ECONOMICS
WHY BUDGET 2024 PRIORITISES DEBT REDUCTION OVER INCREASED SPENDING
Source: INDIAN EXPRESS
Introduction
- The Union Budget for 2024-25 reflects the Indian government's response to several macroeconomic challenges and the need to balance fiscal stability with social and developmental priorities.
- The Finance Minister’s address highlights two critical macro risks: rising global economic uncertainty and global inflation. These risks highlight India's vulnerability as an emerging economy but also emphasize the country's resilience and commitment to maintaining growth amidst these challenges.
Key Budget Figures and Rationale
Budget Size and Increase
- Total Budget: Rs 48.21 lakh crore
- Increase from Previous Year: Rs 3.96 lakh crore
- Explanation of the Increase:
- Interest Payments: The largest share of the increase, approximately Rs 1 lakh crore, is allocated to interest payments, which constitutes about 25% of the total increase.
- Central Sector Schemes: Rs 70,000 crore is allocated for central sector schemes, indicating a rise in funding for various central projects.
- Transfers to States: Additional grants and transfers to states, including new allocations for Andhra Pradesh and Bihar, contribute to the rise. These adjustments are partly in response to demands for special-category status by these states.
Fiscal and Economic Metrics
- Central Expenditure as a Percentage of GDP: Declines from 15.06% to 14.77%.
- Gross Tax Revenue as a Percentage of GDP: Expected to remain stagnant at 11.7%.
- Debt-to-GDP Ratio: Expected to remain at around 56%.
- Implications:
- Decreased Central Expenditure: A slight reduction in central expenditure relative to GDP might reflect a prioritization of fiscal consolidation.
- Stable Tax Revenue: The stagnation in tax revenue percentage indicates potential constraints in revenue generation.
- High Debt-to-GDP Ratio: Despite a reduction from its COVID-19 peak, the high debt level remains a concern, particularly with rising interest payments.
Challenges in Fiscal Stability
Balancing Priorities
- Fiscal Space Creation: Ensuring adequate funding for social and development spending.
- Debt Reduction: Managing and reducing the debt level to avoid compromising fiscal health.
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Interest Burden: The significant interest liability, amounting to Rs 11.62 lakh crore, makes it challenging to allocate funds for development projects. The high-interest payments are absorbing a substantial portion of the budget, constraining fiscal flexibility.
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Need for a Rethink on Fiscal Consolidation
- Existing Framework: The current fiscal consolidation framework, which emphasizes strict numerical limits on deficits, might be outdated, especially in the face of global economic uncertainties.
- Inflation Impact: High inflation can erode the real value of debt, potentially reducing the burden of debt servicing. However, this might not always lead to lower nominal interest payments.
Debt Reduction Path
- Amendments to FRBM Act: The 2018 amendments aimed to reduce Union debt to 40% of GDP and general government debt to 60% by March 31, 2025. Given the COVID-19 impact, achieving these targets might be challenging.
- Importance of a Framework: A structured debt reduction path is essential to manage interest burdens and maintain fiscal prudence.
State-Level Reforms and Challenges
Reform Areas
- Land, Labour, Capital, and Technology: The Budget outlines reforms in these areas, particularly those impacting states.
Challenges in Implementation
- Stamp Duty Reform: Efforts to encourage states to lower stamp duty rates are complex due to varying property market conditions, land valuation practices, and fiscal needs across states.
- Historical Context: Previous attempts at similar reforms, like those under the Jawaharlal Nehru Urban Renewal Mission, have faced challenges.
Coordination and Autonomy
- Union-State Coordination: Successful implementation of state-related reforms requires effective coordination between the Union government and states.
- Fiscal Autonomy: States have lost some fiscal autonomy with the introduction of GST. Therefore, reforms affecting state taxes need to be handled through a consultative process that respects state autonomy.
Conclusion
- The Union Budget 2024-25 reflects the complex interplay between fiscal stability, economic growth, and developmental priorities. While the government aims to balance fiscal consolidation with necessary social and developmental spending, the significant interest burden and high debt levels pose substantial challenges. A re-evaluation of the fiscal consolidation framework, coupled with effective state-level reforms and coordination, will be crucial for sustaining economic resilience and growth
SOCIAL ISSUES
DEFENDING DISABILITY RESERVATIONS
Source: THE HINDU
Introduction
- The recent controversy surrounding an IAS officer, who is accused of fraudulently obtaining benefits by faking her disability and caste, has sparked a debate on the reservation system for persons with disabilities (PwDs) in India.
- Disability reservations are designed to ensure that PwDs receive equitable opportunities in education and employment. The controversy has led to calls for revising these policies, which are intended to address the various barriers PwDs face in participating fully in society.
Barriers Faced by Persons with Disabilities
Infrastructural and Systemic Challenges
- Infrastructural Barriers: Many public spaces and workplaces lack accessibility features, making it difficult for PwDs to navigate and participate.
- Educational System: The education system is often designed for able-bodied individuals, which can disadvantage PwDs who may require special accommodations.
- Exam Formats: Standardized tests and assessments may not account for the specific needs of PwDs, affecting their performance and opportunities.
Employment Challenges
- Low Employment Rates: According to the 76th round of the National Sample Survey (2018), only 23.8% of PwDs were employed, compared to a national Labour Force Participation Rate of 50.2%.
- Stigma and Bias: PwDs often face stigma and bias during the hiring process and may not receive reasonable accommodations at the workplace.
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The debate has been fueled by generalizations based on isolated incidents of fraud. While some individuals may misuse the system, this should not overshadow the broader effectiveness of reservations. The focus should be on addressing fraudulent cases with strict penalties rather than changing the entire system.
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Addressing Systemic Issues
Certification System Flaws
- Outdated Criteria: The current system of quantifying disabilities by percentage is outdated and does not align with modern standards. The UN Convention on the Rights of Persons with Disabilities advocates for assessing functional limitations rather than medical percentages.
- Inconsistent Assessments: Discrepancies between government-issued disability certificates and assessments by institutions like the UPSC lead to conflicting results, complicating the process for PwDs.
Challenges in Assessment
- Lack of Specialists: There is a shortage of specialists trained to assess various disabilities, making the certification process inaccessible and inefficient.
- Subjective Assessments: Psychosocial disabilities and other less apparent conditions face subjective assessments and may be overlooked due to inadequate testing methods like the outdated IDEAS scale.
Focus on Systemic Improvements
- Improving Certification Processes: Modernizing the disability certification process to focus on functional limitations and ensuring consistency between different assessments.
- Enhancing Accessibility: Addressing infrastructural and systemic barriers to improve access for PwDs in education and employment.
- Promoting Awareness: Increasing awareness and training to reduce stigma and bias towards PwDs.
Way Forward
- The fraudulent activities of individuals should be met with stringent punishment. However, this should not lead to a review or dismantling of the reservation system that provides crucial support to PwDs. The reservation system remains a vital tool for ensuring equitable opportunities and combating the systemic barriers faced by PwDs.
- A more productive approach involves addressing the underlying systemic issues and biases that affect PwDs. By improving certification processes, enhancing accessibility, and promoting greater understanding and awareness, society can better support and integrate PwDs, ensuring that the benefits of reservations are realized effectively and justly.
ENVIRONMENT
PLASTIC MESS: ON INDIA’S WASTE PROBLEM
Source: THE HINDU
Introduction
- India’s plastic waste problem is a complex and growing environmental challenge that necessitates comprehensive measures to tackle its root causes and improve recycling systems. The situation is compounded by issues in the management and verification of plastic waste recycling.
Plastic Waste Problem
- Annual Plastic Waste Generation: According to the Central Pollution Control Board (CPCB), India generates approximately four million tonnes of plastic waste each year. The high volume of waste is a significant environmental concern, given that plastics can take hundreds of years to decompose and can contribute to land and marine pollution.
- Recycling Rates: Despite the large amount of plastic waste generated, only about 25% of it is recycled or treated. The remaining 75% either ends up in landfills or is disposed of in an unsustainable manner, leading to environmental and health hazards.
Plastic Waste Management Rules and Extended Producer Responsibility (EPR)
- Plastic Waste Management Rules (2016): The Plastic Waste Management Rules, introduced in 2016, mandated that plastic users take responsibility for the collection and recycling of their plastic waste. This system is intended to encourage recycling and reduce the environmental impact of plastic waste.
- Extended Producer Responsibility (EPR): EPR is a policy approach where the responsibility for managing plastic waste is extended to the producers, importers, and users of plastic products. These entities are required to register with the CPCB and are tasked with ensuring their plastic waste is collected and recycled.
- EPR Trading Platform: An online EPR trading platform was established to facilitate this process. It involves:
- Registration: Packagers, importers, and large industrial users register with the CPCB.
- Certification: Recyclers collect plastic waste, process it, and receive certificates for each tonne recycled.
- Verification: These certificates are uploaded to the CPCB portal and can be purchased by companies that fall short of their recycling targets.
Issues with the EPR System
- Fraudulent Certificates: In 2022-23, it was revealed that approximately 600,000 of the certificates for recycled plastic were fraudulent. This means that companies could have falsely claimed to meet their recycling targets, undermining the integrity of the system.
- Security Breaches: There were reports of hackers stealing and selling several thousand certificates. This security breach further compromised the system's reliability and raised concerns about the extent of genuine recycling.
- Audit and Overhaul: In response to these issues:
- Audit: The CPCB commissioned an audit of nearly 800 firms, which represents about a quarter of the 2,300 registered recyclers. This audit aims to verify the authenticity of recycled plastic claims.
- Platform Overhaul: The CPCB undertook a comprehensive overhaul of the EPR trading platform's security features to prevent future breaches. However, this overhaul has delayed the process of filing returns for 2023-24.
Challenges and Criticisms
- Teething Issues: The CPCB has characterized the problems as "teething issues" associated with implementing a large-scale electronic system. While these issues are expected in new systems, they can undermine trust if not addressed effectively.
- Lengthy Legal Processes: The process for imposing fines on non-compliant firms is lengthy and fraught with legal challenges. This limits the CPCB's ability to enforce compliance swiftly and effectively.
- Limited Market-Driven Effectiveness: While a market-driven approach to managing plastic waste has some benefits, it has limitations. The effectiveness of recycling systems is restricted if the root causes of plastic waste production and consumption are not addressed.
Recommendations for Improvement
Reducing Plastic Production
- Efforts must be made to curb the production of single-use plastics and promote alternatives. This involves:
- Regulation: Implementing stricter regulations on plastic production and encouraging the use of sustainable materials.
- Innovation: Supporting research and development of biodegradable or less harmful alternatives to traditional plastics.
Promoting Sustainable Alternatives
- Encouraging the use of sustainable alternatives, such as reusable products and materials with lower environmental impact, is crucial. This can be achieved through:
- Public Awareness: Raising awareness about the environmental impact of plastic and promoting behavioural changes.
- Incentives: Providing incentives for businesses and consumers to switch to sustainable options.
Enhancing Recycling Systems
- Better Verification: Strengthening the verification process to ensure the authenticity of recycled plastic claims.
- Infrastructure Investment: Investing in better recycling infrastructure and technology to increase the efficiency of waste collection and processing.
- Systematic Reforms: Implementing systematic reforms to streamline the certification and auditing processes.
Addressing Systemic Issues
- Updating Certification Methods: Moving towards certification methods that focus on functional limitations rather than outdated percentage-based assessments.
- Expanding Specialist Resources: Increasing the availability of specialists to assess and certify various types of disabilities and plastic waste.
Conclusion
- India’s plastic waste problem requires a multifaceted approach that includes reducing plastic production, promoting sustainable alternatives, and enhancing the effectiveness of recycling systems. Addressing systemic issues in certification and verification processes, while tackling the root causes of plastic waste, will be crucial in mitigating the environmental impact of plastics and achieving a more sustainable waste management system.
SOCIAL ISSUES
RECASTING CARE MODELS FOR MENTAL ILLNESS AND HOMELESSNESS
Source: THE HINDU
Introduction
- The challenge of addressing mental illness among the homeless population requires a significant shift from traditional, paternalistic models of care to ones that respect individual autonomy and focus on comprehensive, liberatory strategies.
Current Paradigms and Their Limitations
Traditional Approaches: Historically, care models for HPMI (Homeless Persons Living With A Mental Illness) have been focused on transferring individuals from the streets to institutional settings such as mental hospitals, shelters, or even prisons. These models often emphasize:
- Rescue Missions: Moving individuals from hazardous environments to safer but often restrictive spaces.
- Institutionalization: Providing care in large, impersonal institutions that may perpetuate stigma and limit personal agency.
Challenges with Traditional Models
- Lack of Personal Agency: These models frequently prioritize institutional safety and order over individual choice and autonomy.
- Stigmatization: Large asylum-style facilities can perpetuate the stigma associated with mental illness, reinforcing negative stereotypes.
- Limited Integration: Such settings may lack integration with the broader community and fail to address the complexities of the individuals' experiences and needs.
Reframing the Care Paradigm
Liberatory-Focused Strategies
- Personal Agency: Respecting the choices and autonomy of individuals with mental illness, allowing them to have a say in their care and living arrangements.
- Community Integration: Promoting models that facilitate integration into the community rather than isolating individuals in institutional settings.
Key Principles of Liberatory Strategies
- Empowerment: Empowering individuals to make their own decisions about their lives and care.
- Holistic Support: Providing comprehensive support that includes mental health care, social services, and housing.
- Respect for Dignity: Ensuring that care models recognize and uphold the dignity of individuals, avoiding coercive or punitive measures.
Efforts and Innovations in India
Collaborative Initiatives
- Emergency Care and Recovery Centres (ECRCs): Collaborations between entities such as the National Health Mission and local organizations have led to the establishment of ECRCs within district hospitals. These centres:
- Break Down Large Institutions: Offer a more personalized approach to care, breaking away from the large asylum model.
- Provide Proximal Care: Deliver immediate and accessible care across various locations, reducing the need for long-term institutionalization.
Housing First and Similar Models
- Housing First: Provides stable housing without preconditions, followed by supportive services to address mental health needs and other challenges.
- Home Again: A collaborative project that has successfully supported individuals in accessing housing and social care, with a focus on community integration.
Social Protection Measures
- Disability Allowance: Proposing a monthly disability allowance of ₹1,500 as a lifeline for marginalized individuals.
- Documentation and Financial Access: Addressing barriers related to securing Aadhar cards and banking access to enhance financial inclusion.
Addressing Structural Issues
- Discrimination and Violence: Combatting systemic discrimination and violence against HPMI.
- Segregation and Deprivation: Working to dismantle barriers that contribute to social and economic exclusion.
Challenges with Institutional Spaces
Long-Term Care Issues
- Many individuals in state psychiatric facilities experience long-term needs, with extended stays often resulting from judicial and police interventions:
- Rehabilitative Measures: Guidelines have been established for rehabilitative measures, but community re-entry pathways are still limited.
- Trans-Institutional Options: Options for transitioning individuals from institutional care to community living are often inadequate, leading to continued social distancing and diminished quality of life.
Effective care models require
- Dynamic Leadership: Leaders and policymakers must be adaptive and reflective, addressing the complex and evolving needs of HPMI.
- Integration of Support Services: Strengthening post-discharge support and integrating services within the District Mental Health Programme to ensure continuity of care and better outcomes.
Economic Justice and Employment
Workforce Participation
- Social Cooperatives: Encouraging participation in social cooperatives where labour is exchanged within a supportive community framework.
- Vocational Training: Rethinking vocational training to align with contemporary economic realities and individual aspirations.
Affirmative Action Policies
- Implementing policies that promote socio-economic, cultural, and political inclusion for HPMI, ensuring they have access to meaningful employment and participation in society.
Future Directions and Policy Innovations
Tamil Nadu’s Policy Initiative
- Tamil Nadu is set to release a policy integrating many of these approaches, representing a significant step forward in advancing comprehensive care models for HPMI. This policy aims to:
- Address Gaps: Close existing gaps in care and support.
- Promote Inclusion: Foster greater inclusion and respect for individual agency.
Expanding and Scaling Successful Models
- Successful models like Home Again and Housing First should be scaled and adapted to other regions, with a focus on ensuring they are accessible and effective for diverse populations.
Conclusion
- Transforming care models for homeless persons with mental illness requires a fundamental shift from traditional, paternalistic approaches to those that respect personal autonomy, promote community integration, and address systemic issues. By adopting liberatory strategies and innovative models, we can create a more inclusive and effective support system that enhances the well-being and rights of HPMI.
