📰 ‘RBI at end of rate-cut cycle, fiscal steps must for recovery’
High inflation unlikely to decline materially: SBI economists
•The Reserve Bank is at the end of its rate-cut cycle as inflation is unlikely to decline materially from the current level, and the onus of economic recovery has now shifted to the government, economists at SBI said.
•The comments come a day after the release of the minutes of the latest meeting of the RBI’s Monetary Policy Committee, where high inflation was cited as the prime reason for the unanimous decision to hold rates. The Reserve Bank of India (RBI) had cut rates by 1.15% in two moves since the onset of the pandemic in March this year in order to push economic growth, but surprised many by holding rates at the August review as inflation overshot its target.
•“Fiscal policy should play a decisive role, if we have to nurture any hopes of a fast-paced recovery,” economists at the SBI said.
•“We now believe that we are at the end of the rate-cut cycle and expectations of large rate cuts must be anchored as inflation is unlikely to decline materially from current level,” the SBI economists said, hinting at best there can be a 0.25% more of rate cuts in the offing.
•If RBI continues with unconventional policy measures, it would help the financial markets because it has been significantly able to reduce the long and variable lags of monetary policy through successes like fastest rate transmission and restoring financial stability, it said.
•With no rate cuts on the table, the other monetary policy alternative could be to reduce the width of the asymmetric policy corridor or increase in reverse repo rate when the pandemic subsides, they opined.
•The economists said they feel inflation — which came at 6.9% for July — could be sticky because their estimates show the large procurement by the government may have resulted in 0.35-0.40% upward impact.
•The supply chain disruptions are showing no signs of abating and have played a spoilsport across several states, they added.
•The economists also endorsed the Monetary Policy Committee’s call for a change in computing inflation to a practice adopted by developed markets.
•“We plead with the National Statistical Office (NSO) to fix the broken CPI methodology that is playing havoc with policy decisions.
•“The minutes of the MPC meeting make a forceful case for shifting to a chain-based price index for measuring price level, as is the practice in most developed countries given the change in consumer preferences,” they said.
RFI also specifies annual requirement of the various types
•In a move to take forward the long-delayed process of opening up ammunition manufacture to the private sector, the Army has issued a Request for Information (RFI) for procurement of five different types of 7.62mm calibre ammunition to meet the annual requirement for the next 10 years.
•The RFI was issued by the Army’s Master General of Ordnance and gets particular focus following the 101 negative import list announced by the Defence Ministry that includes a range of ammunition.
•“Various 7.62mm ammunitions as mentioned will have to meet all specifications of in-service ammunitions. All available specifications with Director general Quality Assurance (DGQA) and drawings, where available, with DGQA are proposed to be provided for manufacturers to confirm to, in providing required ammunition,” the RFI issued in August first week says. The technology partners could be indigenous or any foreign vendor.
•The five types notified include ammunition for Dragunov sniper rifle and Galil sniper rifle. The RFI also specified the annual requirement of the various types, some of them running into 1-2 million rounds.
•The Ordnance factory Board has so far been the manufacturer and supplier of ammunition and efforts to open it to the private sector over the last few years had been delayed. “With the negative import list, the effort should get high priority for the Army to diversify its ammunition procurement,” an industry source said on condition of anonymity.
•The last date to respond to the RFI is September 30. The selected manufacturer is expected to commence supply within six months of signing the contract and initial supply may be through Semi Knocked Down (SKD), Completely Knocked Down (CKD) ammunition procured from the Transfer of Technology (ToT) partner. “The subsequent supply of ammunition will be manufactured in India,” the RFI states. It also proposes that the manufacturer develop the infrastructure and absorb the complete ToT for manufacture of ammunition within two years from signing of contract.
•It proposes that the manufacturer will ensure continuous availability of minimum one year’s stock components during first two years after signing of contract or 100% indigenisation, whichever is earlier, the RFI said. In case full indigenisation is either not possible or not proposed, from third year the manufacturer fwill have to hold two year’s stock.
📰 Kerala readies to host its first dragonfly festival
‘Thumbimahotsavam’ will encourage varied participation, with Pantalu as its official mascot
•The WWF-India Kerala unit has joined hands with the Society for Odonate Studies (SOS) and Thumbipuranam for the first-ever State Dragonfly Festival in Kerala, named Thumbimahotsavam 2020. ‘Pantalu’ is the official mascot forthe festival.
•Several programmes are set to be rolled out in the coming months to reach out to various sections of society. A ‘dragonfly backyard watch’ has been announced to enhance the participation of people and improve their observation skills — it will be a citizen science project in view of COVID-19 restrictions.
•A social media campaign is also on to spread the message around.
•A field guide on the common dragonflies of Kerala, and a children’s dragonfly colouring and activity book are also under development.
Knowledge hub
•A digital odonate knowledge hub will also be set up under the SOS/Thumbipuranam Facebook page, which will host all available material in the form of scientific papers, posters, videos and stickers on dragonflies. Various competitions will also be organised.
•The festival is expected to culminate with the State dragonfly summit, which is likely to be held in January.
•The events are a part of a national dragonfly festival being organised by the WWF India, Bombay Natural History Society and the Indian Dragonfly Society in association with the National Biodiversity Board, United Nations Environment Programme, United Nations Development Programme and the International Union for Conservation of Nature.
Resource persons
•Initially, a training of trainers will be organised to so that more people can serve as resource persons for the upcoming events. This will be followed by a series of webinars, commencing from September and targeting the public, especially children and youth.
•Webinars will also be organised for specific target groups such as zoology teachers; district coordinators and members of biodiversity management committees; coordinators of Bhoomithrasena clubs for students; district coordinators and teachers-in-charge of eco-clubs; and Forest Department personnel, mainly Vana Samrakshana Samithy and Eco Development Committee members involved in ecotourism activities.
📰 Differential impact of COVID-19 and the lockdown
The resultant distress in India has exacerbated pre-existing structures of disadvantage based on social identity
•In his book, The Great Leveler , Walter Scheidel, the Austrian economic historian, argues that throughout human history, there have been four types of catastrophic events that have led to greater economic equality: pandemic, war, revolution and state collapse. Currently, the world is going through one of them: a massive COVID-19 pandemic. In Scheidel’s analysis, the decline in inequality is a result of excess mortality that raises the price of labour. While the validity of Scheidel’s argument for the current pandemic can only be assessed after it is over, the pandemic has been described as a leveller more loosely, both because the disease can strike anyone, and also because the resultant lockdowns have led to widespread job losses and economic hardships across the range of the income and occupational distribution.
The marginalised at risk
•Focusing on the looser description of the pandemic as a leveller, preliminary data and early indirect evidence from several parts of the world indicate that the incidence of the disease is not class-neutral: poorer and economically vulnerable populations are more likely to contract the virus as well as to die from it. To the extent, economic class and social identity (e.g. race, ethnicity or caste) overlap, this suggests that socially marginalised groups would be at higher risk of mortality due to COVID-19.
•The risks extend beyond mortality as the economic consequences of the current pandemic are likely to be most concentrated among the low wage earners, and less educated workers, segments of the labour force where racial and ethnic minorities are over-represented. Early evidence from the United Kingdom and the United States reveals that racial and ethnic minorities are indeed the ones most likely at the risk of unemployment.
•What does the evidence from India reveal? Disaggregated data on COVID-19 incidence and mortality are not available for India. Thus, we cannot comment on whether certain caste groups are more vulnerable to the virus than others.
The Indian shutdown
•A key element of the pandemic control strategy everywhere has been to shut down economic and social activity, and to impose social distancing with varying degrees of strictness. India’s lockdown, imposed in the last week of March 2020, was among the most stringent. The first month of the severe lockdown, April 2020, witnessed a sharp rise in unemployment.
•Was this sudden unemployment caste-neutral, despite the fact that it was caste-blind?
•We examine shifts in employment and unemployment rates using data from the Centre for Monitoring Indian Economy (CMIE)’s Consumer Pyramids Household Survey (CPHS) database. It is a longitudinal data set covering 174,405 households (roughly 10,900 households per week, and 43,600 per month). Each household is followed three times per year. We use unit-level data from six waves of CPHS: Wave 14 (May-August 2018), Wave 15 (September-December 2018), Wave 16 (January-April 2019), Wave 17 (May-August 2019), Wave 18 (September-December 2019), and Wave 19 (January-April 2020).
•We find that the proportion of employed upper castes dropped from 39% to 32% between December 2019 and April 2020, a fall of seven percentage points. The corresponding fall for Scheduled Castes (SCs) was from 44% to 24%, i.e. a fall of 20 percentage points, almost three times as large. For intermediate castes, Other Backward Classes and Scheduled Tribes (STs) the fall was from 42% to 34%, 40% to 26% and 48% to 33%. Thus, the fall in employment for SCs and STs was far greater in magnitude than that for upper castes.
Education as factor
•The global evidence suggests that job losses associated with COVID-19 are much more concentrated among individuals with low levels of education and those with vulnerable jobs with no tenure or security. We find that individuals with more secure jobs, i.e. not daily wagers, and those with more than 12 years of education, were much less likely to be unemployed in April 2020 than those with less than 12 years of education and with daily wage jobs, relative to their pre-pandemic employment status. Thus, education did turn out to be a protective factor in the first wave of immediate post-lockdown job losses.
•Our earlier work reveals that caste gaps at higher levels of education have either remained static or widened over the last three decades.
•The current pandemic is further likely to exacerbate these educational differences. Data from another nationally representative survey, the India Human Development Survey for 2011-12 (IHDS-II) show that 51% of SC households have adult women who have zero years of education, i.e. are illiterate, and 27% have an illiterate adult male member. These proportions are in stark contrast to Upper Caste (UC) households, where the corresponding proportions are 11% and 24%, respectively. Thus, in the face of current school closures, parents of SC children would be much less equipped to assist their children with any form of home learning, compared to parents of UC children. This would be the case both because of educational differences among parents as well as due to other significant differences in material conditions living.
Issue of technology
•There are many dimensions that reveal continued disparity between caste groups, which would affect the ability of Dalit and Adivasi families to access online education. For example, the proportion of households with access to the Internet is 20% and 10% for UC and SC households, respectively. Only 49% of SCs have bank savings, as compared to 62% of UC households. Thus, differential access to information technology, as well as disparities in the ability to invest in technology will be critical in shaping access to online education, if the pandemic forces schools to close for a substantial period of time.
•Early impacts of the pandemic-induced lockdown indicate that the resultant economic distress is exacerbating pre-existing structures of disadvantage based on social identity, and investments in education and health that close gaps between social groups would be essential to build resilience in the face of future shocks.
