Gist of EPW January Week 3, 2021

The Economic and Political Weekly (EPW) is an important source of study material for IAS, especially for the current affairs segment. In this section, we give you the gist of the EPW magazine every week. The important topics covered in the weekly are analysed and explained in a simple language, all from a UPSC perspective.

TABLE OF CONTENTS

1. A Statistical Quirk
2. American Democracy Struggles for Recuperation
3. A (Re)look at the Proposed DNA Regulatory Board

A Statistical Quirk

Context:

The article analyses the changes in the consumer price index and core inflation of November and December 2020.

Changes in consumer price index (CPI)

  • The consumer prices have shown a decline by 2 percentage points from 6.93% in November 2020 to 4.59% in December 2020.
  • Due to this, the consumer price index (CPI) has once again come under the mandated targets after a long interval of eight months and it is the lowest in the last 16 months.

Implications for RBI:

  • The inflation rate in December was similar to the projections of the RBI. The Reserve Bank of India (RBI) had projected the inflation rates for the third quarter of the financial year 2020-21 as 6.8% and 5.8% for the fourth quarter. 
  • With this, the monetary authorities have taken a sigh of relief which is evident because the rise in consumer prices in the last few months have raised a concern that the government will go for a less rigid inflation target, from the present 2-6% range, in order to focus more importantly on growth when the inflation targets will be reviewed in March. 
  • But now, when the rate of inflation is going below the targeted ranges, continuing with the current levels will be good for many reasons. 
  • If a wide inflation target is selected by the government, it is going to make an impact on the ability of the central bank to set inflation targets and to check top-line inflation.

Fluctuations in food prices:

  • Looking closely, a sharp fall in food prices which is the prime reason for the fall in CPI is more of a statistical outcome than that of actual numbers. Hence, it will be unwise to read too much in the decline of consumer prices of the month of December.
  • In 2020, fluctuations in food prices were of double digits. It suddenly declined from  9.5% in November 2020 to 3.41% in December.
  • The sharp decline in vegetable prices which is the second-largest component in the consumer food basket is the main reason for such a decline in food inflation. The prices of vegetables fell by 26 percentage points in December as compared to November.

Reasons for decline in food prices:

  • The main factor behind the sharp decline in the prices of vegetables and food is largely attributed to the overinflated base numbers of December 2019, when there was a quick rise in the prices of these two products to an abnormally high level of 60.50% and 14.19% respectively. 
  • Hence, because of these bloated base year figures, the vegetable and food prices have recorded a sharp decline in December 2020. 
  • Along with this, favourable weather conditions and abundant Kharif crops in the Rabi season have also relaxed the supply constraints. 
  • This to an extent has also contributed to the fall in the prices of a few food products in the consumer basket. 
  • However, the prices of cereals and many other important food products such as eggs, meat and fish, pulses and products, oil and fat, spices, and non-alcoholic beverages have continued to rise between 10-20% range, which is a matter of concern.

Changes in core inflation

  • With respect to core inflation, that is, inflation excluding food and fuel prices, there are reasons to worry. Towards the end of 2019, the core inflation had dipped to 4%. However, since then it has steadily increased and in November 2020, it peaked at 5.56%, dipping moderately to 5.34% in December 2020.
  • Prices of goods and services, which contribute to core inflation, such as clothing, footwear, health, and recreation are still increasing diminishing the hope of a reversal of the growing trend of core inflation in near future.
  • Also, wholesale prices of manufactured goods have increased steadily since May 2020 and in November it has reached 3%. 
  • In certain segments, the price has increased sharply which has created much disquiet.
    • Recently a union minister has demanded setting up a new regulator to control the sharp rise in prices of cement and steel. He alleged that a cartel of large corporates is responsible for such a steep rise in prices.
  • Such acts of cost-push will impact other sectors of the economy and will lead to higher inflation especially in a situation where demand is still recovering.

Employment situation

  • Employment numbers as presented by the Centre for Monitoring of Indian Economy (CMIE) also present a grim picture for the future. 
  • While highlighting an increase in employment, CMIE data points out that the number of people employed is still 15 million less as compared to the numbers before the pandemic.
  • In such circumstances, a slow recovery and a rise in employment level to pre-pandemic levels will mean that the demand would recover substantially, with a negative impact on inflation.
  • First advance estimates of national income also support this. It highlights that during 2020-21, private consumption expenditure has dipped by 9.95% in real terms. Hence, even a partial recovery of consumption expenditure in 2021-22 will imply a surge in demand and increase consumer prices.

Other factors responsible for high inflation

  • There are external factors that can add to inflation. It is expected that global prices will increase. Oil prices are expected to increase by 12% in 2021. This will give a little window to the policymakers to arrest inflationary pressure.
  • Moreover, cost-push inflation will be strengthened by higher tariff and non-tariff barriers imposed by the government on imports.

Conclusion

  • Trends in both domestic and external sectors suggest that prices will increase and there is a lesser possibility of softening of inflation at least in the medium term.

American Democracy Struggles for Recuperation

Context:

The article analyses the current political situation in the United States especially after the 6th January event and highlights challenges for US democracy.

Background:

  • At the time when the image of the United States (US) as the flagbearer of democracy is severely damaged, Joseph R Biden is going to become the president of the US.
  • People of the US are already facing one of the worst health emergencies and at the same time economic hardships. This is coupled with a power crisis due to the recently concluded presidential election.
  • President Trump refused to accept election results and had launched a powerful campaign to discredit electoral outcomes. 
  • His narrative of a “stolen election” emboldened his supporters to attempt to seize  Capitol Hill on 6 January 2021, when Congress was authenticating the victory of Biden in the presidential election.

The fallout of the 6th January event:

  • The ease with which Trump supporters stormed the capitol building exposed the double standards of the police while dealing with different kinds of protests (consider the role of the police in the Black Lives Matter protests).
  • It also symbolizes the fact that the far-right, white supremacist ideology which is promoted by Trump has its presence in the administrative system of the US.
  • After the 6th January incident, most ruling elites of the US have gone all against Trump with the Democratic Party all set to punish him for his failed “coup” bid. 
  • Even fellow Republicans who were with him when he was dishonouring democratic norms and setting his narratives based on ‘‘alternative truths’’ have shunned Trump now. However, there is no indication by them to face the truth brought to the fore with the anti-democratic action by Trump and his supporters. 
  • The point to dwell upon is whether Trump as a person is a problem or he is the result of more deep-rooted problems.
  •  Biden and his party should look into the above issue and be worried about 74 million Americans who voted for Trump in the last presidential election.
  • These people are not going to wither away either by impeaching Trump or taking action against those who participated in the January 6 event. 

Republicans and Democrats:

  • For Republicans, Trump represents their main support base. The Republican Party cannot immediately revert to its previous strategy of secretly placating white supremacists by using Nixon-era southern strategy and at the same time projecting neo-liberalism of the Ronald Reagan era as its main ideology.
  • Trump has exploited both strategies and has formed his own space in US politics.
  • If the Democrats are focusing only on Trump, neglecting the whole picture, it will be self-defeating for them.
  • Democrats also need to shoulder some responsibility for whatever happened on January 6th.
  • After the success of Ronald Reagan’s style of politics, Democrats too started following his economic policies. Thus, both the Republican and Democratic parties became the same, leaving only cultural and symbolic matters as differences.
  • This led most Americans to believe that both parties are part of an ‘‘establishment controlled by elites.’’ 
  • The success of Trump on the right flank and by Bernie Sanders on the left (albeit limited) reflects the disillusionment of people, fragmenting US society into two parallel worlds having their own truths.

The rise of Trump:

  • The reason behind Trump becoming a cult figure among Republican supporters is his strategy of supporting prejudices of the white population. He supported their hegemonic and supremacist aspirations in no uncertain terms. 
  • Trump spoke bluntly about it. From the very beginning of his presidency, he stoked white nationalism. He targeted Muslims, Mexican immigrants, Blacks, and China for this.
  • He attacked his political opponents along with media and political institutions. His act of withdrawal from international organizations and free trade agreements boosted his image among his supporters.
  • This resulted in a sharp polarisation of US society, making Trump a relevant political figure in US politics even after his defeat.

The way ahead:

  • Future administrations of the US, Democrats and other progressive forces have to deal with this for many years. 
  • The pertinent question is how to break the racial polarisation which has peaked.
  • Can improving social justice and redistribution along with putting the class question at the centre of politics be helpful?
  • If the progressives of the US can find a solution to this, then it will also benefit other democracies that are facing the Trump phenomenon in their own country.

A (Re)look at the Proposed DNA Regulatory Board

Context:

The article analyses various clauses of the DNA Technology (Use and Application) Regulation Bill, 2019.

Introduction:

  • DNA Technology (Use and Application) Regulation Bill, 2019 was introduced in the Lok Sabha in July 2019.
  • It will enable the government to make profiles and databases of people based on their deoxyribonucleic acid (DNA).
  • Currently, the bill is under examination of the Parliamentary Standing Committee on Science and Technology, Environment and Forests.
  • Activists have criticized the bill and termed it as another Aadhar in the making.

Major highlights of the Bill:

  • The bill provides a legal framework for the collection, storage, and use of an individual’s DNA data.
  • The purpose is to use the database for the identification of missing and deceased persons, victims, offenders, suspects, and under­trials. The list of cases for identification of people, for which data can be used can be expanded.
  • There are provisions for providing accreditation to private and public laboratories (including existing ones). Thus, the bill will also regulate these laboratories.
  • Databanks will be established both at national and regional levels to store and maintain DNA profiles. 
  • A DNA Regulatory Board will be constituted to discharge the provisions of the bill.

The DNA Regulatory Board

  • The bill is not exhaustive and delegates rulemaking power to the central government and the DNA Regulatory Board.
  • The board will regulate the use and application of DNA technology in India.
  • The board will be an omnibus body having vast legislative, executive, adjudicative, and advisory powers.
  • Clause 59 of the bill contains an extensive but inclusive list of subjects over which the board can make regulations. It should be noted that the board has been delegated essential legislative power and not incidental legislative power. The board can add to the list of specified purposes for which information relating to DNA profiles, DNA samples, and records relating thereto shall be made available.” 
  • The delegation of such essential legislative powers goes against the principles of separation of powers, which is one of the basic features of the Constitution.
  • Clause 12 lists down the admi­nistrative, adjudicative and advisory fun­ctions of the board. 
  • Clause 57 debars all courts including the high courts and the Supreme Court, from admitting any suit with respect of any matter which the board is empowered to determine. This also goes against the basic structure of the Constitution. It shows that there is an excessive concentration of power in the board without an effective oversight mechanism.

Composition of the DNA Regulatory Board:

  • The board will have the secretary of the Department of Biotechnology as its ex officio chairperson.
  • An eminent person having more than 25 years of experience in the field of biological sciences will be the vice-chairperson.
  • It will have ten members, nine of whom will be ex officio members representing National Human Rights Commission (NHRC), National ­Investigation Agency (NIA), Central ­Bureau of Investigation (CBI), the Director-General of Police (DGP) of “a” state, the Centre for DNA Fingerprinting and Dia­gnostics, National Accreditation Board for Testing and Calibration of Laboratories, Central Forensic Science Laboratory, the Ministry of Law and Justice and the Ministry of Science and Technology. 
  • The 10th member will be an eminent person in the field of biological sciences having more than 25 years of experience.
  • There will be a member secretary who will be an officer not below the rank of joint secretary to the Government of India or equivalent, with knowledge and experience in biological sciences. He will be nominated by the central government.
  • Thus the board is not an autonomous body but a body of officials from the central government. These officials hold the ex-officio positions.
  • There are only two independent experts out of 13 members. They hold office for three years or till a maximum of 65 years of age (whichever is earlier). They are also eligible for reappointment for another three years given that they have not attained 65 years of age.
  • There is neither representation from civil society nor of the judiciary.
  • States are given only symbolic and minimal representation. The central government will appoint DGP of states on the basis of rotation for a three-year tenure in alphabetical order.
  • So, approximately, in 80 years, every state will have its representation in the board. States should have greater representation in the board.

Framework for Functioning of the board:

  • According to Section 6, the board will frame its own regulations regarding meetings, the transaction of business, and quorum.
  • With respect to the transaction of business, decisions will be taken by a majority of votes of members “present and voting,”. In this regard, giving the power to the board to decide the quorum may not be appropriate.
  • The ex-officio members of the board are very high-ranking and pre-occupied officials of the government. So, they may keep the quorum very low so as to keep the requirements of meeting flexible. That is why the quorum needs to be specified by the Parliament itself.
  • The bill also proposes to validate the proceedings of the board in case any discrepancies arise with respect to any vacancy or defect in the constitution of the board, any defect in the appointment of members, or any irregularity in the procedure of the board if that does not affect the merits of the case. These exceptions must be removed because these can validate the illegal and ill-informed decisions taken by the board.
  • According to clause 10 of the bill, the board can delegate all or any of its functions to the chairperson or any other member except the power to make regulations. It is not prudent to give all or any function to a single person. Instead of it, functions can be delegated to a sub-committee of the board. The decision will be then ratified by the board.
  • The bill allows the central government to supersede the board under specific circumstances, and appoint an administrator (not below the rank of a secretary to the Government of India) to discharge the functions performed by the board. The board may need to be reconstituted within six months.
  • The administrator will exercise all the powers during the period for which the board remains suspended.

Conclusion:

The DNA Regulatory Board goes against the ideals of separation of power. It is against the basic structure of the Constitution. Hence, the form and purpose of the board as mentioned in the bill needs a relook.

For more EPW articles, read “Gist of EPW“.


 

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