Summary

Editorial

Stairway to prosperity

Context: > India’s record of reducing poverty pales in comparison to China, Brazil and Mexico. >India needs to build social infrastructure capable of providing quality education, health, and nutrition to buck the trend. What is the Present Status of India? >According to a recent Indian government committee constituted to estimate poverty, nearly 38% of India’s population (380 million) is poor. >60% of the poor still reside in the states of Bihar, Jharkhand, Odisha, Madhya Pradesh, Chattisgarh, Uttar Pradesh and Uttarakhand. >The reason for these states to be in the category of the poorest state is because 85% of tribal people live there. >International poverty line stands at $ 1.25 per day and in 2010, 32.7% of the total population in India was below this line. What are the Reasons of Poverty in India? >High population growth rate is one of major reasons of poverty in India. >It is expected that population in India will reach 1.5 billion by 2026 and then India will be the largest nation in the world. >Ever increasing prices of even basic commodities is another reason of poverty. >The problem lies with the unorganized sector as owners do not bother the way their workers live and the amount they earn. What is Recent development of reducing poverty in comparison with other nations? >India extricated 120 million people from extreme poverty between 1990 and 2013. >Over the same period, China reduced the number of people living in extreme poverty from 756 million to 25 million. >The economic growth, between 1995 and 2012, the growth elasticity of poverty reduction for India is just over 0.12. >By contrast, countries such as Brazil, Mexico, Ecuador, and Thailand that witnessed relatively low economic growth rates emerge as positive outliers >The growth elasticity of poverty reduction for China is a little over 0.28, the numbers for Mexico and Brazil are 3.28 and 1.14 respectively. How India can reduce Poverty? Focusing on rural poverty reduction: >With four out of every five of India’s poor living in rural areas, progress will need to focus on the rural poor. .Capitalizing on growing connectivity between rural and urban areas, and between the agriculture, industry and services sectors, has been effective in the past two decades and holds promise for the future. Jobs creation in different sectors: >The road out of poverty in India has been built on the performance of the labour market, but also benefitted from rising transfers and remittances, and favourable demographics among other factors. >Future efforts will need to address job creation in more productive sectors, which has until now been tepid and has yielded few salaried jobs that offer stability and security.Emphasizing on women and Scheduled Tribes: >Two of the most worrying trends are the low participation of women in the labour market and the slow progress among Scheduled Tribes. >India today ranks last among BRICS countries, and close to the bottom in South Asia in female labour force participation. >Scheduled Tribes started with the highest poverty rates of all of India’s social groups, and have progressed more slowly than the rest.Shifting from poor state to prosperous state >India’s states continue to see large and growing differences in poverty levels and basic opportunities. >More and more of India’s poor are concentrated in the poorest states, and even within relatively prosperous states Improving human development of the poor: >The recent past shows that some problems, such as under nutrition and open defecation, are endemic and not confined to the poor, and have not improved with economic growth.

Government must focus on basic education and let the market take care of skilling the workforce

Context: >According to a recent report, less than 10% of the youth who had received training under the Pradhan Mantri Kaushal Vikas Yojana have obtained placement offers (offers, not jobs).The Real Problem of Jobs: >Jobs are not simply a function of the country’s workforce acquiring formal skills making them employable. >More fundamental to job creation is a vibrant economy, in which investment and consumption fuel demand for labour, skilled and unskilled. >This happened between 2004-05 and 2011-12. >Today’s crisis is not one of employability, but of investment and economic activity leading to shrinking job opportunities. PMKVY .It seeks to impart industry-relevant skill training to 10 million youth over four years (2016-2020), largely through private accredited “training partners” and with the Centre meeting the entire fee expenses. Problem with PMKVY >The problem with PMKVY is not its poor job placement record. >The question to ask is whether a scheme of this kind is required at all. >Ideally, the government’s focus should be on providing decent education. >That would mean ensuring minimum standards in schools, colleges, polytechnics and industrial training institutes (ITI). >Training is better left to the private sector. >The Rs 12,000-crore outlay for PMKVY can instead be used to beef up the infrastructure and course content in 2,284 government ITIs. Way Forward >Formal skilling — currently restricted to hardly three per cent of India’s workforce — is important. >However, skills are mostly job-specific and acquired at the workplace. >The market has ways to address skills gap. >The government would do a great job by just concentrating on basic education, labour reforms and improving the ease of doing business.

The return of India’s super rich

The trajectory of wealth concentration in the country, not just the levels of recently estimated inequality, is important. Context: >High economic disparity among Indians. What are the reasons for high economic disparities? >A large informal labour force >Turbulent capital markets >Unequal access to education >Employment and mobility of workforce What were the reasons of wealth concentration in the past? >Wealth concentration at the top is an entirely different concept that cumulates past prosperity and disparity through inheritance, income and monopoly rents. >Example: Indian has been home to extreme poverty as well as richest people: >In 1937, the nizam of Hyderabad was declared the world’s wealthiest person by Time magazine. >His wealth was estimated to be equal to around 30% of India’s gross domestic product (GDP). Why is the computing wealth inequality in India harder? >The absence of similar tax-return data. >Issues of under-reporting What were the steps taken after independence to reduce wealth concentration? >Old royal wealth was eliminated through the abolition of princely titles and annexation of private land into national wealth as part of Indian unification >A combination of Nehruvian socialism >Indira Gandhi’s nationalization .Progressive tax policies What is the current trend? >The decline of income and wealth inequality between 1950-80; but no diffusion of prosperity >Due to emergence of new markets, promotion of private capital, modern investment, and market reforms made few Indians   >As India began to embrace the market, private capital adapted to more modern investments, and combined with market reforms, it made a select few enormously wealthy.These wealthy people are mainly leaders of the industries >Old wealth came to be replaced by more dynamic and financially savvy industrial wealth. What is necessary to bring equitable growth? >India needs the effort to democratize economic resources to achieve equitable growth. Growth cannot be equitable if the superrich is able to accumulate wealth at even higher rates.

Smart technology, involving people in operations could make 24x7 electricity a reality

ContextWhile 99.5 per cent of India’s villages are considered electrified, a fifth of the country’s population still awaits an electricity connection and many more suffer due to poor power supply. Hence, the government has moved beyond village electrification to 24×7 power for all by 2022.What is the new plan?The central government has set out an ambitious goal by focusing on household electrification and reliable power supply.As per the Ministry of Power statistics, 43 million Indian households are yet to be electrified.In order to achieve the target by 2022, India needs to increase the rate of household electrification by at least four times.What is India’s status in power?India has the fifth largest power generation capacity in the world.The country ranks third globally in terms of electricity production.Electricity production in India reached 584.22 Billion Units (BU) during April-September 2016.Why Power generation for India is Important?Power is one of the most critical components of infrastructure crucial for the economic growth and welfare of nations.The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy.India ranks third among 40 countries in EY’s Renewable Energy Country Attractiveness Index, on back of strong focus by the government on promoting renewable energy and implementation of projects in a time bound manner.India has moved up 73 spots to rank 26th in the World Bank’s list of electricity accessibility in 2017.What is India’s 12th year plan for power generation?As per the 12th Five Year Plan, India is targeting a total of 88.5 GW of power capacity addition by 2017, of which, 72.3 GW constitutes thermal power, 10.8 GW hydro and 5.3 GW nuclear. Power generation of India:Current situation of various sources of power generation in India:What are the major sources of power generations in India?Coal, Natural Oil (Diesel Oil), Gas are the sources for Thermal Power generation.Atomic Minerals are the sources for Atomic Power generation.Water is the source for Hydel Power generation.Wind is the source for Wind Energy generation.Sun is the source of Solar energy.Wood is used as Fuel and energy.Bio Gas is used for Bio Gas based energyUrban Waste – Urban waste energyWaves for Waves or tidal Power generation.Geo-thermal Sources for Geo-thermal en­ergy production. What are the problems with India’s power sector? Inadequate last mile connectivity is the main problem to supply electricity for all users. Due to lack of last-mile link-up with all electricity consumers and reliable power supply (to exceed 99%), many consumers depend on Diesel Generator sets using costly diesel oil for meeting unavoidable power requirements. Government giveaways such as free electricity for farmers, partly to curry political favor, have depleted the cash reserves of state-run electricity-distribution system. This has financially crippled the distribution network, and its ability to pay for power to meet the demand.The residential building sector is one of the largest consumers of electricity in India. Continuous urbanization and the growth of population result in increasing power consumption in buildings. New project management and execution, ensuring availability of fuel quantities and qualities, lack of initiative to develop large coal and natural gas resources available in India are major problems. Land acquisition, environmental clearances at state and central government level, and training of skilled manpower to prevent talent shortages for operating latest technology plants adds to it. Shortages of fuel: despite abundant reserves of coal, India is facing a severe shortage of coal. The country isn’t producing enough to feed its power plants.India’s monopoly coal producer, state-controlled Coal India, is constrained by primitive mining techniques and is rife with theft and corruption; Coal India has consistently missed production targets and growth targets. Poor pipeline connectivity and infrastructure to harness India’s abundant coal bed methane and shale gas potential. The giant new offshore natural gas field has delivered less fuel than projected. India faces a shortage of natural gas. Hydroelectric power projects in India’s mountainous north and north east regions have been slowed down by ecological, environmental and rehabilitation controversies, coupled with public interest litigations. What is the solution? The distribution companies should focus on providing uninterrupted power supply to all the consumers who are using costly Diesel Generator set’s power. This should be achieved by laying separate buried power cables (not to be effected by rain and winds) for emergency power supply in addition to the normal supply lines. Emergency supply power line shall supply power when the normal power supply line is not working. Emergency power supply would be charged at higher price without any subsidy but less than the generation cost from diesel oil. Nearly 80 billion KWh electricity is generated annually in India by Diesel Generator sets, which are consuming nearly 15 million tons of diesel oil. Demand build up measures can be initiated to consume the cheaper electricity (average price Rs 2.5 per kWhr at generator’s supply point) available from the grid instead of running the coal/gas/oil fired captive power plants in various electricity intensive industries. What are new government’s initiative for power generation in India? The Government of India has identified power sector as a key sector of focus so as to promote sustained industrial growth. Some initiatives by the Government of India to boost the Indian power sector: The Ministry of Power has taken various measures to achieve its aim of providing 24X7 affordable and environment friendly ‘Power for All’ by 2019, which includes preparation of state specific action plans, and implementation of Green Energy Corridor for transmission of renewable energy, among other measures. India has become an associate member of the International Energy Agency (IEA), which makes the Paris-based body more significant, indicating India’s growing status in playing an important role in the global energy dialogue. The Government of India plans to auction coal blocks for commercial mining by the end of December 2017, which would end the monopoly of state-run firms in coal mining and help in achieving the country’s target of producing 1 billion tonnes of coal by 2020. The Cabinet Committee on Economic Affairs (CCEA) has approved a new coal linkage policy, aimed at providing necessary supply of fuel to power plants through reverse auction. The Government of India has announced plans to implement a US$ 238 million National Mission on advanced ultra-supercritical technologies for cleaner coal utilization. The Cabinet Committee on Economic Affairs (CCEA) has approved the enhancement of capacity of the Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects from 20,000 megawatt (MW) to 40,000 MW, which will ensure setting up of at least 50 solar parks each with a capacity of 500 MW and above in various parts of the country. The Union Cabinet, Government of India has given its ex-post facto approval for signing of a Memorandum of Understanding (MoU) on Renewable Energy between India and Portugal, which will help strengthen the bilateral cooperation between the two countries.The Ministry of New and Renewable Energy plans to introduce a fixed-cost component to the tariff for electricity generated from renewable energy sources like solar or wind, in a bid to promote a green economy.The Union Cabinet has approved the ratification of International Solar Alliance’s (ISA)framework agreement by India, which will provide India a platform to showcase its solar programmes, and put it in a leadership role in climate and renewable energy issues globally.Way forward: The Indian power sector has a venture potential of Rs 15 trillion (US$ 225 billion) in the next 4–5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment. The government’s immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24×7 electricity for residential, industrial, commercial and agriculture use.The government has electrified 13,000 villages so far out of the total 18,452 villages and is targeting electrification of all villages by 2019, within the targeted 1,000 days.The Government of India is taking a number of steps and initiatives like 10-year tax exemption for solar energy projects, etc., in order to achieve India’s ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power, by the year 2022.The government has also sought to restart the stalled hydro power projects and increase the wind energy production target to 60 GW by 2022 from the current 20 GW.

A few sacks of rice

Context:The article talks about how Indian government’s stance on the Rohingya issue is imprudent, myopic and untenable from the point of view of security, history and morality respectively.An imprudent policy from security point of view: The Indian government has declared the Rohingya to be illegal immigrants not refugees.Treating the Rohingya as illegal migrants will diminish rather than enhance India’s security for a number of reasons. History tells us that radicalisation grows when three conditions obtain:Groups are subjected to political violence and marginalisation.States lose control over territory partly because their own repression destroys the normal fabric of civil society.And other states that side with the repressing state also evoke resentment and become a target.Example: the Bosnian wars were a trigger of radicalisation in other parts of the world.By condoning the Myanmar government’s actions and not assisting the stateless Rohingya, India, in effect, might help create the conditions for greater radicalisation.By declaring a whole refugee community as a national security threat, largely on communal lines, India is risking a communal conflict.India has also implicitly put all its eggs in the basket of the Myanmar government. This is a mistake as it was the Myanmar government that created the push factor in the first place.We will not be able to contain the spillovers across our porous borders if we have alienated communities living on our borders.To isolate radical elements, you need a more imaginative refugee policy.A proper system of identification, rehabilitation, and possibly reporting in India is required to deal with the situation.If we actually had a proper asylum law, and better processing mechanisms for refugees, even the situation of Rohingyas ending up in Jammu could have been avoided.In short, there are prudent security reasons, for treating the Rohingya with more dignity and political finesse.A historically myopic stanceIndia has been exemplary in the way it accommodated refugees from Tibet, Sri Lanka, Afghanistan and Bangladesh.India aspires to be a great power. Its biggest asset is the way it has been the significant open society of the region.India had escaped radicalisation in large part because of its success in democratic incorporation.It was not identified with persecutory ideologies of the state or of other states.The political construct we have put around the Rohingya weakens the ideological projection that has been India’s greatest security strength.Therefore, India is betraying its own historical heritage.A morally untenable stance:India has now changed its stance on an important moral principle: The principle of non-refoulement. This principle stops nations from returning people to a country where they might be at risk of severe persecution.Even if India is not a signatory to International Refugee Conventions, it takes a very pinched up moral imagination to forcibly send back people who will face persecution.There is something disquieting about a country that wants others to have open borders for its rich and privileged, but will not help those who show up at its door because of palpable threats to their lives.In humanitarian terms, Indian policy is a pittance.This stance is likely to be self-defeating.

Shooting in the dark

Why in the News?The Bullet train Project which is very much in news, needs to be evaluated considering all its dimensions to figure out whether it is a project that would be expensive to maintain and difficult to dispose off or will it leap-frog India into a new era of advanced technology. Background: Japan introduced its high-speed Shinkansen line between Tokyo and Osaka as long ago as 1964.Its top speed then was 210 km/hr; it’s now 350 km/hr. Since the first Bullet Train made its debut, 10 other countries have developed a high-speed network, the biggest being China’s. Other countries with high-speed trains include France, Germany, Italy, Spain, South Korea and even Turkey. None of them uses the Shinkansen system.What is the uncertaintity?Since none of the countries uses the Shinakansen system, does it imply that it is the best available technology.There seems to have been no technical evaluation comparing other available systems.So it might be so that India is embarking on such a huge project on the basis of blind faith.Why India should rely upon the technology has not tested?There was no technical evaluation and no transfer of technology agreement, but there was a viability reportNo one knows the details of the viability report because officialdom has refused to share the report even in response to RTI applications. However, there is the example of Taiwan which installed the Japanese Shinkansen system.In the early 1990s, a consortium of private companies was formed to install a high-speed train system on a Build, Operate and Transfer (BOT) model which by end failed and finally the Taiwanese government had to bail out the consortium.In India, the BOT model was not even floated as a trial balloon for the very good reason that no private company would have bid for the project — the failure of the much less capital-intensive Metro project (BOT) is very much on everyone’s mind.Why this project a threat to India?The Japanese are giving a 50-year loan of Rs 88,000 crore of the total project cost of Rs 1,10,000 crore, the rest coming from the central government and state governments of Gujarat and Maharashtra.If the interest rate offered to India of 0.10 per cent sounds benign, consider this: The interest rate on 10-year Japanese government bonds is 0.04 per cent and other interest rates can even be negative.if we consider average Indian inflation at three per cent, and Japanese at zero per cent, the rupee will depreciate three per cent every year vis-a-vis the Japanese yen. So over 50 years, the sum to be repaid will not be Rs 88,000 crore but could be well over twice that amount.95 per cent of rail users in India do not use even the Rajdhani or Shatabdi trains. So only five per cent of Indians use our present super-fast trains because they find the extra fares beyond them. In short, bullet trains are going to make travel faster for five per cent of the population, which already has the option of air travel.How this project is going to benefited India?The raw materials and the labor for the project will be provided from India. Everything that needs to be used in the project, right from services to provisions, will have a great potential of creating revenue. The Bullet Train project is going to cost Rs 1,10,000 crore; in last year’s rail budget, the total outlay for the entire Indian railway system was Rs 1,21,000 crore.The Bullet Train will serve a small percentage of people travelling between two cities; the Indian railway system, with over 13,000 trains running every day, carries more than eight billion passengers per year plus 1,000 million tonnes of freight over the whole country.The cost for the two, as the figures show, is virtually the same.

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