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India started the calendar year by recording the slowest GDP growth rate in six years and ended it by entering a technical recession. Here’s how it all unfolded.

 

Since the Union Budget is now presented on February 1st, much of January’s focus was on understanding the Budget-making exercise. Providing a context was this piece on why the poor in India remain poor. According to the World Economic Forum’s Global Social Mobility report, in India, it would take 7 generations for a member of a poor family to achieve average income; in Denmark, it would take just 2 generations to do so.

 

A key concern leading up to the Budget for 2020-21 was the falling credibility of Budget numbers. With Covid-19 playing havoc with the economy even before the start of the new financial year, this problem is likely to sustain.

Another key concern in the Budget — and this, too, is likely to be a concern in the forthcoming Budget of 2021-22 — was the adherence to fiscal rectitude. But the ugly truth about India’s adherence to the FRBM Act is that — thanks to Indian policymakers ignoring the key metric of revenue deficit — fiscal consolidation now actually hurts India’s economic growth.

 

As it turned out, the Budget for 2020-21 was not anywhere close to a big bang budget that many had hoped for. It was clear that the Central government did not have the resources to provide a fillip to the economy.

 

What was even more worrisome was that state-level finances were also getting increasingly stressed.

It is noteworthy that Indian states, taken together, spend one-and-half times more than what the central government spends through its budget.

Taken together, it meant that at a time when India’s growth rate was at a six-year low — and decelerating — governments, both at Centre and state levels, found themselves rather short of money.

It is at this juncture that the Covid-19 pandemic hit the Indian economy. As early as March 22, the day of Janta Curfew, we put together this sectoral analysis that explained how the Indian economy was far more vulnerable now than what it was when the Global Financial Crisis hit in 2008-09.

 

As India went into a nationwide lockdown, the government announced its initial set of measures (called PM Garib Kalyan Yojana) to limit the damage. The Reserve Bank of India too pitched in to counter “The Great Lockdown” that saw crude oil prices turn negative for the first time in history.

 

As the adverse effects of the Covid-induced disruptions became clear, we tried to explain some of the most important questions:

 

• How the outbreak was disrupting both supply of, and demand for, bank loans?
• Why were Medium, Small, Micro Enterprises worst hit by Covid-19 lockdown?
• Should the government simply resort to printing more moneyto alleviate economic suffering?

And what the hurriedly made changes to labour laws in several states implied?

By the start of May it was clear that without immediate additional help from the government, the Indian economy could be looking at widespread financial ruin.

 

Eventually, on May 12, Prime Minister Narendra Modi announced the Atma-Nirbhar Bharat Abhiyan package, with special focus on the MSME sector. But there were many reasons why this package was criticised even as GDP growth continued to falter and Moody’s downgraded India’s rating.

A particular area of concern during this phase was the call to ban trade with China, thanks to the growing border conflict between the two countries. We explained why a blanket trade ban with China will be counter-productive for India and why, more broadly speaking, the policy move towards atma-nirbharta or self-reliance is neither a new one nor likely to succeed.

 

Then in early September, India’s first official estimates showed that the domestic economy had contracted by almost 24% in the April-May-June quarter — making India one of the worst-hit major economies in the world.

 

It was now clear that after growing at an average annual rate of around 7% since the start of economic liberal isation in 1992, India’s economy was likely to contract by over 7% in 2020-21.

 

By December, it was clear that India had entered a technical recession. Moreover, since this contraction came at the back of secular deceleration in GDP growth rate since 2016-17 onwards, the economic stress was showing up in rising joblessness, increasing poverty and falling health and wellbeing of citizens at large.

 

From the perspective of the RBI, persistently high inflation continually undermined its ability to boost growth.

 

So what lies ahead in 2021? There are five key concerns.

One, quick resolution of the farmer unrest. Data shows that farming in India is rather unremunerative and, as such, this sector has been crying for reforms. However, for reforms to work, the government should learn from China’s experience, and must achieve buy-in from the farming community. The government must understand that persistent protests on the street — be they on economic issues such as farm laws or non-economic ones such as the CAA-NRC issue — are best avoided when the larger idea is to extricate the economy from the clutches of a recession.

 

Two, the Union Budget for 2021-22 has to lay out a cogent policy framework to boost economic activity in India over the medium term. Annual instrumentalism will be counter-productive because economic agents — be it the big businesses firming up their investment plans or migrant labourers deciding on returning to work or families deciding between buying a bigger car and having additional savings — are already plagued by all kinds of uncertainties.

A good starting point would be for the government to correctly assess and honestly declare the true pace of India’s economy. In the past few years, the government has either misestimated the pace of economic growth or misunderstood the reasons for growth deceleration, and, as a result, found itself behind the policy curve.

The First Advance Estimates for the GDP growth in 2020-21 will be released on January 7th and they will provide the closest approximation before the Budget is presented on February 1st.

 

Three, dealing with the fall out of extended regulatory forbearance be it in the shape of not recognizing non-performing assets in the banking system or suspending the functioning of the Insolvency and Bankruptcy Code.

Four, quickly making the vaccine available to the general public because that is the surest way for the economy to recover.

 

Last but not the least, staying aggressive about participating in the global economic recovery. Over the last decade, more and more countries have become insular and protectionist. Over the past 3-4 years, India, too, has been guilty of turning away from international trade — for instance, deciding not to join the RCEP. But there are several opportunities where India can deepen its trade ties still. A possible free trade agreement with the United Kingdom is a case in point.

Source: The Indian Express

The latest National Family Health Survey data shows that in several parts of India, children born between 2014 and 2019 are more malnourished than the previous generation

 

In 2004, the Copenhagen Consensus, which is a think tank devoted to finding the most efficient ways to solving the world’s biggest problems, tossed this very compelling question before an expert panel of scientists and economists, which included four Nobel winners.

“If you had $75 billion for worthwhile causes, where should you start?” the panel was asked.

The idea was to find out that one intervention which gives the most bang for the buck — the one that scored the highest in cost-benefit analyses as limited budgets are a global reality.

This exercise was repeated again in 2008 and then 2012 and in each of these three attempts the winning solution turned out to be the same.

The highest-ranking choice, which was informed by a whole host of research papers, was to invest in “Interventions to Reduce Chronic Undernutrition in Preschoolers”.

By preschoolers, we refer to children below the age of 5 years and the standout measure of chronic malnutrition in such children is stunting — that is, having a low height for one’s age.

According to the 2012 results, each dollar spent towards reducing child stunting results in benefits of 30 dollars.

In fact, a research paper — titled “Hunger and Malnutrition” by John Hoddinott et. al. — found benefits of spending a dollar towards this goal in India were far more than most countries.

In India, the benefits ranged from anywhere between $45 to $139 for each dollar spent towards reducing child stunting (see the table below). The benefits would come in the form of higher per capita income in the future for the children you were saved from stunting.

 

No matter which way one calculates, that is a fantastic rate of return for any investment.

But it is not just a matter of making a quick buck or indeed just about kids growing up a few inches short. There are massive downsides to not arresting high levels of child malnutrition.

According to another paper — “The Economic Rationale for Investing in Stunting Reduction” by John Hoddinott, Lawrence Haddad and others — chronic undernutrition has neurological consequences that lead to cognitive impairments.

Moreover, stunting increases the risk of chronic diseases, which, in turn, have direct resource costs including the costs of medication and the costs associated with accessing and using health-care services. Chronic diseases refer to those which last for more than a year such as cardiovascular disease, chronic respiratory disease, cancer, diabetes etc.

It is hardly surprising then that a number of studies have found malnourished kids to have lower earnings in adulthood.

 

“Everywhere in the world, schooling and cognitive skills are vital for success in the labor market. A useful rule of thumb is that every additional grade of schooling raises wages by eight to 12 per cent,” wrote Hoddinott in his book — “The economic cost of malnutrition”. “So individuals without such skills and with less schooling earn lower wages, which makes it more likely that they will be poor,” he stated.

Of course, child stunting is just one of the measures of child malnutrition. There are several other measures such as child wasting (having low weight for one’s height) and being underweight as well as child mortality.

Given the high incidence of child stunting, wasting and underweight children in India, it is generally regarded as the country with the maximum number of malnourished children in the world. It is for this reason that India routinely languishes at the bottom of global indices such as the Global Hunger Index.

It is in this background that you should read the multiple stories on the latest round of National Family Health Survey. As the table below alongside shows, on several key metrics not only did many states and Union Territories worsen but also that the number of states worsening was more than the number of states staging an improvement.

 

This is an alarming trend and how things might likely get even worse since this phase of NFHS data was collected before the Covid-19 pandemic. There is an “explained” piece as well on this topic.

In short, the latest data shows that in several parts of India, children born between 2014 and 2019 are more malnourished than the previous generation.

 

According to the World Health Organisation (see the table below), in 2019 over 8 lakh children under the age of five died in India. In 2020 and the next few years, with the adverse effects of the pandemic in play, this figure could be higher as most of the child mortality is explained by malnutrition.

For a country that already had the most number of malnourished children in the world, this is a scary picture. India cannot be a global superpower unless it first brings down the alarming — and rising — levels of child malnutrition.

 

According to the World Health Organisation, in 2019 over 8 lakh children under the age of five died in India.

French Prime Minister Jean Castex has said it is “not a text against religion, nor against the Muslim religion”, but against radical Islamism, whose objective, he said, is “to divide French people from one another.”

 

French cabinet presented a draft law that targets “radical Islamism” — although the word “Islamist” is not part of the text. Called a law “to reinforce Republican principles”, the Bill will go to the National Assembly, the lower chamber of Parliament, in January.

Prime Minister Jean Castex has said it is “not a text against religion, nor against the Muslim religion”, but against radical Islamism, whose objective, he said, is “to divide French people from one another.”

The Bill comes in the wake of a series of terror attacks in recent years. Although in the pipeline for some time, it is being seen as a response to the October beheading of schoolteacher Samuel Paty. It has raised concerns that it could stigmatise France’s Muslim community, the largest in Europe.

 

What does the proposed law aim to do?

It envisages a range of measures; including school education reforms to ensure Muslim children do not drop out, stricter controls on mosques and preachers, and rules against hate campaigns online.

Once the law comes into force, French mosques could see increased surveillance of their activities, such as financing. The government would be able to exercise supervision over the training of imams, and have greater powers to shut down places of worship receiving public subsidies if they go against “republican principles” such as gender equality. Moderate community leaders targeted by an extremist “putsch” could receive protection.

Under French secularism laws, or laïcité, there is already a ban on state employees displaying religious symbols that are “conspicuous”, such as the crucifix or hijab. This ban would now be extended beyond government bodies to any sub-contracted public service.

There would also be a clampdown on home-schooling for children over age three, with parents from to be dissuaded from enrolling them in underground Islamic structures.

Doctors who issue “virginity certificates” would be fined or jailed. Officials would be banned from granting residency permits to polygamous applicants. Couples would be interviewed separately by city hall officials prior to their wedding to find out if they have been forced into marriage.

Stricter punishments would be introduced for online hate speech. This is seen as a direct response to the killing of Paty, who was targeted in an online campaign before he was killed.

 

What has been the reaction?

The sharpest criticism of the Bill has come from abroad. Turkish President Recep Erdogan, who has been strongly criticising French President Emmanuel Macron in recent months, has called the proposed law an “open provocation”.

The Grand Imam of Al-Azhar, Egypt’s top cleric has called Macron’s views “racist”. For his part, Macron said recently, “I will not allow anybody to claim that France, or its government, is fostering racism against Muslims.”

At home, experts say that Macron largely enjoys the support of a French electorate that has hardened its position on terrorism, which has claimed more than 200 lives in the past eight years. In a recent nationwide survey, 79% of respondents agreed that “Islamism is at war with France”.

Critics have expressed alarm that the Bill could lead to the conflation of the Islamic religion with Islamism, a political movement, and lead to the alienation of French Muslims. Nevertheless, there have been members of the community who have come out in support of the law, such as the leader of the French Council of the Muslim Faith.

 

Why is it significant politically?

Macron faces re-election in 2022, and experts say he is appealing to France’s right-wing voters after facing a series of electoral losses this year. The President has also been facing protests over proposed “global security” legislation.

In May this year, a group of left-wing MPs from his La République En Marche! (LREM) party defected, costing the party its absolute majority in the National Assembly. Then in June, the LREM performed poorly in local elections.

 

Macron, who describes his politics as “neither right nor left” — he was with the Socialist Party until 2009 — faces a challenge from right-wing politician Marine Le Pen, whom he defeated in the 2017 election, and who has led the charge against him for not cracking down hard enough against Islamism.

 

Source: Indian Express

 

Eco-ducts or eco-bridges aim to enhance wildlife connectivity that can be disrupted because of highways or logging.

 

Ramnagar Forest Division in Nainital district, Uttarakhand, recently built its first eco-bridge for reptiles and smaller mammals. What are these, and why are they important?

Why eco-bridges matter

Eco-ducts or eco-bridges aim to enhance wildlife connectivity that can be disrupted because of highways or logging. These include canopy bridges (usually for monkeys, squirrels and other arboreal species); concrete underpasses or overpass tunnels or viaducts (usually for larger animals); and amphibian tunnels or culverts. Usually these bridges are overlaid with planting from the area to give it a contiguous look with the landscape.

A 2020 study by the Wildlife Institute of India (WII) noted that nearly 50,000 km of road projects have been identified for construction in India over the next five to six years, while many highways are being upgraded to four lanes. The National Tiger Conservation Authority, New Delhi, had identified three major sites that were cutting across animal corridors, including National Highway 37 through the Kaziranga-Karbi Anglong landscape in Assam, and State Highway 33 through the Nagarhole Tiger Reserve in Karnataka.

 

On the Kaladhungi-Nainital Highway, Chandra Sekhar Joshi, Ramnagar Divisional Forest Officer, supervised the building of the new 90-foot eco-bridge. “We found many roadkills on this route, especially of reptiles such as the monitor lizard. The bridge is an awareness-building mechanism for this very congested tourist route,” he said. “… The bridge was a way to see how we can preserve the ecosystem necessary for reptiles that feed on insects, for snakes that feed on reptiles, and for eagles that feed on snakes.”

What builders look at

Bilal Habib, Head, Animal Ecology and Conservation Biology, WII, said there are two important aspects of building eco-bridges – size and location. “When you see a roadkill, you imagine that the animal has died there and so you place a bridge there. However… this may not be the only indicator. Often you don’t see collisions because the road has already become a wall for animals in that area. For instance, when highways are upgraded from two lanes to four lanes, you stop seeing roadkills. It doesn’t mean it becomes a green highway… It’s important therefore to understand what the animal habitats are in the area, topography, disturbance types, road length and its curvature.

The span and distribution of eco-bridges should depend on animal movement patterns. “The bigger bridges will see sambar, spotted deer, nilgai, wild pig using them, while for tigers or leopards, if the bridge is 5m or 500 m, it doesn’t bother them. But some animals like the barking deer, which prefer closed habitats, need smaller bridges,” Habib said.

 

 

The challenges

Senior scientist Divya Mudappa of Nature Conservation Foundation, working in Tamil Nadu’s Anamalai Hills, built canopy bridges for lion-tailed macaques and Nilgiri langurs. “In 2008, we built six bridges across a 3-km stretch where these arboreal animals could move freely without being run over. Our smallest bridge was about 10m and the longest was about 25m. These have been very successful with the monkeys taking to them pretty fast,

 

Habib recounted his team’s observations on NH 44, which intersects Kanha-Pench and Pench-Navegaon-Nagzira corridors in various sections. With five animal underpasses and four minor bridges on the 6.6-km road within the forests, it’s one of India’s success stories. They captured nearly 18 species that used these underpasses, including tiger, leopard, and golden jackal.

“We have a 750m long bridge here, possibly the world’s largest underpass. Most species use this. However, we found that on our 50m bridge, sloth bears and female nilgais don’t travel… In this 750m bridge, the sloth bear took two years to cross, the wolf and the pangolin took less than a year, while the spotted deer and jungle cat barely took a month,” he said.

 

One of the largest underpasses – 1.4km – for animal conservation is India is being built along the Madhya Pradesh-Maharashtra border, he said. Other proposals include the Chennai-Bangalore National Highway, in the Hosur-Krishnagiri segment, near reserve forests for elephant crossings, and in the Tadoba-Andhari Tiger Reserve in Chandrapur, Maharashtra.

 

Source: Indian Express

• The multilateral war-gaming exercise Malabar, which saw the participation of all four member nations of the Quadrilateral Security Dialogue (Quad) for the first time since 2007, and included participation of carrier strike groups, submarines, fighter jets and other vessels, concluded on Friday.
• The naval exercise was conducted in two phases, first off the Visakhapatnam coast earlier in November, and the second in the Arabian Sea, starting November 17.
• The Navy said in a statement that the 24th edition of Malabar maritime exercise, “hosted by Indian Navy (IN) in two phases, concluded in the Arabian Sea” on Friday. “Phase 1 of the exercise involving participation by Indian Navy (IN), United States Navy (USN), Japan Maritime Self Defense Force (JMSDF) and Royal Australian Navy (RAN), was conducted off Visakhapatnam in Bay of Bengal” between November 3 and 6.
• In the second phase, the Navy said, the four navies “participated in joint operations centered on the Vikramaditya Carrier Battle Group of the Indian Navy and Nimitz Carrier Strike Group of the US Navy”. The two aircraft carriers, it said, “along with other ships, submarine and aircraft of the participating navies, engaged in high intensity naval operations including cross-deck flying operations and advanced air defence exercises by MIG 29K fighters of Vikramaditya and F/A-18 fighters and E2C Hawkeye from Nimitz”.
• US Navy’s Strike Carrier Nimitz was accompanied by cruiser Princeton and destroyer Sterett in addition to P8A maritime reconnaissance aircraft, and the Australian and Japanese navies were represented by frigate Ballarat and destroyer Murasame, respectively, along with their integral helicopters.
• Beyond INS Vikramaditya, the Indian Naval Ships including the indigenous destroyers Kolkata and Chennai, stealth frigate Talwar, Fleet Support Ship Deepak and the integral helicopters of these warships, indigenously built submarine Khanderi and P8I and IL-38 maritime reconnaissance aircraft, also participated in the second phase in the Arabian Sea.
• Mentioning some of the exercises that took place in both phases, the Navy mentioned that “in addition to ‘Dual Carrier’ operations, advanced surface and anti-submarine warfare exercises, seamanship evolutions and weapon firings were also undertaken… demonstrating the synergy, coordination and inter-operability between the four friendly navies”.
• On November 5, Defence Minister Rajnath Singh, without mentioning Malabar, had stated in an address at the National Defence College that India’s “interests to secure trade routes, shipping lines of communication, fishing rights and communication networks also require the ability to contribute to the global effort, to maintain open and free oceans.” He had said that it is “the essence of our initiative to be a part of the Indo-Pacific initiative”.

Australia Joined Malabar Exercise

 

Malabar Exercise

• It is an annual trilateral naval exercise between the navies of India, Japan, and the USA which is held alternately in the Indian and Pacific Oceans.
• It began as a bilateral naval exercise between India and the USA in 1992 and was expanded into a trilateral format with the inclusion of Japan in 2015.
• The Exercise is aimed to support free, open and inclusive Indo-Pacific and remain committed to a rules based international order.
• It is also aimed at interoperability with an emphasis on humanitarian assistance, surface war manoeuvres, anti-submarines warfare, counter-terror operations, gunnery training and aerial surveillance.

Key Points

 

2020 Malabar Exercise:

• The 2020 Exercise is expected to be held in theBay of Bengal and the Arabian Sea. In 2019, the exercise was conducted off the coast of Japan.
• Due to Covid-19 pandemicthe exercise had been planned in a ‘non-contact – at sea’ format.
• Its objectiveis to enhance safety and security in the maritime domain.

 

Australia’s Inclusion:

• The issue of Australia’s inclusion in Malabar had again come up for discussion at the Quadforeign ministers meet in Tokyo held in October 2020. Thereafter, India invited Australia to join the Exercise.
• Quadis the informal strategic dialogue between India, the USA, Japan and Australia with a shared objective to ensure and support a free, open and prosperous” Indo-Pacific region.
• The move will bolster the ability of India, Australia, Japan and the United States to work together touphold peace and stability across the Indo-Pacific region.
• It is also expected to further lay the foundations for the eventual formalisation of the Quad grouping.

Background:

• Despite regular requests from Australia, India resisted issuing the invitation due to its concerns that the move would give the appearance of a‘quadrilateral military alliance’ aimed at China.
• In 2017, Australia had requested for observer status in the Malabar Exercise.
• China has repeatedly expressed strong opposition to any expansion of the Malabar Exercise, which it sees as a multilateral naval construct designed to “counter and contain” it.
• However, the recent India-China tensionsover the situation at the Line of Actual Control (LAC) may have brought more flexibility to India’s decision making process.
• Japan and the U.S.A also have been pressing Indiafor Australia’s inclusion in Malabar Exercise.

Other Cooperation Between Quad Members:

• India and Japan had signed a military logistics agreementin September, 2020.
• India has signed maritime information sharing agreements for Maritime Domain Awareness (MDA)with Australia and Japan and a similar agreement is under discussion with the U.S.A.
• MDA is defined by the International Maritime Organization as the effective understanding of anything associated with the maritime domain that could impact the security, safety, economy, or environment of a country.
• India and U.S.A. are also stepping up efforts to conclude the Basic Exchange and Cooperation Agreement(BECA) ahead of the Indo-US 2+2 ministerial meeting on 26-27 October, 2020.
• BECA, a key military pact, will allow India to use U.S.A.’s geospatial intelligence and enhance accuracy of automated systems and weapons like missiles and armed drones.
• BECA is one of the four foundational military communication agreementsbetween the two countries. The other three being GSOMIA, LEMOA, CISMOA.
• GSOMIA:General Security Of Military Information Agreement
• LEMOA:Logistics Exchange Memorandum of Agreement
• CISMOA:Communications and Information Security Memorandum of Agreement
• Defence and Foreign ministers of the two countries will Participate at the 2+2 ministerial meeting.

Way Forward

• As India seeks to increase cooperation with other countries in the maritime security domain, high-end military exercises like Malabar are key to enhancing maritime capabilities, building interoperability with its close partners, and demonstrating its collective resolve to support an open and prosperous Indo-Pacific.
• The fast-tracking of work on BECA and the decision of the four Quad countries to participate in the Malabar Exercise are perceived to be a strategic signal to an aggressive China.