1. Essential Commodities Act amendment Critical Analysis

Relevant for GS Prelims & Mains Paper III; Economics

The Centre’s objective of using the COVID-19 crisis to usher in an Atmanirbhar Bharat saw Finance Minister Nirmala Sitharaman focus Friday’s tranche of announcements on farm sector reforms. The centrepiece was a ₹1-lakh crore fund to finance agriculture infrastructure projects at the farm gate and produce aggregation points.

Need for agriculture infrastructure

Given that the lack of adequate cold-storage facilities continues to extract a high price on farmers and the agrarian economy by way of post-harvest losses, especially in perishables, the targeted outlay is a welcome step.

Micro food enterprises

The Minister also unveiled a ₹10,000 crore scheme to promote the formalisation of micro food enterprises. Suggesting a cluster approach focused in different regions on signature produce, Ms. Sitharaman said the goal was to assist unorganised enterprises in scaling up food safety standards to earn the products certification and build brand value. The package, though, may be more beneficial in the longer term than providing any immediate relief from the lockdown-exacerbated distress in the rural hinterland.

Reforms relating to selling of farm produce

Crucially, the Minister also announced three reform proposals that are ostensibly aimed at enabling better price realisation for farmers by removing restrictions and facilitating enhanced marketing freedom.

These include amendments to the 1955-vintage Essential Commodities Act that would effectively hollow out the legislation by deregulating cereals, pulses, oilseeds, edible oils, onions and potato.

Risk of inflation in food prices

While the Economic Survey, in January, had recommended jettisoning the “anachronistic” Act, the law has nonetheless remained a vital tool in the government’s armoury for protecting consumers from irrational volatility in the prices of essentials by tamping down on black marketeers and hoarders. While the Act’s provisions do have scope for an overzealous bureaucracy to harass even an honest exporter, who may have paid a fair price to the farmer and stocked produce for shipment overseas, total deregulation for foodgrains is fraught with the risk of future inflationary food price spikes.

Bypassing of APMC and encouragement to Contract Farming

The other two proposals are also of concern. While one seeks to bypass the APMC regime through a central law that would allow farmers the freedom to sell across State borders, the other proposes a framework for farmers to enter into pre-sowing contracts that would purportedly help assure them of offtake volumes and prices. Both the changes, once enacted, could privilege market forces without necessarily safeguarding food security. Surely, it would be in no one’s interest to throw the baby out with the bathwater.

Source: The Hindu

2. Sovereign Gold Bonds, a substitute for physical gold

Relevant for GS Prelims & Mains Paper III; Economics

What is a sovereign gold bond (SGB)?

Sovereign gold bond is a substitute for holding physical gold. The bonds are issued by the Reserve Bank of India (RBI) on behalf of the government and is a bond denominated in gold. The government issues such bonds in tranches at a fixed price that investors can buy through banks, post offices and also in the secondary markets through the stock exchange platform.

What are the benefits of buying SGB?

These bonds are backed by a sovereign guarantee and can also be held in demat form. Further, they are priced as per the underlying spot gold prices. Hence, investors who want to invest in gold can buy the bonds without worrying about safekeeping of physical gold along with locker charges, making charges or purity issues. Plus, these bonds offer an interest at the rate of 2.5% per annum on the principal investment amount. While the interest on the bonds are taxable, the capital gains at the time of redemption are exempt from tax. These bonds can also be used as collateral for availing loans from banks and NBFCs.

How are the bonds structured?

SGB has a fixed tenure of eight years, though early redemption is allowed after the fifth year from issuance. Since the bonds are listed on the exchange, these can be transferred to other investors as well. The bonds are priced in rupees based on the simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association for the last three business days of the week preceding the subscription period. At the time of redemption, cash equivalent to the number of units multiplied by the then prevailing price would be credited to the bank account of the investor.

How was the latest tranche priced?

The latest tranche, which closed for subscription last week, was priced at ₹4,590 per gram. Those who apply online were eligible for a discount of ₹50 per gram. Reports suggest that RBI will again issue such bonds in June, July, August and September.

Are there any risks in investing in SGB?

Capital loss is a risk since the bond prices would reflect any change in gold prices. If gold prices fall, the principal investment would fall proportionately.

Source: The Hindu

3. How human challenge works

Relevant for GS Prelims & Mains Paper III; Science & Technology

At a time when the whole world is focused on protecting itself from the novel coronavirus SARS-CoV-2, more than 20,000 people from 102 countries have enrolled on a US website to voluntarily infect themselves with the virus. It is the “human challenge” in the quest for a vaccine against the novel coronavirus disease Covid-19 — the objective is to go on to test whether a given vaccine works on any of these infected persons. Lawmakers in the US have been pushing for human challenge trials and the World Health Organization (WHO) has given the go-ahead, subject to a set of preconditions being met.

What is a human challenge?

Human challenges expedite trials because a lot of time may be lost waiting for a trial subject to contract the disease naturally from the community. Till such time that happens, whether the vaccine works or not cannot be tested. Then again, if infection does not happen normally, there is little way of finding out whether it is because of the vaccine or whether it is because the person was never exposed at all.

Currently there are over a 100 vaccine molecules under various stages of development across the world. Several members of the US Congress have written to the Commissioner of the Food and Drug Administration and Secretary of Health and Human Services, citing the global cost of the pandemic to consider deliberately infecting volunteers with the virus to expedite vaccine trials.

Has such a measure of deliberately infecting individuals been used on previous occasions?

Human challenge trials are routinely done for diseases such as malaria, dengue, influenza and cholera which extract a heavy public health toll but are not otherwise deadly. Back in 1796 Edward Jenner, father of the smallpox vaccine, infected his gardener’s son with the smallpox virus after having used his newly developed vaccine on the eight-year-old. The child did not get smallpox. Later, Jenner used the deliberate infection strategy on 6,000 other people to test the efficacy of his vaccine that eventually became the principal reason why smallpox could be eradicated. In 1976, the US National Institute of Allergy and Infectious Diseases did a challenge study against cholera.

According to 1daySooner, the US-based vaccine advocacy group which has started registration of volunteers for the Covid human challenge, “The first well-described influenza challenge study was published in 1937 and involved the inhalation of a human influenza virus. Because only a small number of volunteers (20%) developed mild disease, this model was used across studies for many decades.”

WHO says that in the last 50 years, challenge studies have been performed safely in tens of thousands of consenting adult volunteers under the oversight of research ethics committees. These studies have recently helped to accelerate the development of vaccines against typhoid and cholera among others.

How necessary is this programme for deliberate infection?

There is currently no approved treatment against COVID. This means that there are only two ways of stopping the global march of SARS-CoV-2. The first is herd immunity — when a critical mass of people in a given population get infected by the virus, develop some immunity against it and thus stop being the vessels for further transmission of the disease. This involves a lot of death and suffering; there is also an element of uncertainty because nobody knows how long immunity against Covid lasts in a person who has already had it. Some estimates say 60-70% of a population needs to have been infected by the virus for herd immunity to kick in. The other way of stopping it is a vaccine. That is why there is so much work going on across the world on a Covid vaccine. There are estimates that even a vaccine that clears all trials in a breeze could have a waiting period of 12-18 months before it is available at a global scale.

Is it ethical to infect people deliberately with a virus that has caused so much suffering?

There are no easy answers to this. That is why it is important to choose volunteers with care, with full disclosure given and informed consent sought from them, before going ahead with the actual act of infection. WHO, in its guidance document says: “Challenge studies are nonetheless ethically sensitive and must be carefully designed and conducted in order to minimize harm to volunteers and preserve public trust in research in particular, investigators must adhere to standard research ethics requirements. Furthermore, research should be conducted to especially high standards where (a) studies involve exposing healthy participants to relatively high risks; (b) studies involve first-in-human interventions (including challenge) or high levels of uncertainty (for example, about infection, disease and sequelae); or (c) public trust in research is particularly crucial, such as during public health emergencies.”

Based on the data available so far, WHO estimates that participation in SARS-CoV-2 challenge studies would be the least risky for young healthy adults. In ages 18-30 years (whether healthy or not), hospitalisation rates for Covid-19 are currently estimated to be around 1% and fatal infection rates around 0.03%

Source: The Indian Express

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