Daily News Simplified - DNS Notes: SL. NO. Topics The Hindu Page No
Daily News Simplified - DNS Notes: SL. NO. Topics The Hindu Page No
Daily News Simplified - DNS Notes: SL. NO. Topics The Hindu Page No
06 05 20
Notes
SL. THE HINDU
TOPICS
NO. PAGE NO.
1 Pathways to more resilient economy 06
The COVID-19 has led to short-term positive social and environmental impacts such as
community support, local organizing and solidarity, less pollution and GHG emissions.
However, these changes would be temporary unless we give up our obsession with the
GDP growth Model. Hence, the COVID-19 Crisis should be seen as an opportunity to
introspect on the present economic model and devise a new economic model.
Recently, a group of 170 Academicians came together to sign and release a 5 Point
Manifesto titled "De-growth" to devise a new economic model. The broad contours of
the new economic model is as given below:
1. A move away from development focused on aggregate GDP growth to Critical
Public sectors
Countries need to differentiate among sectors depending upon their criticality,
importance, sustainability and reliability.
The critical sectors such as Education, Health, Clean energy, Housing etc. need to
be promoted by the Governments through higher investments. Sectors such as Oil,
Gas, Mining etc. need to de-grow i.e. those sectors which are unsustainable and
non-critical should not be promoted.
2. Establish an economic framework focused on redistribution. The redistribution in
the new economic model should take place through - Universal Basic Income,
strong progressive taxation, reduced working hours and recognition of care work
Dated: 06. May. 2020 DNS Notes - Revision
and essential public services such as health and education for their intrinsic value
rather than for their monetary value.
3. Agricultural transformation towards regenerative agriculture based on biodiversity
conservation as well as fair agricultural employment conditions and wages;
4. Reduction of consumption and travel, with a drastic shift from luxury and wasteful
consumption and travel to basic, necessary, sustainable and satisfying
consumption and travel;
5. Debt Cancellation for the workers and small business establishments to tide over
the COVID-19 pandemic.
Recognising Importance of Borders: Prior to the COVID-19, there was huge wave of
globalisation across the world. The GDP based Economic Model propagated the idea that
promotion of free movement of Goods, Services, Investment etc. across the world would
benefit both rich and poor countries equally. Borders across the countries were
considered to be impediment to Growth and development of the countries.
However, the COVID-19 has challenged this notion of globalisation as a tool of
development. The COVID-19 has brought home the point that each and every country
need to find its own model of development. Globalisation cannot emerge as "One-Size-
Fits-All" model of development for all the countries.
Rather than being benefitted through Globalisation, the poor and developing countries
have got adversely affected by opening their borders to cheap goods from other
countries. The free movement of capital has also affected the poor and developing
countries in two ways. Firstly, it has not enabled them to promote domestic companies
due to presence of deep pocketed foreign companies. Secondly, the foreign companies
play huge role in influencing the policies of the government and hence hinder
democratic processes in poor countries.
Hence, COVID-19 has shown us that Boundaries are actually good.
Challenged Laissez- Faire economy: The prevailing Economic Model propagated the idea
of Laissez faire economy wherein the Private sector is considered to be more efficient
and hence given free hand. Under this model, the role of the Government has been
confined to Law Making and Regulation. It was believed that such as Laissez faire
economy would be able to promote growth and development without any government
intervention.
However, such a notion associated with Laissez faire economy has been challenged twice
in the last decade- Post Global Financial Crisis (2008) and now after COVID-19. During
both these times, it was the Government which was in driver seat of the Economy and
it was the private sector which was requesting the Governments for the bailouts. Hence,
the COVID-19 has served as a wake-up call to show us that role of the Government in
any economy (including Capitalistic) cannot be undermined. During the time of Crisis, it
is the only the Government which can bring in much needed stability and certainty in a
economy.
Treating Human being as Citizens and not as Consumers: The prevailing economic
model treats human beings as Consumers. Being Consumers, the human beings are
entitled to high quality goods and services at cheaper prices. However, the prevailing
economic model fails to realise that human beings are entitled to broader set of rights
rather than just access to high quality goods at cheaper prices.
Dated: 06. May. 2020 DNS Notes - Revision
The human beings are entitled to rights such as Justice, Dignity, Fairness, Impartiality
etc. which the present economic model fails to deliver.
Hence, Welfare of citizens should be the goal in a country rather than welfare of the
consumers.
Focus on Collaboration rather than Competition: The present economic model focusses
on promoting competition between the Governments and between the Private sector
entities to foster innovation and promote growth and development. However, it fails to
realise that Collaborative efforts can be more fruitful than competition. For example, a
group of 2-3 private sector entities having specialised expertise in different fields can
come together and develop a new vaccine. Similarly, governments across the world can
collaborate with each other to achieve Sustainable Development Goals (SDGs).
So, in case of collaborative efforts, we would have synergistic and coordinated efforts
leading to better outcomes.
Public ownership of Intellectual Property: The vesting of IPRs has led to development
of monopolies due to which the IPR owners have been able to amass huge amount of
wealth. It has led to growing inequalities within the global economy. Further, concerns
have been raised that such IPRs may not have led to commensurate benefit for the poor
and marginalised sections due to higher costs.
Hence, there is a need to evolve new institutions for public ownership of technologies
and for the regulation of their use.
Way forward
The earlier Financial crisis of 2008 did not lead to fundamental rethink of our economic
models. Now, the COVID-19 has exposed the structural weakness in the global economy
once again. Hence, we need to learn from this crisis and design a new economic model
which is more resilient, sustainable, equitable and healthy.
Personal
Notes
Dated: 06. May. 2020 DNS Notes - Revision
Title India needs a big stimulus package: Abhijit Banerjee (Page Number 1)
Syllabus GS III: Economic and Social development
Theme Understanding some of the suggestions given by Nobel laureate Abhijit Banerjee to deal
with the situation.
Highlights
Context:
• This article is based upon the recent interaction between Nobel laureate and
eminent economist Abhijit Banerjee and former Congress president Rahul Gandhi
on the economic situation during the pandemic.
• Let us understand some of the suggestions given by Nobel laureate Abhijit
Banerjee to deal with the situation.
has announced moratorium of 3 months on the repayment of the loans for the benefit of
business enterprises. However, we need to go beyond moratorium and announce waiver
of loans. This would strengthen the balance sheet of the companies leading to higher
investment and job creation.
Personal
Notes
Dated: 06. May. 2020 DNS Notes - Revision
Important Observations:
• Share of different categories: Self-employed (52%); Casual Workers (25%);
Regular wage (23%)
• Largest share: Own account workers account for the largest share of workers
(36%) followed by casual workers (25%) and Regular wage/Salaried workers
(23%)
• Regular wage/ Salaried Workers: Increase in the share of Workers from 18% in
2011-12 to 23% in 2017-18.
• Self-Employed Category: Proportion of Self-employed workers remained
unchanged at 52% Increase in share of Own account workers and Employers;
Decline in Unpaid Family Labourers;
• Casual Workers: Decrease in the Share from 30% to 25%
Personal
Notes
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