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Current Affairs: 01 February 2019

NATION

‘Unemployment data based on draft report’
  • The government’s think tank NITI Aayog on Thursday debunked claims of a news report that unemployment in 2017-18 was at a 45-year high. The NITI Aayog said the report of the National Sample Survey Office (NSSO), cited as the source for the report, was in fact a draft and not approved by the government.
  • A report in the Business Standard on Thursday, which cited the NSSO’s periodic labour force survey — that is yet to be released — said the unemployment rate was 6.1% in 2017-18. The only year of comparable data when the unemployment rate was higher was in 1972-73. It was at 2.2% in 2011-12.
  • The NSSO report is a matter of much controversy, with the two external members of the National Statistical Commission citing the delay in its release as a major reason for their resignations on Monday.
  • The data reportedly showed that joblessness was higher in urban India (7.8%) than in rural India (5.3%). Within this, it stood at 17.4% for rural males and 13.6% for rural females. In urban India, joblessness was at 18.7% among males and a huge 27.2% among females.
  • Importantly, the data reportedly showed that the labour force participation rate (LFPR), the measure of people working or looking for jobs, declined from 39.5% in 2011-12 to 36.9% in 2017-18. This phenomenon — of unemployment rising while the LFPR dipped — is a cause for serious worry, experts say, explaining that it probably shows that people are simply giving up on finding jobs and have stopped seeking work.
Govt. revises up GDP growth to 7.2%
  • The government on Thursday revised its GDP growth forecast for 2017-18 to 7.2% from the earlier estimate of 6.7%. It revised the actual growth rate in 2016-17 to 8.2% from 7.1%.
  • The revisions, which were made by the Ministry of Statistics and Programme Implementation in its First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, 2017-18, have been criticised by economists, who say the numbers do not match with the ground realities. 
  • This is especially the case in the demonetisation year of 2016-17, which shows a strong growth in sectors that were widely agreed to have been badly hit by the exercise.
  • “For 2016-17, this hike of 1.1 percentage points in GDP growth comes as a surprise because it was the demonetisation year,” D.K. Srivastava, chief policy adviser at EY India, said. “If you look at the demand side, the main factor for this is the increase in private final consumption expenditure, which has also increased 1 percentage point. That is inconsistent with the idea of people having less cash to make purchases.”
  • He further said the main driver of the upward revision on the output side in 2016-17 was the construction sector, which has been revised upwards by 4.7 percentage points. “Construction is also a sector which has a large informal sector component and all earlier analyses had indicated that demonetisation adversely affected the informal sectors,” Mr. Srivastava said. “So that is also a surprise.”
  • Looking at 2017-18, analysts say the government’s explanation does not hold water because the two main drivers of the upward revision — the mining and quarrying sector and the public administration sector — both have data that is compiled by the government itself and so should not have undergone such a vast revision.
IAF chief flags delays in manufacture of equipment
  • The Indian Air Force (IAF) has not shifted any goal posts and is fully committed to indigenisation, Air Chief Marshal (ACM) B.S. Dhanoa said on Thursday, while flagging delays in domestic development and manufacture of defence equipment.
  • His comments come in the backdrop of recent reports that the IAF has been changing parameters of the indigenous Light Combat Aircraft (LCA) Tejas, adding to the delay in development. The IAF has contracted for 40 LCA Mk-I jets, issued a Request For Proposal (RFP) for 83 LCA Mk-IA variants and committed to procure 12 squadrons of LCA Mk-II and eventually the Advanced Medium Combat Aircraft (AMCA).
  • ACM Dhanoa said a crucial contribution to the success of indigenisation was also the sacrifice of IAF’s pilots in testing these aircraft to battle worthy standards.
  • “We have lost 17 pilots and engineers in air accidents during testing and evaluation of the indigenous Marut, Kiran, Ajeet, Saras and early warning prototype aircraft,” he said. Air power would remain a major player in future conflicts, he stated. Investment in air power was an expensive proposition. For instance, each Su-30 costs ₹417 crores. Even the LCA Mk I costs ₹191 crores.
  • There had to be a mix high, medium and low technology, ACM Dhanoa said.
  • ACM Dhanoa said that as on date, the backlog with HAL due to a long overhaul cycle and delays in upgradation was approximately of one squadron Jaguars, nearly two squadrons of Su-30MKI and one squadron of Mirage-2000 jets.
Health sector seeks tax breaks for middle class in Budget
  • The healthcare sector wants the government’s interim Budget to include tax measures to help the middle class better mitigate health risks.
  • “Ayushman Bharat for the financially weaker section took centre stage in healthcare last year; however, the middle class is still at risk!,” said Suneeta Reddy, managing director, Apollo Hospitals Group. 
  • “A first step to universal health coverage would be to increase deduction for medical insurance premium under section 80D for self, family and dependant parents. An enhancement in the medical allowance for salaried employees in line with inflation and a separate deduction in respect of preventive health checks would be desirable,’’ she said, speaking about the sector’s expectations from the Budget.
  • “We look forward to zero-rating of GST for the sector, or for normalisation of the GST rates for services consumed by the healthcare service providers at 5%,’’ Ms. Reddy added.
  • “We expect a reduction in the cost of medical equipment that will help in increasing the outreach of telemedicine and home healthcare facilities,” said Ashutosh Tiwari, director and chairman, Vinoba Bhave Research Institute. “This, in turn, will help in the preventive and timely treatment of non-communicable diseases that are expected to account for 75% of the country’s diseases by 2025.’’
  • The last year had been a challenging one for India’s private healthcare providers, with multiple headwinds impacting growth and profitability. The overall sector had become less attractive for investments, the absence of which had hindered growth significantly, asserted Arindam Haldar, CEO, SRL Diagnostics.
Report confirms crisis: experts
  • The National Sample Survey Office’s (NSSO) data showing a record spike in unemployment in 2017-18, which was published in a news report on Thursday, is a validation of trends seen on the ground, according to labour economists, job-seekers and workers’ representatives. 
  • The government’s failure to release the NSSO report was the latest sign of a complete lack of transparency regarding jobs data, they said.
  • “The NSSO findings are not surprising, but they are alarming. The trends of rising unemployment were already visible. Our analysis showed it was higher in 2015 than in 2011-12, and we expected demonetisation to have a harsh effect,” said Amit Basole, head of the Centre for Sustainable Employment at Azim Premji University in Bengaluru, and lead author of a report on the State of Working India, 2018.
  • Ms. Basole noted that the government’s decision to discontinue the NSSO’s five year surveys, failure to regularly release Labour Bureau data and delay in releasing the NSSO’s periodic labour force survey had led to “an atmosphere of uncertainty and confusion. Instead, the government kept citing job numbers based on EPFO’s payroll data and the Mudra loans, which are not helpful,” he said.
  • “The data, as cited by the news report, shows that there has been a rise in unemployment and a decline in the labour force participation rate (LFPR) post demonetisation, which is in line with what we have also been saying,” said Mahesh Vyas, chief executive and managing director of the Centre for Monitoring Indian Economy (CMIE), which has done its own unemployment surveys.
  • Thursday’s Business Standard report on the NSSO report said overall unemployment was at a 45-year high, with youth between the ages of 15 and 29 facing higher rates of joblessness than others. 
  • The informal sector employs more than 90% of the country’s workforce, and has witnessed a decline in available work and wages in the last two years, said Chandan Kumar, coordinator of the Working People’s Charter, an alliance of informal workers’ groups and unions. “Daily wage labourers say they used to get 20 days of work each month. After demonetisation, they get only 10 days.”
Stop MPs’ meet on Kashmir, India tells U.K.
  • After summoning the Pakistan High Commissioner on Wednesday, India has registered its protest with the British government about an upcoming meet on Kashmir at the British Parliament, the Ministry of External Affairs said. 
  • The government also warned of “consequences” if Pakistan continued its actions on Kashmir, which it called a “direct interference in India’s internal affairs”.
  • “We have told the United Kingdom [government] quite strongly that their territory must not be used for anti-India activity conferences or rallies, and we hope they will take it seriously, and take action against this kind of conference,” said MEA spokesperson Raveesh Kumar. 
  • He was briefing journalists about the measures taken against the meeting in the House of Commons on February 4 of the “All Party Parliamentary Group on Pakistan” (APPG-Pakistan) — a group that includes Conservative and Labour Party MPs.
  • Officials said they hoped that Pakistan Foreign Minister Shah Mahmood Qureshi would not be given an official welcome during his visit to London, where he is expected to attend the conference, and that the British government would distance itself from the proceedings.
  • The British High Commission said the visit by Mr. Qureshi was a “private” one.
  • Late on Wednesday, Foreign Secretary Vijay Gokhale had summoned Pakistan High Commissioner Sohail Mahmood, and issued a stern demarche on Mr. Qureshi’s telephone call to Hurriyat leader Mirwaiz Umar Farooq, calling it proof that Pakistan “abets and encourages individuals associated with terrorism and anti-India activities”.
  • In a reciprocal action on Thursday morning, the Pakistan Foreign Ministry summoned Indian High Commissioner Ajay Bisaria to issue a counter-protest, calling India’s reaction “an indication of domestic politics being allowed to override India’s international obligations.”
ECONOMY

Centre firm on FDI rules deadline
  • The government on Thursday said it would not be extending the deadline for implementation of the new rules governing FDI in e-commerce. The new rules will come into effect on Friday as per plan.
  • “While we remain committed to complying with all laws and regulations, we will continue to look to engage with the government to seek clarifications that help us decide our future course of action as well as minimise the impact on our customers and sellers,” an Amazon spokesperson said. 
  • The new rules ban any firm that has any stake owned by an e-commerce company from selling on the platform run by that e-commerce company. Further, no company that has 25% or more of its purchases from an e-commerce group firm may sell on that firm’s platform.
  • Sanjay Sethi, CEO & co-founder, ShopClues, said the move was a win for small enterprises, moving them a step closer to a level-playing field.
RBI lifts curbs on three PSBs
  • The Reserve Bank of India (RBI) has decided to allow three public sector banks — Bank of India, Bank of Maharashtra and Oriental Bank of Commerce — to exit the PCA framework following capital infusion by the government and a decline in net non-performing asset ratio.
  • The RBI, which conducted a review following a demand made by government to lift the restrictions in order to boost credit growth, said, “it was noted that a few banks are not in breach of the PCA (Prompt Corrective Action) parameters as per their published results for the quarter ending December 2018, except for return on assets (RoA).”
  • The PCA framework is triggered when a bank breaches one of the three risk thresholds, and crossing 6% net NPAs is one of them.
  • Bank of India had made significant higher provisioning during the third quarter which saw net NPA ratio declining to 5.87% from 10.29% a year ago. Similarly, Bank of Maharashtra brought down its net NPA ratio to 5.91% from 12.17%. 
  • OBC, which had made ₹145 crore net profit in the third quarter, reported net NPA ratio of 7.15% at the end of the October-December quarter. RBI justified its action by saying “though the net NPA ratio was 7.15%, as per the published results of third quarter, the government has since infused sufficient capital and bank has brought the net NPA ratio to less than 6%.” Earlier in the day, OBC had informed the exchanges about capital infusion of ₹1,186 crore by the government.

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