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  • challenges the second Covid wave poses to India’s path to fiscal consolidation.

    The article highlights the challenges the second Covid wave poses to India’s path to fiscal consolidation.

    Recalibration to growth projection due to second Covid wave

    • The growth projections of different national and international agencies and the fiscal projections of Centre’s 2021-22 Budget require recalibration.
    • The International Monetary Fund (IMF) had forecast real GDP growth for 2021-22 at 12.5%.
    • The Reserve Bank of India (RBI) had forecast real GDP growth for 2021-22 at 10.5%.
    • The Ministry of Finance’s Economic Survey had forecast real GDP growth for 2021-22 at 11.0%.

    Growth rate of 8.7% to keep GDP at same level as in 2019-20

    • Moody’s has recently projected India’s GDP growth in 2021-22 at 9.3%.
    • Benchmark growth rate: 9.3% is close to the benchmark growth rate of 8.7% which would keep India’s GDP at 2011-12 prices at the same level as in 2019-20.
    • This level of growth may be achieved based on the assumption that the economy normalises in the second half of the fiscal year.
    • The 2019-20 real GDP was ₹145.7-lakh crore at 2011-12 prices.
    • It fell to ₹134.1-lakh crore in 2020-21, implying a contraction of minus 8.0%.
    •  At 8.7% real growth, the nominal GDP growth would be close to 13.5%, assuming an inflation rate of 4.5%.
    • This would be lower than the nominal growth of 14.4% assumed in the Union Budget.
    • At 13.5% growth, the estimated GDP for 2021-22 is ₹222.4-lakh crore at current prices.
    • Impact: This will lead to a lowering of tax and non-tax revenues and an increase in the fiscal deficit as compared to the budgeted magnitudes.

    How much the gross tax revenue would be impacted?

    • The budgeted gross and net tax revenues for 2021-22 were ₹22.2-lakh crore and ₹15.4-lakh crore, respectively.
    • The assumed buoyancy for the Centre’s gross tax revenues (GTR) was 1.2.
    • If, however, the buoyancy of 1.2 proves optimistic and instead a buoyancy of 0.9, which is the average buoyancy of the five years preceding the COVID-19 year, is applied, the nominal growth of GTR would be 12.2%.
    • This would lead to the Centre’s GTR of about ₹21.3-lakh crore.
    • The corresponding shortfall in the Centre’s net tax revenues is estimated to be about ₹0.6 lakh crore.
    • The budgeted magnitudes for non-tax revenues and non-debt capital receipts at ₹2.4-lakh crore and ₹1.9-lakh crore, respectively, may also prove to be optimistic.
    • In these cases, the budgeted growth rates were 15.4% and 304.3%, respectively.
    •  The excessively high growth for the non-debt capital receipts was premised on implementing an ambitious asset monetisation and disinvestment programme.
    • Together with the tax revenue shortfall of nearly 0.6 lakh crore, the total shortfall on the receipts side may be about ₹2.1-lakh crore.

    Impact on fiscal deficit estimates

    • Two factors will affect the fiscal deficit estimate of 6.76% of GDP in 2021-22.
    • First, there would be a change in the budgeted nominal GDP growth.
    • Second, there would be a shortfall in the receipts from tax, non-tax and non-debt sources.
    • Together, these two factors may lead to a slippage in fiscal deficit which may be close to 7.7% of GDP in 2021-22 if total expenditures are kept at the budgeted levels.
    • This would call for revising the fiscal road map again.
    • Protecting total expenditures at the budgeted level is, however, important given the need to support the economy in these challenging time.

    Vaccination policy and role of Central government

    • Positive externalities: COVID-19 vaccination is characterised by strong inter-State positive externalities, making it primarily the responsibility of the central government.
    • The entire vaccination bill should be borne by the central government.
    • If the central government is the single agency for vaccine procurement, the economies of scale and the Centre’s bargaining power would keep the average vaccine price low.
    • The central government may transfer the vaccines rather than the money that it has budgeted for transfer.
    • Some of the smaller States may find procuring vaccines through a global tender to be quite challenging.

    Conclusion

    Protecting total expenditures at the budgeted level and mass vaccination are important in India’s pandemic situation.

    Back2basics: Tax buoyancy

    • There is a strong connection between the government’s tax revenue earnings and economic growth.
    • Tax buoyancy explains this relationship between the changes in government’s tax revenue growth and the changes in GDP.
    • It refers to the responsiveness of tax revenue growth to changes in GDP.
    • When a tax is buoyant, its revenue increases without increasing the tax rate.
    •  In 2007-08, everything was fine for the economy, GDP growth rate was nearly 9 per cent.
    • Tax revenue of the government, especially, that of direct taxes registered a growth rate of 45 per cent in 2007-08.
    • We can say that the tax buoyancy was five (45/9).

    What is tax elasticity?

    • It refers to changes in tax revenue in response to changes in tax rate.
    • For example, how tax revenue changes if the government reduces corporate income tax from 30 per cent to 25 per cent indicate tax elasticity.

  • China’s 17+1 Cooperation Forum

    Lithuania has decided to quit China’s 17+1 cooperation forum with central and eastern European states that include other EU members, calling it “divisive”.

    About 17+ 1 Forum

    • The forum is an abbreviation for Cooperation between China and Central and Eastern European Countries.
    • It is an initiative by the Chinese Ministry of Foreign Affairs to promote business and investment relations between China and 16 countries of CEE (CEEC).
    • The countries are Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Greece, Hungary, Latvia, North Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia.
    • The format was founded in 2012 in Warsaw to push for the cooperation of the “17+1” (the 17 CEE countries and China).
    • Its goals are to promote the Chinese Belt and Road Initiative and enhance cooperation in the fields of infrastructure, transportation, and logistics, trade and investment”.

  • Eruption of Mount Nyiragongo

    Thousands have fled a volcanic eruption in the Democratic Republic of Congo from Mount Nyiragongo on the outskirts of Goma City.

    These were some volcanoes in news this year:

    Mount Vesuvius, Taal Volcano, La Soufriere

    Mount Nyiragongo

    • Mount Nyiragongo is an active stratovolcano with an elevation of 3,470 m (11,385 ft) in the Virunga Mountains associated with the Albertine Rift.
    • The main crater is about 2km wide and usually contains a lava lake.
    • The crater presently has two distinct cooled lava benches within the crater walls.
    • It is one of the 16 Decade Volcanoes.
    • Nyiragongo’s lava lake has at times been the most voluminous known lava lake in recent history. The depth of the lava lake varies considerably.
    • Nyiragongo and nearby Nyamuragira are together responsible for 40 percent of Africa’s historical volcanic eruptions.

    Answer this PYQ in the comment box:

    Q.Which of the following adds/add carbon dioxide to the carbon cycle on the planet Earth?

    1. Volcanic action
    2. Respiration
    3. Photosynthesis
    4. Decay of organic matter

    Select the correct answer using the code given below:

    (a) 1 and 3 only

    (b) 2 only

    (c) 1, 2 and 4 only

    (d) 1, 2, 3 and 4

    What are Decade Volcanoes?

    • The Decade Volcanoes are 16 volcanoes identified by the International Association of Volcanology and Chemistry of the Earth’s Interior (IAVCEI).
    • They are considered worthy of particular study in light of their history of large, destructive eruptions and proximity to densely populated areas.
    • They are named Decade Volcanoes because the project was initiated in the 1990s as part of the United Nations-sponsored International Decade for Natural Disaster Reduction.

  • What is Vaccine Tourism?

    A couple of days ago, reports emerged of a Dubai-based tour operator offering a 24-day package tour from Delhi to Moscow that has included two shots of the Russian Sputnik-V vaccine.

    What is vaccine tourism?

    • In India, the term “vaccine tourism” became popular late last year when reports emerged of several tour operators offering packages to the US with the additional benefit of a vaccine shot.
    • Meanwhile, South Africans are said to be flying to Zimbabwe, Canadians and South Americans are traveling to the US for jabs, while tour operators in Europe are offering trips to Russia for Sputnik V shots.
    • It is said that Russia and the Maldives are already working on programs to offer people abroad the chance to get vaccinated during a visit; similar offerings are sprouting in the US as well.

    Why is it gaining popularity?

    • In fact, vaccine tourism is an emerging trend in countries where vaccines are in short supply, or where certain groups are still restricted from being inoculated.
    • Still, there are only a few countries in the world (parts of the US, Russia, Slovakia, Zimbabwe, etc) that don’t restrict their vaccination policy to local residents.
    • Currently, it is not illegal to travel to a foreign country to get vaccinated if air travel is allowed.
    • Recently, Seychelles announced that only vaccinated visitors from India, Pakistan, and Bangladesh who have completed two weeks after their second dose are permitted to travel to and enter the island nation, with proof.

    Can Indians go abroad to get vaccinated for Covid-19?

    • There may be no need for anyone from India to go abroad for vaccination since all eligible Indians will be vaccinated in the country by the end of this year – that too, at the most reasonable rates possible.
    • However, the idea of vaccine tourism is gaining momentum in India.
    • Many Indians, who fled to Dubai just before the international flight ban came into effect last month, are said to be availing of the Chinese vaccine Sinopharm shots in the UAE.

    Not to be confused with Vaccine Passport

    • Sometimes, vaccine tourism is confused with vaccine passports, which is a more regulated practice gaining currency around the world.

  • Person in news: Sunderlal Bahuguna

    Veteran environmentalist and architect of the Chipko Movement Sundarlal Bahuguna, 94 has succumbed to COVID.

    Answer this PYQ in the comment box:

    Q.In India, the problem of soil erosion is associated with which of the following?

    1. Terrace cultivation
    2. Deforestation
    3. Tropical climate

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

    Sunderlal Bahuguna

    • Bahuguna was one of the leaders of the Chipko movement, fighting for the preservation of forests in the Himalayas.
    • Chipko means ‘embrace’ or ‘tree huggers’ and this vast movement was a decentralized one with many leaders usually being village women.
    • Often, they would chain themselves to trees so that loggers could not cut down forests.
    • These actions slowed down the destruction, but more importantly, they brought deforestation to the public’s attention.

    His contributions

    • From 1981-1983, Sundarlal Bahuguna led a 5,000-kilometre march across the Himalayas, ending with a meeting with late PM Indira Gandhi, to protect some areas of the Himalayan forests from tree-felling.
    • Sundarlal Bahuguna was also a leader in the movement to oppose the Tehri dam project and in defending India’s rivers.
    • He also worked for women’s rights and the rights of the poor.
    • His methods were Gandhian, making use of peaceful resistance and non-violence.
    • The Chipko Movement received the 1987 Right Livelihood Award, also referred to as the Alternative Nobel Prize.

  • Appointments to the Kalakshetra Foundation

    The Central government has appointed 12 eminent artists and musicians to the board of the prestigious institution.

    Kalakshetra Foundation

    • It is an arts and cultural academy dedicated to the preservation of traditional values in Indian art and crafts, especially in the field of Bharatanatyam dance and Gandharvaveda music.
    • Based in Chennai, India, the academy was founded in January 1936 by Rukmini Devi Arundale and her husband George Arundale.
    • Under Arundale’s guidance, the institution achieved national and international recognition for its unique style and perfectionism.
    • In January 1994, an Act of the Parliament of India recognized the Kalakshetra Foundation as an “Institute of National Importance.”

    Who was Rukmini Devi Arundale?

    • Devi (1904 –1986) was an Indian theosophist, dancer, and choreographer of the Indian classical dance form of Bharatanatyam, and an activist for animal welfare.
    • She was the first woman in Indian history to be nominated a member of the Rajya Sabha.
    • The most important revivalist of Bharatanatyam from its original ‘sadhir’ style prevalent amongst the temple dancers, the Devadasis, she also worked for the re-establishment of traditional Indian arts and crafts.
    • She espoused the cause of Bharata Natyam which was considered a vulgar art.
    • She ‘sanitised’ and removed the inherent eroticism of Sadhir to make it palatable to Victorian British morality and Indian upper-caste elites.

    Back2Basics: Bharatanatyam

    • Bharatanatyam previously called Sadhir Attam is a major form of Indian classical dance that originated in Tamil Nadu.
    • It is one of the oldest classical dance traditions in India.
    • It has been nurtured in the temples and courts of southern India since the ancient era.
    • It is one of eight forms of dance recognized by the Sangeet Natak Akademi (the others being Kathak, Kuchipudi, Odissi, Kathakali, Mohiniyattam, Manipuri, and Sattriya).
    • The word Bharata is a mnemonic, consisting of “bha”–”ra”–”ta”.
    • According to this belief, bha stands for bhava (feelings, emotions), ra stands for raga (melody, framework for musical notes), and ta stands for tala (rhythm).

  • How AIDS fight offers a COVID vaccine patent pathway

    The possibilities of new strain of Covid-19 emerging from any region of the world could derail the global recovery. To prevent that from happening vaccines need to be made available and affordable to all. This article discusses the ways to ensure that.

    Ensuring affordability and availability of Covid vaccines

    • To achieve global herd immunity and prevent new strains of COVID-19 from emerging, vaccines need to be affordable and available in massive quantities throughout the globe.
    • Following three are the ways to ensure vaccine availability and affordability.
    • 1) Voluntary linceses: This can happen through patent owners voluntarily licensing their products to other companies, especially Indian producers who are experienced at mass-producing low-cost medications.
    • 2) Compulsory licenses: This can also be done by temporarily suspending patent rights for COVID vaccines.
    • 3) COVAX option: Some favour ensuring access to COVID-19 vaccines through the COVAX programme.

    Options to ensure vaccine availability and affordability

    1) Voluntary licencing: Lessons from fight against AIDS

    • Due to anti-TRIPS activism from low-income countries and low profits from low-income markets some manufacturers placed licensing agreements to produce AIDS drugs for which they owned patent rights in the UN-affiliated Medicines Patent Pool.
    • Several India-based companies then used these voluntary licences to manufacture these drugs on a massive scale and sold them at prices they determined.
    • This effort brought down the price of key AIDS medications in these countries.
    • The United Nations’ Medicines Patent Pool and the World Health Organization’s COVID-19 Technology Access Pool are important tools in an effort to promote voluntary licensing for COVID products.
    • Sharing patent rights through voluntary licensing would need to involve India’s large pharmaceutical sector.

    Challenges in voluntary licensing

    • So far, no patent holders have joined the WHO’s COVID-19 Technology Access Pool.
    • This is why India and South Africa called on the WTO to temporarily waive patent protections for COVID-19.
    •  Meanwhile, the UN Medicines Patent Pool stands ready to accept voluntary licences for COVID-19.

    2) Compulsory licenses

    • Compulsory licenses override patent rights to allow local production or import of drugs by generic manufacturers in the event of a public health crisis.
    • Since 2003, this right has been enshrined in the Doha Declaration addendum to the WTO’s TRIPS agreement and this is what India and South Africa are lobbying for.
    • The Doha addendum, Section 5c, offers AIDS, malaria and tuberculosis as examples of what qualifies as a health emergency.
    • By this standard, COVID-19 should easily qualify.

    Issues with compulsory licensing

    • Good will: Manufacturers in India say they prefer to work with voluntary licences because there is more good will between companies while compulsory licences often come with a legal battle brought by the patent holder.
    • Time factor: Voluntary licences also enable production to begin more expeditiously as they usually are accompanied by “technology transfer” meaning that the patent holder reveals to the licensee how to manufacture the medication.
    • No need to reverse engineer: Volunatry licensing spares the licensee the lengthy and costly process of figuring out how to reverse engineer the product.

    3) COVAX option and issues

    • COVAX programme was established to purchase vaccine doses and donate them to low-income countries.
    • It does not involve modifying patent rights.
    • Underfunded: COVAX is also currently underfunded.
    • Delay: The Director-General of WHO warned that people in the lowest-income countries might have to wait until 2022 to get vaccinated through this programme.

    Government aid should entail an obligation

    • The billions of dollars in government aid given to companies to help develop COVID-19 treatments should entail an obligation to enable the mass production of affordable vaccines.
    • Patents are not ironclad ownership rights, they are a temporary contract that balances the public interest with the claims of the innovator. 

    Consider the question “What is the importance of ensuring availability and affordability of Covid-19 vaccine throughout the world? What are the options available to ensure that?”

    Conclusion

    This is not just a question of social justice and ensuring life-saving therapies are available to the world’s poor. It is a necessary step to prevent deadlier, more contagious and possibly vaccine-resistant variants of COVID-19 from proliferating in an under-vaccinated world.

  • E-way bill integrated with FASTag, RFID

    GST officers have been armed with real-time data of commercial vehicle movement on highways with the integration of the e-way bill (EWB) system with FasTag and RFID.

    Why such a move?

    • The integration of e-way bill, RFID, and FASTag will enable tax officers to undertake live vigilance in respect of EWB compliances by businesses and will help curb tax evasion.
    • It will aid in preventing revenue leakage by real-time identification of cases of recycling and/or non-generation of EWBs.

    What are E-way bills (EWB)?

    • Under the GST regime, transporters should carry the eWay Bill when moving goods from one place to another when certain conditions are satisfied.
    • EWBs are mandatory for inter-state transportation of goods valued over Rs 50,000 from April 2018, with the exemption to precious items such as gold
    • In this system, businesses and transporters have to produce before a GST inspector the e-way bill, if asked.
    • On average, 25 lakh goods vehicle movements from more than 800 tolls are reported on a daily basis to the e-way bill system.

    Benefits of the move

    • Tax officers can now access reports on vehicles that have passed the selected tolls without EWBs in the past few minutes.
    • Also, vehicles carrying critical commodities specific to the state and having passed the selected toll can be viewed.
    • Any suspicious vehicles and vehicles of EWBs generated by suspicious taxpayer GSTINs, that have passed the selected toll on a near real-time basis, can also be viewed in this report.
    • The officers can use these reports while conducting vigilance and make the vigilance activity more effective.
    • Also, the officers of the audit and enforcement wing can use these reports to identify fraudulent transactions like bill trading, recycling of EWBs.

  • World’s largest iceberg breaks off from Antarctica

    A huge ice block has broken off from western Antarctica into the Weddell Sea, becoming the largest iceberg in the world and earning the name A-76.

    Answer this PYQ in the comment box:

    Q.On the planet earth, most of the freshwater exists as ice caps and glaciers. Out of the remaining freshwater, the largest proportion:

    (a) is found in the atmosphere as moisture and clouds

    (b) is found in freshwater lakes and rivers

    (c) exists as groundwater

    (d) exists as soil moisture

    A-76 Iceberg

    • A-76 is the latest in a series of large ice blocks to dislodge in a region acutely vulnerable to climate change, although scientists said in this case it appeared to be part of a natural polar cycle.
    • The iceberg, measuring around 170 km long and 25 km wide, with an area of 4,320 sq km is now floating in the Weddell Sea.
    • Slightly larger than the Spanish island of Majorca, A-76 had been monitored by scientists since it began to separate from the Ronne Ice Shelf.
    • It joins the previous world’s largest title holder A-23A — approximately 3,880 sq. km. in size — which has remained in the same area since 1986.
    • A-76 was originally spotted by the British Antarctic Survey and the calving — the term used when an iceberg breaks off — was confirmed using images from the Copernicus satellite.

    Note: An iceberg is a large piece of freshwater ice that has broken off a glacier or an ice shelf and is floating freely in open water.

  • The outdated nature of bureaucracy

    The second wave of Covid has exposed the inherent weakness of the bureaucracy in India. The article highlights the necessity for reforms in the way bureaucracy functions in India.

    Features of traditional bureaucracy

    • Preference to generalist: Weberian bureaucracy still prefers a generalist over a specialist.
    • Preference to leadership of position: The leadership of position is preferred over leadership of function in the traditional bureaucracy.
    • The leadership of function is when a person has expert knowledge of a particular responsibility in a particular situation.
    • The role of the leader is to explain the situation instead of issuing orders.
    •  Every official involved in a particular role responds to the situation rather than relying on some dictation from someone occupying a particular position.
    • Lack of innovation: The rigid adherence to rules has resulted in the rejection of innovation.

    Covid exposed limits of traditional bureaucracy

    • A generalist officer IAS and State civil service officials are deemed an expert and as a result, superior in traditional bureaucracy.
    • Specialists in every government department have to remain subordinate to the generalist officers.
    • The COVID-19 pandemic has exposed the weakness of this system.
    • Healthcare professionals who are specialists have been made to work under generalist officers and the policy options have been left to the generalists when they should be in the hands of the specialists.
    • The justification is that the generalist provides a broader perspective compared to the specialist.

    Is privatisation and private sector managerial techniques an answer?

    • The reform often suggested in India is new public management.
    • This as a reform movement promotes privatisation and managerial techniques of the private sector as an effective tool to seek improvements in public service delivery and governance.
    • But this isn’t a viable solution in India where there is social inequality and regional variations in development.
    • It renders the state a bystander among the multiple market players with a lack of accountability.
    • Further, COVID-19 has shown that the private sector has also failed in public service delivery.

    Way forward: Collaborative governance

    • The most appropriate administrative reform is the model of new public governance.
    • Work together: In collaborative governance, the public sector, private players and civil society, especially public service organisations (NGOs), work together for effective public service delivery.
    • As part of new public governance, a network of social actors and private players would take responsibility in various aspects of governance with public bureaucracy steering the ship rather than rowing it.
    • As part of new public governance, the role of civil society has to be institutionalised.
    • It needs a change in the behaviour of bureaucracy.
    • Openness to reforms: It needs flexibility in the hierarchy, a relook at the generalist versus specialist debate, and an openness to reforms such as lateral entry and collaboration with a network of social actors.
    • All major revolutions with huge implications on public service delivery have come through the collaboration of public bureaucracy with so-called outsiders.
    • These include the Green Revolution (M.S. Swaminathan), the White Revolution (Verghese Kurien), Aadhaar-enabled services (Nandan Nilekani) and the IT revolution (Sam Pitroda).

    Consider the question “What are the weaknesses of bureaucracy in India? Suggest the measures to improve the quality of public service delivery in India.”

    Conclusion

    New public governance is the future of governance, especially public service delivery.

    Back2Basics: The Weberian Model of bureaucracy

    • The classic model of bureaucracy is typically called the ideal Weberian model, and it was developed by Max Weber, an early German sociologist.
    • Weber argued that the increasing complexity of life would simultaneously increase the demands of citizens for government services.
    • Therefore, the ideal type of bureaucracy, the Weberian model, was one in which agencies are apolitical, hierarchically organized, and governed by formal procedures.
    • Furthermore, specialized bureaucrats would be better able to solve problems through logical reasoning.
    • Such efforts would eliminate entrenched patronage, stop problematic decision-making by those in charge,, impose order and efficiency, create a clear understanding of the service provided, reduce arbitrariness, ensure accountability, and limit discretion.