Note4Students
From UPSC perspective, the following things are important :
Prelims level: Competition Commission of India (CCI), Cartelization
Mains level: Not Much
The Competition Commission of India (CCI) has slapped certain penalties on paper manufacturing companies from agricultural waste and recycled wastepaper against Cartelization.
What is a Cartel?
- According to CCI, a “Cartel includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services”.
- The International Competition Network, which is a global body dedicated to enforcing competition law, has a simpler definition.
- The three common components of a cartel are:
- an agreement
- between competitors
- to restrict competition
What is Cartelization?
- Cartelization is when enterprises collude to fix prices, indulge in bid rigging, or share customers, etc.
- But when prices are controlled by the government under a law, that is not cartelization.
- The Competition Act contains strong provisions against cartels.
- It also has the leniency provision to incentivise a party to a cartel to break away and report to the Commission, and thereby expect total or partial leniency.
- This has proved a highly effective tool against cartels worldwide.
- Cartels almost invariably involve secret conspiracies.
How do they work?
- According to ICN, four categories of conduct are commonly identified across jurisdictions (countries). These are:
- price-fixing
- output restrictions
- market allocation and
- bid-rigging
- In sum, participants in hard-core cartels agree to insulate themselves from the rigours of a competitive marketplace, substituting cooperation for competition.
How do cartels hurt?
- While it may be difficult to accurately quantify the ill-effects of cartels, they not only directly hurt the consumers but also, indirectly, undermine overall economic efficiency and innovations.
- A successful cartel raises the price above the competitive level and reduces output.
- Consumers choose either not to pay the higher price for some or all of the cartelized product that they desire, thus forgoing the product, or they pay the cartel price and thereby unknowingly transfer wealth to the cartel operators.
Are there provisions in the Competition Act against monopolistic prices?
- There are provisions in the Competition Act against abuse of dominance.
- One of the abuses is when a dominant enterprise “directly or indirectly imposes unfair or discriminatory prices” in purchase or sale of goods or services.
- Thus, excessive pricing by a dominant enterprise could, in certain conditions, be regarded as an abuse and, therefore, subject to investigation by the Competition Commission if it were fully functional.
- However, it should be understood that where pricing is a result of normal supply and demand, the Competition Commission may have no role.
How might cartels be worse than monopolies?
- It is generally well understood that monopolies are bad for both individual consumer interest as well as the society at large.
- That’s because a monopolist completely dominates the concerned market and, more often than not, abuses this dominance either in the form of charging higher than warranted prices or by providing lower than the warranted quality of the good or service in question.
How to stop the spread of cartelization?
- Cartels are not easy to detect and identify.
- As such, experts often suggest providing a strong deterrence to those cartels that are found guilty of being one.
- Typically this takes the form of a monetary penalty that exceeds the gains amassed by the cartel.
- However, it must also be pointed out that it is not always easy to ascertain the exact gains from cartelization.
- In fact, the threat of stringent penalties can be used in conjunction with providing leniency — as was done in the beer case.
Back2Basics: Competition Commission of India (CCI)
- The CCI is the chief national competition regulator in India.
- It is a statutory body within the Ministry of Corporate Affairs.
- It is responsible for enforcing The Competition Act, 2002 in order to promote competition and prevent activities that have an appreciable adverse effect on competition in India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Jagannath Temple and its architecture
Mains level: Temple architecture of India
Odisha CM will lay the foundation stone of the much-awaited Puri Heritage Corridor.
Puri Heritage Corridor Project
- Conceived in 2016, the Puri Heritage Corridor Project was unveiled in December 2019 to transform the holy town of Puri into an international place of heritage.
- The project includes redeveloping major portions of the holy town and in the vicinity of the temple for visitors and tourists.
About Jagannath Temple
- The Jagannath Temple is an important Vaishnavite temple dedicated to Jagannath, a form of Sri Krishna in Puri in Odisha.
- The present temple was rebuilt from the 10th century onwards, on the site of an earlier temple, and begun by Anantavarman Chodaganga Deva, the first king of the Eastern Ganga dynasty.
- The Puri temple is famous for its annual Ratha Yatra, or chariot festival, in which the three principal deities are pulled on huge and elaborately decorated temple cars.
Its architecture
- With its sculptural richness and fluidity of the Oriya style of temple architecture, it is one of the most magnificent monuments of India.
- The huge temple complex covers an area of over 400,000 square feet and is surrounded by a high fortified wall.
- This 20 feet high wall is known as Meghanada Pacheri.
- Another wall known as kurma bedha surrounds the main temple.
The temple has four distinct sectional structures, namely:
- Deula, Vimana or Garba griha (Sanctum sanctorum) where the triad deities are lodged on the ratnavedi (Throne of Pearls). In Rekha Deula style;
- Mukhashala (Frontal porch);
- Nata mandir/Natamandapa, which is also known as the Jagamohan (Audience Hall/Dancing Hall), and
- Bhoga Mandapa (Offerings Hall)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Formalisation and its challenges
Context
A recent study by SBI has reported that the Indian economy witnessed accelerated formalisation under the distressed conditions of the pandemic and the lockdown last year. The study estimates that the share of the informal economy has fallen to a mere one-fifth of GDP — a figure comparable to many advanced economies.
Understanding informality
- ILO definition: The ILO’s globally accepted framework for definitions is as follows: Informal sector enterprises are defined as private unincorporated enterprises owned by individuals (or households) that are not constituted as separate legal entities independently of their owners.
- They are not registered under specific national legislation (such as Factories’ or Commercial Acts).
- Definition of a formal worker in India: Formal workers in India, on the other hand, are defined as those having access to at least one social security benefit such as a provident fund or healthcare benefits.
What explains the decline of informal sector in GDP
- Significance of informal sector: In 2017-18, as per the latest official statistics, India’s informal sector accounted for approximately 52 per cent of its GDP, employing 82 per cent of the total workforce.
- These ratios have broadly remained unchanged over the last decade.
- Most affected due to pandemic: As the informal (unorganised) sector bore much of the brunt of the economic contraction during 2020-21, a decline in its share in GDP is unsurprising.
- Lack of financial strength: The sector had neither the financial strength nor the technical wherewithal to face the Covid shock.
- Inadequate policy support: Additionally, policy support, mostly supply-side measures, was mainly focused on firms in the formal sector, with the informal sector left to fend for itself.
Issues with decline
- Undeniably, the informal sector’s share in GDP is likely to have shrunk due to the Covid shock.
- However, alarmingly, the purported decline in the informal sector’s share in GDP has not been accompanied by an expected reduction in its employment share.
- Data from the official annual Period Labour Force Survey (PLFS) 2017-18 and 2019-20, where the latter includes the period of the Covid shock from April to June 2020, shows that the employment share in non-agricultural informal enterprises has increased from 68 per cent in 2017-18 to 69.5 per cent in 2019-20.
- These figures do not include the agricultural sector, where employment is almost entirely in the informal sector.
- The increasing share of the formal sector in terms of GDP but declining share in employment only widens the schism (or dualism) between the two sectors.
- The increasing share of the formal sector in terms of GDP but declining share in employment only widens the schism (or dualism) between the two sectors.
Implications
- Impact on investment and growth: The lack of remunerative jobs for the vast majority of Indian consumers implies that eventually the lack of growth in demand will adversely impact investment and economic growth.
- After all, a mere 17-18 per cent of the workforce in the organised sector cannot sustain growth of the economy in the long run.
- Squeezing out informal enterprises: The increase in the formal sector’s share in GDP due to Covid-19 is a result of large, formal enterprises squeezing out informal enterprises.
- It is important to note here that the increase in formalisation is not a consequence of micro and small informal firms transitioning to formality.
Increasing productivity: A way forward to formalisation
- Promoting formalisation: Over the last five years, the economy has officially witnessed a significant drive towards formalisation.
- Multiple reasons for avoiding formalisation: It is crucial to recognise that firms exist in the informal sector for various reasons and not simply to evade regulations and taxation.
- Significance of productivity: Many own account enterprises and MSMEs cannot afford to survive in the formal sector due to their low productivity.
- It is essential to view the process of formalisation as a development strategy that requires stepping up investment in physical and human capital to boost productivity and the extension of social security benefits for all workers, not just a registration strategy on myriad portals.
Consider the question “Informal sector has been affected disproportionately in the wake of the pandemic. What are the implications of this for the economy? Suggest the way forward for the formalisation.”
Conclusion
The informal sector will come back to life as much of it represents the survival efforts of the working poor. Celebrating formalisation based on the misery and devastation of poor informal workers (and their meagre productive assets) is not just misplaced but also callous.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- A collaborative tech vision for India, UAE, ISRAEL and the US
Context
Last month’s meeting between the foreign ministers of India, the US, Israel, and the UAE has set foreign policy circles in India abuzz with talks of the potential emergence of another quadrilateral grouping or as analysts term it, a “new Quad”.
Significance of the new Quad meeting
- Collaboration in various areas: The grouping discussed technology collaboration along with the joint infrastructure projects in transportation, enhancing political and economic cooperation and maritime security matters.
- Forum for economic cooperation: They have agreed to set up an international forum for economic cooperation.
- Collaboration on technology: Amongst all the issues discussed, the technology dimension of this partnership promises a far greater potential for collaboration.
- The four countries are uniquely placed to shape an innovation-based partnership, which can conjoin the technology hubs of Silicon Valley, Dubai, Tel Aviv, and Bengaluru.
- Such potential collaboration can benefit from the existing robust cooperation between these countries.
- Collaboration in fintech: The agreement between Start-Up Nation Central, an Israeli non-profit that connects the tech ecosystem, and Dubai International Financial Centre, the UAE’s financial hub, will create regulatory sandboxes and accelerators for start-ups and provide them with market access opportunities.
- India and the US have been separately working with the two countries on multiple projects.
New Quad’s technology cooperation
- Tech-based collaboration: Given the synergies in the innovation and startup sector, it is logical that the “new Quad” works towards tech-based collaboration.
- The agenda for the new Quad’s technology cooperation can begin by selecting three technologies — quantum science, blockchain, and 3D printing.
- Collaboration in quantum technology: Israel and the US, too, have made research on quantum technology a priority by allocating $91 million and $1.2 billion respectively to this sector.
- India is also fast catching up through its National Mission on Quantum Technologies and Applications and joining hands with countries like France to work on this technology.
- Collaboration in the blockchain: in blockchain, India and the UAE can leverage the American and Israeli expertise in cyber and cryptography to craft customised applications for use in banking, fintech and trade financing.
- Collaboration in 3-D printing: In 3D printing, which promises to transform the manufacturing process radically, Israel has taken the lead in manufacturing about 40 per cent of 3D printers worldwide.
- India, in contrast, has been slow in getting onto the 3D printing bandwagon. But it can certainly benefit from the expertise of the US, Israel and the UAE.
- Opportunity for India: From the Indian perspective, such partnerships can leverage Silicon Valley’s venture capital funding, Tel Aviv’s close-knit organic linkages between start-ups, industry, and academia, and UAE’s funding and focus on innovation.
- To this mix, Bengaluru — and potentially Hyderabad — can add opportunities for scaling up and manufacturing.
- The startup community in the US, Israel and the UAE have already reached an advanced research and development stage providing an opportunity for India to build expertise and offer the scale to the development and applications of these technologies.
Way forward
- Security cooperation: The collaborative and customisation possibilities offered by these technologies and their dual-use nature offers the potential to give a technological edge to the four countries’ militaries.
- This, in turn, can add the security cooperation element to the grouping’s agenda.
- Broaden the base: If the four countries plug their innovation ecosystems in this collaboration to shortlist, fund and develop technologies, it will also help to broaden the base of cooperation for this grouping, rather than restrict it to the government-to-government domain.
- Government push will be the essential catalyst to unlock this space for cooperation through seed-funding, academic collaborations, industrial partnerships and MoUs.
- China factor: By collaborating with Russia, and domestic flagship initiatives like “Made in China 2025”, Beijing has pursued emerging technologies and successfully reduced the capability gap with Washington.
- These developments make it imperative for the US, Israel, UAE, and India to strengthen their newly established cooperation.
Conclusion
Each country with its unique advantage in the field of science and technology, innovation and start-ups can make a significant contribution to advance shared technological goals.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: India-Maldives relations
The Government of Maldives has said that it “strongly rejects attempts to spread false information” criticizing its ties with India, its “closest ally and trusted neighbor”.
The India-Out Campaign
- Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
- ‘India Out’ campaign in Maldives had started sometime last year as on-ground protests in the Maldives and later widely spread across social media platforms under the same hashtag.
- It is not related to people-to-people conflict (Indian diaspora) but is discontent on close relationship between Maldivian government & India.
Causes for the anti-India sentiments
- Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Yameen Abdul Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
- Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
- Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
- Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.
India-Maldives Relations: A backgrounder
- India and Maldives are neighbors sharing a maritime border.
- Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
- India was one of the first nations to recognize Maldives’ independence.
- Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
- Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.
Restoration of ties
- Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.
Major irritants in ties
- Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
- Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
- Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
- Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.
Recent gestures by India
[1] 2014 Malé drinking-water crisis
- In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
- India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.
[2] 2020 Covid-19 crisis
- During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
- Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.
[3] Greater Male Connectivity Project
- India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
- This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.
Why is Maldives significant for India?
- Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
- Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
- Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
- Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
- People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
- Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.
Conclusion
- There is a significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.
- India must use its Diaspora more extensively for strengthening its relations.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Universal Service Obligation Fund (USOF)
Mains level: Not Much
The Union Cabinet has approved the provisioning of mobile services in over 7,000 uncovered villages through the Universal Service Obligation Fund (USOF).
What do you mean by Universal Service?
- In the modern world, universal service refers to having a phone and affordable phone service in every home.
- It means, providing telecommunication service with access to a defined minimum service of specified quality to all users everywhere at an affordable price.
- In 1837, the concept was rolled on by Rowland Hill, a British educator and tax reformer, which included uniform rates across the UK and prepayment by sender via postage stamps.
What is USOF?
- The Universal Service Obligation Fund (USOF) was formed by an Act of Parliament, was established in April 2002 under the Indian Telegraph (Amendment) Act 2003.
- It aims to provide financial support for the provision of telecom services in commercially unviable rural and remote areas of the country.
- It is an attached office of the Department of Telecom, and is headed by the administrator, who is appointed by the central government.
Scope of the USOF
- Initially, the USOF was established with the fundamental objective of providing access to ‘basic’ telecom services to people in rural and remote areas at affordable and reasonable prices.
- Subsequently, the scope was widened.
- Now it aims to provide subsidy support for enabling access to all types of telecom services, including mobile services, broadband connectivity and the creation of infrastructure in rural and remote areas.
Funding of the USOF
- The resources for the implementation of USO are raised by way of collecting a Universal Service Levy (USL), which is 5 percent of the Adjusted Gross Revenue (AGR) of Telecom Service Providers.
Nature of the fund
- USOF is a non-lapsable Fund.
- The Levy amount is credited to the Consolidated Fund of India.
- The fund is made available to USOF after due appropriation by the Parliament.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Langtang Microhydro Electricity Project
Mains level: NA
Langtang Microhydro Electricity Project, Nepal’s first hydropower from a glacial lake has become functional recently.
Langtang Microhydro Electricity Project
- The Project was built three years after the 2015 earthquake-avalanche that devastated the valley, with help from the Hong Kong-based Kadoorie Charitable Foundation.
- It has a weir and spillway at the moraine, and the water is taken through a fibre glass-insulated penstock pipe to a powerhouse that generates 100kW of electricity.
- It seeks to provide 24 hours of electricity to 120 households and tourist lodges in Kyanjin and Langtang.
Uniqueness of the project
- The project is the first-of-its-kind in Nepal to power a village and holds promise for other remote Himalayan valleys where the risk posed by expanding glacial lakes can be mitigated.
- At the same time, it provides electricity to tourism-dependent families.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: General conent
Mains level: Paper 2- Reforms in CBI
Context
The Central government’s decision to give a five-year tenure to heads of the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) has drawn a lot of flak.
Background
- Apex court’s directive giving a mandatory two-year tenure to the Director of the CBI was a fallout of the Hawala scandal.
- Prior to that, the government was arbitrary and capricious in choosing the Director.
- It was not rare to see temporary appointments given to favour some individuals.
- Seniority was often ignored in appointments and Directors were removed frequently.
Why tenure matters
- Short tenure: A two-year tenure for a CBI head is too short for any officer to make an impact on the organisation.
- Longer provides the much-needed continuity that a Director needs in an outfit charged with the task of conducting highly sensitive investigations, which sometimes impinge on the longevity and stability of a democratically elected government.
- The Federal Bureau of Investigation chief in the U.S. gets a 10-year term.
Suggestions
- Need to avoid government interference: Any blatantly dishonest interference in the working of the organisation is bound to raise the hackles of those who believe in and carry out straightforward investigations.
- The government will therefore have to show enormous restraint in its interactions with the head of the CBI.
- Balancing accountability with autonomy: Of course, as a measure of accountability, the Director will have to keep the government informed of all major administrative decisions.
- He or she should inform the executive but not take orders from it.
- Need for CBI Act: Successive chiefs have suggested the drafting of a CBI Act to ensure that the organisation is not dependent on the State governments, many of which have withdrawn consent for the CBI to function in that State.
- Eight States — West Bengal, Maharashtra, Kerala, Punjab, Rajasthan, Jharkhand, Chhattisgarh, and Mizoram — have withdrawn the general consent.
- The CBI should be made to derive its authority for launching investigations from its own statute instead of depending on the Criminal Procedure Code, which makes the CBI a police organisation.
Issue with ordinance
- The only problem with the latest ordinance is that, at the end of the mandatory two-year tenure, the government will have to issue orders granting one-year extensions at a time.
- The rule about three annual extensions can be misused by a tendentious government.
- It may be construed as a reward for ‘good behaviour’, which is a euphemism for an obliging Director.
Consider the question “What are the challenges facing Central Bureau of Investigation? Suggest the measures to make the organisation more effective.”
Conclusion
We will have to wait for a few years to gauge the impact of the change in tenure rules. It is preposterous to probe the intentions of this major move.
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Back2Basics: General Consent
- A “general consent” is normally given by states to help the CBI in seamless investigation of cases of corruption against central government employees in their states.
- Almost all states have traditionally given such consent, in the absence of which the CBI would have to apply to the state government in every case, and before taking even small actions.
- Section 6 of The DSPE Act (“Consent of State Government to exercise of powers and jurisdiction”) says: “Nothing contained in section 5 (“Extension of powers and jurisdiction of special police establishment to other areas”) shall be deemed to enable any member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in a State, not being a Union territory or railway area, without the consent of the Government of that State.”
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Return of Taliban in Afghanistan and implications for India-Pakistan relations
Context
In a rather unfriendly neighbourhood, New Delhi’s attempts at forming a regional consensus to stabilise Afghanistan, albeit wise and timely, will only achieve limited success thanks to the China-Pakistan coalition and its interests at play in and over Afghanistan.
Role played by China and Pakistan in Afghanistan and its implications for India
- China’s long-term vision for Afghanistan revolves around the Belt and Road Initiative (BRI) project of which Afghanistan has been a part since May 2016.
- The China-Pakistan Economic Corridor (CPEC) is also viewed as a key component within the larger Chinese BRI project and Afghanistan could eventually become part of CPEC if and when the Taliban regime stabilises itself in the country.
- Role of Pakistan in keeping India away from Afghanistan: While Pakistan lobbies the international community to help prevent Afghanistan slide into further turmoil, it is determined to keep India as far away from Kabul as possible.
- Pakistan has always been deeply suspicious of growing India-Afghanistan relations no matter who was/is in charge in Kabul.
- Implications for India: It is likely that the more India gets close to the Taliban, the more the Pakistani side will increase the ‘attacks’ in Jammu and Kashmir.
- By maintaining ties with the Taliban and convening the regional security meeting in New Delhi, India has indicated that this is an acceptable risk.
- Regional Security Dialogue: The recently-held Delhi Regional Security Dialogue on Afghanistan was an important initiative to help Afghanistan stabilise, the reality is that the two countries that are key to stabilising Afghanistan — China and Pakistan — decided to stay away from it.
- Scope for other powers: Russia or the Central Asian states have neither the ability nor the desire to pursue a role in Afghanistan autonomous from the larger Chinese or Pakistani designs there.
The dilemma facing the international community
- Taliban and Pakistan refer to the U.S.-led coalition as ‘colonisers’ who just vacated the Afghan territory; and in the same breath, they seek assistance from those very ‘former colonisers’.
- But perhaps what might bother the West the most is that if they stabilise the country, they would still be called former colonisers, and Pakistan and China will benefit out of it geopolitically, making it, in that sense, a thankless job for the West.
- So the question before the western leaders is how to offer structured incentives to the Taliban, and when.
The dilemma facing India
- To engage the Taliban or not: The first one was to decide whether to engage the Taliban or not.
- The successive governments in Afghanistan, including the current Taliban regime, have sought relations with India which has upset Pakistan.
- The Taliban want India to engage and help the country stabilise, but Pakistan resents that.
- Catch-22 situation for India: If the Taliban regime is stabilised in Kabul without India’s assistance to the country, the more it is likely to do Pakistan’s bidding vis-à-vis India.
- On the other hand, the more India helps the Taliban-led Afghanistan, the more Pakistan will up the ante in Kashmir.
- This is a catch-22 situation that India finds itself in.
- And yet, India has little choice but to engage the Taliban.
How Taliban victory led to change in Pakistan’s Kashmir policy
- The earlier Pakistani willingness to be conciliatory towards India on Kashmir before and in the run-up to the Taliban takeover of Kabul in August 2021 seems to have disappeared for now.
- This is at least partly due to the Pakistani triumphalism about the Taliban takeover of Afghanistan.
- Since then, violence data show that the backchannel understanding is withering away with violence in Jammu and Kashmir (J&K) spiking along all three indicators albeit gradually.
- Sentiments from across the border also indicate that the earlier Pakistani stand that it would accept the Indian decision to withdraw the special status to Kashmir in lieu of New Delhi restoring Statehood to Kashmir and allowing political activity in the State has now change.
- It now demands that India fully reverts to the pre-August 5, 2019 position on Kashmir.
Way forward
- No possibility of cooperation with China and Pak: Any possibility of India-Pakistan cooperation in Afghanistan would be very hard to achieve.
- Beijing will play along; so will Iran and the Central Asian countries, for the most part.
- Coordinate with other powers: For India, the options are to coordinate its Afghan policy with Moscow, Washington and the various western capitals while steadfastly engaging the Taliban.
Consider the question “Return of Taliban in Afghanistan and consequential geopolitical changes in the region are bound to have implications for India-Pakistan relation. Comment.”
Conclusion
India’s advances to court the Taliban and attempts to evolve a regional consensus on Afghanistan might deteriorate India-Pakistan relations and pose challenges for India in Kashmir.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Emission intensity
Mains level: Paper 3- Decarbonising the Indian economy
Context
The announcement of enhanced targets for climate action by India, particularly for achieving net-zero emissions by 2070, has highlighted the importance of long-term planning for decarbonising the economy.
Why do we need a decarbonizing strategy
- The Government of India has responded to rapid reductions in the cost of renewable energy (RE) based power, with dramatic enhancements in the targets for RE.
- With this approach, India has done well and is on a path to fulfilling its Paris Agreement commitments for 2030.
- However, the road ahead will be challenging, and therefore, a coordinated strategy for decarbonising the economy efficiently and effectively will be required.
Strategy for decarbonising the economy
- Factoring in the changes: By 2070, there will be many changes in technology, environmental conditions, and the economy.
- The planning horizon of about 50 years will need to be broken up into shorter periods so that new knowledge about emerging technologies can be incorporated into plans.
- Monitoring of the progress: Plans will need to be monitored so that the course can be corrected to respond to any unforeseen problems.
- Five years, as the UK has used, seems like a reasonable “Goldilocks ideal.”
- An autonomous and technically credible agency, like the Climate Change Committee (CCC) in the UK, should be set up.
Decarbonising the power sector
- Biggest source of GHG: The power sector is the biggest source of GHG emissions and also the easiest one to decarbonise.
- Reducing emission intensity is a good overarching objective; increased use of RE or non-fossil-fuel generation is a means to that end.
- The four 2030 targets: Non-fossil fuel generating capacity to be 500 GW, RE capacity to be 50 per cent of all generation capacity, reduction in emission intensity by 45 per cent, and avoidance of GHG emissions by 1 billion tonnes — are inter-related.
Suggestions to decarbonise the power sector
- Set emission intensity targets: Setting permissible emission intensity in terms of grammes of carbon dioxide equivalent per kWh of electricity sold, would be a good option for targets in the power sector.
- Single emission-related objective: In order to decarbonise the power sector, it would be best to have a single emissions-related objective so that an optimal strategy can be developed to achieve the objective at the lowest cost.
- Avoid separate targets: Currently there is a profusion of separate targets for almost every resource used to generate electricity.
- For example, there are separate renewable purchase obligations (RPOs) for solar, non-solar RE, and hydropower.
- Such an approach reduces the flexibility of distribution companies to select resources to meet their loads, resulting in a non-optimal resource mix, and a higher cost of electricity.
- Reconsider RPO: RPOs are usually imposed to support nascent technologies, and because RE is now competitive on costs with conventional generation, the need for RPOs should be reconsidered.
- The use of emission intensity targets is a better approach.
Consider the question “Why power sector holds the key to decarbonising the Indian economy? Suggest the strategy India should follow to decarbonise the power sector.”
Conclusion
The use of five-year interim targets for permissible emission intensity and the establishment of an autonomous and credible agency to advise the government on targets and policies and to monitor progress will greatly facilitate an effective, economic, and smooth transition to decarbonisation of the power sector first, and the Indian economy later by 2070.
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From UPSC perspective, the following things are important :
Prelims level: CBI
Mains level: Issues over CBI
The Centre has told the Supreme Court that the CBI was an “autonomous body” and it had no “control” over the investigative agency.
Background
- The submission in the top court comes two days after the promulgation of an ordinance extending the tenures of the CBI Director and the Enforcement Directorate chief.
- Attorney-General K was objecting to a suit filed by the West Bengal Government over the use of CBI.
West Bengal vs. CBI
- West Bengal has challenged the CBI’s jurisdiction to register FIRs and conduct investigations in the State in some cases.
- The State had withdrawn its “general consent” to the CBI way back in 2018.
About CBI
- The Bureau of Investigation traces its origins to the Delhi Special Police Establishment, a Central Government Police force, which was set up in 1941 by the Government of India.
- It then aimed to investigate bribery and corruption in transactions with the War and Supply Department of India.
- It then had its headquarters in Lahore.
- After the end of the war, there was a continued need for a central governmental agency to investigate bribery and corruption by central-government employees.
- The DSPE acquired its popular current name, Central Bureau of Investigation (CBI), through a Home Ministry resolution dated in 1963.
Mandate of the CBI
- The CBI is the main investigating agency of the GoI.
- It is not a statutory body; it derives its powers from the Delhi Special Police Establishment Act, 1946.
- Its important role is to prevent corruption and maintain integrity in administration.
- It works under the supervision of the CVC (Central Vigilance Commission) in matters pertaining to the Prevention of Corruption Act, 1988.
- The CBI is also India’s official representative with the INTERPOL.
Cases to investigate
- Cases connected to infringement of economic and fiscal laws
- Crimes of a serious nature that have national and international ramifications
- Coordination with the activities of the various state police forces and anti-corruption agencies.
- It can also take up any case of public importance and investigate it
- Maintaining crime statistics and disseminating criminal information.
Issues with CBI
- Caged parrot: The Supreme Court has criticised the CBI by calling it a “caged parrot speaking in its master’s voice”.
- Political interference: It has often been used by the government of the day to cover up wrongdoing, keep coalition allies in line and political opponents at bay.
- Investigation delay: It has been accused of enormous delays in concluding investigations due to political inertia.
- Loss of Credibility: CBI has been criticised for its mismanagement of several cases involving prominent politicians and mishandling of several sensitive cases like Bofors scandal, Bhopal gas tragedy.
- Lack of Accountability: CBI is exempted from the provisions of the Right to Information Act, thus, lacking public accountability.
- Acute shortage of personnel: A major cause of the shortfall is the government’s sheer mismanagement of CBI’s workforce.
- Limited Powers: The powers and jurisdiction of members of the CBI for investigation are subject to the consent of the State Govt., thus limiting the extent of investigation by CBI.
- Restricted Access: Prior approval of Central Government to conduct inquiry or investigation on the employees of the Central Government is a big obstacle in combating corruption at higher levels of bureaucracy.
Way Forward
- Need for autonomy: As long as the government of the day has the power to transfer and post officials of its choice in the CBI, the investigating agency will not enjoy autonomy and will be unable to investigate cases freely.
- A new CBI Act should be promulgated that ensures the autonomy of CBI while at the same time improving the quality of supervision.
- Selection of director/ Officers: To ensure that the CBI is a robust, independent and credible investigation agency, there is an urgent need to work out a much more transparent mechanism for selection and induction of officers on deputation.
- Lokpal scrutiny: The Lokpal Act already calls for a three-member committee made up of the PM, the leader of the opposition and the CJI to select the director.
- Bifurcation of Cadre: CBI should be bifurcated into an Anti-Corruption Body and a National Crime Bureau.
- Develop own cadre: One of the demands that have been before Supreme Court, and in line with international best practices, is for the CBI to develop its own dedicated cadre of officers.
- Annual social audit should be carried out by ten reputed, knowledgeable persons with background of law, justice, public affairs and administration and the audit report should be placed before the parliament.
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From UPSC perspective, the following things are important :
Prelims level: Duare Ration Scheme, PDS
Mains level: Not Much
West Bengal CM has launched an ambitious “Duare Ration” Scheme.
Duare Ration Scheme
- The Scheme aims for providing food grains under the public distribution system (PDS) at the doorstep for the entire population of the State.
- It aims to unload the person carrying huge chunk of food grains manually.
- Vehicles will carry ration in a particular street or lane and employees of ration dealers will make the food grains available to the people near their residence.
Key arrangements
- The state govt would provide around 21,000 ration dealers with the financial assistance of ₹1 lakh each to purchase vehicles for delivering ration to people in this manner.
- It also announced financial assistance to ration dealers to hire additional staff to make the scheme a success.
Back2Basics: Public Distribution System
- The PDS is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
- PDS evolved as a system of management of scarcity through the distribution of food grains at affordable prices.
- PDS is operated under the joint responsibility of the Central and State Governments.
- The Central Government, through the Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation, and bulk allocation of food grains to the State Governments.
- The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
- Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.
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From UPSC perspective, the following things are important :
Prelims level: Taproot upgrade in Bitcoins
Mains level: Cryptocurrencies regulation in India
Bitcoin went through a major upgrade that enables its blockchain to execute more complex transactions, potentially widening the virtual currency’s use cases and making it a little more competitive with Ethereum for processing smart contracts.
What is the new upgrade?
- The enhancement, called Taproot, is the most significant change to the bitcoin protocol since the SegWit (Segregated Witness) block capacity change in 2017.
- SegWit effectively increased the number of transactions that could fit into a block by pulling data on signatures from bitcoin transactions.
- Smart contracts are self-executing transactions whose results depend on pre-programmed inputs.
What is Taproot?
- The Taproot upgrade consists of three separate upgrade proposals.
- However, at its core, the upgrade introduces a new digital signature scheme called “Schnorr” that will help bitcoin transactions become more efficient and more private.
- Schnorr can also be leveraged to let bitcoin users execute more complex smart contracts.
When was Taproot officially activated?
- Taproot was officially activated on block 709,632.
- Blockchains settle transactions in batches or blocks.
- Each block can contain only a certain number of transactions.
What is its impact on Bitcoin?
- The biggest impact would be the bitcoin network’s ability to process more smart contracts, similar to what Ethereum does.
- Bitcoin has historically been much more limited in processing smart contracts compared with Ethereum.
- Taproot increases privacy by obscuring what type of transaction is being executed.
What are the other enhancements?
- The Schnorr signatures can make more complex transactions on the bitcoin protocol, such as those from wallets that require multiple signatures, look like just any other transaction.
- This makes transactions more private and more secure.
- Bitcoin transactions will also become more data-efficient, optimizing block capacity and leading to lower transaction fees.
What does Taproot mean for investors?
- Large-scale upgrades have paved the way for the next phase of innovation in the bitcoin network.
- The last major upgrade in 2017 helped launch the Lightning Network, which facilitated much faster and cheaper bitcoin payments than before.
- Taproot to lead to a similar wave of innovation in bitcoin centered around smart contracts.
Also read:
Cryptocurrency
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From UPSC perspective, the following things are important :
Prelims level: Best Tourism Villages Initiative
Mains level: Bhoodan Movement
Pochampally village in Telangana is set to be named as one of the best Tourism Villages by the United Nations World Tourism Organisation.
Best Tourism Villages Initiative
- The Best Tourism Villages by UNWTO Pilot initiative aims to award those villages which are outstanding examples of rural destinations and showcase good practices in line with its specified nine evaluation areas.
- It also aims to support villages to enhance their rural tourism potential through training and access to opportunities for improvement.
Key objectives
- Reduce regional inequalities in income and development
- Fight rural depopulation
- Progress gender equality and women’s and youth empowerment
- Enhance education and skills development
About Pochampally
- Pochampally, 50 Kms from Hyderabad, is a town in Nalgonda district of Telangana.
- It is often referred to as the Silk City of India for the exquisite sarees that are woven through a unique style called Ikat.
- It is also known as Bhoodan Pochampally to commemorate the Bhoodan Movement that was launched by Acharya Vinobha Bhave from this village on April 18th, 1951.
- Currently, a two-room Vinobha Bhave Mandir exists within the village which was earlier the place where Vinobha Bhave resided during his visit to the village.
What is Pochampally Ikat?
- Ikat is a Malaysian, Indonesian word that means “Tie and Dye”.
- For this style, Pochampally Ikat, received a Geographical Indicator (GI Status) in 2004.
- Ikat involves the process of wrapping (or tying) and dyeing sections of bundled yarn to a predetermined colour pattern before they are woven.
- The dye penetrates into exposed sections while the wrapped section remains undyed.
- This pattern formed by the yarn in this process is woven into fabric.
Back2Basics: Bhoodan Movement
- The Bhoodan movement (Land Gift movement), also known as the Bloodless Revolution, was a voluntary land reform movement.
- It was initiated by Vinoba Bhave, a staunch Gandhian in 1951 at Pochampally village, which is now in Telangana, and known as Bhoodan Pochampally.
- The movement attempted to persuade wealthy landowners to voluntarily give a percentage of their land to landless people.
- Philosophically, Bhave was influenced by Mahatma Gandhi’s Sarvodaya movement and Gram Swarajya.
- Landless laborers were given small plots that they could settle and grow their crops on.
- Bhoodan Acts were passed that stated that the beneficiary had no right to sell the land or use it for non-agricultural purposes or for forestry.
Try this PYQ:
Q. With reference to land reforms in independent India, which one of the following statements is correct?
(a) The ceiling laws were aimed at family holdings and not individual holdings
(b) The major aim of land reforms was providing agricultural land to all the landless
(c) It resulted in cultivation of cash crops as a predominant form of cultivation
(d) Land reforms permitted no exemptions to the ceiling limits
Post your answers here.
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From UPSC perspective, the following things are important :
Prelims level: DILRMP
Mains level: Land records management
Union Minister for Rural Development and Panchayati Raj has recently held a workshop on Digital India Land Record Modernization Programme (DILRMP).
About DILRMP
- The DILRMP was previously known as the National Land Record Modernization Programme (NLRMP).
- It was launched in 2008 with the purpose to digitize and modernizing land records and developing a centralized land record management system.
- The DILRMP is the amalgamation of two projects:
- Computerization of Land Records (CLR)
- Strengthening of Revenue Administration and Updating of Land Records (SRA & ULR)
- The district will be taken as the unit of implementation, where all activities under the programme will converge.
Components of DILRMP
The DILRMP has 3 major components
- Computerization of land record
- Survey/re-survey
- Computerization of Registration
Key features: Unique Land Parcel Identification Numbers
- It is just like the Aadhar Number of land parcels.
- A unique ID based on Geo-coordinates of the parcels is generated and assigned to the plots.
- This has been introduced to share the computerized digital land record data among different States/Sectors and a uniform system of assigning a unique ID to the land parcel across the country.
Benefits offered
The citizen is expected to benefit from DILRMP in one or more of the following ways;
- Real-time land ownership records will be available to the citizen
- Property owners will have free access to their records without any compromise in regard to the confidentiality of the information
- Abolition of stamp papers and payment of stamp duty and registration fees through banks, etc. will also reduce interface with the Registration machinery
- These records will be tamper-proof
- This method will permit e-linkages to credit facilities
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: AUKUS
Mains level: Paper 2- EU's role in Indo-Pacific
Context
Speedy development of the Quad comprising Australia, Japan, India and the U.S.; the emergence of AUKUS comprising Australia, the U.K. and the U.S.; and other alignments raise the question: where does Europe stand in relation to this churning?
Significance of EU’s Indo-Pacific strategy
- Europe’s Asia connect is old, strong and multi-layered.
- Since 2018, countries such as France, the Netherlands, Germany and the U.K. announced their specific policies towards the Indo-Pacific.
- The announcement by the Council of the European Union of its initial policy conclusions in April, followed by the unveiling of the EU strategy for cooperation in the Indo-Pacific on September 16, are notable.
- Focus on security and development: The policy document also says cooperation will be strengthened in sustainable and inclusive prosperity, green transition, ocean governance, digital governance and partnerships, connectivity, security and defence, and human security.
Way forward for EU
- Support France: The EU’s security and defence capabilities are quite limited, as compared to the U.S. and China.
- To obviate an imbalance in favour of economic links, EU will need to give adequate space and support to France which has sizeable assets and linkages with the Indo-Pacific.
- Coordination with UK: EU also must forge strategic coordination with the U.K. as the latter prepares to expand its role in Asia as part of its ‘Global Britain’ strategy.
- Leverage economic power: As a major economic power, the EU has an excellent chance of success in its trade negotiations with Australia, Indonesia and New Zealand; economic partnership agreement with the East African Community; and in forging fisheries agreements and green alliances.
- To achieve all this and more, EU must increase its readiness to share its financial resources and new technologies with partners.
- Internally coordinated approach:Many states view China as a great economic opportunity, but others are acutely conscious of the full contours of the China challenge.
- Russia next door is the more traditional threat. It is increasingly on China’s side.
- Hence, the EU should find it easy to cooperate with the Quad.
- AUKUS, endeavours by a part of the western alliance to bolster naval and technological facilities to deal with China should be welcome.
Way forward for India
- India’s pivotal position in the region necessitates a closer India-EU partnership.
- Early conclusion of an ambitious and comprehensive trade agreement and a standalone investment protection agreement will be major steps.
- Cooperation in Industry 4.0 technologies is desirable.
- Consolidating and upgrading defence ties with France, Germany and the U.K. should also remain a significant priority.
Conclusion
The EU can create a vantage position for itself in the Indo-Pacific by being more candid with itself, more assertive with China, and more cooperative with India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Lapis Lazuli corridor
Mains level: Paper 2- India-Turkey relations
Context
Turkish President Recep Tayyip Erdogan has been playing internationalist card for national benefit. India, which has been worried about Erdogan’s Islamist politics, must now begin to pay attention to another political idea from the Turkish president — promoting pan-Turkism.
Impact of political ideas on global politics
- Internationalism based on religion, region or secular ideologies has always run headlong into resistance from sectarianism and nationalism.
- Yet, these ideas have a profound impact on global politics.
- Calls for regionalism and internationalism as well as religious and ethnic solidarity often end up as instruments for the pursuit of national interest.
The rise of pan-Turkism
- Foundation of OTS: The international symbol of solidarity among peoples of Turkic ethnicity has been the Council of Turkic States, formed in 2009 by Turkey, Azerbaijan, Kyrgyzstan and Kazakhstan.
- At a summit of the Council’s leaders last week in Istanbul, it was announced that the forum has been elevated to an “Organisation of Turkic States”.
- Hungary, which has a long history of association with Turkic people, and Turkmenistan have observer status.
- At least a dozen other countries have apparently shown interest in getting observer status.
- Implications: There is no escaping the fact that Turkey is determined to rewrite the geopolitics of Eurasia.
- The rise of pan-Turkism is bound to have important consequences for Afghanistan, the Caucasus, Central Asia and, more broadly, India’s Eurasian neighbourhood.
Rise of Turkey in Central Asia
- Soft power initiatives: Over the last three decades, a number of soft power initiatives — in education, culture, and religion — have raised Turkey’s profile in Central Asia and generated new bonds with the region’s elites.
- Military power: It is in the domains of hard power — commercial and military — that Turkey’s progress has been impressive.
- Turkey has stunned much of the world with its military power projection into the region.
- That Kazakhstan, a member of the Russia-led regional security bloc, is moving towards strategic cooperation with Turkey, a member of US-led NATO, points to the thickening pan-Turkic bonds in a rapidly changing regional order.
- The dominance of economy and trade: Nearly 5,000 Turkish companies work in Central Asia. Turkish annual trade with the region is around $10 billion.
- This could change as Turkey strengthens connectivity with Central Asia through the Caucasus.
- For the Central Asian states, living under the shadow of Chinese economic power and Russian military power, Turkey offers a chance for economic diversification and greater strategic autonomy.
- Connectivity: Turkey has also made impressive progress in building transportation corridors to Central Asia and beyond, to China, Georgia and Azerbaijan.
- The so-called Lapis Lazuli Corridor now connects Turkey to Afghanistan via Turkmenistan.
What should be India’s approach towards Turkey?
- Pan-Turkism is a good reason for India to explore a more purposeful engagement with Turkey.
- Issues: There is no denying that the current differences between Delhi and Ankara over Kashmir, Pakistan and Afghanistan are real and serious.
- Need for dialogue: The current political divergence only reinforces the case for a sustained dialogue between the two governments and the strategic communities of the two countries.
- Lessons for India: Turkey’s own geopolitics offers valuable lessons on how to deal with Ankara.
- That Turkey is a NATO member has not stopped Erdogan from a strategic liaison with Russian.
- Purchase of advanced weapons like S-400 missiles from Moscow does not stop Erdogan from meddling in Russia’s Central Asian backyard.
- Criticism of China’s repression of Turkic Uighurs in Xinjiang — that was once called “Eastern Turkestan” — goes hand-in-hand with deep economic collaboration with Beijing.
- What does this policy tell India? One, Erdogan’s enduring enthusiasm for Pakistan does not preclude Turkey from doing business — economic and strategic — with India.
- Limiting Turkish hegemony: Erdogan’s ambitions have offended many countries in Eastern Mediterranean, the Middle East and the Caucasus.
- Many of them are eager to expand strategic cooperation with India in limiting Turkish hegemony.
- This opens a range of new opportunities for Indian foreign and security policy in Eurasia.
- Imperative to engage: Sceptics will point to the fact that Erdogan’s time is running out.
- That does not, however, alter the Indian imperative to engage with Turkey.
Consider the question “Turkey’s influence in Eurasian region is expanding. In this context examine the issues that adds friction between India and Turkey and suggest the approach India should adopt in dealing with Turkey.”
Conclusion
Independent India has struggled to develop good relations with Turkey over the decades. A hard-headed approach in Delhi today, however, might open new possibilities with Ankara and in Turkey’s Eurasian periphery.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Digital currencies
Mains level: Paper 3- CBDC and challenges
Context
Recently, Nigeria joined the Bahamas and five islands in the East Caribbean as the only economies to have introduced central bank digital currency (CBDC). This is a shortlist, but one that is likely to be supplemented.
Benefits of CBDC
- Desire to make domestic payments systems and cross-border remittances cheaper, faster and more efficient, and deepen financial inclusion, represent key areas of priority for most other emerging market and development economies (EMDEs).
- Between 2019 and 2021, the last three surveys conducted by the Bank for International Settlements showed that the primary drivers for central banks of EMDEs to study CBDCs were domestic payments efficiency, financial inclusion and payments safety.
Design features of CBDCs
- In theory, the potential of CBDCs are only limited by their design and the capabilities of the central bank issuing it, but their appropriateness and form also depend on the state of the domestic banking and payments industry.
- Ultimately, CBDCs must be seen as a means to an end.
- A particular CBDC could, for example, be account-based or tokenised, may be distributed directly by the central bank or through intermediaries, may be interest-bearing (even the possibility of a negative interest has been considered), may be programmable, may offer limited pseudonymity to its holders (similar to, but not to the extent of, cash) and so on.
- Whether it may be one or the other depends on what its country requires it to be.
Challenges
- An economy that adopts an interest-bearing CBDC could make the interest rate on CBDCs the main tool of monetary policy transmission domestically (assuming a high degree of substitution of fiat and fiat-like currency).
- On the other hand, as former RBI Governor D Subbarao recently warned, rendering an Indian CBDC as an interest-bearing instrument could pose an existential threat to the banking system by eroding its critical role as intermediaries in the economy.
- If CBDCs compete with bank deposits and facilitate a reduction of bank-held deposits, banks stand to lose out on an important and stable source of funding.
- Banks may respond by increasing deposit rates, but this would necessitate a higher lending rate to preserve margins, and dampen lending activities.
- The resultant shrinking of balance sheets will lead to a more pronounced disintermediation role for financial institutions, which could have long-term effects on financial stability, and facilitate easier bank runs.
- The introduction of CBDCs would require central banks to maintain much larger balance sheets, even in non-crisis times.
- They would need to replace the lost funding (because of migration of deposits) by lending potentially huge sums to financial institutions, while purchasing correspondingly huge amounts of government and possibly private securities.
- CBDCs could also have implications for the state from seigniorage as the cost of printing, storing, transporting and distributing currency can be reduced.
Conclusion
Recent comments by RBI officials have focussed on the desirability of introducing CBDCs. But the path to a “Digital Rupee” is not clear.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Digital connectivity and social sector of India
A recent survey released seeks to analyze the COVID-impact on digital connectivity in the context of healthcare, education, and work.
About the Survey
- LIRNEasia, an Asia Pacific think tank focussed on digital policy, tied up with the Indian Council for Research on International Economic Relations (ICRIER).
- They took part in a global study funded by the Canada’s International Development Centre to assess the socio-economic impacts of COVID-19 .
- They sought to analyse access to services, with a focus on digital technologies in healthcare, education and work.
Highlights of the Survey:
[A] Internet Access and Use
(1) Internet users
- The survey found that 47% of the population are Internet users, a significant jump from the 19% who were identified as Internet users in late 2017.
- At least 5 crores have already become new Internet users in 2021.
(2) Gender and internet
- Men still use the Internet more than women.
- There is a 37% gender gap among users, although this is half of the 57% gap present four years ago.
(3) Rural-urban Gap
- The rural-urban gap has dropped from 48% in 2017 to just 20% now as more rural residents come online.
(4) Education
- Among those with college education, 89% are Internet users, compared to 60% of those who completed secondary school.
- Only 23% of those who dropped out of school after Class 8, and 9% of those without any education, are able to use the Internet.
Major inferences drawn
- Among non-users, lack of awareness is still the biggest hurdle.
- The percentage of non-users who said they do not know what the Internet is dropped from 82% to 49% over the last four years.
- Increasingly, lack of access to devices and lack of skills are the reason why people do not go online.
Loopholes in Remote Education
- 80% of school-age children in the country had no access to remote education at all during the 18 months of lockdown.
- This happened even though 64% of households actually had Internet
- Situation was worse for those homes without Internet connections, where only 8% of children received any sort of remote education.
[B] Internet connectivity
- Apart from not having any devices, poor 3G/4G signal and high data cost were listed as the biggest hurdles.
- Even among the 20% who received education, only half had access to live online classes which required a good Internet connection and exclusive use of a device.
- Most depended on recorded lessons and WhatsApp messages which could be sent to a parent’s phone and downloaded at leisure.
- Others were able to have more direct contact with teachers via phone calls or physical visits.
Worst consequences: Dropouts
- Nationwide, 38% of households said at least one child had dropped out of school completely due to COVID-19.
- The situation was significantly worse among those from lower socio-economic classes, or where the head of the household had lower education levels.
[C] Internet access and healthcare
- About 15% required healthcare access for non-COVID related purposes during the most severe national and State lockdown.
- Of the 14% who required ongoing treatment for chronic conditions, over a third missed at least one appointment due to the lockdown.
- Telemedicine and online doctor consultations surged during these times, but only 38% said they were able to access such services.
- With regard to COVID-19, about 40% of respondents depended on television channels for advice as their most trusted source.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Global illegal migrants crisis
Thousands of migrants have flocked to Belarus’ border with Poland, hoping to get to Western Europe.
Background of the crisis
- Belarus was rocked by months of massive protests following the August 2020 election that gave authoritarian President Lukashenko a sixth term in office.
- The opposition and the West rejected the result.
- Belarusian authorities responded to the demonstrations with a fierce crackdown that saw more than 35,000 people arrested and thousands beaten by police.
- The European Union and the US reacted by imposing sanctions on Lukashenko’s government.
Immediate trigger
- The restrictions were toughened after an incident when a passenger jet flying from Greece to Lithuania was diverted by Belarus to Minsk, where authorities arrested a dissident journalist.
- The EU called it air piracy and barred Belarusian carriers from its skies.
- It cut imports of the country’s top commodities, including petroleum products and potash, an ingredient in fertilizer.
Infused by migration
- The EU sanctions deprived Lukashenko government of funds needed to contain flows of migrants.
- Planes carrying migrants from Iraq, Syria and other countries began arriving in Belarus, and they soon headed for the borders with Poland, Lithuania and Latvia.
Rising tensions
- Belarus is estimated to host between 5,000 and 20,000 migrants from the Middle East and Africa.
- Many have run out of money and grown increasingly desperate as the winter approaches.
- Belarusian residents are uneasy about their presence, raising pressure on the authorities to act.
Reservations by EU
- The EU accused Lukashenko of using the migrants as pawns in a “hybrid attack” against the 27-nation bloc in retaliation for the sanctions.
- Lukashenko denies the flow of migrants and said the EU is violating migrants’ rights by denying them safe passage.
What has been the response by EU countries?
- Lithuania introduced a state of emergency to deal with small groups of migrants and strengthen its border with Belarus.
- It set up tent camps to accommodate the growing number of migrants.
- Polish authorities prevented hundreds of attempts by migrants to cross reporting many deaths.
- The EU has made a strong show of solidarity with Poland, Lithuania and Latvia.
What is Russia’s role?
- Belarus has received strong support from its main ally, Russia, which has helped rise Lukashenko’s government with loans and political support.
- Russia considers the migrant flows resulting from the US-led wars in Iraq and Afghanistan and Western-backed Arab Spring uprisings in the Middle East and North Africa.
- It challenged the EU to offer financial assistance to Belarus to deal with the influx.
- At the same time, the Kremlin angrily rejected Poland’s claim that Russia bears responsibility for the crisis.
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