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Coronavirus – Economic Issues

Economic liberalisation and its faults

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- How the Covid-19 brought into focus the faults of economic liberalisation.

The article describes the problems economic liberalisation has created. Covid-19 has exposed these problems even as developed countries faced shortages of masks and ventilators. The focus is on China’s dominance as a manufacturing hub and its implication for the world and India.

Background of the end of the ‘Licence Raj’ in India

  • Manmohan Singh’s 1991-92 Budget speech marked the beginning of the end of the ‘Licence Raj’ in India.
  • The Budget also announced the reduction of import duties and paved the way for foreign-manufactured goods to flow into India.
  • Following this, most of the manufacturing sector was opened up to foreign direct investment.
  • India’s industrial policy was virtually junked, and policymakers and the political leadership became contemptuous of the idea of self-reliance.

Shifting of the base in developing countries

  • In the late 1980s, transnational corporations started shifting the production base to smaller companies in developing countries, especially Asia.
  • The reason for this shift was cheap labour and raw materials.
  • Developed countries supported the move because shifting the polluting and labour-intensive industries suited them as long as ownership remained with their companies.
  • Development of global supply chains: The world witnessed the development of global supply chains in many products starting with garments.

The dominance of China in the global supply chain is at the root of trade war between the US and China. The outbreak of Covid-19 has added it a new dimension and has forced many countries to reframe their trade policies. And India is no different. This makes it an important topic for UPSC. A question can be framed from an impact angle or the US-China trade war angle.

The emergence of China as a global manufacturing hub

  • Though many developing countries participated in the global production/value/supply
  • The substantial value addition in developing countries happened in a few production hubs, of which China emerged to be a major one.
  • Decentralised to localised production: Manufacturing shifted from a decentralised production system spread across different counties to just a few locations.
  • The countries like China defied the logic of supply/value chains ensuring substantial value addition for themselves.
  • They even carried out backward integration and thus emerged as global manufacturing hubs for certain products.
  • In the case of health products, China became the global supplier of active pharmaceutical ingredients (API), personal protective equipment (PPE), and medical devices diagnostics.

What were the implications of China’s dominance in a fight against Covid-19?

  • China’s dominance has major implications for the  COVID-19 outbreak.
  • The resultant loss of manufacturing base has affected the ability of many governments, including of developed countries, to put up an effective response to the crisis.
  • The U.K. Prime Minister asked the country’s manufacturers to produce ventilators in order to provide care for critical COVID-19 patients.
  • Similarly, the U.S. President invoked the Defense Production Act of 1950 to ramp up N95 mask production.
  • Under this legislation, the U.S. President can direct U.S. manufacturers to produce goods according to the directions of the government.
  • Similarly, the French Health Minister stated that the country may nationalise vaccine companies if necessary.
  • Spain nationalised all its private hospitals.
  • Israel and Chile issued compulsory licences to ensure that medicines are affordable.
  • Lack of preparedness and dependence: This exposes the poor state of preparedness and dependence on imports for essential goods required to meet the challenge of any major disease outbreak.
  • This shows that what is good for the company may not be good the country in all circumstances.
  • So, the overwhelming objective of private sector-led economic growth has proved to be disastrous.

Pay attention to the impact on India. The following two points are very important.

How economic liberalisation affected India’s ability?

  • In India, economic liberalisation has damaged the government’s capacity in two ways.
  • 1. It incapacitated the government to respond to emergencies based on credible information.
  • The dismantling of the ‘Licence Raj’ resulted in the elimination of channels of information for the government, which is crucial to make informed policy choices.
  • For example, it took the government several meetings to determine the production capacity of various pharmaceutical companies.
  • Similarly, there were difficulties in finding out India’s production capacity of PPE, medical devices and diagnostics.
  • 2. The logic and policies of economic liberalisation seriously undermined the manufacturing capabilities of health products in India.
  • The short-sighted policy measures, with the objective of enhancing profitability of the private sector, allowed the import of raw materials from the cheapest sources and resulted in the debasing of the API industry, especially in essential medicine.
  • According to a report of the Confederation of Indian Industry (CII), nearly 70% of India’s API import is from China.
  • The CII report lists nearly 58 API where the dependence is 90% to 100%.
  • The disruption in the supply of API due to the COVID-19 outbreak has impacted the production of not only medicines required for COVID-19 patients, but also of other essential medicines in India.
  • As a cost-effective producer of medicines, the world is looking to India for supply, but it cannot deliver due to its dependence on China.
  • This dependence has also forced India to impose export restrictions on select medicines.
  • Similar dependence exists with regard to PPE, medical devices and diagnostic kits.
  • The 100% dependence on Reagents, an important chemical component for testing, is limiting the capacity of the government from expanding testing because the cost of each test is ₹4,500.
  • Dangers of dependence: In the name of economic efficiency, India allowed unconditional imports of these products and never took note of the dangers of dependency.

Loss of jobs and poor working conditions

  • Destruction of manufacturing base: Global supply/production chains destroyed the manufacturing base in developed and developing countries.
  • That also resulted in the loss of jobs and poor working conditions in these sectors.
  • Developing countries were asked to ease their labour protection laws to facilitate global production and supply chains popularly known as global value chains.
  • As a result, people were forced to work in precarious working conditions without any social security net.
  • This created an unorganised army of labourers and is preventing many developing country governments from effectively offering relief.

Conclusion

A virus has made us rethink our obsession with the economic efficiency theory. It implores us to put in place an industrial policy to maintain core capacity in health products so that we can face the next crisis more decisively.

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

Government must fix an upper limit for fiscal deficit

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Need for the stimulus and relief package to in the wake of Covid-19 and issues involved in its size.

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

Why the dilemma is sharpest for India?

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

Why is the relief package criticised as too little?

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

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

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

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

Uncertainties in the crisis

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

Issues over relief and stimulus package

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

Debate on how much additionally the government should borrow

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

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

Way forward

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

Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

Making use of technology to trace Covid-19 cases

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Aarogya Setu App.

Mains level : Paper 3- Using technology for tackling the Covid-19.

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

Success story of domestic digital platforms

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

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

How the Aarogya Setu works?

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

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

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

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

So, what could be the alternate strategy?

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

Limitations of using GPS and Bluetooth for tracing in India

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

Conclusion

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

History- Important places, persons in news

Ambedkar and the Poona Pact

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Poona Pact, Communal Award

Mains level : Read the attached story

Yesterday was the birth anniversary of Dr B.R. Ambedkar, the chief architect of our constitution. On that occasion, author of the news (originally published in TH) highlights the significance of Poona Pact in the formation of our Constitution.

The Poona Pact of 1932 is a landmark event in India’s struggle for independence. It marked the start of social justice movement in the country under the leadership of Dr. Ambedkar.

What is Poona Pact?

  • In late September 1932, B.R. Ambedkar negotiated the Poona Pact with Mahatma Gandhi.
  • The background to the Poona Pact was the Communal Award of August 1932, which, among other things, reserved 71 seats in the central legislature for the depressed classes.
  • The Award was made by then British PM Ramsay MacDonald on 16 August 1932 to extended separate electorate.
  • It aimed to grant separate electorates in British India for the Forward Caste, Lower Caste, Muslims, Buddhists, Sikhs, Indian Christians, Anglo-Indians, Europeans and then Untouchables.
  • Gandhi, who was opposed to the Communal Award, saw it as a British attempt to split Hindus, and began a fast unto death to have it repealed.

How Poona Pact defeated the Communal Award?

  • Reserved seats: In a settlement negotiated with Gandhi, Ambedkar agreed for depressed class candidates to be elected by a joint electorate.
  • More representation: On his insistence, slightly over twice as many seats (147) were reserved for the depressed classes in the legislature than what had been allotted under the Communal Award.
  • Doors opened for Public Services: In addition, the Poona Pact assured a fair representation of the depressed classes in the public services while earmarking a portion of the educational grant for their uplift.
  • Social acceptance: The Poona Pact was an emphatic acceptance by upper-class Hindus that the depressed classes constituted the most discriminated sections of Hindu society.
  • Increased political say: It was also conceded that something concrete had to be done to give them a political voice as well as a leg-up to lift them from backwardness they could not otherwise overcome.

Significance of the pact

  • The concessions agreed to in the Poona Pact were precursors to the world’s largest affirmative programme launched much later in independent India.
  • It would also not have been lost on him that Muhammad Ali Jinnah, with the separatist tendencies strongly backing him, was watching and waiting to take advantage of the evolving situation.
  • A slew of measures was initiated later to uplift Scheduled Castes and Scheduled Tribes.

Major outcomes

  • The Poona Pact emphatically sealed Ambedkar’s leadership of the depressed classes across India.
  • He made the entire country, and not just the Congress Party, morally responsible for the uplift of the depressed classes.
  • Most of all he succeeded in making the depressed classes a formidable political force for the first time in history.

Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

What is pooled testing, recommended by the ICMR?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Pooled testing

Mains level : Intensive measures required for the containment the ongoing pandemic

The Indian Council of Medical Research (ICMR) has issued an advisory for using pooled samples for testing of COVID-19 in order to increase the number of tests conducted by laboratories across the country.

COVID-19 containment measures are pacing up across the country. However, it is argued that we are lagging in the number of tests to be carried out.  With certain limitations, pooled testing promises an edge over individual testings of suspected patients.

What is pooled testing?

  • In a pooled testing algorithm, samples of multiple individuals are put together in a tube and screened through the PCR test.
  • In case the pooled test turns out to be positive, individual samples are tested, which is referred to as pool de-convolution.
  • If there’s no positive result, all individual samples in the pool are regarded as negative, resulting in substantial cost savings.

What the ICMR has recommended?

  • ICMR has advised that while more than two samples can be pooled together, the number should not exceed five samples to avoid sample dilution, which can lead to false negatives.
  • This method can be used in areas where the prevalence of COVID-19 is low, which means a positivity rate of less than two per cent.
  • In areas with a positivity rate between two to five per cent, sample pooling of PCR screening may be considered in a community survey of surveillance among asymptomatic individuals.
  • Samples of individuals with known contact with confirmed cases or healthcare workers should not be included in the pooled samples.
  • Also, ICMR has said pooling of sample is not recommended in areas or population with positivity rates of over five per cent.

Benefits of pooled testing

  • Using this method, substantial costs and testing kits are saved.
  • For instance, if a pooled sample consists of the samples of five individuals and it tests negative, the cost of four testing kits is saved and more number of people are covered with fewer resources.
  • Significantly, pooled screening can also help in tracking down the asymptomatic cases of the disease, thereby tracking community transmission.
  • But in case the sample tests positive, all individuals need to be tested separately.

Digital India Initiatives

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

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CollabCAD tool and its utility

Mains level : Not Much

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

CollabCAD

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

Back2Basics: Atal Innovation Mission (AIM)

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

Tourism Sector

[pib] “DekhoApnaDesh” Webinar

Note4Students

From UPSC perspective, the following things are important :

Prelims level : "DekhoApnaDesh" Webinar

Mains level : Various initiaitves tourism promotion

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

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

About DekhoApnaDesh

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

Digital India Initiatives

[pib] Swayam Prabha TV Channels

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SWAYAM prabha initiaitive

Mains level : DIgital learning initiaitives and their outreach in India

The HRD Ministry has taken several prompt, new and unique initiatives to ensure that the education of learners should not get affected by the challenging situation arising out of COVID 19. One of them is Swayamprabha TV channels.

There are various web/portals/apps with peculiar names such as YUKTI, DISHA, SWAYAM etc. Their core purpose is similar with slight differences. Pen them down on a separate sheet under the title various digital HRD initiatives.

SWAYAM Prabha

  • The SWAYAM Prabha is a group of 32 DTH channels devoted to telecasting of high-quality educational programmes on a 24X7 basis using the GSAT-15 satellite.
  • The channels are uplinked from BISAG, Gandhinagar. The contents are provided by NPTEL, IITs, UGC, CEC, IGNOU, NCERT and NIOS.
  • The INFLIBNET Centre maintains the web portal.
  • Every day, there will be new content for at least 4 hours which would be repeated 5 more times in a day, allowing the students to choose the time of their convenience.

The DTH Channels shall cover the following:

Higher Education: Curriculum-based course contents at post-graduate and under-graduate level covering diverse disciplines such as arts, science, commerce, performing arts, social sciences and humanities, engineering, technology, law, medicine, agriculture, etc.

School education (9-12 levels): Modules for teacher’s training as well as teaching and learning aids for children of India to help them understand the subjects better and also help them in preparing for competitive examinations for admissions to professional degree programmes.

Curriculum-based courses: These channels can meet the needs of life-long learners of Indian citizens in India and abroad.


Back2Basics: SWAYAM Portal

  • SWAYAM is a Hindi acronym that stands for “Study Webs of Active-Learning for Young Aspiring Minds” is an Indian Massive open online course (MOOC) platform.
  • It is an initiative launched by the Ministry of HRD, under Digital India to give a coordinated stage and free entry to web courses, covering all advanced education, High School and skill sector courses.
  • It was launched on 9th July 2017 by Honorable President of India.
  • The platform offers free access to everyone and hosts courses from class 9 till post-graduation.
  • It enables professors and faculty of centrally funded institutes like IITs, IIMs, IISERs, etc. to teach students.