DAILY NEWS ANALYSIS 03 MARCH
SOCIETY
Pension scheme fails to take off
Government reply in parliament:
- Just over 34,000 people have signed up for the National Pension Scheme for Traders, Shopkeepers and Self-Employed Persons.
- The Labour Ministry’s vision document in 2019 had set a target of 25 lakh enrolments for the scheme in 2019-2020.
National Pension Scheme for Traders, Shopkeepers and Self-Employed Persons:
- Labour ministry will be the Nodal ministry to implement this scheme.
- Three crores self- employed workers are the targeted population for this scheme.
- It will provide monthly pension of Rs. 3000 after age of 60 with a miniscule investment.
- Shopkeepers, retail traders and self-employed persons with GST turnover less than 1.5 crores and aged between 18-40 years can enrol for this scheme.
- Life Insurance Corporation has been chosen as fund manager to run this pension scheme.
Financial Security in India:
- As per the World Economic Forum report on Global Human Capital, Only 7.5% population of India covered under some pension program compared to the 65% in Germany and 31% in Brazil.
- Ramadorai Committee on Household finances – India is sitting on a ticking pension time bomb, whereby demographic dividend can become demographic concern.
Fine Points:
- The facility for enrolment under the scheme has been made available to the prospective beneficiaries through 3.50 lakh Common Service Centre (CSCs) across the country.
- At the time of enrolment, the beneficiary is required to have an Aadhaar card and a saving bank/ Jan-dhan Account passbook only.
- He/ She should be within 18 to 40 years of age group.
- GSTIN is required only for those with turnover above Rs. 40 lakhs.
- The enrolment under the scheme is free of cost for the beneficiaries.
- The beneficiary should not be income tax payer.
- He should not be a member of EPFO/ESIC/NPS (Govt.)/PM-SYM.
- The Central Government shall give 50 % share of the monthly contribution and remaining 50% contribution shall be made by the beneficiary.
- This scheme will target enrolling 25 lakh subscribers in 2019-20 and 2 crores subscribers by 2023-2024.
Confusion in the Scheme:
- What will happen if they forget to make their contribution? What will happen if future turnover crosses Rs 1.5 Crores? Will government stop the pension? Will government compensate for their contribution or penalize them?
- There will be issues in identifying the traders.
- It is just an extension of Atal Pension Yojana.
POLITY
EC not for state funding of polls: Thakur tells LS
The Election Commission has informed the Government that it is not in favour of state funding of elections.
Reasons behind it:
- Commission would not be able to prohibit or check candidates’ expenditure over and above the state’s provision.
Need for the state funding:
- Electoral bonds, current way of funding are marred with opaqueness and lack of transparency.
- Funding from the corporate houses comes with attached strings leading to growth of crony capitalism.
- Increased expenditure in contesting the elections have led to concept of winnable candidates thus leaving behind the poor candidate.
- Money sources from the criminals have led to criminalisation of politics.
- State funding would allow free and fair elections as envisaged in article 324 of constitution.
- Indrajit Committee had recommended for state funding long back in 1998.
- Arguably, the 16th Lok Sabha Election was the second most-expensive election after the 2012 US presidential elections.
- Candidates fighting a Lok Sabha election spend around INR 5–10 crores to run a decent campaign.
- The growing role of money has negatively affected competition at the level of candidature within parties. Due to the increasing need for money, most candidates chosen by parties are individuals who can finance themselves and do not need to rely on party funds for campaigning.
- A few dynasts and regional satraps (local area chiefs) control party finances across India, there is limited internal democracy in these parties.
Recommendation of Indrajeet Committee:
- It recommended partial state funding and creation of a state fund with a reserve of Rs 6 billion.
- It recommended funding in Kind than in cash.
- It sought only part of the financial burden of political parties may be shifted to the state.
Recommendation of Law Commission:
- 1999 Law Commission of India report concluded that total state funding of elections is “desirable” so long as political parties are prohibited from taking funds from other sources.
- It strongly recommended that the appropriate regulatory framework be put in place with regard to political parties (provisions ensuring internal democracy, internal structures and maintenance of accounts, their auditing and submission to Election Commission) before state funding of elections is attempted.
International Experience:
- It was Uruguay that introduced state subsidies in 1920s, which was later borrowed by Costa Rica and Argentina.
- Germany introduced state funding in the 1950s, a model that has now been copied by many democracies including the UK and France.
- As many as 116 countries (68 percent) have introduced direct public funding to political parties.
- Japan has been able to reduce the costs of their elections by implementing state funding.
Challenges in State funding:
- State funding would lead to huge burden on exchequer, which may not be economically feasible.
- Committees are recommending partial state funding which has been a failure in USA. State funding must come along with the rider of no acceptances of resources from any other sources.
- State funding based on criteria like recognised political party or minimum votes would restraint the independent contestant who would not receive it.
- State funding without enough curtails on criminals and inner party democracy will not bring many changes in the working of elections.
Way Forward:
- As election, commission has denied for the state funding due to lack of power to prohibit the candidates from accepting resources from other sources. The need is to empower the election commission.
- Election commission should be allowed to regulate the finances of political parties along with contestant.
- It should be allowed to deregister a political party if party does not submit the whole account statement to election commission.
- There should be stringent provisions on curbing the criminalisation of politics.
ECONOMY
Manufacturing activity eases marginally in Feb.
India Manufacturing Purchasing Managers’ Index (PMI):
- It was at 54.5 in February.
- This is the 31st consecutive month that the manufacturing PMI has remained above the 50-point mark.
- Factories in India continued to benefit from strong order flows in February, from both the domestic and international markets.
- The pick-up in demand meant that companies were able to further lift production and input buying at historically elevated rates.
- Alarm bells are ringing for Indian goods producers as the COVID-19 outbreak poses threats to exports and supply chains.
About PMI:
- Purchasing Managers’ Index (PMI) is an indicator of business activity -- both in the manufacturing and services sectors.
- It is a survey-based measure that asks the respondents about changes in their perception of some key business variables (New Orders, Output, Employment, Stocks of Purchases etc.) from the month before.
- The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared to the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
OECD lowers India’s FY21 GDP growth to 5.1%
OECD comment:
- Global agency OECD has lowered its India’s GDP growth forecast to 5.1% from the earlier projection of 6.2% for 2020 on concerns of impact of the deadly COVID-19 on the domestic as well as the global economy.
- India’s real GDP growth is expected at 5.1% during the fiscal year starting April 1, 2020 and improves to 5.6% in the following year.
- OECD has projected the growth at 4.9% for the financial year ending March 2020.
Reasons behind the lowering of growth rate:
- Adverse impact on confidence, financial markets, travel sector and disruption to supply chains contributes to the downward revisions.
About OECD:
- The Organisation for Economic Co-operation and Development is an intergovernmental economic organisation with 36 member countries.
- It was founded in 1961 to stimulate economic progress and world trade.
- It is a forum of countries describing themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices and coordinate domestic and international policies of its members.
- Most OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries.
- The OECD is an official United Nations observer.
RBI receives ₹1.71 lakh crores in LTRO
The Reserve Bank of India has said it had received Rs.1.71 lakh crores in the third long-term repo operation (LTRO) conducted for an amount of Rs.25,000 crores.
About long-term repo operation (LTRO):
- Under LTRO, RBI will conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of Rs. 1 lakh crores at the policy repo rate.
- RBI introduced LTRO with a view to assuring banks about the availability of durable liquidity at reasonable cost relative to prevailing market conditions.
- It will encourage banks to undertake maturity transformation smoothly and seamlessly to augment credit flows to productive sectors.
- It is a measure that market participants expect will bring down short-term rates and boost investment in corporate bonds.
- These new measures coupled with RBI’s earlier introduced ‘Operation Twist’ are an attempt by the central bank to manage bond yields and push transmission of earlier rate cuts.
Reference: https://www.thehindu.com/business/rbi-receives-171-lakh-crore-in-ltro/article30965993.ece
INTERNATIONAL RELATIONS
India monitoring impact of U.S.-Taliban deal: MEA
India’s Position:
- India is “watching the space” closely to ensure that gains of the last two decades are not lost.
- The “real negotiations” would only begin now — a possible reference to the Intra-Afghan dialogue due to begin on March 10, as well as a Pakistan-Afghanistan dialogue facilitated by Washington on securing borders and ending terror safe havens.
Indian Concern:
- India has raised concerns over the future of democracy, human rights, women’s rights and other achievements made in Afghanistan since 2001.
About the Agreement:
- The agreement provides a timetable for withdrawal of US troops from Afghanistan by May 2021 and an intra-Afghan dialogue in March 2020.
SECURITY
Access to Internet is not negotiable: Law Minister
Government Stand:
- Access to Internet is plainly non-negotiable as it flows from the right to information.
- It flows from our right to have information.
Supreme Court observations on Internet blockade:
- Directed the government to “forthwith” review its orders suspending Internet services in Jammu and Kashmir.
- Confined itself to declaring that the freedoms of speech, expression and conducting business on the Internet are fundamental rights, integral to Article 19 of the Constitution and subject to reasonable restrictions.
- State cannot restrict or deny free speech on the Internet because the medium can circulate information widely.
- The right to free speech and expression includes the right to disseminate information.
- Mandatory for the government to publish each and every one of its orders that crippled the fundamental freedoms of over seven million Kashmiris, including the suspension of telecom and Internet services in the Valley since August 5 following the abrogation of special status of the erstwhile State under Article 370.
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