From UPSC perspective, the following things are important :
Prelims level: Upstream and downstream sectors
Mains level: Paper 3-Disruption in supply chains and ways to ensure their recovery.
Disruption of the supply chains lies at the heart of the decline in the output amid lockdown. And the government has announced the fiscal stimulus to revive the economy. How effective will be the fiscal stimulus to streamline the supply chains? The focus of this article is on tackling this question.
Disruption in supply chains and decline in output
Much of the decline in output is due to supply chain disruptions generated by the lockdown.
Government spending can do little to alleviate this.
Putting money in the hands of people can increase the demand for goods but cannot increase the supply of goods and services.
In modern economies, the production of goods happens through complex supply chains that traverse geographical boundaries.
Let’s understand how supply chains work
Upstream sectors like ‘mining’ produce metals that are in turn used to produce machines.
These machines are used to sow seeds, harvest crops, and transport fuel.
Finally, the harvested crops are used by downstream sectors to produce flour and bread.
At each step, machines and labour combine to produce goods which are the inputs for sectors further downstream.
So, how lockdown affected the supply chains?
Under the lockdown, numerous inputs have not moved from their producers to their users.
These disruptions may not at first generate a reduction in consumer goods like bread.
However, the availability of consumer goods will begin to decline as bakers run out of flour, and mills exhaust their stocks of wheat.
And there is no way to guarantee the flow of essential goods while suspending the production of non-essential goods.
Automotive spare parts may be non-essential in the short run, but become essential as food-carrying trucks begin to break down.(i.e. in the long run)
How far is the long run? This is difficult to say; there may be some variation across goods.
Impact of labour shortage on supply chains
The supply chain disruptions are going to be amplified by labour shortage as workers remain at home.
Countries like India are likely to experience a greater reduction in output on this count than, say, Europe or the U.S.
This is because of the higher labour intensity of production in India.
To understand this, think of the difference in unloading of goods in the port at Rotterdam and the port at Kochi.
Is it viable to substitute labour with capital? Poorer countries are less likely to be able to substitute locked down labour with capital because of the dearth of capital in these nations.
Adapting and Adjusting to the new reality
As economies emerge out of the lockdown, entrepreneurs, workers, and consumers must adjust to the new reality.
The world supply chain must adapt.
Firms may choose to source inputs from suppliers in their geographical proximity to minimise the risk of future disruptions.
But this involves building productive capacity at new locations, all of which requires investments fuelled by savings.
Furthermore, the investments must be guided by price signals.
Within a market economy, the movement of prices provides the incentive and information needed to adapt and grow.
As economist Ronald Coase put it, prices are bundles of information wrapped in an incentive.
As the prices of some inputs rise, the buyers of these inputs look for alternate suppliers, and firms which did not hitherto produce the good have an incentive to do so.
The key to economic recovery lies in millions of such adjustments.
Through such adjustments, firms locate new providers of inputs, new buyers of their output, and build factories at new locations.
How fiscal stimulus would disrupt the recovery of supply chains?
Market adjustment processes are likely to be disrupted by government stimulus packages.
Governments spend by printing money, raising debt, or increasing taxes.
Irrespective of the way in which the expenditure in funded, resources are transferred from private entrepreneurs to government bureaucrats.
When governments print money, they draw resources through inflation.
Bureaucrats tend to be less efficient than profit-motivated firms in allocating scarce resources.
Bureaucrats have little incentive or information to bring about the granular supply chain adjustments necessary to revive growth.
As the stimulus package kicks in, economic efficiency is likely to decline and so are the chances of a timely recovery of output.
A lesson from West Germany after WW II
The experience of West Germany after World War II has a useful lesson for India.
Beginning mid-1944, Allied bombing disrupted the German supply chain by targeting bottleneck sectors like electric power generation.
This destruction of the supply chain devastated the German economy.
Per person food production fell to about half of its pre-war level.
Two years later, this changed after Chancellor Ludwig Erhard lifted price controls and cut taxes.
West German entrepreneurs re-established a thriving supply chain through which goods went from upstream sectors to final consumers.
By 1950, per capita income in West Germany had reached its pre-war level.
Consider the question “Supply chain disruption has been at the core of economic consequences of the corona pandemic. New adjustment in the supply chains would be the norm in the aftermath of the pandemic. What these readjustments would entail? Suggest the measures to help the supply chains recover.”
Conclusion
The recent supply chain disruptions are likely to last long. The path to recovery lies in cutting government expenditure, removing price controls, and opening up trade.
From UPSC perspective, the following things are important :
Prelims level: Korean Armstice Agreement
Mains level: Korean Armstice Agreement
A United Nations investigation into a recent exchange of gunfire between North Korea and South Korea inside the Demilitarized Zone (DMZ) has determined that both countries violated the armistice that ended the 1950-53 Korean War.
Practice question for mains:
Q. What is the Korean Armstice Agreement? Discuss the concept of the Demilitarized Zone (DMZ)?
The Korean Armstice Agreement
The Korean Armstice Agreement signed on 27 July 1953 is the armistice that brought about a complete cessation of hostilities of the Korean War.
It was not the end of a war, but only a cessation of hostilities in an attempt to negotiate a lasting peace.
Military commanders from China and North Korea signed the agreement on one side, with the US-led United Nations Command signing on behalf of the international community.
What is the Demilitarized Zone (DMZ)?
The DMZ marks where the 1950-53 Korean War — when China and North Korea battled UN forces led by the United States — ended with an armistice, not a treaty.
It is a 2 km-wide buffer, stretching coast to coast across the peninsula, lined by both sides with razor wire, heavy armaments and tank traps.
It is 60 km from Seoul and 210 km from the North Korean capital of Pyongyang. Inside the DMZ is a Joint Security Area (JSA).
The so-called ‘peace village’ of Panmunjom, where the armistice that halted the Korean War was signed in 1953, is located in the 800-metre-wide and 400-metre-long JSA zone.
A Military Demarcation Line (MDL) marks the boundary between the two Koreas.
Why it is significant?
Vast stretches of the DMZ have been no man’s land for more than 60 years, where wildlife has flourished undisturbed.
Last year, US President Donald Trump met with North Korean leader Kim Jong Un at the demilitarized zone separating the two Koreas, in Panmunjom.
From UPSC perspective, the following things are important :
Prelims level: Doctrine of Force Majeure
Mains level: Doctrine of Force Majeure, frustration of a contract
The recent spread of the Coronavirus has triggered a global slowdown and has rendered ongoing business operations of several organisations to almost a standstill. This has resorted them to invoking the ‘force majeure’ clause to seek some relief.
Practice question for mains:
Q) What is the doctrine of Force Majeure and Frustration of a Contract? Discuss how it can worsen the NPA crisis in India.
What is Force Majeure?
Force majeure is purely a contractual remedy available to an affected party under a contract and for seeking relief, the reference would be to the express terms of the contract.
It is a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled.
While force majeure has neither been defined nor specifically dealt with, in Indian statutes, some reference can be found in Section 32 of the Indian Contract Act, 1872 (the “Contract Act”).
It envisages that if a contract is contingent on the happening of an event which event becomes impossible, then the contract becomes void.
Where are such clauses found?
Force majeure clauses can usually be found in various contracts such as power purchase agreements, supply contracts, manufacturing contracts, distribution agreements, project finance agreements, agreements between real estate developers and home buyers, etc.
Circumstances qualified for force majeure
A force majeure clause typically spells out specific circumstances or events, which would qualify as force majeure events, conditions which would have be fulfilled for such clause to apply.
As such, for a force majeure clause to become applicable the occurrence of such events should be beyond the control of the parties.
The parties will be required to demonstrate that they have made attempts to mitigate the impact of such force majeure event.
If an event or circumstance qualifies, the consequence would be that parties would be relieved from performing their respective obligations to be undertaken by them under the contract.
Why it is in news, now?
Due to the lockdown restrictions placed by the government, the parties’ ability to perform and fulfil their contractual obligations is affected.
Where the contract does not specifically cover the current situation is a matter of debate.
The Indian Contract Act, 1872 is more than a century old and does not have any specific provisions relating to suspension of contracts or termination of contracts in cases of a pandemic.
The Act clearly provides that an agreement to do an act impossible in itself is void (Section 56).
After a contract is made, if any act becomes impossible or unlawful by reason of some event, such a contract becomes void.
What is the difference between force majeure and frustration of a contract?
Under the doctrine of frustration, the impossibility of a party to perform its obligations under a contract is linked to the occurrence of an event/circumstance subsequent to the execution of a contract and which was not contemplated at the time of execution of the contract.
However, under in case of a force majeure, parties typically identify, prior to the execution of a contract, an exhaustive list of events, which would attract the applicability of the force majeure clause.
The doctrine of Frustration renders the contract void and consequently, all contractual obligations of the parties cease to exist.
What did the Supreme Court say?
Recently, the Supreme Court observed that the doctrine of frustration as enumerated in the Act would apply only where the parties have not specified the consequences of an event which renders the performance of the contract impossible.
Termination of a frustrated contract would be possible only in cases where the contract becomes impossible to perform which means the damage to the contract should be of permanent nature and not something which can be performed with the passage of time.
Hence a temporary inability or force majeure event would not qualify under the doctrine.
What lies ahead?
The force majeure clause in contracts should not be misconstrued as an event of frustration covered under the Act.
Force majeure is purely a contractual remedy available to an affected party under a contract and for seeking relief; the reference would be to the express terms of the contract.
However, a party claiming frustration of contract and seeking to escape liability or other obligation under a contract will necessarily have to approach an appropriate judicial forum.
It is likely that ‘force majeure’ clauses in contracts need to be more heavily negotiated to include references to epidemics or pandemics, in addition to other situations.
From UPSC perspective, the following things are important :
Prelims level: Heatwaves, Western Disturbances
Mains level: Heatwaves and various threats posed
For the past five days, Rajasthan, Delhi, Uttar Pradesh, Madhya Pradesh, and Maharashtra have been experiencing severe to very severe heatwave conditions. Here is why this summer is slightly unusual.
Heatwaves being more frequent phenomena, the UPSC may end up asking a prelim as well as mains question about it. It may ask Q. What are heat waves and how are they classified? What are the external factors on which it is depended?
A MCQ may be a statement based question mentioning the criteria for declaring a heatwave.
What is a heatwave and when is it declared?
Heatwaves occur over India between March and June.
IMD declares a heatwave event when the maximum (day) temperature for a location in the plainscrosses 40 degrees Celsius.
Over the hills, the threshold temperature is 30 degrees Celsius.
Following criteria are used to declare heatwave:
To declare heatwave, the below criteria should be met at least in 2 stations in a Meteorological subdivision for at least two consecutive days and it will be declared on the second day.
a) Based on Departure from Normal
Heat Wave: Departure from normal is 4.5°C to 6.4°C
Severe Heat Wave: Departure from normal is >6.4°C
b) Based on Actual Maximum Temperature (for plains only)
Heat Wave: When actual maximum temperature ≥ 45°C
Severe Heat Wave: When actual maximum temperature ≥47°C
How long can a heatwave spell last?
A heatwave spell generally lasts for a minimum of four days. On some occasions, it can extend up to seven or ten days.
The longest recorded heatwave spell, in recent years, was between 18 – 31 May 2015.
This spell had severely affected parts of West Bengal along with Odisha, Andhra Pradesh, and Telangana.
Heatwave conditions occurring in May have been observed to last longer, as the season reaches its peak this month.
Whereas those reported in June often die down sooner, often due to the onset of Southwest monsoon over the location or in its neighbourhood.
Does all of India experience heatwave conditions?
Heatwaves are common over the Core Heatwave Zone (CHZ) — Rajasthan, Punjab, Haryana, Chandigarh, Delhi, West Madhya Pradesh, Uttar Pradesh, Chhattisgarh, Orissa, Vidarbha in Maharashtra.
The CHZ also includes parts of Gangetic West Bengal, Coastal Andhra Pradesh and Telangana, as categorised by IMD.
Several recent studies indicate that CHZ experience more than six heatwave days per year during these four months.
Many places in the northwest and cities along southeastern coast report eight heatwave days per season.
However, the regions in the extreme north, northeast and southwestern India are lesser prone to heatwaves.
Whats’ so unusual this year?
Summer season reaches its peak by May 15 in India when the day temperatures across north, west, and central India cross 40 degrees and hover close to 45 degrees then on.
This year, north India did not experience such temperatures till May 21.
It was mainly because of the continuous inflow of Western Disturbances that influenced the weather in the north till as late as April.
Since last winter, there was frequent passing of Western Disturbances over the north, appearing after every five to seven days.
What are these Western Disturbances?
Originating in the Mediterranean Sea, Western Disturbances are eastward-moving winds that blow in lower atmospheric levels.
They affect the local weather of a region during its onward journey.
Between January and March this year, there were about 20 Western Disturbances, a record of sorts.
When Western Disturbances interact with weather systems heading from the two southern seas, that is, warm winds blowing in from the Bay of Bengal or the Arabian Sea, they cause snowfall or rainfall over the north.
A significant influence of Western Disturbances is experienced from December to February. However, this year, its influence persisted until early May.
The recent Western Disturbances got support from easterly winds blowing over from the Bay of Bengal.
Has cyclone Amphan influenced the current heatwave?
Since the event of severe heat has emerged immediately after the passing of Cyclone Amphan, experts confirm its role in leading to the present heatwave spell.
Cyclone Amphan, which was a massive Super Storm covering 700 km, managed to drag maximum moisture from over the Bay of Bengal to entire Peninsula.
All the moisture that was otherwise built during the thunderstorm and rainfall got gradually depleted from over vast areas as the storm advanced towards West Bengal and Bangladesh between May 16 and 20.
It has now triggered dry north-westerly winds to blow over Rajasthan, Madhya Pradesh, Uttar Pradesh and Maharashtra causing severe heatwave.
From UPSC perspective, the following things are important :
Prelims level: Charru mussel
Mains level: NA
An invasive mussel native to the South and Central American coasts is spreading quickly in the backwaters of Kerala.
Try this PYQ from CSP 2018:
Q. Why is a plant called Prosopis juliflora often mentioned in news?
(a) Its extract is widely used in cosmetics.
(b) It tends to reduce the biodiversity in the area in which it grows
(c) Its extract is used in the pesticides.
(d) None of the above
Charru mussel
The rapid spread of the Charru mussel (Mytella strigata) may have been triggered by Cyclone Ockhi which struck the region in 2017.
With a population as high as 11,384 per sq metre here, it has replaced the Asian green mussel (Perna Viridis) and the edible oyster Magallana bilineata (known locally as muringa).
Externally, the Charru mussel resembles the green and brown mussels (kallummekka in Malayalam) but is much smaller in size. Its colour varies from black to brown, purple or dark green.
Surveys show the presence of the Charru mussel in the Kadinamkulam, Paravur, Edava-Nadayara, Ashtamudi, Kayamkulam, Vembanad, Chettuva and Ponnani estuaries/backwaters.
Ashtamudi Lake, a Ramsar site in Kollam district, remains the worst-hit.
Threats posed
Though this smaller mussel is edible, the overall economic loss and impact on biodiversity are much bigger, it is pointed out.
It is throwing out other mussel and clam species and threatening the livelihoods of fishermen engaged in shrimp fisheries.
From UPSC perspective, the following things are important :
Prelims level: Dugong
Mains level: NA
The dugong, commonly known as the sea cow, is fighting for its survival in Indian waters experts have said on the eve of ‘World Dugong Day’ on May 28, 2020.
Try this question from CSP 2015:
Q) With reference to ‘dugong’, a mammal found in India, which of the following statements is/are correct?
1) It is a herbivorous marine animal.
2) It is found along the entire coast of India
3) It is given legal protection under Schedule 1 of the Wildlife (Protection) Act, 1972.
Select the correct answer using the code given below.
(a) 1 and 2
(b) 2 only
(c) 1 and 3
(d) 3 only
Dugong
Dugongs are mammals, which means they give birth to live young and then produce milk and nurse them.
It is the flagship animal of Gulf of Mannar Marine National Park.
Once the female is pregnant, she will carry the unborn baby, called a foetus for 12-14 months before giving birth.
Female dugongs give birth underwater to a single calf at three to seven-year intervals.
Dugongs graze on seagrass, especially young shoots and roots in shallow coastal waters. They can consume up to 40 kilograms of seagrass in a day.
Dugongs are an IUCN Endangered marine species like sea turtles, seahorses, sea cucumbers and others.
They are protected in India under Schedule I of the Wild (Life) Protection Act, 1972.
Threats to dugongs
Human activities such as the destruction and modification of habitat, pollution, rampant illegal fishing activities, vessel strikes, unsustainable hunting or poaching and unplanned tourism are the main threats to dugongs.
The loss of seagrass beds due to ocean floor trawling was the most important factor behind dwindling dugong populations in many parts of the world.
Why needs urgent attention?
There were just 250 dugongs in the Gulf of Mannar in Tamil Nadu, the Andaman and Nicobar Islands and the Gulf of Kutch in Gujarat according to the 2013 survey report of the Zoological Survey of India (ZSI).
Hundreds of dugongs inhabited waters off the Odisha, West Bengal and Andhra Pradesh coasts two centuries back. But they are extinct in these areas now, he added.
Seagrass in Odisha’s Chilika Lake is a proper habitat for dugongs. However, there is not an extant population in Chilika.
Other facts:
The 13th CoP of the Convention on the Conservation of Migratory Species of Wild Animals (CMS), an environmental treaty under the aegis of the UNEP, was hosted by India this year at Gandhinagar in Gujarat.
India is a signatory to the CMS since 1983.
India has signed non-legally binding Memorandums of Understanding with CMS on the conservation and management of Siberian Cranes (1998), Marine Turtles (2007), Dugongs (2008) and Raptors (2016).
Proper conservation is the only way to save dugongs from extinction. Conservation in other places like Australia has seen their population crossing 85,000.
From UPSC perspective, the following things are important :
Prelims level: FAITH and Solidarity Trials
Mains level: Clinical trials and ethical issues involved
With the number of COVID-19 patients rising in India, a pharma company has announced a new randomized study to test the combined efficacy of two antiviral drugs under the ‘FAITH Trials’.
Misleading names: One may get confused over the names given to these clinical trials. The name ‘FAITH’ and ‘Solidarity’ appear more like a judicial trial or some Human Rights violation related trials. UPSC can knock such areas in prelims.
FAITH Trials
The two drugs: Favipiravir and Umifenovir will be tried as a potential COVID-19 treatment strategy.
This new combination clinical trial will be called FAITH – (FA vipiravir plus Um I fenovir (efficacy and safety) Trial in Indian Hospital setting).
The two antiviral drugs have different mechanisms of action, and their combination may demonstrate improved treatment efficacy by effectively tackling high viral loads in patients during the early stages of the disease.
This trial offers a comprehensive antiviral cover on pre-entry and post-entry life-cycle of the SARS-CoV-2 virus.
Dosages under the trial
Patients taking the drug will receive Faviprivir 1800 mg bid and Umifenovir 800 mg bid on Day 1.
Thereafter, they will receive Faviprivir 800mg bid and Unifenovir 800mg bid for the remaining course of treatment.
Duration of treatment will be 14 days and patients will be discharged after clinical cure and two consecutive negative tests.
While one group will be receiving Favipiravir and Umifenovir (with standard supportive care), the other group will receive Favipiravir along with standard supportive care.
Other trials in news: The Solidarity Trial
“Solidarity” is an international initiative for clinical trials launched by the WHO, along with partners, to help find an effective treatment for Covid-19.
It was originally supposed to look at four drugs or drug combinations: Remdesivir, HCQ, Ritonavir/Lopinavir and Lopinavir/Ritonavir/Interferon beta 1a.
Now with HCQ trial enrolment stalled for at least the next few weeks, the Solidarity trial will proceed with the other three arms.
| Science Tech | 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 :
Mains level: Paper 3- Importance of innovation for self-reliance.
What does it take to be self-reliant? (Hint: R&D!) This is the question this article tries to answer. After independence, we had a good start in R&D. But what went wrong? What was the role played by globalisation? Did the globalisation deliver on its promise of technology transfer? And finally, what lies on the way forward for India? This article answers all such question.
What went wrong: historical perspective
India chose the path of self-reliance in state-run heavy industries and strategic sectors after independence.
In the decades following independence, this choice of self-reliance had placed India ahead of most developing countries.
In the 1970s and 80s, however, India did not modernise these industries to climb higher up the technological ladder.
The private sector, which had backed the state-run core sector approach in its Bombay Plan, stayed content with near-monopoly conditions in non-core sectors in a protected market.
Little effort was made to modernise light industries or develop contemporary consumer products.
India’s industrial ecosystem was thus characterised by low productivity, poor quality and low technology, and was globally uncompetitive.
What did India lose in the ‘lost decades’?
India completely missed out on the ‘third industrial revolution’.
Third industrial revolution comprised electronic goods, microprocessors, personal computers, mobile phones and decentralised manufacturing and global value chains during the so-called lost decade(s).
Today, India is the world’s second-largest smartphone market.
However, it does not make any of these phones itself.
India manufactures only a small fraction of solar photovoltaic cells and modules currently used, with ambitious future targets.
What happened to ‘self-reliance’ after India embraced globalisation?
At the turn of the millennium, when India embarked on liberalisation, privatisation and globalisation.
So, the very concept of self-reliance was rubbished.
This happened in the belief that it was like reinventing the things already invented and wasting money on it.
And when advanced technologies could simply be bought from anywhere at lower costs.
Two related ideas have prevailed since then, and neither delivered the desired results.
So, what are these two basic ideas?
1. Unsuitability of PSUs in the globalised world
The first idea was that public sector undertakings (PSUs) are, by definition, inefficient and sluggish for the competitive globalised scenario.
No effort was made to engender either real autonomy or a transition to new technological directions.
Instead, PSUs with capability and scale were undermined or abandoned, along with many nascent research and development (R&D) efforts, for instance, in photovoltaics, semiconductors and advanced materials.
So, what was the result of this attitude towards PSUs?
The private sector displayed little interest in these heavy industries and showed no appetite for technology upgradation.
With entry of foreign corporations, most Indian private companies retreated into technology imports or collaborations.
Even today, most R&D in India is conducted by PSUs.
And much of the smaller but rising proportion of private sector R&D is by foreign corporations in information technology and biotechnology/pharma.
Conclusion: Given the disinclination of most of the private sector towards R&D and high-tech manufacturing, significant government reinvestment in PSUs and R&D is essential for self-reliance.
2. Foreign companies were expected to bring new technologies in India
The second idea was that inviting foreign direct investment and manufacturing by foreign majors would bring new technologies into India’s industrial ecosystem.
This was thought to obviate the need for indigenous efforts towards self-reliance.
So, what happened on the ground?
But mere setting up of manufacturing facilities in India is no guarantee of absorption of technologies.
There is no evidence from any sector that this has taken place or has even been attempted.
The fact is, foreign majors jealously guard commercially significant or strategic technologies in off-shore manufacturing bases.
Conclusion: The key problem of self-reliance is therefore neither external finance nor domestic off-shore manufacturing, but resolute indigenous endeavour including R&D.
Let’s look at experience of other Asian countries towards self-reliance
Three models emerge from Asian countries.
1. Focus on technology and industries
Japan’s post-war success, was seen as a template by some countries to follow.
These include countries like South Korea, Taiwan, Singapore and Hong Kong
These countries took huge technological and industrial strides in the 1970s and 80s.
South Korea emerged as a global powerhouse in manufacturing, but also in indigenously developed technologies.
Taiwan developed technologies and manufacturing capacities in robotics and micro-processors.
While Singapore and Hong Kong adapted advanced technologies in niche areas.
These self-reliant capabilities were enabled, among other factors, by planned state investments in R&D including basic research (3-5% of GDP), technology and policy support to private corporations, infrastructure and, importantly, education and skill development (4-6% of GDP).
2. Focus on off-shore manufacturing and not on self-reliance
Countries like Thailand, Malaysia, Indonesia and Vietnam have focused on off-shore manufacturing lower down the value chain and without the thrust on self-reliance.
This is useful for job creation but is an unsuitable model for a country of India’s size and aspirations.
3. China: Transition from low-end manufacturing to dominant role in supply chains
China is, of course, unique in scale and in its determination to become a superpower not just geopolitically but also in self-reliant S&T and industrial capability.
China advanced purposefully from low-end mass manufacturing to a dominant role in global supply chains.
It has now decided on shifting to advanced manufacturing.
It has set itself a target of becoming a world leader by 2035 in 5G, supercomputing, Internet of Things (IoT), artificial intelligence (AI), autonomous vehicles, biotech/pharma and other technologies of the ‘fourth industrial revolution’.
Way forward for India
India may well have missed the bus in many of technologies in which the U.S., Europe and China have established perhaps insurmountable leads.
Yet, self-reliant capabilities in electric and fuel cell vehicles, electricity storage systems, solar cells and modules, aircraft including UAVs, AI, robotics and automation, biotech/pharma and others are well within reach.
Large-scale concerted endeavours would, however, be required, since self-reliance will not happen by itself.
State-funded R&D, including in basic research, by PSUs and research institutions and universities needs to be scaled-up significantly, well above the dismal 1% of GDP currently.
Upgraded and reoriented PSUs would also be crucial given their distinctive place in the ecosystem.
Private sector delivery-oriented R&D could also be supported, linked to meaningful participation in manufacturing at appropriate levels of the supply chain.
India’s meagre public expenditure on education needs to be substantially ramped up including in skill development.
Consider the question “The path to the self-reliance of any country goes through robust capabilities in the R&D. Comment”
Conclusion
Self-reliance would need a paradigm shift in our approach toward many things. First and foremost is the R&D. Potential of the PSUs has to be tapped to their fullest in the realms of R&D. The second area of focus should be education. These two areas are the key to achieve self-reliance and should be the focus of policymakers.
Back2Basics: Bombay Plan
The Bombay plan was a set of proposal of a small group of influential business leaders in Bombay for the development of the post-independence economy of India.
This plan was published in two parts or volume- first in 1944 and second in 1945.
The prime objectives of the plan were to achieve a balanced economy and to raise the standard of living of the masses of the population rapidly by doubling the present per capita income within a period of 15 years from the time the plan goes into operation.
From UPSC perspective, the following things are important :
Prelims level: GSTN
Mains level: Paper 3- Challenges ON-ORC could face and how the GST could offer valuable lesson for ON-ORC
Never before we felt the necessity of portable benefit schemes as we did in the wake of the pandemic. Portable ration card could have mitigated the suffering of migrant workers to some extent. But it was not to be. This article examines the challenges in implementing the idea of ON-ORC and offers the solution to these challenges by drawing on the lessons learned from GST. At the same time, the shortcoming of GST can also be avoided in the ON-ORC.
What is One Ration Card (ON-ORC)?
In the present system, a ration cardholder can buy foodgrains only from an Fair Price Shop that has been assigned to her in the locality in which she lives.
However, this will change once the ONORC system becomes operational nationally.
Under the ONORC system, the beneficiary will be able to buy subsidised foodgrains from any FPS across the country.
The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs.
This would enable that person to purchase the number of foodgrains to which she is entitled under the NFSA.
Portable welfare benefit and attempts so far to achieve it
The idea of portable welfare benefits means a citizen should be able to access welfare benefits irrespective of where she is in the country.
In the case of food rations, the idea was first mooted under the UPA government by a Nandan Nilekani-led task force in 2011.
The current government had committed to a national rollout of One Nation, One Ration Card (ON-ORC) by June 2020, and had initiated pilots in 12 states.
Progress on intra-state and inter-state portability
While intra-state portability of benefits has seen good initial uptake, inter-state portability has lagged.
The finance minister has now announced the deadline of March 2021 to roll out ON-ORC.
So, to ensure a smooth rollout, let’s review the challenges thus far
1) The fiscal implications:
ON-ORC will affect how the financial burden is shared between states.
2) The larger issues of federalism and inter-state coordination:
Many states are not convinced about a “one size fits all” regime because i) they have customised the PDS through higher subsidies, ii) higher entitlement limits, and iii) supply of additional items.
3) The technology aspect:
ON-ORC requires a complex technology backbone that brings over 750 million beneficiaries, 5,33,000 ration shops and 54 million tonnes of food-grain annually on a single platform.
How the lessons learned from GST can be applied to deal with the above 3 challenges?
1. Fiscal challenge
Just like with ON-ORC, fiscal concerns had troubled GST from the start.
States like Tamil Nadu and Gujarat that are “net exporters” were concerned they would lose out on tax revenues to “net consumer” states like UP and Bihar.
Finally, the Centre had to step in and provide guaranteed compensation for lost tax revenues for the first five years.
The Centre could provide a similar assurance to “net inbound migration” states such as Maharashtra and Kerala that any additional costs on account of migrants will be covered by it for the five years.
2. We could have a National council for ON-ORC
GST also saw similar challenges with broader issues of inter-state coordination.
In a noteworthy example of cooperative federalism, the central government created a GST council consisting of the finance ministers of the central and state governments to address these issues.
The government could consider a similar national council for ON-ORC.
To be effective, this council should meet regularly, have specific decision-making authority, and should operate in a problem-solving mode based on consensus building.
3. Technological aspect: PDS Network
GST is supported by a sophisticated tech backbone, housed by the GST Network (GSTN), an entity jointly owned by the Centre and states.
A similar system would be needed for ON-ORC.
The Nilekani-led task force recommended setting up of a PDS network (PDSN).
PDSN would track the movement of rations, register beneficiaries, issue ration cards, handle grievances and generate analytics.
Since food rations are a crucial lifeline for millions, such a platform should incorporate principles such as inclusion, privacy, security, transparency, and accountability.
The IM-PDS portal provides a good starting point.
Also, there are certain shortcomings in GST which we could avoid in ON-ORC
We should learn from the shortcomings and challenges of the GST rollout. For example:
1)Delay in GST refunds led to cash-flow issues.
Similar delays in receiving food rations could be catastrophic.
Therefore, ON-ORC should create, publish and adhere to time-bound processes.
The time-bound processes could be in the form of right to public services legislation that have been adopted by 15 states, and rapid grievance redress mechanisms.
2)Increase in compliance burdenfor MSMEs, especially for those who had to digitise overnight.
Similar challenges could arise in ON-ORC.
PDS dealers will need to be brought on board, and not assumed to be compliant.
Citizens will need to be shielded from the inevitable teething issues by keeping the system lenient at first.
This can be done by providing different ways of authenticating oneself and publicising a helpline widely.
Consider the question “One Nation-One Ration Card(ON-ORC) could solve many problems faced by the beneficiaries when they move across the country. Examine the challenges the ON-ORC could face. Suggest ways to deal with these challenges.”
Conclusion
If done well, ON-ORC could lay the foundation of a truly national and portable benefits system that includes other welfare programmes like LPG subsidy and social pensions. It is an opportunity to provide a reliable social protection backbone to migrants, who are the backbone of our economy.
From UPSC perspective, the following things are important :
Prelims level: MOOCs
Mains level: Paper 2- Is online learning a substitute for the traditional educational institutions?
Left with no choice, many education institutions turned to online mode. But could that be a new normal? This article analyses the indispensable role of online education. However, online education cannot be a substitute for traditional education institutes. WHY? Read the article to know about the vital role of traditional educational institutions…
Online education (OE): Supplement not the substitute
The incredible synergy unleashed by information and communications technology (ICT) is the best thing to have happened to education since the printing press.
Indeed, higher education today is unthinkable without some form of the computer and some mode of digitised data transmission.
OE can use content and methods that are hard to include in the normal curriculum.
OE can put pressure on lazy or incompetent teachers.
OE can provide hands-on experience in many technical fields where simulations are possible.
And OE can, of course, be a powerful accessory for affluent students able to afford expensive aids.
As products of this revolution, online methods of teaching and learning deserve our highest praise — but only when cast in their proper role.
This proper role is to supplement, support and amplify the techniques of face-to-face education.
The moment they are proposed as a substitute for the physical sites of learning we have long known — brick-and-cement schools, colleges, and universities — online modes must be resolutely resisted.
So, what are the vested interests involved?
Resistance to OE is often dismissed as the self-serving response of vested interests, notably obstructive, technophobic teachers unwilling to upgrade their skills.
But these are not the only vested interests involved.
Authoritarian administrators are attracted by the centralised control and scaling-at-will that OE offers.
Educational entrepreneurs have been trying to harvest the billions promised by massive open online courses (MOOCs) — think of Udacity, Coursera, or EdX.
Pundits are now predicting post-pandemic tie-ups between ICT giants like Google and Amazon and premium education brands like Harvard and Oxford that will launch a new era of vertically-integrated hybrid OE platforms.
Is OE a viable alternative to traditional educational institutions (TEI) for the typical Indian student?
No one with access to an elite TEI chooses OE.
Instead, we know that OE always loses in best-to-best comparisons.
Favourable impressions about OE are created mostly by comparing the best of OE with average or worse TEIs.
But is it true that the best OE is better than the average college or university?
OE claims that neither the campus nor face-to-face interaction are integral to education.
Since the comparative evaluation of virtual versus face-to-face pedagogic interaction needs more space, the campus question is considered here.
How does the typical student’s home compare with a typical TEI campus?
Census 2011 tells us that 71 per cent of households with three or more members have dwellings with two rooms or less.
According to National Sample Survey data for 2017-18, only 42 per cent of urban and 15 per cent of rural households had internet access.
Only 34 per cent of urban and 11 per cent of rural persons had used the internet in the past 30 days.
It is true that many TEIs (both public and private) have substandard infrastructure.
But these data suggest that the majority (roughly two-thirds) of students are likely to be worse off at home compared to any campus.
The impact of smartphone capabilities and stability of net connectivity on OE pedagogy also needs to be examined.
Importance of college as a social space
It is as a social rather than physical space that the college or university campus plays a critical role.
Public educational institutions play a vital role as exemplary sites of social inclusion and relative equality.
In Indian conditions, this role is arguably even more important than the scholastic role.
The public educational institution is still the only space where people of all genders, classes, castes, and communities can meet without one group being forced to bow to others.
Whatever its impact on academics, this is critical learning for life.
Women students, in particular, will be much worse off if confined to their homes by OE.
Consider the question- “Covid-19 pandemic forced many educational institute to explore the online more of education. And this also brought to the fore the potential of the online mode of education. In light of this, examine the issues with substituting the online mode of education for the traditional educational mode.”
Conclusion
Though an indispensable supplement for traditional education, there are certain aspects of education and a social life that online learning cannot substitute. So, the government should not divert its attention from the traditional educational institution and look at online education as its substitute.
From UPSC perspective, the following things are important :
Prelims level: Van Allen Radiation Belt, South Atlantic Anomaly
Mains level: South Atlantic Anomaly and its impact
New data obtained by the European Space Agency (ESA) Swarm satellites has revealed the existence of a mysterious anomaly weakening the Earth’s magnetic field. Termed as ‘South Atlantic Anomaly’, it extends all the way from South America to southwest Africa.
The term ‘South Atlantic Anomaly’ at its first sight looks similar to any climate/oceanic current related phenomena. But it’s not! This is where you can end up losing 2.66 marks in the prelims!
What is South Atlantic Anomaly (SAA)?
The SAA is referred to the behaviour of Earth’s Geo-Magnetic field in an area between Africa and South America.
The SAA is an area where the Earth’s inner Van Allen radiation belt comes closest to the Earth’s surface, dipping down to an altitude of 200 kilometres.
This leads to an increased flux of energetic particles in this region and exposes orbiting satellites to higher-than-usual levels of radiation.
The effect is caused by the non-concentricity of the Earth and its magnetic dipole.
The SAA is the near-Earth region where the Earth’s magnetic field is weakest relative to an idealized Earth-centered dipole field.
Weakening of the magnetic field
Over the last 200 years, the magnetic field has lost around 9% of its strength on a global average.
A large and rapid shrink has been observed in the SAA region over the past 50 years just as the area itself has grown and moved westward.
The weakening of the magnetic field is also causing technical difficulties for the satellites and spacecraft orbiting the planet.
The study conducted between 1970 and 2020, said that the magnetic field weakened considerably in a large region stretching from Africa to South America, known as the ‘SAA’.
This area has grown and moved westward at a rate of around 20 km per year.
Its impact
The magnetic shield has an important role to play in keeping unwanted radiation away as well as helping determine the location of magnetic poles.
Even though unlike global warming or any weather change, this anomaly doesn’t directly impact human lives, it could actually bring on a change in the way we access technology.
The reversal and apparent shift, which could keep extending could actually impact satellite and telecommunication system, which means that some of the internet and mobile phone functioning which depend on satellite signals can possibly get disrupted.
It could also affect the mapping and navigation systems in smartphones.
The weakening of earth’s magnetic field could also impact migratory movement.
Birds, animals- all those who migrate with the change in season depend on the earth’s mapping to move about can find it a little difficult.
This is only a possibility, but we don’t know the extent of the damage till now.
About the Van Allen Radiation Belt
A Van Allen radiation belt is a zone of energetic charged particles, most of which originate from the solar wind, that are captured by and held around a planet by that planet’s magnetic field.
The belts are located in the inner region of Earth’s magnetosphere. The belts trap energetic electrons and protons.
Earth has two such belts and sometimes others may be temporarily created.
Most of the particles that form the belts are thought to come from solar wind and other particles by cosmic rays.
By trapping the solar wind, the magnetic field deflects those energetic particles and protects the atmosphere from destruction.
Swarm is a European Space Agency (ESA) mission to study the Earth’s magnetic field.
It is ESA’s first constellation of satellites for Earth observation.
The Swarm constellation consists of three satellites (Alpha, Bravo and Charlie) placed in two different polar orbits, two flying side by side at an altitude of 450 km and a third at an altitude of 530 km.
From UPSC perspective, the following things are important :
Prelims level: Various missions mentioned in the newscard
Mains level: Quest for Mars and its possibility to host life
China’s space program is now slated to achieve a new milestone. In July, the country will launch its first Mars mission, the ‘Tianwen-1’, which is expected to land on the Red Planet’s surface in the first quarter of 2021.
UPSC may ask an MCQ asking: Which of the following is/are the space missions related to Mars? It may throw up 4-5 options (which we all get confused at after few months) like Cassini , InSight , Messanger, Voyager etc.
Tianwen-1 Mission
The mission is named after the ancient Chinese poem ‘Questions to Heaven’, the Tianwen-1.
It is an all-in-one orbiter; lander and rover will search the Martian surface for water, ice, investigate soil characteristics, and study the atmosphere, among completing other objectives.
It will carry 13 payloads (seven orbiters and six rovers) that will explore the planet.
It will be the first to place ground-penetrating radar on the Martian surface, which will be able to study local geology, as well as rock, ice, and dirt distribution.
China’s previous ‘Yinghuo-1’ Mars mission, which had piggybacked on a Russian spacecraft, had failed after it could not leave the Earth’s orbit and disintegrated over the Pacific Ocean in 2012.
Why all are curious about Mars exploration?
After the Moon, the most number of space missions in the Solar System has been to Mars.
Despite being starkly different in many ways, the Red Planet has several Earth-like features– such as clouds, polar ice caps, canyons, volcanoes, and seasonal weather patterns.
For ages, scientists have wondered whether Mars can support life.
In the past few years, Mars missions have been able to discover the possible presence of liquid water on the planet, either in the subsurface today or at some point in its past.
This has made space explorers more curious about whether the planet can sustain life.
Newer NASA missions have since transitioned from their earlier strategy of “Follow the Water” to “Seek Signs of Life”.
Back2Basics: Various missions on Mars
The USSR in 1971 became the first country to carry out a Mars landing– its ‘Mars 3’ lander being able to transmit data for 20 seconds from the Martian surface before failing.
The country made it’s second and Mars landing two years later in 1973.
The second country to reach Mars’s surface, the US, holds the record for the most number of Mars landings.
Since 1976, it has achieved 8 successful Mars landings, the latest being the ‘InSight’ in 2019 (launched in 2018).
India and the European Space Agency have been able to place their spacecraft in Mars’s orbit.
India’s Mars Orbiter Mission (MOM) or ‘Mangalyaan’ was able to do so in September 2014, almost a year after its launch from the Satish Dhawan Space Centre in Andhra Pradesh.
The Chinese mission now is expected to take off around the same time when NASA is launching its own Mars mission– the ambitious ‘Perseverance’ which aims to collect Martian samples and bring them back.
From UPSC perspective, the following things are important :
Prelims level: AarogyaSetu App
Mains level: Privacy concerns with AarogyaSetu App
Amid concerns over privacy of data being collected by its COVID-19 contact tracing app, the union government has open-sourced the Aarogya Setu app.
Right to Privacy is an important topic for GS. The Aarogya Setu app which has a lot more to offer is under the radar due to the underlying vacuum of Privacy Law in India. To tackle this, the government has launched a bug bounty programme (a sort of hackathon).
About AarogyaSetu App
The App enables people to assess themselves the risk of their catching the Corona Virus infection.
It is designed to keep track of other AarogyaSetu users that a person came in contact with and alert him or her if any of the contacts tests positive for COVID-19.
It achieves this using the phone’s Bluetooth and GPS capabilities.
Once installed in a smartphone through an easy and user-friendly process, the app detects other devices with AarogyaSetu installed that come in the proximity of that phone.
The app can then calculate the risk of infection based on sophisticated parameters if any of these contacts have tested positive.
The personal data collected by the App is encrypted using state-of-the-art technology and stays secure on the phone until it is needed for facilitating medical intervention.
Issues with the app
The AarogyaSetu app faces the same issue as every other contact tracing technology that has come up during the pandemic period — it is people dependent.
It needs widespread usage and self-reporting to be effective.
Given that any number of total users will be a subset of smartphone owners in India, and there are bound to be variations in the levels of self-reporting, the efficacy is not bulletproof.
The terms of use of the app also say as much, distancing the government from any failure on the part of the app incorrectly identifying COVID-19 patients.
1) Privacy concerns
First of all, the app exists in the privacy law vacuum that is India.
With no legislation that spells out in detail how the online privacy of Indians is to be protected, AarogyaSetu users have little choice but to accept the privacy policy provided by the government.
The policy goes into some detail on where and how long the data will be retained, but it leaves the language around who will have access to it vague.
As per the policy persons carrying out medical and administrative interventions necessary in relation to COVID-19” will have access to the data.
This suggests interdepartmental exchanges of people’s personal information and is more excessive than countries like Singapore and even Israel.
2) Technical issue
Beyond the legal loopholes, there are technical loopholes as well.
The unique digital identity in AarogyaSetu is a static number, which increases the probability of identity breaches.
The abundance of data collected is also potentially problematic.
AarogyaSetu uses both Bluetooth as well as GPS reference points, which could be seen as overkill whereas other apps such as TraceTogether make do with Bluetooth.
3) Other issues
Experts emphasise that automated contact tracing is not a panacea.
They caution against an over-reliance on technology where a competent human-in-the-loop system with sufficient capacity exists.
Back2Basics: What is Open Source?
The term open source refers to something people can modify and share because its design is publicly accessible.
The term originated in the context of software development to designate a specific approach to creating computer programs.
Today, however, “open source” designates a broader set of values—what we call “the open source way.”
Open source projects, products, or initiatives embrace and celebrate principles of open exchange, collaborative participation, rapid prototyping, transparency, meritocracy, and community-oriented development.
The source code
“Source code” is the part of the software that most computer users don’t ever see; it’s the code computer programmers can manipulate to change how a piece of software—a “program” or “application”—works.
Programmers who have access to a computer program’s source code can improve that program by adding features to it or fixing parts that don’t always work correctly.
What is Open Source Software?
At the simplest level, open-source programming is merely writing code that other people can freely use and modify.
Open source is a term that originally referred to open source software (OSS).
OSS is a code that is designed to be publicly accessible—anyone can see, modify, and distribute the code as they see fit.
An open-source development model is a process used by an open-source community project to develop open-source software.
The software is then released under an open-source license, so anyone can view or modify the source code.
From UPSC perspective, the following things are important :
Prelims level: Cicadas
Mains level: NA
A brood of periodical cicadas, noisy insects that breed underground for as long as 13-17 years are expected to emerge into some states of the US this year.
A stand-alone species being mentioned in the news for the first time may find their way into the prelims. Make special note here.
What are Cicadas?
Cicadas are insects that spend most of their lives underground and emerge from the soil mainly to mate.
Once out of the ground, their life span is fairly short, somewhere between two-four weeks.
At present, there are about 15 active broods of these cicadas as some have gone extinct.
The insects are found in America’s as well as New Zealand and Australia.
The name 13 and 17 year refers to the number of years that cicada nymphs take to reach adulthood.
It is not clear why their development period is so long, researchers suspect that it may be linked to avoiding predators above the soil.
How are the fed?
During this time underground the nymphs feed on sap from plant roots.
After this developmental period, the cicada nymphs construct a “cicada hut” and burrow their way out from the soil and climb onto any nearby tree or vegetation.
From UPSC perspective, the following things are important :
Prelims level: Kheer Bhawani Mela
Mains level: NA
In the UT of Jammu and Kashmir, the Annual Kheer Bhawani Mela in Tulmulla village of Ganderbal district has been cancelled by its religious trust.
Match the pair based question can be asked from festivals as such. Recently, the following festivals were in the news: Ambubachi Mela, Thrisoor Puram, Meru Jatara, Nagoba Jatara etc.
Try this:
Q. Consider the following pairs:
TraditionsCommunities
1. Chaliha Sahib Festival — Sindhis
2. Nanda Raj Jaat Yatra — Gonds
3. Wari-Warkari — Santhals
Which of the pairs given above is/are correctly matched ? (CSP 2017)
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) None of the above
Kheer Bhawani Mela
The festival witnesses lakhs of Hindu pilgrims from across the country largely the Kashmiri Pandit Community, who throngs the famous Ragyna Devi Temple which is popularly known as “Mata Kheer Bhawani”.
The festival falls on the auspicious day of “Zeshta Ashtami”.
The term kheer refers to rice pudding that is offered in the spring to propitiate the Goddess, which became part of the name of the temple.
The devotees have been asked to cooperate with the authorities and perform the worship of the Goddess at their homes only.
However, the holy rituals and Aarti of the Deity will be conducted as per the tradition which will be shared with the devotees via social media.
Significance
Kheer Bhawani Mela is one of the biggest religious functions of Kashmiri Pandit Community.
It is believed and rather has been seen that the colour of the water in the spring around the Kheer Bhawani Temple changes its colour with the change in the circumstances of the Kashmir valley.
From UPSC perspective, the following things are important :
Prelims level: Char Dham Project
Mains level: Not Much
The Chamba Tunnel constructed by the Border Roads Organisation (BRO) under Chardham Project was recently inaugurated.
Make a note of all projects and circuits under Swadesh Darshan and PRASHAD Scheme.
What is the Char Dham Project?
The Char Dham project consists of widening and repairing 889-kilometres of national highways leading to revered shrines of Kedarnath, Badrinath, Gangotri and Yamunotri.
It is a proposed two-lane expresses National Highway with a minimum width of 10 metres in the state of Uttarakhand.
The project includes 900 km national highways will connect whole of Uttarakhand state.
Chamba Tunnel
The Chamba tunnel is 440 m long and is a Horseshoe type tunnel with 10-metre carriageway width and 5.5m vertical clearance.
The BRO achieved this major milestone by digging up a 440 m long Tunnel below the busy Chamba town on Rishikesh-Dharasu road Highway (NH 94).
Back2Basics: Border Roads Organisation (BRO)
The BRO develops and maintains road networks in India’s border areas and friendly neighbouring countries and functions under the Ministry of Defence.
It is entrusted for construction of Roads, Bridges, Tunnels, Causeways, Helipads and Airfields along the borders.
Officers from the Border Roads Engineering Service (BRES) and personnel from the General Reserve Engineer Force (GREF) form the parent cadre of the Border Roads Organisation.
It is also staffed by officers and troops drawn from the Indian Army’s Corps of Engineers on extra regimental employment.
The BRO operates and maintains over 32,885 kilometres of roads and about 12,200 meters of permanent bridges in the country.
Mains level: Paper 3- Way out to restart the economy,
Whether to focus on demand side or supply side is the dilemma policymakers dealing with the financial crises have always faced. If we look closely, the focus of the package announced by the government is on the supply side and pushing liquidity in the economy. This article examines the various measure announced in the package and elaborated why such measures are likely to fail.
Focus on credit and liquidity in the package
The government has relied heavily on measures aimed at pushing credit to banks, non-banking financial companies (NBFCs) and businesses big and small.
These are expected to use borrowed funds to lend to others, make payments falling due, compensate employees even while under lockdown, and otherwise spend even while not earning.
The thrust is to get the Reserve Bank of India (RBI) and other public financial institutions to infuse liquidity and increase lending by the financial system.
RBI offered the financial institution capital for longer periods at a repo or policy interest rate that has been cut by more than a percentage point to 4%.
Let’s understand liquidity and its role in crisis
The Prime Minister in his speech calling for a “self-reliant India” identified, besides land, labour and laws, “liquidity” as among the areas of focus of the package.
What is liquidity: In economic and business parlance, liquidity refers to ease of access to cash.
A liquid asset is one that can be easily sold for or replaced with cash.
And a liquid firm or agent is a holder of cash, a line providing access to cash, or assets that can be easily and quickly converted to cash without significant loss of value.
In periods of crisis, individuals, small businesses, firms, financial institutions and even governments tend to experience a liquidity crunch.
Relaxing that crunch is a focus of the government’s crisis-response package.
So, the government has given a much larger role to enhancing liquidity than it does either to direct transfers.
So, let’s look at steps taken by the government to ensure liquidity
1. LTRO and issues with it
Among the first steps taken by the RBI was the launch of special and ‘targeted’ long term repo operations (TLTROs).
LTROs allowed banks to access liquidity at the repo rate to lend to specified clients.
One round of such operations, which was relatively more successful, called for investment of the cheaper capital in higher quality investment grade corporate bonds, commercial paper, and non-convertible debentures.
What went wrong? That funding allowed big business, varying from Reliance and L&T to financial major HDFC, to access cheap capital to substitute for past high-cost debt or finance ongoing projects.
There is little evidence that this is triggering new investment decisions.
2. Focus on saving NBFCs and why it failed to give the desired result?
The second round was geared to saving NBFCs, whose balance sheets were under severe stress even before the COVID-19 strike.
NBFCs were finding it difficult to roll over the short-term debt they had incurred to finance longer-term projects.
Banks were wary about lending to these NBFCs.
Banks feared that their clients could default in amounts that would bring the viability of these institutions into question.
Those fears were confirmed when Franklin Templeton announced that it was shutting down six of its funds.
Franklin Templeton set off redemption requests across the NBFC sector, as investors rushed to take back their money.
This happened at a time when the ability of these institutions to mobilise funds to meet these demands had been impaired.
Not surprisingly, banks were unwilling to respond when liquidity was infused to target lending to the NBFCs.
3. More intermediaries and credit guarantee by the government
Building on these initial liquidity infusion efforts, the COVID-19 package identified more intermediaries.
These intermediaries include the Small Industries Development Bank of India, the National Bank for Agriculture and Rural Development, and the National Housing Bank.
The intermediaries were expected to refinance lending by the banks to different sections.
To persuade the banks and other intermediaries to take up these offers when the clients they must lend to MSME, street vendors, marginal farmers, etc. are themselves stressed, in some instances the government offered them partial or full credit guarantees in case their clients defaulted.
The government also sought to persuade the RBI to lend directly to NBFCs against their paper.
Why the above 3 measure won’t succeed?
These measures, which are only marginally effective even in the best of times, will not work during this crisis.
Consider a bank or NBFC lending to small business.
With economic activity either at a complete stop or at a fraction of the normal, those who can access credit would either not borrow or only do so to protect themselves and not use the funds either to pay their workers or buy and stock inputs.
Even after the lockdown is lifted, the compression of demand resulting from the loss of employment and incomes would be considerable.
It would be aggravated by the fact that spending by a fiscally conservative government would fall sharply because of a collapse in revenue collections.
Faced with sluggish demand, firms are unlikely to meet past and current payments commitments and help the revival effort, just because they have access to credit.
This would mean that credit flow would actually not revive.
This danger is even greater because the government has been measly with its guarantees.
The government doesn’t want to accumulate even contingent liabilities that do not immediately affect the fiscal deficit.
Increasing the disposable income
Another component of the “liquidity” push is the measures that temporarily increase the disposable income of different sections.
Such measures include advance access to savings like provident fund contributions, lower tax deduction at source, reduced provident fund contributions and moratoriums on debt service payments for a few months.
These measures are expected to provide access to cash inflows and reduce cash outflows, to induce agents to meet overdue payments or just spend to enhance the incomes of others.
These are marginal in scope, if relevant at all.
They have been combined with non-measures like adding on pending payments such as income tax refunds to spike “liquidity provision”.
Way forward
What is needed now is government support in the form of new and additional transfers to people in cash and kind, and measures such as wage subsidies, equity support and spending on employment programmes.
That, as many have acknowledged, would require debt financed spending by the government, with borrowing at low-interest rates from the central bank or a “monetisation” of the deficit.
Unfortunately, obsessed as it is with fiscal conservatism and tax forbearance, the government is unwilling to take that route.
Consider the question “Every stimulus package provokes a debate for its emphasis on either supply-side or the demand side. Examine the provision in the stimulus package announced by the government which focuses on the supply side. What are the issues with supply-side focus in the package?”
Conclusion
Overall, the “transmission” of the supply side push from these monetary policy initiatives for relief and revival is bound to be weak. Given the circumstances, the liquidity push, even if partially successful, would only culminate in eventual default, as borrowers use the debt to just stay afloat in the absence of new revenues.
From UPSC perspective, the following things are important :
Prelims level: Various location mentioned in the article.
Mains level: Paper 2- Implications of dispute for India China relation
The article gives an in-depth analysis of the current border dispute between India and China in Ladakh. But the present dispute follows the pattern. China has been encroaching and gaining control over the disputed territory since the 1980s. And this dispute also fits into that pattern.
China acting strategically in Ladakh
While India has pursued its core national interests in J&K, China’s response was strategic — a shift that may have a lasting imprint on geopolitics.
We have been harping on the “differing perception” theory of the LAC for decades.
But in reality China has been gaining control over a massive “disputed territory” in Eastern Ladakh since the 1980s.
Major Chinese encroachment events
The Chinese first made encroachments into the 45-km long Skakjung pastureland in Demchok-Kuyul sector.
This resulted in local Changpas of Chushul, Tsaga, Nidar, Nyoma, Mud, Dungti, Kuyul, Loma villages gradually losing their winter grazing.
Ladakh’s earlier border lay at Kegu Naro — a day-long march from Dumchele.
Starting from the loss of Nagtsang in 1984, followed by Nakung (1991) and Lungma-Serding (1992), the last bit of Skakjung was lost in 2008.
The PLA followed the nomadic Rebo routes for patrolling in contrast to Indian authorities restricting Rebo movements that led to the massive shrinking of pastureland and border defence.
By the 2000s, the PLA’s focus shifted to desolate, inhospitable Chip Chap which remains inaccessible until end-March.
After mid-May, water streams impede vehicles moving across Shyok, Galwan, and Chang-Chenmo rivers leaving only a month and a half for effective patrolling by the Indian side.
No human beings inhabit here, a 1962 war site, an entry point into Ladakh for the Uyghurs and Tibetans.
Local Ladakhi personnel manned the posts here, but patrolling in the 972 sq km Trig Height area has been lax.
Easier accessibility allowed the PLA to intrude into Chip Chap with impunity during July-August — its regulars usually spent a few hours before crossing back.
But, during the 21-day Depsang stand-off in 2013, when Burtse became a flashpoint, the PLA set up remote camps 18-19 km inside Indian territory.
Chinese soldiers virtually prevented Indian troops from getting access to Rakinala near Daulat Beg-Olde (DBO) where the IAF reactivated the world’s highest landing strips in 2008.
2008 Daulat Beg Oldi Stand-off
This plus the reopening of Fukche and Nyoma airbases perhaps provoked the PLA’s intrusion in Depsang.
So, what is the current stand-off about?
Despite topographical challenges, the BRO has lately fast-tracked the 260 km long Shayok-DBO road construction.
That road construction probably triggered the PLA intrusion in early May sparking the current Galwan stand-off.
Towards the south at Pangong Tso, forces had physical scuffles over area-denial for patrolling at Sirijap on May 5-6 and on May 11.
The situation remains tense at Sirijap’s cliff spurs and also at the Tso, where troops are chasing each other in high-speed patrol boats.
Clearly, intrusions are part of China’s never-ending effort to push Indian troops westward of the Indus and Shyok rivers and reach the 1960 claimed line.
Details of the disputed border in Ladakh
Out of the 857 sq km long border in Ladakh only 368 sq km is the International Border, and the rest of the 489 sq km is the LAC.
The two traditional disputed points included Trig Heights and Demchok.
At eight points, the two sides have differing perceptions.
But lately, China has raised two fresh dispute points at Pangong Tso 83 sq km and at Chumur where it claims 80 sq km.
The old dispute sites were at the end point of Pangong Tso and at Chushul — the 1962 battle-site.
Three-pronged strategy
1) The Sirijap range on the northern bank of the lake remains most contested, from which several cliff spurs jut out — the “finger series” 1 to 8.
India’s LAC claim line is at Finger-8, but the actual position is only up to Finger-4.
The Chinese are asserting further west to claim 83 sq km here.
The PLA has built a 4.5 km long road to prevent patrolling by Indian troops.
The PLA’s road network from here extends to Huangyangtan base located near National Highway G219.
2) Further south in Demchok, China claims some 150 sq km.
The PLA has built massive infrastructure on its side, moved armoured troops into Charding Nalla since 2009.
Tibetan nomads pitch tents on Hemis Monastery’s land throughout 2018-2019.
3)In Chumur, China claims 80 sq km and probably wants a straight border from PT-4925 to PT-5318 to bring Tible Mane (stupa) area under its control.
For India, holding of Chumur is critical for the safety of the Manali-Leh route.
PLA demanded removal of India’s fortified positions in Burtse (2013) and Demchok and Chumur (2014) for its retreat.
What could be the implications for India?
Overall, the pattern shows the PLA’s desperate design to snatch the lake at Lukung through a three-pronged strategy of attacking from Sirijap in the north, Chuchul in the south and through the lake water from middle.
This is the key chokepoint from where the Chinese can cut off Indian access to the entire flank of Chip Chap plains, Aksai Chin in the east and Shayok Valley to the north.
Which means that Indian control is pushed to the west of the Shyok river and south of the Indus river, forcing India to accept both rivers as natural boundaries.
And once China gets control of the southern side of the Karakoram it can easily approach Siachen Glacier from the Depsang corridor.
And meet at Tashkurgan junction from where the CPEC crosses into Gilgit-Baltistan.
That would be disastrous for Indian defence, leaving the strategic Nubra vulnerable, possibly impacting even India’s hold over Siachen.
China’s access to Changla-pass through Lukung and Tangtse would threaten the entire Indus Valley.
It is quite possible that China is eyeing the waters of the Shyok, Galwan and Chang-Chenmo rivers, to divert them to the arid Aksai Chin and its Ali region.
Consider the question “What could be the strategic and security implications of China’s claim in Pangong Tso region for India?”
Conclusion
India should resist the Chinese design which could have disastrous consequences for India’s defence and strategic interests. This should involve diplomatic channels rather than skirmishes on the borders.
From UPSC perspective, the following things are important :
Prelims level: Regions of Afghanistan
Mains level: Paper 2- Implications of the return of Taliban for India.
The US-Taliban peace deal signals growing heft of the Taliban in Afghanistan. Pashtuns constitute nearly 42 per cent population of Afghanistan and the Taliban is essentially a Pashtun formation. Also, remember Pakistan: just like the kid who is always up to something. The ethnic fragmentation and Pakistan’s meddling is a recipe for perpetual conflict zone in the region.
The question of India’s engagement with Taliban
Taliban’s effective control of territory in Afghanistan expanded in recent years.
This led to the question of India’s direct dialogue with the Taliban gain some relevance.
It has acquired some immediacy after the US announced plans for a significant draw down of its forces from Afghanistan and signed a peace deal with the Taliban earlier this year.
Also, recently the US Special Envoy for Afghanistan, Zalmay Khalilzad, called on India to open a political conversation with the Taliban.
The interest was further amplified by a signal from the Taliban that it is eager for a productive relationship with India.
So, what should India do?
Those calling for direct engagement with the Taliban say that Delhi can’t ignore such an important force in Afghan politics.
Opponents say there is no reason for Delhi to join the international stampede to embrace the Taliban.
If and when the Taliban becomes a peaceful entity and joins the quest for a political settlement with Kabul, they argue, Delhi should have no objection to direct talks.
So, opening a dialogue with the Taliban is a tactical issue focused on when, how and on what terms.
Pashtun question and India’s enduring interest in Afghanistan
The Taliban remains an important sub-set of the larger and more strategic Pashtun question.
The Pashtun question holds the key to India’s enduring interest in Afghanistan: Promoting a peaceful, independent and a sovereign Afghanistan that is not a subaltern to the Pakistan army.
2 Basic issues that will define the Pashtun question
1. Forming unity among multiple ethnic groups
First is the problem of reconciling the interests of multiple ethnic groups in Afghanistan.
The Pashtuns constitute nearly 42 per cent of the population.
The sizeable Afghan minorities include 27 per cent Tajiks, 9 per cent each of Hazaras and Uzbeks.
Irrespective of the nature of the regimes in Kabul over the last four decades— constructing a stable internal balance has been hard.
That problem will acquire a new intensity as the Taliban stakes claim for a dominant role in Kabul.
But has the Taliban learnt to live in peace with the minorities?
The Taliban, an essentially Pashtun formation, had brutally crushed the minorities during its brief rule in the late 1990s.
There are some indications that the Taliban is now reaching out to the minorities but it is some distance away from winning their trust.
2. Pakistan’s meddling in Afghanistan
The problem of constructing internal balance in Afghanistan has been complicated by Pakistan’s meddling.
Pakistan would like to have the kind of hegemony that the British Raj exercised over Afghanistan.
Neither can Pakistan replicate that dominance nor are the Afghans willing concede it to the Pakistan army.
What about the Pashtun minority in Pakistan?
There are more than twice as many Pashtuns living in Pakistan than in Afghanistan.
The Pashtun population is estimated to be around 15 million in Afghanistan and 35 million in Pakistan.
And as mentioned above, the Taliban is essentially Pashtun formation.
Although Pashtun separatism has long ceased to be a force in Pakistan, Islamabad finds the Pashtun question re-emerge in a different form.
Pakistan can’t really bet that the Taliban will not put Pashtun nationalism above the interests of the Pakistani state.
The Taliban, for example, has never endorsed the Durand Line as the legitimate border with Pakistan.
It is by no means clear if Pakistan’s construction of the Taliban as a conservative religious force has obliterated the group’s ethnic character.
Sufferings of Pakistani Pashtun People: Islamabad’s quest for control over Afghanistan over the last four decades has heaped extraordinary suffering on the Pashtun people on Pakistan’s side of the Durand Line.
As the Pashtun Tahafuz Movement seeks a peaceful redressal of its demands for basic human rights, Pakistan has unleashed massive repression.
India’s importance in Afghanistan
That the Taliban wants to talk to India and Pakistan brands Pashtun leaders as Indian agents only underlines Delhi’s enduring salience in Afghanistan.
Consider the question “After the US-Taliban peace deal, India is forced with a difficult prospect of opening the dialogue with the Taliban. Examine the implications of the return of Taliban in Afghanistan for India. What is your opinion on India starting the dialogue with Afghanistan?”
Conclusion
Pakistan’s expansive military and political investments in Afghanistan have not really resolved Islamabad’s security challenges on its western frontier. If an Afghan triumph eludes Pakistan, Delhi can’t escape the complex geopolitics of the Pashtun lands.
From UPSC perspective, the following things are important :
Prelims level: CoAST India
Mains level: Not Much
India Observatory has come up with a GIS-enabled dashboard called CoAST India to monitor migrants in India.
Here, UPSC may create an illusion on:
India Observatory – open-source database (misleading name): It may be asked in relation to some ISRO project.
CoAST India – COVID related info (again misleading): UPSC may ask it in context to Cyclone Warning Systems.
CoAST India
The platform is a map reflecting the movement of migrants in real-time on their long journeys, often on foot, along with facilities and relief organisations on their routes.
It is a collaboration with Anand-based Forest Ecological Security (FES) as its main nodal point.
It draws information from 55 organisations on the ground, mostly in villages, and aims to make such data available so that it would enable governments and small local civil society groups to be of assistance.
The map matches time and spatial data, on administrative facilities in the area, transportation and healthcare facilities of an area and summaries, on the fly, in real-time of people passing by.
Features of the portal
Four elements are sought to be brought together in this portal:
Location of migrants and vulnerable people, their specific needs,
Location of key infrastructure on the way which can double up as a rest-centre, or
Quarantine space and location of relief and
Rehabilitation providing NGOs and civil society organisations
About India Observatory
The Foundation for Ecological Security (FES), an NGO working on conserving natural resources at the grassroots, has brought together a unique ecosystem of tools – open data platform India Observatory – to help understand the status of local-level resources and facilitate the action plans for conserving them.
The data made available on India Observatory platform has been pooled from various sources and dates as far back as the 1960s.
India Observatory was set up in December 2019, with FES focused on ecological issues about forests, water bodies, conservation, etc. that needed “a bird’s eye view or a satellite’s vision”.
It is a research unit at the London School of Economics and Political Science (LSE).
