December 2022
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Foreign Policy Watch: India-Myanmar

The soft approach: India-Myanmar

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: India- Myanmar relations

Myanmar

Context

  • On November 20-21, Indian Foreign Secretary Vinay Kwatra made a two-day visit to Myanmar. The Indian Ministry of External Affairs (MEA) in a press release stated that he met with members of the military junta that is currently ruling the country and discussed security and stability in the border areas, human trafficking issues (several Indian nationals have been victims), and infrastructure development.

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Myanmar

What are the interpretations over the foreign Secretary’s visit?

  • Myanmar’s national portal says discussion on friendly relations: According to Myanmar National portal, the two sides held discussions on Myanmar-India friendly relations, exchanged views on the promotion of bilateral cooperation and the implementation of Myanmar’s peace process.
  • India’s no mention of Myanmar’s return to democracy: The MEA statement made no mention of any Indian interest in seeing Myanmar return to the path of democracy or the release of political prisoners and other tricky issues.
  • Emphasis on completing the ongoing projects: On the contrary, the foreign secretary spoke about continued Indian support for “people-centric socio-economic developmental projects” and early completion of connectivity projects including the Kaladan Multimodal Transit Transport Project and the Trilateral Highway between India, Myanmar, and Thailand.
  • Assured development Programs: It appears that infrastructure and developmental projects were a big emphasis during the visit because Kwatra also assured the Myanmar junta about projects under Rakhine State Development Program and Border Area Development Program.
  • Contradictory omissions: Despite the MEA press release not mentioning it, the MEA spokesperson Arindam Bagchi tweeted that the foreign secretary had discussions on several important issues including “India’s support to democratic transition in Myanmar.”

Myanmar

Background of the different interpretations

  • MEA’s 2021 statement that India’s interest in Myanmar’s return to democracy: Contrast this with the December 2021 statement that the MEA issued following then-Foreign Secretary Harsh Vardhan Shringla’s visit where he emphasized India’s interest in seeing Myanmar’s return to democracy at the earliest; release of detainees and prisoners; resolution of issues through dialogue; and complete cessation of all violence.”
  • India’s strong and consistent support to ASEAN: He had also reiterated that India’s strong and consistent support to the ASEAN initiative and expressed hope that progress would be made in a pragmatic and constructive manner, based on the five point consensus.

Myanmar

What are the India’s concerns?

  • Human trafficking emerged as the major issue: Human trafficking has emerged as a major issue in Myanmar, with several criminal syndicates running a racket luring Indian citizens with fake job prospects. The MEA spokesperson, according to media reports, cautioned Indian nationals of being wary of trafficking. IT companies recruiting Indian workers in the pretext of jobs in Thailand, who were then taken to Myanmar. There have been reportedly close to 200 Indian nationals who have been duped into this job racket.
  • China’s support to Military Junta: Since the military coup, China has improved on its good relations with the military junta, providing much-needed support for the Myanmar leadership in the face of international opprobrium.
  • Chinas’ high investment in Myanmar: China reportedly has been a key source of foreign investment in Myanmar. China’s multiple projects include several high-speed railway lines and dams as well as a $2.5 billion investment in a gas-fired power plant. The China-Myanmar Economic Corridor, which consists of oil and gas pipelines and infrastructure development projects run into billions of dollars.
  • China’s aim to get better access to Indian ocean: Of particular interest to China is the deep sea port that China plans to develop at Kyaukphyu, on Myanmar’s west coast, this will possibly give China better access to the Indian Ocean, which China has been eyeing for a while.
  • Budding relationship between Myanmar and Pakistan a cause of concern: According to media reports, Myanmar took the delivery of six JF-17 light-weight multi-role fighter jets from Pakistan in 2018 after signing a contract two years earlier in 2016. Myanmar was to get another batch of 10 aircraft although the date of delivery is unknown.

Rational behind India’s changed interest in Myanmar’s return to democracy

  • Pragmatism on account of the growing presence and inroads of China in Myanmar has possibly pushed India to give up on its moralizing about democracy and increase its outreach to Naypyidaw.
  • While the pro-democracy elements within Myanmar as well as India’s strategic partners in ASEAN may not be particularly pleased with this outreach, especially India dropping ASEAN’s Five-Point Consensus on Myanmar, it appears that New Delhi sees itself as having not too many choices

Conclusion

  • Strategic factors appear to be driving India’s greater engagement with the military junta, especially fear of China and Pakistan making inroads into the country. India has to maintain delicate balance while dealing with the ruling military junta.

Mains question

Q. In the backdrop of much speculations about the recent visit of India’s foreign secretary to Myanmar. Discuss India’s evolving position, which shows a soft approach towards the ruling military junta.

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G20 : Economic Cooperation ahead

The ‘Global South’ Narrative

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Global South

Mains level: Global South Narrative

south

As India assumed the presidency of the G20 group of countries for 2022 to 2023, EAM S Jaishankar said on December 1 that India would be the voice of the Global South that is otherwise under-represented in such forums.

What is ‘Global South’?

  • The term has since been used multiple times, such as when Jaishankar said of ongoing global conflicts, “polarisation may occur elsewhere, the people who suffer most are the Global South”.
  • ‘Global North’ refers loosely to countries like the US, Canada, Europe, Russia, Australia and New Zealand, while ‘Global South’ includes countries in Asia, Africa and South America.

Behind the binary difference: ‘Global North’ and the ‘Global South’

  • For a long time in the study of international political systems, the method of categorising countries into broad categories for easier analysis has existed.
  • The concepts of ‘East’ and ‘West’ is one example of this, with the Western countries generally signifying greater levels of economic development and prosperity among their people.
  • Eastern countries were considered as being in the process of that transition.

What are other such categorizations?

  • Another similar categorisation is of First World, Second World and Third World countries.
  • It referred to countries associated with the Cold war-era alliances of the US, the USSR, and non-aligned countries, respectively.
  • The idea of the “third” world underlined that it was not only different from the “first” — the capitalist West — but also and the second — the socialist “East”.

Concept behind: World Systems Approach

  • At the centre of these concepts is the World Systems approach introduced by sociologist Immanuel Wallerstein in 1974, emphasising an interconnected perspective of looking at world politics.
  • He said there are three major zones of production: core, peripheral and semi-peripheral.
  • The core zones reap profits, being the owners of cutting-edge technologies – countries like the US or Japan.
  • Peripheral zones, on the other hand, engage in less sophisticated production that is more labour-intensive.
  • In the middle are countries like India and Brazil.

Need for new terms

(1) Global shift of powers

  • In the post-Cold War world, the First World/Third World classification was no longer feasible.
  • This is because when the Communist USSR disintegrated in 1991, most countries had no choice but to ally at some level with the capitalist US – the only remaining global superpower.

(2) Monolithic classification

  • The East/West binary was seen as often perpetuating stereotypical thinking about African and Asian countries.
  • Categorising incredibly diverse countries into a monolith was felt to be too simplistic.
  • Also, the idea that some countries were ‘developed’ while others were not was thought to be too wide a classification, inadequate for accurately discussing concerns.

(3) Issues with Developed vs. Developing

  • Writing in 2014 from the perspective of his organisation’s philanthropic activities, Bill Gates said of the ‘developing’ tag.
  • It found an irony that- any category that lumps China and the Democratic Republic of Congo together confuses more than it clarifies.
  • Some so-called developing countries have come so far that it’s fair to say they have developed.
  • A handful of failed states are hardly developing at all. Most countries are somewhere in the middle.

Emergence of Global South

  • Colonial past: A big commonality between the South countries is that most have a history of colonization, largely at the hands of European powers.
  • No say since de-colonization: Region’s historical exclusion from prominent international organizations – such as from the permanent membership of the UN is intriguing.
  • Consciousness for decision-making: As bodies like the UN and the IMF are involved in major decision-making that affect the world in terms of politics, economy and society, the exclusion is seen by these countries as contributing to their slower growth.
  • Economic emergence: China and India have emerged economically sound in the past two decades.
  • Declining US hegemony: Many consider the world to now be multipolar rather than one where the US alone dominates international affairs.
  • Climate reparations: In the ongoing debate adds Northern countries paying for funding green energy, having historically contributed to higher carbon emissions.

Criticism of the classification

  • Only few players: South simply aims to replace the North and the positions it occupies, again continuing a cycle in which a few countries accumulate crucial resources.
  • More of a India vs. China competition: Much controversy currently surrounds the question of whether elites of the global South and ‘rising powers’ genuinely have the intention to challenge the dominant structures of global capitalist development”.
  • Anti-china motive: China’s tentative “going out” strategy at the turn of the century eventually morphed into the expansive Belt and Road Initiative.

Where does India stand?

  • No further diplomatic groupism: EAM S Jaishankar India’s objective is not to rebuild a global trade union against the North.
  • Bridging the divide: India is eager to become a bridge between the North and the South by focusing on practical outcomes rather than returning to old ideological battles.

Challenges

  • Political consistency: In the past, India’s ideological enthusiasm for the Global South was not matched by material power and political will.
  • Bridging the neighbours: India must also come to terms with the fact that the Global South is not a coherent group and does not have a single shared agenda.
  • Despaired south: There is much differentiation within the South today in terms of wealth and power, needs and capabilities.
  • Defiance from NAM: India’s Third World strategy (and Non-Aligned Movement) in the Cold War era was undermined by multiple internal and regional conflicts within the Global South.

Way ahead

  • More engagement in neighborhood: Championing the Global South today would demand more active Indian engagement with the messy regional politics within the developing world.
  • Political coherence: If India can translate this ambition into effective policy, there will be no contradiction between the simultaneous pursuit of universal and particular goals.

 

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Air Pollution

What is missing in Delhi’s breathing

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Air pollution

Mains level: Impact of Air pollution and Delhi's annual air pollution problem and way ahead

Delhi

Context

  • Every year around Deepavali, and like clockwork, Delhi’s air quality makes it to the headlines. As firefighters we are doing well, but as planners doing very little. While nature will not change, emissions can be reduced. While a lot has been written and said about Delhi’s air quality, the question that still has to be answered is this: why is nothing changing after all these years?

Air pollution and its impact

  • Air pollution a health crisis in making: Increasingly polluted air is a hazard and a health crisis in the making, in fact, it is already one.
  • Air pollution related death in India: India now reports 2.5 million air pollution-related deaths annually.
  • Air pollution not confined to external hazard: Pollution not only makes our throats and eyes burn but is much more insidious.
  • Pollutants can enter bloodstreams: Some pollutants are so small that they are able to enter the bloodstream with ease, impacting almost every organ in the body and leading to the onset of health issues such as stroke, heart diseases, respiratory diseases and cancer, to name just a few serious health problems.

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Delhi

Critique: Why is nothing changing after all these years?

  • Applying same approach without through evaluation: A principal reason is that year after year, we are doing the same things to try and address the problem without actually trying to evaluate why those measures are not effective.
  • Inefficiency of Commission for Air Quality Management: The Government formed the Commission for Air Quality Management, which, unfortunately, did not offer anything new. This body essentially issued the same orders the Ministry and the Environment Pollution (Prevention and Control) Authority used to, with just a slight change in the language used.
  • Same advisory every year than the preventive measures: Every year schools are closed, people are advised to to stay indoors, or carpool and work from home, bans on firecrackers are reinforced, construction stopped, trucks and cars not allowed to enter the city, and industries running on fuel shut. These measures, and several others, are akin to dressing a bullet wound with band-aid.

Analysis: Is it only stubble burning is the culprit behind Delhi’s air pollution?

  • Delhi’s bad air when stubble is not being burnt: Stubble burning in the neighbouring States being identified as the main culprit. However, the reality is that Delhi’s air is bad even when stubble is not being burnt.
  • Burning of biomass in and around Delhi: The burning of biomass in and around Delhi, if audited properly, would be the same as stubble burning in other States. Unfortunately, none of the bodies, be it the municipal body or the government’s Public Works Department, is willing to take responsibility for this or address and find a solution to the problem.
  • Less compliance on construction activities: Delhi chokes on its own dust and industrial activities. No clarity on how and who is ensuring compliance with the rules relating to the handling of construction and demolition waste.
  • Heavy reliance on private Vehicles which is another major source of pollution: Vehicles are another source of pollution in the city. Despite an expanding fleet of public transport, citizens who primarily use two-wheelers have not moved to using the public transport system, buses and the metro. Reasons for this may include last-mile connectivity, the problem of crowding in buses and metros, and the inability to reach and navigate narrow lanes that two-wheelers can. The state of maintenance of buses could be another reason as well.

Delhi

What needs to be done?

  • Look beyond the measures that have already been tried: We have to be creative and look beyond the measures that have already been tried and proved they are at best a short-term solution to a recurring, long-term problem.
  • Making efficient and coordinated governance mechanism: Core issue that needs to be addressed is the governance system. There needs to be a single entity that takes responsibility for air quality management. We cannot operate in silos where one system of governance is responsible for thinking, a second issues orders and a third is responsible for implementation. There need to be an efficient system that works in a coordinated way.
  • Acknowledge the reality and not just taking the actions in the time of crisis: The reality also is that Delhi is not the sole offender. There are many other cities in India where safe levels of air quality are breached regularly. We need to take more comprehensive, long-term measures throughout the year and not just in the days and weeks when it begins to make news.

Conclusion

  • This is not to say that stubble burning is not a problem. Some solutions have been tried out over the years, but with little success. Unless farmers are adequately compensated, the problem is unlikely to go away. What is required is a fundamental shift in agricultural patterns, and a strong political will to take bold decisions.

Mains question

Q. Do you agree with the statement that only stubble burning is the culprit behind Delhi’s air pollution?

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Russian Invasion of Ukraine: Global Implications

Price cap on Russia’s Oil and India’s contextual response

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: Price cap on Russia's Oil and its implications on global oil supply chain, India's response and bilateral trade

cap

Context

  • Recently, G7 proposal to impose a price cap on Russian oil came into effect. The proposal, which took months to fructify, seeks to achieve a delicate balance how to starve the Russian state of oil revenues so as to financially cripple its war against Ukraine, but without causing supply disruptions in the global oil market which would cause prices to spiral. The move, however, risks fracturing the global crude oil market.

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What is Price cap on Russian oil?

  • The $60 per barrel and denial of infrastructure services to Russian oil: The $60 per barrel cap is intended to cut Russia’s oil revenues while keeping Russian crude on the market by denying insurance, maritime services, and finance provided by the Western allies for tanker cargoes priced above a fixed dollar-per-barrel cap.
  • Aim to hurt Russia’s oil revenue and create a pressure: The US-proposed cap aims to hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.
  • Impact on shipping: Without insurance, tanker owners may be reluctant to take on Russian oil and face obstacles in delivering it.

cap

Russian response to the price cap

  • Russia refused to abide by the measure: Russia has said it will not observe a cap and will halt deliveries to countries that do.
  • Retaliate by shutting off the shipments: It could retaliate by shutting off shipments in hopes of profiting from a sharply higher global oil price on whatever it can sell around the sanctions.
  • Russia said price cap will not hurt financing the war: Russia recently said that the cap would not hurt the financing of its “special military operation” in Ukraine.
  • Others buyers may bypass the restrictions putting countries interests first: Buyers in China and India might not go along with the cap, while Russia or China could try to set up their own insurance providers to replace those barred by US, UK and Europe. It is also possible that these countries will find creative ways to bypass the restrictions imposed by the G7.

cap

How impacts global oil supply chain?

  • Russian oil can now only be shipped using G7 countries infrastructure: Broadly speaking, Russian oil can now be shipped across the world using the infrastructure of the G7 countries tankers, insurers, etc only if it is sold at a price of $60 per barrel or less.
  • Higher price for buying oil from Russia: This makes buying oil from Russia at a higher price in the week prior to this announcement, Urals crude was trading in the mid-$60s range  a difficult proposition as most of the companies that offer shipping and insurance services are located in these G7 nations.
  • Countries wish to buy are at disadvantage but still not higher than brent crude oil: While Russia has refused to abide by this measure, and the cap will place countries that do opt for buying oil from Russia at a price higher than $60 at a disadvantage, it will still be at a considerable discount compared to Brent crude oil which is currently trading at around $81 per barrel.
  • Countries that continued trade despite of objections: So far, despite objections from western nations, countries like India and China have continued to trade with Russia.

cap

India’s response and the bilateral trade with Russia

  • India’s bilateral trade with Russia has surged to an all-time high: In fact, as reported in this paper, India’s bilateral trade with Russia has surged to an all-time high in the first five months of the year (April-August).
  • India putting its interests first and taking advantage of discounted price: Putting its interests first, India has raised its oil imports from Russia, taking advantage of the discounts being offered the country which used to import less than 1 per cent of its import requirement from Russia, now imports around a fifth from it.
  • As India is an oil importer, the trade at discounted price will give some relief in current account deficit and economic stability: After all, for an oil importer like India, which meets an overwhelming share of its requirements through imports, lower crude oil prices will moderate the price pressures in the economy and bring relief to the current account deficit, easing risks to macroeconomic stability.
  • India rejected the so-called moral duty: India has rejected any “moral” duty to join the price cap coalition.

Conclusion

  • Attempts to use trade as a weapon will only distort the global market and hurt energy-poor consumers not responsible for the war. India’s response so far to the West’s retaliation against Russia for the war in Ukraine has been guided by its sovereign interests. This must continue to be the guiding principle.

Mains Question

Q. G7 recently imposed a price cap on Russian oil driven by US and west. In light of this Discuss how it disrupt the global oil supply chain and how India is responding?

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Nuclear Diplomacy and Disarmament

China reiterates ‘No First Use’ Nuke Policy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: 'No First Use' Policy

Mains level: Nuclear disarmament

China responded to a US report alleging a major build-up in Beijing’s nuclear capabilities. It said, it adheres to its policy of no first use of nuclear weapons.

What is the news?

  • The Pentagon released an annual China security report that warned Beijing would likely have 1,500 nuclear.
  • China currently has 350 nuclear warheads.
  • As of 2022, Russia possesses a total of 5,977 nuclear warheads compared to 5,428 in the US inventory.

What is ‘No First Use’ Doctrine?

  • In nuclear ethics and deterrence theory, NFU is a commitment to never use nuclear weapons first under any circumstances, whether as a pre-emptive attack or first strike, or in response to non-nuclear attack of any kind.

Where do nuclear-armed countries stand on No First Use?

  • China is the only nuclear-armed country to have an unconditional NFU policy.
  • India maintains a policy of NFU with exceptions for a response to chemical or biological attacks.
  • France, North Korea, Pakistan, Russia, the UK and the US maintain policies that permit the first use of nuclear weapons in a conflict.
  • Israel does not acknowledge the existence of its nuclear arsenal so has no publicly known position.

Why advocate for global NFU commitments now?

  • The world after US bombing of Japan has never faced any crises that could escalate to nuclear conflict.
  • In addition to the precarious situation on the Korean peninsula, we’re running acceptably high risks of nuclear weapons use between-
  1. NATO and Russia: Amid ongoing Ukrainian Invasion
  2. India and Pakistan: Jihadist acquiring nuclear weapons
  3. US and China: Due to provocations over the South China Sea and Taiwan
  • In fact right now the chances that nuclear weapons will be used — intentionally, accidentally, or due to miscalculation — are the highest they’ve been since the worst days of the Cold War.
  • Establishing global NFU would immediately make the world safer by resolving uncertainty about what a nuclear-armed country might do in a crisis.
  • It removes pressure and incentive for any one country to “go nuclear” first in a crisis and thus create a moral obligation on others.

Consequences of nuclear war

  • Any use of a nuclear weapon would invite massive retaliation.
  • Not to mention the horrific aftermath of nuclear war.
  • A 2014 study shows that so-called “limited” nuclear war in South Asia, in which 100 nuclear weapons are used, would have global consequences.
  • Millions of tons of smoke would be sent into the atmosphere, plunging temperatures and damaging the global food supply.
  • Two billion people would be at risk of death by starvation.

What lies ahead?

  • Global No First Use would be an important step toward making nuclear weapons irrelevant to national security.
  • These policies would strip nuclear weapons of value in the eyes of military planners, enable future nuclear disarmament negotiations, and accelerate the dismantling of these weapons.
  • It would also serve as a “confidence-building measure” that establishes greater trust among nuclear-armed countries.
  • It thus makes it easier to work together to reduce nuclear risks and ultimately eliminate all nuclear weapons.

 

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Child Rights – POSCO, Child Labour Laws, NAPC, etc.

Pendency falls in the Child Adoption cases

Note4Students

From UPSC perspective, the following things are important :

Prelims level: CARA

Mains level: Child Adoption

The pendency in the adoption of children has come down to 644 from 905 over the last two months since the new Adoption Regulations were notified.

What is the news?

  • The Rules for the adoption of the Juvenile Justice Act were notified in September this year.

Adoption Regulations, 2022

  • The new rules empower District Magistrates to issue adoption orders.
  • Earlier, this power was exercised by the judiciary.
  • Changes have also been made to the Child Adoption Resource Information and Guidance System (CARINGS) online platform for adoption.
  • In accordance with the new rules, prospective adoptive parents can now opt from their home State or region.
  • This has been mandated to ensure that the child and the family adjust well with each other, belonging to the same socio-cultural milieu.

Adoption in India: A backgrounder

  • In 2015, the then Minister for Women and Child Development centralised the entire adoption system by empowering Central Adoption Resource Authority (CARA).
  • CARA is an autonomous and statutory body of Ministry of Women and Child Development set up in 2015.
  • It was empowered to maintain in various specialised adoption agencies, a registry of children, prospective adoptive parents as well as match them before adoption.
  • This was aimed at checking rampant corruption and trafficking as child care institutions and NGOs could directly give children for adoption after obtaining a no-objection certificate from CARA.

Why is there concern over the revised rules?

  • Parents, activists, lawyers and adoption agencies will have to be transferred and the process will have to start afresh.
  • A delay in such an order can often mean that a child can’t get admission into a school because parents don’t yet have a birth certificate.
  • Parents and lawyers also state that neither judges, nor DMs are aware about the change in the JJ Act leading to confusion in the system and delays.
  • DMs don’t handle civil matters that bestow inheritance and succession rights on a child.
  • If these rights are contested when a child turns 18, a judicial order is far more tenable to ensure the child is not deprived of his or her entitlements.

Is it such a big issue?

  • The Central Adoption Resource Authority (CARA) says there are nearly 1,000 adoption cases pending before various courts in the country.
  • This is not such a huge burden.

What is the adoption procedure in India?  

  • Adoptions in India are governed by two laws:
  1. Hindu Adoption and Maintenance Act, 1956 (HAMA): It is a parent-centric law that provides son to the son-less for reasons of succession, inheritance, continuance of family name and for funeral rights and later adoption of daughters was incorporated because kanyadaan is considered an important part of dharma in Hindu tradition.
  2. Juvenile Justice Act, 2015: It handles issues of children in conflict with law as well as those who are in need of care and protection and only has a small chapter on adoptions.
  • Both laws have their separate eligibility criteria for adoptive parents.
  • Those applying under the JJ Act have to register on CARA’s portal after which a specialised adoption agency carries out a home study report.
  • After it finds the candidate eligible for adoption, a child declared legally free for adoption is referred to the applicant.
  • Under HAMA, a “dattaka hom” ceremony or an adoption deed or a court order is sufficient to obtain irrevocable adoption rights.

Issues with child adoption in India

  • Parent-centrism: The current adoption approach is very parent-centred, but parents must make it child-centred.
  • Age of child: Most Indian parents also want a child between the ages of zero and two, believing that this is when the parent-child bond is formed.
  • Institutional issues: Because the ratio of abandoned children to children in institutionalised care is lopsided, there are not enough children available for adoption.
  • Lineage discrimination: Most Indians have a distorted view of adoption because they want their genes, blood, and lineage to be passed down to their children.
  • Red-tapism: Child adoption is also not so easy task after the Juvenile Justice Rules of 2016 and the Adoption Regulations of 2017 were launched.

Practical issues in adoption

  • There are no rules for monitoring adoptions and verifying sourcing of children and determining whether parents are fit to adopt.
  • There are many problems with the adoption system under CARA but at the heart of it is the fact that there are very few children in its registry.
  • According to the latest figures there are only 2,188 children in the adoption pool, while there are more than 31,000 parents waiting to adopt a child.

 

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WTO and India

What is Goods Trade Barometer?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: WTO trade barometer

Mains level: Not Much

barometer

The World Trade Organization’s Goods Trade Barometer says the global economy, hit by strong headwinds and weakening import demand, may see trade growth slowdown in the closing months of 2022 and into 2023.

What is Goods Trade Barometer?

  • The Goods Trade Barometer was developed by the WTO to complement conventional trade statistics and forecasts.
  • It is the world’s leading composite indicator that highlights the turning points in the global merchandise trade and provides forecasts of its likely trajectory in the near future.
  • It is released on a quarterly basis based on the availability of data.
  • It provides real-time data on the trajectory of merchandise trade relative to the current trends.
  • Values higher than 100 indicates above-trend growth and the values less than 100 indicates below-trend growth.

Key trends

  • In its recent release, it said trade growth is likely to slow down in 2022 and into 2023.
  • Reflecting a cooling demand for traded goods based on actual trade developments through the second quarter of 2022, the current reading of 96.2 is below the baseline value index and the prior reading of 100.0.
  • The downturn in the goods barometer is in line with the earlier forecast which predicted a merchandise trade volume growth of 3.5% in 2022 and a revised lower estimate of 1% for 2023.

Impact on India’s trade balance

  • With a likely fall in export earnings, and no decrease in imports of essential items like crude oil and capital goods, India’s trade deficit is set to widen.
  • The projection is that the country’s current account trade deficit is expected to be around 3% of GDP for FY23.
  • Foreign exchange reserves which have already depleted by over $100 billion over the last year are likely to shrink further.

What does a slowdown mean for India?

  • India is not an export-led economy. In FY22, 21.5% of Indian GDP depended on exports.
  • However, in view of the poor performance of the country’s major market destinations such as the US and China, Indian exports are bound to suffer.
  • During the subprime crisis which engulfed the entire world, India’s export-oriented sectors had to pay the price though the economy was to a large extent insulated due to a vibrant rural sector.
  • But currently rural India is not in a strong position unlike in 2008-09.

 

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