The Hindu Editorial Analysis | 22nd Oct '19

Table of Contents

New rules to regulate social media by January

Internet has emerged as a potent tool that can cause unimaginable disruption to the democratic polity, the government has told the Supreme Court.
The Ministry of Information Technology said in an affidavit that rules to regulate social media intermediaries needed to be revised. The regulatory regime had to be ramped up considering the “ever-growing threats to individual rights and the nation’s integrity, sovereignty, and security.”
It said the new Information Technology Intermediaries Guidelines (Amendment) Rules would be notified by January 15, 2020.
The affidavit was in response to a September 24 order of the court to appraise it of the status of framing of the new rules and the timeline for their notification.
The order came on a petition filed by the social media giant Facebook for transfer of pleas concerning the linking of social media accounts to Aadhaar.
Social media intermediaries like Facebook and WhatsApp have argued that this would lead to loss of individual privacy. The Tamil Nadu government — one of the cases is pending in the Madras High Court — has argued that the social media should be more transparent and cooperative with the police for purposes of crime detection, national security, etc.
The Centre said Internet had led to development, but it had also been a platform for spreading hate and fake news. Internet had led to an exponential rise in “antinational activities.”
The government said in the “last few years there has been an enormous increase in the use of social media, and with lower Internet tariffs, availability of smart devices and last-mile connectivity, more and more people in India are becoming part of the Internet/social media platforms.”
“If on the one hand technology has led to economic growth and societal development, on the other hand there has been an exponential rise in hate speech, fake news, public order, anti-national activities, defamatory postings, and other unlawful activities using Internet/social media platforms,” the Centre told the apex court.

Winter session from Nov. 18 to Dec. 13

Session to see many controversial Bills
The winter session of Parliament will be held from November 18 to December 13. The Parliamentary Affairs Ministry on Monday communicated the dates to the Lok Sabha and the Rajya Sabha Secretariats.
The 20-day session is likely to see many controversial Bills, including the Citizenship Amendment Bill. The legislation, which was introduced in the Modi government’s previous stint, lapsed as it could not be tabled in the Rajya Sabha. The Home Ministry now has to frame a new law and get it cleared by the Cabinet well in time for the session.
In its previous avatar, the Bill sought to amend the Citizenship Act, 1955 to make it easier for Hindus, Sikhs, Buddhists, Jains, Parsis and Christians from Afghanistan, Bangladesh and Pakistan to seek Indian citizenship. The legislation deliberately omitted “Muslims”. Coupled with the National Register of Citizens, the Opposition has slammed the law, claiming that it is an effort to disenfranchise Muslims. The Northeast States too have been stridently opposing it since it will legalise migrants from the neighbouring countries.
Apart from this, two crucial ordinances are on the list to be converted into law during the session. One ordinance, reducing the corporate tax rate for new and domestic manufacturing companies, was issued in September to give effect to amendments to the Income Tax Act, 1961 and the Finance Act, 2019.
The second ordinance banned the sale, manufacture and storage of e-cigarettes and similar products. “We will raise all the relevant issues, including the dismal state of the economy as highlighted by the IMF and other institutions,” said the Congress’s floor leader of the Lok Sabha, Adhir Ranjan Chaudhary.
With the government comfortably placed in the Rajya Sabha, with the BJP at 83 and the Congress at 45, the Upper House will not pose a challenge to any controversial legislation. This winter session, unlike the usual norm, is a short one. In the past two years, winter sessions have been convened on November 21 and ended in January first week.

Avoid oil imports from Malaysia: trade body

Advisory follows its PM’s J&K remarks
In line with the Union Government’s strong objections to Malaysia’s “unprovoked” remarks and criticism on India’s move to abrogate Article 370 in Jammu and Kashmir, India’s apex oil trade body Solvent Extractors’ Association of India (SEA) on Monday advised all its members to avoid imports from the southeast Asian nation amid prevailing tensions between the two countries.
The association issued a short advisory asking its members, including importer-crushers and processors, to avoid importing palm oil from Malaysia till clarity emerges.
“Our government has not taken kindly to the unprovoked pronouncements by the Malaysian Prime Minister and is contemplating some retaliatory action. It would be in fitness of things, as a responsible Indian vegetable oil industry, we avoid purchasing of palm oil from Malaysia till such time clarity on the way forward emerges from the Indian government.”

Palm oil imports

India’s total annual palm oil import is approximately 9 million tonne out of which around 3-3.5 million tonne is imported from Malaysia and rest from Indonesia, another major palm oil producing country.
Palm oil accounts for almost two-thirds of the country’s total edible oil imports.
In the first nine months of 2019, India was the biggest buyer of Malaysian palm oil, taking 3.9 million tonnes, as per the industry data.
“In your own interest as well as a mark of solidarity with our nation, we should avoid purchases from Malaysia for the time being. We trust [you] would heed our advice,” Atul Chaturvedi, president, SEA stated in the advisory.
The row was triggered when speaking at the 74th session of the UNGA, Malaysian Prime Minister Mahathir Bin Mohamad had reportedly remarked that Jammu and Kashmir “has been invaded and occupied,” a statement that angered the Union government.
Subsequently, government sources hinted at looking for ways to limit palm oil imports and placing restrictions on other goods being shipped from the country.
The Ministry of Commerce and Industries held several meetings to discuss ways to introduce restrictions. Avoid oil imports from Malaysia: trade body Advisory follows its PM’s J&K remarks

Ministers highlight stronger relationship with the U.S.

India likely to increase oil and gas imports to $10 bn: Goyal
Indian Ministers sought to highlight a strong relationship with the U.S., with Petroleum Minister Dharmendra Pradhan on Monday saying that India is likely to increase its oil and gas imports from the U.S. to $10 billion in the current year. Commerce Minister Piyush Goyal said India and the U.S. had settled the broad contours of a trade deal, which would likely be announced soon.
The Ministers were speaking at separate sessions of the Second Annual India Leadership Summit by the U.S. India Strategic Partnership Forum.
“India has already increased its engagement with the U.S. on oil and gas,” Mr. Pradhan said. “Before 2014, we did not import any oil and gas from the U.S. By 2018-19, we started importing about $6 billion worth from the U.S., and this may go up to $10 billion in 2019-20. This is due to the gas-based economy this government is setting up in India.”
Later in the day, Mr. Goyal said that Indo-U.S. relations were “better than ever” on a country level as well as leadership level. He further said that a trade deal would have been announced by now if not for the delays due to U.S. trade discussions with other countries.
“By now, we would have been in a position to announce something, but counterpart in the U.S. was first caught up with talks with Japan, and then with China,” Mr. Goyal said. “The broad contours have been settled and we can hopefully come out with the first set of agreements soon.” The Commerce Minister added that India and the U.S. had the potential to work out a bilateral agreement that went beyond the “mere tinkering” they were doing today.
Delhi records over 40% of total crimes
The Capital has recorded over 40% of total crimes reported across 19 metropolitan cities in the county, according to data released by the National Crime Records Bureau.
Crimes increased by 6.87% with 2,13,141 cases registered in 2017 as compared to 2016 which had 1,99,445 cases.

Mains Question

Give an account of Asian Growth history in last 200 years and ongoing growth projections. Define Position of India in it.(250 W)
Two centuries ago, in 1820, Asia accounted for two-thirds of the world’s population and more than a half of world income. It also contributed more than a half of manufacturing production in the world economy. The subsequent decline of Asia was attributable to its integration with the world economy shaped by colonialism and driven by imperialism. By 1962, its share in world income had plummeted to 15%, while its share in world manufacturing had dropped to 6%.
Even in 1970, Asia was the poorest continent. Its demographic and social indicators of development, among the worst anywhere, epitomised its underdevelopment. Gunnar Myrdal, who published his magnum opus Asian Drama in 1968, was deeply pessimistic about the continent’s development prospects.

Key metrics

In the half century since then, Asia has witnessed a profound transformation in terms of economic progress of nations and living conditions of people. By 2016, it accounted for 30% of world income, 40% of world manufacturing, and over a third of world trade. Its income per capita also converged towards the world average, although the convergence was at best modest compared with industrialised countries because the initial income gap was so enormous. This transformation was unequal across countries and between people. Even so, predicting it would have required an imagination to run wild. Indeed, Asia’s economic transformation in this short time span is almost unprecedented in history.
It is essential to recognise the diversity of Asia. There were marked differences between countries in geographical size, embedded histories, colonial legacies, nationalist movements, initial conditions, natural resource endowments, population size, income levels and political systems. The reliance on markets and degree of openness in economies varied greatly across countries and over time.
The politics too ranged widely from authoritarian regimes or oligarchies to political democracies. So did ideologies, from communism to state capitalism and capitalism. Development outcomes differed across space and over time. There were different paths to development, because there were no universal solutions, magic wands, or silver bullets. Despite such diversity, there are common discernible patterns.
For Asian countries, political independence, which restored their economic autonomy and enabled them to pursue their national development objectives, motivated and drove this transformation. And, unlike Latin America and Africa, most Asian countries did have a long history of well-structured states and cultures, which were not entirely destroyed by colonialism.
Economic growth drove development. Growth rates of GDP and GDP per capita in Asia were stunning and far higher than elsewhere in the world. Rising investment and savings rates combined with the spread of education were the underlying factors. Growth was driven by rapid industrialisation, often export-led. There was a virtuous circle of cumulative causation, wherever rapid investment growth coincided in time with rapid export growth, leading to rapid GDP growth. This was associated with structural changes in the composition of output and employment. The process was also supported by a coordination of economic policies across sectors and over time.

Unequal outcomes

However, development outcomes were unequal across sub-regions and countries. East Asia was the leader and South Asia was the laggard, with Southeast Asia in the middle, while progress in West Asia did not match its high-income levels. In just 50 years, South Korea, Taiwan and Singapore joined the league of industrialised nations. China was a star performer throughout, making impressive strides in development after 1990.
The economic dynamism of Indonesia, Malaysia, and Thailand waned after the Asian financial crisis. The growth performance of India, Bangladesh and Vietnam was most impressive during the past quarter century, although India and Bangladesh did not match the rest of Asia in social progress. In comparison, the performance of Sri Lanka was respectable, while that of Turkey was average; but that of Pakistan and the Philippines was relatively poor.
Rising per capita incomes transformed social indicators of development, as literacy rates and life expectancy rose everywhere. Rapid economic growth led to a massive reduction in absolute poverty. But the scale of absolute poverty that persists, despite unprecedented growth, is just as striking as the sharp reduction therein. The poverty reduction could have been much greater but for the rising inequality. Inequality between people within countries rose almost everywhere, while the gap between the richest and poorest countries in Asia remains awesome.
Governments performed a vital role, ranging from leader to catalyst or supporter, in the half-century economic transformation of Asia, while their willingness and ability to do so depended on the nature of the state, which in turn was shaped by politics. Success at development in Asia was about managing this evolving relationship between states and markets, complements rather than substitutes, by finding the right balance in their respective roles that also changed over time. Countries where governments could not perform this role lagged behind in development.
The developmental states in South Korea, Taiwan and Singapore coordinated policies across sectors over time in pursuit of national development objectives, using carrot and stick to implement their agenda, and were able to become industrialised nations in such a short time span. China emulated these developmental states with much success, and Vietnam followed on the same path two decades later, as both countries have strong one-party communist governments that could coordinate and implement policies.
It is not possible to replicate these states elsewhere in Asia. But other countries did manage to evolve some institutional arrangements, even if less effective, that were conducive to industrialisation and development. In some of these countries, the institutionalised checks-and-balances of political democracies were crucial to making governments more development-oriented and people-friendly.

Openness, Industrialisation

Economic openness performed a critical supportive role in Asian development, wherever it was in the form of strategic integration with, rather than passive insertion into, the world economy. While openness was necessary for successful industrialisation, it was not sufficient. Openness facilitated industrialisation only when combined with industrial policy. Clearly, success at industrialisation in Asia was driven by sensible industrial policy that was implemented by effective governments. In future, however, technological learning and technological capabilities are also essential to provide the foundations for sustaining industrialisation.
The countries in Asia that modified, adapted and contextualised their reform agenda, while calibrating the sequence of, and the speed at which, economic reforms were introduced, did well.
They did not hesitate to use heterodox or unorthodox policies, or experiment and innovate, for their national development objectives. Learning and unlearning were part of a process in which economic policies were seen as means to the end of development, and not ends in themselves.

Challenges ahead

The rise of Asia represents the beginnings of a shift in the balance of economic power in the world and some erosion in the political hegemony of the West.
The future will be shaped partly by how Asia exploits the opportunities and meets the challenges and partly by how the present difficult economic and political conjuncture in the world unfolds.
Even so, by 2030, per capita income in Asia, relative to the world, will return to its level in 1820. In terms of per capita income, however, it will be nowhere near as rich as the United States or Europe. Thus, Asian countries would emerge as world powers, without the income levels of rich countries.
Yet, it is plausible to suggest that in circa 2050, a century after the end of colonial rule, Asia will account for more than a half of world income and will be home to more than half the people on earth.
It will thus have an economic and political significance in the world that would have been difficult to imagine 50 years ago, even if it was the reality in 1820.
After having been in denial mode for months, the government with its substantive cut in corporate tax, publicly admitted, through belatedly, what was widely known and experienced about the sluggish economy. The audacious tax cut, that was effected last month, was apparently done in the hope that it would kick-start the sagging economy. By bringing down corporate tax to the global level, the government has undoubtedly sent a strong and positive message which has cheered the stock market and hit the media headlines globally.
Though the immediate tax bonanza would boost the bottom lines of only Indian corporates, its message to foreign investors too was positive. Against the backdrop of China losing its sheen as a preferred global investment destination, the prospects of attracting sizeable foreign capital investment in the Indian economy are indeed brighter than ever before especially in the context of the trade war between China and the United States.
Describing the corporate tax cut as historic, the Prime Minister said it would give a stimulus to the ‘Make in India’ campaign, attract private investment from across the globe, improve the competitiveness of India’s private sector, create more jobs, and result in a win-win situation for the 130 crore Indians.
The country’s corporate honchos and the stock market loudly echoed the sentiments of the Prime Minister and cheered the government’s move.
For an economy raring to become a $5-trillion one by 2025, sacrifice of tax revenue of a lakh-and-a-half crore rupees in favour of the corporate sector could be justified politically and economically, provided it realises the ambitious expectations spelt out by the Prime Minister. But as euphoria over the unprecedented step is evaporating, it is time to closely look at its possible impact both in the immediate and the long term in the context of the current sluggishness in the economy.
Action, reaction and reality
By now it is widely accepted that the slump in demand for industrial and consumer goods that range from heavy equipment to automobiles to soaps and biscuits have starkly reflected the reality of a slowdown. The government woke up to this reality, though belatedly, and swallowing its earlier dubious explanations such as changing consumer preferences and the like for the downturn in demand, injected with alacrity a massive dose of adrenalin in the body corporate hoping that it would release the animal spirit in the economy. The capital market was enthused, the Sensex soared and corporates exuded confidence. Now the million dollar question is whether the revival of the animal spirit would spur an increase in capital investment either for expansion of existing operations or for the launch of green field projects.
Regrettably, the prospects are bleak for the same reasons on account of which the economy slumped in the first instance — lack of demand that was evident in the market for quite some time. For obvious reasons, higher levels of surplus income with corporates will not necessarily translate into a higher level of investment and a consequent spurt in economic growth.
A high level of demand for products and services is the sine qua non of higher levels of investment and consequent economic growth.
Agriculture and allied sectors and micro, small and medium enterprises (MSMEs) — not corporates — are still the strongest drivers of our economy. Agriculture and allied sectors which not only contribute to our food security but to approximately over 50% employment have been on the decline in spite of several ad hoc policy pronouncements to revive them. At the same time, MSMEs suffering for a long time on account of institutional constraints including inadequate and timely availability of credit were crippled after demonetisation.

Some recommendations

The report of the expert committee on MSMEs that was set up by the Reserve Bank of India has made significant recommendations. These include
constituting a government-sponsored “fund of funds” to support venture capital funds and
a credit guarantee fund which would go a long way in enabling their growth. Employment generation has been dismally low and unemployment has reached an all time high despite the government’s feeble protestations to the contrary. These are issues that are fundamental to the economy, and without addressing them directly and systematically, expecting higher levels of growth is patently unrealistic. The latest reports of Moody’s, the International Monetary Fund and the Asian Development Bank confirm this gloomy assessment.
Reinvigorating the National Rural Employment Guarantee Programme, and making it demand-driven as originally envisaged could be a concrete and immediate step to generate greater purchasing power in the hands of the people to accelerate demand and consumption, especially in the rural areas.
Higher levels of public spending for creating much-needed infrastructure in several sectors would not only generate employment but also create productive assets. For instance, spending on buildings, roads, bridges, schools, hospitals and waterbodies would have multiple benefits to the economy. Well-calibrated policy interventions and targeted incentives to select industries specially with high export potential would push MSMEs to a higher growth trajectory.
If speedily and efficiently implemented, these mundane measures could pull the sagging economy out of the quagmire, especially in the near term, and hopefully incentivise and facilitate the much anticipated spurt in corporate investment which apparently the government was aiming at while announcing the tax bonanza.