16th July – Editorials/Opinions Analyses

Contents

1. Inflation alert
2. China’s post ­COVID 19 aggression is reshaping Asia
3. It’s time to flatten the pandemic stereotyping
4. Skill India For Atmanirbhar Bharat

Inflation alert

Why in news?

Headline inflation for the month of June is 6.1%. Demand supply mismatch during COVID 19 pandemic and higher inflation rate is worrying Indian economy.

More about the news?

• Disruptions caused to the supply of goods and services as a result of the nationwide shutdown can to an extent explain the acceleration in price gains, that this happened despite depressed demand is cause for disquiet.

• Prices in the food and beverages group rose an average 7.3% year ­on ­year

• Employers are set to cut jobs to cope with faltering demand, companies also plan to raise selling prices over the next 12 months to protect profitability.

What is Inflation?

• Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc.
• Inflation measures the average price change in a basket of commodities and services over time.
• The opposite and rare fall in the price index of this basket of items is called ‘deflation’.
• Inflation is indicative of the decrease in the purchasing power of a unit of a country’s currency. This could ultimately lead to a deceleration in economic growth.
• However, a moderate level of inflation is required in the economy to ensure that production is promoted.

Who measures Inflation in India?

• Inflation is measured by a central government authority, which is in charge of adopting measures to ensure the smooth running of the economy. In India, the Ministry of Statistics and Programme Implementation measures inflation.
• In India, inflation is primarily measured by two main indices WPI (Wholesale Price Index) and CPI (Consumer Price Index) which measure wholesale and retail-level price changes, respectively.
• The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics etc, which Indian consumers buy for use. CPI is also called as Headline inflation.

What are the main causes of Inflation?

Some key reasons for Inflation:

• High demand and low production or supply of multiple commodities create a demand-supply gap, which leads to a hike in prices.
• Excess circulation of money leads to inflation as money loses its purchasing power.
• With people having more money, they also tend to spend more, which causes increased demand.
• Spurt in production prices of certain commodities also causes inflation as the price of the final product increases. This is called cost-push inflation.
• Increase in the prices of goods and services is also a factor to consider as the involved labour also expects and demands more costs/wages to maintain their cost of living. This spirals to further increase in the prices of goods.

What is Stagflation?

• The term was coined by Iain Macleod, a Conservative Party MP in the United Kingdom, in November 1965.
• Stagflation is said to happen when an economy faces stagnant growth as well as persistently high inflation.
• With stalled economic growth, unemployment tends to rise and existing incomes do not rise fast enough and yet, people have to contend with rising inflation.
• So people find themselves pressurised from both sides as their purchasing power is reduced.

China’s post ­COVID 19 aggression is reshaping Asia

Why in news?

China is surrounded by various geopolitical confrontations with a growing array of its Neighbours. stand­offs with Vietnam and Malaysia in the South China Sea to threatening Australia with boycotts of wine, beef, barley, and Chinese students is threatening Chinese dominance.

Isolating China.

• The Indian, Japanese, Malaysian, and Australian governments have all taken concrete steps to reduce their economic exposure to Beijing, spanning investment, manufacturing, and technology.

• India and Australia recently inked a new military logistics agreement in the “virtual summit” between Prime Ministers Narendra Modi and Scott Morrison, and a similar agreement between Delhi and Tokyo may follow.

• The Quadrilateral Dialogue between Australia, India, Japan, and the United States is growing stronger and even expanding.

• Association of Southeast Asian Nations (ASEAN) Foreign Ministers issued one of their strongest statements to date on the South China Sea, insisting that maritime disputes must be resolved in accordance with the UN Law of the Sea treaty

What can USA do?

• U.S. policy needs to start supporting, rather than attempting to commandeer, regional efforts to build a less China­ centric future for the Indo­ Pacific

• U.S. partners are seeking an agenda that is framed in broader terms than simply rallying to counter Beijing.

• U.S. can think of harnessing the growing desire to reduce reliance on Beijing and try to “re­couple” investments and supply chains among allied nations

• Washington should avoid repeating Beijing’s mistakes and offer a clear alternative in word and deed to China’s “Wolf Warrior” diplomacy

U.S. versus China

• Across the Indo­ Pacific, the desire for U.S. leadership remains strong, with the U.S. still viewed more favourably than China

• Facing the unprecedented health and economic crises spawned by COVID­19, the U.S. and Asian partners will need to coordinate more closely than ever

• Asian countries, too, have an opportunity to continue strengthening their own regional networks, which will challenge and complicate the views of those in both Washington and Beijing who would see the region only as a sparring ground in a bipolar U.S.­ China competition

Historic ties between India and China

India and china have had relations sustained for more than 2000 years. First records of such a relationship was mentioned during 2nd century BCE. Chanakya, the minister of Mauryan empire has referred to Chinese silk in Arthashastra.

Buddhism has been the strongest bond between two countries. China has the largest Buddhist population in the world which comprises of 18.8% of the Chinese population.

Bilateral relations are dominated by trade commerce and People to people contact. Spices, Opium and Tea were the major products traded between the two big states. Various travelers including Hsuan Tsnag visited the silk in 7th century AD. In the very dynamic world scenario, bilateral relations deteriorated gradually.

India and china bilateral relations

• Political
  • It marks the year of the 70th anniversary of the establishment of diplomatic relations between China and India.
  • It is also China-India Year of Cultural and People-to-People Exchanges, where the two sides agreed to hold 70 celebratory activities to demonstrate the historic connection between the two civilizations as well as their growing bilateral relationship.
  • There are 50 dialogue mechanisms between China and India for exchanging views on various topics of bilateral, regional and global concern.
  • Heads of both the states met at Wuhan informally to boost the ties.
  • Chinese president came to india for 2nd informal summit at Mamallapuram in 2019.

• Trade
  • Trade relations have exponentially increased between India and China.
  • In 2019, the trade volume between China and India was $70.3 billion. India has a trade deficit of around 50 billion $ with china.

• Chinese exports to India stand at around 15 billion $ and 2% of chinese exports.

• With a combined market of over 2.7 billion people and a GDP of 20% of the world’s total, China and India enjoy huge potential and broad prospects for economic and trade cooperation

• Investment
  • Seven Indian Banks have opened branches in China. Chinese bank and ICBC have branches in India.
  • Chinese investment is predominant in Indian start-ups. Companies like Ola, Uber, Swiggy, Flipkart have chinese stakeholders.
  • Cumulative Chinese investment in India is around 5 billion $ including the recent purchase in HDFC bank
  • The cumulative Indian investment in China till March 2017 reached US$ 705 million

• Defence
  • India China take part in Hand-in-Hand’ joint anti-terrorist exercises to enhance mutual understanding and trust, exchange training experiences and jointly improve anti-terrorism capabilities.
  • China-India defence and security consultations take part  to strengthen exchanges and cooperation in the defence field.
  • Defence partnerships and military exercises are possible if the diplomatic relations are strong and disputes are less or absent. Between India and China, there are very less defence related partnerships.
• People to People
  • The number of Indian pilgrims to Xizang Autonomous Region of China has surged from several hundred in the 1980s to more than 20,000 in 2019
  • There are around 25k Indian students studying in Chinese universities. 90% of the students are studying medicine. Chinese medical colleges attract students as the fees is relatively less and infrastructure is better.

India and China signed Education Exchange Programme (EEP) in 2006, which is an umbrella agreement for educational cooperation between the two countries. 

It’s time to flatten the pandemic stereotyping

Why in news?

“Super Spreader” means an individual who transmits infection to many others than is typical  It emerged in the context of the research on transmission of a wide range of infectious diseases such as tuberculosis, Ebola, and Severe Acute Respiratory Syndrome (SARS), which shows that 80% of the infections in a population are transmitted by only 20% of those infected the so called 20/80 rule

Why Is it difficult to contain the spread?

Challenging aspect of this pandemic has been the large proportion of asymptomatic infected patients who can shed high virus loads before experiencing symptoms and can spread infection to many contacts without their knowledge. Because of this complexity, practices such as universal masking, social distancing, and hand hygiene have become key to containing the pandemic.

Examples of super spreaders

Prominent examples of such groups include those who attended the Tablighi Jamaat religious congregation in Delhi, workers providing essential services (vegetable/fruit vendors, pharmacists, garbage collectors, grocery and milk sellers, bus conductors), and migrant workers returning to their hometowns

Stereotyping

• For example, as vegetable vendors are labelled widely as super spreaders, it becomes a shared belief among sections of the society that they spread virus.

• Further  one may attach the images of the stereotype to a random person whose perceived characteristics match that of a member of the stereotyped group

• Stereotyping a group will have undesirable consequences for its individual members, if the label carries negative evaluation

• Research documents a range of negative consequences (direct and indirect) associated with negative stereotyping, such as discrimination and hostility, negative attitudes, and a lingering effect of lack of self-­ control and aggression

• Incidents of people, particularly Muslims, being harassed for their suspected affiliation with Tablighi Jamaat have been reported

Government support is key

• The Ministry of Health and Family Welfare had urged the citizens to “not label any community or area for the spread of COVID­19

• the governments could provide them cost ­free masks and sanitisers and support the families of infected individuals. Public officials and the media could also refrain from the indiscriminate use of the term super spreaders, when referring to these groups, to avoid the resultant negative stereotyping

Skill India For Atmanirbhar Bharat

Why in news?

As India embarks on the path of self-reliance through Atmanirbhar Bharat Abhiyan, it has to nurture the skilled workforce. There is a need to upgrade the skills or upskill the youth to meet the employment needs of technology-driven 21st century.

Objectives

• Atmanirbhar Bharat has twin objectives.
  1. Reviving different spheres of the economy in the short term.
  2. Insulating India from any future global economic downturn, by making it robust in the long run.
• The Abhiyan seeks to build capacities across sectors and promote local products.
• Further, it would focus on scaling up manufacturing, accelerating infrastructure development, attracting investments and promoting a consumption-led growth.

Youth: Strength of India

• About 65 per cent of India’s population is below 35 years and 50 per cent is below 25 years.
• With a huge, educated young population, India is uniquely poised to realise its demographic potential.
• The fact that Indians are heading several MNCs shows that there is no dearth of knowledge and talent in the country.
• However, we need to upgrade the skills or upskill the youth to meet the employment needs of technology-driven 21st century.

Opportunities and challenges

• Pandemic and is being seen by many as an opportunity to upgrade their knowledge and acquire new skills.
• The fourth industrial revolution has triggered a paradigm change in which digital technology drives the job market.
• Remote working with increasing adoption of digital technology might continue to be dominant mode of working for the near future.
• It is estimated that nearly 70 per cent of the world’s learners are affected by school closures due to pandemic across education levels.
• Artificial intelligence, machine learning, data science, cloud computing and Internet of Things will be area of interest for companies.
• With people opting to online buying, companies will seek to adopt new online marketing strategies.
• Another important issue that needs to be addressed is ensuring equitable employment through higher participation of women in the workforce.

Way forward for Atmanirbhar Bharat

1) Local to global

• There have been some reassuring developments with an accent on “local to glocal”
• The production of several lakh PPE kits, a collaboration of automobile industries to produce ventilators, manufacture of more than 70 Made in India products by the DRDO are just a few examples of the capability of Indian scientists, IT professionals and technocrats.

2) Reducing import

• We must aim to gradually reduce imports in every sector from crude oil to heavy machinery.
• This reduction should be based on the locally available resources, talent, and skills of the human capital.

3) Globally competitive product

• While remaining vocal about local, we must aim at making Indian products to be globally competitive. 
• We should try to stay ahead in the innovation-led knowledge economy.
• PSUs and the private sector should not only complement but collaborate wherever feasible.
• The private sector must massively step up investments R&D. PSUs too need to modernise in terms of technology.

Thank you!