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Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

Welcome Policy On APIs, Devices

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Incentive package to promote the API production in India.

Context

It is most welcome that the Centre has announced a `14,000-crore incentive package to boost the manufacture of drugs, especially active pharmaceutical ingredients (API).

What should be the immediate policy focus?

  • Focus on protective gear: The immediate policy focus must be to swiftly overcome shortages of critical protective gear like gowns and face masks, diverting production lines if required.
  • We also need to anticipate and step-up production of vital devices like ventilators.
  •  Provisions in the package: What is proposed now are industrial parks for bulk drugs and APIs, together with a policy for multi-year fiscal benefits. And ditto for parks for the manufacture of medical devices and attendant fiscal incentives.
  • The state governments need to identify 1,000 acres for the parks that are well-integrated with knowledge centres and nationally accredited labs.

What additions need to be made in the package?

  • Public-private partnership: In tandem, the pharmaceuticals package issued on Saturday needs to be followed through, with a forward-looking public-private partnership, to avoid import-dependency in this critical sector.
  • What is envisaged is a set of schemes to reap economies of scale and ready availability of inputs in the production of APIs and medical devices via the cluster approach.

How India became uncompetitive in API?

  • Policy rigidities and price controls: APIs are, of course, bulk drugs that provide medicines with their therapeutic value, and it is unfortunate that since circa 1995, India has become steadily uncompetitive in API production, thanks to a panoply of policy rigidities such as onerous price controls.
  • Export competition from China: Opaque export competition from China has been game-changing indeed: APIs for most medicines are mostly imported.
  • This needs to change, fast. We do need to competitively and efficiently boost output of pharmaceuticals right across the value chain.

Conclusion

The government must understand that manufacture by itself is not enough. The policy must ensure competition and quality, keep prices down.

Parliament – Sessions, Procedures, Motions, Committees etc

What is Finance Bill?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Finance Bill

Mains level : Finance Bill

The Parliament has passed the Finance Bill 2020 with 40 amendments without any discussion.

Highlights of the Bill

  • Among the important amendments included was one enabling the government to raise additional excise duty on petrol by up to Rs 18 per litre and diesel by up to Rs 12 per litre when required.
  • Amendments enabling the taxation of NRIs’ India-controlled income above Rs 15 lakh, and another extending the DDT exemption to REITs and Infrastructure Investment trusts were passed.
  • The Bill also changes the definition of ‘Resident’, as stipulated under the Income Tax Act.
  • Presently, a person is considered a resident of India, i.e. their global income is taxable in India if they are in the country for more than 182 days a year. This has now been reduced to 120 days.
  • The amendments also include provisions for levying TDS of 1 per cent on e-commerce transactions.

What is a Finance Bill?

  • As per Article 110 of the Constitution, the Finance Bill is a Money Bill.
  • The Finance Bill is a part of the Union Budget, stipulating all the legal amendments required for the changes in taxation proposed by the Finance Minister.
  • This Bill encompasses all amendments required in various laws pertaining to tax, in accordance with the tax proposals made in the Union Budget.
  • The Finance Bill, as a Money Bill, needs to be passed by the Lok Sabha — the lower house of the Parliament. Post the Lok Sabha’s approval, the Finance Bill becomes Finance Act.

Difference between a Money Bill and the Finance Bill

1) Money Bill

  • A Money Bill has to be introduced in the Lok Sabha as per Section 110 of the Constitution. Then, it is transmitted to the Rajya Sabha for its recommendations.
  • The Rajya Sabha has to return the Bill with recommendations in 14 days.
  • However, the Lok Sabha can reject all or some of the recommendations.

2) Finance Bill

  • In a general sense, any Bill that relates to revenue or expenditure is a Financial Bill.
  • The Finance Bill is introduced in Lok Sabha.
  • Rajya Sabha can recommend amendments in the bill. However, the bill has to be passed by the Parliament within 75 days of introduction.

>Types of Finance Bills

Type I

  • Financial Bill Cat-1 is a bill which contains any of the matters specified in Article 110 but does not exclusively deal with such matters.
  • For example- a bill which contains a taxation clause, but does not deal solely with taxation under Article 117 (1), has two features in common with a money bill.
  1. It cannot be introduced in the Rajya Sabha.
  2. It can only be introduced in Lok Sabha with the prior recommendation of the President.(Similarities)
  • But has one feature uncommon that is, not being a Money Bill, the Rajya Sabha has the same power to reject or amend such Financial Bill subject to limitation.

Type II

  • It is a finance bill which merely involves expenditure and does not include any of the matters specified in Article 110.
  • It is an Ordinary Bill and may be initiated in either House and the Rajya Sabha has full power to reject or ament it.
  • It is thus apparent that all Money Bills are Financial Bills but all Financial Bills are not Money Bills.

Who decides the Bill is a Finance Bill?

  • The Speaker of the Lok Sabha is authorised to decide whether the Bill is a Money Bill or not.
  • Also, the Speaker’s decision shall be deemed to be final.

Why Finance Bill is needed?

  • The Union Budget proposes many tax changes for the upcoming financial year, even if not all of those proposed changes find a mention in the Finance Minister’s Budget speech.
  • These proposed changes pertain to several existing laws dealing with various taxes in the country.
  • The Finance Bill seeks to insert amendments into all those laws concerned, without having to bring out a separate amendment law for each of those Acts.
  • For instance, a Union Budget’s proposed tax changes may require amending the various sections of the Income Tax law, Stamp Act, Money Laundering law, etc.
  • The Finance Bill overrides and makes changes in the existing laws wherever required.

What changes can be made via Finance Bill?

  • The most awaited changes in the tax proposals in the Union Budget usually pertain to personal income tax.
  • For taxpayers across the country, the most awaited moment is when the Finance Minister’s speech announces an increase in minimum income threshold, or declares any changes in income tax slabs to make it less costly, or other exemptions.
  • In addition, there might be changes in the rules, procedures, and deadlines for filing tax returns or the payment of tax itself.
  • For instance, there might be a change in the amount of penalty for missing the deadline. Those proposed changes would typically need to be brought in via amending the Income Tax Act.
  • Among other changes, the FM may propose in the Union Budget with regard to the rates or processes for payment or administration of stamp duty levied on various instruments.
  • Such a change would need to be brought in via an amendment to the Stamp Act.
  • Since the introduction of GST, there is no amendment to indirect taxes in the Union Budget, since that is under the purview of the GST Council.

 

Oil and Gas Sector – HELP, Open Acreage Policy, etc.

Govt. has raised excise duty cap on fuel

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Excise duty

Mains level : Crude oil pricing dynamics

In a move which would help the government to raise excise duty on fuel further in future, the government has raised the cap on special additional excise duty on petrol and diesel. These changes are as per the amendments in the Finance Bill passed in the Parliament.

Why such move?

  • Government is increasing duties on petrol and diesel to raise revenues in view of a tight fiscal situation.
  • Slump in global crude oil prices, alongside possibility of a global economic recession, has forced the government to look for avenues to raise revenues to support growth.
  • With major companies going for production shut downs, industry players have suggested the government to boost fiscal stimulus in the wake of demand collapse triggered by the coronavirus.
  • Earlier, Saudi Arabia had triggered the crash in prices by announcing a sharp increase in oil production after Russia declined to reduce oil supply to contain a fall in oil prices due to declining demand in a meeting of petroleum exporting countries.

Impact of the move

  • Every rupee hike in excise duty is expected to yield roughly Rs 13,000-14,000 crore annually.
  • The slump in global crude oil prices enables the government to raise these duties substantially without immediately putting the burden on the consumer.
  • But there is expected to be a demand slowdown for fuels with a nearly country wide lockdown in the wake of coronavirus.
  • With airlines, railways, trucks and passenger cars going off the roads, petrol, diesel and ATF (aviation turbine fuel) consumption is expected to fall drastically.

Back2Basics

What is Excise Duty?

  • Excise duty is a form of tax imposed on goods for their production, licensing and sale.
  • It is the opposite of Customs duty in sense that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.
  • At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc.
  • Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.

Purview of excise duty

  • The GST introduction in July 2017 subsumed many types of excise duty.
  • Today, excise duty applies only on petroleum and liquor.
  • Alcohol does not come under the purview of GST as exclusion mandated by constitutional provision.
  • States levy taxes on alcohol according to the same practice as was prevalent before the rollout of GST.
  • After GST was introduced, excise duty was replaced by central GST because excise was levied by the central government. The revenue generated from CGST goes to the central government.

Types of excise duty in India

Before GST kicked in, there were three kinds of excise duties in India.

Basic Excise Duty

  • Basic excise duty is also known as the Central Value Added Tax (CENVAT). This category of excise duty was levied on goods that were classified under the first schedule of the Central Excise Tariff Act, 1985.
  • This duty was levied under Section 3 (1) (a) of the Central Excise Act, 1944. This duty applied on all goods except salt.

Additional Excise Duty

  • Additional excise duty was levied on goods of high importance, under the Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957.
  • This duty was levied on some special category of goods.

Special Excise Duty

  • This type of excise duty was levied on special goods classified under the Second Schedule to the Central Excise Tariff Act, 1985.
  • Presently the central excise duty comprises of a Basic Excise Duty, Special Additional Excise Duty and Additional Excise Duty (Road and Infrastructure Cess) on auto fuels.

Coronavirus – Health and Governance Issues

Legal Provisions Used By Law Enforcement Agencies To Control The Spread Of Coronavris

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Significance of self-imposed curfew

To enforce a full lockdown to contain the spread of COVID-19, law enforcement agencies have taken the help of various legal provisions in CrPC and IPC.

  • The orders issued to curb the spread of the coronavirus have been framed under the Epidemic Diseases Act, 1897, which lays down punishment as per Section 188 of the Indian Penal Code, 1860.
  • Similarly, Sections 269 and 270 IPC are being invoked against persons who malignantly do any act which is likely to spread the infection of any disease dangerous to life.

    Sections 269 and 270 of the IPC

    • Sections 269 (negligent act likely to spread infection of disease dangerous to life) and 270 (malignant act likely to spread infection of disease dangerous to life) come under Chapter XIV of the IPC.
    • The chapter is named ‘Of Offences Affecting The Public Health, Safety, Convenience, Decency and Morals’.
    • While Section 269 provides for a jail term of six months and/or fine, Section 270 provides for a jail term of two years and/or fine.
    • In Section 270, the word ‘malignantly’ indicates a deliberate intention on the part of the accused.
    • During the coronavirus outbreak, penal provisions, such as Sections 188, 269 and 270 of the IPC, are being invoked to enforce the lockdown orders in various states.

    Earlier instances of invocation

    • Both Sections have been used for over a century to punish those disobeying orders issued for containing epidemics.
    • The Sections were similarly enforced by colonial authorities during outbreaks of diseases such as smallpox and bubonic plague.

What is Section 188 of the Indian Penal Code?

  • Section 3 of the Epidemic Diseases Act, 1897, provides penalties for disobeying any regulation or order made under the Act.
  • These are according to Section 188 of the Indian Penal Code (disobedience to order duly promulgated by public servant).
  • It is not necessary that the offender should intend to produce harm, or contemplate his disobedience as likely to produce harm.
  • It is sufficient that he knows of the order which he disobeys, and that his disobedience produces, or is likely to produce, harm.

What happens if you violate the lockdown orders? 

Under Section 188, there two offences:

1) Disobedience to an order lawfully promulgated by a public servant, If such disobedience causes obstruction, annoyance or injury to persons lawfully employed

Punishment: Simple Imprisonment for 1 month or fine of Rs 200 or both

2) If such disobedience causes danger to human life, health or safety, etc.

Punishment: Simple Imprisonment for 6 months or fine of Rs 1000 or both

According to the First Schedule of the Criminal Procedure Code (CrPC), 1973, both offences are cognizable, bailable, and can be tried by any magistrate.

Triable By: Any Magis­trate

 

Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

[pib] National Supercomputing Mission (NSM)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Supercomputers

Mains level : Applications of Supercomputers

The Union Ministry of Science & Technology has informed about the progress of the National Supercomputing Mission.

National Supercomputing Mission (NSM)

  • NSM is a proposed plan by GoI to create a cluster of seventy supercomputers connecting various academic and research institutions across India.
  • In April 2015 the government approved the NSM with a total outlay of Rs.4500 crore for a period of 7 years.
  • The mission was set up to provide the country with supercomputing infrastructure to meet the increasing computational demands of academia, researchers, MSMEs, and startups by creating the capability design, manufacturing, of supercomputers indigenously in India.
  • Currently there are four supercomputers from India in Top 500 list of supercomputers in the world.

Aims and objectives

  • The target of the mission was set to establish a network of supercomputers ranging from a few Tera Flops (TF) to Hundreds of Tera Flops (TF) and three systems with greater than or equal to 3 Peta Flops (PF) in academic and research institutions of National importance across the country by 2022.
  • This network of Supercomputers envisaging a total of 15-20 PF was approved in 2015 and was later revised to a total of 45 PF (45000 TFs), a jump of 6 times more compute power within the same cost and capable of solving large and complex computational problems.

IWhat is a Supercomputer?

  • A supercomputer is a computer with a high level of performance as compared to a general-purpose computer.
  • The performance of a supercomputer is commonly measured in floating-point operations per second (FLOPS) instead of million instructions per second (MIPS).
  • Since 2017, there are supercomputers which can perform over a hundred quadrillion FLOPS (petaFLOPS).
  • Since November 2017, all of the world’s fastest 500 supercomputers run Linux-based operating systems.

Why do we need supercomputers?

  • Developed and almost-developed countries have begun ensuring high investments in supercomputers to boost their economies and tackle new social problems.
  • These high-performance computers can simulate the real world, by processing massive amounts of data, making cars and planes safer, and more fuel-efficient and environment-friendly.
  • They also aid in the extraction of new sources of oil and gas, development of alternative energy sources, and advancement in medical sciences.
  • Supercomputers have also helped weather forecasters to accurately predict severe storms, enable better mitigation planning and warning systems.
  • They are also used by financial services, manufacturing and internet companies and infrastructure systems like water-supply networks, energy grids, and transportation.
  • Future applications of artificial intelligence (AI) also depend on supercomputing.
  • Due to the potential of this technology, countries like the US, China, France, Germany, Japan, and Russia have created national-level supercomputing strategies and are investing substantially in these programmes.

When did India initiate its efforts to build supercomputers?

  • India’s supercomputer programme initiated in the late 1980s, when the United States ceased the export of a Cray Supercomputer due to technology embargos.
  • This resulted in India setting up C-DAC in 1988, which in 1991, unveiled the prototype of PARAM 800, benchmarked at 5 Gflops. This supercomputer was the second-fastest in the world at that time.
  • Since June 2018, the USA’s Summit is the fastest supercomputer in the world, taking away this position from China.
  • As of January 2018, Pratyush and Mihir are the fastest supercomputers in India with a maximum speed of Peta Flops.

What are the phases of the National Supercomputing Mission?

Phase I:

  • In the first phase of the NSM, parts of the supercomputers are imported and assembled in India.
  • A total of 6 supercomputers are to be installed in this phase.
  • The first supercomputer that was assembled indigenously is called Param Shivay. It was installed in IIT (BHU) located in Varanasi.
  • Similar systems, Param Shakti (IIT Kharagpur) and Param Brahma (IISER, Pune) were also later installed within the country.
  • The rest will be installed at IIT Kanpur, IIT Hyderabad and Jawaharlal Nehru Institute of Advanced Studies (JNIAS).

Phase II:

  • The supercomputers that are installed so far are about 60% indigenous.
  • The 11 systems that are going to be installed in the next phase will have processors designed by the Centre for Development of Advanced Computing (C-DAC) and will have a cumulative capacity of 10 petaflops.
  • These new systems are to be constructed more cost-effectively than the previous ones.
  • One of the 11 proposed supercomputers will be installed
  • at C-DAC exclusively for small and medium enterprises so that they can train employees as well as work on supercomputers at a very low cost.

Phase III:

  • The third phase aims to build fully indigenous supercomputers.
  • The government had also approved a project to develop a cryogenic cooling system that rapidly dispels the heat generated by a computing chip. This will be jointly built together by IIT-Bombay and C-DAC.

What are the advantages of the National Supercomputing Mission?

  • The National Supercomputing Mission can ensure accessibility to supercomputers at an affordable rate to the scientific community and medium and small enterprises.
  • It can exponentially enhance the quality and quantity of R&D and higher education in the areas of science and technology.
  • It can solve the current and future challenges that are plaguing the country.
  • Currently, the world’s top supercomputers are mostly under the control of advanced nations like the US, Japan, China and the European Union. This Mission has the potential to bring India into this select league of such nations.
  • These supercomputers can be used in the areas of climate modelling, weather predictions, computational biology, atomic energy simulations, defence, disaster simulation, astrophysics etc.
  • These computers have played a crucial role in scientific and technological advancements in numerous fields.
  • Unlike other computers, these high-performance machines can crunch the most complex of data at a speed, which is millions of times faster than a desktop PC.
  • This mission, aiming to provide supercomputing facilities to about 60-70 institutions across the nation and thousands of active researchers, academicians, is moving fast towards creating a computer infrastructure within the country.
  • This mission can also enhance the country’s capacity to develop the next generation of supercomputer experts.

How do other countries make use of supercomputers?

China:

  • Jiangsu Province has a supercomputer called “Sunway TaihuLight”.
  • This supercomputer performs a wide range of tasks, including climate science, weather forecasting and earth-system modelling to help ships avoid rough seas, improve farmers’ yields and ensure the safety of offshore drilling.
  • TaihuLight has already led to an increase in profits and a reduction in expenses that justify its cost ($270 million).

United States:

  • In the US, supercomputers are radically transforming the healthcare system.
  • The Centre for Disease Control (CDC) has used supercomputers to create a far more detailed model of the Hepatitis-C virus, a major cause of the liver disease that costs $9 billion in healthcare costs in the US alone.
  • Using supercomputers, the researchers have now developed a model that comprehensively simulates heart down to the cellular level and can lead to a substantial reduction in heart diseases.

These are some of the very few cases of how supercomputers have enhanced breakthroughs in various fields.

How do supercomputers help fight coronavirus?

  • Earlier, the US had established COVID-19 High-Performance Computing Consortium that will bring together industry, academic institutions, and federal laboratories to try to identify or create candidate compounds that might prevent or treat coronavirus infection.
  • One of the members of the consortium, the Oak Ridge National Laboratory, aimed to look into compounds that are already available in the market that might combat COVID-19.
  • For this purpose, the world’s fastest supercomputer “Summit” was used.
  • Like other viruses, the novel coronavirus uses a spike protein to inject cells.
  • Using Summit with an algorithm to investigate which drugs could bind to the protein and prevent the virus from doing its duty, the researchers have a list of 77 drugs that show promise.
  • Starting with 8,000 compounds, Summit has shortened the time of the experiment exponentially, ruling out the vast majority of possible medications before settling on 77 drugs, which are ranked based on how effective they are likely to be at halting the virus in the human body.

Way forward

  • It is evident that supercomputers would become a vital part of our lives as it can provide solutions to the current and future problems and India, one of the most populous nations in the world, must ensure that it also has access to this technology for the welfare of its people.
  • Supercomputers, as they operate at such incredible speeds, will encounter numerous barriers like network and interconnectivity hardware that previous generations of designers did not have to deal with.
  • The cooling system is also one of the major design constraints.
  • Hence, India must give a high emphasis on innovation to tackle these challenges.
  • India must also give high emphasis to the application rather than the technology itself.
  • Supercomputing research also requires fundamental research of the next stages of computing like quantum computing that are still in the theoretical stage.
  • Bureaucratic red-tapism must be circumvented and scientists and researchers must be allowed to take bold and radical steps without fear of reprisal.
  • The government must also invest in necessary physical and digital infrastructure.
  • It must also address the challenges of:
  • Limited funding and delayed release of funds
  • The increasing need for imports for necessary hardware components to build supercomputers

Conclusion:

  • Supercomputers are strategically important for India as it can help the country to become a knowledge-driven economy.
  • This technology also can support cutting edge research that can benefit the economy, society, businesses, environment, etc.
  • Thus, enhancing investments, improving flexibility for research and providing other necessary infrastructures must be ensured for it to grow.
  • Without this technology, India risks being surpassed on the global stage by other nations and will consequently miss the huge benefits that come from having this strategically important technology at the disposal of the country’s best and brightest minds

 

 

Foreign Policy Watch: India-China

China and WHO a new story

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- China's growing influence at UN agencies and how it matters for Indian and the world.

Context

The WHO leadership, especially its Director-General, has been accused of serving China’s interests rather than preparing the world against the spread of the virus.

What is the basis of accusations?

  • The first basis for these charges is the WHO’s endorsement of the Chinese claim in mid-January that there was no evidence of human-to-human transmission of the virus.
  • Second, consistent support for Beijing’s handling of the crisis.
  • Third, WHO’s criticism of other nations for imposing travel restrictions to and from China.
  • Critics also believe the WHO lulled the world into complacence by delaying the decision on calling it a global emergency.

The new geopolitics of multilateralism

  • Whatever the merits of the above arguments, they point to the new geopolitics of multilateralism,
  • It also disproves the assumptions in both the West and India on China’s role in the UN.
  • It also underlines Beijing’s success in the leveraging of international organisations for its national advantage.
  • Nations working together against the trans-national threat: On the face of it, the sentiment that nations must work together against common trans-national threats is an eminently sensible one. But it does not easily translate into concrete actions.
  • Example of failure to act against a common threat: Take climate change. Attempts at developing collective solutions to the problem over the last three decades have foundered.
  • Most leaders agree on the problem and the solutions but are not willing to accept the framework — either the domestic or international — for distributing the costs associated with the solutions.
  • The US-China rivalry angle to the coronavirus outbreak: The problem of the cost-benefit distribution is compounded by great power rivalries. The coronavirus has shown up at a moment of deepening tensions between the US and China.
  • The grave collective challenge that the virus constitutes has only sharpened the conflict.
  • The blame game between the two: The US blames Beijing for letting this virus become a global monster and Beijing is doing all it can to deny that the virus came out of China.

How the relationship between China and WHO has transformed over the years?

  • WHO’s actions in the past: Nearly two decades ago, during the SARS crisis, WHO was at the front and centre of pressing China to come clean on the unfolding pandemic.
  • In 2003, it had issued the organisation’s first travel advisory ever on travel to and from the epicentre of the pandemic in southern China.
  • As the SARS crisis escalated, Beijing’s traditional arguments about the centrality of state sovereignty yielded place to a new policy of working with the WHO and taking proactive steps to reassure neighbours in South East Asia.
  • Reasons for change in WHO’s stance: Some attribute the turnaround in the relationship between Beijing and WHO to China’s growing financial contributions.
  • China’s efforts to expand clout: Observers of the UN point to something more fundamental — a conscious and consequential Chinese effort to expand its clout in the multilateral system.
  • China, which was admitted to the UN system in the 1970s, was focused on finding its way in the 1980s, cautiously raised its profile in the 1990s, took on some political initiatives at the turn of the millennium and seized the leadership in the last few years.

How India and the West are reacting to China’s rise?

  • Unprepared to deal with China’s rise at UN: Neither the West nor India have been prepared to deal with the impact of China’s rise on the UN system.
  • The US and its allies bet that China will be a “responsible stakeholder”. Put another way, they hoped that China will play by the rules set by the West.
  • China’s ambitions: China, of course, wants to set its own rules. Only the political innocents will be shocked by China’s natural ambition.
  • India’s past alignment with China: India, which considered US dominance over the international institutions in the 1990s as a major threat, chose to align with China in promoting a “multipolar world”.
  • Delhi convinced itself that despite differences over the boundary, Pakistan and other issues, there is huge room for cooperation with China.
  • Replacing the US as the dominant force: To their chagrin, the West and India are being compelled to respond to a very different environment at the UN. China wants to replace America as the dominant force in the UN.
  • The US is now fighting back. Last month, Washington went all out to defeat the Chinese candidate for the leadership of an obscure UN agency called the World Intellectual Property Organisation.

Implications of China’s rise for India

  • Chinese hegemony vs. American primacy: Delhi discovered that Chinese global hegemony could be a lot more problematic than American primacy.
  • After all, it is China that complicates India’s plans for membership of the Nuclear Suppliers Group, protects Pakistan against international pressures on cross-border terrorism, and relentlessly pushes the UN Security Council to take up the Kashmir question.
  • India now turns to the US and its allies to pursue some of its interests in the UN.
  • Multilateralism not an end in itself: Political ironies apart, if there is one lesson that India could learn from China’s experience with WHO and the UN, it is that multilateralism is not an end in itself for major powers.
  • It is an important means to secure one’s national interest and shape the international environment.
  • As a nation battered by the Cultural Revolution, China used international cooperation and global institutions to rebuild itself in the last decades of the 20th century.
  • Ready to reorder global governance: Having developed its economy and advanced its scientific and technological base, China is now ready to reorder global governance and become a rule-maker.
  • The effects are visible in the arena of global health.
  • China’s expanding global engagement with the WHO, its substantive international health assistance programmes, and an impressive domestic health technology sector are poised to boost China’s ambition to build a “Global Silk Road for Health’.

Conclusion

On its part, Delhi needs to intensify the recalibration of India’s multilateralism, rewrite its diplomatic lexicon at the UN, and build new political coalitions that will simultaneously contribute to India’s internal modernisation and enhance its international influence. The corona crisis is a good moment to start writing a new script for India’s own health diplomacy.

Issues related to Economic growth

How policy can bridge the gap

Note4Students

From UPSC perspective, the following things are important :

Mains level : Paper 3- Economic policy changes to mitigate the impact of slowdown on the vulnerable.

Context

India must use the windfall from oil to provide assistance to the most vulnerable to mitigate the impact due to COIVD-19 outbreak.

Estimates of impact

  • Impact on major economies: Minus 40 per cent, -30 per cent, -22 per cent, and -14 per cent. These are the estimated impacts (at an annualised rate) on the quarterly growth rates of China, the UK, Eurozone, and the US because of the Covid-19 virus.
  • Even excluding China and those that are closely tied to its supply chain — Korea and Taiwan — emerging markets (EM) are expected to go into recession in the first half of 2020, with the second quarter taking the biggest hit at over an 8 per cent quarterly decline.
  • Impact on India: India will not be spared this growth shock. In fact, the economic impact could be deeper and longer in emerging markets where the capacity of public health systems is limited at the best of times.

Prospects of recovery

  • Sudden stop to economic activity: We also know from the experiences of the countries already infected that the way to control the spread of the virus is through aggressive containment and social distancing that inevitably brings economic activity to a sudden stop.
  • There doesn’t seem to be a middle path. We also know that unlike natural catastrophes like earthquakes, capital stock is not destroyed by the virus.
  • Sharp recovery and conditions: Once the containment period is over and social interaction normalises, there is every reason to believe that activity can recover very sharply.
  • Unless the containment period is long because of capacity constraints in the healthcare system which could turn supply chain disruptions into a long-term problem, or the credit stress created by the lack of earning by households and firms during the sudden stop stymies the recovery.

India needs to brace itself

  • Unfortunately, India, where the virus still appears to be in the early stage, needs to brace for such a sudden stop.
  • The lockdown could be for an extended period given the already stretched public health system.
  • Impact on urban economy: The swathe of the economy that depends on social interaction — retail sales, entertainment, restaurants, and importantly construction and manufacturing — is very large.
  • Even if one believes that rural areas with relatively low population densities will not be affected much, the impact on urban economic activity could be very large.

Role of economic policy

  • What is the role of economic policy in such circumstances? It needs to “bridge the gap” between the brutal downturn and the eventual recovery.
  • While public health policies force a sudden stop in the economy to save lives, economic policies need to ensure that the impact from the shutdown is cushioned, incomes of households and firms supported, credit stress is contained, and the recovery is not hamstrung by policy headwinds.
  • This requires policy support to be operated on various fronts.
  • Role of the Central bank: Central banks not only need to cut rates but also need to provide adequate liquidity and extend regulatory forbearance to prevent credit stress and non-performing loans from clogging up the already strained financial system when the economy starts to recover.
  • Role of fiscal policy: The role of fiscal policy is even larger, from direct and indirect tax cuts or postponement to targeted credit support for sectors that are likely to be most affected such as airlines and retail trade.
  • Support to the vulnerable: The key is income support to the most vulnerable: From daily wage earners to SMEs (small and medium enterprises).
  • Using JAM trinity for cash transfer: It is here that the government’s efforts over the last five years make India one of the best-placed economies to deliver such cash transfers.
  • Since 2015, substantial time, effort, and resources have been expended to establish Jan Dhan (bank accounts), Aadhaar and mobile banking (JAM), and Mudra, the programme that dispenses loans to SMEs.
  • The objective of JAM and Mudra is to use Aadhaar as a way of accurately identifying beneficiaries and use mobile banking to digitally and seamlessly transfer cash/subsidies directly to households’ bank accounts and provide loans to SMEs without any leakages.
  • According to government reports, the total number of Jan Dhan accounts stand at around 380 million and 59 million MUDRA loans were sanctioned last year.
  • For a country with a population of 1.3 billion and about 63 million SMEs, even if there are duplicate accounts, JAM and Mudra should be able to cover almost all households and SMEs.
  • With Aadhaar accurately targeting beneficiaries, leakages should be minimised. If there ever was a time that India needed JAM and Mudra it is now.

Issue of fiscal space and solution

  • Some will argue that India doesn’t have the fiscal space. But it does.
  • Use oil windfall: In the last month or so, the crude oil price has dropped from around $60/bbl to around $30 and is likely to stay at this level given the breakdown in agreement among oil-producing countries and the massive collapse in global demand.
  • If the government simply taxed the oil windfall by raising excise duties, as it did during the 2014-15 oil price collapse, it could potentially raise almost 1 per cent of GDP or a staggering Rs 2.25 trillion.
  • If 50 million households have to be provided assistance because of the shutdown, it comes to about Rs 14,000 per month for three months or about Rs 24,000 a month to half of the 63 million SMEs.
  • And this without even having to increase this year’s budgeted deficit.

Conclusion

The government might have other uses for the oil windfall. But if India is forced into lockdown, the economic costs will be very large and the recovery will crucially depend on whether the pilot-light of the economy is kept lit through this period. This critically requires income transfers to vulnerable households and SMEs. India cannot complain that it does not have the fiscal space or the infrastructure to provide it.