DAILY NEWS ANALYSIS 13 MAY
EDITORIALS
Getting cash transfers out of a JAM
Context:
- JAM trinity (Jan Dhan-Aadhaar-Mobile) has been propounded as a dream cash-transfer infrastructure for India.
- It was born in chapter 3 of the Economic Survey 2015, titled “Wiping every tear from every eye: The JAM number trinity solution”.
- The original formulation, in 2015, mentioned two possible incarnations of the trinity: mobile banking and post office payments.
- The second option never made much headway, perhaps because it did not have enough scope for private profit.
JAM and its benefits:
- So Aadhaar-enabled mobile banking became the supreme goal.
- This utopia was happily embraced by a familiar bandwagon of Aadhaar champions, software businesses, digital-payment companies, fintech wizards, and embedded economists.
- Later, JAM project latched on to another flourishing narrative, universal basic income (UBI).
- In the early days of the crisis, JAM was often invoked (sometimes along with UBI) as a possible tool of emergency relief.
Challenges to JAM:
- But when the time actually came to make cash transfers to the poor, JAM turned out to be of little use.
- JAM had not gone beyond some fancy digital-payment systems for the privileged. Poor people, far from using the “thumb in thirty seconds” method to cash in, were still running from pillar to post to collect their meagre benefits from old-fashioned bank accounts.
- Sure enough, long bank queues and related hardships have started emerging, especially in rural areas where the density of banks is relatively low.
- In a Dalberg survey conducted last month in 10 states, only 25% of poor households reported that it was “easy” to access cash benefits.
- The crowds are all set to swell further as and when the lockdown is lifted or relaxed.
One way to think about this is to compare women’s JDY accounts with another possible basis for cash transfers, at least in rural areas: the list of households that have a National Rural Employment Guarantee Act (NREGA) job card.
The numbers of accounts are roughly comparable: about 14 crores for NREGA job cards, and 12 crores or so for women’s JDY accounts in rural and semi-urban areas (assuming that the gender distribution of accounts is similar in rural and urban areas). For purposes of cash relief, the JDY approach turns out to fare poorly on several counts.
Errors galore
- Non-Operational Banking account: First, JDY accounts are a mighty mess – the NREGA job-cards list is far more transparent and well organised. In 2014-15, banks opened JDY accounts en masse to meet the targets. Banking norms went for a toss: many accounts were opened without informed consent, duplicate accounts flourished, Aadhaar numbers were seeded without any safeguards, and so on.
- A large proportion of JDY accounts (40% in March 2017, down to 19% in January 2020) went “dormant” as customers were unable or unwilling to use them.
- Other accounts were blocked because the account holders were unable to complete timely ex-post biometric authentication (“e-KYC”) of the Aadhaar numbers that had been seeded into their accounts.
- It is not clear what proportion of JDY accounts are operational today, in the sense that a bank transfer to these accounts will actually reach the recipient in good time.
- Large Exclusion errors: Second, cash transfers to women’s JDY accounts are likely to involve large exclusion errors.
- According to a recent Yale study, less than half of poor adult women have a JDY account (an even lower proportion, 21%, know that they have a JDY account).
- The NREGA job-card list is likely to have much better coverage of poor households.
- The natural complementarity between NREGA and social security pensions (covering more than four crores persons under the National Social Assistance Programme alone) would further help to reduce exclusion errors.
- Large Inclusion errors:Third, inclusion errors are also likely to be larger in the JDY approach.
- Job cards are meant for rural workers, JDY accounts are for everyone.
- National Election Studies 2019 data, analysed by Sanjay Kumar and Shreyas Sardesai, show that JDY beneficiaries tend to be better off than NREGA beneficiaries.
Way Forward:
- As far as effective payment is concerned, there is a further argument in favour of the NREGA job-cards list:
- Unlike JDY accounts, it lends itself to the “cash-in-hand” method (on-the-spot payment in cash, instead of bank payments) as a possible fallback.
- The job-cards list is a transparent, recursive household list with village and gram Panchayats identifiers, while the list of JDY accounts is an opaque list of individual bank accounts.
- Cash-in-hand may seem like the antithesis of JAM, but this option may become important in the near future if the banking system comes under further stress.
- There are precedents of effective use of the cash-in-hand method, notably in Odisha for pension payments, and in various states for NREGA wage payments.
- Several states (including Andhra Pradesh, Odisha and Tamil Nadu) have already resorted to cash-in-hand for relief payments during the lockdown.
Conclusion:
- In short, there is nothing compelling about the use of women’s JDY accounts for cash relief. In fact, it is a bit of a shot in the dark.
- It would do well, however, to consider other options after that, including a switch to the NREGA job-cards list in rural areas.
- As for the JAM trinity, it should come down to earth for a reality check.
Reference: https://www.thehindu.com/opinion/lead/getting-cash-transfers-out-of-a-jam/article31568674.ece
Reaffirm cooperative federalism
Context:
- India’s success in defeating COVID-19 actively rests upon Centre-State collaboration, it is indeed its commitment to federalism that is under the most strain.
- Constituent assembly adopted a ‘pick and choose’ policy to formulate a system suited uniquely to the Republic’s need.
- As a result, India’s Constituent Assembly became the first-ever constituent body in the world to embrace what A.H. Birch and others have referred to as ‘cooperative federalism’ — essentially defined by administrative cooperation between the Centre and the States, and a partial dependence of the States upon payments from the Centre.
- Accordingly, Indian constitutional law expert Granville Austin remarks that despite a strong Centre, cooperative federalism doesn’t necessarily result in weaker States; rather, the progress of the Republic rests upon active cooperation between the two.
Fissures in cooperation
Nevertheless, some recent developments have revealed fissures in Centre-State cooperation.
- The zone classifications into ‘red’ and ‘orange’ has evoked sharp criticisms from several States.
- The States have demanded more autonomy in making such classifications. This is despite the fact that State consultation is a legislative mandate cast upon the Centre under the Disaster Management Act of 2005 (under which binding COVID-19 guidelines are being issued by the Centre to the States).
- Centre has chosen instead to respond to COVID-19 through ad hoc binding guidelines issued to States, thereby circumventing the legislative mandate of State consultations. In fact, the Home Ministry order ushering in lockdown 3.0 prohibited States from lowering the Centre’s classifications.
- This selective application of the Act serves to concentrate all decision-making powers with the Centre.
- The Centre has also declared that corporations donating to PM-CARES can avail CSR exemptions, but those donating towards any Chief Minister’s Relief Fund cannot. This directly disincentivises donations to any Chief Minister’s Relief Fund;
- Diverts crores in potential State revenues to PM-CARES;
- Makes the States largely dependent upon the Centre.
- Further, the revenue streams of several States have dried up because of the liquor sale ban;
- Negligible sale of petrol/diesel;
- No land dealings and registration of agreements.
- States’ GST collections have also been severely affected with their dues still not disbursed by the Centre.
- All this has made it difficult for States to defray expenses of salaries, pensions and welfare schemes.
Way forward:
- Centre should view the States as equals, and strengthen their capabilities, instead of increasing their dependence upon itself.
Reference: https://www.thehindu.com/opinion/op-ed/reaffirm-cooperative-federalism/article31567966.ece
COVID-19 and the path ahead
Context:
- COVID-19 has caused severe disruption across the world.
- However, there are variations both among and within countries in the number of cases and in case fatality rates.
- It is not yet clear why such geographical differences exist; they cannot be explained by healthcare facilities alone.
- India had reported its first case on January 30, 2020; as of May 12, it has reported over 71,000 cases and more than 2,300 deaths. In comparison, the U.S. and the U.K., which also reported their first cases around the same time, recorded over 13, 47,930 cases and over 2, 24,330 cases, and over 80,600 deaths and over 32,100 deaths, respectively.
Reasons behind:
- The relatively young population of India has been suggested as a possible factor for this stark difference.
- Differences in case ascertainment may explain some of the patterns: South Korea and Germany tested widely in an effort to identify cases, whereas some countries including India offered testing (at least in the initial stages) to only those with a history of foreign travel or with close contact with a known case.
- However, this does not explain differences in mortality. Also, case fatality rates may even be an underestimation in India where a number of asymptomatic cases may go undetected.
- Low temperature and low absolute humidity have been suggested as factors influencing transmission. But this theory needs further proof.
- Genetic variations may be a possible explanation. During the 2003 SARS epidemic, specific genetic variants that provided resistance or susceptibility to infection were identified in different populations.
- Population-specific differences such as ACE2 (which permits virus to enter the body) may partly explain the differential infection rates of COVID-19.
- It is also possible that some Asian and African populations have been exposed to a multitude of coronaviruses previously, which has provided some cross-immunity.
- The SARS epidemic did not affect South Asian and African countries significantly.
- The West Asian countries which bore the brunt of Middle East Respiratory Syndrome (MERS) do not appear to be significantly affected by COVID-19.
- While European countries reacted with restrictions and closures, it remains a question if these measures were taken too late. India closed its doors to foreign travelers early on in the outbreak and has not seen the surge that could potentially have been expected for a population of 1.3 billion people.
Easing of lockdown
- If the epidemic does spread with generalised community transmission, the healthcare, social and economic implications will be significant.
- A measured public health approach is critical in controlling this epidemic.
- Current approaches are largely urban-centric with little focus on rural dynamics.
- A decentralised approach is required to manage the large rural population, and the success in Kerala may serve as a useful model.
- Governments may consider mobilising and training a range of healthcare providers (including providers of primary care, and traditional healthcare systems) in responding to this situation.
- Crucially, the current practice of isolating all cases in hospital settings is not sustainable if cases increase.
- Those with mild symptoms (and their household contacts) should be advised to stay at home.
- If cases cannot be managed at home, community centers may be deployed for isolation.
- The lifting of the lockdown needs to be undertaken in a phased manner.
- One approach would be to ensure that the vulnerable (such as the elderly and the immuno-compromised) are protected beyond initial lockdown periods, while restrictions are lifted for the majority of the healthy population.
- The disease has generally been mild among most people affected in the subcontinent, and it is possible that herd immunity may develop through gradual exposure among healthy individuals.
- While lockdown measures are lifted in a controlled manner, government public health agencies need to continue to promote hygiene measures.
- Physical distancing will need to be continued.
- Public health messages need to be locally tailored and consistent.
- They require not only awareness, but also resources as these are largely middle-class concepts and not easy to practice in crowded areas where there is no running water.
- In conclusion, the approach to the management of COVID-19 needs to blend acute disaster management strategies with longer-term public health measures including economic measures.
Reference: https://www.thehindu.com/opinion/op-ed/covid-19-and-the-path-ahead/article31568078.ece
INTERNATIONAL
India caught in U.S.-China spat over Taiwan’s status at WHO
Indian Challenges:
- India, is set to take over as the next Chairperson of the World Health Organization’s decision-making executive body in May.
- Faced with a major choice on whether to support a U.S. move to reinstate Taiwan’s observer status at the World Health Assembly (WHA) or to China’s opposition to it.
- The U.S. has, in the recent past, accused WHO of acting as a “PR agency” for China during the pandemic.
- Foreign minister will take part in a virtual meeting of the 8-nation Shanghai Cooperation Organisation (SCO) led by China and Russia, which will discuss responses to the pandemic.
About WHO:
- Primary role is to direct and coordinate international health within the United Nations system.
- Main areas of work are health systems; health through the life-course; non-communicable and communicable diseases; preparedness, surveillance and response; and corporate services.
- The World Health Assembly is attended by delegations from all Member States, and determines the policies of the Organization.
- The World Health Organization (WHO) is a specialised agency of the United Nations that is concerned with world public health.
- The WHO is a member of the United Nations Development Group.
Executive bodies of WHO:
World Health Council:
- The World Health Assembly is the supreme decision-making body for WHO.
- It generally meets in Geneva in May each year, and is attended by delegations from all 194 Member States.
- Its main function is to determine the policies of the Organization.
Executive Board:
- The Executive Board is composed of 34 members technically qualified in the field of health.
- Members are elected for 3-year terms.
About The Shanghai Cooperation Organisation:
- The Shanghai Cooperation Organisation (SCO) is a permanent intergovernmental international organization.
- Proceeding from the Shanghai Spirit, the SCO pursues its internal policy based on the principles of mutual trust, mutual benefit, equality, mutual consultations, respect for cultural diversity, and a desire for common development.
- The SCO comprises eight member states, namely the Republic of India, the Republic of Kazakhstan, the People's Republic of China, the Kyrgyz Republic, the Islamic Republic of Pakistan, the Russian Federation, the Republic of Tajikistan, and the Republic of Uzbekistan.
POLITY
PM announces Rs. 20 lakh crores economic stimulus package
PM statement:
- A new-look Lockdown 4.0 beyond May 17 was in the offing.PM announced an economic stimulus package for Rs. 20 lakh crores (estimated at 10% of the GDP).
- This amount includes packages already announced at the beginning of the lockdown, incorporating a slew of measures from the RBI and the payouts under the Pradhan Mantri Garib Kalyan Yojana.
- In this crisis, however, India had an opportunity to look at systems and institutions that were in existence before the crisis hit and how they crumbled.
- PM used example of India’s ramped-up capacity in producing Personal Protection Equipment (PPE) kits and N-95 masks required by medical personnel and frontline health workers to illustrate point that India could achieve this.
- Clarifying that by self-reliance, it did not mean insularity and suspicion of the world as in the past, but embracing the world in the spirit of Vasudheva Kutumbakam (the world is one family).
- Self-reliance in this sense is neither exclusionary nor isolationist, it is for helping the world, with our actions.
- New edifice of this self-reliant India would be based on the five pillars of the economy, infrastructure, demography, technologically driven systems and to strengthen demand and supply chains, with the supply chains being based on local sourcing.
Parliamentary panel questions dilution of labour laws
Comment of Parliamentary committee on Labor:
- Written to State governments demanding an explanation on dilution of labour laws during the ongoing COVID-19 pandemic.
- The issue will be taken up, whenever the committee next meets.
- States have utilised two instruments — using the executive order or ordinance. Whatever be the instrument, it has to get the sanction of the legislature and subsequently it will be scrutinised in the court of law.
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