Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Challenges after TRIPS waiver
The article highlights the challenges countries could face despite the patent waiver for Covid-19 vaccine.
TRIPS waiver for Covid-19 vaccine
- The United States has finally relented and declared its support for a temporary waiver of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement for COVID-19 vaccines at the World Trade Organisation (WTO).
- Hopefully, the U.S.’s decision would cause other holdouts like Canada and the European Union to give up their opposition.
- While the U.S.’s decision is to be welcomed, the devil would be in the details.
The challenges after waiver
1) Conditions of the waiver
- If the experience of negotiating such waivers, especially on TRIPS, were anything to go by, it would be too early to celebrate.
- In the aftermath of the HIV/AIDS crisis the WTO adopted a decision in 2003 waiving certain TRIPS obligations to increase the accessibility of medicines.
- However, this waiver (later incorporated as Article 31 bis in the TRIPS agreement) was subject to several stringent requirements such as the drugs so manufactured are to be exported to that nation only; the medicines should be easily identifiable through different colour.
- Given these cumbersome requirements, hardly any country, in the last 17 years, made effective use of this waiver.
2) Countries will protect the interest of pharma companies
- India and South Africa proposed a waiver not just on vaccines but also on medicines and other therapeutics and technologies related to the treatment of COVID-19.
- So, the U.S. has already narrowed down the scope of the waiver considerably by restricting it to vaccines.
- Medicines useful in treating COVID-19 and other therapeutics must be also included in the waiver.
- While the U.S. would not like to be seen as blocking the TRIPS waiver and attracting the ire of the global community, make no mistake that it would resolutely defend the interests of its pharmaceutical corporations.
3) Lack of access to technology
- The TRIPS waiver would lift the legal restrictions on manufacturing COVID-19 vaccines.
- But it would not solve the problem of the lack of access to technological ‘know-how’ related to manufacturing COVID-19 vaccines.
- Waiving IP protection does not impose a legal requirement on pharmaceutical companies to transfer or share technology.
- While individual countries may adopt coercive legal measures for a forced transfer of technology, it would be too draconian and counterproductive.
- Therefore, governments would have to be proactive in negotiating and cajoling pharmaceutical companies to transfer technology using various legal and policy tools including financial incentives.
4) Domestic IP regulation
- While a TRIPS waiver would enable countries to escape WTO obligations, it will not change the nature of domestic IP regulations.
- Therefore, countries should start working towards making suitable changes in their domestic legal framework to operationalise and enforce the TRIPS waiver.
- In this regard, the Indian government should immediately put in place a team of best IP lawyers who could study the various TRIPS waiver scenarios and accordingly recommend the changes to be made in the Indian legal framework.
Conclusion
Notwithstanding the usefulness of the TRIPS waiver, it is not a magic pill. It would work well only if countries simultaneously address the non-IP bottlenecks.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: TRIPS
Mains level: Paper 2- Implications of patent waiver for Covid-19 vaccine
The article highlights the implications of patent waiver for Covid-19 for global health equity.
Where the opposition to waiver proposal came from
- Recently, the US agreed to support the India-South Africa proposal, seeking a waiver of patent protection for technologies needed to combat and contain COVID-19.
- Response to the proposal was divided during earlier debates at the WTO.
- While many low and middle income countries supported it, resistance came from the U.S., the United Kingdom, the European Union, Switzerland, Australia and Japan.
- Since the WTO operates on consensus rather than by voting, the proposal did not advance despite drawing support of over 60 countries.
- Predictably, the pharmaceutical industry fiercely opposed it and vigorously lobbied many governments.
- Right-wing political groups in the high income countries sided with the industry.
Issues with the reasons given for opposition to the waiver proposal
1) Quality and safety of vaccine production in low and middle-income countries
- It was argued that the capacity for producing vaccines of assured quality and safety was limited to some laboratories.
- So, it is argued that it would be hazardous to permit manufacturers in low and middle-income countries.
- However, pharmaceutical manufacturers have no reservations about contracting industries in those countries to manufacture their patent-protected vaccines for the global market.
2) Licenced manufacturing
- The counter to patent waiver is an offer to license manufacturers in developing countries while retaining patent rights.
- This restricts the opportunity for production to a chosen few.
- The terms of those agreements are opaque and offer no assurance of equity in access to the products at affordable prices, either to the country of manufacture or to other developing countries.
3) Supplying vaccines through COVAX facility
- It was also stated that developing countries could be supplied vaccines through the COVAX facility, set up by several international agencies and donors.
- While well-intended, it has fallen far short of promised delivery.
- Some U.S. states have received more vaccines than entire Africa has from COVAX.
4) No availability of extra capacity for vaccine production
- Critics of a patent waiver say there is no evidence that extra capacity exists for producing vaccines outside of firms undertaking them now.
- Even before the change in the U.S.’s position, manufacturers from many countries expressed their readiness and avidly sought opportunities to produce the approved vaccines.
- They included industries in Canada and South Korea, suggesting that capable manufacturers in high income countries too are ready to avail of patent waivers but are not being allowed to enter a restricted circle.
- The World Health Organization’s mRNA vaccine technology transfer hub has already drawn interest from over 50 firms.
- Instead of arguing that capacity is limited, high-income countries and other donors should be supporting the growth of more capacity to meet the current and likely future pandemic.
- They should learn from the manner in which India built up capacity and gained a reputation as a respected global pharmacy by moving from product patenting to process patenting between 1970 and 2005.
5) Time required to utilise patented technology is long
- Patent waivers are also dismissed as useless on the grounds that the time taken for their utilisation by new firms will be too long to help combat the present pandemic.
- But many countries have low vaccination rates and variants are gleefully emerging from unprotected populations.
- This makes it difficult to put the end date for the pandemic to end
6) China factor
- An argument put forth by multinational pharmaceutical firms is that a breach in the patent barricade will allow China to steal their technologies, now and in the future.
- The original genomic sequence was openly shared by China, which gave these firms a head start in developing vaccines.
Issue of rewarding innovation financially
- Much of the foundational science that built the path for vaccine production came from public-funded universities and research institutes.
- Further, what use is it to hold on to patents when global health and the global economy are devastated?
- It is often argued that for defending patent protection, is that innovation and investment by industry need to be financially rewarded to incentivise them to develop new products.
- Even if compulsory licences are issued bypassing patent restrictions, royalties are paid to the original innovators and patent holders.
Way forward
- Developing countries must take heart from his gesture and start issuing compulsory licences.
- The Doha declaration on TRIPS flexibilities permits their use in a public health emergency.
- High-income countries and multilateral agencies should provide financial and technical support to enable expansion of global production capacity.
Consider the question “Why are the implications of patent waiver for Covid-19 vaccine for the global health equity? What were the reasons for opposition to waiver proposal?”
Conclusion
The U.S.-supported patent waiver in the COVID fight has the potential to bring in much-needed global health equity.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GVA
Mains level: Paper 3- Role informal sector can play in Atmanirbhar Bharat
The article highlights the important role the informal sector can play in the vision of Atmanirbhar Bharat.
Economic development through Atmanirbhar Bharat
- The vision of the Atmanirbhar Bharat is rooted in the classical paradigm of economic development, based on demand injection in the economy via two sources, domestic and external.
- ‘Vocal for local’ exhorts a distinct and decisive shift in consumer preferences towards locally-produced goods and services.
- ‘Make for the world’ is more ambitious and resembles the export-led growth strategy adopted in East Asia.
- Thus, the Atmanirbhar Bharat categorically bestows the Indian economy with twin engines of growth.
Important role informal sector can play
- The strategy is based on an assumption of lack of adequate demand.
- So a prognosis of supply side with respect to the ability of domestic producers of goods and services to seize the opportunity at the requisite scale and scope is pertinent.
- The nature, character, structure and contributions of the informal sector require retrospection.
- The size of India’s informal sector is massive, it accounts for about 50% of GVA and a major share in the export basket.
- This position proffers it with growth opportunities emanating from domestic as well as external sources.
Constraints faced by informal sector
- Most firms are micro in size and deploy little capital.
- They have a small scale of production, substandard/unbranded quality of products, and localised scope of procuring raw material and marketing their products.
- They are vulnerable to business downturns and other market uncertainties, as reflected in high mortality.
- Their access to cheap, reliable and long-term credit sources is highly restricted.
- The sector also endures a lack of official identity and recognition of its existence and contribution.
Three transformations informal sector need to adopt
- Atmanirbhar Bharat promises enhanced demand for domestically-produced goods and services, but the exposure to stiff global competition, especially for informal sector units, is imminent.
- In such a scenario, the informal sector must embrace for three tectonic shifts with respect to internal transformation, strategic positioning and labour-market dynamics.
1) Internal transformation
- Enterprises must undergo drastic internal transformation, progressively converging at incremental formalisation through spontaneous and self-propelled transition into economically-viable units.
- It requires infusion of capital to ensure enhanced labour productivity and higher wages.
- A systemic disruption, fostering natural growth must be ushered in, which would also curb the birth of new informal enterprises.
- Moreover, internal consolidation in the sector via merger and acquisitions of units would bring benefits accruing from scale economies.
2) Strategic positioning
- Two, because the vision of the Atmanirbhar Bharat exposes the informal sector to global competition, entrepreneurs must embrace the subtle art of strategic positioning in global mega-supply chains.
- They must pick their products and markets with utmost care, and engrain two mantras of success at the global stage in the DNA of their business strategies.
- Global mega-supply chains demand ultra-flexibility in production cycle in addition to heightened resilience to withstand headwinds emanating from not just domestic factors but also global.
3) Labour market dynamics
- The informal sector employs more than 80% of India’s workforce.
- The changes in the first two spheres i.e. higher capital intensity-led enhanced labour productivity and ultra-flexibility in production cycles may have severe repercussions on the availability and quality of jobs in India.
- To alleviate these concerns, the first assumption is that the proportionate increase in expected demand must be more than the enhanced labour productivity to at least retain the currently employed workers.
- To generate good quality jobs, diversification (both horizontal and vertical) must be encouraged.
- Vertical diversification entails products not just be partly produced or assembled in India, they must be the end-products of fully indigenised and integrated production and supply chains, from design to made in India.
- Horizontal diversification involves expansion into newer products and markets, smartly aligning with India’s comparative advantage of surplus labour.
Consider the question ” India’s vast informal sector is poised to play an instrumental, decisive and intriguing role in the vision of the Atmanirbhar Bharat. But the sector, in its current form, appears severely constrained to harness the opportunities. In lights of this, examine the constraints faced by the sector and suggest the measures needed to transform the sector.”
Conclusion
The vision of the Atmanirbhar Bharat is an inflexion point for India’s informal sector, which stipulates adroit manoeuvring between contrasting forces of continuity and change.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Exploring potential for a Westward trade push
After walking away from the RCEP, India needs to find alternative trading partners that can offer the potential for trade expansion. The article suggests a Westward trade push as an alternative.
Forging trade deals with the Western countries
- Our rejection of RCEP, which covers much of the eastern hemisphere, had exposed us to the risk of losing out on cross-border commercial relations in a highly dynamic part of the world.
- To compensate for the opportunity cost of that decision, it was imperative to strike other alliances.
- As a part of this, India adopted a roadmap for the rest of this decade to elevate ties with the UK and also moving to revive free-trade talks with the EU.
- An India-UK plan unveiled recently will raise our bilateral relationship to a ‘comprehensive strategic partnership in such areas as economic affairs, defence and health.
- The two countries signed a £1-billion trade investment pact that is expected to generate jobs in both.
- Separately, India and the EU are reportedly working out how to resume stalled negotiations for a trade deal.
Issues India may face
- The signing of pacts would involve mutual tariff reductions and the lowering of other barriers, both of which have proven thorny so far.
- In general, while the West wants us to lower import duties, our negotiators have been citing India’s sovereign right to protect domestic businesses under World Trade Organization rules.
- Globally, even before covid knocked the wind out of the sails of cargo ships, commerce across borders had been doing badly under the extended effects of a financial crisis that shook things up in 2008-09.
- But world trade remains a reliable path to global prosperity and must therefore regain its gusto.
- For us, deal-making would mean opening up markets to imports in lieu of easier access to foreign ones.
Way forward
- Concessions that cause very few job losses in India can easily be made. A broad cost-benefit analysis will have to guide our approach to talks, on complex issues like US visa rules which affect our software exports.
- Since it is governments that thrash out deals, geopolitical convergences are often sought too.
- We seem to be in a favourable position on this, given the West’s need to keep China’s rise in check.
- The UK’s Rolls-Royce has just inked a memorandum with Hindustan Aeronautics Ltd for warship engines, a sign of our strategic ties.
- Technology could come our way from the US, too.
- If we can leverage an ability to play a role in Asia’s balance of power to our economic benefit, we should.
Conclusion
Mutually assured flexibility on tariff concessions would help India and its Western partners score economic gains and also counterbalance China’s growing dominance of world trade.
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B2B
[pib] India-UK Virtual Summit
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Strategic implications of Covid second wave
Foreign policy consequences
- The devastation caused by the second Covid wave prompted India to accept foreign aid after a gap of 17 years.
- This is bound to have far-reaching strategic implications for India.
- As a direct consequence of the pandemic, India’s claim to regional primacy and leadership will take a major hit.
- India ‘leading power’ aspirations will be dented, and accentuate its domestic political contestations.
- These in turn will impact the content and conduct of India’s foreign policy in the years to come.
What would be the strategic implications?
1) Impact on India’s regional primacy
- COVID 2.0 has quickened the demise of India’s regional primacy.
- India’s geopolitical decline is likely to begin in the neighbourhood itself.
- India’s traditional primacy in the region was built on a mix of material aid, political influence and historical ties.
- Its political influence is steadily declining, its ability to materially help the neighbourhood will shrink in the wake of COVID-19.
- Its historical ties alone may not do wonders to hold on to a region hungry for development assistance and political autonomy.
2) Impact on India’s great power aspiration
- India aspires to be a leading power, rather than just a balancing power.
- While the Indo-Pacific is geopolitically keen and ready to engage with India, the pandemic could adversely impact India’s ability and desire to contribute to the Indo-Pacific and the Quad.
- COVID-19, for instance, will prevent any ambitious military spending or modernisation plans.
- Covid-19 will also limit the country’s attention on global diplomacy and regional geopolitics, be it Afghanistan or Sri Lanka or the Indo-Pacific.
- With reduced military spending and lesser diplomatic attention to regional geopolitics, New Delhi’s ability to project power and contribute to the growth of the Quad will be uncertain.
3) Domestic political contestation and its impact on strategic ambition
- Domestic political contestations in the wake of the COVID-19 devastation in the country could also limit India’s strategic ambitions.
- General economic distress, a fall in foreign direct investment and industrial production, and a rise in unemployment have already lowered the mood in the country.
- A depressed economy, politically volatile domestic space combined with a lack of elite consensus on strategic matters would hardly inspire confidence in the international system about India.
4) Impact on India-China equation
- From competing with China’s vaccine diplomacy a few months ago, New Delhi today is forced to seek help from the international community.
- China has, compared to most other countries, emerged stronger in the wake of the pandemic.
- The world, notwithstanding its anti-China rhetoric, will continue to do business with Beijing — it already has been, and it will only increase.
- Claims that India could compete with China as a global investment and manufacturing destination would be dented.
- India’s ability to stand up to China stands vastly diminished today: in material power, in terms of balance of power considerations, and political will.
5) Depressed foreign policy
- Given the much reduced political capital within the government to pursue ambitious foreign policy goals, the diplomatic bandwidth for expansive foreign policy goals would be limited.
- This, however, might take the aggressive edge off of India’s foreign policy.
- Less aggression could potentially translate into more accommodation, reconciliation and cooperation especially in the neighbourhood, with Pakistan on the one hand and within the broader South Asian Association for Regional Cooperation (SAARC) framework on the other.
- COVID-19 has forced us to reimagine, to some extent at least, the friend enemy equations in global geopolitics.
- While the United States seemed hesitant, at least initially, Russia was quick to come to India’s aid.
6) Implications for strategic autonomy
- The pandemic would, at the very least indirectly, impact India’s policy of maintaining strategic autonomy.
- As pointed out above, the strategic consequences of the pandemic are bound to shape and structure India’s foreign policy choices as well as constrain India’s foreign policy agency.
- It could, for instance, become more susceptible to external criticism for, after all, India cannot say ‘yes’ to just aid and ‘no’ to criticism.
Consider the question “Examine the strategic implications of Covid for India.”
Way forward
- COVID-19 will also do is open up new regional opportunities for cooperation especially under the ambit of SAARC.
- India might do well to get the region’s collective focus on ‘regional health multilateralism’ to promote mutual assistance and joint action on health emergencies such as this.
- Classical geopolitics should be brought on a par with health diplomacy, environmental concerns and regional connectivity in South Asia.
Conclusion
While the outpouring of global aid to India shows that the world realises India is too important to fail, the international community might also reach the conclusion that post-COVID-19 India is too fragile to lead and be a ‘leading power’.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Zoonotic diseases
Mains level: Paper 2- 'One Health' approach to deal with infections diseases
The article highlights the need for a holistic approach to animal and human health as more than two-thirds of existing and emerging infectious diseases are zoonotic.
Need to document the link between environment animal and human health
- Studies indicate that more than two-thirds of existing and emerging infectious diseases are zoonotic, or can be transferred between animals and humans, and vice versa.
- Another category of diseases, anthropozoonotic infections, gets transferred from humans to animals.
- The transboundary impact of viral outbreaks in recent years such as the Nipah virus, Ebola, Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory Syndrome (MERS) has reinforced the need for us to consistently document the linkages between the environment, animals, and human health.
India’s ‘One Health’ vision
- India’s ‘One Health’ vision derives its blueprint from the agreement between the tripartite-plus alliance.
- The alliance comprises the Food and Agriculture Organization of the United Nations (FAO), the World Organisation for Animal Health (OIE), the World Health Organization (WHO) and the United Nations Environment Programme (UNEP) — a global initiative supported by the United Nations Children’s Fund (UNICEF) and the World Bank under the overarching goal of contributing to ‘One World, One Health’.
- In keeping with the long-term objectives, India established a National Standing Committee on Zoonoses as far back as the 1980s.
- This year, funds were sanctioned for setting up a ‘Centre for One Health’ at Nagpur.
- Further, the Department of Animal Husbandry and Dairying (DAHD) has launched several schemes to mitigate the prevalence of animal diseases since 2015.
- Hence, under the National Animal Disease Control Programme, ₹13,343 crore have been sanctioned for Foot and Mouth disease and Brucellosis control.
- In addition, DAHD will soon establish a ‘One Health’ unit within the Ministry.
- Additionally, the government is working to revamp programmes that focus on capacity building for veterinarians such as Assistance to States for Control of Animal Diseases (ASCAD).
- There is increased focus on vaccination against livestock diseases and backyard poultry.
- DAHD has partnered with the Ministry of Health and Family Welfare in the National Action Plan for Eliminating Dog Mediated Rabies.
Need for coordination
- There are more than 1.7 million viruses circulating in wildlife, and many of them are likely to be zoonotic.
- Therefore, unless there is timely detection, India risks facing many more pandemics in times to come.
- There is need to address challenges pertaining to veterinary manpower shortages, the lack of information sharing between human and animal health institutions, and inadequate coordination on food safety at slaughter.
- These issues can be remedied by consolidating existing animal health and disease surveillance systems — e.g., the Information Network for Animal Productivity and Health, and the National Animal Disease Reporting System.
Conclusion
As we battle yet another wave of a deadly zoonotic disease (COVID-19), awareness generation, and increased investments toward meeting ‘One Health’ targets is the need of the hour.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-Britain relations
The article highlights the factors that make building sustainable partnership with Britain hard for India and suggests the ways to find fresh basis for bilateral relationship.
Need to tap potential for bilateral strategic cooperation
- The long-scheduled summit between Prime Ministers of India and UK will take place with a digital conversation scheduled for Tuesday.
- India and the UK must tap into the enormous potential for bilateral strategic cooperation in the health sector and contributions to the global war on the virus.
- Foreign ministers of India, Japan and Australia would also join this meeting to set the stage for the “Group of Seven Plus Three” physical summit next month hosted by the British Prime Minister.
Challenges in forming a sustainable partnership with Britain
- Few Western powers are as deeply connected to India as Britain.
- While India’s relations with countries as different as the US and France have dramatically improved in recent years, ties with Britain have lagged.
- One reason for this failure has been the colonial prism that has distorted mutual perceptions.
- The bitter legacies of the Partition and Britain’s perceived tilt to Pakistan have long complicated the engagement between Delhi and London.
- Also, the large South Asian diaspora in the UK transmits the internal and intra-regional conflicts in the subcontinent into Britain’s domestic politics.
Finding fresh basis for bilateral relationship
- The two leaders are expected to announce a 10-year roadmap to transform the bilateral relationship that will cover a range of areas.
- Both countries are on the rebound from their respective regional blocs.
- Britain has walked out of the European Union and India has refused to join the China-centred Regional Comprehensive Economic Partnership.
- Although both will continue to trade with their regional partners, they are eager to build new global economic partnerships.
- While remaining a security actor in Europe, Britain is tilting to the Indo-Pacific, where India is a natural ally.
- India needs as wide a coalition as possible to restore a semblance of regional balance.
- Britain could also contribute to the strengthening of India’s domestic defence industrial base.
- The two sides could also expand India’s regional reach through sharing of logistical facilities.
- Both countries are said to be exploring an agreement on “migration and mobility” to facilitate the legal movement of Indians into Britain.
- Both sides are committed to finding common ground on climate change.
Consder the question “What are the factors that introduce friction in the sustainability of India’s bilateral relations with the Britain? Identify the areas in which both the countries can find fresh basis for the bilateral relations?”
Conclusion
If leaders of both the countries succeed in laying down mutually beneficial terms of endearment, future governments might be less tempted to undermine the partnership.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 139A
Mains level: Paper 3- Judicial federalism and autonomy of the High Courts
The article discusses the idea of judicial federalism and autonomy of the High Courts.
Issue of transfer of cases from High Courts to Supreme Court
- Under Article 139A of the Constitution, the Supreme Court does have the power to transfer cases from the High Courts to itself if cases involve the same questions of law.
- In Parmanand Katara v. Union of India (1989), the Supreme Court underlined that the right to emergency medical treatment is part of the citizen’s fundamental rights.
- As such, constitutional courts owe a duty to protect this right.
- In the face of a de facto COVID-19 health emergency, the High Courts of Delhi, Gujarat, Madras and Bombay, among others, have done exactly that.
- These High Courts among others have directed the state governments on various issues related to COVID-19 health emergency.
- However, Supreme Court issued an order asking the State governments and the Union Territories to “show cause why uniform orders” should not be passed by the Supreme Court.
- Therefore, the Supreme Court indicated the possibility of the transfer of cases to itself.
Issues with the SC’s move
- According to the Seventh Schedule of the Constitution, public health and hospitals come under the State List as Item No. 6.
- There could be related subjects coming under the Union List or Concurrent List.
- Also, there may be areas of inter-State conflicts.
- But as of now, the respective High Courts have been dealing with specific challenges at the regional level, the resolution of which does not warrant the top court’s interference.
- In addition to the geographical reasons, the constitutional scheme of the Indian judiciary is pertinent.
- In L. Chandra Kumar v. Union of India (1997), the Supreme Court itself said that the High Courts are “institutions endowed with glorious judicial traditions” since they “had been in existence since the 19th century”.
- Even otherwise, in a way, the power of the High Court under Article 226 is wider than the Supreme Court’s under Article 32.
- This position was reiterated by the court soon after its inception in State of Orissa v. Madan Gopal Rungta (1951).
- Judicial federalism has intrinsic and instrumental benefits which are essentially political.
- The United States is an illustrative case.
- The U.S. Supreme Court reviews “only a relative handful of cases from state courts” which ensures “a large measure of autonomy in the application of federal law” for the State courts.
- The need for a uniform judicial order across India is warranted only when it is unavoidable — for example, in cases of an apparent conflict of laws or judgments on legal interpretation.
- Otherwise, autonomy, not uniformity, is the rule.
- Decentralisation, not centrism, is the principle.
Consider the question “Under Article 139A of the Constitution, the Supreme Court does have the power to transfer cases from the High Courts to itself if cases involve the same questions of law. However, transferring such cases should not impinge on judicial federalism. Comment.”
Conclusion
In the COVID-19-related cases, High Courts across the country have acted with an immense sense of judicial responsibility. This is a legal landscape that deserves to be encouraged. To do this, the Supreme Court must simply stay away.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: TRIPS
Mains level: Paper 2- Option to waiver from IP rights for vaccine production
There has been growing clamour across the world for waiver of intellectual property protection for Covid-19 vaccines under TRIPS. The article suggests alternatives to achieve the desired production of vaccines without setting the precedent for a waiver.
Waiver from TRIPS
- Last October, India and South Africa moved a motion at the WTO asking its council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to provide a waiver on intellectual property protection for pharmaceutical patents.
- Many developing countries have since supported the joint move.
- While most advanced countries, home to the world’s major pharmaceutical companies, have opposed it.
- Nobel economist Joseph Stiglitz, along with activist Lori Wallach, penned an opinion piece making a case for such a waiver.
Voluntary licensing
- Alternative to waiver could be voluntary licensing arrangements between pharmaceutical companies and countries that wish to make vaccine doses for their own use.
- This is exactly what has occurred in India’s case, with a licensing agreement between AstraZeneca and Serum Institute of India.
- The recent difficulties with this arrangement are a result of India diverting some doses intended for export (or for Covax) to its domestic vaccination drive.
- But India will soon begin making other important global vaccines under similar licence arrangements, and a waiver would do nothing to speed up this process.
Compulsory licensing
- In the event that India needs to ramp up production more than is feasible via licences from global manufacturers, there is another alternative available, which is ‘compulsory licensing’.
- Such an approach would not permit the export of vaccine doses made under a compulsory licence.
- This approach should be taken by any developing country, if, for some reason, global pharmaceutical companies are unwilling to license a life-saving vaccine for domestic manufacture and distribution in that nation.
Why TRIPS waiver won’t help
- India’s limiting factors are a shortage of raw materials and low production capacity, neither of which would be cured with the supposed magic bullet of a WTO waiver.
- Not only would a WTO waiver not do anything to address the real bottlenecks that constrain the global production and distribution of vaccines, it would also set a bad precedent.
- It is true that governments, including the US and others, have significantly subsidized or incentivized in other ways the research and development activities of private pharmaceutical companies that now hold patents for major covid vaccines.
- Yet, these governments required the ingenuity of private enterprise to invent these vaccines.
Consider the question “What are the legal provisions to ensure the accessibility of life-saving drugs in the country?”
Conclusion
While it may seem appealing, a WTO waiver on intellectual property protection is an inappropriate priority. It’s a distraction from the heavy lifting needed to create the capacity to fight the scourge of covid.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CoRe-Competitive and Resilient Partnership
Mains level: Paper 2- India-Japan relations
The article discusses the areas in which India-Japan are cooperating and also highlight the areas in which both countries can expand cooperation.
Issues discussed in US-Japan summit
- The discussion focused on their joint security partnership given the need to address China’s recent belligerence in territorial disputes in the South and East China Seas as well as in the Taiwan Strait.
- Both sides affirmed the centrality of their treaty alliance, for long a source of stability in East Asia, and pledged to stand up to China in key regional flashpoints such as the disputed Senkaku Islands and Taiwan.
- Both sides acknowledged the importance of extended deterrence vis-à-vis China through cooperation on cybersecurity and space technology.
- Discussions also touched upon Chinese ambitions to dominate the development of new age technologies such as 5G and quantum computing.
- Given China’s recent pledge to invest a mammoth $1.4 trillion in emerging technologies, Washington and Tokyo scrambled to close the gap by announcing a Competitiveness and Resilience Partnership, or CoRe.
- Both sides have also signalled their intent to pressure on China on violations of intellectual property rights, forced technology transfer, excess capacity issues, and the use of trade-distorting industrial subsidies.
- Both powers repeatedly emphasised their vision of a Free and Open Indo-Pacific.
Issues that need to be discussed in Japan PM’s visit to India
1) Continuation of balancing security policy
- First, one can expect a continuation of the balancing security policy against China that began in 2014.
- Crucially, India’s clashes with China in Galwan have turned public opinion in favour of a more confrontational China policy.
- In just a decade, New Delhi and Tokyo have expanded high-level ministerial and bureaucratic contacts, conducted joint military exercises and concluded military pacts such as the Acquisition and Cross-Servicing Agreement (ACSA) logistics agreement.
- Both countries need to affirm support for a Free and Open Indo-Pacific and continued willingness to work with the Quad.
- Both countries need to take stock of the state of play in the security relationship while also pushing the envelope on the still nascent cooperation on defence technology and exports.
2) Expanding cooperation in various sectors
- The two powers will look to expand cooperation in sectors such as cybersecurity and emerging technologies.
- Digital research and innovation partnership in technologies from AI and 5G to the Internet of Things and space research has increased between the two countries in the recent past.
- There is a need to deepen cooperation between research institutes and expand funding in light of China’s aforementioned technology investment programme.
- Issues of India’s insistence on data localisation and reluctance to accede to global cybersecurity agreements such as the Budapest Convention may be discussed in the summit.
3) Economic ties
- Economic ties and infrastructure development are likely to be top drawer items on the agendas of New Delhi and Tokyo.
- Though Japan has poured in around $34 billion in investments into the Indian economy, Japan is only India’s 12th largest trading partner.
- Trade volumes between the two stand at just a fifth of the value of India-China bilateral trade.
- India-Japan summit will likely reaffirm Japan’s support for key manufacturing initiatives such as ‘Make in India’ and the Japan Industrial Townships.
- Further, India will be keen to secure continued infrastructure investments in the strategically vital connectivity projects currently under way in the Northeast and the Andaman and Nicobar Islands.
4) Joint strategy toward key third countries
- In years past, India and Japan have collaborated to build infrastructure in Iran and Africa.
- Both countries have provided vital aid to Myanmar and Sri Lanka and hammer out a common Association of Southeast Asian Nations outreach policy in an attempt to counter China’s growing influence in these corners of the globe.
- However, unlike previous summits, the time has come for India and Japan to take a hard look at reports suggesting that joint infrastructure projects in Africa and Iran have stalled with substantial cost overruns.
- Tokyo will also likely try to get New Delhi to reverse its decision not to join the Regional Comprehensive Economic Partnership.
Consider the question “Changes on the geopolitical horizon offers India-Japan relations multiple avenues to deepen their ties. In light of this, discuss the areas of cooperation and shared concerns for India and Japan.”
Conclusion
Writing in 2006, Shinzo Abe, expressed his hope in his book that “it would not be a surprise if in another 10 years, Japan-India relations overtake Japan-U.S. and Japan-China relations”. Thus far, India has every reason to believe that Japan’s new Prime Minister is willing to make that dream a reality.
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From UPSC perspective, the following things are important :
Prelims level: Debt to GDP ratio
Mains level: Paper 3- Need to shed the worry over fiscal deficit
The devastation caused by the second wave calls for the government to shed its worry over the fiscal deficit. The article deals with this issue.
Role of fiscal policy to support economy through second wave
- As India battles to contain the surge in COVID-19 cases, several states have already imposed severe restrictions at the local level.
- The services sector has been hit the most as a consequence of these lockdowns and it would be difficult for India to deliver on this optimistic growth projection.
- Against this background, the role fiscal policy can play to support the economy needs consideration.
- The monetary policy is already accommodative and may not have enough room to further boost the economy.
- With headline as well as core inflation inching up in recent months, the RBI may not be in a position to further cut the policy rate.
- As per the latest Union Budget, the fiscal deficit is estimated to moderate from 9.5 per cent of GDP in FY21 to 6.8 per cent of GDP in FY22.
- This expected decline in fiscal deficit is not on account of lower fiscal spending but because of expectations of sharper revenue growth.
- The revenue receipts are estimated to grow by 15 per cent and fiscal spending by 1 per cent this financial year.
- With the debt to GDP ratio already more than 90 per cent, additional fiscal expansion will not be an easy choice for the government.
Government need to create fiscal space
- Extraordinary times call for extraordinary measures and the government will have to find ways to create fiscal space.
- This has become especially important as the economy is yet to shrug off the impact of the previous lockdown.
- Under these difficult circumstances, immediate measures must aim at providing the requisite social safety net to the poor and the vulnerable.
- The central government has already announced it will distribute an additional five kg of grain to the 800 million beneficiaries of the National Food Security Act, which is welcome.
- However, given the unprecedented uncertainty brought about by this COVID wave, the ration support under the PDS should be raised further.
- The government should also consider transferring cash to the bank accounts of the poor, just as it did last time.
- This becomes important as MGNREGA may not provide the safety cushion that it is indeed to as long as lockdown measures remain in place.
- The best stimulus perhaps would be to provide free vaccinations to the population as the benefits of faster and wider vaccine coverage more than outweighs its monetary cost.
- Immunisation is a public good. As we get over this crisis, the government must increase its outlay on physical and human health infrastructure.
How to finance additional cost?
- Part of this additional cost may be financed by reducing non-essential government expenditures and use it for COVID-related expenditure.
- The government may need to resort to additional borrowings from the market than budgeted earlier.
- The RBI may allow inflation above the upper bound of 6 per cent only in the short run.
- The plausible rise in interest rates may also be crucial to prevent capital outflows, given the global “economic outlook” when the US economy adopts an easy monetary policy combined with a huge fiscal stimulus.
Conclusion
The government should not be deterred by a worsening fiscal deficit in the short run as the additional growth that it generates may make debt consolidation easier when things normalise.
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From UPSC perspective, the following things are important :
Prelims level: Article 32
Mains level: Paper 3- Vaccination of Covid-19
The article highlights the role the Supre Court can play in universal vaccination in India.
Why Supreme Court needs to step in
- Amid raging debate over the vaccination strategy, the role the Supreme Court of India can play to safeguard the right to life guaranteed under Article 21, for which it is duty-bound to exercise jurisdiction under Article 32 needs consideration.
- In this regard, universal vaccination is a glimmer of hope.
- The Supreme Court of India can facilitate speed and deeper penetration of universal vaccination, which is now commonly accepted as the only possible solution to the pandemic in the long run.
Issue of patent of vaccine
- It is time to question patents claimed by vaccines that have been developed with aid from the state in research and development.
- These patents, if established, must be immediately acquired with just and adequate compensation and made accessible to all manufacturers.
- This was done for medicines for AIDS and it can be done again under the Patents Act.
- The Court can also issue mandamus to undertake this exercise on an emergency basis.
- Thereafter, all pharmaceutical companies with Good Manufacturing Practices (GMP) as per the Drugs and Cosmetics Act must be allowed to manufacture vaccines at a pre-approved price of cost + 6 per cent return on investment.
- States can also be directed to incentivise the setting up of new manufacturing facilities as a possible third wave, periodic booster doses and the need for ancillary vaccines make it a long-term phenomenon.
- All this has to be ensured in addition to the free import of vaccines approved by advanced nations.
Free for all
- The availability of all the vaccines, whether indigenous or imported, must be free for all the recipients to be paid by GoI.
- The vaccines can be distributed to states on a pro-rata basis as per population and price adjusted as part of general revenue sharing in GST.
Vaccine administration
- The vaccine administration needs to be ramped up both in state and private facilities.
- For vaccine hesitancy, we need to incentivise the vaccination through a direct deposit of Rs 500 in Jan Dhan accounts for each vaccinated member of BPL families.
- This vaccination can be made compulsory for identifiable categories of persons from MGNREGA beneficiaries to Aadhaar Card holders to income-tax payers to bank account holders to driving-licence holders.
- There must be a strict penalty to be recovered from those who do not get vaccinated without medical reasons.
- Private efforts can be made eligible for reimbursement of cost.
Conclusion
The Supreme Court can steer us, with greater emphasis on the right to life. The pandemic may leave nothing and nobody behind to bicker about.
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From UPSC perspective, the following things are important :
Prelims level: Factors responsible for anti-microbial resistance
Mains level: Paper 2-Threats posed by anti-microbial resistance
The article highlights the challenges posed by anti-microbial resistance (AMR) and suggests ways to deal with it.
Understanding the severity of challenges posed by AMR
- Antimicrobial resistance (AMR) is the phenomenon by which bacteria and fungi evolve and become resistant to presently available medical treatment.
- AMR represents an existential threat to modern medicine.
- Without functional antimicrobials to treat bacterial and fungal infections, even the most common surgical procedures, as well as cancer chemotherapy, will become fraught with risk from untreatable infections.
- Neonatal and maternal mortality will increase.
How AMR will affect low and middle-income countries
- All these effects will be felt globally, but the scenario in the low- and middle-income countries (LMICs) of Asia and Africa is even more serious.
- LMICs have significantly driven down mortality using cheap and easily available antimicrobials.
- In the absence of new therapies, health systems in these countries are at severe risk of being overrun by untreatable infectious diseases.
Factors contributing to AMR
- Drug resistance in microbes emerges for several reasons.
- These include the misuse of antimicrobials in medicine, inappropriate use in agriculture, and contamination around pharmaceutical manufacturing sites where untreated waste releases large amounts of active antimicrobials into the environment.
Stagnant antibiotics discovery
- The Challenge of AMR is compounded by fact that no new classes of antibiotics have made it to the market in the last three decades.
- This has happened on account of inadequate incentives for their development and production.
- A recent report from the non-profit PEW Trusts found that over 95% of antibiotics in development today are from small companies, 75% of which have no products currently in the market.
- Major pharmaceutical companies have largely abandoned innovation in this space.
Measures to deal with the challenge of AMR
- In addition to developing new antimicrobials, infection-control measures can reduce antibiotic use.
- A mix of incentives and sanctions would encourage appropriate clinical use.
- To track the spread of resistance in microbes, surveillance measures to identify these organisms need to expand beyond hospitals and encompass livestock, wastewater and farm run-offs.
- Finally, since microbes will inevitably continue to evolve and become resistant even to new antimicrobials, we need sustained investments and global coordination to detect and combat new resistant strains on an ongoing basis.
Way forward
- A multi-sectoral $1 billion AMR Action Fund was launched in 2020 to support the development of new antibiotics.
- The U.K. is trialling a subscription-based model for paying for new antimicrobials towards ensuring their commercial viability.
- Other initiatives focused on the appropriate use of antibiotics include Peru’s efforts on patient education to reduce unnecessary antibiotic prescriptions.
- Australian regulatory reforms to influence prescriber behaviour, and initiatives to increase the use of point-of-care diagnostics, such as the EU-supported VALUE-Dx programme.
- Denmark’s reforms to prevent the use of antibiotics in livestock have led to a significant reduction in the prevalence of resistant microbes in animals and improved the efficiency of farming.
- Finally, given the critical role of manufacturing and environmental contamination in spreading AMR there is a need to curb the amount of active antibiotics released in pharmaceutical waste.
- Regulating clinician prescription of antimicrobials alone would do little in settings where patient demand is high and antimicrobials are freely available over-the-counter in practice, as is the case in many LMICs.
- Efforts to control prescription through provider incentives should be accompanied by efforts to educate consumers to reduce inappropriate demand, issue standard treatment guidelines.
- Solutions in clinical medicine must be integrated with improved surveillance of AMR in agriculture, animal health and the environment.
- AMR must no longer be the remit solely of the health sector, but needs engagement from a wide range of stakeholders, representing agriculture, trade and the environment with solutions that balance their often-competing interests.
- International alignment and coordination are paramount in both policymaking and its implementation.
Consider the question “Anti-microbial resistance (AMR) represents an existential threat to modern medicine. What are the factors contributing to AMR? Suggest the measures to deal with it.”
Conclusion
With viral diseases such as COVID-19, outbreaks and pandemics may be harder to predict; however, given what we know about the “silent pandemic” that is AMR, there is no excuse for delaying action.
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From UPSC perspective, the following things are important :
Prelims level: Article 239AA
Mains level: Paper 2- GNCT of Delhi Amendment Act notified by the Centre
GNCT Act comes into effect
- The Ministry of Home Affairs (MHA) issued a gazette notification stating that the provisions of the Government of National Capital Territory (GNCT) of Delhi (Amendment) Act, 2021, would be deemed to have come into effect from April 27.
- The Act defines the responsibilities of the elected government and the L-G along with the “constitutional scheme of governance of the NCT” interpreted by the Supreme Court in recent judgements regarding the division of powers between the two entities.
What the Amendment seeks to achieve
- The Act will clarify the expression Government and address ambiguities in legislative provisions.
- It will also seek to ensure that the L-G is “necessarily granted an opportunity” to exercise powers entrusted to him under proviso to clause (4) of Article 239AA of the Constitution.
- Clause (4) of Article 239AA provides for a Council of Ministers headed by a Chief Minister for the NCT to “aid and advise the Lieutenant Governor” in the exercise of his functions for matters in which the Legislative Assembly has the power to make laws.
- Now Act will also provide for rules made by the Legislative Assembly of Delhi to be “consistent with the rules of the House of the People” or the Lok Sabha.
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From UPSC perspective, the following things are important :
Prelims level: Patent Law, TRIPS
Mains level: Paper 3- Impact of IPR on right to access healthcare
Request for waiver
- Last year, India and South Africa requested WTO for a temporary suspension of rules under the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
- A waiver was sought to the extent that the protections offered by TRIPS impinged on the containment and treatment of COVID-19.
- The request for a waiver has, since, found support from more than 100 nations.
- But a small group of states — the U.S., the European Union, the U.K. and Canada among them — continues to block the move.
- These countries have already secured the majority of available vaccines.
- But for the rest of the world mass immunisation is a distant dream.
Grounds on which patent laws are justified
- Patent laws are usually justified on three distinct grounds:
- On the idea that people have something of a natural and moral right to claim control over their inventions.
- On the utilitarian premise that exclusive licenses promote invention and therefore benefit society as a whole.
- On the belief that individuals must be allowed to benefit from the fruits of their labour and merit.
- These justifications have long been a matter of contest, especially in the application of claims of monopoly over pharmaceutical drugs and technologies.
Patent laws in India
- In 1959, a committee chaired by Justice N. Rajagopala Ayyangar objected to monopolies on pharmaceutical drugs through colonial-era patent law.
- The committee found that foreign corporations used patents to suppress competition from Indian entities, and thus, medicines were priced at exorbitant rates.
- The committee suggested, and Parliament put this into law through the Patents Act, 1970, that monopolies over pharmaceutical drugs be altogether removed, with protections offered only over claims to processes.
- This change in rule allowed generic manufacturers in India to grow.
How TRIPS goes against the interest of developing countries
- WTO has into its constitution a binding set of rules governing intellectual property.
- Countries that fail to subscribe to the common laws prescribed by the WTO would be barred from entry into the global trading circuit.
- It was believed that a threat of sanctions, to be enforced through a dispute resolution mechanism, would dissuade states from reneging on their promises.
- With the advent in 1995 of the TRIPS agreement, this belief proved true.
- The faults in this new world order became apparent when drugs that reduced AIDS deaths in developed nations were placed out of reach for the rest of the world.
- It was only when Indian companies began to manufacture generic versions of these medicines as TRIPS hadn’t yet kicked in against India, that the prices came down.
Argument in support of the patent regime
- Two common arguments are made in response to objections against the prevailing patent regime.
- One, that unless corporations are rewarded for their inventions, they would be unable to recoup amounts invested by them in research and development.
- Two, without the right to monopolise production there will be no incentive to innovate.
Issues with the argument in support of patent regime
- Big pharma has never been forthright about the quantum of monies funnelled by it into research and development.
- Moderna vaccine in the U.S. emanated out of basic research conducted by the National Institutes of Health, a federal government agency, and other publicly funded universities and organisations.
- Similarly, public money accounted for more than 97% of the funding towards the development of the Oxford/AstraZeneca vaccine.
- Therefore, the claim that the removal of patents would somehow invade on a company’s ability to recoup costs is simply untrue.
- The second objection — the idea that patents are the only means available to promote innovation — has become something of a dogma.
- The economist Joseph Stiglitz is one of many who has proposed a prize fund for medical research in place of patents.
Consider the question “What are the issues with the patent regime under the TRIPS in the field of medicine?”
Conclusion
We cannot continue to persist with rules granting monopolies which place the right to access basic healthcare in a position of constant peril. In its present form, the TRIPS regime represents nothing but a new form of “feudal calculus”.
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From UPSC perspective, the following things are important :
Prelims level: Women Judges in the SC
Mains level: Paper 2- Issue of women representation in the judiciary in Inda
The article highlights the issue of women representation and its implications for the role of the judiciary.
Improving representation of women
- Presently, the Supreme Court is left with only one woman judge, who is also going to retire next year, after which, the SC will be left without a woman judge.
- The collegium failed to take timely steps to elevate more women judges in the SC.
- In the 71 years of history of the SC, there have been only eight women judges — the first was Justice Fathima Beevi, who was elevated to the bench after a long gap of 39 years from the date of establishment of the SC.
- In the submissions filed by the AG on the issue states that improving the representation of women in the judiciary could go a long way towards attaining a more balanced and empathetic approach in cases involving sexual violence.
- The AG also brought up the fact that there has never been a woman Chief Justice of India (CJI).
Women representation in developed countries
- The situation is not any different in developed countries such as the US, UK, Ireland, France and China.
- According to the data collected by Smashboard, a New Delhi and Paris-based NGO, not only has no woman ever been appointed as the CJI, the representation of women across different courts and judicial bodies is also abysmally low.
Way forward
- In the last few meetings of the collegium, there has been some talk of promoting women to the apex court.
- In this regard, if Justice B V Nagaratha of the Karnataka High Court is elevated to the Supreme Court, she could become the first woman CJI in February 2027.
- But her elevation will lead to the supersession of 32 senior judges.
- Supersession itself is perceived as a threat to an independent judiciary
- Seniority combined with merit is the sacrosanct criteria for promotion in the judiciary.
- New CJI should secure the trust of members of his collegium to fill the backlog of 411 vacancies across high courts and six vacancies in the SC.
Consider the question “What are the various structural issues faced by the judiciary in India? Suggest the measures to deal with them.”
Conclusion
A greater number of women in the Supreme Court would eventually lead to a woman CJI. This would be a gratifying change, which may mark the beginning of a new era of judicial appointments.
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From UPSC perspective, the following things are important :
Prelims level: BEPS
Mains level: Paper 3- Global minimum tax
The article highlights the issue of race among countries to offer low corporate taxes to attract global financial capital and its implications.
What factors contributed to low corporate tax
- When the Soviet Bloc collapsed in 1990, nations in east Europe were badly hit and needed capital infusion to overcome their economic woes.
- To attract global capital, they cut their tax rates sharply. This resulted in a ‘race to the bottom’.
- Global financial capital which is highly mobile has effectively used tax havens and shell companies to shift profits and capital across the globe.
- This mobility has enabled it to extract concessions from countries by making them compete with each other to match the concessions given by another — that is the ‘race to the bottom’.
- Nations in Europe were forced to cut their tax rates one after the other to not only attract capital but also to prevent capital from leaving their shores.
- Also, any country facing economic adversity can cut its tax rates to attract capital and force others to follow suit.
- India has also cut its tax rates since the 1990s.
- Most recently in 2019 the corporation tax rate was cut drastically to match those prevailing in Southeast Asia.
Implications of lower corporate tax rate
1) Shortage of resources
- The race to the bottom had global implications.
- Nations became short of resources and cut back expenditures on public services and encouraged privatisation.
- The developing countries followed suit even though private markets do not cater to the poor.
- Thus, disparities increased within nations.
2) Base Erosion and Profit Shifting
- The world experienced Base Erosion Profit Shifting (BEPS).
- Namely, companies shifted their profits to low tax jurisdictions, especially, the tax havens.
- For instance, many of the most profitable companies like Google and Facebook are accused of shifting their profits to Ireland and other tax havens and paying little tax.
- EU has levied fines on Google and Apple for such practices.
- Since all the OECD countries have suffered due to cuts in tax rates and BEPS, initiatives have been taken to check these practices.
- But they will not succeed unless there is agreement among all the countries.
3) Regressive tax structure
- Another implication of the reductions in direct tax rates has been that governments have increasingly depended on the regressive indirect taxes for revenue generation.
- Value-Added Tax and Goods and Services Tax have been increasingly used to get more revenues.
- This impacts the less well-off proportionately more and is inflationary.
- Direct taxes tend to lower the post-tax income inequality.
- The rising inequalities result in shortage of demand in the economy and to its slowing down which then requires more investment and that calls for more concessions to capital.
Call for Global minimum tax rate
- It is against this backdrop that United States Secretary of the Treasury Janet L. Yellen’s has proposed a global minimum tax rate.
- But, without global coordination, corporation tax rates cannot be raised.
- The U.S. is crucial to this coordination.
- There will also have to be cooperation among countries to tackle the lure of the tax havens by enacting suitable global policies.
Consider the question “What factors contributed to the race to bottom on the corporate taxes among the countries? What are its implications? Will the global minimum tax rate be able to deal with it?”
Conclusion
The impact of all this will be far-reaching impacting inequalities, provision of public services and reduction of flight of capital from developing countries such as India and that will impact poverty.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Factors to consider in finding solution to conflicts in Afghanistan and Myanmar
The article highlights the inherent difficulty in finding a solution to the two conflicts raging on in India’s neigbourhood.
Tale of two conflicts in neighbourhood
- Efforts to end two major conflicts in India’s neighbourhood have become intense.
- To the west, a peace summit on Afghanistan, seeking to end decades of conflict there, was also scheduled to take place in Istanbul over the weekend.
- To the east, the Association of Southeast Asian Nations (ASEAN) has produced a diplomatic opening with Myanmar’s military leadership.
- Afghan conflict go back to the late 1970s; since then we have seen different phases of the conflict.
- Although the crisis in Myanmar appears recent, the tension between civil-military relations is not new.
- Back in 1988, the army annulled the huge mandate won by Aung San Suu Kyi and unleashed massive repression.
3 Common Themes in the effort at peace and reconciliation
1) Ending violence
- The first is about ending violence.
- In Afghanistan it has been near impossible to get a resurgent Taliban to agree to stop its attacks on government forces or the civilian population.
- The ASEAN initiative in Myanmar calls for an immediate cessation of violence and utmost restraint from all sides.
- The opposition demanding restoration of democracy might find this rather ironic, since it is the army that is employing violence and has shown scant restraint.
2) Dialogue among all parties
- The second theme in the ASEAN initiative — “constructive dialogue among all parties” to “seek a peaceful solution” — is also common to all peace processes.
- The Taliban found all kinds of excuses to delay a dialogue with the Kabul government that it always saw as illegitimate. So far, it has avoided one.
- In Myanmar, the army might be ready to engage the opposition in a prolonged dialogue and defuse international pressure; but it will be hard for the victims of the coup to accept a dialogue on the army’s terms.
3) Third-party mediator
- The Afghan conflict has long been internationalised.
- All major powers, including regional actors and neighbours, have acquired stakes in the way the Afghan conflict is resolved.
- This unfortunately makes the construction of an internal settlement that much harder.
- In Myanmar, the ASEAN has set the ball rolling by agreeing that a special envoy will be traveling to the region and will engage with all parties to the conflict.
Cost-benefit in diplomacy
- The US is hoping that the Taliban will moderate some of its hardline positions given its need for significant international economic assistance for reconstruction, political legitimacy.
- In Myanmar, too, the international community will hope the military would want to avoid the risks of political isolation and economic punishment.
- But how the Taliban and the Myanmar army calculate these costs and benefits could be very different.
- Both have long experience of surviving external pressure and enduring sanctions.
Conclusion
Few civil wars have seen the kind of massive external effort to change the internal dynamics as in Afghanistan; but to no avail. In Myanmar, it is not clear how far the international community might go. The prospects for positive change in Afghanistan and Myanmar, then, do not look too bright in the near term.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Role of civil servants in implementing the development agenda
The article highlights the role bureaucracy can play in the development of the country and suggests the ways to deal with the challenges faced by the bureaucracy.
Background of the PSU’s
- In the 1950s and ’60s, the private sector had neither the capability to raise capital to take the country on the path of industrialisation.
- The state had to take on the role of industrialising the country by establishing PSUs.
- The civil services became the natural choice for establishing and managing these units.
- They delivered substantially, if not fully.
- Even after privatisation, the bureaucracy would be required for the transition of PSUs from the public to the private sector.
Need for structural transformation agenda
- The goal of making India a $5-trillion economy needs a coherent structural transformation agenda and extraordinary implementation capacity.
1) Dealing with crony capitalisms
- Since Independence, the political survival of Indian regimes has required pleasing a powerful land-owning class and a highly concentrated set of industrial capitalists.
- The elites of business houses and land owners share no all-encompassing development agenda.
- Can the present regime find a way out of this conundrum?
2) Implementing the development agenda
- While the agenda is an outcome of political choices, the thinking goes that market mechanisms should be used as far as possible to make economic choices.
- This argument is at the heart of the privatisation of state assets.
- However, markets operate well only when they are supported by other kinds of social networks, which include non-contractual elements like trust.
- Particularly in industrial transformation, there must be an essential complementarity of state structures and market exchange.
- Only a competent bureaucracy can provide this.
- It is for this reason that Max Weber argued that the operation of large-scale capitalist enterprise depended upon the kind of order that only a modern bureaucratic state can provide.
3) Removing the constraints on the bureaucracy
- The political and permanent executives had to work as a team through mutual respect for each other’s roles as defined in the Constitution.
- Every deviation from these ideals has lowered the capacity of the state to deliver.
- This is the result of electoral politics where the essence of the state action is the exchange relationships between the incumbent governments and its supporters.
- All this is achieved by undermining the impartiality of the bureaucracy in implementing rules and giving opinions frankly.
- The power to transfer is weaponised to bring the bureaucrats to heel and it works because authority sits with the position not the person.
- The pressure on officials to behave contrary to the ostensible purpose of the department undermines to a great extent the ability of the state to promote development.
- If privatisation is to work, then the corruption-transfer mechanism and its effects on the bureaucracy has to go.
4) Corporate coherence
- Corporate coherence is the ability of the bureaucracy internally to resist the invisible hands of personal maximisation by undercutting the formal organisational structure through informal networks.
- If this goes too far, then everything becomes open to sale and the state becomes predatory.
Consider the question “What are the issues facing civil services in India? Suggest the ways to deal with these issues.”
Conclusion
We need to fight the increasing tendency to grab public resources and restore to the bureaucracy its autonomy of action as envisaged in the Constitution by de-weaponising transfers.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Role of microfinance in India and challenges sector faces
The article highlights the important role played by the microfinance sector in furthering financial inclusion in India and suggests measures to achieve holistic development of the sector.
Important role played by microfinance
- No other form of financial services has had the kind of far-reaching impact, in terms of fostering financial inclusion, as microcredit has.
- Access to small, collateral-free loans for economically productive purposes has helped transform the lives of millions at the bottom-of-the-pyramid—especially women.
- Over the past decade, India’s microfinance industry has grown at a compound annual growth rate of 26% to reach ₹2.36 trillion.
- It has helped 50 million economically vulnerable Indians, 99% of them women, live a life of dignity and financial independence.
- Assuming that these 50 million people who took a loan to start a small business employed at least one other person, it translates into 50 million additional jobs in the country.
- This creates a ‘network effect’ that has a social impact at scale.
Evolution of microfinance industry
- Recommendations of the Malegam Committee, which became regulations, and practices such as relying on credit bureau data to assess a borrower’s creditworthiness have helped the industry immensely.
- The vital role that microfinance plays in the last-mile delivery of financial services was acknowledged.
- Subsequently, eight out of the 10 small finance bank licences granted were also given to microfinance institutions.
- RBI has sought to undertake a comprehensive review of the sector again, after 10 years, to better align the regulatory framework with the sector’s current realities.
Steps for development of sector
- First, Entities should promote financial literacy through group meetings of borrowers.
- Second, organizations should complement their microcredit operations with social development projects and community-connect initiatives.
- Third, prospective borrowers’ indebtedness and ability to repay dues should be assessed properly.
- Fourth, loans must be given only for income-generation purposes.
- Fifth, every microfinance organization should devote time and resources for capacity building at the grassroots.
- Sixth, rather than focusing on taking over the existing debt of a borrower, or lending to her further, institutions should focus on bringing new-to-credit customers into the fold.
Consider the question “How can microcredit stimulate financial inclusion in India? Suggest the measures for the development of microfinance sector in India.”
Conclusion
There is much more that we, as a nation, collectively need to do in order to bring a vast population of unbanked and underbanked Indians into the fold of formal financial services.
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