The Hindu Editorial Analysis- 19th November, 2020 | Additional Study Material for UPSC PDF Download

1. NEW CHALLENGES-

GS 2- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

Context
With the late night call on Tuesday between Prime Minister Narendra Modi and U.S. President-elect Joseph Biden done, Indian and U.S. officials can begin their formal interactions on the future of bilateral relations.

Listing Out Priorities
(i) The two leaders listed out their priorities, according to separate statements issued by the External Affairs Ministry and the Biden-Harris transition team.
(ii) According to the readouts, the leaders committed to strengthening the Indo-U.S. Comprehensive “Global” Strategic Partnership, and cooperating on global challenges including the COVID-19 pandemic, affordable vaccines, climate change and the Indo-Pacific region.
(iii) Mr. Biden’s readout also included “strengthening democracy at home and abroad”, which was dropped from the MEA version, indicating New Delhi’s discomfort.
(iv) Critical and recent comments made by Mr. Biden and Vice-President-elect Kamala Harris over J&K, the CAA and actions against NGOs should not make the Modi government shy from engaging with the U.S. on these issues.
(v) Most remarkably, the leaders did not dwell on traditional security issues, global terrorism, conflict regions or even trade, but instead charted areas for Indo-U.S. cooperation that are more in line with their current challenges and indicate Mr. Biden’s own immediate priorities.
(vi) On COVID-19, Mr. Biden and Mr. Modi have their work cut out, given that the U.S. (over 11 million cases) and India (over 8 million cases) remain the top two worst affected countries, and showing daily increases.
(vii) Making affordable vaccines available to their afflicted(harmed) populations will be the immediate challenge.

Economic Recovery
(i) On the need for economic recovery, their projected policies do not appear to be too divergent(different).
(ii) Unveiling his administration’s economic revival policy, Mr. Biden announced a plan to “Buy American”, and to ensure no government contract goes to companies that do not make their products in America.
(iii) The Modi government has already launched its “Atmanirbhar Bharat” programme on similar lines.
(iv) External Affairs Minister of India making it clear that the globalised economy and trading arrangements have been assessed as detrimental(harmful) to India’s manufacturing industry.
(v) On climate change, a decision by the U.S. to re-enter the Paris Accord will be welcomed by India, that is also hoping to promote cooperation on the International Solar Alliance that it co-founded in 2016 with France.
(vi) But it is unclear if Mr. Biden would revive the earlier U.S. promises of funding green technology that Mr. Trump cancelled when he walked out of the Paris Accord.
(vii) Finally, it is significant that Mr. Biden expressed his commitment to the Indo-Pacific policy, but New Delhi will be keen to see just what shape the new administration intends to take in its measures to maintain a “secure and prosperous” Indo-Pacific, and how far the Biden Administration will challenge China’s moves in the region.

Conclusion
India must not fight shy of engaging with the Biden administration on contentious issues.

2. REINVENTING CITIES-

GS 2- Important aspects of governance, transparency and accountability

Context
(i) Prime Minister’s call for a reimagining of urban planning and development to make cities and towns healthy and liveable after COVID-19 reflects the reality of decrepit(weak) infrastructure aiding the virus’s spread.
(ii) At the Bloomberg New Economy Forum, he emphasised resetting the mindset, processes and practices for safe urban living, and acknowledged that governments actually do little for the working millions.

Impact On Pandemic
(i) In the first hundred days of the pandemic, the top 10 cities affected worldwide accounted for 15% of the total cases, and data for populous Indian cities later showed large spikes that radiated into smaller towns.
(ii) Rapid transmission in Mumbai, Delhi, Bengaluru and Chennai was the inevitable outcome of densification and an inability to practise distancing norms.
(iii) In globally recognised Dharavi, which has one of the world’s highest slum densities, epidemiologists attribute a seemingly low viral impact to screening and herd immunity.
(iv) The pandemic’s full social impact, especially among the poorer quintiles, has not been adequately measured here or elsewhere, and as the Prime Minister said, it is only clear that the cities “are not as they were before”.
(v) If governments are serious about the reset moment — he likened it to a post-World War reconstruction plan — they must resist returning to business-as-usual.

Reinventing Cities
(i) Good, affordable housing is the cornerstone of a sustainable and healthy city, but it also represents India’s weakest link.
(ii) Unlike speculative housing investments, well-designed rental housing that is key to protecting migrant labour and other less affluent sections remains poorly funded.
(iii) Mumbai is estimated to have added only 5% of rental housing in new residential construction (1961-2000), and that too led by private funding.
(iv) The post-COVID-19 era, therefore, presents an opportunity to make schemes such as the Centre’s Affordable Rental Housing Complexes deliver at scale, focusing on new good houses built by the state — on the lines of the post-war reconstruction in Europe, Japan and South Korea.
(v) The Ministry of Housing, which has thus far focused on a limited set of expensive showpiece smart cities, could work on this imperative with the States, digitally aggregating and transparently publishing data on demand and supply for each city.
(vi) It is also an open secret that laws on air pollution, municipal solid waste management and water quality are hardly enforced, and tokenism marks the approach to urban mobility.
(vii) Past scourges(diseases) such as cholera, the plague and the global flu pandemic a century ago led to change — as sewerage, waste handling, social housing and health care that reduced disease.
(viii) Governments are now challenged by the pandemic to show the political will to reinvent cities.

Conclusion
A new urban development paradigm should focus on cutting disease spread.

3. THE NEED FOR ‘MAXIMUM GOVERNMENT’-

GS 2- Important aspects of governance, transparency and accountability

Context
(i) In the new set of relief measures announced by the Finance Minister, job creation has moved to the forefront.
(ii) This shows that the government has finally accepted that the unemployment rates are very high, a fact it has so far been suppressing or dismissing. This is a welcome change.
(iii) But recognising a problem is only the first step towards solving it.
(iv) What hasn’t changed, to our dismay(dissatisfaction), is the government’s core belief in ‘minimum government’, which ties its hands when it comes to fiscal measures even in such harsh economic conditions, created to a great extent by its own lack of governance during the COVID-induced lockdown.
(v) As a result of that lockdown, Indians got both a COVID-19-induced health crisis and, in an attempt to control it, a severe economic crisis.

The Ball Is In The People’s Court
(i) If you look at these relief measures, announced in three tranches — Atmanirbhar 1.0, 2.0 and 3.0 — what the government seems to be saying to the people and businesses is: ‘if you do this, we will award you with this and this’.
(ii) The ball is being put in the court of those who are suffering instead of the government taking the responsibility of steering(moving) the economy out of this turmoil(problem).
(iii) Take Atmanirbhar 1.0, for example. Out of the ₹20.9 lakh crore package, ₹17.9 lakh crore worth of measures were below-the-line(income or expense in accounting which have no noticeable effect on company profits in the current period ones), such as credit guarantees and liquidity easing.
(iv) Things are not very different in the other two tranches as well.
(v) These measures are made on the assumption that they will induce the business sector to start the virtuous cycle of investment and induce households to increase consumption despite evidence to the contrary.
(vi) Corporate investment is limited by sales and/or credit.
(vii) While drying up of either sales or credit can bring about a decline in investment, a revival in investment requires a revival of both. This is a very important lesson for a policymaker.
(viii) The fact that sales are low means factories are running below capacity.
(ix) If the existing equipment is not being fully utilised, why would businesses add further to capacity just because the cost of loans has declined or the access to credit has been eased?
(x) While this is, in general, true for both big businesses as well as MSMEs, for the latter, sales/profits are even more binding as a constraint because the pockets of MSMEs do not run as deep as those of the big fish.
(xi) So, however detailed the credit package may be for MSMEs, in times of deep economic crises, they will not deliver as they will be wary of taking more loans.

Revicing Demand
(i) As for the households, if there is a cloud of doubt over future incomes (or dwindling current income), they would not be inclined to take more consumer or housing loans just because credit is easily available at lower rates of interest.
(ii) Moreover, even if there were takers for these loans, if the banks are burdened with bad loans as a result of past decisions, they may be wary of releasing credit.
(iii) In order to increase their margins to cover for these losses, the banks, since early 2019, data from the RBI confirm, have chosen not to pass on the fall in the policy rate to the consumers in which case the very premise of a fall in the cost of loans is violated.
(iv) The data suggest something more. On the one hand, banks are functioning well below their capacity in terms of extending credit.
(v) On the other, despite a fall in investment, there is consistent growth in the corporate sector’s current assets, a proxy for their liquidity position, which means the sector is not short on liquidity.
(vi) Such credit lines, guarantees or the low cost of loans, therefore, hardly have an effect on reviving demand in the economy.
(vii) These actors can at best play a supporting role, not the lead one. What does this mean for the magnitude of the stimulus?
(viii) Neither do these numbers show up in the government’s books (which is by design) nor in the business or household balance sheets.
(ix) It means these figures just stay on paper. They are something for the government to brag about.
(x) Unfortunately, this seems to be the preoccupation of this government instead of really engaging with the economy and trying to find real solutions.

Solution: The Demands
(i) If none of this is working, what can?
(ii) The foremost demand, from which others follow, is that FRBM should be kept in abeyance, both for the Centre and the States, and the government should inject a fiscal stimulus of at least ₹10 lakh crore and borrow to finance it or, if required, monetise the deficit.
(iii) This stimulus could comprise, among other things, free ration and other essentials like oil, soap and cooking gas for a period of six months; cash transfer till employment opportunities are back; and an urban employment guarantee law.
(iv) Given that this pandemic has exposed the precarious health sector, we can spend our way out of this crisis by building a robust public health infrastructure on the principle of public provisioning.
(v) This has also opened an opportunity to think about climate change.
(vi) There cannot be a better time than this for a green deal, which addresses both the demand and supply side of emissions as well as acts as the much-needed fiscal stimulus which has long-term implications.
(vii) A comprehensive green deal can be planned, partly financed by the government and partly by carbon tax, which not only changes the energy mix of the economy but also makes the poor and the marginalised a part of a sustainable development process.

Conclusion
(i) This crisis has provided us with an opportunity to rethink our health, economic and climate policies.
(ii) We can choose to act on these or walk down the beaten path.
(iii) Whatever we choose, it will be good to remember that the future generations will never forgive us for losing an opportunity to fundamentally change course.