9 PM Daily Brief – May 21st ,2020

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9 PM for Main examination

GS-2

  1. How public health boosts an economy?
  2. Analysis of Epidemic Act, 1897

GS-3

  1. What is the response of government in handling COVID-19?
  2. Promoting Privatization
  3. How the recent reforms in defence sector are beneficial?

9 PM for Preliminary examination

FACTLy


1.How public health boosts an economy?

Source: The Hindu

Syllabus: GS 2-Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

Context: The IMF called the present crisis the worst downturn since the Great Depression. Questions are being raised on low investments in health.

The Rs.20-lakh-crore package recently includes proposals to prevent and respond to future pandemics by:

  • Strengthening of health and wellness centres.
  • Establishment of infectious diseases hospital blocks in all districts.
  • Expansion of the laboratory network.
  • ‘One Health’ research on zoonotic diseases under the Indian Council of Medical Research (ICMR).

Weaknesses of our health system:

  • Lack of capacity: Weak health systems which do not function well in a steady state cannot suddenly generate surge capacity when challenged by a public health emergency.
  • Selective health investment: A selective investment in some components of infectious disease control will not meet the many other essential demands on the health system.
  • Diversion of attention: Even during the COVID-19 response, attention has been diverted from maternal and child health and care for other infectious diseases and non-communicable diseases.

The southern States have shown how efficient and equitable health systems are our best defence against public health emergencies.

Need of adequate investment in creating a health system that:

  1. Can withstand any kind of public health emergencies.
  2. Deliver universal health coverage and
  3. Other targets of the Sustainable Development Goals.

Why the investments in health is low?

  • Low priority to health: For long Health systems were mostly seen as unavoidable expenditures which had to be accommodated as the essential service entourage of a booming economy but not to be placed at the high table of policy priorities.
  • Considered as Cost disease: One of the most influential economists of the modern era, William Baumol, described healthcare as a ‘cost disease’ where costs naturally rise, outpacing the value of services rendered and therefore it is less rewarding than the industrial engines of economic growth. The rising costs of healthcare in industrialised countries, especially those without organised universal health coverage, may well invite such a description.

Investments in public health and primary care pay rich economic dividends:

  • A UN High Level Commission, headed by the Presidents of France and South Africa, reported in 2016 that investments for augmenting the size and skills of the health workforce yields economic growth through:
    • Improved population health and productivity,
    • Reduced healthcare costs and
    • Job creation even in a gloomy global scenario of job loss.
  • For India:
    • Productivity boost promised by a demographically young population can be protected.
    • Education and skilling of a diversified health workforce can uplift health services for health protection at both population and individual levels.
    • When domestic needs are met, this expanded health workforce can also meet global health needs, both as a rapid action force for health emergency response and as a unit taking care of the chronic care needs of aged societies.
    • Innovative health technologies and inexpensive pharmaceutical products can be created at scale, for domestic use and global export.

History teaches us that such an investment in health is especially useful in times of economic adversity:

  • South-East Asian countries invested in health and universal health coverage during and soon after the Asian Financial Crisis of the 1990s.
  • The UK adopted universal health coverage soon after the Second World War.
  • Japan adopted it in the early 1960s to hasten recovery from the economic injuries inflicted by defeat in that war.

All of them recognized that greater investment in health is a winning bet for economic development.

Way Forward

A stronger health system in a country can lead to better outcomes on the economic growth front. India must choose this path to boost the trajectory of its economic growth.

2.Analysis of Epidemic Act, 1897

Source – Indian Express

Syllabus – GS 2 – Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Context – The Epidemic Diseases Act, 1897, is the nodal legislation with respect to containment of ‘Dangerous Epidemic Diseases’ and has been invoked to deal with COVID 19.

The act allows the State Governments and the Central Government to adopt any measures to prevent the outbreak of a dangerous disease once confirmed as an epidemic.

Brief History

  1. Reason for introduction– The British government passed the Epidemic Diseases Act, 1897 to tackle the epidemic of bubonic plague in the erstwhile Bombay Presidency in the 1890s.
  2. Steps taken– Empowered by the Act, the colonial authorities searched the homes and checked passengers suspected of plague cases. Forcible segregations, evacuations, and demolitions of infected places were carried out.
  3. Instructions to public– The assembly of crowds was prevented; public meetings and festivals were banned, and pilgrimages suspended.
  4. Criticism of the abuse of the act– Bal Gangadhar Tilak was awarded 18 months’ rigorous imprisonment for the criticism of the imperial authorities’ handling of the plague in his newspapers Kesari and Mahratta.

Features of Act

  1. Section 2Powers of government– Under section 2,the State government, when faced with the challenge of an epidemic, can do the following:
    • inspection of persons travelling by railway or otherwise
    • segregation of persons suspected to be infected
    • prescribe temporary regulations to be observed by the public or by any person or class of persons
  1. Section 3Punishment for disobeying – It provides for penalties for disobeying any regulation or order made under the Act. These are according to section 188 of the Indian Penal Code (Disobedience to order duly promulgated by public servant).
  2. Section 4Legal Impunity to state agencies – It gives legal protection to the implementing officers acting under the Act.

Issues

  1. No clear definition– The law fails to define terms like “dangerous”, “infectious”, “contagious diseases” or “epidemic”. This makes early detection of severity of diseases tough and so, the response gets delayed.
  2. Fails to provide roles and responsibilities– It doesn’t provide for specific roles, responsibilities and clear hierarchy, nor a pre-planned format within which to operate for a coordinated and concerted response. Given this, the government has invoked the Disaster Management Act, 2005, since it provides for an exhaustive administrative set up for disaster preparedness.
  3. Reactive in approach – No provisions on the sequestering and the sequencing required for dissemination of drugs/vaccines, and the quarantine measures and other preventive steps that need to be taken. This makes the law reactive on its approach to handle epidemics.
  4. Human Rights neglected –The Act emphasizes only the powersof the central and state governments during the epidemic, but it does not state the rights of the citizens during the event of a significant disease outbreak.
  5. Multiplicity of laws – India has a number of laws that can be applied during a public health emergency. There is, for instance, the Indian Ports Act, the Livestock Importation Act, the Aircraft Rules and Drugs and Cosmetic Act, with provisions that can be used during a situation such as COVID-19. The requirement is for these provisions to be harmonized into a single overarching legislation.
  6. Health is a State subject– Many Indian states have had their own epidemic disease acts since the colonial era, like the Madras Public Health act of 1939 and the Malabar Public Health Act of 1939. More recently, states like Karnataka and Gujarat have drafted their own public health legislations.

Suggested Reforms – Recently Ordinance to amend the Act was passed which include protections for healthcare personnel combatting epidemic diseases and expands the powers of the central government to prevent the spread of such diseases.

  1. Clear definition– The terms epidemic and pandemic need to b defined based on variables and standards like
    • the scale of the disease,
    • the distribution of the affected population across age groups,
    • the possible international spread,
    • the severity of the malady, or
    • the absence of a known cure.

This would expedite the identification a global pandemic such as COVID-19 domestically.

  1. Model central law – Since health is state subject and there are multiple laws to deal with epidemic or pandemic, model central law is needed to provide broad framework to states.

Way Forward – The COVID-19 public health emergency provides the Union government a rare opportunity to update the country’s laws; otherwise, this legislative and policy gap could soon prove to be India’s Achilles’ heel when world is witnessing rise of zoonotic diseases in last two decade.

3.What is the response of government in handling COVID-19?

Source: The Indian Express

Syllabus: GS 3-Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context: The Finance Minister announced stimulus last week to tackle COVID-19 crisis. It is a said to be carefully crafted, well-balanced and bold package.

Objectives of Stimulus:

  • To ensure that human cost of the crisis is minimized, especially for those at the bottom of the pyramid
  • To convert this crisis into an opportunity by implementing bold structural reforms that will go beyond repairing the damage to the production capacities and enhance the overall supply response capabilities of the economy.

Response of government on the supply side of COVID-19 crisis:

Aim Steps by government

 

To ensure that food security and farmers’ incomes are not impaired · The government declared agriculture and all related activities as essential services immediately upon announcing the lockdown.

· This permitted the successful harvesting and efficient procurement of the critical Rabi crop.

· It also implied pumping in Rs 78,000 crore as new purchasing power in the hands of the farmers.

 

To effectively prevent the pressing cash/liquidity crunch from leading to insolvencies and bankruptcies. · An immediate moratorium was announced on their debt servicing obligations to commercial banks.

· This measure was reinforced for MSMEs, for whom an additional credit line of Rs 3 trillion without any fresh collateral was extended.

· MSMEs could also avail of new equity from the Rs 50,000 crore fund of funds and take advantage of the subsidiary debt facility announced by the FM.

· The Rs 90,000 crore credit package made available to state discoms should also be included in this set of measures as it will prevent bankruptcies of state electricity utilities and the power producers.

 

To significantly improve the ecosystem for private producers, both in agriculture and manufacturing. · Long-pending reforms to give farmers the much-needed freedom to choose their clients and for traders and exporters of agro-products to maintain necessary stocks have now been announced.

· Defence production and exports will get a new fillip with the liberalisation measures.

· Greater space will be given to private businesses in sectors in which public sector enterprises had either a monopoly or a predominant presence.

A measure that does not have a large fiscal footprint but touches the lives and livelihoods of more than 50 lakh families, street vendors. · They have been given a credit of Rs 10,000 each for re-stocking and use as working capital.

· “The package” has guaranteed the survival of existing production capacities and laid a strong foundation to enhance larger private sector participation.

 

The aggregate demand is made up of consumption, investment and demand for intermediate goods.

Response of government on the demand side of COVID-19 crisis:

  1. Additional credit lines provided to MSMEs, vendors or farmers will contribute to the strengthening of aggregate demand.
  2. The 20 crores female Jan Dhan account holders will receive monies directly into their bank accounts
  3. Rs 50,000 additional incomes in the hands of those whose TDS and TCS were reduced by 25 per cent
  4. Rs 40,000 crore additional allocation for MNREGA, which will provide jobs and help to those returning to their villages from metros and cities
  5. Rs 30,000 crore for construction workers
  6. Rs 17,800 crore transferred to 12 crore farmers
  7. Rs 13,000 crore transferred to states to finance the costs of running quarantine homes and shelters for migrant workers.

Way Forward

The Atmanirbhar package with nearly 10 per cent of GDP, combined with the significant number of bold structural reform measures promises to promote India’s economic recovery in the post COVID-19 period.

4.Promoting Privatization

Source – Livemint

Syllabus – GS 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context – Government’s new public sector enterprise policy is aimed at having minimum one and maximum four PSU in strategic sectors

Privatization – It refers to transfer of shareholding, management, and control of public sector enterprises to the private sector.

Difference between Privatization and Disinvestment

Privatization Disinvestment
Selling all of government’s stakes of PSU to private sector which results in change of ownership and management. Selling minority shares of Public Enterprises, to another entity be it public or private is disinvestment. In this the government retains ownership of the enterprise.

Disinvestment may or may not result in privatization.

 

Example – Privatization of the Maruti Udyog Ltd which is now Maruti Suzuki Example – Disinvestment of 12.6% shares of GOI in IRCTC (Indian Railways Catering and Tourism Corporation)

Objective of new public sector enterprise policy – The policy has objective of promoting private sector participation in strategic sectors (yet to be defined) in order to foster competition and improve efficiency of these sectors.

Benefits of Privatization

  1. Loss-making PSU– Most of the PSU’s are underperforming which adds burden to exchequer where funding is done from taxpayer’s money. This sum can be better utilized for development process.
  2. Earning of non-tax revenue– Selling PSUs will lead to more non-tax revenue which can be used to give stimulus to economy.
  3. Corporate tax by private sector– PSU’s when transformed by private sector leads to more efficiency and thus more profit. This adds to the government’s direct tax resources.
  4. Successful Example of privatization– Hindustan Zinc – The Atal Bihari Vajpayee-led BJP government sold 45% of Hindustan Zinc for ₹769 crore in 2002. The company became the world’s second-largest zinc-lead miner and one of the top 10 silver producers. Management change and privatization can thus raise shareholder wealth through improved efficiency.

Way Forward – Governments across the world acts more as facilitator to promote business friendly environment by reducing regulatory cholesterol and privatization by government of India is a welcome step in this direction.

5.How the recent reforms in defence sector are beneficial?

Source: The Hindu

Syllabus: GS 3-Achievements of Indians in science & technology; indigenization of technology and developing new technology.

Context: The measures recently announced to promote self-reliance in defence production addresses long-standing strategic and national security concerns about the extent of India’s external dependence for its defence-preparedness.

Heavy dependence of India on imports in defence:

  • India has been the world’s largest arms importer in the last decade. It accounted for about 12% of global arms imports.
  • Saudi Arabia jumped to first place in 2018 and 2019, but India still takes over 9% of global imports.
  • Problem: This external dependence may create vulnerabilities during military crises.

Background: The new Defence Procurement Procedures (DPP) 2020 are under formulation and Chief of Defence Staff (CDS) is tasked with promoting indigenous equipment in the armed forces.

A movement of Opportunity due to COVID-19 crisis:

  • Encouragement to Indian private defence manufacturers:
    • By the decision to notify a list of weapons systems for sourcing entirely from Indian manufacturers, the promise to progressively expand this list and a separate Budget provision for domestic capital procurement.
  • Promise of a time-bound defence procurement process, overhauling trial and testing procedures and establishing a professional project management unit:
    • Over the past five years, the Indian government has approved over 200 defence acquisition proposals but most are still in relatively early stages of processing.
    • This delay now provides the opportunity to re-examine them and to prioritise those with indigenous research and development.
  • The decision to corporatise the Ordnance Factory Board:
    • Ordnance factories structure, work culture and product range need to be responsive to technology and quality demands of modern armed forces.
    • Corporatization ensures a more efficient interface of the manufacturer with the designer and end user.
    • The factories would be better integrated into the larger defence manufacturing ecosystem.
  • Self-reliance not be taken to overzealous extremes:
    • The thrust for indigenous research and development will coexist with the import of cutting-edge military technologies to remove near-term defence vulnerabilities.
  • Framing “realistic” specifications for desired weapons platforms:
    • It will be based on the requirements of India’s defence strategy, rather than on aspirational considerations.
    • Avoiding urgent replenishments: It is imperative that when we import weapon systems, we should plan for the ammunition and spares for them to be eventually manufactured in India so that we are not driven to seek urgent replenishments from abroad during crises.

Impact of FDI on Defence:

  • More joint ventures: The liberalisation of FDI in defence manufacturing, raising the limit under the automatic route to 74%, should open the door to more joint ventures of foreign and Indian companies for defence manufacturing in India.
  • Indigenisation: It would sustain a hub of domestic industrial activity in the research, design and manufacture of systems and subsystems.
  • Opportunity for Indian companies: Our companies have long been sub-contractors to prominent defence manufacturers abroad. They would get the opportunity to directly contribute to Indian defence manufacturing.

Development of a thriving indigenous defence industry needs an overhaul of existing regulations and practices:

  • A long-term integrated perspective plan: For the requirements of the armed forces should give industry a clear picture of future requirements.
  • DPP 2020 should incorporate guidelines: To promote forward-looking strategic partnerships between Indian and foreign companies. It will help to achieve indigenisation over a period.
  • Cost evaluation: It must evolve from mechanical application of the L1 (lowest financial bid) principle to prioritizing indigenous content.
  • The definition of indigenization: It needs to privilege technology over value or volume.
  • Transparent policy: Investment will be viable only if the door to defence exports is opened with a transparent policy.
  • Level playing field for private sector: Conflicts of interest, created by the role of DRDO as the government’s sole adviser, developer and evaluator of technologies have to be addressed.

Way Forward

The government’s moves will help address vulnerabilities in crises as well as strategic and national security concerns.


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