The Quantum Hub

Author: Aparajita Bharti
Published: November 30, 2019 in the Times of India

Alina, 17, Mumbai, says she often gets taunted about her weight on her pictures online. Abhijit, 18, Delhi, mentions he got bullied when he posted his thoughts about the 2019 general election results. Sonali, 16, Kolkata, acknowledges that she remained quiet about her depression and anxiety till she found an online community where she let it all out.

Our relationship with technology is one of the most defining aspects of our life. On an average, Indians spend roughly three of their waking hours on their smartphones. This includes time for conversations, accessing news/information, forming new friendships, entertainment, work, etc.

Teens spend more time online than anyone else. A survey published by McAfee in 2014 titled ‘Tweens, teens and technology’ revealed that 71% teens interacted online with people they don’t know in person, 64% admitted to having created fake profiles to appear more likeable and mature, while 46% admitted “they put themselves in danger to see more engagement/activity on their posts.”

Given the salience of technology in a teenager’s life, and potential associated risks such as cyber-bullying, poor mental health, access to adult content, harassment and body shaming, parents and educators are rightly concerned about managing their kids’ time and interactions online. However, their approach ranges from instituting complete access control to following complete non-interference. While one is akin to hoping that the clock turns back, the other is like leaving an amateur swimmer on their own in the ocean.

So, what should the appropriate response be? First, parents and schools need to acknowledge that many of the behaviours and risks that manifest online reflect their teens’ lives offline, however much they are amplified online because of the anonymity and physical distance offered by the internet. Therefore, we need to invest in social and emotional development of our children. We need to re-inforce positive behaviours such as empathy, respect, tolerance for people who do not ‘fit in’ or who are different. It is important to make teenagers aware that they can be at the receiving end of behaviours such as bullying, even if today they find themselves at the other end.

While parents can engage in this dialogue at a personal level, schools need to institutionalise social and emotional learning as a part of their regular activities. A key learning for us from our initiative – the ‘Counter Speech Fellowship’ that runs in partnership with Instagram, across six cities in India and works with teenagers on these themes online – has been that such programs need not be prescriptive, but should serve as a platform for students to openly share their experiences. The aim should be to create a space for students to reflect on their own behaviours and finally become champions of positive behaviours among their peers.

Second, educators and parents must keep themselves updated with safety features of social media platforms that are popular among teens – like turning off comments, filtering specific trigger words, and reporting content related to self-harm. Third, at an ecosystem level, school education boards should prescribe a digital citizenship curriculum that schools can follow not just for teenagers but even for younger students. A recent survey by McAfee conducted among affluent kids across 10 major cities in India suggested that 62% of the surveyed kids (aged 4-12) had an e-mail address. Out of these kids, 67% were 4-8 years old. This shows that the age at which kids are experimenting with internet is reducing rapidly.

While many private organisations have worked on disparate digital citizenship curriculums, there needs to be a common consensus on the required approach by involving academics, technology companies, parents, school administrators and teens themselves. As more and more teenagers from tier 2 and tier 3 towns and cities in India join cyberspace, this becomes even more pertinent.

It in fact can be argued that social media usage is intrinsically linked with broader civic education, and this is also an opportunity for shaping citizens of tomorrow to be mindful of the power of social media and its equal ability to be deployed both for positive and negative causes. For far too long, we have parked the blame at technology’s door itself for encouraging these behaviours, but constant and innovative engagement with youth is essential in making the internet a more hospitable space.

Author: Vanya Gupta
Published:  December 11, 2019 on the India Development Review (IDR)

India is expected to add seven crore individuals to its labour force by 2023—a 21 percent addition to the existing base of 33 crore. Given this rapidly increasing workforce, creation of employment opportunities and skill development is vital for the Indian economy. This is especially important because India faces a massive skill development gap; only 4.69 percent of India’s current workforce is formally skilled. Cognisant of this, the government has undertaken several measures to meet the challenge. The launch of the Skill India Mission in 2015 was one such important measure. Under this mission, several skilling initiatives were launched, including flagship schemes such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), to train a large number of youth in industry-relevant skills so they may secure better livelihood opportunities.

While initiatives such as PMKVY have received enormous backing from the government in terms of budgetary and administrative support, they have not delivered on the expected outcomes. For instance, during the 2016-2020 period, the government committed more than INR 12,000 crore to PMKVY. While lakhs of candidates have been trained through the programme, a large number have not been placed. In fact the first iteration of PMKVY was heavily criticised for its poor placement record, in addition to the poor quality of jobs in which the candidates were placed. Many candidates seemed to have been placed in informal sector engagements without job security, in trades such as electrical repairing and self-employed tailoring.

Photo courtesy: Unsplash

Where does the scheme fall short?

A 2019 analysis by The Quantum Hub (TQH), the organisation where I work, suggests that these outcomes are, in large measure, expected. A closer look at the programme design highlights issues with stakeholder incentives, as well as challenges in implementing the scheme’s provisions.

Insufficient incentives for training partners: The PMKVY is designed in such a way that training, certification, and placements are implemented through Project Implementing Agencies (PIAs) or training partners. These organisations receive funds upon completion of different stages of skilling. As it so happens, the least amount of money is allocated to student placement—30 percent of the payment is released at enrolment and commencement of training, 50 percent on certification, and the remaining 20 percent on placement. This leaves very little incentive for PIAs to push for placements or provide post-placement support. Moreover, students do not pay any amount of money to receive training. This not only affects how seriously candidates approach training, but also deters them from holding the PIAs accountable for quality training.

Low implementation capacity due to geographical spread and absence of standardised testing: Delivering effective, on-ground skill development requires high implementation capacity. Since the scheme is implemented by PIAs with training centres dispersed across the country, monitoring and quality control is hard to execute. Once training is complete, assessments and certification are done by selected third-party agencies. However, standardised testing is difficult, given the diversity of trades taught, which range from plumbing to apparel to Information Technology/Information Technology enabled Services (IT/ITeS). This creates room for discretion at the local level and opens avenues for collusion. The incentive for collusion between PIAs and testing agencies is also high given that 50 percent of the payment in PMKVY is linked to a candidate clearing the examination.

Leakages due to problems in tracking placements in the informal sector: In the case of wage employment, the last tranche of payment to PIAs is linked to the submission of proof of placement, either in the form of an offer letter or proofs of salary (such as bank statements). This opens another avenue for leakages, especially given that it is difficult to produce placement records (salary slips and certificates) for people working primarily in informal economic setups such as plumbing and tailoring. Our analysis of programme data from 2018 in Haryana shows that a large number of youth (the highest among all trades) skilled through PMKVY ended up becoming self-employed tailors. This seems odd especially in a state where automobile and ITeS are some of the largest and fastest growing sectors. While it is hard to say so conclusively, the fact that these tailors are ‘self-employed’ rather than ‘actively’ placed could be one explanation for the anomaly. It is possible that PIAs enrolled a greater number of candidates in the tailoring category simply because it exempted them from having to invest in placements and it was easier to submit documents proving self-employment. As per PMKVY guidelines, self-employment also qualifies as placement if the PIA is able to submit a self-declaration letter from the candidate, and another verifiable document such as a trade license.

The government’s own reviews also corroborate our analysis. The Sharda Committee Report (2016) examined how skilling schemes could be rationalised and optimised, and the role played by the National Skill Development Corporation (NSDC) and India’s Sector Skill Councils (SSC). SSCs are bodies constituted with members from the industry, and are tasked with creating curriculum and supervising the entire skilling process. The report highlighted that in order to achieve targets, SSCs sometimes compromised on the quality of training, assessments, and certifications. And that training courses were too short to effectively supply a decent skill set, and schemes needed to be restructured for more effective implementation. The committee also reported that skill development courses offered poor placements to participants and added limited value to their employment opportunities.

An alternate approach to skilling

Our analysis and the findings of the Sharda Committee Report both call for a re-examination of the way skilling is currently being imparted in India. Luckily, there is already a scheme called the National Apprenticeship Promotion Scheme (NAPS), which may be capable of bridging some of the gaps identified above. Currently, NAPS is a small scheme, with a 2019-2020 budget of only INR 61 crore. This is a meagre sum when compared to PMKVY, which has been allocated INR 12,000 crore for 2016 to 2020.

NAPS is unique because it uses employment as a means of skilling youth and aligns the objectives of stakeholders in a productive manner. The scheme incentivises potential employers who wish to engage apprentices by paying a part of the apprentice’s stipend. The government currently shares 25 percent of the prescribed stipend, subject to a maximum of INR 1,500 per month per apprentice with the employer. Since apprentices are recognised as trainees and not workers under NAPS, it also exempts employers from meeting certain labour law requirements such as those prescribed under the Industrial Disputes Act or the Employees’ Provident Funds Act for the duration of the apprenticeship. By directly engaging with the industry, apprentices are able to pick up relevant skills on-the-job and are often well positioned to get placed after.

Surprisingly, though NAPS has been around for a while, it hasn’t managed to scale up. In 2016, only 30,165 establishments were engaging apprentices—a miniscule number when compared to the total number of establishments in the country. While the government had set a target of engaging 50 lakh apprentices cumulatively by 2019-2020, so far it has managed to engage only 14.45 lakh apprentices since NAPS’ inception in 2016.[1]

However, we feel that the design of NAPS is largely effective and it has the potential to drive skilling in a big way. What the scheme needs is a stronger push from the government. The government should invest more in streamlining enrolment by strengthening the NAPS portal and possibly increase stipend amounts to incentivise industry to take on more apprentices. Unlike other skilling initiatives, investment in NAPS is likely to lead to more sustainable skilling outcomes, as establishments might see apprentices as an asset (having invested both time and money in their training).

At its core, NAPS is similar in design to the German Dual Vocational Education and Training system (DVET) that combines work experience, learning on-the-job, and classroom education, and is considered one of the best practices in skilling across the world. This model is increasingly being discussed in policy conversations in India and Dr MN Pandey, the Minister of State for Skill Development and Entrepreneurship has also emphasised the need to impart apprenticeship training as a part of regular courses for students.

What we need now is a concerted shift away from PMKVY and similar schemes, towards models that leverage apprenticeship as a core tool for training. Increased focus on creating awareness and higher budgetary allocations for NAPS will help provide the practical skills necessary to bridge the skill gap in the Indian economy.

Footnotes
1. The figure of 14.45 lakh apprentices has been calculated using data from a July 2019 PIB press release, which reports 3.78 lakh, 4.00 lakh and 4.45 lakh candidates have undergone apprenticeship training during the financial years 2016-17, 2017-18 & 2018-19 respectively.

Authors: Rohit Kumar & Vanya Gupta
Published: April 06, 2020
Context: 1.7 Lakh Crore Pradhan Mantri Garib Kalyan Yojana

Image source: Aljazeera

The prevalence of a large informal economy makes India extremely vulnerable to the socio-economic impacts of COVID-19. Displacement, poverty and malnutrition are some of the issues that will almost certainly result from the lockdown that has been put in place to contain the spread of the disease. While the lockdown is a move in the right direction, it is going to affect almost every industry, and worryingly, the most vulnerable people in each industry. Gig economy workers and daily wage labourers face huge losses as their work comes to a standstill.

The government, recognizing the potential fallout of the lockdown, has been prompt in announcing a bunch of measures to address the problem. These include relaxed compliance requirements for companies, lower taxes, medical insurance for all frontline workers and a large social protection package for at-risk populations, such as farmers, self-help groups, construction workers, widows, differently abled, and senior citizens. This is certainly a good move. However, the package announced by the government may not be enough to contain the impact of the lockdown, and many households may find themselves pushed deep into poverty by the end of this crisis. While India’s package, by the FM’s reckoning, totals 1.7 lakh crore rupees, it is still only 0.8% of India’s GDP. Compare this with the US that has announced a stimulus package of over $2 trillion. Of this, $500 billion (or 2.3% of US GDP) is in the form of direct payments to people to overcome the loss of income likely to result from the crisis.

But numbers still don’t tell the entire story. Many sub-measures announced by the government are simply frontloading payments that were already committed, or redirecting funds that had been budgeted for other welfare activities. Most transfers also ride on existing schemes and use the existing database of beneficiaries. While this will help in speedy implementation, it is likely to replicate the inclusion-exclusion errors of the existing schemes and may pose a threat to vulnerable populations that are currently not covered.

For instance, additional food grains and pulses will be distributed for free through the PDS system. While it is good to leverage the existing system, these disbursals are likely to be impacted by the exclusion errors in PDS beneficiary lists. A study published in 2019 estimates exclusion errors to the tune of 10% across six states, with states like Jharkhand showing exclusion errors of 24% i.e. 24% of otherwise eligible households do not have a ration card to avail subsidized grain from the government. To go around this, states like Kerala and Delhi have come up with the suspension of Aadhaar cards and ration cards until the lockdown is lifted, so as to include as many people as possible under the social protection measure. More states may need to do this too, to truly ensure that the most vulnerable are not left stranded.

The increase in wages of MGNREGA workers, although a great step, will only kick-in after the lockdown is lifted, because all construction work has currently been suspended for the 21-day period. At this stage, the government can only clear the currently pending MGNREGA dues which can help families by giving them more cash in hand. It appears that every financial year, from the third quarter onwards, funds for MNREGA start to dry up. As of January 2020, 91% of wages, involving 2.03 crore transactions amounting to ₹2,802.59 crore, were pending for the month. The problem is likely to have exacerbated in March, thus putting daily wage labourers at greater risk during the pandemic.

The government also announced cash transfers to all women-held Jan-Dhan accounts to help women run their households, however, this too comes with challenges. When introduced, Jan-Dhan accounts came with a facility that allowed account holders the option of availing overdrafts (to be automatically adjusted against money that is deposited into the account). For many women, if they used the overdraft facility, the government’s cash transfer may never become available. And even if it does, the amount may not be adequate.

With regards to the free cooking gas cylinders being given out under the Ujjwala Scheme, there are a couple of issues to consider. The original scheme design requires people to pay for the cylinder at the time of collection, and the money gets reimbursed in their account at a later date. This has been a problem for many because low-income households often do not have the cash flow to avail the benefits of the scheme; as a result, the uptake of refills under Ujjwala has been very low. If implemented in the existing format, the scheme is likely to face the same problem, and poor households will be unable to benefit from it.

Lastly, the use of the Welfare Fund for Construction Workers by states may exclude a large proportion of construction workers who are at risk because of the lockdown. Workers aged between 18 and 60 years who have been engaged in building or construction work for at least 90 days in the preceding 12 months are eligible to register under the fund. A report by India Spend suggests that a large proportion of construction workers, especially seasonal migrants and ‘naka’ workers are not registered; moreover, several registrations are incorrect too. Currently the number of registered construction workers in India is 3.5 crore, however, according to an estimate by Invest India, there are over 5 crore construction workers in India. Some other sources suggest that the actual number of construction workers is even higher. This directly reflects on the issue of exclusion as many construction workers will be left out of the social protection package being offered by the government. Some Trade Unions have also pointed out that the Welfare Fund is actually workers’ money, built through cess collected from builders. If it is used for COVID-19 relief, the fund would be depleted and this would hamper the other welfare activities that the fund was designed for.

For a country as large as India, and in the context of a crisis such a COVID-19, the government’s fiscal response needs to be stronger. COVID-19 is going to strongly hit the economy and affect the livelihoods of millions of Indians. While the lockdown may save people from succumbing to the disease, in the absence of a strong social protection response from the government, we will risk losing an equal number of lives to poverty.

Author: Renjini Rajagopalan
Published: April 25, 2020

Most countries impacted by the COVID crisis have put in place containment measures of one kind or the other. These range from sealing state and national borders, to imposing curfews and lockdowns in varying degrees. However, given the unsustainability of lockdowns which impose large economic costs, countries have been exploring strategies by which they can slowly revive economic activity, but without compromising on public health measures to contain the COVID infection.

Many countries are still struggling with the first wave of virus infections and therefore seem far away from implementing an exit strategy. Major European countries like Spain, Italy and Netherlands – despite their public spending in healthcare – haven’t done well either. Germany, however, seems to be an exception to this rule. Germany has over 1,53,000+ cases, of which only a third are currently active.[1] The country has cured and discharged over 106,800+ people successfully, and has death rates that are a fifth of what Spain and Italy are going through, and nine times lesser than the US.[2] Germany’s lockdown exit strategy involves allowing hairdressers, shops of 800 sq. meters as well as bookshops, bike stores and car dealerships to function.[3] By focusing on smaller establishments, and the auto industry in Germany which employs many people, the government is trying to elevate hardships for those employed in these sectors. Germany has also planned to open its educational institutions to relieve the burden of home-schooling, and to prevent an escalation of social and gender inequality in the next generation.[4] However, kindergarten classrooms will not function because younger kids usually find it difficult to socially distance or wear masks properly.[5] Large cultural events, such as concerts and beer festivals, will continue to remain banned until the end of August.

A major benefit that Germany seems to have had is its successful healthcare system which makes the country reasonably certain that if social distancing and adequate caution is maintained, then a second wave of COVID cases can be stymied. Extensive contact tracing has also been implemented by public health offices, and the state has leveraged even students (who are trained for contact tracing), to help beef up state capacity.[6] In the testing arena, the government has a wealth of private laboratories that have been leveraged to improve testing capacity.[7] Health insurance covers testing, and the state has also passed the COVID-19 Hospital Relief Act which guarantees funding of hospitals to ensure their liquidity, and to ensure compensation and rehabilitation of those in the medical profession.[8]

Yet another example of a country that seems to be doing relatively well is South Korea. Though the country only had a tenth of the cases that Germany did (10,708),[9] it has managed to successfully curb the spread of the virus without enforcing a full lockdown.[10] South Korea has allowed the functioning of a number of economic activities, including the running of its transport systems and many commercial establishments, so long as social distancing measures are maintained. While the pandemic was underway, factories were permitted to function at some level,[11] and once numbers came down, national elections were held too.[12] Currently, it is also understood to be considering requests to allow potential travel exemptions for businesspeople given how the country is one of the largest exporters and investors in the world.[13] That being said, schools remain closed for the time being, as do religious places.[14]

Some things that have worked well for South Korea have been its contact tracing measures, wherein information of confirmed patients is published on each local governments’ official website, and citizens also get regular alerts via the government’s Corona 100m app if they are in the vicinity of a COVID patient.[15] The government has also been making heavy use of surveillance technology, notably CCTV and the tracking of bank cards and mobile phone usage data, to identify who to test in the first place.[16] The state has been relatively transparent about the collection of information and is said to be anonymizing it. Interviews with citizens reveal that while some privacy concerns exist about contact tracing, most people are willing to surrender some freedoms in return for public health and safety.[17]

Perhaps most important has been South Korea’s experience battling SARS in the past[18]. The state proactively directed its biotech businesses to create COVID rapid test kits, as early as January 2020[19] which helped with its own testing, and now even other countries through exports. The country’s cultural comfort with social distancing norms – with South Koreans generally wearing face masks when unwell or while traveling to prevent contamination by germs, and bowing to greet each other as opposed to more intimate expressions of affection like hugs or handshakes, have also helped enforcement of health protocols. The country has also announced that all medical costs associated with COVID-19 would be met by the government regardless of whether it is a citizen or a foreigner resident in South Korea.[20]

While India is not in the same league as Germany or South Korea when it comes to public health infrastructure, two key lessons still stand out – (i) the need to leverage the private sector and cover costs of testing and treatment, and (2) to utilize technology in contact tracking, but responsibly. As India, relaxes the lockdown, infections are likely to increase again. Unless the government’s capacity is buffeted through the use of resources in the private sector, the effort to control COVID is unlikely to pay off. While there has been some movement on this front, the collaboration between the private sector and the government is yet to properly take off. Secondly, the adoption of technology in contact tracing, while deployed through the use of the Arogya Setu app, and through drones as well as CCTVs in states like Maharashtra[21] and Kerala[22], has not been very transparent. There is fear that the data collected through these means could be repurposed to tighten the government surveillance net, particularly in the absence of a national privacy legislation.[23],[24] What is urgently needed, therefore, is for the government to be transparent about the architecture of the tech apps being deployed and institute strict frameworks, and check and balance mechanisms, to regulate the usage of the data being generated from these interventions.

Sources:
[1] https://coronavirus.jhu.edu/map.html;
[2] https://coronavirus.jhu.edu/map.html;
[3] https://www.euronews.com/2020/04/06/analysis-what-is-europe-s-coronavirus-exit-strategy
[4] https://innovationorigins.com/initial-outline-of-the-german-exit-strategy-face-masks-and-then-back-to-school/
[5] https://innovationorigins.com/initial-outline-of-the-german-exit-strategy-face-masks-and-then-back-to-school/
[6] https://www.covid19healthsystem.org/countries/germany/countrypage.aspx;
[7] https://www.bloomberg.com/news/articles/2020-04-02/private-labs-helped-germany-test-1-million-for-covid-19-virus;
[8] https://www.covid19healthsystem.org/searchandcompare.aspx
[9] https://coronavirus.jhu.edu/map.html;
[10] https://www.npr.org/sections/goatsandsoda/2020/03/26/821688981/how-south-korea-reigned-in-the-outbreak-without-shutting-everything-down;
[11] https://www.ft.com/content/04e9c5fe-52b1-4eb8-bf9c-793d71a0524d
[12] https://asia.nikkei.com/Spotlight/South-Korea-election/South-Korea-s-COVID-19-response-masks-economic-woes-at-election
[13] https://www.ft.com/content/04e9c5fe-52b1-4eb8-bf9c-793d71a0524d;
[14] https://www.aljazeera.com/programmes/upfront/2020/03/testing-times-south-korea-covid-19-strategy-working-200320051718670.html
[15] http://ncov.mohw.go.kr/en/faqBoardList.do?brdId=13&brdGubun=131&dataGubun=&ncvContSeq=&contSeq=&board_id=&gubun=;
[16] https://www.nature.com/articles/d41586-020-00740-y;
[17] https://www.nature.com/articles/d41586-020-00740-y;
[18] https://www.ft.com/content/e015e096-6532-11ea-a6cd-df28cc3c6a68
[19] https://www.theguardian.com/commentisfree/2020/mar/20/south-korea-rapid-intrusive-measures-covid-19
[20] https://www.brookings.edu/blog/techtank/2020/04/13/combating-covid-19-lessons-from-south-korea/
[21] https://indianexpress.com/article/cities/mumbai/india-lockdown-drones-5000-cctv-cameras-keep-eye-on-crowd-in-mumbai-6342941/
[22] https://economictimes.indiatimes.com/news/politics-and-nation/kerala-police-drone-video-shows-lockdown-flouters-running-away-like-tracer-bullets/articleshow/75046046.cms?from=mdr
[23] http://www.rfi.fr/en/international/20200421-india-surveillance-apps-during-covid-19-%E2%80%93-boon-or-bane
[24] https://economictimes.indiatimes.com/tech/software/aarogya-setus-not-all-that-healthy-for-a-persons-privacy/articleshow/75112687.cms

Author: Aparajita Bharti
Published: July 22, 2020 in the Financial Express

The emergence of a ‘leaked, unconfirmed’ National E-commerce Policy Draft earlier this month follows a string of dubious developments in this sector. To a keen observer of e-commerce regulations, it is not surprising that the draft emerged before the official announcement, given the government’s previous misadventures with the policy in 2018 and 2019. Both the previous drafts had to be rolled back due to serious pitfalls and strong criticism from domestic and foreign players, other ministries within the government, and small sellers alike.

One of the key criticisms of these drafts, among other things, was that they sought to expand the regulatory mandate to have a say in the areas that are already regulated by other entities. For instance, the 2018 draft covered corporate governance provisions such as control of Indian founders with minority shareholding over their companies, and the 2019 draft included provisions with regard to governance of personal data, even when the Personal Data Protection Bill was already under consideration.

Given the significant pushback on many fronts, the leaked 2020 draft steers clear of many problematic issues. However, the overall protectionist and interventionist tone evident in the 2018 and 2019 drafts has been retained. Without going into the specifics of how it might be implemented, the draft makes several references to the government’s intention of imposing forced information-sharing obligations on larger companies to develop the Indian innovation ecosystem and prevent the creation of monopolies.

Even though this draft clearly states that data governance is the domain of the Personal Data Protection Bill and the Non-Personal Data Committee, several clauses allude to the powers of the proposed e-commerce regulator to restrict cross-border data flows and impose additional regulations on the use of data for the development of the domestic industry. Considering that ‘e-commerce’ and ‘digital economy’ are used interchangeably in this draft, it seems the envisaged e-commerce regulator and the Data Protection Authority under the Personal Data Protection Bill are headed towards a regulatory clash.

Further, certain other clauses, especially the power to seek source code from e-commerce entities (which, given the way e-commerce has been defined in the draft, includes everything from B2C e-commerce entities to social media platforms and search engines as well as IoT devices), is bound to make investors in India very nervous. There is no reference to IPR laws/trade secret protection when talking about such disclosures, completely disregarding the industry’s incentive to innovate or the benefits to Indian consumers through such innovation.

The silver-lining in the current draft is the government’s focus on B2C exports for Indian sellers. Interestingly, foreign e-commerce platforms are referenced quite fondly for their efforts to get Indian MSMEs registered on their global platforms. However, the government seems to have ignored principles of reciprocity in trade, while hoping for foreign players to be engines of growth in B2C exports from India.

Such provisions of the draft, in fact, reflect the broader inconsistency in approach of the Indian government with respect to the e-commerce industry over the last few years. In 2014, the Prime Minister issued a clarion call for increasing foreign direct investment and made several trips abroad to canvass for the same, bringing in large amounts of investment in this sector. By 2016, the government had started coming under pressure from organisations such as the Confederation of All India Traders (CAIT) to check the market power of the e-commerce sector as a whole. India then became the first country to have different rules for ‘marketplace’ and ‘inventory-based’ models, and FDI was clearly restricted to marketplace models.

In 2018, fearing the WTO talks on e-commerce, the government then hastily constituted a think tank within the Ministry of Commerce to draft India’s e-commerce policy. Interestingly, the two biggest online marketplaces by market share—Amazon and Flipkart—were not invited to give their views when this policy was being drafted (Flipkart was included initially, but kicked out after its takeover by Walmart). Till then domestic start-ups under intense competition from foreign players had also banded together to form ‘India Tech’, which started pushing hard for the government’s protection to Indian companies. The 2018 draft, therefore, had bizarre clauses such as protection of rights of Indian promoters for e-commerce companies, outside of the provisions of the Companies Act as discussed earlier.

After the roll-back of this draft, a press note 2 (2018) was issued that aimed to placate trader associations till the time a second draft was prepared. The second draft (2019) of the e-commerce policy was released in the din of the general elections, with no time for a consultative process. For most industry watchers, it was more of a statement of intent to protect domestic players as well as the interests of small and medium businesses, messaging that was necessitated because of imminent elections.

The current version, i.e. the third draft, is admittedly a lot more balanced than the previous ill-conceived drafts. However, it achieves this balance by not going into too many details. This allows the draft to retain its pro-domestic industry stance, while kicking thorny issues down the road to the proposed e-commerce regulator. Interestingly, this draft does not get into the nitty-gritty of pricing and discounting—a key sore point for small traders. Instead, it seems to take a more information disclosure-based approach to check unfair trade practices.

Overall, unfortunately, in this atmosphere of ‘atmanirbharta’, this policy does little to build confidence among foreign investors in India. It seems that while India wants capital investment, it is unwilling to cede any space to the entities that are willing to invest, not even a stable regulatory environment without the fear of policy concessions being reversed. What is worrying is that a lot of FDI was brought into India citing favourable government support, but that is now being increasingly reversed under pressure from domestic lobbies—a development that has wide ramifications for the Indian economy, even beyond this sector.

The question that faces the Indian government is whether it believes that India is self-sufficient even in terms of capital investment (many economists would disagree)? Unfortunately, the latest e-commerce policy draft suggests that the government has still not been able to resolve the conflict in its thinking.

Authors: Abhinav Saikia & Aparajita Bharti
Published: December 13, 2019 in the Financial Express

The draft Rules contain some ambiguous clauses and restrictive norms that can hurt both offline and online pharmacies

E-pharmacies, in recent years, have been able to fulfil unmet medical needs of the large Indian population by enabling access to affordable medicines to people in remote areas. They are also ensuring efficacy, transparency and reliability in delivering these items. Despite their noticeable advantages, e-pharmacies in India operate in a grey area from a regulatory standpoint. They have been embroiled in litigation following concerns raised by traditional offline chemists and entities from the medical fraternity.

To remedy the situation, the government had resolved to introduce e-pharmacy Rules with urgency. The Rules have now been approved by two committees, the Drugs Consultative Committee (DCC) and the Drugs Technical Advisory Board (DTAB). However, the government has still not been able to reconcile the demands of online and offline pharmacies within these Rules, leading to delays in formalisation of the regulatory structure for e-pharmacies.

Stakeholder concerns
Although the Rules seek to mitigate regulatory confusion and bring about a measure of uniformity in registration and licensing of all pharmacies, both offline and online, various stakeholders have taken objection to its provisions. They have argued that the Rules do not provide sufficient clarity on FDI norms. This is partly due to the vague definition of e-pharmacies in the Rules that does not distinguish between the marketplace and inventory-based models. They feel that FDI provides unfair advantage to e-commerce entities who can then introduce discounts on medicines and offer them at cheaper prices. They also fear that predatory pricing can hurt local players.

Another objection that the All India Organisation of Chemists and Druggists (AIOCD), a lobby group comprising 8 lakh offline chemists, has put forward is that the Rules allow snapshots of prescriptions to be uploaded (while the original Drugs and Cosmetics Act requires the original prescription to be submitted). According to them, not only does this water down the prescription verification system, it can help facilitate fraud, such as by allowing consumers to forge or reuse prescriptions, resulting in misuse of prescription drugs.

Licensing and monitoring clauses are yet another area of concern. Though the Rules provide that the e-pharmacy business premises will be periodically monitored by central and state licensing authorities, this will be hard to implement given how e-pharmacies are websites that are anchored online. The resulting ambiguity has thrown up questions as to whether e-pharmacies will require separate licences to operate across multiple states, so as to allow state authorities—who traditionally regulate drug sale—to monitor them?

Brick-and-mortar stores are not alone in their concerns, and e-pharmacies themselves have voiced concerns such as ambiguity around clauses of state licensing and FDI norms. They also find the Rules compliance-heavy in many respects. For instance, the Rules dictate that e-pharmacies record large amounts of data for every transaction and do a drugs dispensation verification on submitted prescriptions, which makes compliance extremely onerous and will result in poor-quality customer experience.

Another pressing concern is the Rules’ prescription regarding security of customer data. In order to address the issue of data security, the Rules prohibit disclosure of information gathered through the online platform and do not make any exceptions for such data to be shared internally for improving the functionality of platforms.

The Rules insist that all e-pharmacy portals operating in India should be registered in India and the data generated by them be stored and processed locally. E-pharma organisations, such as Myra, have expressed concerns that such a requirement would hinder local companies from sharing critical information with drug manufacturers who may be based abroad. Certain Indian pharma companies are of the opinion that more clarification is required on how doctors will access records data hosted on these platforms.

The data localisation requirements in the draft Rules are also not in sync with other proposals concerning data storage and processing, such as the soon-to-be-tabled law on data privacy – the draft Personal Data Protection Bill, 2018 (PDP Bill) – or the proposed regulation for health data under the Digital Information Security in Healthcare Bill, 2018 (DISHA). The PDP Bill allows cross-border flow of health data on the prerequisite that the individual has explicitly consented to it or because the transfer is necessary for emergency services, and DISHA does not provide a mandate for localisation of data. Such differences in requirements can lead to regulatory confusion in handling health data.

The way forward
The draft Rules comprise of some ambiguous clauses and in some cases restrictive norms that can hurt both offline and online pharmacies. The government should ideally leave the subject of localisation of health data under the purview of the PDP Bill, and provide more clarity with respect to ambiguous norms, such as FDI and state licensing. In drafting these Rules, the government has largely adopted norms relating to offline chemists and has not acknowledged the distinctions between the offline and online models. E-pharmacies come with multiple advantages such as greater choice, less information asymmetry, wider reach, better tracking systems and more effective consumer redressal mechanisms. The e-pharmacy Rules are therefore an opportunity to correct the huge imbalance in availability of drugs across the country by riding on increasing internet penetration. Given the positive externalities associated with e-pharmacies, it is imperative that the government create an enabling regulatory environment for them to thrive.