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1 Economic Survey 2018-19 : Volume-I

INTRODUCTION

• Prime Minister laid down a vision of becoming USD 5 trillion economy by 2024-25 for which India needs to sustain a realGDP growth rate of 8%.

• Based on the international experience of East Asian Economies, such growth can be sustained by “virtuous cycle” =>Savings + Investment + Exports + Demographic Dividend.

• Economic Survey recommended that Exports must form an integral part of the growth model because higher savingspreclude domestic consumption as the driver of final demand.

Aggregate Demand = Consumption + Investment + Government Expenditure + Net Exports

• The Survey departs from traditional Anglo-Saxon thinking by advocating a growth model for India that views the economyas being either in a virtuous or a vicious cycle, and thus never in equilibrium.

ACCOMPLISHMENTS IN THE LAST FIVE YEARS

1. Macroeconomic Stability• Output : India became the sixth largest economy by sustaining

growth rates higher than China, thereby becoming the fastestgrowing major economy in the world.

• Inflation : Average inflation in these five years was less than halfthe inflation level of the preceding five years, matching the lowestlevels attained in the country’s post-independence history.

• Current Account Deficit (CAD) : It remained within manageablelevels at 2.1% of GDP (should be under 3% of GDP) and foreignexchange reserves rose to all-time highs. (At present, foreignreserves are around $427 billion)

2. Beneficiary focus and targeted deliveryThe government also focused on last-mile delivery of basic servicesto the poor, on basic safety-nets and on creating pathways for thebenefits of growth to reach the bottom of the socio-economicladder. Some major initiatives are:• Promulgation of the Aadhaar (Targeted Delivery of Financial

and Other Subsidies, Benefits, and Services) Act, 2016.Aadhar coverage stands at more than 90% of the country’spopulation.

• Pradhan Mantri Jan Dhan Yojana (PMJDY) : The linking ofmobile numbers with bank account numbers and subsequentlyAadhaar, created a JAM (Jan Dhan, Aadhaar, Mobile) trinitythat further secured Direct Benefit Transfers (DBT) to theintended beneficiaries. Close to 1 Lakh crore is deposited inmore than 35 crore bank accounts opened under PMJDY.

• Major schemes implemented under DBT are:Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)National Social Assistance Program (NSAP)

Pradhan Mantri Awas Yojna- Gramin (PMAY-G)

SHIFTING GEARS: PRIVATE INVESTMENTAS THE KEY DRIVER OF GROWTH,

JOBS, EXPORTS AND DEMAND

TOPIC

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Reason for Macro-economic Stability

The performance was not just a onetime adjustmentbut stemmed from a new institutional framework.

1. Monetary Policy Committee

• Following an agreement between Governmentof India (GOI) and Reserve Bank of India (RBI), aMonetary Policy Committee (MPC) wasconstituted in February, 2015.

• Mandate : To target a headline inflation of 4 percent, with a band of two percentage points oneither side.

• Set up under Section 45ZB of the amended RBIAct, 1934.

• Composition: 6 members = 3 from RBI and 3 areappointed by the Central Government.

• Tenure : 4 Years

2. Fiscal Responsibility and Budget Management(FRBM)

• The F iscal Responsibility and BudgetManagement (FRBM) Act of 2003, which got anew lease of life since 2016, determines the glidepath for the ratio of Gross Fiscal Deficit (GFD) toGDP to reach an eventual target of 3 per cent.

• The ratio declined from 4.5 per cent in 2013-14 to3.4 per cent in 2018-19.

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• Pradhan Mantri Ujjwala Yojana (PMUY) : The PMUY had originally targeted to provide 5 crore LPG over a span of threeyears to BPL families. Till date more than 70 million PMUY-LPG connections have been released to women residing inmore than 700 districts.

• Ayushman Bharat Yojana (ABY) : The scheme was launched in 2018 which provides an insurance cover of Rs. 5,00,000for cashless treatment to each of the 100 million BPL families at a nominal premium of Rs. 100 per month. Till date,the scheme has empanelled more than 15,000 hospitals, which have admitted about 2.6 million persons from the 346million enlisted beneficiaries.

3. Infrastructure

The creation of physical infrastructure accelerated significantly during the period of 2014-19.

• Electrification : In April 2018, electricity finally reached every village in India, though the effort to electrify every homeis still underway.

• National Highways : The construction of national highways (NH) proceeded at a rapid pace with more than 20 per centof the existing highway length of 132,000 km being constructed in the last four years alone.

• Flight Connectivity : UDAAN scheme was launched in 2017 to foster regional connectivity by extending flight connectivityto Tier-3 and Tier-4 towns in the country. The scheme has also sparked significant increase in helicopter services in hillyareas and islands that engage 31 heliports.

• Infrastructure development in North Eastern Region : Building of key bridges, and the expansion of railways/highways.Example- 4.94 km long Bogibeel Bridge in Assam was inaugurated in December 2018; it is the second longest rail-cum-road bridge in Asia.

4. Federalism

Fiscal federalism strengthened through various initiatives as follows:

• Fourteenth Finance Commission (FFC) : Increased the share of states in the divisible pool of central taxes from 32 percent to 42 per cent. Although central grants to states saw compensatory cuts, the shift empowers states to managetheir revenues and expenditures independently.

• Goods and Service Tax : The GST Council experience provides key learning for implementing cooperative federalism inseveral other areas such as labour and land regulation.

• Niti Aayog : It helped to institutionalize cooperative federalism by setting up teams from both the states and the centralgovernment to jointly evolve strategies for addressing development challenges. States have also been involved in afriendly competition to improve their Key Performance Indicators (KPIs).

5. Corporate Exits

• Insolvency and Bankruptcy Code (IBC) : Introduced in 2016, it consolidated the insolvency resolution process into asingle law by repealing/amending multiple rules and processes earlier in operation.

IBC set a time limit maximum of 270 days for closing of insolvency and bankruptcy cases within which assets of adefaulting borrower are auctioned to pay off the debt owed to lending institutions.

Following the operationalization of IBC since 2017, a significant number of non-performing assets have been broughtunder its ambit.

In addition to the large sums recovered by creditors from resolution or liquidation, the introduction of a frameworkfor exit has improved the overall business culture of the country.

FUTURE ECONOMIC ROADMAP: A BLUEPRINT FOR GROWTH AND JOBS

Key Element in this Economic Survey

I. Vision: India aims to grow into a USD 5 trillion economies by 2024-25, which will make India the third-largesteconomy in the world.

II. Strategic Blue Print: Key Theme- Shifting gears through a virtuous cycle of savings, investment, exports and growthwith investment as the “Central Driver”.

III. Tactical Tool : This is necessary to calibrate into this Strategic Blue Print.

Behavioural Economics Data as a public good Legal Systems and Contracts Enforcement Consistency in EconomicPolicymaking

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What are the ingredients of a model that can generate a growth rate of 8 percent in a sustainable manner?

Evidence from countries like China and East Asia in recent times, is that high growth rates have only been sustained by agrowth model driven by a virtuous cycle of savings, investment and exports supported by a favourable demographic phase.

Importance of Investment

New Approach of Economic SurveyDeparting from traditional thinking by outlining a growth model that views the economy as being in constant disequilibriuma virtuous cycle or a vicious cycle.• When the economy is in a virtuous cycle, investment, productivity growth, job creation, demand and exports feed into

each other and enable animal spirits in the economy to thrive.• In contrast, when the economy is in a vicious cycle, moderation in these variables dampens each other and thereby

dampens the animal spirits in the economy.

Why this departure from traditional approach?I. First, the traditional view, which has come under significant challenge following the Global Financial Crisis, considers

the concept of equilibrium as a key tenet. In contrast, it is observed that the economy as being in a constant state ofdisequilibrium as captured by a virtuous or a vicious cycle.

II. The traditional view often attempts to solve job creation, demand, exports, and economic growth as separateproblems. In contrast, these macro-economic phenomena exhibit significant complementarities.

This Survey makes the case for investment as the “key driver” that can create a self-sustaining virtuous cycle inIndia. This investment can be both government investments in infrastructure; as such investment crowds in privateinvestment, and private investment in itself.As the economy started doing better measured by GDP per capita, the savings, investment and exports increasedfurther. This is true of China and four countries in East Asia (Thailand, Indonesia, Malaysia and South Korea) whichwitnessed high growth before the Asian Financial Crisis.

Importance of Savings• As demonstrated in the “Feldstein-Horioka puzzle”, a high investment effort must be backed by domestic savings.• The positive correlation of savings and growth is even stronger than that between growth and investment.• It is argued that investment is risky and entrepreneurs are exposed to the risk of idiosyncratic business failure that leads

to the loss of the invested capital. Therefore, savings have to increase more than investment to allow for the accumulationof precautionary savings.

Jobs• A general apprehension is that high investment rate will substitute labour. This thinking has led to much debate about

labour-intensive versus capital-intensive modes of production. However, the Chinese experience illustrates how a countrywith the highest investment rates also created the most jobs.

• Capital investment fosters job creation as capital goods production, research and development, and supply chains alsogenerate jobs.

• International evidence also suggests that capital and labour are complementary when high investment rate drives growth.• For instance, the coming of software and computers, while having replaced some white collar tasks, have also

generated new labour centric tasks related to software and application development, computer security, andspecialised tasks for loan application analysts and medical equipment technicians.

Exports• An aggressive export strategy must be a part of any investment driven growth model. There has been a strong correlation

between growth in exports and GDP growth for the high growth East Asian economies.

• The global market is extremely competitive with the firms that are able to produce at the lowest costs having the abilityto gain market share in exports. So, average productivity of firms in the economy becomes crucial to exportcompetitiveness.

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• Capital investment enhances total factor productivity, which in turn enhances export performance. Therefore,investment becomes crucial to enhancing export performance.

MAJOR FACTORS, REFORMS AND RISKS

Role of demographics in the “virtuous cycle”• The working age population (20-59 years) which comprised 50.5% of the overall population in 2011 will increase to about

60% in 2041. India will remain in this phase of ‘demographic dividend’ for over two decades.• There has been an increase household saving rate with the increase in working age population as witnessed in China

and other high-growth East Asian economies. This is due to many reasons:The decline in fertility rate has reduced the number of youth dependents and thus raises the availability of resourcesfor future savings.Due to the importance of children as a source of retirement income in the Asian/Indian context, the decline in thenumber of children by the working generation promotes saving as they must rely more on savings for retirement incomparison to previous generations.Saving also increases as a result of a composition effect: a large portion of saving tends to occur between the agesof 40 to 65 as people start to save for retirement.

• Both savings and investment rise with the proportion of the working population. Investment rises significantly with anincrease in each of the age cohorts till age 50 while savings rises significantly with an increase in each of the age cohortstill age 60.

Role of Job creation and earnings• Small firms dominate the Indian economy and holds back job creation and

productivity.• Dwarfs account for half of all the firms in organised manufacturing by

number, their share in employment is only 13.3%.• The share of dwarfs in NVA (Net Value Added) is only 4.7% despite

dominating half the economic landscape.• Young, large firms (more than 100 employees and less than 10 years old)

account for only 6.2% of firms by number but contribute a quarter of theemployment and 38% of the NVA.

• Old, large firms (more than 100 employees and more than 10 years old)account for only 9.5% of firms by number but contribute half of the employment as well as the NVA.

• Thus, firms that are able to grow over time to become large are the biggest contributors to employment andproductivity in the economy. In contrast, dwarfs that remain small despite becoming older remain the lowestcontributors to employment and productivity in the economy.

Cross-Country ComparisonAn average firm in the U.S. employs more than seven times as many workers when it is 40 years of age when comparedto the average workers it employed when it was less than five years of age. In contrast, an average firm in India onlyemploys 40% more workers when it is forty years of age when compared to the workers it employed when it was less thanfive years of age. Thus, firms in India do not grow enough to create the necessary jobs and productivity in the economy.

The Role of Financial Sector• The cost of capital remains quite high in India, due to higher real rate of interest, which affects investment prospects in

the country.Risk-return trade-off in the economy• As investment represents a forward looking activity, investors eventually make their decisions to invest based on the risk

adjusted return they expect. Therefore, systematically lowering the risks faced by investors in India is critical for thesuccess of the investment-driven model for economic growth.

• Countries across the world recognise the need to evolve tax system that can foster innovation. Therefore, tax policy andits implementation for start-ups must be rationalised to foster innovative investments in the Indian economy.

ConclusionContinuing the creation of an ecosystem for private investment, especially in the new economy, is therefore critical to enablethe virtuous cycle of investment, demand, exports, growth and jobs.

Note:

1. Firms employing less than 100 arecategorised as small and firmsemploying 100 or more workers arerelatively are large firms.

2. Firms that are both small and olderthan ten years are categorised asdwarfs as these firms have continuedto be stunted in their growth

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INTRODUCTION

• Principles of Behavioural EconomicsIn India, where social and religious norms play a dominant role in influencing behaviour, behavioural economics cantherefore provide a valuable instrument for change. So, beneficial social norms can be furthered by drawing attentionto positive influencers, especially friends/ neighbours that represent role models with which people can identify.As people face tremendous inertia while making a choice, they prefer sticking to the default option. By the nearlycostless act of changing the default to overcome this inertia, desired behaviour can be encouraged withoutaffecting people’s choices.As people find it difficult to sustain good habits, repeated reinforcements and reminders of successful pastactions can help sustain changed behavior.

• The chapter lays out an ambitious agenda for social change:From BBBP to BADLAV (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi);From Swachh Bharat to Sundar Bharat;From “Give it up” for the LPG subsidy to “Think about the Subsidy”; andFrom tax evasion to tax compliance.

THE INFLUENCE SPECTRUM OF PUBLIC POLICY

• Public policies are graded on a spectrum capturing how strongly they influence (or coerce) behavior.On one extreme is laissez faire, i.e. doing nothing and leaving individuals/ firms to chart their own course. But thisfails when markets fail. For instance,individuals/firms in a free market would not restrain pollution.On another extreme, public policy – in the form of regulation – mandates people to act in a socially desirable manner.In between these extremes, there are policies that incentivize good behaviour or dis-incentivize bad behaviour, suchas subsidies for renewable energy and taxes on tobacco.The efficacy of new class of “nudge” policies that lie between laissez faire and incentives have been recentlydiscovered by behavioural economists.

• “Nudge” policies gently steer peopletowards desirable behaviour even whilepreserving their liberty to choose.

• Nudge policies cannot and should notsupplant every incentive-based andmandate-based policy. For example, apolicy that merely nudges people torefrain from assaulting others will fail assuch situations warrant strict decree or,at least, a stronger push than a merenudge.

POLICY FOR HOMO SAPIENS, NOT HOMOECONOMICUS: LEVERAGING THE

BEHAVIOURAL ECONOMICS OF "NUDGE"

TOPIC

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SUCCESSFUL APPLICATIONS OF BEHAVIOURAL INSIGHTS IN INDIA

1. Swachh Bharat Mission (SBM)

• Launched : On 2nd October, 2014 to leverage the leverage the values propagated by ‘role model’ Mahatma Gandhi andthereby create a mass movement on the lines of ‘satyagraha’ for a cleaner India.

• Aim : To achieve universal sanitation coverage.

• Symbol : Invokes Gandhiji’s values.

• Achievement : SBM is the first one to emphasize on behaviour change. Within five years of the launch of SBM, householdaccess to toilets has increased to nearly 100 per cent in all states.

• Attitudinal Change : An independent verification of SBM through the National Annual Rural Sanitation Survey (NARSS)2018-19 has found that 93.1 per cent of rural households had access to toilets, 96.5per cent of the households inrural India who have access to a toilet use it.’

• Learning : Toilet access and usage can be suitably increased with behavioural nudges that push female literacy rates upand discourage early marriages of girls.

• Use of Behavioural insights:

To initiate behavioural change in usage of toilets, more than five lakh swachhagrahis, foot soldiers of the SBM, wererecruited; the similarity with satyagrahis is intentional to reinforce the message.As each village has at least oneswachhagrahi, who is a local, these swachhagrahis were able to leverage their social ties within their villages toeffect change.

SBM relies on community-based approaches to sanitation through Behaviour change techniques such as ParticipatoryRural Appraisal and Community-led Total Sanitation.Non-conformers, therefore, find their act more visible totheir community. The fear of community scorn, or a desire to fit in, or both, have led many to renounce opendefecation.

Many swachhagrahis delivered the message that open defecation is tantamount to eating one’s own excreta, asflies sit on excreta left in open spaces and then sit on food. Thus, appealing to people’s emotions, for example byattaching a sense of disgust to open defecation,has a better chance of moving people to change.

2. Beti Bachao, Beti Padhao (BBBP)

• Background : Between the 2001 and 2011 census, 21 out of 29 states registered a decline in child sex ratio.

• Launched : On 22nd January, 2015 in 100 districts from Panipat, Haryana which had the worst child sex ratio at 834compared with the national average of 919.The initiative was expanded to 61 all districts of the country on March 8,2018 from Jhunjunu, Rajasthan

• Aim : To address the issue of decline in child sex ratio and related issues of empowerment of girls and women.

• Symbol : Choice of Painpat is symbolic through the association with the famous battles fought at Panipat in 1526, 1556and 1761.Later, Rajasthan was chosen for expanding the scheme as the State improved by 34 points in 2017-18 toindicate that good performance receives a reward.

• Achievement : The SRB has improved in 107 districts within a period of 4 years viz., from2015-16 to 2018-19. On anaverage, the sexratio for 161 districts has improved from 909 in 2015-16 to 919 in 2018-19.

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• Attitudinal Change : BBBP has had an impact particularly on large states with very poor child sex ratios – states thatplausibly also needed the greatest pivot in their social norms. The large states of Uttar Pradesh, Madhya Pradesh,Rajasthan, Chhattisgarh, Andhra Pradesh and Jharkhand, all of which had registered declining child sex ratios betweenthe 2001 and 2011 censuses. Around the launch of the BBBP in 2015-16, they had among the poorest sex ratios atbirth but by 2018-19, all these states showed a reversal of the trend, registering an increase in Sex Ratio at Birthbetween 2015-16 and 2018-19.

• Use of Behavioural Insight:

‘Selfie with Daughter’ Initiative: Started by one proud father in a village in Haryana, thecampaign went viral and#Selfie With Daughter became a worldwidehit.

Two elements enabled the campaign’s success: first, telling people what the norm is, and second, showcasing thethousands of other people who were acting in line with that norm.

POWER OF CLEAR MESSAGING

Use of socially and culturally identifiable names gives a clear message of the objectives of the programme – one of theprinciples of behavioural economics is that the messaging needs to be clear and simple. This is evident from the names usedfor various recent schemes, some of which are tabulated in table below:

Name of the Scheme Literal Meaning of the Name Objective of the Scheme Cultural/Societal aspect used

Namami Gange Namami Gange means 'I pray to To arrest the pollution of Ganga River and revive the river.Ganga' as the river Ganga isrevered in our culture.

POSHAN Abhiyan Poshan means holistic nutrition Multi-ministerial convergence mission to ensure amalnutrition free India by 2022.

Ujjwala Means 'bright. clear' To safeguard the health of women by providing them withclean cooking fuel — LPG.

PM Mudra Yojana Mudra means "currency. coins" Provides loans upto 10 lakh to the non-corporate. non-farmsmall/ micro enterprises.

Jan DhanYojana Jan Dhan implies "money of the Financial inclusion program to expand access to financialpeople" services.

Ayushman Bharat Ayushman means "Being Blessed Universal and affordable access to good quality health carewith long life" services.

PRINCIPLES FOR APPLYING BEHAVIOURAL INSIGHTS TO PUBLIC POLICY AND TO AVOID SOCIAL SINS

SOCIAL SINS OF GANDHIJI:

• Mahatma Gandhi’s Seven Social Sins, publishedin Young India on October 22, 1925, providedeep insights into the role of social and politicalconditions shaping human behavior.

• Each of these is a statement of principle thatcan be interpreted and utilized for nudgingpeople towards desirable behavior.

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Principles ofBehavioral Economics

Leverage loss aversion

Disclose outcomes

Leverage default rules

Match messages tomental models

Emphasizing socialnorms

Making it easy tochoose

Reinforce repeatedly

Social Sins ofGandhiji

Politics withoutprinciple

Wealth withoutwork

Pleasure withoutconscience

Knowledgewithout

character

Commercewithout morality

Science withouthumanity

Worship withoutsacrifice

Applications

• Design incentives to reward good behaviour ex ante with threat torevoke reward later if behaviour fails to match expectations.

• Policy makers and legislators exhibit loss-a version in decision-making.• Behavioral insights to address the loss aversion of policymakers can improve

policy and legislative outcomes and uphold ‘Politics with principle’.

• The perception of getting things for ‘free’ as an entitlement has to bereoriented towards discharging our obligations towards society byrendering productive work and contributing to national growth.

• The principles of behavioral economics, viz. disclose the realized benefitsof good behavior and the adverse outcomes of bad behaviour, on theone hand, and emphasizing social norms, on the other hand, offer insightstowards enhancing productivity and tax compliance.

• When less deserving people claim benefits of a development programme,it is an act of pleasure without conscience or a sense of responsibility.

• The behavioural principle of leveraging default rules like making thedefault ‘opt-out’ for availing subsidy, etc. canbe employed to nudge peopletowards confident displays and conduct of altruism.

• The “Give it up” campaign can use this principle more effectively tobroaden its adoption to surrendering all types of subsidies.

• Lack of moral element underlying the information explosion bears therisk of desensitizing societies to ethics of harmony and brotherhood.

• Train people to shift to new rules of thumb, for example, “fluids out – sofluids in” to increase fluid intake during diarrhoea.

• Highlighting information regarding people who exhibit good behaviourand clarifying insignificant role of negative influencers can help enhanceconformity and deter unethical social behaviours.

• Emphasize the number of people who vote, save regularly, file taxes ontime, etc. – the enhancers of good behaviour.

• The National Corporate Social Responsibility Awards of Ministry ofCorporate Affairs is an initiative in this direction. These awardsemphasize ethical behaviour and acknowledge companies that havepositively impacted both business and society.

• Keep options few in number and easy to comprehend.• Using the behavioral principle of “Making it easy to choose”, technology

can make things simple to understand, cut through layers of processesand target the benefit to the actual beneficiary.

• Data in the present times can be created as a public good within thelegal framework of data privacy using technology.

• Remind people of past good behavior. People tend to continue theirpast behaviour, especially when reminded about the same.

• Repeatedly reinforcing examples of people following the positivesentiments of gender and caste equality as truly spiritual people can helpestablish the correct social norm that “serving man is serving God.”

• This may also be seen in the MARD (Men Against Rape and Discrimination)campaign underlying which is the sacrifice of the male ego in a patriarchalsociety for the larger good of gender equality.

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BBBP TO BADLAV (BETI AAPKI DHAN LAKSHMI AUR VIJAY LAKSHMI)

• Learning : The campaign must draw on social and cultural norms because they affect behavior so crucially in India.

• Recommendation : The campaign BADLAV (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi) can be labelled to represent the‘change’ towards gender equaliy by drawing on the imagery of the forms of Goddess Lakshmi and victory (VijayLakshmi).

• Mythological Role Models : The Rigveda identified many women sages as treasures of knowledge and foresight:

o The prophetess Gargi, who questioned the origin of all existence in her Vedic hymns and

o The great Maitreyi, who rejected half her husband’s wealth in favour of spiritual knowledge.

• Mythological insights about gender equalitycan be used as part of a revolutionary BADLAV programme for thefollowing:

a) To explicity state the new norm of gender equality.

b) To focus attention on all those who adopt the new norm.

c) To continuously reinforce the norm over time.

SWACHH AND AYUSHMAN BHARAT to SUNDAR BHARATH

Learning Principle

A strong way to reinforce behaviour is by getting people topre-commit to a certain course of action.

People often respond to disclosure of outcomes; they aremore likely to sustain their new behaviour if told abouttangible benefits that they can internalize.

Recommendation for SBM

SBM swachhagrahis may use this strategy to make peoplepre-commit to sanitation goals.

A swachhagrahi may disseminate information about theincidence of sanitation-related illness in her village and howthis rate has improved after the adoption of sanitation practices.

• SBM was success because it relies on a sustained change in behaviour, not a one-time change.

• Health Sector : People often make decisions in health care that are not in their best interest. This ranges from failing toenrol in health insurance to which they are entitled, to engaging in harmful behaviour like smoking and drug abuse.

• Recommendation:To develop an all-encompassing behavioural economics architecture for the entire health sector ashealth signifies inner beauty

GIVE IT UP to THINK ABOUT THE SUBSIDY

• Campaign Objectives: “Give It Up” encouraged Above poverty line (APL) households to voluntarily surrender their LPGsubsidies – for every household that “gave it up” a BPL household would receive a gas connection.

• Achievement by North eastern states: Arunachal Pradesh, Nagaland, Manipur and Mizoram have higher rate ofsubsidy surrender as compared to larger states availing much more subsidy.

• Behavioural Insight:

Leveraging Default Rules:The default choice matters immensely in the ‘Give it Up campaign’.Given the inertia ofthe nineteen crore people who did not give up their subsidy, many may have intended to give up their subsidy buthave simply not been nudged to action.

Emphasising Social Norms:People act positively when they see others act positively, and particularly when they canrelate to such individuals.So displaying the names and photographs of people who give up subsidy on the website andwhile filling the form can bolster the act of giving it up.

TAX EVASION TO TAX COMPLIANCE

• Behavioural Insight

Modify social norms:From “evading taxes is acceptable” to “paying taxes honestly is honourable”

• Tax Evasion is driven significantly by tax morale which itself is driven primarily by two perceptive factors:

Vertical fairness, i.e. what I pay in taxes is commensurate to the benefits I receive as services from the Government.Citizens perceive vertical fairness to be low if they find their tax payments being squandered in wasteful publicexpenditure or by corruption

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Horizontal fairness, i.e., differences in the taxes paid by various sections of society.Perceptions of horizontal fairnesssuffer when the employee class is forced to contribute disproportionately to income taxes while the class of self-employed gets away paying minimal taxes.

• Recommendations:Signboards showing “tax money at work”in constructions projects in a panchayat/district explicitly convey to citizensthat their tax money is used in valuable public goods,thereby lowering perceptions of vertical unfairness.Similarly, highlighting the tax paid by other tax payers, especially self-employed individuals, in the panchayat/districtthrough SMS, billboards etc., can correct perceptions of horizontal unfairness.Top 10 highest tax payers within a district can be highlighted and accorded due recognition.The highest taxpayers over a decade could be recognised by naming important buildings, monuments, roads, trains,initiatives, schools and universities, hospitals and airports in their name.

USING BEHAVIOURAL PRINCIPLES FOR VARIOUS SCHEMES

SCHEMESPRINCIPAL

LEVERAGEDEFAULT RULES

MAKE IT EASYTO CHOOSE

EMPHASIZESOCIAL NORMS

DISCLOSEOUTCOMES

REINFORCEREPEATEDLY

LEVERAGE LOSSAVERSION

BBBP to BADLAV

Simplify procedures tomake it easier forwomen to reportincidences of variouscrimes.

Women village leadersmust be advertised asrole models

Mandating organisationsto report the "Genderpay gap".

Regular TV advertise-ments that reinforcethe positive norm ofgender equality.

Reward structures canbe modified to amelioratethe higher aversion ofwomen to competition.

SWACHH BHARAT toSUNDAR BHARAT

Providing smart insuranceplan defaults can significantlysimplify health insurancechoice.

Making the process ofbuying unhealthy optionsmore time taking.

Youth may be moreresponsive to a drugprevention program afterthe death of a celebrityfrom drug overdose.

Disclosing to people aboutthe realized benefits ofhand-washing or familyplanning practices.

Sending messages topatients.

Savings to be returned tothem if they achieve theirgoals, but are forfeitedotherwise, can help themachieve these difficult goals.

GIVE IT UP to THINKABOUT THE SUBSIDY

The default option canbe modified to 'opt out'of the subsidy for thehouseholds having acertain threshold ofincome.

Mobile phones andapps can also makeimpulsive giving upeasier.

Making people feelgood about giving upsubsidies can helpestablish the correctsocial norm

Displaying the namesand photographs ofpeople who give upsubsidy on the website.

Givers could viewpersonal photos of thepeople benefitting fromthe subsidy or a videowith a beneficiary sayingthank you.

Reinforce the policy ofsetting the subsidyschemes default toopt-out with a fairlyeasy process to opt in.

TAX EVASION to TAXCOMPLIANCE

Automatic deduction oftax and directing all orportion of refunds intosavings accounts can beused to encouragesavings, includingretirement savings.

Removing barriers tofiling taxes-procrasti-nation, hassle of fillingforms, or failing tounderstand the terms-can improve compliance.

Providing informationabout peer behaviourcan make taxpayersadjust their reportedincome.

Persistent public shamingcan be detrimental forcompliance because ofstigmatisation effects.

Repeatedly sendingfairness driven andnormative messagesadded to standardreminder letters.

Tax with holding followedby refunds at the timeof tax filing may increasetax compliance andtotal taxes paid.

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FUTURISTIC APPROACH

• First, the proposal to set up a behavioural economics unit in the Niti Aayog must be immediately activated. Care,however, must be taken in not to appoint those who are not experts in this area.

• Every program must go through a “behavioural economics” audit before its implementation which should adhere to itsprinciples.

• The behavioural economics team can work with various state governments not only to inform them about the potentialbenefits but also help them to improve the efficacy of the programs.

MAKEMESSAGES

MATCH MENTALMODELS

Design programmeswith appropriatelygendered wording toattract female applicants

Mother's Absolute Affection(MAA) Programmecampaign leverages roleof influencers and the ideaof commitment devices.

Behavioural techniquescan help achievedesirable outcomesfrom subsidy program-mes and in turn reducethe effective costs ofsubsidy.

Reminding tax payersthat public goods canonly be provided inreturn for tax compliancecan boost tax morale.

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INTRODUCTION

• MSMEs that grow not only create greater profits for their promoters but also contribute to job creation and productivityin the economy.

• Job creation in India, however, suffers from policies that foster dwarfs, i.e. small firms that never grow, instead ofinfant firms that have the potential to grow and become giants rapidly.

• The perception of small firms being significant job creators is not necessarily correct as small firms find it difficult tosustain the jobs they create. In contrast, large firms create permanent jobs inlarger numbers.

• This fostering of dwarfs occurred because of size-based incentives that are provided irrespective of firm age andinflexible labour regulation, which contain size-based limitations.

• To unshackle MSMEs and thereby enable them to grow, all size-based incentives must have a sunset clause of lessthan ten years.

• Deregulating labour law restrictions can create significantly more jobs, as seen by the recent changes in Rajasthan whencompared to the restof the states.

THE BANE OF DWARFISM AND ITS IMPACT ON JOBS AND PRODUCTIVITY

1. Domination of ‘Dwarfs’ in number

• Dwarfs are defined as small firms that never grow beyond their small size which dominates the Indian economy andholds back job creation and productivity.

• Based on the data from the Annual Survey of Industries (ASI) for the year 2016-17:

NOURISHING DWARFS TO BECOMEGIANTS: REORIENTING POLICIES

FOR MSME GROWTH

TOPIC

3

Observation

Thus, firms that are able to grow over time to become large are the biggest contributors to employment and productivityin the economy. In contrast, dwarfs that remain small despite becoming older remain the lowest contributors to employmentand productivity in the economy.

Criteria

Definition

Proportion of firms

Contribution inEmployment

Share in NVA (NetValue Added)

Dwarfs

Small and older than ten yearsare categorised as dwarfs

Account for half of all the firmsin organized manufacturingby number

14.1%

7.6%

Young and Large Firms

More than 100 employees andless than 10 years old

Account for only 5.5% of firmsby number

21.2%

37.2%

Old and Large Firms

More than 100 employees andmore than 10 years old

Account for only 10.2% of firmsby number

Around 50%

Around 50%

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Observation

• Thus, the contribution of small firms to output and employment in the manufacturing sector is insignificant thoughthey account for close to 85 per cent of all firms.

• The above findings dispel the common notion that small firms generate the most employment. Small firms maygenerate a higher number of new jobs. However, they destroy as many jobs as well. Thus, higher levels of job creationin small firms co-exist with job destruction, thereby leading to lower levels of net job creation.

2. Effect of Size compared to Effect of age

• As compared to the small firms, it is the young firms that contribute significantly to employment and value added.

• Firms less than 10 years of age account for about 30% of employment and about half the NVA.

• In fact, the share in employment as well the share in NVA trend downwards with an increase in firm age.

Observation

• Thus, young firms account for a disproportionateshare of employment and productivity.

3. Impact of the above size distribution of firms on jobs and productivity

Criteria

Definition

Proportion offirms

Contribution inEmployment

Share in NVA (NetValue Added)

Small Firms

Less than 100 employees

Around 85% in organized manufacturing

Accounted for only 23 per cent of the totalemployment in organized manufacturing

The share of small firms in Net Value Added (NVA)from organized manufacturing was only 11.5 per cent

Large Firms

More than 100 employees

Account for only around 15 per cent of allthe firms in organized manufacturing

Accounted for over 77 per cent of the totalemployment

The share of large firms in NVA was 88.5 percent in 2016-17.

Criteria

EmploymentLevel

Productivity

United States

The average employment level for 40-year oldenterprises in the U.S. was more than seven timesthat of the employment when the enterprise isnewly set up.

The average productivity level for 40-year oldenterprises in the U.S. was more than four timesthat of the productivity of an enterprise that is newlyset up.

India

The average employment level for 40-year old firmsin India was only 40 per cent greater than theemployment when the enterprise is newly set up.

The average productivity level for 40-year old firmsin India was only 60 per cent greater than theproductivity of an enterprise that is newly set up.

Observation

• Thus, the comparison with other countries highlights that both employment creation and productivity do not growadequately as firm’s age in India.

ROLE OF POLICY IN FOSTERING DWARFISM

• Our policies protect and foster dwarfs rather than infants. While infant firms are small and young, dwarfs are small but old.

• While infant firms can grow to become large firms that are not only more productive and generate significant employment,dwarfs remain small and contribute neither to productivity nor to jobs.

• The lack of productivity and growth inhibits the ability of the dwarfs to create jobs.

IMPACT OF LABOUR REGULATION

• India has a plethora of labour laws, regulations and rules, both at the centre and the state levels that govern theemployer-employee relationship. Each of these legislations exempts smaller firms from complying with these legislations.

• Based purely on the size of firms:

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The Industrial Disputes Act (IDA), 1947 mandates companies with more than 100 employees to get permission fromthe Government before retrenchment of employees. A large majority of firms would prefer to be below the thresholdof 100 employees.

Observation

• Thus, such labour legislation creates perverse incentives for firms to remain small.

S. No.

1.

2.

3.

4.

5.

6.

7.

8.

Labour Acts

Industrial Disputes Act, 1947, Chapter V relating tostrikes, lockouts, retrenchment, layoff

Trade Union Act, 2001-Registration of trade unions

Industrial Employment (Standing Orders) Act, 1946

Factories Act, 1948

Contract Labour (Regulation & Abolition) Act, 1970

The Minimum Wages Act, 1948

Employees' State Insurance Act, 1948 - ESI Scheme

Employees' Provident Fund Miscellaneous ProvisionsAct, 1952

Applicability to Establishments

Employing 100 or more workers

Membership of 10 per cent or 100 workmen whicheveris less

100 or more workmen

10 or more workers with power and 20 or more workerswithout power

20 or more workers engaged as contract labour

Employment in the schedule having more than 1000workers in the State

10 or more workers and employees monthly wage doesnot exceed Rs. 21000

20 or more workers

Size based Limitations posed by Key Labour Legislations

COMPARING PRODUCTIVITY INDICATORS IN “INFLEXIBLE” VERSUS “FLEXIBLE” STATES

Background of the Comparison

• 21 States were surveyed and the responses were compiled by the OECD into an index that reflects the extent to which

procedural changes have reduced transaction costs by limiting the scope of regulations, providing greater clarity

in the application of regulations, or simplifying compliance procedures.

• Rajasthan was the first State that introduced labour reforms in the major Acts. There after many States followed on

the path of Rajasthan.

• The year 2014 is, therefore, fixed as the cut off year to classify and rank States as Flexible and Inflexible.

• Flexible states include those states that score 20 or more out of a maximum score of 50, i.e., states that have reduced

transaction costs by at least 40 per cent. Other states are denoted as Inflexible.

• The Flexible States contribute disproportionately more to labour, capital and productivity when compared to the Inflexible

States.

• The aggregate number of workers, capital and NVA are significantly higher on average in the Flexible States than in the

Inflexible States.

• The average number of workers per factory, capital per factory and wages per factory are also higher in the Flexible

states than in the Inflexible states.

• Due to rigidity in the labour laws, employers in Inflexible States prefer substituting labour with capital.

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IMPACT OF THE LABOUR LAW CHANGE IN RAJASTHAN

Summary of labour reforms in Rajasthan

Labour Acts Amendments introduced in Rajasthan as part of Labour Reforms

Industrial Disputes Act, 1947 • No government nod required for companies employing up to 300 workers forretrenching, laying off or shutting down units. Earlier limit was 100 workers.

• To form any union, requirement of membership as a proportion oftotal workmenincreased from 15 per cent to 30 per cent.

Factories Act, 1948 Threshold limit increased from 10 or more workers with power to 20 or more workerswith power

Contract Labour (Regulation Applicable to establishments that employ 50 or more workers on contract againstand Abolition) Act, 1970 the earlier 20 or more workers.

Apprentices Act, 1961 • Fix the number of apprentice-training related seats in industry and establishments.• The stipend for apprentices will be no less than the minimum wage.• To encourage skilling, government to bear part of costs of apprentice training.

Observation• There has been a significant increase in the annual growth of various indicators post-labour reforms in Rajasthan vis-à-

vis the Rest of India.1. Number of factories with more than 100 employees has increased2. Number of workers per factory has increased3. Total output per factory has increased

• Plants in labour-intensive industries in states that have transited towards more flexible labour markets, such as UttarPradesh or Gujarat, are 25.4 per cent more productive than their counterparts in states like West Bengal or Chhattisgarhthat continue to have labour rigidities.

POLICY OF SMALL SCALE RESERVATION

About the Policy• The Small Scale Industries (SSI) reservation policy was introduced in 1967 to promote employment growth and income

re-distribution.• The policies targeted at the small firms referred to as the MSMEs include various incentives till they reach an investment

upper limit quantified in terms of investment in plant & machinery.

Scheme

Priority Sector Lending (PSL)

Credit Guarantee Fund Scheme

Purchase Preference Policy

Raw Material AssistanceScheme of National Small

Industries Corporation (NSIC)

Marketing Assistance Scheme

GST Composition scheme

Objective

Direct and indirect finance at subsidized interest rates shall include all loans given tomicro and small enterprises, irrespective of their age.

This scheme makes available collateral-free credit to the micro and small enterprises,irrespective of their age.

A group of items are reserved for exclusive purchase from small scale units, irrespectiveof their age.

This scheme aims to help MSMEs, irrespective of their age, with financing the purchaseof raw material (both indigenous and imported).

Provides assistance to MSMEs, irrespective of their age, for the following activities:organization of exhibitions abroad, organizing buyer-seller meets, intensive campaignsand marketing promotion activities.

Scheme allows MSME firms, irrespective of their age, to pay GST at a flat rate. Theturnover limit for businesses availing of the GST composition scheme is set at Rs. 1.5 crore.

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Impact by Firm of Different Size and Age• The dwarfs firms that are small and old are significantly more likely to manufacture reserved products than any other

category of firm.The larger firms (above 50 employees) and younger firms are significantly more likely to manufacturede-reserved products than smaller firms.

• Following the de-reservation (several product categories were eliminated in phased manner from 1997-2007), smallfirms lost the jobs and large firms created jobs.

• Across the various size categories, the effect of de-reservation on net job creation decreased with firm age.• Specifically, job destruction was the maximum among the smallest firms (1-4 employees) and least among the firms with

50-99 employees.• In contrast, job creation was the maximum among the largest firms (500+ employees) and least among the firms with 50-

99 employees.• Across all age categories, the effect of de-reservation on net job creation monotonically increased with firm size.

Observation• When benefits reserved for small firms are eliminated, younger and larger entrants create the most jobs while

older and smaller incumbents destroy the maximum jobs.• The older and smaller firms utilize reservation policies the most. Benefits provided to small scale firms irrespective

of their age create perverse incentives for firms to remain dwarfs and thereby limit their contribution to jobs. Incontrast, infant firms, especially new entrants, create the most jobs.

FUTURISTIC TREND

• The evidence provided above highlights that dwarfs, i.e., small firms that have continued to remain small despite aging,have low productivity and low value added in manufacturing. In contrast, infants, i.e., small firms that are small whenthey are young but can grow to become large firms as they age, have high productivity and higher value added inmanufacturing.

• Therefore, while dwarfs consume vital resources that could possibly be given to infant firms, they contribute less tocreation of jobs and economic growth as compared to infant firms.

• This necessitatesre-calibration of policy towards supporting infant firms as detailed below:

1. Incentivizing ‘infant’ firmsrather than ‘small’ firms

2. Re-orienting Priority SectorLending (PSL)

3. Sunset Clause for Incentives

4. Focus on High EmploymentElastic Sectors

5. Focus on Service Sectorswith high Spillover Effectssuch as Tourism

• With the appropriate grandfathering of existing incentives, they need to be shiftedaway from dwarfs to infants based on the age criterion.

• This will discourage the firms to remain small as they would receive no benefit fromcontinuing to remain small despite aging and thus, their natural incentives to growwould get activated.This will generate economic growth and employment.

• As per extant policy, certain targets have been prescribed for banks for lending tothe Micro, Small and Medium (MSME) sector that exacerbates perverse incentivesto firms to remain small.

• Under MSME’s PSL targets, it is necessary to prioritize ‘start ups’ and ‘infants’ inhigh employment elastic sectors. This would enhance direct credit flow to sectorsthat can create the most jobs in the economy.

• Every incentive for fostering growth should have a ‘sunset’ clause of five to sevenyears after which the firm should be able to sustain itself.The policy focus wouldthereby remain on infant firms.

• To step up the impact of economy growth on employment, the focus has to be onsuch high employment elastic sectors such as the manufacture of rubber and plasticproducts, electronic and optical products, transport equipment, machinery, basicmetals and fabricated metal products, chemicals and chemical products, textilesand leather & leather products.

• Developing key tourist centres will have ripple effects on job creation in areas suchas tour and safari guides, hotels, catering and housekeeping staff, shops at touristspots etc.

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INTRODUCTION

In recent years there has been an exponentialrise in the amount of published data due towidespread availability of technology andinternet. People produce data about themselvesand store this data on public and private servers.Together the advancements in gathering, storing,processing and dissemination has lowered themarginal cost of data. Alongside, it has alsoincreased its marginal benefits. For the data tobe useful it is important that it be available to thecitizens of the country as a public good along withnecessary check and balances.

USING DATA AS PUBLIC GOOD

The survey calls for a data democracy where the data is “of the people, by the people, for the people”. However, itrecognizes various hurdles in our current system and data structure, in realising this goal.

• Private sector has a huge investment in data related endeavours as companies are increasingly reliant on date formaking decisions (as per Forbes survey its 53%). Yetthere are areas where the data has not beenubiquitously harnessed because marginal benefitsfrom the data may not be as high for the privatesector.

For example developing an all-encompassingapplication for farmers that may help them toknow the predicted weather, prices of goods inneighbourhood villages, etc.

Such areas require government interventioneither by providing the data itself or correctingthe incentive structure faced by the privatesector, depending on the nature and sensitivityof data. In the agriculture sector, theGovernment has done exactly this by creatingthe e-NAM.

• There is simultaneous concern related to theprivacy of data and data leakages. The processrequired for ensuring privacy of intimate data isdifferent from that required for anonymized orpublic data due to the difference in knowledge andconsent of the data principle.

• For the data to be useful (Economies of scale) itneeds to qualify 3 aspects-

DATA "OF THE PEOPLE,BY THE PEOPLE,

FOR THE PEOPLE"

TOPIC

4

E-NAM

E-NAM i.e. National Agriculture Market is a pan-India electronictrading (e-trading) portal which seeks to establish-

• A national e-market platform for transparent saletransactions and price discovery initially in regulatedmarkets. Willing States to accordingly enact suitableprovisions in their APMC Act for promotion of e-trading bytheir State Agricultural Marketing Board/APMC.

• Liberal licensing of traders/buyers and commission agentsby State authorities without any pre-condition of physicalpresence or possession of shop /premises in the market yard.

• One license for a trader valid across all markets in the State.

• Harmonisation of quality standards of agricultural produceand provision for assaying (quality testing) infrastructure inevery market to enable informed bidding by buyers.

• Single point levy of market fees, i.e. on the first wholesalepurchase from the farmer.

• Provision of Soil Testing Laboratories in/ or near the selectedmandi to facilitate visiting farmers to access this facility inthe mandi itself.

• Small Farmers’ Agribusiness Consortium (SFAC, a registeredsociety of Dept of Agriculture) is the lead promoter of NAM.

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Data Integration : Firstly, in terms of data, thewhole is larger than the sum of its parts. Forexample, as MGNREGA can be a real-timeindicator of rural distress, the credit scoring doneusing the transactions data of Jan Dhan accountscan be used to provide credit in districts/panchayats that are experiencing distress.

Data Presentation : Data needs to cover acritical mass of individuals/firms so that comparisons and correlations can be assessed among individuals/firms togenerate useful policy insights.

Data Assessment : Data must have a long enough time-series so that dynamic effects (like before and afterevaluation) can be studied and employed for policymaking.

• There can be various issues even if the private sector collects social sector data.

Firstly, if private sector were to put such rich data together, this would result in a monopoly that would reducecitizen welfare on onse hand and would violate the principle of ‘data by citizens and for citizens’.

Secondly, as the private sector would fail to provide an optimal amount of any non-rivalrous, nonexcludable data(like a public good), government intervention is required.

Building the Data System

In the path of making data a public good, a major/initial step is the building of a framework for data related services in formof Data system.

• The government of India collects 4 distinct sets of data about people- administrative, survey, institutional and transactivedata. While the first two are robustly and comprehensively maintained the latter two require immediate attention.

• The data collection in India is highly decentralised and the data collected by one ministry is kept separate from the onecollected by another. However, lately there have been discussions on the integration of data under the Data AccessFiduciary Architecture.

The Data Access Fiduciary themselves have no visibility on the data due to end-to-end encryption. Such a modelputs user consent in the centre of the government’s initiative to make Data a Public Good.

• Further, it is also important to have a common identifier to make it easy to consolidate information.For example, if allgovernment databases requiring location codes are aligned with the codes in a single directory (like Local GovernmentDirectory developed by Ministry of Panchayati Raj), then all databases will share a common location field that can helpin merging data, and reduce accuracy errors in the distribution of welfare.

• To alleviate the concerns related to such data system having hold of such comprehensive & exhaustive information aboutevery citizen, the survey provides 3 arguments-

Large quantities of data already exist in government records, and the objective is only to use this data in a moreefficient way. A real time up gradation can aid in processing and integration.

People can always opt out of divulging data to the government, where possible.

The choice to share the individually linked data from such services will always be with the citizen under the DataAccess Fiduciary Architecture.

TRANSFORMING INDIA’S DATA INFRASTRUCTURE

To improve the quality of the data collectedthe survey suggests various reforms on each ofthe 4 steps of data harnessing, viz. gathering,storage, processing and dissemination.

• Gathering data: Digitize existing paperbased data (like Digitize India) and initialdigital data collection at source.

• Storing Data: Initiate real time storagefor select data and reduce time lag betweencollection and data entry.

Related Information

Anonymized data: Data that is not linked to a specific individualbut is still available at an individual level of granularity.

Public data: Data neither linked to an individual nor at anindividual level of granularity, such as census.

Non-rivalrous: Consumption by one individual does not reducethe quantum available for others.

Open Government Data• It allows citizens to access a range of government data in machine-

readable form in one place.• The portal allows union ministries and departments to publish datasets,

documents, services, tools and applications collected by them for public use.• Theplatform also includes citizen engagement tools like feedback forms,

data visualisations, Application Programming Interface (APIs) etc.• Open data not only helps government officials make better decisions

but also gets people involved in solving problems.

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• Processing data: Building capacities of government bodies to analyse data and involve private sector in analysis andinsight generation.

• Disseminating data: Create scheme dashboards, open district level dashboard to public and open data from third partystudies for the public.

Potential Benefits of installing data structure

• For Governments: Being able to retrieve authentic dataand documents instantly, governmentscan improve targetingin welfare schemesand subsidies by reducing both inclusionand exclusion errors.

• Private sector firms: There is tremendous scope for the private sector to benefit from the data and they should beallowed to do so, at a charge. Fortunately, stringent technological mechanisms exist to safeguard data privacy andconfidentiality even while allowing the private sector to benefit from the data.

• For Citizens: Having all the data at one place and easily accessible can work as a boon for the citizens. For example, dueto DigiLocker, citizens no longer need to run from pillar to post to get “original” documents from the state such as theirdriving licence, Aadhaar card, PAN card, CBSE results, etc.

• The benefits of creating data as a public good can be generated within the legal framework of data privacy. Thegovernment is working in this direction. A recent example of the efforts can be seen in government’s plan of ‘DataLocalization’.

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INTRODUCTION

• The single biggest constraint to ease of doing business in India is the abilityto enforce contracts and resolve disputes. India continues to lag on theindicator for enforcing contracts, climbing only one rank from 164 to163 in the latest report of EODB, 2018.

• There are more than 3.5 crore cases pending in the judicial systempredominantly concentrated in various district and sub-ordinate courts.These backlog of cases constrains economic growth.

• A case clearance rate of 100 per cent can be achieved with the addition ofmerely 2,279 judges in the lower courts and 93 in High Courts which iswithin sanctioned strength and only needs filling vacancies.

Observations of Economic Survey 2017 on Judicial Pendency and Economic Growth

Steps taken to improve the Contract Enforcement Regime

• The government scrapped over 1000 redundant legislations;

• Rationalisation of tribunals

• Amendment of The Arbitration and Conciliation Act, 2015

• Passage of The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015

• Reduction of intra-government litigation

• Expansion of the Lok Adalat Programme to reduce the burden on the judiciary

• Expansion of the National Judicial Data Grid by the judiciary

Observation

• Delays and pendency of economic cases are high and mounting in the Supreme Court, High Courts, Economic Tribunals,and Tax Department, which is taking a severe toll on the economy in terms of stalled projects, mounting legalcosts, contested tax revenues, and reduced investment more broadly.

• Delays and pendency stem from the increase in the overall workload of the judiciary, in turn due to expanding jurisdictionsand the use of injunctions and stays; in the case of tax litigation, this stems from government persisting with litigationdespite high rates of failure at every stage of the appellate process;

ANALYSIS OF INDIAN JUDICIARY

PENDENCY OF CASES

• The pendency of a case on a given date is the time since the date of filing.

• More than 64 per cent of all cases are pending for more than one year.

• The civil cases contribute a mere 28.38 per cent of total pendency while criminal cases contribute about 71.62 percent in District & Sub-ordinate (D&S) courts.

• Odisha, Bihar, West Bengal, Uttar Pradesh and Gujarat have higher average pendency for both civil and criminal cases ascompared to the national averages.

• Punjab and Delhi have the least average pendency of cases.

ENDING MATSYANYAYA: HOW TO RAMP UPCAPACITY IN THE LOWER JUDICIARY

TOPIC

5

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DISPOSAL OF CASES

• Disposal time is measured as the time span between the date of filing and the date when the decision is passed.

• In D&S courts, 74.7 per cent of the civil cases and 86.5 per cent of the criminal cases are disposed within threeyears.

• Bihar,Odisha and West Bengal have higher average disposal time than the national average forboth civil and criminalcases. Further, Punjab and Delhi have the lowest average disposal time.

• The states in eastern India perform poorly although Gujarat too has higher disposal time.

• The average disposal time for civil and criminal cases in Indian D&S courts in 2018was 4.4 fold and 6 fold higherrespectively when compared with the average of Council of Europe (COE) members.

CASE CLEARANCE RATE

• The Case Clearance Rate (CCR) is the ratio of the number of cases disposed of in a given year to the number of casesinstituted in that year.

• CCR for civil and criminal cases in India was 94.76 per cent and 87.41 per cent respectively in 2018 while the COEmemberhas already achieved the CCR above 100per cent in 2016 for both civil and criminal cases.

• While the numberof cases instituted each year in D&S courtshas gone up, so has the number of disposals.However, thegap between institution and disposals allows cases to accumulate and results in an increase in pendency. This is becausethe CCR remains structurally below 100 per cent.

• Gujarat and Chhattisgarh have clearance rates of above100 per cent in 2018.Madhya Pradesh, Assam and Tamil Naduhave impressively high clearance rates of close to 100 per cent.

• Again, eastern Indian states perform poorly. Bihar, Odisha, and West Bengal have low clearance rates. These statesshould be given priority in the appointment of additional judges.

CLEARING THE LOGJAM IN COURTS

There are 2 major issues that needs to be dealt:

• To achieve a 100 per cent clearance rate must be achieved so that there is zero accumulation to the existing pendency.

• Secondly, the backlog of cases already present in the system must be removed.

Criteria District & High Supreme

Subordinate Courts Courts Court

Institution of Cases in 2018 1.5 crore 17.93 Lakh 33,743

Disposal of Cases in 2018 1.33 crore 15.75 Lakh 33,011

Backlog of Cases 3.03 Crore 42.39 Lakh 56,320

Sanctioned Strength of Judges 22750 1079 31

Working Strength of Judges 17891 671 28

Case Clearance Rate (CCR) 89% 88% 98%

Additional Judges required to reach 100% CCR 2279 93 1

Additional Judges needed to clear entire backlog in next 5 years 8152 361 6

Observation

• A major hurdle to economic growth and social well-being can be stabilized through a relatively small investment in thelegal system.

PENDENCY IN PROCEDURES

• Lower Courts Records – Records and Proceedings : Civil cases spend an average of 398 days in this stage and 369 daysin the Hearing’ stage. This in efficiency consumes a significant proportion of a case’s life, and is a major factor contributingto delays and backlog.

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• Notice/Summons’ and Evidence’ stages: These are also time consuming at 322 and 325 days on average, respectivelyin civil cases.

• Evidence’ stage and Framing of Charges’ stages: These consume 235 and 231, respectively in criminal cases.

Observation

• The process for both civil and criminal cases can be significantly sped up by targeting the delay in these specific stages.

MAKING COURTS MORE PRODUCTIVE

Increase numberof working days

Establishment ofIndian Courts andTribunal Services

Deployment ofTechnology

• After accounting for weekends and public holidays, it leaves 190 working days for the SupremeCourt, 232 working days for High Courts and 244 days for Subordinate courts.

• Subordinate courts, which account for the bulk of pendency, seem to work almost as manydays as government offices (around 244 working days in 2019).

• The survey observes that increasing the number of working days may improve productivityof the Supreme Court and in some High Courts, but is unlikely to significantly impactlower courts which account for the bulk of pendency.

• Major problem lies with the quality of the administration of the courts system, particularlybackend functions and processes.

• Create a specialized service called Indian Courts and Tribunal Services (ICTS) that focuses onthe administrative aspects of the legal system. Similar, court management services exist inother countries: Her Majesty's Court and Tribunals Services (UK), Administrative Office of USCourts (US), Court Administration Service (Canada).

• The major roles to be played by ICTS would include the following:

(i) Provide administrative support functions needed by the judiciary.

(ii) Identify process inefficiencies and advise the judiciary on legal reforms.

(iii) Implement the process re-engineering.

• One major effort in this direction is the e-Courts Mission Mode Project that is being rolled outin phases by the Ministry of Law and Justice. This has allowed the creation of the NationalJudicial Data Grid (NJDG).

• The digitalization of cases is now allowing stake-holders to keep track of individual cases andtheir evolving status.

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INTRODUCTION

• Economic policy uncertainty correlates strongly with the macroeconomic environment, business conditions and othereconomic variables that affect investment.

• Surges in economic policy uncertainty increase the systematicrisk, and thereby the cost of capital in the economy. As a result,higher economic policy uncertainty lowers investment, especiallybecause of the irreversibility of investment.

Why Policy Uncertainty Effects Investment?

• A poorly drafted law that is riddled with ambiguities andexemptions that inevitably lead to conflicting interpretationsand spawn endless litigation.

• Such uncertainty can spook investors and spoil the investmentclimate in the economy.

• As investment is forward-looking, future expectations play acritical role in the decision to invest.

• Specifically, an investor invests in a project if the upfront costsare less than the present value of the expected rewards fromthe investment.

ECONOMIC POLICY UNCERTAINTY IN INDIA

• Economic Policy Uncertainty when measured using Economic Policy Uncertainty (EPU) index was the highest in 2011-12coinciding with the years of policy paralysis.

• The index is also high in the second half of 2013 when the economy faced the episode of “taper tantrum” leading tovolatile capital flows, depreciation of rupee vis-a-vis US dollar.

• Afterwards economic policy uncertainty has reduced significantly over the last decade in India.

• The index of economic policy uncertainty for India shows peaks in few months of 2011 and 2012, reflecting the policyparalysis during that period, which witnessed the problems of the high twin deficits and high inflation, thereby exacerbatingmacroeconomic vulnerability.

Decoupling of Economic Policy Uncertainty in India Since 2015

• Economic policy uncertainty in India moved closely in tandem with global uncertainty until 2014. However it started todivulge starting from 2015.

• Even though world over uncertainties are on the raise such as Brexit and US trade war with China, India is hardly affectedby these incidents.

• The low economic policy uncertainty index for India in last one year points towards resilience of the economy even intimes of global trade uncertainty.

RELATION BETWEEN ECONOMIC POLICY UNCERTAINTY AND INVESTMENT

• Foreign Investment- The foreign component of fixed investment, FDI and FII flows are expected to be negatively relatedto the volatility of exchange rate.

• Cost of Borrowing- Borrowing costs are expected to be negatively associated with investment as they reflect higherinput costs.

HOW DOES POLICY UNCERTAINTYAFFECT INVESTMENT?

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Capital Asset Pricing Model

• It postulates that the required return oninvestment correlates positively with thesystematic risk underlying the investment.

• An increase in uncertainty in the economyincreases this systematic risk and therebyincreases the rate of return required to justifythe investment.

• As a result, projects that generate a return lowerthan this required return become unviable whenuncertainty increases in the economy.

• Also, as fixed investment is irreversible,uncertainty exacerbates riskaversion, increasesthe premium demanded for assuming risk, andeventually dampens investment.

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• Price of Product - Rise in prices are expected to trigger greater investments. As businesses find it profitable to do so aslong as consumption demand is strong to overcome the impact of inflation.

• Capacity Utilization - The utilization of capacity in any quarter is expected to have a positive relationship with investmentgrowth in the following quarter, as excess unutilized capacity in the previous quarter may lower the need for newinvestment in the current quarter.

POLICY RECOMMENDATIONS

• Firstly, policymakers must ensure that their policy actions are predictable, provide forward guidance on the stance ofpolicy, maintain broad consistency in actual policy with the forward guidance, and reduce arbitrariness in policyimplementation.

• Secondly, economic policy uncertainty index must become an important index that policymakers at the highest levelmonitor on a quarterly basis.

• Thirdly, Quality assurance of processes in policy making must be implemented in the government.


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INTRODUCTION

• There are trends of slowdown in population growth in the next two decades. India will enjoy the “demographic dividend”phase but some states will start transitioning to an ageing society by the 2030s.

• India’s working-age population will grow by significant numbers by 2031-41. Meanwhile, the proportion of elementaryschool-going children will witness significant declines.

• The focus of the policy makers should be two-fold:

Consolidation/Merging of Schools rather than Prepare for ageing which will need investments in building new health

make them viable rather than building new ones care as well as plan for increasing the retirement age.

RECENT DEMOGRAPHIC TRENDS

• India’s population growth has come down from an annual growthrate of 2.5 per cent during 1971-81 to an estimated 1.3 per centas of 2011-16.

Populated states like U.P, Bihar, Rajasthan and Haryana havewitnessed deceleration in population growth and some states such as West Bengal, Punjab, Maharashtra, etc aregrowing below 1%.

• This decline in population growth is due to steady decline in India’s TFR from 4.5 (1984) to 2.3 as of 2016. This is gradualas compared to other emerging economies.

• The replacement level fertility is marked at 2.1 and India has reached the current TFR of 2.3 at a relatively low percapita income.

• Inter-state variation in TFR:It is below replacement level fertility in 13 out of the 22 major states. In fact, TFR hasreached as low as 1.6-1.7 in states such as Delhi, West Bengal, Andhra Pradesh and Punjab. Even high fertility states suchas Bihar, Rajasthan, Madhya Pradesh, Uttar Pradesh have seen a sharp decline in TFR over the years.

• These trends indicate India has entered the next stage ofdemographic transition with population growth set to slowalong with a significant increase in the share of working-agepopulation (also called “demographic dividend” phase).

• The southern states such as H.P, Punjab, West Bengal andMaharashtra are already quite advanced in the demographictransition with:

TFR already well below replacement level fertility

Population growth mainly due to momentum

More than 10 per cent of the population over the age of 59

At most one-third of the population below the age of 20.

• States such as Bihar, Uttar Pradesh, Jharkhand, Chhattisgarh, Rajasthan and Madhya Pradesh are still in the early stagesof demographic transition.

• Urbanisation, Improvements in health care and increase in female education are the various drivers of demographicchange.

INDIA'S DEMOGRAPHY AT 2040:PLANNING PUBLIC GOOD

PROVISION FOR THE 21st CENTURY

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Total fertility rate: Total fertility rate refers to thetotal number of children born or likely to be bornto a woman of child-bearing age in her lifetime

Demographic dividend: It means the economicgrowth potential that can result from shifts in apopulation’s age structure, mainly when theshare of the working-age population (15 to 64) islarger than the non-working-age share of thepopulation (14 and younger, and 65 and older)

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PROBABLE OUTCOMES OF PROJECTING POPULATION

• Declining Fertility Rates: By 2021, TFR will lie below replacement level fertility at 1.8 and will stabilize for some timearound 1.7 similar to nations such as China, Belgium and Brazil.

Southern states, West Bengal, Punjab, Maharashtra and Himachal Pradesh, are expected to see TFR decline furtherby 2021, reaching as low as 1.5-1.6 and stabilizing thereafter.

By 2031, all states would see below the replacement level fertility.

Some of the reasons of further decline in fertility for females are rising female education, postponement ofmarriage, access to family planning methods, and continued decline in infant mortality along with the familyplanning prorammes.

• Population Growth Trajectory: India’s population rate will grow at less than 1% during 2021-31 and under 0.5% during2031-41. Positive population growth in the next two decades will be due to population momentum and the continuedrise in life expectancy.

States like Andhra Pradesh, H.P.,Punjab, Karnataka and Maharashtra ahead in the demographic transition willsee a continued deceleration in population growth and reach near-zero growth rates by 2031-41.

States lagging behind in the demographic transition such as Chhattisgarh, Uttar Pradesh, Rajasthan and MadhyaPradesh will also witness a marked slowdown in population growth during 2021-41.

• Changing Age Composition: India’s population at the national level and in several states will begin ageing significantlyin just a decade.

The share of India’s young (0-19 years), population has already started to decline and is projected to drop from ashigh as 41% in 2011 to 25% by 2041. On the other hand, the share of elderly (60 years and above) population willcontinue to rise steadily from 8.6% in 2011 to 16% by 2041.

India’s demographic dividend will peak around 2041, when the share of working-age (20-59 years) populationis expected to hit 59 per cent.

All major states will witness a decline in the share of young population and an increase in the share of elderlypopulation over the next two decades.

• Implications for Working-Age Population: India’s working-age population will continue to increase through 2041,rising by 96.5 million during 2021-31 and by 41.5 million during 2031-41. This will have implications for the required rateof job creation in the economy.

The size of working-age population will start to decline in 11 out of the 22 major states during 2031-41.

Working-age population will continue to rise through 2041 in states lagging behind in the demographic transition,particularly Bihar, U.P, and M.P. The latter states with rising working-age population could meet the labour deficit inmany of the former ageing states.

POLICY IMPLICATIONS OF AGEING

• Elementary schools: As of 2016, number ofelementary school-going children (5-14 years) hasalready begun declining across all major statesexcept Jammu & Kashmir. This have very importantsocial and economic consequences.

The number of schools per capita will risesignificantly in India across all major states evenif no more schools are added (Figure 7). Thetime may soon come in many states toconsolidate/merge elementary schools inorder to keep them viable. Thus, there is needto shift policy emphasis from quantitytowards quality and efficiency of education.

• Health Care Facilities: Rising population over the next two decades (even with slowing population growth rates) willsharply reduce the per capita availability of hospital beds in India across all major states.

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States with high population growth are also the ones with the lowest per capita availability of hospital beds.Thus,there lies the need of expanding medical facilities.

States in the advanced stage of demographic transition will require health services to adapt towards greaterfocus ongeriatriccare.

• Retirement Age: Ageing population and increasing pressure on pension funding would like to need an increase in theretirement age.

Life expectancy for both males and females in India is likely to continue rising. Increasing the retirement age forboth men and women going forward could be considered in line with the experience of other countries asgiven in the side table.

This will be a key to the viability of pension systems and would also help increase female labour force participationin the older age-groups.

Country

Germany

U.S.

U.K.

Australia

China

Japan

Retirement Age Reforms

Retirement age to increase Germany gradually to 66 h\ 2023 and to 67 by 2029

Pension benefit age to rise gradually to reach 67 for those born in 1960 or later

State pension age to increase for both men and women to 66 by October 2020, and further to 67 between2026-28 and to 68 between 2044-46

Pensionable age scheduled to Australia increase graduall) to 67 by 2023

Under consideration to raise the retirement age for women by 1 year every three years and for China menby 1 year every six years so that by 2045, the retirement age for both men and women ‘‘ould be 65

Under consideration to raise the retirement age to 70


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INTRODUCTION

• Status of Open Defecation before SBM:After 67 years of India’s independence, in 2014, around 10 crore rural andabout one crore urban households in India were without a sanitary toilet and over 55 crore, about half thecountry’s population, still practiced open defecation.

• Cost of Open Defecation:Open defecation in India represented 60 per cent of open defecation globally. Poor sanitationcosts India around 5.2 per cent of its GDP (LIXIL, Water Aid and Oxford Economics, 2016).

• Swachh Bharat Mission (SBM): It was initiated in 2014 to achieve universal sanitation coverage by 2 October 2019. Itis one of the largest cleanliness drives in the world.The focus under this mission has not just been on construction of toiletsbut also on effecting a behavioural change in the communities.

• Achievements of SBM: Since October 2014, over 9.5 crore toilets have been builtall over the country and 564,658villages have been declared Open Defecation Free (ODF). As on14 June 2019, 30 States/UTs are 100 per cent coveredwith Individual Household Latrine (IHHL).

• Linkage with Sustainable Development Goals (SDGs):SDG 6.2 aims to provide access to adequate and equitablesanitation and hygiene for all and end open defecation by 2030.

SWACHH BHARAT MISSION GRAMIN (SBM)

• It was launched to enhance the quality of life by promoting cleanliness, hygiene and eliminating open defecation.Themission cover all rural and urban areas. The urban component of the mission will be implemented by the Ministry ofUrban Development, and the rural component by the Ministry of Drinking Water and Sanitation.

• The targets of the mission are to be met by 2 October, 2019, coinciding with the 150thbirth anniversary of the Father ofthe Nation.

• SBM adopts a multi-faceted approach:

Community participation:To promote ownership andsustained use of toilets.

Flexibility in Choice:Menu of options for poor/disadvantagedfamilies to subsequently upgrade their toilets.

Capacity Building: Augmenting the institutional capacity toimplement the programme in a time-bound manner.

Instil Behaviour change:Incentivize State-level institutionsto implement activities for behavioural change amongcommunities.

Broad-based Engagement:Swachh Bharat Kosh was set up to encourage Corporate Social Responsibility andaccept contributions from private organizations, individuals and philanthropists.

• Use of Technology:Nearly 90 per cent of all SBM toilets have already been geo-tagged. Technology direct themunicipal corporations attention towards unclean areas.

• Under SBM, an incentive of Rs. 12,000 is provided for construction of Individual Household Latrines (IHHL) toeligible beneficiaries in rural areas and covers for provision of water storage. The incentive is divided in the ratio of60:40 between centre and states.

• As a result of the efforts of the Government, as on date, 98.9 per cent of India has been covered under SBM.

FROM SWACHH BHARAT TO SUNDARBHARAT VIA SWASTH BHARAT: AN

ANALYSIS OF THE SWACHH BHARAT MISSION

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Open Defecation Free (ODF)

ODF would mean the termination of faecal-oraltransmission, defined by

a) No visible faeces found in the environment/village and

b) Every household as well as public/communityinstitution(s) using safe technology option fordisposal of faeces.

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COMPARISON ACROSS STATES FOR ODF STATUS (IN PER CENT)

• Most of the states have achieved the status of 100 percent ODF coverage and only few states are yet to achievetheir targets.

• Goa has the lowest ODF coverage declared followedby Odisha, Telangana and Bihar.

• West Bengal and Sikkim are very close to achieving100 per cent ODF coverage.

Observation:

• The success of a scheme like the SBM depends not only on the infrastructure created but also on the resultantbehavioural change and the associated changes in the patterns of toilet usage by individuals.

SOLID AND LIQUID WASTE MANAGEMENT

• Solid and Liquid Waste Management (SLWM) is another major component of SBM Mission. There is an urgent need forsetting up the system for efficient disposal of waste in various states.

• Many states have undertaken various activities such as:

Construction of waste collection centres System for collection

Menstrual hygiene management activities Segregation and disposal of garbage

Installation of bio-gas plants Construction of drainage facility and leach pits and

Construction of compost pits Construction of soak pits and stabilization ponds

Installation of dustbins

IMPACT OF SWACHH BHARAT MISSION (SBM)

HEALTH

• Diarrhoea, a leading cause of death among the under-five children in India, accounted for around 11 per cent of deathsin 2013. Diarrhoea casesamong children below 5 years in India have reduced significantly over the past 4 years.

Observation

• The districts with low IHHL coverage suffered more from diarrhoea, malaria, still births and low birth weight than thedistricts with high IHHL coverage indicating that sanitation and hygiene is the primary reason for these healthproblems in the country.

ECONOMIC

• The World Bank estimated the economic impacts of inadequate sanitation in India in the year 2006 showing anannual economic impact of Rs 2.4 trillion, implying a per capita annual loss of Rs. 2,180 or 6.4 per cent of the GDP inthe same year (World Bank 2011).

• Another study conducted by UNICEF on behalf of MoDWS found that on an average, every household in an opendefecation free village saved about Rs 50,000 per year on account of financial savings due to a lower likelihood ofdisease from using a toilet and practicing hand washing and the value of time saved due to a closer toilet.

PHYSICAL ENVIRONMENT

• A study by UNICEF, in association with MoDWS indicates considerable impact on combating contamination of water, soiland food.

ODF villages were 11.25 times less likely to have their groundwater sources contaminated.

ODF villages were 1.13 times less likely to have their soil contaminated, 1.48 times less likely to have foodcontaminated and 2.68 times less likely to have household drinking water contaminated.

SOCIAL GAINS

• Dignity:Many States have achieved the status of 100 per cent ODF and IHHL coverage, thereby has led to a sea changein the dignity of people, especially women.

National Annual Rural Sanitation Survey (NARSS)

• The National Annual Rural Sanitation Survey (NARSS)2018-19, conducted by an Independent VerificationAgency (IVA) has found that 93.1 per cent of householdshad access to toilets during the survey period.

• 96.5 per cent of the households in rural India thathad access to a toilet used them.

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• Gender parity:This mission acts as a driver for eliminating the gender disparity through the construction of gender-specific latrines in public areas such as schools, roads and parks.

• Girl’s education:This public movement will have indirect positive impact on society by increasing the enrolmentratio of girls in schools and improving health standards.

CONSOLIDATING THE GAINS OF SWACHH BHARAT

• The Mission has brought one of the largest behavioural changes in its citizenry.The mission mirrors the NationalDevelopmental priorities by focusing on gender equality and women empowerment.

• The dream of clean India can only be realized by addressing these multiple facets maintaining a culture of swachhataat public places beyond individual houses, cleaning water bodies, scientific waste management, dealing withplastic menace, controlling air pollution, etc.

• Culture of Swachhata:Number of actions to be taken to sustain the momentum:

Motivation of “agents of change” at theground level,

Impart training to field agents,

Appointment of sanitation Ambassadors to campaign and create awareness especially onhealth benefits,

Obtain systematic feedbackfrom users.

Sewer construction and water availability

• Waste Management:SBM should focus on achieving 100 per cent disposal of solid and liquid waste which has not beenemphasized by many states. Scientific techniques for the safe and effective disposal of waste should be the next onthe agenda for this mission.

• Cleaning of rivers: It should be an integral part of clean India, along with coordinated activities between Centre andStates such as treatment of industrial effluence, river surface cleaning, rural sanitation, river front development,afforestation and biodiversity conservation etc.

• Resource Requirements: To facilitate and sustain innovative financing mechanisms by exploring the suitability of variousfinancial instruments in specific contexts and interventions. For example, micro-financing, concessional loans, corporatesocial responsibility and crowd funding align with local government financing.

• Private Partnership and Corporate Social Responsibility can ensure a smooth flow of funds for the procurement ofvarious scientific technologies for waste disposal and awakening masses.

• Finally, all these efforts together endeavour into culminating a Swachh (Clean), Swasth (Healthy) and Sundar (Beautiful)Bharat and this will be a real tribute to the ‘Father of the Nation’.

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INTRODUCTION

The importance of greater access to energy for economic growth in the country along with improvement in various humandevelopment indicators is enormous. India has lagged behind in energy usage (1/3rd of world average) which has led toenergy poverty in the country. The disparity can be seen spatially between urban and rural areas as well as socio-economicallybetween various income groups.

However, it has strived to improve energy access and increase the share of sustainable energy in its energy mix (share ofrenewables in total energy generationincreased from 6% in 2014-15 to 10% in 2018-19). There are a number of programmesand schemes that have been introduced to achieve the goal of achieving 40% of its total electricity generation from non-fossilfuel sources by 2030.

ENERGY FOR PROSPERITY

• For India to achieve higher per capita GDP and higher HDI,it needs to fulfil two conditions, viz.

Rapidly raising its share of the global energy consumption commensurate with its share of the global population,and

Ensuring universal access to adequate moderncommercial energy at affordable prices.

• Thus, India will have to increase its per capitaconsumptionfrom the current 24 Gigajoules by 2.5 times toincrease its real per capita GDP by US$ 5000 in 2010 prices.

To reach this goal it is essential for the government to focus onincreasing access to energy in the country.

Increasing Energy Access

• In terms of cooking fuel, the share of LPG has increaseddrastically, yet the disparities between urban and rural areasand among various socio-economic groups has remained, if notincreased. There are around 81 % of rural households and 59 %of urban households in lowest 5 percentile classes of expenditurewho use firewood & chips as their primary source ofenergy forcooking.

• To tackle the situation the government has introduced variousinitiatives like Ujjawala and PAHAL scheme.

For the path towards improving energy access along withsustainability in energy production to be viable for the country thereneeds to be a simultaneous focus on energy efficiency.

Energy Efficiency

• The term energy efficiency broadly means using lesser amount of energy to produce a given amount of output. India’sprimary energy intensity of GDP has fallen from 0.0004 tonne of oil equivalent (toe) in 1990 to 0.0002 toe in 2017.

• The overall size of the energy efficiency market in India is estimated to be US$ 22.81 billion.

• The institutional and legal frameworkin the country for energy efficiency hasbeen strengthened through the EnergyConservation Act in 2001, which created the Bureau of Energy Efficiency (BEE).

• Along with this the government has initiated various schemes and programmes like Standards and Labelling programme,Energy Conservation Building Code (ECBC), Corporate Average Fuel Efficiency (CAFE) norms, etc.

ENABLING INCLUSIVE GROWTH THROUGHAFFORDABLE, RELIABLE AND

SUSTAINABLE ENERGY

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Ujjwala Scheme

• Launched in May 2016, under the scheme, fivecrore LPG connections are to be provided toBPL households.

• Release of LPG connection under this Schemeshall be in the name of the women belonging tothe BPL family.

• The Scheme would be implemented over threeyears, namely, the FY 2016-17, 2017-18 and2018-19 across the country.

PAHAL (Pratyaksh Hanstantrit Labh)

• The Direct Benefit Transfer of LPG (DBTL) orPAHAL (Pratyaksh Hanstantrit Labh) schemewas earlier launched on June 1, 2013 and finallycovered 291 districts.

• It required the consumer to mandatorily havean Aadhaar number for availing LPG Subsidy.

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• The impact of all the efforts has been a reduction in GHGs and cost savings. For example, according to a BEE study,overall,this has resulted in total cost savingsworth ‘53,000 crore (apprx) in 2017-18 and contributed in reducing 108.28MillionTonnes of CO2 emission.

• Although there is still great potential to be realized in terms of energy efficiency in various demand sectors.

Sustainability of Energy Generation

• Given the current scenario of natural non renewable resources like coal and petrol, there is an increasing bend of policymakers towards renewable resources to achieve the long term goal of sustainability in energy generation.

• Currently, coal remains the largest source of electricity generation mix globally (with 38 per cent market share in 2018(IEA, 2019) as well as in India.

• In terms of generation capacity, at the end of 2018, global renewable generation capacity amounted to 2351 GW thatconstituted around a third of total installed electricity capacity (IRENA, 2019).

• Despite having 22% of energy from renewable sources the country needs to enhance its efforts to fulfil its NationallyDetermined Contribution (NDC) under the Paris Agreement.

• However, considering the intermittency of renewable power supply, unless sufficient technological breakthrough inenergy storage happens in the near future,it is unlikely that thermal power can be easily replaced as the main source ofenergy for a growing economy such as India.

• Thus, a comprehensive energy policy should take into consideration the economies of both coal and renewables as theyare interdependent. They are substitutes for each other as a source of energy but are complementary in keeping theflow to the grid stable as coal generation represents a stable source of power while renewable energy may be variable.

POTENTIAL OF RENEWABLE ENERGY

• To materialize sustainability in energy consumption through renewable sources, it is important that the potential ofrenewable energy in the country be enhanced. The government has taken a number of steps to achieve this.

• As per MNRE the share of renewables (excluding hydro above 25 MW) in total generation increased to 10% in 2018-19from 6% in 2014-15. Now globally India stands 4th in wind power, 5th in solar power and 5th in renewable power installedcapacity.

• In terms of solar energy, the government announced zero import duty on components used in making solarpanels togive a boost to domestic solar panel manufacturers. It has also offered various financial incentives for off grid anddecentralized renewable energy systems and devices.

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• The solar tariff has come down from around ‘18/kWh in 2010 to ‘2.44/ kWh in 2018.

• To facilitate smooth integration of increasing shareofrenewables into the national grid, GreenEnergyCorridor project continues to bein operation.KisanUrja Suraksha Evam Utthaan Mahabhiyan(KUSUM) scheme has been launched.

• India has a high potential for hydro powergeneration. For utilizing the same, a new HydroPolicy has been approved which includesrecognising large hydropower projects as arenewable energy source. Further, tariffrationalization measures have been undertaken.

• One of the major steps in reducing dependence onnon-renewable fuels, has been the promotion ofElectric Vehicles. The government introducedNational Electric Mobility Mission Plan 2020(NEMMP) and the Faster Adoption andManufacturing of Electric vehicles (FAME) scheme.

Many states like Karnataka, Kerala, Telangana,Maharashtra and Andhra Pradesh,UttarPradesh, Uttarakhand, also have draftedelectric vehicle (EV) policies to complement thenational policy.

Given India’s increasing demand oftransportation, it will be important to moveaway from non renewable fuels and adopt EVs,learning from successful countries like China &Norway.

However, introduction of EVs will highly incumbent on the prevalence of regular charging infrastructure and thetime consumed to charge EV’s.

Given the commitments that India has madeon the climate front as a nation, it can benefitfrom higher penetration of EVs in private andpublic transportation. It may also be a hub forEV manufacturing, thus providing anopportunity to the manufacturers.

Way Forward

• India has come a long way in improving its energyaccess, but there still remains a long way to go.The schemes require better penetration in theuntouched households.

• Future policy direction should orient itself towards enhanced energy efficiency programmes in different sectors of theeconomy as well as technological solutions to better utilise the natural resource endowments of the country forgreater prosperity. A sustainable model based on renewable energy is the need of the hour.

• Therefore, it is important to prepare and plan strategies to unlock the potential to achieve the goal, which should includefavourable regulatory structures, strengthened institutional framework, innovative financial structures for affordablefinancing, use of technology, and increased stakeholder engagement. The existing approaches must be reviewed and anew portfolio of strategies planned to strengthen energy efficiency across all sectors in the country.

Budget highlights for energy access and sustainability

Focus on rural energy access and farmers:

• Every rural household to get electricity connection and accessto clean cooking fuel (except those unwilling)

• New Ujala-type scheme that will promote solar stoves andbattery chargers

• Private initiatives will be supported to develop renewableenergy as an alternate source of income for farmers

• Plans on “one nation one grid” for affordable power to states.

• Custom duty has been cut on fuel for nuclear plants.

• LPG subsidy to rise by 63%

FAME• FAME India Scheme [Faster Adoption and Manufacturing of

(Hybrid &) Electric Vehicles in India] is implemented witheffect from 1st April 2015.

• Itsobjective is to support hybrid/electric vehicles marketdevelopment and Manufacturing eco-system.

• The scheme has 4 focus areas i.e. Technology development,Demand Creation, Pilot Projects and Charging Infrastructure.The phase-I of the scheme is being implemented for a period of2 years i.e. FY 2015-16 and FY 2016-17.

• The scheme covers Hybrid & Electric technologies like MildHybrid, Strong Hybrid, Plug in Hybrid & Battery ElectricVehicles.

• It was extended upto 31st March, 2019 (or till Notification)asFAME-II. The government has already approved Rs 10,000 crorefor FAME II scheme on April 1, 2019 to encourage fasteradoption of electric vehicles.

KUSUM

• The scheme consists of three components-

10,000 megawatts (MW) of decentralised groundmounted grid-connected renewable power plants(Component-A);

installation of 17.50 lakh standalone solar poweredagriculture pumps (Component-B); and

solarisation of 10 lakh grid-connected solar poweredagriculture pumps (Component-C)

• It aims to add a solar capacity of 25,750 MW by 2022.

• It will have a substantial environmental impact in terms ofsavings of CO

2 emissions.

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INTRODUCTION

• ‘Food for Work’ is first referred in Kautilya’s Arthashastra and modern workforce programs traced its origin to such foodfor work programs.

• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which was enacted through an Act ofParliament in 2005, represents the modern version of “food for work” programmes in India.

• The streamlining of the programme occurred in 2015 when the government harnessed the benefits of technology whichincluded various initiatives:

Implementation of Direct Benefit Transfer (DBT)

Linking it to Aadhar linked Payments (ALP).

• Moreover it leveraged the Jan Dhan, Aadhaar and Mobile (JAM) trinity to credit wages directly into MGNREGS workers’bank accounts, thereby reducing scope for delays in payment.

Observation

• Skilful use of technology when combined with an unwavering commitment to monitoring effectiveness of governmentschemes can make a substantial difference on the ground.

MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME

About MGNREGA

• Reason of Launch : The programme was initiated to ameliorate rural distress by providing at least 100 days of manuallabour at minimum wages to anyone who seeks employment under the program.

• Pillars of the Programme : Creation of productive assets for prescribed quality and durability, social inclusion, genderparity, social security and equitable growth form the founding pillars of the programme.

• The Act states that “the objective of the legislation is to enhance the livelihood security of poor households inrural areas”.

Streamlining of MGNREGA

• During the course of implementation, MGNREGS had been saddled with several inefficiencies, including widespreadcorruption, political interference, leakage, and significant delay in wage payments.

• Theprogramme was reviewed in 2015 and thegovernment initiated major reforms:

Using Technology

Emphasis on transparency and accountability

Robust planning and creation of durable assets

Integration with Aadhar Linked Payments (ALP) system.

Leveraging JAM trinity to provide DBT transfers

Observation

• The delays in payment has been reduced after the wage payment system underlying MGNREGS got streamlined.

• Delays in payments lead to driving away distressed farmers away from MGNREGS.

• Improvements in the targeting of MGNREGS to genuine beneficiaries can increase the demand for work from distressedworkers, there by effectively realising the objective of the programme.

EFFECTIVE USE OF TECHNOLOGYFOR WELFARE SCHEMES

- CASE OF MGNREGS

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Use of Technology in Implementation of MGNREGA

• Implementation of DBT was hampered by thestructural constraints before 2015.

• Various government initiatives have facilitatedovercoming these structural constraints.

I. Aadhar Enrolments

• The totalnumber of Aadhaar enrolments in thecountryexceeded 100 crore, thereby covering amajorportion of the adult population. LinkingtheAadhaar Number to an active bank accountwasthe key to implementing income transfers.

• Aadhar provided a credible identity source to whoever wanted to open a bank account.

II. Pradhan Mantri Jan DhanYojna (PMJDY)

• In 2015, the Pradhan Mantri Jan DhanYojana (PMJDY) was launched to ensure universal access to banking facilitieswith at least one basic banking account for every household. .

• By expanding the mobile payment options, the Government was able to ease the connectivity issue as peoplecould get access to banking facilities using their mobile phones.

Observation

• The JAM trinity enabled the roll-out of DBT by streamlining the validation/verification of beneficiaries as well as theprocess for release of funds. This ensured timely transfer of funds to the right beneficiary and enabled effectivetargeting under welfare schemes.

III. National electronic Fund Management System (NeFMS)

• NeFMS was implemented in 2016 to streamline thesystem of fund flow and ensure timely payment ofwages.

• Under the system, the Central Government directlycredits the wages of the MGNREGS workers, on a realtime basis, to a specific bank account opened by theState Governments.

• NeFMS is implemented in 24 States and 1UnionTerritory wherein payment of wagesis being crediteddirectly to the bank/post-office accounts of MGNREGSworkersby the Central Government. This initiatedtheimplementation of DBT in the Scheme.

IV. Aadhar Linked Payments (ALP)

• In 2015, the Government introduced ALP in MGNREGSin 300 districts that had a high banking penetration. Remaining District were covered under ALP in 2016.

• ALP could speed up the wage payment cycle in the following two ways.

First, due to stringent biometric requirements, an Aadhaar linked account curtailed ghost beneficiaries. Hence,Government officials require less time toverify and audit claims from such accounts.

Second, the Central Government can transfer wages directly to the bank accounts of the beneficiaries, therebycutting the bureaucratic red tape.

• Almost 55.05 per cent of all the payments under MGNREGS are through Aadhaar Based Payment Systems(ABPS).

Key Structural Constraints

• As per a World Bank report, close to 50% of the country’spopulation did not have bank accounts.

• The same report highlighted that proportion ofunbanked population was significantly higher for ruralpeople who are the target group for MGNREGS.

• Verifying the identity of genuine beneficiaries andtransferring wages directly into their bank accountsposed problems.

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Perceived Benefits of DBT on MGNREGA

1. Providing timely release of payments.

2. Ensuring correct funds are transferred to correct beneficiaries, reducing corruption & leakages in system.

3. Reduction in delays in system for funds transfer (improving programme performance and instilling trust and confidencein system by beneficiaries).

4. Strong focus on security, tracking and monitoring of funds (through use of digital sign/signatures and convergence/interoperability),

5. Reconciliation process during payments between intermediate agencies involved in funds transfer (near real timetracking, accountability and transparency).

6. Streamline the verification process and end to end funds release process in all the beneficiary oriented schemes

7. It has enabled MGNREGS to be effective in alleviating distress of workers

8. Both demand and supply of work under the Scheme increased, especially in blocks suffering from distress and from thevulnerable sections of society, including women, persons with disability, SCs and STs.

Initiatives to streamline MGNREGS

NREGAsoft is a local language enabled work flow based e-Governance system to capture all the activities under MGNREGSat Center/State/District/Block and Panchayat level.

GeoMGNREGA uses space technology to develop a database of assets created under MGNREGS using technologicalinterventions like mobile based photo geo-tagging and a GIS based information system for online recording and monitoring.

Natural Resource Management (NRM) – Mission Water Conservation (MWC): Planned and systematic developmentof land to improve its productivity and harnessing of water through development of watersheds has become the centralfocus of MGNREGS work across the country.

Support for Drought Proofing: In 2015-16, provision of additional employment of 50 days in drought affected areasover and above 100 days per household under MGNREGS was approved. The major drought proofing works undertakenunder MGNREGS are plantations, afforestation, land development, check dams, wells, trenches, bunds and ponds,percolation tanks.

Increased accountability: Various citizen centric mobile Apps like Gram Samvaad Mobile App and JanMnREGA (an assettracking and feedback app for MGNREGS assets) have been developed, which aim to empower the rural citizens byproviding direct access to information and improve accountability to the people.

LEVERAGING TECHNOLOGY FOR POLICY IMPLEMENTATION

• Probable Indicator of distress : By utilizing information on demand for work under MGNREGS and correlating it withother real-time measures of weather etc., that lead to rural distress, a dashboard can be created which flashes ‘alerts’from areas under local distress to enable policymakers to act in a timely manner to alleviate such distress.

• Expansion of ‘works’ under MGNREGS : For Example- Inclusion of de-silting of canals and water bodies in the WaterConservation Mission would enhance their storage capacity and mitigate the frequency of floods.

• Up-skilling the MGNREGS Workers : The objective of the scheme to enhance livelihoods for households can be reinforcedby enabling them to acquire suitable skills, which in turn will help them increase income and provide horizontal andvertical mobility to them. Example- The convergence of MGNREGS with Deen Dayal Upadhyaya Grameen KaushalyaYojana (DDU-GKY) and involvement with women Self-Help Groups needs to be strengthened so that supply for skilledwage labour increases.

• Expanding use of JAM to other Welfare Schemes : The adoption of DBT in programmes which involve transfer of cashbenefits (scholarships or pensions) and price subsidies (liquefied petroleum gas (LPG), public distribution system (PDS),fertilisers and other input subsidies needs to be strengthened to minimise exclusion and inclusion errors. This will makepublic spending more efficient and effectively targeted.

• Use of Digital Infrastructure for micro benefits : This can be used to expand the reach of the programmes throughprovision of micro-insurance, micro pensions and micro-credit to people in every corner of the country. Its wide use canlead to financial and economic inclusion benefitting the vulnerable and marginalized sections of the society.

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INTRODUCTION

• Minimum wages for labour has been a feature of societysince ancient times like Arthashastra ordained 60 panasas the lowest wages for state employees.

• Minimum wage systems have been strengthened bymany countries in recent years to lift workers out ofpoverty and to reduce levels of inequality.

• Low pay and wage inequality in India still remainserious obstacles towards achieving inclusive growth. An effective minimum wage policy that targets the vulnerablebottom rung of wage earners can help in driving up a phase of sustainable and inclusive growth.

• The present minimum wage system in India is extremely complex.Despite its complex structure and proliferation ofscheduled employments over time, the Minimum Wages Act, 1948 does not cover all wage workers. One in every threewage workers in India is not protected by the minimum wage law.

Observation

• With 93% workers in the informal economy, a well-designed minimum wage system can reduce inequalities in incomes,bridge gender gaps in wages and alleviate poverty.

MINIMUM WAGE SYSTEM IN INDIA

• India introduced minimum wages with the enactment of theMinimum Wages Act, 1948.The Act protects both regular andcasual workers.

Minimum wage rates are set both by the Central and theState governments for employees working in selected ‘scheduled’ employment.

The Act did not prescribe norms for fixing the level of the minimum wage but provided for tripartite advisoryboards consisting of employers, employees of scheduled employments, and independent persons to advise theGovernment in fixing minimum wages.

• The Indian Labour Conference (ILC)of 1957 recommended determining theminimum wage based on the principle ofahousehold’s needs.

• In 1988, the Labour Minister’s Conference made recommendations for linking minimum wage with the cost of livingindex, which became mandatory in 1991.

• In 1992, the Supreme Court of India ruled that minimum wage should also be linked with aspects such as children’seducation, medical requirements etc.

• National Level Minimum Wage: The mainargument against a national minimum wagehas been the existence of widedisparities ineconomic development and large variationsin cost of living between regions and states.

COMPLEX MINIMUM WAGE SYSTEM IN INDIA

• Issue of Coverage: There are nearly 429 scheduled employments and 1,915 scheduled job categories for unskilledworkers. This massive expansion in job categories and wage rates has led to major variations not only across states butalso within states.

REDESIGNING A MINIMUMWAGE SYSTEM IN INDIA

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Minimum Wage under Indian Constitution

• The Indian constitution does not define minimum wagesbut defines the 'living wage' for a worker. The term'living wage' ensures a basic standard of living, whichincludes good health, dignity, comfort, and education.It also provides for contingencies.

Scheduled Employment

Employments notified under the Minimum WagesAct by the Centre and States.

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• Lack of Uniform Criteria: Different minimum wages occur across states due to lack of uniform criteria for fixing theminimum wage rate. In some states or in specific scheduled employments, minimum wages are linked to the cost ofliving whereas other states do not include this component.

The range (differencebetween highest and lowest minimum wages) in each state varies from Rs. 16 in Nagaland toRs. 905 in Kerala.

• Exclusion of workers: Minimum Wages Act does not cover all wage workers. One in every three wage workers in Indiais not protected by the minimum wage law.

Vulnerable categories – such as domestic workers – are presently covered only in 18 States and Union Territories.

• Gender discrimination: While the Minimum Wages Act does not discriminate directly between women and men,minimum wages for different occupations shows persistence of systematic bias.

For instance, women dominate in the category of domestic workers while men dominate in the category of securityguards. While both these occupations fall within the category of unskilled workers, the minimum wage rate fordomestic workers within a state is consistently lower than that of minimum wage rates for security guards.

• Regular Revision: There is no regular revision of minimum wage rates.

COMPLIANCE WITH THE MINIMUM WAGE ACT

• The proliferation of minimum wage rates is a strong deterrent for compliance.

• Different statutory minimum wage rates for the same occupation between states combined with the wide rangebetween the lowest and highest minimum wages can trigger migration of the industry to lower wage regions/state.

• National Floor Level Minimum Wage (NFLMW) is non-statutory. Few states and occupations/job categories have minimumwage below the NFLMW.

IMPACT OF MINIMUM WAGES ON THE LABOUR MARKET

• On Wage Levels: Minimum wage in India does not operate as a conventional floor wage to protect the lowest paidworkers but has a “lighthouse effect”, i.e., the minimum wage acts as a benchmark that pulls up wages in the low-paid and informal sector by enhancing the bargaining power of vulnerable workers.

• On Wage Inequality:Greater compliance with minimum wages has led to reduction in wage inequality. It is seen thatinequality decreased among casual workers while it has increased amongst regular workers. This can be explainedby the rise of average minimum wages, in consonance with the increase in Mahatma Gandhi National Rural EmploymentGuarantee Scheme (MGNREGS) wages, which were benchmarked to minimum wages.

Observation

• It is, therefore,established that well-designed and effective implementation of minimum wages will strengthen thetrend towards decreasing wage in equality especially at lower levels.

• This becomes all the more significant as women constitute the majority of the bottom rungs of the wage distribution.

• On Employment: There is a minimal (or no) impact of minimum wages on employment but in some cases positive effecthas been seen.

DESIGNING A MINIMUM WAGE SYSTEM

A well designed minimum wage system can be a potent tool for protecting workers and alleviating poverty. Internationalexperience has shown that relatively simple systems are more effective and usually complex systems are least effective.Some policy recommendations for an effective design of minimum wages system are as follows:

• Simplification and Rationalization: Rationalization of minimum wages as proposed under the Code on Wages Billneeds to be supported. The definition of wage in the new legislation should subsume the present situation of 12different definitions of wages in different Labour Acts.

• National Floor Level Minimum Wage: Central Government should notify a “national floor minimum wage” that canvary across the five geographical regions. There after, states can fix the minimum wages, which shall not be less than the“floor wage.” This would bring some uniformity in the minimum wages across country and would make all states

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almost equally attractive from the point of view of labour cost for investment as well as reduce distress migration.

• Criteria: There should be criteria for setting minimum wage based on either of the two factors viz; (i) Skill category i.e.unskilled, semi-skilled, skilled and highly skilledand (ii) Geographical region, or else both. This key change would substantiallyreduce the number of minimum wages in the country.

• Coverage: The applicability of minimum wages should extend to all employments/ workers in all sectors and should coverboth the organized as well as the unorganized sector.

• Regular revision of minimum wages

• Role of Technology: A national level dashboard can be created at the Centre with access to the state governmentswhere by the states can regularly update the notifications regarding minimum wages.

• Grievance Redressal: There should bean easy to remember toll-free number for anybody to register his grievanceonnon-payments of the statutory minimum wages.


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Behavioural Economics : Behavioral economics studies the effects of psychological, cognitive, emotional, cultural andsocial factors on the economic decisionsof individuals and institutions and how those decisions vary from those implied byclassical theory.

BPL : Below Poverty Line is an economic benchmark used by the government of India to indicate economic disadvantage andto identify individuals and households in need of government assistance and aid. It is determined using various parameterswhich vary from state to state and within states.

Bureau of Energy Efficiency (BEE) : The Bureau of Energy Efficiency is an agency of the Government of India, underthe Ministry of Power created under the provisions of the nation’s 2001 Energy Conservation Act whose function is to developprograms which will increase the conservation and efficient use of energy in India.

CAGR : CAGR, or compound annual growth rate, is a useful measure of growth over multiple time periods. It can be thoughtof as the growth rate that gets you from the initial investment value to the ending investment value if you assume that theinvestment has been compounding over the time period.

Child Sex Ratio : Child Sex Ratio is defined as the number of females per thousand males in the age group 0–6 years ina human population.

Corporate Average Fuel Efficiency (CAFE) : CAFE regulations aim at lowering fuel consumption (or improving fuel efficiency)of vehicles by lowering carbon dioxide (CO2) emissions, thus serving the twin purposes of reducing dependence on oil for fueland controlling pollution.The norms are applicable for petrol, diesel, LPG and CNG passenger vehicles.

Corporate Social Responsibility : Corporate social responsibility (CSR) is a self-regulating business model that helps a companybe socially accountable to itself, its stakeholders, and the public.

Data Localization : Data localization requires data about a nations’ citizens or residents be collected, processed, and/or storedinside the country, often before being transferred internationally, and usually transferred only after meeting local privacy ordata protection laws, such as giving the user notice of how the information will be used and obtaining their consent.

DigiLocker : DigiLocker is a online service provided by Ministry of Electronics and IT (MeitY), Government of India underits Digital India initiative. DigiLocker provides an account in cloud to every Indian citizen to access authentic documents/certificates such as driving license, vehicle registration, academic mark list in digital format from the original issuers of thesecertificates. It also provides 1GB storage space to each account to upload scanned copies of legacy documents.Users need topossess an Aadhar card to use DigiLocker.

End-to-End Encryption : End-to-end encryption (E2EE) is a system of communication where only the communicating userscan read the messages. In principle, it prevents potential eavesdroppers – including telecom providers, Internet providers,and even the provider of the communication service – from being able to access the cryptographic keys needed to decrypt theconversation.

Energy Conservation Building Code (ECBC) : The Energy Conservation Building Code (ECBC) was launched by Ministry ofPower, as a first step towards promoting energy efficiency in the building sector. This, coupled with the fast growing buildingsector, is likely to result in a big leap towards achieving nation’s energy efficiency goals.

FELDSTEIN-HORIOKA PUZZLE :This Economic theory assumes that if investors can easily invest anywhere in the world, actingrationally they would invest in countries offering the highest return per unit of investment. This would drive up the price of theinvestment until the return across different countries is similar.

• In the absence of regulation in international financial markets, the savings of any country would flow to countries withthe most productive investment opportunities. Therefore, domestic saving rates would be uncorrelated with domesticinvestment rates.

IMPORTANT ECONOMICSURVEY TERMINOLOGIES

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• Savers would show no preference for investing within their own country, but would lend to foreign investors and wouldnot need to lend domestically.

• Feldstein and Horioka observed that domestic savings rates and domestic investment rates are highly correlated, incontrast to standard economic theory.

Feldstein and Horioka’s assumption of perfect capital mobility discounts factors such as:

• Differential tax treatment. For example, New Zealand, an OECD member, has a tax regime which penalises outwardforeign investment.

• Differential dealing costs, custody fees, and management fees, which are typically higher for foreign instruments.

• Information asymmetry; targets for foreign investment may be less well-known than domestic ones, and informationabout them may be harder to obtain or written in a foreign language.

Geo-tagging : It is the process of adding geographical identification metadata to various media such as a geotaggedphotograph or video, websites, SMS messages, QR Codes[1] or RSS feeds and is a form of geospatial metadata. This datausually consists of latitude and longitude coordinates, though they can also include altitude, bearing, distance, accuracydata, and place names, and perhaps a time stamp.

Geriatric Care : Geriatrics, or geriatric medicine, is a specialty that focuses on health care of elderly people. It aims topromote health by preventing and treating diseases and disabilities in older adults.

HOMO ECONOMICUS : Homo economicus, or “economic man,” is the characterization of man in some economic theories asa rational person who pursues wealth for his own self-interest. The economic man is described as one who avoids unnecessarywork by using rational judgment.

Laissez Faire : It is the policy which is based on the idea that governments and the law should not interfere withbusiness, finance, or the conditions of people’s working lives.

MATSYANYAYA : When the rule of law collapses it is replaced by ‘Matsyanyaya’, which means the ‘law of the jungle’. InSanskrit the word 'Matsya' means fish and Matsyanyaya means a state of affairs where the big fish devours the smaller one.

National Floor Level Minimum Wage (NFLMW) : National Floor Level Minimum Wage is the minimum wage below which nostate Government in India can fix the minimum wage.Unlike the concept of “minimum wage” this is a non-statutory measureto ensure upward revision of minimum wages in different in States/UT’s. Thus, the State Governments are persuaded to fixminimum wages such that in none of the scheduled employments (those employments which are by law, liable for paymentof minimum wages), the minimum wage is less than the National Floor Level Minimum Wage.

National Judicial Data Grid (NJDG) : The Supreme Court of India launched a public access portal of the National Judicial DataGrid (NJDG) for district courts to demystify the judicial process for the ordinary citizen. The public access portal will disseminatenational, state, district and court-wise information about institution and disposal of cases on a monthly basis. The NJDG willalso provides daily statistics on case pendency before the courts under the e-courts projects.

Net Value Added (NVA) : Net value added is the value of output less the values of both intermediate consumption andconsumption of fixed capital, can be defined as Gross Value Added (GVA) less depreciation.

Replacement level fertility : It is the level of fertility at which a population exactly replaces itself from one generation to thenext. In developed countries, replacement level fertility can be taken as requiring an average of 2.1 children per woman.

Selfie with Daughter: President Mukherjee stated that the app is an innovative concept and an act of gentle persuasion.

SSI (Small Scale Industries) : Small scale industries (SSI) are those industries in which manufacturing, providingservices, productions are done on a small scale or micro scale. Enterprises where the investment in plant and machinery orequipments is between Rs. 25 lakhs to Rs. 10 crores in case of a manufacturing industry and between Rs. 10 lakh to Rs. 5Crore in case of a service sector enterprise.

Standards and Labelling programme : The Standards & Labeling Programme is one of the major thrust areas of BEE. A keyobjective of this scheme is to provide the consumer an informed choice about the energy saving and thereby the cost savingpotential of the relevant marketed product.

Swachh Bharat Kosh : A fund that will be utilised to build toilets in schools, rural and urban areas will seek to attractdonations under Corporate Social Responsibility (CSR) from Corporate Sector and contributions from individuals andphilanthropist to achieve the objective of Clean India (Swachh Bharat) by the year 2019. It will be under the Ministry ofFinance and will be managed by a Governing Council headed by Expenditure Secretary.

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Swachhagrahis : A Swachhagrahi is a volunteer who can come from any background, including a local ASHAworker, ANM,Anganwadi worker, and staff, water line man, pump operator, member of NCO/CSOs,youthorganisations or from the generalpublic living in village promoting and working towards swachh bharat mission.

Taper tantrum : It is nothing but altering or changing the value of an entity, say value of shares or can be put as interferingwith the natural flow of the value of share. It is a strategy used to avoid or overcome the possible adverse change in themarket trends. It describes the 2013 surge in U.S. Treasury yields, resulting from the Federal Reserve’s use of tapering, in itscampaign to gradually reduce the amount of money it was feeding into the economy.

• The aim of the campaign is to motivate the society to feel proud to be parents of a girl child

• The campaign was started by Sunil Jaglan, former sarpanch, in village Bibipur, Jind, Haryana, in the year 2015

• This in turn should help in improving the child sex ratio.


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