CNA 28th March 2020:- Download PDF Here
TABLE OF CONTENTS
A. GS 1 Related B. GS 2 Related POLITY AND GOVERNANCE 1. Concerns over privacy as details of air travellers are leaked online HEALTH 1. India to join WHO drug trial C. GS 3 Related ECONOMY 1. RBI cuts rates, allows loan moratorium 2. World is now in recession: IMF D. GS 4 Related E. Editorials SOCIAL JUSTICE 1. Shift to upscaling food rationing now ECONOMY 1. It’s also a fight against punitive measures F. Prelims Facts 1. After ossification test, court grants minor bail G. Tidbits 1. Moody’s cuts India GDP growth forecast to 2.5% 2. Major news publishers unite to tackle misinformation H. UPSC Prelims Practice Questions I. UPSC Mains Practice Questions
A. GS 1 Related
Nothing here for today!!!
B. GS 2 Related
- Privacy concerns over the government’s measures to tackle the spread of Coronavirus.
- The governments have taken many steps to monitor the people who are advised quarantine to contain the spread of COVID-19.
- Databases of passengers who returned from high risk “coronavirus affected countries” have been shared with relevant departments to monitor these high risk suspected cases. In Delhi, the list contains details of 722 passengers who arrived in Delhi and are mandated 14 days of quarantine.
- The government has newly launched pilot or beta version of a mobile phone application called “Corona Kavach” which uses the data of confirmed COVID-19 patients to alert subscribers when they are in close proximity.
- The app is designed to track the location of COVID-19 infected people and alert subscribers when they come near their location.
- The app will require all the COVID-19 patients to download the app to track their whereabouts.
- Government’s efforts to monitor people advised quarantine for COVID-19 has run into privacy issues.
- The database of hundreds of passengers who returned from “coronavirus affected countries” has been leaked online and shared by social media groups. The data was leaked by specific Resident Welfare Associations which had access to the lists of their areas.
- Notably, the list includes names, passport numbers, flight details, mobile phone numbers and addresses of all travellers. Worryingly, this includes personal information that could be used for identity theft.
- Apart from the threat of violence, these details make each person on the list vulnerable to a number of crimes.
Corona Kavach app:
- Meanwhile, the Ministry of Electronic and Information Technology’s “Corona Kavach” app has also raised some red flags.
- The “Corona Kavach”, whose beta app has already been downloaded by more than 100,000 people, will require all COVID-19 patients to download the app to track their whereabouts.
- Given the possibility of leak of information of the infected people, there is the concern that the infected people may be vilified.
- Given the highly contagious nature of the COVID-19 and the criticality of tracking and monitoring high suspect cases, some agencies have argued for the necessity for higher state surveillance during these critical times.
- Given the slack adherence to compulsory quarantine suggested for the passengers returning from Coronavirus infected countries, there is an argument that the large scale publicity of the names of highly suspect cases can ensure social pressure on such people to ensure the 14 day quarantine. This would also enable the people around the suspected cases to ensure social distancing.
- It is very important to ensure that there is no vilification of the infected or suspected cases.
- India is all set to join World Health Organisation (WHO)’s “Solidarity Trial” aimed at rapid global search for drugs to treat COVID-19.
- There are 30 vaccine groups that are operational worldwide right now looking at COVID-19, with five having gone into animal-toxicity study.
- Given the high lifecycle time required for the development of vaccines, global efforts have also considered using the already available drugs for the short term.
- India had so far stayed away from the multi-country trial, due to its small sample size. But with increasing number of cases India has decided to join this WHO endeavour.
The Solidarity Trial will test four different drugs or combinations and compare their effectiveness in treating COVID-19 patients.
Based on the study it could recommend the standard of care for hospital treatment of COVID-19 patients.
- The Solidarity Trial will test:
- Remdesivir (a combination of two drugs, lopinavir and ritonavir)
- Interferon beta
India’s efforts towards drug or vaccine development:
- In terms of developing a drug or vaccine against COVID-19, Indian Council of Medical Research (ICMR) is currently looking at re-purposed drug molecules to find treatment for COVID-19.
C. GS 3 Related
- The economic impact of the COVID-19 pandemic and Reserve Bank of India’s (RBI) efforts to address it.
- The countrywide lockdown in place to check the spread of novel Coronavirus will have an economic impact for India.
- In this light of the unprecedented crisis, the meeting of the Monetary Policy Committee (MPC) was advanced.
- In a move aimed at easing the impact of the lockdown, RBI has come out with several measures to increase liquidity in the economy.
- In a move to infuse sufficient liquidity into the banking system, RBI has reduced the Cash Reserve Ratio (CRR) requirement by 100 basis points (bps) for banks. The cash reserve ratio has been reduced from 4% to 3%.
- The minimum daily requirement of maintaining CRR balance has also been reduced to 80% from 90%.
- With the reduction in CRR requirements, banks can deploy the liquidity in interest-earning assets.
Reduction in key interest rates:
- The RBI has reduced the key interest rates of repo and reverse repo rates sharply.
- The repo rate was reduced by 75 bps to 4.4% while the reverse repo rate was cut by 90 bps point to 4%.
- The higher reduction in the reverse repo rate was aimed at prompting banks to lend more rather than keeping their excess liquidity with the RBI.
- While cutting benchmark rates, the RBI has continued with its accommodative stance.
- RBI has also allowed banks to defer payment of Equated Monthly Installments (EMIs) on home, car, personal loans as well as credit card dues for three months till May 31, 2020.
- Since non-payment will not lead to non-performing asset classification by banks, there will be no impact on credit score of the borrowers.
- The interest payments have been deferred and not waived.
- The three-month moratorium on all term loan installments, along with deferment of interest on working capital, will help mitigate debt servicing burden due to COVID-19 disruption, and prevent transmission of financial stress to various sectors of the economy. This move will protect borrowers financially amid the nationwide lockdown.
Marginal Standing Facility:
- RBI has increased the cap for liquidity available under the marginal standing facility.
- Under the marginal standing facility (MSF), banks can borrow overnight at their discretion by dipping up to 2% into the Statutory Liquidity Ratio (SLR). The RBI has decided to increase the limit of 2% to 3% till June 2020.
- Marginal standing facility (MSF) is a window for banks to borrow from the Reserve Bank of India in an emergency situation when inter-bank liquidity dries up completely.
- Banks borrow from the central bank by pledging government securities at a rate higher than the repo rate under liquidity adjustment facility. The MSF rate is pegged 100 basis points or a percentage point above the repo rate.
Long-term repo operations:
- Observing that large sell-offs in the domestic equity, bond and forex markets has intensified redemption pressures, the central bank has decided to infuse money into the economy through Targeted Long-Term Repo Operations (TLTRO).
- The RBI will auction long-term repo of around 1 lakh crore rupees.
- Liquidity availed under the scheme by banks has to be deployed in investment grade corporate bonds, commercial paper and non-convertible debentures.
- The three-year targeted long term repo operations will decongest credit channels and lower cost of credit, providing much needed relief to the corporate.
Indian Banks in offshore NDF markets:
- The ongoing financial market volatilities triggered by Coronavirus outbreak dragged the rupee to touch lifetime lows and also breach the 75-mark against the US dollar. The rupee has come under pressure recently as foreign investors are exiting emerging economies.
- The Reserve Bank of India has allowed Indian banks to participate in the offshore Non-Deliverable Forwards (NDF) rupee derivatives.
- This is a positive step in broadening market participants and better rate discovery.
- The move is aimed at curtailing the volatility in the domestic currency due to the Covid-19 pandemic.
- The above actions will see an infusion of 3.74 lakh crore rupees into the banking system. These measures will provide adequate liquidity in the system, bring down the cost of capital and mitigate the impact of pandemic COVID-19.
- The Indian financial markets which are facing heightened volatility due to the spread of the COVID-19 pandemic could stabilize with the Reserve Bank of India unveiling measures.
- Given the importance of monetary policy transmission to ensure the effectiveness of RBI actions, banks will have to reduce their lending rates and ramp up credit disbursal.
- Economic impact of the COVID-19 pandemic.
- The International Monetary Fund (IMF) chief has stated that the COVID-19 pandemic has driven the global economy into a recession. There are concerns that this recession might be worse than the one in 2009, following the global financial crisis.
- Recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock).
- It has been typically recognized as two consecutive quarters of economic decline (GDP decline), as reflected by GDP in conjunction with other indicators like a rise in unemployment.
- Massive funding is absolutely necessary to cushion the world’s economy against an abrupt drop in economic activities.
- The need for funding is more so important for developing nations, which need massive funding to overcome this recession. The overall financial needs of emerging markets is around $2.5 trillion.
- Emerging economies suffered an exodus of capital of more than $83 billion in the recent weeks attributable to fears of the COVID-19 pandemic. Many of these countries have high debt loads.
- Over 80 countries, mostly with low incomes, have already requested emergency aid from IMF.
- This makes it clear that domestic resources would be insufficient and there would be need for international finances. However, the global impact of the pandemic limits the possibility of such an intervention.
D. GS 4 Related
Nothing here for today!!!
The Finance Minister has announced a ₹1.7-lakh crore package of social security measures to deal with the COVID-19 pandemic in the period of the 21-day lockdown.
The topic has been comprehensively covered in 27th March 2020 Comprehensive News Analysis. Click here to read.
- The burden of the current lockdown is borne disproportionately by the large unorganised workforce, comprising hundreds of millions of casual daily wage-workers and self-employed workers.
- India already holds the record for the largest number of malnourished persons in the world. As their ability to purchase food diminishes, a growing population of working people and their families will soon enter a phase of hunger and undernourishment.
- In respect of food security, the package falls far short of what is needed.
Lessons provided by the experience of other countries in using rationing in times of scarcity:
- In the 1940s, in the United Kingdom, rationing or a policy of “fair shares” was introduced in a period of war and scarcity. Starting in 1939, each and every person was issued a ration book, with a weekly entitlement that could be collected at a local grocery store.
- A remarkable outcome of the war years was, as Amartya Sen has demonstrated, a significant improvement in vital statistics including a rise in life expectancy and a decline in the mortality rate.
- Despite heavy war casualties and a decline in consumer expenditure per capita, life expectancy actually improved.
- In the first six decades of the 20th century, the decade from 1941 to 1950 saw the largest increase in life expectancy in England and Wales.
China’s current strategy:
- In China, the National Development and Reform Commission (NDRC), a planning body, was the key coordinator along with the Ministry of Commerce in ensuring supplies of basic foods and price stability to the poor, especially in Wuhan province, the epicentre of the current pandemic.
- The Chinese strategy had multiple components, which included public corporations and ministries, 300 large private companies, 200,000 private stores, and local government institutions. State-owned companies supplied key commodities to Wuhan.
- Special delivery trucks for transport of vegetables were arranged, and the local government organised open-air markets.
- In India, the British introduced rationing in six cities in 1942, mainly to supply industrial workers with adequate food.
- Following demands from a strong political movement, Malabar became the first rural area to implement rationing in 1943.
- In the mid-1960s, the system of rationing or the Public Distribution System (PDS) was made a national universal programme, which steadily expanded till 1991.
- In the 1990s, the policies of liberalisation led to the withdrawal of universal rationing and its replacement by a policy of narrow targeting. Differential entitlements were provided for BPL (Below Poverty Line) and APL (Above Poverty Line) households.
- In 2013, the landmark National Food Security Act (NFSA), ensured legal entitlement to rations and other food-based schemes (such as mid-day meals in schools).
- Around 75% of rural households, and 50% of urban households, that is, a total of two-thirds of all households, were eligible for inclusion (now termed priority households) in the NFSA.
- The implementation of the NFSA — notably the PDS, the Mid-day Meal Scheme, and the Integrated Child Development Services scheme — varies significantly across States; nevertheless, the infrastructure for distribution of food is in place in all parts of the country.
- In the on-going pandemic situation, Kerala is the first State in India to have announced a package with income support measures and in-kind measures including free rations of 15 kg (grain) and provision of cheap meals.
- The government of Tamil Nadu announced free rations of rice, sugar, cooking oil and dal to all ration card holders. The supply of rations for unorganised workers is to be through Amma canteens.
- The Delhi government will give 1.5 times existing entitlements at no cost to all ration card holders.
- To ensure that all people have access to adequate food in the midst of this unprecedented health and economic crisis with potentially high levels of mortality, the need of the hour is to expand the food security system.
- The answer to this looming and very real scenario of food insecurity lies in a massive programme of food rationing.
- It is argued that there is a need to immediately ensure universal rationing with an expanded food basket, and special measures for cooked food in urban areas for the vulnerable population.
- In India a system of expanded rations must have the following components:
- For all rural households, free rations of rice and wheat at double the normal entitlement must be distributed.
- The current entitlement is about half the quantity of daily cereal intake recommended by the Indian Council of Medical Research.
- The new quantities should be the actual minimum requirement per person per day.
- The provision of rations must be universal: this is not the time to demarcate households by type of ration card or whether they have a ration card or by any form of biometrics.
- The system of identification of priority households is not error-proof, and no household wrongly excluded should be outside the ambit of rationing today.
- For all rural households, additional rations of cooking oil, sugar, salt and lentils should be provided on a regular basis.
- Supplies have to be arranged, the distribution could be weekly or fortnightly in order to ensure smooth availability.
- If milk, eggs and vegetables (or one or more of them) can be supplied, we can not only ensure basic food security at the time of a major health crisis, but actually address the burden of malnutrition.
- For urban areas, there is a need for combination of provision of dry goods and of cooked food. All households with ration cards can be given the same entitlements as proposed for rural households.
- For the vast numbers of workers and migrants in towns and cities, however, arrangements for preparation and delivery of cooked food must be set up.
- The large numbers of closed community kitchens (schools and colleges, company and office canteens, for example) and restaurant workers now sitting idle or laid off can be brought together to undertake a massive programme of provision of cooked meals at subsidised rates.
- This will require careful planning and technology to distribute food while ensuring physical distancing.
- All the measures proposed must continue for at least three months, and be reviewed afterwards.
- An imaginative massive exercise of expanded rations could not only provide aid in this pandemic but also bring in a policy shift that will help sustain a nourished and healthy population.
The editorial explains how the requirement of massive resources following the pandemic may be an occasion to lift global economic sanctions.
- Many international sanctions imposed on the basis of political and economic decisions and taken as a part of diplomatic efforts by countries, multilateral or regional organisations against states or organisations exist around the world.
- These were meant either to ‘protect national security interests, or to protect international law, and defend against threats to international peace and security.
- These measures include the temporary imposition on a target of economic, trade, diplomatic, cultural or other restrictions’ and can be lifted only through a long process of ascertaining whether their objectives were met.
- The UN Security Council has a ‘mandate by the international community to apply sanctions that are binding on all UN member states.
- They serve as the international community’s most powerful peaceful means to prevent threats to international peace and security or to settle them’.
- The sanctions often lie dormant for technical reasons even if their original intent and purpose have lost their relevance.
- The victims of these sanctions suffer in silence or engage in negotiations to get relief.
- Apart from UN sanctions, there are ‘unilateral sanctions that are imposed by individual countries in furtherance of their strategic objectives.
- Typically intended as strong economic coercion, measures applied under unilateral sanctions can range between coercive diplomatic efforts, economic warfare, or a threat of war.
- These take the form of economic, diplomatic, military and sport sanctions.
- There are many more cases of sanctions against many countries still in existence. Temporary sanctions in protest against the policies of countries often result in expulsion or withdrawal of diplomatic personnel.
- The unilateral sanctions are naturally not mandatory to any other state, but the United States has often stipulated, like in the case of Iran, that those countries which do not apply sanctions to Iran would be debarred from doing business with the U.S., a Hobson’s choice (a free choice in which only one thing is offered) in many cases.
- The U.S.’s withdrawal from the Iran deal has now resulted in Iran facing crippling sanctions.
- Perhaps, the impact of COVID-19 was severe in Iran on account of the sanctions and the resultant economic crisis in the country.
- The politics of sanctions entered a new era when U.S. President Donald Trump signed into law the Countering America’s Adversaries Through Sanctions Act (CAATSA) that grouped together sanctions against Russia, Iran and North Korea.
- Currently, the U.S. alone, or together with other countries has sanctions against Belarus, Myanmar, Côte d’Ivoire, Cuba, the Democratic Republic of Congo, Iran, Iraq, Liberia, North Korea, Sudan, Syria, and Zimbabwe and several other countries.
- The wide network of sanctions is comprehensively monitored by the Office of Foreign Assets Control of the US Department of the Treasury which enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes and related entities and individuals.
- Any global cataclysm affects poor countries more than the rich ones as the former do not have the resources to meet the unexpected economic challenge.
- While the developed countries and their groups provide economic packages to themselves and their partners, developing countries can only hope to receive handouts from the international financial institutions or some generous rich allies.
Dealing with the emergency – Way forward:
- One way of dealing with the emergency in an emergency mode is to consider lifting of economic sanctions imposed by the United Nations and individual countries on developing countries.
- There is no estimate of the losses sustained by these countries on account of these sanctions. But these countries will be much relieved if these restrictions are removed.
- The present global pandemic and the requirement of massive resources may be an occasion to lift these sanctions. The countries which have imposed these sanctions will not have to make any financial outlay to assist these countries at this time of a humanitarian emergency.
- The G20 Chairman, the King of Saudi Arabia, on a suggestion by Prime Minister Narendra Modi, had convened a video conference of G20 leaders. As a follow up of that meeting, the G20 could consider proposing the lifting of multilateral and bilateral sanctions. As Winston Churchill said, “ Never let a good crisis go to waste.”
- It is largely opined that a global pandemic demands game-changing actions by all nations in order to halt its global spread, provide relief in terms of medical supplies and to rebuild shattered lives. The global community has the responsibility to rise to the occasion.
F. Prelims Facts
- Ossification test is one of the primary test for age determination in India.
- Human bones are remodelled evey year and new layer of bone material is laid by a process called ossification (or osteogenesis).
- Based upon this phenomenon, ossification test is carried out.
- Moody’s Investors Service has reduced its GDP growth forecast for India to 2.5% in 2020. This marks a sharp drop from the earlier projection of 5.3%, due to the impact of the COVID-19 pandemic and the resultant lockdown.
- India grew at 5% in 2019.
- The ratings agency expects the country’s economy to recover in 2021, estimating a growth rate of 5.8%.
- Moody’s Global Macro Outlook 2020-21 projects that the G20 countries are likely to see an overall contraction of GDP by 0.5% in the light of the ‘unprecedented shock’ in the world economy.
- The BBC’s global Trusted News Initiative will be extending its efforts to identifying false and potentially harmful information on the coronavirus pandemic.
- The initiative will have in place a system in which partners in the initiative will be able to alert each other about misinformation with respect to COVID-19. This will enable partner platforms such as Facebook and Google to review promptly and the publishers in the network can ensure that the information is not republished.
H. UPSC Prelims Practice Questions
Q1. Which of the following statement/s is/are correct?
- Chloroquine is a medication primarily used to prevent and treat malaria.
- Indian Council for Medical Research has recommended hydroxychloroquine as a preventive medication for high risk population against COVID-19.
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
Q2. Which of the following are the likely measures to increase liquidity with the banks?
- Reduction in Cash Reserve Ratio (CRR)
- Increase the cap under the Marginal Standing Facility (MSF)
- Increase in Statutory Liquidity Ratio (SLR)
- Decrease the rate for Marginal Standing Facility (MSF) funds.
- Increase in Cash Reserve Ratio (CRR)
- Decrease in Statutory Liquidity Ratio (SLR)
a. 1,2,4 and 6
b. 5,2,4 and 6
c. 1,3 and 4
d. 1,4 and 6
Q3. Which of the following statement/s is/are incorrect?
- Marginal Standing Facility is meant for long term loans taken by the banks from the Reserve Bank of India.
- The Marginal Standing Facility rates are always below the repo rates.
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
Q4. Which of the following statement/s is/are correct?
- Corona Kavach app has been developed by the Ministry of health and family welfare.
- Corona Kavach app is designed to track the location of COVID-19 infected people and alert subscribers when they come near their location.
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
I. UPSC Mains Practice Questions
- The Reserve Bank of India has announced measures to stabilize the financial system of India amidst the crisis brought out by the COVID-19 pandemic. Analyze how those measures will provide adequate liquidity in the system, bring down the cost of capital and mitigate the impact of the pandemic. (15 marks, 250 words)
- The government’s efforts to monitor people advised quarantine for the COVID-19 pandemic has run into several privacy issues. Discuss, how relevant are privacy concerns over public health concerns, in the light of the unprecedented crisis the world finds itself in. Suggest suitable safeguards necessary. (10 marks, 150 words)
CNA 28th March 2020:- Download PDF Here