Mint | India's employment challenge: 20 million jobs need to be created each year

A number of analysts attribute the Bharatiya Janata Party’s (BJP) underperformance in the general election to voter unhappiness with the Narendra Modi government over unemployment, job reservations and farmer livelihoods. 

The Agnipath scheme of military recruitment came in for criticism during the election campaign and many political commentators expect that the new government will be compelled to make changes to it. We should view interpretations of election results with some scepticism, but it does appear that the issue of inadequate employment opportunities has bubbled up to the surface of our political ocean.

Read the full article here.

Hindustan Times | Developed country ambitions need deep structural reforms

India’s impressive growth performance has raised hopes of it becoming a developed country in the not-too-distant future. The Prime Minister has set 2047, the centenary year of Independence, as the aspirational target year. However, leapfrogging from being a low middle-income economy to becoming a developed country in the next 25 years requires raising the country’s per capita income by more than five times, from $2,600 to $10,205. This effectively translates into a per capita income growth at 7.5% per year and an aggregate Gross Domestic Product (GDP) growth at 9%. Read the full article here.

The Indian Express | Aadhaar, PAN, Paytm, KYC — how fintech regulation is hurting the consumer

In the evolving landscape of fintech or financial technology, India stands at the crossroads of innovation and regulation. What began as a quest for stability and oversight has devolved into a dystopian odyssey, where good intentions pave the road to chaos, and unintended consequences lurk around every corner.

Our story today commences with a modest trigger — the cautious instructions of the RBI to Kotak Bank, halting new digital customer onboarding and suspending credit card issuances. The regulatory zeal, ostensibly aimed at preempting potential outages, lacks a tangible basis for outage events. It’s reminiscent of the regulatory crackdowns of the past, where rigid checks were imposed without a clear understanding of the underlying issues, like the one on HDFC a few years ago or on Paytm recently. This knee-jerk reaction to largely hypothetical scenarios reflects a systemic failure to distinguish between proactive risk management and reactive overreach.

Read the full article here.

Deccan Herald | Time for Structural Reforms

The World Economic Outlook brought out by the IMF in April did not project an optimistic economic scenario for the global economy. The world economy is estimated to grow at 3.2 per cent in 2024 and 2025, which is the same rate as it was in 2023. Read the full article here.

Hindustan Times | A self-harming stance on digital trade tariffs

India was at loggerheads with the developed nations and China at the World Trade Organization’s (WTO’s) 13th Ministerial Conference (MC-13) in Abu Dhabi earlier this year. India’s resistance to extending the moratorium on tariffs for digital trade was one point of divergence. This stance is counterproductive, and likely to hurt India’s most promising sector. Read the full article here.

The Times of India | Happiness from subsidy: It’s complicated by factors such as neighbour’s envy

I am a relatively poor man. Govt does a lot for me. Or at least in my name. In Bengaluru, for example, govt has kept the price of water low, so that I can afford it. Though it costs them roughly Rs 100 a kilolitre to provide, they charge everybody only about Rs 10 and give a subsidy to cover the rest. Honourable intentions, no doubt, for which I am sincerely grateful. What hurts me a little bit is that my supremely rich neighbours also use this subsidy in large amounts. To wash their grand cars and water their sprawling lawns. Read the full article here.

Mint | India cannot solve its water crisis without proper pricing

A few years ago, the mayor of a Karnataka town asked me how she could prevent people from wastefully washing their yards, walls and vehicles with water from the municipal water supply. She told me she had organized awareness campaigns, promoted conservation efforts and even personally remonstrated with citizens, but to little avail. When I asked her how much they paid for the water, she replied that the monthly charge was a few tens of rupees per connection, but this was not strictly enforced. She was taken aback when I told her that was why her conservation efforts had been unsuccessful. Read the full article here.

Times of India | Piketty’s wrong again. We should be happy India is creating billionaires

To a man with a hammer, everything looks like a nail. Thomas Piketty, economist and writer of big fat books, believes that economic inequality is a problem and higher taxes on the rich are the solution. To this end, he has enlisted social scientists from around the world to cast inequality as a global problem. It’s a little like European communists who, a century ago, zeroed in on class struggle as the big problem and went around the world looking for it. Read the full article here.

Moneycontrol | Supreme Court’s push to fix medical rates is unjustified and counterproductive

In the Indian blockbuster series of judicial interventions in policymaking, the latest episode on fixing the rates of medical services charged by hospitals in the country dropped last week. The Supreme Court of India, overcome by the pressing concerns of rising healthcare costs and disparities in costs of treatments availed at public and private hospitals, heard a public interest litigation (PIL) filed by the NGO ‘Veterans Forum for Transparency in Public Life’. In the characteristic style of PILs, the Court directed the Union Government to find a way to fix the price bands for all medical procedures and treatments offered by hospitals in the country and report back in 6 weeks. Or else, the Court threatened to impose the medical rates charged under the Central Government Health Scheme (CGHS) on all hospitals as an interim measure. Hospital stocks responded promptly by shedding more than a few points. Read the full article here.

Moneycontrol | Bangalore Water Crisis: Marginal pricing of water, subsidies to poor may curb water woes

Barely a few days into summer and there are already reports of Bangalore facing a severe water crisis. Groundwater is depleting and borewells are running dry. The price charged by private tankers have doubled. Some apartment complexes and RWAs are already rationing water and cutting off water supply to households for a few hours in the daytime. Meanwhile, the state government has decided to nationalise all private water tankers in the city. This is a complex problem with multiple causal factors – geography (Bangalore is situated far away from any naturally occurring water body), weather (weak southwest monsoons), and mismanagement. Mismanagement takes the shape of encroachment and building property on lake beds, failure to enforce rainwater harvesting systems, not providing piped water supply to peripheral areas, and unabated exploitation of ground water. Read the full article here.

Moneycontrol | Multi-Contributor Social Security: Time to reimagine social security contributions

It was recently in the news that the Employee State Insurance Corporation (ESIC) is considering extending its coverage to unorganised and gig sector workers. On July 24, 2023, Rajasthan became the first Indian state to pass a legislation aimed at providing social security benefits to gig workers. These are part of various attempts that governments have been making to extend social security beyond just the formal sector. Social security in India faces two main problems – coverage and financing. It covers mainly the organised sector, leaving out gig workers, unorganised sector workers, etc. Even within the organised sector, around 53 percent do not have any social security benefits, as per the Periodic Labour Force Survey (PLFS) report. In fact, more than 90 percent of India’s workforce is engaged in informal employment. Even the National Pension System (NPS), theoretically open to all, has very poor coverage – only around 6.2 crore subscribers as of March 2023. Read the full article here.

Deccan Herald | States and tax shares: The fight for fiscal space

As southern states demand higher share in devolution of taxes, what can work in Karnataka's favour. Read the full article here.

Times of India | Why resource distribution is creating a North-South divide

Over the last few days, there have been calls to form an economic alliance of southern states for equal resource distribution. Chief ministers from states such as Karnataka, Kerala, and Tamil Nadu held demonstrations in New Delhi to express their discontent. The Karnataka chief minister claimed that the current system for distributing resources among states puts states like Karnataka at a disadvantage while favouring states in the North with uncontrolled population growth. While the states’ concerns are valid, this focus on the horizontal distribution of tax resources is misplaced. Instead, the states should advocate for an enlargement of the divisible pool by calling for a curtailment in Union cesses and surcharges. Here’s why: Read the full article here.

Moneycontrol | Karnataka’s plan to fix prices for Uber-Ola cabs is going to boomerang badly

There’s ridiculous and then, there’s this! In a long list of antagonist policy decisions taken against cab-aggregators by Indian state governments, the latest one by the Karnataka government takes the cake. In a policy that plans to emulate the pricing structure of the city’s autos, the Karnataka government plans to fix prices for all taxis in the state. In the new fare structure, all taxis will be categorised into three segments based on the purchase value of the vehicle and the prices will be fixed for each segment. Read the full article here.

Moneycontrol | Why Budget 2024 will rank as a good budget

Ceteris paribus, a boring budget is a good budget and this one definitely fits the bill. The impressive part was the resistance on part of the government to introduce any big, populist measures aimed at strengthening their position before the upcoming elections. As the name suggests, this is an interim plan until the real deal in July 2024, which the Finance Minister seemed very confident of being the one to present. The interim budget speech by the Finance Minister for 2024-25 sounded largely like a report card of past achievements rather than a plan proposal for the upcoming year. Read the full article here.

Mint | We need to build social capital for a better quality of urban life

Five years after Bengaluru’s Church Street received a facelift, it is struggling with dumped garbage, broken pavements, damaged street lights, brazen illegal parking and inadequate maintenance in general. It has been painful to observe this deterioration right outside my office. At this point, you are perhaps rolling your eyes and saying “what’s new?", since we all know about the corruption in local government, incompetence of city authorities and the ‘lack of civic sense’ among our people. Read the full article here.

Times of India | Republic Day reminder: Let’s reclaim the right to economic freedom

Let’s get the basics out of the way — we celebrate the Republic because it prohibits any majority from running roughshod based on its numerical strength. The Constitution limits the power of governments and groups to protect the minority of One, i.e. every individual. The Republic grants fundamental rights to individuals to live, trade, work and protest peacefully. Yet, among these freedoms, the one that governments most readily and frequently trample upon — with little or no opposition—is the right to economic freedom. We can endlessly debate the current state of political or religious freedom and the decline of the freedom of expression, and that is partly the point — there is at least a debate. Read the full article here.

Mint | Eating together could strengthen our national consciousness

You might not have noticed it, but it is extremely difficult to find a restaurant in India that can seat a dozen people around a single round table. If you have more than six diners, you have to ask the restaurant to join two or more tables to create a long rectangle. While this allows several colleagues or family members to technically sit at the same table, conversation and sharing of food is limited to groups of four or five people sitting next to each other. Compared to many East Asian countries where big round tables are commonplace in restaurants, communal dining in India mostly caters to rather small groups. Read the full article here.

Moneycontrol | Global Economy 2024: Positives in macro outlook outweighing uncertainties, India in a position to dream big

Macroeconomists were created to make weather forecasters gain credibility” goes one joke. “Economists have successfully predicted 9 out of the last 5 recessions” is another dig at the predictive ability of the macroeconomics discipline. Beyond the humour, it points to the obvious complexity of interaction between hundreds of related variables in a complicated geopolitical scenario. Despite the obvious risks involved in speculating about the future in the economic domain, many brave economists undertake foolhardy tasks of making year-end projections and this is one such attempt. Read the full article here.

Mint | Social capital can help close a wide MSME gap

In his inaugural address to the first Industrial Conference in Pune in 1890, Mahadev Govind Ranade noted that “the industry of the country is parched up for want of Capital" because after land revenue, a considerable portion of gross savings was used to hoard bullion. The lack of institutional arrangements for industrial finance meant that capital was locked up in unproductive assets and not available to India’s entrepreneurs. A century later, the German economic historian Dietmar Rothermund came to a similar conclusion. Lacking financial institutions, Indian surpluses in the second half of the 19th century went into gold and land. Meiji Japan, in contrast, was able to “gather small savings and to channel them into the mainstream of the national economy," enabling the country’s industrialization. Read the full article here.