29 Feb 2020: UPSC Exam Comprehensive News Analysis

C. GS 3 Related

Category: ECONOMY

1. Coronavirus infects global markets, investors dump equities

Context:

The spread of the n-CoV and its impact on the global economy.

Background:

• There have been a rising number of new COVID-19 cases being reported outside China.
• About 60 new countries as far apart as Mexico, Belarus, the Netherlands and New Zealand have reported new cases, with Nigeria, Africa’s largest economy, reporting its first case.
• The World Health Organization Director-General has stated that the virus has a “pandemic potential”, which has added to the global panic.

Details:

• Rating agency Moody’s had warned that the impact of disruptions in global supply chains, investment pullbacks by companies and slowing travel could trigger a global recession in the first half of 2020.
• Investors are fearful that the outbreak of COVID-19 may lead to a global recession, as the outbreak is spreading to the world’s largest economy — the U.S. as well as Europe which will adversely impact the global supply chains big time and derail economic growth.
• In the backdrop of the global spread of the Coronavirus and fears of a global recession, investors have retreated back out of stocks and commodities towards the safer option of government bonds. As a result of this, the major stocks of the world are tumbling to new lows.
• Markets seem to be frightened by the uncertain impact of the virus on global economic health.

U.S.:

• The U.S. markets appear set to experience their worst week since the 2008 global financial crisis. The broad-based S&P 500 index has witnessed a decline.
• The yields on U.S. Treasury bills have fallen sharply as investors have embraced the bills’ relative safety over equities.
• The bond markets have displayed an inverted yield curve where short-term bills yield more than long-term ones, signifying nervousness over economic prospects. General economic wisdom holds that an inverted yield curve is the signal of a recession.
• Subsequent to Wall Street experiencing a rout, global markets have followed the trend.

Global stock exchanges:

• Indices across the world, beginning with Tokyo’s Nikkei, Seoul’s Kospi and European indices such as the FTSE 100 in London and Frankfurt’s DAX, have all tanked, as investors have rushed to sell their shares.
• The global markets have witnessed a tailspin.

Indian Scenario:

• The BSE benchmark Sensex has recorded its second-worst drop in absolute terms. The BSE Sensex has shrunk by 3.64%.
• Reflecting the turmoil in the stock markets, the rupee hit a six-month low against the dollar, at Rs. 72.27, before recovering marginally to close at Rs. 72.21. The RBI had to intervene in the foreign exchange market by selling dollars to control the fall.
• Foreign Portfolio Investors (FPIs) sold equities worth nearly Rs. 1,500 crores.
• The fall in the markets would have been steeper if domestic institutional investors, that include insurance firms and mutual funds, did not step up their buying with net purchases of almost Rs. 7,700 crores.

Commodity prices:

• Given the likely chance of recession leading to reduced demand for commodities in the market, the commodities markets have witnessed declining prices.
• Oil prices have experienced their worst week since 2016, with the prices of the benchmark Brent crude falling to as low as $50.51 a barrel. The metal prices have also fallen by up to 6%.

Borrowing rate:

• Given the high possibility of the U.S. going in for accelerated rate cuts as a response to a possible economic recession, the global borrowings benchmark LIBOR experienced its worst single-day drop in a decade.
  • The London Interbank Offered Rate (LIBOR) is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.

2. Growth slows to 4.7% in Q3, ‘bottomed out’, says Centre

Context:

Economic data released by the National Statistical Office (NSO).

Details:

• The Gross Domestic Product expanded by 4.7% in the third quarter. This marks a deceleration as compared to 5.6% in the previous quarter.
• The major factor seems to be the slump in the manufacturing sector which has weighed on the overall economic momentum.

Concerns:

• The growth rate of 4.7% is the slowest pace in about seven years.
• The Gross Domestic Product (GDP) growth had registered 5.6% in the corresponding quarter of 2018-19, as per official data. There seems to be a steady decline in the growth numbers.
• There is the possible impact of the global spread of the Coronavirus outbreak in China on India’s economy. This could further slowdown Indian economy owing to the global recession.

Positives:

• The NSO revised upward its GDP growth estimates for the first two quarters of the current fiscal year: growth in the first quarter of 2019-20 was pegged at 5.6%, higher than its earlier estimate of 5%. For the second quarter too, it increased the estimate to 5.1%, from 4.5%.
• The Central government has asserted that the slowdown had bottomed out and the economy will witness an acceleration in the coming quarters.
• There has been a recent increase in core sector output.
  • According to data released by the Commerce Ministry, Eight core industries recorded a 2.2% growth in January 2020 helped by expansion in the production of coal, refinery products and electricity.
  • The eight-core sectors recorded negative growth from August 2019 to November 2019.
  • The turnaround in growth in the eight core sector industries index in December 2019 and January 2020 augurs well for the manufacturing sector.
• The government’s increased spending, especially on infrastructure, may have helped spur a modest economic recovery. They have been positive signs in foreign direct investment, mining and agriculture, and demand in rural areas.

Category: ENVIRONMENT AND ECOLOGY

1. Summer to be hotter than usual says IMD

Context:

Forecast by the India Meteorological Department (IMD).

Details:

Higher temperatures:

• The forecast states that the summer months from March to May will be hotter than normal.
  • The forecast indicates that the MAM (March-May) season averaged temperatures are likely to be at least half a degree hotter than normal over North-West, West and Central India and some parts of South India.
• The season averaged maximum temperature is likely to be warmer than normal in Himachal Pradesh, Uttarakhand, West Rajasthan and Arunachal Pradesh.
• The other regions are likely to be warmer than normal by over 0.5°C to <1°C.

Heatwave conditions:

• Above normal heatwave conditions are also likely in the core heat wave zone during the MAM (March-May) season.
  • The core heatwave zone covers the States of Punjab, Himachal Pradesh, Delhi, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Gujarat, Madhya Pradesh, Bihar, Chhattisgarh, Jharkhand, West Bengal, Odisha and Telangana and parts of Maharashtra and coastal Andhra Pradesh.

Monsoons:

• A hot summer is a key factor to a timely monsoon. However, the impact of a warming ocean and its impact on the monsoon is likely to be more apparent around April when the IMD issues its first forecast for the monsoon.
  • The South-West monsoon in 2019 (June to September) delivered rainfall 10% above average in the country which makes it the highest in 25 years.

Category: AGRICULTURE

1. Farmers’ not to be hurt by govt. move to cut crop cover premium: Bhutani

Context:

Revamping of the Pradhan Mantri Fasal Bima Yojana (PMFBY).

Background:

• As part of the revamping of the Pradhan Mantri Fasal Bima Yojana (PMFBY), the Centre has reduced its contribution to the crop insurance schemes.
• The centre has slashed its share of the premium subsidy from the current 50% to just 25% in irrigated areas and 30% for unirrigated areas from the Kharif season of 2020.

Details:

• The Centre had capped its subsidy for premium rates up to 30% for unirrigated crops and 25% for irrigated areas and crops.
• If the premium for a crop in a particular district is below the cut-off figure of 30%, the Centre will equally split the subsidy burden with the State. If the premium is above 30%, the State will have to pay the entire additional amount.
• The CEO of Pradhan Mantri Fasal Bima Yojana (PMFBY) has claimed that the Centre’s move to reduce its subsidy share in the case of high premium crops will not increase the cost to farmers. And that, it should spur States to take steps to ensure that premiums are reduced.

Issue of high premiums:

• There are very high premiums in some cases, with premiums being reported as high as 60%. The lack of long-term, structured and consistent data are the main reasons for these high and unsustainable premiums.
• In such a scenario the government should be finding other ways to help farmers manage risks.
• In case of high premiums, it may be that the crop is simply not viable in that area, in which case also, insurance schemes are unsustainable.

For more information, read 20 Feb 2020 Comprehensive News Analysis.

 

E. Editorials

Category: HEALTH

1. State lethargy amidst cough syrup poisoning

Context:

• About 12 children died in Udhampur district of Jammu after they consumed poisoned cough syrup (Coldbest-PC).

What led to death of Children?

• The syrup is manufactured by Himachal Pradesh-based pharmaceutical company Digital Vision.
• The suspect product, although manufactured in H.P., has been sold across the country.
• A team of doctors at the Post Graduate Institute of Medical Education & Research, Chandigarh, attributed the deaths to the presence of Diethylene Glycol in the cough syrup which was consumed by all the dead children.

Diethylene Glycol

• It is an anti-freezing agent that causes acute renal failure in the human body followed by paralysis, breathing difficulties and ultimately death.

Similar incidents

• This is the fourth mass glycol poisoning event in India.
• In 1973- An incident at the Children’s Hospital in Chennai led to death of many children.
• In 1986, poisoning at Mumbai’s J.J. Hospital caused the deaths of 14 patients who were otherwise on the path to recovery.
• In 1998, 33 children died in two hospitals located in New Delhi due to similar poisoning.
• In all three cases, the deaths occurred due to negligence or human error, failure to detect and contain the level of diethylene glycol in the syrup, thereby causing poisoning of the patients who consumed it.

What does the law say?

• Under the Drugs and Cosmetics Act, 1940, regulating the manufacture, sale and distribution of drugs is primarily the concern of state authorities.
• The Central Drug Standard Control Organisation (CDSCO), is responsible for laying down the standards of drugs, coordinating the activities of state regulatory authorities and providing them expert advice.
• The punishment for distributing spurious drugs that can cause death includes 10 years to life imprisonment and a fine of Rs 10 lakh or three times the value of drugs confiscated, according to Drugs and Cosmetics Act, 1940.

Steps to be taken immediately

• The negligence of the manufacturing company has led to death of innocent children. Therefore, legal action has to be initiated and all those responsible should be prosecuted, but the immediate response of doctors, pharmacists and the drug regulators should be to prevent deaths.
• The only way to do so, is to account for each and every bottle of the poisoned syrup that has ever been sold in the Indian market and stop patients from consuming this drug any further.
• Any patient who has consumed even a spoon of the syrup should then immediately be referred to a hospital for treatment.
• While a national recall of this adulterated medicine is the immediate need, the administration also needs to quickly identify which other pharmaceutical companies have received the spurious ingredient that was supplied to the manufacturer in H.P. from a trader in Chennai.
  • It is very likely that the trader in question marketed the same ingredient to other pharmaceutical companies, who, like the manufacturer at the centre of the present scandal, may have failed to test it for its identity and purity.
  • It is important for regulatory enforcement to raid and seize the records of the trader in Chennai and verify its sales.

How United States Food and Drug Administration (USFDA) tackled the problem?

• When the United States faced a similar situation with glycol poisoning in the year 1937, USFDA, its entire field force of 239 inspectors and chemists were assigned to the task of tracking down every single bottle of the drug.
• Even if a patient claimed to have thrown out the bottle, the investigators searched the street until they found the discarded bottle.
• This effort was accompanied by a publicity blitz over radio and television.

Lack of information

• Such public health measures are not being undertaken in Himachal Pradesh (HP).
• The authorities are simply not communicating the seriousness of the issue to the general public.
• At most, the authorities in Himachal Pradesh (H.P.), who are responsible for oversight of the manufacturer of this syrup, have made general statements that they have ordered the withdrawal of the drug from all the other States where it was marketed.
• However, there is no transparency in the recall process and information about recalls and batch numbers is not being communicated through authoritative channels.
• There is no public announcement by the Drug Controller General of India (DCGI), which is responsible for overall regulation of the entire Indian market.
  • The website of the DCGI, which is supposed to communicate drug alerts and product recalls, has no mention of Coldbest-PC as being dangerous.

It could harm the exports

• For more than three decades, India has been the largest supplier of generic medicines in the world. However, the country’s pharma industry has never answered satisfactorily the questions that have been asked about the quality of its products.
• In 2015, the EU banned 700 drugs produced in the country.
• In 2019, Indian drug manufacturers received at least 20 letters of warning from the US FDA over the quality of their products.
• In 2019, the Bureau of Pharma PSUs of India, which implements the Pradhan Mantri Janaushadhi Pariyojana, found 25 batches of drugs supplied to the Centre’s flagship affordable medicine programme to be substandard.
• Incidents like these, not meeting the standards as prescribed by the global community could harm the reputation of India and ultimately lead to fall in exports as well.

Need for a recall policy

• The 59th report of the Parliamentary Standing Committee on Health as well as the World Health Organization (in its national regulatory assessment) had warned the DCGI on the lack of a national recall framework in India.
• A set of recall guidelines was drafted in 2012 but never notified into law.
• One of the key reasons why the DCGI and state drug authorities have been so sloppy is because unlike other countries, India has not notified any binding guidelines or rules on recalling dangerous drugs from the market.
  • There is scarcely any information-sharing between the Centre and the states and among states.
  • The Central Drugs Standard Control Organization (CDSCO) has not issued binding guidelines to state regulators for recalling medicines that are Not of Standard Quality (NSQ).
  • A batch of drugs that is deemed NSQ in one state could find its way to the market in another.
• So the Govt should notify guidelines for recalling spurious drugs.

Conclusion

• Thus, there is dire urgency of plugging loopholes in the country’s drug regulatory regime.

F. Prelims Facts

Nothing here for today!!!

Q1. Which of the following pair of stock indices and stock exchanges are correctly matched?

Q2. Which of the following statement/s is/are correct?

Q3. The term ‘Remdesivir’ is associated with?

 Q4. Which of the following statements are correct?

I. UPSC Mains Practice Questions

1. Poor oversight, laxity in implementing laws and corruption at the local level, is enabling unscrupulous manufacturers of medicine to operate without penalty. Suggest measures to overcome the issue. (15 Marks, 250 Words)
2. Right to avail legal services of an advocate is a constitutional right of an accused and denying them the right to legal representation violates the principles of the Due Process of Law. Elaborate. (15 Marks, 250 Words)