National Multidimensional Poverty Index

Syllabus: Issues Relating to Poverty and Hunger

In News

The NITI Aayog released the ‘National Multidimensional Poverty Index: A Progress Review 2023’

Key highlights:

Over the period from 2015 to 2021, India has made significant progress in reducing multidimensional poverty, with the percentage of multidimensionally poor declining from 24.85% to 14.96%. This positive trend resulted in approximately 13.5 crore Indians lifting themselves out of poverty during these five years.

However, despite these improvements, it’s important to note that one in seven Indians still remains multidimensionally poor.

What is the National Multidimensional Poverty Index (MPI)?

The National Multidimensional Poverty Index (MPI) was introduced in 2021 with the purpose of deconstructing the Global MPI and tailoring it to India’s specific context. By aligning with global standards while considering India’s unique challenges, the MPI aims to provide a comprehensive assessment of poverty in the country.

The ultimate objective of the project is to develop thorough Reform Action Plans that will contribute to elevating India’s position in the rankings of the Global MPI. NITI Aayog serves as the nodal agency responsible for implementing the National MPI and evaluating the performance of states and union territories based on their efforts to combat multidimensional poverty.

• The Multidimensional Poverty Index (MPI) is designed to measure multidimensional poverty by considering overlapping deprivations in health, education, and living standards. It assesses specific parameters within three broad categories and assigns a value to each, resulting in what is known as a ‘deprivation score.’
• To calculate the deprivation score for an individual, the weighted status of all relevant indicators is summed up. Only if this score exceeds 0.33, an individual is considered to be experiencing multidimensional poverty.
• The National Family Health Survey-5 (NFHS-5) served as the primary data source for obtaining the necessary figures and information to derive the MPI for the assessment of poverty in India.

Highlights of the National MPI Report 2023 (2nd Edition):

• What indicators have contributed to the reduction of India’s multidimensional poverty? Progress has been observed in indicators such as access to cooking fuel, sanitation, drinking water, and bank accounts.
• However, there is still room for improvement in certain areas. Indicators like nutrition and access to education have shown only marginal improvements and require further attention to make a more significant impact on reducing multidimensional poverty in India.

Performance of various states:

• Among the BIMARU states (Bihar, UP, MP, Odisha, and Rajasthan), the rural areas witnessed the fastest decline in the number of people living in poverty, reducing from 32.59% to 19.28%, attributed to notable improvements in these states.
• The number of states with less than 10% of their population living in multidimensional poverty has doubled between 2016 and 2021, increasing from 7 (Mizoram, HP, Punjab, Sikkim, TN, Goa, and Kerala) to 14 (Telangana, Andhra Pradesh, Haryana, Karnataka, Maharashtra, Manipur, and Uttarakhand).
• With the exception of Bihar, no other state in India has more than one-third of its population living in multidimensional poverty.

Comparing with Global MPI 2023:

India’s progress in reducing multidimensional poverty is evident. In 2005/2006, about 645 million people were living in multidimensional poverty, which decreased to approximately 370 million in 2015/2016 and further down to 230 million in 2019/2021. Consequently, around 415 million individuals were lifted out of poverty from 2005/2006 to 2019/2021. The incidence of multidimensional poverty also fell significantly, from 55.1% to 16.4%. Improvement was observed in all indicators of deprivation.

Factors contributing to multidimensional poverty:

• Within the health category, sub-indicators such as nutrition, child and adolescent mortality, and maternal health showed only moderate improvement. Lack of proper nutrition had the highest impact, contributing to close to 30% of India’s MPI.
• Other indicators that recorded limited decline include lack of years of schooling, inadequate access to maternal health services, and suboptimal school attendance.
• In the standard of living category:
  • While access to cooking fuel has significantly improved, approximately 44% of India’s population still faces deprivation in this aspect.
  • Although sanitation numbers have improved, over 30% of the population still lacks access to proper sanitation services.
  • Access to housing also saw marginal improvement.

Government’s flagship programmes:

• Several flagship initiatives have contributed to reducing deprivations in various areas:
• Health and Nutrition: Poshan Abhiyan and Anaemia Mukt Bharat have played crucial roles in improving health outcomes.
• Sanitation: Swachh Bharat Mission (SBM) and Jal Jeevan Mission (JJM) have been instrumental in enhancing sanitation across the country.
• Cooking fuel: PM Ujjwala Yojana (PMUY) has had a transformative impact on the lives of many.
• Other initiatives: Saubhagya (electricity), PM Awas Yojana (housing), PM Jan Dhan Yojana (banking), and Samagra Shiksha (education) have also contributed significantly.

Conclusion:

To further reduce deprivations across multiple indicators, consistent implementation of a diverse set of programs and initiatives with strong interlinkages is crucial. Continued efforts and collaborations between various sectors will be essential in driving positive change and improving the overall well-being of the population.

Tax Challenges Arising from the Digitalisation of the Economy

Syllabus: Global Agreements involving India and/or affecting India’s interests

In News

In a significant development, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), comprising 138 members and representing over 90% of global GDP, has reached a momentous Outcome Statement.

BEPS

BEPS, a term denoting corporate tax planning strategies employed by multinational corporations to transfer profits from higher-tax regions to lower or tax-free jurisdictions, has been a pressing issue. These strategies exploit gaps and discrepancies in tax regulations, leading to a substantial erosion of the tax base in higher-tax jurisdictions and resulting in an annual loss of revenue estimated at USD 100-240 billion.

Unfortunately, developing countries bear a disproportionate burden due to their greater reliance on corporate income tax, making them more vulnerable to the adverse effects of BEPS. To combat this global tax challenge, the OECD/G20 Inclusive Framework on BEPS has brought together over 135 countries and jurisdictions to collaborate on various initiatives, including the implementation of measures to combat tax avoidance, enhancing the coherence of international tax rules, and promoting a transparent tax environment.

Objective

The main objective of the Outcome Statement is to present a comprehensive package for the further implementation of the Two-Pillar Solution, designed to address the tax challenges arising from the digitalization of the economy.

Two-Pillar Solution

The Two-Pillar Solution, also known as the Global Anti-Base Erosion (GloBE) rules, was collectively agreed upon by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS in 2021. These rules aim to curtail base erosion and profit shifting by establishing a framework that ensures fair taxation in an increasingly digitalized global economy.

Importance of the 2-Pillar Solution:

The 2-Pillar Solution holds significant importance due to the following key aspects:

• Defining Multinational Enterprises (MNEs) Scope: It will clearly outline the MNEs that fall under the minimum tax regulations, ensuring a more inclusive approach to taxation.
• Calculating Effective Tax Rate: The solution will establish a mechanism to calculate the effective tax rate of MNEs on a jurisdictional basis, promoting transparency and accountability.
• Imposing Top-Up Tax: An agreed-upon rule will enable the imposition of a top-up tax on specific members of the MNE group, discouraging profit shifting and ensuring a fairer distribution of tax responsibilities.
• Enhancing International Tax Stability: By providing stability to the international tax system, the 2-Pillar Solution will create a more equitable and efficient tax framework that accommodates the complexities of a digitalized and globalized world economy.

Summary of the Outcome Statement:

The Outcome Statement comprises the following key elements:

• Multilateral Convention (MLC): The Inclusive Framework has developed a text for a Multilateral Convention, which enables jurisdictions to reallocate and exercise domestic taxing rights concerning a portion of MNE residual profits. This empowers countries to better regulate and tax profits generated within their borders.
• Streamlined Arm’s Length Principle: A proposed framework will simplify and streamline the application of the arm’s length principle, which governs transfer pricing between related entities. This will reduce complexities and ensure a fair and consistent approach to transfer pricing.
• Subject-to-Tax Rule (STTR): Together with its implementation framework, the STTR will allow developing countries to update their bilateral tax treaties to enable the taxation of income within their borders. This empowers these countries to “tax back” income and prevent profit shifting.
• Comprehensive Action Plan: The OECD will prepare a comprehensive action plan to facilitate the swift and coordinated implementation of the Two-Pillar Solution. This plan will ensure that the agreed-upon measures are effectively put into practice and yield the desired results.

OECD

• Established in 1961 under the Rome Treaties of 1957, this intergovernmental organization consists of 38 Member countries. Its primary mission is to foster economic progress and promote global trade.
• Functioning as a forum, its member nations proudly identify themselves as staunch supporters of democracy and proponents of the market economy.

Prelims Links: UPSC 2016

The term ‘Base Erosion and Profit Shifting’ is sometimes seen in the news in the context of

1. mining operation by multinational companies in resource-rich but backward areas 
2. curbing of tax evasion by multinational companies
3. exploitation of genetic resources of a country by multinational companies
4. lack of consideration of environmental costs in the planning and implementation of developmental projects

Ans: 2

Industrial Concentration in India

Syllabus: Effects of Liberalisation on the Economy, Changes in Industrial Policy and Their Effects on Industrial Growth

In News

• India’s major businesses appear to be flourishing, as evidenced by a former RBI Deputy Governor’s report. Between 1991 and 2021, the Big-5 business groups saw a significant increase in their share of assets in the non-financial sectors, rising from 10% to 18%. 
• In contrast, the next five business groups experienced a decline in their share from 18% to less than 9%. 
• This concentration of wealth in a few dominant corporations is attributed to market functioning, where inequality and varying economic power lead to concentration and centralization instead of promoting healthy competition.

However, such rapid industrial concentration poses several risks:

• Suppression of competition.
• Potential inflation or profiteering due to manipulation of costs and prices.
• Influence over democratic institutions, including media capture.
• Diminished role of civil society as a countervailing power.
• Undue corporate influence over political processes and policymaking.
• Tendencies of state capture.
• Escalation of asset and income inequality.

How can this be minimised?

To address these issues, it is necessary to regulate markets and prevent the unrestrained growth of dominant businesses and excessively large conglomerates. Breaking up entities that have become too large for comfort is also a potential measure to minimize the risks of industrial concentration.

Challenges towards regulating markets

However, regulating markets faces challenges, primarily due to the close relationship between the state and big businesses. 

Three trends have signalled this narrowing of political distance

• The adoption of neoliberalism, which emphasizes facilitating the growth of private capital rather than regulating it, leading to unintended consequences in various sectors.
• State policies favoring domestic big businesses, using resources and diplomacy to strengthen their position.
• The refusal to reduce the influence of money in politics, leading to corporate donations to political parties and the use of big businesses as a means to garner electoral support.

What is frightening in the current situation?

The current situation is alarming as these trends are combined into a strategy that strengthens Indian businesses under the pretext of promoting national interest. Dissent against centralization and concentration is suppressed by the state in the name of national interest.

Way ahead

To move forward, it is essential to build a broad alliance of diverse classes to push for robust actions against monopolies and trustification. Similar efforts were observed in India after Independence during the License-Permit-Quota Raj era.

Conclusion

In conclusion, while a return to the pre-reform License-Permit-Quota Raj is not feasible in contemporary India, what the country requires is equitable treatment of all businesses, regardless of their size, to genuinely promote the national interest in the long term.

Mains Question

Examine the impact of liberalisation on companies owned by Indians. Are they competing with the MNCs satisfactorily? Discuss. (UPSC 2013)

Small Modular Reactors (SMRs)

Syllabus: Science and Technology: Nuclear Science

What are SMRs?

SMRs are advanced nuclear reactors with a capacity of up to 300 MW per unit, known for their simplicity, safety, and cost-effectiveness. These reactors can be manufactured in factories and transported to the installation site, making them economical and time-efficient. Unlike traditional reactors that require refueling every 1-2 years, SMRs only need refueling every 3-7 years.

Status of India’s nuclear power:

India currently operates over 22 nuclear reactors in 7 power plants across the country, producing a total of 6780 MW of nuclear power. The country aims to increase nuclear power’s contribution to 10% of its energy mix by 2035.

Global Status of SMRs:

Globally, more than 70 SMR designs are under development in 17 countries. Notably, companies like NuScale Power in the United States have received approval for their 600 MW SMR plant design from the Nuclear Regulatory Commission. Russia’s Akademik Lomonosov, a 77 MW SMR, has been operational since 2019. In the UK, Rolls-Royce is establishing a manufacturing facility for SMRs.

Reasons for India’s need for more nuclear power:

India faces limitations in hydropower growth due to concerns about biodiversity conservation, rehabilitation and compensation costs for landowners, and seismological factors in the Himalayas. The country heavily relies on coal, with nearly 210 gigawatts of coal capacity producing 73% of its electricity, which is environmentally unfriendly. Additionally, wind and solar power are intermittent and variable energy sources.

India’s strategy:

India’s strategy for transitioning towards nuclear energy involves shifting from larger nuclear power plants to smaller ones, specifically SMRs. The government aims to engage the private sector through public-private partnerships to establish SMRs across the country, with the ultimate goal of reaching 10% nuclear power in its energy mix by 2035.

NITI Aayog’s suggestions for SMRs include:

Encouraging private sector participation through public-private partnerships.

Implementing comprehensive regulatory changes to ensure safety standards and monitoring.

Modifying foreign investment policies to attract domestic and foreign companies for SMR development in India.

The way ahead for India:

To advance the nuclear industry, India should adopt ‘passive safety’ designs for nuclear reactors, such as active cooling pumps. Enforcing nuclear liability, as demonstrated by the Civil Liability for Nuclear Damage Act 2010, will also be crucial. Additionally, ending the monopoly of the Nuclear Power Corporation of India Limited (NPCIL) in reactor operations and allowing other government companies and the private sector to participate will foster further growth.

Conclusion:

To achieve its goal of ‘net zero’ emissions by 2070, India needs to have around 100 GW of nuclear power by 2050. Utilizing a portfolio of technologies, including SMRs, will be essential in making nuclear power safe and cost-effective over time.

Mains Questions

Give an account of the growth and development of nuclear science and technology in India. What is the advantage of a fast breeder reactor programme in India? (UPSC 2019)

Prelims Links: UPSC 2016

India is an important member of the  ‘International Thermonuclear Experimental Reactor’. If this experiment succeeds, what is the immediate advantage for India?

1. It can use thorium in place of uranium for power generation
2. It can attain a global role in satellite navigation
3. It can drastically improve the efficiency of its fission reactors in power generation
4. It can build fusion reactors for power generation

Ans: 4

Fusion of rock art at Rudragiri Hillock

In News

The Rudragiri hillock in Andhra Pradesh showcases a fascinating blend of history, featuring both prehistoric rock paintings from the Mesolithic period and exquisite artwork from the Kakatiya dynasty, dating back to approximately 1300 AD.

• During the Mesolithic age around 5000 B.C., five naturally formed rock shelters served as living quarters. These shelters now stand as a testament to that ancient era.
• The Kakatiya-era paintings, on the other hand, portray scenes from the epic Ramayana and boast a rich array of colors derived from white kaolin and various pigments. Among the captivating artworks, one cave depicts the intense battle between the Vanara brothers Vali and Sugriva, with Rama shooting arrows at Vali. In another cave, a grand sketch portrays Hanuman carrying the Sanjivani hill in his right hand, symbolizing his mission to save Lakshmana’s life.

About Kakatiya Dynasty

• As for the Kakatiya dynasty, it was a prominent Andhra dynasty that flourished in the 12th century CE, ruling from Warangal in Telangana from CE 1083 to 1323. One of their significant contributions to the region was the construction of an extensive network of tanks for irrigation and drinking water, fostering the overall development of the area.
• The Kakatiya kings, such as Ganapati Deva, Rudrama Devi, and Prataparudra, were great patrons of Hindu temples. Numerous temples were built under their support, including the famous Thousand Pillar Temple or Rudreshwara Swamy Temple in Telangana. This unique star-shaped temple features a triple shrine (Trikutalayam) dedicated to Vishnu, Shiva, and Surya.

Digital time voucher system for political parties

In News

The Election Commission of India (ECI) has implemented a digital time voucher system to grant political parties access to government-owned electronic media, such as Doordarshan and All India Radio, during elections.

What is the Digital time voucher system?

The Digital time voucher system operates by providing political parties with specific time slots, serving as permissions to broadcast or telecast their campaign messages on these media platforms. This system simplifies the process, eliminates the need for physical collection of vouchers, and enhances accessibility and convenience for political parties engaged in election campaigns.

Significance

This move highlights the ECI’s dedication to leveraging technology for a smoother electoral process. The primary objective of the scheme is to ensure fair and equal access to electronic media for campaigning. Each national and state party receives a base time allocation, with additional time granted based on their previous poll performance.

Rules

• The rules governing political parties’ access to government-owned electronic media in India, such as Doordarshan and All India Radio, fall under the jurisdiction of the Election Commission of India (ECI) and the Prasar Bharati Act.
• During elections, the ECI requires Doordarshan and All India Radio to allocate a certain amount of free airtime to recognized political parties for broadcasting their campaign messages. The time slots allotted to political parties are determined by the ECI, considering factors such as their past electoral performance and representation in the legislature. Fixed time slots are designated for each party’s broadcasts.

Other aspects of the rules related to political parties’ access to media are governed by the Representation of the People Act, 1951.

RBI’s SOPs to Banks for Rupee Trade

In News

The Reserve Bank of India (RBI) is preparing to issue a standardized operating procedure (SOP) to banks to streamline the process of providing proofs of inward remittances for exporters.

The objective of this initiative is to tackle the challenges faced by exporters in the rupee-based trading mechanism for foreign trade.

Issues with FIRC (Foreign Inward Remittance Certificate)?

The main issue lies with the Foreign Inward Remittance Certificates (FIRC) when they are not forwarded from one bank to another. This delay hampers the generation of electronic bank realisation certificates (e-BRCs), which are essential for exporters as they serve as evidence of payment for their exports. These certificates also make them eligible for benefits under the Foreign Trade Policy.

To illustrate, suppose an exporter in India receives payment for their exports from a foreign buyer through a bank. In that case, they need a FIRC from that bank as proof of the inward remittance. However, if the FIRC is not transmitted to the exporter’s bank, they won’t obtain the required e-BRC, potentially preventing them from accessing government-provided benefits or incentives for their export transactions.

What is FIRC (Foreign Inward Remittance Certificate)?

To clarify, the FIRC (Foreign Inward Remittance Certificate) acts as a testimonial for all inward remittances entering India.

What is an Electronic Bank Realization Certificate(e-BRC)?

On the other hand, an Electronic Bank Realization Certificate (e-BRC) is a crucial digital certificate for export businesses. It is issued by a bank to confirm that the buyer made payment to the exporter for services or goods exported. The e-BRC serves as proof of payment realization for the exports.

Steel Slag Roads

In News

India has achieved a groundbreaking feat by developing the latest Steel Road technology, utilizing steel slag.

What is the Steel Slag Road?

The Steel Slag Road is a revolutionary concept that makes use of steel slag, a byproduct generated during the steelmaking process. This slag is produced when molten steel is separated from impurities in steel-making furnaces. Instead of discarding this waste material, it is ingeniously processed and incorporated as an aggregate in road construction. By blending steel slag with other materials and advanced technologies, engineers have created a road surface that is not only durable but also environmentally sustainable.

Development Credit:

The pioneering technology behind Steel Slag Road is attributed to the CSIR-Central Road Research Institute (CRRI). Their innovation enables the large-scale utilization of waste steel slag from steel plants in the construction of roads.

Advantages:

• Environmentally Beneficial: This initiative aligns with the “Waste to Wealth” approach and effectively addresses the environmental degradation caused by the accumulation of waste steel slag.
• Cost-Effective and Long-Lasting: Steel slag roads have proven to be well-suited to India’s diverse terrain, offering substantial cost savings of up to 30% compared to traditional road construction. Moreover, these roads boast a lifespan three times longer than conventional roads, making them an economically sensible and sustainable choice.
• Weather-Resistant: Steel slag roads exhibit remarkable resistance to various weather conditions, ensuring their stability and longevity even in challenging environments.
• The success of steel slag roads has been convincingly demonstrated through several projects, including those in Surat, Arunachal Pradesh, and the prestigious National Highway NH-66. With such positive outcomes, this innovative technology has the potential to transform road construction in India while promoting ecological stewardship.

93% DPT3 immunisation coverage in 2022: WHO

In News

In 2022, India achieved a remarkable milestone in immunization, as reported by the World Health Organization (WHO). 

The coverage rate for the DPT3 vaccine (diphtheria, pertussis, and tetanus) reached an all-time high of 93%. This marked a significant improvement compared to the pre-pandemic best of 91% in 2019 and a considerable increase from the 85% recorded in 2021. 

In the WHO South-East Asia Region, the DPT3 coverage rate also saw a positive trend, reaching 91% in 2022, up from 82% in 2021, which brought it back to pre-pandemic levels.

Key Findings

• The region experienced other positive developments in vaccination. The measles vaccine coverage rose to 92% in 2022, a notable increase from 86% in 2021. 
• Furthermore, the number of zero-dose children, those who had not received any dose of the DPT vaccine, was halved from 4.6 million in 2021 to 2.3 million in 2022. 
• Similarly, the number of partially vaccinated children decreased from 1.3 million in 2021 to 650,000 in 2022.
• India and Indonesia were recognized for their commendable efforts in improving immunization rates in the region. Their initiatives played a pivotal role in achieving the strong immunization recoveries observed.
• The report underlines the importance of addressing gaps in immunization coverage at the subnational level to effectively prevent outbreaks of vaccine-preventable diseases.

About the DTP vaccine:

• The DTP vaccine is designed to protect against diphtheria, tetanus, and pertussis. Diphtheria and pertussis are contagious diseases that spread from person to person, while tetanus enters the body through cuts or wounds.
• Diphtheria (D) can lead to serious health complications, including difficulty breathing, heart failure, paralysis, or even death.
• Tetanus (T) causes painful stiffening of the muscles and can lead to severe problems like being unable to open the mouth, difficulty swallowing and breathing, or death.
• Pertussis (aP), commonly known as “whooping cough,” can cause uncontrollable and violent coughing spells, making it challenging to breathe, eat, or drink. In babies and young children, pertussis can be extremely dangerous, causing pneumonia, convulsions, brain damage, or death. In teens and adults, it can lead to weight loss, loss of bladder control, passing out, and even rib fractures due to severe coughing.

Cicada species

In News

Researchers have recently discovered a cicada species frequently encountered in various regions of South India, which had been previously misidentified. The newly identified species has been named Purana cheeveeda, taking inspiration from its Malayalam name, Cheeveedu.

Initially, it was mistakenly identified as Purana tigrina, a species that was described in Malaysia back in 1850. The Association for Advancement in Entomology has now rectified this longstanding taxonomic error by distinguishing Purana cheeveeda from the Malaysian species.

The research team observed notable differences in the male genitalia and operculum’s structure, leading to the reclassification of the species.

Gambusia

In News

In an effort to combat mosquito-borne diseases like malaria and dengue, the Andhra Pradesh government has introduced approximately 10 million Gambusia fish, commonly known as mosquitofish, into the state’s water bodies.

Gambusia fish have long been recognized as an effective biological agent for controlling mosquito larvae and have been utilized in mosquito-control strategies in India since 1928. Their remarkable breeding capacity and adaptability enable them to thrive in various environments.

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