UPSC Essentials: Weekly news express with MCQs — World population, pension scheme and more

Preliminary Examination: Economic and Social Development

Mains Examination: General Studies I: Population and associated issues

Why in news?

—According to un.org :The global population is projected to reach 8 billion on 15 November 2022, and India is projected to surpass China as the world’s most populous country in 2023, according to World Population Prospects 2022, released on World Population Day.

KEY TAKEAWAYS

—While the United Nations hailed the 8-billion figure as “a testament to humanity’s achievements”, it also sounded a note of caution.

“The growth of our population is a testament to humanity’s achievements, including reductions in poverty and gender inequality, advancements in health care, and expanded access to education. These have resulted in more women surviving childbirth, more children surviving their early years, and longer, healthier lifespans, decade after decade,” the United Nations Population Fund (UNFPA) said.

—However, in a report, Liu Zhenmin, UN Under-Secretary-General for Economic and Social Affairs, said rapid population growth can make challenges of hunger and poverty steeper. “Rapid population growth makes eradicating poverty, combating hunger and malnutrition, and increasing the coverage of health and education systems more difficult,” the UN official said.

Unequal distribution

—The UN population report said the global population is growing at its slowest rate since 1950, having fallen under 1 per cent in 2020. The world’s population could grow to around 8.5 billion in 2030 and 9.7 billion in 2050. It is projected to reach a peak of around 10.4 billion people during the 2080s and to remain at that level until 2100.

“More than half of the projected increase in the global population up to 2050 will be concentrated in eight countries: the Democratic Republic of the Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and the United Republic of Tanzania. Countries of sub-Saharan Africa are expected to contribute more than half of the increase anticipated through 2050,” the report said.

How India is placed

—India is projected to overtake China as the world’s most populous country in 2023, “with prospects to reap the demographic dividend as the median age of an Indian this year was 28.7 years, compared to 38.4 for China and 48.6 for Japan against a global value of 30.3 years,” a PTI report said.

—The population prospects report had said that India’s population stands at 1.412 billion in 2022, compared to China’s 1.426 billion. India is projected to have a population of 1.668 billion in 2050, way ahead of China’s 1.317 billion people by the middle of the century.

—According to UNFPA estimates, 68 per cent of India’s population is between 15-64 years old in 2022, while people aged 65 and above comprise seven per cent of the population.

—As per UN estimates, over 27 per cent of the country’s population is between the ages of 15-29. At 253 million, India is also home to the world’s largest adolescent population (10-19 years).

—UNFPA has noted that India has its largest ever adolescent and youth population. According to UNFPA projections, India will continue to have one of the youngest populations in the world till 2030 and is currently experiencing a demographic window of opportunity, a “youth bulge” that will last till 2025.

How China is placed

—China, which is weighed down by a rapidly increasing aging population, is projected to enter a “severe aging” phase in 2035 with 400 million people above 60 years. This can be blamed mainly on its decades of one-child policy.

—China’s elderly population reached 267 million last year, accounting for 18.9 per cent, Wang Haidong, director of the National Health Commission’s Department of Aging and Health said.

—It is estimated that the elderly population will top 300 million by 2025 and 400 million by 2035, he said in September, according to Chinese official media reports.

—The size of China’s senior population and its proportion of the total population is expected to peak around 2050, posing huge challenges to the provision of public services and to the national social security system, Wang said.

—On the one hand, China is rapidly aging, and on the other, its population is in decline due to falling birth rates. This is raising concerns over the future availability of a labour force, the main driver of the country’s economic growth.

—China’s population grew by less than half a million last year to 1.4126 billion as the birth rate fell for the fifth consecutive year.

—Since last year, China has allowed couples to have three children and even announced incentives for people to have more children.

Note of caution from UN secy general

— Writing in The Indian Express, UN Secretary-General Antonio Guterres has highlighted some of the challenges the world is facing, saying that “as our human family grows larger, it is also growing more divided.”

“Unless we bridge the yawning chasm between the global haves and have-nots, we are setting ourselves up for an 8-billion-strong world filled with tensions and mistrust, crisis and conflict,” Guterres wrote, adding, “A handful of billionaires control as much wealth as the poorest half of the world. The top one per cent globally pockets one fifth of the world’s income, while people in the richest countries can expect to live up to 30 years longer than those in the poorest. As the world has grown richer and healthier in recent decades, these inequalities have grown too.”

United Nations Population Fund or UNFPA

— It is a subsidiary organ of the UN General Assembly . It majorly works as a sexual and reproductive health agency. The UN Economic and Social Council (ECOSOC) establishes its mandate.

— UNFPA aims to work on the  Sustainable Development Goals – health (SDG3), education (SDG4) and gender equality (SDG5).

Point to ponder: UN projections on population underline opportunities and challenges, addressing which will require long-term vision and imagination. Discuss.

1. MCQ:

With reference to UNFPA, consider the following statements

1. UNFPA aims to work on SDG 3, 4 and 6.

2. India is projected to surpass China as the world’s most populous country in 2023, according to World Population Prospects.

Which of the statements are incorrect?

a) Only 1                                         b) Only 2

c) Both 1 and 2                             d) Neither 1 nor 2

 Road to net-zero status

Syllabus:

Preliminary Examination: General issues on Environmental ecology, Bio-diversity and Climate Change – that do not require subject specialization.

Mains Examination: General Studies III: Conservation, environmental pollution and degradation, environmental impact assessment.

Why in news?

At the COP27, India outlined its plan to achieve a net-zero emission status by 2070.

KEY TAKEAWAYS

— In a 121-page document, India listed some of the measures — decarbonising of electricity and transport sectors, redesigning of urban spaces, increase in energy and material efficiency, revitalisation of forests, and a push for climate-oriented research and development — it planned to take in the coming decades to achieve the net-zero status.

The context

— Under the 2015 Paris Agreement, countries have to prepare and submit two kinds of climate action plans — one for the short term, and another for long-term. The short-term climate action plans, also called Nationally Determined Contributions (NDCs), have to be submitted every five years, with specific actions being taken over 5- or 10-year periods. The NDCs of all countries currently contain the actions they are taking till 2030.

— For developed countries, NDCs must include specific emission reduction targets for the year 2030. Every subsequent NDC — next one is due in 2025 — must be a progression from the existing NDC.

— In its NDC, India has promised three main targets for 2030 — a 45 per cent reduction in emission intensity (emission per unit of GDP) from 2005 levels, 50 per cent share of renewables in electricity generation, and creation of 2.5 to 3 billion tonnes of additional carbon sink through forests.

— Apart from NDCs, the Paris Agreement also asks countries to submit their long-term strategies to reduce emissions. There is no particular time frame for which these long-term strategies have to be prepared, but it is generally understood that countries will draw out plans till the middle of the century.

— In the run-up to last year’s climate change conference in Glasgow, countries also announced target years for achieving net-zero status. In the case of most developed countries, this is 2050. China has set 2060 as its target year, while India said it would reach there in 2070. Long-term strategies, inevitably, got linked to net-zero targets after that.

India’s strategy

— To reach the net-zero destination, India is planning largescale interventions in five sectors — energy and electricity, transport, urban design, industries, and forestry. The plan also involves focused research and development efforts aimed at developing climate-specific technologies, and mobilisation of financial resources, both public and private, domestic and international.

— The long-term strategy document lists key focus areas and specific interventions that India is already taking, or has planned to initiate, in each of these priority sectors.

— In the energy sector, for example, decarbonization would come mainly through expanding the share of renewable energy, rationalising the utilisation of fossil fuels, and focusing on demand-side management.

— Low carbon development in the transport sector would be driven mainly by electrification of both public and private vehicles, phased transition to cleaner fuels, and introduction of intelligent traffic systems. Similar focus areas have been identified for other sectors as well.

— There are no mid-term goals or indicative pathways. In fact, the document is entirely devoid of any numbers or projections, and understandably so. Mid-term goals or projection pathways could be considered by the international community as interim targets, and India could be held accountable to them in the future.

— Most of the 60-odd countries that have submitted their long-term strategies have not offered mid-term targets or pathways, but some, including the UK and the US, have provided a few sectoral projections with expected milestones they hope to reach.

Agriculture missing

— One of the sectors India has not mentioned in its long-term strategy is agriculture, which is mainly responsible for methane emissions. Methane is the second most common greenhouse gas in the atmosphere after carbon dioxide, and has attracted great attention in the past few years. That is because methane is far more dangerous than carbon dioxide in its potential to cause global warming.

— That also means that, molecule to molecule, the reduction of methane offers far greater benefits than carbon dioxide. The good thing is that unlike carbon dioxide, methane is largely a sectoral gas, so its reduction does not have economy-wide repercussion the way carbon dioxide has.

— However, methane emissions is a sensitive issue for India, mainly because major contributors happen to be agriculture — paddy crops in standing water, for example — and belching of cattle, which India has the world’s largest population of. That is why India did not even join a global coalition on methane reduction that was launched at the previous climate conference in Glasgow.

Scepticism on carbon removal tech

— The net-zero status can be achieved only when the emissions are offset either by absorption of greenhouse gases by forests or physical removal of these gases through futuristic technologies. Emissions can be reduced significantly but not brought down to zero. The balance would have to be offset through various kinds of carbon capture and storage technologies, which, at the moment, seem unviable. This is what all the countries are relying on in their promises to turn net-zero.

— India’s long-term strategy talked about the use of such technologies, but did not rely on them in any big way. “This is a new sector being explored the world over, and may also be explored in the Indian context. This shall require substantial international support through innovation, technology transfer, climate-specific finance, and capacity building,” the strategy document said. It did however acknowledge that without CCS, achieving net-zero would not be possible.

“By 2070, when emissions will have to be net-zero, India will be heavily reliant on CCS and negative emissions technologies to achieve this goal, and in particular, to offset emissions from challenging and hard-to-abate sectors,” the document said.

R&D

— Accordingly, India has identified several climate-specific technologies — in CCS, biofuels, smart grids, solar photovoltaics, energy storage, and others — which it said are key to achieving the net-zero goal. It has said it would support research and development in these, and related, areas in public and private sector institutions.

— It has also provided a “non-exhaustive” list of technologies for which it would require international support. Under the international climate change framework, developed countries are mandated to provide technology transfer to the developing countries.

( source: Road to net-zero status by Amitabh Sinha)

Points to ponder: India’s net-zero strategy lays out the challenge before it, and the world. Do you agree?

MCQ: 

The term ‘Intended Nationally Determined Contributions’ is sometimes seen in the news in the context of (UPSC CSE 2016)

(a) pledges made by the European countries to rehabilitate refugees from the war-affected Middle East

(b) plan of action outlined by the countries of the world to combat climate change

(c) capital contributed by the member countries in the establishment of the Asian Infrastructure Investment Bank

(d) plan of action outlined by the countries of the world regarding Sustainable Development Goals

 Old Pension Scheme

Syllabus:

Preliminary Examination: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.

Main Examination: General Studies II: Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.

Why in news?

— Congress and AAP are promising to switch to the Old Pension Scheme. Congress has already reverted to the Old Pension Scheme in Rajasthan and Chhattisgarh, and AAP has said it would do the same in Punjab.

KEY TAKEAWAYS

What was the Old Pension Scheme?

— Pension to government employees at the Centre as well as states was fixed at 50 per cent of the last drawn basic pay. The attraction of the Old Pension Scheme or ‘OPS’ — called so since it existed before a new pension system came into effect for those joining government service from January 1, 2004 — lay in its promise of an assured or ‘defined’ benefit to the retiree. It was hence described as a ‘Defined Benefit Scheme’.

— To illustrate, if a government employee’s basic monthly salary at the time of retirement was Rs 10,000, she would be assured of a pension of Rs 5,000. Also, like the salaries of government employees, the monthly payouts of pensioners also increased with hikes in dearness allowance or DA announced by the government for serving employees.

— DA — calculated as a percentage of the basic salary — is a kind of adjustment the government offers its employees and pensioners to make up for the steady increase in the cost of living. DA hikes are announced twice a year, generally in January and July. A 4 per cent DA hike would mean that a retiree with a pension of Rs 5,000 a month would see her monthly income rise to Rs 5,200 a month.

What were the concerns with the OPS?

i) The main problem was that the pension liability remained unfunded — that is, there was no corpus specifically for pension, which would grow continuously and could be dipped into for payments.

The Government of India budget provided for pensions every year; there was no clear plan on how to pay year after year in the future. The government estimated payments to retirees ahead of the Budget every year, and the present generation of taxpayers paid for all pensioners as on date. The ‘pay-as-you-go’ scheme created inter-generational equity issues — meaning the present generation had to bear the continuously rising burden of pensioners.

ii) The OPS was also unsustainable. For one, pension liabilities would keep climbing since pensioners’ benefits increased every year; like salaries of existing employees, pensioners gained from indexation, or what is called ‘dearness relief’ (the same as dearness allowance for existing employees). And two, better health facilities would increase life expectancy, and increased longevity would mean extended payouts.

— Over the last three decades, pension liabilities for the Centre and states have jumped manifold. In 1990-91, the Centre’s pension bill was Rs 3,272 crore, and the outgo for all states put together was Rs 3,131 crore. By 2020-21, the Centre’s bill had jumped 58 times to Rs 1,90,886 crore; for states, it had shot up 125 times to Rs 3,86,001 crore.

— In 30 years, the cumulative pension bill of states has jumped to Rs 3,86,001 crore in 2020-21 from Rs 3,131 crore in 1990-91.

What was planned to address this situation?

— In 1998, the Union Ministry of Social Justice and Empowerment commissioned a report for an Old Age Social and Income Security (OASIS) project. An expert committee under S A Dave, a former chairman of SEBI and Unit Trust of India, submitted the report in January 2000. The OASIS project was not meant to reform the government pension system — its primary objective was targeted at unorganised sector workers who had no old age income security.

—Taking the 1991 Census numbers, the committee noted that just 3.4 crore people, or less than 11 per cent of the estimated total working population of 31.4 crore, had some post-retirement income security — this could be government pension, Employees’ Provident Fund (EPF), or the Employee Pension Scheme (EPS). The rest of the workforce had no means of post-retirement economic security.

—The OASIS report recommended individuals could invest in three types of funds — safe (allowing up to 10 per cent investment in equity), balanced (up to 30 per cent in equity), and growth (up to 50 per cent in equity) — to be floated by six fund managers. The balance would be invested in corporate bonds or government securities. Individuals would have unique retirement accounts, and would be required to invest at least Rs 500 a year.

— Post retirement, at least Rs 2 lakh from the retirement account would be used to purchase an annuity. (An annuity provider invests the amount and provides a fixed monthly income — which was Rs 1,500 when the report was prepared — for the remainder of the individual’s life.)

— A year-and-a-half after the Project OASIS report was submitted, the Ministry of Personnel, Public Grievances and Pensions set up a high-level expert group (HLEG) under B K Bhattacharya, a former chief secretary of Karnataka, to look into the situation for government employees.

— The HLEG suggested a hybrid defined benefit/ defined contribution scheme for government employees. In the first tier, it recommended a 10 per cent contribution by the employer and the employee. The accumulated funds would be used to pay pension in annuity form.

— In the second tier, no limit was specified for the employee, but the employer’s contribution would be matching but limited to 5 per cent. Accumulated funds could be withdrawn in lumpsum or converted into annuity. These incomes would be tax exempt.

— The report was submitted on February 22, 2002, but it did not find favour with the government.

What was the origin of the New Pension Scheme?

— The New Pension System proposed by the Project OASIS report became the basis for pension reforms — and what was originally conceived for unorganised sector workers, was adopted by the government for its own employees.

— The New Pension Scheme (NPS) for Central government employees was notified on December 22, 2003. Unlike some other countries, the NPS was for prospective employees — it was made mandatory for all new recruits joining government service from January 1, 2004.

— The defined contribution comprised 10 per cent of the basic salary and dearness allowance by the employee and a matching contribution by the government — this was Tier 1, with contributions being mandatory. In January 2019, the government increased its contribution to 14 per cent of the basic salary and dearness allowance.

— Individuals can choose from a range of schemes from low risk to high risk, and pension fund managers promoted by public sector banks and financial institutions, as well as private companies.

— Schemes under the NPS are offered by nine pension fund managers — sponsored by SBI, LIC, UTI, HDFC, ICICI, Kotak Mahindra, Adita Birla, Tata, and Max. The risk profiles of various schemes offered by these players vary from ‘low’ to ‘very high’. The 10-year return for the NPS Scheme-Central Government floated by SBI, LIC, and UTI stood at 9.22 per cent; the 5-year return at 7.99 per cent, and the 1-year return at 2.34 per cent. Returns on high-risk schemes could be as high as 15 per cent.

— Over the last eight years, the NPS has built a robust subscriber base, and its assets under management have increased. As on October 31, 2022, the Central government had 23,32,774 subscribers, and states had 58,99,162 subscribers. The corporate sector had 15,92,134 subscribers, and the unorganized sector 25,45,771. There were 41,77,978 subscribers under the NPS Swavalamban scheme. The total assets under management of all these subscribers stood at Rs 7,94,870 crore as on October 31, 2022.

(Source: Why the Old Pension Scheme is both bad economics and bad politics by  P Vaidyanathan Iyer )

Point to ponder: Will reviving the Old Pension Scheme will turn the clock back on hard-won reforms?

3. MCQ: 

With reference to NPS, consider the following statements

1. National Pension System (NPS) is a pension cum investment scheme launched by Government of India to provide old age security to Citizens of India.

2. It brings an attractive long term saving avenue to effectively plan your retirement through safe and regulated market-based return.

3. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA).National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS.

How many statements are true?

a) Only 1 statement is true

b) Only 2 statements are true

c) All three statements are true

d) No statements are true

Ukraine and Global Food Security

Syllabus:

Preliminary Examination: Current events of national and international importance.

Main Examination: General Studies II: International Affairs

Why in news?

— War, rain and economic hardship have depressed Ukraine’s wheat plantings, depriving the nation of vital export earnings in 2023 and heralding another year of tight global supplies and potentially high prices for basic foodstuff.

KEY TAKEAWAYS

— The drop in production will affect some of the world’s poorest countries. Ukraine exports some wheat to Turkey where it may be processed into flour and shipped to Africa, particularly sub-Saharan Africa, and also into soft wheat-based pasta which is popular among consumers in developing countries owing to more affordable prices compared to the pasta made from durum.

— The Agricultural Market Information System (AMIS), which was set up by G20 members to strengthen global food security, has warned another poor crop in Ukraine would mean global stocks would not recover for at least another year, ensuring prices remain high and markets volatile.

— The food crisis also coincides with continued economic fallout from the COVID-19 pandemic, climate shocks and high energy prices.

— In contrast, prices the farmers receive in Ukraine remain very low due to the difficulty and high cost of moving crops across the war-torn country to export hubs.

Lower export earnings

— A sharp drop in production is also likely to mean Ukraine’s wheat export revenues fall far below the roughly $4 billion in the 2021/22 season, according to Reuters calculations.

— Farmers had sown 3.6 million hectares of winter wheat, as of Nov. 7, down 41 per cent from 6.09 million at the same stage a year ago, government data shows.

— Ukraine sowed around 6.1 million hectares of winter wheat for the 2022 harvest, but a large area has been occupied by Russian forces since they invaded Ukraine in February and only 4.6 million hectares were harvested.

“It’s a triple effect of weather, economic and technical factors (such as the inability to access fields),” said Sebastien Poncelet, analyst at Agritel, a French crop consultancy which has a Ukrainian office, referring to the drop in planted area.

— In contrast to wheat, rapeseed plantings have held up well.

Spring oilseeds favoured

— Ukraine is expected to see similar shifts in the upcoming spring planting season, with corn the main grain crop sown and sunflowers the main oilseed.

— Prospects, however, also hinge on whether it is possible to export from Ukraine’s ports under a United Nations-led pact which was signed on July 22 but is due to expire on Nov. 19.

— The agreement allows for agricultural products to be exported from three Ukrainian ports and there are hopes that it will be extended despite some reservations from Russia about how the pact is working. Without it prices within Ukraine are likely to fall further, particularly in eastern and central Ukraine as it will only be possible to export through land routes which run from western Ukraine into the European Union.

— “Much depends on the ability to export by sea. In fact, one of the reasons for the decrease in sown areas this autumn was the lack of funds for farmers due to the inability to sell grain at (global) market prices,” said Denys Marchuk, deputy chair of the Ukrainian Agrarian Council.

(Source: How Ukraine’s sparse wheat plantings are sowing further trouble for global food security by Reuters)

Point to ponder: Ukraine imbroglio can give the Global South a chance to claim a place at the high table of global diplomacy. Comment.

MCQ:

Consider the following pairs: (2022)

Regions in News             Country

1. Anatolia –              Turkey
2. Amhara –               Ethiopia
3. Cabo Delgado –    Spain
4. Catalonia –            Italy

How many pairs given above are correctly matched?

1. Only one pair
2. Only two pairs
3. Only three pairs
4. All four pairs

Answers to MCQs: 1 (a), 2 (d), 3 (c), 4 (b)

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