India close to Hindu Rate of Growth: Raghuram Rajan

Central idea: Former RBI Governor Raghuram Rajan has warned that India is “dangerously close to the Hindu rate of growth”.

What is Hindu Rate of Growth?

• The “Hindu Rate of Growth” is a term used to describe the slow growth rate of the Indian economy between the 1950s and the 1980s.
• It was coined by the Indian economist Raj Krishna in the 1970s.
• During this period, the Indian economy grew at an average rate of around 3.5% per year, which was much lower than other developing countries like South Korea, Taiwan, and Hong Kong.
• The term is considered controversial as it suggests that the slow growth rate was a result of cultural or religious factors rather than economic policies and structural issues.
• However, the term is still used in academic and policy discussions to refer to the slow growth of the Indian economy during this period.

Features of Hindu Rate of Growth

The then features which led to the coining of this term were-

• Low GDP growth rate: The term refers to the period from the 1950s to the 1980s when India’s economy grew at an average rate of around 3.5% per year, which was much lower than other developing countries.
• Slow Industrialization: The industrial sector was dominated by a few public sector companies, and the private sector was heavily regulated.
• Stagnant Agriculture: There was little investment in agriculture, and the sector was not given much priority in government policies.
• License Raj: India had a socialist economic model with heavy government regulation. The License Raj system required permits and licenses for businesses, creating a bureaucratic and corrupt system that hindered innovation and entrepreneurship.
• Import Substitution: India followed a policy of import substitution, where the government tried to develop domestic industries by protecting them from foreign competition. This led to a lack of competition, low quality of products, and high prices.
• Inefficient Public Sector: The public sector dominated the economy, but it was inefficient, unproductive, and plagued by corruption. Public sector companies were often overstaffed and poorly managed, resulting in low productivity.
• Lack of Foreign Investment: India was not attractive to foreign investors during this period, and there was little foreign investment in the economy. The government imposed strict controls on foreign investment, and the regulatory environment was not conducive to foreign investment.

Concerns flagged by Rajan

Rajan noted that India’s economic growth rate had been declining even before the COVID-19 pandemic hit the country.

(a) Decline in GDP growth rate

• India’s economic growth rate had fallen to 4.5% in the September quarter of 2019, before the pandemic hit in early 2020.
• During the pandemic, the Indian economy contracted sharply, with GDP falling by 7.7% in the 2020-21 fiscal year.
• The economy has rebounded somewhat, with the IMF forecasting GDP growth of 9.5% for the current fiscal year.

(b) Lower growth potential than hyped

• However, Rajan noted that India’s potential growth rate is likely to be lower than in the past, due to factors such as an aging population, a decline in the working-age population, and sluggish investment.
• He also cited the country’s poor performance on human development indicators, such as education and health, as a constraint on growth.

Key suggestions

• Rajan called for measures to address the structural factors that are holding back growth, such as investment in infrastructure and education, and improving the ease of doing business in India.
• He also emphasized the importance of macroeconomic stability and maintaining fiscal discipline, to avoid inflation and currency depreciation.
• He also called for measures to address inequality, such as better targeting of subsidies to those who need them most.

Conclusion

• Overall, Rajan’s remarks suggest that India faces significant challenges in maintaining high levels of economic growth, and that structural reforms will be needed to address these challenges.

UN seals historic deal to save oceans

GS Paper – 1 (Geography)

Wrapping up almost two decades of negotiations; UN member countries, including India reached a historic agreement to protect the world’s oceans and the species that dwell in them from exploitation. It is the first international agreement to protect the high seas, which cover 60% of the earth’s surface, regulate the climate and generate half of the oxygen we breathe.

What

1. The high seas begin at the border of countries’ exclusive economic zones and fall under the jurisdiction of no country.
2. The treaty aims to make 30% of the high seas “protected waters” by 2030 and help establish a conference of parties for further negotiations.
3. Protected waters mean there will be restrictions on fishing, what routes ships can use, and exploration activities like deep-sea mining.
4. The talks that began in 2007 have been hampered by disagreements even till the last minute. A major stumbling block was how to share marine genetic resources available vastly in the deep sea, like sponges, krill, corals, seaweeds, bacteria and minerals.
5. Industrialised nations target these resources for use in medicines, cosmetics, making electric vehicle batteries, and other industrial purposes. The treaty will give all countries equitable rights over fishing, shipping and research.
6. The first UN convention on the law of the sea was signed some 40 years back, which didn’t address the emerging scenario where every country is eyeing resources to tackle climate change.

 SWAMIH investment fund

The Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund I launched in November2019 has raised Rs 15,530 crore so far to provide priority debt financing for the completion of stressed, brownfield and Real Estate Regulatory Authority (RERA)-registered residential projects that fall in the affordable, mid-income housing category. SWAMIH has so far provided final approval to about 130 projects with sanctions worth over Rs 12,000 crore.

What is the SWAMIH investment fund?

• It is a social impact fund specifically formed for completing stressed and stalled residential projects.
• The Fund is sponsored by the Ministry of Finance, Government of India, and is managed by SBICAP Ventures Ltd., a State Bank Group company.
• The Fund considers first-time developers, established developers with troubled projects, developers with a poor track record of stalled projects, customer complaints and NPA accounts, and even projects where there are litigation issues, it is considered as the lender of last resort for distressed projects.
• The Fund’s presence in a project often acts as a catalyst for better collections and sales primarily in projects that were delayed for years.
• According to the Finance Ministry, SWAMIH Fund has one of the largest domestic real estate private equity teams focused only on funding and monitoring the completion of stressed housing projects.

Projects financed by the Fund:

• SWAMIH has so far provided final approval to about 130 projects with sanctions worth over Rs 12,000 crore.
• The Fund has completed 20,557 homes and aims to complete over 81,000 homes in the next three years across 30 tier 1 and 2 cities.
• A government release saidthe Fund has been able to complete construction in 26 projects and generate returns for its investors.
• The Fund has also played a critical role in the growth of many ancillary industries in real estate and infrastructure sector having successfully unlocked liquidity of more than Rs. 35,000 crore.

Flashback:

For Affordable Housing:

Pradhan Mantri Awas Yojana (PMAY Urban)

• The Indian government introduced PMAY to help the Economic Weaker Section (EWS) of the society to afford a home.
• PMAY-Urban would help via a subsidy of up to ₹2.67 lakhs for those who are eligible.
• Based on the sub-section eligibility, the loan amount and the size of the house, the eligibility for the scheme is determined.
• It gives preference to females and senior citizens, with senior citizens getting ground floor accommodation.

Pradhan Mantri Awas Yojana (PMAY Gramin)

1. PMAY Gramin was initially introduced as the Indira Awaas Yojana.
2.  This government housing scheme was introduced to help homeless families and give them pucca houses with all the necessary basic facilities by 2024.
3. The PMAY Gramin programme is just one of the several government programmes designed to end poverty.
4. This programme halves the cost of building new homes with the state while providing financial assistance to low-income families. Families living in kutcha or decaying houses will benefit from this plan.

 Pigeons lead to diseases in humans

Recently, the Thane Municipal Corporation (TMC) in Maharashtra put up several posters warning people against feeding pigeons in order to spread public awareness about hypersensitive pneumonia, a lung disease which is contracted by living near pigeons. The posters warned that a fine of Rs 500 will be levied on those found feeding pigeons.

What kind of diseases can pigeons spread to humans?

1. Pigeons may lead to various kinds of lung diseases, ranging from respiratory allergies to serious infections.
2. The latter can lead to Pneumonia-Psittacosis, which is a bacterial infection and may result in death in 15 per cent of those affected by it if untreated.
3. There is also Histoplasmosis, which is a fungal infection with high mortality rates. Cryptococcal infections may lead to pulmonary or meningeal infections in some people with an immunocompromised host.

How does residing near pigeons lead to disease among humans?

1. Being in the proximity of birds including pigeons can lead to diseases, especially if they are in the home as companion birds or in heavy numbers in the vicinity of the home with droppings and feathers accumulating nearby.
2. The breathable antigen arising from the bird droppings and feathers goes into the lung and leads to an immunological reaction, which damages the lung.
3. That pigeons lead to allergies and infections is well-established and Pigeon Breeder’s Disease is a common cause of Hypersensitivity Pneumonitis.

 Ship-launched version of BrahMos missile

The Navy successfully test-fired the ship-launched version of BrahMos supersonic missile with an indigenous seeker and booster in the Arabian Sea on 5 March 2023. The Indian Navy carried out a successful precision strike in the Arabian Sea by ship launched BrahMos missile with DRDO-designed indigenous seeker and booster, reinforcing our commitment towards Aatmanirbharta in defence.

What

1. The anti-ship version of the BrahMos cruise missile was successfully test-fired jointly by the Navy and the Andaman and Nicobar Command in April last year.
2. BrahMos Aerospace Pvt Ltd – a joint venture of India and Russia – makes supersonic cruise missile which has a speed of 2.8 Mach or about three times the speed of sound.
3. The missiles can be launched from a range of platforms such as submarines, ships, aircraft, or land.
4. BrahMos Aerospace is also developing the BrahMos NG, a compact version of the missile.

Flashback

1. In January last year, India signed a $375 million deal with the Philippines for supplying the missile.
2. India is also eyeing other countries such as South Africa, Saudi Arabia, UAE and Egypt to sell the missiles.

Indian Tea Industry

India has taken several steps to boost the output, create a niche brand for Indian tea, and ensure the welfare of the families associated with the tea industry.

About Indian Tea Industry:

• India is the 2nd largest tea producer and largest black tea producer after China and 4th largest exporter of Tea in the world.
• India is also the largest consumer of black tea and accounts for 18% of the total World tea consumption.
• The main tea-growing regions are in the Northeast (including Assam) and in north Bengal (Darjeeling district and the Dooars region).
• Tea is also grown on a large scale in the Nilgiris in south India.

Ideal climate condition for tea cultivation:

• Originate in tropical and subtropical climates.
  • Major tea growing regions are mainly concentrated in Asia, Africa, South America.
• Tea requires cool to warm temperatures with at least 5 hours of sunlight per day.
  • The average annual temperature for tea plants to grow well is in the range of 15 – 23°C.
  • The rainfall needed is between 150-200 cm.

Market Size of Tea Industry in India:

• In 2020, nearly 10 million tons of tea was consumed in the country.
• The market in the country is projected to witness a further growth in the forecast period of 2022-2027, growing at a CAGR of 4.2%.
• In 2026, the tea industry in India is expected to attain 1.40 million tons.

Tag for Geographical Indication (GI)

• The first GI tag product was Darjeeling Tea, also known as the “Champagne of teas” due to its floral aroma.
• Green and white tea, the other two Darjeeling tea varieties, also have GI tags.
• The Indian tea industry is being developed and promoted by the Tea Board of India.

About Tea Board of India:

• The genesis of the Tea Board India dates back to 1903 when the Indian Tea Cess Bill was passed.
• The present Tea Board was set up under Section 4 of the Tea Act 1953.
• It is functioning as a statutory body of the Central Government under the Ministry of Commerce.
• The Board is constituted of 31 members (including Chairman) drawn from Members of Parliament, tea producers, tea traders, tea brokers, consumers, and representatives of Governments from the principal tea producing states, and trade unions .
• HQ: Kolkata
• The Board is reconstituted every three years.
  • Earlier, the Tea Board had offices in Cairo and Kuwait.
  • But these two offices were relocated to Dubai.

Issues associated with the Indian Tea sector:

• Stiff competition and improved standards in the world market – due to low product prices from Kenya and other countries – increasing demand for organic tea and quality assurance that entails environmental justice.
• Decline in productivity and quality – Tea bushes must be replanted every five years, but most Tea bushes older than 20 yrs.; uneven rainfall due to climate change – is affecting the productivity and quality of Indian Tea leading to lower prices at Tea auctions.
• Poor worker conditions and low wages – despite the provisions of the Plantation Labor Act, 1951 most workers and their families live in unsanitary conditions and receive low wages – this issue needs to be addressed given the fact that “starvation deaths” in North Bengal caught the international media attention.
• Small Tea Growers – the challenges faced by the Small Tea Growers’ sector is as follows
  • Not getting the right green leaf price
  • Unlike large estates, STG’s are not able to capitalize on scale and marketing of product as a collective is difficult – since it is unorganized
  • Issue of workers’ rights – since STG’s are not governed by the PLA, 1951
• Most of them are not recognized by the Tea Board of India due to landownership regulations and related procedural problems – this means lesser data available on the state of the STG’s making it difficult for policy coordination
• Some global factors like the decline in demand from European markets in the wake of the Russia-Ukraine war have compounded the problem.

Suggestive measures:

• The One District and One Product (ODOP) program can aid in promoting Indian Tea’s fame.
• The “AROMA” of tea needs to be improved in order for the industry to become profitable, viable, and sustainable.
• Support small farmers to raise production to satisfy domestic and international demand while improving quality and sustainability.
• Create infrastructure to boost exports and concentrate on high value markets like the EU, Canada, South America, and the Middle East to re-energize.
• Promote GI tea and organic tea using brand marketing and promotion.
• Modernization: To help local supply networks be strengthened and tea producers to become self-sufficient
• Adaptability: Focus on the importance of a risk proof ecosystem, that is, the need for sustainable solutions to make tea plantations meet the challenges of climate change.

India being the second largest producer of Tea has numerous opportunities to develop the Tea Industry as it is providing employment to a huge number of people in the north eastern states. A win-win for all and therefore a truly sustainable and transparent model — is the key requirement for a highly labour-centric industry like tea plantations.