Content

1. Towards an effective vaccination distribution policy
2. A brief history of the Indian economy in 2020

Editorial: Towards an effective vaccination distribution policy

Context:

• India plans to vaccinate 300 million people against COVID-19 over the next 6-7 months.

Relevance:

• GS Paper 2: Social Sector & Social Services (health, education, human resources – issues in development, management);

Mains Questions:

1. The government must examine the principle underlying the triage scheme and whether private players should be allowed space. In this context discuss the Vaccination Distribution Policy in India. 15 Marks

Dimensions of the Article:

• What is Vaccination?
• Why is Vaccination Important?
• Issues related to Vaccination in India.
• Initiatives for Vaccination in India.
• Way Forward

What is Vaccination?

Vaccination is a simple, safe, and effective way of protecting people against harmful diseases, before they come into contact with them. It uses your body’s natural defense to build resistance to specific infections and makes your immune system stronger.

• Vaccines train your immune system to create antibodies, just as it does when it’s exposed to a disease. However, because vaccines contain only killed or weakened forms of germs like viruses or bacteria, they do not cause the disease or put you at risk of its complications.
• Most vaccines are given by an injection, but some are given orally (by mouth) or sprayed into the nose.

Why is Vaccination Important?

Vaccination is a safe and effective way to prevent disease and save lives – now more than ever. Today there are vaccines available to protect against at least 20 diseases, such as diphtheria, tetanus, pertussis, influenza and measles. Together, these vaccines save the lives of up to 3 million people every year.

• When we get vaccinated, we aren’t just protecting ourselves, but also those around us. Some people, like those who are seriously ill, are advised not to get certain vaccines – so they depend on the rest of us to get vaccinated and help reduce the spread of disease.
• During the COVID-19 pandemic, vaccination continues to be critically important. The pandemic has caused a decline in the number of children receiving routine immunizations, which could lead to an increase in illness and death from preventable diseases. WHO has urged countries to ensure that essential immunization and health services continue, despite the challenges posed by COVID-19.

Issues related to vaccination in India?

• Lack of selection criteria: A uniform selection criteria for a procurement and selection of vaccines does not exist at state levels.
• Delay in regular vaccination: due to restrictions on movement, lack of information or fear infection.
• Lack of health workers: Many health workers are unavailable because of restrictions on travel, or redeployment to COVID response duties, as well as a lack of protective equipment.
• Delayed delivery of regular vaccines: UNICEF has reported a substantial delay in planned vaccine deliveries due to the lockdown measures and the ensuing decline in commercial flights and limited availability of charters.
• Low preference to adult vaccination: Healthy adults are harder to reach through public health system and hence vaccination of this age group becomes difficult.
• No priority list: There is also no specific time frame or the order of priority for the vaccination of public if the COVID vaccine gets ready.

Initiatives for Vaccination in India:

• Mission Indradhanush (MI) was launched in December 2014 and aims at increasing the full immunization coverage to children to 90%.
  • It targets to immunize all children below two years of age either unvaccinated, or are partially vaccinated as well as all pregnant women.
  • It includes seven vaccine preventable diseases namely Diphtheria, Pertussis, Tetanus, Childhood Tuberculosis, Polio, Hepatitis B and Measles.
  • In addition to this vaccine for Japanese Encephalitis, Haemophilus influenza type B, inactivated polio vaccine, Rotavirus and Rubella are also being provided in selected states.
  • Intensified Mission Indradhanush (IMI) 2.0: was recently rolled out for enhanced focus on left outs, dropouts, and resistant families and hard to reach areas and urban, underserved population and tribal areas.
• Electronic Vaccine Intelligence Network (eVIN) system was launched that digitizes the entire vaccine stock management, their logistics and temperature tracking at all levels of vaccine storage.
• National Cold Chain Management Information System (NCCMIS) to track the cold chain equipment inventory, availability and functionality.

Way forward:

WHO provides a model strategy for achieving better immunization outcomes:

• National team: A capable national team—supplied with sufficient resources and authority—to excellently manage each country’s national immunization program
• Strategies to identify under vaccinated and unvaccinated persons and regularly provide them with the vaccines they need. o An information system that identifies and tracks each person’s vaccination status can be developed.
• Operational level funding: Assurance that sufficient and adequately appropriated funds reach the operational level of the programme regularly.
• Vaccinator and manager skills: Regular and systematic capacity building, skills development and supportive supervision for vaccinators and district managers.
• Modern vaccine supply chain: Modernized vaccine supply chains and management to ensure the correct amounts of the right potent vaccines are available at each vaccination session.
• Accurate information system:
• Life course vaccination: Expanded routine immunization schedules that cover people’s entire lives and not only their childhood.

Editorial: A brief history of the Indian economy in 2020

Context:

• India started the calendar year by recording the slowest GDP growth rate in six years and ended it by entering a technical recession. Here’s how it all unfolded.

Relevance:

• GS Paper 3: Indian Economy (issues re: planning, mobilisation of resources, growth, development, employment); Inclusive growth and issues therein.

Mains Questions:

1. In India, it would take 7 generations for a member of a poor family to achieve average income, according to the World Economic Forum’s Global Social Mobility report. Discuss. 15 Marks
2. How and why the Indian economy is losing its growth momentum. 15 Marks

Dimensions of the Article:

• What is GDP?
• What are the drivers of Economy?
• What explains the turnaround in India’s fortunes?
• What was the twin-balance sheet problem?
• Why did economy continue to grow fast between 2010 and 2012 even after the GFC impact?
• What kept the economy going from 2014 to 2018?
• Reasons for falling GDP after 2018:
• Way Forward

What is GDP?

GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year. GDP growth rate is an important indicator of the economic performance of a country. Followings are the methods to calculate the GDP:

• Output Method: This measures the monetary or market value of all the goods and services produced within the borders of the country. In order to avoid a distorted measure of GDP due to price level changes, GDP at constant prices or real GDP is computed. GDP (as per output method) = Real GDP (GDP at constant prices) – Taxes + Subsidies.
• Expenditure Method: This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country. GDP (as per expenditure method) = C + I + G + (X-IM) C: Consumption expenditure, I: Investment expenditure, G: Government spending and (X-IM): Exports minus imports, that is, net exports.
• Income Method: It measures the total income earned by the factors of production, that is, labour and capital within the domestic boundaries of a country. GDP (as per income method) = GDP at factor cost + Taxes – Subsidies.

What are the drivers of Economy?

• The total expenditure (demand) by private individuals (represented by C),
• The total expenditure (demand) by the Government (represented by G),
• The total expenditure (demand) on investments made businesses in the country (represented by I),
• The net effect of imports and exports (represented by NX).

What explains the turnaround in India’s fortunes?

• In a new working paper published by Harvard University’s Center for International Development last week, Arvind Subramanian argue that Indian economy is facing both
  • Structural Issues: that is, more long-term issues related to the overall framework of the economy such as the flexibility or inflexibility of labour laws etc.
  • Cyclical Issues: that is, more short-term issues such as a bad monsoon that disrupts production of food articles etc.) challenges.
• Since the causes are both structural and cyclical: Thus arresting this economic slowdown is proving to be so difficult – measures that would have alleviated a cyclical slowdown fall flat because structural reasons are also involved.

What was the twin-balance sheet problem?

Subramanian, in his role as the CEA, had argued in the Economic Survey of 2017-18 that the economy was facing a TBS problem.

• The two balance sheets he referred to belonged to the Indian banks (especially public sector banks or the government-owned banks) and the corporate sector, respectively.
• He pointed out that the balance sheets of Indian banks were burdened by a high proportion of non-performing loans and the balance sheet of corporates were clogged because they had over-borrowed and were unable to pay.
• He traced the origins of India’s TBS to the economic boom that happened between 2005 and 2009.
• This was a period when economic prospects were rosy and the economy was growing at near double-digit growth rates.
• As such, companies threw caution to the wind and borrowed heavily in the hope of making profits in the future.
• The banks, especially the government-owned ones, too, ignored prudential norms and lent a lot of money to companies in the hope that this would help boost economic growth.
• As it happened, economic prospects collapsed quite sharply after the Global Financial Crisis (GFC) and a high proportion of companies found that their projects were no longer viable.
• The end result was that the companies were left with huge loans they could not pay back in time and the banks were left with huge loans that had turned duds.
• This essentially meant that neither the Indian companies were in position to invest nor were the Indian banks in a position to lend. This was the TBS.

Why did economy continue to grow fast between 2010 and 2012 even after the GFC impact?

• Banks: Because most of the struggling banks were owned by the government and so there was no risk associated with them; it was always believed that the government would bail them out.
• Companies: Most companies survived because banks took a call that giving these companies more time will help the companies repay. In fact, many banks actually lent new loans to such companies so that these companies stayed afloat.

What kept the economy going from 2014 to 2018?

• Fall in oil price: During 2015 and 2016, international crude oil prices fell to a third of what they were in 2014. This essentially meant that Indians could spend more and the “C” component of the equation boosted the GDP. Subramanian and Felman claim this gave a 1 to 1.5 percentage point boost to the GDP.
• Depreciation of rupee: 2017 and 2018 saw an uptick in world demand and a real depreciation of the rupee, amounting to about 13 percent in real effective terms by late 2018. As a result, non-oil export growth rose from -8.6 percent in 2015-16 to 8.9 percent in 2017-18.
• The Government Investment: Because government funded economic activity in the country not directly but indirectly through government backed institutions such as Food Corporation of India and National Highways Authority of India. These are called “off-budget” items which should ideally be counted in the fiscal deficit but are not.
• Financial Mobilization: NBFCs took over the leading role of lending to the economy because banks were still struggling with NPAs and were largely unwilling to lend directly to businesses. The credit provided by NBFCs fuelled both private consumption (C) and business investment (I), and through this route fuelled GDP growth.

Reasons for falling GDP after 2018:

• Lingering weakness in some Non-Bank financial companies (NBFCs): Following ILFS crisis last year, abrupt reduction in NBFC’s credit expansion took place, leading to the associated broad-based tightening of credit conditions.
• Lesser consumption demand: Weak income growth, especially rural, has been affecting private consumption.
• Corporate and Environmental regulatory uncertainty: Private investment has been hindered by the financial sector difficulties (including in the public sector banks (PSBs)) and insufficient business confidence.
• Implementation issues with some structural reforms like goods and services tax (GST)

Way Forward:

• Government driven expenditure to increase consumption-led demand: The investment in building resilient infrastructure, which is not only futuristic but also green, could address multiple problems such as massive scale unemployment, reduced consumption-led demand, liquidity crisis and environmental challenges. The announcement of the National Infrastructure Pipeline (NIP) is a crucial step to stimulate the progression.
• Resetting Fiscal deficit: This indeed is the perfect junction when the government can manoeuvre to reset its federal fiscal deficit target to around 5 percent of GDP and gradually bring it to approximately 3-3.5 percent over the next 2-3 years. This could solve the immediate liquidity crisis considering that in the current situation, the direct and indirect tax revenues would falter due to the slowing down of industrial activities.
• Core sectors Prioritization: The focus on core sectors that can trigger strong growth stories such as Agriculture, healthcare, education and IT, etc. should be prioritized, and the policy framework needs to be reworked which allows swifter movement and reduces the bottlenecks. The Indian agricultural sector is under-tapped. The immense potential of the industry calls for structural reforms rather than the temporary corrections.
• Reinforcing the rural development: Rural Infrastructure needs to be strengthened that can spur the growth of agro-based industries, better access to markets for farmers, creation of job opportunities for the rural population, improving the purchasing power, decongestion of cities, boost to the MSMEs and promote entrepreneurship with innovation.

The structural reforms always take time to show results. Still, the current pandemic has not allowed the time to wait for 3-4 years instead both the short-term and long-term measures are needed to be synergized so that the human resource and natural resource can attain a perfect balance. Lastly, If the vaccine is available for masses soon, then we may experience a faster economic revival and fancy our chances of a V-Shape recovery.