Kurukshetra IAS Academy Blogs

1. Employment scenario in India grim, says ILO report

The share of those with secondary or higher education among the unemployed youth in India has almost doubled from 35.2% in 2000 to 65.7% in 2022, according to the India Employment Report 2024 released by the International Labour Organisation (ILO) and the Institute of Human Development (IHD) here on Tuesday.

The report says that youngsters account for almost 83% of the country’s unemployed workforce.

Employment and underemployment of the youth increased between 2000 and 2019 but declined during the pandemic years, the study, released by Chief Economic Adviser V. Anantha Nageswaran, said, adding that educated youngsters experienced much higher levels of unemployment in the country during the period.

The Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR) and Unemployment Rate (UR) showed a long-term deterioration between 2000 and 2018, but witnessed an improvement after 2019, the study said. It added that the improvement coincides with periods of economic distress. “This improvement needs to be interpreted cautiously as jobs generated in the slowdown period raise questions about the drivers of these changes,” the authors of the report said.

The paradoxes

The report said India’s job story over the past two decades had seen some paradoxical improvements in labour market indicators, while the basic long-term feature of the employment situation in the country continued to be insufficient growth of the non-farm sectors and the ability of these sectors to absorb workers from agriculture.

“This is notwithstanding the fact that non-farm employment grew at a higher rate than farm employment over the different periods prior to 2018,” the report said.

Labour from agriculture was mainly absorbed by the construction and services sectors. Also, almost 90% of workers remain engaged in informal work, while the share of regular work, which steadily increased after 2000, declined after 2018.

There are widespread livelihood insecurities, the report added, with only a small percentage being covered with social protection measures, precisely in the non-agriculture, organised sector. “Worse, there has been a rise in contractualisation, with only a small percentage of regular workers covered by long-term contracts,” the report said.

While India’s large young workforce is a demographic dividend, the report noted that they don’t appear to have the skills to deliver — with 75% of youth unable to send emails with attachments, 60% unable to copy and paste files, and 90% unable to put a mathematical formula into a spreadsheet.

The country is also facing the challenge of a substantial gender gap in the labour market, with low rates of female labour force participation.

Social inequalities

Throwing light on the growing social inequalities, the report said despite affirmative action and targeted policies, the Scheduled Castes and Scheduled Tribes still lag in terms of access to better jobs. “Scheduled Castes and Scheduled Tribes have greater participation in work due to economic necessity but engaged more in low-paid temporary casual wage work and informal employment,” it said. “Despite improvement in educational attainment among all groups, the hierarchy within social groups persists,” the report added.

2. ‘RBI actions to restrict credit growth’

S&P Global expects RBI’s steps aimed at reining in lending, safeguarding customers to raise the cost of capital and restrain loan growth in 2024-25; investors may seek higher premium for increased regulatory risk, potentially affecting valuations

 The spate of tough regulatory actions from the Reserve Bank of India (RBI) to rein in lenders’ “overexuberance”, enhance compliance culture and safeguard customers would raise the cost of capital and cause loan growth to slow to 14% in 2024-25 from 16% this year, S&P Global Ratings said on Tuesday.

While the regulator’s actions reflect a “serious commitment” to improve governance and transparency at finance companies and banks, the rating agency flagged that the drawback of this drive would be to increase capital costs for institutions.

The rating major cited the RBI’s recent moves to restrain certain lending by IIFL Finance and JM Financial Products, as well as curb the onboarding of new customers at Paytm Payments Bank, and said these were a departure from the “historically nominal financial penalties imposed for breaches.”

“The RBI’s new measures are creating a more robust and transparent financial system,” said S&P Global credit analyst Geeta Chugh. “But the increased regulatory risk could impede growth and raise the cost of capital for financial institutions,” she added.

While the RBI’s measures were likely to lead to increased compliance costs for lenders and might curb the ability of smaller players to compete, it would also potentially curb excessive lending practices, the rating firm said.

“Combined with tight liquidity, the RBI’s new measures are likely to limit credit growth in fiscal 2025. We expect loan growth to decline to 14% in fiscal 2025 from 16% in fiscal 2024, reflecting the cumulative impact of all these actions,” it concluded.

Noting that finance firms were also vulnerable to confidence sensitivity, S&P Global said investors were likely to seek a higher premium for the increased regulatory risk, potentially affecting valuations.

3. India supports Philippines’ sovereignty, says Jaishankar; sparks Beijing response

External Affairs Minister’s Manila visit comes as tensions between the Philippines and Chinese navies rose to new levels; China’s Ministry of Foreign Affairs says maritime disputes are matters between countries concerned and third parties have no right to interfere in the South China Sea issue

India supports the Philippines’s sovereignty, External Affairs Minister S. Jaishankar said in Manila, in comments that sparked a response from the Chinese Ministry of Foreign Affairs, which called on “third countries” not to “interfere”.

Mr. Jaishankar’s visit to Manila on Tuesday, where he met Philippines President Bongbong Marcos and Foreign Minister Enrique Manalo, is part of a three-nation five-day tour to Singapore, the Philippines, and Malaysia.

“I take this opportunity to firmly reiterate India’s support to the Philippines for upholding its national sovereignty,” said Mr. Jaishankar, reading his opening statement to the media during a joint press conference after talks with Mr. Manalo. He said that the 1982 UN Convention on the Law of the Seas (UNCLOS) was the “the constitution of the seas” and all parties “must adhere to it in its entirety, both in letter and in spirit”, in comments seen as aimed at China, whose Navy and Coast Guard have been frequently accused of violating sovereign waters of other countries and claiming islands. China’s actions have drawn protest from many Asian neighbours, including the Philippines, Vietnam, and Indonesia in the South China Sea (SCS) region.

Visit to ship

The External Affairs Minister also visited the Indian Coast Guard pollution-control ship ICGS Samudra Paheredar on Tuesday, which is on a port call in Manila until Thursday, and hailed maritime cooperation between the two countries. In a speech he gave on board the Indian ship docked at Manila’s South Harbour, Mr. Jaishankar said that the ship’s visit was “significant” because it highlighted “shared challenges” that India and Philippines face on oceanic pollution, illegal fishing, and protecting the environment in the region. He also underlined the need for “like-minded countries” in the Indo-Pacific region to enhance cooperation.

Mr. Jaishankar’s Manila visit came as tensions between the Philippines and Chinese navies rose to new levels over aggressive maritime moves by the Chinese Coast Guard against a Filipino ship meant to carry supplies to their troops aboard the BRP Sierra Madre ship in the Spratly Islands. On Monday, the Philippines Ministry of Foreign Affairs had summoned the Chinese envoy to protest the actions, including the Chinese Coast Guard ship’s physical blocking of the Philippines ship, firing it with a water cannon that injured three of its soldiers. The Chinese Coast Guard, meanwhile claimed that it was legitimately guarding “Chinese waters” from the “foreign vessel”.

Reacting sharply to Mr. Jaishankar’s comments in Manila within hours, the Chinese Ministry of Foreign Affairs called on India and the Philippines to “respect China’s territorial sovereignty”.

“Maritime disputes are issues between countries concerned. Third parties have no right to interfere whatsoever,” the Chinese Ministry of Foreign Affairs spokesperson Lin Jian said. “We urge relevant parties to squarely face the facts and truth on the South China Sea issue, and respect China’s territorial sovereignty and maritime rights and interests and the efforts of regional countries to keep the South China Sea peaceful and stable,” he added.

India’s External Affairs Ministry did not respond to requests for a response to the Chinese MFA’s remarks. Apart from the current controversy, Beijing is understood to be watching India’s sale of Brahmos missiles to the Philippines very closely, deliveries for which are expected to be begin shortly.

Deepening ties

During talks with Mr. Manalo, Mr. Jaishankar said he discussed other areas of growing cooperation between the two countries, including trade and capacity-building in digital infrastructure. They also spoke on issues concerning the Indo-Pacific, Myanmar, the Ukraine war, and cooperation in common fora such as the UN and Non-Aligned Movement (NAM). He said he had briefed the Philippines Minister on Indian naval deployment in the Red Sea to counter threats from Houthi militia and piracy. He also highlighted rescue operations, including those where Indian naval personnel have helped Philippines nationals on board ships in distress, including the MV True Confidence and MV Lila Norfolk.

4. Sensing China threat, India joins Sri Lanka in race for seabed mining; applies for exploration rights

Earlier this month, India applied to the International Seabed Authority (ISBA), Jamaica, for rights to explore two vast tracts in the Indian Ocean seabed that aren’t part of its jurisdiction. The application to explore one of these regions, a cobalt-rich crust long known as the Afanasy Nikitin Seamount (AN Seamount), is a gambit by India.

Rights to the region have already been claimed by Sri Lanka under a separate set of laws, The Hindu has learnt, but India’s application is part-motivated by reports of Chinese vessels undertaking reconnaissance in the same region, a highly placed official, who declined to be identified, confirmed

The AN Seamount is a structural feature (400 km long and 150 km wide) in the Central Indian Basin, located about 3,000 km off India’s coast. From an oceanic depth of about 4,800 km it rises to about 1,200 metres and is rich in deposits of cobalt, nickel, manganese and copper.

For any actual extraction to happen, interested explorers — in this case, countries — must apply first for an exploration licence to the ISBA, an autonomous international organisation established under the United Nations Convention on the Law of the Sea (UNCLOS).

Open ocean

These rights are specific to areas that are part of the open ocean, meaning ocean — whose air, surface and sea-bed — where no countries can claim sovereignty. Around 60% of the world’s seas are open ocean and though believed to be rich in a variety of mineral wealth, the costs and challenges of extraction are prohibitive. Currently, no country has commercially extracted resources from open oceans.

However, another UNCLOS-linked body, the Commission on the Limits of the Continental Shelf, may impede India’s exploration ambitions.

Countries have exclusive rights up to 200 nautical miles, and its underlying sea-bed from their borders. Some ocean-bound states may have a natural stretch of land, connecting their border and the edge of the deep ocean that extends beyond this 200, as part of their so-called continental shelf. To claim so, however, a country must give a detailed scientific rationale to show this unbroken land-connect to a scientific commission appointed by the ISBA. If such a claim is approved, then such a country will have primacy to explore and potentially exploit the resources in the region.

Normally, claims to the continental shelf do not extend beyond 350 nautical miles from their coast. “However, there is a provision under which countries along the Bay of Bengal can apply a different set of criteria to make claims on the extent of their continental shelf. Using this, Sri Lanka has claimed up to 500 nautical miles. Whether they are actually awarded so we have to wait and see but India has staked a claim for exploration because we have noted Chinese presence. If we don’t at least stake a claim now, then this could have consequences in the future,” the official said.

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