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Delhi Edition of The Hindu
Caution from a sobering Survey By tradition the Economic Survey used to be presented to Parliament on the eve of the Union Budget. Government under Prime Minister Narendra Modi is known to break with tradition. 1)-It advanced the presentation of the Budget by one month; 2)-It has done away with a separate Railways Budget; and 3)-It has merged the two categories of plan and non plan spending. 4)-The big one, of course, is the winding down of the Planning Commission itself. So also, in a break from tradition, this year, the full Survey was not presented at the beginning of the Budget session-> Only Part I was presented.
This is the part which is policy oriented and future looking. It reads like a doctoral thesis, with many conceptual ideas and analytical pieces. It covers various topics: 1)-The puzzle of lack of convergence in growth of States, 2)-The challenge of governance of cities, 3)-A new fiscal framework for India, etc. 4)-It also presents a much-awaited longish piece on demonetisation. Such is the impression of the scholarly tome on the research community, that the University of Mumbai has adopted it as a textbook in its economics courses.
The update The data about the year gone by was not available in February, hence the delay. The second part of the Survey comes almost six months later, so has some additional analytical pieces. The data that it presents and its prognosis(र ग क न द ) for the near term future. Economic growth for fiscal year 2016-17 was 7.1%. This was the year when 1)-Oil prices and inflation were moderate, 2)-Monsoon rains were abundant, 3)-Inbound foreign direct investment was at record peak, 4)-The currency was stable and 5)-The fiscal deficit was under control
With such macroeconomic context, the year should have recorded at least one percentage point higher growth than the previous year. But that was not to be, and demonetisation could be the biggest reason. Survey says that signs of slowdown were evident even before the surprise November announcement of demonetisation. 1)-The continuing deflationary trends arise from lower investment ratio, 2)-Low farm prices especially for non cereals foods, 3)-The cutting back on development spending by State governments owing to the burden of loan waivers, and 4)-Of course the twin balance sheet problem (more about this below). Survey cites the example of Uttar Pradesh which had to slash its development spending by 13% in order to accommodate the farm loan waiver.
Industrial problems The latest June data on the index of industrial production (IIP) shows negative growth, i.e. contraction of the index-> which is the first in the last four years. It may very well be due to de-stocking of warehouses before the July 1 launch of the Goods and Services Tax (GST), but it does not seem so. Contraction is particularly widespread across manufacturing sectors, with 15 out of 23 industries showing negative growth. This is where the twin balance sheet problem hits hardest. Bank balance sheets are stretched with a nonperforming assets (loans) ratio close to 10% of their total loan. It is higher than the capital base available to most public sector banks. So technically their net worth is negative.
. Their situation is made worse with the flood of imports, which take away their domestic market share. Strong rupee makes imports more attractive. Under the GST regime, the countervailing duty paid in lieu of excise (now GST) is now tax deductible. Earlier it was not for many products. This makes imports that much more attractive in comparison with domestically produced goods. The strong rupee has also been flagged by the Survey as potentially harming the domestic economy.
Is the weakness in industrial growth a structural problem or a cyclical one? If the latter, then we should see an upswing. But it also has long-term structural dimensions. The investment-to-gdp ratio has been steadily falling for five years in a row. Of this the private sector component growth is abysmally low. Bank credit growth to industry has been consistently negative since September 2016. Opportunities from 1)-Digital India, 2)-Smart Cities Mission and 3)-Housing for All are huge, But a kick start is needed.
3 rd highlighted by the Survey is the financial sector, including money and banking. Blames the high interest policy of the Reserve Bank of India (RBI) for thwarting(र क ) industrial growth. Now become focussed on inflation targeting-> Isn t it being too conservative? Why can t it slash interest rates aggressively to enable growth? Many other factors weigh(त ल ) on the minds of investors. Key problem is of course the continuing burden of non-performing assets (NPA). Repeated and innovative proposals from the RBI (under various acronyms such as CDR, SDR, S4A, or corporate debt restructuring, strategic debt restructuring and scheme for sustainable structuring of stressed assets) have not borne fruit.
Conclusion Finally as with all things Indian, one must end with optimism. 1)-The fiscal situation at the Centre is improving. 2)-Exports are finally in positive territory. 3)-The basic building blocks of longer term growth are being put in place. The four major reforms are: 1)-GST, 2)-a new insolvency and bankruptcy code to deal with NPAs, 3)-a new monetary policy framework, and 4)-Aadhaar linkage to government services. While the near term may not cross 7%, the medium term has the potential to see a sustained 8% growth path. Survey is tinged(र ग) with this optimism!
No case for an all India judicial service Centralising recruitment will not address the multiple problems in the judiciary Proposal to create an All-India Judicial Service (AIJS) along the lines of the All India Services (AIS) is one that has been endlessly debated since the idea was first mooted by the Law Commission in the 1950s. There are no neat lines which can be drawn between those who favour and oppose. The debate has once again come to the fore with a fresh move to implement it and nine High Courts expressing their disapproval.
Why it is a bad idea An AIJS addresses neither the problem of disproportionately low pay nor the lack of career advancement. An AIJS is a terrible idea in so far as judicial reforms in India are concerned and does not solve even a single problem being faced by the Indian judiciary. The brief outline of the AIJS is generally this: district judges will be recruited centrally through an all-india examination and allocated to each State along the lines of the AIS. This, it is argued, will ensure a transparent and efficient method of recruitment to attract the best talent in India s legal profession. A milder version of this, with judges recruited by High Courts on the basis of a common examination is currently being debated in the Supreme Court. Bar Council of India has mismanaged legal education- Almost no effort has gone into improving the standard of legal education across the country.
While a lot of effort has been undertaken by the Supreme Court to ensure uniformity in pay scales across States through its orders in the All India Judges Association case, it is still abysmally low. Study published in the Economic and Political Weekly in 2016 showed that less than a third of seats in the High Courts are filled by judges from the district cadre. They are also appointed later in their careers and tend to have shorter tenures than judges appointed directly from the Bar. Even if a lawyer is eager to serve as a judge, she would rather wait to be eligible for direct elevation to the High Court than have to go through the grind in the district judiciary. AIJS> problem of disproportionately low pay & the lack of career advancement. While the former is in the hands of the State governments concerned, the latter is in the hands of the judiciary itself, but no changes have been made to ensure better district judge representation in the High Courts
Causes new problems-> A national exam risks shutting out those from less privileged backgrounds from being able to enter the judicial services. It may also end up not taking into account local laws, practices and customs which vary widely across States, Vastly increasing the costs of training for judges selected through the mechanism. Compare the vacancy position in the AIS and the subordinate judiciary. The total number of positions in the subordinate judiciary as of October 2016 was 21,374 while the total number of sanctioned posts for the three AIS was 14,355.
Conclusion Problems of the Indian judiciary at all levels have reached catastrophic levels. The public is losing confidence in the judiciary. 1)-delays, 2)-cost, 3)-uncertainty, 4)-in efficiency and 5)-corruption. On the contrary, this endless, stagnant debate on the AIJS only takes up time and energy instead of focussing attention on implementing more direct solutions to address the problems of the Indian judiciary.
Why can t the government provide a higher income for farmers? There are two major challenges before Indian agriculture today: 1)-ecological and 2)-economical. In Punjab, and in other Green Revolution States, the water table has gone down During the Green Revolution the population was about 400-500 million; now it is 1,300 million and it is predicted to be 1.5 billion by 2030. Addressing the ecological challenge requires more technology while the economics requires more public policy interventions. In my 2006 report, I had recommended-> Raise the current MSP NDA government has said it wants to double farmers incomes by 2022 But they haven t implemented the recommendations of the Swaminathan Commission Report that you submitted to the UPA government in 2006.
Government is willing to pay 7 th Pay Commission salaries to insulate government servants from inflation, but they cannot provide a higher income for farmers to improve their lot? Farm loan waivers are posing a bigger burden on the government exchequer compared to what higher pay for farm produce will incur. There are three ways to improve the incomes of farmers. 1)-MSP and procurement is one. 2)-We also need to improve productivity. 3)-The marketable surplus from agriculture has to be enhanced. We should also look at making a value addition to biomass-> For example, paddy straw is a biomass product that could be used to make edible mushrooms. Incidence of farmers committing suicides has shown no signs The idea of more crops per drop has been implemented well in Israel. We should adopt those practices here.
Heavy use of pesticides and high-yielding varieties of paddy have resulted in environmental degradation and loss of biodiversity. Opinion is divided on the benefits of genetic modification technology to improve yields of food crops. Can GM technology help address food security challenges? Genetic modification has both advantages and disadvantages We need an efficient regulatory mechanism for GM in India. We need an all India coordinated research project on GMOs Scope for organic farming when it comes to addressing food security? Organic farming can have a good scope only under three conditions. One, farmers must possess animals for organic manure. Two, they must have the capacity to control pests and diseases. Three, they should adopt agronomical methods of sowing such as rotation of crops.
Even genetic resistance to pests and diseases can help organic farmers India s ranking on the Global Hunger Index has become worse over the years and we missed out on the Millennium Development Goal of halving hunger. What are the steps we should take to address the matter? India has done well in production, but not in consumption. What we are witnessing today is grain mountains on the one side and hungry millions on the other. The Food Security Act must be implemented properly to address the situation. We should also enlarge the food basket to include nutri-millets.
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Last Day- Q s- Ans Two Nations theory was given by MD. Ali Jinnah in 1940. Mountbatten Plan-> Partition of Two country. Lake Tanganyika touches the border of Burundi, Tanzania, Democratic Republic of Congo ( DCO) & Zambia countries. Indian Constitution- languages- 14 Eight schedule include recognition of 22 language.