23 Dec 2020: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: ECONOMY

1. Delaying the inevitable

Context:

• The Union Government has extended the moratorium on critical provisions of the Insolvency and Bankruptcy Code (IBC) till March 2021.

Details:

• The Covid-19 pandemic and the lockdown meant that the economy went into a downward spiral with economic activities ranging across a number of sectors suffering.
• The economy was grounded to a halt with the lockdown causing immense stress to the business enterprises.

Insolvency and Bankruptcy Code (IBC)

• The Insolvency and Bankruptcy Code 2016 was enacted to radically change the process of insolvency resolution in India.
• The IBC provided a specialized forum to oversee all insolvency and liquidation proceedings for individuals, SMEs and corporates.

Pandemic induced worries

• The lockdown increased the pressure on the distressed Indian markets, MSME and other small-scale business operations.
• The government has taken stock of the situation and measures are being adopted in the form of relief packages and legal amendments to deal with the already distressed market and for further strengthening the debt-resolution regime and ease of doing business.

Steps taken by Government

1. Threshold of loan defaults
   • The threshold for loan defaults was increased from Rs.1 lakh to Rs.1 crore in March.

2. Suspension of certain provisions of IBC
   • An ordinance was issued in June to bar the creditors from setting into motion insolvency proceedings for defaults arising from March 25^th. The ordinance stated that the moratorium could be possibly extended for a year.
   • The ordinance had set the suspension of IBC provisions up to 25^th of December 2020, but the Finance Minister has announced that moratorium will complete its full cycle of one year.

Economy recovery

• The extension of suspension suggests that the economy is still a long way off from recovery.
• The optimism showed by some due to the second quarter data of just 7.6% contraction in comparison to the first quarter data of 23.2% contraction, the 0.6% manufacturing output expansion and the claims of a V-shaped recovery will have to be tempered.
• The government has to identify sectors that need fiscal support, enterprises in these sectors have to be shielded and sheltered from exiting the market.
• The small and medium enterprises will take a longer road to recovery, they would be better off if the government raises the default threshold limit a little higher.
• But the blanket suspension of IBC could burden the banks and could hurt future credit dispersal to the industry.
• The blanket suspension of IBC could clog the path of business enterprises who voluntarily want to exit, the pandemic has changed the way certain businesses will be carried out in the future, thus several enterprises will not find it viable and thus need an exit.
• The absence of a voluntary exit may lead to the loss in value of the assets, causing even more distress to the borrower and lender.

Conclusion:

• The government needs to adopt a more balanced approach that benefits the banks, businesses and the economy.
• The aim should be to arrive at a mechanism that would lead to a smooth restructuring and recovery of loans, a blanket suspension of IBC will not benefit in the longer run.

Category: HEALTH

1. Pandemic resilience

Context:

• The Parliamentary Standing Committee on Home Affairs has unequivocally called for a broad, all-inclusive Public Health Act.

Details:

• The committee’s recommendation has been in the light of the COVID-19 pandemic.
• The pandemic has exposed India’s health system of its inadequacies, in terms of investment in the health sector, lack of infrastructure, exploitation by the private sector, etc.

Status of the health system in India

• The public health system is plagued with a shortage of manpower, absence of quality infrastructure, absence of accountability mechanism, inefficiency, etc.
• The above factors have forced the people to knock on the doors of private healthcare, this has been more conspicuous in the rural areas.
• The private health system has not been kind on economically vulnerable segments of the population.
• The lack of regulatory oversight, rampant corruption, exorbitant costs has been a constant feature of the private health system.
• The pandemic exposed the vulnerabilities of both public and private healthcare.

Issues

1. Public Health Act
   • The panel was of the opinion that the present legal mechanisms are not robust to curb the malpractices that are widely prevalent in private healthcare.
   • Thus, the panel has called for a comprehensive Public Health Act that obligates the private healthcare establishments to adhere to the regulatory standards.

2. Cashless treatment
   • Extremely profit-motivated private enterprises have been known to insist on cash payment. This excessive commercial nature of the healthcare system has made the panel recommend allowing cashless treatment for COVID-19 for people who are covered by insurance.
   • This will be a major relief to patients suffering from COVID-19 and their families, especially when out of pocket expenditure is responsible for driving millions into poverty each year.
3. Insurance
   • Private hospitals refused to admit COVID-19 patients even when insured, this caused a financial strain on the families at a time when the pandemic induced lockdown was squeezing the disposable income.
   • The panel saw this behaviour of hospitals as a breach of trust and abdication of the responsibility on behalf of the hospitals.
   • Another observation noted by the panel is the rise in the premium costs of insurance in COVID times, especially for senior citizens.
   • The IRDAI, the insurance regulator has set the bar at 65 years for getting a standard policy, this has further exacerbated the concerns of the uninsured older senior citizen.

Reforms suggested

• A tax-funded system will help create an equitable framework, the government in this system will assume the role of a single and sole payer to care providers.
• The above scheme of things was suggested by the erstwhile Planning Commission.
• The Government as a single payer would be better equipped to resist the commercial pressures in determining the costs.
• This model can also be replicated in matters of central procurement of essential drugs, which can then be distributed free of costs.

Way forward

• Universal state-provided health services under a rights-based, non-exclusionary framework, implemented by states will be needed to make quality health truly accessible and affordable.
• The implementation of the recommendations of the panel along with addressing the lacunae in the health system will go a long way in making the right to health a fully legal and justiciable right.

Category: ENVIRONMENT

1. Five years since Paris, an opportunity to build back better

Context:

• The Paris Agreement completed its fifth anniversary in December 2020.

Details:

• There have been questions raised over the importance of climate-related goals amidst the COVID-19 pandemic.
• However, some feel that the pandemic has given an opportunity to remodel growth strategies and make ‘green growth’ central’ to such strategies, the virus should not be allowed to derail climate actions.

The European Green Deal

• It is a new growth model and aims to achieve climate neutrality in the EU. By 2050, Europe wants to become the world’s first climate-neutral continent.
• The deal is a series of goals and initiatives announced by the European Commission.
• During the coronavirus pandemic, economic activity slowed, causing a reduction in carbon emissions but leaving the EU facing recession. The European Parliament called for an ambitious recovery plan with the Green Deal at its core.
• In response, the European Commission came up with Next Generation EU, a €750 billion recovery plan.
• To add to this, an additional financial outlay of half a trillion euros has been earmarked to tackle climate change in the budget.

The roadmap to carbon-neutral 2050

• A pledge to reduce greenhouse gas emissions by at least 55% compared to the 1990 levels by 2030.
• The pledge also deals with driving down the cost of low-carbon technologies by driving up demand and accompanied by increased investment in Research and Development (R&D).
• The cost of photovoltaics has already declined by close to 82% in the last decade. The driving down of cost is important to substitute carbon-intensive technologies with green technologies.
• Further estimates have revealed that achieving the 55% target will help save a humongous 100 billion in a decade and a possible trillion by the year 2050.

EU-India collaboration

• Climate change is no longer a national problem, it is a global threat, therefore it requires countries working in unison to achieve climate goals and save the planet.
• The ambitions of the EU are matched by the potential of India and together they will be crucial to plans of achieving the global climate goals.
• The EU and India are fully behind the goals enshrined in the Paris Agreement, this commitment is not just expressed through words and declarations but have been backed by actions on ground.
  • India’s renewable energy push.
    • India’s renewable energy capacity addition has been on an upward trend in the last couple of years.
    • Installed solar capacity had increased to 36 gigawatts in 2020.
    • India’s renewable energy capacity is currently listed in the fourth position globally and is expected to reach as high as 175 GW by 2022.

• India has also been proactive in institution building in the global arena, this can be seen in India’s pioneering efforts in building the International Solar Alliance at the Paris CoP-15.
• India also played a significant role in the Coalition for Disaster Resilient Infrastructure and Leadership Group for Industry Transition.

The promise of the Paris Agreement

• The Paris Agreement seeks to limit the rise in global temperatures within 2 degrees Celsius.
• This requires cooperation and coordination at a global scale to achieve the targets, it is very important that the countries come up with strategies and plans for net-zero emissions for 2030.
• The next decade will be pivotal to the dreams of a carbon-neutral 2050, there is a responsibility on the developed countries over climate financing.
• The steps towards achieving the Paris Agreement will receive impetus if the growth strategies adopted by countries post the pandemic embraces ‘green growth’.
• The countries need to explore green pathways that focus on low carbon intensity, energy efficiency, renewable energy, etc.

Way forward

• The climate change ill-effects can be mitigated if the recovery plans at the level of individual, local, national, regional and international focus on building back better.
• The climate change actions cannot be just government-led, it requires more active ownership at the grassroots levels.
• The target is to synergize the efforts of governments, academicians, business people, policymakers, civic society actors and citizens to work towards a safer planet.
• Each generation has an inherent responsibility to leave behind a better world than what it inherited.

Q1. Which of the following countries border Nigeria?

Q2. Consider the following statements:

Q3. The Copenhagen consensus is related to which of the following?

Q4. Mouling National Park is located in