4 November 2024 : Indian Express Editorial Analysis

 1. A new tryst with destiny

(Source: Indian Express; Section: The Editorial Page; Page: 8)

Topic: GS2 – International Relations

Context:

The article examines why China, an autocracy, has experienced robust wage growth despite weak shareholder returns, whereas India, a democracy, has seen significant shareholder returns but weak wage growth. This contrast highlights distinct economic paths taken by the two countries over recent decades. The article also delves into India’s ongoing struggle with “employed poverty” and limited industrialization. To create mass prosperity, India must increase manufacturing jobs, address regulatory burdens, and better leverage its domestic consumption, drawing lessons from both past policy successes and current obstacles.

Comparative Economic Puzzle: China vs. India

• China: As an autocracy, it has delivered robust wage growth but witnessed weak public market shareholder returns, averaging around -13% over the last 20 years.
• India: As a democracy, it has experienced strong shareholder returns, approximately 1,300% over the last two decades, yet this has coincided with relatively weak wage growth.
• India’s economic challenges trace back to the structure of jobs created since independence in 1947 and the flow of job creation since the economic liberalization reforms of 1991.
• Addressing these issues necessitates expanding manufacturing jobs and fostering high-productivity firms to sustain long-term economic transformation.

India’s Post-Independence Progress and Social Mobility Challenges

• Achievements since 1947: India has built the world’s largest democracy, improving life expectancy from 31 years to 68 years, and transitioning to a middle-income economy.
• Social Mobility Constraints: Despite progress, social mobility remains limited, as it is 40% lower in middle-income countries compared to high-income nations.
• Global Context: The World Bank’s Chief Economist, Indermit Gill, underscores that the path to high-income status is challenging. Only 34 of 108 middle-income economies since 1990 have achieved high-income status, covering only 250 million people (approximately the population of Uttar Pradesh).

Employment and Structural Economic Challenges

• Labour Force Composition: India’s labor force is unevenly distributed across sectors:
• 11% in manufacturing
• 14% in construction
• 45% in agriculture
• 30% in services
• Self-Employment and Low Productivity: A large proportion of farmers are informally self-employed, leading to what is termed “self-exploitation.”
• Sustainable Solution: India needs to shift more workers from agriculture to manufacturing to improve productivity and economic growth. China’s successful transition of labor from farms to factories serves as a model.

Barriers to Industrial Transition

1. Factors Unlikely to be Barriers:

• Land and Labor: Sufficient land exists, and a significant portion of the labor force remains in low-productivity sectors.
• Capital: India has attracted substantial foreign direct investment (FDI), with 50% of all FDI since independence arriving in the past five years.
• Cultural and Economic Stability: Growth rates have increased from the “Hindu rate of growth” (2%) to around 7% without major cultural or law-and-order changes.
• Financialisation: India’s banking and equity markets have strengthened, and macroeconomic stability has generally improved.

2. Key Structural Barriers:

• Infrastructure: Infrastructure investment has improved considerably, addressing critical logistical and transportation needs.
• Skills: Recent education policies, such as the National Education Policy (NEP) 2020, aim to enhance the workforce’s employability. The Annual Status of Education Report (ASER) shows improvements in enrollment and learning outcomes. Additionally, short-term training (e.g., for cell phone assembly) indicates a potential workforce for low-skill manufacturing roles.
• Regulatory Complexity: Overly burdensome compliance requirements, known as “regulatory cholesterol,” present a significant barrier, especially for small and informal firms. This includes complex filing requirements, criminalization of certain offenses, and frequent regulatory changes.

Long-Term Vision: Building Mass Prosperity through Manufacturing

• Manufacturing Growth Potential: Success in sectors like electronics assembly demonstrates India’s capacity for labor-intensive manufacturing, indicating that low manufacturing employment is a latent capacity rather than an inherent limitation.
• Economic Impact Goals: By raising manufacturing employment to 18-20% of the workforce, India could see significant gains in economic complexity, technological transfer, and wage growth through high-productivity factories and firms.
• Conclusion: India’s journey toward mass prosperity relies on fostering high-productivity firms and factories that can unlock the country’s potential, realizing its long-held economic aspirations and delivering broad-based prosperity.

Domestic Consumption as an Economic Strength

• Growth of Service Sector Jobs: Sectors such as sales, customer service, and logistics are experiencing rapid growth, leveraging India’s robust domestic demand.
• Complementing “Make in India” with “Make for India”: Supporting industries that serve domestic consumption needs is essential. For example, the automotive sector’s growth relied on a level playing field for both domestic and international companies. Without such policies, foreign manufacturers from Thailand, China, or Vietnam might have met India’s car demand, hindering local industry development.

Way Forward: Policy Proposals for Enhancing Manufacturing and

Domestic Demand

• Regulatory Reforms: Efforts like Jan Vishwas 2.0, Enterprise Digilocker, and the National Open Compliance Grid aim to streamline compliance, thus easing business operations.
• Labour Code Revisions: Updating labor codes, fostering competition in social security provisions (e.g., Employee Provident Fund, EPF, and Employees’ State Insurance, ESI), and rationalizing statutory wage gaps are essential for reducing costs for low-wage employers and encouraging formal employment.
• Strategic Tariff Use for Domestic Manufacturing: The strategic application of tariffs could support local manufacturing without hindering export competitiveness. Examples like India’s auto industry, which benefited from moderate import restrictions, show how policy can encourage domestic production and attract foreign investment.

2. The Frugal innovation

(Source: Indian Express; Section: The Editorial Page; Page: 8)

Topic: GS2 – Social Justice- Health

Context:

Richard Cash, an American physician and global health scholar, made transformative contributions to healthcare, especially in South Asia. He was instrumental in developing and advocating for Oral Rehydration Therapy (ORT), a low-cost, life-saving treatment for diarrheal diseases, particularly in resource-limited settings.

Key Achievements and Innovations

1. Pioneering Oral Rehydration Therapy (ORT)

• In collaboration with David Nalin, Cash conducted the first clinical trials of ORT on cholera patients in Bangladesh in the late 1960s.
• The simplicity of ORT—boiled water, sugar, and salt—proved highly effective in reducing intravenous fluid needs and saving lives.

2. Impact of ORT in Public Health

• ORT has saved an estimated 80 million lives, especially among children, making it one of the most cost-effective health interventions in history.
• The Lancet described ORT as “the most significant medical advance of the 20th century,” and UNICEF hailed it as a breakthrough that prevented countless deaths at minimal cost.

3. Recognition and Legacy

• In 2006, Cash and colleagues received the Prince Mahidol Award from Thailand for their role in promoting ORT.
• ORT is celebrated as a model of frugal innovation, providing a powerful, accessible health solution that empowers communities.

Personal Commitment to South Asia and Health Equity

• Cash was deeply involved with health equity organizations such as BRAC, the Public Health Foundation of India, and the Sree Chitra Tirunal Institute in Kerala.
• His connection to the region extended beyond his work; he developed a profound appreciation for South Asian cultures, art, and music.
• Cash was widely beloved in South Asia, often opening his home (dubbed the “Cash Inn”) to students, colleagues, and friends.
• His connection to the region was also personal, as he met his wife, Stella Dupuis, in Kerala, whom he married in 2009.

Advocacy and Academic Contributions

• Cash was known for challenging policies he found harmful, such as lockdowns during the COVID-19 pandemic, especially in economically vulnerable countries like India.
• He valued practical, on-the-ground engagement over purely academic solutions and encouraged his students to do the same.
• Teaching global health at Harvard for nearly 50 years, Cash was a beloved mentor, pushing students to actively engage with communities.
• His mentorship has shaped generations of global health professionals, creating a lasting educational legacy.

Conclusion:

His pioneering work on ORT, profound impact in South Asia, and legacy of teaching and mentorship leave an enduring mark on global health, celebrated by colleagues, students, and friends worldwide.

Richard Cash’s life and work exemplify dedication to global health and a commitment to simplicity, equity, and community-driven solutions.