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Summary
Economics Class 01

Mains 365 EconomicsÂ

A brief overview of the document and mode of classesÂ

Employment Skill development and Labour reforms (1:19:00PM)
Periodic labour force Survey - every year, frequent then EUSÂ
The latest PLFS data was released 2 months back from July 2019 - June 2020Â
FindingsÂ
The Unemployment Rate (UR) fell to 4.8% in 2019-20.
LFPR- Labour force Participation Rate - 40.1%Â
Critically analyse Indias ability to realise a proverbial demographic dividend.Â
Labour force - Economically active PopulationÂ
Unemployment Rate - Those who are willing to work/ those who are unable to workÂ
LFPR in China - 67%, India 40.1%Â
Unemployment rate - Decreased to 4.8% , GrowthÂ
Jobless Growth - Economy grows but Jobs are not created.Â
Growth less Jobs - Jobs without Growth.Â
Highlights of PLFSÂ
High UR in the 15-29 age group (15%).
Higher joblessness in urban youth as compared to in rural areas.Â
Almost the entire rise in the workforce is due to an increase in the agriculture workforce.Â
Nature of Jobs - The majority of the Rural Workforce is self-employed rather than salaried/regular wage.Â
An increase in Jobs can be attributed to increase in employment in Agriculture.Â
Recent steps that have been taken (1:55:00PM)
Digi Saksham: It is a digital skills programme to enhance the employability of youth.Â
Atmanirbhar Bharat Rozgar Yojana (ABRY): ABRY was launched to incentivize employers for the creation of new
employment along with social security benefits.
E-Shram Portal: All registered workers shall be issued an e-Shram card with Universal Account Number (UAN) to
avail benefits of various social security schemes of the government.Â

Fixed Term Employment (2:02:00 PM)Â

Discuss how can Fixed Term employment balance the needs of the employer with the expectation of the employee.
Comment in the light of recent Labour law reforms.Â
FTE -Â
It is a contract in which a company or an enterprise hires an employee for a specific period, usually a year with the
option to renew on term expiry depending on the requirement
Why FTE - “Fixed-term employmentâ€​ means the engagement of the worker based on a written contract of
employment with an employer for a fixed period.
Termination: The termination of the service of a worker because of completion of tenure will not be considered as
retrenchment.
Compensation: The salary payment will be more transparent, and all remuneration will be paid within a maximum
of seven days after completion of the wage period of a worker.Â
ConcernsÂ
Going against the concept of job security
Difficulty in the enforcement of agreements.
Misuse of contractual employment arrangements.Â

Gig Economy (2:23:00PM )

Gig work is the work in which organizations contract with independent workers for short-term engagements on a
per-time or per-task basis (with no commitment of future work).
The gig worker has the flexibility to choose hours of work with no negative impact on earning potential.
Benefits associated with Gig economyÂ
Service Listing Platform offers a platform to list the demand for various professional services which can then be
matched with the services being
offered. For instance– Truelancer.
Explaining what Gig economy is discuss its potential in India along with Possible issues which come associated
with it.Â
Prominent issues related to Gig economy
Low Job security and Inconsistent income.
Lack of social security benefits: Jobs in the gig economy have no such safeguards such as Health Insurance,
EPF etc.Â
Limited opportunities for skill up-gradation and career progression that are attached to traditional jobs.
Application of labour laws: The dispersed nature of the work on digital labour platforms across international
jurisdictions makes it difficult.Â

Skill Development (2:49:00 PM)

TargetsÂ
Increase the Formally skilled labour from the Current 5.4% to at least 15 %
Ensure inclusivity based on Gender, location, organised/unorganised.Â
 SchemesÂ
Pradhan Mantri Kaushal Vikas YojnaÂ
Deendayal Upadhyay Grameen Kaushal YojnaÂ
Pradhan Mantri Yuva YojnaÂ
Skill India Mission.Â
Unemployment in India can be explained largely using structural and voluntary reasons. Skill development is the
key part of the solution. Elaborate.Â

Labour Law Reforms (2:59:00 PM)

Labour laws are complex and overlapping in nature.Â

Poor enforcement of laws due to delays in referral.
It tends to constrain the growth of the firm.Â
Inadequate coverage of workersÂ
The potential effect of labour codes on these issuesÂ
Codification and simplification of labour lawsÂ
Extended coverage to more categories of workers.Â
Facilitates the growth of firms along with job creationÂ
Provides recognition to negotiation unions.Â

CODE ON INDUSTRIAL RELATIONS, 2020 (03:13:00 PM)

It combines the features of three erstwhile laws Trade Unions Act 1926, Industrial Employment (Standing Orders)
Act, 1946 Industrial Disputes Act, 1947Â
Provisions :Â
Prior permission of the government for closure, lay-off and retrenchment.
Negotiating Union and Council.
Tribunals for settlement of disputes.
Re-skilling fund: To re-skill those workers who are fired from their jobs.Â
Associated IssuesÂ
May impact ability of workers to strike & employers to lock out workers.Â
Earlier these provisions were applicable only for public utility services (railways, airlines, and establishments that
provide water, electricity, and telephone service).Â
Violation of the principle of separation of executive and judiciary.
The code gives extensive power to the government to modify or reject tribunal awards through executive action
and raises a question of conflict of interest.Â
Certain terms not defined in the Code: it does not define the terms ‘manager’, ‘supervisor’,
‘contractor’ and ‘establishment’ leaving them open to wider interpretation.

 Code on Social security (3:23:00PM)

Replaces nine laws related to social securityÂ

Major provisions of the codeÂ
The code is applicable to any establishment (subject to size threshold as may be notified by the central
government).Â
Social security fund: The code states that the central government will set up such a fund for unorganised workers,
gig workers and platform workers.Â
Provisions for registration of all three categories of workers - unorganised workers, gig workers and platform
workers.Â
Offences and penalties: The code changes the penalties for certain offences. For example, the maximum
imprisonment for obstructing an inspection
Code on Occupational Safety, Health and Working conditions
It consolidates 13 existing acts regulating health, safety and working conditions.
Major provisions
The daily work hour limit fixes the maximum limit at eight hours per day.
Employment of women: Women will be entitled to be employed in all establishments for all types of work.
The code empowers the state government to exempt any new factory from the provisions of the Code in order to
create more economic activity and employment.
Key Issues with the code
The rationale for some special provisions unclear
It contains general provisions which apply to all establishments. These include provisions on registration, filing of
returns, and duties of employers.
While special provisions for hazard-prone establishments such as factories and mines and categories of vulnerable
workers such as contract labour seems justified, the rationale for mandating special provisions for other workers is
not clear.
Civil Court barred from hearing matters under the Code

Post-Pandemic EconomyÂ

Persistent economic slowdown compounded by the Pandemic.Â

Economic fragility due to large dependence on the service sector.Â
The trust deficit between Government and Private Sector.Â
A high degree of formalization.Â
Unstable nature of economic growth.Â
Changes took place in the nature of the economy
 The idea of work from Home.
Increased focus on self-reliance due to disruption of the global supply chain.Â
Accelararting trend of deglobalisation.Â
Push towards technology-intensive and capital intensive growth.Â
Measures to ensure a smooth and speedy recoveryÂ
Ensuring food security.
A direct cash transfer to affected populations.Â
Participating in rekindled supply chains.Â
Public investment in physical and social infrastructure.Â
Philosophy to build post-pandemic Economy
Moving from shareholder capitalism to stakeholder capitalism.Â
Focus on building resilience and going forward.Â
Focus on triple bottom line people, profit and planet.
Making continuous information part of the process.Â

Poverty Alleviation (4:02:00PM)

Key TargetsÂ
Eradicate extreme poverty for all people.Â
Basing poverty line estimation in India on the consumption expenditure and not on the income levels.
Identification of all forms of poverty beyond the economic realm.Â
Addressing Multi-dimensional poverty in a holistic manner.
Schemes
Deen Dayal Antayodya YojnaÂ
PM Awas YojnaÂ
PM Kisan Nidhi Scheme.Â
Integrated Child development services.Â
Pradhan Mantri Garib Kalyan Yojna.Â
ConstraintsÂ
Unequal distribution of land and other assets.
The amount of resources allocated is not sufficient.Â
Implementing officials are inadequately trained.
Way forwardÂ
Providing adequate training and incentives.Â
Ensuring participation of local governments.
Effective distribution of wealth.Â
Expanding cooperation and coordination at state national and global levels.

Inflation and Money supply (4:03:00)

Key TargetsÂ
Ensuring overall price rise in the economy stays within reasonable limits.Â
Inflation targeting is being estimated though CPI (4%+- 2)
SchemesÂ
Banning of export of Onions, Impositions of stock limit.Â
Creation of buffer stock of pulses.
Price stabilisation funds and price support schemes.
Creation of strategic buffers.Â
ConstraintsÂ
Estimation of the appropriate level of inflation.Â
Subdued economic activity at the international level.
Pandemic induced supply constraints.Â
Way forwardÂ
More effective implementation of countercyclical Fiscal policy.
Targetting High inflation growthÂ
Long term measures to curtail food inflation.
Review of Onion Buffer stock policy.

Liquidity TrapÂ

IMF economist Gita Gopinath stated that the global economy may be heading towards a liquidity trap.Â
A liquidity trap is a contradictory economic situation in which interest rates are very low and savings rates are
high, rendering monetary policy
ineffective.
The economic situation created by the pandemic has led to the following developmentsÂ
Very low-interest rates: 60 per cent of the global economy - including 97 per cent of advanced economies -- central
banks has pushed policy interest rates below 1 per cent.
Remedial measuresÂ
Global synchronized fiscal push:
Coordination and collective easing of the monetary policy
Reevaluating the global arrangements like trade agreements and global supply changes.Â

The topic for the next class - Fiscal PolicyÂ