Note4Students
From UPSC perspective, the following things are important :
Prelims level: Debt to GDP ratio
Mains level: Paper 3- Need to shed the worry over fiscal deficit
The devastation caused by the second wave calls for the government to shed its worry over the fiscal deficit. The article deals with this issue.
Role of fiscal policy to support economy through second wave
- As India battles to contain the surge in COVID-19 cases, several states have already imposed severe restrictions at the local level.
- The services sector has been hit the most as a consequence of these lockdowns and it would be difficult for India to deliver on this optimistic growth projection.
- Against this background, the role fiscal policy can play to support the economy needs consideration.
- The monetary policy is already accommodative and may not have enough room to further boost the economy.
- With headline as well as core inflation inching up in recent months, the RBI may not be in a position to further cut the policy rate.
- As per the latest Union Budget, the fiscal deficit is estimated to moderate from 9.5 per cent of GDP in FY21 to 6.8 per cent of GDP in FY22.
- This expected decline in fiscal deficit is not on account of lower fiscal spending but because of expectations of sharper revenue growth.
- The revenue receipts are estimated to grow by 15 per cent and fiscal spending by 1 per cent this financial year.
- With the debt to GDP ratio already more than 90 per cent, additional fiscal expansion will not be an easy choice for the government.
Government need to create fiscal space
- Extraordinary times call for extraordinary measures and the government will have to find ways to create fiscal space.
- This has become especially important as the economy is yet to shrug off the impact of the previous lockdown.
- Under these difficult circumstances, immediate measures must aim at providing the requisite social safety net to the poor and the vulnerable.
- The central government has already announced it will distribute an additional five kg of grain to the 800 million beneficiaries of the National Food Security Act, which is welcome.
- However, given the unprecedented uncertainty brought about by this COVID wave, the ration support under the PDS should be raised further.
- The government should also consider transferring cash to the bank accounts of the poor, just as it did last time.
- This becomes important as MGNREGA may not provide the safety cushion that it is indeed to as long as lockdown measures remain in place.
- The best stimulus perhaps would be to provide free vaccinations to the population as the benefits of faster and wider vaccine coverage more than outweighs its monetary cost.
- Immunisation is a public good. As we get over this crisis, the government must increase its outlay on physical and human health infrastructure.
How to finance additional cost?
- Part of this additional cost may be financed by reducing non-essential government expenditures and use it for COVID-related expenditure.
- The government may need to resort to additional borrowings from the market than budgeted earlier.
- The RBI may allow inflation above the upper bound of 6 per cent only in the short run.
- The plausible rise in interest rates may also be crucial to prevent capital outflows, given the global “economic outlook” when the US economy adopts an easy monetary policy combined with a huge fiscal stimulus.
Conclusion
The government should not be deterred by a worsening fiscal deficit in the short run as the additional growth that it generates may make debt consolidation easier when things normalise.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 32
Mains level: Paper 3- Vaccination of Covid-19
The article highlights the role the Supre Court can play in universal vaccination in India.
Why Supreme Court needs to step in
- Amid raging debate over the vaccination strategy, the role the Supreme Court of India can play to safeguard the right to life guaranteed under Article 21, for which it is duty-bound to exercise jurisdiction under Article 32 needs consideration.
- In this regard, universal vaccination is a glimmer of hope.
- The Supreme Court of India can facilitate speed and deeper penetration of universal vaccination, which is now commonly accepted as the only possible solution to the pandemic in the long run.
Issue of patent of vaccine
- It is time to question patents claimed by vaccines that have been developed with aid from the state in research and development.
- These patents, if established, must be immediately acquired with just and adequate compensation and made accessible to all manufacturers.
- This was done for medicines for AIDS and it can be done again under the Patents Act.
- The Court can also issue mandamus to undertake this exercise on an emergency basis.
- Thereafter, all pharmaceutical companies with Good Manufacturing Practices (GMP) as per the Drugs and Cosmetics Act must be allowed to manufacture vaccines at a pre-approved price of cost + 6 per cent return on investment.
- States can also be directed to incentivise the setting up of new manufacturing facilities as a possible third wave, periodic booster doses and the need for ancillary vaccines make it a long-term phenomenon.
- All this has to be ensured in addition to the free import of vaccines approved by advanced nations.
Free for all
- The availability of all the vaccines, whether indigenous or imported, must be free for all the recipients to be paid by GoI.
- The vaccines can be distributed to states on a pro-rata basis as per population and price adjusted as part of general revenue sharing in GST.
Vaccine administration
- The vaccine administration needs to be ramped up both in state and private facilities.
- For vaccine hesitancy, we need to incentivise the vaccination through a direct deposit of Rs 500 in Jan Dhan accounts for each vaccinated member of BPL families.
- This vaccination can be made compulsory for identifiable categories of persons from MGNREGA beneficiaries to Aadhaar Card holders to income-tax payers to bank account holders to driving-licence holders.
- There must be a strict penalty to be recovered from those who do not get vaccinated without medical reasons.
- Private efforts can be made eligible for reimbursement of cost.
Conclusion
The Supreme Court can steer us, with greater emphasis on the right to life. The pandemic may leave nothing and nobody behind to bicker about.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Python-5 missile
Mains level: Paper 3- Python-5 missile
Tejas adds Python-5 in its capacity
- Tejas, India’s indigenous Light Combat Aircraft, added the 5th generation Python-5 Air-to-Air Missile (AAM) in its air-to-air weapons capability on April 27, 2021.
- Trials were also aimed to validate enhanced capability of already integrated Derby Beyond Visual Range (BVR) AAM on Tejas.
- The test firing at Goa completed a series of missile trials to validate its performance under extremely challenging scenarios.
- The trials met all their planned objectives.
- The missiles were fired from Tejas aircraft of Aeronautical Development Agency (ADA) flown by Indian Air Force (IAF) Test pilots.
- The successful conduct was made possible with years of hard work by the team of scientists, engineers and technicians from ADA and HAL-ARDC along with admirable support from CEMILAC, DG-AQA, IAF PMT, NPO (LCA Navy) and INS HANSA.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Agreement on assistance in customs matters
Background of the agreement
- The Cabinet, chaired by Prime Minister has approved the signing and ratification of an Agreement with the UK on Customs Cooperation and Mutual Administrative Assistance in Customs Matters.
- The Agreement would provide a legal framework for sharing of information and intelligence between the Customs authorities of the two countries.
- It will also help in the proper application of Customs laws, prevention and investigation of Customs offences and the facilitation of legitimate trade.
- The Agreement takes care of Indian Customs’ concerns and requirements, particularly in the area of exchange of information on the correctness of the Customs value, tariff classification and origin of the goods traded between the two countries.
Impact
- The Agreement will help in the availability of relevant information for the prevention and investigation of Customs offences.
- The Agreement is also expected to facilitate trade and ensure efficient clearance of goods traded between the countries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: DPCO
Mains level: Paper 2- Vaccine pricing issue
How government regulate prices of drugs
- The Supreme Court flagged the issue of differential pricing for vaccines among States and the Centre and directed the central government to clarify it in an affidavit.
- To ensure accessibility, the pricing of essential drugs is regulated centrally through The Essential Commodities Act, 1955.
- Under Section 3 of the Act, the government has enacted the Drugs (Prices Control) Order (DPCO).
- The DPCO lists over 800 drugs as “essential” in its schedule, and has capped their prices.
- The capping of prices is done based on a formula that is worked out in each case by the National Pharmaceutical Pricing Authority (NPPA), which was set up in 1997.
So, why the government is not regulating price of vaccines through DPCO
- This is because the regulation through DPCO is not applicable for patented drugs or fixed-dose combination (FDC) drugs.
- This is why the price of the antiviral drug remdesivir, which is currently in great demand, is not regulated by the government.
- To bring vaccines or drugs used in the treatment of Covid-19 such as remdesivir under the DPCO policy, an amendment can be brought.
What other options government can explore to deal with the vaccine price issue
1) Patent Act 1970
- The Patent Act 1970 has two key provisions that could be potentially invoked to regulate the pricing of the vaccine.
- Section 100 of the Patents Act gives the central government the power to authorise anyone (a pharma company) to use the invention for the “purposes of the government”.
- It enables the government to license the patents of the vaccine to specific companies to speed up manufacturing and ensure equitable pricing.
- Under Section 92 of the Act, which deals with compulsory licensing, the government can, without the permission of the patent holder, license the patent under specific circumstances prescribed in the Act.
- Section 92 can be invoked in case of circumstances of national emergency or in circumstances of extreme urgency or in case of public non-commercial use.
- After the government issues a notification under Section 92, pharma companies can approach the government for a licence to start manufacturing by reverse engineering the product.
- However, in the case of biological vaccines like Covid-19, even though ingredients and processes are well known, it is difficult to duplicate the process from scratch.
- The process will also entail new clinical trials to establish safety and efficacy, which makes compulsory licensing less attractive.
2) The Epidemic Diseases Act, 1897
- Section 2 of this law gives the government “power to take special measures and prescribe regulations as to dangerous epidemic disease”.
- These broad, undefined powers can be used to take measures to regulate pricing.
- However, the law lacks the teeth to implement such an important policy framework.
- Violation of the Act is penalised under Section 188 of the Indian Penal Code, which deals with “disobedience to order duly promulgated by (a) public servant”.
3) Direct procurement by the Centre
- Apart from these legislative options, experts suggest that the central government procuring directly from the manufacturers could be the most beneficial route to ensure equitable pricing.
- As the sole purchaser, it will have greater bargaining power.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Net Zero Producers' Forum
Mains level: Paper 3- Net Zero Producers' Forum
About the Net Zero Producers’ forum
- Five of the world’s major oil and gas producers are working together to ‘develop pragmatic net-zero emission strategies’.
- Qatar, the US, Saudi Arabia, Canada and Norway, collectively responsible for 40% of global oil and gas production, will come together to form a cooperative forum that will develop pragmatic net zero-emission strategies.
- Energy producers are faced with unique responsibilities to furnish the world with energy but the climate crisis requires serious leadership and a strong alliance to deliver a path to net-zero.
Strategies and technologies
- The Net Zero Producers’ Forum will consider strategies and technologies which include methane abatement, circular carbon economy approach, development and deployment of clean energy and carbon capture and storage technologies, diversification from reliance on hydrocarbon revenues etc.
Source:
https://www.energy.gov/articles/joint-statement-establishing-net-zero-producers-forum-between-energy-ministries-canada
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