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Redesigning India’s ailing data system (The Hindu)

Mains Paper 2: Governance
Prelims level : System of National Accounting
Mains level : Approaches towards calculation of GDP data

Context:

• The new series of Gross Domestic Product (GDP) figures with 2011-12 as base, released in 2015, has not gone well with analysts.
• The withholding of employment-unemployment data for some time and consumer expenditure data, which is not released, added to this unease.
• Bringing the National Sample Survey Office (NSSO) under the fold of National Statistics Office, altering its long-standing arrangement under the Governing Council and then National Statistical Commission, triggered suspicion.
• As official statistics is a public good, giving information about the state of the economy and success of governance, it needs to be independent to be impartial.

Wide-ranging impact:

• GDP covers all productive activity for producing goods and services, without duplication.
• In effect it adds apples and oranges, tractors and sickles, trade, transport, storage and communication, real estate, banking and government services through the mechanism of value.
• The System of National Accounting (SNA) is designed to measure production, consumption, and accumulation of income and wealth for assessing the performance of the economy.
• GDP data influence markets, signalling investment sentiments, flow of funds and balance of payments.
• The input-output relations impact productivity and allocation of resources; demand and supply influences prices, exchange rates, wage rates, employment and standard of living, affecting all walks of life.

Calculation of GDP data:

• The data on GDP are initially estimated at current price and then deflated for constant price for comparability of data over time.
• It is necessary to separate out price effect to adjust value for real volume for comparison over time and sectors.
• There is a way of adjusting price effect through appropriate price index.
• The present series encountered serious problems for price adjustment, specifically for the services sector contributing about 60% of GDP, in the absence of appropriate price indices for most service sectors.
• The deflators used in the new series could not effectively separate out price effect from the current value to arrive at a real volume estimate at constant price.
• Price indices going into a low and negative zone in 2014-17 distorted real growth.
• The shift from establishment to enterprise approach, replacing Annual Survey of Industries (ASI) with Ministry of Corporate Affairs MCA21 posed serious data and methodological issues.
• The use of MCA21 data and blow up factors thereof without weeding out defunct enterprises, and then insufficient work on mapping of comparable ASI data, followed by similar survey on services sector enterprises were another major lacunae.

Unchanged approach:

• The price and production indices are constructed using a fixed base Laspeyres Index, yield rate for paddy is estimated by crop cutting experiments.
• The organisation of field surveys for collection of data on employment-unemployment, consumer expenditure, industrial output, assets and liabilities continue.
• When productivity and remunerative price of output are major concerns for agriculture, it is necessary to collect data on factors such as soil conditions, moisture, temperature, water and fertilizer use determining yield, impact of intermediary and forward trade on farm gate price and so on.
• Israel collects these data for analysis to support productivity.
• The initiative under e-governance enabled the capturing of huge data, which need to be collated for their meaningful use for production of official statistics.
• The process for collection and collation of data needs modernisation using technology.

Data logistics:

• Along with GDP, we need data to assess competitiveness, inclusive growth, fourth-generation Industrial Revolution riding on the Internet of things, biotechnology, robotics-influencing employment and productivity, environmental protection, sustainable development and social welfare.
• Hence GDP data needs to be linked with a host of other data for deeper insight. We need to re-engineer the existing system, creating an integrated system populated with granular data.
• The country is vast, heterogeneous.
• There are non-linearities and path dependence, which should be considered while setting goals for development, reducing regional imbalance.
• To pursue the goal of a $5-trillion economy by 2024-25, harnessing demographic dividend, we must tap underused resources for demand creating investment, which require data to pursue policy right from a district and evaluate performance for efficiency including governance.

The present and future:

• The present national accounting and analytical framework misses out on many important dimensions of the economy and its complex character as an evolving economy that is constantly experiencing technological and institutional transitions and power plays in a market economy.
• We need a new framework for analysis for such a complex system and evolutionary process.
• There is a question of growing market power, automation, robotisation and other labour-replacing technologies affecting profitability, structural change and general welfare.
• We need to find alternative avenues for the unemployed and jobs lost.
• In order to inject efficiency and stability, we need to have detailed data on how: markets clear, prices are formed, risks build up, institutions function and, in turn, influence the lifestyle of various sections of the people.
• We also need to know in greater detail about market microstructure and optimality therein, the role of technology and advanced research, changing demand on human skills, and enterprise and organising ability, which are all complex.
• The growing inequality and concentration of wealth in a few hands to the detriment of social welfare needs to be arrested at the earliest.
• The deadweight loss caused to the economy through monopoly power, inefficient input-output mix, dumping, obsolete technology and production mix must be contained.

Analysis of macroeconomic framework:

• The consensus macroeconomic framework of analysis assumes symmetric income distribution, and does not get into the depth of structural issues, as it focuses on a trend-cycle decomposition of GDP for growth and stability in market parlance and a trickledown effect for percolation of income.
• This framework is questioned by many. The alternative to be realistic for the real world must rest on two pillars:
• The micro-behaviour of individuals, and
• The structure of their mutual interactions.
• In the changed situation of availability of micro data, we need to build a system to integrate the micro with the macro, maintaining distributional characteristics.

Way forward:

• Data is the new oil in the modern networked economy in pursuit of socio-economic development.
• The economics now is deeply rooted in data, measuring and impacting competitiveness, risks, opportunities and social welfare in an integrated manner, going much beyond macroeconomics.
• We have a commitment to produce these statistics transparently, following internationally accepted standards, tailor-made to suit local conditions, for multi-disciplinary analytics.
• As these statistics reflect on the performance of the government, it is necessary that its independence is maintained scrupulously.

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Coronavirus alert (The Hindu)

Mains Paper 2: Health
Prelims level : Coronavirus
Mains level : coronavirus virus and its symptoms

Context:

• On December 31, 2019, China informed the World Health Organization (WHO) of a cluster of cases of pneumonia of an unknown cause in Wuhan City in Hubei province.
• A few patients in Wuhan had been suffering from respiratory illnesses such as pneumonia since early December.
• Besides providing care, Chinese public health officials began carrying out environmental assessments at the wholesale market and trying to identify the microbe causing the outbreak.

How was the virus identified as a coronavirus?

• On January 9, 2020, WHO issued a statement saying Chinese researchers have made “preliminary determination” of the virus as a novel coronavirus in a person with pneumonia.
• They were able to determine the virus by sequencing the genome using an isolate taken from an infected patient.
• Preliminary identification of a novel virus in a short period of time is a notable achievement and demonstrates China’s increased capacity to manage new outbreaks.
• Public health experts are yet to identify the source of the new virus.

What are coronaviruses?

• Coronaviruses are a large family of viruses with some causing less severe common cold to more severe diseases such as severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS).
• While the SARS coronavirus is thought to be an animal virus from an as-yet-uncertain animal reservoir, perhaps bats, that spread to other animals (civet cats) and first infected humans in the Guangdong province of southern China in 2002
• The MERS coronavirus was passed on from dromedary camels to humans in Saudi Arabia in 2012.

Has China shared the genome sequence data?

• On January 11, China shared the whole genome sequence data with WHO and submitted them to the Global Initiative on Sharing All Influenza Data (GISAID) platform to allow researchers across the world to access the data.
• Sharing the data with GISAID will help other countries to quickly identify the virus, provide care, and also develop specific diagnostic kits, drugs and even vaccines.
• Since January 11, five more genome sequences have been submitted to GISAID.

How many have been infected?

• Using the genomic test kit, China was able to accurately identify that only 41 of the 59 suspected cases have been infected.
• On January 17, four more cases were reported by the Wuhan health department.
• According to WHO, the clinical signs and symptoms of the patients are mainly fever and fatigue, accompanied by dry cough, with a few experiencing difficulty in breathing. Chest radiographs showed fluid in both lungs. As of January 17, two people had died.

Has the virus been able to spread among humans?

• WHO has said 763 people, including medical staff, who have come in close contact with patients infected with the novel coronavirus.
• This have been identified for close monitoring. Based on preliminary epidemiological investigation, most of the patients had come in close contact with animals or frequently visited a wholesale seafood market (which authorities in Wuhan said was the centre of the outbreak, and closed since January 1).
• But in the case of the Japanese man who had travelled to Wuhan and found to be infected with the new virus, the transmission does not seem to be from animals as the person did not visit the Huanan seafood market.
• According to WHO, the fact that certain cases do not seem linked with the seafood market would mean that the possibility of “limited human-to-human transmission cannot be excluded”.

Has the virus been seen in people outside China?

• On January 8, a 61-year-old woman who had travelled from Wuhan to Thailand was hospitalised and mild pneumonia was diagnosed.
• Thermal surveillance at the one of the airports in Bangkok detected the febrile illness of the traveller.
• Subsequent testing confirmed that the woman, a Chinese national, was that country’s first imported case of a ‘novel’ coronavirus infection. She had not visited the Wuhan seafood market but instead another market where freshly slaughtered animals are sold.
• A second case was seen in Thailand on Friday, January 17 in a 74-year-old Chinese woman who travelled from Wuhan. \
• On January 16, Japan reported a case of a man in his 30s who was infected with the new coronavirus. He has been discharged from hospital.

Are there any travel restrictions to China?

• India has issued a travel advisory asking citizens to follow certain precautionary measures while visiting China.
• WHO advises against the application of any travel or trade restrictions on China based on the information currently available.
• It does not recommend that travellers take any specific measures either.

Conclusion:

• However, WHO provides general tips to reduce the risk of infection such as washing hands with soap and water,
• It covering one’s nose and mouth while sneezing and coughing, avoiding contact with anyone who has cold or flu-like symptoms, thoroughly cooking meat and eggs, and avoid making unprotected contact with wild or farm animals.

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(Download) UPSC IES Exam Paper - 2020 "Electronics and Telecommunication Engineering"

Exam Name: Engineering Services Exam (IES)

Paper : Electronics and Telecommunication Engineering

Year: 2020

File Type: PDF

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What is the US-Guatemala asylum deal (Indian Express)

Mains Paper 2:- International Relations
Prelims level:- US-Guatemala agreement
Mains level:- Highlights of the US-Guatemala agreement

Context:

• In July 2019, the then President of Guatemala signed an asylum deal with the US.
• Alejandro Giammattei, Guatemala’s new President, has not cleared his position on the pact, causing uncertainty over its future.

Safe third country agreement:

• Under the “safe third country” agreement, migrants have to apply for asylum in the first country they land in.
• If they fail to do so and proceed to the second country, they can be sent back to the first country.
• The US first signed such an agreement with Canada in 2002.

US-Guatemala agreement:

• In 2019, the US administration signed “safe third country” agreements with the Northern Triangle countries of Guatemala, El Salvador, and Honduras.
• This made it more difficult for refugees to seek asylum in the US.
• This agreement allowed the US to send asylum seekers from third countries to Guatemala.
• So far, Guatemala is the only country which has implemented the agreement.
• Unless migrants apply for protection in Guatemala before proceeding to the US, they are sent back to Guatemala.
• As of now (January 2020), the US had sent 158 El Salvadoran and Honduran asylum seekers to Guatemala since the agreement was signed.
• The US also plans to send migrants from other nationalities to Guatemala in the future.
• In the 2019 fiscal year, Guatemala was the largest source of migrants (more than 2.64 lakh persons) detained at the US border.

Criticisms:

• A “safe third country” is supposed to mean a nation which is capable of offering protection to refugees.
• The Northern Triangle countries are known for high levels of crime, violence, and economic deprivation.
• The deal with Guatemala has been criticised, given the risk that migrants might face when they are sent back here.

Way ahead:

• The US-Guatemala agreement was challenged at a US federal district court, with petitioners arguing that the pact violates US law.
• It has been contended that,
• Guatemala does not meet the definition of a “safe third country” under US asylum law and,
• The agreement does adequately protect asylum seekers from harm.
• Since President Trump came to power in 2016, the US has increasingly adopted policies aimed at deterring refugee migration.
• Under the ‘Remain in Mexico’ policy, which came into force in January 2019, 55,000 asylum seekers to the US have been sent back to Mexico to wait out their asylum cases in that country.

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Why ‘Make in India’ has failed (The Hindu)

Mains Paper 2:- Governance
Prelims level:- Make in India program
Mains level:- Shortcomings of the Make in India program

Context:

• On September 25, 2014, the Indian government announced the ‘Make in India’ initiative to encourage manufacturing in India and galvanize the economy with dedicated investments in manufacturing and services.

Background:

• In 2015, India emerged as the top destination for foreign direct investment, surpassing the U.S. and China.
• In line with the national programme, States too launched their own initiatives.
• Five years later, as we brace for another Union Budget, it would be appropriate to take stock of the much-hyped initiative as the economy in general, and the manufacturing sector in particular, is on a slippery slope.
• The ‘Make in India’ idea is not new.
• Factory production has a long history in the country.
• This initiative, however, set an ambitious goal of making India a global manufacturing hub.
• To achieve this goal, targets were identified and policies outlined.

Objectives of the Make in India program:

• The three major objectives were:
• (a) to increase the manufacturing sector’s growth rate to 12-14% per annum in order to increase the sector’s share in the economy;
• (b) to create 100 million additional manufacturing jobs in the economy by 2022; and
• (c) to ensure that the manufacturing sector’s contribution to GDP is increased to 25% by 2022 (revised to 2025) from the current 16%.

Designed to fail?

• Given that big-ticket projects for grand initiatives such as ‘Make in India’ have long gestation periods and lag effects, assessments of such initiatives can be premature.
• Also, governments often use the excuse of inheriting an economy riddled with macroeconomic problems, and demand more time to set things right.
• This is an argument that the current government invokes frequently.
• However, five years is a reasonable time period to assess the direction and magnitude of outcomes.
• As the policy changes were intended to usher growth in three key variables of the manufacturing sector — investments, output, and employment growth — an examination of these will help us gauge the success of the policy.

Economic slowdown:

• The last five years witnessed slow growth of investment in the economy. This is more so when we consider capital investments in the manufacturing sector.
• Gross fixed capital formation of the private sector, a measure of aggregate investment, declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-14 (Economic Survey 2018-19).
• Interestingly, though the public sector’s share remained more or less the same during this period, the private sector’s share declined from 24.2% to 21.5%.
• Part of this problem can be attributed to the decline in the savings rate in the economy.
• Household savings have declined, while the private corporate sector’s savings have increased.
• With regard to output growth, we find that the monthly index of industrial production pertaining to manufacturing has registered double-digit growth rates only on two occasions during the period April 2012 to November 2019.
• Data show that for a majority of the months, it was 3% or below and even negative for some months.
• Regarding employment growth, we have witnessed questions being raised over the government’s delay in releasing data as well as its attempts to revise existing data collection mechanisms.
• The crux of the debate has been that employment, especially industrial employment, has not grown to keep pace with the rate of new entries into the labour market.

Policy casualness:

• ‘Make in India’ is a good example of a continuous stream of ‘scheme’ announcements. The announcements had two major lacunae.
• The bulk of these schemes relied too much on foreign capital for investments and global markets for produce.
• This created an inbuilt uncertainty, as domestic production had to be planned according to the demand and supply conditions elsewhere.
• The policymakers neglected the third deficit in the economy, which is implementation.
• The economists worry mostly about budget and fiscal deficit, policy implementers need to take into account the implications of implementation deficit in their decisions.
• The result of such a policy oversight is evident in the large number of stalled projects in India.
• The spate of policy announcements without having the preparedness to implement them is ‘policy casualness’. ‘
• Make in India’ has been plagued by a large number of under-prepared initiatives.

Why did ‘Make in India’ fail?

• It set out too ambitious growth rates for the manufacturing sector to achieve. An annual growth rate of 12-14% is well beyond the capacity of the industrial sector.
• The initiative brought in too many sectors into its fold. This led to a loss of policy focus.
• Further, it was seen as a policy devoid of any understanding of the comparative advantages of the domestic economy.
• It given the uncertainties of the global economy and ever-rising trade protectionism, the initiative was spectacularly ill-timed.

Way forward:

• ‘Make in India’ is a policy initiative with inbuilt inconsistencies.
• The bundle of contradictions unfold when we examine the incongruity of ‘swadeshi’ products being made with foreign capital.
• This has led to a scenario where there is a quantum jump in the ‘ease of doing business’ ranking, but investments are still to arrive.
• The economy needs much more than policy window dressing for increasing manufacturing activity.
• The government must realise that industrialisation cannot be kick-started by a series of bills in Parliament and hosting investors’ meets.

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Equity’s weak pulse and commodified medicine (The Hindu)

Mains Paper 2:- Health
Prelims level:- Subsidised Rural Medical Relief Scheme
Mains level:- Requirement of Subsidised Rural Medical Relief Scheme in Indian healthcare system

Context:

• In 1924, the Madras presidency of British-India rolled out the Subsidised Rural Medical Relief Scheme (SRMRS), which was about providing temporary annual subsidies to doctors choosing to settle down and practise privately in villages specified by local boards.

Subsidised Rural Medical Relief Scheme:

• Essentially a manifestation of the English laissez-faire policy, the scheme was then reckoned to be an economical way of expanding health-care access in rural areas.
• The economic depression of the 1930s brought this scheme to a complete standstill, and an initiative named Honorary Medical Scheme (HMS) received impetus.
• While initially planned to assist full-time permanent medical officers in government hospitals, honoraries soon started to supplant permanent doctors in an attempt to cut government spending on health.
• Eventually, any further recruitment into full-time permanent positions (expect in cases of exceptional need) was halted.

Trends directly inherited from colonial times:

• The spending on health shall be smooth to come under the knife at the slightest whiff of an economic downturn.
• Laissez-faire will be the unannounced, yet predominant, approach towards health care, and the majority of doctors (and patients) shall be left to fend for themselves in an unregulated market.

Advent of the private sector:

• As early as in 1938, only 23% of doctors were in the public sector with the rest working in the private sector, predominantly in single practices.
• Post-Independence, perpetual sub-optimal investments in public health allowed the private sector to capitalise, flourish, and increasingly gain the confidence of the masses.
• The private sector went from having about 1,400 enterprises in 1950 to more than 10 lakh in 2010-11.
• To doctors, this promised greater professional liberty, lesser restrictions, and higher incomes.
• After liberalisation, the greater focus shifted to the lucrative tertiary-care sector and led to an onslaught of sophisticated private health care in cities.

Larger chunk in Indian health care system:

• The dominance of the market, bespoken by the simple fact that the private sector has over 70% of the health-care workforce and 80% of allopathic doctors, has meant that it is scarcely possible for a health-care provider to function in defiance of its norms.
• The pervasiveness of malpractices in this market has come to ensure that few could survive without condoning them.
• The players in this market, in much of their malpractices, have also learnt to function as a harmonious family.
• The family plays its role in safeguarding its members, acquainting them with its norms and interests, and leveraging the power of its patriarchs to defend its interests in society.
• It is little wonder that the market has also come to dictate the avenues of aggrandisement and yardsticks of professional success for health-care professionals.
• Business finesse and social adroitness rather than clinical excellence and empathy become the touchstones of calibre in this market.
• It could not be brought under a “national system” having some form of overarching state control or involvement — which could avail of essential health care without most people having to rely on a vagarious market, except as a luxury.

Case study:

• The National Health Service of the United Kingdom, despite having seen a number of pro-market reforms over the years, remains the single largest health-care provider, employs nearly the entire health-care workforce, and makes essential health care available to all practically free at the point of service.
• This ensures is that the profit-driven private sector, the minor component, caters mainly to the affluent lot as largely a matter of deliberate choice rather than desperate compulsion.
• The Indian example, much like the United States’s, bespeaks the failure of the idea that a free market will compel players to be more efficient rather than increasing efficiency, the players have found it expedient to scrupulously exploit the prevailing cracks in the system and employ devious methods in order to maximise profits.

Two systems:

• Health-care providers, just like others, are moulded by their social surroundings.
• When necessary controls are loosened, the connatural vices are let loose; when the habitat is conducive to values, the right traits develop.
• A system that starts off with health care as an overt tradeable commodity queers the pitch for virtues.
• Over time, a culture of exploitation and profiteering gets cemented, and the system gets locked in a trajectory that becomes difficult to alter.
• Also, the medical profession attracts more of those with an ambition to earn riches than ones with an aptitude for medical service, thus leading to a generation of doctors who become the apologists of a profiteering system.
• A system founded on the concept of equity (which, while remunerating doctors well, is able to separate incomes from patient care decisions by and large) cultivates a totally different culture of patient care.

Conclusion:

• Doctors manufactured under its aegis cherish a spirit of service and hanker less for extravagant incentives
• Things such as professional satisfaction and success come to be measured by a different yardstick, and there exists a different kind of motivation towards work, which is then bequeathed to the forthcoming generation.

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Is the Indian economy staring at stagflation? (The Hindu)

Mains Paper 3:- Economy
Prelims level:- Stagflation
Mains level:- Affecting stagflation in an economy

Context:

• The rise in retail price inflation to a nearly six-year high of 7.35% in December has led to increasing worries that the Indian economy may be headed towards stagflation.
• The current rise in retail inflation has been attributed mainly to the rise in the prices of vegetables such as onions.
• Still, the steady rise in wider inflation figures over the last few months amidst falling economic growth has led to fears of stagflation.

What is stagflation?

• Stagflation is an economic scenario where an economy faces both high inflation and low growth (and high unemployment) at the same time.
• The Indian economy has now faced six consecutive quarters of slowing growth since 2018.
• Economic growth in the second quarter ending September, the most recent quarter for which data is available, was just 4.5%. For the whole year, growth is expected to be around 5%.
• Most economists have blamed the slowdown on the lack of sufficient consumer demand for goods and services.
• In fact, insufficient demand was cited as the primary reason behind the low price inflation that was prevalent in the economy until recently.
• The expectation among analysts was that these interest rate cuts would spur demand and boost the economy.
• In the second half of 2019, prices of goods began to rise at a faster pace on the back of the RBI’s rate cuts. But the growth rate of the economy continued to fall significantly. This combination of rising prices and falling growth has led many to believe that India may be sliding into stagflation.
• The only thing right now that stops many from concluding that the economy is in full-fledged stagflation is the fact that core inflation, which excludes items such as vegetables whose prices are too volatile, remains within the RBI’s targeted range.

Can economists explain stagflation?

• The conventional view among economists is that there is an inverse relationship between economic growth and inflation.
• The idea was first proposed by New Zealand economist William Phillips, after whom the “Phillips Curve” is named, based on statistical studies of inflation and unemployment. It later gained widespread acceptance among mainstream economists.
• The inverse relationship between inflation and unemployment was seen as a confirmation of the hypothesis that inflation helps the economy function at its full potential.
• The logic behind the belief is that, at least in the short term, inflation (by boosting nominal wages but not real wages) can trick workers in an economy to accept lower real wages.
• Without inflation, it is argued, workers would be unwilling to accept these lower real wages, which in turn would lead to higher unemployment and decreased output in the economy.
• At the same time, economists argue that an inflation rate beyond a certain level, at which point labour and other resources in the economy are fully employed, will have no employment or growth benefits.
• Accordingly, policymakers are often advised to maintain a certain inflation rate to ensure that unemployment is kept to a minimum and the economy is operating at full capacity.
• The simultaneous presence of high inflation and low economic growth under stagflation, however, challenges the conventional view that inflation helps an economy operate at full capacity.
• It was the stagflation in the United States in the 1970s, caused by rising oil prices after the Organization of the Petroleum Exporting Countries cut supplies abruptly, which first led many to question the validity of the Phillips Curve.

Why is stagflation a problem?

• Economists who believe that the current slowdown is due to the lack of sufficient consumer demand prescribe greater spending by the government and the central bank to resuscitate the economy.
• But stagflation essentially ties the hands of the government and the central bank from taking such countercyclical policy steps.
• With retail inflation now well above the RBI’s targeted range of 2-6%, the central bank is unlikely to assist the economy any time soon by cutting its benchmark interest rate.
• If the central bank decides to inject fresh money into the economy either by cutting its benchmark interest rate or other unconventional means, it could lead to a further rise in prices and make things worse. A similar rise in inflation could result if the government engages in deficit spending that is funded by the RBI.
• All this is considered to be bad news at a time when the economy, with significant unemployed resources, is not functioning at its full capacity.
• Stagflation can also be politically costly to the ruling government.
• On the one hand, the slowdown in growth could affect peoples’ incomes. On the other, higher inflation could cause a reduction in people’s standard of living as they can afford fewer things.

Way forward:

• Economists are divided along ideological lines on what needs to be done for an economy to recover from stagflation.
• Some economists suggest that policymakers should stop worrying about inflation and instead focus exclusively on boosting aggregate demand in the economy.
• India’s nominal GDP growth, a measure of the overall level of spending in the economy, is expected to hit a 42-year low of 7.5% this year.
• They consider the RBI’s target of keeping inflation from rising above 6% as an arbitrary one and believe that the central bank should further ease its policy stance and the government should spend more on infrastructure and other sectors to boost the economy.
• Another point raised by these economists is that inflation on the broader level, as measured by the core inflation figures, remains within the RBI’s target range.
• Core inflation in December was at 3.7%. So greater spending by the government and the RBI will not cause inflation levels to run out of control, they argue.

Conclusion:

• India’s growth rate, it is worth noting, was boosted by the availability of easy credit over the last decade, or even longer.
• Further credit expansion by the central bank and debt-fuelled government spending, these economists argue, will not lead to genuine and sustainable economic growth but only to another unsustainable boom followed by a bust.
• So they instead advocate supply-side reforms to bring about genuine economic growth.

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Needless fracas: On Governors vs Kerala and West Bengal governments (The Hindu)

Mains Paper 2:- Polity
Prelims level:-
Mains level:- Role of governor in a democracy

Context:

• The endless squabbles between the Governors and respective State governments in Kerala and West Bengal are disconcerting. Arif Mohammad Khan and Jagdeep Dhankhar, Governors of Kerala and West Bengal, respectively,
• It has been claimed by the both state governments have arrogated to themselves an activist role, which is at the heart of the tensions.
• Mr. Khan has made repeated public statements on controversial questions such as the Citizenship (Amendment) Act, 2019; he has even said that it was his duty to defend the laws made by the Centre.
• It is a dubious claim to make, and at any rate, there is no discernible precedent as such. His view that his office is not a rubber stamp.
• is true, but he must also be mindful that the Constitution envisages the execution of popular will through an elected government.
• Mr. Dhankhar has placed himself at the centre of several controversies, and often appears eager for the next spectacular showdown with the State government. Kerala’s Left Democratic Front has been more restrained than the combative resistance by West Bengal Chief Minister Mamata Banerjee.
• The boisterous profiles of these Governors are symptomatic of a larger malaise of degrading relations between the Centre and States ruled by parties opposed to the BJP, aggravated by an insatiable yearning of the former for centralisation of power.

Role and performance of the governor:

• The Constitution seeks to bolster centripetal forces in this vast and diverse country, and the Centre’s power to appoint Governors is one such.
• The Governor’s constitutional role has been debated and interpreted through several cases, but ingenious occupants of the office have managed to push the boundaries with unprecedented moves. Sagacious occupants have used the Governor’s office to promote national integration.
• Many others have merely acted as agents of the ruling party at the Centre. Using a pliant Governor to undermine a State government or engineer a legislative majority is an old and secular trick used by all parties at the Centre.
• State government-Governor conflicts have hence not been rare, but what makes the current situation extraordinary is the political context.

Conclusion:

• The Governor appears to have a critical, instrumental role. The Governor’s role as a link between the State and the Centre shall not be an imperial one.
• The office of the Governor must be a dialogic and consultative one.
• The combative posturing in Kerala and West Bengal will bring more disarray, no unity. The Centre must treat State governments with the respect that democratically elected governments deserve.

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India’s growth hinges on cooperative federalism (The Hindu)

Mains Paper 2: Polity
Prelims level: Cooperative federalism
Mains level: Development of cooperative federalism

Context:

• In the World Bank’s Ease of Doing Business index released last month, India ranked 63, an impressive jump from its lowly rank of 142 in 2014.

Challenges ahead:

• The government amended the terms of reference of the 15th Finance Commission a few months ago asking that allocations for defence and internal security be carved out upfront, before determining the pool of resources to be shared with the states, the latter baulked at the highhandedness of the Centre.
• It has been attempted to reform the land acquisition law by tweaking the balance in favour of investors, but quickly buckled down as many states took umbrage.
• Even though land is on the concurrent list in the Constitution, and a central law would have prevailed notwithstanding states’ opposition.

Importance of states in India’s economic management:

• In the early years of our republic, the Centre dominated across all domains — political, economic and administrative — and states, even those led by leaders with political heft, acquiesced to this unequal arrangement.
• The reaction to central dominance came in the early 1980s when strong regional leaders started agitating against “the hegemony of the Centre”.
• Several of them, for instance N T Rama Rao, built their political careers on an “anti-Centre” platform.
• Much of the economic policy control stayed with the Centre which decided not just public investment but even private investment through its industrial and import licensing policies, leaving the states on the margins of economic management.

Three trends in economic reforms:

• That arrangement started to change with the onset of reforms from 1991.
• Three trends, in particular, have shifted the economic centre of gravity from the Centre to the states

Change in the content of the reform agenda:

• The Centre could push through the reforms of the 1990s without even informing, much less consulting, the states because they all pertained to subjects such as industrial licencing, import permits, exchange rate and the financial sector, which were entirely within its domain.
• In contrast, the second-generation reforms on the agenda now shift the emphasis, to use economic jargon, from product to factor markets like land, labour and taxation, which need, not just acquiescence, but often the consent of states.
• There was a clash of interests not just between the Centre and states but also between producer and consumer states, large and small states and coastal and inland states.
• The grand bargain that culminated in the GST, admittedly imperfect, involved all parties making compromises.
• But the deal could not be clinched until the Centre guaranteed to fill the revenue gap, if any, of states according to an agreed formula.

Driving the economic centre of gravity towards states:

• This is the changing dynamics of our fiscal federalism. Ballpark estimates suggest that the Centre collects about 60 per cent of the combined revenue (Centre and states), but gets to spend only about 40 per cent of the combined expenditure.
• This asymmetry is mirrored on the states’ side. Together, they collect 40 per cent of the combined revenue, but spend as much as 60 per cent of the combined expenditure.
• The aggregates is the greater autonomy that states now enjoy in determining their expenditure. Gone is the Planning Commission.
• The states now not only get a larger quantum of central transfers but also get to decide on how to spend that larger quantum.

How states manage their public finances matters much more than before?

• The RBI in its latest annual report on state finances, raised several red flags — states’ increasing weakness in raising revenue, their unsustainable debt burden and their tendency to retrench capital expenditures in order to accommodate fiscal shocks such as farm loan waivers, power sector loans under UDAY and a host of income transfer schemes.
• As the RBI pointed out, the quality of expenditure at the state level has a multiplier effect on overall development outcomes.
• Conversely, fiscal irresponsibility will take a heavy toll on our growth and welfare prospects.
• The market will penalise mismanagement of public finances; it does not much care who is responsible, the Centre or the states, for an unsustainable debt burden or for even the colour of the fiscal deficit.

3. Growing importance in economic federalism:

• Their critical role in creating a conducive investment climate in the country. Much of the responsibility for improving the ease of doing business rests not with Delhi but with the states.
• This highlights the need for coordinated action.

Conclusion:

• India’s prospects, including our aspiration for a $5 trillion economy, depend on the Centre and the states working together.
• No one would know this better than Modi who combines over two decades of experience as chief minister and prime minister.
• Arguably, he has another unique advantage in that more than two-thirds of the states are currently governed by the BJP.

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Moving towards a Colombo reset (The Hindu)

Mains Paper 2: International Relations
Prelims level: Not much
Mains level: New dimensions of India – Sri Lanka Relations

Context:

• Even before the new president of Sri Lanka, Gotabaya Rajapaksa, was sworn in, the narrative about Colombo’s renewed “tilt” towards China and against India had taken root.
• The headline misrepresents the complex power play involving Beijing, Delhi and Colombo.

Background:

• The Great Game in the Subcontinent is not limited to just India and China.
• It is quite easy to forget the considerable interests and influence of many other powers in the region, including the US, European Union, Japan and Russia.
• The exclusive focus on major power rivalry masks the agency of South Asian political elites and their capacity to manoeuvre among the major powers.

About Rajapaksas:

• Although the Rajapaksas had blamed India for their defeat in the 2015 elections, they have sought to make up with Delhi in recent years.
• India has been engaging all the major political formations in Sri Lanka.
• The stage, then, is ready for a reset in the bilateral relations between the two strong governments in Delhi and Colombo.

China’s movement:

• India is acutely aware that China’s economic and strategic salience in the Subcontinent will continue to grow and is not tied to the regime leadership in its neighbourhood.
• Delhi can’t expect its neighbours to shut down economic and commercial engagement with Beijing, notwithstanding the many questions about the terms of China’s assistance on projects, including those under the Belt and

Road Initiative.

• But Delhi will be right to ask Colombo not to take steps with Beijing that threaten India’s security.
• That reset involves addressing the structural factors that have complicated the relationship between Delhi and Colombo.

Develop India-Sri Lanka relationship:

• Delhi and Colombo need a clear understanding of mutual red lines relating to national security and a political comfort level to discuss cases that fall within the orange zone.
• That should help prevent the recurrence of the controversy over Chinese submarines in Colombo port that generated so much bad blood between the two nations in 2014.
• As the world rediscovers the geopolitical value of Sri Lanka at the heart of the Indo-Pacific, Colombo has huge opportunities to leverage its location for national benefit.
• A prudent and important part of that strategy would be to avoid provoking India.
• Delhi too would be wise to be mindful of Colombo’s security concerns and find ways to develop long-term strategic cooperation with Sri Lanka.

Resolve disputes

• Delhi needs to invest some political capital in resolving problems such as the long-standing dispute over fisheries.
• Beyond its objection to China’s BRI projects, Delhi, either alone or in partnership with like-minded countries like Japan, should offer sustainable terms for infrastructure development.
• Delhi also needs to contribute more to the development of Colombo’s defence and counter-terror capabilities.

Shaping India’s relations with Sri Lanka:

• The structural factor shaping India’s relations with Sri Lanka is the Tamil question.
• India’s involvement in Sri Lanka’s tragic civil war has been far more consequential than the China factor in complicating Delhi’s relations with Colombo.
• Delhi has certainly learnt the dangers of being drawn too deep into the domestic conflicts of neighbouring countries.

Way ahead:

• The Rajapaksas have declared that they will not bend before foreign pressures.
• India knows that too much heat from the West will automatically increase China’s leverage in Colombo.
• If the Tamil question continues to have a big impact on Sri Lanka’s foreign policy, Delhi needs to look beyond old formulae to try and encourage reconciliation within Lanka and across the Palk Strait with Tamil Nadu.

Conclusion:

• With a strong government in Sri Lanka, it is time for Delhi to think boldly about its relationship with Colombo.

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The longevity is the biggest achievement: on Shinzo Abe (Indian Express)

Mains Paper 2: International
Prelims level: Not much
Mains level: Challenges ahead of the PM Shinzo Abe

Context:

• On November 20, Shinzo Abe will become the longest- serving Prime Minister of Japan, overtaking Taro Katsura’s record of 2,886 days in office.

Prime Minister term of Mr. Abe:

• Mr. Abe has been in power for two different spells: a short-lived one, between July 2006 and September 2007, and the current stretch since 2012.
• Over the last seven years, he has brought stability to a political landscape that had been fractured, honing the image of a strong, conservative leader readying Japan for a newly muscular role in a shifting geopolitical landscape.
• Mr. Abe has steered the economy out of deflation and decline, if not into growth.
• He has presided over a significant increase in the country’s military capabilities and attempted to expand Japan’s strategic options beyond its traditional reliance on the United States.

The TINA factor

• His legacy might not be as long-lasting as his time in office.
• Critics say the only reason Mr. Abe is still in power is because of a weak and uninspiring Opposition.
• The TINA (there is no alternative) factor that voters around the world are all too familiar with.

Tenure and performance of Mr. Abe:

• Mr. Abe returned to power in 2012, Japan had been through five Prime Ministers in as many years.
• His immediate order of business was implementing a set of economic reforms to stimulate the economy, popularly dubbed Abenomics.
• The three pillars of this stimulus included monetary easing, fiscal spending and deregulation to promote private investment.
• He also vowed to bring more women into the workforce, an attempt nicknamed “womenomics”.
• Mr. Abe has reinvented Japan, from a recalcitrant participant in trade liberalisation to a leader of the Trans-Pacific Partnership bloc, after the U.S. withdrew from it in 2017.
• Under him, Japan has boosted defence spending and enhanced its ability to project power outside of its borders.
• In a historic shift in 2014, Mr. Abe’s government reinterpreted (without amending) the Constitution to permit Japanese troops to fight overseas for the first time since the Second World War.
• A five-year defence programme announced in 2018 allocated 25.5 trillion yen ($233.7 billion) in spending, a 6.4% rise over the previous five years.

On the diplomatic front:

• Mr. Abe has reached out to traditional partners like the U.S. (he was the first foreign leader to meet with Donald Trump after the President’s election), while keeping ties with rival China on an even keel.
• Mr. Abe made an official visit to Beijing last October (the first such visit in nearly seven years) and President Xi Jinping is expected in Japan next year.
• For Japan, it has been a difficult balancing act, to avoid excessive dependence on the U.S., while anticipating the dangers associated with a more assertive China.
• Mr. Abe has demonstrated considerable tactical pragmatism in walking this tightrope.
• Mr. Abe has also reached out to strengthen alliances with regional powers like India and floated the idea of a Free and Open Indo-Pacific for which he has gained the backing, to varying degrees, of the U.S., Australia and India.But, despite this smorgasbord of initiatives,

Criticism:

• Mr. Abe’s tenure has not been entirely rosy.
• The Japanese economy remains limp and Japanese corporations have so far proved unable to transform themselves into 21st century technology leaders.
• Though, during his tenure, Japan has benefited from periods of economic growth and low unemployment, the country remains mired in a slow-growth, high-debt deflationary trap.
• The government recently downgraded its 2019 growth forecast to 0.9% from an earlier prediction of 1.3%.

Moving away from pacifism

• Domestically, Mr. Abe’s vision of a less pacifist Japan remains deeply contested.
• His most cherished policy goal is the amendment of Article 9 in the Constitution: the clause that restricts Japan’s ability to maintain a military deterrent.
• But it is looking no closer to fulfilment than it did at the beginning of his reign. The Prime Minister wants to write the existence of Japan’s Self-Defense Forces, as the military is known, into Article 9, giving constitutional standing to de facto reality.
• However, a survey conducted by the Asahi Shimbun newspaper earlier this year showed that 64% of respondents opposed even this modest revision.
• While Mr. Abe continues to reiterate his pledge to push through the revision by 2020, it is looking increasingly unlikely that he will prove successful.

Way ahead:

• Japan can meet the challenge of China’s increasing heft. Relations with neighbour and potential ally, South Korea, are worse than ever.
• Under Mr. Abe, Japan has made little progress in facing up to its historical responsibility for the widespread atrocities of the Japanese Imperial Army in the Second World War.
• The recent deterioration in relations with Seoul were prompted by unresolved grievances involving Koreans who were forced to work in Japan’s mines and factories during the war, as well as “comfort women” who were made to service the military’s brothels.
• Far from helping heal the historical wounds inflicted by Japan, Mr. Abe’s nationalistic stance is seen as unrepentant at best and provocative at worst.

Conclusion:

• Mr. Abe’s long reign will come to an end in September 2021 when his term as leader of the Liberal Democratic Party finishes.
• At the current juncture it looks as though he will get a pass in the history books, though not with distinction. ‘A’ for longevity, but a ‘B,’ at most, for everything else.

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Maternity scheme beneficiaries (Mint)

Mains Paper 2: Governance
Prelims level: Pradhan Mantri Matru Vandana Yojana
Mains level: Government policies and interventions for development in various Sectors and issues arising out of their design and implementation incl. Housing

Context:

• A vital programme to support lactating mothers and pregnant women by compensating them for loss of wages during their pregnancy has been able to reach less than a third of the eligible beneficiaries.
• The researchers who extrapolated from data obtained under the Right to Information (RTI) Act said.

Pradhan Mantri Matru Vandana Yojana:

• Almost 61% of beneficiaries registered under the Pradhan Mantri Matru Vandana Yojana (PMMVY) between April 2018 and July 2019 (38.3 lakh out of the total 62.8 lakh enrolled) received the full amount of ₹6,000 promised under the scheme, according to an RTI reply.
• However, the researchers, who are development economists, assert that since the scheme failed to reach at least 49% of all mothers who would have delivered their first child (an estimated total of 123 lakh for 2017 according to the researchers), the scheme was able to benefit only 31% of its intended beneficiaries.
• The PMMVY is targeted only at women delivering their first child.
• A cash amount of ₹6,000 is transferred to the bank account of the beneficiary in three instalments upon meeting certain conditions including early registration of pregnancy, having at least one ante-natal check-up and registration of child birth.

The stipulated conditions:

• The scheme brings under its ambit 23% of all births and pays full benefits to a mere 14% of all births, which was at 270.5 lakh for 2017.
• The meagre reach calculated is also an overestimate, asserts Ritika Khera, Assistant Professor, IIM Ahmedabad.
• The actual number of beneficiaries would have been higher for 2018-2019, she contends, as the figure increases from one year to the next.
• The data extrapolated from the RTI reply is also consistent with a survey coordinated by three development economists Jean Dreze, Anmol Somanchi and Ms. Khera.
• The survey was conducted to assess the implementation of the scheme.
• The survey team covered a district each in six States — Chhattisgarh, Himachal Pradesh, Jharkhand, Madhya Pradesh, Uttar Pradesh and Odisha — in 2019 to interview women and inspect anganwadis.
• A total of 706 women were interviewed, including 342 pregnant and 364 lactating women.

Inadequate awareness:

• The study found that only 50% of pregnant women and 57% of nursing women surveyed were eligible for the scheme.
• It also throws light on the need for higher awareness among the pool of beneficiaries — only 66% of pregnant women and 69% of nursing women knew about the scheme. Only 8% of pregnant women and 23% of nursing mothers received some benefits.

Shortcomings:

• Several factors impeded proper implementation of the programme that aims to fight malnutrition among children.
• These include an application form of about 23 pages, a slew of documents such as mother-child protection card, Aadhaar card, husband’s Aadhaar card and bank passbook aside from linking their bank accounts with Aadhaar.
• The requirement to produce the husband’s Aadhaar card results in excluding women who may be living with men they are not married to, single mothers and those who may be staying at their natal home.
• Women must also have the address of their marital home on their Aadhaar card, which often results in newly weds being either left out or forced to go from door-to-door when pregnant and needing rest and care.
• Odisha, which decided to not implement PMMVY because it has its own State-sponsored scheme called ‘Mamata’ that includes two births, has a few lessons to offer through its near universal coverage.

Way ahead:

• According to the survey, 95% of pregnant women and 89% of nursing mothers had been enrolled, the level of awareness was more than 90% among the two categories of women.
• However, there were long delays in transferring the cash amount to the beneficiaries resulting in only 35% of all women who were pregnant and 67% of all nursing women receiving some benefits.
• The survey findings also highlight the need to pay greater attention to the special needs of pregnancy good food, extra rest and health care.
• Only 22% of the nursing women surveyed reported that they had been eating more than usual during their pregnancy and the average weight gain was barely 7kg when it should be at least 13-18kg.
• Almost all the respondents had done household work regularly during their last pregnancy.
• 21% of nursing women said that they had no one to help them with domestic chores and 63% said that they had been working right until the day of delivery.

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Empowered Action Group States (Mint)

Mains Paper 2: Health
Prelims level: National Family Health Survey
Mains level: National Family Health Survey report on malnutrition in Odisha

Context:

• Odisha, which is one of the Empowered Action Group States, or eight socioeconomically backward States of India, has done remarkably well in health and nutrition outcomes over the past two decades. Its infant mortality rate has significantly declined.
• Its under-five mortality rate almost halved in the National Family Health Survey (NFHS)-4 from NFHS-3.
• It has seen a steep decline in stunting in children under five. Anaemia in children and pregnant women has also decreased since NFHS-3.
• Antenatal care and institutional deliveries have shown good improvement. All these changes have been possible with financing, policy support, robust leadership, and innovations in delivery of services.

Nutritional interventions

• Nutrition has a strong correlation to health, and is integral to growth and development. Timely nutritional interventions of breastfeeding, age-appropriate complementary feeding, Vitamin A supplementation, and full immunisation are effective in improving nutrition outcomes in children.
• Odisha has performed better than other Empowered Action Group States in reducing undernutrition, and sets an example with its nutrition action plan calling for convergence with health, nutrition, and WASH (water, sanitation and hygiene) programmes.
• Odisha has taken a decisive step of decentralising the procurement of supplementary nutrition under the Integrated Child Development Services programme.
• This has led to fair access of services under the ICDS by all beneficiaries.
• This is evident from the rise in utilisation of services under the ICDS as compared to a decade ago.
• There has been a marked improvement in supplementary nutrition received by pregnant and lactating women in NFHS-4 compared to NFHS-3.

Major loopholes highlighted:

• However, despite progress in child and maternal indicators, Odisha continues to be plagued by a high level of malnutrition.
• There is stark variability across districts in stunting ranging from as high as 47.5% in Subarnapur to a low of 15.3% in Cuttack.
• Wasting is high in 25 out of 30 districts. Almost half of the under-five children from tribal communities in Odisha are underweight, and 46% are stunted.
• The infant mortality rate among tribals is the fourth highest in Odisha, after Madhya Pradesh, Rajasthan and Chhattisgarh.
• Supplementary food given under the ICDS programme has shown a significant increase.
• However, data show that less of such food is given as children grow older.
• There is also a decline is children receiving timely complementary feeding.
• Less than 10% of children receive a minimum acceptable diet. This can be attributed to a possible lack of understanding and awareness about nutrition due to illiteracy.

Improving implementation

• Another challenge for Odisha is in reaching out to remote and particularly vulnerable tribal groups.
• This could be the reason why tribal women and children are lagging behind the national average on nutrition and health indicators.
• It is essential to improve the implementation of schemes, and ensure last-mile delivery of nutrition services.
• A part of the solution lies in setting up mini Anganwadi centres catering to far-flung tribal hamlets.
• Raising awareness through community campaigns on the need for good nutrition would help improve utilisation of services by beneficiaries.
• The International Food Policy Research Institute, in its research, called for inter-department engagements to accelerate the nutrition outcome in Odisha.
• There is a need to improve sanitation, women’s education and underlying poverty, to be able to tackle undernutrition.

Conclusion:

• Underweight children should also be identified precisely so that the monitoring mechanism for improving service delivery can be strengthened.
• The National Nutrition Mission sets an example with its inter-ministerial convergence and real-time monitoring mechanism for tracking each beneficiary and tackling malnutrition.

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Global trading system poised for a new normal (The Hindu)

Mains Paper 2: International Relations
Prelims level : World Trade Organisation
Mains level : Bilateral trade grouping and its affect India’s interest

Context:

• The tale of two events at two different points of time demonstrate unusual commonalities.
• One occurred in 2001, and another is about to take place on January 15.
• While the first event happened against the backdrop of the 9/11 terrorist attacks and the impending Iraq war, the second is about to unfold amidst escalating US-Iran tensions.
• In both events, the dramatis personae are the same: the US and China, the world’s two largest economies.

Protracted negotiations preceded:

• The US paved the way for China to join the World Trade Organisation (WTO) in 2001, after extracting a significant price by forcing Beijing to slash its tariffs on industrial and agricultural products to levels that industrialised countries took more than 200 years to bring down. China had also committed to reduce subsidies and other trade-promoting measures for industry and agriculture.
• Beijing had agreed to reduce its de minimis support for agriculture producers below what was allowed for developing countries.
• For almost 15 years, anti-dumping investigations against Chinese products were punitively high as they were treated as products originating from non-market economy. \
• China chose to pay the price to establish its presence in the global trading system.

US’ allegations:

• The US says China aggressively promotes 10 advanced manufacturing industries domestically “to replace foreign products with Chinese companies’ products in the China market through a variety of fair and unfair means, including through the extraction of foreign technologies,” according to a 2017 report to the US Congress by the Office of the US Trade Representative in January 2018.
• The continued ballooning of the US trade deficit which touched $648 billion in manufactured goods last year and the loss of five million jobs during the last 16 years demonstrates that multilateral, regional, and even bilateral trade agreements with Korea and others, have only brought de-industrialisation and destruction.
• In short, the US argues that ever increasing trade deficits are an offshoot of the manner in which it was duped, cheated, and deceived by its trade partners who refused to play by the rules governing the so-called “fair and free trade”.
• The new Sino-US normal attempts to cock a snook at the global trading system based on rules and comparative advantage.
• So, the trade war between the two largest economies in the world has almost paved the way for managed trade in which countries compete not on the basis of their comparative trading strengths but on sheer market and power-based equations.
• There will be several collateral causalities in the global trade because of this new normal.
• Countries like Australia, Brazil, Argentina, and other major farm producers will take a hit once orders from China dry up because of the purchase of American farm products.

Conclusion:

• There is no guarantee that trade relations between the two major powers will dramatically improve.
• Indeed, the trade war could continue for a considerable period of time.
• It is essentially a battle over who is going to be the hegemon and who is going to lead the fourth industrial revolution,” former South African trade minister Rob Davies told this columnist.

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NPA crisis: Prevention is the cure (The Hindu)

Mains Paper 3: Economy
Prelims level : Insolvency and Bankruptcy Code
Mains level : Significance of the IBC

Context:

• At the end of September 2019, the GNPA was at 9.1 per cent of banks’ loans and other outstandings.

Significance of the IBC:

• Credit for this has been given to the Insolvency and Bankruptcy Code (IBC).
• While it has indeed put the fear of God into defaulting company promoters (who don’t want to lose the controlling interest in the company to the highest bidder), for banks it means huge sacrifices, euphemistically and flippantly described as ‘haircuts’, in the range of 50-60 per cent.

‘Cleaning up’ the balance sheet:

• Balance sheets of banks look squeaky clean when bad debts (or NPAs) are brushed under the carpet after the IBC resolution process is over. But then, banishing the problem is not the same as finding a solution.
• The IBC resolution process, to be sure, is better than the earlier state of affairs when banks would wait helplessly for years wringing their hands in desperation. In the end, they may recover a small portion, which is better than nothing.
• While the grim prospect of losing control of the company is bound to halt the rampaging promoters in their tracks, the economic downturn and genuine business issues often come in the way of loan and interest repayment.
• Some fly-by-night, thick-skinned operators do not really lose sleep over losing control of their companies.

Asset-liability mismatch:

• Banks have also been guilty of courting trouble by lending to long-gestation infrastructure projects. Asset-liability mismatch (ALM) is a banker’s nightmare.
• If a bank has accepted fixed deposits of ₹1,000 crore for three years, it must earmark this for loans of shorter maturities.
• Otherwise it may find itself in a fix, with depositors demanding their money back after three years.
• It is to avoid ALM that take-out financing emerged on the scene. Like a relay race, with bank A passes the baton to bank B after the first three years, bank B to bank C after the next three years and so on, so that no bank faces the pitfalls of an ALM.
• But in India, take-out financing is extremely inadequate, with specialised infrastructure financing agencies like IIFCL passing the buck to the banks instead of undertaking loan appraisal upfront, and then bringing the banks into picture when things have stabilised.

Way ahead:

• Banks which read the riot act to mortgagers and gold-loan clients have, alas, no immediate and sure-shot recourse when it comes to industrial loans.
• They do compensate for this extra risk by charging higher interests, but when the loans go sour, interest too stops flowing in.
• The government and the RBI must celebrate only when they succeed in preventing NPAs from building up in the first place, rather than after brushing them under a carpet.

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Shameful deaths (The Hindu)

Mains Paper 2: Health
Prelims level : Not much
Mains level : Loopholes in health system in India

Context:

• At JK Lon Hospital in Kota, 105 infants died in December alone. In neighbouring Gujarat, 111 infants died in Rajkot Civil Hospital and 85 deaths were recorded in Ahmedabad Civil Hospital, also in December.
• The divergence in Gujarat between its economic and social indicators (as indeed for India as a whole) points to the problems with India’s model of development, where the State has persistently under-invested in the social sector.

Causes of death:

• As for the prevalence of hunger amidst a stockpile of foodgrains, the government needs to do some explaining.
• Community medicine research has established the role of nutrition in keeping even vector-borne diseases like malaria at bay.
• In Rajasthan, the report of a government panel reveals that a majority of infants died due to hypothermia.
• The ICU did not have warmers to maintain the infant body temperature at its ideal of 36.5 degrees Celsius.
• Of the total 28 nebulisers, 22 were dysfunctional, there were no para monitors or oxymeters that are routinely required to monitor oxygen levels, there was no oxygen pipeline, and the ICU had not been fumigated for months.

Way ahead:

• These revelations are reflective of both the appalling state of public hospitals in India and the vulnerability to disease of the impoverished population.
• In the range of 1.2-1.4 per cent of GDP over the past decade, public financing of health accounts for less than a third of overall, mostly out of pocket, health expenditure.
• As a result, life expectancy at birth in India is lower than in Nepal and Bangladesh.
• The infant mortality rate is higher than that of Bangladesh.
• Full immunisation rate of children is 62 per cent while many countries in Sub-Saharan Africa have rates higher than 90 per cent.
• The urgency of a substantial increase in public financing of health care, besides health system reforms, cannot be greater.

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Man-made disaster: On Iran shooting down Ukraine plane (The Hindu)

Mains Paper 2: International
Prelims level : Surface-to-air missile
Mains level : Iran shooting down Ukraine plane

Context:

• The shooting down of a passenger plane by Iran’s military on Wednesday, a few hours after it launched missile attacks on U.S. troops in Iraq, is the most tragic outcome of the recent spike in U.S.-Iran tensions.
• The Ukrainian jet with 176 aboard was hit by an Iranian surface-to-air missile shortly after it took off from Tehran’s Imam Khomeini Airport.
• After initially rejecting western assertion that an Iranian missile brought down the plane, Tehran on Saturday said one of its soldiers fired the missile, mistaking the jet for an enemy aircraft “as it turned to a sensitive area”.

Background:

• This is not the first time U.S.-Iran tensions have led to an aviation disaster.
• In 1988, in the last stage of the Iran-Iraq war, a U.S. Navy warship shot down an Iran Air flight over the Gulf, killing all 290 passengers.
• Then the U.S. troops said they mistook the plane for a military aircraft that was going to attack the ship.
• Iran says the same today. In both incidents, innocents, who did not have anything to do with the conflict, became victims.

Man-made disaster:

• Iran blames “human error” for the attack on the passenger plane. But whatever the context is, it cannot abdicate responsibility for what happened.
• Ukraine International Airlines says the flight took off after clearance from the airport.
• The airline also rejects the Iranian military’s claim that the plane veered off its route.
• Iran’s admission and apology is a step in the right direction. But it should carry out, along with international investigators, a thorough probe into what led to the “accident”, and punish whoever is responsible for the “human error”.
• Such mistakes are unacceptable even in war.
• Iran should have put in place the highest safety measures and followed international protocols while preparing itself for enemy retaliation.
• Clearly it did not do so. And innocent people paid a price for Iran’s mistake.

Way ahead:

• Both Iran and the U.S. should also ask themselves whether the confrontational path they have chosen since Mr. Trump unilaterally pulled the U.S. out of the Iran nuclear deal, in May 2018, was worth the risk.
• Both countries were on the brink of an all-out war early this week.
• At least 226 people, mostly Iranians, have already lost their lives in tragedies related to the Soleimani killing (over 50 were killed in a stampede at the funeral).
• If Iran is sincere in its apology, it should not only unearth what happened and punish the culprits but also take immediate steps to reduce tensions with the U.S.

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Matter of interpretation: On NCRB’s Crime in India Report 2018 (The Hindu)

Mains Paper 3: Defense and Security
Prelims level : NCRB 2018
Mains level : Highlights the NCRB’s Crime in India Report 2018

Context:

• The National Crime Records Bureau’s 2018 report was unveiled last week. \
• While the fact that this document has been made available so soon should be welcomed, this report, as with those for earlier years, carries the caveat that crime records and statistics are only as good as their reporting.
• Some States are better than others in tracking and registering crimes.

Key highlights of the report:

• Kerala and the National Capital Region having the highest crime rates in the country — 1463.2 per one lakh population and 1342.5, respectively — is also a reflection of the fact that crime reporting, follow-up and subsequent steps in trial and punishment are much better undertaken in these two States/UTs.
• Yet, what should be worrying for the capital city region is that unlike Kerala, the number of cognisable crimes has steadily increased to 2,62,612 in 2018 from 2,16,920 in 2016.
• Better reporting could also perhaps explain why there is a 15% increase in the total crimes against women across all States, but the fact that this number went up by 66% in a large State such as Uttar Pradesh must because for concern.
• The crimes against women fell 20.8% after reaching a peak number of 17,222 in Delhi.
• The fall in these numbers, corresponding to the general increase in crimes, could reflect the outcomes of better gender sensitisation in the capital region.
• Unlike crime numbers that are difficult to interpret due to registration and policing issues, the number of murders across States is a stark reflection of violent crime.
• The finding in the 2017 NCRB report that northeastern States such as Arunachal Pradesh, Assam, Tripura and Meghalaya have a relatively higher murder rate compared to most States bears itself out in 2018 as well.
• Other States which have a worrisome record here include Jharkhand (4.6 murders per one lakh population, the highest in the country) and Haryana (3.9). Among cities, Patna (4.4) has an egregious murder rate.
• The protests and violence related to them have occupied the news cycle in the last month or so, data from the report suggest that there has been a marginal decrease in the total cases related to rioting from 2016 (61,974) to 2018 (57,828).
• Cases related to caste and communal/religious riots, political violence and agrarian conflicts registered a dip while there was an increase in industrial rioting and other personal disputes.

Way ahead:

• Among cases registered as “offences against the State”, there has been an ominous increase under “sedition” with the number of those booked in 2018 double that of 2016, even as most such cases under this section came under the “Prevention of Damage of Public Property Act”; Tamil Nadu and Uttar Pradesh led with nearly half of the overall cases.

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Hypocrisy in the name of liberalism (Indian Express)

Mains Paper 3: Defense and Security
Prelims level : Not much
Mains level : Challenges associate with spreading left-wing-extremism

Context:

• Uninformed opposition to the Citizenship Amendment Act is a classic case of back-door support to the front-door entry of Bangladeshi infiltrators.
• While those in office are striving to ward off the impact of the challenges from the global economy and give further impetus to India’s manufacturing sector, many in the opposition are working overtime to “manufacture” unrest.

Background:

• It is easier to do so as most “narrative shapers” come from the left-of-centre camp.
• Compared to the BJP, ideologies opposed to it have always had an upper hand in the mainstream media.
• Even in the NGO sector, many of whom now call themselves civil society, leftists have been in a dominant position.
• This used to be the case in academia as well. Even the Padma awards were almost an exclusive right of the left-of-centre artistes and authors.

Post 2014:

• Post 2014, this situation has been changing. The left-of-centre ideological block is facing stiff opposition in every walk of public life.
• Accustomed to calling the shots without any accountability, this group is now bewildered at an establishment that is demanding answers.
• Increasingly, they are now finding it tough to protect their privileges.
• Habituated to an unquestioned hegemony in their chosen sectors, leftists are perturbed to find that their opponents can outsmart them.
• During the last five years, all this contributed to the unease in the leftist block.
• Frustration in this block reached its zenith after the resounding victory of the BJP-NDA in the 2019 general election.
• Finding themselves in a helpless situation, they are now spreading unfounded fears, sowing seeds of suspicion and rejecting the fears about the impact of unchecked infiltration of Bangladeshis, expressed even by the apex court.
• Uninformed opposition to the Citizenship Amendment Act is a classic case of back-door support to the front-door entry of Bangladeshi infiltrators.

Spreading left-wing-extremism:

• The people are being told that opposing the CAA is equal to progressivism. Now that there is a greater public awakening about the truth behind the CAA and with the initial opposition to the Act depleting, violence in JNU is being used by the leftist to play the martyr.
• It is, therefore, educative to understand the general game plan as well as the usual positions of the leftists.
• To start with, nationalism was always a bad word for the Left. Many in the ultra-left have a firm conviction that India is a conglomeration of several nationalities.
• Although they talk of constitutionalism, they look grudgingly even at the constitutional boundaries of India.
• Disregarding the threat of secessionism, they have always been pro-Article 370, much against the desire of the framers of Constitution.
• Supreme Court observations and reprimands notwithstanding, leftists always opposed the common civil code and by implication, freedom to Muslim women from the barbaric practice of triple talaq as well.
• Post JNU, the entire leftist ecosystem is busy in condemning violence.
• Violence is always deplorable. But the leftists have double standards.
• They don’t mind burning public property in Delhi and unleashing murderous politics in Kerala.
• But when violence takes a toll on their functionaries, they suddenly become Gandhian and create a picture as if their political activism has always been within the “legal framework” and non-violent as well.

Way forward:

• Frustrated by electoral reverses, the ideological untouchability practised by the leftists leading to intellectual arrogance is now acquiring new, dangerous dimensions.
• Their hegemony is now being challenged and that is the real reason for their stomach ache.
• This frustration takes a perverted turn when enmity to and a pathological hatred of Prime Minister Narendra Modi is added to it.
• Unless the saner elements in their ideological block ensure that leftists liberate themselves from this hypocrisy, their anarchist politics is going to wreak havoc, and sadly, all in the name of liberalism.

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