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01 06 20 Notes

SL. NO. TOPICS

THE HINDUPAGE NO.

1 It’s time for a universal basic programme in India 07

2 Too many aspirants for MGNREGS job 08

3 SpaceX’s spacecraft successfully docks with ISS 01

Dated: 01-June-2020 DNS Notes

Title 1. It’s time for a universal basic programme in India – Article (The Hindu – Pg. 7)

Syllabus Prelims: EconomyMains: GS Paper III – Economy

Theme Universal Basic Income – UBI Highlights

Being unwanted, unloved, uncared for, forgotten by everybody, I think that is a much greater hunger, a much greater poverty than the person who has nothing to eat. Mother Teresa

A referendum was carried out in Switzerland in 2016 where in the people were asked to give their opinion on the implementation of Universal Basic Income (UBI). The proposal included the UBI of 2,500 Swiss francs to be provided to all the adults living in Switzerland. The result of the referendum was quite surprising given the fact that more than 75% of the population rejected the idea of UBI.

However, in spite of its rejection, the idea of UBI has caught the imagination of the world. A large number of countries such as US, Canada, Kenya, Finland, Namibia, Netherlands, India etc are implementing UBI through a pilot program in order to study its impact on the society. The UBI is being considered as a magic bullet to solve the various socio-economic challenges confronting the global community. It has found its proponents in both developed and developing countries. More importantly, even though the ideologies of Capitalism and Socialism are poles apart and do not reach on common ground on number of issues. However, both capitalists and socialists seem to have reached a consensus on the implementation of UBI.

However, UBI has its advocates as well as opponents. On one hand, the advocates have pitched for UBI as an answer to solve the problems of poverty and unemployment while, on the other hand, the opponents have argued that UBI would not be economically feasible and impose additional social costs in the form of inducing laziness and increased demand for temptation goods such as alcohol, cigarettes etc.

Against this backdrop, questions which can be raised here is whether India is ready for UBI?? Can UBI emerge as a tool to promote faster and inclusive growth and bridge the regional and gender disparity? More importantly, in spite of its desirability, does India has the necessary financial capability and resources to implement UBI? Let us find the answers to these questions.

Understanding Universal Basic IncomeA Universal Basic Income (UBI) is a regular fixed cash transfer payment provided by the government to every citizen or resident regardless of their socio-economic status to ensure that they are atleast able to meet their basic needs. The idea of a basic income is founded on the three following characteristics:Universality: UBI should be given to the entire population without taking into account the socio-economic status.Un-conditionality: UBI should be unconditional i.e. UBI should be given without any conditionality.Agency: UBI should be in the form of cash transfers without dictating the choices i.e. the recipients should have complete freedom to use the UBI in whatever way they deem fit.


The Genesis of UBIThe idea of UBI is an old idea in western countries. It has been associated with a large number of scholars such as Thomas Paine, J S Mill, Thomas More etc. For example, Thomas More proposed providing all the people with a basic means of livelihood in order to control social evils such as thefts and burglary. Further, post the world war, the UBI received support from economists such as Milton Friedman and Keynes.However, the idea of UBI has gained renaissance in the recent times due to the concerns that growing automation may render people jobless and hence would need support from the government. Further, as the concept of modern welfare state is expanding, it is expected that the state ought to fulfill the basic needs of its citizens.

UBI- Neither Right nor Left but its forwardAt last, Karl Marx and Adam smith have something to agree upon since UBI has found support from both capitalists as well as socialists. The Capitalists argue that growing automation would lead to loss of jobs and hence can have an adverse impact on the demand in the economy. Under such circumstances, the UBI would enable the economies to keep the demand intact and consequently the future economic growth would not be jeopardised.Further, the capitalists argue that UBI would not induce laziness among people. It is based upon the assumption that all the individuals are utility maximisers and would strive for higher quality of life once they are assured of basic needs through the UBI.On the other hand, the socialists argue that implementation of UBI would reduce the growing socio-economic disparities across the world and would go a long way in taking forward the idea of modern welfare state.Thus, it is argued that UBI is neither right (Capitalist) nor left (Socialist), rather it should be way forward for all the countries.

UBI Pilot Programmes across the worldA number of countries such as Namibia (Basic Income Grant), Canada (MINCOME), Kenya (GiveDirectly), USA (YCombinator), Finland, Netherlands etc have launched pilot programs for the UBI on an experimental scale. Even India has carried out pilot study of UBI in state of Madhya Pradesh known as Madhya Pradesh unconditional cash transfers project (MPUCT). This clearly highlights that there has been growing enthusiasm among the global community for the implementation of UBI. Advantages of UBI in IndiaFreedom and JusticeIt is often said that the greatness of a nation can be judged by how it treats its weakest member. In this regard, the UBI would enable the government to realise its vision of social and economic justice as enshrined in the Preamble of the Indian Constitution.

It is to be noted that Article 21 of the Indian constitution includes the Right to Life. The right to life is not confined to mere animal existence and it means more than physical survival. It includes the right to live with human dignity by being able to meet the basic necessities such as food, clothing, shelter, education, healthcare etc. Thus, the state is required to play a facilitative role in ensuring human dignity and enabling the individuals to reach their optimum potential. Hence, the implementation of UBI would promote the basic values such as freedom, justice, equality, fairness in a country.

Apart from that, Nobel laureate Amartya Sen has shown a clear link between poverty and basic human rights. He believes that poverty is result of deprivation of basic


human rights leading to the state of “Unfreedom”. Lack of access to basic human rights leads to poverty and makes the people incapable of taking economic decisions. Thus, the UBI would give the people the most important freedom i.e. deciding for themselves what they want to do with their life. Hence, UBI would go a long way in ensuring freedom and economic and social justice for the people.

Poverty ReductionThe Government has launched a large number of schemes and programmes aimed at poverty eradication. However, it has not had intended benefits. In this regard, the UBI can be considered to be a much better tool for poverty eradication for number of reasons.

Firstly, if we look at the BPL population in India, it has got reduced from almost 70% in 1950s to 22% in 2011-12. However, in spite of this huge achievement, a large section of Indian society is even today unable to meet their basic needs. This is because the poverty line estimates in India takes into the account only the ability of the people to meet their basic food needs and not other basic needs such as education, healthcare, transportation etc. This clearly highlights that we still have along way to go in order to “wipe out every tear from every eye”.

Secondly, the BPL list in India is characterised by inclusion and exclusion errors due to which we have been unable to ensure basic needs for the poorest and most vulnerable sections of Indian society. Unless we are able to clearly identify the poorest sections in our society, poverty eradication would always a distant dream. In this regard, since the UBI is designed to be universal, it would be most appropriate tool to ensure basic rights of the poor and the downtrodden.

Thirdly, reasons for the poverty in India vary across the families. In some families, lack of basic education could be reason for poverty whereas in other families, lack of unemployment opportunities or poor health conditions could be reasons. Due to which, “One size fits all approach” to eradicate poverty does not work. Hence, it is the family and not the government that is in the best position to decide as to what actions should be taken in order to come out of the vicious cycle of poverty. The UBI would empower the families to take this important decision and hence can be considered to be a much better tool for poverty eradication.

Reducing Income InequalityThe UBI could also be considered as a solution to address the growing inequality in India for number of reasons. Firstly, according to a recent study conducted by the World Bank, almost 1/3 of jobs in developing countries could face immense pressure due to growing technological advancements and automation. Hence, the UBI would provide the people with the necessary security net in order to withstand any potential job losses in future.

Secondly, the UBI would be financed through the progressive income tax leading to redistribution of income from the richer class to the poor people.

Thirdly, provision of income security through the UBI would have positive spill-over effects such as increased levels of entrepreneurship among the poor families. This would promote inclusive growth and reduce the gap in the income levels between the households.

Promote Women Empowerment


Even though, women contribute significantly for the growth of our economy, their contribution is hardly recognised since majority of the women are involved in “unpaid” household work. Hence, in this regard, the feminists argue that the implementation of UBI would lead to change in the outlook of the society towards women and promote gender equality. This becomes extremely important in India where the women are regarded as burden on the families leading to their low social status.

UBI and Mental HealthNormally, the poor people across the world are burdened with the “psychology of scarcity” characterised by anxiety, distress and depression leading to poor mental health condition. This significantly affects their decision making ability and hence they fall into the vicious cycle of poverty and poor mental health condition.The UBI could, therefore, help people free themselves of the mental burden and preoccupations and move towards a healthier life. It could allow them to find time for other activities which lead to their personal satisfaction and improve emotional well-being.Thus, in the long term, UBI would lead to improved decision making, better mental health and emotional well-being, and means of breaking out of poverty cycle.

Problems with the Universal Basic IncomeThe motivation behind most universal basic income is laudable. However, some of the economists have argued that the UBI may not have intended benefits on the economy. They argue that in reality, the UBI would likely fall far short of eliminating poverty while imposing large economic and social costs. It was account of these reasons, the Swiss electorate had rejected the UBI by a overwhelming majority.In this regard, let us understand some of the problems and challenges in implementation of UBI in India.

Economic cost of UBIMany opponents of the UBI argue that providing an income transfer to the entire population would result in very high expenditure. For example, if India has to provide UBI to all its citizens, it would be required to pay Rs 1190 per person per month (This is based on the Poverty line estimates of 2011-12 according to Tendulkar committee estimates). This expenditure would amount to around 12.5% of its GDP. So, the question here is even though UBI is desirable, where is the fiscal space for India to implement UBI, particularly when its tax-GDP ratio is abysmally low.Thus, in view of high economic cost of UBI, it can be argued that the UBI is a kind of luxury, which only the developed economies can think of. For poor and developing countries, the UBI would always a lofted ideal which would be difficult to achieve.

Social Cost of UBIWork plays a central role in the life of the people. Apart from enabling them to earn their livelihood, working has certain social benefits. It contributes to feelings of self-worth and personal satisfaction, facilitates social interaction and enables the people to fulfil social needs and establish their role and identity in the society. In this regard, some economists have opposed UBI on the grounds that it would disincentive work and lead to negative social cost on the society. Apart from that, modern societies are necessarily based upon the principle of reciprocity i.e. the people’s rights must be commensurate with their duties and obligations. The UBI would violate this principle of reciprocity since people would receive the money as matter of right without the imposing any economic or social obligation.


Political Cost of UBIIn order to implement UBI, the government would be required to do away with all the subsidies, which presently account for around 4.24% of the GDP. However, doing away with the subsidies has always been Achilles heels for India since it imposes political cost in the form of loss of vote bank.Hence, normally, the governments are reluctant to do away with the subsidies. Under such circumstances, if the government implements UBI as an add-on benefit along with the subsidies, it would unnecessarily complicate the welfare economics in India.Further, it has to be noted that the UBI may have to be revised periodically taking into account the rate of inflation and standard of living. Hence, competitive and vote bank politics may play a major role in the revision of UBI leading to unnecessary increase in the UBI amount. This would have an adverse impact on the economy in the long term.

Certain Questions about UBIDoes UBI discourages work and make people Lazy?It has been argued that UBI would discourage work and make people lazy since they are assured of minimum income for meeting their basic needs. On the other hand, this criticism against the UBI has been countered by some of the economists on number of grounds.

Firstly, the amount of money to be given under the UBI is meant to cover only the basic needs of the people. This means that the UBI cannot be considered to be sole means of survival for the large chunk of India’s population. People would still have to work in order to meet their higher order needs. This can be explained through Maslow’s Theory of Motivation. Maslow believed that the people’s motivation to work arises from their inherent need to meet their multiple needs i.e. people work in order to meet their needs. Now, these multiple needs of the people can be arranged in form of hierarchy wherein the lower order needs include Physiological needs and safety needs while the higher order needs include Social Needs, Esteem Needs and Self-Actualisation needs. The UBI would enable the people to meet only their lower order needs. Hence, the people would still need to work in order to meet their higher order needs. Thus, it would be naive and fallacious to argue that the implementation of UBI would discourage work and affect the labour market.

Secondly, the argument that UBI would discourage work is based upon erroneous assumption that people work only in order to meet their basic needs. Hence, it is argued that people would stop working once their basic needs are met through UBI. However, such an assumption demeans human dignity and labour and portrays the human beings in negative manner. As discussed before, human beings may like to work in order to have personal satisfaction and develop a feeling of self-worth. Further, it also enables them to meet their social needs of being loved, respected and cared for by the society.

Thirdly, it can also be argued that the UBI would lead to increase in the productivity level of the workers. UBI would enable the workers to increase their bargaining power and negotiate on better terms of employment such as increased wages, better working conditions, access to social security benefits such as pension, insurance etc. Further, assurance of UBI would enable the workers to spend the money on development of their skills leading to increase in their productivity.


Hence, it can be argued that, contrary to the claims that UBI would discourage work, implementation of the UBI would actually improve the status of the workers, improve their bargaining power and more importantly, lead to higher productivity.

Does UBI lead to increase in demand for Temptation Goods?It has been argued that the implementation of the UBI would lead to increase in the demand for temptation goods such as Alcohol, Tobacco, Gambling etc leading to moral hazard. However, this criticism against UBI may be countered on number of grounds.

Firstly, it is to be noted that both alcohol and Tobacco are inferior goods and not normal goods i.e their demand reduces as the income level of the people increases due to the substitution effect (Law of Demand).Hence, it is expected that as the income levels of the people increases through the implementation of UBI, the people would spend less money on the temptation goods and instead substitute this wasteful expenditure with some productive expenditure such as education, healthcare etc.

Secondly, the assumption that the UBI would lead to increase in the temptation goods goes against the empirical evidence. It was observed in various pilot programmes across the world that UBI did not lead to increase in the temptation goods among the communities. For example, doing the pilot study carried out in Madhya Pradesh, it was found out that the tribal communities used the money obtained under the UBI for productive purposes rather than using the money for the temptation goods.

Thirdly, there is also evidence that as the poor people are provided with UBI, they are willing to start small businesses and pull themselves out of poverty trap. Further, an assessment of NSS 2011-12 data, revealed that temptation goods are a small component of overall household budget and as overall consumption increases, the consumption of temptation goods does not increase commensurately.

Thus, based upon these aspects, some of the economists have argued that the criticisms against UBI are unfounded and detached from reality. Empirical evidence and strong counter arguments can be presented to dispel these criticisms against UBI.

Implementing UBI in IndiaUBI has entered policy debate in India ever since UBI was proposed by the Economic Survey 2016-17 as a social welfare scheme suitable for India. Further, recently, the Sikkim government has declared that it would be implementing the UBI from 2022.These developments point out that the debate on the UBI has already been ignited in India. But the question here is does India has sufficient financial resources to implement UBI? From where should we generate revenue to fund UBI? The Economic survey has given answers to these questions.

The Economic survey proposes that the UBI should target only 75% of the population rather than being universal. It is of the opinion that the top 25% of the India's population can be easily excluded from the purview of UBI through automatic exclusion criteria such as payment of income Tax, ownership of movable and immovable property etc. Hence, in order to provide the UBI for 75% of the population in India, we would be required to spend around 5-6% of the GDP in order to implement the UBI.


The Economic survey has proposed that the UBI can be implemented by doing away all the subsidies presently given by the government. For example, presently, the government spends around 2% of the GDP on various subsidies such as fertilisers, petroleum, food etc. Apart from that, there are large number of subsidies that are mainly benefitting the middle class such as subsidies on railways, aviation fuel, electricity etc and hence doing away with such subsidies would release an additional amount of 1% of the GDP.Further, the Budget for 2016-17 indicates that there are about 950 central sector and centrally sponsored sub-schemes in India accounting for about 5 percent of the GDP.Most of the central sector schemes are on-going for at least 15 years and 50 percent of them were over 25 years old. Hence, we can achieve considerable gains by replacing many of these ineffective and out-dated schemes with a UBI. Thus, this clearly highlights that India may be in a position to implement UBI if it is able to do way with the subsidies and inefficient schemes and programmes. However, financial resources alone would not guarantee the success of UBI in India. There are host of other factors which should have to be considered.Firstly, it is observed that the success of the UBI initiative would depend upon the Political will and administrative efficiency. If the UBI is implemented without the support of all the stakeholders, it is doomed to fail. Hence, in order to implement UBI, we need to adopt participatory and more inclusive approach by consulting all the stakeholders. Such an approach would build the necessary trust and confidence among the stakeholders for the implementation of UBI.Secondly, there is a need to recognise that the success of the UBI would depend upon providing information and enhancing the awareness levels of the people in India. The UBI should have to be implemented along with a sustained media campaign that should be targeted to bring about attitudinal and behavioural change among the people.Thirdly, lack of Financial Inclusion may create a significant impediment to UBI implementation. According to the WB, there are only around 20 ATMs for every 100,000 adults in India. Hence, under circumstances, it may become quite difficult for the people living in remote areas to access the UBI. Hence, there is need to make the optimum use of JAM (Jan Dhan, Aadhaar and Mobile) trinity solution for making cash transfers . Apart from that, we need to improve the last-mile connectivity before implementing UBI. In this regard, there is a need to give further boost to differentiated banks such as Payment Banks and Small Finance Banks along with enhancing the presence of Banking correspondents (BCs) in the rural areas. Fourthly, being a large and diverse country, India has to implement the UBI in an incremental and phased manner. Such an approach would enable us to keep learning from the challenges and problems which would be encountered in the implementation of the UBI. Such an approach provides scope for mid-course correction and would lead to development of fail-proof and error-free UBI programme in the long term.

Lastly, the government has to realise that the implementation of UBI is just one facet of welfare state and its implementation should not deter the government from undertaking other welfare measures. The Government needs to continue to invest in the creation of welfare state such as provision of Education, Healthcare, Housing, Sanitation etc. Provision of such basic infrastructure is equally critical for the success of the UBI.

The Economic Survey 2016-17 aptly titled the Chapter on the Universal Basic Income as “UBI: Conversation with and Within Mahatma”. The title clearly highlights that even Gandhiji would have intrigued on the question of implementing the UBI in India.


However, as a champion of rights of the poor and downtrodden, it is most likely that Gandhiji would be in favour of UBI.

Further, if one looks at teaching of Buddha, even he would also emerge as a strongest and most vocal supporter of UBI in India. The Buddha states that such a king should take care of the poor and the needy people by providing them with wealth. If he does so, the people will not violate the five precepts (killing, lying, stealing, sexual misconduct, and taking intoxicants) and their lifespan and beauty (i.e., health) will also increase. Thus, provision of wealth to the poor and needy would not only end poverty but also put an end to the social evils.Thus, the UBI may also emerge as an answer to India’s ethical and Moral Crisis and promote ethical behaviour among the various sections of the Indian Society.

Personal Notes

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Title 2. Too many aspirants for MGNREGS job (The Hindu Pg. No. 8) Syllabus Prelims: Polity & Governance

Mains: GS Paper II – Polity & Governance Theme MGNREGA Highlights

Context: As the COVID-19 induced reverse migration has brought many families to their native places in the northern districts of Karnataka, the onus is now on creating more person days under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). While there are still problems at the ground level, the reality is that not all can find jobs under the scheme.

About MGNREGA The Parliament has formulated MGNREGA Act, 2005 to provide at least 100 days

of wage employment to people willing to work as manual casual labour. The objective of the programme is to create employment opportunities in the rural areas and prevent distress migration. It also seeks to create durable assets to improve livelihood resource base of the rural poor.

The Act provides that the Central Government could notify wage rates and till


such time as the Central Government notified a wage rate, minimum wages for agricultural labour notified by the State would be paid to NREGA workers. The Central Government started notifying wages under MGNREGA from the financial year 2008-09.

The MGNREGA Wages were linked to Consumer Price Index- Agricultural Labour (CPI-AL) and notified at the start of every financial year.

Inflation Indices in India Consumer Price Index - Agricultural Labour (CPI-AL) and Consumer Price Index -

Rural Labour (CPI-RL) are both computed and compiled by the Labour Bureau under Ministry of Labour and Employment. The Base year of these two indices is 1986-87.

The CPI-AL covers the households of agricultural labourers and the CPI-RL covers the households of rural labourers (including agricultural labourers).

Consumer Price Index (CPI): It is compiled and computed by National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation. Its base year is 2012. The CPI has mainly 3 distinct components: CPI-Rural, CPI-Urban and CPI-Combined.

Problems with linking MGNREGA Wages to CPI-AL The Mahendra Dev Committee appointed by the Rural Development Ministry on

the appropriate inflation Index for linking MGNREGA Wages had recommended that CPI-AL is not correct choice for linking MGNREGA wages. It had recommended that it should be replaced by CPI-Rural.

Changes in the Consumption Basket: The Inflation index is calculated based upon the increase in the prices of the goods included in the consumption basket for calculating Index. The Consumption basket of CPI-AL has not been updated for more than 3 decades. Prices of some of the items included in the consumption basket are not even available for data collection. In addition, new items of consumption have entered the consumption basket for the target groups. Hence, linking MGNREGA Wages to outdated CPI-AL may not capture the changes in the consumption pattern of the people.

Higher Weightage to Food Items: The CPI-AL gives a weightage of around 40% to the food category. However, the rural workers spend a much smaller percentage of their money on subsidised food and increasingly larger percentage on health, education and transportation costs.

Coverage of Households: MGNREGA is applicable to all rural households and not just agricultural labour households. Hence, an index such as CPI-Rural that reflects the rural consumption basket and prices should be the relevant index for revising the wage rates under the MGNREGA.

What's the Government's Proposal? Both Labour Bureau and National Statistical Office have begun work on updating

CPI-AL and CPI-Rural respectively to reflect the demands of an inflation index for linking MGNREGA works. The Government's plans to link the MGNREGA wages either to CPI-AL or CPI-Rural, whichever is higher in a particular state.

Various issues being faced in the implementation of this scheme:

States facing finance crunch Several states are also facing finance crunch on MGNREGA funds and hence

people are denied work in many states. Ministry of Rural Development, which administers the scheme had asked for a supplementary allocation in early January of 2019.


Due to lack of funds, denial of work and long-term delay in payments, rural workers feel discouraged from registering with MGNREGA.

Unemployment Allowance: The MGNREGA is a demand-driven programme, i.e., work must be provided within 15 days of demanding work failing which the Centre must pay an unemployment allowance (UA). The work demanded by labourers is to be fed into the MGNREGA Management Information System (MIS) but this information not fed and thereby suppressed at the source.

Under-provision of Work: There is a lack of offline alternatives to capture work demand from labourers, which means that data on the MIS is the only available. Both work demand data and employment-generated data are available at a panchayat level. However aggregate data at the national level are only presented for employment generated. This therefore hide the extent of under-provision of work.

Lack of Funds: The fund allocation for MGNREGA continuously gets exhausted before completion of Financial Year. Apart from this, majority of States still highlight a continued lack of funds. This shows that funds are not being allocated based on actual demand in first stage.

Delay in Compensation: The mandate is to pay wages within 15 days else workers are entitled to a delay compensation. While this delay by the Central government (called stage 2 delays) is captured in the system, it is intentionally suppressed to avoid paying delay compensation.

Personal Notes


Title 3. SpaceX’s spacecraft successfully docks with ISS (Page number 1) Syllabus Prelims: General Science

Mains: GS Paper III – Science & Technology Theme Commercialisation of Space Highlights

Context – SpaceX’s Dragon spacecraft with two NASA astronauts on Sunday successfully docked with the International Space Station (ISS) after a historic launch from the Kennedy Space Center in Florida, marking the dawn of a new age in commercial space travel.

The SpaceX Crew Dragon spacecraft, carrying astronauts Behnken and Hurley, lifted off on Saturday atop the company’s Falcon 9 rocket from Launch Complex 39A at NASA’s Kennedy Space Center.

With the liftoff, SpaceX became the first private company to launch people into the orbit, a feat achieved previously by only three governments: the U.S., Russia and China.

Why private sector should be involved in space industry?1. Increasing Demand- Indian Space Research Organisation (ISRO)’s annual

budget has crossed Rs. 10,000 crore and will grow annually. However, demand for space-based services in India is far greater than what ISRO can provide. Therefore, private sector investment will provide the additional boost in the sector. It will also increase entrepreneurship in the space sector after recent decision of central government on opening up the sector for private participation.

2. Overall growth of space sector- Private sector participation is needed to ensure overall growth of the space sector. ISRO has a strong association with the industry, particularly with Public Sector Undertakings (PSUs) like Hindustan Aeronautics Limited and large private sector entities like Larsen and Toubro. But most of the private sector players are Tier-2/Tier-3 vendors, providing components and services. The Assembly, Integration and Testing (AIT) role is restricted to ISRO. Role of private industries should be increased.

3. Very less global contribution- The global space industry is estimated to be $350 billion and is likely to exceed $550 billion by 2025. Despite ISRO’s capabilities, India’s share is estimated at $7 billion (just 2% of the global market). Private sector role is must to increase India’s contributions globally.

4. International trends and experience– Elon Musk’s “SpaceX” and its high profile projects have highlighted the increasing significance of the private players in the space sector. In India, despite the various strategic, security and regulatory constrains, a limited private ecosystem has evolved around


the ISRO. Private are merely contracting with national space agencies to build satellites and subsystems. Contrarily, the current trend is developing entire vertically integrated operations without licensing or purchase agreements with national agencies.

Various Benefits of private sector’s participation in space industry1. Greater pool of resources - Public resources- land, labour, capital are

limited. Private sector participation will open new pool of resources and talent. It will bring more funding, and experience into space exploration activities.

2. Human Capital- Restricting space activities to ISRO, limits proper utilisation of talent all over the country. With demographic dividend, private sector participation can exploit the talent across the nation contributing a lot to space explorations in India.

3. More time for ISRO- Today every space mission is done by ISRO, whether its communication satellite or any weather monitoring satellite. With increased role of private player, ISRO can concentrate more on its pathbreaking innovations like Reusable PSLVs, Cryogenic rockets, mars inhabitation.

4. Technological advancement– Commercialisation will also develop better technologies which is important. It will allow integration of many other technologies like artificial intelligence into space exploration activities. With experience from space activities, private sector can increase role of technology in other areas.

5. Risk Sharing- Every launch consists Risk. Privatising helps in sharing the risk of cost factor. Failure costs will be distributed. Also with increased private participation, failures will reduce due to increased available human capital and mind. Joint venture brings the knowledge from various stakeholders minimises failures and increases productivity.

6. Commercial demand- There is need to enhance internet connectivity for the masses, which is another demand pull factor for increased commercial interest in space. Asteroid mining is also another potential area that looks promising, with scope for monetisation and disrupting commodity markets.

Issues and Concerns of private participation in space industry1. Data Risk– Though space it gives an opportunity to entrepreneurs but raw

data of ISRO in the hands of public is sensitive and consists of danger of misuse or improper utilisation of data.

2. Regulation- Though its a profitable investment, regulation of private sector participation is not easy. The time taken for regulatory clearances and unstable political institutions can cause delays and hurdle in decision making of investors.

3. Revenue loss– ISRO will loose a fair amount of money it is earning through its space activities. This will reduce government revenue.

4. Unfair commercial practices– Allowing private sector may lead to lobbying and unfair means to get space projects or launch of any satellite for their own profit. It may also lead to leakage of sensitive information by private players to other countries and companies to make profit.

Some recommendations 1. A facilitating foundation – To be able to even debate commercial space in India and their viability within the government, or to make specific recommendations to the government, there needs to be a neutral facilitating foundation without any self interest.

2. Demarcating space and defence – Issues around national security will always be a concern with privatising space activities. However, this will only hold back the country in expanding products/services. This may also lead to an ecosystem of Indian space entrepreneurs creating holding companies in space commerce friendly countries and operating their product/service, eventually creating loss of high-technology jobs and tax revenues for the country. The recent decision of government to open up space sector will help in private players participation.


3. Promoting startups – It will boost startups by private players and will encourage young scientists to take future steps in this regard. A dedicated fund vehicle can be set up which would disburse money based on a national prize event, similar to Google’s XPrize, with industry leaders being the primary promoters (with the backing of ISRO), and bringing potential investors and stakeholders on the same table to promote innovation and entrepreneurship in this sector.

4. ISRO and Antrix providing mentorship – The emergence of Bengaluru as an IT and aerospace hub for the country should be leveraged for the space industry. Dedicated infrastructure to enable technology development (e.g. Berlin Adlershof) should be allocated to space ventures emerging from India to assist them in the startup stage. In addition, mentorship by senior ISRO and Antrix executives will ensure they operate within the Indian space policy framework but are still able to leverage technical expertise built by ISRO in an appropriate manner.5. Space laws – The enactment of space legislations to define regulatory, legal and procedural regimes with transparent timelines for pursuing space activities by the private space industry is currently at a nascent stage.

6. Manufacturing in space sector – The government has taken significant steps in the creation of an active investor mindset by rolling out programmes like ‘Make in India’. But no significant proposals have been mooted for manufacturing space-related systems in India. So there is a need for a transparent strategy on how the potential of the space sector can be leveraged under this programme.

7. Establishing think-tanks – There is scope to establish an independent, wholly space-activities-focused think-tank similar to the European Space Policy Institute, constituting distinguished experts in the space field while preserving its independence in the preparation of its various research outputs, research materials and expert gatherings. Such a think-tank will not only provide a fair assessment of national goals but also, potentially, key insights on space programme management, dual-use of technologies, economic impacts of space expenditures, space law, international cooperative space agreements, etc.

8. Setting up industry-academia linkups – Actively engaging academia as well as the industry is of significant importance – especially for creating systemic changes in establishing a leading research environment. One of the excellent methods of moving away from an ‘islands of excellence’ model to actively promoting interdependent engagement is by creating flagship programmes (where each of these stakeholders have concrete involvement in deliverables and gain significant benefits having long term ecosystem prospects of spin-offs). Such templates are already available with programmes such as Hodoyoshi by the Japanese government.


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