The HINDU Notes – 13th October 2021 - VISION

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Wednesday, October 13, 2021

The HINDU Notes – 13th October 2021


📰 Expert panel clears Covaxin for emergency use in 2-18 age group

Bharat Biotech says it has submitted the recommendations to the Drugs Controller General of India.

•Bharat Biotech’s COVID-19 vaccine Covaxin (BBV152) has been recommended for Emergency Use Authorisation (EUA) for 2-18- year-olds by the Subject Expert Committee (SEC) of the Central Drugs Standards Control Organisation (CDSCO).

•Covaxin is the country’s first indigenous, whole-virion, inactivated vaccine developed by Bharat Biotech in collaboration with the Indian Medical Research Council (ICMR) and the National Institute of Virology (NIV).

•If given the green signal, it will emerge as the first COVID-19 vaccine globally to be used for vaccinating children as young as 2 years.

Data submitted

•In a statement issued on Tuesday, the company said it had submitted data from clinical trials in the 2-18 age group to the CDSCO. The positive recommendations, after due review by the SEC, were submitted to the Drugs Controller General of India (DCGI).

•A senior Central Government official stated that the Hyderabad-based Bharat Biotech had completed Phase-2 and Phase-3 trials of Covaxin on children below 18 in September and submitted the trial data. The trials were done on the age groups of 2-6, 6-12 and 12 -18.

•Experts maintained that two doses of Covaxin could be administered to children within a gap of 28 days. For adults, the government has set 4-6 weeks between the two shots.

•“This represents one of the first approvals worldwide for COVID-19 vaccines for the 2-18 age group,” the Bharat Biotech statement claimed. The company was awaiting further regulatory approvals from the CDSCO prior to product launch and market availability of the vaccine for children.

•Dr. Shuchin Bajaj, founder and director, Ujala Cygnus Group of Hospitals, highlighted, “India has always been known as a vaccine and a medicine drug producer but never a medicine or a drug developer. This is the first time that a vaccine has been entirely developed and produced in India and its efficacy and safety have been proven to be high so much so that it is now being trialled in children.”

•The vaccine would lead to protection of children. “Currently, adults have been vaccinated, but children have been left exposed to the virus. This vaccine will bring about a positive change,’’ he stressed.

•Dr. Bipin Singh, assistant professor, School of Engineering & Technology, BML Munjal University (BMU), noted that the emergency use approval of the vaccine for children aged 2-18 years was promising. It would have been better if the vaccine was first approved for children within the age bracket of 10-18 years. The recommendations were based on a larger and diverse pool of clinical trails data and long-term evaluations, he pointed out.

‘Watch and wait scenario’

•Dr. (Maj.) Manish Mannan, head of department, Pediatrics and Neonatology, Paras Hospitals, Gurugram, speaking about the availability of the vaccine in the private sector observed that it would be a watch and wait scenario.

•“The DCGI has to give its final approval and then vaccination has to begin. As doctors working with children, we will be watching the data closely. I would go slow into the vaccination and will see how the data comes in on the phase four of the trial or when actually the vaccine is being given to children in various parts of the country and various centres. We have to see the response. Even though the number of children involved in the clinical trial is a small number, the results have been encouraging. As the vaccination process starts, we will see how it goes and then we will go ahead and consider using this vaccine,” he remarked.

•The World Health Organisation is expected to take a call on Bharat Biotech’s Emergency Use Listing (EUL) application for Covaxin soon.

📰 China launches biodiversity fund

Xi Jinping pledges $233 million, asks other countries to contribute to it

•China on Tuesday pledged to inject $233 million into a new fund to protect biodiversity in developing countries during a key UN conservation summit, despite disagreements among major donors on the initiative.

•Beijing — the world’s biggest polluter — has sought to play a more prominent role internationally on biodiversity conservation in recent years.

•Its pledge came as delegates from about 195 countries gathered in the southern Chinese city of Kunming for the first of a two-part summit on safeguarding plants, animals and ecosystems.

•The summit aims to establish a new accord setting out targets for 2030 and 2050. “China will take the lead in establishing the Kunming biodiversity fund with a capital contribution of 1.5 billion yuan ($233 million) to support the cause of biodiversity conservation in developing countries,” Chinese President Xi Jinping said during a speech delivered via video link at the COP15 leaders’ summit.

•“China calls on... all parties to contribute to the fund.”

‘30 by 30’ agenda

•A key proposal being debated at the conference is the “30 by 30” agenda that would afford 30% of the Earth’s land and oceans protected status by 2030.

•Global spending to protect and restore nature needs to triple this decade to about $350 billion annually by 2030 and $536 billion by 2050 to meet this target, a UN report said in May.

•But some rich country donors say a new fund for conservation is unnecessary because the United Nations’ Global Environment Facility already helps developing nations finance green projects.

📰 Centre announces plastic waste recycling targets

The notification is expected to come into force by December 6

•The Environment Ministry has issued draft rules that mandate producers of plastic packaging material to collect all of their produce by 2024 and ensure that a minimum percentage of it be recycled as well as used in subsequent supply.

•It has also specified a system whereby makers and users of plastic packaging can collect certificates — called Extended Producer Responsibility (EPR) certificates — and trade in them.

•The notification is expected to come into force by December 6 and, as of now, is open to public feedback.

•Only a fraction of plastic that cannot be recycled — such as multi-layered multi-material plastics — will be eligible to be sent for end-of-life disposal such as road construction, waste to energy, waste to oil and cement kilns, and here too, only methods prescribed by the Central Pollution Control Board will be permitted for their disposal.

•As of 2019, about 660,787.85 tonnes of plastic waste is produced in India annually, of which around 60% is reportedly recycled. Nearly 43% is packaging material and most are single use plastic.

•Plastic packaging, as per the rules made public on October 6, fall into three categories: The first is “rigid” plastic; category 2 is “flexible plastic packaging of single layer or multilayer (more than one layer with different types of plastic), plastic sheets and covers made of plastic sheet, carry bags (including carry bags made of compostable plastics), plastic sachet or pouches; and the third category is called multi-layered plastic packaging, which has at least one layer of plastic and at least one layer of material other than plastic.

•Producers of plastic will be obliged to declare to the government, via a centralised website, how much plastic they produce annually. Companies will have to collect at least 35% of the target in 2021-22, 70% by 2022-23 and 100% by 2024.

•In 2024, a minimum 50% of their rigid plastic (category 1) will have to be recycled as will 30% of their category 2 and 3 plastic. Every year will see progressively higher targets and after 2026-27, 80% of their category 1 and 60% of the other two categories will need to be recycled.

•There are similar targets, with slight variations, for companies that use packaging material as well as import them.

•If entities cannot fulfil their obligations, they will on a “case by case basis” be permitted to buy certificates making up for their shortfall from organisations that have used recycled content in excess of their obligation. The CPCB will develop a “mechanism” for such exchanges on a centralised online portal.

•Non-compliance, however, will not invite a traditional fine. Instead an “environmental compensation” will be levied, though the rules do not specify how much this compensation will be.

•Entities that do not meet their targets or do not purchase enough credits to meet their annual target must pay a fine. Were they to meet their targets within three years, they stand to get a 40% refund. Beyond that, however, the money will be forfeited. Funds collected in this way will be put in an escrow account and can be used in collection and recycling/end of life disposal of uncollected and non-recycled/ non-end of life disposal of plastic packaging waste on which the environmental compensation is levied.

•From July 2022, the manufacture of a range of plastic products will be banned. These include ear buds with plastic sticks, plastic sticks for balloons, plastic flags, candy sticks, ice-cream sticks, thermocol for decoration, plates, cups, glasses, cutlery such as forks, spoons, knives, straws, trays, wrapping or packing films around sweet boxes, invitation cards, and cigarette packets, plastic or PVC banners less than 100 microns, and stirrers.

📰 Jabbing children: On a COVID-19 vaccine for kids

As Covaxin gets closer to approval for children, data transparency is vital

•As a milestone, the Subject Expert Committee’s (SEC) recommendation to the Drugs Controller to grant emergency use authorisation (EUA) for Covaxin among children aged 2-18 years, is huge. If the Drugs Controller General of India (DCGI) goes ahead and grants approval, it will be the first vaccine to be administered to children in India. While one other vaccine, ZyCoV-D, has been granted EUA, it is still to be administered. Trials have started with the Serum Institute’s Covovax for children, extending the timeline of any other COVID-19 vaccine for actual use in children. On the front of it, it seems like a tremendous achievement within a short period. While the data seem to have convinced the SEC that there is cause to make its considered recommendation, none of that is yet in the public domain, at the time of SEC’s announcement. Bharat Biotech presented interim data from the phase II/III trials to the DCGI, as the safety follow-up is longer in this case. One month after the two doses, an immunogenicity check and safety follow up are done, according to reports. The company claimed the data indicated that the vaccine used — the same product and presentation as the adult vaccine — was safe. The two-dose Covaxin was administered to 525 children 28 days apart, after it received the nod to conduct trials on children in May this year. A possibly unintended but welcome outcome of the pandemic is the stress on being transparent about scientific data generated in trials. Data from other vaccine trials have routinely been posted in the public realm, not just with state regulators.

•Working on vaccine or drug regimens with children is challenging on many fronts; to start with, it is not merely a case of sizing down adult dosage for children. Children have distinct developmental and physiological differences, and WHO recommends that clinical trials in children are essential to develop age-specific, empirically verified therapies and interventions to determine the best possible treatments for them. Their bodies work in very different ways and they undergo many changes as they grow from infancy towards adolescence and adulthood, calling for age de-escalation studies in trials, beginning with an older age group, and working towards the youngest group. Another question experts are raising is whether the cohort of 525 children is large enough to wing an EUA, or if incremental numbers should be added, given the size of the target paediatric/teen population. Many of these questions are easily addressed with publication of the data. While a recommendation is only that, it has indeed raised extraordinary expectations in the community. The DCGI, as it considers the SEC’s advice, should address the concerns raised, and reinstate the issue of transparency to its rightful place as the cornerstone of scientific temper, besides infusing confidence in the public.

📰 Do not breathe easy on the silicosis prevention policy

The Government must make haste to prevent a killer disease that claims thousands of workers’ lives each year

•Long before COVID-19 hit, countless workers engaged in mines, construction and factories in India were silently dying of exposure to dust, utmost exploitation and apathy. They continue to do so.

Rajasthan’s pioneering model

•One State — Rajasthan — with the top-most share of over 17% in value of mineral production in the country and a long history of civil society activism, was the first to notify silicosis as an ‘epidemic’ in 2015, under the Rajasthan Epidemic Diseases Act, 1957. In 2019, it announced a formal Pneumoconiosis Policy, only next to Haryana.

•Silicosis is part of the pneumoconiosis family of diseases, described by the policy as “occupational diseases due to dust exposure... are incurable, cause permanent disability and are ‘totally preventable by available control measures and technology’ (emphasis added)”. A ‘silicosis portal’ was hosted by the Department of Social Justice and Empowerment and a system of worker self-registration, diagnosis through district-level pneumoconiosis boards and compensation from the District Mineral Foundation Trust (DMFT) funds to which mine owners contribute, was put in place. In just two years, the State has officially certified and compensated over 25,000 patients of silicosis, of which 5,500 have already died of the disease.

Gaps in the system

•But even this ‘pioneering model’ stops short of where it matters the most. In the mining sector alone, none of the silicosis cases diagnosed has been notified by mine owners or reported by the examining doctors to the Directorate General of Mines Safety (DGMS), Ministry of Labour and Employment. But this is what they are legally required to do, according to Section 25 of the erstwhile Mines Act, 1952 and Section 12 of the now-effective Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020.

•Why is notifying cases to the DGMS important? Only that would shift the paradigm from compensation to prevention, and fix the responsibility on mine owners, who now continue to slip away despite violating safety and preventive protocols. The DGMS, the sole enforcement authority for health and safety in mines, can take action against mine owners only if it knows who they are, and in turn, whom they employ. But only 10%-20% of the over 33,100 mining leases and quarry licences in Rajasthan are DGMS-registered.

•So the present system is designed to ‘consume’ the worker and dispense with him with a small compensation while the mine owner sits back and continues to hire the next able worker — an inhuman cycle, which the Government is complicit in.

Labour Code dilutions

•Persistent attempts to establish the employer-worker relationship on record have drawn a blank, given that the mine-owning community is a major revenue contributor to the State. That said, the immediate impetus for silicosis prevention could come from two related places in the OSHWC Code.

•Section 6 of the Code makes it mandatory for all employers to provide annual health checks free of cost “to such employees of such age or such class of employees of establishments or such class of establishments, as may be prescribed by the appropriate Government”. Section 20 gives powers to the DGMS to conduct health and occupational surveys in mines.

•Positive as they sound, these sections are severely diluted from the earlier Mines Act provisions, which in turn, were simply never implemented. The draft Central rule 6 corresponding to Section 6 of the Code fixes an age floor of 45 years for workers in all establishments (including mines) to be eligible for these health checks, though Rules 92 to 102 provide for initial and periodic examinations of all mine workers from their time of joining — which is an anomaly. Two, Section 20 places no obligation on the mine owner to provide any form of rehabilitation in terms of alternative employment in the mine, or payment of a disability allowance/lump sum compensation for a worker found medically unfit. These paragraphs in the earlier Mines Act linked to the Workmen’s Compensation Act (also subsumed), have been deleted.

•A ‘medically unfit’ worker is thus expected to leave the job and fend for themselves or subsist on the compensation of ₹3 lakh provided in Rajasthan from the DMFT — and not even that, perhaps, in other States.

Steps for prevention

•State governments need to be alive to these dreadful regressions and use their powers to contain the damage. Rajasthan could lead the way by establishing a robust system of preventive annual health checks as a real and regular feature of the silicosis prevention plan.

•One, the related State departments, in close dialogue with the DGMS, must urgently draw up detailed guidelines for district-wise health surveys. The State rules under the OSHWC Code must take care to ensure the health checks are provided to all workers in all establishments, irrespective of age. The State Advisory Board (Section 17 of the Code), along with technical committees, must be quickly constituted, with workers and their representatives having a say in them.

•Two, local manufacturers must be incentivised to innovate and develop low-cost dust-suppressant and wet-drilling mechanisms that could either be subsidised or provided free of cost to the mine owners. Existing prototypes must be tested and scaled up.

•Three, the DMFT funds are both underutilised and spent in an entirely ad hoc manner. A Centre for Science and Environment report shows Rajasthan had ₹3,514 crore under DMFTs in 2020 of which only approximately ₹750 crore was spent. Their haphazard allocation for non-mineworker-related expenditure must be replaced by a streamlined and accountable system for the direct benefit of mineworkers under clearly defined budget heads such as prevention (including innovation fund and subsidy for wet drilling equipment), disability compensation, solatium, administrative expenses and others. But even this planning will be incomplete without bringing worker-employer identification on record. A systematic identification ultimately lies in the hands of the authorities and their will to enforce the law in this regard and a rising among the workers for their rights.

•No more time must be lost in bringing prevention to the heart of the pneumoconiosis policy.

📰 The sanctions cloud over India-U.S. ties

The debate in the U.S. hovers around the efficacy of CAATSA-related sanctions against India

•The Chief of the Air Staff, Air Chief Marshal V.R. Chaudhari, recently said that the delivery of the S-400 Triumf air defence systems from Russia is expected according to schedule. In response, U.S. Deputy Secretary of State Wendy Sherman hoped that both the U.S. and India could resolve the issue. The “issue” here is that receiving the missile systems could attract for India sanctions under the Countering America’s Adversaries through Sanctions Act (CAATSA), enacted by the U.S. Congress. Ms. Sherman emphasised that the U.S. thinks it’s “dangerous” for “any country that decides to use the S-400”. India is scheduled to receive five squadrons of the surface-to-air missile systems under the $5.43 billion (₹40,000 crore) agreement it signed three years ago.

Enactment of CAATSA

•Even though CAATSA was signed into law by then President Donald Trump in 2017, India stuck to its guns, signed the agreement with Russia a year later, and paid an advance in 2019. The missile systems were originally scheduled to be delivered between 2020 and 2023 and the supplies are expected to commence now. Both New Delhi and Washington have been in conversations over the deal. India has stressed on the tactical importance of the defence missile systems considering the environment in the Indian subcontinent.

•The CAATSA was passed when the U.S. sought to discourage trade in the defence and intelligence sectors of Russia, a country perceived to have interfered with the 2016 U.S. presidential election. The Act mandates the President to impose at least five of the 12 sanctions on persons engaged in a “significant transaction” with Russian defence and intelligence sectors. These sanctions include suspending export licence, banning American equity/debt investments in entities, prohibiting loans from U.S. financial institutions and opposing loans from international finance institutions.

•The Act also built in a safety valve in the form of a presidential waiver. This was written into the law after much persuasion and is interpreted as one crafted to accommodate countries like India. Policy planners on either side are aware of the law and the provisions to work around it. Ms. Sherman and Secretary of State Antony Blinken, who came to India earlier this year, cannot be expected to announce whether India can secure a waiver from President Joe Biden when the time comes for the White House to make a decision.

•The “modified waiver authority” allows the President to waive sanctions in certain circumstances. He has to decide whether the move is in American interest; does not endanger the country’s national security; and affect its military operations in an adverse manner. In addition, he has to determine whether the country in question is taking steps to bring down its inventory of defence equipment from Russia and cooperating with Washington on matters of critical security. There are a few more provisions including one that allows for sanctions waivers for 180 days, provided the administration certifies that the country in question is scaling back its ties with Russia.

•The debate in the U.S. hovers around the efficacy of such sanctions against India when the geopolitical situation in the region is undergoing a change. Today, there is a growing relationship between China and Russia with both countries seeking to expand engagement in Afghanistan from where the U.S. withdrew its military after two decades of war. India turned sullen over the manner in which the U.S. negotiated the exit deal with the Taliban. Yet, on the strategic plane, India remained on course by agreeing to the upgrading of the Quadrilateral Security Dialogue and sharing the same vision as the U.S. on the Indo-Pacific construct.

•Sanctions have the tremendous potential of pulling down the upward trajectory of the bilateral relationship between the U.S. and India, which now spans 50 sectors, especially in the field of defence. The U.S.’s apprehension is that bringing India under a sanctions regime could push New Delhi towards its traditional military hardware supplier, Russia. Till about a decade ago, an influential segment of the Indian political leadership and top bureaucracy remained wary of deeper engagement with the U.S. Sanctions can stir up the latent belief that Washington cannot be relied upon as a partner.

Decrease in imports

•Over the last decade, India’s military purchase from Russia has steadily declined. India’s import of arms decreased by 33% between 2011-15 and 2016-20 and Russia was the most affected supplier, according to a report by the Stockholm-based defence think-tank SIPRI. In recent years, though, there have been some big-ticket deals worth $15 billion including S400, Ka-226-T utility helicopters, BrahMos missiles and production of AK-203 assault rifles.

•On the other hand, over the past decade, government-to-government deals with the U.S. touched $20 billion and deals worth nearly $10 billion are under negotiation. The U.S. designated India as a Major Defence Partner in 2016. It later gave India Strategic Trade Authorisation-1 which allows access to critical technologies. Today, manufacturers in both countries are exploring ways to co-develop and co-produce military equipment.

What next?

•There are advocates in the U.S. who strongly favour imposing sanctions on India following the U.S.’s decision to impose restrictions on its NATO ally, Turkey. China was the first country to attract the provision after it procured the S-400. Should India be treated with a different yardstick? A section of influential lawmakers in the Democratic Party hold a different view.

•There are three clear steps in this regard. The first is the presidential determination on waiver; the second is the referral to the Congressional Committees; and the third is clearance by these panels. While referral to the Armed Services is spelled out, it is a distinct possibility that this will be sent to the Senate Foreign Relations Committees. This powerful committee, headed by Senator Bob Menendez, wrote to Defence Secretary Lloyd Austin ahead of his visit to New Delhi in March this year that he must inform India of the perils of the deal, while a Republican, Todd Young, on the panel argued against it.

•The CAATSA test will determine the course of the India-U.S. strategic partnership. Will the Biden administration sail through opposition within his party in allowing India a clear passage? While the administration will have to do the heavy lifting, the role of Indian-Americans should be significant just as they rallied around to support the historic Civil Nuclear Deal in the face of stiff resistance from Democrats opposed to nuclear proliferation.

📰 Taking the lid off illicit financial flows

The Pandora Papers have only highlighted the need for concerted steps to alter the global financial architecture

•The Pandora Papers, published on October 3, once again expose the illegal activities of the rich and the mighty across the world. The Pandora Papers investigation is “the world’s largest-ever journalistic collaboration, involving more than 600 journalists from 150 media outlets in 117 countries”. The International Consortium of Investigative Journalists (ICIJ) has researched and analysed the approximately 12 million documents in order to unravel the functioning of the global financial architecture which helps illicit financial flows, in turn enabling the rich to throw a cloak over their incomes and activities.

•Given the complexity of the tax laws and the loopholes available, some of the deft moves may be strictly legal, but not necessarily morally justified. The ICIJ says that while some of the files date to the 1970s, most of those it reviewed were created between 1996 and 2020. The ICIJ has also said that the “data trove covers more than 330 politicians and 130 Forbes billionaires, as well as celebrities... drug dealers, royal family members and leaders of religious groups around the world”.

History of leaked data

•Since at least 2008, files indicating the manipulations by the rich have been stolen from financial institutions. In 2017, the Paradise Papers were leaked out mostly from the more than 100-year-old offshore law firm, Appleby, which operates globally. In 2016, the Panama Papers were obtained by hacking the server of the Panamanian financial firm, Mossack Fonseca. In these exposés, the British Virgin Island (BVI) figured prominently. The leaked documents from Luxembourg, the “Luxembourg Leaks”, appeared in 2014.

•In 2008, a former employee of the LGT Bank of Liechtenstein offered information to tax authorities. There were Indian names also but the Indian government accepted the data only under pressure from the Supreme Court. The same year, Hervé Falciani obtained confidential data on HSBC bank accounts from remote servers and gave the data to then French Finance Minister Christine Lagarde (she later became chief of the International Monetary Fund to then move on as President of the European Central Bank) who passed it on to the various governments, including India.

•In the United States, in the mid-2000s, UBS Bank and Bradley Birkenfeld, who was acting as a private banker on its behalf, were prosecuted for enabling U.S. citizens to spirit away their income and wealth.

•A large extent of the illicit financial flows have a link to New York City and London, the biggest financial centres in the world that allow financial institutions such as big banks to operate with ease. The leaked data show that these entities move the funds of the rich and the powerful via tax havens; Delaware in the U.S. is a tax haven. The big financial entities operating from these cities have been prosecuted for committing illegalities. In 2012, an investigation into the London Interbank Offered Rate or LIBOR — crucial in calculating interest rates — led to the fining of leading banks such as Barclays, UBS, Rabobank and the Royal Bank of Scotland for manipulation. These banks also operate a large number of subsidiaries in tax havens to help illicit financial flows.

The modus operandi

•The leaked papers now and even earlier have exposed the international financial architecture and illicit financial flows. For instance, Panama Papers highlighted the template used in other tax havens. The Pandora Papers once again confirm this pattern.

•Tax havens enable the rich to hide the true ownership of assets by using: trusts, shell companies and the process of ‘layering’. Financial firms offer their services to work this out for the rich. They provide ready-made shell companies with directors, create trusts and ‘layer’ the movement of funds. Only the moneyed can afford these services.

•The process of layering involves moving funds from one shell-company in one tax haven to another in another tax haven and liquidating the previous company. This way, money is moved through several tax havens to the ultimate destination. Since the trail is erased at each step, it becomes difficult for authorities to track the flow of funds.

•It appears that most of the rich in the world use such manipulations to lower their tax liability even if their income is legally earned. The Panama Papers revealed the names globally of current and former leaders, politicians and public officials, billionaires, celebrities, sports stars, small and big businesses and professionals.

•Is it that the rich move their funds to tax havens because of high tax rates? Not really. Even citizens of countries with low tax rates use tax havens. Over the three decades, tax havens have enabled capital to become highly mobile, forcing nations to lower tax rates to attract capital. This has led to the ‘race to the bottom’, resulting in a shortage of resources with governments to provide public goods, etc., in turn adversely impacting the poor.

The specificity of the Papers

•The Pandora Papers, unlike the previous cases mentioned above, are not from any one tax haven; they are leaked records from 14 offshore services firms. The data pertains to an estimated 29,000 beneficiaries. The 2.94 terabytes of data have exposed the financial secrets of over 330 politicians and public officials, from more than 90 countries and territories. These include 35 current and former country leaders. Singer Shakira and former Indian cricket captain Sachin Tendulkar are among the celebrities and sport stars named in the investigation. Others include the King of Jordan, the Presidents of Ukraine, Kenya and Ecuador, the Prime Minister of the Czech Republic, former British Prime Minister Tony Blair and Russian President Vladimir Putin. Surprisingly there are few names from the United States, even though it has the largest number of billionaires.

•The very powerful who need to be onboard to curb illicit financial flows (as the Organisation for Economic Co-operation and Development, or the OECD is trying) are the beneficiaries of the system and would not want a foolproof system to be put in place to check it. With the current global financial architecture, black income generation cannot be checked.

•Revelations suggest that funds are moved out of national jurisdiction to spirit them away from the reach of creditors and not just governments. Many fraudsters are in jail but have not paid their creditors even though they have funds abroad.

•Strictly speaking, not all the activity being exposed by the Pandora Papers may be illegal due to tax evasion or the hiding of proceeds of crime. The authorities will have to prove if the law of the land has been violated. Each country will have to conduct its investigations and prove what part of the activity broke any of their laws. In the United Kingdom, the laws regarding financial dealings are very favourable to the rich and their manipulations. It is no wonder, in the recent past, that several Indian fraudsters have thus fled to London to escape the Indian law. A large number of rich Indians have bought property in the U.K. Thousands of foreigners buy or rent property in the U.K. because no questions are asked about the sources of funds; this has enriched the U.K. by $100 billion.

India’s investigations

•Many Indians have become non-resident Indians or have made some relative into an NRI who can operate shell companies and trusts outside the purview of Indian tax authorities. That is why prosecution has been difficult in the earlier cases of data leakage from tax havens. The Supreme Court of India-monitored Special Investigation Team (SIT) set up in 2014 has not been able to make a dent. The Government’s focus on the unorganised sector as the source of black income generation is also misplaced since data indicate that it is the organised sector that has been the real culprit and also spirits out a part of its black incomes.

•An interesting recent development (October 8) has been the agreement among almost 140 countries to levy a 15% minimum tax rate on corporates. Though it is a long shot, this may dent the international financial architecture. Other steps needed to tackle the curse of illicit financial flows are ending banking secrecy and a Tobin tax on transactions; neither of which the OECD countries are likely to agree to.

📰 Free power at a big price

The promise of free power to households cannot be sustained

•With elections around the corner in many States, political parties are competing with one another in promising free power, with the Aam Aadmi Party in the lead. Promises are for free power up to 300 units/month for households, free electricity for farmers and waivers of pending bills. Who stands to gain and lose from such promises?

Problems with free power

•Let us first look at subsidised electricity supply to agriculture. Supported by state subsidy, electricity tariff to agriculture is low in most States – often less than ₹1/unit – and is free in some States such as Punjab, Tamil Nadu and Karnataka. While this helps in ensuring food security and promoting rural livelihood, free power has many adverse impacts. There is inefficient use of electricity and water, neglect of service quality by the distribution companies leading to frequent outages and motor burn outs, and high subsidy burden on the State governments. Since nearly three-fourth of the agriculture connections in the country are unmetered, consumption estimates are often inflated by distribution companies to increase subsidy demand and project low distribution losses. Any metering effort faces resistance as it is perceived as the first step towards levying charges. The experience over the past 15 years highlights that revoking the decision to provide free power requires significant political will. Opting-out schemes are being made but do not seem to have uptake. Free power provision along with issues of metering make implementation of Direct Benefit Transfer difficult. All this leaves farmers, distribution companies and State governments frustrated.

•Providing subsidised low tariff for small consumers is necessary, considering the rising costs of electricity supply. The current cost is around ₹7-8/unit, which is not affordable for many small households. The situation is worse due to the economic slowdown and the pandemic. Basic requirements of a small household, such as lighting, fans, mobile charging and TV, require only about 50 units/month, which increases to about 100 units/month with a refrigerator. A low tariff — say, at half the cost of supply — can be justified for such consumers. The monthly consumption will be 200-300 units only if the household has high-end appliances like air-conditioners. But free power is already being provided for consumption up to 200 units/month in Delhi and Punjab.

•Due to free power in Delhi, the total state subsidy amounts to 11% of the total expenses. In Tamil Nadu, where free power is available to households, half of the total subsidy is earmarked for this. If there is further increase in number and consumption limits of free power, the subsidy burden on State governments will substantially increase. There are already issues with metering and billing of households. This will also increase, especially since distribution companies are likely to pay limited attention to low-revenue consumers. Roof-top solar and energy efficiency are good environment-friendly options for homes but providing free power to well-off households will discourage them from taking these up. The familiar, tragic story of free or low-tariff agriculture supply is going to play out in this segment too, with poor consumers becoming the ultimate losers.

Limiting free power beneficiaries

•Good power supply and service are necessary to improve quality of life and encourage productive activities. This in turn requires financially stable distribution companies and accountability measures for quality service for all, especially small and rural consumers. Free or low-tariff power is at best a short-term relief, which should be provided to those who desperately need it. A government which has the long-term interest of the people in mind should work to limit free power beneficiaries.

•There are some ideas which would help in this journey. A fixed rebate of up to ₹200/month for residential consumers can be provided in the electricity bill. The impact on small consumers will be significant, compared to big. As the rebate is delinked from consumption, distribution companies won’t have an incentive to inflate consumption. A similar rebate can be extended to home-based enterprises, which in most States pay high tariff. There can be additional rebates for adopting energy-efficient appliances like refrigerators, combined with State-level bulk procurement programmes to reduce the cost. The atmosphere of mutual mistrust between small consumers and distribution companies has to change. There should be quick resolution of arrears and one-time offers for settlements. If a bill amounts to more than three times that of previous bills, the distribution company should resolve it, without waiting for complaints. We hope that people question the wisdom of broad-brush promises such as free power, which cannot be sustained in the long run.

📰 Boost tourism through disruption

India needs a comprehensive disruptive strategy to tap the potential of the tourism and hospitality sector

•The Indian tourism and hospitality sector were adversely affected by the COVID-19 pandemic and saw substantial job loss. How do we pull this sector out of the COVID-19 trap?

•The Government of India recently announced financial support for more than 11,000 registered tourist guides/travel and tourism stakeholders. It also said once international travel resumes, the first five lakh tourists will be issued visas free of charge. In the pre-pandemic period too, many initiatives were adopted to promote the tourism sector, such as providing e-visas under various categories for people from particular countries, Global Media Campaigns, the Heritage Trail and the Paryatan Parv celebration.

•These measures are welcome. However, we need other long-term measures too, to tap the potential of this sector. What we need is disruptive innovation strategy which has the potential to create employment opportunities and increase revenue through private sector growth.

•The Startup India initiative has boosted entrepreneurship. However, the travel and tourism startups need a bigger push. Innovative startups should be encouraged. Support from the government for ideation and access to finance are required.

A sector with potential

•As per the estimates of the erstwhile Planning Commission, an investment of ₹1 million generates 78 jobs in the tourism sector. In the manufacturing sector, it results in just 18 jobs and in the agriculture sector, 45. The tourism sector, unlike many other sectors, can grow with smaller capital investments and that too without any industrial gestation period.

•There is need to train the workforce in India, so that workers can develop the skills to perform jobs in the travel and tourism sector. The growth in this sector has multiplier effects on income generation as it is employment-intensive with less capital investment. The India Skill Report, 2019, estimates the Indian workforce to increase to about 600 million by 2022 from the current 473 million in view of the fourth industrial revolution. The tourism sector will have a major role to play in providing employment opportunities.

•India improved its competitiveness in travel and tourism, from occupying the 65th position in 2013 and then the 40th position in 2017 and then the 34th position in 2019, as per the Travel and Tourism Competitiveness Report of 2019. But international arrivals have remained comparatively low, at around 9 to 10 million. Thus, there is a need to highlight the significance of public-private partnership to improve infrastructure and tackle the problem of end connectivity, which negatively affect the experiences of international travellers. The travel and tourism industry in India is also fragmented, hindering the ability of the sector to achieve its potential. This area needs to be nudged to embrace the digital revolution, so as to promote public-private initiatives, medium and small and sized enterprises’ growth while ensuring that India follows best practices from across the world.

Use of blockchain technology

•Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. There are examples worldwide on blockchain-based money solutions to kick-start local tourism industries, for instance. Blockchain enables the tracking of items through complex supply chains. Indian start-ups could also explore strategies along these lines. Blockchain ledger coupled with IOT devices for healthcare could have a positive impact on medical tourism.

•There are challenges too with the advent of disruptive technologies. The government and regulators need to collaborate and design innovative mechanisms to address the challenges of these technologies, for smooth growth of the sector.