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FOOD AND FUEL INFLATION: INDIVIDUALS AND BUSINESSES SUFFER

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Business and economy sections of newspapers during the Covid-19 pandemic have featured similar headlines everyday, mostly related to prices of commodities, including raw materials and consumer goods, which continue to rise, along with unemployment levels, while economic growth is spiraling to record lows. In May 2021, Wholesale Price Index-based inflation rose to a record high of 12.94 per cent, pushed by higher fuel and commodity prices while retail inflation touched a high of 6.3 per cent in the same month. As Covid-19 cases in India reduce after a devastating second wave, inflation continues to haunt Indian households, as prices of all commodities increase.

Photograph by Creative Commons

Consumer Price Index (CPI) measures the cost of a fixed basket of goods and services bought by a typical consumer over a year. It is a macroeconomic indicator that measures inflation and monitors changes in the cost of living. A healthy CPI is critical to maintaining money supply and ensuring price stability in India.

The rise in retail inflation across the country is directly proportional to a rise in food inflation. During the first wave of the Covid-19 pandemic, after the sudden announcement of a national lockdown, the agricultural supply chain across the country was severely disrupted. This caused a sharp rise in food inflation. The pandemic, which has already negatively affected the economy by pushing unemployment to an all-time high of 7.11 per cent in 2020 (Centre for Economic Data and Analysis, CEDA) and has resulted in lower incomes, is now threatening to increase malnutrition and nutritional poverty by pushing millions of people to lower their expenditure on food.

Food inflation hit a high of 13.63 per cent in December 2020 and reduced marginally to 8.76 per cent in March 2021. However, since the onslaught of the second wave of the Covid-19 pandemic, food inflation in the country has been much higher than the RBI’s mandated 6 per cent upper limit, while economic growth in the country touches record lows with every economic prediction. Economists state that a sustained rise in food prices will continue to have a worrying impact on India’s most vulnerable, putting pressure on their savings.

Other items in the basket that have pushed retail inflation include fuel, which recorded an inflation rate of 11.6 per cent in May 2021, transport and communications, which was recorded at 12.6 per cent, and edible oil at 30.8 per cent. In October 2020, the CPI hit 7.6 per cent, the highest it has been in 6.5 years due to rising gold prices, healthcare costs, and people’s increased preference for using private transportation due to Covid-19. The government’s policy of increasing taxes on fuels, which causes cost-push inflation in an economy, was a major factor behind the rise in the CPI. Additionally, the global rise in prices of edible oils is another major risk to the rising inflation baskets.

During the second wave of the pandemic, markets overall saw fewer supply chain disruptions, but the global rise in prices, along with an increase in prices of crude oil, gold, and edible oil, all of which are spilling over into consumer inflation, along with rising prices of food items are painting a very worrisome picture of the Indian economy. The surge in prices is not expected to stabilise anytime soon, as the RBI estimates CPI inflation at 5.1 per cent for the 2021-2022 financial year. It has predicted an inflation rate of 5.4 per cent for the second quarter, 4.7 per cent in the third quarter, and 5.3 per cent in the fourth quarter.

Edible oils have recorded some of the highest inflation rates in the last couple of months.

Photograph by Biswarup Ganguly | creativecommons.org

Rising prices of Petrol & Diesel directly fuels inflation for all other items by increasing the transportation costs.

WHY IS THE WPI RISING?

The Wholesale Price Index (WPI), measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses. Before 2014, the WPI was given more weightage as an indicator of inflation by the RBI. However, in 2014, CPI was adopted as the official indicator to measure the rate of inflation in the country. The WPI rose to a record high of 12.94 per cent in May 2021 – this was the highest wholesale inflation rate since December 1998. Three major components that can be attributed to this record-high increase in the WPI are fuel, power, and manufacturing. Fuel and power have registered an increase of 37.6 per cent, followed by manufacturing at 10.8 per cent and primary article at 9.6 per cent. Manufactured products have a weightage of around 65 per cent in the WPI. This, compounded with a steep increase in prices of metals, rubber, chemicals, and textiles, has prompted a further increase in the WPI.

Economists suggest that globally rising prices of crude oil and essential commodities worldwide will continue to push WPI inflation further in India in the next few months. High taxes on retail fuel cause a spike in inflation and the transportation cost of the manufactured products has also increased, thus adding to wholesale inflation.

MONETARY VS FISCAL POLICY: WHAT IS THE SOLUTION?

Wars disrupt supply of goods and services as stock is diverted to meet the needs at the frontline.
Photograph by Wikimedia Commons
Droughts induced by overuse of underground resources or poor rainfall agricultural yield and prices of food items.
Photograph by Wikimedia Commons

The RBI faced many competing objectives on inflation, bond yields, and the rupee, in 2020 while struggling to encourage economic development when the economy was devastated by the COVID-19 pandemic. However, since the second wave of the pandemic hit the country in March 2021, the job of the RBI became even more difficult, as it continues to struggle to maintain its objectives.

Governments often use fiscal policies, including changing tax and spending levels to influence the level of aggregate demand in an economy, thereby reducing the inflationary pressure on an economy. The 2021-22 Union Budget allotted INR 34.83 lakh crore for expenditure, which is roughly 15.6 per cent of GDP. In the recent past, no union budget has exceeded the limit of 13.5 per cent. Capital expenditure in the economy also received a huge boost to INR 5.5 crore. Additionally, the government reduced import duties on edible oil and masoor dal. However, in December 2020, the Ministry of Finance said that the government could not spend more because it was concerned about a higher fiscal deficit, and cut spending by about 22 per cent in the September quarter of the last financial year.

One of the major reasons an increase in retail inflation, especially food inflation is worrying for any economy, is that it often coincides with a contraction of demand in an economy. Rising food prices, when not compensated with an increase in food support from the government, force low-income households to dip into their savings, which are already falling due to the economic pressure of the pandemic. This is likely to cause a decline in overall household savings, jeopardizing any chances of recovery for a struggling economy. Economists have criticized the government for not increasing spending to compensate for the losses of households with low-income and those below the poverty line. While food inflation continued to be high even months after the COVID-19 lockdown, the government did not continue its free grain distribution scheme under the Pradhan Mantri Gareeb Kalyan Anna Yojana beyond November 2020.

India is certainly not the only country facing inflationary pressures due to the COVID-19 pandemic. Brazil, which has been facing historically high inflation rates, has increased interest rates. The United States of America has also increased its interest rates to curb inflation which is at its highest levels since August 2008, when the recession hit. China is also seeing inflationary pressures in its economy due to an increase in prices of raw materials, and the Chinese government has decided to release its stockpiles of metals to reduce the pressure.

During its monetary policy meeting earlier in June, all eyes were on the RBI, with hopes that they would intervene to reduce the price pressure on businesses and individuals alike. However, during this meeting, the RBI announced that it would keep interest rates unchanged at current low levels, in an attempt to encourage growth in the economy. Economists state that the RBI needs to carefully forge a balance between fiscal and monetary policies in order to facilitate economic recovery in the country. Given the conflicting and competing objectives of the economy, this is undoubtedly easier said than done.

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PARLIAMENT MONSOON SESSION 2021: EVERYTHING YOU NEED TO KNOW

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The Monsoon Session of Parliament started on 19 July 2021, and will likely run for 19 business days until 13 August 2021. Over 400 Members of Parliament (MPs) and 200 staff have received the Covid-19 vaccinations before the start of the session. Covid-19 protocols, including maintaining social distancing are also in place, even as members of both houses have been sitting simultaneously for the sessions.

During the 19 days, as per the Ministry of Parliamentary Affairs, 31 government business items will be taken up, including 29 bills (in various stages) and two financial items. 26 bills have been tabled (including both Lok Sabha and Rajya Sabha), out of which nine are listed for consideration and passing, and 17 are listed for introduction, consideration, and passing. The first few days of the Monsoon Session have witnessed some turbulence, with parties protesting against the fuel price hikes, the government’s handling of the second wave of COVID-19, and the farm laws. The House has been adjourned several times in the past few days due to loud protests by opposition party members against various bills and ordinances. Union minister Bharati Pravin Pawar’s response to a written question, stating that no deaths due to lack of oxygen were specifically reported by states and Union Territories during the second wave, attracted widespread criticism and opposition. Key bills such as the Essential Defence Services Bill 2021, Maintenance and Welfare of Parents and Senior Citizens (Amendment) Bill 2019, and The Commission for Air Quality Management in National Capital Region and Adjoining Areas Bill, 2021 have attracted protests from various stakeholder groups across the country.

HOW IS A BILL PASSED IN PARLIAMENT?

The Rajya Sabha currently has 245 members, out of which 12 have been nominated directly by the President. Out of these 237 seats, the National Democratic Alliance (NDA) has 115 seats. The Lok Sabha has 545 members, out of which the NDA has 382 seats – 301 of these are the Bharatiya Janata Party’s (BJP). Any Constitution Amendment Bill must be passed by both Houses of Parliament and would require a simple majority of the total membership of that House, and a two-thirds majority of all members present and voting. Money and Financial Bills can only be introduced in the Lok Sabha by the recommendation of the President. Money Bills must be passed first in the Lok Sabha by a simple majority, following which it is sent to the Rajya Sabha for recommendations, which can be rejected by the Lok Sabha. Financial Bills must be passed by both Houses of Parliament. Ordinary Bills, on the other hand, can be introduced in either House and must be passed by both Houses by a simple majority of all members present and voting.

A CLOSER LOOK: WHAT DO THE BILLS ENTAIL?ESSENTIAL DEFENCE SERVICES BILL, 2021THE TRAFFICKING OF PERSONS (PREVENTION, PROTECTION AND REHABILITATION) BILL, 2021

The Essential Defence Services Bill aims to provide for the maintenance of essential defence services for the country’s security and will replace the Essential Defence Services Ordinance. The Ordinance empowers the government to prohibit strikes, lockouts, and layoffs in units that are involved in providing essential defence services. The bill will grant power to the government to act in the case of a strike against the corporatisation of ordnance factories. It also enables them to take disciplinary action, including penalties and dismissal, for participating in such strikes. The legislation will affect around 80,000 workers employed across Indian ordnance factories and other establishments.

Various trade union and employees groups such as the All India Defence Employees’ Federation (AIDEF) of Left unions; Bhartiya Pratiraksha Mazdoor Sangh (BPMS), an arm of RSS-affiliate Bharatiya Mazdoor Sangh; and Indian National Defence Workers’ Federation (INDWF) of the Indian National Trade Union Congress have registered strong opposition to the legislation. The federations have also declared an indefinite strike from 26 July despite the assurances by the government to take care of the employees’ conditions of service.

The main aim of the bill is to “prevent and counter trafficking in persons, especially women and children, and to provide for the care, protection, and rehabilitation to the victims while respecting their rights” while also “creating a supportive legal, economic and social environment for them.” The main features of the legislation include that it expands the definition of the “victim” to include transgenders, widens the range of offenders who can be charged under the law to include public servants and armed forces personnel, and calls for the setting up of a National Anti-Trafficking Committee. Penalties and imprisonment under the law have also been made more severe, especially for “aggravated offences”. However, the bill has attracted objections from lawyers, human rights activists, and civil society members.

Legal experts say that the bill criminalizes sex work and does not provide exit or rehabilitation options for people who are in the profession voluntarily. Additionally, they point out that trafficking and sex work have been made to overlap in the bill, which means that prostitution and pornography have been added in the definition of sexual exploitation. Legal experts have pointed out that making the consent of the victim irrelevant in the bill will put voluntary sex workers in prison. The bill was also only put online for public comments for two weeks (in English only), leading to criticism about it not being accessible to those it affects the most.

ELECTRICITY (AMENDMENT) BILL, 2021

The Electricity (Amendment) Bill,2021 seeks to amend the existing Electricity Act, 2003 and will set the framework for devising and enforcing rules for electricity by regulatory authorities in the power sector. Under the bill, power distribution will be de-licensed to increase competition and will be privatized to allow consumers to choose from multiple service providers. The bill has attracted widespread opposition from stakeholder groups, including trade unions and political parties.

Photograph by Wikimedia CommonsPhotograph by Wikimedia Commons

The All India Power Engineers Federation (AIPEF) has stated that major key stakeholders are being ignored in the process of finalizing the bill, and the privatisation of power distribution will lead to bankruptcy amongst major state DISCOMs. They also mention that the decision to de-license power distribution will not ensure an efficient and cost-effective electricity supply. Members of the Aam Aadmi Party (AAP) and Sanyukta Kisan Morcha (SKM) also opposed the introduction of the Bill, stating that it will take away the rights of state governments.

INDIAN MARINE FISHERIES BILL, 2021

The Indian Marine Fisheries Bill, 2021 proposes to grant licenses to vessels registered under the Merchant Shipping Act, 1958, to fish in the exclusive economic zone (EEZ). It also puts the Indian Coast Guard (ICG) in charge of Monitoring Control and Surveillance (MCS), and proposes punishments for fishermen breaching the EEZ without a licence, for not complying with ICG orders, and for obstructing ICG officials. The bill has attracted criticism from political parties and fishermen’s groups. Earlier this month Tamil Nadu Chief Minister M.K. Stalin wrote to Prime Minister Narendra Modi against the bill and said that it went against the interests of the local fishermen and certain clauses infringed upon the rights of the states. Fishermen’s groups have said that the bill does not take into account the traditional rights of fishermen, and the fines prescribed for fishermen with non-motorised traditional crafts are hefty. The groups have also touched upon the fact that the bill was introduced without consultation with stakeholder groups and the public. Fishermen’s groups have been holding black flag protests across the country against the bill being introduced in the Parliament.

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GOA ASSEMBLY ELECTIONS 2022: ROAD AHEAD

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The Goa Assembly elections are slated to be held in February 2022. The Indian National Congress (INC) emerged as the party with the highest number of seats in the 2017 elections. However, due to a post-poll alliance, the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) secured the Assembly with then Defence Minister Manohar Parrikar, who was sworn in as the Chief Minister for the fourth time in the state. In the two years following the elections, a wave of defections and a few deaths of major leaders were instances that affected change. The BJP is currently the party with the highest number of seats (27), while the INC has only five MLAs in the 40-member house.

THE AFTERMATH OF THE 2017 ASSEMBLY POLLSPhotograph by joegoauk72Photograph by joegoauk72

In the 2017 Assembly elections, the Congress won 17 seats with a vote share of 32.9 per cent, while the BJP won 13 seats with a vote share of 28.7 per cent. Other parties won 10 seats, with the Maharashtrawadi Gomantak Party (MGP) and Goa Forward Party (GFP) winning three seats each and independent candidates winning three seats. The Nationalist Congress Party got one seat. After the elections, the GFP and MGP, along with some independent candidates. joined hands with the BJP in a post-poll alliance. The NDA secured a majority.

The defections started soon after the elections, when a key INC MLA, Vishwajit Rane, son of Pratap Rane, MLA and former Goa Chief Minister, switched his allegiance to the BJP. As a result, the BJP’s strength in the house rose to 14. By October 2017, two more INC MLAs had announced their allegiance to the BJP. However, in 2019, following the death of Chief Minister Manohar Parrikar and MLA Francis D’Souza, the BJP’s seat share came down to 12. Thereafter, Pramod Sawant was sworn in as the Chief Minister with the NDA coalition in majority with 21 seats.

After Sawant was installed as Chief Minister, two MLAs from the MGP joined the BJP, bringing the party’s seat share to 14. In March 2019, due to defections and the passing of some MLAs, by-polls were conducted in four constituencies. The BJP won three seats. Political analysts state that these by-polls reflected that voters in Goa elected candidates independent of the banner of the party they were contesting under. The only seat the BJP lost was Parrikar’s former seat, which was won by INC candidate Atanasio “Babush” Monserrate. After the by-polls, the BJP’s seat share (as a single party) was up to 17 seats.

A dramatic shift in party allegiance happened in July 2019, when a group of 10 INC MLAs in Goa, led by the leader of opposition in the assembly, Chandrakant Kavlekar, shifted their support to the BJP. This increased the strength of the BJP to a whopping 27 seats out of 40 (from 13 seats, when the elections were conducted in 2017). With this major wave of defections, the strength of the INC, which had emerged as the single-largest party after the 2017 Assembly elections, was reduced to five MLAs.

WHAT’S PREDICTED FOR 2022?

Photographs from Wikimedia Commons

The BJP currently has 27 MLAs in the Assembly. However, the road to winning the 2022 elections is going to be difficult for the BJP,The second wave of the COVID-19 pandemic devastated the state, with a record-high number of deaths. People have protested against the government’s handling of the crisis, and noted the lack of financial and economic support to help them navigate the devastating impact on their livelihood.

Goa has also experienced a wave of growing protests against major development works planned in the state, including the decision to build IIT Goa in the eco-sensitive forested village of Melauli. Tribal groups have been fighting for their rights in the state – that such construction projects not only cut straight into their livelihoods but also spark atrocities against tribal and Adivasi rights. Additionally, intra-party tensions, including the escalating rifts between the Chief Minister and Health Minister over policy decisions are likely to impact the party’s success in the upcoming elections.

In April 2022, the GFP announced that it had quit the NDA. The party stated that the BJP has been introducing “anti-Goan”policies that affect the locals. Following this, last month, after a state executive committee, the BJP announced that it will be contesting the 2022 Assembly polls independently in Goa, “but options are open.”

The INC was left with merely five MLAs by 2019. Congress’ Goa in-charge Dinesh Gundu Rao made a trip to the state in June 2021, with the aim of strengthening the organization of the party and preparing for the upcoming polls. Congress President Girish Chodankar stated that the INC will contest the upcoming elections with new faces, while keeping alliance options open. It is to be noted that the National Congress Party (NCP) national general secretary Praful Patel has ruled out creating an alliance with the Congress for the polls.

Another party that has promised to contest all 40 seats in Goa is the AAP. While the party received a lot of attention from the youth and media, it failed to have any impact on the voting patterns of the state. Last week, Delhi Chief Minister Arvind Kejriwal announced the AAP’s promises for Goa for the upcoming elections, including free electricity of up to 300 units per month. The party has launched its “Let’s Clean Goa’s Politics” campaign for the 2022 election, promising to replicate the “Delhi model” of clean politics in Goa. Kejriwal has also promised uninterrupted power supply in the state, as well as with free electricity for farmers.

Other parties such as the MGP and GFP, which were in the NDA, have ruled out any possibility of a pre-poll alliance with the BJP for the polls. Both parties have announced that they are open to a pre-poll alliance with opposition parties in the state.

While other parties are trying to woo the Goan voter base with promises of free electricity and preserving the “Goan identity”, the organizational strength that the BJP hasand the support it receives in the state are strong. With important issues, including the development projects and the handling of the COVID-19 situation, leading to dissatisfaction among the people, it is yet to be seen what impact this will have on the election results.

Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Ajitabh Singh, Interns at Polstrat.

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BREAKING DOWN THE DELHI MASTER PLAN 2041

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Earlier this month, the Delhi Development Authority along with the National Institute of Urban Affairs opened up a draft of the Delhi Master Plan (MPD) 2041 for public feedback until 24 July. The Delhi Master Plan 2041, the fourth of its kind since the first effort covering 1961-81, aims to introduce policies that will help provide a “strategic and enabling framework that can nurture the future growth of the city,” according to the planning agency. The National Capital of Delhi is one of the most populous cities in the world and accounts for 1.39 per cent of India’s population. According to a 2018 report by the Population Division of the UN Department of Economic and Social Affairs, the population of Delhi and its immediate neighbourhood was estimated to be 2.9 crores in 2018 and is expected to touch 3.72 crores by 2028. The urban conglomerate is home to a large number of urban and migrant workers and supports a major economic structure.

The city’s heritage needs to be accounted for while considering any development plans(Photograph by Creative Commons)

Being home to such a huge population, the city is riddled with a unique set of challenges, which often make newspaper headlines. From unbreathable air to skyrocketing property prices and rents, and from clogged roads to issues of water supply, Delhi faces it all. The master plan of any city is essentially a vision document by the urban planners and land-owning agencies, which provides a vision for future development while keeping in mind the limitations and challenges currently faced by the city. MPD 2041 is a framework that builds upon the lessons learnt from the implementation of the previous three plans. The plan includes sector-wise policies in the areas of environment, economy, public spaces, heritage, shelter, mobility, and social and physical infrastructure. While the 22 chapters of the MPD aim to address a range of issues that riddle the city, the plan definitely leaves behind some marginalized groups, and the issues of inadequate monitoring, implementation, and funding will pose challenges when the plan is implemented on the ground.

ACCOUNTABILITY, FUNDING AND TRANSPARENCY: MAIN CHALLENGES OF IMPLEMENTATION

Many urban planners and environmental experts state that while on paper the MPD or any other plan for the future of the city could be very comprehensive, the real challenges emerge when the plan is implemented on the ground.

In fact, a report in the Hindustan Times highlighted that many provisions of the MPD 2021 were in fact never implemented. Provisions such as the regularization of unauthorized colonies, preparation of ward-level local area plans, a redevelopment plan for special areas, development of integrated freight complexes (IFCs), and shifting of wholesale markets from city’s centre to these IFCs, redevelopment of old planned areas, which were all included in the MPD 2021, were left out. Additionally, a survey of the 2021 MPD revealed that while 80-90 per cent of the plan was implemented in the New Delhi Municipal Corporation (NDMC) area, only 50 per cent of the same was implemented in other parts of Delhi and even lesser in areas beyond the Yamuna river. The NDMC area mainly covers Lutyens’ Delhi and the areas surrounding it, a small 42.7 square kilometres of the total area of 1,484 square kilometres comprising Delhi.

Every expanding city needs a well connected and affordable Rapid Transit System. Delhi Metro’s increasing ridership is an example of this.(Photograph by Creative Commons)

Many provisions of the past MPD’s have never seen the light of day due to inadequate funding available for implementation and the city’s unique governance structure which poses institutional challenges in implementing any policy changes. In the past, implementation of the MPD provisions has been characterized by delays, due to overlapping jurisdictions of various civic bodies and a lack of communication and coordination between different government departments responsible for its implementation.

Another major challenge to the plan is the population growth of Delhi, which several experts have highlighted are on the conservative side. Experts state that conventional methods used in estimated population projections yield unrealistic and lower figures of population growth, and the provisions will not be able to match the growth in Delhi’s population.

The MPD highlights that having a greener environment with protection norms and enhanced mobility by promoting the use of cleaner fuels is one of its key areas of focus. As a part of the environmental focus, the draft plan aims to reduce vehicular pollution through including the adoption of mix-use transit-oriented development (TOD), migration to greener fuels for public transport, and water quality improvement to be taken for river Yamuna and various natural drains, lakes and baolis. The plan also states that a clear boundary will be established in a buffer zone near the Yamuna (300-metre wide) and be maintained along the entire edge of the Yamuna river. Concerns have been raised over the preservation of the South Delhi Aravali ridge, the rejuvenation of the Yamuna River and the development plans for green areas.

WHO DOES THE MPD LEAVE BEHIND?

Various lobby groups, NGOs and planning experts have highlighted that while the MPD 2041 (as well as previous MPDs) make provisions for the welfare of poor and marginalized communities, these provisions become the last priority and are not carried out during implementation. A collective of women’s groups, housing groups and urban planning experts called Main Bhi Dilli, who aim to make the planning process more inclusive, have highlighted that the plan may not do enough for marginalized groups and informal sector workers which comprise a huge percentage of the population of the city.

Sprawling slums and its inhabitants fulfill the city’s needs in terms of low cost labour, but the city fails to provide for them. (Photograph by Creative Commons)

Many have mentioned that the plan being available online only and in Hindi and English for a city where a huge percentage of the population is technologically illiterate does not create a conducive environment for feedback. Responses and suggestions to the plan, while open to all in the public domain, can only be submitted online, which makes it inaccessible to a large number of people, especially those in marginalized groups.

Some experts have also highlighted that the plan does not have sufficient provisions to address the issues of fair land use, including ensuring affordable housing. Many have also added that the plan fails to address the problems faced by villages, which were urbanized in the 1970s and 1980s, without basic infrastructural facilities. Additionally, the provisions to reform the Yamuna also pose the risk of completely excluding poor farmers and fishermen who not only help sustain the river but also earn their livelihood from it. Delhi’s differently-abled population, which was not a focus in the MPD 2021 has been left behind in the MPD 2041. Additionally, there have been no provisions in the MPD 2041 to provide dedicated spaces for the LGBTQ community.

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DELHI MASTER PLAN 2041: FUTURE ROADMAP CHALLENGES

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Urban planning and development are vital for the future of a city’s growing population. Unless the city’s development stays ahead of this process, it can result in great difficulties managing the ever-increasing demand for resources and infrastructure in the long run. As we’ve seen in metropolitan cities in the country such as Bengaluru, inadequate long-term planning coupled with a boom in population over a few decades has resulted in a strain on the city’s resources.

Delhi has its own set of problems, from toxic air quality to water shortages. A clear plan must be developed. With the 2041 focus on environment and economic sustainability, we can only hope to work towards a better-planned city – outcomes of past Master Plans tell us that it may be easier said than done. It may perhaps be more sustainable to further develop areas beyond the major central regions of the city, including outside the city. In the long run, there is a need to expand the geographical area of the city while continuing to develop sustainable policy solutions as a response to these issues. It is also vital to bring neighbouring states into this conversation as Gurgaon and Noida, which are part of the NCR region, are also burdened by similar problems and it would be wise to work with them to tackle these. An inadequate and poorly arranged plan along with ineffective implementation will continue to make things worse as resources keep becoming scarce and the population of the city continues to grow.

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WHAT DOES THE CONGRESS INFIGHTING IN PUNJAB MEAN FOR STATE ELECTIONS?

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The infighting in the Indian National Congress (INC) in Punjab has made news over the last few months. The news took precedence in April after the Punjab and Haryana High Courts quashed the Special Investigation Team’s (SIT) report on the sensitive Behbal Kalan and Kot Kapura firing cases. The judgement sparked tension between a few Congress leaders, who have been critical of Chief Minister Captain Amarinder Singh in the past. While the SIT probe may have been the match that lit the fire, signs of brewing discontent amongst the senior members of the party and the Captain have been there since his victory in the state polls in 2017. Out of the seven states going to polls in 2022, Punjab is the only state where the Congress is in power. Along with dealing with a shrinking voter base, with control of only three states in India, winning Punjab back is critical for the survival of the INC. The question that now arises is what effect the growing dissatisfaction will have on the Congress’ strategy in the upcoming elections and whether or not the Captain will be able to quash the dissent and secure another victory in the state.

THE MATCH THAT LIT THE FIRE

The feud between senior Congress legislators and the Captain came to light after the government lost the Behbal Kalan and Kot Kapura firing cases in the High Court in April this year. In 2015, a number of instances of desecration of the Guru Granth Sahib took place at Bargari in Faridkot district. Thousands of people came out in protest, demanding action against those behind the incident. During one such demonstration in Kotkapura, the police fired upon unarmed protestors, killing two people. An onslaught of allegations appeared, including that top police officials and then Deputy CM Sukhbir Singh Badal gave directions for the firing. This caused the popularity of the Badal government to sink to an all-time low, and the Congress promised action against those responsible for the incident as one of the key promises during their 2017 election campaign.

The rejection of the SIT report intensified the criticism against the Captain’s government, with many leaders, including Navjot Singh Sidhu, saying that this was due to the “incompetence” of the Captain. Punjab Provincial Congress Committee president Sunil Jakhar and Cabinet Minister Sukhjinder Randhawa even offered to resign at a Cabinet meeting over the issue.

LONG-TERM RESENTMENT BREWING AGAINST AMARINDER SINGHETT and TET teachers Protest Punjab
(Photograph from Twitter)

In 2017, the INC was able to sweep the assembly elections, securing a solid 77 seats in the 117 member legislature and a vote share of 38.64 per cent. The SAD-BJP alliance, which was struggling in the aftermath of the 2015 cases and subsequent firing incidents, only managed to secure 18 seats. The AAP won 20 seats, which however, were limited to urban seats and the party could not make inroads into the rural base. Captain Amarinder Singh proved his worth once again during the 2019 Lok Sabha elections, winning eight of the 13 seats, with a vote share of 40.12 per cent. The BJP and SAD managed to secure only two seats each, while the AAP won one seat.

Resentment started brewing inside the Congress shortly after its victory, when the government fulfilled its promise of extending farm debt waivers worth INR 5,000 crore to farmers. From the first year of the government, party members began complaining that bureaucrats were running the government while the political leaders were being ignored. Many complained that the debt waiver benefit was being transferred without any credit to politicians. Time and time again, the Captain has also been accused of being inaccessible by others in the party. The report of a Special Task Force (STF) on drugs, soft stance on sand mafia, and not cancelling the controversial Power Purchase Agreements (PPA) have also all been points of resentment among party members.

Another major point that led to anger within the party was reports of the Captain keeping dossiers on over two dozen INC MLAs. These alleged dossiers detail the involvement of party contemporaries in the sand mining business, liquor trade, transport business, and land-grab cases. During a Vidhan Sabha session, the Captain indicated that he had reports on all his party legislators, however, he has now denied having prepared any dossiers recently.

WHAT DOES THIS MEAN FOR THE CONGRESS IN 2022?Navjot Singh Sidhu with CM Captain Amarinder Singh at his farmhouse in March 2021 (Photograph from Twitter)

After the infighting became public, Congress Chief Sonia Gandhi constituted a committee headed by Leader of Opposition in Rajya Sabha Mallikarjun Kharge along with Delhi MP JP Agarwal and Congress general secretary in-charge of Punjab, Harish Rawat. The committee, after listening to about 150 leaders including ministers, MLAs, MPs, leaders of frontal organisations, and others, submitted a report to Sonia Gandhi. The Chief Minister, Captain Amarinder Singh, also appeared before the committee.

As per media reports, the report of the Committee has recommended that Navjot Singh Sidhu be given a role and the party structure be reorganized. Sources also added that the majority of the MLAs continue to support the Captain, even though some of them are unhappy with him. The committee has recommended that more Dalit leaders should be given representation within the party. The Congress has yet to take any action on the report and its recommendations.

While the crisis seems to have simmered down, with party rebels stating that they are waiting for Sonia Gandhi to take action, the problems for the Congress in Punjab leading up to the assembly elections are far from over. While internal dissent has emerged, the party is also facing external dissent from teachers, healthcare workers, safai karamcharis, government employees, farmers groups amongst others. While it is possible that the Congress will not change guard in the state, it is likely that the Captain will need to share power with his detractors. The party faces a tough challenge as it continues to contemplate who the Deputy Chief Minister and state Congress chief could be, while maintaining caste and communal representation balance, which could affect the outcome of the elections.

Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Abhinay Chandna, Shivangana Chaturvedi, Interns at Polstrat.

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Statistically Speaking

INCREASING AUTOMATION VS BPO SECTOR

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While the Indian economy continues to struggle with a sluggish growth rate and high unemployment, the IT sector has actually been one of the biggest winners. IT firms in India, which constitute a significant portion of the services sector in the country, saw record deals during the COVID-19 pandemic. Tata Consultancy Services (TCS) clocked in deals totaling USD 9.2 billion in Q4 FY21, its highest ever in a quarter, the total being over USD31.5 billion in the last fiscal year. Similarly, Infosys recorded USD 14 billion in deals in total, while WIPRO signed 12 large deals with a total contract value of USD 1.4 billion in Q4 FY21. This should be good news for the domestic IT sector. However, a recent report published by the Bank of America detailing the future of work, automation, and the IT sector points to a worrying trend of robot process automation, or RPA, taking away 30 per cent of jobs in this field. If this is true, it would threaten the livelihoods of around three million Indians, and for a country that is already struggling with a high unemployment rate of 11.8 per cent (CMIE, May 2021), this would add to the stress the economy is already under.

Photograph by Creative Commons

UNDERSTANDING INDIA’S SERVICE SECTORPhotograph by Aranami | Creative CommonsPhotograph by Ford Asia Pacific | Creative Commons

The service sector is one of the most significant building blocks of the Indian economy, contributing more than half of the Gross Value Added (GVA) of the country. The GVA from the services sector grew at a Compound Annual Growth Rate (CAGR) of 1.45 per cent to USD 1,064.8 billion in FY20 and comprised over 55 per cent of the GVA of the country. Service exports also comprise a major part of the total exports from India. According to the Reserve Bank of India (RBI), in January 2021, service exports stood at USD 17.07 billion, while imports stood at USD 10.09 billion. The service sector accounts for two-thirds of total Foreign Direct Investment (FDI) inflows and 38 per cent of total exports. The services category ranks first in FDI inflow as per data released by the Department for Promotion of Industry and Internal Trade (DPIIT). According to data released by the RBI, the sector is also the biggest employer in the country, with a share of around 44.4 per cent.

The growth trajectory of the Indian economy has been unusual as compared to developed countries, which have traditionally relied on manufacturing-led economic growth. India, on the other hand, relies on the growth of the services sector to fuel its economic growth. When we look at historical data, we find that between the financial years 1950 and 2012, the annual average contribution of the services sector to Gross Domestic Product (GDP) growth was 54.4 per cent. However, between 2011-12 and 2019-20, its contribution to the growth increased to a whopping 67.7 per cent. The service sector also provides employment to around 44.2 per cent of the Indian population, while 43.2 per cent is employed in agriculture. The manufacturing sector accounts for 11.4 per cent of the same. The main industries that constitute a significant proportion of the services sector in India include Information Technology (IT), Business Process Management (BPM), transportation, healthcare, insurance. and financial services.

The importance of the service sector in the economy had been understated in the past.The lack of a blueprint for the development of the sector adversely affected its growth. The services sector is not only important for the growth of the Indian economy, but also plays a role in ensuring the population has access to basic services such as health and education.

WHAT IS HAPPENING TO THE IT SECTOR?Photograph by Niti Aayog

In the last few years, the Indian IT-BPM industry has been the flagship services export from India. Over the last decade, the industry has recorded a growth rate of around 102 per cent while earning revenue of around USD 190.5 billion (2019-20). IT services constitute a majority of the services in the sector, constituting around USD 97 billion in revenue in 2019-20. Other significant sectors include software and engineering services (21 per cent with USD40.2 billion revenue) and CPM services (19.8 per cent). A significant part of the industry is export-oriented with export revenues recorded in an excess of USD 146 billion in 2019-20. Out of the total export revenue, IT services contribute around USD 79.1 billion, accounting for 54 per cent of the exports. BPM and software products and engineering services account for the remaining 46 per cent.

The domestic revenue of the IT industry is estimated at USD 44 billion and export revenue is estimated at USD 147 billion in FY20. The IT sector in India employs around 16 million people, out of which 9 million are employed in low-skilled services and Business Process Outsourcing (BPO). The report published by the Bank of America earlier this month which revealed that 30 per cent of around three million jobs in the sector will be lost by 2022, also detailed that proposed layoffs will help the software companies save USD 100 billion, mostly in salaries,annually.

According to the report, around 0.7 million roles will be replaced by RPA alone and the rest will be due to other technological upgrades and upskilling by domestic IT players. RPA is likely to have the largest impact in the United States with a loss of almost 1 million jobs. Another key reason for RPA-driven job losses is that many countries that had offshored and outsourced their work in the past are likely to bring the jobs back to their home markets. Developed countries, which offshored IT jobs previously, will look at native IT workers or RPA to secure their digital supply chains to establish reliance on their own technological infrastructure, rather than banking on another country. It also goes on to warn that emerging economies such as India and China are at the highest risk of technologically driven disruptions.

However, the National Association of Software and Service Companies (NASSCOM) issued a statement after this report was released, claiming that the BPO sector actually continues to be a net hirer of skilled talent, and has in fact added 138,000 jobs in FY2021. NASSCOM also stated that the nature of the BPO sector in India has been evolving constantly, and that the impact of RPA and any other automation has led to a net creation of jobs for the BPM sector over the last two years.

AUTOMATION = JOB CUTS?

While the scale of automation in the IT sector is likely to have an impact on jobs in India, there are steps, including upskilling of workers and adoption of better policies, which can help foster growth of jobs in the sector. With the ongoing COVID-19 pandemic, an increasing number of companies have been shifting their base of operations from China, and India could be poised to fill a sizable portion of these jobs. Recently, Japan offered incentives to Japanese companies to shift their manufacturing base from China to India. Additionally, India has overhauled its legal, regulatory, and policy framework (such as indirect tax, insolvency, land, and labour laws) to rapidly jump the ease of doing business global index, which is likely to attract more industries into the country.

Subsequent industrial revolutions have changed the way production and supply of goods and services has been organised. With that, the nature of employment has shifted from low-skilled to high-skilled labour and revolution in the services sector through IT has further marked this transition. However, the fear that this transition will always mean a loss of jobs is not entirely true. According to several studies and reports, artificial intelligence (AI), robotisation, and automation would open avenues for new jobs rather than generating job losses. For instance, a significant share of the developed countries’ applications of AI are in the finance, transportation, healthcare, and defence sectors. In India, too, we have approximately seven per cent of workers in these sectors. The use of robots and AI is chiefly in the fields of manufacturing, construction, rescue operations, and personal security. As the dominance of these sectors in the economy increases, the level of employment will also increase, along with support services for these sectors.

Moreover, not all industries would be able to afford automation, primarily for cost reasons, and with an increase in automation and AI in other sectors, these technologies will open avenues for new jobs in information and communication technologies and data sciences. According to a World Economic Forum (WEF) research, by 2025 more than half of all current workplace tasks will be performed by machines as opposed to 29 per cent today. However, in terms of overall numbers of new jobs, the outlook is positive, with 133 million new jobs expected to be created by 2022, in comparison with the 75 million that will be displaced.

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