📰 ‘Greying India must delay retirement’
Survey says the elderly population is expected to nearly double from 8.6% in 2011 to 16% by 2041
•India may have to raise the retirement age as the country sees a rapid increase in the size of the elderly population over the next two decades due to the slowing down of the population growth rate, according to the Economic Survey 2018-19.
•It is forecast that the population rate will grow less than 1% from 2021 to 2031 and under 0.5% from 2031 to 2041. This is primarily due to the fall in the total fertility rate (TFR), which is projected to decline between 2021-2041 and fall below replacement level fertility at 1.8 as early as 2021.
•The total fertility rate of 2.1 is called the replacement level fertility below which populations begin to decline. For India, the effective replacement level fertility is slightly higher than the normal benchmark due to the skewed gender ratio and is at 2.15-2.2. The current TFR in 14 out of the 22 major States is already below the effective replacement level fertility.
•At the State level, southern States as well as West Bengal, Punjab, Maharashtra and Himachal Pradesh have below replacement level fertility and will see TFR decline to 1.5-1.6 by 2021. And by 2031, all States are likely to see below replacement level fertility.
•The size of the elderly population, 60 years and above, is expected to nearly double from 8.6% in 2011 to 16% by 2041, whereas the population size of those between 0-19 years, which is on the decline, is likely to drop from as high as 41% in 2011 to 25% by 2041.
•This will throw new policy challenges such as provision for health and old-age care, access to retirement-related financial services, public pension funding, and retirement age, states the survey.
•“Increasing the retirement age for both men and women going forward could be considered in line with the experience of other countries. This will be key to the viability of pension systems and would also help increase female labour force participation in the older age-groups,” it suggests.
•Many countries such as the U.S., Germany and France have already raised the retirement age to reduce the burden on pension funding. The working-age population is expected to see a large increase leading to India’s demographic dividend peaking around 2041, when the share of those in the age group of 20-59 is expected to hit 59%. The survey highlights that this will mean additional jobs will have to be created to keep pace with annual increase in working-age population of 9.7 million during 2021-31 and 4.2 million during 2031-41.
100% safe disposal of waste targeted.
•With the Centre claiming that 99.2% of rural India is now open defecation free, the next big goal on the Swachh Bharat journey is the 100% safe and scientific disposal of solid and liquid waste, according to the Economic Survey 2018-19.
•However, it emphasises that the large resources needed to reach this milestone will need to be met through crowd and corporate funding, private partnerships and innovative financing mechanisms along with government allocations.
•Progress in the first phase of the Swachh Bharat Abhiyan, focussing on toilet construction and use, had a positive impact on the health, economy and environment of rural India, said the report, citing a number of studies. However, these benefits will not be sustainable if solid and liquid waste management is ignored.
•“Currently, many States are not concentrating enough on this aspect which could pull us back to where we were a few years back. Scientific techniques for the safe and effective disposal of waste should be the next on the agenda for this mission,” says the survey.
•According to it, the scientific disposal of waste has a noticeable impact on “social development”, referring to the sanitation workers and manual scavengers who now work to dispose of waste, mostly in unscientific and unsafe ways.
•Some of the areas which must be dealt with in this next phase are sewer construction and water availability, scientific techniques for waste disposal, treatment of industrial effluence, drain bio-remediation, river surface cleaning, sustained rural sanitation and monitoring of villages, says the survey.
•“As the resource requirements are large, there is a need to facilitate and sustain innovative financing mechanisms by exploring the suitability of various financial instruments in specific contexts and interventions,” it says.
•Some examples are micro-financing, concessional loans, private partnerships, corporate social responsibility, and crowd funding aligned with local government financing.
•While these can ensure a smooth flow of funds for the procurement of various scientific technologies for waste disposal and mass awareness, governments must also “assign significant weight to the allocation of adequate resources as improvement in sanitation is one of the key determinants for the wider economic development,” says the survey.
Mindset change
•Apart from financial resources, mindset change is the other major ingredient required for sustained progress in sanitation.
•The swachhagrahis or village level ambassadors who have already been recruited for Phase 1 of the programme are key to maintaining momentum, it says, in keeping with its overall thrust on leveraging behavioural economics.
📰 Economic Survey moots central welfare database of citizens
‘Information can be used to improve targeting in schemes’
•The Economic Survey 2018-19, tabled in Parliament on Thursday, pitched for setting up a central welfare database of citizens — by merging different data maintained by separate Ministries and departments — which can be tapped for enhancing ease of living for citizens, particularly the poor.
•While the Survey pointed out that governments can create data as a public good within the legal framework of data privacy, it added that care must also be taken not to impose the “elite’s preference of privacy on the poor, who care for a better quality of living the most.”
Stringent safeguards
•It also recommended granting access to select database to private sector for a fee, given that “stringent technological mechanisms exist to safeguard data privacy.”
•The Survey noted that there had been some discussions around the “linking” of datasets, primarily through the seeding of an Aadhaar number across databases such as PAN database, bank accounts and mobile numbers. However, it clarified that the linking is “one-way.” For example, banks can use the tokenised Aadhaar number to combine duplicate records and weed out benami accounts, but this does not mean that the UIDAI or government can read the bank account information or other data related to the individual. “While private sector does a good job of harnessing data where it is profitable, government intervention is needed in social sectors of the country where private investment in data remains inadequate,” the Survey said.
•These recommendations come at a time when India is working on finalising its personal data protection policy.
•“The principle is that most data are generated by the people, of the people and should be used for the people,” it said.
•The Survey highlighted that the governments already held a rich repository of administrative, survey, institutional and transactions data about citizens, but these data were scattered across numerous government bodies. Merging these distinct datasets would generate multiple benefits with the applications being limitless.
•The government could utilise the information embedded in these distinct datasets to enhance ease of living for citizens, enable truly evidence-based policy, improve targeting in welfare schemes, uncover unmet needs, integrate fragmented markets, bring greater accountability in public services and generate greater citizen participation in governance, etc.
•The datasets talked about inclusion of administrative data such as birth and death records, pensions, tax records, marriage records; survey data such as census data, national sample survey data; transactions data such as e-national agriculture market data, UPI data, institutional data and public hospital data on patients.
•On granting access to the public sector, the Survey said, “Consistent with the notion of data as a public good, there is no reason to preclude commercial use of this data for profit… Although the social benefits would far exceed the cost to the government, at least a part of the generated data should be monetised to ease the pressure on government finances.”
📰 Talking sanctions, endangering peace
The Trump administration’s successive punitive actions against Iran can only be interpreted as a desire for direct conflict
•More than a year ago, the U.S. unilaterally abrogated the Joint Comprehensive Plan of Action (JCPOA) and began to squeeze the Iranian economy using sanctions. The latest round of sanctions were announced in June. Iran announced a week later that it had exceeded a limit set by the JCPOA on its stockpile of nuclear fuel.
•The U.S.-Iran conflict is often portrayed in the media as one that involves two flawed actors struggling for supremacy on a complex West Asian stage. But a closer look reveals a simpler underlying reality: the Donald Trump administration is using the U.S.’s clout in an old-fashioned attempt to assert the country’s hegemony; Iran is just doing whatever it can to resist U.S. pressure.
The Shah connection
•The roots of this dispute can be traced back to 1953, when the Central Intelligence Agency orchestrated a coup to remove Iran’s elected Prime Minister, Mohammad Mossadegh. After instituting the rule of Shah Mohammad Reza Pahlavi, the U.S. encouraged him to establish a nuclear programme.
•The U.S. built Iran’s first nuclear reactor in 1967. The Shah was clear that his ambitions went beyond nuclear energy, and extended to nuclear weapons. In 1974, he explained that Iran would acquire nuclear weapons “without a doubt, and sooner than one would think.” Nevertheless, the West continued to provide nuclear technology to his government.
•After the Shah was toppled in 1979, the new government, under Ayatollah Ruhollah Khomeini, cancelled his plans for a large nuclear-energy sector, retaining only those facilities that had already been established. Khomeini also declared that nuclear weapons and other weapons of mass destruction (WMDs) were haram — forbidden in Islam. Whatever one may think about Khomeini’s government, his spiritual injunctions were taken very seriously. When Iraq attacked Iran with chemical weapons, with the tacit support of the Ronald Reagan administration, Tehran refrained from responding in kind despite having the requisite technology.
•It is possible that during the Iran-Iraq war, some elements within the Iranian establishment started exploring the possibility of developing a nuclear deterrent. Even if this was the case — and the evidence on the matter is far from conclusive — these activities were definitely stopped by 2003. In the same year, Khomeini’s successor, Ayatollah Ali Khamenei, issued an unambiguous fatwa against nuclear weapons.
•Soon after invading Iraq on the false pretext that it had WMDs, the U.S. attempted to build a similar narrative around Iran, which had established a modest programme to enrich uranium to fuel its existing reactors. The U.S. alleged that the fuel was intended for a bomb. These allegations were undercut by U.S. intelligence agencies themselves who reported that “in fall 2003 Iran halted... nuclear weapons... activities”. In 2015, after a multi-year investigation, the International Atomic Energy Agency (IAEA) went further, declaring that “activities relevant to... a nuclear explosive... did not advance beyond feasibility and scientific studies” and, as a “coordinated effort”, were only carried out “prior to the end of 2003”.
•In spite of these facts, successive U.S. administrations imposed sanctions on Iran, demanding that it completely halt uranium enrichment. It was only during President Barack Obama’s second term that the U.S. sought a temporary truce, leading to the JCPOA.
•The JCPOA recognised Iran’s right to maintain a civilian nuclear programme, but placed significant restrictions on its size and scope for 10 to 15 years. Most importantly, Tehran reiterated that “under no circumstances” would it “ seek… nuclear weapons.” The IAEA was granted unprecedented powers to inspect Iran’s nuclear activities, and has repeatedly verified Tehran’s compliance.
•So, when the Trump administration ceased to abide by the JCPOA last year, this could only be interpreted as a message that the U.S. was not interested in arms control, but rather in initiating a direct conflict with Tehran.
An economy devastated
•Over the past year, the U.S. has made threats, mobilised troops and warships, and provoked Tehran by flying military planes dangerously close to its border. However, Washington’s primary strategy has been to use economic measures as a weapon. It has prevented foreign entities from trading with Iran, devastating the Iranian economy.
•India has also been hurt by these policies. Until recently, Iran was one of India’s largest oil suppliers. Even though Iranian oil came with discounts on freight, and favourable terms of payment, the Indian government obeyed Washington’s dictates and stopped purchasing oil from Iran in May.
•India’s investments in Iran’s Chabahar port are nominally exempt from U.S. sanctions, but they have been damaged anyway since suppliers are reluctant to deliver equipment. The sanctions have also prevented ONGC Videsh, which discovered the Farzad B gas field off Iran’s coast, from pursuing its investments there.
•Further, New Delhi has refused to explore several available strategies that could ameliorate the impact of sanctions. China has maintained some commercial ties with Iran by routing transactions through the Bank of Kunlun. U.S. sanctions on this bank have been ineffective since it is carefully insulated from the U.S. financial system. European countries have attempted to bypass sanctions through a special mechanism called INSTEX.
•It is revealing that India has failed to join any of these initiatives or to develop its own solution. A few months ago, Prime Minister Modi boasted that India’s foreign policy had become “fearless, bold and decisive”. Is this fearlessness restricted to India’s interactions with its smaller neighbours, or is his government also willing to stand up to the biggest bully in the room and protect India’s interests from Washington’s destructive policies?
📰 Economic Survey lays out blueprint for $5 trillion economy
Notably, the Survey made the point that data must be viewed as a public good and used in a concerted way to deliver services.
•The Economic Survey 2019 presented by Chief Economic Adviser (CEA) Krishnamurthy Subramanian focusses on moving to a “virtuous cycle” of savings, investments and exports to transform India into a $5 trillion economy in the next five years.
•According to the survey, India’s GDP is forecast to expand by 7% in fiscal 2019-20, slightly higher than the 6.8% in 2018-19.
•In his preface to the survey, the CEA said the team had been guided by a ‘blue sky’ thought process, an unfettered approach to thinking about the appropriate economic model for India.
•“When the economy is in a virtuous cycle, investment, productivity growth, job creation, demand and exports feed into each other and enable animal spirits in the economy to thrive,” the survey’s authors wrote. “In contrast, when the economy is in a vicious cycle, moderation in these variables dampen each other and thereby dampen the animal spirits in the economy.”
•In his first Survey, Dr. Subramanian highlighted the fact that private investment was a key driver for demand, capacity, labour productivity, new technology adoption, and for job creation.
•“What we have tried to talk about is that investment is really critical; related to that is that investment by the private sector cannot happen unless there is no crowding out because of the government,” the CEA said at a press conference.
•Further, he said, implicit in the emphasis on private investment was the fact that the government had and would stick to its fiscal consolidation glide path. It has committed to a fiscal deficit of 3.4% of GDP in 2019-20, and 3% each in the subsequent two years.
Fiscal glide path
•“Implicit in the emphasis on private investment, what we are also talking about is sticking to the glide path, which over the last five years we have done a very good job of,” Dr. Subramanian said. “And therefore we anticipate that is the path we would continue on. We will be sticking to the fiscal path.”
•Moving the economy into a virtuous cycle would require the adoption of certain practices and norms on data, legal reforms and policy certainty, and some micro-economic aspects such as boosting MSMEs and reducing the cost of capital, he said.
•Notably, the Survey made the point that data must be viewed as a public good and used in a concerted way to deliver services.
•It said that as data of societal interest is generated by the people, it can be created as a public good within the legal framework of data privacy.
•The government must intervene in creating data as a public good, especially of the poor and in social sectors.
•Interestingly, the Survey talked about merging the distinct datasets held by the government into a single dataset, which would generate “multiple benefits.”
•Another key area of focus for the Survey was the MSME sector and how to make it grow so as to boost profit creation, job creation, and enhance productivity.
•It noted that ‘dwarf’ firms (with less than 100 workers), accounted for more than 50% of all organised firms in manufacturing by number.
•Despite this, their contribution to employment was just 14% and to productivity a mere 8%. Large firms, on the other hand, are just 15% in number but account for 75% employment and close to 90% of productivity. Therefore, there is a need to “unshackle” MSMEs and enable them to grow into larger firms. Regarding employment, the Survey pointed out that the general apprehension was that a high investment rate would mean labour would be substituted out by capital. This, the authors said, was an incorrect assessment as shown by the Chinese model.
•“The Chinese experience illustrates how a country with the highest investment rates also created the most jobs,” the Survey’s authors wrote.
•When the full value chain is examined, Dr. Subramanian explained in the press conference, then it becomes clear that capital investment fosters job creation since capital goods production, research and development, and supply chains also generate jobs.
•The Survey also pointed to the need for labour reform, highlighting the fact that factories in States that have flexible labour markets are much more productive than those in States with rigid laws.
📰 Polavaram deadline pushed back to 2022
Coffer dam is the first priority, says project authority CEO
•The Polavaram multi-purpose project, which is considered as the lifeline of Andhra Pradesh, is likely to be completed only by 2022.
•An indication to this effect was made by Polavaram Project Authority (PPA) Chief Executive Officer (CEO) Rajendra Kumar Jain after emerging from a review meeting here on Thursday. The PPA team would visit the site on Friday.
•Mr. Jain said work on the coffer dam was partially completed, and a target was set to complete it before floods hit that area. It was estimated that about 10,000 cusecs of flood would reach the coffer dam this year. The coffer dam, however, would not be affected, he added.
•The estimates committee had to examine the increase in project expenditure. The committee has asked the State government to submit a few more details. The Central government had already released ₹ 6,700 crore for the project, he said.
Audit exercise
•Mr. Jain said the State government was yet to complete certain formalities with regard to submission of bills to the Centre, which initiated an audit into the expenditure incurred on the project in 2014. An audit relating to the expenditure of ₹1,300 crore on relief and rehabilitation (R&R) was still going on. The audit relating to the expenditure incurred by the State government on the project before it was declared a national one was also yet to be completed, he said.
•To a question, Mr. Jain said he had no information on reverse tendering for the project. The PPA was in no way concerned with the tenders. The State government would take a call on it, he added.
•The previous government announced that water would be released through gravity by December 2018 and the project would be completed December 2019.
•The Environment Ministry recently extended the construction period by two years. In 2011, the Union government asked the A.P. government to stop construction.
•In 2014, the NDA government declared Polavaram a national project and the ministry kept the ‘stop work order’ in abeyance to facilitate work.
📰 Well-designed minimum wage system required to reduce wage inequality, says Economic Survey 2018-19
Economic Survey 2018-19: calls for streamlining the complex mechanism.
•A well-designed and streamlined minimum wage system is required to reduce wage inequality in the country, the Economic Survey says.
•Currently, the minimum wage system, under the Minimum Wages Act, 1948, in India is complex, with 1,915 different minimum wages defined for different job categories across States, the survey said. Despite the complex system, workers were still falling through the gaps, it said.
•“One in every three wage workers in India is not protected by the minimum wage law,” it said, citing the International Labour Organisation.
•In its 2018 India Wage Report, the ILO said 66% of wage workers in “scheduled employment” were covered under the minimum wage system. For instance, the survey stated, domestic workers were covered under minimum wage laws in only 18 States and union territories. It also pointed out that while the law did not discriminate between men and women, analysis of different wages showed a bias.
•“For instance, women dominate in the category of domestic workers while men dominate in the category of security guards. While both these occupations fall within the category of unskilled workers, the minimum wage rate for domestic workers within a State is consistently lower than that for the minimum wage rates for security guards,” the survey said.
•Apart from increasing the ambit of the minimum wage system, it recommended deciding minimum wages on the basis of skills and split across geographical regions. With the government in the process of bringing the Code on Wages Bill in Parliament, the survey said the rationalisation of minimum wages proposed by the Bill should be supportedThe code will bring together the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 into a single legislation.
•The survey suggested the government should notify a “national floor minimum wage” across five regions, after which States can fix their own minimum wages, but not lower than the floor wage.
•This, it said, would bring uniformity and make States “almost equally attractive from the point of view of labour cost for investment as well as reduce distress migration.”
•The floor wage is currently non-statutory.
•The Code on Wages Bill should consider deciding minimum wages based on skill, with different wages for unskilled, semi-skilled, skilled and highly skilled, and on region.
•“The proposed Code on Wages Bill should extend applicability of minimum wages to all employments/workers in all sectors and should cover both the organized as well as the unorganized sector.”
•In addition, the survey suggested that a mechanism for regular adjustment of minimum wages should be developed, with a national-level dashboard at the Centre that States can access and update. It said that an easy to recall toll-free number to lodge complaints about non-payment of minimum wages should be publicised.
•“A simple, coherent and enforceable Minimum Wage System should be designed with the aid of technology as minimum wages push wages up and reduce wage inequality without significantly affecting employment. An effective minimum wage policy is a potential tool not only for the protection of low paid workers but is also an inclusive mechanism for more resilient and sustainable economic development,” the survey said.
📰 No train collisions in 2018-19, fire incidents rise: Economic Survey
Derailments decline to 46 from 54
•While the incidents of train collisions came down to zero and those of derailments declined to 46 during last year, occurrence of fire in trains went up to six, according to data provided in the Economic Survey 2018-19.
•The category-wise break-up of consequential train accidents shows that the incident of collisions has come down to zero in 2018-19 from three in 2017-18, while those of derailment declined to 46 from 54 in the previous year. However, incidents related to fire in trains increased to six in the year 2018-19 as against three in 2017-18, the survey said.
•The total number of train accidents came down from 104 in 2016-17 and 73 in 2017-18 to 59 in 2018-19.
•Additionally, the survey said that in 2018-19, Indian Railways carried 1221.39 million tonnes of revenue earning freight, an increase of 61.84 million tonnes or 5.33% over 2017-18.
•The revenue earning freight loading by Indian Railways during 2017-18 was placed at 1159.55 million tonnes as against 1106.15 million tonnes during 2016-17, up 4.83%.
•“There is an increase of 2.09% in the number of passengers carried by railways during 2017-18 as compared to 2016-17 and 0.64% increase in 2018-19 as compared to 2017-18,” the survey said.
📰 Economic Survey: shift focus to water productivity
Survey calls for efficient ways of water use by farmers to avert the looming crisis
•The Economic Survey 2018-19 has said as far as agriculture is concerned, the country should shift its focus from land productivity to irrigation water productivity and on devising policies to incentivise farmers to adopt efficient ways of water use.
•This should become a national priority to avert a looming water crisis.
•Agriculture remains the predominant occupation in terms of number of people employed. Also, agriculture is dependent highly on water. So, appropriate mechanism needs to be framed for economical use of water among small and marginal farmers, said the Survey.
•“The cropping pattern in India is highly skewed towards crops that are water-intensive. The incentive structures like minimum support price, heavily subsidised electricity, water and fertilizers have played a significant role in the misalignment of crop patterns in the country,” said the Survey, adding that the water guzzlers, paddy and sugarcane, consume more than 60% of irrigation water available in the country, reducing water availability for other crops.
•The survey said States such as Tamil Nadu, Karnataka, Maharashtra and Andhra Pradesh, which have high land productivity, tend to have very low irrigation water productivity, reflecting inefficient use of water and the need to re-calibrate cropping pattern.
•“Adopting improved methods of irrigation and irrigation technologies will have a critical role in increasing irrigation water productivity,” it said.
📰 Arctic mission will trap scientists in ice to study climate
Scientists from 17 nations will take part in the year-long mission as they anchor the ship to a large piece of Arctic sea ice to study climate change
•In a couple of months, the German icebreaker RV Polarstern, a hulking ship will set out for the Arctic packed with supplies and scientific equipment for a year-long mission to explore the planet’s frigid far north. The icebreaker will be the base for scientists from 17 nations studying the impact of climate change on the Arctic and how it could affect the rest of the world.
•Scientists plan to sail the ship into the Arctic Ocean, anchor it to a large piece of sea ice and allow the water to freeze around them, effectively trapping themselves in the vast sheet of white that forms over the North Pole each winter. The organizers say that the project is unprecedented in scale and ambition.
•As temperatures drop and the days get shorter, they’ll race against time to build temporary winter research camps on the ice, allowing them to perform tests that wouldn’t be possible at other times of the year or by satellite sensing.
•“So far we have always been locked out of that region and we lack even the basic observations of the climate processes in the central Arctic from winter. We are going to change that for the first time,” said Markus Rex of Germany’s Alfred Wegener Institute, who will lead the 140-million euro ($158 million) expedition. The mission’s aim to understand global warming means there’s no time for national rivalry, said Rex.
•Scientists from United States, China, Russia and other countries will be rotating every two months as other icebreakers bring fresh supplies.
•By combining measurements on the ice with data collected from satellites, scientists hope to improve the increasingly sophisticated computer models for weather and climate predictions. “We can do a lot with robotics and other things but in the end the visual, the manual observation and also the measurement, that’s still what we need,” Marcel Nicolaus, a German sea ice physicist who will be part of the international mission, said.
•The mission has received funding from U.S. institutions such as the National Science Foundation, the Department of Energy, the National Oceanic and Atmospheric Administration, and NASA.
•Once the Polarstern is carried into the depth of the Arctic night, far off the coast of northern Greenland, the scientists will be on their own, making any emergency evacuation almost impossible. Nonetheless, the ship has a fully equipped medical station to avoid any calamity on board, said Verena Mohaupt, a logistics expert who has prepared elaborate safety measures for the ship.
•The MOSAiC mission, which stands for Multidisciplinary drifting Observatory for the Study of Arctic Climate, comes about 125 years after Norwegian explorer Fridtjof Nansen first managed to seal his wooden expedition ship, Fram, into the ice during a three-year expedition to the North Pole.
•Scientists now believe that the cold cap that forms each year is key to regulating weather patterns across the Northern Hemisphere. Mr. Rex cited the polar vortices that blasted cold air as far as Florida last winter and the early summer heat wave in Europe as prime examples of the impact.
•“The dramatic warming of the Arctic doesn’t stay in the Arctic. We as scientists, I think, have the obligation to produce the robust scientific basis for political decisions,” Mr. Rex said, adding that understanding the processes is crucial for world leaders to tackle climate change effectively.
📰 Can the government help create jobs?
Expansion of public employment and a nationalskilling programme could boost employment
•Data released by the Labour Ministry show that the unemployment rate in 2017-18 was 6.1%, arguably the highest in 45 years. The Periodic Labour Force Survey (PLFS) findings have been the subject of intense scrutiny and debate ever since a leaked report in January revealed a surge in joblessness as well as a drop in the labour force participation rate. In a conversation moderated by Suresh Seshadri, Jayati Ghosh and Ajit Ranade discuss the issue. Edited excerpts:
Dr. Ranade, how much confidence do you place in the PLFS data and what do you draw as the key conclusions from it?
•Ajit Ranade: This was started as a pilot project about two years ago and the purpose was to get a much more granular and in-depth understanding of the labour market. And there was a change in methodology, from sampling based on expenditure categories, which was done by the National Sample Survey (NSS), to education status. So, of course this is a very welcome initiative, because we need better data on the labour market. As far as how much confidence we have, since this is the best we’ve got, I think we have to use this data. I’m sure it will be fine-tuned and perhaps the numbers will become more reliable, but as such the numbers do tally with other indicators of the labour market conditions or the economy’s condition.
Dr. Ghosh, you had in a blog post pointed to how the PLFS data coheres with other estimates including those of the CMIE. How do you then view opinions that posit that the unemployment rate is painting an inaccurate picture when viewed in the backdrop of rising school and college enrolment?
•Jayati Ghosh: Many of the criticisms of the PLFS survey are actually not very well informed because they are suggesting that the results are not comparable with the earlier large sample surveys of the NSS. The sampling method has not changed; it’s never been a stratified sample, it’s always been a random sample of households and it always tries to capture as many different forms and levels of education, occupation and so on and so forth. That’s the point of the sample.
•The PLFS is different because it was trying to get quarterly data: that is, how does the employment of the same family vary across every quarter, and that is very important and would have been very useful. However, what the earlier NSS used to do was to take just one quarter for each household and extrapolate to that for the whole year. If you take the same PLFS data and do that, you get completely comparable data. The PLFS will give us slightly better estimates of how the same family, the same household, responds over a period — over four quarters of the year: do they stay in employment, do they lose employment, does it go from casual to regular and so on and so forth. In that sense, it’s a better survey. The trouble is that it was really meant to be continuous. We were not supposed to have any gaps in it at all. So, not only did we get only one year’s data but we then didn’t get that for a very long time because it was suppressed.
•But, essentially, what it is showing us fits very well with all the other unfortunate indicators, which are that there is a real problem of divergence of output growth and employment in the country. Unemployment actually reflects those who are in the labour force. If you are in education, you are simply not in the labour force. Those who say, “Oh, it doesn’t capture the fact that more and more people are in education” don’t know what they’re talking about. Because the unemployment rate is the ratio of those who are actually seeking work to all of those who are either employed or seeking work. If you are in education or training, you are not in the labour force. The high unemployment rate, however, does possibly reflect the impact of previous education, which is, and that shows in the data, the more educated you are, the more likely you are to be unemployed. The highest unemployment rates are found among the tertiary educated, that is, those who have done beyond high school, and that reflects the fact that you’re then not willing to take just any job; that you will actually try and wait and hope to get something that, at least, is vaguely related to your qualifications.
If one accepts the premise that improved access to education has led to a more aspirational youth segment, which in turn is loath to work in low remuneration jobs, how do we tackle the problem?
•AR: This is a very big key challenge to having adequate, good-quality, well-paying jobs and this is a very large agenda. But since you asked me what would help, then one can think of multiple things, each of which is probably a small step but it does help. For example, setting up an enterprise. As you know, in India there are perhaps 60 million odd enterprises, and mostly in the unregistered sector. And out of the 60 million only about one, one-and-a-half million, 1.2 million actually contribute towards Provident Fund or ESI [Employees’ State Insurance]. So, a very large proportion is in the unregistered or informal sector. So, as a first step, perhaps we can make it easy for these firms to get registered, or to comply. So, the big, big challenge is in the ease of doing business, setting up businesses, getting them registered. You have multiple registrations — you need to register for GST, for ESIC [ESI Corporation], for Provident Fund. There are probably dozens and dozens of registrations. This just makes it very hard for the whole process, to set up and start employing people. Then, you have this thing about on-the-job training, that workers need to be skilled but employers don’t want to invest in skilling. We need a portable national programme where you acquire apprenticeships in one firm, you solve this problem of underinvestment in skilling by individual firms, so that is a very big agenda. But this is a huge challenge, how to get firms to hire in bigger numbers and how to get them a little more into the formal, registered sector.
Dr. Ghosh, is the situation of decades-high joblessness more a result of the economy’s trajectory or an outcome of government policies?
•JG: It’s clearly both. This is a process that’s been ongoing for about 15 years, this separation of economic activity and job creation. So, I think it’s a deeper structural problem and part of the difficulty that I am having with the current government is that whenever you talk about joblessness, they seem to see this as a political attack, whereas this is really an issue of economic policy that has deeper roots.
•Now, in terms of what you do about it, I think some of the issues that Dr. Ranade mentioned are certainly valid, but I would argue that you also need a very large push in terms of the expansion of public employment. And there are two reasons for this. One, public employment has very obvious, standard multiplier effects, which are fairly pronounced in a country like India, and we know that we are hugely lacking in terms of the public services that we provide our people.
•If you look at the average of public employees per population, which is a kind of indicator of what public services you’re providing: globally the average is 3.5 per 100 people, in Europe it’s more like 6 per 100, in Scandinavia it’s as high as 8 per 100, in India it’s less than 2 per 100. We are under-providing public services. It’s not just in health and education. If you actually bring public services up to a minimum level that is required of, let us say, even a lower middle-income country, Kenya, you would require a tripling of public employment. That, in turn, has massive multiplier effects. All these people who you pay will get incomes that they will go out and spend, and when they spend they will create demand; there’s a huge paucity of demand in the economy. With that demand, you will get the emergence of new activities, which will then generate the kind of entrepreneurs that Dr. Ranade was talking about and then if there are start-ups, if there are micro entrepreneurs, they will have a market to cater to. In other words, you really have to have a big employment push from the government.
Dr. Ghosh, this talk about the need for reforms to labour legislation, has it been a little wrong-headed? Instead of focusing on easing restrictions on hire and fire and contractual hiring norms, should we move towards ensuring more formalisation, say of high-volume job-creating sectors like construction, with more supportive laws? There are some laws, but I think it’s at the State level and not all of them have been implemented well.
•JG: You put your finger on it. None of them is enforced. We have actually pretty good legislation for construction workers; we have a number of laws and regulation for various other workers. Mostly they are not implemented. On the other hand, you do have inspector raj of a most terrible kind for small and micro-entrepreneurs. It’s a peculiar combination of the worst of all possible worlds, whereby the legislation and things that would actually protect workers are simply not enforced, and all the kinds of things, the flexibilities that small producers do need are not allowed to them or rather they’d have to pay massive bribes to be able to take advantage of any kind of flexibility.
•Whether it is your street vendor or it is a small person running a small factory or a small service provider, all of them have to face the rather oppressive hand of the state in different ways, which doesn’t really help them in terms of improving their productivity. Now, does that mean that we should just allow the freedom to hire and fire? I frankly think that’s a red herring. I mean, factories do what they want anyway, this is all nonsense that they cannot expand. I will take you to factories in the National Capital Region where more than half of their workforce are actually daily wagers and do not have a permanent contract. So, this notion that factories can’t expand, or employers can’t expand because of labour laws, I think it’s completely off track.
•AR: On labour laws, I think we have to move towards a system where the laws protect the worker but not the job. So, worker protection is paramount but not job protection.
•JG: I would argue that at the moment they protect neither.
Lastly, if there’s one single key intervention that the government can do to create jobs, what would be your prescription?
•JG: Fill the vacancies [in the government sector], but expand good quality public employment.
•AR: I would support filling up the vacancies, which are more than two million. But also, a national-level apprenticeship programme with portability, subsidised and well-defined accreditation, which you can take to any part of India.
📰 Expanding India’s share in global space economy
ISRO should embrace a civilian identity and, aided by legislation, form partnerships with the industry and entrepreneurs
•From a modest beginning in the 1960s, India’s space programme has grown steadily, achieving significant milestones. These include fabrication of satellites, space-launch vehicles, and a range of associated capabilities.
•Today, the Indian Space Research Organisation (ISRO)’s annual budget has crossed ₹10,000 crore ($1.45 billion), growing steadily from ₹6,000 crore five years ago. However, demand for space-based services in India is far greater than what ISRO can supply. Private sector investment is critical, for which a suitable policy environment needs to be created. There is growing realisation that national legislation is needed to ensure overall growth of the space sector. The draft Space Activities Bill introduced in 2017 has lapsed and the government now has an opportunity to give priority to a new Bill that can be welcomed by the private sector, both the larger players and the start-ups alike.
ISRO’s thrust areas
•Since its establishment in 1969, ISRO has been guided by a set of mission and vision statements covering both the societal objectives and the thrust areas. The first area was of satellite communication, with INSAT and GSAT as the backbones, to address the national needs for telecommunication, broadcasting and broadband infrastructure.
•Gradually, bigger satellites have been built carrying a larger array of transponders. About 200 transponders on Indian satellites provide services linked to areas like telecommunication, telemedicine, television, broadband, radio, disaster management and search and rescue services.
•A second area of focus was earth observation and using space-based imagery for a slew of national demands, ranging from weather forecasting, disaster management and national resource mapping and planning.
•These resources cover agriculture and watershed, land resource, and forestry managements. With higher resolution and precise positioning, Geographical Information Systems’ applications today cover all aspects of rural and urban development and planning. Beginning with the Indian Remote Sensing (IRS) series in the 1980s, today the RISAT, Cartosat and Resourcesat series provide wide-field and multi-spectral high resolution data for land, ocean and atmospheric observations.
•A third and more recent focus area is satellite-aided navigation. The GPS-aided GEO augmented navigation (GAGAN), a joint project between ISRO and Airports Authority of India, augmented the GPS coverage of the region, improving the accuracy and integrity, primarily for civil aviation applications and better air traffic management over Indian airspace. This was followed up with the Indian Regional Navigation Satellite System (IRNSS), a system based on seven satellites in geostationary and geosynchronous orbits.
•It provides accurate positioning service, covering a region extending to 1,500 km beyond Indian borders, with an accuracy greater than 20 metres; higher accuracy positioning is available to the security agencies for their use. In 2016, the system was renamed NavIC (Navigation with Indian Constellation).
•With growing confidence, ISRO has also started to undertake more ambitious space science and exploration missions. The most notable of these have been the Chandrayaan and the Mangalyaan missions, with a manned space mission, Gaganyaan, planned for its first test flight in 2021. These missions are not just for technology demonstration but also for expanding the frontiers of knowledge in space sciences.
•None of this would have been possible without mastering the launch-vehicle technology. Beginning with the Satellite Launch Vehicle (SLV) and the Augmented Satellite Launch Vehicle (ASLV), ISRO has developed and refined the Polar Satellite Launch Vehicle (PSLV) as its workhorse for placing satellites in low earth and sun synchronous orbits. With 46 successful missions, the PSLV has an enviable record. The Geosynchronous Satellite Launch Vehicle (GSLV) programme is still developing with its MkIII variant, having undertaken three missions, and is capable of carrying a 3.5 MT payload into a geostationary orbit. Compare this to the French Ariane 5, which has undertaken more than 100 launch missions and carries a 5 MT payload, with an Ariane 6 in the pipeline for 2020.
•Over the years, ISRO built a strong association with the industry, particularly with Public Sector Undertakings (PSUs) like Hindustan Aeronautics Limited, Mishra Dhatu Nigam Limited and Bharat Electronics Limited and large private sector entities like Larsen and Toubro, Godrej and Walchandnagar Industries. However, most of the private sector players are Tier-2/Tier-3 vendors, providing components and services. The Assembly, Integration and Testing (AIT) role is restricted to ISRO, which set up Antrix, a private limited company, in 1992 as its commercial arm to market its products and services and interface with the private sector in transfer of technology partnerships.
•Today, the value of the global space industry is estimated to be $350 billion and is likely to exceed $550 billion by 2025. Despite ISRO’s impressive capabilities, India’s share is estimated at $7 billion (just 2% of the global market) covering broadband and Direct-to-Home television (accounting for two-thirds of the share), satellite imagery and navigation. Already, over a third of transponders used for Indian services are leased from foreign satellites and this proportion will rise as the demand grows.
•Developments in Artificial Intelligence (AI) and big data analytics has led to the emergence of ‘New Space’ — a disruptive dynamic based on using end-to-end efficiency concepts. A parallel is how the independent app developers, given access to the Android and Apple platforms, revolutionised smartphone usage. New Space entrepreneurship has emerged in India with about two dozen start-ups who are not enamoured of the traditional vendor/supplier model but see value in exploring end-to-end services in the Business-to-Business and Business-to-Consumer segments. However, these start-ups have yet to take off in the absence of regulatory clarity.
‘New Space’ start-ups
•The New Space start-ups discern a synergy with government’s flagship programmes like Digital India, Start-Up India, Skill India and schemes like Smart Cities Mission. They see a role as a data-app builder between the data seller (ISRO/Antrix) and the end user, taking advantage of the talent pool, innovation competence and technology know-how. They need an enabling ecosystem, a culture of accelerators, incubators, Venture Capitalists and mentors that exists in cities like Bengaluru which is where most New Space start-ups have mushroomed.
•Equally, clear rules and regulations are essential. ISRO can learn from its 1997 SatCom policy which neither attracted any FDI in the sector nor a single licensee. A similar situation exists with the Remote Sensing Data Policy of 2001, amended in 2011, which too has failed to attract a single application. The 2017 draft Bill raised more questions because it sought to retain the dominant role of ISRO/Antrix as operator, licensor, rule-maker and service provider.
•Another revolution under way is the small satellite revolution. Globally, 17,000 small satellites are expected to be launched between now and 2030. ISRO is developing a small satellite launch vehicle (SSLV) expected to be ready in 2019. It is a prime candidate, along with the proven PSLV, to be farmed out to the private sector. This requires giving it responsibility for AIT activities.
•Years ago, ISRO launched the idea of Village Resource Centres to work in collaboration with local panchayats and NGOs but only 460 pilots have begun. Expanding this for rural areas is a formidable challenge but has the potential to transform rural India if properly conceived as a part of the India Stack and the Jan Dhan Yojana.
•With the Ministry of Defence now setting up a Defence Space Agency and a Defence Space Research Organisation, ISRO should actively embrace an exclusively civilian identity. A new Space law for India should aim at facilitating growing India’s share of global space economy to 10% within a decade which requires a new kind of partnership between ISRO, the established private sector and the New Space entrepreneurs.
📰 Blue-sky visions: on Economic Survey 2018-19
The ambitions of the Economic Survey depend on the implementation of its ideas
•The Economic Survey for 2018-19 reflects the views of its principal author, Chief Economic Adviser (CEA) Krishnamurthy Subramanian. And the CEA has made bold to use the new government’s first economic assessment-cum-agenda setting exercise to posit a range of ideas that he attributes to “blue sky thinking”. From an embrace of a “world that is in constant disequilibrium”, and the need therefore to adapt to it, to the stress on drawing upon Richard Thaler’s work in the behavioural economics of ‘nudge’ for addressing issues including gender equality, savings and tax compliance, the survey attempts to reset multiple paradigms. The broad goal is to help drive economic strategy to achieve sustained real GDP growth of 8% so as to enable fulfilment of the government’s grand vision of making India a $5 trillion economy by 2025. For that, the first task is to take stock of the economy’s current state. The CEA is cautiously confident that the slump in investment, which he rightly identifies as the key driver of growth, jobs and demand, has bottomed out. Setting the huge electoral mandate for the government as an enabler that would “push the animal spirits of the economy”, the survey projects real GDP growth to rebound to 7% in 2019-20. But the CEA doesn’t shy away from flagging ‘consumption’ as being crucial in determining the growth trajectory in the current fiscal year, and in pointing out its vulnerability to the health of the monsoon-dependent rural economy. With rainfall as on July 3 about 28% less than average and large parts of southern and western India in the grip of a crippling drought, clearly the circumspection appears well warranted.
•On the fiscal front, the survey is even less optimistic. It lists several challenges to achieving the fiscal deficit target of 3% of GDP by March 2021: the “apprehensions of slowing of growth” and the implications for revenue collections; the shortfall in GST collections and the imperative that it places on revenue buoyancy this year; the hunt for resources to fund the expanded PM-KISAN scheme, Ayushmaan Bharat and other government initiatives; and the impact on oil purchase prices due to the U.S. sanctions on import of crude from Iran. It is, however, on the policy prescriptions front that the CEA comes into his own. Central to the recommendations is the focus on triggering a self-sustaining “virtuous cycle” of savings, investment and exports. To achieve which, he suggests, presenting data as a ‘public good’, ensuring policy consistency and reducing the cost of capital. Micro, small and medium enterprises must be nourished, especially firms that are most likely to boost both job creation and productivity, and labour laws made flexible. Ultimately, it is the implementation that may well decide how “blue sky” these ideas are.
