Daily Current Affairs for UPSC IAS | 23rd September 2021

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1.  Greater automation and labour market

UPSC Syllabus: GS Paper III – Indian economy
Sub Theme: Link between Automation and Labour status | UPSC

Context:

Automation in a labour-intensive nation like India could be counter to employment generation. Post pandemic revival of Indian economy is largely pushing for automation which is not desirable to achieve higher employability of India.

Content:

  • Link between Automation and Labour status.
  • Why automation is a necessity?
  • What are the issues with automation?
  • How to resolve this conflict between automation and labour-intensive employment?

Link between Automation and Labour status.

Automation is a process of employing more machines in order to achieve higher efficiency. However, when machines come into picture, they replace human effort and causes unemployment. The best example here could be agriculture, where since India’s independence, higher ratio of mechanization has caused shifting of labour to secondary and tertiary sector. This promotes the frictional unemployment at gross level.

A single machine can replace thousands of employees. Best example here is the ongoing Fastage at toll plaza across India.

Bessen et al. argue that beliefs that automation in an industry portends mass unemployment events are largely unsupported by the empirical evidence.

However, many economists argue that the automation would only bring a shift in the type of employment demand. More industries would be looking for a demand of skilled worker who could easily operate machines and bring transparency.

Increasing demand towards 4th Industrial revolution would require high skilled labour. Unavailability of skilled labour to meet the demand of industrial sector would cause unemployment. This gap could get widening up if skill sets are not provided to the labour class.

Why automation is a necessity?

  • To ensure higher efficiency in the production process.
  • Automation provides accuracy in the production process and reduces the chances of errors.
  • It reduces delays in production process.
  • Automation provides chances of mass production.
  • Cheaper production is possible through automation.
  • Higher share of urbanisation is also causing demand for automation and production at large scale.

Issues with Automation process:

Economic:

  • Skill set: Indian labour is marginally skilled and could not meet the technical requirement of the industrial sector.
  • Liberalisation: Post liberalisation production process and rise of MNCs presence in India has brought the global technical giant and gradually shifted towards mechanisation.
  • Employment: Automation is severely hurting the labour-intensive sectors like agriculture, textile sector and construction sector.
  • Issue of frictional unemployment.
  • Higher capital cost which is a hindrance to the MSME sector.

Socio-Cultural:

  • Automation also substitutes the traditional production process with mechanised ones. This goes against the cultural aspects of a region. For example, rubber extraction by farmers.
  • Automation is also causing the rural to urban migration in India.
  • Highest burden goes to the women who are more vulnerable to mechanisation led unemployment.
  • Old-age population are most vulnerable as they are technically retarded.
  • Poverty among backward classes, keep them away from the latest technical know-how in the production process. Thereby keeping them secluded from the economic expansion.

Political:

  • Automation causes regional disbalance which fuel political aspirations and antagonism.
  • It also leads to federal conflict between centre and state with respect to level of mechanisation and funds allocated for the mechanisation.
  • Policy formulation and implementation could be biased towards more mechanised states or regions.

International:

  • Regional disparity: developed nations take advantage of money resources in developing nations through mechanised products.
  • Balance of payment crisis: developing nations are matching the mechanisation demand by importing expensive technology.

How to resolve this conflict between automation and labour-intensive employment?

  • Gradual shift: from capital intensive sector to labour intensive sector.
  • Skill development to meet the current industrial demand.
  • Promotion to traditional methods without directly shifting to high-end technology.
  • Gender parity in skill development entrepreneurships.
  • Promotion to sectors where labour employability is very high such as textile sector or leather industries.
  • Digital literacy to labour to raise their productivity.

Practice question:

  1. Do you agree with the fact that mechanisation would lead to high unemployment in India? Substantiate your arguments.

 

2.  On World Rhino Day, 2,500 horns turned to ashes in Assam

UPSC Syllabus: GS Paper III – Disaster Management
Sub Theme:  Biological Disasters | UPSC

Context: world’s largest stockpile of Rhino horns was burn out in Assam.

Objective: To aware people about the fact to the world that rhino horns are just a mass of compacted hair and they have no medicinal value. Event urged people not to kill these rare animals or buy their horns based on superstitions or myths.

About One-Horned Rhino:

The Greater One-Horned Rhino is one among the five different species of Rhino. The other four are:

  • Black Rhino: Smaller of the two African species.
  • White Rhino: Recently, researchers have created an embryo of the northern white rhino by using In vitro Fertilization (IVF) process.
  • Javan Rhino: Critically endangered in IUCN Red List.
  • Sumatran Rhino: Recently gone extinct in Malaysia.
  • There are three species of rhino in Asia—Greater one-horned (Rhinoceros unicornis), Javan and Sumatran.
  • Only the Great One-Horned Rhino is found in India.
  • Also known as Indian rhino, it is the largest of the rhino species.
  • It is identified by a single black horn and a grey-brown hide with skin folds.
  • They primarily graze, with a diet consisting almost entirely of grasses as well as leaves, branches of shrubs and trees, fruit, and aquatic plants.
  • Habitat:
    • The species is restricted to small habitats in Indo-Nepal terai and northern West Bengal and Assam.
    • In India, rhinos are mainly found in Assam, West Bengal and Uttar Pradesh.
    • Assam has an estimated 2,640 rhinos in four protected areas, i.e. Pabitora Wildlife Reserve, Rajiv Gandhi Orang National Park, Kaziranga National Park, and Manas National Park.
      • About 2,400 of them are in the Kaziranga National Park and Tiger Reserve (KNPTR)
    • Protection Status:
      • IUCN Red List: Vulnerable.
      • Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES): Appendix I (Threatened with extinction and CITES prohibits international trade in specimens of these species except when the purpose of the import is not commercial, for instance for scientific research).
      • Wildlife Protection Act, 1972: Schedule I.
    • Threats :
      • Poaching for the horns
      • Habitat loss
      • Population density
      • Decreasing Genetic diversity
    • Conservation Efforts by India:
      • The five rhino range nations (India, Bhutan, Nepal, Indonesia and Malaysia) have signed a declaration ‘The New Delhi Declaration on Asian Rhinos 2019’ for the conservation and protection of the species.
      • Recently, the Ministry of Environment Forest and Climate Change (MoEFCC) has begun a project to create DNA profiles of all rhinos in the country.
      • National Rhino Conservation Strategy: It was launched in 2019 to conserve the greater one-horned rhinoceros.
      • Indian Rhino Vision 2020: Launched in 2005, it is an ambitious effort to attain a wild population of at least 3,000 greater one-horned rhinos spread over seven protected areas in the Indian state of Assam by the year 2020.

 

UPSC Current Affairs: A flawed calculation of inflation | Page – 07

UPSC Syllabus: GS Paper III – Indian Economy

Sub Theme:  Inflation measurement | UPSC

Context: Inflation measurement is not meeting the demand of current economic situation where demand is subdued yet inflation is high due to changing consumption basket.

Measurement of Inflation in India

Criteria WPI CPI
Level Measures Inflation at Wholesale level Measures Inflation at Retail Level
Who Calculates? Office of Economic Advisor, Ministry of Commerce and Industry National Statistical Office, Ministry of Statistics and programme Implementation
Base year 2011-12 2012
Categories Primary Articles

Manufactured products

Fuel and Power

Food and beverages

Pan, Tobacco and Intoxicants

Clothing and Footwear

Housing

Fuel and Light

Miscellaneous- Education, Healthcare, Transportation etc.

Highest Weightage Manufactured products Food and Beverages
Impact of increase in Food items Less impact on WPI as compared to CPI since WPI provides higher weightage to manufactured products and lower weightage to Food items. Larger impact on CPI as compared to WPI since it gives more weightage to food products.
Services included No Yes
Indirect Taxes Included? No Yes
Targeted by RBI? No Yes. The RBI is required to maintain CPI rate of inflation of 4% with a deviation of 2%.

Headline and Core Inflation

The headline inflation simply refers to the inflation in the CPI (or WPI) covering all the categories of goods and services. On the other hand, the core inflation excludes the volatile categories such as food and fuel in order to measure the increase in the prices of goods and services. Hence, a drastic fall in the food and fuel prices can bring down the headline inflation by a to a large extent. However, the core inflation may remain unaffected.

Note: Presently, the RBI is targeting the CPI headline rate of inflation (and not Core Inflation)

Base Effect: To calculate the rate of Inflation, the prices of Goods and services in the current month are compared with the prices in the corresponding month of the previous year.

The rate of inflation in the current month is calculated as

(Prices of Goods in Current Month- Prices of Goods in Corresponding month of Previous year)/ Prices of Goods in Corresponding month of Previous year * 100

As can be seen in the above formula, the denominator (base) is the prices of Goods in the corresponding month of previous year.

So, the if the denominator (base) value is lower, the rate of inflation in the current year would be higher. Similarly, if the  denominator (base) value is higher, the rate of inflation in the current year would be lower. This can be understood as seen below:

Reasons for the rising Inflation in India

  • Imported Inflation: Increase in global commodity prices such as Crude oil, Edible oil etc.
  • Increase in certain food items such as Egg, Edible oils, Fruits, Pulses.
  • Increase in services such as Health, Transport and Communication etc.
  • Low Base effect as the prices of some of the Goods had declined last year due to the pandemic.

Important highlights of the Article

The article highlights that the covd-19 pandemic has led to decrease in the income levels of the poor people. As income levels have reduced, the consumption basket has changed. For example, now people spend higher proportion of their income on essential goods and services.

Similarly, the COVID-19 pandemic has led to increased demand for services such as Education and Healthcare. However, even now, the CPI is calculated as per the earlier weightage assigned to different goods and services.

Hence. the author feels that weightage of different commodities should change and it should reflect the consumption pattern, which has come into being post COVID-19.

What to Target: Headline or Core Inflation?

Presently, the RBI targets CPI headline rate of inflation and not the Core Inflation. In this regard, the Economic Survey 2020-21 has highlighted that sole focus on CPI headline rate of Inflation may not be appropriate on account of number of reasons. Accordingly, it has recommended that a greater focus on core inflation is warranted.

Reasons:

Firstly, Headline inflation may take place due to volatility in prices of Crude oil and Food commodities, over which RBI has no control. For example, failure of monsoons, lack of cold chain infrastructure, supply side bottlenecks etc. usually lead to increase in Food prices.

Secondly, most of the time inflation in Food commodities is transitory and may not require any policy action by the RBI

Thirdly, if the RBI tries to control inflation due to volatility in prices of food commodities, it can prove to be counterproductive. For example, to control inflation, rate of interest would increase–> Decline in Investment and Consumption Expenditure–> Economic Slowdown.

Fourthly, to measure inflation correctly, weightage must be assigned to different categories of commodities depending upon their share in the household expenditure. Higher the share, higher should be weightage. The share of food commodities in the household expenditure has declined since 2011-12, yet the CPI gives a weightage of almost 45% to the food commodities.

 

3.  50000 crore for each COVID death

UPSC Syllabus: GS Paper II – Social issues
Sub Theme:  Vaccination | Important Highlights about NDMA| UPSC

Context: Government has informed SC that compensation against the COVID-19 death would be provided by NDMA.

Petition filed in Supreme Court

  • A petition was filed in the Supreme Court seeking compensation for deaths caused due to COVID-19 as the novel disease was declared as a “notified disaster” under the Disaster Management Act.
  • Supreme Court mentioned that it is the statutory duty of National Disaster Management Authority (NDMA) to recommend guidelines for the minimum standards of relief to be provided to persons affected by disaster, which shall include the reliefs as per Section 12(iii) of Disaster Management Act.
  • Accordingly, the Court had directed NDMA to recommend guidelines within six weeks for ex gratia to family members of those who lost their lives during the COVID pandemic.

Acknowledgment by Home Ministry

  • Based on Supreme Court’s directives, the Ministry of Home Affairs has informed the Supreme Court that the National Disaster Management Authority (NDMA) has recommended the payment of Rs. 50,000 each as ex gratia assistance to the next of kin of those who died of COVID-19, including those who succumbed to the virus while involved in relief operations and preparedness activities.
  • The financial aid would be given, provided that the cause of death is certified as COVID-19.
  • The money would be provided by the States from the State Disaster Response Fund (SDRF). The disbursement of the amounts would be carried out by the District Disaster Management Authority/district administration concerned to the families.

Declaration for Compensation under Disaster Management Act

  • April, 2015 – the Disaster Management Division of the Ministry of Home Affairs (MHA) attached a revised list of “norms of assistance” to all state governments. Under “ex gratia payment to families of deceased persons”, it specified to pay Rs. 4 lakh per deceased person including those involved in relief operations or associated in preparedness activities, subject to certification regarding cause of death from appropriate authority.”
  • COVID-19 declared as Notified Disaster – Ministry of Home Affairs (MHA) in March 2020 in its letter to state governments stated that it has declared Covid-19 as a notified disaster under the Disaster Management Act for the purpose of providing assistance under State Disaster Response Fund (SDRF). However, MHA did not specify payment of ex gratia to families of deceased.

Section 12 of Disaster Management Act

It allows National Disaster Management Authority to recommend guidelines for the minimum standards of relief to be provided to persons affected by disaster. Guidelines for minimum standards of relief to be provided by NDMA must include:

  • the minimum requirements to be provided in the relief camps in relation to shelter, food, drinking water, medical cover and sanitation;
  • the special provisions to be made for widows and orphans;
  • ex gratia assistance on account of loss of life as also assistance on account of damage to houses and for restoration of means of livelihood;
  • such other relief as may be necessary.

Important Highlights about NDMA

  • Prime Minister is the Chairperson of NDMA
  • Duties of NDMA
  • lay down policies, plans and guidelines for disaster management for ensuring timely and effective response to disaster.
  • lay down guidelines to be followed by the State Authorities in drawing up the State Plan.
  • approve National Plan or plan prepared other departments or ministries.
  • Coordinate the enforcement and implementation of the policy and plan for disaster management.
  • Recommend provision of funds for the purpose of mitigation.
  • Provide such support to other countries affected by major disasters as may be determined by the Central Government.
  • Lay down broad policies and guidelines for the functioning of the National Institute of Disaster Management.
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