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  • [pib] Earth’s Magnetosphere and its dynamics

    Scientists at the Indian Institute of Geomagnetism (IIG) have developed a generalized one-dimensional fluid simulation code capable of studying a wide spectrum of coherent electric field structures of earth’s magnetosphere which can be useful in the planning of future space missions.

    The newscard talks of not so new phenomenon but a basic terminology of space sciences. Kindly make a note of what the Magnotesphere is, how it is formed, role of solar winds, Geodynamo etc.

    Earth’s Magnetosphere

    • The magnetosphere is the region of space surrounding Earth where the dominant magnetic field is the magnetic field of Earth, rather than the magnetic field of interplanetary space.
    • It is generated by the interaction of the solar wind with Earth’s magnetic field.

    Features of the Earth’s magnetosphere

    1) Bow shock,

    2) Magnetosheath,

    3) Magnetopause,

    4) Northern tail lobe,

    5) Southern tail lobe,

    6) Plasmasphere,

    7) Solar wind.

    How is it formed?

    • Sun is the major source of plasma deposition in space around the Earth. Sun forces some of its plasma towards the earth in the form of the solar wind.
    • The speed of this wind varies between 300 to 1500 km/s, which carries with it solar magnetic field, called as Interplanetary Magnetic Field (IMF).
    • The magnetic field is generated by electric currents due to the motion of convection currents of a mixture of molten iron and nickel in the Earth’s outer core.
    • These convection currents are caused by heat escaping from the core, a natural process called a geodynamo.

    Why study the magnetosphere?

    • The Earth’s magnetosphere is a vast region which has a finite number of satellites hurtling through this realm.
    • The morphology of the plasma processes around the satellite can be understood quite well.
    • However, when they leave the observational domain of one satellite to enter into another, a vast blind arena is created.
    • How the morphology of these processes changes over space and time can be ideally deciphered only through computer simulations.

    Outcome of the study

    • Almost 99% of matter in the universe is in the form of plasma, Earth’s magnetosphere, too, contains this material and the plasma.
    • They have the ability to hamper the working of a number of satellites that have been placed in orbit in the magnetospheric region.

    Significance

    • Apart from the well being of these expensive satellites, the academic understanding of this region is quite essential to comprehend the cosmos in its entirety.
    • The study will help advance the knowledge of plasma waves, instabilities, and coherent effects associated with wave-particle interactions that are useful in planning of future space missions.
    • It can also lead to precisely controlled fusion laboratory experiments for ever-expanding energy needs of humanity.

  • GI tag to Manipur black rice, Gorakhpur terracotta and Kovilpatti kadalai mittai

    Chak-Hao, the black rice of Manipur and the Gorakhpur terracotta and the Kovilpatti kadalai mittai of Tamil Nadu have bagged the Geogrphical Indication (GI) tag.

    Must read: GI Tags in news for 2020 Prelims

    Chak-Hao

    • Chak-Hao, the scented glutinous rice which has been in cultivation in Manipur over centuries.
    • It is characterized by its special aroma. It is normally eaten during community feasts and is served as Chak-Hao kheer.
    • The application for Chak-Hao was filed by the Consortium of Producers of Chak-Hao (Black Rice), Manipur and was facilitated by the Department of Agriculture.
    • Chak-Hao has also been used by traditional medical practitioners as part of traditional medicine.
    • According to the GI application filed, this rice takes the longest cooking time of 40-45 minutes due to the presence of a fibrous bran layer and higher crude fibre content.
    • At present, the traditional system of Chak-Hao cultivation is practised in some pockets of Manipur.
    • Direct sowing of pre-soaked seeds and also transplantation of rice seedlings raised in nurseries in puddled fields are widely practised in the State’s wetlands.

    Gorakhpur terracotta

    • The terracotta work of Gorakhpur is a centuries-old traditional art form, where the potters make various animal figures like, horses, elephants, camel, goat, ox, etc. with hand-applied ornamentation.
    • The application was filed by Laxmi Terracotta Murtikala Kendra in Uttar Pradesh.
    • Some of the major products of craftsmanship include the Hauda elephants, Mahawatdar horse, deer, camel, five-faced Ganesha, singled-faced Ganesha, elephant table, chandeliers, hanging bells etc.
    • The entire work is done with bare hands and artisans use natural colour, which stays fast for a long time.
    • There are more than 1,000 varieties of terracotta work designed by the local craftsmen.
    • The craftsmen are mainly spread over the villages of Aurangabad, Bharwalia, Langadi Gularia, Budhadih, Amawa, Ekla etc. in Bhathat and Padri Bazar, Belwa Raipur, Jungle Ekla No-1, Jungle Ekla No-2 in Chargawan block of Gorakhpur.

    Kovilpatti kadalai mittai

    • It is a candy made of peanuts held together with glistening syrup, and topped with wisps of grated coconut dyed pink, green and yellow.
    • It is made using all natural ingredients such as the traditional and special ‘vellam’ (jaggery) and groundnuts and water from the river Thamirabarani is used in the production, which enhances the taste naturally.
    • It is manufactured in Kovilpatti and adjacent towns and villages in Thoothukudi district.
    • It is produced by using both groundnuts and jaggery (organic jaggery), in carefully selected quantities from selected specific locations in Tamil Nadu.

    Back2Basics: Geographical Indications in India

    • A Geographical Indication is used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Such a name conveys an assurance of quality and distinctiveness which is essentially attributable to its origin in that defined geographical locality.
    • This tag is valid for a period of 10 years following which it can be renewed.
    • Recently the Union Minister of Commerce and Industry has launched the logo and tagline for the Geographical Indications (GI) of India.
    • The first product to get a GI tag in India was the Darjeeling tea in 2004.
    • The Geographical Indications of Goods (Registration and Protection) Act, 1999 (GI Act) is a sui generis Act for protection of GI in India.
    • India, as a member of the WTO enacted the Act to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights
    • Geographical Indications protection is granted through the TRIPS Agreement

  • Festival in news: Chithirai Festival

    For the first time, in place of Madurai’s Chithirai Festival, a simple celestial union is set to take place that will be streamed online.

    Match the pair based question can be asked from festivals as such. Recently, the following festivals were in the news: Ambubachi Mela, Thrisoor Puram, Meru Jatara, Nagoba Jatara etc.

    Chithirai Festival

    • Chithirai Festival or Chithirai Thiruvizha is an annual celebration celebrated in the city of Madurai during the month of April.
    • It is celebrated during the Tamil month of Chithirai.
    • It lasts for one month of which the first 15 days mark the celebrations of the coronation of Goddess Meenakshi and the Marriage of Lord Sundareswara and Goddess Meenakshi.
    • The next 15 days mark the celebrations of the Journey of Lord Alagar from Kallazhagar temple in Alagar Koyil to Madurai.

    About Meenakshi Temple

    • The ancient city of Madurai, more than 2,500 years old, was built by the Pandyan king, Kulashekarar, in the 6th century B.C.
    • But the reign of the Nayaks marks the golden period of Madurai when art, architecture and learning flourished expansively.
    • The most beautiful buildings in the city including its most famous landmark, the Meenakshi temple, were built during the Nayak rule.
    • Located in the heart of the city, the Meenakshi-Sundareshwarar temple is dedicated to goddess Meenakshi, the consort of lord Shiva.
    • The sculpted pillars are adorned with the exquisite murals that celebrate the ethereal beauty of princess Meenakshi and the scenes of her wedding with Lord Shiva.
    • The pillars depict scenes from the wedding of Meenakshi and Sundareswarar. There are 985 richly carved pillars here and each one surpasses the other in beauty.

  • It is time to design clear rules for departure from accepted norms of fiscal prudence

    This editorial spells out the size of the stimulus package that would be required to restart the economy. It also discusses the possible sources that the government could tap to raise the revenue. Such huge expenditure is likely to result in the huge fiscal deficit which would necessitate that the stimulus is time-bound and transparent.

    Prospects of substantially negative growth

    • Arvind Subramanian has likened the current economic situation to a “pralay (deluge)”.
    • A deluge in which the government should spend more than even what it ought to in a rainy day.
    • India, the former chief economic adviser said that India must plan for a “substantially negative” growth this year that might require an additional fiscal expenditure of Rs 10 lakh crore.
    • Corporate indebtedness was already high before the lockdown.
    • Insolvency cases will mount further.
    • Even companies facing no significant cash flow issues wouldn’t invest in uncertain public health as well as the demand-constrained environment.
    • Banks, too, aren’t going to lend, no matter how much liquidity the Reserve Bank of India (RBI) may infuse.
    • The burden of non-performing assets, which is set to get heavier in the coming months, makes it impossible for them to finance an economic recovery.
    • Last, but not the least, are faced with layoffs and pay cuts, they would rather save and will be afraid to spend.

    Importance of government spending in the current situation

    • Under the circumstances, the onus for ensuring that the wheels of the economy start moving lies on the government.
    • There’s no guarantee of it happening even with all lockdown restrictions being lifted.
    • Without somebody to spend, the economy is in real danger of contraction, which will, in turn, worsen the problem of businesses going bust, joblessness and loan defaults that can spread to the entire financial services industry.

    No “3F” constraints and risk of deflationary shocks

    • The one consolation today is that India is not saddled with its traditional “3F” constraints — food, fuel and foreign exchange — which were triggers for inflation and balance of payments crises.
    • On the contrary, public foodgrain stocks are at an all-time high, global oil prices have crashed and there is no run on the rupee, unlike during the “taper tantrum” period of May-August 2013.
    • Risk of deflationary shock: The risks, if at all, are tilted more towards demand-side “deflationary shocks” than supply-side inflation concerns.

    How will the government manage the resources?

    • The finances of both the Centre and states are in a mess, with receipts from tax and non-tax sources hardly covering even existing expenditures.
    • But governments enjoy sovereign borrowing powers that allow fund-raising at rates below that of triple A-rated instruments issued by private corporates, more so in the present risk-averse scenario.
    • Also, there is the option of deficit financing (“printing money”) through the RBI subscribing to primary auctions of government securities.
    • There are, of course, costs in such powers being exercised.
    • Past precedents — whether the issuance of ad hoc Treasury Bills to the RBI prior to April 1997 or the stimulus package post the 2008 global financial crisis — do not inspire confidence.

    A question based on the stimulus package and its consequences can be framed, for ex- “Do you agree with the view that a stimulus package by the government to restart the economy is necessary? What are the options with the government to raise the money for such a package? What could the consequences of such a package on the economy in the future?”

    Conclusion

    This is the time to design clear rules for departure from accepted norms of fiscal prudence. Any stimulus has to be transparent and time-bound.

  • Spanish Plan for Phased Easing of Lockdown

    • Spain’s Prime Minister has presented a four-phase lockdown exit strategy for the country.
    • It’s imperative for India to learn from global examples for easing lockdown without doing away with health concerns.

    With the nearing end of nationwide lockdown, various exit strategies are being discussed for a smooth restart.

    Spain’s exit strategy

    • The opening up of the lockdown will begin with phase 0 throughout Spain, except for a few islands that will already be in phase 1 by then.
    • A week later, provinces will enter phase 1, which will last for two weeks and the remaining phases will also last for two weeks each.
    • In total, the de-escalation will take at least six weeks to be complete.

    Phase 0: The preparation phase

    • De-escalations in this phase include opening up of takeaway facilities at restaurants and opening up of some other establishments such as hair salons.
    • From May 2, individuals will be able to go out for a walk or to exercise alone or with people they stay with. In this phase, professional athletes will be able to access individual training sessions.
    • Children aged 14 years or younger have been allowed to go out for walks from April 26.

    Phase 1: The initial phase

    • Begins on May 11. Small businesses will be allowed to open under strict security measures.
    • For instance, gyms can open for people who want to train individually and by appointment.
    • Further, hotels and tourist accommodations will be allowed to open, excluding the common areas and with certain restrictions in place.
    • Places of worship will also be allowed to open, limiting their capacity to one-third. Owners of terrace bars can open their establishments but with 30 per cent capacity.
    • In this phase, some degree of social contact with a limited number of people may also be allowed, subject to what the conditions are then.

    Phase 2: The intermediate phase

    • Begins on May 25.Will include the resumption of hunting and sport fishing, and the opening of cinemas and auditorium theatres at one-third of their capacity.
    • Visits to monuments and cultural facilities, such as exhibition halls and conference rooms, will resume with one-third occupancy.
    • Cultural shows will be allowed with less than 50 people in closed spaces. In the outdoors, shows and events can be held with less than 400 people provided they are seated.
    • All places of worship will have to limit their capacity to 50 per cent.

    Phase 3: The advanced phase

    • Begins on June 8 and provided the situation is under control, general mobility will be made more flexible.
    • Wearing masks will be recommended when people venture outside, especially on public transport. In commercial settings, capacities will be restricted to 50 per cent.
    • Beaches may also open in this phase. The movement of people into other provinces or islands is restricted until the de-escalation process is complete.

  • Ganga water improves during lockdown

    The Ganga water quality has improved remarkably during the lockdown period. This highlights the importance of synergy for absolute symbiosis between nature and man as the need of the hour.

    Context

    • The novel coronavirus lockdown (COVID-19) pandemic has put millions in the throes of adversity — and yet, there is a reason to celebrate.
    • Over a month into the nationwide lockdown, air and water pollution levels have shrunk and the wildlife is free.
    • Of 36 monitoring units placed in the Ganga, water quality at 27 points was found suitable for bathing and propagation of wildlife and fisheries in the lockdown period

    Status of rivers in India

    • India’s water bodies are in a poor state. The rivers are becoming dumpyard for untreated sewage and industrial waste.
    • In the name of economic growth, most rivers and streams have been turned into sewer canals and are getting difficult to be treated.
    • It is estimated that every day, almost 40 million litres of wastewater enters rivers and other water bodies; only 37 per cent is adequately treated.
    • A Centre Pollution Control Board (CPCB) report showed that critically polluted river stretches in the country have increased from 302 stretches in 2016 to 351 stretches in 2018.
    • The finding was based on Biological Oxygen Demand (BOD).

    Ganga

    • According to CPCB, more than half of wastewater treatment plants in the basin do not comply with the discharge norms.
    • Since 1985, several programmes and schemes have been launched to clean the Ganga. It began with the Ganga Action Plan I, followed by Ganga Action Plan II.

    • In 2015, the biggest-ever initiative, Namami Gange was launched with a budget of over Rs 20,000.
    • Despite numerous programmes and huge funds, the Ganga still runs polluted.

    The causes

    • More than 80 per cent of pollution in the Ganga is due to domestic sewage from surrounding towns and villages. The rest is contributed by industrial waste.
    • During the lockdown, domestic sewage would have increased owing to increased demand for water to maintain hand-washing hygiene. Industrial waste, however, stopped entering the Ganga.
    • Other activities such as tourism, fairs, bathing and cloth washing near the ghats were curtailed. Experts said these observations reflected that domestic sewerage was not the only cause of concern.
    • When sewage is mixed with industrial effluents, it gets difficult for the river to assimilate pollution.
    • One more reason was high number of western disturbances which brought rain and improved the flow in the river leading to dilution.

    COVID-19’s gift to Ganga

    • After the nationwide lockdown was imposed, within 10 days signs of improvement in water quality started surfacing.
    • At Varanasi’s Nagwa Nala, the Dissolved Oxygen (DO) values were found increased to 6.8 milligram/litre against 3.8 mg/l on March 6, showcasing an extraordinary improvement of 79 per cent in DO values.
    • 30 per cent of the total BOD load was due to industries along the river, which amounted to 130-150 tons per day.
    • Since all major polluting industries are closed, the toxic load is off the river.

    Surprisingly better

    • Ganga water at Haridwar and Rishikesh was reported fit for drinking due to 500 per cent decrease in sewage and industrial effluents.
    • A dip in the number of visitors at ghats in Haridwar also helped the river water quality.
    • The Ganga water has become fit for ‘achaman’, which means ritual sipping, after a long time.

    Bringing the ambitions to reality

    There is an urgent need to:

    • Reinvestigate the main source of pollution in Ganga and reorient all river cleaning policies and programmes based on lockdown findings.
    • Industries need to strictly adhere to discharge norms accompanied with strong enforcement of laws and regulations vis-a-vis strong monitoring and vigilance framework.
    • Setting up of effective interventions to clean rivers, reliable, representative and comprehensive data collected at high frequency in a disaggregated manner.
    • There is an urgent need to expand the network of monitoring stations on the Ganga, the Yamuna and tributaries of Ganga in more places.
    • Over-extraction and over-exploitation of Ganga’s waters have rendered long stretches of the river completely dry for much of the year. There is a need to maintain ecological flow to keep it clean for longer run.
    • Education and awareness needs to be carried out strategically.

    Back2Basics: Biochemical Oxygen Demand

    • BOD is the amount of dissolved oxygen needed (i.e. demanded) by aerobic biological organisms to break down organic material present in a given water sample at certain temperature over a specific time period.
    • The BOD value is most commonly expressed in milligrams of oxygen consumed per litre of sample during 5 days of incubation at 20 °C and is often used as a surrogate of the degree of organic pollution of water.
    • BOD is similar in function to chemical oxygen demand (COD), in that both measure the amount of organic compounds in water.
    • However, COD is less specific, since it measures everything that can be chemically oxidized, rather than just levels of biodegradable organic matter.

  • Religious Freedom and India

    The U.S. Commission on International Religious Freedom (USCIRF) has downgraded India to the lowest ranking, “countries of particular concern” (CPC) in its 2020 report.

    Religious freedom in India has been a contested issue since decades. Recent moves by the govt. since the abrogation of Art. 370 which triggered the riots in Delhi has left a big scar on the secular fabric of India.

    About USCIRF

    • It is a U.S. federal government commission created by the International Religious Freedom Act (IRFA) of 1998.
    • Its principal responsibilities are to review the facts and circumstances of violations of religious freedom internationally.

    Accusing India of religious intolerance

    • USCIRF has placed India alongside China, North Korea, Saudi Arabia and Pakistan.
    • India was categorised as a “Tier 2 country” in last year’s listing.
    • This is the first time since 2004 that India has been placed in the CPC category.
    • The commission also recommended that the U.S. government take stringent action against India under the “International Religious Freedom Act” (IRFA).

    What led India to lower its religious freedom?

    • India took a sharp downward turn in 2019 due to concerns about the Citizenship Amendment Act, the proposed National Register for Citizens, anti-conversion laws and the situation in Jammu and Kashmir.
    • The report accuses India using its strengthened parliamentary majority to institute national-level policies violating religious freedom across India.
    • The panel reported harassment and violence against religious minorities to continue with impunity, and engaged in and tolerated hate speech and incitement to violence against them.

    India’s reaction

    • The Centre reacted sharply to the USCIRF report terming it “biased and tendentious” and rejected its observations.
    • The biased and tendentious comments against India are not new. But on this occasion, its misrepresentation has reached new levels.
    • Major panellists of USCIRF dissented with the recommendation on India as being ‘too harsh’ and that ended up placing the country alongside what they termed as “rogue nations” like China and North Korea.
    • India regards the accusations as inaccurate and unwarranted and questioned the body’s “locus standi” in India’s internal affairs.

    US’s religious activism: Unwelcomed by all

    • The US earlier this month has announced the launch of a 27-nation International Religious Freedom Alliance, which aim to adopt a collective approach in protecting and preserving religious freedom across the world.
    • Among the prominent countries to join the alliance are Brazil, the United Kingdom, Israel, Ukraine, the Netherlands and Greece.
    • The USCIRF has been accused worldwide of being biased towards focusing on the persecution of Christians and of being anti-Muslim & Hinduphobic. It panels various controversial personalities.

  • [pib] Petersberg Climate Dialogue

    India along with 30 countries deliberated on issues of Climate Change in first-ever virtual Petersberg Climate Dialogue.

    Climate change negotiations are somehow put to a halt due to ongoing pandemic. Such small dialogues are keeping alive the spirit of climate action.

    Petersberg Climate Dialogue

    • It has been hosted by Germany since 2010 to provide a forum for informal high-level political discussions, focusing both on international climate negotiations and the advancement of climate action.
    • This year’s virtual Dialogue was co-chaired by Germany and the UK.
    • The dialogue was crucial because of the efforts to contain coronavirus as well as countries preparing to move into the implementation phase of the Paris Agreement 2015 in the post-2020 period.

    India’s Contributions

    • Expressing solidarity with the world as it combats the COVID 19 pandemic the Union Minister highlighted how COVID – 19 has noticed that we can survive on less.
    • India pushed for having climate technology as an open source available to all countries at affordable prices.
    • India stressed on climate finance and urged to plan for 1 trillion USD in grants to the developing world immediately.
    • India focussed on the opportunity that the world has today to accelerate renewable energy deployment and creating new green jobs in the renewable energy and energy efficiency sector.

  • Recovery from COVID-19 is an opportunity to create economies that are more resilient and fair

    This article discusses the three principles which could form the basis for recreation of the economy devastated by the Covid-19. The first is adopting the economies of “scope” instead of economies of scale. The second is about governance and focus on bottom-up approach. And third is about empowering the people.

    Impact of Covid-19 on the ideology of globalisation

    • The history of the globalisation has turned out to be very brief.
    • In 2020, the global COVID-19 pandemic has forced millions of Indians to return to their villages.
    • Jetsetters have been locked in their gated communities.
    • Global supply chains have been broken apart.
    • People are scrambling for essentials from local suppliers.
    • The ideology of globalisation has hit realities on the ground.

    Recovery from COVID-19 is an opportunity to create economies that are more resilient and fair. The following three architectural principles must apply.

    1. Replace economies of scale by the economies of scope

    • COVID-19 has settled, for now, the debate between free-trade evangelists and advocates of industrial policy.
    • The vulnerability of global supply chains: A complex global economy in which local producers obtain scale (and lower costs) by supplying products for global markets is vulnerable to shutdowns anywhere.
    • The resilience of local economies: Local economies that have a variety of capabilities within them, albeit on smaller scales, are more resilient.
    • Therefore, local economic webs must be strengthened, in preference to global supply-chains.
    • “Make in India,” which was dismissed by free traders as a reversion to pre-1991 economic policies, has become a necessity.
    • Make in India is necessary to maintain supplies of essentials and to create employment for the hundreds of millions of Indians with fragile incomes who have been badly shaken by the lock-down of the Indian economy.

    2. Local systems solution to global problems

    • Local systems solutions are essential for global systemic problems.
    • Privatisation: Garrett Hardin had coined the expression, “The Tragedy of the Commons”, in 1968.
    • The Tragedy of the Commons is a term for the proposition that a resource that belongs to everybody will not be cared for by anybody.
    • This supported policies to privatise public property, ostensibly for the benefit of everybody and became the dominant school of economics from the 1970s onwards.
    • A different explanation: Elinor Ostrom, who was awarded the Nobel Prize for economics in offered a different explanation for the tragedy of the commons.
    • She argued that common resources are well-managed when those who benefit from such resources the most are in close proximity to them.
    • For her, the tragedy occurred when external groups exerted their power (politically, economically or socially) to gain a personal advantage.
    • Bottom-up approach: She was greatly supportive of the “bottom-up” approach to issues: Government intervention could not be effective unless supported by individuals and communities.
    • The world is facing challenges of ecological sustainability and persistent inequalities, which seem to get worse with the prevailing paradigm of economic growth.
    • These challenges are described in the 17 Sustainable Development Goals (SDGs).
    • They cut across national boundaries.
    • They also span several domains of expertise and institutional mandates.
    • The final, 17th goal states the principle by which all the goals will be achieved — “partnerships”.

    Actions theory Vs. Systems thinking

    • Action theory: The prevalent action theory, used by governments, businesses and philanthropic organisations to solve complex problems, focuses on breaking complex problems into components and then tackling the components in separate silos.
    • Problems caused by the actions theory: This widely prevalent theory of action has contributed greatly to causing the systemic, interconnected problems the SDGs now aim to address.
    • What is systems thinking: Effective action to address multiple challenges together requires “systems thinking” — that is, a systemic vision spanning across the problems.
    • Systems thinking is essential, amongst experts at the top and amongst partners on the ground.
    • Several organisations are promoting collaborative action with systems thinking on the ground in India.
    • Kudumbashree in Kerala has proven the power of community action.
    • The Foundation for Ecological Security, guided by Elinor Ostrom’s ideas, is working in many Indian states.
    • Dainik Bhaskar is promoting “SDG chaupals” in Indian villages.

    3.  Empowering the people

    • The third principle for the new economy is, empower the people, the fundamental requirement for genuine democracy.
    • India’s Constitution seeks self-governance in India’s towns and villages.
    • These are not being implemented by governments and policy experts who do not want to give up power to the people.
    • India lives in its villages, Mahatma Gandhi had said. Most of India still does.
    • And many, who had migrated to cities looking for jobs, are returning, shaken by the pandemic.
    • Gandhi was a systems thinker. For Gandhi, the global village was an abstract concept.
    • This cannot be realised until local villages and towns become harmonious communities, where people live in harmony with each other and with nature around them.

    The corona crisis has laid bare some of the problems associated with globalisation. It has forced a rethink of the economic policies and model adopted by the world. Against this backdrop, a question can be asked by the UPSC that demands the analysis of problems that have surfaced and solutions. For ex. “Covid-19 pandemic has brought into a sharp focus some inherent problems associated with the globalisation. In this context suggest the ways to make the Indian economy resilient to such shocks and fair to all the sections of society”

    Conclusion

    COVID-19 marks the end of the economics’ paradigm of the Washington Consensus. New models of economies, and new rules of global governance, must be bottom-up, not top-down. That’s how the whole world can move from relief, to recovery, and into resilience.

    Back2Basics: What was the Washington Consensus?

    • The Washington Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury.
    • A British economist named John Williamson coined the term Washington Consensus in 1989.
    • The ideas were intended to help developing countries that faced economic crises.
    • In summary, The Washington Consensus recommended structural reforms that increased the role of market forces in exchange for immediate financial help.
    • Some examples include free-floating exchange rates and free trade.

  • It will take fiscal boldness now to relieve financial distress

    The article discusses the fiscal response of the government to deal with the corona crisis. Fiscal response to the 2008 financial crisis was higher in terms of GDP percentage. Also, a comparison with emerging peer economic indicates that India might be running the tighter fiscal policy in the time of crisis. The article suggests higher spending by going beyond the traditional fiscal space.

    A possible explanation for moderate fiscal response by the government

    • The Indian government has till now come up with an insipid fiscal response to the ongoing economic crisis.
    • Long battle: One view is that the government does not want to fire all its bullets in what threatens to be a long battle. It wants to time its interventions.
    • Weak public finances: The other possible explanation for this fiscal timidity is that India has entered this crisis with weak public finances.

    Comparison with finances at the 2008 financial crisis

    • The combined official fiscal deficit of the Union plus state governments was at its lowest level in many decades.
    • The economic boom of the preceding four years had led to higher tax collections pouring into the treasury.
    • The massive increase in spending announced in the budget of February 2008 was with an eye on the national election scheduled a year later, rather than in anticipation of a coming storm.
    • Then followed the second wave of fiscal expansion after the North Atlantic financial crisis hit Indian shores seven months later.
    • Back then, India’s effective fiscal stimulus over two years was a substantial 4.3% of gross domestic product (GDP).
    • In 2020, the crisis-driven spending plan announced by the government so far is less than 1% of GDP.
    • There could yet be a big fiscal push in the coming days.

    Tighter fiscal policy in crisis compared to other emerging economies

    • Some of the budget estimates released a few days ago by the International Monetary Fund are telling.
    • In 2018, the total fiscal deficit of the Indian government as a proportion of GDP was 2.4 percentage points higher than the average for Asian emerging markets.
    • India is expected to end 2020 with a total fiscal deficit that will be 2.5 percentage points lower than Asia’s average.
    • In other words, India ran a looser fiscal policy compared to the rest of Asia in normal times, but is likely to run a tighter fiscal policy than its regional peers in a crisis year.
    • Something similar can be seen in estimates for public debt.
    • Asian public debt as a proportion of GDP is expected to go up by nine percentage points in 2020.
    • The comparable figure for India is 2.9 percentage points. (These estimates are being cited with full knowledge that forecasting models break down during extreme events.)

    Funding extra expenditure through money creation

    • Lack of traditional fiscal space should not hold the government back in a crisis situation.
    • There are many options outside the consensus macro playbook.
    • Money creation: A commonly cited option right now is funding extra expenditure through money creation rather than borrowing.
    • The size of the Reserve Bank of India (RBI) balance sheet as a percentage of nominal GDP is close to its 35-year average.
    • There is scope for printing more money right now.
    • Lower inflationary pressure: And the inflationary consequences are likely to be muted because of the lower velocity of money amid a demand collapse.
    • Public finances in the future: Getting public finances back on track is a battle that lies in the future.
    • A rapid recovery in economic activity would be the best solution.
    • Otherwise, history tells us that countries have brought down their public debt numbers through some combination of financial repression, austerity, higher taxes and inflation.
    • Some element of capital controls could also be back in play.

    Need for increasing discretionary government spending

    • The collapse in tax revenues as the economy is shut down will automatically lead to a rise in India’s fiscal deficit.
    • However, there is a need for an increase in discretionary government spending as well.
    • Economists have shown that spending multipliers are higher than tax multipliers in India.
    • In other words, the increase in economic output for every unit increase in the fiscal deficit is higher when the government spends rather than changes tax rates.
    • State’s spending Vs. Union spending: Spending by states gives more bang for the buck than equivalent spending by the Union government.

    “Below the line measures” to support the economy

    • Also, there are options other than direct spending to support the economy.
    • Countries such as Germany, the UK, Italy, France and South Korea have complemented traditional fiscal expansions with “below the line” measures such as loans and guarantees to companies.
    • In an excellent recent study, analysts estimate that more than half of Indian corporate balances sheets will be unable to meet expenses with zero revenues.
    • They are careful to point out that their analysis is based on extreme assumptions that there is no fall in their wage bills, no revenues, and no access to fresh credit.

    One of the common suggestions we have been coming across is the spending by the government by printing money. In this article, the second important suggestion is below the line measures. Take note of these measures and options available with the government.

    Way forward

    • The poor need income support for their very survival. That should be at the top of any democratic government’s list of
    • However, protecting Indian companies from a financial collapse also matters, because otherwise, the economy will see a reduction in its capital stock, which will be needed both for a rapid recovery as well as job creation once the worst is over.
    • There are contagion risks in financial markets as well, going by what has happened to some mutual funds that were invested in bonds.

    Conclusion

    These are extraordinary times that require extraordinary measures. The danger from a delayed fiscal programme is that hysteresis may set in, as companies run out of money and supply chains are broken, damaging our economic prospects in the medium term.