Gist of EPW March Week 2, 2023

The Economic and Political Weekly (EPW) is an important source of study material for IAS, especially for the current affairs segment. In this section, we give you the gist of the EPW magazine every week. The important topics covered in the weekly are analysed and explained in a simple language, all from a UPSC perspective.

TABLE OF CONTENTS

1. Industry 4.0
2. Informal employment
3. Demand Elasticities of Pulses in India

1. Industry 4.0

What is Industry 4.0?

• Industry 4.0 refers to the fourth industrial revolution.
  • The first industrial revolution came with the advent of mechanisation, steam power and water power.
  • This was followed by the second industrial revolution, which revolved around mass production and assembly lines using electricity.
  • The third industrial revolution came with electronics, I.T. systems and automation. 
  • Industry 4.0 combines manufacturing technologies and IT like the Internet of Things, artificial intelligence and machine learning, mixed reality, and 3D printing to expedite processes and optimise businesses. 

Image: Industrial Revolution

Source: bismarckstate.edu

Read more on the first industrial revolution in the linked article.

Opportunities offered by the Fourth Industrial Revolution: 

• It will play a very important role in the process of data analytics. Cloud computing, which delivers data storage, computation, and networking over the internet, is made available by running information technology (IT) hardware like servers/processors and local data centres along with software applications. This has been made possible by the tremendous advances in semiconductor chips and software. 
• With the help of industry 4.0, all the transactions will take place in a secure and transparent manner. 
• The advances in cloud computing and data analytics are driving significant progress in machine learning and artificial intelligence algorithms/software, which enable drawing out insights and patterns from large sets of voluminous data/big data.
• It also helps in improved productivity and efficiency, better flexibility and agility, and increased profitability. Industry 4.0 also improves the customer experience, including through more personalised and intelligent products.
• Industry 4.0 technologies enable you to do more with less. In other words, increasing throughput while allocating your resources more cost-effectively and efficiently.
• It will enable people to have access to better data to give them enhanced oversight as well as the ability to take data-driven decisions.
• Complying with regulations doesn’t have to be a manual process in industries like pharmaceutical and medical device manufacturing. Instead, Industry 4.0 technologies make it possible to automate compliance, including track and trace, quality inspections, serialisation, and data logging. 
• Digital transformations across sectors will therefore lead to a significant increase in direct and indirect demand for electronics products. It will thus help in meeting India’s target of electronic independence. 
  • Electronics system design and manufacturing (ESDM): 
    • Imports  of electronics and other software-embedded products/machinery as a whole 
    • Imports of their parts and components if the national policy mix primarily incentivises domestic assembly production.

Limitation of the industrial revolution: 

• With the advent of the industrial revolution, there is the likelihood that inequality would be increased. The top 10% of the Indian population holds 77% of the total national wealth. 73% of the wealth generated in 2017 went to the richest 1%.
• The risk of cyber security would increase manifold under the influence of the new era. India, being a developing country where lots of people are digitally illiterate, this scenario would further lead to a rise in cybercrime cases. 
• The initial costs of inducing these technologies are very high which would require big investments. This would limit the scope of expansion for countries like India.

Image: Challenges of Industry 4.0

Source: radixweb.com

 Industrial revolution 4.0 opens up various opportunities for developing countries like India. But, these opportunities are fully materialised only when the data of the consumers are secured and their privacy is maintained. 

2. Informal employment

What is informal employment? 

• Informal sector refers to those economic activities which do not guarantee any statutory benefits to the workers working therein. In other words, these are those sectors that in themselves are legal but not declared to the authorities for tax, social security and/or labour law purposes. However, they play an important role in virtually all economies.
• According to various stats, nearly 90% of the workers work in the informal sector of the economy.

Image: Form of informal employment

Source: researchgate

What are the recent causes of the informalisation of the economy? 

• The government’s decision to demonetise the big currency notes was one of the reasons for the rise in the informal economy. Following the demonetisation in November 2016, there was an exodus of migrant workers from the cities.
  • Multiple policy shifts on cash withdrawals, and delay in pumping back currency notes into the economy, had disrupted and stalled employment, livelihood and spending, especially for the informal labourers. Small and medium industries customarily pay the informal workers in cash.
  • For a few days the workers were paid, but facing an acute cash crunch, they were then left to themselves. 
• The outbreak of the COVID crisis and the resultant lockdown was the second reason for the further rise in the informal economy. 

Impact of demonetisation: 

• The Centre for Monitoring the Indian Economy (CMIE) estimated that about 12 million people were immediately affected by the demonetisation policy, and even thereafter 3.3 million people permanently lost their livelihoods.
• Small businesses were even more adversely affected by the new indirect tax regime, the goods and services tax (GST), introduced in 2017.
• There was a big fall in the labour participation rate (LPR for people of working age who are looking for work or working), especially among the youth and particularly, young women. 

Impact due to the COVID crisis: 

• Education had taken a severe hit during the COVID crisis. A lot of people were left uneducated as a result of covid. A majority of them fell in the category of vulnerable sectors of society. 
• Of the total sample studied, around two-thirds of the female workers had education up to Class 5 or less, and 44% had no schooling. Not a single female worker had a diploma, two were 12th pass and one was a graduate.

 IMAGE: distribution of women according to income

Source: EP&W

• Of the total sample studied, 90% of the workers are from what is loosely referred to as the marginalised sections of the Indian social structure. 
  • Of the total 12 graduate workers, five belonged to the SC and three were Muslims. This indicates the impact of the dep­ressed labour markets on the marginalised youth, who disproportionately bear the ­economic burden.
• Another big problem was the lack of alternative employment opportunities open to vulnerable sections of workers.

Steps needed to reduce the impact of the informal economy: 

• Imparting marketable skills to the people of the backward region through mapping of the population. 
• Creating sources of employment in the formal sector of the economy. 
• Devising various policies for the welfare of the platform workers whose numbers are consistently rising due to the rise in various e-commerce platforms. 

Informalisation of the economy is the biggest problem in the process of achieving the target of Sustainable Development Goals (SDGs). It is high time that the government takes steps to reduce the number of people working in the informal sector of the economy so that they get the benefits of the labour market and thus become part of inclusive growth. 

3. Demand Elasticities of Pulses in India

State of pulse production in India:

• India is the largest producer and consumer of most of the pulses in the world. 
• But, the pulses productivity at 1 tonne per hectare is far less in India than other pulses-producing major countries in the world like Canada, where it is around 2 tonnes per hectare.
• Additionally, pulse production in India is less remunerative in comparison to other crops as a result of which low amounts of pulses are grown in the country giving way to more remunerative crops. 
• The market prices of pulses have shown consistently rising trends, resulting in a slow increase in pulses consumption across the country’s households.

Changes occurring in the contemporary situation: 

• The economic development in India has brought in dietary diversification and has resulted in significant changes in the composition of the food basket of a consumer. A drift towards the pulses are seen in the dietary composition of the people. 
• Additionally,  the central government and state governments are planning to introduce pulses through the social safety net programmes to enhance the nutritional security of the poor and vulnerable population. 
  • National Nutrition Strategy, 2017 was launched by the Government of India keeps pulses at the centre of the dietary plan. 
• Due to the rise in average income of the people in the country the consumers are moving towards a high range of commodities which are capable of offering high nutritional capabilities. 
  • With increasing disposable incomes and improving living standards, a general trend of increasing intake of protein is emerging. The pulses have been the highest contributor to dietary proteins, next to cereals.

Image: Annual per capita consumption of pulses

Source: EPW

• Consumer expenditure for 2011, shows that there is an upward trend in consumption of total pulses between 2004 and 2011. The pulses consumption increased from 8.93 kilogram (kg)/capita/year in 2004 to 9.90 kg/capita/year by 2011 at all-India level. During 2004 and 2011, the per capita annual consumption of pulses increased from 8.62 kg to 9.54 kg in the rural households (an increase of 10.7%) and from 9.54 kg to 10.48 kg in the urban households (an increase of 9.9%) in India.

Consumption trends of major pulses:

• Chickpea, pigeon pea, mung bean, and black gram are the major pulses consumed in India that constitute about 70%–75% of total consumption of pulses at the household level. 
• Among them, pigeon pea accounts for the highest share (29.3%), followed by chickpea (20.2%), mung bean (14.7%), and black gram (11.1%) in 2011. However, lentil plus group accounts for a substantial share (24.7%) in the total pulses consumption.

Image: percentage share of major pulses

Source: EPW

• There is a regional preference for pulses in India, for example, pigeon pea in Andhra Pradesh, Telangana, and Gujarat; lentil plus and chickpea in Bihar are consumed the most.

Contribution of pulses to nutrition:

• Pulses contain two to three times more protein than cereals and are a rich source of minerals and vitamins. The share of pulses in total calorie intake in India accounted for 3.80% in 2004 and 4.47% in 2011.
• The contribution of pulses to total protein intake is estimated to be 10.9% in the country as a whole. 
• There has been a slight increase in pulses contribution to total protein as observed in 2011 over 2004. So, the overall share of pulses, in terms of both calories and protein, has shown a positive upward trend because of the increase in total pulses’ consumption.

Image: Intake of total calories and pulses 

Source: EPW

Demand elasticities for major pulses:

• Pulse consumption responds more to income changes among the poorer households than among middle income and richer households. 
• Hence, as states in India become more successful in their drive towards poverty alleviation, a higher demand for pulses can be expected to come from the low income households, which comprise the bulk of the Indian population.

Pulses constitute one of the important parts of the dietary pattern and contribute towards nutrition enhancement. It is becoming part of the food habits of the people. So, it is cardinal that the government take steps to reduce volatility in the price of the pulses which has a potential to discourage its consumption. Providing statutory support to the farmers could pave the way towards enhancing its production and reducing uncertainty around its pricing. 

Read previous EPW articles in the link.

Gist of EPW March 2023 Week 2:- Download PDF Here