INDIAN POLITY

1. EXPLAINED: THE AMENDMENTS TO THE IT RULES, 2021

THE CONTEXT: Recently the Ministry of Electronics and IT (MeitY) has notified amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules, 2021) .In June 2022, MeitY had put out a draft of the amendments and solicited feedback from the relevant stakeholders.

THE EXPLANATION:

What are the key features of the IT Rules, 2021?

Grievance Appellate Committees (GACs):

• The new rules pave the way for the establishment of one or more Grievance Appellate Committees (GACs) within 3 months.
• These committees will enable users of social media platforms like Facebook and Twitter to get recourse to settle complaints without depending on the judiciary.
• The committee will have three members. One of them will be a government officer and the other two will be independent representatives.

SMIs obligations:

• SMIs (social media intermediaries) are mandated to ensure that their users comply with the relevant rules of the social platform. Earlier, the rules only mandated SMIs to inform their users of the “rules and regulation, privacy policy and user agreement”.
• The SMIs are required to make “reasonable” efforts to prevent prohibited content from being hosted in their platforms. They will be responsible for policing and moderating the content on their platform. This rule has been met with scepticism due to the subjectivity of the content’s nature and magnitude of information.
• SMIs are required to remove information or communication links that belong to 6 prohibited categories of content within 72 hours after the complaint is raised. This will help stop the content from becoming viral and spreading across the world.
• The SMIs are required to take reasonable measures to increase accessibility to their services to make them more inclusive. This is to strengthen inclusivity of the SMI ecosystem, making it accessible to persons with disabilities and those with diverse linguistic backgrounds. The new IT rules require the platforms to make available the “rules and regulations, privacy policy and user agreement” in all languages listed in the 8th schedule of the Indian constitution.

What is the criticism of the rules?

High cost

• Rights provided under the Indian Constitution, which the SMIs are mandated to protect, are subject to wide range of interpretations.
• Thus, compliance cost for the SMIs is expected to increase significantly.
• It could also lead to regulatory uncertainties as well.

Uncertainties regarding GAC

• It is uncertain whether the user needs to approach GAC before accessing the court. This confusion arises since the press note mentions that the user is not prohibited from approaching the court directly against the order of the grievance officer. However, the final amendments of the IT rules do not have provisions related to it.
• Due to this uncertainty, if the user approached the GAC and courts parallelly, it could result in conflicting decisions. This will undermine the impartiality and merit of one institution or the other.
• GAC’s members are appointed by the Central Government. This creates apprehension of bias in content moderation.
• Furthermore, the IT rules, 2021 do not provide any explicit power to GAC to enforce its rulings.

What is IT Rules, 2021?
Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 or IT Rules, 2021 was notified by the Ministry of Electronics and IT (MeitY). It replaces decade-old rules regulating social media intermediaries (SMI) to make them more accountable towards providing open, safe and trusted internet.

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

2. GEAC PLANNING TO RECOMMEND ‘ENVIRONMENTAL RELEASE’ OF BAYER’S GM COTTON

THE CONTEXT: Genetic Engineering Appraisal Committee (GEAC) is currently planning to recommend environmental release of a genetically modified (GM) herbicide tolerant cotton of German multinational company Bayer AG.
THE EXPLANATION:

What is BG-II RRF?

• Bollgard II Roundup Ready Flex (BG-II RRF) is a transgenic cotton having three alien genes.
• Two of the alien genes – cry1Ac and cry2Ab – were isolated from a soil bacterium Bacillus thuringiensis. These genes have proteins that are harmful for American bollworm, spotted bollworm and tobacco caterpillar insect pests.
• The third gene – cp4-epsps – was obtained from another soil bacterium Agrobacterium tumefaciens. Its inclusion makes the cotton crop “tolerant” to the harmful herbicide glyphosate, which does not distinguish between the crops and weeds.
• The BG-II RRF cotton was developed by the American company Monsanto, which was acquired by Bayer in 2018.
• It underwent biosafety research and field trials in 2012-13. The results of the trials were submitted to the GEAC in 2013. However, the American company withdrew the application seeking environmental clearance for the crop due to regulatory uncertainties and lack of government decisions.
• Bayer had resubmitted the permission for environmental clearance to GEAC early this year.

What are genetically modified crops?

• Genetically modified crops are crops that had their DNAs altered to include certain desirable traits. The widely used GM soyabean, maize, cotton and canola are tolerant to herbicides and resistant to pest attacks.
• Other common traits included in genetically modified crops are resistance to virus, resistance to drought and improved fruit and tuber quality.

How are genetically modified crops regulated in India?

• Genetically modified crops pose threat to animal health, humans and biodiversity during the process of development, cultivation and transboundary movement.
• Hence, their production, cultivation and movement are highly regulated. Rules and Acts that ensure their regulation are Environmental Protection Act, 1986, Biological Diversity Act, 2002, Plant Quarantine Order, 2003, GM Policy under Foreign Trade Policy, Food Safety and Standards Act, 2006 and Drugs and Cosmetics Rule (8th Amendment), 1988.

3. UTTAR PRADESH’S RANIPUR TIGER RESERVE BECOMES 53RD TIGER RESERVE INDIA

THE CONTEXT: Uttar Pradesh is set to have its fourth Tiger Reserve and 53rd tiger reserve in India. The tiger reserve is spread across over 529.36 sq km out of which the core area is 230.32 sq km and the buffer area is 299.05 sq km.

THE EXPLANATION:

• Apart from Ranipur, Uttar Pradesh has three tiger reserves, Dudhwa, Pilibhit, and Amangarh.
• Uttar Pradesh government approved the development of the first tiger reserve in the Bundelkhand region of the state on 28th September 2022.
• The UP government also approved the notification of the Ranipur Wildlife Protection Act 1973.
• UP Chief Minister has also decided to establish the Ranipur Tiger Conservation Foundation along with sanctioning of requisite posts.
• Ranipur Tiger Reserve is covered by northern tropical dry deciduous forests and is home to mammals like megafauna tiger, leopard, bear, spotted deer, sambhar, and chinkara among others.
• According to the state government, the establishment of the Tiger Reserve in Ranipur will lead to the opening up of eco-tourism in the area and create immense employment opportunities.

VALUE ADDITION:

Project Tiger

• Project Tiger is a Centrally Sponsored Scheme of the Ministry of Environment, Forests and Climate Change launched in 1973 to provide central assistance to the tiger States for tiger conservation in designated tiger reserves in India. The project is administered by the National Tiger Conservation Authority (NTCA).

National Tiger Conservation Authority

• National Tiger Conservation Authority (NTCA) is a statutory body under the Ministry of Environment, Forests and Climate Change.
• It was established in 2005 following the recommendations of the Tiger Task Force.
• It was constituted under enabling provisions of the Wildlife (Protection) Act, 1972, as amended in 2006, for strengthening tiger conservation, as per powers and functions assigned to it.

ECONOMIC DEVELOPMENTS

4. RBI LAUNCHES FIRST PILOT FOR DIGITAL RUPEE

THE CONTEXT: The Reserve Bank of India (RBI) said the first pilot of the Central Bank Digital Currency — Digital Rupee (Wholesale segment) will be launched from 1st November 2022 for transactions in government securities.

THE EXPLANATION:

• According to RBI, the use case for the pilot is settlement of secondary market transactions in government securities.
• Nine banks — State Bank of India (SBI), Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC — have been identified for participation in the pilot.

What is Digital Rupee?

• A Central Bank Digital Currency (CBDC) or Digital Rupee is a digital form of currency notes issued by a central bank. Digital currency or rupee is an electronic form of money, that can be used in contactless transactions.
• Presenting Union Budget 2022, Finance Minister Nirmala Sitharaman announced that the Reserve Bank of India (RBI) would be rolling out its digital currency soon.

CBDC can be classified into two types
1. Retail (CBDC-R): Retail CBDC would be potentially available for use by all
2. Wholesale (CBDC-W) is designed for restricted access to select financial institutions.

SCIENCE AND TECHNOLOGY

5. TIANGONG SPACE STATION’S FINAL MODULE LAUNCHED

THE CONTEXT: China successfully launched the final module of its Tiangong space station inching closer to its completion by the end of the year and a landmark moment in the country’s space ambitions.

THE EXPLANATION:

What is “Mengtian” module?

• “Mengtian” module was launched aboard a Long March-5B Y4 carrier rocket from Wenchang launch centre in China.
• It is the third and final module Tiangong space station and it is an important component of the Chinese space station, equipped with numerous cutting-edge scientific equipment.
• The module is expected to be operational for 10 years or more. The name “Mengtian” means “dreaming of the heavens”. It is the second of the two modules that will host science labs required for conducting research.
• This module, once docked on the core module Tianhe, will complete the T-shaped structure of the space station along with the other module Wentian, which was launched in July 2022.
• Mengtian will have workstations supporting experiments related to microgravity scientific studies and frontier scientific projects focusing on fluid physics, combustion and materials science and space technologies.

About Tiangong space station

• The Tiangong space station is currently being constructed by China and operated by the China Manned Space Agency (CMSA) in the low Earth Orbit between 340 and 450 km above the surface.
• The mass of this space station is around one-fifth of the mass of the International Space Station. Its size is almost equivalent to the decommissioned Russian Mir Space Station. It has a core module named Tianhe (Harmony of the Heavens) and two laboratory cabin modules Wentian (Quest for the Heavens) and Mengtian.
• China was banned from the International Space Station since the year 2011 after the US refused to let NASA to work with China. Since then, Beijing has been heavily investing in its space programmes to compete with the US and Russia. It had even landed a rover to Mars and sent lunar probes during its early space missions.

6. DEMAND GROWS, BUT DNA TESTS FALL UNDER A GREY AREA

THE CONTEXT: Recently the Supreme Court has voiced concerns over the increasing use of DNA to prove cases.

THE EXPLANATION:

Current Challenges:

• More and more complainants are seeking DNA tests – such requests are increasing by around 20% each year.
• DNA Forensics Laboratory Private Limited says it tests around 300-400 samples each month that are both private requests and court-mandated.
• The numbers were only around 30-40 till five years ago.
• DNA Forensics Laboratory Private Limited is one of the biggest centres which is accredited with the National Accreditation Board for Testing and Calibration Laboratories (NABL).

Justice vs privacy: The Supreme Court has recently held that compelling an unwilling person to undergo a DNA test would be a violation of his/her personal liberty and right to privacy.
The court is turning the spotlight on the spreading use of a technology that aids the cause of justice on the one hand but violates privacy on the other.
Global scenario: While the 3,000-odd DNA tests Indian labs perform annually is minuscule compared to the 70 other countries that rely on DNA technology.

VALUE ADDITION:
About DNA Testing:

• DNA is a very powerful tool for investigation because no two people can have the same DNA except in the case of identical twins.
• DNA/Genetic tests are performed on a sample of blood, hair, skin, amniotic fluid (the fluid that surrounds a fetus during pregnancy), or other tissue.

Where is it used?

Crime scenes:

• DNA tests are used in the criminal investigation by the police where they find the suspect by matching the DNA samples of the crime scene with the suspected person’s DNA.

Finding inheritance:

• DNA test is the only tool that can deliver justice in cases of abandonment of mothers and children.
• It is also a very powerful tool in civil cases where the court has to decide the matter relating to the maintenance and find the parents of the child.

Legislation on DNA testing:

• There is no legislation present in India which can provide specific guidelines to the investigating agencies or the court for dealing with DNA testing.
• Section 53 of the Code of Criminal Procedure,1973
• This section authorized a police officer for getting the assistance of a medical practitioner in good faith for the purpose of the investigation
• The section does not enable to collect blood semen etc. for bringing the charges against a person.

Courts’ stands:
Courts are also reluctant to use the DNA test technique because there are serious questions raised regarding the right of privacy which comes under Article 21 of the Constitution and the right against self-incrimination which comes under Article 20(3) of the Constitution.

VALUE ADDITION:
Autosomal DNA technique :

• It is a term used in genetic genealogy to describe DNA that is inherited from the autosomal chromosomes.
•  An autosome is any of the numbered chromosomes, as opposed to the sex chromosomes.
• The autosomal DNA technique can be used even when very limited genetic data are available.
• Autosomal DNA tests can be used to confirm relationships with a high level of accuracy for parent/child relationships and all relationships up to the second cousin level.
  o For all relationships additional contextual and genealogical information is required to confirm the nature of the relationship.

[WpProQuiz 363]

THE CONTEXT: Three decades ago, India embarked on a new economic journey when Manmohan Singh, then Finance Minister, placed the reform Bill and echoed Victor Hugo, “No power on earth can stop an idea whose time has come,” in Parliament. Since then, the crisis-hit economy has come a long way and marked its firm presence in the global platform. In this article, we will analyse India’s Journey in these three decades.

AN INTRODUCTION OF THE ECONOMIC REFORMS

• Economic reforms in India refer to the structural adjustments initiated in 1991 to liberalise the economy and accelerate its economic growth rate. The Narsimha Rao Government, in 1991, introduced economic reforms to restore internal and external confidence in the Indian economy.
• The reforms aimed at bringing in greater participation of the private sector in the growth process of the Indian economy. Policy changes were introduced with respect to industrial licensing, technology up-gradation, removal of restrictions on the private sector, foreign investments, and foreign trade.
• The reforms aimed to attain a high rate of economic growth, reduce the rate of inflation, reduce the current account deficit, and overcome the balance of payments crisis. The important features of the economic reforms were Liberalisation, Privatisation and Globalisation, popularly known as LPG.

NEED FOR ECONOMIC REFORMS

The need for the introduction of the reforms was because of the following factors:

POOR PERFORMANCE OF THE INDUSTRIAL SECTOR

Before the introduction of economic reforms, the industrial sector suffered due to bureaucratic controls. The industries had to obtain several licenses and permissions for any undertaking activity such as setting up a new firm, starting a new product line, expanding existing business, foreign investments, etc. Many public sector enterprises were incurring huge losses due to poor productivity.

The main objectives of the industrial policy introduced in 1991 were:

 I. To unshackle the Indian industrial sector from the cobwebs of unscrupulous bureaucratic controls.

II. To introduce liberalisation to integrate the Indian economy with the world economy.

III. To remove restrictions on foreign investments and relieve the entrepreneurs from the restrictions of the MRTP Act.

IV. To shed the load of public enterprises that were incurring heavy losses.

ADVERSE BALANCE OF PAYMENTS

• India faced a severe economic crisis during the end of the 1980s. India was unable to meet its international debt obligations and was pushed to a situation of near bankruptcy.
• The foreign exchange reserves were insufficient to pay the import bills. The Balance of Payments deficit could not be financed beyond a certain point.

Some of the factors responsible for the crisis were:

  I. The rising level of expenditure over revenue.

 II. Heavy government borrowing.

III. Inefficient utilisation of resources.

 IV. Excessive protection to domestic industries.

 V. Inefficient management of public sector enterprises.

 VI. Lack of technological development and innovation

 VII. Lack of investments in research and development.

RISE IN FISCAL DEFICIT

• This was mainly due to the increase in the non-developmental expenditure of the government. The government had to borrow a huge sum of money to finance the deficit and meet these debts’ interest obligations.
• The government was in a debt trap. Thus, there was a need to bring in reforms to reduce the non-developmental expenditure and to bring about a fiscal discipline.

INFLATION

• Due to continuous borrowing by the government to meet its mounting expenditure, there was a rapid increase in the money supply.
• The government resorted to deficit financing wherein the RBI financed the borrowings by the Government of India by printing currency notes.
• This leads to a rise in the money supply. When the money supply increased, the demand for goods and services also rose, increasing their prices and causing an inflationary situation.

THE GULF WAR

• The Gulf war during 1990-91 had a significant impact on the supply of oil. As a result, the price of oil shot up, increasing India’s foreign currency outlays. The Gulf crisis also affected the flow of foreign currency into India.
• The NRI deposits were moving out of India and remittances from Indians employed abroad were also affected during the war.

THE ECONOMIC REFORMS

Economic reforms in India were implemented to change the pattern of economic activities to liberalise the Indian economy and accelerate the rate of economic growth. These new economic reforms brought about a structural change in the share of different sectors in the national income.

The new economic reform policies mainly focused on structural reforms in the agricultural sector, industrial sector, financial sector, and global trade. Such economic reforms were possible with the help of broad and comprehensive policies on liberalisation, privatisation and globalisation.

LIBERALISATION – MEANING AND FEATURES

The main objective of liberalisation was to unshackle the industrial sector from the cobwebs of unnecessary bureaucratic controls.

The main features of liberalisation policy were

ABOLITION OF INDUSTRIAL LICENSING

• The new industrial policy of 1991 abolished the industrial licensing for all the industries except for a selected 18 industries due to security and strategic concerns.

REMOVAL OF RESTRICTIONS

• Other than those 18, all industries could set up and sell shares without any restrictions; they could expand their business and start a new product line without obtaining any license.

RELAXATION OF MRTP RESTRICTIONS

• The Monopolies and Restrictive Trade Practices (MRTP) Act aimed at controlling monopoly practices to prevent concentration of economic power.
• The MRTP Act has now been replaced by the Competition Act, 2002, which came into effect in 2009. The Competition Act checks all anti-competitive practices and prohibits abuse of dominance. To protect consumer interest at large, it aims at promoting and sustaining competition in the market.

FOREIGN INVESTMENT

• The reforms reduced several procedural bottlenecks for foreign investments. Approval was given for foreign direct investment up to 51 percent of the equity in high priority industries.

FOREIGN TECHNOLOGY

• Automatic approval was provided to Indian industries with respect to foreign technology agreements, especially in the case of high priority industries.
• Permissions were not required for hiring foreign technicians and experts and for foreign testing of indigenously developed technologies.

GLOBALISATION – MEANING AND FEATURES:

Globalisation may be defined as the integration of the domestic economy with the world economy to facilitate the free movement of goods, services, people, ideas, technology, etc. It refers to the opening of the economy to international competition.

The major features of globalisation measures as undertaken in 1991 were:

Reduction of Trade Barriers

• With the introduction of globalisation measures, trade barriers restrictions were reduced.
• It provided immense opportunities to Indian industries to expand their markets abroad and offered Indian consumers a wide variety of quality goods at competitive prices.
• The export-import policy announced for the period 1992-97 removed all restrictions on external trade and enhanced the export capabilities of the Indian industries.

Promotion of Foreign Direct Investment:

• Many Indian industries were opened to foreign direct investment.
• India became a favourable investment destination for foreign investors due to the low cost of production and availability of cheap labour resources.
• The government of India further initiated a series of measures to promote foreign technical collaborations in case of high priority industries and for the import of foreign technology. Foreign Investment Promotion Board (FIPB) was set up to facilitate foreign direct investments in India.

To Encourage Efficiency

• Globalisation encouraged domestic industries to become more competitive and efficient to face competition at the global level.
• The domestic industries had to produce quality goods at low cost to compete with the foreign producers’ cheaper and superior quality goods.

Diffusion of Technology

• An opportunity to India to have access to global technology and India could utilise the technologies of developed countries without many investments in research and development.

PRIVATISATION-MEANING AND FEATURES:

Privatisation refers to the introduction of private ownership in public sector enterprises. The government holding in public sector enterprises was sold to increase private participation.

Many public-sector units were incurring losses due to inefficiencies in management and lack of innovation and investments in research and development. Privatisation measures enabled modern technology, improved the quality of service, and led to efficient utilisation of resources.

Various privatisation measures introduced in India included:

1. Transfer of ownership of public sector units, either fully or partly, to private hands through denationalisation.
2. Transfer of control to the private sector through disinvestment policies.
3. Opening of areas that were exclusively reserved for public sector.
4. Transfer of management to the private sector through franchising, contracting, and leasing.
5. Limiting the scope of the public sector.

The privatisation wave in India, which was a part of the economic reforms of 1991, increased the role of the private sector and restricted the public sector to priority areas which included:

1. Physical and social infrastructure
2. Mining and oil exploration
3. Manufacture of products that were of strategic importance and where security concerns were involved like in the case of manufacture of defence equipment, and
4. Investments in technologies that required huge outlay and where private sector investment was inadequate.

Privatisation measures were introduced in India as part of the economic reforms in 1991 for the following reasons:

To Reduce the Burden of the Government

• Many public sector units were only functioning to protect the interests of the laborers. Privatisation offloaded this burden from the government and reduced the strain on resources.

To Promote Efficiency

• Many public sector companies were also struggling due to inefficient management, lack of transparency and corruptive practices.
• Privatisation measures got rid of these problems and enabled the public sector units to achieve optimum productivity.

To Enhance Investment Opportunities

• Privatisation helped in reducing the inconsistencies in management and improved the economic status of many public sector units. This brought in good returns and attracted investments.

To Facilitate Growth of Infrastructure

• Privatisation of industries led to the growth of industrial sector on modern lines. The private enterprises, to provide competitive products and services, initiated and facilitated the improvement of the infrastructure.

To Reduce Unnecessary Bureaucratic Interventions

• Privatisation reduced unnecessary government intervention in the management, thereby giving the private enterprises more autonomy in management and operations. This enhanced their efficiency and profitability.

SUCCESS AND FAILURE OF REFORMS: AN ANALYSIS

THE SUCCESS:

SIZE OF GDP AND GROWTH

From a GDP of $512.92 billion in 1991, India had grown to $2.70 trillion by 2020. Besides, the average annual growth rates in GDP, post the 1990s, have been around 6.25 per cent against 4.18 per cent for the three decades prior to the reforms.

RATE OF INFLATION

The average annual inflation rates in the post-reform period were significantly lower at around 5 per cent and the gross fiscal deficit was below 4.80 per cent of GDP. While curbing automatic monetisation of deficits and strong monetary measures contributed to lower inflation, disinvestment via privatisation and fiscal restraint in the form of lower subsidies arrested the deficits.

IMPORT- EXPORT

On the external front, the reforms made a significant impact too. Firstly, India’s trade openness increased from a meagre 13 per cent in 1990-91 to 42 per cent in 2020. The exports, driven by the devaluation of the rupee in 1991 and further depreciation in later years, have increased from $17.96 billion in 1990 to $324.43 billion in 2019.

FOREIGN INVESTMENT

Abolition of licence-raj and curbing of excessive regulations saw rewards in terms of better foreign investment. From $236.69 million in 1991, the net FDI inflows stood at $50.61 billion in 2020. With more foreign companies entering India, domestic consumers benefited from healthy market competition. For Indian manufacturing, the foreign collaborations meant access to technology and, thereby, efficient production. Also, there has been a significant improvement in forex reserves, which are now sufficient to cover 15 months’ imports.

REDUCING POVERTY

The reforms had a telling impact on India’s socio-economic fabric. From about 45 per cent of the population below the national poverty line in 1994, the rates fell to 21.9 per cent in 2011. There have also been improvements in literacy rates, gross enrolments ratio and life expectancy, among others.

AVERAGE MONTHLY PER CAPITA HOUSEHOLD CONSUMPTION EXPENDITURE

It was Rs 243.5 and Rs 370.3 in July-Dec 1991 and this stood at Rs 1,430 and Rs 2,629.7 from July 2011 to June-2012 for rural and urban areas.

FOREIGN EXCHANGE RESERVE

Increased $1.1 billion in 1991 to $642 billion in 2021.

PER CAPITA INCOME

Increased $300.10 to $2200.60 in 2020.

However, opening up the economy makes it susceptible to external shocks. Within a few years after the reforms, the first challenge for India came from its East Asian neighbours in 1997. In a span of three years, the world economy was hit by the dot-com bubble, and the third challenge came in the form of the global financial crisis in 2008. It was prudent economic policies and disciplined financial markets that helped the Indian economy to resist and recover quickly from all three crises.

THE FAILURES:

INCONSISTENT PERFORMANCE

• India’s growth rate and its progression as one of the leading developing economies of the world is inconsistent with the Human Development Index (131st rank in 2020), Global Hunger Index (94th position in 2020), Gender Inequality Index (122nd rank in 2018) and Environmental Performance Index (168th rank in 2020).

RICH-POOR DIVIDE

• It has widened the gap between rich and poor. The World Bank estimates show that the Gini index, a measure of income inequality, had deteriorated marginally from 31.7 in 1993 to 35.7 in 2011.
• According to NSSO consumption surveys, while the bottom 20 per cent of the population contributed to 9.20 per cent of consumption expenditure in 1993-94, their contribution had declined to 8.10 per cent in 2011-12. Further, the share of the top 20 per cent of the population has fattened from 39.70 per cent to 44.70 per cent during the same time.

POVERTY RATE

• As per the Tendulkar Committee estimations, India’s 21.92% of the population was living below the poverty line in 2011-12. However, as per the National Family Health Survey-4 (2015-16), the multi-dimensional poverty rate stood at 27.9%.
• The poverty rate, which was 45% in 1994, declined, especially during 2004-2011 when India implemented substantive anti-poverty measures and rights-based initiatives to uplift the poor.
• This has been affected by the pandemic due to loss of work and earnings and the people, especially informal and daily wage labourers, are pushed into the vicious cycle of poverty.
• A study conducted by the Azim Premji University (2021) finds that “230 million additional individuals slipped below the poverty line defined by the national floor minimum wage” and took away the anti-poverty efforts that were in place during the pandemic for the last 25 years.

UNEMPLOYMENT

• The reduction in poverty rate during 2004-2012 was due to the employment shift from farm to non-farm, especially in the services sector. The construction sector absorbed many informal/unskilled labour resulting in the real wages enhancing the purchasing power of the people.
• On the other side, the number of jobs created during this period was very less, ie, 0.6% per year than the growth of the working-age population.
• According to the International Labour Organization’s ILOSTAT database, India’s unemployment rate in 2020 was the highest since 1991 with 7.11%.

MORTALITY RATE

• Surely economic liberalisation should result in better care for our children, the country has made considerable progress on that front, with the under-five mortality rate coming down from 125.8 per thousand in 1990 to 47.7 per thousand in 2015. But neighbouring Bangladesh and Nepal, much poorer than India, have brought down their under-five mortality rates more than India.

SHARE OF MANUFACTURING IN GDP%

• One would have expected that the New Industrial Policy would have been a pivotal moment for the manufacturing sector and India would soon take its place among the manufacturing powers of East Asia. Still, while, in 1989-90, the share of manufacturing in the gross domestic product was 16.4%, it reduced to 16.2% in 2015-16.

COMBINED FISCAL DEFICIT OF CENTRE AND STATES

• One underlying reason for the crisis of 1991 was the indiscriminate rise in government borrowing in earlier years. It was only to be expected therefore that after the crisis, the government would do all it could to curb its fiscal deficit and that of the states. Unfortunately, that didn’t happen. By 2000-01, the combined fiscal deficit of the centre plus the states, as a percentage of GDP, had risen beyond the 1991 level.

TAX TO GDP RATIO

• One reason why government deficits remained high is that, despite robust economic growth, tax revenues weren’t buoyant. The central government’s gross tax revenues as a percentage of the gross domestic product have remained below the 1991-92 level.

DOES INDIA NEED ANOTHER REFORM?

Successive governments have built on LPG reforms, but a lot more needs to be done if India is to achieve its full potential. A look at the key areas that need urgent intervention to address long-standing issues to help the country achieve double-digit growth.

EDUCATION

• Possibly the most pressing focus area given the urgency to leverage human resources.
• Total revamp from primary level to higher education with equal emphasis on skills.
• Outcome- and learning-based education so that only those eligible progress to the next level.
• Along with health, education should get much higher funding.

HEALTHCARE

• Needs reorganisation and more funding.
• Expensive out-of-pocket health spending major cause of poverty.
• Massive public healthcare supported by insurance for critical care is needed.

JUDICIAL REFORMS

• Inadequate court capacity & judicial delays undermining the economy.
• More courts, better processes, and simpler laws to reduce caseload.

(Vacancies of Judges- 38.70%)

(Pending cases- 63,146 in SC, 56.43 lakh in High Courts and 3.71 Cr in Districts and Subordinate Courts)

TAX REFORMS

• Direct tax reforms progressing as per template.
• GST needs a makeover; all items should be included.

POWER SECTOR

• Unbridled populism has made power expensive, unreliable and inadequate.
• State finances are in disarray in many cases due to power subsidies.
• Users must pay for power; DBT for those states want to support.
• Privatise discoms, enforce open access, continue focus on renewables.

INNOVATION

• Unshackle the startup system totally.
• Provide funding missions for startups in innovation areas crucial to India.
• Encourage blockchain technology in payment systems.

UNIVERSAL BROADBAND

• Reach broadband across the country, keep it affordable.
• Go for satellite broadband in remote areas.

EASE OF DOING BUSINESS

• Much progress made, but the cost of doing business is still high.
• Multiple last-mile hurdles, particularly in the states.
• Massive review of policy, rules and regulations to simplify business.
• Use technology for governance and nonintrusive oversight.

SOME OTHER TARGET AREAS

• Comprehensive social security, which would also make labour reforms easier.
• Steps towards low carbon economy; continued emphasis on EVs and renewables.
• Further relaxation of foreign investment where possible.
• Massive privatisation to reduce state sector.
• Clear framework to bring back private investment in infrastructure.
• Framework for dispute resolution and enforceability of contracts.

THE WAY FORWARD

• The journey of three decades of economic reforms has certainly transformed our economy from a slow and regulated to a fastened and liberalised path of growth. During this process, what was really missed out was the large workforce of the informal sector. This non-inclusive approach is one of the limitations of the trickle-down economic growth model and needs serious revision.
• The 1991 reforms have provided the required dynamism to the economy. However, it has fallen short in sustaining the pace of growth owing to structural and institutional deficits, including the model of development and centralised governance. 91% of the labour force participation working in the informal sector needs to be provided better avenues of employment by leveraging the inherent potentials of agriculture and allied sectors.
• In spite of the pandemic, the expenditure on the health sector is still low compared with our neighbours like Bangladesh and Sri Lanka, which are ahead of India in terms of human development. Social and political (governance) reforms are imperative to achieve the goal of sustainable and equitable economic growth.

THE CONCLUSION: While Covid-19 has been a big blow, the economy was already showing signs of deteriorating growth even in periods preceding the pandemic. This would require immediate intervention to tackle the predicaments of unemployment, poverty, and other social issues. The pandemic has also raised concerns over existing health infrastructure and the future of education. The government must make higher investments in these sectors.

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Disinvestment:

This is one of the most important strategies adopted by the Government of India as a part of its privatisation measures. A disinvestment is an act by which the government sells its complete or a part of its holding in a public sector unit to the private sector.

The disinvestment policies of the government also enable it to raise huge revenue to finance its fiscal deficit. About Rs. 20,000 cores were raised through disinvestment in public sector units between the period of 1991-92 to 2001-02.

The funds raised through disinvestment are also used:

1. To shut down the industries declared sick by the Board of Industrial and Financial Reconstruction (BIFR) and settle their claims.

2. To restructure and modernise the public sector enterprises.

3. To settle the public debt.

The disinvestment policies of the government, by bringing in private participation, improve the efficiency of public sector units by lowering their costs of production. It enables access to modern technology, thus, improving the quality of products and services. Disinvestment can be carried out through the public issue of equities to retail investors through Initial Public Offer (IPO).