1. Lessons from Ukraine war: UAVs, missiles are likely future threats
Protective cover: Efforts are under way by the Army to put in place a layered air defence net for various ranges and altitudes.
Army carries out detailed analysis of the conflict; loitering munitions are another major threat; analysis has shown that the best air defences against them are high-rate gun systems, better optic sights, fragmented ammunition and ASEA radars
Missiles and Unmanned Aerial Vehicles (UAV) are likely to be a major future threat, calling for a mitigation strategy as part of an integrated air defence, and underlining the need for a comprehensive air defence solution.
That is the biggest takeaway for India from an Army analysis of the war in Ukraine, in the context of the air battle fought there and its implications for the Indian air defence, according to defence sources.
With the Russia-Ukraine conflict having lasted almost a year now, the Army is also feeling the pinch in terms of spares and ammunition, particularly for its air defence and armoured fleets, which are largely of Russian origin, a fact recently acknowledged by Army chief General Manoj Pande.
Earlier this month, General Pande said that the Army had carried out a detailed analysis of the various lessons that the conflict threw up for India — on weapon systems, tactics and operational procedures. These lessons will be applied and incorporated in the Indian context, he said.
“For ground-based air defences (GBAD), the most important aspect is Survivability against Suppression and Destruction of Air Defence (SEAD/DEAD) operations by the adversary. Deconfliction of air defence missiles with interceptors in exclusive engagement zones and decentralised execution of air defence function is a must,” said a source, elaborating on the lessons for GBAD to be learned,which have emerged crucial, from the Russian offensive and the Ukrainian response.
The Russian Air Force attempted to gain control of Ukrainian air space as a prelude to the war. In the first three days of the conflict, there was an average of 140 sorties per day, with about 10% of the Russian aircraft lost to the Ukrainian air defences, analysis shows. Russian strike operations after the first three days were largely confined to stand-off launches using missiles, sources said, adding that this was also prompted by Russia’s heavy losses due to Ukraine’s Man Portable Air Defence Systems (MANPADS).
Ukrainian GBADs shot down almost 50% of Russian cruise and ballistic missiles launched against multiple targets, despite the fact that they were operating in tandem with Russia’s Shahed-136 UAVs, the source observed.
Loitering munitions are another major threat that has emerged in this war posing asymmetric challenge to both armour as well as air defences. Analysis has shown that the best air defences against them are high rate gun systems, better optic sights, fragmented ammunition and Active Electronically Scanned Array (ASEA) radars. MANPADS have been noticed to be highly effective when in range and with night vision, the source said. This is an area that the Indian Army has been looking to modernise for a while, with limited success.
The Army’s air defence is in the midst of a major transition. Several inductions are in the pipeline and efforts are under way to put in place a layered air defence net for various ranges and altitudes, which has only gained urgency post the Ukraine war.
As part of modernisation efforts, a ₹200 crore networking and automation project — on the lines of the Indian Air Force’s Integrated Air Command and Control System (ICCCS) network — is now ready. “All tests have been completed and it is ready to be fielded. Integration is distributed at all levels. It is scheduled to go for approval of the competent financial authority by March 31,” said sources who know of the development.
The Defence Acquisition Council (DAC) which met on January 10 had given its approval for procurement of a Very Short Range Air Defence Systems (VSHORAD-Infrared Homing) missile system currently under design and development by the Defence Research and Development Organisation (DRDO).
At the short-range level, the Army has the indigenous Akash surface-to-air Missile (SAM). A quick-reaction SAM is under development by the DRDO, with a range of 25-30 km. At the next range, the medium-range surface-to-air missile (MRSAM) project jointly developed by the DRDO with Israel has now entered production, sources said.
General Pande had also stated that sustenance of weapon systems and equipment, in terms of spares and ammunition, is one issue that the Army has addressed.
2. ‘India has done well in terms of aggregate growth over the last year’
Former Chief Economic Adviser hopes the Budget will treat unemployment and alarming inequality as big challenges, and the Finance Minister will announce measures to turn the economy around
The erosion of India’s institutions is a worry and leaders should tackle this problem on an urgent basis, says Kaushik Basu, former Chief Economic Adviser to the Government of India. Excerpts:
How is India’s economy doing at the moment?
In terms of aggregate growth over the last year, India has done well, especially in the context of the current global situation, where several advanced economies are on the brink of a recession. There are two reasons for India’s good performance. First, the RBI has done a skilful job in terms of monetary policy, managing interest rates judiciously to dampen inflation, and it has used the foreign exchange reserves strategically — releasing and buying dollars to hold the exchange rate within a reasonable range. Second, India has conducted its foreign policy with a measure of finesse and this has had a positive fallout on the economy. As the cracks between the West and China grow deeper, global players are now looking at India as a potential investment destination.
However, this relative good performance must not lead to complacency. India’s growth of 8.7% in 2021-22 is good, but India was among the weakest performers in the world in 2020-21 with a growth of minus-6.6%. So, most of the growth in 2021-22 was the growth of climbing out of the well. The average annual growth from 2020 to 2023 is 2.77%, which is much below India’s performance in the past and below that of many other nations.
The state of the economy is not a major talking point today despite several consecutive years of slowing growth. Can you elaborate on why economic growth matters?
India’s economy grew slower than in the previous year for five consecutive years — from 2016 to 2021. I believe growth matters, but I do not agree with economists who push growth to the margins. The mistake is to treat growth as an end in itself. Its importance is as an instrument to spread well-being in the entire population. Unfortunately, the growth that is occurring in India is disproportionately at the top-end. The rich are getting richer. We do not have enough data but all signs are that the lower middle classes are facing negative growth even while overall GDP growth is positive. India’s youth unemployment rate stands at 28.3%, which is almost double that of most east and southeast Asian nations. Clearly, these youngsters without work are not getting a share of the nation’s overall GDP growth.
My hope is that the Union Budget that Finance Minister Nirmala Sitharaman will present soon will treat unemployment and the alarming inequality as the big challenge and that she will announce measures to turn the economy around. I say this aware that she has a hard act to perform because not only is India’s debt-to-GDP ratio high, but a large part of the government’s revenue receipts will have to be spent on paying interest on past debt. In the case of the Central government, in 2022-23, it is expected that 43% of the revenue receipts will be used on interest payment.
How would you rate the performance of the Modi government since 2014 in implementing 1991-style structural reforms?
The Modi government has done some important reforms, for which it deserves credit. Among them are the Insolvency and Bankruptcy Code of 2016, and the Goods and Services Tax.
But there have also been major mistakes. The demonetisation of 2016 caused a huge setback to India’s economy and also to India’s reputation for professional policymaking. Second, the lockdown of 2020 was poorly done, with little attention to the well-being of workers, farmers and small businesses. Hence, the overall picture is mixed.
How would you rate the quality of India’s institutions today?
What is not always appreciated is that an economy relies not just on economic policy but also on political, legal and social institutions, and on trust and confidence among citizens. These have been eroded over the last few years with increasing polarisation.
This erosion, unlike a bad economic policy, does not have an immediate effect on the economy but it weakens the foundations and can cause long-run damage.
The most outstanding years of India’s growth were from 2003 to 2011, from the time of Atal Bihari Vajpayee’s government to Manmohan Singh’s.
One clear sign that the institutional foundations and trust were growing was India’s investment rate, which rose steadily. In 2011-12, the investment rate reached 39%. This has come down steadily and in 2019-20 was at 32.3%.
3. Editorial-1: Revisit the tax treatment of tobacco products
Adam Smith, in his famous work The Wealth of Nations, argued that commodities such as sugar, rum and tobacco, though not necessary for life, are widely consumed, and thus good candidates for taxation. Research in India and around the world supports the use of taxes to regulate tobacco consumption. However, in India, tobacco taxes have not increased significantly since the implementation of the Goods and Services Taxation (GST) over five years ago, making these products increasingly affordable, as recent studies show.
In 2017, the economic burden and health-care expenses due to tobacco use and second-hand smoke exposure amounted to ₹2,340 billion, or 1.4% of GDP while India’s average annual tobacco tax revenue stands at only ₹537.5 billion. Despite the government’s goal of making India a $5 trillion economy, the increasing affordability of tobacco poses a threat to this vision and could harm GDP growth. Tobacco use is also the cause for nearly 3,500 deaths in India every day, which impacts human capital and GDP growth in a negative way.
The issue is with the tax system
The current GST system for tobacco taxation in India has features that are hindering efforts in regulating consumption. One issue is the overuse of ad valorem taxes, which are not effective in reducing consumption. Many countries use a specific or mixed tax system for harmful products. The GST system in India relies more on ad valorem taxes than the pre-GST system, which primarily used specific excise taxes. Many countries with a GST or value-added tax (VAT) also apply an excise tax on tobacco products. In India, the share of central excise duty in total tobacco taxes decreased substantially from pre-GST to post-GST for cigarettes (54% to 8%), bidis (17% to 1%), and smokeless tobacco (59% to 11%). A large part of the compensation cess as well as the National Calamity Contingent Duty, or NCCD (it is levied as a duty of excise on certain manufactured goods specified under the Seventh Schedule of the Finance Act, 2001) currently applied on tobacco products is specific. If specific taxes are not revised regularly to adjust for the inflation, they lose their value. Inflation indexing should be made mandatory for any specific tax rates applied on tobacco products.
Discrepancies in product taxation
There is a large discrepancy in taxation between tobacco products. Despite cigarettes accounting for only 15% of tobacco users, they generate 80% or more of tobacco taxes. Bidis and smokeless tobacco have low taxes, encouraging consumption. Taxes should be made more consistent across all tobacco products, as none is more or less harmful than the others. The main principle behind tobacco taxation should be in protecting public health. Notably, bidis are the only tobacco products without a compensation cess under GST, despite being just as harmful as cigarettes. This lack of a cess on bidis has no public health rationale. The current six-tiered tax structure for cigarettes is complex and creates opportunities for cigarette companies to avoid taxes legally by manipulating cigarette lengths and filters for similarly named brands. Instead, the tiered system should be eliminated or reduced to two tiers, which can then be phased out over time to have a single tier.
The GST rates on certain smokeless tobacco ingredients such as tobacco leaves, tendu leaves, betel leaves, areca nuts, etc. have either zero or 5%-18% GST. It is important that all products that are exclusively used for tobacco making are brought under the uniform 28% GST slab. This will generate the right public health message — that all tobacco products are bad and their consumption needs to be discouraged.
Smokeless tobacco products in India are taxed ineffectively due to their small retail pack size (often 1/2 gram or less) which keeps the price low. To standardise and increase the retail price, mandatory standardised packing should be implemented for smokeless tobacco pouches (at least 50 g-100 g). This will also make it easier to implement graphic health warnings on the packaging.
GST currently exempts small businesses with less than ₹40 lakh annual turnover. Many smokeless tobacco and bidi manufacturers operate in the informal sector, which reduces the tax base on these products. While these exemptions are intended to protect small businesses, the public health rationale requires that they not be extended to businesses that produce or distribute tobacco products. Therefore, conditions should be imposed on these exemptions so that tobacco businesses do not benefit from them.
Before GST, taxing tobacco was a way for State governments to increase revenue and regulate consumption. For example, Rajasthan had a 65% VAT on tobacco products. After GST, States can no longer raise taxes on tobacco, which hinders their ability to increase revenue and regulate consumption. While a uniform tax across the country is good, not increasing it at the national level at regular intervals harms public health.
It is cause for concern that while most countries regularly increase taxes on tobacco products to make them less affordable, India has not increased taxes on any tobacco products in over five years. This may undo much of the progress seen in a 17% reduction in tobacco use from 2009-10 to 2016-17. Both the GST Council and the Union Budget should take the opportunity to significantly increase taxes on all tobacco products, including bidis, cigarettes, and smokeless tobacco, through hikes in excise duties or compensation cess.
The GST system for tobacco taxation is hindering efforts in regulating consumption and protecting public health
4. Editorial-2: In NREGA reforms, prioritise the worker and her dues
In reforms to the National Rural Employment Guarantee Act, an administrative and fiscal efficacy-alone focus would be a flaw
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is no stranger to reform. In fact, the zeal with which reforms are introduced often outpaces the capacity to adapt. Every time the administrative system gets back on its feet after a reform move, it is hit by another. Poorer States struggle more to adapt when compared to those that are better off because of weaker administrative capacity. The most recent concern of the central government is over the programme’s “regressive” spending pattern, where poorer States spend less NREGA funds than better-off ones. As if on cue, a committee to suggest reforms has been constituted instead of listening to the long-standing demands of workers and their collectives. NREGA is underperforming because its most basic design principles have been forgotten or wilfully ignored. We remind the committee of this simple message.
Address violation of entitlements
The first is: address delays in wage payments to restore the faith of workers in the programme. In 2016, the Supreme Court of India directed the government to ensure that wages were paid on time, calling the act of making workers wait for wages for months as equal to “forced labour”. However, there has not been even a single decisive step taken by the Ministry since then. Instead, the process of wage payments created by the central government has become even more convoluted. For instance, seven or more functionaries have to sign off before payment due to a worker can be approved (stage one of the wage payment cycle). This does not even include the series of delays from when the payment is approved till payment is made (stage two of the cycle). In contrast, the processing of loans from private banks is done in fewer steps. The point is the Ministry of Rural Development must simplify the payment process and has to be transparent about pending wage payments in stage one and two so that bottlenecks can be corrected.
The second is: strengthen implementation capacities where expenditure is low instead of curbing expenditure where employment generation is high. States which are spending more are implementing the programme better because they have better capacities (as several studies including the government’s own Economic Survey concluded in 2016). For a universal, demand-based social security programme such as NREGA, reforms cannot be based on ‘targetting’ better. There has to be a focus on exclusion and not inclusion “errors”. Instead of using expenditure and income poverty as the only markers, exclusion must be identified at the household level. There is enough evidence to show that NREGA is fairly well targeted, benefiting the poorest, especially Scheduled Caste (SC) and Scheduled Tribe (ST) families. However, there is scope for improvement. For instance, panchayats, blocks and districts where employment of SCs and ST families is lower than their proportion in the population must be identified. This would indicate pockets where the most marginalised are being nudged out of the programme. Similarly, panchayats where the average wage being paid is lower than the notified wage rate must be identified as well. This would indicate places where the implementing authorities need to be hauled up for failing to ensure work is completed — which in turn deprives workers of their minimum wage. The online Management Information System of NREGA can flag areas where entitlements are violated instead of being used as a tool by bureaucrats to centralise and control things.
The third is: run the programme like a demand-based law, and not a scheme. Intermittent and unpredictable fund releases by the central government are one of the fundamental reasons why State governments are unable to ensure the full potential of NREGA. As of today, ₹18,191 crore in liabilities is due to 24 States. Poor performing States, on account of inadequate funds, typically discourage and often deny demand for work.
The case of Bihar
Based on our experience of organising NREGA workers in several districts of Bihar, we have found that even when we have been able to get receipts for our work demand applications, worksites are not opened on time, and the work provided does not match demand. The Kaam Mango Abhiyan was launched by the Ministry of Rural Development in 2013 — due to declining demand of work under NREGA), the Union Ministry of Rural Development launched this campaign, which literally means “ask for work” — with the help of civil society organisations in six districts in six States; 53,000 workers demanded work in Katihar district alone and dated receipts were provided. Unfortunately, the historic numbers of workers demanding work were let down by the Ministry because funds to honour the demand were not released to States in time. Lessons from such campaigns are part of the institutional memory of government. In a related instance, workers in Barari block of Katihar were on indefinite strike as they have not been provided work and wages for the work they have done. Given the unique financial needs of this programme, the General Financial Rules need to be reimagined so that budgetary allocations remain flexible to the need for funds by States in response to demands for work.
The fourth is: make discussions on any proposed reforms participatory. NREGA emerged from the demands of a vibrant peoples’ movement across India and its cornerstones have been its path-breaking provisions for public accountability. Building on the spirit of public participation, which gave NREGA an institutional architecture that was well before its time, is needed. There has to be a leveraging of consultative processes and forums built into it, such as the State and Central Employment Guarantee Councils. State governments have played a pivotal role in the successes and failures of NREGA, and any proposed reforms must be tabled in State assemblies in addition to Parliament along with bringing civil society organisations, worker unions and representatives of self-help groups into the discussion.
‘Top down’ reforms as a problem
The fifth is: it is time the Government of India makes an earnest attempt to map the impact of each of its “reforms” on access to and the expenditure of NREGA, particularly in poorer States. A slew of “reforms” — the majority have focused on centralisation such as the electronic fund management system, geo-tagging of assets and a national mobile monitoring system (NMMS) — have disrupted implementation. Almost 3,000 women NREGA workers in Muzaffarpur district are protesting against the NMMS application after the app failed to capture their attendance. They have been denied their wages. The committee members must meet the protesting workers when they visit various States. The central government must be held accountable for the denial of entitlements to NREGA workers as a result of top down “reforms” that workers had no say in designing.
The article is also an appeal to this committee to consider some principles in order to guide its discussions and recommendations. Reforms to NREGA must prioritise the access of workers to entitlements with ease and dignity, rather than focus on administrative and fiscal efficacy alone.
The three writers are associated with the Peoples’ Action for Employment Guarantee and the National Rural Employment Guarantee Act (NREGA) Sangharsh Morcha
5. Opinion-1: Shortfall of specialist doctors in rural areas was 80% in 2022
It was acute in the northern and eastern States of India
The shortfall of specialist doctors in community healthcare centres (CHCs) in rural areas has increased over the past decade in India. Surgeons, obstetricians, gynaecologists, physicians and paediatricians were considered specialists for this analysis. In 2012, the shortfall of specialists was already high at 69.7%, but it increased further to 79.5% in 2022.
As per the norms of the Indian Public Health Standards, a CHC is required to be manned by four medical specialists: surgeon, physician, obstetrician/gynaecologist, and paediatrician. As on March 31, 2022, according to the 2021-22 Rural Health Statistics, released recently, 21,920 specialist doctors were required in rural areas across India. However, only 4,485 were available, which means that there was a shortfall of 17,435 specialists. This translates into a shortfall of 79.5% (17,435 as a percentage of 21,920), which is nearly 10% points more than a decade ago (Chart 1). The shortfall of obstetricians/gynaecologists was 74.2% in 2022, which is a 9.1% point increase from a decade ago. The shortfall of surgeons was 83.2% in 2022, a 8.3% point increase from 10 years ago.
There was a shortfall of specialists in urban CHCs too, but this was far lower than the shortfall in rural CHCs. In urban CHCs, there was a 46.9% shortfall in 2022, which is 32.6% points less than the shortfall in rural CHCs. Therefore, the crisis was more acute in rural areas.
While these numbers show a shortfall of specialists, it is important to understand that the calculation is done with the assumption that there should be four specialists in every CHC. This is crucial because a State with a lower number of CHCs than what is required can escape scrutiny when it comes to the shortfall of specialists, as the number of such doctors required is low to start with. So, it becomes important to analyse the number of CHCs in each State. Chart 2 shows the shortfall percentage and surplus percentage of CHCs in each State as of March 2022. Both figures were arrived at by using the requirement levels based on the prescribed norms calculated using the 2022 rural population estimates. In each State, the number off unctioning CHCs was subtracted from the required number of CHCs to arrive at shortfall or surplus. Kerala had a surplus of 171% — the highest in India. While the requirement was 78 CHCs, the State had 211 in place. It was followed by Himachal Pradesh (63% surplus) and Tamil Nadu (28%) among the major States. Of the 27 States considered for analysis, only 10 had either a surplus or the required number; the rest had a shortfall. Among the States with a shortfall, Bihar (71% shortfall), Andhra Pradesh (64%), Maharashtra (56%), Karnataka (45%) and Uttar Pradesh (44%) stood out.
The number of States with a shortfall in CHCs slightly reduced in 2022 from a decade ago. Chart 3 shows the shortfall percentage and surplus percentage of CHCs in each State in 2012. In 2012, the number of States with a shortfall was 20; this reduced to 17 in 2022.
In 2012, all the northern States had a shortfall of CHCs, while in 2022, only Punjab and Himachal Pradesh did not. In the east, except Odisha, all the States had a shortfall in both years. India’s shortfall of CHCs remained unmoved at 36% in both years.
Chart 4 shows the shortfall percentage of specialists in 2022 only among the States that had a shortfall of CHCs in 2022. Tripura, Meghalaya and Sikkim had a nearly 100% shortfall. This means the number of specialists in these regions was zero or close to zero. The shortfall of specialists was lowest in Karnataka (46% shortfall), Andhra Pradesh (64%) and J&K (43%).