Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Do you agree with the view that coordination at global level was lacking in fight against Covid-19?
The article discusses the three stages involved in successfully dealing with the pandemic. In the next part, it goes on to explain the factors that determine the success or failure of the governments. In the last week, we read about the success story of Kerala and underlying reasons. This article is also written on similar lines.
Stages in the pandemic response
- Disease outbreaks, even global pandemics, are scarcely new. The playbook for dealing with them, therefore, is well understood and has been honed by practices and lessons gleaned from hard-fought battles.
- A first stage is an early clear-eyed recognition of the incoming threat, and, in the case of COVID-19 at least, requires the unpalatable decision to lock down society.
- Ideally, this is done with full consideration of how to support the most vulnerable members of society, especially in a country such as India, where so many survive hand-to-mouth.
- This is a phase aimed at buying time, of flattening the epidemic curve, so that public health facilities are not overwhelmed.
- And, for using this time, paid for by collective sacrifice, to secure the personal protective equipment (PPE) and medical supplies necessary to save lives.
- The second phase of the pandemic response is slowly to ease the burden on the economy by permitting a measured return of business activity so that livelihoods and supply chains can be restored.
- This stage can only be safely executed if accompanied by a war-footing expansion of testing capacity so that new infections can be identified and isolated at once, allowing contact tracing to be implemented by masses trained to do this crucial and painstaking work in communities across the country.
- The final stage, which for COVID-19 seems a lifetime away, is a mass vaccination programme and then the full rebuilding of economic and social life.
- None of this is easy, but, like an examination in a dreaded subject, one’s only hope is early and persistent preparation and, at crunch time, remembering the lessons learned.
The above-mentioned stages are sort of a template that seems to have gained acceptance for dealing with the pandemic. A question based on it, like “What are the various stages involved in government’s response to deal with a pandemic?”
Following three factors make the difference between successful and failed response
1. Leadership problems in global politics
- The defensive finger-pointing, opportunistic politicking and xenophobic posturing are shown by some leaders amid pandemic.
- This is not a crisis that can be tackled without robust and multidimensional international cooperation between nations.
- We are watching in real-time the benefits of intellectual collaboration that does not stop at national borders.
- From the epidemiologists to the medical community identifying more effective treatments, to the research scientists racing to find a vaccine, we are benefiting from collaboration.
- But the nationalistic turn in global politics over the past two decades has reduced investment in and undermined the legitimacy of the very institutions that facilitate international partnership at the very time they are needed most.
- Prime Minister Narendra Modi did well to convene the leaders of the South Asian Association for Regional Cooperation (SAARC) nations in mid-March to discuss the possibility of a regional response.
- But that video-conference call also highlighted that there have been no summit-level meetings of SAARC since 2014.
- Similarly, United States President Donald Trump demanded that the U.S. end funding of the World Health Organization (WHO).
- This not only endangers American lives by cutting off his own administration’s access to vital international data.
- But also directly affects India which receives significant funding and expertise from WHO with ~10% of its overall WHO financing in 2019 coming directly from the U.S.
2. The whole-of-the-government strategy
- Pandemic response requires a whole-of-government strategy, for which political will and legitimate leadership are vital to convene and maintain.
- Germany and Kerala provide two powerful though different examples of this in action.
- In Germany, in spite of a high level of federalism that gives its States (Länder) a lot of power, Chancellor Angela Merkel’s ability to mobilise the entire system has allowed Germany to emerge as a success story in Europe.
- In Kerala, State Chief Minister Pinarayi Vijayan convened a State response team at the earliest possible moment and has provided the full weight of his office in support of a coordinated public health strategy that has been accepted by the State’s citizens who have learned to trust the government in such situations.
- Yet these two examples stand out in part for how rare they are.
- Consider again the cautionary tale of the U.S. where some State Governors have yet to issue stay-at-home orders.
3. The robust public health system
- We are seeing first hand the consequences of starving public health systems of necessary funds and resources.
- The comparative advantage of the private sector is efficiency; the need of the hour in pandemic response is redundancy, or, more precisely, excess capacity.
- Most hospitals do not need invasive ventilators normally, just as they do not need vast stocks of PPE and extra intensive care units beds, but these are essential goods right now as we brace ourselves for a flood of sick patients into hospitals.
- Watching the advanced health-care system of northern Italy buckle under the unimaginable pressures to which it was exposed over the past six weeks should be a cautionary tale for all countries that thought turning health care over to private actors was responsible governance. It is not.
- Again, consider Kerala, which has consistently ranked at the top of State rankings for health expenditures.
- Kerala has, a well-functioning local public health system capable of implementing the test-isolate-trace protocols critical for fighting COVID-19.
Conclusion
With the central role of leadership and governance underlined in the successful dealing with the pandemic, leadership across the world need to come together to coordinate at all levels in dealing with the problems that are not bound by any border.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 10 % condition for FDI.
Mains level: Paper 3-What are the implications of two dominant players in IT and telecom respectively coming together for data privacy and net neutrality?
Facebook’s decision to acquire a 9.99 per cent stake in the parent company of Reliance Jio could have several implications. It could impact retail stores which we are trying hard to protect by restricting FDI in retail. Second, it could have implications for net neutrality. Third, it would have implications for data privacy.
Implications for the country’s retail landscape
- Recently, Reliance Industries and Facebook announced that the California-based social media giant will acquire a 9.99 per cent stake in Jio Platforms limited, the holding company of Reliance Jio, for $5.7 billion (Rs 43,574 crore).
- At its core, the idea is to create an ecosystem around JioMart, enabling customers to access the local Kirana stores using WhatsApp, combining both offline and online retail.
- This ability to connect millions of local businesses with end consumers, and provide them a seamless online transaction experience could radically alter the country’s retail landscape.
- Both firms have stressed on the new opportunities for businesses of all sizes, and especially for the millions of small businesses across the country.
- With the ongoing lockdown in the country only reaffirming the importance of the local Kirana store — major online delivery channels have struggled to reach consumers during this period — integration is bound to be an enticing proposition.
Opportunities for cross-selling
- A scaling up of this model will also provide opportunities for cross-selling — significantly increasing the upside for firms and increasing the valuation of its retail arms.
- At present, though, the reach of WhatsApp Pay is limited — just over a million Indians are reported to currently have access to the pay feature.
- But this sort of model is popular in other Asian economies such as China, Korea and Japan where apps like WeChat have a wide range of product offerings, which induces consumer stickiness.
- This arrangement also allows Jio to greatly expand its product offering to its more than 370 million-odd subscriber base.
- The deal may also open up the entire WhatsApp consumer base of around 400 million — to Reliance, including those on other telecom platforms such as Airtel and Vodafone.
The following concern could arise from the deal and the UPSC can frame a question based on these concern, like ” Recently a global IT giant acquired a significant stake in an Indian telecom giant. Discuss the various issues which could arise from coming together of such dominant players.”
What are the concerns in such deals?
- Implications for consumer welfare: Given the dominant market position of the players, concerns over the market structure and its implications for consumer welfare are bound to arise.
- Questions over net neutrality: The tie-up also raises questions on net neutrality with the possibility of preferential treatment being granted.
- Data privacy issue: Third, given the data privacy issues highlighted in the past by the Cambridge Analytica episode, for instance, there are apprehensions over the enormous amounts of data that will be collected by these entities.
- This concern gains significance especially when India still does not have a personal data protection law.
Conclusion
Whenever two dominant players of respective fields come together, it gives rise to concern. The government must keep watch on the implications and how such a deal plays out in the future. If the concerns raised turn out to come true, maybe India should come out with the antitrust law of its own.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: WTO benchmark, Brent crude.
Mains level: Paper 3- What are the implications of oil price fluctuations for Indian economy?
This article discusses the factors that contributed to oil prices falling below zero, and where the prices are headed in the near future. There are suggestions for India to make the most of this oil crisis. In the last week, we covered the same topic but its focus was on increasing the storage capacity. This article also covers the geopolitical implications of oil prices remaining low for long.
What negative price of the benchmark US crude WTI mean?
- The collapse in the price of WTI reflected a technical peculiarity of futures trading.
- Paper traders would normally have had two options- 1) To let their contract expire and take physical delivery 2) To pass on the contract to someone else.
- The US was running out of crude oil storage capacity and traders knew they could not “risk” taking delivery.
- There was no physical space to hold the product.
- So their only option was to sell the contract.
- On the last day before the contracts expired, the traders in desperation “paid” to offload their risk.
- There was no physical transaction of oil.
- The current future price is back in positive territory.
The world running out of oil storage capacity
- The world and not just the US was fast running out of storage capacity.
- Production in excess of demand: This was because oil production was way in excess of demand.
- The latter had crashed by almost 30 million barrels a day or mbd (the equivalent of OPEC’s entire production) because of the COVID-induced lockdown of transportation and industry.
- The price of the other crude benchmarks had also dropped but not the same extent — the North Sea Brent fell, for instance, to $15/bbl, a level not seen since 1999.
- The reason was that unlike the WTI, which is traded in the US and therefore dependent on US inland storage capacity, the other crudes have access to seaborne storage (oil tankers).
- This latter capacity is, however, fast filling up and the price of these crudes may also hit historic lows.
So, where the oil prices are headed?
- Oil prices will be volatile downwards until demand picks up and/or supply is further cut.
- Demand will depend on the curve of post-COVID economic recovery.
- Supply will rest on the outcome of further discussions amongst OPEC, Russia and, ironically, the US.
- OPEC and Russia had earlier this month agreed to cut production by 10 mbd.
- But clearly, this is not enough and further cutbacks have to be agreed on.
- Whatever the scenario for economic recovery or supply constraints, there is a slim likelihood of crude oil prices reaching the average price levels of 2019 ($64) over the next 12 months or so.
- More likely, they will be volatile downwards with $50 as the ceiling and with no floor.
- This “low for longer” price outlook raises two issues for India’s policy-makers.
As India depends on imports for over 80% of its oil requirements, oil prices have wide implications for the financial health of India. Safe oil supply lines are essential for its energy security. Both these points are important from the UPSC point of view. Following two points deal with these two factors.
Two issues that India’s policy-makers need to consider-
1. Disruption of oil supply lines and problems of diaspora
- Every oil producer with no exception will face a budgetary crisis.
- Some, like Saudi Arabia, the UAE and Kuwait will finance their social and economic commitments by cutting costs, increasing debt and drawing down on their sovereign reserves.
- Others like Iran, Iraq, Nigeria and Venezuela, who have no such cushion and whose credit ratings are junk, will confront deepening political and social crises.
- Economic plan: India should build into its economic plans the possibility that its traditional oil supply routes could get disrupted.
- And that its diaspora, whose remittances are of significance, could face disproportionate hardship as these economies retrench.
India has the largest diaspora in the world and sends as much as $80 billion back home as remittances. So, any impact on diaspora in oil economies has implication for India from this perspective as well.
2. Empower the oil traders and remove bureaucratic control
- On the day prices hit negative territory, it is unclear whether the trading experts in our oil PSUs had the flexibility to even contemplate “buying” the WTI futures contract for June, taking delivery, shipping it to India and storing it someplace.
- It is also not clear whether they had the authority to lock in low prices through forward contracts.
- Storage capacity and WTI quality mismatch: There is a shortage of storage capacity in India and a mismatch between the quality of WTI and the requirements of our refineries.
- India cannot leverage the current market conditions of low and volatile oil prices to our national advantage unless we empower the traders and leave them unencumbered from bureaucratic control.
- Most importantly, protect them from the three Cs ( CVC, CBI and CAG) in case their trade goes awry.
Conclusion
This oil market crisis could be made to work to our advantage. We must not waste this opportunity. There is a need to remove the bureaucratic hurdles in our PSUs, increasing storage capacity and sound financial planning by the government to make the most of this oil crisis.
Back2Basics: What is WTI and Brent crude benchmark?
- West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing.
- This grade is described as light crude oil because of its relatively low density, and sweet because of its low sulfur content.
Brent Crude
- Brent Crude is a trading classification of sweet light crude oil that serves as one of the two main benchmark prices for purchases of oil worldwide.
- This grade is described as light because of its relatively low density, and sweet because of its low sulphur content.
Futures contract
- In finance, a futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other.
- The asset transacted is usually a commodity or financial instrument.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Various article to ensure the independence of judiciary.
Mains level: Paper 2- Do you agree with the view that post-retirement appointment of the judges undermine the confidence in judiciary? Give suggestions to deal with the problem.
The article discusses the issue of retired judges accepting government post after retirement. Such appointments have several implications. It undermines confidence in the independence of the judiciary. It also influence pre-retirement judgements delivered by the judges. The article also offers some solutions to this problem.
The provisions in the Constitution to secure the independence of the judiciary
- The Constitution has been conceived to provide a pride of place to the judiciary.
- Constitutional appointees to the Supreme Court have been guaranteed several rights in order to secure their independence.
- Salary: The salaries of judges and their age of retirement are all guaranteed in order to secure their independence.
- Removal: They cannot be easily removed except by way of impeachment under Articles 124(4) and 217(1)(b).
- They have the power to review legislation and strike it down.
- They can also question the acts of the executive.
- All this makes it clear that the framers of the Constitution envisaged an unambitious judiciary for which the only guiding values were the provisions of the Constitution.
Issue of judges accepting post-retirement jobs
- It was thought that on retirement from high constitutional office, a judge would lead a retired life.
- Nobody ever expected them to accept plum posts.
- But the clear demarcation between the judiciary and executive got blurred as many judges over the years began to accept posts offered by the government.
- A few years ago, a former Chief Justice of India (CJI) was made a Governor by the ruling party.
- Now, we have the case of a former CJI, Ranjan Gogoi, being nominated by the President to the Rajya Sabha and taking oath as Member of Parliament.
- Pre-retirement judgements under cloud: During his tenure as CJI, Justice Gogoi presided over important cases such as Ayodhya and Rafale where all the decisions went in favour of the government.
- This gave rise to the impression that his nomination was a reward for these ‘favours’.
- Thus his appointment — and that too within a few months of his retirement — not only raised eyebrows but came in for severe condemnation from varied quarters.
- Loss of confidence: People are fast losing confidence in the so-called independent judiciary.
- In 2013 Arun Jaitley, who was also a senior Advocate, ironically said that legislature was creating post-retirement avenues for Judges in every legislation.
- He also said that post-retirement job influences pre-retirement judgements.
- It is in this context that the appointment of Mr Gogoi has to be perceived.
Did Constitution makers intend to nominate Judges?
- Mr Gogoi’s view that membership of the Rajya Sabha was not a job but a service, and that once the President nominated him the call of duty required him to accept it, only created the impression that the judiciary is pliant.
- A bare reading of Article 80(3) of the Constitution only envisages the President to nominate “persons having special knowledge in literature, science, art and social service” as members to the Rajya Sabha.
- It is difficult to imagine that the Constitution-makers had in mind a retired CJI when framing this provision.
A direct question based on the issue can be asked, like “What are the implications of post-retirement appointments of the judges? Give suggestions to deal with this problem”. So, take note of the various issues and their solutions discussed here.
Way forward
- If post-retirement appointments are going to undermine confidence in the judiciary and in a constitutional democracy.
- Enact law or amend Constitution: It is time to have a law in place either by way of a constitutional amendment or a parliamentary enactment barring such appointments.
- This is the only way to secure the confidence of the people and prevent post-retirement appointments.
- Increase pension: Judges can be compensated by being given their last drawn salary as a pension.
- Retirement age can be increased: Also, the age of retirement for judges can be increased by a year or two.
- This will undo the damage caused by post-retirement jobs.
Conclusion
The appointments of persons who have held constitutional office will undermine the very constitutional values of impartiality in the dispensation of justice. So, enacting a law to bar such appointments or amendment to the Constitution would be the step in the right direction.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Reproduction number-with respect to pandemic.
Mains level: Paper 3- What was the extent of damage caused by the Covid-19 to the India economy?
The theme of the article is the restarting of the Indian economy. Striking the right balance between livelihood and the spread of the virus is important for India. While India has been doing well on the curbing of the spread of the virus, its economy remains in the complete shutdown. So, we must restart our economy and this article offers some suggestions to do so and some trends that our economy is showing are discussed here.
Striking the balance between the economy and the spread of the virus
- One critical problem is striking the right balance between curbing the spread of the virus and keeping the economy functioning.
- We cannot have the poor, the labourers and the migrants bear the brunt of the effort to contain the spread of the virus.
- And nor do we want to weaken the foundations of the economy so much that we emerge from the pandemic onto an economic wasteland.
- The choice between lives and economy is also a choice between lives and lives.
Appreciation of India’s effort to curb the virus
- India’s effort to curb the spread of the virus has received appreciation — not just the state of Kerala, which has got accolades from around the world, but the country as a whole.
- The incidence of COVID-19 remains low in India.
- Of every 10 million people, there are as yet 5 lives lost in India.
- Comparison with the world: This is vastly lower, not just compared to Belgium, which tops the list with 5,180 fatalities for every 10 million people, but many other nations, such as the United States with 1,370 fatalities, Spain with 4,550, Italy with 4,080 and the UK with 2,550 fatalities.
One of the many puzzles associated with the Covid-19 is variation shown by it in fatality rate across the globe. Following are some figures about it.
Worldwide variation in the fatality rate
- To be fair, the low fatality, per 10 million population, is not specific to just India.
- We have comparably low figures currently in almost all African and South Asian nations.
- Thus, it is seven for Bangladesh, three for Sri Lanka, nine for Pakistan, two for Tanzania, one for Nigeria, and 0.3 for Ethiopia.
- No one fully understands these huge differences between Europe and North America, on the one hand, and Africa and South Asia, on the other.
- Isolation of nation, not a factor: This cannot be because these nations are more isolated.
- Bangladeshis are among the most globally scattered people and Ethiopia has huge interactions with China, but the fatality rates are low in both countries.
- Why is this so? The short answer is we do not know.
Defeating the virus by keeping reproduction number below one
- It is important to realise that the risk cannot be cut to zero — nothing in life is a zero-risk activity.
- To defeat the virus, the aim has to be to keep the “reproduction number”, or R-0, down to less than one.
- R-0 refers to the number of people, on average, who get infected by each infected person.
- When R-0 reaches less than one in any given region, such as is the case in Kerala, we know that the incidence of the disease is winding down in that region.
Following points are important from the UPSC perspective. A question can be framed on the economic damage of the Covid-19, opportunities provided by it, its implications for the vulnerable section of the society, unemployment, international trade, changes in the economic policies of the government etc.
Coming out of lockdown: Economic policy challenge
- The economic policy challenge is about how to come out of the lockdown.
- This has to be done carefully, but quickly.
- The stringency of India’s lockdown at top: A study by researchers at the University of Oxford, of the stringency of lockdowns in 73 countries, places India right on top.
- For a short while, this is worth it, and also impressive for a populous nation like India.
- Not desirable position: The top rank on the stringency index is not something any country will want to occupy for long.
- That will have a devastating effect on the poor and damage the nation’s long-run economic prospects.
Trends in the Indian economy
- Unemployment rate at an all-time high: There are studies showing that India’s unemployment rate is now at 24 per cent, an all-time high.
- Biggest ever capital outflow in a month: March also saw the biggest outflow of capital from the nation ever recorded in one month — roughly $15 billion left the nation.
- This also happens to be the largest capital outflow from any emerging economy in March.
- Clearly, global players are reacting to the fact that the economy is not functioning.
- Rupee at an all-time low: These sentiments have weakened the Indian rupee, which is now at an all-time low.
- Some of these problems are inevitable in this dystopian world; we can deal with these problems for a short while.
- Global trade: If these trends persist, India would end up ceding space to other nations in global trade, exports and business, and the suffering will be huge on the working classes.
Way forward in opening the economy
- Once this phase of the lockdown ends on May 3, we will have to start opening businesses, allowing the private sector, especially the informal enterprises and small firms, to operate.
- Rule of behaviour: There will have to be rules of behaviour in place, such as social distancing, masks, hand-washing, but we have to begin to facilitate poor labourers to reach their place of work, and our farms and factories to function.
- Focus on participation, not permission: We have to encourage the rules of behaviour to continue by “participation” and not by bureaucratic “permission”.
- India has a long history of the “permit raj”, where all businesses were beholden to the bureaucracy for what they did.
- This had a tendency to strangle all but a few big firms and had held up the nation’s economic growth for long.
Conclusion
India stands at an important juncture. A misstep at such moment could turn the course of history for the nation. So, the right steps at various fronts from containing the spread to the reopening of the economy are required from the government.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Ways and means advances, limit on the states for borrowing.
Mains level: Paper 3- Discuss the ways to ensure that the States do not face lack of resource in fight against Covid-19?
The article elaborates on the central role played by the States in the fight against Covid-19. The article emphasises the role that States can play in the implementation of the various measures to tackle the epidemic and economic revival of the country. It also highlights the lack of resources at the States’ disposal and reasons for the lack such as revenue loss in the lockdown and lower devolution by the Central Government. In the end, there is a suggestion to increase the borrowing limit of the States’.
Time to relax fiscal constraints on the States
- The speed of economic revival will depend on how long it will take to revive economic activities and the volume of stimulus through public spending the government is able to provide.
- It now appears that the lockdown will be lifted in stages and the recovery process will be prolonged.
- The country is literally placed in financing a war-like situation.
- The government will have to postpone the fiscal consolidation process for the present, loosen its purse strings and finance its deficits substantially through monetisation.
- This is also the time for the government to announce relaxation in the States’ fiscal deficit limit to make them effective participants in the struggle.
The following points highlight the importance of States in dealing with the crisis. The federal structure of India comes to the fore here. The UPSC can aks question on this theme, for example, “Discuss the important role played by the States in dealing with the Covid-19 and how it underscores the federal character of the Indian polity?”
The important role played by the States
- Prioritise health spending: It is also important for the States to realise the importance of health and prioritise spending on health-care services.
- Being closer to the people, the States have a much larger responsibility in fighting this war.
- Public health, as well as public order, are State subjects in the Constitution.
- Acts invoked for lockdown: Some States were proactive in dealing with the COVID-19 outbreak by involving the Epidemic Diseases Act, 1897, even before the Government of India declared a universal lockdown invoking the Disaster Management Act, 2005.
- Of course, the Centre under Entry 29 of the Concurrent List has the powers to set the rules of implementation which states, “Prevention of the extension from one State to another of infectious or contagious diseases or pests affecting men, animals or plants”.
- Implementation at the ground level: While Central intervention was done to enable, “consistency in the application and implementation of various measures across the country”, the actual implementation on the ground level will have to be done at the State level.
- Furthermore, States are better informed to decide the areas and activities where relaxations should be done as the coronavirus curve is flattened.
- Coordination: Hopefully, there will be better coordination between the Union and State governments instead of claiming credit and apportioning blame.
Covid-19 has made clear the neglect and poor state of health in India. The UPSC can frame the question based on the health infrastructure and expenditure on it. The question can be framed on the following lines “Covid-19 has highlighted India’s lack of preparedness and the poor health infrastructure in the country. What are the reasons for it? Give suggestions to improve it.”
Neglect of the health-care sector in the country
- The pandemic has underlined the historical neglect of the health-care sector in the country.
- Expenditure on health as a percentage of GDP: The total public expenditures of Centre and States works out to a mere 3% of GDP.
- In 2017-18, in per capita terms, the public expenditure on medical and public health varied from an abysmal ₹690 in Bihar and ₹814 in Uttar Pradesh to the highest of ₹2,092 in Kerala.
- The centrally sponsored scheme, the National Health Mission, is inadequately funded, micromanaged with grants given under more than 2,000 heads and poorly targeted.
- The focus of “Ayushman Bharat” has been to advocate insurance rather than building wellness centres.
Economic revival by the States
- Besides protecting lives and livelihoods, States will have to initiate and facilitate economic revival, and that too would require substantial additional spending.
- Hand holding small and medium enterprises which have completely ceased production, providing relief to farmers who have lost their perishable crops and preparing them for sowing in the kharif season are other tasks that require spending.
- In fact, States have been proactive. Kerala came out with a comprehensive package allocating ₹20,000 crores to fight the pandemic.
- Almost all States have taken measures to provide food to the needy besides ramping up health-care requirements.
Lack of resources and revenue loss suffered by the States
- While the requirement of States for immediate expenditures is large, they are severely crippled in their resources.
- In the lockdown period, there has virtually been no economic activity and they have not been able to generate any revenue from State excise duty, stamp duties and registration fees, motor vehicles tax or sales tax on high-speed diesel and motor spirit.
- The revenue from Goods and Services Tax is stagnant and compensation on time for the loss of revenue has not been forthcoming.
- As the recovery process will be staggered, it is doubtful whether tax revenues will register any positive growth in 2020-21.
- Not surprisingly, the State has decided to monetise land through auctions to get money besides regularising unauthorised constructions by paying high fees.
Lower tax devolution from the Centre
- The position regarding tax devolution from the Centre is even more precarious.
- To begin with, the tax devolution in the Union Budget estimate is lower than the Commission’s estimate by ₹70,995 crores.
- In fact, the Budget estimate for 2020-21 itself is a huge overestimate when seen against the 11-month actual collections in 2019-20.
- The required growth to achieve the Budget estimate is 33.3% over the annualised actual collection.
- The projections are that the growth of nominal GDP in 2020-21 will be just about 4%.
- And if the tax revenue increases by the same rate, devolution to the States would be lower by ₹2.2-lakh crore than the Finance Commission’s estimate.
- This results in a loss of ₹9,173 crores for Tamil Nadu, ₹9,000 crores for Andhra Pradesh, ₹8,000 crores for Karnataka, ₹4,671 crores for Telangana, and ₹4,255 crores for Kerala.
- Supplementary report by the Finance Commission: There is a strong case for the States to go back to the Finance Commission with a request to make and give a supplementary report.
Of late, the poor fiscal health of the States has been in the news. Following are some of the factors that are responsible for it. A question can be asked with relation to this problem like “The States are facing fiscal constraints owing to the lack of revenue. What are the reasons for it? What are the options available to help the States to deal with such a situation?”
Problems faced by the States in raising resources
- There is only a limited scope for expenditure switching and reprioritisation now.
- Limited space for borrowing: Their borrowing space too is limited by the fiscal responsibility and budget management limit of 3% of Gross State Domestic Product (GSDP).
- High yield no the State bonds: Faced with an acute fund crunch, Kerala floated 15-year bonds but was faced with a huge upsurge in the yield to 8.96%.
- Increase in the WMA limit: The announcement by the Reserve Bank of India on the increase in the limit of ways and means advances by 60% of the levels prescribed in March 31 could help States to plan their borrowing better.
- But that is too little to provide much relief.
Conclusion
It is important for the Central government to provide additional borrowing space by 2% of GSDP from the prevailing 3% of GSDP. This is the time to fiscally empower States to wage the COVID-19 war and trust them to spend on protecting lives, livelihoods and initiate an economic recovery.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-What economic measures and reforms are needed to deal successfully with the crisis.
The article discusses three fronts on which actions are required viz- health, economy and geopolitics. How much the global economy is going to be affected? how the US-China rivalry would affect the recovery? what the lack of global coordination means? all such questioned are discussed here. It also suggests actions that India should take to deal with the crisis.
Many unknowns than knowns about Covid-19
- The virus currently has many more unknowns than knowns.
- We don’t know for sure how it spreads, whether people can get re-infected, whether it is mutating, whether the hot weather kills it, and what the real fatality rate is.
- We don’t know for sure how far we are from an anti-viral.
- We know that we are at least 18 months away from having a vaccine that works and is available at scale.
- Till an anti-viral is found, economic activity will be constrained, and this will affect people, industries and countries in disparate ways.
The extent of damage to the global economy
- Loss of ten trillion dollars: The global economy is set to lose close to ten trillion dollars because of the “self-induced coma” it has been put into — to use Paul Krugman’s evocative phrase.
- Loss of effectiveness of monetary policy: The preceding global financial crisis (GFC) has exhausted the efficacy of monetary tools.
- In addition, corporates globally are leveraged to the tune of $12 trillion.
- The slump in demand: The accompanying oil price collapse, beginning due to a spat between producers Saudi Arabia and Russia have been compounded by a precipitous slump in demand.
- The Chinese economy can’t help as it did during the GFC, as it is hemmed in itself.
- Even if it could, there is too much global suspicion of China to allow it to do so. So, countries will largely be on their own.
Tensions between the US and China
- The tensions between the US and China have escalated into a full-scale superpower crisis after the virus spread.
- Since 2010, there has been great concern in the US about China’s rise.
- China’s muscular foreign policy together with its aggressive stance on multiple issues, most importantly on technology and technology standards, has created conflict.
- The coronavirus is spreading in the US in an election year and smashing its economy.
- The virus infected over three-quarter of a million people in the country and killed more than 40,000.
- After this, China could be seen as enemy number one in the US.
No global coordination
- No wonder then that at a time when the world yearns for global coordination, there is almost none — in healthcare responses and economic coordination.
- Multilateral agencies, especially the WHO and UN, suffer a complete loss of credibility.
- India needs to chart its own course in these turbulent times.
- If India takes the requisite actions it may come out well.
Following suggestions are important from the UPSC perspective. The suggestions deals with three fronts-health, economic and geopolitics.
How India could come out of the crisis?
- India needs to act at three levels — health, economic and geopolitical.
1. Actions at the health level
- The Union Ministry of Health and Family Welfare has done well to stem the spread of the infection.
- It has sensitised the public, introduced the concept of social distancing and isolation in the most challenging situations.
- Now it must test at scale and isolate.
2. Actions at the economic level
- Indians cannot afford to stay locked much longer.
- We are too poor and too many of us live on a day-to-day basis — not even on a paycheck to paycheck basis.
- Economic activity will be subdued in the near-term, but it must be “unlocked”.
- The current IMF projections suggest that India will have the highest growth rate in the world this year.
- Oil prices have collapsed, really helping our balance of payments.
- Our food stocks are plentiful, the rabi crop has been good, and the prognosis for the monsoon is positive.
- Low inflationary pressure: This, together with the fact that aggregate demand is down, will dampen inflationary impulses.
- The “new RBI” has acted boldly and strongly.
- It has taken prompt actions to reduce rates, increase liquidity, adjust prudential norms, allow moratoriums, and protect financial entities.
- Indian is better placed: The weakened rupee will help our exports and with a debt to GDP ratio of about 73 per cent, along with better growth prospects, India is relatively better placed than several other countries.
- We should, therefore, not unduly worry about our credit rating. This both allows and actually requires the government to act on the fiscal front.
- The government needs to implement the following four steps to spur the economy.
- (1) It should do so by “printing money” given the moderated inflation
- (2) It needs to provide additional direct benefit transfers of Rs 2,000 every month for three months to Jan Dhan accounts, together with foodgrains release from the FCI, to the tune of around Rs 65,000 crore, to alleviate people’s miseries.
- (3) It needs to protect MSMEs directly by providing them working capital (with an RBI backstop) and, like in the UK, provide 80 per cent of the salary to employees of the “GST-paying MSMEs” for six months.
- (4) It needs to launch a massive public works programme outside the Budget as suggested by the chairman of CII’s National Committee of Infrastructure and PPP, Vinayak Chatterjee.
- This fund should be earmarked for infrastructure and a quarter of its budget should be set aside for strengthening and upgrading primary health centres.
- The allocation should not be less than Rs 200,000 crore.
- Push through pending reforms: The government should take advantage of the crisis to push through much needed pending reforms in agriculture-especially those pertaining to APMC), power-pricing and discoms, banks-government ownership at 30 per cent and bad banks.
- Revenue from private gold: Given the paucity of tax revenues, the government could also consider having the PM making an appeal for private gold from people and temples.
- It could target 1,000 tonnes of gold worth $30 billion and offer a five per cent tax-free return repayable ($1.5 billion a year) after 10 years, in rupees or gold.
3. Actions at the geopolitical level
- India can come out ahead if we act now.
- Super-power rivalries will create opportunities to replace China as a major supplier to the US and Japan.
Conclusion
The battle to deal with the corona disaster has to be fought on many fronts. India must form a strategy and act on various front i.e. health, economic and geopolitical- to be victorious at the end.
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From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Various geopolitical factors that influence the recovery of the world in post-pandemic period/How India could play a crucial role in forming the global coalition for faster recovery?
This article discusses the various factors with geopolitical significance. These factors would shape the post-pandemic recovery on a global scale. Though these factors have been touched upon in the previous op-eds, they are dealt with in detail here.
Post-pandemic strategic environment for the recovery
- It’s the post-pandemic strategic environment that will dictate how soon the world recovers from this unexpected shock.
- It must start with the international geopolitical angle, with many assumptions.
- With some clarity in this domain, we can prepare ourselves better for the recovery phase of a near post-war situation.
- Shortly, even as the world continues to reel under the pandemic threat, there will be more endeavours on enhancing human security through better strategic management of the world.
- So, what will all that be about? It could be a major conference.
- Major conference with agenda for revival: The situation is similar to the elusive efforts towards the creation of new world order after the end of the Cold War in 1989.
- Will the world consider a major conference with the agenda being a revival after the coronavirus?
- The 2015 Paris Summit of the United Nations, which was convened to save the world from the rapid impact of climate change, could not muster a consensus.
- Will a potential 2020 “pandemic conference” succeed in getting big powers to jettison their geopolitical ambition?
China’s role has significance for India. The UPSC asks questions touching the economic or security aspect of China for India. So, the role played by China in the post-pandemic world is important from Mains perspective. Take note of the issues discussed below.
The US-China rivalry
- The US-China rivalry will remain the core issue, with several other regions and nations aligning with the one who can bring them short to medium-term advantages.
- Contingent upon how badly the US is finally affected, its current confused leadership is unlikely to inspire and its efforts at internal stabilisation may compromise US power.
- A major turn in political fortunes in the US and its bumbling on pandemic management could throw open opportunities for others to exploit.
- The US will perceive itself far more insecure than it was even after 9/11.
Accusations over China’s role in the pandemic
- There is likely to be a huge effort to slander China — accusing it of being the originator of the scourge — and isolate it economically and politically.
- The allegations on the use of biological warfare are the ones which will cause turbulence in relationships.
- Ironically, China is also in a unique position to help the world bounce back.
- Against the backdrop of these accusations regarding culpability, we need to be ready for changes in the norms of international cooperation and behaviour.
- Cold war situation: A cold war of sorts could well be on the cards for some time, hampering a full recovery.
- It will be brutal in the cyber world — fake news on social media will prevent international cooperation in crucial fields such as scientific research, patents.
- And this could perhaps even slow down the ability to prevent the next pandemic.
The crucial role of the US
- Subject to the US’s economic capability after the pandemic, the ability to find a consensus to put on hold defence spending for the sake of human security will be the key.
- But the trust deficit between nations will probably hamper this to a great extent.
- The key anchor of globalisation — the US-China trade relationship — will change even more.
- China cannot be replaced by the US as a major industrial producer (even for the US market).
- Other countries or blocs — ASEAN, Bangladesh and India — will all chip in but that will still not be enough.
- Nor can any country buy as much grain from the US as China does.
- So, an economic relationship will continue but will be politically fractured as both parties search for alternatives, which don’t exist on a scale that both of them need.
The growing influence of China
- China’s recovery is likely to be the fastest.
- Its ambitious Belt and Road Initiative (BRI) may now go uncontested by the US-led efforts to create alternatives.
- The Chinese ability to influence politics among smaller nations in Asia and Africa could bring it strategic advantages.
- But this influence is unlikely to be enough to replace America unless the recession-hit US remains defensively oriented.
- Potential for conflict: Knowing the US propensity to bounce back, China’s efforts will have to remain energetic and that is where the potential for conflict is likely to rise.
- Of course, it is not as if the US would abandon its interests for an era of only-inward economic healing.
- Its eye on the future will remain firmly in place.
The decline in the credibility of the UN
- Role of WHO: The UN has lost credibility with the World Health Organisation taking the worst hit any UN agency has suffered in years.
- Its future is contingent upon how it manages the geopolitical fallout of the pandemic.
- The sooner it can get the world leaders on board, the better.
Instability in Iran and Afghanistan
- The collapse of the economy: Iran has been hit badly and with the US unrelenting on sanctions, its economy could collapse with frightening results as far the Middle East is concerned.
- The threat for peace in the region: A big nation in instability mode with internal turbulence and leadership challenges could spread greater threats of an undefined kind.
- The US may abandon Afghanistan with less commitment towards keeping its economy sustainable.
- Possibility of IS revival: It could be a sure recipe for internal instability, which could see the Islamic State emerge a major player.
- Russian advantage: Everything in the Middle East points towards Russian advantage and domination.
Opportunities for India
- India without recession: Economically hit but probably one of the few nations without a recession, India’s strong central leadership could be a big advantage.
- International cooperation: Prime Minister Narendra Modi would need to use all his influence to cobble together international cooperation to pull the world from the abyss it could sink into.
- His credibility is already higher than most international leaders and could spell a leadership role for India not in conflict with China but in cooperation with it.
- It is India’s established multilateral foreign policy that could eventually come to the assistance of the world.
Conclusion
Successful and swift recovery of the world hinges on international cooperation among the nation. This provides India with an opportunity to stitch together international cooperation in dealing with the aftermath of the crisis.
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From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Need to revisit the state's role in political, social and economic aspect of the society.
The role of the state has come in the focus in the corona crisis. This article describes how the dominant role once played by the state declined over time and what implications it has for society. In the next part of the article, need to revisit the political system of the country is emphasised.
Paradigm shift due to Covid-19
- We are unlikely to return to pre-coronavirus homeostasis after the war against it is won.
- No section or sector is going to remain untouched and unaltered by the devastation the novel coronavirus is now unleashing.
- Its annihilation in the near future is not on the cards.
- Vaccines are going to be slow in coming; therefore, its taming is not immediate.
- The second wave of an outbreak is a realistic probability.
- Unlike the other threats: Unlike other threats to humanity such as global warming and nuclear armageddon, this threat is now, not in the future.
- It is here simultaneously for everyone, not for someone else and somewhere else; its casualties are around us, not in faraway battlefields or polar regions and coastal areas.
- No country can rescue another; it is each one fending for itself.
Possibility of a deep recession in the world
- If the lockdown continues, the world economy will contract by as much as 6% according to the International Monetary Fund.
- If it is not extended, the loss of human lives could be of unacceptable proportions.
- The global community will be fortunate if it does not spiral into depression.
- Both demand and supply contractions are likely to be severe.
- They are not going to be short-lived. Political systems, economic architectures and cultural mores are on trial.
Time to build a new paradigm
- Work patterns, production and distribution practices are up for
- Denial and wishing away unpleasant, yet probable, realities by governments, global organisations and public intellectuals will only compound economic, social, political and human costs.
- Build a new paradigm: We must now be quick in seizing lessons from the present crisis and get ready to embark on measures to build a new paradigm of life, work and governance.
Role of state in focus once again
- The enlarged economic role of the state in the aftermath of the Second World War came under major assault since the 1980s.
- Leaders who asked ‘where is society?’ rode to power on the promise of cutting down the government’s role.
- Systems that were alternatives to capitalism fell out of favour.
- Entrepreneurs heading unicorns and ‘soonicorns’ have become the new demigods.
- Minimum governance became the mantra.
- India too without much consideration joined this creed.
- Role of state in focus: But COVID-19 is beginning to challenge the political economy of this creed.
- Very soon the full scores of the performance of state and non-state actors in the COVID-19 stress test will be available across the globe.
- The Indian state will also have to give answers as far as its report card is concerned.
How the state’s role declined in India?
- India embarked on the path of reducing the role of the state, initially, with such caveats as ‘safety net’ and ‘reform with a human face’.
- Gradually, those caveats fell by the wayside.
- The Indian state’s role in health care, education, creation and maintenance of infrastructure and delivery of welfare has shrunk or become nominal, half-hearted, inefficient, and dysfunctional.
- Of course, it is true that it did not give a great account of itself in these sectors even before the 1991 departure.
- Disappointment with the dismal performance in its economic and administrative functions in the backdrop of a changing global ideological ecosystem encouraged a sharp de facto downsizing of the Indian state’s role.
- Acceptance among the upper section of society: Its retreat from vital functions and abdication of its social responsibility have gained acceptance and legitimacy among the articulate upwardly mobile.
- While retreat and abdication found influential and forceful evangelists, the selective retreat had few advocates.
- This departure, however, was not vigorously interrogated.
- Supporters of the departure, on the other hand, had little engagement in giving shape to the new policy.
- Nor did they worry about calibrating the architecture of the emerging role for the state.
- As a result, ‘private sector’ became the new holy cow in place of the ‘state sector’.
- What made matters worse is the culture of a simplistic and shallow discourse of public policy that took hold in civil society.
- It mindlessly privileges the agenda of corporates. It transacts in the idiom of stock exchanges and international rating agencies.
Who is affected due to declined role of the state?
- Today, those who bear the brunt of the consequences of shrunken and unresponsive state are the farmer and farm labour, the migrant worker, the unemployed, those in the unorganised sector, the rural poor, and the small entrepreneur.
- They are paying the highest price for the necessary but unbearable lockdown.
- They are either stranded far away from home or confined to their homes with no work and incomes, unsupported by the state.
- Underfunded public health systems are unable to serve them.
- But the dominant strand of public discourse is out of its depth. It has no time for these concerns.
- Worse, this discourse can be gamed from time to time.
- And the alternative discourse is too feeble to draw the attention of the government to the grave implications of COVID-19 for the weak in our society.
State’s responsibility towards the marginalised
- The state’s first responsibility is marginalised.
- The marginalised are also the crucial part of our economy. They lubricate its wheels and generate demand.
- Demand-side needs to be revived: Announcing stimulus packages that address the supply side alone without beefing up the demand side will be self-defeating to corporates.
- Prioritising the needs of corporate entities will lead to convulsions in our body politic in the wake of COVID-19.
- The state is in danger of forfeiting legitimacy if it does not ensure the survival and revival of the marginalised sections.
From the Mains perspective, following points are important to highlight the importance of the state’s role in ensuring the welfare of society and why there is a need to revisit the current system owing to certain problems in it.
Time to revisit the political economy of the Indian state and its role
- The country should begin a vigorous discourse on redefining every aspect of its involvement in our collective political, economic and social life.
- The relation between the state and economy, its role in allocating resources and addressing questions of inequality, its duty to provide basic human needs, the extent of the market’s role in providing services such as health, education, civic amenities needs to be revisited.
- The responsibility of the state and private enterprise towards deprived sections need urgent attention.
- Re-examining the political structure: We should re-examine the efficacy of our political structures too.
- The equation between citizens and government and what its implications are for individual freedom, privacy and national security.
- Also, the equation between the legislature and executive needs to be re-visited.
- Financial powers: The balance of administrative and financial power between provinces and the union on the one hand and provinces and local bodies on the other should be reconsidered.
- Election of the representatives: The way we elect our representatives to legislatures must also come under the lens.
- The issue of weakened local authorities and enfeebled legislatures need attention.
- For, they are at the coalface, delivering the state to the citizen.
- The way legislatures are elected and governments are made and unmade must be scrutinised.
- Our outrage at the power of big money in our electoral system has not arrested its growth.
- The role of serving and retired members of higher judiciary ought to be a part of the debate.
- We had an opportunity for intensive debate when the Justice Venkatachaliah Commission submitted its report in 2002 to review the working of the Constitution.
Conclusion
The opportunity that COVID-19 provides should not be squandered and must be utilised to have a fresh look at the various issues regarding our social, economic and political life. And states responsibility towards marginalised.
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From UPSC perspective, the following things are important :
Prelims level: FDI in India.
Mains level: Paper 3- Implications of growing Chinese investment in India.
This editorial discusses the implications of growing Chinese investment in India. After People’s Bank of China bought 1 per cent stake in HDFC bank, Indian government made prior government approval mandatory for investment from countries sharing border with India. Various aspects of the move are discussed here.
No separating commerce and security in dealing with China
- India’s move to prevent a predatory Chinese hunt for Indian companies comes at a time when the stock market has been badly bruised by the coronavirus.
- It underlines the emerging perception in India that there is no separating commerce and security in dealing with China.
- India’s concerns are similar to those being expressed elsewhere in the world.
- A number of European countries have already moved in that direction.
- In recent years, apprehensions have grown, in both the developing and developed world, that China is targeting their infrastructural, industrial and technological assets for control.
- But many governments were willing to give the benefit of doubt to Beijing.
- That willingness has rapidly eroded in the wake of the corona crisis that has devastated the Western world.
Taking economic advantage of other nation’s misery
- Although few world leaders want to join the US President in publicly attacking China.
- Many of them know that Beijing bears some responsibility for letting a health emergency in one of its cities become a global pandemic.
- That Chinese companies, with access to easy money and strong political support in Beijing, are now taking economic advantage of other nations’ misery has added insult to injury.
- While most leaders are preoccupied with the corona crisis, they are not likely to let Beijing have its way.
- Even in Britain, where the Boris Johnson government is now taking a second look.
- Last week, the British Foreign Secretary, said there will be no going back to “business as usual” with China.
China’s growing influence has been posing challenges for India on various fronts. Its growing footprint on India’s economy is one of such challenges. The UPSC frames question in relation to China from various angles. So, the penetration of China in India economy is also an important aspect from the Mains perspective.
Rethinking the commercial engagement with China
- Beyond the question of accountability for the spread of the coronavirus, many countries are rethinking the very nature of their commercial engagement with China.
- Gaming the system by China: On a host of issues ranging from trade and investment to intellectual property protection, there is an inescapable sense that China has gamed the global system for unilateral gains.
- India late in learning: India certainly has had a longer learning curve than the West in recognising the relationship between commerce and national security.
- Since the early 1990s, Delhi bet that expanding economic cooperation with China will help mitigate political disputes.
- But the differences have only become intractable even as China became stronger economically.
- India gave China an easy pass into the WTO.
- India’s trade deficit: It let cheap imports from China undermine India’s manufacturing sector and run up a massive trade surplus.
- India allowed massive Chinese penetration of its telecom, digital and other advanced sectors only to discover the multiple negative consequences.
- India’s new approach: The last few years have seen a new approach that has seen India oppose China’s Belt and Road Initiative and walk out of the RCEP negotiations citing the trade imbalance with China.
Conclusion
The decision on Chinese FDI can be seen as one of the piece of the puzzle India has to face on the various front. But the puzzle of dealing with a rising China’s strategic economic onslaught will test India for a long time.
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From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- How effective is the democratic system in dealing with the pandemics like Covid-19?
The article deals with the fundamental differences between democratic states and one-party state against the backdrop of response to Covid-19. The second part of the article focuses on post-Covid-19 scenarios like changes in the supply chains and the state of the China’s economy.
Two aspects of Chine’s propaganda campaign
- China, with the lack of transparency inherent in its one-party authoritarian system, contributed to the spread of Covid-19.
- There is a desperate effort on the part of China to erase its culpability in unleashing COVID-19 across the world.
- It has sought to overcome the damaging global public opinion which it has suffered by a subsequent sustained propaganda campaign.
- This has two aspects.
- 1. Highlighting the success: One highlights the success China claims to have achieved in arresting the pandemic within the country through drastic measures on a massive scale.
- Thereby demonstrating the superiority of its authoritarian system.
- This authoritarian system is contrasted with the delayed and often less-than-effective measures taken in democratic European countries and the US in particular.
- 2. Publicity of assistance provided to other countries: The other seeks blanket publicity of much-needed medical equipment and medical teams to assist affected countries.
- The main target is Europe, though assistance to other countries is also given prominence.
- Chinese diplomats are using Twitter, Facebook and other social media platforms to create an image of a benign China providing public goods to a grateful community of beleaguered nations.
- In reporting on India, Chinese media has often highlighted the plight of migrant workers and the frequent violations of social distancing regulations.
- It is true that India has sought and received much-needed medical supplies from China.
What China would like us to believe?
- China wants us to believe that COVID-19 virus did erupt in Wuhan, but it may not have originated in China.
- That there may have been a delay in acknowledging the seriousness of the crisis, but this was due to missteps by the local leadership in Wuhan city and Hubei province.
- Once the gravity of the situation was recognised, Chinese leaders promptly informed the WHO and shared the DNA sequence of the virus with it and other countries.
- The unprecedented measures adopted by Chinese authorities bought valuable time for the rest of the world to get prepared to deal with the pandemic.
- Having achieved notable success in arresting the spread of the virus, valuable assistance is now being provided to affected countries in the spirit of solidarity.
- China’s economy is beginning to recover and this will contribute to the recovery of the global economy.
China has been highlighting its success in dealing with Covid-19 as an achievement of its single-party system. So, it is important to understand why it is not entirely true. And UPSC can frame a question like “To what extent has democratic system helped India in dealing with the corona crisis? “. Following points highlight the advantages of democracy in this regard.
Democracy Vs. One-party system
- Has China demonstrated the superiority of China’s one-party system as compared to democracies? No!
- There is no escaping the fact that COVID-19 may not have become a pandemic if China were a democracy.
- With a free flow of information through an independent media and accountable political leadership, the rest of the world would have been alerted in time.
- There are democracies which have done as well if not better than China without resorting to its sledgehammer tactics.
- Notably, there is Taiwan, which is constantly bullied by China.
- There is South Korea, which has even held parliamentary elections after having brought the pandemic under control.
- Even in India, the government is providing daily updates on the spread of the virus.
- Conclusion: The bottom line is that as a result of being a democracy, we have a better chance of knowing the true dimensions of the crisis.
- With the democracy we have a better chance of being able to obtain constant feedback on people’s reactions and access the best advice from multiple sources.
China’s assistance and resentment against it
- One must acknowledge China’s assistance to affected countries despite reports of defective and low-quality materials.
- But recipients have often been “persuaded” to express fulsome praise for China.
- This accompanying publicity overdrive has caused resentment rather than gratitude
- Then there have been reports from Guangzhou on racial discrimination against stranded African students.
- This has led to a sharp reaction from African countries.
- This will be difficult to live down.
The revival of China’s economy
- There is no doubt that economic activity in China is beginning to revive after a steep drop of 6.8 per cent (year on year) in GDP during the first quarter of 2020.
- Latest estimates are that the Chinese economy is now functioning at about 80 per cent of the level last year, which is impressive.
- Less dependence on export: China’s economy is not as export-dependent as it has been in the past.
- Exports were 5 per cent of GDP in 2018 against 32.6 per cent in 2008.
- But the external economic environment is critical for China’s globalised economy.
- It is a significant node in the most important regional and global supply chains.
Changes in supply chains in the future and opportunity for India
- China’s position as a significant node will be impacted by countries re-shoring production or opting for shorter and closer-to-home supply chains.
- Japan will spend $2.2 billion to assist Japanese companies to shift units from China back to Japan or relocate to South East Asia.
- In 2012, when China-Japan tensions were at a peak, there was a similar move and India was seen as an alternative.
- But that opportunity was lost. Perhaps India has a second chance.
- Decoupling from the US economy: China will suffer from accelerated “decoupling” from the US economy with COVID-19 sharpening the already fraught bilateral relations.
- In a sense, China was already decoupled from the US by denying entry to US tech giants, Google, Facebook, Microsoft and Amazon.
- This even while its own tech multinationals like Huawei and Alibaba have built markets in the West.
- This cannot be sustained.
- The winners in the more digital world which will emerge post-COVID-19 will be the American tech giants, even though the US is politically dysfunctional.
- Democracies sometimes win even if their politics is frustrating.
Conclusion
Rather than express envy of Chinese authoritarianism, Indians should be thankful that we are a democracy. We need more democracy, not less, to overcome the COVID-19 challenge. India should also be ready to grab the opportunities in the post-Covid-19 era in the economic realms.
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From UPSC perspective, the following things are important :
Prelims level: Social democracy.
Mains level: Paper 2- What were the factors that helped Kerala deal most effectively with the Covid-19 pandemic?
This article is an analysis of Kerala’s success in dealing with the Covid-19. Factors that emerge are-strong emphasis on the social democracy, the participation of civil society and strong social compact between the government and citizenry. We have also covered the same subject in a previous article but focus there was more on the administrative level.
Kerala’s success story
- Kerala was the first State with a recorded case of coronavirus and once led the country in active cases.
- It now ranks 10th of all States and the total number of active cases (in a State that has done the most aggressive testing in India) has been declining for over a week and is now below the number of recovered cases.
- Given Kerala’s population density, deep connections to the global economy and the high international mobility of its citizens, it was primed to be a hotspot.
- Yet not only has the State flattened the curve but it also rolled out a comprehensive ₹20,000 crore economic package before the Centre even declared the lockdown.
Why does Kerala stand out in India and internationally?
- Kerala’s much-heralded success in social development has invited endless theories of its cultural, historical or geographical exceptionalism.
- But taming a pandemic and rapidly building out a massive and tailored safety net is fundamentally about the relation of the state to its citizens.
- From its first Assembly election in 1957, through alternating coalitions of Communist and Congress-led governments, iterated cycles of social mobilisation and state responses have forged what is in effect a robust social democracy.
- The current crisis underscores the comparative advantages of social democracy.
Kerala’s success is built on social democracy in the state. Following are the factors that constitute the social democracy in the state which is helping it fight against the Covid-19 pandemic with considerable success. These factors are also important from the Mains point of view if the question is framed on Kerala’s success story.
How social democracy is practised in Kerala?
- Social democracies are built on an encompassing social pact with a political commitment to providing basic welfare and broad-based opportunity to all citizens.
- In Kerala, the social pact itself emerged from recurrent episodes of popular mobilisation.
- Popular mobilisations include the temple entry movement of the 1930s to the most recent various gender and environmental movements.
- These movements nurtured a strong sense of social citizenship.
- These movements also drove reforms that have incrementally strengthened the legal and institutional capacity for public action.
- Second, the emphasis on rights-based welfare has been driven by and in turn has reinforced a vibrant, organised civil society.
- This civil society demands continuous accountability from front-line state actors.
- Third, this constant demand-side pressure of a highly mobilised civil society and a competitive party system has pressured all governments in Kerala.
- The pressure made governments to deliver public services and to constantly expand the social safety net, in particular a public health system that is the best in India.
- Fourth, that pressure has also fuelled Kerala’s push over the last two decades to empower local government.
- Nowhere in India are local governments as resourced and as capable as in Kerala.
- Finally, all of this ties into the greatest asset of any deep democracy, that is the generalised trust that comes from a State that has a wide and deep institutional surface area.
- That on balance treats people not as subjects or clients, but as rights-bearing citizens.
How the built-in social democracy is helping in dealing with the pandemic?
- A government’s capacity to respond to a cascading crisis such as the COVID-19 pandemic relies on a very fragile chain of –(1)mobilising financial and societal resources, (2)getting state actors to fulfil directives, (3)coordinating across multiple authorities and jurisdictions and maybe, most importantly, (4)getting citizens to comply.
- First, an effective response begins with programmatic decision-making.
- From the moment of the first reported case in Kerala, Chief Minister convened a State response team that coordinated 18 different functional teams.
- The CM held daily press conferences and communicated constantly with the public.
- Kerala’s social compact demanded no less.
- Second, the government was able to leverage a broad and dense health-care system.
- The health-care system, despite the recent growth of private health services, has maintained a robust public presence.
- Kerala’s public health-care workers are also of course highly unionised and organised, and from the outset the government lay emphasis on protecting the health of first responders.
- Third, the government activated an already highly mobilised civil society.
- As the cases multiplied, the government called on two lakh volunteers to go door to door, identifying those at risk and those in need.
- A State embedded in civil society — the women’s empowerment Kudumbasree movement being a case in point.
- Kudumbasree movement was in a good position to co-produce effective interventions, from organising contact tracing to delivering three lakh meals a day through Kudumbasree community kitchens.
- Fourth, you can get the politics right and you can have a great public health-care system, but its effectiveness in a crisis like this will only be as good as the infamous last kilometre.
- And this is where two decades of empowering local governments have clearly paid off.
Conclusion
At a time when India is dealing with this unprecedented crisis, it is important to be reminded that Kerala has managed the crisis with the most resolve, the most compassion and the best results of any large State in India. And that it has done so precisely by building on legacies of egalitarianism, social rights and public trust. Other states and the Central government must learn from Kerala’s experience.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Anti-defection law.
Mains level: Paper 2- What are the solution to the issue of bypassing of the anti-defection law by the political parties?
The article discusses the recent event in Madhya Pradesh where a group of legislature resigned bringing down the government. A most important issue arising out such incidents is circumventing of the laws made to avoid such things from happening. Several such issues along with their solutions are described here.
New method to bypass the anti-defection law
- The political activities in Madhya Pradesh represent a new method of bypassing the anti-defection law and toppling elected governments.
- The government in Karnataka was brought down in July last year in a similar manner with 17 MLAs of the ruling coalition resigning and joining the BJP.
- What method was used? Under this novel method, a set of legislators of the party in power is made to resign from the Assembly to reduce the total strength of the House enough for the opposition party to cross the halfway mark to form the government.
- In the ensuing by-elections, the members who resigned were then fielded as ruling party candidates (most of whom have been re-elected in the case of Karnataka).
- The same practice is likely to be repeated in Madhya Pradesh soon.
A question based on anti-defection law and its implication for healthy debate in the parliament was asked in 2013. And that issues still persist. So, take note of these issues.
Exploiting the loophole in the Tenth Schedule
- This method of mass defection circumvents the provisions of the Tenth Schedule of the Constitution (better known as the anti-defection law)
- What is the Tenth Schedule? The tenth schedule prescribes the grounds for disqualification of legislators: voluntarily giving up party membership and voting or abstaining to vote against party directions.
- Resignation is not mentioned as a ground for disqualification.
- However, the Speaker in Karnataka disqualified them for the rest of the Assembly’s term, thereby barring them from contesting the by-polls.
- While the Supreme Court upheld the disqualification.
- It stuck down the bar from contesting by-polls.
- In Madhya Pradesh, since the Speaker has accepted the resignation of the MLAs, the defectors can in any case contest the by-polls.
Damaging the underpinnings of democracy
- The recurrence of this model of defection signals the exploitation of the inherent weaknesses of the anti-defection law.
- While solo legislators jumping ship might have reduced now, “horse-trading” seems to have gone from retail to wholesale.
- This threatens the underpinnings of India’s electoral democracy since such surreptitious capture of power essentially betrays the people’s mandate in a general election.
Kihoto case is an important case in relation to the anti-defection law.
Time to reframe the anti-defection law
- In this context, it is important to examine whether the anti-defection law fulfils any purpose.
- This law raises fundamental concerns regarding the role of a legislator in a parliamentary democracy.
- Issues with the law: It denies the legislator the right to take a principled position on a policy matter and reduces her to an involuntary supporter of the whims of party bosses.
- Challenge to the constitutionality: The constitutionality of the Tenth Schedule was challenged for violating the Basic Structure of Constitution with regard to parliamentary democracy and free speech.
- Judicial review of the Speaker’s decision: The Supreme Court in Kihoto Hollohan v. Zachillhu (1992) in a 3-2 verdict upheld the law while reserving the right of judicial review of the Speaker’s decision.
What are the shortcomings in the anti-defection law?
- Restriction on the freedom of legislator: The anti-defection law, on the one hand, severely restricts the freedom of a legislator and makes her a slave of party whips.
- Failure in preventing the horse-trading: On the other hand, it has not been able to meet its primary objective of preventing horse-trading and continues to be circumvented to bring down elected governments.
- This calls for reforms that address concerns at both ends of the spectrum.
Following two are the solutions offered here. They are important from Mains point of view. As solutions are often asked for the pressing issues.
Dinesh Goswami Committee and other suggestion
- Restrict the scope of the binding whip: For addressing the first issue, as the Dinesh Goswami Committee also suggested, the scope of the binding whip should be restricted to a vote of confidence.
- For addressing the second issue, it is best to institutionalise the Karnataka Speaker’s decision to bar the defected members from contesting in the ensuing by-poll, if not for a longer period.
- This will disincentivise MLAs from jumping ship.
- These reforms would require a constitutional amendment to the Tenth Schedule, an uphill task under the current circumstances.
Conclusion
We are facing a deeper challenge of the corrosion of India’s parliamentary system, for even in jurisdictions without such anti-defection laws, we do not see “horse-trading” and “resort politics”. Hence, beyond institutional fixes, we also need a popular articulation of an ethical politics that causes the public to shun such political manoeuvres.
Back2Basic: What is the Tenth Schedule?
- The Tenth Schedule was inserted in the Constitution in 1985.
- It lays down the process by which legislators may be disqualified on grounds of defection by the Presiding Officer of a legislature based on a petition by any other member of the House.
- A legislator is deemed to have defected if he either voluntarily gives up the membership of his party or disobeys the directives of the party leadership on a vote.
- This implies that a legislator defying (abstaining or voting against) the party whip on any issue can lose his membership of the House.
- The law applies to both Parliament and state assemblies.
- Exceptions under the law: Legislators may change their party without the risk of disqualification in certain circumstances.
- The law allows a party to merge with or into another party provided that at least two-thirds of its legislators are in favour of the merger.
- In such a scenario, neither the members who decide to merge nor the ones who stay with the original party will face disqualification.
- Is there any time limit to decide on the matter? The law does not specify a time period for the Presiding Officer to decide on a disqualification plea.
- Given that courts can intervene only after the Presiding Officer has decided on the matter, the petitioner seeking disqualification has no option but to wait for this decision to be made.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- What are the factors that helped Kerala deal with Covid-19 successfully compared to the rest of the country?
With figures emerging of Kerala’s success in dealing with the Covid-19, the rest of the nation has lessons to learn from it. This article describes the approach adopted by Kerala, and how various factors like robust health infrastructure, past experience etc. are helping it.
Kerala stands out in India: some figures and facts
- The COVID curve in Kerala is flattening.
- Every day, for a week now, the number of recoveries has exceeded the number of new infections.
- The recovery rate in Kerala is nearly 50 per cent while the all-India average is around 11.
- While the mortality rate among the infected is 5 per cent in Kerala, the all-India average is 3.4 per cent.
- The transmission rate of a primary carrier is 6 while in Kerala it is only 0.4.
With Covid-19, we are in unknown territory in many ways. If Kerala emerges as the success model, the question can be framed from that perspective. So, note down the factors described below that are helping the state in tackling Covid-19 successfully.
Preparing for the next challenge
- Kerala is preparing for the next challenge, the outcome of which will determine the result of the war against COVID.
- Lifting of the lockdown is going to result in an influx of returning migrants from foreign countries and other states.
- Hundreds of thousands would have to be quarantined, tested and, if positive, treated, ensuring there is no secondary spread.
- State authorities have already identified accommodation and other facilities for more than two lakh persons.
- Use of big data analytics: The state is also exploring the possibility of big data analytics to plan a strategy and, if necessary, for reverse quarantining.
- Authorities have access to WHO data covering nearly two-thirds of the state`s population.
- Integrating this data with the information currently being generated, we will be able to map vulnerable sections of the population, simulate scenarios and plan ahead.
- Exit strategy: An exit strategy from the lockdown is being prepared to protect livelihoods and stimulate the economy.
Strength of the public health system of Kerala
- The single most important factor that enabled Kerala to be prepared for the COVID is the strength of the public health system.
- Kerala’s health system is a proud legacy of our past.
- It has had a big push in infrastructure and equipment investment of around Rs 4,000 crore from the Kerala Infrastructure Investment Fund Board.
- Five thousand seven hundred and seventy-five new posts have also been created.
- The Aardram Health Mission was launched with a focus to transform the PHCs into family health centres.
- Distinctive feature: There is also the distinctive flavour of Kerala — mass participation in preventive and palliative healthcare.
- Training to health workers: The morale of health personnel has been exceptionally high.
- Special training, protective gear, scientific duty rotation and, most importantly, societal empathy and solidarity, have all contributed.
Learning from the past experience
- Nipah outbreak experience: The recent experiences of successful containment of the Nipah outbreak and management of the two post-flood health situations have provided a kind of herd immunity to the health workers to crisis situations.
- Covid-19 preparedness: Once news of the Wuhan pandemic came, the Kerala health system scrambled to readiness — the control room was set up, mock drills were organised and the first influx was contained.
- Once migrants from the Gulf and Europe began to return, things began to get out of hand.
- But now this battle has been successfully concluded.
Testing and tracing in Kerala
- A route map of each COVID positive case is prepared and given publicity, alerting everybody who might have been in contact.
- The protocol of cycles of intense test, trace, isolate and treatment has been the norm.
- Kerala has the highest test rate in the country.
- Break the Chain Campaign to promote social distancing has been successful.
- Lockdown by itself is not going to contain the COVID spread. It would continue to multiply within households and dormitories.
- Testing has been woefully insufficient in the national response so far.
Welfare payment in Kerala more than the rest of the country
- In Kerala, 55 lakh elderly and disadvantaged have received Rs 8,500 as welfare payments.
- An equal number of workers have been paid Rs 1,000-3,000 each from the welfare funds.
- Every family has been provided with a food kit.
- Interest-free consumption loan of Rs 2,000 crore has been distributed.
- Besides, nearly 4 lakh meals are distributed every day to the needy from community kitchens set up by local governments.
- Local governments are also duty-bound to monitor the camps of migrant workers, set up new ones and ensure medicine and food to them.
Decentralisation paying off in Kerala
- All the above was not made possible by the state government alone.
- It is the synergy generated by integrating state government plans and programmes with the local governments, the co-operatives, women neighbourhood groups (Kudumbashree) and civil society organisations that make Kerala distinct.
- The floods and the pandemic have given testimony for the potential of democratic decentralisation.
- It is a case of multi-level planning with technical committees and groups working at the state level coordinated by the chief minister.
Conclusion
Though it is too early to declare Kerala as a success story, still there are many lessons to be learned by the rest of the country in its fight against Covid-19.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: IBC, difference between operational and financial creditor, threshold limit to file insolvency case etc.
Mains level: Paper 3- Purpose and issues with IBC, its various provisions and changes that needs to be made in the wake of Covid-19.
This article argues the suspension of IBC for six months. The issues arising out of suspension like damage to the creditors are also dealt with here. Reading of this article will help us understand the finer details of IBC that are relevant from the UPSC point of view. We have also covered one article from livemint dealing with the same issue, but that article covered the issue in a broader sense.
Who are operational and financial creditors?
- After the lockdown is over, several companies are likely to default on their dues to both operational and financial creditors.
- Who is a financial creditor? The financial creditors include banks and others who have given financial assistance to a company in the form of loans and debentures.
- According to a 2018 amendment to the Insolvency and Bankruptcy Code (IBC) 2017, flat purchasers are also deemed as financial creditors.
- An operational creditor is just about anyone who has to receive money from a company.
- The IBC provides a fast-track mechanism to deal with companies which are unable to repay their creditors and have become financially unviable.
- Section 22 of the Code mandates the appointment of a Resolution Professional (RP) who is expected to miraculously turn around the company in 330 days.
- If this attempt fails, the company goes into liquidation.
The two types of creditors were in the news, so pay attention to these terms.
Increase in threshold limit to file an insolvency petition
- The IBC’s provisions have been extensively used by various creditors whose dues were not paid.
- What was the threshold limit? Initially, the threshold limit was just Rs 1 lakh and the IBC became an effective recovery mechanism for all operational creditors.
- What is the limit now? Just before the lockdown, the finance minister raised the threshold for invoking the insolvency provisions to Rs 1 crore.
- This limit was raised to prevent proceedings being initiated against small and medium enterprises.
Possibility of the domino effect after the lockdown is over
- After the lockdown, several enterprises, large, medium and small, might not be able to pay their dues, at least in the short-term.
- The easiest way for a creditor to recover money is to initiate insolvency proceedings against the debtor company and threaten it with liquidation.
- The shutdown of business after the lockdown could have a domino effect.
- How would the domino effect come into play? If an auto-manufacturer has shut down its operations, the ancillary units will not get their dues.
- This would then lead to non-payment to downstream vendors and service providers as well.
- It might take at least three to four months for the situation to stabilise.
Steps that should be taken to avoid the domino effect
- Moratorium on the IBC: The most important, and immediate, step that needs to be taken is to have a six-month moratorium on the IBC.
- It may be necessary to promulgate an ordinance suspending the prospective operation of Sections 7 and 9 of the IBC so that no fresh petition is filed against a company.
- Impact on creditors: While this could hurt some of the creditors, the damage that could be done to the corporate sector by invoking the IBC is likely to be far greater.
- A distressed creditor is not without a remedy as he can always approach the civil courts for relief, which will not be so severe on a defaulting company.
- If an insolvency petition is filed and the RP appointed, it is difficult to stop the insolvency process.
- The IBC requires a financially-stressed company to be taken over by a financially-sound
- For example, Essar Steel was taken over by ArcelorMittal and Bhushan Steel was taken over by Tata Steel.
- In the current scenario, it will be difficult, if not impossible, for an RP to find a suitable buyer and the only option would be to liquidate the company.
- Using the insolvency process to recover dues is contrary to the IBC’s objectives.
The objective of the IBC is not just insolvency but the reorganisation of companies, maximisation of value of assets and the need to balance the interests of all stakeholders. Pay attention to this point.
How the suspension of the IBC will be beneficial?
- Suspending the IBC for a short period would enable several companies to return to normalcy.
- It will help them function without the constant threat of an insolvency application and its Board of Directors and management being taken over by the RP.
- Moreover, the National Company Law Tribunal benches will simply be unable to take any additional workload.
Conclusion
Suspending the IBC for six months would be a much-needed step to prevent further damage to the economy. It would be in the larger public interest. Indeed, at this critical stage, permitting the legal remedy of insolvency could be the last nail in the coffin of many companies.
Back2Basics: What is the Insolvency and Bankruptcy Code?
- IBC provides for a time-bound process to resolve insolvency.
- When a default in repayment occurs, creditors gain control over debtor’s assets and must take decisions to resolve insolvency.
- Under IBC debtor and creditor both can start ‘recovery’ proceedings against each other.
- Insolvency and Bankruptcy Code 2016 was implemented through an act of Parliament.
- It got Presidential assent in May 2016.
- The law was necessitated due to huge pile-up of non-performing loans of banks and delay in debt resolution.
- Insolvency resolution in India took 4.3 years on an average against other countries such as United Kingdom (1 year) and United States of America (1.5 years), which is sought to be reduced besides facilitating the resolution of big-ticket loan accounts.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: WHO.
Mains level: Paper 2- How failure of WHO to alert the world in time of Covid-19 pandemic matters for India?
The article elaborates on the role played by China in manipulating WHO to its advantage and to the detriment of the rest of the world. India must take cognisance of the growing Chinese influence at various global platforms and act accordingly.
China’s role in electing Director-General of WHO
- Tedros was Ethiopia’s Minister of Health (2005—2012) and Minister of Foreign Affairs (2012 to 2016).
- In 2017, China catapulted him to lead the WHO as its Director General (DG).
- India, the world’s largest democracy, played second fiddle.
- We will never know who gamed India inside and abroad, but tough questions must be asked.
Pandemic as a wake-up call for India
- Public health is a rights-driven developmental track for any country, especially for India.
- The ministries of foreign, trade, information and broadcasting, home, finance, women and child development, law, infrastructure and industry, among others, should be part of the country’s health equation and decision-making on a daily basis.
- Should the WHO be sitting in on high-level health ministry discussions given what we now know about its allegiance to all things Chinese?
- China, an economic and military behemoth, now seeks the same power in public health.
- India, with its double burden of disease and an uncritical alignment with the WHO, is fertile ground for data and dollars.
Dependence on China for API
- For now, India, like most countries, is at China’s mercy because of years of short-sightedness and corruption in the health sector.
- While it is hailed as the pharmacy of the world and has sent drugs as humanitarian assistance, India relies heavily on raw materials from China.
- Quick thinking and swift action can reverse this.
The above points highlight the implications of Chinese dominance for India. Questions related to China is a recurrent theme in the UPSC papers. Next thing to note here is India’s dependence on China for APIs.
The US’s stand on WHO funding
- Some are blaming US President Donald Trump for contemplating cutting off funding for the WHO and not Tedros, for taking orders from China about the pandemic.
- The war is not between an American President and Tedros.
- It is between Tedros, a global public health head, and his subservience to China.
- That ship of trust, the cornerstone of public health work that the WHO should have been leading, has long set sail.
- Protecting Tedros is important as the WHO needs money to help poor countries with weak health systems.
Last year, UPSC asked about UNESCO when the US and Israel withdrew from it. This year, WHO has been in focus for allegedly towing China’s line.
Issue of funding and spending by the WHO
- War chests are being mobilised to help the WHO help China disburse aid and assistance to dying people and gasping economies.
- The recent announcement by the World Bank to fast track $1.9 billion for health systems to respond to Covid-19 also includes Ethiopia.
- For the first time in its history, the WHO has opened its doors to private funding via a Solidarity fund and China is expected to keep an eye on this.
- To keep track of how the money is spent is a problem.
Conclusion
India must decide if it wants to blindly follow the blind or lead by bringing the WHO back to its original promise. At stake is the country’s economic security of which public health is a key component. India can either be a part of history or pick up the pen even in these times of distress and rewrite it.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- The dominance of private health sector in India makes partnership with it a must to deal effectively with any pandemic.
The article delineates five areas in which partnership with the private sector is essential to deal effectively with the epidemic and ensure a whole-of-society response. Ensuring the participation of the private sector has been the recurring theme of many op-eds we have come across after the outbreak.
Significance of private healthcare in India
- According to the WHO, a critical lesson from the 2014-16 West African Ebola epidemic was that both the public and private sector need to work in tandem in responding to large-scale epidemics.
- In the COVID-19 response in India, the private sector has to play an even more important role, as it is the dominant provider of health services in the country.
- The private sector includes the for-profit and not-for-profit segments.
- The dominance of the private sector in India: The NSSO 71st round data on social consumption of health show that private hospitals, clinics and nursing homes provide over 70 per cent of healthcare.
- Data on the nearly 1 crore treatments received under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) corroborate this finding.
- AB PM-JAY data shows that over half of all treatments are being availed of from private providers, accounting for over 60 per cent of total disbursements.
UPSC asked about community-level healthcare intervention in 2018. So, pay attention to the significant role played by the private health sector in India.
Following five are the areas in which cooperation with the private sector will be essential-
1 Testing
- Creating a large and accessible testing infrastructure is the first weapon in the armoury.
- Countries like South Korea, Singapore, Germany and Japan have been successful at controlling the spread of COVDID-19 and reducing mortality through early detection and quick containment.
- This has been possible only through widespread testing.
- India has opened testing up to private labs.
- Testing has been included under the AB PM-JAY as well.
- We need to substantially expand testing capacity.
- This cannot happen without the active participation of the private sector.
2 Converting private hospitals into Covid-19-only hospitals
- As the government deepens its containment efforts, the country will need to rapidly surge the numbers of quarantine units, isolation wards and ICU beds in COVID-19-only
- It will also need to ensure increased and continued supply of essential medical products — from testing kits, masks and other PPEs to oxygen and ventilators.
- According to a recent ICMR study, around five per cent of those infected will need intensive care and half of those in intensive care units will need mechanical ventilation.
- These projections translate into large numbers that considerably exceed the capacity of the government health system.
- Private hospitals with adequate infrastructure will need to convert in COVID-19-only hospitals.
- There should be a clear policy framework of designated hospitals, reporting and referral systems and an appropriate payment system.
- With many government facilities being converted into COVID-19-only hospitals, a large number of non-COVID-19 patients will need facilities and providers to take care of their other urgent, critical or continuing healthcare needs.
- The AB PM-JAY has started a process to bring on board more hospitals to respond to such needs.
3 Protecting healthcare workers
- As more private providers join this fight, a major concern that will arise is keeping healthcare workers from becoming infected.
- In addition to being at a high risk of contracting the virus, healthcare workers are also potential carriers.
- Ensuring their protection is of paramount importance.
- Increasing the production: Companies manufacturing essential medical products such as ventilators, masks will need to crank up their production.
- Direct support from banks may be needed to keep production and supply chains going.
4 The private sector has to support the ecosystem driving health system
- The private sector will need to vigorously support the large ecosystem that drives the health system as the lockdown and ongoing epidemic restrict movement and normal economic activities.
- Activities such as the production of essential drugs and medical products, logistics to maintain smooth supply need to not only continue but also accelerate.
- Support for community activities such as night shelters and community kitchens will need to be strengthened.
5 Collaborate to share knowledge on the epidemic
- An adequate stage-wise response to the pandemic and its economic, social and political aftermath will require the rapid filling of the many knowledge gaps.
- Government, private and not-for-profit research institutions need to collaborate to understand the nature of transmission of the virus.
- They must understand the factors that slow its spread, the most at-risk communities, or the optimal quarantine period.
In 2015, UPSC asked whether the private health sector could help bridge the gap in providing universal health coverage. A question can be asked based on the same theme but in reference to dealing with the pandemic.
Conclusion
The fight against COVID-19 is not a race to a hilltop. It involves the continuous management of an evolving public health crisis that threatens to spawn economic and social crises. These multiple dimensions will require a whole-of-society approach that goes beyond the government alone.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Need for the stimulus and relief package to in the wake of Covid-19 and issues involved in its size.
D. Subbarao in this article discusses how the government is facing the hard choice of choosing between saving lives and saving the economy. On the government’s response on economic front he argues that the government, unlike the rich countries should keep an upper limit on its spending because of the dangers involved in unrestricted spending.
Why the dilemma is sharpest for India?
- This dilemma is arguably the sharpest for India.
- Because of our high population density and poor medical infrastructure, any laxity in prevention can result in a huge health disaster.
- On the other hand, an extended lockdown will force millions into the margins of subsistence, push small and large firms alike into bankruptcy, seriously impair financial stability and land us in a humanitarian and economic disaster.
Why is the relief package criticised as too little?
- After the lockdown, the government announced a relief package amounting to 0.8 per cent of GDP, that’s been criticised as being too little.
- From a study of a sample of countries, the latest issue of The Economist reports that India’s lockdown has been the most stringent while its fiscal relief package is the smallest in proportion to GDP.
What could be the reasons for a cautious approach in the relief package?
- A possible explanation for the government’s timid fiscal response may be the fear of spooking the market.
- For years, every economist and analyst has been warning the government of the dire consequences of fiscal irresponsibility.
- And that warning message must have been so hardwired into the government’s collective mind that it was unable to get over the mental overhang.
We should be aware of the reasons from the macroeconomic point of view that force the government to limit its fiscal deficit. In this case, India government is exercising the caution owing to the same constraints.
Uncertainties in the crisis
- Uncertainty is a defining feature of every crisis.
- During the global financial crisis, a big uncertainty around the world was about how much risk there was in the system, where it lay and who was bearing it.
- The uncertainty of the corona crisis is much deeper.
- There are far too many known unknowns not to speak of unknown unknowns.
- Uncertainties in corona crisis: We just don’t know enough about the effectiveness of the lockdowns, the age and gender profile of susceptibility to the virus.
- We also don’t know about the process of recovery, the tipping point if any for mass immunity, whether the virus will attack in waves.
- And most importantly, when we might have a vaccine and a cure.
- Governments are, for the large part, having to fly blind.
Issues over relief and stimulus package
- There are many issues to be decided and planned on the way forward.
- A big issue will be an expenditure plan for relief during the crisis and stimulus after some normalcy is restored.
- Borrow more spend more: Even the most ardent fiscal hawks are now agreed that the government needs to abandon its fiscal reticence, and borrow more and spend more.
- Even the most extreme monetary purists are agreed that the RBI should fund the government borrowing by printing money.
- Even the staunchest advocates of financial stability are agreed that more regulatory forbearance is necessary.
- And virtually everyone is agreed on where additional spending should be directed.
Debate on how much additionally the government should borrow
- There is disagreement on how much additionally the government should borrow.
- There are two opposing views in this regard, which are discussed below.
- 1. Fiscal risk without preset fiscal deficit: One view is that the government should err on the side of taking a fiscal risk without any preset fiscal deficit number.
- It should simply determine what needs to be done and borrow to that extent, acting as if there were no fiscal constraint at all.
- In other words, act as per the diktat of the now famous three words — “whatever it takes”.
- 2. Set a limit: An opposing view is “whatever it takes” is not an option for India.
- Many analysts have estimated that just the loss of revenue due to the economic shutdown will take the combined fiscal deficit of the Centre and states beyond 10 per cent of GDP.
- The borrow and spend programme will be in addition to the above loss.
- Unlike rich countries, we can’t afford to ignore the risks of fiscal excess of that magnitude, no matter the compelling circumstances.
- What are the risks involved? There will be a heavy price to pay down the road by way of inflation and exchange rate volatility.
From the UPSC point of view you must pay attention to the both the arguments made here, question can be asked in UPSC based on the suggestions and their pros and cons. Both the arguments cited above have their merits and demerits.
Way forward
- It’s important to keep in mind that we have resources and capability in the near future should there be another wave of the virus later in the year.
- It will be advisable for the government to fix an upper bound for fiscal deficit and operate within that. For now, the borrow and spend programme should be restricted to 2 per cent of GDP.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Aarogya Setu App.
Mains level: Paper 3- Using technology for tackling the Covid-19.
The article argues for the greater adoption of technology in tracing the Covid-19. Taking a cue from the success of JAM and UPI, recently launched app Aarogya Setu could also be the next game-changer in the fight against the pandemic. However, there are several challenges that are also discussed here.
Success story of domestic digital platforms
- The success of two domestic digital payment platforms offers us an opportunity to show how the tracing of COVID-19 cases can be done at scale and with greater speed.
- The JAM (Jan Dhan-Aadhaar-Mobile) trinity for DBTs (Direct Benefit Transfers) and UPI (Unified Payments Interface) have made India a technology leader in money transfers.
- The JAM has lent efficiency to the transfer of funds to the needy.
- It was drafted into action recently to channel payments to the more vulnerable who need help in dealing with the adverse economic consequences of the lockdown.
- The UPI is emerging as a transaction vehicle of choice for all retail payments.
- In March, 148 banks were on the UPI platform, helping process over 120 crore transactions worth over Rs 2 lakh crore.
The success story of the UPI and JAM is important from the UPSC point of view. Riding on the success of these two, the Aarogya Setu could also become the third and help in the fight against the epidemic. So, we should be aware of the basics of its working and problems the app could face.
How the Aarogya Setu works?
- Widespread adoption is required: The success of India’s Aarogya Setu mobile application will depend on its widespread adoption.
- Based on bluetooth technology: The app relies on bluetooth technology to map and deconstruct the contact history of individuals who may have come in contact with potential carriers of the coronavirus.
- Exchange of information between apps: If two individuals are at the same place at the same time, their apps can exchange information-up to a maximum distance of about 15 feet.
- Exchange of the above information is without the server knowing anything about it.
- The app notifies users and authorities of individuals who are at risk.
- Privacy safeguards: Some privacy safeguards have been put in place to ensure that individuals do not share personally identifiable information with each other but only with authorities — that too, in select cases.
- A confidence-building measure would be to release the code for public scrutiny with the aim of further bolstering privacy standards.
What are the possible challenges in the success of Aarogya Setu?
- The distribution of the detection framework necessitates a rethink, beyond an app.
- Issues with app download in India: Nandan Nilekani has underlined that app downloads in India are perhaps the most expensive compared to any other developed or fast-developing nation.
- Despite the falling cost of data, Indian users consider several factors before downloading an app such as required storage space, the potential impact on battery and data usage.
- Given India’s open internet, several publishers from across industries and geographies are vying for smartphone real estate.
- Challenge involved: In such a situation, drawing attention to particular use-cases i.e. Aarogya Setu-howsoever urgent-is challenging.
Following are the suggestions to overcome the shortcoming of the Aarogya Setu. Though they are for Aarogya Setu, we can apply these in other situations in which mobile technology bases app is used by the government in the larger public interest such as rescue operation or warnings in case of disaster.
So, what could be the alternate strategy?
- The alternative strategy involves using the reach of the other famous apps (for ex. Paytm) to do what we want to do i.e. tracing by delinking.
- Delinking involves separating the technology we want to use for tracing (the backend) from the channels (the front end).
- A fine-tuned backend can be pushed to, and used by, publishers (other apps) who already have the reach.
- Similarity with UPI: This is akin to the UPI being used by several banks and technology firms for payment.
- The government did build its frontend in the form of the BHIM (Bharat Interface for Money) app but mostly for signalling purposes.
- In the current context, the government can consider using its own app for tracing and for additional use-cases such as passes and approvals for movement when the lockdown is gradually eased out.
- It could even host other health-related features.
- Expanding its ambit and making it a conduit like JAM will likely increase the incentive for people to embrace it.
Limitations of using GPS and Bluetooth for tracing in India
- Another area where improvisations are called for is the tooling for tracking.
- While reports have indicated that the developers are using bluetooth for tracing and are also capturing GPS coordinates, both users and device manufacturers limit their usage of these technologies in favour of other optimisations.
- Users are concerned with both data and battery usage while device manufacturers kill background jobs even if the publishers have sought and secured permissions from users.
- These tendencies are pronounced on Android, the dominant mobile operating system in India.
- What are the other options? In such a scenario, developers ought to think about using other techniques.
- For instance, using cell tower data and WiFi identifiers to bolster tracing efforts.
- This is especially important in a context where only a third of our population has smartphones and even fewer people have devices with bluetooth capability.
- Even the recently announced Google-Apple partnership may not have meaningful results in this setting.
Conclusion
With the potential ramifications of COVID-19’s spread in India and across the globe, the nation’s recent history of technological successes and a government committed to agile governance, the pandemic presents an opportunity for the country to show its people and the world how technology is a force of good.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 1- Closing the the gap between urban and rural in India using knowledge-eratechnology.
This article puts forward the idea of using knowledge-era technology to minimise the difference between rural and urban areas. In the first part, it elaborates the reasons and circumstances that led to the neglect of rural areas and development in urban areas. In the next part, the idea of using knowledge-era technologies to close the gaps between rural and urban areas is explored.
Why Urbanisation is spreading and how it led to the neglect of rural areas?
- Better opportunities: The tendency to migrate to urban areas has been a natural consequence of better opportunities that got created there — in contrast to life in rural areas becoming increasingly unsustainable.
- Centralisation: The industrial-era dynamics that led to centralisation in support of mass production or massive scale-up was clearly a major one.
- This, in turn, also led to the concentration of higher education/capacity building processes to urban centres where there was job growth, quite to the detriment of the much larger rural area.
- Problems in education and training: The education and training environment became myopic, essentially meeting the manning requirements to run systems created by others.
- Our education with its inherent problems led to little confidence in creating one’s own systems to address needs independent of others.
- Demographic dividend: India’s importance grew primarily because of her demographic dividend and the large market that her people constituted and not because of the systems and technologies.
- Neglect of rural India: Rural India suffered severe neglect in the process, probably as a result of poor job opportunities there and education having lost its role as an enabler of local development.
- However, the country is learning to create systems and technologies to address her needs. The exercise is, by and large, urban-centric.
UPSC asked about the quality of urban life in 2014, and the trends of labour migration in 2015. This article touched upon both of these themes.
Using the knowledge-era technology to close the urban-rural gap
- We are now in the knowledge era.
- And knowledge-era technologies, in contrast to industrial-era technologies, promote democratisation (social media, for example) and facilitate decentralisation (work from home).
- It should thus be possible for an adequately educated and trained youth residing in a rural domain to support a significant part of the manufacturing and service needs of urban areas.
- Just as an urban youth can support a significant part of the knowledge and application needs in rural areas.
- With technologies like additive manufacture, internet of things, and artificial intelligence, well-trained people can address needs in both urban and rural areas from wherever they are.
- Thus, the knowledge era should, in principle, become a significant income leveller between the urban and rural domains, with a large rise in the overall national income.
- As we focus on capacity building of rural youth, the opportunities in rural areas should, in principle, become higher than those in urban areas since the rural segment can now benefit from all three sectors of the economy- agriculture, manufacturing and services.
The idea of “cillage”
- In the knowledge era, with emphasis on capability and capacity building of rural youth in terms of holistic education, appropriate technology and enhanced livelihood, there is a possibility for a more balanced distribution of income as well as population.
- This would, however, need knowledge bridges to be built between cities and villages, and the creation of an ecosystem which has been conceptualised as a “cillage” — a synergistic combination of city and village.
- Bridging the knowledge gap between a city and a village would also bridge the income gap between the two.
- This will also lead to a faster bridging of the gap between the average individual income in India and that in industrially advanced countries.
- Democratisation promoted by knowledge technologies, if properly leveraged, can in principle reduce disparities, which, unfortunately, are on the rise today.
How to realise the idea of cillage?
- Integrated and holistic approach: Developing a “cillage” ecosystem would need a rooted and integrated approach to holistic education and research, technology development and management, as well as technology-enabled rural livelihood enhancement.
- It would take a while for the rural youth to become empowered enough to convert the challenges into opportunities in rural areas.
- The emergence of a new-age society is an inevitability.
- How soon the rural domain can embrace it and how concurrently, comprehensively that can happen, is the real challenge.
- That will decide whether India will gain in the knowledge era or lag as it did in the industrial era.
Look at one more question from 2015-“Smart cities in India cannot sustain without smart villages. Discuss this statement in the backdrop of rural-urban integration”. The ideas discussed here in this article help us to deal with such questions.
Can Covid-19 speed up the realisation of cillage?
- The process could also be seen as the migration of a set of experiences and skills to villages.
- We can look at this as a potential two-way bridge for a new relationship between cities and villages.
- It will be the bridge in which not all need to return to cities, but can rather meet the needs of cities as well as villages by remaining in villages.
- Several initiatives will be needed to realise such a possibility.
- Facilitating a number of new skills, technologies and support systems that can further leverage current capabilities of these people for starting a new enterprise would be important.
- Immediate arrangements to facilitate their livelihood, and leveraging their present capabilities could help retain at least some of these people in villages.
- It could trigger a faster movement towards an inevitable long-term equilibrium.
- Going forward, we should take knowledge activities to a higher level so that the products and services created by these people become more competitive.
- Looking at disruptive technologies for exploiting local opportunities should follow.
Conclusion
Given that the new normal after Covid-19 would, in any case, be quite different, the right course would be to channelise the stimulus caused by this crisis towards accelerating the shift to a new normal. This will not only help a more dispersed population, but will also reduce disparities and lead to faster growth of the economy.
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