📰 Dowry deaths | Supreme Court widens scope of Section 304-B
CJI Ramana’s judgement goes beyond a straitjacket and literal interpretation of provision
•The Supreme Court indicated in a judgment on Friday that a straitjacket and literal interpretation of a penal provision on dowry death may have blunted the battle against the “long-standing social evil”.
•Dowry deaths accounted for 40% to 50% homicides in the country for almost a decade from 1999 to 2018. The judgment pronounced by a three-judge Bench led by Chief Justice of India N.V. Ramana called dowry harassment a “pestiferous” crime where women are subjected to cruelty by “covetous” husbands and in-laws.
•In 2019 alone, 7,115 cases of dowry death were registered under Section 304-B of the Indian Penal Code.
•But the language used in Section 304-B has always flummoxed courts. Courts have often opted for a strict and narrow reading of the provision, which was one of the many legal initiatives introduced against dowry.
•Chief Justice of India N.V. Ramana, who authored the judgment, said courts should instead interpret Section 304-B liberally while keeping in mind the law’s intention to punish dowry and bride-burning.
•According to Section 304-B, to make out a case of dowry death, a woman should have died of burns or other bodily injuries or “otherwise than under normal circumstances” within seven years of her marriage. She should have suffered cruelty or harassment from her husband or in-laws “soon before her death” in connection with demand for dowry.
•Over the years, courts had interpreted the phrase 'soon before' in Section 304-B as 'immediately before'. This interpretation would make it necessary for a woman to have been harassed moments before she died. Such “absurd” interpretations should be avoided, the apex court noted in the judgment on Friday.
•Instead, Chief Justice Ramana said the prosecution needed to show only a “proximate and live link” between the harassment and her death.
•“It is safe to deduce that when the legislature used the words ‘soon before’ they did not mean ‘immediately before’. Rather, they left its determination in the hands of the courts. The factum of cruelty or harassment differs from case to case. Even the spectrum of cruelty is quite varied, as it can range from physical, verbal or even emotional… No straitjacket formulae can therefore be laid down by this court to define what exact the phrase ‘soon before’ entails,” Chief Justice Ramana explained.
•The court further said the phrase “otherwise than under normal circumstances” in the Section also calls for a liberal interpretation. “Section 304-B, IPC does not take a pigeonhole approach in categorising death as homicidal or suicidal or accidental. The reason for such non-categorisation is due to the fact that death occurring in ‘other than under normal circumstances’ can, in cases, be homicidal or suicidal or accidental,” Chief Justice Raman noted.
•The judgment also raised concern about the casual way in which trial courts examined accused persons in dowry death cases under Section 313 of the Code of Criminal Procedure.
•The examination of the accused about the incriminatory material against him should be done in a fair manner. The court must put incriminating circumstances before the accused and seek his response. He should be given sufficient opportunity to give his side of the story. The court should question the accused fairly, with care and caution.
•“Due to the precarious nature of Section 304-B, judges, prosecution and defence should be careful during conduct of the trial,” Chief Justice Ramana observed in the judgment.
📰 India seeks more studies on virus origin
World Health Assembly reviews findings of the WHO special team that visited China earlier this year
•India on Friday pushed for further studies on the origins of the novel coronavirus, as the decision-making body of the World Health Organization (WHO), the World Health Assembly, reviewed the findings of its special team.
•The 120-page report submitted by the WHO on March 31 had listed various hypotheses as possible origins, including the “lab leak” theory that it said was “extremely unlikely”, but concluded that there was need for further research.
•Several countries at the Assembly’s ongoing annual meeting from May 24-June 1 have raised the need for further studies, but it is unclear whether the body will pass any resolution on the issue.
•“The WHO-convened global study on the origins of COVID-19 is an important first step. It stressed the need for the next phase of studies, as also for further data and studies, to reach robust conclusions,” said Ministry of External Affairs (MEA) official spokesperson Arindam Bagchi.
•“The follow-up of the WHO report and further studies deserve the understanding and cooperation of all,” he stated, in reference to WHO chief Tedros Ghebreyesus’ earlier statement that accused China of limiting access to its team to conduct studies.
•On April 1, the MEA issued a statement on the report, which had listed “four pathways” or possible options that led to the pandemic: a direct zoonotic transmission; the introduction of the virus through another intermediate host or animal; the introduction through the cold chain or food chain; and a laboratory incident.
•The inquiry conducted over four weeks by a joint WHO-China study team had concluded that the first two theories were “likely to very likely”, the food chain theory “possible” and the lab incident theory “extremely unlikely”.
•In its statement, India also called for “a comprehensive and expert-led mechanism” to investigate the origin of COVID-19 in cooperation with all stakeholders, and supported the possibility of an additional WHO mission to the Chinese sites to further study the issue.
•India’s statement comes days after U.S. Health and Human Services Secretary Xavier Becerra called on the WHO to conduct a second and more transparent investigation into the origins of COVID-19.
•U.S. President Joseph Biden has also tasked his National Security Advisor and intelligence agencies to redouble efforts to reach a conclusion on the origins of the virus.
•China, which has consistently denied the theory that there was a leak from the Wuhan lab, where research on zoonotic transmissions of coronaviruses was taking place, criticised Mr. Biden’s statement. Spokesperson of China’s Ministry of Foreign Affairs Zhao Lijian accused the U.S. of not caring “about facts and truth...or serious scientific origin tracing,” on Thursday, indicating that China considers the “lab leak” theory report closed.
📰 Government puts off decision on tax relief for COVID-19 supplies
Group of Ministers to meet, recommend rates for individual items.
•The Goods and Services Tax (GST) Council failed to agree on immediate tax breaks for critical pandemic relief supplies, including COVID-19 vaccines, and constituted a Group of Ministers to recommend individual items’ tax rates by June 8.
•Union Finance Minister Nirmala Sitharaman, chairing the Council’s first meeting in nearly eight months on Friday, said there were protracted discussions with ‘varying viewpoints’ on the taxation of COVID-related items and these dominated the over eight hour-parley between States and the Centre.
•“So I have decided and announced a group of ministers to submit a report within ten days so that if there are any further reductions that need to be done, will be done,” Ms. Sitharaman said. Opposition States, including West Bengal, Kerala and Punjab, have been demanding that the GST levied on COVID-related items be scrapped.
•The Minister added that revenue implications were not driving the rate cut reluctance, rather the question of whether GST relief on such items will benefit the common man. Technical panels reviewing the rates have found that there will be a ‘collateral impact’ of rate cuts on other items, she explained.
•“I underline the fact that it is not as if one segment said we should do it on humanitarian grounds and another said, we shouldn't do anything on humanitarian grounds,” the Minister said.
•While Punjab Finance Minister Manpreet Singh Badal said that “GST #COVID19 relief put on hold for lack of compassion by the Union Government,” Ms Sitharaman the Union Finance Minister refused to react directly.
•“If we are quick to say that the Centre has no compassion, I have nothing to say. Ultimately, we are all responsible for our citizens’ welfare. I humbly submit that the interest of all the States and the Centre is towards making sure that Indians get the vaccine on time and the States get their fair share of revenues in time,” she asserted.
•The Council did, however, agree to extend the GST exemption granted on relief material received free from abroad for donations to State-approved entities, to those who want to make such donations by purchasing the material from overseas. The period for availing this exemption has also been extended to August 31.
•“With the rising cases of Black Fungus, a particular medicine required for it — amphotericin-B — has also been included in the exemption list (for tax-free imports),” Ms. Sitharaman told reporters.
•On the Delhi High Court setting aside the 12% GST levy on imports of oxygen concentrators for personal use, Revenue Secretary Tarun Bajaj said the order has led to a situation where GST levies will be zero if the item is received as a ‘gift’, but 28% if purchased from abroad.
•“The HC has ordered that if it is received as a gift, there will be no tax. While the notification has been set aside that was issued by us, which has resulted that if you buy from outside and bring it yourself, you are taxed at 28% which had actually been brought down to 12%. So inadvertently, what has happened is that because of this confusion, that tax has become 28%. But that will be taken care of by the GoM,” he said.
•Industry was broadly disappointed with the outcomes. "There were no major announcements and the issue of GST reduction on COVID items has been deferred by a few more days which is disappointing. The Council has failed to address major pain points of the industry and the common man resulting from the pandemic,” said Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co.
Paying States’ Dues
•A special session of the Council will be held to discuss with States how long the Compensation Cess levied under the GST regime needs to be extended beyond its current sunset date of July 2022, Ms Sitharaman said.
•For this year’s estimated shortfall in compensation cess collections to meet States’ dues, the Centre will raise ₹1.58 lakh crore to recompense States via back-to-back loans, like it was done last year.
•The same formula adapted last year will be adopted this year. A rough estimate is that the Centre will have to borrow ₹1.58 lakh crore and lend it to States on a back-to-back basis.
📰 COVID-19 toll on Indian economy deepens: poll
Respondents in Reuters survey say jobs crisis may worsen; on average see full-year growth at 9.8%
•India’s economic outlook has weakened again, albeit slightly, with worst-case scenario forecasts suggesting the toll from the COVID-19 pandemic could be much deeper, stoking fears the job crisis may worsen over the coming year, a Reuters poll found.
•Renewed restrictions to curb the current wave have stalled economic activity, leaving many millions out of work and pushing economists — who have broadly been bullish — to downgrade their views for the second time since early April.
•The May 20-27 poll showed the outlook for the current quarter was lowered to 21.6% annually, and to 9.8% on average for this fiscal year, down from 23% and 10.4% respectively a month ago. The economy was then forecast to grow 6.7% next fiscal year, compared to 6.5% predicted previously.
•While the consensus pointed to healthy growth figures later this year, all 29 economists, in response to an additional question, warned the outlook was either “weak and prone to further downgrades” or “fragile, with a limited downside”.
•“Recovery in India was strong in the months before the second wave,” said Wouter van Eijkelenburg, an economist at Rabobank. “This leads us to believe the recovery can rebound quickly after the number of new infections have come down. But vaccination implementation needs to pick up pace in order to have an effect.
‘Sword of Damocles’
•“Therefore new surges of the virus hang above recovery like the sword of Damocles. Until a large share of the population is vaccinated there remains this downside risk of new waves and subsequent lockdowns hampering the recovery,” he added.
•Underscoring concerns that a slow vaccine rollout may make a bigger dent in the economy, the consensus showed in a worst-case scenario the economy would average just 6.8% growth this fiscal year after its deepest ever recession last year.
•“Let’s hope (the situation) doesn’t go there,” said Gareth Leather, seniorAsia economist at Capital Economics. “If it does and we do have another wave ... after this one, maybe the government will learn some lessons — that it is better to lock down the economy sooner, rather than later. The threat of further waves will hang over the economic outlook so long as India’s vaccination progress remains lacklustre,” he added.
•“There is going to be a significant demand shock to the economy, some of that could be permanent demand destruction, thereby pushing more out of the jobs market and keeping the unemployment rate elevated over the coming year,” said Prakash Sakpal, senior Asia economist at ING.
📰 Timely windfall: On RBI's fund transfer
The RBI’s transfer is a much-needed buffer, but there are risks in banking on these surpluses
•The Reserve Bank of India’s decision to transfer ₹99,122 crore of surplus to the Centre comes as a windfall to the government, at a moment when the ferocious second wave of the COVID-19 pandemic has likely upended most projections for the economy including revenue assumptions. The payout is almost double the ₹53,511 crore that the Finance Minister had budgeted for by way of dividend receipts, including from nationalised banks and financial institutions. That the RBI has generated a surplus that is over 73% higher than what it posted for the previous 12-month period ended June 2020, is also noteworthy when one considers that the bank just changed its accounting calendar from July-June to an April-March format by truncating its last financial year to a nine-month period. The RBI’s annual report, released on Thursday, shows that a sharp 63% contraction in expenditure was a major factor in boosting the surplus, especially as income fell by 11%. However, the biggest contributor in real terms was the ₹50,629 crore of exchange gain realised by the central bank from its foreign exchange transactions. The central bank, which admits to intervening in the foreign exchange market to smoothe volatility, clearly had a very busy time mopping up the record foreign direct investment inflows that exceeded $81 billion (at a gross level) in the last financial year, as well as the sizeable portfolio investments from overseas. Still, a 69% increase in exchange gain, over the preceding 12-month period, prompts the question as to whether the RBI’s foreign exchange transactions were all entirely aimed only at stabilising the rupee’s value.
•Given the magnitude of economic disruption caused by the ongoing pandemic and the lack of visibility on the costs that the economy is going to have to bear in the coming months, the RBI’s transfer surely provides a much-needed buffer to the government’s finances. However, both the Centre and the central bank need to be cognisant of the risks in making a habit of banking on these surpluses to cushion the government’s coffers. After all, just two years ago, the RBI had transferred a record ₹1.76-lakh crore to the exchequer. While the Reserve Bank has ensured that it maintains contingency reserves at exactly 5.5% of the overall size of its balance sheet, the level of its reserves provides little wiggle room to safeguard against a sudden, unexpected financial crisis and is at the lower end of the 5.5%-6.5% band recommended by the Bimal Jalan committee. With the government facing the likelihood of overshooting its budgeted borrowing, given the higher spending needed to bolster vaccinations, health care and direct fiscal support, the RBI’s balance sheet could swell in size this year too. It would behove policymakers to remember that the central bank is ultimately the lender of last resort to the nation as a whole and can ill-afford to be less than adequately funded to meet every conceivable contingency.
📰 France’s role in the Rwandan genocide
In Kigali, French President Emmanuel Macron asked Rwandans for “forgiveness” for France’s role in the 1994 killings.
•The story so far: French President Emmanuel Macron on Thursday asked for forgiveness for his country’s role in the 1994 Rwandan massacre in which about 800,000 people, mostly ethnic Tutsis, were killed. Speaking at the genocide memorial in Kigali, Rwanda’s capital, Mr. Macron said France chose “silence over examination of the truth” for too long, but stopped short of issuing an apology, saying France had not been an accomplice in the genocide.
What was France’s role in the killings?
•France, which enjoyed close ties with Rwanda’s Hutu-led government of President Juvénal Habyarimana, has long been criticised for its role in the killings of the Tutsi minorities in the months of April to June 1994. In May 2019, President Macron, promising a new beginning with Rwanda, set up a 15-member expert committee to investigate his country’s role in the genocide. The committee, which had access to official files and secret documents, submitted its findings to the government in March, which stated that France, which was then ruled by President François Mitterrand, bore “heavy and overwhelming responsibilities" for being “blind” to the events that led to the killings. The report blamed Mitterrand for a “failure” of policy towards Rwanda in 1994. Rwanda had commissioned a separate inquiry, which concluded in a report submitted to the Cabinet in April that France “enabled” the genocide. The 600-page report stated that France did “nothing to stop” the massacres, and tried to cover up its role and even offered protection to some of the perpetrators. President Macron said on Thursday, “I come to recognise the extent of our responsibilities”.
What’s the history of the Hutu-Tutsi relations?
•The majority Hutus and minority Tutsis have had a troubled relationship in Rwanda that goes back to the German and Belgian colonial period. Colonialists ruled Rwanda through the Tutsi monarchy. Tutsis were appointed as local administrative chiefs and the ethnic minority enjoyed relatively better educational and employment opportunities, which led to widespread resentment among the majority Hutus. In 1959, Rwanda saw violent riots led by Hutus in which some 20,000 Tutsis were killed and many more were displaced. Amid growing violence, the Belgian authorities handed over power to the Hutu elite. King Kigeli V fled the country. In the 1960 elections, organised by the Belgians, Hutu parties gained control of nearly all local communes. In 1961, Hutu leader Grégoire Kayibanda declared Rwanda an autonomous republic and the next year, the country became independent. Kayibanda became Rwanda’s first elected President, while the Tutsis who fled the country formed armed insurgencies. Since then, Rwanda had been controlled by Hutus, until their genocidal regime was toppled by the Rwandan Patriotic Front (RPF) in 1994.
What led to the genocide?
•The crisis escalated in the 1990s when the RPF, led by Paul Kagame, the current President, grew in strength and posed a serious challenge to the regime of President Habyarimana, who was backed by France and had defence ties with Israel. In 1993, Habyarimana, who rose to power in 1973, was forced to sign a peace agreement (Arusha Accords) with the RPF. This led to resentment among Hutu militias, backed by the government, towards local Tutsi population, who were accused of collaborators of the RPF. On April 6, 1994, a Falcon 50 jet carrying Habyarimana and his Burundi counterpart Cyprien Ntaryamira was shot down near Kigali International Airport. The Hutu-led government blamed the RPF for the attack on the presidential jet. The military and Hutu militias, mainly Interahamwe, unleashed violence against Tutsis and moderate Hutus. Mr. Kagame has denied any involvement in shooting down the plane. The RPF says Hutu extremists ordered the attack to use it as an excuse for the genocide (which they were preparing for long before the plane downing) as well as to capture power.
What happened?
•The killings were a pre-planned extermination campaign. The militias, with support from the government, launched a premeditated violent campaign on April 7, aimed at eliminating the entire Tutsi communities. Interahamwe militants went to cities and villages across the country, hunting down Tutsis, and asking Hutus to join the campaign, killing at a pace of 8,000 people a day. The Hutus who opposed the killings were also targeted. The militias used a radio station to coordinate the killings. Bodies were dumped in the Nyabarongo River. France, which had backed the Hutu government, did nothing to stop the massacre. Thousands were slaughtered in churches where they sought refuge. The Catholic Church had deep ties with the ruling Hutu elites – Archbishop Vincent Nsengiyumva was a member of the ruling party’s central committee. Many priests were involved in the killings. In a visit to Rwanda in 2017, Pope Francis asked for forgiveness for the Church’s role in the killings. The violence continued for three months.
How did the killings come to an end?
•The killings came to an end after the RPF, under Mr. Kagame’s command, captured Kigali and toppled the Hutu regime. While the RPF put an end to the Hutu campaign to exterminate Tutsis, the rebels were also accused of carrying out revenge killings during the civil war. When it was evident that the RPF was winning, an estimated 2 million Hutus fled Rwanda, mainly to the neighbouring Zaire (the Democratic Republic of Congo), where Hutu militias are still operating from. The RPF initially went about establishing a multi-ethnic government with Pasteur Bizimungu, a Hutu, being the President. Mr. Kagame, a Tutsi, was his deputy. In 2000, Mr. Kagame assumed the Presidency and continues to be in power till today.
📰 Democracy at stake in Nepal
If the political Opposition resolves to fight back, it is likely that the new republic will gain in the long term
•Nepal is facing its severest political crisis in decades. The repeated dissolution of Parliament, from last December to May this year, is not just a manifestation of the power struggle between political parties and leaders in Nepal but also a dangerous game plan by national and international forces to dismantle the federal republican democratic Constitution and restore the old Hindu monarchical state. It is really anachronistic that the so-called Marxist-Leninist party headed by Prime Minister K.P. Sharma Oli is in collusion with Hindu monarchical forces in Nepal and the Rashtriya Swayamsevak Sangh in India. A section of the Janata Samajbadi Party (JSP) led by Mahanta Thakur and Rajendra Mahato have been lured or forced to join hands with Mr. Oli, who is notorious for his anti-Madhesh tirade till the other day.
Autocratic splash
•Even when India’s political and diplomatic culture saw a departure from best past practices, it was expected that its official regime would always support multiparty democracy, progressive political action and changing fundamentals.
•Contrary to this, India is being seen backing an autocratic and unconstitutional regime, surviving in ‘caretaker mode’ with the connivance of Nepal’s President Bidya Devi Bhandari and Mr. Oli. In helping an unpopular and illegitimate regime in Kathmandu, the game-plan seems to be to derail the Constitution and plunge the country into endless crisis. It is impossible to understand how this will benefit either India or Nepal, especially when the establishment in New Delhi is perceived here to be hell bent on turning Nepal into a Hindu state and scrapping federalism as well (ultimately disempowering oppressed Madhesis, Tharus, Janajatis, women and others). The statement by India’s Ministry of External Affairs, that “political developments in Nepal are the country’s internal matters” did not help too in changing the popular perception.
•If the objective is to scrap the present Constitution to undo the Kalapani-Limpiadhura map episode, why throw the baby out with the bathwater? The India-Nepal boundary issue can be resolved through serious political dialogue. There should be a trade-off between the developmental aspirations of Nepal and the strategic concerns of India, in the light of changing geopolitical dynamics in the Himalayan region. India should do course correction and should not throw its weight behind an autocratic regime; it must reassure all who care for the peace and the prosperity of Nepal by reposing faith in Nepal’s democracy and due processes. Also, India must fulfil the promises it made for COVID-19 vaccines to Nepal. The glaring gap between the promises made and delivery has been a big disappointment; people should never be kept in lurch like this.
The twists and turns
•It is in the public domain that the Opposition alliance in Nepal filed a petition in the Supreme Court last week demanding that the Nepali Congress’s Sher Bahadur Deuba be declared the new Prime Minister and the House of Representatives be reinstated. As many as 146 members of the dissolved House of Representatives — 61 from the Nepali Congress, 49 from the Communist Party of Nepal (Maoist Centre), 23 from the Madhav Nepal faction of the CPN-UML, 12 from a section of the JSP and one from the Rastriya Janamorcha Nepal — have signed the petition, challenging Mr. Oli and Ms. Bhandari’s House dissolution moved late on the night of May 21 and disqualified Mr. Deuba’s claim that he be appointed Prime Minister. Representing the Opposition alliance, Mr. Deuba had presented the signatures of 149 lawmakers to prove that he commanded the majority to lead a new government in this crisis phase when Nepal is witnessing an unprecedented crisis with the novel coronavirus pandemic and an abjectly poor counter-response by the
Oli-occupied regime.
•Without any delay in subverting constitutionally due procedures, Mr. Oli too made a ridiculous claim that he be appointed Prime Minister, while technically still being the Prime Minister, falsely claiming to have the backing of 153 lawmakers. Since the plot was scripted, he failed to name those lawmakers. After the President disqualified both claims as the most suitable possibility for Mr. Oli, he, through a dramatic midnight Cabinet meeting, recommended the House’s dissolution. The President duly obliged him and his autocratic manoeuvring that have hammered democratic principles and national interest. Alas!
•For the manner in which Ms. Bhandari has acted to keep Mr. Oli in power and undermining her constitutional role as the first citizen of the country, impeachment will be the easiest exit route for her.
•A graceful exit is not an idea tempting enough for her and Mr. Oli; so going in for the lawful provision of impeachment is a prerequisite to restore eroded faith in the presidential position and due processes. Ms. Bhandari’s role in public life has been questioned earlier too, as she, as the President of a new democracy, did all possible to weaken the system and make Mr. Oli a walking authority above the Constitution. Never ever was she deterred by fierce public criticism and continued her business as usual with Mr. Oli. In a press conference recently, Mr. Oli said, “Disrespect for the President is disrespect for the republican system. In a monarchy, there is a King, in a republic system, there is a President. The President is the symbol of republicanism and an attack on the dignity of the Office of the President is an attack on the republic system.” This makes things very clear. Ironically, Ms. Bhandari and Mr. Oli are two prominent figures who have consistently disrespected and abused the President’s high office for their shared political gains — and made it subservient to the executive whims and fancies.
•Mr. Oli’s sudden bout of nostalgia for the long gone monarchy is not just his bid to revisit the history but is also something in progression and from the hope he has been given by his invisible handlers and friends, in both the north and the south. He is not an original thinker. He is counting on a plan to drive the country to the brink of a constitutional crisis, stay at the helm as an authoritarian caretaker Prime Minister with an unreasonably friendly President, and force the country into elections when even the next moment is uncertain. To end their Machiavellian treachery, the Opposition alliance has to rise to the occasion and make all possible efforts to foil the unholy plan.
Nepal at the crossroads
•Nepal’s quest should be to redeem its lost glory, and for the first time, avail its true development potential — and stop being a ‘theatre of the absurd’ and hosting the harmful advances of neighbours involved in geostrategic rivalries. On the domestic front, an increased focus should be on homework, instead of leveraging on vulnerabilities and the making of unruly partners. In a functional democracy, statecraft is not supposed to be altruistic till it relies on progressive policy and governance — with an aim to augment the mission of ‘greater common good’. Long ago, the People’s War was over in Nepal, with a transitory accomplishment of a goal in a new republic. However, the task is still unfinished till the people-centric priorities are not driving the political agenda and action.
•Despite all the flaws, Nepal should protect its democracy that is now at stake because of actions by political opportunists. Politicians such as Mr. Oli and Ms Bhandari have endangered the country’s prospects. However, an accomplished democracy like Nepal will rise again.
•For sure, the road ahead is not easy and it is going to be one of struggle. If the Opposition alliance makes a resolve and fights back, it is likely that the new republic will gain in the long term.The big powers should take note of this.
📰 Humanity matters, capitalism needs an upgrade
The COVID-19 vaccine crisis is an opportune time when companies must rethink the purpose behind their existence
•The COVID-19 vaccine crisis is another tragic instance of a clash between the needs of humanity and the principles of capitalism. Capitalists insist that private producers of vaccines must make profits because that is their compensation for investing in research and production. If the prices they charge are beyond the reach of poor people, they are not morally compelled to serve them at a loss. Then, governments must step in and buy from private producers and subsidise sales to poorer people. For which, governments need revenues of course, and taxes on private companies could be a significant source. However, if private companies also press governments for lower taxes, to make their investments more attractive; and if the government is also pushed by them, on ideological grounds, to stay out of business, viz. not having any “public sector” production enterprises, governments find both their hands tied behind their backs in crises when citizens blame them for breakdowns of public services. The Indian government is facing this crisis now.
Conversion of the commons
•How Will Capitalism End? Ask Wolfgang Streeck and his co-authors in their book with that title. It will end, they say, when the forces that support capitalism run out. Capitalism expands by converting “the commons” into private capital. Economists justify this on practical grounds: it is the ‘tragedy of the commons’, Garrett Hardin postulated, that people will not care for something unless they own it. This is an ongoing justification for capitalist businesses owning land and forests and water resources. Businesses convert natural capital into financial capital and use it for generating profits and more capital for themselves. Over-exploitation of the earth’s resources to produce profits has contributed to the crisis of environmental sustainability and climate change. The concept of ownership of assets for creating wealth had gone too far when slaves without human rights were used in capitalist enterprises as their economic assets until moralists objected.
Creation of monopolies
•Slavery is banned by law and the earth’s resources are limited. Therefore, capitalism has moved on to convert knowledge into private property. Modern regimes of intellectual property rights (IPR) with armies of patent lawyers help capitalists to create intellectual property monopolies. Thus, people are denied the use of their own knowledge — as they are when natural products, such as neem and turmeric are patented by capitalists. Thereby, communities whose traditions produced the knowledge must pay those who stole it from them, albeit legally. The public contributes to the creation of scientific knowledge in many ways, for example through government research and development grants and subsidies, as Mariana Mazzucato explains in her book, The Value of Everything: Making and Taking in the Global Economy. In fact, large public assistance in various ways has enabled U.S. pharmaceutical companies to develop their new COVID-19 vaccines at ‘warp speed’.
•India has been a spoiler in the global Trade-Related Aspects of Intellectual Property Rights (TRIPS) regime which was promoted by the World Trade Organization in 1995 for uniform global IPR rules. TRIPS is founded on the principle of “product patents”. India had a different approach to IPR based on “process patents”. Product patents allow inventors of new drugs to have exclusive rights to produce and sell them for some years. Producers can use their monopoly to fix higher prices and make more profits for recovering their investments in drug development. Thus, the quantum of production is limited by the inventor to keep prices high. On the other hand, the process patents route forced Indian producers to invent better processes for producing larger volumes at lower costs of ‘generic’ versions of the medicine. This benefited citizens of poorer countries including India. However, Indian generic drug producers became threats to the pricing power of ‘innovator’ drug producers from the West.
•TRIPS does have a provision to enable governments to enforce ‘compulsory licensing’. They can demand that an innovator company must allow domestic, lower cost, producers to increase the supply of the drug in an emergency, with compensation to the inventor of course. However, western companies do not like this provision, which has been used before by the South African government, for example, to get drugs for AIDS produced by Indian low cost producers when the AIDS pandemic was raging and Africans could not pay the high prices charged by western companies. This is the provision that South Africa and India want to invoke now to enable production of the new U.S. invented COVID-19 vaccines whose prices are too high for poorer countries.
•There are three stakeholders involved in a system to produce adequate volumes of affordable medicines: citizens who need the medicines, governments who must ensure they get them, and private companies who produce and sell them. If the stand of private companies is that because their business must be only business, and the public good is not their responsibility, governments must step in. They must have the means to regulate the prices and also to enhance production. However, if private companies (and the economists who support them) take the view that any interventions by governments distort the market, and go even further to say that taxes must be reduced to make their investments more attractive, governments have both hands tied behind their backs when they have to step in to help people in distress.
Public sector versus private
•Many economists do not like ‘public sector’ enterprises. Whenever governments set up ‘public sector’ enterprises, such as banks, hospitals, and schools, economists can prove that these enterprises do not produce as much shareholder returns than they would if they were ‘privatised’. If they were privatised, their owners’ objectives would be primarily, if not entirely, to maximise returns to investors. In that case, public benefits are relegated to the background, or even drop right off the table. Therefore ‘private’ will always be better than ‘public’ by the limited metric of shareholder returns.
•The purpose of governments is to improve the all-round well-being of all citizens; not merely to provide products to customers who can pay good prices for them, which is the means by which private enterprises meet their objective of producing profits for their investors. The COVID-19 crisis has revealed the inadequacy of capitalism to fulfil societal needs. If capitalist enterprises are not willing to fulfil public purposes, governments must create more public spirited enterprises to provide public goods equitably to all citizens. Relentless economic growth is devouring the earth that hosts humanity. With artificial intelligence algorithms in social media, capitalist enterprises are able to manipulate human minds. Their investors have become the richest people on the planet. New mRNA technologies on which some new COVID-19 vaccines are based provide the means to manipulate the composition of human bodies. Thus, capitalists can create even more wealth for themselves off human beings.
Time to reflect
•Money-driven capitalist values have drifted too far from human values. Money has become the supreme measure of success in all spheres: the wealth of individuals, the size of companies, and the scales of nations’ economies. The sustainable health of complex systems — which human beings and societies are — is being lost sight of. The COVID-19 crisis will not end capitalism. But capitalism must mutate to survive. Companies must rethink the purpose for their existence. It is imperative now that more human and less money values are adopted.
