In this section, we are presenting our readers/aspirants compilation of selected editorials of national daily viz. The Hindu, The live mint,The Times of India, Hindustan Times, The Economic Times, PIB etc. This section caters the requirement of Civil Services Mains (GS + Essay) , PCS, HAS Mains (GS + Essay) & others essay writing competition.
1. Why the RBI should buy NBFC bonds
Uday Kotak has stated that the Reserve Bank of India (RBI) might inevitably have to expand its balance sheet to support the economy amidst the raging pandemic. The central bank does precisely that when it carries out long-term repo operations. However, there is scope for the RBI to provide direct liquidity support to large non-banking financial companies (NBFCs) that play a vital role in meeting the credit requirements of swathes of small and medium industry.
It is true that RBI has shored up liquidity conditions for the banking system in the past one year for onward lending, and is providing further liquidity support this fiscal. Note that the central bank has announced its pathbreaking G-SAP, government securities acquisition programme under which RBI would purchase government paper to the tune of Rs 1 lakh crore in the first quarter of FY22. Further, its targeted long-term repo operations (TLTROs) are meant to provide credit to smaller NBFCs, but, again, via bank funding. But NBFCs do have a critical role in India’s credit system, providing, as they do, credit for largely un-banked segments, and the way forward is for the RBI to directly purchase the paper issued by major league NBFCs. It would rightly and speedily step up credit support across the board.
The central bank is in the process of thoroughly revamping its oversight on NBFCs with a four-layered regulatory structure, based on such parameters as operational size, leverage, interconnectedness and nature of activity. The way ahead is for the largest NBFCs to issue bonds for direct subscription by RBI. The central bank needs to phase in making use of corporate bonds in its liquidity management operations, to boost demand for these bonds.
2. The tweaks vaccine policy cries out for
India’s Covid vaccination drive has expanded eligibility for the jab, even as production is yet to ramp up. This means policy must be finetuned to allocate vaccines to those who need them most. First, instead of leaving allocation of vaccines among the states to vaccine manufacturers, the Indian Council of Medical Research must guide vaccine makers, based on transparent parameters such as vulnerable populations size, rate of vaccination, number of Covid cases, positivity rate and record of vaccine wastage. Vulnerability should be measured in terms of both the current pace of pandemic spread and size of both healthworker/frontline worker groups and the elderly population. States should prioritise vaccine delivery by vulnerability.
Second, ICMR must provide clear information on the minimum and maximum gap between the two doses of vaccines being administered. This will help avoid panic among those who have already taken the first shot but are finding it difficult to get the second. Third, the central government must strengthen and simplify the technological backbone of the vaccination drive, the CoWIN app. It must be easy to access irrespective of technological savvy. The app must be programmed to prioritise those who have had their first dose, so that they can get their second jab within the stipulated time frame. Voluntary organisations should help the digitally non-savvy to get enrolled, till vaccine supplies increase to a level when walk-in registration at vaccination centres becomes feasible. Four, map out delivery centres to maximise access and minimise crowding and infections.
Rather than a few big centres, favoured by some states, the focus should be on many smaller centres—using local primary health centres, community halls and other such facilities to set up vaccination centres. Arrangements must be made to whisk away those who develop allergic reactions to well-equipped intensive care units. It will make it easier for people particularly those who are daily wagers and informal sector workers to get vaccinated.
3. RBI unleashes another round of quantitative easing to limit economic damage of the second wave
The Reserve Bank of India this morning announced a series of measures to limit the economic damage caused by the advent of the second wave of Covid-19. It builds on last year’s quantitative easing (QE), an increase in the amount of potential money supply for the economy.
The unscheduled announcement by RBI governor Shaktikanta Das can be separated into three categories.
One, special provisions have been provided for banks to lend to earmarked segments of the economy at lower interest rates. Notable among these sectors are vaccine manufacturers, pathology labs and micro and small enterprises.
Two, some sections of relatively small borrowers will now have the opportunity to restructure their loans as the patchwork of lockdowns across India is likely to negatively impact their cash flows.
Three, state governments who are in the frontline of the battle against Covid-19 will be given the benefit of a relaxation in their overdraft facilities.
These measures are welcome and perhaps the most important aspect is that RBI has reacted fast. The quicker the reaction in the current situation, the higher the probability of limiting the damage. Now, both RBI and the Centre need to keep track of how these measures are playing out and be prepared to back them with other steps.
4.Pandemic 101: The IPL jolt underlines how much all economic activity is dependent on controlling Covid
Indefinite suspension of the Indian Premier League after participants tested Covid positive underlines that no one and no economic activity is safe until everyone is safe. By keeping crowds out of stadiums, IPL had eliminated the superspreader dangers of mass political or religious gatherings. But keeping players protected and preserving the bio-bubble in Delhi while the pandemic raged outside proved too tough. BCCI should also examine how the basic protocols followed by franchises successfully in UAE last year failed in an Indian milieu.
Staging IPL amid a public health emergency had its supporters and detractors. BCCI noted that it had “tried to bring in some positivity and cheer” amid difficult times for India. In addition sport is a jobs and revenue generator. So what has happened here is definitely relevant for the country at large. It is a stark reminder that reviving economic activity to pre-pandemic or pre-second-wave levels will be possible only when the tools to fight Covid are optimally deployed and the current surge is brought down to manageable levels. This could be why CII president Uday Kotak has mooted a “nationwide maximal response measure at the highest level” and curtailment of all “non-essential economic activity” to break the chain of transmission.
But the widespread destruction of livelihoods by last year’s “hard” lockdown should not be forgotten, nor the painful logjams created in separating essential and non-essential activities, many of which actually worsened the health toll of the pandemic. Of course different restrictions are anyway under effect in different parts of the country, and localised controls will continue to be needed for some time. As far as the stated aim is to reduce viral transmission and bring down caseloads to manageable levels for doctors, many of whom are close to breaking point, governments should not use movement curbs as a proxy for essential pandemic governance. As the undermining of green corridors for ambulances by increased police chowkis illustrates, lockdowns can even aggravate India’s medical supply chain crisis.
Fixing the vaccine pipeline, enabling mass uptake of medical grade masks, improving the quality of testing, more genome sequencing, plugging the logistical leakages for medicines and oxygen, upping triage management to reduce the exhaustion of both health seekers and health givers etc – experts have been clear and convincing on what will really make a difference. Lockdowns are no magic bullet. Getting these fundamental public health responses right is the only path to normalcy.
- 2021-22 needs a new economic blueprint
It will also allow the Union government to assess the urgent needs of the time — particularly income support to the poor, concessions to the middle class, and perhaps policy tweaks to help the private sector, especially micro, small and medium enterprises, survive and stay the course — and find the required resources for it.
It is now clear that the second Covid-19 wave will continue to inflict great destruction across India in the coming weeks, as it has done in the past month. It is also clear that unless this second wave can be tamed and infections brought under control, economic activity in the country will continue to shrink. There are localised restrictions in various states and cities in order to curb the spread of the disease. But alongside, there is a deep sense of fear among citizens — who, remember, are also the primary economic agents as producers and consumers. Till the health crisis is addressed, the fear won’t diminish, and till fear doesn’t diminish, the possibility of the resumption of any kind of normal economic life is dim.
And that is what makes it incumbent on the State to step in with a new economic plan. Given how badly the first quarter has been hit, optimistic projections of economic recovery this year will not hold. Within a month of fiscal year 2021-22, it is also clear the Union budget numbers will not hold, tax revenues will dip, expenditure requirements will increase, pushing through contentious structural reforms will become more difficult (and may not even be advisable), and the State’s responsibility for welfare of the vulnerable will only increase.
The central government must draw up a new economic blueprint for the year — this can retain a degree of flexibility given the fluidity of the situation, but it needs to be based on realistic goals, timelines and numbers. This will also allow the Union government to assess the urgent needs of the time — particularly income support to the poor, concessions to the middle class, and perhaps policy tweaks to help the private sector, especially micro, small and medium enterprises, survive and stay the course — and find the required resources for it.