Syllabus– General Studies 3(economy) 

Context

• With 62% of the population in the working-age group and 54% below the age of 25, India has the advantage of leveraging the skill and ability of our youth to drive the nation forward through productive output and innovation.

Furthermore

• While India has historically and culturally been an entrepreneurially-driven nation, the last decade-and-a-half has witnessed a significant change in the landscape- from the founding of new startups to global investor interest, to the advances made in infrastructure and policies. 
• In 2021 alone, Indian startups have so far raised upward of $20 billion in funding, achieved unicorn statuses, and more.
• The proliferation of this startup economy has brought with it new business opportunities, innovation, tech-centric approaches and job creation across sectors. 
• While the flow of investments from traditional industries into tech-focused sectors has been instrumental for entrepreneurs, India’s own growing tech prowess has had an inspirational journey in the last few decades.
• From 2011, when India’s first private company achieved unicorn status, to being on track to have a 50-plus strong “Unicorn club” in 2021 according to Nasscom, the country now finds itself at the epicentre of entrepreneurship.

How Startups are best suited in India?

• A mature startup ecosystem, with seasoned entrepreneurs and technology-led solutions, paves the way for innovation and expanding its global footprint. 
• While value creation lies at the centre of entrepreneurship, Indian startups are also taking big strides in building synergies and partnerships with global entities, further demonstrating the evolution of the startup ecosystem and its appetite for innovation, collaboration and disruption.
• Even amid the Covid-19 pandemic, Indian startups have rapidly innovated to provide indigenous, tech-enabled solutions to combat challenges from testing kits and ventilators to remote monitoring, and preventive technologies, as well as innovations in supply chain management, logistics, and education. 
• Today, India is home to more than 40,000 startups and is building a robust tech and internet infrastructure. 
• Moreover, the ability of the young generation to take risks, move fast, and disrupt things without fear, has become our biggest asset today. 

Issues/challenges

• From industrial conglomerates, banks, automobile giants, software pioneers to tech startups, India has been steadily scripting its growth story. Global investors too are realising the potential upside in India’s huge, under-penetrated market as the country steadily makes a place for itself as a leading R&D hub for many Silicon Valley companies.
• However, in order to transition beyond the current capabilities and achieve the demographic dividend, education, and reskilling, and upskilling of our workforce is crucial. 
• Apart from the domestic policy environment, the global environment and technological advances are also changing, and it is imperative that India is prepared for this revolution.
• Apart from policy-level decisions that promote entrepreneurship, the onus is also on India’s corporate sector to foster entrepreneurialism and create synergies to build impactful technology solutions, sustainable and resource-efficient growth.

Syllabus: General Studies Paper 3

Context:

The Indian economy has travelled through an eventful period through the last three decades.

In the post-independence economic history of our country, 1991 stands out as a watershed year.

This was the year in which the economy was faced with a severe balance of payments crisis.

In response, we launched a wide-ranging economic programme, not just to restore the balance of payments but to reform, restructure and modernise the economy.

A near tragedy was averted and a new path was laid out before the country.

The shift, key players:

• It is important to recognise in what way the new regime was different from the earlier one.
• The break with the past came in three important ways:
  • In dismantling the vast network of licences, controls and permits that dominated the economic system;
  • In redesigning the role of the state and allowing the private sector a larger space to operate within, and
  • In abandoning the inward-looking foreign trade policy and getting integrated with the world economy and trade.
• The last was particularly important because it was the opposite of what we normally did when faced with a balance of payments crisis.
• Manmohan Singh as Finance Minister spearheaded the new policy and articulated the need for change and provided not only the broad framework but also the details of the reforms.
• Narasimha Rao as Prime Minister gave valuable political support and shield which were very much needed.
• It must be noted that as Prime Minister, P.V. Narasimha Rao also held the portfolio of Industry which was directly responsible for initiating the changes that led to the dismantling of various types of controls and licences related to the industrial sector. This was indeed a key element of the reform programme.

Foreign reserves:

The balance of payments situation had remained comfortable.

There were three years in which the current account showed a small surplus.

Most of the years showed a small deficit. The exceptions were 2011-12 and 2012-13 when the current account deficit exceeded 4%. This was taken care of quickly.

Foreign exchange reserves showed a substantial increase and touched $621 billion as of last week.

The opening up of the external sector, which included liberal trade policy, market-determined exchange rate and a liberal flow of external resources, has greatly strengthened the external sector.

Of course, we still run a high merchandise trade deficit which is offset to a large extent by the surplus in services.

Growth and Reforms must be go hand in hand:

• Growth requires more than reforms. Reforms are, in the words of economists, only a necessary condition. It is not sufficient.
• In a developing economy, in the final analysis, growth is driven by investment. It is the decline in investment rateof nearly five percentage points since 2010-11 that has led to the progressive decline of the growth rate.
• Reforms normally create a natural climate for investment. But ‘animal spirits’ are also influenced by non-economic factors such as social cohesion.
• Reforms supplemented by a careful nurturing of the investment climate are needed to spur growth again. This should become the sole concern of policymakers.

Priorities looking ahead:

• The economy is clearly recovering from the contraction induced by the pandemic, but how quickly it will recover is uncertain.
• Much depends upon whether we are hit by a third wave, and more importantly on how severe it is. The priority now must be to get the vaccination coverage expanded as soon as possible.
• This will create conditions conducive to a return to normalcy. The government has set an ambitious target of covering the entire adult population by end-December.
• Achieving this target or getting as close to it as possible will make the best contribution possible for a quick recovery.
• Global supply/production chains not only destroyed the manufacturing base in developed and developing countries; they also resulted in the loss of jobs and poor working conditions in these sectors.
• Developing countries were asked to ease their labour protection laws to facilitate global production and supply chains popularly known as global value chains.
• As a result, people were forced to work in precarious working conditions without any social security net.
• This created an unorganised army of labourers and is preventing many developing country governments from effectively offering relief.
• A virus has made us rethink our obsession with the economic efficiency theory. It implores us to put in place an industrial policy to maintain core capacity in health products so that we can face the next crisis more decisively.

Syllabus: General Studies Paper 3

Context:

As artificial intelligence (AI) becomes ubiquitous, India has the potential to leverage these massive datasets to build frameworks to empower people, create equity and race towards its goal of $1 trillion of economic value using digital technologies by 2025.

The opportunity for AI-driven growth:

• The use cases of AI in the Indian government include facial recognition and hotspot analysis, biometric identification, criminal investigation, traffic and crowd management, wearable’s to empower women safety, optimising revenues in the forest, cleaning rivers, tiger protection, digital agriculture, student progress monitoring and more.
• Cutting energy losses: Energy is another key sector that can benefit from the wide-scale adoption of AI.
  • Currently, Delhi and Kolkata alone account for $36 million of annual loss in revenue from renewable energy losses across the country.
  • By using AI in the energy sector, renewable energy generators and Discoms can cut losses and increase efficiencies by better predicting grid load management, and ultimately making the adoption of renewables cost-effective.
• Better management of power sector: With the use of AI, the Power Ministry’s Renewable Energy Management Centres (REMCs) will be able to provide enhanced renewable energy forecasting, scheduling, and monitoring capabilities by processing large datasets of past weather, generation output history, and electricity requirement in a region.
• Digital transformation through AI can help governments in being more responsive to emerging trends and act accordingly. Within the government machinery, policymakers are moving forward with incorporating AI solutions for effective tax monitoring, data compliance etc.

While successfully narrowing down the digital divide, India now has an exceptional opportunity to harness the data being created to benefit citizens through the adoption of frontier technologies.

Government initiatives:

• The government released the National Strategy for Artificial Intelligence (NSAI)in June 2018, which serves as a roadmap for the government to adopt artificial intelligence to increase efficiency in the delivery of services, collaborate with the private sector to enhance public sector potential, and develop capacities to embrace and deploy innovation.
• In 2020, the Indian government increased the outlay for Digital India to $477 million to boost AI, IoT, big data, cybersecurity, machine learning and robotics.
• The government also deregulated the geospatial sector allowing private players to bring state-of-the-art solutions to the sector, and spur innovation in AI-enabled hotspot mapping and analytics.
  • In India, this can lead to the transformation of various sectors such as infrastructure, health, and help in designing climate change resilient cities.
• AI portal: Jointly developed by MeitY and NASSCOM in June 2020, the Indian government launched a dedicated artificial intelligence (AI) portal, India AI is slated as a central hub for everything.
  • A beginning has been made with India’s own AI-first compute infrastructure, AIRAWAT, which is a cloud platform for Big Data analytics with advanced AI processing capabilities.
  • The portal will act as a one-stop shop for all AI-related developments and initiatives in India.
• The government has established the Centre for Artificial Intelligence and Robotics (CAIR), a laboratory of the DRDO, in 2014 for research and development in AI, robotics, command and control, networking, information and communication security
• National Research Foundation: NRF, an autonomous body under the new National Education Policy (NEP) 2020, has been established to boost research across segments, including AI.
• Promoting AI in schools: The National Council of Educational Research and Training (NCERT) is preparing a new National Curriculum Framework for School Education in pursuance of the National Education Policy 2020. This will also aim at introducing a basic course on AI at the secondary level.

Challenges for AI Adoption in India:

• Poor Data Quality: Data is the backbone of AI, hence easy availability of open-source data is crucial for any country to accelerate AI innovation and adoption. Apart from regulatory restrictions on data, data annotation and labelling are tedious but essential processes to provide useful datasets.
• Lack of AI and Cloud Infrastructure: AI and cloud are inseparable because AI is data-hungry and the cloud is the only viable solution. However, despite the potential, India lacks access to specialized compute and storage facilities that form the backbone of AI.
• Lack of AI Expertise and Investments: AI requires highly trained and skilled professionals, but being an emerging technology, the talent pool is limited. There are concerted efforts to be seen, in the form of NASSCOM’s FutureSkills Prime initiative, for instance, which aims to bridge the skilling gaps.
• High implementation cost resists numerous organizations to implement AI solutions. For instance, transforming a manufacturing plant from manual operation to automated operation would require high capital investment to integrate IIoT and other components of industry 4.0.
• Unethical  Artificial Intelligence and Machine Learning solutions: With the advent of AI products and algorithms and their increasing role in decision making, ethics and morality have emerged as a major challenge for AI solution providers.
  • An AI algorithm works based on training given to it, meaning the AI solution predicts instances based on the data being fed into it and based on the self-learning capability.
  • However, in a few instances, the AI algorithm overlooks the correctness of the data and gives an ambiguous result. It is also possible for the results to be skewed due to tampering with the dataset itself.
• Privacy and Cybersecurity issues: AI solutions build on ML and DL are based on a huge volume of confidential data, which are often sensitive and personal in nature.
  • Along with automation, AI also brings a range of security and privacy vulnerabilities, which can subsequently exacerbate any organization’s exposure to cyber risk and geopolitical risk.
  • However, India is moving in the right direction with the personal Data Protection Bill, 2019, and the National Cyber Security Strategy, 2020.

Syllabus– General Studies 3(economy) 

Context

According to the government’s latest annual PLFS (Periodic Labour Force Survey) data, the economy may be limping towards normalcy after the Covid-19 second wave, but the job market continues to show extended signs of stress.

Cause of such stress:

• The loss of employment in the contact-intensive sectors now appears to be accompanied by a progressive shift towards low-paying subsistence work.

Major findings of the latest annual PLFS (Periodic Labour Force Survey) on quality of Jobs:

• Multiple data sets point to differences in the way the first wave impacted workers compared to the trends visible in the job market after the second wave. 
• The biggest brunt after the first wave was borne by women across both rural and urban areas, alongside services and construction sector jobs. 
• Post the second wave, the impact seems to be more pronounced in the case of better quality jobs in urban areas, especially salaried jobs.
• Both the farm and non-farm sectors accounted for employment generation in rural areas after the first wave last year, a visible increase in rural jobs is being driven by the seasonal farm sector post the second wave. 
  • Non-farm sector jobs, however, seem to have been negatively impacted, unlike after the first wave.
• On the positive side, the one exception is the construction sector job market, which is markedly improved this time around compared to the period after the first wave.

The disproportionate impact of better quality jobs in Centre for Monitoring Indian Economy (CMIE) data:

• Compared to the levels in 2019-20, while employment in July 2021 was down by 2.3 per cent, the decline in salaried jobs, according to CMIE, is 11.7 per cent. 
  • Businesspersons have seen a loss of 7.5 per cent.
• Lower-end jobs are less impacted — small traders and daily wage labourers suffered a much smaller loss of 3.2 per cent. 
• CMIE says some of these people who lost jobs migrated to becoming farmers and so the count of farmers has grown by 9.6 per cent.
• In the rural areas, unlike the last time, the growth of employment in July 2021 was mostly among agricultural labourers and construction workers — signifying the poor quality of employment. 
  • It is mostly informal and at least in the case of agriculture, there is a strong likelihood that temporary jobs could go away after the Kharif harvest.

Concerns:

• According to the survey, there are clear indicators of economic distress and lack of opportunities.
  • This points to workers being forced into low productivity and low paying work, thereby aggravating the under-employment problem.
• The latest annual PLFS (July-June 2019-20) data showed a higher share of self-employed in total employment (53.5 per cent in the 12 months to July 2020 from 52.1 per cent in the same period in the previous year). 
  • Worse still, even within the self-employed category, the big increase is among those categorised as unpaid family workers/helpers in household enterprises (the poorest quality employment) up from 13.3 per cent (in terms of its share in total employment) in 2018-19 to 15.9 per cent in 2019-20.
• A constrained non-farm jobs scenario in the rural areas, however, is bad news, as it effectively squeezes out the options for workers, with the resultant lower wages and potential distress in the jobs market in the hinterland adding to the broader negative sentiment in the country’s employment market.

Syllabus– General Studies 3(economy) 

Context

Recently the government of India, released ‘IndiGau’, India’s first Cattle Genomic Chip for the conservation of pure varieties of indigenous cattle breeds like Gir, Kankrej, Sahiwal, Ongole etc.

About IndiGau:

• This indigenous chip was developed by the concerted efforts of scientists of the National Institute of Animal Biotechnology (NAIB), Hyderabad, an autonomous institution under the aegis of the Department of Biotechnology.
• It is purely indigenous and the largest cattle chip in the world. 
• It has 11,496 markers (SNPs) more than that placed on 777K Illumina chips of US & UK breeds. 
• The Minister stated that this CHIP of our own indigenous cows is a great example of self-reliant India / “ATMA NIRBHAR BHARAT”. 

Benefits: 

• It will have practical utility in the Government’s schemes to achieve the goal of conservation of our own breeds with better characteristics.
• It will help towards doubling farmers’ income by 2022. 

To further the use of this chip in generating phenotypic and genotypic correlations, NIAB has entered into a collaborative agreement with National Dairy Development Board (NDDB).

• Since NDDB has a well-organized presence in the field for the collection of phenotypic records. 
• NIAB and NDDB complement each other to undertake this research for generating information for low-density SNP chips for any important trait detection, like high milk yield or heat tolerance etc. 
  This will eventually help in the elite bull selection and improvement of productivity characters of Indian cattle.

• NIAB has also entered into an MoU with private industry to generate capability within India for designing and making our own SNP chips.  
  • These may be very low-density SNP chips in the beginning and slowly this technology can be further strengthened for bigger chips, making India self-reliant in this field. 

Syllabus– General Studies 3(economy) 

Context

The Ministry of Housing and Urban Affairs recently launched ‘SonChiraiya’ (A brand and logo).

What is SonChiraiya?

• It is for the marketing of urban Self-Help Group (SHG) products.
• It will help women to become financially empowered and live dignified life.
• This initiative will certainly prove as a step towards increased visibility and global access for the products made by urban SHG women. 
• The Ministry expects to link many more such SHG members, with a variety of professionally packaged, hand-crafted ethnic products, reaching the doorsteps of the customers globally.
• The DAY-NULM under the aegis of MoHUA has focussed on equipping the urban poor women with adequate skills and opportunities and enabling them to promote sustainable micro-enterprises. 
  • It mobilises women from urban poor households into SHGs and their federations to create a support system for these women. 
  • Over 5.7 lakh SHGs have been formed across various States/ UTs with almost 60 lakh members. 
  • Many of these SHGs are engaged in livelihood activities, producing goods such as handicrafts, textiles, toys, eatables and so on. 
  • These were being sold primarily in local neighbourhood markets and often faced barriers in achieving visibility and wide market access. 
  • To overcome these challenges, the Ministry entered into a Memorandum of Understandings (MoUs) with leading e-Commerce Portals viz. Amazon and Flipkart, with an underlying narrative of women empowerment.
• Achievements:
  • Despite the challenges posed by the COVID-19 pandemic, this partnership has successfully onboarded on the e-Commerce Portal over 2,000 products of nearly 5,000 SHG members across 25 States/ UTs. 
  • Innovative methods of online training for SHGs have been ensured to enable them to smoothly operate on e-portals. 
  • Live demonstrations for account registration, pricing, packaging, re-branding and so on were also organized in collaboration with the e-portals and State Urban Livelihoods Missions.

Syllabus: General Studies Paper 3

Context:

Hit by a relentless second wave of COVID-19 infections, India has seen localised lockdowns across several States.

With activity restrained, job losses have climbed. This has dampened family incomes and consumer sentiment, setting the stage for lower-than-anticipated economic growth and belying the nation’s hopes of racing back to activity this year on a low base last year.

Economy Estimates and GDP figures:

• As per the Centre for Monitoring Indian Economy’s estimates, the unemployment rate in Indiapeaked to 23.5% in April 2020 before falling to 6.9% in February 2021.
• According to the World Economic Outlook report of April 2021 of the International Monetary Fund (IMF), almost all countries, except China, experienced economic contraction last year.
• The global GDP shrunk by 3.3%. The contraction in the U.S., Brazil, Japan, Canada and Euro Area was in the range of 3.5%-7%. India’s GDP plummeted by 8%. China, on the contrary, posted a growth of 2.3%.
• The report stated that 95 million people have fallen into the ranks of the extreme poor category.
• The unemployment rate in the Euro Area, the U.S. and Canada shot up to 7.1%, 8.1% and 9.6%, respectively.
• Spain, Greece, Turkey, the Philippines, Argentina, Brazil, Colombia, and Peru among others are grappling with unemployment rates in double digits.

Vulnerability of Informal sector jobs:

• Workers in the informal sector have already begun to face wage loss due to the curfews and lockdowns in some States like Maharashtra and the National Capital Territory of Delhi.
• The job loss, hunger will be worse this time as the COVID-19 cases are much worse.
• Experts argued that the government failed to take actions like reducing the working hours of informal sector workers and getting them registered for social security benefits.
• Daily wage labourers and small traders saw a loss of employment in the order of 0.2 million in April.
• Some of these agricultural and daily wage labourers may have found work in the construction industry as the sector saw an increase of 2.7 million jobs during April.
• But, as the CMIE posits, most of the 6.2 million people released from agriculture and daily wages jobs could well have ended up remaining unemployed during the next months.
• This is a clear indication that the jobs scenario is weakening even before recovering from last year’s onslaught.

The rural-urban livelihood divide must be addressed:

• In the wake of the economic deceleration, the challenge is to minimise livelihood losses. Traditionally, governments have addressed this issue from a sectoral viewpoint.
• Given the contemporary realities, the need is to approach this from a rural-urban perspective for two reasons.
  • First, when there is an economic shock, it is essential to provide people with formal access to a livelihood safety net.
  • Second, the livelihood safety net must have comprehensive coverage.
  • Such a net, provided by the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), exists only in rural areas.
• Urban India does not have any such cushion. Though the Indian government operates the National Urban Livelihoods Mission, which is focused on self-employment through skill up-gradation and credit linkages through banks, the scheme does not have guaranteed wage employment provisions akin to what MGNREGS provides.
• MGNREGS, designed to check such migration, provides a livelihood safety net in rural India only.

Syllabus: General Studies Paper 3

Context:

Recently, PM launched an electronic voucher-based digital payment system “e-RUPI”

About e-RUPI:

• The platform has been developed by the National Payments Corporation of India (NPCI), Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority.
• It will be a person-specific and purpose-specific payments system.

Working of the e-RUPI:

• The e-RUPI system is accessible to anyone with a mobile phone, even if the recipient does not have a bank account.
• It comes in the form of one-time use e-vouchers to access government health services.
• It could gradually be implemented to cover welfare servicesa beneficiary is already receiving from different government agencies.
• It is a cashless and contactless digital payments medium, which will be delivered to mobile phones of beneficiaries in the form of an SMS string or a QR code.
• This will essentially be like a prepaid gift voucher that will be redeemable at specific accepting centres without any credit or debit card, a mobile app or internet banking.
• e-RUPI will connect the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface.
• Beneficiaries will be identified by their mobile numbers, and the e-vouchers will be sent to their phone through the bank’s voucher management system.

Process of issuing vouchers:

• The system has been built by NPCI on its UPI platform and has onboarded banks that will be the issuing entities.
  • The service has authorised 11 banks to issue digital vouchers; these include both private and public banks.
• Any corporate or government agency will have to approach the partner banks, with the details of specific persons and the purpose for which payments have to be made.
• Avoucher allocated by a bank to the service provider in the name of a given person would only be delivered to that person.

Uses of e-Rupi:

• According to the government, e-RUPI is expected to ensure a leak-proof delivery of welfare services.
• The contactless prepaid payment system can be issued by both government agencies and corporate entities to a specific individual to avail a targeted service.
• The Union government plans to use e-RUPI for its COVID-19 vaccination drive for citizens and gradually implement it as part of other government schemes such as:
  • It can also be used for delivering services under schemes meant for providing drugs and nutritional support under:
    • Mother and Child welfare schemes,
    • TB eradication programmes,
    • Drugs & diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertiliser subsidies etc.
    • Public Distribution System (PDS) and fertilisers.
    • Universal Basic Income (UBI)
  • To begin with, the NPCI has tied up with more than 1,600 hospitals where e-RUPI can be redeemed.
  • Its immediate and first-use case is to facilitate cashless service at paid Covid vaccination centres (CVCs).
    • For instance, corporations and philanthropies can buy services in bulk to vaccinate employees and those in need.
    • The intended beneficiaries will receive an SMS or QR code on their feature/smartphone, redeemable for cashless vaccination at participating centres.
    • A single-source MIS gets created effortlessly at the back end.
  • The beneficiary will then need to show it to the welfare service provider to authenticate the transaction.
  • The utility of cash transfers to guarantee food security or generate sustainable livelihoods compared to PDS or MGNREGA, for instance, is considered suspect for its use.
  • Another application is in basic income support.
    • The lockdowns to contain the pandemic exposed the poor to acute distress, due to loss of means of livelihood.
    • e-RUPI can mitigate their stress by rapidly distributing food and cash vouchers at scale.
  • A similar application of e-RUPI can be envisaged for the Ayushman Bharat healthcare initiative.
    • Beneficiaries will receive e-RUPI vouchers of designated value tenable at empanelled healthcare facilities, providing them portability and facility choice.
    • The service provider will benefit from the immediate payment.
  • Citizens do not have to carry any printout, and as these vouchers are created for a specific purpose, they cannot be transferred or cashed out.
  • The government also stated that even the private sector can leverage these digital vouchers as part of their employee welfare and corporate social responsibility programmes.

Corporate applications of e-RUPI includes: 

• Scrupulous disbursement and easy compliance of providing employee benefits with tax implications such as meals, education, travel and health.

What is the significance of e-RUPI and how is it different from a digital currency?

• The government is already working on developing a central bank digital currency and the launch of e-RUPI could potentially highlight the gaps in digital payments infrastructure that will be necessary for the success of the future digital currency.
• In effect, e-RUPI is still backed by the existing Indian rupee as the underlying asset and the specificity of its purpose makes it different to a virtual currency and puts it closer to a voucher-based payment system.
• The e-RUPI is built for a specific transaction to avail a service at a particular welfare centre.
• The digital vouchers have a one-time use case and they can’t be transferred.
  • This puts e-RUPI within a voucher-based payment system rather than a virtual currency.
• But the government’s move could be a good starting point to experiment with digital currency.
• It can be a preamble to a digital currency, but it may not directly be the platform that is used for the digital currency because UPI will be the overlay on top and below it can be an actual or digital currency.

Challenges:

• A 2018 research by Harvard University revealed a 33-percentage point gender gap in mobile phone ownership in India.
  • In their study, the authors point to the economic and normative barriers as important drivers of the mobile gender gap.
  • They also note that the disparity exists across Indian society, and is not limited to rural, less educated or poorer groups.
  • In the same study, even among men, only 71% owned a cell phone, an essential device to access digital schemes like the e-RUPI vouchers.
• Online data portal Statista pegs India’s smartphone penetration rate at 42% in the financial year 2020 and estimates it to reach 51% by 2025.
• Closing the mobile gender gap and enabling a large proportion of citizens to own a mobile phone will remain a problem to be solved.
• The Aadhaar experience suggests ownership must vest with a specific agency.
  • Without the UIDAI nurturing its applications within the government and the private sector, the widespread adoption of the Aadhaar would not have been possible.
  • Making the distribution and acceptance of e-RUPI incentive-compatible is recommended, as demonstrated by the popularisation of prepaid telephony by the telecom industry.

The need of the e-RUPI:

• Also, the ubiquitousness of e-RUPI in the future will depend on the end-use cases.
• The e-RUPI is a digital voucher that can be redeemed by beneficiaries to avail themselves of a specific service.
• The digital platform does not require a card, app or internet access to redeem an e-voucher.
• The e-vouchers can be issued by the government or private entities to the beneficiaries through QR codes or long-string SMS.
• The service is aimed at plugging holes in the existing welfare payment disbursement system.
• The idea here is to track and trace how the subsidies and benefits given to citizens are used.
• With e-RUPI, government agencies can keep track of how much of the allocated funds have been disbursed to citizens.
  • Otherwise, carrying out reconciliation for unused subsidies could be an accounting nightmare for the government.

Benefits of e-RUPI:

• e-RUPI could break the policy logjam by making cash transfers purpose- and person-specific, freeing them from dependence on bank accounts and providing visibility from the time of issue until redemption.
• e-RUPI could make the PDS programme more efficient.
  • The inefficiency of the programme is rooted in high overhead costs, leakages, exclusion and inefficiencies.
  • A food-specific e-RUPI voucher will allow beneficiaries to buy rations from an outlet of their choice.
  • The value addition beyond the One Nation, One Ration Card will come from removing price distortion and the redemption of the voucher at market price by merchants within and outside the PDS network.

It could also be used to streamline fertiliser subsidies to farmers. 

• e-RUPI will enable farmers to buy fertiliser at nominal prices with direct credit of the subsidy amount into the account of the authorised dealers.
• As far back as 2011, a task force on direct transfer of subsidies on kerosene, LPG and fertilisers headed by Nandan Nilekani had suggested a roadmap for direct cash transfer of fertiliser subsidies in a phased manner.
• Its recommendations on the LPG subsidy got implemented with desired results.
• The ones relating to fertilisers have not happened.
• The e-RUPI will allay apprehensions about creating an IT infrastructure, managing nearly 3,00,000 fertiliser sale points, the collapse of dealer network due to liquidity squeeze in the event of subsidy payments getting delayed and a complex system of timely credit of subsidy into an estimated 129 million Aadhaar-linked bank accounts of farm households.

e-RUPI is almost custom-designed for school voucher programmes. 

• The efficacy of these programmes is well established in many countries. Identified students receive vouchers to pay school fees and expenses at empanelled institutions of their choice, public and private, which compete to get full fee-paying students:
• The resultant option and competition benefit students and schools while enhancing transparency and accountability.

Syllabus: General studies paper 3

Context:

• On July 1, 2020, the Indian Railways launched the formal process of inviting private parties to run trains on the Indian railway system. Bids were finally opened last month.

More in News:       

• Hopes of large participation were belied as there were no bids for nine clusters and only two bids for three clusters.
  • Even for these three clusters, the only serious bid was by Indian Railways’ (IR) own company IRCTC, which in effect negated the basic objectives of bringing in private capital.

Reasons for their failure:

• It is an outcome of the lack of alignment of the interests of IR and the concessioners.
• IR wants the capital and technology without giving up control, while the concessioner wants a far more equal relationship to be moderated by a regulator.
• IR has imposed constraints that prevent efficient decisions and adopted an organisational design that does not take into account the characteristics and associated risks that will determine outcomes and investment decisions.

Risks and Constraints:

• The biggest dampener is the lumpiness of investment before a single passenger can be carried. Train sets have to be purchased without really knowing how much traffic the service will be able to attract in the face of rising competition from airlines.
  • IR does not guarantee the investor that, in case the concession fails, it will acquire the train sets.
• The other big dampener is the absence of a regulator for resolving disputes. The proposed independent engineer is far from satisfactory.
• The central issue is how to align the three interests:
  • India’s need to be capable of designing and manufacturing state-of-the-art rolling stock,
  • IR’s need for private capital participation and private capital’s necessity of earning a profit.