April 2020

Government Budgets

A niggardliness that is economically unwarrantedop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Fiscal deficit and its relation with inflation, CAD etc.

Mains level : Paper 3- Should India consider a package to ease the sufferings inflicted by the covid-19 even at the cost of large fiscal deficit?


The Centre can afford to step up its COVID-19 assistance to a higher scale; fiscal deficit is no worry.

Comparison with the US

  • Unemployment benefit in the US: In the United States, for instance, where the lockdown has raised the number of persons filing unemployment claims from 2.8 lakh to 6.6 million in a matter of days, those affected can fall back on unemployment benefit.
  • Comparison of packages: The US government has approved a package of ameliorative steps costing roughly 10% of that country’s GDP to cope with the crisis.
  • In India by contrast, the Finance Minister’s package comes to less than 1% of its GDP; and much of it is just a repackaging of already existing schemes.
  • New expenditure comes to just a little over half of the ₹1.7-lakh crore earmarked for the package.
  • Migrant workers are not the beneficiary: Besides, none of the steps will help the migrant workers; not even the larger foodgrain ration which in principle could, because most of them would have ration cards back home rather than in the places where they stay.

What can be done?

Consider the cash transfer

  • Many economists and civil society activists had suggested a cash transfer of ₹7,000 per month for a two-month period to the bottom 80% of households to tide over the crisis, in addition to enhanced rations of foodgrains and the inclusion of certain other essential commodities within the ration basket.
  • The cost of their proposed cash transfers alone would come to ₹3.66-lakh crore, which is more than 10 times the cash transfers provided in the Finance Minister’s package.
  • Providing assistance on the scale proposed by civil society organisations is necessary; it will no doubt pose logistical problems, but not financial problems.
  • Two possible effects of cash transfer: Even if all of it is financed through a fiscal deficit for the time being, the economic implications of such an enlarged deficit would not be forbidding.
  • These implications can manifest themselves in two ways: one is through inflation, and the other by precipitating a balance of payments problem. Let us consider each of these.

   Effect of cash transfer on inflation

  • As long as supplies of essential commodities are plentiful and these are made available through the Public Distribution System to the vast majority of the people so that they are insulated against the effects of inflation, any inflation per se should not be a matter of great concern. This is the case in India at present.
  • Foodgrain stocks with the FCI: The supply of the most essential of goods, food grains, is plentiful. Currently, there are 58 million tonnes of foodgrain stocks with the government, of which no more than about 21 million tonnes are required as buffer-cum-operational stocks.
  • This leaves a surplus of 37 million tonnes which can be used for distribution as enhanced ration, or for providing a cushion against inflation.
  • The rabi crop is supposed to be good; as long as it is safely harvested, this would further boost the government’s food stocks.
  • Rise in demand of other commodities: Likewise, the supplies of other essential commodities which consist of manufactured goods and where output has been demand-constrained all along will get boosted in response to higher demand; and in special cases, imports may have to be resorted to.
  • There is in short no reason to think that inflation of a worrisome magnitude will follow if the fiscal deficit is increased.
  • What about the multiplier effect? There is an additional factor here. The increase in total demand caused by an initial increase in demand, which is financed by a fiscal deficit, is a multiple of the latter.
  • Now in a situation like the present, when even if the lockdown is lifted social distancing and restrictions on social activities will continue, the value of the multiplier will be lower than usual.
  • People, in short, would hold on to purchasing power to a much greater extent than usual because of the continuing restrictions on demand, which would act as an automatic anti-inflationary factor.
  • Of course, there will be shortages of some less essential commodities and also hoarding on account of such shortages. But since these shortages will be expected to be temporary, a result of the pandemic unlikely to last long, there will be a damper on hoarding.

Effect of cash transfer on deficit

  • The price rise of non-rationed commodities: If inflationary expectations are strong and persistent, then the prices of non-rationed commodities may rise sharply for speculative reasons.
  • How the government can prevent the price rise? But the government can prevent such expectations, by adopting measures such as bringing down petro-product prices, taking advantage of the collapse of world oil prices.
  • A larger fiscal deficit, therefore, need not cause disquiet on account of inflation.
  • Balance of payment issue: On the balance of payments front, the worry associated with a larger fiscal deficit is financial flight caused by frightened investors.
  • Some financial flight is already happening, with the rupee taking a fall.
  • Rush to dollar: This flight is not because of our fiscal deficit but because, whenever there is panic in financial markets, the tendency is to rush to dollars, even though the cause of the panic may lie in the United States itself.
  • Using foreign exchange reserves: India has close to half a trillion dollars of foreign exchange reserves. These can be used, up to a point, to check the flight from the rupee to the dollar.
  • Restriction on capital outflow: If the flight nonetheless persists, then India will have a legitimate reason for putting restrictions on capital outflows in the context of the pandemic.

Way forward

  • The Centre must not worry about its fiscal deficit; and since the State governments will bear a substantial expenditure burden on account of the pandemic.
  • The Centre must make more resources available to the states.
  • The centre should raise their borrowing limits, perhaps double their current limits as a general rule, apart from negotiating the magnitude of fiscal transfers it should make towards them.


If the hardships of the people are not ameliorated through larger government expenditure, because of the fear that the larger fiscal deficit required for it would frighten finance into fleeing, then the privileging of finance over people would have reached its acme.


Communicable and Non-communicable diseases – HIV, Malaria, Cancer, Mental Health, etc.

The spectre of a post-COVID-19 worldop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- What are the possibilities that could be brought in the world by the epidemic.


As COVID-19 spreads exponentially across the world, profound uncertainty and extreme volatility are wreaking havoc of a kind seldom encountered previously. It might, hence, be wise to start thinking of what next, if at least to try and handle a situation created by the most serious pandemic in recent centuries.

China’s important role

  • No previous experience: The problem with the novel coronavirus is that with the exception of China, which battled another coronavirus epidemic in 2003 — SARS epidemic — there is little available for most nations on which to base their assessment of what next.
  • Further drop in China’s growth rate: What is known is that China’s growth rate has further plummeted, even as it was confronting an economic slowdown which had been in the works for some time.
  • Economic downturn internationally: The consequences for the global economy of China ceasing to be the world’s biggest exporter of manufactured goods are considerable.
  • And with no country in a position to replace it, this development will precipitate a further economic downturn internationally.

Uncertainties before epidemic

  • The COVID-19 pandemic could not have come at a more difficult time.
  • Uncertain economic environment: The world was already having to contend with an uncertain economic environment, with industries in turn facing newer challenges such as having to adjust to a shift from cost efficiencies to innovation and breakthrough improvements.
  • Added to this were: a global slowdown, increasing political and policy uncertainties, alterations in social behaviour, new environmental norms, etc.
  • India’s position: Newly emerging economies, such as India, were even more affected by all this, than some of the older established ones.

Impact on India and what lies ahead?

  • Estimate of cost by ADB: An early estimate by the Asian Development Bank, soon after the epidemic was declared, was that it would cost the Indian economy $29.9 billion.
  • A recent industry estimate pegs the cost of the lockdown at around $120 billion or 4% of India’s GDP.
  • May require six months to recover after epidemic: The Confederation of Indian Industry (CII) had at one point warned that the COVID-19 impact, and the existing stress in the financial sector, meant that India would require up to six months even after the entire course of the COVID-19 epidemic is over to restore normalcy and business continuity.
  • The COVID-19 Taskforce under the Finance Minister come up with measures to mitigate the economic hardship engendered by the pandemic, and finally a three-week-long lockdown.
  • Several precautionary measures based on guidelines in vogue elsewhere in the world for preventing pandemics of this kind, have also been introduced including ‘home isolation’, ‘home quarantine’, etc.
  • The prognosis as to what lies ahead is indeed bleak.
  • On the economic plane, according to most experts, a global recession seems inevitable.
  • The decline in demand: Uncertainty, panic and lockdown policies are expected to cause demand worldwide to decline in a precipitous way.
  • Start of downward cycle: Decline in demand will inevitably lead to a vicious downward cycle, where companies close down, resulting in more lay-offs and a further drop in consumption.
  • A precipitous decline in GDP would follow.
  • Massive funds would be needed: To compensate for this loss, massive inflows of government funds would be needed, but most governments, India included, might find it difficult to find adequate resources for this purpose.
  • Right time for fund: Equally important, if not more so, is that such massive inflows of funds (if they are to be effective) should be here and now, and not later, by which time the situation may well have spiralled out of control. Global coordination was a must in the extant situation.

Disruption in the global order- Implications for the position of the US

  • COVID-19 is, in turn, expected to bring about major changes in the global order.
  • Changes would get accelerated: Some of these changes have, no doubt, been in the making for some time, but would get accelerated.
  • As of now, though the U.S. is no longer the global power that it once was, it is hardly in retreat.
  • Retreat from Afghanistan, not the end: The US is, without doubt, increasingly disinclined to act as the world’s gendarme, as instanced by its retreat from Afghanistan after a dubious accord with the Afghan Taliban,
  • But this was not the end of the road as far as U.S. power was concerned.
  • The US would step back further: Post COVID-19, however, and given that the U.S. is among the countries badly affected by this pandemic, together with existing uncertainties affecting its financial markets, the U.S. can be expected to step back even further — from one of assertion to neutrality in global affairs.
  • Already, U.S. command of the global commons has weakened. Meantime, China and Russia have strengthened their relationship and improved their asymmetric capabilities.
  • US not the largest economy by PPP: The challenge from China is becoming more obvious by the day — measured by purchasing power parity, the S. is not the largest economy in the world as of now.
  • Russian challenge: Even more daunting from a U.S. standpoint, and also representing a sea-change from the recent past, Russia has become far more economically and politically stable and an important power broker in West Asia.
  • Impact on liberal international order: These shifts cannot but, and are likely to, have a direct impact on the liberal international order. It could, in turn, give a boost to authoritarian regimes and authoritarian trends.

Impact on social behaviour

  • Moving away from the political and economic consequences of COVID-19 are other concerns arising from an extended lockdown, social distancing and isolation.
  • The epidemic of despair: Psychologists are even talking of an ‘epidemic of despair’ arising from a fear of unknown causes, resulting in serious anxiety and mental problems.
  • Problems due to extended isolation: Extended isolation, according to psychologists, can trigger a different kind of pandemic even leading to possible suicidal tendencies, fits of anger, depression, alcoholism and eccentric behavioural patterns.

Inequality and impact

  • The impact is not the same for all: Another fallout from the current epidemic might well be the extent to which inequality in incomes impact segments of the population, facing a common malaise.
  • Countries lacking a comprehensive nation-wide health system would find this an even more difficult situation to handle.
  • Meantime, as the economy weakens, accompanied by job losses, those without high levels of skills would fall further behind.
  • This is evident to some extent already given recent reports of mass migration across the Indian landmass.
  • Out of work migrant labour, unable to find new jobs since they lack the necessary skills, are attempting to return to their normal habitat, bringing in their wake untold suffering and, perhaps even the spread of the virus.
  • This has all the makings of a huge human tragedy. Existing curbs on their movement would further exacerbate the problem, and could even lead to a major law and order situation.

Possibility of the rise of digital authoritarianism

  • One possible, and unexpected, aspect of the COVID-19 epidemic could be the thrust it could provide to ‘digital authoritarianism’.
  • China’s authoritarian methods seem to have helped it to contain the spread of the virus — at least for the time being.
  • Somewhat similar tactics are being employed by some other countries as well.
  • In turn, leaders across many nations may find China’s methods, and the embracing of technology to refashion authoritarianism for the modern age irresistible, and a standard to be adapted, even if they profess to be democratic.
  • The rise of digital autocracies could lead to digital repression, and in the age of AI-powered surveillance, create a capacity for predictive control, or what is often referred to as ‘social management’.


The pandemic even after it’s over could change the world in more than one ways and we must be cautious in our approach in accepting or rejecting these changes brought about by the epidemic.

Communicable and Non-communicable diseases – HIV, Malaria, Cancer, Mental Health, etc.

Making the private sector care for public healthop-ed of the day


From UPSC perspective, the following things are important :

Mains level : Paper 2- Government should consider taking control of the private healthcare sector to deal with the Covid-19 outbreak.


As India enters the second week of a national lockdown imposed in response to COVID-19, it is still unclear how well prepared the healthcare system is in dealing with the pandemic.

Need for roping in the private healthcare

  • No indication of an increase in expenditure on health: A preparedness plan has to address all levels of care in terms of infrastructure, equipment, testing facilities and human resources in both the public and private sectors.
  • However, so far, the Central and State governments have given little indication of bringing an increase in public expenditure on health.
  • So, an already overburdened public health system will be unable to meet the increase in moderate and severe cases of COVID-19 that would require hospitalisation.
  • Need for the comprehensive national policy: While some individual private sector companies have come forward with offers of creating capacity and making it available to COVID-19 patients, there is a need for a comprehensive national policy to ensure that private healthcare capacity is made available to the public.
  • Some states like Chhattisgarh, Rajasthan, Madhya Pradesh and Andhra Pradesh have already roped in the private sector to provide free treatment.

What the government should do?       

  • Provide universal health service: The governments at the Centre and in States have to take responsibility for providing universal health services free of charge and accessible to all.
  • Tap into private sector capacity: This will require governments to not just expand the capacity within the public sector, but also to tap into the available capacity in the private sector.
  • Faced with a serious health emergency, the silence of the government on the expected role of the private sector is intriguing.
  • Include COVID-19 testing in PM-JAY: The National Health Authority has recommended that the testing and treatment of COVID-19 be included in the PM-Jan Arogya Yojana (PM-JAY) but this proposal is still awaiting clearance.
  • Form the central command: The governance of the health service system is clearly fragmented and has created anxiety among the public.
  • There is a lack of a visible central command, which should be created under the supervision of the Union Health Minister, aided by a team of experts.
  • They should be tasked to make policies as and when required and communicate them to State governments, taking into account an evolving situation.
  • Ensure that there is no cost to the patient: There have been some tentative measures taken by States to allow individuals seeking testing for COVID-19 to access private laboratories at subsidised rates.
  • At present, the government has put a cap on the cost at ₹4,500 per test, which is a burden for even a middle-class patient.
  • The poor will clearly have no access to this and the government itself does not have adequate facilities to meet the increasing demand. It is here that the government needs to ensure that there is no cost to the patient.
  • Create adequate testing facilities: At this point, and certainly, before the lockdown is lifted, it is absolutely essential that adequate testing and quarantine facilities are created.
  • The Central government has already taken over some private hotels to accommodate persons quarantined for COVID-19.
  • One way of expanding such facilities would be for the government to ‘take over’ private corporate laboratories and hospitals for a limited period.
  • Standard treatment protocol: The political directive for such a move needs to come from the Central government while ensuring that the Ministry of Health provides standard treatment protocols for health personnel.

Learning lessons from Spanish and British experience

  • The Spanish government issued an order bringing hospitals in the large private corporate sector under public control for a limited period.
  • This tough decision was taken with the understanding that existing public healthcare facilities would not be able to cope with the sudden, if short-term, rise in COVID-19 cases.
  • British trade unions have demanded that the government make the 8,000 beds in 570 private hospitals in the country available.
  • They have argued that while beds in private hospitals are lying empty, there is a severe shortage of beds in public hospitals.
  • The unions have also been critical of the U.K. government decision to rent these beds at an exorbitant cost to the exchequer.

Way forward

  • Rope in the private healthcare sector: In India, private corporate hospitals have, in the past, received government subsidies in various forms and it is now time to seek repayment from them.
  • They are also well poised to provide specialised care and have the expertise and infrastructure to do so.
  • Bring in the universal public healthcare: Universal public healthcare is essential not only to curb outbreaks but also to ensure crisis preparedness and the realisation of the promise of the right to health.
Oil and Gas Sector – HELP, Open Acreage Policy, etc.

The battle to set oil pricesop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Factors contributing to the drop in oil prices and implications for India.


The global economy, grappling with the COVID-19 pandemic, is now facing an energy war, with crude oil prices crashing in the international market.

Developments that contributed to the fall in oil prices

  • First, Crude oil prices tanked, as the Organisation of the Petroleum Exporting Countries (OPEC) and its alliance partners failed to reach any consensus on cutting back production to levels that would enable prices to remain stable.
  • Second, the U.S., as the largest oil producer today, has stayed away from the OPEC-plus arrangement, hoping that production cuts by OPEC-plus countries will help it increase its market share.
  • Russia refused any production cuts, unleashing an energy war with Saudi Arabia. There has been a spectacular fall of around 30% in crude oil prices.
  • The International Energy Agency (IEA) has scaled down global demand for oil, a move not taken by the energy watchdog since 2009.
  • COVID-19 Factor: Demand for oil had already weakened owing to the global economic slowdown, and this weakening has become more pronounced due to the COVID-19 pandemic, which has hit China’s economy and reduced consumption by the world’s largest importer.

The US-Russia oil war

  • Denying market share to the US oil producer: Russia’s decision to reject any production cuts is driven directly by its strategy of denying market share to American shale oil producers.
  • Shale oil companies can sustain in high prices only: The American shale oil producers rely on higher prices in the range of $50-$60 to remain profitable because of higher production costs.
  • At $31 per barrel, not more than five American shale oil producers can remain profitable.
  • Sanctions on Rosneft: Russia also remains resentful of sanctions imposed on Rosneft, which is building the gas pipeline project Nord Stream 2 across the Baltic Sea, carrying Siberian gas to Germany, a major consumer.
  • Delay in completion of the pipeline: This pipeline was delayed due to opposition from Denmark’s environmental activists and could not be completed before the U.S. sanctions kicked in.
  • Moscow has accused Washington of using geopolitical tools for commercial reasons.
  • The energy war over prices is Russia’s revenge, to cripple the American shale oil industry.
  • Russia’s signal to Saudi Arabia: Russia is also signalling to Saudi Arabia that its American patrons can do little to protect its oil interests and it would be prudent for Saudi Arabia to reach some understanding with Russia.
  • Both Saudi Arabia and Russia depend heavily on oil revenues — upwards of 80% of export revenues accrue from crude oil.
  • Russia and Saudi Arabia fighting for market share: Both are also fighting to retain market share.
  • Impact on India: It has been reported that Saudi Arabia has agreed to supply crude oil at lower rates to refiners in India and China, two primary customers, but refused to supply to other refiners in Asia. This will have an impact on India’s oil procurement from the U.S.

The benefits to importing countries

  • Why the price drop matters to India? Lower crude oil prices are not necessarily bad news for oil importing countries like India, which is the world’s third-largest importer of crude oil and the fourth largest importer of LNG.
  • Collateral adverse consequences: There are, however, collateral adverse consequences like the battering of the stock markets worldwide.
  • Impact on the global economy: The global economy, already impacted by President Donald Trump’s trade war with China and other countries, including India, and the COVID-19 pandemic, may find lower energy costs helpful in overall growth.

Benefits for India

  • From a high of $147 per barrel in 2008, crude oil prices have fallen to around $24 per barrel and may even go further southwards.
  • How much the price drop matter for India? India, with 80% of its energy requirements met by imports from the international market, stands to save ₹10,700 crores for every $1 drop in prices.
  • Non-oil related factors: While this may help manage the current account deficit, fiscal deficit and inflation, there are non-oil related collateral factors that can cause countervailing adverse economic impact.

How long Russian and Saudi Arabia can sustain the war?

  • Can Russia and Saudi Arabia sustain the energy war for long?
  • Saudi Arabia’s production cost is the cheapest in the world and it can ramp up production to around 12 million barrels a day.
  • By offering discounts, it can undercut other producers, including Russia.
  • Domestic considerations also matter.


There is no doubt that India will benefit from lower oil prices if the cost of fuel at the pump is passed on to consumers. It will reduce transportation costs and boost demand. The consumer, however, may not benefit much since the government may choose to use this financial windfall for other purposes, like bailing out banks which have been hollowed out by NPAs to leading Indian companies.

Prime Minister’s Office : Important Updates

Six things to consider about PM-CARESop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : PM-CARES fund.

Mains level : Paper 3- Concerns over PM-CARES fund.


In the midst of all of this, our Prime Minister announced the creation of the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM-CARES), which—if the intention is to allow funds to move fast and circumvent bureaucratic hurdles—is a great initiative.

The backdrop against which the fund was created

  • The battle is a struggle for so many people. The Prime Minister called for physical distancing and the shutdown.
  • But physical distancing is a luxury. Many people cannot do so, because they live in tiny homes, in close proximity to each other.
  • And then there are the migrant workers who are squeezed next to each other as they struggle to head home.
  • The announcement of the PM-CARES Fund will convince more people to give to the cause.
  • However, certain aspects make one to look at the PM-CARES fund with mixed emotions. Here is why:

1. The government has faced challenges on the execution side

  • The PM did a great job rallying the country together, but the pictures of migrants walking hundreds of miles to get to the safety of their homes are heart-wrenching.
  • Criticism in hindsight: Of course, such decisions had to be made quickly, and it is easy to criticise the government in hindsight.
  • Inaction could be more damaging: And sometimes there are limited alternatives when one is doing work on a war footing. Mistakes are bound to be made, and in many cases, inaction could be more damaging.
  • The PM also acknowledged and apologised for these hardships in his latest Mann Ki Baat address.

2. Non-profits working on relief and rehabilitation are already struggling

  • In this environment, nonprofits are already struggling on the funding side.
  • Many will shut down or go into hibernation over the next three months and their employees will join the daily wage earners as workers who suddenly do not have any income.

3. Based on media reports, PM-CARES has been set up as a trust

  • Legislation to ban CSR funding to trusts: Despite the fact that the government is currently pushing legislation that aims to ban Corporate Social Responsibility (CSR) funding to nonprofits set up as trusts or societies.
  • Poor governance of the trusts: One of the reasons given for doing so is the alleged poor governance structure of trusts and societies when compared to Section 8 companies.
  • Why then has the government set up PM-CARES as a trust aimed at targeting corporate CSR funds?

4. PM-CARES has made no announcements on governance, accountability, etc.

  • No questions asked: While many donors have stepped up to fund non-profits working on covid-19 relief measures, their amounts pale in comparison to how much PM-CARES raised in its first two days.
  • Moreover, donors have grilled nonprofits on how we will ensure proper delivery.
  • But no such questions are being asked of the PM-CARES Fund.
  • How will success be measured? What audited accounts will be given? This information has not been shared.
  • So far, the success with respect to funds raised for PM-CARES is a reflection of the confidence people have in our Prime Minister.
  • Problems are surfacing: However, problems are already surfacing, like reports of fake online accounts being set up to steal funds meant for PM-CARES.
  • Presumably, issues will be addressed over the next few days, because everything is moving so fast and decisions are being taken on a war footing.

5. Centralised funding could hurt localised solutions

  • Solution comes from decentralisation: The internet has taught us that ideas and solutions come from decentralised, empowered teams driven by big, hairy, audacious goals.
  • Involving people in finding solutions: There are so many smart people across our country—in governments, research institutions and academia, the private sector, nonprofits, and civil society.
  • Today, more than ever, we need to get them all involved in finding solutions. And doing so requires money.
  • If a lot of funding for covid-19 gets centralised, funds to other players could get curtailed and localised solutions will die.
  • Funding to innovative solutions: Here again, it is hoped that the funds collected will also be given to other groups who are coming up with innovative solutions.

6. The government needs to trust and work closely with the nonprofit sector

  • The central, as well as many state governments, are talking to individuals, nonprofits, and the private sector for help to handle this pandemic.
  • And they are relying on the generosity (and duty) of the citizens to come up with solutions because, as with all disasters, the state cannot handle this problem on its own.
  • At the same time, the stimulus packages offered to the private sector have been very little.
  • Nonprofits, most of whom are funded either by philanthropists or CSR, will, therefore, be squeezed for funding, as their donors pull back discretionary money.
  • And many nonprofit professionals are worried that they may not have a job soon.
  • So, on one hand, various governments rush to the private players for help, while at the same time some people in the government treat the nonprofit sector with suspicion.


It is hoped that PM-CARES will help various teams in the public and private sector work together, bridging our trust deficits, to fight the virus and reduce the pain inflicted on so many vulnerable people on various fronts—physical, mental, and financial.

Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

Lock, don’t shutop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Lockdown is not an end in itself, allowing the movements of goods and operations of industrial units should be considered.


Economy is a living machine — cannot be simply turned off and on. Even in lockdown, it needs to be kept alive.

Movement of goods exempted

  • Essential and non-essential distinction removed: It is, welcome that the Centre has now exempted transportation of all goods from the lockdown’s provisions, without distinction of “essential” and “non-essential”.
  • When goods aren’t the culprit — it didn’t make sense, in any case, to allow bureaucrats and local authorities to decide what is essential and hold up trucks carrying material deemed non-essential.
  • One cannot expect officials or state border police to have intimate knowledge of production processes and inputs that go into every good, essential or otherwise.
  • The purpose of a lockdown is to minimise physical human interaction and maintain social distancing even if people have to meet.
  • Blocking movement of goods, far from achieving that objective, only results in overcrowding and snarls at check posts.

How allowing Industrial establishment to operate matters?

  • Allowing industrial establishment to operate: There’s no reason why even industrial establishments cannot be permitted to run during the lockdown.
  • Again, it shouldn’t matter whether these units are producing essential or non-essential goods. What matters is only social distancing.
  • Right step by the Punjab government: The Punjab government has taken the right step of permitting all factories in the state to resume operations, subject to their being able to provide in-house lodging, food and medical facilities to workers and ensure no overcrowding at the plant.
  • Mass exodus could have been avoided: Most factories today, whether in Punjab, Haryana and Delhi or Maharashtra, Gujarat and Tamil Nadu, are manned by migrant labourers from Bihar, Uttar Pradesh and other eastern states.
  • Had measures to retain this workforce within or close to the premises of factories been in place — instead of a blanket order to shut down — the current situation of a mass exodus of labourers and the attendant risk of COVID-19 transmission may have been avoided.
  • Difficulty in getting the labour back: It isn’t going to be easy for the closed units to get this labour back even when the lockdown ends.


  • The economy needs to be kept alive: An economy is ultimately a living machine — one that cannot simply be turned off and on. Even in lockdown, it needs to be kept alive and whirring.
  • Difficulty in resumption: The danger from mechanically ordered closure of activities is that resumption becomes difficult. Rebuilding broken supply chains is easier when things are allowed to run even if at low key so that the system can respond when demand returns.
  • Lockdown is not an end in itself: Combating COVID-19 should obviously be the government’s top priority now. Lockdown is a necessary part of that strategy, but cannot be an end in itself. It is necessary primarily for social distancing, which can also be achieved without bringing the wheels of commerce to a complete halt.
G20 : Economic Cooperation ahead

The deep void in global leadershipop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- International cooperation to deal with the coronavirus is a need of the hour.


The coronavirus’s flight across the world at lightning speed has exposed the total void in collective leadership at the global level.

No global plan of action to combat the virus

  • No plan of action: Three months into the catastrophic war declared by an invisible virus, there is as yet no comprehensive, concerted plan of action, orchestrated by global leaders.
  • The G20 meeting: The G20 has just had a virtual meeting, at the prodding of Prime Minister Narendra Modi.
  • $ 5-trillion into the world economy: It is encouraging to learn that the G20 leaders have agreed to inject $5-trillion into the world economy to partially counter the devastating economic impact of the pandemic. This is indeed good news.
  • Need to do more: But taking collective ownership to fight a global war against the virus will require a lot more than writing cheques.

SAARC meeting stands out in the world

  • Pandemic is not treated as a common enemy: World leaders are obviously overwhelmed with their own national challenges and do not appear inclined to view the pandemic as a common enemy against mankind, which it is.
  • Delay in reporting by China: China delayed reporting the virus to the World Health Organisation (WHO), and perhaps, contributed to the exacerbation of the spread of the virus across the globe.
  • Unilateral suspension of flight by the US: It was reported that the Trump administration did not even inform the European Union before it shut off flights from Europe.
  • Why the SAARC meeting stands out? It must be acknowledged that the initiative taken by Mr Modi in the early days to convene a meeting of South Asian Association for Regional Cooperation countries stands out in contrast to the pusillanimous leadership around the world.

Need for leaders of nations to come together for collective global action.

  • Pandemic to persist: There is no evidence that, at the global level, the pandemic has abated yet and would be brought under control soon.
  • Massive lockdown, not a solution: To imagine that nations would be able to tame the virus soon with massive shutdowns might be just wishful thinking.
  • National shutdowns and physical distancing have been a challenge not only in the United States and some European countries, but it would also be more so in populous countries such as India.
  • At any rate, such lockouts come at enormous economic and social costs.
  • The utility of long suspension of international travel: As long as the virus is alive in some corner of the world, it would resume its travel across the world the moment international travel restrictions are relaxed.
  • Is it realistic to imagine that international travel will remain suspended until the last virus alive on this planet is extinguished?
  • This is a war. A good war against a bad enemy, and a common enemy, that respects no borders.
  • It is a global challenge to be fought by collective global leadership: If this global challenge is not a battle to be fought by a collective global leadership, nothing else is.
  • And yet, the typical response by all affected nations has been to impose ‘National distancing’ by closing borders.
  • While this is no doubt, a most appropriate response, there is a much bigger and emergent need for leaders of nations to come together for collective global action.

Two reasons for the lack of collective global action

  • 1. Right-wing nationalism: The swing towards right-wing nationalism, as a guiding political ideology, in large swathes of the world, particularly in the U.S.
  • This ideology posits ‘global good’ being in conflict with and inimical to national interests.
  • 2. Ineffectiveness of the multilateral institutions: The United Nations was the outcome of the shared vision of the world leaders after World War II, that collective action is the only way forward to prevent the occurrence of another war.
  • That institution has notoriously failed to live up to its expectations to maintain peace among nations in the nearly 80 years since its formation.
  • Its affiliate organisations have, in several ways, failed to deliver on their lofty missions.
  • In particular WHO has proven to be too lethargic in reacting to pandemics in the past.
  • Its responses to COVID-19 has come under the scanner, not merely for incompetence, but also for lack of intellectual integrity.

G-20 offers hope

  • A nimble outfit, not burdened with bureaucracy, is required to manage a global crisis of the nature that we are confronted with, today.
  • The G20, with co-option of other affected countries, itself might serve the purpose for the present.
  • What the global leadership must acknowledge: What is important is for the global leaders to acknowledge what every foot soldier knows: winning a war would require the right strategy, rapid mobilisation of relevant resources and, most importantly, timely action.
  • The following actions should come out of such a collective-
  • 1. Dealing with the shortages: The collective should ensure that shortages of drugs, medical equipment and protective gear do not come in the way of any nation’s capacity to contain or fight the pandemic.
  • Assistance from other countries: It is very likely that some nations that have succeeded in bringing the pandemic under control, such as China, Japan or South Korea, might have the capability to step up production at short notice to meet the increasing demand from other countries which are behind the curve.
  •  Development of information exchange: This would typically involve urgent development of information exchange on global production capacity, present and potential, demand and supply.
  • This is not to mean that there should be centralised management, which is not only infeasible but counterproductive, as the attendant bureaucracy will impede quick action.
  • A common information exchange could restrain the richer countries from predatory contracting of global capacities.
  • 2. Protocol among participant countries: Protocols might need to be put in place among participating countries to ensure seamless logistics for the supply chain for essential goods and services to function efficiently.
  • This might be particularly necessary in the context of controls on international traffic and national shutdowns.
  • There would need to be concomitant accord to eliminate all kinds of tariff and non-tariff barriers.
  • 3. Exchange of information: There needs to be an instantaneous exchange of authenticated information on what clinical solutions have succeeded and what has not.
  • A classic example is an issue relating to hydroxychloroquine, which is being used experimentally, bypassing the rigours of randomised clinical trials.
  • While there is no substitute to classic clinical proof, the more field-level information is shared within the medical community, the better will be the success rates of such experimentation.
  • 4.Cross country collaboration on the trials: This is a time to have cross-country collaboration on laboratory trials and clinical validation for vaccines and anti-viral drugs.
  • It must be acknowledged that WHO has already moved on this issue, although, perhaps, belatedly.
  • The best way to ensure speedy research is to pool global resources.
  • This attempt to collaborate might also bring in its wake an acceptable commercial solution that adequately incentivises private research while ensuring benefits being available to the entire world at affordable costs.
  • Such a framework might be necessary for sustained collaborations for future challenges.
  • 5. Easy movement of trained health professionals: There is a need to facilitate easy movement of trained health professionals across the world to train others and augment resources wherever there are shortages.
  • In other words, nations should come together to organise a global army to fight the pandemic, equipped with the best weapons and tools.
  • 6. The anticipation of food shortages: We must anticipate food shortages occurring sooner or later, in some part of the world, consequent to the national shutdowns.
  • Ironically, while we might have saved lives from the assault of the novel coronavirus, we might run the risk of losing lives to starvation and malnutrition, somewhere in the world if we do not take adequate precautions.
  • This requires not only coordinated global action; it would also turn out to be the test of global concern for mankind in general.

Reconstruction of the global economy

  • Devastation no less than after the world war: Eventually, there is no doubt that human talent will triumph over the microscopic virus. But the economic devastation, that would have been caused as a result will be no less than the aftermath of a world war.
  • What should the reconstruction of economy involve? An orderly reconstruction of the global economy, which is equitable and inclusive, will eventually involve renegotiating terms of trade among key trading blocs, concerted action among central bankers to stabilise currencies, and a responsible way to regulate and manage global commodity markets.


Does India have the power to awaken the conscience of the Superpowers and catalyse collective global action? Remember, historically, it is always the weakling or the oppressed, who have caused transformational changes in the world order.

RBI Notifications

Will RBI’s big-bang monetary easing work?op-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Why pumping more money into the economy at such point is unlikely to kickstart it?


On Tuesday, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) convened for an emergency meeting, ahead of schedule, to discuss its response to the economic challenges posed by the Covid-19 outbreak.

Bond market reaction to the RBI announcement

  • The MPC deliberated for three full days, but its decision would most probably have been sealed right at the onset.
  • For that day, the Indian bond market saw no trades in the first twenty minutes.
  • Fear and uncertainty in the market: The gap between the asking price and bids was so wide that the first trade for the day took place at 9:33 am. Gripped by uncertainty and fear about the future following the outbreak, the market had frozen.

Measures by the RBI

  • Injecting the liquidity of Rs. 3.74 trillion: Responding to the market signal, the RBI rolled out a slew of measures from its armoury that will release liquidity of up to ₹3.74 trillion, or nearly 2% of gross domestic product, in the financial system.
  • This will facilitate the market’s orderly functioning.
  • Condition on LTRO-created-liquidity: In particular, the condition that the liquidity created through the Long Term Repo Operations (LTRO) tool must only be deployed in corporate debt securities was a direct response to the disruption in the markets seeing heavy sell-offs in the midst of thin trading volumes.
  • Comparison with measures by the Fed.: The US Federal Reserve, which has launched an unconventional asset sales programme for $4 trillion, has announced it will also directly buy corporate bonds to ease the tight market.
  • RBI has refrained from following suit, instead of passing the buck to banks via the conditional LTRO liquidity.
  • Banks are unlikely to step in to ease the tight corporate securities market.
  • Repo rate below the level seen in 2008: To combat the economic consequences of the Covid-19 pandemic, the MPC has dropped its policy interest rate by 75 basis points, taking it down to 4.4%, a multi-year low.
  • The rate is now lower than it was in April 2009, when the central bank had taken it down to 75%, responding to the global financial crisis.
  • In 2008, just four days ahead of a scheduled policy review, RBI had cut the policy repo rate by 1 percentage point, sending an extraordinarily strong signal.

How the challenge this time is different from the 2008 crisis?

  • The nature of the current economic challenge is a lot different.
  • Economy at standstill: The shock back then had depressed demand, but the economy had not been brought to a standstill as it has now, with resources, including labour and capacities idling.

Why the measures would not kickstart the economy

  • Effect of rate cut: When all economic activity has halted, and uncertainty about the future is soaring, there’s no way a rate cut—no matter how steep—can kickstart the economy.
  • Businesses cannot plan for the future and will not borrow.
  • Banks will hold on too, fearful of the risk of loans going bad.
  • As it is, even before Covid-19 struck, credit disbursement was sluggish.
  • Now, with a host of companies facing the threat of credit rating downgrades, the probability of lenders turning a little less risk-averse is even lower.
  • Who would be the beneficiary of the rate cut? The biggest beneficiary of RBI’s rate cut—which was bigger than market expectations—would be the government.
  • Reduced borrowing cost for the government: In one stroke, the MPC has altered the fiscal deficit calculation by reducing the government’s borrowing cost.
  • There will be savings on its outgo on interest payments for new and rollover borrowings.

Three-month moratorium and issue with it

  • RBI also permitted banks and non-bank financial institutions to grant a three-month moratorium on loan repayments and reclassification of stressed loans as non-performing assets (NPAs).
  • This will provide relief by cushioning cash flow pressures for firms and individuals when incomes and revenues have dropped sharply due to the lockdown.
  • The forbearance on downgrading these loans will prevent a sharp spike in NPA levels for banks and NBFCs.
  • There could be a sharp rise in the bad loans: The risk now is that a few quarters after the end of the moratorium there could be a sharp rise in bad loans.
  • It could give rise to the NPA problem: In that sense, it amounts to kicking the problem of a potential spike in NPAs down the road.
  • The problem of evergreening: On balance, it is the right call given the extraordinary challenge of the lockdown—provided a new cycle of evergreening of loans by banks is not allowed in a repeat of what happened in the aftermath of the global financial crisis.

Way forward

  • What more could RBI have done? Special credit windows for the worst-hit sectors like aviation, hotels and tourism may soon be required.


While prioritising financial stability is fine, the MPC’s inflation projection is puzzling. While refraining from providing estimates on growth and inflation, given that the spread, intensity and duration of Covid-19 remain uncertain, RBI said it expects food price pressures to soften going ahead on account of a blow to demand during the lockdown. The projection seems unreasonable when there are unprecedented supply-side bottlenecks.

Foreign Policy Watch: India-Afghanistan

Terrorist attack in Kabul’s Gurudwaraop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- The US-Taliban pact and its implications for India.


Attack on gurdwara underlines that the US-Taliban deal has brought Afghanistan no respite.

The futility of US-Taliban deal highlighted

  • The attack on a gurdwara in Kabul, in which 25 people were killed, has shown that the coronavirus may well be vanquished by science, but human beings will continue to inflict barbarity upon each other.
  • Within hours, it was claimed by the Islamic State, which later also said it had carried it out in revenge for Kashmir.
  • The deal not leading to peace: If there were still doubts left on this score, it must be clear after this attack that the US-Taliban deal was not an arrangement to return Afghanistan to peace.

Why the attack matters for India?

  • The gurdwara attack was the first strike after the agreement claimed by the IS.
  • A provision in pact: Under the pact, the Taliban have committed themselves to eliminate the Islamic State from Afghanistan.
  • Yet to start honouring commitment: If the IS claim is true, the Taliban have yet to begin honouring that commitment.
  • India’s reaction: Appearing to hint at something more sinister, the ministry of external affairs called the attack “diabolical” and condemned the “perpetrators and their backers”, a formulation usually reserved for attacks suspected to have emanated from or to have the backing of Pakistan.
  • Connection of attack with India: The Taliban’s operational leadership is now in the hands of Sirajuddin Haqqani of the Haqqani group, which has been blamed for several attacks on Indian targets, including the 2008 Indian Embassy bombing in Kabul.
  • The Taliban have denied having anything to do with the gurdwara attack, and Pakistan has condemned it strongly.
  • The question over IS in Afghanistan: Who, really, is the IS in Afghanistan is a question that security experts have been asking for some time now.

COVID-19 outbreak in Afghanistan

  • Appeal for ceasefire: The UN Secretary-General made an appeal for an immediate ceasefire in theatres of conflict across the world, to enable governments, health workers and humanitarian aid agencies to access those who might be most vulnerable to COVID-19.
  • The epicentre of the outbreak is Herat, where over 1,00,000 Afghans recently crossed over from Iran.
  • After the number of confirmed cases rose to 58, the province has been placed under lockdown.
  • But the government is hobbled in its efforts to contain the disease, both by a contested election result — Afghanistan has two presidents — and the burden of an agreement that has brought it no respite.


With the recently concluded US-Taliban deal delivering no peace and coronavirus spreading unabated, Afghanistan faces two contagions, new and old — COVID-19 and the relentless violence.

Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

Impacts of the Oil Price Warop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Pricing mechanism of fuels in India.

Mains level : Paper 3- Implications of oil-price war for India.


A “pass-through effect” of low crude prices is improbable given the constrained fiscal space.

The backdrop to the oil price war

  • Against the backdrop of the covid-19 pandemic and the economic slowdown, Saudi Arabia-led oil cartel OPEC (Organization of the Petroleum Exporting Countries) wanted to curtail oil production by 1.5 million barrels per day.
  • However, as Russia has not agreed to this proposal, Saudi Arabia has declared a price war by reducing the Brent crude oil price from $65 per barrel in end-December 2019 to $33 now.
  • The race to the bottom to this extent by Brent is the first time ever since the 1991 Gulf crisis.

Would it impact India by providing a fiscal dividend?

  • A $20 reduction in Brent oil prices can reduce India’s current account deficit.
  • However, the instability in oil prices is a short-run phenomenon, and India cannot anticipate a prolonged fiscal dividend.
  • Quite contrary to the expectations about a “pass-through effect” of low crude oil prices on consumers, the Government of India (GoI) raised the excise duty on petrol and diesel by `3 per litre.
  • The special excise duty on petrol was hiked by 2 to 8 per litre in the case of petrol and to 4 in the case of diesel.

Fuel price determination in India

  • There has been no “pass-through effect” primarily because the price determination of petrol and diesel in India is not linked to crude oil prices in the international market.
  • Price determination is done through dynamic pricing, termed as “trade parity pricing,” based on the international prices of petrol and diesel (finished products) prevailing in the international markets, and not on crude oil per se.
  • An obvious question here is whether the crude oil prices and the petrol-diesel prices move in tandem in the international market. Not always.
  • Globally, the market mechanism of ad hoc configurations of demand and supply of crude oil is different from the demand-supply dynamics of petrol and diesel, and, in turn, their pricing behaviour will also be distinctly different.
  • The goi fixes the price of petrol and diesel based on dynamic pricing and trade parity pricing by converting the price from dollars to Indian rupees.

Factors affecting fuel prices in India

  • The rupee-dollar exchange rate mechanism also affects the pricing of petrol and diesel.
  • This can offset the benefits India can reap from comparatively lower prices of crude oil in the international market, quoted in dollars.
  • The other components of this pricing formula are: 1.The cost of inland freight marketing costs. 2. Taxes levied by the centre and the state governments. 3. The margins (charged by the oil companies) and (the dealer) commissions.
  • It is, therefore, obvious that low international prices per se do not translate into lower prices for petrol and diesel in India as long as the centre and states levy exorbitant taxes on these products.
  • The interstate variation in the prices of petrol and diesel is also significantly explained by the differentials in taxes imposed.
  • Yet another factor to be borne in our minds is that the effect of international prices on the in-house pricing of petrol and diesel in India is not instantaneous or spontaneous.
  • There is a time lag involved in the pricing process.
  • Even though the goi uses the daily pricing mechanism in the dynamic pricing formula of petrol and diesel, the international prices component enters into the pricing equation as an international “benchmark price” of petrol and diesel.
  • Today’s price in India reflects the average international prices of petrol and diesel of the previous fortnight.
  • However, the fuel prices will not come down in a fortnight’s time.
  • This is because, in the price equation, the international price component is just one among many components, whereas the tax component constitutes a dominant part in the equation.

The Covid-19 factor

  • The covid-19 outbreak has started striking the financial markets and the real sector, and especially investment in the energy sector.
  • So, the lowering of the oil price by Brent cannot help the global economy from recession.
  • Overall, the oil price war can negatively affect the investment decisions in the energy sector and can be a drag on global growth.
  • Due to the covid-19 outbreak, there could be reduced oil-drilling activities in the energy sector, and there will be some cutbacks in demand and, in turn, in the capex energy infrastructure.
  • Analysts have revealed that every $10 fall in oil prices transfers around 0.3% of the global gross domestic product from oil-producing nations to oil-consuming nations.
  • The interest rate strategists are also concerned as the Russian 10-year bond yields reached a record low of 2.56%, and Saudi Arabian government bonds maturing in April 2030 are currently at 2.38%.

Microeconomic policy to tackle oil price war?

  • The US Federal Reserve has lowered the federal funds’ interest rate by 50 basis points (one-half of a percentage point) to 1.25%.
  • The Bank of Canada also reduced the bank rate by 50 basis points to the US level. The stock market indexes fell to the levels of  2008.
  • The 1.25% federal funds rate now is below the 2.5% US inflation rate. However, monetary policy has failed to trigger the economy.
  • As mentioned by the European Central Bank, “targeting” rather than generalised public policy needs to be done.


  • The Reserve Bank of India policy tools may be ineffective now to tackle the slowdown, especially against the backdrop of the worsening of the economy from the effects of covid-19. The re-dominance of fiscal policy by the North Block is what is keenly awaited, for an economic turnaround.
Communicable and Non-communicable diseases – HIV, Malaria, Cancer, Mental Health, etc.

Home and nationop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2-Role of administration in 21-day lock-down of country.


A 21-day lockdown is extraordinary. Government, people must come together to ensure that supply chains and social trust must not break.

An unprecedented move

  • A 21-day nationwide lockdown: The way we conduct ourselves in these 21 days will be critical in our fight against the coronavirus.” With these words, Prime Minister announced a measure unprecedented in India’s 72-year-old history.
  • Never have the people of the country been asked to stay within the confines of their homes for this long a period, not even when the country has fought wars.
  • Yet extraordinary times demand extraordinary measures. As the PM underlined, “stringent social distancing and staying within the Lakshman Rekha of our homes is the only prevention against the coronavirus”, the only way to break its transmission cycle.

Challenges and consequences

  • There will be social and economic consequences and the PM did not equivocate on the challenges. He spoke of the vulnerable sections, and, as in last week’s speech, emphasised the imperative to be compassionate.
  • He lauded the frontline workers, doctors, nurses and other healthcare workers, expressed gratitude to safai karamcharis and praised the private sector and civil society.
  • A reworked social compact — more compassionate — will be necessary to confront the challenges posed by the lockdown.
  • It is now up to civil society, government agencies, the healthcare and corporate sectors to take their cues from the PM’s speech and ensure that the burden of fighting the pandemic does not fall too heavily on those at the margins, the migrant and daily wage labourers, the rickshaw pullers and others for whom these 21 days could prove to be the toughest.
  • Centre and state to work together: The Centre and state governments will need to work together, setting aside their political differences, to ensure that there is no shortage of essential commodities and the supply chains are not broken.

Measures to mitigate the impact

  • Earlier in the day, Finance Minister Nirmala Sitharaman had announced a slew of measures that could soften the blow of a 21-day lockdown.
  • The deadline for filing of income taxes for the financial year 2018-19 has been extended, as has the last date for filing GST returns.
  • Sitharaman also announced that the threshold for taking companies through the insolvency and bankruptcy proceedings has been increased from Rs 1 lakh to Rs 1 crore.
  • This will prevent creditors from taking small and medium-sized companies, who may be facing temporary cash flow management issues due to the lockdown, and hence are unable to meet their obligations, through the IBC process.
  • The Centre has also advised state governments to transfer funds to construction workers from the cess fund collected by the labour welfare boards.


As the PM said, “21 days is a long period”. It’s now up to the authorities and the people to own and implement his message — to ensure that not just supply chains, but also social trust, isn’t broken.

Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

Welcome Policy On APIs, Devicesop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Incentive package to promote the API production in India.


It is most welcome that the Centre has announced a `14,000-crore incentive package to boost the manufacture of drugs, especially active pharmaceutical ingredients (API).

What should be the immediate policy focus?

  • Focus on protective gear: The immediate policy focus must be to swiftly overcome shortages of critical protective gear like gowns and face masks, diverting production lines if required.
  • We also need to anticipate and step-up production of vital devices like ventilators.
  •  Provisions in the package: What is proposed now are industrial parks for bulk drugs and APIs, together with a policy for multi-year fiscal benefits. And ditto for parks for the manufacture of medical devices and attendant fiscal incentives.
  • The state governments need to identify 1,000 acres for the parks that are well-integrated with knowledge centres and nationally accredited labs.

What additions need to be made in the package?

  • Public-private partnership: In tandem, the pharmaceuticals package issued on Saturday needs to be followed through, with a forward-looking public-private partnership, to avoid import-dependency in this critical sector.
  • What is envisaged is a set of schemes to reap economies of scale and ready availability of inputs in the production of APIs and medical devices via the cluster approach.

How India became uncompetitive in API?

  • Policy rigidities and price controls: APIs are, of course, bulk drugs that provide medicines with their therapeutic value, and it is unfortunate that since circa 1995, India has become steadily uncompetitive in API production, thanks to a panoply of policy rigidities such as onerous price controls.
  • Export competition from China: Opaque export competition from China has been game-changing indeed: APIs for most medicines are mostly imported.
  • This needs to change, fast. We do need to competitively and efficiently boost output of pharmaceuticals right across the value chain.


The government must understand that manufacture by itself is not enough. The policy must ensure competition and quality, keep prices down.

Human Rights Issues

Not an unfettered rightop-ed of the day


The UN High Commissioner for Human Rights filed an application seeking to intervene as amicus curiae in the pending litigation in the Supreme Court against the Citizenship (Amendment) Act, 2019.

What are the implications of intervention?

  • Concern over international attention: That the case has attracted the attention of the international human rights agency is a matter of concern for the Indian government.
  • International law principles: The intervention may enable the Supreme Court to read in public international law principles in determining the constitutionality of CAA.
  • Law on concepts of sovereignty: Ultimately, this would assist in laying down the law on concepts of sovereignty in addition to determining the obligations of a nation-state to the international community at large.

Why the intervention matters?

  • Basis of the application: The application is based on the belief that the High Commissioner’s intervention will provide the Court “with an overview of the international human rights norms and standards with respect to the state’s obligations to provide international protection to persons at risk of persecution in their countries of origin”.
  • This application stands out for a number of reasons.
  • First, this is a voluntary application rather than at the invitation of the Supreme Court.
  • Second, she accepts that India is a state party and signatory to various international conventions including the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Culture Rights which contain important non-discrimination clauses, including on the ground of religion.
  • India’s obligations towards migrants: India is obliged, under international law, to ensure that migrants in its territory or under its jurisdiction receive equal and non-discriminatory treatment regardless of their legal status or the documentations they possess.
  • Locus standi issue raised by India: In response, the External Affairs Ministry argued that “no foreign party has any locus standi on issues pertaining to India’s sovereignty”.
  • The High Commissioner has filed similar amicus curiae briefs on issues of pubic importance before a range of international and national judicial fora.
  • A precedent for future: This intervention, if permitted, would serve as a precedent for a number of future applications. It would also provide an opportunity for the Supreme Court to lay down the law on whether such applications interfere with national sovereignty.

Sovereignty as responsibility

  • Defining sovereignty: International Court of Justice judge James Crawford defines sovereignty as, among other things, the “capacity to exercise, to the exclusion of other states, state functions on or related to that territory, and includes the capacity to make binding commitments under international law” and states that “such sovereignty is exercisable by the governmental institutions established within the state”.
  • Sovereignty in Indian Constitution: The Preamble to the Constitution lays out the position, wherein the people of India have resolved to constitute the Indian Republic into a sovereign and not just any one authority.
  • As such, the courts (judiciary), the government (executive) and elected legislatures (legislature) are equally sovereign authorities.
  • No one can claim exclusivity over sovereignty. Furthermore, Article 51 (c) of the Constitution directs the state to “foster respect for international law”.

Responsibility to citizens and the international community

  • Responsibility of political authority: According to the International Commission on Intervention and State Sovereignty, “national political authorities are responsible to the citizens internally and to the international community through the UN”.
  • Constraints on sovereignty: Therefore, it is trite to say that an authority’s right to sovereignty is not unfettered. It is subject to constraints including the responsibility to protect its citizenry and the larger international community.
  • Extending Article 14: Furthermore, Article 14 extends the right to equality to all persons, which is wider than the definition of citizens. Even illegal immigrants shall, consequently, be treated by the government in a manner that ensures equal protection of Indian laws.


It is hoped that the Supreme Court will conclude that the intervention is necessary as the Court would benefit from the High Commissioner’s expertise in public international law principles.

Higher Education – RUSA, NIRF, HEFA, etc.

Need for re-orientationop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Improving the standard and status of State universities and problems faced by them?


State universities will have to deliver more to the State where they are located

Status of the state universities in India

  • Significance of state universities: Out of about a thousand higher education institutions (HEIs) that are authorised to award degrees in India, about 400 are state public universities.
    • These state universities produce over 90% of our graduates (including those from the colleges affiliated to them) and contribute to about one-third of the research publications from this country.
  • Poor quality: That their quality and performance is poor in most cases is accepted as a given today.
    • It is evidenced by their poor performance in institutional rankings,
    • the poor employment status of their students,
    • rather poor quality of their publications,
    • negligible presence in national-level policy/decision-making bodies,
    • poor track record in receiving national awards and recognition, poor share in research funding and so on.
  • Stated reasons for poor performance– Commonly stated reasons for these observations include government/political interference in the management of the university, lack of autonomy, poor governance structures, corruption, poor quality of teachers, outdated curricula, plagiarism, poor infrastructure and facilities, overcrowding, evils of the “affiliation” system and poor linkages with alumni and industry.
    • Symptoms of the problem: While many of these observations are no doubt valid, they appear to be only the symptoms and consequences of some deeper malaise and not the underlying cause.

Core causative factors for the poor state of state universities

  • Lack of support: State universities are not supported the way Central universities are supported by the Central government as well as given patronage by the section of society.
    • It is as though State-level players do not have much stake in the stability and performance of the State university system.
    • What could be the reason for lack of support? One reason why State-level players do not feel compelled to back the State university system more strongly could be that the latter does not commit itself to anything that may be of particular interest and value to the State where the university is located.
  • What could be the solution? In order to receive much more funding and support from the State system then, State universities would have to commit to delivering lots more to the State and its people where they are located.
    • New vision and programmes: They must come up with a new vision and programmes specifically addressing the needs of the State, its industry, economy and society, and on the basis of it make the State-level players commit to providing full ownership and support to them.


The initiative to start a larger dialogue on the future of our State universities would have to be taken primarily by the academic community of these institutions.

Issues related to Economic growth

 The double whammy that India’s economy now facesop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- How will India economy be impacted by the Covid-19?


India is currently in the grip of dual shocks: Covid-19 and a financial one.

The supply and demand shock

  • Containing outbreak at economic cost: Even as infection rates have tapered in China, they are rising elsewhere. Countries that have succeeded in containing it have done so at an economic cost, by quarantining people, implementing lockdowns and social distancing.
    • This has resulted in a plateauing of new infection cases in China and South Korea, but they are still rising exponentially across Europe and the US.
  • Supply shock: This is both a supply as well as demand shock. On the former, the impact is via disruptions in China-centred supply chains.
  • Demand shock: But there is also a hit to final demand as infections spread across the rest of the world, hurting travel, tourism, hotels and local retail activity.
  • Tightened financial condition: The correction in equity markets and wider credit spreads have tightened financial conditions, and both consumer and business confidence has faltered.
  • Rising infections in Europe a big concern: Rising infections in Europe and the US are a big concern as both are large services-driven economies. Any pullback in their consumption demand will likely result in a demand shock for the rest of the world.

Global spillover of Covid-19

  • Hitting economies in waves: One uncertainty pertains to how long this shock will last. There are no definite answers as of now. Covid-19 shocks are hitting economies in waves and countries are imposing lockdowns, one by one.
    • Hence, instead of a synchronized global slump over one or two months, the economic impact is getting spread out.
    • For example, supply chain disruptions and lockdowns in China are gradually easing, and we estimate that factories should be operating at full capacity by mid-April.
  • Hit to travel and tourism to last till June: The hit to travel and tourism will last at least until June because even if the number of new infection cases eases, travellers will remain cautious initially.
  • Demand in the US and Europe to remain low until April: Curtailment in discretionary demand due to social distancing in the US and Europe only started in March and will likely continue until April, if not longer.
  • Global spillover to continue till May: The global spillovers of Covid-19 will likely be spread out over February and May, implying a weak first half of 2020.
    • Whether the shocks last longer will depend on whether countries successfully contain infections.
    • It also depends on the ability of countries to prevent spillover effects onto corporate balance sheets (more defaults) and the labour market (job losses).
  • Global GDP to remain low in the first half: Global gross domestic product (GDP) growth in the first half of 2020 is likely to be weaker than during the global financial crisis of 2008-09, due to a sharp first-quarter decline in China, and weaker  final demand in developed economies in the second.

What will be the impact on India?

  • The economic hit to India will be felt through multiple channels.
  • First, India is not a part of China-centric global value chains, but China accounts for a significant share of India’s imports (14%) and its production halt will hit India’s imports of
    • primary and intermediate goods,
    • disrupting domestic production,
    • particularly in industries such as pharmaceuticals, auto, electronics, solar power and agriculture.
  • Second, there will be a slowdown in international and domestic travel and tourism. India earns over 1% of GDP as foreign exchange earnings from tourism annually.
  • Third, social distancing measures, along with the public fear factor will hit domestic retail activity as people avoid public places.
  • Fourth, India will face the indirect effects of weaker global demand, tighter financial conditions and low confidence.
    • Oil windfall offset: Even though lower oil prices are a boon, in the current environment any benefit from lower oil prices will be offset by other negatives.
  • Domestic financial sector risk: Another big challenge for India relates to domestic financial sector risks.
    • The spillover effect of Yes bank: Weak growth and financial stability concerns have been brewing for over a year now and the spillover effects of Yes Bank’s takeover are still reverberating through the system.
    • The fallout of the shadow banking slowdown via potential stress for real estate developers and small and medium-sized enterprises is a risk.
    • If the asset quality of both shadow banks and the banking sector deteriorate in the next few quarters, as is likely, then domestic credit conditions may stay tight, as the perceived risk premium could rise further.
  • GDP growth rate: In this backdrop, the real activity could suffer. The GDP growth is expected to average around 4% year-on-year in the first half of 2020, with risks skewed to the downside.
    • GDP growth in 2020-21 is unlikely to be more than 2019-20’s 5%.

Way forward

  • An optimal policy response to Covid-19: The optimal policy response to is globally-coordinated public health safety and virus containment. India has taken some worthy decisions on this.
    • Since Covid-19 will adversely impact service sectors like retail, hospitality, travel and civil aviation, the government’s fiscal policy response should be aimed well through measures such as tax relief and interest-free loans, particularly for small and medium enterprises.
  • Liquidity easing and policy accommodation: On monetary policy, a combination of liquidity easing and policy accommodation would be needed beyond the moves already made.
    • Macro-prudential steps such as lowering the counter-cyclical capital buffer for banks could be announced.
    • Fixing the financial sector, though, would need a broader response, including a recognition of the full scale of the problem and then adequately recapitalising banks and shadow banks.
    • Else, credit risk premia may stay elevated and credit growth may not pick up.


In all, the economic impact on India due to shocks emanating from Covid-19 could get compounded due to weak domestic balance sheets. The coming quarters call for close vigilance of credit risks and the prioritizing of financial stability.

Right To Privacy

Breach of trustop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Breach of privacy in sharing of call record data of citizens.


In bypassing established protocol to seek call details of citizens en masse, the government violates SC guidelines.

What is the issue?

  • Departure from stringent protocol: The Cellular Operators Association of India has reported mass requests from the government for mobile call detail records (CDRs).
    • Which is a serious departure from the stringent protocol established by the UPA government following an uproar in 2013 after prominent politicians were found to be under unauthorised surveillance.
  • Records of all customers: Records have been sought for all consumers on certain dates in parts of Delhi, Andhra Pradesh, Haryana, Himachal Pradesh, Jammu & Kashmir, Kerala, Odisha, Madhya Pradesh and Punjab.
    • In the case of Delhi, records were sought for the last three days of campaigning before assembly elections, while the anti-CAA protests were at their peak.
  • How the data was requested? Requests were delivered by local offices of the Department of Telecommunications, taking advantage of a condition in licences granted to operators, which permits the DoT to inspect their CDRs, which go back one year.

Breach of many requirements and norms

  • A serious breach of privacy: These requests depart from established protocol and international expectations on multiple counts, and amount to a serious breach of privacy.
  • What is the protocol for requesting CDR information? A CDR request is supposed to be sanctioned by the home secretary and handled by a police officer of the rank of SP or above,
    • But in this case DoT offices were used.
  • The requirement of informing magistrate was not fulfilled: The requirement to report CDR requests on a monthly basis to the district magistrate was not complied with.
  • No reason was offered: Most importantly, no reason was offered for snooping on the traffic of citizens.
  • Surveillance must be specific and purposive: It is generally understood that communications surveillance must be specific and purposive, and must not trespass on the privacy of the innocent.
  • Invasion of privacy of all citizens: Indiscriminate mass surveillance of communications invades the privacy of all citizens to the detriment of public trust. In this case, it was for purposes which are not verifiably honourable, since the government has chosen not to reveal them.

Why the CDR data matters if it is metadata only?

  • Combining CDR with other data gives more information: CDRs are all metadata and no content. They do not reveal any words uttered or messaged.
    • But combining the metadata with phone location data reveals a lot about connections between specific people and the actions that they take.
  • Multi-dimensional map of human activity: If data is available at scale, as was the case here, it is possible to build a multi-dimensional map of human activity, and correlate it with real events.
  • This would disturb the balance of information power between the citizen and the state, and amount to a breach of privacy.


If the government needs CDR data for a legitimate purpose, it should have no objection to following the rule-book scrupulously. And if there is a reason for sidestepping protocol in a sensitive matter, it should explain why.

Issues related to Economic growth

Triggering a Global Financial Crisisop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Suggestions to avoid next global financial crisis.


Although we could not have predicted it, Covid-19 was not the reason, but just the trigger for the ongoing financial crash as all we needed was the proverbial straw to break the finance sector’s back

Economic sudden stop

  • Not just any trigger: Covid-19 was not just any trigger as it gave birth to the concept of the economic “sudden stop.” When the global equity markets dropped on 31 January 2020 following the WHO declaration of the Public Health Emergency of International Concern, El-Erian (2020) warned the investors on 2 February 2020 that they should snap out of the “buy the dip” mentality.
    • Pointing out two vulnerabilities, namely structurally weak global growth and less effective central banks, he introduced the concept of “sudden stop” economic dynamics.
  • What is sudden stop? It can be considered as an abrupt onset of a deep recession.
    • Supply and demand shock: In the case of Covid-19, it is a sudden stop of economic activity resulting in supply and demand shocks to the global economy as major cities in infected countries, more than 100 and counting, are put on lockdown.
    • And, add to that the deepening oil price war between Russia and Saudi Arabia.
  • On 8 March 2020 in New York, the futures markets opened and oil futures (both Brent and WTI) are trading about 21% down, gold is above $1,700 per ounce, and all United States (US) equity index futures are trading about 4% down.
  • Long terms treasury yield at historical lows: What is worse is that with the long-term US Treasury yields at their historical lows (10-year yield below 0.5% and 30-year yield below 1%), the capital markets are frozen (not to mention many oil projects that will go bust at these prices).

Disorderly non-financial private sector debt leading to dire consequences

  • A disorderly global non-financial private sector debt deleveraging, which is likely to lead to deep global debt deflation, followed by a recession (and possibly a depression).
    • Which could result in creating financial and economic instabilities, and further tensions in international relations with dire consequences for emerging and developing countries, not to mention developed countries.
  • Difference in developed and developing countries debts: While in developed and high-income developing countries, the non-financial private sector is more over-indebted, in middle-income and low-income developing countries, the public sector is more over-indebted.
  • Impact on developed economies: Given that the global non-financial private sector debt deleveraging has already started, the public sector debts of the developed and high-income developing countries will also go up and the governments’ ability to rescue their economies will also decline in these countries.
  • Impact on funding for climate change: Furthermore, this will severely constrain the governments’ ability to spend on climate change-related projects to address the potentially catastrophic effects for many years to come, diminishing our hopes to make the necessary investments and innovations to address the now existential climate crisis on time will diminish.
  • The corona factor: The measures we have to take to control the spread of Covid-19 before a cure is found will further challenge the financial system, as people stop earning an income and businesses go bankrupt.

Way forward

  • Three authorities solution: In the suggested framework, there would be three authorities to maintain a deposit account at the central bank in each country
    • 1. A deleveraging authority for leverage reduction.
    • 2. Lastenausgleich (based on German Currency Reforms) authority for capital levies.
    • 3. Climate authority for financing needs in developing national climate plans.
    • These national authorities should be globally coordinated through the appropriate United Nations agencies.
  • Control the three authorities: The Lastenausgleich authority would be under the finance ministry, whereas the deleveraging and climate authorities would be not-for-profit corporations promoted by the government.
  • Capitalisation issue: The government would capitalise the deleveraging and climate authorities by the Treasury-issued zero-coupon perpetual bonds.
  • The deleveraging authority would then sell its equalisation claims to the central bank in exchange for an increased balance in its deposit account at the bank, while the climate authority would wait until the deleveraging concludes.
    • Further, the climate authority would not be allowed to open deposit accounts to its borrowers to ensure that it would be a pure financial intermediary, not a bank.
  • Framework: Assuming that a globally agreed-upon debt reduction percentage that would bring the global non-financial sector leverage well under 100% is determined and that all countries agree to act simultaneously, the framework is as follows
    • (i) the financial institutions comprising the banks and non-bank financial institutions (NBFIs) write down all the loans and debt securities on both sides of their balance sheets by the required percentage;
    • (ii) the deleveraging authority compensates the banks and NBFIs for the loss if any; and
    • (iii) the deleveraging authority pays each qualified resident their allocated amount less than the debt relief if any.
    • If an NBFI gain after the above debt reduction, it should owe equalisation liabilities to the deleveraging authority of its jurisdiction.
    • Note that as all debts mean all debts, public sector debts will also be written down by the same percentage except the official debts of the sovereigns that fall out of the scope of our proposed framework and should be handled by other means.
  • After deleveraging: After deleveraging the balance of the deleveraging authority account at the central bank goes down whereas the total balance of the bank accounts (reserves) at the central bank goes up by the total payment made by the deleveraging authority.
    • Hence, the base money goes up by the total payment of the deleveraging authority.
    • Since NBFIs and residents cannot maintain deposit accounts at the central bank, they have to be paid through a bank which creates deposits for the NBFIs and residents against reserves.
    • Hence, the broad money goes up by the amount of the payment to the NBFIs and residents.
  • Issue of multi-currency balance sheet: One issue is that in many countries, the bank and NBFI balance sheets are multi-currency balance sheets.
    • However, the deleveraging authority payments are in domestic currency, which may create currency risk for some banks and NBFIs.
    • Backed by the central banks, the globally coordinated national deleveraging authorities should stand ready to intervene to avoid potential crises.
  • Condition to spend on climate bonds: The authorities would require their domestic banks and other financial institutions to spend an internationally agreed-upon percentage of their newly found money, if any, after the deleveraging on the interest-bearing, finite-maturity bonds the national climate authorities would issue.
    • Since the promoter of the climate authority is the government, the bonds of the climate authority would have the same credit with the government bonds, and the central bank would accept the climate authority bonds in its open market operations.
  • Climate authority bonds as reserves: Therefore, the climate authority bonds would be the main tool to manage the reserves and deposits created through the equalisation claims.
    • In addition, the climate authority bonds could be used for the greening of the financial system through the investment of foreign exchange reserves of the central banks proposed by the Bank of International Settlements (BIS 2019).
  • Progressive wealth tax collection: Lastly, equipped with a “globally coordinated wealth registry” (Stiglitz et al 2019), the Lastenausgleich authorities would collect progressive wealth taxes from the owners of real and non-debt financial assets for the equalisation of burdens.
    • While a part of these taxes could be used to retire some of the equalisation claims and the corresponding reserves and deposits created in the deleveraging process, another part could be transferred to the climate authorities, and the rest could be spent in the interests of the society.
Blockchain Technology: Prospects and Challenges

India can use Yes Bank debacle to chase China in Cryptoop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Is cryptocurrency solution to bad governance in the banking system in India?


There’s an opportunity to stabilize the financial system and prevent a rival power from widening its lead.

The backdrop of YES bank failure time for cryptocurrency

  • Perfect time for cryptocurrency: Confidence in the Indian financial system has been breaking down for some time. Instead of trying to restore trust, it may be time to require less of it — with the help of an official rupee cryptocurrency.
  • The last straw: The collapse of corporate lender Yes Bank Ltd. was the last straw, which failed in slow motion in full view of authorities.
    • Depositors have been assured that their $20 billion-plus in stuck funds will be released after a rescue by the government-controlled State Bank of India.
    • What could be the impact on the sentiment of the people? While that may help prevent widespread panic, even temporarily stopping people from accessing their funds would mean that from now on, not all savings and current accounts will be treated by individuals and businesses as a perfect substitute for cash.

Why it would be costly and difficult to revive the public faith?

  • It will be both difficult and costly to revive the public’s dwindling faith.
  • Nationalisation not an option: A nuclear option is to nationalize the banks and non-bank finance firms that provide $1.75 trillion in annual funding. Doing so would be a doomed throwback to the late 1960s when India lurched toward stultifying socialist-style state controls.
  • Corruption in banking won’t go away: Similarly, it would be unrealistic to assume that the Yes Bank embarrassment would trigger an improvement in the status quo.
    • Deep crony-capital relationship: The crony-capital relationships between financiers and borrowers in India are steeped in its colonial history.
    • Basel III won’t solve the problem: Putting on the gloss of Basel III capital requirements, which are supposed to make lenders less prone to failure, doesn’t make corruption in banking go away.

Can cryptocurrency be an answer?

  • It offers hope: Blockchain technology, which the Indian establishment is trying to snuff out in finance, offers hope. Government should consider official crypto to obviate the need for trusted intermediaries, which are in short supply, anyway.
  • China expected to launch digital currency: Before the coronavirus outbreak, China was widely expected to start its own central bank digital currency this year.
    • But India’s need is greater, and its motivation very different from Beijing’s desire to shake the hegemony of the dollar.
  • After the Yes Bank debacle and botched rescue, deposits in India will probably gravitate toward four or five large lenders, whose managers may be emboldened to make risky bets with other people’s money. The remaining banks will struggle for liquidity. A perennially unstable credit delivery network will always be one misstep away from the next blowup. While every country has its share of manias, panics and crashes, to be gripped by absolute financial mistrust every few years is not an environment where growth can flourish.
  • Opportunity to think afresh: Earlier this month, India’s highest court set aside the Reserve Bank of India’s directive that asked banks to not offer services to cryptocurrency traders and exchanges.
    • A legal defeat has provided the opportunity to think afresh.
    • But in parallel, the government is considering a blanket ban on private virtual tokens. The crypto activity could get slammed again.
  • Possibility of misuse: To be sure, one popular use of technology is money laundering.
    • But to kill the industry and send practitioners packing would be to lose out on a valuable innovation at a time when India needs to build on the globally recognized successes of its digital payments industry, which has gained users’ trust just as banks and shadow banks have lost it.

Implications for deposit in the aftermath of Yes bank debacle

  • Deposits may gravitate towards big banks: After the Yes Bank debacle and botched rescue, deposits in India will probably gravitate toward four or five large lenders, whose managers may be emboldened to make risky bets with other people’s money.
    • The remaining banks will struggle for liquidity.
  • Next blowup: A perennially unstable credit delivery network will always be one misstep away from the next blowup.
  • Impact on growth: While every country has its share of manias, panics and crashes, to be gripped by absolute financial mistrust every few years is not an environment where growth can flourish.

Possible pathways for central banks digital currency

  • Pathways suggested by BIS: After surveying 17 projects around the world — from Norway and Sweden to China, Cambodia and South Africa — the Bank for International Settlements (BIS) has identified four possible pathways for a central bank digital currency.
  • Starting point- Rupee token: Of the pathways suggested by the BIS, a rupee token that doesn’t require the holder to have an account with anyone but has value guaranteed by the Reserve Bank of India could be a starting point.
  • Who should enable the fund transfer? Cryptography (“I know a secret, therefore I own the funds”) rather than an account relationship (“I am who I say I am, therefore I own the funds”) would be used to enable transfers.
    • Later, the RBI can open up the validation of transactions to authorized parties on distributed ledgers.
  • What is the current system and issues with it? Currently, a deposit holder has to rely on everyone from the bank’s management and board to the auditors, the rating firms and the regulator to do their jobs.
    • When they all fail, as in the case of Yes, the bank’s chequebook, ATM card, and online banking password cease to generate liquidity.
    • Deposits stop being the same as cash, even if the state guarantees their safety.
    • It would be far less painful if deposit owners only had to trust the RBI, not as a banking regulator but as a money-printing authority that could never run out of resources to settle its IOUs.


  • China’s ambition challenge dollars position as a reserve currency: China wants the yuan to take over from the dollar as the world’s reserve currency. A tech-enabled global alternative to the greenback — of the kind that Facebook Inc.’s proposed Libra had threatened to be — would have been an obstacle. Hence, Beijing accelerated its tokenized currency initiative.
  • India should jump the bandwagon: India needs to jump on the bandwagon for self-preservation. If the RBI doesn’t make easy-to-transact digital rupees available and leaves ordinary folks at the mercy of poorly run and supervised banks like Yes, people would rather store their wealth in Silicon Valley-sponsored tokenized money — or Beijing’s digital yuan — whenever they arrive.
Foreign Policy Watch: India-United States

The ambit and the limits of ‘diaspora diplomacy’op-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Indian diaspora and limits on its ability to influence.


It is necessary for New India to look at the political choices of Indian migrants abroad through a more realistic lens.

Indian diaspora

  • Largest diaspora and highest remittances: India has the world’s largest diaspora, about 17.5 million and receives the highest remittance of $78.6 billion from Indians living abroad (Global Migration Report 2020).
  • Impact of the diaspora back home: Members of the diaspora, often seen as more “successful” and therefore more influential, can have a big impact on their relatives back home.

Certain wrong premises: The promise of the diaspora’s dual power is based on certain faulty premises.

1. Transferability of vote: To start with, the transferability of votes has not yet been proven conclusively.

    • It is necessary and timely that the government re-analyses the benefits accrued from the diaspora’s political presence through a more realistic lens.
    • One obvious reason is that the Indian community isn’t large enough to make a difference in the voting patterns in any of these countries.
    • The second is that the population that comes out for the rallies doesn’t represent the entire diaspora.

2. Not necessarily support the government: The second issue is that politically active members of the Indian diaspora don’t necessarily support the Indian government’s actions, and often because they are of Indian origin, hold the government in New Delhi to higher standards than they do others.

  • Concern over CAA and Kashmir Issue: The U.S. House Foreign Affairs Committee Chairperson for Asia, Ami Bera, voiced his concerns quite plainly about Kashmir and Citizenship (Amendment) Act (CAA) during a visit to India last month.
  • Criticism of the government actions: The sponsor of the U.S. House resolution on Kashmir (HR745) Pramila Jayapal; co-chair of U.S. Presidential candidate Bernie Sanders’s campaign Ro Khanna; and former presidential contender Kamala Harris, have all been openly critical of the government’s actions.

What should the government do? The conclusion for the government is that it cannot own only that part of the diaspora that supports its decisions, and must celebrate the fact that members of the Indian diaspora, from both sides of the political divide, are successful and influential.

3. Diaspora as a factor in bilateral relation: The government must ensure that its focus on the diaspora doesn’t become a factor in its bilateral relations.

  • While it is perfectly legitimate and laudable to ensure the safety and well-being of Indian citizens in different parts of the world, it must tread more lightly on issues that concern foreign citizens of Indian origin.

4.Introduction of India’s internal politics:

  • The introduction of India’s internal politics into this equation is another new angle, one that led the British Foreign Office to remonstrate with India about interference last December.
  • Politically affiliated Indian diaspora chapters are now also playing old India-Pakistan fault-lines amongst immigrants, which in the past were fuelled by Pakistani agencies.
  • In California primaries this month, local “Hindu-American” groups protested against Democratic candidates like Ro Khanna for joining the Congressional Pakistan caucus and for criticising New Delhi’s actions.

5. Impact on diaspora:

  • Conflating POI with citizens of India: The government must consider the impact that policies conflating the PIOs with Indian citizens could have on the diaspora itself.
  • Ability to assimilate: Most immigrant Indian communities have been marked by their ability to assimilate into the countries they now live in.
  • Much of that comes from a desire to be treated as equal citizens, not as immigrants, while a few also have bad memories of anti-immigrant sentiments in the 1960s and 1970s in Europe and the U.S. when they were targeted and accused of “divided loyalties”.


Laying claim to diasporas kinship and culture and taking pride in their success is one thing. It would be a mistake to lay claim to their politics, however.


Communicable and Non-communicable diseases – HIV, Malaria, Cancer, Mental Health, etc.

Positive responseop-ed of the day


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- India's handling of coronavirus pandemic.


Cooperation between the Centre and the States in dealing with the threat of the virus is commendable.

Hope in dealing with the pandemic and India’s response to the pandemic

  • What is the best response?  World Health Organisation declared it a pandemic, Secretary-General offered hope: “If countries detect, test, treat, isolate, trace, and mobilise their people in the response, those with a handful of cases can prevent those cases becoming clusters, and those clusters becoming community transmission.”
  • The advantage with India: India, with 70-odd cases, has the advantage, and commendably, the central and state governments have reacted rapidly to the developing pandemic
  • Equally importantly, they have set aside the acrimony over the CAA-NRC question and pulled together, without the need for external urging.
    • Because everyone realises that COVID-19 is everyone’s problem.
  • Steps taken by the government: No visas are being issued, screening is in progress, health education messaging is visible, public gatherings are sharply reduced and there is no sign of the wearying political blame game which generally besets such challenges.

No room for complacency

  • Display of political will: The secretary-general has also cautioned that while many nations can avoid the pandemic, the operative verb is not “can” but “will”. The Indian response has displayed political will, but there is no room for complacency.
  • Fear of the unknown: This is the first coronavirus to reach pandemic levels. For at least 18 months, no vaccine can be market-ready. At least until the summer, there will be insufficient information about the behaviour of the organism in the wild. Wisely, Homo sapiens fears the unknown.
  • Caution is the best prescription: Until we learn more about the nature of the beast, abundant caution is the only credible prescription.
    • Isolation at the focus of the response: At present, the focus of the response is isolation (including self-isolation) and the maintenance of sanitation barriers. Schools have been closing down, some workplaces are screening staff, and people are discouraged from leaving home without a compelling reason.
    • However, outside the controlled conditions in homes and hospitals, maintaining the patency of the sanitation barrier requires extraordinary vigilance and self-control.

Status of healthcare infrastructure

  • The readiness of healthcare facilities: In the case of breaches — a few oversights or accidents are inevitable — the readiness of healthcare facilities would become a serious factor in controlling mortality.
  • Variation in states’ preparedness: The quality of the states’ level of preparedness and the quality of health services varies. While Kerala efficiently controlled the Nipa virus, Uttar Pradesh, the most populous state, has failed to contain annual outbreaks of Acute Encephalitis Syndrome for over a decade.
    • And the capital’s initial failure in the face of seasonal waves of lethal mosquito-borne diseases cannot be forgotten.
  • Rural cluster-most vulnerable: How much less protected would a rural cluster be, serviced by a poorly equipped primary health centre?


If community transmission becomes commonplace, it would become a difficult battle. Hence, the sanitation barrier remains the most reliable epidemiological response. If the government has to resurrect primordial provisions from the era of bubonic plagues to keep it patent, so be it.