Current Affairs - Survey And Index
The Commitment To Reducing Inequality Index-2020
- On 7th October, 2020, Oxfam International along with the Development Finance International(DFI) published the third(previous two in 2017 and 2018) edition of The Commitment to Reducing Inequality Index(CRI) Index-2020.
- It is a multidimensional index which ranks 158 countries on their policy performance to reduce inequality.
- It primarily measures progress on tackling economic inequality, i.e. the gap betweenrich and poor
- The index has three pillars and 19 different indicators, each of which relates to one policy area that has been found to be critical in reducing inequality: public services (previously known as spending); taxation; and labour.
World Specific Findings
- Most of the countries near the top of the index are Organisation for Economic Co-operation and Development(OECD) countries.
- With higher gross domestic products (GDP), they have much more scope to raise progressive tax revenues because they have more citizens and corporations with higher incomes.
- Likewise, they have greater scope to spend those revenues on public services and social protection.
- Norway tops the 2020 CRI Index, notably scoring top on labour rights.
- At the bottom of the Index is South Sudan, which is new to the index and comes close to last on all three pillars.
- Vietnam’s response to the coronavirus pandemic has been among the best in the world.
- The low ranking also reflects a failure of policy setting by the government for its citizens: for instance, South Sudan spends six times more on the military and on debt servicing than it does on vital public services, and it collects only around 15% of the tax that it should. This leads to failure to deliver on even the most basic of services.
India Specific Findings
- Ranked at 129 in the index, India’s health budget is the fourth lowest in the world.
- Just half of its population have access to even the most essential health services, and more than 70% of health spending is being met by people themselves, one of the highest levels in the world.
- So far India’s response to COVID-19 has been woeful, with huge numbers of deaths and millions of people forced into destitution.
Fighting Inequality in the Time Of Covid-19
Role International Financial Institutions in Response to Pandemic
Urgent Government Action to Radically Reduce Inequality
- In response to the coronavirus pandemic, governments must dramatically improve their efforts on progressive spending, taxation and workers’ pay and protection as part of National Inequality Reduction Plans under SDG 10.
- Spending on public services and social protection needs to be increased and its impact on coverage and inequality improved.
- There also needs to be systematic tracking of public expenditures, involving citizens in budget oversight.
- Workers need to receive living wages and have their labour rights better protected.
- Women and girls especially need their rights to equal payand protection against sexual harassment and rape to be enforced including for vulnerable workers.
Inequality Policy Impact and Analysis
- Governments, international institutions and other stakeholders should work together to rapidly improve data on inequality and related policies, and to regularly monitor progress in reducing inequality.
Coming Together to Fight Inequality
- Governments and international institutions should come together in the fight against increasing inequality as a result of the coronavirus pandemic.
- The most urgent policy measures include a global commitment and funding to ensure that COVID-19 vaccines will be free to all countries and expansion in social protection to protect workers in lower-income countries.
- The international community must support them with Special Drawing Rights,debt relief and global solidarity taxes.
Confronting Carbon Inequality
- According to a new report titled- Confronting Carbon Inequality, by Oxfam and the Stockholm Environment Institute (SEI), the extreme carbon inequality in recent decades that has driven the world to the climate brink.
The Era of Extreme Carbon Inequality
- The 25 years from 1990 to 2015 saw a rapid escalation of the climate crisis, as global annual carbon emissions grew by around 60%.
- Around half the emissions of the richest 10% (24.5% of global emissions) are today associated with the consumption of citizens of North America and the EU, and around a fifth (9.2% of global emissions) with citizens of China and India.
- The richest 10% of humanity accounted for 52% of the cumulative emissions, depleting the global carbon budget for 1.5C by nearly a third (31%).
- The poorest 50%accounted for just 7% of cumulative emissions, and a mere 4% of the budget.
Carbon Inequality is driving the World to the Climate Brink
- The world's poorest 3.5 billion people contribute little to carbon emissions but are most affected by climate impacts like floods, storms, and droughts.
- Extreme carbon inequality is the result of political choices made over the past 20-30 years.
- It is a direct consequence of our governments’decades long pursuit of unequal and carbon intensive economic growth.
Unequal Growth and Climate Justice
- Unequal economic growth slows poverty reduction rates.
- Unequal growth has another implication: it means that the global carbon budget is being rapidly depleted, not for the purpose of lifting all of humanity to a decent standard of living, but to a large extent to expand the consumption of a minority of the world's very richest people.
- Women also often experience the impacts of climate change differently from men:whether walking further to collect water, being last to eat during droughts, or assuming most of the household caring responsibilities in the wake of extreme weather.
Tackling Carbon Inequality
- To limit global heating to 1.5C, global average per capita emissions should be approximately 2.1t/year by 2030.
Recommendations for Economic Recovery from COVID-19
- The right public policy measures, enacted now, can both cut the emissions and create healthier, more cohesive and resilient societies.
- In addition to essential measures to rapidly shift energy supply to sustainable renewable sources, governments should consider:
- Wealth taxes, luxury carbon taxes and wider progressive carbon pricing to fund the expansion of universal social services
- Ending the tax-free status of aircraft fuel and tax breaks for company cars
- Public investment to create decent job guarantees
- Changing corporate governance to curtail company’s short-termism
- Setting science- and equity-based national targets to reduce carbon emission
- Developing a wider set of gender-transformative indicators of economic progress beyond GDP, such as New Zealand's Wellbeing Budget
- Incorporating principles of social dialogue at all levels to ensure the wellbeing of workers in affected industries, women, low-income and marginalized groups.
Ranking Of States On Support To Startup Ecosystems
- On 11th September, 2020, the Ministry of Commerce & Industry released the second edition of Ranking of States on Support to Startup Ecosystems-2019, conducted by the Department for Promotion of Industry and Internal Trade (DPIIT).
- A total of 22 states and 3 Union Territories participated in the exercise, including four states from North East India.
- To help bring to fore progress made by the States/ UTs for promoting Startup ecosystem
- To foster competitiveness & propel the States/ UTs to work proactively
- To facilitate States/ UTs to identify, learn and replicate good practices
About States Startup Ranking 2019
- The framework is spread across 7 areas of intervention with a total of 30 action points, as compared to the 38 action points in previous years’ Ranking Framework.
7 Pillar wise Participation of States
- It cover parameters such as Institutional Support, Simplifying Regulations, Ease in Public Procurement, Incubation Support, Seed Funding support, Venture Funding support, and Awareness and Outreach.
- To establish uniformity and ensure standardization in the ranking process, States and UTs have been divided into two groups.
- Category X: All other States and UT of Delhi.
- Category Y: All UTs except Delhi and all States in North East India except Assam.
- For the purposes of Ranking, States are classified into 5 Categories:
- Best Performers
- Top Performers
- Aspiring Leaders
- Emerging Startup Ecosystems
- Best Performer: Gujarat (State), Andaman & Nicobar Islands (UT)
- Top Performers: Karnataka and Kerala
- Leaders: Bihar, Maharashtra, Odisha, Rajasthan, Chandigarh
- Aspiring Leaders: Haryana, Jharkhand, Punjab, Telangana, Uttrakhand
- Emerging Startup Ecosystem: Andhra Pradesh, Assam, Chhattisgarh, Delhi, Himachal Pradesh, Madhya Pradesh, Sikkim, Tamil Nadu, Uttar Pradesh
- Best Performer: Andaman and Nicobar Islands
- Leader: Chandigarh
- Aspiring Leader: Nagaland
- Emerging Startup Ecosystems: Mizoram, Sikkim
- The ranking will not help the states and UTs, but also the entrepreneurs, and will help in expansion of the startups and launching of new ventures.
- Implemented as capacity development exercise, it will help to encourage mutual learning among all states and to provide support in policy formulation and implementation.
A startup venture could be defined as, a new business that is in the initial stages of operation, beginning to grow and is typically financed by an individual or small group of individuals.
An entity will be considered a startup if it fulfils overarching conditions mentioned below:
- Incorporated as a private limited company (as defined in the Companies Act, 2013) or
- Registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or
- Registered as a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
- 10 years from date of incorporation.
- Must not exceed one hundred crore rupees in any fiscal year.
Nature of Activity
Given that the entity is working towards-
- Development or improvement of products or processes or services
- Job Creation
- Wealth Creation
Opportunities for Startups
Indian markets provide numerous opportunities for startups.
- India’s Large Population: The population of India is a huge asset for the country. By 2020, it is expected that the working age population would surpass the non-working population. This unique demographic advantage will offer a great opportunity to any startup. Various infrastructure issues and the bottom- of the- pyramid market would provide huge opportunities for the startups.
- Change of Mind Set of Working Class: Traditional career paths will be giving way to Indian startup space. Challenging assignments, good compensation packages would attract talented people to startups. Also, it is seen that several high-profile executives are quitting their jobs to start or work for startups.
- Huge Investments in Startups: The startup ecosystem is getting substantial support from foreign and Indian investors, who have shown more faith in the industry and have provided funds to help these companies to grow leaps and bounds.
- Government Initiatives: Government and semi-governmental initiatives are currently supporting startups through infrastructure, financial and technical assistance and easier compliance norms.
Startup Landscape in India
Some key outcomes of the India’s startup growth story as on 31st March 2020 are as follows –
Issues and Challenges of Startups
- Dearth of Financial Resources:Availability of finance is critical for the startups and is always a problem to get sufficient amounts.Proper cash management is critical for the success of the startups. A recent report paints a gloomy picture with 85% of new company’s reportedly underfunded indicating potential failure
- Poor Revenue Generation: Several startups fail due to poor revenue generation as the business grows. As the operations increase, expenses grow with reduced revenues forcing startups to concentrate on the funding aspect. Therefore, the challenge is not to generate enough capital but also to expand and sustain the growth.
- Supporting Infrastructure: Various support mechanisms that play asignificant role in the life cycle of startups which include incubators, science and technology parks, business development centers etc. Lack of access to such support mechanisms increases the risk of failure.
- Lack of Awareness in Markets: Startups fail due to lack of attention to limitations in the markets. The environment for a startup is usually more difficult than for an established firm due to uniqueness of the product.
- Complex Regulatory Environment: Starting a business requires a number of permissions from government agencies. Despite the perceptible change in recent years, it is still a challenge to register a company. Further, regulations pertaining to labor laws, intellectual property rights, dispute resolution etc. are rigorous in India.
- Lack of Mentor ship:Lack of proper guidance and mentor ship is one of the biggest problems that exist in the Indian startup ecosystem. Most of startups have brilliant ideas and/or products, but have little or no industry, business and market experience to get the products to the market.
- Lack of an Effective Branding Strategy:Absence of an effective branding strategy is another issue that prevents startups from flourishing. Branding is of paramount importance for startups as it gives an identity and occupies a space in the consumers’ minds.
Recent Regulatory Reforms towards Startups
Aatmanirbhar Bharat ARISE-Atal New India Challenge (ANIC) Program
- Launched on 9th September, 2020, the Aatmanirbhar Bharat ARISE-Atal New India Challenge (ANIC) Program, launched by the government, is a national initiative to promote research & innovation and increase competitiveness of Indian startups and Micro, Small and Medium Enterprises (MSMEs).
- Launched by Atal Innovation Mission (AIM) in July, 2020, it is an Incubator Capabilities Enhancement program for a Robust Ecosystem focused on creating high performing Startups.
- It has been designed to act as a growth support for AIM’s Atal and Established Incubators across the country.
National Startup Advisory Council
- In January, 2020, the government created National Startup Advisory Council to advise the Government on measures needed to build a strong ecosystem for nurturing innovation and startups in the country to drive sustainable economic growth and generate large scale employment opportunities.
- Announced by the government on 15th August 2015, the initiative aims to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities.
- To achieve the objectives of the Startup India initiative, an Action Plan for Startup India on 16th January 2016. The Action Plan comprises of 19 action items spanning across areas such as “Simplification and handholding”, “Funding support and incentives” and “Industry academia partnership and incubation”.
Make in India
- Launched in 2014, its ultimate aim is to transform India into a global design and manufacturing hub. This initiative facilitates investments, skill development, encourages innovation, protect intellectual property rights to achieve this objective.
- Through this scheme, startups get loans from the banks to set up, grow and stabilize their businesses.
SETU (Self-Employment and Talent Utilization) Fund
- Government has allotted Rs 1,000 Cr in order to create opportunities for self-employment and new jobs mainly in technology-driven domains.
- Government launched e-biz portal that integrates 14 regulatory permissions and licenses at one source to enable faster clearances and improve the ease of doing business in India.
- Startups are currently an important asset that needs to be supported through fast-paced infrastructure growth. Additionally, the government must push banks and other financial institutions to give low-interest loans to innovative startups. These startups must be given free training so that they can survive the competitive market.
- India has a huge demographic base. The lack of necessary skills and education are preventing India from realising the human capital’s potential. Reforms in these aspects is a need of the hour.
- As part collective initiative, the Centre and States would need to work together and build required infrastructure, dedicated system, pool of intellect and financial resources for all age groups.
- Reforms must be made to the current restrictive legislative structure and regulatory norms in a way that allows the startups to flourish and develop across the country.
Global Energy Review-2020
- On 1st May, 2020, the International Energy Agency (IEA) released a report Global Energy Review, detailing the impact of Covid-19 on global energy demands and CO2 emissions.
Global Energy Scenario
- Global coal demand was hit the hardest, falling by almost 8% compared with the first quarter of 2019.
- Three reasons converged to explain this drop. China – a coal-based economy – was the country the hardest hit by Covid19; cheap gas and continued growth in renewables elsewhere challenged coal; and mild weather also capped coal use.
- As a consequence of global lockdown measures,
- Road transport in regions mobility – 57% of global oil demand – has declined at an unprecedented scale.with lockdowns in place has dropped between 50% and 75%, with global average road transport activity almost falling to 50% of the 2019 level by the end of March 2020.
- The impact of the pandemic on gas demand was more moderate, at around 2%, as gas-based economies were not strongly affected in the first quarter of 2020.
- Renewable energy has so far been the energy source most resilient to Covid19 lockdown measures
- Renewable electricity has been largely unaffected while demand has fallen for other uses of renewable energy and the total global use of renewable energy is expected to rise by 1 per cent by 2020.
- Lockdown measures have significantly reduced electricity demand, affecting in turn the power mix.
- Increases in residential demand were far outweighed by reductions in commercial and industrial operations.
- Demand reductions have lifted the share of renewables in electricity supply, as their output is largely unaffected by demand. Demand fell for all other sources of electricity, including coal, gas and nuclear power.
- Global nuclear power generation fell by about 3% in Q1 2020 compared with Q1 2019, pulled down by electricity demand reductions.
- For 2020, it is estimated that nuclear power declines by 2.5% from 2019 due to lower demand and delays for planned maintenance and construction of several projects.
Carbon Dioxide Emission
- Carbon emissions were five percent lower than during the same time in 2019.
- This year saw an 8 percent decline in coal emissions, 4.5 percent from oil and 2.3 per cent from natural gas.
- Emissions declined the most in regions which were impacted the highest by the disease.
- Overall, the emissions decline in 2020 could be 8 percent lower than in 2019, which would be the lowest level of emissions since 2010 and the largest level of emission reduction — six times larger than what was witnessed during the 2009 financial crisis, and twice as large as the combined total of all reductions witnessed since World War II.
Indian Energy Scenario
- India, which is one of the IEA association countries, has seen a reduction in its energy demands by over 30 percent as a result of the nation-wide lockdown.
- Moreover, in India, where “economic growth and power production are slowing significantly”, the demand for coal will decline steeply.
- The energy industry is feeling the financial impact throughout value chains, with most energy companies losing substantial revenues.
- In effect, they are being hit twice, first by lower demand for their products – including oil, gas, coal and electricity – and again by lower prices for these products.
- The smallest impact is on coal: as the supply chain is less affected by logistical constraints than oil and natural gas.
- Low prices and low demand in all subsectors will leave energy companies with weakened financial positions and often strained balance sheets.
- Business lines that are insulated to a degree from market signals, including those with renewable electricity projects, will emerge in the best financial position.
- Across the energy sector, the Covid19 crisis will have a significant impact on investment. This could raise concerns about energy security because investment is necessary even if global energy demand takes a long time to return to the pre-crisis trajectory.
- The Covid‑19 crisis is also influencing the path for clean energy transitions.
Suggestions for Policy Makers
- Policymakers and regulators need to ensure that operational, maintenance and safety expenditures are prioritised and appropriately maintained.
- Governments will play a major role in shaping the energy sector’s recovery from the Covid‑19 crisis, just as they have long been in the driving seat in orienting energy investment.
- In particular, the design of economic stimulus packages presents a major opportunity for governments to link economic recovery efforts with clean energy transitions – and steer the energy system onto a more sustainable path.
- While the clean energy transitions and stimulus discussions are gathering momentum, a co-ordinated policy effort will be needed to harvest its opportunities and lead to a more modern, cleaner and more resilient energy sector for all.
International Energy Agency
Important Reports Published by IEA
Corruption Perceptions Index – 2019
- On 23rd January, 2020, Corruption Perceptions Index (CPI) was released by the Transparency International, which reveals that a majority of countries are showing little to no improvement in tackling corruption.
About the Index
- First launched in 1995, the Corruption Perceptions Index has been widely credited with putting the issue of corruption on the international policy agenda.
- The index ranks 180 countries and territories by their perceived levels of public sector corruption, according to experts and business people.
- It uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean. More than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43.
- The 2019 CPI draws on 13 surveys and expert assessments to measure public sector corruption in 180 countries and territories, giving each a score from zero (highly corrupt) to 100 (very clean).
- The top countries are New Zealand and Denmark, with scores of 87 each, followed by Finland (86), Singapore (85), Sweden (85) and Switzerland (85).
- The bottom countries are Somalia, South Sudan and Syria with scores of 9, 12 and 13, respectively. These countries are closely followed by Yemen (15), Venezuela (16), Sudan (16), Equatorial Guinea (16) and Afghanistan(16).
Source: Transparency International
Regional Findings and their Challenges
- With an average score of 43 for the fourth consecutive year on the Corruption Perceptions Index (CPI), the Americas region fails to make significant progress in the fight against corruption.
- The region faces significant challenges from political leaders acting in their own self-interest at the expense of the citizens they serve.
- Specifically, political party financing and electoral integrity are big challenges.
- A regional average of 45, after many consecutive years of an average score of 44, illustrates general stagnation across the Asia Pacific. Despite the presence of high performers like New Zealand (87), Singapore (85), Australia (77), Hong Kong (76) and Japan (73), the Asia Pacific region hasn’t witnessed substantial progress in anti-corruption efforts or results.
- India’s ranking in the Corruption Perceptions Index (CPI-2019) has slipped from 78 to 80 compared to the previous year. Its score of 41 out of 100 remains the same.
- Many countries see economic openness as a way forward, however, governments across the region, continue to restrict participation in public affairs, silence dissenting voices and keep decision-making out of public scrutiny.
- Opaque political financing, lobbying by corporate interests has caused control of corruption to fall in democracies like India and Australia, notes Transparency International.
Eastern Europe and Central Asia Region
- With an average score of 35, this region is the second-lowest performing region on the CPI.
- Across the region, countries experience limited separation of powers, abuse of state resources for electoral purposes, opaque political party financing and conflicts of interest.
Middle East and North Africa Region
- With the same average score of 39 as last year, there is little progress in improving control of corruption in the Middle East and North Africa region.
- The region faces significant corruption challenges that highlight a lack of political integrity.
- Separation of powers is another challenge.
- As the lowest-scoring region on the CPI, with an average of 32, Sub-Saharan Africa’s performance paints a bleak picture of inaction against corruption.
- Across the region, money is used to win elections, consolidate power and further personal interests.
- Tackling corruption in the context of fragile states presents unique challenges, as fragility is both a cause and an effect of any downward trends in development.
Western Europe & European Union
- Fourteen of the top 20 countries in this year’s CPI are from Western Europe and the European Union (EU), including nine countries from the EU alone.
- Issues of conflict of interest, abuse of state resources for electoral purposes, insufficient disclosure of political party and campaign financing, and a lack of media independence are prevalent in the region.
- Most post-communist EU member states are struggling to address corruption effectively.
Transparency International recommends the following measures in order to prevent corruptions and foster the integrity of political systems:
- Managing Conflicts of Interest: Governments should reduce the risk of undue influence in policy-making by tightening controls over financial and other interests of government officials.
- Control Political Financing: In order to prevent excessive money and influence in politics, governments should improve and properly enforce campaign finance regulations. Political parties should also disclose their sources of income, assets and loans, and governments should empower oversight agencies with stronger mandates and appropriate resources.
- Strengthen Electoral Integrity: For democracy to be effective against corruption, governments must ensure that elections are free and fair. Preventing and sanctioning vote-buying and misinformation campaigns are essential to rebuilding trust in government and ensuring that citizens can use their vote to punish corrupt politicians.
- Regulate Lobbying Activities: Governments should promote open and meaningful access to decision-making and consult a wider range of groups, beyond well-resourced lobbyists and a few private interests. Lobbying activities should be public and easily accessible.
- Tackle Preferential Treatment: Governments should create mechanisms to ensure that service delivery and public resource allocation are not driven by personal connections or are biased towards special interest groups at the expense of the overall public good.
- Empower Citizens: Governments should protect civil liberties and political rights, including freedom of speech, expression and association. Governments should engage civil society and protect citizens, activists, whistleblowers and journalists in monitoring and exposing corruption.
- Reinforce Checks and Balances: Governments must promote the separation of powers, strengthen judicial independence and preserve checks and balances.
- On 22nd January, 2020, the Economist Intelligence Unit (EIU) released the Democracy Index under the title-A Year of Democratic Setbacks and Popular Protest.
- First published year 2006, Democracy Index provides a snapshot of the state of democracy worldwide for 165 independent states and two territories.
- It based on the ratings for 60 indicators, grouped into five categories:
- Electoral process and pluralism
- Civil liberties
- Functioning of government
- Political participation
- Political culture.
- The category indexes are based on the sum of the indicator scores in the category, converted to a 0 to 10 scale. Adjustments to the category scores are made if countries do not score a 1 in the following critical areas for democracy:
- Whether national elections are free and fair
- The security of voters
- The influence of foreign powers on government
- The capability of the civil service to implement policies.
- The index values are used to place countries within one of four types of regime:
- Full democracies (scores of 8-10)
- Flawed democracies ( score of 6 to 7.9)
- Hybrid regimes (scores of 4 to 5.9)
- Authoritarian regimes (scores below 4)
Worst Performance Since 2006
- The average global score fell from 48 in 2018 to 5.44 (on a scale of 0-10). This is the worst score since the index was first produced in 2006.
- The decline in the average global score was driven by sharp regressions in Latin America and Sub-Saharan Africa. Latin America was the worst-performing region in 2019.
- The average score for Asia and Australasia, eastern Europe, North America and western Europe stagnated in 2019.
- Almost one-half (48.4%) of the world’s population live in a democracy of some sort, although only 5.7% reside in a full democracy.
- The overall list was topped by Norway, followed by Iceland and Sweden, New Zealand and
- Three countries-Chile, France and Portugal, moved from the “flawed democracy” category to become “full democracies”.
- Other “full democracies” include Germany, the United Kingdom and France.
- The United States, with a score of 7.96 that is just below the benchmark for a “full democracy”, is a “flawed democracy”.
- India, too, with a score of 7.23, find its place in the “flawed democracy” category, along with the Bangladesh (5.88).
- Pakistan, with a score of 4.25, is categorised as a “hybrid democracy”.
- China having score of 2.26 and North Korea (bottom-ranked with 1.08) are categorised as “authoritarian regimes”.
SELECTED COUNTRIES, 2019
Source: Indian Express
- The world’s biggest democracy slipped 10 places in the 2019 global ranking to 51st place.
- India’s overall score fell from 7.23 to 6.9, on a scale of 0-10, within a year (2018-2019) — the country’s lowest since 2006.
- The Index categorises India under “flawed democracies”, countries that hold free and fair elections and where basic civil liberties are respected, but have significant weaknesses in aspects of democracy, such as problems in governance, an under developed political culture and low levels of political participation.
- India was graded in electoral process and pluralism (8.67), government functioning (6.79), political participation (6.67), political culture (5.63) and civil liberties (6.76).
Source: The Hindu
Causes of Democratic Regression
The primary cause of the democratic regression was an erosion of civil liberties in the country. According to the report, the following events led to Democratic Regression in the country.
- Revocation of the special status of Jammu and Kashmir with the repeal of Articles 370 and 35 and the various security measures that followed the bifurcation of the state including deployment of large number of troops, restriction of internet access and placing local leaders under house arrest.
- The NRC exercise in Assam excluded 1.9 million people from the final list, and that the vast majority of people excluded from the NRC being Muslims.
- According to the report, the Citizenship Amendment Act law has enraged the large Muslim population, stoked communal tensions and generated large protests in major cities, across the country.
World Employment And Social Outlook-Trends 2020
- On 20th January, 2020, the International Labour Organisation (ILO) released the World Employment and Social Outlook: Trends 2020 (WESO) report, which examines employment and social trends for the world as a whole and for each region, and analyses structural transformation and implications for future job quality.
- The annual WESO report analyses key labour market issues, including unemployment, labour underutilisation, working poverty,income inequality, labour income share and factors that exclude people from decent work.
- More than 470 million people worldwide are currently unemployed or underemployed, warning that a lack of access to decent jobs was contributing to social unrest.
- Global unemployment has been roughly stable for the last nine years but slowing global economic growth means that, as the global labour force increases, not enough new jobs are being generated to absorb new entrants to the labour market.
- More than 60% of the global workforce currently works in the informal economy, often toiling for substandard wages and lacking basic social protections.
Declining Global Labour Income
- Unequal access to decent work translates into high and persistent income inequalities.
- In high income countries, the decreasing labour income of the self-employed, compared with that of employees, is a key driver of the aggregate decline.
Work Related Inequality
- Persisting and substantial work-related inequalities and exclusion are preventing the people from finding decent work and better futures. This in turn, has profound and worrying implications for social cohesion.
Decent Work Deficit
- Significant inequalities in access to decent work opportunities and outcomes continue to be a persistent feature of current labour markets. Decent work deficits are especially pronounced in the informal economy.
- Contemporary labour markets also continue to be characterized by gender inequality. In 2019, the female labour force participation rate was just 47 percent, 27 percentage points below the male rate (at 74 percent). There is strong regional variation in gender disparities in access to employment.
Rising Working Poverty
- In 2019, more than 630 million people— a fifth of the global working population lived in so-called working poverty, meaning they made less than $3.20 per day in purchasing power.
Trade Restrictions and Protectionism
- The report cautions that intensifying trade restrictions and protectionism could have a significant impact on employment, both directly and indirectly.
- According to the report, a moderate or extreme working poverty is expected to edge up in 2020-21 in developing countries, increasing the obstacles to achieving Sustainable Development Goal 1 on eradicating poverty everywhere by 2030.
- Projected lower economic growth and the lack of inclusiveness are very likely to impair the ability of lower-income countries to reduce poverty and improve working conditions.
- The report provides an overview of global and regional trends in employment, unemployment, labour force participation and productivity.
- This report also presents the labour market situation and prospects of rural and urban workers, which is a key line of segmentation that divides the economic and social prospects among the world’s workforce.
- It also examines income and social developments, and provides an indicator of social unrest.
- Countries all over the world must ensure that economic growth and development occurs in a way that leads to the reduction of poverty and better working conditions in low-income countries, through structural transformation, technological upgrading and diversification.
International Labour Organization (ILO)
Headquarters: Geneva, Switzerland
Global Investment Trend Monitor Report
- On 20th January, 2020, the United Nations Conference on Trade and Development (UNCTAD) released its Global Investment Trend Monitor Report.
Global Foreign Direct Investment Trend
- Global foreign direct investment (FDI) remained flat in 2019, a 1% decline from a revised $1.41 trillion in 2018. It was attributed to weaker macroeconomic performance and policy uncertainty for investors, including trade tensions.
- FDI flows to developed countries remained at a historically low level, decreasing by a further 6%.
- FDI to the European Union (EU) fell by 15%.
- FDI increased by 16% in Latin America and the Caribbean
- Africa continued to register a modest rise (+3%) while flows to developing Asia fell by 6%. Despite a decline, flows to developing Asia continued to account for one-third of global FDI in 2019.
- There was zero-growth of flows to United States, which received USD 251 billion FDI in 2019, as compared to USD 254 billion in 2018.Despite this, the United States remained the largest recipient of FDI, followed by China and Singapore.
- In West Asia, FDI flows declined by 16% in 2018.
FDI in South East Asia
- South-East Asia continued to be the region’s growth engine. It recorded a 10% increase in FDI to $60 billion.
- The growth was driven by India, with a 16% increase in inflows. The majority went into services industries, including information technology.
- Inflows into Bangladesh and Pakistan declined by 6% and 20% respectively.
FDI Inflows by Region (2018 and 2019)
Cross-Border Mergers & Acquisitions (M&As)
- As per the report, Cross-border M&As decreased by 40% in 2019– the lowest level since 2014. European M&A sales were halved due to slowdown in Eurozone growth and Brexit.
- Deals targeting United States companies remained significant – accounting for 31% of total M&As.
- The fall in global cross-border M&As sales was deepest in the services sector, followed by manufacturing and primary sector. In particular, sales of assets related to financial and insurance activities and chemicals fell sharply.
- The decline in M&A values was driven also by a lower number of megadeals. In 2019, there were 30 megadeals above $5 billion compared to 39 in 2018.
Future Prospects: Growth with Significant Risks
- FDI flows are still expected to rise moderately in 2020, as current projections show the global economy to improve some what from its weakest performance since the global financial crisis in 2009.
- GDP growth, gross fixed capital formation and trade are projected to rise, both at the global level and, especially, in several large emerging markets.
- However, significant risks persist, including high debt accumulation among emerging and developing economies, geopolitical risks and concerns about a further shift towards protectionist policies.
United Nations Conference on Trade and Development (UNCTAD)
Headquarters: Geneva, Switzerland
What is Foreign Direct Investment?
- Foreign direct investment (FDI) is when a company takes controlling ownership in a business entity in another country.
- FDI is when an individual or business owns 10% or more of a foreign company. If an investor owns less than 10%, the International Monetary Fund defines it as part of his or her stock portfolio.
- With FDI, foreign companies are directly involved with day-to-day operations in the other country. This means they aren’t just bringing money with them, but also knowledge, skills and technology.
Where is FDI made?
- FDIs are commonly made in open economies that offer a skilled workforce and above-average growth prospects for the investor, as opposed to tightly regulated economies. FDI frequently involves more than just a capital investment. It may include provisions of management or technology as well.
- The key feature of FDI is that it establishes either effective control of or at least substantial influence over the decision-making of a foreign business.
- Horizontal FDI: A horizontal foreign direct investment refers to the investor establishing the same type of business operation in a foreign country as it operates in its home country. For example, McDonald’s opening restaurants in Japan would be considered horizontal FDI.
- Vertical FDI: It is one in which different but related business activities from the investor's main business are established or acquired in a foreign country. For example, McDonald’s could purchase a large-scale farm in Canada to produce meat for their restaurants.
- Conglomerate: It is one where a company makes a foreign investment in a business that is unrelated to its existing business in its home country. An example of this would be if Virgin Group, which is based in the United Kingdom, acquired a clothing line in France.
- Increased Employment and Economic Growth
- Human Resource Development
- Improved Capital Flow
- Increase in Exports
- Development of Backward Areas
- Access to Global Technological Developments
- Exchange Rate Stability
- Stimulation of Economic Development
- Creation of a Competitive Market, Consumers Benefit
- Uncertainty in Government Policies
- Loss of Domestic Investment
- Unethical Access to Local Markets
- Exploitation of the Resources of Host Countries
- Profit Repatriation
First Global Social Mobility Report –2020
- On 20th January, 2020, the World Economic Forum (WEF) released its first-ever Global Social Mobility Report to provide a much needed assessment of the current state of the paths to social mobility around the world.
- It seeks to measure parameters necessary for creating societies where every person has the same opportunity to fulfill his potential in life irrespective of socio-economic background.
- Not with standing fast global growth, inequalities have been growing across the world. The rise of inequality has not only created massive social unrest but also adversely affected the global consensus on the kind of economic policies that countries follow.
- Social mobility has become the pressing issue of modern life, and as the index highlights, while major improvements have been made in some areas, notably extreme poverty, in others, the situation is deteriorating.
About the Index
- The WEF’s Global Social Mobility Index assesses the 82 economies on “10 pillars” spread across the following five key dimensions of social mobility:
- Education (access, quality and equity, life-long learning)
- Work (opportunities, wages, conditions)
- Protection and Institutions (social protection and inclusive institutions)
Need for Social Mobility Agenda to Tackle Inequality
- The Index shows that very few economies have the right conditions to foster social mobility and consequently income inequalities have become entrenched. On average, across key developed and developing economies, the top 10% of earners have nearly 3.5 times the income of the bottom 40%.
Greatest Global Challenges
- Low wages, lack of social protection and poor lifelong learning systems are the greatest challenges globally.
- In many countries, the root cause of low social mobility is related to economic development issues that go beyond income—namely, qualityof and access to education, access to work, poor working conditions and health disparities. Digital leapfrogging will not happen unless these issues are addressed decisively.
Fourth Industrial Revolution, Globalization and Technology
- Globalization and the Fourth Industrial Revolution have generated significant benefits, but have also exacerbated inequalities. The Fourth Industrial Revolution, and with it, continuing and future disruption to labour markets, will likely compound differences in social mobility for those countries unprepared to take advantage of new opportunities.
Increasing Social Mobility
- If countries included in this report were to increase their social mobility index score by 10 points, this would result in an additional GDP growth of 41% by 2030 in addition to vast social cohesion benefits.
- Countries that adhere to the “stakeholder capitalism” model tend to perform better than countries with a focus on “shareholder value maximization” or “state capitalism”.
- Denmark tops the rankings with a social mobility score of 85.2, closely followed by Finland (83.6), Norway (83.6), Sweden (83.5) and Iceland (82.7).
- Cote d'Ivoire (82nd rank) is last on the Index preceded by Senegal, Cameron, Pakistan and Bangladesh.
- Among the world’s large emerging economies, the Russian Federation is the most socially mobile of the BRICS grouping, ranking 39th, with a score of 64 points, followed by the China (45th), Brazil (60th), India (76th) and South Africa (77th).
Top Gainer in Social Mobility
- The economy with the most to gain is China, whose economy could grow by an extra USD 103 billion a year or USD 1 trillion dollars over the decade.
- USA would make the second-largest gains, at USD 87 billion a year.
- Next is India, followed by Japan, Germany, Russia, Indonesia, Brazil, the UK and France.
- India is ranked at 76th out of 82 economies. It ranks 41st in lifelong learning and 53rd in working conditions.
- The Areas of improvement for India include social protection (76th) and fair wage distribution (79th).
Source: Indian Express
- Benchmarking Tool: The index benchmarks a country’s ability to foster social mobility across its population. It measures the extent to which fundamental drivers—both old and new—of equality of opportunity are in place as well as the enabling environment factors that help translate these drivers into actual social mobility out comes.
- Guidance to Policy-Makers: The Index is designed to equip policy-makers and other leaders seeking to take informed action on a reinvigorated social mobility agenda with a useful tool to identify areas for improving social mobility and promoting equally shared opportunities in their economies and societies.
- Tool to Improve Social Mobility: It aims to point the way toward the need for establishing a new standard to identify priority policy actions and business practices focused on improving social mobility, as part of a global shift towards stakeholder capitalism and equitable and sustainable economies.
Suggestive Measures to Increase Social Mobility
Creating a New Financing Model
Forging a New Social Contract
Improving Education and Embracing Lifelong Learning
Improving Health Outcomes
Role of Businesses
What is Social Mobility?
- Social mobility can be understood as the movement in personal circumstances either “upwards” or “downwards” of an individual in relation to those of their parents. In absolute terms, it is the ability of a child to experience a better life than their parents.
- On the other hand, relative social mobility is an assessment of the impact of socio-economic background on an individual’s outcomes in life.
- It can be measured against a number of outcomes ranging from health to educational achievement and income.
- The concept was introduced by the Russian-born American sociologist and political activist Pitirim Sorokin in his book “Social and Cultural Mobility.”
Dimensions of Social Mobility
- Intra-generational Mobility: The ability for an individual to move between socio-economic classes within their own lifetime.
- Intergenerational Mobility: The ability for a family group to move up or down the socio-economic ladder across the span of one or more generations.
- Absolute Income Mobility: The ability for an individual to earn, in real terms, as much as or more than their parents at the same age.
- Absolute Educational Mobility: The ability for an individual to attain higher education levels than their parents.
- Relative Income Mobility: How much of an individual’s income is determined by their parent’s income.
- Relative Educational Mobility: How much of an individual’s educational attainment is determined by their parent’s educational attainment.
Factors Responsible Social Mobility
- Motivation: Each individual has a desire not only to have a better way of living but also to improve his social status. This desiremotivates and without such motivation social mobility is not possible.
- Achievements and Failures: Remark able achievements affect status. For instance, instance,a poor man who has acquired wealth or anun known writer who has won a literary prize will improve his status.
- Education: Education not only helps an individual to acquire knowledge and works like a passport to a higher prestige – occupational/ positional. Education facilitates upward mobility,where as lack of education can lead to downward mobility.
- Skills and Training: Each society makes provision to impart skill and training to the younger generation. Skill and training facilitate in theim provement of social position, thus leading to social mobility.
- Migration: People migrate from one place to another either dueto push or pull factors. Migration affects one’s position and results in social mobility; it can be both ways – upward or downward.
- Industrialization: The industrial revolution ushered new social system in which people were given status according to their ability and training. There fore, industrialization facilitates social mobility.
- Urbanization: Urban settlements offer lots of work and educational facilities to people keeping aside their ascribed status. There fore, urbanization facilitates social mobility by removing those factors which hinder social mobility.
- Legislation: Enactment of new laws also facilitates social mobility.Legislations like right to education to all, property rights to women and secularisation and so on help people to grab opportunities and prosper, therefore resulting in social mobility.
Market Study On E-commerce In India
- On 8th January, 2020, the Competition Commission of India (CCI) released a Report under the title-Market Study on E-commerce in India.
- The study was initiated by the CCI in April 2019 with a view to better understand the functioning of e-commerce in India and its implications for markets and competition.
- The study covered the three broad categories of e-commerce in consumer goods (mobiles, lifestyle, electrical & electronic appliances, and grocery), accommodation services and food services.
- To study market trends with a particular focus on emerging distribution methods and strategies in response to ecommerce
- To understand business practices and contractual provisions in ecommerce, their underlying rationale and implications for competition
- To identify impediments to competition, if any, relating to ecommerce
- To ascertain enforcement and advocacy priorities for the Commission in e-commerce
Growing E-commerce Sector
- India is the fastest growing market for the e-commerce sector growing at an annual rate of 51 percent, the highest in the world.
- E-commerce in India has attracted investors from across the world.
Increasing Price Competition
- The study points to an increased intensity of price competition across the categories studied.
- On the one hand, consumers enjoy increased price transparency and the consequent ease of price-comparison, on the other hand it enables sellers to monitor competitor’s prices on a real-time basis and use the same as an input in setting their own prices.
Strategic Response to e-Commerce
- Businesses across sectors and at the various levels of supply chains were found to be gearing up to avail the opportunities of e-commerce while also equipping themselves to address the attendant challenges.
Role of Online Marketplace Platforms
- The study reveals that third-party online marketplaces play a central role in e-commerce in India. An estimated 64% of digital retail trade in India is through online platforms.
- While large brands/retailers own and manage popular stand alone websites, online commerce in India is driven largely bythird party platforms.
- Discounts can harm competition when used as an exclusionary device by enterprises with market power.
- The concern raised by sellers/service providers with respect to discounts offered on/by marketplace platforms is threefold - i) discounts are discriminatory ii) discounts imposed by platforms in exercise of their superior bargaining power adversely affects the business models of the service providers iii) discounts push prices to below-cost levels in certain product categories and impair the offline small retailer’s ability to compete.
- Exclusive agreements raise potential competition concern when used as an exclusionary tactic to foreclose competition torivals or to impede entry.
- Exclusive agreements may make rival platforms incur significant additional cost to induce the brands/service providers to give up the exclusive contract with the major platform.
Platform Parity Restrictions
- Platform parity clauses imposed by incumbent platforms may serve as a barrier to entry by such low-cost platforms.
- A review of the anti-trust literature on price parity clauses show that these restrictions can give rise to competition concerns.
Lack of Platform Neutrality
- Lack of transparency in the platform’s functioning and practices can on the one hand allow for possible distortion of competition on the platforms and on the other hand, consumer choice may not reflect consumer preference with perfect information.
- The three elements, which according to the business users of the platforms are susceptible to manipulation/exploitation by platforms, are search results,seller’s/service provider’s data and user review/rating mechanisms.
Unfair Platform-to-Business Contract Terms
- The study has also found that online platforms exercised superior bargaining position by imposing unfair contract terms on sellers, which led to growing unease and tensionin platform-business relations.
Recommended Transparency Measures
Collection, Use and Sharing of Data
User Review and Rating Mechanism
Revision in Contract Terms
- The study has helped gather useful insights and information on the key features of e-commerce in India, the different business models of e-commerce players, and the various aspects of commercial arrangements between market participants involved in e-commerce.
- In addition, it also provides an opportunity to learn from business enterprises on how they are responding to the advent of digital trade and has helped gauge the key parameters of competition in digital commerce.
Competition Commission of India (CCI)
CCI was established on 14 October, 2003, under the Competition Act, 2002 for the administration, implementation and enforcement of the Act, and was duly constituted in March 2009.