Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Issues with vaccination strategy
The article highlights the issues with the new vaccine strategy adopted by the government.
Revamped vaccine strategy
- With the second Covid-19 wave reaching catastrophic proportions, the Government of India has acted by unveiling a completely revamped vaccine strategy.
- Two key elements are the hallmark of this new strategy, which will be implemented from May 1.
- First, the vaccination drive has now been extended to the entire adult population, namely, to those above 18 years.
- Second, vaccine manufacturers have been given the freedom to sell 50% of their vaccine production to State governments and private hospitals.
- A third element of the vaccine strategy, which was not announced formally, is a grant of ₹45 billion to the two vaccine manufacturers, the Serum Institute of India (SII) and Bharat Biotech, to boost their capacities.
Issues with the new vaccine strategy
1) Control over the market for vaccine
- The central government has given up its control over the market for vaccines, a key feature of the vaccine roll-out plans thus far.
- This issue assumes further significance since the Government of India is well aware about the significance of vaccinating every citizen in the country; “none of us will be safe until everyone is safe”.
- It is, therefore, vitally important that public health authorities in the country take an objective view of the realities of the country before adopting strategies for vaccine availability.
2) Vaccine export
- The phased roll-out of the government’s ambitious vaccination drive, beginning with health-care and frontline workers in January was in sync with the availability of vaccines in the country.
- But, given that India too saw a degree of “vaccine-scepticism”, the Government of India found itself in a situation where it could promise exports of vaccines to 95 countries, mostly in Africa and Asia.
- As of April 26, these countries have received more than 66.4 million doses of vaccines from India.
- Until now, nearly 142 million vaccine doses have been administered in the country, the third highest in the world.
- However, in terms of population share, less than 2% has received both vaccine doses, while less than 9% has received one dose.
- But there is one worrying facet, which is that a demand-supply mismatch has begun to appear as the coverage of the vaccine-eligible population expanded.
- The largest supplier, SII, gave two explanations for its inability to meet its commitments.
- The first was that the United States Government had restricted exports of vaccine culture and other essential materials.
- Second, the company complained that it lacked the financial capacity to expand its production, requesting a grant of ₹30 billion from the government.
3) Onus on the States
- Central government have allowed vaccine producers to sell 50% of their production directly to State governments and private hospitals.
- The central government would continue to support vaccination for people above 45 years, and health-care workers and frontline workers.
- The new strategy shifts the onus onto the State governments, which have to take decisions regarding free vaccination for people above 18 years.
- The government has not fixed the vaccine prices and has allowed the producers to pre-declare the prices they would charge from the State governments and private hospitals, a sharp departure from the extant strategy.
- New policy fragments the market into three layers namely, central government procurement, State government procurement and the private hospitals.
- This layering of the market would allow the producers to charge high prices from the State governments and private hospitals.
- The new strategy would shift the burden of vaccination of the young population, namely, those between 18-44 years, entirely on the State governments.
- This implies that the vaccination of a significant section of the population depends on the financial health of each State government, resulting in inequitable access to vaccines across States.
4) Public money given for expanding production capacity
- In view of the advance of ₹45 billion made by the Government of India to the two vaccine producers in India for expanding their production capacities decision to deregulate the vaccine market raises serious questions.
- This question is more pertinent in India, where access to affordable vaccines is critical for ensuring “vaccination for all”.
Way forward
- Rather than allowing duopoly in the vaccine market, the government should have ensured a competitive market for vaccines.
- One positive step that the government has taken in this direction is to increase production of Bharat Biotech’s vaccine through the involvement of three public sector undertakings, including Haffkine Institute.
- There is a need for more open licensing of this vaccine to scale up production.
Conclusion
There can be no alternative to vaccination for all if we want to overcome the Covid and to ensure that government needs to rethink its new strategy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: BEPS
Mains level: Paper 3- Global minimum tax
The article highlights the issue of race among countries to offer low corporate taxes to attract global financial capital and its implications.
What factors contributed to low corporate tax
- When the Soviet Bloc collapsed in 1990, nations in east Europe were badly hit and needed capital infusion to overcome their economic woes.
- To attract global capital, they cut their tax rates sharply. This resulted in a ‘race to the bottom’.
- Global financial capital which is highly mobile has effectively used tax havens and shell companies to shift profits and capital across the globe.
- This mobility has enabled it to extract concessions from countries by making them compete with each other to match the concessions given by another — that is the ‘race to the bottom’.
- Nations in Europe were forced to cut their tax rates one after the other to not only attract capital but also to prevent capital from leaving their shores.
- Also, any country facing economic adversity can cut its tax rates to attract capital and force others to follow suit.
- India has also cut its tax rates since the 1990s.
- Most recently in 2019 the corporation tax rate was cut drastically to match those prevailing in Southeast Asia.
Implications of lower corporate tax rate
1) Shortage of resources
- The race to the bottom had global implications.
- Nations became short of resources and cut back expenditures on public services and encouraged privatisation.
- The developing countries followed suit even though private markets do not cater to the poor.
- Thus, disparities increased within nations.
2) Base Erosion and Profit Shifting
- The world experienced Base Erosion Profit Shifting (BEPS).
- Namely, companies shifted their profits to low tax jurisdictions, especially, the tax havens.
- For instance, many of the most profitable companies like Google and Facebook are accused of shifting their profits to Ireland and other tax havens and paying little tax.
- EU has levied fines on Google and Apple for such practices.
- Since all the OECD countries have suffered due to cuts in tax rates and BEPS, initiatives have been taken to check these practices.
- But they will not succeed unless there is agreement among all the countries.
3) Regressive tax structure
- Another implication of the reductions in direct tax rates has been that governments have increasingly depended on the regressive indirect taxes for revenue generation.
- Value-Added Tax and Goods and Services Tax have been increasingly used to get more revenues.
- This impacts the less well-off proportionately more and is inflationary.
- Direct taxes tend to lower the post-tax income inequality.
- The rising inequalities result in shortage of demand in the economy and to its slowing down which then requires more investment and that calls for more concessions to capital.
Call for Global minimum tax rate
- It is against this backdrop that United States Secretary of the Treasury Janet L. Yellen’s has proposed a global minimum tax rate.
- But, without global coordination, corporation tax rates cannot be raised.
- The U.S. is crucial to this coordination.
- There will also have to be cooperation among countries to tackle the lure of the tax havens by enacting suitable global policies.
Consider the question “What factors contributed to the race to bottom on the corporate taxes among the countries? What are its implications? Will the global minimum tax rate be able to deal with it?”
Conclusion
The impact of all this will be far-reaching impacting inequalities, provision of public services and reduction of flight of capital from developing countries such as India and that will impact poverty.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- India as third highest military spender
What the SIPRI database says
- India was the third largest military spender in the world in 2020, behind only the US and China.
- The US accounted for 39 per cent of the money spent on military globally, China accounted for 13 per cent, and India accounted for 3.7 per cent of the globe’s share.
- The US spent a total of $778 billion in 2020, China spent $252 billion and India’s military expenditure was $72.9 billion.
- The United States’ military spending was 3.7 per cent of its GDP while the corresponding numbers for China and India were 1.7 per cent and 2.9 per cent respectively.
- The other top spenders included Russia with $61.7 billion, the UK at $59.2 billion, Saudi Arabia at $57.5 billion, followed by Germany and France at just under $53 billion each.
Increase in spending in the year of pandemic
- SIPRI said that the total “global military expenditure rose to $1981 billion last year, an increase of 2.6 per cent in real terms from 2019.
- 2.6 per cent increase in world military spending came in a year” when the global GDP shrank by 4.4 per cent largely due to the economic impacts of the Covid-19 pandemic.
- Military spending as a share of GDP—the military burden—reached a global average of 2.4 per cent in 2020, which is the biggest year-on-year rise in the military burden since the global financial and economic crisis in 2009.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Herd immunity
Mains level: Paper 2- Herd immunity and issues related to it
What is herd immunity
- The herd immunity concept is based on lowering the number of susceptible individuals.
- If sufficient individuals in the population are immune either through vaccination or a prior exposure, then the number of susceptible individuals drops.
- For example, if the immune population is 70%, then the susceptible population is 30%.
Does herd immunity really protect from subsequent waves?
- The number of daily cases depends on three factors: The number of infectious people in the population, the number of susceptible individuals, and the rate of transmission of the virus.
- The rate of transmission is dependent on the nature of the virus and the extent of contact between individuals.
- So, if the rate of transmission increases due to change in social behaviour and increased contact then even with a large percentage of the immune population, a significant number of daily cases can result.
- The “herd immunity” number is not a static number but it changes depending on the rate of transmission of the virus and the extent of virus present.
Estimating exposures in metro cities
- Serosurveys indicated that Covid had touched 56% of population in Delhi by January; 75% in some slums Mumbai in November, and about 30% in Bengaluru in November.
- The population touched by Covid can also be estimated by the Infection Fatality Rate (IFR).
- This is the total number of deaths divided by the total people infected. In India, the estimate is 0.08%.
- So this number can be used to back-calculate the number of infections based on the number of deaths in the different cities.
- The table given below shows the number of people exposed to Covid in some metros until January 31 using the method above.
What are the reasons behind the recent surge
- The reasons behind the recent surge are not fully understood.
- The one factor that is not in doubt, however, is that interaction and contact with the population has increased since February.
- Such increased contact increased the virus in circulation and led to increased cases in the susceptible population.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Factors to consider in finding solution to conflicts in Afghanistan and Myanmar
The article highlights the inherent difficulty in finding a solution to the two conflicts raging on in India’s neigbourhood.
Tale of two conflicts in neighbourhood
- Efforts to end two major conflicts in India’s neighbourhood have become intense.
- To the west, a peace summit on Afghanistan, seeking to end decades of conflict there, was also scheduled to take place in Istanbul over the weekend.
- To the east, the Association of Southeast Asian Nations (ASEAN) has produced a diplomatic opening with Myanmar’s military leadership.
- Afghan conflict go back to the late 1970s; since then we have seen different phases of the conflict.
- Although the crisis in Myanmar appears recent, the tension between civil-military relations is not new.
- Back in 1988, the army annulled the huge mandate won by Aung San Suu Kyi and unleashed massive repression.
3 Common Themes in the effort at peace and reconciliation
1) Ending violence
- The first is about ending violence.
- In Afghanistan it has been near impossible to get a resurgent Taliban to agree to stop its attacks on government forces or the civilian population.
- The ASEAN initiative in Myanmar calls for an immediate cessation of violence and utmost restraint from all sides.
- The opposition demanding restoration of democracy might find this rather ironic, since it is the army that is employing violence and has shown scant restraint.
2) Dialogue among all parties
- The second theme in the ASEAN initiative — “constructive dialogue among all parties” to “seek a peaceful solution” — is also common to all peace processes.
- The Taliban found all kinds of excuses to delay a dialogue with the Kabul government that it always saw as illegitimate. So far, it has avoided one.
- In Myanmar, the army might be ready to engage the opposition in a prolonged dialogue and defuse international pressure; but it will be hard for the victims of the coup to accept a dialogue on the army’s terms.
3) Third-party mediator
- The Afghan conflict has long been internationalised.
- All major powers, including regional actors and neighbours, have acquired stakes in the way the Afghan conflict is resolved.
- This unfortunately makes the construction of an internal settlement that much harder.
- In Myanmar, the ASEAN has set the ball rolling by agreeing that a special envoy will be traveling to the region and will engage with all parties to the conflict.
Cost-benefit in diplomacy
- The US is hoping that the Taliban will moderate some of its hardline positions given its need for significant international economic assistance for reconstruction, political legitimacy.
- In Myanmar, too, the international community will hope the military would want to avoid the risks of political isolation and economic punishment.
- But how the Taliban and the Myanmar army calculate these costs and benefits could be very different.
- Both have long experience of surviving external pressure and enduring sanctions.
Conclusion
Few civil wars have seen the kind of massive external effort to change the internal dynamics as in Afghanistan; but to no avail. In Myanmar, it is not clear how far the international community might go. The prospects for positive change in Afghanistan and Myanmar, then, do not look too bright in the near term.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Disaster Management Act 2005
Mains level: Paper 2- Governance issues during pandemic
Order under Disaster Management Act 2015
- Invoking the Disaster Management Act, the Centre ordered States that all liquid oxygen shall be made available to the government and will be used for medical purposes only.
- The order said that under section 10(2)(I) and section 65 of the DM Act, States had to ensure that “liquid oxygen is not allowed for any non medical purpose”
- The order was passed after the review of oxygen supply situation in the country.
Dealing with the shortage
- On April 22, Centre issued order under the DM Act, making the district magistrates and senior superintendent of police personally liable to allow unhindered inter-State movement of vehicles carrying medical oxygen.
- Despite MHA’s orders and letters, States continued to flag shortage of oxygen supply.
- Medical oxygen to States are being provided as per daily quota decided by an empowered group of officers in central ministries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: What constitute M3
Mains level: Paper 3- Increase in currency with public
Increase in currency with the public
- During the fortnight ended April 9, currency with the public jumped by Rs 30,191 crore to hit a new high of Rs 27,87,941 crore.
- In the six-week period between February 27 and April 9, currency with the public rose by Rs 52,928 crore, show RBI data.
- Experts said the increase in currency with the public is on account of the fear of imposition of lockdowns by state or central governments.
How currency with public is arrived at
- According to the RBI, currency with the public is arrived at after deducting the cash with banks from the total currency in circulation.
- Currency in circulation, which includes notes in circulation, rupee coins, and small coins, refers to cash or currency within a country that is physically used to conduct transactions between consumers and businesses.
- It effectively means the currency that individuals across the country hold with themselves.
M3 has gone up
- Money supply in the economy – or M3 – has gone up over the last couple of months.
- M3, which includes currency with public, current deposits, savings deposits, and fixed deposits, has increased by 11.3 per cent, or Rs 19.17 lakh crore, to a new high of Rs 189.07 lakh crore as on April 9, 2021.
B2BASICS
Measures of Money supply
- Reserve Money (M0): It is also known as High-Powered Money, monetary base, base money etc.
M0 = Currency in Circulation + Bankers’ Deposits with RBI + Other deposits with RBI
It is the monetary base of economy.
- Narrow Money (M1):
M1 = Currency with public + Demand deposits with the Banking system (current account, saving account) + Other deposits with RBI
- M2 = M1 + Savings deposits of post office savings banks
- Broad Money (M3)
M3 = M1 + Time deposits with the banking system
- M4 = M3 + All deposits with post office savings banks
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