The News Editorial Analysis December 4 2021

The News Editorial Analysis December 4 2021

The News Editorial Analysis December 4 2021

No proposal to ban NSO Group: Govt.

The Government has no plan to ban “any group named NSO Group”, Minister of State of Electronics and IT Rajeev Chandrasekhar told the Rajya Sabha in a written reply on Friday.

His reply comes in the wake of an uproar and a plea in the Supreme Court earlier this year over the alleged use of the Israeli firm NSO Group’s Pegasus software to snoop on journalists, politicians and activists worldwide, including in India.

Air India employees move Madras HC

They seek to protect their service conditions after the disinvestment

A trade union representing over 5,000 employees of Air India Limited has approached the Madras High Court to restrain the Centre from disinvesting the air carrier without first holding talks with the union for protecting the service conditions and other rights and entitlements of the existing workforce.

Justice V. Parthiban on Friday ordered notices, returnable by January 7, to the Union Ministry of Civil Aviation, Air India Limited (AIL) and Talace Private Limited, a company set up by the Tata Group to acquire Air India. The notices were ordered on the writ petition filed by the Air Corporation Employees Union (ACEU).

Acceding to a request made by senior counsel R. Vaigai, the judge also granted two interim injunctions restraining the official respondents from evicting employees from the residential accommodation that has been provided to them, and also from discontinuing their existing medical facilities.

The judge also asked Additional Solicitor General R. Sankaranarayanan to make sure that a counter affidavit on behalf of the Centre was filed by the next hearing. In an affidavit filed on behalf of the ACEU, its president C. Udayashankar stated that the union had its registered office in New Delhi and regional office in Chennai.

He claimed it was the largest recognised trade union in Air India. Its members included cabin crew, aircraft equipment operators, drivers, instructors, supervisors, assistants, peons, helpers, safaiwalas and security staff, and women employees accounted for about 40% of its membership.

As per a September 14, 2015 deed of recognition of the petitioner union, the management of Air India should consult the union on matters pertaining to the wage structure, service conditions and all other issues affecting the interests of regular non-managerial employees of the company, the ACEU said.

Pointing out that AIL was a company wholly owned by the Government of India, the ACEU said the Centre was now in the process of 100% disinvestment of its stakes. Since the workforce of the air carrier was over 20,000, the petitioner union insisted on protecting their service conditions in the wake of the disinvestment.

Job security till the age of 58 years, wage revision, rectification in anomalies in basic pay of cabin crew, were of the some of the issues to be settled, the union said.

It urged the court to forbear the Centre, Air India and Talace from proceeding with the disinvestment process without taking appropriate measures to protect the terms and conditions of service and rights of the employees.

COP27, in Egypt, must focus on food systems

In any reimagination of food systems, now unequal and strained, the world has to factor in climate change adaptation

The United Nations Climate Change Conference (COP26) held in Glasgow between October 31 and November 12, 2021 with a huge gathering, generating headlines, criticisms, and some commitments.

Governments did commit to reducing greenhouse gas emissions and put forth a record-shattering U.S.$356 million in new support from contributing national and regional governments to protect the most vulnerable. But this is not enough to stay below the limit of 2°C above pre-industrial levels. COP26 fell far short of the ground-breaking success many had hoped for.

“Our fragile planet is hanging by a thread… It is time to go into emergency mode — or our chance of reaching net-zero will itself be zero,” said UN Secretary-General António Guterres.

He added that we must “build [the] resilience of vulnerable communities against the here-and-now impacts of climate change. And make good on the $100 billion climate finance commitment to support developing countries.”

Climate crisis and hunger

The agenda of ending world hunger and malnutrition in all its forms by 2030 is facing formidable challenges as the climate crisis and hunger are linked inextricably, and that along with several major drivers have put the world off track. This has been more so after the COVID-19 pandemic has doubled the population under chronic hunger from 130 million to 270 million.

Analysis by the United Nations World Food Programme (WFP) shows that a 2°C rise in average global temperature from pre-industrial levels will see a staggering 189 million additional people in the grip of hunger. Vulnerable communities, a vast majority of whom rely on subsistence agriculture, fishing, and livestock and, who contribute the least to the climate crisis, will continue to bear the brunt of the impacts with limited means to cushion the blow. The absence of social protection measures such as food safety nets forces the food insecure to depend on humanitarian aid for survival.

Across the world, up to 811 million people do not have enough food and as per the recent WFP estimates, 41 million people in 43 countries are at risk of sliding into famine.

The poor and the vulnerable continue to be hardest hit. Even though they contribute least to greenhouse gas emissions, people in low-income countries face the worst impacts. The top 10 most food-insecure countries contribute 0.08% of global carbon emissions.

Crop failures, water scarcity, and declining nutrition threaten millions who rely on agriculture, fishing, and livestock (it must be reiterated that they are those who contribute the least to the climate crisis).

The climate crisis will impact food production and livelihoods but also, as per the latest Intergovernmental Panel on Climate Change (IPCC) report, threaten nutrition through multi-breadbasket failures.

Adaptation is urgent

Adaptation and resilience-building for poor and vulnerable communities are critical for food security. The focus though has been on reducing emissions and targets related as these are essential to protect livelihoods and the food security of millions.

In its outcome document, the conference took note of how climate and weather extremes and their adverse impacts on people and nature will continue to increase with rising temperatures. There is a strong emphasis on the urgency of scaling up action and support, including finance, capacity-building, and technology transfer, to enhance adaptive capacity, strengthen resilience and reduce vulnerability to climate change in line with the best available science, and considering the priorities and needs of developing country parties.

Significantly, the statement welcomes the national adaptation plans that deepen the understanding and implementation of adaptation actions and priorities. This is an area where India has a huge role to play with its ongoing and now substantial policy work at the national and State levels.

The outcome document also extends an invitation to the IPCC to present at the COP27 (in Egypt) the findings from the contribution of Working Group II to its Sixth Assessment Report, including adaptation needs to further the understanding of global, regional, and local impacts of climate change, response options, and adaptation needs.

Adaptation finance

The recent pledges made by the developed countries on enhancing climate finance to support adaptation in developing countries to adjust to worsening climate crisis impacts were welcomed in the outcome document from COP26. It observed that the contributions made to the Adaptation Fund and the Least Developed Countries Fund, represent significant progress when compared with previous efforts.

The current climate finance for adaptation and base of stakeholders remain insufficient to respond to worsening climate change impacts.

“(COP) calls upon multilateral development banks, other financial institutions, and the private sector to enhance finance mobilization to deliver the scale of resources needed to achieve climate plans, particularly for adaptation, and encourages Parties to continue to explore innovative approaches and instruments for mobilizing finance for adaptation from private sources.”

Mr. Guterres, at an emergency summit in Milan, Italy, at the end of September, had called for funding for developing nations, 50% for adaptation and resilience to the climate crisis. He said, “Adaptation needs are increasing every year.” “Developing countries already need $70 billion for adaptation, and that figure could more than quadruple to $300 billion a year by the end of this decade.”

The WFP is working with communities to adapt to the changing climate that threatens their ability to grow food, secure incomes, and withstand shocks. It has supported 39 governments, helping them realise their national climate ambitions.

In 2020, the WFP implemented climate risk management solutions in 28 countries, which benefited more than six million people so that they are better prepared for climate shocks and stresses and can recover faster.

In India, the WFP and the Ministry of Environment, Climate Change, and Forestry are planning to develop a best practice model on adaptation and mitigation with potential support from the Adaptation Fund.

Here are a few key areas or measures we should focus on. First, creating resilient livelihoods and food security solutions by protecting and improving the livelihood of vulnerable communities. Second, the adaptation of climate-resilient food crops, such as millets, for nutritional security. Third, enabling women’s control and ownership of production processes and assets and increased value addition and local solutions. Fourth, promoting a resilient agriculture sector by creating sustainable opportunities, access to finance, and innovation for small-holder farmers, with climate information and preparedness. Fifth, building capacity and knowledge of civil society and governments for vulnerability analysis to increase food security by addressing the link between food security and climate risk.

Fixing broken food systems

The climate crisis impacts all parts of the global food system — from production to consumption. It destroys land and crops, kills livestock, depletes fisheries, and cuts off transport to markets. This impacts food production, availability, diversity, access, and safety. At the same time, food systems impact the environment and are a driver of climate change.

COP26 came after the pioneering UN Food Systems Summit in September, which was a wake-up call that food systems are unequal, strained, or broken as 811 million people are going to bed hungry.

The United Nations Special Envoy for Food Systems Summit, Agnes Kalibata, has called for an unprecedented focus on food systems — food and agriculture — by ensuring that COP27 has a dedicated focus on this.

Reimagining food systems requires us to look at food systems through the prism of climate change adaptation and mitigation, which must also entail making them resilient to climate change and pandemics while making them green and sustainable.

We are on the cusp of transformation to make the world free of hunger by 2030 and deliver promises for Sustainable Development Goals (SDGs), with strong cooperation and partnership between governments, citizens, civil society organisations, and the private sector.

This requires reimagining the food system towards balancing growth and sustainability, mitigating climate change, ensuring healthy, safe, quality, and affordable food, with investment from governments and the private sector in supporting farmers while maintaining biodiversity, improving resilience, and offering attractive income and work environment to smallholders and youth.

Bishow Parajuli is United Nations World Food Programme (WFP) Representative and Country Director to India

Corridors of death

Elephants are victims of train collisions and electric fences in rising man-animal conflicts

The death of five elephants, four of them cows, caused by trains colliding with them, and all within a week, has again highlighted the gaps in efforts to reduce man-animal conflicts in the country. On November 26, the first accident occurred near Madukkarai in Coimbatore district, Tamil Nadu that has seen many an elephant death on a rail track stretch that extends up to Kanjikode, Kerala. The second accident was near Jagiroad in Assam’s Morigaon district, four days later. Both accidents were at night. Elephant deaths in railway accidents are not new in India. A reply by the Project Elephant division of the Union Ministry of Environment, Forest and Climate Change in May to a set of RTI questions highlighted reasons other than natural causes as having led to the killing of 1,160 elephants over 11 years ending December 2020; 741 deaths were due to electrocution; railway accidents accounted for 186 cases; poaching 169 and poisoning 64. The pattern of train accidents involving elephants has been studied by different stakeholders, including the Railways, Forest and Wildlife Departments and activists, especially with regard to the Madukkarai stretch. That a greater number of casualties getting reported are in elephant passages has been confirmed by the C&AG in its latest compliance audit report on the Ministry of Railways.

There are effective solutions in the case of two causes: electrocution and train hits. Installing hanging solar-powered fences, as has been planned in Tamil Nadu and Kerala, and planting citronella and lemon grass, as done in Golaghat district, Assam, to deter elephants are some of the large-scale options. The authorities should ensure that there are no illegal electric fences or barbed wire fences, which, instead, can be replaced with the solar powered ones. Needless to say, the participation of local communities is crucial. The critical role elephants play in biodiversity conservation must be highlighted, especially to those living in areas close to elephant corridors. The Environment Ministry and Ministry of Railways should also expedite proposals for elevated wildlife crossings or eco-bridges and underpasses for the safe passage of animals. A finding of the C&AG was that after the construction of underpasses and overpasses in the areas under the jurisdiction of East Central and Northeast Frontier Railways, there was no death reported. The authorities should also expedite other recommendations made by the C&AG such as a periodic review of identification of elephant passages, more sensitisation programmes for railway staff, standardisation of track signage, installation of an animal detection system (transmitter collars) and ‘honey bee’ sound-emitting devices near all identified elephant passages. Of the 29,964 elephants in India, nearly 14,580 are in the southern region, and the State governments concerned and the Centre need to find lasting solutions to the problem of man-animal conflicts.

Recast this apples-and-oranges ranking method

The NIRF’s ranking of State-run and centrally-funded higher education institutions on a common scale is problematic

The ranking of State-run higher education institutions (HEIs) together with centrally funded institutions such as the Indian Institutes of Technology (IITs), the Indian Institute of Science, the National Institutes of Technology, central universities, etc. using the National Institutional Ranking Framework, or the NIRF (a methodology adopted by the Ministry of Education, Government of India, to rank institutions of higher education in India), is akin to comparing apples and oranges.

The outline, institute data

The NIRF outlines a methodology to rank HEIs across the country, which is based on a set of metrics for the ranking of HEIs as agreed upon by a core committee of experts set up by the then Ministry of Human Resources Development (now the Ministry of Education), Government of India. The rationale to compare State universities and colleges with the Ivy League of India, to which the Central government is committed to sponsoring resources and infrastructure, is inexplicable. The Central government earmarked the sums, ₹7,686 crore and ₹7,643.26 crore to the IITs and central universities, respectively, in the Union Budget 2021.

According to an All India Survey on Higher Education (AISHE) 2019-20 report, there are 1,043 HEIs; of these, 48 are central universities, 135 are institutions of national importance, one is a central open university, 386 are State public universities, five are institutions under the State legislature act, 14 are State open universities, 327 are State private universities, one is a State private open university, 36 are government deemed universities, 10 are government aided deemed universities and 80 are private deemed universities.

A close study of this data shows that 184 are centrally funded institutions (out of 1,043 HEIs in the country) to which the Government of India generously allocates its financial resources in contrast to inadequate financial support provided by State governments to their respective State public universities and colleges. Ironically, out of the total student enrolment, the number of undergraduate students is the largest (13,97,527) in State public universities followed by State open universities (9,22,944).

Deficiencies in the focus

The financial health of State-sponsored HEIs is an open secret with salary and pension liabilities barely being managed. Hence, rating such institutions vis-à-vis centrally funded institutions does not make any sense. Interestingly, no agency carries out a cost-benefit analysis of State versus centrally funded HEIs on economic indicators such as return on investment the Government made into them vis-à-vis the contribution of their students in nation building parameters such as the number of students who passed out serving in rural areas, tier-2 and tier 3 cities of the country and bringing relief to common man.

While students who pass out of elite institutions generally prefer to move abroad in search of higher studies and better career prospects, a majority of State HEIs contribute immensely in building the local economy. Given the challenges State HEIs face in their day-to-day functioning, the NIRF seems to have taken cognisance of only the strength of institutions while completely disregarding the problems and the impediments they encounter, hence, disallowing a level-playing-field to State universities and colleges vis-à-vis their centrally funded counterparts. It must be noted that 420 universities in India are located in rural areas. Scare resources and the lackadaisical attitude of States preclude such institutions from competing with centrally sponsored and strategically located HEIs.

Ranking parameters

The NIRF ranks HEIs on five parameters: teaching, learning and resources; research and professional practice; graduation outcome; outreach and inclusivity, and perception. To take stock of the situation, let us first analyse two important NIRF parameters in the context of State HEIs. Teaching, learning and resources includes metrics viz. student strength including doctoral students, faculty-student ratio with an emphasis on permanent faculty, a combined metric for faculty with the qualification of PhD (or equivalent) and experience, and financial resources and their utilisation. In the absence of adequate faculty strength, most State HEIs lag behind in this crucial NIRF parameter for ranking. The depleting strength of teachers, from 15,18,813 (2015-16) to 15,03,156 (2019-20), as a result of continuous retirement and low recruitment has further weakened the faculty-student ratio with an emphasis on permanent faculty in HEIs.

Research and professional practice encompasses a combined metric for publications, a combined metric for quality of publications, intellectual property rights/patents and the footprint of projects, professional practice and executive development programmes. As most laboratories need drastic modernisation in keeping pace with today’s market demand, it is no wonder that State HEIs fare miserably in this parameter as well while pitted against central institutions.

Interestingly the share of PhD students is the highest in State public universities, i.e. 29.8%, followed by institutes of national importance (23.2%), deemed universities – private (13.9%) and central universities (13.6%), while the funds State HEIs receive are much less when compared to centrally funded institutions. As quality research publications and the number of patents filed in State HEIs are contingent on well-equipped laboratories, modern libraries and generously funded infrastructure, it is imperative for policymakers to reorient financial allocation strategies towards State HEIs. Similarly, three other NIRF parameters too offer little opportunity for State HEIs to compete with their better and conveniently placed competitors for ranking. The total enrolment in higher education has been estimated to be 38.5 million — 19.6 million boys and 18.9 million girls (female students constitute 49% of the total enrolment).

Where State HEIs struggle

There is another aspect: State HEIs are struggling to embrace emerging technologies involving artificial intelligence, machine learning, block chains, smart boards, handheld computing devices, adaptive computer testing for student development, and other forms of educational software/hardware to remain relevant as per the New Education Policy.

Therefore, when these two are put together, ranking HEIs on a common scale purely based on strengths without taking note of the challenges and the weaknesses they face is not justified. It is time the NIRF plans an appropriate mechanism to rate the output and the performance of institutes in light of their constraints and the resources available to them.

Milind Kumar Sharma teaches in the Department of Production and Industrial Engineering, M.B.M. Engineering College, Faculty of Engineering and Architecture, Jai Narain Vyas University, Jodhpur (erstwhile University of Jodhpur). The views expressed are personal

MGNREGA seeks ₹25,000 crore more

Total supplementary demands for 2021-22 amount to ₹3.73 lakh crore, Parliament told

The Centre has sought ₹25,000 crore as additional funding for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme as part of the supplementary demand for grants submitted to Parliament on Friday, after the demand-driven rural jobs scheme ran out of funds midway through the year.

The additional budget for MGNREGA was among the most keenly awaited, as pending payments for wages and materials have threatened to cripple implementation of the scheme.


Rural distress

Continuing economic distress in rural India has led to increased demand for jobs under the scheme, which promises 100 days of unskilled work for every household at a pay of about ₹210 per day.

With four months remaining in the financial year, MGNREGA has finished spending the ₹73,000 crore initially allocated in the budget, and its financial statement now shows a negative net balance of ₹10,244 crore, including payments due.

Last year, with the COVID-19 pandemic forcing lockdowns and widespread unemployment, MGNREGA, with a revised budget of ₹1.1 lakh crore, acted as a lifeline for the rural economy. This year, the Centre seeks to transfer ₹25,000 crore to the National Employment Guarantee Fund, and the supplementary demand for grants entails an additional cash out-go of almost ₹22,039 crore for the scheme.

“It’s still hugely deficient. This is clearly another pandemic-affected year. Given the current demand, it’s clear you would have needed about ₹50,000 crore to deal with it, so this is only half of that,” said Mazdoor Kisan Shakti Sangathan founder Nikhil Dey.

“Even this amount, it is not clear when the releases will be made and when they will reach the people, who are waiting for their wages well beyond the due date. The money coming in driblets continues to starve the programme so it cannot be implemented as the law requires,” he added.

Fertiliser subsidy

The additional fertiliser subsidy includes ₹43,430 crore for the phosphatic and potassic subsidy and ₹15,000 crore towards the urea subsidy scheme. The Food Ministry has also sought an additional ₹49,805 crore for food storage and warehousing schemes. ₹53,123 crore will go towards payment of pending export incentives.

“At end-October 2021, 52% of the full year expenditure target had been completed, and a portion of the higher than expected net cash outgo of ₹3 trillion in the second supplementary demand for grants will need to be absorbed through savings in other demands, to curtail the impact on the fiscal deficit. Nonetheless, there is near certainty that the fiscal deficit will exceed the budgeted ₹15.1 trillion, despite our assessment that net tax revenues and RBI surplus transfer will together surpass the BE by ₹1.7 trillion,” said ICRA chief economist Aditi Nayar.

“As hopes of a substantial portion of the ambitious FY2022 disinvestment target being realised fade, and we move closer to eventual rate hikes from the MPC, G-sec yields are likely to witness an inevitable hardening,” she added.

Implement panel’s anti-pollution measures, says SC

Flying squads to penalise polluters

The Supreme Court on Friday approved the measure taken by the Centre’s Air Quality Commission to create an ‘Enforcement Task Force’ and flying squads to prevent and penalise polluters in Delhi NCR.

Appearing before a Bench led by Chief Justice of India N.V. Ramana, Solicitor General Tushar Mehta, for the Centre, said the task force was formed on December 2.

Mr. Mehta, reading out from an affidavit filed by the commission in court, informed the court that 17 flying squads were formed on Thursday and would be increased to 40 in the next 24 hours.

The flying squads have already conducted 25 surprise checks since December 2. These squads would directly report to the task force.

“The task force has two independent members. It will meet at 6 p.m. everyday. The task force will take action on behalf of the commission against violators,” the Solicitor General submitted.

Justice D.Y. Chandrachud, on the Bench, asked whether the flying squads would be confined to Delhi or the National Capital Region (NCR) too.

“The NCR… It is therefore that their number would be increased to 40 squads. This is to cover the entire NCR,” Mr. Mehta clarified.

Industrial operations

The court directed the Centre and the Delhi Government to implement the anti-pollution measures introduced by the commission. The affidavit said industrial operations in NCR where gas was not available and not running on PNG or clean fuel would be allowed to operate for eight hours during weekdays and remain closed in weekends.

Senior advocate Vikas Singh, for petitioner, suggested harnessing solar or electrical energy to power the plants.

When Uttar Pradesh objected to the eight-hour work day, saying the sugarcane farmers would be hit at the peak of the ongoing crushing season, the court asked the State to approach the commission.

Mr. Mehta, referring to the commission’s affidavit, said thermal plants within 300 km radius of Delhi would continue to be regulated.

Only five of 11 plants were functional. The rest would remain closed till December 15.

At this, Justice Chandrachud suggested that the Government should consider shifting these plants to alternative fuel for the long term.

The court posted the case to December 10.

Supreme Court comes to the aid of sex workers

ID cards not required to get rations

The Supreme Court has reiterated its direction to States and Union Territories to supply dry rations to sex workers identified by the National AIDS Control Organisation and district legal authorities without insisting on the production of identity documents like ration card.

“Right to food has been recognised as a human right under Article 21 of the Constitution of India. Though, there is some improvement in the situation caused by COVID-19 pandemic, we are of the view that the constitutional obligation on the State Governments and Union Territories to provide basic amenities to the citizens of this country takes into its fold that the sex workers are entitled for being provided dry ration,” a Bench led by Justice L. Nageswara Rao recorded in a recent order.

The Court pointed out that it would be difficult for sex workers to produce a proof of identity and asked the Government to reach out and provide them food.

Govt. seeks ₹62,000 cr. to clear Air India debt

So, what is the balance ₹33,105 crore for?

“The amount includes interest liabilities toward working capital and aircraft loans, lease rentals, owings to oil companies and to the Airports Authority of India. This is what the government has provided for in the supplementary demand for grants,” a source close to the developments said.

As of August 31, Air India had a total debt of ₹61,562 crore. Of the total amount, Tata Sons’ subsidiary Talace will take over ₹15,300 crore. The remaining ₹46,262 crore will be transferred to a government-owned special purpose vehicle (SPV) known as Air India Assets Holding Limited.

This company, which was set up to clean the national carrier’s balance sheet, also houses non-core assets such as land and buildings worth ₹14,718 crore. Since 2018, the government has already budgeted ₹8,351 crore for servicing some of the liabilities parked in this SPV.

Omicron has arrived; follow covid norms to avoid spread

The News Editorial Analysis December 4 2021

Of the two persons detected with the Omicron variant of the SARS-CoV-2 virus in Bengaluru, India, one had no travel history. The other has flown out. This in itself indicates quite a few things. Whatever explanation is offered for someone being able to just leave the country even as genome sequencing of his sample is still awaited, it does show up a dangerously casual approach. The conjecture about the second person, a doctor with no travel record, is that he may have picked it from the conference he attended at a city hotel where delegates from abroad too were present. Stopping flights from certain designated countries like South Africa, Botswana, Zimbabwe, Mauritius, Hong Kong, Netherlands and Belgium will be of little consequence now. Omicron—so named so as to avoid it being called Nu or Xi for obvious reasons—has arrived and is spreading. 

The new mutated variant of concern, designated B.1.1.529 by WHO on November 26, has an unusual number of mutations. Data from South Africa, which has done an excellent job of tracking and identification, is that it spreads quietly. Whether faster or more lethally than the earlier villain, Delta, is yet to be fully established. However, what is easier done is being unerringly done: blame and isolate the African nations not just for warning the world against the new strain, but also point fingers at some unknown immuno-deficient—probably HIV-infected—African for the latest mutation. China may not have come clean on Covid-19 yet. We may not ever know where the original SARS-CoV-2 strain came from, a lab in Wuhan or an intermediary animal. But from there to Omicron, what has not changed is the worst in us. What else? Yes, oh, mask up, avoid crowds and human proximity, wash hands. And, yes, vaccinate. Omicron or not, that may be the only hope to avoid another debilitating wave. 

Need sustainable growth target

The Indian economy grew by 8.4% in Q2, but a complete rebound, it appears, has never been closer and never further away. At least three factors, including the new Covid variant Omicron, a not-so-transitory inflation and global supply chain issues, are threatening to dangle the economy back on a fishing hook. As SBI Research estimates, the Covid-19 pandemic hacked `11.4 lakh crore off real GDP in the first half of last fiscal. We are better off now, with real gains of `8.2 lakh crore, but we still need to recoup the remaining `3.2 lakh crore lost output to be back at the pre-pandemic spot. This, SBI Research believes, will take one more quarter. But regardless of how much forecasters bleat about regaining the pre-pandemic levels, that’s an unconvincing benchmark given that we were coursing through one of the harshest slowdowns then. Thus, India should set itself the sustainable pre-slowdown 7–8% growth as the ideal target. 

Though the Q2 headline growth rate is appealing, granular data is somewhat disappointing. For, the industries sector is still operating below potential and recovery was largely driven by investments than private consumption, which remained below pre-pandemic levels. The demand side hasn’t recovered fully and with a weak household sector, consumption may continue to lag. Given the uneven nominal wage growth and chances of continuing high inflation, which is forcing producers to jack up prices (e.g., the auto sector), chances are that the negative impact on consumption will likely persist and the negative output gap may sustain longer than anticipated. Moreover, the services sector operating at 80% of pre-pandemic levels may suffer if Omicron infections worsen.     

As they say, caution is a logical response to uncertainty and so the RBI may keep rate hikes on hold next week. This will be a marked departure from the widely expected reverse repo rate hikes in December to narrow the rate corridor, notwithstanding the inflationary pressures. The government, which incidentally is blessed with robust direct and indirect tax collections, too should stand ready with counter-crisis measures.  


The News Editorial Analysis 3rd December 2021



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