The Hindu Editorial Analysis | 3rd July 19

Table of Contents

Trump in North Korea

The U.S. President appears committed to diplomacy in dealing with North Korea

U.S. President Donald Trump made history on Sunday when he stepped on to North Korean soil from the demilitarized zone (DMZ) that separates the two Koreas. He is the only American President to have visited North Korea, the isolated, nuclear-armed dictatorship that is historically seen as an enemy in Washington’s policy establishment. The President’s surprise announcement, via Twitter, that he was ready to visit the DMZ to meet with North Korean leader Kim Jong-un was typical of Mr. Trump, who enjoys conducting offthe-cuff personal diplomacy. North Korea seized the opportunity, and both leaders met at the DMZ, held talks for nearly an hour and decided to resume parleys that have stalled since the two leaders’ failed summit in Hanoi. Mr. Trump deserves credit for infusing fresh life into the nuclear negotiations. His intervention came at a time when North Koreans were growing impatient over lack of progress in the matter of ties. In recent weeks, they had personally attacked U.S. Secretary of State Mike Pompeo and targeted the South Korean leadership over the sanctions and the logjam in talks. Now that both Mr. Trump and Mr. Kim have met and decided to set up teams on both sides to hold negotiations, the impasse is broken. But key challenges remain.
Mr. Trump appears to be committed to diplomacy in addressing the North Korean issue. Pyongyang, though often cryptic in its responses, has also shown interest in staying engaged with the U.S. Mr. Kim has, in principle, agreed to denuclearize the peninsula, which is the goal of the U.S. as well. But the critical question is when and how it should be done. The Hanoi summit collapsed chiefly as the U.S. considered the compromise that North Korea offered insufficient to warrant reciprocation with sanctions relief. North Korea had agreed to close down the Yongbyon facility, its main nuclear fuel production site, but the U.S. rejected the offer, saying the North’s nuclear capability is now much more diversified and goes beyond that one plant. When they resume talks, the question of how much the North should compromise to get at least a partial reprieve from sanctions will be back. If the U.S. sticks to its maximalist demands such as complete denuclearization, the talks are likely to run into trouble again. For Pyongyang, nuclear weapons are its insurance against potential external aggression, and it would accede to total denuclearisation only if its security concerns are ensured and sanctions are fully withdrawn. Both sides should learn from their failure in Hanoi. They can take small steps towards the final goal. The U.S. could demand a total freeze on North Korea’s nuclear activities, besides shutting down Yongbyon, which the North has already agreed to, in return for providing partial reprieve from sanctions. Constructive and reciprocal confidence-building measures would mean that Mr. Trump’s personal diplomatic outreach and the momentum it created won’t be in vain.

Teachers and quotas

Bill on reservation in central academic cadre provides relief to disadvantaged sections

Legislation to overcome the effects of court verdicts is not always a good idea. However, sometimes an exception ought to be made in the larger public interest. One such law is the Centre’s Bill to ensure that reservation for scheduled castes, tribes and other backward classes in appointments to central educational institutions is preserved. The Central Educational Institutions (Reservation in Teachers’ Cadre) Bill, 2019, passed by the Lok Sabha, replaces an ordinance promulgated in March.
Its main object is to restore the system of treating an institution or a university as a single unit to apply the reservation roster, and thus help fill 7,000 teaching vacancies. It seeks to get around a 2017 judgment of the Allahabad High Court striking down University Grants Commission regulations that treated the institution as the unit for determining the roster, and directing that each department be the relevant unit. In short, reservation should be department-wise, and not institution-wise, the court ruled. The Supreme Court rejected the Centre’s appeal against the order. But the narrower basis for applying quotas would mean fewer aspirants from OBC and SC/ST sections would be recruited as assistant professors. In the interest of social justice, it had to restore the system of having a wider pool of posts in which the quotas of 27% for OBC, 15% for SC and 7.5% ST could be effectively applied. From this perspective, the Bill provides welcome relief for aspirants from the disadvantaged sections of society.
It is not that the court was manifestly wrong in applying the roster based on a smaller unit, that is, a department in a university or institution. The High Court noted that having the whole institution as a unit would result in some departments having only reservation beneficiaries and others only those from the open category.
But the counterpoint is equally valid. Having the department as the unit would mean smaller faculties would not have any reservation. In the roster system, it needs 14 posts to accommodate SC and ST candidates, as their turn would come only at the seventh and 14th vacancy. There may be no vacancies in many departments for many years, with none from the reserved categories for decades. On the other hand, taking the institution as the unit would give more opportunities for these sections. According to the UGC’s annual report for 2017-18, nearly two-thirds of assistant professors in Central universities are from the general category. Their representation would go up further, as the present Bill also applies the 10% quota for the economically weak among those outside the reservation loop. Applying the court’s department-wise roster norm would have deepened the sense of deprivation of the backward classes and SC/ST communities. To that extent, the new enactment will serve a vital social purpose.
In early June, at a NITI Aayog meeting, Prime Minister Narendra Modi set a clear and bold economic target — to grow India into a $5 trillion economy by 2024. It is now for ‘Team India’, as the meeting was bannered, to translate this target into a plan and policies and programmes. Historically, such goals by popularly elected leaders have voiced the aspiration of voters and energized nations to realise their potential.
How realistic?
What does the targeted $5 trillion economy mean in familiar economic terms? It is ₹350,00,000 crore of gross domestic product (GDP) at current prices, at ₹70 to a U.S. dollar exchange rate.
India’s (provisional) GDP in 2018-19 at current prices is ₹190,10,164 crore (or $2.7 trillion), which means the annual per capita income is ₹1,42,719, or about ₹11,900 per month.
The target implies an output expansion by 84% in five years, or at 13% compound annual growth rate.
Assuming an annual price rise of 4%, in line with the Reserve Bank of India’s inflation target, the required growth rate in real, or inflation-adjusted, terms is 9% per year. To get a perspective, India officially grew at 7.1% per year over the last five years, but the annual growth rate never touched 9%. Hence, the target seems ambitious. Is it doable?
How Asia fared •
How does the target compare with the Asian experience? China, with a historically unprecedented growth record in its best five years, during 2003-07, grew at 11.7%; South Korea, between 1983 and 1987, grew at 11%. So, Mr. Modi’s target is smaller than the best historical records and may seem realistic.
What would it take to grow at 9%? No country grew at such a pace without mobilizing domestic saving and raising fixed investment rates.
In the last five years, on average, the domestic saving rate was 30.8% of gross national domestic income (GNDI), and the investment rate (gross capital formation to GDP ratio) was 32.5%. Assuming the underlying technical coefficients remain constant, a 9% annual growth rate calls for 39% of domestic saving rate and 41.2% of investment rate.
Correspondingly, shares of private consumption need to shrink to about 50% of GDP from the current level of 59% of GDP at current prices, assuming foreign capital inflow remains at 1.7% of GDP.
In other words, India will have to turn into an investment-led economy as it happened during the boom last decade (2003-08) before the financial crisis, or like China since the 1980s. Granting that rapid technical progress or changes in output composition could reduce the required incremental capitaloutput ratio (ICOR), it nevertheless will call for a nearly 8-9 percentage point boost to saving and investment rates.
If, however, the economy has grown at a much slower pace than the officially claimed rate — as the ongoing GDP debate suggests and at 4.5% as the former Chief Economic Adviser Arvind Subramanian has pegged it — then Mr. Modi’s growth target would become even more daunting.

Low domestic saving rate

These stark facts call for a re-thinking in the ruling dispensation that seems to hail India as a consumptionled growth story. There is a belief that greater foreign capital (FDI) inflow would fill in the investment gap, as evident from the NITI Aayog Vice-Chairman’s various pronouncements. History shows that no country has succeeded in accelerating its growth rate without raising the domestic saving rate to close to 40% of GDP.
Foreign capital can fill in some vital gaps but is not a substitute for domestic resources. Even in China, FDI inflows as a proportion of GDP never exceeded 5-6%, most of which was in fact round-tripped capital through Hong Kong for securing better property rights at home.
Gross FDI inflow into India peaked in 2008-09 at 2.7% of GDP, decelerating thereafter. As it increasingly consists of private equity (PE) with a three- to five-year tenure, mostly acquiring capital assets (contrary to the textbook FDI definition as fixed capital formation for the long term) net FDI rate is lower than the gross inflows, standing at 1.5% of GDP in 2017-18. Hence, there is a need for caution against the exuberance (or opportunistic bias) that FDI will help to get to the $5 trillion GDP target.
What is serious is that the economy has slowed down for a while now.
The domestic saving rate has declined from 31.4% in 2013-14 to 29.6% in 2016-17; and gross capital formation rate from 33.8% to 30.6% during the same period. The banking sector’s ability to boost credit growth is limited by non-performing assets (NPAs) and the governance crisis in the financial sector. Export to GDP ratio has declined rapidly, with a looming global trade war on the horizon, as has been indicated by the Baltic Dry Index. The highly regarded leading indicator of global trade, currently trading at 1354 is forecasted to decline to less than 1,000 index points by the year-end (a decline from its historic high of 11,793 points in May 2008, just before the financial crisis set in).
Given the foregoing, the $5 trillion target appears daunting. It may yet be doable, provided policymakers begin with a realistic assessment, by willing to step up domestic saving and investment, and not by the wishful thinking of FDI-led growth accelerations in uncertain economic times.
What Is the Baltic Dry Index – BDI?
The Baltic Dry Index (BDI) is a shipping and trade index created by the London-based Baltic Exchange. It measures changes in the cost of transporting various raw materials, such as coal and steel.
How the Baltic Dry Index – BDI Works The Baltic Exchange calculates the index by assessing multiple shipping rates across more than 20 routes for each of the BDI component vessels. Analyzing multiple geographic shipping paths for each index gives depth to the index’s composite measurement. Members contact dry bulk shippers worldwide to gather their prices and they then calculate an average. The Baltic Exchange issues the BDI daily.
The deaths of 154 children in Bihar due to acute encephalitis syndrome (AES) has laid bare the precarious capacity of the State’s healthcare apparatus to handle outbreaks. AES has been linked to two factors: litchi consumption by starving children and a long, ongoing heat wave. As promises of bolstering the health infrastructure are being made, it is important to analyse what could have formed the ideal line of action.
AES is largely preventable both before and just after the onset of the disease, and treatable with high chances of success on availability of medical intervention within 2-4 hours of symptoms. Therefore, the first signs of an outbreak must prompt strong prevention measures.
These include, apart from a robust health education drive and replenishing primary health centres (PHCs) with essential supplies, extensive deployment of peripheral health workers (ASHA workers) and ambulance services to facilitate rapid identification and management of suspected cases. Vacant doctor positions in PHCs must be urgently filled through deputation.
Furthermore, short-term scaling-up of the Poshan Abhiyaan and the supplementary nutrition programme — which makes available hot, cooked meals for pre-school children at Anganwadis along with take home ration for mothers and distribution of glucose/ORS packets in risk households — are imperative. Nearly every one of these elements lies undermined in Bihar.
Crumbling healthcare in Bihar
In Bihar, one PHC caters to about 1 lakh people rather than the norm of 1 PHC per 30,000 people. Furthermore, it is critical for such a PHC, catering to more than three times the standard population size, to have at least two doctors. However, three-fourths of the nearly 1,900 PHCs in Bihar have just one doctor each.
Muzaffarpur has 103 PHCs (about 70 short of the ideal number) with 98 of them falling short of basic requirements outlined by the Health Management Information System. Bihar, one of the most populous States, had a doctor-population ratio of 1:17,685 in 2018, 60% higher than the national average, and with only 2% of the total MBBS seats in the country. There is also a onefifth shortage of ASHA personnel, and nearly one-third of the sub-health centres have no health workers at all. While the State reels under the highest load of malnutrition in India, a study found that around 71% and 38% of funds meant for hot, cooked meals and take home ration, respectively, under the supplementary nutrition programme, were pilfered. Meals were served for just more than half the number of prescribed days, and only about half the number of beneficiaries on average actually got them.
This is not all. Even those PHCs with adequate supplies remain underutilised. Perennial subscription to selective healthcare services by PHCs, like family planning and immunization, have cultivated the perception that PHCs are inept as centres of general healthcare. This leads patients either directly to apex government hospitals situated far away or to unqualified private providers. This results in a patient losing precious time in transit and landing up in a hospital in a critical and often irreversible stage of illness.
Merely strengthening the tertiary care sector will be inefficient and ineffective. Most attention was focused on the poor state of the Sri Krishna Medical College and Hospital in Muzaffarpur, with 600 beds, already functioning beyond its full capacity. Hospitals in Muzzafarpur have a bed occupancy of over 300%, three times the full occupancy. In such a case, even a significant addition of hospital beds and ICUs won’t solve the problem. ICUs can only deal with the most advanced cases. A narrow focus on the hospital sector will wastefully increase costs, ignore the majority of cases, increase the number of cases that are in advanced stages, while continuing to overstretch public hospitals.

Revamp primary health infrastructure

The solution lies in building more functional PHCs and sub-health centers; scaling-up the cadres of ASHA workers; strict monitoring of nutrition programmes; and addressing the maldistribution of doctors and medical colleges. The resultant robust primary care system can then be geared towards being more responsive to future outbreaks. We should also bolster our technical capacity to better investigate the causes of such outbreaks and operationalize a concrete long-term strategy. Policy documents, while emphasizing on financial and managerial aspects of public health, fail to address the aberrant developmental paradigm of our health services. Decades of hospital-centric growth of health services have eroded faith in community-based healthcare. In these circumstances, even easily manageable illnesses increase demand for hospital services rather than PHCs. There is need to work on inculcating confidence in community-based care.

Union Minister opposes U.P. move to shift 17 OBCs to SC list

Thawar Chand Gehlot says only Parliament can do it
The Uttar Pradesh government’s move to shift 17 Other Backward Classes (OBCs) to the Schedule Caste list is unconstitutional, and it is a transgression of Parliament’s jurisdiction, Union Minister for Social Justice and Empowerment Thawar Chand Gehlot said in the Rajya Sabha on Tuesday.
“This is not proper and not constitutional,” he said in reply to Satish Chandra Misra of the BSP, who raised the issue during Zero Hour.
Agreeing with Mr. Misra, Mr. Gehlot said that only Parliament had the right to alter the notified list.
“This issue came to Parliament a couple of times, but no consensus could be formed,” he said, adding that if the government followed due process, it could be considered. “I would request the State not to make caste certificates on the basis of such orders because they will be dismissed by courts and it will be of no help to anyone,” he added. On June 24, the State government directed District Magistrates and Commissioners to issue caste certificates to the 17 OBCs.