24 Apr 2020: The Indian Express Editorial Analysis
1) A big deal-
Jio-Facebook alliance can reshape the retail landscape in India. Partnership raises concerns about data privacy, net neutrality.
On Wednesday, Reliance Industries and Facebook announced that the California-based social media giant will acquire a 9.99 per cent stake in Jio Platforms limited, the holding company of Reliance Jio, for $5.7 billion (Rs 43,574 crore).
The deal which pegs(puts) the value of Jio platforms at Rs 4.62 lakh crore will help the Reliance group to reduce its debt burden, something the oil-to-telecom conglomerate(combination) has been actively working towards.
The two companies expect to benefit from the synergies created by partnerships between the various arms of Reliance — retail and telecom — and Facebook’s platforms such as WhatsApp. At its core, the idea is to create an ecosystem around JioMart, enabling customers to access the local kirana stores using WhatsApp, combining both offline and online retail.
This ability to connect millions of local businesses with end consumers, and provide them a seamless online transaction experience could radically alter the country’s retail landscape.
Both firms have stressed on the new opportunities for businesses of all sizes, and especially for the millions of small businesses across the country. With the ongoing lockdown in the country only reaffirming the importance of the local kirana store — major online delivery channels have struggled to reach consumers during this period — integration is bound to be an enticing(atrractive) proposition.
A scaling up of this model will also provide opportunities for cross-selling — significantly increasing the upside for firms and increasing the valuation of its retail arms. At present, though, the reach of WhatsApp Pay is limited — just over a million Indians are reported to currently have access to the pay feature.
But this sort of model is popular in other Asian economies such as China, Korea and Japan where apps like WeChat have a wide range of product offerings, which induces(attracts) consumer stickiness.
This arrangement also allows Jio to greatly expand its product offering to its more than 370 million-odd subscriber base. The deal may also open up the entire WhatsApp consumer base — the near ubiquitous(found everywhere) chatting app has a consumer base of around 400 million — to Reliance, including those on other telecom platforms such as Airtel and Vodafone.
Yet there are concerns regarding this arrangement. For one, given the dominant market position of the players, concerns over the market structure and its implications for consumer welfare are bound to arise.
Second, the tie-up also raises questions on net neutrality with the possibility of preferential treatment being granted.
Third, given the data privacy issues highlighted in the past by the Cambridge Analytica episode, for instance, there are apprehensions over the enormous amounts of data that will be collected by these entities, especially when India still does not have a personal data protection law.
(TRIVIA- The Facebook–Cambridge Analytica data scandal was a major political scandal in early 2018 when it was revealed that Cambridge Analytica had harvested the personal data of millions of people's Facebook profiles without their consent and used it for political advertising purposes
Net Neutrality- The concept that all data on the internet should be treated equally by corporations, such as internet service providers, and governments, regardless of content, user, platform, application or device. Network neutrality requires all Internet service providers (ISPs) to provide the same level of data access and speed to all traffic, and that traffic to one service or website cannot be blocked or degraded. ISPs are also not to create special arrangements with services or websites, in which companies providing them are given improved network access or speed)
2) How To Find Money In Crisis-
Populist governments at the Centre and in the states, having given out handouts, are now collectively reeling under a debt of over Rs 170 lakh crore. Sixty per cent of this debt has been taken in the last six years, amounting to over Rs 1 lakh crore new debt per month.
UNPRECEDENTED SOCIO-ECONOMIC CALAMITY:
The COVID-19 crisis has precipitated(caused) an unprecedented socio-economic calamity(disaster). Designing an adequate response has become increasingly complicated. Policy decisions made in the next few weeks will have a profound impact on the future.
Notwithstanding the bonanza(advantage) of low crude prices, India is desperately trying to sell familysilver(To sell a very valuable resource for a quick and immediate gain or advantage, rather than holding onto it for future use) to overcome the revenue collection shortfall and, sadly, seeking foreign institution loans to keep its head above the water. Understandably, borrowing money and giving tax cuts are easy, while spending cuts are the hardest.
The question is not only how much money the RBI can print, but also, rather than borrowing indiscriminately, how to save and optimally(carefully) utilise the scarce, available resources.
An economic impetus(momentum) will definitely be required for recovery, so it is time to rethink issues that were, until now, too sacrosanct(sacred) to even be contemplated(thought). About two crore state and central government employees covered by the pay commission guidelines, forming only 1.40 per cent of India’s population, are paid Rs 12 lakh crore annually.
Across India, there is no authentic data on the number of government employees, government-controlled institutions and their debt — to the extent that actual employee expenditure could be 50 per cent higher. This isn’t a simple case of governance failure, but a clever attempt to keep the subject under the radar.
RATIONALISE PAY STRUCTURES:
Now is the time to cut the Gordian knot(extremely difficult or involved problem) to rationalise pay structures. It is within the remit(sphere) of the government to evoke the constitutional provisions of Article 360 to declare a financial emergency.
I am sure that Class A and B employees will agree to a 25 per cent salary deduction for the next three years in the national interest. Class C and D employees, who earn more than Rs 30,000 per month, will also willingly agree to a 10 per cent salary deduction. The deducted amount can be converted into interest-free bonds, redeemable after five years.
Deductions should be applicable for all those whose salary is based on the Seventh Pay Commission recommendations and the recommendations should be reversed wherever accepted. All pensioners receiving pensions above Rs 30,000 per month, too, should get a deduction of 25 per cent.
ALLOWANCES AND PERKS:
Government employees also receive allowances and perks, comprising about 25 per cent of the government expenditure on employees. The government can take a cue from the early 1990s: When India faced a somewhat similar economic crisis, the National Development Council’s Committee on Austerity recommended the freezing(ending) of dearness allowance, leave travel allowance, bonus, encashment of earned leave etc.
Additionally, the retirement age of government employees should be reduced to 57 years and no more than 1 per cent be allowed retainment beyond that.
Elected representatives (MLA, MP etc.) get pension for each time they are elected to the office. It is time to reduce the outgo on their pensions and limit their pension to one term only.
Those holding the government’s reins(control) must set aside their pride and reverse the ill-conceived corporate tax-cuts and stall(end) expenditure on statues, memorials, bullet trains etc. Such steps will release over Rs 4 lakh crore annually to revive the economy. The establishment must not deflect from core issues by merely tinkering(making small changes) with allowances.
There’s another fundamental flaw(defect) in the process of India’s economic recovery. When the first economic package was announced — without consulting those for whom it was intended, the poorest sections of society — it came in for criticism.
Now that the new announcements are due for corporate bailouts, the government is talking to the business leaders. This attitude of only deliberating with the affluent sections of society is what got India into a grand mess(problem) in the first place.
3) Leading from the front-
Transcending(crossing) geographical boundaries — and every socio-economic and political demarcation — the COVID-19 outbreak has caused huge disruptions globally. It has substantially punctured mankind’s vanity(excessive pride in or admiration of one's own appearance).
However, the United Nations secretary-general, António Guterres, was wide off the mark when he termed the pandemic as the greatest test we have faced since World War II. The scourge(thing that causes great trouble or suffering) of nature is far more serious a threat than man-made wars.
It is in this context that I see India’s role as exemplary. Among the world leaders, Prime Minister Narendra Modi seems to be particularly perspicacious(having a ready insight into and understanding of things) — not only did he ascertain(understand) the real nature of the crisis, but he helped to prepare a graded response to it.
A timely response mitigates(reduces) the effects of a disaster and India has been spot-on in this regard. As Modi pointed out in his message to the nation on April 14, India took “quick and decisive action” and adopted a “holistic and integrated approach” in the absence of which the country’s situation could have been drastically different from what it is now.
India has shown remarkable perceptiveness(insightful) and alacrity(eagerness) in tackling the pandemic: From conducting screenings at airports to visa restrictions, India has been scaling up its response well ahead of time. India, under the leadership of PM Modi, has moved with a meticulously(careful) planned roadmap in its fight against coronavirus.
Finally, there also came the most difficult decision: Shutting down all movement to stop the spread of the coronavirus. This was an extraordinary decision in many ways. From persuading(convincing) people to stay at home, to planning for the economic impact of such an unprecedented(never happened before) lockdown — and also implementing it humanely and sensitively. The decision could not have been taken without exceptional leadership skills.
COOPERATIVE NATURE OF INDIAN FEDERALISM:
In an appreciable display of democratic ethos, PM Modi directly reached out to the 1.3 billion citizens to seek their mandate. They supported the move and the lockdown has now been extended, again, with full popular support. Further, he also spoke with all the state chief ministers who reciprocated(responded) in equal measure, highlighting the cooperative nature of Indian federalism.
Acting in tandem with the Union government, Bihar chief minister and Janata Dal (United) president Nitish Kumar displayed his remarkable aptitude for governance and foresight in educating people about the merits of social distancing.
Unlike industrialised states, Bihar is a predominantly rural state with pockets that have some of the highest population density in the world. One misstep could have led to havoc(disturbance). As of now, the state bears the maximum pressure of migrant labourers from across India and is a veritable communal((of conflict) between different communities) cauldron(pot).
Yet, the behaviour of the people of the state is highly disciplined and admirable. That is an obvious reflection of the people’s trust in the leadership of Nitish Kumar.
I would not hesitate to say that Bihar, with its limited resources and other constraints, is indeed an “outlier state” on most parameters of performance in containing the spread of COVID-19. The recovery rate of patients diagnosed positive is arguably better than many others in the world.
The community spread has been effectively contained there, so far. In rural Bihar, a sustained campaign to promote cleanliness and social distancing has made people acutely aware of the pathogen’s insidious(harmful) ways of attacking the human body.
ROLE OF DIFFERENT SECTIONS OF SOCEITY:
Besides Bihar, other states too have been evolving their response models. We are proud of how the political executive, bureaucracy, medical professionals, health workers, the police and ASHA workers in villages, have combined to do their best in checking the spread of the contagion. The media deserves unreserved appreciation for making people aware of the dangers of the pandemic.
Contrast this with the onslaught of the Spanish flu in 1917-1919 — and the number of deaths then — and you will know the difference. Unlike in the past, India seems to be better placed now and ahead of the curve — not only in evolving a response to the corona menace but to mitigate the plight of its people as compared to Europe, the US, and China.
This crisis has foregrounded(most prominent or important feature) a unique aspect of PM Modi’s humanist approach. His persuading people to remain in sustained lockdown is guided by his impulse of not making human life subservient(secondary) to economics.
This strategy has been successful so far. The health ministry has estimated that without the timely imposition of the lockdown, COVID-19 cases could have registered a 41 per cent cumulative increase, reaching up to 8.2 lakh cases, by April 15.
SUPPORT TO THE MARGINALISED SECTIONS & WORLD:
The leadership role that India has assumed in dealing with this crisis is now being appreciated across the globe. India has shown the world that it can not only handle this crisis upfront but also provide aid and support to the marginalised(weaker) sections of society.
The government is making all possible efforts to provide relief to the poor and the migrant workers. A relief package of Rs 1.7 lakh crore, aimed at providing a safety net along with insurance cover for frontline medical personnel, is something that is being acknowledged as a template(model) in the collective fight against the virus.
In the true spirit of Vasudhaiva Kutumbakam, which means “the world is one family”, India has taken the lead in helping the world at this hour of need. India, the largest producer of the drug hydroxychloroquine, has been generously helping many countries with the supplies of this potential cure of COVID-19.
The war against the virus is still raging. But the country has gained great confidence from the exceptional patience of its people, the quick response of public authorities and, above all, from its trust in the leadership. As partial relaxations begin soon, I hope the people embrace more positivity. Amidst all the gloom the world over, this will also not be a small achievement.