Climate Change Impact on India and World – International Reports, Key Observations, etc.

Lessons from Uttarakhand and Texas

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Road to decarbonisation

The article deals with the common threads running through the recent flash floods in Uttarakhand and the severe cold that snapped the power grid in Texas.

Time-bound net zero carbon target

  • Most governments and corporates are in agreement over what needs to be done to reach the target of net-zero carbon emission target. Which include:
  • Fossil fuels must be steadily but inexorably replaced by clean energy electricity should be increasingly generated from solar and wind.
  • Transport should switch from internal combustion engines to electric vehicles.
  • Energy demand should be conserved and more efficiently consumed.
  • Technology and innovation must remain the centrepiece of all activities.
  • Governments and corporates have also to agree on removing the legacy obstacles that lie on the pathway.

3 Legacy obstacles need to be removed

  • Two events last month will explain better the reasons for this concern.
  • A chunk of the Nanda Devi broke off and triggered flash floods downstream that then washed away or damaged several hydroelectric dams and led to the loss of hundreds of lives
  • A severe cold snap crashed the electricity grid system in Texas, plunging a wide swathe of the state into darkness.
  • These two events were unrelated, other than possibly by the link of climate change, but on examination of the reasons for the consequential material and human misery, they offer common insight.

1) Poorly designed planing system

  • In both cases, the authorities were caught unprepared. This is despite the fact that there had been precedents.
  • One reason for this lack of preparedness could be the presumption, based on historical data.
  • The lesson is that whilst the past is a useful guidepost, it is an imperfect one especially in view of the spate of natural disasters across the world in recent times, and that planners should be cautious about linear extrapolations.
  • Certainly, for the journey of decarbonisation, there is little of the distant past for them to hang onto.

2) Siloed and fragmented physical and regulatory oversight mechanisms

  • The tragedy in Uttarakhand reflected the costs of institutional fragmentation and lack of coordination in decision making.
  • The suggestions made in the aftermath of the Kedarnath flooding regarding land use and watershed management and the best means of securing an optimal balance between construction and the Himalayan ecology.
  • But the suggestion had not been implemented in large part because energy is a concurrent subject and there is no one ministerial or regulatory body responsible for this domain.
  • Further, these recommendations required the coming together of various non-energy ministries which, given the current vertically siloed structures of responsibility and accountability in our system, did not happen.
  • The glacial burst may have been beyond anyone’s control; the consequential downstream damage was avoidable. 

3) The lack of investment in energy infrastructure

  • One reason why solar and wind did not pick up the power slack in Texas was because the grid was not resilient enough to absorb the surge in the flow of intermittent renewable electrons.
  • India’s transmission system is not capable of managing the energy transition.
  • This problem will clearly have to be addressed if decarbonisation is to proceed smoothly.
  • But to do so, many issues will have to be resolved.
  • Not least, how much will it cost to upgrade the infrastructure? How will it be financed?
  • Who will take the lead on driving this change e?
  • Questions that are easier to set out than answer.

Way forward

  • To ensure that decarbonisation translates into effective action on the ground, policymakers will have to build structures that reflect the woven, multidimensional, interdependent and interconnected nature of the energy ecosystem.
  • This means creating mechanisms that facilitate inter-ministerial and inter-state collaboration within the country and multilateral cooperation internationally.

Consider the question “There are legacy obstacles in the road to decarbonisation. What are these obstacles and suggest the pathway to remove these obstacles?” 

Conclusion

In order to achieve the targets on carbon emission, India needs to draw on these lessons and build robust systems, regulatory mechanisms and facilitate investment in the creation of resilient energy infrastructure.

A fine balance in digital age

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Regulating social media companies

The Digital Media Code seeks to balance the priorities and interests of several stakeholders. The article explains the various aspects of the code.

Guidelines and ethics code

  • The Ministry of Electronics and Information Technology, Government of India (MeitY) has announced the proposed Intermediary Guidelines and Digital Media Ethics Code. 
  • The guidelines will cover social networks, digital media companies, and OTT platforms.
  • The guidelines will also make the nation’s sovereign stance clear on matters of ethics and the protection of freedom of expression of creators, publishers, and digital platform companies.
  • The guidelines and ethics code seek to balance the questions of accountability and grievance redressal that are posed by the citizens of the country.

Balancing many priorities

  • The ministry’s announcement reveals an approach that is aligned with the thinking of today without imposing unreasonable boundaries on the innovation and expression.
  • The guidelines are designed to carefully balance the many priorities and contexts of all stakeholders.
  • With this move, India continues to deepen its position as a leader in digital policy and technological innovation.
  • These guidelines have been intentionally designed so that India’s next-gen digital media innovators can propel the acceleration of value generation and inclusive empowerment of their local users.
  • Global companies that have large user bases in the country can also align with a common framework that protects creators and consumers alike.

Grievance redressal mechanism

  • The proposal has mechanisms that empower every social and digital media intermediary to self-enforce effective mechanisms to address complaints from users.
  • With a special focus on protecting the online safety and dignity of users, especially women, the guidelines have prioritised affirmative addressal of the most serious issues that have affected India’s digital population.
  • The digital platform companies are empowered to report the first originator of the grievance-causing information.
  • This will ensure that liability is limited while the country’s laws can be fully and effectively enforced on the actual perpetrators.

Addressing the arbitrary censorship

  • Guidelines provide users with an opportunity to be heard — a vital defence against the arbitrary censorship that several social media platforms are increasingly embracing globally.
  • The need of the hour is for every country to have a body of clearly-defined policy that is consistent with the principles of their democracies.
  • The country’s guidelines will ensure that unlawful information has clear boundary conditions, liability is defined, the process for enforcement of orders is transparent.
  • The guidelines will also ensure that all social and digital media companies can rely on a consistent definition of the ethics code that protects all participants in the digital ecosystem.

Conclusion

This light-touch, empowering, and inclusive regulatory architecture is exactly what the country was hoping for, and India’s citizens will applaud this move as a foundational pillar towards an Atmanirbhar India.

Respecting wealth creators

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Private sector led growth

The article deals with the recent acknowledgement of the private sector by the Prime Minister in the development of the country.

Respecting wealth creators

  • In his recent speech in Parliament, the Prime Minister openly acknowledged the contribution and role of the private sector as an important engine of growth and employment in India.
  • The creation of wealth is essential for growth, employment and the reduction of poverty.
  • India’s successes in many fields in the last three decades are linked to the private sector.
  • The industries that have created growth, jobs, buzz and hope in the last three decades, the vast majority have been driven by private enterprise.

Steps taken to promote business

  • India has been making commendable strides in the “Ease of Doing Business”.
  • It is easier to start a business in India than it was a decade ago.
  • We seem to have broken the shackles of a chained belief that business is bad.
  • The success of the Mudra Yojana and Start-up India are living testimony to this fact.
  • And that India is daring to look at sectors we were otherwise hesitant to — space, defence, aeronautics.
  • Some areas need work, but a government willing to listen gives a good head start to solving those problems.
  • Work on faceless tax assessment and PLI schemes are moves that have received encouraging responses far and wide.
  • The India stack has revolutionised the fintech sector.
  • The digital health stack will likely do the same for healthtech.

Conclusion

The recent Union budget has made clear the intent of this government to pursue economic reform and go for growth — whether it is the willingness to live with a higher fiscal deficit or to aggressively pursue divestment of public sector enterprises. Large spending on infrastructure is good news too.

Banking Sector Reforms

PSBs should operate like proper banks if they can’t be privatized

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Privatisation of PSBs

The article deals with the stark differences in the performance of the public sector banks (PSBs) and private banks and suggests ways to deal with the issues.

Comparing PSBs with private banks

  • The performance of PSBs over the years hasn’t been worth the money that the government has invested in them.
  • As the Economic Survey of 2019-20 pointed out that over 4.3 trillion of taxpayer money is invested as government’s equity in PSBs.
  • In 2019, every rupee of taxpayer money invested in PSBs, on average, lost 23 paise.
  • In contrast, every rupee of investor money invested in New Private Banks—banks licensed after India’s 1991 liberalization—on average gained 9.6 paise.
  • The combined market value of HDFC Bank’s shares is 8.56 trillion (as of 18 February), whereas the market capitalization of all PSBs is around 6.41 trillion (excluding IDBI Bank, which is now categorized as a private bank).
  • Of course, if we add up the assets of PSBs, they are a lot bigger than HDFC Bank’s.

Dual regulation

  • The private banks are regulated by the Reserve Bank of India (RBI).
  • PSBs are regulated both by RBI and the department of financial services under the finance ministry.
  • The P.J. Nayak Committee report of May 2014 had pointed out this issue of dual regulation.
  • This is primarily because PSBs are used by the government to fulfil its social obligations and pump-prime the economy when it’s not doing well.
  • The stock market discounts these factors while valuing them.

Way forward

  • The policies for regulating and promoting industrial growth do not have any social content in them.
  • Hence, PSBs should be run as proper banks irrespective of whether they are privatized or not.
  • If they are not privatized, the government’s stake in these banks needs to come down to 33%, something which would help them raise more capital.
  • Once investors see PSBs being run as proper banks their market capitalization will start to go up.
  • Once PSBs are properly valued by the stock market, the government can sell some of its stake in them every year, and use that money to fund its social objectives.
  • It can also use some of that money to incentivize all banks, not just PSBs, to deliver some of its social objectives.

Conclusion

The government should take these steps to let the PSBs realise their potential. At the end of the day, nothing improves service delivery more than some good competition.

Blockchain Technology: Prospects and Challenges

Regulate but do no ban Bitcoin

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Blockchain

Mains level : Paper 3- Implications of banning blockchain technology

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to ban cryptocurrencies. Banning cryptocurrencies would have several implications for India. This article deals with this issue.

Soaring value of Bitcoin

  • Recently, Tesla announced that it will soon accept cryptocurrency as legitimate payment for its cars.
  • Mastercard followed by announcing that it will incorporate ‘select cryptocurrencies’ on its global payment network.
  • BNY Mellon, incidentally the US’s oldest bank, announced holding and transferring digital currencies for asset management clients.
  • JP Morgan and Goldman Sachs announced executive positions to look at cryptocurrencies.
  • All of this resulted in a soaring value of Bitcoin, and its younger sibling, Ethereum.

India’s governments stand on cryptocurrencies

  • India’s government sought to ban cryptocurrency through a proposed legislation, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
  • The Bill also provides to also set up a legal structure for an “official digital currency”.
  • 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.
  • India tried to ban cryptocurrency once before, in 2018, before it was reversed by the Supreme Court.

Implications of banning cryptocurrencies

  • The banning will kill innovation.
  • India has more than 30,000 blockchain innovators and practitioners.
  • These innovators will now be looking at moving out to friendlier regimes like the US, Switzerland, Singapore and Estonia.
  • International tech companies will freeze blockchain and crypto-exchange investments in India and the step will undermine India’s reputation as a technology hub.
  • India is the second-largest Bitcoin trading nation in Asia, and all those trades will move to overseas exchanges.
  • China has large crypto trading and mining operations, and an Indian ban on Bitcoin will leave that space open for it.

Consider the question “What is cryptocurrency? What would be the implications of banning it?”

Conclusion

No doubt, there are many problems with cryptocurrency—it is volatile, sucks energy, and is often abused by criminals. But the answer is not to ban it, but regulate it.

 

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

vaccine hesitancy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Dealing with vaccine hesitancy

Reluctance to take the vaccine has several implications. The misinformation around the vaccines needs to be fought through several measures. 

Understanding vaccine hesitancy

  • According to the World Health Organization, vaccine hesitancy is defined as a reluctance or refusal to vaccinate despite the availability of vaccine services.
  • To date, two vaccines have been approved for inoculation in India: Pune-based Serum Institute’s Covishield and Hyderabad-based Bharat Biotech’s Covaxin.
  • An adequate supply of vaccines is in place at least for the first phase, but the trickier part is to persuade the population for vaccination.
  • Like Western nations, vaccine hesitancy has been a cause of concern in the past in India as well.
  • Social media has seen a rising number of self-proclaimed experts who have been making unsubstantiated claims.
  • The debates around hesitancy for COVID-19 vaccines include concerns over safety, efficacy, and side effects due to the record-breaking timelines of the vaccines, competition among several companies, misinformation, and religious taboos.

Need to adopt libertarian paternalism

  • It is suggested that we adopt the idea of libertarian paternalism, which says it is possible and legitimate to steer people’s behaviour towards vaccination while still respecting their freedom of choice.
  • Vaccine hesitancy has a different manifestation in India, unlike in the West.
  • According to the World Economic Forum/Ipsos global survey, COVID-19 vaccination intent in India, at 87%, exceeds the global 15-country average of 73%.

Way forward

  • Instead of anti-vaxxers, the target audience must be the swing population i.e., people who are sceptical but can be persuaded through scientific facts and proper communication.
  • The second measure is to pause before you share any ‘news’ from social media.
  • It becomes crucial to inculcate the habit of inquisitive temper to fact-check any news related to COVID-19 vaccines.
  • The third measure is to use the celebrity effect — the ability of prominent personalities to influence others to take vaccines.
  • Celebrities can add glamour and an element of credibility to mass vaccinations both on the ground and on social media.

Consider the question “What is vaccine hesitancy? Suggest the measures to deal with it”

Conclusion

The infodemic around vaccines can be tackled only by actively debunking myths, misinformation and fake news on COVID-19 vaccines.

FDI in Indian economy

Indian investments and BITs

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ISDS

Mains level : Paper 3- Termination of BITs and its implications for India

The article examine the termination of agreement for the development of East Container Terminal by Sri Lanka in the context of unilateral termination of bilateral investment treaties by India.

Context

  • Recently, Sri Lanka terminated 2019 agreement with India and Japan that aimed to jointly develop the strategic East Container Terminal (ECT) at the Colombo port.
  • Apart from analysing the diplomatic fallout of this problematic decision for India-Sri Lanka ties, the issue also needs to be looked at through the prism of the India-Sri Lanka bilateral investment treaty (BIT).

India-Sri Lanka  BIT and its termination

  • In 1997, India and Sri Lanka signed a BIT to promote and protect foreign investment in each other’s territories.
  • It empowers individual foreign investors to directly sue the host state before an international tribunal if the investor believes that the host state has breached its treaty obligations.
  • This is known as investor-state dispute settlement (ISDS).
  • Article 3(2) of this treaty provides that investments and returns of investors of each country shall, at all times, be accorded fair and equitable treatment (FET) in the other country’s territory.
  • The normative content of the FET provision has been fleshed out by scores of ISDS tribunals in the last two decades.
  • The tribunals have persistently held that an important component of the FET provision is that the host state should protect the legitimate expectations of foreign investors. 
  •  In a case known as International Thunderbird Gaming Corporation v Mexico, it was held that the concept of legitimate expectations relates to a situation where the host state’s conduct creates reasonable and justifiable expectations on the part of an investor (or investment) to act in reliance on said conduct, such that a failure to honour those expectations could cause the investor (or investment) to suffer damages.
  • Sri Lanka, by signing the agreement to jointly develop the ECT at the Colombo port, created such expectations on the part of Indian investors.
  • However, the twist in the tale is that India unilaterally terminated the India-Sri Lanka BIT on March 22, 2017.
  • This termination was part of the mass repudiation of BITs that India undertook in 2017 as a result of several ISDS claims being brought against it.
  •  In cases of such unilateral termination, survival clauses in BITs assume significance because they ensure that foreign investment continues to receive protection during the survival period.
  • But, in the case of the investment in developing the ECT at the Colombo port, this survival clause will be inconsequential, since the agreement was signed in 2019, i.e., after India unilaterally terminated the BIT.

Important lessons

  • As a consequence of the onslaught of ISDS claims in the last few years, India has developed a protectionist approach towards BITs.
  • However, an important attribute that perhaps has not received much attention is that BITs are reciprocal.
  •  BITs do not empower merely foreign investors to sue India, but also authorise Indian investors to make use of BITs to safeguard their investment in turbulent foreign markets.
  • Accordingly, given India’s emergence as an exporter, and not just an importer of capital, the government should revisit its stand on BITs.

Consider the question “Examine the implications of unilateral termination of bilateral investment treaties(BITs) by India.”

Conlcusion

India needs to adopt a balanced approach towards BITs with an effective ISDS provision. This will facilitate Indian investors in defending their investment under international law should a country, like Sri Lanka, renege on an agreement.

Iran’s Nuclear Program & Western Sanctions

The U.S. policy options and its implications for the world order

Note4Students

From UPSC perspective, the following things are important :

Prelims level : JCPOA

Mains level : Paper 2- The U.S. approach toward JCPOA

The article spells out the U.S.’s foreign policy approach in the changing global order. Though the article doesn’t mention India, the U.S.’s policies and it’s bearing on India need no mention. From that perspective, we should follow their approach.

Decision on the JCPOA

  • During the U.S. presidential election campaign, Joe Biden had criticised the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA).
  • He had then promised that subject to Iran’s compliance with its obligations, the U.S. would re-enter the agreement.
  • In office, Mr. Biden has shown little urgency on the JCPOA matter.
  • Israel has given the opposite message and said that the nuclear agreement was “bad and must not be allowed”.
  • Israel and the U.S.’s Gulf allies, Saudi Arabia and the United Arab Emirates, have also insisted that they be involved with the discussions with Iran on the revival of the agreement.

U.S.’s Policy approach

  •  The U.S. policy is likely to show more continuity than change where the U.S.’s core interests are concerned, specifically in its ties with Russia, China and Iran.
  •  Mr. Biden is likely to reverse his predecessor Donald Trump’s personal accommodative approach towards Russia and adopt the U.S.’s traditional confrontational posture.
  • Mr. Biden’s Iran policy is likely to match Mr. Trump’s hardline approach on substantive matters.
  • This approach also panders to Iran’s regional rivals who wish to see the Islamic republic weakened and isolated.
  • There will thus be no dramatic change in the U.S.’s approach to Iran on the nuclear question.

Regional concerns and role of global powers

  • Despite the sanctions, Iran’s regional influence remains significant.
  • The Iranian ability to mobilise militants across the region is viewed by Israel and some the Gulf Arab states as threatening their security.
  • Gulf states are also concerned about Iran’s influence with their Shia populations.
  • The capabilities of Iran’s precision missiles and drones are also a matter of regional anxiety.
  •  Israel, Saudi Arabia and the United Arab Emirates will be in a face-off with Iran and its allies, Iraq, Syria and its Shia militia.
  • Alternatively, we could see a genuine regional effort to ease tensions and promote regional confidence, spearheaded by Qatar, working with Russia and, possibly, China.
  • Perhaps, Saudi Arabia and the UAE, already facing heat from the Biden administration, will see the value of this approach.
  • Russia now an influential player in the region, China, too, with its Belt and Road Initiative, has high stakes in regional stability.
  • The Sino-Iran 25 years agreement, envisages their substantial and long-term cooperation in political, security, military, economic, energy and logistical connectivity areas.

Consider the question “How far Joint Comprehensive Plan of Action (JCPOA) has been successful in achieving its goals? How peace in the Middle East influence India’s interests?” 

Conclusion

The new U.S. administration will thus witness a new world order, shaped by a coalition of Russia, China and Iran, in which the U.S. is no longer the most significant role-player.

Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

MTP amendment Bill

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- MTP (Amendment) Bill and issues with it

The article discusses the provision of the medical board in the MTP (Amendment) Act and issues with it.

Proposal of medical board

  • The Medical Termination of Pregnancy (Amendment) Bill (‘MTP Bill’) passed in the Lok Sabha is scheduled to be tabled for consideration in Rajya Sabha.
  • The Act prescribes the setting up of medical boards in every state and Union territory (UT), consisting of a gynaecologist, paediatrician, radiologist or sonologist and any other members as proposed by that state or UT.
  • Each board will be responsible for diagnosing substantial foetal abnormalities that necessitate termination of pregnancy after a 24-week gestation period.
  • Medical boards are a form of third-party authorisation and were not envisaged in the MTP Act, 1971.

Issues with the proposal

  • In the context of the current healthcare budgetary challenges, this proposal to set up infrastructure across the country to regulate medical termination of pregnancies is both financially unsound and practically impossible.
  • India’s healthcare system has neither the financial investment nor the infrastructure to sustain the operation and functioning of medical boards in every state and UT.
  • Due to the weak healthcare infrastructure in the country, it would be practically impossible to constitute these boards with the requisite specialists.
  • Even where they are set up, the accessibility of such boards for pregnant persons, especially those living in rural areas, remains a major challenge.
  • More importantly, subjecting people to multiple invasive examinations is a grave violation of their rights to privacy and dignity.
  • Requiring pregnant persons to navigate a bureaucratic web of authorisation will inevitably lead to delays and thereby impede access to safe and legal abortion services.

Poor public financing and privatisation of healthcare

  • At 1.6 per cent of GDP in 2019-20 India’s current level of public financing of health is one of the lowest in the world
  • This has meant that most health expenditure in the country is out of pocket (OOP) — borne by patients themselves.
  • OOP expenditure on healthcare is recorded at 58.7 per cent as per the National Health Accounts in 2016-17.
  • The central government has preferred to incentivise private players to set up or offer services, instead of building infrastructural and professional capacity.
  • Privatisation drives up costs of care and the handing over of public facilities to the private sector can have catastrophic consequences.
  • They additionally remain non-accountable to state authorities in terms of affordability or transparency for instance, through Right to Information enquiries, or to uphold fundamental rights like non-discrimination in treatment or employment, or even the fundamental right to health.
  • The National Sample Survey Organisation (NSSO)’s 75th report shows that less than 20 per cent of the population is covered by health insurance in India.
  • According to the National Health Profile 2017, India has only one doctor for roughly 10,200 people in the public sector.

Consider the question “Discsss the changes made by the Medical Termination of Pregnancy (Amendment) Bill and the challenges its provision could face.”

Conclusion

Poor public health infrastructure and absence of specialists across the country have meant that most abortions do not happen in the public sector, but at private centres or at home. With overwhelming shortfalls in specialist availability, especially in rural and scheduled areas, it would be impossible to constitute boards with requisite specialist representation as contemplated under the MTP Bill.

Important Judgements In News

POCSO doesn’t brook dilution

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UN Convention on the Rights of the Child

Mains level : Paper 2- Issues with the Bombay High Courts Judgement in POCSO Act

The recent Bombay High Court judgement has raised controversy for its interpretation of certain Section of the POCSO Act. The article deals with this issue.

Object of the POCSO Act

  • The Protection of Children from Sexual Offences (POCSO) Act was enacted in 2012 especially to protect children (aged less than 18) from sexual assault.
  • The Statement of Objects and Reasons of the Act admitted that a number of sexual offences against children were neither specifically provided for in extant laws nor adequately penalised.
  • The UN Convention on the Rights of the Child, ratified by India in 1992, also requires sexual exploitation and sexual abuse to be addressed as heinous crimes.

Issues with Bombay High Court’s Judgement

  • The Bench acquitted a man under the POCSO Act found guilty of assault on the grounds that he groped his victim over her clothes and there was no skin-to-skin contact between them.
  • As this judgment was likely to set a dangerous precedent, the apex court stayed the acquittal.
  • Section 7 of the POCSO Act, along with other things, says that whoever with sexual intent touches the breast of the child is said to commit sexual assault.
  • Whereas Section 8 of the Act provides minimum imprisonment of three years for sexual assault.
  • Section 354 of the Indian Penal Code (IPC) lays down a minimum of one year imprisonment for outraging the modesty of a woman.

Difference between IPC and POCSO

  • The difference between POCSO and IPC, as far as the offence of sexual assault is concerned, is two-fold.
  • One, the definition of ‘assault or criminal force to woman with intent to outrage her modesty’ given in the IPC is generic.
  • Whereas in POCSO, the acts of sexual assault are explicitly mentioned such as touching various private parts.
  • ‘Sexual assault’ in POCSO specifically excludes rape which requires penetration; otherwise the scope of ‘sexual assault’ under POCSO and ‘outraging modesty of a woman’ under the IPC is the same.
  • Two, whereas the IPC provides punishment for the offence irrespective of any age of the victim, POCSO is specific for the protection of children.
  • Higher punishment is provided under POCSO not because more serious allegations of sexual assault are required but because the legislature wanted punishment to be more deterrent if the victims are children.

Conclusion

In the absence of any specific provision in the POCSO Act which requires skin-to-skin touch as a mandatory element of an offence, any interpretation which dilutes protection to children must be declared ultra vires.

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

First steps in India’s journey to universal health care

Note4Students

From UPSC perspective, the following things are important :

Prelims level : PM-JAY

Mains level : Paper 2- Achieving universal health coverage

The article highlights the issues with India’s approach in achieving universal health care and issues with it.

Learning from the experience of Thailand

  • About 20 years ago, Thailand rolled out universal health coverage at a per capita GDP similar to today’s India.
  • What made this possible was a three decade-long tradition of investing gradually but steadily in public health infrastructure and manpower.
  • This meant that alongside the availability of funds, there also existed robust institutional capacity to assimilate those funds.
  • This is important because enough evidence exists on weak fund-absorbing capacities particularly in the backward States in India.

Budgetary allocations for health

  • The Union Ministry of Health and Family Welfare budget for 2021-22, viz. ₹73,932 crore, saw a 10.2% increase over the Budget estimate (BE) of 2020-21.
  • Also, a corpus of ₹64,180 crore over six years has been set aside under the PM Atma Nirbhar Swasth Bharat Yojana, (PMANSBY).
  • ₹13,192 crore has been allocated as a Finance Commission grant.
  • These allocations could make the first steps towards sustainable universal health coverage through incremental strengthening of grass-root-level institutions and processes.

Two important and prominent arms of universal health coverage in India merit discussion here

1) Insurance route for achieving universal health coverage and issues with it

  • The Pradhan Mantri Jan Arogya Yojana (PM-JAY) has stagnated at ₹6,400 crores for the current and a preceding couple of years.
  • Large expenditure projections and time constraints involved in the input-based strengthening of public health care have inspired the shift to the insurance route.
  • However, insurance does not provide a magic formula for expanding health care with low levels of public spending.
  • Beyond low allocations, poor budget reliability merits attention.
  • Another related issue is the persistent and large discrepancies between official coverage figures and survey figures (for e.g. the National Sample Surveys, or NSS, and National Family Health Survey) across Indian States.
  • Such discrepancies indicate that official public health insurance coverage fails to translate into actual coverage on the ground.
  • Robust research into the implementational issues responsible for such discrepancies and addressing them is warranted.
  • Without the same, the PM-JAY’s quest for universal health coverage is likely to be precarious.
  • Finally, even high actual coverage should not be equated with effective financial protection.
  • For example, Andhra Pradesh has among the highest public health insurance coverage scores (71.36%, NSS 75), but still has an out-of-pocket spending share much above the national average.

2) Comprehensive primary care

  • Health and Wellness Centres — 1,50,202 of them — offering a comprehensive range of primary health-care services are to be operationalised until December 2022.
  • Of these, 1,19,628 would be upgraded sub health centres and the remaining would be primary health centres and urban primary health centres.
  • Initially, most States prioritised primary health centres/urban primary health centres for upgradation over sub health centres, since the former required fewer additional investments.
  • Till February 2, 58,155 health and wellness centres were operational, of which 34,733 were sub health centres and 23,422 were primary health centres/urban primary health centres.
  • This means that of the remaining 92,047 health and wellness centres to be operationalised by December 2022, 84,895 will be sub health centres.
  • This offers huge cost projections.
  • The current allocation of ₹1,900 crore, an increase of ₹300 crore from previous year, is a paltry sum in comparison.
  • Since 2018-19, when the health and wellness centre initiative began, allocations have not kept pace with the rising targets each year.
  • Additional funding under the PMANSBY and Finance Commission grants is reassuring, but a greater focus on rural health and wellness centres would be warranted.
  • Two untoward implications could result from under-investing and spreading funds too thinly.
  • Continuing the expansion of health and wellness centres without enough funding would mean that the full range of promised services will not be available, thus rendering the mission to be more of a re-branding exercise.
  • Second, under-funding would waste an opportunity for the health and wellness centre initiative to at least partially redress the traditional rural-urban dichotomy by bolstering curative primary care in rural areas.

Consider the question “What are the challenges in adopting the insurance model in achieving the universal health coverage in India?” 

Conclusion

COVID-19 has prodded us to make a somewhat stout beginning in terms of investing in health. The key, and the most difficult part, would be to keep the momentum going unswervingly.

Government Budgets

Infrastructure push now, fiscal consolidation later

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Types of fiscal deficits

Mains level : Paper 3- Push for the growth in the Budget, but concerns with the fiscal deficit remains

The Budget will aid the growth in the aftermath of the pandemic, however, concerns remain over the fiscal deficit.

Concerns about fiscal deficit

  • The Budget, taken as a whole, has provided reasonable stimulus to growth through a change in the composition of expenditure and other measures to improve the climate for investment.
  • But concerns remain about fiscal deficit.

High expenditure growth

  • Proposed growth in central expenditure, both in 2020-21 Revised Estimates (RE) and in 2021-22 Budget Estimates (BE), indicates the extent of contemplated fiscal stimulus.
  • For reaching the projected 2020-21 RE levels, the growth required in the last quarter of the current fiscal year over the corresponding period of the previous year appear extraordinary.
  • This involves transferring on to the Budget, the accumulated food subsidies amounting to ₹2,54,600 crore given to the Food Corporation of India through National Small Savings Fund (NSSF) loans.
  • The balance of subsidies amounting to ₹1,68,018 crore would be the food subsidy pertaining to 2020-21 (RE).
  • This is a desirable change towards transparency.
  • Taking revenue expenditure figures as budgeted and adjusting for the NSSF-accumulated food subsidy amount, the growth is 6.7% in revenue expenditure in 2021-22 (BE) over 2020-21(RE).
  • A good part of expenditure for the last quarter of 2020-21 may also pertain to clearing unpaid dues of various stakeholders including the private sector, autonomous bodies and government-aided institutions.
  • Clearing these payments is desirable and would add to demand.
  • The main expenditure push comes through a budgeted growth of 26.2% in capital expenditure in 2021-22.
  •  Relative to GDP, capital expenditure is expected to increase from 1.6% in 2019-20 to 2.3% in 2020-21 RE and 2.5% in 2021-22 BE, signalling a significant change in priority.

Increase in receipts

  • Significant increases are planned in non-tax revenues and non-debt capital receipts.
  • This increase is mainly predicated on higher dividends from non-departmental undertakings and spectrum sales.
  • From a contraction of 35.6% in 2020-21 (RE), non-tax revenues are budgeted to grow by 15.4% in 2021-22.
  • In the case of non-debt capital receipts, mainly covering disinvestment, a budgeted growth of 304.3% in 2021-22 stands in contrast with the contraction of 32.2% in 2020-21 (RE).
  • Disinvestment initiatives have so far yielded minimal results.
  • Budgeted increase in the Centre’s gross tax revenues is dependent on nominal GDP growth of 14.4%, with a buoyancy of 1.6 for direct taxes and 0.8 for indirect taxes. 

Steps towards asset monetisation

  • An important initiative pertains to the launching of a National Monetisation Pipeline.
  • The time lags involved in starting yielding revenue remain unpredictable because of various potential disputes and claims involving government-owned land.
  • A transparent auction process needs to be set up to facilitate suitable price discovery.

Other institutional initiatives

  • The Budget includes central government’s share to the National Infrastructure Pipeline.
  • However, success of the infrastructure expansion plan would depend on other stakeholders of the pipeline playing their due role.
  • The Budget also proposes setting up of a Development Finance Institution (DFI), to serve as a catalyst for facilitating infrastructure investment.
  • The DFI would have an initial capital of ₹20,000 crore.
  • In order to manage non-performing assets of public sector banks, there is a proposal to set up an Asset Reconstruction Company (ARC) and an Asset Management Company (AMC).
  • Much depends upon the fine-tuning the operations of these institutions.

Finance Commission’s recommendations

  • In the action taken report, the Union government has accepted the recommended vertical share of 41% for the States in the shareable pool of central taxes.
  • The government has accepted the Fifteenth Finance Commission’s recommendation for revenue deficit grants, local body grants and disaster-related grants.
  • The scope of revenue deficit grants has been extended to cover 17 States in the initial years.
  • The determination of these grants is not based on equalisation principle although some norms have been used in the assessment exercise.
  • However, the government has put on hold the consideration of State-specific and sector-specific grants including performance-based incentives.
  • The substantive issue pertains to the mode of transfers in terms of general-purpose unconditional transfers against specific purpose and conditional transfers.
  • States had shown a preference for the former mode and it is for this reason that the 14th Finance Commission had raised the States’ share from 32% to 42%.
  • The reduction from 42% to 41% is only on account of the consideration of 28 States excluding Jammu and Kashmir because of its new status.
  • The imposition of cesses which are almost permanent has reduced the shareable pool.
  • In fact, the States’ share in the Centre’s gross tax revenues is only 30% in 2021-22 (BE).

Way forward

  • The Fifteenth Finance Commission has also proposed a revised fiscal consolidation road map for the Centre and States.
  • The Fifteenth Finance Commission has recommended the setting up of a High-Powered Intergovernmental Group to re-examine the fiscal responsibility legislations of the Centre and States.
  • Giving up the prudential norms will be a wrong lesson to learn from the crisis.
  • The issue of debt sustainability can be certainly re-examined by taking into account the evolving profiles of debt, interest payments, and primary deficits relative to GDP.

Conclusion

Fiscal deficit must be related to household savings in financial assets and the interest payments to revenue receipts. It should not be forgotten that in fiscal 2021-22, interest payments to total revenue receipts will be 45.3%, pre-empting a significant proportion of revenue receipts. We must be conscious of the burden of the rising stock of debt.

Government Budgets

The Budget unshackles India’s economic growth story

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Types of fiscal deficits

Mains level : Paper 3- Key feature of the Budget

The article highlights the three key feature of the Budget which makes it historic.

1) Disinvestment

  • Budget 2021-22 will begin the process of the withdrawal of the state from business.
  • Bank nationalisation in 1969 signalled a new era — just more than 50 years later, India has changed course for the better.
  • The budget signals that the process towards the goal of greater economic freedom, and faster and more equitable economic development, and maturity, has well and truly begun.

2) Changed role of fiscal deficit in economic policy

  • Many of us forgot the original meaning of fiscal deficits and their importance.
  • When there is an unemployment, a considerable portion of deficit financing can go towards growth, rather than inflation.
  • The relegation of the fiscal deficit to a secondary role in economic policy was the second big departure from a conventional budget.
  • The conventional argument was that fiscal deficit was something to really worry about, hence taxes must be raised to keep the deficit within limits.
  • There was serious talk of a COVID cess, a wealth tax, and increase in the tax rate for the rich.
  • There is no increase in tax rates to increases tax revenue.
  • Rather, the finance minister took the extra-bold step of reducing corporate taxes in September 2019.
  • India awaits a comprehensive reform of the Direct Tax Code. It did not happen. But the stage is set for such a reform.

3) Transparency in fiscal math

  • If the government borrows from the Food Corporation of India (to finance MSP purchases, what else), it will now appear as part of expenditures and as part of the deficit.
  • Also, the GDP growth estimates for 2021-22, forecasted at 14.5 per cent (nominal).
  • Normally, finance ministers in India tend to over-estimate, and most often, fall short.
  • Budget 2021-22 might be the first to significantly exceed the forecasts.

Criticism of the budget

  • One of the issues with the budget cited by the critics is that its forecasts would be in error because of problems of “execution and implementation”.

Conclusion

With many firsts, it is a budget that lays the foundation for sustainable recovery in GDP growth and welfare improvement.

Government Budgets

The reason that India cannot afford to go on a debt binge

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Fiscal deficit

Mains level : Paper 2- Challenges posed by high debt levels

The article discusses the challenges associated with the Budget with a high fiscal deficit.

Change in government’s stance

  • India’s economy has suffered more than most from the covid pandemic and so have its people.
  • Its economic contraction has put pressure on its government, like so many others, to respond.
  • Until this week, government’s response had been relatively restrained.
  • The government implied that any welfare-promoting and growth-enhancing measures had to stand on a solid macro-economic foundation.
  • The federal budget for the next financial year, 2021-22, with the fiscal deficit for the current fiscal at 9.5% of gross domestic product (GDP) has changed that optimistic narrative.
  • The government has effectively abandoned its long-term commitment to bring the deficit down to close to 3% of GDP, pitching instead for a gentle descent to 4.5%—six years from now.

Implications of high fiscal deficit

  • Once the covid pandemic retreats, India might end up with a debt-to-GDP ratio of about 90%, compared to the low 70s at present.
  • It would be saddled with a permanently elevated fiscal deficit and a financial system bogged down by high levels of bad debt.
  • Consumer price inflation has topped the Reserve Bank of India’s target zone of 2%-6% since the covid lockdown began last year.
  • Unlike the US or China, countries in India’s position—which have neither a reserve currency nor strong growth momentum—cannot grow rapidly while exploding their debt.
  • They can’t afford to ignore rating agencies because of their supposed bias, or cock a snook at bond markets and just run the currency presses instead.
  • They need to grow in order to reduce their debt. That’s a very different dynamic.
  • India isn’t so attractive that it can expect vast sums of investment to arrive even if its macro-economic numbers look bad and its sovereign rating is junk.
  • We don’t have a history of deflation, we aren’t hitting the zero lower bound.
  • It’s quite the opposite; we have an economy prone to sustained high inflation.
  • India is not in a position in which it could build really productive assets using sustained deficit.
  • This is still a developing economy, which especially in bad times should tread carefully rather than throw caution to the winds.

Rationale behind high spending

  • The government is hoping that increased spending will help India grow out of this predicament.
  • The only way India can pull itself out of this jam is if private investment pours into the country, financing projects that push up the country’s potential growth rate.
  • Yet the government, already monopolizing domestic financial savings, seems to want to go to war with global markets as well.

Consider the question “Fiscal deficit figures for FY21 marks the end of India’s departure from the path of fiscal consolidation. Discuss the challenges posed by such high fiscal deficit to the Indian economy.

Conclusion

India’s greatest strength had been his commitment to fiscal responsibility. The path of fiscal adventurism could end up leaving India’s macroeconomy vulnerable.

Government Budgets

Economy needs much more than what Budget 2021 offers

Note4Students

From UPSC perspective, the following things are important :

Prelims level : MSP

Mains level : Paper 3- Budget 2021-22 and missed opportunities

The article highlights the areas of economy for which the allocation in the Budget has either been kept unchanged or reduced, signaling the missed opportunity to revive the economy.

Including the off-budget items

  • An important feature of the Budget is the transparency on including the off-budget items.
  • The step will result in cleaning up of the balance-sheet of the Food Corporation of India (FCI).
  • The FCI was saddled with a debt of Rs 3.75 lakh crore by the end of December 2020, a significant part of which is now paid by the government.
  • So is the case of the fertiliser subsidy for which the pending Rs 65,000 crore was cleared.

What was the increase in expenditure due to pandemic

  • The total expenditure of the government in 2020-21 hardly increased compared to the pre-pandemic budget estimates (BE).
  • The total increase in revised estimates (RE) for 2020-21 is only Rs 33,000 crore, around 1 per cent more than what was budgeted.
  • The government did raise the expenditure on food subsidy, direct benefit transfer to Jan Dhan accounts (Rs 33,000 crore) and the increase in the Mahatma Gandhi National Rural Employment Guarantee (MGNREGA) (Rs 50,000 crore) and so on.
  • But it did so not by generating resources and expanding the fiscal deficit but by cutting down essential expenditure such as agriculture (Rs 18,000 crore), education (Rs 14,000 crore) and social welfare (Rs 14,000 crore).

No increase in health budget

  • The Budget announced increase in the health budget to Rs 2.23 lakh crore.
  • This number was achieved by adding one-time expenditures on the vaccine, Finance Commission grants and inclusion of expenditure on drinking water, sanitation and nutrition.
  • However, the budget of the health ministry for 2021-21 is lower at Rs 74,602 crore compared to the revised estimates of Rs 82,445 crore for the current year.

No increase in agriculture budget

  • Like in many other essential ministries, the agriculture ministry also witnessed a cut with estimates of 2021-22 lower by Rs 11,000 crore than last year.
  • Real investment in agriculture has been lower than 2013-14 for every year of this government.

Lack of attention on employment generation in rural area

  • The lifeline provided by expenditure in rural areas on infrastructure creation and employment generation has either seen a decline in budgeted expenditure or remained stagnant.
  • The budget for the ministry of rural development is lower by Rs 66,000 crore compared to the RE of last year.
  • The MGNREGA budget of Rs 73,000 crore is barely enough to cover the increase in wages by 11 per cent announced in March.
  • It is only 1.8 per cent higher than the actual expenditure of 2019-20, but 52 per cent lower than the RE of last year.
  • Similarly, for the Pradhan Mantri Gram Sadak Yojna (PMGSY), the budget for 2021-22 has been cut by Rs 4,500 crore, not even enough to cover inflation between the two years.

Consider the question “The Budget 2021-22 has been hailed for bringing in more transparency to the budgeting exerciese? Examine the context for this, how it will benefit the country?”

Conclusion

Estimates for next year point to missed opportunities to use fiscal measures to revive the ailing economy. Unlike the pandemic, where the arrival of vaccines has given hope, the ailing economy needs much more than this budget.

Government Budgets

Despite some hits, the Budget has crucial misses

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Development Finance Institution

Mains level : Paper 3- Crucial misses in the Budget 2021-22

The article highlights the key aspects of the budget and also mention the failure to address the challenge of employment and rising inequality.

Significance of the Budget

  • At its simplest, is the government’s tentative income and expenditure statement.
  • At its broadest, the Budget is a pious statement of the government’s policy and ideological intentions.
  • It is also the government’s statement of how it seeks to tackle the immediate political (electoral) and economic challenges.

Stepping up public investment and challenge of financing

  • The present Budget’s focus on stepping up public investment by 34.5% in the coming fiscal year (compared to the current year) is a welcome sign.
  • The government will borrow an additional ₹80,000 crore for the purpose in the next two months.
  • Realisation of these investments would crucially depend on tax revenue realisations, disinvestment proceeds, sale of rail and road assets and the government’s ability to raise resources from the market, without raising interest rates for the private sector.
  • There is no mention of the government’s recourse to debt monetisation.
  • While the investment intentions are evident, its financing efforts seem to have too many loose ends.

Development Finance Institution

  • To deal with the poor industrial and infrastructure investment during the last decade the Budget proposed setting up of Development Finance Institution.
  • One of the reason for poor investment was a lack of long-term credit for infrastructure,which yields low rates of return spread over a long period of time.
  • Commercial banks, whose deposits are for short to medium term, find it difficult to lend for long term (more than five years) for the fear of maturity mismatch.
  • Moreover, as banks were laden with rising non-performing assets on account of poor corporate sector performance during the last decade.
  • Also,  most successful industrialising economies have relied on DFIs for providing long-term credit.

Financing challenge DFI could face

  • Weakness of DFI lies in securing stable long-term, low cost sources of finance.
  • The proposed DFI will be financed by foreign portfolio investments (FPI), which is a cause for concern.
  • By definition, FPI represents short term inflows with exchange rate risks, while infrastructure investment is for long term whose revenues will be mostly in rupees.
  • Such an investment will inevitably lead to currency and maturity miss-match, raising cost of capital.
  • Hence, there is a need to consider alternative long-term sources, preferably from domestic sources, or international development agencies.

Health infrastructure

  • A substantial annual fixed investment in improving urban sanitation, drinking water and sewage facilities, it is indeed a welcome step.
  • A lessons from rural Swachh Bharat Abhiyan is that  complementary facilities need to be constructed in a coordinated manner to maximise the effectiveness of such investments.

No effort to address rising inequality

  • There is no targeted employment programme to alleviate the immediate crisis is a matter of concern.
  • There is no mention of the stupendous rise in economic inequality during just the last year.
  • While the poor lost their jobs and livelihoods in 2020, corporate India’s profits increased.
  • The Budget could have consider a special tax on the super-rich — as many countries are now mooting.

Consider the question “What necessited the Development Finance Institution? Examine the challenge it would face in its functionig?”

Conclusion

In summary, if the capital expenditure plan outlined in the Budget speech is credible, and implemented with assured financial backing, it could revive the investment cycle. The proposed development bank for term lending for infrastructure is welcome, provided its sources of finance are cheap, long term and mostly domestic. Investments in urban public health infrastructure — sanitation, water supply and sewage — are in the right direction if implemented in a coordinated manner.

 

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

Building a robust healthcare system

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Maternal Mortality Rate, Infant Morality Rate

Mains level : Paper 2- Disparity among states in health parameters

The article focuses on the wide variation across the state in terms of the important health parameters and suggests prioritising health.

Variation across the states

  • The efficacy of the public health system varies widely across the country since it is a State subject.
  • Public health system can be judged just by looking at certain health parameters such as Infant Mortality Rate, Maternal Mortality Ratio and Total Fertility Rate.
  • In Madhya Pradesh, the number of infant deaths for every 1,000 live births is as high as 48 compared to seven in Kerala. In U.P. the Maternal Mortality Ratio is 197 compared to Kerala’s 42 and Tamil Nadu’s 63.
  • The northern States are performing very poorly in these vital health parameters.
  • The percentage of deliveries by untrained personnel is very high in Bihar, 190 times that of Kerala.
  • Since health is a State subject, the primary onus lies with the State governments.
  • Each State government must focus on public health and aim to improve the health indicators mentioned above.
  • Unless all the States perform well, there will be no dramatic improvement in the health system.

Steps needed to be taken

  • The governments — both at the Centre and the Empowered Action Group States — should realise that public health and preventive care is a priority and take steps to bring these States on a par with the southern States.
  • The Government of India has a vital role to play.
  • Public and preventive health should be his focus by holding the Empowered Action Group States accountable to the SDGs.
  • They must be asked to reach the levels of the southern States within three to five years.
  • An important measure that can make a difference is a public health set-up in these States that addresses primary and preventive health.

Conclusion

Unless we invest in human capital, FDI will not help.  Investing in health and education is the primary responsibility of any government. It is time the governments — both at the Centre and States — gave health its due importance.

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

Credit rating

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Credit Rating Agencies

Mains level : Paper 3- Issue of rating given to India by global credit rating agencies

The Economic Survey-2020-21 highlights the issue of the adverse rating given to emerging economies by global credit rating agencies. This article suggests using our flawless repayment record as the basis of argument.

Prejudice against emerging economies

  • The Economic Survey for 2020-21, charged international credit rating agencies with prejudice against emerging economies such as India and China.
  • The Survey has used economic size as an argument.
  • The economy that is the world’s fifth-largest has predominantly been rated AAA, S&P’s top rating.
  • By contrast, India, which displaced the UK in 2019 as the world’s fifth-largest, has been rated BBB-, the lowest investment grade.
  • The Survey points out that since 1994, only twice has the credit rating (as assigned by S&P and Moody’s) of the fifth-largest economy in US dollar terms been poor.
  • This was when China and India rose to that rank, in 2005 and 2019 respectively.

Issues with Credit Rating

  •  Rating agencies rarely get credit quality right and they have been found to be well behind the curve in almost every default crisis.
  • The behavior of these agencies has been pro-cyclical, which is often seen to aggravate crises and fuel bubbles.
  • They are too lenient when the times are good, and too harsh when economic conditions worsen, making booms and busts that much more dramatic.

What should be the basis of India’s argument

  • Unless the country has the privilege of printing the world’s reserve currency, as the US has, there is nothing special that ensures a large economy will always repay what it owes.
  • India’s argument should revolve around the country’s flawless repayment record.
  • The last time we were on the verge of a sovereign default, in 1991, we reformed our economy.
  • Today, the country has foreign exchange reserves in excess of $584 billion, while its total external debt, including that of the private sector, is a shade over $556 billion.

Consider the question “The Economic Survey of 2020-21 point to the adverse rating of India economy by the global rating agencies. What is the significance of such ratings for the economy. What should be the basis of the argument against India’s adverse rating by the agencies?”

Conclusion

Despite the above-mentioned factors, we still find that Indian borrowers must pay higher rates of interest overseas than they would have to with a better rating. Global rating agencies need to overhaul their methodology to better reflect reality.

Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

Emphasising self-reliance in science

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Draft fifth Science, Technology and Innovation Policy

The article discusses the features in the fifth Science, Technology and Innovation policy and also suggests the areas that needs attention.

Draft Science, Technology, and Innovation Policy

  • The new policy envisages technological self-reliance and aims to position India among the top three scientific superpowers.
  • For that to happen, the draft policy says, we need to attract our best minds to remain in India by developing a people-centric science, technology, and innovation ecosystem.
  • It aims at doubling private sector’s contribution to the Gross Domestic Expenditure on Research and Development every five years.

Following are the highlights of the policy

1) Funding issue

  • Raising our R&D investment in science (about 0.6% now) to 2% of the GDP has been a national goal for a while.
  • Despite strong recommendations in the past by several scientific bodies and leading scientists and policymakers, we are still well short of that goal.
  • The 2020 draft policy blames this on “inadequate private sector investment” and adds that “a robust cohesive financial landscape remains at the core of creating an STI-driven Atmanirbhar Bharat.”
  • Government is trying to shift the responsibility of financing R&D to different agencies such as the States, private enterprises, and foreign multinational companies.
  • But it is doubtful if the various funding models that are presented are workable or practical, especially during a pandemic.
  • Private sector cannot be expected to pay for basic research as return on investment in basic research takes too long from a private sector perspective.
  • The fact is that basic science research in India is suffering from the lack of adequate funding despite grand proclamations.
  • We need to implement the self-financing revenue model proposed in the Dehradun Declaration for the CSIR labs back in 2015.

2) A decentralized institutional mechanism

  • Policymakers are considering alternative mechanisms of governance of the financial landscape.
  • The issue of the administrative burdens of researchers and the problem of journal paywalls is also being considered.
  • Policymakers are also exploring international best practices of grant management.
  • The draft policy visualises a decentralized institutional mechanism for a robust STI Governance.
  • This intention is in fact defeated in the document itself, where several new authorities, observatories and centres have been proposed.
  • Decentralisation of administrative architecture is essential, but we need to explore the practical option of providing more autonomy to research and academic centres for financial management.

3) Steps to tackle the discrimination

  • The number of suicides of students is on the increase in the IITs.
  •  In 2019, more than 2,400 students dropped out from the 23 IITs in just two years, over half of them belonging to the Scheduled Caste/Scheduled Tribe and Other Backward Classes.
  • Caste discrimination could be one of the reasons for these tendencies.
  • As a part of inculcating an inclusive culture in academia, the document promises to tackle discriminations “based on gender, caste, religion, geography, language, disability and other exclusions and inequalities”.
  • It mentions more representation of women and the LGBTQ community.

Way forward

  • The document should prioritise important issues and amplify first the problems which have cultural and administrative dimensions.
  • The document does not mention how to stem the rot within, although it speaks extensively about science communication and scientific temperament.
  • There is need to facilitate an environment that encourages a mindset that constantly challenges conventional wisdom as well as open-minded inquiry among the students.

Consider the question “As India aspires to be the scientific superpower, suggest the areas which the new Science, Technology and Innovation policy should focus on”

Conclusion

With the advent of new disruptive technologies, global competitiveness will be increasingly determined by the quality of science and technology, which in turn will depend on raising the standard of Indian research/education centres and on the volume of R&D spending. India has no time to waste.

Government Budgets

Need for expansionary fiscal stance in the Budget

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Expenditure in Budget

Mains level : Paper 3- Issues with expenditure estimates in the Budget

The article highlights the issues with the system of Budget presentation and suggest the areas to focus on.

Issues with expenditure and revenue estimates

  • Experience shows revenues being much less than the Budget projections: each year, this mistake is repeated and even amplified.
  • The expenditure estimates are even more disingenuous because they understate the actual expenditures that should be counted.
  • This concern has been repeatedly brought up by the Comptroller and Auditor General of India (CAG).
  • A CAG report in 2018 identified at least three methods of reducing the stated expenditure:
  • 1) Not paying for the full fertilizer subsidy.
  • 2) Not paying the central government’s dues to the Food Corporation of India (FCI) for the food subsidy, and forcing the FCI to borrow from the market.
  • 3) Using other special purpose vehicles to pay for infrastructure investment, like the Long Term Irrigation Fund.
  • In 2017-18, just those three items amounted to ₹1,29,446 crore or 1.8% of GDP.
  • These strategies are problematic because they are non-transparent and they also force other agencies (like State governments and public sector enterprises) to go in for expensive commercial borrowing.

What CGA data reveals

  • The data from the Controller General of Accounts show that between April and November 2020, revenues of the central government predictably collapsed, by around 18%, or ₹181,372 crores, compared to the same period of the previous year.
  • But despite that, expenditures should have gone up, because the lockdown-induced collapse in an economic activity meant that public spending would be the only thing keeping the economy afloat.
  • In three rounds of stimulus packages government claimed to inject amounts of ₹1.7-lakh crore in March, ₹20-lakh crore in May, and then ₹2.65-lakh crore in November
  •  However, the public accounts show that the total spending of the central government increased by only ₹86,301 crores.
  • That was only a 4.6% increase — not even enough to keep pace with inflation.
  • In other words, the central government reduced its real spending over the period of the pandemic and economic crisis.
  • This fiscal stance obviously affects people and also adds to contractionary tendencies in the economy, and prolongs the severe demand recession.
  • Policies that destroy informal economic activities eventually come to harm the formal enterprises as well.

Consider the question “There has been growing concerns that expenditure estimates presented in our Budget fail to represent the actual expenditure of the government. What are the reasons for that and how it could affect the reliability of government finances?”

Conclusion

The Budget this year needs to focus on moving to a more expansionary fiscal stance that prioritizes employment generation and public service provision.