THE CONTEXT: India registered an improvement of eight places in the annual Gender Gap Report, 2023 of the World Economic Forum (WEF) with respect to the previous report. It was ranked at 127 out of 146 countries in terms of gender parity. This editorial discussion analyses various aspects of gender parity highlighted in the report.

ABOUT THE INDEX

The Global Gender Gap Index annually benchmarks the current state and evolution of gender parity across four key dimensions:

• Economic Participation and Opportunity
• Educational Attainment
• Health and Survival
• Political Empowerment

The Global Gender Gap Index measures scores on a 0 to 100 scale and scores can be interpreted as the distance covered towards parity (i.e. the percentage of the gender gap that has been closed). Cross-country comparisons support the identification of the most effective policies to close gender gaps.

Findings with respect to the world: The global gender gap score in 2023 for all 146 countries included in this edition stands at 68.4% closed. At the current rate of progress, it will take 131 years to reach full parity.

Gender equality recovers to pre-pandemic levels, but pace of progress has slowed. The WEF’s Gender Gap Index, which measures gender parity in 146 countries, has shown an overall improvement of 4.1 percentage points since its inception in 2006.

FOUR SUBINDEXES

Economic Participation and Opportunity: This subindex measured gender-based gaps in workforce participation, remuneration and advancement.

Educational Attainment: Gender-based gaps in educational attainment were measured with the ratio of women to men enrolled in primary, secondary and tertiary education. The ratio of female to male literacy was also used as an indicator of a country’s long-term ability to educate women and men.

Health and Survival: The differences between women’s and men’s health were measured using the sex ratio at birth and the gap between women’s and men’s healthy life expectancy.

Political Empowerment: The gap between women and men at the highest level of political decision-making was measured by the ratio of women to men in ministerial positions and the ratio of women to men in parliamentary positions.

PROGRESS MADE

Health and Survival gender gap has closed by 96%

Educational Attainment gap has closed by 95.2%,

Economic Participation and Opportunity gaps closed by 60.1%

Political Empowerment gap has closed by 22.1%.

TIME NEEDED IN FUTURE TO CLOSE THE GAP

169 years for the Economic Participation and Opportunity gender gap

16 years for the Educational Attainment gender gap.

The time to close.

the Health and Survival gender gap remains undefined.

At the current rate of progress over the 2006- 2023 span, it will take 162 years to close the Political Empowerment gender gap

GENDER GAP IN THE ECONOMIC SPHERE

GENDER GAP IN LABOUR MARKET

• Women continue to face higher unemployment rates than men, with a global unemployment rate at around 4.5% for women and 4.3% for men.
• Even when women secure employment, they often face substandard working conditions: a significant portion of the recovery in employment can be attributed to informal employment, whereby out of every five jobs created for women, four are within the informal economy; for men, the ratio is two out of every three jobs.

GENDER GAPS IN THE LABOUR MARKETS OF THE FUTURE

• Science, technology, engineering and mathematics (STEM) occupations are an important set of jobs that are well remunerated and expected to grow in significance and scope in the future.
• Women make up almost half (49.3%) of total employment across non-STEM occupations, but just 29.2% of all STEM workers.

ARTIFICIAL INTELLIGENCE

• When it comes to artificial intelligence (AI) specifically, talent availability overall has surged, increasing six times between 2016 and 2022, yet female representation in AI is progressing very slowly.
• The percentage of women working in AI today is approximately 30%, roughly 4 percentage points higher than it was in 2016.

GENDER GAPS IN THE SKILLS OF THE FUTURE

• Online learning offers flexibility, accessibility and customization, enabling learners to acquire knowledge in a manner that suits their specific needs and circumstances.
• However, women and men currently don’t have equal opportunities and access to these online platforms, given the persistent digital divide.
• Except for teaching and mentoring courses, there is disparity in enrolment in every skill category. For enrolment in technology skills such as technological literacy (43.7% parity) and AI and big data (33.7%), which are among the top 10 skills projected to grow, there is less than 50% parity and progress has been sluggish.

GENDER GAPS IN POLITICAL LEADERSHIP

• Much like in the case of representation of women in business leadership, gender gaps in political leadership continue to persist. Although there has been an increase in the number of women holding political decision-making posts worldwide, achieving gender parity remains a distant goal and regional disparities are significant.
• Approximately 27.9% of the global population, equivalent to 2.12 billion people, live in countries with a female head of state. While this indicator experienced stagnation between 2013 and 2021, 2022 witnessed a significant increase.
• Another recent positive trend is observed for the share of women in parliaments. In 2013, only 18.7% of parliament members globally were women among the 76 countries with consistent data. By 2022, this number had risen steadily to 22.9%.
• Significant strides have also been made in terms of women’s representation in local government globally. Out of the 117 countries with available data since 2017, 18 countries, including Bolivia (50.4%), India (44.4%) and France (42.3%), have achieved representation of women of over 40% in local governance.

ANALYSIS OF THE SOUTHERN ASIA

• Southern Asia has achieved 63.4% gender parity, the second-lowest score of the eight regions. The score has risen by 1.1 percentage points since the last edition which can be partially attributed to the rise in scores of populous countries such as India, Pakistan and Bangladesh.
• Along with Bhutan, these are the countries in Southern Asia that have seen an improvement of 0.5 percentage points or more in their scores since the last edition.
• Bangladesh, Bhutan and Sri Lanka are the best-performing countries in the region, while Pakistan, Iran and Afghanistan are at the bottom of both the regional and global ranking tables.
• At the current rate of progress, full parity in the region will be achieved in 149 years.

ANALYSIS OF PROGRESS OF INDIA IN GENDER PARITY

India has closed 64.3% of the overall gender gap, ranking 127th on the global index. It has improved by 1.4 percentage points and eight positions since the last edition, marking a partial recovery towards its 2020 (66.8%) parity level.

• The country has attained parity in enrolment across all levels of education. However, it has reached only 36.7% parity on Economic Participation and Opportunity.
• Although there were positive strides in wage and income parity, the representation of women in senior positions and technical roles saw a slight decline since the previous year, posing obstacles to India’s progress in economic empowerment.
• On the Health and Survival index (95%), the improvement in sex ratio at birth by 1.9 percentage points to 92.7% has driven up parity after more than a decade of slow progress. Compared with top scoring countries that register a 94.4% gender parity at birth, the indicator stands at 92.7% for India.
• It is said that for Vietnam, Azerbaijan, India and China, the relatively low overall rankings on the Health and Survival sub-index is explained by skewed sex ratios at

THE ISSUES

Lower FLFR

• According to the latest data available from the Centre for Monitoring Indian Economy (CMIE), India’s labour force participation rate (LFPR) fell to 39.5% in the last financial year (2022-23) that ended in March. This is the lowest LFPR reading since 2016-17. The LFPR for men stood at a seven-year low of 66% while that of women was pegged at a mere 8.8%.

REASON FOR LOW LFPR

Social reasons

• The disproportionate burden of household duties, accompanied by mobility and safety constraints, results in women forgoing their employment. A recent NITI Aayog report states that women in India spend 9.8 times more time than men on unpaid domestic chores (against a global average of 2.6 as reported by UN Women).
• Despite inadequate job creation, household incomes did rise, which potentially reduced women’s participation, especially in subsidiary activities (“income effect”) due to change in preferences.

Maternity factor

• Maternity benefits Act 2016 increased cost for companies so they are reluctant to hire the female employees.
• Non – availability of quality day-care

Barriers to migration for women:

• A significant proportion of women usually engaged in domestic duties reported their willingness to accept work if the work was made available at their household premises.

Workplace Safety

• Out of the population of working women, more than 90 percent work in the informal sector. They are either self-employed or casual workers, predominantly in agricultural and construction sectors. This means that they face increased exploitation, poor working conditions, lack of mobility, and higher risk of violence. This discourages women from entering the workforce.
• Sexual Harassment at the Workplace-While policies such as Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and National Crèche scheme have been enacted by the government, there is limited compliance by industries leading to women facing challenges at work and then choosing to drop out of the workforce.
• 31% of industries is not compliant with POSH. ICC is not constituted  in these (NCRB data shows- sexual harassment within office premises more than doubled)
• Biasness and Sterotyping
• gendering of occupations-Glass ceiling effect
• Gender Pay Gap- According to the Report “Women and Men in India 2022″ released by the National Statistical, wage disparity between men and women has widened over the past decade, with the gap opening up further at higher wage levels.

Policiy/Administartive

• Lack of comprehensive policy support and effective implementation.
• While the government has introduced a number of policies to promote gender equality; lack of convergence in existing initiatives, gender disaggregated data and adequate gender transformative policies by the government, further leads to women dropping out of the workforce.

APPROACH

• As per McKinsey Global Institute’s report, India could achieve an 18 percent increase over business-as-usual GDP (USD 770 billion) by 2025.
• In order to sustain and accelerate the improving LFPR for females, India must adopt a three-pronged approach with active participation, interventions and collaborations on awareness, policy change, implementation and retention initiatives from the trio of samaaj (society), sarkaar (government) and bazaar (business).
• The focused support of the government to catalyse female LFPR through convergence of their efforts through different ministries is the key to fostering the contribution of women in the economy.
• Stronger implementation through gender audits and availability of gender disaggregated data for implementation of existing policies such as equal pay for equal work, POSH, crèche services, etc.
• Enable incentives for companies with equal gender representation across levels will ensure compliance with the policies enacted. For example: post the Hindu Succession (Amendment) Act, 2005, India witnessed an impressive surge in the number of women owning or managing agricultural land as per a World Bank-backed study.
• Mapping of women’s aspirations to available opportunities in the job market, encouraging return to work post break/ maternity leave with effective support and upskilling opportunities are few critical steps to be taken by the industry across the sector.
• Corporates also need to be compliant with policy guidelines such as equal pay, crèche facilities, POSH, etc. to encourage women to continue work, feel safe and valued. For instance, while sexual harassment cases at offices declined in FY 21 due to remote working, 97% firms are still unaware of the POSH Act. Setting up a Women Skill Impact Bond will enable skilling and retention of women in the workforce.
• Need a comprehensive approach to improving labour market outcomes for women through improving access to and relevance of education and training programs, skills development, access to child care, maternity protection, and provision of safe and accessible transport, along with the promotion of a pattern of growth that creates job opportunities.

WOMEN REPRESENTATION IN STEM

• According to The Equality Equation: Advancing the Participation of Women and Girls in STEM, a World Bank report that provides a rich overview of global patterns of gender gaps in STEM education, merely 18% of girls enrolled at the tertiary level are pursuing studies in the field of STEM, as compared to 35% of boys.
• The scenario, however, is much better in India, with nearly 43% of STEM graduates being women, as opposed to other developed nations like the United States, Canada, and the UK, where there are fewer women – 34%, 31% and 38%, respectively – studying STEM at the tertiary level.
• However, we must recognise that this figure must translate into employability and leadership. Data from the National Science Foundation showed that while 52 per cent of women enrolled for science, technology, engineering and math courses for graduation, only 29 per cent actually joined the STEM workforce. Even at the C-suite level only 3 per cent of women hold CEO posts in the STEM Industry.

Steps to be Taken:

• Open pathways and dismantle biases that prevent girls from dreaming of a career in science. Address their obstacles by creating conducive workplaces, improving employment prospects and providing them with support that empowers them—able mentorship, skills, leadership development and equal opportunities.
• There is a need for male allies who further facilitate this at the individual, organisational and institutional level. They play an essential role in creating a more diverse and inclusive workplace, that also leads to sustainable and inclusive growth for any organisation.

Political Front:

• On Political Empowerment, India has registered 25.3% parity, with women representing 15.1% of parliamentarians, the highest for India since the inaugural 2006 edition.
• Out of the 117 countries with available data since 2017, 18 countries — including Bolivia (50.4%), India (44.4%) and France (42.3 %) — have achieved women’s representation of over 40% in local governance.

ISSUE OF THE UNDER REPRESENTATION OF WOMEN

WHAT ARE THE REASONS

• One of the main barriers to participation of women in politics in this country is illiteracy. India has one of the largest illiterate populations. Illiteracy limits the ability of the women to understand the political system and issues.
• Poverty is another barrier which has led to low political participation of women in India. Often poor people have no direct voting stance. It is often influenced by rich and well-off people.
• Role of Money power in politics makes it harder for women to enter the political forum.
• The institution of marriage is another barrier which leads to less political participation of women in India. After a woman gets married, all her political decisions are controlled by the family.it is most often those women who have a political background that enter into electoral arena.
• The unhealthy political environment
• On the reserved seats, at the local level, political leaders take positions in the name of their wife, and after winning elections, actual power is used by their male counterparts instead of women. (Concept of sarpanch pati raj/pati panchayat phenomenon)

WHAT CAN BE DONE

• Women representatives should form into a ‘critical mass’ so as to act as a pressure group in the legislature. A critical mass of women in politics can bring to the agenda issues of crucial concern to women which are often otherwise neglected or relegated to second place, such as contraception.
• Devise, launch and promote public campaigns to alert public opinion to the usefulness and advantages for society as a whole of balanced participation by women and men in decision- making.
• Women should form their own political parties such as those existing in Canada, Germany, Iceland.
• Expansion of educational opportunities for women, greater recognition of their unpaid work, wider representation in electoral politics, legislative and legal mechanisms to safeguard their rights and equal opportunities for participation in the decision-making process are some other things which would strengthen the process of empowerment.
• The Women’s Reservation Bill gives 33 per cent reservation for women seats in all levels of Indian politics. This is an attempt to increase female political participation.

GOVERNMENT INITIATIVES FOR REDUCING GENDER GAP IN ALL ASPECTS OF SOCIAL, ECONOMIC AND POLITICAL LIFE

Economic Participation & Opportunity and Health & Survival: Various programmes/Schemes that are intended towards women development and empowerment are:

• Beti Bachao Beti Padhao (BBBP) ensures the protection, survival and education of the girl child.
• Mahila Shakti Kendra (MSK) aims to empower rural women with opportunities for skill development and employment.
• Working Women Hostel (WWH) ensures the safety and security for working women.
• Scheme for Adolescent Girls aims to empower girls in the age group 11-18 and to improve their social status through nutrition, life skills, home skills and vocational training
• The National Crèche Scheme ensures that women take up gainful employment through providing a safe, secure and stimulating environment to the children.
• Pradhan Mantri Matru Vandna Yojna aims to provide maternity benefit to pregnant and lactating mothers.
• Sukanya Samriddhi Yojna(SSY) – Under this scheme girls have been economically empowered by opening their bank accounts.
• Skill Upgradation & Mahila Coir Yojna is an exclusive training programme of MSME aimed at skill development of women artisans engaged in coir Industry.
• Prime Minister’s Employment Generation Programme (PMEGP) – a major credit- linked subsidy programme aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector
• Female Entrepreneurship: To promote female entrepreneurship, the Government has initiated Programmes like Stand-Up India and Mahila e-Haat (online marketing platform to support women entrepreneurs/ SHGs/NGOs), Entrepreneurship and Skill Development Programme (ESSDP). Pradhan Mantri Mudra Yojana (PMMY) provides access to institutional finance to micro/small business.

Educational Attainment: Several steps and initiatives have been taken up in school education system such as:

• National Curriculum Framework (NCF) 2005 and flagship programme like Samagra Shiksha and the subsequent Right to Education Act (RTE).
• Kasturba Gandhi Balika Vidyalayas (KGBVs) have been opened in Educationally Backward Blocks (EBBs).
• Gender sensitisation is also done which includes gender sensitization Module – part of in-service training, construction of toilets for girls, construction of residential quarters for female teachers and curriculum reforms.

Political Participation:

• To bring women in the mainstream of political leadership at the grass root level, government has reserved 33% of the seats in Panchayati Raj Institutions for women.
• Capacity Building of Panchayat Stakeholders including Elected Women Representatives (EWRs) of Ministry of Panchayati Raj is conducted with a view to empowering women to participate effectively in the governance processes.

THE CONCLUSION: Increasing women’s economic participation and achieving gender parity in leadership, in both business and government, are two key levers for addressing broader gender gaps in households, societies and economies. Collective, coordinated and bold action by private- and public-sector leaders will be instrumental in accelerating progress towards gender parity and igniting renewed growth and greater resilience. Recent years have seen major setbacks and the state of gender parity still varies widely by company, industry and economy. Yet, a growing number of actors have recognized the importance and urgency of taking action, and evidence on effective gender parity initiatives is solidifying.

Mains Question

1. Analyse various dimensions of gender parity in the context of the recently published Global Gender Gap report.
2. Despite various government initiatives India has not been able to plug gender gap, Critically analyse the statement.

THE CONTEXT: The Supreme Court decision on political crises in Maharashtra which started in 2022 needs to be understood comprehensively. Even though the court has answered a few of the questions in the context of the Anti-Defection Law but some are still left in a lurch. This write-up explains the political crises that unfolded in Maharashtra and what the Supreme Court has said and analyses the judgment in the context of the future of the Anti-Defection law.

ABOUT THE ANTI – DEFECTION LAW

• The Tenth Schedule – popularly known as the Anti-Defection Act – was included in the Constitution via the 52nd Amendment Act, of 1985. This was done to bring stability to governments by discouraging legislators from changing parties.
• It is interesting to note that the law does not penalize political parties for encouraging or accepting defecting legislators however it punishes individual Members of Parliament (MPs)/MLAs for defection.
• The decisions on questions as to disqualification on the ground of defection are referred to the Speaker/Chairman of the House, which is subject to ‘Judicial review’.
• However, the law does not provide a timeframe within which the presiding officer has to decide a defection case.
• The 91st Constitutional Amendment Act, 2003, changed the initially envisaged 1/3rd to now at least two-thirds of the members of a party must be in favour of a “merger” for it to have validity in the eyes of the law.

THE GROUNDS FOR DISQUALIFICATION UNDER THE ANTI-DEFECTION LAW

The Tenth Schedule of the Constitution deals with the grounds for disqualification of legislators on account of defection. These are:

• If an elected member voluntarily gives up his membership in a political party.
• If he votes or abstains from voting in such House contrary to any direction issued by his political party or anyone authorized to do so, without obtaining prior permission.
• As a pre-condition for his disqualification, his abstention from voting should not be condoned by his party or the authorized person within 15 days of such an incident.
• If any independently elected member joins any political party.
• If any nominated member joins any political party after the expiry of six months.

Exceptions: Paragraph 4 of the Tenth Schedule says,
4. Disqualification on the ground of defection is not to apply in case of a merger—
(1) A member of a House shall not be disqualified under subparagraph (1) of paragraph 2 where his original political party merges with another political party and he claims that he and any other
members of his original political party—
(a) have become members of such other political party or, as the case may be, of a new political party formed by such merger; or
(b) have not accepted the merger and opted to function as a separate group, and from the time of such merger, such other political party or new political party or group, as the case may be, shall be deemed to be the political party to which he belongs for the purposes of sub-paragraph (1) of paragraph 2 and to be his original political party
for the purposes of this subparagraph.
(2) For the purposes of sub-paragraph (1) of this paragraph, the merger of the original political party of a member of a House shall be deemed to have taken place if, and only if, not less than two thirds of the members of the legislature party concerned have agreed to such merger.

THE POLITICAL CRISIS IN MAHARASHTRA

• The present crisis in Maharashtra where the MLAs have its root in the 2019 formation of the coalition government in the state (Maha Vikas Aghadi).
• In 2022, the MLAs from the Shiv Sena distanced themselves from the coalition and showed faith in a new leader (The Shiv Sena had 55 members in the Maharashtra Assembly, Eknath Shinde, who lead the rebel group, claimed the support of 40 MLAs with him)
• Mr Thackeray urged the Deputy Speaker to initiate disqualification proceedings against the rebel Shiv Sena MLAs, including Mr Eknath Shinde.
• Interestingly, two independent MLAs moved a ‘no confidence motion against the Deputy Speaker and sought his removal from his position. Deputy Speaker rejected the motion and went ahead with the disqualification proceedings against the rebel MLAs. The Shinde faction was given two days to respond to the disqualification notice.
• The Shinde faction challenged the disqualification notice, stating that the deputy speaker had no authority anymore and that the 2 day time to respond was lesser than the mandated 7 days. This gave the rebel Shiv Sena MLAs 12 days of ‘breathing time’ to respond to the disqualification notice.
• The Shinde faction now approached the Governor to conduct the floor test in the Maharashtra Legislative Assembly which forced the Thackeray faction to approach the Court again with the
  argument that MLAs who were themselves facing disqualification had no authority to call a noconfidence motion. The Supreme Court, however, refused to stay the floor test.
• Refusing to be subject to the floor test, Mr Thackery resigned as Chief Minister, making way for Mr Shinde to be the Chief Minister of Maharashtra.
• Later the Thackery faction approached the Supreme Court challenging the decision of Speaker and the Governor and the Supreme Court referred the matter to the Constitution bench.

THE CONTENTIONS RAISED BY THE THACKERAY FACTION

• The acts of members of a political party within the Legislative Assembly who separate themselves from the party should incur disqualification.
• The Governor should not have administered the oath of office to Eknath Shinde while the proceedings before the Supreme Court were pending.
• The Thackeray faction also accused the Speaker of bias saying that the notices for disqualification were dealt with in a discriminatory manner.

THE SUPREME COURT JUDGMENT

The Supreme Court in Subhash Desai VS Principal Secretary, Governor of Maharashtra & Ors. (Maharashtra political crises case) gave the judgment in May 2023:

• To decide whether a notice for removal of a Speaker would restrict the powers of the Speaker to issue disqualification notices to MLAs the court has referred its Nabam Rebia (2016) judgment to a larger Bench.
• The Speaker must decide on disqualification petitions within a reasonable period and the Supreme Court cannot ordinarily adjudicate petitions for disqualification under the Tenth Schedule of the Constitution of India in the first instance.
• An MLA has the right to participate in the proceedings of the House until the date when the Speaker decides on the disqualification petition.
• The political party and not the legislature party appoints the Whip and the Leader of the party in the House.
• The Speaker and the ECI are empowered to concurrently adjudicate on the petitions before them under the Tenth Schedule and under Paragraph 15 of the Symbols Order respectively and that the proceedings before one constitutional authority cannot be halted in anticipation of the decision of another constitutional authority.
• The defence of ‘split’ is no longer available to members facing disqualification proceedings (Paragraph 3 of the Tenth Schedule is deleted) and both the factions can continue as members of the House if the requirements of Paragraph 4(1) of the Tenth Schedule are satisfied.
• The Speaker would prima facie determine who the political party is for the purpose of adjudicating disqualification petitions.
• The court also said that the political crisis in Maharashtra was a result of party differences within the Shiv Sena and that the floor test cannot be used as a medium to resolve internal party disputes or intra-party disputes.
• Dissent and disagreement within a political party must be resolved in accordance with the remedies prescribed under the party constitution (submitted to the Election Commission of India); or through any other method that the political party may opt for.
• Speaking on the actions of the Governor the court said that the gubernatorial conduct in directing the Chief Minister to floor test was not actuated by objective material and hence the exercise of discretion by the Governor in this case was not in accordance with law.
• However, inviting Eknath Shinde to form the government as the post of the Chief Minister of Maharashtra fell vacant after Uddhav Thackeray’s resignation was justified.

THE IMPACT OF THE JUDGMENT ON DEFECTION

• Split is not an escape route for avoiding defection; the only exception is merger according to the provisions provided in the tenth Schedule.
• The Anti-defection law was enacted to bring control over the political parties and the Supreme Court judgment reinforces this idea by making a distinction between a political party and a legislature party. This would certainly limit the role of the legislature party.
• The judgment has accorded the power to decide on the disqualification upon the Speaker even if a motion of resolution for his own removal from the Office of Speaker is pending. This goes against the previous judgment of the Supreme Court in the Nabam Rebia (2016) case. For the time being the Court directed the Nabam Rebia’s case to be reconsidered by a 7-judge bench as an essential question of law remains to be settled.
• Although the Speaker and the ECI are two independent constitutional authorities, in the case of defection the decision of one authority will have implications on the decisions of the other. As the beginning point is the question of disqualification under defection, the proceedings under the ECI should wait until the question is addressed by the Speaker. Otherwise, one authority will use the decision of the other to justify its own decision and in the process, justice might become casualty.

ISSUES WITH THE JUDGMENT

• The Supreme Court has emboldened the role of the Speaker in deciding the cases of defection even though the most glaring loophole in the anti-defection law is the role of the Speaker itself, as some Speakers do play a partisan role, given their party membership.
• The judgement does not explicitly declare the present government formed by Mr Shinde either as unconstitutional or contrary to the norms of constitutional morality, even though the court expressed its displeasure on the role played by the Speaker and the Governor. This is baffling as this may further provide an incentive to defect in the future.
• The judgment has not provided a time frame for the Speaker to decide upon the disqualification question. The court should have reiterated the observation made in Keisham Meghachandra Singh vs the Hon’ble Speaker Manipur Legislative Assembly & Ors. (2020) case wherein the court held that unless there are any exceptional circumstances, disqualification petitions under the Tenth Schedule should be decided by Speakers within three months.

THE ANALYSIS OF THE SUPREME COURT JUDGMENT

There are conflicting interpretations of Kihoto Hollohan and Nabam Rebia judgment regarding the power of the Speaker to decide a disqualification petition. Because of this issue, the matter has been referred to a larger bench, which can provide an authoritative pronouncement on the issue. The Court also held that the Maharashtra Governor did not act in accordance with the law in calling for a floor test. The court further held that the Constitution does not empower the Governor to enter the political arena and play a role either in inter-party disputes or in intra-party disputes. This is a critical proposition that denunciates the active role that Governors are increasingly playing in the formation of state governments. The court also called out the illegal actions of the Speaker which must persuade the Speaker to act impartially and independently within a reasonable time frame to decide on the question of disqualification. However, remitting the matter back to the same speaker whose actions the court termed illegal will be similar to placing too much faith in the impartiality of the Speaker. Also, despite holding that the government formation was illegal the court failed to provide complete justice as it refused to reinstate a democratically elected government by taking shelter under the superficial ground of resignation by the Chief Minister.

THE WAY FORWARD:

• The Speaker should observe ethical conduct and give decisions within a reasonable period as advised by the Supreme Court.
• Political parties shall also have internal democracy to listen and act on different opinions emerging from within. This might restrict the defecting tendencies among the elected representatives and also help in the overall strengthening of the parliamentary democracy in the country.
• The Law Commission in 1999 and the National Commission to Review the Working of the Constitution (NCRWC) in 2002 recommended deleting the clause related to the merger (Paragraph 4, Exception to Disqualification). Parliament should reconsider the debate and decide on the recommendations.
• The Supreme Court needs to maintain consistency in deciding matters over the role and responsibilities of the Speaker and Governor.
• People themselves shall be made aware and educated about their role in the parliamentary democracy and also with the issues of defection and that their franchise shall not be misused by the elected representatives.
• The Anti-Defection Law has failed to curb defections in recent years and lacks any deterrence effect on legislators. The law shall be reformed/amended to address the pertaining issues.

THE CONCLUSION

As defections continue unabated and Speakers refrain from acting on these developments based on their political loyalties, there is a strong case to reform the anti-defection law. The judgment assumes significance for its candid reminder to both the Constitutional authorities; Speaker of the House and the Governor, to live up to the constitutionally generated legitimate expectations held by the people of the Republic of India. It is also imperative for the political leaders and the legislatures that the four walls of the legislature should be protected from extra-parliamentary influences and not be seen as collaborators in flouting the constitutional provisions.

Mains Practice Questions:

1. Anti-defection law was introduced as a panacea for the menace of floor-crossing and toppling of elected regimes, however, the recent events raise questions over its efficacy. Critically discuss.
2. Due to the Anti-Defection law, the idea of accountability has been distorted by making legislators accountable to the political party. Comment.

ADDITIONAL INFORMATION

VARIOUS INCIDENTS RELATED TO DEFECTION IN INDIAN POLITY

We know that the anti-defection law does not apply if the number of MLAs who leave a political party constitutes two-thirds of the party’s strength in the legislature. These MLAs can merge with another party or become a separate group in the legislature. For example,

• In 2021 in Meghalaya, 12 of 17 Congress MLAs joined the All India Trinamool Congress. the Speaker recognised as a ‘merger’ the crossover of 12 Congress MLAs out of a total of 17 to the Trinamool Congress and refused to disqualify them.
• In 2019 Rajasthan , all six MLAs of the Bahujan Samaj Party in Rajasthan joined the Congress. The same year, four out of six Telgu Desam Rajya Sabha MPs joined the BJP. In all such cases, the MPs/MLAs were not disqualified.

RESIGNATION AND ANTI-DEFECTION LAW

• In Karnataka, the 2018 elections threw up a hung assembly. After the Bharatiya Janata Party failed to prove its majority after BS Yediyurappa took an oath, the Congress and the Janata Dal-Secular formed the government under the leadership of HD Kumaraswamy. But a year later, the resignations by Congress and JDS MLAs reduced the government to a minority and the government later fell. The rebel MLAs were later elected on a BJP ticket in the by-elections.
• Again in 2018, Congress won the Madhya Pradesh elections and formed a government under Kamal Nath. Less than a year later, 23 Congress MLAs including six ministers owing allegiance to Jyotiraditya Scindia resigned. The MLAs later joined the BJP government after winning by-elections.

The resignation is the way to circumvent the Anti-defection law and attract punishments thereby prescribed. However, some also contend that if the person is no longer satisfied by the ideologies or the policies of the government then the only way is to resign. It is hard to ascertain whether the resignations are voluntary or under coercion.

THE ISSUES WITH ANTI-DEFECTION LAW

UNDERMINING REPRESENTATIVE & PARLIAMENTARY DEMOCRACY

• After enactment of the Anti-defection law, the MP or MLA has to follow the party’s direction blindly and has no freedom to vote in their judgment.
• Due to the Anti-Defection law, the chain of accountability has been broken by making legislators accountable primarily to the political party.

AMBIGUITY OVER MERGER CLAUSE

• The confusion is about the use of the terms ‘Political Party’ and ‘Legislature Party’. It is not clear whether political parties should merge amongst themselves before the merger of elected members (Legislature Party) of two distinct parties. The merger envisaged in Paragraph 4 of the Tenth Schedule is a two-step process. Under this, one political party first merges with another, and then the legislators accept the merger.
• However, the second subparagraph (of Paragraph 4) says that a party shall be “deemed” to have merged with another party if not less than 2/3rd of the members of the legislature party concerned have agreed to such merger.
• The ambiguity is whether the merger of the Legislature Party would be deemed to be the merger of the Political party as well. Legal experts from the Vidhi Center of Legal Policy argue that the clause seems to be creating a “legal fiction” so as to indicate that a merger of 2/3rd members of a legislature party can be deemed to be a merger of political parties. Even if there is no actual merger of the original political party with another party.

SUBVERSION OF ELECTORAL MANDATES

• Defection is the subversion of electoral mandates by legislators who get elected on the ticket of one party but then find it convenient to shift to another, due to the lure of ministerial berths or financial gains.

AFFECTS THE NORMAL FUNCTIONING OF THE GOVERNMENT

• The infamous “Aaya Ram, Gaya Ram” slogan was coined against the background of continuous defections by the legislators in the 1960s.
• The defection leads to instability in the government and affects the functioning of the administration.

ALLOWS ONLY WHOLESALE DEFECTION

• It allows wholesale defection, but retail defection is not allowed. Amendments are required to plug the loopholes.
• He raised concern that if a politician is leaving a party, s/he may do so, but they should not be given a post in the new party.

CONTROVERSIAL ROLE OF SPEAKER

• There is no clarity in the law about the timeframe for the action of the House Chairperson or Speaker in the anti-defection cases.
• Some cases take six months and some even three years. There are cases that are disposed of after the term is over.
• Being members of political parties, some Speakers do play a partisan role.

FREEDOM OF SPEECH OF LEGISLATORS

• One of the conditions for disqualification is the violation of the whip issued by the Political Party to vote in a particular manner. Critics argue that this greatly limits the ability of a member to exercise her free opinion on the floor of the House on certain proposed legislation.

PROMOTE HORSE-TRADING

• Defection also promotes horse-trading of legislators which clearly go against the mandate of a democratic setup.

VIEWS OF VARIOUS COMMITTEES ON ANTI-DEFECTION LAW

DINESH GOSWAMI COMMITTEE ON ELECTORAL REFORMS (1990)

• Disqualification should be limited to cases where (a) a member voluntarily gives up the membership of his political party, (b) a member abstains from voting, or votes contrary to the party whip in a motion of vote of confidence or motion of no-confidence. The issue of disqualification should be decided by the President/ Governor on the advice of the Election Commission.

LAW COMMISSION (170TH REPORT, 1999)

• Provisions which exempt splits and mergers from disqualification to be deleted.
• Pre-poll electoral fronts should be treated as political parties under the antidefection law.
• Political parties should limit the issuance of whips to instances only when the government is in danger.

ELECTION COMMISSION

• Decisions under the Tenth Schedule should be made by the President/ Governor on the binding advice of the Election Commission.

CONSTITUTION REVIEW COMMISSION – NCRWC (2002)

• Defectors should be barred from holding public office or any remunerative political post for the duration of the remaining term.
• The vote cast by a defector to topple a government should be treated as invalid.
• Recommendations:

On Presiding Officer: Various expert committees have recommended that rather than the Presiding Officer, the decision to disqualify a member should be made by the President (in case of MPs) or the Governor (in case of MLAs) on the advice of the Election Commission.

Similar to Office of Profit: This would be similar to the process followed for disqualification in case the person holds an office of profit (i.e. the person holds an office under the central or state government which carries a remuneration, and has not been excluded in a list made by the legislature).

JUDICIAL PRECEDENTS

1. KIHOTO HOLLOHAN vs ZACHILLHU (1992): In the judgment, the Supreme Court clarified that the 10th schedule is constitutionally valid. It neither impinges upon the freedom of speech and expression nor subverts the democratic rights of elected members. It also upheld the sweeping discretion available to the Speaker in deciding cases of disqualification of MLAs. However, it also held that the Presiding Officer’s decisions of disqualification shall be open to judicial review. The Supreme Court also held that judicial review cannot be available prior to the making of the decision by the Speaker not at the interlocutory stage of the proceedings.
2. RAVI S NAIK vs UNION OF INDIA (1994): The Supreme Court had said that “ an inference can be drawn from the conduct of a member that he has voluntarily given up the membership of the party to which he belongs.
3. NABAM REBIA vs DEPUTY SPEAKER (2016): The court had ruled that it would be “constitutionally impermissible for a Speaker to adjudicate upon disqualification petitions under the Tenth Schedule while a motion of resolution for his own removal from Office of Speaker is pending”. (NOW REFERRED TO LARGER CONSTITUTION BENCH)
4. GISIRSH CHANDONKAR vs THE SPEAKER, GOA (2011): The Bombay High Court held that the merger of 2/3rd of members of the legislative assembly is deemed to be the merger of the original party. (subjudice in Supreme Court).
5. Keisham Meghachandra Singh case (2020): The Supreme Court in Keisham Meghachandra Singh vs. the Hon’ble Speaker Manipur Legislative Assembly & Ors. (2020) case made a significant suggestion regarding disqualification powers of the Speaker. The Court was adjudicating upon the matter relating to the disqualification of Members of the Legislative Assembly (MLAs) in the Manipur Legislative Assembly under the Tenth Schedule. The Court recommended the Parliament to amend the Constitution regarding the role of the Speaker as a quasi-judicial authority while dealing with disqualification petitions under the anti-defection law (when such a Speaker continues to belong to a particular political party either de jure or de facto). The Court suggested that an independent tribunal can be appointed which will substitute the Speaker of the Lok Sabha and Legislative Assemblies to deal with matters of disqualifications under the Tenth Schedule. The Tribunal will be headed by a retired Supreme Court judge or a retired Chief Justice of a High Court. The Court also suggested that some other outside independent mechanism can adjudicate on such matters. This will ensure that such disputes are decided both swiftly and impartially.

ANTI-DEFECTION LAWS IN OTHER PARTS OF THE WORLD

EUROPE

• There are strict laws in all the countries of Europe that if a member changes party, then their membership of Parliament is terminated. It is believed that the person has violated the laws of the country.

IMMEDIATE RESIGNATION IN BANGLADESH

• In Bangladesh, Kenya, South Africa and many other countries, no public representative can do defection. The law doesn’t even allow it. Article 70 of the Bangladesh Constitution states that if a public representative votes against his party in the House or changes the party, he must resign from membership.

SEAT HAS TO BE VACATED IN KENYA

• In Kenya, Section 40 of their Constitution states that if a member leaves his party, he must vacate his seat. Speaker will decide this and the member can appeal against it in the High Court.

IMPOSSIBLE TO CHANGE PARTY IN SINGAPORE

• According to Article 46 of the Constitution of Singapore, if a member leaves the party or is removed by the party, he must also vacate his seat. Parliament will decide the disqualification of any such member.

MEMBERSHIP OF THE HOUSE ENDS IN SOUTH AFRICA

• This is explained in Section 47 of the Constitution of South Africa. According to it, if a member leaves his party, then his membership will automatically end.

FLEXIBLE RULES IN UK AND CANADA

• In Britain and Canada, the rules are flexible, but there is generally no opportunistic defection to form or topple governments. There the defection is called crossing the line. In Britain and Canada, the ruling party and the opposition sit separately. There, if a member crosses his floor and sits on the other side, then it is considered as a change of party.

THE CONTEXT: Recently, the Competition Commission of India (CCI) has imposed a penalty of Rs. 936.44 crores on Alphabet-owned Google for “abusing its dominant position” in markets related to the Android mobile device ecosystem. This article analyses the issues with the growing dominance of Big tech giants and the challenges involved in regulating them.

ABOUT BIG TECH

• The term ‘Big Tech’ is often used to refer to a handful of large technology companies, clubbed together as the Big Four Google, Amazon, Facebook, and Apple have a widespread presence in India. Sometimes, this terminology includes companies like Microsoft, IBM, Baidu, Tencent, and Alibaba. Reliance Jio also displays some of the conceptual markers associated with Big Tech.
• Big Tech is a concept, rather than a static set of companies, which also draws attention to the role of the Indian state since it seeks to leverage data analytics and digital platforms for governance.
• The ‘bigness’ of these large technology companies is reflected in their market valuations, user base, and range of product offerings.
• Their revenues are higher than the GDP of some countries. However, the term ‘Big Tech’ has come to indicate more than just scale and financial strength. It also draws attention to their growing political, social, and cultural influence aspects that are often not shared by other kinds of ‘big’ businesses.
• Search engine giant Google was fined for the second time for abuse of its dominant market position, with the Competition Commission of India (CCI) penalising the company ₹936.44 crores for its app store billing policies. The regulator also issued a cease-and-desist order against Google regarding these policies.
• Google allows developers on its Play store to receive payments for their apps, audio, video, and games, as well as certain in-app purchases, solely through its Google Play Billing System, CCI said in a 199-page order, directing the company to modify its conduct within three months.

WHO ARE THE BIG TECH PLAYERS IN INDIA? AND HOW MUCH IS THEIR MARKET SHARE?

Three of the global Big Tech companies have a widespread presence in India Google, Facebook, and Amazon. Google products and services are ubiquitous in India.

• India constitutes Facebook’s largest market, with more than 270 million total users and 400 million monthly average users for Whatsapp.
• Google Android is a market leader in the mobile operating system market, with a 94.45% market share;42 Google Pay has also clocked more than 300 million transactions in India as of June 2019.
• Amazon also has a large presence, with at least 30% market share in e-commerce and more than 5.5 lakh sellers on its platform.
• While Apple is considered to be a Big Tech company globally, it has a significantly smaller market presence in India, with less than a 3% share in the smartphone market.
• Other foreign companies that display some of the conceptual markers of Big Tech also have a significant presence in India. For example, Walmart is a leader in the e-commerce space, with reportedly 60% market share through its subsidiary Flipkart.

CONTROVERSIAL PRACTICES IN WHICH BIG TECHS WERE INVOLVED IN INDIA:

COMPANIES 

CONTROVERSIAL PRACTICES

FACEBOOK AND TWITTER 

• Facebook and Twitter were criticized for censoring social media in favour of the Indian government during the 2020–2021 Indian farmers’ protest.
• Facebook employees themselves are questioning the procedure and content regulation practice of Facebook’s Indian team. 11 of its employees also wrote a letter to the Facebook management about the policy head’s decision to allow certain posts that spread hate and racial content.

GOOGLE

• The Competition Commission of India (CCI) imposed a penalty of ₹936.44 Crore on Google. The tech giant was found guilty of busing its market position on the Play Store to promote its payments app and in-app payment system.

INSTAGRAM

• The Bois Locker Room controversy refers to the investigation of an Instagram group chat started by a group of schoolboys from Delhi, India in 2020. The group chat’s purpose was to share obscene images of women, many of them underage, which lead to public outcry.

FLIPKART AND AMAZON

• Investigation has been initiated against e-commerce giants Amazon and Flipkart for alleged violation of foreign exchange law, the Enforcement Directorate (ED) Monday informed the Delhi High Court. A bench of Chief Justice Rajendra Menon and Justice A J Bhambhani noted the submissions of the ED that a case has been registered under provisions of the Foreign Exchange Management Act (FEMA) against the two companies.

TWITTER

• Twitter displayed a map of Leh as part of China and later as part of Jammu and Kashmir state (instead of a separate Union Territory). For that, a legal notice has been served to Twitter.

IS THERE ANY INDIAN BIG TECH?

• Reliance Jio also displays some of the conceptual markers associated with Big Tech. In 2019, Jio became India’s leading carrier in terms of the number of users. Since then, Reliance Jio has been expanding into new business verticals as an umbrella platform for all Reliance-owned businesses
• Thinking of Big Tech as a concept, rather than a static set of companies, also draws attention to the role of the Indian state as it seeks to use data analytics and digital platforms for governance.
• As of May 2020, Jio Platforms was reported to be the fourth-largest Indian company by market capitalisation. Much of this is on the back of recent global investments since March 2020, Jio Platforms has attracted more than $15 billion in investments.

HOW ARE BIG TECH COMPANIES ADOPTING IN INDIA?

• Currently, there are over 500 million internet users in India, making India the second largest internet user base in the world.
• Some reports indicate that by 2023 India will have more than 900 million internet users, with most of them accessing the internet through vernacular languages and video content.
• A large and vibrant digital economy is opening up in India due to the proliferation of mobile phones, the spread of internet services, a rising youth population, and the growing adoption of digital services.

INVESTMENTS IN RESEARCH AND DEVELOPMENT

• Big Tech companies seek to leverage and develop India’s large demographic pool for both global and India-focused Research and Development.
• In 2019, Facebook re-hauled the structure of its operations in India and decided to focus on bridging the gendered digital divide, encouraging social interventions to boost economic growth in India. It has done so by investing in startups like Meesho, aimed at nurturing female entrepreneurship.
• Similarly, Google recently established the Google AI Lab, a global research lab that aims to provide opportunities to local Indian talent. The lab will also explore opportunities to leverage Artificial Intelligence (AI) for social good.

EMPHASIS ON SERVICES IN LOCAL LANGUAGES

• Several Big Tech companies in India provides services over voice-based interfaces and in regional languages to address literacy-related barriers to digital services. For example, Google’s AdSense is available in Marathi, Hindi, Bengali, Tamil, and Telugu.67 In 2017, Google partnered with Reliance Jio to reuse its voice assistance technology to operate on feature phones.
• The user base of Google’s voice search has grown exponentially, with most users searching in Hindi.

ENTRY INTO FINTECH (FINANCIAL TECHNOLOGY)

• Fintech in India has boomed after demonetisation and the launch of UPI. Big Tech companies have adapted their business models to ride this wave.
• Since the launch of UPI, Google Pay has acquired nearly 70 million users and carried out more than 2.5 billion transactions,  closely followed by Walmart-owned PhonePe.
• Whatsapp Pay has been allowed a phased roll-out in India, provided Facebook maintains compliance with RBI’s data localisation norms.
• Aside from Amazon Pay, Amazon has also launched an instant zero-interest credit service in India, called Amazon Pay Later.

DIGITAL INFRASTRUCTURE

• In 2016, Google launched the Google Station project (now defunct) in India to provide free high-speed public Wi-Fi to more than 400 train stations in India.
• In June 2018, more than eight million people used the service every month. Google also announced plans to launch a second cloud region in India, to strengthen cloud services in India for businesses, hospitals, and public sector organizations, amongst others.

ONLINE AND OFFLINE SERVICES

• Many Big Tech companies are leveraging offline models of service delivery to effectively reach users in smaller towns and cities in India.

 BIG TECH COMPANIES INFLUENCE OUR MARKET AND SOCIETY IN FOUR KEY AREAS:

MARKET POWER

• Market operations of global Big Tech companies in India create benefits for consumers and businesses. Many start-ups and tech companies rely on Big Tech companies for digital infrastructure, research, and innovation. However, Big Tech companies are prone to monopolistic and anti-competitive behaviour.

PRIVACY

• Big Tech platforms allow for data-based personalization of the internet experience and access to new services. Such benefits, however, come at a significant cost to individual and group privacy. Such personalisation also influences individual and group capacities for self-determination.

INFORMATION GATEWAY

• Social media platforms and search engine operations of Big Tech companies increasingly serve as the primary source of information, news,   and means of communication for many users in India. Yet, this also gives Big Tech companies inordinate influence in shaping how people access information and communicate with one another, making them arbiters of free speech.
• Big Tech platforms also contribute to the spread of misinformation and hate speech, while becoming increasingly politicised.

SOVEREIGN INTEREST

• While the Indian State benefits from Big Tech companies’ infrastructure and innovation to fill gaps in its own capacity and reach, this also raises concerns around democratic accountability, data sovereignty, the impact on domestic businesses, and the distribution of technology gains.

TARGET OF REPRESSIVE ACTIVITIES

• Women is the most vulnerable to cyber abuse like online harassment.
• Online offences are often normalised due to the difficulty in tracing offenders and the complexity and inaccessibility of the justice delivery mechanisms. This creates mistrust of the public towards the justice system, leading to the further marginalisation of women.
• Increased attention to women in social media often makes them the target of repressive activities. This results in gendered barriers for women online as in public places.

SECURITY ISSUES

• Propaganda information to recruit terror groups like AQIS, and LeT on telegram have been intercepted by National Investegating Agency(NIA).
• India has also suffered from it however less severely. An increasing number of cases of youth being influenced by social media to carry out propaganda of hate and violence has been reported in many areas.
• By ‘cyber-planners’, who will be responsible for planning terror attacks, identifying recruits, acting as “virtual coachers”, and providing guidance and encouragement throughout the process.

 CURRENTLY, HOW INDIA IS REGULATING BIG TECHS?

• The government enacted the Competition Act, of 2002. The Act established the Competition Commission of India (CCI). Later the Act was amended in 2007. The CCI has been established to eliminate practices having an adverse effect on competition. The commission also promotes and sustains competition and protects the interests of consumers. The CCI will step in if any of the tech giants will get involved in the anti-competitive practice.
• Intermediaries (providers of network service, telecom service, Internet service, and web hosting) are required to preserve and retain specified information. They also have to obey the directions issued by the government from time to time.
• In return intermediaries are protected from legal action for user-generated content (The big techs used this clause to move away from liability and responsibility in digital space).
• The Information and Technology Act, of 2000 governs all activities related to the use of computer resources in India. Some of the important provisions of the Act are
• Section 69 of the Act gives power to the government to issue directions “to intercept, decrypt or monitor any information generated, transmitted, received or stored” in any digital equipment.
• Section 69A of the Act provides power to the government to block access to any information generated, transmitted, received or stored, or hosted in the digital space.

ISSUES WITH BIG TECHS IN INDIA

MONOPOLY

• There is a suspicion that big tech companies were acquiring more monopoly power leading to a lack of free competition. There is a conjunction of technology and finance here. The more companies were valued, the more they needed monopoly rent extraction to be able to justify those valuations.

LACK OF ACCOUNTABILITY

• There was an irony in an opaque algorithm being the instrument of a free, open, and equitable society.

MIXED IMPLICATIONS FOR THE DISTRIBUTION OF WEALTH

• While the companies had an immense economic impact, their distributive implications were more mixed.
• They empowered new players, but they also seem to destroy lots of businesses. These companies themselves became the symbol of inequality of economic and political power.

THE LACK OF ACCOUNTABILITY AND STANDARDS IN REGULATING FREE SPEECH

• Big tech companies set themselves up almost as a sovereign power. This was most evident in the way they regulated speech, posing as arbiters of permissible speech without any real accountability or consistency of standards.
• The prospect of a CEO exercising almost untrammeled authority over an elected president only served to highlight the inordinate power these companies could exercise.

CONFLICT OF INTEREST

• Many of the big tech companies were not, as they claimed, mere platforms. This is because they began to curate and generate their own content, creating possible conflicts of interest.

CHALLENGES IN REGULATING BIG TECHS IN INDIA:

SMARTPHONES AND THE INTERNET OF THINGS (IoT)

• Smartphones and the Internet of Things (IoT) have become major drivers for the growth of big tech companies in the last decade. India is currently witnessing massive growth in smartphone usage and IoT.
• India is also witnessing an increase in the population of users who are coming online for the first time. So regulating Big Tech strictly will leave the consumer with no other alternative. Hence, it is important to cater to the needs of people.

DEPENDENCY ON VARIOUS SERVICES

• Everyday life is dependent on various apps and technologies. Nowadays technology is linked with remote working and studying, public transport, shopping, telemedicine, on-demand music, video streaming, etc. Tech giants with their presence in the digital space created a monopoly in essential services.

ESSENTIAL NATURE OF SERVICES

• The essential nature of the services provided by them. These tech giants provide Freedom of Expression to individuals and also made billions of people depend on their services. Like, as Google on the internet, Amazon on e-commerce, etc.

THE CHALLENGE OF CROSS-PLATFORM CONNECTIVITY

• Users of Facebook and Google can sign in and access services over food, grocery delivery, and various other companies. This can be used to mine the accounts of users. This creates a challenge to regulate the tech giants alone. To get the proper desired output, one needs to regulate the entire ecosystem. But it is not feasible.

 RECOMMENDATIONS OF COMPETITIONS LAW REVIEW COMMITTEE

1. Introduction of a ‘Green Channel’ for combination notifications to enable fast-paced regulatory approvals for the vast majority of mergers and acquisitions that may have no major concerns regarding appreciable adverse effects on competition. The aim is to move towards a disclosure-based regime with strict consequences for not providing accurate or complete information.
2. Combinations arising out of the insolvency resolution process under the Insolvency and Bankruptcy Code will also be eligible for “Green Channel” approvals.
3. Introducing a dedicated bench in NCLAT for hearing appeals under the Competition Act.
4. Introduction of express provisions to identify ‘hub and spoke’ agreements as well as agreements that do not fit within typical horizontal or vertical anti-competitive structures to cover agreements related to business structures and models synonymous with new-age markets.
5. Additional enforcement mechanism of ‘Settlement & Commitments” in the interests of speedier resolution of cases of anti-competitive conduct.
6. Enabling provisions to prescribe necessary thresholds, inter alia, deal-value threshold for merger notifications.
7. CCI to issue guidelines on the imposition of a penalty to ensure more transparency and faster decision making which will encourage compliance by businesses.
8. Strengthening the governance structure of CCI with the introduction of a Governing Board to oversee advocacy and quasi-legislative functions, leaving adjudicatory functions to the Whole-time Members.
9. Merging DG’s Office with CCI as an ‘Investigation Division’ as it aids CCI in discharging an inquisitorial rather than adversarial mandate. However, functional autonomy must be protected.
10.  Opening of CCI offices at the regional level to carry out non-adjudicatory functions such as research, advocacy, etc., and interaction with State Governments and State regulators.

THE WAY FORWARD

MARKET

• Platform Neutrality, so that Big Tech platforms cannot unfairly discriminate against other businesses using their platform.
• Platform Interoperability, to enable consumer choice and reduce the weight of network effects
• Update Competition Policy to include control over data and network effects.

MEDIA LITERACY AND PUBLISHER ETHICS

• Publisher Ethics so that News and social media platforms are held to the same ethical standards as legacy media.
• Algorithmic Accountability,  to identify, assess and penalise harmful algorithmic amplification.
• Media Literacy, to enable citizens to take more considered decisions

PRIVACY

• Individual and Collective Rights, for citizens to take decisions about how their data is collected and processed by large tech companies and hold these companies accountable for misuse.
• Privacy Protecting Business Models that reduce Big Tech companies’ commercial dependence on the processing of personal data.
• Data Stewardship Models, that allow individuals to safely share their data with businesses.

Sovereign Interests

• Build State and Market Capacity, by investing in education, research, entrepreneurship, and other kinds of social capital
• Equitable Taxation to ensure that developing countries can gain fair and reasonable tax revenue from Big Tech firms.
• Better Cross-border Flows to ensure that transfer of data outside India does not inhibit domestic innovation, law enforcement or other services

BUILD COLLECTIVE RESILENCE

• Technology does not exist in a void and enters a society that is already complex. Society and communities need to be strengthened to collectively maximize the benefits and minimize the harms of technology. In terms of Big Tech, this could imply investing in a regulatory capacity and media literacy.

THE CONCLUSION:  Innovations should prioritize individuals’ agency, material well-being, autonomy, and democracy. Regulation will be required to ensure that innovation is aligned with societal trajectories.

A vibrant public discussion on the role of technology will help navigate the uncertainty that may result from technological innovation. Technology should protect its users by default to ensure the well-being of each individual, especially vulnerable groups. Society and communities need to be strengthened to collectively maximize the benefits and minimize the harms of technology.

THE CONTEXT: The COVID-19 pandemic has not only exposed the vulnerability of the marginalized sections of society, but has also seen lack of communication and coordination between central and the state governments in India. The failure on the part of the governments to establish a robust communication channel, amongst themselves, has aggravated the sufferings of the poor people. This article discusses about the challenges of federal system in India during   pandemic situations.

In addition to this, the article will also focus in brief about how due to unitary nature, India is facing various challenges like

1. Implementation of big bang reforms like GST and Farm Bills
2. Implementation of various major steps taken by the government like abolition of Article 370, CAA and NRC.
3. Encroachment on State List by the Centre like amendments to UAPA and NIA laws, Farm Bills, etc.
4. The recent SC judgement on 97^th Amendment Act.
5. The government seems to be on slow-path on reversals of reforms due to lack cooperation and coordination between union and states.

COVID 19 AND FEDERALISM

COVID-19 has shone light on one of India’s darkest corners that we stoutly refuse to examine – the lack of coordination between the governments in India. In following issues there was lack of coordination between the governments

• Vaccine procurement,
• Pricing and disbursal,
• Oxygen manufacturing and inter-state supply,
• GST rates for covid care resources,
• Trans-state migrating labour,
• National lockdowns,
• Elections in various states,
• Religious gatherings of multi-state relevance,

Thus the absence of planning and coordination across the governments in the country has cost lakhs, perhaps tens of lakhs of lives.

THE CONCEPT OF FEDERALISM

Federalism is a system of government in which powers have been divided between the centre and its constituent parts such as states or provinces. It is an institutional mechanism to accommodate two sets of politics, one at the centre or national level and second at the regional or provincial level.

There are two kinds of federations–

Holding Together Federation

n this type, powers are shared between various constituent parts to accommodate the diversity in the whole entity. Here, powers are generally tilted towards the central authority. Example: India, Spain, Belgium.

Coming Together Federation

In this type, independent states come together to form a larger unit. Here, states enjoy more autonomy as compared to the holding together kind of federation. Example: USA, Australia, Switzerland.

FEDERAL FEATURES OF THE INDIAN UNION

Article 1 of the Indian Constitution states, ‘India, that is Bharat, shall be a union of states’. The word federation is not mentioned in the constitution.

• Governments at two levels – centre and states
• Division of powers between the centre and states – there are three lists given in the Seventh Schedule of the Constitution which gives the subjects each level has jurisdiction in:

1. Union List
2. State List

• Concurrent List
• Supremacy of the constitution – the basic structure of the constitution is indestructible as laid out by the judiciary. The constitution is the supreme law in India.
• Independent judiciary – the constitution provides for an independent and integrated judiciary. The lower and district courts are at the bottom levels, the high courts are at the state levels and at the topmost position is the Supreme Court of India. All courts are subordinate to the Supreme Court.

THE RECENT FEDERAL ISSUES IN INDIA

COVID-19 and states dependence on Centre

• Since March 2020, the states have faced problems of lack of support from centre like

1.       Delay in 14^th transfer

2.       GST loss due transfer

3.       CSR under PMCARE FUND and its transfer issues

4.       The issues related to supply of Oxygen and Vaccines

Such problems are clear reminder of lack of robust Centre-State mechanisms for pro-active cooperation.

The farms bills

• The ongoing farm protests show that there was lack of adequate consultation with stakeholders. The reforms deal with state subject but the states have not been adequately consulted.

The post scenario of abolition of Article 370

• The central government seems to have gone backward on its J & K policy when it invited the leaders of the erstwhile state for consultation. It again reminds that the Centre unitary approach is backfiring.

Fundamental structure

• The problem, of course, goes back to the very establishment of the Union, denying states their sovereignty (unlike in the US) even as it leaned federal.
• Subsequent purposeful Constitutional amendments, like expanding Concurrent lists, or the GST, have vigorously engendered centralisation.

However, the real root of federal rot lies more with states and less with the Union.

Defunct Inter-State Council

• As per Article 263 of the Indian Constitution, the Inter-State Council is composed of the Prime Minister, who is the Chairperson, Chief Ministers of states and Union Territories and several Union Cabinet Ministers, and cannot be dissolved or re-constituted.
• India did set up an Inter-State Council, on the recommendation of the Sarkaria Commission in 1990, to recommend policy on matters of common interests across states and the Union.
• It met a dozen times until 2017. It is extant but defunct, barely meeting once in three years since establishment and not at all during a pandemic that requires intimate partnerships and collaboration.

GST Council

• The GST Council has been established with only the Union Finance Minister as Chair, and ability to call for meetings.
• By any measure, the GST is a multilateral matter, with separate stakeholders, the Union being one.
• There is no reason why Chairpersonship is not rotated or powers (like calling meetings) are not vested in many or all.
• In fact, Mumbai city with its mammoth pre-GST Octroi has no say in the Council, and neither does any other local government.

Finance Commission

• For a Constitutional body that divides monies between states and the Union, and across states, the Union is but one stakeholder. However, the Union assumes all powers in appointment of the Commission and issuing of its Terms of Reference (ToR), an inherent bias for a federal body. That is why there was controversy o the TOR of the 15^th FC.
• This is exactly what the Inter-State Council is meant to do; ensure that a ToR is negotiated and balanced.

THE CONSEQUENCES OF SUCH DEVELOPMENTS

Such developments have given rise to increasing tension and conflicts between union and states. Too much of politics and too little progress on quality of governance and grievance redressal of people. There is also absence of debate on many matters and issues which reforms are long overdue like criminal justice reforms and police reforms. The issues like disaster management, health, education, etc remain like work in progress.

The present government gave a major boost to cooperative federalism and competitive federalism but latter is not possible without the former. In fact, collaborative governance has become imperative for any government in contemporary times. The governments need to collaborate and cooperate at multiple levels but due to unitary approach, states have less trust in Centre.

WHAT CAN BE DONE?

Strengthening Inter-State council

• State platform that brings States together in a routine dialogue on matters of fiscal federalism could be the starting point for building trust and a common agenda. In this context, the Inter-state council can be revived.
• Proper utilisation of the institutional mechanism of the Inter-state Council must be ensured to develop political goodwill between the Centre and the states on contentious policy issues.
• The Punchhi Commission on Centre-State Relations had stressed for granting functional independence to the Council so that it can engage vibrantly on policy development and conflict resolution.

Relaxing FRBM Norms

• The relaxation of limits imposed by the FRBM Act, regarding the market borrowings by the states, is a step in the right direction. However, these borrowings can be backed by sovereign guarantee by the Union Government.
• Moreover, the Union government can provide money to states so that they can take necessary action to deal with the crisis at the state level.
• The gradual widening of the fiscal capacity of the states has to be legally guaranteed without reducing the Centre’s share.

Horizontal federalism

• Horizontal federalism is anchored on the building of a relationship between the constituent units of the federal system, with an oversight power to the federal government.
• Horizontal federalism needs to be viewed differently from cooperative federalism, where the Centre and the states “cooperate” in the larger public interest. However, the horizontal framework facilitates the coordination inter-se provinces on matters of common interest.

Political Will

• Upholding federalism requires political maturity and a commitment to the federal principle.
• A politics for deepening federalism will need to overcome a nationalist rhetoric that pits federalism against nationalism and development.

LESSON FROM INTERNATIONAL EXPERIENCES

Most large democracies like the US, Canada, Australia, etc. have many governments – provincial ones and a Union.

Australia

• As soon as the pandemic struck, Australia was to retire its existing Council of Australian Governments, an existing inter-government coordinating body in their federal structure, and create a National Cabinet.
• It is composed of all Chief Ministers, Premiers, the Prime Minister and even representatives from local bodies.
• An empowered executive, with select and expert committees and adjunct councils, it decides on federal financial, pandemic-related health, employment, even women’s and children’s safety and security, and with a legal framework as buttress.
• For doubters asking if Australia or any of the others in a genuine federal partnership between their in-country governments are managing the pandemic better than India, the answer is crystal clear.

In a Westminster-style democracy, India’s national and sub-national governments are elected for parties’ agendas and as on date, India and its states vest their executive powers in close to 40 distinct ruling parties. So the question before us is not if Australia or countries with federal partnerships within are doing better but if India will now manage COVID-19, and indeed the country in general, better if its various governments with distinct agendas plan and coordinate regularly.

WAY FORWARD

• For India to leapfrog into a developed country, an oft-bandied political rhetoric, the country must first be willing to shed its unitary insecurities, govern via a federal body politic, and defer to local and state governments.
• As things stand, the Union has too much power on inputs and too little stake in outcomes. The Inter-State Council must be resuscitated, reinvigorated and chartered to represent a federal India.
• Matters, not only financial but water management, labour, energy, human trafficking and much more, are cross-state matters, which require ongoing conference between states.
• Intergovernmental cooperation and coordination, yes, but also as much autonomy and agency, given the differences in the social and economic environments across states.

CONCLUSION: ‘One Nation, Many Governments’ is the reality of India, and the Union is but one among the many. India must strive for a boring Union and vibrant states and that indeed will be the hallmark of success, replete with subsidiarity, decentralisation and federalism.

The ARC-II also recommended almost a decade back about the principle of subsidiarity as basis for governance. The governments have also taken steps like the minimum government and the maximum governance but they have hardly any impact on the nature of political governance wherein the Centre with one hand cooperate and with another hand coerce states to achieve its political objective. This must change if India wants to realize its potential.

THE CONTEXT: In July 2021, Government of India announced creation of a new ministry, the Ministry of Cooperation, which is headed by the Union Home Minister. The aim of the Ministry is to implement the vision of ‘Sahkar se Samriddhi’ or prosperity through cooperation to give a new push to the cooperative movement in India. This article analyses about the topic comprehensively as follows.

WHAT WILL BE THE NEW MINISTRY’S OBJECTIVES?

• The Ministry will provide a separate administrative legal and policy framework for strengthening the cooperative movement in the country.
• It will help deepen co-operatives as a true people-based movement reaching upto the grassroots.
• In our country, a co-operative based economic development model is very relevant where each member works with a spirit of responsibility.
• The Ministry will work to streamline processes for ‘Ease of doing businesses for co-operatives and enable development of Multi-State Co-operatives (MSCS).

WHAT IS A COOPERATIVE SOCIETY?

• According to the Cooperative Societies Act, 1912, at least 10 adult members are needed to form a Cooperative Society solely based on mutual aid and self-help principles. The members should work for a common benefit with a motive to help each other.
• Cooperatives are enterprises which are owned, controlled and run by its members to realize their common economic, social, and cultural needs and aspirations.
• Cooperative societies function for a common benefit with a motive to help its members.
• These societies in have played a significant role in strengthening the rural economy.
• Cooperative societies in India expanded from agricultural market to the credit sector, and later to large scale sectors, housing, fisheries, banking, etc. This led to the formation of different types of cooperative societies in India.

WHAT IS THE HISTORY OF THE COOPERATIVE MOVEMENT IN INDIA?

PRE-INDEPENDENCE ERA

• In response to the agrarian distress and overall indebtedness, the first cooperative society legislation came into existence with the Cooperative Credit Societies Act, 1904. The next landmark Act came in 1919 under the Montague-Chelmsford Reforms, under which cooperation was made a provincial subject. It allowed the provinces to come up with their own legislation for governing cooperatives.
• Later, in 1942, the British government announced the Multi-Unit Cooperative Societies Act to cover cooperative societies whose membership extended beyond one province.

POST-INDEPENDENCE ERA

• In 1958, the National Development Council (NDC) had recommended a national policy on cooperatives and for training personnel and setting up cooperative marketing societies.
• In 1984, Parliament enacted the multi-state cooperative societies Act to remove the plethora of laws governing the same types of societies.
• In 2002, the then NDA government, under the leadership of Atal Bihari Vajpayee, announced a National Policy on Cooperatives to support the promotion and development of cooperatives. It is also aimed at reducing regional imbalances and strengthening cooperative education, training and human resource development.

 WHAT ARE THE LAWS GOVERNING THE SOCIETIES AND WHICH GOVERNMENT BODIES OVERSEE THE SECTOR?

1. Cooperation comes under the state list of the under the schedule seven of Indian Constitution; which mean states can make rules to govern them.
2. The 97th Constitutional Amendment, which was passed in 2011, categorically dealt with issues related to the effective management of co-operative societies. It added a new provision in the Constitution under Article 19(1)(c) to provide protection to cooperatives.
3. Article 43B of Part IV states that it is the duty of the State to promote self-reliance, democratic management, voluntary training and professional management of cooperatives in order to improve the economic activity of India.
4. In 2002, the Centre passed a Multi-State Cooperative Societies Act that allowed for registration of societies with operations in more than one state. These are mostly banks, dairies and sugar mills. The Central Registrar of Societies is their controlling authority, but on the ground the State Registrar takes actions on his behalf.
5. The National Cooperative Development Corporation (NCDC) works for the promotion of the cooperative movement in India. It is tasked with planning, promoting, coordinating and financing cooperative development programs at the national level. Also, it provides financial, insurance and technical support to cooperative institutions of farmers and other weaker sections.
6. Most cooperative societies are governed by the laws in the respective states, with a Registrar of Societies and a Cooperation Commissioner as their governing office.

TYPES OF COOPERATIVE SOCIETIES IN INDIA

Based on the members and the kind of business, Cooperative societies in India are classified mainly as 6 types.

1. Farming Cooperative Society: The agriculture sector in India is the largest sector, the country’s farmers need to gain profit for their produce. Unfortunately, this sector is economically weaker because of many causes, some of them being indebtedness of farmers, expensive equipment, agents or middlemen, etc.

The farmers put in the capital for consolidating farming equipment, seeds, fertilizers, etc.They earn more via cooperative farming as compared to individual farming as the profit is divided according to their land shares.

2. Credit Cooperative Society: The cooperatives which provide financial services to its members like deposits, short term loans, etc. All those who deposit in these societies are their members. These societies raise finance with deposits from its members and provide them with short term loans on a low rate of interest.
3. Producer Cooperative Society: These societies play an essential role in the development of medium and small enterprises in India. These cooperatives are for producers like owners of fisheries, farmers, handicraft and local artisans, and many more such businesses. The best example is one of the largest cooperative in India, AMUL dairy.
4. Consumer Cooperative Society: These cooperatives are formed by consumers. For obtaining household goods at an affordable price, the consumers for such cooperatives buy the goods in bulk to reduce the cost and sell them to its members (and non-members also) at lower prices. For example, Apna bazaar is a consumer cooperative in India.
5. Marketing Cooperative Society: Just like farming cooperatives support farmers for pre-farming requirements, marketing cooperatives support them for marketing or selling their produce. These cooperatives help farmers to sell their produce profitably. Fruits, vegetables, cotton, and sugarcane cooperatives are the largest and most demanded marketing cooperatives.
6. Housing Cooperative Society: Housing is a big issue for the common man in cities and towns with skyrocketing prices of land. In such a situation, people form cooperatives to buy the land, construct houses, and sell them to the members. To become a part of the cooperative, a member either has to buy a house or buy shares in the cooperative.

Characteristics of Cooperative Societies:

1. Voluntary Formation and Participation
2. One vote per member
3. Independent body
4. Mutual benefit
5. No financial risks

Objective: The principal aim of cooperative societies is to help people tide through financial situations and gather support and assistance from nearby communities. This strengthens community relationships.

Distribution of Profits: The surplus produce or profits generated in the cooperative sector is distributed amongst its members rightfully according to their shares.

Professional Management: All cooperatives are supposed to be managed awfully and professionally. Audits must be performed periodically. The regulation is under a central Registrar.

EXAMPLES OF COOPERATIVE SOCIETIES AND HOW THEY FUNCTION

AMUL

• Amul is a leading example of an Indian dairy cooperative society. It is managed by the Gujarat Co-operative Milk Marketing Federation Ltd and is jointly owned by around 36 million milk producers.
• The produce is pooled and distributed by the cooperative itself, thereby, eliminating the need for a middle-man.

Jal Shakti Mission

• While the Jal Shakti Mission may not necessarily fall under the co-operative society definition, however, the mission does follow similar principles.
• Under Jal Shakti Abhiyan, the government is training the community as well as working with them together towards water conservation in water-stressed areas. Men and women of the community are being trained to maintain the systems.

Others

• Some other prominent examples of cooperative societies are Kendriya Bhandar and Sahkari Bhandar, which buy goods directly from producers/ manufacturers, thus removing middlemen and delivering the produce at lower costs to the end-consumers, thereby protecting the interests of both the producers and the customers.
• Cooperative societies are not restricted to agriculture alone. In banking and finance, cooperative institutions are spread across rural and urban areas as credit societies.
• As per NABARD’s 2019-20 report, there are 95,238 primary agricultural credit societies (PACSs), 363 district central cooperative banks (DCCBs) and 33 state cooperative banks in India.
• Apart from credit societies, there are also cooperative housing societies in urban areas and cooperative marketing societies in rural areas.
• Now the union government is trying to replicate the Amul model in other sectors of the economy, especially in the agriculture and livestock sector. Dairy farmers in the country have already benefitted hugely by the cooperative movement, and if the same can be replicated in the other areas, it will help in increasing the income of the farmers.

HURDLES FACED BY CO-OPERATIVE SOCIETIES

Non-accountability

The government gave too many benefits to cooperatives like reservation of items extra benefits like finance facilities so also it was also provided with other support this was a good thing to do, but then there was no further accountability which led to these cooperatives becoming more and more lethargic.

Vested interest of some people

A lot of times people who are in position in control of cooperatives are actually people who have joined cooperatives for personal gains.

Lack of coordination

Generally, what happens in cooperatives is that different cooperatives at different level don’t coordinate this makes the work of cooperatives difficult.

The Internal Free Rider Problem

This problem arises when:

a)      New members who provide very little capital enjoy the same benefits as long-standing or founding members.

b)       When the patronage of new members does not make the cooperative much more efficient or competitive by producing significant economies of scale.

Quality more than Quantity

This is another major problem faced by different cooperatives who go in for quantity this causes a major problem because they think it’s a quick way to earn money so this basically affects the productivity.

No Balanced Growth

The cooperatives in northeast areas and in areas like West Bengal, Bihar, Orissa are not as well developed as the ones in Maharashtra and the ones in Gujarat.

Political Interference

This is the biggest problem of cooperatives as politicians use them to increase their vote bank. They also get their own favorites on the boards of such boards so they are on control these cooperatives.

NEED FOR THE NEW MINISTRY

• Till now, the cooperative structure has managed to flourish and leave its mark only in few states like Maharashtra, Gujarat, Karnataka etc. Under the new Ministry, the cooperative movement would get the required financial and legal power needed to penetrate into other states.
• Cooperative institutions get capital from the Centre, either as equity or as working capital, for which the state governments stand guarantee. This formula had seen most of the funds coming to a few states such as Maharashtra, Gujarat, Karnataka while other states failed to keep up.
• The cooperative sector has witnessed drying out of funding. Under the new Ministry, the cooperative structure would be able to get a new lease of life.

Vaidyanathan Committee submitted its report in 2005 regarding financial hurdles to the societies. The committees made following observations:

• There isneed to have a broad roadmap for revival of the short-term cooperative credit structure
• Equalimportance be assigned to all the components as an inter-related and integrated package to ensure synergetic impact in improving the health and viability of the short-term cooperative credit structure, through the following revival package:

1. Special financial assistance to bring the short-term cooperative credit structure to an acceptable level of health;
2. Introduce legal and institutional reforms necessary for their democratic, self-reliant and efficient functioning; and
3. Qualitative improvement in personnel in all tires through capacity building.

• The committee proposed a unified national model to incorporate the old state laws into a new law. The key reforms proposed by the CAS include: a bank can grant full voting rights to all users; reducing the State government’s participation in cooperative actions to 25 per cent; and restricting the power of States to replace the board of directors.
• In her Budget speech, Finance Minister Nirmala Sitharaman had mentioned the need to strengthen cooperatives.

AN ANALYSIS OF THE MOVE

Is the creation an assault on federalism?

• PROS: After the formation of the Cooperation Ministry, many contended that the move would countermand cooperative societies, which form a part of the State List under Entry 32 of Schedule 7 of the Constitution, and will go against the basic contours of cooperative federalism.
• CONS: But it is not an assault. As many societies are beyond one state so there is need for the center intervention for effective working, regulations and management of them.
• The Centre also cited the objective as streamlining the whole process and easing the doing of business.

Is it politically motivated move?

• PROS: It is being said that most of the cooperatives (especially in Maharashtra) are under the control of the opposition parties and ruling party just want to control them. It is also being said that Cooperative sector is related to the economy. How the home minister can be the head of the Ministry?
• CONS: But the truth is that the control over the sector and its close link with power has led to lot of malpractices and corruption.
• There have been a number of episodes of corruption and mismanagement in running cooperative banks and sugar factories. The mismanagement and irregularities in the Maharashtra State Cooperative Bank – the state’s apex cooperative bank – compelled to dissolve the board of directors of the banks and appoint an administrator.
• The directors of the bank were mostly local politicians.

Is it really helpful for the cooperative societies?

• PROS: The government created a separate ministry for cooperatives when a department of cooperation already existed.
• There are many possible reasons for this. The first is the sheer size of the cooperative sector measured in monetary terms.
• According to NABARD’s Annual Report of 2019-20, state cooperative banks have deposits worth Rs 1,35,392 crore and district central cooperative banks have disbursed loans to the tune of Rs 3,00,034 crore.
• There are, thus, considerable financial resources to be controlled.
• There is the opportunity for the Union government to tap these resources to offer lucrative schemes to placate the agitating farmers in northern India, including those in western Uttar Pradesh.
• CONS: In any case, the ministry of cooperation is likely to engender greater control and not autonomy of over cooperatives.

CONCLUSION: The real effects of the Cooperation Ministry can be construed more clearly if one takes into account recent occurrences such as the farmers’ protests. In order to remove the deadlock and ensure a more comprehensive approach, the government will ensure that the farming and livestock cooperative movements in other parts of the country following the new agricultural law are successful, increasing thereby farmers’ incomes and land productivity.

THE CONTEXT: The Parliament has passed three Farm Bills which replaced three Ordinances in 2020 dealing with free trade of agriculture produce, contract farming and essential commodities. The controversies surrounding these Laws point out not only to the federal and farmers’ opposition but also to the flaws in the way these Laws are made. Law or policy making demands adopting a process that involves wide ranging consultations, debate and eliciting feedback etc. This “policy discourse” is vital for formulation of policies based on evidence. In this context, this write up examines the various aspects of the Farm Laws and in the background of these explains public policy process.  For the purpose of this write up Law and policy, and Government and Parliament are used interchangeably.

THE SALIENT FEATURES OF THE THREE FARM LAWS

FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ACT, 2020

• Farmers’ produce trading: The Act allows intra-State and inter-State trade of farmers’ produce outside the various markets and places notified under the State APMC Acts.
• Electronic trade: The Act permits the electronic trading of agricultural produce regulated under any State APMC Act in the specified trade area.  An electronic trading and transaction platform can be set up by companies, FPOs, societies etc to facilitate the direct and online buying and selling of such produce
• Market fee abolished: The Act prohibits State Governments from levying any market fee, cess or levy on farmers, traders, and electronic trading platforms for trade of farmers’ produce conducted in an ‘outside trade area’.

FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES ACT, 2020

• Farming agreement: The Act provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce.  The period of an agreement will be one crop season, or one production cycle of livestock.  The maximum period is five years, unless the production cycle is more than five years.
• Pricing of farming produce: The price of farming produce should be mentioned in the agreement.  For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement.  Further, the process of price determination must be mentioned in the agreement.
• Dispute Settlement:  All disputes must be referred to the Board for resolution.  If the dispute remains unresolved by the Board after thirty days, parties may approach the Sub-Divisional Magistrate for resolution whose decision can be appealed to an Appellate Authority (presided by the collector or the additional collector) against decisions of the Magistrate. The Magistrate or the Appellate Authority may impose certain penalties on the party contravening the agreement.

ESSENTIAL COMMODITIES (AMENDMENT) ACT, 2020

• Regulation of food items:  The Act provides that the Central Government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.   These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.
• Stock limit: The Act requires that imposition of any stock limit on agricultural produce must be based on price rise.  A stock limit may be imposed only if there is: (i) a 100% increase in retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items.

THE BENEFITS OF THE FARM ACTS: AN ANALYSIS

ENDING HISTORY OF EXPLOITATION AT MANDIS

• The farmers are receiving a low share of what the consumer pays as indicated by a Reserve Bank of India study covering mandis in 16 States, 16 food crops and 9,400 farmers, traders, retailers. The farmers’ shares were 28 per cent for potato, 33 per cent for onion, 49 per cent for rice, Injecting competition by widening farm markets will benefit farmers which the three farm laws aim at.

BETTER REMUNERATION FOR FARMERS

• Farmers can sell their produce within the State or anywhere else in the country and there will be no restriction on this type of trade. This will benefit the farmers that they will be able to sell their produce to the merchant wherever they get a higher price.

DEREGULATION OF AGRI TRADE

• There will be no need for any kind of license for traders to purchase agricultural produce of farmers in the trade area outside the APMC mandi, but also those holding PAN card or any other document notified by the Central Government can join this trade. This will facilitate trade in agricultural products and will benefit the farmers.

COMPETITIVE MARKETS FOR AGRI PRODUCTS

• Allowing buyers outside APMC mandis promotes competition and halts exploitation. At present, while consumers are paying higher price, farmers are still receiving lower returns due to inefficiencies and imperfections. Unified Market Platform (UMP) in Karnataka resulted in increase of prices by 38 per cent. This implies that current market prices are depressed by 38 per cent due to lack of adequate competition. Opening up the markets can push the APMCs to offer competitive prices.

AGRICULTURE MARKETS STARVED OF 3Cs

• Agricultural markets are starved of capital, competition and commitment. Capital injection postpones operation of the Law of diminishing marginal returns.
• Investment in marketing infrastructure, processing, and logistics benefits society. New provisions of Essential Commodities Act enable scale economies in agricultural marketing which will attract private sector investment especially in supply chain.

ADDRESSING THE PROBLEM OF MIDDLEMEN IN APMC

• The APMCs still don’t issue formal receipts which are supposed to mention the price, quantity or quality of the produce. Further, due to closed markets, farmers are forced to sell to those middlemen who they have borrowed money from, starting off a vicious circle of exploitation in times of distress sales. Unfair deductions, undercover sales, cartels and collusions at APMCs have continued denying remunerative prices to the farmers.

BENEFITS OF CONTRACT FARMING

• Contract farming enable farmers to offer produce at a predetermined price. When the market price is above contractual price, farmers have the liberty to sell at the higher price. Small farmers have benefitted more than large farmers in contract farming as income derived per acre was the highest for small farmers as a study on contract farming in Karnataka has shown.

THE CHALLENGES OF THE FARM ACTS

• Farmers’ opposition: The primary reason for farmers’ opposition is the lack of clarity on MSP. They demand a legislative backing for MSP as they fear that in the name of open and free trade the mandatory procurement by FCI on MSP will be done away with. Secondly, farmers, feel they will lose the protection of regulation provided by APMC structure and fall prey to the whims and fancies of the private players. Thirdly, they resist contract farming as they fear they will lose their lands due to unfair terms of contract agreement.
• Issue of federalism: Agriculture and markets are State subjects as per entry 14 and 28 respectively in List II. The Acts (except ECA Amendment) are being seen as a direct encroachment upon the functions of the States and against the spirit of cooperative federalism. States contend that entry 33(b) in the Concurrent List (agricultural trade, commerce, production, supply, and food distribution) do not give power to enact Laws by Centre in these areas. Also many States like Punjab, Rajasthan etc have passed their own Farm Bills that run counter to the Central Laws.
• Case study experience: The much hyped Bihar experience presents a mixed bag. In 2004-05, the State Agricultural Board earned 60 crores through taxes and spent 52 crores, of which 31% was on developing infrastructure. With no revenue to maintain it, that infrastructure is now in a dilapidated condition. The large number of migrants from Bihar whose painful trek to and fro during the pandemic has exposed the lack of income and livelihood options in Bihar of which more than 70% are farmers.
• Undemocratic passage of bills: infringement of Parliamentary procedures in getting the Bills passed like the refusal of a division of votes following the debates on the Farm Bills and passing through voice vote have driven the opposition’s resistance. This has resulted in a huge political and public criticism against the manner of passing the Bills.
• Supreme Court intervention: The apex court has stayed the implementation of the Farm Laws and set up a Committee to report on these Laws. This decision has effectively stopped the operationalization of the Laws. It is also held that the court is playing the role of “parliament” which would lead to unnecessary delays and complications.
• Administrative Adjudication: The dispute settlement system takes away the role of Civil Courts which functions on strict principles of Law. While the proposed system will have the Executive (SDM and Collector) as the enforcer, adjudicator and the interpreter of Law. This is a violation of separation of power which is a basic feature of the constitution.  The Bar Council of Delhi has termed the transfer of judicial powers to the Executive as “dangerous and a blunder.” The Council notes its impact on the legal profession, it says that “It will substantially damage District Courts in particular and uproot the lawyers.”
• Policy Flaw: The high rate of indebtedness among the small and marginal farmers decreases the bargaining power to negotiate the price of the farm produce with the sponsors. Another factor is the transportation and transaction cost involved in selling the produce from APMCs to the chosen buyer. Thus the Acts fail to take account of these considerations, which are critical for price assurance and empowerment.
• Food Security: The FCI procurement under MSP is the core of buffer stock of food grains which ensures food security in India. In Covid times, the PDS system and new schemes related to free food grains became possible only because of this institutional structure. The Farm Laws may pose great challenge to the food security by curtailing the FCI role and promoting unregulated agriculture markets that feed on profiteering.            

PUBLIC POLICY: CLARIFYING THE CONCEPT AND MEANING

MEANING OF PUBLIC POLICY

• Public policy is the policy made by the Government. It deals with what the Government choses to do or does not chose to do. In a nutshell, the elected Government translates the needs, wishes and aspirations of the public into concrete measures through formulation of public policies. Once enacted, the administration implements them in accordance with the intent of the policy.

PUBLIC POLICY PROCESS

• The public policy making is conceived as a process or a cycle which involves multiple stages. The actual policy making and its implementation are only two stages in this cycle (see the diagram). It means the success or failure of the policy impinges on not only formulation and implementation but also on other stages.

POLICY DISCOURSE

• Policy discourse means the process of exchange of ideas among various stakeholders concerned with public policy. For instance, the civil society engagement with Government in the formulation of Lok Pal Act. The policy discourse cuts across the various stages of public policy cycle which contribute to evidence-based policy making.

EVIDENCE BASED POLICY MAKING

• It refers to using data and information collected through research studies and consultation for decision making. Evidence thus collected will determine whether a proposed policy is needed at all or whether the policy needs changes etc. NITI Aayog, in Indian context conducts studies and produces reports which contribute to evidence-based policy making.

POLICY ANALYSIS

• Policy analysis is a process of enhancing the effectiveness of a policy. It aids in evidence-based policy making. It refers to identifying the problems requiring policy action and then developing alternative policy options to address the problem. Finally, the pros and cons of these alternatives are also evaluated so that the best course of action can be adopted.

ACTORS IN PUBLIC POLICY PROCESS

• The various actors and institutions involved in policy process includes Legislature, Executive, Judiciary, bureaucracy, civil society organizations like NGOs, trade unions, farmers groups, individual citizens, media etc.

THE FARM LAWS AND THE PUBLIC POLICY PROCESS: AN ANALYSIS

The three Farm Laws made by the Parliament has been criticized on account that they have been made without following a policy cycle approach. The Government of India has denied this and reiterated that it has conducted wide ranging consultations with stake holders. Let us examine these claims in detail

THE GOVERNMENT’S STAND

• The Committee of Chief Ministers constituted on reforming Indian agriculture by Government of India in July 2019 has recommended changes in these Laws. They have undertaken extensive consultations with stakeholders on the ground
• Many State Governments have already amended the Laws dealing with agriculture trade, contract farming etc. long before. For instance, around 16 States have abolished APMC system. These actions point out that there is a general consensus on the reforms. Also, the National Agriculture Policy 2000 has suggested greater private sector involvement in agriculture sector.
• NITI Aayog, has drafted Model Laws on contract farming, free trade in agriculture, land leasing etc. in 2015. These Model Laws have been at the centre of intense scrutiny, discussions and feedback.
• Economic Survey 2019-20 has provided empirical evidence especially in the case of Essential Commodities Act 1955 and shown how the Act has become a tool for harassment, victimization and stifling private investment in agriculture.
• Post enactment of the Laws, the Government has held series of meetings with farmer unions and their leaders and even agreed to amending the Laws after their concerns and apprehensions. This shows the Government was willing to use post policy consultation and feedback to reformulate public policy

CRITIQUE OF THE GOVT’S STAND

• The Govt has used the opportunity of the pandemic to push through these Laws in the form of Ordinances. Ordinance is meant for emergency purpose and there was no emergency for the Govt to enact these Ordinances. No effective engagement with the stake holders was possible in the time of pandemic.
• Pre-Legislative Consultation Policy 2014 provides for comprehensive consultation and eliciting public opinion before policy making. But in the case of these Laws this requirement was observed in the breach
• Agriculture being a State List subject requires States’ consent in Law making. The Committee of Chief ministers constituted by the Government does not replace the role of deliberation in all State Legislatures. Their inputs and suggestions would have provided invaluable evidence for effective policy making.
• The farmers group are the most important constituent of the civil society opposing these Farm Laws. More than 80 percent of the Indian farmers are small and marginal and the pace with which these Laws have been enacted make it impossible for holding any meaningful consultation with these pressure groups.
• The Parliament is the most crucial actor in the public policy cycle. The manner of pushing these Bills by violating procedures and without any proper debate or scrutiny by the Standing Committees has made the policy process myopic.

A POLICY PERSPECTIVE TO THE HISTORICAL QUESTION OF AGRI REFORM

THE BRITISH INDIA

• The farmers and the colonial regime had fought many battles due to the oppressive agriculture   policies of the British.
• For instance, the Indigo revolt against contract farming resulted in colonial Government instituting an Indigo Commission who recommended that farmers should not be compelled to grow Indigo
• Similarly, the Pabna agrarian revolt forced the British to enact Bengal Tenancy Act.
• The point stressed here is that when a colonial Government can listen to the farmers and bring changes in policies, a democratic Government should do more in addressing the farmers concerns by walking an extra mile.

THE POST INDEPENDENCE

• After Independence, the country has seen many incidents of the farmers protesting against legislative and administrative measures.
• Arguably, the biggest among them was 1988 Boat club siege of Delhi by farmers of Punjab, Haryana and Western UP. Around 500000 lakh farmers stayed put in and around the Boat Club for more than 3 weeks.
• Among their demands were the waiver of power and water bills and higher price for sugarcane. The Government has held discussions with the farmers They left only after some of their demands were met.
• Thus, the Government of Rajiv Gandhi which had a brutal majority at the Centre, has engaged with the farmers and incorporated their agenda/inputs for improving the public policy cycle.

MAKING A GOOD PUBLIC POLICY: HOW TO GO ABOUT IT?

PROBLEM DEFINITION

• The Public policy is goal oriented which means it is aimed at solving a problem. Accurate and comprehensive identification of the problem is critical in ensuring the success of a policy. This requires evidence gathering from multiple sources through consultation, research and analytical studies.

CONSENSUS BUILDING

• The actors in policy process have differing motivations to engage in policy process. For instance, in a labour policy the management and workers may have conflicting interests. In a disinvestment policy the staff of PSUs and the Government may not agree on key aspects of the policy. The point is simple. Consensus building across political, federal, civil society and pressure groups and other sectors can’t be wished away.

ADMINISTRATIVE CAPABILITY

• Often the administration is blamed for failure of a policy due to poor implementation. But the crucial point missed here is how a badly formulated public policy can be successfully implemented? So criticizing the administration for poor policy outcome is unfortunate in such a situation.  Secondly, the capacity of the Civil Services in areas like human resource, finance, infrastructure and technology must be enhanced.

PRINCIPLE OF SUBSIDIARITY

• As per the principle of subsidiarity, nothing that can be done at a lower political/administrative level should be done at a higher level. It means if a public policy can be best formulated and implemented at the state level, then the Centre should not interfere in it. The Schedule 7 of the Indian Constitution List 1 and 2 is based on this principle. Scrupulously following this principle is must for successful public policy.

POLITICAL WILL

• Public policy reflects the preferences of the Government and the party that forms the Government. Thus ideology plays vital role in policy making which makes consultation or concession difficult. Another dimension is the resourcefulness of the Government to formulate and implement what is required on the ground. A weak or a “Soft State” lacks this will and the skill and thereby public policy becomes an exercise in “muddling through” (ad hoc solutions)

CONTINUOUS FEEDBACK

• It is said that a policy is being made as is being implemented and is being implemented as is being made. This means that the policy process is a cyclic process and thus the feedback mechanism from the actors in the policy process must be captured in real time. Tools of e governance has revolutionized the speed and scale of feedback and response mechanisms today.

POLICY SCIENCE

• Policy science is an inter disciplinary approach that systematically studies public policy process. It uses scientific techniques and tools to objectively study the policy problems and suggest alternatives course of options to policy makers. The idea behind policy science is to add “some science to the value laden political process” of public policy. Institutions like National Statistical Office, National Council for Applied Economic Research, Institute for Defense Studies and Analysis and non-profits like Centre for policy research etc need to strengthened in this regard.

SPECIFIC MEASURES FOR MOVING OUT OF THE IMBROGLIO CREATED BY THE FARM ACTS

GRAB THE LOW HANGING FRUIT

• The most contentious issue seemed to be the possible dismantling of APMCs. Thus, the Government can repeal the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. Then begin drafting a new Act on this subject through comprehensive consultative process. This will create much good will and create a conducive environment for resolution of other issues.

POLITICAL ENGAGEMENT

• States must be taken onboard by engaging with them in a structured manner either through NITI Aayog or by reviving the Inter State Council. Allaying the apprehension of the States can help build political support for reforms.

EARLY HEARING IN THE SUPREME COURT

• The apex court should hear the challenges to these Laws as early as possible and decide them. This will provide a clear view on the future of Farm Laws and end major disputes regarding legislative encroachment and the like.

FARMERS’ APPROACH

• The farmers must give up the attitude of “my way or high way” and must be more open to engagement with the Government. For instance, agreeing to the suspension of the Laws for 18 months can be a good beginning point.

COMMITTEE ON FARM LAWS

• The SC appointed Committee has submitted report to the court. The findings and suggestions of the Committee can open up informed discussion in the Parliament and in the public domain which can be harnessed to generate further momentum on possible solutions.

NATIONAL OVERSEEING AUTHORITY

• Farmers cannot be left to the free will of competitive markets due to skewed asset distribution. A national body, National Agricultural Marketing authority similar to TRAI and SEBI, needs to be created to enhance the bargaining power of farmers and protect them, along with purchasers, sellers and consumers from possibilities of exploitation.

ISSUE OF MSP

• A legislative back up for MSP can be a great act of statesmanship from the part of Union Government which for all practical purposes can remove the trust deficit with respect to the intention of the Government. It will also make the farmers more receptive to reforms and allay concerns of small and marginal farmers.

THE WAY FORWARD: THE POLICY DISCOURSE

The issues related to Farm Bills can also be seen from policy discourse perspective. Any radical reforms in democracy will demand consensus building. In contemporary practices, when there is increasing emphasis on participation, evidence-based policy making, Pre-Legislative Scrutiny and Legislative Impact Assessment then in such scenario, bringing any radical policy change without meeting such standards will be like not learning anything at all from the developments of standards of policy making and promises often made through various platforms by the governments so far.

Therefore, in this article, we will not emphasize about the number of steps to be taken in the Way Forward, rather on the subject of policy discourse. The NITI Aayog has stated in past that the development should be jan aandolan, it seems more on paper than in reality. It is prudent to have policy discourse, so that, the differences in views can be addressed at early stage rather than at the trail-end of the process.

Today, there is not only concept of deliberative democracy but also its practice through RTI, e-governance, social audit and social media. Ballot box democracy is a thing of past, hence, the governments should not behave as if we are still living in that past era. Therefore, proper consultation, deliberation, legislative scrutiny and public view are sine-quo-non for any good policy, otherwise for what all such brouhaha that there should be policy research and discussion.

Now it is a well-known fact that only a good policy doesn’t make good implementation. For effective implementation, effective consultation is also needed with all stake-holders, so that, we can elicit their cooperation at implementation stage and then there will be effective implementation.

THE CONCLUSION: The commercialization of agriculture in colonial India reflected ruthless exploitation by East India Company and resulted in destruction of Indian agriculture. The lessons of history can create morbid fears among the people. Also, the opaque, hasty and undemocratic passage of the Bills have created mistrust among farmers. Recently, the Chief Justice of India has emphasized upon the quality of Law making through quality of discussion in the Legislature. These events show the importance of procedural modalities in a democratic polity and the relevance of policy process. The Government should have been more forthcoming in opening a channel of communication with the States, political parties, farmer community etc before the passage of Bills. What is needed now is to find a middle ground that addresses the legitimate concerns of all stakeholders by adopting a “post public policy cycle”.

THE CONTEXT: The Union Cabinet on 29 July, 2020, approved the National Education Policy 2020, aiming at transformational reforms in both school and higher education sectors. This is the first education policy of the 21^st century which replaces the thirty-four-year-old National Policy on Education (NPE), 1986.  Built on the foundational pillars of Access, Equity, Quality, Affordability and Accountability, this policy is  aligned to the 2030 Agenda for Sustainable Development and aims to transform India into a vibrant knowledge society and global knowledge superpower by making both school and college education more holistic, flexible, multidisciplinary, suited to 21^st century needs and aimed at bringing out the unique capabilities of each student.

THE MAIN HIGHLIGHTS

SCHOOL EDUCATION

1.       Universalization of Education:It aims for Universalization of Education from pre-school to secondary level with 100 % GER in school education by 2030

2.       New 5+3+3+4 formula: New 5+3+3+4 school curriculum with 12 years of schooling and 3 years of Anganwadi/ Pre-schooling

3.       Foundational education: Emphasis on Foundational Literacy and Numeracy, no rigid separation between academic streams, extracurricular, vocational streams in schools;

4.       Vocational Education to start from Class 6 with Internships.

5.       Teaching upto at least Grade 5 to be in mother tongue/ regional language

6.       Adoption of school complexes

7.       Breakfast in the school meal programme

8.       360-degree Holistic Progress Card:Assessment reforms with 360-degree Holistic Progress Card, tracking Student Progress for achieving Learning Outcomes

HIGHER EDUCATION

1.       A multidisciplinary system offering choices to students from among a variety of subjects from different disciplines

2.       Integrated (undergraduate, postgraduate and research levels) education

3.       A four-year undergraduate programme

1.       GER in higher education to be raised to 50 % by 2035

2.       Promises to provide higher education free to about 50% of the students(with scholarships and fee waivers)

3.       National Research Foundation to be established to foster a strong research culture

4.       Affiliation System to be phased out in 15 years with graded autonomy to colleges

5.       Technology: Increased use of technology with equity; National Educational Technology Forum to be created

6.       Facilitates selective entry of high-quality foreign universities

REGULATION AND GOVERNANCE

1.       Overhauling of the governance structure in higher education with National Education Commission headed by the Prime Minister as apex body at national level.

2.       One regulatory body for the entire sector KNOWN AS the Higher Education Commission of India.

PROMOTION OF TRADITIONAL LANGUAGE AND CULTURE

1.       New Policy promotes Multilingualism in both schools and HEs; National Institute for Pali, Persian and Prakrit, Indian Institute of Translation and Interpretation to be set up

2.       The policy also places emphasis on the liberal arts, humanities, and Indian heritage and languages

FINANCES

1.       Aims to increase public investment in education to 6% of the GDP from the present over 4%of GDP.

 FOUNDATIONAL PILLARS OF EDUCATION POLICY IN INDIA:

NATIONAL EDUCATION POLICY 2020: MAJOR TRANSFORMATIONAL REFORMS IN EDUCATION SECTOR

SCHOOL EDUCATION

Early Childhood care and Education

1.    This will consist of:

• Guidelines for up to three-year-old children (for parents and teachers), and
• Educational framework for three to eight-year-old children.

2.    This would be implemented by improving and expanding the anganwadi system and co-locating anganwadis with primary schools.

3.    NCERT will develop a National Curricular and Pedagogical Framework for Early Childhood Care and Education (NCPFECCE) for children up to the age of 8 .

Right to Education Act, 2009

1.    It extends the RTE coverage from 6-14 years to 3-18 years by including early childhood education and secondary school education.

The Curriculum Framework

1.    It restructures on the basis of 5-3-3-4 design comprising:

• 5years of Foundational Stage (3 years of pre-primary + Class I and II)
• 3 years of Preparatory Stage (Class III, IV and V)
• 3 years of Middle Class (Class VI, VII, VIII)
• Four years of Secondary Stage (Class IX, X, XI, XII)

2.    Curriculum should be reduced to its essential core to make space for holistic, discussion based, and analysis-based learning.

Reforms in school curricula and pedagogy

1. The school curricula and pedagogy will aim for holistic development of learners by equipping them with the key 21^st century skills, reduction in curricular content to enhance essential learning and critical thinking and greater focus on experiential learning.
2. Students will have increased flexibility and choice of subjects. There will be no rigid separations between arts and sciences, between curricular and extra-curricular activities, between vocational and academic streams.
3. Vocational education will start in schools from the 6^th grade, and will include internships.
4. A new and comprehensive National Curricular Framework for School Education, NCFSE 2020-21, will be developed by the NCERT.

Multilingualism and the power of language

The policy has emphasized mother tongue/local language/regional language as the medium of instruction at least till Grade 5, but preferably till Grade 8 and beyond. Sanskrit to be offered at all levels of school and higher education as an option for students, including in the three-language formula.Other classical languages and literatures of India also to be available as options. No language will be imposed on any student. Students to participate in a fun project/activity on ‘The Languages of India’, sometime in Grades 6-8, such as, under the ‘Ek Bharat Shrestha Bharat’ initiative. Several foreign languages will also be offered at the secondary level. Indian Sign Language (ISL) will be standardized across the country, and National and State curriculum materials developed, for use by students with hearing impairment.

Assessment Reforms

360 degree Holistic Progress Card of Child:All students will take school examinations in Grades 3, 5, and 8 which will be conducted by the appropriate authority. Board exams for Grades 10 and 12 will be continued, but redesigned with holistic development as the aim.  A new National Assessment Centre, PARAKH (Performance Assessment, Review, and Analysis of Knowledge for Holistic Development),  will be set up as a standard-setting body .

School Infrastructure

Multiple public schools to be made part of school complexes. A complex will consist of one secondary school (classes nine to twelve) and all the public schools in its neighbourhood that offer education from pre-primary till class eight.

Teacher Management

1.    Teachers need to be associated with a particular school complex for at least 5-7 years.

2.    Teachers will not be allowed to participate in any non-teaching activities during school hours that could affect their teaching capacities.

3.    The existing B.Ed. programme will be replaced by a four-year integrated B.Ed. programme to enrich the quality and content.

4.    Teachers will undergo a minimum 50 hours of continuous professional development training every year.

Robust Teacher Recruitment and Career Path

Teachers will be recruited through robust, transparent processes. Promotions will be merit-based, with a mechanism for multi-source periodic performance appraisals and available progression paths to become educational administrators or teacher educators. A common National Professional Standards for Teachers (NPST) will be developed by the National Council for Teacher Education by 2022, in consultation with NCERT, SCERTs, teachers and expert organizations from across levels and regions.

Regulation of Schools

1.    The Department of Education of the State will formulate policy and conduct monitoring and supervision.

Equitable and Inclusive Education

Special emphasis will be given on Socially and Economically Disadvantaged Groups(SEDGs) which include gender, socio-cultural, and geographical identities and disabilities.  This includes setting up of   Gender Inclusion Fund and also Special Education Zonesfor disadvantaged regions and groups. Every state/district will be encouraged to establish “Bal Bhavans” as a special daytime boarding school, to participate in art-related, career-related, and play-related activities. Free school infrastructure can be used as Samajik Chetna Kendras.

Other features

• National Mission on Foundational Literacy and Numerace
• Curriculum to integrate 21stCentury Skills, Mathematical Thinking and Scientific temper
• Education of Gifted Children
• NewNationalCurriculumFrameworkforECE,School,TeachersandAdult Education
• Board Examination will be Low Stakes, Based on Knowledge Application
• Tracking Student Progress for Achieving Learning Outcomes
• National assessment center – PARAKH
• NTA to offer Common Entrance Exam for Admission to HEIs
• National Professional Standards for Teachers (NPST)
• Book Promotion Policy and Digital Libraries
• Transparent online self-disclosure for public oversight and accountability

HIGHER EDUCATION

Holistic and Multidisciplinary Education

• 50 % Gross Enrolment Ratio by 2035
• Holistic and Multidisciplinary Education -Flexibility of Subjects
• Multiple Entry / Exit
• UGProgram-3or4year
• PGProgram–1or2year
• Integrated 5 year Bachelor’s / Master’s
• M Phil to be discontinued
• Credit Transfer and Academic Bank of Credits
• HEIs : Research Intensive/Teaching Intensive Universities and Autonomous Degree Granting Colleges
• Model Multidisciplinary Education and Research University(MERU) (in or near every District)

Graded Autonomy

• Graded Autonomy : Academic, Administrative & Financial
• Phasing out Affiliation System in 15 years
• National Mission on Mentoring
• Independent Board of Governors (BoG)

National Higher Education Regulatory Authority (NHERA)

Light but tight approach:This independent authority would replace the existing individual regulators in higher education, including professional and vocational education such as AICTE and UGC. Medical and legal fields have been excluded.

• Single Regulator for Higher Education (excluding Legal and Medical)
• On-line Self Disclosure based Transparent System for Approvals in place of ‘Inspections’
• Common Norms for Public and Private HEIs
• Private Philanthropic Partnership
• Fee fixation within Broad Regulatory Framework

National Assessment and Accreditation Council (NAAC)

Currently, NAAC is part of UGC. The policy recommends separating it from UGC and developing it into an independent and autonomous body.

National Research Foundation (NRF)

As the total investment in R&D in India has been declining, the policy recommends establishing a National Research Foundation, an autonomous body, for funding, mentoring and building the capacity for quality research in India.
It will have four major divisions-

◦      Science

◦      Technology

◦      Social Sciences

◦      Arts and Humanities

EDUCATIONAL GOVERNANCE

National Education Commission

This apex body with PM as the head need to be created for dynamically revising the educational vision of the country. It will overlook the function of NHERA, NCERT and NRF.

Renaming of Ministry of HRD

The Ministry of Human Resources and Development must be renamed as the Ministry of Education.

FINANCING EDUCATION

Investment in Education

The draft policy reiterated the long-standing demand of 6% of GDP to be invested in education.

Public Investment

The draft Policy seeks to double the public investment in education from the current 10% of total public expenditure to 20% in the next 10 years.

TECHNOLOGY IN EDUCATION

Technology in education

• Use of Technology in

1. Education Planning
2. Teaching, Learning & Assessment
3. Administration & Management
4. Regulation – Self Disclosure & Minimum Human Interface

• Increasing Access for Disadvantaged Groups

• Divyang Friendly Education Software
• e-Content in Regional Languages
• Virtual Labs

• National Educational Technology Forum (NETF)
• Digitally Equipping Schools, Teachers and Students

INDIAN KNOWLEDGE, CULTURE AND VALUES

Indian Knowledge Systems, Languages, Culture and Values

• Focus on Literature & Scientific Vocabulary of Indian Languages

• Language Faculty

• Research on Languages

• Strengthening National Institutes for promotion of Classical Languages & Literature

• Indian Institute of Translation and Interpretation (IITI)

• Cultural Awareness of our Indian Knowledge Systems

• Promoting Traditional Arts / Lok Vidya
• HEI / School or School Complex to have Artist(s)-in-Residence

Others

• Internationalisation of Education
• Integration of Vocational, Teacher and Professional Education
• Setting up of New Quality HEIs has been made Easier
• Standalone HEIs and Professional Education Institutions will evolve into Multidisciplinary
• Special Education Zone for Disadvantaged Regions
• National Institute for Pali, Persian and Prakrit
• National Educational Technology Forum (NETF)

 THE REASONS FOR THIS POLICY BEING CONSIDERED AS TRANSFORMATIVE

Considering education as the “public good”

It considers “education is a public good” and “the public education system is the foundation of a vibrant democratic society”. This make the education policy unique in the context of increasing commercialization of education. It is public education that contributes to the building of nations, their growth — socially, economically, politically, culturally, and technologically — and the building of a humane society.

The bold initiatives

• The policy promotes a holistic education as well as “each student’s holistic development in both academic and non-academic spheres”
• The foundational education with integration of 3-18 years age in place of 6-14 years

Linking with conceptual and foundational learning

Rote memorisation and learning has become part and parcel of the education system, hence, emphasis of the concept-building, research, innovation and integration of vocational education from the class 6 itself.

Linking with the cultural roots

The emphasis of three language and linking with ancient languages and culture is another initiative for indigenizing Indian education as against the westernized leaning

Light but tight regulation

Creating a new regulatory framework by merging the UGC and AICTE with emphasis on self-regulation is a step long overdue as India faces problems of regulatory cholesterol.

Institutional autonomy

Giving academic, administrative and financial autonomy to educations institutions are very essential for raising the educational standards

Some key new initiates

The policy also has many new initiatives which have become essential for enhancing the learning outcome and matching to the needs of 21^st century.

THE BACKGROUND OF THE POLICY

The policy also has many new When the present BJP-led government came in power in 2014, it constituted the Subramaniam Panel for education reforms which recommended in May 2016, but the Panel recommendations seem to have not been satisfactory.

The then government constituted the Kasturirangan Committee which recommended in May 2019. The recommendations were put for public comments and review and finally the government almost after a year later approved the draft education policy of the Committee, although all the recommendations have not been accepted.

The approval by the cabinet will largely be also approved by the parliament and it will become a national level policy. It will work as a framework for bringing transformation in the field of education.

THE EVOLUTION OF EDUCATION POLICY IN INDIA

1.       University Education Commission (1948-49), also known as Radhakrishnan Committee

Laid down the foundation for University education in India

2.       Secondary Education Commission (1952-53)

3.       Education Commission (1964-66) also known as Dr. D.S. Kothari Committee

The first policy on education adopted in 1968

4.       42nd Constitutional Amendment,1976-

Education in Concurrent List

5.       National Policy on Education (NPE), 1986

The policy which still remained a guide for education in India

6.       National Policy on Education (NPE), 1986 revised in 1992

Program of Action, 1992

7.       The 86^th amendment act 2002

Made education as fundamental right under the Article 21A

8.       The National Knowledge Commission 2005

The right to education act 2009 which aimed to make achieve the objectives of 86^th amendment act

9.       Yash Pal Committee 2009

On higher education but no implementation of recommendations

10.   T.S.R. Subramaniam Committee Report, May, 2016

No implementation of recommendations

11.   Dr. K. Kasturirangan Committee Report, 31 May, 2019

The National Education Policy 2020

THE CRITICISMS OF THE NATIONAL EDUCATION POLICY 2020

More rhetorical, less realistic

The policy seems to be more transformative in promises and words but less emphasis given on how to achieve them

Foundational education on weak foundation

Relying on anganwadi workers for early childhood education is not based on professional standards. The anganwadi workers are not trained for imparting foundation and conceptual knowledge to children and their resourcefulness is seriously doubted

Poor school infrastructure

Already the school infrastructure is very poor in terms of physical, human and financial. Adopting a new system which demands even greater level of infrastructure will face immense implementation challenges.

Missing link with RTE 2009

The policy doesn’t mention about the objectives under this law and how to overcome its weaknesses.

Commercialization of education

Although it mentions education as public good but it doesn’t have framework how to stop commercialization

Language/culture

It gives more emphasis of language, culture, mother tongue, at early education which may overburden children

Not clear about the three language formula

It says that the mother-tongue or the regional language would be the “preferred” mode of instruction till Class 5, possibly Class 8. It also states that, “wherever possible” these languages will be used in public and private schools. Given the ground realities what does all this entail?

Although the Committee recommended for three-language formula but the policy doesn’t have clear word for its implementation

Some recommendations don’t find place in the policy

• The draft policy promised doubling public expenditure on education to 20% of the total government expenditure, from 10%. The 2020 policy simply reaffirms the commitment to allocation of 6% of GDP.
• A National Education Commission at the national level and a similar one at the State level to be set up. There is no mention of State School Education Regulatory Authorities in the 2020 policy.

The promise of 6% GDP

It has been promised since the Kothari Committee 1964 but still it remains a far-fetched dream in India.

The unitary bias

The policy has unitary bias as education is in concurrent list but states have not been made a strong stakeholder. The establishment of national level policy and institutional framework is disregard to the role of the states. For instance, Andhra Pradesh has been recently promoting English medium education but this policy is giving emphasis to art, culture, Sanskrit and regional medium.

The problems of equity and quality of education to children belonging to vulnerable section of society

The emphasis of mother-tongue/regional medium/Sanskrit, etc in public schools which further affect the children belonging to vulnerable section of society as the children from the rich families will access English-medium education. There is already huge disparity due to this factor which will seriously affect equity in society.

THE WAY FORWARD

The positives of the policy should be welcomed. There are many new and bold initiatives in the policy which are essential for 21^st century. However, the efforts should be made to address the challenges in implementation of the policy. There is a now popular saying in India by academicians about improving education system in India, that we don’t need an education policy to improve the system rather the writing on the wall is very clear about what to improve, for instance:

1. Infrastructure: physical, human and financial
2. Pedagogy: the teaching methodology must change to import concept-based learning
3. Academics: the course curriculum should be reviewed at state level time to time on the pattern of NCERT and for higher education the quality of teaching, syllabus and inter-disciplinary approach
4. Regulation must be facilitatory and to create a level playing field rather than politically motivated and there must not be regulatory capture
5. Non-profit motive: TheCompanies Act 2013 Section 8A makes education as a non-profit sector and the SC has also stated in its judgement like TMA PIE case that profit should be for maintaining efficiency of the institution, hence the same should be ensured by the governments through proper regulation
6. PPP: The education sector demands a symbiotic relation between public, private and the third sector including philanthropy, so that, the needed capital and resource can be deployed to reduce the burgeoning demand and the supply gap.

CONCLUSION: The policy is transformative in promise and content. Now it all depends on implementation.The experience of policy implementation in recent times has been much better than that of past and it is expected that in case of this policy also, the implementation will improve. There is need for horizontal and vertical collaboration between union-states and PPP for effective implementation.

THE CONTEXT: India is the world’s fifth largest economy and the prospect of steady progress in the coming years is bright. Here, the critical role played by infrastructure in economic growth cannot be overemphasized. Investing in high-quality infrastructure is crucial for accelerating economic growth and sustaining it in the long run. This chapter covers the recent and past experiences of the government in transforming and inter-locking the potential of physical, regulatory and digital infrastructure.

• The correlation between infrastructure and development brings us to the present scenario when during the times of pandemic and geo-political crisis, the government kept its focus on reforms in areas of physical, digital and regulatory infrastructure.
• In order to increase the private sector participation in creation of new infrastructure and development of existing ones, the government took initiatives like Public-Private Partnership (PPP), National Infrastructure Pipeline (NIP) and National Monetisation Pipeline (NMP).
• In addition to this, as part of the structural reforms with the objective to enhance efficiencies and cost competitiveness, Gati Shakti and National Logistics Policy (NLP) were launched.

• Reflecting on the journey of digital infrastructure growth and its global adoption, it is pertinent to mention that in 2009, only 17 per cent of adults in India had bank accounts, 15 per cent used digital payments, 1 in 25 had a unique ID document, and about 37 per cent had mobile phones.
• These numbers have seen a meteoric rise — tele density has reached up to 93 per cent, over a billion people have a digital ID document, more than 80 per cent have bank accounts, and as of 2022, over 600 crore of digital payment transactions are completed per month.
• India is able to offer many best practices, particularly with respect to its digital infrastructure innovations, that can be emulated globally. Successful vaccination drive through the one-stop Co-WIN portal, DigiLocker, Open Network for Digital Commerce (ONDC), Open Credit Enablement Network (OCEN), Goods and Services Tax (GST) Sahay are a few success stories among many.

GOVERNMENT’S VISION AND APPROACHES TO INFRASTRUCTURE DEVELOPMENT IN INDIA

• The government, in recent years, provided an increased impetus for infrastructure development and investment through the enhancement of capital expenditure.
• This push has happened at a time of crisis when the capital expenditure by the private sector has been subdued. The outlay (target) for capital expenditure in 2022-23 (BE) was increased sharply by 35.4 per cent from ₹ 5.5 lakh crore in the previous year (2021-22) to ₹ 7.5 lakh crore, of which approximately 67 per cent has been spent from April to December 2022.

PUBLIC-PRIVATE PARTNERSHIPS (PPPS)

• Private participation in infrastructure programmes supports several PPP models, including management contracts like Build-Operate-Transfer (BOT), Design-Build-FinanceOperate-Transfer (DBFOT), Rehabilitate-Operate-Transfer (ROT), Hybrid Annuity Model (HAM), and Toll-Operate-Transfer (TOT) model. Under the BOT model, there are two variants – BOT (Toll) and BOT (Annuity) depending on who bears the traffic risk. In the case of BOT (Toll), the traffic risk is borne by the PPP concessionaire, while in the case of BOT (Annuity), it is borne by the public authority.
• The Public Private Partnership Appraisal Committee, the apex body for appraisal of PPP projects, has cleared 79 projects with a total project cost of ₹2,27,268.1 crore from FY15 to FY23.

NATIONAL INFRASTRUCTURE PIPELINE (NIP)

• The government launched the National Infrastructure Pipeline (NIP) with a forward-looking approach and with a projected infrastructure investment of around ₹111 lakh crore during FY20-25 to provide high quality infrastructure across the country.
• The NIP currently has 8,964 projects with a total investment of more than ₹108 lakh crore under different stages of implementation.

NATIONAL MONETIZATION PIPELINE – CREATION THROUGH MONETIZATION

• The National Monetization Pipeline (NMP) was thus announced on 23 August 2021. Based on the principle of ‘asset creation through monetization’, it taps private sector investment for new infrastructure creation.
• The NMP provides an opportunity for deleveraging balance sheets and providing fiscal space for investment in new infrastructure assets.
• The top 5 sectors (by estimated value) capture around 83 per cent of the aggregate pipeline value: roads (27 per cent) followed by railways (25 per cent), power (15 per cent), oil & gas pipelines (8 per cent), and telecom (6 per cent). Roads and railways together contribute around 52 per cent of the total NMP value.
• Against the monetization target of ₹0.9 lakh crore in FY22, ₹0.97 lakh crore have been achieved during the period under roads, power, coal and mines.

NATIONAL LOGISTICS POLICY: REDUCING THE COST OF LOGISTICS

• Logistics costs in India have been in the range of 14-18 per cent of GDP against the global benchmark of 8 per cent.
• Many efforts have already been made by the Government of India to improve the logistics ecosystem through ‘infrastructure initiatives’ such as Ude Desh ka Aam Nagrik (UDAN), Bharatmala, Sagarmala, Parvatamala, National Rail Plan, and through ‘process reforms’ GST, e-Sanchit, Single Window Interface for Trade (SWIFT), Indian Customs Electronic Data Interchange Gateway (ICEGATE), Turant Customs, and others.
• National Logistics Policy (NLP) was launched on 17 September 2022, addressing the components of improving efficiency in logistics through streamlining processes, regulatory framework, skill development, and mainstreaming logistics among others. The Policy will be implemented through a Comprehensive Logistics Action Plan (CLAP).
• The targets for achieving the vision of the NLP are to-

1. reduce the cost of logistics in India to be comparable to global benchmarks by 2030.
2. improve the Logistics Performance Index ranking – endeavour is to be among the top 25 countries by 2030.
3. create a data driven decision support mechanism for an efficient logistics ecosystem.

LEADS (Logistics Ease Across Different States) index:

• Government undertook a survey-based assessment of logistics ease in various States and UTs in the form of the LEADS index in 2018 to gauge their logistics ecosystem. It was followed by surveys in 2019, 2021, and 2022.
• It is based on a stakeholders’ survey and uses the World Bank’s Logistics Performance Index (LPI) methodology.
• LEADS 2022 has adopted a classification-based grading, and States have been now classified under four categories viz., coastal States, hinterland/ landlocked States, North-Eastern States, and UTs for the assessment of how well a State or UT has performed in comparison to the top State/UT within the specific cluster.
• Taking a break from the past, states have not been ranked in order. This time, they have been allotted three performance categories, namely, Achievers: States/UTs achieving a percentage score of 90 per cent or more, Fast Movers: States/UTs achieving percentage scores between 80 to 90 per cent, and Aspirers: States/UTs achieving percentage scores below 80 per cent.

PM GATI-SHAKTI: A MASTER PLAN FOR INTEGRATED PROJECT PLANNING

• The growth experience of advanced economies has highlighted the importance of having a multimodal transport network approach.
• Introducing the holistic planning in the case of infrastructure projects, the government launched PM GatiShakti, charting a transformative approach to infrastructure development.
• PM GatiShakti National Master Plan creates comprehensive database for integrated planning and synchronized implementation across Ministries/ Departments.

• It aims to improve multimodal connectivity and logistics efficiency while addressing the critical gaps for the seamless movement of people and goods.

DEVELOPMENTS IN PHYSICAL INFRASTRUCTURE SECTORS

Road Transport: Increased budgetary support by the government augmented road connectivity.

• There has been an increase in the construction of National Highways (NHs)/roads over time, with 10,457 km of roads constructed in FY22 as compared to 6,061 km in FY16. In FY23 (until October 2022), 4,060 km of NHs/roads were constructed, which was around 91 per cent of the achievement in the corresponding period of the previous financial year.
• Total budgetary support for investment in the sector has been increasing rapidly in the last four years and stood at around ₹1.4 lakh crore during FY23 (as of 31 October 2022).

Railways: Expansion and modernization, a continuous process

• The Indian Railways (IR), with over 68,031 route kms, is the fourth largest network in the world under single management.
• The capital expenditure (Capex) on infrastructure in railways has received tremendous boost since 2014. It has seen a continuous increase in the last four years with Capex (B.E.) of ₹2.5 lakh crore in FY23, up by around 29 per cent compared to the previous year.
• During the last eight years (2014-22), 30,446 Route Kilometres (RKM) have been electrified compared to an electrification of 4,698 RKM during the previous eight-year period, a more than six-fold increase.

Civil Aviation: Revival backed by domestic demand

• While in FY21, there was a considerable decline in the air-traffic (a decline of 54 per cent) as well as passenger traffic handled (a decline of 66 per cent), FY22 saw a recovery, mainly led by the domestic sector. The current financial year has further shown a rebound, with both passenger and cargo movement close to the pre-Covid-19 levels.
• Schemes such as UDAN, which has considerably enhanced regional connectivity through the opening of airports in India’s hinterland.

Ports: Handling higher capacity with governance reforms

• The development of ports is crucial for the economy, given that most of the international trade is handled through ports (around 90 per cent of international trade cargo by volume and 79.9 per cent by value). The capacity of major ports, which was 871.5 Million Tonnes Per Annum (MTPA) at the end of March 2014, has increased to 1534.9 MTPA by the end of March 2022. Cumulatively they handled 720.1 MT traffic during FY22.

Inland Water Transport: Tapping the potential of navigable waterways

• Inland water transport holds great untapped potential as a means for the transportation of goods and passengers. India has a large endowment of rivers, canals, and other waterways. The total navigable length of waterways in India is around 14,850 kilometres.
• Under the National Waterways Act 2016, 106 new waterways have been declared as National Waterways (NWs), taking the total number of NWs in the country to 111.

Electricity: Installed capacity growth driven by renewables

• The total electricity generated, including that from captive plants during the year FY22 was 17.2 lakh GWh as compared to 15.9 lakh GWh during the FY21, of which 14.8 lakh GWh was generated by utilities and 2.3 lakh GWh in captive plants.
• Thermal sources of energy make up the largest (59.1 per cent) share of total installed capacity in utilities, followed by renewable energy resources with 27.5 per cent and hydro with 11.7 per cent.

DEVELOPMENTS IN DIGITAL INFRASTRUCTURE

• The government’s Digital India programme, which aims to transform India into a digitally empowered society and knowledge economy, envisions digital infrastructure as a core utility to every citizen.

Telecommunications: Accelerating provision of affordable services

• The total telephone subscriber base in India stands at 117 crore (as of November 2022). While more than 97 per cent of the total subscribers are connected wirelessly (114.3 crore at the end of November 2022), 83.7 crore have internet connections as of June 2022. The overall tele-density in India stood at 84.8 per cent, with wide differences across states. It ranged from 55.4 per cent in Bihar to 270.6 per cent in Delhi.

• With a special focus on the states in the North-Eastern Region, the government is implementing a Comprehensive Telecom Development Plan (CTDP).
• A comprehensive initiative to connect our islands to the mainland has been realized through the government’s initiative of the Comprehensive Telecom Development Plan for Islands.
• A landmark achievement in telecommunications in India was the launch of 5G services. 5G could impact consumers directly through higher data transfer speeds and lower latency.
• As a major reform measure, the Indian Telegraph Right of Way (Amendment) Rules, 2022, will facilitate faster and easier deployment of telegraph infrastructure to enable speedy 5G rollout.
• Universal and equitable access to broadband services across the country, especially in rural areas, is an important part of the government’s vision for national digital connectivity.

Growth Story of Digital Public Infrastructure

• The emergence of Digital Public Infrastructure (DPI), aimed at improving financial literacy, innovation, entrepreneurship, employment generation, and empowering beneficiaries has played a critical role in uplifting the economy and bringing it to the stature where it stands today.
• A lack of knowledge about the existing schemes was seen as a primary reason behind the beneficiaries’ inability to access the schemes’ benefits. ‘MyScheme’ is an e-Marketplace for schemes where users can look for suitable schemes based on their eligibility.
• The scheme acts as the single national platform for launching any government scheme. As on 16 January, 2023, more than 181 Central and State/UT government schemes across 14 diverse categories have been hosted on the portal.

• To reduce the search cost for the commoners, the government launched Unified Mobile Application for New-Age Governance (UMANG), which enables citizens to access e-Government services offered by the Central and State Government in various sectors such as agriculture, education, health, housing, employees, pensioners, and students’ welfare, the Public Distribution System, and others.
• Until 16 January 2023, UMANG catered to about 21,869 services (1,672 Central and State Govt. services and 20197 Bill Payment services) under 310+ departments of Central Government and departments of 34 States/UTs. Over 4.9 crore users are registered and benefiting from services on UMANG.
• While the initiatives mentioned above focused on bringing the government to the doorsteps of the citizens, a unique initiative that deserves special mention is the Open Network for Digital Commerce (ONDC).
• Another important domain that the government has emphasized is the availability of open resources on Artificial Intelligence (AI). The national AI portal has been developed with a view to strengthening the AI ecosystem in the country.
• The government has also taken initiatives towards empowering individuals with control over their data to access essential services related to finance, health, education, and skills digitally.
• The Account Aggregator (AA) is a global techno-legal framework that enables individuals to share their financial data quickly and securely, with their consent, with any regulated third-party financial institution of their choice. The AA framework is currently live across over 110 crore of bank accounts.
• India is geared to strengthen the up-and-coming drone industry. Under Mission ‘Drone Shakti’, the drone start-ups and Drone-as-a-Service (DrAAS) are being promoted.
• As our digital space widens to bring in newer services, the need for appropriate regulations becomes paramount.

THE CONCLUSION: Today, we are operating in the new normal where the global economy is still recovering from the setback due to pandemic, and geo-political conflicts persist. India could effectively steer through the situation owing to its dedicated support to infrastructure creation through increased capex and strong macroeconomic fundamentals. But, with the advent of new technologies, we are witnessing new regulatory challenges. Technology and innovation are, per se, neither constructive nor destructive. The use cases present the positive aspects of technology and innovation. The synergy between physical and digital infrastructure will be one of the defining features of India’s future growth story.

THE CONTEXT: India’s external sector has been buffeted by shocks and uncertainty manifested in terms of elevated, though now easing global commodity prices; tightening international financial conditions; heightening financial market volatility; reversal of capital flows; currency depreciation and looming global growth and trade slowdown. However, it has been able to face these headwinds from a position of strength on the back of strong macroeconomic fundamentals and buffers.

TRADE HELPING INDIA REAP THE BENEFITS OF GLOBALIZED WORLD

• For the world as a whole, the share of trade as a percentage of world GDP has been in the range of 50-60 per cent since 2003 and stood at 52 per cent in 2020, according to the World Bank database.
• For India as well, the share of trade as a percentage of GDP has been steadily increasing, being above 40 per cent since 2005 (except 2020 being the pandemic year). The ratio stands at 46 per cent in 2021 and 50 per cent for H1 of 2022.

Global Scenario

• The global trade volume grew by 4.8 per cent in H1 2022, on top of an impressive recovery of 9.7 per cent in 2021, as per the World Trade Organisation (WTO) statistics. The global merchandise trade in value terms rose year-on-year (YoY), by 22.2 per cent in 2021, reversing the deceleration observed in the previous three years. During the H1 of 2022, the trade-in value terms grew by 32 per cent compared to the corresponding period of 2019.
• Trade growth is likely to slow in the closing months of 2022 and into 2023, according to the WTO Goods Trade Barometer.

India’s growing and diversifying trade

• International trade has been an important pillar of the resilience of India’s external sector. Trade as a percentage of GDP for India was in the range of 12-15 per cent in the 1980s; 16-25 per cent in the 1990s and 25-50 per cent in the 2000s.

• India achieved an all-time high annual merchandise export of US$ 422.0 billion in FY22.
• Merchandise exports were US$ 332.8 billion over April-December 2022 against US$ 305.0 billion during the period April-December 2021. Nonpetroleum and non-gems & jewellery exports in April-December 2022 were US$ 233.5 billion, as compared to US$ 230.0 billion in April-December 2021.

Bright spots in India’s Trade performance

• India’s pharma exports: US$ 15.4 billion in FY15 to US$ 24.6 billion in FY22
• Electronic goods exports: US$ 11.0 billion during April-December 2021 to US$ 16.7 billion during April-December. 2022 .
• Engineering goods exports crossed the US$ 100 billion mark in FY22 for the first time.
• Merchandise imports for the period April-December 2022 were US$ 551.7 billion as against US$ 441.5 billion
• Among major import commodities, petroleum crude & products imports increased by 45.6 per cent to US$ 163.9 billion in April-December 2022 compared to US$ 112.6 billion in April-December 2021 and continue to be the highest imported commodity.

• The merchandise trade deficit for April-December 2022 was estimated at US$ 218.9 billion as against US$ 136.5 billion in April-December 2021.
• The USA remained the top export destination in April-November, 2022 followed by UAE and the Netherlands.
• As regards imports, China, UAE, USA, Russia, and Saudi Arabia have a joint share of 40 per cent of the total imports of India.

Trade in Services

• India’s services exports stood at US$ 254.5 billion in FY22 recording a growth of 23.5 per cent over FY21 and registered a growth of 32.7 per cent in April-September 2022 over the same period of FY22.
• Software and business services together constitute more than 60 per cent of India’s total services exports.
• Services imports rose by 25.1 per cent between FY22 and FY21 to reach US$ 147.0 billion and have registered growth of 36.7 per cent in April-September 2022 over the same period of FY22.
• The increase in services imports is mainly on account of payments for transport services, travel and other business services.

Foreign Trade Policy

• India’s Foreign Trade Policy (FTP) has, conventionally, been formulated for five years at a time.
• The latest FTP for 2015- 2020 is in vogue at present. To provide policy stability during the pandemic period, the five-year FTP 2015-20 was extended from 2020 to 2022. The policy has been further extended till March 2023.
• In the year 2022, India signed Free Trade Agreements (FTAs) with UAE and with Australia to provide greater market access with a reduction in tariff and non-tariff barriers.

International Trade Settlement in Indian Rupees

• In July 2022, the Reserve Bank of India (RBI) issued a circular permitting an additional arrangement for invoicing, payment, and settlement of exports/imports in Indian Rupees (INR) to promote the growth of global trade.
• The above-mentioned framework for international settlement in INR acquires significance against the backdrop of the US Fed aggressively hiking the policy rates and its hawkish stand, the consequent rallying of the US dollar to multi-decade high levels, and concomitant weakening of currencies of various EMEs including the INR.
• The INR accounted for 1.6 per cent. If the INR turnover rises to equal the share of non-US, non-Euro currencies in global forex turnover of 4 per cent, INR could be regarded as an international currency, reflecting India’s position in the global economy.

Initiatives to enhance trade

• Focus on Agricultural Products: India’s agricultural exports achieved the highest ever export in FY22 reaching US$ 37.8 billion and it continued to perform well in FY23 with exports of US$ 26.8 billion during April- November 2022 backed by an effective agriculture export policy.
• Interest Equalisation Scheme: This Scheme was formulated to give benefit in the interest rates being charged by the banks to the exporters on their pre- and post-shipment rupee export credits.
• Remission of Duties and Taxes on Exported Products (RoDTEP) scheme: The scheme seeks remission of Central, State and Local duties/taxes/levies at different stages at the Central, State, and local level.
• Export Credit Guarantee: The Export Credit Guarantee Corporation (ECGC) supports Indian exporters and banks by providing export credit insurance services.
• Krishi Udan Scheme: Krishi Udan Scheme was launched in August 2020 on international and national routes to assist farmers in transporting agricultural products so that it improves their value realization. Krishi Udan 2.0 was launched in October 2021.
• Trade Infrastructure for Export Scheme: The creation of appropriate infrastructure for the growth of exports from the States.
• Districts as Export Hubs – One District One Product Initiative: The Districts as Export Hubs-ODOP initiative is aimed at targeting export promotion, manufacturing, and employment generation.

India’s Global Trade Engagements

• Governments have been pursuing international trade cooperation largely driven by diverse external and internal political economy considerations such as promoting peace and stability, increasing market size and most importantly, insuring themselves against unfavourable trade policies of other countries.
• The economic rationale for FTAs was the diversification and expansion of India’s exports to its trading partners, providing a level playing field vis-à-vis the competing countries having preferential access in our trading partners.
• India has so far concluded 13 FTAs and 6 Preferential Trade Agreements (PTAs).

BALANCE OF PAYMENTS IN CHALLENGING TIMES

Current Account Balance

• India’s current account balance (CAB) recorded a deficit of US$ 36.4 billion (4.4 per cent of GDP) in Q2FY23 in contrast to a deficit of US$ 9.7 billion (1.3 per cent of GDP) during the corresponding period of the previous year.
• For the period April- September 2022 (H1FY23), India recorded a CAD of 3.3 per cent of GDP on the back of an increase in the merchandise trade deficit, as compared with 0.2 per cent in H1FY22.

Invisibles

• Net services receipts increased from US$ 51.4 billion in H1FY22 to US$ 65.5 billion in H1FY23.
• Remittances anticipated to reach a milestone of US$100 billion in 2022 according to the World Bank.

Capital Account Balance

• On a BoP basis, the net capital inflows declined to US$ 29.0 billion in H1FY23 from US$ 65.0 billion19 in H1FY22 primarily driven by the FPI outflow of US$ 14.6 billion in Q1FY23. Net FDI inflows at US$ 20.0 billion in H1FY23 were comparable with US$ 20.3 billion in H1FY22.

• In terms of FDI inflow, Singapore was the top investing country with a 37.0 per cent share, followed by Mauritius (12.1 per cent), UAE (11.0 per cent), and the USA (10.0 per cent).

• Foreign Portfolio Investments (FPIs) recorded a net outflow of US$ 2.5 billion during April-December 2022 as against an outflow of US$ 0.6 billion a year ago.

Balance of Payments and Foreign Exchange Reserves

• There was a depletion of foreign exchange reserves on a BoP basis to the tune of US$ 25.8 billion in H1FY23 in contrast to an accretion of US$ 63.1 billion in H1FY22. But huge valuation losses (US$ 48.9 billion) contributed to the net depletion of US$ 74.6 billion of reserves in nominal terms during the period.
• As of end-November 2022, India was the sixth largest foreign exchange reserves holder in the world according to data compiled by the IMF.
• India’s foreign exchange reserves stood at US$ 562.7 billion as of end December 2022 covering 9.3 months of imports.

EXCHANGE RATES MOVING IN TANDEM WITH GLOBAL DEVELOPMENTS

• The INR appreciated against select major currencies barring the US dollar. The average exchange rate of INR against the Pound Sterling appreciated by 6.7 per cent in April -December 2022 over April – December 2021. This rate of appreciation was 14.5 per cent with respect to the Japanese Yen and 6.4 per cent against the Euro.

INTERNATIONAL INVESTMENT POSITION: A REFLECTION OF INDIA’S FINANCIAL SOUNDNESS

• As of end-September 2022, Indian residents’ overseas financial assets at US$ 847.5 billion were lower by US$ 73.0 billion or 7.9 per cent compared to the level as of March 2022, mainly due to the reduction in reserve assets even as trade credit and overseas direct investment recorded an increase.
• Reserve assets at US$ 532.7 billion, accounting for around 62.9 per cent of India’s international financial assets fell by 12.3 per cent over the same period.
• International liabilities at US$ 1,237.1 billion as of end-September 2022 were lower by US$ 41.6 billion (3.2 per cent) as compared to the level as of end-March 2022.

SAFE AND SOUND EXTERNAL DEBT SITUATION

• India’s external debt, at US$ 610.5 billion as of end-September 2022, grew by 1.3 per cent (US$ 7.6 billion) over US$ 602.9 billion as of end-September 2021. However, external debt as a ratio to GDP fell to 19.2 per cent as of end-September 2022 from 20.3 per cent a year ago.

THE OUTLOOK FOR THE EXTERNAL SECTOR: CAUTIOUS AMIDST GLOBAL HEADWINDS

• Slowing global demand is weighing on India’s merchandise exports. Thus, the export outlook may remain flat in the coming year if global growth does not pick up in 2023.
• In such cases, product basket and destination diversification which India is taking through FTAs would be useful to enhance trade opportunities. Governments can try and open markets through FTAs.
• India is facing competition from South Asian countries in a few of its export competitive products. However, given the benefits of the lower average age of the working population along with the advantage of economies of scale, India has the potential to cater to the global demand for several products in a cost-effective manner. For example, in the textile sector, Bangladesh and Vietnam are seen to be expanding their exports globally, in recent years.
• India is cementing its position as the top remittance receiver in the world, with inward remittances projected to be at record levels during 2022; the CAD would be within manageable limits and eminently financeable.
• The forex reserves remained comfortable at US$ 562.7 billion as of end-December 2022, covering 9.3 months of imports. The stock of India’s external debt has been prudently managed.
• From a cross-country perspective too, India’s external sector has fared relatively better and hence positioned relatively stronger to face the evolving adverse global scenario as evidenced by the Indian rupee outperforming most currencies, comfortable import cover and moderate CAD. India’s external debt vulnerability indicators are benign by international standards.
• To sum up, while India’s external sector faces challenges, it is performing relatively better as compared to many of its peers as it has inbuilt shock absorbers to weather them.

THE CONTEXT: India has been a major player in services trade, being among the top ten services exporting countries in 2021, having increased its share in world commercial services exports from 3 per cent in 2015 to 4 per cent in 2021. India’s services exports have remained resilient during the Covid-19 pandemic and amid current geopolitical uncertainties, driven by higher demand for digital support, cloud services, and infrastructure modernization catering to new challenges.

• The services sector witnessed a swift rebound in FY22, growing Year-on-Year (YoY) at 8.4 per cent compared to a contraction of 7.8 per cent in the previous financial year.
• The improvement was driven by growth in the ‘Trade, Hotel, Transport, Storage, Communication and Services related to broadcasting’ sub-sector, which bore the maximum burden of the pandemic.
• The growth momentum has continued in FY23 as well.

TRENDS IN HIGH-FREQUENCY INDICATORS

Services PMI

• India’s services sector activity, gauged by PMI Services, which remained in the contractionary zone for several months during 2020 and 2021 on account of the restrictions imposed to tackle the Covid-19 pandemic, recovered swiftly with the waning of the Omicron variant at the beginning of 2022.
• PMI services again witnessed a setback with the outbreak of the Russia-Ukraine conflict.

Bank Credit

• Bank credit to the services sector has witnessed significant growth since October 2021 with the improvement in vaccination coverage and recovery in the services sector. The credit to services sector saw a YoY growth of 21.3 per cent in November 2022, the second highest in 46 months.

Services Trade

• India’s services exports may improve as runaway inflation in advanced economies drives up wages and makes local sourcing expensive, opening up avenues for outsourcing to low-wage countries, including India. India is a significant player in services trade, being among the top ten services exporter countries in 2021, having increased its share in world commercial services exports from 3 per cent in 2015 to 4 per cent in 2021.
• A further increase in the share is likely, with the services exports registering growth of 27.7 per cent during April-December 2022 as compared to 20.4 per cent in the corresponding period last year.

Foreign Direct Investment (FDI) in Services

• In FY22 India received the highest-ever FDI inflows of US$ 84.8 billion including US$ 7.1 billion FDI equity inflows in the services sector.
• To facilitate investment, various measures have been undertaken by the Government, such as the launch of the National Single-Window system, a one-stop solution for approvals and clearances needed by investors, entrepreneurs, and businesses.

MAJOR SERVICES: SUB-SECTOR-WISE PERFORMANCE

Tourism and Hotel Industry

• India’s tourism sector is showing signs of revival. Foreign tourist arrivals in India in FY23 have been growing month-on-month with the resumption of scheduled international flights and the easing of Covid-19 regulations. Yet, the arrivals are below the pre-pandemic level. Profitability ratios of the tourism industry further point towards a strong rebound in the June 2022 quarter.
• India is ranked 10th out of the top 46 countries in the World in the Medical Tourism. The way India has handled the Covid situation trust in India’s medical infrastructure has improved.

• India has also attempted to improve its attractiveness as a destination for specialized tourism. Recent initiatives like the Ayush visa for tourists who desire to visit India for medical treatment, the launch of the National Strategy for Sustainable Tourism & Responsible Traveller Campaign, the introduction of the Swadesh Darshan 2.0 scheme, and Heal in India can assist in capturing a larger share of the global medical tourism market.

Real Estate

• The sector has witnessed resilient growth in the current year, with housing sales and the launch of new houses in Q2 of FY23 surpassing the pre-pandemic level of Q2 of FY20.
• Going forward, the recent government measures, such as the reduction in import duties on steel products, iron ore, and steel intermediaries, will cool off the construction cost and help to check the rise in housing prices.

IT-BPM Industry

• IT-BPM revenues registered YoY growth of 15.5 per cent during FY22 compared to 2.1 per cent growth in FY21, with all sub-sectors showing double-digit revenue growth.
• Within the IT-BPM sector, IT services constitute the majority share (greater than 51 per cent). Exports (including hardware) witnessed a growth of 17.2 per cent in FY22 compared to 1.9 per cent growth in FY21 and the use of core operations.

E-Commerce

• On the same lines as the IT-BPM sector, the E-Commerce sector also witnessed a renewed push and a sharp increase in penetration in the aftermath of the pandemic.
• Lockdowns and mobility restrictions disrupted consumer behaviour and gave an impetus to online shopping. The Government’s push to boost the digital economy, growing internet penetration, rise in smartphone adoption, innovation in mobile technologies, and increased adoption of digital payments further accelerated the adoption and growth of e-commerce.
• According to the Global Payments Report by Worldpay FIS, India’s e-commerce market is projected to post impressive gains and grow at 18 per cent annually through 2025.

Digital Financial Services

• Digital financial services enabled by emerging technologies and innovative solutions are accelerating financial inclusion, democratizing access, and spurring the personalization of products.
• With a strong foundation provided by the Jan Dhan-Aadhaar-Mobile (JAM) trinity, UPI, and other regulatory frameworks, the pandemic has aided acceleration in digital adoption and provided a fillip to digital financial services solutions by banks, NBFCs, insurers as well as fintech.
• The pandemic provided the opportunity for fintech companies to reach the underserved and provide cost-effective financial services to those at the bottom of the pyramid.
• The government also, through various initiatives, has given a push to digital banking solutions. 75 Digital Banking Units (DBU) across 75 districts announced in Union Budget 2022-23 to take banking solutions to every nook and corner of the country have been launched.
• The introduction of CBDC will also significantly boost digital financial services.
• Digitalizing documents has also played a pivotal role in giving further impetus to digital financial services. The digitization of documents ensures safety, online verification, improved accessibility, and fraud reduction, enhancing use for end customers and the service provider.

OUTLOOK

• India’s services sector growth which was highly volatile and fragile during the last 2 fiscal years, has shown resilience in FY23 driven by the release of pent-up demand, ease of mobility restriction, near-universal vaccination coverage and pre-emptive government interventions.
• Broad-based recovery has been observed in recent months, with pick up in almost all sub-sectors especially contact intensive services sector, which bore the maximum brunt of the pandemic.
• This is reflective of an uptick in the performance of various HFIs, reflecting a solid upswing in recent months, hinting at an enhanced presentation of the services sector in the next fiscal.
• The prospects look bright with improved performance of various sub-sectors like Tourism, Hotel, Real estate, IT-BPM, E-commerce etc. The downside risk, however, lies in the external exogenous factors and bleak economic outlook in Advanced Economies impacting growth prospects of the services sector through trade and other linkages.

THE CONTEXT: The industry holds a prominent position in the Indian economy contributing about 30 percent of total gross value added in the country. In FY23, the Indian industry faced some extraordinary challenges as the Russian-Ukraine conflict broke out. That led to a sharp rise in the prices of many commodities. In this chapter, the survey will review the performance of the Indian industry in the current financial year.

AN OVERVIEW

• Industry holds a prominent position in the Indian economy, accounting for 31 per cent of GDP, on average, during FY12 and FY21 and employing over 12.1 crore people.
• The sector’s relevance can be identified through various direct and indirect linkages with other sectors, contributing to economic growth and employment.
• It ensures that domestic production can accommodate domestic demand and reduces the reliance on imports.
• Industrial growth has multiplier effects, which translates into employment growth.
• Industrial growth spurs growth in services sectors such as banking, insurance, logistics, etc.

• In FY23, the Industry sector witnessed modest growth of 4.1 per cent compared to the strong growth of 10.3 per cent in FY22.

DEMAND STIMULUS TO INDUSTRIAL GROWTH

• Strong external demand also served the Indian industry well in FY22 when manufactured exports soared, responding to a rebound in global growth. Trade had also recovered and grown as bottlenecks in global supply chains eased.
• The export stimulus for the Indian economy persisted in the first half of FY23. In this half of the year, exports of goods and services as a share of GDP have been the highest since FY16.
• An increase in investment demand has emerged as another powerful stimulus to industrial growth. It has been triggered by a jump in the Capex of the central government in the current and the previous year as compared to the pre-pandemic years.

SUPPLY RESPONSE OF INDUSTRY

• The supply response of the industry to the demand stimulus has been robust, as seen in high-frequency indicators. The PMI-Manufacturing, for example, has remained in the expansionary zone for 18 months since July 2021.
• The eight core industries of coal, fertilizers, cement, steel, electricity, refinery products, crude oil, and natural gas are critical in meeting the demand for inputs across industries. The growth in these industries has held steady, reflecting a broad momentum in industrial activity.

• Growth in industrial output would have been higher, but for some constraints it faced in the first half of FY23.
• Manufacturing output appears to have been constrained by a large build-up in inventory. For five consecutive quarters ending in Q2 of FY23, an increase in stocks had accumulated to more than 1.3 per cent of the annual GDP.
• The manufacturing landscape shows uneven growth across various categories. For example, the motor vehicles manufacturing segment’s performance continues to improve, induced by robust demand and an easing of chip shortage.
• The manufacturing of ‘computer, electronic and optical products’, an upcoming industry, has also been rising.
• Growth in pharmaceutical output has slowed due to an unfavourable base effect and the waning of the pandemic.

ROBUST GROWTH IN BANK CREDIT TO INDUSTRY

• Growth in bank credit has kept pace with industrial growth, with a sequential surge evident since January 2022.
• Credit to MSMEs has also seen a significant increase in part assisted by the introduction of the Emergency Credit Line Guarantee Scheme (ECLGS), which supports around 1.2 crore businesses of which 95 per cent are MSMEs.
• The share of MSMEs in gross credit offtake to the industry rose from 17.7 per cent in January 2020 to 23.7 per cent in November 2022.

RESILIENT FDI INFLOW IN MANUFACTURING SECTOR

• Annual FDI equity inflows in the manufacturing sector have been steadily increasing over the last few years. It jumped from US$ 12.1 billion in FY21 to US$ 21.3 billion in FY22 as the pandemic-driven expansionary policies of advanced economies led to a surge in global liquidity.

INDUSTRY GROUPS

Micro, Small and Medium Enterprises (MSMEs) post smart recovery from pandemic

• While the contribution of the MSME sector to overall GVA rose from 29.3 per cent in FY18 to 30.5 per cent in FY20, the economic impact of the pandemic caused the sector’s share to fall to 26.8 per cent in FY21. MSME contribution to the manufacturing sector’s GVA also marginally fell to 36.0 per cent in FY21.

Electronics industry to be a key driver of manufacturing output and exports

• The electronics industry continues to ascend in importance as its applications become pervasive, particularly in the socio-economic development of a country.
• Electronics, supported by continuously improving communication services, will significantly enhance productivity, efficient service delivery, and social transformation.
• The domestic electronics industry, as of FY20, is valued at US$118 billion. India aims to reach US$300 billion worth of electronics manufacturing and US$ 120 billion in exports by FY26, supported by the vision of a US$ 1 trillion digital economy by 2025.
• Improvement in manufacturing and export over the past five years ensures that India is on the right trajectory to achieve this target.
• Electronic goods were among the top five commodity groups exhibiting positive export growth in November 2022, with the exports in this segment growing YoY by 55.1 per cent.

CoaI Industry: Key in maintaining energy self-reliance during uncertain times

• At the beginning of the fiscal year, coal availability became a challenge for India’s largely thermal-based power generation plants because of a resurgence in economic activity and the emergence of intense heat waves from early March to mid-May of 2022, increasing the demand for power in the country.
• In addition, in the wake of rising international coal prices, the power sector curtailed coal import drastically from 69 MT in FY20 to 45 MT in FY21 and further to 27 MT in FY22.
• As domestic coal production could not keep pace with its rising demand from power-generating plants, its availability got limited. Resultantly, in April 2022, even as coal offtake rose to meet higher demand, coal stock with power plants, as on 31st April 2022, fell to 8 days from 12 days a year ago.

Re-invigorated infrastructure sector & construction activity to drive steel industry

• Steel sector plays a pivotal role in crucial sectors such as construction, infrastructure, automobile, engineering and defence.
• Over the years, the steel sector has witnessed tremendous growth. The country is now a global force in steel production and the 2nd largest crude steel producer in the world.
• The steel sector’s performance in the current fiscal year has been robust, with cumulative production and consumption of finished steel at 88 MT and 86 MT, respectively, during April-December 2022, higher than the corresponding period during the previous four years.
• The growth in finished steel production is aided by double-digit growth in consumption (11 per cent on a YoY basis), bolstered by a pick-up in the infrastructure sector significantly driven by increased Capex of the government.

Government support to help textile Industry weather current challenges.

• The Textile industry is one of the country’s most significant sources of employment generation, with an estimated 4.5 crore people directly engaged in this sector, including a large number of women and the rural population.
• In the current financial year, the textile industry has been facing the challenge of moderating exports compared to FY22. However, the levels in the eight six months still prevail, 9.5 per cent higher than the corresponding pre-pandemic level of FY20.
• Export of readymade garments registered a growth of 3.2 per cent YoY basis during the same period.

Growth momentum in pharmaceuticals industry sustains after the pandemic

• The Indian Pharmaceuticals industry plays a prominent role in the global pharmaceuticals industry. India’s domestic pharmaceutical market is estimated at US$ 41 billion in 2021 and is likely to grow to US$ 65 billion by 2024 and is further expected to reach US$ 130 billion by 2030.
• India is ranked 3rd worldwide in the production of pharma products by volume and 14th by value.
• The nation is the largest provider of generic medicines globally, occupying a 20 per cent share in global supply by volume, and is the leading vaccine manufacturer globally with a market share of 60 per cent.

India becomes the world’s 3rd largest automobile market

• The automobile sector is a key driver of India’s economic growth. In December 2022, India became the 3rd largest automobile market, surpassing Japan and Germany in terms of sales.

INDIA’S PROSPECTS AS A KEY PLAYER IN THE GLOBAL VALUE CHAIN

• In this fast-evolving context, as global companies adapt their manufacturing and supply chain strategies to build resilience, India has a unique opportunity to become a global manufacturing hub this decade.

Make in India 2.0 and the PLI schemes

• To further enhance India’s integration in the global value chain, ‘Make in India 2.0’ is now focusing on 27 sectors, which include 15 manufacturing sectors and 12 service sectors.

• In pursuit of the objectives of the Make-in-India programme and with a vision to achieve Aatmanirbharta, the government launched the PLI scheme.
• The scheme is expected to attract a capex of approximately ₹3 lakh crore over the next five years. It has the potential to generate employment for over 60 lakh in India and increase the share of the manufacturing sector in total capital formation.

Fostering Innovation

• The government’s efforts towards fostering innovation include incubation, handholding, funding, industry-academia partnership and mentorship.
• The government has also strengthened its IPR regime.
• This has resulted in a 46 per cent growth in the domestic filing of patents over 2016-2021, signalling India’s transition towards a knowledge-based economy.

Structural reforms have enhanced the Ease of Doing Business

• This has been done through various reforms that have led to increased investment inflows and economic growth.
• The reform measures include amendments to laws and liberalization of guidelines and regulations to reduce compliance burdens, bring down costs and enhance the ease of doing business in India.

THE CONCLUSION: Despite global headwinds, industrial production expanded during FY23, backed by sustained demand conditions. The growth in bank credit has kept pace with industrial growth, with a sequential surge evident since January 2022. Credit to MSMEs has seen a significant increase in part, assisted by the introduction of the ECLGS. Amidst heightened global uncertainty, FDI in the manufacturing sector moderated in the first half of FY23. However, inflows stayed well above the pre-pandemic levels, driven by structural reforms and measures improving the ease of doing business, making India one of the most attractive FDI destinations.

THE INTRODUCTION:  The performance of the agriculture and allied sector has been buoyant over the past several years, much of which is on account of the measures taken by the government to augment crop and livestock productivity, ensure certainty of returns to the farmers through price support, promote crop diversification, improve market infrastructure through the impetus provided for the setting up of farmer-producer organizations and promotion of investment in infrastructure facilities through the Agriculture Infrastructure Fund. The chapter discusses these aspects while also focussing on other government interventions to enhance credit availability, facilitate mechanization and boost horticulture and organic farming.

• The Indian agriculture sector has been growing at an average annual growth rate of 4.6 per cent during the last six years. It grew by 3.0 per cent in 2021-22 compared to 3.3 per cent in 2020- 21.
• In recent years, India has also rapidly emerged as the net exporter of agricultural products. In 2020-21, exports of agriculture and allied products from India grew by 18 per cent over the previous year. During 2021-22, agricultural exports reached an all-time high of US$ 50.2 billion.

• Further, income support to farmers through the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the promotion of allied activities has led to diversification in sources of farmers’ income, improving their resilience to weather shocks.
• While Indian agriculture has performed well, the sector needs re-orientation in the backdrop of certain challenges like adverse impacts of climate change, fragmented landholdings, sub-optimal farm mechanization, low productivity, disguised unemployment, rising input costs, etc.

RECORD PRODUCTION OF FOODGRAINS

• As per Fourth Advance Estimates for 2021-22, the production of food grains and oil seeds has been increasing Year-on-Year (YoY). Production of pulses has also been notably higher than the average of 23.8 million tonnes in the last five years.
• However, as indicated earlier changing climate has been impacting agriculture adversely. The year 2022 witnessed an early heat wave during the wheat-harvesting season, adversely affecting its production.

MSP TO ENSURE RETURNS OVER THE COST OF PRODUCTION

• The Union Budget for 2018-19 announced that farmers in India would be given an MSP of at least one and a half times the cost of production.
• Accordingly, the Government has been increasing the MSP for all 22 Kharif, Rabi and other commercial crops with a margin of at least 50 per cent over the all-India weighted average cost of production since the agricultural year 2018-19.

ENHANCED ACCESS TO AGRICULTURAL CREDIT

In 2021-22 also, it was about 13 per cent more than the target of ₹16.5 lakh crore. The target for the flow of credit to agriculture for 2022-23 has been fixed at ₹18.5 lakh crore.

FARM MECHANIZATION- KEY TO IMPROVING PRODUCTIVITY

• As of December 2022, 21628 CHCs and 467 Hi-Tech hubs and 18306 farm machinery banks have been established. Increasing fragmentation of farm holdings requires machines that are viable and efficient for small farm holdings.

CHEMICAL-FREE INDIA: ORGANIC AND NATURAL FARMING

• India has 44.3 lakh organic farmers, the highest in the world, and about 59.1 lakh ha area was brought under organic farming by 2021-22.
• The Government has been promoting organic farming by implementing two dedicated schemes, i.e., Paramparagat Krishi Vikas Yojana (PKVY) and Mission Organic Value Chain Development for North Eastern Region (MOVCDNER) since 2015 through cluster/ Farmer Producer Organisations (FPOs) formation.

OTHER IMPORTANT INITIATIVES IN AGRICULTURE

• PM KISAN Scheme: It is a Central Sector Scheme to supplement the financial needs of land-holding farmers. The financial benefit of ₹6,000 per year is transferred into the bank accounts of farmer families through DBT.
• Agriculture Infrastructure Fund (AIF): AIF is a financing facility operational from the year 2020-21 to 2032-33 for the creation of post-harvest management infrastructure and community farm assets, with benefits including 3 per cent interest subvention and credit guarantee support.
• Pradhan Mantri Fasal Bima Yojana (PMFBY): PMFBY was launched in the 2016 Kharif season. PMFBY is currently the largest crop insurance scheme in the world in terms of farmer enrolments, averaging 5.5 crore applications every year. Farmers pay only 1.5 per cent and 2 per cent of the total premium for the Rabi and Kharif seasons, respectively, with Centre and State Governments bearing most of the premium cost. To better resolve grievances within the scheme, National Crop Insurance Portal has been developed to handle all grievances from end to end.
• Mission for Integrated Development of Horticulture (MIDH): The scheme to promote horticulture covering fruits, vegetables, root and tuber crops, spices, flowers, plantation crops etc., was introduced in 2014-15.
• National Agriculture Market (e-NAM) Scheme: The Government of India launched the National Agriculture Market (e-NAM) Scheme in 2016 to create an online transparent, competitive bidding system to ensure farmers get remunerative prices for their produce.
• Climate-Smart Farming Practices: This is slowly gaining acceptance with farmers using clean energy sources like solar for irrigation. The farmers have been incentivized to transfer electricity generated through solar to the local grid.

ALLIED SECTORS: ANIMAL HUSBANDRY, DAIRYING AND FISHERIES CATCHING UP IN RECENT YEARS

• The livestock sector grew at a CAGR of 7.9 per cent during 2014-15 to 2020- 21 (at constant prices), and its contribution to total agriculture GVA (at constant prices) has increased from 24.3 per cent in 2014-15 to 30.1 per cent in 2020-21. Similarly, the annual average growth rate of the fisheries sector has been about 7 per cent since 2016-17 and has a share of about 6.7 per cent in total agriculture GVA.

• The dairy sector is the most critical component of the livestock sector, employing more than eight crore farmers directly, and is the most prominent agrarian product.
• As a part of the Aatmanirbhar Bharat (ANB) stimulus package, the Animal Husbandry Infrastructure Development Fund (AHIDF) worth ₹15,000 crore was launched in 2020. Under this scheme, the Central Government provides a 3 per cent interest subvention to the borrower and credit guarantees up to 25 per cent of total borrowing.
• In May 2020, as a part of the ANB package, the Government of India launched its flagship scheme Pradhan Mantri Matsya Sampada Yojana (PMMSY), with a total outlay of ₹20,050 crore. PMMSY marks the highest-ever investment in the fisheries sector in India.

SAHAKAR-SE-SAMRIDDHI: FROM COOPERATION TO PROSPERITY

• To realize the vision of “Sahakar-see-Samriddhi”, a renewed impetus was given to the growth of the cooperative sector. Currently, around 19 per cent of agriculture finance is through cooperative societies.
• A full-fledged Ministry of Cooperation was established in July 2021 to provide greater focus to the cooperative sector. In addition, the Government has taken various initiatives to promote and strengthen Primary Agriculture Credit Societies (PACS), like the computerization of 63,000 functional PACS and the preparation of by-laws for enabling PACS to expand their activities.

FOOD PROCESSING SECTOR-THE SUNRISE SECTOR

• The food processing industries sector has been growing at an average annual growth rate of around 8.3 per cent. As per the latest Annual Survey of Industries (ASI) 2019-20, 12.2 per cent of persons in the registered manufacturing sector were employed in the food processing sector.
• The value of agri-food exports, including processed food exports, was about 10.9 per cent of India’s total exports during 2021-22.
• Recognizing the abundant potential of the sector, the Government has been at the forefront with various interventions aimed at the development of food processing in the country.
• The Ministry of Food Processing Industries, through the component schemes of Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), provide financial assistance for the overall growth and development of the food processing sector. Under PMKSY, 677 projects have been completed till 31 December 2022.
• The Ministry also launched in 2020 the Prime Minister’s Formalisation of Micro Food Processing Enterprises (PMFME) Scheme as part of the ANB Abhiyan.
• The Production Linked Incentive Scheme for Food Processing Industry (PLISFPI), launched in March 2022, has the specific mandate to incentivise investments to create global food champions. Subsequently, a PLI Scheme for millet-based products was also introduced with an outlay of ₹800 crore.
• To focus on transporting perishable food products, including horticulture, fishery, livestock and processed products, from the Hilly Areas, North-Eastern States and Tribal Areas, Krishi UDAN 2.0 version was launched in October 2021 as a six-month pilot project.

FOOD SECURITY- SOCIAL & LEGAL COMMITMENT TO THE PEOPLE OF THE NATION

• The Government is currently running the most extensive legislation-based food security programme in the world, covering about 80 crore of India’s population under the National Food Security Act (NFSA), 2013.
• The food management programme in India comprises procurement of food grains from farmers at remunerative prices, distribution of food grains to consumers, particularly the vulnerable sections of society, at affordable prices and maintenance of food buffer stock for food security and price stability.
• Till December 2022, the NFSA provided, for coverage of up to 75 per cent of the rural and up to 50 per cent of the urban population highly subsidized food grains at ₹1/2/3 per kg for coarse grains/ wheat/rice.
• To further ease the process of access to food, the Government launched a citizen-centric and technology-driven scheme in 2019 called the One Nation One Ration Card (ONORC) scheme. The ONORC system enables intra-State and inter-State portability of ration cards.

THE CONCLUSION: The performance of the agriculture sector remains critical to growth and employment in the country. Investment in the sector must be encouraged through an affordable, timely and inclusive approach to credit delivery. Intervention by the Government through PM Kisan to provide income support, strengthening of institutional finance and insurance through the PMFBY and the push given to Kisan Credit Cards as also access to machines and tools that improve productivity have been significant. A focus on the horticulture sector and the thrust towards allied activities have diversified farmers’ income making them more resilient to weather shocks. All these initiatives have led to sustainable and inclusive development of the sector.

THE CONTEXT: This chapter presents an updated discussion on the issue of climate change from India’s perspective, including a discussion on forests and their role in mitigating carbon emissions, an approach to transition to renewable energy and the recently submitted low emissions development strategy. The chapter further presents a discussion on the outcomes of the 27th session of the Conference of Parties (COP 27), progress made on enabling financing for sustainable development and India’s role in global efforts towards addressing climate change. Besides this, recent changes in environmental regulations and other environmental aspects, such as biodiversity and wildlife, are also discussed.

• Climate change is the long-term change in temperature and weather patterns that can occur due to natural reasons, but since the beginning of the industrial revolution in the 19th century, it has been predominantly due to anthropogenic activities.
• Much of the global angst associated with climate change is about the emission of GHGs and carbon, in particular. The more GHGs are emitted, the more they stay trapped in the atmosphere, accelerating global warming. Hence, the argument goes that if some of the cataclysmic consequences are to be avoided, then global warming must be arrested, slowed and, if possible, reversed.

One way to strive for it is to reduce emissions of GHG, including carbon. Many nations pledge to reduce their net emission to zero by 2050. Some wish to achieve it by 2060 and by 2070.

• However, this is where things begin to get interesting. Science is not very clear on whether further emission reduction would necessarily guarantee a stoppage or reversal of global warming.
• The IPCC’s Sixth Assessment Report (AR6) notes that high human vulnerability global hotspots are found particularly in West, Central & East Africa, South Asia, Central, and South America, Small Island Developing States, and the Arctic.
• The fact that climate change is a global phenomenon and requires collective efforts has been widely accepted and is the basis of the commitments in the United Nations Framework Convention on Climate Change (UNFCCC) and its Paris Agreement.
• Recognizing the differentiated responsibility of countries (in view of their role in GHG emissions) and the higher developmental needs of the developing countries, they call for a collective action based on the principles of equity and Common But Differentiated Responsibility and Respective Capabilities (CBDR-RC).
• The collective action has translated into NDCs-through which each country has made a commitment to work towards a collective goal of keeping temperature rise to below 2° C above pre-industrial levels.
• India has been striving to pursue the goal of sustainable development. It spearheads one of the most robust climate actions through its NDCs, which includes an ambitious programme for transitions to clean energy in the world.

PROGRESS ON INDIA’S CLIMATE ACTION

• India’s climate vision is integrally linked to its vision of development that foregrounds the goals of poverty eradication and guaranteeing basic well-being to all its citizens. Action on addressing climate action was initiated even before the Paris Agreement came into being.
• In 2008, India launched the National Action Plan on Climate Change (NAPCC), establishing eight National Missions, covering several initiatives and a slew of measures in the area of solar, water, energy efficiency, forests, sustainable habitat, sustainable agriculture, sustaining Himalayan ecosystem, capacity building and research and development (R&D).

• National Adaptation Fund for Climate Change (NAFCC), a central sector scheme, was initiated in 2015-16 to support adaptation activities in the States and Union Territories (UTs) of India that are vulnerable to the adverse effects of climate change.

India’s updated Nationally Determined Contribution (NDC)

• Article 4 of the Paris Agreement provides that each Party shall communicate or update its NDC every five years.
• India submitted its first NDC to UNFCCC in October 2015. This was updated in August 2022.
• The 2015 NDC comprised eight goals, three of which were quantitative targets to be achieved up to 2030.
• The three targets included cumulative electric power installed capacity from non-fossil sources to reach 40 per cent, reduction in the emissions intensity of GDP by 33 to 35 per cent compared to 2005 levels, and creation of additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover.

India, at COP26 in Glasgaw, has presented the following five nectar elements (Panchamrit) of India’s climate action:

1. Reach 500 GW Non-fossil energy capacity by 2030.
2. 50 per cent of its energy requirements from renewable energy by 2030.
3. Reduction of total projected carbon emissions by one billion tonnes from now to 2030.
4. Reduction of the carbon intensity of the economy by 45 per cent by 2030, over 2005 levels.
5. Achieving the target of net zero emissions by 2070.

STATUS OF FOREST AND TREE COVER

• One of the three quantifiable targets of India’s NDC is to achieve an additional carbon sink of 2.5 billion to 3.0 billion tonnes through additional forest and tree cover by 2030. The forest and tree cover in India has shown a gradual and steady trend of increase in the last one and a half decades.
• The country ranks third globally with respect to the net gain in average annual forest area between 2010 and 2020.
• Schemes like the Green India Mission (GIM), Compensatory Afforestation Fund Management and Planning Authority (CAMPA), National Afforestation Programme (NAP), Green Highway Policy – 2015, Policy for enhancement of Urban Greens, National Agro-forestry Policy, and Sub-Mission on Agro-forestry (SMAF), are among the most important ones.

CARBON STOCK IN INDIA’S FOREST AND TREE COVER

• The Indian State of Forest Report (ISFR) estimates the carbon stock of forests to be about 7,204 million tonnes in 2019 , which is an increase of 79.4 million tonnes of carbon stock as compared to the estimates of the previous assessment for 2017.

PRESERVATION OF ECOSYSTEMS: A CRITICAL ADAPTATION ACTION

• Ecosystems play an important role in carbon storage, protect the coastal areas, and enhance water quality besides other services, such as cultural, spiritual or tourist attractions. Wetlands are natural buffers against floods, droughts, and tropical cyclones.
• Mangroves and coastal wetlands form the first line of defence for coastal communities against increased storm surges, flooding, and hurricanes.
• The Government has taken both regulatory and promotional measures to protect and conserve mangroves.

Importance of Mangroves:

• Mangroves have a complex root system that is very efficient in dissipating sea wave energy thus protecting the coastal areas from tsunamis, storm surges, and soil erosion. E.g. they played important role in Tsunami of 2004.
• Mangrove roots slow down water flows and enhance sediment deposition. Therefore, they act as a zone of land accretion due to the trapping of fine sediments including heavy metal contaminants.
• They also arrest coastal erosion and sea water pollution.
• They act as a fertile breeding ground for many fish species and other marine fauna. Therefore, they have high biodiversity.
• They act as an important source of livelihood for the coastal communities dependent on the collection of honey, tannins, wax, and fishing.
• Mangroves are important carbon sinks.

RIVER CONSERVATION AND REJUVENATION

• The Government is working on mapping and converging the 5Ps’ – People, Policy, Plan, Programme and Project.
• The government has recently released Detailed Project Reports (DPR) for the rejuvenation of 13 major rivers prepared by the Indian Council of Forestry Research and Education (ICFRE), Dehradun in consultation with the State Forest Departments and other line Departments.

APPROACH TO TRANSITION TO RENEWABLE ENERGY SOURCES

• While the target was to achieve 40 per cent of the installed electric capacity from non-Fossil fuel sources by 2030 in the initial NDC submitted in 2015, the target has already been achieved.
• India is now striving to achieve the target of 50 per cent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030, in line with updated NDCs.

• India is progressively becoming a favoured destination for investment in renewables. As per the Renewables 2022 Global Status Report, during the period 2014 -2021, total investment in renewables stood at US$ 78.1 billion in India.

• The likely installed capacity of electricity capacity by the end of 2029-30 is expected to be more than 800 GW of which non-fossil fuel would be more than 500 GW.

GREEN HYDROGEN-A CRITICAL SOURCE OF ALTERNATE ENERGY

• With a vision to make India an energy-independent nation, and to de-carbonize critical sectors, the Government approved the National Green Hydrogen Mission on January 4, 2023. The Mission will facilitate demand creation, production, utilization and export of Green Hydrogen.

LONG-TERM LOW EMISSIONS DEVELOPMENT STRATEGY (LT-LEDS)

India submitted its Long-Term Low Carbon Development Strategy (LT-LEDS) on November 14, 2022, at COP 27.

• Focus on the rational utilization of national resources with due regard to energy security.
• Encompasses the objectives of the National Hydrogen Policy.
• Increased use of biofuels, especially ethanol blending in petrol.
• Climate-resilient urban development will be driven by smart city initiatives.
• India’s industrial sector will continue on a strong growth path, with the vision of ‘Aatmanirbhar Bharat’ and ‘Make in India’.

FINANCE FOR SUSTAINABLE DEVELOPMENT

GREEN BONDS

• Green bonds are financial instruments that generate proceeds for investment in environmentally sustainable and climate-suitable projects.
• In keeping with the ambition to reduce the carbon intensity of the economy significantly, the Union Budget 2022-23 announced the issue of Sovereign Green Bonds.
• The Reserve Bank of India (RBI) has notified the indicative calendar for the issuance of Sovereign Green Bonds (SGrBs) for the fiscal year 2022-23.
• The issuance would take place through two auctions on January 25, 2023 and February 9, 2023, respectively, for ₹8,000 crore each, totalling ₹16,000 crore.

REGULATORY FRAMEWORK FOR ISSUANCE OF GREEN DEBT SECURITIES

• SEBI introduced the regulatory framework for issuance of green debt securities as a mode of sustainable finance under the erstwhile SEBI.

INVESTING IN RESILIENCE FOR SUSTAINABLE DEVELOPMENT

• SEBI has issued new sustainability reporting requirements under the Business Responsibility and Sustainability Report (BRSR), which are more granular with quantifiable metrics in line with the principles ensconced in the ‘National Guidelines on Responsible Business Conduct’.

MAJOR DECISIONS AT COP 27

• India participated in COP 27, with a focus on mainstreaming the theme of LiFE – Lifestyle for Environment.
• Importance of the transition to sustainable lifestyles and sustainable patterns of consumption and production for efforts to address climate change.
• To establish new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change in responding to loss and damage.
• The importance of science in guiding climate action, doubling adaptation finance, dialogue on making finance flows consistent with low-emissions, and climate-resilient development calls on Multilateral Development Banks (MDB) reform for delivering climate finance at scale; diversity of sources of finance (including new and additional finance), etc.
• The target of US$ 100 billion per year is yet to be achieved.

INDIA’S INITIATIVES AT THE INTERNATIONAL STAGE

INTERNATIONAL SOLAR ALLIANCE (ISA)

• The International Solar Alliance (ISA) is a treaty-based inter-governmental organization working to create a global market system to tap the benefits of solar power and promote clean energy applications.
• ISA’s mission is to unlock US$ 1 trillion of investments in solar by 2030 while reducing the cost of the technology and its financing.
• With the signing and ratification of the ISA Framework Agreement by 15 countries on 6 December 2017, ISA became the first international intergovernmental organisation to be headquartered in India (at Gurugram, Haryana).
• ISA has expanded its coverage to all its 110 member countries.

COALITION FOR DISASTER RESILIENT INFRASTRUCTURE

• CDRI was launched by the Hon’ble Prime Minister of India during the United Nations Climate Action Summit on 23 September 2019 in New York.
• It is a global partnership of National Governments, UN agencies and programmes, multilateral development banks and financing mechanisms, the private sector, and academic and knowledge institutions.
• It aims to promote the resilience of infrastructure systems to climate and disaster risks, thereby ensuring sustainable development.
• As on 29 June 2022, thirty-one Countries, six International Organisations and two private sector organisations have joined as members of CDRI.

Leadership Group for Industry Transition (LeadIT)

• The LeadIT gathers countries and companies that are committed to action to achieve the Paris Agreement. It was launched by the governments of Sweden and India at the UN Climate Action Summit in September 2019 and is supported by the World Economic Forum.

INITIATIVES RELATED TO OTHER ENVIRONMENTAL ISSUES

ENSURING THE CONSERVATION OF BIODIVERSITY

• The 1992 Earth Summit held at Rio de Janeiro led to the adoption of an internationally binding legal instrument, the Convention on Biological Diversity (CBD), with the objectives of conservation, sustainable use, and fair and equitable sharing of benefits arising from the use of biological diversity.
• May 22nd is celebrated as an International Day for Biological Diversity every year globally.
• India ranks eighth in the world and fourth in Asia among the mega-diverse countries in the world.
• The fifteenth meeting of the Conference of Parties (COP 15) to the Convention on Biological Diversity (CBD) took place between 7th and 19th December 2022 in Montreal, Canada.

Key outcomes of the COP 15 to CBD include-

• Effective conservation and management of at least 30 per cent of the world’s lands, inland waters, coastal areas, and oceans. Currently, 17 per cent and 10 per cent of the world’s terrestrial and marine areas are under protection.
• Reduce to near zero the loss of areas of high biodiversity importance.
• Cut global food waste in half and significantly reduce overconsumption and waste generation.
• Reduce by half both excess nutrients and the overall risk posed by pesticides and highly hazardous chemicals.
• Progressively phasing out or reforming subsidies that harm biodiversity by 2030 by at least US$500 billion per year while scaling up positive incentives for biodiversity’s conservation and sustainable use.
• Mobilise by 2030 at least US$ 200 billion per year in domestic and international biodiversity-related funding from all sources – public and private.
• Raise international financial flows from developed to developing countries, in particular, least developed countries, small-island developing States, and countries with economies in transition, to at least US$ 20 billion per year by 2025 and to at least US$ 30 billion per year by 2030.
• India and Nepal signed a Memorandum of Understanding (MoU) in August 2022 on biodiversity conservation to strengthen and enhance the coordination and cooperation.

WILDLIFE – ITS PRESERVATION AND PROTECTION

• Enacted in 1972 called the Wildlife (Protection) Act 1972 to provide special legal protection to our wildlife and endangered species. The Act has been amended multiple times to strengthen conservation measures.
• India is home to 54 Tiger Reserves covering approximately 75,796.8 sq. km area in 18 States, with about 75 per cent of the wild tiger population at the global level.
• 17 Tiger Reserves in the country have CA|TS international accreditation and and two have received International Tx2 Award.

The TX2 Tiger Conservation Award is given away by Conservation Assured | Tiger Standards (CA|TS), Fauna & Flora International, Global Tiger Forum, IUCN Integrated Tiger Habitat Conservation Programme, Panthera, UNDP Lion’s Share, Wildlife Conservation Society, and World Wide Fund For Nature’s (WWF’s) Tigers Alive Initiative.

• India now (2020) has 12,852 leopards compared to the previous estimate of 7910 conducted in 2014.
• The current population estimates indicate about 50,000 – 60,000 Asian elephants worldwide. More than 60 per cent of the population is in India.

Government has brought in the Wildlife (Protection) Amendment Act, 2022. The Act seeks to –

• increase the number of species protected under the law and implement the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
• The Wildlife (Protection) Act 1972 has six schedules. The Act aims to rationalise the schedules by

(i)      reducing the number of schedules for specially protected animals to two,

(ii)    removing the schedule for vermin species, and

(iii)   inserting a new schedule for specimens listed in the Appendices under CITES (scheduled specimens).

• the Act empowers the government to regulate or prohibit the import, trade, possession or proliferation of invasive alien species.

Plastic Waste Management and Elimination of Identified Single-Use Plastics

• On July 1, 2022, a ban was imposed on the manufacture, import, stocking, distribution, sale and use of identified single-use plastic items, which have low utility and high littering potential, all across the country.

Battery Waste Management

• The Government published the Battery Waste Management Rules, 2022, on August 24, 2022 to ensure environmentally sound management of waste batteries.

E-waste Management

• The Government notified the E-Waste (Management) Rules, 2022, on November 2, 2022. These rules will replace the E-waste (Management) Rules, 2016.
• Under these rules, a provision for reducing hazardous substances in the manufacturing of EEE has been provided. It mandates that every producer of EEE and their components shall ensure that their products do not contain lead, mercury, and other hazardous substances beyond the maximum prescribed concentration.

THE CONCLUSION: India is spearheading one of the world’s most ambitious clean energy transitions and remains steadfast in its commitment to combating climate change. Despite the adverse impacts of Covid-19 on the economy, India has enhanced its climate ambition manifold and embarked on a long-term strategy towards a Low GHG Emission Development Strategy by adopting a multi-pronged approach.

THE CONTEXT: India is entering the Amrit Kal with better-equipped schools, affordable healthcare, increasing formal employment, empowered women’s collectives, and far-reaching access to basic amenities such as sanitation, drinking water and electricity. This Chapter presents emerging evidence of the achievements on these fronts. It reviews the progress on the social infrastructure front and the enhancement of employment opportunities in the country.

SOCIAL SECTOR EXPENDITURE KEEPING PACE WITH GROWING IMPORTANCE OF THE SECTOR

• The Government’s spending on social services has shown a rising trend since FY16 with a focus on many aspects of the social well-being of citizens of the country.
• The share of expenditure on social services in the total expenditure of the Government has been around 25 per cent from FY18 to FY20. It increased to 26.6 per cent in FY23 (BE).

• The share of expenditure on health in the total expenditure on social services, has increased from 21 per cent in FY19 to 26 per cent in FY23 (BE).

IMPROVING HUMAN DEVELOPMENT PARAMETERS

• According to United Nations Development Programme (UNDP) report, 90 per cent of countries have registered a reduction in their Human Development Index (HDI) value in 2020 or 2021, indicating that human development across the world has stalled for the first time in 32 years.
• India ranked 132 out of 191 countries and territories in the 2021/2022 HDI report. India’s HDI value of 0.633 in 2021 places the country in the medium human development category, lower than its value of 0.645 in 2019.
• However, India’s HDI value continues to exceed South Asia’s average human development. It has been steadily increasing and moving towards the world average since 1990 due to priority placed on investment in social infrastructure, including ensuring universal health and education.
• On the parameter of gender inequality, India’s Gender Inequality Index (GII) value is 0.490 in 2021 and is ranked 122. This score is better than that of the South Asian region.

UNDP Multidimensional Poverty Index 2022

• Multidimensional poverty measures are used to create a more comprehensive picture. It reveals who is poor and how they are poor, and the range of different deprivations experienced by them.
• The 2022 report of the UNDP on MPI was released in October 2022 and covers 111 developing countries.

TRANSFORMATION OF ASPIRATIONAL DISTRICTS PROGRAMME

• The Government of India launched the ‘Transformation of Aspirational Districts’ (Aspirational Districts Programme (ADP)) initiative in January 2018 with a vision of a New India by 2022 wherein the focus is to raise living standards of its citizens and ensuring inclusive growth of all in the burgeoning economy.
• Aspirational Districts (ADs) across 28 States/UTs have been identified by NITI Aayog based upon composite indicators ranging from health and nutrition, education, agriculture, and water resources, financial inclusion and skill development, and basic infrastructure which have an impact on HDI.
• The Aspirational Districts Programme has emerged as a template for good governance, especially in remote and difficult areas.
• At present, two programmes have been conceptualized along the lines of ADP design, one is ‘Mission Utkarsh’ and the other is ‘Aspirational Blocks Programme’ (ABP).

PROGRESSING LABOUR REFORM MEASURES

• In 2019 and 2020, 29 Central Labour Laws were amalgamated, rationalized, and simplified into four Labour Codes, viz., the Code on Wages, 2019 (August 2019), the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health & Working Conditions Code, 2020 (September 2020).
• The new laws are in tune with the changing labour market trends and, at the same time, accommodate the minimum wage requirement and welfare needs of the unorganized sector workers, including the self-employed and migrant workers, within the legislation framework.
• Rules made under the Codes have been entrusted to Central Government, State Government and at appropriate level.

e-Shram portal

• Ministry of Labour and Employment (MoLE) has developed eShram portal for creating a National database of unorganized workers, which is verified with Aadhaar.
• As on 31 December 2022, total over 28.5 crore unorganized workers have been registered on eShram portal.

AADHAAR: THE MANY ACHIEVEMENTS OF THE UNIQUE IDENTITY

Achievements of Aadhaar

• Aadhaar is an essential tool for social delivery by the State. 318 Central schemes and over 720 state DBT schemes are notified under section 7 of the Aadhaar Act, 2016, and all these schemes use Aadhaar for targeted delivery of financial services, subsidies, and benefits. Aadhaar is the foundation of India’s digital integration.

• JAM (Jan-Dhan, Aadhaar, and Mobile) trinity, combined with the power of DBT, has brought the marginalized sections of society into the formal financial system, revolutionizing the path of transparent and accountable governance by empowering the people.

• Aadhaar played a vital role in developing the Co-WIN platform and in the transparent administration of over 2 billion vaccine doses.

IMPROVING EMPLOYMENT TRENDS

• Labour markets have recovered beyond pre-Covid levels, in both urban and rural areas, with unemployment rates falling from 5.8 per cent in 2018-19 to 4.2 per cent in 2020-21, and a noticeable rise in rural FLFPR from 19.7 per cent in 2018-19 to 27.7 per cent in 2020-21.
• More recent urban employment data shows progress beyond pre-pandemic levels as the unemployment rate declined from 8.3 per cent in July-September 2019 to 7.2 per cent in July-September 2022.

SUPPLY SIDE OF EMPLOYMENT

• The labour force participation rate (LFPR), worker population ratio (WPR) and unemployment rate (UR) in PLFS 2020-21(July-June) have improved for both males and females in both rural and urban areas compared to PLFS 2019-20 and 2018-19.

• Quarterly urban unemployment rate declined from pre-pandemic level of 8.3 per cent in July-September 2019 to 7.2 per cent in July-September 2022, accompanied by a rise in LFPR from 47.3 per cent to 47.9 per cent during the same period, as discussed in paraghaphs 6.33 and 6.34.
• The share of self-employed increased and that of regular wage/salaried workers declined in 2020-21 vis-à-vis 2019-20, driven by trend in both rural and urban areas. The share of casual labour declined slightly, driven by rural areas.

Quarterly PLFS for urban areas

• An improvement in all the key labour market indicators in the quarter ending September 2022 both sequentially and over the last year. The labour participation rate increased to 47.9 per cent in July-September 2022 from 46.9 per cent a year ago

DEMAND SIDE OF EMPLOYMENT

• The estimated total employment in the nine selected sectors according to the fourth round of QES (January to March 2022) stood at 3.2 crore, which is nearly ten lakh higher than the estimated employment from the first round of QES (April-June 2021).

FORMAL EMPLOYMENT

• EPFO data indicates a consistent YoY increase in payroll addition, pointing towards improved formalization as economic activities picked up. The net addition in EPF subscriptions during FY22 was 58.7 per cent higher than in FY21 and 55.7 per cent higher than that in the pre-pandemic year 2019. In FY23, net average monthly subscribers added under EPFO increased from 8.8 lakh in April-November 2021 to 13.2 lakh in April-November 2022.

DEMAND FOR WORK UNDER MGNREGS

• The number of persons demanding work under MGNREGS was seen to be trending around pre-pandemic levels from July to November 2022.
• In FY23, as on 24 January 2023, 6.49 crore households demanded employment under MGNREGS, and 6.48 crore households were offered employment out of which 5.7 crore availed employment.

THE TREND IN RURAL WAGES

• Nominal rural wages have increased at a steady positive rate during FY23 (till November 2022). In agriculture, the YoY rate of growth of nominal wage rates in agriculture was 5.1 per cent for men and 7.5 per cent for women, during the period April-November 2022.

ENSURING QUALITY EDUCATION FOR ALL

• The NEP 2020 was laid down as the first education policy of the 21st century, aiming to address the many growing developmental imperatives of the country.
• This includes regulation and governance, creation of a new system that is aligned with the aspirational goals of 21st century-education, including SDG4, while building upon India’s traditions and value systems.
• It provides for nurturing all-around development and skill acquisition by youth in an inclusive, accessible, and multilingual set-up.

SCHOOL ENROLMENT

• The year FY22 saw improvement in Gross Enrolment Ratios (GER) in schools and improvement in gender parity. GER in the primary-enrolment in class I to V as a percentage of the population in age 6 to 10 years – for girls as well as boys have improved in FY22.

SCHOOL DROP-OUT

• School dropout rates at all levels have witnessed a steady decline in recent years. The decline is for both girls and boys.
• The schemes such as Samagra Shiksha, RTE Act, improvement in school infrastructure and facilities, residential hostel buildings, availability of teachers, regular training of teachers, free textbooks, uniforms for children, Kasturba Gandhi Balika Vidyalaya and the PM POSHAN Scheme play an important role in enhancing enrolment and retention of children in schools.

HIGHER EDUCATION

• The total enrolment in higher education has increased to nearly 4.1 crore in FY21 from 3.9 crore in FY20. Since FY15, there has been an increase of around 72 lakh in enrolment (21 per cent). The female enrolment has increased to 2.0 crore in FY21 from 1.9 crore in FY20.

Initiatives for higher education

• Research & Development Cell (RDC) in Higher Education Institutions (HEI)
• Guidelines for pursuing two academic programmes simultaneously
• Interest subsidy on education loan

EQUIPPING THE WORKFORCE WITH EMPLOYABLE SKILLS AND KNOWLEDGE IN MISSION

• Skill development is aimed at the removal of the disconnect between demand and supply of skilled manpower, building vocational and technical training framework, skill up-gradation, and building of new skills, and innovative thinking not only for existing jobs but also jobs of the future.
• In order to address the incremental manpower requirement and to empower youth with adequate skills, the Ministry of Skill Development and Entrepreneurship (MSDE) was created in 2014 and Skill India Mission was launched in 2015.

• The Skill India Mission focuses on skilling, re-skilling and up-skilling through short term and long term training programmes. Under the Mission, the government, through more than 20 Central Ministries/Departments, is implementing various skill development schemes across the country.

QUALITY AND AFFORDABLE HEALTH FOR ALL

Ensuring the provision of quality health facilities to citizens is an important priority for the Government. Towards this objective, multidimensional initiatives have been launched and carried forward for better overall health of the citizens.

• With concerted efforts made under the Reproductive, Maternal, New-born, Child, Adolescent Health Plus Nutrition (RMNCAH+N) strategy, India has made considerable progress in improving the health status of both mothers and children.
• As per the Sample Registration System (SRS) data, India has successfully achieved the major milestone to bring the Maternal Mortality Ratio (MMR) to below 100 per lakh live births by 2020 (laid down in National Health Policy 2017) by bringing it down to 97 per lakh live births in 2018-20 from 130 per lakh live births in 2014-16.
• Eight states have already achieved the SDG target to reduce MMR to less than 70 per lakh live births by 2030. These include Kerala (19), Maharashtra (33), Telangana (43) Andhra Pradesh (45), Tamil Nadu (54), Jharkhand (56), Gujarat (57), and Karnataka (69).
• Following a steady downward trend, Infant Mortality Rate (IMR), Under Five Mortality Rate (U5MR) and Neonatal Mortality Rate (NMR) have further declined as a result of countrywide efforts towards increasing health service coverage through strengthening of service delivery; quality assurance; RMNCAH+N; human resources, community processes; information and knowledge; drugs and diagnostics, and supply chain management, etc.

HEALTH EXPENDITURE ESTIMATES

• The NHA estimates for FY19 show that there has been an increase in the share of Government Health Expenditure (GHE) in the total GDP from 1.2 per cent in FY14 to 1.3 per cent in FY19.
• Overall, for FY19, THE for India is estimated to be `5,96,440 crore (3.2 per cent of GDP and `4,470 per capita).
• The social security expenditure on health, which includes the social health insurance programme, government-financed health insurance schemes, and medical reimbursements made to government employees, has increased from 6 per cent in FY14 to 9.6 per cent in FY19.

Rural health care – strengthening of infrastructure and human resource

• The recent health sector reforms in India have laid emphasis on strengthening health infrastructure as well as human resource in the public sector system.
• This can be observed in the rise in the number of Sub-centres (SCs), Primary Health Centres (PHCs), and Community Health Centres (CHCs) in rural areas, along with the rise in doctors, nurses, and other medical personnel over time.

PROGRESS UNDER MAJOR GOVERNMENT INITIATIVES FOR HEALTH

Immunization

• To reinforce universal immunization, Mission Indradhanush (MI) was launched in December 2014 with the aim to rapidly increase full immunization coverage of children to 90 per cent and sustain it thereafter.

eSanjeevani (Tele-medicine)

• At present, eSanjeevani is operational in all states and UTs across India. As of 17 January 2923, 1,12,553 HWCs in rural areas and 15,465 Hubs at tertiary level hospitals, and medical colleges in the states have been enabled in the eSanjeevani.

NATIONAL COVID-19 VACCINATION PROGRAMME

• More than 220 crore COVID vaccine doses administered as on 06 January, 2023.
• 97 per cent of eligible beneficiaries have already received at least one dose of Covid-19 vaccine and around 90 per cent of eligible beneficiaries have received both the doses. Vaccination for the age group 12-14 years was started on 16 March 2022, followed by the precautionary dose for the age group 18-59 years starting from 10 April 2022.

AYUSHMAN BHARAT

• Nearly 22 crore beneficiaries have been verified under the Ayushman Bharat Scheme as on 04 January, 2023. Over 1.54 lakh Health and Wellness Centres have been operationalized across the country under Ayushman Bharat.

THE CONCLUSION AND THE WAY FORWARD

• Today, India is moving towards the attainment of the UN SDGs. While doing so, it is cognisant of the fact that for equitable development, a country as vast and diverse as India requires the implementation of broad-based inclusive social policies, supported by adequate and commensurate financial resources. Thus, the character and contour of such an approach to development presents a unique set of challenges which is consistently being addressed in the form of mindful reforms.
• Ensuring that intended outcomes of social sector development schemes reach the intended, involvement of the grassroot level of governance is imperative and is being actively pursued.
• Technology has been a great enabler in ensuring the last-mile connectivity of government schemes to the targeted citizens. It has revolutionized the delivery of services while ensuring transparency and accountability. It needs to be harnessed further to help the government attain the lofty SDGs on the social front.
• As India marches ahead, the ground lost as regards social sector improvements due to the pandemic, has largely been recouped, powered by prompt policymaking and efficient implementation interwoven with technology.
• Going forward with the vision of ‘Minimum Government; Maximum Governance’, further developments will hold the key to attaining more equitable economic growth.
• Evident ones include stepping up learning outcomes through digital and teaching interventions in schools, enhancing the role of community workers in healthcare, pushing SHGs through better product design and upscaling enterprises.
• Further, channelizing women’s economic potential through ecosystem services such as affordable market alternatives for care work, safe transportation and lodging, and long-term counselling support, can help capitalize the gender dividend for the country’s future economic and social development.

THE INTRODUCTION: Rising prices are always a cause of concern for policymakers as they hurt the common man the most. The perils of inflation are felt more in developing economies, where necessities have a higher share in the consumption basket than in developed countries. In recent years, India’s inflation rate has been well-behaved, lying tamely below the RBI target rate of 4 per cent from 2017 to 2019.

• In advanced economies, the rate of inflation is projected by the International Monetary Fund (IMF) to increase from 3.1 per cent in 2021 to 7.2 per cent in 2022, the highest since 1982.
• The inflation rate in Emerging Markets and Developing Economies (EMDEs) is anticipated to have increased from 5.9 per cent in 2021 to 9.9 per cent in 2022 (WEO, October 2022).
• India’s inflation rate peaked in April 2022 at 7.8 per cent before moderating to 5.7 per cent in December 2022 on the back of good monsoons as well as prompt government measures that ensured adequate food supply.
• Core inflation remains sticky at nearly 6 per cent and reflects the second-round effects of the supply shocks witnessed earlier this year.

DOMESTIC RETAIL INFLATION

Headline Inflation Declined from its Peak

• In FY23, retail inflation was mainly driven by higher food inflation, while core inflation stayed at a moderate level. Food inflation ranged between 4.2 per cent to 8.6 per cent between April and December 2022, while the core inflation rate stayed at around 6 per cent except in April 2022.

Retail Inflation Driven by Food Commodities

• Retail price inflation mainly stems from the agriculture and allied sectors, housing, textiles, and pharmaceutical sectors.
• During FY23, ‘food & beverages’, ‘clothing & footwear’, and ‘fuel & light’ were the major contributors to headline inflation– the first two contributing more this fiscal than in the previous one.

Food Inflation Caused by Vegetables and Cereals in FY23

• Food inflation based on Consumer Food Price Index (CFPI) climbed to 7.0 per cent in FY23 from 3.8 per cent in FY22. Though the increase in food inflation is broad-based, the major contributors are vegetables, cereals, milk, and spices.
• India meets 60 per cent of its edible oils demand through imports, making it vulnerable to international movements in prices.
• For instance, sunflower oil, which makes up 15 per cent of our total edible oil imports, is procured mainly from Ukraine and Russia. Thus, FY22 saw edible oil inflation on account of international price pressures. However, inflation remained subdued in FY23 because of rationalization of tariffs and the imposition of stock limits on edible oils and oil seeds.

RURAL-URBAN INFLATION DIFFERENTIAL HAS DECLINED

• Rural inflation has remained above its urban counterpart throughout the current fiscal year, reversing the trend seen during the pandemic years.
• CPI-C based food inflation seems to have cooled down after reaching a high of 8.3 per cent in April 2022 due to a subsequent moderation in global food prices and a reduction in farm input costs.
• However, the cooling was more pronounced for urban inflation, which softened to 2.8 per cent in December 2022.
• Rural fuel inflation remained lower than its urban counterpart throughout the current fiscal, due to subdued price pressures on traditional fuel items such as firewood and cow dung cakes as opposed to petrol and diesel.

Majority of the States/UTs have Higher Rural Inflation than Urban Inflation

• CPI-C inflation increased in most of the states in FY23 as compared to FY22. Telangana, West Bengal, Maharashtra, Madhya Pradesh, Haryana, and Andhra Pradesh saw especially high rates of inflation in FY23. Fuel and clothing were the major contributors to the surge in inflation.

DOMESTIC WHOLESALE PRICE INFLATION

• WPI-based inflation remained low during the Covid-19 period, and it started to gain momentum in the post-pandemic period as economic activities resumed.
• The Russia-Ukraine conflict further exacerbated the burden as it worsened global supply chains along with the free movement of essential commodities.
• As a result, the wholesale inflation rate climbed to about 13.0 per cent in FY22.

FUEL PRICE INFLATION: DECLINING GLOBAL CRUDE OIL PRICES

• In FY22 and FY23, inflation in WPI ‘fuel and power’ was mostly driven by high international crude oil prices.
• A cut in central excise duty on petrol and diesel in November 2021 and May 2022, followed by a reduction in Value Added Tax (VAT) by the State Governments, led to a moderation of the retail selling price of petrol and diesel in India.

Convergence of WPI and CPI Inflation

• The headline inflation based on WPI and the CPI-C started diverging in March 2021, as WPI inflation touched double digits due to unfavourable base effects while CPI-C inflation remained stable.
• The wedge between CPI-C and WPI inflation continued to widen before reaching its peak at 10 per cent in November 2021. Thereafter, the gap began to narrow until April 2022.
• The path to convergence, however, was short-lived as another inflationary pressure started building up in February 2022 as a consequence of the Russia-Ukraine conflict.
• The convergence between the WPI and CPI indices was mainly driven by two factors. Firstly, a cooling in inflation of commodities such as crude oil, iron, aluminium and cotton led to a lower WPI.
• Secondly, CPI inflation rose due to an increase in the prices of services. Services form a part of the core component of the CPI-C but are not included in the WPI basket.

FALLING INFLATIONARY EXPECTATIONS

• The one-year-ahead inflationary expectations for both businesses and households have moderated in the current financial year.

MONETARY POLICY MEASURES FOR PRICE STABILITY

Reserve Bank of India’s Monetary Policy Committee (MPC) increased the policy repo rate under the liquidity adjustment facility (LAF) by 2.25 per cent (225 basis points) from 4.0 per cent to 6.25 per cent between May and December 2022.

HOUSING PRICES: RECOVERING HOUSING SECTOR AFTER THE PANDEMIC

• Timely policy intervention by the government in housing sector, coupled with low home loan interest rates propped up demand and attracted buyers more readily in the affordable segment in FY23.
• An overall increase in composite Housing Price Indices (HPI) assessment and Housing Price Indices market prices indicates a revival in the housing finance sector. A stable to moderate increase in HPI also offers confidence to homeowners and home loan financiers in terms of the retained value of the asset.

KEEPING CHECK ON PHARMACEUTICAL PRICES

• The principles for the regulation of the prices of drugs are based on the National Pharmaceuticals Pricing Policy, 2012, administered by the Department of Pharmaceuticals.
• The key principles of the policy are the essentiality of drugs, control of formulation prices and market-based pricing.
• Until 31 December 2022, ceiling prices for 890 formulations of 358 drugs/medicines across various therapeutic categories under National List of Essential Medicines (NLEM), 2015 have been fixed by National Pharmaceuticals Pricing Authority.

THE CONCLUSION: It is not wishful thinking that 2023 will show less macroeconomic volatility than its preceding financial year. Both CPI-C and WPI have fallen below 6 per cent (which is the RBI tolerance limit for the former). International crude oil prices, the principal drivers of inflation this financial year, have returned to normal levels and so have prices of other major commodities. The geopolitics associated with oil can particularly affect our imported inflation. Still, overall, the inflation challenge in FY24 must be a lot less stiff than it has been this year.

THE CONTEXT: The year 2022 marked the return of high inflation, especially in advanced economies, after nearly four decades. Inflation did not spare emerging economies either. These developments led to an unprecedented, synchronous, and sharp cycle of monetary tightening across countries. Major central banks have implemented sharp increases in policy rates, with the Federal Reserve’s rate hikes being the steepest since the 1970s. While the Federal Reserve has raised policy rates by 425 basis points (bps), the European Central Bank (ECB) and the Bank of England (BoE) have implemented 300 bps and 250 bps rate increases, respectively. The RBI initiated its monetary tightening cycle in April 2022 and has since implemented a policy repo rate hike of 225 bps. Consequently, domestic financial conditions began to tighten, which was reflected in the lower growth of monetary aggregates.

MONETARY DEVELOPMENTS

• The Monetary Policy Committee (MPC) maintained a status quo on the policy repo rate between May 2020 and February 2022 after implementing a 115 basis points (bps) reduction between March 2020 and May 2020.
• Retail inflation has crossed the upper limit of RBI’s tolerance band since January 2022. Sensing a serious risk to price stability, RBI initiated the monetary tightening cycle.
• In its April 2022 meeting, the committee introduced the Standing Deposit Facility (SDF), which allowed for the deposit of excess funds by banks with the RBI without the necessity of collateral in the form of government securities, thereby allowing effective liquidity management in a collateral-free manner.
• The MPC indicated a change in stance from ‘Accommodative’ to ‘Accommodative and focused on the withdrawal of accommodation, while supporting growth’ in this meeting, signaling the start of the monetary tightening cycle.

• Recognizing the sizeable upside risk imparted by adverse global developments, such as the generalized hardening of commodity prices and an increased likelihood of prolonged supply chain disruptions, the MPC convened an off-cycle meeting in May 2022. Members unanimously voted for an increase of 40 bps each in the policy repo rate, the SDF and the Marginal Standing Facility (MSF), and a 50 bps increase in the Cash Reserve Ratio (CRR).
• Reserve money (M0) increased by 10.3 per cent year-on-year (YoY) as on 30th December 2022 compared to 13 per cent last year.
• Growth in Currency in Circulation (CIC) broadly remained stable at levels seen after Covid-19, barring a marginal increase in the immediate aftermath of the outbreak of the Russia-Ukraine conflict, which can be attributed to a rise in precautionary holdings. So far, expansion in M0 during FY23 was mainly driven by bankers’ deposits with the RBI, with an increase in the CRR.

• The money multiplier – the ratio of M3 and M0 – has broadly remained stable at an average of 5.1 over April – December 2022 period compared to 5.2 in the corresponding period of the previous year.

LIQUIDITY CONDITIONS

• Surplus liquidity conditions that prevailed post-Covid-19 in response to the Reserve Bank’s conventional and unconventional monetary measures moderated during FY23 in consonance with the changed monetary policy stance that focused on the withdrawal of accommodation.
• With the MSF rate retained at 25 bps above the policy repo rate, the LAF corridor became symmetric around the policy repo rate – the corridor width was thus restored to 50 bps, the position that prevailed before the pandemic.
• The RBI’s move to hike the CRR by 50 bps resulted in a withdrawal of primary liquidity to the tune of ₹87,000 crore from the banking system.

MONETARY POLICY TRANSMISSION

• Lending and deposit rates of banks increased during FY23 in consonance with the policy repo rate changes.
• During FY23 (up to December 2022), external benchmark-based lending rate and 1-year median marginal cost of funds-based lending rate (MCLR) increased by 225 bps and 115 bps, respectively.
• Overall, the weighted average lending rate (WALR) on fresh and outstanding rupee loans rose by 135 bps and 71 bps, respectively, in FY23 (up to November 2022). On the deposit side, the weighted average domestic term deposit rate (WADTDR) on outstanding deposits increased by 59 bps in FY23 (up to November 2022).

DEVELOPMENTS IN THE G-SEC MARKET

• After remaining steady through 2020 and 2021, the yield on the 10-year government bond rose in 2022. The weighted average yield spike reflects the domestic bond market volatility stemming from uncertainty in crude prices, a hawkish stance of major central banks, a hardening of global bond yield and the pressure on the rupee.

BANKING SECTOR

Resilient and well-capitalized Banking System

• Since the middle of the previous decade, RBI and the government have made dedicated efforts in terms of calibrated policy measures like strengthening the regulatory and supervisory framework, implementation of 4R’s approach of Recognition, Resolution, Recapitalisation and Reforms to clean and strengthen the balance sheet of the banking system.
• These continuous efforts over the years have culminated in the enhancement of risk absorption capacity and a healthier banking system balance sheet both in terms of asset quantity and quality over the years.

• During the first half of FY23, the profitability of SCBs, measured in terms of Return on Equity (ROE) and Return on Assets (ROA), improved to levels last observed in FY15.

Credit Growth Aided by a Sound Banking System and Deleveraged Corporate Sector

• The recovery in economic activity in FY22, along with the enhanced financial soundness of banks and corporates, has bolstered the expansion of non-food bank credit since June 2021.
• The YoY growth in non-food bank credit accelerated to 15.3 per cent in December 2022. This not only shows an acceleration in the growth of current economic activities but also an anticipation of continued momentum in economic activity in future.

Non-Banking Financial Companies (NBFCs) Continue to Recover

• The growing importance of the NBFC sector in the Indian financial system is reflected in the consistent rise of NBFCs’ credit as a proportion to GDP as well as in relation to credit extended by SCBs.
• Supported by various policy initiatives, NBFCs could absorb the shocks of the pandemic. They built up financial soundness during FY22, marked by balance sheet consolidation, improvement in asset quality, augmented capital buffers and profitability.

PROGRESS MADE UNDER THE INSOLVENCY AND BANKRUPTCY CODE

Ease of doing business: Facilitating the process of ‘exit’

• The Insolvency and Bankruptcy Code (IBC) has facilitated the exit of distressed firms, thereby allocating scarce economic resources towards more productive use.
• Since the inception of the IBC in December 2016, 5,893 Corporate Insolvency Resolution Processes (CIRPs) had commenced by end-September 2022, of which 67 per cent have been closed.
• Of these, around 21 per cent were closed on appeal or review or settled, 19 per cent were withdrawn, 46 per cent ended in orders for liquidation, and 14 per cent culminated in the approval of resolution plans.

Behavioural change: Recoding Business Relationships

• One of the far-reaching spill-over effects of the Code has been the behavioural change effectuated by it among debtors. The fear of losing control over the CD upon initiation of CIRP has nudged thousands of debtors to settle their dues even before the initiation of insolvency proceedings.

69 per cent of the distressed assets rescued, realization value around 178 per cent of the liquidation value

• Until September 30, 2022, 553 CIRPs have ended in resolution. Despite the very low value of the distressed firms to begin with, 69 per cent of distressed assets were rescued by the Code.

92 per cent of the value realized under the liquidation Process

• 1807 CDs ended up with orders for liquidation as of September 2022. These CDs assets were valued at less than 8 per cent of the aggregate claim amount on the ground.

NPAs: IBC recovers highest amount for Scheduled Commercial Banks

• As per the RBI data, in FY 22, the total amount recovered by SCBs under IBC has been the highest compared to other channels such as Lok Adalat’s, SARFAESI Act and DRTs in this period.

DEVELOPMENT IN CAPITAL MARKETS

• Though global macroeconomic and financial market developments exercised some influence on Indian capital markets, India’s capital market had a good year, overall.

PRIMARY MARKET

• From April to November 2022, the buoyant performance of the primary market has been observed despite turmoil in global financial markets. Compared to FY22, the number of firms opting to list on the bourses increased by 37 per cent, though the amount raised declined to almost half of what was raised in the last year.

SECONDARY MARKET

• In April-December 2022, global stock markets declined because of geopolitical uncertainty. On the contrary, the Indian stock market saw a resilient performance, with the bluechip index Nifty 50 registering a return of 3.7 per cent during the same period.

FOREIGN PORTFOLIO INVESTMENTS

• The total assets under custody with FPIs increased by 3.4 per cent at the end of November 2022 compared to November 2021. The overall net investments by Foreign Portfolio Investors during FY23 registered an outflow of ₹16,153 crore at the end of December 2022 from an outflow of ₹5,578 crore during FY22 at the end of December 2021, with both the equity segment and the debt segment witnessing net FPI outflows.

OTHER DEVELOPMENTS

Necessity of a common approach to regulating the crypto ecosystem

• The recent collapse of the crypto exchange FTX and the ensuing sell-off in the crypto markets have placed a spotlight on the vulnerabilities in the crypto ecosystem.
• Crypto assets are self-referential instruments and do not strictly pass the test of being a financial asset because it has no intrinsic cashflows attached to them.
• The geographically pervasive nature of the crypto ecosystem necessitates a common approach to the regulation of these volatile instruments.

IFSC – GIFT CITY

• Over the last few years, various initiatives taken by the government have opened up new avenues and opportunities for capital market players. Setting up and operationalizing India’s maiden International Financial Services Centre (IFSC) in GIFT City is the most important one.
• The aim is to facilitate India to emerge as a significant economic power by accelerating the development of a strong base of International Financial Services in the country.
• IFSC can play a key role in facilitating India’s emergence as a preferred jurisdiction for international financial services and encouraging easier access and greater participation from foreign investors to bring in capital to further promote India’s growth.

DEVELOPMENTS IN THE INSURANCE MARKET

• In 2021, total global insurance premiums grew by 3.4 per cent in real terms, with the non-life insurance sector registering 2.6 per cent growth, driven by rate hardening in commercial lines in developed markets.
• However, in China, the largest emerging market, non-life premium volumes contracted by 0.7 per cent as the de-tariffication of motor insurance sparked fierce competition and rate reductions.
• India poised to emerge as one of the fastest-growing insurance markets in the coming decade.
• In keeping with this understanding, India’s largest life insurer, the Life Insurance Corporation of India, went public in May 2022, raising US$ 2.7 billion in the country’s largest IPO to date.
• Government schemes and financial inclusion initiatives have driven insurance adoption and penetration across all segments.

PENSION SECTOR

• The Government of India is implementing various pension schemes such as the Indira Gandhi National Old Age Pension Scheme (IGNOAPS), Indira Gandhi National Widow Pension Scheme (IGNWPS), Indira Gandhi National Disability Pension Scheme (IGNDPS) under the National Social Assistance Programme (NSAP) with a total beneficiary coverage of 4.7 crore.
• The National Pension System (NPS) was introduced in January 2004, the primary pension system for government employees with a pay-as-you-go defined benefit plan.
• NPS for government employees is a defined contribution plan with co-contribution from the government.
• The total number of subscribers under the NPS and APY registered a YoY growth of 25.1 per cent in November 2022, with AuM witnessing a growth of 22.7 per cent during the same period.

OUTLOOK

• Buoyant demand for bank credit and early signs of a revival in the investment cycle are benefiting from improving asset quality, a return to profitability and resilient capital and liquidity buffers.
• Further, IBC mechanism continues to support the ‘Ease of Doing Business’ in India by facilitating easy exit with time bound resolutions for firms.
• These strengths are helping the financial system absorb external spillovers, tightening global financial conditions and high volatility in financial markets.
• India is one of the fastest-growing insurance markets in the world and is expected to emerge as one of the top six insurance markets by 2032. Digitisation of India’s insurance market, accompanied by an increase in FDI limit for insurance companies, is likely to facilitate an increased flow of long-term capital, a global technology, processes, and international best practices, which will support the growth of India’s insurance sector.
• Government initiatives towards enhancing pension literacy of subscribers and intermediaries, and a nudge from the regulator and the government to encourage young adults to join the pension scheme would play a significant role in enhancing pension availability to a more extensive section of society.

THE CONTEXT: With the continuing global risks and uncertainties, the availability of fiscal space with governments has become paramount. In India, particularly when all economic activities had reached a standstill, fiscal policy was instrumental in providing a safety net to the vulnerable, reviving the economy by boosting demand, and addressing certain domestic supply-side constraints through public investments and sustained structural reforms. The Government of India adopted a calibrated fiscal response to the pandemic and planned to withdraw the fiscal stimulus gradually as it moves along the glide path outlined in the Budget FY22.

DEVELOPMENTS IN UNION GOVERNMENT FINANCES

• While India entered the pandemic with a stretched fiscal position, the government’s prudent and calibrated fiscal response enabled stable public finances even amidst the present uncertainties.
• The fiscal deficit of the Union Government, which reached 9.2 per cent of GDP during the pandemic year FY21, has moderated to 6.7 per cent of GDP in FY22 and is further budgeted to reach 6.4 per cent of GDP in FY23.
• This gradual decline in the Union government’s fiscal deficit as a per cent of GDP, in line with the fiscal glide path envisioned by the government, is a result of careful fiscal management supported by buoyant revenue collection over the last two years.

Union Government on track to achieve the Fiscal deficit target for FY23

• The Union Government is well on track to achieve the budget estimate for the fiscal deficit in FY23. The fiscal deficit of the Union Government at the end of November 2022 stood at 58.9 per cent of the BE, lower than the five-year moving average of 104.6 per cent of BE during the same period.

Conservative budget assumptions provide a buffer during global uncertainties

• As an illustration, the Gross Tax Revenue (GTR) to the Centre was envisaged to grow at 9.6 per cent in FY23. Against this implicit (budgeted) growth, the data for the first eight months of the year show that GTR has grown at a much higher rate. The annual estimate of GTR for FY23 is thus expected to overshoot the budget estimates.

Direct taxes propelling the growth in Gross tax revenue

• Direct taxes, which broadly constitute half of the Gross Tax Revenue (Figure III.3), have registered a YoY growth of 26 per cent from April to November 2022, enabled by corporate and personal income tax growth. The growth rates observed in the major direct taxes during the first eight months of FY23 were much higher than their corresponding longer-term averages.

• Customs and Excise duties act as Flexi-fiscal policy tools: The excise duty collection has declined by 20.9 per cent from April to November 2022 on a YoY basis.
• Stabilising Goods and Services Tax yielding returns: The pick-up in GST collections was consistently spread across all the months during the current fiscal year, with an average monthly collection of ₹1.5 lakh crore. Apart from directly supporting government revenues, GST has led to better reporting of income, which in turn has positive externalities for income tax collection and economic activity.

PERFORMANCE OF UNION GOVERNMENT EXPENDITURE

• The government adopted a pragmatic approach of increasing its expenditure in a calibrated way. Upon ensuring the basic safety nets for the vulnerable, the emphasis of the Government expenditure shifted to productive domestic capital expenditure.

• The Government’s thrust on Capital expenditure, particularly in the infrastructure-intensive sectors like roads and highways, railways, and housing and urban affairs, has longer-term implications for growth.

Geopolitical developments stretched the Revenue Expenditure requirements

• Due to the sudden outbreak of geopolitical conflict resulting in higher international prices for food, fertilizer and fuel, there was a higher food and fertilizer subsidy requirement for supporting the people and ensuring macroeconomic stability. Around 94.7 per cent of the budgeted expenditure on subsidies has been utilized from April to November 2022.
• Another major component of revenue expenditure, interest payments, had maintained a stable ratio of non-debt receipts and revenue expenditure during the pre-pandemic years.

OVERVIEW OF STATE GOVERNMENT FINANCES

• State Governments improved their finances in FY22 after being adversely impacted by the pandemic in FY21. The combined Gross Fiscal Deficit (GFD) of the States, which increased to 4.1 per cent of GDP in the pandemic-affected year, was brought down to 2.8 per cent in FY22.
• Given the geopolitical uncertainties, the consolidated GFD-GDP ratio for States has been budgeted 3.4 per cent in FY23.
• However, the States’ monthly fiscal Accounts data released by CAG shows that from April- November 2022, the combined borrowings of the 27 major states have just reached 33.5 per cent of their total budgeted borrowings for the year.

Cooperative fiscal federalism drives a well-targeted fiscal policy

• Transfer of funds to the States comprises the share of States in Union taxes devolved to the States, Finance Commission Grants, Centrally Sponsored Schemes (CSS), and other transfers. Total transfers to the States have risen between FY19 and FY23.

DEBT PROFILE OF THE GOVERNMENT

• For India, the total liabilities of the Union Government, which were relatively stable as a percentage of GDP over the past decade, witnessed a sharp spike in the pandemic year FY21.
• This spike in debt resulted from the pandemic-induced higher Government borrowings to finance the additional expenditure needs, given the strained revenues and sharp contraction in the GDP.
• Total liabilities of the Union Government moderated from 59.2 per cent of GDP in FY21 to 56.7 per cent in FY22 (P).

• India’s public debt profile is relatively stable and is characterized by low currency and interest rate risks.

THE CONCLUSION: The Government of India has adopted a holistic policy towards fiscal stability in the last few years. Using the crisis as an opportunity to bring about reforms, the government undertook a series of policy measures in the previous few years. The Centre should continue incentivizing the States for reforms and higher capital spending to ensure a stronger General government. The capex-led growth strategy will ensure sustainable debt levels in the medium term.

THE CONTEXT: Indian economy has undergone a transformative process of New Age reforms in the last eight years. These diverse policies converge towards improving the economy’s overall efficiency and lifting its potential growth. To achieve the broader policy goal of unleashing the productive potential of the economy and its people, the reforms aimed at enhancing the ease of living and doing business at the fundamental level. The use of technology, in particular digital technology, forms the basis of these reforms.

PRODUCT AND CAPITAL MARKET REFORMS

INITIATION OF THE REFORMS- 1991

• The macroeconomic imbalances of the late 1980s and early 1990s pushed the government towards introducing the structural reforms of 1991. The high combined deficit of the central and state governments elevated inflationary pressures, and large and unsustainable current account deficit (CAD) led to a balance of payments crisis in the Indian economy. In response to the situation, trade and investments were liberalized in 1991.

CONTINUITY IN REFORMS WITH A RENEWED IMPETUS

• The product and capital market reforms continued slowly over the decade of the 1990s. They got a renewed impetus from the government closer to the decade’s end. Investments were liberalized further to encourage Foreign Direct Investment as a main source of non-debt-creating capital inflows.
• The telecom sector was entirely reformed by the New Telecom Policy of 1999. It was opened for private sector participation with a strengthened regulatory regime through TRAI (Telecom Regulatory Authority of India).
• These reforms were a cornerstone for the IT sector boom in India and had widespread spillover benefits to other sectors of the economy. The policy on disinvestment and privatization also gathered steam during this period.
• This period also marked the launch of the then largest infrastructure project of independent India, the ‘Golden Quadrilateral’.
• The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 was passed to address the historic highs of the combined Gross fiscal deficit of the Government.
• The banking system, which had accumulated bad debts during the period of economic resurgence after the 1991 reforms, was supported through the deregulation of interest rates and the enactment of the SARFAESI Act 2002.

ONE-OFF SHOCKS OVERSHADOWED THE REFORMS OF 1998-2002

• The sanctions imposed by the US on India after India’s nuclear test led to a sharp decline in capital flows to India during the months following the nuclear tests.
• The period between 2000 and 2002 also witnessed two successive droughts.

INDIA’S PARTICIPATION IN THE GLOBAL BOOM OF 2003-08

• The years of structural reforms had prepared the Indian economy to contribute to global growth and also benefit from it. While the global growth averaged 4.8 per cent during 2003-2008, the Indian economy grew at more than 8 per cent on average. The economic growth during the period was supported by strong capital inflows.

REFORMS FOR NEW INDIA- SABKA SAATH SABKA VIKAAS

• The reforms undertaken before 2014 primarily catered to product and capital market space. They were necessary and continued post-2014 as well. The present government, however, imparted a new dimension to these reforms in the last eight years.
• The broad principles behind the reforms were creating public goods, adopting trust-based governance, co-partnering with the private sector for development, and improving agricultural productivity.

• While the reforms undertaken in the post-2014 period have multiple socioeconomic benefits for the economy, this chapter focuses on the growth-centric aspects of these reforms.

1. Creating public goods to enhance opportunities, efficiencies and ease of living

• A quantum leap in policy commitment and outlay for infrastructure is now visible in the last few years, cushioning economic growth when the non-financial corporate sector was unable to invest due to balance sheet troubles. In doing so, the government has laid a good platform for crowding in private investments and growth in the coming decade.

• With the National Infrastructure Pipeline (NIP) in 2019 and the National Monetization Pipeline in 2021, a strong baseline for infrastructure creation and development has been put in place, providing a multitude of opportunities for foreign investment and engagement.
• Besides the push to physical infrastructure, the government’s emphasis on developing public digital infrastructure during the last few years has been a game changer in enhancing the economic potential of individuals and businesses.
• Based on the pillars of a digital identity Aadhar, linking bank accounts with PM-Jan Dhan Yojana, and the penetration of mobile phones (JAM Trinity), the country has witnessed significant progress in financial inclusion in recent years.
• Unified digital interfaces that connect various initiatives/portals have simplified governance resulting in a more efficient resource allocation in the economy. The National Single Window System for business approvals, the JanSamarth portal for credit-linked Central Government scheme, and the UMANG app for access to Central and state government services are essential steps towards enhancing the ease of doing business through the integration of existing systems.
• eShram portal, with more than 28.5 crore registered workers, has been integrated with various other digital portals for easy accessibility. PM Gatishakti, the GIS-based platform that brings together multiple ministries for integrated planning and coordinated implementation of multimodal infrastructure connectivity projects, aims to reduce logistics costs.

1. Trust-based Governance

• Building trust between the government and the citizens/businesses unleashes efficiency gains through improved investor sentiment, better ease of doing business, and more effective governance.
• Consistent reforms have been made in this direction during the last eight years. Simplification of regulatory frameworks through reforms such as the Insolvency and Bankruptcy Code (IBC) and the Real Estate(Regulation and Development) Act (RERA) have enhanced the ease of doing business.
• The IBC has imbibed some of the best international practices of asset resolution mechanism.
• Another significant reform to enhance doing business has been the decriminalization of minor economic offences under the Companies Act of 2013.
• Tax policy reforms such as adopting a unified GST, reducing corporate tax rates, exemption of sovereign wealth funds and pension funds from taxes, and removing the Dividend Distribution tax have reduced the tax burden on individuals and businesses.
• Despite tax rationalization, a positive trend of higher tax buoyancy is visible in the economy.

• CBDT and CBIC on an automatic and regular basis is a promising reform, and it would result in efficiency gains in the tax system.

III. Promoting the private sector as a co-partner in the development

• A fundamental principle behind the government’s policy in the post- 2014 period has been the engagement with the private sector as a partner in the development process.
• The government’s disinvestment policy has been revived in the last eight years with stake sales and the successful listing of PSEs on the stock market.
• Significant initiatives have been introduced under Aatmanirbhar Bharat and Make in India programmes to enhance India’s manufacturing capabilities and exports across the industries.
• Sector-specific Production Linked incentives (PLI) have been introduced in the aftermath of the pandemic to incentivize domestic and foreign investments and to develop global Champions in the manufacturing industry.
• The last eight years have seen further liberalization of the policy towards foreign investors, with most sectors now open for 100% Foreign Direct Investment (FDI) under the automatic route.
• The government is developing infrastructure for making India a cost-effective production hub.
• The National Logistics Policy (2022) has been launched to create an overarching logistics ecosystem for lowering the cost of logistics and bringing it to par with other developed countries.
• The number of recognized Start-ups has increased from 452 in 2016 to 84,012 in 2022.
• Support measures for MSMEs during the pandemic in the form of the Emergency Credit Line Guarantee Scheme (ECLGS) and revision in the definition of MSMEs under the ambit of Aatmanirbhar Bharat helped them face the crisis shock.

1. Enhancing productivity in agriculture

• The agriculture sector in India has grown at an average annual growth rate of 4.6 per cent during the last six years. This growth is partly attributable to good monsoon years and partly to the various reforms undertaken by the government to enhance agricultural productivity.
• Policies such as Soil Health Cards, the Micro irrigation Fund, and organic and natural farming have helped the farmers optimize resource use and reduce the cultivation cost.
• The promotion of Farmer Producer Organisations (FPOs) and the National Agriculture Market (e-NAM) extension Platform have empowered farmers, enhanced their resources, and enabled them to get good returns.
• Agriculture Infrastructure Fund (AIF) has supported the creation of various agriculture infrastructures. Kisan Rail exclusively caters to the movement of perishable Agri Horti commodities.
• The Cluster Development Programme (CDP) has promoted integrated and market-led development for horticulture clusters.

RETURNS TO THE ECONOMIC AND STRUCTURAL REFORMS AFTER 2014

SHOCKS THAT THE ECONOMY FACED DURING 2014-22

• As per data from the Bank for International Settlements, India’s non-financial private sector debt to GDP ratio went up from 72.9 per cent in March 2004 to 113.6 per cent by December 2010. That is an increase of 40.7 percentage points in just over six years.
• In rupee terms, the amount of debt accumulated by the non-financial sector went up from nearly 44 lakh crore to almost 133 lakh crore. It trebled in six years.
• Despite limited economic reforms, global capital flows and optimism about BRICS (Brazil, Russia, India, China and South Africa) triggered a domestic credit and investment boom that eventually proved unsustainable, as the twin deficit – fiscal and external – crisis of 2013 revealed.
• Thereafter the non-financial private sector debt to GDP ratio began to come down meaningfully only from 2015 onwards, dropping to a low of 83.8 per cent by December 2018. That is nearly a 30-percentage point reduction from 113.6 per cent in December 2010 over eight years.

THE PERIOD 2014-2022 IS ANALOGOUS TO THE PERIOD 1998-2002

India’s recent economic history provides a similar parallel to this situation. During 1998- 2002, transformative reforms were launched but yielded lagged growth dividends.

GROWTH MAGNETS IN THIS DECADE (2023-2030)

• As the health and economic shocks of the pandemic and the spike in commodity prices in 2022 wear off, the Indian economy is thus well placed to grow at its potential in the coming decade, similar to the growth experience of the economy after 2003. This is the primary reason for expecting India’s growth outlook to be better than it was in the pre-pandemic years.
• The digitalization reforms and the resulting efficiency gains in terms of greater formalization, higher financial inclusion, and more economic opportunities will be the second most important driver of India’s economic growth in the medium term.
• The evolving geo-political situation also presents an opportunity for India to benefit from the diversification of global supply chains.
• While the new age reforms undertaken over the last eight years form the foundation of a resilient, partnership-based governance ecosystem and restore the ability of the economy to grow healthily, further reforms are needed to ensure that economic growth can both accelerate and be sustained at higher levels, to deliver a better quality of life.

THE CONCLUSION: The Indian economy had not lost its vigour, nor have government reform measures their effectiveness. The Indian economy could have grown faster in the absence of the financial and corporate sector balance sheet stress. We were now looking forward to the economy being able to reap the benefits of improved and healthier balance sheets in the new decade.

THE CONTEXT: Recovering from pandemic-induced contraction, Russian-Ukraine conflict and inflation, Indian economy is staging a broad-based recovery across sectors, positioning to ascend to the pre-pandemic growth path in FY23.

GDP GROWTH

• India’s GDP growth is expected to remain robust in FY24. GDP forecast for FY24 to be in the range of 6-6.8 %.
• Monetary tightening by the RBI, the widening of the CAD, and the plateauing growth of exports have essentially been the outcome of geopolitical strife in Europe. As these developments posed downside risks to the growth of the Indian economy in FY23, many agencies worldwide have been revising their growth forecast of the Indian economy downwards.
• Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 per cent, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energize the growth drivers of the economy.

• Rising inflation and monetary tightening led to a slowdown in global output beginning in the second half of 2022. The global PMI composite index has been in the contractionary zone since August 2022, while the yearly growth rates of global trade, retail sales, and industrial production have significantly declined in the second half of 2022.
• The consequent dampening of the global economic outlook, also compounded by expectations of a further increase in borrowing costs, was reflected in the lowering of growth forecasts by the IMF in its October 2022 update of the World Economic Outlook (WEO).

MACROECONOMIC AND GROWTH CHALLENGES IN THE INDIAN ECONOMY

The impact of the pandemic on India was seen in a significant GDP contraction in FY21 but the third wave did not affect economic activity in India as much as the previous waves of the pandemic did since its outbreak in January 2020 and India gets hope to achieve the pace of growth similar to pre-pandemic level. But still some challenges remain for India economy-

• Inflation: The country’s retail inflation crept above the RBI’s tolerance range (i.e., 6%) in January 2022. It remained above the target range for ten months before returning to below the upper end of the target range in November 2022.

• Depreciation of the Rupee: With monetary tightening, the US dollar has appreciated against several currencies, including the rupee. However, the rupee has been one of the better-performing currencies worldwide.
• Current Account Deficit: The modest depreciation of the Rupee may have added to the domestic inflationary pressures besides widening the CAD. Global commodity prices may have eased but are still higher compared to pre-conflict levels. They have further widened the CAD, already enlarged by India’s growth momentum. However, for FY23, India has sufficient forex reserves to finance the CAD and intervene in the forex market to manage volatility in the Indian rupee.
• Export Growth: Export growth was strong enough to increase India’s share in the world market of merchandise exports. However, due to aggressive and synchronized monetary tightening, global economic growth has started to slow, and so has world trade.

CONSUMPTION

Private consumption in Half-1 is the highest since FY15 and this has led to a boost to production activity resulting in enhanced capacity utilization across the sectors.

• The rebound in consumption has also been supported by the release of “pent-up” demand, a phenomenon not again unique to India but nonetheless exhibiting a local phenomenon influenced by a rise in the share of consumption in disposable income.
• Accelerating growth in personal loans in India testifies to an enduring release of “pent-up” demand for consumption.
• The “release of pent-up demand” was reflected in the housing market too. Demand for housing loans picked up.

Note: Pent-up demand refers to consumer demand for products and services that builds over time due to a recession. People delay purchasing goods and services during a recession, which leads to a large amount of buying once the recession is over.

CAPITAL EXPENDITURE

The Capital Expenditure of Central Government and crowding in the private Capex (Capital expenditure) led by strengthening of the balance sheets of the Corporates is one of the growth drivers of the Indian economy in the current year.

• Construction activity, in general, has significantly risen in FY23 as the much-enlarged capital budget (Capex) of the central government and its public sector enterprises is rapidly being deployed.
• Going by the Capex multiplier estimated for the country, the economic output of the country is set to increase by at least four times the amount of Capex.
• Evidence shows an increasing trend in announced projects and capex spending by the private players.

CREDIT SUPPLY

• The credit growth to the MSME sector was over 30.6 per cent on average during Jan-Nov 2022.
• The banking sector in India has responded in equal measure to the demand for credit. The Year-on-Year growth in credit since the January-March quarter of 2022 has moved into double-digits and is rising across most sectors.
• The finances of the public sector banks have seen a significant turnaround, with profits being booked at regular intervals and their Non-Performing Assets (NPAs) being fast-tracked for quicker resolution/liquidation by the Insolvency and Bankruptcy Board of India (IBBI).

INFLATION

• RBI has projected headline inflation at 6.8 per cent in FY23, which is outside its target range.
• At the same time, it is not high enough to deter private consumption and not so low as to weaken the inducement to invest.
• Moderately high inflation has further ensured the anchoring of inflationary expectations preventing prices from weakening demand and growth in India.
• Additionally, with inflation on the declining path, the interest cost of domestic credit will likely decline, inducing a further increase in demand for credit by corporates and retail borrowers.

INDIA’S INCLUSIVE GROWTH

• Growth is inclusive when it creates jobs. Both official and unofficial sources confirm that employment levels have risen in the current financial year. The Periodic Labour Force Survey (PLFS) shows that the urban unemployment rate for people aged 15 years and above declined from 9.8 per cent in the quarter ending September 2021 to 7.2 per cent one year later (quarter ending September 2022).

• In FY21, the Government announced the Emergency Credit Line Guarantee Scheme. The scheme has succeeded in shielding micro, small and medium enterprises from financial distress. A recent CIBIL report (ECLGS Insights, August 2022) showed that the scheme has supported MSMEs in facing the covid shock.
• The Mahatma Gandhi National Rural Employment Guarantee (MGNREGS) scheme has been rapidly creating more assets in respect of “Works on individual’s land” than in any other category. The share of this category rose to about 60 per cent in FY22, indicating that MGNREGA, besides generating daily wage employment, has also been creating assets for individual households to diversify their sources of income and lift their supplementary incomes.
• The National Family Health Survey (NFHS) in India shows improved rural welfare indicators from FY16 to FY20, covering aspects like gender, fertility rate, household amenities, and women empowerment.

• Strong consumption rebound, robust revenue collections, sustained capex in both the public and the private sector, growing employment levels in the urban as well as the rural areas, and targeted social security measures further underpin the prospects for economic and social stability and sustained growth.
• India is the third-largest economy in the world in PPP terms and the fifth-largest in market exchange rates. As expected of a nation of this size, the Indian economy in FY23 has nearly “recouped” what was lost, “renewed” what had paused, and “re-energized” what had slowed during the pandemic and since the conflict in Europe.

OUTLOOK: 2023-24

• India’s recovery from the pandemic was relatively quick, and growth in the upcoming year will be supported by solid domestic demand and a pickup in capital investment. Reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code enhanced the efficiency and transparency of the economy and ensured financial discipline and better compliance.
• Even as India’s outlook remains bright, global economic prospects for the next year have been weighed down by the combination of a unique set of challenges expected to impart a few downside risks.
• Global growth is forecasted to slow from 3.2 per cent in 2022 to 2.7 per cent in 2023 as per IMF’s World Economic Outlook, October 2022. A slower growth in economic output coupled with increased uncertainty will dampen trade growth. This is seen in the lower forecast for growth in global trade by the World Trade Organisation, from 3.5 per cent in 2022 to 1.0 per cent in 2023.
• On the external front, risks to the current account balance stem from multiple sources. Strong domestic demand amidst high commodity prices will raise India’s total import bill and contribute to unfavourable developments in the current account balance.
• Another risk to the outlook originates from the ongoing monetary tightening Entrenched inflation may prolong the tightening cycle, and therefore, borrowing costs may stay ‘higher for longer’.
• In such a scenario, the global economy may be characterized by low growth in FY24. However, the scenario of subdued global growth presents two silver linings – oil prices will stay low, and India’s CAD will be better than currently projected. The overall external situation will remain manageable.

The upside to India’s growth outlook arises from –

1. Limited health and economic fallout for the rest of the world from the current surge in Covid-19 infections in China and, therefore, continued normalization of supply chains.
2. Inflationary impulses from the reopening of China’s economy turning out to be neither significant nor persistent.

• Recessionary tendencies in major advances economies triggering a cessation of monetary tightening and a return of capital flows to India amidst a stable domestic inflation rate below 6 per cent.

1. This leads to an improvement in animal spirits and provides further impetus to private sector investment.

• Against this backdrop, the survey projects a baseline GDP growth of 6.5 per cent in real terms in FY24.
• The projection is broadly comparable to the estimates provided by multilateral agencies such as the World Bank, the IMF, and the ADB and by RBI, domestically. The actual outcome for real GDP growth will probably lie in the range of 6.0 per cent to 6.8 per cent, depending on the trajectory of economic and political developments globally.

THE CONCLUSION: The year FY23 so far for India has reinforced the country’s belief in its economic resilience. The economy has withstood the challenge of mitigating external imbalances caused by the Russian-Ukraine conflict without losing growth momentum in the process.

THE CONTEXT: In a major breakthrough, on 10 March 2023, Saudi Arabia and Iran signed an agreement to restore their diplomatic relationship, which was severed in 2016 after the Saudi Embassy in Tehran and Consulate in Mashhad were ransacked by protesters demonstrating against the Saudi execution of Shia cleric Nimr Al Nimr. The deal was brokered by China and has a huge significance within the Arab world as well as outside the region.

ABOUT THE DEAL

• The two countries affirmed respect for states’ sovereignty and emphasised adherence to the non-interference in the internal affairs.
• Saudi Arabia and Iran agreed that the Foreign Ministers of both the countries will make arrangements for the return of their ambassadors and discuss means of enhancing bilateral relations.
• Multilateral areas of cooperation: The two countries also agreed to implement the bilateral Security Cooperation Agreement signed in 2001 and the General Agreement for Cooperation in the Fields of Economy, Trade, Investment, Technology, Science, Culture, Sports, and Youth, signed in 1998.

WHY SAUDI ARABIA ACCEPTED THE DEAL?

• To achieve the long-term vision, long-term peace with Iran is necessary to achieve the targets they have put before themselves under Saudi Vision 2030.
• Help in rebuilding the economy: Protecting the critical infrastructure: Saudi Arabia hopes to protect borders and critical infrastructure from the Houthi attacks by signing an agreement with Iran to restore normalcy. It also gives Saudi Arabia a chance for a face-saving exit from an ‘un-winnable war’ in Yemen as well as relief from drone attacks on its oil installations and airports, as was the case in recent times.

WHY IRAN ACCEPTED THE DEAL?

• Economic isolation and domestic pressure: Iran is going through one of the toughest phases of economic isolation and domestic pressure. Tehran knows that getting a reprieve from Western sanctions is not a near-term possibility and at home, despite its crackdown, protests refuse to die down.
• Need for Chinese support: China’s economy is deteriorating and its currency, the rial, is struggling. Iran wanted Chinese investments and support for the rial. According to Iranian media reports, China allowed Tehran to withdraw parts of the $20 billion funds that were frozen with Chinese banks (after the U.S. sanctions).

SIGNIFICANCE OF THE REAPPROACHMENT

• Mutual distrust will decrease: Saudi Arabia and Iran have been at loggerheads over the latter’s suspected role in inciting protests in Bahrain during the Arab Spring, and support for the proxy groups in the region, fueling instability in the region. On the other hand, Iran perceived Saudi Arabia as a dominant opponent that has been a major factor in inviting external players into the region.
• Peace in Yemen: It offers hope for a peaceful resolution of the conflict in Yemen which had turned into a battlefield for a proxy war between Iran and Saudi Arabia. The agreement, if implemented fully, can substantially improve the situation in Yemen. The end of the Saudi military operation in Yemen and restraint on the part of the Houthis can significantly reduce armed violence in the country. It can also considerably improve the humanitarian situation and help the country rebuild its economy.

THE IMPLICATION IN REGIONAL POLITICS IN WEST ASIA

• US-Saudi Relationship: The Saudi–Iran agreement will have implications for US–Saudi relations. Although the US and Saudi Arabia are strategic partners and Saudi Arabia is an important regional ally of the US in West Asia, its normalising of relations with Iran at a time when Vienna nuclear talks remain inconclusive, points towards a tough road ahead for their bilateral relationship.
• China will emerge as a player in West Asia: China through mediation brought Saudi Arabia and Iran together successfully. By doing so, China intends to shape the international community’s perception about its image and role as a neutral and benevolent player in the turbulent Gulf region.
• Impact on Israel-Saudi Arabia relationship: The Abraham Accords are a series of joint normalization statements initially between Israel, the United Arab Emirates, and Bahrain. Israel wanted Saudi Arabia too to join the Abraham Accords. But the Saudi restoring ties with Iran has come as a severe jolt to the Israeli ambitions.
• Rapprochement of Israel and Arabs will take a jolt: With strengthening solidarity between the Arabs and Iran there will be suffering in ties between Israel and Arabs.
• Regional and Global trade: The peace deal also offers hope for a safe passage of trade by sea, both through the Bab-al-Mandab as well as the Persian Gulf, crucial not only for the region but global trade too. The 2019 Persian Gulf crisis had severely disrupted oil trade and had brought the region precariously close to a direct military conflict.

IMPLICATION FOR INDIA

The West Asian region forms an important part of India’s extended neighbourhood, and is vital to India’s strategic outlook. India has vital stakes in the stability, security and economic well-being of the region.

Importance of the Region:

• Energy Security: The region supplies about 50 per cent of India’s crude oil requirements, over 70 per cent of natural gas requirements.
• Diaspora and Remittance: It hosts about 9 million Indians and accounts for 60 per cent of remittances received in India annually.
• Security: Security challenges in the region have a ripple effect into India, and therefore any instability in the region has a direct bearing on the safety and security of millions of Indians working there, our energy security and our steadily growing trade relations.

POSITIVE IMPLICATIONS

• Business Opportunities: Iran and Saudi Arabia form the major power block and any reconciliation between them opens further opportunities for India. India already has comprehensive trade and business relations with Saudi Arabia. With Iran, although it has been restrained in furthering its ties due to international sanctions on Iran because of its nuclear issues, but India and Iran have been attempting to revitalise their ties in recent times.
• End of the conflict in Yemen is important for India: Any potential conflict between the two main rivals anywhere in the West Asian region, puts to danger millions of Indians working in the region and is a logistic nightmare for the Indian government. For Example with ‘Operation Raahat’ in Yemen, India evacuated over 4,000 Indians and 1,950 foreign nationals from 48 countries in March 2015.
• Cost-effective Oil Imports: If crude oil from Iran comes back into play, it adds to the various options of cost effective and efficient imports by India. India has previously tried rupee trade arrangements with Iran and it is currently in talks with the UAE too. A peaceful region offers opportunities for India to collaborate better with major countries in the region to promote ‘non-dollar trade’, rupee trade etc. which are beneficial in the long run.

NEGATIVE IMPLICATIONS

• China as a major stakeholder in West Asia: China as a competing nation with india, will have the upper hand in the region which will be against the interest of India. Unlike the U.S., which has a history of military interventions in West Asia, China comes with a cleaner record. While the U.S.’s ties with Saudi Arabia faced headwinds in recent years and it has hostile ties with Iran, China has warm ties with both — it is a leading buyer of Saudi oil and the largest trading partner of Iran. This allowed China to use its economic leverage to bring the parties closer.
• Regionally, the agreement marks China’s arrival as a major power in West Asia. Though in earlier major deals like US was present like Camp David agreement (1978), Oslo Accords (1993), the Israel-Jordan Treaty (1994), Middle East Quartet (2002) or the Abraham Accords (2020) — but in this the U.S. was absent.
• China as leader of the Global South: While the U.S. is busy rallying the Western world to arm Ukraine to push back Russia and weaken Moscow through sanctions, China is quietly brokering peace in the Global South. With this deal, China is trying to send a clear message to countries in the Global South. Khalistan
• Hamper strategic autonomy: India will have difficulty to deal simultaneously Arab world and Israel as Israel has registered its opposition with the deal while india has welcomed the deal.
• Challenge the India as a net security provider: India now sees itself as a “net security provider” to the region. This reflects India’s aspirations to take a leading strategic role throughout the Indian Ocean and to expand its strategic reach even into the Pacific. Many countries see India in benign terms and welcome its rise as a regional security provider. There is a growing expectation that India will shoulder more of the responsibilities of providing the so-called “public goods” of security. However the prospect of India will diminish with the greater involvement of China in West Asia.
• Rejection of the US: The influence and commitment of US in the region have definitely reduced, given an absence of strategic vision in conflicts like Iraq, Syria, Yemen, etc. The last decade has shown many Middle Eastern countries losing faith in the U.S., and broadening their options to other players like Russia for energy matters, and China for economic and political matters. This will have indirectly impact the India as India and US is a strategic partner and have signed the logistic agreement.

THE WAY FORWARD

• India till now maintained strategic autonomy by maintaining good relations with all the countries in the region. Even after this deal, India needs to build good relations with the Arabs, Iran and Israel.
• Maintaining the status in the region as a net security provider.
• Leverage Iran and Saudi Arabia’s good relationship, which has provided greater business and trade opportunities.
• Chinese involvement in the region may create conflict thus India has to increase the Navy presence and capacity building in the region.
• There is need to strengthen the multipolar world order. India should reclaim its status as the leader of the global South.

THE CONCLUSION: The Iranian Ambassador to India echoed the sentiment, stating that the peace deal would be of benefit to India since it would help and intensify the stability and peace in the Persian Gulf region. It is now for India to seek the best opportunities from this deal, especially with regard to its revitalised engagement options with Iran.

THE CONTEXT: A colossal police hunt for the Sikh separatist, Amritpal Singh who has revived calls for an independent homeland named ‘Khalistan’ in India’s Punjab state has stoked fears of violence and revived painful memories of a bloody insurgency that killed thousands.

EVOLUTION OF THE KHALISTAN MOVEMENT

• Khalsa is referred to as the community that practices Sikhism as a faith and a special group of initiated Sikhs. The Khalsa tradition was introduced in 1699 by Guru Gobind Singh, the 10th Guru, after his father Guru Tegh Bahadur, was beheaded in the reign of Aurangzeb.
• The roots of the Khalistan movement can be traced back to the partition of India in 1947, which led to the formation of India and Pakistan. The Punjab region was divided between the two countries, with the majority of Sikhs living in the Indian part of Punjab. Many Sikhs felt that they had been betrayed by the Indian government, which had promised them autonomy but had failed to deliver. This feeling of betrayal led to a growing sense of alienation among Sikhs, which was exploited by some militant leaders.
• Jagjit Singh Chohan is the discredited founder of the Khalistan movement. In his early life, he was a dentist and was later first elected to the Punjab Assembly in 1967. He then became the finance minister.
  • Chohan moved to Britain in 1969 and began campaigning for Khalistan to be created. In 1971, he went to Nankana Sahib in Pakistan and initiated setting up a Sikh government.
  • Chohan was considered a Sikh leader by Yahaya Khan, the military dictator of Pakistan, and was handed over certain Sikh relics which he took with him to Britain. These relics helped him to gather support and followers. Thus, he visited the US at the invitation of his supporters in the Sikh diaspora.
• The Khalistan movement is a separatist movement that emerged in the 1970s, with the aim of creating an independent Sikh state, Khalistan, in the Punjab region of India. The movement gained momentum in the 1980s and early 1990s, during which time it became notorious for its violent tactics and terrorist attacks.
• The Khalistan movement was further led by Sant Jarnail Singh Bhindranwale, a charismatic preacher who gained a large following among the Sikh community. Bhindranwale believed that the Sikhs were being discriminated against by the Indian government and that the only solution was to create a separate Sikh state. In 1984, Bhindranwale and his followers took over the Golden Temple in Amritsar, which is the holiest site in Sikhism. The Indian government launched a military operation (Operation Blue Star) to remove Bhindranwale and his followers from the Golden Temple, which resulted in the deaths of many innocent civilians and damaged the temple itself.
• The attack on the Golden Temple sparked outrage among Sikhs around the world, and the movement gained widespread support. Many Sikhs felt that the Indian government had shown its true colors by attacking the holiest site in Sikhism and that they needed to take drastic action to protect their community. This led to a wave of violence in the Punjab region, with terrorist attacks becoming increasingly common. The Indian government responded by launching a crackdown on the movement, which resulted in the deaths of many Sikh militants and innocent civilians.
• The Khalistan movement declined in the mid-1990s, due in part to the death of Bhindranwale and the capture of many other militant leaders. The movement also lost support among the Sikh community, as many Sikhs came to see it as a violent and extremist movement that did not represent their values. Today, the Khalistan movement remains a controversial issue in India, with some Sikhs continuing to advocate for an independent Sikh state while others believe that the movement is a relic of the past and that the focus should be on building a more inclusive and diverse India.

REASONS FOR RESURGENCE OF KHALISTAN MOVEMENT

There are several factors that have contributed to the revival of the Khalistan movement in Punjab:

• Political marginalization: Many Sikhs in Punjab feel that they are politically marginalized in the Indian political system. They feel that their voices are not being heard and that their needs are being ignored. This feeling of political isolation has contributed to the resurgence of the Khalistan movement.
  • Also, Punjab in recent years has witnessed a political crisis leading to a change in governments, ruling political parties and CM’s giving chance for radical outfits to grow.
• Economic grievances: Punjab has seen a decline in economic growth in recent years, which has led to widespread unemployment and poverty. Many Sikhs in Punjab feel that they are being left behind and that their economic needs are not being addressed. The Khalistan movement has tapped into this sense of economic disenfranchisement.
  • Punjab state has a high employment rate (According to data from the Centre’s Periodic Labour Force Survey 2019-20, Punjab’s unemployment rate is higher than the national average).
• Perception of injustice: Many Sikhs feel that they have been treated unjustly by the Indian government. This feeling of injustice is rooted in the Sikh community’s history of persecution, including the 1984 anti-Sikh riots, in which thousands of Sikhs were killed in retribution for the assassination of Prime Minister Indira Gandhi. Many Sikhs feel that justice has not been served in these cases, which has contributed to the revival of the Khalistan movement.
• Social and cultural issues: There is a growing sense among many Sikhs that their culture and traditions are being eroded in the modern Indian society. They feel that their unique identity is not being respected and that their religious rights are being violated. The Khalistan movement has become a way for Sikhs to assert their identity and protect their cultural heritage.
• International support: The Khalistan movement has received support from Sikhs living abroad, particularly in countries like Canada and the United Kingdom. These expatriate Sikhs have provided financial and political support to the movement, which has helped to increase its influence in Punjab.
  • Also, investigations by security agencies suggest links between Khalistani groups and Pakistan’s Inter-Services Intelligence (ISI), further increasing the likelihood of feelings of separatism due to drug trafficking and networking through Sikh pilgrimages.

WHY IS THERE SUPPORT FOR KHALISTAN OUTSIDE OF INDIA?

The support for Khalistan outside of India is primarily driven by the Sikh diaspora, which includes millions of Sikhs who have emigrated from India to countries around the world. There are several reasons why the Sikh diaspora supports the Khalistan movement:

• Identity and cultural preservation: Many Sikhs living outside of India feel a strong attachment to their cultural and religious identity. They believe that the establishment of Khalistan would provide a way to protect and preserve their unique cultural heritage.
• Historical grievances: The Sikh community has a long history of persecution and marginalization in India. This includes the 1984 anti-Sikh riots, in which thousands of Sikhs were killed in retribution for the assassination of Prime Minister Indira Gandhi. Many Sikhs feel that justice has not been served in these cases and that the Indian government has not done enough to address their historical grievances.
• Political influence: The Sikh diaspora is a significant political force in many countries around the world. By supporting the Khalistan movement, Sikhs living abroad can influence government policy and draw attention to their cause on the global stage.
• Support for self-determination: Many Sikhs living outside of India support the idea of self-determination for the people of Punjab. They believe that the establishment of Khalistan would provide a way for Sikhs to govern themselves and to achieve greater autonomy within India.
• Economic interests: Some Sikhs living outside of India have financial interests in the Punjab region. They believe that the establishment of Khalistan would provide greater economic opportunities and help to develop the region.

KHALISTAN MOVEMENT: CAUSE OF CONCERN FOR INDIA

• Threat to National Security: The Khalistan movement seeks to establish a separate state in the Punjab region of India, which would involve the secession of a significant part of the country. This would threaten the territorial integrity and national security of India by kindling other separatist movements within India.
• Terrorism: The Khalistan movement has been associated with acts of terrorism and violence in the past. The movement has carried out several bombings, assassinations, and other violent acts in India. The Indian government views the Khalistan movement as a terrorist threat and has taken steps to counter its activities.
• Instability: The Khalistan movement has the potential to create instability and unrest in the Punjab region of India. The movement has the support of some sections of the Sikh community, and its activities could lead to protests, strikes, and other forms of civil unrest.
• Religious tensions: The Khalistan movement is rooted in the Sikh community’s identity and grievances. However, it could also lead to tensions between Sikhs and other religious communities in India, such as Hindus and Muslims.
• Economic Impact: The establishment of Khalistan could have a significant economic impact on India, as the Punjab region is an important agricultural and industrial hub. The movement could disrupt economic activities, deter investment, and hurt the livelihoods of millions of people.

STEPS TAKEN BY GOVERNMENT OF INDIA TO TACKLE THE KHALISTAN MOVEMENT

The Indian government has taken several steps to tackle the Khalistan movement, which seeks to establish a separate Sikh state in the Punjab region of India. The government views the movement as a threat to national security and has implemented a range of measures to counter its influence. Some of the key steps taken by the government include:

• Counter-terrorism measures: The Indian government has taken a tough stance against Khalistan militants, cracking down on terrorist activities and launching anti-insurgency operations to disrupt their networks. This has included targeted killings, raids on suspected militant hideouts, and the use of military force to quell violent protests.
• Legal action: The government has also used legal means to crack down on the Khalistan movement. Several Khalistan leaders and activists have been arrested and charged with sedition and terrorism-related offenses. The government has also banned several Khalistan organizations and declared them as terrorist organizations.
  • The Khalistan movement is outlawed in India and considered a grave national security threat by the government – a number of groups associated with the movement (like Babbar Khalsa International (BKI), Khalistan Commando Force (KCF), International Sikh Youth Federation (ISYF), All-India Sikh Student Federation (AISSF)) are listed as “terrorist organizations” under India’s Unlawful Activities (Prevention) Act, 1967.
• Dialogue with moderate Sikh leaders: The government has engaged in a dialogue with moderate Sikh leaders to address their grievances and to find a peaceful solution to the issue. The government has also encouraged moderate Sikh leaders to speak out against the Khalistan movement and to promote the idea of a united India.
• Development initiatives: The government has launched several development initiatives in Punjab to address economic grievances and improve the living conditions of the people. These initiatives include infrastructure development, job creation, and social welfare programs.
• Diplomatic pressure: The Indian government has also put diplomatic pressure on foreign countries to prevent them from supporting the Khalistan movement. This has included lobbying foreign governments to ban Khalistan organizations and to extradite Khalistan militants who are living abroad.

OTHER MOVEMENTS FOR SEPARATE STATE IN INDIA

The Khalistan movement is not the only separatist movement in India. There have been several other movements seeking the creation of separate states based on ethnic, linguistic, or regional identities. Here are some of the major movements:

• Gorkhaland: The Gorkhaland movement seeks to create a separate state for the Gorkha ethnic community in the Darjeeling hills of West Bengal. The movement has been ongoing for several decades and has been marked by protests, strikes, and violence.
• Bodoland: The Bodoland movement seeks to create a separate state for the Bodo tribe in the Bodoland Territorial Area Districts of Assam. The movement has been ongoing for several decades and has been marked by violent clashes between Bodo militants and the Indian government.
• Greater Nagalim: The Nagaland movement seeks to create a separate state for the Naga people in the northeastern region of India. The movement has been ongoing for several decades and has been marked by armed conflict between Naga militants and the Indian government.
• Tamil Eelam: The Tamil Eelam movement seeks to create a separate state for the Tamil people in the northern and eastern regions of Sri Lanka. The movement has been marked by a prolonged civil war and international involvement.

VARIOUS INSTITUTIONAL AND LEGAL MECHANISMS TO DEAL WITH HINTERLAND TERRORISM IN INDIA

KEY LEGAL MECHANISMS:

• The Unlawful Activities (Prevention) Act, 1967 (UAPA): The UAPA is the primary legislation that deals with terrorism-related offenses in India. The act provides for the detention of suspects without trial, the freezing of assets, and the seizure of property in terrorism-related cases. The act also contains provisions for the investigation and prosecution of terrorist acts.
• The Indian Penal Code (IPC): The IPC contains provisions that deal with various offenses related to terrorism, including waging war against the nation, sedition, and conspiracy to commit an offense.
• The Prevention of Terrorism Act, 2002 (POTA): POTA was enacted in response to the growing threat of terrorism in India. The act provided for special courts to try terrorism-related cases, allowed for the interception of communications, and contained provisions for the investigation and prosecution of terrorist acts. However, POTA was repealed in 2004 due to concerns about its misuse.
• The National Investigation Agency Act, 2008 (NIA Act): The NIA Act provides for the establishment of the National Investigation Agency, which is a specialized agency that investigates and prosecutes terrorism-related cases. The act provides the agency with extensive powers, including the power to arrest and detain suspects and to conduct searches and seizures.
• The Arms Act, 1959: The Arms Act regulates the possession, acquisition, and transfer of arms and ammunition. The act contains provisions for the punishment of offenses related to the illegal possession of firearms and explosives.
• The Explosives Act, 1884: The Explosives Act regulates the manufacture, possession, and use of explosives. The act contains provisions for the punishment of offenses related to the illegal possession and use of explosives.

INSTITUTIONAL MECHANISMS:

• National Security Council (NSC): The NSC is the apex body for the formulation and implementation of national security policies. It advises the government on matters related to national security and crisis management.
• National Investigation Agency (NIA): The NIA is a specialized agency that investigates and prosecutes terrorism-related cases. It was established in 2009 and has the power to take over any terrorism-related case from the state police and conduct its investigation.
• National Security Guard (NSG): The NSG is a specialized counter-terrorism force that is equipped and trained to handle terrorist situations. It was established in 1984 and is available for deployment anywhere in the country.
• Anti-Terrorism Squad (ATS): The ATS is a specialized unit of the state police that deals with terrorism-related cases. Each state has its ATS, which works in coordination with the central agencies.
• Multi-Agency Centre (MAC): The MAC is an intelligence-sharing platform that brings together various intelligence agencies, including the Intelligence Bureau (IB) and the Research and Analysis Wing (RAW), to coordinate their efforts and share information.
• Cyber Security and Information Assurance (CSIA) Cell: The CSIA Cell is a specialized unit that deals with cyber threats and information security issues. It works in coordination with other intelligence agencies to provide a comprehensive threat assessment.

THE WAY FORWARD:

The Khalistan issue is a complex and sensitive matter that requires a nuanced approach. Here are some steps that could be taken to address the issue:

• Address Historical Grievances: The Indian government could take steps to address the historical grievances of the Sikh community, such as the 1984 anti-Sikh riots. This could involve providing compensation to the victims and their families, holding those responsible for the riots accountable, and ensuring that such incidents do not happen again.
• Political Dialogue: The Indian government could engage in political dialogue with the leaders of the Khalistan movement to understand their concerns and work towards a peaceful resolution. The dialogue could involve representatives from the Sikh community, civil society, and other stakeholders.
• Address Economic Concerns: The Indian government could take steps to address the economic concerns of the people of Punjab, such as creating jobs, promoting investment, and developing infrastructure in the region. This could help to address some of the underlying causes of the Khalistan movement.
• Promote Cultural Diversity: The Indian government could promote cultural diversity and respect for all religious communities in the country. This could involve promoting interfaith dialogue, celebrating cultural festivals, and creating opportunities for people from different communities to come together and interact.
• Counter Radicalization: The Indian government could take steps to counter the radicalization of the Sikh community by promoting moderate voices and countering extremist propaganda. This could involve working with civil society organizations, religious leaders, and the media to promote messages of peace, tolerance, and understanding.
• Strict Law Enforcement: The Indian government could also take strict law enforcement measures against those involved in violent activities, while also respecting the rights of peaceful protestors and activists.

THE CONCLUSION: The Khalistan movement is a cause of concern for India due to its potential to inflict multi-dimensional impacts on India. Addressing the Khalistan issue requires a comprehensive approach that involves multiple stakeholders, including the government, civil society organizations, religious leaders, and the media.

THE CONTEXT: Union Ministry of Environment, Forest and Climate Change (MoEFCC) has cleared the decks for a mega project at the cost of about ₹70,000 crores at the southern tip of the Andaman and Nicobar Islands. ‘Holistic Development of Great Nicobar Islands in Andaman and Nicobar Islands’ project is being spearheaded by the Andaman and Nicobar Islands Integrated Development Corporation under a vision plan conceived by the NITI Aayog, the Centre’s public policy think tank.This article analyses various aspects of this mega projects.

ABOUT THE PROJECT

The ‘Holistic Development of Great Nicobar Island’ project contains the 4 Sub-parts:

•  An international transhipment port of 14.2 mTEU cargo capacity at Galathea Bay along the island’s south-eastern coast,
• An international airport to support 4,000 passengers during peak hours,
• A 450 MVA gas and solar-based power plant, and
• An ecotourism and residential township of about 160 sq km.

BACKGROUND OF THE PROJECT

September 2020

During the COVID-19 pandemic, NITI Aayog issued the request for proposals for the “Preparation of Master Plan for Holistic Development of Great Nicobar Island.”

August 2021

AECOM, got the contract and released the pre-feasibility report in March 2021. It was immediately taken up for discussion by the Environment Appraisal Committee – Infrastructure 1 (EAC) which issued the Terms of Reference in May 2021. AECOM also submitted the Preliminary Engineering Design Report of the ITP to NITI Aayog in August 2021.

January 2021

In January 2021, well before the project proponent – Andaman and Nicobar Islands Integrated Development Corporation (ANIIDCO) – even submitted the proposal to the EAC, the Standing Committee of the National Board for Wildlife denotified the Galathea Bay Wildlife Sanctuary to free it as the port site.

In early 2021, the Union Ministry of Environment Forest and Climate Change (MoEFCC) declared a “zero extent” eco-sensitive zone for the Galathea National Park, allowing forest land along its south and south-eastern boundary to be made available for the project.

March, 2022

VIMTA Lab published the final Environmental Impact Assessment (EIA) Report in March, 2022. The project was discussed by the EAC in its meetings in March and May and finally recommended for clearance in its meeting held on August 22-23, 2022.

October 27, 2022

 Ministry gave in-principle or Stage 1 Forest Clearance that will involve felling of approximately 8.5 lakh trees in the rich rain forests teeming with extraordinary flora and fauna species. This was done by amending the Rules in haste.

November 4, 2022

MoEFCC granted final Environmental Clearance for the plan.

With this, the decks were cleared to start construction of a port, an international airport, a power plant and a township spread over 166 square km of land.

SIGNIFICANCE OF THE PROJECT

• Strategic Location – Located on the International Trade Route, with existing transhipment terminals like Singapore, Klang and Colombo in proximity.
• Catchment – Potential to capture transhipment cargo from the similar international facilities in the sub-continent and Ports in the proximity including Indian Ports.
• It can attract Indian and regional transhipment traffic from the current hubs, save significant revenue loss, reduce logistics inefficiencies for Indian trade, reduce risks to the country’s export competitiveness and create an opportunity for India to become a large hub for Asia-Africa, Asia-US/Europe container traffic trade. Indian ports can save $200-220 Million each year on transhipment cargo.
• Developing Galathea Bay Transhipment Port will accrue significant benefits such as forex savings, foreign direct investment, increased economic activity at other Indian Ports, enhanced logistics infrastructure and thus, efficiencies, employment generation, and increased revenue share.
• Tourism promotion: Connectivityv will also help in promotion of the tourism in the Nicobar Islands
• Other projects include, Airport, Township & Power plant– aims to bridge the gaps in infrastructure and improve economic opportunity for rapid increase in size for all types of vessels, from feeders to the large inter-continental carriers.

THREATS DUE TO THE PROJECT

• Environmental Threat:
  • Deforestation: The project also involves the cutting of nearly a million trees in a largely pristine and untouched rainforest ecosystem. The Ministry’s forest conservation division granted clearance for the use of 130.75 sq km of pristine forest for the project, making it one of the largest single forest diversions in recent times.
  • Threat to species: National Board for Wildlife (NBWL) denotified the Galathea Bay Wildlife Sanctuary to free it as the site for a port. However, beaches on either side of Galathea River as it empties into the sea are among the most important nesting sites in the northern Indian Ocean for the giant leatherback turtle, the world’s largest marine turtle. India’s National Marine Turtle Action Plan, released in February 2021, names Galathea Bay in the list of “Important Marine Turtle Habitats in India”.
  • It is home to 648 species of flora and hosts 330 species of fauna including rare and endemic ones such as the Nicobar wild pig, Nicobar tree shrew, the Great Nicobar crested serpent eagle, Nicobar paradise flycatcher and the Nicobar megapode.
  • Threat to the protected sites: MoEFCC declared a zero- extent eco-sensitive zone for the Galathea and Campbell Bay National Parks, thus making pristine forest land along the central and south-eastern coast of the island available for the project. This will make the national parks vulnerable to the projects.
  • Impacting coral reefs & mangroves:
    • Coral reefs, already under threat from warming oceans, are of enormous ecological importance.
    • Environmentalists have also flagged the loss of mangroves on the island as a result of the development project.

• • Threat to indigenous people: Another key concern is regarding the rights and livelihoods of the two tribal communities for whom Great Nicobar has been home for thousands of years: the Nicobarese (about a 1,000 people) and the Shompen (about 200). The latter is classified as a particularly vulnerable tribal group (PVTG) and is a hunter-gatherer nomadic community critically dependent on the forests of the island for survival.
  • Urbanisation in the fragile area: The Great Nicobar Island has a population of about 8,000. Once completed, the project is expected to attract more than 3 lakh people. This urbanisation project will have huge ecological and environmental costs in an area known for its marine and terrestrial biodiversity.
  • Threat to protected land: The island, which is spread over 900 sq km, was declared a biosphere reserve in 1989 and included in the UNESCO’s Man and Biosphere Programme in 2013.
  • Disaster prone:
    • Great Nicobar is not far from Banda Aceh in Indonesia, which was the epicentre of the December 2004 earthquake and tsunami that caused unprecedented damage. Andaman and Nicobar Islands had experienced nearly 444 earthquakes in the past 10 years.
    • A 2005 Earthquake Engineering Research Institute (EERI) Special Earthquake Report by a multi-disciplinary team from the Indian Institute of Technology (IIT) Kanpur, recorded witness accounts of 8-metre-high tsunami waves hitting the Great Nicobar coast on December 26, 2004. “The lighthouse at Indira Point, the southernmost tip of the Great Nicobar Island, which was on high ground before the earthquake,” the report notes, “is now under water, indicating a land subsidence of about 3-4 m.” Thus the island is also vulnerable to the Tsunami.
  • Lack of transparency: A Right to Information (RTI) application filed in October seeking details of the clearance, including the proposed compensatory afforestation scheme, was rejected citing security, strategic, scientific, or economic interests of the state. Not a single document pertaining to the forest clearance has been made available on the Ministry’s Parivesh portal to date.

THE WAY FORWARD

• Ecological Importance should be taken into account in the development projects. These should be prepared for identified islands with principles of sustainability, people’s participation, eco-system preservation and determination of carrying capacity as the guiding principles.
• The interests of Shompen and other tribal populations residing in the areas must be given adequate weightage. We have to recognize that it is not only a geographical area of residence but also a cultural landscape for the tribal communities. The tribes must be treated as important stakeholders in the project, and their voices and interests must be adequately safeguarded.
• Endemic species should not be disturbed. If possible recovery plan of species should be developed for the disturbed species. Compensatory afforestation should be in place which has ecologically the same characteristics. Disaster resilient infrastructure should be buildup in the development plans.
• Since Malacca Strait is strategically significant and is close to Andaman and Nicobar Island, the prospects of militarization of the islands do not seem far-fetched. To counter China in India’s sphere of maritime interest, the militarization of islands is often advocated. However, a deep assessment of the advantages and disadvantages must be conducted before the militarisation of islands takes place.
• Transparency should be emphasised in every stage of the development project so that confidence building of the community can take place.
• The right will and intention of the government, with an emphasis on ecological and cultural sustainability, along with taking into account the interests of tribal population and islanders, will go a long way in creating sustainable, ecologically rich developed islands with a bustling economy and happy and prosperous people.
• There is a need for a comprehensive study of their biodiversity. New findings keep emerging regularly which indicates much work requires to be done. It will help in a comprehensive assessment of the various development project.

THE CONCLUSION: The debate of the development vs environment has taken a prime position in the current phase of Climate Change. In this era, it is need to go for sustainable development so that both development imperative and ecological preservation can be balanced.

THE CONTEXT: Recently, tremors have been felt in Meghalaya and in the region around Joshimath and Chamoli in Uttarakhand. These events got further intensified in the aftermath of a series of earthquakes in Turkey recently. In this context, the Delhi High Court while hearing a petition, recently asked the state government to file a status report and action plan on the structural safety of buildings in Delhi. The following article intends to explain the catastrophe of Earthquake and analyse India’s vulnerability and preparedness for the same.

UNDERSTANDING THE GENESIS OF EARTHQUAKES

• Earthquakes are the result of sudden movement along faults within the Earth. The movement releases stored-up ‘elastic strain’ energy in the form of seismic waves, which propagate through the Earth and cause the ground surface to shake. Such movement on the faults is generally a response to long-term deformation and the buildup of stress.
• Seismic waves from large earthquakes pass throughout the Earth. These waves contain vital information about the internal structure of the Earth. As seismic waves pass through the Earth, they are refracted, or bent, like rays of light bend when they pass through a glass prism. Because the speed of the seismic waves depends on density, we can use the travel time of seismic waves to map change in density with depth and show that the Earth is composed of several layers.
• The Earth’s outermost layer is fragmented into about 15 major slabs called tectonic plates. These slabs form the lithosphere, which is comprised of the crust (continental and oceanic) and the upper part of the mantle. Tectonic plates move very slowly relative to each other, typically a few centimeters per year, but this still causes a huge amount of deformation at the plate boundaries, which in turn results in earthquakes.

OUTBREAK OF AN EARTHQUAKE

• Observations show that most earthquakes are associated with tectonic plate boundaries, and the theory of plate tectonics can be used to provide a simplified explanation of the global distribution of earthquakes, while some of the characteristics of earthquakes can be explained by using a simple elastic rebound theory.
• What drives the movement of tectonic plates?

Below the tectonic plates lies the Earth’s asthenosphere. The asthenosphere behaves like a fluid over a very long-time scale. There are a number of competing theories that attempt to explain what drives the movement of tectonic plates.

• Mantle convection currents: warm mantle currents drive and carry plates of lithosphere along a like a conveyor belt.
• Ridge push (buoyant upwelling mantle at mid-ocean ridges): newly formed plates at oceanic ridges are warm, so they have a higher elevation at the oceanic ridge than the colder, more dense plate material further away; gravity causes the higher plate at the ridge to push away the lithosphere that lies further from the ridge.
• Slab pull: older, colder plates sink at subduction zones because, as they cool, they become denser than the underlying mantle and the cooler, sinking plate pulls the rest of the warmer plate along behind it.

INDIA’S VULNERABILITY TOWARDS EARTHQUAKES

India is prone to earthquakes due to its geographical location and tectonic activity. India is situated on the Indian Plate, which is moving northward and colliding with the Eurasian Plate. The interaction between these two plates causes frequent earthquakes in the region. Here are some major earthquake-prone zones in India:

• Himalayan Region: The Himalayan region is one of the most seismically active zones in India. The collision between the Indian and Eurasian plates causes frequent earthquakes in this region. The Himalayan region comprises several states, including Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, and Arunachal Pradesh.
• Northeastern Region: The northeastern region of India is also seismically active due to its location on the boundary of the Indian and Eurasian plates. The region comprises states such as Assam, Manipur, Mizoram, Nagaland, Tripura, and Meghalaya.
• Central India: Central India is also prone to earthquakes, although it experiences fewer earthquakes compared to the Himalayan and northeastern regions. The region includes states such as Madhya Pradesh, Chhattisgarh, and Maharashtra.
• Western India: The western region of India is also seismically active, primarily due to its proximity to the Arabian Sea. The region includes states such as Gujarat and Rajasthan.
• Andaman and Nicobar Islands: The Andaman and Nicobar Islands are also prone to earthquakes due to their location on the boundary of the Indian and Burmese plates.

INDIA’S PREPAREDNESS FOR EARTHQUAKES

Nearly 58 per cent of the Indian landmass is vulnerable to earthquakes and the concerns that have been raised by the court need a policy response. The Indian government has taken several steps to tackle earthquakes in India. The government’s primary focus has been on earthquake preparedness, which includes building codes and guidelines, disaster management plans, and public awareness campaigns. Here are some of the steps taken by the government for tackling earthquakes in India:

• Building Codes and Guidelines: The Bureau of Indian Standards (BIS) has developed codes and guidelines for earthquake-resistant construction in India. These codes and guidelines provide a framework for safe and earthquake-resistant building design and construction.
• Disaster Management Plans: The National Disaster Management Authority (NDMA) has developed disaster management plans to tackle earthquakes in India. The plans include measures for early warning systems, search and rescue operations, medical aid, and relief and rehabilitation efforts.
• Public Awareness Campaigns: The government has launched several public awareness campaigns to educate people about earthquake safety and preparedness. The campaigns include disseminating information on earthquake-resistant construction, emergency preparedness, and evacuation procedures.
• Seismic Monitoring: The government has established a network of seismic monitoring stations across the country to monitor seismic activity and provide early warning systems. The Indian Meteorological Department (IMD) operates these monitoring stations.
• Research and Development: The government has invested in research and development to improve earthquake-resistant construction techniques and materials. The Central Building Research Institute (CBRI) and the National Institute of Disaster Management (NIDM) are some of the institutions working on earthquake-related research and development.
• International Collaboration: The Indian government has collaborated with international organizations, including the United Nations Development Programme (UNDP), to improve earthquake preparedness and response in the country.

Despite the efforts made by the Indian government to tackle earthquakes, there are several challenges that hinder effective earthquake management and response in the country.

CHALLENGES IN INDIA’S EARTHQUAKE PREPAREDNESS

Currently, India’s policy on earthquake preparedness operates primarily at the scale of structural details. Guided by the National Building Codes, this includes specifying dimensions of the structural members, columns, beams, etc. and details of the reinforcements that join these elements together.

• National Building Code ignores the buildings that were constructed before such codes were published in 1962. Such buildings form a large part of our cities.
• Further, it assumes infallibility in the processes of enforcement relying only on penalization and illegalities.
• It treats earthquakes as a problem of individual buildings as if they exist and behave in complete isolation from their urban context.

OTHER INHERENT CHALLENGES FOR TACKLING EARTHQUAKES IN INDIA

• Population Density: India is one of the most densely populated countries in the world, and this poses a significant challenge for earthquake management. The high population density makes it difficult to evacuate people in the event of an earthquake, and it also puts a strain on relief and rehabilitation efforts.
• Informal Construction: A significant percentage of buildings in India are constructed informally, without following proper building codes and guidelines. These buildings are often vulnerable to earthquakes and can cause significant damage and casualties.
• Limited Resources: India is a developing country, and it often lacks the resources and infrastructure required for effective earthquake management. This includes inadequate funding for research and development, limited equipment and resources for search and rescue operations, and insufficient medical facilities for emergency treatment.
• Geological Diversity: India has a diverse geological makeup, which makes it challenging to predict earthquake activity accurately. Different regions in the country have different seismic histories, and this requires tailored earthquake management strategies.
• Lack of Awareness: Despite the public awareness campaigns by the government, many people in India are still unaware of earthquake safety and preparedness measures. This lack of awareness can lead to confusion and panic during an earthquake, making it challenging to implement effective response strategies.

The National Disaster Management Authority (NDMA) has developed guidelines for earthquakes in India. These guidelines provide a framework for earthquake management and response, including measures for early warning systems, search and rescue operations, medical aid, and relief and rehabilitation efforts. Here are some of the key NDMA guidelines for earthquakes in India:

• Early Warning Systems: The NDMA recommends the development of early warning systems to provide advance notice of earthquakes. These systems can help authorities to initiate response measures and reduce the impact of earthquakes.
• Building Codes and Guidelines: The NDMA recommends the implementation of building codes and guidelines developed by the Bureau of Indian Standards (BIS) for earthquake-resistant construction. The guidelines provide a framework for safe and earthquake-resistant building design and construction.
• Search and Rescue Operations: The NDMA recommends the establishment of a trained search and rescue team to carry out rescue operations in the event of an earthquake. The team should be equipped with appropriate equipment, including search cameras, rescue tools, and communication devices.
• Medical Aid: The NDMA recommends the establishment of medical facilities to provide emergency treatment to earthquake victims. These facilities should be equipped with essential medical equipment and supplies and should be staffed by trained medical personnel.
• Relief and Rehabilitation: The NDMA recommends the establishment of relief camps to provide shelter, food, and other essentials to earthquake victims. The camps should be located in safe areas and should be adequately equipped to meet the needs of the victims.
• Public Awareness: The NDMA recommends the implementation of public awareness campaigns to educate people about earthquake safety and preparedness. The campaigns should include disseminating information on earthquake-resistant construction, emergency preparedness, and evacuation procedures.

The Bureau of Indian Standards (BIS) has developed codes and guidelines for earthquake-resistant construction to mitigate the effects of earthquakes and reduce the risk of casualties and property damage. Here are some preparatory steps and rules for earthquake preparedness in building construction in India:

• Site Selection: The first step in earthquake-resistant construction is selecting a site with low seismic activity. The Geological Survey of India provides maps that highlight seismic zones and help identify areas with high seismic activity.
• Foundation: The foundation is the most critical part of a building, and it should be designed to withstand the forces generated during an earthquake. The foundation should be dug deep enough to reach the hard strata and be wide enough to distribute the load evenly.
• Building Materials: The use of good quality building materials is essential for earthquake-resistant construction. The materials should be able to withstand the forces generated during an earthquake. Bricks, concrete blocks, and reinforced concrete are commonly used building materials for earthquake-resistant construction.
• Building Design: The building design should be such that it can resist the forces generated during an earthquake. The design should incorporate earthquake-resistant features such as cross-bracing, shear walls, and ductile detailing.
• Building Height: The height of a building is a crucial factor in earthquake-resistant construction. The taller a building, the greater the forces it will experience during an earthquake. As a result, high-rise buildings need to be designed with more earthquake-resistant features.
• Non-structural Components: Non-structural components such as glass facades, partition walls, and false ceilings are vulnerable to damage during earthquakes. These components should be designed to withstand the forces generated during an earthquake.
• Regular Maintenance: Regular maintenance of the building is essential for earthquake-resistant construction. Cracks, fissures, and other signs of damage should be addressed promptly.

In addition to these steps, there are specific building codes and guidelines for earthquake-resistant construction in India. The Indian Standard Code of Practice for Design Loads for Buildings and Structures (IS 1893) provides guidelines for earthquake-resistant design and construction of buildings.

BOTTOMLINE:

Policy makers need to understand that buildings exist in clusters and in the event of an earthquake, behave as a system. They collapse on nearby buildings and on the abutting streets damaging buildings that might have otherwise survived and blocking evacuation routes. Earthquake preparedness, therefore, needs to act at the scale of building details as well as that of cities. Moreover, we must think about it in the realm of policy and not just legal enforcement.

THE WAY FORWARD:

• Retrofitting Buildings to Seismic Codes:
  • Aim: To create a system of tax-based or development rights-based incentives for retrofitting one’s building up to seismic codes.
  • Such a system of incentives will enable the growth of an industry around retrofitting and will generate a body of well-trained professionals and competent organisations.
• Better enforcement of seismic codes:
  • Ensuring better enforcement of seismic codes through step such as the National Retrofitting Programme launched in 2014.
  • Under the programme, the Reserve Bank of India directed banks to deny loans for any building activity that does not meet the standards of earthquake-resistant design.
• Care contemplation of construction projects:
  • For example, experts from different organisations including the Geological Survey of India, IIT Roorkee, are studying the cause of the sinking, and many geologists have blamed NTPC’s Tapovan-Vishnugad hydroelectric power project for the current disaster.
• Strict policy formulation:
  • After the 2001 Bhuj earthquake, the Gujarat government immediately adapted new town planning schemes that widened roads and created routes for evacuation and relief work.
  • Turkish government, in denial of its own responsibility, has arrested contractors for building unsafe buildings.
• Programmes like the ongoing Urban 20 meetings are an excellent opportunity for international knowledge exchange on earthquake preparedness. Further, India should use its G20 presidentship to arouse global attention towards this issue so as to generate collective response measures.

CASE STUDIES

JAPAN

• It has invested heavily in technological measures to mitigate the damage from the frequent earthquakes that it experiences.
• Skyscrapers are built with counterweights and other high-tech provisions to minimise the impact of tremors.
• Small houses are built on flexible foundations and public infrastructure is integrated with automated triggers that cut power, gas, and water lines during earthquakes.
• This has been a result of cultivating an industry around earthquake mitigation and fostering expertise.

SAN FRANCISCO

• It was devastated by an earthquake in April 1906.
• San Francisco implemented policy changes similar to Japan’s.
• The next major earthquake hit in 1989, the city recorded just 63 casualties compared to more than 3,000 deaths in 1906.

THE CONCLUSION: Addressing the issue of earthquakes in India requires a sustained effort from the government, private sector, and civil society. Strengthening building codes and guidelines, establishing early warning systems, developing search and rescue capabilities, establishing medical aid and relief and rehabilitation facilities, and public awareness campaigns are some of the key steps that can be taken to improve earthquake management and response in the country.