It will take a cillage: Covid-19 crisis can help us rework relationship between city and village
GS Paper I, III
Topic: Indian geography and technology
Prelims: Cillage ecosystem
Mains: How knowledge-era can promote decentralisation
What’s the news?
Developing a “cillage” ecosystem i.e. a synergistic combination of city and village would need a rooted and integrated approach to holistic education and research, technology development and management, as well as technology-enabled rural livelihood enhancement.
Migrants caught in impasse:
- Witnessing the reverse migration of daily wage earners in large numbers despite the lockdown to contain the coronavirus has been distressing.
- Many even resorted to walking back to their hometowns, hundreds of kilometres away, as their survival in cities, with no jobs in hand, became untenable.
Rural to Urban Migration:
- The tendency to migrate to urban areas has been a natural consequence of better opportunities that got created there — in contrast to life in rural areas becoming increasingly unsustainable.
- While there may be several drivers of this situation, the industrial-era dynamics that led to centralisation in support of mass production or massive scale up was clearly a major one.
- This, in turn, also led to concentration of higher education/capacity building processes to urban centres where there was job growth, quite to the detriment of the much larger rural domain where significant wisdom did exist.
- The education and training environment became myopic, essentially meeting the manning requirements to run systems created by others — with little confidence in creating one’s own systems to address needs independent of others.
Neglect of rural India:
- While many countries which created new systems and technologies in the industrial era climbed up the power ladder, India’s importance grew primarily because of her demographic dividend and the large market that her people constituted.
- Rural India suffered severe neglect in the process, probably as a result of poor job opportunities there and education having lost its role as an enabler of local development.
- The Anand dairy revolution and sugar co-operatives were exceptions driven by a few visionaries where livelihood enhancement needs inspired development, which in turn pulled in education — in whatever form it could be leveraged — to rural areas.
- Slowly, the country is learning to create systems and technologies to address her needs. However, the exercise is, by and large, urban-centric.
Knowledge-era technologies to industrial-era technologies:
- Knowledge-era promotes democratisation (social media, for example) and facilitate decentralisation (work from home).
- With technologies like additive manufacture, internet of things, and artificial intelligence, well-trained people can address needs in both urban and rural areas from wherever they are.
- Thus, the knowledge era should, in principle, become a significant income leveller between the urban and rural domains, with a large rise in the overall national income.
- As we embrace the knowledge era and focus on capacity building of rural youth, the opportunities in rural areas should, in principle, become higher than those in urban areas since the rural segment can now benefit from all three (agriculture, manufacturing and services) sectors of the economy.
- For a more balanced distribution of income as well as population. This would, however, need knowledge bridges to be built between cities and villages, and the creation of an ecosystem which has been conceptualised as a “cillage” — a synergistic combination of city and village.
- Bridging the knowledge gap between a city and a village would also bridge the income gap between the two, and lead to a faster bridging of the gap between the average individual income in India and that in industrially advanced countries.
- Democratisation promoted by knowledge technologies, if properly leveraged, can in principle reduce disparities, which, unfortunately, are on the rise today.
- Developing a “cillage” ecosystem would need a rooted and integrated approach to holistic education and research, technology development and management, as well as technology-enabled rural livelihood enhancement.
- Facilitating a number of new skills, technologies and support systems that can further leverage current capabilities of these people for starting a new enterprise would be important.
- Taking knowledge activities to a higher level so that the products and services created by these people become more competitive. Looking at disruptive technologies for exploiting local opportunities should follow.
The emergence of a new-age society is an inevitable and to become empowered enough to convert the challenges into opportunities in rural areas depends on how soon the rural domain can embrace it and how concurrently, comprehensively that can happen, is the real challenge: That will decide whether India will gain in the knowledge era or lag as it did in the industrial era.
- The disruption caused by the COVID-19 crisis, particularly in the context of loss of livelihoods at the base of the socio-economic pyramid, is bound to have a deep impact. It will need every effort to return to normal.
- Given that the new normal would, in any case, be quite different, the right course would be to channelise the stimulus caused by this crisis towards accelerating the shift to a new normal.
- This will not only help a more dispersed population, but will also reduce disparities and lead to faster growth of the economy.
Economic liberalisation and its faults
GS Paper III
Topic: Indian Economy-Economic liberalization
Mains: Impact of economic liberalization on handling Covid-19 crisis
What’s the News?
The COVID-19 virus reveals how dependence on private sector-led economic growth and imports has proved to be disastrous.
Background: Economic liberalization and dependence on foreign goods
- Dr. Manmohan Singh’s 1991-92 Budget speech marked the beginning of the end of the ‘Licence Raj’ in India.
- The Budget also announced the reduction of import duties and paved the way for foreign-manufactured goods to flow into India.
- Following this, most of the manufacturing sector was opened up to foreign direct investment.
- India’s industrial policy was virtually junked, and policymakers and the political leadership became contemptuous of the idea of self-reliance.
A disastrous model:
- In the late 1980s, transnational corporations started shifting the production base to smaller companies in developing countries, especially Asia, in search of cheap labour and raw materials.
- Developed countries supported the move because shifting the polluting and labour-intensive industries suited them as long as ownership remained with their companies.
- Thus, the world witnessed the development of global supply chains in many products starting with garments, wherein huge companies with massive market power dictated the terms to smaller manufacturers down the value chain to produce cheaply.
China became global supplier of essential health products:
- Though many developing countries participated in the global production/value/supply chains, however China emerged as a major supplier of substantial value addition.
- Manufacturing shifted from a decentralised production system spread across different counties to just a few locations.
- However, countries like China defied the logic of supply/value chains ensuring substantial value addition for themselves.
- They even carried out backward integration and thus emerged as global manufacturing hubs for certain products.
- In the case of health products, China became the global supplier of active pharmaceutical ingredients (API), personal protective equipment (PPE), and medical devices diagnostics.
Implications for COVID-19 outbreak:
- The resultant loss of manufacturing base has affected the ability of many governments, including of developed countries, to put up an effective response to the crisis.
- The U.K. Prime Minister asked the country’s manufacturers to produce ventilators in order to provide care for critical COVID-19 patients. Similarly, the U.S. President invoked the Defense Production Act of 1950 to ramp up N95 mask production.
- Under this legislation, the U.S. President can direct U.S. manufacturers to shift from their normal manufacturing activities to produce goods according to the directions of the government.
- Similarly, the French Health Minister stated that the country may nationalise vaccine companies if necessary.
- Spain nationalised all its private hospitals. Israel and Chile issued compulsory licences to ensure that medicines are affordable.
U.S dependence on China shows increasing power of China:
- In an indirect show of power, Chinese billionaire Jack Ma sent a flight containing 5.4 million face masks, kits for 1.08 million detection tests, 40,000 sets of protective clothing and 60,000 protective face shields to the U.S.
- This exposes the poor state of preparedness and dependence on imports for essential goods required to meet the challenge of any major disease outbreak.
- This shows that what is good for the company may not be good the country in all circumstances. So, the overwhelming objective of private sector-led economic growth has proved to be disastrous.
Implications for India of economic liberalization:
In India, economic liberalisation has damaged the government’s capacity in two ways.
- First, it incapacitated the government to respond to emergencies based on credible information. The dismantling of the ‘Licence Raj’ resulted in the elimination of channels of information for the government, which is crucial to make informed policy choices.
- For instance, as part of the removal of ‘Licence Raj’, the government stopped asking for information from the manufacturer to file the quantity of production of various medicines. As a result, it has taken weeks now and a series of meetings for the government to gather information about stocks and the production capacity of pharmaceutical companies.
- Similarly, there were difficulties in finding out India’s production capacity of PPE, medical devices and diagnostics. The only government data available in the public domain is with regard to the production of vaccines.
- Second, it seriously undermined the manufacturing capabilities of health products in India. The short-sighted policy measures, with the objective of enhancing profitability of the private sector, allowed the import of raw materials from the cheapest sources and resulted in the debasing of the API industry, especially in essential medicine.
Report of the Confederation of Indian Industry (CII):
- According to a report of the Confederation of Indian Industry (CII), nearly 70% of India’s API import is from China. The CII report lists nearly 58 API where the dependence is 90% to 100%.
- The disruption in the supply of API due to the COVID-19 outbreak has impacted the production of not only medicines required for COVID-19 patients, but also of other essential medicines in India.
- As a cost-effective producer of medicines, the world is looking to India for supply, but it cannot deliver due to its dependence on China, which has also forced India to impose export restrictions on select medicines.
Dangers of dependence:
- The 100% dependence on Reagents, an important chemical component for testing, is limiting the capacity of the government from expanding testing because the cost of each test is ₹4,500.
- A population of 1.33 billion requires a large number of tests. Dependence on imports affects the ability of Indian diagnostic companies to provide an affordable test for all those who want to test for COVID-19.
- There are only a few domestic manufacturers who can produce PPE and medical devices like ventilators.
- Now the country is not able to get required quantities of test kits, PPE and parts of ventilators through importation.
- It not only destroyed the manufacturing base in developed and developing countries; they also resulted in loss of jobs and poor working conditions in these sectors.
- People were forced to work in precarious working conditions without any social security net. This created an unorganised army of labourers and is preventing many developing country governments from effectively offering relief.
In the name of economic efficiency, India allowed unconditional imports of these products and never took note of the dangers of dependency.
A virus has made us rethink our obsession with the economic efficiency theory. It implores us to put in place an industrial policy to maintain core capacity in health products so that we can face the next crisis more decisively.