All Newspaper editorials in one place – January 22, 2024



January 22, 2024

A backsliding

Curbs on financing of civil society bodies denote eroding civil liberties


Less than a year after suspending the Foreign Contribution (Regulation) Act (FCRA) licence of the Centre for Policy Research (CPR), the Government of India has cancelled its FCRA licence. The justification for this move — CPR’s publications have been equated with current affairs programming, prohibited for an entity using FCRA funds — is nothing if not farcical. As a premier think tank, the CPR has been around for more than half a century, during which it has been an exemplar of public-spirited scholarship feeding into an ecosystem of governance and policy-making where multiple stakeholders and their often divergent interests need consensus-building through informed debates — the hallmark of a democracy. A decision to effectively shut down such an institution by crippling its finances is bound to send the message that India is no longer open to the free flow of knowledge and ideas. The move also fits into a broader, and sadly, by now all-too-familiar, pattern of the state wielding the FCRA as a weapon to silence entities whose work is not to its liking — typically those working on environmental issues, civil liberties and human rights. The use of the FCRA to target civil society for political or ideological reasons is perhaps written into its DNA. The legislation is the child of the Emergency, enacted by a regime paranoid about foreign governments interfering in India’s internal affairs by channelling funds through NGOs. Since then, it has been amended by successive governments, with the provisions becoming more stringent.


When the latest round of amendments was passed in 2020, the International Commission of Jurists denounced it as “incompatible with international law” and warned that it would “impose … extraordinary obstacles on the capacity of … civil society actors to carry out their important work”. It appears as though the government has been working hard to prove the ICJ right. Even before dust could settle on the FCRA cancellation of CPR, World Vision India, which works with children, has had its FCRA cancelled. On the one hand, India seeks recognition as a ‘Vishwaguru’. Its calling card as the G-20 host was ‘Mother of Democracy’. The government is hypersensitive to rankings on international indices, yet unwilling to acknowledge the link between perception and reality. When the U.S.-based non-profit, Freedom House, in its Democracy Index, downgraded India to an “electoral autocracy”, a reason it cited was erosion of civil liberties. Shutting off the finances of civil society organisations on flimsy grounds is a textbook example of civil liberties erosion, guaranteed to amplify the narrative of democratic backsliding. It would then be pointless to complain about bias or invoke “conspiracies” to tarnish India’s image when these actions get reflected in India’s downgrading in global indices of freedom and democracy.





January 22, 2024

Asia ascendant

Japan’s partly successful moon landing sees Space Race with Asia in lead


On January 19, the Smart Lander for Investigating Moon (SLIM) spacecraft of the Japan Aerospace Exploration Agency (JAXA), launched in September, was expected to soft-land on the moon. Shortly after the stipulated time, reports from JAXA indicated the lander had touched down but its solar panels were not producing power, forcing the craft to bank on its batteries. However, SLIM, it said, appeared to be transmitting data, and checks of its other components did not indicate any damage — meaning Japan had become the fifth country to soft-land a robotic spacecraft on the moon. SLIM, like Chandrayaan-3, was tasked with a lunar soft-landing and deploying a rover mission (with two small rovers) but its primary mission was pioneering. Thus far, interplanetary spacecraft to the moon and Mars have been assigned suitable landing areas several hundred metres wide. SLIM however was designed to land within a 100 sq. m area, and thus its nickname “moon sniper”. In a press conference in which they confirmed the controlled descent, JAXA officials also said it could be a month before they could ascertain if SLIM had successfully executed its pinpoint landing.


SLIM’s partial success (for now) comes a day after a moon-landing mission built by Astrobotic, a private U.S. company, and funded by NASA, reentered the earth’s atmosphere following a propellant leak. SLIM also happened roughly a month ahead of a landing attempt by another American company and four ahead of China’s ambitious sample-return mission from the moon’s far-side. JAXA’s lessons from SLIM are expected to inform the planned Lunar Polar Exploration Mission, an India-Japan collaboration with India expected to provide the lander. Precision landing is valuable because it allows lunar missions to begin closer to a place of interest, where there may be a smaller patch suitable for landing, instead of landing further away and roving to the area. And the moon’s surface around its south pole is mostly rough terrain. There are now five countries with the demonstrated ability to land robotic spacecraft on the moon. These plus the European Space Agency are the world’s major spacefaring entities. No other such entity has a robotic lunar mission planned in the near future. Both the U.S. and Russia also last demonstrated their abilities in a bygone era, although the NASA Commercial Lunar Payload Services programme will be making frequent attempts, as with the Astrobotic mission. As such, the new Space Race is currently being led by Asian countries.





January 22, 2024


Stock markets have been volatile. A combination of global and domestic factors will influence investment


AFTER SCALING NEW highs, the Indian stock markets have been experiencing a bout of volatility. The BSE Sensex began last week by crossing the 73,000 level. Over the course of the next few days, it fell 2,141 points or nearly 3 per cent. On Friday, it recovered marginally, ending the day up 0.7 per cent. From the beginning of this year, the Sensex is down 1.17 per cent. However, this weakness does not reflect in the broader market. Over the same period, the BSE mid cap index is up 3.63 per cent, while the small cap index is up 3.81 per cent.


The recent market volatility can be traced to several factors. Investor sentiment soured after HDFC Bank, the leading private sector bank, posted weaker than expected third quarter results. The bank fell more than 8 per cent on Wednesday and around 3 per cent on Thursday, dragging down the benchmark index. The fallout could be seen in stock prices of other private sector banks. Since January 15, the NIFTY Private Bank index is down around 4.5 per cent. Alongside, remarks by US Federal Reserve official Christopher Waller also seemed to have caught investors off guard. Waller cautioned that the Fed might not cut rates as quickly as many investors had believed — following the US Fed’s December meeting in which it had indicated the possibility of three rate cuts in 2024, many had penciled in the first rate cut in March. Waller’s comments, which come after the minutes of the December meeting that showed that most officials were in favour of keeping interest rates high for some time, seem to have dented investor exuberance over the policy pivot by major central banks. Foreign portfolio investors have also changed tack. After $1.08 billion in November and $7.93 billion in December, net investments by FPIs have turned negative (- $1.56 till January 19). However, the Sensex is currently trading at a PE ratio of 25, higher than its average over the past decade.


A combination of global and domestic factors will influence markets. Towards the end of this month, the US Fed will hold its first meeting of this calendar year. This meeting is expected to provide clues on when the central bank is likely to begin cutting rates. Alongside, the continuing crisis in the Red Sea will also be felt across markets. On Friday, Brent crude oil rose to $78.51 per barrel as a growing number of oil tankers diverted course from the region. On the domestic front, investors will turn their attention to the interim budget and the monetary policy committee meeting that is slated a few days thereafter. In the following weeks, the focus will shift to the 2024 general elections.





January 22, 2024


Government’s nudge for responsible antibiotic prescription is welcome. Medical community must also weigh in


THE CENTRE HAS done the right thing in asking doctors to be more responsible when they prescribe antibiotics. The Union Health Ministry has asked physicians to write down the exact reasons for advising patients to use these medicines. It has also asked pharmacists to not dispense anti-microbials without a prescription. The country has had a policy to prevent the overuse of antibiotics for close to a decade. However, the use of such medicines is still not monitored by the government. A Lancet study in 2022 noted that “India consumes a large volume of broad-spectrum antibiotics that should ideally be used sparingly”. Antibiotic overuse is the primary reason for bugs developing resistance to these medicines. That is why patients with severe diseases like tuberculosis are increasingly not responding to the first line of treatment.


Broad-spectrum antibiotics target a wide variety of bacteria and are antidotes to serious infections. However, anecdotal evidence shows that doctors tend to err on the side of caution and prescribe these medicines without diagnosing whether an infection is viral or bacterial. They also advise antibiotics to prevent secondary infections even when the threat of such a malady is remote. Individual doctors, though, are only one part of the problem. Medical protocols require hospitals to have a policy for rational use of antibiotics —this is important because studies show that these healthcare facilities are major breeding grounds for antimicrobial resistance. But only a few big hospitals follow this mandate. A recent study by the National Centre for Disease Control revealed that three out of four patients who went to a tertiary care centre were prescribed an antibiotic, often to prevent an infection rather than to cure it. The study conducted between November 2021 and April 2022 under the National Programme of Antimicrobial Containment found only a 10 percentage point difference in antibiotic use between intensive care units that have the sickest patients and the other wards.


Given the heterogeneity of the country’s healthcare settings, a one-size-fits-all approach might not be apt to regulate antibiotic use. In 2013, the Chennai Declaration by a group of concerned doctors suggested strict control of the use of such medicines in areas with relatively well-provisioned medical facilities and a more liberal system based on the strict monitoring of select oral antimicrobials in other areas. Another school of experts believes that medical experts must create more awareness within their community. Some others advocate that healthcare centres must have more microbiologists to guide doctors. The government’s nudge to doctors should spur such conversations. The medical community must now step in to tackle the problem in all its dimensions.





January 22, 2024

Loanly Budget

India’s growth is good. To be better govt debt needs to come down


GOI will present its last budget ahead of Lok Sabha elections, in an unusual context. India stands out globally for having safe macroeconomic indicators and good prospects for economic growth. Yet, fiscal performance has worsened since February 2019. It needs to be set right to make the most of the growth potential.


Spending overshoots | Fiscal indicators over last five years were undermined by the Covid shock. Consequently, spending outpaced nominal GDP growth. From 2018-19 to 2023-24 budget estimates, GOI total expenditure grew 14.23% to ₹45.03 lakh crore. Nominal GDP for this period grew 9.4%. Outcome was an expansion in fiscal deficit by 2.5 percentage points to 5.9% of GDP in current year’s budget estimates. Simultaneously, GOI domestic borrowing increased from 47.1% of GDP in 2018-19 to 57.7% in 2022-23.


Capex, silver lining | Spending pattern had a positive feature, higher public investment. GOI stepped in to fill the gap left by private investment when firms cut back on borrowing to improve their financial position. In current year, GOI’s capital expenditure is expected to be 22% of total spending. This will be supplemented by investments by PSUs.


Subsidies, a problem | Downsides are that subsidies have not only grown, they are not under control. For example, extra spending on food and fertiliser subsidies during 2022-23 overshot budget estimates by more than ₹1.50 lakh crore.


Revenue potential is promising | GST has stabilised and its reforms have begun to show results. In direct taxes, an unexpected boost came from personal taxes that have almost caught up with corporate tax in terms of contribution. In 2023-24 (up to December 17), personal income tax revenue was ₹6.72 lakh crore, just short of corporate tax collections of ₹6.94 lakh crore.


Disputes remain a worry | Tax system remains litigation prone. Fresh litigation keeps rising. Between 2018-19 and 2021-22, tax disputes over one year but less than two years rose from ₹5.21 lakh crore to ₹6.99 lakh crore. This calls for an overhaul of the law.


Disinvestment disappoints | Just twice in last nine years did disinvestment revenue overshoot budget estimates. It needs to improve to widen revenue base.


GOI weathered the pandemic shock well. Looking ahead, it needs to lower its debt level and smoothen tax architecture.





January 22, 2024

On The Fence

Myanmar-India border needs fencing. But it also needs deft political handling


GOI’s decision to fence India-Myanmar International Border (IB) won’t be easy to implement. It will mean not just construction through 1,600-km-odd very tough terrain through Arunachal, Nagaland, Mizoram and Manipur, it will also demand deft political fencing.


Why the fence | Since February 2021’s coup in Myanmar, smuggling of narcotics and arms into India has exponentially increased from Myanmar’s barely secret jungle factories. Part of Manipur conflict has been blamed by state government on militia from Myanmar. Border instability makes the free movement regime appear like sitting on the fence on security concerns. Right now the focus should be stemming flows of contraband into India.


Open borders | India-Myanmar’s longstanding open border that allows free movement was formalised in 2018 as part of GOI’s Act East Policy. Family and kin upto 16 km on either side move freely. This movement is not just social but is central to trade ties in low-value regional economy – pulses, bamboo, spices, forest produce etc. For some years, an uptick in smuggling of teak and gold has worried India.


Open arms | Following 2021’s coup, Kuki-Chin communities in Myanmar who faced junta persecution meant refugees in tens of thousands moved into border states where they had family or community – Mizoram, Nagaland, Arunachal and Manipur. CMs of these states barring Manipur have made common cause with refugees given kinship and ethnic ties. New Delhi sees them as illegal migrants.


Mind the fence | Plans for a fence triggered misgivings across tribes – fears of a partition. So closely linked are they that reportedly in Nagaland’s Mon district, IB splits a village chief ‘s house between two nations. Hard borders cannot solve domestic political impasse. It is critical the decision doesn’t circle back into ethnic turmoil. Ensuring that is a political task.





January 22, 2024

Crouching Tiger, Slowed Down Dragon

China’s investment-led growth has hit a ceiling


China has managed to meet its low official growth target for the first year after Covid restrictions were lifted without having to unveil a large stimulus. This picture is flattering in two aspects. One, the low growth is on the basis of even lower growth of the previous year, when Beijing extended its zero-Covid policy. Two, stimulating domestic consumption is no longer a choice if China wants to sustain growth rates in the region of 4-5% over the next decade. China’s decades-long high growth has been accomplished by funnelling household savings into investments. These investments have lost their capacity to push growth in a cooling global economy. Chinese consumers have traditionally been low spenders. With a collapsing property market, they have become even more wary about spending.


The world’s second largest economy has an outsized investment and puny consumption footprint globally. Unless it rebalances, China is faced with the prospect of low growth, although the rate will be higher than those of advanced economies. The way out of this situation is shoring up incomes through transfers to Chinese households. This can be attempted by redistributing wealth among households. But the effects would be limited. Manufacturers could also make these transfers by raising wages and interest rates. However, this reduces China’s comparative advantage as the world’s factory. Finally, the government in Beijing could step in by enhancing social security. This course would be the least disruptive.


China’s investment-led growth has hit a ceiling with its principal trading partners shoring up domestic investment. The model of running an enormous trade surplus with the rest of the world has not yielded mass affluence. As its population begins to shrink, China will need to counteract the slowdown. Unlike Japan, which became rich before it grew old, China needs to raise its standard of living. Stimulating consumption is less damaging to its economy than a collapse of investment following a burst of high growth.





January 22, 2024

PG-Rated Living Gets Trendy in the US, UK


Adults living with their parents — once an ‘Asian/Indian’ norm — is now reality for almost half of 18-34-year-olds in the US and Britain. Moving out, living on one’s own, being financially independent, a major marker of adulthood in developed economies, has been a post-war trend driven by increased affluence. Ghar wapsi among millennials and Gen Z in these two countries is once again driven by economics.


Living with parents (LWP) reached an all-time high during the pandemic. But that merely gave LWP a 50% boost. 2021 US Census reports that 23 million (45%) 18-29-year-old Americans were living with parents. That is roughly the LWP level in the 1940s, after the Great Depression. In Britain, 51.2% of 20-24-year-olds LWP while among 25-29-year-olds, the number is 26.7%. Runaway housing costs is a primary cause. Mounting student debt, post-pandemic work choices and situations, record high-inflation pushing up cost of living are other factors. Inability of young persons to secure steady jobs because of lack of opportunity or insufficient skills, and available jobs not paying well enough, have added to the ‘reverse flow’. With rising costs, adult children are also becoming caregivers.


Things have gotten more socially comfortable for today’s Adrian Moles. The trend has also been a gift for the luxury industry. With budgets freed from daily needs, discretionary spending is up. In 2022, the US surpassed China as the leading market for luxury Swiss watches. Advice givers, too, are making hay, providing guidance to both adult-children and parents on life. One wonders if and when the once-trendy ‘Indian-style’ joint family will make an appearance in countries that made the Beatles sing, ‘She’s Leaving Home’ in the Swinging Sixties.




January 22, 2024

Weak foundations

Poor teenage learning levels, a national crisis


Two recent reports – the Annual Status of Education Report (ASER) on the cognitive skills of adolescents, prepared by the NGO Pratham, and a report on the quality of teachers by the Tata Institute of Social Sciences – on India’s school education landscape paint a very disturbing picture. The first, ironically called ‘Beyond Basics’, tells us that up to 25 per cent children in the 14-18 age category cannot read Class II level text fluently even in their mother tongue.


More than half the children studying in rural India struggle with basic maths, says the report. These findings, derived on the basis of a large and varied sample used for comparisons over time, do cast a shadow of doubt over India’s literacy rate of 77.7 per cent, according to NFHS-5 (2019-21). Literacy that precludes the ‘three Rs’ (reading, writing, arithmetic) is a mere joke. The TISS report, on the ‘State of Teachers, Teaching and Teacher Education’. is quite as alarming and perhaps explains the results of the ASER report. The TISS report says that around 35-41 per cent of mathematics teachers, both in government and private schools, lack the necessary expertise to teach the subject. They did not take mathematics as a subject at their undergraduate level. Generally speaking, the qualifications deficit is worst at the primary level and reduces a bit at the middle and secondary levels, except in maths. But the initial damage is hard to reverse.


The ASER says only 43 cent of 14-18 year-olds are able to do simple division (three digit-by-one digit) correctly, a skill that is usually expected in Standard III/IV. A similar proportion cannot read English sentences, though this figure is an improvement from 47 per cent in the 2017 ASER survey. Over half the students are enrolled in the humanities, where dealing with abstract concepts and complex texts is crucial. Overall, India’s school education, especially public schools in rural areas, is simply catastrophic, for a country that is relying on its ‘demographic dividend’.


It is intriguing that such a situation should persist for years (as ASER reports show) despite generous allocations for education. According to a Ministry of Education report released in 2022, States spend almost 80 per cent of their education budget on primary and secondary education. But the RBI’s data on State finances show that the States’ spending on education has fallen from 16 per cent of their total expenditure in 2014-15 to 13.3 per cent today, with the southern States too cutting back sharply. Yet, States that have spent more such as Bihar, Chhattisgarh and Rajasthan over 15 years have little to show. The quality of education would depend both on the quantum of outlays and the manner in which it is put to use. Above all, the disaster in education points to distorted policy priorities. The politics of instant gratification via caste, religion and freebies has become the order of the day.





January 22, 2024

Gaza’s expanding footprint

The conflict is getting unpredictable


The expanding theatre of conflict in West Asia following the outbreak of the Hamas-Israel hostilities in Gaza on October 7 last year has substantially increased the level of threat to global stability and growth. Iran and Pakistan’s missile strikes on each other’s territories have raised the temperature. With a decisive expansion of Iran’s involvement in the conflict, the footprint of the Gaza war has expanded to Iraq, Syria, Lebanon, and even Pakistan. Earlier this month, Iran-backed anti-Israel Houthi rebels in Yemen destabilised world trade with their unanticipated attacks on shipping on the Europe-Southeast Asia route. This route accounts for 12 per cent of global trade and has caused major shipping companies to divert their vessels around the longer route, causing shipping costs to more than double in less than a month. Over the weekend, Israeli missile strikes in Damascus killed three Iranian Revolutionary Guards; another on Iran-backed Hezbollah bases in Lebanon killed one. On Saturday, Iran-backed groups in Iraq launched missiles and rockets at a US air base, injuring several US soldiers, some severely. In short, the risks in the region seem only to be increasing.


The core of the problem lies in the intransigence of the principal actors in the conflict. There has been worldwide condemnation, including in the United Nations, of civilians in Gaza being made a collateral damage in Israel’s retaliation against the Hamas’ October attacks. Israeli Prime Minister Binyamin Netanyahu’s right-wing coalition is politically weak and leaves him vulnerable to its more extreme elements. His survival, therefore, depends on how the situation in Gaza is handled. His advantage lies in the fact that it is politically inconvenient for the US to withdraw defence and logistical support to an ally it was instrumental in creating under pressure from a powerful and wealthy domestic lobby. Having faced pro-democracy protests over the past year, Iran’s ruling regime has little incentive to dial down its implacable animosity with Israel and the US, which had withdrawn from the nuclear deal with Tehran under President Donald Trump.


In this fast-moving fluid situation, India has held the line on its traditional diplomatic positions. The official response to Iran’s cross-border missile strike on Pakistani Balochi bases of Jaish al-Adl, a designated terror group, was implicit support of Tehran’s actions as an act of self-defence against terrorists, underlining New Delhi’s position of zero-tolerance for terrorism. But the prolonged threat to global shipping is yet to be resolved. Despite attacks on Houthi bases by the navies of the UK and US, global shipping on this route is unlikely to stabilise anytime soon. This raises challenges for India. Russian crude oil, which has a substantial share in India’s imports, is mostly routed through the Red Sea. So far, there has been no disruption in supplies, but this could change. Supplies from Iraq, India’s second-largest supplier, could be affected if hostilities deepen. At Davos, Petroleum and Natural Gas Minister Hardeep Puri said India would diversify oil supply sources and accelerate the transition to renewable power. The other major threat is to India’s exports to Europe, its second-largest destination. Around 80 per cent of goods India exports to Europe are routed through the Red Sea. The alternative Africa route will considerably increase costs and threaten India’s competitive position. Sustained geopolitical risks in the region could begin to affect India’s economic prospects.





January 22, 2024

Threats and opportunities

Policy should prepare to deal with AI


A recent study by the International Monetary Fund (IMF) brought back both excitement and fears surrounding the impact of artificial intelligence (AI) on jobs and living conditions. While AI-induced automation promises higher productivity, it also evokes fear of dislocation and an increase in unemployment. The IMF research shows that almost 40 per cent of global employment is exposed to AI. What sets apart AI from previous technological advances is its ability to impact high-skilled jobs. In advanced economies, around 60 per cent of jobs could be affected by AI. Although half of these are expected to benefit, resulting in higher productivity, the other half could see displacement of labour and lower wages. The impact of AI, however, is likely to differ significantly across countries at different levels of development, or with different economic structures.


Emerging markets and developing economies, relying more on manual labour and traditional industries, may initially face fewer AI-induced disruptions. In India, for instance, the proportion of high-exposure employment stands at 26 per cent. The study notes that employment in India is mostly generated in the low-exposure category, such as in agriculture and semi-skilled work. Advanced economies are better positioned to gain. Developing countries, meanwhile, will find it difficult to catch up with early AI-driven productivity gains, given their lack of infrastructure and skilled workforce. Different social groups and sectors within countries are also likely to be affected differently. AI is expected to complement the work of higher-income workforce, resulting in a disproportionate increase in their labour income. Furthermore, productivity gains for firms that adopt AI are likely to boost capital returns, which may also favour high earners, thus exacerbating inequalities.


Notably, some of these concerns have also been brought to the fore by the International Labour Organization’s latest World Employment and Social Outlook report. For the year 2024, it projects increased unemployment globally, and the possibility of growing inequality. The report highlights slow labour-market adjustment and a lack of significant improvement in living standards. India is already witnessing early signs of AI-led disruption. A digital payments company last year laid off workers to augment AI-powered automation. Another dimension of AI is in the realm of firms’ market power. Only a handful of large corporations dominate leading AI technologies because of the initial cost involved and their capability for development.


Despite concerns, it is fair to argue that the adoption of AI will only grow, perhaps at a much faster rate than most people imagine. AI, particularly generative AI, will pose numerous challenges for policymakers. Aside from its implications for jobs and livelihood, generative AI, if not devolved and used responsibly, can pose risks to the social fabric. Some of these concerns were reflected in a major AI summit hosted by the UK last year. It is thus important for governments and regulators to start preparing. In the Indian context, while the threat to jobs in the initial phase is expected to be limited, AI adoption can change the dynamics in the future. India’s large presence in the IT sector presents both risks and opportunities. A lot will depend on how Indian firms adopt and work on AI.  In terms of employment dislocation, given that social security systems are not very strong, labour displacement will only increase policy challenges.  .




January 22, 2024

Stellar show

The Budget estimates on tax buoyancy could actually turn out to be much better


Direct tax collections in the current year so far have been nothing short of stunning. Till January 10, the number was Rs 14.7 trillion, hitting 81% of the budget estimate (BE) of Rs 18.2 trillion. It is the personal income tax (PIT) collections that have stolen the show, having grown at a brisk 27.3% compared with the targeted growth rate of 10.5%. The main reason for this has been better compliance. Thanks to the efficient tracking mechanisms, it is near impossible to evade taxes. The shift to the new regime is also believed to have helped boost collections. Going by the current trends, the BE for PIT of Rs 9 trillion is sure to be exceeded. While the tax collections from corporations were initially slow, they too have picked up smartly. The growth has been until 12.4% year-on-year so far, ahead of the targeted pace of 10.5%. This is good news for the exchequer since direct taxes account for 54% of the gross collections.


One expects the increasing formalisation of the economy will help grow the taxpayer universe. In FY19, the number of income tax filers was 85 million, which increased to 95 million in FY23. While the actual taxpayers are barely a third of this, at some point they should start contributing to the collections. Direct taxes are probably the most effective way to transfer funds from companies and individuals to the government. Given how private sector firms are unlikely to add too much fresh capacity—except probably by way of acquisitions—for the next few years, the burden of capex will fall on the government. The government will need resources to meet its expenditure not just on infrastructure and public goods but also defence, education and health.


Indirect taxes in the current year aren’t doing too well; they were targeted to grow at 11.8% but have reported a run rate of 6% y-o-y until November. GST collections, however, have surprised on the upside and have grown at a very smart 13.4%; the average monthly GST collections until December have been `1.67 trillion. Reports to the effect that consumer spends having tapered off, post the festive and holiday seasons, are worrying.


While the budget estimates for the current year assume a tax buoyancy of 1.2, it could turn out to be better as the figure in the first half has been close to 2. The actual number is sure to touch a new peal even if it eases in the second half. While buoyancy was 1.8 in FY22, it was largely because the nominal GDP grew 18.4%, on a negative base and taxes also grew 34% because of a very low base. Ignoring this, the highest buoyancy was seen in FY16 when it was 1.6 and, before that, in FY07 and FY08, when it was 1.7.


The tax-to-GDP for the current year has been assumed at 11.3%. Given that for the first half, we are already at 11.4%, the ratio could overshoot 1.3 for the full year. It is possible gross tax collections will grow at faster than 11%—the budgeted number. In that case the tax-to-GDP could go up to 11.5%, which would be close to the high of 12.1% seen in FY08 (excluding FY22). Else, India’s tax-to-GDP has been in the range of 10- 11%.




January 22, 2024

A promising turn in the quest to treat long Covid


A new study in Science makes a compelling case that people with long Covid have a chronic imbalance in their immune response. The findings don’t explain why that immune response is out of whack, and needs confirming in larger studies. Still, this is important new piece to the vexing puzzle that is long Covid.


One of the challenges with diagnosing and treating long Covid is the dozens of ways it can manifest: brain fog, extreme fatigue, shortness of breath, heart palpitations and headaches, to name just a few. Finding a common biomarker across people experiencing such different symptoms suggests a path to a diagnostic test. The work even could lead to new treatment strategies.


The virus has issued one of its regular reminders that it’s not going anywhere: Hospitalizations and deaths in the US have been ticking up since early November, and wastewater data suggest the country is experiencing the biggest peak in cases in more than a year.


Each wave risks adding to the already massive number of people experiencing long-term effects of their infection. The most recent Centers for Disease Control and Prevention data showed that 8.8 million people in the US were living with long Covid in 2 022. Meanwhile, new preliminary data, reported in Medscape, show that nearly 1,5 00 people died from long Covid last year. Some health experts expect long Covid to account for an increasing portion of overall Covid deaths.


This latest research is a good step in explaining what might be going wrong in the immune systems of people with lingering symptoms. Scientists at the University of Zurich followed 113 people with Covid over the course of a year to understand on a molecular level the differences between those that did and did not develop long Covid. They found a distinct signal: People with long Covid had elevated levels of proteins involved in the “complement” system, a part of our immune response that tags foreign microbes for disposal.


Typically, the complement system revs up when we’re exposed to a virus or bacteria and then relaxes when the threat is eliminated. During that resting state, it plays a key role in sweeping away dead or damaged cells.


But when that part of our immune response is constantly triggered, it can cause inflammation and cell and tissue damage, and even causes increased blood clotting—all symptoms found in people with long Covid, explains Onur Boy man, the immunologist who led the study. The work doesn’t explain why this arm of the immune system continues to be on high alert in some people, while others recover—only that it seems to be a common feature of long Covid. But it does nicely intersect with some of the leading hypotheses about the root causes of the condition.


The question for long Covid patients, of course, is how and when this work could help improve their lives. The next step will be confirming the findings in a larger patient group. From there, a diagnostic company needs to develop a test for the proteins implicated in a dysregulated complement system.


And then there’s treatments. The good news is that drugs that try to calm down an overactive complement system are already on the market and in development for other conditions. Some of those were tested to treat acute, severe Covid infections, with mixed results. But as evidence accumulates that the complement system contributes to long Covid, those treatments should be tested in clinical studies for this population.


Long Covid patients need these next steps to happen fast and with the full backing of government funding agencies. At a Senate hearing on long Covid this week, Rachel Beale, a long Covid advocate, told lawmakers that she has been frustrated with the lack of progress in finding tests and treatments and made plea for continued resources to push the science forward. Three years into her condition, Beale has resigned herself to making peace with her situation, she said.”It makes me sad to think about my future. This maybe as healthy as I get.”


Let’s hope this latest finding is a step forward in improving Beale’s life and the lives of the millions who share her condition.



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