TOP 5 TAKKAR NEWS OF THE DAY (6th JULY 2023)

1. THE DIGITAL PERSONAL DATA PROTECTION BILL, 2022

TAG: GS 2: POLITY

THE CONTEXT: Nearly six years after the Supreme Court held privacy to be a fundamental right, a reworked version of India’s long-awaited data protection law has been cleared by the Cabinet.  It could come before Parliament in the Monsoon Session.

EXPLANATION:

  • Contents of the Bill will remain confidential until it is brought to Parliament. Some of the most contentious issues included are the wide-ranging exemptions to the Centre and its agencies and diluting the role of the Data Protection Board.
  • The Bill, once it becomes law, will play a crucial role in India’s trade negotiations with other nations, and especially regions like the European Union, whose General Data Protection Rules (GDPR) are among the world’s most exhaustive privacy laws.

Significance of the bill:

  • This is a crucial pillar of the overarching framework of technology regulations which also includes the Digital India Bill, the proposed successor to the Information Technology Act of 2000, the draft Indian Telecommunication Bill of 2022, and a policy for non-personal data governance.
  • The proposed law will apply to the processing of digital personal data within India and to data processing outside the country if it is done for offering goods or services or for profiling individuals in India.
  • It requires entities that collect personal data, called data fiduciaries, to maintain the accuracy of data, keep data secure, and delete data once their purpose has been met.
  • It is expected to allow “voluntary undertaking”, where any violation of the provisions will be addressed by Data Protection Board by accepting settlement fees.
  • It deals with cross-border data flows to international jurisdictions moving from a ‘whitelisting’ approach to a ‘blacklisting’ mechanism.
  • The proposed law could allow global data to flow by default to all jurisdictions other than a specified ‘negative list’ of countries, essentially an official blacklist of countries where transfers would be prohibited.

Concerns around the draft bill regarding control of the central government:

  • The central government can exempt “any instrumentality of the state” from adhering to the provisions on account of national security, relations with foreign governments, and maintenance of public order, among other things.
  • Control of the central government in appointing members of the Data Protection Board, an adjudicatory body that will deal with privacy-related grievances and disputes between two parties.
  • The chief executive of the board will be appointed by the central government, which will also determine the terms and conditions of their service.
  • The Bill can dilute the Right to Information (RTI) Act, as the personal data of government functionaries is likely to be protected under it.

Regulation in other countries:

  • According to the United Nations Conference on Trade and Development (UNCTAD), an estimated 137 out of 194 countries have put in place legislation to secure the protection of data and privacy.
  • Africa and Asia show 61% (33 countries out of 54) and 57% (34 countries out of 60) adoption respectively. Only 48% of Least Developed Countries (22 out of 46) have data protection and privacy laws.
  • EU model: The GDPR focuses on a comprehensive data protection law for processing of personal data. It has been criticised for being excessively stringent and imposing many obligations on organisations processing data.
  • US model: Privacy protection is largely defined as “liberty protection” focused on the protection of the individual’s personal space from the government. It only enables collection of personal information as long as the individual is informed of such collection and use.
  • China model: Personal Information Protection Law (PIPL), which came into effect in November 2021, gives Chinese data principals new rights as it seeks to prevent the misuse of personal data. The Data Security Law (DSL), which came into force in September 2021, requires business data to be categorised by levels of importance and puts new restrictions on cross-border transfers.

Information Technology Act, 2000

  • It is an act of the Indian Parliament notified in 2000. It is the primary law in India dealing with cybercrime and electronic commerce.
  • The Act provides a legal framework for electronic governance by giving recognition to electronic records and digital signatures.
  • It also defines cyber crimes and prescribes penalties for them. The Act directed the formation of a Controller of Certifying Authorities to regulate the issuance of digital signatures. It also established a Cyber Appellate Tribunal to resolve disputes arising from this new law.
  • The Act also amended various sections of the Indian Penal Code of 1860; the Indian Evidence Act of 1872; the Banker’s Book Evidence Act of 1891; and the Reserve Bank of India Act of 1934, to make them compliant with new technologies.
  • A major amendment was made in 2008. It introduced Section 66A, which penalized sending “offensive messages”.
  • It also introduced Section 69, which gave authorities the power of “interception or monitoring or decryption of any information through any computer resource”.
  • Additionally, it introduced provisions addressing – pornography, child porn, cyber terrorism and voyeurism. The amendment was passed on 22 December 2008 without any debate in Lok Sabha.

Draft Indian Telecommunication Bill, 2022:

  • The Draft Bill seeks to replace the Indian Telegraph Act of 1885, the Indian Wireless Telegraphy Act of 1933, and the Telegraph Wires (Unlawful Possession) Act of 1950.
  • Operating a telecom network and providing telecom services will be licensed activities. Telecom services will also include broadcasting, OTT, M2M, and data communication services.
  • Spectrum may be allocated through auction, administrative process, or other mechanisms decided by the central government.
  • The central government may intercept, monitor, or block messages between two or more persons in the event of a public emergency or in the interest of the security of the state. Telecom services may be suspended on similar grounds.
  • The Bill provides a mechanism to exercise the right of way for laying telecom infrastructure.

Digital India Bill, 2022:

  • The Bill will replace the 23-year-old Information Technology Act(IT) and is a much sought-after legislation by the industry.
  • The Digital India Bill is expected to address a variety of online safety issues, including combating child sexual abuse material, religious incitement material, patent violation material, and misinformation on social media platforms.
  • The full list of 11 things includes porn, content harmful to children, copyright infringement, misleading content, impersonation, content deemed against India’s unity and integrity, computer malware, banned online games, and anything else that is illegal.
  • These types of content are currently listed in the last update of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, but the Digital India Bill will give the government legal teeth to hold platforms accountable for hosting such content.

2. USA IS UNDERGOING A ‘GROWTH RECESSION

TAG: ECONOMY

THE CONTEXT: US stock markets are ascending even as the economy struggles to avoid recession. The US is neither fully in recession nor growing to its full potential. There is a need to look at the impacts of the growth recession in the USA and India.

EXPLANATION:

  • Indian stock markets are getting impacted by the rise in the United States and its stock markets.
  • Two of the key benchmark indices in the US, namely the S&P 500 and the Nasdaq 100, have registered quite remarkable gains over just the past six months.
  • Foreign Portfolio Investors (FPIs) are also pumping money into Indian markets as well.

What is expected during the recession?

  • At the start of 2023, it was predicted that the US, which is the world’s largest economy, would experience a recession.
  • During inflation, central bankers tend to rapidly raise interest rates to bring down economic activity and cool down inflation.
  • Typically, during such phases, stock markets tend to suffer because:
  • If interest rates are moving up, an investor feels less inclined to invest money in the riskier stock markets when they can earn more by just keeping it in the bank.
  • A slowing economy essentially means more unemployment, lower consumption levels and lower profitability of companies which reduces the incentive to lend to these companies by investing in the stock markets.

Growth recession:

  • A recession implies that the total economic activity in an economy contracts for two consecutive quarters. It means if an economy’s GDP in the first quarter is lower than what it was in the first quarter of last year and the same thing happens in the second quarter, then the economy is said to have gone into a recession.
  • The phrase “growth recession” was coined by American economist Solomon Fabricant in a 1972 paper titled “The ‘recession’ of 1969-1970”.
  • A growth recession is something above zero but below potential GDP growth. The eventual GDP growth rate is likely to be well below the potential GDP growth rate.
  • In other words, there are times when it may not be a recession, but it feels like one. For instance, a key marker of recession is the rise of joblessness or unemployment, but if an economy grows along with rising unemployment, it can be termed a “growth recession”.

Potential GDP growth rate:

  • The potential GDP growth rate is the rate of growth at which an economy can grow without spiking inflation.
  • For instance, the US has the potential to grow (its GDP) by 1.8% each year. It is a combination of (increased) productivity (accounting for 1.5%) and changes in labour force (accounting for the remaining 0.3%).

India’s growth trajectory:

  • India’s potential GDP growth rate has been sliding since the Global Financial Crisis of 2009.
  • It used to be 8% during the high growth phase of 2004-2009. Since then, it had fallen to just 6% by 2019, just before the pandemic hit the economy.
  • Coming out of the pandemic, India’s economy has grown much faster and given India the mantle of the world’s fastest-growing major economy.
  • India seems to have grown faster in the last two financial years has been the effect of a low base because of Covid-induced contraction in 2020.
  • Growth rates have started decelerating yet again from 9.2% in FY22 to 7.2% in FY23 to likely around 6% in the current financial year.
  • Consumption levels of average Indians have largely remained subdued as companies have held back from aggressively ramping up fresh investments.

3. ZAPORIZHZHYA, THE NUCLEAR POWER PLANT(NPP)

TAG: PRELIMS PERSPECTIVE

THE CONTEXT: Zaporizhzhya plant has been compared to the Chornobyl disaster as the concerns intensified that the Russian-occupied nuclear reactor in southern Ukraine could be the target of fresh attacks.

EXPLANATION:

Reactor design and mechanism at Zaporizhzhya NPP:

  • Zaporizhzhya NPP is located southwest of Zaporizhzhia city, along the Dnieper River. It has six VVER-1000 reactors providing a total power-generation capacity of 6 GW.
  • The reactor complex consists of the reactor vessel, in which fuel rods are submerged in water. Control rods are inserted at the top. The water acts as both coolant and moderator. A pressuriser holds the water at a high but constant pressure (around 150 atm) to prevent it from boiling. This is the primary cooling circuit.
  • As the water heats up, the heat is moved to a secondary cooling circuit, where it converts a separate resource of water into steam. This steam is fed to turbines that generate electricity.

Chernobyl NPP and Zaporizhzhya NPP:

  • The principal difference between Chernobyl and Zaporizhzhya is that the former had RBMK reactors, and the latter has VVER-1000 reactors (this is the same reactor design installed at the Kudankulam NPP in India).
  • In Zaporizhzhya, the primary coolant and the moderator are the same substance (water), and it doesn’t leave the reactor vessel at any time.
  • In RBMK reactors like at Chernobyl, on the other hand, the coolant and the moderator are different (light water and nuclear graphite, respectively).

Chernobyl disaster:

  • It was a nuclear accident that occurred near the city of Pripyat in the north of the Ukrainian SSR in the Soviet Union and called as the world’s worst-ever civil nuclear incident.
  • The accident occurred during a safety test of the reactor.

Risk at Zaporizhzhya NPP:

  • Primary water circuits could depressurise as steam and escape into the air along with radioactive material and other volatile substances.
  • This mixture will contain the isotope iodine-131, which is easily dispersed by winds and accumulates in and damages the thyroid gland in humans.
  • It has a half-life of around eight days and so, as per the report, “would only pose a threat for several weeks”.
  • A breach and depressurisation would also release caesium-137, which has a half-life of 30 years and was responsible for contaminating much of Chornobyl’s surroundings after the accident.

Related news:

  • Recently, the Kakhovka dam, which is downstream of the Zaporizhzhya NPP and in whose reservoir the plant is located, was breached.
  • While the water level in the reservoir subsequently dropped, the Zaporizhzhya NPP wasn’t affected because the cooling pond from which it draws water is isolated from the water in the reservoir.
  • The Kakhovka Hydroelectric Power Plant is in the city of Nova Kakhovka in the Kherson region. The city is currently under Russian occupation. In the Kherson region, Russia occupies the left, or southern, bank, while Ukraine controls the right, or northern, bank.
  • The dam was built in the Soviet era and is one of six that sit along the Dnipro River, which stretches from the very north of the country into the Black Sea.

4. BHARAT 6G ALLIANCE(B6GA)

TAG: GS 3: SCIENCE AND TECHNOLOGY

THE CONTEXT: Telecom sector is a continuously evolving sector with high technological obsolescence from Wire-line to Mobile services to 2G to 3 G to 4G to 5G, and now 6G is on the horizon. Department of Telecommunications (DoT) launched Bharat 6G Alliance to drive innovation and collaboration in next-generation wireless technology.

EXPLANATION:

  • It is a collaborative platform consisting of public and private companies, academia, research institutions, and standards development organizations aimed at promoting innovation and collaboration in next-generation wireless technology.
  • B6GA will forge coalitions and synergies with other 6G Global Alliances, fostering international collaboration and knowledge exchange.
  • The primary objective is to understand the business and societal needs of 6G beyond technical requirements, foster consensus on these needs, and promote high-impact open research and development (R&D) initiatives.
  • B6GA aims to bring together Indian startups, companies, and the manufacturing ecosystem to establish consortia that drive the design, development and deployment of 6G technologies in India.
  • It aims to achieve universal and affordable connectivity, foster indigenous technology development, and nurture the telecom and semiconductor manufacturing ecosystem in India.
  • One of the key goals of B6GA is to facilitate market access for Indian telecom technology products and services, enabling the country to emerge as a global leader in 6G technology.

Differences between 5G and 6G network

  • Use of different spectrum: 5G is allocated for low band and high band frequencies from 6 GHz to 24.25 GHz respectively while 6G will be operative at the frequency range 95 GHz to 3 THz.
  • Faster than 5G technology: 6G speed is expected to be 100 times faster than 5G with enhanced reliability and wider network coverage.
  • 6G wireless accelerates more connections: With 6G it is expected to connect ten times more devices per square kilometer with increase in number of connected devices in the upcoming years.
  • Low latency in both G’s: 5G networks has a latency of about 5milliseconds but with 6G internet it will range from 1millisecond to 1microsecond which will make massive data transmissions possible in less than a second.

Related information:

Telecom Technology Development Fund (TTDF):

  • Telecom Technology Development Fund (TTDF) scheme was launched by DoT.
  • 5% of annual collections from the Universal Service Obligation Fund (USOF) will be available for the TTDF Scheme to fund research & development of technologies, products, and services.
  • The scheme is envisaged to bridge the digital divide among academia, start-ups, research institutes, and industry by developing and manufacturing state-of-the-art technologies.
  • The Telecom Technology Development Fund (TTDF) scheme entails grants to Indian entities to encourage and induct indigenous technologies tailor-made to meet domestic needs.
  • It aims to develop standards and create the ecosystem for research, design, prototyping, use cases, pilots, and proof of concept testing, among others.

Universal Service Obligation Fund:

  • It was established with the fundamental objective of providing access to “Basic” telegraph services to people in remote and rural areas at affordable and reasonable prices.
  • Subsequently, the Indian Telegraph (Amendment) Act of 2006 repealed the term “Basic”, wherein the scope of the USO Fund was widened to provide access to telegraph services in rural and remote areas.

5. CRIMINALISATION OF POLITICS

TAG: GS2: POLITY

THE CONTEXT: The association for Democratic Reforms (ADR) has approached the Election Commission of India seeking action against political parties that fail to publish details of criminal antecedents of candidates as per orders of the Supreme Court.

EXPLANATION:

  • For years, activists and independent electoral watchdogs like ADR have been raising concerns over political parties fielding candidates with criminal antecedents.
  • After the 2019 Lok Sabha elections, according to ADR, 43% of the newly-elected MPs had pending criminal cases against them.

Background:

  • Responding to a petition filed by Public Interest Foundation, the Supreme Court in September 2018 made it mandatory for political parties to publish the details of criminal cases pending against their candidates, including on their websites, in a format prescribed by the Election Commission of India.
  • It directed parties to publish the details of criminal cases pending against a candidate in bold letters and told the candidate with pending cases to inform the party about these cases.
  • The court also ordered that the candidate and the party have to publish the information at least thrice after filing the nomination.
  • In February 2020, the apex court reiterated that the parties would have to publish the details of candidates with pending criminal cases. It also added that they would have to include the reasons for selecting such a candidate.
  • The reasons for selection shall be with reference to the qualifications, achievements and merit of the candidate concerned and not mere ‘winnability’ at the polls.
  • It said the information would have to be published in one local vernacular newspaper, one national newspaper and on the official social media platforms of the political party within 48 hours of the selection or not less than two weeks before the first date of nominations, whichever is earlier.
  • The parties would then have to submit a compliance report with the ECI within 72 hours.

Provisions under the Representation of Peoples (RP) Act:

  • Section 8 of the Representation of the People Act, 1951, provides for the disqualification of a person convicted of certain offences from being chosen as or continuing as, a Member of Parliament or a Member of a Legislative Assembly.
  • Section 8 of the Representation of the People (RP) Act, 1951, disqualifies a person convicted with a sentence of two years or more from contesting elections.
  • Currently, under the Representation of Peoples (RP) Act, lawmakers cannot contest elections after their conviction in a criminal case. But those under trial continued to be eligible to contest elections.

Lily Thomas Case:

  • In 2005, Kerala-based lawyer Lily Thomas and NGO Lok Prahari filed a PIL before the SC which challenged Section 8(4) of the RPA as ‘ultra vires’ to the Indian Constitution, saying it protected convicted legislators from disqualification because their appeals were pending before higher courts.
  • The case drew attention to Articles 102(1) and 191(1) of the Constitution. The former lays down the disqualifications for membership to the Houses of Parliament, while the latter lays down the disqualifications for membership to the Legislative Assembly or Legislative Council of the state.
  • Supreme Court struck down Section 8(4) of the Representation of the People (Act) 2013 and concluded that there would be no window of appeal and a legislator stood disqualified immediately when convicted for two or more years of imprisonment

Association for Democratic Reforms (ADR):

  • It is an electoral watchdog established in 1999 by a group of professors from the Indian Institute of Management (IIM) Ahmedabad. The objective of ADR is to improve governance and strengthen democracy by continuous work in the area of Electoral and Political Reform
  • Purpose of the ADR:
  1. Empowerment of the electorate through greater dissemination of information relating to the candidates and the parties
  2. For a better and informed choice
  3. Need for greater accountability of Indian Political Parties
  4. Need for inner-party democracy and transparency in party functioning.



TOPIC : THE PARADOX BETWEEN GROWTH AND POVERTY ERADICATION

THE CONTEXT: The discontentment with growth not being beneficial to all became a highly debated topic in the past few years and the arena of policymaking also focused on reforms in a situation where India achieved higher economic growth but sluggish poverty reduction. Realising the importance of this debate, the government of India also envisioned “inclusive growth” as a strategy to ensure that economic progress is pro-poor and inclusive. This article explains various reasons for poverty in India and how can economic growth be of help in reducing the poverty.

WHAT IS ECONOMIC GROWTH?

Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. It can be measured in nominal or real (adjusted for inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.

Economic growth refers to an increase in aggregate production in an economy. Often, but not necessarily, aggregate gains in production correlate with increased average marginal productivity. That leads to an increase in incomes, inspiring consumers to open up their wallets and buy more, which means a higher material quality of life or standard of living.

INDIA’S GROWTH STORY

India’s economic journey since 1947 has seen its share of ups and downs. Once branded a “third world country”, a term for poor developing nation-states which has now fallen into disuse, India is now among the biggest economies of the world. In 1991, India was a leader of the G-77 (a group of poor countries constantly demanding more concessions to develop). Today India is in the T-20, the top 20 economies that lead the world.

FOOD PRODUCTION

  • Achieving “self-sufficiency” in food grains has been Independent India’s biggest achievement. From receiving food aid in the 1950s and 1960s to becoming a net exporter, India has seen a turnaround in food production. The total food production, which stood at 54.92 million tonnes in 1950, rose to 305.44 million tonnes in 2020-21.

GROSS DOMESTIC PRODUCT (GDP)

  • India’s GDP stood at ₹ 2.7 lakh crore at Independence. 74 years on, it has reached ₹ 135.13 lakh crore. India is now the 6th largest economy in the world and is on its way to becoming the third-largest by 2031, as per Bank of America. An unmissable fact is that there has been a 10- fold increase in the GDP (at constant prices) since the reform process began in 1991.

FOREX

  • India’s forex reserves (In foreign currencies and other assets like gold) stood at a meagre ₹ 1,029 crores in 1950-51. In fact, India’s low forex reserves played a catalytical role in kickstarting the economic reforms. With just $1.2 billion worth of forex reserves in 1991, India just had enough reserves to finance 3 weeks of imports. Three decades since the reform process began, India’s forex reserves now stand at ₹ 46.17 lakh crore – the world’s fifth-largest.

START-UP ECOSYSTEM

  • India has emerged as the third-largest startup ecosystem in the world after the US and China and the pace of growth is not showing any signs of slowing down.

POVERTY

  • Poverty is a state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living. Poverty means that the income level from employment is so low that basic human needs can’t be met.
  • According to World Bank, Poverty is pronounced deprivation in well-being and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life.
  • In India, 21.9% of the population lives below the national poverty line in 2011, however, this estimate of numbers might have increased in the aftermath of the Covid pandemic bringing many into the poverty net and still many poor were pushed deeper into poverty.
  • Also, the Periodic Labour Force Survey for the years 2017-18, 2018-19 and 2019-20 shows that the Top 10% earn approximately equal to the bottom 64%. The top 10 accounts for one-third of the incomes earned. While income disparity is not the only trigger to descent into poverty, it boldly outlines the everyday experiences of inequality and inequities.

ABSOLUTE POVERTY

A condition where household income is below a necessary level to maintain basic living standards (food, shelter, housing). This condition makes it possible to compare different countries and also over time. It was first introduced in 1990, the “dollar a day” poverty line measured absolute poverty by the standards of the world’s poorest countries. In October 2015, the World Bank reset it to $1.90 a day.

RELATIVE POVERTY

It is defined from the social perspective that is living standard compared to the economic standards of the population living in its surroundings. Hence it is a measure of income inequality.

Usually, relative poverty is measured as the percentage of the population with income less than some fixed proportion of median income.

CAUSES OF POVERTY IN INDIA

GROWTH FACTOR

  • As development proceeds, the earnings of different groups rise differently.
  • The incomes of the upper-income and middle-income groups rise more rapidly than those of the poor. This happens in the early stages of growth which India is passing at present.
  • The explanation lies in the shift of population from agriculture which is a slow-growing sector to the modern large industrial sector which grows more rapidly.
  • The capital-intensive type of growth leads to the concentration of income in those few hands who supply capital.

PRIVATE OWNERSHIP OF PROPERTY

  • India being a mixed economy, has guaranteed the right to private property to its people Accordingly, tangible wealth like land, buildings, automobiles, white goods etc. are owned by a private individual.
  • Inequalities of income have resulted from the ownership of private property in the following manner:

Ø  Inequalities Arising Out of Concentrated Land Ownership and Concentration of Tangible Wealth in the Rural Sector.

Ø  Private Ownership of Industries, Trade and Real Estates.

Ø  Inequalities in Professional Knowledge and Training

PREVALENCE OF THE LAW OF INHERITANCE

  • The prevalence of the law of inheritance perpetuates income inequalities to a significant level.
  • As per this law, the property of the father is usually inherited by his sons and daughters and thus children of the richer class automatically become richer and the children of the poorer class remain poor.

CLASS-BASED DEVELOPMENTS

  • The upper classes were the main beneficiary of the nation’s surging economic development and poverty rates are also significantly lower among the upper caste Hindus rather than in the others classes
  • One-third of Muslim and Hindu scheduled castes and tribes are in poverty compared to 10% of the upper castes Hindu. Altogether, 28% or around 360 million Indians are living in conditions of severe poverty.

OTHER FACTORS

Ø  SOCIAL FACTORS: Apart from economic factors, there are also social factors hindering the eradication of poverty in India. Some of the hindrances in this regard are the laws of inheritance, caste system, certain traditions, etc.

Ø  CLIMATIC FACTORS: Most of India’s poor belong to the states of Bihar, UP, MP, Chhattisgarh, Odisha, Jharkhand, etc. Natural calamities such as frequent floods, disasters, earthquakes and cyclones cause heavy damage to agriculture in these states.

Ø  POVERTY TRAP:

CONSEQUENCES OF POVERTY

SOCIO-ECONOMIC IMPACTS

  • It is estimated that 300 million Indians live in abject poverty. This is the largest number in the world.
  • India has the highest number of homeless people.
  • Gender inequality leading to violence against women, the burden of unpaid care work, fiscal injustice for women and other marginalised groups. Inequality leads to increased crime and workplace accidents.
  • It stems from class, caste and gender inequalities.

INADEQUATE DEVELOPMENT

  • The gap between the rich and the poor has created “Club States” with Gujarat, Punjab and other rich states forming the richest clubs.
  • Madhya Pradesh, Orissa, Bihar and other such states being left behind in terms of development.

INEQUALITY MAKES THE FIGHT TO END POVERTY MUCH HARDER

  • Higher income inequality impedes class formation and poverty reduction.
  • Unless growth benefits the poorest people more between now and 2030, the World Bank forecasts that the first Sustainable Development Goal (SDG) to eliminate extreme poverty will be missed.
  • Access to social amenities such as decent shelter, clean water, nutrition and food as well as healthcare and education has become difficult for the poor.

Case study

The growth of the middle class plays a significant role in strengthening democratic structures and cultures. But rising income inequality in India is hampering the formation and growth of the middle class. If one were to take an income of $10-$20 per day in 2011 purchasing power parity as an indicator of the middle class, then India has not done as well as Malaysia, Indonesia and China in growing its middle class.

DISPARITIES IN SOCIAL SERVICE

  • The highest-quality medical care is only available to those who have the money to pay for it.
  • The country is a top destination for medical tourism. At the same time, levels of public spending on health are some of the lowest in the world.
  • The poorest Indian states have infant mortality rates higher than those in Sub-Saharan Africa.
  • The shortage of health specialists in rural areas, the report compares India’s 0.7 doctors per 1,000 people to the UK’s 2.8.
  • The dropping enrolment ratio in government schools, particularly for girls, while private schools see an uptick in admission.

THE ANALYSIS: THE GROWTH – POVERTY PARADOX

  • The surging economic growth has improved the living conditions of its citizens, but these improvements were not uniformly distributed among India’s diverse population. Despite being among the richest countries in the world, India has attracted negative attention in recent years and ranked 66 out of 109 countries in Multidimensional Poverty Index 2021.
  • On the surface, India’s story of growth and its triumph over poverty is enviable. India’s income per capita has increased fourfold in the last two decades, and its absolute poverty – measured on the international poverty line – reduced sharply from 40 per cent in 2000 to 13.4 per cent in 2015 but while India is no longer chronically poor, its growth has not been inclusive. The segment of the population that ‘graduated’ from poverty is largely still vulnerable, with consumption levels very close to the poverty line, and far from becoming a ‘middle class.’
  • Poverty is concentrated more and more in urban areas, as now one-in-three poor is living in urban areas, which was about one-in-eight in the early 1950s. In the post-liberalisation period, urban growth and non-agricultural growth has emerged as major driver of national poverty reduction including rural poverty.
  • Unlike in advanced economies, economic growth and inequality converge in terms of their effects on socio-economic indicators in India i.e. with economic growth the inequality in income and asset distribution also increases; however economic growth helps in reducing the poverty.
  • Manifestation of unequal growth is also growing inequalities:

Growing Rich: During the pandemic, the wealth of Indian billionaires increased from Rs 23.14 lakh crore to Rs 53.16 lakh crore.

ü  India has the third-highest number of billionaires in the world, just behind China and the United States.

ü  There is a 39% increase in the number of billionaires in India in 2021.

Growing Poor: More than 4.6 crore Indians are estimated to have fallen into extreme poverty in 2020. This is nearly half of the global new poor according to the United Nations.

ü  Also, in the same year, the share of the bottom 50% of the population in national wealth was a mere 6%.

  • Unemployment in India has also increased.

CASE STUDY OF TWO GOVERNMENT PROGRAMS AIMED AT POVERTY REDUCTION

PRADHAN MANTRI GRAM SADAK YOJANA (PMGSY)

  • PMGSY, state-wise allocations are fixed based on pre-determined gaps in road infrastructure. That automatically ensures more money is released and roads get built.
  • PMGSY is less prone to leakage because it is a specific asset-focused programme.

MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME (MGNREGA)

  • MGNREGA is supposed to be demand or need-driven, the reality is that it is being successfully implemented only in better-governed states even with lower levels of poverty.
  • MGNREGA is general dole-based and not amenable to monitoring beyond a point.

MGNREGA may have a role in mitigating immediate rural distress on account of drought and other unforeseen calamities. But programmes like PMGSY provide more effective long-term poverty alleviation solutions, through raising overall productivity and expansion of non-farm employment opportunities.

BHAGWATI – SEN DEBATE

Bhagwati Model:

The idea in the book ” Why Growth Matters: How Economic growth in India reduced Poverty and lessons for other developing countries” is in consonance with Adam Smith’s theory of the invisible hand of the market. It believes that increasing the pie of growth can ultimately lead to an increase in income and consequent development. In other words, it believes in the trickle-down effect.

Amartya’s Sen Model:

The idea is propounded in his book ” An uncertain glory: India and its contradiction”. It proposes an increase in the capacity and capability of people as the prime mover of development. Thus Government needs to invest in public health, infrastructure, education and democratic participation. It fosters the idea of a bottom-up approach. The ability of each individual as a change agent. It is about empowerment.

THE WAY FORWARD: ELIMINATING POVERTY IN INDIA

FIXING MINIMUM WAGE

  • Guarantee each citizen a minimum wage consistent with a minimum standard of living.
  • In India in 1948, the Minimum Wages Act was passed in pursuance of which minimum wages are being fixed for agricultural labour and labour in what is called the ‘sweated trades’. This is a step which will level up the incomes from below.

SOCIAL SECURITY

  • Introduction of a comprehensive social security scheme guaranteeing to each individual a minimum standard of economic welfare.
  • The government includes progressively making school education free; ensuring reduced out-of-pocket expenses on health, and meeting global benchmarks of 6% and 3.5% of GDP on education and public health respectively.
  • Strengthening quality public healthcare, strict enforcement of the Right to Education norms, stopping the commercialisation of education and health, and an increased focus on gender budgeting.

PROMOTION OF LABOUR-INTENSIVE MANUFACTURING

  • The proportion of the labour force in agriculture has come down, but the workers who have left farms have not got jobs in modern factories or offices. Most are stuck in tiny informal enterprises with abysmal productivity levels.
  • If India could somehow reverse this trend and promote labour-intensive manufacturing then inequality could fall.

MORE INCLUSIVE GROWTH

  • The promotion and adoption of an Inclusive Growth Agenda is the only solution to the rising inequality problem. Economic growth which is not inclusive will only exacerbate inequality

SKILL DEVELOPMENT

  • The development of advanced skills among the youth is a prerequisite if India wants to make use of its demographic dividend. The skilling of youth by increasing investment in education is the only way we can reduce inequality. India needs to become a Skill-led economy

PROGRESSIVE TAXATION

  • Higher taxes on the Rich and the luxuries will help reduce income inequalities.
  • Getting the richest one per cent in India to pay just 0.5 per cent extra tax on their wealth could raise enough money enough to increase government spending on the heath by 50 per cent

EQUAL OPPORTUNITY FOR ALL

  • The Government may devise and set up some sort of machinery which may provide equal opportunities to all rich and poor in getting employment or getting a start in trade and industry.
  • In other words, something may be done to eliminate the family influence in the matter of choice of a profession. For example, the government may institute a system of liberal stipends and scholarships, so that even the poorest in the land can acquire the highest education and technical skill.

LEARN FROM OTHER COUNTRIES

China’s case study

  • Meta’s narrative for China’s economic development is that its leadership combined the drive for growth with the spreading of human capital.
  • As the human capital endowment was relatively equal, most people could share in this growth, which accounts for the relative equality of outcomes in China when compared to India.
  • The greater participation of women in the workforce of China

THE CONCLUSION:

India’s dominant economic growth over the last 30 years continued to pull millions of people out of poverty. Due to the unexpected impact of COVID-19, India experienced a spike in its poverty rate. Moving forward, the elimination of poverty in India over the next decade is within reach in spite of the challenges ahead.Rapid economic growth and the use of technology for social sector programs can help make a significant dent in extreme poverty in the country.