INDIAN POLITY

1. MULLAPERIYAR: TECHNICAL PANEL FOR PREPARING EMERGENCY ACTION PLAN

THE CONTEXT: Recently, Kerala government has constituted a technical committee for preparing an Emergency Action Plan (EAP) for the downstream part of the Mullaperiyar dam in Idukki district.

THE EXPLANATION:

• Earlier Water Resources department issued orders creating the technical committee for preparing the EAP ”downstream of the Mullaperiyar dam (Kerala part) in line with the provisions of the Dam Safety Act, 2021 and guidelines issued by the Central Water Commission for developing EAP for dams.”

Mullaperiyar dam: The current dispute

The Supreme Court order came after a court-appointed supervisory committee had suggested 139.50 ft as the permissible level. The court has directed both states to go by the committee’s recommendation. Tamil Nadu had wanted the level increased to 142 ft as fixed by the Supreme Court in 2014, while Kerala wanted it within 139 ft as per a rule curve fixed until the end of the month.

ABOUT MULLAPERIYAR DAM

• It is a masonry gravity dam on the Periyar River in the Indian state of Kerala.
• It was constructed between 1887 and 1895 and also reached an agreement to divert water eastwards to the Madras Presidency area.
• The dam created the Periyar Thekkady reservoir, from which water was diverted eastwards via a tunnel to augment the small flow of the Vaigai River.
• It originates from the Sivagiri hills of Western Ghats and flows through the Periyar National Park.
• The main tributaries of Periyar are Muthirapuzha, Mullayar, Cheruthoni, Perinjankutti.
• According to a 999-year lease agreement made during British rule, the operational rights were handed over to Tamil Nadu.

Image Courtesy: The Hindu

Kerala’s stance:

The state governments of Kerala have pointed out the unfairness of the 1886 lease agreement and its validity itself. Its core issue is the safety of the Mullaperiyar Dam. Kerala wants to decommission the 100+ year old dam and construct a new one in its place, as not doing so will endanger many lives in the process.

• The Kerala Government stated that it did not object to giving water to Tamil Nadu but pointed out that raising its level would add more pressure than the dam could take. The dams, as pointed out by Kerala, were leaking and had many structural faults.
• In addition, the Kerala government has accused Tamil Nadu of adopting an “obsolete” gate operation schedule dating back to 1939.

Tamil Nadu’s Stance:

• For Tamil Nadu, the Mullaperiyar dam and the diverted Periyar waters act as a lifeline for Theni, Madurai, Sivaganga, Dindigul and Ramnad districts, providing water for irrigation and drinking, and also for the generation of power in Lower Periyar Power Station.
• Tamil Nadu argues that building a new dam is for gaining unfair tax revenues from developing states.
• Tamil Nadu is not able to access data that is in Kerala’s terrain. There is no road built, the power supply has not been restored, although Tamil Nadu has paid for it.

HEALTH ISSUES

2. WHO RELEASES FIRST-EVER LIST OF HEALTH-THREATENING FUNGI

THE CONTEXT: Recently, WHO published a report highlighting the first-ever list of fungal “priority pathogens” – a catalogue of the 19 fungi that represent the greatest threat to public health.

THE EXPLANATION:

• The WHO fungal priority pathogens list (FPPL) is the first global effort to systematically prioritize fungal pathogens, considering the unmet research and development (R&D) needs and the perceived public health importance. The WHO FPPL aims to focus and drive further research and policy interventions to strengthen the global response to fungal infections and antifungal resistance.
• It has been divided into three categories — critical, high and medium priority.
• This classification is based on the pathogen’s public health impact or emerging antifungal resistance risk. The WHO urges a geography-wise close reading of these lists is key for assessing and tackling the threat.

What is the need?

• Fungal pathogens are a major threat to public health as they are becoming increasingly common and resistant to treatment with only four classes of antifungal medicines currently available, and few candidates in the clinical pipeline. Most fungal pathogens lack rapid and sensitive diagnostics and those that exist are not widely available or affordable globally.
• The invasive forms of these fungal infections often affect severely ill patients and those with significant underlying immune system related conditions. Populations at greatest risk of invasive fungal infections include those with cancer, HIV/AIDS, organ transplants, chronic respiratory disease, and post-primary tuberculosis infection.
• Emerging evidence indicates that the incidence and geographic range of fungal diseases are both expanding worldwide due to global warming and the increase of international travel and trade. During the COVID-19 pandemic, the reported incidence of invasive fungal infections increased significantly among hospitalized patients. As the fungi that cause common infections (such as candida oral and vaginal thrush) become increasingly resistant to treatment, risks for the development of more invasive forms of infections in the general population are also growing.

INTERNATIONAL RELATIONS

3. WHY IS ASEAN HOLDING A SPECIAL MEETING ON MYANMAR?

THE CONTEXT: Foreign ministers from member countries of the Association of Southeast Asian Nations (ASEAN) held a discussion recently over intensifying crisis in Myanmar, 18 months after agreeing a peace plan with its military rulers.

THE EXPLANATION:

Why is the meeting happening?

• ASEAN’s peace effort is the only official diplomatic process in play, but it has so far been a failure, with the junta unwilling to implement a so-called “five-point consensus” that it agreed to with ASEAN in April 2021.
• ASEAN holds its annual summit next month (November 2022) and will be joined by numerous world leaders. The United Nations has backed the ASEAN plan, but international patience is wearing thin, with suspicion the generals are paying lip service and buying time to consolidate power and crush opponents before a 2023 election, knowing they could then control the outcome.
• For ASEAN to remain credible as a mediator, it may need to present a new strategy before the summit.

What is the consensus?

• The agreement includes an immediate end of hostilities, all parties engaging in constructive dialogue, allowing an ASEAN envoy to mediate and meet all stakeholders, and for ASEAN to provide humanitarian assistance.
• So far, the only success cited by ASEAN chair Cambodia has been allowing some humanitarian access, but that has been limited and conditional.

VALUE ADDITION:

ASIAN GROUPING:

The Association of Southeast Asian Nations is a regional organization which was established to promote political and social stability amid rising tensions among the Asia-Pacific’s post-colonial states. The motto of ASEAN is “One Vision, One Identity, One Community”. ASEAN Secretariat – Indonesia, Jakarta.

Genesis: Established in 1967 with the signing of the ASEAN Declaration (Bangkok Declaration) by its founding fathers. Founding Fathers of ASEAN are: Indonesia, Malaysia, Philippines, Singapore and Thailand.

Institution Mechanism: Chairmanship of ASEAN rotates annually, based on the alphabetical order of the English names of Member States.

ASEAN Summit: The supreme policy making body of ASEAN. As the highest level of authority in ASEAN, the Summit sets the direction for ASEAN policies and objectives. Under the Charter, the Summit meets twice a year.

ASEAN Ministerial Councils: The Charter established four important new Ministerial bodies to support the Summit.

• ASEAN Coordinating Council (ACC).
• ASEAN Political-Security Community Council.
• ASEAN Economic Community Council.
• ASEAN Socio-Cultural Community Council.

INDIAN AGRICULTURE

4. GENETIC ENGINEERING APPRAISAL COMMITTEE APPROVES COMMERCIAL CULTIVATION OF GENETICALLY MODIFIED MUSTARD

THE CONTEXT: The Genetic Engineering Appraisal Committee (GEAC) has yet again cleared the proposal for the commercial cultivation of genetically modified (GM) mustard.

THE EXPLANATION:

• The recommendation will now again go for the approval of the Environment Ministry. Though the GEAC had cleared the proposal in 2017, the Ministry had vetoed it and suggested that the GEAC hold more studies on the GM crop.
• A GEAC recent meeting allowed the environmental release of two varieties of genetically engineered mustard, so that it can be used for developing new parental lines and hybrids under the supervision of the Indian Council of Agriculture Research (ICAR). “The environmental release of mustard hybrid Dhara Mustard Hybrid (DMH-11) for its seed production and testing as per existing ICAR guidelines and other extant rules/regulations prior
• to commercial release”. The field demonstration studies on the effect of GE mustard on honey bees and other pollinators was also allowed to be conducted.

VALUE ADDITION:

Genetic Engineering Appraisal Committee (GEAC) :

• The Genetic Engineering Appraisal Committee (GEAC) functions in the Ministry of Environment, Forest and Climate Change (MoEF&CC).
• It is responsible for appraisal of activities involving large scale use of hazardous microorganisms and recombinants in research and industrial production from the environmental angle.
• The committee is also responsible for appraisal of proposals relating to release of genetically engineered (GE) organisms and products into the environment including experimental field trials.
• GEAC is chaired by the Special Secretary/Additional Secretary of MoEF& CC and co-chaired by a representative from the Department of Biotechnology (DBT). Presently, it has 24 members and meets every month to review the applications in the areas indicated above

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

5. TWO MORE INDIAN BEACHES ENTER THE COVETED LIST OF BLUE FLAG BEACHES

THE CONTEXT: The internationally renowned and coveted International eco-label “Blue Flag” has been accorded to two new beaches — Minicoy Thundi Beach and Kadmat Beach — both in Lakshadweep.

THE EXPLANATION:

• This is yet another acknowledgement of India’s commitment to protect and conserve the pristine coastal and marine ecosystems through holistic management of the resources. With this, there are now twelve beaches that have earned the Blue Flag designation.
• One of the Lakshadweep archipelago’s most beautiful and unspoiled beaches, Thundi Beach features white sand and turquoise lagoon water. Both swimmers and tourists will find it to be a heaven. In particular, cruise visitors who come to the island for water activities enjoy the Kadmat Beach.
• With its pearl white beaches, azure lagoon waters, comfortable atmosphere, and welcoming residents, it is a heaven for nature lovers. Both beaches have personnel assigned to beach upkeep and cleanliness as well as to swimmer security.

ABOUT BLUE FLAG BEACHES:

• The Blue Flag certification is awarded by a non-profit organization called the Foundation for Environmental Education (FEE).
• The Blue Flag programme was started in France in 1985 and in areas out of Europe in 2001.
• To qualify for the Blue Flag certificate, a series of stringent requirements or criteria should be satisfied. The criteria are environmental, educational, access, and safety-related. There are a total of 33 criteria.
• The program promotes sustainable development in freshwater and marine areas through four main criteria: water quality, environmental management, environmental education, and safety.
• The certification is awarded to beaches, marinas (which are small ports or harbours designed for pleasure yachts or boats), and sustainable boat tourism operators in FEE member countries.
• The Blue Flag is an eco-label and blue flag beaches should provide clean and hygienic bathing water, along with basic infrastructure for tourists.
• Operators of beaches or boating tourism that have been awarded the ‘blue flag’ are allowed to display the blue flag logo.
• This is awarded to local authorities or private operators only of the member countries.
• Blue Flag also advocates against inequality, disparity, unemployment, depletion of natural resources, health and environmental threats, pollution as well as general environmental degradation.
• Blue Flag is accorded by the international jury composed of eminent members – United Nations Environment Programme (UNEP), United Nations World Tourism Organisation (UNWTO), Denmark-based NGO Foundation for Environmental Education (FEE) and International Union for Conservation of Nature (IUCN).
• There are more than 4000 blue flag beaches worldwide with Spain leading the number of beaches per country with this certification.

As of October 2022, Twelve Beaches in India have been awarded the prestigious certification, namely:
1. Golden Beach – Odisha
2. Shivrajpur Beach – Gujarat
3. Kappad Beach – Kerala
4. Ghoghla Beach – Diu
5. Radhanagar Beach – Andaman and Nicobar
6. Kasarkod Beach – Karnataka
7. Padubidri Beach – Karnataka
8. Rushikonda Beach – Andhra Pradesh
9. Kovalam Beach – Tamil Nadu
10. Eden Beach – Puducherry
11. Thundi Beach – Lakshadweep
12. Kadmat Beach -Lakshadweep

PRELIMS PERSPECTIVE

6. WHAT IS NIHONSHU?

THE CONTEXT: The Embassy of Japan applied for a GI tag for nihonshu, also known as Japanese sake.

THE EXPLANATION:

• Recently, Japan sought a Geographical Indication (GI) tag for the first time in India. The Japanese Embassy in New Delhi applied for a GI tag for nihonshu (Japanese sake) at the Geographical Indication Registry in Chennai.
• Japanese sake is a valuable beverage made from the fermentation of rice. It is made using three main raw materials – rice, a type of fungal spore known as koji-kin, and water.
• The rice and Koji used in the beverage must originate from Japan. It is made using an alcoholic fermentation method called parallel multiple fermentation.
• Other tasks involved in its creation include koji making, starter culture-making, mash-making, pressing, heat sterilization, and bottling. It is consumed mainly during special occasions like festivals, weddings, or funerals, besides being used for daily consumption. This alcoholic beverage is an integral part of Japanese culture and lifestyle.

Background

• Since the Japanese economy was historically based on rice, it was partly used as a medium of exchange before the constitution of the monetary economy during the Meiji period (1869-1912). Hence, nihonshu production was fully under the control of the government.
• With the production of Japanese sake becoming industrialized during the Edo period (1603-1868), those having special licenses to produce nihonshu hired farmers during the agricultural off-season and gained a reputation as craftsmen. This resulted in the establishment of the hierarchical Toii system, similar to the apprenticeship and guild system.
• Toii (the person responsible for brewing the sake) has full authority for the production of nihonshu at breweries. Toii is also involved in the training of apprentices and passing on the traditional brewing technique to the next generation.

About GI tag

The GI tag is given to those products with specific geographical origins and characteristics that are closely associated with the geographical origin. In India, a GI tag is granted based on the provisions of the Geographical Indications of Goods (Registration and Protection) Act, 1999.

1. Punya as GPS orients us to right directions READ MORE
2. The human endeavour READ MORE

1. An unkind hike: Amid sticky inflation, small savings rates should have been pegged higher READ MORE
2. The climate crisis and the urgent need for global cooperation READ MORE
3. Rising temperatures hold a dire warning READ MORE

1. Bridging the gender digital divide to get women into the workforce READ MORE
2. POVERTY MAKING KIDS DROP OUT OF SCHOOLS READ MORE
3. ‘Women, Life. Freedom’ READ MORE

1. Protecting competition: The Competition Commission of India’s action will open up the Android space READ MORE
2. After Union govt, states obfuscating budgets. India needs true bond market more than CAG audits READ MORE
3. Rule of Law Globally Under Assault READ MORE
4. Supreme Court’s exasperation against hate speech is just the tip of the iceberg READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. Bats evicted from prehistoric Manipur cave for tourism: Study READ MORE
2. ISRO to boost NavIC, widen user base of location system READ MORE
3. India’s imports from China surge to record high in first nine months of year READ MORE
4. Genetic Engineering Appraisal Committee approves commercial cultivation of genetically modified mustard yet again READ MORE
5. Liquidity in system tightens on rising credit demand, RBI forex intervention READ MORE
6. Understanding GM mustard: what is it, and how has it been achieved? READ MORE
7. Anti-trust cases against Google, how regulator decided fine READ MORE
8. Biotech regulator approves GM mustard, now Centre to take a call READ MORE

Main Exam

GS Paper- 1

1. Colonialism and its discontents today READ MORE
2. ‘Divide and rule’ does not work Making sense of an outreach to Pasmanda Muslims READ MORE
3. ‘Women, Life. Freedom’ READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

1. Protecting competition: The Competition Commission of India’s action will open up the Android space READ MORE
2. After Union govt, states obfuscating budgets. India needs true bond market more than CAG audits READ MORE
3. Rule of Law Globally Under Assault READ MORE
4. Supreme Court’s exasperation against hate speech is just the tip of the iceberg READ MORE

SOCIAL ISSUES

1. Bridging the gender digital divide to get women into the workforce READ MORE
2. POVERTY MAKING KIDS DROP OUT OF SCHOOLS READ MORE

INTERNATIONAL ISSUES

1. Pakistan’s exit from FATF Grey List and India’s challenge READ MORE
2. Xi envisions China-centric world order READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. Daylight data robbery READ MORE
2. Income is not the right gage of poverty READ MORE
3. PM Kisan’s direct transfers can help food distribution. But there are four challenges READ MORE

ENVIRONMENT AND ECOLOGY

1. An unkind hike: Amid sticky inflation, small savings rates should have been pegged higher READ MORE
2. The climate crisis and the urgent need for global cooperation READ MORE
3. Rising temperatures hold a dire warning READ MORE

SECURITY

1. Why development projects are critical for rooting out extremism READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. Punya as GPS orients us to right directions READ MORE
2. The human endeavour READ MORE

Questions for the MAIN exam

1. ‘The battle against internal terror cannot be fought without the help of the people’. Discuss, why development projects are critical for rooting out extremism?
2. How far do you agree with this view that recent supreme court concern against hate speech is good move, but this is the administration and executive that can work effective against the propagation of hate? Justify your view.

QUOTATIONS AND CAPTIONS

• Instability is the repetition of tactics without a strategy.
• The Global Hunger Index exposes the falsity of poverty estimates that do not take into account the true rise in cost of living.
• Grazing by mammalian herbivores can be a climate mitigation strategy.
• The quest for Atmanirbharta has to be an ongoing and long-term endeavour that must take due note of its adverse impact on the military’s short and mid-term operational effectiveness.
• Water resources are essential for economic development. India has 4 per cent of global water resources for its use. India’s water resources are under immense pressure.
• India needs to embark on export-led growth to create high-income jobs with a big role of MSMEs.
• The Government should identify better alternatives and encourage innovation that can eventually lead to the betterment of public health. It is essential for the government to take on a multidimensional and unprejudiced stance in adopting harm reduction alternatives for the betterment of its citizens.
• Consensus among political parties is needed to avert the financial disaster that freebies will lead to in the long run.
• Fostering peaceful coexistence of the diverse sects and sections of society is crucial for India’s image globally, too, as its voice gains credence in diplomatic and geopolitical affairs.
• The Supreme Court’s intervention in the matter is welcome. Now, political and legal action must follow in case of hate speech.
• Development projects bolster internal security and help policing become more focused and result-oriented, ensuring a government-people bond.
• Administrative bias on the one hand and the spread of social prejudice on the other cannot be allowed to vitiate the national mood. the Court must do everything possible to nudge authorities to enforce the law against the propagation of hate.

50-WORD TALK

• Appointing a new career-diplomat to run the US embassy in India is just a band-aid for a festering wound. Thirty-nine US embassies—including Saudi Arabia, the UAE, and Brazil—have no ambassador, because political feuding has blocked nominees. Leadership summits can’t replace effective ambassadors who manage everyday irritants and challenges.
• AAP chief Arvind Kejriwal’s demand for images of deities Lakshmi and Ganesh on currency notes has just raised the bar for competitive Hindutva politics. From being called BJP’s ‘B-team”, he’s now out to outdo BJP. But Delhi CM should leave our gods and goddesses out of temporal issues like economy.

Things to Remember:

• For prelims-related news try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
• Whenever any international place will be in news, you should do map work (marking those areas in maps and exploring other geographical locations nearby including mountains, rivers, etc. same applies to the national places.)
• For economy-related news (banking, agriculture, etc.) you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
• For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the mains point of view will be covered in ED.
• Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.

[WpProQuiz 361]

THE CONTEXT: Unprecedented fall in GDP in the first quarter of current financial year has brought back the importance of fiscal policy into limelight. With monetary policy not producing the desired result; consumption and private investment expenditure remaining subdued, the onus of reviving the economy rests on the fiscal policy. The expansionary fiscal policy (huge government expenditure or a cut in tax rate) can bring about a visible and concrete change in the status of Indian economy.

The government is expected to shun the path of fiscal orthodoxy and make a meaningful expenditure to arrest the decline in GDP or income. Fiscal stimulus seems to be the need of the hour.

The present article analyses the rationale and feasibility of fiscal support that the economy needs to mitigate the impact of covid-induced recession.

REASONS FOR A FISCAL BOOST

• The unprecedented 23.9% decline in the gross domestic product (GDP) in the first quarter of 2020–21, mainly due to the stringent lockdown enforced after the COVID-19 outbreak, is the main reason demand for a massive fiscal stimulus has arisen.
• Taking into consideration the activities in the informal sector of the economy, the decline could be much larger than reported. This is because quarterly estimation of GDP does not capture informal sector which accounts for almost half of our GDP.
• The largest decline was in manufacturing, construction, and trade, hotels, transport, and communication where output fell by 39.3%, 50.3% and 47%, respectively. These three segments ­account for almost three-fourths of the total workers employed outside of agriculture and the sharp fall in output would have wiped out millions of jobs.
• Similarly, the expenditure-side numbers indicate a sharp fall in both consumption and investments. While private consumption, the biggest component, has declined by almost a quarter, the gross fixed capital formation or investment has almost halved. This urgently necessitates huge government stimulus.
• The economy had already slipped into a crisis even before the pandemic struck. In fact, the quarterly GDP has steadily decelerated for nineth consecutive quarters and brought down growth rates from a high of 8.1% in the last quarter of 2017–18 to a low of -23.9% in the first quarter of 2020-21. And, given the current trends, it can now be safely assumed that the GDP will shrink substantially, maybe even by double digits, in the fiscal year 2020–21.
• Historically, India’s GDP has shrunk four times since the early 1950s, with the sharpest and the most recent one being in 1979–80 when GDP declined by 5.2%. But, the current decline is both much more extensive and severe. There is a simultaneous fall in consumption, investments, and exports and only concerted and radical interventions by the government can ensure that the growth bounces back closer to double digits.
• The pandemic has also exposed many lacunae in the economy, especially in the health and social security network. very few informal workers in the economy, who account for around 92.4% of the total workforce, have any social security benefits like paid leave or other non-wage benefits that will help them tide over a crisis.
• International commitments towards SDG should also be reasons for enlarging government expenditure.

FISCAL RESPONSE SO FAR

The government’s response to the pandemic so far has been slow and inadequate.

Despite the havoc heaped by the pandemic, on both business and employment, and the millions of migrants fleeing to the safety of their villages, the government delayed any substantial relief till the third week of May. And, though the stimulus package announced in May 2020 was as large as `20 lakh crore, or around 10% of the GDP, most measures were focused on monetary policy interventions. Fiscal support was only a little more than 1% of the GDP. The government clung on to fiscal orthodoxy even as the economy suffered one of the biggest hits ever.

So, the burden of recovery was shifted largely on to the central bank, which steadily cut rates and pumped up credit flows to productive sectors. But, as consumer inflation steadily rose to exceed the central bank’s targets, mainly due to high taxes on fuel and bottlenecks in food supply, the Reserve Bank of India was soon forced to pause the rate cuts.

Many economists and commentators have mentioned that Government announcement on the stimulus of Rs 20 lakh crores tries to resolve only supply-side issues. There is nothing to bring in an additional demand.

INDIA’S FISCAL STIMULUS IS INADEQUATE AS COMPARED WITH DEVELOPED AS WELL AS ITS DEVELOPING PEERS

Across the world, country stimulus responses vary from 1 percent of GDP to 12 percent of GDP as of now. Rich countries seem to have announced larger stimulus packages (5 to 10 percent) and poor countries have announced smaller packages (2 to 5 percent). In case of India, it is a bit more than only 1 per cent of its GDP.

DO WE HAVE A FISCAL SPACE?

There is no denying the fact that the fiscal space with the government to deal with recession is limited. Corporate tax has already been cut and, now, with growth slumping into negative territory, the ability of the government to raise tax revenue in coming months would further get hampered.

In this dire situation, the increased expenditure on fiscal stimulus can be dealt with by raising market borrowings. India has already raised its estimated fiscal deficit from 7.8 lakh cr to 12 lakh cr.

DOES THE CENTRAL GOVERNMENT HAVE MORE CAPACITY TO BORROW?

Yes. The following points illustrate this;

• Surplus liquidity and limited private credit demand will ensure that government bond auctions remain well subscribed.
• India is running a current account surplus. That’s compounded by strong capital flows. So we have the pool of savings. Banks don’t want to lend to the real economy. There is a presumption here that those resources will ultimately be channelled into government bonds.
• In addition, the government can choose to roll-over the treasury bills issued in the first half of the year. The government has borrowed and issued close to Rs 5 lakh crore in treasury bills already. One way the government can finance more of its deficit is by rolling over those treasury bills.

Eventually, the extent to which the government can allow its debt burden to build up during the pandemic will depend on the expected trend growth in the economy.

If India’s growth is at 7% over the next five years, India can absorb a much larger stimulus this year and in the medium term, debt-to-GDP come down. If India’s trend growth settles at 5%, even a muted fiscal response this year will result in debt to GDP rising enormously. So we should not lose sight of the fact that trend growth matters a lot.

WAY FORWARD:

Government can carve out more fiscal space to boost spending without any downside risks. It must release funds through a multi-year asset sale programme.The public authorities in India have a good amount of shares in public sector undertakings (PSUs), public land, and foreign exchange reserves. There is scope and anyway a need for reducing public holdings of these assets.

Disinvestment:

The market return on investments in PSUs is very low and it is doubtful if even the social returns are large; there is a rationale for disinvestment or privatisation (Dutta 2010). Indeed, the GOI has been engaged in a disinvestment programme for quite some time.

Monetising Public Land:

public authorities in India hold excess land; 13 major port trusts have 100,000 hectares of land, the International Airports Authority of India has 20,400 hectares of (additional) land, the Ministry of Defence has 283,280 hectares of land, and the Indian Railways has 43,000 hectares that is valued roughly at a whopping Rs. 3 trillion, which is significantly more than the true fiscal component of the big financial package of about Rs. 21 trillion announced in May 2020. So, here again, we have a way to mobilise funds by selling excess land – more so when the market price of land in India is more than the fundamental value of land.

Forex Reserve:

Finally, let us come to the foreign exchange reserves with the RBI. These stand at US$ 560 billion or Rs. 42.5 trillion as on 30 October 2021 (this is about 2 times the size of the relief package announced by the GOI in May 2021). It has been argued that these reserves can be reduced significantly without endangering macro-financial stability.

All this suggests that the public authorities have considerable fiscal space if we consider their assets.

CONCLUSION:

Nobody is advocating that India does the kind of stimulus that the UK or Germany or other developed countries are able to adopt, because we don’t have the kind of hard currency that they have. However, a meaningful demand-driven expenditure could be made to turn the course of the economy.

• Basic income in terms of cash transfer to a selected group of people, like women, will go a long way in addressing the demand side .
• Government should spend on creation of social and economic infrastructure which will not only generate employment abut also crowd-in private investment.
• Building an efficient social security network to protect all workers from economic instabilities.
• Rolling out programmes to scale up medical coverage across the country to ensure better protection from future pandemics.

Clearly, the government’s efforts to provide relief and revive the economy have now reached a dead end, and the only way to kick-start a steady recovery is to launch a massive fiscal stimulus package to stem the fall and ensure a quick recovery.