The HINDU Notes – 21st May 2020 - VISION

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Thursday, May 21, 2020

The HINDU Notes – 21st May 2020

πŸ“° China accuses India of trespass, LAC heats up

It referred to recent skirmish in Sikkim

•China accused the Indian Army of crossing into its territory and “blocking” its patrols and “attempting to unilaterally change the status” on the Line of Actual Control (LAC) between the two countries in Sikkim and Ladakh.

•As both sides increased troop strength at points of conflict along the LAC, sources indicated that military commanders were holding talks to defuse the situation.

•In a statement released on Tuesday in Chinese, the Ministry of Foreign Affairs in Beijing referred to the recent skirmish in Sikkim, claiming that “the Indian Army crossed the line across the western section of the Sino-Indian border and the Sikkim section to enter Chinese territory”.

•The statement said the Chinese side had taken up the matter with India, asking it to “immediately withdraw personnel across the line, restore the status quo of the relevant areas, strictly restrict the front line troops, observe the important consensus reached by the leaders of the two countries and the agreements signed by the two sides, and jointly maintain peace and stability in the border areas”.

•The Ministry of External Affairs declined to respond to the comments by the Chinese Ministry. Official sources said deliberations were on and they were at a “crucial stage”.

πŸ“° Nepal’s new political map unacceptable, says India

‘It is not based on historical facts’

•Nepal’s new official map is “artificial” and unacceptable to India, the Ministry of External Affairs said on Wednesday after Kathmandu unveiled a new political map that claimed Kalapani, Limpiyadhura and Lipulekh of Uttarakhand as part of its sovereign territory.

•“This unilateral act is not based on historical facts and evidence. It is contrary to the bilateral understanding to resolve the outstanding boundary issues through diplomatic dialogue. Such artificial enlargement of territorial claims will not be accepted by India,” said official spokesperson Anurag Srivastava, urging Kathmandu to opt for diplomatic dialogue to settle border disputes.

•Earlier in the day, the new map was launched at a press conference in Kathmandu by Minister of Land Management Padma Kumari Aryal, who said the government of Prime Minister K.P. Sharma Oli is committed to protecting the territorial integrity of the country.

πŸ“° Cabinet okays NBFC liquidity plan

Scheme is a non-starter, says industry body FIDC

•The Union Cabinet on Monday approved a ₹30,000-crore special liquidity scheme for non-banking finance companies (NBFCs) and housing finance companies aimed at improving the cash position of these entities.

•A special purpose vehicle (SPV) would be set up by a public sector bank to manage a Stressed Asset Fund (SAF) whose special securities would be guaranteed by the Government of India and purchased by the Reserve Bank of India (RBI) only, the government said.

•The proceeds of sale of such securities would be used by the SPV to acquire short-term debt of NBFCs/HFCs. The scheme will be administered by the Department of Financial Services, which will issue the detailed guidelines.

•“The SPV would issue securities as per requirement subject to the total amount of securities outstanding not exceeding ₹30,000 crore to be extended by the amount required as per the need,” a statement by the government said.

•“The securities issued by the SPV would be purchased by the RBI and the proceeds thereof, would be used by the SPV to acquire the debt of at least investment grade of short duration (residual maturity of up to three months) of eligible NBFCs / HFCs,” it added.

•Raman Aggarwal, co-chairman, FIDC, the industry body of NBFCs, termed the scheme a non-starter due to the short tenure of the funds.

•“The details of the special liquidity scheme has come as a disappointment,” he said.

•“The funds will be made available for a tenor of up to three months while a majority of the lending done is for a tenure of 2-3 years.

•“In order to prevent any asset-liability mismatch, the expectation was for a tenure of three years,” said Mr. Aggarwal.

πŸ“° Cabinet approves ₹3 lakh crore funding for MSMEs

NCGTC to guarantee credit to MSMEs; ₹3,110 crore foodgrain subsidy for migrant workers among other schemes to receive approval

•The Union Cabinet on Monday approved additional funding of up to ₹3 lakh crore to micro, small and medium enterprises (MSME) that was announced by Finance Minister Nirmala Sitharaman last week as part of the ₹20 lakh crore economic package.

•Under the scheme, 100% guarantee coverage will be provided by National Credit Guarantee Trustee Company Limited (NCGTC) to eligible MSMEs and interested borrowers of the MUDRA scheme, in the form of a Guaranteed Emergency Credit Line (GECL) facility, the government said.

•The tenure of loan under this scheme will be four years with a moratorium period of one year on the principal amount. No guarantee fee will be charged by NCGTC. Interest rates on loans extended by banks and financial institutions will be capped at 9.25%, and 14% for those extended by non-banking financial companies (NBFCs). The scheme would be applicable to all loans sanctioned under GECL till October 31, or till an amount of ₹3 lakh crore is sanctioned, whichever is earlier.

•“For this purpose, a corpus of ₹41,600 crore shall be provided by the Government of India, spread over the current and the next three financial years,” the government said.

•“All MSME borrower accounts with outstanding credit of up to ₹25 crore as on February 29, 2020, which was less than or equal to 60 days past due as on that date, i.e., regular, SMA 0 and SMA 1 accounts, and with an annual turnover of up to ₹100 crore, would be eligible for GECL funding under the Scheme,” the government said.

Bankers unimpressed

•However, bankers said that since the government is not giving a direct guarantee, this may not solve the ‘risk averse’ issue that the lenders are facing.

•“It is like the CGTMSE [Credit Guarantee Fund Trust for Micro and Small Enterprises] scheme. The claims will not be settled unconditionally. Questions will be asked… they may like to see the loan appraisal process once a claim is made when the borrower defaults,” an official from a public sector bank said.

•Since the scheme is not directly guaranteed by the government, banks still have to attach a risk weight of 20% for the loans. And, if the claim is not settled, banks have to make provision in line with the age of default. Bankers said they may approach the Reserve Bank of India to allow them not to attach any risk weight.

•“The government would probably issue a letter of comfort and based on that this corporation will issue guarantees and then when guarantees devolve, that is when banks will make a claim, which is likely in the next two to three financial years; so defaults will happen [over] a period of time. And, the budgetary impact will be spread over a period of time,” the chief executive of a government-owned bank said.

•Among other proposals approved by the Cabinet on Wednesday was a subsidy of almost ₹3,110 crore for distribution of extra foodgrains to about eight crore migrant workers and their families.

•The Cabinet also approved a new centrally-sponsored scheme to support micro food processing units at an outlay of ₹10,000 crore, the expenditure being shared by the Centre and the States on a 60:40 basis.

•The scheme will be implemented over a five-year period and will benefit about two lakh self-help groups, farmer producer organisations and other small units through a credit-linked subsidy, providing money for working capital and tools, a marketing grant, skills training and technical upgrade.

•It also approved the Pradhan Mantri Matsya Sampada Yojana, a scheme announced in the 2020 Budget, to develop the fisheries sector over a five-year period.

•Of the total investment of ₹20,050 crore, the Centre will spend ₹9,407 crore, the States ₹4,880 crore while beneficiaries themselves will have to invest about ₹5,763 crore. The Cabinet Committee on Economic Affairs also approved the adoption of a new methodology for the auction of coal and lignite blocks on a revenue-sharing basis. The tenure of coking coal linkage was increased to 30 years.

•It will also permit commercial exploitation of coal-bed methane in the mining lease area. Rebates in revenue share payments will be given in the event of an early production of coal from the mine. Further rebates will be offered for gasification of coal to encourage environment-friendly actions.

πŸ“° How public health boosts an economy

A stronger health system in a country can lead to better outcomes on the economic growth front

•When public health sneezes, the economy catches cold. Dire predictions for the post-COVID-19 global economy have come from the International Monetary Fund, which called the present crisis the worst downturn since the Great Depression. Grim forebodings for the Indian economy have been sounded by many distinguished economists and the Governor of the Reserve Bank of India.

•Will this lead to higher investment in health to protect the economy from the effects of endangered health? The Rs. 20 lakh crore package recently announced includes proposals to prevent and respond to future pandemics. These include strengthening of health and wellness centres, establishment of infectious diseases hospital blocks in all districts, expansion of the laboratory network and ‘One Health’ research on zoonotic diseases under the Indian Council of Medical Research (ICMR). This is a limited response to the threat of infectious outbreaks.

Need for equitable systems

•The creation of a well-balanced health system is not the objective of this crisis response, despite the fact that the southern States have shown how efficient and equitable health systems are our best defence against public health emergencies. It is also clear that weak health systems, which do not function well in a steady state, cannot suddenly generate surge capacity when challenged by a public health emergency. Further, a selective investment in some components of infectious disease control will not meet the many other essential demands on the health system. Even during the COVID-19 response, attention has been diverted from maternal and child health, and care for other infectious diseases and non-communicable diseases. Also, where will the additional health workforce needed even for this limited expansion come from, without a planned investment in education, skilling and employment?

•What is needed is adequate investment in creating a health system that can withstand any kind of public health emergencies, deliver universal health coverage and other targets of the Sustainable Development Goals, while creating mutually beneficial synergies between health and the economy. The Fifteenth Finance Commission is reportedly examining ways to increase public financing of the health sector, while framing its final recommendations. Given the major role that States have to play in creating strong health systems across the country, the directions and allocations provided by the Finance Commission can become the critical catalyst for transforming the nation’s health. Will the Commission invigorate public health and primary care or will it be influenced by the intensive care narrative of COVID-19, which only a fraction of the infected persons need or benefit from? Will it highlight the economic benefits that will accrue from investing in health as a sustained commitment?

Not a ‘cost disease’

•Ambivalence of economists towards health dominated much of the 20th century. Health systems were mostly seen as unavoidable expenditures, which had to be accommodated as the essential service entourage of a booming economy but not to be placed at the high table of policy priorities. Indeed, one of the most influential economists of the modern era, William Baumol, described healthcare as a ‘cost disease’ where costs inexorably rise, outpacing the value of services rendered and therefore it is less rewarding than the industrial engines of economic growth.

•The rising costs of healthcare in industrialised countries, especially those without organised universal health coverage, may well invite such a description though the proposition could be debated even there. Public health, which is hidden away in the scullery when economic revelry is in full flow, cannot however be dismissed so easily. The services rendered by public health are far too valuable to be dismissed as a cost disease. Indeed, both population-based public health and individual-centred healthcare are joint accounts in human development that yield rich returns for economic development, if invested wisely.

•The evidence-backed proposition that population health and national economic growth have a bi-directional relationship, as do poverty and individual ill health, has made its way into the paradigm of the Sustainable Development Goals. However, investments in health have lagged behind that awareness or have been heavily skewed in favour of advanced clinical care. Public health and primary care were left pleading for more, like a plaintive Oliver Twist, but were disdainfully dismissed.

Robust evidence on correlation

•There is robust evidence that investments in public health and primary care pay rich economic dividends. Apart from the WHO Commission on Macroeconomics and Health (2001), two other economists-led reports on Investing in Health (1993, 2013) concluded that investments in population health will yield rich returns of economic growth. The 2013 report estimated that low- and middle-income countries will realise 9 to 20 fold returns respectively on investments in health. A UN High Level Commission, headed by the Presidents of France and South Africa, reported in 2016 that investments for augmenting the size and skills of the health workforce yields economic growth through improved population health and productivity, reduced healthcare costs and job creation even in a gloomy global scenario of job loss. The Baumol hypothesis on investments in health was strongly disputed by this report.

•India, in particular, stands to gain greatly by investing in health, especially health beyond illness care. Productivity boost promised by a demographically young population can be protected. Education and skilling of a diversified health workforce can uplift health services for health protection at both population and individual levels. When domestic needs are met, this expanded health workforce can also meet global health needs, both as a rapid action force for health emergency response and as a unit taking care of the chronic care needs of aged societies. Innovative health technologies and inexpensive pharmaceutical products can be created at scale, for domestic use and global export.

•This calls for stepped up public financing for the health sector. Questions may be posed as to how this can be done at a time of economic downturn. History teaches us that such an investment is especially useful in times of economic adversity. South-East Asian countries invested in health and universal health coverage during and soon after the Asian Financial Crisis of the 1990s. The United Kingdom adopted universal health coverage soon after the Second World War. Japan adopted it in the early 1960s to hasten recovery from the economic injuries inflicted by defeat in that war. All of them recognised that greater investment in health is a winning bet for economic development. India too must choose that path to boost the trajectory of its economic growth.

•At the bottom of the Pandora ’s box lies hope. As COVID-19, which emerged through our indiscretions, exits, its attendant ills which afflict our economic and social life, too can fade away. If we let hope rise, through health.

πŸ“° A hole in the whole

Health-care services cannot be allowedto be overwhelmed by the pandemic

•Mathematically, the whole is equal to the sum of its parts, neither more nor less. But the COVID-19 pandemic has taken the parts and overwhelmed the whole. The lockdown, as it was conceived originally, was meant to be, at best, a stopgap arrangement that would help nations tide over the crisis caused by the SARS-CoV-2 virus. But as the days rolled on, and the lockdown moved on from phase to phase, it has caused a paralysis in general health care. As sparse health-care resources in most parts of the country have been channelled towards the COVID-19 effort, the numbers have risen, but normal health-care services have been in suspended animation for just under two months now. Staff running several national health programmes, and State health missions, besides health-care workers from tertiary hospitals down to the primary health centres, have been diverted to buttress public health efforts in the COVID-19 battle. And the epidemic still rages on, with thousands of people testing positive every day and the number of cases coursing past the one lakh mark. Lockdowns have been partially lifted in some areas and in others, a mere semblance of normalcy has returned. As conditional movement has been allowed, people travelling across States bring positive cases to States or districts that have remained case-free for a while now.

•But the time has now come for the country to attempt an equipoise of sorts, balance the different requirements of health care, along with efforts to continue to fight COVID-19. While health-care services themselves have been on the backfoot for non-COVID-19 conditions, except in emergencies, access too, for the bulk of the population, has been hampered by the non-availability of public transportation. Recent data culled from the National Health Mission pointed to less than normal coverage in key areas such as immunisation, institutional deliveries; further, delay, or failure, in delivering life-saving drugs to persons with HIV, tuberculosis, or inability to offer support for other chronic conditions have been documented. The usually robust private health system, which caters to various segments of the population, also took a back seat, or played a supportive role. While the Finance Minister’s announcement on increase in health allocations as part of the Rs. 20-lakh crore relief package is welcome, more than money is required to set this right. If life after COVID-19 is not to be worse than life before the pandemic, the governments need to ensure that the country’s multi-layered health system is not sacrificed at the altar of one virus; they need to give it their whole attention, now.

πŸ“° Working safely

Employers should see the value of reduced attendance and encourage staff protection

•Opening up economic production from a lockdown, even partially, when the COVID-19 pandemic has not peaked in the country poses an extraordinary challenge. Countries around the world are focusing on making the workplace safe, and issuing guidelines to help workers return to their jobs. Reducing the number of people present at any given time is a universal principle, either through resort to shifts, or arrangements to enable employees to work from home. The Union Health Ministry has addressed the issue through a manual of preventive measures that covers all types of workplaces and depends heavily on behavioural change, with some additional requirements for confined spaces such as offices. Fortunately, the first line of defence against the novel coronavirus is a set of simple measures that involves little expenditure: physical distancing of at least one metre, mandatory use of face masks or cover, frequent hand washing with soap, respiratory etiquette, sanitising contact surfaces and self-monitoring of health. These requirements have by now become familiar to everyone, and employees need only be nudged into adopting them through persistent communication, free provisioning of masks and sanitising materials, and organising office space suitably. Physical distancing of even one metre, if not the ‘do gaz’ or six feet that Prime Minister Narendra Modi advocated, does pose difficulties because of the lack of space and density of workers in many places. But employers should see the value of keeping staff attendance at safe levels even within the legally permitted ceiling, which now extends to 50% in specified sectors and even in some government offices. Failure to maintain distancing, more so in a poorly-ventilated, closed environment, gives the virus a free run, as Chennai’s wholesale vegetable market showed starkly.

•The Centre’s protocol for symptomatic cases at the workplace, requiring testing, and, where warranted, quarantining of both the worker and close contacts, and a two-day closure of offices experiencing an outbreak, should underscore to employers the importance of prevention. Responsibility, however, does not devolve entirely on offices and establishments, and it is imperative for other activities, such as public transport used by many workers, to meet COVID-19 requirements. Some institutions are mandating installation of the Aarogya Setu app by employees returning to work, when the legal basis of this monitoring mechanism remains shaky and there are no assured benefits in terms of health care. At this stage of the pandemic, when a gradual resumption of economic activity in multiple sectors ranging from construction to food takeaways is a necessity, the most feasible interventions at the workplace are voluntary and those that cost the least. There may still be occasion to resort to intermittent lockdowns if opening up leads to mounting cases. A prudent course would be to navigate the present with a minimalist approach, as the quest for a medical breakthrough makes progress.