Context
The provisional estimates of annual national income (2020-21), released on May 31 by the National Statistical Office, did not have any surprises, but for one, that is, there is nothing encouraging in the numbers.[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]
Important Findings
- The agriculture sector continued its impressive growth performance, reiterating that it still remains as the vital sector of the economy, especially at times of crisis.
- The manufacturing sector continued its subdued growth performance, failing to emerge as the growth driver, with production interruptions due to localised lockdowns to be blamed.
- The contraction in trade (-18.2%), construction (-8.6%), mining (-8.5%) and manufacturing (-7.2%) is a matter of concern as these sectors account for the bulk of low-skilled jobs.
- Gross Domestic Product (GDP) at Constant (2011-12) Prices in Q4 of 2020-21 is showing a growth of 1.6%, slightly better than expected, but for a period when the restrictions on mobility and economic activity witnessed reduction, this performance looks below par.
- Further, this growth, which is an improvement over the 0.5% rate of growth in the previous quarter, is a statistical artefact as it is not devoid of the base effect and seasonality which plagues quarterly estimates.
- The magnitude of contraction in the economy and the policy responses towards it raises an important issue, that is, the question of growth prospects for the next year.
Rising unemployment rate
Contextualising the current growth rates in terms of some other macroeconomic data would provide us a better perspective on growth recovery.
- First, the unemployment data released by the Centre for Monitoring Indian Economy (CMIE) which says, “In May 2021, India’s labour participation rate at 40 per cent was the same as it was in April 2021. But, the unemployment rate shot up to 11.9 per cent from 8 per cent in April.
- A stable labour participation rate combined with a higher unemployment rate implies a loss of jobs and a fall in the employment rate.
- According to CMIE, over 15 million jobs were lost in May 2021 itself.
- May 2021 was also the fourth consecutive month of a fall in employment. The more worrying fact is that the cumulative fall in employment since January 2021 is 25.3 million
- This shows that the second wave of the pandemic has already dented economic activities, postponing recovery further.
- The job losses also bring out the high informality and vulnerability of labour in India as of the total jobs lost during April-May, 17.2 million were of daily wage earners.
Elementary textbook economics tells us that employment and aggregate demand in an economy are related via the channel of disposable incomes of workers. We also know that aggregate demand and output growth have a positive correlation. Hence, the prospects of growth revival in the next year look bleak at the moment and from this perspective, it is worrying that in just April and May 2021, India lost 25 million non-farm jobs.
Low business confidence
- This gets reflected in the business confidence of Indian companies, which is the second important data point that needs to examined.
- Business confidence index (BCI), from the survey by the industry body FICCI, plummeted to 51.5 from 74.2 in the previous round.
- The survey also highlights the weak demand conditions in the economy. It says, “With household income being severely impacted and past savings being already drawn on during the first wave of infections, demand conditions can be expected to remain weak for longer.”
- Compounding this is the uncertainty arising out of the imposition of localised curbs due to the second wave of infections and a muddled vaccine policy in the country.
- Manufacturing Purchasing Managers’ Index (PMI) also throws some light on the shape of things to come. PMI has slipped to a 10-month low indicating that the manufacturing sector is showing signs of strain with growth projections being revised lower.
- Both BCI and PMI slipping down indicates that the overall optimism towards 2021-22 is low, which could impact investments and cause further job losses.
Demand recovery
Growth recovery depends on demand recovery. External demand looks robust as India’s exports touched $32 billion in May 2021, 67% higher than in May 2020 and 8% more than in May 2019. The combined increase in exports of April and May 2021 is over 12% indicating that global demand rebound is much faster than the domestic demand.
Stimulus programmes and a sharp decline in COVID-19 infections seem to be aiding these economies. What needs to be addressed immediately is the crisis of low domestic demand.
Since last year, the policy responses have been to rely on credit easing, focusing more on supply side measures, with more and more guarantees by the government to improve flow of credit to important sectors.
There has been less direct action by the government to support the vulnerable to alleviate their hardships. There were some sector-specific measures to alleviate distress in certain sectors, which were timely.
However, this policy stance is unlikely to prop up growth for three reasons.
- First, the bulk of the policy measures, including the most recent, are supply side measures and not on the demand side. In times of financial anxiety, what is needed is direct state spending for a quick demand boost.
- Second, large parts of all the stimulus packages announced till now would work only in the medium term. These include policies related to the external sector, infrastructure and manufacturing sector.
- In fact, some of the policies towards agriculture, such as productivity enhancement through the introduction of new varieties, will only work over years.
- Third, the use of credit backstops as the main plank of policy has limits compared to any direct measure on the demand side as this could result in poor growth performance if private investments do not pick up.
- Further, the credit easing approach would take a longer time to multiply incomes as lending involves a lender’s discretion and borrower’s obligation.
- Interestingly, a tight-fisted fiscal policy approach comes at a time when conventional fiscal stimulus packages might not be enough as supply side issues arising out of episodic lockdowns need to be addressed simultaneously.
What is required now is a sharp revival in overall demand. Focusing on short-term magnified growth rates resting on low bases might be erroneous, as income levels matter more than growth rates at this juncture.
Focusing on growth rates has its merits in the long term as achieving higher income levels require sustained growth for longer periods. Bangladesh seems to be doing this without much fanfare, but the quest for sustained higher growth has been elusive for India for the last five years.
Public spending is the key
Right now, raising public spending is the only game in town left to the policymaker serious about bringing on a recovery. If we are to have it, though, we should accept a higher than budgeted deficit. A debate involving economists and central bankers has been set off on whether the government should now ‘print money’. This is the wrong way to approach the problem. It puts the cart before the horse. It is also alarmist.
The objective is to revive the economy, public spending is the instrument and the funding must be found. It need not involve money creation. India’s public debt is low by comparison with the OECD countries, and debt financing remains an option.
Even if money financing is adopted, it need not cause accelerating inflation as some predict. Experience in India suggests otherwise. However, studies do show that any economic expansion would be inflationary if the production of food does not respond adequately. How the expansion is financed is less relevant for inflation at least in the near term.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.
On March 31, the World Economic Forum (WEF) released its annual Gender Gap Report 2021. The Global Gender Gap report is an annual report released by the WEF. The gender gap is the difference between women and men as reflected in social, political, intellectual, cultural, or economic attainments or attitudes. The gap between men and women across health, education, politics, and economics widened for the first time since records began in 2006.
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]No need to remember all the data, only pick out few important ones to use in your answers.
The Global gender gap index aims to measure this gap in four key areas : health, education, economics, and politics. It surveys economies to measure gender disparity by collating and analyzing data that fall under four indices : economic participation and opportunity, educational attainment, health and survival, and political empowerment.
The 2021 Global Gender Gap Index benchmarks 156 countries on their progress towards gender parity. The index aims to serve as a compass to track progress on relative gaps between women and men in health, education, economy, and politics.
Although no country has achieved full gender parity, the top two countries (Iceland and Finland) have closed at least 85% of their gap, and the remaining seven countries (Lithuania, Namibia, New Zealand, Norway, Sweden, Rwanda, and Ireland) have closed at least 80% of their gap. Geographically, the global top 10 continues to be dominated by Nordic countries, with —Iceland, Norway, Finland, and Sweden—in the top five.
The top 10 is completed by one country from Asia Pacific (New Zealand 4th), two Sub-Saharan countries (Namibia, 6th and Rwanda, 7th, one country from Eastern Europe (the new entrant to the top 10, Lithuania, 8th), and another two Western European countries (Ireland, 9th, and Switzerland, 10th, another country in the top-10 for the first time).There is a relatively equitable distribution of available income, resources, and opportunities for men and women in these countries. The tremendous gender gaps are identified primarily in the Middle East, Africa, and South Asia.
Here, we can discuss the overall global gender gap scores across the index’s four main components : Economic Participation and Opportunity, Educational Attainment, Health and Survival, and Political Empowerment.
The indicators of the four main components are
(1) Economic Participation and Opportunity:
o Labour force participation rate,
o wage equality for similar work,
o estimated earned income,
o Legislators, senior officials, and managers,
o Professional and technical workers.
(2) Educational Attainment:
o Literacy rate (%)
o Enrollment in primary education (%)
o Enrollment in secondary education (%)
o Enrollment in tertiary education (%).
(3) Health and Survival:
o Sex ratio at birth (%)
o Healthy life expectancy (years).
(4) Political Empowerment:
o Women in Parliament (%)
o Women in Ministerial positions (%)
o Years with a female head of State (last 50 years)
o The share of tenure years.
The objective is to shed light on which factors are driving the overall average decline in the global gender gap score. The analysis results show that this year’s decline is mainly caused by a reversal in performance on the Political Empowerment gap.
Global Trends and Outcomes:
– Globally, this year, i.e., 2021, the average distance completed to gender parity gap is 68% (This means that the remaining gender gap to close stands at 32%) a step back compared to 2020 (-0.6 percentage points). These figures are mainly driven by a decline in the performance of large countries. On its current trajectory, it will now take 135.6 years to close the gender gap worldwide.
– The gender gap in Political Empowerment remains the largest of the four gaps tracked, with only 22% closed to date, having further widened since the 2020 edition of the report by 2.4 percentage points. Across the 156 countries covered by the index, women represent only 26.1% of some 35,500 Parliament seats and 22.6% of over 3,400 Ministers worldwide. In 81 countries, there has never been a woman head of State as of January 15, 2021. At the current rate of progress, the World Economic Forum estimates that it will take 145.5 years to attain gender parity in politics.
– The gender gap in Economic Participation and Opportunity remains the second-largest of the four key gaps tracked by the index. According to this year’s index results, 58% of this gap has been closed so far. The gap has seen marginal improvement since the 2020 edition of the report, and as a result, we estimate that it will take another 267.6 years to close.
– Gender gaps in Educational Attainment and Health and Survival are nearly closed. In Educational Attainment, 95% of this gender gap has been closed globally, with 37 countries already attaining gender parity. However, the ‘last mile’ of progress is proceeding slowly. The index estimates that it will take another 14.2 years to close this gap on its current trajectory completely.
In Health and Survival, 96% of this gender gap has been closed, registering a marginal decline since last year (not due to COVID-19), and the time to close this gap remains undefined. For both education and health, while progress is higher than economy and politics in the global data, there are important future implications of disruptions due to the pandemic and continued variations in quality across income, geography, race, and ethnicity.
India-Specific Findings:
India had slipped 28 spots to rank 140 out of the 156 countries covered. The pandemic causing a disproportionate impact on women jeopardizes rolling back the little progress made in the last decades-forcing more women to drop off the workforce and leaving them vulnerable to domestic violence.
India’s poor performance on the Global Gender Gap report card hints at a serious wake-up call and learning lessons from the Nordic region for the Government and policy makers.
Within the 156 countries covered, women hold only 26 percent of Parliamentary seats and 22 percent of Ministerial positions. India, in some ways, reflects this widening gap, where the number of Ministers declined from 23.1 percent in 2019 to 9.1 percent in 2021. The number of women in Parliament stands low at 14.4 percent. In India, the gender gap has widened to 62.5 %, down from 66.8% the previous year.
It is mainly due to women’s inadequate representation in politics, technical and leadership roles, a decrease in women’s labor force participation rate, poor healthcare, lagging female to male literacy ratio, and income inequality.
The gap is the widest on the political empowerment dimension, with economic participation and opportunity being next in line. However, the gap on educational attainment and health and survival has been practically bridged.
India is the third-worst performer among South Asian countries, with Pakistan and Afghanistan trailing and Bangladesh being at the top. The report states that the country fared the worst in political empowerment, regressing from 23.9% to 9.1%.
Its ranking on the health and survival dimension is among the five worst performers. The economic participation and opportunity gap saw a decline of 3% compared to 2020, while India’s educational attainment front is in the 114th position.
India has deteriorated to 51st place from 18th place in 2020 on political empowerment. Still, it has slipped to 155th position from 150th position in 2020 on health and survival, 151st place in economic participation and opportunity from 149th place, and 114th place for educational attainment from 112th.
In 2020 reports, among the 153 countries studied, India is the only country where the economic gender gap of 64.6% is larger than the political gender gap of 58.9%. In 2021 report, among the 156 countries, the economic gender gap of India is 67.4%, 3.8% gender gap in education, 6.3% gap in health and survival, and 72.4% gender gap in political empowerment. In health and survival, the gender gap of the sex ratio at birth is above 9.1%, and healthy life expectancy is almost the same.
Discrimination against women has also been reflected in Health and Survival subindex statistics. With 93.7% of this gap closed to date, India ranks among the bottom five countries in this subindex. The wide sex ratio at birth gaps is due to the high incidence of gender-based sex-selective practices. Besides, more than one in four women has faced intimate violence in her lifetime.The gender gap in the literacy rate is above 20.1%.
Yet, gender gaps persist in literacy : one-third of women are illiterate (34.2%) than 17.6% of men. In political empowerment, globally, women in Parliament is at 128th position and gender gap of 83.2%, and 90% gap in a Ministerial position. The gap in wages equality for similar work is above 51.8%. On health and survival, four large countries Pakistan, India, Vietnam, and China, fare poorly, with millions of women there not getting the same access to health as men.
The pandemic has only slowed down in its tracks the progress India was making towards achieving gender parity. The country urgently needs to focus on “health and survival,” which points towards a skewed sex ratio because of the high incidence of gender-based sex-selective practices and women’s economic participation. Women’s labour force participation rate and the share of women in technical roles declined in 2020, reducing the estimated earned income of women, one-fifth of men.
Learning from the Nordic region, noteworthy participation of women in politics, institutions, and public life is the catalyst for transformational change. Women need to be equal participants in the labour force to pioneer the societal changes the world needs in this integral period of transition.
Every effort must be directed towards achieving gender parallelism by facilitating women in leadership and decision-making positions. Social protection programmes should be gender-responsive and account for the differential needs of women and girls. Research and scientific literature also provide unequivocal evidence that countries led by women are dealing with the pandemic more effectively than many others.
Gendered inequality, thereby, is a global concern. India should focus on targeted policies and earmarked public and private investments in care and equalized access. Women are not ready to wait for another century for equality. It’s time India accelerates its efforts and fight for an inclusive, equal, global recovery.
India will not fully develop unless both women and men are equally supported to reach their full potential. There are risks, violations, and vulnerabilities women face just because they are women. Most of these risks are directly linked to women’s economic, political, social, and cultural disadvantages in their daily lives. It becomes acute during crises and disasters.
With the prevalence of gender discrimination, and social norms and practices, women become exposed to the possibility of child marriage, teenage pregnancy, child domestic work, poor education and health, sexual abuse, exploitation, and violence. Many of these manifestations will not change unless women are valued more.
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]2021 WEF Global Gender Gap report, which confirmed its 2016 finding of a decline in worldwide progress towards gender parity.
Over 2.8 billion women are legally restricted from having the same choice of jobs as men. As many as 104 countries still have laws preventing women from working in specific jobs, 59 countries have no laws on sexual harassment in the workplace, and it is astonishing that a handful of countries still allow husbands to legally stop their wives from working.
Globally, women’s participation in the labour force is estimated at 63% (as against 94% of men who participate), but India’s is at a dismal 25% or so currently. Most women are in informal and vulnerable employment—domestic help, agriculture, etc—and are always paid less than men.
Recent reports from Assam suggest that women workers in plantations are paid much less than men and never promoted to supervisory roles. The gender wage gap is about 24% globally, and women have lost far more jobs than men during lockdowns.
The problem of gender disparity is compounded by hurdles put up by governments, society and businesses: unequal access to social security schemes, banking services, education, digital services and so on, even as a glass ceiling has kept leadership roles out of women’s reach.
Yes, many governments and businesses had been working on parity before the pandemic struck. But the global gender gap, defined by differences reflected in the social, political, intellectual, cultural and economic attainments or attitudes of men and women, will not narrow in the near future without all major stakeholders working together on a clear agenda—that of economic growth by inclusion.
The WEF report estimates 135 years to close the gap at our current rate of progress based on four pillars: educational attainment, health, economic participation and political empowerment.
India has slipped from rank 112 to 140 in a single year, confirming how hard women were hit by the pandemic. Pakistan and Afghanistan are the only two Asian countries that fared worse.
Here are a few things we must do:
One, frame policies for equal-opportunity employment. Use technology and artificial intelligence to eliminate biases of gender, caste, etc, and select candidates at all levels on merit. Numerous surveys indicate that women in general have a better chance of landing jobs if their gender is not known to recruiters.
Two, foster a culture of gender sensitivity. Take a review of current policies and move from gender-neutral to gender-sensitive. Encourage and insist on diversity and inclusion at all levels, and promote more women internally to leadership roles. Demolish silos to let women grab potential opportunities in hitherto male-dominant roles. Work-from-home has taught us how efficiently women can manage flex-timings and productivity.
Three, deploy corporate social responsibility (CSR) funds for the education and skilling of women and girls at the bottom of the pyramid. CSR allocations to toilet building, the PM-Cares fund and firms’ own trusts could be re-channelled for this.
Four, get more women into research and development (R&D) roles. A study of over 4,000 companies found that more women in R&D jobs resulted in radical innovation. It appears women score far higher than men in championing change. If you seek growth from affordable products and services for low-income groups, women often have the best ideas.
Five, break barriers to allow progress. Cultural and structural issues must be fixed. Unconscious biases and discrimination are rampant even in highly-esteemed organizations. Establish fair and transparent human resource policies.
Six, get involved in local communities to engage them. As Michael Porter said, it is not possible for businesses to sustain long-term shareholder value without ensuring the welfare of the communities they exist in. It is in the best interest of enterprises to engage with local communities to understand and work towards lowering cultural and other barriers in society. It will also help connect with potential customers, employees and special interest groups driving the gender-equity agenda and achieve better diversity.