The News Editorial Analysis 28th Jan 2022

Central Asia meet forms Afghan group 

PM says countries ‘concerned about the developments in Afghanistan’; leaders discuss connectivityOvercoming the lack of land connectivity between India and Central Asia’s landlocked countries was one of the “main issues of discussion” during the first India-Central Asia Summit hosted by Prime Minister Narendra Modi with the Presidents of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, officials said on Thursday.The leaders also spoke at length about concerns over Afghanistan, sharing the “same concerns and same objectives” in broader terms and agreed to setting up a Joint Working Group (JWG) of senior officials, said Reenat Sandhu, Secretary (West) in the Ministry of External Affairs, listing those concerns as the need for immediate humanitarian assistance, ensuring the formation of a truly representative and inclusive government, combating terrorism and drug trafficking, and preserving the rights of women, children and minorities.Mr. Modi tweeted that all countries at the summit were “concerned about the developments in Afghanistan”. “In this context, our mutual cooperation has become even more important for regional security and stability,”

More meetings proposed

Mr. Modi also proposed a number of high-level exchanges between the two sides, including biannual summits and annual meetings of the Foreign, Trade and Cultural Ministers and Secretaries of Security (National Security Advisers) to “strengthen cooperation in the areas of political and development, partnership, trade and connectivity, culture and tourism and security”, the officials said, adding that these proposals were accepted, along with a plan to build a “Central Asia Centre” in New Delhi. They also announced two “Joint Working Groups” on Afghanistan and the Chabahar port project.“Further development of mutual connectivity is essential for enhanced trade and commerce between India and Central Asian countries in the context of their landlocked nature and lack of overland connectivity with India,” said the “Delhi Declaration” joint statement issued at the end of the 90-minute summit. “The leaders emphasised that connectivity projects deserve priority attention and could be a force-multiplier for trade and economic cooperation and contacts between countries and people,” it added, but did not directly refer to the blocks on transit trade imposed by Pakistan.The leaders discussed possibilities of increasing Indian trade with the region beyond the currently low levels of about $2 billion, welcoming options over sea provided by Iranian ports including the Chabahar port terminal managed by India and the International North South Transport Corridor (INSTC) through Bandar Abbas that is promoted by Russia and Iran, and which is due to include both Chabahar and Turkmenistan’s Turkmenbashi port.Notably, the statement recorded that President Gurbanguly Berdimuhamedov had “stressed on the importance of TAPI gas pipeline project” that runs from Turkmenistan’s Galknyshk oil fields near Mary (Marv) through Afghanistan and Pakistan to India, but did not record any support from India on the project. The TAPI project, inaugurated in 2015, has run into issues over India-Pakistan tensions and the situation in Afghanistan, though the Taliban officials recently said they hope to restart work on the pipeline in September 2022.

Air India back in Tata Group hangar

Govt. transfers shares to Tata Sons unit TalaceThe Union government on Thursday transferred its shares in Air India, along with control and management, to the Tata Sons subsidiary Talace, ending a disinvestment process that started five years ago and saw a failed attempt. The airline has been a public sector undertaking from 1953.The transaction covers Air India, Air India Express and the government’s entire 50% stake in a ground handling company AI SATS.“We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline. I warmly welcome all the employees of Air India to our Group and look forward to working together,” N. Chandrasekaran, chairman, Tata Sons, said. He met Prime Minister Narendra Modi. Mr. Chandrasekaran’s comment followed the last meeting of the incumbent Board of the airline headed by Secretary, Ministry of Civil Aviation, Rajeev Bansal. Once the transfer was completed, the new Board of the airline held its first meeting.In a statement, the Tata Group said that it philosophically agreed with the Prime Minister’s vision of making the aviation sector affordable.

The government has a total disinvestment target of ₹1.75 lakh crore for the financial year 2021-22.Tata Sons have paid ₹2,700 crore in cash for the airline, along with taking on a debt of ₹15,300 crore. Of the total debt and liabilities of Air India of ₹77,396 crore, the government will absorb ₹62,096 crore. Some non-core assets of Air India with a book value of ₹15,834 crore will also remain with the governmen“Formalities have been completed. Air India disinvestment transaction is now closed. The shares have been transferred to Talace. A cash consideration of ₹2,700 crore has been received and the debt of ₹15,300 crore has been accepted [by the new owners],” Secretary, Department of Investment and Public Asset Management, Tuhin K. Pandey told reporters here.Tatas will get Air India’s fleet of 141 planes, along with ownership of iconic brands like Air India, Indian Airlines and the Maharajah.As many as 13,500 permanent and contractual employees will also move to the Tata fold and have to be retained at least for one year.

Early signs of a flat caseload, says govt.

Need to track changes: Health MinistryThere are early indications of a plateau in COVID-19 cases being reported in certain geographies, but the trend needs to be observed and required precautions need to be continued, the Union Health Ministry said on Thursday.At the weekly briefing, Lav Agarwal, Joint Secretary, Health Ministry, said 10 States contributed to more than 77% of the total active cases in the country. Karnataka, Maharashtra, Kerala and Tamil Nadu led the tally.

90% in home isolation

Data released by the Ministry added that Uttar Pradesh, Delhi, Odisha, Haryana and West Bengal were registering a steady decline in daily caseload, while Pune, Ernakulam and Nagpur were flagged as districts of concern. Also more than 90% of active cases are under home isolation at present — indicating mild to moderate clinical severity, Mr. Agarwal said.“A clear trend in terms of fewer COVID cases requiring oxygen-supported beds or ICU beds has been observed,” he said.C“Also, active COVID-19 cases and corresponding deaths are much lower during the present wave compared to earlier surges,” he added.Warning against any laxity in following COVID norms, Mr. Agarwal said 400 districts have reported over 10% weekly positivity while in 141 districts, it was between five to 10% in the week ending January 26.Speaking at the briefing, National Centre for Disease Control (NCDC) director Sujeet Singh warned that Delta variant cases had not been completely eliminated. “Unvaccinated persons with co-morbidities form the high-risk group currently, and maximum fatalities due to COVID are being reported from this group,” he said.Omicron sub-variant BA.2 is more prevalent in India now as opposed to BA.1 being dominant when international travellers were being analysed,

Not for third party in LAC talks, China tells U.S.

PLA Senior Colonel says 14th round of talks on the dispute with India was ‘positive and constructive’China’s military said on Thursday it was “opposed to third-party involvement” in the India-China border dispute, as it hit out at comments from Washington about Beijing “intimidating” its neighbours.“The China-India border issue is a matter between China and India, and both sides have expressed their opposition to third-party involvement,” People’s Liberation Army (PLA) Senior Colonel Wu Qian, spokesperson for the Ministry of Defence, said in Beijing. He appeared to be referring to comments from Washington ahead of the 14th round of talks between Indian and Chinese military commanders earlier this month saying the U.S. was “closely monitoring” the situation and that it was concerned about Beijing’s “destabilising” behaviour and “attempt to intimidate its neighbours”.“Some people on the U.S. side like to use the word ‘coercion’ but they do not know that the U.S. is the originator and master of ‘coercive diplomacy’,” Col. Wu said, adding that China was “firmly opposed to the U.S. engaging in ‘coercive diplomacy’ with other countries”.“China will work together with the Indian side to continue to properly deal with the border issue through negotiations,” he added. The PLA spokesperson described the 14th round of talks as “positive and constructive”. He referred to the joint statement put out by both sides after the talks agreeing to “stay in close contact and maintain dialogue” to work out a “mutually acceptable resolution” of remaining issues along the Line of Actual Control (LAC).While there was no agreement to disengage in the three remaining areas of difference — the focus of the 14th round was Hot Springs, where both sides are thought to be close to agreeing on a plan to disengage, while differences in Demchok and Depsang are more pronounced with the prospects of an early resolution unlikely — the joint statement struck a more positive note than the previous round, when both sides traded accusations and failed to issue a joint statement.China, Indian officials have said, has dragged its feet in the negotiations to return to status quo on the LAC, prior to the multiple transgressions by the PLA starting in April 2020.

The PLA spokesperson said there were four points of agreement reached in the last round. “First, the two sides agreed that they should follow the guidance provided by the leaders of the two countries and work for the resolution of the remaining issues at the earliest,” he said. “Second, the two sides agreed to consolidate the previous outcomes and take effective efforts to maintain the security and stability on the ground in the Western Sector including in winter. Third, they agreed to stay in close contact and maintain dialogue via military and diplomatic channels and work out a mutually acceptable resolution of the remaining issues at the earliest. Fourth, they agreed that the next round of the Commanders’ talks should be held at the earliest.”

India’s economy and the challenge of informality

Policy efforts to formalise the economy will have limited results as the bulk of informal units are petty producersSince 2016, the Government has made several efforts to formalise the economy. Currency demonetisation, introduction of the Goods and Services Tax (GST), digitalisation of financial transactions and enrolment of informal sector workers on numerous government Internet portals are all meant to encourage the formalisation of the economy. But why the impetus for formalisation? The formal sector is more productive than the informal sector, and formal workers have access to social security benefits.The above-mentioned efforts are based on the “fiscal perspective” of formalisation. This perspective appears to draw from a strand of thought advanced by some international financial institutions such as the International Monetary Fund, which foregrounds the persistence of the informal sector to excessive state regulation of enterprises and labour which drives genuine economic activity outside the regulatory ambit. It underplays informality as an outcome of structural and historical factors of economic backwardness. Arguably, excessive regulation and taxation ensure the endurance of informal activities. Hence, it is believed that simplifying registration processes, easing rules for business conduct, and lowering the standards of protection of formal sector workers will bring informal enterprises and their workers into the fold of formality.The fiscal perspective has a long lineage in India going back to tax reforms initiated in the mid-1980s. Early on, in an attempt to promote employment, India protected small enterprises engaged in labour intensive manufacturing by providing them with fiscal concessions and regulating large-scale industry by licensing. Questions of efficiency aside, such measures led to many labour-intensive industries getting diffused into the informal/unorganised sectors.Further, they led to the formation of dense output and labour market inter-linkages between the informal and formal sectors via sub-contracting and outsourcing arrangements (quite like in labour abundant Asian economies). In the textile industry, the rise of the power looms at the expense of composite mills in the organised sector and handlooms in the unorganised sector best illustrates the policy outcome. While such policy initiatives may have encouraged employment, bringing the enterprises which benefited from the policy into the tax net has been a challenge. The challenge is only partly administrative. Political and economic reasons operating at the regional/local level in a competitive electoral democracy are responsible for this phenomenon, too.

Sign of underdevelopment

Undoubtedly, widening the tax net and reducing tax evasion are necessary. However, global evidence suggests that the view that legal and regulatory hurdles alone are mainly responsible for holding back formalisation does not hold much water. A well-regarded study, ‘Informality and Development’ (https://bit.ly/3KOBEVx), argues that the persistence of informality is, in fact, a sign of underdevelopment. Across countries, the paper finds a negative association between informality (as measured by the share of self-employed in total workers) and per capita income. The finding suggests that informality decreases with economic growth, albeit slowly. A similar association is also evident across major States in India, based on official PLFS data. Hence, the persistence of a high share of informal employment in total employment seems nothing but a lack of adequate growth or continuation of underdevelopment.

Transformation in Asia

The defining characteristic of economic development is a movement of low-productivity informal (traditional) sector workers to the formal or modern (or organised) sector — known as structural transformation. East Asia witnessed rapid structural change in the second half of the 20th century as poor agrarian economies rapidly industrialised, drawing labour from traditional agriculture. However, in many parts of the developing world, including India, informality has reduced at a very sluggish pace, manifesting itself most visibly in urban squalor, poverty and (open and disguised) unemployment.Despite witnessing rapid economic growth over the last two decades, 90% of workers in India have remained informally employed, producing about half of GDP. Combining the International Labour Organization’s widely agreed upon template of definitions with India’s official definition (of formal jobs as those providing at least one social security benefit — such as EPF), the share of formal workers in India stood at 9.7% (47.5 million). Official PLFS data shows that 75% of informal workers are self-employed and casual wage workers with average earnings lower than regular salaried workers. Significantly, the prevalence of informal employment is also widespread in the non-agriculture sector. About half of informal workers are engaged in non-agriculture sectors which spread across urban and rural areas.

It has many layers

It needs to be appreciated that informality is now differentiated and multi-layered. Industries thriving without paying taxes are only the tip of the informal sector’s iceberg. What remains hidden are the large swathes of low productivity informal establishments working as household and self-employment units which represent “petty production”. To conflate the two distinct segments of the informal sector would be a serious conceptual error. Survival is perhaps the biggest challenge for most informal workers (and their enterprises), and precarity defines their existence.Despite (well-intentioned) efforts at formalisation, the challenge of informality looms large for India. The novel coronavirus pandemic has only exacerbated this challenge. Research by the State Bank of India recently reported the economy formalised rapidly during the pandemic year of 2020-21, with the informal sector’s GDP share shrinking to less than 20%, from about 50% a few years ago — close to the figure for developed countries. As we have argued elsewhere (https://bit.ly/3G6JtST), these findings of a sharp contraction of the informal sector during the pandemic year (2020-21) do not represent a sustained structural transformation of the low productive informal sector into a more productive formal sector. They are a temporary (and unfortunate) outcome of the pandemic and severe lockdowns imposed in 2020 and 2021. The informal sector will perforce spring back to life soon, for sheer survival, to produce whatever it can, using its abundant labour and meagre resources.

The necessary elements

Policy efforts directed at bringing in the tip of the informal sector’s iceberg into the fold of formality by alleviating legal and regulatory hurdles are laudable. However, these initiatives fail to appreciate that the bulk of the informal units and their workers are essentially petty producers (self-employed and casual workers) eking their subsistence out of minimal resources. Therefore, these attempts will yield limited results. The continued dominance of informality defines under-development. Policy-induced restrictions are minor irritants, at best. The economy will get formalised when informal enterprises become more productive through greater capital investment and increased education and skills are imparted to its workers. A mere registration under numerous official portals will not ensure access to social security, considering the poor record of implementation of labour laws.

 ‘Growing threat to rights in India’

Former Vice-President Hamid Ansari, four U.S. lawmakers express concernAs part of a reflective celebration of India’s Republic Day, a Democratic Senator and three Democratic Congressmen expressed their concerns about democracy and human rights in India.The remarks were made at a Congressional briefing, Protecting India’s Pluralist Constitution, organised by the Hindus for Human Rights, the Indian American Muslim Council and 15 other organisations.

Former Vice-President of India Hamid Ansari also delivered a video message at the event.Ed Markey, senior Senator from Massachusetts, said that as the world’s largest democracy, India had for long been committed to universal human rights and the rule of law, but there were concerns now. “That commitment includes the protection of religious freedom and refraining from actions that limit the rights of minorities,” Mr. Markey said.

Peeling back rights

“That is why I remain concerned about Prime Minister Modi’s government’s efforts to peel back the rights of religious minorities in India. Laws on religious conversion, citizenship and other restrictive measures fly in the face of India’s inclusive secular constitution and core tenants of any democracy,” he said.Mr. Markey said that while honouring the strong ties between the two countries, the U.S. would continue to speak up when a fellow democracy was “unable to protect” all of its people.

Rising intolerance

Mr. Ansari also shared his concerns.“In recent years, we have experienced emergence of trends and practices that dispute the well-established principle of civic nationalism and interposes a new and imaginary practice of cultural nationalism … It seeks to present an electoral majority in the guise of a religious majority and monopolise political power. It wants to distinguish citizens on the basis of their faith, give vent to intolerance, insinuate otherness, and promote disquiet and insecurity,” he said.Mr. Ansari said these trends need to be contested both legally and politically.U.S. Congressman from Massachusetts, Jim McGovern, who co-chairs the bi-partisan Tom Lantos Human Rights Commission, also spoke about the strength of the U.S.-India relationship and the need to speak up for human rights.

2.49 lakh fresh COVID-19 cases reported

Union Home Ministry extends guidelines till February 28, tells States to strictly enforce normsThe country recorded 2,49,415 new COVID-19 cases on Thursday. The total number of infections has reached 4.03 crore, and the active cases have crossed the 33.5 lakh mark.The figures are based on the State bulletins released until 10.30 p.m. on Thursday. However, Ladakh, Tripura, Jharkhand and Lakshadweep had not yet released data for the day.Kerala recorded 51,739 infections on Thursday, followed by Karnataka (38,083) and Tamil Nadu (28,515).On Thursday, 616 deaths were recorded in India, considerably higher than the average levels recorded in the last week. The total number of recorded fatalities has reached 4,91,754.Kerala reported the most deaths with 153 fatalities (57 were from a backlog), followed by Tamil Nadu (53) and Karnataka (49).On Wednesday, 14.6 lakh tests were conducted (the results for which were made available on Thursday).The test positivity rate (the number of cases detected per 100 tests) was 17%.As of Thursday, 91.9% of the eligible population has been vaccinated with at least one dose, while 68.4% have received both doses.In the 15-17 age cohort, 59.9% of the population have received their first dose.Altogether, 93,67,34,502 first doses, 69,72,07,423 second doses, and 98,74,345 booster doses have been administered across India.The Ministry of Home Affairs (MHA) has extended the COVID-19 guidelines issued under the Disaster Management Act till February 28.Union Home Secretary Ajay Kumar Bhalla said in a letter to States that due to the current COVID wave, led by the new variant, Omicron, there has been a steady increase in the number of COVID cases in the country and the active cases have increased to over 22 lakh.

“Though a majority of active cases are recovering fast and a low percentage of cases are in hospitals, it is still a matter of concern that 407 districts in 34 States and Union Territories are reporting a positivity rate of more than 10%. Therefore, looking at the current trends of COVID virus, there is a need to exercise caution and vigilance,” the letter said. States were asked to observe all precautions and not let the guard down.“Imposition and lifting of local curbs/restrictions should be dynamic and should be based on the case positivity and hospitalisation status at the local level,” the letter said.

The Ministry said there should be continued focus on the five-fold strategy of test-track-treat, vaccination and adherence to COVID appropriate behaviour. State enforcement agencies have been told to strictly enforce norms such as wearing of masks, maintaining safe social distancing and limiting social gatherings.

Covishield and Covaxin get conditional market approval

Health Ministry announces DCGI approval for adult useConditional market authorisation was granted on Thursday by the Drugs Controller General of India (DCGI) to COVID-19 vaccines Covishield and Covaxin for use in adults. Announcing the decision, Union Health Minister Mansukh Mandaviya tweeted: “The @CDSCO_INDIA_INF has now upgraded the permission for Covaxin and Covishield from restricted use in emergency situations to normal new drug permission in the adult population with certain conditions.”The conditions set down by the DCGI include supply for programmatic settings including registration on the CoWin platform and continued submission of safety data on a six-monthly basis, the Minister added, referring to rules under the New Drugs and Clinical Trials Rules, 2019.Adverse events following immunisation will continue to be monitored.Conditional market authorisation is a new category of market authorisation that has emerged during the current global pandemic of COVID-19. The approval pathways through this route are fast-tracked with certain conditions to enhance the access to certain pharmaceuticals for meeting the emerging needs of drugs or vaccines, the Health Ministry explained.Adar Poonawalla, CEO of Serum Institute of India (SII) which manufactures Covishield said, “We are delighted to receive the conditional market authorisation for Covishield from the DCGI. With this, our focus should be to reduce the gap between the 2nd and the 3rd dose to six months, as it is done globally. Our objective must be to get the population fully vaccinated to curb the spread of the pandemic.”

The News Editorial Analysis 27th Jan 2022