18 May 2020: UPSC Exam Comprehensive News Analysis

A. GS 1 Related
B. GS 2 Related
INTERNATIONAL RELATIONS
1. Afghan President, rival sign power sharing deal
2. ‘India must not give Taliban legitimacy until it joins intra-Afghan talks’
POLITY AND GOVERNANCE
1. Over 42,000 undertrials released
C. GS 3 Related
ECONOMY
1. Centre throws open all sectors to private players
INFRASTRUCTURE
1. Multiple conditions on discoms
AGRICULTURE
1. Punjab farmers’ to go for direct seeding of rice
D. GS 4 Related
E. Editorials
POLITY AND GOVERNANCE
1. Farm gate in focus
ECONOMY
1. Labour rights are in free fall
HEALTH
1. Where is health in the stimulus package?
F. Prelims Facts
1. Odisha braces for Amphan impact
2. Lockdown extended; States will take a call on infection zones
G. Tidbits
1. Pak. President issues order to hold polls in Gilgit-Baltistan
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

A. GS 1 Related

Nothing here for today!!!

C. GS 3 Related

Category: ECONOMY

1. Centre throws open all sectors to private players

Context:

• The fifth tranche of the Atmanirbhar Bharat Abhiyan stimulus package announced by the Finance Minister.

Details:

• The major provisions of the final tranche of the Atmanirbhar Bharat Abhiyan stimulus package include the following:
  • There is an additional 40,000 crore rupees allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
  • The new Public Sector Enterprise Policy promotes the entry of private companies into every sector of industry, while limiting public sector enterprises to only strategic sectors.
    • The new policy will notify specific strategic sectors in which at least one PSU will remain, although private companies will also be allowed.
    • Even in the strategic sectors, no more than four PSUs will be allowed, with the rest being privatised, merged or brought under holding companies.
    • PSUs in all other sectors will be privatised.
  • Corporate enterprises have been offered relief via changes to the Insolvency and Bankruptcy Code (IBC) and the Companies Act.
    • Fresh insolvency proceedings would be suspended for a year.
    • COVID-19 related debt will not trigger defaults.
    • Firms will be allowed to list abroad directly.
  • State governments have been given more fiscal room in the current crisis with the hiking of their borrowing limits from 3% to 5% of Gross State Domestic Product (GSDP). However, the hiked limits will be conditional on States implementing reforms related to ration portability, ease of doing business, power distribution, and urban local bodies.

Significance:

• The total package announced under the Atmanirbhar Bharat Abhiyan stimulus package amounts to 20.97 lakh crore rupees accounting to 9.8% of GDP.
• The decision to allocate 40,000 crore rupees to the MGNREGA scheme in addition to the 61,000 crore rupees allocated in the Budget was widely welcomed, as a measure that will support rural livelihoods at a time when returning migrants swell unemployment in the villages.
• The hike in borrowing limits of the state is important as GSDPs are likely to contract, further shrinking possible borrowing at a time when States are at the frontline of containment and relief operations. The increase in borrowing limits would make extra resources worth 4.28 lakh crore rupees available to States.
• For the health sector, there is the announcement for increased public expenditure including infectious disease hospital blocks in every district and public laboratories in every block. There are provisions for higher number of health and wellness hubs.

Concerns:

Inadequate expenditure:

• Out of the ₹20.97 lakh crore stimulus package, only ₹2.2 lakh crore can be traced as direct additional budgetary cost to the central exchequer, while another ₹1.55 lakh crore relates to already budgeted expenditures.

Heavy reliance on credit related measures:

• The remaining 85% of the stimulus package is heavy on credit-related measures and comes from the RBI’s liquidity announcements (amounting to around 8 lakh crore rupees), credit guarantee schemes and insurance schemes, apart from the structural reforms which are not really stimulus or relief measures.

Double counting:

• Some analysts have pointed out double counting as the credit guarantee schemes to support small companies and non-banking finance companies would also tap into the RBI’s measures.

Weak state’s finances:

• Though the additional allocation to MGNREGA is welcome, given that States account for 40% of MGNREGA expenditure, including most upfront costs, they will also have to be willing to spend on the scheme.

Higher cost of borrowing for the states:

• The interest on the state bonds has shot up to 9% and States are having to pay a high cost for their market borrowings.
• Given that the Centre’s cost is lower at about 6%, it would have been better for the Centre to borrow from the market and transfer to the States.

Public sector enterprise policy:

• There are concerns that privatising PSUs would find fewer buyers at a time of global recession.
• The process of privatization would lead to a scenario wherein the potential buyer would be spending money which could have otherwise gone into fresh investment or a financial transfer, thus effectively contracting demand in the economy.

D. GS 4 Related

Nothing here for today!!!

E. Editorials

Category: POLITY AND GOVERNANCE

1. Farm gate in focus

Context:

• Farm sector reforms announced under the Atmanirbhar Bharat package.

Also read: CNA dated May 16, 2020

Details:

• The Centre’s moves for farm sector reforms have received both positive and negative feedback from the stakeholders.

Positive steps:

Agricultural infrastructure:

• Given the lack of adequate cold-storage facilities which was causing large post-harvest losses, especially in perishables, the 1-lakh crore rupees fund to finance agriculture infrastructure projects at the farm gate and produce aggregation points is a laudable step.
• The government’s proposal to channel the funds to agricultural cooperatives, farmer producer organisations, rural entrepreneurs and start-ups is encouraging as it lays the onus of creating the appropriate infrastructure or logistics solution largely on the principal beneficiaries, the farmers themselves. This would ensure greater effectiveness and accountability.

Promoting food processing units:

• The 10,000 crore rupees scheme to promote the formalisation of micro food enterprises is a significant step forward.
• A cluster approach focused on different regions on signature produce would assist unorganised enterprises in scaling up food safety standards to earn the products certification and build brand value.

Concerns:

• The package includes three reform proposals that are aimed at enabling better price realisation for farmers by removing restrictions and facilitating enhanced marketing freedom. It included:
  • Amendments to the Essential Commodities Act
  • Proposal for a federal law to facilitate barrier free inter-state trade of farm products
  • Law for contract farming

Essential Commodities Act:

• Though the reforms are well-intended, the move to amend the Essential Commodities Act is fraught with risks.
  • The Essential Commodities Act has been a vital tool in the government’s armoury for protecting consumers from irrational volatility in the prices of essentials by tamping down on black marketeers and hoarders.
  • Despite the chances of harassment of even honest traders and exporters under the old act, the total deregulation for foodgrains is fraught with the risk of future inflationary food price spikes.
    • The amendment deregulates cereals, pulses, oilseeds, edible oils, onions and potato from stocking limits, all of which are essential parts of the Indian diet.

Bypassing APMC Act and contract farming law:

• The centre seeks to bypass the APMC regime through a central law that would allow farmers the freedom to sell across State borders.
• There is also a proposal for a framework for farmers to enter into pre-sowing contracts with buyers.
• The proposed changes, once enacted, could privilege market forces without necessarily safeguarding food security.

Category: ECONOMY

1. Labour rights are in free fall

Context:

• Under compulsion of reviving the economy, the state governments are amending and relaxing labour laws.

Check CNA dated May 12, 2020

Government’s arguments:

• The government’s strategy visualises effecting an economic turnaround through improvement of India’s rank in the “ease of doing business” index, thereby attracting foreign direct investment (FDI) and enthusing domestic private capital.
• Industry associations and government are projecting these changes as necessary for enticing FDI relocating from China.
• Flexible labour and environmental laws are key instruments through which business sentiments are being sought to be improved.
• The extension of a work day up to 12 hours would help address the problem of labour shortages at a time when social distancing is the norm.

Concerns:

Labour law dilution:

• There seems to be steady effort at easing labour laws in favour of the businesses.
• Elements of labour law dilution were already visible in the four labour codes aimed at consolidating 44 central labour laws (on wages, industrial relations, social security and occupational safety, health and working conditions).
• The COVID crisis seems to have provided an opportunity for the government to amplify its efforts in labour law reforms.

Minimum Wages Act:

Under Labour Code:

• The Code on Wages, 2019 makes a distinction between national minimum wage and national floor wage.
• The minimum wage calculated by a government-appointed committee in 2018 was ₹375 per day, whereas, the national floor wage in the same year was ₹176 per day.
• The State governments, under the wages code, are directed to set their minimum wages only above the national floor wage. Thus, States, vying for private investments, would invariably consider the national floor wage, and this in effect would dilute the idea of minimum wage.

Under COVID crisis:

• Some states under the current crisis have sought to exempt employers from complying with the Minimum Wages Act 1948.

Industrial Disputes Act:

Under Labour Code:

• The Industrial Relations Code, 2019, proposes to raise the membership threshold of a trade union from 15% to 75% of the workforce in an establishment, for it to be recognised as the negotiating union.

Under COVID crisis:

• Some states have sought to exempt employers from complying with the Industrial Disputes Act, 1947.
  • Therefore, employers can hire and fire workers at will.
  • Employers are allowed to offer “fixed-term” employment without any restrictions on the number of renewals.
• The M.P. ordinance states that for new establishments, provisions guiding industrial dispute resolution, strikes/lockouts and trade unions would cease to operate.

Labour inspection:

Under Labour Code:

• The wages code had severely eroded the inspection mechanism by snatching away the power of inspectors to conduct surprise checks. Even when violations in law are detected, they are mandated to advise, provide information and facilitate employers to comply with the law.

Under COVID crisis:

• Some states under new amendments have sought to exempt factories employing less than 50 workers from regular inspections and allow third-party inspections.

Undemocratic route:

• The governments have chosen the path of promulgating ordinances and notifying rules, in which labour rights have been suspended without discussion and deliberation.

Period of suspension:

• The length of suspension of the labour rights varies from 1,000 days (M.P.) to three years (U.P.). There is no basis to expect that the impact of the lockdown will stretch for so long and it appears that State governments are competing to project themselves as investor-friendly.

Doubtful impact:

• There are doubts over whether the suspension of labour rights, aimed at reducing labour cost, would stimulate private investment and ensure recovery.
• Past experience does not inspire confidence.
  • The Reserve Bank of India’s policies designed to reduce the cost of borrowing capital has not been able to increase credit takeoff.
  • Reductions in corporate tax made no impact in boosting private capital and reviving growth in subsequent quarters.
• Banking on private investment for economic recovery when the economy is facing acute uncertainty may turn out to be futile.

For more information on this issue, refer to:

CNA dated May 12, 2020
Category: HEALTH

1. Where is health in the stimulus package?

Context:

• Atmanirbhar Bharat Abhiyan stimulus package.

Details:

• The package of 20-lakh crore rupees announced by the Prime Minister focuses on reviving economic activities, restoring livelihoods, addressing concerns of hunger and starvation, stimulating small and medium enterprises, and enhancing farm incomes. The health sector has not received much attention.

Concerns:

Poor state of healthcare facilities:

• The healthcare delivery system in most States is extremely fragile given the poor state of primary healthcare facilities.
• The public provisioning of healthcare has been found to be insufficient, of poor quality and having limited reach.

Poor resource allotment to health sector:

• The public spending on health has been consistently low at around 1.15% of GDP for well over a decade.

Opportunity cost of COVID-19 pandemic:

• It is possible that resources allocated for other health programmes are being diverted to deal with the COVID-19 pandemic. The opportunity cost of such diversion of funds could be high.
• People’s access to routine maternal and child health as well as family planning services in parts of the country has been negatively impacted. Progress made with respect to various diseases could witness setbacks.

Limitations of private sector:

• India’s private sector in health is sizable.
  • The private sector accounts for 93% of all hospitals, 64% of all hospital beds, and 80-85% of all doctors.
• Most private healthcare providers seem to be incapable of and unwilling to help even during a national crisis.
  • Rapidly declining revenues and sharply eroding profits are leading to the closure of many private hospitals.
  • Only a few private providers have come forward to extend support to the government.

Way forward:

Strengthening public health:

• The COVID-19 pandemic experience has brought out the critical importance of the public sector in health provisioning.
• There is a need to invest in universal health coverage (UHC) by reversing the financial neglect of public healthcare. Nearly every country in the world that has achieved anything like UHC has done it through the public assurance of primary healthcare.

Increasing investments in health:

• There is a need to urgently and immediately step up investments in health.
• A new ‘health investment plan’ (as part of the stimulus package), at least 1% of the GDP, out of the stimulus package should be earmarked for improving the country’s health infrastructure and strengthening public health service delivery.

Prioritizing primary healthcare:

• Up to 70% of the additional expenditures should be ring-fenced for primary healthcare and further strengthening health and wellness centres, primary health centres and community health centres. This would enable the State governments to be better prepared to face a second round of the pandemic.

Conclusion:

• Investing in health, apart from improving people’s well-being, is also essential for accelerating and sustaining India’s economic growth.

G. Tidbits

1. Pak. President issues order to hold polls in Gilgit-Baltistan

• Pakistan President has promulgated an order to form a caretaker government, as well as to conduct elections in Gilgit-Baltistan province, a move strongly opposed by India.
• India has argued that the entire union territories of Jammu and Kashmir and Ladakh, including the areas of Gilgit and Baltistan, are an integral part of India.

H. UPSC Prelims Practice Questions

Q1. Which of the following statements is/are correct with respect to the National Legal 
Services Authority of India (NALSA)?

1. It is a statutory body.
2. It organizes the Lok Adalats for speedy resolution of cases.
3. The Chief Justice of India is the executive Chairman of NALSA.

Options:

1. 1 and 2 only
2. 1, 2 and 3
3. 1 and 3 only
4. 3 only

See

Q2. Which of the following are the advantages of the Direct Seeding of Rice
(DSR) technology being propounded in Punjab?

1. Less time consuming
2. Less labour intensive
3. Lesser weed problem
4. Lesser water requirements
5. Crops mature earlier
6. Aids groundwater recharge

Options:

1. 1, 2 and 4 only
2. 1, 2 and 3 only
3. 1, 2, 5 and 6 only
4. 1, 2, 3, 4, 5 and 6

See

Q3. The severe cyclonic storm ‘AMPHAN’ is associated with which of the following 
regions?

1. East coast of India
2. West coast of India
3. South east Asia
4. West Asian region

See

Q4. The National Executive Committee (NEC) of the National Disaster Management 
Authority (NDMA) is chaired by

1. Union Home Minister
2. Prime Minister
3. Union Home Secretary
4. Cabinet Secretary

See

I. UPSC Mains Practice Questions

1. In the light of the farm sector reforms announced under the Atmanirbhar Bharat package, discuss the significance of the reforms and the possible concerns due to the changes proposed. (15 marks, 250 words)
2. Under compulsion of reviving the economy, the state governments are amending and relaxing labour laws. Analyze the government’s arguments for the changes being made and also the concerns expressed by the stakeholders. (10 marks, 150 words)
3. In the light of the health sector not receiving much attention under the Atmanirbhar Bharat Abhiyan stimulus package, discuss the challenges in the Indian health sector and suggest suitable measures to mitigate the risks involved. (15 marks, 250 words)

Read the previous CNA here.