- Fed’s insurance Policy: On Federal Reserve’s rate cut:
Relevance: mains: G.S paper III: Economy
The rate cut is aimed at insuring against global risks to favourable U.S. economic outlook
The U.S. Federal Reserve on Wednesday announced its first reduction in the funds rate since 2008, a move that was widely expected. Elaborating on the Federal Open Market Committee’s rationale in deciding policy action, Chairman Jerome Powell was emphatic that the aim was to provide a measure of insurance, especially given that the outlook for the U.S. economy remains favourable. The quarter percentage point interest rate cut, he said, was designed to support economic growth by ensuring that confidence was kept intact and “intended to insure against downside risks from weak global growth and trade policy uncertainty.” In the space of less than three quarters, the Fed has pivoted from talking of further rate increases, to being on hold, to finally cutting interest rates as a global economic slowdown is exacerbated by trade tensions unleashed by U.S. President Donald Trump’s aggressively insular approach to trade ties. The U.S. economy, which expanded by 2.9% in 2018 and posted a 3.1% expansion in the first quarter, slowed to a 2.1% pace in the second quarter, with the ongoing trade war with China blamed for a manufacturing slowdown as well as a decline in business investment. Just last week, the IMF pared its forecast for global growth in 2019 by 0.1 percentage point to 3.2%, warning that “risks to the forecast are mainly to the downside”. The IMF cautioned that further trade tensions could dent sentiment and slow investment, a theme that Mr. Powell too referred to, when he said the rate cut was intended “to help offset the effects these factors are currently having on the economy.”
The Fed Chairman, however, finds himself in an unenviable situation with the rate reduction satisfying neither the sharply critical President who appointed him in 2018, nor the markets where investors fretted that Mr. Powell had failed to signal the start of a protracted easing cycle. A fair part of the problem appears to be of his own making as the central bank chief muddled his messaging, speaking at one point during the post policy press conference of a “somewhat more accommodative stance”, and at another emphasising that the move was not the start of a long series of rate cuts. Central bankers at the best of times have a delicate balancing act to perform to ensure that policies to support growth do not lead to a dilution of focus on price stability. In the Fed’s case, Chairman Powell is clearly concerned that with inflation in the U.S. stubbornly refusing to move toward the central bank’s 2% objective, there is a risk that persistent global disinflationary pressures could at some point feed into the domestic economy, undermining its efforts to spur wage and price gains. For the RBI, the Fed’s move signals that, for now at least, it can stay on its accommodative path in the confidence that U.S. investors seeking rate arbitrage may hit the pause button on plans to head home.
(source: The Hindu)
- An unfinished reform in need of a final push:
Relevance: mains: G.S paper II: Polity
Two years is a reasonably long time for any new reform to be fully implemented. But the goods and services tax (GST), rolled out in July 2017, is still a work in progress. By now, most of its problematic aspects, such as the multiplicity of rate slabs and complexity of filing returns, ought to have been addressed. Yet, plenty of work still needs to be done. Apart from slab reduction, compliance simplification and a friendlier online transaction reporting interface, the GST needs a workable mechanism to check evasion. A recent report on the tax by the Comptroller and Auditor General of India (CAG) highlights these shortcomings. It draws special attention to the system’s vulnerability to fraud by way of excess input tax credit claims—which are refunds of taxes already paid by input suppliers, GST being applicable only to the value added by a business or service provider. While there is no denying that the GST today is better than it was two years ago, the fact that some of its original goals remain elusive suggests the need for a course correction.
One of the major issues outlined by the CAG report is the lack of a system to match the invoices of buyers and sellers that would have closed interstitial spaces for tax evasion. The idea was to structure the system in such a way that there was no gap between two ends of a reported transaction. This way, neither party could under-report its value without detection, making it difficult for payments to be kept hidden. For business supply chains involving several entities, a robust database of doubly recorded payments also meant that a cascade of taxes from one production link to another could be eliminated, with input credits at each stage ensuring that only value addition would bear the net GST burden. For smaller units, however, the system proved so hard to comply with that adoption was slow and the credit system didn’t work out as smoothly as envisaged (restaurants and some realty projects were even allowed to abandon credits for a lower overall rate). As complaints grew, New Delhi withdrew the invoice-matching system. This deprived the taxman of full information on transactions, leaving him in the dark on whether credit claims were true or inflated.
As India’s informal sector shrinks as a proportion of the whole, the credit system will be easier to sort out, but ease-of-compliance must hasten the process. Among other problems, the CAG report points to an alleged deviation in the way GST revenue is shared with states. To determine how integrated GST is to be split up, the report notes, the government has followed a formula prescribed by the Finance Commission, though it should have gone by the Constitution and Integrated GST Act. All this suggests that the GST needs urgent fixes to resolve its deficiencies. A rehaul at this stage would be impractical, but a series of measures can surely be taken. The gains on the efficiency front alone could be significant, given the current economic slump. In theory, a common and easy-to-pay tax on all value generated doesn’t just invite wider participation, it also allows for greater specialization (since it is cascade-free), smoother commercial operations and a more competitive economy on the whole. To maximize the potential of GST, the government needs to examine its flaws closely. It’s much too important a reform.
(Source: Livemint)
- A step for Gender justice:
Relevance: mains: G.S paper I: Social Issues
It is a historic moment for this country. The arbitrary, unconstitutional and unreasonable practice, generally called triple talaq, has become a practice of past and now, an offence. India has moved on from an era when the name of movie was changed to Nikah because there was a danger that if a husband asked his wife to watch a movie named “Talaq Talaq Talaq”, she may suffer a heart attack as uttering talaq, talaq, talaq was considered as divorce.
The present legislation comes in the backdrop of an evolving society, which has influenced even Islamic states to make corrective changes by legislation to Muslim personal law. I congratulate our Muslim sisters for getting their due right of equality, an issue of paramount importance for the present government. Eradicating the unfair practice of triple talaq has ended their insecurity and uncertain future.
The fight against instant talaq was the fight of every Muslim woman, though it was started by an ordinary Muslim woman. Talaq-e-biddat left women insecure since it was generally accepted and practiced by the community, when a man wanted to correct his mistake. There was no reason for a woman in a civilised society to go through this trauma. This fight, being the fight of ordinary women against inequality and injustice, deserved the support of the government that considers equality, as outlined in the Constitution, its guiding principle.
Bringing the law that declares triple talaq an offence is a victory for the civil society; it should not be seen as a political victory. It is surprising how anyone can oppose such a progressive law, which was essential for the women of one particular community, who were facing discrimination due to this arbitrary practice. It is disheartening to see how those who have been talking about the Beijing declaration were against the passing of this much-needed law to ensure women’s dignity.
Instant talaq concerns gender justice. The law banning it is about ensuring human rights and providing liberty to women to live with dignity. Many criminal offences have civil consequences, for example, rash driving. Crime involves punishment by the government while a civil wrong is a wrong against an individual that calls for compensation to the wronged person.
Generally, civil action can provide only compensation. What compensation would be appropriate for a woman like Shah Bano, who was divorced by her husband at 70? There was need for a law, which may act as a deterrent and prevent people from resorting to instant talaq. In short, criminalising instant talaq was the only option.
Triple talaq was not only a wrong against an individual, but it was an attack on the society in general. The government deserves appreciation for bringing a law that terms it as offence; declaring it a punishable offence makes it an effective law. The deterrence theory of criminology is shaping the criminal justice system in various countries.
We also cannot ignore the constitutional morality. The Supreme Court has held that the practice of triple talaq is not protected under religious freedom and the same is against the dignity of women. Gender justice is an important constitutional goal and without accomplishing the same, half of the country’s citizens would not be able to enjoy their rights in reality. When Article 51-A (e) of the Constitution talks about renouncing practices derogatory to the dignity of women, how can a government not bring about an effective law to end the practice? Articles 14, 15 and 21, which are a part of the basic structure of the Constitution, make it clear that there was a need to bring a law, particularly since the Court had declared that the ambit of religious freedom does not cover triple talaq. Democratic values will survive only when people are guided by the constitutional parameters.
It is also important to note that it is not the first law to declare an unreasonable and arbitrary act as an offence. There are so many examples. For example, from the ancient time, polygamy was permitted amongst Hindus. But in 1860, the Indian Penal Code made “polygamy” a criminal offence. Next was The Hindu Marriage Act, 1955, which provides the conditions for a valid Hindu marriage. One of the conditions introduced was that neither of the parties to the matrimonial alliance should have a living spouse at the time of marriage. Clearly, the practice of polygamy among Hindus was eradicated by legislation and the same was made a criminal offence through law. So the law criminalising triple talaq is not the first instance of personal law being changed to ensure gender justice in India.
So many reformative laws have been introduced by the state. One such law was the Hindu Widows’ Remarriage Act. The issue is not about religion or faith but the concern for gender justice and gender equality. In order to fully emancipate Muslim women from an unjust and discriminatory family law, their unique position and experience at the intersection of gender discrimination and religious discrimination must be taken into account.
The present government deserves appreciation for ensuring equality of women in letter and spirit. What is held to be bad in the Holy Quran cannot be good in sharia. Or, what is bad in theology is bad in law as well.
(Source: The Indian Express)
- Health Care is Ailing:
Relevance: mains: G.S paper II: Policy
There are six reasons why governments would like to regulate medical education. One, to ensure that doctors are appropriately trained and skilled to address the prevailing disease burden; two, to ensure that medical graduates reflect a uniform standard of competence and skills; three, to ensure that only those with basic knowledge of science and aptitude for the profession get in; four, to ensure ethical practice in the interest of the patients; five, to create an environment that enables innovation and research; and six, to check the corrosive impact of the process of commercialisation on values and corrupt practices. The question is whether the National Medical Commission Bill passed by Rajya Sabha on Thursday addresses these concerns.
The problem of inappropriately trained doctors of varying quality has been known since decades. The report of the Mudaliar Committee set up in 1959 had devoted substantial space to pointing out how doctors had neither the skills nor the knowledge to handle primary care and infectious diseases that were a high priority concern then as now. Likewise, standards vary greatly with competence levels dependent upon the college of instruction. In professionalising the MCI, with experts for all levels of education and practice, the NMC Bill can be a gamechanger.
It has the potential to be more nimble in setting curricula, teaching content, adding new courses and providing the much needed multisectoral perspectives. More importantly, the NMC has the potential to link the disease burden and the specialties being produced. In the UK, for example, it is the government that lays down how many specialists of which discipline need to be produced, which the British Medical Council then adheres to. In India, the MCI has so far been operating independently. This gap can be bridged by the NMC. Given the right people, it is also possible that the NMC can encourage and incentivise innovation and promote research by laying down rules that make research a prerequisite in medical colleges.
It is in curbing unethical practice and commercialisation of medical education that the Bill falls short. Today, there are 536 medical colleges with 79,627 seats. Of them, 260 or 48.5 per cent are private with 38,000 seats. The bill allows differential pricing with freedom for the college managements to levy market determined fees on 19,000 students, under what is called the management quota. This is admission for those with the ability to pay. There are colleges that are rumoured to arrange admission and the degree for a fee.
To counter such practices, the Bill has proposed mandating the NEET and NEXT. I was Secretary, Health, when these two concepts came into the policy dialogue. The NEET was mooted by the then board of governors for three reasons: One, to reduce the pain of students having to take an estimated 25 examinations to gain admission in a college; two, given the abysmal level of high school education, to ensure a minimum level of knowledge in science, and three, to reduce corruption by restricting student admission to those qualifying the NEET. Measured against these three goals, the experience has been mixed, demanding a rethink.
The NEXT is an idea borrowed from the UK that has for over seven years been struggling to introduce it. In all such countries, the licensing exams are stretched into modules, not a multiple choice questions type of exam. The underlying belief is that in centralising the qualifying examination, a college with the largest number of failed students will automatically close down. Following from this, the Bill has virtually given up inspections for assuring the quality of education.
It is a fact that the MCI required a college to be inspected 25 times to get final recognition, each being a rent seeking exercise. That “inspector Raj”, as the Health Minister noted, will be done away with, is indeed a positive step. But in relying only on the NEXT as the principal substitute is to abdicate governance. Undoubtedly, there are grey areas giving scope for corrupt practices and production of substandard doctors. It would have been preferable to have tested the waters, examined the implications and then introduced the reform rather than including it in a law that is difficult to amend.
The excessive reliance on a battery of diagnostic tests is reflective of both commercial considerations as well as weak knowledge. Students spending lakhs to become doctors resort to unethical practices to recoup their investment and pollute the system. In the US, despite tight regulations and remunerative payment systems, there is still substantial unethical practice. The Bill, in reducing oversight, allowing extensive discretionary powers to government to set aside decisions of the NMC, making it virtually an advisory body, gives scope for the current state of affairs to continue, only at a higher premium nullifying the major need for reform of the MCI. This is the most worrying aspect of the NMC. In other words, the MCI got into disrepute only when commercialisation of medical education set in in the 1990’s, and the amendment of the MCI Act in 1993, reducing the autonomy of the MCI and making it subservient to government. This has now been taken to another level in the Bill.
The Bill has other irritants — like permitting a registered medical practitioner to prescribe medicines. Left vague, much will depend on the rules. While there is a need to decentralise, to give to non-medical personnel some powers and authority, it needs tight regulation and supervision. Given our inability to enforce the Drugs and Cosmetics Act, as seen in the rising rate of the antimicrobial resistance problem, the issue of which comes first needs to be carefully examined. Prudence may be advisable. Another irritant is the continuance of the two parallel streams of producing specialists. By not bringing the DNB under the purview of the NMC, the DNB system is left open to abuse.
No law is perfect. It is dependent upon the people who interpret and implement it. Government has, under this Bill, arrogated to itself an unprecedented power to appoint people in the various arms of the proposed structure. The quality and integrity of these people will then define the future of the health system in India. We hope for the best as the long, bitterly fought battle to reform the 86-year-old MCI comes to a close.
(Source: The Indian Express)