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17 October 2017
job creation:challenges and how to solve it in india.
job creation:challenges and how to solve it .
Introduction
Introduction
Growth generates employment and employment generates further growth. In general, employment corresponds to the qualitative aspect of growth. If a country is on the growth trajectory, it will generate more employment opportunities and while the growth declines, people start losing jobs.
Jobless growth is an economic phenomenon in which a macro economy experiences growth while maintaining or decreasing its level of employment.
The aim should be at growth that is driven both by improvements in productivity and modernizations of its labour force — especially since better jobs are crucial to improving the lives of millions.
What are the main factors of India’s jobless growth?
The transition peasants into factory workers requires basic training, which is not keeping in pace with job needs. Moreover the main contributor in India’s GDP is service sector which is not labour intensive and thus adds to jobless growth.
The other factor is related to small and medium enterprises (SMEs). Their labour intensity is four times higher than that of large firms. SMEs, which employ 40 per cent of the workforce of the country and which represent about 45 per cent of India’s manufacturing output and 40 per cent of India’s total exports, are in a better position to create jobs. But it is not able to do so because of poor infrastructure, lack of skilled labour and also they don’t have easy access to loans.
What can policy-makers do to revive job growth?
An industrial and trade policy is needed.
The Department of Industrial Policy and Promotion (DIPP) is preparing an industrial policy. National Manufacturing Policy came in 2011, was not implemented fully.
The Department of Industrial Policy and Promotion (DIPP) is preparing an industrial policy. National Manufacturing Policy came in 2011, was not implemented fully.
While the DIPP is preparing the industrial policy document, it is essential that trade policy is consistent with such an industrial policy. Otherwise the two may work at cross purposes and undermine each other’s objectives.
Excessive imports have been decimating Indian manufacturing.
An inverted duty structure has the following features: higher duty on intermediate goods compared to final finished goods, with the latter often enjoying concessional customs duty.
As a result, domestic manufacturers face high tariffs leading to higher raw material cost at home, emanating from the unfavourable inverted duty structure.
This has prevented many manufacturing sectors from growing since economic reforms began. This must be corrected.
The automobiles sector in India faced no inverted duty structure, and has thrived. India has become in the last decade one of the largest producers of vehicles of several kinds in the world now. Electronics faced an inverted duty structure, but due to changes made, electronics manufacturing has shown slow growth.
Special packages are needed for labour-intensive industries to create jobs.
There are a number of labour intensive manufacturing sectors in India such as food processing, leather and footwear, wood manufacturers and furniture, textiles and apparel and garments.
There are a number of labour intensive manufacturing sectors in India such as food processing, leather and footwear, wood manufacturers and furniture, textiles and apparel and garments.
The apparel and garments sector received a package from the Government of India roughly a year back. The other labour intensive sectors have been ignored.
The nature of the package will need to be individually designed for each sector defined as quickly as possible.
The nature of the package will need to be individually designed for each sector defined as quickly as possible.
Cluster development
There should be cluster development to support job creation in micro, small and medium enterprises (MSMEs).
Most of the unorganised sector employment is in MSMEs, which tend to be concentrated in specific geographic locations.
There are 1,350 modern industry clusters in India and an additional 4,000 traditional product manufacturing clusters, like handloom, handicraft and other traditional single product group clusters.
There is a cluster development programme of the Ministry of MSMEs, which need to be funded adequately and better designed to create more opportunities.
There are 1,350 modern industry clusters in India and an additional 4,000 traditional product manufacturing clusters, like handloom, handicraft and other traditional single product group clusters.
There is a cluster development programme of the Ministry of MSMEs, which need to be funded adequately and better designed to create more opportunities.
Align urban development with manufacturing clusters to create jobs.
The Ministry of Urban Development has a programme called AMRUT (Atal Mission for Rejuvenation and Urban Transformation) aimed at improving infrastructure for small towns. Infrastructure investment by the government creates many jobs.
The same intervention should be made in towns which have clusters of unorganised sector economic activities.
Hence an engagement between the Urban Development and MSME Ministries is necessary to attract more investment to industrial clusters and increase non-agricultural jobs.
Hence an engagement between the Urban Development and MSME Ministries is necessary to attract more investment to industrial clusters and increase non-agricultural jobs.
More focus on women participation
Girls are losing out in jobs, or those with increasing education can’t find them, despite having gotten higher levels of education.
Secondary enrolment in the country rose from 58% to 85% in a matter of five years (2010-2015), with gender parity.
Skilling close to clusters is likely to create more no of jobs.
The problem with skilling programmes has been low placement after skilling is complete.
The availability of jobs close to where the skilling is conducted will also enhance the demand for skilling.
Skilling close to clusters is likely to create more no of jobs.
The problem with skilling programmes has been low placement after skilling is complete.
The availability of jobs close to where the skilling is conducted will also enhance the demand for skilling.
Public investments in health, education, police and judiciary
This can create many government jobs.
Public investment in the health sector has remained even in the last three years at 1.15% of GDP, despite the creation of the national health policy at the beginning of 2017.
The policy indicates that expenditure on health will rise to 2.5% of GDP by 2025.
Given the state of health and nutrition of the population, it is critical that public expenditure on health is increased immediately.
In the absence of greater public expenditure, the private sector in health keeps expanding, which raises the household costs on health without necessarily improving health outcomes, because the private sector does not spend on preventive and public health measures.
Preventive and public health have been in all countries the responsibility of government. More government expenditure in health means more jobs in government and better health outcomes.
The policy indicates that expenditure on health will rise to 2.5% of GDP by 2025.
Given the state of health and nutrition of the population, it is critical that public expenditure on health is increased immediately.
In the absence of greater public expenditure, the private sector in health keeps expanding, which raises the household costs on health without necessarily improving health outcomes, because the private sector does not spend on preventive and public health measures.
Preventive and public health have been in all countries the responsibility of government. More government expenditure in health means more jobs in government and better health outcomes.
Next important area should be Revitalising schools.
Government schools should maintain education quality on par with private schools.
Many new government jobs can be provided if more young people could be trained specially to become teachers for science and mathematics at the secondary and higher secondary levels in government schools.
Many new government jobs can be provided if more young people could be trained specially to become teachers for science and mathematics at the secondary and higher secondary levels in government schools.
The same applies to the police and the judiciary.
All the vacancies in Police and judiciary should be filled immediately. More police and a larger judiciary can both reduce crime as well as speed up the process of justice for the ordinary citizen.
Conclusion:
Conclusion:
Government schemes rarely create many jobs. International evidence is that when consumer demand grows consistently, whether from domestic or international markets, that is when jobs grow. That requires an industrial policy. Ease of doing business improvement and infrastructure investment increases should improve the economic environment. But most importantly India needs a robust industrial policy.
bureau of Indian standards (BIS) Act 2016 brought into force with effect from 12th October, 2017
bureau of Indian standards (BIS) Act 2016 brought into force with effect from 12th October, 2017
A new Bureau of Indian standards (BIS) Act 2016 which was notified on 22nd March, 2016, has been brought into force with effect from 12th October, 2017. The Act establishes the Bureau of Indian Standards (BIS) as the National Standards Body of India. The Act has enabling provisions for the Government to bring under compulsory certification regime any goods or article of any scheduled industry, process, system or service which it considers necessary in the public interest or for the protection of human, animal or plant health, safety of the environment, or prevention of unfair trade practices, or national security. Enabling provisions have also been made for making hallmarking of the precious metal articles mandatory. The new Act also allows multiple type of simplified conformity assessment schemes including self-declaration of conformity against a standard which will give simplified options to manufacturers to adhere to the standards and get certificate of conformity. The Act enables the Central Government to appoint any authority/agency, in addition to the BIS, to verify the conformity of products and services to a standard and issue certificate of conformity. Further, there is provision for repair or recall, including product liability of the products bearing Standard Mark but not conforming to the relevant Indian Standard. The Hon’ble Minister for Consumer Affairs, Food and Public Distribution said that the new Act will further help in ease of doing business in the country, give fillip to Make In India campaign and ensure availability of quality products and services to the consumers.
Audrey Azoulay nominated by UNESCO Executive Board for the post of Director-General:current affairs for upsc pre
Audrey Azoulay nominated by UNESCO Executive Board for the post of Director-General
The 58 members of UNESCO’s Executive Board on 13 October nominated Audrey Azoulay of France for the position of Director-General of the Organization, replacing outgoing Director-General Irina Bokova.
The nomination will be submitted to the vote of the General Conference that brings together all 195 Member States of the Organization every two years on 10 November.
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The 58 members of UNESCO’s Executive Board on 13 October nominated Audrey Azoulay of France for the position of Director-General of the Organization, replacing outgoing Director-General Irina Bokova.
The nomination will be submitted to the vote of the General Conference that brings together all 195 Member States of the Organization every two years on 10 November.
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india-EU
India and the EU have been strategic partners since 2004. The 14th annual Summit between India and the European Union (EU) was held in New Delhi. The two sides reviewed a full spectrum of their ties at the 14th summit with a focus on ramping up two-way trade and investment.
India and the EU have been strategic partners since 2004. The 14th annual Summit between India and the European Union (EU) was held in New Delhi. The two sides reviewed a full spectrum of their ties at the 14th summit with a focus on ramping up two-way trade and investment.
The leaders reviewed the wide-ranging cooperation under the India-EU Strategic Partnership. Recognising that India and the EU are natural partners, the leaders reaffirmed their commitment to further deepen and strengthen the India-EU Strategic Partnership based on shared principles and values of democracy, freedom, rule of law and respect for human rights and territorial integrity of States.
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The U.S. has announced its withdrawal from the United Nations Educational, Scientific and Cultural Organization (UNESCO), accusing it of “continuing anti-Israel bias.” Besides the US, Israel has also decided to pull out of UNESCO.
As required by law, the U.S. has stopped funding UNESCO. The U.S. withdrawal will take effect on December 31, 2018. Until then, it will remain a full member.
About UNESCO:
About UNESCO:
UNESCO is a United Nations organization that helps preserve historical and cultural sites worldwide.
It is a special multi-country agency, formed in 1945 and based in France, that promotes sex education and literacy as well as improving gender equality in countries around the world.
It is also known for its work to preserve cultural and heritage sites such as ancient villages, ruins and temples, and historic sites such as the Great Mosque of Samarra in Iraq, which at one point came under threat of being destroyed by the Islamic State.
It is also known for its work to preserve cultural and heritage sites such as ancient villages, ruins and temples, and historic sites such as the Great Mosque of Samarra in Iraq, which at one point came under threat of being destroyed by the Islamic State.
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deep sea fishing and marine conservation
Deep sea fishing has been an integral part of the country’s Blue Revolution vision to exploit fishing resources to the maximum within the 200 nautical mile exclusive economic zone (EEZ). One day workshop was organized on Deep sea fishing with an aim to promote deep sea fishing as an alternative to trawling in the Palk Bay.
Deep sea fishing has been an integral part of the country’s Blue Revolution vision to exploit fishing resources to the maximum within the 200 nautical mile exclusive economic zone (EEZ). One day workshop was organized on Deep sea fishing with an aim to promote deep sea fishing as an alternative to trawling in the Palk Bay.
What is the issue with Bottom trawling?
Bottom trawling, an ecologically destructive practice, involves trawlers dragging weighted nets along the sea-floor, causing great depletion of aquatic resources. Bottom trawling captures juvenile fish, thus exhausting the ocean’s resources and affecting marine conservation efforts. This practice was started by Tamil Nadu fishermen in Palk Bay and actively pursued at the peak of the civil war in Sri Lanka.
The Palk Bay fishing conflict has figured prominently in high-level meetings between India and Sri Lanka. The Joint Working Group on Fisheries was formed by the two countries in November, 2016 to discuss the prolonged issue. But Sri Lankan fishermen wanted an immediate end to incursions by Indian trawlers, which resulted into amendment to the Fisheries and Aquatic Resources Act by Sri Lankan parliament. Also its navy has been vigilantly patrolling the International Maritime Boundary Line, ‘capturing’ Indian trawl boats and fishers.deep sea fishing and marine conservation
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Sampoorna Bima Gram Yojana
About the Sampoorna Bima Gram (SBG) Yojana:
About the Sampoorna Bima Gram (SBG) Yojana:
Under the Sampoorna Bima Gram (SBG) Yojana, at least one village (having a minimum of 100 households) will be identified in each of the revenue districts of the country, wherein endeavour will be made to cover all households of that identified village with a minimum of one RPLI (Rural Postal Life Insurance) policy each. Coverage of all households in the identified Sampoorna Bima Gram village is the primary objective of this scheme.
Rural Postal Life Insurance (RPLI), introduced on March 24, 1995 on the recommendations of the Malhotra Committee, provides insurance cover to people residing in rural areas, especially weaker sections and women living in rural areas
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National e-Governance Services Ltd (NeSL) has become India’s first information utility (IU) for bankruptcy cases under the Insolvency and Bankruptcy Code 2016. NeSL is owned by State Bank of India and Life Insurance Corporation Ltd., among others. Recently, the Insolvency and Bankruptcy Board of India (IBBI) eased ownership norms for setting up such utilities.
What is an information utility?
Information utility is an information network which would store financial data like borrowings, default and security interests among others of firms. The utility would specialise in procuring, maintaining and providing/supplying financial information to businesses, financial institutions, adjudicating authority, insolvency professionals and other relevant stake holders.
Why is it important? How useful is it?
The objective behind information utilities is to provide high-quality, authenticated information about debts and defaults. Information utilities are expected to play a key role as they allow storage of financial information of registered users and expeditiously process and verify information received.
Moreover, the database and records maintained by them would help lenders in taking informed decisions about credit transactions. It would also make debtors cautious as credit information is available with the utility. More importantly, information available with the utility can be used as evidence in bankruptcy cases before the National Company Law Tribunal
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change in uppcs 2018 exam: new pattern
change in uppcs 2018 exam: new pattern
more friendly to upsc aspirants.now ukpsc candidate can also easily appear in uppcs.
more friendly to upsc aspirants.now ukpsc candidate can also easily appear in uppcs.
Avoid the adventurous path
Any aggressive attempt to widen the fiscal deficit will land India’s economy in problems
The sharp deceleration in the growth of the economy as revealed by the first quarter estimate of GDP released a month ago has been widely commented upon. The policy prescriptions needed to reverse the trend depend on our understanding of the factors responsible for the slowdown. Among other things, one factor that stands out is the steady and sharp decline in the investment rate. The Gross Fixed Capital Formation (GFCF) rate has touched the level of 27.5% in the first quarter of 2017-18. A year ago, it was 29.2%, and a decade ago, it was 10 percentage points higher. In recent years, public investment has shown a small rise. The decline in the investment rate has been largely due to a decline in the private investment rate, both corporate and household.
Fiscal and revenue deficits
Given this situation, policy initiatives must be directed towards raising private investment. However, some have argued for a strong fiscal stimulus through an increase in public investment by relaxing the fiscal deficit. It is also suggested that what is relevant is revenue deficit and that there is no rationale for having a fiscal deficit target. There are two problems with this argument. First, the focus on fiscal deficit is mainly to ensure that the private sector has sufficient borrowing space. This is clearly set out in the Report of the Twelfth Finance Commission (TFC) chaired by the first author and which was reiterated by the recent Report of the Fiscal Responsibility and Budget Management (FRBM) Review Committee chaired by N.K. Singh, former Revenue and Expenditure Secretary and former Member of Parliament. The argument in the TFC was that when the transferable saving of the household sector relative to GDP is 10% and an acceptable level of current account deficit 1.5%, containing the aggregate deficit of the Centre and States at 6% and providing 1.5% to the public sector enterprises would leave 4% borrowing space to the private sector.
Similarly, the target of debt-GDP ratio at 60% in 2023 from the present level of 70% (with the Centre and States required to contain their ratios at 40% and 20%, respectively) is supposed to be achieved by limiting the fiscal deficit at 3% of GDP in the first three years and 2.5% in the next two by both the Centre and States.
Second, over 60% of the estimated fiscal deficit at the Centre in 2017-18 (1.9% out of 3.2%) is revenue deficit. At the State level, when the impact of loan waivers, additional interest payments on account of Ujwal DISCOM Assurance Yojana (UDAY) and possible impact of pay revision is considered, the revenue deficit may increase by 1% of GDP. Thus, the problem of proliferation in revenue deficit continues. The golden rule which the U.K. wanted to follow set no limit on fiscal deficit. But borrowing was limited to only financing capital expenditures. The implication is revenue deficit will be nil. We are far from this.
History of fiscal laxity
Indian economic history is replete with instances of adverse effects of fiscal expansion on inflation as well as the balance of payments. The huge fiscal expansion in the late 1980s, with the fiscal deficit at more than 10% of GDP leading to the macroeconomic and balance of payments crisis requiring the adoption of structural adjustment programme in 1991, has been very well documented. The recent episode of fiscal expansion after 2008-09 and 2009-10 is fresh in memory. After substantial improvement in the fiscal situation during the period 2004-05 to 2007-08, the implementation of the Pay Commission recommendation, expansion of rural employment guarantee for the whole country and the introduction of the loan waiver led to derailing the process of adjustment in 2008-09, and the fiscal deficit of the Centre increased from 2.5% in 2007-08 to 6.1% in 2008-09. It further ballooned to 6.6% in 2009-10 and the consolidated deficit was 9.4%. This was one of the important reasons for the inflation rate increasing to 10.2% in March 2010, and the average increase in wholesale price index in 2010-11 was 11.1%.
Declining financial savings
The Annual Report of the Reserve Bank of India (RBI) gives the latest estimate of the financial saving of the household sector for 2016-17 at just about 8.1% of GDP. And if the foreign savings of 2% is added, the transferable savings is just a little over 10%. The aggregate fiscal deficit at the Central and State levels budgeted for 2017-18 is about 6% of GDP, but this is likely to go up after the impact of loan waivers and increase in house rent allowance at the Centre and possible revision of pay scales in the States are taken account of. The annual report also estimates the impact of loan waivers alone at 0.5% of GDP. Taking 6.5% of GDP as the aggregate fiscal deficit and leaving aside 2% for public enterprises, the private corporate sector is left with a borrowing space of just about 1.5% of GDP. At a time when the need is to stimulate private investment, to restrict the space available for it may be counterproductive. In such an environment, there is hardly any scope for reducing the interest rates by the RBI, and even if it did, financial institutions would be unwilling to lend at lower rates. The liquidity crunch may eventually result in monetising the deficits, if not directly but indirectly.
Shortfalls in Centre and States
As it is, adhering to the fiscal deficit targets set out in the Budgets is going to be challenging. There will be a sharp reduction in the dividends from banking and financial institutions. The RBI has announced that against the expected ₹58,000 crore, the actual dividend will be ₹36,905 crore, and given the difficulties in the public sector banks, there will be shortfalls in the dividends from them as well. There will be a shortfall in disinvestment and tax revenue collection, if current trends persist.
The problem of adhering to the fiscal deficit target is not confined to the Centre alone. At the State level, the combined fiscal deficit for 26 States is budgeted at 2.2% of GDP excluding the deficit arising from taking over the power distribution companies (discoms) loans. However, as mentioned earlier, the expenditure on account of loan waivers is estimated at about 0.5% of GDP. Furthermore, following pay revision at the Centre, some of the States may revise their pay scales which could add to the fiscal pressure. There could be a slippage of about 1% GDP in fiscal deficits.
Road map ahead
The solution to the current slowdown in growth lies in reviving private investment, recapitalising banks to enable them to lend more, and speedy completion of stalled projects. Fiscal policy can at best play a role in creating the appropriate climate. Fiscal prudence is one of the elements in sustaining growth over an extended period. The fiscal deficit rules that we have evolved are consistent with the level of savings and the demands of the various sectors on those savings. Our adherence to the fiscal rules has been weak. They have been more honoured in breach than in observance. We are passing through a difficult situation. Even to maintain government expenditures at the budgeted levels, there will be a slippage in the fiscal deficit budgeted because of the likely fall in revenues. The slippage in fiscal deficit by a few decimal points may not matter but any aggressive attempt to widen the fiscal deficit will land us in problems. Our history is witness to it. We should avoid being adventurous.
C. Rangarajan is Former Chairman of the Economic Advisory Council to the Prime Minister and Former Governor, Reserve Bank of India. M. Govinda Rao was Member, Fourteenth Finance Commission and is Emeritus Professor, NIPFP
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