PM IAS FEB 22 EDITORIAL ANALYSIS

Editorial 1: India needs a Budget for its young

Introduction:

• The world is looking up to the Indian economy as a ‘bright star’, as the Finance Minister noted in the Budget speech of 2023. In 2020, India accounted for 20.6% of the worldwide population of 15 to 29 year olds. Which means that in the years ahead, one out of every five workers deployed globally could be an Indian. No doubt, the rest of the world foresees a fortune in India’s young population. But are our policymakers doing enough to realise the possibilities that are unfolding?

Budgetary measures:

• The key proposals in this year’s Union budget are the following.
• On the one hand, there will be a considerable increase in capital expenditures, for the building of physical infrastructure, mainly in transport, energy and defence.
• While the growth of the tax revenues is going to be modest, the government is nevertheless committed to reducing the fiscal deficit (FD)— the shortfall in government’s receipts relative to its expenditures — to 5.9% of GDP. That could have been achieved only by reducing the spending on some other sectors.
• The axe has fallen on subsidies and social sector expenditures. Compared to its previous year, in 2023-24, the Union government’s expenditure on food subsidy will fall by ₹0.9 trillion (or Rs 90,000 crore), on fertiliser subsidy by ₹0.5 trillion, and on the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) by ₹0.3 trillion.
• The marginal increases in the allocations on health, education, agriculture and the Anganwadi scheme are unlikely to make an impact, after taking into account the effect of inflation.

Public-private complementarities

• A jump in capital spending by the government, as proposed in the Budget, is a much-needed step to reinvigorate the Indian economy. Investment (for buying new machines and building roads and factories) as a proportion of income or GDP indicates the rate at which a country’s productive capabilities are growing.
• In India, this proportion rose steadily during the mid-2000s and peaked at 42% in 2007, which was even better than China’s record at that point in time. High rates of investment translated into extremely fast rates of economic progress in the country, which lasted until the early 2010s.
• The disruptions and the uncertainty caused due to the global financial crisis in 2007-08 had been a turning point. China responded to the crisis by increasing domestic investment, a large part of which coming from its public sector.
• On the other hand, in India, the government restrained its expenditures, worrying about the rising fiscal deficits. As public expenditures nosedived, private investors lost confidence as well. Investment as a proportion of GDP was on a steady downward slide, falling to 33.8% in 2013-14 and 27.3% in 2020-21. If the proposed investments by the government come through, and they indeed crowd in private investments as the Finance Minister has predicted, that can set the stage for a revival of the Indian economy.

• In contrast to capital expenditures, subsidies and social sector spending are considered ‘wasteful’ and, therefore, it is believed, a cut on their outlays will not hurt economic growth. Quite the contrary, a reduction in social expenditures not only worsens the existing social inequalities but can also dampen the prospects for long-term growth.
• Only 9.8% (in 2020-21) of India’s workers are in regular jobs that provide some form of social security. Therefore, measures such as MGNREGA and free provision of food are necessary for millions of poor Indians, hit as they have been by the COVID-19 pandemic and joblessness.

Way forward: Invest in people, invest in the future

• Public expenditures on the social sectors constitute an investment for the future — more so for a country with a predominantly young population. The income a destitute mother receives for work through MGNREGA may ensure that her children do not have to go to school with empty stomachs.
• Underinvestment in education and health will undercut India’s chances in a global economy that is increasingly dominated by knowledge. In 2022, only 2.6% of the nearly 1.9 million candidates who wrote the National Eligibility cum Entrance Test (NEET) in India for admission to undergraduate medical courses managed to secure a seat for MBBS in a government college.
• Every year, millions of young women and men in the country are denied the opportunity for affordable basic and higher education. At the same time, there is frustration among the educated that there are too few decent jobs for many of them.
• Government expenditure on health and education can provide a boost to both the supply and the demand fronts in a knowledge-driven economy: more new jobs as teachers and doctors, especially for women, and a greater supply of younger professionals and skilled workers.

Unwarranted fears about fiscal deficit

• Inflated fears about the fiscal deficit and government debt will only be counterproductive in a country possessing vast reserves of untapped human and other resources as India does. Only a small portion of India’s public debt is owed to external agencies (amounting to 4.2% of GDP in 2022), which does not pose a threat of the kind that external debt had created in Greece or is creating in Sri Lanka now.
• India’s government debt is held largely by domestic financial institutions, including public sector banks, insurance companies and provident funds. In other words, this is a debt the government owes to the people of this country, whose savings the financial institutions have mobilised.
• If the government is borrowing to build resources that help generate new jobs and incomes, it is in fact setting off a virtuous cycle. Higher incomes and higher levels of development will also lead to the creation of fresh savings, which will help pay off the debts.

Conclusion:

• The proportion of the population in India aged 30 years and above will rise to 58.6% in 2040, up from 37.5% only in 2000. On the other hand, with a boost in government expenditures to provide food security, health and education, millions of India’s youngsters could indeed aspire to grow into bright stars that illuminate the world.

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Editorial 2: Turn off the tap of urban bias in rural development

Introduction:

• The divide between the rural and the urban has grown due to an inherent urban bias among policymakers and institutions, including the government. This happens because groups in urban areas are able to effectively influence these institutions in their favour.

The spill-over effect:

• Second, the spill-over from markets in urban areas is also limited to the rural areas that are closer to urban settlements. This is known as the spill-over effect where the development of rural areas is dependent on larger urban cores. Consequently, rural areas which are far away from the urban core not only suffer from a lack of development but also keep falling behind rural areas which are closer to the urban core.
• It is for this reason that the state must step in to correct the rural-urban disparity by having in place special and targeted measures to develop rural areas. The Jal Jeevan Mission (JJM), launched in August 2019, is one such project which aims to provide access to safe and adequate drinking water to all households in rural India by 2024.

Jal Jeevan Mission (JJM)

• Launched in 2019, this centrally sponsored scheme of  Jal Shakti Ministry envisages supply of 55 litres of water per person per day to every rural household through Functional Household Tap Connections (FHTC) by 2024.

Features of JJM:

1. JJM looks to create a jan andolan for water, thereby making it everyone’s priority.
2. The mission ensures functionality of existing water supply systems and water connections, water quality monitoring and testing as well as sustainable agriculture.
3. It also ensures conjunctive use of conserved water; drinking water source augmentation, drinking water supply system, grey water treatment and its reuse.
4. JJM focuses on integrated demand and supply-side management of water at the local level.
5. Creation of local infrastructure for source sustainability measures as mandatory elements, like rainwater harvesting, groundwater recharge and management of household wastewater for reuse, is undertaken in convergence with other government programmes/schemes.
6. The Mission is based on a community approach to water and includes extensive Information, Education and Communication as a key component of the mission.
7. Implementation of JJM is by Paani Samitis plan, implement, manage, operate and maintain village water supply systems. These consist of 10-15 members, with at least 50% women members and other members from Self-Help Groups (SHGs), Accredited Social and Health (ASHA) Workers, Anganwadi teachers, etc.
8. The committees prepare a one-time village action plan, merging all available village resources. The plan is approved in a Gram Sabha before implementation.
9. The fund sharing pattern between the Centre and states is 90:10 for Himalayan and North-Eastern States, 50:50 for other states, and 100% for Union Territories.

Significance of JJM:

• The provision of safe drinking water is an important non-food factor influencing health and nutrition. Besides enabling tap water access at the household level, it helps reduce the drudgery women and girl children have to face and ensures their safety as well. Ensuring the “availability and sustainable management of water and sanitation for all” is the sixth goal in the Sustainable Development Goals (SDG no. 6) of the United Nations to be achieved by 2030.

Falling behind

• The percentage of additional tap water connections in rural areas of a district provided by the government between 2019 and 2022 was found to be significantly associated with the percentage of the urban population in the districts concerned.
• When it comes to the total population of Tamil Nadu, its urban share is 48.4% as compared to 31.2% of India (Census 2011); but districts with low urban population percentages are lagging in the implementation of the JJM. For instance, among the five low performing districts, four districts have an urban population below 31%.
• This kind of relationship between urban and rural regions has been found in other places of the world as well. Left to itself, this may exacerbate the rural-urban disparity across regions and districts.
• In addition to the data on tap water connections, the provision of additional details such as the volume of water being supplied per day to each household as well as its quality will help in understanding the rate of progress better.

Conclusion:

• Otherwise, it is highly unlikely that the goal of reaching all rural households by 2024 or even 2030 will be reached if the State does not change its methods. The achievements in these districts will likely have a demonstration effect on other districts with a high rural population. This will not only help to correct urban bias but also meet the SDG goal with regard to tapping water connections by 2024.