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Daily Current Affairs : 01-Feb-2020

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Part of GS- 1 A&C

Why in news?

  • President Ram Nath Kovind will visit Haryana tomorrow to inaugurate the 34th Surajkund International Crafts Mela at Faridabad.


  • The year, partner country in the fair is Uzbekistan and Himachal Pradesh is the theme-state.

  • The Surajkund International Crafts Mela is being organized since 1987 to showcase the richness and diversity of handicrafts, handlooms and cultural heritage of India.

  • Surajkund is an ancient reservoir of the 10th century located on Southern Delhi Ridge of Aravalli range in Faridabad city of Haryana.

  • Surajkund (literal meaning is 'Lake of the Sun') is an artificial Kund ('Kund' means "lake" or reservoir).

  • It is said to have been built by the king Surajpal of Tomar dynasty in the 10th century.

Source : All India Radio


Part of GS- 1 Social Issue

Why in news?

  • To mark of 25 years of the adoption of Beijing Platform for Action, Ministry of Women & Child Development (MWCD), the National Commission for Women (NCW) and UN Women organized a National Consultation on the Review of Beijing+25, to galvanize all stakeholders to implement actions that remove the most conspicuous barriers to gender equality.


  • The aim of the consultation was to bring together civil society and the women and youth of India, gender equality advocates from all walks of life, in a national public conversation on the urgent actions that need to be taken for the realization of gender equality.

  • The objectives of the Consultation were to assess progress and challenges to the implementation of the Beijing Declaration and Platform for Action in India over the past 5 year, discuss lessons learned, priority actions required to realized gender equality and the empowerment of women by 2030, discuss emerging areas that have impact on women’s empowerment.

  • The 1995 Fourth World Conference on Women, held in Beijing, was one of the largest ever gatherings of the United Nations, and a critical turning point in the world’s focus on gender equality and the empowerment of women.

  • 2020 marks the twenty-fifth anniversary of the Fourth World Conference on Women and adoption of the Beijing Declaration and Platform for Action (1995), (Beijing + 25). A quarter of a century on, several innovations and progress has been made on many fronts across the 12 critical areas of concern of the BPfA.

Source: PIB


Part of GS- 3 Economy

Why in news?

  • First Banana Container Train of India was sent from Tadipatri, Anantpur in Andhra Pradesh to Jawaharlal Nehru Port (JNPT) in Mumbai for export to international markets.


  • Government of India under Agri Export Policy has notified banana cluster in Anantpur and Kadapa districts of Andhra Pradesh.

  • Agricultural and Processed Food Products Export Development Authority (APEDA), along with State Government of Andhra Pradesh dispatched the first shipment of 890 MTs of high quality bananas, loaded in 43 refrigerated containers, from Tadipatri, Anantpur in Andhra Pradesh to Jawaharlal Nehru Port (JNPT) in Mumbai for export to international markets.

Source : The Hindu


Part of GS- 3 Economy

Why in news?

  • The Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman presented the Economic Survey 2019-20 in the Parliament today.

The Key Highlights of the Economic Survey 2019-20 are as follows:

Wealth Creation: The Invisible Hand Supported by the Hand of Trust

  • India’s dominance as global economic power for three-fourths of economic history manifests by design.

  • Kautilya’s Arthashastra postulates the role of prices in an economy (Spengler, 1971).

  • Historically, Indian economy relied on the invisible hand of the market with the support of the hand of trust:

  • o Invisible hand of the market reflected in openness in economic transactions.

  • o Hand of trust appealed to ethical and philosophical dimensions.

  • Post-liberalisation, Indian economy supports both pillars of the economic model advocated in our traditional thinking.

  • Survey illustrates enormous benefits accruing from enabling the invisible hand of the market.

  • Exponential rise in India’s GDP and GDP per capita post-liberalisation coincides with wealth generation.

  • Survey shows that the liberalized sectors grew significantly faster than the closed ones.

  • Need for the hand of trust to complement the invisible hand, illustrated by financial sector performance during 2011-13.

Survey posits that India’s aspiration to become a $5 trillion economy depends critically on:

  • Strengthening the invisible hand of the market.

  • Supporting it with the hand of trust.

Strengthening the invisible hand by promoting pro-business policies to:

  •  Provide equal opportunities for new entrants.

  •  Enable fair competition and ease doing business.

  •  Eliminate policies unnecessarily undermining markets through government intervention.

  •  Enable trade for job creation.

  •  Efficiently scale up the banking sector.

  • Introducing the idea of trust as a public good, which gets enhanced with greater use.

  • Survey suggests that policies must empower transparency and effective enforcement using data and technology.

Entrepreneurship and Wealth Creation at the Grassroots:

  • Entrepreneurship as a strategy to fuel productivity growth and wealth creation.

  • India ranks third in number of new firms created, as per the World Bank.

  • New firm creation in India increased dramatically since 2014:

  • 12.2 % cumulative annual growth rate of new firms in the formal sector during 2014-18, compared to 3.8 % during 2006-2014.

  • About 1.24 lakh new firms created in 2018, an increase of about 80 % from about 70,000 in 2014.

  • Survey examines the content and drivers of entrepreneurial activity at the bottom of the administrative pyramid – over 500 districts in India.

  • New firm creation in services is significantly higher than that in manufacturing, infrastructure or agriculture.

  • Survey notes that grassroots entrepreneurship is not just driven by necessity.

  • A 10 percent increase in registration of new firms in a district yields a 1.8 % increase in Gross Domestic District Product (GDDP).

  • Entrepreneurship at district level has a significant impact on wealth creation at the grassroots.

  • Birth of new firms in India is heterogeneous and dispersed across districts and sectors.

Literacy and education in a district foster local entrepreneurship significantly:

  • Impact is most pronounced when literacy is above 70 per cent.

  • New firm formation is the lowest in eastern India with lowest literacy rate (59.6 % as per 2011 Census).

  • Physical infrastructure quality in the district influences new firm creation significantly.

  • Ease of Doing Business and flexible labour regulation enable new firm creation, especially in the manufacturing sector.

  • Survey suggests enhancing ease of doing business and implementing flexible labour laws can create maximum jobs in districts and thereby in the states.

Pro-business versus Pro-markets

Survey says that India’s aspiration of becoming a $5 trillion economy depends critically on:

  • Promoting ‘pro-business’ policy that unleashes the power of competitive markets to generate wealth.

  • Weaning away from ‘pro-crony’ policy that may favour specific private interests, especially powerful incumbents.

  • Viewed from the lens of the Stock market, creative destruction increased significantly post-liberalisation:

  • Before liberalisation, a Sensex firm expected to stay in it for 60 years, which decreased to only 12 years after liberalisation.

  • Every five years, one-third of Sensex firms are churned out, reflecting the continuous influx of new firms, products and technologies into the economy.

Despite impressive progress in enabling competitive markets, pro-crony policies destroyed value in the economy:

  • An equity index of connected firms significantly outperformed market by 7 % a year from 2007 to 2010, reflecting abnormal profits extracted at common citizens’ expense.

  • In contrast, the index underperforms market by 7.5 % from 2011, reflecting inefficiency and value destruction inherent in such firms.

  • Pro-crony policies such as discretionary allocation of natural resources till 2011 led to rent-seeking by beneficiaries while competitive allocation of the same post 2014 ended such rent extraction.

  • Similarly crony lending that led to wilful default, wherein promoters collectively siphoned off wealth from banks, led to losses that dwarf subsidies for rural development.

  • Undermining Markets: When Government Intervention Hurts More Than It Helps

  • Government intervention, though well intended, often ends up undermining the ability of the markets to support wealth creation and leads to outcomes opposite to those intended.

Four examples of anachronistic government interventions:

Essential Commodities Act (ECA), 1955:

  • Frequent and unpredictable imposition of blanket stock limits on commodities under ECA distorts:

  • The incentives for the creation of storage infrastructure by the private sector.

  • Movement up the agricultural value chain.

  • Development of national market for agricultural commodities.

  • Imposition of stock limits on dal in 2006-Q3, sugar in 2009-Q1 and onions in September, 2019 spiked up the volatility of the retail and wholesale prices of onions.

  • The Ministry of Consumer Affairs must examine whether the ECA is relevant in today’s India.

  • With raids having abysmally low conviction rate and no impact on prices, the ECA only seems to enable rent-seeking and harassment.

  • Survey suggests there is clear evidence for jettisoning this anachronistic legislation.

Drug Price Control under ECA:

  • The regulation of prices of drugs, through the DPCO 2013, led to increase in the price of the regulated pharmaceutical drug vis-à-vis that of an unregulated but similar drug.

  • The increase in prices is greater for more expensive formulations than for cheaper ones and for those sold in hospitals rather than retail shops.

  • These findings reinforce that the outcome is opposite to what DPCO aims to do - making drugs affordable.

  • Government, being a huge buyer of drugs, can intervene more effectively to provide affordable drugs by combining all its purchases and exercising its bargaining power.

  • Ministry of Health and Family Welfare must evolve non-distortionary mechanisms that utilise Government’s bargaining power in a transparent manner.

Government intervention in Grain markets:

Policies in the food-grain markets led to:

  • Emergence of Government as the largest procurer and hoarder of rice and wheat.

  • Crowding out of private trade.

  • Burgeoning food subsidy burden

  • Inefficiencies in the markets, affecting the long run growth of agricultural sector.

  • The food-grains policy needs to be dynamic and allow switching from physical handling and distribution of food-grains to cash transfers/food coupons/smart cards.

Debt waivers:

Analysis of debt waivers given by States/Centre:

  • Full waiver beneficiaries consume less, save less, invest less and are less productive after the waiver, compared to the partial beneficiaries.

  • Debt waivers disrupt the credit culture.

  • They reduce formal credit flow to the very same farmers, thereby defeating the purpose.

Survey suggests that:

  • Government must systematically examine areas of needless intervention and undermining of markets; but it does not argue that there should be no Government intervention.

  • Instead it suggests that the interventions that were apt in a different economic setting may have lost their relevance in a transformed economy.

  • Eliminating such instances will enable competitive markets spurring investments and economic growth.

  • Creating Jobs and Growth by Specializing in Network Products

  • Survey says India has unprecedented opportunity to chart a China-like, labour-intensive, export trajectory.

  • By integrating “Assemble in India for the world” into Make in India, India can:

  • Raise its export market share to about 3.5 % by 2025 and 6 % by 2030.

  • Create 4 crore well-paid jobs by 2025 and 8 crore by 2030.

  • Exports of network products can provide one-quarter of the increase in value added required for making India a $5 trillion economy by 2025.

Survey suggests a strategy similar to one used by China to grab this opportunity:

  • Specialization at large scale in labour-intensive sectors, especially network products.

  • Laser-like focus on enabling assembling operations at mammoth scale in network products.

  • Export primarily to markets in rich countries.

  • Trade policy must be an enabler.

  • Survey analyses the impact of India’s trade agreements on overall trade balance: