1.Resources aplenty, no jobs (The Hindu)

2.Course correction (The Hindu)

1.Resources aplenty, no jobs (The Hindu)

Synoptic line: It throws light on the issue technology affect on human capital generation. (GS paper III)

Overview

  • India is growing and one of the factors contributing to its growth is technology. Every time there was a revolution, mankind has benefited. The technological revolution is going. With advancements in sectors like telecom, IT, space-research and nuclear technology, India is surely marching ahead like never before. The human capital requirement is on a steep decline owing to the advent of cutting-edge technologies such as artificial intelligence and robotics.
  • While five high-technology firms find themselves among the list of the top seven most valuable companies in the world, with a cumulative market capitalisation of almost $3 trillion, it is distressing to note that that they employ just under 700,000 people among them.

Reduced human capital

  • In India the informal economy employs more than 90% of our workforce. Efforts to structure the informal sector, by encouraging them to adopt modern-day tools and best practices, and by giving them adequate access to capital for expansion, would stimulate the economy and the job market.
  • The adoption of next generation technologies indicates a future of mass unemployment, and concentration of wealth in the hands of a few enterprises capable of providing minuscule job openings.
  • The primary challenge is the optimal allocation of copiously produced resources among an increasing population with dwindling wage-earning opportunities. We can take cue from these trends; several progressive political outfits across Europe have started demanding legislation favouring reduced working hours with no cuts in pay, three-day weekends, and the introduction of a universal basic income.
  • The Indian scenario already looks grim, the Labour Bureau had stated that India added just 1.35 lakh jobs in eight labour-intensive sectors in 2015, against a backdrop of almost 1.5 crore annually entering the job market. Conditions are ripe for the creation of a plenitude of frustrated people who would be easy prey to the sway of radical nationalists and populists.
  • The new models built around the reduction, sharing, and diffusion of work and the provision of a supplementary income can sustain employment levels and living standards in wealthy nations with a steady, declining, or ageing population, with most of them plugged into the formal economy, it will be impractical in countries like India.

Way ahead

  • India has massive basic infrastructural capacity requirements. There is need to focussed on government planning and spending, along with the creation of an environment that would encourage private investments into these potentially large-scale projects, could create immediate openings for millions in sectors like construction, India’s second largest employer, providing jobs for over 44 million 
  • There is need to create essential and permanent assets, employment-guaranteeing schemes like MGNREGA would also effectively absorb a large slice of job seekers, there is need to redefine the existing economic planning, employment and resource-allocation models, to get them in sync with this technology-accelerated age. 

Question-Human capital requirement is on a steep decline owing to the advent of cutting-edge technologies such as artificial intelligence and robotics. Critically analyse.

 

2.Course correction (The Hindu)

Synoptic line: It throws light on the issue of decisions taken in 22nd meeting of GST council. (GS paper II)

Overview

  • It has been nearly 100 days with India’s tryst with the new Goods and Services Tax regime, the GST Council empowered to oversee its implementation has approved several alterations. The 22nd meeting of the all-powerful GST Council is expected to provide some much-needed relief to traders and exporters, particularly small and medium businesses.
  • The Council’s agenda for the meeting is a relook at procedures for businesses and discussions on changes that need to be brought about based upon the learnings of the government and the feedback it has received in the three months since GST launch. The meeting was advanced by almost 20 days, and that it has tried to fix the problems faced by traders in the first quarter of GST is welcome.

Council decision

  • The Council lowered the rates on 27 items, more importantly, yarn and sewing threads to soothe the textile industry that has been in distress over GST norms and is a bulwark for job-creation.
  • The decision has been taken to switch the requirement to file three monthly returns and an annual return to a quarterly frequency for firms with a turnover of ₹1.5 crore will ease the burden of compliances on small and medium enterprises, and reduce the workload on the tax regime’s fledgling IT backbone.
  • There would be long-term solutions for exporters; a facility of e-wallet will be set up, preferably by April 1 next year. There will be a notional amount in the e-wallet to give advance credit to exporters. This credit will be used to pay the IGST or GST for his products. Refunds that exporters get will be used to offset this advance credit. A technology firm will develop the e-wallet.
  • The new indirect tax regime had put extra burden on small business owners and traders, the GST Council could also agree to a proposal to increase the threshold for the composition scheme which allows small traders to pay a standard tax rate – from Rs 75 lakh in annual turnover to Rs. 1 crore. This will allow small eateries to pay the 1-5 per cent tax without undertaking the three-stage filing process.
  • The Council is also expected to take up proposals regarding suspension of the reverse charge mechanism. This rule shifts the liability to pay the tax on the buyer instead of than the seller. This could be suspended for unregistered traders.
  • There is proposed simplification of the composition scheme, under which firms with an annual turnover of up to ₹1 crore pay a flat and low tax, and the six-month suspension of the reverse charge mechanism that required large firms to deduct tax on supplies from firms outside the GST net.
  • It has been promised of faster tax refunds, for exporters facing a working capital crunch too is re-assuring. Time will tell how smoothly these decisions pan out on the ground, but suspension for six months of the payment of integrated GST (IGST) on inputs used for exports will bring immediate relief.
  • The GST will cover the entire country by April 2018, but upto now it is not clear how this will impact inter-State movement of goods in the interim three months, and industry has good reason to worry about fresh complications. The government should move swiftly to bring clarity on all remaining grey areas.

QuestionDiscuss the GST, its features and its impact on Fiscal Federalism.