Gist of EPW May Week 4, 2023

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. The Eurasian Economic Union and India
2. Failure of the ‘Pharmacy of the South’
3. Labour Migration in India
4. Online Gaming

1. The Eurasian Economic Union and India

What is Eurasian Economic Union?

• The Eurasian Economic Union is an international organisation for regional economic integration.
  • It has international legal personality and is established by the Treaty on the Eurasian Economic Union.
• The EAEU provides for free movement of goods, services, capital and labour, pursues coordinated, harmonised and single policy in the sectors determined by the Treaty and international agreements within the Union.
• The Union is being created to comprehensively upgrade, raise the competitiveness of and cooperation between the national economies, and to promote stable development in order to raise the living standards of the nations of the Member-States.

International North-South Transport Corridor (INSTC)

• International North-South Transport Corridor (INSTC), is a multi-modal transportation established in 12 SEP 2000 in St. Petersburg, by Iran, Russia and India for the purpose of promoting transportation cooperation among the Member States. 
• This corridor connects the Indian Ocean and Persian Gulf to the Caspian Sea via Islamic republic of IRAN, then is connected to St. Petersburg and North European via the Russian Federation.  
• India’s investments in INSTC infrastructure have amounted to about $2.1 billion, including the construction of the port of Chabahar and a 500 km Chabahar–Zahedan railway line.

 Image: Problems of INSTC

Source: EP&W

Issues with International North-South Transport Corridor (INSTC)

• Transit time by sea from Russia to India is two times faster than North–South (taking into account downtime–three times). 
• Export is sent using bank letters of credit. 
• Banks do not want to participate in logistics related to Iran. The volume of investments required is more than $10 billion. 
• Only container cargo are transited through Iran. There is a significant amount of losses for non-container cargo, a shortage of infrastructure, and transit costs. 
• There are no transportation capacities of motor transport/railway in Iran for the organisation of transportation of more than 30,000 TEU per year.

There has been some progress in certain sectors of the EAEU that could be used as the basis for further development of the INSTC.

• Border control in the implementation of international road transport is carried out at the external borders of the EAEU.
• Domestic and international road haulage carried out by EAEU carriers in transit through the territory of the EAEU is carried out without the necessity for additional permits.
• The programme of gradual liberalisation of cabotage road transport in the EAEU for 2016–25 was adopted.
• Domestic transportation and export to third countries/import from third countries through the seaports of the EAEU, a single (unified) railway tariff of the EAEU countries applies. 
• the principles of access of railway carriers of the EAEU countries to each other’s infrastructure are defined.
• The largest railway operator of the EAEU countries, the United Transport and Logistics Company (UTLC), was created. 

Issues with  EAEU

• The growing India–United States (US) strategic engagement in Indo-Pacific security could act as an impediment to the connectivity that India desires to achieve with the new route. 
• The US is not appreciative of India’s engagement with Russia, Iran, and China, the three main pillars of Eurasian connectivity. 
• India’s ability to assert its strategic autonomy, the sustained growth of its manufacturing sector, and the efforts to resolve the various issues of the INSTC.

The most important strategic tasks for India in respect of furthering the EAEU in order of priority are as follows:

• Using national currency or barter arrangements in trade.
• Development of an alternative to the SWIFT system of payments.
• The development of the North–South corridor. Formation of an expert advisory council from all interested countries to monitor and progress this transport route.
• The use of non-Western companies for cargo transportation.
• The use of non-Western companies for shipping, insurance and allied services.
• Development of the Vladivostok-Chennai shipping route as a first step, and then partnering with Russia in the development of the NSR, including railway projects associated with it. 
• Development of stronger trade ties, firstly with Iran and then with other Central Asian countries. This could be facilitated by the establishment of a multilateral business council.
• Confidentiality of all agreements to avoid Western interference and secondary sanctions.

The EAEU has great potential to integrate the economies of India, Central Asian countries, the Russian Federation and China. Therefore, India must take additional steps to recalibrate an effort to develop it. 

2. Failure of the ‘Pharmacy of the South’

Introduction

• India’s pharmaceutical industry grew at a slow pace since independence. However, in the last few decades, it has gained tremendous momentum.
• It has become a sunrise sector due to its high growth and revenue at the international level.
• There is a high demand for Indian pharmaceutical products in developing and developed countries because of their acceptable quality.
  • Indian companies comply with all international Food and Drug Administration (FDA) standards.
• Moreover, several multinational companies established their base in India because of:
  • Advantages of the cheap labour force
  • Easy manufacturing licences
  • Efficient regulatory regime

Achievements of Indian Pharmaceutical Sector

• The high exports of generic medicines give India a reputation as the “Pharmacy of the world”.
• India ranks third in the world in producing final consumable drugs.
• Moreover, India is the vaccine producer of more than half of the global need to mitigate the challenges of preventable diseases.

Also read: Indian Pharma Winning Global Trust: AIR Spotlight [UPSC Notes] Download PDF

Associated Concerns

• Volatile API Market:
  • India depends heavily on imports of active pharmaceutical ingredients (APIs).
  • The country lacks the technology and the technical knowledge for API production.
  • The domestic production of APIs is a daunting task due to a lack of investments.
  • In the absence or delay of essential APIs, patients will suffer more.
  • It is suggested that there is a saving of 15%–20% in the cost of raw materials if APIs are imported.
  • It is found that API business is of low-return margin.
• Procurement of Medicines:
  • Health is a state subject and thus availability and procurement of medicines depends on state governments.
  • The Union Health Ministry also plays a role in the pharmaceutical policy of India.
  • It is argued that several states support the firms according to their industrial policies.
• Medicine Suppliers’ Challenges
  • The price and profit margin for government supplies is not very encouraging for local companies, thereby forcing them to leave supplying to the public health facilities.
  • There are influences of bureaucracy and the inefficiency of the system.
• Impact of Global Supply Chain
  • As per the pharmacopoeia principles, the quality control for every intermediate product and active ingredient should be strengthened.
  • The patent and copyright regulations of the World Trade Organization (WTO) often pose severe challenges in the supply chain.
  • Geopolitics also causes a shortage of life-saving drugs.

• Support for Public Health
  • The emerging challenges of public health like the rising TB burden are a cause of concern.
  • India needs the strong support of the industry to tackle emerging diseases.
  • India’s dependence on China for API jeopardizes healthcare supplies.
• Operationalization of NLEM
  • The National List of Essential Medicines (NLEM) provides a safety net for the consumers of pharmaceutical products essential in nature.
  • It imposes a ceiling price on essential drugs, above which a seller can’t sell.
  • The dependency on other countries for drugs under NLEM is a grave concern.
  • Several pharmaceutical deals in NLEM drugs suffer from red-tapism.
• Price Control and Accessibility

• • Though government efficiently controls the prices, the availability and distributions of essential medicines are still inefficient in different places.
  • The urban-rural divide and regional differences in the distribution of essential medicines also impact the prices and accessibility.
  • The industry focuses more on profit maximization.
  • Some of the causes of inaccessibility are:
    • Less investment in R&D owing to low or limited capacity for innovation.
    • Import dependence
    • Intake of antibiotics without practitioner’s consultation and antibiotic resistance
    • Lack of affordability for high-cost products
    • Lack of accountability of public health experts
    • Regulatory negligence in the production and distribution process
    • Market failure

Way Ahead

• The government can focus on brownfield pharmaceutical industries to produce more drugs indigenously.
• It is important to strengthen the role of the National Formulary of India (NFI) for further enhancing the administration and accessibility of medicines.
• Outdated pharmaceutical products, their pricing policy, and procurement in hospitals should be discarded and digital procurement should be strengthened.
• Pharmaceutical companies should invest in improving their research and development (R&D).
• There is a need for strong regulation and assistance from the government to augment the API and intermediary products.
• Antibiotic misuse should be checked.

3. Labour Migration in India

Migration: 

• The population census defines a migrant as a person residing in a place that is different from his or her place of birth or “usual place of last residence,” where the latter refers to a place of residence for six months or more.

Stats related to migration: 

• According to the 2001 Census, 33 million people were migrants for economic reasons and over 80% of these migrants were male. 
• Recent evidence from the 2011 Census suggests that the annual rate of growth of labour migrants nearly doubled to that of the previous decade rising to 4.5% per annum between 2001 and 2011 from 2.4% during 1991–2001. 
  • Therefore, the stock of migrants stating economic reasons for migration increased to 51 million in 2011; over 80% of these migrants were still male.
• In 1992–93, 41.5% of urban male migrants cited economic reasons for migration, compared to 51.9% in 1999–2000 and 55.7% in 2007–08.

Determinants of Internal Labour Migration:

• Differences in earning opportunities between rural and urban areas are the predominant factor driving relocation of people from one place to another. 
  • In recent years, states in the Hindi-speaking belt, such as Uttar Pradesh, Bihar, and Rajasthan, had the highest net outflow of migrants, whereas Tamil Nadu and Kerala recorded the highest migrant inflow during the period.
• Short-term circular migration has emerged as an important form of internal labour migration, particularly among the poor, less educated, and lower-caste households. 
• Circular migrants are often those in debt, with little or no access to credit, landless and unemployed, typically in rural areas. 
  • Circular migration is also higher among SCs and STs and among the unskilled who find employment in factories, agro-processing plants or by working as porters, domestic servants, rickshaw pullers, street hawkers, and construction workers.
  • Circular migration or repeat migration is the temporary and usually repetitive movement of a migrant worker between home and host areas. 
• The lack of cultural similarities as an impediment to rural–urban migration in India has been highlighted through caste-based social networks in source areas. 

Image: Migration Data 

Source: EP&W

Circular and long-term migration: 

• For circular, short-term migrants, migration between states (55%) exceeded migration within states (43%). For overall long-term migration flows, the share of those moving within states (55%) was higher than those moving across states (45%).
• Rural–urban migration flows were also more important for short-term migration. In 2011–12, almost two-thirds of circular migrants moved to urban areas, whereas migration from rural to urban areas accounted for around half of the long-term labour migration flows.
• About half of the households that reported at least one circular migrant were classified as SC or ST; in contrast, around one-fourth of the households with at least one long-term migrant were classified as SC/ST.

Observation: 

• There is a positive association between exposure to mass media and the probability of households having long- and short-term/circular migrant members, thereby highlighting the importance of the availability of information for both streams of labour migration.

Migration reflects skewed development of the region forcing people to move from one place to another. Reducing regional disparity and undertaking equitable regional growth lies at the base of the developmental process. 

4. Online Gaming

Stats related to online gaming: 

• The online gaming industry is growing rapidly throughout the world as well as in India. The rapid growth of smartphone penetration in India, which has over 600 million internet users, of whom 80% use smartphones, has contributed to an explosion in online gaming platforms.
• With the largest youth population (15–35 years old) globally, India is poised to become a leading market for online gaming.
• With an estimated compound annual growth rate (CAGR) of 12.92% over the forecast period of 2022–27, the online fantasy sports (OFS) sector is expected to reach $44.07 billion globally. 
• According to NITI Aayog (2020), 90 million users played fantasy sports in 2019 compared to 2 million in 2016. 
  • A survey undertaken by the Federation of Indian Fantasy Sports (FIFS) in 12 Indian cities found that 67% of respondents were aware of OFS and that 89% of respondents played OFS games quite frequently. 

Externalities of online gaming: 

Positives: 

• The industry impacts the economy through several channels such as corporate taxes, goods and services tax (GST), and job creation.
• The OFS ecosystem is not just limited to OFS platforms and sports leagues, but it also includes ancillary services such as payment gateways, technology vendors, over-the-top platforms, and more, which generate indirect revenues.

Negatives: 

• There are instances of negative effects of excessive OFS participation, especially among youngsters, which can lead to addiction and financial issues. 

Issues with online games: 

• There is a lack of a uniform regulatory framework and several unaddressed legal issues have led to confusion and irregularities in this area. 
  • A few states have completely banned online games, while some use the “dominant factor test” to determine the dominance of skill over chance, and whether a given game falls within the ambit of gambling.
• States such as Andhra Pradesh (2020), Tamil Nadu (2021), and Karnataka (2021) amended their online gaming laws to ban all forms of online games involving monetary stakes.
• There is a lack of analytical and/or mathematical methods to assess skill versus chance dominance.
• The term “online gaming” is very broad and encompasses games across a variety of formats and genres. As a result, it can be very challenging from a policy implementation perspective to apply a one-size-fits-all approach to such a diverse industry.

Regulatory framework related to online gaming: 

• The Madras High Court passed a landmark judgement in the matter of Junglee Games India Pvt Ltd v State of Tamil Nadu (2021), striking down some of the amendments introduced in the new act, stating that a complete ban on games of skill involving money was unreasonable, overbearing, and in conflict with Article 19(1)(g) of the Constitution.

Position of other countries: 

• China implemented strict regulations that limited the time teenagers spent on video gaming. 
• In 2011, South Korea introduced a “shutdown law” that prohibited children below 16 years of age from playing video games from midnight till 6 am.
• The Kansai region in Japan adopted a similar law in March 2020 that limited game time for minors to one hour each day.
• The UK’s Gambling Act, 2005 allows users to play games of chance but prevents anyone under the age of 18 from participating in such activities. 
• In the United States (US), online gambling is governed by the Unlawful Internet Gambling Enforcement Act (UIGEA), 2006. While there is no law prohibiting online gaming, gambling is a federal issue that gives each state the freedom to frame its own law.
• Australia’s Interactive Gambling Act, 2001 requires any online gaming operator to possess a licence and prohibits interactive gambling activities such as “online casinos.” 

India’s position: 

• In December 2020, NITI Aayog released draft guidelines for the national-level regulation of online fantasy sports in India.
• The draft makes a clear distinction between online games and fantasy sports and recommends regulating OFS operators through a self-regulatory fantasy sports industry body. 
• The problem with the current governance structure for online gaming is not only that it is fragmented and inconsistent at different levels, but also that it subjects all types of online gaming to the same law.
• Therefore, it is important to first classify online games and then examine the problems posed by each category.
• All games under the “adventure–action games” and “first-person shooter games” categories may be violent in nature, but the games under the other categories hardly involve the risk of violence. 

Image: Classification of Online Gaming

Source: EP&W

Effective regulation is necessary to support this growing industry by ensuring that users enjoy games of skill and engage responsibly, while also protecting vulnerable sections from its negative effects.

Read previous EPW articles in the link.

EPW May Week 4, 2023:- Download PDF Here