Note4Students
From UPSC perspective, the following things are important :
Prelims level: IMF
Mains level: Pakistan economic crisis, Debt trap
The latest IMF press release maintains it would consider an extension of the current Extended Fund Facility (EFF) to end June 2023 and augment the fund amount to $7 billion for Pakistan.
Pakistan seeks IMF bailout
- Surprisingly, it took five months to reach the staff-level agreement.
- The total disbursement under the current EFF to Pakistan has now been $4.2 billion.
- The talks were originally aimed at releasing a tranche of $900 million.
What is Extended Fund Facility (EFF)?
- The EFF was established by the IMF to provide assistance to countries experiencing serious payment imbalances because of structural impediments or slow growth and an inherently weak balance-of-payments position.
- An EFF provides support for comprehensive programs including the policies needed to correct structural imbalances over an extended period.
What was the Pakistani EFF?
- The 39-month EFF between the two was signed in July 2019 to provide funds amounting to Self-Drawing Rights (SDR) — $4,268 million.
- The EFF was signed by Pakistan to address the medium-term balance of payment problem, and work on structural impediments and increase per capita income.
Why did the talks take longer to conclude?
- The IMF placed demands (all of which seem impossible for Pakistan) includes :
- Fiscal consolidation to reduce debt and build resilience
- Market-determined exchange rate to restore competitiveness
- Eliminate ‘quasi-fiscal’ losses in the energy sector and
- Strengthened institutions with transparency
- Ousted Pakistani PM eased fuel prices. This was considered a major deviation under the EFF benchmarks.
- Then govt gave tax amnesties to the industrial sector, impacted the tax regime and a structural benchmark for fiscal consolidation.
- The IMF insisted on its demands before approving any release of the tranche.
How important is the IMF support to Pakistan?
- Pakistan’s economic situation is dire.
- According to the Economic Survey of Pakistan 2022, the fiscal deficit in FY 22 was $18.6 billion, and the net public debt at $252 billion, which is 66.3% of the GDP.
- The power sector’s circular debt is $14 billion.
Why have the Pakistan-IMF relations remained complicated?
- Structural reforms require long-term commitment, which have been sacrificed due to Pakistan’s short-sighted political goals.
- Hence the urge to go to the IMF for fiscal stability has been repeated over time.
Risks posed by a failed Pakistan
- There is also a narrative that Pakistan has the fifth largest population with nuclear weapons that cannot be allowed to fail.
- A section within Pakistan also places the geo-strategic location of the country would provide an edge for cooperation, rather than coercion.
- Hence, this section believes, the IMF would continue to support.
- Given the IMF’s increased assertion, Pakistan’s political calculations and the elections ahead, the relationship between the two is likely to remain complicated.
What lies ahead for Pakistan and the IMF?
- Despite the latest agreement, the road ahead for the IMF and Pakistan is not an easy one.
- Political calculations and the elections ahead will play a role in Pakistan’s economic decision-making.
- However, one thing is eminent Pakistan will certainly collapse someday badly like Sri Lanka.
Try this PYQ from CSP 2022
“Rapid Financing Instrument” and “Rapid Credit Facility” are related to the provisions of lending by which one of the following?
(a) Asian Development Bank
(b) International Monetary fund
(c) United National Environment Programme Finance initiative
(d) Word bank
Post your answer here.
Back2Basics: Special Drawing Rights (SDRs)
- SDRs, created by the IMF in 1969, are an international reserve asset and are meant to supplement countries’ reserves.
- Adding SDRs to the country’s international reserves makes it more financially resilient.
- Providing liquidity support to developing and low-income countries allows them to tide over the balance of payments (BOP) situations like the one India has been experiencing due to the pandemic and the one it faced earlier in 1991.
- SDRs being one of the components of foreign exchange reserves (FER) of a country, an increase in its holdings is reflected in the BOP.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Religious and linguistic minorities
Mains level: Not Much
The minority status of religious and linguistic communities is “State-dependent”, said the Supreme Court.
What did the Supreme Court say?
- Every person in India can be a minority in one State or the other.
- One can be a minority outside his/her State.
- Similarly, a Kannada-speaking person may be in minority in States other than Karnataka.
What was the petition about?
- The court was hearing a petition complaining that followers of Judaism, Bahaism and Hinduism are the real minorities in Ladakh, Mizoram, Lakshadweep, Kashmir, Punjab and the North-East States.
- However, they cannot establish and administer educational institutions of their choice because of the non-identification of ‘minority’ at the State level.
- Religious communities such as Hindus here are socially, economically, politically non-dominant and numerically inferior in several States.
Various states on Minorities
- The Centre gave the example of how Maharashtra notified ‘Jews’ as a minority community within the State.
- Again, Karnataka notified Urdu, Telugu, Tamil, Malayalam, Marathi, Tulu, Lambadi, Hindi, Konkani and Gujarati as minority languages within the State.
Who are the Minorities?
- Muslims, Sikhs, Christians, Buddhists, Jain and Zoroastrians (Parsis) have been notified as minority communities under Section 2 (c) of the National Commission for Minorities Act, 1992.
- As per the Census 2011, the percentage of minorities in the country is about 19.3% of the total population of the country.
- The population of Muslims are 14.2%; Christians 2.3%; Sikhs 1.7%, Buddhists 0.7%, Jain 0.4% and Parsis 0.006%.
- Minority Concentration Districts (MCD), Minority Concentration Blocks and Minority Concentration Towns, have been identified on the basis of both population data and backwardness parameters of Census 2001 of these areas.
Defining Minorities
- The Constitution recognizes Religious minorities in India and Linguistic minorities in India through Article 29 and Article 30.
- But Minority is not defined in the Constitution.
- Currently, the Linguistic minorities in India are identified on a state-wise basis thus determined by the state government whereas Religious minorities in India are determined by the Central Government.
- The Parliament has the legislative powers and the Centre has the executive competence to notify a community as a minority under Section 2(c) of the National Commission for Minorities Act of 1992.
Article 29: It provides that any section of the citizens residing in any part of India having a distinct language, script, or culture of its own, shall have the rights of minorities in India to conserve the same. Article 29 is applied to both minorities (religious minorities in India and Linguistic minorities in India) and also the majority. It also includes – rights of minorities in India to agitate for the protection of language.
Article 30: All minorities shall have the rights of minorities in India to establish and administer educational institutions of their choice. Article 30 recognizes only Religious minorities in India and Linguistic minorities in India (not the majority). It includes the rights of minorities in India to impart education to their children in their own language.
Article 350-B: Originally, the Constitution of India did not make any provision with respect to the Special Officer for Linguistic minorities in India. However, the 7th Constitutional Amendment Act, 1956 inserted Article 350-B in the Constitution. It provides for a Special Officer for Linguistic Minorities appointed by the President of India. It would be the duty of the Special Officer to investigate all matters relating to the safeguards provided for linguistic minorities under the Constitution.
Try this PYQ:
Which one of the following categories of Fundamental Rights incorporates protection against untouchability as a form of discrimination?
(a) Right against Exploitation
(b) Right to Freedom
(c) Right to Constitutional Remedies
(d) Right to Equality
Post your answers here.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MSP system, Crop Seasons in India
Mains level: Legal backing for MSP
The Centre has finally constituted a committee headed by former Union Agriculture Secretary Sanjay Agrawal here to look into the issues of Minimum Support Price (MSP), as promised to protestant farmers after the repeal of three farm laws.
Panel on MSP: Terms of reference
- The panel will consist of representatives of the Central and State governments, farmers, agricultural scientists and agricultural economists.
- This panel will be constituted:
- To promote zero budget-based farming,
- To change crop patterns keeping in mind the changing needs of the country
- To make MSP more effective and transparent
- It also says that the committee will discuss methods to strengthen the Agricultural Marketing System as per the changing requirements of the country
- It would ensure higher value to the farmers through remunerative prices of their produce by taking advantage of the domestic output and export.
- On natural farming, the committee will make suggestions for programs and schemes for value chain development, protocol validation, and research for future needs.
- It would support area expansion under the Indian Natural Farming System through publicity and through the involvement and contribution of farmer organizations.
What is MSP?
- The MSP assures the farmers of a fixed price for their crops, well above their production costs.
- MSP, by contrast, is devoid of any legal backing. Access to it, unlike subsidized grains through the PDS, isn’t an entitlement for farmers.
- They cannot demand it as a matter of right. It is only a government policy that is part of administrative decision-making.
- The Centre currently fixes MSPs for 23 farm commodities based on the Commission for Agricultural Costs and Prices (CACP) recommendations.
Fixing of MSPs
- The CACP considered various factors while recommending the MSP for a commodity, including the cost of cultivation.
- It also takes into account the supply and demand situation for the commodity; market price trends (domestic and global) and parity vis-à-vis other crops; and implications for consumers (inflation), environment (soil and water use) and terms of trade between agriculture and non-agriculture sectors.
What changed with the 2018 budget?
- The Budget for 2018-19 announced that MSPs would henceforth be fixed at 1.5 times of the production costs for crops as a “pre-determined principle”.
- Simply put, the CACP’s job now was only to estimate production costs for a season and recommend the MSPs by applying the 1.5-times formula.
How was this production cost arrived at?
- The CACP projects three kinds of production cost for every crop, both at the state and all-India average levels.
- ‘A2’ covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labor, leased-in land, fuel, irrigation, etc.
- ‘A2+FL’ includes A2 plus an imputed value of unpaid family labor.
- ‘C2’ is a more comprehensive cost that factors in rentals and interest forgone on owned land and fixed capital assets, on top of A2+FL.
How much produce can the government procure at MSP?
- The MSP value of the total production of the 23 crops worked out to around Rs 10.78 lakh crore in 2019-20.
- Not all this produce, however, is marketed. Farmers retain part of it for self-consumption, the seed for the next season’s sowing, and also for feeding their animals.
- The marketed surplus ratio for different crops is estimated to range differently for various crops.
- It ranges from below 50% for ragi and 65-70% for bajra (pearl millet) and jawar (sorghum) to 75% for wheat, 80% for paddy, 85% for sugarcane, 90% for most pulses, and 95%-plus for cotton, soybean, etc.
- Taking an average of 75% would yield a number of just over Rs 8 lakh crore.
- This is the MSP value of production that is the marketable surplus — which farmers actually sell.
Nature of MSP
- There is currently no statutory backing for these prices, nor any law mandating their enforcement.
Farmers demand legalization
- Legal entitlement: There is a demand that MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce.
- Private traders’ responsibility: Some says that most of the cost should be borne by private traders, noting that both middlemen and corporate giants are buying commodities at low rates from farmers.
- Mandatory purchase at MSP: A left-affiliated farm union has suggested a law that simply stipulates that no one — neither the Government nor private players — will be allowed to buy at a rate lower than MSP.
- Surplus payment by the govt.: Other unions have said that if private buyers fail to purchase their crops, the Government must be prepared to buy out the entire surplus at MSP rates.
- Expansion of C2: Farm unions are demanding that C2 must also include capital assets and the rentals and interest forgone on owned land as recommended by the National Commission for Farmers.
Government’s position
- The PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns — often determined by MSP and procurement.
- The panel will have representatives from farm groups as well as from the State and Central Governments, along with agricultural scientists and economists.
Issues with legal backing
- Demand-supply dynamics: Economic theory, as well as experience, indicates that the price level that is not supported by demand and supply cannot be sustained through legal means.
- States responsibility: The Centre has suggested that the States are free to guarantee MSP rates if they wish, but also offers two failed examples of such a policy:
[I] Sugar FRP
- In the sugar sector, private mills are mandated to buy cane from farmers at prices set by the Government.
- Faced with low sugar prices, high surplus stock, and low liquidity, mills failed to make full payments to farmers, resulting in an accumulation of thousands of crores worth of dues pending for years.
[II] Withdrawal of traders
- The other example is a 2018 amendment to the Maharashtra law penalizing traders with hefty fines and jail terms if they bought crops at rates lower than MSP.
- As open market prices were lower than the (legalized) MSP levels declared by the State, the buyers withdrew from the market and farmers had to suffer.
Will a legal backing for MSP solve all the ills that plague the Agriculture sector?
- Only one side of the coin: Actually, no. Remunerative price or MSP is only one part of the problems farmers face. Farmers face many other issues other than price, which itself is not guaranteed given the influence of politicians and cartels in mandis.
- Information deficit: They lack information on which crop to grow, when to sow, apply plant nutrients and which pest is attacking their crop.
- Lack of technology: Farmers are also short of post-harvest technologies to ensure a better shelf life for their produce.
- Irrigation and storage problem: They do not get adequate facilities to irrigate their lands, with nearly 50 percent of the land being rain-fed and lacking ample warehouses to store their produce at the village level, besides proper roads to connect them to the mandis.
- Threat of new loopholes: Legal backing for the MSP could also lead to the danger of the trade keeping away from places where the law is implemented vigorously.
Fiscal cost of making the MSP legally binding
- The MSP value of the total output of all the 23 notified crops worked out to about Rs 11.9 lakh crore in 2020-21.
- Taking an average of 75% yields a number – the MSP value of production actually sold by farmers – just under Rs 9 lakh crore.
- The government is further, as it is, procuring many crops. The MSP value of the 89.42 mt of paddy and 43.34 mt of wheat alone bought during 2020-21 was around Rs 253,275 crore.
- All in all, then, the MSP is already being enforced, directly or through fiat, on roughly Rs 3.8 lakh crore worth of produce.
- Providing a legal guarantee for the entire marketable surplus of the 23 MSP crops would mean covering another Rs 5 lakh crore or so.
Conclusion
- A growing consensus among economists for guaranteeing minimum “incomes”, as against “prices”, to farmers.
- That would essentially entail making more direct cash transfers either on a flat per-acre (as in the Telangana government’s Rythu Bandhu scheme) or per-farm household (the Centre’s PM-Kisan) basis.
- The resource requirement of such interventions will be so huge that no government will be left with resources to help farmers through other means like investment in public infrastructure, irrigation, and other incentives.
- The danger of over-reliance on MSP is already visible in the state of Punjab. Agriculture has reached an almost static stage there.
- The state is unable to diversify away from crops like paddy, which is destroying its natural resources and environment, marring long-term prospects of farming.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: India's defence exports
Our defence exports have increased seven times in the last eight years, informed the Prime Minister. We had achieved defence exports worth ₹13,000 crore and of this 70% was from the private sector.
Why in news?
- The Indian Defence sector, the second largest armed force is at the cusp of revolution.
India’s Defence Exports
- India has put out a range of military hardware on sale which includes various missile systems, Light Combat Aircraft (LCA), helicopters, warship and patrol vessels, artillery guns, tanks, radars etc.
- From 2016-17 to 2018-19, the country’s defence exports have increased from ₹1,521 crore to ₹10,745 crore, a staggering 700% growth.
Steps taken by the Centre to boost defence production
- Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
- Lines of Credit: Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product.
- Policy boost: The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
- Indigenization lists: On the domestic front, to boost indigenous manufacturing, the Government had issued two “positive indigenization lists” consisting of 209 items that cannot be imported.
- Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.
- Defence Industrial Corridors: The government has also announced 2 dedicated Corridors in the States of TN and UP to act as clusters of defence manufacturing that leverage existing infrastructure, and human capital.
- Long-term vision: The vision of the government is to achieve a turnover of $25 bn including export of $5 bn in Aerospace and Defence goods and services by 2025.
- Push for self-reliance: The govt has identified the Defence and Aerospace sector as a focus area for the ‘Aatmanirbhar Bharat’ or Self-Reliant India initiative.
Issues retarding defence exports
- Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
- Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
- Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
- Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
- ‘Unease’ in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
- Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
- Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
- FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.
- R&D Lacunae: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
- Lack of skills: There is a lack of engineering and research capability in our institutions. It again leads us back to the need for a stronger industry-academia interface.
Way forward
- Reducing import dependence: India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as the largest importer to Saudi Arabia, says 2019 SIPRI report.
- Security Imperative: Indigenization in defence is critical to national security also. It keeps intact the technological expertise and encourages spin-off technologies and innovation that often stem from it.
- Economic boost: Indigenization in defence can help create a large industry which also includes small manufacturers.
- Employment generation: Defence manufacturing will lead to the generation of satellite industries that in turn will pave the way for a generation of employment opportunities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Fast Radio Burst (FRB)
Mains level: Not Much
A strange radio signal (called Fast Radio Bursts) has been detected in a galaxy several billion light-years from Earth, a recent study claimed.
What is an FRB?
- The first FRB was discovered in 2007, since when scientists have been working towards finding the source of their origin.
- Essentially, FRBs are bright bursts of radio waves (radio waves can be produced by astronomical objects with changing magnetic fields).
- Its durations lie in the millisecond scale, because of which it is difficult to detect them and determine their position in the sky.
Who discovered it?
- The X-ray portion of the simultaneous bursts was detected by several satellites, including NASA’s Wind mission.
- Further, a NASA-funded project called Survey for Transient Astronomical Radio Emission 2 (STARE2) also detected the radio burst.
Why are they significant?
- First noticed in 2018 by the Canadian observatory the waves have created ripples across the globe for one reason — they arrive in a pattern.
- This gave birth to theories that they could be from an alien civilization.
- Initially, it was believed that the collision of black holes or neutron stars triggers them.
- But the discovery of repeating FRBs debunked the theory of colliding objects.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Agri-GDP
Context
The United Nations latest report, “Population Prospects” forecasts that India will surpass China’s population by 2023, reaching 1.5 billion by 2030 and 1.66 billion by 2050.
Poverty eradication: Lessons from China
- China’s story since 1978 is unique – the country has achieved the fastest decline in poverty.
- Its experiences hold some important lessons for India, especially because in 1978, when China embarked on its economic reforms, its per capita income at $156.4 was way below that of India at $205.7.
- Today, China is more than six times ahead of India in terms of per capita income – China’s per capita income in 2021 was $12,556, while that of India was $1,933 in 2020.
- China started its economic reforms in 1978 with a primary focus on agriculture.
- Contribution of agriculture: It broke away from the commune system and liberated agri-markets from myriad controls.
- Increase in agri-GDP: As a result, during 1978-84, China’s agri-GDP grew by 7.1 per cent per annum and farmers’ real incomes grew by 14 per cent per annum with the liberalisation of agri-prices.
- Creation of demand: Enhanced incomes of rural people created a huge demand for industrial products, and also gave political legitimacy for pushing further the reform agenda.
- The aim of China’s manufacturing through Town and Village Enterprises (TVEs) was basically to meet the surging demand from the hinterlands.
- Population factor: China introduced the one-child per family policy in September 1980, which lasted till early 2016.
- It is this strict control on population growth, coupled with booming growth in overall GDP over these years, that led to a rapid increase in per capita incomes.
- Chinese population growth today is just 0.1 per cent per annum compared to India’s 1.1 per cent per annum.
Growth story of Indian agriculture
- Over a 40-year period, 1978-2018, China’s agriculture has grown at 4.5 per cent per annum while India’s agri-GDP growth ever since reforms began in 1991 has hovered at around 3 per cent per annum.
- Market and price liberalisation in agriculture still remains a major issue, and at the drop of any hint of food price rise, the government clamps down exports, imposes stock limits on traders, suspends futures markets, and pushes other measures that strangle markets.
- Implicit taxation of farmers: The net result of all this is reflected in the “implicit taxation” of farmers to favour the vocal lobby of consumers, especially the urban middle class.
Way forward
- Population control: The only way is through effective education, especially that of the girl child, open discussion and dialogue about family planning methods and conversations about the benefits of small family size in society.
- Effective education: As per the National Family Health Survey-5 (2019-21), of all the girls and women above the age of 6 years, only 16.6 per cent were educated for 12 years or more.
- Based on unit-level data of NFHS5 (2019-21), it is found that women’s education is the most critical determinant of the status of malnutrition amongst children below the age of five.
- Unless a focused and aggressive campaign is launched to educate the girl child and provide her with more than 12 years of good quality education, India’s performance in terms of the prosperity of its masses, and the human development index may not improve significantly for many more years to come
- If government can take up this cause in sync with state governments, this will significantly boost the labour participation rate of women, which is currently at a meagre 25 per cent, and lead to “double engine” growth.
- Nutrition interventions: The NFHS-5 data shows that more than 35 per cent of our children below the age of five are stunted, which means their earning capacity will remain hampered throughout life. They will remain stuck in a low-level income trap.
Conclusion
From a policy perspective, if there is any subsidy that deserves priority, it should be for the education of the girl child. This policy focus can surely bring a rich harvest, politically and economically, for many years to come.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 74th Constitutional Amendment Act
Mains level: Paper 2- Municipal finances
Context
Recently, the Indian Institute for Human Settlements (IIHS) analysed data from 80 urban local bodies (ULBs) across 24 States between 2012-13 and 2016-17 to understand ULB finance and spending, and found some key trends.
Health of municipal finances
- The 74th Constitution Amendment Act was passed in 1992 mandating the setting up and devolution of powers to urban local bodies (ULBs) as the lowest unit of governance in cities and towns.
- Constitutional provisions were made for ULBs’ fiscal empowerment.
- Challenges in fiscal empowerment: Three decades since, growing fiscal deficits, constraints in tax base expansion, and weakening of institutional mechanisms that enable resource mobilisation remain challenges.
- Revenue losses after implementation of the Goods and Services Tax (GST) and the pandemic have exacerbated the situation.
Analysing the trends in municipal finances
Recently, the Indian Institute for Human Settlements (IIHS) analysed data from 80 ULBs across 24 States between 2012-13 and 2016-17 to understand ULB finance and spending, and found some key trends.
1] Own sources of revenue less than half of total revenue
- Key sources of revenue: The ULBs’ key revenue sources are taxes, fees, fines and charges, and transfers from Central and State governments, which are known as inter-governmental transfers (IGTs).
- Important indicator of financial health: The share of own revenue (including revenue from taxes on property and advertisements, and non-tax revenue from user charges and fees from building permissions and trade licencing) to total revenue is an important indicator of ULBs’ fiscal health and autonomy.
- The study found that the ULBs’s own revenue was 47% of their total revenue.
- Of this, tax revenue was the largest component: around 29% of the total.
- Property tax, the single largest contributor to ULBs’ own revenue, accounted for only about 0.15% of the GDP.
- Figures for developing countries: The corresponding figures for developing and developed countries were significantly higher (about 0.6% and 1%, respectively) indicating that this is not being harnessed to potential in India.
2] High dependence on IGTs
- Most ULBs were highly dependent on external grants — between 2012-13 and 2016-17, IGTs accounted for about 40% of the ULBs’ total revenue.
- Transfers from the Central government are as stipulated by the Central Finance Commissions and through grants towards specific reforms, while State government transfers are as grants-in-aid and devolution of State’s collection of local taxes.
3] Tax revenue is largest revenue for larger cities, while smaller cities are more dependent on grants
- here are considerable differences in the composition of revenue sources across cities of different sizes.
- Class I-A cities (population of over 50 lakh) primarily depend on their own tax revenue, while Class I-B cities and Class I-C cities (population of 10 lakh-50 lakh and 1 lakh-10 lakh, respectively) rely more on IGTs.
- Own revenue mobilisation in Class I-A cities increased substantially.
- It was primarily driven by increases in non-tax revenue
4] Increasing operations and maintenance (O&M) expenses
- Operations and maintenance (O&M) expenses are on the increase but still inadequate.
- While the expenses were on the rise, studies (such as ICRIER, 2019 and Bandyopadhyay, 2014) indicate that they remained inadequate.
- For instance, O&M expenses incurred in 2016-17 covered only around a fifth of the requirement forecast by the High-Powered Expert Committee for estimating the investment requirements for urban infrastructure services.
- O&M expenses should ideally be covered through user charges, but total non-tax revenues, of which user charges are a part, are insufficient to meet current O&M expenses.
- The non-tax revenues were short of the O&M expenditure by around 20%, and this shortfall contributed to the increasing revenue deficit in ULBs.
Way forward
- Improving own revenue: It is essential that ULBs leverage their own revenue-raising powers to be fiscally sustainable and empowered and have better amenities and quality of service delivery.
- Stability in IGT: Stable and predictable IGTs are particularly important since ULBs’ own revenue collection is inadequate.
- O&M expenses: Increasing cost recovery levels through improved user charge regimes would not only improve services but also contribute to the financial vitality of ULBs.
- Measures need to be made to also cover O&M expenses of a ULB for better infrastructure and service.
- Tapping into property taxes, other land-based resources and user charges are all ways to improve the revenue of a ULB.
Conclusion
The health of municipal finances is a critical element of municipal governance which will determine whether India realises her economic and developmental promise.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Coal Index
Mains level: Paper 3- Need for increasing the domestic production of coal
Context
With inflation at unprecedented levels in many countries, concerns over energy security have gained centre stage.
National Coal Index to factor in the increased price of imported coal
- This index was created to provide a benchmark for revenue-sharing contracts being executed after the auctions for commercial mining of coal.
- The NCI had to be introduced as the wholesale price index (WPI) for coal has no component of imported coal.
- For the last six months, the WPI for Coal has been stable at around 131.
- Over the same period, the NCI has jumped from about 165 to about 238 reflecting the sharp increase in international coal prices.
Needs to increase domestic coal production
- High prices of coal and coal-based generation will only encourage imported coal and expose the country to price risks from international energy prices.
- The domestic coal industry has responded to increasing internation prices with an increase of over 30 per cent in coal production from April to June this year.
- Anticipating these problems, a big effort toward permitting commercial mining has been made to get the private sector to produce more coal.
- Gradual transition: Looking at coal from a singular focus on GHG emissions will give a myopic view of energy requirements for a growing economy like India.
- The path to achieving 500 GW of renewables needs to be gradual, ensuring an orderly transition as coal is unavoidable in the near future.
- Reducing coal imports and increasing domestic production of coal needs focused attention
Suggestions to increase domestic production of coal
1] Sensitising the financial community
- The financial community has to be sensitised to the need of increasing domestic coal production to meet the growing energy demand.
- The draft National Electricity Policy released in May 2021, recognised the need to increase coal-based generation.
- This policy has not yet been finalised.
- It should clearly articulate the importance of domestic coal-based generation.
- Holistic approach in ESG criteria: Apart from the government, the industry should also take up this issue with the financial community in adopting a more holistic approach toward environmental, social, and governance (ESG) criteria.
2] The regulator needs to facilitate greater role of private sector
- There is the need for a regulator to address the issues arising from a greater role of the private sector.
- The current arrangements were put in place at a time when the public sector dominated.
- There are several issues where new private commercial miners would need help.
- Single point of contact: A single point of contact for the industry in the form of a dedicated regulator would give great comfort to private players and would help to overcome problems that could arise in due course.
3] Diversifying the production base
- Increasing domestic production of coal and diversifying the production base are both needed.
- This must be complemented with efforts to improve the quality of the coal produced.
4] Remove financial burden due to cross subsidies
- The undue financial burden on the coal sector due to various cross subsidies needs attention.
- The regime needs to be reformed.
Conclusion
Action on the issues discussed above will only help to deepen and strengthen these reforms which are needed to overcome the challenges that have resurfaced over the past few months.
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From UPSC perspective, the following things are important :
Prelims level: Treaty of Friendship
Mains level: India-Bhutan Relations
After over two years of the COVID-19-induced lockdown, Bhutan will open its doors to tourists on September 23 with a new expensive policy for Indians and other foreign tourists.
India-Bhutan Relations: A backgrounder
- India and Bhutan have had long-standing diplomatic, economic and cultural relations
- Bhutan and India relations are governed by a friendship treaty that was renegotiated only in 2007, subjecting the Himalayan nation’s security needs to supervision.
- Treaty of Friendship in 2007, which brought into the India-Bhutan relationship “an element of equality.”
- The Treaty provides for perpetual peace and friendship, free trade and commerce, and equal justice to each other’s citizens.
What is the Treaty of Friendship?
- On August 8, 1949, Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other’s internal affairs.
- India re-negotiated the 1949 treaty with Bhutan and signed a new treaty of friendship in 2007.
- The new treaty replaced the provision requiring Bhutan to take India’s guidance on foreign policy with broader sovereignty and not require Bhutan to obtain India’s permission over arms imports.
- Under the 2007 India-Bhutan Friendship Treaty, the two sides have agreed to “cooperate closely with each other on issues relating to their national interests.”
- Neither Government shall allow the use of its territory for activities harmful to the national security and interest of the other
Various facets of ties
(1) Commercial Relations
- India is Bhutan’s largest trading partner.
- India and Bhutan have signed an Agreement on Trade, Commerce and Transit on in 2016, which provides for a free trade regime between the two countries.
- Tourism is another point of convergence.
(2) Energy Cooperation
- A scheme titled “Comprehensive Scheme for Establishment of Hydro-meteorological and Flood Forecasting Network on rivers Common to India and Bhutan” is in operation.
- The network consists of 32 Hydro-meteorological/ meteorological stations located in Bhutan and being maintained by the Royal Government of Bhutan with funding from India.
- The data received from these stations are utilized in India for formulating flood forecasts.
Significance of Bhutan to India
- Buffer to China: Bhutan is a buffer state between India and China. Bhutan shares a 470 km long border with China.
- Vital connectivity through chicken’s neck: The Chumbi Valley is situated at the tri-junction of Bhutan, India and China and is 500 km away from the “Chicken’s neck” in North Bengal.
- Security in North-East: Bhutan has in the past cooperated with India and helped to flush out militant groups in NE.
- Chinese inroad in Bhutan: China is interested in establishing formal ties with Thimphu, where it does not yet have a diplomatic mission.
China factor in ties: China predates on small neighbours
- Bhutan is strategically important for both India and China. Chinese territorial claims in western Bhutan are close to the Siliguri Corridor.
- Beijing is reportedly insisting on Bhutan establishing trade and diplomatic relations as a quid pro quo for a border settlement.
- Bhutan is currently India’s only neighbour who has stayed away from joining China’s Belt and Road Initiative (BRI), but that may change if India can’t make itself an attractive ally and neighbour.
Why does India need Bhutan?
- Bhutan has always been India’s most trusted ally in South Asia and has often put India’s security at the forefront.
- Come to think of it, in December 2003, Bhutan’s fourth king personally led the army to throw out Indian militants living in Bhutan’s jungles.
- Bhutan was also the only South Asian country besides India not to attend China’s Belt and Road Initiative forum in May 2017.
- In other words, land-locked Bhutan has held its end of the bargain.
Various cooperation developments
- Maitri Initiative: Bhutan is the first country to receive the Covishield vaccines under India’s Vaccine Maitri Initiative.
- Financial connectivity: It has touched new heights through the launch of the RuPay card and the BHIM app.
- Start-Up ecosystem: Both nations successfully linked up the Start-Up systems of our two countries via structured workshops; through the National Knowledge Network & the Druk-REN connection.
- E-Library project: It has opened up new vistas of education and knowledge sharing between two countries.
Irritants in ties
- India has not invested in significantly in Bhutan and other smaller neighbours that modicum of trust which is critical in building genuine goodwill.
- This means not only increasing people-to-people contact but also being sensitive to Bhutan’s desire for a wider engagement beyond India’s borders. This means respecting Bhutan as an equal, sovereign nation-state.
Conclusion
- The Indo-Bhutan friendship is built on shared values and aspirations, trust and mutual respect.
- Bhutan’s foreign policy framework holds the relationship with India as being integral to its national interest.
- The Indian approach to Bhutan has necessarily to be tailored while being sensitive to the growing Bhutanese aspirations of being considered equal.
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From UPSC perspective, the following things are important :
Prelims level: ECB
Mains level: Not Much
The Reserve Bank of India has relaxed norms for companies raising external commercial borrowings (ECBs), as part of a set of measures to stem the slide in the rupee.
What are ECBs taken by Indian companies?
- ECBs are commercial loans that eligible resident entities can raise from outside India, i.e. from a recognized non-resident entity.
- ECBs can be buyer’s credit, supplier’s credit, foreign currency convertible bonds, foreign currency exchangeable bonds, loans etc.
- ECBs can be raised via the automatic route where cases are examined by the Authorized Category Dealer, or the approval route where borrowers are mandated to forward their request to RBI through their authorized dealers.
- Borrowers must follow norms on minimum maturity period, maximum all-in-cost ceiling, end-uses etc.
What is the relaxation offered by the RBI?
- RBI earlier had raised borrowing limit under the automatic route from $750 million or its equivalent per financial year to $1.5 bn up till up to 31 December, 2022.
Why such move?
- The objective was to increase the supply of foreign exchange reserves.
- This in turn would thereby prevent the fast depreciation of the rupee witnessed over the last few months.
What clarity do foreign lenders want from RBI?
- Lenders want to know whether the investment grade needs to be rated by domestic or international agencies.
- If it is only by global agencies, it would limit the number of potential borrowers.
- This is because companies which might be rated high domestically might not necessarily have made the investment grade when rated by international agencies.
Why do Indian firms go for ECBs?
- Low cost: ECBs give companies the benefit of borrowing abroad at lower interest rates.
- Long term repayment: They are also an avenue to borrow a large volume of funds for a relatively long period of time.
- Surpassing exchange fluctuation: Also, borrowing in foreign currencies enables companies to pay for their machinery import etc., thereby nullifying the impact of varying exchange rate.
- Long term profitability: ECBs can help diversify the investor base and funds available at lower cost, helping improve profitability of companies.
- Better credit ratings: ECB interest rates are also a function of their ratings in the international market.
What are the risks for firms raising ECBs?
- Though companies get attracted to ECBs due to lower interest rates, the comfort level of the borrower depends on how stable the rate of exchange is.
- Depreciation of the rupee will raise debt servicing burden as compared to what has been worked out at the time of availing of the ECB facility.
- Thus, the companies might need to incur hedging costs (amount equal to the aggregate costs, fees, and expenses) to cover the exchange rate risk.
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From UPSC perspective, the following things are important :
Prelims level: Read the attached story
Mains level: NA
This article provides a quick summary of what has been happening in the global economy. These are few key terms that one is likely to hear repeatedly in the coming days and weeks:
- Yield Inversion
- Soft-landing and
- Reverse Currency War
Here’s a quick look at what they mean and why they are significant at present.
(1) Bond Yield Inversion
What is Bond Yeild?
- Bonds are essentially an instrument through which governments (and also corporations) raise money from people.
- Typically government bond yields are a good way to understand the risk-free interest rate in that economy.
- This 2019 piece provides an introduction to government bonds and explains how yields are calculated.
What is Yield Curve?
- The yield curve is the graphical representation of yields from bonds (with an equal credit rating) over different time horizons.
- In other words, if one was to take the US government bonds of different tenures and plot them according to the yields they provide, one would get the yield curve.
The chart below provides a sense of the different types of yield curves one could have.
How to see this?
- Under normal circumstances, any economy would have an upward sloping yield curve.
- That is to say, as one lends for a longer duration — or as one buys bonds of longer tenure — one gets higher yields. This makes sense.
- If one is parting with money for a longer duration, the return should be higher.
- Moreover, a longer tenure also implies that there is a greater risk of failure.
- An inversion of the yield curve essentially suggests that investors expect future growth to be weak.
Inversion of bond yield
- However, there are times when this bond yield curve becomes inverted.
- For instance, bonds with a tenure of 2 years end up paying out higher yields (returns/ interest rate) than bonds with a 10 year tenure.
- Such an inversion of the yield curve essentially suggests that investors expect future growth to be weak.
Here’s how to make sense of this?
- When investors feel buoyant about the economy they pull the money out from long-term bonds and put it in short-term riskier assets such as stock markets.
- In the bond market, the prices of long-term bonds fall, and their yield (effective interest rate) rises.
- This happens because bond prices and bond yields are inversely related.
- However, when investors suspect that the economy is heading for trouble, they pull out money from short-term risky assets (such as stock markets) and put them in long-term bonds.
- This causes the prices of the long-term bonds to rise and their yields to fall.
Why use inversion curve?
- Over the years, inversion of the bond yield curve has become a strong predictor of recessions. Of course, for it to be taken seriously, such an inversion has to last for several months.
- Over the past few weeks, such inversion is happening repeatedly in the US, suggesting to many that a recession is in the offing.
- In the current instance, the US Fed (their central bank) has been raising short-term interest rates, which further bumps up the short-end of the yield curve while dampening economic activity.
(2) Soft-Landing
- The process of monetary tightening that the US is currently unveiling involves not just reducing the money supply but also increasing the cost of money (that is, the interest rate).
- US is doing this to contain soaring inflation.
- Ideally, the US Fed or any central bank doing this would like to bring about monetary tightening in such a manner that slows down the economy but doesn’t lead to a recession.
- When a central bank is successful in slowing down the economy without bringing about a recession, it is called a soft-landing — that is, no one gets hurt.
- But when the actions of the central bank bring about a recession, it is called hard-landing.
(3) Reverse Currency War
- A flip side of the US Fed’s action of aggressively raising interest rates is that more and more investors are rushing to invest money in the US.
- This, in turn, has made the dollar become stronger than all the other currencies. That’s because the dollar is more in demand than yen, euro, yuan etc.
- On the face of it, this should make all other countries happier because a relative weakness of their local currency against the dollar makes their exports more competitive.
- For instance, a Chinese or an Indian exporter gets a massive boost.
- In fact, in the past the US has often accused other countries of manipulating their currency (and keeping its weaker against the dollar) just to enjoy a trade surplus against the US.
- This used to be called the currency war.
What explains this reverse currency war unfolding at the moment?
- The important thing to understand is that a stronger dollar has had a key benefit — importing cheaper crude oil.
- A currency which is losing value to the dollar, on the other hand, finds that it is getting costlier to import crude oil and other commodities that are often traded in dollars.
- But raising the interest rate is not without its own risks.
- Just like in the US, higher interest rates will decrease the chances of a soft-landing for any other economy.
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From UPSC perspective, the following things are important :
Prelims level: Vice President of India
Mains level: Not Much
A major political party has declared that West Bengal Governor Jagdeep Dhankhar would be the candidate for the post of Vice-President.
About Vice President of India
- The VP is the deputy to the head of state of the Republic of India, the President of India.
- His/her office is the second-highest constitutional office after the president and ranks second in the order of precedence and first in the line of succession to the presidency.
- The vice president is also a member of the Parliament as the ex officio Chairman of the Rajya Sabha.
Qualifications
- As in the case of the president, to be qualified to be elected as vice president, a person must:
- Be a citizen of India
- Be at least 35 years of age
- Not hold any office of profit
- Unlike in the case of the president, where a person must be qualified for election as a member of the Lok Sabha, the vice president must be qualified for election as a member of the Rajya Sabha.
- This difference is because the vice president is to act as the ex officio Chairman of the Rajya Sabha.
Roles and responsibilities
- When a bill is introduced in the Rajya Sabha, the vice president decides whether it is a money bill or not.
- If he is of the opinion that a bill introduced in the Rajya Sabha is a money bill, he shall refer it to the Speaker of the Lok Sabha.
- The vice president also acts as the chancellor of the central universities of India.
Election procedure
- Article 66 of the Constitution of India states the manner of election of the vice president.
- The vice president is elected indirectly by members of an electoral college consisting of the members of both Houses of Parliament and NOT the members of state legislative assembly.
- The election is held as per the system of proportional representation using single transferable votes.
- The voting is conducted by Election Commission of India via secret ballot.
- The Electoral College for the poll will comprise 233 Rajya Sabha members, 12 nominated Rajya Sabha members and 543 Lok Sabha members.
- The Lok Sabha Secretary-General would be appointed the Returning Officer.
- Political parties CANNOT issue any whip to their MPs in the matter of voting in the Vice-Presidential election.
Removal
- The Constitution states that the vice president can be removed by a resolution of the Rajya Sabha passed by an Effective majority (majority of all the then members) and agreed by the Lok Sabha with a simple majority( Article 67(b)).
- But no such resolution may be moved unless at least 14 days’ notice in advance has been given.
- Notably, the Constitution does not list grounds for removal.
- No Vice President has ever faced removal or the deputy chairman in the Rajya Sabha cannot be challenged in any court of law per Article 122.
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From UPSC perspective, the following things are important :
Prelims level: GST Slabs
Mains level: Rationalization of GST
Customers will have to pay a 5% Goods and Services Tax (GST) on pre-packed, labelled food items such as atta, paneer and curd, besides hospital rooms with rents above ₹5,000.
What is GST?
- GST launched in India on 1 July 2017 is a comprehensive indirect tax for the entire country.
- It is charged at the time of supply and depends on the destination of consumption.
- For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).
- GST, being a consumption-based tax, resulted in loss of revenue for manufacturing-heavy states.
What are GST Slabs?
- In India, almost 500+ services and over 1300 products fall under the 4 major GST slabs.
- There are five broad tax rates of zero, 5%, 12%, 18% and 28%, plus a cess levied over and above the 28% on some ‘sin’ goods.
- The GST Council periodically revises the items under each slab rate to adjust them according to industry demands and market trends.
- The updated structure ensures that the essential items fall under lower tax brackets, while luxury products and services entail higher GST rates.
- The 28% rate is levied on demerit goods such as tobacco products, automobiles, and aerated drinks, along with an additional GST compensation cess.
Why rationalize GST slabs?
- From businesses’ viewpoint, there are just too many tax rate slabs, compounded by aberrations in the duty structure through their supply chains with some inputs taxed more than the final product.
- These are far too many rates and do not necessarily constitute a Good and Simple Tax.
- Multiple rate changes since the introduction of the GST regime in July 2017 have brought the effective GST rate to 11.6% from the original revenue-neutral rate of 15.5%.
- Merging the 12% and 18% GST rates into any tax rate lower than 18% may result in revenue loss.
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From UPSC perspective, the following things are important :
Prelims level: Anayoottu
Mains level: Not Much
Anayoottu, an annual ritual at the Sree Vadakkunnathan Temple, Thrissur was recently held.
Why in news?
- There is a history behind this annual ritual at the temple.
- Kerala’s elephant pooram was selected, along with other cultural forms of the country, for display at the opening ceremony of the Asian Games held in Delhi in 1982.
- Elephants were transported all throughout the country to New Delhi.
What is Anayoottu?
- The Aanayoottu (gaja pooja/ feeding of elephants) is a festival held in the precincts of the Vadakkunnathan temple in City of Thrissur, in Kerala.
- The festival falls on the first day of the month of Karkkidakam (timed against the Malayalam calendar), which coincides with the month of July.
- It involves a number of unadorned elephants being positioned amid a multitude of people for being worshipped and fed.
- Crowds throng the temple to feed the elephants.
Mythology behind
- It is believed that offering poojas and delicious feed to the elephants is a way to satisfy Lord Ganesha—the god of wealth and of the fulfillment of wishes.
- The Vadakkunnathan temple, which is considered to be one of the oldest Shiva temples in southern India, has hosted the Aanayottoo event for the past few years.
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From UPSC perspective, the following things are important :
Prelims level: Article 21
Mains level: Paper 2- Consolidation of multiple FIRs
Context
The Supreme Court’s (SC) refused to consolidate multiple FIRs filed in several states against former BJP spokesperson.
When are multiple FIRs clubbed?
- In 2001, the SC, in TT Antony vs. State of Kerala, made it clear that only the earliest information in regard to the commission of an offence could be investigated and tried.
- In Babubhai vs. State of Gujarat (2010), the Court explained that the test to determine the sameness of the offence is to identify whether “the subject matter of the FIRs is the same incident, same occurrence or are in regard to incidents which are two or more parts of the same transaction”.
- the SC extensively relied upon TT Antony while granting similar relief to two journalists.
Reasons given by the SCs for refusal to club the FIRs
- The bench said that party spokespersons and journalists cannot be treated identically.
- The Constitution creates no hierarchical difference between journalists and ordinary citizens when it comes to the enforcement of fundamental rights.
- The right to approach the SC under Article 32 is in itself a fundamental right.
- Nor did the SC craft any distinction on the basis of the status or affiliation of the accused in TT Antony.
- Second, the bench said that she has not unconditionally apologised for her remarks and her political clout is apparent from the fact that she has not been arrested despite an FIR being filed against her.
- This view is again misplaced. Whether or not the person has tendered an apology is not germane to the issue at hand.
- Seeking or tendering an apology may be a mitigating factor while deciding punishment but only after the guilt is proved.
Why the multiple FIRs should be consolidated
- Abuse of statutory power of investigation: Filing of successive FIRs amounts to an abuse of statutory power of investigation and is a fit case for the SC to exercise its writ powers under Article 32 because high courts cannot transfer cases from one state to another.
- Wastage of state resources and judicial time: Prudence demands that state resources and judicial time are not spent on a multiplicity of proceedings.
- The multiplicity of proceedings would result in violation of fundamental rights under Article 21 as parallel investigations would result in her being forced to join investigations in different police stations in different states.
- This serves no practical purpose because ultimately it is only one of the police reports that would be tried by a court of law.
Conclusion
In the absence of strict guidelines, some degree of caution is necessary on the part of judges to work within the confines of judicial propriety.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Return of Euro-centrism
Context
The Russian aggression against Ukraine has led to an unmissable feeling of insecurity in Europe, particularly in Germany.
Euro-centric world order and new security consciousness
- For centuries, Europe imagined itself to be the centre of the world — its order, politics and culture.
- What contributed to its decline? Decolonisation, the emergence of the United States as the western world’s sole superpower, and the rise of the rest dramatically diminished the centuries old domination of the European states and their ability to shape the world in their own image.
- The political and military aftermath of Russia’s war on Ukraine could potentially tilt the current global balance and take us back to a Euro-centric world order.
- US dominance: For sure, the U.S. continues to dominate the trans-Atlantic security landscape and this is likely to remain so.
- And yet, the new security consciousness in Europe will reduce Washington’s ability to continue as the fulcrum of the trans-Atlantic strategic imagination.
- If wars have the potential to shape international orders, it is Europe’s turn to shape the world, once again.
- The United States, fatigued from the Iraq and Afghan wars, does not appear to be keen on another round of wars and military engagements.
- A pervasive sense of what some described as “existential insecurity” has brought about a renewed enthusiasm about the future of the European Union and the North Atlantic Treaty Organization (NATO).
- The European Union (EU) Commission has backed Kyiv’s bid for EU candidature.
- This new military unity is not just words, but is backed with political commitment and financial resources from the world’s richest economies.
- Berlin, for instance, has decided to spend an additional €100 billion for defence over and above its €50 billion annual expenditure on defence.
Implications
1] Weakened faith in the institutions and globalisation
- Germany, the engine of this new security thinking in Europe, is coming out of its self-image of being a pacifist nation.
- There appears little faith in the United Nations or the UN Security Council anymore in Berlin, they have decided to put their faith in a revitalised EU and NATO.
- European states are deeply worried about globalisation-induced vulnerability and this has set in a rethink about the inherent problems of indiscriminate globalisation.
- The combined effect of European re-militarisation (however modest it may be for now), its loss of faith in multilateral institutions, and the increased salience of the EU and NATO will be the unchecked emergence of Europe as an even stronger regulatory, norm/standard-setting superpower backed with military power.
2] Unilateral and Euro-centric decision making
- The EU already has a worryingly disproportionate ability to set standards for the rest of the world.
- Instruments such as the Digital Services Act and the Digital Assets Act or its human rights standards will be unilaterally adopted, and will be unavoidable by other parts of the world.
- While these instruments and standards may in themselves be progressive and unobjectionable for the most part, the problem is with the process which is unilateral and Euro-centric.
3] Euro-centric worldview
- A euro-centric worldview of ‘friends and enemies’ will define its engagement with the rest of the world.
- India is a friend, but its take on the Ukraine war is not friendly enough for Europe.
- The EU will lead the way in setting standards for the rest of us and we will have little option but to follow that.
- For sure, Europe will seek partners around the world: to create a Euro-centric world order, not a truly global world order.
4] Dilemma for India
- This unilateral attempt to ‘shape the world’ in its image will also be portrayed as an attempt to counter Chinese attempts at global domination.
- To oppose or not? When presented as such, countries such as India will face a clear dilemma: to politically and normatively oppose the setting of the global agenda by Europeans or to be practical about it and jump on the European bandwagon.
Conclusion
The key message from the European narratives about the Ukraine war is that European states would want to see their wars and conflicts as threatening international stability and the ‘rules-based’ global order.
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From UPSC perspective, the following things are important :
Prelims level: Ozone, Ozone Hole
Mains level: Read the attached story
A new ozone hole has been detected over the tropics, at latitudes of 30 degrees South to 30 degrees North, a recent study claimed. But some experts are divided over this.
Do you know?
The Antarctic ozone hole — one of the deepest, largest gap in the ozone layer in the last 40 years — has closed, according to the World Meteorological Organization (WMO).
What is Ozone and Ozone Layer?
- An ozone molecule consists of three oxygen atoms instead of the usual two (the oxygen we breathe, O2, makes up 21% of the atmosphere).
- It only exists in the atmosphere in trace quantities (less than 0.001%), but its effects are very important.
- Ozone molecules are created by the interaction of ultra-violet (UV) radiation from the Sun with O2 molecules.
- Because UV radiation is more intense at higher altitudes where the air is thinner, it is in the stratosphere where most of the ozone is produced, giving rise to what is called the ‘ozone layer’.
- The ozone layer, containing over 90% of all atmospheric ozone, extends between about 10 and 40km altitude, peaking at about 25km in Stratosphere.
Why need Ozone Layer?
- The ozone layer is very important for life on Earth because it has the property of absorbing the most damaging form of UV radiation, UV-B radiation which has a wavelength of between 280 and 315 nanometres.
- As UV radiation is absorbed by ozone in the stratosphere, it heats up the surrounding air to produce the stratospheric temperature inversion.
What is Ozone Hole?
- Each year for the past few decades during the Southern Hemisphere spring, chemical reactions involving chlorine and bromine cause ozone in the southern polar region to be destroyed rapidly and severely.
- The Dobson Unit (DU) is the unit of measure for total ozone.
- The chemicals involved ozone depletion are chlorofluorocarbons (CFCs for short), halons, and carbon tetrachloride.
- They are used for a wide range of applications, including refrigeration, air conditioning, foam packaging, and making aerosol spray cans.
- The ozone-depleted region is known as the “ozone hole”.
Tropical Ozone Hole
- According to the study, the ozone hole is located at altitudes of 10-25 km over the tropics.
- This hole is about seven times larger than Antarctica, the study suggested.
- It also appears across all seasons, unlike that of Antarctica, which is visible only in the spring.
- The hole has become significant since the 1980s. But it was not discovered until this study.
What caused an ozone hole in the tropics?
- Studies suggested another mechanism of ozone depletion: Cosmic rays.
- Chlorofluorocarbon’s (CFC) role in depleting the ozone layer is well-documented.
- The tropical stratosphere recorded a low temperature of 190-200 Kelvin (K).
- This can explain why the tropical ozone hole is constantly formed over the seasons.
Significance of the finding
- The tropical ozone hole, which makes up 50 percent of Earth’s surface, could cause a global concern due to the risks associated with it.
- It is likely to cause skin cancer, cataracts and other negative effects on the health and ecosystems in tropical regions.
Back2Basics: Antarctic Ozone Hole
- The Antarctic “ozone hole” was discovered by British Antarctic Survey scientists Farman, Gardiner and Shanklin in 1985.
- It was caused by the chemical reactions on polar stratospheric clouds (PSCs) in the cold Antarctic stratosphere caused a massive.
- Though localized and seasonal, an increase in the amount of chlorine present in active, ozone-destroying forms.
Role of PSCs
- The polar stratospheric clouds in Antarctica are only formed when there are very low temperatures, as low as −80 °C, and early spring conditions.
- In such conditions, the ice crystals of the cloud provide a suitable surface for the conversion of unreactive chlorine compounds into reactive chlorine compounds, which can deplete ozone easily.
Try this PYQ
Q.Consider the following statements:
Chlorofluorocarbons, known as ozone-depleting substances are used:
- In the production of plastic foams
- In the production of tubeless tyres
- In cleaning certain electronic components
- As pressurizing agents in aerosol cans
Which of the statements given above is/are correct?
(a) 1, 2 and 3 only
(b) 4 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4
Post your answers here.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SCO
Mains level: Read the attached story
Iran and Belarus are likely to be the two newest additions to the China and Russia-backed Shanghai Cooperation Organisation (SCO) grouping.
What is SCO?
- After the collapse of the Soviet Union in 1991, the then security and economic architecture in the Eurasian region dissolved and new structures had to come up.
- The original Shanghai Five were China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.
- The SCO was formed in 2001, with Uzbekistan included. It expanded in 2017 to include India and Pakistan.
- Since its formation, the SCO has focused on regional non-traditional security, with counter-terrorism as a priority.
- The fight against the “three evils” of terrorism, separatism and extremism has become its mantra. Today, areas of cooperation include themes such as economics and culture.
India’s entry to the SCO
- India and Pakistan both were observer countries.
- While Central Asian countries and China were not in favor of expansion initially, the main supporter — of India’s entry in particular — was Russia.
- A widely held view is that Russia’s growing unease about an increasingly powerful China prompted it to push for its expansion.
- From 2009 onwards, Russia officially supported India’s ambition to join the SCO in 2017.
- China then asked for its all-weather friend Pakistan’s entry.
Why expand now?
- China and Russia are looking to frame the grouping as a counter to the West — particularly after Russia’s invasion of Ukraine.
- China wishes to draw a sharp contrast between the SCO and NATO.
Changing narrative of SCO
- There has been discussion in the international arena that the trend of non-alignment is back.
- NATO is based on Cold War thinking.
- The logic of NATO is creating new enemies to sustain its own existence.
- However, SCO is a cooperative organisation based on non-alignment and not targeting a third party.
India and SCO: Present status
- India will host the SCO summit next year, and Varanasi has been selected as the SCO region’s first “Tourism and Cultural Capital”.
- India will also be chairing the summit.
Try this PYQ now:
In the context of the affairs of which of the following is the phrase “Special Safeguard Mechanisms” mentioned in the news frequently?
(a) United Nations Environment Programme
(b) World Trade Organization
(c) ASEAN- India Free Trade Agreement
(d) G-20 Summits
Post your answers here.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Capital expenditure
Mains level: Read the attached story
Finance Minister said India’s long-term growth prospects were embedded in public capital expenditure programs.
What is the news?
- FM has raised capital expenditure (capex) by 35.4% for the financial year 2022-23 to ₹7.5 lakh crore to continue the public investment-led recovery of the pandemic-battered economy.
- The capex last year was ₹5.5 lakh crore.
What is Capital Expenditure (Capex)?
- The government’s expenditure is categorized into two:
- The one which results in asset development or acquisition known as CAPEX,
- Another is utilized to cover operating costs and obligations but does not result in asset creation known as Revenue expenditure.
- Capex is defined the as money spent on the acquisition of assets such as land, buildings, machinery, and equipment, as well as stock investments.
What attributes to capex?
- The portion of government payments that goes toward the construction of assets such as schools, colleges, hospitals, roads, bridges, dams, railway lines, airports, and seaports amounts to capex.
- The acquisition of new weaponry and weapon systems, such as missiles, tanks, fighter planes, and submarines, necessitates a significant financial outlay.
- The defense sector receives over a third of the central government’s capital spending, primarily for armament acquisitions.
- Despite the fact that defense spending is classified as a capital expenditure, it does not result in the development of infrastructure to support economic growth.
- Also includes investments that will produce earnings or dividends in the future.
Significance of Capex
- Economic recovery: This action is crucial in light of the economic slowdown induced by the Covid-19 epidemic, as well as a dip in the employment ratio.
- Value creation: Capital asset formation provides future cash flows for the economy and contributes to value creation.
- Multiplier Effect: Capex is expected to have a Multiplier Effect (a change in rupee value of output with respect to a change in rupee value of expenditure).
- Increased employment: Capital spending creates jobs and improves labor productivity as a result of the multiplier effect.
- Macroeconomic Stabilizer: Capital Expenditure serves as a macroeconomic stabilizer and is an excellent instrument for countercyclical fiscal policy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Mission Indradhanush
Mains level: Read the attached story
The number of children in India who were unvaccinated or missed their first dose of diphtheria-tetanus-pertussis (DTP) combined vaccine doubled due to the pandemic, rising from 1.4 million in 2019 to 2.7 million in 2021, according to official data published by the WHO and UNICEF.
Why in news?
- This data signifies that the world recorded the largest sustained decline in childhood vaccinations in approximately 30 years.
- There was an increase in zero dose.
- This is the first time ever there has been a decline in evaluated coverage in immunisation for India as a whole.
Vaccination measures in India
- Intensified Mission Indradhanush (IMI) 4.0: India started IMI 4.0 from February 2022, which is expected to further reduce the number of unvaccinated children.
- India’s Universal Immunisation Programme (UIP): It provide free vaccines to all children across the country to protect them against Tuberculosis, Diphtheria, Pertussis, Tetanus, Polio, Hepatitis B, Pneumonia and Meningitis due to Haemophilus Influenzae type b (Hib), Measles, Rubella, Japanese Encephalitis (JE) and Rotavirus diarrhoea. (Rubella, JE and Rotavirus vaccine in select states and districts).
About Intensified Mission Indhradhanush (IMI) 4.0
- IMI 4.0 aims to fill gaps in the routine immunisation coverage of infants and pregnant women hit by the Covid-19 pandemic and also aims to make lasting gains towards Universal Immunization.
- It will have three rounds and will be conducted in 416 districts across 33 states.
- Unlike the past, each round under IMI 4.0 will be conducted for seven days, including Routine Immunization (RI) days, Sundays, and public holidays.
Mission Indradhanush (MI)
- Mission Indradhanush (MI) was launched in 2014 with the goal to ensure full immunization with all available vaccines under Universal Immunization Programme (UIP) for children up to two years of age and pregnant women.
- It targets achieving 90% full immunization coverage in all districts.
- Under MI, all vaccines under the Universal Immunization Program (UIP) are provided as per National Immunization Schedule.
- UIP provides free vaccines against 12 life-threatening diseases, mentioned above.
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Back2Basics: Universal Immunisation Programme
- The Expanded Programme on Immunization was launched in 1978.
- It was renamed as UIP in 1985 when its reach was expanded beyond urban areas.
- UIP is one of the largest public health programmes targeting close to 2.67 crore newborns and 2.9 crore pregnant women annually.
- Under UIP, Immunization is provided free of cost against 12 vaccine-preventable diseases.
- The two major milestones of UIP have been the elimination of polio in 2014 and maternal and neonatal tetanus elimination in 2015.
- To speed up the coverage, Mission Indradhanush was planned and implemented to rapidly increase the full coverage to 90%.
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