Daily Editorial Analysis for 27th May 2021

  1. Home
  2. »
  3. Editorial Analysis May 2021
  4. »
  5. Daily Editorial Analysis for 27th May 2021

Tackling rural economic distress

Why in News

  • There is an urgent need to strengthen the public distribution system and the MGNREGS.
  • Several States are under lockdown again. This will have severe implications for the livelihoods of those in the informal sector.
  • There is adequate evidence that migrant workers and the rural poor have been facing great distress over the past one year and the crisis for food and work is only going to intensify further.

Hunger and distress

  • A few months ago, the Right to Food campaign and the Centre for Equity Studies published a ‘Hunger Watch’ report which compared the pre­lockdown situation last year to the situation in October 2020 to assess the impact of the nationwide lockdown.
  • The survey involving 4,000 respondents across 11 States exposed the life and livelihood uncertainties of people belonging to low-income categories in the informal sector.
  • In October 2020, 27% of the respondents stated that they had no income, 40% respondents said that the nutritional quality of food had become “much worse” and 46% of the respondents said they had to skip one meal at least once in the day in October 2020.
  • The migrants have again become vulnerable due to the lockdown in different cities.
  • While many have once again headed to their villages, a large population has got stranded in different parts of the country without work.
  • The Stranded Workers Action Network, a group of individuals helping distressed migrant workers since 2020, has been reaching out to workers for providing essential help.
  • According to the group, 81% of the people whom they reached out, had mostly stopped working since April
  • 15, 2021 and 76% of the workers are facing shortage of food and cash and require immediate support.

Solution to reduce the Economic Distress

  • There is an urgent need to strengthen the public distribution system (PDS) and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
  • The government announced 5 kg free food grains for individuals enlisted under the National Food Security Act (NFSA), for May and June 2021.
  • The government should expand PDS coverage immediately and include all eligible households under the schemes.
  • According to an independent study, about 100 million people are excluded from the ration distribution system owing to a dated database based on the 2011 Census.
  • The Centre should also extend the free food grains programme to a year instead of limiting it to two months.
  • The economic crisis is likely to last for a long time. It is being reported that India procured record amounts of rice and wheat last year through mandis.
  • The total procurement is way more than the current requirement for PDS. It is thus quite possible to expand the safety net of the a NFSA.

Inadequate provisions

  • The Centre had allocated ₹ 73,000 crore for 2021­22 for MGNREGS and notified an annual increment of about 4% in wages.
  • The central allocation for MGNREGS is about ₹38,500 crore less than last years revised estimate.
  • Of the 7.56 crore households which worked in MGNREGS in 2020­21, even if 1 crore households opt out of the scheme this year, the Centre should still budget for 75­80 days of employment in the year for 6.5 crore families given the current scale of economic distress.
  • By this rationale, at the current rate of ₹268/ day/person, at least ₹1.3 lakh crore will have to be budgeted.
  • The government should also re­consider its decision of a mere 4% increase in MGNREGS wages and hike it by at least 10%. This will mean another ₹ 10,000 crore.


  • Therefore, at least ₹1.4 lakh crore will be required to ensure uninterrupted implementation during the year.
  • A large population is facing hunger and a cash crunch. The situation is only becoming more dire as the pandemic continues to rage on.
  • Therefore, the Union government should prioritise food and work for all and start making policy reforms right away.


How US has weakened WTO


  • Though global merchandise trade took a significant hit in the first half of 2020 and fell as much as 15% in the second quarter, it exhibited astonishing recovery in the second half of the year.

Merchandise Exports

  • According to a March 31, 2021, press release by the World Trade Organisation (WTO), merchandise exports fell by only 5.3% over the full year. This compares with a whopping 12% fall in 2009 following the global financial crisis. WTO predicts that merchandise exports volume would rise by 8% in 2021.
  • Global merchandise exports have thus survived well the onslaught of Covid-19. With vaccine supplies expected to rise at an accelerated pace globally, prospects for the WTO forecast coming true are excellent.
  • While this fact removes weak global market as a source of worry in the immediate aftermath of Covid-19 crisis, world still face challenges posed by the fissures and fractures in the WTO system.

Dispute Settlement Body (DSB)

  • Central to the enforcement of multilaterally agreed rules under the auspices of WTO is its dispute settlement body (DSB), which does for international trade disputes what domestic courts do for civil disputes.
  • If a WTO member feels that another member has violated its trading rights enshrined in WTO rules, it can bring a case against the latter in DSB.
  • If the initial efforts to settle the dispute through intermediation fail, DSB appoints a panel to investigate and hear the case and give a ruling.
  • If either party is dissatisfied with the ruling by the panel, it can take the matter to the appellate body (AB). Ruling by AB is final and binding.

Appellate Body (AB)

  • Judges to AB are appointed for a four-year term (renewable for at most another term) by consensus among WTO members. At any time, AB can have up to seven members of which three make the quorum for hearing a dispute.
  • For more than a decade, the United States has been unhappy with the rulings by AB in cases brought against it.
  • As a result, beginning in 2011, it has been of vetoing the renewal AB members completing their first term as well as the appointment of others to succeed them.
  • Cumulative effect of the vetoes has been that the total number of AB members fell to two on December 11, 2019, one short of the quorum for a hearing.
  • Consequently, WTO is no longer able to enforce its rules.
  • If this emboldens one or more members to begin exploiting the system by violating the rules, members whose rights are violated and are unable to seek a remedy via DSB are bound to respond in kind. That is what has happened in cases of steel and aluminum tariffs and US-China trade conflict.

US has weakened WTO

  • While the United States has expressed its displeasure with a number of features of how DSB has operated, so far, it has not placed a proposal to reform it to WTO membership. Therefore, the path to bringing the DSB process back on track is simply not clear.
  • In part, the United States’ reluctance to offer a reform proposal may be rooted in its dissatisfaction with WTO on other counts, many of them centred on China.
  • It contends that under the existing WTO rules, it is not possible to satisfactorily deal with China’s state-owned enterprises, industrial policy, subsidies and intellectual property rights violations.
  • China for its part resents the United States for not making good on its promise to give it market-economy status.
  • The United States also remains unhappy with developing-country status (which qualifies them for special and differential treatment under WTO rules) to countries such as China, India and Brazil. Additionally, it wants greater transparency and better enforcement of WTO notification obligations.
  • Most of these issues cannot be resolved without renegotiation of many of the current WTO rules. Unfortunately, rule-making negotiations are currently stalled and may take some years to return on track.
  • In the meantime, one can only hope that member countries would recognise the value of trade benefits they have enjoyed within a rules-based multilateral trading system since World War II and adhere to their commitments and obligations.

Concern of India

  • As far as India is concerned, with global merchandise exports holding up at $18-19 trillion and commercial services exports at another $6-7 trillion, it has much to gain from the current system even if it is somewhat broken.
  • To return the country quickly to 7-8% growth path in the post-Covid-19 era, it must unwind its higher tariffs rather than continue with the losing strategy of import substitution.
  • For geopolitical reasons, India aims to distance itself from China. To achieve this objective while simultaneously improving its access to foreign markets, its recent decision to pursue free trade agreements with the United Kingdom and European Union is a very welcome development.
  • India has much to gain from duty-free access to these large markets. The issue of protecting the interests of sensitive import-competing products should be handled via a 10–15-year phase out of tariffs on them rather than protection in perpetuity.

Current Affairs

Recent Posts