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-Rajeev Kumar (Editor-in-chief)

Showing posts with label The Economic Times. Show all posts
Showing posts with label The Economic Times. Show all posts

Wednesday, February 24, 2021

Cut those levies on Petro-fuels (The Economic Times)

Retail prices of petrol and diesel have flared up to record levels nationally, driven by heavy taxation of fuels, even as global crude prices harden. Central and state levies on petro-fuels must be rationalised, and stem further buildup of cost-push inflationary pressures. The price of petrol in the National Capital Territory (NCT) is now well over Rs 90 per litre, with central and state taxes amounting to over 60% of the price. Similarly, the price of diesel, the most-used petroleum product by far, in NCT is over Rs 80 per litre, with levies adding up to nearly 55% of the price. In some states, petrol now costs more than Rs 100 a litre. This is not sustainable.

Such high levels of indirect taxes are regressive. RBI’s Monetary Policy Committee (MPC), in its latest minutes, has called for ‘calibrated unwinding’ of high retail taxes in the main oil products. True, higher retail taxation of automotive fuels in the backdrop of collapsing global crude prices, in the early stages of the pandemic last year, did make perfect sense, and has, in fact, gainfully shored up revenue amidst the lockdown and subsequent reopening. But central taxes in the retail price of petrol in NCT, which includes basic excise, surcharge, road cess and agri-infra cess, have gone up some 300% from Rs 10.38 per litre in March 2014, to Rs 32.98 per litre in September 2020. Central levies on diesel have gone up some 600% during the like period, from Rs 4.58 per litre to Rs 31.83 per litre. The duties are levied at a specific rate, in terms of rupees per kilolitre, but do need to be pruned going forward.


Further, state retail tax on petrol is about Rs 20 per litre and that on diesel about half that, but both the taxes are ad valorem, linked to product price. It amounts to cascading inefficient tax-on-tax across the value chain. Hence the need to modernise taxation of the main oil products and bring natural gas, petrol and diesel under GST, of course, with a component not eligible for input tax credit. Till then, state-level levies should also take the form of specific duties.

Courtesy - The Economic Times.

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The importance of cultivating reform (The Economic Times)

Prime Minister Narendra Modi was spot on when he said that the Rs 65,000-70,000 crore India spends on edible oil imports is money that could go to the country’s farmers. He also urged the states to encourage crops that suit their agroclimatic conditions and to build the infrastructure farmers need. In fact, if the Centre had acted on these insights before amending the farm bills, a lot of the farmer angst could have been avoided, and reform of agriculture away from excess production of grain to crops in short supply, such as edible oil seeds and pulses, could be accomplished without friction. Reform of something as complex as agriculture, after all, is a process and not just a question of changing some rules and laws.

The PM did well, too, to emphasise the role of physical infrastructure in enhancing the farmers’ income. Farmers need roads to carry their produce to the market. Climate-controlled storage and refrigerated fleets of trucks and rail cars are essential for reducing the wastage/spoilage of fresh produce and achieving greater levels of farm exports. It is surprising, however, that the PM did not emphasise the importance of political courage in carrying out farm sector reform. A vibrant agro-processing industry not far removed from the site of production — just as Amul’s milk processing plants are available within a few hours’ distance from milk collection centres — is a key ingredient of doubling farmers’ incomes. Some rudimentary agro-processing has been commonplace since Neolithic times. However, modern agro-processing calls for a steady supply of stable power. Even after drawing power lines to rural areas, power during the daytime remains unpredictable. Ending the political culture of patronising power theft and free, unmetered connections is the cornerstone of the needed power reform. The lead for this must come from the top.


A stable foreign trade regime for farm produce, functional forward markets, and genuine and transparent risk-transfer mechanisms are also with the Centre. It must walk the talk on these fronts.

Courtesy - The Economic Times.

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Monday, February 8, 2021

For solidarity with the people of Myanmar (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The military coup in Myanmar curtails democracy, limited and imperfect as it was, in one of the poorest countries. The military takeover came hours ahead of the swearing in of the newly elected parliament. India has, along with other countries, expressed concern at the developments and called for upholding the rule of law and democratic process. Democracy requires work and support. Stronger, more mature democracies must provide support required by newer democracies, without becoming prescriptive.


The coup is no bolt from the blue. The military never relinquished power. Under the 2010 constitution, day-to-day functioning of the government had been handed over to an elected president and parliament. However, the military retained a decisive position — 25% of seats in parliament were reserved for the military. The contest between Aung San Suu Kyi-led National League for Democracy (NLD) and the military that had marked the previous 30-odd years continued. Myanmar has had two elections since, Suu Kyi’s NLD won both. At 399 seats, the 2020 tally is an improvement over the 2015 one and had the potential to intensify the contest with Suu Kyi pushing for constitutional changes. China’s blocking of a UN Security Council statement on Myanmar complicates the situation, particularly in the region.


India has made clear its support for restoration of democracy. In the long run, the people prevail over dictatorial regimes and it pays to forge ties of solidarity with the people. At the same time, India must respect the sovereignty of nations and the wrong-headedness of outsiders trying to export democracy to a nation. New Delhi has to deal with whatever government is in charge at the moment, and work with other democracies, to herald the desired change.


Courtesy - The Economic Times.

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Now, farmers, it is your turn (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.

Little is to be gained by prolonging the ongoing confrontation between a large section of farmers and the central government. The farmers have stuck, so far, to the maximalist demand of repealing the three farm laws the government has newly legislated, whereas the government has made significant concessions. The government has offered to hold the new laws in abeyance for one-and-a-half years, during which all matters can be discussed relating to the new laws. It is up to the farmers to take the government up on its offer to suspend the laws till next June.


Now, it is common sense that holding the laws in abeyance till shortly before important state assembly elections in Madhya Pradesh, Chhattisgarh and Rajasthan and one-and-a-half years before the next general elections are due effectively means suspending the operation of the contentious laws for the remainder of this government’s term. This is a very major concession. At one point, agriculture minister Tomar is reported to have invited the Unions to negotiate, during the period when the laws are held in abeyance, all contentious issues, including whether to repeal the laws or not. The farmers should match the step retreated by the government from its rigid position and agree to withdraw the agitation pending early negotiations with the government on everything related to enhancing the livelihoods dependent on farming. For the government, the farmers’ agitation is a global embarrassment. For the farmers, to agitate in the cold of the Delhi winter is to suffer extreme hardship, to which, some have succumbed.


The time bought by suspending the agitation and the three farm laws must be utilised to create a vibrant new link between farmers and their end-consumers. The government’s promise to double the farmer’s income by 2022 depends on creating market linkages for agriculture. That means building warehouses that can issue receipts and building a power grid that would supply power even during the day, to fuel a new revolution in rural value addition.


Courtesy - The Economic Times.

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Law’s not on whim, fancy or phone call (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


Comedian Munawar Faruqui, after spending 35 days in Indore Central Jail and being granted interim bail by the Supreme Court on Friday, was released late Saturday night, but not before a Supreme Court judge called up the Indore chief judicial magistrate to check that the bail had been executed. This, after the jail authorities had allegedly refused to comply on Friday as they had ‘not received any official order’ staying an order from the Prayagraj CJM for Faruqui’s production before him. If these proceedings (sic) were not grave, they would have been comic.

The charge levelled — by a Madhya Pradesh MLA, no less — against Faruqui has become rather hackneyed: ‘hurting religious sentiments’. He had also seemingly hurt non-religious sentiments in one of his performances by cracking a joke about a Union minister, something newspaper cartoons do several times a day without being deemed illegal. The defence maintained that the charges filed were ‘vague’ and that due process had not been followed in his arrest, submissions disregarded by the MP High Court but readily accepted by the Supreme Court. How divergence of legal perspective reflects on the working of the high court is a matter of concern.


The law works according to procedures, not on whim, fancy and phone calls. Apart from the fact that the state and its arms need to encourage the development of thicker skins, not of hair-trigger sensitivities, for the sake of a liberal India that can focus on genuine crimes and problems, India should be made to behave less like a banana republic. Otherwise, it runs the risk of becoming a selective banana republic, on the peel of which some people can be made to slip at the behest of others. That would be tragic, not slapstick.


Courtesy - The Economic Times.

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Friday, February 5, 2021

Predictably running to stand still (The Economic Times)


Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


Monetary policy has run fast to stand still. Policy rates remain static and the stance of monetary policy would stay accommodative to support much-needed economic recovery. The Reserve Bank of India estimates that even as growth accelerates in the coming fiscal to 10.5% in real terms, consumer price inflation would stay well below 6%, the upper bound of the central bank’s comfort zone for inflation. This, despite the hardening of crude and commodity prices across the world. There is, however, no conflict between rising input costs and expectation of low inflation in a context of rapid economic growth. This has to do with vast unutilised capacity across the board.


In India, capacity utilisation is well below 70%. Rise in prices would trigger increased output. That goes for commodities as well. Crude prices are soaring because of production cuts by Saudi Arabia. If America under President Biden revives the Iran nuclear deal, as Tehran desperately wants to, lots of additional oil would come into production. Commodity prices are rising because, in part, of scarce shipping capacity. The pandemic-stricken global logistics industry has cut back on operational fleet capacity. Locked-down production in the world outside China has made it unnecessary for cargo ships to travel to China, laden with normal exports. This has resulted in Chinese output, robust enough in its domestic production, not being able to be shipped out of China. These kinds of restrictions on supply would ease, with vaccination’s progress. The prospect of supply restrictions easing would take out the speculative layer in commodity prices, forcing them down. It makes eminent sense for the central bank to look through these price changes.


Giving direct access to retail investors to government bonds is a major step forward. At a time when retail investors are clueless as to where to put their savings, direct access to the safest instruments possible would be of great help, particularly for things like inflation-adjusted bonds targeted at senior citizens.


Courtesy - The Economic Times.

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Thursday, February 4, 2021

Health: Bold Steps In a Long Journey (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The long overdue attention to health in Budget 2021 is welcome, even if no surprise, given the context of Covid. Of note is the systems approach adopted by the government. Health is not just about clinics, hospitals, labs, doctors and medical personnel; it is also about nutrition, sanitation, general cleanliness, clean air and water.


The budget focuses on building capacity and promoting wellbeing. The task ahead is to ensure that these plans are carried through. The pandemic underscores the importance of investing in health — public expenditure was 1.29% of GDP in 2019-20, lagging not just developed countries but the Brics nations as well. The gap reflects in both health infrastructure and outcomes.


Budget 2021seeks to correct that — an increase in outlay, 137% over the last year’s allocation for health and well-being, including a one-off outlay of Rs 35,000 crore for vaccines and a near-fourfold increase in the outlay on water and sanitation.


The Centre’s decision to fund capacity-building at primary, secondary and tertiary levels (allocating Rs 64,180 crore over six years) will provide the basis for a healthcare system that can deal with emerging diseases. This plan must take on board the existing capacities, including in the private sector. India’s experience with the Covid pandemic underscores the importance of prevention. In a country of the size and wide diversity as well as huge disparities of India, focusing on well-being or preventing the occurrence of disease is equally critical. Improved sanitation, access to potable water, clean air and better nutrition help minimise the occurrence of comorbidities that make the population vulnerable.


Strengthening Mission Poshan, particularly in the 112 aspirational districts, will help improve health outcomes as well as productivity of the population in these areas. Dealing with air pollution, waste management, bioremediation of legacy dump sites and vehicle scrapping as health issues is an important change in approach and will make a difference in implementation.

Courtesy - The Economic Times.

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Privatisation Serves A Public Purpose (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The finance minister’s budget speech was unabashedly bold on strategic sale and privatisation of central public sector enterprises (CPSEs). The FM did state that a ‘bare minimum’ of CPSEs would operate in four strategic sectors and the rest privatised, and all CPSEs in non-strategic areas would be privatised.


The welcome divestment strategy makes perfect sense, policy designed as it is to better leverage private sector efficiency, provide resources for developmental purposes and generally redeploy valuable assets earning suboptimal returns.


The fact is that CPSEs post modest returns on equity, over two-thirds of profits of CPSEs are confined to just three sectors, petroleum, coal and power; over 150 CPSEs incur huge losses amounting to Rs 45,000 crore annually. The political class must reach a clear consensus on privatisation and wider shareholding in public sector assets, even as CPSEs step up their productivity levels with transparent board-managed corporate governance. In tandem, the Centre must reach out to CPSE trade unions and communicate that greater investment space for the private sector is for the greater good.


The disinvestment target for next fiscal,  Rs 1.75 lakh crore, seems daunting, but note that divestment of BPCL, Air India, Shipping Corporation of India, IDBI Bank and Container Corporation, among others, is a carry-over from this pandemic-affected fiscal, and so can well be expected to be completed soon. Two public sector banks and one public sector general insurance company will also be privatised. The Centre’s resolve to form a special purpose vehicle for unlocking asset value in CPSEs, like real estate, is sensible, as would timely closure of sick and loss-making units. Privatisation serves a public purpose.

Courtesy - The Economic Times.

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Thursday, January 28, 2021

An assault on child And sexual rights (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The Bombay High Court recently acquitted a man, accused of luring a 12-year-old into his house, groping her and trying to disrobe her, of the charge of sexual assault, on the ground that there was no skin-to-skin contact, and, instead, found him guilty of the lesser charge of outraging the modesty of a woman.


The case has many layers, like an onion, and removing each layer can make you cry. It is a crime against a child, it is a sexual crime against a child, it involves defining sexual assault, it calls into question the propriety of mandatory minimum sentencing, it calls for deliberation on the deterrent power of maximalist penalties on the very likelihood of someone being found guilty.


The government did well to challenge the high court ruling, and the Supreme Court, to stay it. The high court was of the view that the man’s actions did not meet the criteria of ‘sexual assault’ as defined in the Protection of Children from Sexual Offences (Pocso) Act. Sexual offences against children are different from those against adults, and laws and the legal community must recognise this. The ramifications of the same act of violation against a child and an adult are different in magnitude.


Therefore, the decision by the high court not to prosecute the accused whose victim was a minor under a law geared specifically to sexual offences against children was unfortunate. Sexual offence goes beyond rape, penetration and fondling and extends to intent to abuse and solicitation, including online. The punishment should be proportionate to the crime, said the high court. This is where the instrument of mandatory minimums must be revisited. Studies show that judges are reluctant to convict under the laws with mandatory minimums, as with Pocso.

Courtesy - The Economic Times.

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Use Market for Oversight of NBFCs (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


An RBI discussion paper on a revised regulatory framework for non-banking financial companies (NBFCs) has called for staggered, scale-based approach. The paper pitches for the principle of proportionality in regulatory oversight, commensurate with systemic risk perceptions, and taking into account interconnectedness, leverage levels, substitutability and the like, so as to make judicious use of ‘supervisory resources’.


It seems very much a work in progress. The information dissemination and processing ability of the market is something that has to be marshalled for oversight and self-correction, and an easy way to achieve this is by creation of a vibrant market for corporate debt. The suggested risk perception looks odd. The paper visualises a pyramidical regulatory framework.


NBFCs requiring the least regulatory intervention, characterised as non-systemically important, are placed, unexceptionably, at the base. However, NBFCs in housing finance or infrastructure finance are supposed to be placed in the Middle Layer, which may not be prudential or even efficient. The fact is that the failure of high-profile NBFCs like IL&FS, which quite spectacularly defaulted on its highly rated bonds a couple of years ago, does corroborate the need for an active and vibrant corporate bond market.


In the Upper Layer of the proposed regulatory pyramid structure, the 10 largest NBFCs are to be placed for supervisory purposes, as also the next 50. And the Top Layer is to be empty, reserved for entities that require prompt correction in their governance practices and operational parameters.


The central bank surely needs to boost its supervisory capacity across the board rather than mechanically follow an overtly rule-based approach that can, well, fail. After all, NBFCs perform a vital role in intermediation and provide credit to segments and niche markets unserviced by banks. Large-scale use of data analytics, to scan financial flows among banks and NBFCs for assorted patterns, must supplement normal audit and supervision. Fintech has a big role to play.

Courtesy - The Economic Times.

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Saturday, January 23, 2021

Biden on the Local And the Global (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


US President Joseph Biden’s inauguration speech was about unity, renewal and hope. Entrenched belief in sections of the population that they are being cheated of their destiny as the master race, on account of weakness and the machinations of a deep State, did not start with the Trump presidency, but those who uphold such beliefs felt free to act out their belief system, leading to the eruption of tensions that had simmered below the surface since the Civil War.


Quite apart from taking on the pandemic and its economic fallout, the new president has to bring some functional cohesion to the divided nation. In a speech that touched upon the challenges that the United States faces, on its own and as member of the global community, President Biden addressed themes that resonate around the world, wherever democracies strain to prove themselves a little better than the worst form of government, except for all the rest.


Unity, renewal and hope were the leitmotif of President Biden’s speech, but he did not deny differences or past failings. The critical message the 46th US President had was that democracy is hard work, and a nation is more than just its institutions, it is its people.


Therefore, a nation is never a finished project but a constant endeavour. It requires the full measure of the devotion of each citizen towards the project of national renewal towards greater collective coherence. Biden stressed the need for all parts of the political spectrum to come together on a common cause.


Differences exist, in some ways, differences are a critical component of a democracy. But differences should not metamorphose into unbridgeable divides that prevent people from working together to address common challenges.


Nor should differences be harvested, for partisan goals, with hatred and rage, to make it impossible to work together. Biden’s call for unity underlines the special responsibility that those in public office, elected officials and representatives have to ensure that differences do not define a people. That holds true everywhere.

Courtesy - The Economic Times.

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Sustainable Progress In Nuclear Energy (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The recent grid synchronisation of the third unit at Kakrapar Atomic Power Project (KAPP), near Surat in Gujarat, is notable indeed. The 700 MW unit is now our largest-capacity nuclear reactor, and the first of at least 16 units planned to balance the grid as we duly rev up green renewable power generation, intermittent and variable in nature.


The nuclear route provides clean, stable, baseload power, and is an important element of our energy policy and climate strategy. The latest unit incorporates the indigenously developed pressurised heavy-water reactor (PHWR) technology, designed for use of natural uranium and avoid fuel enrichment.


Note that KAPP has two smaller PHWRs, each of 220 MW capacity. Domestic resource endowments — rather small uranium reserves and bountiful availability of nuclear-fertile material thorium — have prompted India to adopt its well-known three-stage nuclear programme.


The stated target is to achieve 63 GW of nuclear power capacity by 2032; uranium imports are no longer a constraint, thanks to the Indo-US civil nuclear agreement, agreed upon in circa 2005 and concluded in 2008. The ongoing development of a chain of nuclear reactors here appears to have avoided costly time and cost overruns, reportedly due to modular design, standardisation and proven buildup of expertise over the years.


The country embarked on its second-stage nuclear programme with the successful operation of a research reactor labelled Fast Breeder Test Reactor. Fastbreeder reactors produce more fissile material than they consume. And the 500-MW Prototype Fast Breeder Reactor (PFBR) is slated to be commissioned later this year. The advanced reactors would enable conversion of thorium into fissile uranium in the third stage.

Courtesy - The Economic Times.

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Friday, January 22, 2021

Farmers Besotted By Protestations (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The immovable object and the unstoppable force shifted and paused. But while the government offered the agitating farmers that it would hold the new farm laws in abeyance for 18 months — as a committee thrashes out differences between the farmers and government on the substance of the laws — the farmers have rejected this compromise.


Even the tractor rally the farmers have planned for Republic Day, a symbolic act that should have been withdrawn after GoI’s temporary ‘rollback’, remains rather inexplicably on schedule. We urge GoI to take independent action to realise profitable crop diversification on the ground in the major grain-growing regions of Punjab and Haryana, while the committee is at work.


And we urge protesting farmers to not get besotted by their own protestations. It would have been ideal if consensus could have been reached on the substance of the new farm laws, as they chart a path out of the status quo that has become unviable on both economic and environmental grounds.


India today produces far more grain than it consumes, spends far too much on that excess production and damages the environment, by depleting groundwater and turning the soil toxic. It must move out of open-ended procurement of rice and wheat at ever-rising support prices. Farmers are told that the laws seek to enrich large companies at their expense.


It is desirable, therefore, that reform is implemented on the ground, even as negotiations proceed in a committee. India imports edible oil, fruit and pulses even today. The point is to move out of grain to these crops and others such as flowers, for which the market only grows. The farmers had been unwilling to negotiate on anything other than outright repeal of the new laws, and the government had refused to postpone implementation of the laws. Such rigidity on either side had thwarted a solution. We hope better sense will prevail now, and the farmers lift their siege of Delhi.

Courtesy - The Economic Times.

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What goes up might stay up, for now (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


India’s major stock market indices, Sensex and Nifty, yesterday crossed, respectively, 50,000 and 14,700. Some will pop bottles of champagne, some worry where they will find themselves when the bubble eventually bursts. The price-to-earnings ratio for the Sensex is 34.42, meaning that to gain command over Re1 of earnings, you need to buy stock worth Rs 34.42.


That is steep. And the price-to-book ratio is 3.39. It is not unnatural for companies to be valued in excess of their book value. But this valuation, too, seems indulgent. Should investors stay put and celebrate or sober up and exit? It depends on their appetite for risk. Greed and panic drive the markets, it used to be said. Add central bank liquidity as a new driver of capital markets around the world.


In response to the pandemic and the economic downturn it brought on, governments around the world offered their citizens support worth $12 trillion, says the IMF. A portion of that leaches into the pool of capital scouring the world for profitable deployment. The monetary creation was accompanied by lowering interest rates to record lows. Ten-year US treasuries yield 1.08%.


Policy rates are negative in Europe and Japan. Diversifying portfolios across asset classes is the way to optimise risk and reward. So, a good part of the footloose capital comes to emerging markets. India got $23 billion of portfolio flows into equity in 2020, even after the panic outflows in March and September. In January, more than $3 billion has come in.


Domestic investors, too, have been investing in stocks in unprecedented numbers, given the low returns on traditional savings instruments such as fixed deposits. The US Fed wants to keep money easy till inflation stays put above 2% for some time. So, markets could keep their heady levels and even grow. The ideal way off the rollercoaster is for the real economy to grow to justify the valuations. Growth should be the focus of policy.

Courtesy - The Economic Times.

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Thursday, January 21, 2021

President Biden: Hope And Responsibility (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


Joseph Biden, Jr has been sworn in as the 46th President of the United States. The absence of the outgoing president at the inauguration for first time underlines the deep fractures within the US polity.


Despite legal challenges, a vociferous campaign of lies and incitement of an insurrection by the disgraced loser in the presidential race, there was no stopping the transition of power. President Biden has not just to repair the rift but to move forward as well, fighting the pandemic, rebuilding the economy and regaining America’s position in the world, repairing alliances and partnerships across the world.


President Biden begins with a flurry of more than a dozen executive orders — some reversing measures taken by his predecessor and others reorienting the administration’s strategy. Ending the ban on travel from Muslim countries, accelerating the pace of vaccination against Covid and a pathway to citizenship for America’s nearly 11 million undocumented immigrants are the easy bits.


Getting the kind of stimulus the President wants through Congress will be more complex. Biden acknowledges that these have been dark times for the US, but reminds people that there is always light and that not only can things change but that they do. He will need to work on all fronts, not just to heal the US but to restore its place in the world.


A first step will be reaffirming faith in multilateralism — rejoining the Paris Agreement on climate and the World Health Organisation, and reversing the undermining of the World Trade Organisation. The US-India relationship will deepen, moving away from the transactional. The point is to build a partnership in a world that has altered, with new challenges in technology and strategic rivalry from China.

Courtesy - The Economic Times.

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Get on with our data protection law (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


Facebook is accountable for many sins of omission and commission, and whether buying WhatsApp to pre-empt competition is one of them is being determined by a judicial process in the US. Compared to these, WhatsApp’s decision to change its user agreement to make it clear that it will share some data with Facebook properties is a minor infraction.


Only the innocent fail to appreciate that when you get a service for free, you pay for it with your data. Google, for example, knows not only who you correspond with over mail and chat, but what your browsing habits are, where all you go, what your engagements are, as well. It targets its ads better, using this information, and makes more money.


Instead of crying about unilateral changes in the terms of service, what India needs to do is to put in place a reasonable law on protecting data. The European Union has the General Data Protection Regulation, which lays down clear-cut rules for protecting EU citizens’ data by any service provider.


So, if WhatsApp’s user terms in Europe are less invasive of privacy than these are in India, the fault is in our failure, so far, to put in place a legal framework for data protection. If the rules that have to be followed are clear enough, it will be up to WhatsApp to decide whether to offer its services in India or not, instead of asking Indian users to either accept its new terms of use or sign out.


In fact, WhatsApp is more rattled by mass defection of its users to rival Signal and Telegram messaging services than by legally unenforceable demands from the government. WhatsApp user groups are major sites of ideological indoctrination and this user base is confused whether to stay on or migrate, creating the uproar in social media.


As the recent publication of detailed WhatsApp messages of a celebrity journalist shows, data leaks happen not so much at the level of the messaging service as at the level of those that lay their hands on it. Yes, a data protection law is vital, but so is its rigorous enforcement beyond the realm of technology providers,

Courtesy - The Economic Times.

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Tuesday, January 19, 2021

Adverse Effects of Vaccine: Be Rational (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


At the end of day two of India’s vaccination drive against Covid-19, more than 224,300 people have been inoculated. Of these, 447 reported adverse effects, of whom three required hospitalisation. The number of adverse reactions should not cause worry, they account for 0.19% of the persons vaccinated. This is a good start.

Some adverse effects are par for the course for any vaccine, let alone the cohort of vaccines developed at the pace at which Covid-19 vaccines have been. As of now, the share of adverse reactions should not give rise to questions about any vaccine in particular and the use of vaccines for building immunity against Covid-19 in general. It is important to collect data on the nature of adverse reactions and characteristics of people experiencing them: it might reveal patterns or new information that can help improve vaccine delivery and effectiveness. In Norway, 29 persons above the age of 75 died after receiving the first shot of the Pfizer vaccine, prompting the Norwegian authorities to adjust their advisory for frail patients, who may not be able to withstand the nausea engendered by the vaccine. The Indian Council of Medical Research and the Drugs Controller General of India must keep processing and evaluating the information on adverse reactions and effects, and relay necessary information to the medical community and the public at large. The government must ensure that the information is widely disseminated, to counter rumour and worse.


India’s vaccination programme has begun well. Given the population size, it is essential to maintain the momentum. The health ministry has done well to be forthcoming with FAQs on the vaccines, including possible after-effects, and with information of actual experience.

Courtesy - The Economic Times.

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Defence Orders to Boost Local Capacity (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The government has cleared an order for 83 light combat aircraft (LCA) on Hindustan Aeronautics Ltd (HAL). The order is worth nearly ₹48,000 crore. The indigenous content is supposed to be 50% at the beginning and is supposed to go up to 60% by the time all the aircraft are delivered. Defence production is a way to encourage advanced manufacturing in the country. The present order is, in this respect, a boost for self-reliant (atmanirbhar) production.

If only things were that simple. How much of the total value that is added to produce the LCA Tejas Mk1A is accomplished in India is anybody’s guess. It is an old public sector trick to count as local production anything that is purchased from an Indian company, regardless of the import content of that purchase. Suppose an Indian company buys sophisticated electronic sub-assemblies from Israel, France or the US and puts them together to supply HAL with an assembly that purports to be made in India for the Tejas fighter, what is the real gain for domestic industry? The point is not to create an autarkic defence sector. India must procure from the rest of the world what is best and most cost-effective for its defence equipment. But there must be clarity on the extent of foreign content in the so-called indigenous output, so that improvement on this score can be achieved and measured. India still has the largest national contingent of young people of college-going age and, even after taking into account the damage done to their potential by terrible schooling, has the largest potential pool of engineers, scientists, designers and dreamers who can produce breakthrough technologies and convert them into useful products. Provided this capacity is marshalled.


That is why India needs to step up efforts on the lines of America’s Darpa — Defense Advanced Research Projects Agency, which funds moonshot projects — and nourish a startup ecosystem that innovates, drawing upon the best of R&D from around the world. The LCA order just scratches the surface. The point is to dig deep and rake it in.

Courtesy - The Economic Times.

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Monday, January 18, 2021

The needle as the sword & the shield (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


Roll-out of mass vaccination against Covid-19 marks the beginning of the end of the pandemic and, therefore, of the economic distress caused by it. For every inhabitant of the land to acquire protection, immunisation has to be universal. For the population to acquire herd immunity, which would suffice to halt the spread of the disease within the community, but does not guarantee that everyone would be immune, even if exposed, say, to an infected visitor, an estimated 60-70% of the population would need to be inoculated. Not surprisingly, along with China’s, India’s would be the world’s largest Covid vaccination drive, by far.

The development, testing and approval of multiple vaccines against Sars-Cov-2, the virus causing Covid-19, within one year of its genetic sequence being put out by Chinese scientists, has been a remarkable achievement of technology and global cooperation. Administering the vaccine to billions of people around the world would be a gigantic task of planning, organisation, cooperation, logistics management, record-keeping and database management. The initial experience in India demonstrates our capacity to manage this task reasonably well. Sure, there have been some cases of allergic reactions, but these are relatively few and none has been fatal. While India has prioritised healthcare and frontline workers, other places are following different strategies: Indonesia wants to inoculate working people first, since they are the ones most likely to contract the disease and spread it. New Jersey wants smokers to get the jab before, say, teachers. The results of these different strategies should constantly be monitored.


A word of caution on Bharat Biotech’s Covaxin, still in phase 3 clinical trials. The emergent nature of the vaccination task, in the face of new strains that spread faster, has led the authorities to clear its use as a backup in clinical trial mode. No one should be forced to take it. Commercially vital reputations are at stake: India’s drug regulation’s and Bharat Biotech’s. These should not be damaged.


Courtesy - The Economic Times.

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Negative lessons for the world from the U.S. (The Economic Times)

Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.


The US political establishment faces the delicate task of balancing the need to move forward from a divisive election and hold to account those who attacked American democracy. The first step in this dual act of looking forward and backward will be played out on Capitol Hill. The US Senate is gearing up for US President Donald Trump’s second impeachment trial and confirmation of the members of the Biden Administration, besides the incoming administration’s other urgent legislative agenda. We wish them success in this endeavour.


Donald Trump secured his ignominious place in history by being voted out after a single term, losing his party’s hold over the presidency, the House and the Senate, and being the first American president to be impeached twice. The push for impeachment by Democrats led by Speaker Nancy Pelosi is an effort to hold him accountable for his unambiguous efforts to undermine the elections and his encouragement of actions that led to the insurrection at Capitol Hill.


There is little doubt about the part that President Trump played in instigating the insurrectionists, repeatedly calling on them to stop what he called the stealing of the vote. Yet, impeachment is a political rather than a juridical punishment. If the Senate votes in favour, it will bar Trump from future elections. But it could also feed his supporters’ sense of aggrievement. Trump can be punished, but can impeachment extinguish Trumpism?


There is a lesson here for political leadership in other democracies, as well. There are serious long-term consequences of undermining democratic political processes and playing up peoples’ insecurities and fears for the sake of political power. Pursuit of power should not be at the expense of the nation’s unity.


Courtesy - The Economic Times.

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