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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

[PREMIUM] Express View on inflation: A matter of interest

Explained | Economics | Mains Paper 3: Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: CPI and WPI

Mains level: Challenges and measures related to inflation

Why in the news? 

AAZData released by the National Statistical Office on Friday showed that retail inflation had edged marginally upwards last month.

What is inflation?

  • Inflation, as per the definition provided by the International Monetary Fund, represents the pace at which prices rise within a specified timeframe, covering a comprehensive assessment of general price escalations or those pertaining to particular goods and services. To measure the inflation there is differnt type inflation index.

What is the inflation Index? 

  • An inflation index is a statistical measure used to track changes in the overall price level of goods and services in an economy over a specific period. It quantifies the rate of inflation by comparing the current prices of a selected basket of goods and services to their prices in a base period.

In India, there are primarily two types of inflation indices used to measure price changes:

  • Consumer Price Index (CPI): The CPI measures changes in the prices paid by urban and rural consumers for a basket of goods and services. It provides insights into inflation experienced by households and is divided into various sub-indices based on categories such as food, fuel, clothing, housing, transportation, medical care, recreation, and education. The Government of India releases multiple CPI indices, including:
  1. CPI for Industrial Workers (CPI-IW)
  2. CPI for Agricultural Labourers (CPI-AL)
  3. CPI for Rural Labourers (CPI-RL)
  4. CPI for Urban Non-Manual Employees (CPI-UNME)
  5. CPI for Rural (CPI-R)
  6. CPI for Urban (CPI-U)
  • Wholesale Price Index (WPI): The WPI tracks changes in the prices of goods at the wholesale level. It includes the prices of commodities traded in bulk such as agricultural products, minerals, crude oil, manufactured products, and electricity. The Office of the Economic Adviser, under the Department for Promotion of Industry and Internal Trade (DPIIT), releases the WPI on a monthly basis.

What is Retail inflation? 

  • Retail inflation, also known as Consumer Price Index (CPI) inflation, tracks the change in retail prices of goods and services which households purchase for their daily consumption.CPI is calculated for a fixed basket of goods and services that may or may not be altered by the government from time to time.

How relatail inflation calculated? 

  • Fixing a basket of goods and services: A representative basket of goods and services is selected to represent the typical consumption patterns of households
  • Calculating the cost of the selected basket: The cost of the basket of goods and services is calculated for a base period
  • Calculating the CPI: The CPI is calculated by dividing the cost of the basket in the current period by the cost of the basket in the base period and multiplying by 100
  • Calculating the Inflation Rate: The inflation rate is calculated by comparing the CPI of the current period with the CPI of the base period

Key points as per AAZData released by the National Statistical Office:

  • Retail Inflation Data: The National Statistical Office reported that retail inflation in India increased marginally, rising to 5.69% in December from 5.55% in November, primarily driven by higher food inflation
  • Reason behind the inflation: RBI Governor Shaktikanta Das had anticipated the rise in inflation due to risks in food prices, cautioning about potential second-round effects
  • Food Inflation: The Consumer Food Price Index surged to 9.53% in December, up from 8.7% in November, with notable inflation in cereals, vegetables, pulses, sugar, and spices
  • Industrial Production: The index of industrial production slowed to 2.4% in November, partly due to the base effect, with a 6.4% increase in industrial output for the first eight months of the year (April-November)
  • Monetary Policy Committee (MPC) Actions: The MPC maintained the status quo on rates and stance in the last meeting, focusing on withdrawing accommodation to align inflation with the target of 4%
  • Future Monetary Policy: There are discussions within the MPC about the necessity of an interest rate cut to prevent excessive real interest rates, especially as inflation is projected to moderate in the coming quarters

Way forward

  • Monetary Policy Adjustment: The Reserve Bank of India (RBI) could consider implementing a cautious monetary policy stance, possibly by tightening monetary policy through measures such as raising the repo rate. This would help curb inflationary pressures by reducing liquidity in the economy and making borrowing more expensive.
  • Supply-Side Interventions: The government could focus on addressing supply-side constraints in the agricultural sector to mitigate food price inflation. This might involve measures such as improving infrastructure, increasing agricultural productivity, reducing post-harvest losses, and enhancing market efficiency through better distribution networks.
  • Fiscal Policy Support: The government could also provide fiscal support to sectors facing supply-side disruptions or demand constraints, which could help stabilize prices and support economic growth. Targeted fiscal measures, such as subsidies for essential commodities or infrastructure investments, could be considered to address specific challenges contributing to inflation.

Mains PYQ 

Q Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss. (UPSC IAS/2022)

Q Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments. (UPSC IAS/2019)

Prelims PYQ 

Consider the following statements:(UPSC IAS/2020)

1) The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).

2) The WPI does not capture changes in the prices of services, which CPI does.

3) Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.

Which of the statements give above is/are correct?

a) 1 and 2 only

b) 2 only

c) 3 only

d) 1, 2 and 3

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Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Implementing the Street Vendors Act

Explained | Governance | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections
Note4Students

From UPSC perspective, the following things are important :

Prelims level: The Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014

Mains level: Challenges related to Act implementation

Why in the news? 

Celebrated as a progressive legislation (Street Vendors Act) , the Act now faces numerous challenges in its implementation.

The Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 

  • It is an Act of the Parliament of India enacted to regulate street vendors in public areas and protect their rights.
  • The Act aims to protect the rights of urban street vendors and regulate street vending activities. It delineates the roles and responsibilities of both vendors and various levels of government.
  • According to the Ministry of Housing and Urban Poverty Alleviation, there are around 10 million street vendors in India, with major cities like Mumbai, Delhi, Kolkata, and Ahmedabad.

Significance of street vendors 

  • Role of Street Vendors: Street vendors constitute about 2.5% of any city’s population and play multifaceted roles in city life, providing essential services, modest income for migrants and the urban poor, and affordable goods for others.
  • Integral to Urban Life: Street vendors are essential for maintaining affordability and accessibility to food, nutrition, and goods distribution, and they are integral to the cultural fabric of cities like Mumbai and Chennai.

Challenges related to Act implementation 

  • Administrative Challenges: Increase in harassment and evictions of street vendors despite the Act’s emphasis on protection and regulation.Outdated bureaucratic mindset viewing vendors as illegal entities.
  • Lack of awareness and sensitization about the Act among state authorities, the public, and vendors.
  • Limited influence of street vendor representatives in Town Vending Committees (TVCs), often remaining under the control of local city authorities.Tokenistic representation of women vendors in TVCs.
  • Governance Challenges: Weak existing urban governance mechanisms.
  • Lack of integration of the Act with the framework established by the 74th Constitutional Amendment Act for urban governance.
  • Insufficient powers and capacities of ULBs.
  • Focus of top-down policies like the Smart Cities Mission on infrastructure development, ignoring provisions for the inclusion of street vendors in city planning.
  • Societal Challenges: Prevailing image of the ‘world-class city’ tends to be exclusionary.Marginalization and stigmatization of street vendors as obstacles to urban development rather than legitimate contributors to the urban economy.
  • Reflection of these challenges in city designs, urban policies, and public perceptions of neighborhoods.

Way forward 

  • Decentralization of Interventions: There’s a need to decentralize interventions and enhance the capacities of Urban Local Bodies (ULBs) to plan for street vending in cities.
  • Shift from Department-led Actions to Deliberative Processes: Moving away from high-handed department-led actions towards actual deliberative processes at the Town Vending Committee (TVC) level is crucial.
  • Amendments to Urban Schemes and Policies: Urban schemes, city planning guidelines, and policies need to be amended to include provisions for street vending.
  • Need based Welfare Provisions: Broad welfare provisions of the Act should be used creatively to meet the emerging needs of street vendors, such as addressing the impact of climate change, competition from e-commerce, and reduced incomes.
  • Adaptation in National Urban Livelihood Mission: The sub-component on street vendors in the National Urban Livelihood Mission should acknowledge changed realities and facilitate innovative measures to address needs.

Mains PYQ

Q To what extent, in your opinion, has the decentralisation of power in India changed the governance landscape at the grassroots?

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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Constitution and the redistribution of wealth

Explained | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters
Note4Students

From UPSC perspective, the following things are important :

Prelims level: FR and DPSP

Mains level: Current debate surrounding economic policies and inequality in India due to shift from Socialistic to Market-Driven Economy

Why in the news? 

The debate surrounding the redistribution of wealth that has piqued interest during the ongoing election campaigns.

What does the Constitution provide?

  • Preamble to the Constitution: It outlines the objectives of the Constitution, including securing social, economic justice, liberty, and equality for all citizens.
  • Part III and IV: Part III of the Constitution lists down the fundamental rights that guarantee liberty and equality while Part IV contains the DPSP. These are principles that the central and State governments should follow to achieve social and economic justice in our country. Unlike the fundamental rights in Part III, the DPSP is not enforceable in court.
  •  Article 39(b) and 39 (c): DPSP focus on principles aimed at securing economic justice. Article 39(b) emphasizes the distribution of ownership and control of material resources to serve the common good. Article 39(c) aims to prevent the concentration of wealth in a manner detrimental to the common good.

The history of the right to property in the Indian Constitution:

  • Original Guarantee: The Constitution initially guaranteed the right to property as a fundamental right under Article 19(1)(f). It provided that individuals have the right to acquire, hold, and dispose of property.
  • Compensation Requirement: Article 31 of the Constitution mandated that the state must provide compensation in case of the acquisition of private property for public purposes.
  • Land Reforms and Public Welfare: The government, facing challenges such as land reforms and the need for public infrastructure development, found the original provisions restrictive due to inadequate resources. This led to amendments aimed at providing more flexibility in acquiring land for public welfare.
  • Constitutional Amendments: Notable amendments such as Articles 31A, 31B, and 31C were introduced to curtail the right to property and facilitate land acquisition for public welfare projects.
  • Judicial Interpretation of constitution amandment: The Supreme Court interpreted the relationship between fundamental rights and Directive Principles of State Policy (DPSP) in various cases. In the Golak Nath case (1967), the Court held that fundamental rights cannot be diluted to implement DPSP. However, in the Kesavananda Bharati case (1973), the Court upheld the validity of Article 31C, subject to judicial review.
  • Harmonious Balance: In the Minerva Mills case (1980), the Supreme Court emphasized the need for a harmonious balance between fundamental rights and DPSP in the Constitution.
  • 44th Amendment Act: In 1978, the right to property was removed as a fundamental right through the 44th Amendment Act, making it a constitutional right under Article 300A. This aimed to reduce excessive litigation and protect public welfare projects.

Current debate surrounding economic policies and inequality in India due to shift from Socialistic to Market-Driven Economy:

  • Impact of Economic Policies: The socialistic policies of the early decades after independence focused on land reforms, nationalization of industries, high taxation rates, and regulations on private enterprise. These policies aimed to reduce inequality and redistribute wealth but were criticized for stifling growth and leading to inefficiencies.
  • Changes in Taxation: Over the years, there have been significant changes in taxation policies, including the abolition of estate duty in 1985 and wealth tax in 2016. Income tax rates were also reduced considerably, reflecting a shift towards a more business-friendly environment.
  • Growing Inequality: Despite economic growth, there has been a growing concern about inequality. Reports, such as the one by the World Inequality Lab, highlight the widening wealth and income gap, with a significant portion of the wealth concentrated among the top 10% of the population.
  • Opposition Criticism: The ruling party and its supporters have criticized the Opposition, alleging that their proposed measures, such as the reintroduction of inheritance tax, would burden even the poorer sections of society.
  • Legal Interpretation: The Supreme Court’s involvement in the debate is highlighted by its decision to constitute a nine-judge Bench to interpret whether Article 39(b) of the Constitution, which pertains to the distribution of material resources for the common good, includes private resources.
  • Central Question of the debate: The central question in the current debate revolves around the balance between economic policies that promote growth and efficiency versus those aimed at reducing inequality and ensuring social justice.

Way forward: 

  • Inclusive Growth: While promoting innovation and growth, it’s essential to ensure that the benefits are distributed equitably across all sections of society, especially the marginalized. Policies should aim for inclusive growth where the benefits reach those who need them the most.
  • Debate and Adaptation: Economic policies should be framed after adequate debate and consideration, taking into account current economic models and global best practices. There should be a continuous process of adaptation and refinement to address emerging challenges and opportunities.
  • Empowerment of Marginalized: Special attention should be given to empowering marginalized communities through targeted interventions such as education, skill development, access to resources, and opportunities for economic participation.

Mains PYQ: 

Q Critically discuss the objectives of Bhoodan and Gramdan movements initiated by Acharya Vinoba Bhave and their success.(UPSC IAS/2013)

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Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

The need for the use of labour statistics

Explained | Governance | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Trade union

Mains level: Issues related to labour statistics

Why in the news? 

Trade unions can play a pivotal role in producing labour statistics

Issues related to labour statistics

  • Lack of Rigorous Labour Statistics: Labour statistics are not as robust as economic and industrial data. While institutions like the Annual Survey of Industries (ASI) and the National Sample Survey Office (NSSO) provide valuable information.
  • Voluntary Reporting of Work Stoppages: Data collection on work stoppages relies on voluntary reporting, which may lead to underreporting or incomplete information. This lack of comprehensive data on strikes and other work stoppages affects the accuracy and reliability of labour statistics.
  • Limited Use of Evidence in Social Dialogue:Lack of evidence-based arguments in these dialogues undermines their effectiveness, leading to a perception of the ILC as a mere “talking shop.”
  • Class-Based Opinions without Data Support: Stakeholders often advocate for labour reforms based on “class-based opinions” rather than credible data or empirical evidence.

The role of trade unions in producing labour statistics:

  • Data Collection on Labour Inspection: Trade unions can gather information and statistics on labour inspection practices, including the number of sanctioned and employed inspectors, inspection frequency, and coverage. This data can highlight deficiencies in inspection systems and advocate for their strengthening.
  • Monitoring Retrenchment and Closure Applications: Trade unions can track retrenchment and closure applications submitted to labour departments, along with permissions granted or refused. This data can provide insights into the prevalence of denials and the impact of labour regulations on job security.
  • Analysis of Strikes and Lockouts: Trade unions can utilize data on strikes and lockouts published by agencies like the Labour Bureau to analyze trends and patterns. This analysis can inform discussions on labour laws and industrial relations, challenging the need for harsher clauses on strikes.
  • Evidence-based arguments: Trade unions can use objective data and empirical studies to contest labour reforms in policy debates. By presenting evidence-based arguments, trade unions can influence decision-making processes and advocate for policies that promote workers’ rights and well-being.

Conclusion:  

Implement more robust and standardized data collection methods for labour statistics to ensure accuracy and consistency across different sources. This may involve leveraging technology, such as digital reporting systems, to streamline data collection processes.

Mains PYQ 

Q Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports.

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The Crisis In The Middle East

[PREMIUM] Conflict Regions in West Asia

world map | International Relations | Mains Paper 2: India & Its Neighborhood - Relations
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Conflict areas in West Asia

Mains level: NA

Why in the news?

  • The resurgence of West Asian rivalries has been reignited by the ongoing Hamas-Israel War, which commenced on October 7, 2023.
  • With a backdrop of historical conflicts, including the Iran-Iraq War and Israel’s engagements with Hezbollah and Hamas, the current conflict is escalating tensions in the region.

About West Asia

[A] Political Overview:

  1. Countries:
  • West Asia comprises 17 countries, including:
    • In Gulf Cooperation Council (GCC) has 6 countries such as Saudi Arabia, UAE, Qatar, Bahrain, Kuwait, and Oman.
    • Middle Eastern countries like Iran, Iraq, Turkey, Syria, Lebanon, Jordan, Israel, Palestine, and Yemen.
    • Egypt is sometimes included in the definition of West Asia due to its geographical proximity and historical ties.
  1. Geopolitical Dynamics:
    • The region is characterized by complex geopolitical dynamics, including conflicts, alliances, and power struggles.
    • Ongoing conflicts include the Syrian Civil War, the Israeli-Palestinian conflict, and the Yemeni Civil War, among others.
    • Strategic interests of global powers, including the United States, Russia, and China, contribute to the region’s instability.

[B] Physical Features:

  1. Terrain:
    • West Asia encompasses varied terrain, including vast deserts like the Rub’ al Khali in Saudi Arabia and the Syrian Desert in Syria and Jordan.
    • Mountainous regions include the Zagros Mountains in Iran, the Taurus Mountains in Turkey, and the Anti-Lebanon Mountains along the Lebanon-Syria border.
    • Fertile river valleys, such as the Tigris-Euphrates in Iraq and the Nile in Egypt, have historically supported agriculture and civilization.
  2. Climate:
    • The region experiences diverse climates:
      • Arid and semi-arid climates prevail in much of the interior, with hot summers and mild winters.
      • Mediterranean climates along the coastal areas, characterized by hot, dry summers and mild, wet winters.
      • Highland climates in mountainous regions, with cooler temperatures and higher precipitation.
  3. Natural Resources:
    • West Asia is endowed with abundant natural resources, notably oil and natural gas reserves, concentrated primarily in countries like Saudi Arabia, Iran, Iraq, and the Gulf states.
    • The region also possesses significant mineral deposits, including phosphates in Jordan, sulfur in Iraq, and metals like copper and iron in various countries.

[C] Physiographical Details:

  1. Biodiversity:
    • Despite its predominantly arid climate, West Asia supports diverse ecosystems, including desert, mountain, and coastal habitats.
    • Unique species of flora and fauna, adapted to harsh environmental conditions, inhabit the region, including desert mammals like the Arabian oryx and mountain species like the Persian leopard.
  2. Water Resources:
    • Water scarcity is a pressing issue in West Asia, exacerbated by population growth, urbanization, and climate change.
    • Countries rely on shared river basins, such as the Tigris-Euphrates and the Nile, leading to water disputes and conflicts.
    • Desalination plants along the coastlines provide an alternative source of freshwater, particularly in Gulf countries.
  3. Human Geography:
    • The region is home to diverse ethnic and religious communities, including Arabs, Kurds, Turks, Persians, Jews, and Christians, among others.
    • Urbanization is on the rise, with major cities like Riyadh, Tehran, Istanbul, and Cairo serving as economic, cultural, and political centers.

Flash Points in West Asia

Conflict 

Areas

 Description Flashpoints
Israeli-Palestinian Conflict A protracted dispute over territory, borders, and self-determination between Israel and Palestinians. Gaza Strip: A densely populated coastal enclave with sandy beaches, urban areas, and limited agricultural land. It is approximately 41 kilometers long and 6 kilometers wide.

 

Netzarim Corridor: The Netzarim Corridor is a just under seven-kilometer-long corridor that is set to cut Gaza City from the rest of the enclave, running east to west from the Israeli border south of Nahal Oz to the Mediterranean Sea. Israel has previously bisected the Gaza Strip to create a Buffer Zone.

West Bank: Diverse geography including mountainous terrain, fertile valleys, and the Jordan River Valley. It covers an area of approximately 5,655 square kilometers.

East Jerusalem: Hilly terrain with historic landmarks and religious sites, including the Old City with its ancient walls, mosques, and churches.
Syrian Civil War Complex conflict involving multiple factions, resulting in immense humanitarian suffering. Aleppo: Surrounded by fertile plains and agricultural land, it is one of the oldest continuously inhabited cities in the world. It covers an area of approximately 190 square kilometers.

Damascus: Situated in the foothills of the Anti-Lebanon Mountains, it is one of the oldest cities in the Middle East. It spans an area of around 105 square kilometers.

Homs: Located along the Orontes River, it is an important industrial center with a history dating back to ancient times. It has an area of about 165 square kilometers.

Idlib: Mix of agricultural plains, hills, and urban centers, covering an area of approximately 6,097 square kilometers.
Iraqi Conflict Various conflicts including the Iraq War, sectarian violence, insurgency, and fight against ISIS. Baghdad: Flat terrain surrounded by fertile agricultural land, situated on the Tigris River. It covers an area of around 204 square kilometers.

Mosul: Surrounded by plains, historic landmarks, and the Tigris River, it is one of Iraq’s largest cities. It spans an area of approximately 370 square kilometers.

Fallujah: In the Euphrates River valley with arid landscapes and urban areas, it is strategically located near major highways. It covers an area of about 139 square kilometers.

Kirkuk: Oil-rich region with diverse ethnic populations and mountainous terrain, it covers an area of approximately 9,679 square kilometers.
Yemeni Civil War Involves the Yemeni government, Houthi rebels, and other factions, leading to a dire humanitarian crisis. Sana’a: Surrounded by mountains and valleys in the Yemeni Highlands, it is one of the highest capital cities in the world. It covers an area of approximately 73 square kilometers.

Aden: Coastal city with a strategic port and urban areas, located on the Gulf of Aden. It spans an area of around 50 square kilometers.

Hodeidah: Major port city with coastal plains, mountains, and urban areas, situated on the Red Sea coast. It covers an area of about 192 square kilometers.
Lebanese-Israeli Tensions Sporadic clashes and occasional escalation over territorial disputes and Hezbollah’s presence. Southern Lebanon: Rugged terrain with mountains, fertile valleys, and coastal plains along the Mediterranean Sea. It covers an area of approximately 929 square kilometers.
Kurdish-Turkish Conflict Involves the Turkish government and Kurdish separatist groups, focusing on Kurdish autonomy. Southeastern Turkey: Mountain ranges, plateaus, fertile river valleys, and urban areas, covering an area of approximately 190,534 square kilometers.

Northern Iraq: Zagros Mountains, valleys, rivers, and urban centers, with an area of about 198,956 square kilometers.
Iranian-Israeli Tensions Fueled by Iran’s support to militant groups and its nuclear program, leading to regional security concerns. Golan Heights: Plateau region with rocky slopes, volcanic hills, fertile agricultural land, and urban settlements. It spans an area of approximately 1,800 square kilometers.

Southern Lebanon: Rugged terrain with valleys, plains, and urban areas, covering an area of about 929 square kilometers.
Gulf States Tensions Rivalries among Gulf states are driven by ideological differences, political alliances, and economic interests. Qatar: Peninsula with desert terrain, low-lying coastal areas, and urban development, covering an area of approximately 11,586 square kilometers.

Eastern Province of Saudi Arabia: Desert landscapes, oasis areas, oil fields, and urban centers, with an area of about 672,522 square kilometers.

 

PYQ:

[2015] Which one of the following countries of South-West Asia does not open out to the Mediterranean Sea?

(a) Syria

(b) Jordan

(c) Lebanon

(d) Israel

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Global Geological And Climatic Events

Taam Ja’: World’s Deepest Blue Hole

Prelims Only | Enviro & Biodiversity | Mains Paper 1: Salient Features Of World'S Physical Geography
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Taam Ja’ Blue Hole (TJBH) and its location

Mains level: NA

Why in the news?

Researchers have made a discovery in Mexico, uncovering the world’s deepest blue hole, known as Taam Ja’ Blue Hole (TJBH).

What are Blue Holes?

  • Blue holes, such as TJBH, are formed in coastal regions with soluble bedrock, such as limestone, marble, or gypsum.
  • Water percolates through the rock, dissolving minerals and widening cracks, ultimately leading to the formation of sinkholes.
  • Famous examples: 410-foot Great Blue Hole in Belize, the 663-foot Dean’s Blue Hole in the Bahamas and the 328-foot Blue Hole in the Red Sea near Dahab, Egypt.

About Taam Ja’ Blue Hole (TJBH)

  • TJBH extends at least 1,380 feet (420 meters) below sea level, making it the deepest known underwater sinkhole in the world.
  • It is located in Chetumal Bay off the southeast coast of the Yucatan Peninsula.
  • It was first discovered in 2021, was originally thought to be 900 feet deep.
  • This discovery surpasses the previous record-holder, the Sansha Yongle Blue Hole in the South China Sea, by an impressive 480 feet.

Research Expedition and Findings

  • Scientists utilized a conductivity, temperature, and depth (CTD) profiler to collect data about the environmental conditions within the blue hole.
  • Despite reaching depths of 1,640 feet (500 meters), the CTD profiler was unable to reach the bottom of TJBH, indicating its remarkable depth.
  • Data from the profiler suggested the presence of different water layers within the blue hole, with conditions resembling those of the Caribbean Sea at depths below 1,312 feet (400 meters).

PYQ:

[2017] In the context of mitigating the impending global warming due to anthropogenic emissions of carbon dioxide, which of the following can be the potential sites for carbon sequestration?

1. Abandoned and uneconomic coal seams.

2. Depleted oil and gas reservoirs.

3. Subterranean deep saline formations.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

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Festivals, Dances, Theatre, Literature, Art in News

Unveiling of Raja Ravi Varma’s Indulekha Painting

Prelims Only | History and Art & Culture | Mains Paper 1: Arts & Culture
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Raja Ravi Varma and his notable paintings

Mains level: NA

Why in the news?

The first true copy of Raja Ravi Varma’s painting “Indulekha” will be unveiled at Kilimanoor Palace, the birthplace of the legendary artist, on his 176th birth anniversary celebrations.

About the Indulekha Painting:

Indulekha
  • The painting depicts Indulekha, the protagonist of the first modern Malayalam novel by O. Chandu Menon, published in 1889.
  • The painting holds significance as it is believed to have inspired Ravi Varma’s famous work, “Reclining Lady.”
  • The oil painting portrays Indulekha holding a letter, dated 1892.
  • It exhibits meticulous attention to detail and symmetry, characteristic of Ravi Varma’s style.

Who was Raja Ravi Varma (1848-1906)?

  • Raja Ravi Varma was born in April 1848 in Kilimanoor, Kerala, to a family which was very close to the royals of Travancore.
  • Often referred to as the father of modern Indian art, he is widely known for his realistic portrayal of Indian gods and goddesses.
  • While he majorly painted for the royalty, he is also credited for taking art to the masses with his prints and oleographs.
  • Patronised by Ayilyam Thirunal, the then ruler of Travancore, he learnt watercolour painting from the royal painter Ramaswamy Naidu.
  • He later trained in oil painting from Dutch artist Theodore Jensen.

Fame as a notable painter

  • Following a portrait of Maharaja Sayajirao of Baroda, he has commissioned 14 Puranic paintings for the Durbar Hall of the new Lakshmi Vilas Palace at Baroda.
  • Depicting Indian culture, Varma borrowed from episodes of Mahabharata and Ramayana for the same.
  • He also received patronage from numerous other rulers, including the Maharaja of Mysore and Maharaja of Udaipur.
  • As his popularity soared, the artist won an award for an exhibition of his paintings at Vienna in 1873.
  • He was also awarded three gold medals at the World’s Columbian Exposition in Chicago in 1893.
  • Viceroy Lord Curzon honoured him with the Kaisar-i-Hind Gold Medal for his service.

Nature of his artforms

  • Much of his celebrated art also borrows heavily from Indian mythology.
  • In fact, he is often credited with defining the images of Indian gods and goddesses through his relatable and more realistic portrayals often painted with humans as models.
  • The depictions include Lakshmi as the goddess of wealth, Saraswati as the goddess of knowledge and wisdom, and Lord Vishnu with his consorts, Maya and Lakshmi.

Notable Paintings

  • Raja Ravi Varma aspired to take his art to the masses and the intent led him to open a Lithographic Press in Bombay in 1894.
  • The first picture printed at Varma’s press was reportedly The Birth of Shakuntala, followed by numerous mythological figures and saints such as Adi Shankaracharya.

Major works

  • It is believed that he had made around 7,000 paintings before his death at the age of 58.
  • But only one painting is now left in ‘Chithrashala,’ the artist’s studio at Kilimanoor Palace — an unfinished portrait of ‘Parsi lady’ which was his last work.
  • Some of his popular works include ‘Lady in the Moonlight’, ‘Nair Lady Adorning Her Hair’, ‘Malabar Lady with Violin’, ‘Lady with Swarbat’, and ‘Maharashtrian Lady with Fruits’.

PYQ:

[2018] The well-known painting “Bani Thani” belongs to the

(a) Bundi school

(b) Jaipur school

(c) Kangra school

(d) Kishangarh school

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Capital Markets: Challenges and Developments

SEBI board approves amendment to Mutual Funds rules

Prelims Only | Economics | Mains Paper 3: Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Mutual Funds and its regulations

Mains level: NA

Why in the news?

  • The Securities & Exchange Board of India (SEBI) has recently approved amendments to SEBI (Mutual Funds) Regulations, 1996, aimed at enhancing the regulatory framework for Asset Management Companies (AMCs).
    • These amendments mandate AMCs to establish institutional mechanisms to deter potential market abuse, including front-running, following recent instances observed by the market regulator.

What are Mutual Funds?

  • A mutual fund is a pool of money managed by a professional Fund Manager.
  • It is a trust that collects money from a number of investors who share a common investment objective and invests the same in equities, bonds, money market instruments and/or other securities.
  • And the income / gains generated from this collective investment is distributed proportionately amongst the investors after deducting applicable expenses and levies, by calculating a scheme’s “Net Asset Value” or NAV.
  • SEBI regulates mutual funds through the SEBI (Mutual Funds) Regulations, 1996.

Categories of Mutual Funds:

  1. An actively managed fund is a mutual fund scheme in which the fund manager “actively” manages the portfolio and continuously monitors the fund’s portfolio, deciding on which stocks to buy/sell/hold and when, using his/her professional judgement, backed by analytical research.
  2. A passively managed fund, by contrast, simply follows a market index, i.e., in a passive fund , the fund manager remains inactive or passive inasmuch as, he/she does not use his/her judgement or discretion to decide as to which stocks to buy/sell/hold , but simply replicates / tracks the scheme’s benchmark index in exactly the same proportion.

Fund Structure

  • Mutual funds in India operate under a three-tier structure, comprising the
  1. Asset Management Company (AMC),
  2. Trustees, and
  3. Custodians.
  • The AMC manages the fund’s investments, the Trustees oversee the operations, and the Custodians safeguard the fund’s assets.

Key highlights of the recent update:

  • Institutional Mechanism: AMCs are required to implement enhanced surveillance systems, internal controls, and escalation processes to identify and address specific types of misconduct, such as front-running, insider trading, and misuse of sensitive information.
  • Whistleblower Mechanism: To foster transparency, AMCs are mandated to have a whistleblower mechanism.
  • Recording of Communication: SEBI has exempted face-to-face interactions during market hours from the requirement of recording all communication by dealers and fund managers. This exemption will be effective upon the implementation of the institutional mechanism by AMCs.
  • Prudential Norms for Passive Schemes: SEBI has streamlined prudential norms for passive schemes, allowing equity passive schemes to invest up to the weightage of constituents in the underlying index, subject to a 35% cap on investment in sponsor group companies.

PYQ:

[2014] What does venture capital mean?

(a) A short-term capital provided to industries

(b) A long-term start-up capital provided to new entrepreneurs

(c) Funds provided to industries at times of incurring losses

(d) Funds provided for replacement and renovation of industries

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Forest Conservation Efforts – NFP, Western Ghats, etc.

Chunk of India’s forests ‘missing’ after 27-year-delay to file reports | Analysis

Explained | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Unclassed forests;

Mains level: Forest coverage in India; Issues related to identification and protection of unclassed forests;

Why in the news?

SC ordered MoEFCC to upload State Expert Committee reports on unclassed forests due to concerns over the Forest (Conservation) Act Amendment 2023 constitutionality, impacting protection and potential diversion of these forests.

What are unclassed forests?

  • Unclassed forests, also known as deemed forests, are forest areas that may belong to various entities such as government bodies (forests, revenue departments, railways), communities, or private owners. However, these forest areas have not been officially notified as forests.
  • The State Expert Committees (SECs) were tasked with identifying all such unclassed forests across the country (referring to Forest Working Plans and Land Revenue Records).
  • Additionally, SECs were required to physically identify any land patches that exhibit characteristics of forests, as per the dictionary meaning of forests, irrespective of their ownership status.

What are the present issues?

  1. The missing forests in SECs 
  • Undermined the previous judgment: MoEFCC informed a Parliamentary Committee that SECs had identified unclassed forests, aligning with the proposed Forest (Conservation) Act Amendment, despite earlier criticism that the law undermined the Godavarman judgment.
    • However, an RTI application revealed that MoEFCC claimed not to have the SEC reports, raising questions about its assurance to the Parliamentary Committee.
  • Lack of verified data: Following a Supreme Court order, MoEFCC uploaded the SEC reports, but they showed a lack of verifiable data on the identification, status, and location of unclassed forests.
  • States not constituted SECs: Seven states and Union Territories, including Goa, Haryana, and Tamil Nadu, hadn’t constituted SECs, while others hadn’t fully complied with Supreme Court directives.
  • Non-traceable Forest: Ladakh formed an SEC only after the dissolution of Jammu & Kashmir, and Puducherry’s report was declared “not traceable”, further highlighting inconsistencies in the process.
  1. Disagreement with FSI data 
  • Insufficient timeline: Many states argue that the one-month timeline provided by the Supreme Court was insufficient for comprehensive work due to the voluminous nature of the task.
  • Relied on Existing data: Instead of conducting ground-truthing, physical cadastral surveys, and demarcation of unclassed forest lands, most states relied on existing data from forest and revenue departments. Some states, like Manipur and Sikkim, simply quoted figures from the Forest Survey of India (FSI).
  • Question on Data: The reliability of data is questioned, with Haryana’s report lacking clarity on data sources and creation dates. Only nine states provided the extent of unclassed forests, while others focused on different types of forest areas specified in the order.
  1. Lack of clarity in the Reports:
  • Failed to specify the geographic locations: Most states and UTs failed to specify the geographic locations of forests in their SEC reports, rendering the information provided largely unhelpful for accurate identification and protection.
    • But Tripura was an exception, providing Khaitan numbers for forest areas beyond those officially recorded, but the classification of land remained unclear.
  • Lack of on-ground verification: SEC is lagging that on-ground verification may have led to the widespread destruction of forests that should have been identified and protected nearly three decades ago.
    • Instances like Kerala’s SEC excluding ecologically significant areas like Pallivasal unreserve and Chinnakanal unreserve, critical for wildlife corridors and conservation, showcase the lack of diligence in identifying and protecting vital forest areas.

Suggested Measures:

  • Extended Timeline: Provide states with a more realistic timeline to conduct comprehensive surveys and data verification, considering the voluminous nature of the task and the need for accuracy.
  • Ground Truthing and Surveys: Mandate states to conduct ground-truthing, physical cadastral surveys, and demarcation of unclassed forest lands to ensure accurate identification and mapping of forest areas.
  • Data Verification: Implement mechanisms for verifying and cross-referencing data obtained from various sources, such as forest and revenue departments and the Forest Survey of India, to ensure reliability and consistency.

Main PYQ: 

Q Examine the status of forest resources of India and its resultant impact on climate change.(UPSC IAS/2020)

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Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

The poultry industry needs urgent reforms

Explained | Economics | Mains Paper 3: Economics Of Animal-Rearing
Note4Students

From UPSC perspective, the following things are important :

Prelims level: H5N1 Virus

Mains level: Scale of spreading H5N1 virus

Why in the news?

The current outbreak of H5N1 was a disaster waiting to happen, as experts have been sounding alarm bells on the unsafe conditions at industrial livestock production for more than 10 years now.

Scale of spreading H5N1 virus:

  • Global Spread of H5N1 in humans: The H5N1 virus has spread globally, affecting various species including humans, polar bears in the Arctic, and seals and seagulls in Antarctica.
  • In India Spread of H5N1 in humans:  The first H5N1 patient was reported in Maharashtra in 2006. An outbreak in December 2020 and early 2021 spread across 15 States
  • Human Fatality Rate: As per WHO, the fatality rate for H5N1 among humans is estimated at 52%, with 463 deaths recorded since 2003 out of 888 diagnosed cases.
  • Transmission from Birds and Contaminated Environments: Almost all human infections with H5N1 are linked to close contact with infected birds or contaminated environments, emphasizing the importance of biosecurity measures.
  • Spread in other species: This pathogen has crossed many species barriers, causing mortality among the polar bears in the Arctic and seals and seagulls in Antarctica.

Causes for the spread of H5N1 (avian influenza or bird flu) infection:

  • Contact with infected birds: Humans can contract H5N1 if they come into direct contact with the body fluids, such as saliva, respiratory droplets, or feces, of infected birds.
  • Poultry Trade and Movement: The transportation and trade of infected poultry, poultry products, and crowded live poultry markets provide an environment for the virus to spread between birds and potentially to humans.
  • Antibiotic Resistance: The 269th Law Commission of India Report in 2017 highlighted evidence from the Tata Memorial Centre regarding the use of non-therapeutic antibiotics in poultry farming, leading to antibiotic resistance due to unhygienic living conditions.
  • Environmental Factors: Factors like proximity to bodies of water, reduced rainfall, and presence near major highways have been associated with increased risk of H5N1 outbreaks. These environmental conditions may facilitate the spread of the virus.

Regulation: The Central Pollution Control Board (CPCB) has classified poultry units with more than 5,000 birds as a polluting industry that requires compliance and regulatory consent to establish and operate.

Way Forward:

  • Draft Rules for Welfare: The Law Commission 269th recommended a set of draft rules for the welfare of chickens in the meat and egg industries, aligning with existing laws and international best practices for animal care, waste management, and antibiotic use.
  • Weaknesses in Draft Rules: The Draft Rules for the egg industry released by the Ministry of Agriculture and Farmers’ Welfare in 2019 were criticized for being weak and tokenistic, failing to meet the recommendations of the Law Commission.
  • Need for Oversight and Enforcement: Given the reclassification of the poultry industry as a highly polluting ‘orange category’ industry by the Central Pollution Control Board (CPCB), strict oversight for compliance and enforcement of environmental regulations is essential.

Mains PYQ:

Q What is the basic principle behind vaccine development? How do vaccines work? What approaches were adopted by the Indian vaccine manufacturers to produce COVID-19 vaccines? (UPSC IAS/2022)

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Tax Reforms

The rising share of Personal Income Tax and Indirect Tax is a concern

Explained | Economics | Mains Paper 3: Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Trend related to Taxes in India

Mains level: Concerns due to the rising share of personal income tax and indirect tax

Why in the news?

Recent data show that Personal Income Tax Collections have increased, while collections from Corporate Taxes have reduced.

The present context of the rising share of Personal Income Tax and Indirect Tax:

  • Shift in Tax Composition: The data illustrates a significant shift in the composition of tax revenue, with personal income tax forming a larger share compared to corporate tax. This trend is accentuated by the sharp decline in corporate tax following the 2019 tax cuts.
  • Progressive vs. Regressive Taxation: Direct taxes, such as personal income tax, are considered progressive as they are based on income levels, whereas indirect taxes, like GST, are regressive, impacting all consumers uniformly regardless of their income.
    • The increasing share of indirect taxes implies a heavier burden on lower-income individuals.
  • Trend in Tax Composition: Chart 2 demonstrates a historical trend where indirect taxes had been decreasing since the 1980s, whereas direct taxes were on the rise. However, recent years have witnessed a reversal of this trend, with indirect taxes increasing and direct taxes declining.
  • International Comparison: Comparisons with BRICS economies indicate that India’s effective personal income tax rate is among the highest. This implies that Indian taxpayers may face relatively higher tax rates compared to individuals in other emerging economies.

Concerns due to rising share of Personal Income Tax and Indirect Tax:

  • Impact on Middle and Lower Income Groups: The rising share of personal income tax and indirect taxes places a greater burden on poorer citizens and the middle class. This is particularly concerning as the majority of personal income tax filers fall within the ₹1 lakh-₹5 lakh annual income bracket, indicating that middle-income earners are disproportionately affected.
  • Comparison with BRICS Economies: Data comparisons with BRICS economies reveal that India’s effective personal income tax rate is among the highest. This suggests that individuals in India may be facing relatively higher tax rates compared to their counterparts in other emerging economies.
  • Concern for Equity and Economic Stability: The data underscores a growing concern regarding the equitable distribution of the tax burden. The heavier reliance on personal income tax and indirect taxes may exacerbate income inequality and strain the finances of middle and lower-income households.

Way Forward:

  • Progressive Tax Reforms: Implementing progressive tax reforms can help alleviate the burden on middle and lower-income groups. This could involve revising tax brackets and rates to ensure that higher-income individuals contribute proportionally more to tax revenue.
  • Enhanced Direct Tax Compliance: Improving direct tax compliance measures, such as increasing tax enforcement efforts and reducing tax evasion loopholes, can help enhance revenue collection from high-income individuals and corporations.

Mains PYQ 

Q What is the meaning of the term ‘tax expenditure’? Taking housing sector as an example, discuss how it influences the budgetary policies of the government. (UPSC IAS/2013)

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Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

Court’s nudge on Hospital charges, a reform opportunity

Explained | Governance | Mains Paper 2: Health & Education
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Health; Government Initiatives;

Mains level: Challenges in benchmark for pricing

Why in the news? 

The SC while hearing a PIL in February’24, directed the Central Government to find ways to regulate the rates of Hospital Procedures in the Private sector.

  • The SC also warned against applying Central Government Health Scheme (CGHS) rates for treatment services at private healthcare facilities until standardized rates are set.

About Central Government Health Scheme (CGHS) Rates:

CGHS is a health care scheme provided by the Indian Government for its central government employees and pensioners.

  • Commencement Year: 1954
  • Objective: To provide comprehensive health coverage to Central Government Employees (Allopathy/Homoeopathy)
  • Present change: The rates of the Central Government Health Scheme (CGHS) for general surgery have been revised since February 2024.

Benchmark for Pricing:

  • Standard Treatment Guidelines (STGs): These can establish relevant clinical needs, the nature and extent of care, and the costs of total inputs required.
    • They address confounders and ensure clinical autonomy while enabling the valuation of healthcare resources consumed for precise cost determination.
  • Pooled payments by government: Formulating and adopting STGs require providers’ revenues to be tied to fewer payers.
    • This necessitates reimbursements from pooled payments with low Out-Of-Pocket (OOP) payment levels, supported by the government.
  • Coordination between payers and providers: Governments can support the agreement on pricing that provides a reasonable and sustainable surplus over input costs.
    • However, the ability of providers to access markets with OOP payments could hinder this effort.

Challenges faced during benchmarking of the price:

  • Private sector issues 
      • Private sector dominance: In India, over half of the total health expenditure is OOP, with the private sector predominantly composed of small-scale providers. Standardizing rates faces implementation uncertainties, and enforcement mechanisms for adherence remain unclear.
      • Resistance from providers: Concerns arise about the feasibility of regulatory measures if providers do not adhere to prescribed procedure rates, as seen in various health schemes.
  • Weak implementation
    • Limitations of regulations: While price caps can influence behavior in the short term, weak enforcement mechanisms lead to temporary effects as the overall environment remains unchanged.
    • Enforcement challenges: Despite suggested measures, enforcement remains weak, with only a fraction of states and union territories implementing the Clinical Establishment Act.
  • Data-related issues: Although the insurance industry initiated STGs for hospitals in 2010, progress was hindered by a lack of representative and accurate costing data due to limited participation from private hospitals.

Government Initiatives:

  • Developing STGs: The Pradhan Mantri Jan Arogya Yojana and the Department of Health Research have made significant strides in developing STGs for common conditions and adopting a comprehensive costing framework.
  • Efforts are also ongoing to create an Indian version of Diagnostics-Related Groups (DRGs)

Way Forward:

  • Addressing anticipated challenges: Anticipated challenges in implementing rate standardization policies need to be identified and addressed proactively to ensure successful outcomes.
  • Evidence-based policy: Conduct rigorous research and evaluation to generate evidence on the impact of regulatory measures on affordability, care quality, and provider behavior, informing future policy decisions.
  • Ensuring broader stakeholder participation: It is essential to involve a wide range of stakeholders in the development and implementation of rate standardization policies to increase their effectiveness and acceptance.

Mains PYQ 

Q Public health system has limitation in providing universal health coverage. Do you think that private sector can help in bridging the gap? What other viable alternatives do you suggest? (UPSC IAS/2015)

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Tribes in News

Chin-Kuki-Zo Tribes: Backdrop of Ethnic Conflict in Manipur

Prelims Only | Trivia | Mains Paper 1: Population & Associated Issues
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Chin-Kuki-Zo Tribes

Mains level: NA

Why in the news?

Manipur CM took it to social media where he alleged an “unnatural growth” in the population of the “Chin-Kuki-Zo” tribes in the state, posing a perceived threat to indigenous communities and national security.

About Chin-Kuki-Zo Tribes

Chin Tribe Kuki Tribe Zo Tribe
Ethnic Composition Major ethnic group in Myanmar’s Chin State; known for distinct customs and language. Heterogeneous group in Northeast India; recognized for diverse subtribes. Diverse ethnic group in Northeast India, Myanmar, and parts of Bangladesh.
Geographical Distribution Primarily in Myanmar’s Chin State; significant populations in Indian states like Mizoram. Mainly in Northeast India; also found in Chin State, Myanmar. Inhabits Northeast India, particularly Mizoram and Manipur; also in parts of Myanmar and Bangladesh.
Language Chin language, part of Kuki-Chin subgroup of Tibeto-Burman family. Kuki-Chin languages; various dialects with distinct variations. Mizo-Kuki-Chin languages; different dialects within Tibeto-Burman family.
Culture and Traditions Vibrant music, dance, festivals; celebrates Chin National Day. Rich oral traditions, folk music; celebrates festivals like Chavang Kut. Rich oral literature, vibrant festivals; celebrates Chapchar Kut and Mim Kut.
Livelihood Historically practiced subsistence agriculture; now diversified livelihoods. Historically practiced shifting (Jhum) cultivation; now engaged in various occupations. Historically practiced shifting (Jhum) cultivation; now diverse livelihood patterns.
Religion Predominantly Christianity with some traditional animistic beliefs. Predominantly Christianity with traditional animistic practices. Predominantly Christianity with remnants of traditional beliefs.
Socio-Political Organization Advocates for cultural identity and rights; e.g., Chin National Front. Promotes Kuki identity; active organizations like Kuki National Organization. Promotes Zo identity; e.g., Zomi Council and Mizo Zirlai Pawl.

Issues with their migration

The Chin-Kuki-Zo tribes in Manipur are contributing to the conflict in the state due to various factors.

  • There have been longstanding demands from various tribal groups for greater recognition of their ethnic identity and autonomy within Manipur.
  • Land ownership and control are significant issues among the Chin-Kuki-Zo tribes in Manipur.

PYQ:

[2016]  Consider the following pairs: (2016)

Community sometimes  mentioned in the news In the affairs of
1. Kurd Bangladesh
2. Madhesi Nepal
3. Rohingya Myanmar

Which of the pairs given above is/are correctly matched?

(a) 1 and 2
(b) 2 only
(c) 2 and 3
(d) 3 only

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RBI Notifications

RBI’s New Guidelines for Asset Reconstruction Companies (ARCs)

Prelims Only | Economics | Mains Paper 3: Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Asset Reconstruction Companies, SARFAESI Act, 2002;

Mains level: NA

Why in the news?

The RBI has introduced updated guidelines for Asset Reconstruction Companies (ARCs) through a master direction, effective from April 24, 2024.

What is an Asset Reconstruction Company (ARC)?

Description
About ARC is a special financial institution that acquires debtors from banks at a mutually agreed value and attempts to recover the debts or associated securities.
Regulation
  • ARCs are registered under the RBI.
  • Regulated under the SARFAESI Act, 2002 (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act).
Objective ARCs take over a portion of the bank’s non-performing assets (NPAs) and engage in asset reconstruction or securitization, aiming to recover the debts.
Functions
  • Asset Reconstruction: Acquisition of bank loans or other credit facilities for realization.
  • Securitization: Acquisition of financial assets by issuing security receipts.
Foreign Investment 100% FDI allowed in ARCs under the automatic route.
Limitiations
  • ARCs are prohibited from undertaking lending activities.
  • They can only engage in securitization and reconstruction activities.
Working
  • Bank with NPA agrees to sell it to ARC at a mutually agreed value.
  • ARC transfers assets to trusts under SARFAESI Act.
  • Upfront payment made to bank, rest through Security Receipts.
  • Recovery proceeds shared between ARC and bank.
Security Receipts Issued to Qualified Institutional Buyers (QIBs) for raising funds to acquire financial assets.
Significance
  • Banks can clean up their balance sheets and focus on core banking activities.
  • Provides a mechanism for resolution of NPAs and debt recovery.

What are the new guidelines laid out by the RBI?

  • Enhanced Capital Requirements:
      • Minimum Capital Requirement Increase: ARCs are now mandated to maintain a minimum capital requirement of Rs 300 crore, a significant increase from the previous Rs 100 crore stipulation established on October 11, 2022.
      • Transition Period for Compliance: Existing ARCs are granted a transition period to reach the revised Net Owned Fund (NOF) threshold of Rs 300 crore by March 31, 2026.
      • Interim Requirement: However, by March 31, 2024, ARCs must possess a minimum capital of Rs 200 crore to comply with the new directives.
  • Supervisory Actions for Non-Compliance:
      • ARCs failing to meet the prescribed capital thresholds will face supervisory action, potentially including restrictions on undertaking additional business until compliance is achieved.
  • Expanded Role for Well-Capitalized ARCs:
    • Empowerment of Well-Capitalized ARCs: ARCs with a minimum NOF of Rs 1000 crore are empowered to act as resolution applicants in distressed asset scenarios.
    • Investment Opportunities: These ARCs are permitted to deploy funds in government securities, scheduled commercial bank deposits, and institutions like SIDBI and NABARD, subject to RBI specifications. Additionally, they can invest in short-term instruments such as money market mutual funds, certificates of deposit, and corporate bonds commercial papers.
    • Investment Cap: Investments in short-term instruments are capped at 10% of the NOF to mitigate risk exposure.

 

PYQ:

[2018] With reference to the governance of public sector banking in India, consider the following statements:

  1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
  2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

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Coal and Mining Sector

[pib] Critical Minerals Summit

PIBPrelims Only | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Critical Minerals, Mineral Security Partnership (MSP)

Mains level: NA

Why in the news?

The Ministry of Mines has organized a pivotal summit in New Delhi aimed at fostering collaboration, sharing knowledge, and driving innovation in Critical Mineral beneficiation and processing.

What are Critical Minerals?

  • Critical Minerals are indispensable for economic development and national security, with their scarcity or concentration in specific regions posing potential supply chain vulnerabilities.
  • The declaration and identification of Critical Minerals is an ongoing process, influenced by technological advancements, market dynamics, and geopolitical factors.

Critical Minerals in India:

  • India has identified 30 Critical Minerals (July 2023) based on factors like disruption potential, import reliance, and cross-sectoral usage.
    • Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, Rare Earth Elements, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium.

Critical Minerals

Global Perspective:

Various nations have outlined their lists of Critical Minerals based on unique circumstances:

  • The US recognizes 50 minerals critical for national security and economic development.
  • Japan has identified 31 minerals crucial for its economy.
  • The UK, EU, and Canada have their respective lists, reflecting their strategic priorities.

India became the 14th member of the Mineral Security Partnership (MSP) in June 2023. 

  • MSP seeks to bolster critical minerals supply chains to support economic prosperity and climate objectives.
  • It seeks to ensure that critical minerals are produced, processed and recycled by catalyzing investments from governments and private sector across the full value chain.
  • Members: The other member countries are United States, Australia, Canada, Finland, France, Germany, Italy, Japan, Norway, the Republic of Korea, Sweden, the United Kingdom and the European Commission.

Note: Copper, gold and silver are not on the list of minerals under MSP (Wiki).

Various Government Initiatives:

  • MMDR Act Amendment (2023):   24 minerals were designated as critical and strategic under the Mines and Minerals (Development and Regulation) Act.
  • National Mineral Policy (2019): The updated policy emphasizes the exploration and exploitation of Critical Minerals to harness India’s mineral potential effectively.
  • Khanij Bidesh India Ltd (KABIL): A joint venture comprising National Aluminium Company Ltd (NALCO), Hindustan Copper Ltd (HCL), and Mineral Exploration Corporation Ltd (MECL), KABIL aims to secure a consistent supply of Critical Minerals by acquiring and developing assets overseas.
  • Indian Rare Earths Limited (IREL): It is a PSU that plays a significant role in the research and production of rare earth minerals.

India’s Critical Mineral Imports:

  • Lithium Imports: In FY23, India imported 2,145 tonnes of lithium carbonate and lithium oxide, costing Rs 732 crore.
  • Nickel and Copper Imports: The country imported 32,000 tonnes of unwrought nickel and 1.2 million tonnes of copper ore, costing Rs 6,549 crore and Rs 27,374 crore, respectively.
  • Import Dependence: India relies entirely on imports for lithium and nickel, and 93% for copper.

Country-wise dependence:

  1. China: India heavily relies on China for the import of critical minerals like lithium, cobalt, nickel, and graphite.
  2. Australia: India is actively engaged with Australia for acquiring mineral assets, particularly lithium and cobalt, to secure its supply chain for critical minerals.
  3. Argentina, Bolivia, and Chile: India is engaging with these countries, known for their reserves of battery metals like lithium and cobalt, to diversify its sources for critical minerals.

 

PYQ:

[2019] With reference to the management of minor minerals in India, consider the following statements:

  1. Sand is a ‘minor mineral’ according to the prevailing law in the country.
  2. State governments have the power to grant mining leases of minor minerals, but the powers regarding the formation of rules related to the grant of minor minerals lie with the Central Government.
  3. State Governments have the power to frame rules to prevent illegal mining of minor minerals.

Which of the statements given above is/are correct?

(a) 1 and 3

(b) 2 and 3

(c) 3 only

(d) 1, 2 and 3

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Climate Change Impact on India and World – International Reports, Key Observations, etc.

Why the Thar Desert on the borders of India and Pakistan is getting greener?

Places in newsPrelims Only | Enviro & Biodiversity | Mains Paper 1: Geographical Features & Their Location
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Thar Desert, Desert National Park;

Mains level: NA

 

Why in the news?

Rajasthan’s barren Thar Desert may turn green, says a recent study in the journal Earth’s Future.

Thar Desert

  • The Thar Desert is the 18th largest subtropical desert globally and is one of the most densely populated deserts.
  • Approximately 40% of the human population in Rajasthan resides in the Thar Desert.
  • It extends from the Sutlej River and is bounded by the Rann of Kutch, the Aravalli Mountains, and the Indus River.
  • About 85% of the Thar Desert is located in India, with the remainder in Pakistan.
  • In India, it spans across Rajasthan, Gujarat, Haryana, and Punjab as well.
  • Civilizations are believed to have thrived in the Thar region around 50,000 years ago across the extinct Saraswati River.
  • The Desert National Park (home to the endangered Great Indian Bustard, desert fox, desert cat, blackbuck, and Indian gazelle) is situated in the Thar Desert in the northwest Indian state of Rajasthan.

Why is the Thar desert getting greener?

  • Climate Change Effects:
      • Alteration of Weather Patterns: Climate change is causing shifts in rainfall distribution in the thar desert area.
      • Potential for Vegetation Growth: The increased precipitation could provide favorable conditions for vegetation growth, contributing to the greening of the desert.
  • Indian Monsoon Dynamics:
      • Westward Extension of Indian Monsoon: The Indian monsoon, known for bringing heavy rainfall to eastern India, is now extending further westward into regions like the Thar Desert.
      • Impact on Moisture and Rainfall: This change in monsoon dynamics could lead to increased moisture and rainfall in the desert region, facilitating the growth of vegetation.
  • Expansion of Indian Ocean Warm Pool (IOWP):
      • Influence on Monsoon Patterns: The Indian Ocean Warm Pool (IOWP) influences monsoon patterns and rainfall distribution over the Indian subcontinent.
      • Westward Expansion due to Climate Change: Climate change is causing the IOWP to expand westward, potentially resulting in increased rainfall over semi-arid regions like the Thar Desert and promoting greening.
  • Water Management Practices:
      • Contribution to Greening: Effective water management practices, such as rainwater harvesting and irrigation techniques like johad, kuis, and kunds, may be playing a role in the greening of the Thar Desert.
      • Utilization of Water Resources: By harnessing and efficiently utilizing available water resources, local communities and authorities can support vegetation growth and ecosystem restoration efforts in the desert.
  • Introduction of Irrigation  
    • Commercial Cropping: Irrigation was introduced during British colonial rule in the 19th and 20th centuries to convert arid and semi-arid ecosystems into cropland.
    • Restrictions on Grazing: The right to graze animals was restricted to landowners who cultivated crops, leading to the transformation of nomadic pastoralists into sedentary agropastoralists.

Sustainability of this transformation

  • Recent greening activities, largely on arid scrub savannahs, have threatened species adapted to such climates and have been linked to locust outbreaks.
  • The Indira Gandhi Canal project in the 1980s led to extensive crop cover in the Thar Desert, resulting in areas becoming infertile due to waterlogging and salinity.
  • Planting invasive species, such as prosopis juliflora and acacia tortilis, has led to habitat degradation and biodiversity loss.

 

PYQ:

[2018] Which of the following leaf modifications occur(s) in the desert areas to inhibit water loss?

  1. Hard and waxy leaves
  2. Tiny leaves
  3. Thorns instead of leaves

Select the correct answer using the code given below:

(a) 2 and 3 only

(b) 2 only

(c) 3 only

(d) 1, 2 and 3

[2020] The process of desertification does not have climate boundaries. Justify with examples.

[2013] Major hot deserts in northern hemisphere are located between 20-30 degree north and on the western side of the continents. Why?

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Indian Navy Updates

[pib] Launching of LSAM 20 (Yard 130)  

PIBPrelims Only | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates
Note4Students

From UPSC perspective, the following things are important :

Prelims level: LSAM 20;

Mains level: NA

Why in the News?

The Indian Navy has inducted the ‘Ammunition Cum Torpedo Cum Missile Barge, LSAM 20 (Yard 130) into its fleet.

What is LSAM 20?

  • LSAM 20 (Yard 130) is the Ammunition Cum Torpedo Cum Missile Barge (Storage) inducted by the Indian Navy.  (built by MSME Shipyard, M/s Suryadipta Projects Pvt Ltd, Thane).
  • LSAM 20 facilitates transportation, embarkation, and disembarkation of articles/ammunition to IN Ships.
  • These Barges are indigenously designed and built under relevant Naval Rules and Regulations of the Indian Register of Shipping.

Objective 

  • A Torpedo Cum Missile Barge is a specialized vessel used by the Indian Navy to transport various types of ammunition, torpedoes, and missiles to operational areas.
  • These barges play a crucial role in providing logistical support to naval vessels by ensuring the uninterrupted transportation of essential military supplies. 

PYQ:

[2016] Which one of the following is the best description of ‘INS Astradharini’, that was in the news recently?

(a) Amphibious warfare ship

(b) Nuclear-powered submarine

(c) Torpedo launch and recovery vessel

(d) Nuclear-powered aircraft carrier

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RBI Notifications

Towards a Green Growth: On the RBI and a Green Taxonomy

DOMRExplained | Economics | Mains Paper 3: Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Monetary Policy

Mains level: The impact of climate shock and extreme weather events

Why in the news?

Extreme weather conditions may pose a risk to inflation, along with prolonged geopolitical tensions that could keep crude oil prices volatile, the Reserve Bank’s April Bulletin said on April 23.

RBI’s Monetary Policy Report on the impact of climate shock and extreme weather events on food inflation:

  • Effects of Food Inflation: The report highlights the significance of extreme weather events and climate shocks in affecting not only food inflation but also the broader impact on the natural Rate of Interest and Financial Stability.
  • Broader Economic Impact: Climate shocks and extreme weather events are mentioned to have a broader impact on the economy’s financial stability, indicating that disruptions in food production and supply chains due to these events can lead to inflationary pressures beyond just the food sector.
  • Use of Economic Modeling: The report mentions the utilization of a New-Keynesian model incorporating a physical climate risk damage function to estimate the macroeconomic impact of climate change. This likely includes projections on how climate shocks affect food production and subsequently food inflation.
  • Warning on Long-Term Output Reduction: The report warns that without climate mitigation policies, the long-term economic output could be lower by around 9% by 2050. This suggests that climate shocks and extreme weather events could have lasting effects on food production and inflation.
  • Potential for Inflation Hysteresis: There’s a warning about the potential for inflation hysteresis to become entrenched, which could lead to a de-anchoring of inflation expectations. This implies that persistent disruptions caused by climate shocks could lead to sustained increases in food inflation.

Way Forward:

  • Need Investment in Climate Resilience: Governments and businesses can invest in climate-resilient agriculture practices and infrastructure to mitigate the adverse effects of extreme weather events on food production.
  • Need Diversification of Food Sources: Diversifying food sources can help reduce reliance on regions prone to climate-related disruptions. This could involve promoting local food production, supporting small-scale farmers, and investing in alternative food production methods such as vertical farming or hydroponics.

Mains PYQ 

Q What policy instruments were deployed to contain the great economic depression?

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Global Geological And Climatic Events

Anticyclones, hanging even now over India, link warming to heat | Explained

Explained | Enviro & Biodiversity | Mains Paper 1: Geographical Features & Their Location
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Anticyclone and El Nina

Mains level: Link between anticyclone and heat

Why in the news?

The record warming of 2023 has so far not been fully explained since it was much warmer than expected just from the superposition of El Nino on global warming.

About Anticyclone:

  • An anticyclone is a weather phenomenon defined as a large-scale circulation of winds around a central region of high atmospheric pressure, clockwise in the Northern Hemisphere and counterclockwise in the Southern Hemisphere.

The link between ElNino and Anticyclone: 

  • El Nino events can lead to the formation of anticyclone events. During El Niño, the weakening or reversal of the Walker circulation and strengthening of the Hadley circulation caused warm ocean water to develop in the central and east-central equatorial Pacific.

The link between anticyclone and heat 

  • Stability and Weather Patterns: Anticyclones are areas of high pressure in the atmosphere characterized by descending air, which stop the cloud formation and precipitation. This stable air mass tends to promote clear skies and can lead to prolonged periods of hot and dry weather.
  • Amplification by Global Warming: Studies suggest that global warming can intensify anticyclones, making them stronger and more persistent. Warmer temperatures due to climate change can enhance the evaporation of moisture from land and water surfaces, further reinforcing the stability of anticyclonic conditions.
  • Feedback Loop: Anticyclones can create a feedback loop with global warming. As anticyclones persist, they can exacerbate heatwaves by trapping heat near the surface, preventing it from escaping into the upper atmosphere. This trapped heat can then further strengthen the anticyclone, leading to a self-reinforcing cycle of heat and stability.

What are the stages of early warnings?

The stages of early warnings on the ‘ready-set-go’ system for disaster management

  • Ready: This stage involves providing a seasonal outlook based on background states and external factors like global warming and El Niño. The aim is to maximize the accuracy of longer-lead forecasts, enabling organizations like the National Disaster Management Agency (NDMA) and local governments to prepare their disaster response systems accordingly.
  • Set: In this stage, subseasonal predictions for weeks two to four are utilized. Resource allocations are made, and potential hotspots are identified to ensure that disaster preparedness is in place. This step involves moving resources, including personnel, to areas that are identified as at risk based on the extended range forecasts.
  • Go: The final stage, based on short- and medium-range forecasts (days 1-10), involves the activation of disaster response efforts. This includes implementing rescue operations, setting up hydration centers, heat shelters, and other necessary measures to manage the disaster effectively.

Conclusion: All evidence suggests India’s prediction system and early warning systems continue to improve and the NDMA has worked these details well into its ‘ready-set-go’ system.The remaining challenges are to build resilience for the future by better predicting the trajectory of the weather at every location over India.

Mains PYQ 

Q Drought has been recognized as a disaster in view of its spatial expanse, temporal duration, slow onset and lasting effects on vulnerable sections. With a focus on the September 2010 guidelines from the National Disaster Management Authority (NDMA), discuss the mechanisms for preparedness to deal with likely El Nino and La Nina fallouts in India.

https://www.thehindu.com/sci-tech/science/anticyclones-hanging-even-now-over-india-link-warming-to-heat/article68117359.ece

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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

Inequality can no longer be ignored

Explained | Indian Society | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Trends related to tax to GDP ratio;

Mains level: Growth and issues with inequality in India

Why in the news?

Addressing the present inequality in the market is questioning the nature of growth which is now unequal.

The reason behind the inequality in India:

    • Taxation Disparities: India’s tax-GDP ratio is comparatively low, standing at 17% as opposed to 25% in Brazil, indicating room for improvement in revenue generation. The taxation structure in India leans towards indirect taxes, which contribute significantly (about two-thirds) to overall tax revenue collection.
    • Regressive Taxation Structure: India’s tax system is described as regressive, indicating that it disproportionately impacts low-income individuals compared to high-income individuals. Indirect taxes, which are a significant component of overall tax revenue, tend to burden lower-income groups more than higher-income groups.
    • Lack in Tax Progressivity: There are concerns about the lack of progressivity in India’s direct tax regime, where higher-profit companies enjoy relatively lower effective tax rates compared to lower-profit companies.

Welfare spending is low

    • Low Spending on Welfare and Social Sector: India’s expenditure on welfare and the social sector is significantly lower compared to other countries. Public spending on health remains low, approximately 1.3% of GDP, falling short of the National Health Policy (NHP) target of 2.5% of GDP by 2025.
    • Eventual decline Budget Allocations: Major budgetary allocations for programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), education, and budgets for children have either declined as a proportion of total expenditure or GDP.

Way forward

  • Revenue Mobilization and Spending Priorities: There’s a pressing need to improve revenue mobilization progressively, ensuring that the burden of taxation is distributed fairly and equitably.
    • Simultaneously, increasing spending on areas that directly affect the lives of the poor is crucial. This includes healthcare, education, social protection programs, and employment generation schemes like MGNREGA.
  • Achieving Policy Targets: Meeting targets set by policies like the NHP requires a concerted effort to ramp up healthcare spending in line with national goals.

Mains PYQ 

Q) Despite the consistent experience of high growth, India still goes with the lowest indicators of human development. Examine the issues that make balanced and inclusive development elusive.  (UPSC IAS/2019)

Q) Critically discuss the objectives of Bhoodan and Gramdan movements initiated by Acharya Vinoba Bhave and their success.  (UPSC IAS/2013)

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