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IASbaba’s Daily Current Affairs – 31st May, 2016

  • May 31, 2016
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IASbaba's Daily Current Affairs Analysis, IASbaba's Daily Current Affairs May 2016, National
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IASbaba’s Daily Current Affairs – 31st May, 2016

 

NATIONAL

 

TOPIC:  General studies 2

  • Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.
  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation

 

Elderly Population need to thrive not just survive

Definition of Ageing/Old Age

  • Elderly or old age consists of ages nearing or surpassing the average life span of human beings (generally agreed cutoff is 65+ years)
  • Note: At the moment, there is no United Nations standard numerical criterion
  • In Indian context, the National Policy on Older Persons, 1999 defines ‘senior citizen’ or ‘elderly’ as a person who is of age 60 years and above
  • In brief, ageing means deteriorative biological and psychological changes that occur in genetically matured organism

Indian Scenario

  • India is expected to be home to 300 million elderly people by 2050
  • 18 per cent of the population is going to be over 60 years of age by 2050
  • In India, about 50 per cent of the elderly are being financially dependent on others
  • Most of the elderly have been turned out from their homes, or have lost a partner, or just can’t manage to live on their own anymore

It is time India pay heed to the problems of those who are old, else the country will be faced with a large incidence of degenerative diseases, accompanied with serious gaps in the geriatric medical ecosystem, a changing joint family structure, the lack of ‘grey-friendliness’ in public spaces, transport, housing, and a virtually non-existing policy framework to tackle these issues.

 

Problems faced by the Aged:

Failing Health:

  • India is a country with no social security and dismal elderly care facilities
  • Older people are vulnerable to non-communicable and infectious diseases
  • Failing health due to advancing age is complicated by non-availability to good quality, age-sensitive, health care
  • In addition, poor accessibility and reach, lack of information and knowledge and/or high costs of disease management make reasonable elder care beyond the reach of older persons (esp. those who are poor and disadvantaged)

Economic Insecurity:

  • The problem of economic insecurity is faced by the elderly when they are unable to sustain themselves financially
  • Many lack the opportunity and/or capacity to be as productive as they were
  • Increasing competition from younger people, individual, family and societal mind sets, chronic malnutrition and slowing physical and mental faculties, limited access to resources and lack of awareness of their rights and entitlements play significant roles in reducing the ability of the elderly to remain financially productive and thereby independent

 

 Isolation:

  • Isolation, or a deep sense of loneliness, is a common complaint
  • While there are a few who impose it on themselves, isolation is most often imposed purposefully or inadvertently by the families and/or communities where the elderly live
  • Isolation is a terrible thing that, if not addressed, leads to tragic deterioration of the quality of life

Neglect:

  • Elderly, especially those who are weak and dependent, require physical, mental and emotional care and support. When this is not provided they suffer from neglect, a problem that occurs when a person is left uncared for and that is often linked with isolation
  • Changing lifestyles and values, demanding jobs, distractions such as TV and smart phones, a shift to nuclear family structures and redefined priorities have led to increased self-neglect of the elderly by families and communities.

Abuse:

  • Elderly are highly vulnerable to abuse, where a person is willfully or inadvertently harmed, usually by someone who is part of the family or otherwise close to the victim
  • The major forms of abuse are physical, sexual, psychological and economical

Other problems:

  • Fear, Boredom (Idleness), Lowered self-esteem, Loss of control, Lack of preparedness for old age etc

(Government should respond to their needs such as – affordable housing, healthcare, and the psychological and social manifestations of ageing)

Policy and Programme initiatives: Taking care of the elderly

  • The Ministry of Social Justice and Empowerment (MoSJE) – is the nodal ministry for policy and programme initiatives for Elderly Welfare. The MOSJE should focus on effective policies and programmes for the senior citizens in close collaboration with state governments, NGOs and civil societies.
  • Article 41 of the Constitution provides that the state shall, within the limits of its capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement and in other cases of undeserved want.
  • Article 47 also provides that the state shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health among its primary duties.
  • Towards this end, the Government of India enacted some policies such as the Maintenance and Welfare of Parents and Senior Citizens Act in 2007 and Integrated Programme for Older Persons (IPOP)

 

Concerns with government’s policies and programmes:

Case I: Maintenance and Welfare of Parents and Senior Citizens Act

  • The Maintenance and Welfare of Parents and Senior Citizens Act makes it obligatory for children or relatives to provide maintenance to senior citizens and parents.
  • It also provides for the setting up of old age homes by State governments.

(But these provisions are poorly implemented and not strictly followed in India)

  • Many children and relatives have failed to provide maintenance to senior citizens and parents. Most elderly people in India would rather suffer than have the family name sullied by taking their own children to court for not providing maintenance for them.
  • Lack of knowledge of rights, the inherent inability of the elderly to approach a tribunal for recourse under the law, and poor implementation of the Act by various State governments are other concerns

Case II: Integrated Programme for Older Persons (IPOP)

  • The main objective of the Scheme is to improve the quality of life of the Older Persons by providing basic amenities like shelter, food, medical care and entertainment opportunities and by encouraging productive and active ageing through providing support for capacity building of Government/ Non-Governmental Organizations/Panchayati Raj Institutions/ local bodies and the Community at large.

(But these provisions are also poorly implemented and not strictly followed in India)

  • The number of old age homes the Centre supports under the Integrated Programme for Older Persons (IPOP) has seen a decline from 269 homes in 2012-13 to a dismal 137 in 2014-15
  • The Centre has asked State governments to ensure that there are old-age homes whose functioning can be supported under IPOP, but since it is optional for the State governments to do so, the total number of old-age homes remains abysmally low.

 

The Way ahead:

There is a need for a pragmatic approach, with focus on the three key aspects of health, housing, and dignity.

Strengthen the health-care system

  • Good quality health care should be made available and also should be accessible to the elderly in an age-sensitive manner.
  • It is crucial to encourage research in geriatric diseases, and push for building capacity in the geriatric departments across the primary and tertiary health-care systems.
  • Rehabilitation, community or home based disability support and end-of-life care should also be provided where needed in a holistic manner, to address the issue of falling health among the elderly.

Strengthen the Housing

  • There needs to be a network of old age homes, both in the private and public sector.
  • There also seems to be a growing informal industry of home care providers, which urgently needs regulation and mandated guidelines.
  • While the private sector has taken the lead in setting up some state-of-the-art facilities, most of these are priced well out of the reach of ordinary citizens. State governments must be mandated to set up quality, affordable homes.

Ensure life and dignity

  • As traditionally supportive social structures are changing and the elderly are increasingly losing their ‘status’ as the family patriarchs, it is also time that we did our bit to help address the indignities and loneliness that this change is bringing.
  • Businesses could look at harnessing the talent of elders by retaining or hiring older workers and offering flexible working hours for those who want to continue working after retirement.
  • Industry will benefit by retaining their knowledge and experience and the elderly will continue to be financially independent and retain their sense of self-worth.
  • At the community level we also need to increase the avenues for older people to participate in local issues, in resident associations, set up and manage spaces for community interaction, to leverage their experience as a resource, give them an opportunity to share their concerns, and help them feel that they contribute socially and have a purpose in life.

Connecting the dots:

  • What are the problems faced by elderly population? Critically examine how far government policies and programmes have been successful in this regard.

 

ECONOMICS

 

TOPIC: General Studies 3

  • Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
  • Government Budgeting

 

India’s Inflation Outlook

Inflation: a sustained increase in the general level of prices for goods and services

Inflation indicators:

  • Wholesale Price Index (WPI): looks at price changes for manufactured goods only
  • Consumer Price Index (CPI): measures the prices of services as well as manufactured goods

Note: The WPI and CPI index often move at different paces and even in different directions because they are each calculated using different baskets of goods and services

Has India’s inflation been tamed?

  • Inflation has fallen—to 5.4% in April 2016 from 11.5% in November 2013
  • Inflation rates in both food and core (i.e. non-food and non-fuel) components: No more at their peak prices

Yet, in order to be sure, there are three questions that needs to be assessed responsibly—

  1. Is the fall in CPI inflation sufficient?
  • Inflation outcomes have been better than the guidance of 8% for January 2015 (actual: 5.2%) and 6% for January 2016 (actual: 5.7%)
  • Insufficient decline in the headline CPI inflation— because RBI aims to bring inflation down to 5.3% in Q1 2017 and to around 4% in Q1 2018
  1. Is the decline in inflation sustainable?
  • Sustainability of inflation means that inflation should toe along the line marked by RBI (irrespective of other factors like picking up of aggregate demand and return of the pricing power of Indian corporates)
  • Also, one needs to pay attention to the factors that might not be as favourable as they were previously—
    • Collapse in the international prices of commodities (especially crude oil and food)
    • Weak domestic corporate pricing power
    • Government’s policy on Minimum Support Prices
  • Rigidity in core inflation—because of higher inflation in service sectors, including education and health as these sectors have become extremely important and widely focussed upon in lieu with the government’s aspiration towards initiatives like ‘Skill India’, ‘Digital India’ as well as ‘Make in India’.
  • Government is also yet to work upon placing informed institutional policies at the helm of the recent surge of oil and food prices for ensuring sustained low volatility. Inflation in pulses is a correct example to assess the government’s failure in boosting confidence in the minds of the people that inflation can decline even when growth accelerates
  1. Should policymakers be worried about the recent signals from wholesale price index (WPI) inflation?
    • WPI inflation has been driven mainly by higher food inflation and the rebound in commodity prices
    • CPI inflation did not benefit much from the negative WPI inflation from late 2014—
      • Composition of the two inflation yardsticks with respect to food, fuel-related items and services inflation

Reasons for the divergence between the two indices- WPI and CPI and its Impact:

  • Variation in base years– While WPI’s base year is 2004-05, CPI’s base year is 2012.
  • Composition– The basket of items and weights allocated to the individual items in the two indices is also different with cost of transportation and rent on housing being a part of the CPI and not WPI.
  • End consumers overburdened– Though the prices of raw materials have gone down considerably, it is not getting reflected in the final price of the product as it is not passed on to the consumers. There is a huge profit margin made by the users.
  • While profit margins are a significant factor in the CPI divergence, corporate profits have not really gone up much so as to define the current gap between the two indices.
  • Same is the case with fuel prices– Though the fuel prices too have come down sharply, the government has not passed the benefit of a benign fuel prices to customers. That has been used to reduce subsidies and strengthen the fiscal position

 

Some experts Opinion/Views:

  • For WPI – WPI should be used to measure inflation because Indian markets are not integrated
  • For CPI– In economies where such integrated markets exist, CPI is the ideal measure. In such markets, both CPI and WPI should move in tandem.
  • Balanced view–
    • While WPI can be used as a more effective measure of inflation (the signals from input prices and tradables inflation captured in WPI offer useful clues about the potential risks to retail inflation), CPI can be used for inflation targeting by the RBI because it has to maintain the real interest rate and therefore has to target CPI because retail consumers are impacted by it.
    • The choice of CPI is superior to the WPI because it measures the cost of living for consumers
    • Is there a guarantee that higher WPI inflation won’t have any adverse impact on retail inflation?

No— acceleration in private consumption growth in a supply constrained economy is dependent upon:

  • Implementation of the pay commission recommendations
  • Favourable monsoon
  • Structural rigidities that kept retail inflation sticky—
  • Lack of progress in the implementation of structural programs to negate the rigidities
    • Lack of a well-functioning bond market, a competitive banking sector, an independent government debt manager and full understanding and commitment on part of government to low and stable inflation

 

What should the government do?

  1. Need to notify the inflation rate that has to be achieved—

The inflation target in the MPFA chosen by government and the RBI was 6 per cent by January 2016 and then 4 per cent for 2016-17 and thereafter (with a band of 2 per cent)

The jump down in the inflation rate is not in tandem (unrealistic)with views of Urjit Patel Committee report of setting a glide path to inflation

 

  1. The government and the RBI should together review India’s first experience with formal inflation targeting

Lack of transmission has been witnessed due to the lack of other reforms in the financial markets such as the creation of a well-functioning bond market, a competitive and market-oriented banking system, and a bond-currency-derivative nexus

  1. If the government wants to give the country low and stable inflation by adopting an independent monetary policy, it should clearly signal that it does not want the RBI to peg the exchange rate

 

  1. Government needs to understand that RBI cannot target WPI—
    • Bulk of the items in WPI is tradables
    • Follows the US producer price index based inflation rate thus, prices are internationally determined and not by domestic monetary policy

Connecting the Dots

  1. In the Indian context, is CPI the right measure of inflation?
  2. Should India use both the indices, CPI and WPI, for inflation measurement and inflation targeting? Give your arguments and substantiate.

 

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