Day: January 21, 2020

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WTO and India

[op-ed of the day] Delhi-Davos disconnect-India must find ways to take advantage of new opportunities

op-ed snap | Economics | Mains Paper 3: Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- Trade war, Globalization and effects on Indian economy.

Context

Given its increased heft in the global economic order, India ought to be at the leading edge of the current debate of the future of capitalism.

The emergence of “stakeholder capitalism”

  • Interests of all shareholder: Klaus Schwab, who founded the World Economic Forum 50 years ago, wants capitalists to look beyond their shareholders and consider the interests of all the stakeholders.
    • Long overdue debate: Some hope that the debate on stakeholder capitalism is a long-overdue recognition of the capitalist excesses of recent decades.
  • Generating value for customers: Last August, the Business Roundtable in the US, which brings together some of the top American corporates, said American companies must now generate value for customers.
    • Invest in their employees.
    • Deal fairly with suppliers and support the communities in which they operate even as they service their shareholders.
  • Scepticism over “interests of all shareholders”: Sceptics say that this is a nice way of saying the right things, repackaging old ideas on corporate social responsibility and creating illusions about reforming capitalism.
    • Cynics insist that it will be business as usual for the world’s capitalists.
    • Reflection of deeper crisis: Beyond this divide between optimists and pessimists, the discourse on “stakeholder capitalism” is a reflection of the deeper crisis afflicting the global economy today.

Three major challenges according to WEF

  • In its annual survey on global risks, the WEF has identified many challenges. Three of them stand out.
  • First Challenge: Polarised politics
    • In the US Trump is unlikely to be defensive.
    • While the dominant sentiments see Trump as the very embodiment of nationalism and populism that are polarising politics around the world.
    • Others point to the structural conditions that have bred these forces.
    • America’s working-class whose wages haven’t risen in decades, whose jobs are less secure than ever rallied behind Trump.
    • Politics in the US: Much the same happened in the British elections last year.
    • Tory leader Boris Johnson won a sweeping mandate by breaking into the working-class strongholds of the Labour Party.
  • Second Challenge: Trade war
    • Trump had a long record of denouncing free trade.
    • Many had hoped that Trump will moderate his anti-globalist rhetoric once in office.
    • Attack on a core principle of globalisation: Trump has taken a pickaxe to the core principles of the globalised economic order – free trade, open borders and multilateralism.
    • Renegotiating the treaties: The US has renegotiated a 25-year old trade agreement with America’s neighbours, Canada and Mexico.
    • The threat of all-out-trade war with China: Trump’s threat of an all-out trade war with China over the last couple of years has led to an interim agreement.
    • The agreement commits Beijing to reduce its trade surplus with the US by importing more.
    • The trade deficit of the US with EU: At Davos, Trump is expected to turn his ire on the EU, which has a near $200 billion trade surplus with the US.
  • Third challenge: Technology
    • War in technology domain: The trade wars among the world’s major capitalist centres is accentuated by the technological revolution, especially in the digital domain.
    • Need for coordination: The Davos report on global risks argues that the realisation of the full potential of new technologies depends on unprecedented coordination among all stakeholders.
    • Digital fragmentation: What is emerging instead is “digital fragmentation” marked by the extension of geopolitical and geo-economic rivalries into the new domain.
    • Digital issues have come to the front and centre of American arguments with Europe.

Conclusion

  • India must find ways to take advantage of the new opportunities from the unfolding rearrangement of the global capitalist system.

 

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Foreign Policy Watch: India – EU

[op-ed snap] Acting in concert

op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- India-EU relations and scope and areas of cooperation.

Context

The EU-India Strategic Partnership has come a long way in recent years. The relationship is based on long-standing shared values and interests. There are numerous opportunities to unleash the full potential of EU-India cooperation.

India-EU Cooperation on Climate Change

  • The EU has committed to becoming carbon neutral by 2050.
  • But EU member states together only account for 9 per cent of global emissions.
  • Need to engage with the rest of the world:  EU-India cannot solve this problem unless they engage with the rest of the world to address it.
    • India’s commitment, as one of the biggest democracies in the world, is a key part of the solution.
    • The mixed outcome of the COP25 Climate Conference shows how much more remains to be done.
    • Clean Energy and Climate Partnership (CECP): In 2016 Prime Minister Narendra Modi and European leaders agreed on an EU-India Clean Energy and Climate Partnership (CECP).
    • EU and International Solar Alliance: In 2018, the EU joined efforts with the International Solar Alliance, headquartered in India.

Cooperation in trade

  • Both are the members of WTO: India and EU both agree on the vital role of the World Trade Organisation (WTO) and the need to overcome the crisis of the dispute settlement system.
    • Ministerial dialogue: The launch of a regular ministerial dialogue on economic, trade and investment issues could give additional impetus to the relations.

Cooperation on security

  • Indian Navy vessels are now escorting World Food Programme ships in the framework of the EU Atlanta operation against piracy off the coast of Somalia.
  • Cooperation on anti-terrorism: Counter-terrorism experts from Europe and India exchange experiences and best practices.
    • As a result, an enhanced working relationship between our police officers is taking shape.

Digital economy and cyber

  • Need to deepen cooperation: EU and India should deepen cooperation to protect fundamental freedoms in cyberspace and the free flow of data – and counter the drift towards high-tech “de-coupling”.
  • India-EU does not want a split in cyberspace, forcing both to “choose sides” between competing systems and standards.
  • India and EU both believe in fair competition, based on global standards, for 5G, AI, big data and the internet of things.

Conclusion

There is much that the EU and India have accomplished in recent years. But there is even more to be done to further strengthen our dynamic dialogue and cooperation in all areas of mutual interest and as players on the world stage.

 

 

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

[op-ed snap] Redesigning India’s ailing data system

op-ed snap | Economics | Mains Paper 3: Indian Economy
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- National accounting and problems in associated with the data collection and methods.

Context

As official statistics is a public good, giving information about the state of the economy and success of governance, it needs to be independent to be impartial.

GDP calculation and its significance

  • What is GDP:
    • Assigning a value to products and services: In effect, it adds apples and oranges, tractors and sickles, trade, transport, storage and communication, real estate, banking and government services through the mechanism of value.
    • GDP covers all productive activity for producing goods and services, without duplication.
    • The System of National Accounting (SNA): It is designed to measure production, consumption, and accumulation of income and wealth for assessing the performance of the economy.
  • What is the significance of GDP data?
    • Influence the market: GDP data influence markets, signalling investment sentiments, the flow of funds and balance of payments.
    • The input-output relations impact productivity and allocation of resources.
    • Demand and supply influences prices, exchange rates, wage rates, employment and standard of living, affecting all walks of life.
  • Issues over the present series of GDP:
    • Nominal GDP: The data on GDP are initially estimated at a current price known as nominal GDP.
    • Real GDP: Nominal GDP minus the inflation effect is real GDP.
    • Price Index: There is a way of adjusting inflation effect through an appropriate price index.
    • Pricing series issue with the service sector: The present series encountered serious problems for the price adjustment, specifically for the services sector contributing about 60% of GDP.
    • Absence of price index: There is an absence of appropriate price indices for most service sectors.
    • What the absence of series means: The deflators used in the new series could not effectively separate out price effect from the current value to arrive at a real volume estimate at a constant price.
    • Methodical issue: Replacing Annual Survey of Industries (ASI) with the Ministry of Corporate Affairs MCA21 posed serious data and methodological issues.

Need for the change in the approach of data collection

  • The approach for the collection of data remains largely the same for long.
    • Price and production indices are constructed using a fixed base Laspeyres Index.
    • The yield rate for paddy is estimated by crop cutting experiments.
    • The organisation of field surveys for collection of data on employment-unemployment, consumer expenditure, industrial output, assets and liabilities continue.
  • Why data collection for yields need to change?
    • Productivity and remunerative price of output are major concerns for agriculture.
    • Data collection from diverse factors: It is necessary to collect data on factors such as soil conditions, moisture, temperature, water and fertilizer use determining yield, the impact of intermediary and forward trade on farm gate price and so on.
    • Israel collects these data for analysis to support productivity.
    • Need to leverage the e-governance: The initiative under e-governance enabled the capturing of huge data, which need to be collated for their meaningful use for the production of official statistics.

Data Logistics

  • Need of data from the other areas: Along with GDP, we need data to assess-
    • Inclusive growth.
    • Fourth-generation Industrial Revolution riding on the Internet of things.
    • Robotics-influencing employment and productivity.
    • Environmental protection.
    • Sustainable development and social welfare.
  • How to deal with the data inconsistency
    • We need systems which have the capability to sift through a huge volume of data seamlessly to look for reliability, validity, consistency and coherence.
    • Such a system is possible through a versatile data warehouse as a component of big–data technology.
    • Rangarajan Committee recommendation: Setting up of such system has been wanting as thoughtful and well-meaning key recommendations of the Rangarajan Commission and subsequent recommendations from 2006 onwards by successive National Statistical Commissions.

Way forward

  • The need for a new system: The present national accounting and analytical framework miss out on many important dimensions of the economy.
    • We need a new framework for analysis for such a complex system and evolutionary process.
    • The system needs to take into account automation, robotisation and other labour-replacing technologies affecting profitability, structural change and general welfare.
  • Need to find alternative avenues for the unemployed and jobs lost: In order to inject efficiency and stability, there is a need to have detailed data on how: markets clear, prices are formed, risks build-up, institutions function and, in turn, influence the lifestyle of various sections of the people.
  • Knowing market microstructure: It is also needed to know in greater detail about market microstructure and optimality therein, the role of technology and advanced research, changing demand on human skills, and enterprise and organising ability.
  • Monopoly must be contained:  The loss caused to the economy through monopoly power, inefficient input-output mix, dumping, obsolete technology and product mix must be contained.
  • Ensure distribution of wealth: The consensus macroeconomic framework of analysis assumes symmetric income distribution and does not get into the depth of structural issues.
    • In the changed situation of availability of microdata, there is a need to build a system to integrate the micro with the macro, maintaining distributional characteristics.

Conclusion

Data is the new oil in the modern networked economy in pursuit of socio-economic development. The economics now is deeply rooted in data, measuring and impacting competitiveness, risks, opportunities and social welfare in an integrated manner, going much beyond macroeconomics. There is a need for commitment to producing these statistics transparently.

 

 

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Poverty Eradication – Definition, Debates, etc.

Global Social Mobility Report 2020

IOCR | Trivia | Mains Paper 1: Social Empowerment
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Global Social Mobility Report 2020 and its highlights

Mains level: Social Mobility

 

The Global Social Mobility Report was recently released at the ongoing World Economic Forum at Davos, Switzerland.

Global Social Mobility Report

  • The World Economic Forum organizes the well-known annual gathering of the world’s most influential business and political decision-makers at Davos.
  • It has come out with its first-ever Global Social Mobility Report, which has ranked India a lowly 72 out of the 82 countries profiled.
  • According to the report, the Nordic economies such as Denmark and Finland top the social mobility rankings while countries like India, Pakistan, Bangladesh and South Africa languish at the bottom (see Table 1).

Table 1: WEF’s Global Social Mobility Rankings

Country Rank (out of 82)
Denmark 1
Germany 11
United Kingdom 21
United States 27
Russia 39
China 45
Saudi Arabia 52
Brazil 60
India 76
Pakistan 79

 

What is the context for this report?

  • Notwithstanding fast global growth, inequalities have been growing across the world.
  • The rise of inequality has not only created massive social unrest but also adversely affected the global consensus on the kind of economic policies that countries follow.
  • A good example of this is the rise of trade protectionism across the world over the past few years.
  • Be it US or the UK several countries have started looking inwards in the hope that greater trade protectionism will help allay the fears and apprehensions of domestic workers.

What is Social Mobility?

  • Typically, inequalities are measured in income terms. And this measure has been found inadequate.
  • As the report states, “many situations exist where, despite high levels of absolute income mobility, relative social mobility remains low.
  • For example, in economies such as China and India, economic growth can lift entire populations upward in terms of absolute income, but an individual’s status in society relative to others remains the same”.
  • The report states: “The notion of relative social mobility is more closely related to the social and economic status of an individual relative to their parents. I
  • n a country with a society with perfect relative mobility, a child born in a low-income family would have as much chance to earn a high income as a child born to parents who earn a high income”.

Thus, the concept of social mobility is much broader than just looking at income inequality. It encompasses several concerns such as:

  • Intragenerational mobility: The ability for an individual to move between socio-economic classes within their own lifetime.
  • Intergenerational mobility: The ability for a family group to move up or down the socio-economic ladder across the span of one or more generations.
  • Absolute income mobility: The ability for an individual to earn, in real terms, as much as or more than their parents at the same age.
  • Absolute educational mobility: The ability for an individual to attain higher education levels than their parents.
  • Relative income mobility: How much of an individual’s income is determined by their parents’ income.
  • Relative educational mobility: How much of an individual’s educational attainment is determined by their parents’ educational attainment.

Why does social mobility matter?

  • How far an individual can move up in the society determines a lot whether one is closer to the income “floor” (or poor) or “ceiling” (or rich).
  • Social mobility levels, then, can help us understand both the speed – that is, how long it takes for individuals at the bottom of the scale to catch up with those at the top – and the intensity – that is, how many steps it takes for an individual to move up the ladder in a given period – of social mobility.
  • Research also shows that countries with high levels of relative social mobility—such as Finland, Norway or Denmark— exhibit lower levels of income inequality.
  • Conversely, countries with low relative social mobility—such as India, South Africa or Brazil—also exhibit high levels of economic inequality.
  • That’s why it matters for countries like India to increase social mobility.

 

As shown in Table 2, it would take a whopping 7 generations for someone born in a low-income family in India to approach mean income level; in Denmark, it would only take 2 generations.

 

Table 2: Income Mobility across Generations

Country Number of generations required by a poor family member to achieve mean income level
Denmark 2
United States/ United Kingdom 5
Germany/ France 6
India/China 7
Brazil/South Africa 9

 

So, how is social mobility calculated?

The WEF’s Global Social Mobility Index assesses the 82 economies on “10 pillars” spread across the following five key dimensions of social mobility:

  1. Health;
  2. Education (access, quality and equity, lifelong learning);
  3. Technology;
  4. Work (opportunities, wages, conditions);
  5. Protection and Institutions (social protection and inclusive institutions).

How did India perform on each of the 10 pillars of social mobility?

India’s overall ranking is a poor 76 out of the 82 countries considered. Thus it should not come as any surprise that India ranks lowly in individual parameters as well.

Table 3 below provides the detailed breakup.

Table 3: Where India ranks on the 10 Pillars of Social Mobility

Parameter Rank (out of 82 countries)
Health 73
Access to Education 66
Quality and Equity in Education 77
Lifelong learning 41
Access to Technology 73
Work Opportunities 75
Fair Wage Distribution 79
Working Conditions 53
Social Protection 76
Inclusive Institutions 67

 

Back2Basics

World Economic Forum (WEF)

  • The WEF based in Cologny-Geneva, Switzerland, is an NGO founded in 1971.
  • The WEF’s mission is cited as “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas”.
  • It is a membership-based organization, and membership is made up of the world’s largest corporations.
  • The WEF hosts an annual meeting at the end of January in Davos, a mountain resort in Graubünden, in the eastern Alps region of Switzerland.

Various reports published by WEF:

[Tikdam: Most (Not all) reports titled with ‘Global’ are released by WEF.]

  1. Global Competitiveness Report
  2. Global Information Technology Report
  3. Global Gender Gap Report
  4. Global Travel and Tourism Report
  5. Global Enabling Trade Report etc.

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

Thawing of Permafrost

| Enviro & Biodiversity | Mains Paper 1: Climatic Change
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Thermokarsts, Thawing of permafrost

Mains level: Impact of climate change on polar permafrost

 

A recent study makes a disturbing connection between the loss of Arctic sea ice and thawing (melting) of permafrost in the region, with global implications.

What is Permafrost?

  • ‘Permafrost’ or permanently frozen ground is land that has been frozen at or below 0 degrees Celsius for two or more consecutive years.
  • A staggering 17 per cent of Earth’s entire exposed land surface is comprised of permafrost.
  • Composed of rock, sediments, dead plant and animal matter, soil, and varying degrees of ice, permafrost is mainly found near the poles, covering parts of Greenland, Alaska, Northern Canada, Siberia and Scandinavia.
  • The Arctic region is a vast ocean, covered by thick ice on the surface (called sea ice), surrounded by land masses that are also covered with snow and ice.

Permafrost thawing

  • When permafrost thaws, water from the melted ice makes its way to the caves along with ground sediments, and deposits on the rocks.
  • In other words, when permafrost thaws, the rocks grow and when permafrost is stable and frozen, they do not grow.

Why thawing?

  • The link between the Siberian permafrost and Arctic sea ice can be explained by two factors:
  • One is heat transport from the open Arctic Ocean into Siberia, making the Siberian climate warmer.
  • The second is moisture transport from open seawater into Siberia, leading to thicker snow cover that insulates the ground from cold winter air, contributing to its warming.
  • This is drastically different from the situation just a couple of decades ago when the sea ice acted as a protective layer, maintaining cold temperatures in the region and shielding the permafrost from the moisture from the ocean.
  • If sea ice (in the summer) is gone, permafrost start thawing.

Impact on Climate Change

  • Due to relentlessly rising temperatures in the region, since the late-twentieth century, the Arctic sea ice and surrounding land ice are melting at accelerating rates.
  • When permafrost thaws due to rising temperatures, the microbes in the soil decompose the dead organic matter (plants and animals) to produce methane (CH4) and carbon dioxide (CO2), both potent greenhouse gases.
  • CH4 is at least 80 times more powerful than CO2 on a decadal timescale and around 25 times more powerful on a century timescale.
  • The greenhouse gases produced from thawing permafrost will further increase temperatures which will, in turn, lead to more permafrost thawing, forming an unstoppable and irreversible self-reinforcing feedback loop.
  • Experts believe this process may have already begun. Giant craters and ponds of water (called ‘thermokarst lakes’) formed due to thawing have been recorded in the Arctic region. Some are so big that they can be seen from space.

Why a matter of concern?

  • An estimated 1,700 billion tonnes — twice the amount currently present in the atmosphere — of carbon is locked in all of the world’s permafrost.
  • Even if half of that were to be released to the atmosphere, it would be game over for the climate.
  • Scientific estimates suggest that the Arctic Ocean could be largely sea ice-free in the summer months by as early as 2030, based on observational trends, or as late as 2050, based on climate model projections.

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Foreign Policy Watch: India-Middle East

UAE declared ‘Reciprocating Territory’ by India

| International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Reciprocating Territory

Mains level: Reciprocating Territory

Recently, the Ministry of Law and Justice issued an Extraordinary Gazette Notification, declaring the UAE to be a “reciprocating territory” under Section 44A of the Civil Procedure Code, 1908. The notification also declared a list of courts in the UAE to be “superior Courts” under the same section.

What is a ‘Reciprocating Territory’ ?

  • Essentially, orders passed by certain designated courts from a ‘reciprocating territory’ can be implemented in India, by filing a copy of the decree concerned in a District Court here.
  • The courts so designated are called ‘superior Courts’.

What does Section 44 of the CPC say?

Section 44A, titled “Execution of decrees passed by Courts in reciprocating territory”, provides the law on the subject of execution of decrees of Courts in India by foreign Courts and vice versa.

Under Explanation 1 of S. 44A:

  • “Reciprocating territory” means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section; and “superior Courts”, with reference to any such territory, means such Courts as may be specified in the said notification.”
  • 44A (1) provides that a decree passed by “a superior Court” in any “reciprocating territory” can be executed in India by filing a certified copy of the decree in a District Court, which will treat the decree as if it has been passed by itself.
  • According to Explanation-2, the scope of the Section is restricted to decrees for payment of money, not being sums payable “in respect of taxes or other charges of a like nature or in respect of a fine or other penalty”.
  • It also cannot be based on an arbitration award, even if such an award is enforceable as a decree or judgment.

Other countries with such status

  • Apart from Dubai, the other countries declared to be “reciprocating territories” are: United Kingdom, Singapore, Bangladesh, Malaysia, Trinidad & Tobago, New Zealand, the Cook Islands (including Niue) and the Trust Territories of Western Samoa, Hong Kong, Papua New Guinea, Fiji, Aden.

Why such move?

  • The notification was the only remaining part of a 1999 agreement between the UAE and India related to cooperation in civil and commercial matters.
  • The decision is believed to help bring down the time required for executing decrees between the two countries.
  • With this, Indian expatriates in the UAE would no longer be able to seek safe haven in their home country if they are convicted in a civil case in the UAE.

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Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

[pib] UNCITRAL

IOCR | International Relations | Mains Paper 2: Important International Institutions
Note4Students

From UPSC perspective, the following things are important :

Prelims level: UNCITRAL

Mains level: Not Much

 

An International Arbitration Tribunal has dismissed all claims brought against  India in entirety. The arbitration arose out of the cancellation of Letters of Intent for the issuance of telecom licences to provide 2G services in five telecommunications circles by reason of India’s essential security interests.

UNCITRAL

  • The UN Commission on International Trade Law (UNCITRAL) is a subsidiary body of the U.N. General Assembly responsible for helping to facilitate international trade and investment.
  • Established by the UNGA in 1966, UNCITRAL’s official mandate is “to promote the progressive harmonization and unification of international trade law” through conventions, model laws, and other instruments that address key areas of commerce, from dispute resolution to the procurement and sale of goods.
  • UNCITRAL carries out its work at annual sessions held alternately in New York City and Vienna, where it is headquartered.
  • The Tribunal constituted in accordance with the UNCITRAL Arbitration Rules 1976 is seated at the Hague, Netherlands, and proceedings are administered by the Permanent Court of Arbitration.

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Wildlife Conservation Efforts

Steppe Eagle

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

From UPSC perspective, the following things are important :

Prelims level: Steppe Eagle

Mains level: Conservation of migratory birds in India

 

A lone endangered steppe eagle (Aquila nipalensis) has been sighted by a group of birdwatchers in a paddy field near Vijayawada.

Steppe Eagle

  • The Steppe Eagle is a migratory raptor which has undergone extremely rapid population declines within all its range.
  • It breeds in Russia, Kazakhstan, and Mongolia during the winter season.
  • Steppe eagle is the second-largest migratory eagle species to India.
  • IUCN Status: It has moved from ‘Least Concern’ to ‘Endangered’

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Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

Xenobot

Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Xenobot

Mains level: Utility of stem cells in bio-robotics

Scientists in the US have created the world’s first “living machines” — tiny robots built from the cells of the African clawed frog that can move around on their own.

Xenobot

  • Scientists have developed living robots from frogs stem cells.
  • They have named this millimetre-wide robots “xenobots” — after the species of aquatic frog found across sub-Saharan Africa from Nigeria and Sudan to South Africa, Xenopus laevis.
  • Scientists have repurposed living cells scraped from frog embryos and assembled them into entirely new life-forms.
  • The xenobots can move toward a target, perhaps pick up a payload (like a medicine that needs to be carried to a specific place inside a patient) — and heal themselves after being cut.

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