Blog

Daily Current Affairs 08.09.2022 (Content moderation on Wikipedia, The mandatory requirements for packaged commodities, Cabinet approves PM SHRI scheme, WHO to stress prevention of non-communicable diseases, CBDC to reduce time, cost in cross-border business: RBI’s Sankar, How ideology muddled inflation control in India, The Spirit of 1971, The evolving role of CSR in funding NGOs)

Daily Current Affairs 08.09.2022 (Content moderation on Wikipedia, The mandatory requirements for packaged commodities, Cabinet approves PM SHRI scheme, WHO to stress prevention of non-communicable diseases, CBDC to reduce time, cost in cross-border business: RBI’s Sankar, How ideology muddled inflation control in India, The Spirit of 1971, The evolving role of CSR in funding NGOs)

3-5

1. Content moderation on Wikipedia

What are the mechanisms Wikipedia uses to ensure that users do not have unrestricted editorial privilege?

India has summoned officials of Wikipedia, in response to cricketer Arshdeep Singh’s Wikipedia page being edited with misleading information that stated he was a “khalistani”.

To increase Wikipedia’s reliability and also to prevent vandalism and disruptive edits, there are restrictions on edits to the content that Wikipedia hosts. One of these restrictions is to allow certain “protections” to be accorded to particular articles. An article may have varying degree of protection depending on the vulnerability of the article to vandalism, disruption and abuse. 

In the case of social media platforms, platform owners such as Meta or Twitter are responsible for exercising due diligence in content moderation through individuals on their payroll. However, in Wikipedia, the situation is slightly different given that content moderation decisions are not taken by employees.

Trishee Goyal

The story so far: On Tuesday, India summoned officials of Wikipedia, in response to cricketer Arshdeep Singh’s Wikipedia page being edited with misleading information that stated he was a “khalistani”. This was done by online trolls after Arshdeep Singh dropped a catch in India’s match against Pakistan. The Minister of State for Electronics and IT, Rajeev Chandrashekhar tweeted that “no intermediary operating in India can permit this type of misinformation” as it violated the government’s expectation of a safe and trusted internet. To determine the role and liability of the Wikimedia Foundation (the owner of Wikipedia), in such instances, it is important to understand how content on the platform is moderated.

What is Wikipedia and its model for functioning?

Since its inception in 2001, Wikipedia has become a household name. It describes itself as a “multilingual free online encyclopedia written and maintained by a community of volunteers through open collaboration and a wiki-based editing system”. Unlike traditional encyclopedias that have entries from pre-identified authors, all of Wikipedia’s encyclopedic content is user generated.  This means that anyone can contribute to its pool of knowledge by making edits to existing pages for updation or correction and can even add new pages.

While this model has its advantages in so far that it allows democratisation of knowledge,unhindered access to edit has also resulted in concerns relating to the reliability of information that it hosts.

Are there no control mechanisms for content on Wikipedia?

Even though majority of the content is user generated, the Wikimedia Foundation has instituted some content moderation practices.

First, to increase its reliability and also to prevent vandalism and disruptive edits, over time restrictions have been placed on edits to the content that Wikipedia hosts. One of these restrictions is to allow certain “protections” to be accorded to particular pages. A page may have varying degree of protection depending on the vulnerability of the page to vandalism, disruption and abuse. To implement this system of protection, Wikipedia classifies users depending on the edit rights that they have. For example, one of the highest levels of protection that can be accorded to a page is “full protection”. This means that only those users (called administrators) that have been given full edit rights (as per Wikipedia community review process) can make modifications. A slightly lower level of protection is “semi protection”. “Semi protected” pages cannot be edited by unregistered users. Another category of protection is “pending changes”, which means that changes made will not be reflected on the page unless the changes are accepted by an editor with those rights.

Second, given that edit rights are widespread there have been instances of “content disputes” and “edit warring”. Content disputes occur when editors disagree with each other’s content. This could also lead to edit warring where editors repeatedly override each other’s contribution in a specific page. In such circumstances also, administrators can provide temporary or permanent protection to a page to prevent edits.

However, most of the individuals that perform tasks for Wikipedia such as those holding the designation of bureaucrats, administrators or other editors with varying levels of edit rights are not employees of Wikimedia. These individuals gain such designations and exercise attendant rights through a community review process. Essentially, the more the trust they gain from the Wikipedia community, the greater is their degree of editorial responsibility. They are not given or removed from a particular designation by the Wikimedia Foundation per se.

Although Wikimedia’s terms of use state that it “generally does not contribute, monitor or delete content” there are ways in which the Wikimedia Foundation exerts control over Wikipedia. First, the Wikimedia Foundation legally controls the servers on which Wikipedia’s content is hosted. This means that even though they do not have ownership of the user generated content hosted on Wikipedia, they are in control of the user activity information generated on the servers. Second, Wikimedia Foundation also exercises control on who the “system administrators” of Wikipedia are. System administrators are in a position to exercise considerable power because they can take decisions of blocking users or reversing edits in some circumstances, which can have content moderation implications.

Therefore, can the Wikimedia Foundation be held responsible for the content that Wikipedia hosts?

There is no settled position on this. Typically, the architecture of Wikipedia is that of an intermediary i.e. it hosts content generated by its users. Under most laws regulating online content, intermediaries are endowed with immunity from the user generated content they host, provided they maintain some due diligence over their platforms. Intermediaries are afforded this immunity because first, the sheer volume of content generated makes it impossible to monitor this content and second, being personally responsible for user content would inundate them in legal battles making operations at that scale infeasible.

In previous challenges to content on Wikipedia, there have been rulings that the Wikimedia Foundation does not own the content, and does not have the legal responsibility for it. However, administrators or editors have taken heed of the content concerns arising out of the situation and have made suitable edits. In case volunteer editors do not make suitable edits, Wikimedia, as per its terms of use states that it can “contribute, monitor or delete content” for legal compliance. Therefore, it is arguable that since Wikimedia can exercise such power, it can be held responsible for illegal content being hosted on Wikipedia.

What can the Indian government do if it is aggrieved by content on Wikipedia?

In India, for intermediaries to claim the “safe harbour” of not being responsible for the content they host, under Section 79 of the Information Technology Act, 2000, they must abide by due diligence requirements under the Act and its Rules. As per the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, there are certain categories of information that an intermediary should not allow to be hosted or uploaded on its platform. One such category is information that is “patently false and untrue, and is written or published in any form, with the intent to mislead or harass a person, entity or agency for financial gain or to cause any injury to any person”. Therefore, in the Indian context, even if the Wikimedia Foundation does not own the information hosted on Wikipedia, once Wikimedia Foundation has “actual knowledge” of such content being hosted on its platform, it would be held responsible for the same.

In the context of the IT Rules, 2021 “actual knowledge” occurs when an intermediary has been notified by either a court order or through an order of the appropriate agency demanding removal of the offending content. In this case while neither has happened, Wikipedia administrators and editors have removed the distortion from Arshdeep Singh’s page and granted it certain protection such that only “trusted editors” can edit the page.

2. The mandatory requirements for packaged commodities

Why is it necessary to list out the constituents of a product on the front packaging?

The Department of Consumer Affairs, Legal Metrology Division has notified a draft amendment to the Legal Metrology (Packaged Commodities) Rules 2011. 

The Department of Consumer Affairs has suggested that at least two prime components should be declared on the package’s front side along with the brand name. Currently, manufacturers list the ingredients and nutritional information on the back of the packaging.

Public comments were solicited from all stakeholders, including industries, associations, consumers, and voluntary consumer organisations.

G.S. Bajpai Sangeeta Taak

The story so far: The Department of Consumer Affairs, Legal Metrology Division has notified a draft amendment to the Legal Metrology (Packaged Commodities) Rules 2011. As stated in the notification, the Department of Consumer Affairs Legal Metrology Division has observed that many manufacturers/packagers/importers do not clearly label necessary declarations or prime constituents on the front of packaged commodities, which are deemed essential to be disclosed in order to protect consumer interests.

What are the mandatory provisions under the Legal Metrology (Packaged Commodities) Rules, 2011?

It is mandatory under the Legal Metrology (Packaged Commodities) Rules, 2011 to ensure a number of declarations, such as the name and address of the manufacturer/packer/importer, the country of origin, the common or generic name of the commodity, the net quantity, the month and year of manufacture, the Maximum Retail Price (MRP) and consumer care information. As a consumer-oriented policy, all prepackaged commodities should also be inspected.

As stated in Rule 2(h), the “principal display panel”, in relation to a package, means the total surface area of a package containing the information required in accordance with these rules, namely that all the information should be grouped together and given in one place — the pre-printed information could be grouped together and given in one place and the online information in another place.

Additionally, Rule 9(1)(a) provides that the declaration on the package must be legible and prominent. The consumers’ ‘right to be informed’ is violated when important declarations are not prominently displayed on the package.

If there is more than one major product, Rule 6(1)(b) states that “……the name or number of each product shall be mentioned on the package.” This sub-rule is however, not applicable to mechanical or electrical commodities.

What are the proposed amendments?

As many blended food and cosmetic products are sold on the market, the key constituents need to be mentioned on the product packaging. It is common for consumers to assume that brands’ claims are accurate, but such claims are usually misleading. Additionally, the front side of the package must contain the percentage of the composition of the unique selling proposition (USP). As the name suggests, a USP also known as a unique selling point, is a marketing strategy designed to inform customers about the superiority of one’s own brand or product. Listing the USP of a product on the front of the package without disclosing its composition percentage violates consumer rights. Also, packages displaying key constituents must display a percentage of the content used to make the product. For example, if a brand sells aloe vera moisturiser or almond milk/biscuits, then the maximum percentage of the product should be aloe vera and almond, otherwise, the product name is misleading.

The Department of Consumer Affairs, Legal Metrology Division has suggested that at least two prime components should be declared on the package’s front side along with the brand name. Currently, manufacturers list the ingredients and nutritional information only on the back of the packaging.

The proposed Section 6(1)(ba) states that when a commodity contains more than one constituent, the front side of the package must include a declaration of two or more of the commodities’ prime constituents along with the brand name. This declaration must also include the percentage/quantity of the USPs of the product in the same font size as the declaration of the USPs. However, mechanical or electrical commodities are excluded from this sub-rule.

Moreover, public comments were solicited from all stakeholders, including industries, associations, consumers, and voluntary consumer organisations, in order to obtain their viewpoints.

When the new provision of Section 6(1) (ba) is added, consumers will not be misled by the fake claims of manufacturers relating to the content in blended foods and cosmetics.

3. Cabinet approves PM SHRI scheme

Government schools will be selected if a State agrees to implement NEP in ‘entirety’

The Union Cabinet on Wednesday approved the ‘PM Schools for Rising India’ (PM SHRI) scheme to turn existing government schools into model schools for implementation of the National Education Policy, 2022.

The scheme will be implemented as a Centrally sponsored scheme with a total project cost of ₹27,360 crore, with the Centre’s share being ₹18,128 crore for the period of five years from 2022-23 to 2026-27 for transforming nearly 14,500 schools across the country.

However, schools will be selected only if the State government agrees to implement the NEP “in entirety with the Centre laying down commitments for supporting these schools for achieving specified quality parameters” to become PM SHRI schools, according to a press statement of the Ministry of Education. These schools will also be “monitored vigorously” to assess their progress in implementing NEP.

The scheme has been announced at a time when some States, including Tamil Nadu, continue to oppose the NEP for imposing a centralised education system on the entire country when education is a State subject as well as enforcing the three-language policy under which students will learn three languages out of which two have to be native to India. Other grounds for opposition include mandatory school entry at three years, which could leave out many from marginalised communities, promotion of vocational courses from Class 6 at the cost of formal education, as well as the option to exit schools in Class 10 with the option to re-enter in Class 11.

“A school will receive nearly ₹2 crore, and the money will be transferred directly to the school’s account through Direct Benefit Transfer. The principal or the local committee will be given the flexibility to determine the use of 40% of the fund,” Education Minister Dharmendra Pradhan said at a press conference.

The PM SHRI scheme also provides a “School Quality Assessment Framework” which will be developed for measuring key performance indicators for carrying out quality evaluation of schools selected from the current academic year.

The quality parameters that will be evaluated once a school is selected for the scheme will include implementation of NEP 2020, student registry for tracking enrolment and learning progress, improvement in learning outcomes of each child to achieve levels above State and national average, linkage of school with higher education institutions and local entrepreneurial ecosystem for mentoring as well as creating “students rooted in the heritage of India, proud of values of Bharat, conscious of duties towards society and responsibilities towards nation-building”.

Earlier, Delhi Chief Minister Arvind Kejriwal wrote a letter to Prime Minister Narendra Modi on the scheme and said there was a need to pay attention to all government schools, which he said were worse than “kabaadkhana” (scrapyard). “You have only prepared a scheme for 14,500 schools. There are more than 10 lakh government schools in the country,” he wrote

PM-SHRI Scheme

  • It is a new centrally sponsored scheme and will showcase the components of the National Education Policy, 2020.
    • A Centrally Sponsored Scheme is one where the cost of implementation is likely to be split in the 60:40 ratio among the Union government and the states/Union Territories.
    • In Northeastern states, Himachal Pradesh, Uttarakhand, Jammu and Kashmir and UTs without legislatures, the Centre’s contribution can go up to 90 per cent.
    • For instance, the mid-day meal scheme (PM Poshan) or the PM Awas Yojana.
  • Under it, as many as 14,500 schools across states and Union Territories will be redeveloped to reflect the key features of the NEP, 2020.
    • The NEP envisages a curricular structure and teaching style divided into various stages – foundational, preparatory, middle and secondary
  • PM SHRI schools will be an upgrade of existing schools run by the Centre, states, UTs and local bodies. The PM SHRI schools can either be KVs, JNVs, state government schools or even those run by municipal corporations.

Significance

  • The aim of these schools will not only be qualitative teaching, learning and cognitive development but also to create holistic and well-rounded individuals equipped with key 21st-century skills.
  • These schools will be equipped with modern infrastructure including labs, smart classrooms & other modern skills. 
  • The pedagogy adopted in these schools will be more experiential, holistic, integrated, play/toy-based, inquiry-driven, and discovery-oriented.

4. WHO to stress prevention of non-communicable diseases

Southeast Asia regional committee session in Bhutan

The member countries of the World Health Organization (WHO) South-East Asia Region on Wednesday resolved to accelerate progress for the prevention and control of non-communicable diseases, including oral and eye afflictions.

“The region must build on the progress made in the prevention and control of non-communicable diseases. Though the trends are in the right direction, we need to accelerate efforts to achieve global, regional, and national goals,” Poonam Khetrapal Singh, Regional Director, WHO South-East Asia Region, said at the ongoing 75th regional committee session of the WHO Southeast Asia in Bhutan.

Non-communicable diseases, including cardiovascular diseases, cancers, chronic respiratory disease and diabetes, account for almost two-thirds of all deaths in the region.

Nearly half these deaths occur prematurely between the ages of 30 and 69 in 2021.

The meeting noted the continuing high burden of disease and death due to cardiovascular diseases, cancer, diabetes and chronic respiratory diseases, a large number of untreated cases of dental caries and oral health conditions, and challenges in the provision of comprehensive eye care.

The member countries endorsed the road map for the prevention and control of non-communicable diseases, an action plan for oral health and another plan for an integrated people-centered eye care during the session.

Non-communicable Disease (NDC)

Non-communicable diseases are non-infectious in nature and thus do not spread like communicable diseases. Most NCDs are chronic and last for a longer period of time. NCDs account for approximately 71% of global deaths. Furthermore, these deaths are concentrated in middle and low-income countries. The four major death-causing NCDs are –

  1. Cardiovascular Diseases
  2. Cancer
  3. Respiratory Diseases
  4. Diabetes

The NCDs may occur due to lifestyle as well as genetic factors. Thus, some of them are also termed lifestyle diseases. The risk factors for NCDs are mostly poor diet, lack of exercise, inadequate sleep, smoking, alcohol consumption and stress.

Lifestyle Diseases

Lifestyle diseases, like hypertension, diabetes, cancer, heart diseases, and stroke are a part of non-communicable diseases (NCD). Mental health diseases like trauma and depression are also included under this. Various physiological factors, along with improper diet and exercise, are a major cause of most NCDs.

Physiological Factors

  • Blood Pressure
  • Cholesterol
  • Blood Glucose
  • Hyperlipidemia
  • Overweight or Obesity

Behavioural Factors

  • Sedentary Lifestyle
  • Unbalanced Diet
  • Stress
  • Tobacco and Alcohol

People of all ages, gender and region are prone to these risk factors. In this, the behavioural factors are modifiable with proper lifestyle changes.

Hypertension

Hypertension is a sustained increase of systemic arterial blood pressure, typically more than 150/90 mm Hg. Essential or primary hypertension is seen in 90% of total hypersensitive individuals. In most persons, obesity and a sedentary lifestyle appear to play a major role in causing essential hypertension. This is treatable but not curable. The high salt content in canned and packaged foods can also lead to hypertension. Thus, it can be prevented with a proper diet and lifestyle.

In the early stages of hypertension, an increase in stress states (exercise, excitement, emotions, etc.) can be observed. In late stages, it can also lead to renal failure and cardiac complications.

Cardiovascular disease

The term denotes a group of disorders associated with the blood vessels and heart. Cardiovascular diseases include rheumatic heart disease, coronary heart disease, heart failure, heart attack, stroke, etc. The main reason is the blockage of blood vessels supplying the brain or heart. This blockage is caused due to fat deposits in the walls of blood vessels. Heart attack and stroke are the major NCDs and are usually acute events. Strokes are caused by blood clots or bleeding from the blood vessel.

Most cardiovascular diseases can be prevented by healthy eating, limiting alcohol intake, exercising, avoiding tobacco, etc. Treating high blood lipids, high blood pressure and diabetes can also prevent cardiovascular diseases. Genetics is also a risk factor for certain cardiac diseases.

Genetic Diseases

Genetic diseases are also NCDs that are caused due to abnormalities in genes or chromosomes. These errors can be either inherited or caused by mutations. Haemophilia, thalassemia, and muscular dystrophy are genetic diseases that run through generations in a family. Support and constant care are the only things that help to manage these disorders. Some other examples of genetic disorders are –

  • Down’s Syndrome (mutation)
  • Cystic Fibrosis (mutation and inherited)
  • Huntington’s chorea (inherited)

Haemophilia

Haemophilia is a serious disease that is more common in men than women. It is a metabolic disorder associated with the X-linked recessive gene. It is characterised by uncontrolled bleeding, even from slight wounds. This is because of the lack of clot-forming substances (thromboplastin). There is no long term cure for haemophilia.

Thalassemia

It is also an inherited hematologic disease. Thalassemia is characterised by decreased production of haemoglobin. It leads to severe destruction of RBCs and thus leads to anaemia. It can be treated by iron chelation, folic acid and blood transfusions.

Certain heart diseases, diabetes and cancer, are caused by environmental factors as well as gene mutations.

Prevention and Cure

NCDs affect the global socioeconomic balance. Thus it should be controlled by focusing on the risk factors.

  • Healthy Diet – Avoiding canned food and excessive salt can prevent hypertension. Also, taking high fibre content helps in controlling hypertension. A healthy and balanced diet is also vital for overall body health.
  • Regular Exercise – Approximately 1.6 million global deaths are attributed to a sedentary lifestyle. Obesity is associated with many NCDs like coronary heart disease, type 2 diabetes, asthma, stroke and even some cancers.
  • Adequate Sleep – 6 to 8 hours of sound sleep is a must for a healthy body to function. Inadequate sleep leads to an increase in stress levels, changes in blood pressure and disturbance in the biological cycle.
  • Mental Relaxation – Meditation, exercise, and relaxation play a role in reducing anxiety and depression. This will have a positive impact on reducing hypertension, heart attacks and diabetes in the longer run.
  • Avoiding tobacco and alcohol – Avoiding alcohol will have an impact on preventing depression, chronic liver diseases and even motor vehicular injuries. Also, both chewing and smoking tobacco contribute to cancer, chronic lung diseases, heart diseases and strokes.
  • Genetic Counselling – It is a remarkable way to detect genetic diseases in an unborn child. Genetic counselling, along with gene therapy, is the only way to prevent genetic disorders as most of them do not have a complete cure.

The first step towards a cure is the management of these diseases. The management includes screening, detecting and treating the diseases. As NCDs are chronic, palliative care is also needed. Strengthening primary health care will significantly reduce the deaths associated with NCDs.

5. CBDC to reduce time, cost in cross-border business: RBI’s Sankar

Digital rupee will cut settlement risk’

Central bank digital currency (CBDC), to be introduced this year, could become a tool for reducing time and cost for cross-border transactions, Reserve Bank Deputy Governor T. Rabi Sankar said on Wednesday.

The RBI has proposed to roll-out the CBDC, or a digital equivalent to the rupee, on a pilot basis this fiscal year, as announced by Finance Minister Nirmala Sitharaman in the Budget.

“We have to understand that internationalisation of CBDC is crucial to addressing the payments issue that bodies like G-20 and Bank for International Settlements (BIS) are dealing with now,” he said at the India Ideas Summit.

Observing that India had an ‘excellent, cheap and fast’ domestic payments system, he said the cost of cross-border payments, however, was still high.

There was a lot of scope for improvement in terms of both cost and speed, he noted.

CBDC was probably the most efficient answer to this, he said, adding, for example, if India’s CBDC and the U.S. CBDC systems could talk to each other, one wouldn’t have to wait for settling transactions.

“That massively takes out the settlement risk from cross border transactions that reduces time, that reduces cost. So, CBDC internationalisation is something that I’m looking forward to,” he said.

Concerning fraud management, Mr. Sankar said digital payment needs to be scaled up while preserving system integrity, which essentially means technical stability.

“It just doesn’t mean that the technical failures of transactions have to be minimised, it also means that transactions themselves have to inspire confidence; we cannot have too many instances of frauds,” the RBI Deputy Governor added.

‘Fraud management’

“Fraud management is an area that we also need to focus on if we have to scale it up [digital payment],” he noted. Citing the example of the Unified Payments Interface (UPI) for non-feature phones, Mr. Sankar said the RBI pays special attention to the fact that digital payment technology should be inclusive.

“The third is of course innovation. I’ve talked about it in terms of what the RBI India Innovation Hub has been doing. But this innovative impulse is something that we would want the industry to rise up to,” he said.

On data security, he said the RBI had to keep working on it on a continuous basis.

“We need to understand [that] there’s never a moment when we feel we are secure enough because that is the moment you get vulnerable,” he added.

6. Editorial-1: How ideology muddled inflation control in India

The agencies responsible for macroeconomic policy have hitched their wagon to Anglo-American economics

The Governor of the Reserve Bank of India reportedly stated that the inflation rate would be brought to its target level of 4% within 24 months. It had been above this level for 34 consecutive months already. If the prognosis is correct, by 2024 it would have remained off target for close to five years. In the United States and the United Kingdom, the inflation rate has been off target for a lesser period, but it has lately run at rates close to four times the target. What credibility do the world’s central banks have if they fail so egregiously in delivering on their mandate? Though the characteristics of India’s economy vary substantially when compared to those of the industrialised West, their governments follow the same approach to inflation control, termed ‘inflation targeting’ and implemented by their central banks. It would be reasonable to surmise then that the approach is ineffectual because it is flawed in its imagination.

A particular problem

The approach to inflation currently favoured in Anglo-American economics is the result of an evolution lasting close to a century. In the 1930s, the world faced an unprecedented crisis with the capitalist economies plunging into depression. We can now see that this was a particular problem of such economies, for the Soviet Union was unaffected. The Great Depression was as much a crisis for the economics profession, for it was expected to come up with ideas on how the global economy could be lifted out of the morass it had sunk into. The central banks were rendered helpless, for monetary policy, the preferred macroeconomic instrument, proved to be impotent under the circumstances. The profession responded momentously, through the publication by J.M. Keynes of The General Theory of Employment, Interest and Money. It provided the insight that at times, capitalist economies would require “the socialisation of investment”, by which he meant that the state would have to shoulder the burden of maintaining demand in the economy through its fiscal policy.

At some level, the message that when private investment was depressed public investment must take over, is no more than an application of economic accounting, but the proposal triggered an ideological backlash. Not all economists of the time were well disposed to the government intervention and larger public deficits, even when temporary, that was being advocated. However, confirmation of the validity of Keynesian economics came from an unexpected source. Hitler, through greater public spending on roads and armaments, showed that a market economy would respond to a Keynesian stimuli, and nothing like the hyperinflation of the Weimar Republic followed.

Impact of ‘oil shocks’

The Keynesian principle continued to work after the war, when the reconstruction of Europe meant that aggregate demand was maintained by public spending on the infrastructure that had been destroyed. The consequent unprecedented rise in living standards came to an abrupt end, though, with the two ‘oil shocks’ of the 1970s, when the petroleum exporting countries combined to hike the price of oil. This both sucked demand out of the oil importing countries and gave rise to inflation in them. Stagflation, a combination of inflation and stagnant output, followed. It is indeed correct that The General Theory was unprepared for this phenomenon, but a complete explanation of it was quickly provided by the Keynesian economist Nicholas Kaldor, and possible solutions identified. This did not receive wide enough acknowledgement, however, and a revival of pre-Keynesian economics, with its assumption of a self-regulating economy, occurred. Its leader, Milton Friedman, argued that in an unfettered market economy, unemployment would tend towards the ‘natural’ level, where presumably everyone who wishes to work would be working.

Inflation targeting

Accordingly, public policy should not target unemployment, attempting which could destabilise the economy, and focus on inflation alone. And, inflation was solely a function of money supply growth which must always be controlled. Friedman’s assertion of the optimality of the market gained impetus after the collapse of the former Soviet Union. His diagnosis of inflation led to a clamour for central banks to be made independent of politicians and given an exclusive mandate to target inflation. The arrangement came to be known as inflation targeting, with the claim that the central bank can fine tune inflation by moving the interest rate. The Anglo-American orientation of India’s policy makers meant that this view of inflation control came to be adopted in this country too.

The allure of inflation targeting is the implicit premise that the authorities, in this case the central bank of a country, will now be both devoted to and capable of controlling inflation. Nothing demonstrates that the latter is make-believe more than the runaway inflation presently on view across the world. Inflation in the U.S. and the U.K., the epicentres of the Friedmanite revolution in economics, is far higher than the targets set for their central banks by their governments.

The question is whether this reflects a lack of commitment on the part of the central banks of these countries or their inability to do anything in the face of an inflation sparked off by a rise in commodity prices, notably the price of oil and food, as is the case today. Obviously, it is the latter. Nothing else can explain inflation rates that are over four times the announced target. Faced with high inflation, Europe’s policymakers exhort that central banks should raise the interest rate further, even if it means triggering a recession. But we can now see that this is no permanent solution to a supply-side driven inflation as the present one is. Even if it were to be granted that the global inflation of the 1970s was contained by the policies advocated by Friedman, we see the problem is back four decades later, driven this time by the disruption of global supply chains due to the war in Ukraine. A recession works to lower inflation when it does by lowering output, and thereby demand; it cannot increase supply, a shortfall in which had caused the inflation to start with.

In the face of the evident failure of monetary policy in controlling inflation globally today, central bankers concerned with retaining their relevance make a renewed case for it by arguing that by pursuing a high-interest-rate policy, central banks can ‘anchor’ the expectation of inflation, and thereby inflation itself.

But why would economic agents harbour such an illusion when forming expectations of inflation? “How,” they are bound to ask, “can a central bank ever achieve this?” A central bank can dampen expectations of a depreciation of its national currency so long as it holds sufficient reserves of the dollar. However, would it have any leverage when it comes to commodity price expectations? No central bank holds stocks of petroleum or wheat. Therefore, it can never directly influence commodity prices, and the public knows this only too well. Having established itself by arguing that Keynesian economics has no explanation of stagflation, the challenge to it finds its own remedy for inflation discredited.

In India

Coming back to India, there exists published research demonstrating that household expectation of inflation, based on data released by the Reserve Bank of India, is not a determinant of it. This makes it difficult to claim that inflation targeting, which is supposed to work via the central bank’s ‘anchoring’ of expectations, works in India. We have long known what needs to be done to control inflation in India, but the agencies responsible for macroeconomic policy ignore this knowledge when they hitch their wagon to the ideology of Anglo-American economics. The consequences are there to see.

7. Editorial-2: The Spirit of 1971

India and Bangladesh must focus on future cooperation based on past partnership

Bangladesh Prime Minister Sheikh Hasina’s ongoing state visit to India and meeting with Prime Minister Narendra Modi have resulted in positive outcomes and seven agreements, which include the conclusion of the first water sharing agreement in 26 years, the launch of free trade agreement talks, and infrastructure projects particularly in the railways sector. The water sharing agreement on the Kushiyara, which was preceded by the first Joint River Commission meeting in 12 years, is a particularly hopeful sign on resolving water management, and a very contentious issue, of 54 trans-boundary rivers. While there has been a smaller agreement on the withdrawal of 1.82 cusecs from the Feni in the interim period, the Kushiyara agreement is the first time the Centre has been able to bring on board Assam and other north-eastern States, for the agreement since the 1996 Ganga water treaty. However, the Teesta agreement, of 2011, held up by West Bengal, remains elusive, a point Ms. Hasina made several times. Clearly, the Teesta river agreement will require more efforts by the Modi government, and flexibility from the Mamata Banerjee-led State government, if the deal is to be sealed soon. The timeline grows more important for Ms. Hasina, who is due to hold elections at the end of next year, after three terms in office. Much of her focus was also on attracting investment by Indian industry, which now constitutes a small fraction of Bangladesh’s FDI inflows. Ms. Hasina made particular mention of two dedicated Special Economic Zones for Indian companies, coming up at Mongla and Mirsarai.

Ms. Hasina’s visit, which follows her previous state visit in 2017, and Mr. Modi’s visit to Bangladesh in 2021, have set India-Bangladesh ties on a firmer footing, and on course for closer engagement in trade, connectivity and people-to-people ties. However, the positive trend in ties goes further back, to Ms. Hasina’s advent to power in 2009, her unilateral moves to shut down terror training camps, and to hand over more than 20 wanted criminals and terror suspects to India. It is incumbent on New Delhi, which has benefited from such outcomes and the turnaround in relations with what used to be an inimical neighbour, to be equally sensitive to Dhaka’s concerns, particularly when it comes to comments made by ruling party leaders on deporting Rohingya refugees, comparing undocumented migrants to “termites”, the Citizenship (Amendment) Act, and more recent references to annexing Bangladesh for “Akhand Bharat”. While cross-border sensitivities in South Asia often run high over such political rhetoric, it is necessary that New Delhi and Dhaka remain focused on their future cooperation, built on their past partnership, and what is referred to as the “Spirit of 1971”.

8. Editorial-3: The evolving role of CSR in funding NGOs

Beyond signing cheques, corporates are recognising that what’s good for society is good for business

When COVID-19 spurred a nationwide lockdown in India in 2020, a grave need for localised social support emerged. Giving, both private and public, flowed to NGOs working towards combating pandemic-induced challenges such as loss of livelihood for vulnerable communities, food banks, and health and medical support. 

In any such social effort, programme expenses attract the big cheques — especially when they come from corporate social responsibility (CSR) initiatives in India. For example, an NGO working on education outcomes might receive funding for books, other online resources, teacher training, curriculum design, etc. But NGOs have other expenses too. In order to achieve long-term and sustained impact, they need to pay for administrative and support expenses not specifically tied to programmes— for instance, rent, electricity, technology and human resource costs. These organisational development and indirect costs, combined with programme expenses, make up an NGOs’ true costs. And underfunding an NGO’s true costs reduces the efficacy and impact of the very programmes that funders support.

To understand how funders and NGOs perceive an NGO’s true costs, and what it takes to build a financially resilient social sector, we surveyed and interviewed over 500 NGOs, funders and intermediary organisations across India as part of our multi-year Pay-What-It-Takes-India initiative.

The funder archetypes

Based on a recent survey of nearly 80 diverse social sector funders, we discovered three distinct funder archetypes — programme proponents, adaptive funders, and organisation builders. The three archetypes represent different beliefs in terms of how philanthropy becomes impact. And those beliefs manifest in different practices around funding indirect costs and organisational development. Programme proponents value programme outcomes above all. Adaptive funders are not rigid and support indirect costs and organisational development, if the NGO makes a case. Organisation builders see value in investing in stronger organisations in addition to programmes.

CSR funders, who now represent a fifth of all private giving in India, principally fall under programme proponents. They mostly contribute little or no money to organisational development and limit what they pay for indirect costs to a fixed rate often below 5%. Our 2020 primary research showed that NGOs’ indirect costs range from 5% to 55%, depending on their mission and operating model, much as a corporate’s sales and administration costs vary significantly by industry and product.

These practices are partly a consequence of CSR funders’ focus on regulatory compliance — amendments to the CSR law in 2021 include substantial financial penalties for non-compliance. Roughly 90% of the CSR funders are relatively small, unlisted companies — and companies that spend less than ₹50 lakh annually on CSR are not required by law to have a CSR committee. They generally leave decision-making and action plans to company boards, who may have little to no experience working with NGOs or on social impact. Hence, their priorities tend to sway towards risk avoidance, compliance, and cost minimisation. Several larger companies have added CSR to the responsibilities of their HR or administration or communications head, rather than hiring professional leads, experienced in the social sector. 

Further, not every company is aware of all the facets of the CSR rules they are complying with. For instance, the 5% cap on administrative overhead costs is applicable only to a business’ internal CSR operation cost, not to the grantee’s administrative costs, as is widely perceived. Many CSRs make errors on safety with the unintended consequence of leaving an NGO with unpaid bills or worse still, drawing on its scarce core funding from other donors to pay for these essential costs.

How might this change? For one thing, companies can pool their resources with other mission-aligned CSR or social sector stakeholders, increasing their collective impact potential, and also hire or tap into professionals with experience working with NGOs. Since 2020, the number of philanthropic collaboratives, such as the Migrants Resilience Collaborative that supports migrant workers or Revive Alliance that finances semi- and unskilled workers, have more than doubled.

Learn from peer organisations

In addition, CSR funders would learn from peers who view organisational development and indirect costs differently. For example, ASK Foundation, the CSR arm of ASK Group, is working to enable better livelihoods for rural communities. Until four years ago, the ASK gave annual programme grants to NGOs, limited indirect cost coverage to between 5% and 10%, and did not provide organisational development expenses. Then, it shifted to a multi-year grant making approach and started providing up to 20% support for indirect costs. The shift in practice came after the CSR team presented benchmarks of the higher rates paid by peer CSR organisations and the beneficial effects of a stronger NGO partner on its programme outcomes. These peer examples and impact stories were instrumental in ASK getting board approval for changing its NGO funding policy.

The pandemic also exposed how vulnerable NGOs are to financial stress. Our research revealed that 54% of NGOs had less than three months in reserve funds in September 2020. This number stood at 38% before the pandemic. Without adequate reserves, NGOs cannot pay salaries or bills when faced with an unexpected funding shortfall.

The CSR programmes cannot currently contribute to NGO reserves/corpus by law. However, by covering indirect costs and organisational development, they still help to relieve financial pressure and make organisations more resilient. What’s more, corporates have considerable accounting and finance capabilities that they can offer to NGOs, in addition to their funding. NGOs don’t have clear financial reporting standards and many lack the internal capabilities to undertake a true-cost analysis. A corporate that has developed a relationship of mutual trust with an NGO could offer volunteer financial analysis services to help the NGO calculate true costs and communicate with other funders, and build financial resilience.

Not many CSR funders think this way right now, but CSR practices are maturing. As our research has shown, more CSR decision-makers are shifting their focus from compliance with CSR laws to the social impact they are making. CSR funders are following several themes to make this transition, such as hiring professionals, coming together in collaboratives, and defining and publishing their impact metrics to hold themselves accountable. The idea is to move beyond signing cheques to recognising that, ultimately, what’s good for Indian society is also good for business.

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest
kurukshetraiasacademy

kurukshetraiasacademy

Leave a Reply

Your email address will not be published.