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DAILY CURRENT AFFAIRS, 02 AUGUST 2023

STATE OF UNEMPLOYMENT

 

1. Context

Data from the Centre for Monitoring Indian Economy (CMIE) shows that India’s labour force participation rate (LFPR) has fallen to just 40% from an already low 47% in 2016. This suggests not only that more than half of India’s population in the working-age group (15 years and older) is deciding to sit out of the job market, but also that this proportion of people is increasing. 

2. Labour Force

The labor force, also known as the workforce or labor pool, refers to the total number of people who are employed or seeking employment in a particular country, region, or economic sector. It includes both employed individuals and those who are actively seeking job opportunities.

The labor force consists of two main components:

  • Employed: These are individuals who are currently working, either as full-time or part-time employees, in self-employment, or as casual laborers. They are actively engaged in economic activities and are contributing to the production of goods and services.
  • Unemployed: These are individuals who are not currently employed but are actively seeking employment opportunities. They are willing and available to work but have not yet found suitable job opportunities.

3. What is LFPR (Labour Force Participation Rate)?

  • LFPR stands for Labor Force Participation Rate. It is a key labor market indicator that measures the proportion of the working-age population that is actively engaged in the labor force, either by being employed or actively seeking employment.
  • The labor force participation rate provides insights into the extent of labor market involvement among individuals who are of working age and capable of working.
  • Labor Force: The total number of individuals who are either employed or actively seeking employment (i.e., the number of employed + the number of unemployed).
  • Working-Age Population: The total number of individuals within a specific age group considered to be of working age, typically defined as those aged 15 to 64 years (the age range may vary in different countries).
  • The LFPR is expressed as a percentage and provides valuable information about the proportion of the population that is contributing to the labor market.
  • A high LFPR indicates a larger share of the working-age population is actively participating in the labor force, while a low LFPR suggests that a significant portion of the population is not actively involved in the labor market, which can have implications for economic growth and development.
  • Changes in the LFPR over time can be influenced by various factors, including demographic trends, social norms, economic conditions, and government policies.
  • Monitoring LFPR is essential for understanding labor market dynamics and making informed decisions related to employment policies and workforce development initiatives.

4. Significance of LFPR in India

The Labor Force Participation Rate (LFPR) holds significant importance in India for several reasons:

  • Employment Analysis: LFPR helps in understanding the level of workforce engagement and the proportion of the working-age population that is actively participating in the labor market. It provides insights into the employment situation in the country.
  • Unemployment Assessment: LFPR is an essential component in calculating the unemployment rate. By comparing the LFPR with the actual employment figures, one can determine the extent of unemployment in the economy.
  • Demographic Trends: LFPR can highlight demographic patterns and changes in labor force behavior. For example, a rising LFPR may indicate greater economic opportunities for women, while a declining LFPR could suggest challenges in attracting youth to the workforce.
  • Economic Growth: A higher LFPR can positively impact economic growth as it implies a larger workforce actively contributing to the production of goods and services. A productive workforce can boost overall economic output and development.
  • Policy Formulation: LFPR data assists policymakers in devising appropriate strategies to address employment challenges. Understanding the labor market dynamics can aid in formulating policies to enhance job creation and workforce participation.
  • Skill Development: Analyzing LFPR by education level or skill set can help identify skill gaps in the workforce. This information is crucial for designing skill development programs to align workforce capabilities with industry demands.

5. Importance of Employment Rate (ER) in Evaluating Labor Market Stress

  • LFPR vs. ER: When LFPR is falling sharply, it's essential to consider the Employment Rate (ER) as an alternative indicator to understand labor market stress better.
  • ER Definition: ER is the percentage of employed people in the working-age population, providing insights into the proportion of people with jobs.
  • Capturing Labor Market Stress: ER considers the base of the working-age population and focuses on the number of employed individuals, offering a clearer picture of labor market stress during declining LFPR.
  • ER Data Analysis: By examining ER data, it becomes evident that India's working-age population has been increasing. However, the number of employed individuals has decreased over time.
  • Absolute Numbers: In December 2021, India's working-age population was 107.9 crore, of which only 40.4 crore had jobs (ER of 37.4%). Comparing this to December 2016, with 95.9 crore in the working-age group and 41.2 crore employed (ER 43%), a concerning trend emerges.
  • Long-Term Impact: Over five years, while the working-age population increased by 12 crores, the number of employed individuals declined by 80 lahks, highlighting the severity of the employment challenge.

6. Why is India’s LFPR so low?

  • The main reason for India’s LFPR being low is the abysmally low level of female LFPR.
  • According to CMIE data, as of December 2021, while the male LFPR was 67.4%, the female LFPR was as low as 9.4%. In other words, less than one in 10 working-age women in India are even demanding work.
  • Even if one sources data from the World Bank, India’s female labour force participation rate is around 25% when the global average is 47%. 

7. Reasons for Low Female Labor Force Participation in India

  • Working Conditions: Women face challenges in seeking work due to unfavorable working conditions, including concerns about law and order, lack of efficient public transportation, violence against women, and societal norms that discourage women from working outside their homes.
  • Measurement Issues: Capturing women's economic contribution is complex, as many women in India are primarily involved in household duties and caregiving for their families. Traditional economic measurements may not fully account for their significant contributions within their households.
  • Job Opportunities: A lack of adequate job opportunities is another significant factor contributing to low female labor force participation. Limited access to suitable employment options hinders women from joining the workforce.
For Prelims: Labor Force Participation Rate (LFPR), Employment Rate (ER), Centre for Monitoring Indian Economy (CMIE), and Labour Force.
For Mains: 1. Discuss the significance of the Labor Force Participation Rate (LFPR) as a critical labor market indicator in the context of economic development and policy formulation. (250 words).
 

Previous year Question

1. In India, which one of the following compiles information on industrial disputes, closures, retrenchments, and lay-offs in factories employing workers? (UPSC 2022)
A. Central Statistics Office
B. Department for Promotion of Industry and Internal Trade
C. Labour Bureau
D. National Technical Manpower Information System
Answer: C
 
2. Which of the following brings out the 'Consumer Price Index Number for Industrial Workers'? (UPSC 2015)
A. The Reserve Bank of India
B. The Department of Economic Affairs
C. The Labour Bureau
D. The Department of Personnel and Training
Answer: C
 
3. International Labour Organization's Conventions 138 and 182 are related to (UPSC 2018)
A. Child labour
B. Adaptation of agricultural practices to global climate change
C. Regulation of food prices and food
D. Security
Answer: A
 
4. Which of the following statements about the employment situation in India according to the periodic Labour Force Survey 2017-18 is/are correct? (UPSC CAPF 2020)
1. Construction sector gave employment to nearly one-tenth of the urban male workforce in India.
2. Nearly one-fourth of urban female workers in India were working in the manufacturing sector.
3. One-fourth of rural female workers in India were engaged in the agriculture sector.
Select the correct answer using the code given below:
A. 2 only
B. 1 and 2 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: B
Source: The Indian Express

CHINA PAKISTAN ECONOMIC CORRIDOR (CPEC)

 
 
 
1. Context
Pakistan and China on Monday signed six key documents to help undertake the second phase of the USD 60 billion China-Pakistan Economic Corridor (CPEC) projects under a new model
 
2. About China Pakistan Economic Corridor (CPEC)
  • CPEC refers to a clutch of major infrastructure works currently under way in Pakistan, intended to link Kashgar in China’s Xinjiang province to Gwadar deep sea port close to Pakistan’s border with Iran
  • Several other road, rail and power projects are associated with the corridor, and the project seeks to expand and upgrade infrastructure across the length and breadth of Pakistan, and to widen and deepen economic ties with its “all-weather friend”, China
  • The CPEC is part of China’s larger regional transnational ‘One Belt One Road’ (OBOR) initiative, whose two arms are the land-based New Silk Road and the 21st century Maritime Silk Road, using which Beijing aims to create a Silk Road Economic Belt sprawled over a large patch of Asia and eastern Europe, and crisscrossed by a web of transport, energy supply and telecommunications lines
  • Gwadar lies close to the Strait of Hormuz, a key oil shipping lane. It could open up an energy and trade corridor from the Gulf across Pakistan to western China, that could also be used by the Chinese Navy
  • The CPEC will give China land access to the Indian Ocean, cutting the nearly 13,000 km sea voyage from Tianjin to the Persian Gulf through the Strait of Malacca and around India, to a mere 2,000 km road journey from Kashgar to Gwadar
3. Key Features of CPEC

Key features and components of the China-Pakistan Economic Corridor (CPEC) include:

  1. Infrastructure Development: CPEC involves the construction of various infrastructure projects, including roads, railways, pipelines, and energy facilities. These projects aim to improve transportation and connectivity within Pakistan and facilitate trade between China and Pakistan.

  2. Energy Projects: One of the prominent aspects of CPEC is the development of energy projects in Pakistan, such as coal-fired power plants, hydroelectric projects, and renewable energy initiatives. These projects address Pakistan's energy needs and aim to overcome the country's power shortages.

  3. Gwadar Port Development: Gwadar, a strategically located deep-sea port in southwestern Pakistan, is a vital component of CPEC. China has invested in the development of Gwadar port and its associated infrastructure to create an important trade gateway for the region, providing China with access to the Arabian Sea and the Indian Ocean.

  4. Economic Zones: CPEC includes the establishment of Special Economic Zones (SEZs) in Pakistan, where Chinese companies are encouraged to invest and set up industries. These SEZs are intended to promote industrialization, create jobs, and boost Pakistan's manufacturing sector.

  5. Regional Connectivity: CPEC aims to enhance regional connectivity by improving transportation links and promoting economic integration between China, Pakistan, and neighboring countries.

  6. Geostrategic Significance: CPEC holds significant geopolitical and strategic importance for both China and Pakistan. For China, it provides an alternative trade route to the energy-rich Middle East and Africa, bypassing the lengthy and vulnerable sea routes. For Pakistan, it is expected to boost economic growth, create job opportunities, and strengthen its ties with China.

4. Way forward
However, CPEC has also faced criticism and concerns. Some of the key issues include the potential for creating unsustainable debt burdens for Pakistan, questions about transparency and governance in project execution, and environmental and social impacts of large-scale infrastructure development
The CPEC is still in its early stages, but it has the potential to be a major game-changer for Pakistan. If the project is successful, it could help to boost economic growth, reduce poverty, and improve connectivity in the country
 
 
 
For Prelims: CPEC, One belt One road Initiative
For Mains: 1.Analyze the strategic and economic significance of China's One Belt One Road (OBOR) initiative for the countries in Asia, Europe, and Africa. Discuss the potential opportunities and challenges it presents to India's regional interests and connectivity plans
2.The China-Pakistan Economic Corridor (CPEC) is considered a significant development project in South Asia. Analyze its strategic implications for India and its neighboring countries. How can India effectively respond to the changing regional dynamics arising from CPEC?
 
 
Previous Year Questions
1. Belt and Road Initiative is sometimes mentioned in the news in the context of the affairs of (UPSC CSE 2016)
A. Africa Union
B. Brazil
C. European Union
D. China
Answer - D
Source: indianexpress

STATUTORY MINIMUM PRICE (SMR)

 
 
 
 
1. Context
The Finance Ministry has notified the rules enabling cooperative sugar mills to claim past cane price payments made to farmers, in excess of the government’s statutory minimum price (SMP), as “business expenditure”. The move is expected to provide mills a relief of almost Rs 10,000 crore, against pending tax demands and litigation in respect of payments made before 2015-16 financial year
 
2. What is the Statutory minimum Price (SMP)
  • The statutory minimum price (SMP) is announced by the central government based on the cost of cultivation estimated by the Commission for Agricultural Costs and Prices (CACP)
  • This is the basic price which the sugar mills must pay sugarcane growers
  • However, citing differences in cost of production, productivity levels and also as a result of pressure from farmers groups, some states (Uttar Pradesh, Punjab, Haryana, Tamil Nadu and Uttarakhand) used to declare state-specific sugarcane prices called State Advised Prices (SAP), usually higher than the SMP
  • These states also argued that SMP was merely the minimum price which could be enhanced to protect farmers interests
  • Even though the name suggest that SAPs are advisory prices, litigation in courts has established that the mills in these states mandatorily pay SAP to farmers in these states. 
  • Unlike the MSP for wheat or paddy announced by the Centre, where the government procures a commodity from farmers directly in case market prices go below the MSP, the government never procures sugarcane from farmers directly
3. Minimum Support Price (MSP)
 
Minimum Support Price (MSP) is a price support mechanism implemented by the government of India to protect farmers from fluctuations in agricultural produce prices and ensure remunerative prices for their crops.
MSP is an important agricultural policy that aims to provide stability to farmers' income and safeguard their interests during times of market volatility.
The MSP is announced by the government each year, and is based on the recommendations of the Commission for Agricultural Costs and Prices (CACP)

As of 2023, there are 22 crops under the Minimum Support Price (MSP) in India. These crops are:

  • Kharif crops:
    • Paddy
    • Jowar
    • Bajra
    • Maize
    • Ragi
    • Tur (Arhar)
    • Moong
    • Urad
    • Cotton (Medium Staple)
    • Cotton (Long Staple)
    • Groundnut
    • Sunflower Seed
    • Soyabean (Black)
    • Soyabean (Yellow)
  • Rabi crops:
    • Wheat
    • Barley
    • Gram
    • Lentil
    • Rapeseed/Mustard
    • Sesame
    • Nigerseed
  • Commercial crops:
    • Sugarcane
    • Copra
4. Commission for Agricultural Costs and Prices (CACP)
 
  • The Commission for Agricultural Costs and Prices (CACP) is an advisory body of the Government of India that advises the government on agricultural pricing policy.
  • The CACP was established in 1965 as the Agricultural Prices Commission and was renamed the Commission for Agricultural Costs and Prices in 1985
  • The CACP is responsible for recommending the Minimum Support Prices (MSPs) for agricultural crops.
  • The MSPs are prices that the government guarantees to buy agricultural crops from farmers, even if the market prices are lower.
  • The MSPs are intended to protect farmers from distress sales and to ensure that they receive a fair price for their produce
4. Fair and Remunerative Prices (FRP)
  • Fair and Remunerative Price (FRP) is a minimum price set by the government for sugarcane, which is to be purchased by sugar mills from farmers.
  • The FRP is fixed by the Cabinet Committee on Economic Affairs (CCEA) on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP)
  • The FRP is calculated based on the cost of production of sugarcane, which includes the cost of land, water, fertilizers, pesticides, and labor. The FRP is also adjusted for inflation
  • In recent years, the government has increased the FRP for sugarcane, in response to the demands of sugarcane farmers. The government has also announced a number of other measures to support sugarcane farmers, such as providing them with subsidized fertilizers and crop insurance
 
 
 
For Prelims: MSP, FRP, SMP
For Mains: 1.MSP has traditionally focused on major crops, but several other agricultural commodities lack price support mechanisms. Assess the feasibility and implications of extending MSP to non-major crops to promote diversification and sustainable agricultural practices
2.Discuss the role of the Commission for Agricultural Costs and Prices (CACP) in determining the Minimum Support Price (MSP) for various crops. Critically evaluate the methodology employed by CACP and suggest measures to make MSP more inclusive, especially for small and marginalized farmers
 
 
Previous Year Questions
1. Consider the following Statements (UPSC CSE 2020)
1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India
2.In the case of cereals and pulses, the MSP is fixed in any State/UT at level to which the market price wiull never rise
Which of the statements given above is/ are correct?
A. 1 Only
B. 2 Only
C. Both 1 and 2
D. Neither 1 nor 2
Answer -D
 
Source: indianexpress

HOLOCENE CLIMATE ANOMALIES

1. Context

Some headlines proclaimed recently that a particular day in July was the warmest in more than 100,000 years. It is not scientifically possible to make such a claim. Temperature estimates from before thermometers were invented are derived from “palaeo proxies”. These are biological and chemical signatures of the temperature somewhere having been warmer or colder than a specific baseline temperature. 

2. Understanding Paleoclimate Proxies:

  • Palaeo proxies are responses of physical, biological, and chemical processes to past temperatures.
  • Isotopes with steady rates of radioactive decay are used to estimate past temperatures.
  • Limitations of proxies: cannot provide direct temperature measurements, only temperature anomalies.
  • Different timescales for temperature estimations.

3. Constraints on Timescales:

  • Proxies can only record temperature anomalies on long timescales (centuries to thousands of years).
  • Mixing by ocean water and microbes obscures short-term temperature changes.
  • Best proxies provide estimates on weekly or seasonal timescales.

4. Regional Estimates and Uncertainties

  • All proxies offer local or regional historical temperature anomaly estimates.
  • Even the Holocene epoch records come with significant uncertainties.
  • Global estimates based on averaging local proxies have higher uncertainties.

5. What is Holocene epoch?

  • The Holocene epoch is a geological epoch that began approximately 11,700 years ago and continues to the present day.
  • It is the most recent epoch in the Quaternary period and follows the Pleistocene epoch, which was characterized by a series of ice ages and interglacial periods.
  • The Holocene epoch is marked by a relatively stable and warm climate, which allowed for the development of modern human civilizations.
  • During this time, the Earth's climate has been relatively stable compared to the preceding ice ages.
  • Glacial ice retreated, and sea levels rose, shaping the modern geography and climate patterns we see today.
  • The Holocene is a crucial period in human history as it coincides with the development of agriculture, the rise of human settlements, and the advent of written language.
  • It is during this epoch that human societies transitioned from hunter-gatherer lifestyles to more settled agricultural communities.
  • The Holocene epoch continues to be a significant era for the study of climate change and human impact on the environment.
  • Understanding the climatic variations and natural changes during this period provides valuable insights into how Earth's climate has evolved over time and how it may respond to future challenges, including the effects of anthropogenic climate change.

6. Limitations in claiming Daily Timescale Temperatures:

  • Palaeo proxies cannot provide daily timescale temperature data.
  • Global warming can lead to record-breaking warm months and years, but caution needed for daily records.

7. Endangering Climate Action

  • Scientifically impossible to estimate daily temperature without direct thermometer measurements.
  • The danger of making alarmist claims without scientific rigor and accuracy.
  • Sacrificing credibility for the climate community may hinder global climate efforts.

8. Way forward

  • Climate reporting should prioritize scientific accuracy and responsible reporting.
  • Trust in scientific findings is crucial for fostering meaningful climate action.
  • Climate challenges require collective efforts with reliable scientific evidence.
For Prelims: Paleoclimate Proxies, Global Warming, Holocene epoch, Seasonal timescales, Global climate efforts, and Anthropogenic climate change.
For Mains: 1. Analyse the impact of the Holocene epoch on the rise of early human civilizations and the transition from hunter-gatherer societies to settled agricultural communities. (250 words)
 
 Source: The Hindu

UNIQUE IDENTIFICATION AUTHORITY OF INDIA (UIDAI)

 
 
 
1. Context
As more frauds related to the Aadhaar-enabled Payment System (AePS) come to the fore, the Unique Identification Authority of India (UIDAI), has turned to artificial intelligence-based systems in a bid to limit the cases  this includes developing technologies around fingerprinting and facial recognition
2. Aadhar fingerprint technology work
  • The technology uses a combination of both finger minutiae and finger image to check the liveness of the fingerprint captured
  • The measure was implemented after instances of people creating fake fingerprints using silicone to syphon off money from unsuspecting individuals’ bank accounts were reported
  • Aadhaar fingerprint technology works by using a scanner to capture the unique patterns of ridges and valleys on a person's finger.
  • The scanner converts the fingerprint image into a digital algorithm, which is then stored in a database.
  • When a person's fingerprint is scanned again, the algorithm is used to compare it to the stored fingerprint. If the two algorithms match, the person is authenticated.
  • The Aadhaar fingerprint technology is very accurate, with a false acceptance rate of less than 0.0001%.
  • This means that there is a very small chance that someone else's fingerprint will be mistakenly matched to yours
3. Payment frauds
  • According to the Home Ministry, in the financial year 2020-21, 2.62 lakhs financial crimes, such as money laundering, bribery, corruption and different kinds of frauds, were reported
  • The number jumped to 6.94 lakhs in 2022, a report, released by the Standing Committee on Finance
  • Citing data it received from the supervised entities of the Reserve Bank of India (RBI), the committee noted that payment-related frauds are on the rise in India 
  • In FY21, the volume of such frauds was a little over 700,000, which by FY23, increased to close to 20 million. 
4.Can technology solve fraud problem
Deploying technological measures to curtail financial frauds has its own limits, though.
For instance, they have failed to thwart a number of frauds related to AePS, in which a business correspondent, a key member in the payment supply chain, is the culprit
A business correspondent (BC) is an informal bank agent equipped with a biometric Point-of-Sale (PoS) machine, which works like a micro ATM
5. About the Unique Identification Authority of India (UIDAI)
  1. The Unique Identification Authority of India (UIDAI) is a statutory authority established in January 2009 by the Government of India under the provisions of the Aadhaar Act, 2016. UIDAI is responsible for issuing unique identification numbers, known as Aadhaar numbers, to residents of India
  2. The primary objective of UIDAI is to provide a unique and verifiable identity to every Indian resident, regardless of age, gender, or socioeconomic status
  3. The UIDAI is responsible for issuing Aadhaar, a 12-digit unique identification number to all residents of India.

Aadhaar is a proof of identity and address, and can be used for a variety of purposes, such as:

  • Accessing government services
  • Opening bank accounts
  • Making payments
  • Traveling
  • Enrolling in school
6. Way forward
Aadhaar has been integrated into various welfare schemes and government services, making it an essential part of India's digital identity infrastructure. However, it has also raised concerns about privacy, data security, and potential misuse of personal information. The Indian government has taken steps to address these concerns and improve the security and accessibility of Aadhaar services
 
 
For Prelims: UIDAI, Aadhar, Cybercrime
For Mains: 1.Discuss the potential cybersecurity risks and challenges associated with the Aadhaar biometric authentication system in India. What measures should be taken to mitigate these risks effectively?
2.Analyze the role of Aadhaar in combating cybercrimes in India. How can Aadhaar's unique identification system be leveraged to enhance cybersecurity and protect individuals from online threats?
 
Previous year Questions
1. Consider the following Statements (UPSC CSE 2018)
1. Aadhar card can be used as proof of citizenship or domicile
2.Once issued, the Aadhar number cannot be deactivated or omitted by the issuing Authority
Which of the statements given above is/ or Correct?
A. 1 Only
B. 2 Only
C. Both 1 and 2
D. Neither 1 nor 2
Answer- D
2.Consider the following statements
1. Aadhar card data cannot be stored more than three months
2.State cannot enter into any contract with private corporations for sharing Aadhar data
3.Aadhar is mandatory for obtaining insurance products 
4. Aadhar is mandatory for getting benefits funded out of the Consolidated fund of India
Which of the statements given above is/ are correct
A. 1 and 4
B. 2 and 4
C. 3 Only
D. 1, 2 and 3
Answer - B
 
Source: indianexpress
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