Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

Online versus offline

op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 3-Ensuring fair competition and dealing with the problem of predatory pricing.
Context

Any intervention to “correct” pricing essentially involves placing a higher weightage on the assumed losses of competitors/producers than on the consumer’s apparent gains. This is not a straightforward exercise.

Duopolies and scrutiny by the CCI
- Duopolies in the most segment: The online marketplace or the platform/intermediation service market is now largely characterised by duopolies in most segments:
  - Amazon and Flipkart in e-commerce, Uber and Ola in transport, Zomato and Swiggy in food service, MakeMyTrip and Yatra in travel bookings.
  - Some niche players do exist in these segments, but by and large, the market has been carved up by large players.
- Why CCI is scrutinising these companies? Several of these companies have come under the scrutiny of the Competition Commission of India (CCI).
  - What are the issues involved? The issues involved here have far-reaching ramifications for both online and offline market places. Some of the more contentious issues are:
  - Do such market structures restrict online competition?
  - Are the players engaging in predatory pricing?
  - If so, is it driving out both online and offline competition and does this adversely impact consumer welfare?
  - Is there a need for policy intervention, and, if so, what should be the underlying framework?
Lower barrier to entry not translating into greater competition
- Market not working as per theory: In theory, the online market structure should facilitate greater competition given the lower barriers to entry. But this may not be the case.
  - Take-over: Most other firms in the segments mentioned above have either been taken over or have folded up.
- What is the reason for the emergence of such marker structures
- Positive feedback loop: One explanation for the emergence of these market structures is that as companies grow, with more users coming on board these platforms, they benefit from what CCI calls positive feedback loop.
  - This leads to market concentration.
  - Difficulties for new players: Given the network effects, which are common in digital spaces, it becomes difficult for new players to enter these spaces, and gain market share as there isn’t much space for many such networks.
- Capital intensive market: Another possible explanation is that, contrary to perception, the online space is highly capital intensive.
  - Deep pockets are required to fund the discounts to get customers on board initially.
  - Such market structures are more likely in capital deficit countries like India.
- Incumbents restricting new entrant: Incumbents, as in other sectors, may also engage in various strategies to restrict entry and thus competition.
  - Even small actions by these platforms coupled with the network effects can adversely impact competition.
Predatory pricing-issues involved in it
- Allegations of predatory pricing driving out the competition: Many allege that these two-sided online platforms engage in predatory pricing or below-cost pricing either by funding it themselves (deep pockets) or by squeezing producers.
  - This drives out the competition — both online as well as offline.
  - Predatory pricing is anti-competition, to begin with.
  - How it is harmful to the customers? While consumers do benefit in the short run, once the competition is driven out, the platform starts raising prices to recoup previous losses.
  - But is it that straightforward?
- What are the issues involved in predatory pricing?
- First- Assessing whether a platform is engaged in predatory pricing.
  - In India, it is defined as price falling below average variable cost — may not be a straightforward exercise.
  - Why it is not a straight forward exercise? The dynamics of online pricing (prices change over time), their unique cost structures — in such two-sided platforms, prices/costs on both sides should be seen in conjunction — as well as the impact of economies of scale and organisational efficiency in lowering costs, all need to be factored in.
  - Discount for clearing inventories: Besides, one would also have to take into account that even offline firms engage in deep discounting to clear inventories.
  - As do both online and offline firms to acquire customers in the early stages of their business.
- Second-The impact of such pricing strategies on competition and on consumer welfare must be carefully assessed.
  - Driving out competitors is not equal to driving out the competition: It is quite likely that once the competition is eliminated and the platform starts to raise prices, new players will enter the market, attracted by higher prices.
  - Driving out competitors may not be the same as driving out the competition — though the extent to which new firms are able to enter the market will depend on the degree to which barriers to entry exist.
  - Concerns of recovering the losses: Platforms will be mindful that losses will be hard to recover, and may not engage in below-cost pricing to drive out competitors for extended periods.
  - Consumers are unlikely to lose out as prices are likely to remain low.
- Third- Possibility of collusion
  - There is also an argument for closer examination of such market structures because of the possibility of collusion.
  - Customers moving towards cheaper options: In most such markets, as the consumer has little to differentiate between the two platforms, it is the price that sets them apart.
  - Consumers tend to gravitate towards the cheaper option. This ensures continuous competition between the major players to offer low prices.
  - Possibility of customer left with no option: It is possible that at some point, the players will find it in their interest to venture into some sort of agreement that allows both of them to survive, rather than be engaged in a race to the bottom — as has seemingly happened in the telecom sector.
- Fourth- Linking predatory pricing with abuse of dominant market position must be reexamined.
  - The dominant position is not always linked with predatory pricing: As the experience of the telecom sector shows, a dominant position may not be a prerequisite for predatory pricing.
  - Accepting this argument would imply that if regulatory intervention is required to check predatory pricing, it could kick in before market power or dominance is established.
  - Taking into account deep pockets: Alternatively, the definition of market dominance could be expanded to take into account deep pockets.
Conclusion
- Set of guidelines instead of the fixed framework: Any intervention to “correct” pricing essentially involves placing a higher weightage on the assumed losses of competitors/producers than on the consumer’s apparent gains. This is not a straightforward exercise. Having a fixed predetermined framework is unlikely to be helpful. Instead, it would be more useful to have a set of guiding principles based on which regulatory intervention, if required, can be undertaken.
- Safeguarding competition not competitors: Competition policy should be driven by safeguarding competition, not competitors. It should seek to bring about greater transparency in pricing and reduce information asymmetry.
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Higher Education – RUSA, NIRF, HEFA, etc.

A disconnected pedagogy

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- Aligning national curriculum with the needs of the market and society.
Context

The gap between jobs, needs and knowledge, and the absence of role models, could be turning India’s demographic dividend into a nightmare.

National curriculum and problems with it
- What is in our national curriculum? It is a fixed set of topics prescribed in all subjects — from physics to geography, and engineering to planning.
  - And it is taught in English at our elite MHRD institutions.
- Designed by professionals: It has not been designed by politicians but by our elite professors and bureaucrats: It is what they believe the nation really needs to know.
- Issue of imposition: It is imposed on ordinary students and parents through competitive exams and on colleges and universities through various central regulatory agencies, most egregiously, through the UGC-NET, an objective-type multiple-choice (!) exam that decides who is fit to be a college teacher.
Issues with the engineering curriculum
- Doesn’t address the regional needs: We already know that the national engineering curriculum fails miserably in meeting regional needs.
  - No regional variation accounted for: Engineering for Himachal Pradesh needs to be different from that in Maharashtra or Kerala.
- Not in sync with the demands of the industry: It must address the needs of core industries, local enterprises, the provisioning of basic amenities such as water and energy.
  - None of this is in our national curricula or practised at the IITs.
  - Moreover, there is no mechanism for engineering colleges to work with their communities.
Issue with the social science curriculum
- No interdisciplinary courses: Let us look at the UGC-NET curricula, which is largely what is taught in our elite institutions.
  - At the BA level, it is divided into several disciplines — for instance, political science, sociology and economics.
  - This is unfortunate since much of life in India is interdisciplinary.
  - As a result, many activities such as preparing the balance sheet for a farmer, or analysing public transport needs, and development concerns such as drinking water or even city governance, are given a miss.
- Example of economics curriculum: The UGC-NET curricula in economics has 10 units, the very last unit is Indian Economics. Unit 8 is on Growth and Development Economics, where the student must know Keynes, Marx, Kaldor, and others.
  - There are various mathematical models, for example, the IS-LM macroeconomic model, whose validity in the Indian scenario is questionable.
  - Absence of important sectors: The study of sectors such as small enterprises or basic economic services such as transportation is absent. The District Economic Survey, an important document prepared regularly by every state for each district, is not even mentioned.
Sociology curriculum and issues involved
- Absence of certain important items: There is no preamble nor a list of textbooks or case studies.
  - Under “Social Institutions”, we have a list of timeless words such as culture, marriage, family and kinship.
  - Peasant occurs two times, but there is no farmer. Here is a sample question: “Who uses the phrase ‘fetishism of commodities’ while analysing social conditions?” followed by four names.
- No mention of important data: There is also no mention of important data sets such as the census or developmental programmes including MGNREGA in either curriculum.
Conclusion
- National curricula divorced from the community: The training at our elite institutions, and consequently, in the national curricula, is not to empower ordinary students to probe their lived reality. Or to contribute professionally and constructively to the development problems around us. Rather, it is to perpetuate a peculiar intellectualism which is divorced from the community in which these institutions are embedded.
- Need to rethink the one-nation-one curriculum: One-nation-one-curriculum certainly has some advantages in enabling mobility of some jobs, especially in the national bureaucracy and a multinational economy.
  - Cost to the developmental needs: But one-nation-one-curriculum comes at the cost of the developmental needs of the states and the emergence of good jobs there.
- Turning demographic dividend into a nightmare: The above-stated asymmetry is behind the aspirational dysfunction in higher education. It is this disconnect between jobs, needs and knowledge and the absence of role models, which is slowly turning our demographic dividend into a nightmare on the streets.
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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Way out lies within

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-Focus on demand side of the Indian economy instead of focusing all attention on supply-constraints.
Context

Domestic demand must play a greater role in India’s growth story.

Recovery in the Indian economy
- Sub-5 per cent growth rate: India’s fourth-quarter GDP growth (the calendar year 2019) printed another sub-5 per cent growth rate.
- Favourable base effect: It would have been lower had it not been for the large downward revisions to previous years’ GDP that statistically boosted the last quarter’s growth rate because of favourable base effects.
- The decline in GDP stabilised: Policymakers and the market heaved a sigh of relief that the relentless decline over the last three years at least seems to have stabilised around 4-5 per cent.
- Why some countries prefer sequential growth rate: Because year-over growth rates are so strongly affected by what happened a year ago, most economies (including China) instead publish and conduct policy discussions based on sequential quarterly growth.
  - Better sense of momentum: Sequential growth rates provide a much better sense of the momentum and turning points in activity, which are critical to deciding whether, how much, and when the economy needs policy support.
- The magnitude of recovery: The growth momentum rose, albeit modestly, from 3.8 per cent in the third quarter of 2019 to 4.1 per cent.
  - Non-farm and non-governmental GDP recovery: More importantly, non-farm and non-government GDP (the closest approximation to non-farm private-sector GDP) bounced much more sharply from 1.6 per cent (and no this is not a misprint) to 4.4 per cent in the fourth quarter.
What is the dominant narrative of the slide in growth?
- The deceleration in sequential terms: With the revised data, we now know that annual growth over the last four years has slowed from 8.3 per cent to 7 per cent to 6.1 per cent to 4-5 per cent.
  - The decline in non-farm private GDP: In sequential terms, the deceleration was far more dramatic, especially in non-farm private GDP, which after hitting a run rate of 13 per cent in the first quarter of 2016 fell to 1.6 per cent by the third quarter of 2019.
  - The dominant narrative of the cause of slide: The dominant narrative is that India’s woes are just an unfortunate and unintended consequence of demonetisation, the shift to a national GST, and the credit squeeze caused by the bad debt in banks and non-banks.
  - The dominant narrative on recovery: With a bit more fiscal support, some monetary easing, and extended regulatory forbearance to help banks work out their bad debts, these headwinds will fade and India will likely be back to its winning ways.
Why real cause of the slowdown lays somewhere else?

Following factors suggest that answer lies somewhere else.
- Disruptive but not the drivers of the slowdown: While it is undeniable that facts stated in the dominant narrative had been disruptive, they couldn’t be the drivers of the decline.
  - Slide in growth started even before demonetisation: India’s growth had been sliding since the second quarter of 2016; nearly 6 months before demonetisation and a year before the GST was introduced.
  - By the third quarter of 2016, non-farm private sector growth had already slid to 3.5 per cent.
  - Bad debt problem predates slowdown: Although bad debt hit the headlines in 2016, the overleverage had already begun to tighten bank lending since 2014.
- Fall in corporate investment- inexplicable cause: More inexplicable is the argument that falling corporate investment is the main culprit for the slowdown.
  - It is true that corporate investment is no longer running at the heady 17 per cent of GDP of the pre-global financial crisis (GFC) days but at a much more sombre 11-12 per cent.
  - However, this outsized adjustment had already taken place by 2010 and since then, corporate investment has flatlined at current levels.
The answer lies in globalisation

It is obvious once one eschews India’s exceptionalism and accepts that it is just another emerging market economy that grew on the coattails of globalisation with the minimal reforms. Globalisation has largely determined India’s fate.
- Growth in corporate investment and exports: Contrary to a widely held misperception, India is and has been for a long time far more open to the global economy than believed.
  - Rise in corporate investment from 5 to 17%: The limited liberalisation of 1991-92, coupled with the corporate restructuring in the late 1990s, spurred corporate investment to rise from 5-6 per cent of GDP in the early 2000s to 17 per cent of GDP by 2008.
  - Increase in exports: Almost all of this expansion in investment was geared to produce for exports, which grew at an astonishing pace of 18 per cent per year-over-year in this period as global trade expanded at breakneck speed with the entry of China into the WTO in 2001.
  - 12% of GDP to 26% of GDP: Exports as a share of GDP more than doubled from 12 per cent in the early 2000s to over 26 per cent by 2008.
  - Slow growth in private consumption: In contrast, private domestic consumption, which is considered to be India’s great strength, grew only at 6 per cent annually, less than the growth rate of the economy, such that its share in GDP fell from 63 per cent to 56 per cent.
  - The engine of the Indian economy- Export: Since 2012, global trade has floundered and with that so has India’s economy.
  - Indeed, the entire rise and fall of investment, including the quarter-to-quarter twists and turns in it, can be almost fully explained by changes in exports.
  - The Indian economy has long been flying on one engine – exports — and that is now spluttering.
What are the prospects of taking the economy back to its high growth path
- Unlikely: So will the nascent recovery strengthen and take the economy back to its high growth path? Unlikely on current policies.
- COVID-19 factor: In the near term, as in now widely feared, the COVID-19 outbreak could turn into a pandemic, sharply reducing global demand and trade.
  - With that, even expectations of a modest 2019-20 recovery to 5.25 per cent growth are under threat.
- Backlash against globalisation: Over the longer term, it is unlikely that global trade will return to its pre-Global financial crisis growth rates not only because supply chains have stopped expanding in the absence of any material technology breakthrough, but there is also a growing political backlash against globalisation in the developed market that has led to increased trade barriers.
Way forward
- Search for new sources of growth: India too, like other emerging market economies, needs to face up to the reality that it can no longer depend on global trade to be the only growth driver. Instead, it needs to search and find new sources of growth and that starts with recognising and accepting reality.
- Let domestic demand play a greater role in the economy: Policymakers need to stop thinking about India as a perennially supply-constrained economy focusing almost all policies and reforms to easing these constraints. Instead, it is time to let domestic demand play a greater role in India’s growth story.
- Policy changes: The above factors mean that India Inc. needs to shift from producing what foreigners want to produce what residents can afford, it also means that policymakers have to reverse policies that have so far forced households to keep increasing savings (for retirement income, children’s education, healthcare, and housing) through a web of financial repression, regulatory distortions, and public spending choices.
  - It means redesigning India’s infrastructure to look more inward and less outward.
  - Reduce out of pocket expenses: Increasing public provisioning of healthcare and education, reforming insurance regulations to reduce out-of-pocket expenses and eliminating financial repression to raise returns on retirement savings.
  - Merely tinkering with macroeconomic policies will not be enough.
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Minority Issues – SC, ST, Dalits, OBC, Reservations, etc.

A blow against social justice

op-ed snap | Polity | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Constitutional provision for the reservation in the government jobs.
Mains level: Paper 2- Reservation in the government jobs is not the fundamental right.
Context

The recent verdict of a two-judge Supreme Court Bench on reservations and Scheduled Caste and Scheduled Tribes promotions — has mainly raised four constitutional questions.

The first question-Whether reservation in promotions is a fundamental right or not.
- Scope for the reservation: Addressing the first question, the scope for reservation for the Backward Classes is promised in Part III of the Constitution under Fundamental Rights.
  - Articles 16(4) and 16(4A) which empowers the state to provide reservation for SCs and STs are a part of the section, “Equality of opportunity in matters of public employment”.
  - The right to equality is also enshrined in the Preamble of the Constitution. Many construe that the reservation is against Article 16 (Right to equality).
- The basis for the reservation: One should understand that the absence of equal opportunities for the Backward Classes due to historic injustice by virtue of birth entails them reservation.
  - In other words, the right to equality is the basis of reservation as there is no level-playing field among castes.
  - Articles 16 (2) and 16(4) are neither contradictory nor mutually exclusive in nature. In fact, they are complementary to each other; even Article 16(4) is not a special provision.
- Whether reservation should be applied in promotions?
  - The answer is yes because, in India, where there is a peculiar hierarchical arrangement of caste, it is conspicuous that SCs and STs are poorly represented in higher posts.
  - Confined to lower cadre jobs: Denying application of reservation in promotions has kept SCs and STs largely confined to lower cadre jobs. This is even seen in the higher judiciary.
  - Hence, providing reservation for promotions is even more justified and appropriate to attain equality.
  - Need of the reservation at every level: The question of law is not about enabling reservations in promotions or not, but this judgment destabilises the very basis of reservation; when there is no direct recruitment in higher posts, the implementation of the reservation is justified at every level to get a reasonable representation.
  - Subdivision of reservation not correct: It is not correct to subdivide the scope of reservation at the entry-level and in promotions; this delineation will only lead to confusion in the implementation of reservation.
  - Now, by declaring that reservation cannot be claimed as a fundamental right is a dangerous precedent in the history of social justice.
The second question- Can a court issue a mandamus to the state for providing reservation?
- Will it be appropriate for the courts to issue a mandamus in this regard?
  - This is inappropriate because when the court is empowered to pass orders to create extra seats every year for forward-caste students who claim to be affected by reservation, why cannot it direct the state to provide reservation in promotions?
- Use of powers under Article 142: The Supreme Court has extraordinary powers under Article 142, which empowers the Court to pass any order necessary for doing “complete justice in any cause or matter pending before it”.
Third question-Necessity of quantifiable data
- Data to prove inadequate representation: The next question is about the necessity of quantifiable data to show an inadequate representation of reserved category people.
- Article 16 addresses the question: This question has been addressed in the Constitution. Article 16(4) reads: “Nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State.”
- How “opinion of the State” should be construes: Here, “in the opinion of State” should not be construed as the discretion of the state to give the reservation or not; on the contrary, if the state feels that SCs and STs are under-represented, then it is in the domain of the state to provide reservation.
- Quantifiable data for exceeding the 50% limit: In the Indra Sawhney vs Union of India case (Mandal Commission) the idea of quantifiable data on inadequate representation was applied for exceeding the 50% cap for reservation; within 50% where the existing quotas for SCs and STs are accommodated were not affected.
  - Responsibility to collect data on the State: The responsibility of collecting data on representation by the Backward Classes lies with the state.
  - Pathetically, the last caste-based census was in 1935, and in the pre-Independence era, by the British government.
  - No caste-based census in India: After Independence, no government has had the inclination to conduct a caste-based census due to political reasons.
  - Even if a caste-based census is collected, the population and proportionate representation of SCs and STs will be low. For this reason alone, a proper caste-based census has not been conducted in independent India.
  - No mention of quantifiable data: Moreover, Article 16(4) clearly mentions that if the state, in its opinion, feels that SCs and STs are not adequately represented, then it can provide reservation for them. There is no mention of “quantifiable data” in the Constitution. Even after 70 years of SC/ST reservation, their representation is as low as 3%.
Fourth question-Whether it is the obligation of the state to give reservation?
- Obligatory on the government: Finally, if the argument is that it is not binding on the state to give reservation, it must be noted that when reservation rights are in Part III as Fundamental Rights, it is the obligation of the state to ensure reservation to the underprivileged.
- Interpretation as obligatory provisions: This judgment has interpreted Articles 16 (4) and 16(4A) only as enabling provisions.
- Enabling provisions mean that these provisions empower the state to intervene; it does not mean the state is not bound to provide it.
- Interpreting the Constitution by paraphrasing and selective reading is dangerous.
Administrative efficiency
- Reservation should not affect the efficiency of administration: More importantly, this judgment has raised a new point — that the decision of the State government to provide reservation for SC/STs should not affect the efficiency of administration.
  - This implies that the entry of SC/STs in the job market can reduce the quality of administration; this by itself is discriminatory.
- No evidence to support the claim: There is no evidence that performance in administration is affected on account of caste.
- There have been many attempts to dilute reservation in the past. But, this judgment appears to be debatable in the larger context and should be challenged in a constitutional bench.
Conclusion

In a country of parliamentary democracy, even the Constitution of India can be amended. If the government at the Centre has a genuine concern for SC/STs, it can amend the Constitution using its political majority.
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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

The growth challenge

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- Prospects of recovery of Indian economy and indications from demand and supply side.
Context

The focus in the near future should to increase investments and facilitate credit for funding these productive assets so that India’s potential output growth can steadily rise.

Growth prospects of India
- The NSO forecast at 5%: The latest data from the National Statistical Office (NSO) retained India’s economic growth forecast at 5 per cent for the current financial year.
  - Growth has dropped from 6.1 per cent in the previous year.
- Fall in nominal GDP: More strikingly, nominal GDP growth has decelerated from an average of 11 per cent during 2016-17 to 2018-19 to 7.5 per cent this year.
  - Lower inflation added to the volume slowdown.
  - The value of India’s GDP for FY20 is estimated at around $2.9 trillion.
Input and output side growth prospects
- GDP is estimated from both output and demand lenses, using specific economic indicators as proxies for activity in specific sectors.
- Output side: From the output side, sector-wise estimates were as following-
  - Agriculture sector growth was revised up to 3.7 per cent (up from the 2.8 per cent previously).
  - Agricultural production is expected to improve based on the third advance estimates of the rabi season crops, as well as higher horticulture and allied sector output (livestock, forestry and fishing), which now is significantly larger than conventional food crops.
  - Industrial activity was lowered to 1.5 per cent (from 2.3 per cent earlier).
  - The key concern regarding the continuing slowdown is the increasing weakness in the industrial sector (particularly of manufacturing, whose growth has progressively fallen from 13.1 per cent in FY16 to 5.7 per cent in FY19, and plummeting to 0.9 per cent in FY20).
  - Services output remained largely unchanged at 6.5 per cent.
- Demand-side: From a demand perspective, the obverse side to the manufacturing slowdown is the even sharper drop in fixed asset investment growth — down sharply from an average 8.5 per cent during FY17 and FY19 to -0.6 per cent in FY20.
  - The causes for this contraction needs to be understood in detail, and we will return to this.
Private consumption- a significant driver of growth
- Private consumption at 60% of GDP: The other significant driver of growth in India has been private consumption. For perspective, the share of private consumption had averaged 59-60 per cent during FY16-FY20.
- Government consumption 10% of GDP: Reflecting the higher spending over the last couple of years, the share of government consumption in GDP has risen from an average of 10.5 per cent of GDP over FY12-17 to almost 12 per cent in FY20, resulting in the share of total consumption above 70 per cent.
Drop in the share of nominal investment
- Drop from 39 % to 30 % of GDP: The really remarkable trend, though, as noted above, is the share of nominal investment in GDP progressively dropping from 39 per cent in FY12 to 30 per cent in FY20.
- Is it a good sign? Part of this is actually good, reflecting higher Capex efficiency.
  - Slowing household consumption: One narrative underlying the contraction in fresh Capex in FY20 was slowing household consumption growth, which, in nominal terms, fell from an average 11.6 per cent during FY16-19 to an estimated 9.1 per cent in FY20.
  - Disproportionate contribution to lower growth: Though the deceleration prima facie does not seem significant enough to result in a broader economic slowdown of the current magnitude, the high share of household consumption has contributed disproportionately to lower growth.
  - Fall in capacity utilisation: A direct fallout of this is that seasonally adjusted capacity utilisation (based on RBI surveys) had shrunk from 73.4 per cent in the first quarter of FY20 to 70.3 per cent in the second quarter, and this is unlikely to have improved materially in the second half of the year.
  - This is one of the reasons for the low levels of fresh investment.
Reduced flow of credit to the commercial sector
- Impediment to growth revival: The other cause of the low Capex, more from the supply side, is a much-reduced flow of credit to the commercial sector, and this remains the proximate impediment for growth revival, with signs of risk aversion in lending still strong despite the recent measures by RBI to incentivise credit to productive sectors.
  - Funds from selected sources, over April-January FY20, was only about Rs 9 lakh crore as against Rs 15 lakh crore in the corresponding 10 months of FY19.
- Bank credit lowest in three months: Growth in bank credit (which is still the largest source of financing) till mid-February 2020 was down to 6.3 per cent — the lowest in three years.
  - Even this is almost wholly driven by retail credit; incremental credit to industry and services over this period was negative.
Investor confidence and coronavirus factor
- A bright feature of the economic environment: One bright feature in this economic environment is strong foreign investor confidence in India, reflected in both FPI equity and FDI flows.
  - Many borrowers have used offshore sources to refinance or pay down domestic bank loans and debt.
  - A global risk-off environment might restrict even this channel in the near future.
- Robust corporate bond issuances: Domestic corporate bond issuances have also remained robust, although the dominant set of borrowers still remain public sector agencies and financial institutions.
- Coronavirus factor likely to moderate the gains: Monthly economic indicators suggest that the growth deceleration has likely bottomed out in the third quarter.
  - The bet has been on reducing inventories and the consequent production ramp-up to replenish stocks. However, the evidence on this is mixed.
  - The coronavirus effects, both concurrent and lagged, will also moderate some of the emerging positive effects of counter-cyclical policy measures of the past six months.
  - If the outbreak does not abate over the next month or so, the complex supply chains of intermediates sourced from China will run dry and add to the already weak system demand.
- Growth prospects in the next few weeks: Surveys indicate that both business and consumer confidence, which while improving, remain muted. A growth revival, hence, is likely to be only very modest over the next few quarters.
Conclusion

A $5 trillion economy by 2025 is still a worthwhile target and aspirational; coordinated strategies, policies, execution and institutional mechanisms will be needed to move up to a sustained 8 per cent plus growth consistent with achieving the target. The focus in the near future should to increase investments and facilitate credit for funding these productive assets so that India’s potential output growth can steadily rise.
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Nuclear Energy

Pushing the wrong energy buttons

op-ed snap | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 3- Nuclear energy-issues involved.
Context

For more than a decade, no major meeting between an Indian Prime Minister and a U.S. President has passed without a ritual reference to India’s promise made in 2008 to purchase American nuclear reactors.

Issues in the nuclear deal
- Construction of reactors: During president Trumps visit techno-commercial offer for the construction of six nuclear reactors in India at the earliest date was considered.
- More expensive: Indeed, it has been clear for years that electricity from American reactors would be more expensive than competing sources of energy.
- Prone to disasters: Moreover, nuclear reactors can undergo serious accidents, as shown by the 2011 Fukushima disaster.
- No liability for accidents: Westinghouse has insisted on a prior assurance that India would not hold it responsible for the consequences of a nuclear disaster.
  - Which is effectively an admission that it is unable to guarantee the safety of its reactors.
Who will be benefited from the deal?
- The two beneficiaries: The main beneficiaries from India’s import of reactors would be Westinghouse and India’s atomic energy establishment that is struggling to retain its relevance given the rapid growth of renewables.
- Political implications: Mr Trump has reasons to press for the sale too. His re-election campaign for the U.S. presidential election in November.
  - The election centrally involves the revival of U.S. manufacturing and he has been lobbied by several nuclear reactor vendors, including Westinghouse.
  - Finally, he also has a conflict-of-interest.
Comparisons with the renewables
- The total cost of the reactors: The six reactors being offered to India by Westinghouse would cost almost ₹6 lakh crore.
  - If India purchases these reactors, the economic burden will fall upon consumers and taxpayers.
- Per unit price: In 2013, it was estimated that even after reducing these prices by 30%, to account for lower construction costs in India, the first year tariff for electricity would be about ₹25 per unit.
- Comparison with solar energy: Recent solar energy bids in India are around ₹3 per unit.
  - Lazard, the Wall Street firm, estimates that wind and solar energy costs have declined by around 70% to 90% in just the last 10 years and may decline further in the future.
Safety concern with nuclear energy
- Long term cost in case of disasters: Nuclear power can also impose long-term costs.
  - Chernobyl accident: Large areas continue to be contaminated with radioactive materials from the 1986 Chernobyl accident and thousands of square kilometres remain closed off for human inhabitation.
  - Fukushima accident: Nearly a decade after the 2011 disaster, the Fukushima prefecture retains radioactive hotspots.
  - The cost of clean-up: the cost of clean-up has been variously estimated to range from $200-billion to over $600-billion.
- No liability towards company: The Fukushima accident was partly caused by weaknesses in the General Electric company’s Mark I nuclear reactor design.
- But that company paid nothing towards clean-up costs, or as compensation to the victims, due to an indemnity clause in Japanese law.
- What are the provisions in Indian laws: Westinghouse wants a similar arrangement with India. Although the Indian liability law is heavily skewed towards manufacturers, it still does not completely indemnify them.
  - So nuclear vendors have tried to chip away at the law. Instead of resisting foreign suppliers, the Indian government has tacitly supported this process.
India’s experience with nuclear energy
- Starting with the Tarapur 1 and 2 reactors, in Maharashtra, India’s experiences with imported reactors have been poor.
- The Kudankulam 1 and 2 reactors, in Tamil Nadu, the only ones to have been imported and commissioned in the last decade, have been repeatedly shut down.
- Producing less than capacity: In 2018-19, these reactors produced just 32% and 38%, respectively, of the electricity they were designed to produce.
- These difficulties are illustrative of the dismal history of India’s nuclear establishment.
- Electricity generation stagnant at 3%: In spite of its tall claims, the fraction of electricity generated by nuclear power in India has remained stagnant at about 3% for decades.
Conclusion

The above factors indicate that the government should take the rational decision on the adoption of nuclear energy given its cost and the risk involved and the better alternative available in the form of solar and other renewable energies.
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International Space Agencies – Missions and Discoveries

New forces in orbit

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- What reforms are needed in space sector to leverage it for commercial purposes.
Context

As it looks at the growing role of the private sector and the effort by nations like the UAE and Luxembourg, Delhi needs to move quickly towards a new model for India’s space activity.

Growing presence in the outer space
- Outer space no longer a preserve of a few: When you think of outer space, you think of big powers like the United States, Russia and China.
  - You might also note the collective European effort under the European Space Agency as well as the impressive national space programmes of India and Japan.
  - Strategic or symbol of national pursuit: Space programmes have for long been viewed as either strategic or symbols of national prestige for big countries that are prepared to invest significant resources in the pursuit of a credible presence in outer space.
- Two small countries challenging the narrative: Two small countries, the United Arab Emirates in the Gulf and the Grand Duchy of Luxembourg in Europe have begun to demonstrate that the outer space need not be the playing ground for big powers alone.
  - Sceptics might think it is pretentious for the UAE with its native population of barely one million and Luxembourg with 600,000 people to think of a place for themselves in space.
UAE’s presence in the space
- Reminder for India: The interesting path these two countries have set for themselves in outer space is a reminder that Delhi needs to adapt to the rapidly changing dynamic in outer space.
- Hope Mars Mission: That size is not a constraint is reflected in the UAE’s plan to launch its Mars mission, “Hope”, later this year in partnership with a range of organisations across the world — including three universities in the US.
  - Japan is scheduled to launch the UAE Mars probe this year.
  - India’s own ISRO is also working with the UAE on its Mars mission.
- Last year, the first Emirati Astronaut, Hazza al-Mansouri spent more than a week in the US-Russian space station.
- What are the reasons for the UAE’s space strategy? It is about cornering a slice of the rapidly growing commercial space industry — part of a major effort to diversify the UAE economy away from its reliance on hydrocarbons.
How Luxembourg is increasing its presence in the outer space
- Commercial space as a major opportunity: Over the years, Luxembourg moved away from its past reliance on the steel industry to become a centre of European banking and finance.
  - It is now looking at commercial space as a major opportunity.
- Regulatory steps: Luxembourg has taken a number of regulatory steps to create a vibrant ecosystem for space companies ranging from satellite operations to future extraction of resources from asteroids and other space objects.
- Expansion of the space sector: At the moment, the space sector accounts for nearly 2 per cent of Luxembourg’s GDP.
  - There are more than 50 companies and two public research organisations that are driving the expansion of space sector in Luxembourg.
  - It entered the space sector only in the middle of the last decade. It is also driven by the need for economic diversification.
- Leveraging new ideas: UAE and Luxembourg do have a reputation for leveraging new ideas to transcend the limitations of their size in the world.
  - But their space adventure was not possible without the structural changes that are reshaping the global space activity.
How space industry underwent a change over the years
- Preserve of national programs: Through the second half of the 20th century, outer space was the sole preserve of national space programmes driven by government-funding, direction and management.
- The emergence of the private sector: As military uses of space and prestige projects like Moon-landing emerged, major private sector entities already in the aviation industry like Boeing and Lockheed won space contracts in the US.
  - Collaboration with government: The Pentagon and the National Aeronautics and Space Administration (NASA) told these companies what to do.
- Expansion: The last decades of the 20th century saw significant expansion of satellite-based telecommunication, navigation, broadcasting and mapping, and lent a significant commercial dimension to the space sector.
  - As the digital revolution in the 21st century transformed the world economy, the commercial space sector has begun to grow in leaps and bounds.
  - The global space business is now estimated to be around $ 400 billion and is expected to easily rise to at least trillion dollars by 2040.
- Rise of SpaceX: One example of the rise of private sector companies in the space sector is SpaceX run by the US entrepreneur Elon Musk.
  - Hired for a resupply mission for the space station, it now launches more rockets every year than NASA.
  - The entry of the private sector has begun to drive down the cost-per-launch through innovations such as reusable rockets.
Scope of the expansion of the space industry
- Decrease in launch cost and rise in ambition: As launch costs came down, the private sector has become more ambitious.
  - Internet through space: SpaceX plans to launch hundreds of satellites into the low-earth orbit to provide internet services. Amazon has plans to build a network of more than 3,000 satellites in the low-earth orbit.
  - Space tourism: Musk and Amazon’s Jeff Bezos have plans to develop space tourism and build human settlements on the Moon and on Mars.
  - Small private companies in the fray: It is not just big companies that are aiming for the Moon. Last year, a private company in Israel sent a lunar lander to the Moon. Although the lander crashed, much like India’s Vikram, the private sector has begun to do things that were once the monopoly of national agencies.
India not in synch with the global changes
- Not adapting to the change: India, however, is quite some distance away from adapting to the unfolding changes in the global space business.
  - In its early years, India’s space programme that was constrained by lack of resources found innovative ways of getting ahead in space.
- Space sector dominated by the government: Although the ISRO encourages private sector participation in the national space programme, its model is still very 20th century — in terms of governmental domination.
Conclusion

As it looks at the growing role of the private sector and the effort by nations like the UAE and Luxembourg, India needs to move quickly towards a new model for India’s space activity. It needs a regulatory environment that encourages a more dynamic role for the private sector and promotes innovation.
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Important Judgements In News

Whither tribunal independence?

op-ed snap | Governance | Mains Paper 2: Statutory, Regulatory & Various Quasi-Judicial Bodies

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 2- Provision of constitution of tribunal, tenure and the SC directives.
Context

The reframed Tribunal rules are in contempt of several Constitution Bench decisions of the Supreme Court.

What the SC said in Rojer Mathew case
- Rules being unconstitutional: In November 2019, a Constitution Bench of the Supreme Court, in Rojer Mathew, declared the Tribunal, Appellate Tribunal and other Authorities (Qualification, Experience and other Conditions of Service of Members) Rules, 2017 as unconstitutional.
  - Why it was declared unconstitutional? It was declared unconstitutional for being violative of principles of independence of the judiciary and contrary to earlier decisions of the Supreme Court in the Madras Bar Association
- Direction to the Central government: In Rojer Mathew, there was also a direction to the Central government to reformulate the rules strictly in accordance with principles delineated by the Court in its earlier decisions.
  - The reframed rules, notified by the Ministry of Finance, however, suffer from the same vices.
What were the issues in the Finance Act, 2017
- What was prescribed in the Finance Act, 2017: The Finance Act, 2017, around 26 Central statutes were amended.
  - Excessive rule-making powers to the Centre government: The power to prescribe eligibility criteria, selection process, removal, salaries, tenure and other service conditions pertaining to various members of 19 tribunals were sub-delegated to the rule-making powers of the Central government.
- Attempt to keep the judiciary away: Describing the search-cum-selection-committee as an attempt to keep the judiciary away from the process of selection and appointment of members, vice-chairman and chairman of tribunals.
  - Executive litigant in most cases: The Court held that the executive is a litigating party in most of the litigation and hence cannot be allowed to be a dominant participant in tribunal appointments.
  - Selection committee issue: Barring the National Company Law Appellate Tribunal (NCLAT), the selection committee for all other tribunals was made up either entirely from personnel within or nominated by the Central government or comprised a majority of personnel from the Central government.
  - While the selection committee for NCLAT consisted of two judges and two secretaries to the Government of India, all other committees comprised only one judge and three secretaries to the Government of India. Now, in the 2020 rules, by default, all committees consist of a judge, the president/chairman/chairperson of the tribunal concerned and two secretaries to the Government of India
- 3 years tenure injurious to the efficiency: Reiterating its previous decision in Madras Bar Association (2010), the Court held that the tenure of three years for members will “preclude cultivation of adjudicatory experience and is thus injurious to the efficiency of the Tribunals”.
An equal say for the judiciary
- 2 Judges in 4 member committee: The common thread in the Madras Bar Association series and Rojer Mathew decisions is that judiciary must have an equal say in the appointment of members of the tribunals.
  - To deny the executive an upper hand in appointing members to tribunals, the court ordered to have two judges of the Supreme Court to be a part of the four-member selection committee.
  - In Madras Bar Association(2010), held that the selection committee should comprise the Chief Justice of India or his nominee (chairperson, with a casting vote), a senior judge of the Supreme Court or Chief Justice of the High Court, and secretaries in the Ministry of Finance and Ministry of Law and Justice respectively.
- Decision applicable to all tribunals: Subsequent Constitution Bench decisions in Madras Bar Association (2014), Rojer Mathew and the decision of the Madras High Court in Shamnad Basheer have repeatedly held that the principles of the Madras Bar Association (2010) are applicable to the selection process and constitution of all tribunals in India.
- What are the provisions dealing with appointment in 2020 rules? Under the 2020 rules, the inclusion of the president/ chairman/chairperson of the tribunal as a member in the selection committee is in the teeth of previous decisions of the Supreme Court.
  - Non-judicial member can become a chairman: For instance, now, in the Income Tax Appellate Tribunal (ITAT), Customs Excise and Service Tax Appellate Tribunal (CESTAT), Central Administrative Tribunal (CAT), Debt Recovery Appellate Tribunal (DRAT), etc. a non-judicial member can become the president/chairman/chairperson, as the case may be.
  - Therefore, when a non-judicial member becomes a member in the selection committee, the Supreme Court judge will be in minority, giving primacy to the executive, which is impermissible.
- Only judges and advocates can be judicial members: In Madras Bar Association (2010), the Court explicitly held that only judges and advocates can be considered for appointment as a judicial member of the tribunal and that persons from the Indian Legal Service cannot be considered for appointment as judicial member.
  - Recently, in Revenue Bar Association (2019), the Madras High Court declared Section 110(1)(b)(iii) of the CGST Act, 2017 as unconstitutional for allowing members of Indian Legal Service to be judicial members in GSTAT.
Violation of the SC directives
- What the SC said on tenure: Based on Madras Bar Association (2010), in Rojer Mathew, the Court held that the term of three years is too short, and by the time members achieve a refined knowledge, expertise and efficiency, one term will be over.
  - What are the provisions in 2020 rules? In the 2020 rules, the tenure of members has been increased from three years to four years, thereby blatantly violating the directions of the Supreme Court.
- Since the Madras Bar Association (2010), the government has repeatedly violated the directions of the Supreme Court.
  - One by one, the traditional courts, including the High Courts, have been divested of their jurisdictions and several tribunals have been set up.
Conclusion

The 2020 rules are, thus, in contempt of several Constitution Bench decisions of the Supreme Court. Unless the Court comes down heavily on the Central government, we will see these encroachments over and over again.
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Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

Tracking the big three

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-Key areas India needs to focus on to achieve good health and well being.
Context

The article focuses on the top three Sustainable Development Goals (SDGs) of the United Nations, namely poverty elimination, zero hunger, and good health and well-being by 2030.

India’s record on extreme poverty, hunger and health
- Decline in extreme poverty: The World Bank’s estimates of extreme poverty- measured as $1.9/per capita/per day at purchasing power parity of 2011- show a secular decline in India from 45.9 per cent to 13.4 per cent between 1993 and 2015.
- Elimination of extreme poverty 2030: If the overall growth process continues as has been the case since, say, 2000 onwards, India may succeed in eliminating extreme poverty by 2030, if not earlier.
- Zero hunger by 2030: Given the overflowing stock of food grains with the government, and a National Food Security Act (NFSA) that subsidises grains to the tune of more than 90 per cent of its cost to 67 per cent of the population, there is no reason to believe that India can also not attain the goal of zero hunger before 2030.
- Health- a real challenge: The real challenge for India, is to achieve the third goal of good health and well-being by 2030. India’s performance in this regard, so far, has not been satisfactory. as per the National Family Health Survey (NFHS 2015-16)-
  - In 2015-16, almost 38.4 per cent of India’s children under the age of five years were stunted.
  - 8 per cent were underweight.
  - 21 per cent suffered from wasting (low weight for height).
  - The situation in some states like Bihar, Jharkhand and Uttar Pradesh is even worse.
- Global Hunger Index ranking of India: No wonder, the Global Hunger Index (GHI) ranks India at 102 out of 117 countries in terms of the severity of hunger in 2019.
What are the various targets set on the nutrition problem?
- Target on reducing the problems of underweight children: The National Nutrition Strategy, 2017, aims to reduce the prevalence of underweight children (0-3 years) by three percentage points every year by 2022 from NFHS 2015-16 estimates.
  - Why this is an ambitious target? This is an ambitious target given the decadal decline in underweight children from 42.5 per cent in 2005-06 to 35.8 per cent in 2015-16 amounts to less than 1 per cent decline per year.
- Targets set in National Nutrition Mission: Similar targets have been set by the National Nutrition Mission (renamed as POSHAN Abhiyaan), 2017.
  - To reduce stunting by 2 per cent.
  - Under-nutrition by 2 per cent.
  - Anaemia (among young children, women and adolescent girls) by 3 per cent.
  - Low birth weight by 2 per cent.
Four areas India needs to focus to achieve the set targets
- India has to focus on four key areas: If India has to make a significant dent on malnutrition by 2030.
- First- Mother’s education.
  - Multiplier effect: It is one of the most important factors that have a positive multiplier effect on child care and access to healthcare facilities.
  - Increases awareness: It also increases awareness about the nutrient-rich diet, personal hygiene, etc. This can also help contain the family size in poor, malnourished families.
  - Thus, a high priority to female literacy, in a mission mode through liberal scholarships for the girl child, would go a long way towards tackling this problem.
- Second- Access to improved sanitation and safe drinking water.
  - The Swachh Bharat Abhiyan and Jal Jeevan Mission would have positive outcomes in the coming years.
- Third-shift in dietary pattern
  - Shift from cereals to more nutritious food: There is a need to shift dietary patterns from cereal dominance to the consumption of nutritious foods such as livestock products, fruits and vegetables, pulses, etc.
  - But they are generally costly and their consumption increases only by higher incomes and better education.
  - Diverting the food subsidy to nutritious foods: Diverting a part of the food subsidy on wheat and rice to more nutritious foods can help.
- Fourth- Adoption of new agricultural technology
  - Adopt bio-fortifying cereals: India must adopt new agricultural technologies of bio-fortifying cereals, such as zinc-rich rice, wheat, iron-rich pearl millet, and so on.
  - The Indian Council of Agricultural Research (ICAR) has to work closely with the Harvest Plus programme of the Consultative Group of International Agricultural Research (CGIAR) to make it a win-win situation for curtailing malnutrition in Indian children at a much faster pace — and, at a much lower cost than would be achieved under a business as usual scenario.
Examples from the world
- Right public policies make the difference: Global experience shows that with the right public policies focusing on agriculture, improved sanitation, and women’s education, one can have much better health and well-being for its citizens, especially children.
- China’s example: In China, it was agriculture and economic growth that significantly reduced the rates of stunting and wasting among the population and lifted millions of people out of hunger, poverty and malnutrition.
- Brazil and Ethiopia example: According to FAO, Brazil and Ethiopia have transformed their food systems: They have targeted their investments in agricultural R&D and social protection programmes to reduce hunger in the country.
Conclusion

Despite India’s improvement in child nutrition rates since 2005-06, it is way behind the progress experienced by China and many other countries. According to the Global Nutrition Report, 2016, at the present rates of decline, India will achieve the current stunting rates of China by 2055. India can certainly do better, but only if it focuses on this issue.
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Foreign Policy Watch: India-SAARC Nations

Regional bonding: On Ranil Wickremesinghe’s prescription for peace

op-ed snap | International Relations | Mains Paper 2: India & Its Neighborhood – Relations

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 2- Issues in the SAARC, India need to move sub-regional grouping to increase the intra-regional trade.
Context

Former Sri Lankan Prime Minister Ranil Wickremesinghe’s push for regional economic integration and for India-Pakistan dialogue should be studied carefully by New Delhi.

What are the issues with SAARC?
- Recent moves by India: India has more or less shut down all conversations on the South Asian Association for Regional Cooperation (SAARC).
  - India also walked away from the ASEAN-led Regional Comprehensive Economic Partnership (RCEP).
- Mr Wickremesinghe set out a number of suggestions:
- The original purpose of SAARC-Regional growth: India-Pakistan tensions have brought economic integration within the SAARC region to a “standstill”.
  - That the original purpose of the South Asian group was to build a platform where bilateral issues could be set aside in the interest of regional growth.
- Start at the sub-grouping levels: To engender more intra-regional trade, an even smaller sub-grouping of four countries with complementary economies: India, Sri Lanka, Bangladesh and Thailand, can start the process of reducing tariffs and demolishing non-tariff barrier regimes.
  - When it comes to the intra-regional share of total trade, SAARC and BIMSTEC languish behind groupings such as ASEAN, EU and MERCOSUR.
- Economic Integration Road Map: The Sri Lankan leader also suggested that with India’s leadership, a more integrated South Asian region would be better equipped to negotiate for better terms with RCEP so as not to be cut out of the “productivity network” in Asia, and envisioned an Economic Integration Road Map to speed up the process.
Governments stand
- Talks with Pakistan off the table: The government has made it clear that talks with Pakistan are strictly off the table, and that a SAARC summit, which has not been held since 2014, is unlikely to be convened anytime soon.
- More reliance on bilateral deals: The government, which has taken a protectionist turn on multilateral trade pacts, is relying more on direct bilateral deals with countries rather than overarching ones that might expose Indian markets to flooding by Chinese goods.
- India’s trade deficit with the neighbours: For any regional sub-grouping in South Asia to flourish, it is India that will have to make the most concessions given the vast trade deficits India’s neighbours have at present, which it may not wish to do.
Conclusion
- The overall projection that India’s global reach will be severely constrained unless it is integrated with its neighbours, and tensions with Pakistan are resolved, cannot be refuted. India needs to be more accommodative for the realisation of its ambitions.
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Type: op-ed snap