Note4Students
From UPSC perspective, the following things are important :
Prelims level: LCA Tejas
Mains level: Not Much
The Union Cabinet has approved procurement of 73 LCA Tejas Mk-1A fighter aircraft and 10 LCA Tejas Mk-1 Trainer aircraft for Indian Air Force.
Try this PYQ from CSP 2018:
Q.What is “Terminal High Altitude Area Defense (THAAD)”, sometimes seen in the news?
(a) An Israeli radar system
(b) India’s indigenous anti-missile programme
(c) An American anti-missile system
(d) A defence collaboration between Japan and South Korea
LCA Tejas
- The Tejas is an Indian single-engine, fourth-generation, multirole light fighter aircraft.
- It is designed by the Aeronautical Development Agency (ADA) in collaboration with the Aircraft Research and Design Centre (ARDC) of Hindustan Aeronautics Limited (HAL).
- It came from the Light Combat Aircraft (LCA) programme, which began in the 1980s to replace India’s ageing MiG-21 fighters.
- The indigenous content of the Tejas was 59.7% by value and 75.5% by a number of lines replaceable units.
Which are the procured variants?
- Light Combat Aircraft Mk-1A variant is an indigenously designed, developed and manufactured state-of-the-art modern 4+ generation fighter aircraft.
- It is the first “Buy (Indian-Indigenously Designed, Developed and Manufactured)” category procurement of combat aircraft.
Significance
- Tejas enable IAF to handle repairs or servicing at their base depot so that the turnaround time would get reduced for mission-critical systems.
- This would enable IAF to sustain the fleet more efficiently and effectively due to the availability of repair infrastructure at respective bases.
- It will give a further push to Atmanirbhar Bharat initiative and boost indigenization of defence production and the defence industry in the country.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Comprehensive Agreement of Investment between China and the EU
Mains level: Paper 2- Contours of the post-pandemic world order
Thought the article is not directly related to India, the conclusion of the investment treaty between the EU and China serves as the prelude to the post-pandemic world order which surely matters for India. The article explains the implications of the agreement.
Investment agreement between EU and China
- Recently, the EU and China announced the completion of a Comprehensive Agreement on Investment (CAI) between the two.
- The CAI gives European firms enhanced access to the Chinese market, removes (or relaxes) Chinese government requirements on joint ventures and technology transfer in some sectors.
- The European Commission has claimed that the CAI allows the EU to maintain its “policy space”, especially in “sensitive” sectors such as energy, infrastructure, agriculture, and public services
- The deal also promises equal treatment with state enterprises and greater regulatory transparency in China.
- Moreover, the Chinese government has undertaken some obligations on environmental sustainability and labour rights, notably by agreeing to make “continued and sustained efforts” to ratify the Forced Labour Convention.
Reaction to the agreement
- The US reaction ranged from disappointment to outright hostility.
- The incoming Biden administration would have preferred a unified front against China, by striking an economic deal with Europe first.
- For others, it was the EU’s apparent misjudgement on China’s human rights promises.
Post-pandemic world order and role of democracies
- The Europe-China agreement underscores a fundamental question of the post-pandemic world order: Can democracies remain true to their values while engaging in trade and investment with China?
- To answer that, we must recognize two facts.
- First, it is impossible to decouple the economies of the West from the Chinese economy without causing an economic catastrophe.
- Second, there is little that Western countries can do to reshape China’s state-driven economic model or repressive human- and labour-rights regime.
What should be the approach in dealing with China
- The West should pursue more limited, more attainable, and ultimately more defensible goals.
- Two goals are paramount.
- First, trade and investment rules should be such that Western firms and consumers are not directly complicit in human-rights abuses in China.
- Second, such rules should safeguard democratic countries against Chinese practices that could undermine their domestic institutional arrangements on labour, environment, technology, and national security.
Lack of clarity over arbitration mechanism
- The agreement contains an arbitration scheme that enables the parties to bring violation complaints against each other.
- Arbitration scheme could serve as a means for the Chinese government to challenge specific entry barriers against Chinese firms.
- How much this mechanism will be sensitive towards the issues such as treatment given to workers or the environmental protection is not clear.
- Similarly, how much deference will panels show to exceptions to market access based on “national security” considerations is not clear.
Conclusion
We should not judge the CAI by whether it enables Europe to export its system and values. We should judge it by whether it allows Europe to remain true to its own.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Functions of the the judiciary
Mains level: Paper 2- Issues with the Supreme Court order suspending the implementation of the Farm acts
The article deals with the recent Supreme Court order in which it suspended the implementation of the Farm Acts. This order gives rise to several issues. The article deals with these issues.
What is the issue
- The Supreme Court has suspended the implementation of the farm laws.
- The court created a committee to ascertain the various grievances of the farmers.
- But the Supreme Court has not clarified the legal basis of this suspension.
What are the issues with the suspension?
- The court’s action, at first sight, is a violation of separation of powers.
- It also gives the misleading impression that a distributive conflict can be resolved by technical or judicial means.
- It is also not a court’s job to mediate a political dispute.
- Its job is to determine unconstitutionality or illegality.
- Even in suspending laws there needs to be some prima facie case that these lapses might have taken place.
- It has set a new precedent for putting on hold laws passed by Parliament without substantive hearings on the content of the laws.
- Also in appointing the committee, the court has violated the first rule of mediation: The mediators must be acceptable to all parties and appointed in consultation with them.
Conclusion
The Supreme Court order has given the government a setback while not addressing the concerns of the protesting farmers. The court needs to consider these facts and mend its implications.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SAARC, USMCA, MERCOSUR, AfCFTA
Mains level: Paper 2- Revival of SAARC
The article examines the issues are making it difficult to function and suggests its revival.
Dysfunctional SAARC and its implications
- The year 2020 marked the sixth year since the leaders of the eight nations that make up SAARC were able to meet.
- India-Pakistan issues have impacted other meetings of SAARC as well.
- Inactive SAARC is making it easier for member countries, as well as international agencies, to deal with South Asia as a fragmented group.
- India’s refusal to allow Pakistan to host the SAARC summit is akin to giving Pakistan a ‘veto’ over the entire SAARC process.
- The events of 2020, particularly the novel coronavirus pandemic and China’s aggressions at the Line of Actual Control (LAC) shone a new spotlight on this mechanism.
- This should make the government review its position and reverse that trend.
Reasons India should review its position on SAARC
1) India attend other forums with Pakistan
- India continued to attend Shanghai Cooperation Organisation (SCO) meetings along with their Pakistani counterparts.
- While China’s incursions in Ladakh constituted the larger concern in the year, India did not decline to attend meetings with the Chinese leadership at the SCO, the Russia-India-China trilateral, the G-20 and others.
- No concerns over territorial claims stopped the government from engaging with Nepal either.
2) Pandemic caused challenges
- Reviving SAARC is crucial to countering the common challenges brought about by the pandemic.
- Studies have shown that South Asia’s experience of the pandemic has been unique from other regions of the world.
- This experience needs to be studied further in a comprehensive manner in order to counter future pandemics.
- Such an approach is also necessary for the distribution and further trials needed for vaccines, as well as developing cold storage chains for the vast market that South Asia represents.
3) Impact of the pandemic on economies of South Asia
- Apart from the overall GDP slowdown, global job cuts which will lead to an estimated 22% fall in revenue for migrant labour and expatriates from South Asian countries.
- World Bank have suggested that South Asian countries work as a collective to set standards for labour from the region, and also to promoting a more intra-regional, transnational approach towards tourism, citing successful examples including the ‘East Africa Single Joint Visa’ system.
- In the longer term, there will be a shift in priorities towards health security, food security, and job security, that will also benefit from an “all-of” South Asia approach.
- While it will be impossible for countries to cut themselves off from the global market entirely, regional initiatives will become the “Goldilocks option”.
4) Dealing with the China challenge
- In dealing with the challenge from China too, both at India’s borders and in its neighbourhood, a unified South Asian platform remains India’s most potent countermeasure.
- At the border, tensions with Pakistan and Nepal amplify the threat perception from China, while other SAARC members (minus Bhutan), all of whom are Belt and Road Initiative (BRI) partners of China will be hard placed to help individually.
- Significantly, from 2005-14, China actually wanted to join SAARC.
- Despite the rebuff, China has continued to push its way into South Asia.
Conclusion
Seen through Beijing’s prism, India’s SAARC neighbourhood may be a means to contain India, with the People’s Liberation Army strategies against India over the LAC at present, or in conjunction with Pakistan or Nepal at other disputed fronts in the future. New Delhi must find its own prism with which to view its South Asian neighbourhood as it should be: a unit that has a common future, and as a force-multiplier for India’s ambitions on the global stage.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Parental care and associated societal perspectives
Indian cricket captain has opted for paternity leave amidst an ongoing tournament. This has led to his criticism as well as praise for prioritizing family.
Q.Paternity leave is one of the solutions which can help in ending the “motherhood penalty”. Examine with context to working mothers.
What is Paternity leave?
- Paternity leave is a short period of leave for the father to take immediately following childbirth to help care for the child and assist the mother.
- Parental leave is a longer period of leave granted to look after the infant child, usually after the expiration of paternity/maternity leave.
Legal Aspects of Paternity Leave in India
There is no specific or explicit law for paternity leave in India.
- Maternity leave is governed by the Maternity Benefit Act, 1961 which was last amended in 2017 to enhance the period of maternity leave to 26 weeks from the previous 12 weeks.
- The Central Civil Service (Leave Rules), 1972 allows for 15 days of paid paternity leave before childbirth or up to 6 months from the date of the delivery of the child.
- An attempt was made to introduce a pan India legislation on paternity leave in 2017 as a private member’s bill in Lok Sabha, but it was not successful.
- The Paternity Benefit Bill, 2017, provided for a paid leave of fifteen days which could be availed up to three months from the date when the child was born.
- It also included an adopted child below the age of three months and applied to men in the organised i.e. private as well as unorganised sectors.
Popular trends
- The longest leave –– six months –– is provided by Ikea, which extends rules from home country Sweden to India.
- Among Indian companies, Zomato made news in 2019 when it decided to give 26-week paternity leave to its employees.
Precursors in India
- The Central Government recently announced that male government employees who are ‘single parents’ which included widowers, divorcees, or unmarried men raising children single-handedly would now be entitled to “child care leave” (CCL).
- Here, they would receive 100% of the leave salary for the first 365 days of leave and 80% of leave salary for the next 365 days.
- This leave was previously only available to women employees.
Why paternity leave matters?
- Most working new mothers (for those who can make that choice) opt for maternity leave either just before the birth or after childbirth.
- It paves the way for at least their temporary, and sometimes their permanent exit from the workplace.
- On the other hand, not many fathers experience much difference in their employment and workplace situation after their child is born, which may either be voluntary by not taking time off or involuntary.
- This structural difference is one of the key components that influence gender dynamics both in the workplace and at home.
The gender dynamics behind
- Lack of paternity leave not only robs new fathers of the crucial chance to bond with their newborn child but also reinforces women’s role as the primary caregiver and underpins the belief that child care is predominantly the mother’s job.
- Paternity leave is a way to directly address the gender dynamic that prevails both at the workplace and at home.
- The undue burden of childcare that is placed on women at home is bound to and does, spill over into their workplace and professional lives.
- The natural effect of it is that it puts hurdles across women’s careers and might slow their growth prospects while some women might choose to quit altogether.
Way forward
- By only having maternity leaves and not giving due consideration to paternity leave, the stereotype that women belong at home, taking care of children is reinforced.
- By no means is the introduction of paternity leave a panacea for gendered workplaces, but it will be a significant step in combating and overcoming stereotype.
- For India, a decent way to begin would be to have a national policy on paternity leave that would include all fathers and would apply irrespective of whether they worked in the organised or unorganised sectors.
- Shifting from a purely maternity oriented care framework to a parental care framework which would involve both parents would be beneficial for all stakeholders and is what we need today.
Conclusion
- A major benefit that accrues from paternity leave is that it eases pressure and stigma from women at the workplace, as they no longer are the only ones who are taking leave for child care purposes.
- Paternity leave is also one of the solutions which can help in ending the “motherhood penalty”.
- The motherhood penalty is a term that describes the disadvantages that women with children face as compared to women who don’t in workplaces.
- Fathers need to be active co-parents and not just helpers to their female partners/wives.
- And for ones with feminist’s perspectives, they should not look paternity leave as a sole vacation for men.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Persecution of minorities in neighbouring countries
Pakistan’s Hazaras finally ended a protest and agreed to bury the bodies of 11 coal miners from the community killed by the IS.
Genocide and Pakistan are the two inseparable metaphors. Pakistan’s treatment of its minorities is the least highlighted global violation of Human Rights. Hindus, Sikhs and Christians are the most persecuted communities.
Who are the Hazaras?
- Around 1773, the mountainous region of Hazarajat in modern-day central Afghanistan was annexed and made a part of the territories of the Afghan Empire under Pashtun ruler Ahmad Shah Durrani.
- The Sunni Muslim majority under the Pashtun ruler resulted in further marginalization of the Shiite Hazara community, to the extent that in the 18th and 19th century.
- They were forced to leave fertile lowlands in central Afghanistan and make the dry, arid mountainous landscape their new home.
Their persecution
- Persecution of the Shiite Hazaras is nothing new in Pakistan or neighbouring Afghanistan.
- They have been frequently targeted by Taliban and IS militants and other militant groups in both countries.
Causes of persecution: Ethnicity and Religion
- Their unique identity, ethnicity and religion always made the Hazaras stand out among the other communities.
- Hazaras speak Hazaragi, which is close to Dari Persian, the official language of modern-day Afghanistan.
- The community also shares physical similarities with the Mongols and their speech, specific terms and phrases, reflect strong Central Asian Turkic influences.
- This sets them apart from their neighbours in Pakistan and other communities within Afghanistan.
An attempted ethnic cleansing
- In the 19th century, the Hazara community constituted approximately 67 per cent of Afghanistan’s total population.
- Since then, primarily due to violence, oppression and targeted massacres, that number has come down to a little as 10 to 20 per cent of the population now.
- The attacks reached a crescendo in 2013 when three separate bombings killed more than 200 people in Hazara neighbourhoods of Quetta.
- In the aftermath of this incident, the Shia community in Pakistan had erupted in anger over the Pakistani government’s lack of protection of its minorities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PMFBY
Mains level: Success of PMFBY
The Pradhan Mantri Fasal Bima Yojana (PMFBY) has completed 5 Years of successful operations.
It has become vital these days to remember and recognize every detail of government schemes.
What is PMFBY?
- 5 years ago, on 13th January 2016, the GoI took a historic step towards strengthening risk coverage of crops for farmers of India and approved the flagship crop insurance scheme – the PMFBY.
- The scheme was conceived as a milestone initiative to provide a comprehensive risk solution at the lowest uniform premium across the country for farmers.
- Premium cost over and above the farmer share is equally subsidized by States and GoI.
- However, GoI shares 90% of the premium subsidy for the North Eastern States to promote the uptake in the region.
- The average sum insured per hectare has increased from ₹15,100 during the pre-PMFBY Schemes to ₹40,700 under PMFBY.
Coverage of Risks and Exclusions:
Following stages of the crop and risks leading to crop loss are covered under the scheme.
- Prevented Sowing/ Planting Risk: The insured area is prevented from sowing/ planting due to deficit rainfall or adverse seasonal conditions
- Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, viz. Drought, Dry spells, Flood, Inundation, Pests and Diseases, Landslides, Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane and Tornado.
- Post-Harvest Losses: Coverage is available only up to a maximum period of two weeks from harvesting for those crops which are allowed to dry in cut and spread condition in the field after harvesting against specific perils of a cyclone and cyclonic rains and unseasonal rains.
- Localized Calamities: Loss/ damage resulting from the occurrence of identified localized risks of hailstorm, landslide, and Inundation affecting isolated farms in the notified area.
Try this question from CSP 2020:
Q.Under the Kisan Credit Card Scheme, short-term credit support is given to farmers for which of the following purposes? (CSP 2020)
- Working capital for maintenance of farm assets
- Purchase of combine harvesters, tractors and mini trucks
- Consumption requirements of farm households
- Construction of family house and setting up of village cold storage facility
- Construction of family house and setting up of village cold storage facility
Select the correct answer using the code given below:
(a) 1,2 and 5 only
(b) 1,3 and 4 only
(c) 2,3,4 and 5 only
(d) 1, 2, 3 and 4
Progress till date
- The Scheme covers over 5.5 crore farmer applications year on year.
- Till date, claims worth Rs 90,000 crores have already been paid out under the Scheme.
- Aadhar seeding has helped in speedy claim settlement directly into the farmer accounts.
- Even during COVID lockdown period, nearly 70 lakh farmers benefitted and claims worth Rs. 8741.30 crores were transferred to the beneficiaries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Khadi Prakritik Paint
Mains level: KVIC and its success
Union Minister for MSMEs has launched an innovative new paint called Khadi Prakritik Paint – India’s first cow dung paint
It is very unlikely that an MCQ will be asked in Prelims. However one must know this from mains perspective.
Khadi Prakritik Paint
- It is developed by Khadi and Village Industries Commission at his residence.
- The eco-friendly, non-toxic paint, called “Khadi Prakritik Paint” is a first-of-its-kind product, with anti-fungal, anti-bacterial properties.
- Khadi Prakritik Paint is available in two forms – distemper paint and plastic emulsion paint.
- The project was conceptualized by Chairman KVIC in March 2020 and later developed by Kumarappa National Handmade Paper Institute, Jaipur (a KVIC unit).
- The paint is priced at only Rs. 120 per litre for the distemper, and Rs.225 per litre for the emulsion, almost half the price charged by big paint companies.
A no lesser brand
- Khadi Prakritik Emulsion paint meets BIS 15489:2013 standards; whereas Khadi Prakritik Distemper paint meets BIS 428:2013 standards.
- The paint has successfully passed various test parameters such as application of paint, thinning properties, drying time and finish, among others.
- It dries in less than 4 hours and has a smooth and uniform finish.
Why makes it competent?
- Based on cow dung as its main ingredient, the paint is cost-effective and odourless and has been certified by the Bureau of Indian Standards.
- The paint is free from heavy metals like lead, mercury, chromium, arsenic, cadmium and others.
- It will be a boost to local manufacturing and will create sustainable local employment through technology transfer.
- This technology will increase the consumption of cow dung as a raw material for eco-friendly products and will generate additional revenue to farmers and gaushalas.
- Utilization of cow dung will also clean the environment and prevent clogging of drains.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NAM, SAARC
Mains level: Paper 2- India's foreign policy challenges
The article highlights the challenges facing the India’s foreign policy and factors responsible for these challenging circumstances.
Stronger China in 2021 and Impact on India
- China is about the only major country which had a positive rate of growth at the end of 2020, and its economy is poised to grow even faster in 2021.
- Europe has recently revived its China links by ‘concluding in principle the negotiations for an EU-China Comprehensive Agreement on Investment’.
- The China-EU Investment Treaty which is an indication that Europe values its economy more than its politics.
- In one swift move, Europe has thus shattered all hope that China would remain ostracised in 2021.
- India which has greatly curtailed its relations with China in the wake of Chinese aggression in Eastern Ladakh, will find itself in difficult position.
Major changes in West Asia and implications for India
- In West Asia, the Abraham Accords have sharpened the division between the Saudi Bloc and Iran-Turkey.
- Despite the hype surrounding the Abraham Accords the risk of a confrontation between Iran and Israel remains high.
- This does pose problems for India, since both have relations with it.
- Meanwhile, China demonstrates a willingness to play a much larger role in the region, including contemplating a 25-year strategic cooperation agreement with Iran.
Foreing policy challenges for India in 2021
- No breakthrough in Sino-Indian relations has, or is likely to occur.
- India-Iran relations today lack warmth.
- In Afghanistan, India has been marginalised as far as the peace process is concerned.
- While India’s charges against Pakistan of sponsoring terror have had some impact globally, it has further aggravated tensions between the two neighbours and pushed Pakistan closer to China.
- Hostility between India and Nepal appears to have reduced lately, relations continue to be strained.
- Through a series of diplomatic visits, India has made efforts to improve relations with some of its neighbours such as Bangladesh, Myanmar and Sri Lanka, but as of now worthwhile results are not evident.
- One key takeaway is that as India-China relations deteriorate, India’s neighbours are not averse to taking sides, increasing India’s isolation.
- India will serve as the president of the powerful UN Security Council for the month of August, 2021, but if it is to make a real impact, it must be seen to possess substantial weight to shape policies, more so in its traditional areas of influence.
Factors responsible for India’s foreing policy issues
- There is a perception that India’s closeness to the U.S. has resulted in the weakening of its links with traditional friends such as Russia and Iran.
- Perhaps the most relevant explanation could be the shifting balance of power in the region in which India is situated, notably the rise of China.
- The enlarging conflict between the two biggest powers in Asia is compelling many nations to pick sides in the conflict.
- Othe important factor is that India’s foreign policy suffers from an ideational vacuum.
- India remains isolated from two important supranational bodies of which it used to be a founding member, viz., the Non-Aligned Movement (NAM) and the South Asian Association for Regional Cooperation (SAARC).
Conclusion
As part of the ideational restructuring of India’s foreign policy, what is urgently required, apart from competent statecraft, is the adoption of prudent policies, pursuit of realistically achievable objectives, and, above all, a demonstration of continuity of policy, irrespective of changes in the nature of the Administration.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India's relations with neighbouring countries
The article examines the issue of intervention in domestic politics by the external powers and the practical utilities of principles of non-intervention in the internal matters of neighbouring countries.
Political turmoil in Nepal and India’s reaction
- Nepal has been going through political crisis for some days now.
- India’s reluctance to be drawn into the political turmoil in Kathmandu has drawn much attention.
- India’s refusal is in contrast to Beijing’s active effort to preserve the unity of the ruling communist party in Kathmandu.
The principles of sovereignty and non-intervention and its violations
- India and China always insist that other countries should stop interfering in their respective internal affairs.
- But big nations always intervene in other nations but fend off potential threats to their own sovereignty.
- That does not prevent others from messing with India and Beijing.
- Intervention is part of international life; all powers — big and small — frequently violate the principle of sovereignty.
- The concept of national sovereignty was never absolute.
- Big nations tend to intervene more, and the smaller ones find ways to manage this through the politics of balancing against their large neighbours.
Analysing the causes of external interventions
- The pressure for external intervention often comes from major domestic constituencies within.
- For example, the conflict between Sinhala majority and Tamil minority in Sri Lanka produces political pressure on Delhi to intervene in Sri Lanka.
- The demand sometimes comes from outside.
- In Nepal, for example, elite competition sees different factions trying to mobilise external powers.
- In recent years, we have also seen the intense interaction between domestic power struggles and external powers like India and China.
- The Maldives is one example.
Factors responsible for intervention
- Given the nature of South Asia’s political geography, very few problems can be isolated within the territories of nations.
- There is also the tension between the shared cultural identity in the subcontinent.
- There is also the determination of the smaller nations to define a contemporary identity independent of India.
- The bitter legacies of Partition leave the domestic political dynamics of Bangladesh, India and Pakistan tied together.
- India’s relations with its smaller neighbours are also burdened by the legacy of India’s past hegemony and the emerging challenges to it.
What should be India’s regional policy?
- India can neither stand apart nor jump into every domestic conflict within the neighbourhood.
- It is always about political judgement about specific situations.
- Active and direct intervention in the domestic politics of neighbours must be a prudent exception rather than the rule in India’s regional diplomacy.
Conclusion
The subcontinent has historically been an integrated geopolitical space with a shared civilisational heritage. Equally true is the reality of multiple contemporary sovereignties within South Asia. In dealing with these twin realities, the principles guiding India’s engagement should be based on “mutual respect and mutual sensitivity”.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: UNSC
Mains level: India's agenda at UNSC
India is back as a non-permanent member on the United Nations Security Council.
Q.What objective India should pursue in its stint at the UNSC? What challenges India will face in achieving these objectives?
India at the UNSC
Take a look at its seven previous terms, and what its agenda will be amid events concerning China, Pakistan and the US:
- In 1950-51, India, as President of UNSC, presided over the adoption of resolutions calling for the cessation of hostilities during the Korean War and for assistance to the Republic of Korea.
- In 1967-68, India co-sponsored Resolution 238 extending mandate of UN mission in Cyprus.
- In 1972-73, India pushed strongly for admission of Bangladesh into the UN. The resolution was not adopted because of a veto by a permanent member.
- In 1977-78, India was a strong voice for Africa in the UNSC and spoke against apartheid. Then External Affairs Minister Atal Bihari Vajpayee spoke in UNSC for Namibia’s independence in 1978.
- In 1984-85, India was a leading voice in UNSC for resolution of conflicts in the Middle East, especially Palestine and Lebanon.
- In 1991-92, PM P V Narasimha Rao participated in the first-ever summit-level meeting of the UNSC and spoke on its role in the maintenance of peace and security.
- In 2011-2012, India was a strong voice for developing world, peacekeeping, counter-terrorism and Africa. The first statement on Syria was during India’s Presidency at the UNSC.
India’s diverse role-play
- India played an active role in discussions on all issues related to international peace and security.
- It included several new challenges which the UNSC was called upon to deal with in Afghanistan, Cote d’Ivoire, Iraq, Libya, South Sudan, Syria and Yemen.
- In view of the threat posed to international trade and security by piracy off the coast of Somalia, India promoted international cooperation against the pirates.
- At India’s initiative, the UNSC mandated international cooperation for release of hostages taken by pirates as well as for prosecution of those taking hostages and those aiding and abetting these acts.
- India also worked for enhancing international cooperation in counter-terrorism, prevention of the proliferation of weapons of mass destruction to non-state actors, and the strengthening of UN peacekeeping efforts.
Issues at UNSC: The politics within
- The seven previous terms have given Indian diplomats the experience of how diplomacy is conducted at the multilateral setting.
- There have been instances where permanent members would like the non-permanent members to be “cooperative”, and no stand in the way of major resolutions.
- Most non-permanent members get influenced by the P-5 members. They did not wish to irritate the permanent members and were keen to be perceived by them as ‘cooperative’.
- This was precisely how the permanent members would like the non-permanent members to behave.
Walk-alone moves by India
- The Indians took P5 work more seriously and consequently had to fight a lonely battle.
- This was the time when the Gulf War erupted and India voted in favour of the US-sponsored resolution in April 1991.
- India’s vote was dictated by pragmatic considerations.
- The US had made it clear to India that failure to support the resolution would make it very difficult for them to help India in the World Bank and the IMF.
- Back then, India was going through a severe balance-of-payment crisis and needed funds from these organisations.
- Also, India needed the US on its side, if and when the Kashmir issue came up.
Twenty years later, when India again became a non-permanent member at the UNSC, it was stronger economically but still had to negotiate politics within the Council.
Ugly faces of the council
- Most professional diplomats shed their innocence before they arrive at the horse-shoe table around which the Security Council meets.
- In the real world of foreign and security policy, decision-makers are invariably confronted by cruel choices that are equally problematic and come in various shades.
- Practitioners are acutely conscious that it is only diplomacy’s outward packaging that dwells in a commitment to a higher moral purpose.
- The shameless pursuit of narrowly defined interests is most often the motivation and seldom raises eyebrows in the world of multilateral diplomacy.
Issues before India
(A) Long slated UN reforms
- New Delhi has said it is essential that the Security Council is expanded in both the permanent and non-permanent categories.
- It says India is eminently suited for permanent UNSC membership by any objective criteria, such as population, territorial size, GDP, economic potential and ongoing contributions to UN activities.
(B) Terrorism
- The international effort against terrorism is a key priority for India in the UN.
- With the objective of providing a comprehensive legal framework to combat terrorism, India took the initiative to pilot a draft Comprehensive Convention on International Terrorism (CCIT) in 1996.
- A text of the Convention is being negotiated in the 6th Committee of the UN General Assembly.
- India worked closely to ensure the listing of Pakistan-based terrorist Masood Azhar under the UNSC’s 1267 Sanctions Committee (May 2019) concerning al-Qaida and ISIS terrorists.
(C) China challenge
- India is entering the UNSC at a time when Beijing is asserting itself at the global stage much more vigorously than ever.
- It heads at least six UN organisations — and has challenged the global rules.
- China’s aggressive behaviour in the Indo-Pacific, as well as the India-China border, has been visible in all of 2020, and New Delhi will have to think on its feet to counter Beijing.
- At Pakistan’s behest, China has tried to raise the issue of Kashmir at the UNSC — but has not found much support.
- There is some discussion among the strategic community in New Delhi on raising the issues of Taiwan, Hong Kong and Tibet at the UNSC.
Conclusion
- India will weigh the pros and cons with partners on what steps to take in this direction.
- But, the polarizing politics inside India gives a window of opportunity to its rivals and opens up the possibility of criticism — especially on human rights issues.
Back2Basics: United Nations Security Council
- The UNSC is one of the six principal organs of the United Nations and is charged with the maintenance of international peace and security.
- Its powers include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action through Security Council resolutions.
- It is the only UN body with the authority to issue binding resolutions to member states.
- The Security Council consists of fifteen members. Russia, the United Kingdom, France, China, and the United States—serve as the body’s five permanent members.
- These permanent members can veto any substantive Security Council resolution, including those on the admission of new member states or candidates for Secretary-General.
- The Security Council also has 10 non-permanent members, elected on a regional basis to serve two-year terms. The body’s presidency rotates monthly among its members.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Farmers agitation
The Supreme Court has intended to stay the implementation of the controversial agricultural laws while proposing to form an independent committee chaired by a former CJI to resolve the stand-off between the protesting farmers and the Union government.
Q.The judicial systems in India and the UK seem to be converging as well as diverging in recent times. Highlight the key points of convergence and divergence between the two nations in terms of their judicial practices. (150W, CS Mains 2020)
Halting the farm laws
- The Parliament’s power to legislate, drawn from Article 254(1) of the Constitution, can only be restricted if the law violates the Constitution.
- How the Supreme Court operationalizes its suggestion to stay the operation of the three farm laws and open fresh talks via a committee will be evident.
- The Supreme Court has previously set up committees, delegating some of its powers to the members to implement or oversee a law or an order of the court.
- A line of precedents shows that courts have been very cautious while passing interim orders to stay laws passed by the Legislature.
Narrow grounds
The implementation of a law can be halted on two narrow grounds:
- The first ground is legislative competence, that is, if the court finds that the Parliament has no power to legislate on a subject matter.
- The other two grounds are if the law violates fundamental rights or any other provisions of the Constitution respectively.
Various precedents
- In matters involving the constitutionality of any legislation, courts should be extremely loath to pass an interim order,” a Supreme Court bench had said in 2013 ruling on the validity of the Cigarettes and Other Tobacco Products Regulation Act, 2003.
- At the time of final adjudication, the court can strike down the statute if found ultra vires of the Constitution.
- Even in 2019, the Supreme Court refused to stay amendments made in 2018 to the SCs and STs Atrocities Prevention Act saying that a law made by Parliament cannot be stayed.
- The court also refused to stay the Citizenship Amendment Act, 2019, which was also challenged after it drew protests across the country.
NJAC and Aadhaar Case
- Even strongly contested legislation such as the National Judicial Appointments Commission (NJAC) and Aadhaar was not stayed by the Supreme Court.
- They were, instead, stalled by the government for the duration of the protracted legal battles in court.
- While the NJAC Act, which contemplated a significant role for the executive in judicial appointments, was struck down as being violative of the basic structure, the SC upheld the Aadhaar Act.
What are the issues with the suspension?
- The court’s action, at first sight, is a violation of separation of powers.
- It also gives the misleading impression that a distributive conflict can be resolved by technical or judicial means.
- It is also not a court’s job to mediate a political dispute.
- Its job is to determine unconstitutionality or illegality.
- Even in suspending laws there needs to be some prima facie case that these lapses might have taken place.
- It has set a new precedent for putting on hold laws passed by Parliament without substantive hearings on the content of the laws.
- Also in appointing the committee, the court has violated the first rule of mediation: The mediators must be acceptable to all parties and appointed in consultation with them.
Conclusion
The Supreme Court order has given the government a setback while not addressing the concerns of the protesting farmers. The court needs to consider these facts and mend its implications.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PM-KISAN
Mains level: Not Much
PM-KISAN payments worth ₹1,364 crores have been wrongly made to more than 20 lakh ineligible beneficiaries and income tax payer farmers.
Try this PYQ:
Q.Under the Kisan Credit Card Scheme, short-term credit support is given to farmers for which of the following purposes? (CSP 2020)
- Working capital for maintenance of farm assets
- Purchase of combine harvesters, tractors and mini trucks
- Consumption requirements of farm households
- Construction of family house and setting up of village cold storage facility
- Construction of family house and setting up of village cold storage facility
Select the correct answer using the code given below:
(a) 1,2 and 5 only
(b) 1,3 and 4 only
(c) 2,3,4 and 5 only
(d) 1, 2, 3 and 4
PM-KISAN
- The Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan Yojana) is a government scheme through which, all small and marginal farmers will get up to Rs 6,000 per year as minimum income support.
- Under the PM-KISAN scheme, all landholding farmers’ families shall be provided with the financial benefit of Rs. 6000 per annum per family payable in three equal instalments of Rs. 2000 each, every four months.
- The definition of the family for the scheme is husband, wife, and minor children.
- State Government and UT administration will identify the farmer families which are eligible for support as per scheme guidelines.
- The fund will be directly transferred to the bank accounts of the beneficiaries.
Why in news?
- When it was launched just before the general election in 2019, it was meant to cover only small and marginal farmers who owned less than two hectares.
- Later that year, large farmers were included in the scheme as the government removed land size criteria.
Certain exclusions
- However, certain exclusions remained.
- If any member of a farming family paid income tax, received a monthly pension above ₹10,000, held a constitutional position, or was a serving or retired government employee, they were not eligible for the scheme.
- Professionals and institutional landholders were also excluded.
Who are NOT eligible for PM-KISAN?
The following categories of beneficiaries of higher economic status shall not be eligible for benefit under the scheme.
- All Institutional Landholders.
Farmer families that belong to one or more of the following categories:
- Former and present holders of constitutional posts
- Former and present Ministers/ State Ministers and former/present Members of Lok Sabha/ Rajya Sabha/ State Legislative Assemblies/ State Legislative Councils, former and present Mayors of Municipal Corporations, former and present Chairpersons of District Panchayats.
- All serving or retired officers and employees of Central/ State Government Ministries
- All superannuated/retired pensioners whose monthly pension is Rs.10,000/-or more. (Excluding Multi-Tasking Staff / Class IV/Group D employees) of the above category
- All Persons who paid Income Tax in the last assessment year
- Professionals like Doctors, Engineers, Lawyers, Chartered Accountants, and Architects registered with Professional bodies and carrying out the profession by undertaking practices.
Note: It is not so easy to remember all such exclusions. But one must be able to recognize them by applying pure logic and thumb rule. This can be well understood from the PYQ given.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Global Burden of Disease (GBD) Report
Mains level: Not Much
According to the Global Burden of Disease, nearly a quarter (24.8 per cent) of all deaths in India is due to cardiovascular diseases (CVDs).
The fastest-growing economy has some perils. In this newscard, you will get to see how CVDs are a legacy of economic growth.
Global Burden of Disease (GBD) Report
- The GBD is a comprehensive regional and global research program of disease burden that assesses mortality and disability from major diseases, injuries, and risk factors.
- GBD is a collaboration of over 3600 researchers from 145 countries.
- It is based out of the Institute for Health Metrics and Evaluation (IHME) at the University of Washington and funded by the Bill and Melinda Gates Foundation.
Indian burden of CVDs
- About a third of the senior citizens have been diagnosed with hypertension, 5.2% with chronic heart disease and 2.7% with stroke
- Even an analysis of the medical certification of cause of death (MCCD) reports points to an increase in the proportion of deaths due to CVD. It went from 20.4 per cent in 1990 to 27.1 per cent in 2004.
- According to MCCD report, 2018, CVDs accounted for more than half (57%) of the total deaths in the age group of 25–69 years.
- Case fatality due to CVD in low-income countries, including India, appears to be much higher than in middle and high-income countries.
- In India, for example, the mean age at which people get the first myocardial infarction is 53 years, which is about 10 years earlier than their counterparts in developed countries.
- About a third (32 per cent) of the senior citizens have been diagnosed with hypertension, 5.2 per cent were diagnosed with chronic heart disease and 2.7 per cent with stroke.
Women are more vulnerable
- Numerous studies have also pointed out that CVD remains the number-one threat to women’s health as more women than men die annually due to these diseases.
- A Harvard study shows low high-density lipoproteins and high triglycerides appear are the main factors that increase the chances of death from cardiovascular disease in women over age 65.
- As per the LASI report, gender differences were evident in cross-state variations.
- CVD among men was higher in Kerala (45 per cent), Goa (44 per cent), Andaman and Nicobar (41 per cent) and lower in Chhattisgarh (15 per cent), Meghalaya (16 per cent), Nagaland (17 per cent).
Why CVDs are prevalent in India?
- Epidemiological evidence suggests that CVD is associated with behavioural factors such as smoking, alcohol use, low physical activity, and insufficient vegetable and fruit intake.
- In the Indian context, poverty, maternal malnutrition, and early life changes enhance an individual’s risk of CVDs.
- Rural to urban migration that happens in distress leads to over-crowded and unclean environments in urban slums.
- Problems of inadequate housing, indoor pollution, infectious diseases, inappropriate diet, stress and smoking crop up as a result.
Need of the hour
- CVD-risk prevention is one of the important priorities among India’s sustainable development goals.
- In an earlier estimate, WHO had said with India’s present CVD burden, the country would lose $237 billion from the loss of productivity and spending on healthcare over 10 years (2005–2015).
- This is because the diseases affect the country’s working population.
Way ahead
- The government should devise an approach that can improve the efficiency of care and health system preparedness to curb the CVD epidemic currently sweeping India.
- Attempts in direction to preserve the traditional lifestyle are also necessary.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Coal bidding in India
Mains level: Coal mining and legal hurdles
The Union government has announced a new online single window clearance portal for the coal sector to speed up the operationalization of coal mines.
Try this PYQ:
Q.Consider the following statements:
- In India, State Governments do not have the power to auction non -coal mines.
- Andhra Pradesh and Jharkhand do not have goldmines.
- Rajasthan has iron ore mines.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 3 only
What is a single-window clearance portal?
- A single window clearance portal is aimed at allowing successful bidders for coal blocks to be able to obtain all required clearances.
- It includes environmental and forest clearances, from a single portal with progress monitoring, instead of having to go to multiple authorities.
- The portal should allow successful bidders to operationalize coal mines more quickly.
- The Parivesh mechanism for forest and environment-related clearances would likely be merged into this mechanism.
Why need such a portal?
- Presently, about 19 major approvals or clearances are required before starting the coal mine in the country.
- In the absence of a unified platform for grant of clearances, companies were required to approach different departments, leading to delay in operationalization.
How will the portal help?
- Industry sources said that the sector has long sought a single-window clearance system to help with quicker operationalization.
- Obtaining the requisite clearances was taking over 2-3 years for successful bidders in many cases.
- Some coal blocks auctioned as far back as 2015 has still not been operationalised due to delays in obtaining required clearances.
Must read:
[Burning Issue] The Mineral Laws (Amendment) Bill, 2020
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MEE Survey
Mains level: Not Much
Minister for Environment, Forest and Climate Change has released Management Effectiveness Evaluation (MEE) of 146 national parks and wildlife sanctuaries in the country.
Map the protected areas mentioned in the newscard in your Atlas.
MEE Survey
- MEE is a very important document that provides valuable guidance on various aspects of wildlife and protected area expand MEE of Marine Protected Areas.
- In order to assess the efficacy of Protected Areas, evaluation of management effectiveness was required.
- MEE has emerged as a key tool for PA managers and is increasingly being used by governments and international bodies to understand the strengths and weaknesses of the protected area management systems.
- The results of the present assessment are encouraging with an overall mean MEE score of 62.01% which is higher than the global mean of 56%.
- With this round of evaluation, MoEFCC successfully completed one full cycle of evaluating all terrestrial National Parks and Wildlife Sanctuaries of the country from 2006 to 2019.
India has systematically designated its Protected Areas in four legal categories — National Parks, Wildlife Sanctuaries, Conservation Reserves and Community Reserves under the Wildlife (Protection) Act, 1972.
Areas surveyed
- Under the WP 1972 Act, India has 903 formally designated Protected Areas with total coverage of 1,65,012.6 square km.
- Among these are 101 National Parks, 553 Wildlife Sanctuaries, 86 Conservation Reserves and 163 Community Reserves.
- For the survey, 146 National Parks and Wildlife Sanctuaries across 29 states and Union territories were evaluated.
Highlights of the MEE
- Tirthan Wildlife Sanctuary and Great Himalayan National Park in Himachal Pradesh have performed the best among the surveyed protected areas.
- The Turtle Wildlife Sanctuary in Uttar Pradesh was the worst performer in the survey.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CRZ norms
Mains level: Coastal conservation in India
Few illegal apartment complexes in Maradu, Kerala, were razed as ordered by the Supreme Court for breaching Coastal Regulation Zone (CRZ) norms. The court had called the illegal constructions a “colossal loss” to the environment.
What are CRZ norms?
- In India, the CRZ Rules govern human and industrial activity close to the coastline, in order to protect the fragile ecosystems near the sea.
- They restrict certain kinds of activities — like large constructions, setting up of new industries, storage or disposal of hazardous material, mining, reclamation and bunding — within a certain distance from the coastline.
- After the passing of the Environment Protection Act in 1986, CRZ Rules were first framed in 1991.
- After these were found to be restrictive, the Centre notified new Rules in 2011, which also included exemptions for the construction of the Navi Mumbai airport and for projects of the Department of Atomic Energy.
- In 2018, fresh Rules were issued, which aimed to remove certain restrictions on building, streamlined the clearance process, and aimed to encourage tourism in coastal areas.
- While the CRZ Rules are made by the Union environment ministry, implementation is to be ensured by state governments through their Coastal Zone Management Authorities.
Where do they apply?
- In all Rules, the regulation zone has been defined as the area up to 500 m from the high-tide line.
- The restrictions depend on criteria such as the population of the area, the ecological sensitivity, the distance from the shore, and whether the area had been designated as a natural park or wildlife zone.
- The latest Rules have a no-development zone of 20 m for all islands close to the mainland coast, and for all backwater islands in the mainland.
Back2Basics
Coastal Regulation Zone: How rules for building along coast have evolved
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Lithium ion battery
Mains level: Paper 3- Adoption of e-vehicles and challenges
Article highlight India’s preparedness for the faster adoption of electric vehicles and steps taken by the government in this direction.
Why electric mobility matters for India
- It is important for India because such vehicles are sustainable and profitable in the long term.
- Reducing dependence on crude oil will save the government money, reduce carbon emissions, and build domestic energy independence.
- India’s transition to electric vehicles will allow us to fine-tune our infrastructure.
- This will also influence India’s foreign policy as our energy security dependence will shift from West Asia to Latin America.
- India imported 228.6 MT of crude oil worth $120 billion in 2018–19, which made it the third-largest oil importer in the world in terms of value.
Government policies
- Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles and its updated (Fame 2) version, the government has allocated $1.3 billion in incentives.
- A proposal for a $4.6 billion subsidy for battery makers has also been proposed by the NITI Aayog.
- These policies are embedded with the vision to have 30% electric vehicles plying the roads by 2030.
Developing domestic battery manufacturing capacity
- At present, India’s lithium-ion battery demand is fulfilled by imports from China, Vietnam, and Hong Kong.
- In the last two years, India’s lithium imports have tripled from $384 mn to $1.2 bn.
- With its policy intervention to support battery manufacturers by supplying lithium and cobalt, this industry is more likely to grow domestically to support India’s goal to switch to electric mobility.
- In 2019, NALCO, Hindustan Copper Limited (HCL) and Mineral Exploration Corporation Ltd (MECL) formally signed a joint venture agreement to form Khanij Bidesh India Limited (KABIL) to scout for strategic mineral assets like lithium and cobalt abroad for commercial use and for supplying to meet the domestic requirement for battery manufacturers.
- Developing domestic battery manufacturing capacity may fundamentally change India’s relationship with resource-rich Latin America as the government plans to buy overseas lithium reserves.
- In Latin America, most of the production comes from Argentina, Chile, and Bolivia which holds about 80% of the explored lithium of the world.
- Currently, India’s biggest trading partners in Latin America are Brazil, Mexico, and Venezuela, and majority of trade is concentrated on crude oil which includes 14%-20% of India’s total crude oil imports.
- This may soon shift to lithium and cobalt.
Conclusion
The Indian government’s initiation to take the front seat in electric mobility and preemptive action to send a high-level delegation to have a precise understanding of the availability of lithium and possibilities of joint ventures will supply domestic markets and drive international markets.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Marginal propensity to consume
Mains level: Paper 3- Economic recovery and India's New Deal Moment
The article explains the opportunity presented by the budget to steer the economy out of the uncertain territory.
3 characteristics of India’s economic recovery
- First, India has broken the link between virus proliferation and mobility earlier and more successfully than many countries.
- Second, the employment rate gradually improved till September but has weakened since then, even as the economy has progressively opened up.
- CMIE’s labour market survey still reveals 18 million fewer employed (about 5 per cent of the total employed) compared to pre-pandemic levels.
- A third phenomenon is large firms have endured the crisis better and are gaining market share at the expense of smaller firms.
- To the extent there is a migration of activity from the informal/SME firms to larger firms, tax collections and Sensex/Nifty earnings should get a boost, even holding the economic pie constant.
- Greater scale and formalisation undoubtedly augur well for medium-term productivity but could increase near-term labour market frictions and boost pricing power.
Increased prospects of K-shaped recovery
- Above 3 factors increases prospects of a K-shaped recovery from COVID, a phenomenon playing out globally.
- Households at the top of the pyramid are likely to have seen their incomes largely protected, and savings rates increased.
- Meanwhile, households at the bottom are likely to have witnessed permanent hits to jobs and incomes.
3 Implications of K-shaped recovery
- 1) What we are currently witnessing is pent-up demand from the upper-income households.
- However, households at the bottom have experienced a permanent loss of income in the forms of jobs and wage cuts, this will be a recurring drag on demand, if the labour market does not heal faster.
- 2) To the extent that COVID has triggered an effective income transfer from the poor to the rich, this will be demand-impeding in the steady state.
- This is explianed by the fact that marginal propensity to consume at the bottom is higher than that at the top, just as the marginal propensity to import at the top is higher than at the bottom.
- 3) If COVID-19 reduces competition or increases the inequality of incomes and opportunities, it could impinge on trend growth in developing economies by hurting productivity and tightening political economy constraints.
Factors that need to be considered to decide the policy response
- Policy need to look beyond the next few quarters and anticipate the state of the macro economy post this expression of pent-up demand.
- The key factor is wheather private sector starts re-investing and re-hiring.
- With manufacturing utilisation rates below 70 per cent pre-COVID, an investment revival, in turn, will depend crucially on the
- Exports should benefit from strengthening global growth as the world gets progressively vaccinated and more US fiscal stimulus.
Upcoming budget: India’s New Deal moment
- It’s against this backdrop that the upcoming budget presents India with its New Deal moment.
- Given the prevailing demand uncertainties, the budget represents an opportune moment for the Centre, in conjunction with the states, to embark on a large physical and social infrastructure push.
- This will simultaneously boost near-term aggregate demand, crowd in private investment, create jobs to soak up the unemployed, and improve the economy’s external competitiveness.
- Job creation, health and education, in turn, will be a start to help mitigate COVID-induced inequalities.
How to finance the investment?
- Gradual near-term consolidation coupled with a credible medium-term fiscal plan will be key to anchoring the bond market and underscoring an adherence to macro stability.
- How then can public investment increase meaningfully if the headline deficit (projected above 11 per cent of GDP) must come down?
- Public investment could be increased only if the public investment push is financed by aggressive asset sales-strategic sales, disinvestment, land and infrastructure monetisation.
- In this manner, expenditure to GDP can actually rise next year — generating an expansionary fiscal impulse to the economy — while automatic stabilisers are used to reduce the headline fiscal deficit.
Conclusion
India’s faster-than-expected rebound is very encouraging. But given labour market pressures and prospects of a K-shaped recovery around the world, the economy will need to be carefully nurtured and stoked. The budget presents a crucial opportunity to make a big down payment towards this end.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Taper tantrum
Mains level: Paper 3- Challenges ahead for the RBI in withdrawing expansionary policy measures
With the Indian economy showing green shoots, RBI has to face some fundamental challenges while withdrawing the expansionary measures.
Expansionary policy as a response to pandemic
- To manage the financial pressures unleashed by COVID-19, the RBI unleashed several measures.
- It reduced policy interest rates aggressively.
- It released an unprecedented amount of liquidity in the market.
- It instituted a slew of measures for targeted assistance to, especially distressed sectors.
Time to roll back the expansionary monetary policy
- As the Indian economy is showing the signs of recovery, the RBI must be planning for a non-disruptive exit out of the easy money regime.
- Reversing a crisis-driven expansionary policy has to be a deliberative process, with the timing and sequencing carefully planned.
- A big lesson of the global financial crisis is that any missteps on the exit path by way of commission, omission, or importantly communication, can be costly in macroeconomic terms.
Challenges RBI will face on the way out of expansionary monetary policy
1) Restraining inflation while supporting the recovery
- Inflation remained above the RBI’s target band for the past several months.
- According to the RBI’s own estimates, inflation is expected to remain above the band for the next several months.
- Yet, the MPC, in its recent review, decided against any rate action out of concerns for growth and financial stability.
- The MPC expects inflation to soften on its own in the weeks ahead.
- That outcome is not inevitable.
- Inflation could be pressured upwards by several factors even though there could be some apparent softening purely because of base effects.
- There is the risk that persistent high inflation expectations would result in food inflation getting more generalised.
- Core inflation could firm up because of rising input prices.
- ‘Excessive margins’, among the factors cited by the MPC as one of the causes of high inflation, may not disappear.
- Equally, there are concerns that the recovery, for all the positive signals, is still fragile.
- And there is heightened concern about an aggravated unemployment problem caused by big firms retrenching labour to cut costs.
2) Impact on savings
- RBI should also be concerned about the plight of savers who are being shortchanged by low-interest rates at a time of high inflation.
- Low-interest rates, its impact on inflation and economic recovery taken together make a complex cocktail of dilemmas for the RBI as it seeks to normalise the policy rates.
3) Withdraw excess liquidity at right time and to avoid ‘taper tantrum’
- Another related challenge will be to withdraw the ‘excess’ liquidity in good time.
- Banks are routinely depositing trillions of rupees with the RBI every day, evidencing that all the money that the central bank injected into the system is not doing much good anymore.
- Every financial crisis can be traced back to mispricing of risk.
- Mispricing of risk results when there is too much liquidity sloshing around the system for too long.
- It will drive investors into dodgy ventures and threaten financial stability.
- As the RBI seeks to guard financial stability by normalising liquidity, it will have to contend with possible market tantrums.
- The lesson from the taper tantrums in the U.S. is that the RBI will have to manage its communication as carefully as it does the liquidity withdrawal.
4) Stability of the rupee
- Next challenge for the RBI will be to restrain the rupee from appreciating out of line with fundamentals.
- Here, the RBI is confronted with a classic case of ‘the impossible trinity’.
- The impossible trinity deals with allowing free capital flows while simultaneously maintaining a stable exchange rate and restraining inflation.
- The current account surplus this year together with massive capital flows has meant an excess of dollars in the system putting upward pressure on already overvalued rupee.
- The RBI has absorbed nearly $90 billion this fiscal year to prevent exchange rate appreciation and to maintain the competitiveness of the rupee.
- The RBI’s ability to continue to intervene in the forex market will be constrained by its anxiety about how the resultant liquidity might aggravate inflation and the risk to financial stability.
Consider the question “What are the challenges ahead for the RBI while winding down the expansionary monetary policy measures that were announced to deal with the economic disruption of caused due to pandemic and subsequent lockdown.
Conclusion
It is better to be rough right, as Keynes said, than be precisely wrong. That should be the guiding principle for RBI as it navigates its way out of the crisis driven easy money policy.
Back2Basics: What is taper tantrum?
- Taper tantrum refers to the 2013 collective reactionary panic that triggered a spike in U.S. Treasury yields, after investors learned that the Federal Reserve was slowly putting the breaks on its quantitative easing (QE) program.
- The Fed announced that it would be reducing the pace of its purchases of Treasury bonds, to reduce the amount of money it was feeding into the economy.
- The ensuing rise in bond yields in reaction to the announcement was referred to as a taper tantrum in financial media.
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