Daily News Analysis 30th October 2023 (The Hindu)

October 30, 2023
12:00 pm

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Here are the topics covered for 30th October 2023:

GS-1: Turkey Earthquake Study Reveals Unprecedented Tectonic Dialogue

GS- 3: Indian Railways’ Revenue Problem, India’s Complex Economic Realities, Government’s Vision India 2047 Plan

Facts for Prelims: Kavach, Atal Innovation Mission (AIM)

Turkey Earthquake Study Reveals Unprecedented Tectonic Dialogue

Context:

In February 2023, Turkey and Syria experienced devastating earthquakes that left widespread destruction and casualties.
The scale of these quakes caught scientists by surprise, prompting a study to uncover the intricate tectonic forces at play. Published in the journal Science, this research sheds light on the factors behind the earthquakes, their unexpected power, and the implications for forecasting similar events.

About the study:

The earthquakes occurred along the East and North Anatolian Fault Lines, which run 700 km and 1,500 km long, respectively.
The study found that these two fault lines were in constant dialogue and that this conversation was disrupted by the quakes, leading to a cascade of ruptures.
The researchers used kinematic slip inversion and fault-property modelling to understand how earthquakes evolved and to predict how they are likely to spread.
They found that the earthquakes were revelations of the planet’s oft-enigmatic inner workings, underscoring the unpredictable nature of seismic events.
The study underscores the unpredictable nature of seismic events. While Turkey had building codes to mitigate earthquake risks, enforcement was lacking, resulting in a serious disaster.
The study also suggests that scientists need to develop new ways to forecast earthquakes that take into account the complex interactions between different fault lines. This is a challenging task, but it is essential for reducing the risk of future disasters.

Way forward:

The lessons from Turkey’s quakes have far-reaching implications for earthquake science, policy, and disaster management.
The study highlights the need for better enforcement of building codes and other policies designed to mitigate the impact of earthquakes.
It also underscores the importance of continued research to better understand the complex forces that drive these events.

Indian Railways’ Revenue Problem: Freight business needs to be improved

Context:

The Indian Railways (IR) has been on a spending spree with respect to capital expenditure (capex), particularly after the government merged its rail budget with the main budget. However, its operating ratio has shown no improvement.

About:

The Indian Railways (IR) has been experiencing significant capital expenditure (capex) to enhance its infrastructure and role in the country’s economic growth.
Indian Railways relies on Gross Budgetary Support(GBS) and Extra Budgetary Resources(EBS) due to a lack of surplus. Debt repayment now accounts for a significant portion of revenue receipts, affecting its financial stability.
The IR’s freight segment is profitable whereas the passenger segment makes huge losses.
The IR’s modal share in India’s freight business has steadily decreased to approx. 27% from upwards of 80% at the time of independence.
Key commodities like coal, iron ore, and cement, which account for a significant portion of the IR’s freight revenue, have seen a decline in the rail transport share.
Despite initiatives to promote container train operations, the IR’s share of exim containers moving to and from ports remains stagnant.
The IR needs to shed the artificial divide between goods and parcels and divide cargo based on its characteristics as bulk and non-bulk.
Net Tonne Kilometres (NTKM) a key index for measuring performance, has experienced fluctuations and slower growth compared to road transport.

Way forward:

Focus on Freight: The IR should prioritize increasing its freight volume and revenue, as this segment is profitable. This includes exploring new markets and commodities to transport.
Cost Efficiency: Implement cost-effective measures in both freight and passenger services to reduce losses and enhance profitability.
Rationalizing Operations: Streamline operations by eliminating artificial divides and improving cargo classification based on characteristics to optimize handling and movement.
Private Participation: Encourage private participation in container movement and other freight operations to enhance efficiency and market share.
Modernization: Invest in modern technology and infrastructure to improve the competitiveness and appeal of rail transport.

Government’s Vision India 2047 Plan

Context:

Indian government’s efforts to create a comprehensive national vision plan with the aim of making India a developed nation by 2047. The plan intends to prevent India from falling into a middle-income trap, a situation experienced by several countries during similar stages of development.

Key Points:

Vision India@2047 Plan: The Prime Minister is set to introduce the ‘Vision India@2047’ plan within the next three months. This extensive plan encompasses reforms and objectives to be achieved by 2030. It also includes structural changes in governance that are pivotal in realizing the vision of making India a $30 trillion economy by 2047, with a per-capita income ranging between $18,000 and $20,000.
Planning and Consultations: The Niti Aayog has been meticulously developing this plan for nearly two years. Recently, it was presented to Cabinet Secretary Rajiv Gauba. Upcoming consultations with thought leaders, including prominent business figures such as Tim Cook, Sundar Pichai, Gautam Adani, Mukesh Ambani, K.M. Birla, N. Chandrasekharan, and Indra Nooyi, are scheduled for November. This aims to gather insights from diverse sectors.
Addressing Middle-Income Trap: The ‘Vision India@2047 plan is primarily concerned with avoiding the middle-income trap. Many countries reach a per capita income of $5,000 to $6,000 but then struggle to progress further. The vision seeks to ensure India continues to advance, avoiding stagnation, drawing from examples like Argentina, which faced challenges in fulfilling its potential.
Regional Development and Reforms: The plan also focuses on mitigating regional economic disparities. It recognizes that while certain parts of India are experiencing rapid growth, others are being left behind. Addressing this disparity is crucial for the nation’s overall development.
Global Dominance: India’s share of the global GDP has tripled from 1.1% in 1991 to 3.5% in 2023, making it the fifth-largest economy in the world. However, it lacks representation in the world’s largest banks, contractors, legal, consultancy, or accountancy firms. The vision emphasizes the importance of Indian firms dominating key sectors and becoming global leaders.
Skill Development: To empower India’s young population and meet global demands, skill development is a priority. The plan acknowledges the demand for Indian nurses worldwide but highlights that certain states are more proactive in responding to this demand, while others are not. Skill development and ensuring the readiness of the workforce are critical aspects.

Conclusion:

The ‘Vision India@2047’ plan, spearheaded by the Prime Minister and developed over several years, is aimed at propelling India into the league of developed nations by 2047 while avoiding the middle-income trap.
With a focus on regional development, global dominance in key sectors, and skill enhancement, this plan underscores the government’s commitment to addressing India’s diverse economic challenges and promoting sustained growth.

India’s Complex Economic Realities

Context:

In a recent analysis, it has been suggested that India’s GDP growth is likely to remain constrained in the medium term, forecasting a range of 3%-4%. This sobering insight has shed light on the misleading nature of India’s recent GDP growth figures and the deeper underlying issues plaguing the economy.

Skepticism Towards GDP:

The piece begins by highlighting the widespread excitement and optimism when the National Statistics Office (NSO) reported a remarkable annual GDP growth rate of 7.8% for the April-June quarter.
Even more optimistic forecasts envisioned an acceleration to 8%, while conservative estimates pegged GDP growth between 6% and 7%.

Inherent Flaws in GDP and Underlying Issues:

GDP is intrinsically flawed as a measure of national economic welfare. It conceals deep-seated inequalities within Indian society and diverts attention from pressing issues like job scarcity, inadequate education and healthcare, unlivable urban conditions, a dysfunctional judicial system, and environmental degradation.

Analyzing India’s Economic Trajectory Pre and Post-COVID-19:

A historical perspective on India’s GDP growth highlights a remarkable peak in GDP growth at an annual rate of 9% during the mid-2000s, driven by exceptionally high global trade growth and a real estate and construction boom fueled by the financial sector.
However, this growth proved unsustainable, and it decelerated to 6% following the global financial crisis of 2007-08 as global trade rapidly declined. By 2012-13, GDP growth had fallen to approximately 4.5%, though a mysterious data revision in January 2015 temporarily inflated figures for that year and the next three years.
The slowdown persisted after events like demonetization and a problematic GST rollout and worsened with the collapse of the finance-real estate bubble due to the IL&FS bankruptcy in August 2018. In the year preceding the COVID-19 pandemic, GDP growth had dwindled to a mere 3.9%.

Challenges in the Post-COVID Economic Landscape:

In the post-COVID-19 years, India’s economy went through significant fluctuations, including a sharp decline, moderate recovery, severe slowdown, and a brief resurgence in late 2022.
complexities of evaluating the post-COVID period, where different approaches yield varying results. For instance, comparing the latest four quarters with the four quarters before COVID results in an average annual growth rate of 4.2%, but looking at only the most recent quarter compared to the quarter before COVID shows an annual growth rate of just above 2%.

Policy Failures and the Path Forward:

Government policies have focused on stimulating supply rather than enhancing demand through job creation, investments in human capital, and urban development.
Measures such as the corporate tax cut in September 2019 and various incentive schemes have failed to reignite corporate investment. The increasing reliance on indirect taxes, which erode purchasing power, has exacerbated the demand problem.

Conclusion:

The need for a more realistic and comprehensive assessment of GDP growth just before and after COVID, with a projected medium-term annual GDP growth of 3%-4%.
However, the author expresses concerns that a misleading narrative of “high growth” will persist, perpetuated by the domestic elite and international media.
This, in turn, may lead to policies misaligned with India’s actual needs, resulting in a recurring clash between narrative and reality, ultimately having adverse economic consequences.

Fact for Prelims

Kavach

Kavach is India’s indigenous automatic train protection system, initially known as the Train Collision Avoidance System (TCAS).
Kavach has been in development since 2012 and aims to enhance railway safety.
It employs electronic and RFID devices in locomotives, signalling systems, and tracks.
This system uses high-frequency radio communication to control train brakes and alert drivers, drawing inspiration from established safety systems like the European Train Protection and Warning System and the Anti-Collision Device.
Kavach operates at the highest safety standard, SIL4, to prevent train collisions.
When activated, Kavach halts all trains within a 5-km range, enhancing safety by preventing collisions.

Atal Innovation Mission (AIM)

The Atal Innovation Mission (AIM) is a flagship initiative of NITI Aayog, the Government of India’s premier policy think tank.
It was launched in 2016 to promote a culture of innovation and entrepreneurship in the country.
AIM has taken a holistic approach to ensure the creation of a problem-solving innovative mindset in schools and creating an ecosystem of entrepreneurship in universities, research institutions, private and MSME sectors.
Atal Tinkering Labs: ATL is a flagship program of AIM that provides a platform for students to learn about innovation, design thinking, and physical computing. ATLs are set up in schools across India and are equipped with a variety of tools and equipment, such as 3D printers, laser cutters, and robotics kits.
Atal Incubation Centres: AICs are business incubators supporting startups and entrepreneurs. AICs are set up in universities, research institutions, and private companies across India.
Atal New India Challenge (ANIC): ANIC is a flagship program of AIM that supports early-stage technology-based innovations. ANIC provides funding, mentorship, and other resources to help startups develop and commercialize their innovations.