Daily Mains Newsletter For UPSC
| RaghukulCS

01 July 2021 - Thrusday


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Mains Analysis

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India’s 1991 liberalisation leap and lessons for today

The Hindu


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Indian Express

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Elections no guarantee against tyranny: CJI

Syllabus–GS 2: Election issues(RPA)

Analysis: –

  • Chief Justice of India N.V. Ramana on Wednesday said the mere right of the public to change the “ruler” once every few years by itself need not be a guarantee against “tyranny”.
  • “In the 17 general elections held so far, the people have changed the ruling party or combination of parties eight times, which accounts for nearly 50% of number of general elections.
  • In spite of large scale inequalities, illiteracy, backwardness, poverty and alleged ignorance, the people of independent India have proved themselves to be intelligent and up to the task.
  • The masses have performed their duties reasonably well. Now, it is the turn of those who are manning the key organs of the State to ponder if they are living up to the Constitutional mandate,” Chief Justice Ramana said.
  • The new media tools that have enormous amplifying ability are incapable of distinguishing between right and wrong, good and bad, and the real and fake.
  • Therefore, media trials cannot be a guiding factor in deciding cases.

Reimagining examinations

Syllabus – GS 2: Government policy

Analysis: –

  • For students, empowerment and acquisition of knowledge begin when they are properly evaluated in an appropriate examination system through a process that provides immediate results and success.
  • The online pattern of examination should not only judge intellectual development, as is prevalent in the present-day examination system, but it must also test the holistic development of students.
  • It is the responsibility of every academician and authority to find the ways and means to conduct online examinations with reliable standards amid the COVID-19 pandemic.
  • To successfully complete examinations during this period, constructive strategies, particularly in the online mode, should be employed, rather than calling for the cancellation of exams.

Mains Analysis

India’s 1991 liberalisation leap and lessons for today

Why in News?

Montek Singh Ahluwalia, discusses in an interview with The Hindu the transition of the Indian economy, what remains to be done, and the road ahead after recovery from the slowdown induced by the COVID-19 pandemic.

Syllabus— GS 3 Security

Scenario Before 1991 –

  • The private sector was barred from investing in a number of sectors deemed vital to development. Despite its poor performance, the public sector was given the so-called “commanding heights.”
  • Where the private sector was permitted to invest, it could only do so after obtaining an industrial licence, which was particularly difficult to get for “large” industrial houses.
  • Over 860 goods were set aside for small-scale producers only, including many with great export potential.


Evolution of Indian Economy since 1991 –

  • The changes were aimed at releasing the private sector’s energy in order to boost economic growth while also ensuring a sufficient flow of benefits to the poor.
  • Because of the gradualist strategy used — which is appropriate in a democracy — the full benefits took time to manifest, but the effects are dramatic when viewed over a longer period of time.
  • GDP growth averaged 7% over the 25 years from 1992 to 2017, compared to 5% in the previous ten years and 4% in the previous twenty.
  • But at same time In the areas of health and education, we have not done as much as we should have, and environmental problems have not been effectively addressed in our development strategy.

Imports: –

  • Imports were highly regulated, more so than in nearly any other developing country, in order to conserve scarce foreign cash. Imports of consumer goods were simply not possible, therefore domestic producers faced no import competition.
  • Importing capital goods and intermediates was possible for producers, although it usually required an import licence. Technology imports were restricted, and foreign direct investment (FDI) was discouraged.

Pending Reforms –

  • The necessity for labour market reforms was recognised, but it was decided that we should focus on the industrial, trade, and financial sectors first, with labour market reforms following later.
  • For a few years, we grew at a rate of above 9%, but persuading labour proved tough.
  • Land reforms is also one of the thing we need to put pressure as there is requirement for centre state cooperation beyond political motives.

In the era of protectionism –

  • India gradually reduced import taxes from an estimated 57.5 percent in 1992 to 8.9 percent in 2008, but this trend has now been reversed.
  • The reversal of a trend that other governments had been following. It will prevent our professed goal of joining global supply chains. Inadequate infrastructure, poor logistics, and time-consuming trade procedures are genuine concerns for Indian industry, lowering its competitiveness.
  • However, the solution rests in directly resolving these issues rather than raising import tariffs, which will merely increase economic expenses.
  • We should go to an average duty rate of roughly 7%, gradually limiting the range of fluctuation between items and eliminating duty reversals, according to the NITI Aayog’s first Vice-Chairman, Arvind Panagariya. This is the correct strategy.


  • The tariff reductions necessary by the RCEP were to be phased in over several years, allowing us plenty of time to improve our competitiveness.
  • When it comes to unfair competition from China, the approach is to impose anti-dumping penalties on China more quickly rather than hiking import duties across the board.
  • It’s worth noting that geopolitics is pressuring big nations to minimise their reliance on China.
  • India will not be able to replace China, but it can hope to become a big role in supply chains that are not controlled by China.
  • Membership in the RCEP would be beneficial because it would ensure partners that trade policy would not be modified arbitrarily.
  • We have typically supported trade liberalisation in a multilateral venue for FTAs with the United States, Europe, and the United Kingdom, but major industrialised countries appear to be moving away from multilateral negotiations.
  • Working on bilateral agreements with significant parties appears to be the only way to ensure market access.
  • However, such FTAs will necessitate greater concessions, notably on difficult subjects like intellectual property rights and bilateral investment protection, which we must be willing to accept.


Problem of Joblessness and impact of Pandemic

  • The UPA period was the first time we saw a drop in agricultural employment… but it was accompanied by enough increase in total employment in non-farm sectors to absorb the labour displaced from agriculture.
  • Santosh Mehrotra and Jajati K. Parida examined the post-UPA period before to the pandemic in a recent paper. They discovered that after the significant slowdown in GDP growth in 2016-17, employment fell from 474 million in 2011-12 to 469 million in 2018-19.
  • Agriculture employment continued to fall, reflecting a typical structural transition, although non-agricultural employment grew considerably more slowly than during the UPA years.
  • As a result, the number of people who are unemployed has increased. The problem was most acute among the youth, who had an unemployment rate of 18 percent.

Challenges: –

  • The COVID-19 pandemic has resulted in a labour shortage. GDP decreased by 7.3 percent in 2020-21, according to preliminary National Income estimates.
  • Many observers believe that this understates the decline because the negative impact on the informal sector is not taken into account.
  • In any case, a substantial drop in GDP will inevitably lead to a reduction in total employment, as the data from the Centre for Monitoring Indian Economy shows.

Priorities in Post COVID era –

  • Only a return to the level of 2019-20 will suffice. We will get no relief on the employment front or in eliminating poverty if we simply return to the pre-pandemic growth rate of approximately 4% to 5%.
  • Past experience demonstrates that if we want to make progress on poverty reduction and provide adequate jobs for our rising labour force, we need to return to a growth rate of 7% to 8%.

Way Forward: –

  • Once the pandemic has been contained and production has returned to the 2019-20 level, the government would be well advised to examine what caused the slowdown prior to the pandemic and to issue a clear statement of mutually supportive policies to counteract these forces and lead to higher growth and employment.
  • It should also come out with a post-pandemic growth target.

Question: –

Critically evaluate the Economic reforms of 1991. Explain the negative impacts of these reforms and the road ahead after recovery from the slowdown induced by the COVID-19 pandemic.

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Why in News?

On Tuesday, the Supreme Court did well to set a deadline of July 31 for states to implement the One Nation One Ration Card system. Syllabus—GS2: Issues related to Governance

Background: –

  • Considering the sheer scale of the migrant crisis that unfolded last year — foodgrains were distributed to a staggering 2.8 crore migrants under the government’s AatmaNirbhar Bharat scheme — and the still precarious financial position of households, especially of migrant labourers working in the informal economy, the Court has rightly reminded states of the urgency of implementing this scheme.
  • Citizens must not be denied basic welfare benefits simply because they have migrated beyond state boundaries.

What is the ‘One Nation, One Ration Card’ system?

  • Under the National Food Security Act, 2013, about 81 crore persons are entitled to buy subsidized foodgrain — rice at Rs 3/kg, wheat at Rs 2/kg, and coarse grains at Re 1/kg — from their designated Fair Price Shops (FPS) of the Targeted Public Distribution System (TPDS).
  • In the present system, a ration cardholder can buy foodgrains only from an FPS that has been assigned to her in the locality in which she lives. However, this will change once the ‘One Nation, One Ration Card’ system becomes operational nationally.

How will the system of ration card portability work?

  • Ration card portability is aimed at providing intra-state as well as inter-state portability of ration cards.
  • While the Integrated Management of Public Distribution System (IM-PDS) portal provides the technological platform for the inter-state portability of ration cards, enabling a migrant worker to buy foodgrains from any FPS across the country, the other portal (annavitran.nic.in) hosts the data of distribution of foodgrains through E-PoS devices within a state.
  • The Annavitran portal enables a migrant worker or his family to avail the benefits of PDS outside their district but within their state.
  • While a person can buy her share of foodgrains as per her entitlement under the NFSA, wherever she is based, the rest of her family members can purchase subsidised foodgrains from their ration dealer back home.

Concept behind the Scheme: –

  • The concept of One Nation One Ration Card revolves around the idea that citizens should be able to avail of their entitlements irrespective of where they reside in the country.
  • In this framework, migrant workers can access the subsidised foodgrains under the National Food Security Act from any of the 5.4 lakh fair price shops across the country, and not be bound to the fair price shop near the place where their ration card is registered.

How many states have come on board to roll out inter-state portability of ration cards?

  • It was initially proposed to nationally rollout the ‘One Nation, One Ration Card’ scheme by June 1, 2020.
  • So far, 17 states and UTs — Andhra Pradesh, Goa, Gujarat, Haryana, Jharkhand, Kerala, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Telangana, Tripura, Uttar Pradesh, Bihar, Punjab, Himachal Pradesh, and Dadra & Nagar Haveli and Daman & Diu — have come on board to roll out the inter-state portability of ration cards under the NFSA.
  • Three more states — Odisha, Mizoram, and Nagaland — are expected to come on board by June 1, taking the number of States and UTs to 20 under the One Nation, Once Ration Card System.

Issues: –

  1. First, shifting to such an architecture will also require continuous and real-time information on migration across the country. But there has been little progress on this front. The Court on Tuesday chastised the Centre for the delay in setting up a portal to register migrant and unorganised workers.
  2. Second, foodgrain allocations across states will need to be more flexible in nature, taking into account seasonal fluctuations in migration. Thus the information technology infrastructure needs to be robust to ensure effective inventory and stock management.
  3. Third, as entitlements tend to vary across states, migrants will not be able to access the full benefits available to them in their home states, unless those costs are borne by the states. But this would require integrated, regularly updated, dynamic systems.
  4. Fourth, not all the 5.4 lakh fair price shops have installed ePoS machines. For instance, as reported in this paper, Delhi is yet to start using ePoS in fair price shops.
  5. Fifth, there is also the issue of allowing for the updation of household member details on the ration card, and seeding of ration cards with Aadhaar only in the home state.

Way Forward: –

  • To incentivise states to shift to this architecture, last year, the central government had made states’ additional borrowings conditional on the successful implementation of the One Nation One Ration Card system. More such measures may be needed to ensure a quick and effective rollout of this scheme. The migrant crisis last year threw into sharp relief not only their precarious economic situation, but also the absence of comprehensive safety nets to fall back on. Shifting to this new framework would be a step towards strengthening existing social security nets whose glaring holes have been exposed by the pandemic.

Question: –

To incentivise states to shift to this architecture, the central government had made states’ additional borrowings conditional on the successful implementation of the One Nation One Ration Card system. Discuss the significance of this scheme in the context of challenges exposed  by Covid-19 Pandemic.

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