Mitras Analysis of News : 16-05-2017

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Global cost for carbon (The Hindu)

Off The Road- India cannot sit out B&R I (The Hindu, The Indian Express)

Inefficiency of public health care(Rashtriya Swasthya bima Yojana) (The Hindu)

 

Global cost for carbon (The Hindu)

Synoptic line: It throws light on the need to impose a universally harmonised carbon tax to curtail the nuisance of climate change (GS paper III)

Overview

  • Global warming is real and it is caused by human activity. In terms of droughts, heat waves, floods, forest fires, disease, rising sea levels and extreme weather disturbances, global warming is already causing devastating problems. The simple truth is that if we do not act boldly and quickly these problems will only get much worse in the years to come. Global warming is the greatest environmental threat facing the planet and averting a planetary disaster will require a major reduction in the burning of coal, oil and other fossil fuels.
  • Thus, few radical steps such as carbon tax are needed to mitigate the impacts of climate change.

Impending problem

  • There is a large chance of a global average temperature rise exceeding 2ºC by the end of this century. It has also been established in various scientific studies that any such warming of the planet will lead to increased natural calamities.
  • A large increase in global temperatures correlates with an average 5% loss in global GDP, with poor countries suffering costs in excess of 10% of GDP.

Carbon tax as a tool to mitigate global warming

  • A carbon tax is a way to make users of carbon fuels pay for the climate damage caused by releasing carbon dioxide into the atmosphere. If set high enough, it becomes a powerful monetary disincentive that motivates switches to clean energy across the economy, simply by making it more economically rewarding to move to non-carbon fuels and energy efficiency.
  • A carbon tax must be a central part of our strategy for dramatically reducing carbon pollution, a view shared by economists and ecologists.
  • Basically, a carbon tax would put a price on greenhouse gas emissions (GHG) to encourage a faster changeover to clean energy. This isn’t a new idea; carbon pricing programs have been around for decades. For example, Denmark instituted a carbon tax in 1992 and, according to a report from the U.S. National Renewable Energy Lab, emissions per person in Denmark went down between 1990 and 2005 by 15 percent.
  • However, carbon tax regimes will only be effective if harmonised internationally. Different country-wise policies could lead to ‘carbon leakages’ where energy-intensive businesses will most likely move to less strict national regimes.

How harmonized carbon tax will be more effective?

  • Harmonised carbon taxes hold advantages over quantitative limits imposed through government control and regulation such as:
  1. A carbon tax regime avoids the problems related to choosing a baseline. In a price approach, the natural baseline is a zero carbon tax.
  1. A carbon tax policy will be better able to adapt to the element of uncertainty which pervades the science of climate change. Quantity limits on emissions are related to the stocks of greenhouse gas emissions, while the price limits are related to the flow of emissions.
  1. Quantity limiting policies are often accompanied by administrative arbitrariness and corruption through rent-seeking. This sends off negative signals to investors. In a price-based carbon tax, the investor has an assured long-term regulation to adapt to and can weigh in the costs involved.
  1. The most contentious issue in any international negotiation on climate change mitigation either at the level of the World Trade Organisation (WTO) or at the United Nations Framework Convention on Climate Change has been the issue of equity between high-income and low-income countries. The price-based approach in the form of carbon taxes makes it easier to implement such equity-based international adjustments than the quantity-based approach.

Certain challenges

  • The political consensus in favour of a direct carbon tax will be difficult to achieve in low- and middle-income countries that have developmental priorities and lack the capacity to administer such regimes. A general tax on energy consumption combined with a technology-centric policy that promotes entrepreneurs and investors who develop low-energy intensive products can be a good starting point from where they can gradually move towards a direct carbon tax.
  • Another near-term approach can be a ‘cap-and-tax’ which combines the strengths of both quantity and price approaches. Cap-and-tax might also address the concerns of environmentalists that a price-based approach does not impose hard constraints on emissions.

Way ahead

  • Attempts to regulate energy efficiency and reduce consumption are only randomly effective and cannot contribute to the urgent need to reduce fossil fuel consumption in the next two decades, the period in which such consumption must be curbed and reversed if we are to mitigate the most serious impacts of global warming. Carbon taxes are the easiest and clearest way to reduce fossil fuel use and they also conform to the “free market” philosophy of minimal government interference and regulation. They also conform to two other norms: that people pay for the goods or services they want or need, and that The Polluter Pays.
  • Countries must negotiate and share policy experiences and researches in this area. They also must decide upon the appropriate forum to discuss and implement any such mitigation policy. The WTO could be the preferred forum, given the important nexus between international trade and climate change.

Question: What measures can be taken by the government on the lines of carbon tax to realise the “principle of polluter pays” in practice?

 

Off The Road- India cannot sit out B&RI (The Hindu, The Indian Express)

 Synoptic line: It throws light on issue of recent boycott of Belt and Road forum by India. (GS paper II)

Overview

  • China has concluded the first Belt and Road Forum. It served as a diplomatic showcase for China’s ambitious global project, which aims to create an interlocked trade, financial, and culture network stretching from East Asia to Europe and beyond.
  • While 130 countries participated, of which at least 68 are now part of the $900-billion infrastructure corridor project, India boycotted the event, while affirming that “no country can accept a project that ignores its core concerns on sovereignty and territorial integrity.”

Analysis

  • Beijing has occupied a large part of Ladakh in the north-eastern part of J&K. After the Sino-Indian border conflict of 1962, Pakistan had ceded part of the territory controlled by it to Beijing. China’s has started its presence in region dates back to the late 1960s, with first trans-border infrastructure project in Kashmir, the Karakoram Highway. Since then, China’s presence in Pak-occupied Kashmir has steadily grown. As the CPEC deepens the integration between Pakistan occupied Kashmir and China, Beijing looms larger than ever before over J&K.
  • China has formally invited India to join the B&R. China mentioned that if India doesn’t want to take a part on the stage, then it should just be a good member of the audience.

Reason for boycott

  • The BRI’s flagship project is the China-Pakistan Economic Corridor (CPEC), which includes projects in the Gilgit-Baltistan region, ignoring India’s “sovereignty and territorial integrity”.
  • The BRI infrastructure project structure shows Chinese neo-colonialism and could cause an “unsustainable debt burden for communities” with an adverse impact on the environment in the partner countries.
  • There is a lack of transparency in China’s agenda; India believes the B&RI is not just an economic project but one that China is promoting for political control.
  • India always sees Kashmir as a bilateral issue with Pakistan, but it is China that has become the real third force in Kashmir. While China asks India to downplay the sovereignty argument in Pakistan occupied Kashmir, Beijing objects to all Indian activity, political or economic, in Arunachal Pradesh. The state is part of the Indian Union, but is claimed in entirety by China.

Downside of reluctance

  • India may also face some difficult choices in the road ahead, because being a co-founder of the Asian Infrastructure Investment Bank and a member of the Shanghai Cooperation Organization (from June 2017) it will be asked to support many of the projects under the B&RI.
  • The UN Secretary General mentioned the B&RI is rooted in a shared vision for global development; India should not simply sit out the project. It must actively engage with China to have its particular grievances addressed, articulate its concerns to other partner countries in a more productive manner, and take a position as an Asian leader, not an outlier in the quest for more connectivity.
  • The China-Pakistan Economic Corridor (CPEC) is a collection of developing projects. The CPEC aims to facilitate trade along an overland route connecting Kashgar and Gwadar, through the construction of a network of highways, railway lines and pipelines. Growing relation between China Pakistan can be major threat to India.

Way ahead

  • Both the countries need to engage in a necessary and patient dialogue with each other. India must articulate a political framework for economic and commercial cooperation across the contested frontiers of Kashmir in all directions with modernizing and deepen J&K’s connectivity with the rest of India.
  • India must devote high-level political attention to the long neglected Andaman and Nicobar islands that sit across China’s planned maritime silk routes in the eastern Indian Ocean. It is only by realizing the full strategic potential of the island chain; India can cope with the maritime dimension of China’s Belt and Road Initiative.
  • In Arunachal Pradesh also there is need to accelerate the state’s economic development and its connectivity to the rest of India.

Question What are the possible take-away for India with respect to BRI initiative. How India should respond in such a situation?

 

Inefficiency of public health care(Rashtriya Swasthya bima Yojana) (The Hindu)

 Synoptic line: It throws light on the need to provide robust mechanisms in health care in India. (GS paper II and III)

Overview

  • According to World Bank data available for 2013, per capita expenditure on healthcare in India – at about $61 – is much lower than in Brazil ($1085) and China ($367), two comparable countries on the development scale. Lower public expenditure on healthcare has resulted in a situation where hospital bed density in India has stagnated at a mere 0.9 beds per 1000 patients since 2005.
  • Hence, in such a scenario, there is a need of robust public health strategy. There is even more pressing need to focus on Insurance regime to curb the nuisance of out of pocket expenditure.

Rashtriya Swasthya Bima Yojana

  • The Rashtriya Swasthya Bima Yojana (RSBY) was introduced in 2008 by the Ministry of Labour and Employment, with the aim of providing health insurance coverage to individuals/ families that belong to the BPL (Below Poverty Line) category. Currently, this scheme also provides health insurance cover to workers belonging to unorganized categories such as construction and building workers who are registered under Welfare Boards, Street Vendors, Licensed Porters (railway), Beedi workers, MNREGA workers etc.
  • The scheme is today the world’s largest medical insurance programme covering over 120 million poor people in the country. It provides a maximum cover of Rs 30,000 to each BPL (below poverty line) household in the country. However, the insurance is available only for in-patient care (or hospitalisation)

Report card of RSBY

  • Despite such eagerness shown by the governments both at the Centre and the states, observers feel RSBY is pushing India’s health care into a deeper mess.
  • Below Poverty Line (BPL) family of five is entitled to more than 700 treatments and procedures at government-set prices, for an annual enrolment fee of ₹30. However, even nine years after its implementation, it has failed to cover a large number of targeted families almost three-fifths of them.
  • Their exclusion has been due to factors like the prevalent discrimination against disadvantaged groups; a lack of mandate on insurance companies to achieve higher enrolment rates and an absence of oversight by government agencies.
  • In the absence of a strong primary and secondary health infrastructure, it increases the tendency among patients to get hospitalised at the first instance. As an off-shoot, it leads to increased frauds. Various studies and reports have shown how empanelled hospitals did not have adequate facilities, or how hospitals conducted unnecessary hysterectomies on patients to make easy money through the cashless insurance schemes.
  • Evidence on the financial protection front is conflicting as well. One study revealed that poorer households in districts exposed to the RSBY and other PFHIs recorded an increase in out-of-pocket (OOP) expenditures for hospital care, and a corresponding rise in incidence of catastrophic expenditure. There is near-consensus that the RSBY has resulted in higher OOP expenditures. Though it is a cashless scheme, many users are exploited by unscrupulous hospital staff.

Way ahead

  • Major design flaw in RSBY and other such state health insurance programmes is their narrow focus on secondary and tertiary care hospitalisation. Essentially, these models are designed to address low-volume, high-value financial transactions that could result in catastrophic expenditure and impoverishment of households. However, evidence points in the opposite direction.

Question What can be the possible move on part of government to ensure the availability of an affordable insurance for all?

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