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GS Paper: GS3

  • Spontaneous Regression

    Patients sometimes make ‘miraculous’ recoveries from severe ailments. This is called spontaneous healing or spontaneous regression.

    Spontaneous healing/regression

    • A patient improves unexpectedly from a disease that usually progresses, such as cancer, and at times is even cured.
    • Such cases notwithstanding, the medical fraternity is often sceptical and takes “miraculous” recoveries as flukes.
    • A research explores patterns behind healing illnesses such as the deadliest kinds of cancers, and lays out physical and mental principles associated with recovery.
    • These include physically healing diets and immune systems, and mentally healing stress responses and identities.

    How does it occur?

    • The research states that much of our physical reality is created in our minds and perception changes our experiences, sometimes to the point of changing our bodies.
    • Therefore it argues that healing our identities may be a key tool to recovery.

  • Trading with America

    Context

    Trump has made India’s trade headache more acute. But he has also opened up opportunities.

    Political polarisation in both countries

    • Impeachment attempt: The Democrats in the US have struggled to oust Trump from the White House and rarely find anything they can agree with their President on.
    • The deeper political divide in India: While ousting Narendra Modi through a legal process of impeachment is not an option in India, the political divide is even deeper.
    • No consensus on foreign policy
      • Under Trump, consensus on foreign policy in Washington has broken down.
      • In Delhi, the Opposition has never been willing to acknowledge the diplomatic successes of the government.
      • But the usually bipartisan support for foreign policy in the strategic community has eroded.
      • Many leading voices of the establishment who have a long and distinguished service have become major critics of foreign policy.

    Comparison of India’s trade with the US and China

    • Trade with the US: In 1995, total two-way trade, including goods and services, between India and the US was $11 billion.
      • In 2018, it crossed $140 billion.
      • It is reported to be around $150 billion in 2019.
      • In trade with the US, India enjoys a surplus of nearly $23 billion.
      • A 14-fold increase in trade turnover in 25 years is certainly not something to sneer at.
      • Can India and the US do better on trade? Yes, of course.
      • Only a few years ago, the two sides were looking at an annual trade target of $500 billion. That looks rather ambitious amidst the current disputes
    • Trade with China: India’s China trade too has risen, even more rapidly.
      • From a couple of hundred million dollars in the mid-1990s to nearly $90 billion in 2019.
      • India has a deficit of nearly $57 billion with China.

    Trade disputes between India-US

    • Trade has long been a contentious issue between Delhi and Washington.
    • There had been enduring tension since the late 1980s between the US demand for-
      • Greater market access.
      • Intellectual property protection.
      • And a host of other demands and India’s own cautious approach to economic liberalisation.
    • Rise in pressure under Trump administration: All recent US administrations have applied continuous pressure on India for trade agreements.
      • The pressure has significantly risen under President Trump.
    • Trade dispute at the centre of the relationship: If his predecessors were willing to cut some slack for India by citing larger political and strategic considerations in the bilateral ties, Trump has put trade disputes at the front and centre of the relationship.
      • Officials in the Department of Commerce and the US Trade Representative’s office have adopted extremely aggressive tactics in the negotiation with India.
    • Result of a radical reorientation of US trade policy: Trump has undertaken a radical reorientation of US trade policy.
      • For Trump, this is a matter of long-standing ideological conviction as well as a political convenience.
      • He has bet that the anti-free-trade White working classes in the American rust belt are the key to his re-election.
    • No option but to deal with it: Given America’s pole position in the global trading system, you have no option but to deal with it.
      • Trump is getting away with his demand for the restructuring of trade relations with key economic partners.
      • He has renegotiated the NAFTA with neighbours Canada and Mexico and has compelled China to start reducing the massive trade deficit with the US.
    • The difference in India and China’s response to the US: In response to Trump’s pressure, Xi reaffirmed his commitment to economic globalisation and domestic liberalisation and wooed American investors with even greater vigour than before.
      • India embracing protectionism: India appears to be sending the opposite signal — of a definitive drift towards protectionism. India’s trade troubles are certainly not limited to the engagement with the US.

    Problem with India’s trade policies

    • India walking away from RCEP: Delhi walked away at the very last minute from signing the RCEP agreement last year to deep disappointment among its partners including the ASEAN, Australia, Japan and New Zealand.
      • The trade deficit with China: One of the main arguments cited by India was the massive trade deficit with China and the potential danger of it widening further under RCEP.
    • Failure in negotiations with the EU: The European Union is reluctant so far to restart trade negotiations that ended in great frustration for Brussels some years ago.
    • No deal with Australia and New Zealand: Australia and New Zealand have given up.
    • Neighbours complaint: India’s immediate neighbours complain that India’s rhetoric on connectivity and regionalism is matched by the multiple non-tariff barriers that continue to constrain commerce across the South Asian frontiers.
    • Why so many deals are pending? It is certainly probable, statistically, one in a million, that the fault lies, always, with India’s partners. But one would think there might be a real problem with Delhi’s own trade policies.

    Conclusion

    • New opportunity: Trump has certainly made India’s trade headache more acute. But he has also opened up opportunities.
      • His trade war on China has put pressure on the global supply chains centred around China.
      • India not the beneficiary of the US-China trade war: Many companies are moving their production out of China, but only a few are turning towards India.
      • While Delhi has talked the talk on taking advantage of the US-China trade war, it is yet to get its act together.
    • No opposition against protectionism at home: What makes Delhi’s devaluation of trade as a key instrument of economic growth potentially irreversible is the fact that there is little domestic political opposition to it.
    • Time to take a hard look at trade policy: For now, though, India’s partnership with the US might not only survive the current trade tensions but advance during Trump’s visit.
      • There is so much happening elsewhere in the relationship — especially in the defence and security domain.
      • But the time has come for Delhi to take a hard look at its current trade policy that threatens to undermine India’s regional and international prospects.

     

     

     

     

  • [pib] Scheme for formation and promotion of Farmer Producer Organizations (FPOs)

    The Cabinet Committee has given its approval for 10,000 FPOs to be formed in five years period from 2019-20 to 2023-24 to ensure economies of scale for farmers.

    What are Farmer Producer Organizations?

    • A Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen.
    • A PO can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members.
    • In some forms like producer companies, institutions of primary producers can also become member of PO.
    • FPO is one type of PO where the members are farmers. Small Farmers’ Agribusiness Consortium (SFAC) is providing support forthe promotion of FPOs.

    About the Scheme

    • It would be a new Central Sector Scheme titled “Formation and Promotion of Farmer Produce Organizations (FPOs)” to form and promote 10,000 new FPOs.
    • Initially there will be three implementing Agencies to form and promote FPOs, namely Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).
    • States may also, if so desire, nominate their Implementing Agency in consultation with DAC&FW.
    • DAC&FW will allocate Cluster/States to Implementing Agencies which in turn will form the Cluster-Based Business Organization in the States.

    Modes for promotion

    • FPOs will be promoted under “One District One Product” cluster to promote specialization and better processing, marketing, branding & export by FPOs.
    • There will be a provision of Equity Grant for strengthening equity base of FPOs.
    • There will be a Credit Guarantee Fund of up to Rs. 1,000.00 crore in NABARD.

    Benefits

    • Small and marginal farmers do not have the economic strength to apply production technology, services and marketing including value addition.
    • Through the formation of FPOs, farmers will have better collective strength for better access to quality input, technology, credit and better marketing access through economies of scale for better realization of income.

  • USTR takes India off Developing Country List

    Context

    The United States’s annual exercise of designating developing, and least developed countries has assumed importance for India this year: it has been dropped from the list of developing countries.

     ‘Developing’ or ‘developed’ country designation by the US

    • Last week, the United States officially designated developing and least-developed countries for the purposes of implementing the countervailing measures.
      • The division is provided by the Agreement on Subsidies and Countervailing Measures (ASCM) of the World Trade Organisation (WTO).
    • Why the designation matters?
      • The higher level of subsidies allowed: According to the ASCM, developing countries are allowed to grant higher levels of subsidies as compared to the developed countries before countervailing duties (CVD) can be imposed.
      • What are the limits? The maximum limit of the subsidy is-
      • For developed country: Limit is maximum 1% of the import value of the investigated product.
      • For developing country: Limit is a maximum 2% of the import value of the investigated product.
      • If the limit is breached the importing country can impose a countervailing duty on the product.

    India as a target by the US

    • Provision of self-designation: Under the WTO rules, any country can “self-designate” itself as a developing country.
    • No criteria specified by the WTO: The WTO does not lay down any specific criteria for making a distinction between a developed and a developing country member, unlike in the World Bank where per capita incomes are used to classify countries.
    • Arbitrary criteria used to designate India: Despite this clearly laid down criterion in the WTO rules, the United States Trade Representative (USTR) employed an arbitrary methodology that took into consideration-
      • “Economic, trade, and other factors, including the level of economic development of a country (based on a review of the country’s per capita GNI) and a country’s share of world trade” to exclude India from list of designated developing countries.
    • Second such instance after denying GSP: Excluding India from the lists of developing countries for the purposes of using countervailing measures or denying benefits of GSP are but two of the more recent initiatives that the U.S. has taken to challenge India’s status as a developing country in the WTO.

    What would the impact on India?

    • Loss of Special and Differential Treatment (S&DT): India would lose the ability to use the special and differential treatment (S&DT) to which every developing country member of the WTO has a right.
      • What is S&DT? In short, S&DT lessens the burden of adjustment that developing countries have to make while acceding to the various agreements under the WTO.
      • How S&DT benefited India?S&DT has been particularly beneficial for India in two critical areas: one, implementation of the disciplines on agricultural subsidies and, two, opening up the markets for both agricultural and non-agricultural products.
    • Limits on subsidies: The WTO Agreement on Agriculture(AoA) provides an elaborate discipline on subsidies.
      • Subsidies are classified into three categories, but two of these are virtually outside the discipline since the WTO does not limit spending on these categories of subsidies.
      • Limits on price support measures: The discipline exists in case of price support measures (minimum support price) and input subsidies which is the more common form of subsidies for most developing countries, including in India.
      • Limits on spending on prices support measures: For developing countries, spending on price support measures and input subsidies taken together cannot exceed 10% of the total value of agricultural production.
      • In contrast, developed countries are allowed to spend only 5% of their value of agricultural production.

    Shifting to DBT

    • Why shifting to DBT necessary? India is a major user of price support measures and input subsidies.
      • And given the constraints imposed by the AoA, the government has spoken about its intention to move into the system of direct benefit transfer (DBT) for supporting farmers.
      • No limit on spending through DBT: A shift to DBT is attractive for India since there are no limits on spending, unlike in case of price support measures and input subsidies.
      • Rework subsidies’ programme: Faced with on-going farm distress, the government has had to rework its subsidies’ programme in order to extend greater benefits, especially to small and marginal farmers.
    • Challenges in the implementation of DBT
      • Implementation of DBT in agriculture has several insurmountable problems.
      • Difficulty in identifying the beneficiary: Targeting potential beneficiaries of DBT seems difficult at this juncture for a number of reasons, including inadequate records of ownership of agricultural land on the one hand, and the presence of agricultural labour and tenants on the other.
      • This implies that in the foreseeable future, India would continue to depend on price support measures and input subsidies.
      • How it matters: Given this scenario, the government needs the policy space to provide adequate levels of subsidies to a crisis-ridden agricultural sector.
      • And therefore it is imperative that continues to enjoy the benefits as a developing country member of the WTO.

    Issue of tariffs

    • The issue of market access, or the use of import tariffs, is one of the important trade policy instruments.
    • Provision of no reciprocal tariff cuts: It has some key provisions on S&DT, which the developing countries can benefit from. The most important among these is the undertaking from the developed countries that they would not demand reciprocal tariff cuts.
      • Over the past two years, the government of India has been extensively using import tariffs for protecting Indian businesses from import competition.
      • With the increasing use of tariffs, almost across the board, India’s average tariffs have increased from about 13% in 2017-18 to above 17% at present.
    • Why it matters? Developed country members of the WTO have generally maintained very low levels of tariffs, and, therefore, India’s interests of maintaining a reasonable level of tariff protection would be well served through its continued access to S&DT, by remaining as a developing country member of the WTO.

    Conclusion

    With the changing stance of the US towards India, the government must ensure its international trade and agriculture at home is not adversely impacted.

     

  • Explained: One Health Concept

     

    The concept of ‘One Health’ is gaining importance as most of the contagious diseases affecting humans are zoonotic (animal to man origin) in nature. It can be effectively implemented for reducing incidence of emerging zoonotic threats like COVID-19.

    The One Health concept

    • The World Organization of Animal Health, commonly known as OIE (an abbreviation of its French title), summarizes the One Health concept.
    • It says that as “human health and animal health are interdependent and bound to the health of the ecosystems in which they exist”.
    • Circa 400 BC, Hippocrates in his treatise On Airs, Waters and Places had urged physicians that all aspects of patients’ lives need to be considered including their environment; disease was a result of imbalance between man and environment.
    • So One Health is not a new concept, though it is of late that it has been formalized in health governance systems.

    Why accept this model?

    • Of the contagious diseases affecting humans, more than 65% are of zoonotic or animal to man origin.
    • One Health model is a globally accepted model for research on epidemiology, diagnosis and control of zoonotic diseases.
    • One Health model facilitates interdisciplinary approach in disease control so as to control emerging and existing zoonotic threats.
    • Increasing stress on animals due to loss of their habitat would increase scope of zoonotic diseases.

    Why corona is so deadly?

    • Current outbreak of COVID-19 still could not find out the actual source of virus.
    • Even though genomics of the virus has been published ambiguity still exists whether it was from bats, snakes, pangolin, etc.

    Frequent Outbreaks of Zoonotic Diseases

    • Not so long ago, the widespread prevalence of avian influenza in poultry, or bird flu as it commonly became known, created nationwide panic resulting in the culling of millions of poultry birds.
    • It was concern for human health that prompted the extreme reaction and subsequent establishment of protocols; containment of avian influenza is managed quite effectively now.
    • Similarly in 2003, SARS or Severe Acute Respiratory Syndrome emanated suddenly in China and vanished soon.

    Followed by hues and panic

    • These outbreaks culminated emergency response that included extreme measures like travel bans and restrictions.
    • In both cases, panic spread much faster than the virus.
    • Besides drawing a response from governments, these events also brought forth the hitherto forgotten philosophy of One Health.
    • This idea recognizes inter-connectivity among human health, the health of animals, and the environment.

    Why rise in zoonotic outbreaks?

    • As human populations expand, it results in greater contact with domestic and wild animals, providing more opportunities for diseases to pass from one to the other.
    • Climate change, deforestation and intensive farming further disrupt environment characteristics, while increased trade and travel result in closer and more frequent interaction, thus increasing the possibility of transmission of diseases.

    Need for a robust animal health system

    • Private sector presence in veterinary services is close to being nonexistent.
    • Unlike a physician, a veterinarian is always on a house call on account of the logistic challenge of transporting livestock to the hospital, unless they are domestic pets.
    • There could not be a stronger case for reinventing the entire animal husbandry sector to be able to reach every livestock farmer, not only for disease treatment but for prevention and surveillance to minimize the threat to human health.
    • Early detection at animal source can prevent disease transmission to humans and introduction of pathogens into the food chain. So a robust animal health system is the first and a crucial step in human health.

    Conclusion

    • Developing countries like India have a much greater stake in strong One Health systems on account of agricultural systems resulting in uncomfortably close proximity of animals and humans.
    • This builds a strong case for strengthening veterinary institutions and services.
    • Further delay may pave way for emergence of new communicable diseases.

    Way Forward

    • The most effective and economical approach is to control zoonotic pathogens at their animal source.
    • It calls not only for close collaboration at local, regional and global levels among veterinary, health and environmental governance, but also for greater investment in animal health infrastructure.
    • Need of the hour is to scale up such a model across the country and to establish meaningful research collaborations across the world.
    • Health, veterinary, agriculture and life science research institutions and universities can play a lead role.

  • Aditya L1 Mission

     

    NASA’s Parker Solar Probe launched on August 12, 2018 has completed its fourth close approach — called perihelion very recently, whizzing past at about 3.93 lakh km/h, at a distance of only 18.6 million km from the Sun’s surface.

    Aditya L1: Exciting ahead

    • The ISRO is preparing to send its first scientific expedition to study the Sun.
    • Named Aditya-L1, the mission, expected to be launched early next year, will observe the Sun from a close distance, and try to obtain information about its atmosphere and magnetic field.
    • ISRO categorizes Aditya L1 as a 400 kg-class satellite that will be launched using the Polar Satellite Launch Vehicle (PSLV) in XL configuration.
    • The space-based observatory will have seven payloads (instruments) on board to study the Sun’s corona, solar emissions, solar winds and flares, and Coronal Mass Ejections (CMEs), and will carry out round-the-clock imaging of the Sun.
    • Aditya L1 will be ISRO’s second space-based astronomy mission after AstroSat, which was launched in September 2015.

    What is L1?

    • L1 refers to Lagrangian/Lagrange Point 1, one of five points in the orbital plane of the Earth-Sun system.
    • Lagrange Points, named after Italian-French mathematician Josephy-Louis Lagrange, are positions in space where the gravitational forces of a two-body system (like the Sun and the Earth) produce enhanced regions of attraction and repulsion.
    • These can be used by spacecraft to reduce fuel consumption needed to remain in position.
    • The L1 point is home to the Solar and Heliospheric Observatory Satellite (SOHO), an international collaboration project of NASA and the European Space Agency (ESA).
    • The L1 point is about 1.5 million km from Earth, or about one-hundredth of the way to the Sun.

    But why is studying the Sun important?

    • Every planet, including Earth and the exoplanets beyond the Solar System, evolves — and this evolution is governed by its parent star.
    • The solar weather and environment, which is determined by the processes taking place inside and around the sun, affects the weather of the entire system.
    • Variations in this weather can change the orbits of satellites or shorten their lives, interfere with or damage onboard electronics, and cause power blackouts and other disturbances on Earth.
    • Knowledge of solar events is key to understanding space weather.
    • To learn about and track Earth-directed storms, and to predict their impact, continuous solar observations are needed.
    • Every storm that emerges from the Sun and heads towards Earth passes through L1, and a satellite placed in the halo orbit around L1 of the Sun-Earth system has the major advantage of continuously viewing the Sun without any occultation/eclipses.

    Why are solar missions challenging?

    • What makes a solar mission challenging is the distance of the Sun from Earth (about 149 million km on average, compared to the only 3.84 lakh km to the Moon).
    • More importantly the super hot temperatures and radiations in the solar atmosphere make it difficult to study.
    • NASA’s Parker Solar Probe has already gone far closer — but it will be looking away from the Sun.
    • The earlier Helios 2 solar probe, a joint venture between NASA and space agency of erstwhile West Germany, went within 43 million km of the Sun’s surface in 1976.

    Problem of Heat

    • The Parker Solar Probe’s January 29 flyby was the closest the spacecraft has gone to the Sun in its planned seven-year journey so far.
    • Computer modelling estimates show that the temperature on the Sun-facing side of the probe’s heat shield, the Thermal Protection System, reached 612 degrees Celsius, even as the spacecraft and instruments behind the shield remained at about 30°C, NASA said.
    • During the spacecraft’s three closest perihelia in 2024-25, the TPS will see temperatures around 1370°C.

    Hurdles for Aditya L1

    • It will stay much farther away, and the heat is not expected to be a major concern for the instruments on board. But there are other challenges.
    • Many of the instruments and their components for this mission are being manufactured for the first time in the country, presenting as much of a challenge as an opportunity for India’s scientific, engineering, and space communities.
    • One such component is the highly polished mirrors which would be mounted on the space-based telescope.
    • Due to the risks involved, payloads in earlier ISRO missions have largely remained stationary in space; however, Aditya L1 will have some moving components, scientists said.

  • May the Force be strengthened

    Context

    The functioning of the CRPF needs to be revisited.

    Historical background and present status of CRPF

    • Crown Representative Police: In the wake of Independence, a contentious administrative issue was over the retention of CRP (Crown Representative Police).
      • The question over the relevance of the force: As the Constitution designated ‘law and order’ as a State subject, the relevance of having a Central police force was questioned by everyone
      • But Deputy Prime Minister and Home Minister Sardar Vallabhbhai Patel argued vehemently and boldly in favour of it.
    • Present-day relevance of the force
      • From having just two battalions as the CRP, the Central Reserve Police Force (CRPF) has now expanded to being a three-and-a-half lakh-strong force.
      • Consisting of specialist wings like-
      • The Rapid Action Force.
      • The COBRA (Commando Battalion for Resolute Action).
      • The Special Duty Group.
      • Largest Paramilitary force: It is the largest paramilitary force in the world and no other security force of the country has seen expansion at such a rapid rate.
    • Importance of the force
      • Security to the country: Providing integrated security to a diverse country of continental size is not an easy task.
      • Immediate solution situation: Resolving certain conflicts requires immediate solutions for which regular armed forces cannot be deployed.
      • Peacekeeper of the nation: For the reason cited above, we require paramilitary forces, and the CRPF is the most sought-after one because of its flexibility and versatility.
      • The force has earned its place as the ‘peacekeeper of the nation’.

    Problems faced by the CRPF

    • A year after Pulwama attack, it is time for the nation to take a relook at the main agency dealing with conflicts in different territorial zones. The following 3 are the major concerns of the force.
    • 1. Pressure taking its toll: The frequent movements lock, stock and barrel are taking its toll.
      • There are increasing cases of suicides and fratricides.
      • The anguish caused because of prolonged periods of duty away from one’s family members adds to the pressure experienced the soldiers having their fingers constantly on the trigger guard.
    • What is being done or needs to be done to address the problem?
      • 100-days leave: Though the Home Minister recently stated that CRPF jawans would get to spend 100 days with their families every year, considering the present levels of commitment, 100 days of leave is an impossible dream for a soldier.
      • Need to revisit the decision of assigning exclusive operations: An easier way out here would be to revisit the government’s decision on tasking specific Central Paramilitary Forces exclusively with certain operations.
      • It should be compulsory for recruits to all Central Police Forces to be deployed to anti-insurgency roles during their first 15 years of service.
      • They can be shifted, in the next 10 years, to border duties.
      • The last phase of their career should be in static duties.
    • 2. Rehabilitation of retired personnel
      • Care of welfare and morale: As the Force is deployed to the last man, the welfare and morale of the soldiers need to be taken care of.
      • No rehabilitation policy: A large number of personnels are taking voluntary retirement, but there is no rehabilitation policy.
    • What is being done or needs to be done to address the problem?
      • The creation of a Welfare and Rehabilitation Board has not made any impact. Provision of canteen facilities, without tax exemption, hardly gives the soldiers any relief.
      • Another demand that needs to be considered is that of One Rank, One Pension scheme.
    • 3. Leadership issue
      • It is high time the Force develops home-grown leadership.
      • Elements like healthy work culture, ethos and regimentation are very crucial for any armed force and they are best guarded by officers born on the cadre.
    • Steps taken to address the issue
      • The long-overdue Non-Functional Financial Upgradation (NFU) materialised only after the judicial intervention.
      • However, the top leadership- made up of IPS officers on deputation- is reluctant to implement it.

    Conclusion

    The first anniversary of the Pulwama attacks should enable all stakeholders to devise ways and means to plug the loopholes and address the system failures in a Force that still remains the most formidable in internal security matters.

     

  • The $5 trillion arithmetic

    Context

    The Indian government has set itself a big target, namely, that the Indian economy will have an aggregate income or gross domestic product (GDP) of $5 trillion by 2024-25.

    Lack of clarity

    • There is little effort to take it beyond a slogan.
    • When it comes to targets and aims pertaining to the economy, it is important to have-
      • The officials and advisers go beyond the headline.
      • To lay out the details and the road-map for the target.
    • Matter for investors: For international observers and particularly investors, not to see these details creates doubts about professionalism.

    What growth rate is required to reach that target?

    • How long will it take to achieve the target at the present growth rate?
      • In 2018-19, India’s GDP was $2.75 trillion.
      • India’s latest official growth rate happens to be 5 per cent.
      • Target will be reached in 2032-33: Continue in the same fashion to compute the size of the GDP and it becomes clear that the target of $5 trillion will be reached not in 2024-25, but in 2032-33.
    • What is the required rate? Set the target as $5 trillion dollars for 2024-25 the required rate turns out to be 10.48 per cent or, approximately, 10.5 per cent.

    Why 10.5 rate is an ambitious target?

    • The only example of any nation growing for six consecutive years at an average annual rate of over 10.5 per cent was China from 2003 to 2009.
    • Can India achieve this rate?
      • From 1947 till now, India’s economy grew at over 10 per cent only twice — in 1988-89 and 2007-8.
      • Of these, the first may be dismissed because the previous year the economy had grown very slowly, by 3.5 per cent.
    • What we can learn from the past growth rate?
      • The only example to learn from: The only example from which we can learn is the remarkable growth in 2007-8, made all the more remarkable by the fact that India had been growing well for several years, starting from 2003.
      • And from 2005, India was actually growing over 9 per cent.
      • What factors played the role in high growth?
      • This was a period of professional fiscal policy and steady effort at building infrastructure.
      • India’s economy was making big news in the international media and investment poured in.
      • India’s investment-to-GDP rate climbed to an all-time record of 39 per cent.
    • Current investment-to-GDP ratio: Our investment-to-GDP ratio has crashed to 30 per cent and this takes time to re-build.
      • If we can get back to a growth rate of 7 per cent we will be lucky.

    Can inflation make the target achievable?

    • Combination of real growth and inflation can make it possible: Virtually all serious commentators agree that in purely real terms, the $5-trillion target is unreachable.
      • But maybe we can make it by a combination of real growth and inflation.
      • How the combination will work? One way India can get to the target is if alongside say 7 per cent growth, India has inflation of say 3.5 per cent.
      • Then India’s nominal GDP growth rate will be 10.5 per cent.
    • Why the inflation argument is flawed?
      • The five trillion target is in dollar terms.
      • Inflation will lead to depreciation: Typically, if India has higher inflation than the US, the rupee would depreciate vis-à-vis the dollar to account for that.
      • For the sake of pure arithmetic, assume US inflation is zero, India’s inflation is 10 per cent, and India’s real growth rate is 0.
      • In that case, in rupee terms, India’s economy will grow by 10 per cent. But how much will India’s economy grow in dollar terms?
      • The answer is zero.
      • Why is it so? This is because the rupee will typically depreciate by 10 per cent to match the inflation differential, and so the larger GDP of India in rupee terms, when converted to dollars will show no growth.
    • The other possibility of achieving the target?
      • What if the dollar loses value? But this should immediately make it clear that there is another way of getting to the target.
      • This can happen if the US dollar loses value.
      • We can then get to the target of $5 trillion because that will mean less in real terms.

    Conclusion

    There are two routes to achieve the target of $5 trillion: A huge policy initiative to boost real growth or the luck of dollar depreciation. The luck of dollar would mean nothing for us in the real term so the best course of action for the government is to seek the first option and try to achieve it.

  • RBI’s accounting year

    The Reserve Bank of India (RBI) is aligning its July-June accounting year with the government’s April-March fiscal year in order to ensure more effective management of the country’s finances.

    • Accordingly, the next accounting year will be a nine-month period which starts from July 2020 and ends on March 31, 2021. Thereafter, all the financial years will start from April every year, the RBI said.
    • The Bimal Jalan Committee on Economic Capital Framework (ECF) of the RBI had proposed a more transparent presentation of the RBI’s annual accounts and change in its accounting year from July to June to April to March from the financial year 2020-21.

    How did the RBI’s July-June accounting year come to be?

    • When it commenced operations on April 1, 1935, with Sir Osborne Smith as its first Governor, the RBI followed a January-December accounting year.
    • On March 11, 1940, however, the bank changed its accounting year to July-June.
    • Now, after nearly eight decades, the RBI is making another switch: the next accounting year will be a nine-month period from July 2020 to March 31, 2021, and thereafter, all financial years will start from April, as it happens with the central and state governments.

  • State of India’s Birds 2020 (SoIB) Assessment

     

    State of India’s Birds 2020 (SoIB) assessment was recently released.

    Highlights of the report

     

     

    • The SoIB was produced using a base of 867 species (among 1,333 birds ever recorded in India), and analysed with the help of data uploaded by birdwatchers to the online platform, eBird.
    • Adequate data on how birds fared over a period of over 25 years (long-term trend) are available only for 261 species.
    • Current annual trends are calculated over a five-year period.

    Alarming declines

    • The SoIB assessment raises the alarm that several spectacular birds, many of them endemic to the sub-continent, face a growing threat from loss of habitat due to human activity, widespread presence of toxins including pesticides, hunting and trapping for the pet trade.
    • Diminishing population sizes of many birds because of one factor brings them closer to extinction because of the accelerated effects of others, the report warned.
    • Over a fifth of India’s bird diversity, ranging from the Short-toed Snake Eagle to the Sirkeer Malkoha, has suffered strong long-term declines over a 25-year period.
    • More recent annual trends point to a drastic 80% loss among several common birds.

    Various species mentioned

    • Of 101 species categorised as being of High Conservation Concern — 59 based on range and abundance and the rest included from high-risk birds on the IUCN Red List.
    • Endemics such as the Rufous-fronted Prinia, Nilgiri Thrush, Nilgiri Pipit and Indian vulture were confirmed as suffering current decline.
    • And all except 13 had a restricted or highly restricted range, indicating greater vulnerability to man-made threats.
    • Peafowl, on the other hand, are rising in numbers, expanding their range into places such as Kerala, which is drying overall, and areas in the Thar desert where canals and irrigation have been introduced. Stricter protection for peacocks under law also could be at work.