30 January 2021: The Hindu Editorial Analysis

1) A Budget blueprint for difficult times.

Alarming inequality, failing health care and border tensions loom large and the economic situation needs full attention.

GS-2: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources. Issues relating to poverty and hunger.

GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Inclusive growth and issues arising from it. Government Budgeting.

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CONTEXT:

1. The impact of the COVID-19 induced lockdown cannot be understood merely through headline macro-economic numbers of Gross Domestic Product (GDP), stock market indices.
2.  The country prepares to enter a new financial year after an ominous and gloomy 2020-21; there are great expectations about green shoots and the shape of the economic recovery.
3. The inequality between the haves and the have-nots, which can turn into a permanent scar if not remedied urgently, the industrial activity indices or any such measure. COVID-19 has destroyed lives and incomes.

 

India Missed opportunities:

1. The sudden onslaught and rapid spread of COVID-19 have devastated most nations. The ambition to make India a US$ 5 trillion economy by 2024-25.
2. If India has higher inflation and high debt than the US, the rupee would depreciate vis-à-vis the dollar to account for that.
3. The contribution Loss of the Aviation Sector and Tourism to our GDP stands at about 2.4% and 9.2% respectively. The Tourism sector served approximately 43 million people in FY 18-19.
4. The impact of corona virus pandemic on India has been largely disruptive in terms of economic activity as well as a loss of human lives.

 

MEASURES FOR THE NEW NORMAL:

1. India’s unique conditions of a large migrant and informal workforce could have reduced the deep distress in the labour market.
2.  A responsible and generous fiscal aid package would have soothed millions of struggling families, brought food to starving homes and contained widening inequality.
3. India announces $22.5 billion stimulus package to help those affected by the lockdown.
4. The Reserve Bank of India’s actions to supply enough liquidity was laudable, but they were inadequate.
5. The demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) programme. providing work at minimum wages to anyone that asked.
6.  Total work demanded under MGNREGA in 2020-21 is 53% higher than last year. The optimism about headline economic recovery in the last few months seems hollow when we realise that nearly 35 million people have requested MGNREGA work in the months of December and January
7.  Continued high demand for MGNREGA work at subsistence wages is a clear sign that there is no true economic recovery, let alone a ‘V’ or any other letter shaped.
8.  The top 50 companies increased their market wealth by nearly ?3,00,000 crore ($40 billion) during this time.
9.  The excess liquidity pumped in by central banks is finding its way to asset markets, including India’s stock markets, driving it to unreasonable highs.
10.  If the stock market exuberance were to benefit the broader economy and most Indians, then it is welcome.

 

 

Threats for Economy:

1. The prices and supply shocks have also led to a rise in consumer price inflation. Rising inflation will inevitably force the RBI to tighten interest rates or at least pause the lowering of rates.
2. A tighter monetary policy carries the risk of slowing down private investment, with the consequential effect of lackluster growth in jobs and wages. India’s macro economy is, thus, precariously poised and needs deft handling.
3. About 85% of these NPAs are from loans and advances of public sector banks. For instance, NPAs in the State Bank of India are worth Rs 2.23 lakh crore.
4. The government’s fiscal situation is bleak/bad ,The fiscal measure to aid the needy is to embark on a large-scale public investment programme that can stimulate economic activity, create jobs and revive demand.

 

Weaknesses of Indian Economy:

1. The external sector could be a potential saviour of India’s economy as global trade grows from its post-COVID-19 lows.
2. Over the past three decades, a surge in labour intensive exports has been the predominant driver of growth in jobs and wages for millions of high- and low-skilled Indians.
3. The slowdown in exports and the misplaced aversion to two-way external trade will further harm the livelihoods of many Indians.
4. India’s fiscal policy response to the COVID-19 shock has been underwhelming. The lack of a basic minimum income safety net to cope with the shock has plunged millions of families into poverty.
5. As of December, 12 million adult Indians have dropped out of the labour force compared to last year when, given India’s demographic profile, there should have been a net addition to the labour force.
6.  Unemployment in the formal sector too is very high. Most supply-side measures such as the government’s corporate tax cuts, loan moratoriums, and guaranteed credit schemes seem to have helped corporate to boost their profits and reduce their debt.
7. The demonetization, muddled Goods and Services Tax, the government has sought to thrust ill-thought policies such as the controversial farm laws on the nation, with no consultation or discussions.
8. The agriculture has also been wrecked with rising anger among farmers, confusion over farm produce procurement, doubts over the continuation of Minimum Support Price, and a loss of trust between farmers and the government.

 

The non-negotiable for coming budget:

1. The government had budgeted to collect tax revenues of ?16-lakh crore in 2020-21. Eight months into the year, the government has been able to collect only ?7-lakh crore in tax revenues at the end of November 2020.
2.  The government had budgeted to spend ?30-lakh crore this financial year and is on track to fulfilling, and even possibly exceeding, its expenditure budget.
3.  The reality of an unequal economic recovery, a misconceived trade policy and a perilous fiscal situation, the government will have to unveil its economic plan for the next financial year.

 

4. The COVID-19 pandemic has exposed the multiple lacunae in India’s public health infrastructure and served a stern warning that nothing is more important than increasing health-care expenditure and ramping up the health infrastructure.
5. The central government’s Ministry of Health and Family Welfare’s budget has to increase from the current levels of roughly ?70,000 crore (2% of total expenditure in 2020-21) to at least ?1,00,000 crore.
6. India must immediately shore up its defence preparedness and be ready to defend its borders. India’s defence expenditure as a share of GDP has been falling.
7. The government must increase defence expenditure from the current level of 1.6% of nominal GDP to 3% of nominal GDP in the next year, keeping in mind that the GDP will be lower than the level attained in 2019-20.
8. The bankers are willing to lend and borrowers especially corporates are willing to make fresh investments.
9. A rising interest rate environment, a financial sector choked with record non-performing loans and weak consumption demand implies that a pick up in private investment cannot be assured.
10. The central government’s capital expenditure must be increased significantly from the level of ?4 lakh crore (14% of total expenditure) in 2020-21 to at least 20%-25% of total expenditure.

 

A time for basic income safety net:

1. There is an immediate need for a basic income safety net for the bottom half of India’s families for a six-month period, similar to the Congress party’s NYAY (or Nyuntam Aay Yojana/Minimum Income Support Programme) idea.
2. We believe that an unconditional monthly cash transfer to the needier segments of the population will be the most efficient way to alleviate their miseries fastest.
3.  Fiscal deficit and the threat of international ratings cannot dictate India’s economic policy in current times of deep distress when lives, livelihoods and the nation’s security are at stake.
4.  The situation is so grim that it is not the time to experiment or play loose. Given the dire situation and the government’s penchant for rash policy announcements without a due consultative process,
5.  It is best to self-impose a moratorium on new laws, ordinances or bills for the next one year. For the sake of the nation’s future, we hope the government will embark on steering the economy in the right direction.

 

Credit: India Today

 

CONCLUSION:

1. Public investment must step in to do the heavy lifting and pull the economy from its current dismal state. Expanded public investment can provide jobs and stimulate demand, the two most pressing needs of the country today. 
2. For the sake of the nation’s future, we hope the government will embark on steering the economy in the right direction

 

2) A champion of science, pro-poor technology

C. Subramanian’s call for ‘science for the economic freedom of humanity’ echoes on his birth anniversary today.

GS-3: Science and Technology- developments and their applications and effects in everyday life.

GS-3: Achievements of Indians in science & technology; indigenization of technology and developing new technology.

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CONTEXT:

1. The year 1910 was very significant for India and science. This was the year two great Indian stars, the astrophysicist, Dr. Subrahmanyan Chandrasekhar, or SC, and C. Subramaniam, or CS, were born.
2. ‘Science for the economic freedom of humanity’ two great man  was importance in the evolution of stars in the universe.

 

ABOUT:

Dr. Subrahmanyan Chandrasekhar:

1. He worked on a variety of topics like stellar structure, stellar dynamics, white dwarfs, radiative transfer, and stochastic process, the quantum theory of the hydrogen anion, equilibrium and the stability of ellipsoidal figures of equilibrium, turbulence, hydrodynamic and hydromagnetic stability, general relativity, theory of colliding gravitational waves, and the mathematical theory of black holes.
2. He is most famous for what is called the Chandrasekhar Limit. While at Cambridge, he outlined a theoretical model that explained the structure of white dwarf which considered the relativistic variation of mass with velocities of electrons that comprise their degenerate matter.
3. In 1983, he received the Nobel Prize in Physics for his work on the physical processes important to the structure and evolution of stars.He has received numerous other awards. NASA named one of its 4 great observatories after the scientist, called Chandra X-ray Observatory.

 

Chidambaram Subramaniam:

1. Mr. Subramaniam was concerned about the problem of food security in India. He sowed the seeds of the Green Revolution in Indian agriculture.  And an architect of public policy for Indian science and of the ‘Green Revolution’ in the country.
2. As Minister for Food and Agriculture, he introduced high-yielding varieties of seeds and more intensive application of fertilizers which paved the way for increased output of cereals and attainment of self-sufficiency in food-grains in the country. About his contribution,

 

Food sufficiency goal (Mr. Subramaniam):

1. Mr. Subramaniam and his super ordinate national goals, probity in public life and institutional mechanisms.
2. When India faced the reality of ship-to-mouth status in the 1960s  when a few million tonnes of grain were imported —a superordinate goal that India became self-sufficient in food in five years was set.
3. The goal was realised and has been sustained since then. After the Green Revolution, the site used for storing food grains became the Technology Bhavan that continues to house the Ministry of Science and Technology;
4. He serves as a reminder to scientists that the purpose of public investments in science must include its duty to ensure social and public good.
5. The beneficiary of the long-term impacts of CS’s several contributions to education, agriculture, science and technology to name a few.
6. He was one of the architects of modern India and relied on evidence-based approaches in decision making. Transparency and probity were his powerful tools.
7. The blueprint for linking science and technology to the development path of India was cast by CS even before the formation of the dedicated Science and Technology Ministry.

 

 

The agro foundation:

1. He realised that the economic freedom of every citizen of India was heavily reliant on the 4Es: Education, Environment, Economy and Empowerment of our farmers.
2. The National Agro Foundation (NAF) was his gift to the nation on his 90th birthday; NAF institutionalized his will through farmer-centric programmes.

 

CONCLUSION:

1. The novel corona virus pandemic has pushed millions of people below the poverty line. The best way to pay tribute to a patriot like Mr. Subramaniam is to connect to science and see to it that it brings succor to the poor.
2. He was a revered promoter of scientific temper and a shining Ratna of Bharat. His call for “science for the economic freedom of humanity”
3. Dr. Chandrasekhar was concerned about processes of importance in the evolution of stars in the universe, but Chidambaram Subramaniam make human as stars through empowering them.