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  • PM Gareeb Kalyan Scheme

    Union Finance Minister has announced the Pradhan Mantri Garib Kalyan Scheme, under which the government would provide a relief package of Rs 1.7 trillion to the underprivileged, poor and migrant workers affected by a lockdown amid the Covid-19 crisis.

    PM Garib Kalyan Scheme

    • PM Gareeb Kalyan scheme is to have two parts — cash transfer and food security.
    • The package aims to take care of the welfare concerns of the poor and migrant workers who have been suffering because of a nationwide lockdown.

    Two silos of the scheme

    1) PM Gareeb Kalyan Anna Yojana

    • 800 million poor people in the country to get 5 kg of rice/wheat per month free of cost, in addition to the 5 kg they already get.
    • Additionally, each household to get 1 kg of preferred dal for free for the next three months

    2) Cash transfer scheme

    It has nine sub-parts

    • Farmers: First instalment of the PM-KISAN payment of Rs 2,000 to be frontloaded; move to benefit 87 million
    • MGNREGS: Wage increased from Rs 182 to Rs 202 per day. A wage increase to benefit 50 million families, as there will be about 2000 increase in their income
    • Poor widows, aged, and divyang: Ex-gratia of Rs 1,000 for the next three months, in two instalments. 30 million people to benefit. transfers to be done through direct benefits transfer (DBT)
    • Women with Jan Dhan Yojana accounts: 200 million to benefit from Rs 500 ex-gratia for the next 3 months
    • Beneficiaries of the Ujjwala scheme: 80 million households benefit from the gas cylinders provided under the scheme. These beneficiaries will get free cylinders for three months in view of the disruption the coronavirus lockdown will cause.
    • Women in self-help groups: 6.3 million SHGs get up to Rs 10 lakh collateral-free loans under the Deen Dayal Upadhyaya National Rural Mission scheme. The cap has been doubled to Rs 20 lakh. The move will benefit 70 million households
    • Organised sector workers: Two parts to this. First, the Government of India will pay the EPF contribution of both employee and employer for the next three months. This will be for all those establishments which have up to 100 employees, 90 per cent of whom earn less than Rs 15,000 a month
    • Construction workers: States to be directed to utilise the Rs 31,000 crore welfare fund for building and construction workers for the benefit of 35 million workers in the midst of the coronavirus crisis
    • District mineral fund: State govts. to be urged to utilise this fund for medical screening, medical testing and providing health care services in the wake of the coronavirus crisis

    Other initiatives

    • Insurance cover for healthcare workers attending to Covid-19 patients: Rs 50 lakh per person.
    • Two million health workers to benefit from the insurance scheme.
    • In what will benefit 8 million employees and 400,000 establishments, the EPFO regulation will be amended to allow the withdrawal of up to 75 per cent of their corpus as non-refundable advance, or three months’ salary, whichever is less.

  • [pib] Capital to Risk Weighted Assets Ratio (CRAR)

    The Cabinet Committee on Economic Affairs has given its approval for continuation of the process of recapitalization of Regional Rural Banks (RRBs) by providing minimum regulatory capital to RRBs which are unable to maintain minimum Capital to Risk weighted Assets Ratio (CRAR) of 9%, as per the regulatory norms prescribed by the RBI.

    What is CRAR?

    • CRAR also known as Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital to its risk.
    • CRAR is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
    • The Basel III norms stipulated a capital to risk-weighted assets of 8%.
    • In India, scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12% as per RBI norms.
    • It is arrived at by dividing the capital of the bank with aggregated risk-weighted assets for credit risk, market risk, and operational risk.
    • RBI tracks CRAR of a bank to ensure that the bank can absorb a reasonable amount of loss and complies with statutory Capital requirements.
    • The higher the CRAR of a bank the better capitalized it is.

    Why recapitalize RRBs?

    • RRBs are primarily catering to the credit and banking requirements of agriculture sector and rural areas with focus on small and marginal farmers, micro & small enterprises, rural artisans and weaker sections of the society.
    • A financially stronger and robust RRB with improved CRAR will enable them to meet the credit requirement in the rural areas.
    • As per RBI guidelines, the RRBs have to provide 75% of their total credit under PSL (Priority Sector Lending).
    • In addition, RRBs also provide lending to micro/small enterprises and small entrepreneurs in rural areas.
    • With the recapitalization support to augment CRAR, RRBs would be able to continue their lending to these categories of borrowers under their PSL target, and thus, continue to support rural livelihoods.

    Back2Basics

    Regional Rural Banks (RRBs)

    • RRBs are Scheduled Commercial Banks operating at regional level in different States of India. They are recognized under the Regional Rural Banks Act, 1976 Act.
    • They have been created with a view of serving primarily the rural areas of India with basic banking and financial services.
    • However, RRBs may have branches set up for urban operations and their area of operation may include urban areas too.
    • The area of operation of RRBs is limited to the area covering one or more districts in the State.

    Their functions

    RRBs also perform a variety of different functions. RRBs perform various functions in following heads:

    • Providing banking facilities to rural and semi-urban areas
    • Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc.
    • Providing Para-Banking facilities like locker facilities, debit and credit cards, mobile banking, internet banking, UPI etc.
    • Small financial banks etc.

  • The Covid-19 crisis could bring the country up to digital speed

    Context

    The Covid-19 pandemic gives us a chance to re-evaluate the worth of two major initiatives of the government: demonetization and digitization.

    Importance of digitalisation in pandemic

    • The importance of digitization in a pandemic cannot be exaggerated when we are repeatedly told to maintain social distance and work from home in order to avoid infection.
    • Consider how nigh impossible it would be to avoid contact with retail cashiers and point-of-sale (PoS) terminals if we were to use credit cards and cash to pay for our daily necessities.
    • Today, most bill payments have moved online and barring older people, who may prefer to pay their electricity bills at physical counters, digitization is delivering in spades.
    • But digitization is not just about payments and financial transactions. Consider what all will happen as the current lockdown persists across the country.

    Application in the judiciary

    • Courts are beginning to use video-conferencing to conduct hearings. It is ironic that something that should have been done years ago to hasten hearings is now being done to prevent infections.
    • India’s judiciary has been resisting technology for as long as one can remember.
    • Witnesses do not have to drag themselves to court every day; they can video-record their statements in advance, and submit themselves to questioning through Skype or other such video-calling apps.
    • When the entire case is recorded, the possibility of judges conducting trials in an unfair way gets substantially reduced, for those at the receiving end of judicial injustice can seek retrials based on video recordings.
    • These recordings will also enable the higher judiciary to figure out who its good judges are, and who adopts dilatory tactics and frequent adjournments, delaying justice.
    • At some point, a judicial appointments commission will have video records of all judges shortlisted for promotions. They will thus know whom to recommend for elevation and whom to sideline. Corruption is also likely to come down.

    Application in the healthcare sector

    • In the current Covid-19 crisis, doctors and nurses are putting themselves at huge risk, and so are those handling millions of samples of throat swabs that need to be analysed for the virus
    • Applications: Remote patient examinations, analysis of symptoms with the help of databases and algorithms, and even the basic task of taking down a new patient’s medical history can all be done remotely through a digital app or interface.
    • The doctor will know even before he has met the patient what could be wrong, something she only has to confirm after interacting with the patient.
    • India is spending humongous amounts of money, and so are to-be doctors, to master medical knowledge that doubles every 75 days. In short, by the time your average MBBS doctor completes his or her degree, much of that knowledge could be outdated.
    • He or she has to use technology to update himself or herself, and also rely on databases and artificial intelligence to deliver healthcare without the risk of misdiagnosis.
    • India may be spending too much on training doctors at a cost of millions of rupees per head when a lot of that money could have been spent on technology to deliver competent and lower-cost healthcare.

    Conclusion

    If we just stop to think where we would have been in this pandemic but for digital technology, we would recognize the importance of going digital. It should make us think of how to convert the Covid-19 disruption into an agenda that brings us up to technological speed in various spheres of human activity.

  • Protecting Peatlands can help attain climate goals

     

    Peatlands, which play a crucial role in regulating global climate by acting as carbon sinks, are facing degradation and need to be urgently monitored, according to the FAO. 

    What are Peatlands?

    • Peatlands are a type of wetlands that occur in almost every country on Earth, currently covering 3% of the global land surface.
    • The term ‘peatland’ refers to the peat soil and the wetland habitat growing on its surface.
    • They are formed due to the accumulation of partially decomposed plant remains over thousands of years under conditions of water-logging.
    • In these areas, year-round waterlogged conditions slow the process of plant decomposition to such an extent that dead plants accumulate to form peat.
    • Over millennia this material builds up and becomes several metres thick.

    Why are peatlands significant?

    • Large amounts of carbon, fixed from the atmosphere into plant tissues through photosynthesis, are locked away in peat soils, representing a valuable global carbon store.
    • Peatlands are highly significant to global efforts to combat climate change, as well as wider sustainable development goals.
    • The protection and restoration of peatlands are vital in the transition towards a low-carbon and circular economy.

    1) Better sinks of Carbon

    • Damaged peatlands contribute about 10% of greenhouse gas emissions from the land-use sector.
    • CO2 emissions from drained peatlands are estimated at 1.3 gigatonnes of CO2 This is equivalent to 5.6% of global anthropogenic CO2 emissions.
    • However, at the same time, peatlands are the largest natural terrestrial carbon store. Worldwide, the remaining area of near-natural peatland contains more than 550 gigatonnes of carbon.
    • This represented 42% of all soil carbon and exceeds the carbon stored in all other vegetation types, including the world’s forests. This area sequesters 0.37 gigatonnes of CO2 a year.

    2) Vital ecosystem services

    • By regulating water flows, peatlands help minimize the risk of flooding and drought and prevent seawater intrusion.
    • In many parts of the world, peatlands supply food, fibre and other local products that sustain local economies.
    • They also preserve important ecological and archaeological information such as pollen records and human artefacts.
    • Draining peatlands reduces the quality of drinking water due to pollution from dissolved compounds. Damage to peatlands also results in biodiversity loss.

    Other benefits

    • Peatlands occur in different climate zones.
    • While in a tropical climate, they can occur in mangroves, in Arctic regions, peatlands are dominated by mosses. Some mangrove species are known to develop peatland soils under them.
    • Besides climate mitigation, peatlands are important for archaeology, as they maintain pollen, seeds and human remains for a long time in their acidic and water-logged conditions.
    • In many countries, pristine peatlands are important for recreation activities. These areas also support livelihood in the form of pastoralism
    • The vegetation growing on pristine peatlands provide different kinds of fibres for construction activities and handicrafts.
    • Many wetland species produce berries, mushrooms and fruits, often economically important to local communities.
    • Peatlands also provide fishing and hunting opportunities. It is also possible to practise paludiculture or wet agriculture on rewetted peatlands.

    Various threats

    • Their degradation due to drainage, fire, agricultural use and forestry can trigger the release of the stored carbon in a few decades.
    • Peatlands contain 30 per cent of the world’s soil carbon. When drained, these emit greenhouse gases, contributing up to one gigatonne of emissions per year through oxidation.

    Way forward

    • In India, peatlands occupy roughly 320–1,000 square kilometres area.
    • To prevent further degradation, these areas should be urgently mapped and monitored.

    With inputs from: https://www.iucn.org/resources/issues-briefs/peatlands-and-climate-change

  • Kurzarbeit Scheme

    Amid the all-round disruption caused to the economy by the novel coronavirus outbreak, a concern across the world is the possibility of a loss of jobs. Various governments have unveiled various measures to address such concerns, and one of the most talked-about is Kurzarbeit.

    Kurzarbeit Scheme

    • Kurzarbeit is German for “short-work”.
    • The policy provides for a short-time work allowance, called kurzarbeitgeld, which partially compensates for lost earnings during uncertain economic situations.
    • The policy was rolled out during the 2008 economic crisis while its origins date back as far as the early 20th century, before and after World War I.

    How it works?

    • When companies face a loss of earnings due to unforeseen economic situations, they often need to cut back on their working hours or send some of their employees’ home.
    • It aims to address workers who are impacted by the loss of income due to shortened work hours during such times.
    • They can apply for short-term work benefits under the scheme, with the government stepping in to pay employees a part of their lost income.

    Quantum of payment

    • Payment under Kurzarbeit is calculated on the basis of a net loss of earnings.
    • As per Germany’s Federal Agency for Work, short-time employees generally receive about 60 per cent of the flat-rate net wage.
    • In case there is at least one child in the house of the short-time worker, he/she receives 67 per cent of the flat-rate net wage.

    Benefits

    • This scheme helps the companies retain their employees instead of laying them off, and allows the latter to sustain themselves for a period of up to 12 months.

  • India VIX Index

    The  India VIX Index, an indicator of the volatility of the stock market has been plunging after the outbreak of novel coronavirus.

    What is Volatility Index?

    • Volatility Index is a measure of the market’s expectation of volatility over the near term.
    • Volatility is often described as the “rate and magnitude of changes in prices” and in finance often referred to as risk.
    • It is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term, (calculated as annualized volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options.

    India VIX Index

    • India VIX is a volatility index based on the NIFTY Index Option prices.
    • From the best bid-ask prices of NIFTY Options contracts, a volatility figure (%) are calculated which indicates the expected market volatility over the next 30 calendar days.
    • “VIX” is a trademark of Chicago Board Options Exchange, Incorporated (“CBOE”) and Standard & Poor’s.
    • The firm has granted a license to NSE to use such mark in the name of the India VIX and for purposes relating to the India VIX.

  • Legal Provisions Used By Law Enforcement Agencies To Control The Spread Of Coronavris

    To enforce a full lockdown to contain the spread of COVID-19, law enforcement agencies have taken the help of various legal provisions in CrPC and IPC.

    • The orders issued to curb the spread of the coronavirus have been framed under the Epidemic Diseases Act, 1897, which lays down punishment as per Section 188 of the Indian Penal Code, 1860.
    • Similarly, Sections 269 and 270 IPC are being invoked against persons who malignantly do any act which is likely to spread the infection of any disease dangerous to life.

      Sections 269 and 270 of the IPC

      • Sections 269 (negligent act likely to spread infection of disease dangerous to life) and 270 (malignant act likely to spread infection of disease dangerous to life) come under Chapter XIV of the IPC.
      • The chapter is named ‘Of Offences Affecting The Public Health, Safety, Convenience, Decency and Morals’.
      • While Section 269 provides for a jail term of six months and/or fine, Section 270 provides for a jail term of two years and/or fine.
      • In Section 270, the word ‘malignantly’ indicates a deliberate intention on the part of the accused.
      • During the coronavirus outbreak, penal provisions, such as Sections 188, 269 and 270 of the IPC, are being invoked to enforce the lockdown orders in various states.

      Earlier instances of invocation

      • Both Sections have been used for over a century to punish those disobeying orders issued for containing epidemics.
      • The Sections were similarly enforced by colonial authorities during outbreaks of diseases such as smallpox and bubonic plague.

    What is Section 188 of the Indian Penal Code?

    • Section 3 of the Epidemic Diseases Act, 1897, provides penalties for disobeying any regulation or order made under the Act.
    • These are according to Section 188 of the Indian Penal Code (disobedience to order duly promulgated by public servant).
    • It is not necessary that the offender should intend to produce harm, or contemplate his disobedience as likely to produce harm.
    • It is sufficient that he knows of the order which he disobeys, and that his disobedience produces, or is likely to produce, harm.

    What happens if you violate the lockdown orders? 

    Under Section 188, there two offences:

    1) Disobedience to an order lawfully promulgated by a public servant, If such disobedience causes obstruction, annoyance or injury to persons lawfully employed

    Punishment: Simple Imprisonment for 1 month or fine of Rs 200 or both

    2) If such disobedience causes danger to human life, health or safety, etc.

    Punishment: Simple Imprisonment for 6 months or fine of Rs 1000 or both

    According to the First Schedule of the Criminal Procedure Code (CrPC), 1973, both offences are cognizable, bailable, and can be tried by any magistrate.

    Triable By: Any Magis­trate

     

  • [pib] National Supercomputing Mission (NSM)

    The Union Ministry of Science & Technology has informed about the progress of the National Supercomputing Mission.

    National Supercomputing Mission (NSM)

    • NSM is a proposed plan by GoI to create a cluster of seventy supercomputers connecting various academic and research institutions across India.
    • In April 2015 the government approved the NSM with a total outlay of Rs.4500 crore for a period of 7 years.
    • The mission was set up to provide the country with supercomputing infrastructure to meet the increasing computational demands of academia, researchers, MSMEs, and startups by creating the capability design, manufacturing, of supercomputers indigenously in India.
    • Currently there are four supercomputers from India in Top 500 list of supercomputers in the world.

    Aims and objectives

    • The target of the mission was set to establish a network of supercomputers ranging from a few Tera Flops (TF) to Hundreds of Tera Flops (TF) and three systems with greater than or equal to 3 Peta Flops (PF) in academic and research institutions of National importance across the country by 2022.
    • This network of Supercomputers envisaging a total of 15-20 PF was approved in 2015 and was later revised to a total of 45 PF (45000 TFs), a jump of 6 times more compute power within the same cost and capable of solving large and complex computational problems.

    IWhat is a Supercomputer?

    • A supercomputer is a computer with a high level of performance as compared to a general-purpose computer.
    • The performance of a supercomputer is commonly measured in floating-point operations per second (FLOPS) instead of million instructions per second (MIPS).
    • Since 2017, there are supercomputers which can perform over a hundred quadrillion FLOPS (petaFLOPS).
    • Since November 2017, all of the world’s fastest 500 supercomputers run Linux-based operating systems.

    Why do we need supercomputers?

    • Developed and almost-developed countries have begun ensuring high investments in supercomputers to boost their economies and tackle new social problems.
    • These high-performance computers can simulate the real world, by processing massive amounts of data, making cars and planes safer, and more fuel-efficient and environment-friendly.
    • They also aid in the extraction of new sources of oil and gas, development of alternative energy sources, and advancement in medical sciences.
    • Supercomputers have also helped weather forecasters to accurately predict severe storms, enable better mitigation planning and warning systems.
    • They are also used by financial services, manufacturing and internet companies and infrastructure systems like water-supply networks, energy grids, and transportation.
    • Future applications of artificial intelligence (AI) also depend on supercomputing.
    • Due to the potential of this technology, countries like the US, China, France, Germany, Japan, and Russia have created national-level supercomputing strategies and are investing substantially in these programmes.

    When did India initiate its efforts to build supercomputers?

    • India’s supercomputer programme initiated in the late 1980s, when the United States ceased the export of a Cray Supercomputer due to technology embargos.
    • This resulted in India setting up C-DAC in 1988, which in 1991, unveiled the prototype of PARAM 800, benchmarked at 5 Gflops. This supercomputer was the second-fastest in the world at that time.
    • Since June 2018, the USA’s Summit is the fastest supercomputer in the world, taking away this position from China.
    • As of January 2018, Pratyush and Mihir are the fastest supercomputers in India with a maximum speed of Peta Flops.

    What are the phases of the National Supercomputing Mission?

    Phase I:

    • In the first phase of the NSM, parts of the supercomputers are imported and assembled in India.
    • A total of 6 supercomputers are to be installed in this phase.
    • The first supercomputer that was assembled indigenously is called Param Shivay. It was installed in IIT (BHU) located in Varanasi.
    • Similar systems, Param Shakti (IIT Kharagpur) and Param Brahma (IISER, Pune) were also later installed within the country.
    • The rest will be installed at IIT Kanpur, IIT Hyderabad and Jawaharlal Nehru Institute of Advanced Studies (JNIAS).

    Phase II:

    • The supercomputers that are installed so far are about 60% indigenous.
    • The 11 systems that are going to be installed in the next phase will have processors designed by the Centre for Development of Advanced Computing (C-DAC) and will have a cumulative capacity of 10 petaflops.
    • These new systems are to be constructed more cost-effectively than the previous ones.
    • One of the 11 proposed supercomputers will be installed
    • at C-DAC exclusively for small and medium enterprises so that they can train employees as well as work on supercomputers at a very low cost.

    Phase III:

    • The third phase aims to build fully indigenous supercomputers.
    • The government had also approved a project to develop a cryogenic cooling system that rapidly dispels the heat generated by a computing chip. This will be jointly built together by IIT-Bombay and C-DAC.

    What are the advantages of the National Supercomputing Mission?

    • The National Supercomputing Mission can ensure accessibility to supercomputers at an affordable rate to the scientific community and medium and small enterprises.
    • It can exponentially enhance the quality and quantity of R&D and higher education in the areas of science and technology.
    • It can solve the current and future challenges that are plaguing the country.
    • Currently, the world’s top supercomputers are mostly under the control of advanced nations like the US, Japan, China and the European Union. This Mission has the potential to bring India into this select league of such nations.
    • These supercomputers can be used in the areas of climate modelling, weather predictions, computational biology, atomic energy simulations, defence, disaster simulation, astrophysics etc.
    • These computers have played a crucial role in scientific and technological advancements in numerous fields.
    • Unlike other computers, these high-performance machines can crunch the most complex of data at a speed, which is millions of times faster than a desktop PC.
    • This mission, aiming to provide supercomputing facilities to about 60-70 institutions across the nation and thousands of active researchers, academicians, is moving fast towards creating a computer infrastructure within the country.
    • This mission can also enhance the country’s capacity to develop the next generation of supercomputer experts.

    How do other countries make use of supercomputers?

    China:

    • Jiangsu Province has a supercomputer called “Sunway TaihuLight”.
    • This supercomputer performs a wide range of tasks, including climate science, weather forecasting and earth-system modelling to help ships avoid rough seas, improve farmers’ yields and ensure the safety of offshore drilling.
    • TaihuLight has already led to an increase in profits and a reduction in expenses that justify its cost ($270 million).

    United States:

    • In the US, supercomputers are radically transforming the healthcare system.
    • The Centre for Disease Control (CDC) has used supercomputers to create a far more detailed model of the Hepatitis-C virus, a major cause of the liver disease that costs $9 billion in healthcare costs in the US alone.
    • Using supercomputers, the researchers have now developed a model that comprehensively simulates heart down to the cellular level and can lead to a substantial reduction in heart diseases.

    These are some of the very few cases of how supercomputers have enhanced breakthroughs in various fields.

    How do supercomputers help fight coronavirus?

    • Earlier, the US had established COVID-19 High-Performance Computing Consortium that will bring together industry, academic institutions, and federal laboratories to try to identify or create candidate compounds that might prevent or treat coronavirus infection.
    • One of the members of the consortium, the Oak Ridge National Laboratory, aimed to look into compounds that are already available in the market that might combat COVID-19.
    • For this purpose, the world’s fastest supercomputer “Summit” was used.
    • Like other viruses, the novel coronavirus uses a spike protein to inject cells.
    • Using Summit with an algorithm to investigate which drugs could bind to the protein and prevent the virus from doing its duty, the researchers have a list of 77 drugs that show promise.
    • Starting with 8,000 compounds, Summit has shortened the time of the experiment exponentially, ruling out the vast majority of possible medications before settling on 77 drugs, which are ranked based on how effective they are likely to be at halting the virus in the human body.

    Way forward

    • It is evident that supercomputers would become a vital part of our lives as it can provide solutions to the current and future problems and India, one of the most populous nations in the world, must ensure that it also has access to this technology for the welfare of its people.
    • Supercomputers, as they operate at such incredible speeds, will encounter numerous barriers like network and interconnectivity hardware that previous generations of designers did not have to deal with.
    • The cooling system is also one of the major design constraints.
    • Hence, India must give a high emphasis on innovation to tackle these challenges.
    • India must also give high emphasis to the application rather than the technology itself.
    • Supercomputing research also requires fundamental research of the next stages of computing like quantum computing that are still in the theoretical stage.
    • Bureaucratic red-tapism must be circumvented and scientists and researchers must be allowed to take bold and radical steps without fear of reprisal.
    • The government must also invest in necessary physical and digital infrastructure.
    • It must also address the challenges of:
    • Limited funding and delayed release of funds
    • The increasing need for imports for necessary hardware components to build supercomputers

    Conclusion:

    • Supercomputers are strategically important for India as it can help the country to become a knowledge-driven economy.
    • This technology also can support cutting edge research that can benefit the economy, society, businesses, environment, etc.
    • Thus, enhancing investments, improving flexibility for research and providing other necessary infrastructures must be ensured for it to grow.
    • Without this technology, India risks being surpassed on the global stage by other nations and will consequently miss the huge benefits that come from having this strategically important technology at the disposal of the country’s best and brightest minds

     

     

  • How policy can bridge the gap

    Context

    India must use the windfall from oil to provide assistance to the most vulnerable to mitigate the impact due to COIVD-19 outbreak.

    Estimates of impact

    • Impact on major economies: Minus 40 per cent, -30 per cent, -22 per cent, and -14 per cent. These are the estimated impacts (at an annualised rate) on the quarterly growth rates of China, the UK, Eurozone, and the US because of the Covid-19 virus.
    • Even excluding China and those that are closely tied to its supply chain — Korea and Taiwan — emerging markets (EM) are expected to go into recession in the first half of 2020, with the second quarter taking the biggest hit at over an 8 per cent quarterly decline.
    • Impact on India: India will not be spared this growth shock. In fact, the economic impact could be deeper and longer in emerging markets where the capacity of public health systems is limited at the best of times.

    Prospects of recovery

    • Sudden stop to economic activity: We also know from the experiences of the countries already infected that the way to control the spread of the virus is through aggressive containment and social distancing that inevitably brings economic activity to a sudden stop.
    • There doesn’t seem to be a middle path. We also know that unlike natural catastrophes like earthquakes, capital stock is not destroyed by the virus.
    • Sharp recovery and conditions: Once the containment period is over and social interaction normalises, there is every reason to believe that activity can recover very sharply.
    • Unless the containment period is long because of capacity constraints in the healthcare system which could turn supply chain disruptions into a long-term problem, or the credit stress created by the lack of earning by households and firms during the sudden stop stymies the recovery.

    India needs to brace itself

    • Unfortunately, India, where the virus still appears to be in the early stage, needs to brace for such a sudden stop.
    • The lockdown could be for an extended period given the already stretched public health system.
    • Impact on urban economy: The swathe of the economy that depends on social interaction — retail sales, entertainment, restaurants, and importantly construction and manufacturing — is very large.
    • Even if one believes that rural areas with relatively low population densities will not be affected much, the impact on urban economic activity could be very large.

    Role of economic policy

    • What is the role of economic policy in such circumstances? It needs to “bridge the gap” between the brutal downturn and the eventual recovery.
    • While public health policies force a sudden stop in the economy to save lives, economic policies need to ensure that the impact from the shutdown is cushioned, incomes of households and firms supported, credit stress is contained, and the recovery is not hamstrung by policy headwinds.
    • This requires policy support to be operated on various fronts.
    • Role of the Central bank: Central banks not only need to cut rates but also need to provide adequate liquidity and extend regulatory forbearance to prevent credit stress and non-performing loans from clogging up the already strained financial system when the economy starts to recover.
    • Role of fiscal policy: The role of fiscal policy is even larger, from direct and indirect tax cuts or postponement to targeted credit support for sectors that are likely to be most affected such as airlines and retail trade.
    • Support to the vulnerable: The key is income support to the most vulnerable: From daily wage earners to SMEs (small and medium enterprises).
    • Using JAM trinity for cash transfer: It is here that the government’s efforts over the last five years make India one of the best-placed economies to deliver such cash transfers.
    • Since 2015, substantial time, effort, and resources have been expended to establish Jan Dhan (bank accounts), Aadhaar and mobile banking (JAM), and Mudra, the programme that dispenses loans to SMEs.
    • The objective of JAM and Mudra is to use Aadhaar as a way of accurately identifying beneficiaries and use mobile banking to digitally and seamlessly transfer cash/subsidies directly to households’ bank accounts and provide loans to SMEs without any leakages.
    • According to government reports, the total number of Jan Dhan accounts stand at around 380 million and 59 million MUDRA loans were sanctioned last year.
    • For a country with a population of 1.3 billion and about 63 million SMEs, even if there are duplicate accounts, JAM and Mudra should be able to cover almost all households and SMEs.
    • With Aadhaar accurately targeting beneficiaries, leakages should be minimised. If there ever was a time that India needed JAM and Mudra it is now.

    Issue of fiscal space and solution

    • Some will argue that India doesn’t have the fiscal space. But it does.
    • Use oil windfall: In the last month or so, the crude oil price has dropped from around $60/bbl to around $30 and is likely to stay at this level given the breakdown in agreement among oil-producing countries and the massive collapse in global demand.
    • If the government simply taxed the oil windfall by raising excise duties, as it did during the 2014-15 oil price collapse, it could potentially raise almost 1 per cent of GDP or a staggering Rs 2.25 trillion.
    • If 50 million households have to be provided assistance because of the shutdown, it comes to about Rs 14,000 per month for three months or about Rs 24,000 a month to half of the 63 million SMEs.
    • And this without even having to increase this year’s budgeted deficit.

    Conclusion

    The government might have other uses for the oil windfall. But if India is forced into lockdown, the economic costs will be very large and the recovery will crucially depend on whether the pilot-light of the economy is kept lit through this period. This critically requires income transfers to vulnerable households and SMEs. India cannot complain that it does not have the fiscal space or the infrastructure to provide it.

  • Picking up the quantum technology baton

    Context

    With the Budget announcement providing direction for the development in quantum technology, the stakeholders need to roll-out the national mission quickly.

    Pushing India into second quantum revolution

    • Budgetary allocation for NM-QTA: In the Budget 2020 speech, Finance Minister Nirmala Sitharaman made a welcome announcement for Indian science — over the next five years she proposed spending ₹8,000 crores (~ $1.2 billion) on a National Mission on Quantum Technologies and Applications.
    • This promises to catapult India into the midst of the second quantum revolution, a major scientific effort that is being pursued by the United States, Europe, China and others.

    Timeline of the development of Quantum Mechanics

    • Science to describe nature on atomic-scale: Quantum mechanics was developed in the early 20th century to describe nature in the small — at the scale of atoms and elementary particles.
    • Foundation for understanding: For over a century it has provided the foundations of our understanding of the physical world, including the interaction of light and matter.
      • It also led to ubiquitous inventions such as lasers and semiconductor transistors.
      • Despite a century of research, the quantum world still remains mysterious and far removed from our experiences based on everyday life.
    • Second revolution: A second revolution is currently underway with the goal of putting our growing understanding of these mysteries to use by actually controlling nature and harnessing the benefits of the weird and wondrous properties of quantum mechanics.
    • Challenge of experimental realisation: One of the most striking of these is the tremendous computing power of quantum computers, whose actual experimental realisation is one of the great challenges of our times.
    • Quantum supremacy: The announcement by Google, in October 2019, where they claimed to have demonstrated the so-called “quantum supremacy”, is one of the first steps towards this goal.

    Applications and challenges

    • Applications: Besides computing, exploring the quantum world promises other dramatic applications including the creation of novel materials, enhanced metrology, secure communication, to name just a few.
      • Some of these are already around the corner.
      • Application in communication: China recently demonstrated secure quantum communication links between terrestrial stations and satellites.
      • Applications in cryptography: Computer scientists are working towards deploying schemes for post-quantum cryptography — clever schemes by which existing computers can keep communication secure even against quantum computers of the future.
      • Exploring fundamental questions: Beyond these applications, some of the deepest foundational questions in physics and computer science are being driven by quantum information science. This includes subjects such as quantum gravity and black holes.
    • The need for collaboration: Pursuing these challenges will require unprecedented collaboration between physicists (both experimentalists and theorists), computer scientists, material scientists and engineers.
    • Challenges on the experimental front: On the experimental front, the challenge lies in harnessing the weird and wonderful properties of quantum superposition and entanglement in a highly controlled manner by building a system composed of carefully designed building blocks called quantum bits or qubits.
      • These qubits tend to be very fragile and lose their “quantumness” if not controlled properly, and a careful choice of materials, design and engineering is required to get them to work.
    • Challenges on the theoretical front: On the theoretical front lies the challenge of creating the algorithms and applications for quantum computers.
      • These projects will also place new demands on classical control hardware as well as software platforms.

    Where India stands

    • India late in starting work on technology: Globally, research in this area is about two decades old, but in India, serious experimental work has been underway for only about five years, and in a handful of locations.
    • What are the constraints on Indian progress in this field? So far we have been plagued by a lack of sufficient resources, high-quality manpower, timeliness and flexibility.
      • Resource and quality manpower problem: The new announcement in the Budget would greatly help fix the resource problem but high-quality manpower is in global demand.
      • In a fast-moving field like this, timeliness is everything — delayed funding by even one year is an enormous hit.
    • A previous programme called Quantum Enabled Science and Technology has just been fully rolled out, more than two years after the call for proposals.
    • Laudable announcement: One has to laud the government’s announcement of this new mission on a massive scale and on a par with similar programmes announced recently by the United States and Europe.

    Limits and way forward

    • But there are some limits that come from how the government must do business with public funds.
    • Role of the private sector: Here, private funding, both via industry and philanthropy, can play an outsized role even with much smaller amounts.
    • For example, unrestricted funds that can be used to attract and retain high-quality manpower and to build international networks — all at short notice — can and will make an enormous difference to the success of this enterprise.
    • Private participation is the effective way: This is the most effective way (as China and Singapore discovered) to catch up scientifically with the international community, while quickly creating a vibrant intellectual environment to help attract top researchers.
    • Connection with industry: Further, connections with the Indian industry from the start would also help quantum technologies become commercialised successfully, allowing the Indian industry to benefit from the quantum revolution.
    • We must encourage industrial houses and strategic philanthropists to take an interest and reach out to Indian institutions with an existing presence in this emerging field.
    • For example, the Tata Institute of Fundamental Research (TIFR), home to India’s first superconducting quantum computing lab, would be delighted to engage.