Note4Students
From UPSC perspective, the following things are important :
Prelims level: Banking rates and markets instrument.
Mains level: Paper 3- Steps taken by the RBI to revive growth and provide stability to economy.
Context
The RBI’s Governor’s ‘bazooka’ announcement earlier today has seen the usually conservative institution and its head pull out the big guns in word and action.
Four steps taken by the RBI
- One, increase the liquidity in the system.
- Two, make sure the lower policy rate is transmitted. Steps one and two are linked.
- Three, give a three-month window for a payback on all term loans.
- Four, take steps to reduce volatility and provide stability.
- Big cut in repo rate: He announced a big cut in the repo rate by 75 basis points (100 basis points make a per cent, so three-quarters of a percentage point) to 4.4%.
- What is the repo rate? Repo rate is the rate at which the banks borrow from the RBI. Banks give ‘eligible securities’ they hold for cash that RBI gives as an overnight loan.
- Banks pay the repo rate as interest for this borrowing.
First two steps of the RBI: Increasing liquidity and ensuring policy rate transmission
- Why lower repo rate matters? When the repo rate is high, banks find it costly to borrow and in turn raise the price of loans to their borrowers.
- Reducing interest for the system: A low repo rate has the overall effect of reducing interest rates for the system. Lower rates make it easier for entrepreneurs to take loans for working capital and for households for homes, vehicles and so on.
- Issue of policy rate transmission: Previous rate cuts have not been ‘transmitted’ by the banks who have not reduced lending rates and have preferred to keep money with the RBI at the ‘reverse repo rate’.
- What is reverse repo rate? This is the rate at which banks lend to the RBI.
How RBI is ensuring transmission now?
- The RBI has now reduced the reverse repo rate by 90 basis points to 4%.
- This cut in reverse rape sharper than the one on the repo rate to encourage banks to borrow from the RBI rather than lend to it.
- How reverse repo rate matters? Banks have preferred to deposit money with the RBI rather than lend it out with an average daily amount of ₹3 trillion being kept with the RBI.
- A reduction of the reverse repo to 4% makes it unattractive to banks to park it with the RBI and banks will be nudged to lend.
- Why bank lending matters for business? Bank lending provides the needed oxygen to businesses for their working capital and longer-term loans.
- Read this as a measure to help banks take the decision to lend rather than play it safe by keeping money with the RBI.
How lock-down slows down the economy?
- Rush to safety for money: If people are in a lock-down, the wheels of the economy begin to grind down and there is a rush to safety for money in the system.
- Freezing of the markets market: Investors begin to redeem their shares, bonds and mutual funds. These redemptions cause a fire sale of assets. Finally, when there are no buyers, markets begin to freeze.
What are the measures taken by RBI to stabilise the market?
- To keep the wheels of the markets well-oiled with cash, the RBI has made ₹3.74 trillion available. This it has done using four weapons.
- The first measure: It has used targeted long-term repo operations.
- RBI will lend money to banks (a total of ₹1 trillion) that can be invested in bonds and other forms of lending instruments.
- What is a hold-to-maturity way? Under the hold-to-maturity way, the portfolio is valued not on the market price but on what the price should be given the rate of interest of the bond, the holding period and the rating of the bond.
- Basically, it allows trades to happen at a price that is not confused with the current pandemic in the market.
- The second measure: The RBI reduced the cash reserve ratio (CRR) by a full percentage point down to 3% for a year.
- The CRR is the percentage of demand and time deposits banks have to keep with the RBI.
- Why CRR and not SLR was reduced? There is another 18.25% of deposits that is also not used for lending under the Statutory Liquidity Ratio (SLR), further reducing the money banks have to lend.
- RBI has reduced the CRR to 3%, freeing up ₹1.37 trillion for banks to lend. CRR has been chosen rather than SLR because this increases ‘primary liquidity’ with the banks a bit better.
- Not only is there CRR rate down, banks now need to maintain 80% of the limit on a daily basis instead of 90% till June 26, 2020.
- The third measure: ₹1.37 trillion will be made available under the emergency lending window called the marginal standing facility (MSF).
- Banks will now be able to borrow 3% of their deposits under this window, up from the current 2%. Basically, RBI is willing to lend more than before.
- How much more? ₹1.37 trillion under this window.
The third step of the RBI: Regulatory forbearance
The fourth step of the RBI: Measures to reduce volatility in the exchange rate
- Fourth is a measure to reduce the volatility of the price of the rupee in international markets by allowing banks to deal in off-shore non-deliverable rupee derivative markets.
- It looks like reform using the crisis to bring about this long-awaited change.
Conclusion
We don’t know if measures taken by the RBI and the government are enough. But what is comforting is that the government and the RBI are working in tandem to deal with this giant killer of a virus.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Learning from the experience of South Korea in designing the policies to deal with coronavirus.
Context
How this coronavirus pandemic threat will pan out no one knows but what we do know is that the intensity of the challenge and its impact on our well-being will depend greatly on how we reach out to ordinary people, and the policies we implement.
Historical perspective and comparison
- Compared to the fatality numbers of some earlier pandemics, such as the Asian flu, 1957-58 (1.1 million dead) and Hong Kong Flu, 1968 (2 million dead), the fatality numbers of the current coronavirus pandemic are, as yet, nowhere near.
- One of the most comprehensive studies on the pandemic, by the Imperial College of London, shows that the “case fatality rate”, or fatality among those who get coronavirus is 0.9 per cent — this means a 99.1 per cent survival rate among the people who get it.
- What makes this pandemic special is that it is happening in the age of digital connectivity and greater scientific knowledge than we have ever had.
- We can inform people quickly and take big steps to contain it.
- But this also has a danger we have never faced.
- Policy actions can have a mega backlash on the economy.
- We are in uncharted territory — never before have we taken the kind of collective action against a pandemic as we are doing now.
Time to collectively confront our common humanitarian challenge
- Using the experience of South Korea: There is some evidence from history, and from the country that has been the most successful in dealing with this pandemic —South Korea.
- The country’s success has saved lives, protected the economy from undue damage, boosted the popularity of the Korean President Moon Jae-In across political divides and raised the global standing of South Korea.
- France’s President Emmanuel Macron and Sweden’s Prime Minister Stefan Lofven have consulted Moon Jae-In for advice.
- We have some evidence and estimates about the kind of damage this pandemic can do.
- China’s industrial production in January-February 2020 declined by 5 per cent compared to a year ago.
- Goldman Sachs has estimated that the US’s GDP growth could decline 24 per cent for the second quarter this year.
- Data are coming in on recent US unemployment claims climbing by 30 per cent.
- This is clearly time to put political differences aside, and collectively confront our common humanitarian challenge.
Designing policy to deal with the pandemic
- Economic implications: In designing policy, it is important to realise that all interventions to contain the pandemic have economic implications.
- Some people react to this by saying that our first priority is to save lives, not the economy. This is a mistake. The two are not separate matters.
- A poorly-executed policy can damage the economy and this can end up taking more lives than the original problem.
- Examples of policy doing damage to lives: We have examples of the damage policies can do from history. In 1958, Mao Zedong initiated the Great Leap Forward to boost China’s production. This unleashed the biggest famine in modern times, which resulted in 20 to 40 million deaths.
- The Bengal Famine of 1943 occurred with no decline in food production but there were disruptions in supply chains from the farms to those who needed food.
- The death toll was two to three million. Such evidence from the past warns us that policies not designed well can cause more deaths than the pandemic itself.
Three lessons from South Korea
- We already have three lessons from Korea, which are being widely discussed in newspapers and the media around the world.
- First, you need strong leadership.
- Second, it is critically important to have trust between society and government. There is only that much you can do if people do not cooperate.
- Third, the need is for nuanced policies, with the government having the courage to make course correction as it goes along.
Way forward
- First, trust can be a casualty with the lockdown. There are reports of the police wielding the baton too quickly on ordinary vendors, small grocers and sellers. They need to explain to people so that they begin to actually cooperate, instead of complying only when under observation. That is the key difference between a trusting society and a trustless one.
- The government cannot be a substitute for the private firms: To believe that small traders and private firms can be substituted by the government is the mistake Communist China made in the 1960s and 1970s, before the arrival of Deng Xiaoping.
- An example of the importance of specialised knowledge — this applies to the US as well — pertains to the role of cash grants to the poor. Such grants work well in normal times but may need to be supplemented with the direct support of food and medical services.
Conclusion
Some say that the Korea analogy is of no use to us because it is a relatively small country. It is true that everything will not apply here. But on the other hand, Korea and Hubei province of China are very comparable. Korea’s population is 52 million, Hubei’s is 58 million. The number of people who died of the virus in Korea is 126. The figure for Hubei is 3,160. Korea, of course, had the follower’s advantage since the virus struck there later. But we too have that advantage.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- What are the essential reforms essential for reshaping the India's economy.
Context
The fragility of the global economy has been exposed twice within the last two decades. In 2008, the collapse of a financial services firm in the US triggered a global financial meltdown. In 2020, the emergence of a novel virus in a food market in Wuhan has done it again.
The global economy and system theory
- Systems theory: It that systems take various forms. Broadly speaking, there are three types of systems-1. Chaotic systems. 2. Engineered Systems, and 3. Complex self-adaptive systems.
- As the weather in a storm, chaotic systems are unpredictable and uncontrollable.
- The global economy is behaving like a chaotic system.
- Engineered systems, on the other hand, can be controlled quite tightly, like machines.
- However, they are dull. A nuclear power plant is a well-engineered system. We would want it to do just what it is supposed to and not produce any surprises.
- In contrast to these systems is the design of nature. It is a complex self-adaptive system. It produces myriad innovations. It evolves. Yet, its fundamental stability is very reassuring.
- The realisation that mankind’s technologies and engineering marvels are disrupting nature’s stability, has raised alarms about the architecture of global economic governance.
- More about self-adaptive systems: The architecture of complex self-adaptive systems is formed by essential design principles. One is “permeable boundaries”.
- The many parts of a complex self-adaptive system have permeable boundaries between themselves. Each part has its integrity. The parts exchange information and energy across their boundaries as required.
- When there are no boundaries within, or they are too weak, an accident at one end will soon sink the whole ship.
Consequences of boundarylessness within the global financial system
- The drive for boundarylessness within the global financial system since the 1990s caused the sloshing around of contagion during the global financial crisis in 2008.
- Whereas global economic growth has undoubtedly been enabled by global supply chains, the vulnerability of economies everywhere to their disruption has become painfully evident with the COVID-19 pandemic.
- Complex adaptive systems exhibit “fractal-like” shapes. Their parts are complex, combining the same diverse energies that permeate across the whole.
- Social forces, economic forces, and environmental forces combine within all countries, and in parts within countries too, albeit in different ways.
- Though the parts are similar to each other, they are not the same. Therefore, the same solutions will not fit all.
- An insight from systems theory is that global systemic problems such as climate change, persistent economic inequality, among others, will require local systems solutions.
Six reforms for reshaping Indian economy
- Stress test: Crises create stress tests for the health of systems. The financial crisis of 2008 exposed the fragility of an inter-connected and under-regulated financial system.
- The COVID-19 pandemic has exposed the architectural weaknesses in the global economy.
- Instead of worrying too much about the reversal of globalisation, national leaders should now focus on the well-being of their citizens and the health of their own economies.
- Six reforms are essential for reshaping the Indian economy.
- First, focus on the provision of universal social security, rather than on the misdirected demand for even more “flexibility” in labour laws
- Second, respect the “informal” sector which provides the majority of Indians with opportunities to earn incomes, and give it more strength. It is also a great source for practical innovations and widespread entrepreneurship.
- Third, change the economic paradigm from “trickle-down” to “build up”. Build the internal engine of growth of India’s economy by increasing incomes of India’s citizens.
- Fourth, strengthen public health services. Medical tourism may put India’s private hospitals on the global map. However, they are not the solution to India’s huge health problems.
- Fifth, reform and strengthen the public education system. It will contribute greatly to creating a level playing field for all children.
- Sixth, strengthen local governance in India’s towns and districts to develop and implement local systems solutions. The well-being of Indian citizens will be improved, and India’s economy will be more resilient too.
Conclusion
- All governments are asking their citizens to increase “social distancing” between themselves to prevent the spread of a health contagion. It would be wise for countries to maintain sufficient “economic distancing” amongst themselves too. They should mind the health of their own economies. Thereby, they will improve the health of the global economy too.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Measures to mitigate the impact of steps taken to deal with the coronavirus on Indian economy.
Context
There are going to be the economic impact of the actions designed to combat the virus. The two major tools that the government has available before it are monetary policy and fiscal actions.
Impact of virus and additional slowdown
- The impact of the coronavirus pandemic is now felt by almost every country.
- First, there are the health effects of the virus.
- Second is the economic impact of the various actions that have to be taken to combat the virus.
- The world is experiencing an additional slowdown on top of the contracting tendencies already present and India is no exception.
- The economic impact on India can be traced through four channels: external demand; domestic demand; supply disruptions, and financial market disturbances.
Impact on export
- As the economies of the developed countries slow down (some people are even talking of recession), their demand for imports of goods will go down.
- This lower demand will affect our exports which are even now not doing well.
- In fact, after six months of negative growth, it was only in January that Indian exports showed positive growth.
- The extent of decline will depend on how severely the other economies are affected. Not only merchandise exports but also service exports will suffer.
- Besides these, the IT industry, travel, transport and hotel industries will be affected.
Oil price factor
- The only redeeming feature in the external sector is the fall in oil prices.
- India’s oil import bill will come down substantially.
- But this will affect adversely the oil-exporting countries which absorb Indian labour. Remittances may slow down.
Supply disruption
- To ward off the spread of the coronavirus, the government has declared a lockdown of the country.
- As passengers travel less, the transportation industry, road, rail and air, is cutting down schedules, sometimes drastically.
- This will affect in turn several other sectors closely related to them. The laying off of non-permanent employees has already started.
- As people, in general, buy less, shops stock less, which in turn affects production.
- Perhaps retail units will be first to be affected and they will, in turn, transmit this to the production units.
- One is unable to make an estimate of the reduction in economic activity at this point.
- If the situation is not reversed soon, there can be a serious decline in the growth rate during 2020-21.
- Supply disruptions can occur because of the inability to import or procure inputs.
- The break in supply chains can be severe. It is estimated that nearly 60% of our imports are in the category of ‘intermediate goods’.
- Imports from countries which are affected by the virus can be a source of concern.
- The domestic supply chain can also be affected as the inter-State movement of goods has also slowed down.
Financial market issue
- Financial markets are the ones which respond quickly and irrationally to a pandemic such as the coronavirus pandemic. The entire reaction is based on fear.
- The stock market in India has collapsed. The indices are at a three-year low.
- Foreign Portfolio Investors have shown great nervousness and the safe haven doctrine operates.
- In this process, the value of the rupee in terms of the dollar has also fallen.
- The stock market decline has a wealth effect and will have an impact on the behaviour of particularly high wealth holders.
- How does the government deal with this sudden decline in economic activity which has come at a time when the economy is not doing well? The two major tools that are available are monetary policy and fiscal actions.
Two major tools with government- Monetary Policy and Fiscal Action
- Monetary policy: In a situation like this can only act to stimulate demand by a greater push of liquidity and credit.
- The policy rate has already been brought down by 135 basis points over the last several months. There is obviously scope for further reduction.
- But our own history, as well as the experience of other countries, clearly show that beyond a point, a reduction in interest rates does not work.
- It is the environment of the overall economy that counts. Credit may be available. But there may not be takers.
- Any substantial reduction of policy rate can also affect savers. Interest is a double-edged sword.
- What the RBI needs to do? IT needs to go beyond cutting the policy rate.
- A certain amount of regulatory forbearance is required to make the banks lend.
- Even commercial banks on their own will have to think in terms of modifying norms they use for inventory holding by production units.
- Repayments to banks can be delayed and the authorities must be willing to relax the rules.
- Any relaxation of rules regarding the recognition of non-performing assets has to be across the entire business sector.
- The authorities must be ready to tighten the rules as soon as the situation improves. This is a temporary relaxation and must be seen as such by banks and borrowers.
- Fiscal Policy: Fiscal actions have a major role to play. Once again, the ability to play a big role is constrained by the fact that the fiscal position of the government of India is already difficult.
- Even without the pandemic, the fiscal deficit of the Central government will turn out to be higher than that indicated in the budgets for 2019-20 and 2020-21.
- Revenues are likely to go down further because of the virus-related slowdown in economic activity.
- In this context, the ability to undertake big-ticket expenditures is
- But there are some ‘musts’. The virus has to be fought and brought down. All expenditures to test and to take care of patients must be incurred.
- Now that private hospitals are allowed to test, the cost of the people going to private hospitals must also be met by the government.
- The involvement of private hospitals has become necessary. It is mentioned that a test costs ₹4,500. The total cost can be substantial if the numbers to be tested run in the thousands and more.
- This may sound exaggerated. But we must be prepared so that we avoid the tragedy of Italy.
- Therefore, the first priority is to mobilise adequate resources to meet all health-related expenditures which includes the supply of accessories such as masks, sanitisers and materials for tests.
- The challenge is not only fiscal but also organisational.
Mitigating the impact on the job sector
- Serious concerns have been expressed about people who have been thrown out of employment. These are mostly daily-wage earners and non-permanent/temporary employees.
- In fact, some of the migrant labour have gone back to home States. We must appeal to the business units to keep even non-permanent workers on their rolls and provide them with a minimal income.
- Some relief can be thought of by the government for such business units even though this can be misused.
- However, in general, in the case of sectors such as hospitality and travel, the government can extend relief through deferment of payments of dues to the government.
- Issues in making cash transfer universal: There is talk of providing cash transfer to individuals. There is already a programme for rural farmers with all the limitations.
- For a system of cash transfer to be workable, it has to be universal.
- At this moment when all the energies of the government are required to combat the virus, to institute a system of universal cash transfer will be a diversion of efforts.
- The burden on the government will depend upon the quantum of per capita cash transfer and the length of the period.
- The government should advise all business units not to retrench workers and provide some relief to them to maintain the workers.
- A supplemental income scheme for all the poor can be thought of once the immediate problem is resolved.
- Provision of food and other essentials must be made available to the affected as is done at the time of floods or drought. States must take the initiative.
Conclusion
The fiscal deficit is bound to go up substantially. The higher borrowing programme will need the support of the RBI if the interest rate is to be kept low. The monetisation of the deficit is inevitable. The strong injection of liquidity will store up problems for the next year. Inflation can flare-up. The government needs to be mindful of this. All the same, the government must not stint and go out in a massive way to combat the virus. This is the government’s first priority.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Application of digitalisation in healthcare and judiciary.
Context
The Covid-19 pandemic gives us a chance to re-evaluate the worth of two major initiatives of the government: demonetization and digitization.
Importance of digitalisation in pandemic
- The importance of digitization in a pandemic cannot be exaggerated when we are repeatedly told to maintain social distance and work from home in order to avoid infection.
- Consider how nigh impossible it would be to avoid contact with retail cashiers and point-of-sale (PoS) terminals if we were to use credit cards and cash to pay for our daily necessities.
- Today, most bill payments have moved online and barring older people, who may prefer to pay their electricity bills at physical counters, digitization is delivering in spades.
- But digitization is not just about payments and financial transactions. Consider what all will happen as the current lockdown persists across the country.
Application in the judiciary
- Courts are beginning to use video-conferencing to conduct hearings. It is ironic that something that should have been done years ago to hasten hearings is now being done to prevent infections.
- India’s judiciary has been resisting technology for as long as one can remember.
- Witnesses do not have to drag themselves to court every day; they can video-record their statements in advance, and submit themselves to questioning through Skype or other such video-calling apps.
- When the entire case is recorded, the possibility of judges conducting trials in an unfair way gets substantially reduced, for those at the receiving end of judicial injustice can seek retrials based on video recordings.
- These recordings will also enable the higher judiciary to figure out who its good judges are, and who adopts dilatory tactics and frequent adjournments, delaying justice.
- At some point, a judicial appointments commission will have video records of all judges shortlisted for promotions. They will thus know whom to recommend for elevation and whom to sideline. Corruption is also likely to come down.
Application in the healthcare sector
- In the current Covid-19 crisis, doctors and nurses are putting themselves at huge risk, and so are those handling millions of samples of throat swabs that need to be analysed for the virus
- Applications: Remote patient examinations, analysis of symptoms with the help of databases and algorithms, and even the basic task of taking down a new patient’s medical history can all be done remotely through a digital app or interface.
- The doctor will know even before he has met the patient what could be wrong, something she only has to confirm after interacting with the patient.
- India is spending humongous amounts of money, and so are to-be doctors, to master medical knowledge that doubles every 75 days. In short, by the time your average MBBS doctor completes his or her degree, much of that knowledge could be outdated.
- He or she has to use technology to update himself or herself, and also rely on databases and artificial intelligence to deliver healthcare without the risk of misdiagnosis.
- India may be spending too much on training doctors at a cost of millions of rupees per head when a lot of that money could have been spent on technology to deliver competent and lower-cost healthcare.
Conclusion
If we just stop to think where we would have been in this pandemic but for digital technology, we would recognize the importance of going digital. It should make us think of how to convert the Covid-19 disruption into an agenda that brings us up to technological speed in various spheres of human activity.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Vaccine development and trials.
Context
The world is dealing with an unprecedented and unimaginably serious crisis. Therefore, the speed of vaccine development is crucial.
Speeding up the vaccine development
- Availability of rationale and information: The race for developing an anti-COVID-19 vaccine has begun. Reasonable scientific rationale and the information needed for vaccine development are available to all stakeholders in academia and industry.
- Vaccine platforms: A large number of candidate vaccines based on different vaccine platforms, including delivering the virus genetic materials (RNA, DNA) or using synthetic biology to produce key viral proteins, have already been developed.
- Phase-I safety trials of an experimental vaccine, jointly developed by scientists at the National Institute of Health and at Moderna, a biotechnology company, has already been administered to healthy volunteers for its safety and immunogenicity.
- The speed with which the experimental vaccine has entered safety trials is unprecedented.
- Another vaccine jointly developed by China’s Academy of Military Medical Sciences and CanSino Biologics has reportedly been cleared for early-stage clinical trials.
- Development in India: The Serum Institute of India has also recently announced its readiness to start safety trials following animal experiments.
- According to a World Health Organization (WHO) report, more than 20 vaccine candidates are in advanced stages of development and will be ready for Phase-I safety trials.
- However, it is also clear that it will not be possible to roll-out any efficacious vaccine for at least another year.
Questions that need to be answered
- While these developments are encouraging, several questions will need to be answered for this vaccine development to move further.
- Triggering immune response safely: Although it is quite evident that humans mount a strong immune response and clear the viral load, the nature of the immune response and how to trigger it safely through vaccination will be key questions to address.
- Duration of the acquired immunity: How long the acquired immunity in humans will last is another important question to be asked before experimental vaccines move forward.
- We will need to know this because if the immunity is transient, then humans will be susceptible to reinfections.
- Ensuring no disease enhancement: Before moving to Phase-II trials in a large number of healthy volunteers, we also have to ensure that the immune response induced by vaccination does not lead to any disease enhancement.
Repurposing the already available drugs
- Therapeutic interventions, not only for curing severe cases of the disease but also for protecting all front-line healthcare workers, are urgently needed.
- Using already approved drugs: Since developing new drugs is a complex and lengthy process, scientists and pharmaceutical companies have rushed to investigate and use drugs that have already been approved by regulatory authorities.
- Using available molecular and structural biology information on the virus, a group of scientists have analysed all interactions of the viral proteins with human proteins that are crucial for the virus to enter human cells and use the host cell machinery to rapidly reproduce itself.
- Of the nearly 70 short-listed molecules that may interrupt these key interactions, 24 happen to be already approved drugs which can now be tested in laboratory animal models as well as humans.
- However, the re-purposing of several drugs, alone or in combinations to treat COVID-19 patients, have already been reported.
- More confusion than hope: There are many success stories of curing patients of COVID-19 doing the rounds in different parts of the world, but these have managed to create more confusion than hope.
- Without any appropriate controls, careful dosing and safety concerns, such small experiments can only do more harm than good.
Controlled randomised trials
- Given the urgency of finding a cure, it is absolutely necessary to find out unequivocally what works well and what does not. For that conducting carefully controlled randomised trials is the only way to go.
- In a welcome move, the WHO has announced clinical trials called the ‘Solidarity Project’.
- Under this project four drugs or drug, combinations will be tested in many countries around the world.
- These candidates include the anti-Ebola drug, Remdesivir, Chloroquine, anti-HIV drugs, and the Ritonavir/Lopinavir combination, with or without Interferon-beta.
- The European counterpart of the trial, Discovery, will conduct these trials in countries including France, Spain, Germany and the U.K.
- The pharma company Roche has also decided to initiate large, randomised Phase-III trials of its arthritis drug Actemra for its safety and efficacy in adult patients with severe COVID-19 pneumonia.
- It is complex and tedious to conduct randomised, large multi-centric trials.
- Quickly getting all the stakeholders together is laudable and underscores the notion that everyone needs to fight the deadly virus together. Hopefully, these trials will lead to tangible drug therapies against COVID-19.
Conclusion
It is most heartening to see scientists in academia and industrial partners coming together to fight a monumental public health crisis. The battle between pathogens and humans will continue but let us hope that we win the present one sooner than later.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- China's growing influence at UN agencies and how it matters for Indian and the world.
Context
The WHO leadership, especially its Director-General, has been accused of serving China’s interests rather than preparing the world against the spread of the virus.
What is the basis of accusations?
- The first basis for these charges is the WHO’s endorsement of the Chinese claim in mid-January that there was no evidence of human-to-human transmission of the virus.
- Second, consistent support for Beijing’s handling of the crisis.
- Third, WHO’s criticism of other nations for imposing travel restrictions to and from China.
- Critics also believe the WHO lulled the world into complacence by delaying the decision on calling it a global emergency.
The new geopolitics of multilateralism
- Whatever the merits of the above arguments, they point to the new geopolitics of multilateralism,
- It also disproves the assumptions in both the West and India on China’s role in the UN.
- It also underlines Beijing’s success in the leveraging of international organisations for its national advantage.
- Nations working together against the trans-national threat: On the face of it, the sentiment that nations must work together against common trans-national threats is an eminently sensible one. But it does not easily translate into concrete actions.
- Example of failure to act against a common threat: Take climate change. Attempts at developing collective solutions to the problem over the last three decades have foundered.
- Most leaders agree on the problem and the solutions but are not willing to accept the framework — either the domestic or international — for distributing the costs associated with the solutions.
- The US-China rivalry angle to the coronavirus outbreak: The problem of the cost-benefit distribution is compounded by great power rivalries. The coronavirus has shown up at a moment of deepening tensions between the US and China.
- The grave collective challenge that the virus constitutes has only sharpened the conflict.
- The blame game between the two: The US blames Beijing for letting this virus become a global monster and Beijing is doing all it can to deny that the virus came out of China.
How the relationship between China and WHO has transformed over the years?
- WHO’s actions in the past: Nearly two decades ago, during the SARS crisis, WHO was at the front and centre of pressing China to come clean on the unfolding pandemic.
- In 2003, it had issued the organisation’s first travel advisory ever on travel to and from the epicentre of the pandemic in southern China.
- As the SARS crisis escalated, Beijing’s traditional arguments about the centrality of state sovereignty yielded place to a new policy of working with the WHO and taking proactive steps to reassure neighbours in South East Asia.
- Reasons for change in WHO’s stance: Some attribute the turnaround in the relationship between Beijing and WHO to China’s growing financial contributions.
- China’s efforts to expand clout: Observers of the UN point to something more fundamental — a conscious and consequential Chinese effort to expand its clout in the multilateral system.
- China, which was admitted to the UN system in the 1970s, was focused on finding its way in the 1980s, cautiously raised its profile in the 1990s, took on some political initiatives at the turn of the millennium and seized the leadership in the last few years.
How India and the West are reacting to China’s rise?
- Unprepared to deal with China’s rise at UN: Neither the West nor India have been prepared to deal with the impact of China’s rise on the UN system.
- The US and its allies bet that China will be a “responsible stakeholder”. Put another way, they hoped that China will play by the rules set by the West.
- China’s ambitions: China, of course, wants to set its own rules. Only the political innocents will be shocked by China’s natural ambition.
- India’s past alignment with China: India, which considered US dominance over the international institutions in the 1990s as a major threat, chose to align with China in promoting a “multipolar world”.
- Delhi convinced itself that despite differences over the boundary, Pakistan and other issues, there is huge room for cooperation with China.
- Replacing the US as the dominant force: To their chagrin, the West and India are being compelled to respond to a very different environment at the UN. China wants to replace America as the dominant force in the UN.
- The US is now fighting back. Last month, Washington went all out to defeat the Chinese candidate for the leadership of an obscure UN agency called the World Intellectual Property Organisation.
Implications of China’s rise for India
- Chinese hegemony vs. American primacy: Delhi discovered that Chinese global hegemony could be a lot more problematic than American primacy.
- After all, it is China that complicates India’s plans for membership of the Nuclear Suppliers Group, protects Pakistan against international pressures on cross-border terrorism, and relentlessly pushes the UN Security Council to take up the Kashmir question.
- India now turns to the US and its allies to pursue some of its interests in the UN.
- Multilateralism not an end in itself: Political ironies apart, if there is one lesson that India could learn from China’s experience with WHO and the UN, it is that multilateralism is not an end in itself for major powers.
- It is an important means to secure one’s national interest and shape the international environment.
- As a nation battered by the Cultural Revolution, China used international cooperation and global institutions to rebuild itself in the last decades of the 20th century.
- Ready to reorder global governance: Having developed its economy and advanced its scientific and technological base, China is now ready to reorder global governance and become a rule-maker.
- The effects are visible in the arena of global health.
- China’s expanding global engagement with the WHO, its substantive international health assistance programmes, and an impressive domestic health technology sector are poised to boost China’s ambition to build a “Global Silk Road for Health’.
Conclusion
On its part, Delhi needs to intensify the recalibration of India’s multilateralism, rewrite its diplomatic lexicon at the UN, and build new political coalitions that will simultaneously contribute to India’s internal modernisation and enhance its international influence. The corona crisis is a good moment to start writing a new script for India’s own health diplomacy.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Mains level: Paper 3- Economic policy changes to mitigate the impact of slowdown on the vulnerable.
Context
India must use the windfall from oil to provide assistance to the most vulnerable to mitigate the impact due to COIVD-19 outbreak.
Estimates of impact
- Impact on major economies: Minus 40 per cent, -30 per cent, -22 per cent, and -14 per cent. These are the estimated impacts (at an annualised rate) on the quarterly growth rates of China, the UK, Eurozone, and the US because of the Covid-19 virus.
- Even excluding China and those that are closely tied to its supply chain — Korea and Taiwan — emerging markets (EM) are expected to go into recession in the first half of 2020, with the second quarter taking the biggest hit at over an 8 per cent quarterly decline.
- Impact on India: India will not be spared this growth shock. In fact, the economic impact could be deeper and longer in emerging markets where the capacity of public health systems is limited at the best of times.
Prospects of recovery
- Sudden stop to economic activity: We also know from the experiences of the countries already infected that the way to control the spread of the virus is through aggressive containment and social distancing that inevitably brings economic activity to a sudden stop.
- There doesn’t seem to be a middle path. We also know that unlike natural catastrophes like earthquakes, capital stock is not destroyed by the virus.
- Sharp recovery and conditions: Once the containment period is over and social interaction normalises, there is every reason to believe that activity can recover very sharply.
- Unless the containment period is long because of capacity constraints in the healthcare system which could turn supply chain disruptions into a long-term problem, or the credit stress created by the lack of earning by households and firms during the sudden stop stymies the recovery.
India needs to brace itself
- Unfortunately, India, where the virus still appears to be in the early stage, needs to brace for such a sudden stop.
- The lockdown could be for an extended period given the already stretched public health system.
- Impact on urban economy: The swathe of the economy that depends on social interaction — retail sales, entertainment, restaurants, and importantly construction and manufacturing — is very large.
- Even if one believes that rural areas with relatively low population densities will not be affected much, the impact on urban economic activity could be very large.
Role of economic policy
- What is the role of economic policy in such circumstances? It needs to “bridge the gap” between the brutal downturn and the eventual recovery.
- While public health policies force a sudden stop in the economy to save lives, economic policies need to ensure that the impact from the shutdown is cushioned, incomes of households and firms supported, credit stress is contained, and the recovery is not hamstrung by policy headwinds.
- This requires policy support to be operated on various fronts.
- Role of the Central bank: Central banks not only need to cut rates but also need to provide adequate liquidity and extend regulatory forbearance to prevent credit stress and non-performing loans from clogging up the already strained financial system when the economy starts to recover.
- Role of fiscal policy: The role of fiscal policy is even larger, from direct and indirect tax cuts or postponement to targeted credit support for sectors that are likely to be most affected such as airlines and retail trade.
- Support to the vulnerable: The key is income support to the most vulnerable: From daily wage earners to SMEs (small and medium enterprises).
- Using JAM trinity for cash transfer: It is here that the government’s efforts over the last five years make India one of the best-placed economies to deliver such cash transfers.
- Since 2015, substantial time, effort, and resources have been expended to establish Jan Dhan (bank accounts), Aadhaar and mobile banking (JAM), and Mudra, the programme that dispenses loans to SMEs.
- The objective of JAM and Mudra is to use Aadhaar as a way of accurately identifying beneficiaries and use mobile banking to digitally and seamlessly transfer cash/subsidies directly to households’ bank accounts and provide loans to SMEs without any leakages.
- According to government reports, the total number of Jan Dhan accounts stand at around 380 million and 59 million MUDRA loans were sanctioned last year.
- For a country with a population of 1.3 billion and about 63 million SMEs, even if there are duplicate accounts, JAM and Mudra should be able to cover almost all households and SMEs.
- With Aadhaar accurately targeting beneficiaries, leakages should be minimised. If there ever was a time that India needed JAM and Mudra it is now.
Issue of fiscal space and solution
- Some will argue that India doesn’t have the fiscal space. But it does.
- Use oil windfall: In the last month or so, the crude oil price has dropped from around $60/bbl to around $30 and is likely to stay at this level given the breakdown in agreement among oil-producing countries and the massive collapse in global demand.
- If the government simply taxed the oil windfall by raising excise duties, as it did during the 2014-15 oil price collapse, it could potentially raise almost 1 per cent of GDP or a staggering Rs 2.25 trillion.
- If 50 million households have to be provided assistance because of the shutdown, it comes to about Rs 14,000 per month for three months or about Rs 24,000 a month to half of the 63 million SMEs.
- And this without even having to increase this year’s budgeted deficit.
Conclusion
The government might have other uses for the oil windfall. But if India is forced into lockdown, the economic costs will be very large and the recovery will crucially depend on whether the pilot-light of the economy is kept lit through this period. This critically requires income transfers to vulnerable households and SMEs. India cannot complain that it does not have the fiscal space or the infrastructure to provide it.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NM-QTA
Mains level: Paper 3- Research on Quantum technology and its applications in India.
Context
With the Budget announcement providing direction for the development in quantum technology, the stakeholders need to roll-out the national mission quickly.
Pushing India into second quantum revolution
- Budgetary allocation for NM-QTA: In the Budget 2020 speech, Finance Minister Nirmala Sitharaman made a welcome announcement for Indian science — over the next five years she proposed spending ₹8,000 crores (~ $1.2 billion) on a National Mission on Quantum Technologies and Applications.
- This promises to catapult India into the midst of the second quantum revolution, a major scientific effort that is being pursued by the United States, Europe, China and others.
Timeline of the development of Quantum Mechanics
- Science to describe nature on atomic-scale: Quantum mechanics was developed in the early 20th century to describe nature in the small — at the scale of atoms and elementary particles.
- Foundation for understanding: For over a century it has provided the foundations of our understanding of the physical world, including the interaction of light and matter.
- It also led to ubiquitous inventions such as lasers and semiconductor transistors.
- Despite a century of research, the quantum world still remains mysterious and far removed from our experiences based on everyday life.
- Second revolution: A second revolution is currently underway with the goal of putting our growing understanding of these mysteries to use by actually controlling nature and harnessing the benefits of the weird and wondrous properties of quantum mechanics.
- Challenge of experimental realisation: One of the most striking of these is the tremendous computing power of quantum computers, whose actual experimental realisation is one of the great challenges of our times.
- Quantum supremacy: The announcement by Google, in October 2019, where they claimed to have demonstrated the so-called “quantum supremacy”, is one of the first steps towards this goal.
Applications and challenges
- Applications: Besides computing, exploring the quantum world promises other dramatic applications including the creation of novel materials, enhanced metrology, secure communication, to name just a few.
- Some of these are already around the corner.
- Application in communication: China recently demonstrated secure quantum communication links between terrestrial stations and satellites.
- Applications in cryptography: Computer scientists are working towards deploying schemes for post-quantum cryptography — clever schemes by which existing computers can keep communication secure even against quantum computers of the future.
- Exploring fundamental questions: Beyond these applications, some of the deepest foundational questions in physics and computer science are being driven by quantum information science. This includes subjects such as quantum gravity and black holes.
- The need for collaboration: Pursuing these challenges will require unprecedented collaboration between physicists (both experimentalists and theorists), computer scientists, material scientists and engineers.
- Challenges on the experimental front: On the experimental front, the challenge lies in harnessing the weird and wonderful properties of quantum superposition and entanglement in a highly controlled manner by building a system composed of carefully designed building blocks called quantum bits or qubits.
- These qubits tend to be very fragile and lose their “quantumness” if not controlled properly, and a careful choice of materials, design and engineering is required to get them to work.
- Challenges on the theoretical front: On the theoretical front lies the challenge of creating the algorithms and applications for quantum computers.
- These projects will also place new demands on classical control hardware as well as software platforms.
Where India stands
- India late in starting work on technology: Globally, research in this area is about two decades old, but in India, serious experimental work has been underway for only about five years, and in a handful of locations.
- What are the constraints on Indian progress in this field? So far we have been plagued by a lack of sufficient resources, high-quality manpower, timeliness and flexibility.
- Resource and quality manpower problem: The new announcement in the Budget would greatly help fix the resource problem but high-quality manpower is in global demand.
- In a fast-moving field like this, timeliness is everything — delayed funding by even one year is an enormous hit.
- A previous programme called Quantum Enabled Science and Technology has just been fully rolled out, more than two years after the call for proposals.
- Laudable announcement: One has to laud the government’s announcement of this new mission on a massive scale and on a par with similar programmes announced recently by the United States and Europe.
Limits and way forward
- But there are some limits that come from how the government must do business with public funds.
- Role of the private sector: Here, private funding, both via industry and philanthropy, can play an outsized role even with much smaller amounts.
- For example, unrestricted funds that can be used to attract and retain high-quality manpower and to build international networks — all at short notice — can and will make an enormous difference to the success of this enterprise.
- Private participation is the effective way: This is the most effective way (as China and Singapore discovered) to catch up scientifically with the international community, while quickly creating a vibrant intellectual environment to help attract top researchers.
- Connection with industry: Further, connections with the Indian industry from the start would also help quantum technologies become commercialised successfully, allowing the Indian industry to benefit from the quantum revolution.
- We must encourage industrial houses and strategic philanthropists to take an interest and reach out to Indian institutions with an existing presence in this emerging field.
- For example, the Tata Institute of Fundamental Research (TIFR), home to India’s first superconducting quantum computing lab, would be delighted to engage.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Prospects of revival of SAARC and India's leadership in the aftermath of COVID-19.
Context
If PM Modi’s gesture to SAARC is to go some way towards a solution for the region, India, which will be picking up the pieces itself, must have something to offer to its neighbours.
Background
- Not a viable option: Since 2014, when the last SAARC summit was held in Kathmandu, India had made it more than clear that it no longer considers the South Asia grouping viable.
- It was Islamabad’s turn to host the next summit in 2016, but the Uri attack intervened, and India refused to attend.
- SAARC in limbo: Under the SAARC charter, the summit cannot be held even if a single nation stays away, and the grouping has remained in limbo since.
- India’s increased engagement with other groups: In the last five years, India has actively sought to isolate Pakistan in the region.
- India hyped up its engagement with other regional groupings such as-
- BBIN (Bangladesh-Bhutan-India-Nepal), and
- BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), which includes Bangladesh, India, Myanmar, Sri Lanka, Thailand, Nepal and Bhutan.
How to read the sudden resurrection of SAARC?
- Officials denied revival speculation: Despite hopes that this might be a SAARC revival, officials have discounted such speculation. That would require India to climb down from its position that Pakistan has taken verifiable steps to address India’s concerns on terrorism. There is no evidence at all that Delhi is about to do that.
- No hope of move from Pakistan: It would need Pakistan to turn over a new leaf, stop playing with free radicals to use against India, in Kashmir or elsewhere when the time is ripe. Neither is about to happen.
No cooperative response in the works
- First to call the neighbours: At a time when leaders across the globe appeared to be engrossed in the COVID-19 calamity of their own nations, Modi was the first to think of calling the neighbours.
- Why cooperation among neighbours matter? Almost all South Asian countries are bound to each other by land borders and frequent inter-travel, and it is important that the region liaises to stop the disease from spreading across the Subcontinent.
- Countries not willing to learn from each other: It was a trifle disappointing, therefore, that beyond the experience of witnessing a unique video summit, there is not much to suggest that a cooperative response is in the works.
- There is no evidence that each country is willing to learn from the other’s experiences, or public health systems, or that we are tracking each other’s data and responses.
- What were the proposals made in the summit? Two proposals were made:
- One by India for a regional fund that Modi has generously offered to put aside $10 million for.
- Pakistan proposed the setting up of a diseases surveillance centre for sharing real-time data. India has said it would prepare emergency response task forces to help out the member countries in need.
- Delhi is said to be in the process of sending medical supplies worth $1 million to Nepal, Afghanistan, Sri Lanka, Bhutan and Maldives, which sounds like a fraction of what they may eventually require.
- Pakistan has said China will give it testing kits, protective gear and portable ventilators, as well as a cash grant for a state-of-the-art isolation centre.
- Beijing, eager to live down its image as the point of origin for this global mayhem, will make the same offer to other South Asian countries soon.
What were the lessons India need to learn from video-summit?
- Indian need to go beyond Big Brother events: If the intention was to try and restore the aura Prime Minister Modi enjoyed in the region at the beginning of NDA-1, as some have not improbably suggested, it has to go beyond this Big Boss event.
- The video summit saw polite attendance by all SAARC leaders, with the exception of Pakistan which sent its health minister.
- But going by the scant media coverage that the summit, the first after six years, received in the neighbourhood, no one is holding their breath.
- India has lost heft it once held: For many countries in the region now, India has lost the heft it used to have in the last century.
- A proximate reason is that it is no longer an economic powerhouse nor holds the promise of being one in the near future.
- The other reason is that it no longer offers itself as a model nation, pulling together its complex diversities, pluralism and political ideologies in a broad-minded vision.
- CAA factor and changing the perception of India: The real damage to India’s standing was, of course, done by the badmouthing of the Muslim countries in the neighbourhood to justify the Citizenship (Amendment) Act 2019.
- Larger image of themselves: Seen from the eyes of other countries in South Asia today, India is now just a larger version of themselves and their political and economic dysfunctions.
- While additionally possessing and wielding the instruments to be vengeful and punitive in its foreign policy — including arm-twisting them now and then in its constant quest to isolate Pakistan.
Conclusion
- The real test for India lies ahead: The real test of Modi’s leadership of South Asia, and by extension of India’s, will come after the pandemic subsides, when each country has to deal with what remains of its economy.
- The tourism economy of Bhutan, Maldives, Nepal and Sri Lanka would have been crushed by then. Pakistan will be worse off than it is now.
- There will be more unemployment and hardship everywhere in the region.
- Some of these countries will inevitably turn to China.
- India must have something to offer as a solution: If Modi’s gesture is to go some way as part of the solution for the region, India, which will be picking up the pieces itself, must have something to offer to its South Asian neighbours six months to a year down the line.
- Is there such a plan? Can India put aside the prejudices of its domestic communalism, and its own economic woes, demonstrate large-heartedness to all the countries of the region, irrespective of what religion its people follow, irrespective of its historical hostilities with at least one?
- There may be more economic refugees knocking on India’s doors, apart from a host of other inter-regional problems.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- What are the attitudinal problems in India's healthcare system and how India should deal with the outbreak of COVID-19?
Context
The COVID-19 pandemic has repercussions beyond the biomedical sector — it impinges on industry, transport, finance, banking and education sectors. All of them must act in unison.
Virus different from its nearest relative
- Comparison with SARS and MERS: The rapid spread of the zoonotic (transmitted from animal-to-human) coronavirus infection in Wuhan in China — several hundreds every day — in December 2019 and January 2020 was a clear signal that COVID-19 is drastically different from its nearest relative viz.-
- the Severe Acute Respiratory Syndrome (SARS) coronavirus,
- and its distant relative, the Middle-East Respiratory Syndrome (MERS) coronavirus.
- The former spread slowly among humans in 2002-2003. It was checked globally within nine months by screening passengers and quarantining travellers from infected countries.
- There have been no cases since July 2003. MERS coronavirus is, by and large, an inefficient spreader — it has been confined to the Middle-East.
- How COVID-19 is different? COVID-19 has assumed a pandemic form.
- In less than three months, it has reached more than 180 countries and claimed more than 10,000 lives.
- The disease has claimed more people in Italy than in the country of its origin.
- Travel bans, screening travellers and quarantines are necessary to slow the spread of COVID-19.
- However, there is a limit to the utility of these measures.
- Community transmission: When the infection becomes widespread, screening procedures will become inefficient — the virus will spread stealthily.
- Indigenous transmission — the virus spreading within communities — has begun in many countries.
- This is typical of viruses that spread from human to human through the respiratory system.
How India’s health management systems deals with the disease burden?
- Medicine consists of three components —
- universal healthcare,
- public health, and
- research to constantly contextualise solutions to local problems.
- Reaction after falling ill: Many of us in India believe that disease is a matter of fate or karma and disease prevention is not always in human hands — we only react after falling ill.
- No focus on prevention and control: Therapeutics and surgeries — healthcare interventions — are valued much, but not disease prevention and control.
- Cultural beliefs matter: Attitudes and cultural beliefs do matter. If victims are somehow regarded as responsible for their maladies, universal healthcare is perceived as an optional service — not mandatory.
Good reasons to change the attitude
- There are good reasons for such thinking to change.
- Every person who contracts a communicable disease stands the risk of spreading it to others.
- Prevention of disease is states’ duty: At the same time, the state, too, is responsible for the spread of diseases by not mitigating the environmental and social risk factors or determinants. Prevention of disease is the state’s duty.
- Investment in health and its implications: Healthy people create wealth. For example, every year, uncontrolled tuberculosis drains India’s economy of the equivalent of the GDP of roughly 2 million people.
- Investment in health, therefore, can have implications for the country’s economy.
- But Indians have never really demanded an effective public health system.
- Healthcare has never become a political slogan. That’s one reason for the sorry state of India’s public health system.
- Absence of effective public health system: The country does have international obligations to control TB, malaria and leprosy, and eliminate polio.
- Ad hoc measures: In the absence of an effective public health system, the country has depended on fulfilling these obligations through ad hoc measures that are targeted towards one disease.
- Need for robust health system: Robust public health systems are needed to prevent typhoid, cholera, dysentery, leptospirosis, brucellosis, water-born hepatitis and influenza.
- Overburdened healthcare system with communicable disease: The absence of an effective preventive element means that healthcare services in the public sector are over-burdened with uncontrolled communicable diseases.
- The entry of the private sector: This encourages private sector healthcare providers to step in, which brings in problems related to unregulated profits.
- Questions are often raised over the quality of service.
- COVID-19 could compound the systems problems: Moreover, uncontrolled communicable diseases vie with the non-communicable ones for the healthcare provider’s attention. The COVID-19 outbreak could compound the system’s problems.
One step ahead of the virus
- SARS and Nipah in Kerala: The SARS and Nipah virus outbreak in Kerala in 2018 were crises that required short bursts of professional activity. Our healthcare systems coped with them.
- But endemic diseases, even influenza, that has a vaccine, require sustained interventions.
- Test for the country’s healthcare system: Herein lies the test for the country’s healthcare system.
- It has often been seen that the system is not able to sustain its initial momentum.
- There is a possibility that COVID-19 could follow the path taken by the HINI influenza – after the epidemic died down, the disease became endemic.
- The country’s healthcare system has to prepare for that. In other words, it has to be one step ahead of the virus.
Way forward
- Equipping district hospitals: Every district hospital must be equipped to diagnose infections caused by serious communicable diseases — these affect the lungs, brain, liver and kidneys.
- The system should also ensure that healthcare personnel do not get infected.
- Allocate 5% of GDP to health budget: The country needs to allocate 5 per cent of the GDP to the health budget to have a health management system that can take care of public health emergencies such as the COVID-19 outbreak — and its aftermath.
- Unified control machinery: A unified command and control machinery, under the prime minister’s guidance, to control the spread of COVID-19 is overdue by at least six weeks in the country.
- Define the tasks of various authorities: The tasks of the Directorate-General of Health Services, National Centre for Disease Control, Indian Council of Medical Research, National Health Mission and state health ministries must be clearly defined.
- The mechanism for coordination: Most importantly, a mechanism for coordination between these agencies should be set up to deal with the COVID-19 threat.
Conclusion
The COVID-19 pandemic has repercussions beyond the biomedical sector — it impinges on industry, transport, finance, banking and education sectors. All of them must act in unison.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: SAARC and BIMSTEC
Mains level: Paper 2- Why should India revive the SAARC?
Context
Prime Minister Narendra Modi signalled a change in India’s rejection of SAARC as a platform for regional cooperation by inviting all heads of state and government of SAARC countries to a video summit to promote a region-wide response to the Covid-19 pandemic.
SAARC in virtual deep freeze
- Who attended the video conference? The video summit was attended by all SAARC leaders, except for Prime Minister Imran Khan of Pakistan, who deputed his special assistant for health to represent him.
- Status of SAARC: SAARC has been in a virtual deep freeze since India conveyed it would not attend the 19th SAARC summit, to be hosted by Pakistan in 2017, in the wake of the cross-border terrorist incidents at Pathankot and Uri.
- Other SAARC leaders also declined to attend.
- The summit was indefinitely postponed.
- Focus on BIMSTEC: Since then India has downgraded SAARC as an instrument of its “Neighbourhood First” policy and shifted the focus to the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) instead.
Backdrop of SAARC revival
- For his swearing-in ceremony in 2014, PM Modi had invited leaders of all SAARC countries including Pakistan.
- For the swearing-in ceremony in 2019, it is BIMSTEC leaders who were the invited guests.
- Soon after taking over as external affairs minister, S Jaishankar referred to SAARC having “certain problems” while BIMSTEC was described as having both energy and possibility and “a mindset which fits in with that very optimistic vision of economic cooperation that we want.”
- Deliberate political message: Against this backdrop, Modi’s initiative in convening a SAARC video summit, instead of a BIMSTEC video summit, conveys a deliberate political message.
Proposal of SAARC Covid-19 Fund and Health Ministers’ Conference
- At the conference, Modi gave a call for the countries of SAARC “coming together and not going apart.”
- A SAARC Covid-19 Fund has been proposed with India committing US$10 million.
- Modi referred to the role which could be played by an existing SAARC institution, the Disaster Management Centre, in enabling a coordinated response to Covid-19.
- Suggestions were made by several leaders, including the Pakistani representative, for a SAARC Health Ministers’ Conference to follow up on the summit. This is likely to be convened soon.
Pakistan on defensive
- India seen as undermining SAARC: Modi’s initiative has put Pakistan on the defensive. So far, it was India which was seen as undermining SAARC in which other South Asian countries have a keen interest.
- BIMSTEC no alternative to SAARC: While there has been readiness on their part to participate in BIMSTEC, they do not consider the latter as an alternative to SAARC. In taking this initiative, Modi may be responding to these sentiments.
- Onus on Pakistan: If Pakistan now drags its feet, then the onus will be on her for weakening the Association.
- There is a new situation as a result of the abrogation of Article 370 relating to Kashmir, which has been denounced by Pakistan.
- Difficulty for Pakistan: It would be difficult for Pakistan to accept cooperation with India under SAARC because this would compromise its stand on Kashmir.
BIMSTEC not delivered expected results
- Not yielded the expected result: It is also a fact that the focus on BIMSTEC has not yielded the results India may have expected.
- Trade below the set target: Current trade among its members is US$40 billion, though the potential was set at $250 billion.
- Act East policy stalled: India’s Act East policy, which involved a key role for India’s Northeast, has stalled.
- RCEP factor: The Northeast is in political turmoil while India has opted out of the Regional Comprehensive Economic Partnership (RCEP), which would have added substance to BIMSTEC.
Why India should revive SAARC
1.BIMSTEC not a credible option to SAARC
- Today it is difficult to see BIMSTEC as a credible and preferred alternative to SAARC.
- Cooperation both through SAARC and BIMSTEC: In any case, it makes better sense for India to pursue regional economic cooperation both through SAARC as well as BIMSTEC rather than project them as competing entities.
- SCO membership a contradictory position: If the argument is that regional cooperation involving Pakistan is a non-starter due to its ingrained hostility towards India, then being part of Shanghai Cooperation Organisation (SCO), where both are members, becomes a somewhat contradictory position.
2.The China factor
- China making inroad into the neighbourhood: In determining its position towards SAARC, India must also take into account the significant inroads that China has been making in its sub-continental neighbourhood.
- BRI initiative: With the exception of Bhutan, every South Asian country has signed on to China’s ambitious Belt and Road Initiative (BRI).
- A number of Chinese infrastructure projects are already in place or are being planned in each of our neighbours.
- China likely to become a key player: With SAARC becoming inoperative and BIMSTEC not living up to its promise, China is likely to become a key economic partner for South Asia and India’s hitherto pre-eminent role will be further eroded.
- On this count, too, it is advisable for India to advance regional cooperation both under SAARC as well as BIMSTEC. Both are necessary.
3.Pakistan factor
- Should not give up on Pakistan: Despite the frustration in dealing with Pakistan, India should not give up on its western neighbour.
- Relation needs to be managed: Relations with Islamabad will remain adversarial for the foreseeable future but still need to be managed with two ends in mind.
- One, to ensure that tensions do not escalate into open hostilities and,
- two, to reduce leverage which third countries may exercise over both countries on the pretext of reducing tensions between them.
- No compromise in position on terrorism: This does not in any way compromise our firm stand against cross-border terrorism emanating from Pakistan. The revival of SAARC could be an added constraint on Pakistan’s recourse to terrorism as an instrument of state policy.
4.Afghanistan factor
- Finally, the revival of SAARC would also support the Ashraf Ghani government in Kabul in navigating through a difficult and complex peace process involving a Pakistan-sponsored Taliban.
Conclusion
While these are essentially tactical considerations, there is a compelling reality which we ignore at our peril. Whether it is a health crisis like the Covid-19 or climate change, the melting of Himalayan glaciers or rising sea levels, all such challenges are better and more efficiently dealt with through regional cooperation. The Indian Subcontinent is an ecologically integrated entity and only regionally structured and collaborative responses can work.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Need to entrust the Human Right Commissions with more powers.
Context
The Madras High Court is to decide on whether the recommendations made by such panels are binding upon the state.
A fourth branch institution
- Enactment of the Act and its purpose: In 1993, the Indian Parliament enacted the Protection of Human Rights Act.
- Purpose: The purpose of the Act was to establish an institutional framework that could effectively protect, promote and fulfil the fundamental rights guaranteed by the Indian Constitution.
- To this end, the Act created a National Human Rights Commission, and also, Human Rights Commissions at the levels of the various States.
- What is fourth branch institution: The National and State Human Rights Commissions are examples of what we now call “fourth branch institutions.”
- According to the classical account, democracy is sustained through a distribution of power between three “branches” — the legislature, the executive, and the judiciary, with each branch acting as a check and a balance upon the others.
- The necessity of independent bodies: The complexity of governance and administration in the modern world has necessitated the existence of a set of independent bodies, which are charged with performing vital functions of oversight.
- Some of these bodies are constitutional bodies — established by the Constitution itself. These include, for instance, the Election Commission and the Office of the Comptroller and Auditor General.
- Others have been established under law: for example, the Information Commission under the Right to Information Act, and Human Rights Commissions under the Protection of Human Rights Act.
- HRC under scrutiny and criticism: In the two-and-a-half decades of their existence, however, the functioning of the Human Rights Commissions have come under scrutiny and criticism.
- There have been the usual critiques of the politicization of autonomous bodies, and selectiveness.
- Toothless: Even more than that, however, it has been alleged that for all intents and purposes, the Human Rights Commissions are toothless: at the highest, they play an advisory role, with the government left free to disobey or even disregard their findings.
Limitations of NHRC
- NHRC’s recommendations are not binding
- NHRC cannot penalize authorities who do not implement its orders
- JK is out of its jurisdiction
- NHRC jurisdiction does not cover human right violations by private parties
- 3/5 are judges, leading to more judicial touch to its functioning
- 2/5 are also not Human rights experts. Political appointments.
- Time limit is set to 1 year i.e. NHRC cannot entertain ca case older than 1 year
- Limited jurisdiction over violation by armed forces
- The act does not extend to J&K
- Vacancies are not filled on time. Most human rights commissions are functioning with less than the prescribed Members
- Fund crunch
- Overload and backlog. Too many complaints. Hence, in recent days, NHRC is finding it difficult to address the increasing number of complaints
- Bureaucratic style of functioning
What the case before Madras High Court will decide?
- Whether recommendations are mandatory or not: A Full Bench of the High Court will be deciding upon whether “recommendations” made by the Human Rights Commissions are binding upon their respective State (or Central) governments, or whether the government is entitled to reject or take no action upon them.
- What are the power of HRC under the act? Under the Protection of Human Rights Act, the Human Rights Commissions are empowered to inquire into the violations of human rights committed by state authorities, either upon petitions presented to them, or upon their own initiative.
- Powers of civil courts: While conducting these inquiries, the Commissions are granted identical powers to that of civil courts, such as the examining witnesses, ordering for documents, receiving evidence, and so on.
- These proceedings are deemed to be judicial proceedings, and they require that any person, who may be prejudicially affected by their outcome, has a right to be heard.
- Issue over the meaning of recommend: The controversy before the Madras High Court stems from the issue of what is to be done after the Human Rights Commission completes its enquiry, and reaches a conclusion that human rights have been violated.
- Section 18 of the Protection of Human Rights Act empowers the Human Rights Commission to “recommend” to the concerned government to grant compensation to the victim, to initiate prosecution against the erring state authorities, to grant interim relief, and to take various other steps.
- The key question revolves around the meaning of the word “recommend.”
- Opposite conclusion by different benches: The Full Bench of the Madras High Court is hearing the case because different, smaller benches, have come to opposite conclusions about how to understand the word “recommend” in the context of the Protection of Human Rights Act.
- According to one set of judgments, this word needs to be taken in its ordinary sense. To “recommend” means to “put forward” or to “suggest” something or someone as being suitable for some purpose.
- Ordinarily, a mere “suggestion” is not binding. Furthermore, Section 18 of the Human Rights Act also obligates the concerned government to “forward its comments on the report, including the action taken or proposed to be taken thereon, to the Commission”, within a period of one month.
- The argument, therefore, is that this is the only obligation upon the government.
- If indeed the Act intended to make the recommendations of the Commission binding upon the government, it would have said so: it would not simply have required the government to communicate what action it intended to take to the Commission (presumably, a category that includes “no action” as well).
Why ordinary meaning of recommend needs to be rejected?
- Argument against the ordinary meaning of “recommend”
- Ordinary meaning and meaning within the legal framework: The first is that there is often a gap between the ordinary meanings of words and the meanings that they have within legal frameworks.
- Legal meaning: Legal meaning is a function of context, and often, the purpose of the statute within which a word occurs has a strong influence on how it is to be understood.
- For example, the Supreme Court has held, in the past, that the overriding imperative of maintaining judicial independence mandates that “consultation” with the Chief Justice for judicial appointments (as set out under the Constitution) be read as “concurrence” of the Chief Justice (this is the basis for the collegium system).
- Recently, while interpreting the Land Acquisition Act, the apex court held that the word “and” in a provision had to be construed as “or”.
- Of course, there needs to be a good reason for interpretations of this kind.
- Constitutional commitment: This brings us to the purpose of the Human Rights Act, and the importance of fourth branch institutions.
- Ensure adequate realisation of constitutional commitment: As indicated above, the Human Rights Act exists to ensure the protection and promotion of human rights.
- To fulfil this purpose, the Act creates an institutional infrastructure, via the Human Rights Commissions.
- The Human Rights Commissions, thus, are bodies that stand between the individual and the state, and whose task is to ensure the adequate realisation of constitutional commitment to protecting human rights.
- Leaving decision with the state would defeat the purpose of the act: It stands to reason that if the state was left free to obey or disobey the findings of the Commission, this constitutional role would be effectively pointless, as whatever the Human Rights Commission did, the final judgment call on whether or not to comply with its commitments under the Constitution would be left to the state authorities.
- This, it is clear, would defeat the entire purpose of the Act.
- Past precedents: Indeed, in the past, courts have invoked constitutional purpose to determine the powers of various fourth branch institutions in cases of ambiguity.
- For example, the Supreme Court laid down detailed guidelines to ensure the independence of the Central Bureau of Investigation; various judgments have endorsed and strengthened the powers of the Election Commission to compulsorily obtain relevant details of candidates, despite having no express power to do so.
- It is therefore clear that in determining the powers of autonomous bodies such as the Human Rights Commission, the role those fourth branch institutions are expected to play in the constitutional scheme is significant.
- Powers of civil courts: And lastly, as pointed out above, the Human Rights Commission has the powers of a civil court, and proceedings before it are deemed to be judicial proceedings. This provides strong reasons for its findings to be treated — at the very least — as quasi-judicial, and binding upon the state (unless challenged).
- Indeed, very recently, the Supreme Court held as much in the context of “opinions” rendered by the Foreigners Tribunals, using very similar logic to say that these “opinions” were binding.
Conclusion
The crucial role played by a Human Rights Commission — and the requirement of state accountability in a democracy committed to a ‘culture of justification’ — strongly indicates that the Commission’s recommendations should be binding upon the state. Which way the Madras High Court holds will have a crucial impact upon the future of human rights protection in India.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Using technology to deal with epidemics.
Context
Coronavirus crisis is an opportunity for India to build on domestic technological capabilities in artificial intelligence, big data analytics, life sciences and health technology in the private sector.
How a small tech company flagged Covid-19 outbreak?
- What does it do? A small tech company in Canada — BlueDot — was among first outside China to spot a new epidemic spreading out from Wuhan last December.
- BlueDot, founded in Canada by a medical scientist of South Asian origin, Kamran Khan, tracks the origin and transmission of infectious diseases around the world.
- How could they detect the outbreak in China? BlueDot did this by sifting through massive volumes of news reports and blogs by individuals, including health professionals flowing out of China.
- Data analytics and medical expertise combined: BlueDot combines “public health and medical expertise with advanced data analytics to build solutions that track, contextualise, and anticipate infectious disease risks”.
- Use of AI: BlueDot is one of the many technology firms leveraging artificial intelligence for business and policy purposes.
- Many governments are reaching out to tech companies to cope with the corona crisis.
- The state government of California has just hired BlueDot to help it deal with the challenge.
The growing role of technology in dealing with coronavirus
- Across the world, policymakers see a growing role for technology in identification, tracking, and treating the coronavirus.
- Alibaba and Tencent’s help in China: In China, the Communist Party roped in big tech companies like Alibaba and Tencent in the battle against the virus.
- Silicon valley’s help in the US: In the US, President Donald Trump has set aside his well-known distaste for Democrat-leaning Silicon Valley to tackle what he now calls a war-like emergency.
- India will need all the science and technology it can get hold of in overcoming the crisis that is bound to escalate by the day.
- An opportunity to do good: For the small tech startups in related areas, this is a moment to shine. For the large tech companies, this is a huge opportunity to deploy their immense capabilities to resolve the specific problems posed by the spread of the coronavirus.
- In rising to the occasion, they could fend off a lot of the recent negative criticism of their business practices and demonstrate that their commitment to “doing good” is not just empty rhetoric.
- A good business proposition: “Doing good” is also a sensible business proposition at this time.
- As governments desperately seek solutions to the crisis, the tech startups and established companies leverage the moment to scale up many technologies, develop new uses and markets.
How countries used technology to deal with the outbreak
- How China used technology? In China, as the government moved decisively after the delayed initial response, it turned to-
- the well-established mass surveillance system based on facial recognition technologies,
- sensing technologies to identify those with fever in public places and
- data from mobile phone companies to trace the people who might be infected, and limit the spread of the disease.
- China also developed a Health Code that uses data analytics to-
- identify and assess the risk of every individual in a targeted zone based on travel history and time spent in infected places.
- The individuals are assigned a colour code (red, yellow, or green) which they can access via popular apps to know if they ought to be quarantined or allowed in public.
- How Korea used technology? Many Asian democracies like South Korea have also turned to AI tools to contain the spread of the disease.
- How the US used technology? As it copes with the rapid spread of the coronavirus, the US had no option but to use surveillance to contain it.
- Partners in dealing with outbreak: Unsurprisingly, the big tech companies in the US, based on collecting and monetising massive amounts of data from individuals, have inevitably become partners for Washington.
- But the relationship between the government, corporations and individual citizens in the US is governed by a welter of laws.
- There is mounting pressure now to tweak these laws to manage the corona crisis.
- The US is also liberalising the regulations on the access to, and use of, patients’ health records.
Growing collaboration between science and the state
- The race between China and the US: Overarching these arguments is a race between the US and China to find new vaccines for the coronavirus.
- And, more broadly, for the mastery of new scientific capabilities — from artificial intelligence to health technologies.
- The competition, in turn, is promoting a more intensive alliance between science and the state in both nations.
- Collaboration could accelerate the technological capabilities: The collaboration between science and the state during past crises led to a dramatic acceleration of technological capabilities.
- World War precedents: During the Second World War, science and the state got together to move nuclear physics from the lab to the battlefield.
- Cold War precedent: The Cold War between America and Russia promoted the development of space technology, microelectronics, communications and computing.
- Role of private entities: What marks out the current technological race between the US and China is the role of private and non-governmental entities.
- That might well be the missing link in India’s effort to beat the coronavirus.
Conclusion
- Opportunity for India: The current crisis, however, is also an opportunity for India to build on the existing domestic technological capabilities in the areas of artificial intelligence, big data analytics, life sciences, health technology in the private sector.
- India needs stronger private sector in science: In India, the state has dominated the development of science and its organisation. That was of great value in the early decades after Independence.
- Today, what Delhi needs is a stronger private sector in science and greater synergy with it in dealing with challenges like the corona crisis.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- India is unprepared for dealing with pandemics.
Context
India is unprepared for dealing with the outbreak of coronavirus.
Is India really faring better than the other countries?
- 45 days for first 100,000: Globally, it took roughly 45 days for the first 100,000 cases. It is likely to take nine days for the next 100,000.
- Death count: The global death count is now doubling every nine days and stands at 8,248, with 207,518 confirmed cases.
- That is how epidemics work — they gather steam as infected individuals go on to infect even more people. Confirmed cases in India, as of today stand at 169.
- It is much lower than in small countries such as Iceland (around 250). Could this really be the case that we have fared better than everyone else?
- Probably India is not performing better: Testing in India remains abysmally low. Only about 10 in a million people in India have been tested, compared to say nearly 120 in a million in Thailand or 40 per million in Vietnam.
- Why testing in not being done in India? The stated explanation is that the limited number of test kits are being conserved for when they are truly needed but when is the need greater than right now?
- There are probably shortages even in being able to procure adequate supplies given that many countries are seeking to buy the limited stocks.
- Importance of testing: Testing is the most important thing we could be doing right now.
- As the Director-General of the World Health Organization, said recently about the need for more testing, “You cannot fight a fire blindfolded.”
Avoiding undercounting
- Timely identification is essential to prevent secondary infection: We need to identify coronavirus-infected patients in a timely manner in order to increase our chances of preventing secondary infections.
- There is no shame in saying that we have far more cases than what we have detected so far.
- K.’s admitted undercounting: Even the United Kingdom, which has a far better health system than India, has admitted that it is probably undercounting its true infections by a factor of 12, and is likely have about 10,000 cases.
- Is it possible that India with 20 times their population has only 169 cases?
- Preparedness to deal with a higher number of cases: If widespread testing were to commence in India, the number of confirmed cases would likely climb to the thousands very quickly. This is something we have to be prepared for without panic or fear-mongering.
- Positive action: This is how epidemics move and the real numbers should spur us into positive action.
- Strict measures by the government: At some stage, it is possible that the government may have to put in place very strict measures on quarantining and closures, much like what China had to do to control the epidemic in Wuhan.
How prepared is India?
- There is not an easy answer to how worst things could go.
- Mutation or sensitivity of virus: If we escape the worst, either because this virus mutates to a less virulent form or because there is something about its temperature or geographical sensitivity that we know nothing about, then we should count our blessings.
- Viruses do mutate and generally to be less lethal.
- Projection from Europe: If the projections from Europe are applicable in India, our ‘namastes’ and clean hands notwithstanding, the prevalence in India would be upwards of 20%.
- In other words, we should expect to see about 200-300 million cases of COVID-19 infections and about four and eight million severe cases of the kind that are flooding hospitals in Italy and Spain at the moment.
- More importantly, these cases are projected to appear in just a two to the four-month window.
- In the current scenario, we are not ready.
- India has somewhere between 70,000 and 100,000 intensive care unit beds and probably a smaller number of ventilators.
- That is simply inadequate.
- What should be done? The next two weeks should be spent on planning for large, temporary hospitals that can accommodate such numbers. If we are lucky, we will not need them.
Unprepared for pandemics
- Catastrophic event with highest probability-Pandemic: This all sounds doomsday-like. But we have known for decades now that of all catastrophic events to befall humanity, between an asteroid hit and a nuclear war, a disease pandemic has always been the highest on our list of impact and probability.
- Not enough changes in preparedness: There were some changes after the Severe Acute Respiratory Syndrome (SARS) but not nearly enough.
- Pandemic preparedness always took a backseat to the crisis of the moment.
- And in fairness, there is truly no amount of preparation that can fully mitigate such an occurrence.
Conclusion
Things are about to get a lot worse. Let us hope that this brings out the best in us, and not the worst. Whether we know this or not, these events are just a dress rehearsal for the more challenging events such as climate change that are likely to be with us this century. And if we take care of each other, we will survive both these challenges with our humanity intact.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: AT-1 bonds.
Mains level: Paper 3- Issues involved in banking system and resolution process in case of failures.
Context
Resolving bank failure is tough but following a set of principles could achieve a fair and efficient outcome.
Key issues involved in the resolution
- Challenge in courts: Resolving Yes Bank’s failure is no easy task. Some bondholders are already challenging the restructuring plan of the Reserve Bank of India in court, and seem ready for a long-drawn battle.
- How much dilution is fair for existing shareholders to take?
- AT-1 Bonds issue: Should the value of the Additional Tier 1 (AT-1) bonds be written off entirely?
- As such issues become matters of policy discussion and address, we must not lose sight of some fundamental principles of resolving bank failures.
- Three of them should be on the top of the list: honour contracts, address market failure and protect systemic stability.
How honouring contracts matter for economy?
- For efficient outcomes: Honouring contracts is vital for achieving efficient outcomes between contracting parties such as lenders and borrowers, managers and shareholders, and insiders and outsiders.
- Shying away from entering a contract: If there is uncertainty over this fundamental principle, contracting parties will shy away from entering contracts in the first place.
- Lenders will be less willing to lend.
- Prospective minority shareholders will be less keen to buy shares in a company.
- Impact on allocative efficiency: This will ultimately compromise the economy’s allocative efficiency, or the market’s ability to deploy capital to its best use.
AT-1 bond issue
- Honouring contract in Yes banks resolution: There are several issues in the application of this principle in Yes Bank’s resolution.
- The most visible one concerns the decision of writing off its perpetual contingent, or AT-1, bonds.
- Write off: According to the original agreement, these additional tier-1 (AT-1) bonds are indeed supposed to be written off at a time like this.
- And this write-off need not happen before the common equity value goes down to zero.
- The entire idea behind these perpetual contingent bonds is to improve a bank’s capitalization if its common equity value falls below a certain threshold, but does not hit zero.
- Counter argument: These bondholders and some commentators are arguing that writing off those bonds will be a big blow to India’s bond market.
- Moral hazard problem: This is just the opposite of the truth. Not writing them off in accordance with the original contract will create a severe moral hazard problem.
- What incentive would any bondholder have to correctly price and monitor these banks in the future?
- Market discipline would die a quick death, and the bond market will suffer in the long run.
- What the resolution process should do? Therefore, the resolution process should honour the contract and write off the entire value of Yes Bank’s AT-1 bonds.
Dealing with critical market failures
- Second core principle: The second core principle in this resolution should be to tackle some critical market failures that led here.
- Several observers have pointed out the failure of board oversight, promoter negligence and reckless lending at the bank.
- Vital market failure in the purchase of AT-1 bonds by retail investors: Indeed, these issues must be addressed. But there seems to be another vital market failure hidden in this crisis: the purchase of AT-1 bonds by retail investors.
- Why AT-1 bonds are complex? AT-1 bonds are “information-sensitive” instruments, which means that the value of these instruments is extremely sensitive to information on the firm’s fundamentals.
- Complex financial security: They are very complex financial securities. Understanding the risk and reward associated with these securities and valuing them properly is not an easy task even for the best of market professionals.
- Retail investors are certainly not suited to buy this product. Still, several of them ended up holding Yes Bank AT-1 bonds in their asset portfolios.
- Demand deposits and market failure: Banking theory relies on the idea that demand deposits are information-insensitive instruments.
- Hence, a retail investor can place deposits in a bank without worrying about understanding the real risks borne by it. Government-backed deposit insurance makes deposits even more liquid and riskless.
- Hence, retail investors should hold regular deposits in a bank, and not complex securities like AT-1 bonds.
- Where is the market failure involved? If such bonds are sold to them without proper disclosure of the associated risks, then it amounts to a serious market failure.
- Way forward: This market failure must be corrected.
- Holding investment advisors to higher standards of fiduciary responsibility is one way of doing so.
- Prohibiting retail investors from investing in such securities is another critical step to prevent such a market failure.
Way forward to carry out the resolution process
- Restitution of value to retail investors: Meanwhile, the resolution process could consider partial or full restitution of value to retail investors in Yes Bank’s AT-1 bonds, if these products were indeed mis-sold to them.
- Large professional investors should be treated differently: But such a rescue must not extend to large professional investors who willingly bought these bonds for higher returns.
- One mechanism to do this could be to create a separate fund for retail investors with investments capped at a certain point.
- Or, their AT-1 investments up to a specific limit could be converted into a simple deposit contract. The legal hurdles may be insurmountable.
- However, in principle, those who mis-sold these products to retail investors should be required to compensate them.
- Conflict in two principles: Sometimes, these principles can come into direct conflict with each other.
- If the resolution allows retail investors in those AT-1 bonds to recover their investments, it would go against the “honour the contract” principle, but it would address the “market failure” issue.
- Ensuring systemic stability: How should we reconcile this conflict? That’s where the third principle comes in: ensuring systemic stability.
- After all, the regulator’s main objective is to restore the market’s faith in the country’s financial system.
- While this is not an easy task, protecting the capital and confidence of small investors can go a long way in restoring their faith in the banking system.
Conclusion
Resolving bank distress is never an easy job. But honouring contracts, addressing market failure and ensuring systemic stability can together go a long way in achieving a fair and efficient outcome.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Requirement of cooling off period for accepting the government office post-retirement by the judges to ensure the independence of judiciary.
Context
It has been recently announced that the President has nominated former Chief Justice of India, Ranjan Gogoi, to the Rajya Sabha. However, the time has come for us to ask a difficult question: Should judges stop accepting post-retirement jobs offered by the government, at least for a few years after retiring, because accepting such posts could undermine the independence of the judiciary?
The issue of post-retirement employment of the judges
- Retirement age of judges: Unlike federal judges in the US, judges in India do not hold office for life. They remain in office until they reach the retirement age — 65 for Supreme Court judges and 62 for high court judges.
- Protection against arbitrary removal: These judges do not hold their offices at the “pleasure” of the President. In other words, they cannot be arbitrarily removed by the government once they are appointed, and can only be impeached by a supermajority of both houses of Parliament “on the ground of proved misbehaviour or incapacity”.
- Difficult impeachment process: The impeachment process is a very difficult one and never in the history of independent India has a judge been impeached, though attempts have sometimes been made to do so. Judges, therefore, enjoy security of tenure while holding office, which is essential for maintaining judicial independence.
- How retirement of judges could undermine judicial independence? The retirement of judges threatens to undermine judicial independence.
- This is because some judges — not all — are offered post-retirement employment by the government. It is often feared that a judge who is nearing retirement could decide cases in a manner that pleases the government in order to get a favourable post-retirement position.
Not an unprecedented move
- Former CJI Gogoi is certainly not the first retired judge to be appointed to political office.
- In 1952, Justice Fazl Ali was appointed the Governor of Orissa, shortly after retiring from the Supreme Court.
- In 1958, Chief Justice M C Chagla resigned from the Bombay High Court in order to become India’s Ambassador to the US at Prime Minister Nehru’s invitation.
- In April 1967, Chief Justice Subba Rao resigned from the Supreme Court to contest elections for President.
- In 1983, Justice Baharul Islam resigned from the Supreme Court to contest as a Congress (I) candidate for a Lok Sabha seat, after ruling in favour of Bihar’s Congress (I) chief minister, Jagannath Mishra, in a controversial case where Mishra had been accused of criminal wrongdoing and misuse of office.
- In more recent times, Chief Justice P Sathasivam was appointed the Governor of Kerala. There are many other such examples.
Why restrictions about employment were not included in the Constitution?
- The Constitution provides that a retired Supreme Court judge cannot “plead or act in any court or before any authority within the territory of India”.
- Constituent assembly debate: In the Constituent Assembly, K T Shah, an economist and advocate, suggested that high court and Supreme Court judges should not take up an executive office with the government, “so that no temptation should be available to a judge for greater emoluments, or greater prestige which would in any way affect his independence as a judge”.
- However, this suggestion was rejected by B R Ambedkar because he felt that the “judiciary decides cases in which the government has, if at all, the remotest interest, in fact, no interest at all”.
- Government is the largest litigant in the courts: In Ambedkar’s time, the judiciary was engaged in deciding private disputes and rarely did cases arise between citizens and the government. “Consequently”, said Ambedkar, “the chances of influencing the conduct of a member of the judiciary by the government are very remote”.
- This reasoning no longer holds today because the government is one of the largest litigants in the courts.
Question of independence of the judiciary
- The question of constitutional propriety: In the words of India’s first Attorney General, M C Setalvad, all this raises “a question of constitutional propriety” relating to the independence of the judiciary.
- After all, could the government not use such tactics to reward judges who decide cases in its favour?
- Public perception of compromised judiciary: Further, if a judge decides highly controversial and contested cases in favour of the government and then accepts a post-retirement job, even if there is no actual quid pro quo, would this not lead to the public perception that the independence of the judiciary is compromised?
Law Commission recommendations
- In its 14th report in 1958, the Law Commission noted that retired Supreme Court judges used to engage in two kinds of work after retirement:
- Firstly, “chamber practice” (a term which would, today, mean giving opinions to clients and serving as arbitrators in private disputes).
- Secondly, “employment in important positions under the government”.
- The Law Commission frowned upon chamber practice but did not recommend its abolition.
- Ban on post-retirement government employment: It strongly recommended banning post-retirement government employment for Supreme Court judges because the government was a large litigant in the courts.
- The Commission’s recommendations were never implemented.
Conclusion
It is about time that we start expecting the judges of our constitutional courts to follow CJI Hidayatullah’s excellent example in which he had accepted government job only after the cooling period of several years.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Opportunity for India to assume global leadership in dealing with the COVID-19 pandemic
Context
A leadership role by India in mobilising world collaboration would be in keeping with its traditional activism globally.
Challenges and two aspects associated with it.
- The COVID-19 pandemic has brought out in sharp relief the compelling reality that has been staring us in the face for the past several years.
- This reality has two aspects.
- First aspect: That most challenges confronting the world and likely to confront it in the future are cross-national in character. They respect no national boundaries and are not amenable to national solutions.
- Second aspect: These challenges are cross-domain in nature, with strong feedback loops.
- A disruption in one domain often cascades into parallel disruptions in other domains.
- For example, the use of chemical fertilizers and toxic pesticides may promote food security but have injurious health effects, undermining health security.
- Whether at the domestic or the international level, these inter-domain linkages need to be understood and inform policy interventions. The UN Sustainable Development Goals (SDGs) reflect this awareness.
Rise in nationalism
- Need for multilateral approach: The intersection of cross-national and cross-domain challenges demand multilateral approaches.
- They require empowered international institutions of governance.
- Underlying these must be a spirit of internationalism and solidarity, a sense of belonging to common humanity.
- Moving in the reverse direction-Rise of nationalism: Over the past decade and more, the world has been moving in the reverse direction. There has been an upsurge in narrow nationalism, an assertion of parochial interests over the pursuit of shared interests and a fostering of competition among states rather than embracing collaboration.
- The global challenge of COVID-19: COVID-19 has brought these deepening contradictions into very sharp relief. This is a global challenge which recognises no political boundaries. It is intimately linked to the whole pattern of large-scale and high-density food production and distribution.
- Health crisis turned into economic crisis: It is a health crisis but is also spawning an economic crisis through disrupting global value chains and creating a simultaneous demand shock. It is a classic cross-national and cross-domain challenge.
How countries are dealing with COVID-19 and possible outcomes
- No coordination at the international level: But interventions to deal with the COVID-19 crisis are so far almost entirely at the national level, relying on quarantine and social distancing. There is virtually no coordination at the international level.
- Blame game at the international level: We are also seeing a blame game erupt between China and the United States which does not augur well for international cooperation and leadership.
- The hopeful outcome of international cooperation: While this is the present state of play, the long-term impact could follow alternative pathways.
- One, the more hopeful outcome would be for countries to finally realise that there is no option but to move away from nationalistic urges and embrace the logic of international cooperation through revived and strengthened multilateral institutions and processes.
- The depressing outcome of intense nationalist trends: The other more depressing consequence may be that nationalist trends become more intense, countries begin to build walls around themselves and even existing multilateralism is further weakened.
- Institutions such as the United Nations and the World Health Organization which are already marginalised may become increasingly irrelevant.
- There could be a return to autarkic economic and trade policies and an even deeper and more pervasive anti-globalisation sentiment.
- Depression decade ahead: Unless there is a conscious effort to stem this through a reaffirmation of multilateralism, we are looking at a very depressing decade ahead.
- This is when the world needs leadership and statesmanship, both in short supply.
- Contrast with the financial crisis: This is in contrast to the U.S.-led response to the global financial and economic crisis of 2008 when the G-20 summit was born and a coordinated response prevented catastrophic damage to the global economy.
Leadership role for India
- Is there a role here for India which is a key G-20 country, the world’s fifth-largest economy and with a long tradition of international activism and promotion of rule-based multilateralism?
- In this context, Prime Minister Narendra Modi’s remarks at the recent Economic Times Global Business Summit are to be welcomed.
- While speaking of the COVID-19 crisis, he said, “Like today, the world is facing a huge challenge in the form of Corona Virus. Financial institutions have also considered it a big challenge for the financial world. Today, we all have to face this challenge together. We have to be victorious with the power of our resolution of ‘Collaborate to Create’.”
- He went on to observe that while the world today is “inter-connected, inter-related and also interdependent”, it has “not been able to come on a single platform or frame a Global Agenda, a global goal of how to overcome world poverty, how to end terrorism, how to handle Climate Change issues.”
- From “Equal distance” to friendship with all: Modi lauded government’s policy of seeking friendship with all countries as contrasted from the earlier policy of non-alignment. He seemed to suggest that non-alignment was a defensive policy which advocated “equal distance from every country”.
- Now, he claimed, India was still “neutral” — presumably meaning non-alignment — “but not on the basis of distance but on the basis of friendship”.
- He cited India’s friendship with Iran and Saudi Arabia, and with the U.S. as well as Russia.
India’s foreign policy
- Non-alignment: Mr Modi may wish to distinguish his foreign policy from that of his predecessors, but what he describes as its “essence” is hardly distinguishable from the basic principles of Indian foreign policy since Nehru.
- Non-alignment was not defensive: India’s non-alignment was anything but defensive. The international peace-keeping contribution that the Prime Minister referred to has its origins in Nehru’s sense of international responsibility.
- Friendship with all: India has always professed its desire to have friendly relations with all countries but has been equally firm in safeguarding its interests when these are threatened.
- Mutually beneficial partnership: India’s non-alignment did not prevent it from forging strong and mutually beneficial partnerships with major countries.
- The India-Soviet partnership from 1960-1990 is an example just as the current strategic partnership with the U.S. is.
- Foreign policy rooted in a civilisational sense: The foreign policy of his predecessors had been rooted in India’s civilisational sense, its evolving place in the international system and its own changing capabilities.
- Their seminal contributions should be acknowledged and built upon rather than proclaim a significant departure.
Move in line with traditional foreign policy
- The Prime Minister’s plea for global collaboration to deal with a densely interconnected world is in line with India’s traditional foreign policy.
- Move in keeping with traditional activism on a global scale: A leadership role in mobilising global collaboration, more specifically in fighting COVID-19 would be in keeping with India’s traditional activism on the international stage.
- Commendable SAARC move: The Prime Minister has shown commendable initiative in convening leaders of the South Asian Association for Regional Cooperation nations for a regional collaborative effort on COVID-19.
- International initiative: This should be followed by an international initiative, either through the G-20 or through the U.N.
Way forward
- Reformed and Strengthened U.N. should be India’s agenda: The Prime Minister made no reference to the role of the U.N., the premier multilateral institution, as a global platform for collaborative initiatives. There may have been irritation over remarks by the UN Secretary-General on India’s domestic affairs and the activism displayed by the UN Commissioner for Human Rights on the Citizenship (Amendment) Act controversy.
- The U.N. Secretary General’s statement on India’s domestic affairs and activism by UN Secretary-General on India’s domestic affairs should not influence India’s long-standing commitment to the U.N. as the only truly inclusive global platform enjoying international legitimacy despite its failings.
- If one has to look for a “single platform” where a Global Voice could be created, as the Prime Minister suggested, surely a reformed and strengthened U.N. should be on India’s agenda.
- Opportunity for India in the pandemic: The COVID-19 pandemic presents India with an opportunity to revive multilateralism, become a strong and credible champion of internationalism and assume a leadership role in a world that is adrift. The inspiration for this should come from reaffirming the wellsprings of India’s foreign policy since its Independence rather than seeking to break free.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Decline in women's work participation rate and possible causes of it.
Context
India is one of the few countries in the world where women’s work participation rates have fallen sharply — from 29 per cent in 2004-5 to 22 per cent in 2011-12 and to 17 per cent in 2017-18.
What could be the possible explanations for the decline?
- No consensus among economists: Trying to explain whether women are choosing to focus on domestic responsibilities or whether they are pushed out of the workforce has become a minor industry among economists.
- Can the quality of data be the explanation? Strangely, the one explanation we have not looked at is whether the declining quality of economic statistics may account for this trend.
- Our pride in the statistical system built by PC Mahalanobis is so great that we find it unimaginable that it could fail to provide us with reliable employment data.
- However, as challenges to economic statistics have begun to emerge in such diverse areas as GDP data and consumption expenditure, perhaps it is time to consider the unimaginable.
- Issue of data collection: Is the decline in women’s labour force participation real or is it a function of the way in which employment data are collected?
Anatomy of the decline in participation rates
- Driven by rural women: The anatomy of the decline in women’s work participation rates shows that it is driven by rural women.
- Data of the prime working-age group: In the prime working-age group (25-59)-
- Urban area data: Urban women’s worker to population ratios (WPR) fell from 28 per cent to 25 per cent between 2004-5 and 2011-12, stagnating at 24 per cent in 2017-18.
- Rural area data: However, compared to these modest changes, rural women’s WPR declined sharply from 58 per cent to 48 per cent and to 32 per cent over the same period.
- Among rural women, the largest decline seems to have taken place in women categorised as unpaid family helpers — from 28 per cent in 2004-5 to 12 per cent in 2017-18.
- This alone accounts for more than half of the decline in women’s WPR. The remaining is largely due to a drop of about 9 percentage points in casual labour.
- In contrast, women counted as focusing solely on domestic duties increased from 21 per cent to 45 per cent.
What are the explanations for this massive change?
- Data collection issue: It is the change in our statistical systems that drives these results.
- Change of workforce collecting data: The questionnaires through which the National Statistical Office (NSO) collects employment data have not changed, but the statistical workforce has, and the surveys that performed reasonably well in the hands of seasoned interviewers are too complex for poorly trained contract data collectors.
- How data is collected? The National Sample Surveys (NSS) do not have a script that the interviewer reads out. They have schedules that must be completed. The interviewer is trained in concepts to be investigated and then left to fill the schedules to the best of his or her ability.
- The NSS increasingly relies on contract investigators hired for short periods, who lack
- Need for redesigning the surveys: Do we need to return to the days of permanent employees or can we design our surveys to overcome errors committed by relatively inexperienced interviewers?
- A survey design experiment led by Neerad Deshmukh at the NCAER-National Data Innovation Centre provides an intriguing solution.
- In this experimental survey, interviewers first asked about the primary and secondary activity status of each household member, mimicking the NSS structure.
- They then asked a series of simple questions that included ones like, “do you cultivate any land?” If yes, “who in your household works on the farm?”
- Similar questions were asked about livestock ownership and about people caring for the livestock, ownership of petty business and individuals working in these enterprises.
- What was the result of survey experiment: The results show that the standard NSS-type questions resulted in a WPR of 28 per cent for rural women in the age group 21-59, whereas the detailed activity listing found a WPR of 42 per cent — for the same women.
- This is an easily implementable module that does not require specialised knowledge on the part of the interviewer.
Identifying the sectors from which women are excludes
- Missing the identification of sector: In our concern with ostensibly declining women’s work participation, we have missed out on identifying sectors from which women are excluded and more importantly, in which women are included.
- What data for men indicate? For rural men, ages 25-59, between 2004-5 and 2017-18, casual labour declined by about 6 percentage points.
- However, this decline is counterbalanced by regular salaried work which increased by 4 percentage points.
- Thus, it seems likely that men are exchanging precarious employment with higher-quality jobs.
- What data for women indicate? In contrast, women’s casual work has declined by 9 percentage points while their regular salaried work increased by a mere 1 percentage point.
- Moreover, the usual route to success, gaining formal education, has little impact on women’s ability to obtain paid work.
- The explanation for the disparity: Rural men with a secondary level of education have options like working as a postman, driver or mechanic — few such opportunities are open to women.
- It is not surprising that women with secondary education have only half the work participation rate compared to their uneducated sisters.
- Takeaway: The focus on employment for women needs to be on creating high-quality employment rather than getting preoccupied with declining employment rates.
Conclusion
It may be time for us to return to the recommendations of ‘Shramshakti: Report of National Commission on Self Employed Women and Women in the Informal Sector’ and develop our data collection processes from the lived experiences of women and count women’s work rather than women workers. Without this, we run the risks of developing misguided policy responses.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Growing difficulties for Iran amid sanctions and cooperation with China and Pakistan, and implications for India.
Context
The coronavirus pandemic creates fresh possibilities for cooperation between the West Asian nation and its neighbours.
Challenges faced by Iran
- Hardest hit by COVID-19 among the West Asian countries: Iran, the hardest-hit among the West Asian countries in the global pandemic, is on the front line of the battle against the coronavirus that causes the causes coronavirus disease, COVID-19.
- Healthcare reeling under combined load: With nearly 900 deaths and over 14,000 cases of infection, its health-care system is reeling under the combined effect of the pandemic and American sanctions.
- Possibility of social unrest resurfacing: The masses thronging the streets some weeks ago may have receded out of fear of both the coronavirus and the wrath of the regime, but there is a possibility of social unrest resurfacing if the government’s response to the spread of the virus is ineffective and shortages are exacerbated.
- Emergency funding from IMF: Iran has already approached the International Monetary Fund for $5-billion in emergency funding to combat the pandemic.
- Easing of some sanctions by the US: The U.S. Treasury had announced in end-February that it was lifting some sanctions on the Central Bank of Iran to facilitate humanitarian trade such as the import of testing kits for COVID-19. Clearly, Iran thinks this is inadequate.
Iran’s nuclear policy
- Iran to resumed nuclear activities: Following the U.S.’s decision to jettison the deal, Iran had announced that it would resume its nuclear activities but had agreed to respect the International Atomic Energy Agency (IAEA) inspections and enhanced monitoring as part of its obligations under the additional protocol.
- What were the conditions of JCPOA? The JCPOA limited Iran to enrich uranium only up to a 3.67% concentration and its stockpile to 300 kg of UF6 (corresponding to 202.8 kg of U-235), and further capped its centrifuges to no more than 5,060, besides a complete cessation of enrichment at the underground Fordow facility.
- It also limited Iran’s heavy water stockpile to 130 tonnes.
- Restriction on enrichment lifted by Iran: Since July 2019, Iran has lifted all restrictions on its stockpiles of enriched uranium and heavy water.
- It has been enriching uranium to 4.5%, beyond the limit of 3.67%.
- Moreover, it has removed all caps on centrifuges and recommenced enrichment at the Fordow facility.
- An increased stockpile of Uranium: As of February 19, Iran’s enriched uranium stockpile totalled 1,020.9 kg, compared to 372.3 kg noted in the IAEA’s report of November 3.
- IAEA’s second report: In a second report issued on March 3, the IAEA has identified three sites in Iran where the country possibly stored undeclared nuclear material or was conducting nuclear-related activities.
- The IAEA has sought access to the suspect sites and has also sent questionnaires to Iran but has received no response.
- Possibility of being on the collision course with the UNSC: The United Kingdom, France and Germany had invoked the JCPOA Dispute Resolution Mechanism (DRM) as early as in January this year.
- The threat to abandon the NPT: With the next Review Conference of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) set to take place in New York from April 27 to May 22, 2020, Iran’s threat to abandon the NPT if the European Union takes the matter to the UN Security Council (UNSC) may yet only be bluster, but the failure of the DRM process would certainly put Iran on a collision course with the UNSC.
- Support from China at UNSC: A sympathetic China, which holds the rotational presidency of the UNSC for March, should diminish that prospect, albeit only temporarily.
- Possibility of reversing the sanctions: As things stand, the terms of UNSC Resolution 2231, which had removed UN sanctions against Iran in the wake of the JCPOA, are reversible and the sanctions can be easily restored.
- That eventuality would prove disastrous, compounding Iran’s current woes.
- Possibility of Iran continuing its nuclear program: While recognising that cocking a snook at the NPT in the run-up to the NPT RevCon and the U.S. presidential elections will invite retribution, Iran may use the global preoccupation with the pandemic to seek a whittling down of sanctions and to continue its nuclear programme.
- More breathing time amid due to pandemic: In the event that the NPT RevCon is postponed due to the prevailing uncertainty, Iran may yet secure some more breathing time.
Iran’s ties with China and implications for India
- China- only major country to defy the US sanctions: Meanwhile, the U.S. continues to implement its “maximum pressure policy”. China remains the only major country that continues to defy U.S. sanctions and buy oil from Iran, apart from a small quantum that goes to Syria.
- The sale of oil to China, however, does little to replenish Iran’s coffers. China is eschewing payments in order to avoid triggering more sanctions against Chinese entities.
- Trilateral naval exercise: When seen in the context of the trilateral naval exercise between China, Iran and Russia in the Strait of Hormuz in the end of December 2019 codenamed “Marine Security Belt”, these developments suggest a further consolidation of Sino-Iran ties in a region of great importance to India.
- Inclusion of Pakistan in the exercise: Over time, this could expand into a “Quad” involving China’s “all-weather friend” Pakistan in the Indian Ocean and the northern Arabian Sea, with broader implications for India as well as the “Free and Open” Indo-Pacific.
Conclusion
- Iran’s foreign policy to remain unchanged: The first round of Iran’s parliamentary elections in February showed that the hardliners are firmly ensconced. The fundamental underpinnings of Iran’s foreign policy are likely to remain unchanged.
- Possibility of cooperation among neighbours: Yet, the rapid spread of the coronavirus in the region creates fresh possibilities for cooperation between Iran and its neighbours, if regional tensions are relegated to the back-burner.
- Laudable example by India: Prime Minister Narendra Modi’s initiative to develop a coordinated response to the pandemic in the South Asian Association for Regional Cooperation framework, indeed, sets a laudable example.
- Much depends on Iran’s willingness: Much though will depend on Iran’s willingness to rein in its regional ambitions and desist from interference in the domestic affairs of others.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now