The Indira Gandhi Urban Employment Guarantee Scheme in Rajasthan
Why in news?
- The Indira Gandhi Urban Employment Guarantee Scheme has rolled out in Rajasthan with the objective of providing economic support to the poor and needy families living in the cities through work to be provided on demand for 100 days in a year.
- It is a scheme to give guaranteed jobs to the people residing in cities, on the lines of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for villagers started by the UPA government at the Centre in 2006.
Who are eligible to get jobs?
- Those in the age group of 18 to 60 years residing within the limits of urban local bodies are eligible to demand and get employment in the identified segments.
- There is no income limit, though the poor and destitute people, especially those who lost their livelihood during the pandemic, will be given preference.
- A budgetary provision of ₹800 crore, announced by Chief Minister in the State Assembly earlier in 2022, has been made for the scheme in 2022-23.
- At least 50 persons in each ward of urban local bodies will be given employment and the work permitted under the scheme will be approved and executed through committees at the State, district and local body levels.
- The State government will also reward the municipal bodies doing good work under the scheme. The cost of material and the payment for the labour for work of general nature will be in the ratio of 25:75 and will vary for special work which needs technical expertise.
- The State government’s Department of Local Bodies will be responsible for the scheme’s implementation.
What are the categories of tasks?
- The tasks to be carried out under the scheme have been clubbed mainly under eight heads.
- The first is environment protection, which will involve tree plantation at public places, maintenance of parks and watering plants on footpaths and dividers.
- The next is water conservation, where the tasks may be allotted for cleanliness and improvement of ponds, lakes and stepwells, construction, repair and cleaning of rain water harvesting structures and restoration of water sources.
- Other categories are heritage conservation, removal of encroachments and illegal boards, hoardings and banners, stopping defacement of property and service-related works.
- As part of convergence, the people engaged under the employment guarantee scheme can be employed elsewhere in other schemes, already having a material component, which require the labour.
- Eligible people will get work such as tree plantation, cleaning ponds, collecting garbage from door to door and segregating it and catching stray animals. Apart from all these categories, the State government can add new tasks or amend the ones already included in the list.
Wages:
- A Jan Aadhar card, introduced by the State government, or its registration slip will be required for registration, which can be done at e-Mitra centres.
- While more than 31,000 muster rolls have been issued for the work, the wages will be paid at the rate of ₹259 a day to unskilled labourers and ₹283 a day to skilled labourers. The 'mates' or supervisors on top of the labourers will get ₹271 a day.
Advantages:
- The latest initiative will highlight it as a major step to address the plight of urban poor, which had not received much attention earlier.
- The identification of unemployed youths in urban areas may require an approach different from the one adopted in the villages for MGNREGA. Besides, the kind of jobs provided under the scheme will be different than those in the rural areas and will need a more skilled workforce.
- The scheme may turn out to be a game changer for the people who lost their jobs in the pandemic and are struggling to make ends meet amid high inflation.
Are similar schemes operative in other States?
- The Rajasthan government has prepared the employment guarantee programme after studying similar such schemes operative in other States. Several States are looking favourably towards an urban version of MGNREGA.
- These schemes include the Ayyankali Urban Employment Guarantee Scheme in Kerala, Urban Wage Employment Initiative under UNNATI in Odisha, Mukhya Mantri Shramik Yojana in Jharkhand and Mukhya Mantri Yuva Swabhiman Yojana in Madhya Pradesh.
- The Swarna Jayanti Shahari Rozgar Yojana was launched as a Centrally-sponsored scheme in 1997 to provide gainful employment to the urban unemployed and underemployed poor by encouraging them to set up self-employment ventures and through the provision of wage employment.
- The scheme was replaced with the National Urban Livelihoods Mission in 2013. However, neither of the two was an employment guarantee scheme.
Urban unemployment:
- The demand for a job guarantee scheme in the cities is increasing because of the growing distress among the urban poor, higher unemployment rates in urban areas in comparison with villages, the persistently high inflation affecting the people and the prevalence of low-wage and poor quality informal work in urban areas.
- Moreover, as against the rural unemployment being mostly seasonal, unemployed people in the cities face problems throughout the year.
India raises Sri Lankan Tamil issue in U.N.
(GS Paper 2, International Relation)
Why in news?
- Recently, India voiced concern over the “lack of measurable progress” in Sri Lanka’s promised political solution to the “ethnic issue” involving Sri Lankan Tamils at a debate in the United Nations Human Rights Council.
- India’s statement was made during the discussion on the report released earlier by the Office of the High Commissioner for Human Rights (OHCHR), on the first day of Geneva-based UNHRC’s 51st session.
UNHRC on Sri Lanka:
- Over 13 years since the end of Sri Lanka’s civil war, in which tens of thousands of civilians were killed and disappeared, survivors continue demanding justice and accountability for war-time crimes.
- In the post-war years, Sri Lanka’s human rights defenders have frequently flagged concerns over persisting militarisation, especially in the Tamil-majority north and east; repression, and the shrinking space for dissent.
- UNHRC said that Sri Lankan should improve human rights and strengthen institutions to tackle the humanitarian challenges that have sprung from its worst financial crisis in seven decades.
- It urged Sri Lanka’s new government to end the use of security laws to arrest protest leaders who helped oust former president Gotabaya Rajapaksa in July.
India’s stand:
- India said it has “always believed in the responsibility of States for promotion and protection of human rights and constructive international dialogue and cooperation” guided by the U.N. Charter.
- In this regard, India is concerned with the lack of measurable progress by Government of Sri Lanka on their commitments of a political solution to the ethnic issue, through full implementation of the 13th Amendment of the Constitution, delegation of powers to Provincial Councils and holding of Provincial Council elections at the earliest.
- The terms of Sri Lanka’s nine provincial councils expired about three years ago, and they have remained defunct since.
Resolution on Sri Lanka:
- India’s statement comes ahead of a resolution on Sri Lanka that will likely face a vote at the Council. Since 2009, India has voted thrice in favour of the U.N. resolution on Sri Lanka, two were critical and abstained twice, in 2014 and 2021.
- Irrespective of its vote, India has consistently underscored the need for a political settlement within the framework of a united Sri Lanka, ensuring justice, peace, equality and dignity for the Tamils of Sri Lanka.
2021 resolution:
- In 2015, Sri Lanka co-sponsored a resolution, which called upon the country to establish a credible judicial process with the participation of Commonwealth and other foreign judges, defence lawyers, and authorised prosecutors and investigators.
- Incidentally, Wickremesinghe had been the prime minister when Colombo supported the resolution. However, the resolution was never implemented, as the Sri Lankan government had second thoughts about the proposals, especially the provision for foreign judges.
- In March 2021, the UN human rights body rejected the domestic mechanism proposed by the then Gotabaya Rajapaksa government. The 2021 resolution was adopted with 22 votes and 11 siding with Sri Lanka, including China. There were 14 abstentions, including India.
- India had abstained at voting for the UNHRC resolution, despite stating publicly that the UN human rights chief’s assessment of post-civil war Sri Lanka raised “important concerns”.
Why India took this stand?
- This has been India’s most severe criticism of the Sri Lankan government to date, in recent years.
- It comes after Sri Lanka allowed a Chinese research vessel to dock at Hambantota port in August, despite India conveying its security concerns over its intentions.
- India had already signalled its unhappiness with Sri Lanka when it issued an advisory calling on Indian tourists to exercise caution and examine all factors before undertaking non-essential travel to India. The advisory led to a drop in the arrival of Indian tourists to Sri Lanka in the last week of August.
- In 2022, India has extended around $4 billion in aid to Sri Lanka as soft loans and currency swaps to tide over the economic crisis. However, the Sri Lankan government has to also enter into talks with China to restructure its debt, an essential requirement before IMF disburses a $2.9 billion loan to Colombo.
China’s response:
- China, Japan, and India are Sri Lanka’s three main bilateral creditors, while the island nation owes the biggest chunk of its foreign debt to International Sovereign Bond holders.
- China said other nations should not take advantage of Sri Lanka’s current vulnerability and expressed appreciation for Sri Lanka’s “unremitting efforts in promoting reconciliation”.
RBI Guidelines on digital lending in India
(GS Paper 3, Economy)
Why in news?
- Recently, the Reserve Bank of India (RBI) issued the ‘Guidelines on Digital Lending’ to banks and non- banking financial companies (NBFCs), which disburse loans through digital lending platforms.
- This follows the press release issued by the RBI on the implementation of the recommendations of the working group set up by the RBI in 2021 to study the market practices followed in the digital lending industry.
Unethical practices by Fintech companies:
- Fintech companies, which operated digital lending platforms offered unique credit products which were tailor-made to the requirements of a specific user base. These platforms gained popularity in a short span of time, especially in the aftermath of the COVID-19 lockdowns imposed by the government.
- Given that only banks and licensed NBFCs had legitimate access to capital, fintech companies had to enter into partnerships with such lenders who outsourced customer acquisition, portfolio monitoring, and loan recovery functions to them.
- With increasing cases of borrower harassment and suicides being reported pursuant to loans availed through such digital lending platforms, the RBI was forced to take notice of the rapid growth of the digital lending industry, and closely monitor the arrangements entered into by regulated lenders and technology companies operating the digital lending platforms.
Regulatory measures:
- The RBI has laid clear emphasis to protect digital lending borrowers who have been the worst affected parties due to the unethical practices, and harsh recovery methods adopted by some digital lending platforms.
- Regulatory measures such as prescribing uniform T&C disclosure formats to be adopted by all digital lenders, permitting customers to exit the loan arrangement within a specified time-period, prohibiting hidden charges, mandating appointment of a nodal officer by both the regulated lenders as well as the digital lending platforms to address customer complaints, and the introduction of data minimisation norms will go a long way in boosting customer confidence and trust in digital lending platforms.
FLDG arrangements:
- The digital lending industry thrived until now since banks and other regulated lenders were ready to provide capital on the assurance that if the borrowers default, they would be compensated by the fintech companies operating the digital lending platforms, and in sourcing new customers.
- Such compensation arrangements were structured though first loss default guarantee (FLDG) arrangements, and the extent of such credit comfort offered was commercially negotiated based on the quality of the loan portfolio, among other factors.
- The RBI working group had recommended a complete ban on such arrangements as it viewed such credit comfort obtained from unregulated fintech companies as posing systemic risks to the market. It appears that the RBI has accepted this recommendation since the digital lending guidelines effectively restrict any such FLDG arrangements.
- This could drastically affect access to capital for fintech companies who are working towards designing new-age credit products, and increasing offerings to new-to-credit borrowers.
- FLDG arrangement would also adversely impact the financial inclusion efforts of the RBI, as regulated lenders would be less incentivised to support new fintech companies innovating in this space without any skin in the game of such companies.
What’s next for Fintech companies?
- Overall, while the new digital lending guidelines will help to streamline and standardise digital lending practices relating to customer transparency and data collection, the restrictions on FLDG could force fintech companies to rethink their strategy.
- Some market players may not have the means to directly obtain lending licenses and fund their customers using their own capital.
- Fintech companies may have to explore adoption of public market infrastructure such as the account aggregator network and open credit enablement network to survive in an increasingly competitive and evolving market.
Linking rural producers with value chains
(GS Paper 3, Economy)
Context:
- Even as independent India turns 75, its developmental agenda continues to revolve around rural areas that account for two-thirds of the population, 70% of the workforce, and 46% of the national income.
Potential & Challenges:
- With significant accomplishments on the economic and literacy fronts, there is huge potential in the rural demography. Simultaneously, with the steady rise in domestic and external demand for rural farm and off-farm commodities, the rural economy also appears poised for a brighter prospect.
- However, the rural farm and off-farm producers do not seem to be fully geared to seize this momentous opportunity.
- There are numerous challenges associated with their informal and decentralised nature, the ultra-tiny scale of their operations and the imperfect rural markets that restrict their competitive abilities.
Critical areas:
Value Addition:
- First, markets need to be studied, mapped, and tagged to the rural production clusters having special advantages.
- Also important is a plan to impart specific skills, infuse technologies, develop value-added products, strengthen infra-logistics, provide finance and government incentives, etc., for developing a specific value chain in a given rural cluster.
Cooperatives:
- Second, devoid of scale, capital and bargaining power, primary producers are forced to purchase inputs on credit at a higher price and sell their produce in distress. As a result, they realise only around 25-35% of the retail price.
- Therefore, it is imperative that they operate collectively, through producer-companies or cooperatives, to take care of their needs such as inputs, finance, technology, processing, logistics, marketing, etc, on an aggregate basis.
- This would help them achieve volumes, economies of scale, efficiency, and collective investment, leading to better competitiveness.
Technology, Quality & Training Hubs:
- Third, rural producers do not have the wherewithal to invest in critical aspects such as technology, digital solutions, training of manpower, etc.
- Therefore, setting up ‘Technology, Quality and Training Hubs’ in rural production clusters would be the right step forward.
- These can provide related services to rural producers and collectives for a fee. Government agencies, technical institutions, and the private sector can be incentivised to set up such facilities.
Capacity building:
- Fourth, rural producers generally sell their produce/products without much value addition and get a smaller share in the consumer price. They also lack adequate storage space and capital to hold stocks.
- The availability of affordable credit and government incentives is therefore necessary for producers to set up processing and storage infrastructure, develop market channels, and hold stocks.
- Alternatively, the government or private stakeholders may set up such facilities and lease them out to producers. Capacity building in product development, processing, packaging, branding, marketing, etc, is another requirement.
Financial Literacy:
- Fifth, the government and financial institutions are employing AI-based data tools to verify the financial information from interlinked databases and make financial decisions.
- However, since the majority of rural producers operate informally, transact in cash, don’t maintain accounts, and rarely use digital financial channels, the history of their transactions is not readily available.
- Providing them with skills in financial management, accounting, and digital finance, introducing user-friendly business accounting and financial management tools, launching an exclusive bank credit portal for them, and covering them under the loan aggregation mechanism, would go a long way.
Skill Training:
- Sixth, most of the rural producers are semi-literate and employ untrained manpower. This limits their ability to adopt modern business practices.
- To help them align with the modern value chains practices, rural producers need to be provided with skills in key entrepreneurial aspects such as governance, management, planning, finance, technology, IT, marketing, customer care, contracts, compliances, etc., and the soft skills such as communication, networking, collaboration, negotiation, conflict management, ESG issues, etc.
- This calls for launching an exclusive National Skilling Initiative for Rural Producers, comprising skilling, apprenticeship, counselling, mentoring, business incubation, etc., on the lines of start-ups.
National database on rural producers:
- Seventh, the absence of a credible national database on rural producers poses a serious challenge.
- Formalisation and registration of rural producers, therefore, would be useful in providing them with a unique identity, mapping production clusters, and targeting interventions.
- Formalisation would also improve their access to various institutional services. Common Service Centres (CSCs), having extensive rural e-governance touch points, may therefore be mandated to take up registration of the rural producers.
Self-Regulatory Organisations (SROs):
- Eighth, organised businesses have their representative forums such as associations, federations, etc, for facilitating consultations with the government and other stakeholders. However, such forums are hardly active in the case of rural producers.
- As rural producers face multiple challenges and need collective efforts for their resolution, they should be encouraged to form Self-Regulatory Organisations (SROs). This would help strengthen the consultative approach to upgrading the rural production ecosystem.
Way Forward:
- Such a framework would help create a technology-driven, vibrant and competitive rural production sector and realise the goal of having a $5-trillion economy.
