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  • Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

    Amid the Lockdown, How can we efficiently manage our Agriculture and Livestock sector

    op-ed snap | Agriculture | Mains Paper 3: Transport & Marketing Of Agricultural Produce

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Essential Services Maintenance Act.

    Mains level: Paper 3- Managing the agriculture and livestock sector.

    Context

    Amid lockdown, we need an action plan to manage our agriculture, livestock sectors.

    Need for an immediate action plan to manage the agriculture and livestock sector

    • The country produces around 52 crore litres of milk daily.
    • There are also 80 crore-odd live poultry, both broilers and layers, at any given time, supplying meat and eggs to consumers.
    • Link with the other producers: These birds and animals, in turn, support the livelihoods of poultry and dairy farmers, as well as those producing maize, soybean, mustard, groundnut, cotton and other coarse grains that are ingredients for livestock feed.
    • It is the government’s responsibility to ensure that farmers are able to keep their animals alive and market the crop that has been, or will be, harvested during the lockdown period.
    • We need an immediate action plan to manage our agriculture and livestock sectors in the interest of both producers and consumers.

    Issue of implementation

    • Ensuring free movements: The first thing is to ensure free movement of farm produce, livestock feed and veterinary medicines.
    • Implementing the already taken decision: It is obvious that not all issues can be addressed overnight. But the minimum the government can do is to ensure ground-level implementation of already-taken decisions.
    • The problem of implementation: Many essential services, for instance, were kept out of the purview of the lockdown. Food, feed and agricultural inputs have been specifically notified as essential services.
    • But there are several problems at the level of implementation that are coming to notice.
    • The Centre has issued various directives/notifications, many of them brief and general in nature.
    • Many of these have either not reached the local authorities and police personnel or are not clearly worded. As a result, the smooth movement of essential items has been affected.
    • There are also reports of conflict between the police and citizens, including people involved in the transportation and delivery of food as well as inputs to farms.
    • Why good food supply line matters? The government must do to ensure that people don’t go hungry and the measures it must take to make sure people don’t crowd a few outlets, increasing the chances of the virus spreading.
    • The government has announced that the beneficiaries of the public distribution system can avail three months’ ration at one go.
    • The challenge of delivery: The challenge is to ensure that fair price shops deliver the provisions in an orderly manner and their supply lines remain intact.

    Issue of poultry and maize farmers

    • Sharp fall in poultry items: In such times, prices of essential food items are known to shoot up. But in India, prices of food items like chicken meat and eggs have registered a sharp fall.
    • In Delhi’s Gazipur Mandi, for example, the price of broiler chicken has fallen from Rs 55/kg in January 2020 to Rs 24/kg in March.
    • This has also pushed the maize prices down as poultry is largely fed packaged maize.
    • The government may have to think of compensating poultry and maize farmers in due course.

    Suggestions for improving the implementation issue

    • Issue a single notification: The Centre must issue a single notification relating to food items in a standard format and uniform language so that all ambiguities are removed.
    • This needs to be finalised after consultations with the stakeholders and the state governments can release it to officials working at the grassroots.
    • The focus should be to address the problems arising from restrictions on the transport — between and within states — of agri-produce and inputs related to them.
    • Invoke the ESMA: Another suggestion is that the Essential Services Maintenance Act (ESMA) be invoked for the delivery of all essential services relating to food to prevent disruption of supplies.
    • Home delivery option: Home (street) delivery of these provisions, to avoid crowding, is a good option.
    • Roping in civil society: This is also an occasion to rope in civil society. NGOs, resident welfare associations, religious organisations and paramilitary forces can be engaged for orderly and safe distribution of food — both pre-cooked and fresh.
    • NGOs with experience in food preparation and distribution, such as Akshaya Patra, could guide local authorities.
    • People involved in this endeavour should be provided with safety gears.
    • The challenge of supplying perishables: These perishables-like fruits, vegetables and milk- must be sold in a packaged form in mobile vans. The weekly markets need to be temporarily suspended lest they spread the virus.
    • Vegetable vendors can work with civil society organisations as well as e-commerce players to do this job in a safe manner.
    • Retail distribution lines: Retail distribution lines need to be seamlessly linked to wholesale supply lines.
    • How to manage rabi season procurement? Procurement operations for rabi crops are around the corner.
    • Training and safety measures: The FCI and other procuring agencies need to be trained about safety measures and supplied safety gear.
    • Providing incentives to farmers for staggered selling: Farmers could be given Rs 50/quintal per month as an incentive to stagger bringing their produce to the market — say after May 10.
    • They will also need to be screened, given training and equipped with safety gear.

    Suggestions to prevent post-lockdown chaos

    • What will happen after the lockdown ends? Many plants are now shut or working at low capacity utilisation. Consumption by hotels and other institutions, too, is low. Nor is any export or import happening. But once the lockdown ends, there will be a rush to procure raw material, trucks and rail rakes.
    • Smooth recovery: Smooth recovery from the lockdown is as important as managing supplies during the lockdown.
    • Here are a few suggestions to ensure that the common man does not have to suffer hardships during and after the lockdown:
    • First– Place all food items, agri-inputs, packaging material and transport services under ESMA for a six-month period to prevent profiteering.
    • The MRP that was applicable in February should remain till October.
    • In the case of farm produce, it helps that we are looking at a bumper crop, which makes it all the more necessary to ensure its smooth marketing.
    • Second-Suspend APMC (agricultural produce market committee) laws for the next six months.
    • Traders with APMC licence are bound to act as cartels during rush hour, which will hurt both farmers and consumers.
    • Third-ESMA should apply to all utilities and transport services. State governments can make exemptions on a case to case basis: These exemptions should be subject to public scrutiny under the Right to Information Act.
    • The government should announce the above measures well in advance.

    Conclusion

    The government must start planning now to prevent post-lockdown chaos, especially profiteering in the event of shortages. Smooth recovery from the lockdown is as important as managing supplies during the lockdown.

     

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  • Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

    A smarter supply line

    op-ed snap | Agriculture | Mains Paper 3: PDS, Buffer Stock & Food Security

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 3- Ensuring the food supply lines are not disrupted in the lockdown and suggestions to ensure it.

    Context

    The government must ensure that people don’t go hungry and take measures to make sure that people don’t crowd a few outlets, increasing the chances of the virus spreading.

    Need for the package to compensate losses

    • Welfare package: The government has announced relief measures. Last week, the Finance Minister announced a welfare package of Rs 1.7 lakh crore.
    • This is too small to cope with the onslaught of the virus.
    • How much a comprehensive package would cost? A package to compensate all losses, including business losses, should amount to at least Rs 5 to 6 lakh crore, if not more.
    • How will the government find funds for this package?
    • Funds accrued as a result of oil price crash: The windfall gains that have accrued to it as a result of the crash in crude oil prices could come in handy.
    • Diver all the subsidies and development funds: The government could divert all subsidies and some development funds to fund this package and ask the country’s corporate leaders to help with funds.
    • Issue clarion call for voluntary donation: The prime minister could even issue a clarion call to those with a fixed income (say above Rs 50,000/month) to voluntarily donate at least 10 per cent of their salaries to fund the battle against the virus.

    Focus on supply lines of food and ways to achieve it

    • Why good food supply line matters? The government must do to ensure that people don’t go hungry and the measures it must take to make sure people don’t crowd a few outlets, increasing the chances of the virus spreading.
    • The government has announced that the beneficiaries of the public distribution system can avail three months’ ration at one go.
    • The challenge of delivery: The challenge is to ensure that fair price shops deliver the provisions in an orderly manner and their supply lines remain intact.
    • Home delivery option: Home (street) delivery of these provisions, to avoid crowding, is a good option.
    • Roping in civil society: This is also an occasion to rope in civil society. NGOs, resident welfare associations, religious organisations and paramilitary forces can be engaged for orderly and safe distribution of food — both pre-cooked and fresh.
    • NGOs with experience in food preparation and distribution, such as Akshaya Patra, could guide local authorities.
    • People involved in this endeavour should be provided with safety gears.
    • The challenge of supplying perishables:  These perishables-like fruits, vegetables and milk- must be sold in a packaged form in mobile vans. The weekly markets need to be temporarily suspended lest they spread the virus.
    • Vegetable vendors can work with civil society organisations as well as e-commerce players to do this job in a safe manner.
    • Retail distribution lines: Retail distribution lines need to be seamlessly linked to wholesale supply lines.
    • Buffer stocks: The government godowns are overflowing with wheat and rice — about 77 million metric tonnes (MMT) on March 1, against a buffer stock norm of 21.4 MMT on April 1.
    • How to manage rabi season procurement? Procurement operations for rabi crops are around the corner.
    • Training and safety measures: The FCI and other procuring agencies need to be trained about safety measures and supplied safety gear.
    • Providing incentives to farmers for staggered selling: Farmers could be given Rs 50/quintal per month as an incentive to stagger bringing their produce to the market — say after May 10.
    • They will also need to be screened, given training and equipped with safety gear.

    Challenge of mandi operations for fresh produce in large mandis

    • This pertains to mandi operations for fresh produce in large APMC mandis like Azadpur in Delhi and Vashi near Mumbai.
    • These mandis are usually overflowing with fruits and vegetables and the labour force at these centres usually handles the produce without safety gears.
    • The challenge of screening and providing safety kits to these workers is doubly daunting. The country is not fully prepared in this respect.
    • The safety of workers in mandis — and other workers who handle agricultural produce — should be accorded as much priority as the safety of frontline health warriors.
    • Suspend the APMC Act: We should also use this opportunity to suspend the APMC Act and encourage NGOs, civil society and corporate houses to directly procure from farmers.

    Issue of poultry and maize farmers

    • Sharp fall in poultry items: In such times, prices of essential food items are known to shoot up. But in India, prices of food items like chicken meat and eggs have registered a sharp fall.
    • In Delhi’s Gazipur Mandi, for example, the price of broiler chicken has fallen from Rs 55/kg in January 2020 to Rs 24/kg in March.
    • This has also pushed the maize prices down as poultry is largely fed packaged maize.
    • The government may have to think of compensating poultry and maize farmers in due course.

    Conclusion

    When things settle, it will be worth knowing how the virus spread from Wuhan to Iran, Italy, Washington, India and other parts of the world. Which organisation or nation failed to blow the whistle and alert the world in time? Was it China’s failure? Or that of WHO? Or was it the failure of all governments around the world to respond quickly to the outbreak? We need better global governance for pandemics to avert the next crisis.

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  • Judicial Reforms

    Ayyappa and the Court

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

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Paper 2- Need for reforms in the administrative functioning of the Supreme Court.

    Context

    In the several cases with potential significance, there was no effective hearing at the interim stages which created fait accompli. And which results in the status quo cementing itself.

    The Sabarimala case and ‘balance of convenience’ principle

    • Review petition pending: Millions of disciples have protested the Court’s 2018 verdict where gender equality was held to trump the tenets of the faith and rejoiced at the November 2019 order of the Chief Justice’s bench granting their cause a fresh lease of life.
    • As things stand, their review petitions are kept pending until the questions of law are determined.
    • Please to enter the temple declined: In December 2019, fervent pleas on behalf of certain women devotees to enter the temple were declined, although the 2018 verdict continued to hold the field.
    • Why declining the plea for entry matters? This was justified by the Court on a “balance of convenience”, thereby laying down a new principle for not directing the implementation of its own judgement.

    Pendency of Article 370 challenge case hearing

    • Nine judge bench: This year it was decided to put together the nine-judge bench to hear the cases on an urgent basis.
    • Kashmir case on the backburner: But with two judges from the ongoing Kashmir/Article 370 challenges also a part of the Sabarimala case, it would mean that the Kashmir issues would be put on the back burner in the middle of its hearing.
    • This is despite the advocates representing the right of women’s entry stating that they had no objection to the Kashmir cases being heard first.
    • Then, barely a day into the hearing, a strain of swine flu reached some of the members of the Bench, leading to a postponement of hearings till the middle of March.
    • Now, with a fierce pandemic enveloping the globe, the case is adjourned indefinitely.

    Criticism of administrative functioning of the SC

    • Over the last few months, the Supreme Court has been besieged by criticism of its administrative functioning.
    • Delay in the hearing of important cases: Cases that have customarily been heard with alacrity, like those concerning personal liberty, law and order and criminal investigation, have been posted after long intervals with the Government being granted the luxury of time to respond.
    • No effective hearing in cases with immediacy: Where immediacy is pre-eminent so that fait accompli may not be created, as with the validity of the Kashmir notifications, the CAA and the electoral bonds, there have been no effective hearings at the interim stage.
    • Thus, the status quo slowly cements itself.

    Reason for problems in administrative functions of the SC

    • Dual role played by the CJI: Since the early years of the judiciary, one person has been given the onerous dual charge of heading both the administrative and judicial functions of the court.
    • As a result, apart from sitting every day, reading briefs, hearing arguments and delivering detailed judgements, the Chief Justice has to also act as the final authority for all service-related matters of the Court’s 2,500 employees, issue office orders to streamline the registry.
    • The CJI also supervise measures for security and infrastructure, chair committees, correspond with and entertain judicial delegations, attend symposia, delegate subject matters among colleagues, constitute benches of varying strengths and interview candidates for the various courts.
    • In the old days, when the burden of cases was modest, these tasks would not have been challenging.
    • But in the present time, not only are they overwhelming, but they also bring in their wake a host of attacks on the person who occupies that high office.

    Need for the Chief Executive Officer in the SC

    • Administrative functioning of the SC: In all the administrative tasks, the Chief Justice is assisted by a team of registrars, who are headed by the secretary-general.
    • As they are junior judicial officers, they neither have the training nor the complete independence to take steps towards course correction.
    • The requirement of CEO: This is why the Supreme Court sorely requires a chief executive officer – an independent professional who is equipped with the day-to-day management of the Court and is not beholden to the judges in any way.
    • How it will help? The CEO will be charged with the entire mission of running the Court so that the judges can concentrate on what they are trained and experienced to do – adjudicate.
    • Operational autonomy: The CEO will, of course, have to be given adequate operational autonomy and be answerable to a committee of the Court, comprising judges and bar representatives, thereby providing for a professional process, much like in the corporate sphere.
    • With this, the judges will at least be spared the charges that they have had to withstand over the last few years.

    Conclusion

    It is only for politicians to concern themselves with public opinion, not for judges. They are weaponised by the Constitution to serve the cause of justice, and in this, as per Article 144, all civil and judicial authorities are enjoined to cooperate. Just a few blows of the gavel to any misadventures would be sufficient to send the message loud and clear: That the Court offers no sanctuary to the executive knaves.

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  • Coronavirus – Health and Governance Issues

    After the lockdown

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- The lockdown hits the poor hardest and how it could have been avoided?

    Context

    Lockdown announcement has not been matched by national strategy — on containing fallout for poor.

    Two arguments advanced against lockdown

    • India’s decision to lock down was necessary. Two arguments are being advanced against it.
    • The first argument: India is a poor economy, with millions at the margins of subsistence, who cannot bear the consequences of a lockdown. The density and living conditions in India make social distancing difficult in many cases.
    • The second argument: It is that the extent of community transmission does not justify such drastic measures.

    What are the justifications for the lockdown?

    • The only hope: Precisely because millions in India are vulnerable and will not later have the possibilities of quarantining or medical care, the only hope we have of securing their lives is to slow down the spread of the virus as much as possible.
    • And the only shot you have at it is when community transmission is possibly still at manageable levels.
    • There is, therefore, a bit of bad faith in using the poor as the basis for expressing scepticism at the need for a lockdown. That is the most insidious form of privilege.
    • The risks of any catastrophic spread will be even more incalculable for the poor.

    Underscoring the importance of federalism and decentralisation

    • States responding in innovative ways: One of the more encouraging things has been the way in which several state governments like Punjab, Odisha, Kerala, Delhi and others have come into their own, innovating under difficult circumstances.
    • Role of panchayat and local officials: The much-neglected panchayat and local officials are key nodes in keeping track of possible cases and the creation of quarantining infrastructure.
    • Role of frontline workers: It would also be churlish not to acknowledge the ways in which most of the frontline workers of the state are responding, learning and innovating in this situation.
    • Federalism and decentralisation: If anything, this crisis is bringing home the importance of both federalism and decentralisation as central to a resilient governance architecture.

    The preparation and follow-up of the lockdown

    • But the national preparation and follow-up to take full advantage of the lockdown do not inspire full confidence.
    • Lack of strategy: The announcement of the lockdown has not been matched by a commensurate national strategy.
    • This is manifest, in the early signals on the following two important aspects:
    • Containing the economic fallout for the poor.
    • Building up the health infrastructure.
    • It is, admittedly, early days; but the signs are not good.

    Economic fallout for the poor

    • Focus is not on the poor: In the entire framing of the problem, the poor have been at best an afterthought, at worst expendable damage.
    • Steps taken not adequate: Steps like health insurance cover for frontline workers, increased food rations, are welcome steps. But a crisis of this magnitude required assurance to the most vulnerable that no stops will be pulled to secure their futures.
    • Instead, what you got was incrementalism of the worst kind, masquerading as a big commitment.
    • Low cash transfer: The cash transfers, in particular, through different schemes, are shockingly low.
    • Need for the unprecedented social security support: This crisis is one of the rare instances where economists and even bankers, from across the political spectrum, have rallied around the intellectual argument for unprecedented levels of social security support.
    • So the government’s “support by stealth” strategy is even more mystifying.
    • Impact of lockdown on migrant labour: The magnitude of the crisis unleashed for migrant labour could have been avoided with a little forethought.
    • What could have been done? Early announcement of cash transfers, shelter and food availability, would have obviated the need for migration.

    Opacity on the health infrastructure side

    • Issue of testing: Opacity is often a consequence of scarcity. And nowhere is this more manifest than in our discussion of testing.
    • Underutilisation of capacity: Everyone understands that India has the scarce testing capacity, though it seems it is also under-utilising what it has.
    • No clear testing strategy: The government is procuring more testing kits. But what is worrying is that there seems to be no publicly articulated statement of what exactly our testing strategy is, given the scarce resources.
    • But there is still no sense of how we plan to put a testing strategy in place (not just numbers of tests, but where can they be optimally deployed), that will minimise the need for future lockdowns.
    • What objectives is it trying to meet? There is more than a whiff of suspicion that there is a view that more testing might spread more panic.
    • Or it might put more pressure on the health care system than it can handle.
    • India has never understood that health expenditure is not an expenditure; it is an investment.
    • Building up of health infrastructure: The success of the lockdown strategy is premised on an unprecedentedly vigorous building up of health infrastructure to fight the pandemic.
    • There is a commitment by the Centre to infuse an extra Rs 15,000 crore in this sector. Some steps are being taken in building up capabilities, including ramping up production of ventilators and masks.
    • Need for warlike mobilisation: This is an area where India needs almost a warlike mobilisation, to make sure we have enough testing, tracking, frontline workers, logistics and equipment in place to make sure that the duration of a lockdown is minimised or a repeat is not necessary.
    • The creation of this kind of infrastructure will pay huge dividends even in non-pandemic times.

    Conclusion

    The prime minister is constantly asking the citizens to mobilise, and most of them respond. But it about time the state mobilises: On an economic stimulus that is truly meaningful and health infrastructure push that inspires confidence.

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  • Coronavirus – Economic Issues

    What the RBI has done to provide relief for the ongoing Coronavirus outbreak in India

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Banking rates and markets instrument.

    Mains level: Paper 3- Steps taken by the RBI to revive growth and provide stability to economy.

    Context

    The RBI’s Governor’s ‘bazooka’ announcement earlier today has seen the usually conservative institution and its head pull out the big guns in word and action.

    Four steps taken by the RBI

    • One, increase the liquidity in the system.
    • Two, make sure the lower policy rate is transmitted. Steps one and two are linked.
    • Three, give a three-month window for a payback on all term loans.
    • Four, take steps to reduce volatility and provide stability.
    • Big cut in repo rate: He announced a big cut in the repo rate by 75 basis points (100 basis points make a per cent, so three-quarters of a percentage point) to 4.4%.
    • What is the repo rate? Repo rate is the rate at which the banks borrow from the RBI. Banks give ‘eligible securities’ they hold for cash that RBI gives as an overnight loan.
    • Banks pay the repo rate as interest for this borrowing.

    First two steps of the RBI: Increasing liquidity and ensuring policy rate transmission

    • Why lower repo rate matters? When the repo rate is high, banks find it costly to borrow and in turn raise the price of loans to their borrowers.
    • Reducing interest for the system: A low repo rate has the overall effect of reducing interest rates for the system. Lower rates make it easier for entrepreneurs to take loans for working capital and for households for homes, vehicles and so on.
    • Issue of policy rate transmission: Previous rate cuts have not been ‘transmitted’ by the banks who have not reduced lending rates and have preferred to keep money with the RBI at the ‘reverse repo rate’.
    • What is reverse repo rate? This is the rate at which banks lend to the RBI.

    How RBI is ensuring transmission now?

    • The RBI has now reduced the reverse repo rate by 90 basis points to 4%.
    • This cut in reverse rape sharper than the one on the repo rate to encourage banks to borrow from the RBI rather than lend to it.
    • How reverse repo rate matters? Banks have preferred to deposit money with the RBI rather than lend it out with an average daily amount of ₹3 trillion being kept with the RBI.
    • A reduction of the reverse repo to 4% makes it unattractive to banks to park it with the RBI and banks will be nudged to lend.
    • Why bank lending matters for business? Bank lending provides the needed oxygen to businesses for their working capital and longer-term loans.
    • Read this as a measure to help banks take the decision to lend rather than play it safe by keeping money with the RBI.

    How lock-down slows down the economy?

    • Rush to safety for money: If people are in a lock-down, the wheels of the economy begin to grind down and there is a rush to safety for money in the system.
    • Freezing of the markets market: Investors begin to redeem their shares, bonds and mutual funds. These redemptions cause a fire sale of assets. Finally, when there are no buyers, markets begin to freeze.

    What are the measures taken by RBI to stabilise the market?

    • To keep the wheels of the markets well-oiled with cash, the RBI has made ₹3.74 trillion available. This it has done using four weapons.
    • The first measure: It has used targeted long-term repo operations.
    • RBI will lend money to banks (a total of ₹1 trillion) that can be invested in bonds and other forms of lending instruments.
    • What is a hold-to-maturity way? Under the hold-to-maturity way, the portfolio is valued not on the market price but on what the price should be given the rate of interest of the bond, the holding period and the rating of the bond.
    • Basically, it allows trades to happen at a price that is not confused with the current pandemic in the market.
    • The second measure: The RBI reduced the cash reserve ratio (CRR) by a full percentage point down to 3% for a year.
    • The CRR is the percentage of demand and time deposits banks have to keep with the RBI.
    • Why CRR and not SLR was reduced? There is another 18.25% of deposits that is also not used for lending under the Statutory Liquidity Ratio (SLR), further reducing the money banks have to lend.
    • RBI has reduced the CRR to 3%, freeing up ₹1.37 trillion for banks to lend. CRR has been chosen rather than SLR because this increases ‘primary liquidity’ with the banks a bit better.
    • Not only is there CRR rate down, banks now need to maintain 80% of the limit on a daily basis instead of 90% till June 26, 2020.
    • The third measure: ₹1.37 trillion will be made available under the emergency lending window called the marginal standing facility (MSF).
    • Banks will now be able to borrow 3% of their deposits under this window, up from the current 2%. Basically, RBI is willing to lend more than before.
    • How much more? ₹1.37 trillion under this window.

    The third step of the RBI: Regulatory forbearance

    • What is the regulatory forbearance?

      What this means is that as economic activity grinds to a slowdown, people will not be able to pay back the loans they have taken for no fault of theirs.

    • This could be businesses with loans, households with EMIs on home loans and others with what are called ‘term loans’.
    • RBI will allow a moratorium of three months for loan repayment.
    • This is a relief especially for small entrepreneurs who have been forced to shut shop and for employees whose incomes have stopped since their place of work is shut.
    • It is good that the RBI has looked at the retail part of the market along with the corporate sector for once.
    • Working capital loans don’t come under the ‘term loan’ category, and these borrowers can defer paying interest for three months till June 2020.

    The fourth step of the RBI: Measures to reduce volatility in the exchange rate

    • Fourth is a measure to reduce the volatility of the price of the rupee in international markets by allowing banks to deal in off-shore non-deliverable rupee derivative markets.
    • It looks like reform using the crisis to bring about this long-awaited change.

    Conclusion

    We don’t know if measures taken by the RBI and the government are enough. But what is comforting is that the government and the RBI are working in tandem to deal with this giant killer of a virus.

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  • Coronavirus – Economic Issues

    Let’s use follower’s advantage

    op-ed snap | Economics | Mains Paper 3:

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- Learning from the experience of South Korea in designing the policies to deal with coronavirus.

    Context

    How this coronavirus pandemic threat will pan out no one knows but what we do know is that the intensity of the challenge and its impact on our well-being will depend greatly on how we reach out to ordinary people, and the policies we implement.

    Historical perspective and comparison

    • Compared to the fatality numbers of some earlier pandemics, such as the Asian flu, 1957-58 (1.1 million dead) and Hong Kong Flu, 1968 (2 million dead), the fatality numbers of the current coronavirus pandemic are, as yet, nowhere near.
    • One of the most comprehensive studies on the pandemic, by the Imperial College of London, shows that the “case fatality rate”, or fatality among those who get coronavirus is 0.9 per cent — this means a 99.1 per cent survival rate among the people who get it.
    • What makes this pandemic special is that it is happening in the age of digital connectivity and greater scientific knowledge than we have ever had.
    • We can inform people quickly and take big steps to contain it.
    • But this also has a danger we have never faced.
    • Policy actions can have a mega backlash on the economy.
    • We are in uncharted territory — never before have we taken the kind of collective action against a pandemic as we are doing now.

    Time to collectively confront our common humanitarian challenge

    • Using the experience of South Korea: There is some evidence from history, and from the country that has been the most successful in dealing with this pandemic —South Korea.
    • The country’s success has saved lives, protected the economy from undue damage, boosted the popularity of the Korean President Moon Jae-In across political divides and raised the global standing of South Korea.
    • France’s President Emmanuel Macron and Sweden’s Prime Minister Stefan Lofven have consulted Moon Jae-In for advice.
    • We have some evidence and estimates about the kind of damage this pandemic can do.
    • China’s industrial production in January-February 2020 declined by 5 per cent compared to a year ago.
    • Goldman Sachs has estimated that the US’s GDP growth could decline 24 per cent for the second quarter this year.
    • Data are coming in on recent US unemployment claims climbing by 30 per cent.
    • This is clearly time to put political differences aside, and collectively confront our common humanitarian challenge.

    Designing policy to deal with the pandemic

    • Economic implications: In designing policy, it is important to realise that all interventions to contain the pandemic have economic implications.
    • Some people react to this by saying that our first priority is to save lives, not the economy. This is a mistake. The two are not separate matters.
    • A poorly-executed policy can damage the economy and this can end up taking more lives than the original problem.
    • Examples of policy doing damage to lives: We have examples of the damage policies can do from history. In 1958, Mao Zedong initiated the Great Leap Forward to boost China’s production. This unleashed the biggest famine in modern times, which resulted in 20 to 40 million deaths.
    • The Bengal Famine of 1943 occurred with no decline in food production but there were disruptions in supply chains from the farms to those who needed food.
    • The death toll was two to three million. Such evidence from the past warns us that policies not designed well can cause more deaths than the pandemic itself.

    Three lessons from South Korea

    • We already have three lessons from Korea, which are being widely discussed in newspapers and the media around the world.
    • First, you need strong leadership.
    • Second, it is critically important to have trust between society and government. There is only that much you can do if people do not cooperate.
    • Third, the need is for nuanced policies, with the government having the courage to make course correction as it goes along.

    Way forward

    • First, trust can be a casualty with the lockdown. There are reports of the police wielding the baton too quickly on ordinary vendors, small grocers and sellers. They need to explain to people so that they begin to actually cooperate, instead of complying only when under observation. That is the key difference between a trusting society and a trustless one.
    • The government cannot be a substitute for the private firms: To believe that small traders and private firms can be substituted by the government is the mistake Communist China made in the 1960s and 1970s, before the arrival of Deng Xiaoping.
    • An example of the importance of specialised knowledge — this applies to the US as well — pertains to the role of cash grants to the poor. Such grants work well in normal times but may need to be supplemented with the direct support of food and medical services.

    Conclusion

    Some say that the Korea analogy is of no use to us because it is a relatively small country. It is true that everything will not apply here. But on the other hand, Korea and Hubei province of China are very comparable. Korea’s population is 52 million, Hubei’s is 58 million. The number of people who died of the virus in Korea is 126. The figure for Hubei is 3,160. Korea, of course, had the follower’s advantage since the virus struck there later. But we too have that advantage.

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  • Issues related to Economic growth

    Mind your own economic health

    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- What are the essential reforms essential for reshaping the India's economy.

    Context

    The fragility of the global economy has been exposed twice within the last two decades. In 2008, the collapse of a financial services firm in the US triggered a global financial meltdown. In 2020, the emergence of a novel virus in a food market in Wuhan has done it again.

    The global economy and system theory

    • Systems theory: It that systems take various forms. Broadly speaking, there are three types of systems-1. Chaotic systems. 2. Engineered Systems, and 3. Complex self-adaptive systems.
    • As the weather in a storm, chaotic systems are unpredictable and uncontrollable.
    • The global economy is behaving like a chaotic system.
    • Engineered systems, on the other hand, can be controlled quite tightly, like machines.
    • However, they are dull. A nuclear power plant is a well-engineered system. We would want it to do just what it is supposed to and not produce any surprises.
    • In contrast to these systems is the design of nature. It is a complex self-adaptive system. It produces myriad innovations. It evolves. Yet, its fundamental stability is very reassuring.
    • The realisation that mankind’s technologies and engineering marvels are disrupting nature’s stability, has raised alarms about the architecture of global economic governance.
    • More about self-adaptive systems: The architecture of complex self-adaptive systems is formed by essential design principles. One is “permeable boundaries”.
    • The many parts of a complex self-adaptive system have permeable boundaries between themselves. Each part has its integrity. The parts exchange information and energy across their boundaries as required.
    • When there are no boundaries within, or they are too weak, an accident at one end will soon sink the whole ship.

    Consequences of boundarylessness within the global financial system

    • The drive for boundarylessness within the global financial system since the 1990s caused the sloshing around of contagion during the global financial crisis in 2008.
    • Whereas global economic growth has undoubtedly been enabled by global supply chains, the vulnerability of economies everywhere to their disruption has become painfully evident with the COVID-19 pandemic.
    • Complex adaptive systems exhibit “fractal-like” shapes. Their parts are complex, combining the same diverse energies that permeate across the whole.
    • Social forces, economic forces, and environmental forces combine within all countries, and in parts within countries too, albeit in different ways.
    • Though the parts are similar to each other, they are not the same. Therefore, the same solutions will not fit all.
    • An insight from systems theory is that global systemic problems such as climate change, persistent economic inequality, among others, will require local systems solutions.

    Six reforms for reshaping Indian economy

    • Stress test: Crises create stress tests for the health of systems. The financial crisis of 2008 exposed the fragility of an inter-connected and under-regulated financial system.
    • The COVID-19 pandemic has exposed the architectural weaknesses in the global economy.
    • Instead of worrying too much about the reversal of globalisation, national leaders should now focus on the well-being of their citizens and the health of their own economies.
    • Six reforms are essential for reshaping the Indian economy.
    • First, focus on the provision of universal social security, rather than on the misdirected demand for even more “flexibility” in labour laws
    • Second, respect the “informal” sector which provides the majority of Indians with opportunities to earn incomes, and give it more strength. It is also a great source for practical innovations and widespread entrepreneurship.
    • Third, change the economic paradigm from “trickle-down” to “build up”. Build the internal engine of growth of India’s economy by increasing incomes of India’s citizens.
    • Fourth, strengthen public health services. Medical tourism may put India’s private hospitals on the global map. However, they are not the solution to India’s huge health problems.
    • Fifth, reform and strengthen the public education system. It will contribute greatly to creating a level playing field for all children.
    • Sixth, strengthen local governance in India’s towns and districts to develop and implement local systems solutions. The well-being of Indian citizens will be improved, and India’s economy will be more resilient too.

    Conclusion

    • All governments are asking their citizens to increase “social distancing” between themselves to prevent the spread of a health contagion. It would be wise for countries to maintain sufficient “economic distancing” amongst themselves too. They should mind the health of their own economies. Thereby, they will improve the health of the global economy too.

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  • Coronavirus – Economic Issues

    Dressing a wounded economy

    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- Measures to mitigate the impact of steps taken to deal with the coronavirus on Indian economy.

    Context

    There are going to be the economic impact of the actions designed to combat the virus. The two major tools that the government has available before it are monetary policy and fiscal actions.

    Impact of virus and additional slowdown

    • The impact of the coronavirus pandemic is now felt by almost every country.
    • First, there are the health effects of the virus.
    • Second is the economic impact of the various actions that have to be taken to combat the virus.
    • The world is experiencing an additional slowdown on top of the contracting tendencies already present and India is no exception.
    • The economic impact on India can be traced through four channels: external demand; domestic demand; supply disruptions, and financial market disturbances.

    Impact on export

    • As the economies of the developed countries slow down (some people are even talking of recession), their demand for imports of goods will go down.
    • This lower demand will affect our exports which are even now not doing well.
    • In fact, after six months of negative growth, it was only in January that Indian exports showed positive growth.
    • The extent of decline will depend on how severely the other economies are affected. Not only merchandise exports but also service exports will suffer.
    • Besides these, the IT industry, travel, transport and hotel industries will be affected.

    Oil price factor

    • The only redeeming feature in the external sector is the fall in oil prices.
    • India’s oil import bill will come down substantially.
    • But this will affect adversely the oil-exporting countries which absorb Indian labour. Remittances may slow down.

    Supply disruption

    • To ward off the spread of the coronavirus, the government has declared a lockdown of the country.
    • As passengers travel less, the transportation industry, road, rail and air, is cutting down schedules, sometimes drastically.
    • This will affect in turn several other sectors closely related to them. The laying off of non-permanent employees has already started.
    • As people, in general, buy less, shops stock less, which in turn affects production.
    • Perhaps retail units will be first to be affected and they will, in turn, transmit this to the production units.
    • One is unable to make an estimate of the reduction in economic activity at this point.
    • If the situation is not reversed soon, there can be a serious decline in the growth rate during 2020-21.
    • Supply disruptions can occur because of the inability to import or procure inputs.
    • The break in supply chains can be severe. It is estimated that nearly 60% of our imports are in the category of ‘intermediate goods’.
    • Imports from countries which are affected by the virus can be a source of concern.
    • The domestic supply chain can also be affected as the inter-State movement of goods has also slowed down.

    Financial market issue

    • Financial markets are the ones which respond quickly and irrationally to a pandemic such as the coronavirus pandemic. The entire reaction is based on fear.
    • The stock market in India has collapsed. The indices are at a three-year low.
    • Foreign Portfolio Investors have shown great nervousness and the safe haven doctrine operates.
    • In this process, the value of the rupee in terms of the dollar has also fallen.
    • The stock market decline has a wealth effect and will have an impact on the behaviour of particularly high wealth holders.
    • How does the government deal with this sudden decline in economic activity which has come at a time when the economy is not doing well? The two major tools that are available are monetary policy and fiscal actions.

    Two major tools with government- Monetary Policy and Fiscal Action

    • Monetary policy: In a situation like this can only act to stimulate demand by a greater push of liquidity and credit.
    • The policy rate has already been brought down by 135 basis points over the last several months. There is obviously scope for further reduction.
    • But our own history, as well as the experience of other countries, clearly show that beyond a point, a reduction in interest rates does not work.
    • It is the environment of the overall economy that counts. Credit may be available. But there may not be takers.
    • Any substantial reduction of policy rate can also affect savers. Interest is a double-edged sword.
    • What the RBI needs to do? IT needs to go beyond cutting the policy rate.
    • A certain amount of regulatory forbearance is required to make the banks lend.
    • Even commercial banks on their own will have to think in terms of modifying norms they use for inventory holding by production units.
    • Repayments to banks can be delayed and the authorities must be willing to relax the rules.
    • Any relaxation of rules regarding the recognition of non-performing assets has to be across the entire business sector.
    • The authorities must be ready to tighten the rules as soon as the situation improves. This is a temporary relaxation and must be seen as such by banks and borrowers.
    • Fiscal Policy: Fiscal actions have a major role to play. Once again, the ability to play a big role is constrained by the fact that the fiscal position of the government of India is already difficult.
    • Even without the pandemic, the fiscal deficit of the Central government will turn out to be higher than that indicated in the budgets for 2019-20 and 2020-21.
    • Revenues are likely to go down further because of the virus-related slowdown in economic activity.
    • In this context, the ability to undertake big-ticket expenditures is
    • But there are some ‘musts’. The virus has to be fought and brought down. All expenditures to test and to take care of patients must be incurred.
    • Now that private hospitals are allowed to test, the cost of the people going to private hospitals must also be met by the government.
    • The involvement of private hospitals has become necessary. It is mentioned that a test costs ₹4,500. The total cost can be substantial if the numbers to be tested run in the thousands and more.
    • This may sound exaggerated. But we must be prepared so that we avoid the tragedy of Italy.
    • Therefore, the first priority is to mobilise adequate resources to meet all health-related expenditures which includes the supply of accessories such as masks, sanitisers and materials for tests.
    • The challenge is not only fiscal but also organisational.

    Mitigating the impact on the job sector

    • Serious concerns have been expressed about people who have been thrown out of employment. These are mostly daily-wage earners and non-permanent/temporary employees.
    • In fact, some of the migrant labour have gone back to home States. We must appeal to the business units to keep even non-permanent workers on their rolls and provide them with a minimal income.
    • Some relief can be thought of by the government for such business units even though this can be misused.
    • However, in general, in the case of sectors such as hospitality and travel, the government can extend relief through deferment of payments of dues to the government.
    • Issues in making cash transfer universal: There is talk of providing cash transfer to individuals. There is already a programme for rural farmers with all the limitations.
    • For a system of cash transfer to be workable, it has to be universal.
    • At this moment when all the energies of the government are required to combat the virus, to institute a system of universal cash transfer will be a diversion of efforts.
    • The burden on the government will depend upon the quantum of per capita cash transfer and the length of the period.
    • The government should advise all business units not to retrench workers and provide some relief to them to maintain the workers.
    • A supplemental income scheme for all the poor can be thought of once the immediate problem is resolved.
    • Provision of food and other essentials must be made available to the affected as is done at the time of floods or drought. States must take the initiative.

    Conclusion

    The fiscal deficit is bound to go up substantially. The higher borrowing programme will need the support of the RBI if the interest rate is to be kept low. The monetisation of the deficit is inevitable. The strong injection of liquidity will store up problems for the next year. Inflation can flare-up. The government needs to be mindful of this. All the same, the government must not stint and go out in a massive way to combat the virus. This is the government’s first priority.

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  • Digital India Initiatives

    The Covid-19 crisis could bring the country up to digital speed

    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: Not much.

    Mains level: Paper 3- Application of digitalisation in healthcare and judiciary.

    Context

    The Covid-19 pandemic gives us a chance to re-evaluate the worth of two major initiatives of the government: demonetization and digitization.

    Importance of digitalisation in pandemic

    • The importance of digitization in a pandemic cannot be exaggerated when we are repeatedly told to maintain social distance and work from home in order to avoid infection.
    • Consider how nigh impossible it would be to avoid contact with retail cashiers and point-of-sale (PoS) terminals if we were to use credit cards and cash to pay for our daily necessities.
    • Today, most bill payments have moved online and barring older people, who may prefer to pay their electricity bills at physical counters, digitization is delivering in spades.
    • But digitization is not just about payments and financial transactions. Consider what all will happen as the current lockdown persists across the country.

    Application in the judiciary

    • Courts are beginning to use video-conferencing to conduct hearings. It is ironic that something that should have been done years ago to hasten hearings is now being done to prevent infections.
    • India’s judiciary has been resisting technology for as long as one can remember.
    • Witnesses do not have to drag themselves to court every day; they can video-record their statements in advance, and submit themselves to questioning through Skype or other such video-calling apps.
    • When the entire case is recorded, the possibility of judges conducting trials in an unfair way gets substantially reduced, for those at the receiving end of judicial injustice can seek retrials based on video recordings.
    • These recordings will also enable the higher judiciary to figure out who its good judges are, and who adopts dilatory tactics and frequent adjournments, delaying justice.
    • At some point, a judicial appointments commission will have video records of all judges shortlisted for promotions. They will thus know whom to recommend for elevation and whom to sideline. Corruption is also likely to come down.

    Application in the healthcare sector

    • In the current Covid-19 crisis, doctors and nurses are putting themselves at huge risk, and so are those handling millions of samples of throat swabs that need to be analysed for the virus
    • Applications: Remote patient examinations, analysis of symptoms with the help of databases and algorithms, and even the basic task of taking down a new patient’s medical history can all be done remotely through a digital app or interface.
    • The doctor will know even before he has met the patient what could be wrong, something she only has to confirm after interacting with the patient.
    • India is spending humongous amounts of money, and so are to-be doctors, to master medical knowledge that doubles every 75 days. In short, by the time your average MBBS doctor completes his or her degree, much of that knowledge could be outdated.
    • He or she has to use technology to update himself or herself, and also rely on databases and artificial intelligence to deliver healthcare without the risk of misdiagnosis.
    • India may be spending too much on training doctors at a cost of millions of rupees per head when a lot of that money could have been spent on technology to deliver competent and lower-cost healthcare.

    Conclusion

    If we just stop to think where we would have been in this pandemic but for digital technology, we would recognize the importance of going digital. It should make us think of how to convert the Covid-19 disruption into an agenda that brings us up to technological speed in various spheres of human activity.

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  • Innovations in Biotechnology and Medical Sciences

    The race to find a cure for COVID-19

    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: Not much.

    Mains level: Paper 3- Vaccine development and trials.

    Context

    The world is dealing with an unprecedented and unimaginably serious crisis. Therefore, the speed of vaccine development is crucial.

    Speeding up the vaccine development

    • Availability of rationale and information: The race for developing an anti-COVID-19 vaccine has begun. Reasonable scientific rationale and the information needed for vaccine development are available to all stakeholders in academia and industry.
    • Vaccine platforms: A large number of candidate vaccines based on different vaccine platforms, including delivering the virus genetic materials (RNA, DNA) or using synthetic biology to produce key viral proteins, have already been developed.
    • Phase-I safety trials of an experimental vaccine, jointly developed by scientists at the National Institute of Health and at Moderna, a biotechnology company, has already been administered to healthy volunteers for its safety and immunogenicity.
    • The speed with which the experimental vaccine has entered safety trials is unprecedented.
    • Another vaccine jointly developed by China’s Academy of Military Medical Sciences and CanSino Biologics has reportedly been cleared for early-stage clinical trials.
    • Development in India: The Serum Institute of India has also recently announced its readiness to start safety trials following animal experiments.
    • According to a World Health Organization (WHO) report, more than 20 vaccine candidates are in advanced stages of development and will be ready for Phase-I safety trials.
    • However, it is also clear that it will not be possible to roll-out any efficacious vaccine for at least another year.

    Questions that need to be answered

    • While these developments are encouraging, several questions will need to be answered for this vaccine development to move further.
    • Triggering immune response safely: Although it is quite evident that humans mount a strong immune response and clear the viral load, the nature of the immune response and how to trigger it safely through vaccination will be key questions to address.
    • Duration of the acquired immunity: How long the acquired immunity in humans will last is another important question to be asked before experimental vaccines move forward.
    • We will need to know this because if the immunity is transient, then humans will be susceptible to reinfections.
    • Ensuring no disease enhancement: Before moving to Phase-II trials in a large number of healthy volunteers, we also have to ensure that the immune response induced by vaccination does not lead to any disease enhancement.

    Repurposing the already available drugs

    • Therapeutic interventions, not only for curing severe cases of the disease but also for protecting all front-line healthcare workers, are urgently needed.
    • Using already approved drugs: Since developing new drugs is a complex and lengthy process, scientists and pharmaceutical companies have rushed to investigate and use drugs that have already been approved by regulatory authorities.
    • Using available molecular and structural biology information on the virus, a group of scientists have analysed all interactions of the viral proteins with human proteins that are crucial for the virus to enter human cells and use the host cell machinery to rapidly reproduce itself.
    • Of the nearly 70 short-listed molecules that may interrupt these key interactions, 24 happen to be already approved drugs which can now be tested in laboratory animal models as well as humans.
    • However, the re-purposing of several drugs, alone or in combinations to treat COVID-19 patients, have already been reported.
    • More confusion than hope: There are many success stories of curing patients of COVID-19 doing the rounds in different parts of the world, but these have managed to create more confusion than hope.
    • Without any appropriate controls, careful dosing and safety concerns, such small experiments can only do more harm than good.

    Controlled randomised trials

    • Given the urgency of finding a cure, it is absolutely necessary to find out unequivocally what works well and what does not. For that conducting carefully controlled randomised trials is the only way to go.
    • In a welcome move, the WHO has announced clinical trials called the ‘Solidarity Project’.
    • Under this project four drugs or drug, combinations will be tested in many countries around the world.
    • These candidates include the anti-Ebola drug, Remdesivir, Chloroquine, anti-HIV drugs, and the Ritonavir/Lopinavir combination, with or without Interferon-beta.
    • The European counterpart of the trial, Discovery, will conduct these trials in countries including France, Spain, Germany and the U.K.
    • The pharma company Roche has also decided to initiate large, randomised Phase-III trials of its arthritis drug Actemra for its safety and efficacy in adult patients with severe COVID-19 pneumonia.
    • It is complex and tedious to conduct randomised, large multi-centric trials.
    • Quickly getting all the stakeholders together is laudable and underscores the notion that everyone needs to fight the deadly virus together. Hopefully, these trials will lead to tangible drug therapies against COVID-19.

    Conclusion

    It is most heartening to see scientists in academia and industrial partners coming together to fight a monumental public health crisis. The battle between pathogens and humans will continue but let us hope that we win the present one sooner than later.

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