The Hindu Editorial Analysis | 24th Feb’20 | PDF Download

Keep up the pressure

• The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
•  The decision by global watchdog, the Financial Action Task Force (FATF), at its plenary in Paris last week, to keep Pakistan on its “greylist” for monitoring its record against terror financing was no surprise.
• June 2018: Pakistan government was given 27-point action plan.

Financial Action Task Force is an inter-governmental body established in

1. 1989
2. 1990
3. 1991
4. 1992

• The 39-member group that includes India decided to extend Pakistan’s September 2019 deadline until June 2020.
• Actions Pakistan still needs to carry out include tightening security and banking restrictions to block loopholes through which designated groups including the Taliban, al-Qaeda, Lashkar-e-Taiba and Jaish-e-Mohammad access funding.
•  It also calls on Pakistan to begin prosecutions against terrorists and sanction entities that are flouting the UNSC’s rules for designated terror organisations.
• The FATF Chairman’s final comment says Pakistan must comply with all 27-action points — it has cleared about 14 — in the next four months or face financial strictures by being placed on the “blacklist”.
• Pakistan is one of 18 countries on the greylist; Iran and North Korea are on the blacklist. Pakistan believes it might be able to slip through the deadlines if it is able to ensure that three countries, China, Turkey and Malaysia, which have pledged support, veto any move to blacklist it.
•  Pakistan also appears to have benefited from playing a role in U.S.-Taliban talks as it seems the U.S. and its allies are not enforcing the deadline to complete the action plan as before.
• Pakistan will feel immunity from the process. The Pakistani court’s hurried conviction of LeT chief Hafiz Saeed on terror financing charges just before the Paris meet appeared to be a command performance, and its shocking submission to the FATF that it cannot trace Masood Azhar must be scrutinised further by the international body.
• U.S. President Trump’s India visit: it is necessary that India raises the need to continue to hold Pakistan to account on terror.

Limits of funding

• That research and development in India is inadequate, in terms of money, personnel and ambition, isn’t news.
• The founders of independent India sought to base its development on science and technology.
•  Even at the expense of universal, free primary education, the country privileged esoteric research such as atomic energy and space over industrial technology, and tertiary research institutions — the IITs — over the spread of technical education in local languages.
• Indian R&D remain beholden to the government.
• Publicly-funded research has always been encouraged to reinvent the wheel and customise technology to Indian realities, whereas private companies and industrial firms have rarely been incentivised to develop their own intellectual property.
• It is only after the turn of the millennium that policymakers have pondered on coaxing the private sector to invest more in R&D.
• Public institutions contribute the lion’s share of R&D investment.
•  In 2004-05, the private sector accounted for 28% of research spend; it was 40% in 2016-17.
•  In most advanced economies, private R&D accounts for the bulk of investment in R&D.
•  Moreover, relative to its income, India underspends on R&D compared to what the U.S. and China did when it had income levels comparable to India’s now.
• Given this history, the Department of Science and Technology is mooting a fund that will match the private contributions in R&D.
• A ₹40-crore target is on the anvil and the idea is that the private sector — Indian firms and foreign companies with Indian subsidiaries — would fund scientists in key academic institutions.
• When ‘Startup India’ and ‘Make in India’ were the buzzwords in the early years of the Modi government, there were attempts to have venture capitalists and government departments involved in scientific research, to pool money and invest in technology start-ups.
• But, unfortunately, this has not resulted in investment in creating intellectual property.
• Too much of India’s research investment is expended on a small pool of scientists in a limited number of institutions.
• The private sector has an extremely limited capacity to absorb scientists and a limited risk-appetite to invest in futuristic technology.
• Private research funding is also boosted more by partnerships among companies rather than by centrally-funded research programmes.
• While private funding is increasing, it still has not reached a level where major central funding can make a significant impact.
•  Many CSIR laboratories have had a long history of collaborating with companies to develop and transfer technology to industry, but here too, restrictions on how intellectual property and licence fees can be shared abound.
• Unless there is greater participation and cooperation at smaller levels among companies and government, central schemes may not be fruitful.

Youth can be a clear advantage for India

• India’s population is among the youngest in an ageing world. By 2022, the median age in India will be 28 years; in comparison, it will be 37 in China and the United States, 45 in western Europe, and 49 in Japan.
•  India’s working-age population has numerically outstripped its non-working age population.
• A demographic dividend said to have commenced around 2004-05, is available for close to five decades.
• This is an extraordinary opportunity. There are, however, 2 caveats.
•  India’s population heterogeneity ensures that this window of demographic dividend becomes available at different times in different States.
•  While Kerala’s population is already ageing, in Bihar the working-age cohort is predicted to continue increasing till 2051.
• By 2031, the overall size of our vast working-age population would have declined in 11 of the 22 major States.
• Harnessing the demographic dividend will depend upon the employability of the working-age population, their health, education, vocational training and skills, besides appropriate land and labour policies, as well as good governance.
• India will gain from its demographic opportunity only if policies and programmes are aligned to this demographic shift. Demography is not destiny.
•  There is the consensus now that among other factors, it was the demographic dividend that powered respectively the Asian economies of Japan, China, and South Korea to spectacular growth.
• UNICEF 2019 reports that at least 47% of Indian youth are not on track to have the education and skills necessary for employment in 2030.
•  While over 95% of India’s children attend primary school, the National Family Health Surveys (completed up to 2015-16) confirm that poor infrastructure in government schools, malnutrition, and scarcity of trained teachers have ensured poor learning outcomes.

• Even while India aspires to become a knowledge economy, millions of young people are getting left behind.
• A coordinated incentive structure prompting States to adopt a broadly uniform public school system focusing on equity and quality will yield a knowledge society faster than privatising school education can accomplish.
•  Most districts now have excellent broadband connectivity.
•  Modernise school curricula, systematically invest in teacher training so that they grow in their jobs to assume leadership roles, while moving beyond the tyranny of the syllabus.
• Growing female literacy is not translating into relevant and marketable skills.
• Flexible entry and exit policies for women into virtual classrooms, and into modules for open digital training, and vocational education would help them access contemporary vocations.
•  The elderly population in India is projected to double from 8.6% in 2011, to 16% in 2040.
•  This will sharply reduce the per capita availability of hospital beds in India across all major States unless investments in health systems address these infirmities.
• We need to assign 70% of health sector budgets to integrate and strengthen primary and integrated public health-care services and systems up to district hospital levels, include outpatient department and diagnostic services in every health insurance model adopted, and implement in ‘mission mode’ the Report of the High-Level Group, 2019, submitted to the XV Finance Commission.
• The policies that we adopt, and their effective implementation will ensure that the our demographic dividend, a time-limited opportunity, becomes a boon for India.

 Batting for the downtrodden

• The Supreme Court has ruled that quotas and reservations for promotions for government jobs are not a fundamental right, setting aside a Uttarakhand High Court order of 2012.
• The top court has also said that States could not be forced to make such provisions without data showing imbalance in the representation of certain communities in public service.
• One expected the Court to be aware about the underrepresentation of Dalits in ownership of land and enterprise, literacy, and access to civil rights, and their over-representation in poverty, malnutrition, and social isolation and atrocities.
•  The SCs suffer from low ownership of capital assets, illiteracy, and lack of access to civil rights.
•  In 2013, of the total wealth in the country, the share of SCs was only 5% in rural areas against their population share of almost 17%.
•  In terms of their share in agricultural land, it was only 5% while in building assets it was 8%.
•  On the other hand, the high castes owned 39% of total natural wealth — 41% land and 39% building assets.
•  In 2015, the enrolment rate in higher education was 20% for SCs compared to 43% for higher castes.
•  In 2014-15, almost half of Dalits depended on casual wage labour when compared to 11% of high castes. Most importantly, caste discrimination and untouchability continue to be practised widely despite anti-discriminatory laws.
•   Many SC farmers admit that they face discrimination in the buying of inputs and sale of outputs. Hindu slavery goes back to at least 600 BC. Manu recognised slavery in 200 BC; it continued to be practised for about 2,500 years before it was banned by the British in 1843.
• Slavery is long gone but its legacy persists in the form of bonded, attached and forced labour of Dalits in many parts of the country.
• Unaccountability and caste slavery have completely crippled Dalits. Therefore, the reservation policy is necessary as a safeguard against discrimination and to secure their fair share.
•  Since the high castes have benefited at the cost of the former untouchables, there is a legal and moral justification that they compensate for the losses they have inflicted on the latter for centuries.

 Making the super-rich pay their fair share

• Transparency seems to have become taboo in India. Financial Secrecy Index by the Tax Justice Network, a U.K.-based financial advocacy group.
• Arrangement with Switzerland: automatic exchange of tax and financial information
•  Capital flight out of India by Indian elites and foreigners alike has been undermining our country’s development for decades.
•  These multinationals may be making profits in India but can easily declare those profits in a low tax jurisdiction like Hong Kong and justify that transaction as a payment for the use of a patent.
• According to one estimate, this strategy represented a loss of $27.5 billion in 2014 for the Indian government, up from $142 million in 2000.
• It is now beyond obvious that India cannot revive its economy without increasing public spending, and so increasing its fiscal resources is essential.
•  Government of India must also assume a more vocal role in the international debate about how to make multinationals pay their fair share of taxes.
•  This means continuing to appeal for a United Nations tax body.

The Organisation for Economic Co-operation and Development (OECD) was officially born on 30 September _______

1. 1945
2. 1961
3. 1991
4. 2000

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