Editorials - 02-06-2021

Indian diplomacy will have to handle the fallout of the vaccine collapse and bio-research regulations

Prime Minister Narendra Modi’s words on Buddha Purnima, that in times to come the planet will remember events as either “pre-Covid or post-Covid” (https://bit.ly/2SIywUO) could not hold truer than for India’s diplomatic structure worldwide. In the past month, the focus for the Ministry of External Affairs (MEA) and Missions abroad has shifted. While the focus in 2020, during the first wave of the pandemic, was on coordinating exports of COVID-19 medicines, flights to repatriate Indians abroad (the ‘Vande Bharat Mission’) after the lockdown, and then exporting vaccines worldwide (‘Vaccine Maitri’), after the second wave, Covid Diplomacy 2.0 has a different order of tasks, both in the immediate and the long term.

The health crisis

The immediate imperative was to deal with oxygen and medicine shortages that claimed the lives of thousands in the matter of a few weeks across the country. In Delhi alone, more than 3,000 people died in the last week of April, including some from Delhi’s diplomatic community, which comprises officials, retired diplomats and foreign diplomats.

The Ministry of External Affairs has had to deal with internal health concerns while galvanising help from abroad for others. It did not help that medical protocols to treat COVID-19 have changed constantly; if the first rush was about bringing in Remdesivir and favipiravir from the United States and Russia, Indian missions are now requesting black fungus medication, as the previous ones have been dropped from the protocol. Despite all this, the Ministry of External Affairs has completed the task of bringing in supplies in a timely manner, and with success.

Handling vaccine shortages

The rest of the year, if not much of 2022 will focus on bringing in vaccines. The shortage of vaccines in the country has arisen from three factors: the failure of the Government to plan and place procurement orders in time; the failure of the two India-based companies to produce vaccine doses they had committed to, and the MEA’s focus on exporting, not importing, vaccines between January and April this year. The challenge now for diplomats has been made all the more imperative by these failures, and much harder, as the visit of the External Affairs Minister, S. Jaishankar, to Washington last week showed. With the companies manufacturing AstraZeneca and Sputnik-V stretched as far as future production is concerned, and Chinese vaccines a non-starter given bilateral tensions, it is clear that the Narendra Modi government is looking to the U.S. to make up the shortfall.

The aim is to do this in several ways. These include requesting the U.S. to share a substantial portion of its stockpile of AstraZeneca doses and to release more vaccine ingredients which are restricted for exports; to buy more stock outright from the three U.S. manufacturers, Pfizer, Moderna and Johnson & Johnson, and to encourage production in India of these vaccines. On each of these issues, the MEA has had to negotiate a difficult route. The U.S. government is holding up its AstraZeneca exports until its own United States Food and Drug Administration approves them; while it has released a small amount (20 million doses) of vaccineingredients and components, it has not changed the policy yet. Production of Johnson & Johnson single-dose vaccines in India, as had been announced during the Quad summit (https://bit.ly/3ySd1l2), will take some time. And as they were originally meant for distribution in South East Asia, it is unclear how many will be provisioned for India.

Even buying vaccines directly will need nimble negotiations as the U.S. companies seem set on getting both an indemnity waiver from India as well as Emergency Use Authorisation prior to supplying them. While the government has relaxed its rules for American and other foreign manufacturers, waiving the need for bridge-trials prior to clearance, these demands will need considerable backtracking from firmly held principles. The Government may also need to make a U-turn from its publicly announced policy that States in India will need to negotiate purchases directly, as the U.S. manufacturers want centralised orders, with payments up-front. Diplomats working to help tie up contracts have their work cut out as time is of the essence for India to complete its vaccination goals ahead of a possible third wave of the pandemic.

Patents, diplomatic fallout

Nor will the promise of patent waivers, from India’s joint proposal at the World Trade Organization (WTO) reap early benefits, despite support from world leaders such as the U.S., Russia and China. As Mr. Modi during his virtual summit meet with European Union leaders in early May, or as diplomats negotiating to bring Quad partners Japan and Australia, and BRICS partner Brazil on board have found, many countries are still holding out on the idea of freeing up intellectual property rights on vaccines for three years. That could ultimately hold up proceedings at the WTO, as it works by consensus.

The third big challenge for Indian diplomacy is to manage the fallout of the vaccine collapse. Domestically, the Government has defended its decision to export more than 66 million vaccines doses to 95 countries between January and April this year, pointing out that only 11 million were grants from India, 35 million were commercial exports and 20 million were sent as part of the global COVAX coalition commitments. Its adding that all exports were stopped as soon as cases in India began to soar is an argument that does not wash internationally. Both India’s neighbours and partners in Africa as well as global agencies depending on India for vaccines have been left in the lurch by the Government’s failure to balance its vaccine budget.

Perhaps the most egregious case is that of Bhutan and its vaccine drive which depended entirely on India’s promise of vaccines for its whole population. In March, once India completed delivery of the first batch, of 550,000 Covishield doses, Bhutan completed the administration of the first dose to 93% of its population in a record 16 days. Two months later, Bhutan does not have any vaccines to complete the second dose and has been left requesting other countries for vaccines so it does not miss the deadline amidst a rising number of cases there. Others in the neighbourhood and further afield have fully-paid-up-but-unfulfilled orders. It is no surprise that each of India’s neighbours has now sought help from China and the U.S. to complete their vaccination drives. Making amends and regaining trust for India’s vaccine and pharmacy exports in the future is going to be a challenge left to the MEA and its missions in several capitals.

Tracing virus pathways

Finally, as more waves of COVID-19 are being speculated, it is becoming increasingly clear that there must be a fuller understanding of what caused it, and India, as one of the worst pandemic-hit countries, must be at the forefront of demanding accountability. Eighteen months, 170 million cases (https://bit.ly/3uElFAd) and over three million deaths later, the World Health Organisation (WHO) which studied “pathways of emergence” of SARS-CoV2 in Wuhan, listed four possibilities: direct zoonotic transmission, an intermediate host, cold chain or transmission through food, or a laboratory incident. While WHO has concluded that the fourth pathway is “extremely unlikely”, scientists and agencies around the world are now calling for more research and transparency from China, particularly over the activities at the Wuhan Institute of Virology. Beijing appears adamant on blocking these studies and even the U.S. appears to have dragged its feet on a conclusive finding, possibly because the U.S. National Institutes of Health had funded some of the Wuhan Institute’s research, and its Office of the Director of National Intelligence decided last year to discount the “lab-leak” theory (https://bit.ly/2TokFmI).

On regulations

India, which has now begun to speak up on the issue, must call for a more definitive answer and also raise its voice for a stronger convention to regulate any research that could lead, by accident or design, to something as diabolical as the current pandemic. Towards that end, it is necessary to revamp the 1972 Biological Weapons Convention (formally known as The Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction) to institute an implementation body to assess treaty compliance, and build safer standards for the future. With its seat at the UN Security Council as non-permanent member and its position on WHO’s Executive Board, India could seek to regain the footing it has lost over the past few months of COVID-19 mismanagement, by taking a lead role in ensuring the world is protected from the next such pandemic.


Unprecedented short-term foreign portfolio investments are entirely responsible for the surge

Total foreign direct investment (FDI) inflow in 2020-21 is $81.7 billion, up 10% over the previous year, reported a recent Ministry of Commerce and Industry press release. It further added, “Measures taken by the Government on the fronts of Foreign Direct Investment (FDI) policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country.” The short press release highlighted industry and State-specific foreign investment figures without detailed statistical information.

The Reserve Bank of India (RBI) bulletin, which was released a week earlier, has the details. They are conceptually more transparent and consistent. The table below summarises the main headings for 2019-20 and 2020-21 and the percentage growth rate.

What accounts for gross inflow?

“Gross inflows/gross investment” in the RBI report is the same as “total FDI inflow” in the press release, identical to the Commerce Ministry’s estimate. The gross inflow consists of (i) “direct investment to India” and (ii) “repatriation/disinvestment”. The disaggregation shows that “direct investment to India” has declined by 2.4%. Hence, an increase of 47% in “repatriation/disinvestment” entirely accounts for the rise in the gross inflows. In other words, there is a wide gap between gross FDI inflow and direct investment to India.

What is repatriation? Why is it so significant? FDI inflow increasingly consists of private equity funds, which are usually disinvested after 3-5 years to book profits (per its business model). In principle, private equity funds do not make long-term greenfield investment.

Similarly, measured on a net basis (that is, “direct investment to India” net of “FDI by India” or, outward FDI from India), direct investment to India has barely risen (0.8%) in 2020-21 over the last year.

What then accounts for the impressive headline number of 10% rise in gross inflow? It is almost entirely on account of “Net Portfolio Investment”, shooting up from $1.4 billion in 2019-20 to $36.8 billion in the next year. That is a whopping 2,526% rise. Further, within the net portfolio investment, foreign institutional investment (FIIs) has boomed by an astounding 6,800% to $38 billion in 2020-21, from a mere half a billion dollars in the previous year.

So, the mystery of the surge in gross FDI inflows is solved. It is entirely on account of net foreign portfolio investment. What is portfolio investment, and how is it included in FDI inflow? FDI inflow, in theory, is supposed to bring in additional capital to augment potential output (taking managerial control/stake). In contrast, foreign portfolio investment, as the name suggests, is short-term investment in domestic capital (equity and debt) markets to realise better financial returns (that is, higher dividend/interest rate plus capital gains). But the conceptual distinctions have blurred in official reporting, showing an outsized role of FDI and its growth in India.

If the deluge of FII inflow did little to augment the economy’s potential output, what then did it do? It added a lot of froth to the stock prices. When GDP has contracted by 7.3% (as per the official estimates released last Monday) in 2020-21 on account of the pandemic and the economic lockdown, the BSE Sensex nearly doubled from about 26,000 points on March 23, 2020 to over 50,000 on March 31, 2021. BSE’s price-earnings (P-E) multiple — defined as share price relative to earnings per share — is among the world’s highest, close behind S&P 500 in the U.S.

Modest contribution

Thus the surge in total FDI inflow during the pandemic year is entirely explained by booming short-term FIIs in the capital market – and not adding to fixed investment and employment creation.

For years now, the government has showcased the rise in gross FDI inflows as a badge of the success of its economic policies to counter the widespread criticisms of output and investment slowdown and rising unemployment rates (especially during the last year).

As Figure 1 shows, between 2013-14 and 2019-20, the ratio of net FDI to GDP has remained just over 1% (left-hand scale), with no discernible rising trend in it. Likewise, the proportion of net FDI to gross fixed capital formation (fixed investment) is range-bound between 4% and 6% (left-hand scale). These stagnant trends are evident when the economy’s fixed investment rate — gross fixed capital formation to GDP ratio — has plummeted from 31.3% in 2013-14 to 26.9% in 2019-20 (right-hand scale). Thus, FDI inflow’s contribution to domestic output and investment remains modest.

To sum up, the Commerce Ministry press release claims an unprecedented surge in gross foreign capital inflow of $81.7 billion in 2020-21, rising 10% over the previous year. The rapid influx is evidence of the success of the economic policies during the pandemic, the government claims. Is it so? Probably not. Unprecedented short-term foreign portfolio investments are entirely responsible for the surge. And within the portfolio investment, FIIs shot up to $38 billion in 2020-21, from half a billion-dollar the previous year. The flood of FIIs has boosted stock prices and financial returns. These inflows did little to augment fixed investment and output growth.

R. Nagaraj is Visiting Professor, Centre for Development Studies, Trivandrum

Though the pandemic has amplified its contributing factors, policy and programmatic interventions can save children

The true extent of the impact of the COVID-19 pandemic on child labour is yet to be measured but all indications show that it would be significant as children are unable to attend school and parents are unable to find work. However, not all the factors that contribute to child labour were created by the pandemic; most of them were pre-existing and have been exposed or amplified by it.

What the data show

As the world enters the third decade of the 21st century, 152 million children around the world are still in child labour, 73 million of them in hazardous work. A Government of India survey (NSS Report No. 585, 2017-18, Statement 3.12, p.35) suggests that 95% of the children in the age group of 6-13 years are attending educational institutions (formal and informal) while the corresponding figures for those in the age group of 14-17 years is 79.6%. Hence, a large number of children in India remain vulnerable, facing physical and psychological risks to a healthy development.

The Census of India 2011 reports 10.1 million working children in the age group of 5-14 years, out of whom 8.1 million are in rural areas mainly engaged as cultivators (26%) and agricultural labourers (32.9%). While multiple data vary widely on enrolment/attendance ratios in India, UNESCO estimates based on the 2011 Census record 38.1 million children as “out of school” (18.3% of total children in the age group of 6-13 years). Work performed may not appear to be immediately dangerous, but it may produce long-term and devastating consequences for their education, their skills acquisition, and hence their future possibilities to overcome the vicious circle of poverty, incomplete education and poor quality jobs. A Rapid Survey on Children (2013-14), jointly undertaken by the Ministry of Women and Child Development and UNICEF, found that less than half of children in the age group of 10-14 years have completed primary education. These remain challenges we must overcome.

A decrease in India

One piece of good news is that child labour in India decreased in the decade 2001 to 2011, and this demonstrates that the right combination of policy and programmatic interventions can make a difference. Policy interventions such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005, the Right to Education Act 2009 and the Mid Day Meal Scheme have paved the way for children to be in schools along with guaranteed wage employment (unskilled) for rural families. Concerted efforts towards convergence of government schemes is also the focus of the implementation of the National Child Labour Project. Ratifying International Labour Organization Conventions Nos. 138 and 182 in 2017, the Indian government further demonstrated its commitment to the elimination of child labour including those engaged in hazardous occupations.

The Ministry of Labour and Employment-operated online portal (www.pencil.gov.in) allows government officials, law enforcement agencies and non-governmental organisations to share information and coordinate on child labour cases at the national, State and local levels for effective enforcement of child labour laws. While child labour has declined during the past decade globally, estimates indicate that the rate of reduction has slowed by two-thirds in the most recent four-year period. These positive and negative trends have to be taken into account when developing India’s policy and programmatic response during and after the novel coronavirus pandemic.

The economic contraction and lockdowns ensuing from the pandemic have affected all countries in Asia, leading to income reductions for enterprises and workers, many of them in the informal economy. The large number of returned migrant workers has compounded the socio-economic challenges. India experienced slower economic growth and rising unemployment even before the pandemic. Subsequent lockdowns have worsened the situation, posing a real risk of backtracking the gains made in eliminating child labour. With increased economic insecurity, lack of social protection and reduced household income, children from poor households are being pushed to contribute to the family income with the risk of exposure to exploitative work.

Challenges in education

With closure of schools and challenges of distance learning, children may drop out leaving little scope for return unless affirmative and immediate actions are taken. As many schools and educational institutions are moving to online platforms for continuation of learning, the ‘digital divide’ is a challenge that India has to reconcile within the next several years. The NSS Report No. 585 titled ‘Household Social Consumption on Education in India’ suggests that in 2017-18, only 24% of Indian households had access to an Internet facility, proportions were 15% among rural households and 42% among urban households. The Annual Status of Education Report (ASER) 2020 survey highlights that a third of the total enrolled children received some kind of learning materials from their teachers during the reference period (October 2020) as digital mode of education was opted for.

The challenges are significant and manifold but it is not impossible to meet them if the right level of commitment among all the relevant stakeholders and the right mix of policy and programmatic interventions are present. It is through strategic partnerships and collaborations involving government, employers, trade unions, community-based organisations and child labour families that we could make a difference building back better and sooner. As we reinforce the commitment to protect children from unacceptable forms of work, our focus to mitigate the aftermath of the pandemic also remains. We need a strong alliance paving our way towards ending child labour in all its forms by 2025 as countries around the world have agreed to in Sustainable Development Goal 8.7.

We — governments, employers, unions, civil society organisations and even individuals — must rise and pledge to ‘Take Action against Child Labour’ as a part of the UN’s declaration of 2021 as the International Year for the Elimination of Child Labour. Our actions today will determine the future of children tomorrow.

Dagmar Walter is Director, International Labour Organization India Country Office

Official secrecy on pandemic policies aggravates a crisis

In August 2020, the Modi government constituted the National Expert Group on Vaccine Administration for COVID-19 (NEGVAC) as a nodal agency on all matters related to vaccine administration and rollout. Asked under the Right to Information (RTI) Act for details of the NEGVAC’s meetings, the Health Ministry, which anchors the expert group, replied that it does not know where the concerned documents are. Asked for the dates and minutes of meetings of other task forces constituted to deal with the pandemic, Dr. Nivedita Gupta of the Indian Council of Medical Research (ICMR) denied the request with this bizarre logic: “The information is not in the public domain”. Asked for the Memorandum of Understanding (MoU) between the ICMR and Bharat Biotech for the rollout of Covaxin, she gave the same response.

Through seven years in power, the Modi government has systematically hobbled the RTI Act. In the face of the pandemic, its war on transparency brings fatal consequences. Brazen denials mark its responses to RTI requests filed over the past year. Such secrecy runs through the full spectrum of COVID-19-related matters — from vaccine manufacturing and pricing decisions, to last year’s lockdown planning and the establishment and running of the Rs. 10,000 crore-plus PM CARES fund. Opacity serves as a cover for large-scaleover-centralisation and misgovernance.

Botched up vaccination programme

Despite thousands of daily deaths, the government continues to withhold information on critical life-saving policies and decisions. Take, for example, India’s botched up vaccination programme. On January 3, the Drugs Controller General of India (DCGI) approved Covaxin. Until today, Bharat Biotech has not published peer-reviewed interim efficacy analyses from Phase 3 clinical trials. The DCGI has denied RTI requests about its decision to grant emergency approval to Covaxin and Covishield, claiming that information about efficacy and safety constitutes confidential commercial information. But such data are routinely published in peer-reviewed journals and disclosed to the public by regulators. Effectively, the DCGI is keeping secret decision-making on what it called a “110% safe vaccine”. But people being administered Covaxin had to consent to a declaration that in case of serious adverse impacts, compensation will be awarded only if a causal link to the vaccine is established.

Second, the rollout of vaccines is badly hit by shortages. Against the target of 30 crore Indians being vaccinated by July, only over 4 crore have been fully vaccinated so far. Covaxin is developed with the help of the ICMR’s National Institute of Virology (NIV) and the Council of Scientific and Industrial Research-Indian Institute of Chemical Technology (IICT), and co-owned by the ICMR. Its production is the easiest for the government to ramp up, and massive vaccine production capacity in the public sector is lying idle. So, what explains the government-enabled scarcity of vaccines?

Like the ICMR, the NIV too refuses to disclose the MoU with Bharat Biotech, and the full extent of public investment into Covaxin’s research and development. Similarly, asked for details of the research collaboration with Bharat Biotech, and investment of public funds in Covaxin, the IICT too denies information, calling the request “an unwarranted invasion of privacy”. Meanwhile, Covaxin has reached private hospitals as among the most expensive vaccines in the world, at over Rs. 1,200 a dose. And the ICMR is earning 5% royalties on the vaccine. This and other scraps of information are public only thanks to the Supreme Court hearing a suo motu PIL on the pandemic. The government’s summary dismissals not just violate citizens’ fundamental right to information but also push RTI requests into an appeal process that can take over two years. Time and resources go waste as citizens have to approach Information Commissions and High Courts to access basic information.

Information blackhole

Effective planning and administration cannot occur in the dark, and experts attribute the death toll and suffering to mismanagement and lack of preparation as much as the virus itself. Official secrecy is undermining the capacity of scientists, public health and policy experts to provide timely feedback and suggestions to the government. Such is the information blackhole that over 900 scientists have appealed to the Prime Minister for access to information and data. But little has changed.

The Supreme Court should order the government to suo motu disclose information related to COVID-19 policies, in line with Sections 4 and 7 of the RTI Act, which deal with proactive and urgent disclosures with consequences for life and liberty. Writing about famines in colonial India, Amartya Sen argued that mass hunger and death do not occur where information flows freely. Ditto for pandemic management.

Aniket Aga teaches at Ashoka University; Chitrangada Choudhury is a journalist on the editorial board of Article 14

With monetary policy having run its course, fiscal policy alone can spur the economy

Reading the Reserve Bank of India (RBI) ’s annual report for 2020-21, the economist is driven to rethink why India today needs its central bank more than ever before. So, what would be the direction from which these thoughts are likely to flow? Most likely it will be the one suggesting that perhaps the RBI is to be desired more for its role as a source of unbiased and reliable information on the economy than its potency in driving it. The former is not a trivial presence at all, especially at a time when citizens are sceptical of the independence of government agencies originally intended to be free from its influence, leave alone stranglehold. The annual report is a splendid document. The information presented in it enables us to understand which economic policy can move the economy even as it shows that the RBI’s own capacity in this task may currently be limited. This by itself is vital guidance at this moment, though the RBI may not read the situation in the same way as others do.

A coherent story

In the annual report we find data on the movement of three variables over the past year, namely, interest rates, inflation and credit flow. Helpfully, in some cases the data are exactly for one year commencing March 27, 2020, a few days after the nationwide lockdown was announced. So, we are able to track the path of the variables of our interest since. Together they tell a coherent story.

And. what is that story? First, it is one of the very active use of monetary policy to stave off the negative impact of the lockdown. The RBI immediately lowered the interest rate in its command, the repo rate, in fact more than once, and has held it since. Then it attempted to influence the long-term rate of interest through targeted long-term repo operations (TLTROs) in order to encourage investment. It enhanced liquidity by lowering the cash reserve ratio. Finally, in sync with the credit guarantee available under the Emergency Credit Line Guarantee Scheme of the Government of India, the on-tap TLTRO scheme was expanded to cover 26 stressed sectors. These amounted to a combination of incentives, enabling measures and safety nets revolving around credit. India’s monetary authority cannot be faulted for the speed with which it acted, which was markedly different from what was seen on the fiscal front.

A limited policy

The second part of the story is that these thoughtful monetary policy actions were not successful in spurring the growth of credit, and thus economic activity. In the following year, credit growth slowed further, remaining barely positive for industry, a sector highly dependent on bank credit. To get the picture, non-food credit to this sector grew by a mere 0.4% in 2020-21.

To understand this outcome we do not have to seek very far. It is not as if the reduction in the central bank’s interest rate actions did not have an impact on commercial bank lending rates, which too declined for all the sectors of the economy. Thus, the so-called ‘transmission mechanism’ worked. That it did not spur credit growth though is to be seen in the light of experience gained from episodes when aggregate demand collapsed. The lockdown did set off such a movement. We see replicated in India the global history of the Great Depression of the 1930s and the Great Recession of the 2000s when monetary policy was ineffective, as animal spirits, at least among investors outside the stock market, were bearish. However, in the case of inflation, again meticulously documented by the RBI, India’s experience stands out. Here, after the lockdown and contrary to the global pattern, the inflation rate has risen well beyond the target, leaving in doubt the ability of monetary policy to control it.

The contribution of the RBI, through its admirably transparent annual report, is to have laid bare the economic toolkit at our disposal. It is plain that monetary policy has run its course. Fiscal policy alone can spur the economy now.

Pulapre Balakrishnan teaches economics at Ashoka University

Creating jobs and boosting incomes, along with vaccination, can sustain the economy

The national income estimates released by the NSO posit an economy that appears to have found some footing in the January-March quarter before the pandemic’s second wave hit. GDP expanded by 1.6% in the final quarter of the last fiscal, an acceleration from the 0.5% growth in the preceding three-month period, that marginally softened the extent of the full-year’s record contraction to 7.3%. The Centre had earlier projected full-year GDP to contract by 8%. There was a 3.7% growth in fourth-quarter gross value added, with all but two of the economy’s eight broad sectors posting expansions. Mining and quarrying and the worst-hit contact-intensive omnibus services category of trade, hotels, transport, communications and broadcasting contracted 5.7% and 2.3%, respectively. Still, the pandemic’s crushing impact over the preceding three quarters meant that only the agriculture, forestry and fishing and the utility services recorded full-year growth. On the expenditure side, private consumption spending appeared to have rebounded to growth for the first time in four quarters, posting an expansion of 2.7% that moderated the full-year’s contraction to 9.1%. And gross fixed capital formation, a proxy for private investment, jumped 11% in the three-month period, most likely helped in fair measure by an increase in capital spending by the Government.

The NSO data, however, needs to be seen in perspective. With the ground having shifted since March with the surge in COVID-19 infections, it is vital to correlate the figures with on-the-ground information. Manufacturing GVA appeared to have gained some traction in the last quarter (a 6.9% expansion), following a return to growth in the September-December period after five straight quarters of contraction. Disappointingly, IHS Markit’s Manufacturing PMI survey for May showed the key sector facing the prospect of stagnation as weakening demand pushed increases in new orders and output to 10-month lows. Similarly, the fiscal 2020-21 provisional estimates for private consumption spending — the bulwark accounting for over 50% of GDP — showed the expenditure figure at Rs. 75.6-lakh crore, its weakest level in three years. Here again, the Refinitiv-Ipsos Primary Consumer Sentiment Index for May, showed consumer confidence had tumbled by 6.3 percentage points from April as fears over the pandemic’s impact depressed respondents’ outlook on all four fronts including jobs and personal financial conditions. With unabated job losses pushing overall unemployment to a one-year high of 11.9% in May, as per CMIE data, and rural areas ravaged, only an accelerated nationwide vaccine roll-out and direct job and income boosting measures can prevent the economy from backsliding again.

China’s demographic interventions have hadunintended social, economic consequences

Six years after abandoning the “one child policy” of 1979, China’s Communist Party has now introduced a “three child policy”. The move is to “improve China’s population structure, actively respond to the ageing population, and preserve the country’s human resource advantages”, the party’s Politburo said on May 31. The once-in-a-decade population census, released on May 11, may have prompted the latest change, recording 12 million births in 2020, the lowest since 1961. The census said there were 264 million in the 60 and over age group, up 5.44% since 2010 and accounting for 18.70% of the population. After the one child policy, China’s fertility rate fell from 2.75 in 1979 to 1.69 in 2018. Monday’s announcement is as much an acknowledgement as may ever come of the unintended consequences of deeply intrusive family planning measures, going back even before 1979, to Mao’s “later, longer, fewer” campaign, which itself, ironically, followed his exhortations to have more children to build the workforce. The party officially still defends the one child policy — that it prevented an additional 300 million births. Yet, the urgency of recent measures suggests otherwise, as China grapples with both an ageing and deeply gender-imbalanced population, and demographers’ worst fears of countries getting old before they get rich.

In 2013, China allowed couples to have a second child if either parent was an only child, with the two child policy introduced in 2015. Explaining why the measures did not boost birth rates, economists Jin Zhangfeng, Pan Shiyuan, and Zheng Zhijie wrote last year the two child policy “substantially increase[d] the number of second-child births” among those “less sensitive to child-rearing costs” but “substantially decrease[d] the number of first-child births” attributing it to rising costs. “Other developing countries, even without China’s stringent child-limitation policies, have also experienced declines,” they argued, suggesting “policy makers should give priority to reducing the child-rearing costs borne by prospective parents rather than simply relaxing or even abolishing birth quotas”. The latest announcement did acknowledge those broader structural problems, pledging to reduce families’ spending on education. It is, however, by no means an abandoning of China’s family planning policies. The entrenched — and widely reviled — family planning bureaucracy remains in place, and this week’s statement underlined that the “current reward and assistance system and preferential policies” for those following rules continue. Even leaving aside the strong moral argument against intrusive family planning — enforcement has meant forced abortions, sterilisations, and other abuses, some of which are still being reported in parts such as the Muslim-majority Xinjiang region — China’s experience is a reminder of the unintended social and economic consequences of state-led demographic interventions.

The following is, an extract from Tagore’s latest letters to shantiniketan published in the ‘Servants’: - Of the politics of our own country, I get some news in occasional hints and suggestions but cannot understand everything distinctly from such a distance. So I cannot make bold to judge of them. Recently a presidential address of Bepin Baba has reached my hands, from which I have got the version of one side, but as yet I have not had the opportunity of bearing the version of the other side fully and clearly. After comparing the Swadeshi movement of Bengal with the present movement, Bepin Baba has remarked that our movement was not a destructive (nastika) but constructive one (astika). To me this appears to be an exaggeration. For my complaint was just this at that time and I was abused for it by my countrymen. A perusal of my writings of that period will make this clear. At that time it was the aim of Bengal to do injury to Englishmen by having recourse to boycott. Only I myself protested against it and held that the foundation of self-government in the country was to be laid with our own efforts.

A piquant situation has arisen for the Centre following the reluctance of the Punjab Government to transfer Fazilka to Haryana, which was agreed upon when the Prime Minister, Mrs. Indira Gandhi, gave her award on the future of Chandigarh [New Delhi, June 1]. The tussle between the two States over Chandigarh went on for over three years when finally Mrs. Gandhi announced her verdict that the city should go to Punjab and, in return, the latter would make over the Fazilka Abhor area to Haryana. It was also agreed that Haryana would construct a new capital for which a sum of Rs. 20 crores has been promised in the agreement, and, for five years, the State also would have its capital at Chandigarh. A Boundary Commission was to be appointed to go into other territorial adjustments among Haryana, Punjab and Himachal Pradesh. Fazilka is to be transferred to Haryana to synchronise with the boundary adjustments recommended by the Commission. Since the award has been given, several meetings have been held by the Union Home Minister and the Prime Minister with the Chief Ministers of Punjab and Haryana on the terms of reference to the Boundary Commission.