On April 30, Super Galaxy, a huge US military plane, landed in Delhi, bringing oxygen cylinders, hospital equipment and Covid test kits. More flights with aid material are on the way to India. And, thereby hangs a tale.
On April 22, Edward Price, the US state department spokesman, was asked at a press briefing about “the horrible surge” in the coronavirus infections in India and why the US was not lifting the ban on exports of raw materials for vaccine production. He uttered no word of sympathy, while offering a long explanation as to why it was “in the interests of the rest of the world to see Americans vaccinated”.
A storm of protests and criticism erupted in India; influential members of the US political and corporate establishment implored their government to change its position. Four days later, on April 26, a much-chastened Price spoke about the importance of the “Global Comprehensive Strategic Partnership” with India, providing details of how the administration planned to help India address the terrible pandemic.
President Joe Biden’s “America is back” mantra — which, for a moment, sounded more like Trump’s “America First”— re-assumed a liberal and humanitarian patina, thus indicating Washington’s right instincts for enlightened global leadership. In a telephone conversation with Prime Minister Modi, Biden acknowledged India’s assistance to the US in the early phase of the pandemic and expressed his determination to stand with India in times of her need.
After intensive inter-agency consultations in recent days, the US government came up with a positive response to India’s requirements. The package of assistance has several elements:
First, the US Defence Production Act’s provisions are being reconsidered. The authorities have agreed to approve the supply of filters needed for the manufacture of the Covishield vaccine.
Second, it is estimated that the US will have 60 million surplus doses of the AstraZeneca vaccine by June, which it will not use at home. Subject to clearance by the FDA, this will be released for use by other countries. Whether some of them will be sent to India is not clear yet.
Third, a comprehensive plan has been prepared for the supply of oxygen-related equipment, including generation systems, cylinders and setting up of field hospitals with oxygen beds.
Four, a special focus is on stepping up commercial supplies of therapeutics, especially remdesivir. Immediate shipment of 1,00,000 vials by Gilead Sciences has been arranged, with another 2,00,000 vials to be made available by end-May.
Five, the US Development Corporation will fund the Indian vaccine firm BioE to expand its manufacturing capacity. This is covered under the Quad’s Vax Partnership, enabling India and the other three partners (US, Japan, Australia) to produce and distribute at least 1 billion doses by end-2022.
It is noteworthy that the Pentagon has been actively involved in helping India. Defence Secretary Llyod Austin observed that the department of defence has been directed to use its resources to provide frontline health workers with needed materials.
What is of immediate impact is the robust engagement of corporate, mostly Big Tech, America. Google, Microsoft and Apple — as well as others — Amazon, Proctor & Gamble and more — are coming forward to commit their resources.
It’s a mix of altruism and pragmatism: US tech has large, valuable investments in India, especially Bangalore, which need protection. The US-India Strategic Partnership Forum is helping with 12 ISO containers for the transport of oxygen to India. The US-India Business Council has appealed to its members to offer assistance. On April 27, Secretary of State Antony Blinken convened a Zoom meeting of business leaders. An Indian participant reported that “a massive effort and dollars” have been invested in supplying assistance urgently.
It is easy to see behind America’s turn around the benign hand of the Indian diaspora, backed by friendly American public figures and proactive diplomacy by India. Pramila Jayapal, the Congresswoman who riled the Modi government for her criticism of the human rights situation, raised her voice, stressing that it was both the right and necessary thing to assist India.
Even after the havoc wreaked by the second wave became clear, there was a disturbing “stony silence” in Washington, said an expert. The US should realise that the lingering anti-American sentiment (which has a long legacy) has not disappeared.
It would be unwise to underestimate its strength. Fortunately, the India-US partnership is now so multi-faceted, deep and robust that it can withstand minor turbulence. The ease and candour with which communications occurred from the US President down to his Deputy Secretary of State and their Indian counterparts, showcased the vibrance of bilateral ties.
India-US relations are in a good place now. They are set to deepen further. When it comes to health-related cooperation, the US needs to internalise that helping India is really helping the world. Vaccines produced in India are meant not only for Indians but for the people of Africa, Asia and Latin America.
That is why all influential figures in Washington should support the initiative by India and South Africa to seek a temporary IPR waiver under the TRIPS agreement. Many are already doing so enthusiastically — for they know that this is a potential game-changer. Let the magic of how India helped Africa vanquish the HIV/AIDS menace be recreated.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.