Indian Economy

(GS-III: Indian Economy and issues relating to Planning, Mobilization of Resources)

In News:

It is an opinion piece arguing that India has strong economic fundamentals and better demographic composition to help it make a prosperous country in the next two decades.

Strong Economic Fundamentals of India:

Focus on Infrastructure: The policy initiatives on infrastructure development (e.g. Bharatmala, Sagarmala, Economic corridors)

Transportation: There is increased mobility of labour, capital, and raw materials which could spur economic growth even in most interior parts of the country.

Digitization of Indian Economy: E.g. In 2021, the number of real-time digital payment transactions in India was almost threefold that of China.

The digital revolution will unlock the country’s entrepreneurial spirit (India 3rd on the startup ecosystem in the world)

Improved quality of rural life: E.g. rural India’s access to clean fuel for cooking increased from 18% of the population in 2012 to 54% in 2020.

Strong Demographic Fundamental: Niti Ayog’s report pointed out that India can utilize demographic dividend for nearly the next 20 years

India’s workforce can contribute to economic development through increased labour supply and higher productivity.

4 fold increase in its per capita income (to come under upper middle-class countries) is possible if:

• GDP: India’s GDP growth needs an average annual growth rate of 7% in the next 25 years
• Higher growth for laggard states: States like Bihar and Uttar Pradesh must grow at a much higher rate to catch up with more prosperous states like Gujarat and Haryana.
• Utilization of the Private sector: It can strong incentives for productivity gains through technological innovation and capital formation.
• Speed up the privatization of the loss-making public sector banks: A market-based banking sector will be in a solid position to allocate capital efficiently and productively across different sectors of the economy.
• It will lead to the creative destruction of underperforming companies, and will eventually pave the way for sustained economic growth.

Nethanna Bima

Nethanna Bima Scheme was launched recently by Chief Minister of Telangana K Chandrashekhar Rao, on the occasion of National Handloom Day.

Under the scheme, the government will provide Rs 5 lakh insurance cover to the families of the weaver, in case of the unfortunate death of the eligible beneficiary.

Telangana state department of handlooms and textiles is the nodal agency for its implementation.

To Provide financial assistance, the government launched the following flagship programmes;

• Chenetha Mithra scheme– It is input subsidy linked wage compensation scheme
• Nethannaku Cheyutha– It is a Handlooms weavers Thrift fund saving and security scheme of Telangana government.
• Pavala Vaddi scheme– Under the scheme, government provide 20% subsidy on yarn and marketing support.

Government to enumerate people who clean sewers

In News:

The Ministry of Social Justice and Empowerment (MoSJ&E) is now preparing to undertake a nationwide survey to enumerate all people engaged in hazardous cleaning of sewers and septic tanks, an activity that has led to at least 351 deaths since 2017.

Details:

Ministry officials said that the enumeration exercise, soon to be conducted across 500 AMRUT (Atal Mission for Rejuvenation and Urban Transformation) cities, is part of the Union government’s National Action Plan for Mechanized Sanitation Ecosystem (NAMASTE)

which will streamline the process of rehabilitating sanitation workers and eventually merge with and replace the Self-Employment Scheme for the Rehabilitation of Manual Scavengers (SRMS), which was started in 2007.

The idea is to also link these sanitation workers to the Swachhta Udyami Yojana, through which the workers will be able to own sanitation machines themselves and the government will ensure that at the municipality level, the work keeps coming in,” said a senior government official.

Manual scavenging is a term used mostly for “manually cleaning, carrying, disposing of, or otherwise handling, human excreta in an insanitary latrine or an open drain or sewer or a septic tank or a pit”.

NAMASTE (National Action Plan for Mechanized Sanitation Ecosystem) Scheme:

It is a joint venture between;

The Department of Drinking Water and Sanitation.

The Ministry of Social Justice and Empowerment.

The Ministry of Housing and Urban Affairs.

The main objective of the scheme is to ensure:

Zero fatalities in sanitation work in India.

No sanitation workers come in direct contact with human faecal matter.

All Sewer and Septic tank sanitation workers have access to alternative livelihoods.

Other benefits:

Capital subsidies of up to ₹5 lakh on sanitation machinery costing up to ₹15 lakh and interest subsidies on loans, where interest rates will be capped between 4-6% for the beneficiaries, with the government taking care of the rest of the interest.

In addition, the scheme also provides for training the workers in the use of these machines, during which time a stipend of up to ₹3,000 per month will be provided.

Regulating Digital Lending

In News:

RBI has released guidelines to regulate digital lending based on the recommendation of the working group on ‘digital lending’ (2021)

Benefits of digital lending:

Ease of doing lending: Digital lenders disburse loans and collect repayments remotely through digital channels, such as bank accounts, e-commerce accounts, or mobile wallets integrated with a partner (or) third party integration.

Transparency: These cashless channels improve operational efficiency and reduce fraud by providing a clear audit trail.

Need for regulation: There have been instances of breach of data, unfair business practices, frauds, widespread defaults, digital unawareness and high-handed loan recovery practices by digital lenders.

Guidelines:

No third party: All loan disbursals will be between the bank account of the borrower and RBI regulated digital lender. Any charge payable to the third party (such as lending service providers) will be paid by the lender (such as a bank) and not the borrower.

Only need-based data collection

Only permitted entities by RBI or under other laws are allowed to lend.

In any digital loan, a standardized key fact statement (KFS)must be provided to the borrower.

Regulated entities and the LSPs working with them must also have a nodal grievance redress officer

The borrower must have the “right to forget” of collected data.