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GS Paper: GS3

  • What is INSACOG?

    The PM has announced that the Indian SARS-CoV-2 Genomics Consortium (INSACOG) would be extended to India’s neighbouring countries.

    What is INSACOG?

    • INSACOG was established in December 2020 as a joint initiative of the Union Health Ministry of Health and Department of Biotechnology (DBT).
    • It aims to expand the whole-genome sequencing of SARS-CoV-2, the coronavirus that causes the Covid-19 disease, across India with the aim of understanding how the virus spreads and evolves.
    • It functions under the Ministry of Science and Technology with the Council for Scientific & Industrial Research (CSIR) and Indian Council of Medical Research (ICMR).

    Composition of INSACOG

    • INSACOG started out with the participation of 10 national research laboratories of the central government, and gradually expanded to a network of 38 labs.
    • It now includes private labs operating on a hub-and-spoke model.
    • These works to monitor genomic variations in SARS-CoV-2 by a sentinel sequencing effort which is facilitated by the National Centre for Disease Control (NCDC).
    • It now involves the Central Surveillance Unit (CSU) under the central government’s Integrated Disease Surveillance Programme (IDSP).

    Working of the INSACOG

    • The data from the genome sequencing laboratories is analysed as per the field data trends to study the linkages, if any, between the genomic variants and epidemiological trends.
    • INSACOG helps to understand super spreader events and outbreaks, and strengthen public health interventions across the country to help break chains of transmission.
    • Linking this data with IDSP data and the patient’s symptoms helps to better understand viral infection dynamics, and trends of morbidity and mortality.
    • The data can be linked with host genomics, immunology, clinical outcomes, and risk factors for a more comprehensive outlook.
    • Sequencing assumes added significance as the incidence of reinfections and vaccine breakthroughs increases.

     

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  • Monetary policy alone won’t bring down inflation

    Context

    The Reserve Bank of India (RBI) last week raised both policy rates and cut back liquidity in a surprise inter-meeting decision. The forcefulness and urgency of the policy shift have been seen as a signal of the RBI’s renewed commitment to fighting inflation via aggressive monetary tightening in the coming months.

    How do higher inflation rates slow inflation?

    • It is true that a large swathe of the global economy is in the throes of runaway inflation and that in many of these economies tightening monetary and fiscal policies is the right response.
    • Initial conditions: But initial conditions matter as do the specific drivers of inflation.
    •  There are typically three ways in which higher inflation rate slows inflation.

    1] Lowering inflationary expectations

    • Suppose one believes that because a central bank has not tightened enough, future inflation will be higher.
    • In that case, the obvious response is to bring forward future consumption and investment to the present, thereby adding to demand and fueling current inflation further.
    • So, in principle, the central bank by credibly committing to bringing down inflation through aggressive current actions can bring down expectations of future inflation. 
    • It won’t work in India: This is a very potent conduit of monetary transmission in developed markets, where there is a wide variety of inflation-hedging instruments, as well as in some emerging markets — Brazil, for instance —where inflation-indexation is widespread.
    • However, there is little empirical evidence that this channel works in India, even weakly.

    2] Exchange rate channel

    • Higher interest rates attract foreign capital that appreciates the currency, lowering import prices and, in turn, inflation.
    • Again, this is a powerful mechanism in Latin America and Central Europe, where bond flows — that are sensitive to interest rate differential —dominate capital movements and the import content of the consumer basket is large.
    • Will it work in India? This is not the case in India and, in any event, for this to work it would require extreme rate hikes in the country, given the anticipated aggressive tightening by the US Fed.

    3] Curbing credit growth

    • Raising both the cost of borrowing as well as its availability (for example, by increasing the cash reserve ratio) reduces credit growth, lowering demand, GDP growth and, eventually, inflation.
    • It works well in India: This is the credit transmission by which higher interest rates dampen inflation and it works well in India.
    • How much of today’s price increase is credit-driven? Even a cursory glance at bank balance sheets would suggest that credit growth is just treading water.
    • Having recovered from being negative in mid-2021, real credit growth is running just around 2 per cent.

    Comparison with inflation-monetary policy dynamics of 2010-11

    • Back then, real GDP growth was clocking over 10 per cent per quarter, nominal credit growth 20-25 per cent, and real credit growth over 10 per cent.
    • Inflation was unambiguously driven by an overheated economy and fueled by runaway credit.
    • In the event, the RBI assessed the drivers of inflation to be originating from the supply side — higher food and commodity prices — and moved at a glacial pace, such that even after 12 rate hikes inflation remained in double digits for much of that period.
    • Faced with a potential US Fed tightening in 2013, India found itself in a near-crisis situation.
    • Today things are different. Much of the inflation is driven by global food and commodity prices.
    • Despite the languishing private demand, core inflation remains high.
    •  But this has been the case for much of the last two years, strongly suggesting that the domestic supply chain disruptions in manufacturing and services, especially at the informal level, haven’t been repaired fully.
    • The reason why firms locate in the informal sector in the first place is because of lower transaction costs, so when parts of the supply chain shift to the higher-cost formal sector, it shows up as inflation during the transition before increased scale of production and efficiency bring down the cost over time.
    • None of these factors is affected much by higher lending rates. 
    • So the burden of taming inflation by tightening monetary policy will fall largely on lower credit.
    • There is clearly a case to remove the extraordinary monetary support provided during the pandemic.

    Conclusion

    The RBI had misread the drivers of inflation badly in 2010-11. Hopefully, it won’t repeat that mistake this time.

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  • Sagittarius A*: Black Hole at the Centre of our Galaxy imaged

    Scientists from the Event Horizon Telescope (EHT) facility revealed the first image of the black hole at the centre of our galaxy i.e. the Milky Way.

    The Milky Way is a spiral galaxy that contains at least 100 billion stars. Viewed from above or below it resembles a spinning pinwheel, with our sun situated on one of the spiral arms and Sagittarius A* located at the centre.

    What is Sagittarius A*?

     

    • Pronounced Sagittarius ‘A’ star, it refers to the believed location of the supermassive black hole in the centre of our galaxy.
    • About 50 years ago, astronomers identified an area within the constellation of Sagittarius that was the strongest region of radio emission – thus making it the likely centre of the Milky Way.
    • It possesses 4 million times the mass of our sun and is located about 26,000 light-years—the distance light travels in a year, 5.9 trillion miles (9.5 trillion km)—from Earth.

    What is an event horizon?

    • Black holes are extraordinarily dense objects with gravity so strong that not even light can escape, making viewing them extremely challenging.
    • A black hole’s event horizon is the point of no return beyond which anything—stars, planets, gas, dust and all forms of electromagnetic radiation—gets dragged into oblivion.
    • The closer someone came to a black hole, the greater the speed they would need to escape that massive gravity.
    • The event horizon is the threshold around the black hole where the escape velocity surpasses the speed of light.

    What are the recent observations?

    • The image of Sagittarius A* (SgrA*) gave support to the idea that the compact object at the centre of our galaxy is indeed a black hole, strengthening Einstein’s general theory of relativity.
    • The image was obtained using the EHT’s global network of observatories working collectively to observe radio sources associated with black holes.
    • It showed a ring of light —super-heated disrupted matter and radiation circling at tremendous speed at the edge of the event horizon—around a region of darkness representing the actual black hole.
    • This is called the black hole’s shadow or silhouette.

    How did Einstein’s theory found its proof here?

    • According to Einstein’s theory, nothing can travel faster through space than the speed of light.
    • This means a black hole’s event horizon is essentially the point from which nothing can return.
    • The name refers to the impossibility of witnessing any event taking place inside that border, the horizon beyond which one cannot see.

    About EHT Facility

    • EHT project is a large telescope array consisting of a global network of radio telescopes.
    • It combines data from several very-long-baseline interferometry (VLBI) stations around Earth, which form a combined array.
    • It provides an angular resolution sufficient to observe objects the size of a supermassive black hole’s event horizon.
    • In 2019, the eHT facility made history by releasing the first-ever image of a black hole, M87* — the black hole at the centre of a galaxy Messier 87, which is a supergiant elliptic galaxy.

     

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  • Ujjwala LPG Scheme: 90-lakh beneficiaries don’t take refills

    In the financial year 2021-22, 90-lakh beneficiaries of the flagship welfare scheme, Pradhan Mantri Ujjwala Yojana (PMUY), did not take refill gas cylinders. And over one crore beneficiaries got their refills only once.

    About the PM Ujjwala Yojana

    • Pradhan Mantri Ujjwala Yojana (PMUY) was launched in 2016, with the aim to provide Liquefied petroleum gas (LPG) connections to five crore women members of below poverty line (BPL) households in the first phase.
    • he scheme was expanded in April 2018 to include women beneficiaries from seven more categories (SC/ST, PMAY, AAY, Most backward classes, tea garden, forest dwellers, Islands).
    • In the second phase the target was expanded to eight crore LPG connections.

    Why was this scheme launched?

    • Indoor air pollution is also responsible for a significant number of acute respiratory illnesses in young children.
    • Providing LPG connections to BPL households will ensure universal coverage of cooking gas in the country.
    • This measure has empowered women and protected their health. It reduced drudgery and the time spent on cooking.
    • It will also provide employment for rural youth in the supply chain of cooking gas.

    Ujjwala 2.0

    • Now migrant workers would only be required to submit a self-declaration of their residential address to get the gas connection.
    • Along with a deposit-free LPG connection, Ujjwala 2.0 will provide the first refill and a hotplate free of cost to the beneficiaries.

     

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  • PAN, Aadhaar made mandatory for high-value cash deposits & withdrawals

    The government has made requirement of a Permanent Account Number (PAN) or Aadhaar number for depositing or withdrawing Rs 20 lakh or more in a financial year or for opening a current account mandatory.

    Regulating high-value transactions

    • The Central Board of Direct Taxes, in a notification, said furnishing PAN or biometric Aadhaar will be mandatory for such high-value cash deposits or withdrawals from banks in a financial year.
    • The same will be applied for opening of a current account or cash credit account with a bank or post office.
    • Banks, post offices and co-operative societies would be required to report the transactions of deposits and withdrawals aggregating to Rs 20 lakh or more in a financial year.
    • As of now, PAN is required to be furnished for cash deposits of Rs 50,000 or more in a day.
    • With these rules, a threshold of Rs 20 lakh has been defined for the full financial year.

    How will this help tax department?

    • This move will help the government in tracing the movement of cash in the financial system.
    • It is expected to help the income tax department monitor deposits/withdrawals where tax would not be getting paid by the individual otherwise on his or her income.

    Why PAN-Aadhaar interoperability?

    • The PAN-Aadhaar interoperability will help banks to record details for those who don’t have PAN.
    • The interchangeable provision in the rules would allow a bank or financial institution to ask for Aadhaar in case an individual states that he or she doesn’t have PAN.
    • The Finance Act, 2019, has provided for the interchangeability of PAN with Aadhaar.
    • It has been provided that every person who is required to furnish or intimate or quote his PAN under the Income-tax Act.
    • Those who, has not been allotted a PAN but possesses the Aadhaar number, may furnish or intimate or quote his Aadhaar in lieu of PAN.

     

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  • Green Manure and its productivity benefits

    The Punjab agriculture department is promoting the cultivation of green manure these days.

    What is the news?

    • Punjab Agro is providing subsidy on the seed at the rate of Rs 2,000 per quintal, which costs Rs 6,300 per quintal without subsidy
    • The farmers can avail its seed from the block level offices of the agriculture department as limited stock is available.

    What is Green Manure?

    • Green manures are crops grown specifically for maintaining soil fertility and structure.
    • It is done by leaving uprooted or sown crops parts, allowing them to wither onto the field and serve as mulch and soil fertilizers.
    • They are normally incorporated back into the soil, either directly, or after removal and composting.
    • There are three main varieties of green manure, including
    1. Dhaincha
    2. Cowpea
    3. Sunhemp
    • Also some crops such as summer moong, mash pulses and guar act as green manure.
    • They can be sown after wheat cultivation

    Characteristics of green manure

    • Green manure must be leguminous in nature
    • They must bear maximum nodules on its roots to fix large amount of atmospheric nitrogen in the soil.

    Various policy initiatives

    • Under Sub- Mission on Seed and Planting Material (SMSP), the govt. provides 50% cost assistance for the distribution of green manure required for a one-acre area per farmer.
    • The Paramparagat Krishi Vikas Yojana (PKVY) promotes cluster-based organic farming with PGS (Participatory Guarantee System) certification.

     

     

  • Places in news: Pantanal Wetlands

    The world’s largest wetland, the Pantanal in South America, is at the risk of collapse due to legal land-use decisions and proposals.

    About Pantanal

    • The Pantanal is a natural region encompassing the world’s largest tropical wetland area, and the world’s largest flooded grasslands.
    • It is located mostly within the Brazilian state of Mato Grosso do Sul, but it extends into Mato Grosso and portions of Bolivia and Paraguay.
    • It sprawls over an area estimated at between 140,000 and 195,000 square kilometres.
    • Various subregional ecosystems exist, each with distinct hydrological, geological and ecological characteristics; up to 12 of them have been defined.
    • Roughly 80% of the Pantanal floodplains are submerged during the rainy seasons, nurturing a biologically diverse collection of aquatic plants and helping to support a dense array of animal species.

    Significance of Pantanal

    • The Pantanal is a refuge for iconic wildlife. This massive wetland has the largest concentration of crocodiles in the world, with approximately 10 million caimans.
    • Jaguars, the largest feline in the Americas, hunt caiman in the Pantanal, which has one of the highest density of jaguars anywhere the world.

    Threats

    • Around 95% of the Pantanal is under private ownership, the majority of which is used for cattle grazing.

     

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  • Power crisis in India

    Context

    The power crisis has taken us by surprise. The question in everyone’s mind is: where did we go wrong? And who slipped up?

    Responsibilities in supply chain

    • Under the Electricity Act, it is the responsibility of the Distribution Licensee/Company (Discom) to provide reliable quality and round-the-clock electricity to all consumers to meet full demand.
    • To do so, they enter into contracts with a number of generating companies in order to ensure adequate supply.
    • These Discoms work under the oversight of the State Electricity Regulatory Commissions.

    Suggestions

    1] Dealing with the challenge of demand prediction

    • Qualitative transformation in demand: With higher incomes and the consequent increase in the use of air-conditioners and other electrical appliances, the nature of electricity demand is undergoing a qualitative transformation with rising daily and seasonal peaks, and spikes on very hot or cold days.
    • While demand prediction is inherently uncertain, the questions to ask are whether Discoms have been making and updating their demand growth projections and scenarios over the medium term with adequate supply arrangements in a robust manner.
    • This needs to become central to the regulatory process.
    • Ensuring reliable supply to meet unanticipated peaks, as have occurred now, requires making supply arrangements with reserve margins that are adequate.
    • The Regulatory Commissions need to provide for such expensive peaking power arrangements in the tariffs they approve.
    • It is also time to move towards separate peaking power procurement contracts in addition to the present system of long-term thermal power contracts.

    2] Demand-based time of day rates of electricity

    • A transition to demand-based time of day rates of electricity for generators as well as consumers would help.
    • These should be brought in by the Regulatory Commissions.
    • Flattening of demand curve: Peak demand moderation and flattening of the demand curve through a change in consumer behaviour is feasible with smart meters.
    • But this would take place only with a strong price signal, a large differential in peak and off-peak rates.

    3] Subsidies and politics

    • Free supply of electricity to farmers and households up to a specified level is not a problem as long as State governments pay for it as provided in the Act, and the Regulatory Commissions do not at the same time act from a political point of view and shy away from determining cost-reflective tariffs.
    • While the problem of delayed payments by Discoms is getting highlighted and needs to be resolved with a sense of urgency, the coal supply problem is not due to this.
    • Coal India needs to create capacities to rapidly ramp up production; and the Railways need to carry larger quantities of coal when demand surges, as has happened now.
    • Imported coal and gas generated electricity: There is idle but expensive generating capacity available — about 15-20 GW of gas-based power plants which can run on imported liquefied natural gas, and 6 GW-8 GW of thermal plants which can run on imported coal.
    • Consumers who are willing to pay more could be kept free of power cuts with purchase and supply of more expensive electricity generated from imported coal and gas.
    • To improve reliability, Discoms, with the approval of the Regulatory Commissions, need to go in for bids for storage.

    Conclusion

    A lesson is that demand growth projections and supply arrangements need to become central to the regulatory process.

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  • Control inflation by acting on liquidity

    Context

    The recent action of the Reserve Bank of India (RBI) to raise the repo rate by 40 basis points and cash reserve ratio (CRR) by 50 basis points is a recognition of the serious situation with respect to inflation in our country and the resolve to tackle inflation.

    Inflation in India and role of government expenditure

    • India’s CPI inflation has been fluctuating around a high level.
    • As early as October 2020, it had hit a peak of 7.61%.
    • It had remained at a high level of over 6% since April 2020.
    • It did come down after December 2020 but has started rising significantly from January 2022.
    • On the other hand, the Wholesale Price Index (WPI) inflation had remained in double digits since April 2021. The GDP implicit price deflator-based inflation rate for 2021-22 is 9.6%.
    • Even though the RBI’s mandate is with respect to CPI inflation, policymakers cannot ignore the behaviour of other price indices.
    • After the advent of COVID-19, the major concern of policymakers all over the world was to revive demand.
    • Keynesian prescription: This was sought to be achieved by raising government expenditure.
    • Thus, the expansion in government expenditure did not immediately result in increased production in countries where the lockdown was taken seriously.
    • However, the Keynesian multiplier does not work when there are supply constraints as in developing countries.
    • That is why the multiplier operates in nominal terms rather than in real terms in such countries.
    • Something similar has happened in the present case where the supply constraint came from a non-mobility of factors of production.
    • Nevertheless, the prescription of enhanced government expenditure is still valid under the present circumstances.
    • Perhaps the increase in output could happen with a lag and also with the relaxation of restrictions.

    Role of monetary policy

    • Why lover money multiplier rate? Initially, the focus of monetary policy in India has been to keep the interest rate low and increase the availability of liquidity through various channels, some of which have been newly introduced.
    • However, the growth rate of money was below the growth rate in reserve money.
    • This is because of lower credit growth which also depends on business sentiment and investment climate.
    • Thus the money multiplier is lower than usual.
    • The Government’s borrowing programme which was larger went through smoothly, thanks to abundant liquidity.
    • Even as the economy picked up steam in 2021-22, inflation also became an issue, this is a worldwide phenomenon.
    • In India too there is a shift in monetary policy.

    Analysing the cause of inflation

    • While discussing inflation, analysts focus almost exclusively on the increases in the prices of individual commodities such as crude oil as the primary cause of inflation.
    • General price level: Supply disruptions due to domestic or external factors may explain the behaviour of individual prices but not the general price level which is what inflation is about.
    • Given a budget constraint, there will only be an adjustment of relative prices.
    • Besides the fact that any cost-push increase in one commodity may get generalised, it is the adjustment that happens at the macro level which becomes critical.
    • It is the adjustment in the macro level of liquidity that sustains inflation.

    Inflation and growth

    • The possible trade-off between inflation and growth has a long history in economic literature.
    • The Phillip’s curve has been analysed theoretically and empirically.
    • Tobin called the Phillip’s curve a ‘cruel dilemma’ because it suggested that full employment was not compatible with price stability. 
    • The critical question flowing from these discussions on trade-off is whether cost-push factors can by themselves generate inflation.
    • In the current situation, it is sometimes argued that inflation will come down, if some part of the increase in crude prices is absorbed by the government. 
    • If the additional burden borne by the government (through loss of revenue) is not offset by expenditures, the overall deficit will widen.
    • The borrowing programme will increase and additional liquidity support may be required.

    Concomitant decisions on CRR and repo rate

    • These are concomitant decisions. Central banks cannot order interest rates.
    • For a rise in the interest rate to stick, appropriate actions must be taken to contract liquidity.
    • That is what the rise in CRR will do.
    • In the absence of a rise in CRR, liquidity will have to be sucked by open market operations.

    Conclusion

    Beyond a point, inflation itself can hinder growth. Negative real rates of interest on savings are not conducive to growth. If we want to control inflation, action on liquidity is very much needed with a concomitant rise in the interest rate on deposits and loans.

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  • Plans underway on Creation of Integrated Battle Groups

    The Indian Army is in advanced stages of putting together Integrated Battle Groups (IBGs) by reconfiguring its combat formations.

    What are IBGs?

    • IBGs are brigade-sized, agile, self-sufficient combat formations, which can swiftly launch strikes against an adversary in case of hostilities.
    • Each IBG would be tailor-made based on Threat, Terrain and Task and resources will be allotted based on the three Ts.
    • They need to be light so they will be low on logistics and they will be able to mobilise within 12-48 hrs based on the location.
    • An IBG operating in a desert needs to be constituted differently from an IBG operating in the mountains.
    • The key corps of the Army is likely to be reorganized into 1-3 IBGs.

    Objective of IBG

    • Holistic integration to enhance the operational and functional efficiency, optimize budget expenditure, facilitate force modernization and address aspirations

    Structure of the IBG

    • While a command is the largest static formation of the Army spread across defined geography, a corps is the largest mobile formation.
    • Typically each corps has about three brigades.
    • The idea is to reorganise them into IBGs which are brigade-sized units but have all the essential elements like infantry, armoured, artillery and air defence embedded together based on the three Ts.
    • The IBGs will also be defensive and offensive. While the offensive IBGs would quickly mobilise and make a thrust into enemy territory for strikes, defensive IBGs would hold ground at vulnerable points or where enemy action is expected.

    Why need IBGs?

    • After the terrorist attack on the Parliament, the Indian military undertook massive mobilization but the Army’s formations which deep inside took weeks to mobilise losing the element of surprise.
    • Following this, the Army formulated a proactive doctrine known as ‘Cold Start’ to launch swift offensive but its existence was consistently denied in the past.
    • Its existence was acknowledged for the first time by (Late) Gen Rawat in January 2017.

     

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