💥Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Login

Type: Op-ed

  • What explains the new mark crosses by our Forex reserves

    At first, it seems almost contradictory. And so it is. Our foreign exchange reserves touched new high of $500 billion for the first time, but the time in which this has happened makes it paradoxical. At the time when economies around the world are touching new lows, this rise in the Forex seems all but usual. In this article, you’ll learn about the 4 factors that made it happen.

    1. Decreased oil imports

    • Usually, we import a lot of oil.
    • But the payment here is dollar-denominated since very few countries are going to accept our currency (Rupee) as is.
    • So, you have to expend dollars i.e. the foreign exchange reserves to keep the flow of crude oil intact.
    • However, with the nationwide lockdown in place, our import bill has reduced drastically.
    • We simply don’t need as much oil anymore.
    • And considering oil prices have also taken a beating simultaneously, our Forex Reserves have been piling up.
    • Less oil import. More Forex reserves.

    2. Dollars coming with foreign investors

    • Contrary to popular opinion, foreign investors have been pouring money into India of late.
    • You could attribute a bulk of these inflows to Reliance Jio.
    • They’ve been enticing investors all over the world and they’ve been doing it at a pace that belies all rational expectations.
    • They’ve raised close to $15 Bn over the course of a few months and it doesn’t look like they’re stopping anytime soon.
    • So technically, dollar inflows have spiked and therefore, Forex reserves get a boost once again.

    3. RBI preparing itself for a bad time

    • Another popular explanation is that the RBI is preparing a war chest to stave off future uncertainties.
    • At a time when the world economy is reeling from an unprecedented crisis, it’s perhaps prudent to build up reserves for a rainy day.
    • So the RBI buys gold and dollar-denominated assets using our national currency and builds up the foreign exchange reserves.
    • Inadvertently, this increases the money supply within the economy.
    • There will be more “Rupees” floating around.
    • As more Indian currency keeps entering the ecosystem, the value of the rupee depreciates.
    • And yes, the value of rupee has tumbled recently, but we are not in dire straits yet.
    • But if India’s economy takes a turn for the worse, it becomes incumbent on the RBI to ensure price stability.
    • Imagine the value of the rupee starts fluctuating wildly because of economic uncertainties.
    • The RBI has to intervene.
    • It has to exchange the foreign reserves for the Indian currency.
    • If they keep mopping up the excess Rupees floating in the system, they could ensure the value of the rupee remains stable.
    • So long as the value of the rupee remains stable, prices of commodities will follow the same cue, all things remaining equal that is.
    • Now, there’s still no clear consensus on what kind of reserves we might need if things do go south.
    • Although there have been recommendations made in the past about hoarding too much, it’s still the RBI’s call at the end of the day.

    4. The RBI is doing it for the government

    • The RBI can turn a profit if it wants to.
    • And once it does turn a profit, it can transfer a part of the surplus to the government — as dividends.
    • Now if the RBI wanted to offer the government a higher dividend, it has to simply turn a higher profit.
    • One way to accomplish this is to simply let the value of the rupee depreciate. Do not intervene.
    • Do not forego the reserves. Let the rupee tumble.
    • And so long as you don’t intervene, all the dollar-denominated assets you own will be worth more in rupee terms.
    • Consider the hypothetical example-suppose the exchange rate was 1$= Rs. 71 in March 2020, then the rupee loses value and you see the same line item once again in June 2020 will be 1$=Rs. 76.
    • The extra ₹ 5 is treated as a profit. And this profit could be ploughed back to the government.

    Consider the question “With the economy in the tailspin amid pandemic, the news of India’s Forex reserves touching the $500 billion mark for the first time provided the semblance of solace. Examine the factors that could explain this increase.”

    Conclusion

    Though there will always be the debate over the optimum value of the Forex reserves, the new level it reached in such an uncertain time for the economy is, nonetheless, a cause for celebration.

     

    Reference Source : https://finshots.in/archive/india-foreign-exchange-reserves/

  • Why South China Sea matters to India

    What happens in the South China Sea has bearing on India. So far, the U.S. played a major role in the prosperity and security of the Indo-Pacific, but after the Covid, it may be forced to reconsider its stand over the region. So, what is at stake for India? And what are the options available with ASEAN countries and Indian in such a situation? Read to know…

    Dilemma the Indo-Pacific countries faces

    •  As the two most consequential powers of the world, the United States and China which are engaged in a fundamental transformation of their relationship rest of the countries in the region face a dilemma.
    • Almost nobody any longer thinks that China will conform to the US worldview, or that China’s rise from hereon will be unchallenged.
    • The Singapore Prime Minister Lee Hsien Loong’s essay in the latest issue of Foreign Affairs cogently spells out this dilemma.

    How the U.S. contributed to the region’s prosperity

    • The Indo-Pacific has prospered under American hegemony for the previous 40 years not just because of their huge investments.
    • U.S. invested $328.8 billion in the Association of Southeast Asian Nations (ASEAN) alone and a further $107 billion in China.
    • However, it’s not the investment but also because of the security blanket that it provides.
    • China might have replaced the US as the primary engine of growth in the last decade, but it has come with a cost — the assertion of Chinese power.
    • The benign American military presence has afforded countries the opportunity to pursue economic prosperity without substantial increases in their own defence expenditures or having to look over their shoulders.
    • No group of nations has benefitted more from the presence of the US than the ASEAN.

    How Chinese military posture is different from the U.S.

    • Chinese military postures, on the other hand, give cause for concern ever since they unilaterally put forward the Nine-Dash Line in 2009 to declare the South China Sea as territorial waters.
    • Their territorial claim itself is tenuous, neither treaty-based nor legally sound.
    • They act in ways that are neither benign nor helpful for long-term peace and stability.
    • In the first half of 2020 alone, Chinese naval or militia forces have rammed a Vietnamese fishing boat, “buzzed” a Philippines naval vessel and harassed a Malaysian oil drilling operation, all within their respective EEZs.
    • Since 2015, they have built a runway and underground storage facilities on the Subi Reef and Thitu Island as well as radar sites and missile shelters on Fiery Cross Reef and Mischief Reef.
    • They conducted ballistic missile tests in the South China Sea in June 2019 and continue to enhance naval patrols to enforce area denial for others.

    Fundamental choices the region faces

    • Going forward, the US and China face fundamental choices.
    • But then, so do the rest of us living in the Indo-Pacific.
    • America’s role in the preservation of the region’s peace and security should not be taken for granted.
    • As COVID imposes crushing costs on all economies, the US may also be weighing its options.
    • Finding justification for Chinese actions in the South China Sea, even as countries in the region help themselves to Chinese economic opportunities while sheltering under the US security blanket, is also fraught with risk.
    • Accommodation may have worked thus far but regional prosperity has come at a mounting cost in geo-strategic terms.
    • The South China Sea is effectively militarised. In the post-COVID age, enjoying the best of both worlds may no longer be an option.

    But, ASEAN won’t change the course suddenly

    • Nobody should expect that ASEAN will suddenly reverse course when faced with possibly heightened Sino-US competition.
    • China is a major power that will continue to receive the respect of ASEAN and, for that matter, many others in the Indo-Pacific, especially in a post-COVID world where they are struggling to revive their economies.
    • ASEAN overtook the European Union to become China’s largest trading partner in the first quarter of 2020, and China is the third-largest investor ($150 billion) in ASEAN.
    • The South East Asians are skilled at finding the wiggle room to accommodate competing hegemons while advancing their interests.
    • This does not, however, mean that they are not concerned over Chinese behaviour in the South China Sea.
    • They need others to help them in managing the situation.

    Validation of the US military presence and collective efforts of stakeholders

    • A robust US military presence is one guarantee.
    • A stronger validation by the littoral states of the South China Sea helps the US Administration in justifying their presence to the American tax-payer.
    • Others who have stakes in the region also need to collectively encourage an increasingly powerful China to pursue strategic interests in a legitimate way, and on the basis of respect for international law, in the South China Sea.
    • The real choice is not between China and America — it is between keeping the global commons open for all or surrendering the right to choose one’s partners for the foreseeable future.

    What is at stake for India?

    • How the South China Sea situation plays out will be critical for our security and well-being.
    • India must consider the following factors while calibrating its approach.
    • 1) The South China Sea is not China’s sea but a global common.
    • 2) It has been an important sea-lane of communication since the very beginning, and passage has been unimpeded over the centuries.
    • 3) Indians have sailed these waters for well over 1,500 years — there is ample historical and archaeological proof of a continuous Indian trading presence from Kedah in Malaysia to Quanzhou in China.
    • 4) Nearly $200 billion of our trade passes through the South China Sea and thousands of our citizens study, work and invest in ASEAN, China, Japan and the Republic of Korea.
    • 5)  We have stakes in the peace and security of this region in common with others who reside there, and freedom of navigation, as well as other normal activities with friendly countries, are essential for our economic well-being. In short, the South China Sea is our business.
    • We have historical rights established by practice and tradition to traverse the South China Sea without impediment.
    • We have mutually contributed to each other’s prosperity for two thousand years.
    • We continue to do so.
    • The proposition that nations that have plied these waters in the centuries past for trade and other peaceful purposes are somehow outsiders who should not be permitted to engage in legitimate activity in the South China Sea, or have a voice without China’s say, should be firmly resisted.

    India needs to be responsive to ASEAN

    • India needs to be responsive to ASEAN’s expectations.
    • While strategic partnerships and high-level engagements are important, ASEAN expects longer-lasting buy-ins by India in their future.
    • They have taken the initiative time and again to involve India in Indo-Pacific affairs.
    • It is not as if our current level of trade or investment with ASEAN makes a compelling argument for them to automatically involve us.
    • They have deliberately taken a longer-term view.
    • A restructuring of global trade is unlikely to happen any time soon in the post-COVID context.
    • Regional arrangements will become even more important for our economic recovery and rejuvenation.
    • If we intend to heed the clarion call of “Think Global Act Local”, India has to be part of the global supply chains in the world’s leading growth region for the next half-century.
    • It is worth paying heed to the words from Singapore’s prime minister, who writes that something significant is lost in an RCEP without India.
    • And urges us to recognise that the value of such agreements goes beyond the economic gains they generate.
    • Singapore is playing the long game. Are we willing to do so, even if it imposes some costs in the short-term?

    Consider the question “The South China Sea has been witnessing growing militarisation day by day. And how the South China Sea situation plays out will be critical for our security and well-being. In light of this, examine the basis on which India should contest China’s unilateral claims in the area and scope of engagement with the ASEAN countries in this regard.”

    Conclusion

    Indian is a stakeholder in the South China Sea. What happens there have implications for us. In such a scenario, India must form a partnership with other players in the region and should attempt to make China follow international laws and global order.

  • What are Biosimilars?

    Recently an Indian pharma company has been granted a USFDA approval for Insulin Glargine, a biosimilar. This article briefly introduces us to this term, complexities involved in its manufacturing and also explains why the USFDA approval create hype.

    The story of simple molecules and some difficult diseases

    • Ever since modern medicine started to emerge post the Industrial Revolution, simple molecules have been used to treat most diseases.
    • While these formulations are highly effective against some illnesses, they aren’t particularly effective against more complex diseases like cancer.
    • Our immune system has evolved over millions of years to specifically defend against outside intruders.
    • But cancer isn’t like most diseases.
    • It’s not caused by an invasion of a foreign pathogen.
    • Instead, it’s a byproduct of rogue cells that destroy our bodies from within.
    • To this end, using simple molecules to defend against a barrage of mutating versions of our own cells is an exercise in futility.

    What is biologic?

    • A biologic is manufactured in a living system such as a microorganism, or plant or animal cells. Most biologics are very large, complex molecules or mixtures of molecules. Many biologics are produced using recombinant DNA technology.
    • What we probably need is a biologic or a complex protein isolated from natural sources that can mimic our immune cells.
    • Maybe this would help us in fighting cancer.

    So, Biosimilars are..

    • A biosimilar is a biological product that is developed to be similar to an already FDA-approved biologic, known as the reference product. It can be tempting to think of a biosimilar as a “generic” version of the reference product.
    • But biosimilar is not an exact duplicate of another biologic. There is a degree of natural variability in all biological products; it is not possible to generate a precise copy of a product that comes from living cells. All biologics—including reference products—show some batch-to-batch variation.

    Utility of patents in the pharmaceutical industry

    • Success in this market is deeply intertwined with the research and development process that characterizes the pharmaceutical industry.
    • It might take 5 years for you to develop a new drug and you might still need another 10 years to clinically test the product and get the necessary approvals from the regulatory agencies.
    • This is a capital intensive process and the only way to remunerate the pharma company’s contribution is to protect their investment through patent laws.
    • This way the companies can be incentivised to invest more in research and we can ensure a steady supply of new drugs that could cure the greatest maladies of modern time.

    What happens when the patent expires?

    • Once the patent expires, other companies can market their own version of the drug (copycats) if they can figure out how to synthesize it.
    • Consider — Aspirin. It’s a simple molecule drug and it’s quite easy to replicate the manufacturing process.

    Why biologics would be difficult to replicate after the patent expires

    • Biologics are harvested from living cells and are often produced using complicated manufacturing processes.
    • Most modern biologics are assembled inside vats — or bioreactors — that house genetically engineered microbes or cell cultures and can often take a whole decade of research to perfect.
    • So replicating the process isn’t exactly a cakewalk.
    • Meaning if you want to market your own version of a “biologic” once all the patents expire, you need some expertise and India’s Biocon is at the forefront of this revolution.
    • For the past few years, they’ve been building a “biosimilar pipeline” — copycats of famous biologics and they’ve been using it to fight cancer, diabetes, and arthritis.
    • And it’s not all that easy for most pharma companies to enter this market.

    Why marketing a drug in the US gather headline?

    • Because the US provides an opportunity like no other.
    • Buying drugs here is expensive and pharmaceutical companies make a killing in the process.
    • It might not necessarily bode well for consumers.
    • But it does provide a lucrative market for potential Indian manufacturers who are looking to sell their products elsewhere.

    Consider the question “What is biosimilar technology? How is it different from generic medicine? Discuss its application.”

    Conclusion

    Growing expertise of Indian pharmaceutical companies in the complex research area bodes well for the Indian pharma sector which is known otherwise for the manufacturing of generic medicines.

     

    Reference Source: https://finshots.in/archive/biocon-and-the-world-of-biosimilars/

  • Skill University

    This article highlights the utility of skill education in India. There are several benefits in its adoption. But it would require several regulatory changes. So, what are these changes?Read to know…

    3 issues with our university education

    •  The differential lockdown outcomes for skilled and unskilled workers highlight our university system’s pre-existing conditions. These are-
    • 1) Broken employability promises.
    • 2) Poor employer connectivity.
    • 3) Poor return on private investment that frustrate parents and students.

    4 ways in which skill university differs from traditional university

    • A skill university differs from a traditional university in four ways.
    • 1) It prays to the one god of employers; for governance, faculty, curriculum, and pedagogy.
    • 2) It has four classrooms; on-campus, on-line, on-site, and on-the-job.
    • 3) It offers modularity between four qualifications; certificates, diplomas, advanced diplomas, and degrees.
    • 4) And it has four sources of financing — employers, students, CSR, and loans though employers contribute more than 95 per cent of the costs.
    • Fro example,  in the case of Gujrat government’s skill university, 97 per cent of the university’s budget comes from employers.

    5 ways in which the universities are broken globally

    • First is broken promises.
    • The world produced more graduates in the last 35 years than 700 years before.
    • Second is broken financing.
    • More than 50 per cent of $1.5 trillion in student debt was expected to default even before the COVID pandemic.
    • Indian bank education loans have high NPAs.
    • The third is broken inclusiveness.
    • The system works for privileged urban males studying full-time, but today’s students are likely to be female, poor, older, rural, or studying part-time.
    • Fourth is broken flexibility.
    • Employed learners will cross traditional learners in three years, but they need on-demand, on-the-go, always-on, rolling admissions, continuous assessment, and qualification modularity.
    • And finally is broken openness. 
    • Google knowing everything makes learning how to learn a key 21st-century skill.
    • Yet too many universities are stuck in knowing.

    Let’s look into the regulatory changes needed for the Skill University

    • Skill universities are a scalable, sustainable, and affordable vehicle to massify higher education by innovations in finance.
    • But they need regulatory change.

    Following are the 3 types of regulatory changes needed

    1. Changes needed in the  UGC Act of 1956

    •  Clause 8.2.6 needs to be rewritten to equalise four classrooms -online, on-site, on-campus, and on-job-and section 22 (3) to recognise apprenticeship linked degree programmes.
    • The UGC Teacher Regulations of 2018 need rewriting: Clause 3.3.(I),(II) to redefine the qualifications, roles and numbers of teachers required, and clause 4 to recognise industry experience as a teaching qualification.
    • The UGC Online Regulations 2018 need to be rewritten: Clause 4(2) and 7(2)(3) to allow innovation, flexibility, credit frameworks, and relevance in online curriculums.
    • Clause 7(2)(2) to allow universities to work with any technology platforms.

    2. Changes needed in NAAC IQAC regulations

    • Criteria 1 and 1.2.2 to include work-based learning and work integrated learning.
    • Criteria 1.1.3 to include life skills and proctored/evaluated internships.
    • Criteria 2 and 2.3.1 to integrate online learning with university programmes.
    • Criteria 2 and 2.4.1, 3 and 6 need to be modified to recognise teachers with industry experience, and include industry-based research.
    • Criteria 4 and 4.1.2 to include industry workplaces and online classrooms as campus extensions.
    • Criteria 5 and 5.2.1 needs to be rewritten to incorporate apprenticeships.

    3. Changes needed in Apprenticeship Act of 1961

    • Clause 2, 8, 9, 21 and 23 of The Apprenticeship Act of 1961 also needs to be modified to allow and lift the licence raj for degree-linked apprentices and recognise skills universities.

    Consider the question “Skill universities, which would go a long way in increasing the employability in India are need of the hour. In light of this, examine the issues that the skill education faces and suggest the changes our education system needs to impart the proper skill education.”

    Conclusion

    Covid crisis has amplified the problems with our education system. So, the adoption of skill universities will help us improve the skill of our youth and achieve more inclusive employment, employability and education.

  • Need for fiscal decentralisation

    Covid pandemic has turned the fiscal health of states from bad to worse. This article highlights the role of the Finance Commission as a neutral arbiter in the Centre-state relation in achieving the delicate balance. It has highlighted certain issues that the commission has to consider when it submits its report. So, what are those issues? Read to know…

    Disruption in fiscal consolidation and impact on Centre-state relations

    • Due to COVID, there is a  collapse in general government revenues and the consequent rise in the deficit levels.
    • It has disrupted the glide path of fiscal consolidation.
    • But it has also deepened the faultlines in Centre-state fiscal relations. 
    • The Centre is trying to claw back the fiscal space ceded to the states and assert its dominance over the country’s fiscal architecture.
    • This coupled with the fiscal constraints exposed by the pandemic have made it harder to maintain the delicate balance needed to manage the contesting claims of the Centre and the states

    Why the 15th Finance Commission report is critical for decentralisation

    • It will be ironic if the ongoing health crisis that has ended up exposing the limitations of a centralised approach, ends up reversing the trend towards fiscal decentralisation.
    • The Commission’s report will be critical on two counts:
    • First, it will determine how India’s fiscal architecture is reshaped.
    • Second, how Centre-state relations are reset as the country attempts to recover from the COVID-19 shock.

    1. Will the burden of reducing debt/gdp  fall equally on Centre and state?

    • The glide path of fiscal consolidation laid out by the FRBM review committee had envisaged bringing down general government debt to 60 per cent of GDP by 2022.
    • This is unlikely to materialise now.
    • Factoring in the additional borrowings, the debt-to-GDP ratio may well be over 80 per cent this year.
    • Thus the fiscal consolidation roadmap will have to be reworked.
    •  As per its terms of reference, the Finance Commission will lay out the new path to be followed by both Centre and states.
    • But the question is: Will the burden of debt reduction fall equally upon the Centre and states?
    • Or will the Commission allow the Centre to have greater leeway when it comes to fiscal consolidation?

    2. Will the conditional extension of borrowing limit be formalised?

    •  Recently, the Centre eased the states’ budget constraint, allowing them to borrow more this year.
    • But this extra borrowing was conditional upon states implementing reforms in line with the Centre’s priorities.
    • Despite protests, most states are likely to comply with the conditions, to varying degrees.
    • But the issue is: As the hit from the ongoing crisis spreads over multiple years, state governments may want to maintain their expansionary fiscal stance next year as well.
    • Then, will the Finance Commission, in line with its terms of reference, go along with the Centre’s stance and recommend imposing conditions on additional borrowing and formalise this arrangement?
    • It is difficult to see such an arrangement being rolled back once formalised.

    3. GST compensation cess

    • The GST council, in which the Centre effectively has a veto, is yet to clearly spell out its views on the extension of the compensation cess to offset states losses beyond the five-year period.
    • The Commission will have to weigh in on this too.
    • At this time the Centre is struggling to fulfil its promise of assuring states their GST revenues.
    • In such situation, will the Commission argue in favour of extending the compensation period, as states desire, but, perhaps, lowering the assured 14 per cent growth in compensation and linking it to nominal GDP growth?
    • As GST revenue accounts for a significant share of states’ income, how this plays out will also have a bearing on their ability to bring down their debt levels.

    4. Issue of tax devolution

    • In some sense, accepting the recommendations of the 14th Finance Commission was a fait accompli.
    • The terms of reference of the 15th Finance Commission points to the present government’s desire to claw back the fiscal space offered to the states.
    • But is clawing back fiscal space now a prudent approach?
    • A cash-strapped Centre will surely welcome greater say over the diminished resources.
    • And there a strong argument for the Centre to have far greater fiscal space than it currently enjoys.
    • This is partly because the fiscal multiplier of central government capital spending is greater than that by the states.
    • But also the nature of politics may well push in that direction.
    • Centralisation of political power may well lead to demands for centralisation of resources.
    • However, surely fiscal space can be created by a review of the Centre’s own spending programme.

    Need to relook at the Centre’s expenditure priorities

    • Over the past decades, there has been a substantial increase in the Centre’s spending on items on the state and concurrent list.
    •  This shift has occurred even as grants by the Centre to states exceed the former’s revenue deficit.
    • This, as some have pointed out, effectively means that the Centre is borrowing to transfer to states.
    • Surely, a relook at the Centre’s expenditure priorities would create greater fiscal space for it.

    What the Finance Commission can do?

    • Any attempt to shift the uneasy balance in favour of the Centre will strengthen the argument that this government’s talk of cooperative federalism serves as a useful mask to hide its centralising tendencies.
    • As a neutral arbiter of Centre-state relations, the Finance Commission should seek to maintain the delicate balance in deciding on contesting claims.
    • This may well require giveaways especially if states are to be incentivised to push through legislation on items on the state and concurrent list.
    • The fiscal stress at various levels of the government necessitates a realistic assessment of the country’s macro-economic situation, the preparation of a medium-term roadmap, as well as careful calibration of the framework that governs Centre-state relations.
    • At this critical juncture, the Finance Commission should present the broad contours of the roadmap.
    • Though it could request for another year’s extension to present its full five-year report citing the prevailing uncertainty.

    Consider the question “COVID pandemic has put the States in the dire fiscal position. What we need is more of the fiscal decentralisation now.” In light of this, along with other factors, elaborate on the role 15th Finance Commission could play in this regard.

    Conclusion

    Finance Commission has to play an important role in achieving the delicate balance in the conflicting domain of finance by addressing the concerns of both the players.

  • Tracking the epidemic

    This article suggests the innovative indicators for the classification of areas. Also, the need for decentralisation of science and governance is stressed. So, how could decentralisation help? What should form the basis of indicators at the local level? Such questions are answered in this article.

    States are better placed to deliver on public health

    • They are, of course, better placed to deliver on public health and welfare. They are also generally more accountable.
    • According to the recent ICMR serological sample study conducted in mid-May, barely 1 per cent of non-metropolitan India was infected.
    • Thus, as the infection spreads and eventually stabilises, there is a lot of heavy lifting that the states must do.

    The measure of prevention and containment zone

    • After lockdown,  the message of prevention and the device called containment zones are the only ways left to manage the epidemic.
    • This includes allied activities: The demarcation of the boundary, testing, treatment, tracing and quarantine.
    • Hidden inside this box of practices are the answers to questions such as: Why is Karnataka doing better than Maharashtra in terms of mortality?

    What went wrong with colour-coded zones at district levels?

    • The older colour-coded zone label, introduced by the Centre on April 14, was at the district scale.
    • That quickly became a collective punishment with little measurable benefits.
    • One consequence was that districts were unhappy with the return of migrants simply because that could change their colour.
    • The second problem was that the red-ness of a region was equated with the need for lockdowns, since that was the only visible instrument.

    Let’s explore the ward and community level base strategy

    • Well designed metrics at the ward and community scale will help the science develop.
    • They can guide the people and the administration and allow the states to compare practices and learn from each other.

    Let us see what can be achieved within this framework: Focusing on measurement

    1. Classified should include socio-economic and demographic factors

    • Any area classification must include key socio-economic and demographic determinants, for example, the density of the area, number of people in dwellings with one room or less, or the fraction of people using community toilets.
    • As we know, much of the infection is spreading within dense clusters.
    • Such metrics would indicate vulnerable areas and the limits to reduction in contact rate through policing.
    • Here, decongestion measures such as out-migration may be required.
    • This will also serve as a guide to the future of the locality or ward.

    2. Designing indicator from data collected so far

    • An important document is the Specimen Referral Form (SRF) designed by the ICMR which must be filled to undertake the PCR Corona Test.
    •  In that, the possible patient backgrounds for recommending the test, are recorded.
    •  In that, symptomatic cases with no known contact are already a large fraction of those infected.
    • This and other fields in the SRF such as age, location and symptoms, would give us substantial insights into the dynamics and severity of the disease and the efficacy of our procedures.
    • This data should be made available immediately.

    3. Measuring the risk from migrants

    • The recent inclusion of migrants in the SRF is indeed welcome.
    • This, coupled with other quarantine data in the SRF, gives us the risk from migrants to the community at large.
    • Also welcome is the setting up of a National Migrant Information System (NMIS) on the NDMA database.
    • Hopefully, we may now know the fraction of migrants who have safely reached home and the state-wise status of those who haven’t and the reasons for the same.
    • In any case, the number of infected migrants, if suitably quarantined, must be subtracted from the total number of positive cases for that area/district, for they did not arise there and they are outside the infective load in the area.
    • This will help reduce the stigma on migrants and instead put more focus on quarantine arrangements for them.

    4. Measuring preparedness

    • Ensuring that our villages and towns are prepared to meet the disease is an important objective.
    • One metric to measure preparedness is the number of beds, doctors and ambulances per 1,000.
    • This may then be compared with the active cases in the region.
    • In fact, the adverse mortality in some areas is directly correlated with the local shortage of medical care.
    • For most districts in Maharashtra, shortages would start biting at about 200 cases per day.
    • An important addition would be village-level data on the running of the local quarantine, the functioning of the PDS and availability of drinking water.

    5. Measuring the prevalence and social distance

    • Coming to prevention, the importance of masks, distance and open ventilation is still not appreciated.
    • A simple statistical metric is to measure the prevalence of masks in an area.
    • This can be done by installing cameras in suitable locations and counting people with masks.
    • Social distance measures are also amenable to indicators.
    • For example, the fraction of buses which have installed a sheet between the driver and the passengers, or recording innovative ways of ticket vending.

    The popularity of the colour-coding based on such indicators may be effective in social mobilisation.

    Social comprehension and local solution

    • Mitigation and adaptation require social comprehension and local solutions.
    • These need scientific studies by regional institutions and partnerships with civil society.
    • Creating and supporting good metrics and providing data is an important step in that direction.
    • This will not only save lives, it will reduce fear and help re-start normal life.

    Decentralisation of science and governance

    • The epidemic has underlined that publicness and decentralisation of science and governance is the only way of creating knowledge and the professional ability to solve our own problems.
    • Without this, the post-corona Indian society would be an unhappy attempt at making the old arrangement work in a degraded reality of fearful and angry people.

    Consider the question “Corona pandemic and subsequent measures to contain it has highlighted the need for decentralisation of governance. Elaborate.”

    Conclusion

    We must learn to live with the virus, but we must also find joy. Only through constant engagement and adaptation will we overcome fear and forge a new society that will sustain both life and happiness.

  • MOOC can’t be the substitute for learning in the classroom

    Massive open online courses (MOOC) could not be panacea for the problems education faces. It can’t be the replacement for the learning in the classrooms. This article highlights the issues with adoption of MOOC and why it can’t be the replacement for learning in the classrooms.

    UGC circular to adopt MOOC

    • In the wake of the COVID-19 pandemic, the University Grants Commission had issued a circular to universities.
    • Through this circular, it encouraged them to adopt massive open online courses (MOOCs) offered on its SWAYAM platform for credit transfers in the coming semesters.
    • But the move poses a great danger.
    • But why it’s danger? Because it is also being seen as an instrument to achieve the country’s target Gross Enrolment Ratio (GER) in higher education.
    • GER in higher education is envisioned to be 30% by 2021; it was 25.8% in 2017–18.

    Issues with MOOC and what classrooms offers

    • MOOC-based e-learning platforms tend to reinforce a top-down teacher-to-student directionality of learning.
    • This misses the point that teaching and learning are skills that are always in the making.
    • The teacher is after all “an intellectual midwife” who facilitates in the birth of students’ ideas and insights through engaging in critical dialogue.
    • In a conducive classroom environment, this role is often switched and the student plays intellectual midwife to the teacher’s ideas.
    • Moving to a MOOC-based degree system would rob young teachers and students of these essential lessons in teaching and learning from each other.
    • Policymakers behind the SWAYAM platform have left out courses in engineering, medicine, dental, pharmacy, nursing, architecture, agriculture, and physiotherapy on the grounds that they involve laboratory and practical work.
    • This move makes sense.
    • But it seems to suggest that the pure sciences, the arts, the social sciences, and humanities curricula are largely lecture- and theory-based, and, therefore, readily adaptable to the online platform.
    • Nothing can be farther from such a misconception.
    • Implicit in every curriculum is the tacit assumption that the classroom is a laboratory for hands-on testing of ideas, opinions, interpretations, and counterarguments.
    • A diverse and inclusive classroom is the best litmus test for any theory or insight.
    • Multidisciplinarity happens more through serendipity — when learners across disciplines bump into each other and engage in conversations.
    • Classroom and campus spaces offer the potential for solidarity in the face of discrimination, social anxiety, and stage fear, paving the way for a proliferation of voluntary associations that lie outside the realm of family, economy, and state.
    • In the absence of this physical space, teaching and learning would give way to mere content and its consumption.
    • Without a shared space to discuss and contest ideas, learning dilutes to just gathering more information.
    • This could also dilute norms of evaluation, whereby a “good lecture” might mean merely a lecture which “streams seamlessly, without buffering”. 

    Online mode: add more value to the classroom education

    • One could think of greater value-sensitive and socially just architectures and technologies that further foster classroom engagement.
    • It also makes it accessible for students of various disabilities and challenges, thereby adding more value to the existing meaning of education.
    • But public education modelled on social distancing is a functional reduction and dilution of the meaning of education.
    • It could add value only as an addendum to the classroom. 

    Consider the question “Examine the issues with wide adoption of the MOOC to address the problems education  sector in India faces.”

    Conclusion

    Such platforms must be seen only as stop-gap variants that help us get by under lockdown situations and complement classroom lectures.

  • Migrants and COVID

    In this Article, we highlight some facts about migration in India, summarize key relief measures announced by the government and directives issued by the Supreme Court for the migrant population in relation to the lockdown.
    ———————————————————————————
    Reference source: https://www.prsindia.org/theprsblog/migration-india-and-impact-lockdown-migrants

  • Faults in section inserted for the suspension of IBC amid pandemic

    Following the lockdown, the government announced the suspension of some provision of IBC to soften the blow of economic crisis. Section 10A was inserted to suspend the provision. But it giver rise to other questions. What are these questions? Read the article to know…

    What changes were made?

    • In mid-May, the Finance Minister announced that the government was planning to bring in an ordinance to suspend provisions enabling filing of fresh insolvency cases for a period of one year..
    • Finally, on June 5, the government promulgated an ordinance which inserted Section 10A in the IBC.
    • The government said the ordinance was promulgated because the lockdown has caused business disruptions which may lead to default on debts pushing such companies into insolvency.
    • Therefore, it felt that suspending Sections 7, 9 and 10 of the IBC would be the right course of action.

    What are the issues with section 10A?

    • Section 10A provides that “no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from this period, as may be notified in this behalf”.
    • This means that these provisions shall remain suspended from March 25 till September 25, unless extended for another six months, which would extend the suspension up till March 25, 2021.
    • However, the proviso to the section states that no application for insolvency resolution shall ever be filed against a corporate debtor for any default occurring during the suspension period.
    • While the main Section 10A suspends such applications for a limited period, the proviso enlarges the scope to provide complete amnesty under the IBC for any default occurring during such period.
    • The role of a proviso in a statute is to restrict the application of the main provision under exceptional circumstances.
    • However, the proviso here expands the substantive provision in the main section.
    • Further, if the main provision is unclear, a proviso may be given to explain its true meaning.
    • In this case the main provision appears clear, only to be obfuscated by the proviso.
    • The proviso therefore does not appear to be legally tenable.
    • As creditors can still approach courts, and as banks/FIs can still approach Debt Recovery Tribunals, the protection given by this proviso seems illusory.
    • But Section 10A also suspends provisions of Section 10 of the IBC which enables voluntary insolvency resolution.
    • This is difficult to understand as such voluntary insolvency resolution should have been made easier for companies facing distress.

    Painting all defaults with the same brush

    • The ordinance appears to consider every default occurring during the suspension period to be a consequence of the pandemic.
    • There could be cases where defaults were imminent due to other reasons, but which will now still enjoy this protection.
    • The ordinance should have protected only such defaults which may occur as a direct consequence of the pandemic or the lockdown and should have left this determination to the National Company Law Tribunal.
    • Also, a company defaulting on its payment obligations on March 24 (a day before the lockdown started) would not be provided any relief under the IBC as compared to a company defaulting on or immediately after March 25 due to similar reasons.
    • This makes the suspension, in the absence of definition of a COVID-19 default, prima facie arbitrary.

    Issue with increasing the default amount limit

    • Earlier, the government increased the minimum default amount to trigger corporate insolvency resolution from ₹1 lakh to ₹1 crore.
    • This was purportedly done to protect MSMEs from insolvency petitions.
    • However, this also operates against such MSMEs because they will now be forced to approach civil courts to recover undisputed debts below ₹1 crore.
    • The suspension of these provisions would now impact even claims above ₹1 crore for at least six months to a year.

    Conclusion

    The ordinance has opened itself up to a legal challenge on grounds of arbitrariness and untenability of the proviso due to the flaw in its drafting. It is unfathomable how these flaws arose despite the government having ample time to think this through.

    B2BASICS:

     Insolvency and Bankruptcy Code, 2015

    The code contains a clear speedy mechanism for early identification of financial distress and initiates revival/re-organisation of the company if it is viable.

    Timeline

    • The bill proposes a timeline of 180 days to deal with the applications for insolvency resolution with an option of extending it by 90 days for exceptional cases.

    Insolvency Resolution Plan

    • The insolvency resolution plan has to be approved by 75% of the creditors. If the plan is approved, then the adjudicating authority will give its sanction. In case of rejection of insolvency resolution plan, the adjudicating authority will pass an order for liquidation.

    Insolvency Professionals (IPs) & Insolvency Professional Agencies (IPAs)

    • The resolution processes will be conducted by licensed insolvency professionals (IPs).  These IPs will be members of insolvency professional agencies (IPAs).  IPAs will also furnish performance bonds equal to the assets of a company under insolvency resolution.

    Information Utilities

    • Information utilities (IUs) will be established to collect, collate and disseminate financial information to facilitate insolvency resolution.

    Bankruptcy and Insolvency Adjudicator

    • The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies.  The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
    • The Debt Recovery Tribunal (DRT), which has jurisdiction over individuals and unlimited liability partnership firms. Appeals from the order of DRT shall lie to the Debt Recovery Appellate Tribunal (DRAT).

    Insolvency regulators

    • The Insolvency and Bankruptcy Board of India will be set up to regulate functioning of IPs, IPAs and IUs.

  • Expanding the G7

    There has been a call for expansion of G7 by the U.S. President. Against this backdrop, this article examines the historical background in which the group emerged. But a lot has changed since. So, it would be appropriate for G7 to adjust to the new reality. But what would be the focus of a new mechanism? What are the areas in which India would be interested? All such questions are answered in this article.

    Call for expansion of G7 and China’s objection

    • Recently, the U.S. President proposed the expansion of G7 to G10 or G11,  with the inclusion of India, South Korea, Australia and possibly Russia.
    • Elaborating this logic, the White House Director of Strategic Communications said the U.S. President wanted to include other countries, including the Five Eyes countries.
    • Five Eye is an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom and the United States.
    • The U.S. also stressed said the expanded group should talk about the future of China.
    • A Chinese Ministry of Foreign Affairs official immediately reacted, labelling it as “seeking a clique targeting China”.

    Should India care about China’s objection if invited to join?

    • China’s objection to an expanded G7 is no reason for India to stay away from it, if invited to join.
    • India has attended several G7 summits earlier too, as a special invitee for its outreach sessions.
    • India’s Prime Minister was guest invited to Biarritz, France to the G7 summit last year, along with other heads of government.

    The historical background of G7

    • The G7 emerged as a restricted club of the rich democracies in the early 1970s.
    • The quadrupling of oil prices just after the 1973 Arab-Israeli War, when  OPEC imposed an embargo against Canada, Japan, the Netherlands, and the United States, shocked their economies.
    • Although the French were spared the embargo, the chill winds of the OPEC action reverberated around the world.
    • So, French President invited the Finance Ministers of five of the most developed members of the Organisation for Economic Cooperation and Development, the United States, Germany, Japan, Italy, and the United Kingdom, for an informal discussion on global issues.
    • This transformed into a G7 Summit of the heads of government from the following year with the inclusion of Canada in 1976.
    • And the European Commission/Community (later Union) joined as a non-enumerated member, a year later.
    • On the initiative of U.S. President Bill Clinton and British Prime Minister Tony Blair, the G7 became the G8, with the Russian Federation joining the club in 1998.
    • This ended with Russia’s expulsion following the annexation of Crimea in 2014.

    Declining share G7 and rising of E7 in world GDP

    • When constituted, the G7 countries accounted for close to two-thirds of global GDP.
    • According to the 2017 report of the accountancy firm, PwC, “The World in 2050”, they now account for less than a third of global GDP on a purchasing power parity (PPP) basis.
    • And less than half on market exchange rates (MER) basis.
    • The seven largest emerging economies (E7, or “Emerging 7”), comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey, account for over a third of global GDP on purchasing power parity (PPP) terms.
    • And over a quarter on MER basis.

    Predictions for India

    • India’s economy is already the third largest in the world in PPP terms, even if way behind that of the U.S. and China.
    • By 2050, the PwC Report predicts, six of the seven of the world’s best performing economies will be China, India, the United States, Indonesia, Brazil, and Russia.
    • Two other E7 countries, Mexico and Turkey, also improve their position.
    • It projects that India’s GDP will increase to $17 trillion in 2030 and $42 trillion in 2050 in PPP terms, in second place after China, just ahead of the United States.
    • This is predicated on India overcoming the challenge of COVID-19, sustaining its reform process and ensuring adequate investments in infrastructure, institutions, governance, education and health.

    Limitations of G7

    • The success or otherwise of multilateral institutions are judged by the standard of whether or not they have successfully addressed the core global or regional challenges of the time.
    • The G7 failed to head off the economic downturn of 2007-08.
    • This failure led to the rise of the G20.
    • In the short span of its existence, the G20 has provided a degree of confidence, by promoting open markets, and stimulus, preventing a collapse of the global financial system.
    • The G7 also failed to address the contemporary issues, such as the COVID-19 pandemic, climate change, the challenge of the Daesh, and the crisis of state collapse in West Asia.
    • It had announced its members would phase out all fossil fuels and subsidies, but has not so far announced any plan of action to do so.
    • And their coal fired plants emit “twice more CO2 than those of the entire African continent”.

    Turmoil in West Asia and failure of Europe to act

    • Three of the G7 countries, France, Germany, and the U.K., were among the top 10 countries contributing volunteers to the ISIS.
    • West Asia is in a greater state of turmoil than at any point of time since the fall of the Ottoman Empire.
    • This turmoil has led to a migrants crisis.
    • Migrant crisis persuaded many countries in Europe to renege on their western liberal values, making the Mediterranean Sea a death trap for people fleeing against fear of persecution and threat to their lives.

    So, to deal with the unprecedented challenge, we need new institution

    • The global economy has stalled and COVID-19 will inevitably create widespread distress.
    • Nations need dexterity and resilience to cope with the current flux, as also a revival of multilateralism, for they have been seeking national solutions for problems that are unresolvable internally.
    • Existing international institutions have proven themselves unequal to these tasks.
    • A new mechanism might help in attenuating them.
    • It would be ideal to include in it the seven future leading economies, plus Germany, Japan, the U.K., France, Mexico, Turkey, South Korea, and Australia.
    •  The 2005 ad hoc experiment by Prime Minister Tony Blair in bringing together the G7 and the BRICS countries was a one-off.

    What should be the focus of this new institution?

    • A new international mechanism will have value only if it focuses on key global issues.
    • A related aspect is how to push for observing international law and preventing the retreat from liberal values on which public goods are predicated.
    • Global public health and the revival of growth and trade in a sustainable way -that also reduces the inequalities among and within nations- would pose a huge challenge.

    What should be India’s priority in new institution?

    • India would be vitally interested in three: 1) international trade, 2) climate change, 3) the COVID-19 crisis.
    • Second order priorities for India would be cross-cutting issues such as counter-terrorism and counter-proliferation.
    • An immediate concern is to ensure effective implementation of the 1975 Biological Weapons Convention .
    • And the prevention of any possible cheating by its state parties by the possible creation of new microorganisms or viruses by using recombinant technologies.
    • On regional issues, establishing a modus vivendi with Iran would be important to ensure that it does not acquire nuclear weapons and is able to contribute to peace and stability in Afghanistan, the Gulf and West Asia.
    • The end state in Afghanistan would also be of interest to India.
    • And also the reduction of tensions in the Korean Peninsula and the South China Sea.

    Consider the question “There has been a clamour for expanding G7 and India is being considered as one of the prospective candidates in the expanded group. In light of this examine the challenges and opportunities for India if it gets entry into the expanded group.”

    Conclusion

    The decaying influence in geopolitics and declining share in the world GDP calls for the formation of the new institution. IF and when that institution comes into being India should try to address its immediate concern with the help of new mechanism based on values.