03 Aug 2020: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: ECONOMY

1. Rebuild India’s confidence, revive the economy

Context:

• The article co-authored by the former Prime Minister Dr Manmohan Singh discusses the economic impact of the COVID-19 pandemic and suggests a few policy measures to address this challenge.

Background:

Economic impact of the pandemic:

• India entered the COVID-19 crisis in a precarious position, with slowing growth, rising unemployment and a strained financial system. The epidemic has made it more painful.
• The COVID-19 pandemic and the subsequent regulations have had adverse impacts on livelihoods and the larger economy. The economic impact of COVID-19 is expected to be bigger than the health impact itself.
• The global economy is expected to experience one of its worst years in history and the Indian economy is expected to contract significantly for the first time in many decades.
• Economic contraction does not just imply a decrease in GDP numbers but marks a reversal of years of progress.
  • The economic contraction will lead to a significant number among the weaker sections of the society slipping back into poverty.
  • Many enterprises may be forced to shut down.
  • Severe unemployment may lead to wastage of the human resource of an entire generation.
  • The economic contraction and the subsequent shortage of financial resources will adversely impact the state’s ability to feed and educate the children.
  • The impact of an economic contraction would be especially severe on the poor and the vulnerable sections.
• There is also the underlying sentiment of fear, uncertainty and insecurity prevalent in people, firms and institutions.

Way forward:

• The article argues that the slowdown in economic activity is a function of both external factors such as the lockdown and behavioural changes of people and enterprises, driven by fear, and calls for definitive and urgent steps to revive the economy back to good health.
• The article argues that the key to reviving India’s economy would be to inject confidence back in the entire ecosystem involving the people (consumers), entrepreneurs and the bankers.
• The path to sustained recovery is to improve confidence and sentiments in society, using economic tools of fiscal and monetary policies.

Cash support:

• The record number of people demanding work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) programme at minimum wages despite the robust agricultural activity seems to be indicative of the extreme duress among India’s poor.
• The article argues that despite the additional budgetary allocation for the MGNREGA programme it may not be enough and argues the case for direct cash assistance for the poor.
  • India is perhaps the only large democracy that has not provided direct cash assistance of a significant amount during the COVID-19 crisis.
• Money in the hands of people can provide an immediate sense of security and confidence for the poor.
• The article argues that the apprehension that providing large cash assistance may deter people from returning to the workforce when needed and starve industry of labour is unfounded. The experience in other economies like the U.S. points otherwise as, despite extensive government aid to the unemployed, people were still looking for work.

Addressing financial system challenges:

• The article calls for restoring confidence in the financial system.
• COVID-19 assistance measures undertaken by the Reserve Bank of India (RBI) and the government such as interest rate reductions, credit guarantee and liquidity enhancement schemes, though are welcome steps, may prove to be ineffective since banks are not confident of lending.
• The revival of the health of the banking sector must, apart from involving steps such as capital infusion and disinvestment of public sector banks,  also involve allowing institutions such as the RBI, public sector banks, bankruptcy boards, securities and insurance regulators to function freely and professionally.

Restoring confidence among investors:

• Entrepreneurs must feel confident about reopening and making investments.
• The confidence among people to spend and among bankers to lend will induce confidence in the private sector to reopen and invest.
• Restoring confidence among businesses with greater access to capital will help them invest and create jobs. Providing credit guarantee schemes for corporates would prove helpful in this direction.

Guarding against hasty decisions:

• The article argues against knee-jerk reactions such as protection of Indian industry through trade restrictions. This would not be able to catalyse economic activity immediately and also would mark a dangerous reversal of established industrial policy that has generated enormous economic gains over the last three decades.

Ensuring financial resources:

• Improving capital adequacy of banks and providing credit guarantee schemes for corporates would require significant financial resources.
• Given that the government is facing a major shortfall in revenues and that new avenues for tax revenues are not feasible in the short term, higher borrowing by the government is inevitable.
• The article argues that the government cannot afford to be too fiscally restrained in these distressing times.
• India can make full use of loan programmes of international institutions such as the International Monetary Fund and the World Bank.
• Deficit monetisation by the RBI, which involves printing money, must only be used as the last resort when all other options are exhausted.

Category: EDUCATION

1. A policy with many a right intention

Context:

• The approval of the new National Education Policy by the Union Cabinet.

Details:

• A majority of the path-breaking proposals submitted by the K. Kasturirangan Committee, in the 2019 draft National Education Policy, have been approved while a few important proposals that figured in the draft have been ignored in the final policy.
• The article notes that the National Education Policy, 2020 though has several innovative and bold proposals, it also makes a few problematic assumptions.

Significance:

Education as a public good:

• The NEP, 2020 has statements such as “education is a public good” and “the public education system is the foundation of a vibrant democratic society”. The policy envisages substantial investment in a strong, vibrant public education system.
• The recognition of education as a public good would have important implications for public policy in planning, providing, and financing education. This would help ensure the state taking initiatives to ensure education for all sections of society. This would ensure accessibility, affordability of quality education for all.
• Public education contributes immensely to the social, economical, political, cultural and technological growth of the nation.

Emphasis on holistic education:

• The NEP 2020 promotes holistic education involving both academic and non-academic spheres, emphasizing even on extra-curricular activities.
• In school education, a National Assessment Centre will help make assessment and evaluation more holistic.

Early childhood care and education (ECCE):

• The approval of the 5+3+3+4 system in school education incorporating early childhood care and education and the provision of breakfast in the school meal programme would play a significant role in ensuring better learning outcomes and nutritional security among the children.

Reforms in higher education:

• The reforms proposed in higher education like the inclusion of a multidisciplinary college system offering choices to students from among a variety of subjects from different disciplines, the vision of an integrated higher education system involving the undergraduate, postgraduate and research levels would ensure more industry-oriented education. This can help bridge the skill gap among the job market entrants.
• The overhauling of the governance structure in higher education with just one regulatory body for the entire sector in the form of Higher Education Commission of India would ensure a light but tight regulation of the higher education sector. The revamping of the University Grants Commission and abolishing of the affiliating system were long due reforms.
• The policy facilitates selective entry of high-quality foreign universities which could play a significant role in improving the quality of education in India.
• The NEP 2020 promises to provide higher education free to about 50% of the students (with scholarships and fee waivers) while also aiming to increase the gross enrolment ratio in higher education to 50% by 2035.
• The establishment of a model Multi-Disciplinary Education and Research University in every district would help ensure more inclusivity in the higher education sector.

Language policy:

• The language policy of the NEP 2020 which states that wherever possible, the medium of instruction until at least Grade 5, will be the home language/mother-tongue/local language/regional language is a bold step forward which will help reduce elitism and dualism in schools.
• The NEP 2020 also says the three-language formula will be implemented. The three-language formula will promote national integration.

For more information on the significance of the NEP 2020, refer to:

CNA dated July 31, 2020

Concerns:

• The NEP, 2020 fails to address the issue of commercialization of education which had been dealt with in the draft policy. The article argues that the policy seems to be based on some untenable basic beliefs and assumptions like the faith in “light but tight” regulation, confidence in the private sector in making honest self-disclosures of all aspects of their operations.
• While 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.
• The draft policy had recommended setting up of a National Education Commission at the national level and a similar one at the State level. However, there is no mention of State School Education Regulatory Authorities in the 2020 policy.
• The policy seems to avoid taking bolder moves like the common school system, which would have been a greater equaliser.
• The article argues that despite the bold reforms envisaged, implementation of these reforms would be the real challenge given the fact that policymakers and administrators have been struggling unsuccessfully with issues like doing away with the affiliating system, ensuring institutional and functional autonomy.