‘Safeguard rights of online users’
It’s duty of state, SC tells government
•The state has a duty to ensure that subscribers of online service providers are not “entrapped” by them, the Supreme Court advised the government on Tuesday.
•The government responded that it was in the process of building a regulatory regime of a binding nature to protect user data.
•“State has a duty to protect the citizenry rights. Since service providers like WhatsApp and Facebook say we are giving it free, the state has to ensure that 160 million citizens who are using the service, are not entrapped in it,” a five-judge Constitution Bench headed by Justice Dipak Misra said.
•The court’s remarks came at the end of a day-long hearing on petitions contesting the constitutionality of the contract entered into between WhatsApp and Facebook on data sharing.
•The Bench asked if WhatsApp, an instant messaging platform, can impose any condition on its users here violating any part of the Constitution.
•K.K. Venugopal, counsel of Facebook, told the Bench that they were not sharing any sensitive or personal data and since India was shifting to digitisation, the service provided by WhatsApp was beneficial as it was end-to-end encrypted.
Palestine, Israel must coexist: Modi
Abbas reiterates demand for return to pre-1967 borders and East Jerusalem as capital
•Pitching for peace in West Asia, India on Tuesday urged that a future state of Palestine should coexist peacefully with Israel. However, visiting Palestinian President Mahmoud Abbas said that a sovereign state of Palestine should be built according to the pre-1967 borders and include East Jerusalem as the capital.
•“Since the days of our own freedom struggle, India has been unwavering in support of the Palestinian cause and we hope to see the realisation of a sovereign, independent, united and viable Palestine, coexisting peacefully with Israel. I have reaffirmed our position on this with President Abbas during our conversation today,” said Prime Minister Narendra Modi articulating India’s desire to find a permanent solution.
Dialogue the way
•“The challenges in West Asia can be dealt with, sustained by political dialogue and peaceful means. India hopes for an early resumption of talks between the Palestinian and the Israeli sides, for finding a comprehensive resolution,” Mr. Modi said.
•In his speech following delegation-level talks at Hyderabad House, the Palestinian President said the peace process received a boost following his meetings with Russian President Vladimir Putin and U.S. President Donald Trump. However, he reiterated that a future Palestinian state should be based on the map of Israel and Palestine that existed before the Six-Day War of 1967 in which Israel absorbed East Jerusalem.
•Competing Israeli and Palestinian claims over East Jerusalem, which is home to Jewish and Muslim holy sites, remain a major hurdle in the peace process.
•“We reiterate our position that the future state of Palestine should be based upon the pre-1967 borders and must include the entire East Jerusalem as the capital of the state,” President Abbas said.
•Mr. Abbas went on to thank India for contributing to capacity-building in the field of information technology in Palestinian territories.
•In an exclusive interview with The Hindu , President Abbas on Monday had called for international backing for the peace efforts and asked for India’s involvement.
India key to talks
•“In the case of India, we have always mentioned that we want India to be involved, besides Arab countries, EU, Russia and other members of BRICS,” Mr. Abbas had said, terming the Jewish settlements in the Palestinian territories a problematic issue.
•The exchange on the West Asian peace process is significant as Mr. Modi is likely to travel to Israel in July which will be the first visit by an Indian Prime Minister to the country since establishment of diplomatic ties in 1992.
•The delegations also signed agreements on visa exemption on diplomatic and official passports, sports and youth affairs, agriculture, health and IT.
New base, new basket
The revised IIP shows India may have been overstating the industrial slowdown in its economy
•The Index of Industrial Production (IIP), a critical economic indicator, has of late become a source of concern — sometimes unmerited — over the credibility of India’s statistics. The bellwether high-frequency indicator is a key input into making and assessing policies, particularly those pertaining to the manufacturing sector, inflation, interest rates and the flow of credit in the economy. But, in the past few years, the month-on-month IIP has shown excessively low, and even negative growth, which subsequently turned out to be out of sync with the actual manufacturing output growth measured through the Annual Survey of Industries (ASI). The survey for a financial year comes with a lag of about 24 months.
•The theoretical aim of the IIP is to capture the direction and the trend of industrial production in the country, not the absolute value of industrial production. Its chief utility is as an early indicator of turning points in the economy. The IIP has been failing in serving this purpose. The reason being that it was measuring industrial output using baskets of production items and producing entities that had remained unchanged since 2004-05. The standard procedure followed was that a list of items was constructed in the base year and for each item the producing entities were identified. This structure was frozen. The index was constructed with the output figures received month over month from the baskets of items and entities fixed in the base year. If an entity shut down, its output fell to zero. But since the basket was frozen no new entity could be taken in place of the zero-output one. Over time, an item, say calculators, may fall out of use and more smartphones may be consumed. The IIP was not equipped to capture such changes in the economy.
A more dynamic index
•Naturally, the IIP growth acquired a certain directional bias, which impaired its usefulness. To overcome the weaknesses, the IIP is being made more dynamic. First, the Central Statistics Office has updated its base year to 2011-12. The revision, the ninth such exercise since the original base year choice of 1937, is aimed at capturing the changes that have taken place in the industrial sector since 2004-05. New products have been included in the items basket, and those that have lost their relevance deleted. Renewable energy, for example, has been included in the electricity index. The expanded coverage — 809 items against 620 earlier, and a larger number of factories — is expected to make the IIP more representative.
•Second, instead of the periodic baskets revisions, a permanent standing arrangement is being put in place to make sure that the IIP remains representative. An ongoing process is to be instituted for monitoring and mapping into the index the changes taking place in the economy under which a technical committee will continuously review the item basket, the reporting entities and the method of coverage.
•The improvements in the statistical apparatus have been carried out on the recommendations of a committee that the United Progressive Alliance (UPA) government had constituted in 2012 under the chairmanship of late Saumitra Chaudhuri, a member of the Economic Advisory Council of Prime Minister Manmohan Singh. Several measuring difficulties remain, though. The process of physically collecting data from entities to establish the collection system, where no statutorily-mandated system of regularly reporting production is in place, is still an institutional challenge.
Righting the numbers
•The updated IIP offers new insights, the most important being that India may have been overstating the industrial slowdown in its economy. Whereas the average industrial output growth of the last five years (2011-12 to 2016-17) in the old IIP is 1.38%, in the updated series it is 3.8%. On the manufacturing front, the news gets even better. The average five-year growth has improved to 4.04% against 0.94% in the old IIP. Although the average growth in two of the five years in which UPA-2 was in office outpaced that in the three years of the incumbent National Democratic Alliance (NDA) government’s tenure. The performance — 4.2% versus 3.9% — challenges the narrative of the ‘policy paralysis’ characterising the dying years of Dr. Singh’s stint. It also tests the efficacy so far of Prime Minister Narendra Modi’s ‘Make in India’ initiative.
•The bad news is that the output growth of the infrastructure and construction sector has slowed down from 5.7% in 2013-14 to 3.8% in 2016-17 despite the NDA government’s sustained push to the infrastructure sector, including through substantial increases in targeted public spending, in the last three years. The updated IIP also shows a modest recovery in the capital goods sector, a barometer of the investment sentiment. From -3.6% in 2013-14, output growth in the sector improved to 1.9% in 2016-17.
•The main driver of growth in the economy remains consumption. Consumer durables grew 6.2% and non-durables 9% in 2016-17. The Seventh Pay Commission award to Central government employees and pensioners last year seems to have spurred consumption. The monthly figures have not been released, but the spurt could also have been triggered by hectic use of demonetised cash for acquiring consumer durables and non-durables.
•Demonetisation’s debilitating impact on manufacturing is visible in the updated monthly IIP for 2016-17. The average output growth for the seven months from April to October was 6.8%, and for the five months from November to March 2.28%. The IIP’s coverage by design is limited to the organised sector. The disruption in the unorganised sector is expected to get measured in the ASI.
•The base years of all the major macroeconomic indicators, the Gross Domestic Product (GDP) and the Wholesale Price Index, are now aligned — 2011-12. The revised IIP will be plugged into the GDP series. The revised GDP estimates are scheduled to be released on May 31.
Held at ransom
The malware attack this weekend must hasten moves towards global rules on cyber threats
•The menacing spread, starting last Friday, of the malicious software WannaCry, which has since infected thousands of computer systems in 150 countries, is a frightening reminder of the vulnerabilities of a connected world. The cyber-attackers who unleashed it, as yet unknown, have essentially used chinks in Microsoft’s outdated software to remotely gain access to computers of unsuspecting users so as to lock them out of their files. These attacks have been in the nature of what are called ‘ransomware,’ wherein attackers demand a ransom (usually in Bitcoins, which are tougher to trace than regular currency) to decrypt the files they have force-encrypted. Cyber risk modelling firm Cyence estimates the economic damage to be $4 billion, a figure that may not seem daunting for a global-scale disruption such as this one. But its spread has exposed the lack of preparedness among government and private institutions. The list of unsuspecting users who fell prey to the malware includes the U.K.’s National Health Service, German transport company Deutsche Bahn, courier delivery services company FedEx and carmaker Renault. Only some weeks earlier Microsoft had made available a patch to remove the chinks, something that raises doubts over whether even large institutions are complacent on cyber risks. That governments across the world went on alert after the outbreak of the global ‘epidemic’ is some consolation. So is the fact that Indian institutions have been largely unscathed by the malware until now. Things, however, could have been worse had a British researcher not registered a domain name hidden in the malware, thereby accidentally stopping its spread as also its momentum.
•While the state of preparedness is a cause for worry, the likely origin of WannaCry forces stakeholders to revisit a long-standing and uneasy question regarding the actions of governments. WannaCry has its origins in a tool developed by the National Security Agency in the U.S. that was dumped online by a group called the Shadow Brokers. A few days after the malware started spreading, Brad Smith, President and Chief Legal Officer of Microsoft, wrote on his blog that governments should treat it as “a wake-up call” and “consider the damage to civilians that comes from hoarding these vulnerabilities.” His point to governments is this: report vulnerabilities to vendors rather than exploit them. The U.S. assesses the balance between cybersecurity and national interest through what is called the Vulnerabilities Equities Process, wherein a review board makes a final decision on whether a ‘vulnerability’ needs to be reported or retained. President Donald Trump’s views on this process are not clear. Cyberthreats are only likely to grow, and the world needs to push for global rules on such issues. It is more than obvious now that cyber vulnerabilities have massive global implications.
‘National Employment Policy this year’
It will ensure shift from informal to formal jobs takes place in the country
•The Centre will frame a new sector-wise National Employment Policy in this financial year even as it grapples with low employment generation, Union Labour and Employment Minister Bandaru Dattatreya said.
Talks on
•“We will come out with a new National Employment Policy in the next five-six months after holding consultations with various ministries, including micro, small and medium enterprises, heavy industries, electronics and information technology, health, education, textiles and more importantly, commerce,” Mr. Dattatreya told The Hindu in an interview. “But first, we have to hold discussions within our own ministry to give it some shape”
•He said the policy’s thrust would be to ensure a transition from informal to formal jobs takes place in the country. “Jobs have come down temporarily. Employment is falling on a global level but in India, it has been marginal. Job creation is taking place in the informal sector, we need to get them into the formal fold,” he said.
•The pace of job creation fell to a six-year low in 2015 with 1.35 lakh new jobs being created compared with 4.21 lakh new jobs in 2014 and 4.19 lakh in 2013, according to a quarterly survey of industries conducted by Labour Bureau, under the Ministry of Labour and Employment. Another survey – Fifth Annual Employment-Unemployment Survey – of households conducted by Labour Bureau showed unemployment rate rising to a five-year high of 5% in 2015-16 compared with 4.9% in 2013-14 and 4.7% in 2012-13.
Informal employment
•At present, in India, around 92% of the workers are engaged in informal employment — those who are not covered by any social security law.
•The minister blamed the recent job cuts in the IT sector to U.S. President Donald Trump’s executive order issued last month to review the H1-B visa program, which aims at tightening visa norms for skilled workers and technology shifts.
‘Tough to solve jobs issue’
India needs to clock 8-10% growth for greater job creation
•India’s current employment challenge is particularly difficult as sectors that did well in generating jobs in the country’s previous economic boom years — information technology (IT), construction and agriculture – are in trouble now, Chief Economic Advisor Arvind Subramanian said on Tuesday.
•Stressing that the economy needs to clock 8% to 10% growth for greater job creation, the CEA said that the IT sector that “we thought would always be a dynamic sector for India” is ‘now the new problem.’
‘Easy to diagnose’
•“Employment is a very important question that the government is very focused on and takes very seriously. The problem is this – it’s relatively easy to diagnose that there is an employment problem. It’s actually really hard to say something that will satisfy the question,” Mr. Subramanian said. The only honest answer, the CEA said, is that many things need to be done to increase employment.
•“First, we need to get the economy growing at 8% to 10% rate because we know that if you have dynamism, it can create opportunities for employment. That is absolutely crucial… you can’t have employment growing if the economy is growing at 3-4%,” he said, stressing this requires investments in infrastructure building, a revival of private investments and a resolution of the banking sector’s problems.
•India’s boom period in the 2000s led to job creation in three sectors that did extremely well, Mr. Subramanian said after a public lecture at the Nehru Memorial Museum and Library.
•This included agriculture, construction and the IT sector. “Today, all these three sectors are challenged. We have to work on construction, we have to work on agriculture and of course, IT is now the new problem.”
‘Foreign food retailers can sell non-foods too’
PMO has assured FDI norms will be tweaked, says Badal
•By October, the Centre is expected to pave the way for multibrand foreign retailers to tap the Indian market, by allowing overseas investors in the food retail segment to offer ‘Made in India’ non-food items as well, according to Food Processing Minister Harsimrat Kaur Badal.
•The Prime Minister’s Office (PMO) had assured her ministry that the concerned foreign direct investment (FDI) norms would be tweaked as a ‘sweetener’ for foreign investors likely to attend a mega World Food Forum being held in the national capital this November, Ms. Badal said in an interview.
•“I have been told the decision would be cleared before World Food India Forum,” Ms. Badal said. “The PMO told me it will be done before World Food summit so October is the last date (but) I think it will be done well before that.”
•While India’s $600 billion retail sector, with 70% of it comprising food, is a ‘mind boggling’ proposition for foreign retailers grappling with stagnating growth in the developed world, the minister said that the food-only model was a challenge for them.
•India had opened up 100% FDI in multibrand food retail and food processing sectors in early 2016.
Employment generation
•“It’s equally important for employment generation. Today, we have got 50% of our youth under the age of 25 looking for jobs. This is not going to kill anybody’s market as we are only processing 10% of our food till now,” said Ms. Badal. The sector had seen a 40% jump in FDI since last year, she added.
•“They are all interested. But in the rest of the world, there’s a set format of food and other items and they replicate that business model from country to country.
•“Now, just food retail is not only something new, but they also have to rework their business plan,” she said.
Huge investment
•Investors had also pointed out that multibrand food retail ventures entailed a lot of investment in infrastructure but the margins had to be really small as one could not be viable with big margins on food, said the minister, who had earlier observed that investments worth $10 billion were waiting in the wings for the right policy framework.
•“So the little kirana shop next to them would be selling all imported goods and other items, but they can only sell food. So how do they compete with the small guy like that? This is a fair point,” Ms. Badal said, adding that she had flagged the issue with Prime Minister Narendra Modi.
•“Our focus is doubling the farmer’s income and today, the farmer is suffering because he doesn’t even have the basic storage facilities to hold his produce for 2-3 months and get a better rate,” the minister said, adding that food retailers would partner with farmers.
•“So if we were to put in a clause that whatever you are spending on retail outlet and whatever you spend on the farm-gate infrastructure, a small portion of that 20%-25% investment, you would be allowed to carry home care items, but those too which are manufactured in India so that it creates employment here,” she said. Even products like shampoos and oil included agricultural output, she added, elaborating on the rationale.
•For consumers, in any case, it was more convenient to buy food and small home care items in one place instead of going to different retailers, Ms. Badal added.
