1. Survey pegs growth at 8-8.5% in ’22-23
Forecast assumes oil prices at $70-75, no pandemic disruptionsGrowth estimate a conservative projection, says CEA NageswaranConcerns remain over hardening inflation, liquidity woes
India’s GDP is expected to grow by 9.2% this year and 8% to 8.5% in 2022-23, though hardening inflation and energy prices along with tightening of global liquidity pose a challenge, according to the Economic Survey for 2021-22 tabled by Union Finance Minister Nirmala Sitharaman in Parliament on Monday.
Newly appointed Chief Economic Adviser V. Anantha Nageswaran termed the 8%-8.5% GDP growth estimate for the coming year a conservative projection.
The growth range hinges on assumptions that “there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be broadly orderly, oil prices will be in the range of $70-$75/barrel, and global supply chain disruptions will steadily ease over the course of the year”.
While last year’s Economic Survey talked of a V-shaped recovery for India’s COVID-hit economy, there is no mention of that aspect or the shape of the recovery in this year’s 442-page document.
Responding to queries on the V-shaped recovery, Principal Economic Adviser Sanjeev Sanyal, who steered this Survey, said the sharp contraction after the national lockdown was followed by a sharp revival in the second half of 2020-21 followed by some disruption due to the second COVID wave last April followed by yet another uptick.
Doodling a sort of ‘W’ shape in the air, he said it was up to observers to “decide what letter of the alphabet we prefer to use” to depict the recovery.
Mr. Nageswaran said the theme of the Survey was in line with the policies pursued by the government of providing short-term support to vulnerable sectors while keeping an eye on the medium term fiscal health and undertaking process as well as supply side reforms.
While the 9.2% growth estimate for 2021-22 suggests a recovery above the pre-pandemic level of 2019-20 by 1.3%, private consumption and segments such as travel, trade and hotels are yet to fully recover, as per the Survey. “The stop-start nature of repeated pandemic waves makes it especially difficult for these sub-sectors to gather momentum,” it said.
Back to Basics: Nominal GDP Vs Real GDP
The Gross Domestic Product (GDP) refers to the market value of all final goods and services produced within an economy. It can be calculated into two ways:
Nominal GDP: It refers to the GDP at the current market prices i.e., the GDP is calculated as per the market prices for the year for which the GDP is calculated.
Real GDP: It refers to the GDP at base year prices i.e., the GDP is calculated as per the market prices in the base year. Thus, the Real GDP negates the inflation in goods and services.
In case of high rate of inflation, the nominal GDP would be higher than the real GDP. However, in case of deflation, the real GDP would be higher than the nominal GDP.
Estimates of National Income for 2020-21
Real GDP: Real GDP at Constant (2011-12) Prices in the year 2020-21 is now estimated to be at Rs 135 lakh crores in comparison to Rs 145 lakh crores in 2019-20. The GDP growth rate is -7.3% in the year 2020-21 in comparison to 4% growth rate registered in the year 2019-20.
Nominal GDP: GDP at Current Prices in the year 2020-21 is now estimated to be at Rs 197 lakh crores in comparison to Rs 203 lakh crores in 2019-20. The GDP growth rate is -3% in the year 2020-21 in comparison to 7.8% growth rate registered in the year 2019-20.
2. The mind and the state of Russia’s President
In a sense, Putin is seeking to rewrite history, with an attempt to push NATO back and restore Russian stature
In early January, there was a flurry of diplomatic activity beginning with talks in Geneva between United States Deputy Secretary of State Wendy R. Sherman and Russian Deputy Foreign Minister Sergei Ryabkov, shifting to Brussels for a North Atlantic Treaty Organization (NATO)-Russia Council meeting on January 12, with the finale being the 57-member Organization for Security and Co-operation in Europe (OSCE) meeting in Vienna the following day. The immediate provocation was the presence of 1,00,000 Russian forces, backed by heavy artillery, tanks and armoured personnel carriers on the Russia-Ukraine border, generating apprehensions about an imminent invasion. The diplomacy has continued with meetings and phone calls at the highest levels. In the absence of any forward movement, the situation in Ukraine remains tense as analysts try to read Russian President Vladimir Putin’s mind about Russia’s next move.
In 2008, the Bucharest NATO summit declaration offered an open-ended timeframe for membership to Georgia and Ukraine. Russia was quick to pick up the gauntlet. Months later, citing Georgian President Mikheil Saakashvili’s actions in South Ossetia as a provocation, Russia intervened taking over the Georgian provinces of South Ossetia and Abkhazia.
As protests mounted in 2013 against Ukrainian President Viktor Yanukovych who was seen as pro-Russia, Russia annexed Crimea, legitimising it with an estimated 94% vote in a referendum in 2014. For the last seven years, the eastern provinces of Luhansk and Donetsk have seen pro-Russian militias fighting the Ukrainian forces in a civil war that has claimed over 10,000 lives.
However, troubles come in multiples. Even as Mr. Putin tries to dampen the Ukrainian tilt to the West, he has had to shore up Belarus President Alexander Lukashenko whose move to get a sixth term in office sparked widespread protests, creating new uncertainty on Russian borders.
In the South Caucasus, fighting had broken out between Azerbaijan and Russian treaty ally Armenia over the disputed area of Nagorno-Karabakh. In end-2020, Russia brokered a ceasefire that has proven to be tenuous. Turkish President Recip Tayyip Erdoğan has been expanding his regional role and provided vital military support to enable Azerbaijan to gain the upper hand. In Ukraine too, Turkey has sold drones and other military hardware to bolster President Volodymyr Zelensky’s ability to resist Russian advances. All this even as Mr. Erdoğan engages with Russia in the Astana process on Syria and is a client for the S-400 missile defence system.
In Central Asia in early January, protests against the fuel price increases in Kazakhstan led to violence, prompting President Kassym-Jomart Tokayev to issue shoot-at-sight orders to the security forces. Mr. Tokayev took over in 2019 from Nursultan Nazarbayev who had ruled for 29 years but public protests forced him to resign. However, he remained influential, as Chair of the National Security Committee, controlling the defence, intelligence and police sectors through his loyalists. He has since quit and his right-hand man, former Prime Minister Karim Massimov, was sacked as head of National Security Committee and arrested for treason. Mr. Tokayev also reached out to Mr. Putin and for the first time since it was set up in 2002, the Collective Security Treaty Organisation (CSTO) has sent a Russian-led 4,000-strong military contingent to restore law and order and protect key government facilities. CSTO was a Russian initiative and includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan.
Notwithstanding the multiple eruptions in its borderlands, Russian Foreign Minister Sergei Lavrov captured the Kremlin sentiment when he described the former Soviet territories not as “free, sovereign and liberated nation-states” but as “territories that lack ownership”.
Seeking lost glory
In a sense, Presidents Biden and Putin are both seeking to rewrite history. The U.S. would like a return to the 1990s, its unipolar moment when it set into motion the eastward expansion of both NATO and the European Union as the instrument for ensuring European security. It engaged Russia through NATO’s Partnership for Peace that grew into the NATO-Russia Council with over two dozen working groups covering arms control, non-proliferation, counter-terrorism, logistics, peacekeeping, civil emergencies, etc.
Mr. Putin thinks differently. He considers the break-up of the USSR the biggest tragedy of the 20th century and has called the eastward expansion of NATO that added 14 new Baltic and Central and East European member states (in stages) an existential threat. At the 2007 Munich Security Conference, Mr. Putin raised the issue of security guarantees for Russia for the first time. He has also described the protest movements (colour revolutions) in the former Soviet republics as western attempts at bringing about regime change. He seeks to push back NATO and restore Russian stature and influence to what USSR enjoyed during the bipolar era.
On December 17, Russia had presented two parallel drafts on security guarantees with the U.S. and NATO. These included a prohibition on any further NATO expansion, removal of all U.S. nuclear weapons from Europe and U.S. troops to be restricted to NATO territory prior to the expansion as in 1997. These would also have curtailed U.S. naval vessels from the Black Sea, the Barents Sea in the north and the Okhotsk Sea in the east. These demands were dismissed by the U.S. as “non-starters”; in turn, it proposed talks on arms control, missile deployments, constraints on military exercises and confidence-building.
While declaring that “Russia had no intention to invade Ukraine”, Russian Deputy Minister Sergei Ryabkov reiterated that “Ukraine must never, never, ever join NATO” and warned of “military and technical consequences that could put European security at risk.” Ms. Sherman maintained that “NATO’s open-door policy was non-negotiable” while Washington hinted at crippling economic and trade sanctions if Russia intervened in Ukraine. The talks in Geneva, Brussels and Vienna ended in a stalemate and brinkmanship continues.
Risks of over-reach
On January 14, over 70 Ukrainian government sites were subjected to a cyber-attack with a warning, ‘Be Afraid and Expect the Worst’; Ukraine has attributed it to Russia. The same day, White House Press Secretary Jen Psaki disclosed intelligence that Russia had pre-positioned special forces and operatives to undertake false flag operations in eastern Ukraine, warning Russia against using it as a pretext for intervention. On January 27, Mr. Biden said he expects Mr. Putin to make a move in February.
In the recent past, former U.S. President Donald Trump was calling NATO a drain on the U.S. and French President Emmanuel Macron had called NATO “brain-dead”. While U.S. President Joe Biden has sought to rebuild alliances, the messy withdrawal from Afghanistan left NATO allies doubting long-term U.S. commitments. Barely six months ago, France recalled its Ambassador from Washington and Australia, protesting against the creation of AUKUS (a trilateral security pact between Australia, the United Kingdom and the U.S. in 2021) that led Australia to cancel its multi-billion submarine deal with France. There were fewer and fewer NATO candidates ready to host U.S. nuclear weapons. The 2008 declaration about expanding NATO to include Georgia and Ukraine was seen as a rash promise that NATO was keen to forget. Even Russia’s takeover of Crimea had been overlooked. But Russian actions in Ukraine have revived NATO, giving it a new lease of life by restoring its original purpose.
The U.S. focus on China and the Indo-Pacific was an opening that Russia sought to exploit but Mr. Biden cannot afford to ignore Europe or be accused of appeasing Russia. Mr. Putin is shrewd enough to know that shifting U.S. focus away from China cannot be in Russian interest; it makes Russia more dependent economically on China because the Nord Stream 2 gas pipeline remains frozen and sanctions isolate it from European markets. Further, it gives China a free hand to expand its influence in Central Asia. An overtly antagonistic relationship with the U.S. and Europe may also limit Russian options in West and South Asia.
Ultimately, a war in Ukraine is something that neither Russia nor the U.S. want. Both need a way out of the escalatory spiral. The recent talks have brought Russian concerns about NATO’s eastward expansion centre-stage. Now, Mr. Putin has to decide which is a greater challenge — a liberally oriented Ukraine or confrontation with a rejuvenated NATO together with an unconstrained China. The choice is clear.
About North Atlantic Treaty Organization:
- It is an intergovernmental military alliance.
- Established by Washington treaty.
- Treaty that was signed on 4 April 1949.
- Headquarters — Brussels, Belgium.
- Headquarters of Allied Command Operations — Mons, Belgium.
- Since its founding, the admission of new member states has increased the alliance from the original 12 countries to 30. The most recent member state to be added to NATO was North Macedonia on 27 March 2020.
- NATO membership is open to “any other European state in a position to further the principles of this Treaty and to contribute to the security of the North Atlantic area.”
3. A hazy picture on employment in India
The trends in employment have not shown any clear and consistent patterns over the years
The two important indicators of structural transformation in any economy are rates of growth and changes in the structural composition of output and the workforce. India has experienced fairly consistent changes in the first indicator, especially after the 1991 reforms, but the trend in employment has not revealed any consistent or clear pattern.
The growth rate of the economy, measured by gross value added (GVA) at constant prices, accelerated from 4.27% in the 20 years before the economic reforms to 6.34% in the 20 years following the reforms and to 6.58% between 2010-11 and 2019-20 at 2011-12 prices. This growth trajectory was accompanied by a steady decline in the share of agriculture from 30% in 1990-91 to 18% in 2019-20 and a steady increase in the share of non-agriculture output in total economic output.
But when it comes to deciphering trends in employment pattern in India, there are wide variations in the conclusions drawn by experts and studies on employment. This is partly due to economical, sociological and technological factors that have brought about changes in the workforce and employment and partly due to gaps in data on various aspects of employment.
Two major sources of data on workforce and employment have been the decennial population census and the nationwide quinquennial surveys on employment and unemployment by the National Sample Survey Office (NSSO). The last available data from the Census refer to 2011. Similarly, the quinquennial NSSO data on employment and unemployment are available up to 2011-12. This was replaced by the Periodic Labour Force Survey (PLFS), started in 2017-18 on an annual basis. The PLFS data set is now available for three consecutive years i.e., 2017-18, 2018-19 and 2019-20. The PLFS is based on a different sampling framework and uses s different analytical approach vis-a-vis NSSO surveys on employment. As a result, the time series data on employment and unemployment available from NSSO surveys are not comparable with PLFS data. At best, the NSSO data can be used as a reference point.
Though the PLFS data cannot be used to infer an underlying trend, as they are available only for three years, they can be used to reveal the effect of various policies and developments during the current NDA regime as well as to understand and shape the employment scenario based on concrete statistics.
PLFS data show an increase in the worker to population (WPR) ratio from 34.7% in 2017-18 to 38.2% in 2019-20. This is a reversal of the previous trend which showed a decline in WPR after 2004-05. The change also implies that employment has increased at a much faster rate than growth in population. The increase in WPR has been reported in the rural and urban population and in the male and female population. This increase in WPR is even more significant as it has occurred in the midst of an increase in the labour force participation rate.
It is interesting to note that the data from the PLFS surveys do not support the assertion that women are going out of the workforce. Female WPR ratio increased from 17.5% to 24% between 2017-18 and 2019-20. When this ratio is multiplied by the female population, it shows an annual increase of 17% of women workers. Another positive indication from PLFS data is that the gap between the male and female worker participation rate is narrowing down. As against 100 male workers, there were 32 female workers in the workforce in 2017-18. This number increased to 40 in 2019-20. Women constituted 24% of the workforce in the country in 2017-18 and 28.8% in 2019-20.
Also, the unemployment rate in the female labour force in rural areas is far lower than the male labour force, whereas the opposite holds true in urban areas. This is despite the fact that the female labour force participation rate in rural India is 33% higher than the rate in urban areas. The reason could be that there is less gender discrimination in informal jobs, which dominate rural areas, than in the formal sector which dominates urban areas.
The unemployment scenario
PLFS data show that the unemployment rate based on principal status plus subsidiary status declined from 6.1% in 2017-18 to 4.8% in 2019-20. This shows that the number of jobs increased at a faster rate than the increase in the number of job seekers between 2017-18 and 2019-20. But despite this, the number of unemployed persons has increased by 2.3 million between 2017-18 and 2018-19, mainly because of an increase in the number of job seekers (52.8 million) in these two years.
The sectoral composition of the workforce shows that 45.6% of the workers in India are engaged in agriculture and allied activities, 30.8% in services and 23.7% in industry. According to PLFS data, there is no increase in the share of industry and services in total employment. This means that the labour shift out of agriculture is not happening. Between 2019-20 and 2017-18, 56.4 million new jobs were created. Out of this, 57.4% were created in the agriculture and allied sectors, 28.5% in services and 14.5% in industry. Within the broad industry group, employment in the manufacturing sector showed a meagre increase of 1.8 million in two years; and construction activity added 6.4 million new jobs.
That a majority of the new entrants to the labour force between 2017-18 and 2019-20 got absorbed in the agriculture sector has serious implications. The young labour force, which is getting increasingly educated, sought more remunerative work outside agriculture but only a few succeeded. This is because the industry and services sectors have adopted capital-intensive and, in many cases, labour-displacing technologies and production strategies. This is getting further aggravated with the rising adoption of modern technologies like Artificial Intelligence and Internet of Things. This raises a big question about the future of new entrants into the labour force.
That there is a dichotomy between the rising share of industry and services in national income without a sizeable increase in employment share is a fairly well-established fact for post-liberalisation India. This puts a serious question mark on the relevance of conventional models of economic growth and development (like the dual-sector model of Arthur Lewis centred on the large-scale shift of the labour force from agriculture to industry. Perhaps it is pertinent to question the conventional economic development models and their applicability for emerging economies like India. Instead, should we rethink our strategy of striving for an industry-led growth model and explore a more relevant agri-centric model of economic transformation to create more attractive, more remunerative and more satisfying employment in and around agriculture?
Besides this there is also an urgent need to generate much more employment in the manufacturing and services sector compared to the number of jobs they have offered in the recent past. This should include (i) changes in labour laws which discourage industry to adopt labour-intensive production (ii) employment-linked production incentives and; (iii) special assistance for labour-intensive economic activities.
- Unemployment in India
- According to an estimate, between 2011-12 and 2017-18, the total employment (in absolute numbers) declined by 9 million, the first time in India’s history when the total employment itself had come down.
- In a nutshell, India had two major concerns about unemployment.
- Firstly, a low LFPR, which means the proportion of people in the working-age who seek to participate in the economy is considerably lower than other economies. The main culprit here is the extremely low LFPR for women in India.
- Secondly, despite a low LFPR, India’s unemployment rate has been quite high.
4. India, Russia hold discussion on UN Security Council agenda
Moscow to assume Presidency of Council in February
Ahead of Russia’s upcoming Presidency of the United Nations Security Council this month, India and Russia on Monday held consultations on the UNSC issues during the visit of Ambassador Sergey Vasilyevich Vershinin, Deputy Minister of Foreign Affairs (DFM) of the Russian Federation. The discussion came in the backdrop of tensions between Russia and Ukraine over possible eastward expansion by NATO.
“The Russian delegation briefed India on its priorities during the 76th session of the U.N. General Assembly. Both sides also agreed to work closely together, given the common challenges faced and in keeping with their long standing special and privileged strategic partnership,” the Ministry of External Affairs (MEA) said in a statement.
Both sides held wide-ranging discussions on issues on the UNSC agenda and related developments. They agreed to deepen cooperation on issues of mutual interest at multilateral platforms. India has maintained a cautious position over the military tension bordering eastern Ukraine where Russia has rushed around a lakh additional soldiers and heavy armaments in the past weeks.
Official spokesperson of the Ministry Arindam Bagchi said last week India supports “peaceful resolution” of the crisis through “sustained diplomatic efforts”. Apart from close strategic ties with both Russia and Ukraine, India is also concerned about the wellbeing of a large number of its citizens who are resident in Ukraine.
- The United Nations Charter established six main organs of the United Nations, including the United Nations Security Council (UNSC).
- The Security Council has the power to make decisions that member states are then obligated to implement under the Charter.
- Permanent and Non-Permanent Members: The UNSC is composed of 15 members, 5 permanent and 10 non-permanent.
- Each year, the General Assembly elects five non-permanent members for a two-year term.
Proposed UNSC reforms:
Reform of the United Nations Security Council (UNSC) encompasses five key issues: categories of membership, the question of the veto held by the five permanent members, regional representation, the size of an enlarged Council and its working methods, and the Security Council-General Assembly relationship.
Case for Permanent Membership of India in UNSC:
- India is the founding member of the UN.
- Most significantly, India has almost twice the number of peacekeepers deployed on the ground than by P5 countries.
- India is also the largest democracy and second-most populous country.
- India’s acquired status of a Nuclear Weapons State (NWS) in May 1998 also makes India a natural claimant as a permanent member similar to the existing permanent members who are all Nuclear Weapon States.
- India is the undisputed leader of the Third world countries, as reflected by its leadership role in Non-Aligned Movement and G-77 grouping.
5. ‘Demand for MGNREGA work softens’
Govt. says drop observed after peak during first wave but figures still higher than pre-pandemic levels
Demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme has dropped from the peak of the first lockdown, but is still higher than pre-COVID levels, the Department of Economic Affairs said in its annual Economic Survey, noting that this is “an indicator of rural labour markets”.
However, it cautioned against drawing conclusions about the movement of migrant labour on the basis of MGNREGA employment, noting that the highest demand for work under the scheme was seen in States which are usually the destination of migrant workers, rather than source States.
More funds sought
Advocates for rural workers argued that the drop in demand is also due to funding constraints, and urged a significant increase in allocations for the scheme in Tuesday’s Union budget.
According to the Survey’s analysis, though demand for work stabilised after the second COVID wave, aggregate MGNREGA employment is still higher than pre-pandemic levels of 2019, after accounting for the seasonality of demand.
“The supply side effect of MGNREGA funding skews the picture of demand,” said Nikhil Dey, founder of the Mazdoor Kisan Shakti Sangathan, a union for unorganised rural workers across the country. “There is no doubt that demand went up during the lockdown and when money was available through the increased allocation,” he said, noting that the Centre had infused ₹40,000 crore worth of additional funding early in the first lockdown, meaning scheme administrators had sufficient money to cope with the hike in demand.
In 2021-22, on the other hand, additional funding was not available until late in the year when many States had already run out of money, forcing an artificial suppression in demand on the ground. “For the upcoming 2022-23 financial year, activists have asked for a budget allocation of ₹2.6 lakh crore, which would cover the guaranteed 100 days of work for all active job card holders. But anything less than ₹1.4 lakh crore, which is the amount spent in 2020-21 plus inflation, will be a clear suppression of demand by the government,” said Mr. Dey.
The Survey also mapped the State-wise demand trends. “Intuitively, one may expect that higher MGNREGS demand may be directly related to the movement of migrant labour i.e. source States would be more impacted. Nevertheless, State-level analysis shows that for many migrant source States like West Bengal, Madhya Pradesh, Odisha, Bihar, the MGNREGS employment in most months of 2021 has been lower than the corresponding levels in 2020,” it said.
According to the Survey, demand has been higher for migrant recipient States like Punjab, Maharashtra, Karnataka and Tamil Nadu.
Mr. Dey noted that Karnataka, Tamil Nadu and Rajasthan have a record of administrative sensitivity and efficiency with regard to MGNREGA implementation even pre-COVID.
“These States also see high levels of short–term migration within their own borders,” added Rajendran Narayan, an assistant professor at Azim Premji University who is part of a research group on MGNREGA.
What is Mahatma Gandhi National Rural Employment Guarantee Act?
- The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) , formerly known as the National Rural Employment Guarantee Act, was passed in 2005 to help India generate more jobs and improve its social security.
- The scheme, which is run by the Ministry of Rural Development, is a demand-driven wage employment scheme.
- Every adult household member having a job card in a rural area is eligible for a job under thisscheme.
- Adult member volunteers for unskilled manual work will receive 100 days of guaranteed wage employment in a financial year under the scheme.
- Except for districts having a 100% urban population, it covers all of India’s districts.
- There is also a provision for an additional 50 days of unskilled wage work in rural regions that have been notified of a drought or natural disaster.
- Section 3(4) of the MGNREGA allows states to make provisions from their own finances to provide additional days beyond the period stipulated by the Act.
6. ‘Vaccination was key to reviving economy’
Was essential to balance lives and livelihoods: DEA
The COVID-19 pandemic posed the challenge of balancing livelihoods while saving lives, the Department of Economic Affairs said in the Economic Survey, tabled in the Parliament on Monday. It highlighted that vaccination played a critical role in minimising the loss of lives, boosted confidence in the economy for resumption of activity and contained the sequential decline in output due to the second wave.
With the global economy continuing to be plagued by uncertainty two years into the pandemic, with resurgent waves of mutant variants, supply-chain disruptions, and a return of inflation in both advanced and emerging economies, the DEA stressed that vaccination had served as more than a health response and was critical in helping reopen the economy, particularly contact-intensive services.
Therefore, it should be treated for now as a macro-economic indicator, it said. According to data in the Survey, 99% of the registered healthcare workers and 100% of frontline workers, 87% of the population aged between 18-44, 95% of the population aged between 45-60 and 89% of the population above 60 had been covered under the first dose.
The DEA observed that a strong and resilient social infrastructure became even more important during the pandemic.
“To save lives and livelihoods amid the COVID-crises, countries have adopted various strategies. India, the country with the second-largest population and a large elderly population, adopted a multi-pronged approach,’’ it said.
Given the nature of the pandemic, the health response, including vaccination strategy, remained critical. India, one of the young nations in the world, also faced the challenge to sustain the learning outcomes in schools, building skills and reskilling the population and ensuring employment and livelihood to one of the largest labour forces in the world.
The government’s response through ‘Atmanirbhar Bharat Abhiyan’ packages and other sector specific initiatives provided the necessary support to mitigate the adverse impact of the pandemic, it asserted.
What is it?
Atmanirbhar Bharat Abhiyan (Self-reliant India Mission) is a campaign launched by the Central Government of India which included an Rs.20 lakh crore economic stimulus package and a number of reform proposals.
As part of the relief measures in the aftermath of COVID-19, the Prime Minister announced a special economic package and gave a clarion call for “Atmanirbhar Bharat” or “Self-reliant India”.
Five Pillars of a Self-reliant India
- Bold reforms across sectors will drive the country’s push towards self-reliance.
- To spur growth and to build a self-reliant India, Atmanirbhar Bharat Abhiyan rests on 5 important pillars.
- Economy: contemplates not an Incremental change but a quantum leap so that we can convert the current adversity into an advantage.
- Infrastructure: that can be an image of modern India or it can be the identity of India.
- Systems: driven by 21st-century technology, and that is not based on old rules.
- Democracy: a vibrant democracy that is the source of energy to make India self-reliant.
- Demand: where the strength of our demand and supply chain is utilized intelligently.
7. Ethanol blending of 8.1% achieved, target was 10%
Output grew 74.5% from previous year
The ethanol supply in the country to enable blending with petrol is likely to reach 302 crore litres, according to the Economic Survey 2021-2022.
The Centre has set a target of 20% ethanol blending with petrol to be achieved by 2025 to reduce the country’s crude oil import bill, give a boost to the agriculture sector and reduce environmental pollution.
Ethanol supply under the Ethanol Blended Petrol (EBP) Programme is expected to exceed 302 crore litres by the end of Ethanol Supply Year (ESY) 2020-2021 (December 1, 2020 -November 30, 2021) to achieve approximately 8.1% blending, the Survey noted. This is an increase of 74.5% compared with the previous year.
The ethanol blending target for ESY 2021-22 is 10%.
The government last year notified mass emission standards for E12 (12% ethanol blended with petrol) and E15 (15% ethanol blended with petrol) to enable the automobile industry to manufacture E12- and E15-compliant motor vehicles.
What is it?
Ethanol is one of the principal biofuels. It is naturally produced by the fermentation of sugars by yeasts or via petrochemical processes such as ethylene hydration. Ethanol has medical applications as an antiseptic and disinfectant. It is used as a chemical solvent and in the synthesis of organic compounds, apart from being an alternative fuel source.
Why the world needs Ethanol Blending?
At present, the global transportation sector is facing three major challenges, namely
- Depletion of fossil fuels,
- Volatility in crude oil prices and
- Stringent environmental regulations.
Alternative fuels specific to geographies can address these issues. Ethanol is considered to be one of the most suitable alternatives for blending, transportation fuel due to its better fuel quality (ethanol has a higher octane number) and environmental benefits.
Why India needs Ethanol Blending?
According to NITI Aayog, India’s net import of petroleum was 185 Mt at a cost of US $ 55 billion in 2020-21. Hence, a successful Ethanol Blended Programme can save the country US $4 billion per annum, i.e. Rs. 30,000 Crore.
- Besides, ethanol is also a less polluting fuel and offers equivalent efficiency at a lower cost than petrol. But, achieving the target is not an easy one and India need drastic reforms to achieve that.
About 20% Ethanol blending of petrol
The National Policy on Biofuels – 2018, provides an indicative target of 20% ethanol blending (also called E20) under the Ethanol Blended Petrol (EBP) Programme by 2030.
- According to the Society of Indian Automobile Manufacturers (SIAM), Ethanol blending at present is 10%(E10). But, a sufficient quantity of ethanol is not available in India. Therefore, only around 50% of petrol sold in India is E10 blended, while the remaining is unblinded petrol (E0). The current level of average blending in the country is 5% (2019-20 data).
- India at present has an ethanol production capacity of 426 crore ltr. For the targeted E20 by 2030, the country will need approximately 1,000-crore ltr capacity.
8. ‘Centre has adopted MSP, but States must facilitate crop shift’
No mention of farm-law repeal, MSP panel in Economic Survey
There is an urgent need for crop diversification in view of the severe water stress in areas where paddy, wheat and sugarcane are grown as well as to increase oil seed production and reduce dependency on imports of cooking oil, the Department of Economic Affairs said in the annual Economic Survey released on Monday.
While the Centre had adopted minimum support prices (MSP) for farm produce as a key tool to encourage crop diversification, the onus was on States to take coordinated action to facilitate a shift towards crops with higher value and lower water consumption, the department said.
However, there was no mention of the MSP committee which the Prime Minister had promised to set up in November to draft a policy on all these issues.
The survey also completely ignored what was arguably the biggest development in agricultural policy over the last year — the repeal of three agrarian reform laws in the wake of widespread, year-long protests by farmers.
The survey urged for an increase in funding for agricultural research rather than farm subsidies, noting that “every rupee spent on agricultural research and development yields better returns compared to returns on money spent on subsidies or other expenditures on inputs.”
The government noted that agriculture continued to be a major driver of the economy in the pandemic era, with the sector’s growth rate rising from 3.6% in 2020-21 to 3.9% in 2021-2022.
What is MSP?
MSP is the rate at which the government buys grains from farmers. Currently, it fixes MSPs for 23 crops grown in both Kharif and Rabi seasons.
How is it calculated?
The MSP is the rate at which the government purchases crops from farmers, and is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
- The Union Budget for 2018-19 had announced that MSP would be kept at levels of 1.5 the cost of production.
- The MSP is fixed twice a year on the recommendations of the Commission for Agricultural Costs and Prices (CACP), which is a statutory body and submits separate reports recommending prices for kharif and rabi seasons.
Which production costs are taken in fixing the MSPs?
The CACP considers both ‘A2+FL’ and ‘C2’ costs while recommending MSP.
- A2 costs cover all paid-out expenses, both in cash and kind, incurred by farmers on seeds, fertilisers, chemicals, hired labour, fuel and irrigation, among others.
- A2+FL covers actual paid-out costs plus an imputed value of unpaid family labour.
- The C2 costs account for the rentals and interest forgone on owned land and fixed capital assets respectively, on top of A2+FL.
9. The limits of the legislature’s power to suspend a member
Can a lawmaker be suspended beyond one session? Is a one-year ban from the House legal?
Last week, the Supreme Court declared as grossly illegal and irrational the suspension of 12 BJP legislators for one year by the Maharashtra Assembly for disorderly conduct.
The State counsel argued that under Rule 53 of the Maharashtra Assembly Rules, the Speaker could direct a Member to withdraw from the Assembly for disorderly conduct for the day, or the remainder of the Session. However, there is no such limitation when the whole House decides to impose suspension. They also stated that once the power to punish a member for disorderly conduct is recognised, there can be no judicial review of the manner in which it is exercised.
The Bench noted that Rule 53 showed a ‘graded approach’ to the issue of disorderly behaviour, an initial suspension for a day, and then for the remainder of the session, but nothing beyond it. Once the length of the suspension goes beyond the session, it ceases to be a disciplinary measure and undertakes the character of punitive action. A lengthy suspension, apart from the deprivation of representation for the constituents, may also be detrimental to democracy.
The story so far: Last week, the Supreme Court declared as grossly illegal and irrational the suspension of 12 BJP legislators for one year by the Maharashtra Assembly for disorderly conduct. Brushing aside objections that the judiciary should not examine the validity of the proceedings of the House, a three-judge Bench, comprising Justice A.M. Khanwilkar, Justice Dinesh Maheshwari and Justice C.T. Ravikumar, ruled that the suspension beyond the term of the particular session in which it was imposed was a nullity in the eyes of the law.
What happened on July 5, 2021?
There was a ruckus in the Assembly when the Maha Vikas Aghadi (MVA) government introduced a resolution seeking empirical data on OBCs from the Union government. The House was adjourned briefly for a few times before the resolution was passed, as BJP members rushed to the well of the House and were accused of damaging the presiding officer’s microphone and grabbing the mace. Later, Bhaskar Jadhav, a Shiv Sena MLA who was in the Chair during the incidents, said that when he was in the Deputy Speaker’s chamber, some members rushed inside and abused him. A resolution moved by the Parliamentary Affairs Minister was subsequently adopted by the House suspending 12 MLAs —Dr. Sanjay Kute, Ashish Shelar, Abhimanyu Pawar, Girish Mahajan, Atul Bhatkhalkar, Harish Pimple, Jaykumar Rawal, Yogesh Sagar, Narayan Kuche, Bunty Bhangdiya, Parag Alavani and Ram Satpute. They were barred from entering the legislative premises for 12 months. The members challenged their suspension in the Supreme Court.
How did the State government defend the action?
Counsel for the State government argued that there is no limitation on the power of the legislature to punish for breach of privilege or disorderly conduct in the course of its proceedings. Once the power to punish a member for disorderly conduct is recognised, there can be no judicial review of the manner in which it is exercised. Under Rule 53 of the Maharashtra Assembly Rules, the Speaker could direct a Member to withdraw from the Assembly for disorderly conduct for the day, or the remainder of the Session. However, there is no such limitation when the whole House decides to impose suspension. In this context, counsel contended that when the power to expel a member is available, the power to suspend, being a lesser punishment, is also available to the House at all times. The Bench had raised a question as to how any suspension can go beyond 60 days, in the light of Article 190(4) of the Constitution, which says the House could declare a seat vacant if a member is absent for 60 days. The State government contended that in such a case, it is the House that declares the seat vacant, and it is not an automatic consequence of a member’s absence for 60 days on which the House met. The Government also pointed out that in Raja Ram Pal (2007), the Supreme Court had upheld the expulsion of 12 MP’s in the cash-for-questions scandal. When expulsion, the greater punishment was allowed, suspension, being a lesser penalty, cannot be questioned.
What are the reasons given by the court for its ruling?
The Bench noted that Rule 53 showed a ‘graded approach’ to the issue of disorderly behaviour, an initial suspension for a day, and then for the remainder of the session, but nothing beyond it. It was a power to be exercised only for the protection of the proceedings. However, in the present case, there was no separate provision for the House to impose a lengthy suspension. If at all it was exercising inherent powers to regulate its proceedings, it ought to have adopted a ‘graded approach’ and limited its suspension to the immediate objective of ensuring order. Once the length of the suspension went beyond the session, it ceased to be a disciplinary measure, but partook the character of a punitive action. Citing Privy Council cases and Indian precedents, the Bench said anything that went beyond the session was irrational and grossly illegal. The Bench also cited provisions of the Representation of the People Act, 1951, that say any vacancy in the House has to be filled up through a by-election within six months of its occurrence.
It ruled that a one-year suspension meant that the constituency concerned would go without represention in the Assembly for a whole year.
Further, suspension seemed to have worse consequences than outright expulsion from the legislature, as a by-election will be held within six months; whereas, a one-year suspension does not entail mandatory filling up of the vacancy.
What general principles arise from the case?
The court has reiterated the principle that even though the judicature will not interfere in the functioning of the legislature, a coordinate body, it is not deprived of the power of judicial review if there is a violation of the Constitution. Even though there were no prescribed limits to the privileges of the House, there is no doubt that these are subject to the provisions of the Constitution. A lengthy suspension, apart from the deprivation of representation for the constituents, may also be detrimental to democracy, as it could be used to manipulate numbers in the legislature, and deny the opposition the opportunity to participate effectively in debates.
Article 102 : Disqualifications
Article 102 of the Constitution provides for disqualification conditions for a member of either House of Parliament. The member shall be disqualified if
- He holds an office of profit (under the Government of India or the Government of any State) other than the office mentioned in the law of parliament.
- If he is of unsound mind and so declared by competent court ;
- If he found to be an undischarged insolvent;
- If he is not a citizen of India, or has voluntarily acquired the citizenship of a foreign State, or is under any acknowledgment of allegiance or adherence to a foreign State;
- If he is disqualified under any law made by Parliament.