1. FDI and employment generation
UPSC Syllabus: Mains: GS Paper III: Indian economy
Sub Theme: employment | UPSC
Context: With rising unemployment, to what extent can FDI provide a level playing field to boost employment in India.
Current Unemployment trend
As per, Centre for Monitoring Indian Economy (CMIE):
- Unemployment rate has increased from around 7% in July to 8.3% for August 2021. • In absolute terms: 1.9 million jobs were lost in one month.
- Usual Status approach: uses a reference period of 365 days i.e. one year preceding the date of the survey of NSSO for measuring unemployment.
- It also looks at the principal activity and subsidiary activity status of the worker.
Why is unemployment rising?
- Most of the jobs lost were farm jobs
- Quality of new jobs generated is a matter of concern. While employment increased mainly in business and small trade, but the manufacturing sector shed 0.94 million jobs. • Thus, much of the labour shed by agriculture has been absorbed in low-end service activities. Employment sustainability
Seasonal labour released from agriculture gets accommodated in the construction sector. Currently, the construction sector itself is shedding jobs, forcing workers to find employment in the household sector and low-end services.
This could dampener for economic recovery in the subsequent quarters of the current fiscal year.
Role / issues of Investment (FDI) in employment generation
- Currently, Private investment is sluggish.
- Hence government and industrial sector is looking for external funding through FDI through making ease of doing ranking more attractive.
⮚ Fill up the saving-investment gap.
⮚ Creates pre-emptive supply (Say’s Law)
⮚ Creates initial demand in the markets.
⮚ Provides new avenues to the labour.
⮚ Plays and important role in fueling the skill set among the labour class.
⮚ Brings best practices in the labour market.
⮚ Help labour class towards interact in international market.
Uncertain nature of investment.
Sudden breakdown of system.
Profit orientation rather than social development.
Intellectual property issues.
More mechanized in practice.
Largely targets highly skilled labour.
More concentrated in urban areas (Metro towns)
FDI issues with specific sectors.
- Agriculture sector: Very limited scope of FDI. Highly limited to development of capital goods and inputs.
- Manufacturing sector: High role. But subject to government policies and international relations
- Construction: Highly vulnerable to the demand sector. Currently it is under stress. 4. Automobile: FDI is very impressive. But this sector is gradually moving towards to the mechanization and robotics.
- Financial sectors: FDI by MNCs requires highly skilled labour, which is negligible in Indian scenario.
⮚ Promotion to MSMEs which are involved in those sectors where FDI is high. Such as Automobile and Electronic sector.
⮚ New labor-intensive sectors could be opened for FDI, such as textile and leather. ⮚ Following China’s model of development (Attracting those labour
⮚ Anchor firms and global value chain.
⮚ Attracting firms which are exiting from China.
⮚ Economic and economic enclaves (reorienting SEZs as EEEs) : Baba Kalyani committee. ⮚ More incentive to labour intensive MNCs which are providing more employment.
2. 5G technologies and TRAI
UPSC Syllabus: Mains – GS II, III: Indian governance system and technology
Theme: Latest mobile technology | UPSC
Context: Department of telecommunication has approached Telecom Regulatory Authority of India on pricing, quantum and other modalities pertaining to radio waves before rolling out 5G spectrum.
What is 5G?
⮚ It is the next generation cellular technology that will provide faster and more reliable communication with ultra-low latency.
⮚ With 5G the peak network data speeds are expected to be in the range of 2-20 Gigabit per second (Gbps).
Who does it benefit?
⮚ With 5G technology, consumers will be able to download data heavy content such as 8K movies and games with better graphics in just a few seconds.
⮚ 5G is expected to form the backbone of emerging technologies such as the Internet of Things (IoT) and machine to machine communications.
⮚ Also, it would be supporting a much larger range of applications and services, including driverless vehicles, tele-surgery and real time data analytics.
⮚ The ultra-low latency offered by 5G makes the technology desirable for such use cases.
What is latency
⮚ Latency is the amount of time data takes to travel between its source and destination. ⮚ The technology will extend the use of wireless technologies — for the first time — across completely new sectors of the economy from industrial to commercial, educational, health care, agricultural, financial and social sectors.
⮚ 5G’s value for India may be even higher than in advanced countries because of the lower levels of investments in physical infrastructure.
⮚ 5G may offer ‘leapfrog’ opportunities by providing ‘smart infrastructure’ that offers lower cost and faster infrastructure delivery.
⮚ One of the primary applications of 5G will be implementation of sensor-embedded network that will allow real time relay of information across fields such as manufacturing, consumer durables and agriculture.
⮚ It can also help make transport infrastructure more efficient by making it smart by enabling vehicle-to-vehicle and vehicle-to-infrastructure communication.
What will be the economic impact?
⮚ 5G is expected to create a cumulative economic impact of $1 trillion in India by 2035 ⮚ Also, the revenue potential in India will be above $27 billion by 2026.
When will it be launched?
⮚ In April, South Korea and the U.S. became the first countries to commercially launch 5G services. ⮚ The Central government had set a target of 2020 for the commercial launch of 5G services, largely in line with rest of the world.
⮚ The government plans to undertake spectrum auction in the current calendar year.
Are there any apprehensions?
⮚ Two of the three private telcos, Bharti Airtel and Vodafone have expressed concern about auction stating that the reserve price of these airwaves is very high.
⮚ Telecom industry body Cellular Operators Association of India (COAI) has Telecom industry body Cellular Operators Association of India (COAI).
⮚ Besides the spectrum, 5G will require a fundamental change to the core architecture of the communication system.
⮚ A report has stated that industry might require an additional investment of $60-70 billion to seamlessly implement 5G networks.
High Level Forum on 5G India 2020
⮚ The economic benefits from the 5G technology are also quite immense. As per the OECD (Organization for Economic Cooperation and Development) Committee on Digital Economic Policy, it has been stated that 5G technologies rollout will help in,
- a) Increasing GDP
- b) Creating Employment
- c) Digitizing the economy.
⮚ For India, 5G provides an opportunity for industry to reach out to global markets, and consumers to gain with the economies of scale. Worldwide countries have launched similar Forums and thus, India has joined the race in 5G technologies. We are open for collaboration with them.
⮚ Government has constituted High Level 5G India 2020 Forum with three Secretaries of key Ministries/Departments Telecom, Meity and DST, and also comprising of renowned experts.
⮚ The Term of Reference of the High Level Forum for 5G India 2020 shall be: –
- a) Vision Mission and Goals for the 5G India 2020, and
- b) Evaluate, approve roadmaps & action plans for 5G India 2020.
⮚ The primary goals of the forum are to achieve:
- early deployment of 5G in India
- a globally competitive product development and manufacturing ecosystem targeting 50% of India market and 10% of global market over next 5 to 7 years.
⮚ The forum will complement the eco-system by focused actions in the following areas:
- Research Ecosystem – for IPR development, standards development and proof of concepts through research projects, PPP projects, testbeds and pilot roll-outs.
- Regulatory Framework – including spectrum assignments and a start-up friendly regulatory environment to enable leap-frog and embracing of innovative technologies.
- Inclusive Business environment – with special focus on investment incentives favourable to start-ups and innovators and enablement of Venture capitalists
Telecom Regulatory Authority of India (TRAI) was established on 20th February, 1997 by the Telecom Regulatory Authority of India Act, 1997.
Objectives of TRAI:
To create and nurture conditions for growth of
telecommunications in the country.
To regulates telecom services including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.
To provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition.
▪ Headquarters: New Delhi.
Composition of TRAI
▪ Chairperson, two whole-time members and two part-time members, all of which are appointed by the Government of India.
▪ Tenure: Chairperson and other members shall hold their office for a term of three years or till the age of 65 years, whichever is earlier.
▪ Chairperson: The Chairperson has the powers of general superintendence.
▪ Removal of Members: The Central Government is empowered to remove any member of the TRAI, if he/she:
Functions of TRAI
▪ Makes Recommendations on telecom sector.
▪ Discharge of Responsibilities on smooth functioning.
▪ Non-Binding Recommendations:
Powers of TRAI
▪ Order for Furnishing Information
▪ Appointments for Inquiry
▪ Order for Inspection
▪ Issue Directions to Service Providers