Daily News Simplified - DNS

02 06 21
Notes
SL. THE HINDU
TOPICS
NO. PAGE NO.

1 Breaking the cycle of child labour is in India’s hands 06

2 Tenuous revival 06

3 COVID diplomacy 2.0, a different order of tasks 06

4 The economic toolkit revealed 07

Date: 02-Jun-21 DNS Notes - Revision

1. UPSC Current Affairs: Breaking the cycle of child labour is in India’s hands | Page 06

UPSC Syllabus: Mains: GS Paper II: Social Justice

Sub Theme: Child Labour| UPSC

Breaking the cycle of child labour is in India’s hands

The true extent of the impact of the COVID-19 pandemic on child labour is yet to be measured but all indications
show that it would be significant as children are unable to attend school and parents are unable to find work.
However, not all the factors that contribute to child labour were created by the pandemic; most of them were pre-
existing and have been exposed or amplified by it.

The state of child labour

• 152 million children around the world are still in child labour, 73 millions of them in hazardous work.
• NSS Report (2017-18) suggests that 95% of the children in the age group of 6-13 years are attending
educational institutions (formal and informal) while the corresponding figures for those in the age group
of 14-17 years is 79.6%. Hence, a large number of children in India remain vulnerable, facing physical
and psychological risks to a healthy development.
• The Census of India 2011 reports 10.1 million working children in the age group of 5-14 years, out of
whom 8.1 million are in rural areas mainly engaged as cultivators (26%) and agricultural labourers
(32.9%).
• A Rapid Survey on Children (2013-14), jointly undertaken by the Ministry of Women and Child
Development and UNICEF, found that less than half of children in the age group of 10-14 years have
completed primary education.

Definition of child and child labour

i. As per the Child and Adolescent Labour (Prohibition and Regulation) Act, 1986, amended in 2016
("CLPR Act"), a "Child" is defined as any person below the age of 14, and the CLPR Act prohibits
employment of a Child in any employment including as a domestic help.

Children between age of 14 and 18 are defined as "Adolescent" and the law allows Adolescent to be
employed except in the listed hazardous occupation and processes which include mining, inflammable
substance and explosives related work and any other hazardous process as per the Factories Act, 1948.

Criticism:

• It is criticised that the Act allows child labour in “family or family enterprises” or allows the
child to be “an artist in an audio-visual entertainment industry”.
o It excludes a section of toiling children in the unorganized sectors including agriculture
as well as the household work
• The Act does not define the hours of work and it simply states that children may work after school
hours or during vacations.

ii. India's Census 2001 office, defines child labour as participation of a child less than 17 years of age in
any economically productive activity with or without compensation, wages or profit.
Date: 02-Jun-21 DNS Notes - Revision

iii. Factories Act, 1948 prohibits the employment of children below the age of 14 years in any factory. The
law also placed rules on who, when and how long can pre-adults aged 15–18 years be employed in any
factory.

iv. Mines Act, 1952 prohibits the employment of children below 18 years of age in a mine.

v. Notably, the Constitution of India prohibits child labour in hazardous industries (but not in non-hazardous
industries) as a Fundamental Right under Article 24.

vi. Right of Children to Free and Compulsory Education Act, 2009 mandates free and compulsory
education to all children aged 6 to 14 years.

vii. National Policy on Child Labour in 1987 also says that “no, child below age of 14 years shall be
employed to work in any factory or mine or engaged in any hazardous employment”.

Causes of child labour

• UNICEF suggests that poverty is the biggest cause of child labour.

• Biggeri and Mehrotra have studied the macroeconomic factors that encourage child labour. They focus
their study on five Asian nations including India, Pakistan, Indonesia, Thailand and Philippines. They
suggest that child labour is a serious problem in all five, but it is not a new problem. Macroeconomic
causes encouraged widespread child labour across the world, over most of human history. They
suggest that the causes for child labour include both the demand and the supply side.

o While poverty and unavailability of good schools explain the child labour supply side, they
suggest that the growth of low paying informal economy rather than higher paying formal
economy – called organised economy in India – is amongst the causes of the demand side.

o India has rigid labour laws and numerous regulations that prevent growth of organised sector
where work protections are easier to monitor, and work more productive and higher paying.

o The unintended effect of Indian complex labour laws is the work has shifted to the unorganised,
informal sector. As a result, after the unorganised agriculture sector which employs 60% of child
labour, it is the unorganised trade, unorganised assembly and unorganised retail work that is the
largest employer of child labour. If macroeconomic factors and laws prevent growth of formal
sector, the family owned informal sector grows, deploying low cost, easy to hire, easy to dismiss
labour in form of child labour. Even in situations where children are going to school, claim
Biggeri and Mehrotra, children engage in routine after-school home-based manufacturing and
economic activity.

o Other scholars too suggest that inflexibility and structure of India's labour market, size of
informal economy, inability of industries to scale up and lack of modern manufacturing
technologies are major macroeconomic factors affecting demand and acceptability of child
labour.

• Many economist suggest the government planned and implemented land redistribution programs in India,
where poor families were given small plots of land with the idea of enabling economic independence,
have had the unintended effect of increased child labour. They find that smallholder plots of land are
labour-intensively farmed since small plots cannot productively afford expensive farming equipment. In
these cases, a means to increase output from the small plot has been to apply more labour, including child
labour.
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• The technical innovations and developments in the IT sector have not created jobs in poverty-stricken
areas.

A decrease in India
One piece of good news is that child labour in India decreased in the decade 2001 to 2011, and this demonstrates
that the right combination of policy and programmatic interventions can make a difference.
While child labour has declined during the past decade globally, estimates indicate that the rate of reduction has
slowed by two-thirds in the most recent four-year period. These positive and negative trends have to be taken into
account when developing India’s policy and programmatic response during and after the novel coronavirus
pandemic.
Policy interventions such as the Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA) 2005, the Right to Education Act 2009 and the Mid Day Meal Scheme have paved the way for
children to be in schools along with guaranteed wage employment (unskilled) for rural families.
Ratifying International Labour Organization Conventions Nos. 138 and 182 in 2017, the Indian government
further demonstrated its commitment to the elimination of child labour including those engaged in hazardous
occupations.
The Ministry of Labour and Employment-operated online portal, Platform for Effective Enforcement for No
Child Labour (PENCIL) Portal since 2017. It allows government officials, law enforcement agencies and non-
governmental organisations to share information and coordinate on child labour cases at the national, State and
local levels for effective enforcement of child labour laws.

The present problem

The economic contraction and lockdowns ensuing from the pandemic have affected all countries in Asia, leading
to income reductions for enterprises and workers, many of them in the informal economy.
The large number of returned migrant workers has compounded the socio-economic challenges.
India experienced slower economic growth and rising unemployment even before the pandemic. Subsequent
lockdowns have worsened the situation, posing a real risk of backtracking the gains made in eliminating child
labour.
With increased economic insecurity, lack of social protection and reduced household income, children from poor
households are being pushed to contribute to the family income with the risk of exposure to exploitative work.
With closure of schools and challenges of distance learning, children may drop out leaving little scope for return
unless affirmative and immediate actions are taken. As many schools and educational institutions are moving to
online platforms for continuation of learning, the ‘digital divide’ is a challenge that India has to reconcile within
the next several years.
The NSS Report No. 585 titled ‘Household Social Consumption on Education in India’ suggests that in 2017-18,
only 24% of Indian households had access to an Internet facility, proportions were 15% among rural households
and 42% among urban households. The Annual Status of Education Report (ASER) 2020 survey highlights that
a third of the total enrolled children received some kind of learning materials from their teachers during the
reference period (October 2020) as digital mode of education was opted for.

Way forward
The challenges are significant and manifold but it is not impossible to meet them if the right level of commitment
among all the relevant stakeholders and the right mix of policy and programmatic interventions are present. It is
through strategic partnerships and collaborations involving government, employers, trade unions, community-
based organisations and child labour families that we could make a difference building back better and sooner.
Date: 02-Jun-21 DNS Notes - Revision

As we reinforce the commitment to protect children from unacceptable forms of work, our focus to mitigate the
aftermath of the pandemic also remains.
We need a strong alliance paving our way towards ending child labour in all its forms by 2025 as countries around
the world have agreed to in Sustainable Development Goal 8.7.
We — governments, employers, unions, civil society organisations and even individuals — must rise and pledge
to ‘Take Action against Child Labour’ as a part of the UN’s declaration of 2021 as the International Year for the
Elimination of Child Labour. Our actions today will determine the future of children tomorrow.

2. UPSC Current Affairs: Tenuous revival| Page 06

UPSC Syllabus: Mains: GS Paper 3: – Economic Development

Sub Theme: GDP Estimation| UPSC

The outbreak of CoVID-19 has impacted both demand and supply side simultaneously leading to twin shocks, which is
considered to be quite unprecedented. Recently, the National Statistical Office (NSO) has released the provisional
estimates of the National income for the year 2020-21. According to the report, the Indian Economy has suffered worst
form of "Economic Recession" for the first time in the last 41 years since 1979-80. This report contains lots of facts and
figures, which are unlikely to be asked in UPSC Prelims Exam.

But from the perspective of UPSC exam, one needs to be aware of Trends in various macro-economic parameters such
as Real GDP, Nominal GDP, Contribution of different components to GDP, Contribution of different sectors and so on.
Further, since the Economy has registered Economic Recession for the first time in the last 49 years, the concept of
Recession also becomes quite important.

Understanding the impact of CoVID-19 on Economy

Back to Basics: Nominal GDP Vs Real GDP

The Gross Domestic Product (GDP) refers to the market value of all final goods and services produced within an economy.
It can be calculated into two ways:
Nominal GDP: It refers to the GDP at the current market prices i.e., the GDP is calculated as per the market prices for the
year for which the GDP is calculated.
Real GDP: It refers to the GDP at base year prices i.e., the GDP is calculated as per the market prices in the base year. Thus,
the Real GDP negates the inflation in goods and services.
Date: 02-Jun-21 DNS Notes - Revision

In case of high rate of inflation, the nominal GDP would be higher than the real GDP. However, in case of deflation, the
real GDP would be higher than the nominal GDP.

Estimates of National Income for 2020-21

Real GDP: Real GDP at Constant (2011-12) Prices in the year 2020-21 is now estimated to be at Rs 135 lakh crores in
comparison to Rs 145 lakh crores in 2019-20. The GDP growth rate is -7.3% in the year 2020-21 in comparison to 4% growth
rate registered in the year 2019-20.
Nominal GDP: GDP at Current Prices in the year 2020-21 is now estimated to be at Rs 197 lakh crores in comparison to Rs
203 lakh crores in 2019-20. The GDP growth rate is -3% in the year 2020-21 in comparison to 7.8% growth rate registered
in the year 2019-20.

Trends in GDP Growth rate

Economic Recession in India

India has recently faced economic recession for the first time in the last 41 years since 1979-80. Recession is defined as a
fall in the overall economic activity for two consecutive quarters (six months) accompanied by a decline in income, sales
and employment.
In independent India’s history, 5 such years of negative GDP growth were registered. They saw contraction of -1.2%
(FY58), -3.66% (FY66), -0.32% (FY73), -5.2% (FY80) and financial year (2020-21).

Trends in share of different Components of GDP

Date: 02-Jun-21 DNS Notes - Revision

Important observations:
1. The Private Final Consumption Expenditure (PFCE) is the major driver of the Indian economy, accounting for
almost 60% of India's GDP. The Covid-19 pandemic has caused uncertainty among the people leading to an absolute
reduction in the PFCE from Rs 83 lakh crores (2019-20) to Rs 75 lakh crores (2020-21)
2. The Gross Capital Formation (GCF) is the second major driver after PFCE. But as can be seen from above, the
GCF has declined from 32% (2014-15) to 27% (2020-21). This in turn has led to decline in both Investment and
consumption expenditure. Hence, the Indian Economy has facing slowdown even prior to Covid-19 pandemic. The
covid-19 has further accentuated the economic slowdown.

Trends in contribution of different sectors

Important observations:
1. The share of Agriculture and allied sector to India's GDP has remained around 17-18% in the last decade from 2010-11
to 2020-21.
2. The Industry sector comprises of Manufacturing, Mining, Electricity, Construction, Gas, Water supply and other
utility services. The share of Industry sector has decline in the last 5 years from 30% to 26%. In particular, the share of
manufacturing sector has declined from around 17% (2015) to 15% (2020). The decline in the share of manufacturing sector
has in turn led to poor job creation in Indian economy.
3. The share of services sector has increased from around 52% (2014-15) to around 55% (2019-20). The Sub-sectors
included in the service sector are-
a. Trade, Hotels, Transport, Communication and services related to broadcasting
b. Financial, real estate and professional services
c. Public administration, Defence and other services
Amongst these sub-sectors, the highest share is contributed by Financial, real estate and professional services.
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3. UPSC Current Affairs: COVID diplomacy 2.0, a different order of tasks | Page 06

UPSC Syllabus: Mains: GS Paper 2: International Relations

Sub Theme: Covid diplomacy 2.0| UPSC

Debate about indemnity clause in the vaccination program

• Vaccine manufacturers like Pfizer are demanding indemnity or liability waiver for the supply
of vaccines.
• The issue is who will be held liable in case of complaint of side effects.
• Manufacturers are demanding that they should not be held liable. This is a precondition for
the introduction of Vaccines in India.

Present status in India -

• The government has included a liability clause in the contract with the manufacturers. As
per the contract, the producers will be liable to compensate the people in all claims that arise
due to the vaccine.

• Section 124 of the Indian Contract Act 1872 defines the Contract of Indemnity as a contract
by which one party guarantees to save the other person from loss caused to him by the
action of the guarantor himself, or by the action of any other person.

What are other countries doing?

• Countries like Canada, Singapore, the United Kingdom, the United States, and the
European Union, have assumed a considerable amount of liability as opposed to the
manufacturers.
• In February, the USA invoked the Public Readiness and Emergency Preparedness Act. The
2005 law empowers the HHS ( Health and Human Service) secretary to provide legal
protection to companies making or distributing critical medical supplies, such as vaccines
and treatments. The immunity will last till 2024.

• A Countermeasures Injury Compensation Program has also been created under this act
where a dedicated compensation amount is enough to treat and indemnify the loss of the
aggrieved. While on the other hand, the South African government has launched its own
$250 million compensation fund for its citizens waiving off the liability of the manufacturers.

Legal point of view on the issue -

• Article 294 (4) of the Constitution states that the liability of the Union Government may arise
‘out of any contract or otherwise. This means that by virtue of the contract between the
vaccine manufacturers and the government, the latter can be held liable. Moreover, the state
can also be made vicariously liable. Since, the manufacturers are working for the
government and their production, sale, distribution is majorly governed by the policies of the
government, these companies are acting as agents.
In the current context, however, the state has freed itself of all liability and shifted the liability
to the vaccine manufacturers
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Challenges for India Diplomacy in the near future

• To roll out a mass vaccination program India will need to negotiate with the US about
various issues like indemnity, the release of vaccine ingredients, the release of stocks of
vaccines lying idle, etc. India's external affairs minister recently visited the US for such
negotiations.
• India proposed a patent waiver on Vaccine production at the WTO. To make it a reality is
the biggest challenge for diplomacy to convince the developed world.
• Managing the promise of Vaccine supply to African nations and the neighboring countries is
another challenge that Indian diplomacy faces. India has stopped the exports recently.
• India's stand on the recent reports of the WHO “pathways of emergence” of SARS-CoV2
and the associated "Lab Leak Theory" will be crucial in its relations with China.
• If the lab leak theory is true India should be at the forefront to revamp the 1972 Biological
Weapons Convention (formally known as The Convention on the Prohibition of the
Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons
to prevent future leaks.

4. UPSC Current Affairs: The economic toolkit revealed| Page 07

UPSC Syllabus: Mains: GS Paper 3: Economic development

Sub Theme: RBI| UPSC

Context:
This article has appeared in the newspaper in the context of publication of RBI's annual report for the financial year 2020-
21. Based upon the analysis of this report, the article highlights that the RBI has taken swift and timely actions to deal with
the economic woes caused by the Covid-19 pandemic. Going forward, the sustained efforts of the RBI must be
complemented by the Government.

Details
In order to deal with Covid-19, the RBI has adopted expansionary monetary policy and has reduced policy rates such as
Repo rates. The RBI has also injected liquidity into the economy through a combination of both conventional and
unconventional policy tools such as Repo, Open Market Operations, Reduction in Reverse Repo, Targeted Long Term
Repo operations (TLTROs) etc.
The RBI has also sought to bring down the yield rates on the long-term G-Secs through the Operation Twist.

On account of these policy actions taken by the RBI, the rates of interest on the loans given by the Banks have also declined.
Ideally, the decline in the interest rates should have led to higher credit creation leading to an increase in investment and
consumption expenditure and hence economic revival.

Unfortunately, the decline in the interest rates has failed to translate into higher credit creation. The financial year 2020-
21 has registered lowest Credit growth in the last 10 years. So, what explains this anomaly?
1. Supply Side Problem: The Banks are sitting on surplus liquidity and are reluctant to give loans due to the
fear of increase in NPAs. Rather than giving loans, the Banks are parking their surplus liquidity with the RBI
through the Reverse Repo route.
2. Demand Side Problem: Both Individuals and Private sector are staring at higher level of uncertainty caused
due to Covid-19. Poor sentiment among the individuals and private sector has led to lower demand for
loans.

Way Forward
The RBI has made optimum use of the tools at its disposal and has also unveiled new tools to deal with the unprecedented
economic situation. The RBI has already done its work quite efficiently. Now, it is the time for the government to
Date: 02-Jun-21 DNS Notes - Revision

complement the efforts of the RBI. As the Economic Survey 2020-21 has recommended, the Union Government must adopt
Counter Cyclical Fiscal policy to revive animal spirits and boost economic growth.