PM launches first indigenously developed and manufactured vaccine against Rotavirus

The Prime Minister, Shri Narendra Modi, today launched the first indigenously developed and manufactured Rotavirus vaccine: `Rotavac.` The indigenously developed vaccine will boost efforts to combat infant mortality due to diarrhoea.

Each year, diarrhoea caused by rotavirus results up to 10 lakh hospitalizations and kills nearly 80 thousand children under the age of 5 years. Besides causing emotional stress to the affected families, it also pushes many Indian families below the poverty line and also imposes significant economic burden on the country.

The Prime Minister felicitated all the partners in the development of the first indigenous rotavirus vaccine, which involved the complete cycle from basic research to product development of this advanced vaccine in India.

The Prime Minister also lauded this initiative as an example of India`s capabilities for high-end research and development; manufacture of sophisticated pharmaceutical products in India; and, effective Public-Private-Partnership model for finding affordable solutions to societal challenges.

The Prime Minister remarked that India is characterised by large size and diversity; and, continues to face a number of socio-economic challenges. He hoped that the development of the rotavirus vaccine would inspire higher levels of research, development and manufacturing activities in India, not just in medical science, but also in other advanced areas of science and technology. Prime Minister felt that solutions found in India would have great relevance to the rest of the world, especially the developing world.

He also highlighted the vaccine as a successful example of collaboration between India and the United States in the area of medical research, for the benefit of ordinary citizens.

The vaccine has been developed under an innovative public-private partnership model. It involved partnership between the Ministry of Science and Technology, the institutions of the US Government, various government institutions and NGOs in India, supported by the Bill and Melinda Gates Foundation.

Funding by Government of India supported basic research in educational and scientific institutions in India. This was also supplemented by the support of U.S. Government institutions like the National Institute of Health. The Gates Foundation and Bharat Biotech India Limited contributed towards product development and testing. The successful launch of the first indigenously developed and produced vaccine today was the result of an extraordinary effort spread over the last 25 years.

The Bharat Biotech India Limited that was involved in the development and production of the vaccine was selected in 1997-1998 by the India-U.S. Vaccine Action Programme and the standard government procedures. The company has been given undertaken to keep the cost of the vaccine at US$ 1 per dose. This is the third such vaccine available globally against Rotavirus and, at the current prices, the cheapest.

The European Union (EU) has formally adopted climate change targets for December 2015 UNFCCC

The European Union (EU) has formally adopted climate change targets for December 2015 UNFCCC Paris Conference. Adopted climate change target includes a 40 per cent cut in emissions by 2030. These targets were agreed by leaders of the 28 EU member-states at a summit in October 2014 but now have been officially forwarded to the United Nations. EU announcement comes prior to the deadline of March 31, 2015 as it is binding on countries to announce their commitment to cutting greenhouse gas emissions. EU countries when taken together form the world’s biggest economy and accounts for nine per cent of global emissions of greenhouse gases. EU has agreed to cut the greenhouse gas emissions by at least 40 per cent compared to 1990 levels. United States also has formally announced its intention to reduce emissions by 26-28 per cent in 2025 compared with their level in 2005. It should be noted that US accounts for 12 per cent of global greenhouse gases emissions. While, China has set a target date of 2030 for its global greenhouse gases emissions to reach peak.

Risks to the new framework

The formalisation of the new monetary policy framework between the government and the central bank marks the next step in the transition to flexible inflation targeting (FIT) by India. The first step was the acceptance by RBI of the Urjit Patel Committee’s (UPC) recommendations in January 2014: Adopt CPI inflation as the clearly-defined nominal anchor; and a two-year ‘glide path’—8% headline CPI inflation by January 2015 and 6% by January 2016—to prepare the initial conditions ahead of formal adoption of FIT. With this agreement, RBI’s primary goal becomes price stability, while keeping in mind the growth objective; the inflation target in year starting April 2016 and beyond will be 4% (±2%); and  achievement of this target, or otherwise, will determine success or failure of RBI’s actions.

Not surprisingly, this has been hailed as an epic reform in Indian macroeconomic policy. As with most reforms, the macroeconomic context acquires relevance for its eventual success. The transition to FIT happens at a time when both domestic and external environments are adverse and uncertain, notwithstanding the fortuitous steep decline in oil prices that has accelerated disinflation. Growth is below-trend; despite what the new GDP series reflect, other indicators suggest substantial over-capacity, weak industrial production and bank credit growth, and considerable distress at the balance-sheet level that is reflected in high bad-asset levels at banks. Although temporarily repaired, the internal and external imbalances are structurally unaddressed: the current account gap remains dependent upon capital flows; sustained financing from export receipts inadequate; and the deficit could enlarge any time imports rebound. Likewise, fiscal balances are still precarious with a low revenue base and lack of subsidy reforms. Finally, global demand is substantially weakened with an uncertain financial environment.

It is against this backdrop that two transformations occurred from January 2014: One, price stability is now the primary policy goal, implying reduced weights on the growth objective in interest rate setting. Two, CPI is the nominal monetary policy anchor against the producer price inflation (WPI) previously. The interplay between these changes and the macroeconomic context provides a perspective on the associated growth sacrifice possibilities. Surprisingly, there isn’t a discussion on the macroeconomic setting or timing of the transition in the UPC report, although it states that output costs of disinflation were balanced vis-à-vis choosing the glide-path or speed of disinflation.

The growth sacrifice, however, may be considerable as this will arise not just from the deflationary bias due to monetary tightening (75 bps over September 2013-January 2014) but also from a lasting or structural increase in the real cost of capital as interest rate setting shifted to a much-higher CPI inflation. This shift, the size of which equals the producer-consumer price inflation gap, constitutes a permanent cost disadvantage to which producers must adjust in the long-run. And it comes at a critically low point of the economic cycle, when firms are the most vulnerable with limited abilities to withstand an enduring shock of this nature. Given the larger significance of cost of capital for manufacturing, the risk is of an unintended resource-shift away from the sector. For manufacturing firms to recover from cyclical and structural shocks of this nature could take long in an environment of surplus global capacity across countries.

Some effects are manifest in the visible deterioration in many firms’ balance sheets, steady rise in bad loans (10.7% of total advances in September 2014 from 10% in March); the feebleness of industrial growth (an average 2.1% monthly in April-December 2014 growth over a corresponding 0.02% last year); weak demand for overall bank credit (5.4% growth over March 21, 2014, to January 23, 2015, against a matching 9.7% the previous year) with prominently pathetic growth in credit to industry (2.6% over March 21, 2014, to January 23, 2015, compared to 8.9% in March 2013 to January 2014).

If disinflation extracts too high a price in the initial stage of FIT, risks to the next phases of implementation could increase. This particularly applies in the case of fiscal policy, institutional support from which is essential for FIT’s success. Fiscal dominance is often a key inflation driver and can negate monetary policy effort, a potential threat to credibility. Adherence to fiscal rules in India is insufficiently entrenched; there is temptation to pause, bend or extend commitments whenever the business cycle wanes, growth slows and tax revenues decline. To recall recent fiscal history, a pause to the consolidation path under the Fiscal Responsibility and Budget Management Act was announced in 2009-10 to combat the crisis shock while return to course was delayed. A revised path to restore fiscal health by 2016-17 was drawn by the Kelkar panel (2012) with the government on course to achieve it since. But in a similar replay, the 2015-16 deficit target (3.6% of GDP) has been raised to 3.9% to address growth concerns.

Then again, overlooking these aberrations and assuming full institutional support by way of tight fiscal rules/commitment that is needed for successful FIT implementation, the required fiscal path could be demanding. Unless growth picks up substantially to relieve the fiscal burden and relaxes budgetary constraints, there could be temptation to delay or breach fiscal targets; or political support for FIT could weaken.

Then, there are the risks from the supply-side, an important source of consumer price shocks.

The Indian political economy, which must adapt itself for monetary policy support, is essentially non-responsive in the sense that reforms to the market structures to allow free and efficient functioning and pricing to balance demand-supply forces have long been postponed or delayed. If supply-side responses are unforthcoming, in conjunction with low-growth conditions at the time of transition, it implies a prolonged burden upon monetary policy that will be forced to remain tighter than otherwise might be the case. The economy could then be locked in a high-interest-rate regime, breaking out from which could be difficult for fear of undermining credibility. Of course, it could also be the case that inflation targeting could itself compel such supply-side reforms.

For India’s adoption of FIT, the growth outcomes are then quite pivotal in the light of these risks.

Carolina Marin Martin of Spain has won the prestigious Women’s Singles Title in the All England Open

Carolina Marin Martin of Spain has won the prestigious Women’s Singles Title in the All England Open Badminton Championships 2015. In the final match she defeated India’s Saina Nehwal by score of 14-21, 21-16, 21-7. With this victory, Carolina Marin became the first Spanish player to win this prestigious title. It should be noted that Saina Nehwal is first Indian woman badminton player to reach finals of All England Badminton Championship. In the semifinal match she had defeated China’s Sun Yu in straight-game by score of 21-13, 21-13.

International Women’s Day

Our ancient scriptures say that 'Yatranaryastupujyanteramantetatradevataha'--- where women are worshiped there the Gods reside. The Upanishads declare that –Ekam sat viprah bahuda vadanthi’ ---there is only one reality in this world, described in many ways. Man and woman are the two manifestations of one supreme power and are equal in strength, power and disposition. Such was the lofty status given to women in our ancient scriptures and society. Over the ages, women became subject to social exclusion, multiple deprivation and mental and physical abuse.

The vicious cycles of inequality perpetuated a decline in the status of women and fostered lop-sided development. In the 21st century, a paradoxical situation exists when a section of them have made a place for themselves in society, yet a large number remains deprived of the right to live with dignity and, moreover, a girl child is deemed unworthy of life itself. To have inclusive growth, it is imperative to ensure  that women in all situations get equal opportunity to live and lead a life of their choice. 

 The Census 2011 is an eye opener as it records an all-time low Child Sex Ratio(CSR) of 918, which is the number of girls per thousand boys, between the age group of 0-6 years. The declining sex ratio is in existence in every part of the country- rural, urban and tribal areas. It is an alarming situation, which will alter the demographic profile of the country, and requires immediate action to reverse this dangerous trend to prevent further erosion of gender justice, and ensure social cohesion and all-round development.

To arrest this declining trend in  the CSR and ensure women’s education, a national program, Beti Bachao Beti Padhao( BBBP), has been launched by the Prime Minister on January 22, 2015, at Panipat in Haryana. It is a joint initiative of the Ministries of Women & Child Development, Health & Family Welfare and Human Resources Development to spearhead twin objectives: to protect a girl child of her right to be born and her right to life, and to empower her with education and life skills. The place selected for launch of this campaign is also significant, with Haryana being one of the worst performers on CSR. Haryana has just 877 females per 1000 males, and in case of 0-6 years, the figure is as low as 830, as per Census 2011.

The Prime Minister's emotional appeal at the launch of the program highlights the urgency of the situation and the need to reverse this dangerous demographic trend. He said that it is the collective responsibility to end this 'terrible crisis' which will have far reaching consequences on future generations. He appealed to the people to turn the birth of a girl child into an ‘.Anandotsav' and make it into a community celebration. The PM also launched the "Sukanya Samriddhi Account" for the benefit of the girl child for her education. The current year’s Budget proposal for 2015-16, gives it a tax break on its accrued annual interest of 9.1%.

The BBBP, for focussed intervention, has initially chosen 100 Gender Critical districts in all States and UTs. The program has a multi-sectoral approach and lays stress on mass mobilisation and community participation. The program in campaign mode has several monitor-able targets. One is to improve the Sex Ratio at Birth(SRB) in identified gender critical districts by 10 points a year. The other is to reduce gender differentials in under Five Child Mortality Rate from 8 points in 2011 to 4points by 2017. The program  sets the target to increase girl enrolment in secondary education from 76% in 2013-14 to 79% by 2017 and provide toilets for girls in every school in the 100 CSR districts by 2017.

The BBBP Campaign  is to ensure effective implementation of PC& PNDT Act to curb sex-selective abortion. It is also to improve the nutritional status of girls by reducing the number of underweight and anaemic girls under the age of 5, from NFHS-3 levels and ensure universalisation of ICDS. The campaign is also to promote a protective environment for the girl child through implementation of Protection of Children from Sexual Offences (POCSO) Act, 2012.

Community participation with the involvement of local leaders is key to the success of any mass mobilisation program that primarily targets at changes in attitude and behavioural pattern. The BBBP campaign strongly advocates for the association of all local leaders and grass-root functionaries who will be trained as community champions.

The major plank on which this mass mobilisation movement is based ison the creation of  an enabling environment for the birth of a girlchild. The PM, in his inaugural speech at Panipat, recalled the example of Jayapura village in Varanasi, where the birth of a girl child is a cause for celebration and five trees are planted on each such occasion. He exhorted every village to emulate such celebrations on the birth of a girl child.

The Program lays stress on generating a supportive atmosphere for the birth of a girl child- both at home and at the community level.   Creation of awareness about safe motherhood, delivery and worth of a girl child is a step in this direction. It envisages promotion of awareness for early registration of pregnancy in the first trimester at AWCs/Health Centres forpre-natal and post-natal care and counselling of mothers. For this, community watch groups like women panchayat members, trained teachers, youth groups, and other local leaders are required to be identified to act as facilitators.

With regard to ensuring enrolment of girls in school education, the program speaks of  activating School Management Committees (SMCs) for universal enrolment of girls through special drives and  creation of  Balika Manches, or Girls' Forum, to encourage participation of girls in school and also to bring back drop outs.  For drop out girls, BBBP proposes to launch massive village contact drives with the help of AWWs, ASHAs, PRIs, and other Community leaders. There is provision for incentives and awards to School Management Committees or SMCs which enrols 100% girls at the primary level and also retains them in the first year, and for transition of 100% girls from class V into class VI, from class VIII to class IX and from class X to class XI. The competition to encourage girl’s enrolment and retention is  open to all Government schools.

Apart from this, the campaign proposes organising mass events like Naari Chaupal, BetiJanmotsav, and monthly celebration of Beti Bachao, Beti Padhao program as an event and to also observe National Girl Child Day  and International Women’s Day for a sustained impact. To fight against socio-cultural prejudices, BBBP envisages mounting more girl or women-centric festivities like celebration of Lohri for the birth of a daughter, siblings tying rakhis to each other on  Rakshya Bandhan Day, etc.

Sensitisation campaign should also bring forth positive reinforcements in favour of a girl child like daughters as providers of old age security to parents and the benefits of simple weddings to protect parents from financial burden of dowry and equal property rights for daughters and sons and prevention of early and child marriage.

The declining sex ratio is a cause for concern and its persistence has serious implications for our society and the future of humankind. Providing education to a girl child is to empower a large section of the population. The BBBP, through its nation-wide campaign with a two-pronged strategy and focussed interventions in 100 gender critical districts, is sure to make the desired impact on the socio-cultural landscape of our country and pave the way for inclusive and sustained growth,

                   

Tax as empowerment

 By Arunabha Bagchi

 As I got to know “local” Americans after settling in the United States, I noticed to my surprise that they never showed any excessive pride for being Americans. What they always bragged about was that they were “taxpayers”. They stressed that their tax money paid all government employees their salaries. Getting service from those public servants was, therefore, a matter of right for them. This was a completely new way of looking at things for someone from India. I realised that paying income tax gives someone a feeling of participation in society and a sense of empowerment. I later found out that about 45 per cent of all Americans pay income tax. The percentage is roughly similar in all Western countries.

By contrast, according to our erstwhile finance minister P Chidambaram, less than 3 per cent of our countrymen fil­ed income tax returns last year. Of course, many Indians earn too little to qualify to pay income tax, but the major reason is the constant upgrading of exemption limits and income brackets. This is why the percentage of Indian tax payers stagnates at this absurdly low level. Despite a substantial increase in incomes of people in provincial towns with the growth of powerful regional political parties, and filtering of considerable investment to the countryside, there is no visible attempt to tap their incomes for tax purposes.

The Indian media are full of blogs on economic matters every day, but the bloggers seem to have adopted a collective maunobrata (vow of silence) as far as inco­me tax is con­cer­ned. The only time we read about income tax is du­ring the budget speech eve­ry year when the finance minster ritualistically in­creases the exemption li­m­it for paying the tax. There is no justification giv­en for the increase, and it is obviously a sop for cheap popularity. But no one takes a critical look at this gimmick, possibly for fear of bringing the income tax debate into the open. This year was no ex­ception. Although our curr­ent Finance Minister did not increase the exemption limit directly in the latest budget proposal, he indirectly jacked it up considerably by providing many tax de­du­c­tible possibilities to please the upper middle class voters.

Winston Churchill showed his contempt of the ability of Indians to govern themselves by declaring that the rulers of an independent India would even tax the air one breathes there. It is as if to prove Churchill wrong that our rules ended up collecting the least amount of tax as percentage of the GDP among all large economies of the world. The most astounding fact in India is that agricultural income, despite huge increase in income of many farmers after the “green revolution”, is not taxed at all. Sometimes it appears that there is a conspiracy among our elites to keep the percentage of taxpayers very low to deny ordinary Indians a sense of permanent empowerment and of participation in the affairs of their country. The fact that these hapless common folk exercise their voting rights once in a while is bad enough!

Comparison with China is appropriate at this point. In an interesting study published five years back, Thomas Piketty and Nancy Qian came up with the startling conclusion, “The combination of fast economic growth and under-indexed tax schedule in China implies that Chinese income tax revenues grow very fast as a fraction of GDP, while the constant adaption of exemption levels and income brackets in India prevents the income tax from playing such a powerful role. According to our estimates, the fraction of the population in China subject to the income tax has increased from less than 0.1 per cent in 1986 to about 20 per cent by 2008, while it has stagnated at around 2 per cent-3 per cent in India.”

The first author is the same Thomas Piketty who has now achieved cult status with the publication of his encyclopedic treatise last year, entitled Capital in the Twenty-First Century. His analysis of the dramatic rise in the wealth gap everywhere during the last three decades and his “dangerous” suggestion of introducing a “wealth tax” are hugely debated in advanced countries at present. By contrast, we have just abolished the paltry wealth tax in the latest budget, replacing it with 2 per cent surcharge instead.

No one likes paying income tax. Even the wealthy among the socially conscious Calvinists/Lutherans of Northern Europe use all possible tax loopholes to reduce their tax burdens. Outright cheating is, however, more widespread in Southern Europe. Their outrageous ways of avoiding income tax became public knowledge during the credit crisis, and is considered a key reason for difficulties facing these countries in getting out of this chaos. India is, however, a case apart. The more property you have and the richer you become the less and less tax you pay, because you can take things like dividend income from shares and property away from taxable income. We do not have any inheritance tax! The highest slab for income tax of 34.61 per cent (including surcharge) is abysmally low by international standards, particularly when we boast of having more billionaires than Germany. Our wealthy use existing tax laws to pay hardly any income tax by international standards. This is in addition to massive cheating of much larger scale than in Southern Europe. Why does this not cause an outrage in our country? I believe it is because only a tiny group of salaried people pay income taxes in India, and others do not feel empowered to demand fairer share of taxes from their rich countrymen. This is why the movement of Anna Hazare against black money, largely amassed by cheating on income tax, attracted the attention of only the tax paying urban middle class in India.

Ever since our economic liberalisation in the early Nineties, our government was steadily reducing its role in education and healthcare under the pretext of balancing the budget, making room for the private players to make huge profits in the bargain. The vast majority of our countrymen could not protest, as they did not contribute directly to the government finances. Those who paid taxes, on the other hand, earned enough to finance costs of education and healthcare from their own pockets. No one objected either when the government steadily increased exemption of taxes paid by our businesses. The only way out of this passivity of the vast majority of our countrymen is to bring as many of them within the income tax bracket as possible.

How could this be achieved? It is preposterous for a layman like me to give any serious suggestion. Here are some off-the-cuff naïve ideas. The first obvious step is to follow China by under indexing the tax schedule. Next, serious efforts must be made to bring all (wage and non-wage) incomes throughout the country into the tax system. A paltry 10 per cent of the workers fall within the organised sector. Bringing more employees into the formal sector is one obvious step in this direction. Here is the real challenge. Our business gurus know everything we need to do to become an advanced economy. The only thing they are apparently clueless about is how to devise a mechanism to tax all (wage and non-wage) incomes as in the advanced economies.

The amount of taxation for low/middle income people must be a token one. But this will give them a real sense of rights. This is different from rights given to them as gifts by governments, often as gimmicks for getting votes. Is it not possible for us to use our much-hyped “digital connectivity” of provincial towns and villages for this purpose?

PPP problems

In the Union Budget for 2015-16, Finance Minister Arun Jaitley promised a major thrust towards investment in infrastructure. The outlay for the railways and road transport ministries were hiked substantially. The finance minister promised Rs 70,000 crore of new spending by way of budgetary support towards the government's Plan outlay. However, it, of course, continues to be true that public spending will be grossly inadequate to close India'sinfrastructure gap. According to the advance estimates of gross domestic product (GDP) for 2014-15, gross fixed capital formation is under 30 per cent of GDP - and has fallen nearly a whole percentage point over the year. This is a fall of at least eight percentage points since the pre-crisis years. And even that rate was small compared with that seen in countries like China that have demonstrated sustained high growth. In other words, public investment would struggle to fill the investment deficit. This is particularly true given India's constrained fiscal space; the finance minister has chosen to delay India's fiscal consolidation in order to prime the investment pump, but naturally this cannot be kept up forever. So private investment in infrastructure is key. This lies behind, presumably, the Rs 20,000-crore fund to be set up that will be able to leverage its equity to sell debt and, thus, mobilise private-sector debt funds for the infrastructure sector.

However, there are reasons to be concerned that the government may be repeating some mistakes from the past that it should have learned from. In his speech, the finance minister assured those listening that the problems in the private-public partnership (PPP) model would be addressed. The way this would be done, he said, was to ensure that the government took most of the risk in such ventures. The argument is that this will permit greater investment in such PPP projects. Certainly, something must be done about PPPs - the problems with the model have been responsible in large part for the investment slowdown of recent years, and such stalled projects are also a significant proportion of the stress on banks' balance sheets. Other methods to settle these issues were also mentioned - a law to oversee disputes, for one, which should be carefully drafted. The Economic Survey, released a day before the Budget, also suggested an independent committee to oversee renegotiation. These are both sensible ideas in theory, and the government's attempts to follow up on them - to "clean up" the sector of disputes and bad loans - should be supported and encouraged.

However, the proposal to transfer risk away from the private sector to the government must be re-examined. This essentially returns India to a pre-2000 model for investment. Has New Delhi forgotten disastrous investment models like Enron's Dabhol project? That is what happens when private returns are guaranteed by the state. When the state takes all the risks, there is little or no reason to suppose that the right projects are picked. Only when private capital takes the risk will the future pay-off from such projects be properly evaluated. PPPs cannot be turned into a system in which project choice is politicised, and serve as an excuse for vast transfers of scarce resources to the private sector in the guise of guaranteed returns - in return for projects of dubious viability and appropriateness. This is not the right way to revive the sector.