IASbaba’s Daily Current Affairs – 2nd June, 2016

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IASbaba’s Daily Current Affairs – 2nd June, 2016

ECONOMICS

TOPIC:

General studies 2:

• Welfare schemes for vulnerable sections
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation. 
• Issues relating to development and management of Social Sector or Services relating to Health, Education, Human Resources

General studies 3:

• Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
• Inclusive growth and issues arising from it.

India as the “world’s human resource capital”

Why there is a need for Skill Development?

• To convert Quantitative Dividend to Qualitative Dividend:
• India’s biggest challenge remains having a young population that is unemployable due to lack of skills. As much as 50 per cent of the population is below 27 years and 700 million in this age group will constitute part of the national population in 2020.
• Therefore, before India’s huge youth population goes into a crisis, Skill development should be a major focus area.
• To fight poverty and achieve standard of living:
• Youth unemployment and underemployment is prevalent around the world because young people lack skills, work experience, job search abilities and the financial resources to find employment.
• In developing countries, this situation is exacerbated by poverty and the competitive pressures that result from a rapidly growing labour force.
• Moreover, the inadequacy of social protection schemes and active labour market policies means that young people in such economies have little support outside their family and friends.
• Globally, young people are, therefore, more likely to be either unemployed or employed on more precarious contracts and in the informal sector.
• To cater to the global market:
• India is envisaged as the “world’s human resource capital” – the country should ready itself to replace the diminishing workforce in other countries.
• This means we must ready our human resources to cater to the global market and that necessarily entails a greater stress on the quality of training imparted.
• To overcome the dependency ratio:
• While India is experiencing a ‘demographic dividend’ due to the youth bulge, many young people struggle to acquire the right skills demanded by employers to successfully navigate the transition from school to work.
• Moreover, with the dependency ratio expected to rise from 2025, India faces a pressing challenge to increase education and skill levels amongst its population to take advantage of this unique moment in its history.

Government policies and programmes:

1. Ministry of Labour and Employment –

• The main responsibility of the ministry is to protect and safeguard the interests of workers in general and the poor, deprived and disadvantaged sections of the society, in particular.
• Further, the Ministry aims to create a healthy work environment for higher production and productivity and to develop and coordinate vocational skill training and employment services.

2. Labour Reforms

• Labour reforms essentially means taking steps to increase production, productivity and employment opportunities in the economy while protecting overall interest of labour.
• Essentially it means skill development, retraining, redeployment, updating knowledge base of workers-teachers, promotion of leadership qualities etc.

3. Ministry of Skill Development and Entrepreneurship

• More than 20 Ministries/Departments run 70 plus schemes for skill development in the country
• Recognizing the need and urgency of quickly coordinating the efforts of all concerned stakeholders in the field of Skill Development and Entrepreneurship, Government of India created a new ministry, called Ministry of Skill Development and Entrepreneurship on 10th Nov, 2014.

4. National Policy on Skill Development and Entrepreneurship 2015

• The objective of the National Policy on Skill Development and Entrepreneurship, 2015 will be to meet the challenge of skilling at scale with speed and standard (quality).
•  It will aim to provide an umbrella framework to all skilling activities being carried out within the country, to align them to common standards and link the skilling with demand centres.

5. National Skill Development Mission

• The National Skill Development Mission was approved by the Union Cabinet and officially launched on July 15, 2015 on the occasion of World Youth Skills Day.
• Its mandate is to train 300 million Indians by 2022

Schemes – The schemes under skill development are:

1. Pradhan Mantri Kaushal Vikas Yojana (PMKVY)

• PMKVY is the flagship outcome-based skill training scheme of the Ministry.
• The objective of this skill certification and reward scheme is to enable and mobilize a large number of Indian youth to take up outcome based skill training and become employable and earn their livelihood.
• Under the scheme, monetary reward would be provided to trainees who are successfully trained, assessed and certified in skill courses run by affiliated training providers.

Udaan

• Udaan is a Special Industry Initiative for Jammu & Kashmir in the nature of partnership between the corporates of India and Ministry of Home Affairs and implemented by National Skill Development Corporation.
• The programme aims to provide skills training and enhance the employability of unemployed youth of J&K. The Scheme covers graduates, post graduates and three year engineering diploma holders.

Challenges

Skilling the youth clearly needs a more skilled approach to implement what has been drawn up in the above government schemes and programmes. Let us analyze some of the concerns and challenges India faces in regard to Skill Development:

• The government has estimated an incremental requirement of 110 million additional skilled personnel across 24 sectors. That means that the task at hand cannot be taken lightly as a routine work in progress.
• However, most of the programmes have been movingalong at a slow pace and it requires a substantial amount of tweaking to actively push towards the goals.
• There have been growing allegations regarding the quality of skills provided by these programmes. If we want our youth to compete with the best in the world then capacity building needs to be taken to a higher and more effective plane.
• The programmes and schemes have failed to effectively engage rural youth. Even in urban slums, awareness about the programmes are limited and the youth still seem to be looking around for skilling opportunities.
• One of the major concerns has been the high drop-out rate among trained candidates — which is close to 70 per cent, as candidates from the hinterland tend to return home, intimidated by urban culture and expectations.

The way ahead:

• Though there has been an effort to converge all the government projects under an umbrella, there is also need to standardise on quality, inputs and outcomes. For that stringent standard operating procedures need to be put in place.
• Till uniform standards are established, the mission may not gain the required acceleration although those associated with it are confident that the required correctives will be incorporated sooner than later.
• To reverse the high drop-out rate trend, some steps have been taken: For instance, on April 1, the government issued Common Norms for all skilling programmes and recently Deen Dayal Upadhyaya Grameen Kaushalya Yojana was introduced.

Common Norms for all skilling programmes

• Under the Common Norms, programme implementing agencies (PIAs) are now offered an incentive up to 3,000 per candidate if he or she retains a job for over 12 months and Rs. 5,000 per candidate for progression to a salary of Rs. 15,000 per month. One-third of the incentive paid to the PIA goes to the candidate in addition to his or her salary.
• To help candidates retain jobs, the PIAs seem to have formulated their own methods. They persuade companies to hire in batches from the same training centre to cut costs and increase support and safety of candidates.
• Skilled migrants are also helped with accommodation and encouraged to live together to enhance the sense of camaraderie.

Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY):

• Recently, the DDU-GKY introduced a migration support framework to address homesickness and cultural alienation.
• It has envisaged migration support centres in every State that will serve as “a home away from home” for the recruits.
• State governments are also supported with a fund of 10 lakh per centre per annum.

However, there are still questions being asked about the quality of some of the training being imparted. To make its mark, the programme needs to not only scale up but adhere to international benchmarks and build a better skilling reputation.

Connecting the dots:

• India is envisaged as “world’s human resource capital”. The country should ready itself to replace the diminishing workforce in other countries. Critically examine.
• Why Skill development should be the primary focus of the Indian Government? Discuss some of the recent government programmes and initiatives to achieve the same?
• Essay – Skills Development for Youth in India: Challenges and Opportunities 

INTERNATIONAL

TOPIC:  General studies 2

• Bilateral, regional, global groupings and agreement involving India and affecting its interest
• Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora

The troubled BIT— Between India and the U.S.

Utility of a BIT:

• Countries develop a model BIT to use it as a template to negotiate investment treaties but it also ends up imposing obligations under international law on host states to protect foreign investment from the other state. On its own, they have very limited legal value.
• S. uses it as a foundation for its agreements on
• Investor protection
• Promote two-way economic partnerships with different countries

World’s 1^st BIT: Signed between Pakistan & Germany (1959)

Significance of moving forward on high-standard BIT negotiations

• Yield clear benefits for both sides be ensuring more certainty when entering other’s market without unduly compromising the host state’s right to regulate
• Create a predictable investment climate
• Boost bilateral investment flows
• Increased employment opportunities

Timeline:

2009 marked the beginning of the discussion of establishing a BIT relationship between India and the U.S., later to be delayed citing updating of their respective BITs model.

2012: US adopted a BITs model

2015: India adopted its formulated BITs model owing to the various cases related to suing done by the foreign companies by referring to their respective BITs. (Method of Immunization against claims by foreign corporations)

Indian BIT entails—

With the onset of various initiatives like ‘Make in India’ and ‘Digital India’, the government failed to balance the protection of foreign investment with India’s right to regulate and this was pronounced as being opposed to the government’s projects to woo foreign investors. For example—

1. No most favoured nation (MFN) provision— a cornerstone of non-discrimination in international economic relations (could send negative signals to foreign investors)
2. Foreign investors have to exhaust local remedies before proceeding for international arbitration—might not be a very attractive proposition for foreign investors because the Indian judicial system is already overstretched with a humongous backlog of cases

The yawning gap between their respective model BITs—

1. U.S.: Contains a Most Favoured Nation (MFN) provision

India: Missing in the Indian model

1. U.S.: Foreign investors can assert claims that taxation measures, such as confiscatory taxation, involve an expropriation of foreign investment

India: Excludes taxation from the purview of the BIT— a major roadblock

1. U.S.: Excludes issuance of CLs and revocation of IPR only from the purview of the expropriation provision

India: Excludes issuance of compulsory licenses (CLs) and revocation of intellectual property rights (IPR) from its purview

Proclaims disagreement from the U.S. viewpoint—

1. S. companies would not be able to sue India directly for issuance of CLs or revocation of IPR
2. India has been kept on a ‘priority watch list’ for IPR violations, and thus U.S. would take no risk in letting go off an opportunity wherein it can challenge India’s IP laws internationally

1. U.S.: Contains elaborate provisions for investor-state arbitration

• Does not require the exhaustion of local remedies before initiating international arbitration
• Empowers private investors to directly bring claims against sovereign action of host states as treaty breaches at international arbitral forums

India: Requires foreign investors to litigate in domestic courts for five years before pursuing a claim under international law (mandatorily)

ISDS provision in BITs: allows foreign investors to directly bring claims against the host state under international law, without the approval of the investor’s home state.

The meeting ground—

The BIT is definitely a promising next step, but both the countries need to understand that it is not the ultimate goal and should work together on laying out a more comprehensive vision of economic cooperation—

Objectives:

1. Minimal barriers to trade and investment— Maximum trade liberalization- more job opportunities
2. Capitalization on areas with clear mutual interest—Building towards a larger goal through a series of smaller agreements

Way Ahead—

• Need to work together on negotiating and sorting out the issues in an expeditious manner—Negotiations should be directed and purposeful
• Insisting on higher standards but with increased flexibility— Treat the BIT as something that can be modified at each stage based on each country’s objectives
• Utilize India’s expertise in ‘service-delivery’
• Promote and conduct discussion and a coalition to minimize political opposition
• Engage the Indian diaspora community on BIT deliberations
• India should initiate domestic policy reforms —
  • Fixing the domestic arbitration ecosystem,
  • Speeding up judicial proceedings
  • Easing issuance of business visas — to attract and protect foreign investments

Connecting the Dots:

• What is a BIT? Do you think that an increased investment follows a BIT for sure? Discuss.
• Enumerate the factors converging to push a fresh BIT perspective between India and U.S. Explain how would the U.S. benefit from a BIT with India.

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