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Every state has played a “crucial role” in India’s fight against Covid and the country’s federal structure and cooperative federalism have emerged as a “model for the world” during the pandemic, Prime Minister Narendra Modi said.
Speaking at the NITI Aayog’s Governing Council meeting, the Prime Minister also gave credit to state governments which, he said, focused on grassroots delivery of public services to the people through cooperation across political lines.
Every state played a crucial role according to its strength and contributed to India’s fight against Covid. This led to India emerging as an example for the developing nations to look up to as a global leader,” the Prime Minister said, according to a press release issued by NITI Aayog.
Niti aayog meet, new delhi news, PM, CMs, states and UTs Prime Minister Narendra Modi and other Ministers and Chief Ministers of States/UTs at the 7th Governing Council meeting of NITI Aayog at Rashtrapati Bhawan Cultural Centre, in New Delhi, Sunday.
This was the first physical meeting of the Governing Council since the onset of the pandemic, with the 2021 meeting held via video conferencing.
The meeting was attended by 23 Chief Ministers, three Lieutenant Governors and two Administrators, and Union Ministers. The Chief Ministers of Bihar, Telangana, Delhi, Tamil Nadu, Karnataka and Mizoram, the L-G of Puducherry, and the Administrator of Chandigarh, did not attend the meeting.
Telangana CM K Chandrashekhar Rao had said that he would skip the meeting to protest “the Centre’s attitude”, and objected to the Prime Minister “dismissing welfare schemes as freebies”. Karnataka CM Basavaraj Bommai had cancelled his trip to Delhi for the meeting after testing positive for Covid.
Satellites ‘no longer usable as ISRO’s first SSLV develops glitch (Page no. 3)
(GS Paper 3, Science and Tech)
ISRO’s Small Satellite Launch Vehicle (SSLV) lifted off from the spaceport in Sriharikota. But almost immediately, something went wrong. Minutes after launch ISRO chairman S Somanath said that the SSLV D1 mission suffered “data loss” at a terminal stage.
And not long after that, ISRO announced that the two satellites deployed by the launch vehicle would not be usable. Here is what went wrong.
All stages performed as expected. The first stage performed and separated, the second stage performed and separated, the third stage also performed and separated, and in the terminal phase of the mission, some data loss is occurring.
We are analysing the data and we will come back on the status of the satellites as well as the vehicle performance soon.
SSLV-D1/EOS-02 Mission update: SSLV-D1 placed the satellites into 356 km x 76 km elliptical orbit instead of 356 km circular orbit.
Satellites are no longer usable. Issue is reasonably identified. Failure of a logic to identify a sensor failure and go for a salvage action,” said the space agency in a tweet.
The mechanism put in place to identify a sensor failure did not work and thereby, the launch vehicle failed to initiate a salvage action that would have made deviations.
The rocket was carrying EOS-02 which is an Earth observation satellite. It was also carrying AzaadiSAT, a student satellite.
It went on to complete all stages of the lift-off successfully until the terminal stage, which is where ISRO scientists observed the “data loss”.
After that, SSLV placed the satellites in an elliptical orbit, instead of a circular orbit, rendering them, “no longer usable.”
Govt. and Politics
Jal Jeevan mission: A Maharashtra village holds a lesson for the rest of India (Page no. 7)
(GS Paper 2, Polity and Governance)
Pimpalghar-Ranjnoli, a village situated in the industrial belt of Thane district’s Bhiwandi tehsil along the Mumbai-Nasik highway, has used funds under the Jal Jeevan Mission (JJM) to ensure that all 842 families in the village get tap water connection. In other words, each of the 5,644 residents of the village has access to 55 litres of water every day.
Under the JJM, the central government, in partnership with states, aims to provide potable water in adequate quantity and prescribed quality on a long-term basis to every rural household, including in tribal areas of the country, through tap water connection by 2024.
With industries mushrooming all around it, Pimpalghar-Ranjnoli has been a preferred residential destination for labourers from different parts of the country. But as more and more labourers came to the village, water demand rose sharply.
It was necessary. One cannot live without water. Women benefited the most due to this initiative. Earlier we used to spend half a day in ensuring water availability for the household chores. But that is all a thing of the past now.
Even during the Covid-19 pandemic, the village used its funds — around Rs 7 to 8 lakh — to lay down the pipelines.
What is equally remarkable about Pimpalghar-Ranjnoli’s achievement is the fact that the village has effectively ensured that residents pay the user charges for tap water.
Often, such initiatives and success stories fail because local authorities fail to bring about a discipline where people pay the required user charges. In the absence of such user charges, many similar initiatives become unsustainable.
Each connection gets a water bill of Rs 100 per month. According to G L Chowdhari, the Village Development Officer of Pimpalghar-Ranjnoli, the village has a 90 per cent bill payment record.
Village gets a bill of around Rs 25,000 to Rs 27,000 from BMC every year and we try to pay the full amount without any dues. The village gets its water from pipelines running through villagers’ fields that take water to Mumbai from dams in Thane district.
Explained
Why food inflation may ease faster than expected (Page no. 9)
(GS Paper 3, Economy)
The global economy is “past peak inflation”, according to Elon Musk. The CEO of Tesla believes “inflation is going to drop rapidly” and prices of commodities used in the manufacture of electric vehicles “trending down in six months”.
What he’s projecting is already happening in food. The UN Food and Agriculture Organization’s Food Price Index (FPI) averaged 140.9 points in July, 8.6% down from its previous month’s level and marking the steepest monthly drop since October 2008.
The FPI – a trade-weighted average of international prices of key food commodities over a base period value, taken at 100 for 2014-16 – hit an all-time-high of 159.7 points in March, the month that followed the Russian invasion of Ukraine on February 24. The latest index reading is the lowest since the 135.6 points of January, before the still-ongoing war.
Between March and July, the FPI has cumulatively declined by 11.8%. This has been led by vegetable oils and cereals, whose average prices have fallen even more, by 32% and 13.4% respectively. The vegetable oil price index has been particularly volatile, soaring from a Covid demand crash-induced low of 77.8 points in May 2020 to 251.8 in March 2022, before easing to 171.1 in July (see chart).
There were four major supply-side shock drivers of the great global food inflation from around October 2020: weather, pandemic, war and export controls.
The weather-related shocks included droughts in Ukraine (2020-21) and South America (2021-22), which especially impacted sunflower and soyabean supplies, and the March-April 2022 heat wave that devastated India’s wheat crop.
The pandemic’s supply-side impact was felt the most in Malaysia’s oil palm plantations, where harvesting of fresh fruit bunches is done mainly by migrant labourers from Indonesia and Bangladesh.
As Covid-19 resulted in many of them flying back and no new work permits being issued, output from the world’s second largest palm oil producer and exporter fell.
The Russo-Ukrainian War led to supply disruptions from the two countries that, in 2019-20 (a non-war, non-drought year), accounted for 28.5% of the world’s wheat, 18.8% of corn, 34.4% of barley and 78.1% of sunflower oil exports.
Export controls were first imposed by Russia in December 2020, prompted by domestic food inflation fears arising from record hot temperatures. Shortage concerns at home triggered similar actions in palm oil by Indonesia (the world’s No. 1 producer-cum-exporter) and in wheat by India during March-May 2022.
ISRO’s SSLV hopes, setback (Page no. 9)
(GS Paper 3, Science and Tech)
It was one of the most keenly-awaited launches of recent years. The maiden flight of the SSLV or the Small Satellite Launch Vehicle, India’s newest addition to its rocket fleet, had been postponed several times in the last three years. The pandemic played its role, but there were delays from ISRO’s side as well.
The rocket finally embarked on its first flight, carrying two satellites, including an earth observation micro-satellite called EOS-02. After a successful lift-off and separation of its three stages, the flight deviated from its script.
ISRO initially said there was data loss in the final stages of the flight. Later in the afternoon, the space agency elaborated saying that the rocket placed “the satellites into 356 km x 76 km elliptical orbit instead of 356 km circular orbit”, adding that the “satellites are longer be usable”.
This less-than-perfect flight of the SSLV puts a cloud of doubt over the new rocket that is being billed to become ISRO’s main launch vehicle in the coming years.
It is a rocket that can be assembled within 72 hours by a team of just 5-6 people. A rocket that costs at least one-tenth of the those currently in use. A rocket that can enable a space launch from India every week.
And, a rocket that caters specifically to the small and micro satellites that constitute over 90 per cent of all satellites being launched these days.
There is a reason why it is considered a gamechanger, and is seen as something that can truly transform the Indian space sector. But Sunday’s flight has the potential to delay the timelines further.
For a very long time, small satellites — anything weighing between 5 and 1,000 kg — have had to remain content with hitching a ride to space on rockets commissioned to carry some other, larger satellites.
The timeline of the launch used to be dictated by this larger, primary, satellite, whose interests would take precedence. But with more and more businesses, government agencies, even universities and laboratories beginning to send satellites — nearly all of them falling in this category of small satellites — to space, the constraints of a piggyback ride have started to hurt.
In fact, the demand for the launch of small satellites has increased at a rapid pace in the last eight to ten years, thanks to the ever-growing need for space-based data, communication, surveillance, and commerce. Estimates suggest that tens of thousands of small satellites would be launched in the next ten years.
Satellite builders and operators, therefore, do not have the luxury to wait for months to get a berth on a rocket, or pay the very high travel costs. Increasingly, organisations are creating a constellation of satellites in space. Projects like Starlink of SpaceX or OneWeb are putting together a constellation of hundreds of satellites.
What is Lumpy Skin Disease, the viral illness spreading among cattle (Page no. 9)
(GS Paper 2, Health)
Over the last few weeks, nearly 3,000 cattle have died in Rajasthan and Gujarat due to a viral infection called the Lumpy Skin Disease (LSD) that has spread across the states. Gujarat Chief Minister Bhupendra Patel visited the affected areas in Kutch to review the situation.
On July 27, the Gujarat government banned the transport of livestock out of 14 affected districts. Around 11 lakh cattle have been vaccinated against the disease, and the National Dairy Development Board has supplied 28 lakh doses of goat pox vaccine to Gujarat, Rajasthan and Punjab, bought from a private entity called Hester Biosciences. A toll-free helpline – 1962 – has also been activated to guide cattle-herders and dairy farmers to tackle the disease.
According to a report by GAVI, the Global Alliance for Vaccines and Immunisation, the Lumpy Skin Disease (LSD) disease is caused by a virus called the Capripoxvirus and is “an emerging threat to livestock worldwide”. It is genetically related to the goatpox and sheeppox virus family.
LSD infects cattle and water buffalo mainly through vectors such as blood-feeding insects. Signs of infection include the appearance of circular, firm nodes on the animal’s hide or skin that look similar to lumps.
Infected animals immediately start losing weight and may have fever and lesions in the mouth, along with a reduced milk yield. Other symptoms include excessive nasal and salivary secretion. Pregnant cows and buffaloes often suffer miscarriage and in some cases, diseased animals can die due to it as well.
This is not the first time LSD has been detected in India. The disease has been endemic in most African countries, and since 2012 it has spread rapidly through the Middle East, Southeast Europe and West and Central Asia. Since 2019, several outbreaks of LSD have been reported in Asia. In May this year, Pakistan’s Punjab also reported the deaths of over 300 cows due to LSD.
In September 2020, a strain of the virus was discovered in Maharashtra. Gujarat too has reported cases over the last few years sporadically, but currently, the point of concern is the number of deaths being reported, and whether vaccination catches up to the rate at which the disease is spreading.
According to the World Organisation for Animal Health (WOAH), of which India is a member, mortality rates of 1 to 5 per cent are considered usual. The disease is not zoonotic, meaning it does not spread from animals to humans, and humans cannot get infected with it.
Editorial Page
An orderly exit (Page no. 10)
(GS Paper 3, Economy)
In its latest meeting, the members of the monetary policy committee voted unanimously to increase the policy repo rate by 50 basis points to 5.4 per cent. This was in line with the RBI’s views on the need for pre-emptive action and a front loading of rate hikes to quell the second-order effects in the face of repeated supply shocks.
The repo rate was 5.15 per cent in February 2020. So, in effect, the RBI’s policy has not only been normalised, but has actually tightened compared to the pre-pandemic level. Even the lower bound of the rate corridor, the Standing Deposit Facility (SDF) rate, at 5.25 per cent is now above the pre-pandemic repo rate.
While the policy rate hike was widely expected, more anticipated were the MPC and the RBI Governor’s forward guidance on the trajectory of policy — on both monetary policy and liquidity instruments. So, how do we see monetary policy evolve over the rest of the year and beyond?
The first signal was on the stance of policy. Given the front loading of rate hikes, retaining the policy stance rather than shifting to “neutral” was a bit surprising.
The reasons for one MPC member differing on this will become clearer after the minutes of the meeting are released. However, reading between the lines, this retention of stance might be interpreted as being a bit more hawkish than “neutral”, which implies that rates might be both increased or cut, depending on economic conditions.
This might have been construed as a signal that rates had risen to a “neutral” point. The governor reinforced this by emphasising that with the growth momentum expected to be resilient, monetary policy should “persevere further in its stance … to ensure inflation moves closer to the target of 4 per cent”. Hence, further tightening is on the cards.
First, now that policy is largely normalised, the pace of tightening is likely to moderate. The urgency of aggressive rate hikes and tightening of liquidity has somewhat moderated, although risks remain.
Going forward, more conventional increases of 25 basis points are likely. Second, RBI’s research suggests that the “real natural rate” — the rate at which policy is neither loose nor tight – is 0.8-1 per cent.
This operative interest rate is usually the three-month T-bill rate, which in “normal” times averages 10-15 basis points above the repo rate.
Considering that monetary policy is calibrated over a one-year horizon and using the RBI’s inflation forecast of 5 per cent for the first quarter of 2023-24, the “natural” repo rate will be around 5.85 per cent.
Considering the tightening phase of the current cycle, the terminal repo rate — the level at which monetary policy will pause — is likely to be around 6.25 per cent.
But all this will depend on evolving inflation and growth conditions. The RBI’s growth projection for 2022-23 has been retained at 7.2 per cent, with growth frontloaded in the first half. CPI inflation is still forecast to average 6.7 per cent.
Idea Page
The wrong diagnosis (Page no. 11)
(GS Paper 3, Economy)
One of the stylised beliefs in India, and amongst some leading economic commentators both in India and abroad, is that our tax/GDP ratio is lower than what it “should” be.
Many ills are laid at the door of this hypothesised low tax/GDP ratio. It is conjectured that we have a lower rate of investment, a higher fiscal deficit, and lower GDP growth — and all because the tax ratio is too low.
There can be reasonable doubts about the presumed links, an issue on which I have relatively little to say. For the record, I have long argued that there is no empirical evidence to indicate a causal relationship between tax ratios or fiscal deficits and growth — or even a statistical relationship. There is, however, a well-established relationship between investment and growth.
Proceeding, there are three important fiscal variables in the economy — taxes, fiscal deficit, and debt. They are inter-related — lower tax revenue means higher fiscal deficit, for the same level of expenditures, and higher deficit means higher debt. All three, directly or indirectly, are assumed to affect growth and/or inflation.
The relationships are complicated, and have provided grist for a number of PhDs, with many more to come. Our goal in this article is to look at the first of the trinity — the tax/GDP ratio (hereafter Xtax). We look at Xtax in an uncomplicated way, just facts, and interpret the evidence.
Two common observations on Xtax for India — first, it is low at around 10-11 per cent of GDP and it has stayed at close to that level for the last 20 years. In 2019, it hit a decade low of 10 per cent of GDP, the same as in 2014.
Second, in comparison with our peers, it is much lower. Hence, logic dictates that we should strive to increase Xtax.
But which country should we compare India with? A common observation (surprisingly also offered by economic experts) is to look at the tax-GDP ratio in G20 countries.
This is the beginning of a set of misinterpretations committed either knowingly, or unknowingly. Because simple logic dictates that tax collected is a function of the average level of per capita income.
Per capita income in the G20 varies from around $2,100 (India) to around $65,000 (US). But before going “there”, there is a more fundamental issue that needs to be resolved.
The 10-11 per cent figure for India is the tax/GDP ratio for taxes administered at the central level. Taxes in India, as in many other large, especially federal, countries, are collected at both a federal and state level.
And many economies have local (municipal) taxes as well. The tax collected is the sum of all these taxes. That is the Xtax that needs comparison.
Ring Fence PMLA from executive (Page no. 11)
(GS Paper 3, Internal Security)
The PMLA judgment has resulted in stellar commentary by some very credible voices. A core concern that merits greater attention is the invidious threat to democracy that the agency poses post this Supreme Court judgment. This is not a presumption but a stark reality.
Consider the following: In August of last year, the Supreme Court asked the Narendra Modi government how many legislators were being investigated under the PMLA.
Of the 122 sitting and ex-legislators, barely three names belonged to the ruling BJP. Does this represent an absence of offenders in the ruling party? Of course not. What it represents is the selective misuse of the agencies.
A similar number of cases is pending with the CBI against leaders of the Opposition. Consider also the cases filed by the Enforcement Directorate (ED) and CBI that go into cold storage as soon as the leaders in question join the ruling party.
Innumerable examples stand out in West Bengal, Assam, Arunachal Pradesh, Maharashtra, Andhra Pradesh, Uttar Pradesh, Gujarat, Karnataka, Goa and so on. This establishes how the draconian abuse of process by the ED has come to the point of being a punishment in itself.
The cardinal constitutional duty of the Supreme Court is to defend the Constitution against the might of the administrative executive as also the abuse of legislative majority to cripple fundamental constitutional guarantees.
Abuse of the PMLA and its creature, the ED, does both. A simple question to ask is: Did the Court redress this diabolical attack on changing the scales of democracy by the grossest abuse of the PMLA law by the ruling government? The answer is clearly no.
What the Court failed to realise is that the ED has become a tool in the hands of a regime to consolidate and remain in power as also to seek revenge.
Recall the raids on former Punjab Chief Minister Charanjit Singh Channi’s relatives around the time of the Punjab election. Or the raids on (and arrest of) D K Shivakumar around the time the government in Karnataka was toppled.
Or on Shiv Sena leader Sanjay Raut as the government in Maharashtra was illegally toppled. The wholly unfounded harassment and questioning of Congress President Sonia Gandhi and Rahul Gandhi for days together, illegal barricading of their houses and the arrest of former Home Minister P Chidambaram in the past are glaring examples of revenge-seeking for actions taken in Gujarat during the UPA government. That this context was factored into the Court’s reasoning is very unfortunate.