From UPSC perspective, the following things are important :
Prelims level: NPA, Writ off, its direct and indirect impact on financial stability
Mains level: NPA's, implications for banks and economy as a whole
What is the news?
The latest financial stability report released by the Reserve Bank of India (RBI) shows a continuous decline in both Gross Non-performing assets (GNPAs) and Net NPAs, reaching their lowest levels since 2015.
Central Idea
In recent years, the Indian banking sector has witnessed a remarkable turnaround in its non-performing assets (NPA) ratio, marking a significant improvement in its overall health. Just four years ago, Indian banks grappled with the highest NPA ratio among emerging economies.
What are Bad loans/ Non-Performing Assets (NPA’s)?
Bad loans refer to loans that are classified as non-performing assets
NPA is a term used to classify loans or advances that are in default. It indicates the inability of borrowers to fulfill their repayment obligations to the lender.
In general, a loan is classified as an NPA when the borrower fails to make payments for a specified period, typically 90 days or more.
There are two key classifications related to NPAs:
Gross Non-Performing Assets (GNPA): This refers to the total amount of loans or advances that have been defaulted by borrowers.
Net Non-Performing Assets (NNPA): NNPA is derived by deducting the provision amount from the GNPA. Provision refers to the amount set aside by banks or financial institutions as a precautionary measure to cover potential losses arising from NPAs.
Background and Current Situation
During the second quarter of 2019, the NPA ratio in Indian banks stood at a worrisome 9.2%, signifying that nearly one in ten loans had become bad.
The severity of the problem was unveiled when the RBI conducted an expansive Asset Quality Review in 2016, exposing the true extent of bad loans.
From 2016 to 2019, the NPA ratio remained high, causing apprehension among stakeholders.
However, subsequent years witnessed a decline in the NPA ratio, a trend that persisted even during the challenging times of the COVID-19 pandemic.
Factors contributing to the decline in NPAs
Insolvency and Bankruptcy Code (IBC): The implementation of the Insolvency and Bankruptcy Code in 2016 played a crucial role in the recovery of sick loans. It provided a structured and time-bound framework for resolving distressed assets, leading to improved NPA management and recovery.
Shift towards personal loans: Banks shifted their lending focus from industries to personal loans. This strategic move reduced the exposure to sectors heavily impacted by the pandemic, potentially mitigating the risks of loan defaults and lowering the NPA ratio.
Impact of COVID-19-related moratoriums: There were concerns about the potential increase in NPAs resulting from the COVID-19-related moratoriums. However, the data indicated that the moratoriums did not lead to a significant bump in NPAs, as initially expected. This suggests that the measures implemented to support borrowers during the pandemic were effective in preventing a major NPA crisis.
Write-offs: The reduction in NPAs, particularly in FY20, can be attributed to the practice of writing off bad loans. Banks voluntarily wrote off NPAs to maintain healthy balance sheets, which had a positive impact on the overall NPA ratio. However, the continued reliance on write-offs raises concerns about the sustainability of this approach in the long run.
What are Write-Offs?
Write-offs refer to the practice of removing non-performing assets (NPAs) from a bank’s balance sheet. When a loan becomes irrecoverable and the borrower is unable to repay, the bank may decide to write off the loan as a loss.
This means that the bank no longer considers the loan as an asset and removes it from its books.
Write-offs are typically done to maintain accurate financial records and reflect the true value of the bank’s assets
Concerns highlighted regarding write-offs
Sustainability of NPA Reduction: Write-offs may artificially lower NPAs, but heavy reliance raises doubts about sustainable NPA reduction without effective recovery measures.
Adequacy of Provisioning: Insufficient provisions to cover losses due to write-offs can weaken a bank’s financial position and ability to absorb future shocks.
Transparency and Accountability: Ensuring transparent and accountable write-off processes is crucial to prevent misuse and maintain trust in the banking system.
Impact on Lending Capacity: Write-offs reduce available capital, limiting a bank’s ability to lend and support economic growth. Inadequate replenishment may further constrain lending.
Decline in NPAs: Implications for the banks
Improved Asset Quality: A decrease in NPAs indicates an improvement in the asset quality of banks. It suggests that a lower proportion of loans are in default or arrears, reflecting healthier lending practices and reduced credit risk. Banks with lower NPAs are better positioned to maintain stability and profitability in their loan portfolios.
Enhanced Financial Health: Declining NPAs contribute to the overall financial health of banks. As the burden of bad loans decreases, banks can allocate resources more efficiently and utilize capital for productive purposes. This improves the banks’ ability to generate profits and strengthens their financial position.
Increased Profitability: Lower NPAs positively impact banks’ profitability. When the proportion of bad loans decreases, banks experience fewer loan write-offs and provisioning requirements. This results in lower expenses associated with NPA resolution and provisioning, thereby enhancing profitability and improving the bottom line.
Strengthened Capital Position: A decline in NPAs can lead to a strengthened capital position for banks. As they recover or resolve NPAs, banks can allocate capital more effectively and build buffers against potential losses. A stronger capital position provides resilience and stability to the banks, ensuring they can absorb shocks and maintain sustainable lending practices.
Improved Investor Confidence: Decreasing NPAs can boost investor confidence in the banking sector. It demonstrates efficient risk management and sound lending practices, attracting investors and potentially leading to increased investments in banks. Enhanced investor confidence can contribute to the stability and growth of the banking sector.
Enhanced Lending Capacity: With lower NPAs, banks can allocate more funds towards fresh lending and credit expansion. As the burden of bad loans reduces, banks have more capital available to extend credit to productive sectors of the economy, supporting economic growth and development
Conclusion
Indian banks have made remarkable progress in reducing NPAs, as evident from the declining NPA ratios and improved profitability. However, the reliance on write-offs raises concerns about the sustainability of this trend. To ensure long-term stability, banks must prioritize prudent lending practices and effective risk management.
A parliamentary committee has given its endorsement to the Forest (Conservation) Amendment Bill, which seeks to amend the Forest (Conservation) Act, 1980.
The proposed amendments have attracted objections and controversies, raising concerns about dilution of forest protection and potential impacts on biodiversity, forest rights, and national security.
Forest (Conservation) Amendment Bill, 2023: An overview
The Forest (Conservation) Act, 1980, safeguards India’s forest land from unauthorized non-forestry use and allows for compensation in case of diversion.
Previous amendments aimed to expand protection, but the current amendments focus on removing ambiguities and clarifying the Act’s applicability on various types of land.
The amendments emphasize promoting tree cover, carbon sinks, national security infrastructure, and livelihood opportunities for forest-dwelling communities.
Forest (Conservation) Act, 1980
It is the principal legislation that regulates deforestation in the country.
It prohibits the felling of forests for any “non-forestry” use without prior clearance by the central government.
The clearance process includes seeking consent from local forest rights holders and from wildlife authorities.
The Centre is empowered to reject such requests or allow them with legally binding conditions.
Process of approval for the diversion of forest land culminates after issuance of final diversion order by the State Government or UT concerned which authorises use of forest land for intended purpose and hands over the land to the user agency.
Key features
Inclusion and Exclusion of Land: The Bill amends the Forest (Conservation) Act, 1980 to make it applicable to land notified as a forest under the Indian Forest Act, 1927 or in government records after the 1980 Act came into effect. Land converted to non-forest use before December 12, 1996, will not fall under the Act’s purview.
Exemptions: Certain types of land are exempted from the Act, including land within 100 km of India’s border required for national security projects, small roadside amenities, and public roads leading to habitation.
Assignment of Forest Land: The state government requires prior approval from the central government to assign forest land to any private or government entity. The Bill extends this requirement to all entities and allows assignment on terms and conditions specified by the central government.
Permitted Activities: The Bill expands the list of permitted activities in forests, including establishing check posts, fencing, bridges, running zoos, safaris, and eco-tourism facilities.
Controversial parts of the Amendment
Dilution Concerns: Some critics argue that the amendments dilute the Supreme Court’s 1996 Godavarman case judgment, which extended protection to forests not officially classified as such.
Geographically Sensitive Areas: Projects within 100 km of international borders or the Line of Control would no longer require forest clearance, which raises concerns about the environment and security.
Deemed Forests and Tourism: Central protection for deemed forests and restrictions on activities like tourism could be compromised, affecting biodiversity conservation and forest integrity.
Impact on Forest Cover: Exempting land near border areas for national security projects may adversely affect forest cover and wildlife in northeastern states, which have high forest cover and are biodiversity hotspots.
Potential Adverse Effects: Blanket exemptions for projects like zoos, eco-tourism facilities, and reconnaissance surveys may have negative consequences for forest land and wildlife.
Opposition and Criticism
Northeast States’ Opposition: Some northeastern states objected to forest land being used for defense purposes without their consent.
Environmental Groups’ Concerns: Environmental organizations criticized the removal of Central protection for deemed forests and allowing tourism in these areas, risking biodiversity and forest conservation.
Name Change Controversy: The proposal to change the name of the Act to Van (Sanrakshan Evam Samvardhan) Adhiniyam faced objections for being non-inclusive and excluding certain regions’ populations.
Conclusion
The Forest (Conservation) Amendment Bill, despite attracting objections and controversies, has received the endorsement of the parliamentary committee.
The proposed amendments aim to bring clarity to the Act’s applicability and promote tree cover, national security infrastructure, and livelihood opportunities.
From UPSC perspective, the following things are important :
Prelims level: urban local bodies
Mains level: disbanding cantonments and its advantages and disadvantages and challenges for urban local bodies
Central Idea
Recently, the Ministry of Defence took a significant step towards disbanding cantonments in India with the notification for the abolition of Yol Cantonment in Himachal Pradesh. This move is part of a larger plan to convert military areas into exclusive military stations, while merging civilian areas with neighboring urban local bodies (ULBs).
Historical Context
The 62 cantonments spread unevenly across the country are considered archaic colonial legacies that originated after the East India Company’s victory in the battle of Plassey.
These cantonments were primarily established for quartering troops, but over time, civilian populations settled within their jurisdictions to provide support services.
The current administration of cantonments is under cantonment boards, which function as deemed municipalities and perform civic duties similar to ULBs
Their features
Cantonment Boards are democratic bodies comprising elected and nominated members.
In terms of Entry 3 of the Union List (Schedule VII) of the Constitution of India, Urban Self Governance of the Cantonments and the Housing Accommodation therein is the subject matter of the Union.
The Station Commander of the Cantonment is the ex-officio President of the Board, and an officer of the IDES or Defence Estates Organisation is the Chief Executive Officer who is also the Member-Secretary of the Board.
They have equal representation of elected and nominated/ex-officio members to balance official representation with democratic composition.
They maintain ecological balance while providing better civic facilities to the residents.
What is the plan?
The plan is to carve out the military areas in all cantonments and convert them into “exclusive military stations” with the Army exercising “absolute control” over them.
The civilian areas, in turn, will be merged with the local municipalities, which will be responsible for their maintenance among other things.
Advantages for the Military
Focus on Core Responsibilities: By separating civilian areas from military stations, the military commanders would be relieved of non-military responsibilities. This would allow them to concentrate more on their core duties, such as training troops and maintaining war preparedness.
Elimination of Political Involvement: In some instances, army officers have found themselves getting involved in local politics within cantonments, despite lacking background and training in this area. The merger of civilian areas into ULBs would reduce the army’s involvement in local political matters.
Homogeneous Management: The merger would enable uniform and homogeneous management of military stations strictly under the control of the army. This would facilitate streamlined decision-making processes and enhance operational efficiency within military establishments.
Enhanced Security: With civilian areas separated from military stations, there is a potential improvement in security arrangements. Military installations can implement stricter security measures without concerns about civilian populations living in close proximity.
Increased Flexibility: Without the burden of managing civilian functions, the military can respond more flexibly to changing security needs and allocate resources more effectively. This flexibility can enhance the overall operational capabilities and readiness of the armed forces.
Benefits for Civilian Residents
Property Regulations: Relief from restrictive property regulations, making it easier for residents to transfer, mutate, and develop properties without excessive limitations.
Reduced Inconvenience: Mitigation of road closures within cantonments, resulting in less inconvenience for civilian residents in terms of movement and transportation.
Access to Welfare Schemes: Integration with ULBs grants civilians access to social welfare schemes provided by the government, which were previously unavailable due to the cantonment’s non-plan sector status.
Economic Opportunities: Removal of stifling restrictions on construction and economic activities encourages growth and urbanization in merged areas, potentially boosting employment and economic opportunities for residents.
Municipal Laws: Residents come under the jurisdiction of ULBs, ensuring that municipal laws and services are applicable to them, leading to better governance and provision of essential services such as water supply, sanitation, education, and street lighting.
Potential Concerns
Uncontrolled Construction: There is a possibility that the merger of cantonment areas into ULBs may lead to uncontrolled construction and commercialization, particularly in hill station cantonments. This could result in the loss of the charm and environmental integrity of these areas.
Insufficient Services: ULBs may struggle to provide quality services and governance to the merged areas. Existing cities already face challenges in delivering services, and the addition of new areas with limited revenue may further strain the capacity of ULBs, potentially resulting in inadequate infrastructure, healthcare, and other essential services.
Environmental Impact: The removal of restrictions on construction and economic activities may have negative environmental consequences, such as increased pollution, strain on natural resources, and encroachment on ecologically sensitive areas. Proper environmental safeguards should be in place to mitigate these potential impacts.
Resistance to Resource Allocation: Existing councillors and political constituencies may resist diverting funds from their own areas to support the merged areas. This resistance could impede the equitable distribution of resources and hinder the development and provision of essential services in the merged areas.
Capacity Constraints: ULBs may struggle with limited manpower, technical expertise, and administrative capacities to effectively govern and manage the merged areas. The sudden addition of new areas may overwhelm the existing administrative setup, hindering their ability to provide efficient and responsive governance.
Revenue Generation: Merged cantonment areas may have limited revenue-generating potential, which can pose challenges for ULBs in generating sufficient funds to sustain and improve services. The existing revenue streams of ULBs may need to be re-evaluated, and new strategies for revenue generation may need to be implemented to support the merged areas.
Way forward
Comprehensive Planning: The government should undertake comprehensive urban planning exercises to ensure orderly and sustainable development in the merged areas.
Strengthening ULBs: To address the challenges faced by ULBs, the government should provide adequate financial resources, technical support, and capacity-building programs.
Public Participation: Engaging the public and stakeholders in the planning and decision-making processes is crucial. This can be achieved through consultations, public hearings, and feedback mechanisms.
Monitoring and Evaluation: Regular monitoring and evaluation mechanisms should be established to assess the progress and impact of the merger. This would help identify any shortcomings or challenges and enable timely corrective measures to be implemented.
Collaborative Approach: Collaboration between the central and state governments, ULBs, and other relevant stakeholders is essential. A coordinated approach will facilitate effective decision-making, resource allocation, and the implementation of policies and programs.
Long-term Perspective: The merger should be viewed from a long-term perspective, considering the social, economic, and environmental implications. It is important to strike a balance between development aspirations and the preservation of the cultural and environmental heritage of the merged areas
Conclusion
The decision to merge civilian areas of cantonments with ULBs carries both advantages and challenges. While the military stands to benefit from the separation, civilians can expect relief from restrictive regulations and improved access to welfare schemes. However, concerns about uncontrolled development and the ability of ULBs to deliver quality services warrant attention. Future mergers emphasize the need for government intervention to adequately fund cities and support their expanding responsibilities.
From UPSC perspective, the following things are important :
Prelims level: Gravity Hole
Mains level: Not Much
The true shape of our Earth
Central Idea
One intriguing phenomenon recently discovered is the presence of a significant “gravity hole” in the Indian Ocean, where the gravitational pull is notably weaker.
Recent research sheds light on the possible causes behind this anomaly.
What is a Gravity Hole?
A “gravity hole” refers to a region on Earth where the gravitational pull is significantly weaker compared to the surrounding areas or the global average.
It is characterized by a dip or low gravity anomaly.
In such areas, the sea level may be lower than average due to the weaker gravitational force acting upon the water.
This term is often used to describe specific locations, such as the Indian Ocean geoid low (IOGL), where the gravitational pull is notably diminished compared to nearby regions.
The exact causes of gravity holes can vary and may involve factors such as variations in the Earth’s mass distribution or underlying geological features.
What is Indian Ocean Geoid Low (IOGL)?
It is located approximately 1,200 kilometers southwest of the southernmost tip of India.
IOGL is an area in the Indian Ocean where the sea level is about 106 meters below the global average.
Unraveling the Causes of IOGL
Discovering the Anomaly: Geophysicist Felix Andries Vening Meinesz first identified the IOGL during a survey in 1948. Since then, it has been confirmed by subsequent ship-based experiments and satellite measurements.
Ancient Ocean Hypothesis: Researchers from the Indian Institute of Science conducted computer-simulated models spanning 140 million years. They discovered remnants of an ancient ocean, located approximately 965 kilometers below the Earth’s crust, just beneath Africa.
Molten Rock Plumes: The simulations revealed molten rock plumes below Africa, potentially caused by tectonic plates subducting into the mantle. These plumes are believed to be a contributing factor to the IOGL.
Possible origination: Researchers said that the IOGL comprises slabs from the Tethys Sea, a long-lost sea that plunged into the depths of the planet millions of years ago. Tethys Sea, which once separated the supercontinents of Gondwana and Laurasia is believed to have perturbed the African Large Low Shear Velocity province.
Future Perspectives
Lack of Seismic Evidence: While the simulated models suggest the presence of molten rock plumes beneath the Indian Ocean, seismographic evidence has yet to confirm their actual existence.
Additional Factors at Play: The researchers emphasize that other factors contributing to the gravitational anomaly in the Indian Ocean need to be further explored before reaching a definitive conclusion.
Further Research: Continuation of studies, including seismic surveys and detailed modelling, is necessary to gain a comprehensive understanding of the IOGL and its causes.
From UPSC perspective, the following things are important :
Prelims level: Ubinas Volcano
Mains level: NA
Central Idea
Peru declared a state of emergency for sixty days in areas around the Ubinas volcano.
The volcano has been spewing ash and gas and is probably set to erupt.
Ubinas Volcano
Ubinas is an active stratovolcano located in the Moquegua Region of southern Peru, approximately 60 kilometers east of the city of Arequipa.
It is part of the Central Volcanic Zone of the Andes and stands at an elevation of 5,672 meters above sea level.
Geological Characteristics
Stratovolcano Formation: Ubinas is characterized by its stratovolcano structure, comprising layers of hardened lava, ash, and other volcanic materials.
Caldera and Crater: The volcano’s summit contains a 1.4-kilometer-wide and 150-meter-deep caldera, within which lies a smaller crater. This distinct feature adds to the volcano’s geological significance.
Ubinas I and Ubinas II: The volcano exhibits an upwards-steepening cone shape, with a notable notch on its southern side. The lower part is referred to as Ubinas I, while the steeper upper section is known as Ubinas II, representing different stages in the volcano’s geological history.
Volcanic Activity
Active Volcanic History: Ubinas is recognized as the most active volcano in Peru, displaying a history of small to moderate explosive eruptions and persistent degassing.
Notable Eruptions: The volcano has experienced notable eruptions throughout history, including the 2006–2007 event that resulted in eruption columns, ash fall, health concerns, and evacuations in the region.
Recent Activity: From 2013 to 2017, Ubinas exhibited lava flow within the crater, accompanied by ash falls, leading to further evacuations in nearby towns.
Eruption and Impact
Ash and Gas Emissions: The Ubinas volcano has been actively spewing ash and gas.
Smoke Cloud and Affected Areas: The smoke cloud generated by the eruption has reached towns located up to 10 kilometers away from the volcano. This has raised concerns for the well-being of approximately 2,000 people residing in the affected areas.
The “Ring of Fire”: The region where Ubinas is situated falls within the “Ring of Fire,” an area around the Pacific Ocean known for its high volcanic and seismic activity.
From UPSC perspective, the following things are important :
Prelims level: Solar Shooting Stars
Mains level: Not Much
Central Idea
Astronomers have made a remarkable discovery of meteor-like streaks on the surface of the Sun, differentiating them from the shooting stars witnessed on Earth.
These solar shooting stars, observed during a phenomenon known as coronal rain, offer valuable insights into the Sun’s complex dynamics.
Observing Coronal Rain and Solar Shooting Stars
Distinction from Earthly Shooting Stars: While shooting stars on Earth are space rocks or dust fragments burning up in our atmosphere, solar shooting stars occur within coronal rain phenomena.
Coronal Rain: Coronal rain is a condensation process involving extremely hot material from the Sun’s corona. It forms dense clumps of plasma, which plummet back to the Sun’s surface due to its immense gravity.
European Space Agency’s Solar Orbiter (SolO): The SolO spacecraft provided valuable observations of solar shooting stars, capturing high-resolution images and monitoring the heating and compression of gas beneath them.
Characteristics of such Stars
Findings: The Solar Orbiter observed the impacts of solar shooting stars for the first time, revealing intense bursts of brightness, upward movement of stellar material, and shock waves that heat up the Sun’s corona.
Unique Features: Unlike Earthly shooting stars, solar shooting stars lack bright tails due to powerful magnetic fields in the Sun’s corona stripping gas from the falling clumps.
Challenging Observations: The magnetic fields’ influence makes the observation of solar meteors challenging, and their true nature remained unknown until these recent observations.
Insights and Implications
Solving the Corona Mystery: Scientists believe that the discovery of solar shooting stars could help explain why the corona, the Sun’s outermost atmosphere, is hotter than the layers beneath it. This puzzles astronomers, as conventional solar models predict increasing temperatures closer to the Sun’s core.
Coronal Rain Formation: Coronal rains are formed by localized temperature drops, causing solar plasma to condense into dense lumps that fall to the Sun’s cooler surface, known as the photosphere, at speeds up to 220,000 miles per hour.
Proximity of Observation: The Solar Orbiter’s close distance of 30 million miles from the Sun allowed for detailed observations of these phenomena, closer than the orbit of Mercury.
From UPSC perspective, the following things are important :
Prelims level: Global Peace Index
Mains level: Not Much
Central Idea: The 17th edition of the Global Peace Index (GPI), ranking 163 independent states and territories based on their level of peacefulness was released.
What is Global Peace Index?
Released by: Institute for Economics and Peace (IEP) since May 2009.
Extensive Coverage: The GPI covers 163 countries, representing 99.7% of the world’s population, utilizing 23 qualitative and quantitative indicators from reputable sources.
3 Domains of Peace: The index measures peace across three domains: societal safety and security, ongoing domestic and international conflict, and militarization. These domains provide a holistic understanding of a country’s peacefulness.
Rankings and Highlights
Most Peaceful Countries: Iceland continues to hold the title of the most peaceful country since 2008, followed by Denmark, Ireland, New Zealand, and Austria.
Least Peaceful Countries: Afghanistan remains the least peaceful country for the eighth consecutive year, followed by Yemen, Syria, South Sudan, and the Democratic Republic of the Congo.
India’s Position: India has climbed two spots to the 126th position in the rankings. It experienced an improvement of 3.5% in peacefulness, attributed to reductions in violent crime, improved relations with neighboring countries, and decreased political instability.
Prominent Countries: Nepal, China, Sri Lanka, USA, and Pakistan have been ranked 79, 80, 107, 131, and 146, respectively.
Global Peace Trends
Overall Deterioration: The 2023 report highlights a 0.42% deterioration in the average level of global peacefulness. This marks the thirteenth deterioration in the last fifteen years.
Improvements and Deteriorations: In 2022, 84 countries demonstrated improvements in peacefulness, while 79 countries experienced deteriorations.
Long-term Perspective: Over the past fifteen years, the global average score of peacefulness has deteriorated by five percent, indicating a decline in peace worldwide.
From UPSC perspective, the following things are important :
Prelims level: Exercise SALVEX
Mains level: NA
Central Idea
The Indian Navy and the US Navy recently concluded the seventh edition of the Salvage and Explosive Ordnance Disposal (EOD) exercise, known as SALVEX.
Exercise SALVEX
Since its inception in 2005, SALVEX has facilitated the exchange of expertise and the enhancement of capabilities in maritime salvage and EOD operations.
The IN-USN SALVEX exercise has become a cornerstone of bilateral naval cooperation between India and the United States, fostering mutual trust and collaboration.
The exercise featured the participation of INS Nireekshak and USNS Salvor, along with Specialist Diving and EOD teams from both navies.
Key outcomes
Shared Learning on Maritime Salvage: The Diving teams from both countries engaged in the exchange of experiences, lessons, and best practices in maritime salvage operations.
Training Synergies on EOD Operations: The exercise provided an ideal platform for joint training exercises, allowing divers and EOD teams to enhance their interoperability and refine their skills.
Mastery of Mine Detection and Neutralization: The participating divers received comprehensive training in the detection and neutralization of mines, enabling them to mitigate potential threats in underwater environments.
Efficient Wreck Location and Salvage Techniques: The exercise focused on honing the teams’ abilities to locate and salvage wrecks, a critical skill for ensuring safe navigation and effective disaster response.
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Frequent Internet shutdowns, need and consequences, Need for an balanced approach
Central Idea
In recent years, the Indian government has increasingly resorted to internet shutdowns as a means to control law and order in various regions, such as Jammu and Kashmir (J&K), Manipur, and Punjab. India has witnessed a staggering 60% of internet shutdowns worldwide between 2016 and 2022.
Relevance of the topic
India emerged as the single biggest offender for a fifth consecutive year, with at least 84 internet blackouts in 2022
Shutdowns could have devastating impact on human lives such as , it may deepen the gender digital divide, disrupting the ability of women to conduct business or access information on reproductive healthcare
Reasons behind internet shutdowns in India
Communal tensions: Approximately 40-50% of internet shutdowns in India are officially attributed to communal tensions. Shutdowns are imposed to prevent the spread of rumors, hate speech, and incitement to violence during periods of heightened communal tensions.
Protests and demonstrations: Shutdowns are frequently imposed during protests and situations of civil unrest to control the spread of information, coordinate activities, and prevent further mobilization of protesters.
Preventing cheating in exams: Internet shutdowns have been imposed during exams to curb cheating and prevent the use of online resources that may aid in dishonest practices.
Religious processions: Shutdowns have also been observed during religious processions, particularly in regions with religious sensitivities, to prevent the circulation of inflammatory content and maintain public order.
Case study: Reviewing shutdowns in Jammu and Kashmir (J&K) and Manipur
Jammu and Kashmir (J&K):
Prolonged Shutdown: The shutdown in J&K has been characterized by its extended duration, causing significant disruptions to the daily lives of residents. Internet access was severely restricted for an extended period, impacting essential services such as healthcare, education, and livelihoods.
Lack of Due Process: Concerns have been raised regarding the decision-making process, with instances of shutdowns imposed by district magistrates without higher-level involvement. This raises questions about procedural fairness and the adherence to due process.
Transparency and Justification: The lack of public information regarding shutdowns in J&K is a cause for concern. The transparency and clarity of justifications for imposing shutdowns are essential for accountability and safeguarding constitutional rights.
Manipur:
Ongoing Shutdown and VPN Blocking: The Manipur High Court has formed a committee to explore blocking VPN servers while maintaining restrictions on social media websites. However, the feasibility of this solution is questioned as VPNs also play a role in the exercise of freedom of speech and expression.
Impact on Livelihoods and Services: The need to protect people’s livelihoods is emphasized, given the reliance on the internet for businesses and livelihoods. Ensuring access to critical services like healthcare and education during shutdowns becomes crucial.
Impact of internet shutdowns
Restriction of Fundamental Rights: Internet shutdowns curtail the exercise of fundamental rights, such as freedom of expression, access to information, and the right to privacy. These shutdowns limit people’s ability to communicate, express themselves, and access essential information.
Economic Consequences: Internet shutdowns have adverse effects on businesses, particularly those that rely on the internet for their operations. E-commerce, online services, and digital platforms suffer financial losses during shutdowns.
Disruption of Essential Services: Internet shutdowns disrupt access to critical services like healthcare, education, and emergency services. Telemedicine, online education, and remote work become inaccessible, impacting people’s well-being, educational opportunities, and productivity
Human Rights Violations: Prolonged and arbitrary internet shutdowns can be seen as human rights violations. They limit people’s ability to exercise their rights, stifle dissent, and undermine democratic processes.
Negative Impact on Education: Internet shutdowns disrupt online education, e-learning platforms, and access to educational resources. This hampers educational progress and has long-term consequences for individuals and societies.
Psychological and Emotional Impact: The inability to connect with others, access information, and engage in online activities can have psychological and emotional implications.
Justifications behind the frequent imposition of shutdowns
Maintaining Public Order: Internet shutdowns are often imposed as a measure to maintain public order and prevent the escalation of law and order situations.
Preventing the Spread of Misinformation: During times of crisis or unrest, shutting down the internet is seen as a way to prevent the rapid spread of misinformation and fake news. .
Curbing Organizational Activities: Shutdowns are also imposed to disrupt the organization and coordination of protests, demonstrations, or other activities perceived as a threat to public order.
Preserving Exam Integrity: Internet shutdowns may be implemented during examinations to prevent cheating. By restricting access to online resources, authorities aim to ensure the fairness and integrity of the examination process.
The two significant Supreme Court judgments related to internet shutdowns in India
Anuradha Bhasin v. Union of India (2020): Recognized the right to access the internet as part of the right to freedom of speech and expression. Emphasized that internet shutdowns must be necessary and proportionate, subject to judicial review.
Faheema Shirin v. State of Kerala (2020): Reaffirmed the importance of internet access for exercising fundamental rights. Stressed that restrictions on internet access should be temporary, proportionate, and justified with reasons
Way forward: Need for balance between maintaining public order and safeguarding the interests of internet-dependent individuals
Protecting Public Order: Maintaining public order is a legitimate concern for governments to ensure safety, security, and the functioning of society. Internet shutdowns may be employed in exceptional situations where there is a real and imminent threat to public safety or when it is necessary to prevent the spread of violence or unrest.
Proportionality: Any measure taken to maintain public order, including internet shutdowns, should be proportionate to the threat faced. Shutdowns should be targeted, time-limited, and precisely tailored to address the specific concerns, rather than imposing blanket restrictions that impact the entire population.
Judicial Oversight: Independent judicial oversight is crucial to ensuring that any restrictions on internet access align with constitutional principles and international human rights standards.
Transparency and Accountability: Governments should provide clear and transparent justifications for internet shutdowns, including detailing the specific risks or threats that justify such measures. Accountability mechanisms should be in place to address any abuses or violations during shutdowns.
Targeted Measures: Rather than resorting to complete shutdowns, governments should explore alternative measures that target specific content or platforms that pose risks to public order. Content moderation, selective blocking, or targeted interventions can help address concerns without unduly infringing on individual rights or stifling access to essential services.
Conclusion
The impact of shutdowns on livelihoods, education, and the economy underscores the urgency to seek alternative solutions. It is imperative that stakeholders reconsider the necessity and consequences of internet shutdowns to ensure a just and balanced approach to maintaining law and order.
From UPSC perspective, the following things are important :
Prelims level: Annapurti
Mains level: Not Much
Central Idea
The recent demonstration of the Automated Multi-Commodity Grain Dispensing Machine, Annapurti, during the ‘National Conference of Food Ministers of States/UTs,’ showcased an innovative solution developed by the World Food Programme (WFP) India.
What is Annapurti?
Annapurti, also known as the Grain ATM, offers a fast, clean, and precise method of providing subsidized grains to beneficiaries through the Public Distribution System.
Developed by WFP India, it is an automated multi-commodity dispensing solution that ensures efficient access to commodities like rice, wheat, and grains.
Beneficiaries can securely access their entitlements through Annapurti following biometric authentication.
Key Features
Annapurti offers 24×7 access to full entitlements, eliminating spillage, waste, and inaccurate weighing.
The machine can dispense one or two grain commodities, up to 50 kilograms, within five minutes, with a minimal error rate of 0.01 percent.
Advantages and Potential Applications
(1) Ensuring Food Security:
Annapurti has significant potential for food-based safety nets, ensuring beneficiaries receive their monthly subsidized grains promptly.
The machine’s precision and reliability prevent losses and ensure individuals receive their entitled portions.
(2) Emergency Food Grain Distribution:
During emergencies, such as natural disasters or humanitarian crises, Annapurti can facilitate efficient and timely distribution of food grains to affected populations.
Its automated system streamlines the process, reducing dependency on manual labor and minimizing errors.
(3) Market Access for Smallholder Farmers:
Annapurti can play a crucial role in expanding market access for smallholder farmers.
By offering a reliable and efficient distribution channel, farmers can sell their produce directly to Annapurti, ensuring fair prices and reducing intermediaries.
Sustainable and Modular Design
(1) Energy Efficiency:
Annapurti is designed to prioritize food security while ensuring efficient energy consumption.
With a consumption rate of only 0.6 Watt per hour, it offers an environmentally friendly solution.
(2) Modular Design:
Annapurti’s modular design allows for flexibility and scalability based on available space.
The storage unit and components can be easily assembled and customized to suit different requirements.
(3) Integration with Renewable Energy:
Annapurti can be integrated with solar panels, inverter batteries, and elevators for automatic refilling.
This integration enhances the sustainability of the system by reducing dependency on conventional energy sources.
From UPSC perspective, the following things are important :
Prelims level: Collegium system, NJAC
Mains level: Not Much
Central Idea
The Supreme Court Collegium, led by Chief Justice of India D. Y. Chandrachud, has recommended new Chief Justices for seven major High Courts in India.
The recommendations focus on criteria such as seniority, regional representation, and gender diversity.
What is Collegium System?
The Collegium of judges is the Indian Supreme Court’s invention.
It does not figure in the Constitution, which says judges of the Supreme Court and High Courts are appointed by the President and speaks of a process of consultation.
In effect, it is a system under which judges are appointed by an institution comprising judges.
After some judges were superseded in the appointment of the CJI in the 1970s, and attempts made subsequently to effect a mass transfer of High Court judges across the country.
Hence there was a perception that the independence of the judiciary was under threat. This resulted in a series of cases over the years.
Evolution: The Judges Cases
First Judges Case (1981) ruled that the “consultation” with the CJI in the matter of appointments must be full and effective.
However, it rejected the idea that the CJI’s opinion, albeit carrying great weight, should have primacy.
Second Judges Case (1993) introduced the Collegium system, holding that “consultation” really meant “concurrence”.
It added that it was not the CJI’s individual opinion, but an institutional opinion formed in consultation with the two senior-most judges in the Supreme Court.
Third Judges Case (1998): On a Presidential Reference for its opinion, the Supreme Court, in the Third Judges Case (1998) expanded the Collegium to a five-member body, comprising the CJI and four of his senior-most colleagues.
Functions of the Collegium
(1) Appointment of CJI
The President of India appoints the CJI and other Supreme Court judges.
The outgoing CJI recommends his successor, and the appointment is typically made based on seniority, following the controversy of the 1970s.
The Union Law Minister forwards the recommendation to the Prime Minister, who then advises the President on the appointment.
(2) Appointment of Other SC Judges
The proposal for appointing other judges to the Supreme Court is initiated by the CJI.
The CJI consults other members of the Collegium, as well as the senior-most judge from the High Court to which the recommended person belongs.
The opinions of the consultees must be recorded in writing and included in the file.
The Collegium sends the recommendation to the Law Minister, who forwards it to the Prime Minister for the President’s advice.
(3) Appointment of High Court Judges
Chief Justices (CJs) of High Courts are appointed based on the policy of having Chief Justices from outside the respective states. The Collegium makes the final decision on their elevation.
The appointment of High Court judges is recommended by a Collegium consisting of the CJI and two senior-most judges.
The Chief Justice of the High Court concerned initiates the proposal in consultation with two senior-most colleagues.
The recommendation is then sent to the Chief Minister, who advises the Governor to forward the proposal to the Union Law Minister.
(4) Transfer Recommendations by the Collegium
The Collegium is also responsible for recommending transfers of Chief Justices and other judges.
Article 222 of the Constitution allows for the transfer of judges from one High Court to another.
When a Chief Justice is transferred, a replacement must be simultaneously appointed for the concerned High Court. An acting Chief Justice can be appointed for a maximum of one month.
In transfer matters, the CJI’s opinion is determinative, and the consent of the judge being transferred is not required.
However, the CJI should consider the views of the Chief Justice of the concerned High Court and one or more Supreme Court judges who are in a position to provide their opinions.
All transfers must be made in the public interest, aiming for the betterment of the administration of justice.
From UPSC perspective, the following things are important :
Prelims level: BBNJ/ High Seas Treaty
Mains level: Read the attached story
Central Idea
The Marine Biodiversity of Areas Beyond National Jurisdiction (BBNJ) or the High Seas Treaty was adopted by the UN on June 19.
It became the third agreement under UNCLOS, following the establishment of the International Seabed Authority (ISB) and the Fish Stocks Agreement (FSA).
BBNJ/ High Seas Treaty
The idea of protecting the marine environment emerged in 2002, leading to the recognition of the need for an agreement in 2008.
In 2015, the UN General Assembly formed a Preparatory Committee to create the treaty.
Intergovernmental conferences (IGC) were held, resulting in the adoption of the treaty in 2023.
The treaty’s objective is to implement international regulations for the protection of marine life beyond national jurisdiction through international cooperation.
Key Provisions of Treaty
(1) Marine Protected Areas:
The treaty establishes marine protected areas to safeguard the oceans from human activities.
Decisions on protected areas require a “three-quarter majority vote” to prevent obstruction by a few parties.
(2) Sharing Benefits from Marine Genetic Resources:
The treaty mandates sharing scientific information and monetary benefits through a “clear house mechanism.”
The mechanism ensures open access to information on marine protected areas, marine genetic resources, and area-based management tools.
(3) Capacity Building and Marine Technology:
The treaty emphasizes capacity building and the use of marine technology for environmental impact assessment.
The Scientific and Technical Body will create standards and guidelines, assisting countries with limited capacity in carrying out assessments.
Challenges and Controversies
(1) Marine Genetic Resources:
The issue of sharing and exchanging information on marine genetic resources was a contentious point during negotiations.
Debates focused on monitoring information sharing and the potential hindrance to bioprospecting research.
(2) Definition and Language:
The use of phrases like “promote” or “ensure” in different parts of the treaty, particularly regarding benefit sharing, sparked heated debates.
(3) Adjacency Issue:
Negotiations were prolonged due to the need for provisions allowing coastal states to exercise sovereign rights over seabed and subsoil in areas beyond their jurisdiction.
The interests of landlocked and distant states further complicated decision-making.
Opposition to the Treaty
Several developed countries opposed the treaty due to their support for private entities involved in advanced research and development of marine technology.
Russia and China also expressed reservations, with Russia ultimately withdrawing during the final stage of consensus building, arguing that the treaty lacks a balance between conservation and sustainability.
Significance of the treaty
(1) Environmental Preservation:
The High Seas Treaty is crucial for protecting marine biodiversity and addressing pressing issues such as overfishing and pollution.
It represents a significant step towards international cooperation in preserving the health and sustainability of our oceans.
(2) Global Cooperation and Research:
The treaty promotes the sharing of scientific information and encourages collaboration among countries.
This will foster research initiatives and facilitate a better understanding of marine ecosystems, leading to more effective conservation measures.
Conclusion
The adoption of the High Seas Treaty marks a significant milestone in international efforts to protect marine biodiversity beyond national jurisdictions.
While challenges and controversies prolonged the negotiation process, the treaty sets the stage for enhanced global cooperation and the implementation of regulations to safeguard our oceans for future generations.
Back2Basics:
International Seabed Authority (ISA)
Fish Stocks Agreement (FSA)
Purpose
Regulate and manage activities in the international seabed and ocean floor beyond national jurisdiction
Ensure the conservation and management of straddling fish stocks and highly migratory fish stocks
Legal Framework
Established by the United Nations Convention on the Law of the Sea (UNCLOS)
International treaty adopted by the United Nations
Established Date
1994
1995
Resource Focus
Non-living resources (seabed minerals) and living resources (deep-sea ecosystems)
Fish stocks (shared resources occurring in EEZs and beyond national jurisdiction)
Cooperation
Emphasizes cooperation among states and establishment of Regional Fisheries Management Organizations (RFMOs)
Promotes cooperation among states for sustainable fisheries management
Conservation
Manages resources for the benefit of humankind as a whole, adhering to the common heritage of mankind principle
Aims to conserve and sustainably manage fish stocks for present and future generations
Licensing
Issues licenses and contracts for seabed mineral exploration and exploitation
N/A (Focuses on the management and conservation of fish stocks)
Data Collection
Promotes scientific research and international cooperation in the deep seabed area
Encourages data collection, reporting, and scientific assessment of fish stocks
Dispute Settlement
Provides mechanisms for dispute settlement and peaceful resolution of conflicts
Includes provisions for dispute settlement and peaceful resolution of conflicts
Membership
Consists of member states and the European Union
Open to states committed to sustainable fisheries management
| Polity | Mains Paper 2: Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Read the attached story
Mains level: Proxy politicians
Central Idea
The Supreme Court of India has stated that the government, rather than the judiciary, should address the issue of men exerting power behind elected women who remain “faceless wives and daughters-in-law” in grassroots politics.
The court’s remarks came in response to a petition filed by an NGO which highlighted the phenomenon of unelected male relatives wielding political influence, undermining the spirit of women’s reservation in Panchayati Raj Institutions (PRIs).
Women in PRIs: Legal Aspects
(a) 73rd Constitutional Amendment Act, 1992:
Mandates 33.3% reservation for women in PRIs across the country.
Recognizes the Gram Sabha as the foundation of the Panchayat Raj System, empowering it to perform functions and exercise powers entrusted by the State Legislatures.
Some states have increased the reservation to 50%, including Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Bihar, etc.
Out of the 30.41 lakh elected representatives in PRIs, 13.74 lakh (45.2%) are women.
(b) Article 15(3) of the Constitution:
Empowers the State to make special provisions for women.
Allows the government to introduce measures to ensure gender equality and promote the interests of women.
(c) Article 243D:
Provides for the reservation of one-third of the total number of seats and offices of Chairpersons in PRIs for women.
The reserved seats and offices are allocated through rotation to different constituencies within a Panchayat.
These reservations for women are in addition to the reservations for Scheduled Castes (SCs) and Scheduled Tribes (STs) in all three tiers of PRIs.
(d) Intersectional Reservations:
The reservation of seats and offices for women in PRIs also falls within the overall reservations for Scheduled Castes (SCs) and Scheduled Tribes (STs) in all three tiers of PRIs.
This provision aims to address the intersecting disadvantages faced by women from marginalized communities.
(e) Proposed 110th Constitution Amendment Bill:
Introduced in the Lok Sabha in 2009 to bring about 50% reservation for women in Panchayats across all states.
The bill aimed to increase the reservation beyond the existing 33.3% mandated by the 73rd Amendment Act.
Despite multiple tabled attempts, the bill was not passed into law.
Proxy Sarpanchs in India
It is generally observed where an elected lady Sarpanch (the head of a Panchayat) delegates their powers and responsibilities to someone else, typically a family member or a trusted individual.
This proxy then acts as a representative or substitute for the Sarpanch in carrying out their duties.
Quite often, this delegation is forcefully acquired from women.
Reasons behind Panchayat Pati syndrome
Gender Inequality: Deep-rooted gender inequalities prevalent in Indian society play a significant role in perpetuating the Panchayat Pati syndrome. Patriarchal norms and cultural beliefs that prioritize male authority and decision-making often restrict women’s agency and participation in public affairs.
Social Norms and Expectations: Traditional gender roles and societal expectations define women’s primary role as homemakers and caretakers. This perception often results in women being considered unfit or inexperienced in matters of governance
Lack of Awareness and Education: Limited access to education and awareness about women’s rights and the importance of their participation in local governance can contribute to the prevalence of Panchayat Pati. Lack of awareness among women themselves, as well as their families and communities, can lead to the perpetuation of discriminatory practices.
Male Domination and Resistance to Change: Male dominance in politics and resistance to gender equality can also contribute to the Panchayat Pati syndrome.
Political Dynamics and Power Struggles: In some cases, male family members or influential community leaders may strategically use the Panchayat Pati practice to retain power and influence. By controlling women’s decision-making, they can ensure their interests are protected and continue to exert control over the local governance processes.
Impact of Panchayat Pati syndrome
1. Economic Impact:
The practice of Panchayat Pati limits the active participation of women in decision-making processes within the panchayat.
This exclusion can hinder the effective utilization of resources and allocation of funds, potentially leading to suboptimal economic outcomes for the community.
Women’s perspectives and needs may not be adequately represented, and projects or initiatives that could benefit women, such as those related to education, healthcare, or livelihood opportunities, may not receive sufficient attention or support.
2. Social Impact:
Panchayat Pati reinforces gender inequalities and perpetuates traditional gender roles within communities.
It hampers women’s ability to exercise agency and engage in community development activities. it diminishes their self-esteem and status within the community.
3. Political Impact:
The practice of Panchayat Pati undermines the principles of democratic representation and participatory governance.
It restricts the political agency of women and denies them the opportunity to actively contribute to decision-making processes.
Women’s perspectives and priorities often differ from those of men, and their exclusion diminishes the diversity of voices and perspectives in local governance. This can lead to policy decisions that may not adequately address the needs and concerns of women and other marginalized groups.
Court’s Response
Not an Executive Authority: The court acknowledged the issue but emphasized that it is not the role of the judiciary to create a spirit of empowerment.
Focus on women empowerment: The court pointed out that preventing influential individuals’ wives from contesting elections is not feasible, and empowering women requires an evolutionary process.
Government’s Responsibility: The court highlighted that the Ministry of Panchayati Raj should address the petitioner’s grievance and explore better mechanisms to implement the objectives of women’s reservation.
Expert Committee and Support Mechanism: The petitioner suggested the formation of an expert committee and the provision of the right support mechanism for women. However, the court deemed this an unrealistic expectation from the judiciary.
Way forward
Engage Men as Allies: Promote male allies in supporting women’s representation in PRIs. Encourage men to actively advocate for gender equality, challenge patriarchal norms, and work towards creating a more inclusive and equitable political environment.
Capacity Building and Leadership Development: Provide training and capacity-building programs for women elected representatives in PRIs.
Political Awareness and Participation: Conduct awareness campaigns to educate women about their rights, the importance of political participation, and the impact of their involvement in PRIs.
Inter-Gender Dialogues: Organize inter-generational dialogues where older leaders and women can exchange knowledge, experiences, and perspectives. This can help bridge the generation gap, promote inter-generational collaboration, and strengthen the collective power of women in PRIs.
Conclusion
It is the responsibility of the executive authority to find suitable solutions and ensure the effective implementation of women’s reservations in panchayat governance.
Mains Mark enhancer: Successful Women Sarpanch in India
Kali Bein Panchayat, Punjab: Kali Bein Panchayat in Punjab gained recognition for its all-women panchayat led by Sarpanch Bibi Jagir Kaur. Under her leadership, the panchayat focused on various development initiatives, including infrastructure development, water conservation, and women empowerment programs.
Mawlynnong, Meghalaya: Mawlynnong, a village in Meghalaya, is known for its clean and well-maintained environment. The village achieved this feat under the leadership of women panchayat leaders who implemented strict cleanliness and waste management measures, making it one of the cleanest villages in Asia.
Devdungri, Rajasthan: Devdungri village in Rajasthan is an exemplary case of women’s leadership in panchayats. Women panchayat members successfully implemented initiatives to address issues such as child marriage, female foeticide, and women’s education. Their efforts resulted in significant positive changes in the community.
From UPSC perspective, the following things are important :
Prelims level: Foreign Direct Investment (FDI)
Mains level: Read the attached story
Central Idea
The Finance Ministry of India emphasized the need to address challenges faced by global investors to facilitate Foreign Direct Investment (FDI) flows.
In this article, we delve into the factors affecting FDI inflows and propose measures to attract and sustain FDI in India.
What is Foreign Direct Investment (FDI)?
FDI refers to the investment made by individuals, companies, or governments from one country into business interests located in another country.
It involves the direct ownership or control of assets in the foreign country, typically in the form of establishing new ventures, acquiring existing businesses, or creating strategic partnerships.
Understanding FDI
Imagine you have a successful toy manufacturing company based in Country A. You have been experiencing steady growth and want to expand your business operations to a new market in Country B. However, entering a foreign market can be challenging due to unfamiliarity with the local business environment, regulations, and market dynamics.
To overcome these challenges, you decide to make a Foreign Direct Investment (FDI) in Country B. Instead of exporting toys from Country A to Country B, you establish a new manufacturing plant or acquire an existing toy company in Country B. By doing so, you gain direct ownership and control over the assets and operations in Country B.
India’s FDI feats
In terms of investor countries of FDI Equity inflow, Singapore is at the top with 27%, followed by the US with 18% and Mauritius with 16% for the FY 2021-22.
‘Computer Software & Hardware’ has emerged as the top recipient sector of FDI Equity inflow during this period with around 25% share followed by Services Sector and Automobile Industry with 12% each.
With53 % Karnataka has received the majority share of FDI equity in the `Computer Software & Hardware’ sector.
FDI in India
Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
Economic liberalisation started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the country.
India, today is a part of top 100-club on Ease of Doing Business (EoDB) and globally ranks number 1 in the Greenfield FDI ranking.
There are two routes by which India gets FDI.
1) Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.
2) Government route: Prior approval by the government is needed via this route. The application needs to be made through Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of FDI application under Approval Route.
India imposes a cap on equity holding by foreign investors in various sectors, current FDI in aviation and insurance sectors is limited to a maximum of 49%.
In 2015 India overtook China and the US as the top destination for the Foreign Direct Investment.
Sectors that come under the ‘100% Automatic Route’ category are
Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under civil aviation sector)
Airports (Greenfield + Brownfield),
Asset Reconstruction Companies,
Auto-components, Automobiles,
Biotechnology (Greenfield),
Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services,
Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development,
Construction of Hospitals,
E-commerce Activities, Electronic Systems,
Food Processing, Gems & Jewellery, Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals & non-metal ores, Other Financial Services,
Sectors that come under up to 100% Automatic Route’ category are–
Infrastructure Company in the Securities Market: 49%
Insurance: up to 49%
Medical Devices: up to 100%
Pension: 49%
Petroleum Refining (By PSUs): 49%
Power Exchanges: 49%
Sectors that come under the ‘up to 100% Government Route’ category are–
Banking & Public sector: 20%
Broadcasting Content Services: 49%
Core Investment Company: 100%
Food Products Retail Trading: 100%
Mining & Minerals separations of titanium bearing minerals and ores: 100%
Multi-Brand Retail Trading: 51%
Print Media (publications/ printing of scientific and technical magazines/ specialty journals/ periodicals and facsimile edition of foreign newspapers): 100%
Print Media (publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news & current affairs): 26%
Satellite (Establishment and operations): 100%
Prohibited Sectors
There are a few industries where FDI is strictly prohibited under any route. These industries are
Atomic Energy Generation
Any Gambling or Betting businesses
Lotteries (online, private, government, etc.)
Investment in Chit Funds
Nidhi Company
Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, Pisciculture, animal husbandry, etc.)
Housing and Real Estate (except townships, commercial projects, etc.)
Trading in TDR’s
Cigars, Cigarettes, or any related tobacco industry
Benefits offered by FDI
Employment generation: FDI boosts the manufacturing and services sector which results in the creation of jobs and helps to reduce unemployment rates in the country.
Economic growth: Increased employment translates to higher incomes and equips the population with more buying powers, boosting the overall economy of a country.
Human capital development: Skills that employees gain through training and experience can boost the education and human capital of a specific country. Through a ripple effect, it can train human resources in other sectors and companies.
Technology boost: The introduction of newer and enhanced technologies results in company’s distribution into the local economy, resulting in enhanced efficiency and effectiveness of the industry.
Increase in exports: Many goods produced by FDI have global markets, not solely domestic consumption. The creation of 100% export oriented units help to assist FDI investors in boosting exports from other countries.
Exchange rate stability: The flow of FDI into a country translates into a continuous flow of foreign exchange, helping a country’s Central Bank maintain a prosperous reserve of foreign exchange which results in stable exchange rates.
Improved Capital Flow: Inflow of capital is particularly beneficial for countries with limited domestic resources, as well as for nations with restricted opportunities to raise funds in global capital markets.
Creation of a Competitive Market: By facilitating the entry of foreign organizations into the domestic marketplace, FDI helps create a competitive environment, as well as break domestic monopolies.
Climate mitigation: The United Nations has also promoted the use of FDI around the globe to help combat climate change
Factors Affecting recent FDI inflows
(1) Inflationary Pressures and Tighter Monetary Policies
The dip in FDI inflows in 2022-23 can be attributed to inflationary pressures and tighter monetary policies.
Policymakers should address these factors to encourage a favorable investment climate.
(2) Geopolitics vs. Geography
The Ministry highlights the influence of “political distance more than geographical distance” on FDI flows.
Geopolitical factors have dominated over traditional geographical considerations.
(3) Global FDI Trends
Gross FDI flows declined by 16% in 2022, compared to the record high of $84.8 billion in 2021-22.
Net inflows experienced a sharper decline of 27.4%.
Similar trends were observed in emerging market economies, where net FDI inflows declined by 36% in 2022.
Challenges for India’s Growth Outlook
(1) External Sector Challenges:
The review identifies the external sector as a potential challenge for India’s growth in 2023-24.
Factors such as geopolitical stress, volatility in global financial systems, price corrections in global stock markets, El-Nino impact, and weak global demand could constrain growth.
Policymakers must closely monitor FDI data and undertake measures to facilitate FDI inflows.
(2) Fragmentation of FDI Flows:
The Ministry highlights the phenomenon of “friend shoring,” wherein FDI is directed towards geopolitically aligned countries.
This has led to a fragmentation of FDI flows globally, as per research from the International Monetary Fund (IMF).
Additionally, inflows from foreign portfolio investors (FPIs) into Indian markets have become less volatile.
Conclusion
To attract and sustain FDI inflows, India needs to address challenges related to inflation, monetary policies, geopolitical factors, and last-mile infrastructure.
Additionally, mitigating trade risks and fostering inclusive growth through job creation will contribute to a favorable investment climate.
From UPSC perspective, the following things are important :
Prelims level: India's major surveys and its findings
Mains level: Issues in India's major surveys, faulty sampling and its consequences for policy making
Central Idea
In India, the accuracy and reliability of data related to poverty, growth, employment, and unemployment are crucial for effective policy formulation. To ensure the well-being of its vast population, it is essential that surveys generating these estimates are conducted regularly, adhering to predetermined schedules, and maintain the highest standards of quality.
*Relevance of the topic*
There is significant gap in the data quality of India’s major surveys such as NSS, NFHS, and PLFS
For Instance, Major surveys conducted post-2011, which utilized the Census 2011 as the sampling frame, have consistently overestimated the proportion of the rural population.
There is need for a comprehensive sampling overhaul to accurately reflect India’s real economy.
The Significance of Sample Surveys
Data for Policy Formulation: Sample surveys, such as the NSS, NFHS, and PLFS, are vital sources of data that policymakers rely on to evaluate the effectiveness of past policies and design new ones.
Identifying Socio-Economic Indicators: Sample surveys provide estimates related to household consumption expenditure, health outcomes, education, employment status, asset ownership, poverty levels, and more. These indicators help policymakers identify areas that require attention and allocate resources accordingly.
Representative Data: Sample surveys through carefully selected samples, they aim to capture the diversity and heterogeneity of different regions, communities, and socio-economic groups.
Monitoring Progress and Development: By conducting surveys at regular intervals, sample surveys facilitate the monitoring of progress and development over time. It helps to identify areas where progress is lagging or where interventions are needed.
Evidence-based Decision-making: Sample surveys provide policymakers with empirical evidence that supports evidence-based decision-making. Instead of relying solely on anecdotal evidence or assumptions, policymakers can access reliable data to understand the impact of policies and make informed choices that are backed by robust statistical analysis.
Transparency and Accountability: Sample surveys promote transparency and accountability in policy-making. The availability of detailed survey methodologies and data allows for scrutiny and peer review, ensuring that the processes and findings are subject to rigorous analysis.
Issues in India’s major surveys
Outdated Sampling Frames: The surveys utilize outdated sampling frames, which means they do not accurately reflect the current population distribution in India. As a result, the surveys may underestimate the proportion of the urban population and overestimate the rural population, leading to biased estimates.
Inadequate Representation: The surveys’ sampling mechanisms are not adapted to rapid changes in India’s population and economy.
Data Quality: While there is a general consensus on the robustness and representativeness of the survey methodology, there is a lack of attention and scrutiny regarding the data quality of these surveys.
Non-Sampling Errors: The response rate in these surveys is not consistent across different wealth levels. This issue can introduce biases in the survey estimates, particularly with regards to the representation of wealthier households.
Underestimation of India’s Progress: In a dynamic economy like India, where there have been significant policy reforms and rapid urbanization, relying on outdated surveys can impede effective policy-making by creating a gap between ground realities and survey estimates.
Consequences of faulty sampling
Biased Estimates: Faulty sampling can introduce biases into survey estimates, leading to inaccurate representations of the target population. Biases can result in misleading findings and hinder effective policy decision-making.
Underrepresentation and Exclusion: Faulty sampling may lead to underrepresentation or exclusion of specific population groups. This can result in neglecting their needs and perspectives, leading to inadequate policy interventions for those marginalized or underrepresented groups.
Lack of Generalizability: Inaccurate or non-representative sampling hampers the generalizability of survey results. When the sample does not accurately reflect the population, it becomes challenging to make valid inferences about the broader population based on the survey findings.
Compromised Data Quality: Faulty sampling undermines the overall quality of the collected data. Sampling errors introduce uncertainty and reduce the precision of estimates, impacting the reliability and trustworthiness of the data.
Misguided Resource Allocation: Biased estimates resulting from faulty sampling can lead to misallocation of resources. If policy decisions are based on inaccurate information, resources may be allocated inefficiently, missing opportunities to address the actual needs of the population.
Erosion of Confidence: Faulty sampling erodes confidence in the survey process and the credibility of the data collected. Stakeholders may question the reliability and integrity of the surveys, leading to decreased trust and potentially hindering the utilization of the data for decision-making.
Way forward: Need for Reforms in Major surveys
Updating Sampling Frames: There is a need for a major sampling overhaul to address outdated sampling frames. Reforms should focus on ensuring that the sampling frames used in surveys like the NSS, NFHS, and PLFS accurately reflect the current population distribution in India.
Improved Survey Mechanisms: There is a necessity of adapting survey mechanisms to rapid changes in the population and economy. Reforms should be aimed at modernizing and streamlining the survey methodologies to better capture the true status of India’s real economy.
Addressing Data Quality Concerns: There is a lack of attention and scrutiny regarding the data quality of the major surveys. Reforms should prioritize enhancing data quality assurance measures throughout the survey process, including data collection, processing, and analysis.
Mitigating Non-Sampling Errors: Non-sampling errors, particularly related to low response rates correlated with wealth levels, need to be addressed. Reforms should focus on understanding and correcting for these errors to ensure more accurate and representative survey estimates.
Accurate Population Projections: Given the rapid pace of change, reforms should aim to improve population projections to align with ground realities. This would involve refining projections based on past trends and incorporating the current pace of urbanization and other demographic shifts.
Conclusion
To ensure effective policy-making and accurate assessments of India’s socioeconomic landscape, it is imperative to address the existing data quality gap. By prioritizing data quality alongside data availability and size, India can better inform policies and bridge the gap between statistical estimates and ground realities, facilitating holistic and inclusive development.
From UPSC perspective, the following things are important :
Prelims level: Currency swap agreements, Rupee Internationalization and its direct and indirect impact on economy
Mains level: Rupee Internationalization, its significance of Indian economy, challenges and learnings from China and reforms
Central Idea
The recent announcement by the Indian government regarding a long-term road map for the internationalization of the rupee holds immense potential for the country’s economic growth. This move aims to revive the rupee’s historical prominence as a widely accepted currency in the Gulf region and strengthen its position in the global foreign exchange market.
*Relevance of the topic*
The Indian government has been consistently focused on promoting the internationalization of the rupee.
India has been exploring the use of the rupee for bilateral trade settlements with its trading partners, for instance amidst Russian oil ban, India explored Rupee-Rubel settlement for oil imports.
China, Russia and a few other countries have become more vocal in questioning the US dollar-dominated global currency system
Historical Context
Indian Rupee as Legal Tender in the Gulf Region: In the 1950s, the Indian rupee held the status of legal tender in several Gulf countries, including the United Arab Emirates, Kuwait, Bahrain, Oman, and Qatar. It was widely used for various transactions, and these Gulf monarchies purchased rupees using the pound sterling.
Introduction of the Gulf Rupee: To tackle challenges related to gold smuggling, the Reserve Bank of India (Amendment) Act was enacted in 1959. This legislation led to the creation of the Gulf Rupee, which was intended for circulation only in the West Asian region. The central bank issued notes specific to the Gulf region, and individuals holding Indian currency were given a six-week window to exchange their rupees for the new Gulf rupee.
Devaluation of Indian Rupee and Transition to Local Currencies: In 1966, India devalued its currency, which eventually had repercussions on the acceptance of the Gulf rupee. The devaluation eroded confidence in the stability of the Indian rupee, prompting some West Asian countries to replace the Gulf rupee with their own sovereign currencies. The introduction of sovereign currencies in the region was driven by both economic factors and concerns about the Indian rupee’s stability.
Impact of Demonetisation: In 2016, the Indian government implemented a demonetisation exercise, which involved invalidating high-value currency notes, including the ₹1,000 and ₹500 denominations. This move aimed to curb black money, corruption, and counterfeit currency. However, it also had an impact on the confidence in the Indian rupee, both domestically and among neighboring countries such as Bhutan and Nepal.
Withdrawal of ₹2,000 Note: In recent times, the decision to withdraw the ₹2,000 note from circulation has further affected confidence in the rupee. This move has led to concerns and uncertainties among the public and businesses, particularly regarding the stability and continuity of currency denominations.
What does it mean by Internationalizing the Indian Rupee?
Internationalizing the Indian Rupee refers to the process of increasing the acceptance, use, and recognition of the Indian rupee as a global currency. It involves making the rupee more widely used and traded in international markets, increasing its convertibility, and promoting its adoption for cross-border transactions, trade settlements, and investment activities
Advantages of internationalization of the rupee
Enhanced Trade and Investment: Internationalization of the rupee can facilitate smoother trade transactions between India and other countries. This can lead to increased bilateral trade, attract foreign investment, and boost economic growth.
Reduced Exchange Rate Risks: Internationalisation reduces exchange rate risks associated with fluctuations in major global currencies. When the rupee becomes more widely accepted and used in international transactions, it reduces the vulnerability of the Indian economy to external currency volatility.
Lower Transaction Costs: Greater international acceptance of the rupee can reduce transaction costs for businesses and individuals engaged in cross-border trade and remittances.
Strengthening Financial Markets: A more internationalized rupee would lead to the development of deeper and more liquid rupee-denominated financial markets. This includes rupee bond markets and derivatives markets. It helps diversify funding sources and provide greater stability and opportunities for investors and businesses.
Reserve Currency Status: The internationalisation of the rupee can potentially lead to its recognition as a reserve currency. Reserve currency status enhances a country’s monetary and financial influence globally and promotes stability in international financial systems.
Boosting India’s Global Standing: Internationalisation of the rupee signals the country’s economic strength, reforms, and openness to international trade and investment. It can improve India’s reputation as an attractive investment destination and strengthen its role in regional and global economic decision-making forums.
The Challenge of International Demand for the rupee
Low Daily Average Share: The daily average share of the rupee in the global foreign exchange market is approximately 1.6%. This indicates that the rupee is not extensively traded or widely used for international transactions compared to currencies like the US dollar or the euro.
Limited International Transactions: Although India has taken steps to promote the internationalisation of the rupee, such as enabling external commercial borrowings in rupees and encouraging trade in rupees with select countries, the volume of such transactions is still limited. For instance, India continues to purchase oil from Russia in dollars, and efforts to settle trade in rupees with Russia have faced challenges.
Capital Account Convertibility Constraints: India imposes significant constraints on capital account convertibility, which refers to the movement of local financial investments into foreign assets and vice versa. These restrictions are in place to mitigate risks of capital flight and exchange rate volatility, given India’s current and capital account deficits. However, they limit the ease of converting rupees into other currencies, reducing international demand.
Lack of Reserve Currency Status: For a currency to be considered a reserve currency, it needs to be fully convertible, readily usable, and available in sufficient quantities. The rupee does not currently enjoy reserve currency status, and its limited convertibility and usage hinder its attractiveness for central banks and international institutions to hold significant amounts of rupees as part of their foreign exchange reserves.
Learning from China’s Experience
Phased Approach: China adopted a phased approach to internationalise the Renminbi (RMB). It initially allowed the use of RMB outside China for current account transactions, such as commercial trade and interest payments, and gradually expanded it to select investment transactions. This gradual approach helped in managing risks and ensuring a smooth transition.
Offshore Markets and Clearing Banks: China established offshore markets, such as the “Dim Sum” bond and offshore RMB bond market, which allowed financial institutions in Hong Kong to issue RMB-denominated bonds. Additionally, China permitted central banks, offshore clearing banks, and offshore participating banks to invest excess RMB in debt securities. These measures enhanced the RMB’s liquidity and facilitated its usage in international transactions.
Currency Swap Agreements: China entered into currency swap agreements with several countries, including Brazil, the United Kingdom, Uzbekistan, and Thailand. These agreements enabled the exchange of equivalent amounts of money in different currencies, facilitating trade and investment transactions in RMB and reducing reliance on other currencies.
Free Trade Zones: China launched the Shanghai Free Trade Zone, which facilitated free trading between non-resident onshore and offshore accounts. This zone provided a platform for international businesses to transact in RMB and boosted the currency’s international usage.
Reserve Currency Status: China’s efforts towards internationalisation of the RMB led to its recognition as a reserve currency. By the second quarter of 2022, the RMB’s share of international reserves reached approximately 2.88%. This status further solidified the RMB’s acceptance and usage in global financial markets.
Way forward: Reforms for Rupee Internationalisation
Full Convertibility: The rupee should be made more freely convertible, with a goal of achieving full convertibility by 2060. This would involve allowing financial investments to move freely between India and abroad, removing significant restrictions on currency exchange and capital flows.
Deeper and More Liquid Rupee Bond Market: The Reserve Bank of India (RBI) should focus on developing a deeper and more liquid rupee bond market. This would enable foreign investors and Indian trade partners to have more investment options in rupees, enhancing the attractiveness and usage of the currency.
Trade Settlement in Rupees: Indian exporters and importers should be encouraged to invoice their transactions in rupees. Optimising the trade settlement formalities for rupee import/export transactions would facilitate greater usage of the rupee in international trade, reducing reliance on foreign currencies.
Currency Swap Agreements: India can establish additional currency swap agreements with trading partners. These agreements would allow India to settle trade and investment transactions in rupees, eliminating the need for reliance on reserve currencies like the US dollar.
Tax Incentives for Foreign Businesses: The government can provide tax incentives to foreign businesses operating in India, encouraging them to utilize the rupee in their operations. This would boost the demand for the rupee and promote its usage in international transactions.
Currency Management Stability: The RBI and the Ministry of Finance should ensure consistent and predictable issuance and retrieval of notes and coins, promoting currency management stability. This stability is crucial for building confidence in the rupee’s value and maintaining trust among market participants.
Exchange Rate Regime Improvement: Improving the exchange rate regime by adopting transparent and market-based mechanisms can enhance the stability and credibility of the rupee’s exchange rate. This would instill confidence among investors and businesses dealing in rupee-denominated transactions.
Higher Profile in International Organizations: Efforts should be made to push for making the rupee an official currency in international organizations. This would raise the profile and acceptability of the rupee globally, contributing to its internationalisation.
Pursuing Expert Committee Recommendations: Recommendations from expert committees, such as the Tarapore Committees, should be pursued. These recommendations include reducing fiscal deficits, lowering gross inflation rates, and addressing banking non-performing assets. Implementing these measures would enhance macroeconomic stability and strengthen the rupee’s attractiveness.
Conclusion
The government’s road map for the internationalisation of the rupee holds immense potential for Indian businesses, financial stability, and the government’s ability to finance deficits. With predictable currency management policies and a phased approach, the rupee’s journey towards internationalisation can contribute to India’s economic growth and strengthen its position in the global economy.
From UPSC perspective, the following things are important :
Prelims level: Biobanks
Mains level: Transformative potential of Bioeconomy, India's potential and leadership capacity for global south
Central Idea
The biotechnology economy, commonly known as the bioeconomy, has experienced significant growth in recent years, driven by advancements in genetic research, healthcare applications, and innovations in food security and bioproduction. However, the responsible collection, storage, and sharing of biological data, particularly in the form of biobanks, necessitate robust governance to ensure equitable access and benefit sharing.
*Relevance of the topic*
India’s participation in healthcare advancements, including vaccine development and deployment, highlights its potential in the bioeconomy.
The pharmaceutical industry, coupled with expertise in medical research, positions India as a global leader in healthcare innovation and the production of drugs and therapies.
Considering its vast populations and challenges in healthcare, personalised healthcare is the need of the hour which makes biobanks is crucial factor for India
What is the biotechnology economy?
The biotechnology economy, also known as the bioeconomy, refers to the sector that encompasses various activities related to biotechnology, genetic research, and the utilization of biological resources for industrial and commercial purposes.
It encompasses the application of biological knowledge, principles, and techniques to develop innovative products, processes, and services in sectors such as healthcare, agriculture, food production, energy, environmental conservation, and more.
The biotechnology economy relies on advancements in genetic engineering, genomics, bioinformatics, and other fields to understand and manipulate biological systems for practical purposes.
It involves the development of new drugs, therapies, and medical treatments, the improvement of agricultural crops and livestock, the production of biofuels and renewable materials, and the creation of sustainable solutions for various industries.
India’s potential in the Bioeconomy
Bioeconomy Market Value: India’s Bioeconomy Report projects a potential market value of US$300 billion for the bioeconomy in India by 2030. This indicates significant growth and economic prospects in the sector.
Biotech Start-up Growth: The number of biotech start-ups in India has witnessed exponential growth, increasing from 50 to over 5,300 in the last ten years. This thriving ecosystem reflects a robust foundation for research, development, and industrial participation in the bioeconomy.
Biobanking Landscape: India currently hosts 19 registered biobanks out of a total of 340 global biobanks. This infrastructure plays a crucial role in the collection, preservation, and sharing of biological data for research and development purposes.
Significance of biobanks for India
Medical Research and Advancements: Biobanks store biological samples, such as blood, tissue, and DNA, along with associated health information. These samples and data enable researchers to study diseases, understand genetic factors, identify biomarkers, and develop new diagnostic tools and therapies.
Disease Understanding and Treatment: By collecting samples and health information from individuals with specific diseases or genetic conditions, biobanks facilitate research on disease etiology, progression, and treatment options.
Precision Medicine and Personalized Healthcare: By analyzing genetic and molecular data stored in biobanks, researchers can identify individual variations and develop tailored treatment approaches based on a person’s unique genetic makeup.
Public Health and Epidemiology: By analyzing large-scale data sets from biobanks, researchers can identify risk factors, understand disease prevalence, monitor disease trends, and develop strategies for disease prevention and public health interventions.
Drug Development and Clinical Trials: Biobanks play a crucial role in drug development and clinical trials. They provide researchers and pharmaceutical companies with access to well-characterized biological samples and associated health data, which are essential for evaluating drug efficacy, safety, and side effects.
Inequitable Data Collection and Benefit Deployment
Global South Underrepresentation: The the majority of biobanks are housed in North America and Europe, covering about 95 percent of the biobanks globally. In contrast, the Global South, including India, only hosts approximately 5 percent of the world’s biobanks. This underrepresentation limits the Global South’s participation in health research and the deployment of health initiatives.
Research Bias: Due to the concentration of biobanks in the Global North, there is a bias in research and funding, focusing on genetic conditions and diseases that are prevalent in those regions. This bias hamper research on health challenges specific to the Global South, limiting the relevance and applicability of the findings to the populations in these regions.
Dissonance in Results: There is a dissonance in using samples from the Global South to cater to health requirements primarily in the Global North. This dissonance implies that research outcomes derived from data collected in the Global South may not adequately address the healthcare needs and challenges faced by the populations in that region.
Lack of Equitable Benefit Sharing: The lack of explicit return on results policies leads to inadequate sharing of benefits derived from the data collected in the Global South. The benefits and outcomes of research conducted using biobank data from the Global South are not shared equitably among the countries and populations from which the data originated.
Inequities During the Pandemic: The article cites an example of inequity during the COVID-19 pandemic, where the capacity of Afrigen, a biotech firm responsible for vaccine production in Cape Town, was limited due to the desire of private sector participants like Moderna and Pfizer to preserve their knowledge. This resulted in Africa’s reliance on global vaccine manufacturing, with only 1 percent of vaccines consumed on the continent being manufactured within Africa.
India’s contributions and leadership in the bioeconomy
Healthcare and Vaccine Development: India has actively contributed to healthcare and vaccine development. The country has been involved in SARS-CoV-2 vaccine development, deployment, and diplomacy. Its expertise and participation have played a crucial role in addressing global health challenges.
Global South Representation: India’s involvement in advocating for global South representation in biobanking governance and global platforms demonstrates its commitment to addressing inequities. India’s leadership contributes to fostering collaboration, trust, and fair participation among countries in the Global South.
Multilateral Engagement: India’s association with the Quadrilateral Alliance and its G20 presidency provide platforms for global diplomacy and collaboration. These engagements enable India to advocate for global governance structures and mechanisms that promote equitable access, benefit sharing, and funding in the bioeconomy.
National Guidelines and Best Practices: India has established guidelines and best practices for biobanking, ethical data storage, sharing, and benefit distribution. The Department of Biotechnology and the Ministry of Science and Technology have played key roles in formulating these guidelines, ensuring responsible practices in the bioeconomy.
Exporting Health Information and Data: India has a history of exporting health information and data, which positions it as a contributor to global health initiatives. Leveraging its experience, India can emphasize the prioritization of diseases relevant to the Global South, prevent biopiracy, and establish rules for benefit sharing to benefit countries in these regions.
Global Diplomacy and Platforms: India’s involvement in global platforms, such as the G20 presidency, has enabled it to expand its national regulations and contribute to the establishment of a global governance structure for biobanking and data sharing. This allows India to advocate for relief from trust issues, mechanisms for benefit sharing, and incentives for funding in the Global South.
Way forward: Addressing Inequities through Global Governance
Global South Representation: There is a need for greater representation of the Global South in global governance structures. This ensures that the specific requirements and perspectives of the Global South are considered in decision-making processes and policies.
Global Guidelines for Biobanking: There is need of the formulation of global guidelines for biobanking to establish standards and best practices. These guidelines would address ethical data collection, storage, sharing, and benefit distribution, taking into account the specific needs and concerns of the Global South.
Equitable Benefit Sharing: It is important to explicit return on results policies to ensure equitable benefit sharing. These policies would ensure that the benefits derived from data collected in the Global South are shared back with the countries and populations from which the data originated.
Collaboration and Knowledge Exchange: Global governance in the bioeconomy should foster collaboration, knowledge exchange, and technology transfer between countries and regions. This collaboration helps address disparities, build trust, and promote capacity-building efforts in the Global South.
Addressing Obstacles and Barriers: Global governance should address obstacles and barriers to data hosting, collection, and sharing in the Global South. This may include financial constraints, technological limitations, and infrastructure gaps that hinder effective participation and contribution.
Private Sector Engagement: It is essential to define the role of the private sector in research and emergencies. Global governance should encourage responsible and ethical private sector engagement, fostering investment, innovation, and knowledge sharing in the Global South.
Conclusion
The promotion of equitable governance in biobanking is crucial for advancing scientific research, ensuring equitable healthcare, and addressing the unique healthcare challenges faced by the global South. The time is ripe for India to champion this cause and drive transformative change in the field of biobanking on a global scale.
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: India's demography: opportunity or disaster, challenges and priorities
Central Idea
India’s greatest strength lies in its vast manpower. In the coming 25 years, the country has the potential to experience a golden era, provided it effectively utilizes its favorable demographic composition.
Relevance of the topic
The current population of India is 1,420,681,800, based on Worldometer elaboration of the latest United Nations data.
The growth is driven by India’s large, dynamic and young population, with 65% of Indians being under 35 years old.
However, one of the greatest challenges facing young India’s is unemployment. This raises core question is this an opportunity or demographic disaster
There is a need to create opportunities for the existing labour force and the new entrants into the labour market by improving their productivity.
India’s Demographic Advantage
Young Workforce: India’s average age of 29 years, compared to countries like the US (38), China (38), France (42), Germany (45), and Japan (48), highlights its advantage of having a younger population, which can contribute to economic growth and productivity.
Favorable Dependency Ratio: The projected old-age dependency ratios indicate India’s advantage in terms of a smaller proportion of the population requiring support from the working-age population. For instance, while India’s projected old-age dependency ratio is 37% in 2075, France is projected to have 55.8%, Japan 75.3%, the US 49.3%, the UK 53%, and Germany 63.1%.
Rising Working-Age Population: India is currently in a phase where its working-age population is increasing, presenting a potential workforce that can drive economic growth and development for several decades.
Potential for Labor Supply: With its large population and a growing workforce, India has the potential to become a significant source of labor supply for the rest of the world. This can attract investment and outsourcing opportunities, further boosting economic growth.
Abundant Human Capital: India possesses a vast pool of educated and skilled individuals, which contributes to its human capital advantage. This workforce can drive innovation, productivity, and economic competitiveness across various sectors.
Consumer Market: India’s large population provides a substantial domestic consumer market, offering significant opportunities for businesses to cater to the needs and demands of a vast consumer base, driving economic activity.
Innovation and Entrepreneurship: The young and dynamic population in India fosters a culture of innovation and entrepreneurship, contributing to the development of new industries, technologies, and solutions, creating employment opportunities and driving economic progress.
Potential for Economic Growth: By effectively utilizing its demographic advantage, India has the potential to achieve higher rates of economic growth and improve its standard of living.
Global Competitiveness: A young and skilled labor force enhances India’s competitiveness in the global market, attracting foreign investment, promoting export-oriented industries, and positioning India as a preferred business and investment destination.
Demographic Dividend: India’s favorable demographic composition presents the opportunity to unlock the demographic dividend, leading to accelerated economic growth and development through investments in education, skill development, healthcare, and employment opportunities.
Lessons learned from Asian success stories accordingly
Harnessing the Demographic Dividend: Asian countries like China, Japan, South Korea, Malaysia, and Singapore have effectively utilized their favorable demographics to drive economic growth and development. India, with its young workforce, can learn from these examples and focus on maximizing the potential of its demographic dividend.
Focus on Labor-Intensive Manufacturing: Asian success stories have demonstrated the importance of capitalizing on labor-intensive manufacturing sectors to create employment opportunities. India can prioritize these sectors, such as textiles, toys, footwear, auto components, and agricultural processing, to leverage its abundant labor force.
Structural Transformations: Asian nations have undergone structural transformations by transitioning from labor-intensive industries to more advanced sectors. India can learn from these examples and emphasize technological advancements, innovation, and high-value manufacturing to sustain economic growth and enhance competitiveness.
Investment in Infrastructure: Developing robust infrastructure is crucial for economic growth. Asian countries have recognized the significance of infrastructure development in reducing trade and transaction costs, improving connectivity, and attracting investments. India should focus on infrastructure development to support its economic growth objectives.
Trade and Investment Facilitation: Asian success stories have implemented trade facilitation measures and pursued policies to attract foreign direct investment. India can learn from these experiences by adopting measures to facilitate trade, improve ease of doing business, and create a favorable investment climate.
Support for MSMEs: Micro, Small, and Medium Enterprises (MSMEs) play a pivotal role in the manufacturing sector. Asian countries have provided support to MSMEs to enhance their competitiveness, scale, and integration into global supply chains. India can prioritize support for MSMEs to drive manufacturing growth and job creation.
Emphasis on Skill Development: Asian success stories have recognized the importance of skill development in enhancing labor force productivity. India should invest in skilling initiatives, re-skilling, and up-skilling programs to improve employability and align the workforce with evolving industry demands.
Quality Education and Healthcare: Asian nations have prioritized investments in quality education and healthcare. India can learn from these examples by focusing on improving access to quality education and healthcare services, which will contribute to a skilled workforce and a healthy labor force.
Government Reforms and Policies: Asian success stories have been supported by proactive government reforms and policies. India should implement favorable policies related to labor laws, taxation, ease of doing business, and intellectual property rights to create an enabling environment for economic growth and entrepreneurship.
Long-term Vision and Implementation: Asian countries that have achieved sustained success have demonstrated long-term vision and commitment to implementing policies and reforms. India should adopt a similar approach by formulating long-term strategies and ensuring consistent implementation to drive sustainable economic growth.
What India needs to capitalize on its demographic dividend?
Skilling and Education: India needs to focus on skill development programs such as the Jan Shikshan Sansthan, the Pradhan Mantri Kaushal Vikas Yojana, and the National Apprenticeship Promotion Scheme. These programs have shown success in increasing human resource supply in various sectors. However, efforts should be made to upscale and improve the skills of the labor force, especially in the unorganized sector where underpaid jobs prevail.
Job Creation and Employment Opportunities: India should prioritize sectors with high labor intensity, such as textiles, toys, footwear, auto components, sports goods, agricultural processing, restaurants, hotels, mining, construction, healthcare, and caregiving services. These sectors have significant potential for employment generation. Additionally, the focus should be on infrastructure development to reduce trade and transaction costs and create an environment conducive to doing business.
Industry and Infrastructure Development: India should accelerate infrastructure development to support economic growth and enhance competitiveness. This includes investment in transportation, energy, digital connectivity, and other critical infrastructure sectors.
Ease of Doing Business: To attract investments and promote entrepreneurship, India should continue its efforts to improve the ease of doing business by simplifying regulatory processes, reducing bureaucratic hurdles, and enhancing transparency.
Social Security and Healthcare: India should work towards improving access to quality healthcare services and implementing robust social security programs. Measures like the Ayushman Bharat and Pradhan Mantri Bhartiya Janaushadhi Pariyojana mentioned in the article can help in achieving these goals.
Government Reforms and Policies: Implementing favorable labor laws, rationalizing taxation systems, and providing policy stability are essential for creating an enabling environment for economic growth. There is importance of reforms such as the National Education Policy 2020, which aims to update knowledge and ensure productive employment opportunities.
Way Forward: Priority areas
Improving Education Quality:
India should prioritize the implementation of the National Education Policy 2020, which emphasizes knowledge updating and aims to provide inclusive, equitable, and quality education at all levels.
Steps should be taken to address challenges such as non-functional schools, resistance to change, and inadequate resources.
Providing access to quality education up to higher secondary levels for all is essential to create a productive labor force.
Ensuring Quality Healthcare:
The government should continue implementing initiatives like Ayushman Bharat and the Pradhan Mantri Bhartiya Janaushadhi Pariyojana to improve healthcare equity.
Efforts should be made to make drug prices affordable and accessible, and steps should be taken to ensure financial medical protection, such as universal insurance and adequate medical infrastructure.
Quality health infrastructure for all will contribute to a healthy and productive labor force.
Accelerating Reforms for Future Success:
India should accelerate the implementation of reforms and flagship programs to unlock its demographic dividend and drive economic growth.
Streamlining bureaucratic processes, improving ease of doing business, and creating an investor-friendly environment are essential to attract investments and foster entrepreneurship.
Additionally, continued infrastructure development, trade facilitation measures, and reforms in labor laws and taxation systems will support the growth of industries and enhance India’s competitiveness in the global market.
Conclusion
India’s demographic dividend offers a unique opportunity for growth and development in the coming years. By prioritizing skill development, creating employment opportunities, enhancing productivity, ensuring access to quality healthcare and education, and implementing crucial reforms, India can fully harness its demographic advantage. The nation has the potential to become a global labor force supplier and secure a prosperous future.
From UPSC perspective, the following things are important :
Prelims level: Digital Personal Data Protection Bill
Mains level: Digital Personal Data Protection Bill, 2022, significance, concerns and its implications
Central Idea
Nearly six years after the Supreme Court recognized privacy as a fundamental right, the Indian government has taken a significant step towards safeguarding personal data with the Digital Personal Data Protection Bill, 2022. This legislation, expected to be tabled in the upcoming Monsoon Session of Parliament, aims to address concerns regarding data protection, while considering the country’s trade negotiations with international partners.
*Relevance of the topic*
Today India has more than 800 million internet users and it is expected to increase by 45% in the next five years to 900 million in 2025
Given the dynamic nature of the online sphere, privacy concerns and issues are rapidly changing.
Need for robust data protection policy and its implications on citizens
Significance of Privacy Law/Data Protection Bill, 2022
Filling the Legislative Gap: The proposed bill aims to fill the legislative gap in India regarding the protection of personal data. By enacting a comprehensive privacy law, it will provide a dedicated legal framework for the collection, storage, processing, and transfer of personal data, addressing concerns that were previously unregulated.
Strengthening Data Protection: The bill seeks to strengthen data protection measures by placing obligations on entities, referred to as data fiduciaries, to maintain the accuracy and security of personal data. It also emphasizes the importance of deleting data once its purpose has been fulfilled, promoting responsible data management practices.
Trade Negotiations and Global Alignment: The bill’s enactment holds significance in India’s trade negotiations, particularly with regions like the European Union. Implementing a robust privacy law aligns India with international data protection standards, such as the GDPR, which can facilitate smoother data transfers and trade relations with countries that prioritize privacy.
Consumer Trust and Confidence: Establishing a privacy law builds consumer trust and confidence in the digital ecosystem. It assures individuals that their personal data will be protected, thereby encouraging greater participation in digital transactions, e-commerce, and other online activities. Increased trust contributes to the growth of the digital economy.
Accountability and Remedies: The bill includes provisions for accountability and remedies in case of privacy breaches. It empowers individuals to seek legal remedies and file complaints against entities that violate the privacy provisions. This promotes a culture of accountability among organizations and strengthens individuals’ rights.
Harmonizing Data Protection and National Interests: The proposed bill aims to strike a balance between data protection and national interests. While safeguarding privacy rights, it also provides exemptions for the central government and its agencies on grounds of national security, foreign relations, and public order, ensuring that legitimate national interests are taken into account
Concerns Surrounding the Draft Bill
Wide-ranging Exemptions: One of the major concerns is the inclusion of wide-ranging exemptions for the central government and its agencies. These exemptions allow the government to bypass certain provisions of the bill based on reasons such as national security, relations with foreign governments, and maintenance of public order. Critics argue that these exemptions could potentially undermine privacy protections and weaken the scope of the law.
Dilution of the Data Protection Board: The role of the data protection board, which serves as an adjudicatory body for privacy-related disputes, is perceived to be diluted in the draft bill. The control of the central government in appointing board members and determining the terms and conditions of their service raises concerns about the independence and effectiveness of the board.
Potential Impact on the Right to Information (RTI) Act: There are concerns that the draft bill could have implications for the Right to Information (RTI) Act. The protection of personal data of government functionaries under the privacy law could make it more challenging for information to be shared with RTI applicants, potentially affecting transparency and accountability
How does India’s proposal compare with other countries?
European Union (EU) Model: The EU’s General Data Protection Regulation (GDPR) is a comprehensive data protection law that sets high standards for the processing and protection of personal data. The GDPR is known for its stringent requirements and extensive obligations on organizations handling personal data. India’s proposed bill aims to align with international standards, including those set by the GDPR, to facilitate data transfers and trade relations with the EU.
United States Model: Privacy protection in the United States is primarily based on sectoral laws and regulations. The focus is on safeguarding individual liberties, with an emphasis on protection from government intrusion. The US approach allows data collection as long as individuals are informed about it. In comparison, India’s proposed bill takes a more comprehensive approach, covering various aspects of data protection and placing obligations on both government and private entities.
China Model: China has recently implemented new data privacy and security laws, including the Personal Information Protection Law (PIPL) and the Data Security Law (DSL). These laws grant individuals new rights over their personal data and impose restrictions on cross-border data transfers. While the specific provisions of India’s proposed bill may differ, both India and China aim to enhance data protection and privacy in the face of increasing digitalization.
Global Adoption: According to the United Nations Conference on Trade and Development (UNCTAD), the majority of countries globally have established data protection and privacy laws. Africa and Asia have shown significant adoption rates, with countries in these regions implementing their own privacy frameworks. It is worth noting that the level of adoption and the specifics of these laws may vary across countries.
Implications of the bill on Citizens
Positive implications
Enhanced Privacy Protection: The bill would provide individuals with greater control over their personal data and reduce the risk of unauthorized access or misuse.
Strengthened Data Security: Stricter requirements for data fiduciaries to implement security measures can help safeguard sensitive data, enhancing trust and confidence in digital transactions.
Increased Accountability and Remedies: The bill empowers citizens by providing them with avenues to address privacy violations, ensuring that their rights are protected and promoting a culture of accountability among data handlers.
Potential Negative Implications:
Exemptions for Government Agencies: Concerns about the government’s access to and use of personal data, leading to potential privacy risks and diminished transparency.
Weakened Role of the Data Protection Board: The perceived dilution of the data protection board’s role, particularly in terms of its independence and control by the central government may result in a lack of impartial adjudication and hinder citizens’ ability to seek redress for privacy violations.
Potential Impact on Right to Information (RTI) Act: If personal data is shielded under the privacy law, it may restrict access to information by RTI applicants, potentially affecting transparency and accountability in the public sphere.
What changes are likely in the final version?
Cross-border Data Flows: A key change in the final draft is a shift from a ‘whitelisting’ approach to a ‘blacklisting’ mechanism regarding cross-border data flows. This means that data transfers will be allowed to most jurisdictions by default, except for those specified in a ‘negative list’ of countries where transfers would be prohibited.
Stricter “Deemed Consent” Provision: The provision on “deemed consent” may be reworded to impose stricter requirements on private entities while allowing government departments to assume consent for processing personal data on grounds of national security and public interest. This change aims to strengthen privacy protections for individuals.
Clarification of Penalties: The final version of the bill is expected to provide clarity on penalties for data breaches. It is reported that the highest penalty for failing to prevent a data breach could be prescribed at Rs 250 crore per instance. The interpretation of “per instance” would be determined by the data protection board on a case-by-case basis.
Way forward
Stakeholder Consultation: Engage with privacy experts, industry representatives, and civil society organizations for comprehensive input and diverse perspectives.
Strengthen Privacy Safeguards: Minimize exemptions for government agencies, ensure an independent and effective data protection board, and clarify provisions on data breaches and penalties.
Transparency and Accountability: Establish clear guidelines for data fiduciaries, conduct regular audits, and provide accessible mechanisms for citizens to file complaints and seek redress.
Awareness and Education: Launch public awareness campaigns, privacy literacy programs, and collaborate with educational institutions to empower individuals with knowledge about their privacy rights.
International Cooperation: Align standards with international frameworks, collaborate on data transfer mechanisms, and actively participate in global privacy discussions and forums.
Continuous Review and Adaptation: Incorporate provisions for regular review and updates to address emerging privacy challenges and technological advancements.
Conclusion
As India prepares to introduce the Digital Personal Data Protection Bill, 2022, it marks a significant milestone in protecting individuals’ privacy rights and regulating data practices. However, concerns regarding exemptions for government agencies and the potential impact on the RTI Act need to be carefully addressed. By striking a balance between privacy protection and national interests, India can establish a robust framework that promotes data-driven innovation, fosters international trade relations, and ensures individuals’ control over their personal data
From UPSC perspective, the following things are important :
Prelims level: Kanwar Yatra
Mains level: NA
Central Idea: The Kanwar Yatra, a significant annual pilgrimage, commenced on July 4 and will continue until July 15.
What is Kanwar Yatra?
This pilgrimage sees millions of devotees, known as Kanwariyas or Kriyas, undertaking a journey to collect water from the Ganga River and offer it to Lord Shiva.
The Kanwar Yatra symbolizes the unbreakable bond between devotees and Lord Shiva and is considered an act of faith and devotion.
Mythological Origins of Kanwar Yatra
Samudra Manthan: Kanwar Yatra is believed to have originated from the mythological story of Samudra Manthan, where Lord Shiva consumed poison to save the world. To alleviate the effects of the poison, all the gods poured water from the Ganga River on Lord Shiva.
King Rama’s Offering: Another version suggests that the ritual of Kanwar Yatra began when King Ram offered water from the Ganga to a statue of Lord Shiva (shivalinga) in an earthen pot.
Customs and Rituals Performed
Collection of Ganga Water: Devotees, dressed in saffron attire, embark on foot to collect water from the Ganga River at Haridwar, Gomukh, and Gangotri. They carry two earthen pots filled with water, hung on a decorated bamboo stick, which they balance on their shoulders.
Significance of Purity: Devotees consider it essential to keep the pots from touching the ground or getting contaminated by dust, as it may impure the sacred water.
Challenging Journey: Kanwariyas undertake the yatra barefoot, covering long distances in challenging terrains and extreme weather conditions.
