on publication and research papers which will help in improving quality by leaps and bounds.

(2) Capacity development of faculty, alumni participation and use of technology.

(3) Deepen engagement of Central Universities with community and address the growing disparity between cities and villages. Increase capacity and intake in the higher educational institutions. In many fields we are stagnating like pure sciences. Increasing attention needs to be paid to that now.

(4) Creating international and national networks for quality education : – Under Global Initiative of Academic Networks (GIAN), the HRD Ministry has asked Central Universities for a list of eminent scholars and researchers for inviting them as guest speakers or scholars. An e-platform needs to be developed to facilitate scholars from within and outside the country to log in their details. It shall, in due course, lead to creation of a robust database of global experts for the Indian higher education system. There will be constraint for resources. But a balance needs to achieved between international and domestic resources. Young academicians within the nation should be encouraged.

(5) A blended Massive Open Online Courses (MOOCs) strategy and SWAYAM (Study Web of Active Learning for Young Aspiring Minds) could pave the way for speed, scale and efficiency for teaching in the higher education system.

(6) Central Universities must establish Innovation clubs , Inspired Teachers’ Network, and Industry-interface cells within the stipulated time.

(7) In addition to international rankings, the universities should attempt ratings on a National Ranking Framework which needs to be expeditiously developed

(7) Adoption of Choice Based Credit System.

CBCS provides choice for students to select from the prescribed courses.  The credit based semester system provides flexibility in designing curriculum and assigning credits based on the course content and hours of teaching. The choice based credit system provides a ‘cafeteria’ type approach in which the students can take courses of their choice, learn at their own pace, undergo additional courses and acquire more than the required credits, and adopt an interdisciplinary approach to learning. Mobility should be provided to students. If they want to transfer from Institute A to B, his credits should also be transferred.

Choice Based Credit System must be implemented from the academic year 2015-16 in all Central Universities. Each Central university will set up a Community Development Cell which will identify at least 5 villages in its vicinity for adoption as model villages by the university.

Prerequisites for CBCS : – Besides introduction of semester system, restructuring of syllabi in the form of modules, standardisation of examinations and switching over from numerical marking system from grading system are among the prerequisites for the introduction of the choice-based credit system.

Problems : – normal tendency is to move from not so well known institution to better ones. Peripheral universities might be sidelined and it will also create institutional pressure and infrastructural bottlenecks to the target institute/university.

Hurried implementation of drastic restructuring without rigorous academic scrutiny will fail the responsibility that the university has towards students.

(8) Rashtriya Uchchatar Shiksha Abhiyan (RUSA) should be implemented properly. It addressed the overall quality of existing State higher educational institutions. Improve it by ensuring their conformity to prescribed norms and standards and adoption of accreditation as a mandatory quality assurance framework. Certain academic, administrative and governance reforms are a precondition for receiving funding under RUSA. Under RUSA, participating States are permitted to mobilize 50% of the State contribution of funding through Public-Private Partnerships, Corporate Social Responsibility funds, philanthropic contributions etc.

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Shanta Kumar Committee Recommendations on Reforming Food Corporation of India ( FCI )

GoI had constituted a committee under  Shanta Kumar  to suggest reforms for Food Corporation of India. The report has been submitted. And some major reforms have been suggested. The various domains under which suggestions have been given are discussed below.

Recommendations

Cash transfer: It has been recommended for cities having 1 million or more population. The government should give deficit states the option of either supplying grain or cash transfer. The panel also suggested the government to gradually move to cash transfer to end the pilferage and black marketing of grains. The panel estimates if food subsidy is transferred in cash, it will save the exchequer around Rs 30,000 crore per annum in subsidies, while giving a better deal to consumers. The benefit of procurement at MSP only reaches to 6% of the 90 million farmers.  If farmers are given cash transfers, all of them can get it. The amount could be invested in irrigation , technological enhancement, market development etc. Giving such subsidies will also allow government to decontrol urea which, in turn, will increase its production and also get farmers to use it more judiciously. The committee has also suggested that the fertilizer industry should be deregulated and fertilizer subsidy should be passed on directly to farmers.

Procurement Operations : FCI should hand over procurement of wheat and rice to state governments in Punjab, Haryana, Andhra Pradesh, Chhattisgarh and Odisha. They have gained sufficient experience and have created reasonable infrastructure for procurement. FCI should concentrate on procurement in the eastern belt ie Uttar Pradesh, Bihar, West Bengal and Assam, where farmers resort to distress sales due to poor state procurement. This is the region dominated by small holdings. This is the belt from where second green revolution is expected, and where FCI needs to be pro-active. If this recommendation is accepted states like Punjab will lose a lot of revenue as they levy mandi taxes on FCI purchases.

Minimum Support Price : MSP is announced for 23 commodities. In reality, price support operates primarily for wheat and rice and that too in some states. This creates a highly skewed incentive structure in favour of wheat and rice. As a result of high MSPs in wheat and rice, farmers have got incentivised to grow just these crops, and this causes shortages and inflation in other crops like pulses, fruits and vegetables. While the country is short of pulses and oilseeds , their prices often go below MSP without any effective price support. Pulses and oilseeds deserve priority. Also, FCI procures most of the marketable surplus in key states which drives out private trade. Consumer costs are driven up by high inefficiency costs – wheat MSP is Rs 1,400 per quintal but FCI’s economic cost is Rs 2,200 per quintal.

National Food Security Act : Legal entitlement under the National Food Security Act  should be limited to 40 % of the population, as against the current norm of 67% coverage, which is excessive. This 40 per cent will include those covered under the Antyodaya Anna Yojana. Those outside this classification but priority households should get grain at a price which is half the government’s minimum support price. The committee however wants more to be given to households classified as below poverty line (BPL), 7 kg per head instead of 5 kg in a month. Many who should not get cheap food will get it when the Act is fully implemented. It has also been found that foodgrain allocation for the APL category does not get lifted and is sold in the black market.  The government should defer implementation of NFSA in states that have not done end-to-end computerisation, have not put the list of beneficiaries online for anyone to verify and have not set up vigilance committees to check pilferage from the Public Distribution System.

Private Sector Engagement : Grain storage needs to be outsourced to private and government agencies like state-owned Central Warehousing Corporation and State Warehousing Corporations and private organisations. There is a need to encourage competition in this sector, so that the quality of storage improves.  FCI must focus on creating bulk grain handling godowns and upgrade the grain supply chain. Storage should be modernized – silos in place of stacking sacks in godowns, elimination of storage in the open . Transport and handling also should be modernized- containers and machinery, instead of gunny bags and loaders.  Private investment through PPP mode should be encouraged in logistics and bulk handling of foodgrains could be done through grain trains.

There is criticism that this will encourage backdoor entry of big private logistics companies, at the expense of FCI. But it has been clarified that FCI’s operations are not being privatized under the guise of this report, nor is it being divided.

Export : The committee has suggested that the food ministry should be quick to export grains or sell them in the local market as soon as FCI procures more than the requirement.

Taxation : The committee has proposed uniform tax of minimum 3 % and maximum 4 % on wheat and rice and the same to be included in the MSP. In Punjab, this tax rate on wheat and rice as of now is 14.5 percent.

 

However, it skips the issue of autonomy for FCI,  even though it acknowledges that FCI does not operate on business principles. The report is also silent on the role of the artiya (the middlemen) in the whole procurement process.

Barring some minor shortcomings, the report suggests a comprehensive overhaul of FCI . With these major changes in the procurement, stocking, movement and distribution of grains, the FCI will transform itself into an agency for innovations in food management.

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Why UNSC Reforms are required and significance for India

UN Security Council (UNSC), must reflect contemporary global realities.UNSC has been reduced to a tool to serve the caprice of its five permanent members. Due to its structural defects, he UNSC has never been capable of preventing the most destructive and deadly wars, many of which are catered by the countries entrusted with the veto. Russia’s armed intervetion in Ukraine, USA’s Iraq invasion are testimonies to this fact. As long as responsibility for the maintenance of peace and security is left to the whims of only the most powerful in the international order, the world cannot expect quality peacekeeping efforts. For this purpose the reform of the UN including the expansion of the UNSC in both permanent and non-permanent categories is crucial. To this end, the Government of India has been actively working along with other like-minded countries for building support among the UN membership for a meaningful restructuring and expansion of the UNSC.