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  • Government Budgets

    [op-ed snap] The stress in state finances

    28 January 2020 | op-ed snap | Economics
    Mains Paper 3: Government Budgeting

    Context

    Lower tax devolution, delays in GST compensation are potential risks to the states.

    Trends in the finances of the state

    • The unaudited fiscal data of 21 states:
      • These states account for around 90 per cent of India’s GDP in 2017-18. The data reveal some trends.
    • First Trend: Revenue receipt sliding down
      • From 15.6 to 4.6 %: At the aggregate level, revenue receipts of these 21 states have grown by a mere 4.6 per cent, sliding down from 15.3 per cent over the same period last year.
      • Decrease in Central tax devolution: The analysis shows that the states’ share in Central tax devolution has slowed the most, contracting by 2.3 per cent during this period, after having grown by 12.1 per cent over the same period last year.
    • Second trend: The Centre’s gross tax revenues are expected to fall short of the budgeted target by a considerable Rs 3- 3.5 trillion this fiscal year.
      • The aggregate tax devolution to all states may be as much as Rs 1.7 – 2.2 trillion lower in the current fiscal year than what was budgeted.
      • This is a key revenue risk staring at the state governments this year.
    • Third trend: States own tax and non-tax revenue contracting.
      • The states’ own non-tax revenues have contracted by 5 per cent during the first eight months of this fiscal year, after an expansion of 15.3 per cent over the same period last year.
      • Decreasing tax revenue: Growth of states’ own tax revenues, the largest source of their revenue receipts, eased to a tepid 2.2 per cent during this period from a healthy 16 per cent over the same period last year.
      • This is in part by the modest rise in collections of the State Goods and Services Tax (SGST).
    • Fourth trend: Increase in the grants from the Centre
      • The primary factor boosting the GST compensation seems to be the low growth in states’ GST revenues relative to the mandated 14 per cent annual growth for the five-year transition period.

    Delay in receipt of the GST collection and the risk

    • Some state has voiced concerns over the delays in receipt of the compensation amount in recent months.
      • The delay has complicated their fiscal position and cash flow management.
      • Risk for the states: The timing of receipt of the compensation is the second major revenue risk facing state governments.
      • If compensation gets delayed to the next fiscal year, we may well find some traditionally revenue surplus states staring at a revenue deficit
      • Case of no GST compensation: But it seems states will have to start gearing up for life without the GST compensation.

    The Rise in State Development Loans or Market borrowing by states

    • SDL rising in first three quarters: According to ICRA’s estimates, net SDL issuance of all states and UTs rose by 15.5 per cent to Rs 2,806 billion in the first three quarters of this fiscal year, up from Rs 2,429 billion last year.
      • The combined gross SDL issuance has expanded by a significant 34.9 per cent to Rs 3,874 billion this fiscal year (April-December), up from Rs 2,872 billion last year.
      • The calendar for state government market borrowings for the fourth quarter indicates tentative gross SDL issuances of Rs 2,086 billion in the quarter, implying a moderate 9.1 per cent growth.
      • But, this conceals a large dip in redemptions.
      • Net SDL issuances will expand by a staggering 55.7 per cent to Rs 1,766 billion in Q4FY20, up from Rs 1,134 billion last year, underlining the stress in state government finances this year.
    • About 25 % rise in borrowing this fiscal: If market borrowings in the fourth quarter are in line with the amounts indicated, total gross borrowing this fiscal year would rise by 24.6 per cent to nearly Rs 6 trillion, up from Rs 4.8 trillion last year.
    • Net borrowing by states as large as Central govt. borrowing: Net borrowings by states would rise by an even sharper 28.3 per cent to Rs 4.6 trillion this year, becoming nearly as large as the Central government’s net market borrowings of Rs 4.7 trillion that have been announced so far for this year.

    Conclusion

    The figure and the trends indicated the financial risk the states are staring at. The government must take measure to revive the economy in order to address the problems faced by the states and ensure that the states are not left in lurch while SGT compensation receipts get delayed.

     

     

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  • Promoting Science and Technology – Missions,Policies & Schemes

    [op-ed snap] Here’s looking at you

    28 January 2020 | op-ed snap | Science and Technology
    Mains Paper 3: Awareness in various sc and tech fields

    Context

    Face recognition technology calls for a more comprehensive domestic framework that promotes the use of new technologies for the public good as well as imposes necessary constraints against their abuse.

    Debate on finding the balance between regulation and promotion

    • Google calls for partial ban: TheGoogle CEO’s recent support for a temporary ban on facial recognition technologies seems uncharacteristic.
      • It is not often that companies developing a technology call for its ban.
      • Their interest is in promoting the use of technology, not proscribing it.
      • Not every one of the leading tech companies agrees with Google on facial recognition.
    • Microsoft against the ban: Microsoft has questioned the idea of a ban. Calling facial recognition a “young technology”, it said “it will get better.
      • To get better the technology has to be used: The only way to make it better is actually to continue developing it.
      • And the only way to continue developing it actually is to have more people using it.
    • IBM’s precision regulation: IBM has taken a step forward in developing the policies for the use of technology by setting up a “lab”.
      • The lab will generate actionable ideas for policymakers to manage the emergence of new technologies like facial recognition that are shaping our digital future.
      • Precision regulation vs. complete ban: The idea is to develop “precision regulation” rather than enforce “blunt” instruments like the ban.
    • The EU’s plans for temporary ban: The debate on finding the right balance between regulation and promotion of emerging technologies comes in the wake of leaked plans of the EU to issue a temporary ban.
      • The ban could be up to five years.
      • Ban on use in public places only: The proposed ban is not a comprehensive one and will be applicable to the use of facial recognition in public spaces.
    • India’s own plans for law enforcement agencies: The intensifying global debate also coincides with India’s own plans to roll out a massive project on deploying facial recognition technologies, essentially for law enforcement.
      • The international discourse provides the context for developing a broad and effective Indian policy framework for the use of facial recognition.

    Background of the backlash against the tech companies

    • Techlash: Well before the EU had begun to discuss a temporary ban on facial recognition, there has been a “techlash” against the companies.
      • The companies faced backlash because they have so dramatically altered our lives in the last few years.
    • The idea of “digital is different”: For nearly two decades, the idea that “digital is different” and does not need public oversight had triumphed in most capitals of the world.
    • Problems with regulations: The main argument was that regulation constrains technological innovation and retards progress.
    • AI and Big data:  The urge to regulate has triggered widespread concerns about the dangers of digitalisation, especially the use of big data and AI by private companies as well as governments.

    Major concerns against facial recognition

    • Surveillance capitalism and surveillance state: The companies were seen as monetising the data generated by the widespread use of digital platforms like Google and Facebook.
      • Surveillance state:  China became the prime example of states using data and information to exercise ever more control over its citizens.
    • Accuracy: At the other end are concerns that facial recognition is not entirely accurate and could lead to punitive actions against innocent people.
    • Racial bias misogyny: There is also a concern in the US that the algorithms behind facial recognition carry the baggage of racism and misogyny.
    • Concerns in India: It also remains a fact that the Indian state has always been tempted to empower itself against its citizens in the name of collective security.
      • It has also tended to weaponise information against political opponents and dissidents.

    Potential Advantages

    • In the control of crime.
    • Better border controls and countering terrorism.
    • Aid the Police: In India, a severely under-policed nation, facial recognition surely offers many benefits.

    Conclusion

    The foreign office must reclaim India’s place in the international discourse on AI and facial recognition and develop a productive alignment between India’s national interests and the development of new digital norms.

     

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  • North-East India – Security and Developmental Issues

    Comprehensive Bodo Settlement Agreement

    28 January 2020 | | Polity
    Mains Paper 2: Federalism

     

    • The MHA, the Assam government and the Bodo groups have signed an agreement to redraw and rename the Bodoland Territorial Area District (BTAD) in Assam, currently spread over four districts of Kokrajhar, Chirang, Baksa and Udalguri.
    • Several Bodo groups led have been demanding a separate land for the ethnic community since 1972, a movement that has claimed nearly 4,000 lives.

    Background

    • The first Bodo accord was signed with the ABSU in 1993, leading to the creation of a Bodoland Autonomous Council with limited political powers.
    • The BTC was created in 2003 with some more financial and other powers.
    • The BTAD and other areas mentioned under the Sixth Schedule of the Constitution have been exempted from the Citizenship (Amendment) Act, 2019.

    Highlights of the Agreement

    • As per the agreement, villages dominated by Bodos that were presently outside the BTAD would be included and those with non-Bodo population would be excluded.
    • Bodos living in the hills would be conferred a Scheduled Hill Tribe status.
    • The BTAD is to be renamed as the Bodoland Territorial Region (BTR).

    Rehabilitation and relief

    • The criminal cases registered against members of the NDFB factions for “non-heinous” crimes shall be withdrawn by the Assam government and in cases of heinous crimes it will be reviewed.
    • A Special Development Package of Rs. 1500 Crore would be given by the Centre to undertake specific projects for the development of Bodo areas.

    A separate Commission

    • It proposes to set up a commission under Section 14 of the Sixth Schedule to the Constitution which will recommend the inclusion or exclusion of tribal population residing in villages adjoining BTAD areas.
    • In this commission, besides State government, there will be representatives from ABSU and BTC. It will submit its recommendation within six months.

    Changes in Legislature

    • The total number of Assembly seats will go up to 60, from the existing 40.
    • The present settlement has a proposal to give more legislative, executive, administrative and financial powers to BTC.

    Bodo as an official language

    • The Assam government will also notify Bodo language as an associate official language in the state and will set up a separate directorate for Bodo medium schools.
    • Bodo with Devnagri script would be the associate official language for the entire Assam.

    Significance of the agreement

    • The signing of the agreement would “end the 50-year-old Bodo crisis.”
    • Around 1500 cadres of BODO militant factions will be rehabilitated by Centre and Assam Government.

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  • Legislative Council in States: Issues & Way Forward

    Legislative Councils and its abolition

    28 January 2020 | States | Polity
    Mains Paper 2: Parliament & State Legislatures

    The Andhra Pradesh Assembly recently passed a resolution to abolish the state’s Legislative Council (LC).

    Legislative Councils

    • The LC or Vidhan Parishad is the upper house in those states that have a bicameral legislature; the lower house being the State Legislative Assembly.
    • Its establishment is defined in Article 169 of the Constitution of India.
    • Each Member of the State LC serves for a six-year term, with terms staggered so that the terms of one third of a State Legislative Council’s membership expire every two years.
    • This arrangement parallels that for the Rajya Sabha, the upper house of the Parliament of India.
    • Q member of LC must be a citizen of India, at least 30 years old, mentally sound, not an insolvent, and must be enrolled on the voters’ list of the state for which he or she is contesting an election.
    • Under Article 171, a Council cannot have more than a third of the number of MLAs in the state, and not less than 40 members.

    Representation in an LC

    MLCs are chosen in the following manner:

    • One third are elected by the members of local bodies such as municipalities, Gram panchayats, Panchayat samitis and district councils.
    • One third are elected by the members of Legislative Assembly of the State from among the persons who are not members of the State Legislative Assembly.
    • One sixth are nominated by the governor from persons having knowledge or practical experience in fields such as literature, science, arts, the co-operative movement and social service.
    • One twelfth are elected by persons who are graduates of three years’ standing residing in that state.
    • One twelfth are elected by persons engaged for at least three years in teaching in educational institutions within the state not lower than secondary schools, including colleges and universities.

    Abolition of LC

    • Article 169(1) of the Constitution allows Parliament to either create or abolish a Council in a state “if the Legislative Assembly of the State passes a resolution to that effect.
    • The resolution must by a majority of the total membership of the Assembly and by a majority of not less than two-thirds of the members of the Assembly present and voting.

    Councils in the Constitution

    • Under Article 168, states can have either one or two Houses of legislature. Article 169 leaves the choice of having a Vidhan Parishad to individual states.
    • The Constituent Assembly was divided on having a second chamber in the states.
    • It was argued that a second House can help check hasty actions by the directly elected House, and also enable non-elected persons to contribute to the legislative process.
    • However, it was also felt that some of the poorer states could ill afford the extravagance of two Houses.
    • It has been pointed out that the Councils can be used to delay important legislation, and to park leaders who have not been able to win an election.

    Councils in other states

    • Besides Andhra Pradesh, five other states have Vidhan Parishads — Bihar (58 members), Karnataka (75), Maharashtra (78), Telangana (40), UP (100).
    • Jammu and Kashmir had a Council until the state was bifurcated into the Union Territories of J&K and Ladakh.
    • In 1986, the M G Ramachandran government in Tamil Nadu abolished the Council.
    • The DMK government passed a law revives it, but the subsequent J Jayalalithaa-led government withdrew it after coming to power in 2010.
    • The Odisha Assembly has passed a resolution for a Legislative Council. Proposals to create Councils in Rajasthan and Assam are pending in Rajya Sabha.

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  • Modern Indian History-Events and Personalities

    Liberation of Auschwitz

    28 January 2020 | |
    Mains Paper 1

     

    • Yesterday on January 27th survivors of the Holocaust and international heads of state marked the 75th anniversary of the liberation of Auschwitz.
    • During the Second World War, the government of Nazi Germany killed approximately 17 million people across Europe in half a dozen camps specifically designated for killings.
    • Of these seven killing centers, the camp at Auschwitz, perhaps the most well known, was the largest in size.

    Why is January 27 an important date in Holocaust history?

    • During the final stages of the Second World War, months before the fall of Nazi Germany, Nazi officials began forcibly moving prisoners between the camps spread across Europe.
    • Called ‘Death Marches’, this forcible displacement on foot over long distances in the bitter cold, with little to no food resulted in many deaths.
    • Some researchers believe that prisoners were moved from camps to prevent the liberation of prisoners held inside these camps and to also remove evidence of crimes against humanity perpetrated by Nazi officials.
    • Prisoners who were very ill and disabled were left to die in the abandoned camps.

    Rescue of Auschwitz

    • Allied forces advanced from the West while soldiers belonging to the Red Army of the Soviet Union began entering concentration camps and killing centers across Europe, liberating survivors.
    • The first camp that the Red Army soldiers liberated was the Majdanek camp in Poland in July 1944.
    • The Army entered Auschwitz on January 27, 1945, finding hundreds of sick, starving and exhausted prisoners, who had somehow survived.
    • In 2005, the UN-designated January 27 as the International Holocaust Remembrance Day.

    What occurred during the liberation of Auschwitz?

    • Along with surviving prisoners, the Red Army also found hordes of items belonging to the prisoners that had been stripped from them by Nazi officials when they first arrived at Auschwitz.
    • The prisoners were so weak after having been starved for prolonged periods of time, that despite medical intervention, many died days after their rescue.
    • Several soldiers in the Red Army and in the Allied troops later gave testimonies concerning the sights that awaited them when they first entered the camps in Auschwitz and elsewhere.
    • Although Nazi officials had destroyed many warehouses and crematoria where property looted from prisoners had been stored and where bodies had been disposed, liberating troops still found evidence of the crimes and brutality perpetrated against the prisoners.

    What made Auschwitz unique?

    • Historical records show that despite attempts by Nazi officials to obliterate prisoners, particularly those at Auschwitz, there were survivors who lived to provide testimony against Nazi officials.
    • Several factors set Auschwitz apart from other camps across Europe.
    • The camp at Auschwitz had originally been built to hold Polish political prisoners but by March 1942, it became one of the main centres for the Nazi’s Final Solution to the Jewish Question.

    Aftermath of the Holocaust

    • Trials were held against Nazi officers and people who worked inside the camps in various capacities and perpetrated crimes against humanity in the camps of Auschwitz and elsewhere in Europe.
    • These individuals included both men and women, many who escaped accountability for their crimes after the fall of Nazi Germany.
    • To evade justice, many SS officers changed their identities and escaped to other parts of Europe, the US and to other parts of the world.
    • The camps at Auschwitz have become an important reminder of the horrors of the Holocaust and in 1947 the government of Poland made the site a state memorial.
    • In 1979, UNESCO added the Auschwitz memorial to its list of UNESCO World Heritage Sites.

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  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    Air India Disinvestment

    28 January 2020 | | Economics
    Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    The government has kicked off the complete disinvestment process of Air India for the second time after it failed to receive a single bid in the first attempt back in 2018.

    100% stake sale

    • Most significantly, the government will offload 100% of its stake in Air India, compared with 76% put on the block last time.
    • The government holding even a minor stake in the airline post disinvestment was seen as a huge negative for any potential buyers.
    • The buyer will have to take on Rs 23,286 crore of debt out of a total Rs 60,074 crore.
    • Compared with this, in the last attempt, a potential buyer would have to take on Rs 33,392 crore of debt and current liabilities.
    • The amount of debt being bundled with the airline in this attempt is towards the aircraft that are being sold off along with the carrier as part of the transaction.
    • The working capital and other non-aircraft debt will be retained by the government.

    Air India’s assets

    • The new owner will be taking on a fleet of 121 aircraft in Air India’s fleet and 25 planes in Air India Express’ fleet.
    • These exclude the four Boeing 747-400 jumbojet aircraft that the airline plans to transfer to its subsidiary Alliance Air, which is not a part of the current transaction.
    • However, like the last attempt, the properties currently in use by Air India, including the Nariman Point building and the company’s headquarters near Connaught Place in New Delhi will be retained by the government.

    Will the new terms attract investors?

    • Air India has a 50.64% market share in international traffic among Indian carriers.
    • The government is hopeful of attracting investors with the new sale criteria, coupled with the main benefits of the airline, which are prime slots in capacity-constrained airports across the world.
    • However, any potential investor is also expected to look at the size of the airline’s operations with reference to what those operations generate.
    • For example, both Air India and Singapore Airlines operate with a fleet of 121 aircraft, but in 2018-19 Air India posted a net loss of Rs 8,556 crore, whereas Singapore Airlines reported a net profit of Singapore $ 779.1 million (approx Rs 4,100 crore).

    What will the new investor get?

    • The most attractive proposition in acquiring Air India is the slots and landing rights that it holds at airports such at Delhi, Mumbai, London, New York, Chicago, Paris, etc.
    • These could be helpful both to airlines looking to expand into long-haul international operations, and to entities looking to set up global operations from scratch.
    • Air India currently operates to 56 Indian cities and 42 international destinations.
    • The new investor also gets hold of the ground-handling firm AI-SATS, which offers end-to-end ground handling services such as passenger and baggage handling, ramp handling, aircraft interior cleaning etc. at Bengaluru, Delhi, Hyderabad, Mangaluru and Thiruvananthapuram airports.
    • This would provide the investor with an ancillary services firm with captive use.

    Loss makers in AI

    • Several of Air India’s international and domestic routes are profit-generating, while a number of them are loss-making or witness low load factors.
    • This is a legacy problem that the airline comes with for the new promoter.
    • Additionally, while the airline comes with 121 aircraft primed as domestic and international workhorses, 18 of them are grounded for lack of funds to make them airworthy.

    How will consumers and employees be impacted?

    Consumers

    • If and when Air India is taken over by a private entity or consortium, experts believe the first move could be pruning of operations to ensure the airline inches closer to profitability.
    • This could cause Air India to cease operations on certain loss-making domestic and international routes — leading to a rise in fares.
    • It is believed that Air India’s continuous loss-making operations have skewed the market, wherein private companies have to play ball even when fares are artificially low.
    • Cutting certain routes could also impact consumers in terms of the unique offerings by Air India, such as higher baggage allowance, etc.

    Employees of AI

    • Air India’s bloated staff strength was flagged by potential investors in the last disinvestment attempt.
    • The airline has 17,984 employees, of which 9,617 are permanent staff.
    • Whether the employees will be retained by the new investor is unclear.
    • The government is expected to provide more clarity on conditions for retaining staff in the request-for-proposal stage, which will come after expressions of interest are received.

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  • Zoonotic Diseases: Medical Sciences Involved & Preventive Measures

    Why China has emerged as the epicentre of global outbreaks of disease?

    28 January 2020 | | Science and Technology
    Mains Paper 3: Awareness in various sc and tech fields

    Several deadly new viruses in recent years have emerged in China — Severe Acute Respiratory Syndrome (SARS), bird flu, and now the novel Coronavirus (nCOV).

    Zoonotic infections

    • Closely packed stalls in busy marketplaces, the Chinese taste for exotic meats, and the high population density of cities create the conditions for the spread of zoonotic infections.
    • The reason could lie in the busy food markets dotting cities across the country — where fruits, vegetables, hairy crabs and butchered meat are often sold next to bamboo rats, snakes, turtles, and palm civets.
    • The relationship between zoonotic pathogens and global pandemics are not new.
    • The WHO estimates that globally, about a billion cases of illness and millions of deaths occur every year from zoonoses, i.e, diseases and infections naturally transmitted between people and vertebrate animals.
    • Some 60% of emerging infectious diseases globally are zoonoses. Of the over 30 new human pathogens detected over the last three decades, 75% originated in animals.

    Major cause: Animal markets

    • In animal markets, there are greater chances of transmission of a virus from animals to humans, and its mutation to adapt to the human body.
    • It has happened wherever in the world there is unregulated mixing of humans and animals, either wild or domesticated.
    • The official referred to the Ebola outbreak in Africa there it was wild chimpanzees who had the disease. It came into humans after these were killed and consumed.

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  • Waste Management – SWM Rules, EWM Rules, etc

    Polycrack Technology

    28 January 2020 | | Science and Technology
    Mains Paper 3: S&T – Applications In Everyday Life

     

    Indian Railways has put in place the country’s first Waste to Energy plant in Mancheswar Carriage Repair Workshop which falls under East Coast Railway. It uses a patented technology called POLYCRACK, is first-of-its-kind in Indian Railways and fourth in India.

    Polycrack Technology

    • It is world’s first patented heterogeneous catalytic process which converts multiple feed stocks into hydrocarbon liquid fuels, gas, carbon and water.
    • The process is a closed-loop system and does not emit any hazardous pollutants into the atmosphere.

    Feeders

    • Polycrack Plant can be fed with all types of plastic, petroleum sludge, un-segregated MSW (Municipal Solid Waste) with moisture up to 50%, e–waste, automobile fluff, organic waste including bamboo, garden waste etc., and Jatropha fruit and palm bunch.

    How it works?

    • The process is a closed-loop system and does not emit any hazardous pollutants into the atmosphere.
    • The combustible, non-condensed gases are re-used for providing energy to the entire system and thus, the only emission comes from the combustion of gaseous fuels.
    • The emissions from the combustion are found to be much less than prescribed environmental norms.
    • This process will produce energy in the form of Light Diesel Oil which is used to light furnaces.

    Advantages of Polycrack

    Polycrack has the following advantages over the conventional approach of treating solid waste:

    • Pre-segregation of waste is not required to reform the waste. Waste as collected can be directly fed into Polycrack.
    • It has high tolerance to moisture hence drying of waste is not required.
    • Waste is processed and reformed within 24 hours.
    • It is an enclosed unit hence the working environment is dust free.
    • Excellent air quality surrounding the plant.
    • Biological decomposition is not allowed as the Waste is treated as it is received.
    • The foot print of the plant is small hence the area required for installing the plant is less when compared with conventional method of processing.
    • All constituents are converted into valuable energy thereby making it Zero Discharge Process.
    • Gas generated in the process is re-used to provide energy to the system thereby making it self-reliant and also bring down the operating cost.
    • There is no atmospheric emission during the process unlike other conventional methods except for combustion gases which have pollutants less than the prescribed norms the world over.
    • Operates around 450 degrees, making it a low temperature process when compared with other options.
    • Safe and efficient system with built-in safety features enables even an unskilled user to operate the machine with ease.
    • Low capital cost and low operating cost.
    • Fully automated system requires minimum man power.

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  • Issues related to Economic growth

     [op-ed of the day] The convergence of rich nations with the rest has gone off track

    27 January 2020 | op-ed snap | Economics
    Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Context

    Sound policies are needed to put emerging economies back on a higher growth path and ameliorate regional inequalities.

    The theory of convergence

    • The theory of convergence is one of the most powerful and noblest ideas in economics.
      • What is it? It is the concept that other things being equal, poorer economies should catch up with richer ones so that inequality between the rich and the poor attenuates, and conceivably even disappears over time.
    • Capital is more productive in poor economies: The premise driving convergence is that capital (whether physical or human) is more productive in poor economies than rich ones due to what economists call “diminishing marginal productivity”.
      • In layman’s terms, a small amount of investment yields a greater increase in output where there is less capital than where there is more.
      • Lesser the development more the development: Even more simply, the rate of return on investment is inversely related to the level of economic development.
    • Experience of Japan and Germany after WW 2: The experience of advanced economies gave economists reason to be optimistic that convergence occurs according to the script.
      • Thus, the devastated economies of Europe, along with Japan, quickly caught up with the advanced economies that had not been ravaged by World War II, most notably, the US.
      • Germany and Japan closing the gap: At the end of the war, with their capital stocks destroyed, Germany and Japan were much poorer than the US; by the 1960s, they had closed the gap.

    Globalisation and the unfulfilled hopes of convergence

    • Replication of the rise of Japan and Germany? At one time, it appeared that the same play was at work between emerging economies and advanced economies.
      • Rise of India and China: Economies such as China and India, as well as others, were far outstripping the growth rates of the US and other rich economies,
      • Hope of closing gap: India and China gave hope that at least the more rapidly growing of the emerging economies would close the gap with the rich world within decades rather than centuries.
    • Adoption of technology at low cost: There was presumed to be an additional powerful force working toward convergence.
      • Poorer economies are, almost by definition, far away from the technological frontier at which the richest economies operate.
      • There is thus ample room to absorb newer technologies at relatively low cost and in a relatively short span of time, without encountering slowing growth like the rich economies,
      • In simpler terms, it is difficult and costly to innovate the latest Apple iPhone, but relatively easy to reverse engineers at least some of Apple’s technology.

    Reality: Convergence is faltering

    • Recent evidence suggests that convergence is faltering.
    • World Bank report of retarding convergence: A recent World Bank report documents a worrying slowdown in productivity growth in emerging economies, significantly retarding convergence.
      • Lower productivity: The report’s calculations suggest that emerging economies have 14% lower productivity than they would have had if previous trends of high productivity growth were maintained.
      • Lower commodity exports: For commodity exporters, this is a whopping 19%.
    • The silver lining for faltering economies: According to the World Bank, the main driver of falling productivity are-
      • Insufficient investment in physical and human capital.
      • Insufficient mobility of machines and workers from less productive to more productive sectors of the economy.
    • India’s case: The Indian case clearly bears this out, with languishing investment and unfinished productivity-enhancing reforms, especially in the country’s labour market, being the key culprits behind the sharp slowdown in growth.

    Way forward

    • Repair financial systems: Governments, including India’s, need to do the heavy lifting of repairing damaged financial systems overladen with bad debt.
    • Restore fiscal rectitude.
    • Inflation focused monetary policy: Ensure that monetary policy remains focused on stable inflation rather than being excessively loose as a risky substitute for structural reforms.
    • Reforms: Press ahead with unfinished reforms to capital, land and labour markets.
    • Address the regional disparities: There is a further critical dimension in the case of large multi-region economies such as India.
      • Not only has convergence been faltering between nations, but it has also been faltering between the richer and poorer regions of large nations such as India.

    Conclusion

    The data does not present an epistle of despair, but of hope. The pursuit of sensible and conventional sound economic policies ought to put emerging economies as a group back on a higher growth trajectory. Convergence may yet end up being a parable of promise rather than a fable of folly.

     

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  • Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

    [op-ed snap] The hype over hypersonics

    27 January 2020 | op-ed snap | Internal Security
    Mains Paper 3: Awareness in various sc and tech fields

    Context

    Russia announced that its new hypersonic glide vehicle (HGV), Avangard, had been made operational.

    What HGV is and where the US and China stand

    • What is HGV and what is it capable of?
      • Speed over 5 Mach: A hypersonic delivery system is essentially a ballistic or cruise missile that can fly for long distances and at speeds higher than 5 Mach at lower altitudes.
      • Invulnerable to interception: This allows it to evade interception from current Ballistic Missile Defence (BMD).
      • High manoeuvrability: It can also execute a high degree of manoeuvres.
      • Avangard-Developed by Russia: Russia claims that this HGV can fly at over 20 times the speed of sound.
      • Invulnerable to interception: and is capable of such manoeuvring as to be invulnerable to interception by any existing and prospective missile defence means of the potential adversary.
    • China and the U.S. are also close on the heels: The U.S. has moved from the research to the development stage.
      • Where China stands: China demonstrated the DF-17, a medium-range missile with the HGV, at the military parade in October 2019.
    • What were the reasons for the development: The U.S. walked out of anti-ballistic missile treaty in 2002, prompted by the U.S. exit from the treaty and fear of the U.S. anti-ballistic missile defence system.

    How would hypersonics complicate the security concerns?

    • First complication-Increase in the possibility of miscalculation: These missiles are being added to the military capabilities of countries that possess nuclear weapons.
      • For these nations, the concern is always an attack on nuclear assets to degrade retaliation
      • Destination ambiguities: Another layer of complication is added by the fact that these missiles bring in warhead and destination ambiguities.
      • Increasing tendency to assume worst: In both cases, when an adversary’s early warning detects such missiles headed in its direction, but cannot be sure whether they are conventional or nuclear-armed, nor ascertain the target they are headed towards, the tendency would be to assume the worst.
      • For an adversary that faces a country with a BMD but itself has a small nuclear arsenal, it would fear that even conventionally armed hypersonic missiles could destroy a portion of its nuclear assets.
      • The tendency to shift to trigger-ready postures: The tendency could then be to shift to more trigger-ready postures such as launch on warning or launch under attack to ostensibly enhance deterrence.
      • Risk of miscalculation: But such shifts would also bring risks of misperception and miscalculation in moments of crisis.
    • Second complication-Offence defence spiral: According to reports, the U.S. has begun finding ways of either strengthening its BMD or looking for countermeasures to defeat hypersonics, besides having an arsenal of its own of the same kind.
      • Possibility of arms race: The stage appears set for an arms race instability given that the three major players in this game have the financial wherewithal and technological capability to play along.
      • This looks particularly imminent in the absence of any strategic dialogue or arms control.
    • Third complication-Possibility of the arms race into outer space: A third implication would be to take offence-defence developments into outer space.
      • Sensors are already placed into space: Counter-measures to hypersonics have been envisaged through the placement of sensors and interceptors in outer space.
      • While none of this is going to be weaponisation of outer space would, nevertheless, be a distinct possibility once hypersonic inductions become the norm.

    Conclusion

    The induction of this technology would likely prove to be a transitory advantage eventually leading nations into a strategic trap. India needs to make a cool-headed assessment of its own deterrence requirements and choose its pathways wisely.

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