CURRENT AFFAIRS – 13/05/2023

CURRENT AFFAIRS – 13/05/2023

Welfare spending has been getting a regular pruning

This year’s Union Budget was criticised by experts over a decline in allocations for welfare schemes in real terms, at a time of post-COVID-19 recovery when welfare spending should have been a priority. Similarly, last year’s Budget too ignored social spending in favour of capital expenditure.

The analysis below, based on Budget papers, shows that the trend of declining central government spending on critical social schemes is not new, having begun when the National Democratic Alliance (NDA) government came to power in 2014. Since then, central allocations for welfare schemes and sectors that ensure basic rights have declined as a proportion of GDP.

Saksham Anganwadi and Poshan 2.0 aims to address child malnutrition and hunger. From 2021-22, the Anganwadi programme (ICDS) was merged with POSHAN Abhiyaan and a nutrition scheme for adolescent girls. Even with more components, its allocation went down from 0.13% of GDP in 2014-15 to 0.07% in 2023-24 — almost half of what it was.

According to National Family Health Survey (NFHS)-5 data, the percentage of anaemic, underweight and stunted children in India is 67%, 32% and 36%, respectively, which is among the worst in the world. Yet, funds meant to address malnutrition are being slashed with abandon.

Another important nutrition scheme is the mid-day meal (MDM) scheme, covering almost 12 crore children. Evidence shows that the scheme has led to an improvement in class attendance, learning as well as nutritional outcomes and reduced stunting in children. However, the Budget allocation for MDM decreased by 50% as a share of GDP, from 0.08% in 2014-15 to 0.04% in 2023-2024. In 2021 the Ministry of Finance rejected a breakfast at school plan citing funds constraint, a plan that has shown promising results in Tamil Nadu within a year.

Lastly, the PM Matru Vandana Yojana (PMMVY) provides maternity benefits as a conditional cash transfer of ₹5,000 to women in the unorganised sector. To cover all women and births as per the National Food Security Act (NFSA) mandate, the scheme needs around ₹14,000 crore, but the PMMVY Budget is yet to cross ₹3,000 crore.

Working class distress worsens

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and NFSA (Food Subsidy) have also declined as a share of GDP since 2014. MGNREGA guarantees 100 days of employment to every rural household whereas the NFSA provides subsidised grains to over 80 crore people.

MGNREGA expenditure as a share of GDP went from 0.26% in 2014-15 to 0.20% in 2023-24. For NFSA it went to 0.65% this year from 0.94% in 2014-15. As experts point out, MGNREGA and the Public Distribution System were key to averting disaster during the pandemic. Both schemes saw record demand in 2020-21; MGNREGA saw 8.55 crore households avail employment, while Public Distribution System (PDS) grain offtake was 93 million tonnes, leading to an expenditure of 2.73% and 0.56% of GDP on NFSA and MGNREGA, respectively. However, since 2020-21, NFSA and MGNREGA allocations have declined rapidly as a share of GDP.

As the economist, Jean Drèze, highlighted recently, real wages of casual workers grew at less than 1% per year from 2014-15 to 2021-22 according to Reserve Bank of India data. Prof. Drèze argues that this worrying trend calls for a reorientation of economic policies, with a sharper focus on drivers of wage growth.

The National Social Assistance Programme (NSAP) is a scheme that provides pensions to the elderly, widows, and disabled individuals below the poverty line and monetary assistance to families that have lost a breadwinner. As a share of GDP, its allocations went down from 0.06% in 2014-15 to 0.03% in 2023-24. The share steadily declined over this period except for 2020-21 when it was 0.21% with COVID relief in cash included in the NSAP.

The NSAP cuts go against advice from 60-odd economists who have been urging the government for long to increase the paltry pension amounts of ₹200 per month for the elderly and ₹300 for widows. The pensions have not increased since 2006.

As a share of GDP, central expenditure on school education (primary and secondary) has steadily declined from 0.37% in 2014-15 to 0.23% 2023-24. It is surprising to see no increase here even after the pandemic which had catastrophic effects including a surge in primary dropout rates because of over 70 weeks of school closures — double the global average.

Only marginal health-care gains

Health-care expenditure, unlike others, rose under the NDA government. The share of central health expenditure in GDP went up from 0.25% in 2014-15 to 0.30% this year. While this is a welcome change, it is too little too late in a post-COVID world.

According to the latest State of the World’s Children report by UNICEF, India has the lowest vaccination rates in South Asia. Furthermore, India’s out-of-pocket expenditure on health remains much higher than the global average, pushing millions into poverty each year.

For these schemes/sectors for which comparable data was available, the allocations saw a noticeable increase from 2004-05 to 2013-14. The share of GDP remained stable for MDM, food subsidy and health care, tripled for ICDS, doubled for NSAP, and increased by 45% for school education with a combined increase from 1.48% of GDP in 2004-05 to 1.8% in 2014-15. But then it dropped to 1.32% this year under the NDA government.

On the other hand, the NDA government was relatively successful in delivering tangible goods — a policy paradigm Subramanian et al. (2021) refer to as the New Welfarism of the Right. They show that considerable progress has been made in access to cooking fuel, electricity, and financial inclusion of women, with an accelerated pace of improvement since 2015. The authors argue that there are rich electoral gains in new welfarism as tangible goods and services are easier to deliver, monitor, and attribute to the central government when compared with traditional government services such as primary education and child nutrition.

A stagnant HDI rank

It is only fair to expect that as a country’s GDP grows, its expenditure on welfare programmes should grow proportionately. In fact, going by international experience, the share of social expenditure in GDP should be rising over time in India. The vital importance of social security programmes was acknowledged by the government when it raised the Budget allocation for all the aforementioned schemes during the pandemic year to 4.3% of GDP; but we are now back to just 1.5%.

According to the World Social Protection Report by the International Labour Organization, only 24.8% of Indians are covered by at least one social security scheme against the Asia-Pacific average of 44%. Its result can be clearly seen in India’s stagnant Human Development Index rank at 132 and rising malnutrition levels. It is difficult for India to be a superpower with an uneducated and unhealthy population.

If fiscal prudence is a worry, we suggest the government recover the ₹4.3 lakh crore of revenue foregone due to tax concessions during NDA-1 and another ₹1.85 lakh crore foregone between 2019-21 after lowering corporate tax rates in 2019.

An analysis of the trend of welfare expenditure on key schemes and sectors since 2014  is revealing.

Welcome initiative

AYUSH collaboration with ICMR for scientific validation is right step

In a welcome move, the Ministry of AYUSH and ICMR have at last joined hands to undertake quality human clinical trials to generate evidence on the benefits of using ayurveda along with modern medicine (evidence-based medicine) in treating certain disease conditions of national importance. With its decades of experience in conducting human clinical trials, it makes eminent sense to rope in the ICMR to design and conduct these trials. To begin with, the collaboration will be restricted to ayurveda. The other systems of AYUSH — yoga, unani, siddha and homoeopathy — may be included, and each system will be tested together with modern medicine when the central councils of the respective AYUSH systems are ready to work with the ICMR. An expert committee will soon decide the area/disease conditions to be included for detailed clinical testing using both ayurveda and modern medicine. Initially, clinical trials for each disease may have two arms — modern medicine as the standard of care as well as a combination of modern medicine and ayurveda. The arm that uses both ayurveda and modern medicine will, if at all, only be able to validate the superiority of combining the two for better outcomes. Scientific validation of superior outcomes of combined therapy using ayurveda and modern medicine will form the basis on which integrated medicine will be offered to patients. Encouraging trial outcomes might probably serve as a starting point to undertake further trials using ayurveda interventions alone to evaluate their effectiveness and understand the mechanism of action; this is currently not within the ambit of the agreement.

While the initiative may right away not provide scientific validation of ayurveda interventions in treating disease conditions when used singularly, it is the first major step in evidence-based approach of validating medical interventions. Though trials using ayurveda and other systems of AYUSH have been conducted in the country, they suffer from major limitations, thus making the outcomes meaningless. The ICMR’s expertise is sure to help in overcoming the major obstacle in scientific validation, which all systems of AYUSH currently suffer from. Evidence, as the practitioners of AYUSH refer to, is nothing but anecdotal, which is not an alternative to evidence-based approach. Lack of scientific validation, as a stand-alone intervention or as adjunct to modern medicine, has been the bane of alternative medicine in India. No sincere, large-scale attempts have been made to address this serious shortcoming. The collaboration with the ICMR is, therefore, a step in the right direction.

Global Centre for Traditional Medicine (GCTM) in Jamnagar, Gujarat.

What is traditional medicine?

The WHO describes traditional medicine as the total sum of the “knowledge, skills and practices indigenous and different cultures have used over time to maintain health and prevent, diagnose and treat physical and mental illness”.

  • Its reach encompasses ancient practices such as acupuncture, ayurvedic medicine and herbal mixtures as well as modern medicines.

Traditional medicine in India:

  • Ayurveda and yoga are practised widely across the country.
  • The Siddha system is followed predominantly in Tamil Nadu and Kerala.
  • The Sowa-Rigpa system is practised mainly in Leh-Ladakh and Himalayan regions such as Sikkim, Arunachal Pradesh, Darjeeling, Lahaul & Spiti.

What is the Purpose for establishing GCTM?

  • Integrating with Technological Advancements:
  • The Centre aims to channel the potential of traditional medicine,by integrating it with technological advancements and evidence-based research.
  • Set Policies and Standards:
  • It willseek to set policies and standards on traditional medicine productsand help countries create a comprehensive, safe, and high-quality health system.
  • Support Efforts to Implement WHO Strategy:
  • It will support efforts to implement the WHO’s Traditional Medicine Strategy (2014-23).

It aims to support nations in developing policies & action plans to strengthen the role of traditional medicine in pursuing the goal of universal health coverage.

Centre prepares new Model Prisons Act with focus on reform

The Ministry of Home Affairs has prepared the ‘Model Prisons Act 2023,’ that will replace a British-era law to overhaul the prison administration, which will focus on the reformation and rehabilitation of inmates, it said on Friday.

Among the salient features of the Act are provisions of punishment for prisoners and jail staff for use of prohibited items such as mobile phones in jails, establishment and management of high security jails, open jail, and provisions for protecting the society from the criminal activities of hardened criminals and habitual offenders. It also contains provisions for providing legal aid to prisoners, parole, furlough and premature release to incentivise good conduct.

130-year-old Act

Prisons in the country and ‘persons detained therein’ are a State subject and the existing law in this context, the Prisons Act of 1894 is a pre-independence era Act and is almost 130-years-old, it said. Two other related laws — The Prisoners Act, 1900 and The Transfer of Prisoners Act, 1950 are also decades-old. The Model Prisons Act, the Ministry said, might serve as a “guiding document” for the States, and for adoption in their jurisdiction. The MHA said it found that there were “several lacunae” in the existing Prisons Act and there was “conspicuous omission” of the correctional focus in the existing Act.

The Ministry, hence, directed the Bureau of Police Research and Development, a Union government think tank on policing subjects, to review the laws and prepare a new draft.

“The [existing] Act mainly focuses on keeping the criminals in custody and enforcement of discipline and order in prisons. There is no provision for reform and rehabilitation of prisoners in the existing Act,” it said. It said a comprehensive ‘Model Prisons Act, 2023’ was finalised with the objective of holistically providing guidance and addressing the gaps in the existing Prisons Act.

“The BPR&D after holding wide-ranging discussions with State prison authorities, correctional experts etc. prepared a draft,” the Ministry said.

RBI to join 12 other regulators to tackle ‘greenwashing’ risks

The Reserve Bank of India (RBI) said it will join 12 international regulators in the Global Financial Innovation Network (GFIN)’s first-ever Greenwashing TechSprint to develop a tool to help regulators and the market effectively tackle the risks of greenwashing in financial services.

The central bank noted the number of investment products marketed as ‘green’ was growing.

“Exaggerated, misleading or unsubstantiated claims about Environmental, Social and Governance credentials damage confidence in the products and the RBI wants to ensure consumers and firms can trust the products have the sustainability characteristics they claim,” the RBI said in a statement.

The central bank would be participating in a virtual TechSprint, hosted on the Financial Conduct Authority’s digital sandbox, to bring together international regulators, firms and innovators to address sustainable finance as a collective priority.

TechSprint would commence on June 5 and run for three months, ending in September.

  • The term greenwashing was first used in 1986 by Jay Westerveld, an American environmentalist and researcher.
  • Greenwashing is the practice in which firms and governments mark all kinds of activities as climate-friendly, as something that would lead to emissions reduction, or avoidance of emissions.
  • Greenwashing is the process of conveying a false impression or misleading information about how a company’s products are environmentally sound.
  • Greenwashing involves making an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than is true.

Examples of Greenwashing

  1. Volkswagen
  • Greenwashing is evident in Volkswagen’s admission that it cheated on emissions testing by fitting a variety of cars with a “defect” device that incorporated software that could detect when an emissions test was being conducted and adjust the performance to reduce the emissions level.
  • The company’s public marketing initiatives during this time emphasised the low emissions and environmentally beneficial features of their vehicles. In reality, these engines were emitting up to 40 times the permitted level of nitrogen oxide.