- The draft National Education policy lacks the very abilities it emphasizes- critical thinking and deeper analysis:
Relevance: mains: G.S Paper II: Education and Human Resources.
The draft National Education Policy (NEP) 2019 recommends a restructuring of school years and the curriculum, in a wide-ranging manner. If properly implemented, many of the suggested changes may help education. These include flexibility and wider scope at the secondary level, space for moral reasoning, re-emphasis on the true spirit of the three language formula, a focus on the core concepts and key ideas in subjects, vocational courses, and also a focus of assessment on understanding. However, the draft NEP also recommends much that may have just the opposite effect. These are, for example, 15 subjects/courses at the upper primary level, three languages in early childhood education, and confusing statements on a number of curricular issues. The curriculum the draft NEP suggests at the upper primary level has started looking like a laundry list, perhaps because of a lack of a coherent vision and the curricular thinking it adopts.
India-centric aim?
The policy envisions an “India centred education system that contributes directly to transforming our nation sustainably into an equitable and vibrant knowledge society”. The proclaimed “India centred-ness” of education is limited to recommendations on Indian languages and a mention of Indian knowledge systems. The operational vision is that of a “knowledge society”, almost entirely contained in UNESCO-preached ‘21st century skills’. The democratic ideal is neither mentioned nor used in articulating the aims of education or curricular recommendation, though democratic values are mentioned in the list of key “skills” that are to be integrated in subjects.
The vision of a knowledge society directly leads to the objectives of curricular transformation “in order to minimise rote learning and instead encourage holistic development and 21st century skills such as critical thinking, creativity, scientific temper, communication, collaboration, multilingualism, problem solving, ethics, social responsibility, and digital literacy”. The most important and educationally worthwhile term is “skill” and everything has to fit in within that; even ethics and social responsibility.
Shaping an individual
“The goal”, according to the draft policy, “will be to create holistic and complete individuals equipped with key 21st century skills”. This makes it quite clear what the definition of “holistic and complete individuals” means. After a host of curricular recommendations which includes new subjects/courses comes another statement which may sound like an articulation of curricular objectives or aims of education. Under the heading “Curricular integration of essential subjects and skills”, it says: “certain subjects and skills should be learned by all students in order to become good, successful, innovative, adaptable, and productive human beings in today’s rapidly-changing world. In addition to proficiency in languages, these skills include: scientific temper; sense of aesthetics and art; languages; communication; ethical reasoning; digital literacy; knowledge of India; and knowledge of critical issues facing local communities, States, the country, and the world”.
The broad goals are to send out “good, successful, innovative, adaptable, and productive human beings”; not a critical, democratic citizen who may want to change the situation rather than adapting to it. The list of eight “skills” (sic) is supposed to “create” such individuals. And to enable such an aim, it is no wonder that everything is a “skill” which includes among others a “sense of aesthetics”, “ethical reasoning”, “compassion” and “curiosity”. The phrase “Evidence-based and scientific thinking” is used together everywhere implying that there can be “scientific thinking” which is not evidence based. The policy assumes that “evidence-based and scientific thinking… will lead naturally to rational, ethical, and compassionate individuals”. I wonder how “evidence based” this claim itself happens to be. How scientific thinking will develop “compassion” is beyond one’s understanding. Further, it is interesting that “evidence-based and scientific thinking” is supposed to help create an ethical, rational, and compassionate individual but not a “logical and problem solving” individual as they are listed separately as “skills”. I wonder what part of logical and problem-solving abilities remain outside evidence-based, scientific and rational thinking.
The comments made above may be seen as a case of nit-picking by some. However, a policy document is read and interpreted at many levels and influences educational discourse. A document which places much emphasis on clarity of understanding and critical thinking cannot itself afford to fail in meeting the same standards. Shoddiness of thinking at the national level does not encourage hope of proper interpretation and implementation of the policy. This is already reflected in some policy recommendations. Here are a few such examples.
Language teaching
The draft NEP rightly criticises private pre-schools for being a downward extension of primary school and of there being formal teaching in them. But it goes on to recommend preparing children for primary by prescribing learning the alphabets of and reading in three languages (for 3-6-year olds). All this in the name of “enhanced (sic) language learning abilities” of young children. Further the draft policy mistakes “language acquisition when children are immersed in more than one languages” with a “language teaching” situation where immersion is impossible in three languages. It then extends it unjustifiably to a learning of three scripts. It prescribes teaching script and reading in three languages to three-year-old children, but writing is supposed to be taught to six-year-old children. It also wants to introduce “some textbooks” only at age eight. One wonders why there is a three year gap between teaching reading and writing. If script and reading are already taught, then why withhold textbooks till age eight?
Here is another example of similar and confused thinking. The draft policy stipulates that the “mandated contents in the curriculum will be reduced… to its core, focussing on key concepts and essential ideas”. This is to “yield more space for discussion and nuanced understanding, analysis, and application of key concepts”. But it goes on to block more than the space vacated by prescribing six new laundry-list subjects/courses in addition to the existing eight. Some of these new courses such as “critical issues” and “moral reasoning” can be taught in a much better way in a revised curriculum of social studies as the context for both is society. Social studies needs more space in the upper primary curriculum. The subject has to be taught in such a manner that it connects with society and can be a very good way of introducing critical issues and moral thinking. Abstract moral reasoning is likely to have the same fate as so-called “moral science” that is taught in many schools. Similarly, “Indian classical language” and “Indian languages” can constitute a single rich subject rather than being split into two courses.
Missing link
Identifying key concepts and essential ideas are a matter of rational curricular decision making; not listing ideas as they come to one’s mind. The absence of discussion on socio-political life seems to be another casualty in the emphasis on a knowledge society and 21st century skills. Social studies seems to be missing entirely as it has been mentioned once and then left out of the entire discussion on curriculum. In the end, the vision of the draft NEP rests on UNESCO declarations and reports rather than the Indian Constitution and development of democracy in this country; this in spite of wanting to make education India-centred. Thus, in the suggested curriculum changes, socio-political life is almost invisible.
All this goes to show that the draft NEP 2019 itself lacks the very abilities it emphasises, namely critical thinking and deeper understanding. It is a badly written document which hides behind a plethora of terms that are half-understood and clubbed under the overarching master concept of “skill”. In short, the policy lacks depth and loses focus of the richness of secular democratic ideals by aiming for 21st century skills.
(Source: The Hindu)
- MDR: The case for some clarification:
Relevance: mains. G.S paper: Indian Economy
Non-banking digital payment service providers reportedly worry that the Budget proposal to waive merchant discount rate (MDR) would force them to shut shop. The concerns of these intermediaries, who deploy and maintain infrastructure, must be addressed.
When digital payment volumes go up, the cost per transaction will diminish, not vanish. Someone has to bear the cost. At present, it comes out of the MDR. The Budget proposal waives MDR, both for merchants and customers, for businesses with a turnover more than Rs 50 crore.
The Budget speech said RBI and the banks will absorb the costs but does not go into who would pay the intermediaries, for whom their intermediation fees are the only income. So, the government should issue a clarification on who would pay these intermediaries when the MDR disappears.
Three parties share the MDR: the card-issuing bank, which accounts for a bulk of the cost of using credit or debit cards, the bank that deploys the card-swipe machine at the store, collects the money deducted and pays it into the merchant’s account with the bank, and Visa, Mastercard or RuPay that provides the service of connecting the banks and debiting and crediting the relevant accounts. Competition from payment networks and greater volumes will also bring down the per-transaction cost for the banks.
The government and RBI should together absorb the cost borne by banks and non-banking payment service firms that create the digital payment infrastructure. For the government, tax collections will rise as digital payments bring in more transparency. RBI will also save on the cost of printing and moving cash. The regulator should ensure that it specifically earmarks money to banks against what they would have recovered from merchants.
(Source: Economic Times)
- India has just one policy option to advance private investment and become a $5 trillion economy- reduce corporate tax rate for all firms to 22 percent, reduce misguided rates of personal income tax:
Relevance: mains: G.S paper III: Indian economy.
Budget 2019-20 contained major tax changes to direct taxes, both personal and corporate. It may have been the last time that we witnessed such changes. Very likely, when Budget 2020-21 is presented, the government would have accepted the direct tax code report, and direct taxes will go the way of excise taxes — out of the budget.
The budget reduced the corporate tax rate (CTR) from 30 per cent to 25 per cent for all firms with a turnover of Rs 400 crore. Earlier, the 25 per cent slab was applicable for firms with a turnover of Rs 250 crore. The FM stated that this move would cover 99.3 per cent of all firms in India. However, it is unclear as to how much of the total corporate taxes is accounted for by these 99.3 per cent of firms.
Tax rates are always an item of discussion and debate, and now more so than ever. President Donald Trump lowered the CTR for the US from 35 per cent to 21 per cent in 2018. As shown below, the lower tax rate was well chosen by Trump because that is close to the optimal tax rate. But that is getting ahead of the story.
OECD has recently released a comprehensive set of data on corporate taxes, for close to a 100 economies. The data reveals what has been feared (and argued) for a long time — India has one of the highest (actually the highest) corporate tax rate in the world. And, according to OECD, it also has the highest effective corporate tax rate (ECTR) — and that to by a huge margin. India’s ECTR is estimated by OECD at 44 per cent. Their definition includes all taxes paid by corporates in different countries — for example, corporate tax, dividend tax, capital gains tax. Incidentally, the second-highest ETR is for Argentina and it is 9 ppt (percentage points) lower than India, and third is France, 11 ppt lower. China’s ECTR is 20 ppt lower than India at 23.6 per cent!
One reason why China has got all the investments, and growth, at least relative to India?
In this age of globalisation, no country is an island. Competitiveness is affected by tax rates, interest rates, exchange rates, and labour costs. However, gone are the days when countries could devalue their way to prosperity. China accomplished this via massive undervaluation for about 20 years, from 1990-2010. Their success ensured that such undervaluation (read currency manipulation) would never again be allowed by the Western powers. It is likely that Trump’s trade war would not have occurred if China had been more responsible with the setting of its exchange rate.
What can countries do to improve their competitiveness, given that the mercantilist route is no longer an option? They can reduce its cost of capital, make labour more competitive, make industry more competitive, and rekindle animal spirits. On the first three counts, the budget has moved in the right direction. Sovereign bond borrowing is an idea whose time has definitely come, notwithstanding the perennial naysayers and those not comprehending the fundamental nature of change in the world. Inflation nowhere (including India) is the bogey it once was. Also naysayers should note, and answer the following question — between fiscal years 2004 and 2011 (the so-called Golden Age of Indian growth) the real repo rate averaged minus 1 per cent. For the fiscal years 2016-2018 real repo rates averaged 2.3 per cent. Go figure the growth implications.
Since Shaktikanta Das assumed governorship of the RBI, there has been considerable improvement in communication and a gradual lowering of policy rates, but this has also been accompanied by a more than equal lowering of inflation, that is, the real repo rate has yet to move below 2.3 per cent. The sovereign bond issue will help, but don’t look for a quick acceleration in GDP growth.
Exchange rate change is no longer operational, labour codes are too slow to change, and monetary policy is sluggish in its operation, and impact. The only real growth option for Indian policymakers — cut tax rates to internationally competitive levels. And what might that be? Around 22 per cent for all firms, and we obtain that result from a comparative study.
But first, a comment on the personal income tax (PIT) rate increase in the budget. The move to increase PIT rates to developed country levels is not in the right direction. It seems that there was more old-fashioned morality (tax the rich) than revenue maximisation at play. At best, the government plans to raise Rs 5,000 crore more by socking it to the rich. (Total personal income tax collection is budgeted at Rs 5,00,000 crore). And even that may not happen as tax arbitrage between the much lower corporate tax rate and the near highest individual income tax rate (only 10 per cent of countries have a higher than 43 per cent top PIT rate) will move animal spirits towards payment of corporate tax. And if not tax arbitrage, tax evasion may lower gain in PIT collection.
Ostensibly, tax rates are set to maximise tax revenue — and tax revenue depends on both income and tax compliance. Tax compliance can either be considered as more firms filing taxes or more firms revealing a closer approximation to true income. Improving compliance alone can ensure greater resource mobilisation through taxation — and without increasing the tax rate (and may indeed occur if the tax rate is reduced).
The non-linear relationship between tax rate and tax revenue (as per cent of GDP) is revealed by the famous Laffer curve – with zero tax rates, you get zero tax revenue and with 100 per cent tax rate, you get zero tax revenue. In-between, logically, the share of tax revenue increases, before peaking and declining toward zero. Several “truths” become evident from even a cursory glance at the chart. First, that OECD cross-country data for 2017 conforms (fits) the inverted U-shaped curve rather well — and the inverted U is a close approximation to a normal distribution (red line in chart). Second, that the lowest bang for the tax buck is obtained in India, possibly because tax rates are set on the basis of morality rather than revenue maximisation. In India, we tax at 44 per cent to get 3.5 per cent of tax revenue (as percentage of GDP). Both Korea and Israel (and other countries) obtain this same amount of revenue with half of India’s taxation levels. As the chart shows, the tax rate level at which revenue is maximised is around 23 per cent — half India’s tax level.
Why is the effective tax rate in India so high? In India, firms must pay a corporate tax, which is followed by a surcharge and an additional 15 per cent dividend distribution tax (DDT). The revenue mobilisation from DDT is marginal compared to the overall tax revenue from corporate taxes. Estimates suggest that the resource mobilisation from DDT is just around 8 per cent of the total corporate tax revenue. A steep 15 per cent DDT only dissuades firms from issuing dividends to their shareholders. Forget about double taxation as there’s another moral Indian tax icing — if an individual earns more than Rs 10 lakh of dividend income, she must pay an additional 10 per cent tax. So the same income is taxed thrice in India — and only in India.
Both the budget and the Economic Survey focused on revival of private investment to ensure sustained long-term growth. Thus, there is strong case for further and aggressive reduction in tax rates on the grounds of revival of investment, and helping India become a $5 trillion economy. With another budget just six months down the line, there is hope that the government will realise its mistake and depart from misguided taxation policies.
(Source: Indian Express)