📰 Six nations call for ‘immediate’ aid for Afghans
India-Central Asian dialogue seeks formation of a truly representative, inclusive government in Kabul.
•India and Central Asian nations share a “broad regional consensus” on Afghanistan, said a regional conference of Foreign Ministers in Delhi on Sunday that proposed the use of the India-run terminal at the Chabahar port in Iran as a route for trade.
•A joint statement issued at the end of deliberations as part of the third India-Central Asia dialogue, hosted by External Affairs Minister S. Jaishankar with the Foreign Ministers of Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan, said it was important to provide “immediate” humanitarian aid for Afghans.
•Sources told The Hindu that the Ministers had confirmed the participation of the leaders of their respective countries at India’s Republic Day celebration, when they will hold a summit-level dialogue with Prime Minister Narendra Modi. The Central Asia dialogue comes a month after National Security Adviser Ajit Doval hosted five counterparts from the region for a security dialogue focusing on Afghanistan.
Broad consensus
•“Ministers noted that there is a broad ‘regional consensus’ on the issues related to Afghanistan, which includes formation of a truly representative and inclusive government, combating terrorism and drug trafficking, central role of the UN, providing immediate humanitarian assistance for the Afghan people and preserving the rights of women, children and other national ethnic groups,” the joint statement said. In his opening remarks, Mr. Jaishankar said that the six nations all shared common “concerns and objectives” in Afghanistan.
Helping Afghans
•“We must find ways of helping the people of Afghanistan,” he added.
•India sent a shipment of medical aid by air to Afghanistan earlier this month, but the bulk of its planned aid including 50,000 tonnes of wheat is still being discussed with Pakistan, the External Affairs Ministry said on Thursday.
•The five Foreign Ministers travelled to India, sending their deputies to Pakistan for a Organisation for Islamic Cooperation meeting.
•Turkmenistan Foreign Minister travelled to Islamabad on Saturday, and held bilateral talks with Pakistan Foreign Minister Shah Mehmood Qureshi.
•While none of the countries recognise the Taliban, only Tajikistan has taken a strong stand against any bilateral contacts with the group after it took control of Afghanistan in August. Turkmenistan and Uzbekistan have re-opened their missions in Kabul. They have also exchanged ministerial level visits with Kabul, as have Kazakhstan and the Kyrgyz Republic. India has thus far met Taliban leaders publicly only twice, in Doha and Moscow.
•The dialogue also discussed how to increase links in what Mr. Jaishankar called the “4 C’s” of Commerce, Capacity enhancement, Connectivity and Contacts. India-Central Asia trade is quite small at present, accounting for less than $2 billion, most of which comes from Kazakh oil exports to India.
•Given Pakistan’s block on land trade from India, the countries determined to make more use of the sea route via Chabahar, which is connected to Central Asian countries by road and rail through Iran, as well as the International North South Transit Corridor (INSTC) that goes via the Iranian port of Bandar Abbas.
•“India welcomed the interest of Central Asian countries to utilize the services of Shahid Beheshti Terminal at Chabahar Port for facilitating their trade with India and beyond,” the joint statement said, adding that Mr. Meredov had stressed on the importance of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.
•The dialogue also decided to explore establishing joint working groups to address issues of free movements of goods and services between India and Central Asian countries, according to the statement.
‘It is in the interest of women, children’
•Data recorded in the Poshan (Nutrition) Tracker have not been made public in the interest of privacy of women and children, the government told Parliament last week.
•“The data that we deal with within the Poshan Tracker, to maintain the privacy of women and children in our country, especially the minor children whose data should not be publicly made available, is an issue which is close to my heart. My pledge is to honour the privacy of women and children who are serviced by the Government of India in collaboration with State Governments across the anganwadi systems in the country,” Smriti Irani, Minister for Women and Child Development, told the Lok Sabha on Friday.
•The Minister was responding to a question from YSRCP MP Goddeti Madhavi on why nutrition indicators recorded in the tracker were not in public domain.
Critical tool
•The tracker is one of the important pillars of the Poshan Abhiyan and helps the government monitor services delivered at 12.3 lakh anganwadi centres and record nutritional indicators of 9.8 lakh beneficiaries, including children in the age of six months to six years as well as pregnant women and lactating mothers. Anganwadis provide six services, which include supplementary nutrition in the form of hot-cooked meals and take home ration, immunisation and pre-school education.
•The Government has spent Rs. 1,053 crore to develop the tracker. Of the total, Rs. 600 crore was spent on procurement of smartphones, followed by Rs. 203.96 crore on smartphone recharge and maintenance, Rs. 180.68 crore on incentives to anganwadi workers and helpers for using the technology and Rs. 68 crore on training. These details were provided by the Ministry of Women and Child Development to the Parliamentary Standing Committee on Education, Women, Children, Youth and Sports which tabled its report recently.
Limited details
•On its Poshan Tracker website ( https://poshantracker.in/ ), the government hosts a dashboard which provides only limited administrative details at national, State and district level. This includes total attendance on a given day, vaccinations, take-home ration and hot cooked meals delivered. But it provides no information on the nutrition status of the beneficiaries such as stunting and wasting among children or prevalence of anaemia.
Constant monitoring
•The parliamentary committee in its report raised several questions on the effective use of the Poshan Tracker. It sought that key performance indicators be constantly monitored and uploaded on its website and a State-wise progress report be maintained “so that identification of those deprived of the benefits can be made on a real-time basis for timely remedial measures.” The committee also recommended that the Ministry put in place a monitoring mechanism to ensure there were no gaps in distribution of food packets to anganwadi beneficiaries.
📰 Private hospitals to be tagged for being breastfeeding-friendly
Hospitals are accredited after a two-stage process costing ₹17,000
•A new initiative will now help mothers identify “breastfeeding-friendly” hospitals before they give birth.
•The Breastfeeding Promotion Network of India(BPNI) in collaboration with Association of Healthcare Providers of India (AHPI), which comprises more than 12,000 private hospitals, has launched an accreditation programme that will enable hospitals to get a “breastfeeding-friendly” tag. This programme is called “Baby Friendly Hospital Initiative (BFHI)”.
•The certification process involves two stages — the first stage includes self-assessment by a hospital, followed by an external assessment by an authorised appraiser who interviews doctors, nurses and patients as well as reviews different practices and training of staff. The accreditation process costs ₹17,000 per hospital.
Golden hour
•Early initiation of breastfeeding continues to be low in the country. According to the National Family Health Survey-5 (2019-2021), while there were 88.6% institutional births, only 41.8% of infants were breastfed within the first one hour, which has improved only marginally from 41.6% during NFHS-4 (2015-2016). In fact, many States such as Maharashtra, Karnataka, Gujarat, Uttar Pradesh, Jharkhand and Chhattisgarh have shown a decline in the proportion of children breastfed within the first hour.
•Provision of mother’s breast milk to infants within one hour of birth ensures that the infant receives the colostrum, or “first milk”, which is rich in protective factors, according to the WHO.
•Lack of support and counselling for expectant mothers during pregnancy and at birth as well as aggressive promotion of baby foods are the reasons for poor early breastfeeding rates. A rise in caesarean sections is also known to negatively impact breastfeeding rates.
C-section delays
•“During caesarean operations everyone is focused on recovery, wound surgery, infection control and breastfeeding within the golden hour is missed. Evidence shows that improving breastfeeding rates in hospitals reduces neonatal mortality and infant mortality rates. Therefore, it is important that we train our nurses, doctors and allied health staff. We will roll out our accreditation programme in phases and begin with 100-bed hospitals through our 19 chapters,” said Giridhar Gyani, Director General, AHPI.
•The initiative is only for private hospitals and is based on the Ministry of Health and Family Welfare's MAA programme for government hospitals launched in 2016. The tools for this evaluation process have been developed in partnership with the Health Ministry and World Health Organisation. The BFHI programme is a worldwide programme of the WHO and UNICEF. Though India adopted it in 1993, it fizzled out by 1998 and is now being revived after more than two decades.
•“The programme will evaluate hospitals on how well they counsel and support mothers in lactation, whether they have adequate skilled support persons and if they adhere to the law that bans promotion of infant formula, feeding bottles and infant food- Infant Milk Substitute Act, 1992 and Amendment Act 2003. Hospitals with the top grade will be accredited and others will be guided to improve their practices,” explained Arun Gupta, Central coordinator, BPNI.
•Chennai's Bloom Healthcare has become the first hospital to be recognised as “breastfeeding-friendly” under this programme.
📰 Explained | Questioning the impartiality of the Election Commission
Why did the note by the Government raise questions about the functioning of the Commission? How did the CEC respond to the letter?
•The story so far: Raising questions of propriety, Chief Election Commissioner (CEC) Sushil Chandra met with Principal Secretary to the Prime Minister, P. K. Mishra, on November 16, where he was “expected to be present.” An official communication from the Law Ministry, which is the administrative ministry of the Commission, said the meeting had been called to discuss electoral reforms. Also, the Ministry claimed that the session with the CEC and Election Commissioners Rajiv Kumar and Anup Chandra Pandey was an “informal interaction”.
Why does this raise issues about the functioning of the Commission?
•The “directive” from the PMO has raised concerns about the independent functioning of the Commission, whose autonomy successive CECs have sought to protect zealously. The “informal interaction” of the CEC and two other Election Commissioners with the Prime Minister’s Principal Secretary has raised questions about the neutrality of the Commission, especially when elections to crucial States are around the corner.
•The Election Commission is a constitutional authority whose responsibilities and powers are prescribed in the Constitution of India under Article 324. As per information available on the Commission’s website, in the performance of its functions, the Election Commission is insulated from executive interference. It is the Commission which decides the election schedules for the conduct of elections, whether general elections or by-elections. Again, it is the Commission which decides on the location of polling stations, assignment of voters to the polling stations, location of counting centres, arrangements to be made in and around polling stations and counting centres and all allied matters. The decisions of the Commission can be challenged in the High Court and the Supreme Court of India by appropriate petitions. By long-standing convention and several judicial pronouncements, once the actual process of elections has started, the judiciary does not intervene in the actual conduct of the polls.
What was wrong in the letter from the Law Ministry to the EC?
•The three ECs are expected to maintain distance from the executive — a constitutional safeguard to insulate the commission from external pressure and allow it to continue as an independent authority. The EC’s communication with the Government on election matters is through the bureaucracy — either with its administrative ministry — the Law Ministry or the Home Ministry for the deployment of security forces during elections. In such cases, the Home Secretary is often invited in front of a full commission where the three commissioners are also present. The Law Ministry spells the fine print on law for the country and is expected not to breach the constitutional safeguard provided to the commission to ensure its autonomy.
•However, from former CEC M.S. Gill who had written to the then prime minister Atal Bihari Vajpayee proposing electoral reforms to former CEC S.Y. Quraishi’s letter to former prime minister Manmohan Singh on the delay in payment for EVMs by the Law Ministry, election commissioners, have from time to time written to prime ministers in the past. In this case, after receiving the letter from the Law Ministry, the CEC, it is learned, conveyed his displeasure and stayed away from the meeting in which his subordinate officials were present. However, the three commissioners did make themselves available for an interaction with Mr. Mishra later.
By making themselves available , has the EC acted in good faith?
•Over the last couple of years, several actions and omissions of the commission have come in for criticism. For example, during the 2019 Lok Sabha Elections, the EC under Chief Election Commissioner Sunil Arora gave a clean chit to Prime Minister Narendra Modi, who in an election rally in Latur, had referenced his campaign with an appeal on behalf of the armed forces. The Election Commission of India took the view that Mr. Modi did not violate its rule book. In doing so, the Commission overruled the opinion of the district election officers by stating that Mr. Modi did not seek votes by invoking the Balakot air strikes. This year, the Commission’s belated decision in banning election campaigns in the midst of a rampaging pandemic, raised eyebrows. Eventually, when they banned rallies and public meetings of over 500 people, the decision came a day after Mr. Modi cancelled his four scheduled rallies. Nearly 66 former bureaucrats in a letter addressed to the President, expressed their concern over the working of the Election Commission which they felt was suffering from a credibility crisis, citing various violations of the model code of conduct during the 2019 Lok Sabha Elections.
📰 Age and marriage: On raising the age of marriage for women
Focus must be on creating social awareness about women’s reproductive health and rights
•Good intent does not guarantee favourable outcomes. Coercive laws without wide societal support often fail to deliver even when their statement of objects and reasons aims for the larger public good. Within days of the Union Cabinet approving a proposal to raise the age of marriage for women from 18 to 21 years, the same age as for men, the Government listed it for legislative business in Parliament this week. If passed, various personal and faith-based laws which govern marriages in India now, including The Hindu Marriage Act, 1955, the Special Marriage Act, 1954, and the Prohibition of Child Marriage Act, 2006, will have to be amended. In her Budget speech last year, Finance Nirmala Sitharaman had announced that the Government would set up a task force to look into the age of a girl entering motherhood with an aim to lower maternal mortality rates, improve nutrition levels as well as ensure opportunities to women to pursue higher education and careers. With these targets in mind, a panel headed by former Samata Party chief Jaya Jaitly was set up in June last year. The panel submitted its report in December 2020. Though the objective looks good on paper, merely raising the age of marriage without creating social awareness and improving access to health care is unlikely to benefit the community it wants to serve: young women not yet financially independent, who are unable to exercise their rights and freedoms while still under the yoke of familial and societal pressures.
•According to Ms. Jaitly, raising the age of marriage is one of its recommendations, which include a strong campaign to reform patriarchal mindsets, and improved access to education. As per the National Family Health Survey (2019-2021), 23.3% of women aged 20-24 years married before 18, which shows that the Prohibition of Child Marriage Act, 2006, has not been wholly successful in preventing child marriages, especially among the poor. Women’s rights activists point out that parents often use this Act to punish their daughters who marry against their wishes or elope to evade forced marriages, domestic abuse, and lack of education facilities. Hence, within a patriarchal setting, it is more likely that the change in the age limit will increase parents’ authority over young adults. A good, but not easy, way to achieve the stated objective is to take steps to counsel girls on early pregnancies, and provide them the network to improve their health. The focus must be on creating social awareness about women’s sexual and reproductive health and rights, and ensuring girls are not forced to drop out of school or college. Laws cannot be a short cut in the path to social reform.
📰 Indian desert cat spotted in M.P.’s Panna Tiger Reserve
•An Indian desert cat has been spotted for the first time in Madhya Pradesh’s Panna Tiger Reserve (PTR), a senior forest official claimed.
•“A tourist has shared the pictures taken by him of an Indian desert cat in the reserve's Akola buffer zone of the reserve recently during the night safari,” PTR’s field director Uttam Kumar Sharma said on Saturday.
•As the name suggests, this cat is found in deserts and can survive without water. The toes of the species have cushion like hair which help it balance the fluctuating desert temperatures, the official said.
•He said the presence of this wild cat was not reported in the PTR’s records earlier.
•“The name of the Indian desert cat was mentioned in old documents of the PTR, but the photographic presence of this species was not recorded earlier,” the official said.
•He said earlier, the presence of a desert cat was recorded in the State’s Nauradehi sanctuary.
•“We are looking for documents to ascertain where its presence was recorded earlier in Madhya Pradesh,” he said.
•The official also said the presence of the desert cat in the PTR indicates that the number of species of various wild animals is increasing in the reserve due to security being heightened in its forest areas.
•In August this year, a fishing cat, one of the endangered animals in India, was spotted in the PTR, State Government officials earlier said.
📰 Testing the red lines in the Iran nuclear talks
It presents itself as a path paved with uncertainties and risks failure if the players adopt a ‘Trumpian’ attitude
•Months after Iran’s presidential elections in June, multilateral nuclear talks have started once again in Vienna with a new Iranian negotiating team. Iran’s chief negotiator Ali Bagheri Kani reportedly introduced demands that in effect cancelled understandings reached in previous rounds of negotiations in June concerning a renewed Joint Comprehensive Plan of Action (JCPOA). As a matter of fact, a report by a nonpartisan organisation points out that Iran began exceeding JCPOA limits on both its allowed stockpile and level of enrichment a year after the Donald Trump administration withdrew from the deal in May 2018 and began re-imposing economic sanctions.
What Iran and the U.S. say
•For the time being, the new round of Vienna talks seems to have no positive outcomes. Both sides are completely intransigent and want the other party to back down and make concessions before they will move. Iran insists on all sanctions being lifted, while the Americans are asking Iran to return to reduced enrichment of uranium and accept full International Atomic Energy Agency (IAEA) inspections. According to some analysts, the current impasse is not due to two factors. First and foremost, Iran is playing the North Korean card, while moving toward leaving the economic sphere of the United States and Europe and joining China and Russia. On the other hand, the Americans do not have a very clear direction for Iran’s future, especially because the U.S. President, Joe Biden, is refusing to commit his administration to lift sanctions on Iran during the remaining years of his presidency.
Europe’s line
•As for the Europeans, thus far they have been almost non-existent in these new talks. Even so, Enrique Mora, Deputy Secretary General/Political Director, European External Action Service, who coordinates talks between Tehran and six powers on reviving a 2015 nuclear pact seemed to be very positive about the way the negotiations had started. According to him: “the P4+1 must “fully take into account” the political sensibilities of the new Iranian administration”, while the Iranian delegation has recognised “the work we have done in the past six rounds and the fact that we will build on this work going ahead”.
•Despite Mr. Mora’s positive remarks, it seems that the Europeans are trying to salvage the deal as quickly as possible, as Iran ramps up uranium enrichment. But at the same time, they seem not to be forceful mediators in these talks, given that there are the Chinese and the Russians, who are in favour of the Iranians.
Chinese remarks
•The Chinese comments about the “nuclear hypocrisy” of the West suggested that it is sympathetic to the fundamental arguments of the Iranian negotiators, that has been dealt a fundamental injustice by the U.S. — an injustice in which the Europeans have been complicit. Unsurprisingly, while the Iranian negotiating team believes that time is running out for the U.S., the U.S. Secretary of State, Antony Blinken, has warned Iran that “the hour is getting very late” to return to the nuclear deal. However, he also added that “it is not too late for Iran to reverse course to save the deal aimed at curbing Tehran’s nuclear capabilities, in exchange for an easing of sanctions from Washington”.
Tehran’s stand, Israel’s view
•All in all, the new Iran nuclear deal presents itself as a path paved with uncertainties. It looks like Iran has headed into the present nuclear talks in Vienna armed with a new general nuclear strategy. Indeed, Iran’s Supreme Leader Ayatollah Ali Khamenei’s demands have consistently centered on full sanctions removal. But, at the same time, the newly elected government headed by Ebrahim Raisi has repeatedly proclaimed that nothing is agreed on unless everything has been agreed on. It seems that the Raisi government is testing international red lines, and trying to leverage Iran’s expanding nuclear programme to produce more concessions from the international community, without paying significant costs. As a result, there is an increasing pessimism on whether the Iran nuclear deal can be revived.
•The fact that Iran has begun using advanced centrifuges to pursue 20% uranium enrichment at the underground Fordow facility is making the IAEA very nervous. Meanwhile, Israeli officials have been pressing European governments and the U.S. on a real Iranian nuclear threat. However, according to the former Israeli Defence Minister, Moshe Ya’alon, “The main mistake of the last decade was to quit the deal during the Trump administration.” However, let us not forget that the Israeli Prime Minister, Naftali Bennet, declared openly in late November that, “The mistake we made after the first nuclear deal in 2015 will not repeat itself.” He recently asked Washington to start using “a different toolkit against Iran’s forward gallop in the enrichment sphere”.
•No doubt, Israel continues to see the Islamic Republic of Iran as an existential threat. From the Israeli point of view, this threat can be justified notably by Iran’s current hegemonic military drive into the Levant. All this does not necessarily mean that Israel has a plan to act militarily against Iran, but the situation is far from encouraging for the Israelis.
•Whatever it may be, the key question remains this: whether the nuclear negotiations in Vienna could become substantive or collapse with no results. No one has the answer to this question yet. But one thing is certain: Iran and the U.S. will both fail if they try to corner each other with a “Trumpian” attitude. After all, if the JCPOA is a complex affair, it is because diplomacy is all about complexity management.
📰 Can India become a technology leader?
A strengthened public sector will create more opportunities for private businesses
•Every time a technology giant chooses an India-born techie as its leader, there is a justifiable swelling of pride in the country, but also some disappointment. Despite having so many celebrated technologists around the world, why is India still not a major player in technology? India has the potential to occupy the upper echelons of the global technology ladder if only it identifies its shortcomings and acts upon them urgently.
•The popular narrative is that India’s failures are linked to its inability to make use of the market-driven growth opportunities. The country’s earlier commitment to planning and the public sector continues to damage its chances, so the argument goes, even after the 1991 economic reforms. And so, the talented left the country in droves for the U.S. Indeed, as of 2019, there were 2.7 million Indian immigrants in the U.S. They are among the most educated and professionally accomplished communities in that country.
An invisible hand
•No doubt, the U.S. is a country of fabled opportunities. However, what is less known is than an invisible hand of the government has been there to prop up each of the so-called triumphs of enterprise and the free market. Research by Mariana Mazzucato shows that the state has been crucial to the introduction of the new generation of technologies, including the computers, the Internet, and the nanotech industry. Public sector funding developed the algorithm that eventually led to Google’s success and helped discover the molecular antibodies that provided the foundation for biotechnology. In these successful episodes, the governmental agencies were proactive in identifying and supporting the more uncertain phases of the research, which a risk-averse private sector would not have entered into.
•The role of the government has been even more prominent in shaping the economic growth of China, which is racing with the U.S. for supremacy in technology. A little over a decade earlier, China was known for its low-wage manufacturing. Even while being hailed as the ‘factory of the world’, China had been stuck at the low value-adding segments of the global production networks, earning only a fraction of the price of the goods it manufactured. However, as part of a 2011 government plan, it has made successful forays into ‘new strategic industries’ such as alternative fuel cars and renewable energy.
The Chinese experience
•China’s achievements came not because it turned ‘capitalist’, but instead by combining the strengths of the public sector, markets and globalisation. China’s state-owned enterprises (SOEs) were seen as inefficient and bureaucratic. However, rather than privatising them or letting them weaken with neglect, the Chinese state restructured the SOEs. On the one hand, the state retreated from light manufacturing and export-oriented sectors, leaving the field open for the private sector. On the other, SOEs strengthened their presence in strategically important sectors such as petrochemicals and telecommunication as well as in technologically dynamic industries such as electronics and machinery.
•When India inaugurated planning and industrialisation in the early 1950s, it was possibly the most ambitious of such initiatives in the developing world. Public sector funding of the latest technologies of the time including space and atomic research and the establishment of institutions such as the Indian Institutes of Technology (IITs) were among the hallmarks of that effort. Many of these institutions have over the years attained world-class standards. The growth of information technology and pharmaceutical industries has been the fastest in Bengaluru and Hyderabad. However, the roadblocks to progress have been many, including India’s poor achievements in school education.
•In 1991, when India embraced markets and globalisation, it should have redoubled efforts to strengthen its technological capabilities. Instead, the spending on research and development as a proportion of GDP declined in India from 0.85% in 1990-91 to 0.65% in 2018. In contrast, this proportion increased over the years in China and South Korea to reach 2.1% and 4.5%, respectively, by 2018.
Supply and demand factors
•Despite the setbacks, India still possesses favourable supply and demand factors that can propel it into the frontlines of technology. The number of persons enrolled for tertiary education in India (35.2 million in 2019) is way ahead of the corresponding numbers in all other countries except China. Further, graduates from STEM (Science, Technology, Engineering and Mathematics) programmes as a proportion of all graduates was 32.2% for India in 2019, one of the highest among all countries (UNESCO data).
•Without doubt, India needs to sharply increase its public spending to improve the quality of and access to higher education. An overwhelming proportion of tertiary students in India are enrolled in private institutions: it was 60% for those enrolled for a bachelor’s degree in 2017, while the average for G20 countries was 33%, according to OECD.
•India — which will soon have twice the number of Internet users as in the U.S. — is a large market for all kinds of new technologies. While this presents a huge opportunity, the domestic industry has not yet managed to derive the benefits. For instance, the country is operating far below its potential in electronic manufacturing. Electronic goods and components are the second largest item, after oil, in India’s import bill. Also, the country’s imports are almost five times its exports in this industry (based on 2020-21 data).
•High-value electronic components needed in the manufacture of, say, mobile phones are technology- and design-intensive. Big multinational companies control these technologies and corner the bulk of the revenues. China has used its large market size as a bargaining chip in negotiations with the foreign firms: stay in our markets only if you localise production and share technologies with the local firms. Meanwhile, there have been aggressive efforts to enhance China’s own technological strengths through its research institutions and SOEs.
•The ‘Make in India’ initiative will have to go beyond increasing the ‘ease of business’ for private industry. Indian industry needs to deepen and broaden its technological capabilities. This will happen only if universities and public institutions in the country are strengthened and emboldened to enter areas of technology development for which the private sector may have neither the resources nor the patience.
•Over the last three decades, PSUs in India have been judged mainly on the short-term fiscal benefits they bring. Instead, they should be valued for their potential long-term contributions to economic growth, the technologies they can create, and the strategic and knowledge assets they can build. A strengthened public sector will create more opportunities for private businesses and widen the entrepreneurial base. Small and medium entrepreneurs will flourish when there are mechanisms for the diffusion of publicly created technologies, along with greater availability of bank credit and other forms of assistance. The next big story about Indian prowess does not have to be from the U.S., but could come from thousands of such entrepreneurs in far-flung corners of the country.
📰 Neither ban nor regulate crypto
The government must simply make it clear that India will never permit cryptocurrencies to be currency
•“India has officially adopted bitcoin as legal tender,” tweeted the Prime Minister at 2 a.m. on December 12. The suddenness of the announcement, its timing and mode of communication would have shocked any nation. But he had made a similar announcement at 8 p.m. on November 8, 2016, declaring that all ₹500 and ₹1,000 notes would no longer be legal tender. So, introducing a new legal tender arbitrarily was not beyond the realm of possibilities. Fortunately, the tweet was deleted later citing “technical compromise”. Conspiracy theories aside, the nation’s currency is a very serious matter.
•Today, I can sell you my painting and accept cryptocurrency in return, just as I can also accept peacock feathers. It is a private transaction between consenting Indian adults and the government should not be involved. Nearly 15 million Indians are supposedly investing in and betting on cryptocurrencies, the value of which swings wildly, purportedly putting these investors and the financial system at risk. So, the government has to formulate a policy goes the argument.
The question of trust
•But why are 15 million Indians gambling on cryptocurrencies? In the hope that its value will keep rising. This hope is based on the ultimate belief that they will be socially accepted as a valid medium of exchange. If I buy a cup of coffee, the shop will accept bitcoin only if they can use it to buy coffee seeds from the planter who in turn will accept bitcoins only if she can use it to buy fertilizer for her coffee plantation. Cryptocurrencies can become an acceptable medium of exchange only when each person in society trusts that the next person will accept it. Or if the government explicitly induces trust in them, as with paper currency. Currency essentially represents trust in society. Some ‘cool’ technology cannot manufacture social trust. If anything, social media companies have proven how if engineers are allowed to run amok, they can wreak havoc in society. As John Maynard Keynes said, “There is no subtler, no surer means of overturning society than to debauch the currency”.
•The government has to make it clear that India will not legitimise cryptocurrencies, which means they cannot be exchanged for rupees in a bank. This will dampen the enthusiasm for investment and speculation. After all, the value for cryptocurrency stems from the hope that it will eventually be a socially accepted medium of exchange or legal tender.
•It requires a global compact of all major nations to jointly resolve to not accept cryptocurrencies as currencies, which is where we seem to be headed. Inevitably there will be some nation that will stay out and allow a loophole. For now, the Indian government must be explicit that India will never recognise cryptocurrencies as currency.
Problem of regulation
•Some experts advocate regulation of cryptocurrencies. Implicit in this prescription is that the government should accord cryptocurrencies the status of a ‘financial instrument’ since only recognised instruments can be regulated. This can be a penny-wise and pound-foolish move. The argument for regulating cryptocurrencies is the notion that millions of investors indulge in risky cryptocurrency trading which can cause losses, increase volatility, spur shadow finance and pose a systemic risk. This advice is subconsciously triggered by the hangover of the 2008 financial crisis caused by mortgage trading. Fear of a systemic risk has already led the world down a dangerous path of excessive financialisation, reckless money supply and Wall Street control of economic policy, leading to huge disparities in societies. We cannot fall prey to it once again.
•If the government recognises cryptocurrencies as ‘assets’ and a regulator is established to supervise this, it runs the ‘moral hazard’ risk of signaling official sanction to speculators and implying government protection. This could perversely lead to more people trading in cryptocurrencies. India does not have the resources and governance capacity to set up a new regulatory infrastructure to oversee the interests of speculators gambling in cryptocurrencies today or peacock feathers tomorrow. By eschewing responsibility for cryptocurrencies, the government can send an unambiguous signal that those indulging in cryptocurrencies do so at their own risk. When it becomes very clear that the government will neither legalise nor regulate cryptocurrencies in India, speculative activity will reduce eventually, even if few investors lose in the process.
•Blockchain can be a powerful technology with many applications that must be encouraged; just not as a nation’s currency. It is neither feasible nor wise to ban or regulate cryptocurrencies. Make it categorically clear that India will never permit cryptocurrencies to be currency and stop there.
