A researcher holds up a plate showing a growth of Klebsiella pneumoniae bacteria from a positive blood culture, December 14, 2019.
| Photo Credit: Chiara Marraccini

Amid the unprecedented challenges presented by the COVID-19 pandemic, a once obscure enzyme found itself in the spotlight: reverse transcriptase. As laboratories worldwide rushed to develop reliable diagnostic tests, techniques using the enzyme became the gold standard to detect the SARS-2 virus, and a cornerstone of molecular diagnostics. This remarkable enzyme didn’t only facilitate rapid and accurate testing; along with another powerful approach — genome-sequencing — it also helped track the virus’s spread, paving the way for surveillance, better public healthcare, and vaccine development.

The discovery of reverse transcriptase is a story unto itself. Researchers in the labs of Howard Temin and David Baltimore independently discovered it and published their findings in back-to-back articles in the journal Nature in 1970. In his paper, Dr. Baltimore suggested that in the vesicular stomatitis virus, a protein called RNA polymerase was involved in reverse-translating RNA to DNA.

A molecular biology revolution

The discovery was transformative. The prevailing belief at the time was that in all living beings, hereditary information flowed only from DNA to RNA and from RNA to protein (a.k.a. the ‘Central Dogma’). The discoveries of Drs. Temin and Baltimore et al. showed information could flow the other way, too, with RNA giving ‘rise’ to DNA. The name “reverse transcriptase” was however coined by the editor of Nature, in an article discussing the significant advance in an accompanying column.

The discovery’s impact was also immediate. The ability of cells to create DNA copies from RNA revolutionised research methods in molecular biology, where researchers could reverse-transcribe messenger RNAs to pieces of DNA, clone that DNA into bacterial vectors, and study the function of the corresponding genes. In diagnostics, clinicians used reverse transcriptase to convert RNA to DNA and thus estimate the amount of viral material in a given sample. This technique quickly found wide application and use in the study of RNA viruses, including hepatitis B and the human immunodeficiency virus (HIV).

Indeed, the discovery of reverse transcriptase had a significant effect on the management and treatment of HIV infections, including Acquired Immunodeficiency Syndrome (AIDS), in the 1980s. A generation of antiviral agents that specifically targeted the reverse transcriptase enzyme helped convert an otherwise deadly disease to one that could be managed, translating to improving the long-term outcomes and survival of people living with AIDS.

Subsequent studies of the reverse transcriptase enzyme since the 1970s led to mechanistic insights into how viruses use this enzyme to replicate, as well.

Retroelements in the human genome

Reverse transcriptases also had a significant role in shaping the human genome.

The human genome is interspersed in many places with sequences, called elements, that appear to have originated from retroviruses. Thus researchers call them retroelements. Evolutionary biologists believe these retroelements to have been transferred horizontally during the course of millions of years of evolution. (Horizontal gene transfer refers to genes ‘jumping’ between organisms rather than from parent to offspring.) And until recently, researchers also considered them to be “junk” elements: they were repeated through the genome and they seemingly did not confer any function to the human organism.

However, recent evidence has suggested that these retroelements could really have had a profound impact on human biology and evolution, and that they play important roles in a variety of physiological processes.

In a recent paper in the journal Nature Communications, researchers extensively studied the expression of genes in different parts of the human brain from post-mortem brain samples. They reported that the expression of more than a thousand human endogenous retroviruses — a major class of retroelements in the human genome — could be associated with a risk of neuropsychiatric diseases in humans.

Retroelements in the human genome and bacterial reverse transcriptases have a common evolutionary history as well as share functional mechanisms. Bacterial reverse transcriptases — believed to be the precursors of their eukaryotic counterparts — exhibit analogous mechanisms.

The discovery of reverse transcriptase activity across the different domains of life underscores the enzyme’s fundamental role in both prokaryotic and eukaryotic systems as well as a remarkable evolutionary continuity and functional versatility.

Writing genes using reverse transcriptase

Researchers widely believed that bacterial reverse transcriptases were the precursors of their eukaryotic counterparts. They discovered the first reverse transcriptase in bacteria in 1989, with papers published back to back in the journals Science and Cell. In bacteria, as in the case of humans, retroelements are categorised as belonging to three broad groups: the Group II introns, the retrons, and the diversity generating retroelements.

In a preprint paper uploaded to the bioRxiv preprint server on May 8, researchers at Columbia University in New York, led by Stephen Tang and Samuel Sternberg, suggested that when the bacteria Klebsiella pneumoniae is infected by bacteriophages — viruses that infect bacteria — they use a non-coding RNA with specific motifs (or structures) that could bind to reverse transcriptase and instruct cells to create DNA. This DNA copy has multiple copies of a gene that can create a specific protein.

The researchers dubbed this protein ‘Neo’ for “never-ending open-reading frame”. It could place the bacterial cell in a state of suspended animation, blocking its replication, and thus stalling the replication of the invading bacteriophage as well. Thus, the infection is stopped in its tracks.

Recent discoveries — including the role of reverse transcriptase in bacterial defence against bacteriophages — hint at the potential of innovative applications in biotechnology and medicine, especially in the context of emerging antimicrobial resistance, the ability of disease-causing microbes to resist the effects of substances designed to incapacitate or kill them. Further exploring reverse transcriptases could also reveal novel mechanisms of genetic evolution and viral resistance, potentially leading to new therapeutic strategies and biotechnological tools.

The authors are senior consultants at Vishwanath Cancer Care Foundation and adjunct professors at IIT Kanpur and Dr. D.Y. Patil Medical College, Hospital & Research Centre, Pune.

Geneva:

Negotiations on a landmark global agreement on handling future pandemics ended Friday without a deal — though countries said they wanted to keep pushing for an accord.

Scarred by the devastation caused by Covid-19 — which killed millions of people, shredded economies and crippled health systems — countries have spent two years trying to hammer out binding commitments on pandemic prevention, preparedness and response.

The talks gathered momentum in the final weeks, but failed to meet a final deadline before next week’s World Health Assembly — the annual gathering of the World Health Organization’s 194 member states.

“This is not a failure,” WHO chief Tedros Adhanom Ghebreyesus insisted as the talks ended at the UN health agency’s headquarters in Geneva.

He urged countries to see it as a “good opportunity to re-energise”.

“The world still needs a pandemic treaty and the world needs to be prepared,” he commented.

‘We’re not finished’

The assembly, which runs from Monday until June 1, will take stock and decide what to do next.

The talks co-chairs Roland Driece and Precious Matsoso told AFP that countries clearly wanted to reach a final agreement.

“It’s not the end,” stressed Matsoso, noting that the same ministers who decided they wanted a pandemic agreement would be the ones deciding on the next steps.

“They are the ones who are going to say, ‘OK, you haven’t finished this. Please go back, finalise it’,” she said.

Driece said the draft they would send to the assembly was “not an agreed document, but it is a document — and we started with a blank sheet of paper. With nothing.”

“I would think it would be very stupid if they would not finish this,” he said.

After arm-twisting, horse-trading and 3:00 am finishes as the talks ramped up, Matsoso said 17 pages out of 32 had been fully agreed by countries.

Sticking points

“It’s clearly a pause. Most member states want to carry on and lock in the gains,” an Asian diplomat in the talks told AFP, speaking on condition of anonymity.

“We’re not yet there with the text we have on the table. The big question is, what will it take for the north and the south to get to convergence? It needs time.”

The main disputes revolved around access to pathogens detected within countries, and to pandemic-fighting products such as vaccines derived from that knowledge.

Other tricky topics were sustainable financing, pathogen surveillance, supply chains, and the equitable distribution of tests, treatments and jabs but also the means to produce them.

“The best thing is to have a good, inclusive text. Whether that is now or later doesn’t matter,” one African negotiator told AFP. 

“We want to continue the process. We really want this text.”

Steadfast commitment

As the talks closed, countries who took the floor stressed their commitment.

US negotiator Pamela Hamamoto said: “I’m glad that we have the draft text to show for the work that we have done together.”

Ethiopia said African countries “remain steadfast”; Britain said there was “real progress”, while the European Union remained “entirely committed” to bringing the talks to fruition.

Bangladesh still wants to deliver a “successful result that will serve humanity”, while Indonesia said “we should continue until it finishes”.

Parallel talks took place on revising the International Health Regulations, which were first adopted in 1969 and last updated in 2005.

The IHR talks outcome will also be presented at next week’s assembly.

The regulations provide a legal framework defining countries’ rights and obligations in handling public health events and emergencies that could cross borders.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Geneva:

Covid-19 cut global life expectancy by almost two years when it raged from 2019 to 2021, wiping out a decade of progress, the World Health Organization said Friday.

“The Covid-19 pandemic reversed the trend of steady gain in life expectancy at birth and healthy life expectancy at birth,” the UN health agency said.

Global life expectancy fell 1.8 years to 71.4 years, the same level as it was in 2012, according to a WHO annual world health statistics study.

The amount of time the average person can expect to live in good health fell 1.5 years to 61.9 years in 2021 — also the 2012 level, the study said.

The impact was even worse than the findings of a study published by the Lancet in January, which said average life expectancy fell 1.6 years during the pandemic.

Researchers for that study said Covid-19 had a “more profound impact” on life expectancy than any other event over the past half century.

WHO director general Tedros Adhanom Ghebreyesus said the figures highlighted the importance of the global pandemic security accord being negotiated in Geneva “to strengthen global health security, but to protect long-term investments in health and promote equity within and between countries”.

The Lancet researchers estimated that Covid-19 caused 15.9 million excess deaths during 2020-2021, either from the virus or pandemic-related disruption to health systems.

The WHO study said however that life expectancy did not fall in the same way around the world.

The Americas and Southeast Asia were the worst-hit regions, with life expectancy falling by about three years, it said.

The Western Pacific was the least hit, with life expectancy falling just 0.1 year.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Researchers update the composition of influenza vaccines every six months to match the strains of the virus that are circulating in the wild, so that the shots may provide protective immunity against the flu. But despite their best efforts, researchers rarely perfectly match the strains loaded in the vaccine with the strains circulating by the time the vaccines reach the market.

The reason for this is the long gestation period – usually at least six months – between identifying the circulating strain and the development, manufacturing, and distribution of the vaccines. By the time the updated flu vaccine is available, the circulating strain may have drifted from the one contained in the vaccine, thanks to the high mutational rates of influenza viruses.

The ‘match’ between strains included in the vaccine and strains in circulation is the most important factor controlling the vaccine effectiveness (VE) of flu vaccines. The VE increases by more than 25% when there is a match with the circulating strains but can be as low as 10% in seasons when there is no match.

Another issue with flu vaccines is the durability of protection. According to a recent study, the VE declines by 7% for H3N2 to 11% for H1N1 viruses per month, and could vanish as soon as 90 days after vaccination.

There are some striking similarities between the influenza and COVID-19 vaccines. The VE of COVID-19 vaccines varies according to the disease’s progression as well as the circulating strains. With the advent of the highly mutated Omicron variant of SARS-CoV-2, the VE of COVID-19 vaccines has nose-dived.

According to one large study, COVID-19 vaccines had a VE of 52.8% against the Delta variant but only 16.4% against the Omicron. Another large review – of the findings of 78 studies on the VE of four COVID-19 vaccines before the advent of Omicron – concluded that VE against symptomatic disease waned by 20-30% by the sixth month of the primary series.

Thus, researchers worldwide rushed to revise COVID-19 vaccines that contained the ancestral strain to match the circulating strain of SARS-CoV-2 and keep it clinically relevant.

In early 2023, a highly mutated sub-lineage of the Omicron variant, XBB.1.5, emerged. It was antigenically as distant from the ancestral strain of SARS-CoV-2  as the latter was from the SARS-CoV-1 virus. There were three COVID-19 vaccines available as booster doses at this time: the monovalent ancestral (OG) shot, a bivalent OG+BA.1 shot, and a bivalent OG+BA.5 booster. However, as stated above, none of the vaccines (including mRNA vaccines) were found to be efficacious against infections of this hypermutated variant.

Subsequently, the vaccine was updated in mid-2023 to include the antigens of the XBB.1.5 strain. But by the time the U.S. Centers for Disease Control (CDC) approved and recommended the updated monovalent vaccine as a booster, another new lineage of Omicron, JN.1, had emerged with more than 30 mutations in the spike protein and a high immune-evasion potential. By January 2024, JN.1 had completely replaced XBB.1.5 in the population.

The CDC estimated the updated booster was around 50% efficacious against symptomatic JN.1 infections but some experts doubted this figure.

Merit in updating COVID-19 boosters

The matching problem raises a pertinent question: Is it prudent to attempt frequent updates?

One interesting study from Australia, uploaded as a preprint paper on February 9, analysed this question in detail. Researchers retrospectively analysed 18 studies that investigated the ability of the OG, the OG+BA.1, and the OG+BA.5 boosters to neutralise the variant that started circulating immediately after their deployment. They found that updated vaccines consistently improved neutralising antibody titres by 40% or more compared to non-updated vaccine formulations.

Specifically, the researchers found that relative to the OG antigens’ efficacy against XBB.1.5, the BA.1 update did a better job and the BA.5 update did even better. Based on these benefits in the neutralisation titres, they predicted that updating an existing vaccine should, on average, induce a 1.52-times higher titre against a future variant compared to boosting with an older formulation. The researchers also stated they expect a 11-25% increase in VE against symptomatic disease and 23-33% against severe disease caused by the future variant.

In sum,  the study supports the case for revising COVID-19 vaccines’ formulations as often as possible.

However, there are some confounding factors, including past exposure to infections, inter-study variations of such exposures, in vitro and in vivo differences, and publication biases. The researchers also clarified the benefits of the update would depend on the ‘distance’ between the antigens in the updated vaccine and the future variant that eventually circulates. Indeed, there is no guarantee that a profoundly drifted variant with a very high transmissibility and more virulence won’t emerge in future, and which would negate the advantage of updating existing vaccines.

Further, the researchers only explored one arm of the immune system: the humoral immunity conferred by antibodies. The other arm, cellular immunity conferred by T-cells, wasn’t considered. T-cells are like airbags: they deploy on their own and become safer to use with every accident (or exposure) that engineers study. Antibodies are like brakes. Our brain deploys them. They are terrific when new but suffer wear over time, and need to be updated.

Does India need an updated booster?

In India, the advent of Omicron (mainly BA.2) in January 2022 and its resultant mild disease rendered a much lower uptake of COVID-19 vaccines. For many Indians, the pandemic is long past, notwithstanding a few surges in 2023. Currently, there is no Indian vaccine with antigens matching the currently dominant JN.1 strain or its predecessor, XBB.1.5. Corbevax, the vaccine made by Biological E, is currently developing an XBB-based vaccine.

Whether Indians should be boosted with an updated COVID-19 vaccine depends on the objective. If it is to prevent severe disease, hospitalisation, and death, only three exposures – through natural infection or vaccination – will suffice to confer protection irrespective of the antigenic makeup of the circulating variant. (This protection is provided by our T-cells.) This is the case with most healthy, immunocompetent individuals.

For the vulnerable sections of society, like the elderly and those with comorbidities and immunodeficiencies, it is desirable to actively prevent an infection. These individuals need an updated booster. The vaccines based on OG or older strains may not offer meaningful protection owing to the mismatch and other factors.

All available influenza vaccines are being developed on conventional egg-based or cell-culture platforms, which is why updating them takes six months or more. Many COVID-19 vaccines use the mRNA platform whose main attraction is the ease and speed with which they can be modified. Unfortunately, updating mRNA vaccines has also required four to six months.

India also has a next-generation mRNA vaccine called Gemcovac, developed indigenously by Gennova Lab and based on the old Omicron variant. It can also be updated to use a contemporaneous variant, but that depends on the need and the will of the national recommending authority as much as the still-evolving SARS-CoV-2 virus.

Vipin M. Vashishtha is past national convener, IAP Committee on Immunisation, and director, Mangla Hospital & Research Center, Bijnor.

• Researchers update the composition of influenza vaccines every six months to match the strains of the virus that are circulating in the wild, so that the shots may provide protective immunity against the flu.
• But despite their best efforts, researchers rarely perfectly match the strains loaded in the vaccine with the strains circulating by the time the vaccines reach the market.
• The reason for this is the long gestation period between identifying the circulating strain and the development, manufacturing, and distribution of the vaccines.

At the Karolinska Institute in Stockholm
| Photo Credit: AFP

The 2023 Nobel Prize for Physiology or Medicine has been awarded to Katalin Karikó and Drew Weissman for developing the mRNA vaccine technology that became the foundation for history’s fastest vaccine development programme during the COVID-19 pandemic. The prizes acknowledge work that has created benefits “for all mankind”, but if we had to be stricter about holding scientific accomplishments up to this standard, the subset of mRNA vaccines used during the COVID-19 pandemic may not meet it. Yet, Dr. Karikó and Dr. Weissman, and others, deserved to win the prize for their scientific accomplishments. Instead, their triumph tells us something important about the world in which science happens and what “for all mankind” should really mean.

Dr. Kariko and Dr. Weissman began working together on the mRNA platform at the University of Pennsylvania in the late 1990s. The University licensed its patents to mRNA RiboTherapeutics, which sublicensed them to CellScript, which sublicensed them to Moderna and BioNTech for $75 million each. Dr. Karikó joined BioNTech as senior vice-president in 2013, and the company enlisted Pfizer to develop its mRNA vaccine for COVID-19 in 2020.

At the expense of public funds

Much of the knowledge that underpins most new drugs and vaccines is unearthed at the expense of governments and public funds. This part of drug development is more risky and protracted, when scientists identify potential biomolecular targets within the body on which a drug could act in order to manage a particular disease, followed by identifying suitable chemical candidates. The cost and time estimates of this phase are $1billion-$2.5 billion and several decades, respectively.

Companies subsequently commoditise and commercialise these entities, raking in millions in profits, typically at the expense of the same people whose taxes funded the fundamental research. There is something to be said for this model of drug and vaccine development, particularly for the innovation it fosters and the eventual competition that lowers prices, but we cannot deny the ‘double-spend’ it imposes on consumers — including governments — and the profit-seeking attitude it engenders among the companies developing and manufacturing the product.

Once Moderna and Pfizer began producing their mRNA COVID-19 vaccines, they were also mired in North American and European countries’ zeal to make sure they had more than enough for themselves before allowing manufacturers to export them to the rest of the world; their use in other countries (including India) was also complicated by protracted negotiations over pricing and liability.

On COVAX

COVAX, the programme to ensure poorer countries did not become the victims of their subpar purchasing power and had sufficient stocks of mRNA vaccines, fell far short of its targets. India, Russia, and China exported billions of doses of their vaccines, but their efforts were also beset by concerns that manufacturing capacity had been overestimated — in India’s case — and over quality in Russia’s and China’s. There were reports of several countries in Africa having to throw away lakhs of vaccine doses because they had been exported too close to their expiry dates. The World Health Organization did urge these countries to use the expired doses, but such a task presumed an existing base of community engagement and risk communication, which was absent in many of these countries.

And Corbevax

A counterexample to the path that Dr. Karikó followed is Corbevax: researchers at the Baylor College of Medicine, Houston, and the Texas Children’s Hospital Centre for Vaccine Development developed this protein sub-unit vaccine and licensed it to India’s Biological E for manufacturing. They did not patent it. In February 2022, Texas politician Lizzie Fletcher wrote a letter nominating the vaccine’s developers for a Nobel Prize for Peace “for their work to develop and distribute a low-cost COVID-19 vaccine to people of the world without patent limitation”. Kenya’s Ambassador to the United Nations Martin Kimani commended the developers for “providing sorely needed ethical and scientific leadership”.

We cannot blame our scientists for trying to profit from their work; the mRNA vaccine story during the COVID-19 pandemic simply placed an extraordinary premium on altruism on their part — a result of administrators’ botched decisions. The technology could have benefited everyone during the pandemic, but it did not. So, history should remember what actually happened during the pandemic and what the 2023 Medicine Nobel claims happened differently.

mukunth.v@thehindu.co.in

• The 2023 Nobel Prize for Physiology or Medicine has been awarded to Katalin Karikó and Drew Weissman for developing the mRNA vaccine technology that became the foundation for history’s fastest vaccine development programme during the COVID-19 pandemic.
• Dr. Kariko and Dr. Weissman began working together on the mRNA platform at the University of Pennsylvania in the late 1990s.
• The University licensed its patents to mRNA RiboTherapeutics, which sublicensed them to CellScript, which sublicensed them to Moderna and BioNTech for $75 million each.

A man wearing a face mask passes a sign put up to encourage social distancing during the coronavirus disease (COVID-19) outbreak, at Marina Bay in Singapore. File photo
| Photo Credit: REUTERS

A 64-year-old Singaporean of Indian origin was sentenced to two weeks’ jail on Monday, September 15, 2023, on pleading guilty to one count of breaching a COVID-19 regulation by failing to wear a mask that covered his nose and mouth while outside his home in 2021.

Despite knowing that he had just tested positive for COVID-19, Tamilselvam Ramaiya deliberately coughed at his colleagues, lowering his mask to do so on one occasion.

Another two charges were taken into consideration during sentencing, according to a Channel News Asia report.

The court heard that Mr. Tamilselvam was working as a cleaner for Leong Hup Singapore at the time.

After reporting for work at 6 Senoko Way on the morning of Oct 18, 2021, he told the assistant logistics manager that he was feeling unwell. He was told to take an antigen rapid test (ART).

A colleague administered the test on Mr. Tamilselvam, and he tested positive for COVID-19.

Given the result, he was instructed to return home and to tell the assistant logistics manager about the result.

The assistant logistics manager, who learnt of the positive test result from someone else, told his other colleagues about it.

However, Mr. Tamilselvam did not head home immediately. Instead, he went to the company’s logistics office to inform the assistant logistics manager about his COVID-19 test result.

Mr. Tamilselvam entered the office with a company driver who did not know about the positive test result.

The first victim, a 40-year-old logistics supervisor, told the driver not to go near Mr. Tamilselvam. The supervisor also asked Mr. Tamilselvam to leave the office and made a gesture mimicking kicking him out.

Mr. Tamilselvam walked to the door but turned back to cough twice into the office with his mask on.

The supervisor closed the office door, but Mr. Tamilselvam opened it. He lowered his mask to uncover his nose and mouth and coughed into the office a third time before leaving.

The act was captured on the closed-circuit television camera in the enclosed air-conditioned office.

While Mr. Tamilselvam was leaving, he passed by a window with a 56-year-old clerk on the other side of the glass in the logistics office.

The colleagues who were coughed at were alarmed as they knew mr. Tamilselvam had tested positive for COVID-19. The clerk was a dialysis patient who suffered from cardiac and renal issues and she administered an ART on herself after being coughed at.

None of them contracted COVID-19 from the incident.

After this, Mr. Tamilselvam went to a polyclinic where he was given another swab test and a three-day medical certificate. He was also told to quarantine himself at home.

The assistant logistics manager of the company lodged a police report over the incident.

‘No laughing matter’

During investigations, Mr. Tamilselvam said he had coughed at his colleagues as “a joke”. He said he did not treat his positive result seriously and visited the polyclinic to confirm if he had contracted COVID-19.

Deputy Public Prosecutor Sruthi Boppana said it was “no laughing matter” and that Mr. Tamilselvam had disobeyed express instructions to leave the premises, returning instead to cough deliberately at his colleagues.

She asked for three to four weeks’ jail, saying his actions came at a time when Singapore was experiencing a fresh surge of COVID-19 cases that led to the tightening of COVID-19 restrictions.

For flouting a COVID-19 regulation, he could have been jailed for up to six months, fined up to SGD10,000, or both.

Finance Minister Nirmala Sitharaman at a press conference in Delhi, after the Budget
| Photo Credit: ANI

The much-anticipated Budget for 2023-24 has been presented. The Budget speech began with a self-congratulatory note: that India has successfully overcome the troubles that came with the COVID-19 pandemic, to a large extent, by ensuring the free food distribution scheme for 800 million people and other ongoing food security programmes. And, it added, India has fully recovered from the output contraction after one year to emerge as one of the world’s fastest growing economies. In fact, while commenting on the Economic Survey that was presented on the day preceding the Budget, Finance Minister Nirmala Sitharaman reportedly said that the economy can now get on with the growth trajectory that it was charting before the outbreak of the pandemic in 2020.

Reversal in aggregate parameters

So, what was the economic situation like before the pandemic? It was an economy in decline for the entire decade of the 2010s — perhaps contrary to the Finance Minister’s perception. Real average annual GDP growth rate in the 2010s, that is, net of inflation, had decelerated 5%-6% from 7%-8% in the previous decade, that is, the 2000s. If the professional criticisms of GDP estimates are valid, its annual growth rate is perhaps lower at 4%-5% than official estimates.

More seriously, India has de-industrialised prematurely since the mid-2010s, with a steep fall in annual output growth rates, from 13.1% in 2015-16 to negative 2.4% in 2019-20 even before the pandemic struck. Deindustrialisation is accompanied by falling aggregate fixed investment rates and domestic savings rates by 4 percentage-5 percentage points of GDP, compared to that of the previous decade of the 2000s. Never in post-independent India has the economy witnessed such a reversal in crucial aggregate parameters.

The Budget’s vision and expenditure priorities need to be viewed in this context. The Finance Minister’s speech rightly emphasised the role of infrastructure and public investment as virtuous since such investments crowd-in private investment. The Budget seeks to raise capital investment outlay to 3.3%, the highest during the last three years. If the grant-in-aid to States is included, the ratio could be up to 4.5% of the outlays. While this is welcome, it is not clear on what specific sectors and schemes this is to be spent.

The Budget’s extension of the interest-free loans of a 50-year tenure to States for infrastructure investment is also welcome. However, their utilisation has been mixed at best, as the conditions seem onerous on poorer States. There is, perhaps, a need to engage with States to improve their utilisation.

Capital expenditure on railways is proposed to be enhanced to ₹2.40 lakh crore, nine times what it was in 2013-14. This is also welcome, but we need to know what this means in real terms or as a proportion of budgetary outlays. Moreover, without knowing the nature of the proposed expenditure, its effectiveness cannot be assessed. For instance, if the railway investment is on much-needed modernisation of rail tracks and rolling stock, it would enhance efficiency. However, if the spend is on station modernisation or other such ‘glamorous’ projects, it may add little to productivity.

The government of the day has all along favoured infrastructure investment over directly productive investment in agriculture and industry, whose share in gross fixed capital formation (GFCF) rate (that is, as a proportion of GDP) has declined. However, evidence shows that the share of infrastructure real GVA and GFCF has hardly improved over the decade of the 2010s, as in estimates reported by the Reserve Bank of India. Therefore, there is a need for caution in accepting the budgetary numbers at their face value.

Import dependence on China

Premature deindustrialisation and the consequent growing dependence on Chinese imports are serious challenges to India in following an independent path of national development. The government’s flagship initiatives ‘Make in India’ (launched in 2014) and Aatmanirbhar Bharat Abhiyan (launched in 2020), are meant to overcome these shortcomings. The “Production Linked Incentive (PLI) Scheme (launched in 2021) was to give incentives for such investments. However, the Budget has hardly furthered these efforts, or had an assessment of how they have performed. The Budget speaks in glowing terms of how the phased manufacturing programme in the mobile phone assembly industry has succeeded in boosting exports. While the headline numbers may be true, they hide the fact that imports of the kits of mobile parts or (kits) have also gone up proportionately as domestic value addition is minimal. Careful research shows that backward integration to produce components and sub-assemblies has made little progress.

Editorial | Budget gives more to the affluent than to the poor 

Another piece of evidence that shows rising import dependence on China is the growing trade deficit with that country — going up from $57.4 billion in 2018 to $64.5 billion in 2021. The Budget, regrettably, has little to say about the growing threat of structural dependence on China.

The truth about bank credit growth

The Budget mentions rising bank credit growth as a positive sign of investment revival. Again, while the headline is correct, the share of the credit accruing to industry has barely inched up, with most increase accruing to personal loans, which may add to luxury (imported) consumption, and not boost the economy’s productivity capacity.

One of the reasons for private long-term investment lagging is the lack of access to long-term credit, as is widely acknowledged. In 2021 the government promoted The National Bank for Financing Infrastructure and Development (NBFID) with substantial equity investment. Unfortunately, the Development Financial Institutions seem to have made modest progress in boosting industrial and infrastructure investment. If the Budget is serious about boosting private investment it has to ensure better performance of the NBFID. However, the Budget has little to say about the much publicised initiative.

In sum, the Budget’s renewed commitment to investment-led growth is well taken. However, the investment magnitudes mentioned (without details) seem to come up short. The Budget seems to fail to grapple with the problem of the decade-long growth deceleration in the 2010s, the unprecedented fall in investment and savings rates compared to the previous decade and premature de-industrialisation since the mid-2010s. Without appreciating these longer-term constraints and finding their solutions, it is perhaps hard to make India Atmanirbhar Bharat.

R. Nagaraj was with the Indira Gandhi Institute of Development Research, Mumbai