In a major boost to exports of Geographical Indication (GI) certified products, a consignment of Dahanu Gholvad Sapota from the Palghar district of Maharashtra was shipped to the United Kingdom.
Gholvad Sapota
GI certification of Ghovad Sapota is held by Maharashtra Rajya Chikoo Utpadak Sangh and the fruit is known for its sweet and unique taste.
It is believed that the unique taste is derived from the calcium-rich soil of Gholvad village.
Currently, in the Palgahr district, around 5000 hectares of land is under sapota or plantation.
Sapota is grown in many states- Karnataka, Gujarat, Maharashtra, Tamil Nadu, West Bengal and Andhra Pradesh.
Karnataka is known to be the highest grower of the fruit, followed by Maharashtra.
Do you know?
Earlier this month, a consignment of 2.5 Metric Tonne of GI certified Banganapalli & Survarnarekha mangoes sourced from farmers in Krishna & Chittor districts of Andhra Pradesh was exported to South Korea.
Back2Basics: Geographical Indication (GI)
The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
Vitalik Buterin, co-creator of the crypto network Ethereum, has made a 1 billion dollar cryptocurrency donation for India’s relief funds as the country battles the latest deadly COVID-19 wave.
Definition
The 2019 Bill defined cryptocurrency as any information, code, number or token, generated through cryptographic means or otherwise, which has a digital representation of value and has utility in business activity, or acts as a store of value or a unit of account. According to professionals a system must need these six points to be called a cryptocurrency system:
The system does not require a central authority; its state is maintained through distributed consensus.
The system keeps an overview of cryptocurrency units and their ownership.
The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.
Ownership of cryptocurrency units can be proved exclusively cryptographically.
The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.
If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.
History/Background
In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash. Later, in 1995, he implemented it through Digicash, an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient.
In 1998, Wei Dai published a description of “b-money”, characterized as an anonymous, distributed electronic cash system.
Shortly thereafter, Nick Szabo described bit gold. Like bitcoin and other cryptocurrencies that would follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system which required users to complete a proof of work function with solutions being cryptographically put together and published.
In 2009, the first decentralized cryptocurrency, bitcoin, was created by presumably pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work
In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult.
In October 2011, Litecoinwas released. It used scrypt as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin used a proof-of-work/proof-of-stake
On 6 August 2014, the UK announced its Treasuryhad been commissioned a study of cryptocurrencies, and what role, if any, they could play in the UK economy. The study was also to report on whether regulation should be considered.
Types of cryptocurrency
The most common and valued cryptocurrency is Bitcoin.
All the other cryptocurrencies other than Bitcoin are together as a set are known as alternate coins or commonly called “Altcoins”. Most famous alt coins are:-
Litecoin
Cardano
Polkadot
Stellar(XLM)
Binance Coin
By the end of March 2021 the total share of altcoins in the cryptocurrency market was estimated to be at 40% of the total market value.
How it works?
Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security.
What is Blockchain Technology?
Simply, blockchain is decentralized, distributed and public digital ledger. Blockchains is a new type of network infrastructure (a way to organize how information and value move around on the internet) that create ‘trust’ in networks by introducing distributed verifiability, auditability, and consensus.
Blockchains create trust by acting as a shared database, distributed across vast peer-to-peer networks that have no single point of failure and no single source of truth, implying that no individual entity can own a blockchain network, and no single entity can modify the data stored on it unilaterally without the consensus of its peers.
New data can be added to a blockchain only through agreement between the various nodes of the network, a mechanism known as distributed consensus. Each node of the network keeps its own copy of blockchain’s data and keeps the other nodes honest – if one node changes its local copy, the other nodes can reject it.
Imagine a blockchain as a ledger—because that’s essentially how most blockchains function. Each block of data represents some new transaction on the ledger, whether that means a contract or a sale or whatever else you’d use a ledger for.
Interestingly, blockchains leverage techniques from a field of mathematics and computer science, known as cryptography, to sign every transaction (e.g. the transfer of assets from one person to another) with a unique digital signature belonging to the user who initiated the transaction.
Advantages
Low transaction Fee: Because miners are simply rewarded cryptocurrency from network itself, there are typically little or no fees for core transactions.
Ownership: With your digital key, access to your currency is yours alone. Unlike money you store at a bank, your use of cryptocurrency cannot be frozen or limited by any entity.
Identity Protection: Paying with credit/debit cards requires submitting sensitive banking information that could be stolen or compromised. Cryptocurrency can be sent directly to a recipient without any information other than total amount you want to send.
Risk-free for sellers: Payments using Cryptocurrency can’t be reversed, which means merchants don’t have to worry about stopped payments. The blockchain makes it difficult for you to be defrauded.
Disadvantages
Privacy Concerns: The privacy of users’ data is at stake. There is concern regarding privacy of users data in using cryptocurrencies as all the transaction information is stored in distributed ledger (called blockchain), which is publicly visible. Thus Hacker can easily observe how the money flows.
High Volatility: The price of Bitcoin suddenly rose to almost $20,000 and then dropped to $6,000. Due to such incidents, it is complicated for the investors to trust the ecosystem.
Destination for black money: The fear among regulators and policymakers is that cryptocurrencies, being an alternative source of value to fiat currency, could be misused to launder black money or finance terrorist activities.
Cybersecurity Concerns: Cryptocurrencies are prone to cybersecurity breaches and hacks. Various attacks are common, even companies and governments are not full proof to them. For example, the Swiss blockchain company, Trade.io, has reported that crypto tokens worth almost $8 million have been stolen from their cold wallet.
Dark activities: The possibility that the new money will nurture illicit activities and markets like drug selling, weapons etc. through Darknet is always high using cryptocurrency anonymously. It also increases the risk of its use in various terrorist activities across the border.
Monetary control and economic behavior: It could dramatically change global monetary policymaking. People will exchange their national currencies for the new digital coin in order to buy and sell the many products that will be priced in it. This will further impact the profit of banks and will put stress on their balance sheet.
Inflation: Governments and policymakers will have reduced ability to control inflation. Usually, when inflation picks up, central banks take steps to control it through various monetary rates. Cryptocurrency will be out of control of the central bank so liquidity control will be an issue.
Cryptocurrency and India
The country, at present, has around 75 lakh cryptocurrency investors who have together pooled over Rs 10,000 crore into Bitcoins and other such digital currencies.
The prices have surged by over 900%, courtesy of the worldwide boom – a single bitcoin that used to cost around Rs 4 lakh in 2020 now costs somewhere around Rs 41 lakh now.
FM Nirmala Sitharaman has said that the Centre will take a “calibrated approach” and leave a window open for experiments with blockchain technology.
Legitimacy of Cryptocurrency in India
Finance minister Arun Jaitley, in his budget speech on 1 February 2018, stated that the government will do everything to discontinue the use of bitcoin and other virtual currencies in India for criminal uses.
He reiterated that India does not recognise them as legal tender and will instead encourage blockchain technology in payment systems. “The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,” Jaitley said
In early 2018 India’s central bank, the Reserve Bank of India(RBI) announced a ban on the sale or purchase of cryptocurrency for entities regulated by RBI
In March 2020, the Supreme Court of India passed the verdict, revoking the RBI ban on cryptocurrency trade.
In 2021, the government is exploring the creation of a state-backed digital currency issued by the Reserve Bank of India, while banning private ones like bitcoin.
Cryptocurrency Bill India 2019
Cryptocurrency cannot be used as a legal tender or currency at any place in India.
The bill prohibits everyone to mine, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency in the territory of India.
The central government is allowed to declare Digital Rupee to be the legal tender with the consent of Reserve Bank of India.
The use of Distributed Ledger Technology (DLT) for creating a network for delivery of any financial or other services or for creating value , without involving any use of cryptocurrency is not prohibited.
Direct or indirect use of cryptocurrency shall be punishable with fine or imprisonment of 1 year which may be extended o 10 years or both.
The court is empowered to transfer any fees recovered to the consolidated fund of India.
The central government on the recommendation of the investigating agency without being bound to it is empowered to grant immunity for any offense under this act.
The bill also provides that no such immunity can be granted by the central government in cases where the proceedings for any such offence have been instituted before the date of receipt of application for grant of such immunity.
The Bill promises to “allow for certain exceptions to promote the underlying technology of cryptocurrency (blockchain) and its uses.”
The way the technology is built, an ownerless, consensus-driven, distributed ledger like a blockchain needs cryptocurrency to grease its wheels.
International Scenario
United states of America
The U.S. has the highest number of cryptocurrency users, the highest number of Bitcoin ATMs and also the highest Bitcoin trading volumes globally.
The US government, in 2013, accepted bitcoin as a decentralized virtual currency that can be used for performing transactions. It was classified as a commodity by CFTC in September 2015.
Bitcoin is also taxable as a property. To sum up, bitcoin is legal in the USA, however, there is no clarification about the legalization of other cryptocurrencies.
Japan
Japan has eliminated the consumption tax on Bitcoin trading on April 1, 2017, when it officially declared Bitcoin as a legal tender. Japan also eliminated the possibility of double taxation on trading of Bitcoins.
Japan is now widely considered a hub for cryptocurrency trading/exchange in Asia.
Canada
Bitcoin is viewed as a commodity by the Canada Revenue Agency (CRA). This means that Bitcoin transactions are viewed as barter transactions, and the income generated is considered as business income. The taxation also depends on whether the individual has a buying-selling business or is only concerned with investing.
Canada considers Bitcoin exchanges to be money service businesses. This brings them under the purview of the anti-money laundering (AML) Bitcoin exchanges need to register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
In addition, some major Canadian banks have banned the use of their credit or debit cards for Bitcoin transactions.
European Union
On Oct. 22, 2015, the European Court of Justice (ECJ) ruled that buying and selling digital currencies is considered a supply of services, and that this is exempt from value-added tax (VAT)in all European Union (EU) member states.
Some individual EU countries have also developed their own Bitcoin stances.
In Finland, the Central Board of Taxes (CBT) has given Bitcoin a VAT exempt status by classifying it as a financial service. Bitcoin is treated as a commodity in Finland and not as a currency.
The National Revenue Agency (NRA) of Bulgaria has also brought Bitcoin under its existing tax laws.
Germany is open to Bitcoin; it is considered legal but taxed differently depending upon whether the authorities are dealing with exchanges, miners, enterprises, or users.
China
Bitcoin is essentially banned in China. All banks and other financial institutions like payment processors are prohibited from transacting or dealing in Bitcoin. Cryptocurrency exchanges are banned.
The government has cracked down on miners.
Way Forward
A worldwide regulatory authority must be established to control the volatility, security and inflation of the cryptocurrency market.
While the number of merchants who accept cryptocurrencies has steadily increased, they are still very much in the minority. For cryptocurrencies to become more widely used, they have to first gain widespread acceptance among consumers.
The more popular they become, the more regulation and government scrutiny they will likely to attract, which erodes the fundamental premise for their existence. And therefore the central authority must be made so in keeping mind that the fundamental of the cryptocurrency existence must not be mended.
For cryptocurrencies to become part of the mainstream financial system must :
Be made mathematically complex (for frauds and hackers) but graphically easy for the users to make them understand better.
Be Decentralized but with adequate consumer safeguards and protection.
Preserve user anonymity without being a conduit for tax evasion, money laundering and other nefarious activities.
The Securities & Exchange Board of India (SEBI) has floated a consultation paper on the proposed framework for Gold Exchange in India.
Why such a move?
According to SEBI, the proposed exchange would bring in more transparency in the gold trading market in terms of spot price discovery, quality of the gold and enable greater integration with the financial markets.
What is a Gold Exchange?
As the name suggests, this would offer trading facilities in the precious metal.
Entities like retail investors, banks, foreign portfolio investors (FPIs), jewellers and bullion dealers among others would be allowed to trade on the exchange.
While there are existing commodity exchanges that offer trading in gold contracts, those are derivative instruments while the proposed gold exchange would allow trading akin to the spot market.
This move assumes significance as India is the second-largest consumer of gold – after China – with an annual demand of around 800-900 tonnes.
Answer this PYQ:
Q.What is/are the purpose/purposes of the Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?
To bring the idle gold lying with India households into the economy
To promote FDI in the gold and jewellery sector
To reduce India’s dependence on gold imports
Select the correct answer using the code given below
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
What are the ways in which one can invest in gold now?
For those wanting to buy physical gold, a visit to the neighbourhood jeweller would suffice.
Meanwhile, there are online platforms such as Paytm, Kuvera and Indiagold among others that allow an individual to buy gold in digital form.
The advantage of buying gold in digital form is that one can put in a very small amount as well with some platforms allowing a minimum investment of just Rs 100.
Digital gold products have become quite popular among millennials. Then there are sovereign gold bonds issued by the government.
One can even look at Gold ETFs or gold funds by mutual funds.
Even gold derivative contracts traded on the exchanges have the option of physical settlement, which means investors can get physical delivery of gold.
How can one trade on a gold exchange?
The SEBI has proposed an instrument called ‘Electronic Gold Receipt’, or EGR.
The gold exchange, along with intermediaries like the vault manager and the clearing corporation, would facilitate the creation of EGR and its trading.
So, participants can convert their physical gold into EGR, which can then be bought or sold on the exchange like any normal equity share of a listed company.
The EGR can even be converted back into physical gold. As part of the draft regulations, SEBI has proposed three denominations of EGR – one kilogram, 100 grams and 50 grams.
It has, however, added that EGRs of five grams or 10 grams can also be allowed for trading to increase the liquidity of the market and attract more participants.
How can one convert physical gold into EGRs?
An entity that intends to convert physical gold into EGR will have to go to a ‘Vault Manager’.
According to the proposed framework, any entity registered in India and with a net worth of at least Rs 50 crore can apply to become a vault manager.
After the receipt of the gold, the vault manager would create an EGR for which the depository will assign an International Securities Identification Number, or ISIN, which is a unique code to identify the specific security.
Once the ISIN is issued, the EGR can be traded on the gold exchange just like any other tradable security.
Can EGRs be again converted into physical gold?
To convert an EGR into physical gold, the owner of the EGR will have to surrender the EGR to the vault manager who will deliver the gold and extinguish the electronic receipt.
Considering the logistics and delivery challenges, it has been proposed that conversion of an EGR into physical gold should be allowed only if a minimum of 50 grams of gold has been accumulated in electronic form.
Issues with gold exchange
Since the EGRs would be traded on an exchange, Securities Transaction Tax (STT) would be levied. Also, GST would be applicable when EGRs are converted into physical gold for withdrawal.
If in case the buyer and seller are from different states then levying state GST could be cumbersome. SEBI is mulling if only IGST or Integrated Goods and Services Tax can be levied to resolve this issue.
As far as transactions are concerned, SEBI working groups have suggested that an entire transaction be divided into three tranches.
The article highlights the variance in India’s stand on intellectual property rights waiver for Covid related drugs on the international level and domestic level.
Removing the IPR barrier
When the pandemic hit the globe, India and South Africa piloted the proposal to waive key provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement on COVID-19 vaccines, drugs, therapeutics, and related technologies.
The core idea is that IPRs such as patents should not become barriers in scaling up production of medical products essential to combat COVID-19.
The TRIPS waiver proposal, now backed by the U.S. would give immunity to member countries from a legal challenge at the WTO if their domestic IPR laws suspend or do not enforce IP protection on COVID-19 medical products.
Member countries of the World Trade Organization (WTO) are under an obligation to ensure that their domestic intellectual property rights (IPR) laws conform to the requirements of the TRIPS agreement.
No use of compulsory licencing in India
The existing flexibilities under the Patents Act of 1970, such as compulsory licences, which are consistent with the TRIPS agreement, can be used to increase the supply of COVID-19 medical products.
However, despite the nudging by the judiciary and others, the government inexplicably hasn’t made use of compulsory licences in the pandemic.
While issuing compulsory licences for COVID-19 vaccines in the absence of technology transfer is easier said than done, they can be used to augment the supply of drugs and other therapeutics.
For instance, there are demands that compulsory licences be issued for drugs such as Remdesivir to augment supply.
Natco, an Indian pharmaceutical company, has requested a compulsory licence under Section 92 of the Patents Act for Baricitinib, a COVID-19 drug.
This is ironic because India has historically played a leading role in mainstreaming TRIPS flexibilities like the compulsory licence at the WTO.
The Central government, in an affidavit filed before the Supreme Court, states that the main constraint in boosting the production of drugs like Remdesivir is the unavailability of raw materials and essential inputs.
The affidavit further states, “it is presumptuous to assume that the patent holder will not agree to more voluntary licences”.
Issues with the government’s stand
If that is the real bottleneck, and not IPR-related legal hurdles, why is India pushing for a TRIPS waiver at the WTO?
The first step in advocating for the removal of IPR-related impediments at the WTO is to make use of the existing lawful means.
Therefore, the government’s stand before the Supreme Court is not only contradictory with India’s position at the WTO but also severely undermines it.
Way forward
To make its TRIPS waiver stand convincing, the government needs to make aggressive use of Sections 92 and 100 of the Patents Act to license all patents necessary to make COVID-19 medical products.
The government should not only transfer Covaxin’s technology to domestic pharmaceutical companies, to boost national supplies, but also offer it to foreign corporations.
By unlocking its vaccine technical know-how to the world, India would demonstrate its resolve to walk the talk on the TRIPS waiver.
Conclusion
India must take a consistent stand on IPRs on COVID-19 medical products internationally and domestically.
The State of Working India (SWI) 2021 has documented the impact of one year of Covid-19 in India, on jobs, incomes, inequality, and poverty.
Highlights of the SWI 2021
The SWI 2021 showed that the pandemic had forced people out of their formal jobs into casual work, and led to a severe decline in incomes.
There is a sudden increase in poverty over the past year.
Maharashtra, Kerala, Tamil Nadu, Uttar Pradesh, and Delhi, contributed disproportionately to job losses.
Unsurprisingly, these are also the states that suffered the maximum Covid caseload.
Labour Participation Rate (LPR) is the ratio of the labour force to the population greater than 15 years of age. It is defined as the section of working population in the age group of 16-64 in the economy currently employed or seeking employment.
Worsened with COVID
It pointed to an ailment of the Indian economy that has not only been a longstanding one but also one that has gotten worse over the past few years even without the help of Covid.
Agriculture, mines, manufacturing, real estate and construction, financial services, non-financial services, and public administrative services sectors account for 99% of total employment in India.
The number of people employed in the manufacturing sector of the economy has come down from 51 million to 27 million — that is, almost halving in the space of just four years!
For instance, the number of people employed in agriculture is going up.
Equally disheartening is that employment in non-financial services (such as providing education and entertainment industry etc.) has fallen sharply.
Why are these trends worrisome?
It is important to understand that traditionally Indian policymakers have been of the view that the manufacturing sector is our best hope to soak up the surplus-labour otherwise employed in agriculture.
Manufacturing is well suited because it can make use of the millions of poorly educated Indian youth, unlike the services sector, which often requires better education and skill levels.
For the longest time, India has struggled to get its manufacturing industries to create a growing bank of jobs.
But, and this is what the CMIE data shows, what is happening in the past 4-5 years is that far from soaking up excess labour from other sectors of the economy, manufacturing is actually letting go of workers.
Return to Agriculture
India has seen a hike in the number of people “employed” in agriculture over the past year.
This is nothing but disguised unemployment.
Essentially, labourers and workers are returning to their rural homes in the absence of jobs either in manufacturing or services.
Why is Indian manufacturing failing to create jobs?
On the face of it, every past government has come out with a policy to boost manufacturing jobs. But still, the situation is getting worse.
There are different ways to look at this question.
One is to look at why manufacturing has struggled to create as many jobs in the past
The second is to look at the specific reasons why manufacturing has been bleeding jobs, instead of creating them, since 2016-17.
Let’s tackle the historical question first.
If one looks at any of the sectors in the economy — agriculture, industry, services — starting a manufacturing unit requires the highest amount of fixed investment upfront (relative to the output that may be generated later).
In other words, it is a big commitment on the part of an entrepreneur to put up a huge amount of money without necessarily knowing how it will all pan out.
What has traditionally made this truly risky is the highly extractive nature of governments.
In simpler terms, far too often governments have been corrupt, with officials and politicians extracting bribes.
Less focus on manufacturing goods
As regards the demand for manufacturing goods, experts point out that Indians have always consumed relatively less of manufacturing goods and relatively more of food and services.
There are two possible reasons for this.
One, most Indians are quite poor and hence most of the income is spent on food.
Two, repairs and maintenance are a very high part of our consumption choice.
In other words, when Indians buy a manufactured product — say a refrigerator — they tend to use it for much longer than in developed countries.
Core of the problem
The trouble lies with policymakers repeatedly neglecting the labour-intensive industries.
Since the second five year plan, the P C Mahalanobis strategy was to gain self-reliance by investing in capital intensive industries so that India does not have to import machines etc. from other countries.
The hope was that the demand from Indian consumers will make the domestic industry viable.
But Indian domestic demand was quite anaemic due to poverty levels.
Other policy lacunas
As against the capital intensive industries, which were involved in making heavy machines, the labour-intensive ones (such as leather, handicrafts, textiles etc.) were reserved for the small-scale industry framework.
But while the labour-intensive manufacturing firms could not match the capital-intensive firms in terms of GDP value or growth of output, they did have a distinct advantage of creating more jobs.
But, by treating them as small-scale industries, policies held back their growth.
Moreover, India did not push for integrating its labour-intensive manufacturing in the global supply chains by aggressively following exports.
Instead, the idea was to substitute imports in the name of self-reliance.
What has happened since 2016-17?
Things have become worse over the past five odd years despite the Indian government unveiling its ambitious Make in India (MII) initiative and the latest Production-Linked Incentive (PLI) scheme.
For one India is repeating the same mistakes with MII and PLI schemes.
They are again aimed more at capital intensive manufacturing, not labour intensive ones.
Moreover, India is reverting to the protectionist approach, aimed at self-reliance, yet again in recent years.
Further, much like in the past, this time, too, the domestic demand is weak for aggressively boosting labour-intensive industries aimed at capturing the export markets.
Conclusion
The growing rift in the fortunes of informal and formal manufacturing could be the reason why India is seeing such a massive decline in manufacturing jobs.
The government has tried its level best to push for greater formalization but it has often been accused of not understanding the nature and functioning of India’s informal economy.
Way forward
For the same level of employment, formality is good.
But if there is a trade-off between formality and employment generation, choosing formality may not be so beneficial. And this trade-off appears to be quite sharp in India.
Indian manufacturing is still at best hope for creating new jobs and soaking up excess unskilled labour through better infrastructure and easier regulatory support — to create millions of new jobs.
The article highlights the need for the RBI to focus on inflation instead of pursuing elusive growth.
Is inflation at a level to be concerned about?
Due to the devastation caused by the pandemic, MPC kept its stance to ‘look through’ the sustained rise in prices through much of last year.
The release of the consumer-price inflation number for April 2021 (4.3%) might seem to validate their decision.
But there are many reasons why the MPC should be concerned.
To start with, the April print carries little validity since the base for comparison (April 2020) has been rubbished by RBI in the past on the grounds that it relates to the first month of the lockdown.
Inflation comes down but after causing devastation
Through a combination of the base effect (high level of inflation in the previous comparable period), belated but inevitable monetary policy action and a fall in demand that more than offsets the disruption in supply, inflation will come down.
However, before inflation comes down, it brings untold misery to the public at large.
In a country where close to 20% of the population lives below the poverty line and food is a major item of their consumption basket, any rise in inflation, especially food inflation, hurts the poor disproportionately.
Add to that the distress caused by job losses on account of the pandemic, and this time round, the pain is likely to be magnified many times over.
What is causing inflation?
Monetary policy acts with long and indeterminate lags.
Far from spurring credit offtake through low interest rates excess liquidity has spilled over into price pressures in India.
Wholesale price inflation at 7.4% (March 2021) was the highest in 8 years, while it would be naïve to take any solace from the latest consumer price index number.
The RBI needs to be appreciated for doing its bit to keep the wheels of our economy moving during the pandemic.
However, its failure to shift gear in the face of mounting evidence of inflation cannot be neglected.
When inflation was breaching the upper end of RBI’s target band for months on end, the message should have been clear.
US recovery and its impact on Indian economy
Globally, commodity prices are already on the rise.
Not without reason, it would seem, as borne out by 12 May’s inflation print of 4.2%, America’s highest in 12 years
Part of the reason is the excessive easing of US monetary and fiscal policies.
Rising US inflation has huge implications for countries like India that are at the receiving end of US policies.
As the US economy recovers, the dollar strengthens and US interest rates rise, the rupee is bound to weaken in response, adding to inflationary pressures here.
Consider the question “What are the factors stoking inflation in the pandemic? How far the monetary policies pursued by the central bank is responsible for it?”
Conclusion
When the MPC meets next in early June, it must re-order its priorities. Instead of chasing elusive growth, it must revert to its swadharma, own dharma, and focus instead on inflation.
India received over USD 83 billion in remittances in 2020,according to a World Bank report.
In 2019, India had received USD 83.3 billion in remittances.
The report said India’s remittances fell by just 0.2 per cent in 2020.
Much of the decline was due to a 17 per cent drop in remittances from the United Arab Emirates, which offset resilient flows from the United States and other host countries.
The World Bank, in its latest Migration and Development Brief, said despite COVID-19, remittance flows remained resilient in 2020.
Trend analysis
China, which received USD 59.5 billion in remittances in 2020 against USD 68.3 billion the previous year, is a distant second.
India and China are followed by Mexico (USD42.8 billion), the Philippines (USD34.9 billion), Egypt (USD29.6 billion), Pakistan (USD26 billion), France (USD24.4 billion) and Bangladesh (USD21 billion).
Remittance outflow was the maximum from the United States (USD68 billion), followed by UAE (USD43 billion), Saudi Arabia (USD34.5 billion), Switzerland (USD27.9 billion), Germany (USD22 billion), and China (USD18 billion).
The relatively strong performance of remittance flows during the COVID-19 crisis has also highlighted the importance of timely availability of data.
Given its growing significance as a source of external financing for low- and middle-income countries, there is a need for better collection of data on remittances, in terms of frequency, timely reporting, and granularity by corridor and channel.
B2BASICS
Remittances
Remittances are usually understood as financial or in-kind transfers made by migrants to friends and relatives back in communities of origin.
These are basically sum of two main components – Personal Transfers in cash or in kind between resident and non-resident households and Compensation of Employees, which refers to the income of workers who work in another country for a limited period of time.
Remittances help in stimulating economic development in recipient countries, but this can also make such countries over-reliant on them.
Remittance and the Indian Economy
Benefits
Increased inward remittance is a boon for the economy at both macro and micro levels.
At the macro level, remittances contribute to maintaining stable foreign reserves.
Remittances help Indian Rupee hold its value against the US dollar and forms a significant part of the GDP.
On a micro level, remittances have shown a positive impact on healthcare, entrepreneurship, education, and overall economic development of the recipient families.
Issues
An increase in outward remittances however, raises an alarm. It causes the rupee to weaken against the dollar, which in return impacts the businesses exposed to foreign exchange, and the economy overall.
NITI Aayog and Mastercardtoday released a report titled ‘Connected Commerce: Creating a Roadmap for a Digitally Inclusive Bharat’.
The report identifies challenges in accelerating digital financial inclusion in India and provides recommendations for making digital services accessible to its 1.3 billion citizens.
The report highlights key issues and opportunities, with inferences and recommendations on policy and capacity building across agriculture, small business (MSMEs), urban mobility and cybersecurity.
This report looks at some key sectors and areas that need digital disruptions to bring financial services to everyone.
Key recommendations in the report include:
Strengthening the payment infrastructure to promote a level playing field for NBFCs and banks.
Digitizing registration and compliance processes and diversifying credit sources to enable growth opportunities for MSMEs.
Building information sharing systems, including a ‘fraud repository’, and ensuring that online digital commerce platforms carry warnings to alert consumers to the risk of frauds.
Enabling agricultural NBFCs to access low-cost capital and deploy a ‘phygital’ (physical + digital) model for achieving better long-term digital outcomes.
Digitizing land records will also provide a major boost to the sector.
To make city transit seamlessly accessible to all with minimal crowding and queues, leveraging existing smartphones andcontactless cards, and aim for an inclusive, interoperable, and fully open system such as that of the London ‘Tube’.
The article highlights the challenges countries could face despite the patent waiver for Covid-19 vaccine.
TRIPS waiver for Covid-19 vaccine
The United States has finally relented and declared its support for a temporary waiver of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement for COVID-19 vaccines at the World Trade Organisation (WTO).
Hopefully, the U.S.’s decision would cause other holdouts like Canada and the European Union to give up their opposition.
While the U.S.’s decision is to be welcomed, the devil would be in the details.
The challenges after waiver
1) Conditions of the waiver
If the experience of negotiating such waivers, especially on TRIPS, were anything to go by, it would be too early to celebrate.
In the aftermath of the HIV/AIDS crisis the WTO adopted a decision in 2003 waiving certain TRIPS obligations to increase the accessibility of medicines.
However, this waiver (later incorporated as Article 31 bis in the TRIPS agreement) was subject to several stringent requirements such as the drugs so manufactured are to be exported to that nation only; the medicines should be easily identifiable through different colour.
Given these cumbersome requirements, hardly any country, in the last 17 years, made effective use of this waiver.
2) Countries will protect the interest of pharma companies
India and South Africa proposed a waiver not just on vaccines but also on medicines and other therapeutics and technologies related to the treatment of COVID-19.
So, the U.S. has already narrowed down the scope of the waiver considerably by restricting it to vaccines.
Medicines useful in treating COVID-19 and other therapeutics must be also included in the waiver.
While the U.S. would not like to be seen as blocking the TRIPS waiver and attracting the ire of the global community, make no mistake that it would resolutely defend the interests of its pharmaceutical corporations.
3) Lack of access to technology
The TRIPS waiver would lift the legal restrictions on manufacturing COVID-19 vaccines.
But it would not solve the problem of the lack of access to technological ‘know-how’ related to manufacturing COVID-19 vaccines.
Waiving IP protection does not impose a legal requirement on pharmaceutical companies to transfer or share technology.
While individual countries may adopt coercive legal measures for a forced transfer of technology, it would be too draconian and counterproductive.
Therefore, governments would have to be proactive in negotiating and cajoling pharmaceutical companies to transfer technology using various legal and policy tools including financial incentives.
4) Domestic IP regulation
While a TRIPS waiver would enable countries to escape WTO obligations, it will not change the nature of domestic IP regulations.
Therefore, countries should start working towards making suitable changes in their domestic legal framework to operationalise and enforce the TRIPS waiver.
In this regard, the Indian government should immediately put in place a team of best IP lawyers who could study the various TRIPS waiver scenarios and accordingly recommend the changes to be made in the Indian legal framework.
Conclusion
Notwithstanding the usefulness of the TRIPS waiver, it is not a magic pill. It would work well only if countries simultaneously address the non-IP bottlenecks.
What the data from Central Electricity Authority says
The total power generation from renewable energy sources including solar, wind, bagasse, biomass, small hydro and others stood at 147.25 billion units in FY21 compared with 138.34 billion units in FY20.
This is an increase of six per cent, according to data from the Central Electricity Authority.
All other key segments such as thermal, hydro and nuclear have reported a drop in power generation during FY21.
This is despite a significant drop in new capacity addition in the renewables sector in Covid-battered 2020-21.
The total power generation from renewable energy sources (including solar, wind, bagasse, biomass, small hydro and others) stood at 147.25 billion units in FY21 compared with 138.34 billion units in FY20.
In FY21, total power generation from thermal, hydro, nuclear and renewables stood at 1372.9 billion units compared with 1383.33 billion units in FY20.
Factors responsible
There are several factors working for an increase in generation by renewable sources.
The first factor is the thrust given to renewable energy by the government.
Second is the growing environmental awareness in the country, and the potential growth is driving more capacity creation here.
Third, getting in investment, — both domestic and foreign, is easier as this is an attractive area for them.
