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Type: op-ed snap

  • Government bailouts are not the answer to India’s energy sector woes

    Context

    Across several states, the fiscal situation is becoming increasingly challenging. Yet, the common thread that runs through these deficits — state ownership and control — remains unaddressed.

    State ownership: structural cause of India’s deficit

    • Coal India’s inability to raise production to meet growing demand contributed to the recent power crisis.
    • The state-owned power distribution companies have failed to bring down losses despite many schemes and packages.
    • The state control of these critical aspects of India’s power chain is central to a higher current account deficit and growing fiscal risks at the state level.

    Coal output fails to meet the demand

    • From 2013-14, the Indian economy has grown by around 50 per cent (in real terms).
    • But Coal India, which accounts for around 80 per cent of India’s total coal production, was able to raise its output by just 34 per cent over the same period.
    • Increased reliance on imported coal: India’s coal imports (thermal and cooking) rose to a staggering 230.3 million tonnes in 2020-21, up 37 per cent from 168.5 million tonnes in 2013-14.
    • Coal imports for thermal power alone have more than doubled in the first quarter, compared to the same period last year.
    • To put this in perspective — the value of coal imports in just the first three months of this year is likely to be around half of what was imported in all of last year.
    • Increase in current account deficit: This growing reliance on coal imports (along with crude and gold) is at the root of the country’s widening current account deficit.
    • An inability to ramp up production, to forecast demand accurately, as every episode of coal shortage over the years has exposed, is the hallmark of the coal sector that is still largely the preserve of a public sector monopoly.

    Problem of DISCOMS

    • No improvement in financial and operational issues: Despite repeated attempts to turn around their financial and operational positions, on key metrics, the divide between the public and private sector discoms is deepening.
    • In 2019-20, public sector discoms lost Rs 0.72 per unit of power sold, while private discoms made Rs 0.20 per unit.
    • High AT&C losses: Similarly, in 2019-20, the AT&C losses (due to operational inefficiencies) for state discoms were pegged at 21.7 per cent, while for the private sector, losses were at 8 per cent.
    • With deteriorating finances, the net worth of all public sector discoms put together stands at a negative Rs 61,757 crore, while for the private sector, it is a positive Rs 24,965 crore.
    • There have been several attempts to rescue state discoms.
    • In the early 2000s, the scheme for repayment of SEB dues amounted to Rs 41,473 crore.
    • In 2012, the financial restructuring plan added up to Rs 1.19 lakh crore.
    • In 2015, UDAY involved a transfer of Rs 2.01 lakh crore to state government balance sheets.
    • Notwithstanding various schemes to turn around their finances, the total debt of all discoms put together stood at Rs 5.14 lakh crore at the end of 2019-20.
    • Of this, Rs 4.87 lakh crore is owed by state discoms.
    • Impact on entire power chain: A deterioration in the financial position of discoms means that their dues to power generating companies start mounting, which in turn delay payments to coal miners, affecting the financial stability of the entire power chain.

    Declining cross-subsidisation

    • As tariffs charged by discoms are much higher than the cost of alternatives, a sizeable part of non-agricultural sales of discoms (industrial and commercial consumers) have already shifted towards captive and solar.
    •  And with the ministry of power recently reducing the threshold for green energy open access, more and more consumers will increasingly opt out.
    • This would mean that discom losses will rise as cross subsidisation from commercial and industrial consumers will decline, increasing their dependence on state subsidies.
    • In 2019-20, the total state subsidy claimed and released was around Rs 1.1 lakh crore or 17 per cent of total discom revenue.
    • This will only increase down the line, making future bailouts even more fiscally challenging.

    Conclusion

    Tackling these deficits requires addressing the issue of government control over critical aspects of India’s energy sector. Without shifting to market-determined prices — reforms are ultimately about price — little headway is likely to be made.

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  • PMLA has SC’s approaval

    Context

    The Supreme Court has upheld the constitutional validity of the provisions of the Prevention of Money Laundering Act (PMLA), calling it a “unique and special legislation” and underlining the powers of the Directorate of Enforcement (ED) to hold inquiries, arrest people and attach property.

    Prevention of Money Laundering Act (PMLA)

    • PMLA, 2002 is an Act of the Parliament of India enacted by the NDA government to prevent money laundering and to provide for confiscation of property derived from money laundering.
    • It was enacted in response to India’s global commitment (including the Vienna Convention) to combat the menace of money laundering.
    • PMLA and the Rules notified there under came into force with effect from July 1, 2005.
    • The act was amended in the year 2005, 2009 and 2012.

    Objectives of PMLA

    The PMLA seeks to combat money laundering in India and has three main objectives:

    • To prevent and control money laundering.
    • To confiscate and seize the property obtained from the laundered money; and
    • To deal with any other issue connected with money laundering in India.

    Issues with the PMLA

    • Opacity: The Enforcement Case Report (the analogue of an FIR) is not shared with the accused.
    • Nor are the full grounds of arrest shared with you.
    • Bail cannot be granted without hearing the prosecution and you are required to prove your innocence to get bail.
    • Lack of clarity in definition: The definition of crime under this Act is elastic.
    • The sovereign has immense latitude to define what counts as the relevant crime.
    • It can also in a classic instance of rule by law change the presumption of innocence.
    • Lack of safeguard: The list of crimes included overrides similar crimes in other parts of the law.
    • The code has an exceptional procedure of its own that can trump the safeguards of the Criminal Code of Procedure.
    • In theory, the law provides safeguards against attaching properties, but those safeguards are weak and do not allow for even reasonable exceptions that might be necessary for your dignity or continuing with your business or livelihood.
    • Mere possession of the proceeds of a crime, without any surrounding consideration of how one came to be in possession of the proceeds, makes it an offence.
    • That the state officials are not classed as police. But they, in some respects, have even more power than the police.
    • Use of Money Bill route: The law itself has been enacted by using the controversial Money Bill route.
    • Low conviction rate: The conviction rate under this law is very low, less than 0.5 per cent.
    • Misuse of law: The stringent provisions and vagueness in definitions in the law make it susceptible to misuse against a political opponenet.
    • International context: Post 9/11, there was concern with terrorist financing and arguably many international treaties actually weakened, rather than strengthened, individual rights protections.
    • The goal of international treaties is laudable.
    • But the rhetoric of international treaties is often used to override domestic rights safeguards.

    Conclusion

    There is a need for a review of the various provision and definitions in the law and their utility.

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  • Tiger conservation

    Context

    India is now reporting increased tiger numbers, and a recent International Union for Conservation of Nature assessment suggests that tiger numbers have increased by 40% since 2005. This is cause for celebration. But is the rise in tiger numbers enough to prevent their extinction?

    Relations between distribution and genetic variation

    • Decades of research in ecology and evolution suggest that numbers are critical to avoid extinction. 
    • Populations that are smaller than 100 breeding individuals have a high probability of extinction.
    • At the same time, for populations to persist, they should be part of larger landscapes with other such populations that are connected.
    • This is because small populations are subject to chance/random events.
    • These chance events may cause them to lose advantageous genetic variants, while other, detrimental genetic variants might increase in frequency.
    • This process is called genetic drift.
    • Individuals in small populations are more likely to be related, leading to inbreeding.
    • This exposes the many slightly disadvantageous genetic variants that are present in all genomes.
    • When expressed together, these detrimental genetic variants cause inbreeding depression, and reduced survival and reproduction of inbred individuals.
    • A closer look at the distribution of tigers across their range shows that most tiger ‘populations’ are smaller than 100.
    • This raises a question why are we not seeing extinctions happening more often? Is this because tiger populations are connected to each other?

    Research findings about movement of tigers

    • One way to answer the question about not so frequent extinction is to use movement data sourced from radio-collared tigers, often difficult to come by for a rare and endangered species.
    • Alternatively, tigers can be genetically sampled using their excreta/scat, hair and other biological samples from different tiger reserves and analysed in a laboratory.
    • Genetic variants in tiger DNA can be identified and analysed and compared across tiger reserves.
    • Genetic variation in landscape with connectivity: Sets of tiger reserves that show shared genetic variation are well connected — the inference is that the intervening landscapes facilitate connectivity or movement.
    • On the flip side, sets of tiger reserves that share less genetic variation must have barriers or landscapes that impede movement and connectivity.
    • Most land-use types were not too bad for tiger connectivity, including agricultural fields.
    • However, the presence of built-up areas and high traffic roads greatly impeded tiger movement.
    • Results showed that extinction could be avoided if corridors were safeguarded.
    • In summary, as long as we manage landscapes outside tiger reserves to allow tiger movement, and protect prey and tigers inside tiger reserves, tigers are sure to survive in landscapes such as central India.

    Genetic changes in isolated tiger population

    • Black tigers were found only in the Similipal tiger reserve in Odisha.
    • Genome sequences of a litter of zoo tigers that included pseudo-melanistic cubs revealed that a single spelling mistake (or mutation) in a specific gene causes these tigers to look this way.
    • Pseudo-melanistic or black tigers found in Odisha has demonstrated the genetic effects of isolation.
    • Results of the research pointed to genetic drift, or random events that have lead to this genetic variant that causes pseudomelanistic coat colour becoming common only in Similipal.
    • On the other side of India, in Rajasthan, genome sequences from wild tigers reveal that individuals in the Ranthambore tiger reserve show inbreeding.
    • In short, we are seeing the genetic effects of isolation and small population size in wild tigers at some locations.

    Way forward

    • Focus on connectivity: While we celebrate the recovery of tiger populations only by looking at numbers, we must not lose sight of other factors that are critical to their continued survival, such as connectivity.
    • Special attention is needed for populations that are becoming isolated and facing the genetic consequences of such isolation.
    • The future of such populations may depend on genetic rescue or even the introduction of novel genetic variants.

    Conclusion

    We are fortunate that novel genome sequencing technology provides an opportunity to understand tigers much better in the context of their conservation. The future of tigers will require a ‘dialogue’ between such data and management strategies in order to ensure their survival. India is lucky to have so many wild tigers and we must work together to save them.

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    Back2Basics: Pseudo-melanism

    • Tigers have a distinctive dark stripe pattern on a light background of white or golden.
    • A rare pattern variant, distinguished by stripes that are broadened and fused together, is also observed in both wild and captive populations.
    • This is known as pseudo-melanism, which is different from true melanism, a condition characterised by unusually high deposition of melanin, a dark pigment.
    • While truly melanistic tigers are yet to be recorded, pseudo-melanistic ones have been camera-trapped repeatedly, and only, in Simlipal, a 2,750-km tiger reserve in Odisha, since 2007

  • From freebies to welfare

    Context

    In a recent address, the prime minister shared his anguish on what he called the “revdi” or the freebies culture.

    Populist policies and its impact over the states’ finances

    • What are freebies? N K Singh defined freebies as “something that is given to you without having to pay for them, especially as a way of attracting your support for or interest in something.”
    • A recent report of the RBI on states’ finances highlighted the perilous condition of states’ finances and enhanced debt stress on account of flawed policies.
    •  Nothing undercuts more irresponsibly India’s abiding international and national commitments than the perils of this reckless populism.

    Factors that need to be considered in devising welfare policies

    1] Quest for sustainable development

    • The initiatives undertaken at COP21 in Paris, the International Solar Alliance and subsequently at the COP26 in Glasgow represent India’s national consensus to forge a path of growth geared towards intergenerational equity and to exponentially increase development.
    • Our ability to adhere to this commitment depends on two other commitments.
    • 1] An increase in the percentage of renewable energy in our energy consumption.
    • While subsidies are being promised in one form or the other by way of free electricity, the deteriorating health of state distribution companies seriously undercuts their financial viability.
    • Lowering the price for some consumers, offset through overcharging industrial and commercial contracts, reduces competitiveness, ushers slower growth both in incomes and employment.
    • 2] The inability of discoms to actively encourage solar power is stymied by their financial condition and the inability to evolve tariff structures.
    •  Regulatory capture, a fixation on unrealistic tariffs and cross-subsidy in energy utilisation prevent a credible coal plan, which is central to our energy planning.

    2] Challenges in providing basic facilities

    • The government seeks to address the challenge of inequity by ensuring access to a wide range of basic facilities.
    • These include banking, electricity, housing, insurance, water and clean cooking fuel, to mention a few.
    • Removing this inequity to access helps boost the productivity of our population.

    3] Issue of access

    • Benefits under various welfare schemes such as PM Awas Yojana, Swachh Bharat Mission and Jal Jeevan Mission have eliminated the biggest barrier for citizens — the exorbitant upfront cost of access.
    • Moreover, they are leading to irreversible empowerment and self-reliance.
    • For instance, a house built under the PM Awas Yojana is a lifelong asset for the beneficiary household that cannot be taken back by any government.

    4] Use of technology in direct benefit transfer

    • Identification of beneficiaries through the SECC and prioritisation based on deprivation criteria has enabled the government to assist those who need it the most.
    • Governments that end up taking the shortcut of universal subsidies or freebies often end up ignoring the poor and transferring public resources to the affluent.

    5] Expenditure prioritisation

    • The next issue that needs to be considered is of expenditure prioritisation being distorted away from growth-enhancing items, leading to intergenerational inequity.
    • Investors, both domestic and foreign, and credit rating agencies look to macro stability in terms of sustainable levels of debt and fiscal deficit.
    • After years of fiscal profligacy, we returned to the path of fiscal rectitude in 2014.
    • The last time such an effort was made was by enacting the first FRBM Act on August 26, 2003.

    6] Impact on future of manufacturing and employment

    • The next factor that need to be considered is the debilitating effect of freebies on the future of manufacturing and employment.
    • Freebies lower the quality and competitiveness of the manufacturing sector by detracting from efficient and competitive infrastructure.
    • They stymie growth and, therefore, gainful employment because there is no substitute for growth if we wish to increase employment.

    Conclusion

    The poor state finance position should serve as a timely reminder to those promising fiscally imprudent and unsustainable subsidies.

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  • Need for overhaul of India’s economic performance measurement framework

    Context

    It is then apparent that GDP growth matters to the average Indian only if it can generate good quality jobs and incomes for them.

    Background

    • Nobel laureate Simon Kuznets, who conceived of GDP as a measure of economic performance, never intended it to be the single-minded economic pursuit for a nation that it has now become, and warned repeatedly that it is not a measure of societal well-being.
    • Irrefutably, GDP is an elegant and simple metric that is a good indicator of economic progress which can be compared across nations.
    • But a compulsive chase for GDP growth at all costs can be counter-productive, since it is not a holistic but a misleading measure.
    • The excessive obsession over GDP growth by policymakers and politicians can be unhealthy and dangerous in a democracy.
    • If growth in GDP does not translate into equivalent economic prosperity for the average person, then in a one person-one vote democracy, exuberance over high GDP growth can backfire and trigger a backlash among the general public.
    • Global phenomenon: Sri Lanka’s mass uprising and people’s revolution can partly be explained through this prism of the structural break between headline GDP growth and economic prosperity for the people.
    • The U.S. today produces fewer new jobs for every percentage point of GDP growth than it did in the 1990s.
    • China produces one-third the number of new jobs today than it did in the 1990s for every percentage of its GDP growth.

    Employment intensity of economic growth

    • Data of ‘employment in public and organised private sectors’ published by the Reserve Bank of India (RBI) shows that in the decade between 1980 and 1990, every one percentage point of GDP growth (nominal) generated roughly two lakh new jobs in the formal sector.
    • In the subsequent decade from 1990 to 2000, every one percentage point of GDP growth yielded roughly one lakh new formal sector jobs, half of the previous decade.
    • In the next decade between 2000 and 2010, one percentage point of GDP growth generated only 52,000 new jobs.
    • The RBI stopped publishing this data from 2011-12.
    • In essence, one percentage of GDP growth today yields less than one-fourth the number of good quality jobs that it did in the 1980s.
    • It is amply clear that the correlation between formal sector jobs and GDP growth has weakened considerably.

    Implications of decline in GDP growth’s contribution to job creation

    • Irrelevant as a political measure: GDP growth may be an important economic measure, but it is becoming increasingly irrelevant as a political measure, since it impacts only a select few and not the vast majority.
    • Indicates changed nature of economic development: This divorce of GDP growth and jobs is both a reflection of the changed nature of contemporary economic development with emphasis on capital-driven efficiency at the cost of labour and GDP being an inadequate measure.
    • Political backlash: The perils of the obsession over GDP growth will be felt by politicians who have to answer voters on lack of jobs and incomes despite robust headline growth.
    • Voter disenchantment over the economy not working for them is already rife in many democracies across the world that have catalysed agitations and social disharmony.
    • Electoral outcomes in favour of extreme positions in mature democracies such as the U.S., the U.K., France and Germany in the last decade may partly be a reflection of voters’ sense of deception over economic gains.

    Way forward

    • It is time for India’s political leaders to not be drawn into argument over GDP growth every quarter and instead clamour for an overhaul of India’s economic performance measurement framework to reflect what truly matters to the common person.

    Conclusion

    GDP growth has turned into a misleading and dangerous indicator that portrays false economic promises, betrays people’s aspirations and hides deeper social problems.

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  • Recent Supreme Court judgment on IBC may weaken insolvency regime

    Context

    In the recent judgement the Supreme Court held that the National Company Law Tribunal (NCLT) cannot admit an insolvency application filed by a financial creditor merely because a financial debt exists and the corporate debtor has defaulted in its repayment.

    Why the point of trigger is important in insolvency law

    • A critical element for any corporate insolvency law is the point of trigger.
    • The law must clearly provide the grounds on which an insolvency application against a corporate debtor should be admitted.
    • If there is any confusion at this stage, precious time could be wasted in litigation.
    • That would cause value destruction of the distressed business.
    • On the other hand, if the law is clear and litigation can be minimised, the distressed business could be resolved faster.
    • Its value could be preserved.
    • And all stakeholders collectively would benefit.
    • Evidently, objective legal criteria for admission are critical for an effective corporate insolvency law.

    Determining insolvency and implications of the SC ruling

    • The balance-sheet test is one method for determining insolvency at the point of trigger.
    • This test, however, is vulnerable to the quality of accounting standards.
    • That’s why the Bankruptcy Law Reforms Committee did not favour this test in the Indian context.
    • Instead, it recommended that a filing creditor must only provide a record of the liability (debt), and evidence of default on payments by the corporate debtor.
    • This twin-test was expected to provide a clear and objective trigger for insolvency resolution. 
    • The Supreme Court’s latest ruling is likely to radically alter these expectations.

    Implications of the Supreme Court ruling

    • Resisting the admission by debtor: Now due to the Supreme Court ruling, even if the NCLT is satisfied that a financial debt exists and that the corporate debtor has defaulted, it may not admit the case for resolution if the corporate debtor resists admission on any other grounds.
    • Corporate debtors are likely to use this precedent to the fullest to resist admission into IBC.
    • Risk of value destruction due to delay: The likely outcome would be more litigation and delay at the admission stage, enhancing the risks of value destruction in the underlying distressed business.

    Conclusion

    In all fairness, the Supreme Court has been extremely pragmatic in its interpretation and application of the IBC. Even in the recent ruling, the court has rightly cautioned that the NCLT should not exercise its discretionary power in an arbitrary or capricious manner. Yet, this decision may have opened a Pandora’s box. Policymakers would be well-advised to take note before history starts repeating itself.

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  • A path to global connectivity

    Context

    As terrestrial 5G mobile networks are being rolled out across countries, there is a renewed interest in integrating Non-Terrestrial Networks.

    SatNets for 5G

    • Satellites and terrestrial networks have always been considered two independent ecosystems, and their standardisation efforts have proceeded independent of each other.
    • The primary non-terrestrial network that is being considered is the low latency Low Earth Orbit (LEO) satellite networks (SatNets), as a complement to terrestrial networks.
    • Towards this, Starlink, operated by the Elon Musk-owned SpaceX, and OneWeb, promoted by Bharti Global, have launched about 2,500 and 648 LEO satellites respectively at an altitude of about 1,200 km with the objective of promoting global broadband connectivity.
    • There are other players such as Reliance Jio in a joint venture with Luxembourg-based SES and Amazon’s Project Kuiper.

    Benefits of using SatNets

    • 1] Service continuity in emergency: service continuity to provide seamless transition between terrestrial networks and SatNets in case of public safety, disaster management and emergency situations;
    • 2] Providing service in remote area: Service ubiquity to provide 5G services in unserved and underserved areas of the world, thereby bridging the digital divide;
    • 3] Scalability: Service scalability that utilises the unique capabilities of SatNets in multicasting and broadcasting similar content over a large geographical area.
    • 4] Service to in-motion user: The LEO SatNets can provide service not only to stationary but also to in-motion users.
    • 5] Low latency over long distance: Wireless communications through LEO satellites over long distances is proven to be 1.47 times faster than communication over the same distance through terrestrial optic fibre. It is this advantage along with global coverage that provide a strong use case for LEO SatNets to complement terrestrial optic fibre networks.
    • SatNet in standardisation: In view of the above advantages, standard-setting organisations such as the Third Generation Partnership project (3GPP), comprising telcos and equipment manufacturers around the world, started integrating SatNets in the standardisation process.

    Measures by the government

    • Realising the advantages, the Government, in its National Digital Communications Policy 2018, has indicated the development of an ecosystem for local manufacturing of satellite communication systems and promoting participation of private players for the strengthening of satellite communication infrastructure in the country.
    • Accordingly, the New Space India Limited (NSIL), a public sector enterprise, was established in 2019 to re-orient space activities from a ‘supply driven’ model to a ‘demand driven’ model, thereby ensuring optimum utilisation of the space assets.
    • The Department of Space also established in 2020 a new regulatory body named the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
    • IN-SPACe is intended to provide a level playing field for private companies to use Indian space infrastructure.

    Issues and challenges

    • Allocation of frequency: Issues will involve addressing issues around frequencies to be allocated for satellite broadband, the methodology of allocation, the relatively higher cost of consumer equipment and the placement and interconnections of SatNets with terrestrial public landline/ mobile networks at the ground stations
    • Cost: The other major challenge in LEO SatNets is the cost of user terminal and access charges to the end users.
    • A recent research analysing both Starlink and OneWeb concludes that the standalone LEO SatNets have a distinct cost advantage only if the density is less than 0.1 person per square km compared to terrestrial broadband networks.
    • Hence it is to the advantage of LEO SatNet providers to integrate their networks with terrestrial 5G networks to improve the cost economies.

    Conclusion

    All these, along with the proposed revisions to the Satellite Communications Policy of the Government, will provide the required fillip to LEO SatNets to become an integral part of the communication infrastructure of the country.

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    Back2Basics: LEO satellites

    • LEO satellites orbit between 2,000 and 200 kilometers above the earth. LEO satellites are commonly used for communications, military reconnaissance, spying and other imaging applications.
    • A low earth orbit (LEO) satellite is an object, generally a piece of electronic equipment, that circles around the earth at lower altitudes than geosynchronous satellites.
    • Satellites made for communications benefit from the lower signal propagation delay to LEO.
    • This lower propagation delay results in less latency.
    • Being closer to the earth has an obvious benefit for many types of earth observational satellites by resolving smaller subjects with greater detail.

  • Monkeypox outbreak: It’s time to act, not panic

    Context

    Monkeypox was previously limited to the local spread in central and west Africa, close to tropical rainforests, but has recently been seen in various urban areas and now in more than 50 countries.

    About monkeypox

    • A virus belonging to the poxviruses family causes a rare contagious rash illness known as monkeypox.
    • This zoonotic viral disease (a disease transmitted from animals to humans) has hosts that include rodents and primates.
    • It is a self-limiting disease with symptoms lasting two to four weeks and a case fatality rate of 3-6 per cent.
    • Symptoms: A skin rash on any part of the body could be the only presenting symptom.
    • Swollen lymph nodes are another distinguishing feature. Aside from these, other symptoms of a viral illness include fever, chills, headache, muscle or back aches, and weakness.
    • Mode of transmission: Touching skin lesions, bodily fluids, or clothing or linens that have been in contact with an infected person can result in transmission.
    • It’s also worth noting that monkeypox does not spread from person to person through everyday activities like walking next to or having a casual conversation with an infected person.
    • Treatment: Monkeypox is mostly treated by managing symptoms and preventing complications if it is diagnosed.
    •  In the minor proportion who are immunocompromised, complications can occur; pulmonary failure was the most common complication with a high mortality rate.

    Containment Measures

    • Because symptoms usually appear 5-21 days after exposure, people with rashes, sores in the mouth, rash, eye irritation or redness, or swollen lymph nodes should be monitored.
    • When symptoms appear, it is critical to isolate the infected from other people and pets, cover their lesions, and contact the nearest healthcare provider.
    • It is also critical to avoid close physical contact with others until instructed to do so by our healthcare provider.
    • It is preferable to use home isolation whenever possible.
    •  Priority should be given to educating grassroots workers about symptoms, specimen collection, disease detection, acquiring sample collection equipment, and maintaining cold storage of specimens.
    •  Increased surveillance and detection of monkeypox cases are critical for controlling the disease’s spread and understanding the changing epidemiology of this resurging disease.
    • Preventive health measures, such as avoiding infected animal or human contact and practising good hand hygiene, are the best option.

    Vaccines and drugs

    • In the US, pre exposure vaccination with JYNNEOS® is available to healthcare workers and lab workers exposed to this group of poxviruses.
    • The smallpox vaccine is 85 percent effective against the disease.
    • Another vaccine, ACAM2000, is a live vaccinia virus vaccine that is otherwise recommended for smallpox immunisation and can also be used for high-risk individuals during monkeypox outbreaks.
    • In addition, Tecovirimat, an antiviral drug used to treat smallpox, is recommended for monkeypox.
    • Challenges: Smallpox vaccination programmes have been discontinued for the past 50 years, resulting in a scarcity of effective vaccines.
    • There are approved drugs and vaccines, but they are not widely available to scale up controlling monkeypox.

    Why WHO declared it as international concern?

    •  The increase in monkeypox cases in a short span of time in many countries necessitated the declaration of public health emergency of international concern  (PHEIC) and additional research studies.
    • It is unclear whether the recent sudden outbreaks in multiple countries result from genotypic mutations that alter virus transmissibility. SARS-CoV-2 and monkeypox virus co-infection can alter infectivity patterns, severity, management, and response to vaccination against either or both diseases.
    • As a result, there is a need to improve diagnostic test efficiency.

    Way forward

    • Plan for pandemic preparedness: This is not the last such difficulty we will face, as the world is still witnessing more such public health crises.
    • Zoonotic diseases are caused by various factors, including unchecked deforestation, climate coupled with a failure to prioritise public health, poverty, and climate change.
    • Instead, a robust plan for pandemic preparedness should be accelerated, guided by a single health agenda.
    •  The world is yet to recognise emerging and re-emerging infectious diseases as a genuine threat.
    • The immediate priority is to strengthen the surveillance infrastructure, including hiring public health professionals and field workers who can participate in outbreak detection and response during many future PHEICs.

    Conclusion

    Without prioritising public health strengthening, the threat of new and re-emerging infectious diseases, as well as the enormous social and economic challenges that accompany them, is real and grave.

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  • Reforms needed in the next stage of GST

    Context

    India has completed five years under the GST regime.

    How GST has performed so far

    • Before the GST, there were multiplicity of the Centre and state levies that masked the actual incidence of tax on products, the debilitating effects of the entry tax and the uncertainty of tax rates.
    • Today, in contrast, we have a single tax across the country combined with a stability in rates and a common technology platform in the form of a GSTN.
    • Record number of registrants: The ease of payments has improved over time with the technical glitches having been slowly sorted out, leading to a record number of GST registrants – increasing from 1.08 crore in April 2018 to 1.36 crore in 2022.
    •  The revenue gains have been significant.
    • If we factor in the three-percentage point decline in the incidence of GST duty from 14.8 to 11.8 per cent as suggested by the RBI, the actual proportion in 2021-2022 would have been 7.4 per cent of the GDP (according to a recent article by Arvind Subramanian and Josh Felman).

    What were the changes made to ensure the stricter compliance

    • The above improvement can be traced to stricter compliance flowing from three factors.
    • 1] Input credit only after supplier uploads invoice: Denial of input credit to the buyer without the supplier uploading the invoice.
    • 2] The introduction of e-invoicing.
    • 3] Third the introduction of e-waybills for transporters for value exceeding Rs 50,000 per consignment.
    • Greater coordination between CBIC and CBDT: Another factor is greater coordination between the Central Board of Excise and Customs (CBIC) and Central Board of Direct Taxes (CBDT) in compliance verification.

    Changes needed

    • 1] Provisions for unregistered GST suppliers: The micro, small and medium enterprises (MSME) sector has been affected by the GST reforms because the large units have been reluctant to buy from them in the absence of input duty credit.
    • An important measure here would be to amend the law to provide that all units buying from unregistered GST suppliers would have to pay duty on a reverse charge basis.
    • 2] Rate rationalisation: While the revenue gains have come through better compliance, the next surge in GST revenues will have to come from an increase in the average incidence of GST duties.
    • This will require a combination of measures — phasing out of exemptions, raising of the merit rate from the present level of 5 per cent and merging the 12 per cent rate with the standard rate, whether to 16 per cent or 18 per cent.
    • 3] Inclusion of fuels and real estate: Including natural gas/ATF under GST should be considered.
    • Further reforms in the factor markets — land, real estate and energy — would require their inclusion in the GST.
    • This is essential because while the economic reforms of the 1990s restructured the product market, the factor market reforms were incomplete.
    • 4] Creation of federal institution: We need to create another institution in the form of a GST state secretariat that can bring together senior officers from the Centre and states in an institutional forum registered under the Society Act.
    • This forum could also provide a common point of contact for trade and industry to redress the grievances on non-policy matters.

    Conclusion

    As GST enters its sixth year journey, the changes suggested above will fine tune it to propel India towards $5 trillion economy.

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    Back2Basics: GST Input Tax Credit

    • Input Tax Credit means claiming the credit of the GST paid on purchase of Goods and Services which are used for the furtherance of business.
    • The Mechanism of Input Tax Credit is the backbone of GST and is one of the most important reasons for the introduction of GST.

  • A global order caught up in a swirl of chaos

    Context

    Adrift at the end of the 20th century, the world of the 21st century is proving to be highly chaotic.

    Lack of strong European leadership

    • Europe has been undergoing several major changes in recent months
    • Germany, which has steered European politics for almost two wdecades under Angela Merkel, now has a Chancellor (Olaf Scholz) who has hardly any foreign policy experience.
    • Without Germany’s steadying hand, Europe would be virtually adrift in troubled waters.
    • Emmanuel Macron may have been re-elected the President of France, but his wings have been clipped with the Opposition now gaining a majority in the French National Assembly.
    •  The United Kingdom is in deep trouble, if not disarray.
    • Consequently, at a time when actual and moral issues require both deft and firm handling, Europe appears rudderless.
    • Economic impact: Compounding this situation is the negative economic impact of the war in Ukraine.
    • What is evident already is that apart from the spiralling cost of energy, food and fertilizers, quite a few countries confront the spectre of food scarcity given that Ukraine and Russia were generally viewed as the granaries of the world.
    • Apart from this, nations do face several other problems as well, including, in some cases, a foreign exchange crisis.
    • The instruments employed by the West against Russia, such as sanctions, have not had the desired impact as far as the latter is concerned.

    Growing Russia-China closeness and its implications for Indo-Pacific

    • The situation in Europe is still to be decided, but what is also becoming obvious is that outside Europe, the conflict is beginning to take on a different dimension, leading to the emergence of new patchworks of relationships.
    • China’s growing influence in the Pacific region, including in the Indo-Pacific, and further strengthened by the entente with Russia, may hardly be a by-product of the Ukraine-Russia conflict, but it has induced fresh energy into a possible conflict between two rival power blocs.
    • Asia unwilling to take sides: Understanding the changing nature of relationships in Asia, and considering that most Asian nations appear unwilling to take sides in the event of a conflict, is important.
    • No unity of purpose: Unlike the unity and the strength displayed by European nations — there is no evidence of any such unity of purpose in the event that China was to launch a conflict with Taiwan.

    Challenges for India

    • India cannot ignore the situation created by the stronger bonds between Russia and China.
    • Uncertainty about Russia: India will need to determine whether Russia can be expected to play a role as a ‘trusted friend’ of India’s.
    • Again, it would be too much to hope that in dealing with China, India can expect the same kind of support it may need from the Quad.
    • China sidelining India: China, however, seems intent on establishing its dominance and also sidelining India in Asia, which New Delhi would have discerned in the course of the virtual BRICS Summit hosted by China in June.
    • Afghanistan challenge: Apart from China, India also urgently needs to come to terms with a Taliban Afghanistan.
    • Sri Lanka Challenge: At this time, the democratic upsurge in Sri Lanka presents India with a fresh set of problems.
    • In a situation where ‘rage’ and ‘anger’ are the dominant sentiments, there is every reason for concern that even governments that have maintained a ‘hands-off’ relationship could become targets of the new forces emerging in Sri Lanka.

    Major developments in West Asia

    • The Abraham Accords in 2020, which brought about the entente between the United Arab Emirates and Israel, has been the harbinger of certain new trends in the tangled web of relationships among countries of West Asia.
    • But even as the U.S.’s relations with Arab nations in West Asia appear to weaken, Russia and China are beginning to play key roles, with Iran as the fulcrum for establishing new relationships.
    • China continues to steadily build on its connections with the region, and with Iran in particular.
    • How India is dealing with the situation: India has been making steady progress in enlarging its contacts and influence in West Asia.
    •  While the India-Israel relationship dates back to the 1990s, the India-UAE relationship has blossomed in the past couple of years.
    • India-Iran relations, however, seem to have reached a stalemate of late.
    • Issues with I2U2: India has joined a U.S.-based group, the I2U2, comprising India, Israel the UAE and the U.S.
    • Details of the new arrangements are unclear, but it is evident that the target is Iran, as China is for the Quad, injecting yet another element of uncertainty into an already troubled region.

    Implications for nuclear deterrence

    • The argument being adduced is that a wide gap exists today in regard to China and India’s nuclear deterrent capabilities, and implicitly blames India for its voluntary ban on testing and its ‘no-first-use’ doctrine from making progress in this arena.
    • What is also implied is that India could overcome the lacuna by seeking the assistance of western nations which have such capabilities and knowledge.
    • Way forward for India: It is important for India to guard against such pernicious attempts at this time to undo its carefully negotiated and structured nuclear policy and doctrine, and be inveigled into any anti-China western move on this front.

    Conclusion

    Geopolitical experts in the West confine their findings at present solely to the impact of the Russia-Ukraine conflict, believing that this alone would determine not only war and peace but also other critical aspects as well. Significant developments are also taking place in many other regions of the globe, which will have equal if not more relevance to the future of the international governance system.

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