17TH OCTOBER – EDITORIALS/OPINIONS ANALYSES

Hope amid uncertainty: On IMF World Economic Outlook

Context: The International Monetary Fund has lowered its global growth forecast for this year and next in the wake of the pandemic.

Relevance:

1. GS Paper 3:  Indian Economy (issues re: planning, mobilisation of resources, growth, development, employment); Inclusive growth and issues therein

Mains questions:

1. Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments. 15 marks
2. Among several factors for India’s potential growth, savings rate is the most effective one. Do you agree? What are the other factors available for growth potential? 10 marks

International Monetary Fund forecast:

• The global economy is projected to shrink 4.4% this year.
• In the IMF’s estimation, in 2020, growth of India’s gross domestic product (GDP) will witness a contraction of over 10%.

Causes of lower GDP growth:

• Worldwide lockdown across the globe disrupted the global supply chain, which further reduced value of trade among the countries.
• The demand in economy reduced which negatively affected the industrial output and employment generation.
• Trade war between USA and China also negatively impacted the global growth because it created competitive trade barriers among the countries.
• Risks associated with predicting the pandemic’s progression, the unevenness of public health responses, and the extent to which domestic activity can be disrupted, magnify the uncertainty.

Why GDP growth matters:

• Growth matters primarily because it directly impacts the average income levels. If, for instance, GDP grows at an average inflation-adjusted (real) rate of 8% per annum, an average Indian would roughly double her income in 10 years. A more modest 5% GDP growth would mean that the same journey would take 17 years.
• If the GDP growth rate were to revert to the pre-1979 trajectory of 3% per annum, it would take nearly 30 years for India’s per capita income to double.

• Growth not only boosts average income levels, but also generates extra funds for welfare programmes. After all, the biggest ever poverty decline in India’s post-Independence history occurred during the 2004-11 period when nearly 150 million people were pulled out of poverty, with the poverty rate falling to 22%.

Measures to revive the growth in India:

•  The Atmanirbhar Bharat Abhiyaan (Self-reliant India campaign) and announced the Special economic and comprehensive package of INR 20 lakh crores – equivalent to 10% of India’s GDP – to fight COVID-19 pandemic in India. This program will focus on land reforms, labour reforms , liquidity and simplifying the laws.
• Prepare for a health emergency: As former RBI governor Raghuram Rajan recently said, countries need to prioritise fighting COVID-19 over stimulus packages. 
• Ready a fiscal contingency plan:   A robust fiscal plan to revive the economy should be kept read
• Use the opportunity to push structural reforms: Coming close on the heels of US-China trade war, it could further turn foreign investors away from China. India should truly be making itself an easier place to do business including measures like simplifying the GST structure.
• Push domestic demand: The government may have to reorient its policies to boost domestic demand at a time global demand is set to remain tepid for a long period of time.
• Keeping monetary policy flexible: The Reserve Bank of India should also be ready to use all the tools at its disposal to provide financial stability while preserving economic growth.

Background:

1. Gross Domestic product:

• Gross Domestic Product (GDP) is the monetary value of all finished goods and services made within a country during a specific period.

• GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.
• Nominal GDP: GDP evaluated at current market prices, in either the local currency or in U.S.

• GDP, purchasing power parity (PPP): GDP measured in “international dollars” using the method of Purchasing Power Parity (PPP), which adjusts for differences in local prices and costs of living in order to make cross-country comparisons of real output, real income, and living standards.
• Real GDP: Real GDP is an inflation-adjusted measure that reflects the quantity of goods and services produced by an economy in a given year, with prices held constant from year to year in order to separate out the impact of inflation or deflation from the trend in output over time.
• GDP Per Capita: GDP per capita is a measurement of the GDP per person in a country’s population.

 China’s rise and fall at the UN

Context: The United nations completed 75 years this year. It’s an opportune time for New Delhi to push for institutional changes and reformed multilateralism in the global system

Mains questions:

1. Discuss the impediments India is facing in its pursuit of a permanent seat in UN Security Council. 15 marks
2. Too little cash, too much politics, leaves UNESCO fighting for life.’ Discuss the statement in the light of US’ withdrawal and its accusation of the cultural body as being ‘anti-Israel bias’. 15 marks

The birth of the United Nations

• The Atlantic Charter: It declared the realisation of “certain common principles in the national policies of their respective countries on which they based their hopes for a better future for the world.
• The first time the term ‘United Nations’ was coined by president Roosevelt to identify those countries which were allied against the axis powers.
• The United Nations came into existence on October 24, 1945 after being ratified by 51 nations, which included five permanent members (France, the Republic of China, the Soviet Union, the UK and the US).

Main Organs of the united nations:

•  The General Assembly
• The security council
• The economic and social council
• The trusteeship council
• The international court of justice
• The UN Secretariat

Main goals of united nations:

• Maintaining international peace and security.
• Developing friendly relations among nations
• Achieving international cooperation in solving international problems and being at the centre for harmonising the actions of nations in the attainment of these common ends.

Achievements of united nations:

• Deploying more than 35 peace-keeping missions. There are presently 16 active peace-keeping forces in operation.
• UN Human Rights Commission has focused world attention on cases of torture, disappearance, and arbitrary detention and has generated international pressure.
• The International Court of Justice has helped settle international disputes involving territorial issues, diplomatic relations, hostage-taking, and economic rights.
•  Promoting Women’s Rights ­have supported programs and projects to improve the quality of life for women in over 100 countries, including credit and training, marketing opportunities, etc.
• Pressing for Universal Immunization of polio, tetanus, measles, whooping cough, diphtheria and tuberculosis ­ has a 80% immunization rate, saving the lives of more than 3 million children each year
• Promoting investment in developing countries ­promoting entrepreneurship and self-reliance, industrial cooperation and technology transfer and cost-effective, ecologically-sensitive industry.

Reforms needed in United nations:

• The UNSC’s permanent, veto-carrying members, chosen by virtue of being “winners” of World War II — the U.S., the U.K., France, Russia and later China — can hardly claim adequate representation of the world’s leadership today. 
• The UNSC does not include a permanent member from the African, Australian and South American continents, and the pillars of the multilateral order, such as the G-4 group of Brazil, India, Germany and Japan, have been ignored for long.

Opportunity for India:

• Earlier in the year, India was elected as a non-­permanent member of the UNSC for a two­ year term. 
• India will also host the BRICS Summit next year and G­20 Summit in 2022. 
• These are openings for India in coalescing the world in critical areas that require global cooperation especially climate change, pandemics and counter­terrorism.
• India also needs to invest in the UN with increased financial contributions in line with its share of the world economy and by placing its people in key multilateral positions.

Why India deserves a fixed UN Security Council seat?

India commands three distinct characteristics which make its case for a permanent seat compelling.

• Currently having a population of 1.28 billion, India will become the most populous country in the world by 2022. Such a large portion of the planet’s population cannot be altogether ignored or kept at a distance from the decision making table of UNSC which brings with itself the “veto” power.
• Secondly, India happens to be the second fastest growing economy in the world making it an ideal destination for foreign investment and future growth.
• Thirdly, India is ruled by a democratic, secular government which has never been upstaged by an army coup and can be labelled as a “responsible” nuclear power.
• India is the fourth largest contributor to UN Peacekeeping behind Bangladesh, Ethiopia and Pakistan. Though India has a large physical presence in UN Peacekeeping, it finances a minuscule 0.13 per cent of UN peacekeeping operations.

• India’s acquired status of a Nuclear Weapons State (NWS) in May 1998 also makes India a natural claimant as a permanent member similar to the existing permanent members who are all Nuclear Weapon States.
• India is the undisputed leader of the Third world countries, as reflected by its leadership role in Non-Aligned Movement and G-77 grouping.
• Therefore, India’s inclusion in UNSC will strengthen India’s stature as a ‘moralistic force’ for the developing states and help in making UNSC more democratic.

The real population worry

Context: India’s population future prompted by release of the Sample Registration System (SRS) Statistical Report (2018) and global population projections made by the Institute of Health Metrics and Evaluation(IHME),US.

Relevance:

1. GS Paper 1: Poverty, Population; Development and associated issues

Mains questions:

1. Critically examine whether growing population is the cause of poverty OR poverty is the main cause of population increase in India. 15 marks

Status of India’s population trends:

• The total fertility rate (TFR) in simple terms refers to the total number of children born or likely to be born to a woman in her lifetime if she were subject to the prevailing rate of age-specific fertility in the population. TFR of about 2.1 children per woman is called Replacement-level fertility.
• According to the United Nations (UN) report, the number of children born per woman in the country still lies in the range of 2.1-4. This puts India in the intermediate-fertility group of countries in which around 40% of the world population lives. India is expected to add nearly 273 million people between 2019 and 2050.

Advantage related to population growth:

• Demographic dividend:  Demographic dividend occurs when the proportion of working people in the total population is high because this indicates that more people have the potential to be productive and contribute to growth of the economy. India has demographic dividend for next four decades and if India provides quality health, education, skills and employment opportunities to people then country can come out from middle income trap.
• Demand creation: Population growth spurs the demand in the economy, thereby fuelling production and hence, economic growth.
• The high proportion of young people in the population will mean an increase in our workforce, more so, if a higher proportion of women enter the workforce.
• The engines of global growth are aging rapidly and many will experience outright population contraction alongside dwindling working-age shares. India can cement economic gains by boosting productivity, taking steps to increase labour force participation.

Challenges related to India population growth:

• In the Population Census of 2011 it was revealed that the population ratio in India 2011 is 940 females per 1000 of males. It is biased toward males which shows patriarchal attitude of society toward female.
• Early Marriage and Universal Marriage System: Even though the marriageable age of a girl is legally 18 years, the concept of early marriage still prevails. Getting married at a young age prolongs the childbearing age. Also, in India, marriage is a sacred obligation and a universal practice, where almost every woman is married at the reproductive age.
• India’s fertility rate is currently at about 2.24, with wide variations across States — it stands at 1.6 in Tamil Nadu and West Bengal and at 3.3 in Bihar and 3.1 in Uttar Pradesh.
• Poverty and Illiteracy: Another factor for the rapid growth of the population is poverty. Impoverished families have this notion that more the number of members in the family, more will be the numbers to earn income. Some feel that more children are needed to look after them in their old age.
• The Economic Survey of 2018 points out that ‘son meta preference’ – the desire to have a male child – has resulted in 21 million “unwanted girls" in India.

Measures to address these issues:

• Women education: it is a important tool to address the issues related to biased sex ratio and empowering to women.
• Curbing under-age marriage and teenage pregnancy will also help in checking the birth rate.
• Budgetary allocations and spending on family planning have to be raised, especially to provide birth spacing methods, adequately train health workers, ensure quality of service delivery and invest in behavior change communication.
• Progress in poverty reduction, greater equality, better nutrition, universal education, and health care, needs state support and strong civil society institutions.

 Way forward: There is an urgent need to reach young people both for reproductive health education and services as well as to cultivate gender equity norms. This could reduce the effect of population momentum and accelerate progress towards reaching a more normal sex-ratio at birth. India’s population future depends on it.