Syllabus subtopic:.

• Role of women and women's organization, population and associated issues, poverty and developmental issues, urbanization, their problems and their remedies.
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Prelims and Mains focus: about the NITI Aayog’s move and its significance; India’s population crisis; NITI Aayog: structure and mandate

News: Invoking the Prime Minister’s concern over the rising population, the NITI Aayog is set to start a process of drafting the roadmap for population stabilisation in the country.

Context

• NITI Aayog’s move comes four months after the Prime Minister voiced concern over the issue.

About the process

• Taking the first step, the Aayog is organising a national consultation on ‘Realising the vision of population stabilization: leaving no one behind’ on Friday.

• The recommendations from the consultation will contribute to a NITI Aayog working paper to help achieve India’s vision of attaining population stabilization, as voiced by PM Modi on 15 August 2019.

• The consultative meeting being organised in partnership with Population Foundation of India (PFI) will bring together senior officials, experts and subject matter specialists to discuss ways and means of strengthening India’s population policy and family planning programmes.

India’s current population scenario

• India with a current population size of 1.37 billion is the second-most populous country in the world.

• India’s birth rates are falling but the population continues to grow due to the fact that more than 30 per cent of the population is young and in the reproductive age group.

Note: to read about India’s population crisis in detail, click on the link below:

https://qz.com/india/1051533/india-is-unprepared-for-a-near-future-when-it-will-be-the-worlds-most-populous-country/

About NITI Aayog

• The Government, in January 2015, replaced Planning Commission with NITI Aayog (National Institution for Transforming India).

• Aim: to achieve Sustainable Development Goals and to enhance cooperative federalism by fostering the involvement of State Governments of India in the economic policy-making process using a bottom-up approach.

Role of NITI Aayog:

The institution has to provide governments at the central and state levels with relevant strategic and technical advice across the spectrum of key elements of policy. This includes matters of national and international import on the economic front, dissemination of best practices from within the country as well as from other nations, the infusion of new policy ideas and specific issue-based support. The institution has to be able to respond to the changing and more integrated world that India is part of.

Composition of NITI Aayog:

• Chairperson: Prime Minister of India as the Chairperson.
• Governing Council comprising the Chief Ministers of all the States and Lt. Governors of Union Territories.
• Regional Councils will be formed to address specific issues and contingencies impacting more than one state or a region. These will be formed for a specified tenure.
• The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region. These will be chaired by the Chairperson of the NITI Aayog or his nominee.
• Experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister.

India should be wary of middle-income trap

Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Prelims and Mains focus: about Middle Income Trap; why is India facing it; about GNI

News: Many economists believe that countries that grow from low-income to middle-income levels tend to get stuck in a trap that prevents them from graduating to high-income status. India runs the risk of getting caught in that trap.

What is the middle-income trap?

World Bank defines a middle-income country as one with a gross national income (GNI) per capita of $1,000-12,000 in 2011 prices.

Those below the $4,000 mark are “lower-middle-income” countries, and those above it “upper-middle-income” ones. The middle-income trap refers to the phenomenon where rapidly growing economies graduate to the middle-income tier but then stagnate. They get squeezed from below by intense competition from lower-cost competitors while failing to transition to high-income levels for a variety of reasons—especially a failure to build institutional, human and technological capital.

Which countries have escaped it?

In the history of development, the success stories of transformation to high-income status include Japan, South Korea, Portugal, Poland and Latvia. Countries such as Brazil, South Africa, Egypt, Thailand and Turkey also tried to develop but could not transition to the high-income level. These countries failed to develop and remain stuck below their potential. Argentina, Mexico, and Russia, meanwhile, have been trapped in the upper middle-income category for a long time. China, with a GNI per capita of around $9,800, is most likely on its way out of the middle-income trap—unless it stumbles.

How has India moved up the development ranks?

In 1960, India had a per capita income of $1,033 (in 2011 purchasing power parity terms). This was equivalent to 6% of the per capita income of the US. India attained lower-middle-income status in 2008. By 2017-18, the country’s per capita income was $6,538—or 12% of the per capita income of the US.

Is India caught in the middle-income trap?

Rathin Roy, a former member of Prime Minister Narendra Modi’s economic advisory council, has cautioned that India runs the risk of getting caught in the middle-income trap. According to him, the country’s growth has mostly been driven by the demand generated by the richest 100 million Indians. However, as this demand cannot keep growing infinitely, a failure to broaden the income base—and, therefore, the demand base or the market size—could act as a growth barrier, resulting in India slipping into a middle-income trap.

Is India’s market too small?

Inequality is a barrier to the broadening of the demand base in an economy. Even at $2.7 trillion, India’s GDP is relatively small—it’s about the size of California’s GDP. China is over 4 times as large. The 2017 Economic Survey warned that four factors could hurt India:

• hyper-globalization repudiation,
• thwarted/impeded structural transformation,
• human capital regression due to technological progress, and
• climate change-induced agricultural stress.

Following are the measures of National Income:

1. Gross Domestic Product (GDP):

• GDP is the final value of the goods and services produced within the geographic boundaries of a country during a year.
• GDP growth rate is an important indicator of the economic performance of a country.
• The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country’s economy
• In India, contributions to GDP are mainly divided into 3 broad sectors – agriculture and allied, industry and service sector.

2. Net domestic product (NDP):

• The net domestic product (NDP) equals the gross domestic product (GDP) minus depreciation on country's capital goods.
• NDP= GDP – Depreciation

3. Gross national product (GNP):

GNP is an estimate of the total value of all the final products and services produced in a given period by the means of production owned by a country’s residents.

4. Gross National Income (GNI):

• Gross national income is a measurement of a country’s income. It includes all the income earned by a country’s residents and businesses, including those earned abroad.
• GNI measures all income of a country’s residents and businesses, regardless of where it’s produced.
• Gross domestic product (GDP), on the other hand, measures the income of anyone within a country’s boundaries, regardless of who produces it.

Difference between GNI and GNP

• GNI measures income earned, including that from investments that flow back into the country. Gross National Product (GNP) includes the earnings from all assets owned by residents.
• It even includes those that don’t flow back into the country.
• It then omits the earnings of all foreigners living in the country, even if they spend it within the country.

Calculation of GNI and NNI:

GNI (calculated from GDP) = GDP + (income from citizens and businesses earned abroad) – (income remitted by foreigners living in the country back to their home countries).

GNI (calculated from GNP) = GNP + (income spent by foreigners within the country) – (foreign income not remitted by citizens).

Net National Income (NNI) = GNI- Depreciation= NDP+ (income from citizens and businesses earned abroad) – (income remitted by foreigners living in the country back to their home countries).

Industry asks govt to boost private investments to kick-start growth

Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Prelims and Mains focus: about the key takeaways from the meeting; suggestions given by various stakeholders and their significance

News: Prominent industrialists on Thursday urged finance minister Nirmala Sitharaman to kick-start economic growth by encouraging private investment, improving the regulatory environment and increasing export competitiveness.

Context:

The finance minister is slated to present her second budget on 1 February amid expectations that she would announce fresh measures to reverse the current economic downturn that has led to GDP growth hitting a six-and-a-half year low at 4.5% in the September quarter.

Suggestions given by industrialists

• In a customary pre-budget consultation with Sitharaman and top officials of the finance ministry, the industrialists suggested ways to revive the rural economy by boosting consumption.

• The suggestions included ideas to improve the Insolvency and Bankruptcy Code with regard to the National Company Law Tribunal and banks, faster merger, acquisition and demerger processes, and ways to reduce time for approval of foreign direct investment proposals.

• The industrialists also called for structural changes in laws for creating an effective and stable business environment, time-bound decisions for augmenting ease of business both at the central and state levels and fresh capital investment by the government towards infrastructure development.

• They also stressed on the need to prevent predatory pricing and dumping in India, facilitate research and development in the country to boost Make in India, and harness public-private partnership by leveraging social funding through a new programme, as well as ensuring liquidity for NBFCs (non-bank financial companies) with focus on rural economy, and ways to increase consumption in the economy.

• Decriminalizing various laws and procedures would address the issue of trust deficit. This will be in line with the principle that entrepreneurship is a risky venture. Wilful defaulters should be dealt with firmly. However, in most cases, the fine should be enough to deal with inadvertent non-compliance.

Concerns raised by representatives of trade organisations

The Finance Minister on Thursday also met representatives of trade unions and labour organizations as part of the pre-budget consultations.

• The participants aired their concerns about provision of social security for workers besides skilling, re-skilling, and up-skilling of the labour force.

• They also emphasized on the quality of job creation, the need to ensure minimum wages for workers in detail, and the need for streamlining various schemes for better results.

Syllabus subtopic: Conservation, environmental pollution and degradation, environmental impact assessment

Prelims and Mains focus: About the relocation plan; About Indian rhinos and threat to their survival; WII

News: The Uttarakhand State Wildlife Board has cleared a proposal by the Wildlife Institute of India (WII) to introduce rhinoceroses in the Corbett Tiger Reserve (CTR) to boost tourism and revive the habitats of species that survive on low-height grass.

Process

According to officials, around 10 rhinos will be brought in CTR in the first phase and subsequently, 10 more would be added. A proposal will be sent to the Centre soon in this regard to transport rhinos from either Assam or West Bengal or both. The capture and translocation are likely to cost about Rs 15 lakh per individual animal.

Challenge ahead

• Experts claim that protecting these rhinos from poaching will be the only challenge for the state’s forest department staff after the move.

Why CTR was found suitable for relocation

• The geographical terrain and environmental conditions in CTR are suitable for rhinos.
• The ideal sites chosen in Corbett are valley habitats bounded on either side by the lower Himalayas (north), Shivalik Hills (south) and the Ramganga Reservoir (east), which would also act as natural barriers to rhino movement outside these area, thereby minimising conflict with people.
• Rhinos were once found in the Terai grassland in the state and adjoining areas but were wiped out by poaching. The horn of a rhino is believed to be an aphrodisiac. Corbett is well protected and hence the rhinos will safely survive there.
• Experts say that each of the founding population animals would be fitted with a GPS radio-collar. A team of researchers would be allocated for monitoring their ranging patterns, foraging habits, demography and habitat use. The Forest Department would be responsible for the safety of these re-introduced rhinos. Researchers will share data with the department’s staff.
• There are less challenges in re-introduction of rhinos. The animals only have to be brought here. Food and water are available.
• According to wildlife experts, rhinos reduce the size of elephant grass by eating it. This would mean that species that thrive on lower-height grass — Hog Deer, Cheetal, Sambar and Swamp Deer, among others — would also be encouraged.

Significance of the move

• The rhino’s range was once continuous across the flood plains of the Indus, Ganges and the Brahmaputra, but today, it is limited to small fragmented pockets in India and Nepal as a result of anthropogenic pressures.
• Re-introduction into habitats in its historic range would not only create safety-net populations for the species but also restore their ecological role in these faunally-degraded habitats.
• The majority of the decline in rhino population in the state of Assam occurred during the period of political unrest. Similar trends in population decline were observed in Nepal during the Maoist movement. Uttarakhand has no such history of political instability and thus would be an ideal site for reintroduction.

About Wildlife Institute of India

• Wildlife Institute of India (WII) is an internationally acclaimed Institution, which offers training program, academic courses and advisory in wildlife research and management.
• WII carries out wildlife research in areas of study like Biodiversity, Endangered Species, Wildlife Policy, Wildlife Management, Wildlife Forensics, Spatial Modeling, Eco development, Habitat Ecology and Climate Change.
• It was established in 1982.
• It is an autonomous institution under the Ministry of Environment Forest and Climate change, Government of India.
• The institute is based in Dehradun.

RBI plans ‘Operation Twist’ in desi avatar

Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Prelims and Mains focus: about Operation Twist and its significance; G-secs: types; Open market operations and their significance

News: On Thursday, the RBI said it would be buying the 6.45% yielding notes maturing in 2029 — the benchmark bonds — and would be selling four papers maturing in 2020. The OMOs would be conducted on Monday.

What exactly is it?

• The Reserve Bank of India (RBI) has commenced something that is akin to the famous “Operation Twist” conducted by the US Federal Reserve by deciding to buy the long-tenor 10-year benchmark bonds worth Rs. 10,000 crores and selling four short-dated securities worth the same amount under open market operations (OMOs).

• The step is liquidity neutral — meaning the OMOs would not be adding any further liquidity to the system that is already flush with excess liquidity to the tune of over Rs. 2 lakh crore.

• The simultaneous purchase and sale of securities would also help in flattening the steep yield curve — where long tenor yields have been high and short-term yields have been low.

• For instance, despite a 60 bps reduction in the repo rate across two monetary policies in August and October, the benchmark yield remains higher by 38 basis points since August. At the same time, the system liquidity has been so high that short-tenor yields have remained fairly low. In some instances, even the 364-day treasury bill yield has gone below the repo rate — a not-so-usual occurrence.

Way ahead

• Experts believe that the central bank may do more of these OMO purchases/sales in coming times which will eventually bring down the excess supply of long-tenor bonds in the market.
• Transmission has been a big issue in this rate cut cycle.
• The long tenor G-sec yields have not moved lower since the last couple of rate cuts. This will bring down the term premium and will be one more step towards improving the transmission of rates. This will also help to absorb excess long tenor bond supply that could be hitting the market on account of potential fiscal slippage from budgeted levels.

Open Market Operations (OMO)

• Open market operations is the sale and purchase of government securities and treasury bills by RBI or the central bank of the country.
• The objective of OMO is to regulate the money supply in the economy.
• RBI carries out the OMO through commercial banks and does not directly deal with the public.
• Features: When the RBI wants to increase the money supply in the economy, it purchases government securities from the market and it sells government securities to suck out liquidity from the system.

About G-Secs

• Government security (G-Sec) is a debt obligation of the Indian government to fund their fiscal deficit. These instruments are tradable and are issued either by the central or the state government. These securities are offered for short term as well as long term. Short-term instruments with a maturity of less than one year are typically called treasury bills (T-Bills) whereas long-term instruments are called government bonds or dated securities with a maturity of one year or more.

• However, in India, the central government issues T-Bills as well as bonds or dated securities while the state government issues only the bonds or dated securities called State Development Loans (SDL). The central government also issues not fully tradable savings instruments like savings bonds, national saving certificate etc or special securities like oil bonds, fertilizer bonds, power bonds etc.

Types of G-Sec

1. Treasury Bills (T-bills): T-bills are money market short term debt instruments which are issued by the central government in three tenures mainly 91-day, 182-day and 364-day. These instruments are zero coupon bonds which pay no interest but are actually issued at a discount and redeemed at the face value at maturity.

2. Cash Management Bills (CMBs): CMBs are a new short-term instrument having the common characteristics of T-Bills but with a maturity of less than 91-days. These instruments are issued to meet the temporary disparity in the cash flow of the government. CMBs too are issued at a discount and redeemed at face value on maturity.

3. Dated Government Securities: These instruments are long-term securities which carry a fixed or floating coupon (interest) rate paid on the face value, which is payable at fixed time periods generally half-yearly. The maximum tenure of these securities is 30 years.