24 Feb 2020: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: SCIENCE & TECHNOLOGY

1. Limits of funding: on private sector research funding

Introduction

• The architects of India believed that for India to prosper, investment in science and technology was essential. To provide wings to its future aspirations the government invested heavily in atomic energy, space sector and IIT’s. During this period the investment was largely from the Govt. with limited participation from the private sector.
• Publicly-funded research was encouraged to reinvent the wheel and customise technology to Indian realities, whereas private companies and industrial firms have rarely been incentivised to develop their own intellectual property.
• It was only in the 2000s the Govt. decided on persuading the private sector to invest more in R&D.

Stats

• Public institutions contribute the lion’s share of R&D investment.
• In 2004-05, the private sector accounted for 28% of research spend; it was 40% in 2016-17.
• In most advanced economies, private R&D accounts for the bulk of investment in R&D.
• Moreover, relative to its income, India underspends on R&D compared to what the U.S. and China did when it had income levels comparable to India’s now.

Boost to R&D

• The Department of Science and Technology is mooting a fund that will match the private contributions in R&D.
  • The idea is to pool funds from a group of companies willing to invest in fundamental research, such as quantum computers or artificial intelligence, and whatever is invested government will match that.
  • A ₹40-crore target is on the anvil, Indian firms and foreign companies with Indian subsidiaries — would fund scientists in key academic institutions.

Examples of private participation in the past

• This is not the first time that the government has tried to get private sector money into R&D.
• Steps like ‘Startup India’ and ‘Make in India’ were initiated by the government.
• These were attempts to have venture capitalists and government departments involved in scientific research, to pool money and invest in technology start-ups.
• But, unfortunately, this has not resulted in investment in creating intellectual property.

Concerns

• Too much of India’s research investment is expended on a small pool of scientists in a limited number of institutions.
• The private sector has an extremely limited capacity to absorb scientists and a limited risk-appetite to invest in futuristic technology.
• Private research funding is also boosted more by partnerships among companies rather than by centrally-funded research programmes. While private funding is increasing, it still has not reached a level where major central funding can make a significant impact.
• Many CSIR laboratories have had a long history of collaborating with companies to develop and transfer technology to industry, but here too, there are restrictions on how intellectual property and licence fees can be shared.

Way forward

• There is a need for greater participation and cooperation at smaller levels among companies and government.

Also read CNA dated Jan 30, 2020
Category: POLITY

1. Batting for the downtrodden

Context

• The Supreme Court has recently ruled that quotas and reservations for promotions for government jobs are not a fundamental right.
• The apex court ruled that it was the discretion of the governments, either at the state or central level, to grant reservation in promotions.

What does the Constitution say on reservations?

• Article 14 of the Constitution guarantees equality before law and equal protection of laws to everyone.
• Article 15(1) generally prohibits any discrimination against any citizen on the grounds of religion, caste, sex or place of birth.
• Similarly, Article 16(1) and 16(2) assure citizens equality of opportunity in employment or appointment to any government office.
• However, Articles 15(4) and 16(4) state that these equality provisions do not prevent the government from making special provisions in matters of admission to educational institutions or jobs in favour of backward classes, particularly the Scheduled Castes (SCs) and the Scheduled Tribes (STs).
• Article 16(4A) was introduced through the Constitution (Seventy-seventh Amendment) Act.
  • Article 16(4A) allowed the State to provide reservations to an SC/ST in matters of promotion, as long as the State believes that the SC/ST is not adequately represented in government services.

What do the precedents say?

• In 1962, in the R. Balaji v. State of Mysore case, the court had ruled that Article 15(4) is an “enabling provision”, meaning that “it does not impose an obligation, but merely leaves it to the discretion of the appropriate government to take suitable action, if necessary”.
• The position went on to be reiterated in several other decisions, including the nine-judge bench ruling in Indra Sawhney v. Union of India (1992) and the five-judge bench decision in M Nagaraj v. Union of India (2006).

How did the case reach the Supreme Court?

• The controversy in the current case pertained to reservations to SCs and STs in promotions for the post of assistant engineer (Civil) in the Uttarakhand government’s Public Works Department.
• The reservation was initially provided for under the Uttar Pradesh Public Services (Reservation for Scheduled Castes, Scheduled Tribes and Other Backward Classes) Act, 1994.
  • Section 3(7) of this Act stated that the government orders providing for reservations in promotions, which were in force at the time of commencement of the Act in 1994 would continue to operate until modified or revoked.
• After the formation of Uttarakhand in 2001, the Act was made applicable to the new state, with a few modifications.
• Section 3(7) was, however, subsequently held unconstitutional by the Uttarakhand High Court in 2011.
• In 2012, the then state government decided that all posts in public services will be filled up without any reservations for SCs and STs.
  • All government orders providing for such reservations were also scrapped.
  • The government had decided against reservations.
  • This was once again challenged in the high court.
• The Uttarakhand High Court then struck down the State’s 2012 decision in 2019.
  • A review petition against this order was filed in the high court, which did acknowledge that Article 16 (4A) is an enabling provision.
  • But it directed the state government to collect quantifiable data regarding the inadequacy of representation of SCs and STs in state services, and then take a decision on providing reservations in promotions.
  • This decision was challenged in the Supreme Court.

What SC ruled?

• The apex court has now reiterated that Articles 16(4) and 16(4A) do not confer any fundamental rights to claim reservations in promotion. It is for the state government to decide whether reservations are required for appointments and promotions to public posts.
• However, if the state government does want to exercise this discretion and provide reservations, it would have to first collect quantifiable data showing the inadequacy of representation of that class in public services.
  • It observed that the state government has the absolute discretion to decide whether or not to provide for reservation in jobs or reservations in promotions.
• No mandamus can be issued by the Court directing the State Government to provide reservations.
• The top court also clarified that a state government is bound to collect data regarding the inadequacy of representation of SCs/STs in government services when it wants to provide reservation.
  • The State can form its own opinion on the basis of the material it has in its possession already or it may gather such material through a Commission/Committee, person or authority.
  • All that is required is that there must be some material on the basis of which the opinion is formed.

A look at the practice of untouchability in the state of Uttarakhand

• According to a recent survey by academician Amit Thorat, up to 47% of respondents in Uttarakhand admitted to practising untouchability.
• More than half the forward caste people confessed to practising untouchability.
• Further, nearly 68% Brahmins in rural and 77% Brahmins in urban areas of the State admitted to the practice.

Concerns

• The SCs suffer from low ownership of capital assets, illiteracy, and lack of access to civil rights. In 2013, of the total wealth in the country, the share of SCs was only 5% in rural areas against their population share of almost 17%.
• In terms of their share in agricultural land, it was only 5% while in building assets it was 8%.
  • On the other hand, the high castes owned 39% of total natural wealth — 41% land and 39% building assets.
• In urban areas, SCs own only 4% of total wealth: 6% land and 2.6% of buildings as against 45% of land and 76% of buildings by high caste, much in excess of their population share of about 21%.
• In 2015, the enrolment rate in higher education was 20% for SCs compared to 43% for higher castes. Besides the massive backlog in government services, these are spheres where SCs are grossly under-represented.
• Primary studies show extensive discrimination in employment, farming, enterprise/business against SCs. Based on NSS data, these studies indicate that in 2017-18, of the differences in access to employment between SCs and high castes, about 71% was due to discrimination in hiring.
• Findings of another primary survey in 2013 in rural India show that SC entrepreneurs in grocery, eatery, and transport services faced discrimination, with the high castes reluctant to avail of their goods and services. Many SC farmers admit that they face discrimination in the buying of inputs and sale of outputs.

The Court, while passing its order, remained silent on the sources of under-representation: namely data on caste discrimination in public employment and other spheres.

• With such a massive backlog in the condition of SCs, the top court should have been more sensitive in its observations.

Conclusion

• Unaccountability and caste slavery have completely crippled Dalits. They remain asset-less, illiterate and socially isolated with overt residential segregation in rural areas, and subtly in urban areas.
• Therefore, the reservation policy is necessary as a safeguard against discrimination and to secure their fair share.

Category: SOCIAL ISSUES

1. Youth can be a clear advantage for India

Introduction

• India’s population is among the youngest in an ageing world.
• By 2022, the median age in India will be 28 years; in comparison, it will be 37 in China and the United States, 45 in Western Europe, and 49 in Japan.
• India’s working-age population has numerically outstripped its non-working age population.
• A demographic dividend, said to have commenced around 2004-05, is available for close to five decades. This is an extraordinary opportunity.

There are however, two caveats

• First, India’s population heterogeneity ensures that this window of demographic dividend becomes available at different times in different States.
  • While Kerala’s population is already ageing, in Bihar the working age cohort is predicted to continue increasing till 2051.
  • By 2031, the overall size of our vast working age population would have declined in 11 of the 22 major States.
• Second, harnessing the demographic dividend will depend upon the employability of the working age population, their health, education, vocational training and skills, besides appropriate land and labour policies, as well as good governance.
  • India will gain from its demographic opportunity only if policies and programmes are aligned to this demographic shift.

Demographic dividends

• Demographic dividend refers to the growth in an economy that is the result of a change in the age structure of a country’s population.
• There is consensus now that among other factors, it was the demographic dividend that powered respectively the Asian economies of Japan, China, and South Korea to spectacular growth.
• More significantly, in each case, the underlying pattern was fairly similar i.e., countries will benefit from the economic potential of their youth bulge when and where they succeed in providing good health, quality education, and decent employment to their entire population.

Need for skills

• The Economic Survey 2019 calls for additional jobs to keep pace with the projected annual increases in working age population. We need a workforce that is well educated, and appropriately skilled.
• UNICEF 2019 reports that at least 47% of Indian youth are not on track to have the education and skills necessary for employment in 2030.
• The projected demographic dividend would turn into a demographic disaster if an unskilled, under-utilised, and frustrated young population undermines social harmony and economic growth.

Measures to improve quality education

• National Family Health Surveys (completed up to 2015-16) confirm that poor infrastructure in government schools, malnutrition, and scarcity of trained teachers have ensured poor learning outcomes.
• High quality education achieves gender parity and propels people forward into more productive lives.
• A coordinated incentive structure prompting States to adopt a broadly uniform public school system focusing on equity and quality will yield a knowledge society faster than privatising school education can accomplish.
• Irrespective of rural or urban setting, the public school system must ensure that every child completes high school education, and is pushed into appropriate skilling, training and vocational education in line with market demand.
• Deploying new technology will help accelerate the pace of building human capital by putting in place virtual classrooms together with Massive Open Online Courses (MOOCS).
  • It will help prepare this huge work force for next-generation jobs.
• The Govt. should invest on open digital universities which would further help yield a higher educated workforce.

Helping women

• Growing female literacy is not translating into relevant and marketable skills. A comprehensive approach is needed to improve their prospects vis-à-vis gainful employment.
• Flexible entry and exit policies for women into virtual classrooms, and into modules for open digital training, and vocational education would help them access contemporary vocations.
• A mushrooming of job portals and organisations are providing employment for trained women, even from home. Equal pay for women will make it worth their while to stay longer in the workforce.

On health care

• In India, population health is caught between the rising demand for health services and competition for scarce resources.
• The National Sample Survey Office data on health (75th round, 2018), shows that a deep-rooted downturn in the rural economy is making quality health-care unaffordable.
• People are availing of private hospitals less than they used to, and are moving towards public health systems.
• That is all very well except for the fact that the central budget 2020-21 lays emphasis on private provisioning of health care which will necessarily divert public investment away from public health infrastructure.
  • The Ayushman Bharat Yojana links demand to tertiary in-patient care.
  • This promotes earnings of under-utilized private hospitals, instead of modernizing and up-grading public health systems in each district.

Improving Healthcare facilities

• We need to assign 70% of health sector budgets to integrate and strengthen primary and integrated public health-care services and systems up to district hospital levels, include out-patient department and diagnostic services in every health insurance model adopted.

Conclusion

• The policies that we adopt, and their effective implementation will ensure that our demographic dividend, a time-limited opportunity, becomes a boon for India.

Category: GOVERNANCE

1. Financial Secrecy Index (FSI)

• Tax Justice Network (TJN) which is a U.K.-based financial advocacy group, pushes for transparency, ranks countries on the size and secretiveness of their financial sectors every two years.
• It examines how intensely the country’s legal and financial system allows wealthy individuals and criminals to hide and launder money.
• Parameters used in the ranking include automatic exchange of information and registration of beneficial ownership.
• TJN’s FSI ranking is based on a combination of a country’s secrecy score and a scale-weightage based on the country’s share in the global market for its offshore financial services.

Global Picture

India

• It has managed to reduce its contribution to global financial secrecy, with its rank falling from 32 on the 2018 index to 47 in 2020, but this is partly because the new edition of the index covers more countries than it did two years ago.

Transparency reforms

• It is true that the government has adopted and supported a few changes, such as the automatic exchange of tax and financial information with other jurisdictions, like Switzerland.
• For example, if an Indian citizen has an account with a Swiss bank, and has a balance over a certain threshold, this information will be sent to the Indian tax authorities automatically.

But reducing the financial losses and making multinationals and the super-rich pay their fair share of taxes requires much more.

Revenue concerns for the government

• Multinational companies have shifted their profits taking advantage of an outdated international tax system.
  • These multinationals may be making profits in India but can easily declare those profits in a low tax jurisdiction like Hong Kong and justify that transaction as a payment for the use of a patent.
  • According to one estimate, this strategy represented a loss of $27.5 billion in 2014 for the Indian government, up from $142 million in 2000.
• The government did create a beneficial ownership register — which would allow the identification of the beneficial owner of an asset regardless of whose name the title of the property is in — but the law is weak, since it exempts a lot of people at the discretion of the authorities.
  • This register is not accessible to the public.
• The government has granted tax incentives on a discretionary basis even though there is little evidence that these incentives attract investment.
  • The massive reduction in corporate tax rates has thus far not led to any increase in private investment — but it has meant a significant reduction in tax revenues, with devastating consequences.
  • It translates into a lack of resources for education, healthcare, food and nutrition and infrastructure.
  • The government budget is also highly dependent on indirect taxes like the Goods and Services Tax which are regressive and hit ordinary citizens harder.

Way forward

• India cannot revive its economy without increasing public spending, and so increasing its fiscal resources is essential.
• There is a need for adopting legislation and institutional reforms to end financial opacity — including, for example, opening the beneficial ownership register to the public and stopping the creation of onshore tax havens.
• In addition, the Government of India must also assume a more vocal role in the international debate about how to make multinationals pay their fair share of taxes.
• This means continuing to appeal for a United Nations tax body, which is much more legitimate than the Organisation for Economic Co-operation and Development (OECD).