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Type: op-ed snap

  • Innovations in Biotechnology and Medical Sciences

    Man versus microbe

    op-ed snap | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Techniques used for detecting virus: RT-PCR, CRISPR and serological tests.

    Mains level: Paper 3- Various techniques used in tests used to detect Covid-19 and their advantages.

    Context

    The present COVID-19 outbreak has brought to light the old struggle between humans and viruses.

    The constant struggle between humans and viruses

    • Hijacking the cell machinery of the host: Microbes, particularly viruses, have only one goal — to find a suitable host and multiply. Viruses, however, do not multiply by themselves. They need the cell machinery of the host for replication.
    • Around two-thirds of all infections in humans are caused by viruses.
    • The current COVID-19 outbreak caused by a coronavirus, SARS-CoV2, has brought this struggle to light once again.
    • Coronavirus has the upper hand now: The virus seems highly successful because it spreads rapidly from human to human and has a lower rate of mortality.
    • Humans have faced new viruses at regular intervals. These include the Ebola, Zika, HIV, the Flu virus H1N1, the Middle East Respiratory Syndrome (MERS), and Severe Acute Respiratory Syndrome (SARS) — the latter two are from the coronavirus family.
    • Animal to humans: These viruses have all appeared in the last few decades, having jumped from their animal reservoirs to humans.
    • Many of these viruses have a much higher mortality rate than the SARS-CoV2 that caused COVID-19.
    • Victory would be at huge costs: Like before, humans will come out of the present crisis as winners but that will happen at a huge cost, in every sense of the word.
    • The loss would include untimely loss of human lives, economic losses and a general loss of confidence in the human ability to deal with a tiny unknown enemy.

    Steps involved in dealing with the virus

    • It involves dealing with any new viral outbreak is to be able to accurately test, detect and track the spread of the virus, and isolate the infected persons to stop further spread.
    • Knowing the genetic makeup of virus matters: In order to implement the first step, it is important to obtain information on the genetic makeup of the virus, which forms the basis of developing highly specific diagnostic tests.
    • Three types of tests are being used which have different advantages associated with them and are based on different technologies. These are described below-

    1. What is the RT-PCR technique?

    • Currently, the most reliable and widely-used test is based on a technique called RT-PCR (Reverse Transcription Time Polymerase Chain Reaction).
    • This test aims to detect the viral RNA, the genetic material of SARS-CoV2.
    • The testing begins with the careful collection of swabs taken from the nose or the back of the throat of the patient and extraction of the viral RNA.
    • However, this extracted viral RNA from the swab is too tiny an amount for direct detection.
    • Amplification: The RT-PCR, through many different reactions that include the conversion of viral RNA to DNA — its amplification and detection — makes it possible to confirm the presence or absence of the virus.
    • The testing kits contain all chemicals and materials required for carrying out the RT-PCR based tests, which are performed by government-approved laboratories such as India’s National Institute of Virology.
    • However, many more testing centres, including those run by private players, have now been allowed to carry out the tests in many countries to bridge the huge demand and supply gap.
    • Why testing matters? It is now clear that countries which were able to scale up the testing of the virus in patients at an early stage were able to control the spread of the disease far better than those which did not.
    • Only viable control measure: Given that there is no cure or vaccine for the control of COVID-19, testing of infected patients much more quickly and tracking their contacts to isolate them till they clear off the virus is currently the only viable control measure.

    2. How CRISPR is proving helpful in scaling up the testing?

    • There is good news of a relatively new but powerful technology called CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats).
    • CRISPR is highly specific in directly detecting viral RNA and confirming the presence or absence of the virus.
    • Interestingly, viruses also attack bacteria and the discovery of CRISPR itself was based on understanding how bacteria cut off the viruses.
    • What are the advantages of CRISPR-based test? The CRISPR-based test is quick and circumvents the need for both expert handling as well as PCR machines and can be done at multiple locations in about half an hour.
    • It can also fend off delays and other logistic problems in collection and transportation of test samples.
    • These tests are being validated and readied for approval.
    • Two companies, separately founded by the two scientists who discovered the CRISPR technique, have also announced that they are ready with their CRISPR-based test for validation and approval.
    • Test in 10 minutes: They have claimed that these tests can be performed within 10 minutes and can be conducted by using a paper strip format.
    • Test in 5 minutes: Another company, Abbott Laboratories, has recently announced the approval of their portable test for coronavirus, which the company claims can provide the results in five minutes.
    • Such a point of care test will not only greatly enhance the speed of large-scale testing but will also relieve the tremendous pressure faced by frontline healthcare providers.

    3. Serological tests to detect the realistic information on the spread of the virus

    • Why we need serological tests? The above described RT-PCR and the newly developed CRISPR based tests are needed for scaling up the testing.
    • But many individuals infected with the virus do not show symptoms of the disease and recover completely.
    • How to test these cases to gather realistic information on the spread of the virus?
    • Such information will be necessary for designing future control strategies.
    • How serological tests work? This is done with serological tests, which are carried out in blood samples collected from a large population and are based on the detection of antibodies that are produced in response to the viral infection.
    • Advantage of the serological tests: These tests are relatively easier to develop and use, less expensive, and also do not need much sophisticated infrastructure or highly trained manpower.
    • Serological tests for COVID-19 have already been developed by many groups and are already in use.
    • India also plans to carry out serological tests to examine the actual spread of the disease in different parts of the country.

    Conclusion

    Lockdowns are essential to control the disease but long-term strategies to deal with the disease would be based on the knowledge of its actual spread. The newly-developed point of care tests should be successfully able to bridge the existing gap in the testing of the virus. This will also assist in gearing up facilities to treat the severely sick as well as relieve and protect frontline health providers. Meanwhile, hopefully, efficient drugs therapies and efficacious vaccines against COVID-19 will also be discovered soon.

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  • Government Budgets

    States at centre

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

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Paper 3- Financial stress on the states and what centre should do to address the problem.

    Context

    Concerned over the impact on their revenues, several state governments planned cuts in salaries of government employees.

    State finances showing the signs of stress

    • The fiscal crisis stemming from the disruption in economic activity due to the coronavirus is now beginning to show.
    • Concerned over the impact on their revenues, several state governments planned cuts in salaries of government employees.
    • The stress to state finances stems from multiple sources.
    • First, as economic growth falters, their own income streams, for instance, revenues from petroleum products, real estate transactions, will slow down further, as will GST collections, and the amount collected through the compensation cess will not be enough to meet budgeted expectations.
    • Second, as the Centre’s own revenues also slow down, transfers to states will take a hit. It is quite likely that tax devolution to states, which has been budgeted at Rs 7.8 lakh crore in 2020-21, will not materialise.
    • Collectively, state expenditure far outstrips that by the Centre, with revenues falling short, any cutbacks in their spending, at a time when there is a need for a bold fiscal expansion, will further aggravate the economic stress.
    • Need assurance of adequate resource: Thus, states, which are at the frontline of fighting the public health crisis, need to be assured of adequate resources.

    Increase in the WMA limit will not address the issue

    • Limit increased by 30%: The Reserve Bank of India decided to increase the ways and means advances (WMA) limit by 30 per cent for state governments.
    • What is WMA? The WMA is a temporary liquidity arrangement with the RBI which helps governments tide over their short-term liquidity woes.
    • A short term measure: While states have been averse to opting for this facility in the past, and the new WMA limits may need to be revised further if the mismatch rises, this is a short-term measure, and does not address the underlying issue of significant revenue slippages.
    • Contradictory impulse: Under the existing fiscal deficit constraint, the collapse in revenues will force states to cut back on spending, imparting a contractionary impulse to the economy.

    Way forward

    • The Centre must take several steps to ensure an adequate flow of resources to states.
    • First, it must immediately clear all its pending dues to state governments.
    • Second, while it is cheaper for the Centre to borrow and transfer to states, even though the spreads between state and central government bonds have now widened, making state borrowing more costly, states must be allowed to borrow more.
    • Third, as some state chief ministers have suggested, the fiscal deficit limits imposed on states must be relaxed.

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  • Important Judgements In News

    The SC order on migrants labours raises several issues

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

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Paper 2- The SC order on migrant labour rises several questions dealing with the fundamental rights.

    Context

    On March 31, the Supreme Court of India (SC), entertaining a writ petition under Article 32, passed an order which raises more questions than it seeks to answer.

    What were the issues involved in the writ petition?

    • The writ petition was purportedly filed in the public interest, “for redressal of grievances of migrant workers in different parts of the country”.
    • Directions which are in favour of the Union government: The Court has proceeded to issue several directions which are clearly in favour of the respondent, the Union of India.
    • The following three directions were uncalled for:

    What were the directions issued by the Supreme Court?

    • One, that under section 54 of the Disaster Management Act, 2005, persons can be punished with imprisonment, which may extend to one year, or with a fine for making or circulating a false alarm or warning.
    • Disobedience of the order including an advisory by a public servant would result in punishment under section 188 of the IPC.
    • Two, all concerned, that is the state government, public authorities and citizens will faithfully comply with directives, advisory and orders issued by the Union of India in letter and spirit in the interest of public safety.
    • Three, the media should only refer to and publish the official version of the Government of India, publishing a daily bulletin.
    • The SC observations about migrant labourers: After giving substantial reliefs to the Union of India, the SC proceeded to make mere observations about migrant labourers by directing that they should be dealt with “in a humane manner”.
    • And that “trained counsellors, community leaders and volunteers must be engaged along with the police to supervise the welfare activities of migrants”.
    • The SC has virtually absolved the government for its handling of the situation.

    What was the basis for issuing orders and issues with it

    • The basis of the directions is a statement made by the Solicitor General of India and some status reports to the effect that “the exodus of migrant labourers was triggered due to panic created by some fake/misleading news and social media”.
    • What is an issue with basis? The SC has proceeded on assumptions and surmises which were untested and unchallenged.
    • What the court should have done? In a matter of such seriousness, the least it should have done was to have appointed an amicus curiae (a friend of the court) to assist it rather than simply accept the self-serving status reports and statements made before it.
    • The Court overlooked the fact that in India, hundreds of millions of people work during the day and are paid at the end of the day and then go and buy their foodstuffs.
    • They have no savings, nor do they have foodgrains stored.
    • It is surprising that the Court, the custodian of fundamental rights, should be oblivious to this reality.

    Issue of press freedom

    • Citizens have the right to freedom of speech and expression. Press freedom is a part of this. Citizens have the right to receive information as well.
    • Article 13 (2) of the Constitution says that the state cannot make any law which takes away or abridges the fundamental rights.
    • If Parliament cannot do so, the Supreme Court — the upholder of the constitutional rights — surely cannot do so.
    • The SC has itself held in M Nagraj (2006): “A right becomes a fundamental right because it has foundational value. The fundamental right is a limitation on the power of the State. A Constitution, and in particular that part of it which protects and which entrenches fundamental rights and freedoms to which all persons in the State are to be entitled, is to be given a generous and purposive construction.”
    • The SC should not have made all media subservient to the government by directing that the former “refer to and publish the official version about the developments”.
    • Such an order could be justified only during an emergency and that too by the executive, subject to challenge before the courts.

    Conclusion

    The SC has given a carte blanche to the authorities, and citizens appear to have no avenues of redress. Most of all, by condemning the media and social media, holding them responsible for fake news, the SC has done a great disservice to the institution which provides information to citizens and upholds democracy.

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  • Issues related to Economic growth

    Opportunity in the Covid-19 crisis

    op-ed snap | Agriculture | Mains Paper 3: Government Budgeting,Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: FRBM Act.

    Mains level: Paper 3- Opportunity to bring in reform that could benefit us in the medium term as well.

    Context

    Coronavirus pandemic offers a trigger to fundamentally strengthen the Indian economy, and protect the vulnerable. This requires cooperation between the Centre and states.

    Opportunity to do things good for the medium term

    • Minimising the impact on the vulnerable: The current crisis is so terrible in its toll of life and livelihoods that the need of the hour must be minimising the health, humanitarian and economic costs, especially for the most vulnerable.
    • Rising expenditure may force hard choices: Rising public expenditures to help tens of millions of workers and their families alongside plummeting resources will inevitably force hard choices.
    • Appropriately, much of the policy discussion and the government’s first response have focussed on addressing the immediate imperatives.

    This crisis is also an opportunity to do things that are not only good for now but for the medium term as well. Few are discussed below.

    1. Revamp macro-fiscal framework

    • Massive fiscal expenditure may require: If the pandemic follows the exponential trajectory seen in other countries, the crisis is going to entail massive fiscal expenditures, perhaps up to 4-5 per cent of GDP, much more than what the government has announced.
    • Macro-fiscal targets have to be exceeded: Consequently, the basic macro-fiscal framework — for example, the Centre’s FRBM target of 3.5 per cent of GDP, and the revenue and deficit estimates for 2020-21 — has been fundamentally overtaken by events.
    • Allow states to exceed deficit targets: The Centre should immediately announce that even the states will be allowed to exceed their fiscal responsibility legislation targets because they will be in the front line of taking action against the pandemic.
    • Opportunity to review the FRBM: The crisis is an opportunity to revisit the entire framework.
    • The focus on unattainable targets, the fact that the FRBM has been honoured only in the breach, and the consequences in terms of loss in budgetary integrity and transparency need serious review, even overhaul.
    • Once the crisis ebbs, India might be looking at overall deficits well in excess of 10 per cent and debt levels much greater than those today. If the starting point is going to be so different, the old goals and targets won’t retain meaning.

    2. Remake finance and adopt a data-driven lending model

    • Going into the crisis, India’s corporate and financial sector were under severe stress — the so-called Four Balance Sheet problem.
    • This crisis will, unfortunately, add consumers and small and medium enterprises to that This will be an extremely hard — but critical — problem to address.
    • A takeover of bad loans will be unavoidable: To allow banks to revert to normalcy, a largescale takeover of their bad loans will be unavoidable not least because the current bankruptcy process will be severely inadequate.
    • Opt for the tech. driven lending model: This crisis opens the door for the new lending model proposed by Nandan Nilekani i.e. technology-driven lending.
    • What is Technology-driven lending? It uses data rather than collateral, allowing the 10 million-odd businesses with deep digital footprints (for example, based on GST invoices), to get loans from the thriving ecosystem of new financial players.

    3. Complete JAM

    • One of the major achievements of the government was to create the plumbing — Jan Dhan, Aadhaar, and Mobile (JAM) — to augment weak state capacity.
    • How JAM is proving helpful in this crisis? The state could now make cash transfers swiftly, with reduced leakages, whether as income support, scholarships or pensions, and potentially eventually implementing a Universal Basic Income.
    • In the current crisis, it is proving to be an important part of the social safety net that is helping to cushion the most adversely affected groups.
    • JAM is not complete yet: But the JAM plumbing is still incomplete because there is a “last mile problem”.
    • Not all those with bank accounts can access money either because of difficult geography or because bank functionaries give incomplete or misleading information.
    • Opportunity to fix the shortcomings: This crisis is an opportunity not just to leverage JAM to enhance cash transfers, but to empower citizens. This will require the government to identify remaining weaknesses on a war footing and fix them.

    4. Re-shape Indian agriculture

    • Need to create one market for agriculture: The need to preserve supply chains in agriculture in times of crisis reinforces the need to create one market for agriculture across India.
    • This requires eliminating legislation like the Essential Commodities Act and the panoply of resulting restrictions.
    • Phase-out subsidies and opt for DBT: Second, the crisis has shown the possibilities created by JAM and direct transfers.
    • Phasing out in cycles: Building on PM-Kisan and various state-level schemes, pernicious subsidies, especially for fertilisers and power, could be phased out over 5-6 crop cycles.
    • This could be done through small but frequent increases in fertiliser prices (the technique used to eliminate fuel subsidies).

    5. Focus on Make in India

    • The critical source for almost all the essential Active Pharmaceutical Ingredients (API) used to manufacture drugs, the ability also to fight death, is largely made in China.
    • India was once a major producer of such APIs but lost ground to China.
    • Frame intelligent industrial policy: The crisis should be the opportunity to go on war footing to do intelligent industrial policy — incentives, regulatory help, trade policy — that would resurrect India’s manufacturing capability.
    • Previous Make in India attempts have shown lackadaisical results.
    • Focus on the pharmaceutical sector: The crisis creates the momentum to focus the effort on one sector, pharmaceuticals. As a result, the ability to save lives could be Made in India, again.

    6. Establish migrants as full citizens

    • Need to change the place-based benefits to person-based benefits: The plight of migrant workers reinforces the need to move from immobile place-based benefits to mobile person-based benefits, which is possible as the JAM infrastructure is strengthened.
    • Portability of benefits: This will require portability of benefits, including access to the PDS, Ujjwala and Ayushman Bharat.
    • The crisis has highlighted the travails of migrant labour and their second-class status.
    • The large gap between the organised and unorganised sector worker: It reflects a broader chasm between the few securely employed in the organised sector and the vast majority subject to the vicissitudes of the unorganised sector.
    • Differences not just in the levels of income but in their volatility as well as differential access to social insurance (healthcare, pensions) distinguish these two classes.

    7. Upgrade Health

    • Weakest state capacity in health and education: State capacity over 70 years in India has been weakest in the areas of education and health.
    • The COVID-19 pandemic must lead to a serious strengthening of the health infrastructure for dealing with pandemics.
    • Set up an apex institution on the lines of US’s CDC: To start with, India needs an apex institution like the US’ Centers for Disease Control with a network across all the states.
    • They should invest in disease surveillance systems, set up diagnostics labs, be able to gather real-time data and analyse them etc.
    • The Taiwan model, which has been so successful in this pandemic, could be studied.
    • More fundamentally, the crisis is a wake-up call to address India’s severe limitations in the provision of basic health.
    • Focus on basic public health: Creating tertiary health facilities must be subservient to strengthening basic public health and early childhood care.

    8. Build a National Solidarity Fund

    • The severe downturn in economic activity ahead will savagely hit the informal poor.
    • How would the Solidarity fund be set up? The government should consider a Solidarity Fund with a one-time annual contribution coming from the wealthy and the employees in the organised sector.
    • Contribution to the fund: This contribution can take the form of taxes or elimination of middle-class subsidies identified in the Economic Survey of 2016.
    • The wealthy could contribute via a wealth tax with thresholds set by property values say above Rs 5 crore.
    • Salaried employees in the public and private sectors could contribute via a small, progressive tax on salaries and pensions.
    • Middle-class subsidies that could be eliminated include interest and tax deductions for small savers, favourable taxation of gold and other luxuries.
    • Wealth taxes and elimination of subsidies for the rich should, in any event, be part of the long-run reform agenda to reduce growing inequality.

    Conclusion

    These examples illustrate how the crisis can be converted to an opportunity to fundamentally strengthen the Indian economy, and protect the vulnerable. A common thread to many of these actions — indeed prerequisites for their success — is cooperation between the Centre and states. Central direction combined with flexibility and nimbleness in the states and local bodies is India’s way through the crisis and beyond.

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  • Defence Sector – DPP, Missions, Schemes, Security Forces, etc.

    Still no bullseye, in volume and value

    op-ed snap | Security Issues | Mains Paper 3: Indigenization Of Technology

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 3- India's growing defence export.

    Context

    Based on the latest estimates released by the Stockholm International Peace Research Institute (SIPRI) in the period between 2009-13 and 2014-18, Indian defence imports fell even as exports increased.

    What are the factors responsible for the shift?

    • Make in India initiative: The first is the ‘Make in India’ initiative, as part of which a number of components from Indian private and public sector enterprises have been prioritised by the government.
    • Delay by vendors in supplying equipment: The second set of factors is extraneous to India in the form of delays in supplying equipment by vendors and the outright cancellation of contracts by the Indian government or at least a diminution of existing contracts.

    How ‘Make in India’ made the difference?

    • DPP’s measures to build India’s defence industry: Under the ‘Make in India’ initiative, the Defence Procurement Procedure (DPP) lays out the terms, regulations and requirements for defence acquisitions as well as the measures necessary for building India’s defence industry.
    • It created a new procurement category in the revised DPP of 2016 dubbed ‘Buy Indian Indigenously Designed, Developed and Manufactured’ (IDDM).
    • Earmarking projects for MSMEs: The ‘Make’ procedure has undergone simplification “earmarking projects not exceeding ten crores” that are government-funded and ₹3 crores for Micro, Small and Medium Enterprises (MSMEs) that are industry-funded.
    • Technology transfer to private companies: In addition, the government has also introduced provisions in the DPP that make private industry production agencies and partners for technology transfers.
    • The growing share of SMEs in the defence market: Small and Medium Enterprises (SMEs) until 2016 accounted for a 17.5% share of the Indian defence market.
    • According to the government of India data for the financial year 2018-19, the three armed services for their combined capital and revenue expenditures sourced 54% of their defence equipment from Indian industry.
    • Four companies among the top 100: Among arms producers, India has four companies among the top 100 biggest arms producers of the world.
    • It is estimated, according to SIPRI, their combined sales were $7.5 billion in 2017, representing a 6.1% jump from 2016.
    • All four of these companies are public sector enterprises and account for the bulk of the domestic armament demand.
    • The largest Indian arms producers are the Indian ordnance factories and the Hindustan Aeronautics Limited (HAL), which are placed 37th and 38th, respectively, followed by Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL).

    Reasons for falling imports

    • Cancellation of contracts: Indian defence acquisitions have also fallen due to the cancellation of big-ticket items. For instance the India-Russia joint venture for the development of the advanced Su-57 stealth Fifth Generation Fighter Aircraft (FGFA).
    • India cancelled involvement in 2018 due to rising dissatisfaction in delays with the project as well as the absence of capabilities that would befit a fifth-generation fighter jet.
    • Reduction in order: In 2015, the Modi government also reduced the size of the original acquisition of 126 Rafale Medium Multi-Role Combat Aircraft (MMRCA) from Dassault to 36 aircraft, which is also responsible for significantly driving down the import bill.
    • Delay by suppliers: That apart, the delays in the supplies of T-90 battle tanks, and Su-30 combat aircraft from Russia and submarines from France, in 2009-13 and 2014-18, also depressed imports.
    • Industrial model at odds with the global trend: India’s defence model faces challenges despite the positive trends generated by ‘Make in India’.
    • SMEs still face stunted growth because India’s defence industrial model is at odds with global trends in that it tends to create disincentives for the private sector.
    • Governments, including the incumbent, have tended to privilege Defence Public Sector Units (DPSUs) over the private sector, despite ‘Make in India’.
    • Undermining the private sector: This model is highly skewed, undermining the growth of private players and diminishes the strength of research and development.

    The rise in Indian defence export

    • Considerable rise between 2012 and 2019: The period between 2012 and 2019 saw Indian defence exports experiencing a considerable jump sourced from Indian public and private sector enterprises.
    • In the last two fiscal years, 2017-18 and 2018-19, exports have witnessed a surge from ₹7,500 crore to ₹11,000 crores, representing a 40% increase in exports.
    • Measures introduced by the government: The sharpest rise in defence export products can be attributed to the measures introduced by the government which in 2014, delisted or removed several products that were restricted from exports.
    • It dispensed with the erstwhile No Objection Certificate (NOC) under the DPP restricting exports of aerospace products, several dual-use items and did away with two-thirds of all products under these heads.
    • According to the Ministry of Commerce and the Industry, Export-Import Data Bank export of defence items in the aerospace category has witnessed an increase in value.
    • Small naval crafts account for the bulk of India’s major defence exports. However, the export of ammunition and arms remain low.
    • As a percentage of total Indian trade, defence-related exports for the fiscal years 2017-18 and 2018-19 were 8 and 0.73%, respectively.

    Conclusion

    From a volume and value standpoint, Indian defence exports, while showing a promising upward trend, still remain uncompetitive globally. It is likely that Indian defence exports will take several years before they are considered attractive by external buyers. But green shoots are emerging in a sector that has long been devoid of any dynamism and Indian policymakers should make the most of the opportunities this represents.

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  • Issues related to Economic growth

    Pull out all the stops

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: "Natural Disaster" clause in FRBM Act.

    Mains level: Paper 3-What should be the policy response of the government to the damage inflicted by the Covid-19 on the economy.

    Context

    Though there is coherence in India’s response to the Covid-19, still there is more that needs to be done.

    Sense of coherence in India’s response

    • Since last week, a sense of coherence is settling over India’s response to the COVID-19 outbreak.
    • The national lockdown, the incomes and credit support, and the three-month debt moratorium announced by the government and the RBI are the needed first steps to contain the outbreak on the one hand and lessen the economic impact on the other hand.

    Uncertainty in two important factors

    • Several laundry lists of measures have already been proffered by many, however, these are not of much help.
    • Uncertainty: Given the extreme uncertainty clouding how long and intensely social distancing policies will need to be pursued, the attendant economic impact and, crucially, how quickly and strongly the recovery can take place.
    • 1. The answer to the first depends on how much the outbreak tests the capacity of the already-stretched public health system.
    • Extending the social distancing policy: If the lockdown does not slow the spread of the virus to a rate that the healthcare system can handle, then the social distancing policies, in some form or another, will need to be extended.
    • Destruction of demand: The longer such containment measures last, the larger will be the destruction to (of) demand and the bigger the collapse in output and incomes.
    • 2. Then, there is the question about the pace and strength of the recovery.
    • Much will depend on how much damage the eventual output loss inflicts on households’ and corporates’ balance sheets.
    • Lower consumption: For example, even if a worker starts earning once the lockdown is lifted if one has incurred large debts in the interim, one’s consumption demand will naturally be much lower than before the crisis.
    • The same holds for corporates, both big and small.
    • No help from global demand: What makes the situation worse is that there is not likely to be much help coming from global demand.
    • Growth estimates: It is now expected global growth would decline to 5 per cent (annualised) in 1H20 (first half 2020), considerably more than during the global financial crisis, and rebound only partially in 2H20, leaving global GDP 2.5 percentage points below its pre-crisis level at the end of this year.

    How the uncertainty makes policy response calibration difficult?

    • Difficulty in assessing economic damage: Given these extreme uncertainties, it is very hard to assess the economic damage with any degree of conviction.
    • In fact, in last week’s policy review, the Monetary Policy Committee refrained from providing any projections for future growth and inflation, breaking from its normal practice.
    • So, if the outlook is so uncertain, how does one calibrate the policy response?
    • 1. Under-support the economy: One can easily under-support the economy, which could prolong the slowdown.
    • 2. Or over-support the economy, which could end up stoking inflation (as it did in 2010-13 when the massive monetary and fiscal easing during the global financial crisis was not withdrawn quickly) or creating asset price bubbles.

    What is the way out in such a situation?

    • Don’t try to calibrate: The way out is not to even try calibrating policies under such extreme uncertainty but to let the size of the support be determined endogenously by the extent and nature of the economic damage.
    • Falling back of first principles: This requires falling back on first principles. We know that the economic damage could be very large.
    • Delay in recovery: We also know that if the damage to households’ and firms’ balance sheets is substantial, then the recovery could be delayed and weakened.
    • Give extensive income support: This calls for extensive income support through existing government Jan Dhan and Mudra accounts to households and SMEs, and temporary tax cuts or deferments to the larger corporates.
    • Tax cuts needed: It also needs substantial cuts in indirect taxes (GST) when social distancing is relaxed.

    Problems with RBI measures

    • RBI providing support: The RBI has begun to provide support via its liquidity facility (TLTRO) and regulatory forbearance that allows banks to offer a debt moratorium to their customers for the next three months.
    • But both these measures work through banks.
    • The problem of bank turning risk-averse: Given that banks have turned substantially risk-averse because of the restructuring and bad debt problems of the last few years, the RBI likely needs to start providing liquidity directly to corporates, as recently announced by the US Fed.
    • At the same time, any debt moratorium will reduce profit and, in turn, capital, banks might be reluctant to extend it to all their customers.
    • Accommodate capital shortfall in the bank: Consequently, the RBI also needs to change regulations to accommodate possible shortfalls in bank capital because of the debt moratorium.

    What should be the scope and size of the policy support?

    • Support should be based on the extent of the damage: The scope and size of such policy support need to be determined by the extent of the economic damage, and not by perceived limits about what India can afford or those imposed by existing institutional arrangements and practices.
    • It is quite possible that the size of the economic damage ends up requiring support that widens the fiscal deficit substantially.
    • India clearly does not have the fiscal space to provide any material economic support when measured against standard benchmarks of fiscal prudence.
    • Directly funding the budget deficit: The market is on edge, and fears of eventual large government borrowing has spiked long-term interest rates despite large cuts in short-term rates by the RBI, which are likely to delay and weaken the recovery.
    • Any large bond auction by the government, even if it is offset by the RBI through open market operations, is not likely to calm market nerves and bring down lending rates.
    • The government should invoke “natural disaster” clause: What is needed is for the government to invoke the “escape” or the “natural disaster” clause in the fiscal responsibility act (FRBM) that allows the RBI to directly fund the budget deficit without having to go through market auctions.

    Conclusion

    Such a proposal is likely to raise the hackles of any fiscal conservative and there is the natural question about how rating agencies might react. As long as the government credibly commits to reversing the action as soon as the crisis is over, rating agencies and fiscal conservatives alike will likely treat this kindly, as it is a response to a crisis caused not by poor economic policies, but by an act of nature.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    The sudden return of quantity planning in the wake of covid-19

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 3-Applying ways suggested by Keynes in times pandemic. of war to deal with the covid-19

    Context

    We could take a leaf out of a booklet by Keynes in our effort to tackle some of the challenges posed by the covid-19 pandemic.

    The Crisis-Keynesian Mode response mode to pandemic

    • What is the war economy? One of the defining features of a war economy is that economic thinking is focused on quantities rather than prices.
    • Much of the ongoing global response to the covid-19 pandemic is still in crisis-Keynesian mode.
    • What is a crisis-Keynesian response: The nation-state has become the income supporter, financier and consumer of last resort.
    • However, there are also clear signs of war economics as well.
    • Signs of war economics: The decision by US President Donald Trump to use America’s Defense Production Act to force General Motors to make ventilators is one resonant example.
    • Just consider some of the key questions that are being asked right now.
    • How many ventilators are available? Are there ample food stocks? Can more hospital beds be made available? How many masks be produced in the next few weeks? Can the production of testing kits be ramped up? It’s all about quantities, quantities, quantities.

    Historical background and impact of a shift in economic strategies

    • Impact persists in subsequent decades: Such big shifts in economic strategies are usually not reversed overnight. Decisions taken in response to a particular emergency tend to remain with us in subsequent decades.
    • World War II example: What happened in India during World War II is instructive. Many of the controls that were introduced during that global conflagration formed the basis of the later interventionist state that sought to control who produces how much. Here are a few examples.

    1. Quantitative import controls

    • One of the first moves by the colonial state was to impose quantitative import controls in May 1940.
    • There were two reasons why this was done—to conserve foreign exchange as well as ensure that shipping capacity was used to bring in only what was essential to the war economy.

    2. Food rationing

    • Food rationing was also introduced during the war years.
    • Over 700 towns were covered by some rationing scheme or the other by the end of the War.
    • The government also brought in measures to buy surplus grain from farmers at administered prices.
    • Various forms of rent control were also instituted. Most of these controls continued after India gained independence.

    3. Balance of payment crisis in 1957

    • India was hit by a balance of payments crisis in 1957.
    • The massive investment thrust in the Second Five Year Plan had severely strained the country’s foreign exchange reserves.
    • The Indian government, once again as a temporary measure, imposed stringent controls on imports.
    • Many of these were quantitative in nature. They survived well into the 1980s.
    • In fact, the entire trade policy approach since the 1957 crisis was to minimize imports in a bid to preserve foreign exchange.

    Will the government opt for automatic monetisation of the deficit?

    • Money creation by the RBI to fund deficit: There is now a growing consensus that the Indian government will have to fund part of its growing fiscal burden through money creation by the Reserve Bank of India.
    • What about inflationary consequences? The inflationary consequences will be muted—for now—because the velocity of narrow money is most likely set to fall on account of weak demand conditions under a lockdown.
    • Precedence: The automatic monetization of Indian government deficits was part of the policy playbook after the 1950s till it was thankfully discontinued in 1997.
    • The main instrument for that was ad hoc treasury bills.
    • These were introduced in 1954 as a temporary measure to replenish the cash balances the government maintains with the central bank.
    • What was ad hoc treasury bills? Ad hoc treasury bills were not introduced through any formal law but as an arrangement between mid-level bureaucrats in New Delhi and Mumbai (i.e. RBI).
    • What began as a temporary measure to smoothen government cash holdings had become a near-permanent feature of Indian macroeconomic policy by the 1970s.

    The uncertain future

    • Longer the war more profound will be the changes: The longer the global battle against the pandemic lasts, the more profound will be the changes across the economic landscape.
    • In an insightful article in Bloomberg, Andy Mukherjee uses the lessons of history to look into the uncertain future.
    • Among the possibilities he mentions are the contrasting ones of an economy run by robots and algorithms but with little labour, or an economy in which labour has clawed back the power it lost in the second age of globalization.

    Managing the resources in the time of war

    • Managing the resources: In 1940, John Maynard Keynes wrote a little booklet How To Pay For The War, Keynes essentially argued that the main challenge was not how to finance the war effort, but how to manage real resources to produce the arms that the UK needed to defend herself.
    • Suppression of consumption: He then argued that war production would necessarily involve suppression of consumption, either through higher taxes or some scheme of deferment.

    Conclusion

    The war against the covid-19 pandemic is very different from the military war that Keynes was thinking about. Yet, his booklet offers useful lessons on how to think about some of our current challenges—and also about what we can expect once the situation returns to normal.

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

    A pandemic in an unequal India

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- How lockdown affects the poor disproportionately and what the state must do mitigate the impact.

    Context

    The official strategies to deal with the virus place the responsibility on citizens, a majority without privilege, to fight the virus.

    The poor disproportionately affected

    • If the COVID-19 pandemic lashes India with severity, it will not be just the middle class who will be affected.
    • India’s impoverished millions are likely to overwhelmingly bear the brunt of the suffering which will ensue.
    • Inequality and impact of a pandemic: The privileged Indian has been comfortable for too long with some of the most unconscionable inequalities in the planet.
    • But with the pandemic, each of these fractures can decimate the survival probabilities and fragile livelihoods of the poor.

    Inadequate capacity of the health system  

    • Low investment in public health: India’s investments in public health are among the lowest in the world, and most cities lack any kind of public primary health services.
    • A Jan Swasthya Abhiyan estimate is that a district hospital serving a population of two million may have to serve 20,000 patients, but they are bereft of the beds, personnel and resources to do this. Few have a single ventilator.
    • The poor left with meagre services: India’s rich and middle-classes have opted out of public health completely, leaving the poor with unconscionably meagre services.
    • The irony is that a pandemic has been brought into India by people who can afford plane tickets, but while they will buy private health services, the virus will devastate the poor who they infect and who have little access to health care.

    No planning and preparation by the state

    • Official strategies placing responsibility on citizens: Most of the official strategies place the responsibility on the citizen, rather than the state, to fight the pandemic.
    • No preparation by the states: The state did too little in the months it got before the pandemic reached India for expanding greatly its health infrastructure for testing and treatment.
    • This includes planning operations for food and work; security for the poor; for safe transportation of the poor to their homes; and for special protection for the aged, the disabled, children without care and the destitute.

    What must be done?

    • 25 day’s minimum wage: For two months, every household in the informal economy, rural and urban, should be given the equivalent of 25 days’ minimum wages a month until the lockdown continues, and for two months beyond this.
    • Pensions must be doubled and home-delivered in cash.
    • There should be free water tankers supplying water in slum shanties throughout the working days.
    • Double the PDS entitlement: Governments must double PDS entitlements, which includes protein-rich pulses, and distribute these free at doorsteps.
    • Provide cooked and packed food: In addition, for homeless children and adults, and single migrants, it is urgent to supply cooked food to all who seek it, and to deliver packed food to the aged and the disabled in their homes using the services of community youth volunteers.
    • Ensure prisons are safe: To ensure jails are safer, all prison undertrial prisoners, except those charged with the gravest crimes, should be released.
    • Likewise, all those convicted for petty crimes. All residents of beggars’ homes, women’s rescue centres and detention centres should be freed forthwith.

    Way forward

    • Commit 3% of GDP on health: India must immediately commit 3% of its GDP for public spending on health services, with the focus on free and universal primary and secondary health care.
    • Nationalise private healthcare: Since the need is immediate, authorities should follow the example of Spain and New Zealand and nationalise private health care.
    • An ordinance should be passed immediately that no patient should be turned away or charged in any private hospital for diagnosis or treatment of symptoms which could be of COVID-19.

    Conclusion

    While one part of the population enjoys work and nutritional security, health insurance and housing of globally acceptable standards, others survive at the edge of unprotected and uncertain work, abysmal housing without clean water and sanitation, and no assured public health care. Can we resolve to correct this in post-COVID India? Can we at least now make the country more kind, just and equal?

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  • Foreign Policy Watch: India-China

    The art of China’s legalpolitic

    op-ed snap | International Relations | Mains Paper 2: Effect Of Policies & Politics Of World On India’S Interests

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: IHR- International Health Regulations.

    Mains level: Paper 2- India needs to make international law a keystone of its diplomacy.

    Context

    A resolution has been moved in the US Senate calling on the international community to inquire into the origins of the virus in China’s Wuhan province. Delhi could learn a trick or two from Beijing on how to make international law the keystone of India’s diplomacy, especially in the multilateral domain.

    Fixing responsibility for the outbreak on China

    • Compensation demand: Lawyers and activists have begun to sue China in US courts demanding compensation. Politicians are not far behind.
    • The U.S. Senate resolution: A resolution has been moved in the US Senate calling on the international community to inquire into the origins of the virus in China’s Wuhan province, quantify the damage inflicted on the rest of the world, and design a mechanism of reparations from Beijing.
    • Basis of the demand for compensation: The case for China’s culpability is based on the principles of state responsibility and Beijing’s alleged failure to respect the obligation, under the 2005 International Health Regulations (IHR), to notify the world on the outbreak of the epidemic.
    • Is the basis valid? Many international jurists dismiss these claims by citing the principles of sovereign state immunity, the lack of precedent in holding states to account for the spread of infectious disease beyond their borders and the absence of provisions for reparations under the IHR.

    The interplay between legality, moralpolitik and geopolitics

    • Gulliver and Lilliputs of the world: On the face of it, China is too much of a Gulliver to be tied down by legal Lilliputs.
    • The Legalpolitik: Before we dismiss international law as not real law, “legalpolitik” can put some real pressure on big nations and contribute to the power play among them.
    • Role of public opinion: As public opinion began to intrude into diplomacy over the last two centuries, legality and moralpolitik have become an integral part of geopolitics.

    Difficulty in proving the case against China

    • The cost of a pandemic: Most world leaders know, whether they say it aloud or not, the international costs of the pandemic could have been far lesser if China had acknowledged the spread of the virus from Wuhan early on and informed other countries.
    • It is one thing to know but entirely another to prove it under the law.
    • The pursuit of claims is a waste of time: Most governments believe the pursuit of claims against Beijing is a waste of time.
    • Political heft of China: If Beijing can make the World Health Organisation toe its line and prevent the rest of the world, including US President Donald Trump, from describing COVID-19 as the “China Virus”, it is unlikely to be impressed by a few legal impresarios from the West.
    • Precedence of defying the law: After all, China had dismissed the unanimous verdict of the International Court of Justice in 2016 on Beijing’s territorial claims over the South China Sea.
    • Beijing did not even bother to appear in the case filed by the Philippines.
    • China had simply declared that the ICJ has no jurisdiction in the matter.

    The relation between power and law in international relations

    • Power prevails: That power tends to prevail over law is certainly truer in international relations than domestic politics.
    • Law in the domestic domain: In the domestic domain, the state as the highest authority compels citizens to abide by the law, with force if necessary.
    • Law in the international arena: In the international arena, no single actor has a monopoly over the instruments of force.
    • We have multiple sovereigns but no “world government” that can compel deviant states to conform to rules.

    Role of the UNSC

    • In theory, the members of the UN Security Council can authorise coercion — in the form of economic sanctions or military force.
    • This, in turn, involves building a consensus among major powers, including the five permanent members of the UNSC who wield a veto.
    • In reality, then, the UNSC can’t act against one of the five permanent members.
    • Beijing, which was so eager to get the UNSC to discuss the situation in Jammu and Kashmir since last August, has simply blocked all suggestions for a discussion on the corona crisis in recent days.

    Are laws meaningless in the global arena?

    • Legal narratives have the weight of their own: While outcomes in international conflicts tend to be defined by power, the international discourse on any conflict today is framed in legal terms.
    • Whether it is a conversation between a state and its citizen or among governments or in a country’s outreach to the global society, legal narratives have a weight all of their own.
    • Delhi, for example, has struggled in recent days to counter the global interpretation of its domestic actions.
    • Importance of legal argument: Winning the legal argument, China has learnt from the history of great power relations, is very much part of great power jousting.
    • The negative lessons are from the Soviet Union that dismissed the Western legal arguments during the Cold War as based on the logic of capital and empire.
    • That did not convert many beyond the choir.
    • The positive lessons are from Great Britain and the United States.
    • The enduring Anglo-Saxon hegemony is rooted not just in economic and military power. It has always been underwritten by a powerful legal tradition that shapes the global narrative on most issues.
    • China developing own narrative: As it mounts a massive propaganda offensive against the US on the corona crisis, China’s state lawyers have filed a case in the Wuhan Intermediate People’s Court last week accusing various US government agencies of covering up the origin of the coronavirus.
    • China’s own narrative: It is no longer about China defending against a powerful international narrative; it is developing one of its own.

    Conclusions

    • 1. Make international law keystone of diplomacy: India has been at the receiving end of China’s legalpolitik — most recently on the quest for the membership of the Nuclear Suppliers Group and the constitutional changes in Kashmir.
    • Delhi could learn a trick or two from Beijing on how to make international law the keystone of India’s diplomacy, especially in the multilateral domain.
    • 2. Reinvest in the geo-legal arts: If China could emulate US and Britain on leveraging legalpolitik for strategic ends, India should not find it too hard to reinvest in the geo-legal arts that Delhi inherited from the Anglo-Saxons but seems to have lost along the way.

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  • Coronavirus – Health and Governance Issues

    Regulating the Private Health Sector to Eliminate COVID-19

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- Regulation of private sector to deal with the COVID-19.

    Context

    The current COVID-19 crisis that India is battling has brought into sharp focus the public health system’s inadequacy to cope with it.

    Contradictory scenario between public and private healthcare delivery

    • The contrast between public and private: Hospitals with state-of-the-art equipment rivalling five-star hotels in their facilities are mushrooming mostly in cities even as the overburdened public hospitals are valiantly fighting to cope. 
    • Dismal picture in rural areas: As far as the rural areas are concerned, the community health centres and primary health centres and sub-centres present an even more dismal picture in terms of availability of medicine stock, trained para-medical staff, and doctors and nurses.
    • However, it is not as if urban hospitals offer patients excellent care. A common and widely held general misperception is that the private healthcare system is better than the public one.
    • Why private is not always better? Complaints of non-transparent billing, demanding exorbitant sums in advance even in a medical emergency, and cutting corners in services are all too familiar, as are cases of the denial of services.
    • In semi-rural areas and towns, the private sector is not necessarily similar to hospitals in cities.
    • The private hospitals in these areas are small and have basic infrastructure and limited medical and non-medical staff. Unlike the cities, the power and water supply in these areas also constitute a problem to the functioning of these hospitals.

    Problems in the public healthcare system

    • Within the public sector health system, there are a number of trends again that add to the dismal picture.
    • A high number of patients: Doctors in the public hospitals deal with an overwhelming number of patients majorly from the poor and marginalised sections.
    • Issue of contractual staff: Health activists have also pointed out that the growing trend of contractual hiring of paramedical and allied staff leads to an insecurity among them, and thus affects overall caregiving to patients.
    • Consequently, the poor patients’ families, frustrated by the lack of infrastructure and services, turn their anger upon the doctors and nurses.
    • What are the implications? The constant vilification of the public hospital staff coupled with starving these hospitals of resources has led to the view that the private hospitals are “much better” despite their exorbitant rates.

    State-wise variation in healthcare

    • States subject: Health is a state subject, and it is well known that the health delivery systems are not uniform across states.
    • Kerala a role model: Kerala is often held up as a role model generally, and even now in the manner in which it has dealt with the COVID-19 crisis.
    • The dismal system in North India: As it is, certain states in North India have abysmal healthcare systems, and a couple does not have any testing facilities, the media has reported.

    Getting the private sector involved in COVID-19 testing

    • Undoubtedly, at present, the private sector must be involved in screening, tests and treatment for COVID-19.
    • The highly trained professionals in this sector can contribute enormously by helping scale up the testing efforts.
    • Importance of large-scale testing: In South Korea too, it was large-scale testing that was instrumental in reducing mortality rates.
    • The pricing issue: Services across sectors must not be priced differently at a time like this. The media has reported that there is a difference of opinion between the government and private sector on the price of COVID-19 tests flowing from the prices of test kits.
    • Need for the protocol: A clear and non-negotiable protocol for the private sector must be established regarding the present crisis and how the government is going to help financially and otherwise in dealing with it.

    Way forward

    • Regulate the testing, screening and treatment facilities: The experience with the government offering subsidies to hospitals, especially in urban areas in terms of land and other concessions, has not borne out desired objectives such as better care for the poor.
    • Taking a cue from this, the testing, screening, and treatment facilities must be regulated in terms of pricing and quality.
    • Focus on strengthening the public health system: The Supreme Court has held healthcare to be a fundamental right under Article 21. The biggest lesson of the current crisis is that political will must focus on strengthening the public health system.

    Conclusion

    The finance minister has announced a package of `1.7 lakh crore to deal with this catastrophic situation. This is welcome, but long-term resource allocation to invigorate the public health system must be a continual and parallel process.

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