22 September, 2020
- Dilution without adequate deliberation (Polity & Governance/ Economy)
- Govt. unveils 2.6% hike in wheat MSP amid protests- Critical Analysis of MSP - (Economy
- Point of Order- Editorial- Editorial- (Polity & Governance)
- Parliament passes IBC Bill (Economy )
- Bacteria behind deaths of Botswana Elephants (Environment)
- In the air- Aerosol Transmission- Reference ( Science & Tech)
- Interpreting India-China conversations Reference (International Relations)
- Question of the Day
- UPSC Current Affairs:Dilution without adequate deliberations a. Need for Labour Reforms in India b. Code on Wages 2019 – Need and Provisions c. Three New Labour Codes – Provisions and Criticisms – Pg7
UPSC Syllabus: Prelims: Economy |Mains: GS Paper III – Economy
Sub Theme: Agricultural Reform | UPSC
Need for Labour Reforms in India
A rapid expansion of the manufacturing sector has been a key element of the growth experience of successful developing countries, especially labour-abundant ones. In this context, the Indian manufacturing sector exhibits many peculiarities: first, it contributes small and stagnant share to GDP (17%); second, its composition is more skewed towards skill and capital intensive activities; third, only a small share of employment in manufacturing is in organized manufacturing (the unorganized manufacturing sector accounted for almost 70 per cent of total manufacturing employment); and fourth, employment is heavily concentrated in small firms. It is being said that the labour laws in India are more geared towards protecting employment rather than boosting employment and hence have proved to be a major hindrance for the development of manufacturing sector.
LABOUR LAWS IN INDIA
Labour laws are under concurrent list. Currently, there are 44 labour laws under the purview of Central Government and more than 100 under State Governments, which deal with a host of labour issues. Some of the laws related to Labour are Factories Act ,1948, Minimum Wages Act, 1948, Industries (Regulation and Development) Act of 1951, Industrial Disputes Act, 1947, Contract labour Act 1970, Trade Unions Act 1926 etc.
PROBLEMS WITH THE LABOUR LAWS
Low Employment Elasticity: Even though, the Indian Economy has grown rapidly, it has failed to create sufficient number of jobs leading to low employment elasticity. • Archaic Labour Laws: Most of the labour laws were enacted 40-70 years back, to address the then needs of regulating the manufacturing sector. Today, service sector has taken the lead with 55% share in the GDP. Labour Laws need to be reoriented to address the emerging needs of the service sector and the new technology intensive manufacturing sector. Multiplicity of Labour Laws: Currently, there are 44 labour laws under the purview of Central Government and more than 100 under State Governments. This not only leads to significant increase in the compliance costs for the firms and also gives scope for corruption and harassment.
Poor Coverage of workers: The labour laws cover only around 8% of the workforce presently employed in the formal sector leading to the exclusion of the remaining 92% of the informal workforce. The informal workers face significant challenges in terms of poor wages, working environment and lack of social security benefits.
Problem of Missing Middle: The Manufacturing sector is basically dominated by a large number of small enterprises and a relatively less number of large scale manufacturing enterprises. There is almost near absence of mid-sized firms, which can be attributed to out-dated labour laws. The labour law imposes compliance costs on the mid-sized and large firms and incentives the small firms to stay smaller. This in turn adversely affects the job creation in the Indian Economy.
Lack of Flexibility to the Firms: Keeping in tune the development of Indian economy, the labour laws should be able to provide sufficient amount of autonomy to the firms to manage its workforce efficiently. However, the labour laws fail to provide necessary flexibility to the firms. For example: Industrial Disputes Act (IDA) requires firms employing more than 100 workers to seek permission from their respective state governments to retrench or lay off workers. Further, Section 9A of the IDA lays out the procedures that must be followed by employers before changing the terms and conditions of work, which introduces additional rigidities for firms in using their existing workers effectively. Similarly, Contract Labour Act regulates and restricts the use of contract labour for certain tasks in the Industries.
Growing Informalisation of Workforce: The slow pace of labour reform has encouraged firms to resort to other strategies to negotiate “regulatory cholesterol”. One popular strategy is to hire contract workers, which has two key benefits: first, the firm essentially subcontracts the work of following regulations and “managing” inspectors to the contract labour firm. Second, because contract workers are the employees of the contractor and are not considered workmen in the firm, the firm stays small enough to be exempt from some labour law. This can be seen in the fact that the share of contractual workers increased from 12 per cent of all registered manufacturing workers in 1999 to over 25 per cent in 2010. The informal workers are paid almost 20 times less wages as compared to formal workers and lack social security benefits.
Obstacle to Human Capital Formation: The industries play crucial role in skill development. However, as stated before, labour laws discourage firms from employing a large number of permanent workers and steer them towards employing more casual or contract workers. The firms do not invest in upgrading the skills of the informal workers leading to lack of human capital formation.
Reduce the Global Competitiveness: The Labour intensive industries in India such as Textile and Leather have remained mainly informal in nature due to labour policies. The Economic survey 2017-18 has highlighted that in response to increase in the labour costs in China, the textile and leather industries from smaller economies such as Bangladesh and Vietnam have got immensely benefitted. This has been possible due to flexible and pro-employment labour policies in such countries.
Need for the Code on Wages
Important provisions of the Code on Wages
Objective: It seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out. The Code replaces the following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.
Coverage: The Code will apply to all employees. The central government will make wage-related decisions for employments such as railways, mines, and oil fields, among others. State governments will make decisions for all other employments.
Floor wage: According to the Code, the central government will fix a floor wage, taking into account living standards of workers. Further, it may set different floor wages for different geographical areas.
The minimum wages decided by the central or state governments must be higher than the floor wage. In case the existing minimum wages fixed by the central or state governments are higher than the floor wage, they cannot reduce the minimum wages.
Fixing the minimum wage: The Code prohibits employers from paying wages less than the minimum wages. Minimum wages will be notified by the central or state governments.
While fixing minimum wages, the central or state governments may take into account factors such as: (i) skill of workers, and (ii) difficulty of work.
Overtime: The central or state government may fix the number of hours that constitute a normal working day. In case employees work in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.
Payment of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque, (iv) by crediting to the bank account, or (v) through electronic mode. The
wage period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.
Deductions: Under the Code, an employee’s wages may be deducted on certain grounds including: (i) fines, (ii) absence from duty, (iii) accommodation given by the employer, or (iv) recovery of advances given to the employee, among others. These deductions should not exceed 50% of the employee’s total wage.
Determination of bonus: All employees whose wages do not exceed a specific monthly amount, notified by the central or state government, will be entitled to an annual bonus. The bonus will be at least: (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher. In addition, the employer will distribute a part of the gross profits amongst the employees. This will be distributed in proportion to the annual wages of an employee. An employee can receive a maximum bonus of 20% of his annual wages.
Gender discrimination: The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature.
Advisory boards: The central and state governments will constitute advisory boards. The Central Advisory Board will consist of: (i) employers, (ii) employees (in equal number as employers), (iii) independent persons, and (iv) five representatives of state governments. State Advisory Boards will consist of employers, employees, and independent persons. Further, one-third of the total members on both the central and state Boards will be women. The Boards will advise the respective governments on various issues including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.
Offences: The Code specifies penalties for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code. Penalties vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees.
How the Code on Wages would benefit?
Expansion in coverage of Employees: The Code proposes to do away with the concept of bringing specific jobs under the Act by the centre and states and mandates that minimum wages be paid for all types of employment – irrespective of whether they are in the organized or the unorganized sector.
Introduction of National Minimum Wage: The Code introduces a national minimum wage which will be set by the central government. This will act as a floor for state governments to set their respective minimum wages.
Easier compliance of law: The Code introduces the concept of a ‘facilitator’ who will carry out inspections and also provide employers and workers with information on how to improve their compliance with the law.
Further, there are 12 definitions of wages in the different Labour Laws leading to litigation besides difficulty in its implementation. The definition has been simplified and is expected to reduce litigation and will entail at lesser cost of compliance for an employer.
- UPSC Current Affairs: Govt. unveils 2.6% hike in wheat MSP amid protests – Critical Analysis of MSP – Article – Pg 5/9
UPSC Syllabus: Prelims: Economy | Mains: GS Paper-III
Sub Theme: Minimum Support Price for Farm Produce | UPSC
Declaration of MSP
- The Cabinet Committee on Economic Affairs (CCEA) notifies MSP based on the recommendations of the Commission on Agricultural Costs and Prices (CACP). These recommendations are made separately for the Kharif marketing season and the Rabi marketing season. Post harvesting, the government procures crops from farmers at the MSP notified for that season, in order to ensure remunerative prices to farmers for their produce.
- As of now, CACP recommends MSPs of 23 commodities, which comprise 7 cereals (paddy, wheat, maize, sorghum, pearl millet, barley and ragi), 5 pulses (gram, tur, moong, urad, lentil), 7 oilseeds (groundnut, rapeseed-mustard, soyabean, seasmum, sunflower, safflower, nigerseed), and 4 commercial crops (copra, sugarcane, cotton and raw jute).
How are the MSPs fixed?
- The CACP considers various factors such as the cost of cultivation and production, productivity of crops, and market prices for the determination of MSPs.
- Different methodologies may be used to calculate the MSPs. These are (i) A2 Approach, which includes cost of inputs such as seeds, fertilizer, labour; (ii) A2+FL Approach, which includes A2 and the implied cost of family labour (FL); and (iii) C2 Approach, which includes the implied rent on land and interest on capital assets and A2+FL.
- Hence, C2 approach is considered to be the most comprehensive approach which can be used to calculate the MSP.
- The National Commission on Farmers led by M.S. Swaminathan had recommended for the adoption of C2 Approach for fixing the MSP. However, presently, the MSPs are fixed at least 50% more than cost of production as calculated according to A2+FL approach.
Limitations in the MSP Regime
- The MSP Policy of the Government has come under immense criticism on account of number of reasons. These flaws with the MSP regime have been highlighted by number of committees such as the Committee on Doubling Farmers' income which was headed by Ashok Dalwai. Some of these fundamental flaws include:
- Promoted Cultivation of Water Intensive Crops: Even though, the Government declares MSP for 23 crops, the procurement is quite strong only for Rice and Wheat. The procurement of other commodities, particularly Pulses and Oilseeds is quite lower. Hence, it has incentivised the cultivation of more water intensive crops such as Rice and Wheat leading to an adverse impact on the Indian Agriculture.
- Lack of Safeguards: The present MSP regime is not geared to pay compensation to the farmers when they are forced to sell the agricultural commodities in the open market below the MSP. Ideally, the MSP regime should be able to compensate such farmers for the losses incurred.
- Flawed Approach: It has been stated that the fixing of MSP based on A2+FL approach would lead to declaration of lower MSP and hence does not adequately compensate the farmers. Accordingly, some of the economists have pointed out that the MSP should be declared based on the C2 Approach as recommended by Swaminathan Committee.
- Benefitted only Large Farmers: The Shanta Kumar Committee on FCI reforms has highlighted that the MSP procurement has benefitted only 6% of farmers in India. Hence, only the large farmers which higher surplus of agricultural commodities have got benefitted from MSP. The Small and marginal farmers who comprise of almost 83% of the farming community have failed to get benefitted from the MSP regime.
- Undue delay: In some of the cases, the Government has not been able to declare the MSPs as per the schedule. These delays in the announcement of the MSPs have not able to able to send the price signals to the farmers on time
- In order to address these problems associated with the MSP regime, the Government has unveiled the PM-AASHA scheme. The Government has to effectively implement the PM-AASHA Scheme so as to improve the agricultural outcomes.
- Ultimately, the Government must realise that unless the prices received by the farmers increase, we would not be able to realise the vision of doubling farmers' income by the end of 2022.
- UPSC Current Affairs: Point of Order – Editorial - Page 6
UPSC Syllabus: Mains: GSII – Social Issues
Sub theme: Parliamentary Proceedings | UPSC
- Rajya Sabha Deputy Chairman Harivansh’s refusal to conduct a division of votes on two controversial pieces of legislation on Sunday, despite persistent demands from members, was unprecedented in its sheer brazenness.
- During the point of order to be raised, he did not allow many members opposing the “anti-farmer bill” to even speak, purported to extend the session beyond 1pm on September 20. As per the convention of parliament, the House functions with the consensus of all political parties. This was specifically pointed out by Leader of Opposition Ghulam Nabi Azad.
In parliamentary procedure, a point of order occurs when someone draws attention to a rules violation in a meeting of a deliberative assembly.
What is a Point of Order
- Any member can and should bring to the Chair’s immediate notice any instance of what he considers a breach of order or a transgression of any written or unwritten law of the House which the Chair has not perceived, and he may also ask for the guidance and assistance of the Chair regarding any obscurities in procedure.
- A member is entitled, in such cases only, to interrupt proceedings of the House by rising and saying, ‘On a point of order, Mr. Chairman’ and then to state the point in question concisely before him. However, there is often some doubt amongst members as to what exactly constitutes a point of order, and the Presiding Officer often replies that the point in question is not a point of order.
What are the conditions?
- A point of order should, relate to the interpretation or enforcement of the Rules of Procedure and Conduct of Business in Rajya Sabha or conventions or such articles of the Constitution as to regulate the business of the House and must raise a question which is within the cognizance of the Chair.
- The test whether a point raised is a point of order or not is not whether the Chair can give any relief but whether it involves such interpretation or enforcement of the rules, etc. and whether it raises a point which the Chair alone can decide.
- UPSC Current Affairs: Parliament passes IBC Bill - Pg 09
UPSC Syllabus: Prelims: Economy |Mains: GS III – Economy
Sub theme: Insolvency & Bankruptcy Code | UPSC
Earlier, there were multiple overlapping laws and adjudicating forums dealing with financial failure and insolvency of companies and individuals in India. This led to undue delays in the recovery of the NPAs by the Banks. Hence, the IBC Code was introduced to consolidate all the existing laws related to Insolvency and Bankruptcy in India and to simplify the process of insolvency resolution.
Adjudicating authorities: The proceedings of the resolution process would be adjudicated by the National Companies Law Tribunal (NCLT), for companies; and the Debt Recovery Tribunal (DRT), for individuals.
Committee of Creditors (CoC) : During the insolvency resolution process, a committee consisting of lenders would be constituted for taking decisions (by voting) on the resolution process. The CoC may either decide to restructure the debtor’s debt by preparing a resolution plan or liquidate the debtor’s assets. However, such a decision has to be approved by at least 66% of the votes in the committee of creditors. (Earlier, the voting threshold for the approval was 75%, but it was reduced to 66% through the IBC amendment act, 2019)
Insolvency and Bankruptcy Board: The Board would regulate insolvency professionals, insolvency professional agencies and information utilities set up under the Code. The Board would consist of representatives of Reserve Bank of India, and the Ministries of Finance, Corporate Affairs and Law.
Procedure to resolve Insolvency and Bankruptcy:
The Code proposes two independent stages: Insolvency Resolution Process, during which lenders assess whether the debtor's business is viable to continue and the options for its rescue and revival; and Liquidation (Sale of Assets), if the insolvency resolution process fails.
Insolvency Resolution Process (IRP): When a default occurs, the resolution process may be initiated either by the debtor or creditor before the adjudicating authority. The NCLT appoints an insolvency professional to administer the IRP. The Resolution Professional identifies the financial creditors and constitutes a Committee of Creditors (CoC). The CoC would prepare the resolution plan for the restructuring the loans of the defaulted borrower which may be in the form of extending the maturity period of the loan, reducing the rate of interest on loans etc. However, such a resolution plan has to be approved by at least 66% of the votes in the committee of creditors.
Liquidation (Sale of Assets): If the Committee of Creditors fail to come up with a resolution plan within the time limit of 330 days, then the proceeds from the sale of the debtor’s assets are distributed in the following order of precedence: i) insolvency resolution costs, including the remuneration to the insolvency professional, ii) secured creditors, whose loans are backed by collateral, dues to workers, other employees, iii) unsecured creditors, iv) dues to government, v) priority shareholders and vi) equity shareholders.
- UPSC Current Affairs: Bacteria behind deaths of Botswana Elephants - Pg 13
UPSC Syllabus: Prelims: General Science |Mains: GS III – Science & Technology
Sub theme: Cyanobacterial Neurotoxins | UPSC
Context: As per the officials of Botswana, toxins in water produced by cyanobacteria killed more than 300 elephants in Botswana this year. The latest tests have detected cyanobacterial neurotoxins to be the cause of deaths in elephants. These are bacteria found in water. Botswana is home to 130,000 African elephants, more than any other country on the continent. Last year, the country scrapped an elephant hunting ban it had in place since 2014, sparking international outcry.
Climate Change Impacts
- Cyanobacteria are microscopic organisms common in water and sometimes found in soil. Not all produce toxins but scientists say toxic ones are occurring more frequently as climate change drives up global temperatures.
- Cyanobacteria are toxic bacteria which can occur naturally in standing water and sometimes grow into large blooms known as blue-green algae. Cyanobacteria, also known as blue-green algae, is found worldwide especially in calm, nutrient-rich waters.
- Scientists warn that climate change may be making these incidents - known as toxic blooms - more likely, because they favour warm water. Scientists worry that climate change will trigger the bacteria to produce more toxins as water temperatures rise and conditions become more favourable for the bacteria to grow.
- Some species of cyanobacteria produce toxins that affect animals and humans. People may be exposed to cyanobacterial toxins by drinking or bathing in contaminated water.
- Symptoms include skin irritation, stomach cramps, vomiting, nausea, diarrhoea, fever, sore throat, headache. Animals, birds, and fish can also be poisoned by high levels of toxin-producing cyanobacteria.
- Sudden deaths of elephants after showing neurological symptoms—such as walking in circles, as reported by eyewitnesses—suggests anthrax poisoning is a likely possibility.
- The bacterium that causes this infectious disease occurs naturally in soil and has been known to affect domestic and wild animals around the world. Elephants could become infected when they breathe in or ingest contaminated soil, plants, or even water.
- But Botswana’s Department of Wildlife and National Parks says it has eliminated anthrax as a possibility, though details about how remain scarce.
Canine Distemper Virus in Gir Lions
- Canine distemper virus (CDV; genus Morbillivirus) causes highly contagious disease in a wide range of carnivores. The disease often manifests as respiratory and gastrointestinal signs that progress to neurologic disease.
- A single isolated population of Asiatic lions (Panthera leo persica) resides in the Gir forests of Gujarat State, India, the last natural habitat for this species. During 2 weeks in September 2018, the unusual death of 28 lions of all age groups was reported from Gir Wildlife Sanctuary.
- A detailed investigation revealed 18 additional lions exhibited dullness, dehydration, lacrimation, cough, diarrhea, and seizures. Necropsy of 2 carcasses showed edema and purulent exudates in the lungs.
- Before 2019, few instances of CDV were reported in lions, tigers, red pandas, and leopards from zoos and forests in India.
- However, canine distemper is prevalent among dogs in India and the free-ranging dog population often poses a threat of CDV transmission to wildlife. Other wildlife species also could play a role in maintenance and transmission of CDV.