Faltering steps in the anti-AIDS march (The Hindu)

Mains Paper 2 : Health
Prelims level : anti-AIDS march
Mains level : Pathways to end AIDS pandemic by 2030

Context

• The Joint UN programme on AIDS, commonly known as UNAIDS, is facing one of the worst challenges afflicting the global AIDS response this time an existential threat questioning its very relevance.
• The UN Secretary-General, António Guterres, is expected to appoint a new executive director after the departure of Michel Sidibé in May 2019 on the recommendation of the programme coordinating board which manages the organisation.
• There are strong contenders from Africa and the U.S. in the reckoning among those who have been shortlisted.

A pivotal role

• At such a crucial time, it is disturbing to hear voices again questioning the relevance of UNAIDS for the global response.
• There are suggestions that AIDS should go back to the World Health Organisation (WHO) where it originally belonged to some 25 years ago.
• And that the new executive director should be equipped with an exit strategy to wind up the organisation.

Background

• Since its establishment in 1994, UNAIDS has been able to successfully mobilise world opinion to mount an exceptional response to an epidemic which has consumed over 20 million lives with still no effective treatment or cure.
• The UN General Assembly Special Session (UNGASS) 2001 was a game changer with the adoption of a political resolution that itself was exceptional in many ways.
• The creation of a Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) and the slashing of prices of AIDS drugs by Indian generics have brought treatment within the reach of many countries.
• Today some 22 million people are under antiretroviral therapy (ART) and preventing mother-to-child transmission of HIV has become an achievable goal by 2020.
• The organisation has provided leadership to many countries which in 10 years (2001-2010) could halt the epidemic and reverse the trend.

The epidemic is still alive

• However, at a time when it should be leading the global response to end AIDS as a public health threat, the organisation has started to falter in its strategy.
• It came the extremely optimistic messaging blitz that the world was going to see the end of AIDS very soon. This is far from true. Regions such as eastern Europe and Central Asia and West Asia are nowhere near reaching that goal, with many countries such as Russia witnessing a raging epidemic among drug users and men who have sex with men (MSM) communities.
• With the top leadership in UNAIDS exhorting countries to bring AIDS “out of isolation” and integrate with health systems, the political leadership in many countries have thought that AIDS is no more a challenge.
  AIDS epidemic
• It has been the thinking that the AIDS epidemic can simply be treated away by saturating anti retroviral (ARV) coverage. Nothing could be farther from the truth. It is forgotten that AIDS affects the poor, the marginalised and criminalised communities disproportionately as they face challenges in accessing the ‘test and treat’ programmes.
• The ever increasing number of young people who are joining the ranks of vulnerable populations do not get prevention messages like in the past. National programmes do not any more consider condoms, sexual education and drug harm reduction as central to the prevention of HIV transmission that results from unprotected sex and drug use.
• Funding for non-governmental organisations and community-based organisations working on prevention has virtually dried up.

Weakening of country leadership of UNAIDS

• It has been the weakening of country leadership of UNAIDS in many high-prevalence countries.
• Senior country-level positions are, in many instances, held by people who do not possess the core competence to constructively engage political leadership to undertake legal reforms and provide access to services to marginalised populations.

Weakening activism

• But the biggest setback has been the lost voice of vulnerable communities which was the main driving force of AIDS response in the decade after UNGASS.
• Activism surrounding AIDS has suddenly fizzled out emboldening many countries, especially in Africa, to further stigmatise and discriminate by enacting new laws that criminalise vulnerable sections of society.
• The charges against one of the senior most staff and his exit from the organisation have seriously compromised UNAIDS at a time when the global response needs its leadership the most.
• The new executive director will have an unenviable task of not just restoring the credibility and relevance of the organisation but strengthening its presence at country level and making it more meaningful to the communities which look to it for leadership.
• The new executive director has to work relentlessly to place prevention of the epidemic and empowering communities at the centre of global response.

Way forward

• With 1.7 million new infections and one million deaths occurring every year, we can’t afford to drop the ball half way. The commitment to end AIDS by 2030 is ambitious but not impossible to achieve.
• What we need is a re-energised UNAIDS with a strong and fearless leadership from a person of high integrity and commitment along with a sincere effort to remove the deadwood from the organisation.
• Any thought of winding it up or giving the mandate back to WHO would be suicidal at this moment.

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Kashmir mediation: Trump has violated diplomatic protocols (The Hindu)

Mains Paper 2 : International Relations
Prelims level : Kashmir Issue
Mains level : Bilateral grouping and agreements

Context

• Facing a furore in Parliament over the issue, the government has clarified in no uncertain terms that Prime Minister Narendra Modi did not request U.S. President Donald Trump to “mediate or arbitrate” on the Kashmir issue, as Mr. Trump claimed on Monday.

Response made by the government

• Addressing Parliament, External Affairs Minister S. Jaishankar said India remains committed to its policy of discussing all outstanding issues with Pakistan only bilaterally, and assured the House that Mr. Modi did not raise this with Mr. Trump at their recent meeting in Osaka during the G-20 summit.
• In making the claim that has been roundly denied by New Delhi, Mr. Trump breached several well-laid diplomatic protocols, including one against discussing privileged conversations with a leader, during a public conversation with another.

Significant Statements

• Mr. Trump also said a “lot” of his talks with the Pakistan Prime Minister would focus on India and Afghanistan, an odd departure from the precept of putting bilateral issues to the fore, and being more discreet when discussing sensitive relations involving other countries.

New Realities

• For New Delhi, it may be time to recognise that Mr. Trump’s comments are a sign of new realities in international diplomacy, where leaders care less about niceties and more about open communication.
• Mr. Modi will have to prepare accordingly for some plain-speaking when he visits the U.S. and meets with Mr. Trump, as he is expected to, in September this year.
• In the short term, the government’s decision to address the claim by Mr. Trump will have nipped any repercussions in the bud.
• The government should pursue the issue through diplomatic channels with the U.S. government, and determine whether Mr. Trump made the comments out of confusion or deliberately.

Stand on Kashmir

Opposition to third part mediation

• India has always opposed any suggestion of third-party mediation on Jammu and Kashmir; both the 1972 Shimla Agreement and the 1999 Lahore declaration included India’s and Pakistan’s commitment to resolving issues between them.
• It is unlikely that Mr. Modi would have spoken out of line with this policy, and the most charitable explanation for Mr. Trump’s new contention is that he mistook India’s appeal to the international community to hold Pakistan accountable for terror groups on its soil that carry out attacks in Kashmir, for a general desire for mediation.

Contentious Issues

• Mr. Trump’s comment in March that the U.S. successfully mediated for the release of captured fighter pilot Abhinandan by Pakistan may have even given him some hope that the U.S. could play a larger role on the Kashmir issue, and New Delhi would need to address that.
• A more worrying proposition is that Mr. Trump took the line favoured by his Pakistani interlocutors on Kashmir as a way of enhancing his own plans for a pullout from Afghanistan with Pakistan’s help on security and talks with the Taliban.

Conclusion

• While the damage from Mr. Trump’s words may not have a very lasting impact on India-U.S. ties, that from any rushed measures to force a resolution in Afghanistan will have far-reaching and lasting impact, including on India.

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SEBI needs financial autonomy to remain effective (The Hindu)

Mains Paper 3 : Economy
Prelims level : SEBI’s surplus funds
Mains level : Impacts of the SEBI’s surplus funds

Context

• The Centre’s decision to clip the wings of the Securities and Exchange Board of India has not gone down too well with its members.
• Yet, the Centre is refusing to budge.
• In a letter dated July 10, SEBI Chairman Ajay Tyagi said the Centre’s decision to suck out SEBI’s surplus funds will affect its autonomy.

Background

• As part of the Finance Bill introduced in Parliament, the Centre had proposed amendments to the Securities and Exchange Board of India Act, 1992 that were seen as affecting SEBI’s financial autonomy.
• To be specific, the amendments required that after 25% of its surplus cash in any year is transferred to its reserve fund, SEBI will have to transfer the remaining 75% to the government.
• On Friday, the government rejected the plea from SEBI’s officials asking the government to reconsider its decision, thus paving the way for further conflict.
• Prima facie, there seems to be very little rationale in the government’s decision to confiscate funds from the chief markets regulator.

Key impacts

• For one, it is highly unlikely that the quantum of funds that the government is likely to receive from SEBI will make much of a difference to the government’s overall fiscal situation.
• So the amendment to the SEBI Act seems to be clearly motivated by the desire to increase control over the regulator rather than by financial considerations.
• This is particularly so given that the recent amendments require SEBI to seek approval from the government to go ahead with its capital expenditure plans.
• A regulatory agency that is at the government’s mercy to run its financial and administrative operations cannot be expected to be independent.
• Further, the lack of financial autonomy can affect SEBI’s plans to improve the quality of its operations by investing in new technologies and other requirements to upgrade market infrastructure.

Long term impacts

• This can affect the health of India’s financial markets in the long run. In the larger picture, this is not the first time that the government at the Centre has gone after independent agencies.
• The Reserve Bank of India and the National Sample Survey Office have come under pressure in recent months, and the latest move on SEBI adds to this worrisome trend of independent agencies being subordinated by the government.
• The Centre perhaps believes it can do a better job of regulating the economy by consolidating all existing powers under the Finance Ministry. But such centralisation of powers will be risky.

Conclusion

• Regulatory agencies such as SEBI need to be given full powers over their assets and be made accountable to Parliament.
• Stripping them of their powers by subsuming them under the wings of the government will affect their credibility.

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Rebooting labour reforms (The Hindu)

Mains Paper 3 : Economy
Prelims level : Wages bill
Mains level : Positivity of the code on wages bill

Context

• The compression of 44 labour laws into four ‘codes’ or broad categories wages, social security, industrial relations and occupational health and safety forms a central aspect of the Centre’s labour reforms push since 2015.

Background

• This is not a bad idea, as it simplifies access to numerous provisions of the law by all stakeholders concerned.
• As part of this exercise, the Cabinet recently approved the tabling of the Code on Occupational Safety, Health and Working Conditions Bill in Parliament, which encapsulates 13 laws.
• The Wage Code Bill, on which the Parliamentary Standing Committee on Labour drew up its comments last December, will be introduced in Parliament soon.
• While piloting these changes, it is important that the Centre reaches out to a cross-section of stakeholders, some of whom have already expressed misgivings.

Positivity of the code on wages bill

• The Code on Wages has some positive proposals, such as extending the minimum wage law to all activities, not just the 45 ‘scheduled’ ones. A benchmark national minimum wage will set a floor.
• However, the definition of worker is not clear. The calculation of the level of minimum wage by an expert committee is at variance with ILO parameters.
• A lean inspector regime is all very well, but it must monitor workplace safety.
• The code on industrial relations has evoked strong reactions, as the right to form unions and accord them powers of representation has been severely curtailed.
• This can be both anti-democratic and economically counterproductive.
• An approach that regards workers as partners in production is likely to promote industrial harmony.
• Shutting out legitimate avenues of expression can lead to violent outbursts.
• Workforce entitlements should not be disregarded in the urgency to ease the conduct of business.

Highlights of the recent economic survey study

• The latest Economic Survey cites studies to observe that a 10 per cent rise in minimum wages leads to a 6.34 per cent increase in employment in rural areas in the case of both men and women, with a statistically insignificant impact in urban areas questioning the bias against raising wages.
• In an age when productivity and skills count for a lot, India is unlikely to gain very much from wage arbitrage alone.
• Its manufacturing is likely to prosper on the back of a skilled and well paid workforce, with a supportive ecosystem in terms of infrastructure and logistics, as Economic Survey 2017-18 suggests.

Way forward

• Speaking of the potential of the labour-intensive garments sector, it observes: “Clearly, India still has potential comparative advantage in terms of cheaper and more abundant labour.
• But these are nullified by other factors that render them less competitive than their peers in competitor countries.” Garment wages in not just China, but Vietnam and Indonesia are higher than in India and their yet their exports are growing.
• An approach to labour regulation that cuts out compliance headaches, while improving the lot of the employees should be the guiding principle — as in the developed world.

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An ally, a partner and American unilateralism: on the U.S. response to Turkey's S-400 deal with Russia (The Hindu)

Mains Paper 2 : International Relations
Prelims level : Countering America’s Adversaries Through Sanctions Act
Mains level : Various allies and NATO forces

Context

• The decision by the United States to terminate Turkey’s participation in the F-35 joint strike fighter project and its threat to impose economic sanctions on Ankara under Countering America’s Adversaries Through Sanctions Act (CAATSA) in response to the Turkish decision to buy Russian S-400 air defence systems has close parallels to the predicament facing India on the same issue.
• There are major differences in the two cases, but there are also remarkable similarities.

Turkey’s move

• Turkey has been a long-standing member of the North Atlantic Treaty Organisation and an integral part of the American-led alliance whose principal goal was and continues to be to prevent the expansion of Russian influence and power.
• It was also seen as the principal gateway for the projection of American power in West Asia, especially in Syria and Iraq, through the Incirlik airbase.
• The U.S. and other members of NATO are worried that a Russian military relationship with Turkey could provide Moscow access to the technological secrets underpinning NATO’s most sophisticated weapon systems.
• Ankara has remained defiant and the first deliveries of components of the S-400 systems arrived in Turkey earlier this month.

Largely counter-productive

• Turkey’s decision to acquire the Russian systems emanated in part from the American refusal under the Barack Obama administration to sell it the Patriot anti-missile system that Ankara considered essential for its air defence in the context of the Syrian civil war.
• Turkey’s forced ejection from the F-35 project now could also turn out to be counterproductive. Reports suggest that Turkey is planning to buy advanced Sukhoi fighter jets (the Su-35 and/or the Su-57) from Russia to compensate for the loss of the F-35 planes, thus further complicating the issue of NATO interoperability.
• Although tensions in the relations between the U.S. and Turkey had become increasingly evident in the past couple of years, especially over the American support to the Syrian Kurdish force fighting the Islamic State, the YPG, which Turkey considers an extension of the secessionist PKK, Ankara and Washington are formal allies as members of NATO.

The Indian deal

• The Indian case is very different. While it is true that the U.S. now considers India a “strategic partner”, principally because it views New Delhi as a counterweight to expanding Chinese influence in the Asia-Pacific region, India has never been a formal ally of Washington.
• From Jawaharlal Nehru’s time New Delhi has attempted to maintain its strategic autonomy and indeed has had a close defence relationship with Russia, which continues to be India’s largest arms supplier. Therefore, there is far less reason for the U.S. to take umbrage at India’s decision to buy the S-400 air defence system.
• However, the current American administration seems incapable of understanding these glaring differences between the two cases. In part this is the result of the fact that in 2017, the U.S. Congress passed CAATSA that makes it mandatory that the U.S. impose economic sanctions on countries engaging in significant business transactions with the Russian defence sector.India’s purchase of the S-400 falls squarely within this definition.
• The threat of CAATSA sanctions comes at a very inopportune time for India as it has been considering major multi-billion dollar arms acquisition deals with the U.S.
• The U.S. is also India’s largest trading partner and is intimately engaged in India’s civil nuclear programme.
• While there is a provision for waivers in the CAATSA legislation, these are not automatic and are tied principally to Russian behaviour and therefore almost impossible to implement.

The whole affair leaves India in a catch-22 situation

• It cannot renege on the S-400 deal, which was signed on October 5, 2018, for deliveries to be made by April 2023, without alienating its largest and most reliable defence supplier.
• On the other hand, going ahead with the deal is likely to invite American economic sanctions and throw a wrench into India’s developing strategic relationship with the U.S.
• On its part, the U.S. is caught in a bind because it cannot give a waiver to India while sanctioning its NATO ally Turkey for the same “crime”.

Conclusion

• The root of the problem lies in America’s twin proclivities of acting unilaterally without regard to the interests of its international interlocutors and of enforcing provisions of pieces of its domestic legislation on foreign countries that have no say in the drafting of these laws and little recourse to appeals against them.
• It has done so in the case of sanctioning countries, including India and Turkey, importing Iranian oil regardless of their dependence on this source of supply or their traditional relations with Iran. Such unilateralism seems to have become an integral part of the current American administration’s DNA.

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Power-sharing agreement, Sudan's new beginning? (The Hindu)

Mains Paper 2 : International Relations
Prelims level : Sudan
Mains level : Power-sharing agreement in Sudan and its major implication on economy

Context

• Sudan’s ruling military council and representatives of the pro-democracy movement have signed a power-sharing agreement, signalling that its disputed transition to civilian rule is on track.
• The pact between the military and civilian protesters may help Sudan turn a democracy

Background

• Ever since President Omar al-Bashir’s fall in April amid anti-regime protests, the military leaders who seized power and the protesters have been on a confrontational path.
• The protesters’ demand for an immediate transfer of power to a civilian transitional government to be followed by free and fair elections was resisted by the powerful, deeply entrenched military.
• As the stand-off continued, a paramilitary unit attacked protesters in Khartoum on June 3, killing at least 128 people. But protesters still didn’t give up.
• This, along with pressure from the African Union and foreign countries, appears to have convinced the generals they could not anymore amass absolute power, as they did under Mr. Bashir’s three-decade-long rule.
• Ethiopian and African Union mediators brought both sides for talks and they reached the power-sharing agreement.
• Under the deal, a sovereign council of 11 members five military and five civilian members and one to be selected based on consensus will rule for over three years.
• A general will lead it for the first 21 months and a civilian leader for 18 months.
• The security apparatus will be controlled by the military; the ministries will get civilian leaders.

A new course for the crisis-hit country

• There still exists deep distrust between the generals and the pro-democracy movement. When protests erupted in December over soaring food prices, Mr. Bashir used multiple tactics, from oppression to introducing  changes in the Cabinet, to control the situation.
• But he had to go as the generals turned against him in April. The military council then had an opportunity, like the military in Tunisia after the fall of the dictator Zine El Abidine Ben Ali in January 2011, to return to the barracks and let the civilian leadership assume power and shape the country’s future.
• But Sudan’s military not only refused to give up its powers but also massacred the protesters who challenged them.
• Even though both sides have now agreed to share power, the finer details of the agreement are yet to be hammered out. It is to be seen how the transitional government would find a balance between the military’s quest to retain its privileges and the revolutionaries’ demand for change.

Conclusion

• It is still not clear whether the military is ready to support a full democratic transition.
• The framing of a new Constitution will be another challenge as there are different power centres with conflicting interests.
• There has to be an independent investigation into the June 3 violence, and whoever is responsible should be brought to justice.
• Then it will at least be a good beginning for a long journey to democracy and accountability.

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On DNA Technology bill (Indian Express)

Mains Paper 2 : Polity
Prelims level : DNA Technology bill
Mains level : Important rules, laws and amendments

Context

• The DNA Technology Regulation Bill, which seeks to control the use of DNA technology for establishing the identity of a person, was introduced in the Lok Sabha amid questions being raised by opposition parties on its provisions.
• A similar bill was passed in Lok Sabha in January but it could not be cleared in the Rajya Sabha. The bill had then lapsed with the dissolution of the previous Lok Sabha. The proposed law, which has been in the
  making since at least 2003, is the third attempt by the government to enact a law to regulate the use of DNA technology.
• DNA technology in the country after an earlier version of the Bill had been finalized 45 in 2015 but could not be introduced in parliament. The congress was against the introduction of the bill, raising privacy and
  other concerns.
• The Minister for science and technology Dr. Harsh Vardhan, who introduced the Bill however rejected the concerns raised by the opposition saying there is “no serious substance”.

Salient Features of the bill

• The Bill regulates the use of DNA technology for establishing the identity of persons in respect of matters listed in a Schedule. These include criminal matters (such as offences under the Indian Penal
  Code, 1860), and civil matters such as parentage disputes, emigration or immigration, and transplantation of human organs.
• The Bill establishes a National DNA Data Bank and Regional DNA Data Banks. Every Data Bank will maintain the following indices: (i) crime scene index, (ii) suspects’ or undertrials’ index, (iii) offenders’ index, (iv) missing persons’ index, and (v) unknown deceased persons’ index.
• The Bill establishes a DNA Regulatory Board. Every DNA laboratory that analyses a DNA sample to establish the identity of an individual, has to be accredited by the Board.
• Written consent by individuals is required to collect DNA samples from them. Consent is not required for
  offences with punishment of more than seven years of imprisonment or death.
• The bill provides for the removal of DNA profiles of suspects on filing of a police report or court order, and of undertrials on the basis of a court order. Profiles in the crime scene and missing persons’
  index will be removed on a written request.

Key Issues and Analysis

• The Schedule lists civil matters where DNA profiling can be used. This includes “issues relating to establishment of individual identity.” DNA testing carried out in medical or research laboratories
  can be used to identify an individual. It is unclear if the Bill intends to regulate such laboratories.
• The Bill requires consent of the individual when DNA profiling is used in criminal investigations and identifying missing persons. However, consent requirements have not been specified in case of DNA
  profiling for civil matters.
• DNA laboratories are required to share DNA data with the Data Banks. It is unclear whether DNA profiles for civil matters will also be stored in the Data Banks. Storage of these profiles in the Data Banks may violate the right to privacy.
• DNA laboratories prepare DNA profiles and then share them with DNA Data Banks. The Bill specifies the process by which DNA profiles may be removed from the Data Banks. However, the Bill does not require DNA laboratories to remove DNA profiles. It may be argued that such provisions be included in the Bill and not left to regulations.
• Deoxyribonucleic Acid (DNA) is a set of instructions found in a cell. These instructions are used for the growth and development of an organism. The DNA of a person is unique, and variation in the sequence of DNA can be used to match individuals and identify them. DNA technology, therefore allows for accurate establishment of an individual’s identity.

Criticism

No requirement for DNA laboratories to remove profiles

• The Bill states that DNA profiles stored in different indices will be removed by the Director of the National DNA Data Bank following a written request, a court order
  or filing of a police report Note that DNA profiles are first prepared by laboratories and are then shared with the DNA Data Banks. The Bill does not require DNA laboratories to remove DNA profiles.
• The criteria for removal of profiles from DNA Data Banks and laboratories have been left to regulations. It may be argued that provisions with regard to removal of DNA profiles by DNA laboratories should be specified in the Bill.

No mechanism for grievance redressal for removal of profiles

• The Bill provides that DNA profiles will be removed by the Director of the National DNA Data Bank. However, the Bill does not provide any mechanism for redressal of grievances in cases where the DNA profile is not removed from the data banks by the Director of the National DNA Data Bank.

Written consent for collecting DNA samples on arrest may be inadequate

• If a person is arrested for an offence that carries punishment up to seven years, investigation authorities must take his written consent before taking his DNA sample. However, the Bill does not include safeguards to ensure that the consent is voluntary.
• In some other procedures, such as that of obtaining a confession for a crime, the Code of Criminal Procedure, 1973, provides a safeguard that the statement is made to a Magistrate (not the police).

Collection of DNA samples from photograph or video is unclear

• DNA profiles are prepared from DNA samples collected from individuals. The Bill provides a list of sources for collection of samples for DNA profiling. This includes biological substances such as blood samples, hair, and mouth swab. However, the Bill also lists photographs or video recording of body parts as a source for sample collection. It is unclear how a DNA sample can be collected from a photograph or video recording.

Comparison of fingerprints and DNA profiling

• Currently fingerprinting is used for the purpose of establishing the identity of a person charged with a criminal offence. However, the regulations governing the use of fingerprinting and the provisions related to DNA profiling under the Bill are different. For example, fingerprints can be taken for offences with punishment of rigorous imprisonment of at least one year or more, while there is no minimum threshold of offences for collecting DNA samples.

Way forward

• We need to have a comprehensive route map to build the infrastructure for the use of technology which includes; skilled personnel and Technology Infrastructure, etc.
• Need to pass the law as soon as possible as we are late already in this regard. Nuances of the bill should be taken care of by the evolution of itself in its due course to make it fit to the situations arise.
• Altogether, the discussion panel has suggested the passage of the bill as soon as possible as they believe it as a game changer with respect to socioeconomic conditions in India.
• However, it should be done with utmost care as the privacy of the individual should not be unwarrantedly
  curtailed.

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On Cashless economy (Indian Express)

Mains Paper 3 : Economy
Prelims level : Not Much
Mains level : Role of Cashless economy

Context

• India’s trust towards a cashless economy. In a bid to promote cashless transactions, the government businesses with an annual turnover of over Rs 50 crore can offer lowcost digital modes of payments and no charges or Merchant Discount Rate will be imposed on them or their customers.
• Presenting the Union Budget for 2019-20, Finance Minister Nirmala Sitharaman also said two per cent tax deducted at source will be levied on cash withdrawals exceeding Rs 1 crore in a year from a bank account to discourage the practice of making business payments in cash. Finance Minister said the Reserve Bank of India and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment.
• Lately, digital transactions using mobile payment firms are on the rise. For instance, Unified Payments Interface transactions have grown to 754 million in June 2019. IMPS and NETC transactions stood at
  around 171 million and 26 million, respectively.
• The cashless transfer is soon becoming the most preferred option and there are a number of benefits of going cashless. The digital or electronic transaction of the capital by using net banking, credit cards etc. is called cashless transfer. People can easily pay their bills online, shop and schedule transactions and manage all the finances using their laptops or smartphones.

Significance:

• Going cashless not only eases one’s life but also helps authenticate and formalize the transactions that are done. This helps to curb corruption and the flow of black money which results in an increase of economic growth.
• The expenditure incurred in printing and transportation of currency notes is reduced. In a nation like India, cashless transactions are not widespread and this is due to the technology gap and the lack of proper education.
• Though these are the matters of concern, the government or the financial institutes need to address them to create a strong cashless economy.

Benefits of Cashless Economy

• Saves money and time.
• Companies and governments will get efficient and they can reduce costs as they no longer need the manual accounting work to be done. The costs associated with accounting and handling cash is very
  high.

Less cash decreased crimes,

• Business and individuals can also avoid other costs as well. Theft often leaves a big hole in one’s pocket. The risk of theft will continue until people carry cash and by going cashless the same can be
  reduced.
• Production costs of coins and paper currency are reduced,
• Production of coins and paper currency is indeed an expensive endeavor and the life span of most of the paper currencies is about 6 years. So, by going electronic the cost of production gets reduced.

Less cash means more data,

• The government can use the data coming from the cashless transactions to improve and analyze their policies. By using such data, officials can predict or identify the patterns of activity and use such information for urban planning for sectors like energy management, housing, and transportation.
• More spending helps improved economic growth,
• When a nation is taking a step towards a cashless economy, a boost in the economic growth can be expected.

Challenges of getting our economy going cashless

• High Cash Dependency: India has a high cash penetration in almost all of its transactions that happen as B2C(Business to customer) transactions. Total cash flow in the market accounts for 12.04% of the GDP, which is among the highest in developing countries.
• Lack of Digital Infrastructure: The first and foremost requirement of a digital economy is the penetration of internet and smartphone. Although a billion mobile subscriptions (not users), only 30% of subscribers use smartphones. With 370 million mobile internet users, over 70% of them are in cities while 70% of Indian population lives in villages.
• Skepticism in Merchants: Small time merchants as well as users have high amount of suspicion over plastic money and they need to be educated over the potential benefits of using it. One cannot expect an overnight change in the perception of a majority of Indians over the use of plastic money. Government
  needs to come out with awareness and incentive schemes to promote digital economy.
• High Merchant Discount Rate: These are the percentage deducted from each purchase a merchant makes by the card issuing authority or bank. These are volume dependent and are more economical if the merchant is able to sell a large amount of products, thereby beneficial for big merchants. For smaller merchants, it does not provide enough incentive to make the shift from cash.

Way forward

• Consumer should be placed at the centre of the debate when cashless economy is discussed.
• The companies should take the consumers’ confidence and their ease into consideration when they go digital in economic transactions.
• The government also needs to take the necessary steps and make some policy considerations when they are preparing for a cashless economy. The payment systems have to be protected from the
  cyber-attacks which are the major threat for cashless transactions.
• Also, the government should be able to serve the underbanked as well. Everyone from the society should have access to an electronic system that they can use for such transactions.

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On Reclaiming the IndoPacific narrative (The Hindu)

Mains Paper 2 : International Relations
Prelims level : Indo-Pacific narrative
Mains level : Bilateral, regional and global groupings and agreements involving India and/or affecting India’s
interest

Context

• ASEAN has released a vision document on Indo-Pacific region.

Significance

• Though there were divisions among ASEAN member states in the run-up to the summit, they managed to come up with a non-binding document.
• It underlines in the document the need for an inclusive and “rules-based framework” to “help to generate momentum for building strategic trust and win-win cooperation in the region”.
• An awareness of the emergence of a great power contest around its vicinity pervades the document as it argues that “the rise of material powers, i.e. economic and military, requires avoiding the deepening of mistrust, miscalculation and patterns of behaviour based on a zerosum game”.
• Despite individual differences and bilateral engagements ASEAN member states have with the U.S. and China, the regional grouping can now claim to have a common approach as far as the IndoPacific region is concerned.
• And, the Thailand’s PM suggests revising the framework on ASEAN cooperation at the regional and sub-regional levels and generate tangible and concrete relations among the countries.
• Further, the idea is put under two heads:

Conduct in the China Sea

• U.S. Free and Open Indo-Pacific (FOIP) strategy report focuses on preserving a “free and open Indo-Pacific” in the face of a more “assertive China” — was perhaps the final push that was needed to bring the ASEAN discussions on the subject to a close.
• Also, Japan had already unveiled its Free and Open Indo-Pacific concept in 2016, while Australia released its Foreign Policy White Paper in 2017, detailing its Indo-Pacific vision centred on security, openness and prosperity.
• Again, Prime Minister Narendra Modi articulated India’s Indo-Pacific vision at the Shangri-La Dialogue in 2018, with India even setting up an Indo-Pacific wing in the Ministry of External Affairs (MEA) earlier this year.
• For a long time, the ASEAN has been reluctant to frontally engage with the Indo-Pacific discourse as the perception was that it may antagonise China.
• But there was soon a realisation that such an approach might allow others to shape the regional architecture and marginalise the ASEAN itself.
• And, so the final outlook that the ASEAN has come up with effectively seeks to take its own position rather than following any one power’s lead.

The framework

• Here, while the ASEAN outlook does not see the Indo-Pacific as one continuous territorial space, it emphasizes development and connectivity, underlining the need for maritime cooperation, infrastructure connectivity and broader economic cooperation.
• And, also, the ASEAN is signaling that it would seek to avoid making the region a platform for major power competition. Instead its frame of reference is economic cooperation
  and dialogue.
• Obviously, India has welcomed the ASEAN’s outlook on the Indo-Pacific as it sees “important elements of convergence” with its own approach towards the region.
• Also, India continues to invest in the Indo-Pacific; on the side-lines of the recent G-20 Summit in Osaka, Japan, Mr. Modi held discussions on the Indo-Pacific region with U.S.
  President Donald Trump and Japan Prime Minister Shinzo Abe with a focus on improving regional connectivity and infrastructure development.

Conclusion

• Altogether, with the ASEAN finally coming to terms with its own role in the Indo-Pacific, the ball is now in the court of other regional stakeholders to work with the regional grouping
  to shape a balance of power in the region which favours inclusivity, stability and economic prosperity.

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Inclusion over exclusion (The Hindu)

Mains Paper 2 : Polity
Prelims level : NRC draft
Mains level : NRC draft impact

Context

• With the Supreme Court-led process of updating the National Register of Citizens in Assam nearing its deadline of July 31, the complexities involved in the gargantuan exercise have dawned upon the executive.
• Both the Central and State governments have sought an extension.
• But it remains to be seen whether the Court, which has insisted on sticking to the timelines, would relent when it hears the matter on July 23.

Background

• The first draft NRC published on the intervening night of December 31 and January 1, 2018 had the names of 19 million people out of the total 32.9 million who had applied for inclusion as citizens.
• The second draft NRC, published on July 30 last, upped it to 28.9 million but left out four million found ineligible.
• Around 3.6 million of them subsequently filed citizenship claims. An “additional exclusion list” was issued last month containing 1,02,463 names included earlier in the draft list.
• In anticipation of millions being ultimately left out, the Assam government is moving to set up 200 Foreigners’ Tribunals to handle cases of people to be excluded from the final NRC, as part of a larger plan to establish 1,000 such tribunals.
• The State government is also preparing to construct 10 more detention centres; six are now running out of district jails.

What are the problems?

• A humanitarian crisis awaits Assam whether the final NRC is published on July 31 or after. In the run-up to the final publication, case after case has emerged of persons wrongfully left out of the list.
• The process has left no group out of its sweep, be it Marwaris or Biharis from elsewhere in the country, people tracing their antecedents to other Northeastern states, people of Nepali origin, and caste Hindu Assamese.
• The prime targets of this exercise, however, are Hindu Bengalis and Bengali-origin Muslims of Assam more than 80% of the 4.1 million people named in the two lists belong to these two groups.
• Yet, the rationale of the Centre and State in seeking a deadline extension, as found in their submissions in the Supreme Court, betrays an exclusionary bias.
• The joint plea sought time to conduct a 20% sample re-verification process in districts bordering Bangladesh and 10% in the rest of the State to quell a “growing perception” that lakhs of illegal immigrants may have slipped into the list.
• This, despite the State NRC Coordinator’s reports to the apex court suggesting that up to 27% of names have been reverified during the process of disposal of claims.

Conclusion

• It hasn’t helped that the Central government keeps holding out the prospect of unleashing a nationwide NRC to detect and deport illegal aliens, when it has no index to base such an exercise on the 1951 register was exclusive to Assam.
• The accent should be on inclusion, not exclusion.
• The wheels of justice cannot pander to the suspicions of a vocal majority without giving the excluded access to due process.

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Disinvestment on development (Live Mint)

Mains Paper 3 : Economy
Prelims level : Central Public Sector Enterprises
Mains level : Disinvestment policy in India

Context

• The government will reinitiate the process of divesting its stake in national carrier Air India, even as it increased its disinvestment target in the Union Budget 2019-20 presented by Finance Minister Nirmala Sitharaman.
• The target for disinvestment receipts has increased to Rs 1.05 trillion for FY20, from Rs 90,000 crore in the interim Budget presented in February. Significantly, the finance minister said that the government’s stake in non-financial public sector units can go below the majority stake of 51 per cent.
• Instead of holding a direct stake of 51 per cent in PSUs, “government-controlled institutions” can chip in the remaining sum which the government will look to divest.
• This move will enable the government to retain control over such firms. The Finance Minister reiterated that the government will make sure that its control is not diluted after lowering its stake in public sector undertakings (PSUs) to below 51 per cent.
• The government will also continue with the strategic divestment of select Central Public Sector Enterprises (CPSEs).

Significance:

• Government of India sets disinvestment targets in most budgets since 1991. Although the chief aim is to add to the exchequer and bridge the fiscal deficit, disinvestment also allows the government to offload its burden by bringing private players onboard.
• However, meeting the disinvestment targets has become quite a formidable task.

Panel discussion and suggestions

• The government in January 2018 allowed foreign airlines to buy a stake of up to 49% in Air India with prior government approval before putting the carrier for sale.
• Until then, foreign airlines were allowed as much as 49% in private Indian airlines, but not in Air India. The government however later clarified that “substantial ownership and effective control of Air
  India will remain with Indian nationals" post any stake sale.
• Here, strategic disinvestment approach is encouraged. For instance, BALCO’s disinvestment in the past.
• 51% of the share of government is appreciated.
• Mixed strategy can be followed too as in some cases strategic disinvestment will do and in some others, some other minor disinvestments can be encouraged to generate revenue.

Some of the salient features of disinvestment are:

• Disinvestment involves sale of only part of equity holdings held by the government to private investors.
• Disinvestment process leads only to dilution of ownership and not transfer of full ownership.
• While privatization refers to the transfer of ownership from government to private investors.

Problems of the PSUs

• The most important criticism levied against public sector undertakings has been in relation to the capital employed, the level of profits has been too low. Even the government has criticized the public sector undertakings on this count. Of the various factors responsible for low profits in the public sector Undertakings, the following are particularly important:-
• Price policy of public sector undertakings,
• Underutilization of capacity,
• Problem related to planning and construction of projects,
• Problems of labor, personnel and management,
• Lack of autonomy.

Way forward

• Ailing PSU’s should be divested. Landed assets should be diverted appropriately and dilution of ownership should be resolved.
• PSU’s those do not have a strategic role in the economy should be disposed off through the route of disinvestment.

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50 years later (Indian Express)

Mains Paper 3 : Economy
Prelims level : Not Much
Mains level : Structural transformation of Indian economy

Context

• This week marks 50 years of one of the most important economic decisions taken by a government in independent India.
• On November 2016 to withdraw high value notes of Rs 500 and Rs 1,000, the decision to nationalise 14 banks by the Congress government led by Indira Gandhi on July 19, 1969 did not quite rest on economic logic but was politically propelled.

Objective behind structural transformation

• The objective, then, was to force banks, many of which were controlled by business groups, to lend to the farm and other sectors, to small firms, offer services in the hinterland and expand credit, especially in rural areas.
• The decades since then have seen a structural transformation evident in the countrywide footprint of banks, channelising of savings by them to productive investment, support for industry and to the government to finance its plan investments, deliver on its social banking mandate, generate jobs in the services sector, help reduce regional disparities and broadly enhance growth.

Start of financial inclusion

• Many metrics capture that phase of the Indian banking industry’s growth.
• But the loan melas of the 1980s, soon after the second round of bank nationalisation marked by coercive lending to support government programmes, dealt the first deep blow from which it took the country’s state-owned banks years to recover.
• Later, what hurt PSU banks severely was the foray into infrastructure financing an area where they had little expertise, the risk of an asset liability mismatch and imprudent lending during the heady growth years between 2005-2009.
• The Indian taxpayers have so far picked up the tab for repairing bank balance sheets with lakhs being pumped to recapitalise banks and bolster lending over the last few decades without generating enough returns.
• In its first term, the Narendra Modi government missed an opportunity for governance reforms in the banks it owns.
• A government with a strong political mandate like NDA 2 should be better equipped to let go of many of its banks after 50 years with a possible backstop of a 26 per cent or 33 per cent holding to be progressively divested to assuage concerns.

Conclusion

• More political molycoddling on separation of ownership from the management of banks will impose huge fiscal costs which will have to be borne again by taxpayers.
• Importantly, it will also drain resources which should ideally be for delivery of public goods.

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What industry can learn from nature (The Hindu)

Mains Paper 3 : Environment
Prelims level : Not much
Mains level : Environmental impact assessment

Context

• In the 1990s when the Japanese were perfecting their Shinkansens, bullet trains as we call them, they faced a particularly difficult challenge.
• As these high-speed trains entered a tunnel (there were many across the country) they created pressure waves that reached the other end of the tunnel at the speed of sound.
• When the air exited the tunnel it created a loud sonic boom that was heard even 400 metres away causing discomfort to people living in those areas.
• Due to this noise pollution the trains were run at a lower speed.

Finding the solutions

• Engineers looking for a solution to this problem were repeatedly frustrated and it was a left to a keen bird watcher among them to succeed.
• The birder realised that Kingfisher, which enters the water without making a splash when hunting for its prey, could provide an answer.
• From the research that followed, it became clear that the Kingfisher’s long beak and the round cross-section of its head enabled it to make a splash-less entry into the water.

Lessons from Japan

• The Japanese used this information to re-design their Shinkansens (500 series) with a beak like front and a round cross-section.
• The sonic boom was much quieter and well below the norms set by the Japanese government.
• Not just that, the new trains had 30 per cent less air resistance, consumed 13 per cent less energy and could go a lot faster.

How man was inspired by nature to find solutions to some pressing challenges?

• The need was not felt. To quote Richard MacCowan of UK-based Biomimicry, an Innovation Lab that specialises in nature inspired technologies, “Industrial revolution made us believe we can control nature.
• It is only now we are realising that we can actually work together.” This realisation has come after over 100 years of industrialisation, unmindful of the ecological damage.
• Also, the solutions that nature offered were not easy to mimic. Technology did not exist earlier to replicate it.

Effects of climate change

• The rising frequency of extreme weather events has brought the world’s focus back to sustainability and the need to live within means so as to leave the world a better place for the future generations.
• Industry, the biggest culprit, is facing a lot of pressure to mend its ways.
• In fact, the next industrial revolution (Industry 4.0) is being touted as the coming together of technology and biology, where nature-inspired technologies could play a large part in making manufacturing sustainable.
• This has been possible because technology has developed significantly over the years.
• It is now possible to simulate solutions that nature offers and develop solutions inspired by nature.

Address the carbon emissions problem

• Many start-ups across the world are already taking a shot at such solutions.
• Calera, a California-based start-up, is mimicking how marine organisms convert carbon-di-oxide (CO2) into calcium carbonate.
• Its process intends to capture CO2 from the air and convert it into calcium carbonate, a raw material for manufacturing cement. Glowee, a French start-up, is developing bulbs filled with genetically modified bioluminescent bacteria.
• It has also been inspired by marine organisms, those that produce light without electricity like squid or jellyfish.
• Also, such technologies will help the country meet its sustainable goals.
• For some time now India has been asking the developed nations to bear the bulk of the goals when it comes to greenhouse gas emissions.
• Such a strategy may not work for too long.
• Embracing nature-inspired technologies and promoting their development will help the country improve its sustainability credentials.
• Also, Industry 4.0 is expected to result in significant job losses due to extensive automation.
• Countries such as India will be most impacted as it is home to a large share of labour-intensive industries.

Conclusion

• For long India has repeatedly missed the manufacturing bus, these technologies could help the country shore up its capabilities and even take a leadership position in some areas apart from making its industry sustainable.
• Also, search for such solutions will invariably spawn start-ups and SMEs who will create enough jobs to ensure India’s demographic dividend does not turn into a demographic disaster.

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OIC’s curious record on Xinjiang (The Hindu)

Mains Paper 2 : Social Justice
Prelims level : Organisation of Islamic Cooperation
Mains level : China’s treatment of Uighurs

Context

• In an epochal development, India became the ‘Guest of Honour’ at the 46th session of the Council of Foreign Ministers of the Organisation of Islamic Cooperation (OIC) held in Abu Dhabi in March.
• The final declaration eschewed the customary reference to Jammu and Kashmir.
• This can be considered unique since the previous Dhaka Declaration in May 2018 had contained this reference.
• Credit must go to the strong personal and state-to-state ties built by the Narendra Modi government with important OIC states, especially the UAE.
• At the same time, one of the resolutions did refer to Kashmir and expressed concern at the situation of Muslims in India.

About OIC

• The OIC, representing 57 member states and a population of about 1.8 billion people, is the world’s second-largest intergovernmental organisation after the UN and is committed to protecting the interests of the Muslim world.
• It routinely expresses solidarity with Palestine, Iraq, Afghanistan, Syria and Bosnia, as well as with the peoples of the Turkish Cypriot state, Kosovo and Jammu and Kashmir.
• However, the organisation, while making repeated references to Jammu and Kashmir, has traditionally disregarded the fact that India is a democratic and secular country, where every citizen is protected by the

Constitution and is free to practise one’s religion.

• It has also conveniently disregarded the fact that India regularly holds State and general elections, including in Jammu and Kashmir.

Turning a Nelson’s eye

• On the other hand, it has turned a Nelson’s eye to the human rights violations committed by its own members, like the actions of the Pakistani state in Balochistan.
• However, the organisation’s record on China’s Xinjiang province, which is in the news on account of alleged violations of human rights and curbs on religious freedom of Uighurs and other Muslim ethnic groups, is far more curious.
• The main Abu Dhabi declaration, like the Dhaka Declaration, made no reference to China or its Muslim minorities. Further, it is intriguing that one resolution passed at Abu Dhabi chose to “commend the efforts of the People’s Republic of China in providing care to its Muslim citizens”.
• This would have come as a huge relief to Beijing, especially after a review held by the United Nations Committee on the Elimination of Racial Discrimination in 2018 had claimed, citing credible reports, that Beijing had turned the Uighur autonomous region into “something that resembles a massive internment camp”.

Anodyne appeals

• All nations have a right to reject external interference in their internal affairs.
• However, while the OIC remains critical of India, it is wary of treading on China’s toes. Various OIC resolutions have, in the past, referred only superficially to the matter.
• For instance, the Islamabad OIC meeting in May 2007 made only an anodyne request to its Secretary General “to make contact with the Government of China” on the matter “and to subsequently report on these consultations”.
• The Baku OIC resolution of June 2006 made an appeal “to give special attention to the conditions of Muslims in East Turkistan (Xinjiang) and to examine the possibility of working out a formula for cooperation with the Chinese Government”.

Way ahead

• China has resented the use of the term “East Turkistan” in OIC documents, reminiscent of the banned East Turkestan Islamic Movement of separatist Uighurs from Xinjiang.
• Yet, Beijing has engaged the OIC and just before the Abu Dhabi meeting, it welcomed an OIC delegation to Xinjiang, a development which perhaps played a role in the OIC ‘commending’ China.
• The organisation remains mindful of how far it can go with its criticism of Beijing considering that China is a major power, a permanent member of the UN Security Council, a large market for hydrocarbons and a source of arms and investment.
• Moreover, China refrains from preaching to others about human rights or systems of governance.
• As China’s continued import of oil from Iran suggests, countries under U.S. pressure and sanctions often turn to China for relief. In return, they do their best to guard China’s interests at the OIC.

Conclusion

• However, OIC countries, under the influence of Pakistan, support resolutions against India despite having excellent bilateral ties with the country.
• Recent developments a call from Pakistan’s Minister for Religious Affairs Pir Noor-ul-Haq Qadri urging China to lift restrictions on Muslims in Xinjiang and Jamaat-e-Islami Pakistan chief Sirajul Haq’s raising concerns about the Uighur issue with the Chinese Ambassador — must, hence, have come as deep embarrassment to the OIC.

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Inappropriate template for a legitimate target (The Hindu)

Mains Paper 3 : Economy
Prelims level : Newly industrialised economies
Mains level : Impact of East Asian model on India’s investment

Context

• The recently-released Economic Survey either glosses over or ignores many acute challenges faced by the Indian economy like the severe agrarian crisis.
• The troubles of loss-making and debt-ridden public sector units; and the issues plaguing public sector banks.
• While the Survey is not incorrect in highlighting the importance of incorporating insights from psychology into economics, it is odd that this has been done so late in the day.

Background behind policy design

• Many other countries like the U.K., Australia and Singapore have for long being applying such points to policy design and implementation areas and the issue has been discussed in India over the last few years as well.
• It is unclear what added value the report truly has to offer here.
• One issue that the Survey rightly underlines is the need for India to revive private investment if it is to achieve the magical $5-trillion economy status by 2024-25.
• However, what is odd here is that to stress this, the document invokes the age-old comparison between India and East Asian countries.
• It is rather strange that the Survey brings up something that has been taught in economic development classes over the last two decades.

How the NIEs prospered

• The East Asian model was largely a story driven by the newly industrialised economies (NIEs) of Singapore, Hong Kong, South Korea and Taiwan, and Japan earlier.
• Specifically, the prime goal in various NIEs from 1960s through to the 1990s (prior to the Asian Financial Crisis) was to raise gross savings rates.
• While the rise in household savings was partly due to the positive demographic dividend, a variety of other factors, including macroeconomic stability, low inflation, lack of social safety nets, inability to leverage (due to a highly regulated banking system) and forced savings (fully-funded Provident Funds) also played a role.
• State-owned enterprises had to operate with budget constraints.
• This, coupled with the fiscal discipline practised by the economies, ensured that the public sector did not crowd out private savings and, in some cases, actually added to national savings.

Concern for Private savings

• Another goal was to ensure that the private savings were actually intermediated into the formal financial system, failing which the cost of capital would remain high and the availability of capital for investment would be low.
• To achieve this, importance was given to the establishment of a safe and secure public sector banking system (usually in the form of postal savings networks) where deposits were guaranteed by the central bank and interest incomes was taxed lightly, if at all.
• The state-owned banks were tightly regulated as financial stability was the cornerstone of overall macroeconomic stability.

Financial inclusion was encouraged

• Though the focus was on actual use of the deposit accounts rather than just their opening.
• While the manufacturing sector was viewed as a growth engine and open to export competition, the banking sector, in all economies apart from Hong Kong, remained tightly regulated and closed to foreign banks.
• Even Singapore initially adopted a dual banking structure that sheltered the domestic economy largely from significant short-term bank flows.
• It resorted to a calibrated policy to allow fully licensed foreign banks only in the late 1990s.

Tight financial oversight

• While these economies were generally successful in encouraging savings, the cost of capital was rather high, not unlike the problem in India today.
• To tackle this, the East Asian economies undertook financial repression conventionally understood as a ceiling price keeping lending rates lower than market equilibrium.
• This, in normal circumstances, would have led to disintermediation from the formal financial system, a consequent reduction in the quantity of financing and the creation of a shadow banking system.
• However, central banks of these economies maintained tight oversight, and selective capital controls ensured that the low-yielding savings did not leave their countries of origin, while limited financial development forestalled the possibility of people looking for savings alternatives.
• Along with these, the governments undertook sophisticated industrial policies to promote domestic investment, much of which was export-led (though not necessarily free-market based).
• The governments understood that a vertical industrial policy (of ‘picking winners’) would not work without a sound horizontal industrial policy (dealing with labour and land reforms, bringing about basic literacy and raising women’s participation in the labour force).
• Besides, incentives also had clear guidelines and sunset clauses and mechanisms were in place to phase out support.
• Thus, winners prospered while losers were allowed to fail.

Heterodox policies, reforms

• Thus, much of the investment and export acceleration in East Asian countries was due to heterodox policies and reforms that were carefully calibrated, well-sequenced and implemented at a time when the external environment was far less hostile than it is today.
• These measures allowed the nations to benefit from their demographic dividends and transform themselves into developed economies in record time.

Way forward

• Due to political and other compulsions, India’s reforms since 1991 have been rather haphazard and of a ‘stop-and-go’ nature with perverse consequences, all of which has made it much more challenging for the country to take full advantage of its demographic dividend.
• Successive governments have neither had the tool-sets and the policy space nor the embedded autonomy needed to drive the industrial transformation as in the East Asian countries.
• Though measures like reducing policy uncertainty; ensuring that the fiscal expenditures do not crowd out private savings and investment;
• To enhancing the efficiency of financial intermediation; and dealing with land acquisition and environment clearances are all essential to reignite investment, we do not need to invoke the East Asian example to understand the importance of these.

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The threat of Ebola (The Hindu)

Mains Paper 2 : Health
Prelims level : Ebola
Mains level : Ebola outbreak and preventive measures

Context

• The health emergency declared by the WHO can counter the risk of a global spread

Background

• After holding itself back on three occasions, the World Health Organization has declared the Ebola virus disease outbreak in the Democratic Republic of the Congo a Public Health Emergency of International Concern.
• The outbreak in Congo, officially declared on August 1, 2018, has killed nearly 1,700 people and made more than 2,500 people ill.
• While cases in other areas are reducing, Beni is the new hotspot.
• The announcement of the health emergency comes amid renewed concerns that the virus could spread to other countries.
• A single imported case of Ebola in Goma, a city in Congo with two million people and with an international airport bordering Rwanda, served as a trigger to finally declare a global emergency.
• Surprisingly, the spread to neighbouring Uganda last month did not seem to change the way the WHO assessed the situation.
• Even when a handful of Ebola cases were confirmed in Uganda, all the infected people had travelled from Congo and there had been no local transmission or spread within Uganda — one of the criteria used by the

WHO to assess if an outbreak is a global emergency.

The past cases

• This is the fifth time that the WHO has declared a global emergency. The earlier occasions were in February 2016 for Zika outbreaks in the Americas, August 2014 for Ebola outbreaks in western Africa, the spread of polio in May 2014, and the H1N1 pandemic in April 2009.
• Declaring an event as a global emergency is meant to stop the spread of the pathogen to other countries and to ensure a coordinated international response.

What is the availability of a candidate vaccine?

• There have been several challenges in interrupting the virus transmission cycle and containing the spread — reluctance in the community, attacks on health workers, delays in case-detection and isolation, and challenges in contact-tracing.
• But compared with the situation during 2014-2016, the availability of a candidate vaccine has greatly helped.
• Though the vaccine has not been licensed in any country, the ring vaccination strategy where people who come into contact with infected people, as well as the contacts of those contacts are immunised, has helped .
• Of the nearly 94,000 people at risk who were vaccinated till March 25, 2019, only 71 got infected compared with 880 unvaccinated who got infected.
• The vaccine had 97.5% efficacy; a majority of those who got infected despite being vaccinated were high-risk contacts.

Way forward

• Owing to vaccine shortage, the WHO’s expert group on immunisation has recommended reducing the individual dose to meet the demand.
• What is equally important is for the G7 countries to fulfil their promise to the WHO to contain the spread.
• The agency received only less than half of the $100 million that was requested to tackle the crisis.
• The global emergency now declared may probably bring in the funding.

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A healthy balance (Indian Express)

Mains Paper 3 : Science and Tech
Prelims level : National Digital Health Blueprint
Mains level : Requirement of National Digital Health Blueprint

Context

• The Union Ministry of Health and Family Welfare has released a National Digital Health Blueprint (NDHB) to “manage and analyse” the big data generated by the Centre’s flagship health programme, Ayushman Bharat.
• Released by the MoHFW Minister, Harsh Vardhan, on Monday, the document recommends the “setting up of a National Digital Health Mission” to create an “ecosystem” that would bring together the health records of people who have benefited from Ayushman Bharat.

Key impacts of National Digital Health Blueprint

• Doctors in both the public and private sectors regularly complain about the lack of comprehensive records of their patients, the digital registry envisaged by the NDHB could fulfill a longstanding requirement of the health sector.
• The proposed data compendium is also in keeping with global trends in healthcare where digital technology is used to make treatment options more personalised and precise.
• Big data can also be used to prevent epidemics and improve the efficiency of drugs

Caution about data theft

• Concerns about the large-scale creation, collection and sharing of health data are, however, pressing.
• The most serious of these pertain to the privacy of patients, and data breaches.

Constitutional safeguards

• Sections 43(a) and 72 of the Information Technology Act do provide the broad framework for the protection of personal information in India, including medical data.
• However, data breaches in the digital domain are not uncommon. In 2016, for example, the electronic medical records of over 35,000 patients held by a Maharashtra-based pathology lab were leaked.
• The NDHB does seem to be alive to such concerns. It states that the architecture of the digital systems will have in-built safeguards to ensure privacy.

Steps needs to be taken

• However, it must also be kept in mind that Ayushman Bharat targets the poorest section of the country’s population with low levels of digital literacy.
• In such a context, a system that places the onus of control on the user, with an assumption that they can control the flow of information, can end up doing more harm than good.
• Last year, the MoHFW framed a draft Digital Information Security in Healthcare Act (DISHA).
• The proposed legislation recognised that existing laws were inadequate to protect the privacy of patients in the digital domain.

Way forward

• In contrast with the blueprint released on Monday, DISHA placed the onus of data protection on the service provider.
• The draft was criticised by industry bodies, which feared the stifling of medical research. DISHA never made it to Parliament.
• In view of its recent emphasis on digital medical data, the MoHFW would do well to revisit this draft legislation and seek a balance between the concerns of industry and the rights of patients.

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Time ripe for sovereign external borrowing (The Hindu)

Mains Paper 3 : Economy
Prelims level : Not much
Mains level : Status Report of external debt

Context

• The Union Finance Minister, Nirmala Sitharaman, in her maiden Budget speech on July 5 made a significant announcement in paragraph 103 that reads: “India’s sovereign external debt to GDP is among the lowest globally at less than 5 per cent. The Government would start raising a part of its gross borrowing programme in the external market in external currencies. This will also have a beneficial impact on the demand situation for government securities.”
• The announcement has been criticised by some for the risks of such an issuance while the government is at pains to explain that it has considered all the risks before making the announcement.
• A clarification issued by the government officials said it will raise around $10 billion first in September 2019. Amid the controversy, a few facts are in order.

Key parameters

• The sovereign external borrowing will be a part of consolidated fund market borrowing for which the Budget has assumed a gross amount of ₹7,10,000 crore (taking into account the net market borrowing of ₹4,73,122 crore and repayments of ₹2,36,878 crore). The government figure of $10 billion thus takes into account the exchange rate ₹75 to a dollar.
• The sovereign’s debt as a percentage of GDP, as per the data released by RBI on June 28, stood at 3.8 per cent as against 4.3 per cent in 2018 and 4.5 percent in 2017. It may be mentioned that these figures pertain to the residual maturity of external debt and amounted to ₹103.5 crore in absolute terms accounting for about 19 per cent of total external debt.
• The current account deficit as percentage to GDP was 2.1 per cent in 2018-19, which was financed comfortably by capital flows (both debt and equity).
• Since most of the external sector vulnerability indicators such as debt to GDP (19.7 per cent), debt to forex reserve (76 per cent), debt service ratio (6.4 per cent) and forex reserve to import cover (eight months) have been at a steady state and stabilised, there is some amount of resilience in the external sector.
• The volatility of the rupee is least among the emerging market economies. Sixth, India has got the investment grade rating (Baa2) from Moody’s.
• Even though the fiscal deficit (5.8 per cent of GDP) and debt (68 per cent of GDP) is at a higher level for the general government (both Centre and the States), the strong commitment voiced by the government for fiscal consolidation will be well received by the global market.
• In view of the foregoing, this is an opportune time for the government to float sovereign external borrowings.
• There are of course associated risks with sovereign external borrowings as country experiences tell us.
• The most important is the default risk, but taking into account the robust forex reserves of around $428 billion as on June 28, 2019, global investors will draw enough confidence to invest.

Debt manager

• The modalities of issuance covering various aspects management of issuance, countries, stock exchanges, coupon rate, and maturity are crucial and need to be looked at immediately.
• According to the RBI Act, 1934, the RBI is the debt manager for issuance of government debt.
• The sovereign debt issuance will also be conducted by the RBI, which will have to appoint a global manger to undertake this.
• The global manger will be an investment banker of high repute and the selection of the global manger will be done through the bidding process (may be the lowest commission bidder will be selected).
• The amount of commission globally at the upper-end has been 1 per cent of the issuance size.
• It is appropriate to float the issuance in countries where there is a large presence of NRIs like North America, and the Middle East.
• In addition, Japan is a good place to float this because of the strong political association and past bilateral swap arrangements between Japan and India.
• The currency of the bond will be in US dollar and Japanese yen.
• The external sovereign bonds will be listed in three important stock exchanges: London, New York and Tokyo. Listing will help and facilitate secondary market trading.

The coupon rate and maturity

• There are a few options.
• One is regular vanilla bonds with a prefixed coupon rate. The second is zero coupon bonds and the third is inflation index bonds.
• However, to begin with, regular vanilla bonds are preferred, being more investor-friendly. The decision on the interest rate is crucial.

Status Report of external debt

• As per the data available in the Status Report of external debt, the implicit interest rate for external debt was 1.3 per cent for concessional rate, 4.4 per cent for NRI deposits and 4.7 per cent for External Commercial Borrowings. The fixation of interest rate has to be seen both from the issuer and investor point of view.
• A 10-year bond for domestic government debt was 7.34 per cent in 2018-19. In the US, a 10-year bond yields around 2 per cent, and in Japan it is (-) 0.15 per cent.
• Taking into account these factors, a suggested coupon rate is 3-4 per cent with no currency, interest rate and credit risk for the investor.
• As an issuer, the government will get the benefit of diversification of investor bases with global presence, and there could be some easing of pressure on the domestic bond rates.

Way forward

• With reasonable economic growth, benign inflation outlook, a resilient external sector and, above all, political stability, it is an opportune time for the authorities to enter the global market with sovereign bond borrowing.
• The critical issue here is the appointment of an investment banker as a global debt manager.
• Testing the market with a new approach to raise sovereign external debt is one thing, but falling into a trap by repeated floating of bonds and unwarranted enthusiasm is quite another.
• In this, while the approach is good, the watchword should be caution.

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Tapping the potential of communities to end AIDS (The Hindu)

Mains Paper 2 : Health
Prelims level : AIDS
Mains level : Measures needed to tackle AIDS epidemic.

Contex

• The UN Sustainable Development Goals include ensuring good health and well-being for all by 2030. This includes the commitment to end the AIDS epidemic.
• In many countries, continued access to HIV treatment and prevention options are reducing AIDS-related deaths and new HIV infections.
• But there are still too many countries where AIDS-related deaths and new infections are not decreasing fast.

The road to success

• Success is being achieved where policies and programmes focus on people, not diseases, and where communities are fully engaged from the outset in designing, shaping and implementing health policies.
• This is how real and lasting change is achieved and this is what will reduce the devastating impact of AIDS.
• Adopting the latest scientific research and medical knowledge, strong political leadership, and proactively fighting and reducing stigma and discrimination are all crucial.
• But without sustained investment in community responses led by people living with HIV and those most affected, countries will not gain the traction necessary to reach the most vulnerable. And only by doing that can we end the AIDS epidemic.
• Community services play varying roles depending on the context.
• They often support fragile public health systems by filling critical gaps.
• They come from and connect effectively with key populations such as gay men, sex workers, people who use drugs, and transgenders.
• They provide services that bolster clinic-based care and they extend the reach of health services to the community at large. They also hold decision-makers to account.
• By signing the 2016 UN Political Declaration on Ending AIDS, countries affirmed the critical role that communities play in advocacy, coordination of AIDS responses and service delivery.
• Moreover, they recognised that community responses to HIV must be scaled up. They committed to at least 30% of services being community-led by 2030.
• However, most countries are nowhere near reaching that commitment. And where investment in communities is most lacking, there is often weaker progress being made against HIV and other health threats.

Reliable partners

• All over the world, communities are demonstrating time and again that they can, and do, deliver results.
• Since the beginning of the epidemic in India until now, communities have been the most trusted and reliable partners for the National AIDS Control Organization and the Joint UN Programme on HIV/AIDS.
• They are fully engaged in many aspects of the National AIDS Response, including prevention, care, support and treatment programmes.
• There are over 1,500 community-based organisations reaching out to key populations.
• In India, there are around 300 district-level networks of people living with HIV which are supporting treatment programmes through psychosocial support, treatment literacy and adherence counselling.

Conclusion

• Our communities present us with a lot of untapped potential. Unleashing this is the key to gaining the momentum we need to make faster progress towards reaching UNAIDS Fast-Track targets.
• The more we invest in communities, the closer we get to ending the AIDS epidemic.

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Chinese check: on economic troubles (The Hindu)

Mains Paper 3 : Economy
Prelims level : Not Much
Mains level : Chinese economy troubles and impact on India

Context

• The Chinese economy is seeing the first signs of trouble after long years of sustained growth that rode on cheap labour and high volumes of exports.
• Data released by the National Bureau of Statistics on Monday revealed that the economy grew by 6.2% in the second quarter, its slowest pace in 27 years.
• This is in contrast to the growth rates of 6.4% and 6.6% reported for the first quarter and the full year of 2018, respectively.
• The faltering growth rate was due to a slump in exports in June amidst China’s ongoing trade war with the United States and the downturn witnessed by sectors such as housing construction, where investor sentiments play a major role.

Analysis made by economist

• Many economists believe that the worst may not yet be over for China and that economic growth could further worsen in the coming quarters.
• But just as growth seems to be faltering, the latest growth figures also showed that the retail sales and industrial output components of the growth numbers witnessed steady growth, suggesting that domestic demand may be compensating for the dropping appetite for Chinese exports weighed down by high tariffs.
• But with China still heavily reliant on exports and its trade war with the U.S. showing no signs of coming to an end, the pressure on growth is likely to remain for some more time.
• So the Chinese government, which has tried to boost the economy through measures such as tax cuts, increased public spending and a relaxation in bank reserve requirements to encourage banks to increase lending, will hope that domestic demand for its goods will hold up the economy.

Challenges for China

• China’s quarterly GDP numbers, while useful in many ways, don’t reveal very much about the underlying challenges facing the country.
• One is the need to improve the credibility of data released by the Chinese government.
• An even larger challenge is the urgent need to restructure the Chinese economy from one that is driven heavily by state-led investment and exports to one that is driven primarily by market forces.
• The high-growth years of the Chinese economy were made possible by the huge amount of liquidity provided by the Chinese state and the large and affordable workforce that helped build China into an export powerhouse.
• But now, with China’s tried and tested growth model facing the threat of getting derailed as the export and investment boom comes to an end, the Chinese will have to build a more sustainable model, or forfeit hopes of double-digit economic growth in the future.

Conclusion

• As of now, there are no signs to suggest that the Chinese authorities are looking at implementing deep-seated structural reforms reminiscent of its early decades of liberalisation that can help fundamentally restructure the economy.
• There might not be a need for radical macroeconomic changes, but China’s economic troubles will not go away unless the government boosts domestic consumption and reduces the reliance on exports.

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