COVID-19: Localise efforts to tackle water shortage

This article is written by Rohan Seth and Rashi Sharma, was first published in Deccan Herald. There have been plenty of debates and discussions around what is being done to manage the threat of coronavirus. A lot of that attention has been focused on using technology to deal with the problem. Apple and Google announced that they will be working on developing software to enable contact tracing in phones. In a similar vein, the Indian government has rolled out its own contact tracing application in Aarogya Setu. Prime Minister Narendra Modi, while extending the nationwide lockdown, urged the public to download the app. While most of the discourse has been focused on how technology fits into the picture, we have ended up missing more fundamental means of coping with the problem. Ubiquitous elements, particularly water, have been overlooked and taken for granted. Water is going to be an essential part of any country’s strategy when dealing with COVID-19. If you are reading this, there is a significant chance you have been told about the importance of washing hands or have watched a video of how to do so properly. Healthcare professionals, essential workers, and law enforcement have and will be subject to a higher risk of exposure to the virus. As our most important line of defence against the pandemic, they will need to sanitise themselves regularly. This involves washing their clothes and taking regular showers. Unfortunately for India, in recent years, the country has been dealing with acute water shortages. While major Indian cities have increased in size and their water consumption, villages lack water for basic sanitation, bearing witness to lowering levels of groundwater. Keeping in mind the lack of access to clean water for nearly 163 million people in 2018,  the Union Government created the Ministry of Jal Shakti in 2019 to integrate water resource management efforts. Under the Jal Shakti Abhiyan, the Ministry plans to ensure the availability of running tap water for domestic purposes in all households across the country. While the mission of the Ministry of Jal Shakti has been off to a promising start, there is only so much it has been able to accomplish in a year. Due to lack of both administrative will and centre-state politics, much of the water projects could not be successfully completed before the outbreak of the virus. COVID-19 and the water crisis A summer induced water crisis is not a new phenomenon for India. The depleted water levels and the already exploited government managed resources have made India rank 13 of the 17 water-stressed countries. Access to freshwater is now important and urgent. Without water to sanitise, villages once exposed to COVID-19, will find it harder to recover and to contain the virus. In the recent past, an inexorable rise in the population residing in clustered areas makes self-isolation a privilege that not many can afford. Given the historically limited state capacity, necessary demands for social distancing, and a time-sensitive situation, it is going to be a lot harder to ensure clean tap water reaches water-scarce areas. The lack of adequate supply, particularly during a lockdown, will prevent households from ensuring domestic sanitisation and lead to an increase in open defecation during this period. This socio-economic standing of the larger Indian community is a ticking time bomb which may be scheduled to explode at Stage 3 of social transmission of the virus. Importance of finding local solutions This brings us to what should be done to mitigate the crisis. There have been some attempts to allocate scarce resources amongst states across the world. Most notably, the Federal Government in the US created competition among states, creating a bidding war for medical equipment. As a result, it created an environment where medical equipment was not distributed based on need but on the purchasing power of states. Of course, a bidding war for medical equipment leaves open the risk for poor areas impacted by the disease not getting enough medical supplies to manage the spread. Learning from the US, and instead of turning to a market to mitigate an impending water crisis, it might make sense to take a different approach. The stakes now have abruptly been raised. What the spread of the pandemic has done is to leave the inadequacies in Indian infrastructure exposed. They needed to be fixed yesterday, and they need to be fixed now. Communities must mobilise their efforts to find solutions to the water crisis locally. The Union government cannot be expected to build adequate infrastructure overnight if doing so has not been possible in over 70 years. Given the social distancing requirements, time and capital constraints, these inadequacies cannot be fixed using a top-down approach. Instead, changes need to be made at the grassroot level so that the water available is optimised for usage. Along with local efforts, nudges towards desired behavioural changes for water optimisation might be the most viable option. Water optimisation thus, involves promoting the usage of greywater for irrigation, and when possible, collecting rainwater in previously built infrastructures. Along with revisiting traditional methods of preserving water, reusing already existing structures like dried-up ponds, reservoirs, tube-wells etc. can also be a low-cost source of clean water. At this point May 3, 2020 is a line in the sand. The pandemic will not end on May 4, neither will the need for water across India. Local efforts may not be enough to meet the surged demands, but steps taken today should contribute to a better scenario tomorrow. (Rohan Seth is a technology policy analyst at the Takshashila Institution and Rashi Sharma is a research assistant at the Observer Research Foundation)

When Does a Crisis Become a Policy Opportunity?

Barring the ultra-pessimist, many public policy opinion pieces are likely to advance one narrative over the next few months: The economic and humanitarian crisis unleashed by COVID-19 is also an opportunity to undertake long-pending reforms in <insert one’s favourite research area/sector>.Inherent in this view is a deep-seated belief that it’s only a crisis that can jolt India to resolve its political economy constraints while in normal times such issues aren’t to be touched with a barge pole.Read the full article in Deccan Herald here.

Consumers should get the benefit of falling oil prices

At a time when even deficit hawks are clamouring for an expansive fiscal policy to fight the severe economic consequences of Covid-19, it will be tempting for the government to exploit every opportunity to fund the welfare programmes. When oil prices first dropped to less than $30 per barrel, the Modi government had promptly increased the central excise duty. However, this will not result in increased revenue due to the enforced lockdowns and halting of economic activity.If the objective is to help the economy rebound and bolster government finances, there are better ways than raising petrol taxes. In fact, lowering it will increase the disposable income of consumers, who will go out and spend more on other goods and services. Apart from increasing incomes, it will also help the government collect higher indirect taxes. Many businesses, which are reliant on petrol, such as transport and logistics, will get a much-needed fillip by reduced petrol prices.Since the price of oil has a cascading effect on the general price level in the economy, maintaining petrol and diesel prices at the same level or increasing it can lead to higher inflation and can further dampen their demand. Moreover, additional revenue gained by the government is offset by increased subsidy payments and revenue foregone from sectors dependent on oil. Further, since petrol is outside the purview of GST, states will want their fair share as well and will competitively increase VAT on petrol.The additional amount that can be raised by petrol taxes is about Rs 30,000 crore, which will not make a dent to the Rs 8-10 lakh crore required for the post-pandemic economic revival package. It’s time to pass on the benefit to the consumers.This appeared in The Print's Talkpoint

Use the oil price crash to boost India’s strategic reserves

One area in which India can definitely use the lower oil prices to its advantage is to stock up on the commodity for future use. Like many other countries, India maintains strategic petroleum reserves (SPR), which is an inventory of oil for emergency purposes. To mitigate supply-side risks and cover for vulnerability to external oil shocks, India holds an emergency oil stockpile in underground salt caverns, which can provide around 4.5 days of import cover. There is additional capacity for five days of oil import cover, which must be filled up at this time when oil prices are at historic lows. Indian petroleum refineries hold an additional 65 days of import cover.India has been delaying the start of phase two of its SPR plans, which was to add another 12 days of oil storage capacity. This was to be done in partnership with either ADNOC (Abu Dhabi) or Saudi Arabia’s Aramco. It is probably the right time now to get this off the drawing board.Alternatively, we can also look at options outside India. We could persuade the Sri Lanka government to kick-start the utilisation of oil storage facilities at Trincomalee. This could be done in a mutually beneficial manner. We could also shop around for storage space in Oman (Ras Markaz) or the United Arab Emirates (Fujairah). Right now, we are in a bizarre situation where the storage space is more expensive than the commodity itself, but things will revert, and any investments now will help India in the long run when oil prices rise again.Finally, the private sector should look at this as an opportunity to lock into long-term contracts with oil suppliers based at current prices. The government can help the struggling Indian airline industry, for instance, by providing it lines of credit to enter into or renegotiate oil contracts.Here's the full article 

Let's make the most of dirt cheap oil

In a dramatic and unprecedented turn of events on Monday, crude oil began trading in negative territory for the first time since records began. The price on a futures contract for West Texas crude that was due to expire on 21 April crashed to minus $37.63 a barrel. This is a direct result of the market mayhem caused by covid-19, which has resulted in lockdowns around the world, brought economies to a screeching halt, and crushed demand for transport fuel. Reports say there is so much unused oil in the US that there is no space left to store fresh supplies. Storage costs money. Thus, oil producers had to pay to offload their stock.The sudden fall in oil prices is tied not just to a demand crunch, but also tensions among the world’s major suppliers. The global effort to contain the pandemic, international pressure, oversupply, and still-sluggish demand seem to have struck both Russia and Saudi Arabia hard. Though a production cut has since been agreed to, demand is estimated to have fallen far more than that.The best way to turn this situation to India’s advantage, therefore, is to grab this chance to fill up the country’s strategic petroleum reserves (SPRs). We should move quickly to boost our strategic petroleum reserves and strike long-term supply contracts with global oil suppliers.Read the full article here

COVID-19 Is a Unique Test of National Decision Making the Modi Govt Can't Afford to Fail

By General Prakash Menon

India enters a new phase in its battle against COVID-19 when it eases its lockdown selectively after 26 days of an extremely stringent lockdown.

Given the enormous uncertainty, national-level decision making on the scope and scale of relaxations and restrictions is best described as dharam sankat.

For a nuclear power, dealing with unimaginable uncertainties where the stakes have to do with your very existence is a scenario that is enacted during national-level war games. There too, it is always a dharam sankat.

Continue reading the article here

Coronavirus lockdown has given us a blank slate. We can write a new world when it lifts

A fact that strikes my public policy students — mostly working professionals from various backgrounds — quite early in their course is that most of India’s problems are hard to solve because they are log-jammed. The status quo is often a sub-optimal equilibrium, but an equilibrium nevertheless. Even if you try to change things, they fall back into the rut.Here’s an example that might appear familiar to you. The traffic junction is congested because of several interconnected reasons: there are too many vehicles, the road alignment is bad, the bus informally stops at the street corner blocking traffic, the auto-rickshaw stand is at a point that prevents vehicles from easily making a U-turn, pedestrians walk on the street because the footpath is blocked by vendors and so on. In the pre-pandemic normal, everyone knew that this was a problem, but were more interested in merely keeping the traffic moving. Some minor repairs here, some police ‘enforcement’ there, used to be all that could be done. While most people were unhappy with the state of affairs, it was rational for all of them to do nothing about it.The coronavirus pandemic has thrown this status quo up in the air. The lockdown offers several weeks wherein urban infrastructure can be put in place because there is little traffic on the streets. Junctions can be realigned. Bus stops and routes can be changed to make public transport more accessible. Motorists can be better regulated and habituated to follow traffic rules. The whole area can be cleaned up and new norms evolved against spitting and public urination. By no means a silver bullet, the pandemic and the resultant lockdown relax some of the acute constraints that previously made reform impossible.Read more

Grain Mountain Amidst Food Insecurity

The official stock of food-grain with the Food Corporation of India stood at 77.7 million tonnes as of March 1. This includes 27.5 million tonnes of wheat and 50.2 million tonnes of rice. The rice estimate includes a significant quantity of unmilled paddy. This mountain of grain is among the highest level that the government has held in its stock. It is far in excess of what is required by the norms defined by the government itself. And this large stock is prior to the coming rabi harvest, which is expected to be bumper, and will add further to the stock. The coexistence of high stocks with the government amidst rising hunger and starvation, is a peculiarly Indian phenomenon, and this is not the first time such an anomaly needs to be highlighted. Food-grain procurement and the public distribution system (PDS) are designed to meet three objectives: food security, food price stability and adequate remuneration to farmers with minimum support prices. There is an inherent inadequacy in using just one instrument to achieve all three objectives. Add to it, the other factors like inefficiency of large bureaucracies, lack of coordination between Central and State agencies, pilferage and wastage, lack of storage capacity, knee jerk policy responses like imports and exports of food, it is no wonder that this elaborate system has failed to address the problems of hunger and nutrition.Read more 

To meet world average, India must add at least 10 lakh doctors to healthcare force

India has long been short of doctors, nurses and hospital beds. And a recent working paper by Shruti Rajagopalan and Abishek Choutagunta of George Mason University’s Mercatus Center reminds us of that. Compared to the world average of 150 doctors per 100,000 people, India has only 86 doctors registered for practice. The actual number of doctors available for practice, as Basant Potnuru shows, is even lower: we probably have only around 64 doctors per 100,000 people, well below half the world average. Of course, the national average does not tell the whole story: southern states and urban areas are vastly better served than other parts of India. The picture with regard to nurses is relatively better, but there is still a shortage, regional variation and differences in skill levels.

We could take any indicator of healthcare capacity and find that as a country, we are short of it. Public expenditure on healthcare is low — our Union and state governments together spend around 1.5 per cent of GDP on health — and most of India relies on private, mostly out-of-pocket healthcare. Even as we point fingers at the government for spending too little on health, consider that only 20 per cent of the population has medical insurance. Perhaps it is yatha praja, tatha raja, and we have been collectively casual about our health.

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Lockdown Stopped Two Thirds Of World Economy

Despite bitter political bickering, the United States passed its highest ever relief package to support the economy. It is valued at 2.2 trillion dollars, and another one trillion is coming, if not more. That would make it nearly 15 percent of the US GDP, as against 0.8 percent announced by India’s Finance Minister last week. And even that meagre announcement of India had items which had already been budgeted for, and hence were not part of the new relief spending. Keep in mind that the political bickering in the US Senate and Congress was not about the size of the package, but its composition. The Democrats claimed that the earlier proposal was too generous to corporations and too stingy to workers. Hence the revised proposal had a provision for a direct cash payment to every adult in America, barring a small minority earning a very high income. There were also tax breaks and loan incentives to companies to not retrench workers, and keep them on the payroll.Read More 

Kautilya and COVID-19

Author: Dr Kajari Kamal, Research Faculty, Takshashila Institution.Why is it that Kautilyan principles are invoked only when India tries to outdo its neighbor through an unconventional military endeavour (recent India-Pakistan conflict), or when devising novel ways to upgrade India’s modern warfare capabilities, or when the nation witnesses a dramatic twist  in domestic politics, often by resort to clever means? Surely, the expansion and maintenance of a political entity as large as the Mauryan Empire would have necessitated a wider, more comprehensive, understanding of governance and statecraft.Continue reading the article here

We must avert an economic disaster due to Covid-19

Indian economy will suffer due to COVID-19, but govt can ease the pain for individuals and firms with decisive and meaningful action nowFor businesses, the union government should think of delaying GST payments, tax credits, and any other policy that could support employers to keep their staff on board.  As on March 24, the Finance Minister, Nirmala Sitharaman has announced a few measures to ease the compliance and regulatory burden for businesses: increasing the threshold of default that triggers the insolvency and bankruptcy proceedings from 1 lakh to 1 crore, easing some of the rules for corporate affairs, and extending extending the deadline to pay excise and customs duty and GST. Government should ensure that the flow of critical supplies and services are uninterrupted, including food, healthcare, security, groceries and other provisions, electricity, telecom, ATM and banking.Most importantly, we need to think about how to protect the unorganised and informal workforce. While the salaried class, small as it may be, can afford to work from home and be assured of payments at the end of the month, the daily wage earner does not have the same luxury. A limited form of targeted Basic Income (not universal) using the JAM (Jan Dhan-Aadhaar-Mobile) trinity could be used to ensure sustenance. The union government can use the unexpected bonanza from the lowering of oil prices to fund some of these programmes.It is important, however, that any policy made for these emergency purposes come with sunset clauses. If not, the extraordinary measures to combat the disease and its impact will linger on far after the disease has faded from human memory.Read more here

Modi govt needs to open the JAM for public contributions. PM Cares alone can’t deliver

If containing the coronavirus outbreak is the primary national policy prerogative at this time, a close second is the task of providing relief to those who have been hardest hit by the lockdown. With advances in financial inclusion, reliable identification and mass mobile internet, the so-called JAM or Jan Dhan, Aadhaar, Mobile trinity, Indian society has efficient ways of delivering aid to those most deserving of it.

State will fall short

The economic damage caused by the coronavirus outbreak will be so large that the government alone will not be able to ameliorate all the suffering and setbacks in society. The Indian economy is large and complex, and the pandemic will have direct and indirect consequences over a long period of time.

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Look ahead of the current crisis to plan for an economic revival

Even as we grapple with the anxieties and uncertainties of the Covid-19 pandemic, two things are clear. First, its impact on Indian society will be unprecedented. Second, the crisis will pass, leaving us with the task of recovery, reconstruction and rejuvenation. While much of our management of the coronavirus outbreak has been reactive in nature, it is both possible and incumbent upon us to start planning for life after the pandemic. It might sound presumptuous to say this at a time when the energies of our Union and state governments are focused on the gargantuan task of managing the consequences of the outbreak and subsequent lockdown.

But if India is to emerge from this crisis with the best prospects of resuming on its development path, it is crucial that we align relief measures and economic stimulus efforts with a medium-term reconstruction plan. With last week’s announcement of a ₹1.7 trillion relief package, amounting to under 1% of gross domestic product (GDP), the government has set the ball rolling on a fiscal response. The Reserve Bank of India followed with a reduction in interest rates. These measures are primarily intended to provide relief to individuals, families and firms affected by the current lockdown.Read more

Public sharing of home quarantine addresses a bad idea

This article originally appeared in Deccan Herald

On March 24, several WhatsApp groups catering to apartment associations started buzzing with excel files containing addresses of those who were placed under home quarantine. The source was a website run by the Government of Karnataka which contained details for all districts in Karnataka (deleted ‘purportedly’). This author was eventually able to access the website which contained approximately 30 files. It is unclear whose decision it was to make these details public. Statements from government officials indicate this was a deliberate step. However, it seems to be at odds with how sensitively matters are reportedly being handled by teams on the ground, who were informing nearby residents as needed.

Why is this a bad idea?

On March 14, a leading English daily misreported a story that the spouse of a patient who had tested positive for COVID-19 had skipped quarantine and traveled to another Indian city. There were several calls for exemplary punishment, but it later turned out that the person in question had not violated quarantine instructions at the time of travelling. Sure, certain questionable decisions were made subsequently. But we need to be aware that these are unprecedented times and no one is really prepared to deal with the situation. The fear and self-preservation instinct is apparent. But there is also a danger of uncontrolled reactions by the general public in such a scenario.

Over the last few days we have also seen disturbing reports of airline crew and healthcare professionals facing a backlash at their respective places of residence. Videos have also emerged showing people physically abusing fellow citizens for coughing in public and not wearing masks. Regrettably citizens from the North-East have been subject to racial abuse.

This is why it is ill-advised to publicly share this kind of information. While individual names and phone numbers have not been shared, an address is enough to enable targeting (changed slightly).  In information security terms, it can be considered a form of  doxing people (publicly posting personal information). The individuals living at those addresses have been put at risk of being on the receiving end of discriminatory and abusive behaviour. While some of them may have violated their quarantine instructions, treating all of them as potential criminals is not an acceptable response (changed slightly).

Unwittingly aiding the flow of information

Another important aspect to consider is the role of unaffected individuals in circulating this information. The Bengaluru version of the list was doing the rounds on WhatsApp since the evening of March 24. And it continued to be circulated by people even if they disagreed with the practice or could not vouch for its authenticity. As expected, the link to the website eventually made its way onto Twitter and was shared by users with a large number of followers. Others shared it with the intention of being helpful and sharing information. Unfortunately, in such a situation, these actions only aided the virality of the information. 

There is also a tendency to believe that since the information is already out there, individual sharing actions do not matter. However, when the information in question can put someone else at risk, we must consider the downstream implications of that individual action too.

What is the right way to react?

Understanding how to react to minimise the risk to others in such situations is important. Although it is tempting to share such information with acquaintances or  Tweet about specifics while disagreeing with the action, it is necessary to consider if the unintended consequence of the action.

If the intention is to raise awareness about the lack of sensitivity, then the act itself can be highlighted without sharing the location/source of such information. It must be remembered that this action can have the second order effect of nudging others to look for it.

Another possible course of action is to reach out directly to the authorities who have made this information public. This  may not be possible in all situations but can be an effective strategy. It should be noted that their actions or decisions are not always taken with bad intentions. Those responsible may react positively to such interventions if the risks are clearly highlighted to them. 

Why is sharing-hygiene important?

This sharing hygiene is especially important as we see more [information disorder] flooding our lives. The large platforms where this information proliferates are attempting to take measures to tackle this but such content moderation at scale is impossible to do well. It is as much a demand-side problem as it is a supply-side problem. Passively sharing information may have more consequences than we realise. We have a collective role to play in curbing information disorder.

Is the government doing enough to fight Corona on health & economic fronts?

The events of the past few weeks have served as a grave reminder of the challenges of living in a globalised world. The benefits of globalisation and its impact on human progress can never be understated. However, every once in a while, through global financial crises or through pandemics such as the one we are currently witnessing with COVID-19, we are also reminded of its perils. What started in Wuhan, China, in late 2019 has within a few months, impacted over 267,000 people in 185 countries, unfortunately killing more than 11,000 people as of 22nd March 2020 already.The economic and social impact of this pandemic will only unfold over time but the early signs are not comforting. An estimated 25 million jobs are likely to be lost due to the COVID-19 crisis, pushing millions more into underemployment and working poverty. With supply chain disruptions impacting almost every sector including Information Technology, Manufacturing, Entertainment, Travel, and Retail, stock markets across the world have witnessed their worst performances since the 2008 global financial crisis. Global income is expected to shirk by as much as US $ 2 trillion in 2020, with developing economies alone bearing as much as US $ 220 billion of the impact. The resulting economic shock and looming financial crisis is expected to push the global annual growth below 2.5% in 2020.The full article is published in and available on The Quint

Wrong to say coronavirus has doomed world economy

The pandemic, like any other economic event, will throw up its own set of winners and losers; best if the debate around the economic impact of coronavirus builds a measure of nuanceThe global conversation about the coronavirus pandemic has focussed on a few things. Firstly, that the outbreak of the virus can largely be considered a Black Swan event, which is an unanticipated problem with severe unintended consequences. Secondly, that there is a need to ‘flatten the curve’ so that healthcare systems can cope, and thirdly, that its impact on the economy and markets everywhere will be debilitating and that everyone is a loser here.As far as the economic impact of the coronavirus pandemic goes, there are two problems with the common assessments making the rounds: One, they are an understatement. The global economy is doing badly and will continue to do so for the foreseeable future. The pandemic will play into this existing matrix in ways that are not entirely clear as yet. Two, when we abstract the analysis to the point that our main takeaway is that everything is going to hell, the analysis itself loses most meaning and its nuance. In short, while it may seem callous to put it like that, the pandemic will have its own set of winners and losers.The tech industry should be Exhibit ‘A’ for this hypothesis. If you ask yourself for a moment who the biggest winners from this pandemic might be, a preliminary response from many will be that tech giants like Facebook, Google, Apple, etc. will stand to gain. Things are not quite as simple as that though. Apple, for instance, is not in the running because their supply chains run through China and are likely to be severely impacted. So is the case for Samsung. Basically, any company with a complex supply chain that may or may not run through China is going to be hit.We need to also consider the fact that we are in the middle of the biggest work from a home experiment in history. Zoom, the US-based video conferencing service, for instance, has gained a lot from this, without actually making a lot of significant changes. Since the beginning of December 2019, its stock price has gone up by $40 to about $ 115 (from approximately $70). It peaked earlier in March at about $125.Moreover, tech platforms, per se, are better suited to navigating this outbreak as compared to more traditional firms. They have fewer components in their supply chains relative to, say, a phone or a tablet. People are likely to depend on the conveniences offered on their screens, given that travelling is going to be restricted. Spending more time at home also means slipping more frequently into distractions of social media and online streaming.Now let’s turn to another aspect of the current economic conundrum. The spread of the virus does not bode well for the gig economy. The current situation puts workers at a huge risk of exposure, especially in developing countries like India. It is not effective to self-quarantine in informal settlements. It is hard to stock up on essentials or food when most of one’s family is living hand to mouth and it is near impossible to provide for families when the small/medium businesses temporarily shut down.Most huge platforms rely on the gig economy to sustain themselves. Let’s take the case of Amazon. While it has its product and management teams, which work from their HQ and other regional offices, there is a huge part of the company that is run by the gig economy, i.e., people working in warehouses and drivers who deliver the products to the consumers. It needs to see to what extent companies with such business models are affected by the current disruptions.Let’s turn to another industry that is likely to be impacted -- Entertainment. Box offices across the world are facing huge losses and will continue to do so. Cinema halls and popcorn machines have already been facing threats from online streaming. Netflix and HBO have been winning golden globes and Academy awards, giving the ‘traditional’ film industry a run for its money. Enter coronavirus and the release dates for most movies have been postponed. The longer social distancing and self-quarantine last, the worse it is going to get for cinema halls. People are likely to get more hooked to streaming and a significant percentage might end up realising that they can do just fine without making that extra trip to the hall.The world is a net loser from coronavirus, there are no two ways about that. But while many industries will be impacted and a large number of firms are likely to shut down due to the lack of demand, this is not reason enough to make abstract, generalised claims about how the economy is going to suffer.We live in a complex, interconnected world where effects are not equally bad for everyone. Let us treat this as a complex global economic event and accord it the nuance it deserves. It would be best to avoid broad generalisations when speaking of the economic impact of the coronavirus and build our beliefs on reason, not dogma.(Rohan Seth and Nischitha Suresh are analysts with the Takshashila Institution)This article was first published in Deccan Herald.

SC Verdict: A positive step to realise VC's potential

On March 4, a historic day for the cryptocurrency industry in India, the Supreme Court of India quashed the Reserve Bank of India’s (RBI) prohibition on the trade of virtual currency (VC). The road towards the day of the verdict has been long and arduous. Even this verdict is a small win and how the cryptocurrency industry moves ahead remains to be seen. The Supreme Court concluded that the interdiction of VCs failed the four-pronged proportionality test and violated the fundamental right of the cryptocurrency exchanges to carry out any occupation, trade, or business. The Court believed that there were less intrusive measures to achieve the purposes that RBI intended. It also added that the RBI had not presented any empirical evidence to show that entities regulated by it suffered harm due to VC exchanges.

Nevertheless, the Court refuted almost all other arguments made by the petitioners. It upheld the right of the RBI to regulate VCs and commented that the RBI could regulate/prohibit anything that may impact the financial system of the country. On the claim by the petitioners that the circular was an executive action by the RBI and did not afford similar judicial acceptance as legislative action, the Court observed that the RBI was an autonomous institution responsible for maintaining the financial integrity of the country and enjoyed broad powers to govern activities that impact the monetary, credit and payments systems in India.

The latest judgment came almost two years after the RBI, through a circular, had prohibited the use of virtual currency. The circular forbade entities regulated by the RBI from dealing with or providing services to individuals or business entities dealing with or settling virtual currencies. All entities which were already involved in the provision of the aforementioned services were asked to wind down in three months. Cryptocurrency tokens could undermine international policy frameworks such as the AML (anti-money laundering) and FATF (Financial Action Task Force), designed to counter money laundering and terrorist financing, RBI had posited. It could also adversely impact market integrity and capital control, RBI’s deputy governor, BP Kanungo had further explained at a press conference on April 5th, 2018.

This led to the closing of many fledgling crypto exchanges within the country. Koinex, India’s largest crypto exchange was shut down because of the circular.  Unocoin, one of the early entrants in the bitcoin space in India, resumed fiat deposits on March 5, 2020, after suspending it in the summer of 2018. Unocoin had to lay off 50 percent of its employees after the ban. India has already lost valuable time, money, talent in a promising industry.

It is believed that the government and the RBI have similar opinions on cryptocurrencies. In February 2018, in his budget speech, then Finance Minister Arun Jaitley had categorically said that ‘the government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payments system’. An inter-ministerial committee also submitted its recommendations on July 22, 2019, and suggested banning private cryptocurrencies and criminalisation of activities related to VCs. The committee also submitted a draft bill - Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019. The current Finance Minister Nirmala Sitharaman has said that ‘countries will have to show extreme caution on cryptocurrencies.

It will take much more to kickstart a decimated industry. Sensing the inclinations within the Finance Ministry and the RBI, and having been at the receiving end once before, the banks are likely to be circumspect in lending to the crypto exchanges.

A consistent policy framework needed

Coherent policy action by the government is required now. The government must identify the policy objective it wishes to achieve. These objectives would be a combination of checking money laundering, preventing terrorist financing, promoting greater financial inclusion, and ensuring financial stability. Evaluating all options and analysing empirical data and then choosing the most effective and less invasive measure is necessary.

RBI set up a sandbox for testing fintech products in April 2019. Opening this sandbox to cryptocurrencies as well would enable companies to live-test their new products in a controlled environment. This would not only promote innovation but also enhance the knowledge and awareness about cryptocurrency projects amongst the government officials, allowing them to take appropriate regulatory measures if and when global players such as Facebook launch their products in India.

The government should set up a specialised cryptocurrency advisory council that would liaise with multiple stakeholders in the government, industry, academia and suggest enabling regulation for the industry in India. The advisory council would be cognisant of the legislations in different parts of the world and conduct India-focused studies and recommend measures suited to the Indian landscape.

The Supreme Court judgment is a small step in the long road towards realising the immense potential of cryptocurrency and the government should leverage this opportunity to inspire confidence and implement progressive legislation.

 (Utkarsh Narain is a technology policy researcher at Takshashila Institution, a centre for research and education in public policy in Bengaluru. This commentary was published in Deccan Chronicle on March 12. The views expressed are personal.)

The prospect of an oil stimulus in the time of Covid-19

Three major players in a market are trapped in a brutal price war. Investors stand to lose billions of dollars unless a price floor is fixed, and there is a fear of bankruptcy. Authorities are hoping that a price floor cartel succeeds. Does this ring a (telecom) bell? Well, it’s not what you think. This market is oil, and the three players are the US, Saudi Arabia, and Russia. The US has private shale oil suppliers, while the latter two have state-owned oil companies. Over the weekend, the price of crude dropped precipitously toward $30 a barrel, after the Saudi-led oil cartel failed to agree on production cuts with non-member Russia. US shale oil players, who were not a party to the negotiations, were hoping for a cartel agreement since their very viability depends on higher oil prices. Anything below $50 is bad news for them, especially for the junk bond investors who have financed these shale oil wells. The Saudis, with a vengeance, decided to up the ante, increasing their oil production and offering customers steep discounts, thus effectively trying to muscle into the market share of Russian oil companies in Europe. Russia, which is not a part of the Organisation of the Petroleum Exporting Countries (Opec), refused to play the ball on production cuts because its oil firms seemed bent on hurting US shale oil producers. The price war might very well be a proxy manifestation of a geopolitical showdown in West Asia between a Russia-Iran alliance and a US-Saudi one.Read More 

ಬಜೆಟ್ ವಿಶ್ಲೇಷಣೆ | ನಾಲ್ಕು ಚಾಲಕಶಕ್ತಿಗಳಿಗೆ ದೊರೆಯುವುದೇ ಬಲ?

ಈಗಿರುವ ಆರ್ಥಿಕ ಸ್ಥಿತಿಯನ್ನು ಉಪೇಕ್ಷಿಸಿ ಬಜೆಟ್ ವಿಶ್ಲೇಷಣೆ ಸಾಧ್ಯವಿಲ್ಲ. ಖಾಸಗಿ ಕಾರ್ಪೊರೇಟ್ ಹೂಡಿಕೆಯು ಉದ್ಯೋಗಸೃಷ್ಟಿ ಮತ್ತು ಜಿಡಿಪಿ ಬೆಳವಣಿಗೆಯ ದೊಡ್ಡ ಮೂಲವಾಗಿದ್ದರೂ, ಆ ವಲಯದಲ್ಲಿ ಹೂಡಿಕೆಯ ವಿಶ್ವಾಸ ಹೆಚ್ಚಿಸುವಲ್ಲಿ ಸರ್ಕಾರಗಳಿಗೆ ಕಳೆದ ಒಂದು ದಶಕದಿಂದಲೂ ಸಾಧ್ಯವಾಗಿಲ್ಲ.ಕರ್ನಾಟಕದ ಬೆಳವಣಿಗೆಯ ನಾಲ್ಕು ಚಾಲಕಶಕ್ತಿಗಳ ವಿಚಾರದಲ್ಲಿ ಬಜೆಟ್ ಏನು ಮಾಡಿದೆ ಎಂಬುದನ್ನು ನೋಡೋಣ.Read the full article on Prajavani here.