1.India is the mother of all democracies, PM says at UNGA

Targets Pakistan, China for exporting terror, ignoring rules-based global order

Terming India the “mother of all democracies”, Prime Minister Narendra Modi launched a defence of the state of democracy in India at the United Nations General Assembly on Saturday, referring to his own journey as a politician as an example in his speech.

In a wide-ranging address, Mr. Modi spoke about climate change, poverty alleviation, developments in Afghanistan, and UN Security Council reform.

He also took aim at Pakistan and China respectively with references to support to terror groups and violating the international rules-based order.

However, Mr. Modi did not mention either country by name, in contrast to Pakistan Prime Minister Imran Khan who named India more than a dozen times, in a speech that focused on Kashmir. India later responded to his speech.

“I represent a country known as the mother of all democracies,” Mr. Modi said, adding that India had entered its 75th year of Independence but had democratic traditions for thousands of years.

Highlights

• PM Modi is the first world leader who is scheduled to address the UN General Assembly.
• The UN General Assembly session is expected tp commence from 6.30 pm IST.
• PM Modi reached New York after holding his first bilateral meeting with US President Joe Biden on September 24.
• He also attended his first in-person Quad summit, hosted by Joe Biden.

Theme of UNGA Debate

Theme for General Debate for year 2021 is “Building Resilience through hope to recover from Covid-19, rebuild sustainably, respond to the needs of the planet, respect the rights of people, and revitalise the United Nations”.

Who will address the session?

According to second provisional list of speakers of General Assembly, 109 heads of state and government are going to address the General Debate in person while 60 will deliver speeches by pre-recorded video statements.

PM Modi’s address

PM Modi had addressed the UN General Assembly session in the year 2019. In the year 2021, world leaders had submitted pre-recorded video statements for the session due to the coronavirus pandemic.

United Nations General Assembly (UNGA)

UNGA is one among the six principal organs of the United Nations (UN). It serves as the main policymaking and representative organ of the UN. It is also responsible for the UN budget, appointment of non-permanent members to the Security Council, appointment of the Secretary-General of the United Nations etc. it is the only UN organ where all the member states have equal representation.

2.India, U.S. find alignment on Indo-Pacific, fighting terrorism

However, no major deliverables on trade in joint statement

Following the bilateral discussions between Prime Minister Narendra Modi and U.S. President Joe Biden, India and the U.S. released a joint statement on their ‘Comprehensive Global Strategic Partnership’, that spoke of cooperation in regional groupings, defence manufacturing, and climate. The statement also denounced the use of “terrorist proxies”, and said Afghanistan should not become a safe haven for terror. However, it did not announce any major deliverables, especially so with trade, talks around which will recommence by the end of the year.

Titled, ‘A Partnership for Global Good’, the statement said the two countries would work with regional groups like ASEAN and with Quad members to promote a “free and open Indo-Pacific” and developing a trade and investment partnership “that increases prosperity for working families in both countries”.

On trade — which Mr. Modi, but not Mr. Biden, explicitly mentioned in his opening remarks at the Oval Office — the two sides said they looked forward to reconvening the India-U.S. Trade Policy Forum before the end of this year. They also said they would convene the CEO Forum and Commercial Dialogue early next year.

Speaking at a briefing after the meeting, Foreign Secretary Harsh Vardhan Shringla said India’s access to the U.S.’s preferential trade programme via the Generalized System of Preferences (GSP) programme, which was revoked under the Trump administration, was not off the table.

“But obviously, when you have a meeting of 90 minutes you cannot go into each and every issue that is there,” he said.

The Foreign Secretary said Mr. Biden confirmed that he stands committed to the position that the U.S. supports an India-South African initiative at the World Trade Organization for a TRIPS waiver (intellectual property rights) for COVID-19 vaccines.

On terrorism, the leaders reaffirmed their commitment to fight terror (including bringing to justice those responsible for the 26/11 Mumbai attacks).

The External Affairs Minister, who is on a two day visit to Russia, has said that Indo Pacific is one of the new concepts and approaches thrown up by the changing world. With various countries and international forums using the term Indo Pacific in their official statements, it is gaining currency in recent times.

 

The Term ‘Indo-Pacific’

• It is a recent concept. It was about a decade ago that the world started talking about the Indo-Pacific but its rise has been quite significant.
• One of the reasons behind the popularity of this term is an understanding that the Indian Ocean and the Pacific are a linked strategic theater.
• Also, the centre of gravity has shifted to Asia. The reason being maritime routes, the Indian Ocean and the Pacific provide the sea lanes. Majority of the world’s trade passes through these oceans.
  • There was a time before the cold war when the centre of gravity of the universe was across the Atlantic i.e. trade was actually transiting from the Atlantic but now it has shifted.
• The earlier term used to be Asia-Pacific, from which India was excluded.
  • This term was prevalent during the cold war time.
  • The shift to the term ‘Indo-Pacific’ shows the salience of India in the new construct.
• Terrorism and the fear of assertion by a particular country in the region are major threats to the Indo-Pacific region.
• The Indo-Pacific region includes world’s four big economies: USA, China, Japan and India.
• The term ‘Indo-Pacific’ is interpreted differently by different stakeholders.
  • India considers the region as an inclusive, open, integrated and balanced space. India continuously emphasises on strategic inter-connections, common challenges and opportunities between the Indian Ocean and the Pacific.
  • The U.S. considers it to be a free and open Indo-Pacific, highlighting the importance of rules or norms of conduct in the region, thus trying to contain the role of China in the region.
  • The ASEAN countries look at Indo-Pacific as a consociational model, thus bringing in China not only for the sake of giving it some stakeholdership but looking for ways to cooperate with it in the region.

Note:

• Consociationalism is a stable democratic system in deeply divided societies that is based on power sharing between elites from different social groups.

India’s Perspective of Indo-Pacific

• A lot of India’s special partners, the US, Australia, Japan and Indonesia actually look at Indo-Pacific as Asia Pacific plus India. They try to embed India into the strategic dynamic of Asia Pacific.
  • They want India’s presence in the South China Sea, East China Sea, basically to counter China.
• India however, seeks to cooperate for an architecture for peace and security in the region. The common prosperity and security require the countries to evolve, through dialogue, a common rules-based order for the region.
• For India, Indo-Pacific stands for a free, open, inclusive region. It includes all nations in the geography and also others who have a stake in it. In its geographical dimension, India considers the area from the shores of Africa to the shores of America.
• India supports rule-based, open, balanced and stable trade environment in the Indo-Pacific Region, which lifts up all nations on the tide of trade and investment. This is the same as what the country expects from the Regional Comprehensive Economic Partnership (RCEP).
• Unlike China, India seeks a unified ASEAN, not a divided one. China tries to play off some ASEAN members against others, thereby in a way executing ‘divide and rule’ conquest strategy.
• India does not comply with the US version of Indo-Pacific, that seeks to contain Chinese dominance. India is rather looking for the ways through which it can work together with China.
• India is looking for democratising the region.
  • Earlier, the region used to be almost like an American lake. However, there exists a fear that the region will become Chinese lake now. Scarborough Shoal dispute is an example here.
  • India doesn’t want hegemony of any player in the region. India is working in trilaterals such as India-Australia-France, India-Australia-Indonesia to ensure that China does not dominate in the region.

China: A Threat or a Challenge

• China has been a threat to the Asia Pacific countries and is posing threat to Indian interests in the Indian Ocean as well.
  • China has a hold over Hambantota port (Sri Lanka), which is just a few hundred miles off the shores of India.
  • China is supplying military equipment to India’s neighbours such as submarines to Myanmar, frigate to Sri Lanka, equipment to Bangladesh and Thailand, thus, in a way, colonising the region.
• ASEAN: Some of the member countries of ASEAN have been under the Chinese influence and thus pose a threat to erode ASEAN’s solidarity with respect to the concept of Indo-Pacific.
  • However, China is ASEAN’s largest trading partner and can hardly be sidelined by the entire grouping which further threatens India’s relations with the grouping.
• Southeast Asia is at the centre of Indo-Pacific and ASEAN is important for India, especially for the country’s Act East Policy. Also, ASEAN countries know that to balance China in the region, India’s presence is necessary.
• Despite several differences, the interests of India-China on some issues such as globalisation, climate change etc. match.
  • Also, India and China are members of several international groupings such as BRICS, SCO etc.
  • China therefore is viewed as more of a challenge to India’s stand in the Indo-Pacific than a threat to its significance in the region.

3.mRNA vaccine manufacturers loath to share know-how

Moderna said it will not enforce patents related to its vaccine during the pandemic, but it is yet to transfer technology to the South African hub

While many low- and middle-income countries have received by far insufficient supply of vital COVID-19 vaccines so far, vaccine inequity has been most striking in Africa. Of the nearly 6 billion doses administered globally, only 2% have been in Africa. And less than 3.5% of people in Africa have been fully vaccinated till date.

In contrast, 54% of the total population in the U.S. is fully vaccinated. After approving booster shots for the immunocompromised people, on September 22, the U.S. FDA greenlighted booster shots for people older than 65 years, adults between 18 and 64 years who are at high risk of severe disease and those at high risk of getting infected and at high risk of serious complications of COVID-19 including severe disease.

Facilitating manufacture

With attempts by the African Union to buy vaccines being unsuccessful, the continent has to wait for donations. It is to correct this anomaly and ensure that low- and middle-income countries can have easy access to vaccines to fight the pandemic that, in April, the WHO and COVAX wanted these countries to produce COVID-19 vaccines themselves. For this, the global health body is facilitating the establishment of technology transfer hubs to transfer necessary technology to manufacture COVID-19 vaccines and provide training to interested manufacturers in these countries.

The initial focus has been on developing vaccines using the mRNA vaccine platform and expanding to other technologies in the future. According to Dr. Gagandeep Kang, Professor of Microbiology at CMC Vellore, the reason why WHO zeroed in on mRNA vaccines is that such vaccines have been found to be extremely efficacious in protecting against COVID-19, and protection is maintained to a large degree against variants. Second, the technology needed to manufacture mRNA vaccines is very flexible and allows relatively rapid adaptation of the vaccine to variants, if needed. Third, such vaccines can be produced by manufacturers of medicines and medical active substances, and finally, the availability of several technical features that are free of Intellectual Property Rights in many countries of the world.

Dr Kang is also the vice-chair of the Coalition for Epidemic Preparedness Innovation (CEPI) which the is part of COVAX that is identifying technology partners for the hub

The WHO, a South African consortium — Biovac, Afrigen Biologics and Vaccines, a network of universities and the Africa CDC — and COVAX partners are working to set-up the first technology transfer hub in South Africa. The assumption is that companies such as Pfizer and Moderna will show a “willingness to transfer technologies”.

As early as October last year, Moderna announced that it will not enforce patents related to its mRNA vaccine during the course of the pandemic. “We feel a special obligation under the current circumstances to use our resources to bring this pandemic to an end as quickly as possible. Accordingly, while the pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic,” Moderna said last year.

Promises unkept

However, according to an exclusive Reuters report, the promise made last year by Moderna is not translating into reality as the company is yet to reach a deal to transfer the technology to the South African hub. The New York Times quoted Dr. Martin Friede, a WHO official and Charles Gore, who runs a United Nations-backed nonprofit organisation, Medicines Patent Pool as saying that they have had “trouble getting Moderna to the negotiating table”.

“We would love to get a discussion with Moderna, about a license to their intellectual property — this would make life so much simpler, but for the moment all attempts have resulted in no reply,” Dr. Friede told The New York Times.

It also reported a Moderna spokeswoman saying that the company was “willing to license its intellectual property for COVID-19 vaccines to others for the post pandemic period.” In effect, contrary to the promise made last year, the company is unwilling to license its mRNA vaccine IP during the pandemic and transfer technology to the South African hub. Vaccination is one sure way to protect people from severe disease and death and end the pandemic.

Research funded

Incidentally, unlike Pfizer that did not take any funding from the U.S. government to develop its vaccine, Moderna was given $1 billion as part of Operation Warp Speed to specifically fund its research efforts. Moderna’s vaccine was in part developed by National Institutes of Health.

Dr. Lawrence Gostin, faculty director of the O’Neill Institute for National and Global Health Law and Georgetown University Law Center tweeted on September 22: “LMIC companies are ready & able to produce mRNA vaccines, but Pfizer-BioNTech & Moderna are refusing to share technology & know-how. LMICs are fed-up with going hat-in-hand to rich countries for donations, which never come in time or at the scale needed.” He then added: “Biden can legally compel mRNA manufacturers to sign technology transfer contracts in exchange for reasonable compensation. The DPA [Defense Production Act of 1950] confers vast powers to act for the national defense. The DPA specifically includes “emergency preparedness.”

Under pressure from U.S. President Joe Biden to enter into joint ventures to contract manufacture the vaccines in low- and middle-income countries, Pfizer took an easy route. It entered into an agreement with the U.S. to sell an “additional 500 million doses at a not-for-profit price for donation to low- and lower-middle-income countries and the organisations that support them”, according to a Pfizer release. The company had agreed to sell the first lot of 500 million doses in June. However, deliveries of the initial 500 million doses began only in August 2021 and only 300 million are expected to be shipped this year. The total one billion doses are expected to be delivered only by next September.

In July, Pfizer signed a deal with South Africa’s Biovac Institute to help manufacture around 100 million doses annually of the mRNA vaccine for distribution exclusively to 55 member States of the African Union. However, as per the Pfizer press release, the drug substance will be manufactured in Europe and shipped to Biovac. Clearly, the agreement is for “fill and finish” of the vaccine, which does not require technology transfer. Also, manufacturing of finished doses will commence only next year.

Reaching targets

Even as President Biden wants 70% of the global population to be vaccinated by September next year, much of the low- and middle-income countries may not come anywhere close to the target unless companies freely share their technology and know-how.

“I see no reason why only one or two companies should be considered when there are several companies that work on mRNA products,” Dr. Kang says. “Moderna is not the only company with the technology to transfer — it was just potentially the easiest. I have no idea why Moderna is not willing to participate given that they have set up contract manufacturing on other continents. However, WHO and COVAX have other potential partners with whom engagement is being explored.”

mRNA Vaccine vs Traditional Vaccines:

• Vaccines work by training the body to recognise and respond to the proteins produced by disease-causing organisms, such as a virus or bacteria.
  • Traditional vaccines are made up of small or inactivated doses of the whole disease-causing organism, or the proteins that it produces, which are introduced into the body to provoke the immune system into mounting a response.
  • mRNA vaccines tricks the body into producing some of the viral proteins itself.
    • They work by using mRNA, or messenger RNA, which is the molecule that essentially puts DNA instructions into action. Inside a cell, mRNA is used as a template to build a protein.
• Functioning of mRNA Vaccines:
  • To produce a mRNA vaccine, scientists produce a synthetic version of the mRNA that a virus uses to build its infectious proteins.
  • This mRNA is delivered into the human body, whose cells read it as instructions to build that viral protein, and therefore create some of the virus’s molecules themselves.
  • These proteins are solitary, so they do not assemble to form a virus.
  • The immune system then detects these viral proteins and starts to produce a defensive response to them.
• Advantages of Using mRNA based Vaccines:
  • mRNA vaccines are considered safe as mRNA is non-infectious, non-integrating in nature, and degraded by standard cellular mechanisms.
  • They are highly efficacious because of their inherent capability of being translatable into the protein structure inside the cell cytoplasm.
  • Additionally, mRNA vaccines are fully synthetic and do not require a host for growth, e.g., eggs or bacteria. Therefore, they can be quickly manufactured inexpensively to ensure their “availability” and “accessibility” for mass vaccination on a sustainable basis.

Mission Covid Suraksha

• Mission Covid Suraksha is India’s targeted effort to enable the development of indigenous, affordable and accessible vaccines for the country.
• The Centre had announced this package during the third economic stimulus.
• The Mission with its end-to-end focus from preclinical development through clinical development and manufacturing and regulatory facilitation for deployment consolidate all available and funded resources towards accelerated product development.
• It is led by the Department of Biotechnology and implemented by a dedicated Mission Implementation Unit at Biotechnology Industry Research Assistance Council (BIRAC).

BIRAC

• Biotechnology Industry Research Assistance Council (BIRAC) is a not-for-profit Section 8, Schedule B, Public Sector Enterprise.
• It has been set up by the Department of Biotechnology (DBT) as an Interface Agency to strengthen and empower the emerging Biotech enterprise to undertake strategic research and innovation, addressing nationally relevant product development needs.

4.‘Will conclude BPCL sale, LIC IPO by Q4’

CEA says privatisation of Air India proceeding well, confident of completing planned disinvestments

The government remains confident of completing the proposed stake sales in Life Insurance Corporation of India and Bharat Petroleum Corporation Ltd. (BPCL) by the end of this fiscal year, Chief Economic Adviser Krishnamurthy Subramanian said on Saturday.

“Privatisation of Air India is proceeding well… two bids have been received. Bharat Petroleum [privatisation] and LIC’s listing we are confident should happen by fourth quarter of this year,” Dr. Subramanian said speaking at the PGPMAX Leadership Summit 2021 of the Indian School of Business (ISB) in Hyderabad.

Describing the three stake sales as important components of the ₹1.75 lakh crore proceeds the Budget had estimated this year from privatisation, the Chief Economic Adviser said the enterprise policy focused on private sector was one of the key pillars of reforms being pursued by the government. Barring three to four public sector undertakings in three or four strategic areas including defence and oil and gas, the rest would be “privatised or taken into right hands so that efficiency gains can come about,” he added.

The proposed privatisation of two public sector banks (PSBs) was also part of the policy. Privatisation of the two banks would be really critical considering PSBs were a bellwether of socialism, he said.

“In another 8-10 years, the Indian economy will look very different and much more efficient to what it is today when this process will be taken to its logical conclusion,” he said, adding that the current year would go down in history as a very important year for privatisation.

Noting that the Atmanirbhar Bharat idea was based on the private sector and an emphasis on achieving self reliance as opposed to the model until 1991 that focused on self-sufficiency, Dr. Subramanian said competition brought out the best.

‘Change in mindset’

The CEA said there had also been a change in the mindset with the stress on “respecting private sector rather than chase guys in the private sector; this is something I feel will be enduring”. The private sector needed to be empowered, he said, asserting that trade and enabling trade were part of India’s DNA.

To a query on a V-shaped recovery post pandemic, the CEA asserted that India was the only country that had converted the crisis into an opportunity. “The V-shaped recovery was really predicated on the understanding of the fundamentals of economy,” Dr. Subramanian said.

Background

The Union Budget 2021 has announced the privatisation of two public sector banks and one general insurance company in the upcoming fiscal 2021-22.

• The move, coming after 51 years of nationalisation of government-owned banks in 1969, will give the private sector a key role in the banking sector.
• Presently, India has 22 private banks and 10 small finance banks.

Key Points

The government decided to nationalise the 14 largest private banks in 1969. The idea was to align the banking sector with the socialistic approach of the then government.

• State Bank of India (SBI) had been nationalised in 1955 itself, and the insurance sector in 1956.
  • Various governments in the last 20 years were for and against privatisation of Public Sector Undertaking (PSU) banks. In 2015, the government had suggested privatisation but the then Reserve Bank of India (RBI) Governor did not favour the idea.
  • The current steps of privatisation, along with setting up an Asset Reconstruction Company (Bad Bank) entirely owned by banks, underline an approach of finding market-led solutions to challenges in the financial sector.
• Reason for Privatisation:
  • Degrading Financial Position of Public Sector Banks:
    • Years of capital injections and governance reforms have not been able to improve the financial position of public sector banks significantly.
    • Many of them have higher levels of stressed assets than private banks, and also lag the latter on profitability, market capitalisation and dividend payment record.

• Part of a Long-Term Project:
  • Privatisation of two public sector banks will set the ball rolling for a long-term project that envisages only a handful of state-owned banks, with the rest either consolidated with strong banks or privatised.
    • The initial plan of the government was to privatise four. Depending on the success with the first two, the government is likely to go for divestment in another two or three banks in the next financial year.
  • This will free up the government, the majority owner, from continuing to provide equity support to the banks year after year.
    
    
    • Through a series of moves over the last few years, the government is now left with 12 state-owned banks, from 28 earlier.
  • Strengthening Banks:
    • The government is trying to strengthen the strong banks and also minimise their numbers through privatisation to reduce its burden of support.
  • Recommendations of Different Committees:
    • Many committees had proposed bringing down the government stake in public banks below 51%:
      • The Narasimham Committee proposed 33%.
      • The P J Nayak Committee suggested below 50%.
    • An RBI Working Group recently suggested the entry of business houses into the banking sector.
• Selection of Banks:
  • The two banks that will be privatised will be selected through a process in which NITI Aayog will make recommendations, which will be considered by a core group of secretaries on disinvestment and then the Alternative Mechanism (or Group of Ministers).
• Issues with PSU Banks:
  • High Non-Performing Assets (NPAs):
    • After a series of mergers and equity injections by the government, the performance of public sector banks has shown improvement over the last couple of years. However, compared with private banks, they continue to have high NPAs and stressed assets although this has started declining.
  • Impact of Covid:
    • After the Covid-related regulatory relaxations are lifted, banks are expected to report higher NPAs and loan losses.
      • As per the RBI’s recent Financial Stability Report, gross NPA ratio of all commercial banks may increase from 7.5% in September 2020 to 13.5% by September 2021.
    • This would mean the government would again need to inject equity into weak public sector banks.
• Performance of Private Banks:
  • Rising Market Share:
    • Private banks’ market share in loans has risen to 36% in 2020 from 21.26% in 2015, while public sector banks’ share has fallen to 59.8% from 74.28%.
  • Better Products and Services:
    • Competition heated up after the RBI allowed more private banks since the 1990s. They have expanded the market share through new products, technology, and better services, and also attracted better valuations in stock markets.
      • HDFC Bank (set up in 1994) has a market capitalisation of Rs. 8.80 lakh crore while SBI commands just Rs. 3.50 lakh crore.
• Issues with Private Banks:
  • Governance Issues:
    • Industrial Credit and Investment Corporation of India (ICICI) Bank MD and CEO was sacked for allegedly extending dubious loans.
    • Yes Bank CEO was not given extension by the RBI and now faces investigations by various agencies.
    • Lakshmi Vilas Bank faced operational issues and was recently merged with DBS Bank of Singapore.
  • Under-reported NPAs:
    • When the RBI ordered an asset quality review of banks in 2015, many private sector banks, including Yes Bank, were found under-reporting NPAs.