IASCLUB Daily Current Affairs : 05 July 2019

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‘Raise age for retirement’

Topic: GS–II: Social Justice  

India may have to raise the retirement age as the country sees a rapid increase in the size of the elderly population over the next two decades due to the slowing down of the population growth rate, according to the Economic Survey.

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  • Survey says the elderly population is expected to nearly double from 8.6% in 2011 to 16% by
  • It is forecast that the population rate will grow less than 1% from 2021 to 2031 and under 0.5% from 2031 to 2041. This is primarily due to the fall in the total fertility rate (TFR), which is projected to decline between 2021-2041 and fall below replacement level fertility at 1.8 as early as 2021.
  • The total fertility rate of 1 is called the replacement level fertility below which populations begin to decline. For India, the effective replacement level fertility is slightly higher than the normal benchmark due to the skewed gender ratio and is at 2.15-2.2. The current TFR in 14 out of the 22 major States is already below the effective replacement level fertility.
  • At the State level, southern States as well as West Bengal, Punjab, Maharashtra and Himachal Pradesh have below replacement level fertility and will see TFR decline to 1.5-1.6 by 2021. And by 2031, all States are likely to see below replacement level fertility.
  • The size of the elderly population, 60 years and above, is expected to nearly double from 8.6% in 2011 to 16% by 2041, whereas the population size of those between 0-19 years, which is on the decline, is likely to drop from as high as 41% in 2011 to 25% by 2041.
  • This will throw new policy challenges such as provision for health and old-age care, access to retirement-related financial services, public pension funding, and retirement age, states the survey.
  • “Increasing the retirement age for both men and women going forward could be considered in line with the experience of other countries. This will be key to the viability of pension systems and would also help increase female labour force participation in the older age-groups,” it suggests.
  • Many countries such as the U.S., Germany and France have already raised the retirement age to reduce the burden on pension funding.
  • The working-age population is expected to see a large increase leading to India’s demographic dividend peaking around 2041, when the share of those in the age group of 20-59 is expected to hit 59%.
  • The survey highlights that this will mean additional jobs will have to be created to keep pace with annual increase in working-age population of 9.7 million during 2021-31 and 4.2 million during 2031-41.

Needed: a well-designed minimum wage system

Topic: GS–II: Social Justice  

 A well-designed and streamlined minimum wage system is required to reduce wage inequality in the country, the Economic Survey says.

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  • Currently, the minimum wage system, under the Minimum Wages Act, 1948, in India is complex, with 1,915 different minimum wages defined for different job categories across States. Despite the complex system, workers were still falling through the gaps.
  • According to the International Labour Organisation, One in every three wage workers in India is not protected by the minimum wage law.
  • For instance, the survey stated, domestic workers were covered under minimum wage laws in only 18 States and Union Territories. It also pointed out that while the law did not discriminate between men and women, analysis of different wages showed a bias.
  • “For instance, women dominate in the category of domestic workers while men dominate in the category of security guards. While both these occupations fall within the category of unskilled workers, the minimum wage rate for domestic workers within a State is consistently lower than that for the minimum wage rates for security guards,” the survey said.
  • Apart from increasing the ambit of the minimum wage system, it recommended deciding minimum wages on the basis of skills and split across geographical regions. With the government in the process of bringing the Code on Wages Bill in Parliament, the survey said the rationalisation of minimum wages proposed by the Bill should be supported.
  • The survey suggested the government should notify a “national floor minimum wage” across five regions, after which the States can fix their own minimum wages, but not lower than the floor wage.
  • This, it said, would bring uniformity and make States “almost equally attractive from the point of view of labour cost for investment as well as reduce distress migration.”
  • The floor wage is currently non-statutory.

Central welfare database of citizens

Topic: GS –II: Governance

The Economic Survey 2018-19, pitched for setting up a central welfare database of citizens — by merging different data maintained by separate Ministries and departments — which can be tapped for enhancing ease of living for citizens, particularly the poor.

Key points:

  • While the Survey pointed out that governments can create data as a public good within the legal framework of data privacy, it added that care must also be taken not to impose the “elite’s preference of privacy on the poor, who care for a better quality of living the most.”

Stringent safeguards

  • It also recommended granting access to select database to private sector for a fee, given that “stringent technological mechanisms exist to safeguard data privacy.”
  • The Survey noted that there had been some discussions around the “linking” of datasets, primarily through the seeding of an Aadhaar number across databases such as PAN database, bank accounts and mobile numbers. However, it clarified that the linking is “one-way.” For example, banks can use the tokenised Aadhaar number to combine duplicate records and weed out benami accounts, but this does not mean that the UIDAI or government can read the bank account information or other data related to the individual.
  • The principle is that most data are generated by the people, of the people and should be used for the people.
  • The Survey highlighted that the governments already held a rich repository of administrative, survey, institutional and transactions data about citizens, but these data were scattered across numerous government bodies. Merging these distinct datasets would generate multiple benefits with the applications being limitless.
  • The government could utilise the information embedded in these distinct datasets to enhance ease of living for citizens, enable truly evidence-based policy, improve targeting in welfare schemes, uncover unmet needs, integrate fragmented markets, bring greater accountability in public services and generate greater citizen participation in governance, etc.
  • The datasets talked about inclusion of administrative data such as birth and death records, pensions, tax records, marriage records; survey data such as census data, national sample survey data; transactions data such as e-national agriculture market data, UPI data, institutional data and public hospital data on patients.
  • On granting access to the public sector, the Survey said, “Consistent with the notion of data as a public good, there is no reason to preclude commercial use of this data for profit… Although the social benefits would far exceed the cost to the government, at least a part of the generated data should be monetised to ease the pressure on government finances.”

‘Aadhaar aided MGNREGS beneficiaries’

Topic: GS–II: Social Justice  

Refuting criticism of Aadhaar-linked payments and the direct benefit transfer system, the Economic Survey 2018-19 has used the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) as a case study to show the benefits of the use of technology in improving targeting and efficiency in welfare schemes, especially for the most vulnerable groups.

More in news:

  • Going forward, the Survey recommends that digital technology and the JAM troika — Jan Dhan, Aadhaar and Mobile — be expanded to other welfare schemes. The Survey cites data on the timeliness of wage payments, worker turnout, demand and supply of work under the scheme before and after Aadhaar-linked payments (ALP) were implemented as a proof for its benefits.
  • Data show that in 2014-15, less than 27% of wage payments were generated within 15 days. Direct benefit transfers were introduced two years later. By 2018-19, more than 90% of wage payments were generated within 15 days. “Payment delays drive away farmers in genuine distress, while others not in distress take the benefits.
  • The Survey also compared the MGNREGS performance in blocks affected by drought versus other blocks, using drought as a proxy for distress. In drought-affected blocks, the number of persons demanding work increased more than 20% after the implementation of ALP, while there was no effect in other blocks.
  • A similar trend is seen in the supply of work. Muster rolls, which are work site attendance registers, show a 19% increase after ALP implementation in most blocks. In drought-affected blocks, muster rolls increased by 44%.
  • The Survey suggests that going forward, “demand for work under MGNREGS may be used to develop a real-time indicator of distress at the granular district or panchayat level.” The Survey also recommends that other welfare schemes implement the lessons learnt from Aadhaar linkages in MGNREGS.
  • Scholarships, pensions, and subsidies for food, kerosene, and gas cylinders should be next in line to implement Aadhaar-based payments, it said.

Private funds needed for Swachh Bharat

Topic: GS–II:  Health

With the Centre claiming that 99.2% of rural India is now open defecation-free, the next big goal on the Swachh Bharat journey is the 100% safe and scientific disposal of solid and liquid waste, according to the Economic Survey 2018-19.

More in news:

  • It emphasizes that the large resources needed to reach this milestone and it will need to be met through crowd and corporate funding, private partnerships and innovative financing mechanisms along with government allocations.

‘Positive impact’

  • Progress in the first phase of the Swachh Bharat Abhiyan, focussing on toilet construction and use, had a positive impact on the health, economy and environment of rural India, citing a number of studies. However, these benefits will not be sustainable if solid and liquid waste management is ignored.
  • Currently, many States are not concentrating enough on this aspect which could pull us back to where we were a few years ago. Scientific techniques for the safe and effective disposal of waste should be the next on the agenda for this mission.
  • According to it, the scientific disposal of waste has a noticeable impact on “social development”, referring to the sanitation workers and manual scavengers who now work to dispose of waste, mostly in unscientific and unsafe ways.
  • Some of the areas which must be dealt with in this next phase are sewer construction and water availability, scientific techniques for waste disposal, treatment of industrial effluence, drain bio-remediation, river surface cleaning, sustained rural sanitation and monitoring of villages.
  • As the resource requirements are large, there is a need to facilitate and sustain innovative financing mechanisms by exploring the suitability of various financial instruments in specific contexts and interventions.
  • Some examples are micro-financing, concessional loans, private partnerships, corporate social responsibility, and crowd funding aligned with local government financing.

Mindset change

  • Apart from financial resources, mindset change is the other major ingredient required for sustained progress in sanitation. The swachhagrahis or village level ambassadors who have already been recruited for Phase 1 of the programme are key to maintaining momentum, it says, in keeping with its thrust on leveraging behavioural economics.

Economic Survey sets out blueprint for $5 tn economy

Topic: GS -III: Economic Development

The Economic Survey 2019 presented by Chief Economic Adviser (CEA) Krishnamurthy Subramanian focusses on moving to a “virtuous cycle” of savings, investments and exports to transform India into a $5 trillion economy in the next five years.

More in news:

  • According to the survey, India’s GDP is forecast to expand by 7% in fiscal 2019-20, slightly higher than the 6.8% in 2018-19.
  • In his preface to the survey, the CEA said the team had been guided by a “blue sky” thought process, an unfettered approach to thinking about the appropriate economic model for India.
  • “When the economy is in a virtuous cycle, investment, productivity growth, job creation, demand and exports feed into each other and enable animal spirits in the economy to thrive,” the survey’s authors wrote. “In contrast, when the economy is in a vicious cycle, moderation in these variables dampen each other and thereby dampen the animal spirits in the economy.”
  • In his first Survey, Dr. Subramanian highlighted the fact that private investment was a key driver for demand, capacity, labour productivity, new technology adoption, and for job creation.
  • “What we have tried to talk about is that investment is really critical; related to that is that investment by the private sector cannot happen unless there is no crowding out because of the government,” the CEA said at a press conference.
  • Further, he said, implicit in the emphasis on private investment was the fact that the government had and would stick to its fiscal consolidation glide path. It has committed to a fiscal deficit of 3.4% of GDP in 2019-20, and 3% each in the subsequent two years.

Fiscal glide path

  • “Implicit in the emphasis on private investment, what we are also talking about is sticking to the glide path, which over the last five years we have done a very good job of,” Dr. Subramanian said. “And, therefore, we anticipate that is the path we would continue on. We will be sticking to the fiscal path.”
  • Moving the economy into a virtuous cycle would require the adoption of certain practices and norms on data, legal reforms and policy certainty, and some micro-economic aspects such as boosting MSMEs and reducing the cost of capital.

Better contract enforcement

Topic: GS -III: Economic Development

Contract enforcement remains the single biggest constraint to improve India’s Ease of Doing Business (EODB) ranking, which currently stands at 163 in the world ranking, the Economic Survey 2018-19 said.

More in news:

  • It remarked that in spite of a number of actions to expedite and improve the contract enforcement regime, economic activity was affected by the long shadow of delays and pendency across the legal landscape.
  • Noting that the relationship between economic governance and the rule of law (Dandaniti) is the key to prosperity, and a bulwark against Matsyanyaya (law of the fish/jungle), the survey said two key issues need to be dealt with in order to make the judiciary more efficient and to clear the ‘legal logjam.’
  • Firstly, the courts must achieve a 100% case clearance rate (CCR) so that there is zero accumulation to the existing pendency. Secondly, the backlog of cases already present in the system must be removed.
  • CCR is the ratio of the number of cases disposed of in a given year to the number of cases instituted in that year.
  • District and Subordinate (D&S) courts, which account for the bulk of pendency, received 1.5 crore additional cases in 2018 and had a backlog of 2.87 crore (as on January 1, 2018).
  • But it managed to dispose of 1.33 crore cases in the year, thus, closing 2018 at 3.04 crore.
  • There are currently 17,891 judges compared to the sanctioned strength of 22,750. On average, a judge disposes of 746 cases.
  • “In order to reach 100% CCR in 2018, the D&S courts needed 2,279 additional judges. This is within the sanctioned strength! However, in order to clear all the backlog in the next five years, a further 8,152 judges are needed,” the survey said.
  • It suggested improving the efficiency of the courts, increasing number of working days of courts, establishment of Indian Courts and Tribunal Services, and deployment of technology in legal system.
  • “Given the potential economic and social multipliers of a well-functioning legal system, this may well be the best investment India can make,” it said.

Water productivity

 Topic: GS -III: Economic Development

 The Economic Survey 2018-19 has said as far as agriculture is concerned, the country should shift its focus from land productivity to irrigation water productivity and on devising policies to incentivize farmers to adopt efficient ways of water use.

More in news:

  • Agriculture remains the predominant occupation in terms of number of people employed. Also, agriculture is dependent highly on water. So, appropriate mechanism needs to be framed for economical use of water among small and marginal farmers.
  • The cropping pattern in India is highly skewed towards crops that are water-intensive.
  • The incentive structures like minimum support price, heavily subsidised electricity, water and fertilizers have played a significant role in the misalignment of crop patterns in the country.
  • The water guzzlers, paddy and sugarcane, consume more than 60% of irrigation water available in the country, reducing water availability for other crops.
  • The survey said States such as Tamil Nadu, Karnataka, Maharashtra and Andhra Pradesh, which have high land productivity, tend to have very low irrigation water productivity, reflecting inefficient use of water and the need to re-calibrate cropping pattern.
  • Adopting improved methods of irrigation and irrigation technologies will have a critical role in increasing irrigation water productivity.

Editorial section:

 Expanding India’s share in global space economy – The Hindu

Blue-sky visions – The Hindu

Raising the bar – The Hindu

Talking sanctions, endangering peace – The Hindu

An upbeat tone amid tensions – The Hindu



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