02 Aug 2022: UPSC Exam Comprehensive News Analysis

B. GS 2 Related

Nothing here for today!!!

E. Editorials

Category: ECONOMY

1. Using a rupee route to get around a dominating dollar

Syllabus: Indian Economy and issues

Mains: The measures undertaken by India and Russia to further the trade relations between them

Context:

• Many countries, including India, are now trying to diversify currencies used in trade to avoid the U.S. dollar and its dominance in settling international transactions.
• Due to sanctions as a result of the annexation of Crimea by Russia in 2014 transactions between Russia and India are continuing on a semi-informal basis through rupee payments by using the Vostro accounts maintained by Russian banks in India.

Measures taken in this regard:

• The Reserve Bank of India took a proactive stand to have rupee settlement of trade – aiming to operationalise the special Vostro accounts with Russian banks in India.
• A Vostro account is an account a correspondent bank holds on behalf of another bank.

Past Experience:

• A comprehensive bilateral trade and payments arrangement existed in 1953 with the Soviet bloc countries.
• The arrangement included: participation by state-trading units alone; fixed exchange rates agreed upon by trade partners, and the offer of credit by trade surplus countries to trade deficit countries. 
• The impact of the Soviet Union’s credit to India resulted in the setting up of the Bhilai steel plant, other industrial units, oil refineries and pharmaceuticals — all controlled by India’s public sector.
• The agreement ended in 1991 following the dissolution of the Soviet Union.

Potential Advantages for India:

• Transactions in dollars can be avoided (as the exchange rate is at all-time high of ₹80) – It, in turn, impacts the economy with:
  • Inflation
  • Capital flight from India to the US (aggravated by interest rate hikes by the Fed and possible hikes in the European Union as well)
  • Reduces the foreign exchange reserves
• It will be cost-efficient to buy oil from Russia with a depreciated ruble.
• Will also result in saving transport time with the use of multi-modal routes using land, sea and air routes.
• Moreover, India can expand trade in sanctions-affected Russia (as it is facing recession and de-industrialisation).
• India’s trade deficit with Russia can be balanced.

Challenges:

• Issues of an agreed exchange rate between the rupee and the ruble (R-R)
• Both currencies are volatile 
• Acceptance by private parties (companies, banks) for trade and settlements
• Concerns/reactions from other countries especially the U.S.
• Moreover, trade on oil at discounted rates can be considered as ‘indirect back door support’/violation of sanctions on Russia.

Nut Graf: The India-Soviet agreements of the past may provide lessons for future course of action on the ‘Rupee – Ruble’ trade. It would benefit both trade partners and counter, globally, the ongoing currency hierarchy.

2. Government’s own ‘gig workers’

Syllabus: Employment

Mains: Contractual and fixed-term employment

Details:

• Government employment is categorized into three categories – permanent, contractual and daily wagers.
• Outsourcing has become the major mode of working in the government, from highly specialized tasks to the most routine ones – from sanitation workers to junior engineers or consultants — all jobs are usually assigned to an agency.
• The vast majority of available government employment is ‘temporary’ in nature.

Methods of Induction of Workers:

• Directly on the payroll of the entity
• Through a labour contractor

Reason for such adoption:

• The cost and liability of the government are considerably reduced
• Easy to shift the burden of responsibility
• The possibility of litigation by the workers seeking ‘regularization’ of jobs predisposes authorities to use such labour contracts

Benefits/Significance of Contractual worker:

• Can augment government capacity
• Enhance employment opportunities
• Local bodies and other public utilities can gain immensely if the modalities of engagement are diligently worked out

Consequences:

• On the worker:
  • Unpaid salaries for extended periods
  • Fudging of statutory deductions for the worker’s welfare such as provident fund (PF), employees’ state insurance (ESI), etc. by the labour contractor
  • Uneven distribution of work
• On the quality of public service:
  • Deteriorated or inadequate quality
  • Undermining of our government institution

Way Ahead:

• Emulating the example of Aurangabad’s City Bus Service where directly drivers and conductors were recruited from amongst ex-servicemen via fixed-term contracts to be renewed periodically – this resulted in a significant improvement in various service level parameters.
• Fixed-term contracts with adequate safeguards for workers can result in better service and inclusion.

Nut Graf: It is time for the government to take some concrete measures that can be beneficial for all the stakeholders, right from the ground-level workers to the receiver of the public service. It will ensure social inclusion and economic growth and development as a whole.

Category: HEALTH

1. Working towards animal health

Syllabus: Issues related to health

Mains: One Health Approach

Facts:

• The livestock population in India is 1.6 billion.
• Farmers relying on livestock and other related activities is 280 million approximately. 
• The dairy industry value (in terms of trade) is $160 billion.
• The meat industry value is $50 billion.

Benefits/Significance of Animals/Livestock:

• Provides a reliable source of alternate income to farmers.
• Reduces rural poverty.
• Contribution to the GDP and export. 

Consequences of poor animal health:

• Between 2000 to 2010, 60% of diseases were found to be zoonotic in nature.
• The disease outbreak incidents across the globe are increasing at a compound annual growth rate (CAGR) of 6%.
• In India alone, the annual outbreak of zoonotic diseases resulted in an estimated annual loss of $12 billion to the economy.

Measures Taken:

• The Department of Animal Husbandry and Dairying (DAHD) has set up a dedicated ‘One Health Unit’ in collaboration with the Gates Foundation.
• DAHD has set up an Empowered Committee for Animal Health to streamline the animal health regulatory ecosystem in the country.
• “Animal pandemic preparedness” model to be implemented through the National Digital Livestock Mission (NDLM).
• Companies can now avail of incentives under the Animal Husbandry Infrastructure Fund. 
• Within the framework of the NDLM, efforts are made to link all the animal disease diagnostic labs involved in sero-surveillance through a single portal.

Way Ahead:

• Close collaboration between veterinary science and human health experts to establish effective tools for pandemic preparedness.
• Enhanced disease surveillance. 
• Ensure timely and successful development of animal drugs and vaccines.
• Pathogen prioritization and aiding pharma companies in vaccine research.
• To create a robust pandemic preparedness model, it is imperative to juxtapose the data on animal health with the available data on human health.

Nut Graf:  In the backdrop of the COVID-19 pandemic it is reiterated that for further pandemic preparedness, both human, as well as animal health, is equally important. India can become a global leader with efficient animal disease preparedness methods.

Q1. Consider the following statements about Lumpy skin disease. (Level – Difficult)

Q2. Which of the following statements is/are correct with respect to Exercise Pitch 
Black? (Level – Medium)

Q3. India has signed and ratified which of the following? (Level – Difficult)

Q5. Which of the following is issued by registered foreign portfolio investors to overseas 
investors who want to be part of the Indian stock market without registering themselves 
directly? (Level – Easy) PYQ (2019)

I. UPSC Mains Practice Questions

1. The ageing condition of the Indian Airforce’s fleet underlines the need to accelerate indigenous fighter jets projects in India. Comment. (250 words; 15 marks) (GS III – Security)
2. It is time to acknowledge the positive side of contractual workers in India and use them to enhance business efficiency. Do you agree? Elaborate. (250 words; 15 marks) (GS III – Economy)

Read the previous CNA here.