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GS Paper: GS3

  • Government must fix an upper limit for fiscal deficit

    D. Subbarao in this article discusses how the government is facing the hard choice of choosing between saving lives and saving the economy. On the government’s response on economic front he argues that the government, unlike the rich countries should keep an upper limit on its spending because of the dangers involved in unrestricted spending.

    Why the dilemma is sharpest for India?

    • This dilemma is arguably the sharpest for India.
    • Because of our high population density and poor medical infrastructure, any laxity in prevention can result in a huge health disaster.
    • On the other hand, an extended lockdown will force millions into the margins of subsistence, push small and large firms alike into bankruptcy, seriously impair financial stability and land us in a humanitarian and economic disaster.

    Why is the relief package criticised as too little?

    • After the lockdown, the government announced a relief package amounting to 0.8 per cent of GDP, that’s been criticised as being too little.
    • From a study of a sample of countries, the latest issue of The Economist reports that India’s lockdown has been the most stringent while its fiscal relief package is the smallest in proportion to GDP.

    What could be the reasons for a cautious approach in the relief package?

    • A possible explanation for the government’s timid fiscal response may be the fear of spooking the market.
    • For years, every economist and analyst has been warning the government of the dire consequences of fiscal irresponsibility.
    • And that warning message must have been so hardwired into the government’s collective mind that it was unable to get over the mental overhang.

    We should be aware of the reasons from the macroeconomic point of view that force the government to limit its fiscal deficit. In this case, India government is exercising the caution owing to the same constraints.

    Uncertainties in the crisis

    • Uncertainty is a defining feature of every crisis.
    • During the global financial crisis, a big uncertainty around the world was about how much risk there was in the system, where it lay and who was bearing it.
    • The uncertainty of the corona crisis is much deeper.
    • There are far too many known unknowns not to speak of unknown unknowns.
    • Uncertainties in corona crisis: We just don’t know enough about the effectiveness of the lockdowns, the age and gender profile of susceptibility to the virus.
    • We also don’t know about the process of recovery, the tipping point if any for mass immunity, whether the virus will attack in waves.
    • And most importantly, when we might have a vaccine and a cure.
    • Governments are, for the large part, having to fly blind.

    Issues over relief and stimulus package

    • There are many issues to be decided and planned on the way forward.
    • A big issue will be an expenditure plan for relief during the crisis and stimulus after some normalcy is restored.
    • Borrow more spend more: Even the most ardent fiscal hawks are now agreed that the government needs to abandon its fiscal reticence, and borrow more and spend more.
    • Even the most extreme monetary purists are agreed that the RBI should fund the government borrowing by printing money.
    • Even the staunchest advocates of financial stability are agreed that more regulatory forbearance is necessary.
    • And virtually everyone is agreed on where additional spending should be directed.

    Debate on how much additionally the government should borrow

    • There is disagreement on how much additionally the government should borrow.
    • There are two opposing views in this regard, which are discussed below.
    • 1. Fiscal risk without preset fiscal deficit: One view is that the government should err on the side of taking a fiscal risk without any preset fiscal deficit number.
    • It should simply determine what needs to be done and borrow to that extent, acting as if there were no fiscal constraint at all.
    • In other words, act as per the diktat of the now famous three words — “whatever it takes”.
    • 2. Set a limit: An opposing view is “whatever it takes” is not an option for India.
    • Many analysts have estimated that just the loss of revenue due to the economic shutdown will take the combined fiscal deficit of the Centre and states beyond 10 per cent of GDP.
    • The borrow and spend programme will be in addition to the above loss.
    • Unlike rich countries, we can’t afford to ignore the risks of fiscal excess of that magnitude, no matter the compelling circumstances.
    • What are the risks involved? There will be a heavy price to pay down the road by way of inflation and exchange rate volatility.

    From the UPSC point of view you must pay attention to the both the arguments made here, question can be asked in UPSC based on the suggestions and their pros and cons. Both the arguments cited above have their merits and demerits.

    Way forward

    • It’s important to keep in mind that we have resources and capability in the near future should there be another wave of the virus later in the year.
    • It will be advisable for the government to fix an upper bound for fiscal deficit and operate within that. For now, the borrow and spend programme should be restricted to 2 per cent of GDP.

  • Making use of technology to trace Covid-19 cases

    The article argues for the greater adoption of technology in tracing the Covid-19. Taking a cue from the success of JAM and UPI, recently launched app Aarogya Setu could also be the next game-changer in the fight against the pandemic. However, there are several challenges that are also discussed here.

    Success story of domestic digital platforms

    • The success of two domestic digital payment platforms offers us an opportunity to show how the tracing of COVID-19 cases can be done at scale and with greater speed.
    • The JAM (Jan Dhan-Aadhaar-Mobile) trinity for DBTs (Direct Benefit Transfers) and UPI (Unified Payments Interface) have made India a technology leader in money transfers.
    • The JAM has lent efficiency to the transfer of funds to the needy.
    • It was drafted into action recently to channel payments to the more vulnerable who need help in dealing with the adverse economic consequences of the lockdown.
    • The UPI is emerging as a transaction vehicle of choice for all retail payments.
    • In March, 148 banks were on the UPI platform, helping process over 120 crore transactions worth over Rs 2 lakh crore.

    The success story of the UPI and JAM is important from the UPSC point of view. Riding on the success of these two, the Aarogya Setu could also become the third and help in the fight against the epidemic. So, we should be aware of the basics of its working and problems the app could face.

    How the Aarogya Setu works?

    • Widespread adoption is required: The success of India’s Aarogya Setu mobile application will depend on its widespread adoption.
    • Based on bluetooth technology: The app relies on bluetooth technology to map and deconstruct the contact history of individuals who may have come in contact with potential carriers of the coronavirus.
    • Exchange of information between apps: If two individuals are at the same place at the same time, their apps can exchange information-up to a maximum distance of about 15 feet.
    • Exchange of the above information is without the server knowing anything about it.
    • The app notifies users and authorities of individuals who are at risk.
    • Privacy safeguards: Some privacy safeguards have been put in place to ensure that individuals do not share personally identifiable information with each other but only with authorities — that too, in select cases.
    • A confidence-building measure would be to release the code for public scrutiny with the aim of further bolstering privacy standards.

    What are the possible challenges in the success of Aarogya Setu?

    • The distribution of the detection framework necessitates a rethink, beyond an app.
    • Issues with app download in India: Nandan Nilekani has underlined that app downloads in India are perhaps the most expensive compared to any other developed or fast-developing nation.
    • Despite the falling cost of data, Indian users consider several factors before downloading an app such as required storage space, the potential impact on battery and data usage.
    • Given India’s open internet, several publishers from across industries and geographies are vying for smartphone real estate.
    • Challenge involved: In such a situation, drawing attention to particular use-cases i.e. Aarogya Setu-howsoever urgent-is challenging.

    Following are the suggestions to overcome the shortcoming of the Aarogya Setu. Though they are for Aarogya Setu, we can apply these in other situations in which mobile technology bases app is used by the government in the larger public interest such as rescue operation or warnings in case of disaster.

    So, what could be the alternate strategy?

    • The alternative strategy involves using the reach of the other famous apps (for ex. Paytm) to do what we want to do i.e. tracing by delinking.
    • Delinking involves separating the technology we want to use for tracing (the backend) from the channels (the front end).
    • A fine-tuned backend can be pushed to, and used by, publishers (other apps) who already have the reach.
    • Similarity with UPI: This is akin to the UPI being used by several banks and technology firms for payment.
    • The government did build its frontend in the form of the BHIM (Bharat Interface for Money) app but mostly for signalling purposes.
    • In the current context, the government can consider using its own app for tracing and for additional use-cases such as passes and approvals for movement when the lockdown is gradually eased out.
    • It could even host other health-related features.
    • Expanding its ambit and making it a conduit like JAM will likely increase the incentive for people to embrace it.

    Limitations of using GPS and Bluetooth for tracing in India

    • Another area where improvisations are called for is the tooling for tracking.
    • While reports have indicated that the developers are using bluetooth for tracing and are also capturing GPS coordinates, both users and device manufacturers limit their usage of these technologies in favour of other optimisations.
    • Users are concerned with both data and battery usage while device manufacturers kill background jobs even if the publishers have sought and secured permissions from users.
    • These tendencies are pronounced on Android, the dominant mobile operating system in India.
    • What are the other options? In such a scenario, developers ought to think about using other techniques.
    • For instance, using cell tower data and WiFi identifiers to bolster tracing efforts.
    • This is especially important in a context where only a third of our population has smartphones and even fewer people have devices with bluetooth capability.
    • Even the recently announced Google-Apple partnership may not have meaningful results in this setting.

    Conclusion

    With the potential ramifications of COVID-19’s spread in India and across the globe, the nation’s recent history of technological successes and a government committed to agile governance, the pandemic presents an opportunity for the country to show its people and the world how technology is a force of good.

  • [pib] CollabCAD tool to create 3D Computer Aided Designs

    Atal Innovation Mission, NITI Aayog and National Informatics Centre (NIC) jointly launched CollabCAD.

    CollabCAD

    • It is a computer-enabled software system which provides a total engineering solution from 2D drafting & detailing to 3D product design.
    • It helps the user to build models in virtual 3d space and create and engineering drawings for the shop floor which makes it a complete package for smart manufacturing.
    • The aim of this initiative is to provide a great platform to students of Atal Tinkering Labs (ATLs) across the country to create and modify 3d designs with free flow of creativity and imagination.
    • This software would also enable students to create data across the network and concurrently access the same design data for storage and visualization.

    Back2Basics: Atal Innovation Mission (AIM)

    • The Atal Innovation Mission (AIM) is a flagship initiative set up by the NITI Aayog to promote innovation and entrepreneurship across the length and breadth of the country.
    • AlM’s objectives are to create and promote an ecosystem of innovation and entrepreneurship across the country at school, university, research institutions, MSME and industry levels.
    • At the school level, AIM establishes Atal Tinkering Labs (ATL) in all districts across India. ATLs provide tinkering spaces to children to hone their innovative ideas and creativity.
    • At the university, NGO, SME and Corporate industry levels, AIM is setting up world-class Atal Incubators (AICs) that would trigger and enable successful growth of sustainable startups in every sector.

  • [pib] “DekhoApnaDesh” Webinar

    The Ministry of Tourism has launched its “DekhoApnaDesh” webinar series to provide information on the many destinations and the sheer depth and expanse of the culture and heritage of India.

    Tourism and tourist sites carry a high incidence of possible prelims questions.  Take time to quickly revise the Swadesh Darshan , PRASHAD Schemes.   Click here for the repository of all such initiaitives.

    About DekhoApnaDesh

    • Under this, a series of webinars will showcase the diverse and remarkable history and culture of India through a documentary series on various cities.
    • It will be including various monuments, cuisine, arts, dance forms, natural landscapes, festivals and many other aspects of the rich Indian civilization.
    • The core of the webinar is based on tourism awareness and social history.
    • The webinar will be available in the public domain through the Ministry’s social media handles- “Incredible India” on Instagram and Facebook.
    • The first webinar, which was part of a series that shall unfold, touched upon the long history of Delhi as it has unfolded as 8 cities.

  • OPEC+ decides combine slashing of crude oil production

    India has made a case for affordable oil prices in the backdrop of the Organization of the Petroleum Exporting Countries-plus (OPEC+) combine slashing production amid the COVID-19 pandemic.

    Global crude oil pricing dynamics greatly impact  India and its import bill. Kindly refer to the article titled “Oil Prices and OPEC+” pinned below this newscard. Various aspects related to the issue are covered in the Burning Issue section . It seeks to answer all your doubts such as ; Impact on Fuel prices,  India’s forex reserves, Strategic petroleum reserves,  etc.

    Why a cause of worry?

    • OPEC accounts for around 40% of global production.
    • The OPEC accounts for 80% of India’s crude oil imports.
    • Any production cut by the OPEC plus arrangement impacts India’s energy security efforts in the short run.

    Impact on India

    • India, which is one of the major OPEC consumers, has always stood for a global consensus on responsible pricing.
    • Indian refiners have cut production as the lockdown has led to a sharp decline in demand for transportation fuels.
    • Demand for domestic cooking gas has, however, increased as more people stay indoors during the lockdown aimed at containing the spread of the coronavirus.

    About OPEC+

    • The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
    • OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
    • Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.

    Back2Basics:  OPEC

    • OPEC is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
    • It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
    • It is headquartered in Vienna, Austria.
    • OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
    • Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.

    Also read:

    [Burning Issue] Oil Prices and OPEC+

  • ConFarm model of agricultural market

    A unique initiative titled Consumer-Farmer Compact in Telangana is ensuring food availability and access in COVID-19 times.

    Such innovative models of agricultural marketing are very crucial while highlighting the limitations of APMCs and eNAM. Make personal notes of such initiatives.

    Consumer-Farmer Compact

    • The initiative is kicked off by some NGOs in June 2018 and has been endeavoring to bring farmers and consumers on the same platform for their benefit.
    • The consumers support farmers with their agricultural needs; in return, farmers ensure consumers are able to access food in a hassle-free manner.

    What does the initiative do?

    • The initiative requires consumers to support farmers at the beginning of a farming season.
    • Each consumer supports a group of farmers with about Rs 12,500 per acre for their farming needs.
    • In return, at the time of harvest, consumers are given products according to the value they invested, leaving the middlemen out.
    • They are provided with millets, pulses, oil, jaggery and other necessary items produced organically — either in bulk or on a monthly basis.
    • The initiative also aims to give millets a push in the urban market, enabling consumers to move beyond the commonly consumed grains such as rice and wheat.

    Significance

    • This model of sharing economy in the village has helped alleviate hunger and ensured their nutritional needs are met.
    • The farmers who are part of the initiative practice traditional ecological farming with an emphasis on biodiverse cultivation.
    • It helps them have dietary diversity in their food choices and control over their land and food production that is not dictated by the vagaries of the market.
    • The practice has brought them closer to a group of consumers who have been keen on trying an alternative route.

    Conclusion

    • At this juncture in crisis — when the free-market system and global trade are staring at an uncertain future — local solutions such as ‘Confarm’ hold greater prominence.
    • Such supply chains such are the need of the hour. Farmers and consumers must come together to face crisis moments in the future as well.

  • How IS regroups and its threat to India

     

    IS has shown its ability to strike by regrouping and co-opting local affiliates be it the case of Ester Sunday attack in Sri Lanka or a recent attack on a  Gurudwara in Afghanistan. For India, the presence of sleeper cells and their links with the Islamic jihad group has internal security implications. We have covered an op-ed dealing with the Gurudwara attack and discussed the futility of the US-Taliban peace deal.

    Security threat of IS to India and South Asia

    • In the immediate aftermath of 9/11, there was speculation about the degree to which al-Qaeda had been able to make inroads in India.
    • In recent years, the focus has shifted to the IS.
    • The creation of an IS-Khorasan (IS-K) in early 2015 with a visible presence in Afghanistan-Pakistan, seemed to suggest that the group is now targeting South Asia.
    • The recent terror attack on a gurdwara in Kabul (March 25) was also claimed by the IS. The IS released a photograph of one of a resident of Kasargod in Kerala
    • According to India’s leading terrorism think-tank SATP (South Asia Terrorism Portal), 99 persons from India were confirmed to have joined the IS in Iraq, Syria and Afghanistan.

    Question about the ” Over-ground worker” of the terrorist organisation was asked by the UPSC in 2019.

    Close intelligence cooperation within and beyond South Asia

    • Last October, the NIA disclosed that it had arrested 127 IS sympathisers from across India since 2014, and the highest number of 33 were from Tamil Nadu.
    • The arrests by NIA were made throughout the country and not from a specific region.
    • This degree of spread is testimony to the close watch the Indian security agencies are maintaining concerning the IS.
    • One may conjecture that close intelligence cooperation has been established within and beyond South Asia.
    • The pattern that now obtains is that countries like Sri Lanka, Bangladesh and Afghanistan have their own internal surveillance in place to monitor the activities of the IS-K.

    Ability of IS to regroup and ally with a domestic affiliate

    • The IS has demonstrated a proclivity to re-group by co-opting or merging with credible domestic affiliates, even if they are little-known.
    • In Afghanistan, the IS-K has sought to position itself favourably in the factional tussle, and the Kabul gurdwara attack is seen as part of this murderous strategy.
    • Pakistan connection: Islamic terror groups in the Af-Pak region are deemed to be as credible as the support that they receive from the deep-state in Pakistan.
    • It is pertinent that the main accused in the Kabul gurdwara attack is Aslam Faroqi, a Pakistani national.

    Conclusion

    The ability of IS to co-opt a local affiliate makes it a credible threat for India where there is a significant presence of the sleeper cells. In the light of that threat India and the other affected nations will have to strive individually and collectively to foil such nefarious designs.

  • Covid-19: Software vendors focus on big data, AI despite fall in IT spending

    The article discusses how COVID-19 has prompted the software companies to focus on technologies that are still in demand. The IT companies have started to focus on ways to leverage the potential of AI and the Big data to deal with the pandemic.

    Impact on IT companies and how they are planning to cope with it?

    • Fall in spending: Spending on information technology (IT) globally is expected to shrink by 3-4% by the end of 2020.
    • Impact: That would have a severe impact on hardware and slowdown in the software and service businesses.
    • How companies are planning to deal with the situation? Software vendors such as IBM, SAP Software Solutions and Microsoft Corporation plan to make use of emerging technologies to become more relevant to their customers.
    • IBM has created an AI platform ‘Watson Assistant for Citizens’ on its public cloud.
    • The platform helps citizens understand and respond to common questions about covid-19, commonly known as the novel coronavirus.
    • While the ongoing pandemic is having a dreadful impact on companies at scale, matured ones are taking a pause and rethinking their analytics approach.
    • Using data analysis to prepare contingency plan: Data science teams are being called into action to crunch petabytes of data and build best business models on trusted data for decision-makers to quickly prepare contingency plans.
    • This is where we are seeing enterprises using AI, machine learning, and natural language processing to mine the data and build predictive or prescriptive models in IBM Cloud Pack for Data.

    UPSC could ask question connecting the use of IT and its potential to deal with the pandemics. And it could also be other way round you can cite the example of use of IT in the health sector.

    Adoption of the AI by various sectors

    • The government and public service agencies as well as healthcare and research companies urgently need AI solutions and analytics as they are in a race to find a treatment for the deadly disease.
    • Other industries with high end-user touch-points like banks, insurance, retail, etc. are also in urgent need to use AI/ML-driven analytics and cognitive technologies to automate their communications, streamline predictions, decision making, etc.

    AI and Big data could be a game-changer across the various sectors, health being one of them. As among the buzzwords in technologie today UPSC could ask about AI and Big data.

    Covid-19 as an opportunity for the IT industry

    • The covid-19 crisis is an opportunity for IT vendors to build and improve on their capabilities on AI and big data.
    • Leveraging AI: They are also keeping an eye on emerging uses cases in AI for disease detection, tracking, and prevention.
    • Relatively smaller companies are also launching dedicated AI-based apps to assist people amid the covid-19 crisis.
    • Eka Software Solutions recently released ‘COVID-19 Risk Monitoring’, it help customers quickly gain visibility in supply chain risks by showing a company’s contract position across countries with reported cases of the virus.
    • Based on company data, the app instantly visualises contracts at risk and provides businesses with the ability to identify alternate suppliers to maintain business continuity.

    Conclusion

    As the epidemic is far from being tamed, various sectors are likely to feel the existential crisis and IT could be one of them. But they can also turn this crisis into an opportunity by leveraging the AI and Big data in tackling the epidemic at various levels.

  • Agmark, Hallmark, ISI, BIS, BEE and Other Ratings

  • Use the COVID crisis to transform the agri-marketing system

    This article discusses the impact of lockdown on farmers and how the disruption of the supply chain is adding to their difficulties in selling their produce in the markets.

    In the last two weeks or so, we have been reading about farmers and issues around the agri-marketing supply chain. If you have been following the story on Agriculture Marketing Reforms, you would remember us talking about it in the op-ed titled “A smarter supply line”

    There are 6 suggestions to overhaul our agri-marketing system. These are-

    1. Abolish/reframe the APMC Act

    • There is an urgent need for abolishing or reframing the APMC Act and encourage direct buying of agri-produce from farmers/farmer producer organisations (FPOs).
    • The companies, processors, organised retailers, exporters, consumer groups, that buy directly from FPOs need not pay any market fee as they do not avail the facilities of APMC yards.

    APMC Act restrict the farmers from selling their produce outside the market yard, so in the present context of Covid-19 this is a counterproductive restrictions. UPSC asked question on in in 2014.

    2. The warehouses can also be designated as markets.

    • The warehouse receipt system can be scaled up.
    • The private sector should be encouraged to open mandis with modern infrastructure, capping commissions.

    3. The futures trading should be encouraged by allowing banking finance to hedge for commodity price risks.

    A futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, encouraging this would help farmers assurance of price and help in making decion for the sowing based on price signal from he markets.

    4. Promote e-NAM through proper assaying and grading the produce and setting up dispute settlement mechanism; rope in major logistics players for delivery of goods.

    5. Avoiding rush in the markets: Procurement must be staggered through coupons and incentives that give farmers an additional bonus for bringing the produce to the market after May 10, or so.

    6. The amount provided under PM Kisan should be increased from Rs 6,000 to at least Rs 10,000 per farming family to partially compensate them for their losses.

    Way forward

    • Besides these, Prime Minister would benefit by taking a leaf out of the book of President Donald Trump. Modi should lead from the front by holding daily press briefings and announce a country-wide relief package amounting to around 8-10 per cent of GDP.
    • Whatever the causes of this disaster are, it is clear that the WHO failed in its duty to raise the alarm in time. India must ask for fundamental reforms in the UN System, including the WHO, making it more transparent, competent, and accountable.