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Type: op-ed snap

  • Delhi Full Statehood Issue

    Centre notifies GNCT Act that gives more powers to Delhi L-G

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary,Governance, Transparency & Accountability, Citizens Charters

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Article 239AA

    Mains level: Paper 2- GNCT of Delhi Amendment Act notified by the Centre

    GNCT Act comes into effect

    • The Ministry of Home Affairs (MHA) issued a gazette notification stating that the provisions of the Government of National Capital Territory (GNCT) of Delhi (Amendment) Act, 2021, would be deemed to have come into effect from April 27.
    • The Act defines the responsibilities of the elected government and the L-G along with the “constitutional scheme of governance of the NCT” interpreted by the Supreme Court in recent judgements regarding the division of powers between the two entities.

    What the Amendment seeks to achieve

    • The Act will clarify the expression Government and address ambiguities in legislative provisions.
    • It will also seek to ensure that the L-G is “necessarily granted an opportunity” to exercise powers entrusted to him under proviso to clause (4) of Article 239AA of the Constitution.
    • Clause (4) of Article 239AA provides for a Council of Ministers headed by a Chief Minister for the NCT to “aid and advise the Lieutenant Governor” in the exercise of his functions for matters in which the Legislative Assembly has the power to make laws.
    • Now Act will also provide for rules made by the Legislative Assembly of Delhi to be “consistent with the rules of the House of the People” or the Lok Sabha.

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  • Intellectual Property Rights in India

    How IPR served as barrier to the right to access healthcare

    op-ed snap | Economics | Mains Paper 3: Intellectual Property Rights

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Patent Law, TRIPS

    Mains level: Paper 3- Impact of IPR on right to access healthcare

    Request for waiver

    •  Last year, India and South Africa requested WTO for a temporary suspension of rules under the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
    • A waiver was sought to the extent that the protections offered by TRIPS impinged on the containment and treatment of COVID-19. 
    • The request for a waiver has, since, found support from more than 100 nations.
    • But a small group of states — the U.S., the European Union, the U.K. and Canada among them — continues to block the move.
    • These countries have already secured the majority of available vaccines.
    • But for the rest of the world mass immunisation is a distant dream.

    Grounds on which patent laws are justified

    • Patent laws are usually justified on three distinct grounds:
    • On the idea that people have something of a natural and moral right to claim control over their inventions.
    • On the utilitarian premise that exclusive licenses promote invention and therefore benefit society as a whole.
    • On the belief that individuals must be allowed to benefit from the fruits of their labour and merit.
    • These justifications have long been a matter of contest, especially in the application of claims of monopoly over pharmaceutical drugs and technologies.

    Patent laws in India

    • In 1959, a committee chaired by Justice N. Rajagopala Ayyangar objected to monopolies on pharmaceutical drugs through colonial-era patent law.
    • The committee found that foreign corporations used patents to suppress competition from Indian entities, and thus, medicines were priced at exorbitant rates.
    • The committee suggested, and Parliament put this into law through the Patents Act, 1970, that monopolies over pharmaceutical drugs be altogether removed, with protections offered only over claims to processes.
    • This change in rule allowed generic manufacturers in India to grow. 

    How TRIPS goes against the interest of developing countries

    • WTO has into its constitution a binding set of rules governing intellectual property.
    • Countries that fail to subscribe to the common laws prescribed by the WTO would be barred from entry into the global trading circuit.
    • It was believed that a threat of sanctions, to be enforced through a dispute resolution mechanism, would dissuade states from reneging on their promises.
    • With the advent in 1995 of the TRIPS agreement, this belief proved true.
    • The faults in this new world order became apparent when drugs that reduced AIDS deaths in developed nations were placed out of reach for the rest of the world.
    • It was only when Indian companies began to manufacture generic versions of these medicines as TRIPS hadn’t yet kicked in against India, that the prices came down.

     Argument in support of the patent regime

    • Two common arguments are made in response to objections against the prevailing patent regime.
    • One, that unless corporations are rewarded for their inventions, they would be unable to recoup amounts invested by them in research and development.
    • Two, without the right to monopolise production there will be no incentive to innovate.

    Issues with the argument in support of patent regime

    • Big pharma has never been forthright about the quantum of monies funnelled by it into research and development.
    • Moderna vaccine in the U.S. emanated out of basic research conducted by the National Institutes of Health, a federal government agency, and other publicly funded universities and organisations. 
    • Similarly, public money accounted for more than 97% of the funding towards the development of the Oxford/AstraZeneca vaccine.
    •  Therefore, the claim that the removal of patents would somehow invade on a company’s ability to recoup costs is simply untrue.
    • The second objection — the idea that patents are the only means available to promote innovation — has become something of a dogma.
    • The economist Joseph Stiglitz is one of many who has proposed a prize fund for medical research in place of patents.

    Consider the question “What are the issues with the patent regime under the TRIPS in the field of medicine?”

    Conclusion

    We cannot continue to persist with rules granting monopolies which place the right to access basic healthcare in a position of constant peril. In its present form, the TRIPS regime represents nothing but a new form of “feudal calculus”.

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  • Judicial Reforms

    Need for diversity and propriety in judiciary

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Women Judges in the SC

    Mains level: Paper 2- Issue of women representation in the judiciary in Inda

    The article highlights the issue of women representation and its implications for the role of the judiciary.

    Improving representation of women

    • Presently, the Supreme Court is left with only one woman judge, who is also going to retire next year, after which, the SC will be left without a woman judge.
    • The collegium failed to take timely steps to elevate more women judges in the SC.
    • In the 71 years of history of the SC, there have been only eight women judges — the first was Justice Fathima Beevi, who was elevated to the bench after a long gap of 39 years from the date of establishment of the SC.
    • In the submissions filed by the AG on the issue states that improving the representation of women in the judiciary could go a long way towards attaining a more balanced and empathetic approach in cases involving sexual violence.
    • The AG also brought up the fact that there has never been a woman Chief Justice of India (CJI).

    Women representation in developed countries

    • The situation is not any different in developed countries such as the US, UK, Ireland, France and China.
    • According to the data collected by Smashboard, a New Delhi and Paris-based NGO, not only has no woman ever been appointed as the CJI, the representation of women across different courts and judicial bodies is also abysmally low.

    Way forward

    • In the last few meetings of the collegium, there has been some talk of promoting women to the apex court.
    • In this regard, if Justice B V Nagaratha of the Karnataka High Court is elevated to the Supreme Court, she could become the first woman CJI in February 2027.
    • But her elevation will lead to the supersession of 32 senior judges.
    •  Supersession itself is perceived as a threat to an independent judiciary
    • Seniority combined with merit is the sacrosanct criteria for promotion in the judiciary.
    • New CJI should secure the trust of members of his collegium to fill the backlog of 411 vacancies across high courts and six vacancies in the SC.

    Consider the question “What are the various structural issues faced by the judiciary in India? Suggest the measures to deal with them.”

    Conclusion

    A greater number of women in the Supreme Court would eventually lead to a woman CJI. This would be a gratifying change, which may mark the beginning of a new era of judicial appointments.

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  • Tax Reforms

    An idea on taxation that is worth a try

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: BEPS

    Mains level: Paper 3- Global minimum tax

    The article highlights the issue of race among countries to offer low corporate taxes to attract global financial capital and its implications.

    What factors contributed to low corporate tax

    • When the Soviet Bloc collapsed in 1990, nations in east Europe were badly hit and needed capital infusion to overcome their economic woes.
    • To attract global capital, they cut their tax rates sharply. This resulted in a ‘race to the bottom’.
    • Global financial capital which is highly mobile has effectively used tax havens and shell companies to shift profits and capital across the globe.
    • This mobility has enabled it to extract concessions from countries by making them compete with each other to match the concessions given by another — that is the ‘race to the bottom’.
    • Nations in Europe were forced to cut their tax rates one after the other to not only attract capital but also to prevent capital from leaving their shores.
    • Also, any country facing economic adversity can cut its tax rates to attract capital and force others to follow suit.
    • India has also cut its tax rates since the 1990s.
    • Most recently in 2019 the corporation tax rate was cut drastically to match those prevailing in Southeast Asia.

    Implications of lower corporate tax rate

    1) Shortage of resources

    • The race to the bottom had global implications.
    • Nations became short of resources and cut back expenditures on public services and encouraged privatisation.
    • The developing countries followed suit even though private markets do not cater to the poor.
    • Thus, disparities increased within nations.

    2) Base Erosion and Profit Shifting

    • The world experienced Base Erosion Profit Shifting (BEPS).
    • Namely, companies shifted their profits to low tax jurisdictions, especially, the tax havens.
    • For instance, many of the most profitable companies like Google and Facebook are accused of shifting their profits to Ireland and other tax havens and paying little tax.
    • EU has levied fines on Google and Apple for such practices.
    • Since all the OECD countries have suffered due to cuts in tax rates and BEPS, initiatives have been taken to check these practices.
    • But they will not succeed unless there is agreement among all the countries.

    3) Regressive tax structure

    • Another implication of the reductions in direct tax rates has been that governments have increasingly depended on the regressive indirect taxes for revenue generation.
    • Value-Added Tax and Goods and Services Tax have been increasingly used to get more revenues.
    • This impacts the less well-off proportionately more and is inflationary.
    • Direct taxes tend to lower the post-tax income inequality.
    • The rising inequalities result in shortage of demand in the economy and to its slowing down which then requires more investment and that calls for more concessions to capital.

    Call for Global minimum tax rate

    • It is against this backdrop that United States Secretary of the Treasury Janet L. Yellen’s has proposed a global minimum tax rate.
    • But, without global coordination, corporation tax rates cannot be raised.
    • The U.S. is crucial to this coordination.
    • There will also have to be cooperation among countries to tackle the lure of the tax havens by enacting suitable global policies.

    Consider the question “What factors contributed to the race to bottom on the corporate taxes among the countries? What are its implications? Will the global minimum tax rate be able to deal with it?”

    Conclusion

    The impact of all this will be far-reaching impacting inequalities, provision of public services and reduction of flight of capital from developing countries such as India and that will impact poverty.

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  • Foreign Policy Watch: India-Myanmar

    An unquiet neighbourhood

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India,Effect Of Policies & Politics Of World On India’S Interests

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Factors to consider in finding solution to conflicts in Afghanistan and Myanmar

    The article highlights the inherent difficulty in finding a solution to the two conflicts raging on in India’s neigbourhood.

    Tale of two conflicts in neighbourhood

    • Efforts to end two major conflicts in India’s neighbourhood have become intense.
    • To the west, a peace summit on Afghanistan, seeking to end decades of conflict there, was also scheduled to take place in Istanbul over the weekend.
    • To the east, the Association of Southeast Asian Nations (ASEAN) has produced a diplomatic opening with Myanmar’s military leadership.
    • Afghan conflict go back to the late 1970s; since then we have seen different phases of the conflict.
    • Although the crisis in Myanmar appears recent, the tension between civil-military relations is not new.
    • Back in 1988, the army annulled the huge mandate won by Aung San Suu Kyi and unleashed massive repression.

    3 Common Themes in the effort at peace and reconciliation

    1) Ending violence

    • The first is about ending violence.
    • In Afghanistan it has been near impossible to get a resurgent Taliban to agree to stop its attacks on government forces or the civilian population.
    • The ASEAN initiative in Myanmar calls for an immediate cessation of violence and utmost restraint from all sides.
    • The opposition demanding restoration of democracy might find this rather ironic, since it is the army that is employing violence and has shown scant restraint.

    2) Dialogue among all parties

    • The second theme in the ASEAN initiative — “constructive dialogue among all parties” to “seek a peaceful solution” — is also common to all peace processes.
    • The Taliban found all kinds of excuses to delay a dialogue with the Kabul government that it always saw as illegitimate. So far, it has avoided one.
    • In Myanmar, the army might be ready to engage the opposition in a prolonged dialogue and defuse international pressure; but it will be hard for the victims of the coup to accept a dialogue on the army’s terms.

    3) Third-party mediator

    • The Afghan conflict has long been internationalised.
    • All major powers, including regional actors and neighbours, have acquired stakes in the way the Afghan conflict is resolved.
    •  This unfortunately makes the construction of an internal settlement that much harder.
    • In Myanmar, the ASEAN has set the ball rolling by agreeing that a special envoy will be traveling to the region and will engage with all parties to the conflict.

    Cost-benefit in diplomacy

    • The US is hoping that the Taliban will moderate some of its hardline positions given its need for significant international economic assistance for reconstruction, political legitimacy.
    • In Myanmar, too, the international community will hope the military would want to avoid the risks of political isolation and economic punishment.
    • But how the Taliban and the Myanmar army calculate these costs and benefits could be very different.
    • Both have long experience of surviving external pressure and enduring sanctions.

    Conclusion

    Few civil wars have seen the kind of massive external effort to change the internal dynamics as in Afghanistan; but to no avail. In Myanmar, it is not clear how far the international community might go. The prospects for positive change in Afghanistan and Myanmar, then, do not look too bright in the near term.

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  • Civil Services Reforms

    Civil service reforms in India

    op-ed snap | Governance | Mains Paper 2: Civil Service

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Role of civil servants in implementing the development agenda

    The article highlights the role bureaucracy can play in the development of the country and suggests the ways to deal with the challenges faced by the bureaucracy.

    Background of the PSU’s

    • In the 1950s and ’60s, the private sector had neither the capability to raise capital to take the country on the path of industrialisation.
    • The state had to take on the role of industrialising the country by establishing PSUs.
    • The civil services became the natural choice for establishing and managing these units.
    • They delivered substantially, if not fully.
    • Even after privatisation, the bureaucracy would be required for the transition of PSUs from the public to the private sector.

    Need for structural transformation agenda

    • The goal of making India a $5-trillion economy needs a coherent structural transformation agenda and extraordinary implementation capacity.

    1) Dealing with crony capitalisms

    • Since Independence, the political survival of Indian regimes has required pleasing a powerful land-owning class and a highly concentrated set of industrial capitalists.
    • The elites of business houses and land owners share no all-encompassing development agenda.
    • Can the present regime find a way out of this conundrum?

    2) Implementing the development agenda

    • While the agenda is an outcome of political choices, the thinking goes that market mechanisms should be used as far as possible to make economic choices.
    • This argument is at the heart of the privatisation of state assets.
    • However, markets operate well only when they are supported by other kinds of social networks, which include non-contractual elements like trust.
    • Particularly in industrial transformation, there must be an essential complementarity of state structures and market exchange.
    • Only a competent bureaucracy can provide this.
    • It is for this reason that Max Weber argued that the operation of large-scale capitalist enterprise depended upon the kind of order that only a modern bureaucratic state can provide.

    3) Removing the constraints on the bureaucracy

    • The political and permanent executives had to work as a team through mutual respect for each other’s roles as defined in the Constitution.
    • Every deviation from these ideals has lowered the capacity of the state to deliver.
    • This is the result of electoral politics where the essence of the state action is the exchange relationships between the incumbent governments and its supporters.
    • All this is achieved by undermining the impartiality of the bureaucracy in implementing rules and giving opinions frankly.
    • The power to transfer is weaponised to bring the bureaucrats to heel and it works because authority sits with the position not the person.
    • The pressure on officials to behave contrary to the ostensible purpose of the department undermines to a great extent the ability of the state to promote development.
    • If privatisation is to work, then the corruption-transfer mechanism and its effects on the bureaucracy has to go.

    4) Corporate coherence

    • Corporate coherence is the ability of the bureaucracy internally to resist the invisible hands of personal maximisation by undercutting the formal organisational structure through informal networks.
    • If this goes too far, then everything becomes open to sale and the state becomes predatory.

    Consider the question “What are the issues facing civil services in India? Suggest the ways to deal with these issues.”

    Conclusion

    We need to fight the increasing tendency to grab public resources and restore to the bureaucracy its autonomy of action as envisaged in the Constitution by de-weaponising transfers.

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  • Financial Inclusion in India and Its Challenges

    Microfinance Institutions

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Role of microfinance in India and challenges sector faces

    The article highlights the important role played by the microfinance sector in furthering financial inclusion in India and suggests measures to achieve holistic development of the sector.

    Important role played by microfinance

    • No other form of financial services has had the kind of far-reaching impact, in terms of fostering financial inclusion, as microcredit has.
    • Access to small, collateral-free loans for economically productive purposes has helped transform the lives of millions at the bottom-of-the-pyramid—especially women.
    • Over the past decade, India’s microfinance industry has grown at a compound annual growth rate of 26% to reach ₹2.36 trillion.
    • It has helped 50 million economically vulnerable Indians, 99% of them women, live a life of dignity and financial independence.
    • Assuming that these 50 million people who took a loan to start a small business employed at least one other person, it translates into 50 million additional jobs in the country.
    • This creates a ‘network effect’ that has a social impact at scale.

    Evolution of microfinance industry

    • Recommendations of the Malegam Committee, which became regulations, and practices such as relying on credit bureau data to assess a borrower’s creditworthiness have helped the industry immensely.
    • The vital role that microfinance plays in the last-mile delivery of financial services was acknowledged.
    • Subsequently, eight out of the 10 small finance bank licences granted were also given to microfinance institutions.
    • RBI has sought to undertake a comprehensive review of the sector again, after 10 years, to better align the regulatory framework with the sector’s current realities.

    Steps for development of sector

    • First, Entities should promote financial literacy through group meetings of borrowers.
    • Second, organizations should complement their microcredit operations with social development projects and community-connect initiatives.
    • Third, prospective borrowers’ indebtedness and ability to repay dues should be assessed properly.
    • Fourth, loans must be given only for income-generation purposes.
    • Fifth, every microfinance organization should devote time and resources for capacity building at the grassroots.
    • Sixth, rather than focusing on taking over the existing debt of a borrower, or lending to her further, institutions should focus on bringing new-to-credit customers into the fold.

    Consider the question “How can microcredit stimulate financial inclusion in India? Suggest the measures for the development of microfinance sector in India.”

    Conclusion

    There is much more that we, as a nation, collectively need to do in order to bring a vast population of unbanked and underbanked Indians into the fold of formal financial services.

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  • Judicial Reforms

    Need to address the systemic issues plaguing the judiciary

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Article 50, Article 124

    Mains level: Paper 2- Challenges facing judiciary in India

    The article highlights the issues facing the judiciary in India and emphasises the need for addressing these issues.

    Separating judiciary from the executive

    • Today, the judiciary, especially the SC, is called upon to decide a large number of cases in which the government has a direct interest.
    • These can be politically sensitive cases too.
    • The framers of the Constitution understood the importance of the oath of office of judges of the Supreme Court of India (SC) and carefully designed its language.
    • The words, “without fear or favour” to “uphold the constitution and the laws” are extremely significant and stress the need for a fiercely independent court.
    • Article 50 of the Constitution provides: “The State shall take steps to separate the judiciary from the executive in the public services of the State.”

    Master of roaster issue

    • The Chief Justice of India is the first amongst the equals but by the virtue of his office assumes significant powers as the Master of the Roster to constitute benches and allocate matters.
    • The SC has re-affirmed this position in a rather disappointing decision in Campaign for Judicial Accountability and Reforms v. Union of India, (2018).
    • The result has been catastrophic.
    • Many matters were either treated casually or deflected for no reason from serious hearing.

    Accountability from legislature and executive

    • The SC is expected to seek strict accountability from the legislature and executive and any infraction of the Constitution and laws must be corrected.
    • Yet, this is not happening.
    • A country of billion-plus needs its highest court to stand for the people, not seemingly for the executive of the day.

    Inherent and fundamental challenges

    • The judiciary is besieged by inherent and fundamental challenges.
    • Millions of pending cases, quality of judges and their decisions, organisational issues and its integrity and impartiality, need urgent attention.
    • Yet, in the last two decades precious little has been done.
    • Justice is eluding the common man, including the vulnerable sections of society.

    Way forward

    • The new Chief Justice must seriously introspect and free himself of the bias in constituting benches and allocating cases and take concrete steps to revitalise the administration of justice.
    • Only then will the rule of law be restored and the Constitution served.

    Consider the question “Examine the inherent and fundamental challenges faced by the judiciary in India. Suggest the measures to deal with these challenges.” 

    Conclusion

    The Chief Justice of India on account of the position he holds as paterfamilias of the judicial fraternity, was suspected by none other than Dr B R Ambedkar. Let us hope the new Chief Justice makes serious efforts to prove otherwise.

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  • Foreign Policy Watch: India-United States

    Data and a new global order

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Role of data in shaping the global order

    Digital data revolution

    • The Industrial Revolution restructured the global manufacturing order to Asia’s disadvantage.
    • But in the ‘Digital Data Revolution’, algorithms requiring massive amounts of data determine innovation, the nature of productivity growth, and military power.
    • Mobile digital payment interconnections impact society and the international system, having three strategic implications.

    3 implications of mobile digital payment interconnections

    1) Symbiotic nature of military and civilian system

    • Because of the nature and pervasiveness of digital data, military and civilian systems are symbiotic.
    • Cybersecurity is national security, and this requires both a new military doctrine and a diplomatic framework.

    2) Productivity advantage of data to Asia

    • The blurring of distinctions between domestic and foreign policy and the replacement of global rules with issue-based understanding converge with the growth of smartphone-based e-commerce, which ensures that massive amounts of data give a sustained productivity advantage to Asia.

    3) India can negotiate new rules as an equal with US and China

    • Data streams are now at the centre of global trade and countries’ economic and national power.
    • India, thus, has the capacity to negotiate new rules as an equal with the U.S. and China.

    How data shaped US-China relations

    • Innovation based on data streams has contributed to China’s rise as the second-largest economy and the “near-peer” of the U.S.
    • The national security strategy of the U.S. puts more emphasis on diplomacy than military power to resolve conflicts with China, acknowledging that its military allies have complex relationships with Beijing, as it seeks to work with them to close technology gaps.
    • China’s technology weakness is the dependence on semiconductors and its powerlessness against U.S. sanctions on banks, 5G and cloud computing companies.
    • But China’s digital technology-led capitalism is moving fast to utilise the economic potential of data, pushing the recently launched e-yuan and shaking the dollar-based settlement for global trade.

    How global strategic balance will be shaped by data standard

    • China has a $53-trillion mobile payments market and it is the global leader in the online transactions arena, controlling over 50% of the global market value.
    • India’s Unified Payments Interface (UPI) volume is expected to cross $1 trillion by 2025.
    • The U.S., in contrast, lags behind, with only around 30% of consumers using digital means and with the total volume of mobile payments less than $100 billion.
    • The global strategic balance will depend on new data standards.
    • The U.S., far behind in mobile payments, is falling back on data alliances and sanctions to maintain its global position.

    India’s role in digital economy

    • With Asia at the centre of the world, major powers see value in relationships with New Delhi.
    • India fits into the U.S. frame to provide leverage.
    • China wants India, also a digital power, to see it as a partner, not a rival.
    • And China remains the largest trading partner of both the U.S. and India despite sanctions and border skirmishes.

    Way forward for India

    • India, like China, is uncomfortable with treating Western values as universal values and with the U.S. interpretation of Freedom of Navigation rules in others’ territorial waters.
    • New Delhi’s Indo-Pacific vision is premised on “ASEAN centrality and the common pursuit of prosperity”.
    • The European Union recently acknowledged that the path to its future is through an enhanced influence in the Indo-Pacific, while stressing that the strategy is not “anti-China”.
    • The U.S. position in trade, that investment creates new markets, makes it similar to China’s Belt and Road Initiative.

    Conclusion

    India alone straddles both U.S. and China-led strategic groupings, providing an equity-based perspective to competing visions. It must be prepared to play a key role in moulding rules for the hyper-connected world, facing off both the U.S. and China to realise its potential of becoming the second-largest economy.

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  • Coronavirus – Health and Governance Issues

    Why single price of vaccine across the country is good idea

    op-ed snap | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Covid vaccination policy and issues with it

    The article deals with the issues of different prices set for the Covid vaccine and its implications.

    Understanding the positive and negative externalities

    • Vaccines have a positive externality; it is a good whose consumption benefits not just the one who has it.
    • A vaccinated person is not only relatively protected against the disease himself/herself, but also less likely to transmit it to others.
    • Usually, a person getting vaccinated takes into account only his/her own cost and benefit, while ignoring the fact that he/she lowers the chances of infecting others.
    • It is the opposite of smoking, which has “negative externality”.
    • Since every individual ignores the full set of benefits/costs from consuming goods with positive/negative externalities, the market isn’t always the most efficient mechanism for allocation of such goods.
    • That is a key reason why governments treat goods having large positive externalities as “public goods” and provide these while factoring in the full costs and benefits to society.

    Analysing the issues with vaccine policy

    1) Vaccine inequality

    • It requires vaccine manufacturers to supply 50 per cent of their production to the Centre at controlled prices, while allowing them to sell the remaining half in the open market including to state governments at pre-announced “self-set” prices.
    • To start with, the new policy can lead to differential access to the vaccine.
    • Manufacturers are supposed to “transparently declare” their prices in advance for their 50 per cent supply to the open market.
    • But there is no limit per se on the retail price they would charge.
    • This could lead to a whole range of prices and vaccine inequality, apart from diversion of supplies from the controlled low-price government centres to the open market.
    • So, we may well have scarcity in the “mass” segment co-existing with a glut in the “elite” segment.
    • There is also concerns about economic efficiency and the potential for market failure.

    2) Economic efficiency and potential for market failure

    • Imagine there are two sets of people in India.
    • The first consists of those who are better off and can afford to stay back or work from home.
    • This lot is also less likely to cause infection to others.
    • The second set is mostly blue-collar workers, small traders, vendors and agriculturists.
    • The nature of their work — on the shop floor or in the field — makes them naturally prone to infect others.
    • It follows, then, that society gains from first vaccinating the latter, as they have a higher negative externality.
    • The market will ignore those with lower purchasing power, despite them having a higher probability of spreading the disease.
    • In fact, the bigger the income difference between the two segments, the greater will be the extent of market failure from simultaneous over-provisioning and under-provisioning.

    Way forward

    • The solution could be a single price to be paid to vaccine makers for all the doses that they supply.
    • The price should be high enough to stimulate them to rapidly ramp up production.
    • Those government should pay directly to the vaccine maker or the hospital administering the dose for those without sufficient means.
    • The suggested solution is similar to the fertiliser subsidy, which is now disbursed to companies only after actual sales to farmers.

    Consider the question “What policy should be followed for the vaccination in the country? What are the issues with the curent policy which involved different price for government and for open market.”

    Conclusion

    A single price for Covid-19 vaccines will stimulate production, ensure efficient vaccination.

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