1. Factory output growth decelerates: PMI
IHS Markit survey shows April production, new orders expansion at 8-month lows on COVID surge
India’s manufacturing sector activity was largely flat in April, as rates of growth for new orders and output eased to eight-month lows amid the rise in COVID-19 cases, a monthly survey showed.
The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) was at 55.5 in April, little changed from March’s reading of 55.4.
In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.
“The PMI results for April showed a further slowdown in rates of growth for new orders and output, both of which eased to eight-month lows amid the intensification of the COVID-19 crisis,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
Ms. Lima also noted that “the surge in COVID-19 cases could dampen demand further when firms’ financials are already susceptible to the hurdle of rising global prices.”
The daily COVID-19 cases in India showed a slight dip with 3,68,147 new coronavirus infections being reported, taking the total tally of cases to 1,99,25,604, according to Union Health Ministry data updated on May 3.
Surging input costs
On the prices front, survey participants also signalled a steep increase in input costs, the quickest since July 2014, and upward revisions to selling prices.
“April saw the steepest increase in input costs for nearly seven years drive the sharpest upturn in output charges since October 2013. Data for the coming months will be important at verifying whether client demand is resilient to these challenges or if producers will have to further absorb cost burdens themselves to secure new work,” Ms. Lima said.
The survey, however, noted that while output and sales increased at the slowest rates since last August due to an intensification of the COVID-19 crisis, there was a faster upturn in international orders. New export orders increased for the eighth consecutive month in April and at the fastest rate since October 2020. The rise was associated with a pick-up in international demand for Indian goods, the survey said. On the job front, although manufacturing employment continued to fall, the rate of contraction recorded in April was marginal and the weakest in the current 13-month sequence of job shedding, it noted.
Purchasing Managers’ Index
- PMI is an indicator of business activity — both in the manufacturing and services sectors.
- It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
How is the PMI derived?
- The PMI is derived from a series of qualitative questions.
- Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.
How does one read the PMI?
- A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
- Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
- If the figure is higher than the previous month’s then the economy is expanding at a faster rate. If it is lower than the previous month then it is growing at a lower rate.
What are its implications for the economy?
- The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
- It is, therefore, considered a good leading indicator of economic activity.
- Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.
- Central banks of many countries also use the index to help make decisions on interest rates.
Calculation of PMI
- It is a survey-based measure that asks the respondents about changes in their perception about key business variables as compared with the previous month.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
- The latest composite PMI decreased to 49.8 in September 2019 from 52.6 in August 2019.
- The PMI is a number from 0 to 100.
- PMI above 50 represents an expansion when compared to the previous month;
- PMI under 50 represents a contraction, and
- A reading at 50 indicates no change.
- If PMI of the previous month is higher than the PMI of the current month (as is the case mentioned above), it represents that the economy is contracting.
- The PMI is usually released at the start of every month. It is, therefore, considered a good leading indicator of economic activity.
2. Embrace diplomacy, Blinken tells N. Korea
At G7 meet, U.S., Japan and S. Korea agree to work ‘towards denuclearisation of the Korean peninsula’
Secretary of State Antony Blinken on Monday asked North Korea to embrace diplomacy as he briefed allies on a new U.S. strategy that stresses low-key progress rather than Donald Trump’s pageantry.
In London for the first in-person Group of Seven (G7) meetings in two years, Mr. Blinken consulted his counterparts from Japan and South Korea on President Joe Biden’s new approach, which has already been denounced by Pyongyang.
The State Department said that Mr. Blinken and Japanese Foreign Minister Toshimitsu Motegi “shared their concerns about North Korea’s nuclear and ballistic missile programmes” in their meeting.
They agreed to work together, along with Japan’s sometime rival South Korea, “towards denuclearisation of the Korean peninsula,” a statement said.
“I hope that North Korea will take the opportunity to engage diplomatically and to see if there are ways to move forward toward the objective of complete denuclearisation of the Korean peninsula,” Mr. Blinken said after meeting his U.K. counterpart Dominic Raab later.
“It is, I think, up to North Korea to decide whether it wants to engage or not on that basis,” he said
Alluding to North Korea’s initial reaction, Mr. Blinken said: “We’ll look to see not only what North Korea says but what it actually does in the coming days and months.”
He ordered an assessment of North Korea policy after taking over from Mr. Trump whose unusual, highly personalised diplomacy featured three made-for-television meetings with the totalitarian state’s young leader Kim Jong-un.
Mr. Trump boasted that he saved Asia from war and deserved the Nobel Peace Prize. But he was not able to secure a permanent agreement to end North Korea’s nuclear programme or even, as the former President considered, to officially end the Korean War after seven decades.
Mr. Blinken acknowledged that successive administrations, including from his Democratic Party, had failed to achieve their goals with North Korea.
“What we have now is a policy that calls for a calibrated, practical approach that is open to and will explore diplomacy with North Korea to try to make practical progress,” Mr. Blinken said.
South Korea’s dovish government supported Mr. Trump’s reconciliation with the North while Japan privately held concerns, fearing a deal under Mr. Trump would have sacrificed its security.
North Korea said on Sunday that the new U.S. approach was a “spurious signboard for covering up its hostile acts”.
U.S. officials largely expected a dismissive first reaction from North Korea, which is known for strident statements, including in 2019 describing Mr. Biden as a “rabid dog” who “must be beaten to death with a stick”.
The G7 Foreign Ministers are meeting for the first time since the start of the pandemic as concerns ease in many Western nations despite rising casualties in India and Brazil.
The three-day talks in London will set the stage for a leaders’ summit next month in southwest England on what will be Mr. Biden’s first foreign trip.
South Korea — as well as India, Australia, South Africa and ASEAN bloc chair Brunei — were invited as guests for meetings of the club of seven wealthy democracies.
- The Group of Seven (G7) is a forum of the world’s seven largest developed economies whose government leaders meet annually to discuss international economic and monetary issues.
- The G-7 has its roots in an informal meeting of the finance ministers of France, West Germany, the U.S, Great Britain, and Japan (the Group of Five) in the wake of the 1973 oil crisis. That, in turn, inspired the French President to invite the leaders of those countries, and Italy, to Rambouillet in 1975 for further discussions on global oil.
- The next year, Canada was also invited to join the group and the first meeting with all G-7 nations was hosted by the United States which was held in Puerto Rico in 1976.
- Summits are held annually and hosted on a rotation basis by the group’s members.
- The 2018 summit was hosted by Canada in Quebec from June 8-9.
- The 45th G7 summit was hosted by France from August 24-26, 2019, in Biarritz in Nouvelle-Aquitaine, France.
The G7 members are recognized as the seven wealthiest and most advanced nations in the world. The members are:
- The United Kingdom,
- The United States of America,
- The European Union is sometimes considered an eighth member of the G-7, since it holds all the rights and responsibilities of full members except to chair or host the meeting.
Expansion to G-8 (the Group of Eight)
- The G-7 responded as the global economy evolved. In 1991, the Soviet Union pledged to create an economy with freer markets and held its first direct presidential election.
- Following the 1994 G7 meeting in Naples, Russian President held meetings with G-7 member countries, in what became known as the P-8 (Political 8).
- In 1998, after urging from leaders including U.S. President, Russia was added to the G-7 group as a full-time member, creating a formal G-8.
- However, in 2014, Russia was suspended from the group after the annexation of Crimea and tensions in Ukraine.
- The major purpose of the G-7 is to discuss and deliberate on international economic issues. It sometimes acts in concert to help resolve other global problems, with a special focus on economic issues.
- G7 fills out numerous global top lists:
- Leading export countries,
- Largest gold reserves,
- Largest nuclear energy producers,
- Top contributors to the UN budget.
3. ICMR to get royalty from sale of Bharat Biotech’s Covaxin
The partnership MoU also includes a clause on prioritising in-country supply
The intellectual property governing the use of Covaxin, jointly developed by Bharat Biotech and the Indian Council of Medical Research, was “shared” and the ICMR would receive royalty payments, the organisation confirmed to The Hindu.
“The Public-Private Partnership was executed under a formal Memorandum of Understanding (MoU) between the ICMR and the BBIL which includes a royalty clause for the ICMR on net sales and other clauses like prioritisation of in-country supplies. The product IP is shared. It is also agreed that the name of ICMR-National Institute of Virology (NIV) will be printed on the vaccine boxes. The same is being done now,” ICMR Director-General Balram Bhargava said in an email.
However he did not say how much money was spent.
The partnership between the two organisations involves 12 activities that include clinical and preclinical studies. Five of these were funded entirely by Bharat Biotech: Candidate vaccine development, preclinical safety and toxicity studies in small animals (rats, mice and rabbits), phase-1 clinical trials including funding of sites, hiring Clinical Research Organisation (CRO) for trial monitoring, insurance, laboratory testing; phase 2 clinical trials including funding of sites, hiring CRO for trial monitoring, insurance, laboratory testing and all other logistics and hiring a CRO for phase-3 trial monitoring, insurance and laboratory testing.
The activities funded by the ICMR were: isolating the SARS-CoV-2 virus from a “huge number” of clinical samples, passage testing and confirmation; BSL-3 facility validation of BBIL for Covaxin production; vaccine strain characterisation by ELISA tests, electron microscopy, next generation sequencing; testing serum samples from preclinical studies in small animals; preclinical safety and efficacy in golden Syrian hamsters and preclinical safety and efficacy studies in rhesus macaques (monkeys); testing sera of Covaxin vaccinated individuals for U.K. strain, Brazil strain, South African strain and double mutant strain of SARS-CoV-2; U.K. variant virus isolation and characterisation, titration, sequencing from clinical specimens and funding the site for the phase 3 clinical trial.
Covishield constitutes over 90% of the country’s vaccine supply so far and has been developed as partnership between the Oxford University and AzstraZeneca. Serum Institute of India is one among the many manufacturers in the world with a production licence and has to pay royalty to a foreign company. Covaxin on the other hand is almost entirely indigenous and yet is priced higher than Covishield. Both are so far being bought by the Central government for ₹150 a dose. However, Covishield was first offered to States at ₹400 a dose and ₹600 to private hospitals and Covaxin was offered at ₹600 for State governments and at ₹1,200 for private hospitals.
Later Covishield’s price was reduced to ₹300 a dose for States and Covaxin reduced theirs to ₹400.
Intellectual Property Rights
Intellectual Property rights mean providing property rights through patents, copyrights and trademarks. Holders of intellectual property rights have a monopoly on the usage of property or items for a specified time period. The term intellectual property began to be used in the 19th Century. Only in the 20th century did it become part of the world’s legal systems.
4 types of Intellectual Property
The 4 main types of intellectual property are listed below.
- Patents – It is used for protecting new inventions, ideas, or processes. Patent holders need to pay periodic government renewal fees. An approved patent is for a limited time period. Know more about Patents Act in India.
- Copyrights – It protects the ideas, examples would be written works, music, art, etc.
- Trademarks – It is something that protects the symbols, colors, phrases, sounds, design etc.
- Trade Secrets – It may be strategies, systems, formulas, or other confidential information of an organization that provides them a competitive advantage in the market.
Intellectual Property Important
Intellectual Property Rights are important to stimulate and promote research and development. If the inventions and ideas of individuals and organizations are not protected then the concerned people or organizations will not reap the benefits of their hard work and naturally, it will lead to discontent and reduce the efforts in the field of research and development, which is extremely important for the growth and development of humanity.
Difference between R and ™ Symbol
The main difference between the two is given below.
- ™ refers to the unregistered trademark to promote or brand goods.
- R – within a circle refers to the registered trademark. It is used by the owner of a trademark that has been registered.
4. Central Vista works get nod
Environment Ministry clears ancillary projects including a new residence for PM
An expert panel of the Environment Ministry has accorded environmental approval to ancillary projects that are part of the construction of a new Parliament, including a new residence for the Prime Minister, common Central Secretariat buildings, Central Conference Centre, a building for the Special Protection Group and a Vice-President’s Enclave. The environmental clearance for the new Parliament building has already been accorded earlier this year.
These are to be built by the Central Public Works Department. The PM’s residence is scheduled to be readied by next December, a month after the construction of a new Parliament Building.
The rest of the many buildings are expected to be ready between 2024 and 2026.
These projects together cost about ₹13,500 crore.
Environmentalists have said that the project has not being considered as a single project and broken up piece-meal to obscure its environmental impact. Several legal obstacles to the project coalesced and were taken up to the Supreme Court which ultimately cleared it. The work on the project has continued despite the second week of lockdown in the capital that has brought most construction sites to a grinding halt. The construction work for the project has been brought under the ambit of “essential services”, a move condemned by the Opposition.
5. 7 Myanmar refugees can approach UNHCR
Manipur High Court says Article 21 encompasses the right of non-refoulement
The High Court of Manipur on Monday allowed seven Myanmar nationals, who entered India secretly following the February military coup, to travel to New Delhi to seek protection from the United Nations High Commissioner for Refugees (UNHCR).
Though India is not a party to the UN Refugee Conventions, the court observed that the country is a party to the Universal Declaration of Human Rights of 1948 and the International Covenant on Civil and Political Rights of 1966. “The far-reaching and myriad protection afforded by Article 21 of our Constitution, as interpreted and adumbrated by our Supreme Court time and again, would indubitably encompass the right of non-refoulement,” the court said.
Non-refoulement is the principle under international law that a person fleeing from persecution from his own country should not be forced to return.
“We welcome the judgment upholding the human rights of the seven Myanmar nationals, three of whom are minors,” Babloo Loitongbam, convener of the Citizens’ Committee Manipur (CCM), said.
The other four are Niang Go Man, Pau Khan Thawn, Cing San Lun and Si Thu Aung.
The last three are journalists who were working with the Mizzima news service banned by the military junta.
Hiding in Moreh
They had been hiding in the border town Moreh until they were brought to Imphal following an order of the High Court on April 20.
“We continue to be deeply concerned about the plight of thousands of other Myanmar nationals taking shelter in the bordering villages of Manipur without any support and protection apart from the hospitality and warmth of the poor villagers,” Mr. Loitongbam said.
The humanitarian sub-committee CCM has provided food, clothing, medicines and utensils donated by the people of Manipur in four villages in Kamjong district and three each in Tengnoupal and Churachandpur districts, housing more than 500 refugees from Myanmar, he said.
United Nations High Commissioner for Refugees (UNHCR)
UNHCR, the UN Refugee Agency, is an international organisation working to saving lives, safeguarding the rights and providing a better future for refugees, forcibly displaced communities and stateless people.
- The organisation’s target audience includes refugees, people who are forcibly displaced from their homes, asylum seekers, internally displaced persons and stateless people.
- The UNHCR was established in 1950 in the wake of the mass displacements caused due to the Second World War in Europe.
- Since then, it has provided relief to thousands of refugees and displaced persons in many parts of the world.
- The UNHCR has also won the Nobel Prize for Peace twice (1954 and 1981).
- The chief legal document that governs the work of the UNHCR is the 1951 Refugee Convention.
- The organisation works in 135 countries and in India, has offices in New Delhi and Chennai. It first established its presence in India in 1981.
- The UNHCR is headed by the High Commissioner for Refugees.
- Its parent organisation is the United Nations General Assembly (UNGA).
- The UNHCR gives the Nansen Refugee Award annually to people who work in the field of refugee rights and protection.
6. Editorial-1: A ‘One Health’ approach that targets people, animals
The battle against COVID-19 should also be used as an opportunity to meet India’s ‘One Health’ targets
The father of modern pathology, Rudolf Virchow, emphasised in 1856 that there are essentially no dividing lines between animal and human medicine. This concept is ever more salient as the world continues to grapple with the COVID-19 pandemic. Discussions that took place around World Veterinary Day, on April 24, 2021, focused on acknowledging the interconnectedness of animals, humans, and the environment, an approach referred to as “One Health”.
Across the species barrier
Studies indicate that more than two-thirds of existing and emerging infectious diseases are zoonotic, or can be transferred between animals and humans, and vice versa, when the pathogen in question originates in any life form but circumvents the species barrier. Another category of diseases, “anthropozoonotic” infections, gets transferred from humans to animals. The transboundary impact of viral outbreaks in recent years such as the Nipah virus, Ebola, Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory Syndrome (MERS) and Avian Influenza has further reinforced the need for us to consistently document the linkages between the environment, animals, and human health.
India’s framework, plans
India’s ‘One Health’ vision derives its blueprint from the agreement between the tripartite-plus alliance comprising the Food and Agriculture Organization of the United Nations (FAO), the World Organisation for Animal Health (OIE), the World Health Organization (WHO) and the United Nations Environment Programme (UNEP) — a global initiative supported by the United Nations Children’s Fund (UNICEF) and the World Bank under the overarching goal of contributing to ‘One World, One Health’.
In keeping with the long-term objectives, India established a National Standing Committee on Zoonoses as far back as the 1980s. And this year, funds were sanctioned for setting up a ‘Centre for One Health’ at Nagpur. Further, the Department of Animal Husbandry and Dairying (DAHD) has launched several schemes to mitigate the prevalence of animal diseases since 2015, with a funding pattern along the lines of 60:40 (Centre: State); 90:10 for the Northeastern States, and 100% funding for Union Territories. Hence, under the National Animal Disease Control Programme, ₹13,343 crore have been sanctioned for Foot and Mouth disease and Brucellosis control. In addition, DAHD will soon establish a ‘One Health’ unit within the Ministry.
Additionally, the government is working to revamp programmes that focus on capacity building for veterinarians and upgrading the animal health diagnostic system such as Assistance to States for Control of Animal Diseases (ASCAD). In the revised component of assistance to States/Union Territories, there is increased focus on vaccination against livestock diseases and backyard poultry. To this end, assistance will be extended to State biological production units and disease diagnostic laboratories.
WHO estimates that rabies (also a zoonotic disease) costs the global economy approximately $6 billion annually. Considering that 97% of human rabies cases in India are attributed to dogs, interventions for disease management in dogs are considered crucial. DAHD has partnered with the Ministry of Health and Family Welfare in the National Action Plan for Eliminating Dog Mediated Rabies. This initiative is geared towards sustained mass dog vaccinations and public education to render the country free of rabies.
Need for coordination
Scientists have observed that there are more than 1.7 million viruses circulating in wildlife, and many of them are likely to be zoonotic, which implies that unless there is timely detection, India risks facing many more pandemics in times to come. To achieve targets under the ‘One Health’ vision, efforts are ongoing to address challenges pertaining to veterinary manpower shortages, the lack of information sharing between human and animal health institutions, and inadequate coordination on food safety at slaughter, distribution, and retail facilities. These issues can be remedied by consolidating existing animal health and disease surveillance systems — e.g., the Information Network for Animal Productivity and Health, and the National Animal Disease Reporting System — developing best-practice guidelines for informal market and slaughterhouse operation (e.g., inspections, disease prevalence assessments), and creating mechanisms to operationalise ‘One Health’ at every stage down to the village level. Now, as we battle yet another wave of a deadly zoonotic disease (COVID-19), awareness generation, and increased investments toward meeting ‘One Health’ targets is the need of the hour.
7. Editorial-2: A transient high
Record GST inflows are heartening, but major risks lie ahead
India’s GST regime could not have hoped for a better start to its fifth year. Revenues from the tax hit an all-time high of ₹1,41,384 crore in April, surpassing the previous month’s record of about ₹1.24 lakh crore. After a disastrous period for the economy following last year’s national lockdown, GST revenues hit ₹1.05 lakh crore in October and have shown a steady uptick since then, in tandem with hopes of a sustained recovery. April’s numbers, which are essentially driven by the transactions in March, were bolstered by heightened economic activity, no doubt. The spectre of rising COVID-19 cases and the fear of an impending lockdown could also have driven people to make advance purchases in anticipation. Moreover, firms in the process of closing annual accounts may have remitted higher GST based on audit advice, while a gradual tightening of the compliance regime, and pro-active co-ordinated probes against taxpayers using fake bills to evade liabilities, have played no small part. In April 2020, GST collections had dipped to a mere ₹32,172 crore after all activity ground to a halt at four hours’ notice in late March. Economic activity may not yet be as badly affected amidst the pandemic’s second wave.
So far, going by the restrictions imposed in several States, supply chain disruptions are not expected to be as challenging. However, weakening demand will trigger a recalibration of production and investment plans, some of which has begun to kick in. Consider some indicators — major two-wheeler producers saw sales plummet by around a third in April, compared to March. Plant shutdowns have gradually begun to reduce inventory build-ups. In a report, ‘Wall of Worry’, Crisil has warned of several indicators sliding since mid-April, including GST e-way bills which fell by over 6%, two weeks in a row. Manufacturing orders’ growth hit an eight-month low in April, as per IHS Markit. And the pandemic surge and desperate shortage of health infrastructure have prompted industry leaders to pitch for a stringent lockdown. It would be foolhardy now to expect GST and other tax revenues to stay robust till the government gets a better grip on infections and vaccinations. With the Assembly polls over, the Centre must urgently convene the GST Council. To add to what is already pending — rationalisation of GST rate slabs, a rejig of rates on critical pandemic supplies and the prickly issue of bringing fuel under GST — the Council must begin gearing up early for shortfalls in GST compensation to States that may arise this year. India can ill-afford a repeat of the 2020 face-off between the Centre and States that almost upended the very spirit of co-operative federalism the GST emerged from.