- Semiconductor chips shortage
- Rohingya protest at Bhashan Char
- As births decline, China allows having third child
- A protracted shortage of inputs, especially semiconductor chips, has made India-based car manufactures and premium bike makers curtail production across categories.
- While carmakers in India appear to be waiting to ride out the chip famine by constraining production, their global counterparts have got more creative in addressing the shortage.
GS-III: Industry and Infrastructure (Industrial Policy and Indigenization of Production and Technology, Government policies and Interventions)
Dimensions of the Article:
- Indian electronics sector
- Why did the chip famine occur?
- What is the impact of the chip famine?
- Trend in importance of semiconductor chips
Indian electronics sector
- The Indian electronics sector is tremendously growing with the demand expected to cross USD 400 billion by 2023-24.
- Domestic production has grown from USD 29 billion in 2014-15 to nearly USD 70 billion in 2019-20 (Compounded Annual Growth Rate of 25%).
- Despite the impressive growth of electronic production in India, the net value added by production units is very low. The net value addition ranges between 5% and 15%, as most components are imported rather than locally sourced.
- In the era of global supply chains, the value addition at the final stages of production is very low, especially in electronics because the more complicated processes, involving greater value addition, occur prior to assembly, in ‘upstream’ industries.
- Currently, these imports nearly constitute 80% of these components, with approximately 67% of the imports coming from China alone.
- In the absence of foundries (semiconductor fabrication plants where microchips are produced), India has to rely on foreign contractors to produce microchips. –[ There are about 170 commercial foundries globally but India does not have a single one.]
- Chip manufacturers like Intel, TSMC and Samsung choose other countries instead of India citing uncertain domestic demand and poor cost efficiencies here.
Why did the chip famine occur?
- The trigger point was the beginning of the Covid-19 pandemic and the subsequent lockdowns across the world that forced shut crucial chip-making facilities in countries including Japan, South Korea, China and the US.
- This is coupled with a 13% increase in global demand for PCs owing to some countries’ shift to a stay-at-home economy. This has impacted the availability of key chips necessary for the manufacturing of a broad range of electronics being a necessary component of every industry.
- A key feature in a chip shortage is that it almost always causes cascading effects, given that the first one creates pent-up demand that becomes the cause for the follow-up famine.
What is the impact of the chip famine?
- Consumers of semiconductor chips, which are mainly car manufacturers and consumer electronics manufactures, have not been receiving enough of this crucial input to continue production.
- Chip shortage is measured in chip lead time, which is the gap between when a chip is ordered and when it is delivered.
- With just-in-time deliveries, carmakers typically kept low inventory holdings and relied on an electronics industry supply chain to feed production lines as per demand. There were two reasons for this: a steady decline in input prices and improvements in the processing power of chips.
What are global carmakers doing?
- In addition to delaying vehicle deliveries, some companies have reportedly started discarding features and high-end electronic capabilities on a temporary basis to deal with the chip shortage.
- Some companies are leaving navigation systems out of thousands of vehicles and stopped offering digital components and parts like screen.
Trend in importance of semiconductor chips
- The number of transistors mounted in IC circuit chips has doubled every two years.
- Notably, the increase in chip consumption over the last decade is also partly attributable to the rising contribution of electronic components in a car’s bill of materials.
- Electronic parts and components today account for 40% of the cost of a new internal combustion engine car, up from less than 20% two decades ago. Chips account for a bulk of this increase.
-Source: The Hindu
Several thousand Rohingya staged protests against living conditions on a cyclone-prone island off Bangladesh where they were moved from vast camps on the mainland.
GS-II: International Relations (India’s Neighbors, Foreign Policy)
Dimensions of the Article:
- Who are the Rohingya?
- About Bhasan Char
- Concern regarding the Bhashan Char island relocation
Who are the Rohingya?
- The Rohingya people are stateless, Indo-Aryan ethnic group who reside in Rakhine State, Myanmar, and the Rohingya Muslims represent the largest percentage of Muslims in Myanmar.
- They have their own language and culture and say they are descendants of Arab traders and other groups who have been in the region for generations.
- They are described by the United Nations (UN) as one of the most persecuted minorities in the world.
- But the government of Myanmar, a predominantly Buddhist country, denies the Rohingya citizenship and even excluded them from the 2014 census, refusing to recognize them as a people. It sees them as illegal immigrants from Bangladesh.
- Although Rohingya history in the region can be traced back to the 8th century, Myanmar law does not recognize the ethnic minority as one of the eight national indigenous races.
- Despite mounting evidence and international pressure, Myanmar continues to deny it all. It says, it is just countering violent insurgent groups.
How does India view the Rohingya issue?
- India maintains that Rohingyas are a threat to its national security and have links with international terror groups.
- India has so far refused to exert any pressure on Myanmar for taking the Rohingyas back and giving them recognition as the citizens of Myanmar.
About Bhasan Char
- Bhasan Char (Floating Island) also known as Char Piya or Thengar Char Island, is an island in Hatiya, Bangladesh. It surfaced only 20 years ago and was never inhabited.
- It was formed with Himalayan silt from the mouth of river Meghna in 2006 spanning 40 square kilometres.
- It is underwater from June to September because of the monsoon.
- The island, which was once regularly submerged by monsoon rains, now has flood protection embankments, houses, hospitals and mosques built at a cost of more than 112 million dollars by the Bangladesh navy.
- As Bhashan Char falls in an ecologically fragile area prone to floods, erosion and cyclones, it is not considered safe for human settlements.
Concern regarding the Bhashan Char island relocation
- In 2015, the Bangladesh government suggested resettling Rohingya refugees on the Bhasan Char island under its Ashrayan Project, and now it has starting acting upon the idea and begun relocation of Rohingyas to the Bhashan Char island.
- Since the end of 2020, Bangladesh has shifted 18,000 out of a planned 1,00,000 refugees to the low-lying silt island of Bhashan Char from the Cox’s Bazar region, where around 8,50,000 people live in squalid and cramped conditions.
-Source: The Hindu
For the first time allowed couples to have a third child in a further relaxation of family planning rules five years after a “two-child policy” largely failed to boost birth rates.
GS-II: Social Justice (Population related issues), GS-II: International Relations (India’s Neighbors, Foreign Policies affecting India’s Interests)
Dimensions of the Article:
- What is the Two-Child Policy?
- About the recent census and trend in China’s Population
- About the Problem of China’s dropping Population and Age
- Population Growth in India and the Challenges
What is the Two-Child Policy?
- The two-child policy is a state-imposed limit of two children allowed per family or the payment of government subsidies only to the first two children.
- A two-child policy has previously been used in several countries including Iran, Singapore, and Vietnam.
- In British Hong Kong in the 1970s, citizens were also highly encouraged to have two children as a limit (although it was not mandated by law), and it was used as part of the region’s family planning strategies.
- Since 2016, it has been re-implemented in China replacing the country’s previous one-child policy.
About the recent census and trend in China’s Population
- The latest census shows that the number of births in China in 2020 is lower than 1961 – to put it into perspective, 1961 is the year when China was in the midst of a four-year famine unleashed by Mao Zedong’s Great Leap Forward policy in 1958 that devastated the farm sector and claimed millions of lives.
- China’s population was 1.41 billion in 2020, according to the census, increasing by 72 million since the last census in 2010, recording a 5.38% growth in this period. The average annual growth was 0.53%.
- The slowing growth rate, a consequence of China’s stringent family planning rules over decades – known as the “one-child policy” but involving a range of varying restrictions across urban and rural areas – has evoked concerns of a rapidly ageing society and the impact on China’s labour force, and fears that China will, as some experts have said, “get old before it gets rich.”
- The census recorded 264 million in the age group of 60 and over, up by more than 5% since 2010 and accounting for almost 20% of the population. Those in the 15-59 age group were just under 900 million persons, down by almost 7% since 2010 and accounting for just over 60% of the population.
- The findings from the census were not entirely dire. The census also shed light on China’s increasingly educated workforce and its rapid pace of urbanisation.
- With the number of births falling for the fourth consecutive year, experts say that we will likely see China’s population peak – and be overtaken by India’s – by as early as 2025.
About the Problem of China’s dropping Population and Age
- Chinese experts acknowledged the seriousness of the problem, without linking it directly to the history of the Communist Party’s harsh family planning policies.
- China loosened family planning rules and allowed couples to have two children in in 2016, but that has failed to mark a boom amid changing lifestyles and declining preferences, particularly in urban areas, for larger families.
- The impact on the labour force and healthcare is a particular concern. China’s workforce in the 15-59 age bracket peaked at 925 million in 2011, the Ministry of Human Resources and Social Security said previously. That number was down to 894 million in this census and would drop to 700 million by 2050, according to the ministry.
- The census did not offer a specific year for the population to peak, but experts said that could happen by 2025.
Population Growth in India and the Challenges
- According to the UN’s World Population Prospects 2019 report, India is projected to become the most populous country by 2027 surpassing China and host 1.64 billion people by 2050. The fertility rate in the country still lies in the range of 2.1-4.
- It would be a challenge to achieve optimal fertility rate in states such as Bihar, Uttar Pradesh, Haryana, Madhya Pradesh, Jharkhand, and Chhattisgarh — which have higher fertility rate as per Sample Registration System data.
- India’s low literacy rate and poor skilling of human capital will turn demographic dividend into a burden. There will be a need to spend more on education, healthcare system, grow more food, and to add capacity to basic infrastructures, such as roads, transport, electricity, and sewage to provide a minimum quality of life to every citizen.
- As per India Ageing Report 2017 by the United Nations Population Fund (UNFPA) the share of the population over the age of 60 could increase from 8% in 2015 to 19% in 2050. India will have to spend more on their health along with geriatric care.
- In the face of an increasing population, unequal distribution of income and inequalities within the country would be a possible outcome.
-Source: The Hindu