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Prime Minister’s Office : Important Updates

PM-CARES Fund

Note4Students

From UPSC perspective, the following things are important :

Prelims level : PM-CARES fund.

Mains level : Paper 3- Concerns over PM-CARES fund.

Context

In the midst of all of this, our Prime Minister announced the creation of the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES), which—if the intention is to allow funds to move fast and circumvent bureaucratic hurdles—is a great initiative.

About PM CARES Fund

  • The Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) was created on 28 March 2020 following the COVID-19 pandemic in India. 
  • The fund will be used for combating, containment and relief efforts against the coronavirus outbreak and similar pandemic like situations in the future. 
  • The Prime Minister is the chairman of the trust. Members will include the defence, home and finance ministers.
  • The fund will also enable micro-donations. The minimum donation accepted for the PM CARES Fund is ₹10 (14¢ US).
  • The donations will be tax exempt and fall under corporate social responsibility.
  • The Prime Minister had said that the PMO had received many requests to help in the war against COVID-19.
  • Accordingly, the fund was set up and will be used for disaster management and research

The backdrop against which the fund was created

  • The battle is a struggle for so many people. The Prime Minister called for physical distancing and the shutdown.
  • But physical distancing is a luxury. Many people cannot do so, because they live in tiny homes, in close proximity to each other.
  • And then there are the migrant workers who are squeezed next to each other as they struggle to head home.
  • The announcement of the PM-CARES Fund will convince more people to give to the cause.
  • However, certain aspects make one to look at the PM-CARES fund with mixed emotions. Here is why:

1. The government has faced challenges on the execution side

  • The PM did a great job rallying the country together, but the pictures of migrants walking hundreds of miles to get to the safety of their homes are heart-wrenching.
  • Criticism in hindsight: Of course, such decisions had to be made quickly, and it is easy to criticise the government in hindsight.
  • Inaction could be more damaging: And sometimes there are limited alternatives when one is doing work on a war footing. Mistakes are bound to be made, and in many cases, inaction could be more damaging.
  • The PM also acknowledged and apologised for these hardships in his latest Mann Ki Baat address.

2. Non-profits working on relief and rehabilitation are already struggling

  • In this environment, nonprofits are already struggling on the funding side.
  • Many will shut down or go into hibernation over the next three months and their employees will join the daily wage earners as workers who suddenly do not have any income.

3. Based on media reports, PM-CARES has been set up as a trust

  • Legislation to ban CSR funding to trusts: Despite the fact that the government is currently pushing legislation that aims to ban Corporate Social Responsibility (CSR) funding to nonprofits set up as trusts or societies.
  • Poor governance of the trusts: One of the reasons given for doing so is the alleged poor governance structure of trusts and societies when compared to Section 8 companies.
  • Why then has the government set up PM-CARES as a trust aimed at targeting corporate CSR funds?

4. PM-CARES has made no announcements on governance, accountability, etc.

  • No questions asked: While many donors have stepped up to fund non-profits working on covid-19 relief measures, their amounts pale in comparison to how much PM-CARES raised in its first two days.
  • Moreover, donors have grilled nonprofits on how we will ensure proper delivery.
  • But no such questions are being asked of the PM-CARES Fund.
  • How will success be measured? What audited accounts will be given? This information has not been shared.
  • So far, the success with respect to funds raised for PM-CARES is a reflection of the confidence people have in our Prime Minister.
  • Problems are surfacing: However, problems are already surfacing, like reports of fake online accounts being set up to steal funds meant for PM-CARES.
  • Presumably, issues will be addressed over the next few days, because everything is moving so fast and decisions are being taken on a war footing.

5. Centralised funding could hurt localised solutions

  • Solution comes from decentralisation: The internet has taught us that ideas and solutions come from decentralised, empowered teams driven by big, hairy, audacious goals.
  • Involving people in finding solutions: There are so many smart people across our country—in governments, research institutions and academia, the private sector, nonprofits, and civil society.
  • Today, more than ever, we need to get them all involved in finding solutions. And doing so requires money.
  • If a lot of funding for covid-19 gets centralised, funds to other players could get curtailed and localised solutions will die.
  • Funding to innovative solutions: Here again, it is hoped that the funds collected will also be given to other groups who are coming up with innovative solutions.

6. The government needs to trust and work closely with the nonprofit sector

  • The central, as well as many state governments, are talking to individuals, nonprofits, and the private sector for help to handle this pandemic.
  • And they are relying on the generosity (and duty) of the citizens to come up with solutions because, as with all disasters, the state cannot handle this problem on its own.
  • At the same time, the stimulus packages offered to the private sector have been very little.
  • Nonprofits, most of whom are funded either by philanthropists or CSR, will, therefore, be squeezed for funding, as their donors pull back discretionary money.
  • And many nonprofit professionals are worried that they may not have a job soon.
  • So, on one hand, various governments rush to the private players for help, while at the same time some people in the government treat the nonprofit sector with suspicion.

Conclusion

It is hoped that PM-CARES will help various teams in the public and private sector work together, bridging our trust deficits, to fight the virus and reduce the pain inflicted on so many vulnerable people on various fronts—physical, mental, and financial.

Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

The sudden return of quantity planning in the wake of covid-19

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Applying ways suggested by Keynes in times pandemic. of war to deal with the covid-19

Context

We could take a leaf out of a booklet by Keynes in our effort to tackle some of the challenges posed by the covid-19 pandemic.

The Crisis-Keynesian Mode response mode to pandemic

  • What is the war economy? One of the defining features of a war economy is that economic thinking is focused on quantities rather than prices.
  • Much of the ongoing global response to the covid-19 pandemic is still in crisis-Keynesian mode.
  • What is a crisis-Keynesian response: The nation-state has become the income supporter, financier and consumer of last resort.
  • However, there are also clear signs of war economics as well.
  • Signs of war economics: The decision by US President Donald Trump to use America’s Defense Production Act to force General Motors to make ventilators is one resonant example.
  • Just consider some of the key questions that are being asked right now.
  • How many ventilators are available? Are there ample food stocks? Can more hospital beds be made available? How many masks be produced in the next few weeks? Can the production of testing kits be ramped up? It’s all about quantities, quantities, quantities.

Historical background and impact of a shift in economic strategies

  • Impact persists in subsequent decades: Such big shifts in economic strategies are usually not reversed overnight. Decisions taken in response to a particular emergency tend to remain with us in subsequent decades.
  • World War II example: What happened in India during World War II is instructive. Many of the controls that were introduced during that global conflagration formed the basis of the later interventionist state that sought to control who produces how much. Here are a few examples.

1. Quantitative import controls

  • One of the first moves by the colonial state was to impose quantitative import controls in May 1940.
  • There were two reasons why this was done—to conserve foreign exchange as well as ensure that shipping capacity was used to bring in only what was essential to the war economy.

2. Food rationing

  • Food rationing was also introduced during the war years.
  • Over 700 towns were covered by some rationing scheme or the other by the end of the War.
  • The government also brought in measures to buy surplus grain from farmers at administered prices.
  • Various forms of rent control were also instituted. Most of these controls continued after India gained independence.

3. Balance of payment crisis in 1957

  • India was hit by a balance of payments crisis in 1957.
  • The massive investment thrust in the Second Five Year Plan had severely strained the country’s foreign exchange reserves.
  • The Indian government, once again as a temporary measure, imposed stringent controls on imports.
  • Many of these were quantitative in nature. They survived well into the 1980s.
  • In fact, the entire trade policy approach since the 1957 crisis was to minimize imports in a bid to preserve foreign exchange.

Will the government opt for automatic monetisation of the deficit?

  • Money creation by the RBI to fund deficit: There is now a growing consensus that the Indian government will have to fund part of its growing fiscal burden through money creation by the Reserve Bank of India.
  • What about inflationary consequences? The inflationary consequences will be muted—for now—because the velocity of narrow money is most likely set to fall on account of weak demand conditions under a lockdown.
  • Precedence: The automatic monetization of Indian government deficits was part of the policy playbook after the 1950s till it was thankfully discontinued in 1997.
  • The main instrument for that was ad hoc treasury bills.
  • These were introduced in 1954 as a temporary measure to replenish the cash balances the government maintains with the central bank.
  • What was ad hoc treasury bills? Ad hoc treasury bills were not introduced through any formal law but as an arrangement between mid-level bureaucrats in New Delhi and Mumbai (i.e. RBI).
  • What began as a temporary measure to smoothen government cash holdings had become a near-permanent feature of Indian macroeconomic policy by the 1970s.

The uncertain future

  • Longer the war more profound will be the changes: The longer the global battle against the pandemic lasts, the more profound will be the changes across the economic landscape.
  • In an insightful article in Bloomberg, Andy Mukherjee uses the lessons of history to look into the uncertain future.
  • Among the possibilities he mentions are the contrasting ones of an economy run by robots and algorithms but with little labour, or an economy in which labour has clawed back the power it lost in the second age of globalization.

Managing the resources in the time of war

  • Managing the resources: In 1940, John Maynard Keynes wrote a little booklet How To Pay For The War, Keynes essentially argued that the main challenge was not how to finance the war effort, but how to manage real resources to produce the arms that the UK needed to defend herself.
  • Suppression of consumption: He then argued that war production would necessarily involve suppression of consumption, either through higher taxes or some scheme of deferment.

Conclusion

The war against the covid-19 pandemic is very different from the military war that Keynes was thinking about. Yet, his booklet offers useful lessons on how to think about some of our current challenges—and also about what we can expect once the situation returns to normal.

Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

Supreme Court upholds “Right to discuss COVID-19”

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Right to Discuss, Art. 19

Mains level : Coronovirus outbreak and its mitigation

The Supreme Court has upheld the right to free discussion about COVID-19, even as it directed the media to refer to and publish the official version of the developments in order to avoid inaccuracies and large-scale panic.

Right to Discuss

  • The Right to Discuss falls under the purview of the right to freedom of speech and expression.
  • Article 19(1)(a) of the Constitution of India states that all citizens shall have the right to freedom of speech and expression.
  • It ensures all citizens the liberty of thought and expression.
  • The exercise of this right is, however, subject to “reasonable restrictions” for certain purposes being imposed under Article 19(2) of the Constitution of India.
  • These restrictions are imposed in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.

Why such a move?

  • The court was responding to a request from the Central government that media outlets, in the “larger interest of justice”, should only publish or telecast anything on COVID-19 after ascertaining the factual position from the government.
  • Any deliberate or inaccurate reporting by the media, particularly web portals, had the serious and inevitable potential of causing panic in a larger section of the society.
  • Any panic reaction in the midst of an unprecedented situation based on such reporting would harm the entire nation.
  • Creating panic is also a criminal offence under the Disaster Management Act, 2005.

Communicable and Non-communicable diseases – HIV, Malaria, Cancer, Mental Health, etc.

A pandemic in an unequal India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- How lockdown affects the poor disproportionately and what the state must do mitigate the impact.

Context

The official strategies to deal with the virus place the responsibility on citizens, a majority without privilege, to fight the virus.

The poor disproportionately affected

  • If the COVID-19 pandemic lashes India with severity, it will not be just the middle class who will be affected.
  • India’s impoverished millions are likely to overwhelmingly bear the brunt of the suffering which will ensue.
  • Inequality and impact of a pandemic: The privileged Indian has been comfortable for too long with some of the most unconscionable inequalities in the planet.
  • But with the pandemic, each of these fractures can decimate the survival probabilities and fragile livelihoods of the poor.

Inadequate capacity of the health system  

  • Low investment in public health: India’s investments in public health are among the lowest in the world, and most cities lack any kind of public primary health services.
  • A Jan Swasthya Abhiyan estimate is that a district hospital serving a population of two million may have to serve 20,000 patients, but they are bereft of the beds, personnel and resources to do this. Few have a single ventilator.
  • The poor left with meagre services: India’s rich and middle-classes have opted out of public health completely, leaving the poor with unconscionably meagre services.
  • The irony is that a pandemic has been brought into India by people who can afford plane tickets, but while they will buy private health services, the virus will devastate the poor who they infect and who have little access to health care.

No planning and preparation by the state

  • Official strategies placing responsibility on citizens: Most of the official strategies place the responsibility on the citizen, rather than the state, to fight the pandemic.
  • No preparation by the states: The state did too little in the months it got before the pandemic reached India for expanding greatly its health infrastructure for testing and treatment.
  • This includes planning operations for food and work; security for the poor; for safe transportation of the poor to their homes; and for special protection for the aged, the disabled, children without care and the destitute.

What must be done?

  • 25 day’s minimum wage: For two months, every household in the informal economy, rural and urban, should be given the equivalent of 25 days’ minimum wages a month until the lockdown continues, and for two months beyond this.
  • Pensions must be doubled and home-delivered in cash.
  • There should be free water tankers supplying water in slum shanties throughout the working days.
  • Double the PDS entitlement: Governments must double PDS entitlements, which includes protein-rich pulses, and distribute these free at doorsteps.
  • Provide cooked and packed food: In addition, for homeless children and adults, and single migrants, it is urgent to supply cooked food to all who seek it, and to deliver packed food to the aged and the disabled in their homes using the services of community youth volunteers.
  • Ensure prisons are safe: To ensure jails are safer, all prison undertrial prisoners, except those charged with the gravest crimes, should be released.
  • Likewise, all those convicted for petty crimes. All residents of beggars’ homes, women’s rescue centres and detention centres should be freed forthwith.

Way forward

  • Commit 3% of GDP on health: India must immediately commit 3% of its GDP for public spending on health services, with the focus on free and universal primary and secondary health care.
  • Nationalise private healthcare: Since the need is immediate, authorities should follow the example of Spain and New Zealand and nationalise private health care.
  • An ordinance should be passed immediately that no patient should be turned away or charged in any private hospital for diagnosis or treatment of symptoms which could be of COVID-19.

Conclusion

While one part of the population enjoys work and nutritional security, health insurance and housing of globally acceptable standards, others survive at the edge of unprotected and uncertain work, abysmal housing without clean water and sanitation, and no assured public health care. Can we resolve to correct this in post-COVID India? Can we at least now make the country more kind, just and equal?

J&K – The issues around the state

J&K Reorganization (Adaptation of State Laws) Order, 2020

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Administrative changes in the state

  • The Ministry of Home Affairs has promulgated the Jammu and Kashmir Reorganization (Adaptation of State Laws) Order, 2020, which comes into force with immediate effect.
  • Earlier this month order for an adaptation of Central Laws was also promulgated. It ordered application of 37 central laws envisaged in the Concurrent List to the newly formed UT.

About the Order

  • Issued by the Department of J&K and Ladakh Affairs, the Order stems from Section 96 of the J&K Reorganization Act, 2019.
  • The Act was a consequence of the abrogation of Article 370 of the Constitution of India and it reorganized the State into two UTs.
  • The Order notifies changes in the J&K Civil Services (Decentralization and Recruitment) Act (hereafter, “Civil Services Act”), which defines “domicile” for employment in the region
  • Domicile Criteria
    Under the newly inserted Section 3A of the Civil Services Act which is regarding domicile for purposes of appointment to any service in UT of J&K.A person will have to fulfill the following conditions to be deemed to be a domicile of the UT of J&K:
  • She/he has to have resided for period of 15 years in the UT of J&K or has studied for a period of 7 years and appeared in Class 10th/12th examination in an educational institution located in the UT of J&K; or
    She/he is registered as a migrant by the Relief and Rehabilitation Commissioner (Migrants) in the UT of J&K.
  • Scope of Section 3A
  • Children of those fulfilling the aforementioned conditions are also deemed to be included.
  • Section 3A also goes on to include children of those Central Government Officials, All India Services Officers, Officials of PSUs and Autonomous body of Central Government, PSBs, etc. who have served in J&K for a total period of ten years.
  • Additionally, it includes those children of such residents of UT of J&K who reside outside the UT of J&K in connection with their employment or business or other professional and vocational reasons, but the parents fulfill the conditions provided under Section 3A(1).

Job reservations

  • Section 5A provides for the domicile reservation for the purpose of appointment of any post carrying a pay scale of not more than Level-04 under the UT of J&K or under local or any other (other than cantonment board) within the UT of J&K.
  • Therefore, lowest level of non-gazetted rank jobs would be reserved exclusively for the Jammu and Kashmir domiciles.

RBI Notifications

Fully Accessible Route (FAR)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Voluntary Retention Route (VRR), Fully Accessible Route (FAR)

Mains level : Not Much

The Reserve Bank of India (RBI) has introduced a separate channel, namely ‘Fully Accessible Route’ (FAR), to enable non-residents to invest in specified government bonds with effect from April 1.

Fully Accessible Route (FAR)

  • The move follows the Union Budget announcement that certain specified categories of government bonds would be opened fully for non-resident investors without any restrictions.
  • Under FAR, eligible investors can invest in specified government securities without being subject to any investment ceilings.
  • This scheme shall operate along with the two existing routes, viz., the Medium Term Framework (MTF) and the Voluntary Retention Route (VRR).

Benefits

  • This will substantially ease access of non-residents to Indian government securities markets and facilitate inclusion in global bond indices.
  • This would facilitate inflow of stable foreign investment in government bonds.

Back2Basics

Voluntary Retention Route (VRR)

  1. RBI had announced a separate scheme called VRR to encourage Foreign Portfolio Investors (FPIs) to undertake long-term investments in Indian debt markets.
  2. Under this scheme, FPIs have been given greater operational flexibility in terms of instrument choices besides exemptions from certain regulatory requirements.
  3. The details are as under:
  • The aggregate investment limit shall be ₹ 40,000 crores for VRR-Govt and ₹ 35,000 crores for VRR-Corp.
  • The minimum retention period shall be three years. During this period, FPIs shall maintain a minimum of 75% of the allocated amount in India.
  • Investment limits shall be available on tap for investments and shall be allotted by Clearing Corporation of India Ltd. (CCIL) on ‘first come first served’ basis.

Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

Foreign Trade Policy 2015-2020 extended for one year

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Foreign Trade Policy 2015-20

The Union Commerce and Industry Ministry has announced changes in India’s Foreign Trade Policy (FTP). The Govt. has decided to continue relief under various export promotion schemes by granting an extension of the existing Policy.

Foreign Trade Policy 2015-20

  • It provided a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in keeping with the “Make in India” vision of Prime Minister.
  • The focus of the new policy is to support both the manufacturing and services sectors, with a special emphasis on improving the ‘ease of doing business’.
  • It described the market and product strategy and measures required for trade promotion, infrastructure development and overall enhancement of the trade ecosystem.

Features of the FTP 

  • Goods – Earlier there were 5 different schemes (Focus Product Scheme, Market Linked Focus Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY) for rewarding merchandise exports with different kinds of duty scrips with varying conditions attached to their use.
  • Duty-free scrips are paper authorisations that allow the holder to import inputs which are used to manufacture products that are exported, or to manufacture machinery used for producing such goods, without paying duty equivalent to the printed value of the scrip.
  • For instance, a duty-free scrip valued at Rupees 1 lakh allows the holder to import goods without paying duty of up to Rupees 1 lakh on the goods.
  • Under the new Foreign Trade Policy, all these schemes have been merged into a single scheme, namely the Merchandise Export from India Scheme (“MEIS“) and there is no conditionality attached to scrips issued under the MEIS.
  • Services – The Served From India Scheme has been replaced with the Service Exports from India Scheme (“SEIS“).
  • SEIS is stated to apply to ‘Service Providers located in India’ instead of ‘Indian Service Providers’.
  • Therefore, SEIS rewards to all service providers of notified services, who are providing services from India, regardless of the constitution or profile of the service provider.
  • Special Economic Zones – The policy outlines extended incentives for Special Economic Zones in India
  • Export Houses – The nomenclature of Export House, Star Export House, Trading House, Star Trading House, Premier Trading House certificate has been simplified and changed to One, Two, Three, Four and Five Star Export House.
  • Status Holders – Business leaders who have excelled in international trade and have successfully contributed to India’s foreign trade are proposed to be recognized as Status Holders and given special privileges to facilitate their trade transactions, in order to reduce their transaction costs and time.
  • Resolving Complaints – In an effort to resolve quality complaints and trade disputes between exporters and importers, a new chapter on Quality Complaints and Trade Disputes has been incorporated into the Foreign Trade Policy.
  • There would be no conditionality attached to any scrips issued under these schemes.
  • For grant of rewards under MEIS, the countries have been categorized into 3 Groups, whereas the rates of rewards under MEIS range from 2% to 5%.
  • Under SEIS the selected Services would be rewarded at the rates of 3% and 5%.