Note4Students
From UPSC perspective, the following things are important :
Prelims level: Exercise SAMPRITI
Mains level: India-Bangladesh Strategic Relations
As part of the ongoing Indo-Bangladesh defence cooperation, a joint military training exercise SAMPRITI-IX is being conducted in Meghalaya.
Exercise SAMPRITI
- It is an important bilateral defence cooperation endeavour between India and Bangladesh and will be the ninth edition of the exercise which is hosted alternately by both countries.
- During the joint military exercise SAMPRITI-IX, a Command Post Exercise (CPX) and a Field Training Exercise (FTX) will be conducted.
- For both the CPX and FTX, a scenario where both nations are working together in a Counter-Terrorism environment will be simulated under the UN Charter.
- The FTX curriculum is progressively planned where the participants will initially get familiar with each other’s organizational structure and tactical drills.
- The training will culminate with a final validation exercise in which troops of both armies will jointly practice a Counter Terrorist Operation in a controlled and simulated environment.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Fruit Train
Mains level: Logistics support for horticulture products
A ‘fruit train’, said to be the first of its kind in India, was flagged off from Tadipatri Railway Station in Anantapur district of Andhra.
About the fruit train
- This is the first time in India that an entire train is being sent to the gateway port (JNPT) for export.
- This helps save both time and fuel as 150 trucks would have been required to send a consignment of this size by road to JNPT, which is over 900 km away, before the temperature-controlled containers are loaded on ships.
- The bananas are being exported under the brand name ‘Happy Bananas’.
- Farmers from Putlur region in Anantapur and Pulivendula in Kadapa district are exporting ‘Green Cavendish’ bananas to many international markets.
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Context
The policy currently being pursued is intended primarily to incentivise potential investors while social objectives and help in indigenisation are being jettisoned.
Call for more liberalisation and its possible impacts
- What reforms are asked for?
- Reforms such as labour market liberalisation and removal of constraints on the acquisition of land for industrial purposes are demanded.
- What could be their possible impacts?
- The negative impact such reform measures are likely to have on the incomes, living conditions and the economic security of the workers and the agricultural class.
- Counterproductive labour policy: The policy of freedom of hiring and firing of labour will be counterproductive as it would squeeze demand further in a situation of huge demand deficit.
Social sector and demand
- Neglect of human infrastructure: While talks of economic revival focus on infrastructure there is little talk of investment in human infrastructure, particularly in education and
- Conditional expenditure: On the contrary, the expenditure in social sectors is made conditional upon a higher rate of growth.
- The flawed premise of long term impact: Most mainstream economists believe that public expenditure in social sectors can only have a long- term impact on growth. Which is not entirely correct.
- The benefit of investment in human infrastructure:
- Increases demand in short-run: Investment in social sectors results in creating demand in the short run by way of opening avenues for large-scale employment.
- Competitiveness and sustainability: It imparts competitiveness and sustainability to the Indian economy in the medium and long run.
- Example of RTE, teacher employment and demand creation
- The recruitment of 5.7 million additional teachers over a period of, say, five years, can create huge scale demand.
- And, this is only one factor essential for universalising quality school education.
- There is also a large gap between the requirement of infrastructure in the schools and that available and built recently.
- The gap between requirement and availability: According to government data, only 12.5% of the schools covered by the RTE Act were compliant with RTE norms.
- Meeting these norms has the potential of creating employment on a large scale.
- Importance of health and education
- Education has a crucial role to play for an individual in gaining employment and retaining employability.
Conclusion
The gestation period of projects in social sectors is not as long as it is made out to be. It is, therefore, time for reprioritising education and health in the scheme of development strategy and the allocation of budgetary resources.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- The crowding out effect, effects of the Government borrowing on various variables.
Context
Market borrowings of the government do not always squeeze credit for the private sector in India.
What is ‘crowding out’ effect?
- Increased government spending and borrowing: It refers to how increased government spending, for which it borrows more money, tends to reduce private spending.
- Why does private spending reduce? This happens because when the government takes up the lion’s share of funds available in the banking system, less of it is left for private borrowers.
- Relationship with interest rate: Higher borrowing by the government and subsequent crowding out also impacts interest rates in the economy.
How the Government borrowing works and the role of RBI
- Local borrowing local spending: Typically, the government funds its fiscal deficit by borrowing from the domestic bond market.
- Its expenditure is also local in nature.
- Overdraft from RBI: The Reserve Bank of India (RBI) is the official banker to the government-which spends money by first taking an overdraft from the central bank.
- This overdraft gets repaid through bond market borrowings.
- Why overdraft? The understanding is that any such government spending should ideally not affect the availability of funds to other borrowers in the market.
- Excessive borrowing and effects on the interest rate: Excessive government borrowing from the bond market, many cautions, could lead to a rise in interest rates for the government itself and consequently for everyone else in the economy.
Analysis of the effects of borrowing on other variables
- Analysis of the data reveals the following trends.
- No impact on other variables: Local borrowing and spending by the Indian government does not impact any other macroeconomic variables like-
- The availability and cost of funds for other participants in the economy.
- Inflation.
- Deposit growth, at the current deficit level—that is, with the state and central combined figure above 6% of GDP.
- What impacts the interest rate the most?
- The two most important variables that impacted interest rates were inflation and the repo rate. Which tend to move together.
- What does it indicate? This clearly indicates that RBI is extremely proactive in the way it manages interest rates.
- Effects of funds on inflation: Such borrowings that are funded by the central bank could lead to inflation, the same is true for large external inflows to domestic money markets.
- The foreign borrowings finally get reflected in the country’s foreign exchange reserves, which have a very strong relationship with inflation.
- Effects on interest rates: Technically, any large inflow of a foreign currency sterilized by RBI does have the potential to move the inflation needle up, thus placing upward pressure on interest rates.
- Relationship between borrowing and growth: It is clear that government borrowing and spending actually drives GDP growth.
- Government borrowing should not impact bank lending to companies, as the sums borrowed return to the market almost immediately.
- How RBI controls bond yield?
- RBI ensures that bond yields don’t shoot up because of the excessive borrowing, by taking bonds onto its books to be released back into the market in good times.
The uniqueness of the Indian money market
- Why is it unique? India market is a unique money market, different from the rest of the world, for the following reasons-
- We have investors who are explicitly required to invest in government debt.
- Banks, non-banking financial companies, insurers, provident funds, and pension funds are all forced to invest in government debt as a condition for their licence to operate in India.
- We also find that RBI works towards aiding the government borrowing programme rather effectively, ensuring that interest rates do not change too adversely.
Conclusion
The government should not be excessively worried about the government living beyond its means at this juncture. Government spending being the main driver for the country’s GDP growth, it could be a good way to put the economy on a higher growth trajectory. Perhaps it is time to revisit the entire FRBM framework.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Bilateral trade opportunity with Australia and area of cooperation in Technology and innovation
Context
The challenge for India and Australia is to transform people-to-people ties into a trade relationship.
People-to-people the two countries
- Soft power: Soft power rather than hard economics has traditionally been the driving force behind India-Australia relations.
- Cricket is a dominant theme that connects the two countries.
- The Indian diaspora in Australia is a vibrant community that plays a robust role in connecting their country of adoption with their country of origin.
Trade relationship scenario
- $31 bn bilateral trade: The trade between the two countries has been at a modest $31 billion, largely composed of resources like coal and other minerals.
- No progress on FTA: Negotiations on a Free Trade Agreement, which began in 2011, have not moved forward significantly.
- No progress on coal mining projects in Australia: The problems faced by the Adani Group to begin work on a coal mining project in Queensland did not go down too well with investors from India.
- India Economic Strategy 2035 by Australia: One of the most widely commended initiatives has been the Australian government’s release of an India Economic Strategy 2035 Report.
- It observes that no single market over the next 20 years will offer more growth opportunities for Australia than India.
- It lays down a comprehensive road map for strengthening Australia’s trade engagement with India.
Development in digital technology and the role of youth
- Development of new architecture: Meanwhile India-Australia trade has been steadily evolving into a new architecture underpinned by developments in digital technology.
- There is a rise of a younger generation of entrepreneurs and a noticeable shift in the trade basket from resources to services.
- Technology and young entrepreneurship make a formidable combination and should set the agenda for the future of bilateral trade relations.
- About 80% of the Australian small and medium-sized enterprises are managed by young professionals.
- The young can see issues like immigration and outsourcing with far more equanimity than the older generation.
- An important role of young Australians: Young Australians are thus emerging as great champions of India-Australia trade relations.
Scope for engagement in innovation and trade relations
- Tech. expertise of Australia: There is also recognition that Australia is a laboratory of ideas, innovation, technology-led growth and university-industry partnerships.
- Scope for India in innovation and trade: India is a large and demographically young market with a love for innovation and an appetite for new products and services.
- These synergies should add momentum to a growing engagement in trade relations.
India’s weakness and Way forward
- Weakest link and way forward: The weakest link in India’s exports to Australia is in merchandise. India needs to look at three broad areas.
- First-Focus on Market Research: Despite globalisation, markets are country-specific and culturally sensitive.
- Indian companies will need to invest a little more in market research on Australian consumer expectations and lifestyles.
- Second-Brand creation: Australia is a brand-conscious market while India has not created a single consumer brand of international acceptance.
- Only when products are visible across the world’s shopping malls and supermarkets displaying their own brands that India will be recognised as a major player in the global markets.
- Third-Innovation: Innovation is emerging as the single-most-important factor for sustained success in every sphere. Global trade cannot be different.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: West Asia Peace Plan
Mains level: Palestine & Israel conflicts
With West Asia Peace plan US plans to revive the stalled two-state talks between the Israelis and the Palestinians. Israeli PM Benjamin Netanyahu, who had earlier spoken against the two-state solution, has accepted the Trump plan.
West Asia Peace Plan
The West Asia peace plan unveiled by U.S. President Trump seeks to give the Israelis what they have long wanted — an expansive state with Jerusalem as its “undivided capital” and tight security control over a future Palestinian state.
What’s the plan about?
- The Trump plan seeks to address most of the contentious issues in the conflict such as the border of Israel, status of Palestinian refugees, Jewish settlements on the West Bank, land swap between Israel and Palestine, Israel’s security concerns and the status of the city of Jerusalem.
- However US have proposed to almost all of these issues favour the Israeli positions.
- For example, Israel would be allowed to annex the Jewish settlements on the West Bank as well as the Jordan Valley.
- The Palestinian refugees, who were forced out from their homes during the 1948 Arab-Israeli war that followed the declaration of the state of Israel in the historic Palestine, would not be allowed to return.
- They could move to the future Palestinian state, be integrated into the host countries or settled in other regional countries.
Jerusalem: The undivided Capital
- Jerusalem, perhaps the most contentious issue, would be “the undivided capital” of Israel, with Palestine gaining its capital in the east of the city — beyond the security border Israel has already built.
- In return, Israel would freeze further settlement activities on the West Bank for four years — the time for negotiations.
Land Swap
- According to the Oslo Accords, the West Bank was divided into three areas and only one of them is under the direct control of the Palestinian Authority.
- The plan proposes some land swap for the Israeli annexation of the West Bank Jewish settlements.
- It seeks to enlarge Gaza and connect the strip with the West Bank through a tunnel.
- The Arab towns in the southeast of Israel, which are close to Gaza, could become part of a future Palestinian state.
Curb on Hamas
- During this period, the Palestinian Authority should dismiss its current complaints at the International Criminal Court against Israel and refrain itself from taking further actions.
- It should also crack down on “terrorist” groups such as Hamas and the Islamic Jihad.
Investment Plans
- US has also proposed $50 billion in investment over 10 years should Palestine accept the proposals.
- In the final settlement, Palestine would get control over more land than what it currently controls.
Implications for Palestine
- The Palestine position is backed by most of the world powers is the formation of an independent, sovereign Palestinian state based on the 1967 border.
- It means the whole of the West Bank and the Gaza Strip with East Jerusalem as its capital including the Old City that houses Haram esh-Sharif, also known as Temple Mount, a holy site for both Muslims and Jews.
- Issues like the right of return of the Palestinian refugees are to be settled in final negotiations.
- But US has effectively rejected the Palestinian claims outright and asked them to make more compromises.
- He seeks to give Jerusalem and about 30% of the West Bank to the Israelis and has denied the right of return of the Palestinian refugees.
- And for this, the Palestinians should take action against militant groups, stop supporting Palestinian families of those jailed or killed by Israel and refrain itself from questioning the occupation in international fora.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Superstitions and associated socail injustice
A controversial anti-superstition law in Karnataka was formally notified by the current government.
Provisions of the earlier drafts
- The law, which was initially drafted as the Karnataka Anti Superstition Bill, 2013, was a pet project of former CM Siddaramaiah.
- The model Bill held human dignity as its central tenet and sought eradication of irrational practices found in different communities.
- The first draft made practices like inflicting self-wounds and conversion through bribery illegal.
- Some of the proposals opposed by religious leaders and political parties in the early draft were the ban on practices such as the carrying of priests in palanquins, worshipping the feet of religious leaders.
- It sought to ban Made Snana practised in the Dakshina Kannada region where Dalits roll over the remains of food consumed by upper castes.
The current version
- A Bill with sizable consensus across the political spectrum finally evolved in 2017. A total of 16 practices have been banned under the law.
- The practice of Vaastu, astrology, pradakshina or circumabulation of holy places, yatras, parikramas performed at religious places were kept out of the purview of the law.
- Made Snana was banned under the law with respect to having Dalits roll over leftover food.
- The practice has now been modified to be voluntary and not involving leftover food.
- Practices such as barring menstruating women from entering houses of worship and their homes, coercing people to take part in fire-walks, and beating up people by declaring them evil, are among the irrational practices that have been banned under the 2017 law.
Penalties
- The law stipulates “imprisonment for a term which shall not be less than one year but which may extend to seven years and with fine which shall not be less than five thousand rupees but which may extend to fifty thousand rupees”, as punishment for violations.
- The law is to implemented by the state police with the appointment of vigilance officers under the law at police stations.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Highlights of the bill
Mains level: MTP: Ethical and health issues surrounding it
The Union Cabinet has approved the Medical Termination of Pregnancy (Amendment) Bill, 2020 to amend the Medical Termination of Pregnancy Act, 1971.
About the Bill
- The Medical Termination of Pregnancy (Amendment) Bill, 2020 is for expanding access of women to safe and legal abortion services on therapeutic, eugenic, humanitarian or social grounds.
- It aims to increase upper gestation limit for termination of pregnancy under certain conditions and to strengthen access to comprehensive abortion care, under strict conditions, without compromising service and quality of safe abortion.
Salient features of proposed amendments:
- Proposing requirement for opinion of one provider for termination of pregnancy, up to 20 weeks of gestation and introducing the requirement of opinion of two providers for termination of pregnancy of 20-24 weeks of gestation.
- Enhancing the upper gestation limit from 20 to 24 weeks for special categories of women which will be defined in the amendments to the MTP Rules and would include ‘vulnerable women including survivors of rape, victims of incest and other vulnerable women (like differently-abled women, Minors) etc.
- Upper gestation limit not to apply in cases of substantial foetal abnormalities diagnosed by Medical Board. The composition, functions and other details of Medical Board to be prescribed subsequently in Rules under the Act.
- Anonymity of the person: Name and other particulars of a woman whose pregnancy has been terminated shall not be revealed except to a person authorised in any law for the time being in force.
Benefits
- It is a step towards safety and well-being of the women and many women will be benefitted by this.
- Recently several petitions were received by the Courts seeking permission for aborting pregnancies at a gestational age beyond the present permissible limit on grounds of foetal abnormalities or pregnancies due to sexual violence faced by women.
- The proposed increase in gestational age will ensure dignity, autonomy, confidentiality and justice for women who need to terminate pregnancy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Highlights of the bill
Mains level: Medical administartion in India and its loopholes
The Union Cabinet has given its approval for proposal of Official Amendments in the National Commission for Indian System of Medicine Bill, 2019 (NCIM) which is pending in the Rajya Sabha.
About the Commission
- The main objective of establishing NCIM is to promote equity by ensuring adequate supply of quality medical professionals and enforce high ethical standards in all aspects of medical services in Indian System of Medicine.
- The Commission will promote availability of affordable healthcare services in all parts of the country.
- The Commission has been structured to streamline the functions related to academic standards, evaluation, assessment and accreditation of educational institutions pertaining to Indian System of Medicine.
Composition
- The NCISM will consist of 29 members, appointed by the central government.
- A Search Committee will recommend names to the central government for the post of Chairperson, part time members, and presidents of the four autonomous boards set up under the NCISM.
- These posts will have a maximum term of four years.
- The Search Committee will consist of five members including the Cabinet Secretary and three experts nominated by the central government (of which two should have experience in any of the fields of Indian System of Medicine).
Functions
Functions of the NCISM include:
- framing policies for regulating medical institutions and medical professionals of Indian System of Medicine,
- assessing the requirements of healthcare related human resources and infrastructure,
- ensuring compliance by the State Medical Councils of Indian System of Medicine of the regulations made under the Bill, and
- ensuring coordination among the autonomous boards set up under the Bill.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Nagoba Jatara
Mains level: Not Much
The month long Nagoba Jatara recently concluded in Adilabad dist. of AP.
Nagoba Jatara
- Nagoba Jatara is a tribal festival held in Keslapur village, Inderavelly Mandal[1] Adilabad district, Telangana, India.
- It is the second biggest tribal carnival and celebrated by Mesaram clan of Gond tribes for 10 days.
- Tribal people from Maharashtra, Chhattisgarh, Orissa and Madhya Pradesh belonging to the Mesram clan offer prayers at the festival.
- It starts in pushya masam. A ceremony of ‘bheting’ is it’s integral part where the new brides are introduced to the clan god during first jatra afer their marriage
- The few hundred Raj Gond and Pardhan Adivasis, men clad in pure white dhoti-kurta and the pagdi headgear and women in the traditional colourful nau-vari Maharashtrian style saree.
- The temple for which a new structure is coming up is dedicated to the serpent god, known as Shri Shek to the aboriginal people, and is the centre of all activities during the week long festivities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Beating Retreat Ceremony
Mains level: Not Much
The Beating Retreat ceremony recently took place at Vijay Chowk. The ceremony, which takes place on January 29 every year, marks the culmination of the four-day Republic Day celebrations.
What is the Beating Retreat function?
- ‘Beating Retreat’ marks a centuries old military tradition, when the troops ceased fighting, sheathed their arms and withdrew from the battlefield and returned to the camps at sunset at the sounding of the Retreat.
- The military tradition began in 17th century England, when King James II ordered his troops to beat drums, lower flags and organise a parade to announce the end of a day of combat.
- The ceremony was then called ‘watch setting’ and took place at sunset after firing a single round from the evening gun.
- The ceremony is currently held by Armed Forces in the UK, US, Canada, New Zealand, Australia, and India, among others.
How did it begin in India?
- Beating the Retreat’ has emerged as an event of national pride when the Colours and Standards are paraded.
- The ceremony traces its origins to the early 1950s when Major Roberts of the Indian Army indigenously developed the unique ceremony of display by the massed bands.
- Section D (Ceremonials) at the Ministry of Defence conducts the event.
- The ceremony consists of musical performances by the bands, who each year play Indian and western tunes.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: No-fly List
Mains level: Not Much
Four airlines in India have banned a stand-up comedian from taking flights after he allegedly heckled television news anchor on-flight.
No-Fly List
- In 2017, the government issued rules for preventing disruptive behaviour by air travellers and laid down guidelines for a no-fly list.
- As per the rules, a complaint of unruly behaviour needs to be filed by the pilot-in-command, and this is to be probed by an internal committee to be set up by the airline.
- During the period of pendency of the inquiry, the rules empower the concerned airline to impose a ban on the passenger.
- The committee is to decide the matter within 30 days, and also specify the ban duration.
- Any aggrieved person, upon receipt of communication of a ban from the airline, may appeal within 60 days from the date of issue of the order, to an Appellate Committee constituted by the Ministry of Civil Aviation.
Three categories of unruly behaviour:
- Level 1 refers to behaviour that is verbally unruly, and calls for debarment up to three months;
- Level 2 indicates physical unruliness and can lead to the passenger being debarred from flying for up to six months;
- Level 3 indicates life-threatening behaviour for which the debarment would be for a minimum of two years.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Delays in NCRB data release, Increasing crime reporting, role played by the media.
Context
Delay in releasing the crime data by NCRB reduces the utility of the data for the policymakers.
Formidable challenges faced by NCRB
- The First-Casual approach of the States: The first is the lackadaisical approach of some of the States in providing data.
- The NCRB merely assembles the figures it receives from the State police forces and does not tinker with them to reach a predetermined conclusion.
- States’ irregularity: Data collection hits a roadblock when a few States either don’t bother to send the figures or send them much after the volume is published.
- The second-Utility of the released data: The second problem is that questions are raised over the utility of the data.
- There was a two-year delay in releasing the crime statistics for 2017.
- Just two months after it was published, the ‘Crime in India’ (CII) 2018 report was released.
- Reduced utility from a policy point of view: These numbers are only relevant to researchers, not policymakers as it does not carry us far in understanding what is happening on the ground.
- A fossilised CII is meaningless.
- The third- Third problem lies with the police and the public.
- The Reluctance of the police to register the complaint: The police are notorious the world over for not registering complaints.
- They do this so that they can present a false picture of a decline in crime.
- The reluctance of the public: The public is also not very enthusiastic about reporting crimes to the police.
- Catch-22 situation: Public is fearful of being harassed at the police station or do not believe that the police are capable of solving the crime. This is a Catch-22 situation.
Crimes difficult to bury
- The positive role played by the media: However, the problem has declined slightly over the years due to public awareness and intense media scrutiny.
- There are a few classes of offences which are becoming increasingly difficult to bury. This is attributable to the extraordinary interest evinced by the media in reporting crime.
- The crimes which are difficult to bury: The following cases of crime are becoming difficult to bury.
- Homicide: The first category of crimes that is difficult to bury is of homicides.
- Matter of distress: India reports an average of 30,000 murders every year (29,017 were registered in 2018). Every murder is a matter of distress.
- Nevertheless, the stabilisation of the figure at 30,000 is a mild assurance.
- The corresponding figure for the period in the U.S. was around 16,200.
- Need to study the US decline: Though the U.S. has about one-third of India’s population, the reported decline in murders in many major U.S cities is worth studying.
- Crime against women: The common man in India does not lag behind others in reacting strongly to attacks on hapless women and men.
- The growth of the visual media possibly explains this welcome feature in Indian society.
- The hope of a decrease in crime: The nationwide outrage over the gang-rape in Delhi and the subsequent tightening of laws on sexual crimes generated the hope that attacks against women would decrease.
The issue of under-reporting
- Under-reporting of crime in rural areas: In 2018, there were 33,356 rapes, a higher number than the previous year.
- But these figures do not fully reflect realities on the ground.
- There is still the unverifiable suspicion that while in urban areas sexual violence cases are reasonably well-reported, the story is different in rural India.
- The role played by money and caste: Money power and caste oppression are believed to play a significant role in under-reporting.
- What is more significant is that a substantial number of such crimes are committed by the ‘friends’ and families of victims.
Conclusion
- To be fair to the NCRB, we must concede that the organisation has more than justified its existence. The CII is used extensively by researchers.
- Need for educating the people on realities of crime and its reporting: There is scope for more dynamism on the NCRB’s part, especially in the area of educating the public on the realities of crime and its reporting.
- Greater pressure on the States to stick to a schedule: The NCRB will also have to be conscious of the expectation that it should bring greater pressure on States to make them stick to schedules and look upon this responsibility as a sacred national duty.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Cause of the emergence of trade disputes and how can emerging economies negotiate the deals
Context
Developing countries have argued for decades that the rules governing international trade are profoundly unfair. But similar complaints are now emanating from the developed countries that established most of those rules.
Why are developed countries complaining now?
- Competition: A simple but inadequate explanation is “competition.”
- Turning tide: In the 1960s and 1970s, industrialized countries focused on opening foreign markets for their goods and set the rules accordingly.
- Since then, the tide has turned.
- Left behind communities in developed countries
- Cheap labour-an advantage: One reason why emerging-market producers are competitive is that they pay workers less.
- Job creation in services by developed countries: To replace lost manufacturing jobs, developed economies have been creating jobs in services.
- Not everyone has moved to the service sector job: Unfortunately, not everyone in developed countries has been able to move to good service jobs.
- Efforts by the left-behind bring back the manufacturing job: The left-behind former manufacturing communities have a voice in the capital city now, and it wants to bring back manufacturing.
- Yet this explanation, too, is incomplete. The ongoing US-China trade war is not about manufacturing, it is about services.
- Services a reason behind US-China dispute: Much of the US dispute with China is not about manufacturing. It is about services.
- Emerging market competition increasing in services: Although eight of the top ten service exporters are developed countries, emerging-market competition is increasing.
- New services related rules: This increased competition from emerging markets is prompting a major push by advanced-economy firms to enact new service-related trade rules.
- An opportunity to protect the developed country producers: The new rules will ensure continued open borders for services. But it will also be an opportunity to protect the advantages of dominant developed-country producers.
Trade disputes- The combined effects of the two factors
- There are no easy trade deals anymore.
- Two conflicting factors: In sum, two factors have increased the uneasiness over international trade and investment arrangements.
- First-Left behind community: Ordinary people in left-behind communities in developed countries are no longer willing to accept existing arrangements.
- They want to be heard, and they want their interests protected
- Second-emerging economy demanding access to service sector: At the same time, emerging-economy elites want a share of the global market for services and are no longer willing to cede ground there. So, there is no easy trade deal anymore.
- Trade disputes-exercise in power politics
- High tariffs and ram tactics: Threats of sky-high tariffs to close off markets, for example, and battering-ram tactics to force “fairer” rules on the weaker party.
- The important difference from the past: One important difference is that the public in emerging markets is more democratically engaged than in the past.
- Short timed victory: Any success that rich countries have in setting onerous rules for others today could prove pyrrhic.
- No consensus on the rules: For one thing, it is unclear that there is a consensus on those rules even within developed countries. For example- rules to regulate social media.
Way forward
How should developed countries respond to domestic pressures to make trade fairer?
- Demand lower tariffs from developed countries: For starters, it is reasonable to demand that developing countries lower tariffs steadily to an internationally acceptable norm.
- Challenge the discriminatory barriers: Discriminatory non-tariff barriers or subsidies that favour their producers excessively should be challenged at the World Trade Organization.
- Go for less intrusive treaties: To go much beyond these measures—to attempt to impose one’s preferences on unions, regulation of online platforms, and duration of patents on other countries—will further undermine the consensus for trade.
- Less intrusive trade agreements today may do more for the trade tomorrow
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Reasons for the slowdown in the Indian economy, declining household saving, consumption driven growth.
Context
Setting aside the gloomy projections based on short-term economic trends, the long-term and comparative evidence reveal interesting trends about the health of the Indian economy.
Performance of the Indian economy after 1991
- Higher growth plateau reached after 1991: After the 1991 economic reforms, the Indian economy reached a higher growth plateau of 7% compared to a prior rate of 3. 85%.
- The high growth rate during 2003-2011: India witnessed a high growth momentum during 2003-04 and 2010-11 with a period average of 8.45% (GDP with base 2004-05) or 7% (base 2011-12).
- Ups and downs after 2012: The momentum lost steam in 2011-12 and 2012-13, gradually picked up again gradually to reach the 8% mark in 2015-16, and then started falling consistently to reach 6.63% in 2018-19.
- Structural dimension? This trend suggests that India’s current growth challenge has a structural dimension as it began in 2011-12.
- Comparison with China and the world
- Average at 7.07% after 2011-12: Despite these fluctuations from 2011-12, on average, India clocked a growth rate of 7.07% from 2011 to 2019, a decent figure compared to China’s and the world’s economic growth rates.
- Whereas like India, the growth of the world economy was fluctuating since 2011, China’s growth declined consistently from 10.64% in 2010 to 6.60% in 2018.
Why couldn’t India’s growth momentum be sustained after 2010-11?
- Analysis of five variables: To answer the above question, an in-depth analysis of trends in five key macroeconomic variables was done for two different periods: 2003-04 to 2010-11 and 2011-12 to 2018-19.
- Consumption.
- Investment.
- Savings.
- Exports.
- Net foreign direct investment (NFDI) inflows.
- What emerged from the analysis: The results reveal that compared to 2003-2011, investment and savings rates and exports-GDP ratio declined in the 2011-2019 period.
- How much the investment declined? The investment rate declined from 34.31% of GDP in 2011-12 to 29.30% in 2018-19.
- Household vs. corporate sector decline: The investment decline was caused mainly by the household sector and to some extent by the public sector, but not the corporate sector.
- The decline in investment compensated by NFDI: The slump in the domestic investment rate in the 2011-2019 period was compensated by increased NFDI inflows.
- On average, NFDI inflow was 1.31% of GDP during 2011-2019 compared to 0.89% during 2003-2011.
Why tax-cut not help the economy
- The justified policy of reviving the housing sector: The decline in household sector investment justifies the package of measures introduced by the Central government to revive the housing sector.
- Why corporate tax cut won’t help much? The questionable policy, however, is the steep cut in the corporate income tax rate from 30% to 22%, aimed at boosting private investment.
- Given that the corporate investment rate has not eroded severely during 2011-2019, the tax cut would help economic revival.
- Lost opportunity to spur rural consumption: A part of the largesse offered to Corporate India could have been used to spur rural consumption.
What the decline in saving rate mean?
- Importance of savings: The savings rate declined almost consistently from 27% of GDP to 30.51% between 2011 and 2018.
- This was also caused by a significant fall in the savings of the household sector in financial assets. Corporate savings did not fall.
- Why the fall in household financial savings needs to be increased? The fall in household financial savings is alarming and needs to be arrested.
- Savings are required to meet the requirements of those who want to borrow for their investment needs.
- Saving-investment relation: Lower household savings imply lesser funds available in the domestic market for investment spending.
- Economic growth powered by consumption: The decline in household savings has pushed up private final consumption expenditure consistently
- Private final consumption rose from 56.21% of GDP in 2011-12 to 59.39% in 2018-19.
- Consumption driven economic growth in 2011-19: The increase in private consumption suggests that economic growth during 2011-2019 was powered by consumption, not investment.
- Investment driven growth during 2003-2011: In contrast, during 2003-2011, growth was powered by investments.
- So, declining saving rate means a slowdown in the economy may not be due to structural issues.
- Re-examination of popular view: Thus, the popular view that economic slowdown was caused due to a slowdown in consumption demand needs to be re-examined.
- There is no concrete evidence to suggest that the economy is facing a structural consumption slowdown.
Export-GDP ratio decline and what it means
- Export-GDP decline from 24.54% to 19.74%: India’s exports-GDP ratio declined from 24.54% to 19.74% during 2011-2019.
- A trend similar to the rest of the world: The decline started from 2014-15, coinciding with a similar trend in the world export-GDP ratio.
- However, the drop in India’s exports was significantly larger than the world, a cause for concern.
- The exports- and NFDI-GDP ratio has deteriorated sharply and consistently in China after 2006.
- Indian economy doing better than China: Sharp decline in China’s export-GDP and NFDI-GDP, together with the consistent fall in China’s GDP growth after 2010, proves that the Indian economy is doing better than China.
Conclusion
The popular view that the slowdown in the Indian economy is due to the structural problems needs a re-examination in the view of the decline in investment in tandem with the world.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Fiscal Marksmanship
Mains level: Signs of economic slowdown in the country
Over the past few years, many have questioned the government’s fiscal marksmanship.
What is fiscal marksmanship?
- Fiscal marksmanship essentially refers to the accuracy of the government’s forecast of fiscal parameters such as revenues, expenditures and deficits etc.
- In other words, if the difference between what the government projected as the likely tax revenues in the Budget and the actual figures a year later is large then it reflects poor fiscal marksmanship.
- In the Indian context, this term gained popularity after Raghuram Rajan, then India’s Chief Economic Advisor stressed on fiscal marksmanship in the Economic Survey for the year 2012-13.
- He had defined fiscal marksmanship as “the difference between actual outcomes and budgetary estimates as a proportion of GDP”.
Why does fiscal marksmanship matter?
- The salience of Budget numbers lies in their credibility.
- The central purpose of publicly disclosing the Budget or the annual financial statement in a democracy and seeking approval from the legislature is to make the policymaking and governance transparent and participatory.
- Everyone knows that Budget numbers are forecasts and estimates, and as such, unlikely to tally exactly with the actual numbers a year later.
- But there is an underlying belief among people that when the government states, say, that its revenues will grow by 12% or that its fiscal deficit will remain within the FRBM Act’s mandate as it is based on genuine calculations.
- However, if these fiscal forecasts turn out to be way off the mark repeatedly, it will undermine the credibility of the Budget numbers and indeed the Budget presentation itself.
Why is India’s fiscal marksmanship being questioned?
Typically, the fiscal marksmanship tends to get dented every time the economy faces a bump during the financial year.
- For instance, as a result of the extent of the Global Financial Crisis in 2008, budget forecasts in the ensuing years did take a hit.
- The latest trigger has been the wide discrepancy between what the last couple of budgets — first the interim budget for 2019-20 (presented in February 2019) and then the full budget for 2019-20 (presented in July 2019).
- It expected the nominal GDP growth to be in 2019-20 and what the First Advance Estimates (FAE), released by the Ministry of Statistics and Programme Implementation in January 2020.
- For instance, the July 2019 Budget expected nominal GDP to grow by 12% in 2019-20 but the FAE expect the nominal GDP to grow by just 7.5% (which by the way is a 42-year low).
- Since all budget calculations are based on the nominal GDP, it is expected that this wide variance in nominal GDP will reflect across the board in the coming Budget.
Impact on revenue
- The government’s revenues are unlikely to grow anywhere close to the last Budget’s expectation.
- Indeed, the revenue shortfall is expected to be anywhere between Rs 2 lakh crore to Rs 5 lakh crore.
- As a result, either the fiscal deficit will overshoot from the budgeted number or the expenditure numbers will be much lower than promised.
Why has fiscal marksmanship worsened?
- As mentioned earlier, when an economy’s growth slows down (or picks up) sharply within a year, it is possible that the fiscal forecasts for that year go down (or up) substantially.
- However, such changes do not happen too often.
- In the recent past, however, there is one structural change that appears to be contributing to poor fiscal forecasts by the government.
- This structural change was the government’s decision in January 2017 to advance the presentation of the Union Budget by a whole month.
- Accordingly, the Union Budget for 2017-18 was presented on February 1 instead of the last working day of February (28th or 29th), as was the norm till then.
- It meant that the First Advance Estimates, which used to come by January end (after taking into account the economic activity of the first three quarters of the financial year), had to be brought out by the start of January.
- This, in turn, essentially meant that the estimate of the key nominal GDP data for the current year — on the base of which next year’s nominal GDP and other estimates were to be made — had to be made using the first two quarters of the current fiscal year.
Why didn’t the government course-correct and project slower economic growth in July 2019 when it presented the full Budget for 2019-20?
- It is unclear why this was not done. But could be two or three possible reasons.
- One, the FM may have favoured continuity over the Interim Budget estimates instead of providing a starkly different set of estimates.
- Two, and a related reason, could be that the government did not have enough time to make the adjustment because it may have required redoing the whole Budget afresh.
- Or third, because perhaps the government did not recognise the severity of the economic slowdown that has been underway.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Asiatic and African Cheetah
Mains level: Translocation of Species and its impacts
The Supreme Court lifted its seven-year stay on a proposal to introduce African cheetahs from Namibia into the Indian habitat on an experimental basis. The plan was to revive the Indian cheetah population.
Asiatic cheetahs in India
- In 1947, Maharaja Ramanuj Pratap Singh of Deoghar of Koriya, Chhattisgarh — who was infamous for shooting over 1,150 tigers — reportedly killed the last known Asiatic cheetah in India.
- In that year, a few miles from Ramgarh village in the state, the Maharaja killed three of the animals — brothers — during a night drive.
- After that, the Maharaja’s kin continued to report the presence of a few stragglers in the forests of Surguja district, including a pregnant female, up until the late 1960s.
- Some more unconfirmed sightings were reported in 1951 and 1952, from the Orissa-Andhra Pradesh border and Chittoor district.
- The latter sighting is generally accepted to be the final credible sighting of a cheetah in India. In 1952, the cheetah was officially declared extinct from India.
African cheetah and Asiatic cheetah
- Before Namibia, India had approached Iran for Asiatic cheetahs, but had been refused.
- The Asiatic cheetah is classified as a “critically endangered” species by the IUCN Red List, and is believed to survive only in Iran.
- From 400 in the 1990s, their numbers are estimated to have plummetted to 50-70 today, because of poaching, hunting of their main prey (gazelles) and encroachment on their habitat.
- ‘Critically endangered’ means that the species faces an extremely high risk of extinction in the wild.
Why does NTCA want to reintroduce cheetahs?
- A section of conservationists has long advocated the reintroduction of the species in the country.
- Reintroductions of large carnivores have increasingly been recognised as a strategy to conserve threatened species and restore ecosystem functions.
- The cheetah is the only large carnivore that has been extirpated, mainly by over-hunting in India in historical times.
- India now has the economic ability to consider restoring its lost natural heritage for ethical as well as ecological reasons.
Why was the project halted?
- The court was also worried whether the African cheetahs would find the sanctuary a favourable clime as far as abundance of prey is concerned.
- Those who challenged the plan argued that the habitat of cheetahs needed to support a genetically viable population.
What did court say?
- The Supreme Court made it clear that a proper survey should be done to identify the best possible habitat for the cheetahs.
- Every effort should be taken to ensure that they adapt to the Indian conditions.
- The committee would help, advice and monitor the NTCA on these issues. The action of the introduction of the animal would be left to the NTCA’s discretion.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Ramsar sites in India
Mains level: Ramsar Convention
Ramsar has declared 10 more wetland sites from India as sites of international importance.
News Ramsar Wetlands
With this, the numbers of Ramsar sites in India are now 37 and the surface area covered by these sites is now 1,067,939 hectares.
- Maharashtra gets its first Ramsar site (Nandur Madhameshwar) ,
- Punjab which already had 3 Ramsar sites adds 3 more (Keshopur-Miani, Beas Conservation Reserve, Nangal) and
- UP with 1 Ramsar site has added 6 more (Nawabganj, Parvati Agra, Saman, Samaspur, Sandi and Sarsai Nawar).
Why conserve wetlands?
- Wetlands provide a wide range of important resources and ecosystem services such as food, water, fibre, groundwater recharge, water purification, flood moderation, erosion control and climate regulation.
- They are, in fact, are a major source of water and our main supply of freshwater comes from an array of wetlands which help soak rainfall and recharge groundwater.
Back2Basics
Ramsar Convention
- The Convention on Wetlands of International Importance (better known as the Ramsar Convention) is an international agreement promoting the conservation and wise use of wetlands.
- It is the only global treaty to focus on a single ecosystem.
- The convention was adopted in the Iranian city of Ramsar in 1971 and came into force in 1975.
- Traditionally viewed as a wasteland or breeding ground of disease, wetlands actually provide freshwater and food, and serve as nature’s shock absorber.
- Wetlands, critical for biodiversity, are disappearing rapidly, with recent estimates showing that 64% or more of the world’s wetlands have vanished since 1900.
- Major changes in land use for agriculture and grazing, water diversion for dams and canals and infrastructure development are considered to be some of the main causes of loss and degradation of wetlands.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Types of palm oil, its uses
Mains level: Impact of import restrictions of palm oil
India has cut import duty on crude palm oil (CPO) and refined, bleached and deodorized (RBD) palm oil, and also moved RBD oil from the “free” to the “restricted” list of imports.
A move against outspoken Malaysia
- Curbing palm oil imports has been construed as retaliation against Malaysia’s PM Mahathir Mohamad, who has criticised India’s internal policy decisions such as the revocation of the special status for J&K and CAA.
- Malaysia has also been sheltering since 2017 the Islamic preacher Zakir Naik who is wanted by India on charges of money laundering, hate speech, and links to terror.
Has India banned import of Malaysian palm oil because of political reasons?
- Not really. The import of RBD palm oil has been restricted, not banned — and this is from all countries, not just Malaysia. Also, CPO can still be imported freely.
- Under the trade classification system that India follows, except for goods that can be imported only by state trading enterprises all goods whose import is not restricted or prohibited are traded freely.
- Normally, a special licence is required to import a restricted good. The government has neither specified what the restrictions entail nor issued any licences.
- However, it has been reported that vessels carrying RBD palm oil are stuck at several ports because buyers have been asked to shun the product.
How much palm oil does India import?
- India imported 64.15 lakh metric tonnes (MT) of CPO and 23.9 lakh MT of RBD in 2018-19, the bulk of which was from Indonesia.
- India imported $10 billion worth of vegetable oil in 2019-20, making it the country’s fifth most valuable import after mineral oil ($141 bn), gold ($32 bn), coal ($26 bn), and telecom instruments such as cell phones ($17 bn).
Why does India need so much palm oil?
- It is the cheapest edible oil available naturally.
- Its inert taste makes it suitable for use in foods ranging from baked goods to fried snacks.
- It stays relatively stable at high temperatures, and is therefore suitable for reuse and deep frying. It is the main ingredient in vanaspati (hydrogenated vegetable oil).
- However, palm oil is not used in Indian homes.
- That, and the fact that CPO continues to be imported, makes it unlikely that the decision to restrict refined palm oil imports will impact food inflation immediately.
Who will be impacted by the decision?
- Indonesia and Malaysia together produce 85% of the world’s palm oil, and India is among the biggest buyers.
- Both Indonesia and Malaysia produce refined palm oil; however, Malaysia’s refining capacity equals its production capacity — this is why Malaysia is keen on exporting refined oil.
- Indonesia, on the other hand, can supply CPO, which would allow India to utilise its full refining capacity.
Why import Crude Palm Oil?
- The CPO that India imports contains fatty acids, gums and wax-like substances. Refining neutralises the acids and filters out the other substances.
- The filtrate is bleached so that the oil does not change colour after repeated use. Substances that may cause the oil to smell are removed physically or chemically.
- This entire process increases the value of a barrel of crude oil by about 4%.
- Additionally, there are costs to transporting the crude, which makes it more cost-effective to import the refined oil.
- But the refining industry has been demanding that the import duty on refined oil be increased, which would make importing crude oil cheaper than importing refined oil.
- The decision to restrict imports of refined oil will benefit refiners, which include big-ticket names like the Adani Wilmar group.
Will restricting imports of RBD palm oil help farmers?
- Restricting refined oil imports will not help farmers directly, as they are not involved in the process of refining.
- However, the restrictions have caused refined palm oil prices to increase. If prices continue to hold, farmers will get a better realization for their crop.
- But the timeframe over which the changes in import policy will have an effect on domestic crop realization is fairly long, given that palm trees take over four years to provide a yield.
- Also, if the demand is met entirely by importing and refining CPO, farmers will be left out of the picture.
How will Malaysia be affected?
- Malaysia has said that it cannot retaliate against India because it is “too small”.
- With imports to its largest market restricted (India bought over 23% of all CPO produced by Malaysia in 2019), Malaysian palm oil futures fell by almost 10% in January, although it has recovered since then.
- India and Malaysia signed a free trade agreement — Malaysia-India Comprehensive Economic Cooperation Agreement — in February 2011.
- In 2018, Malaysia exported 25.8% of its palm oil to India.
- If India does not issue licenses for importing refined oil, Malaysia will have to find new buyers for its product.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Spitzer Telescope
Mains level: Significant feats of the mission
NASA’s Spitzer Mission, which studied the universe in infrared light for more than 16 years, will come to an end since it is low on fuel and has been drifting away from Earth for a few years now.
Spitzer Space Telescope
- The Spitzer Space Telescope is a space-borne observatory, one of the elements of NASA’s Great Observatories that include the Hubble Space Telescope and the Chandra X-Ray.
- Using different infrared wavelengths, Spitzer was able to see and reveal features of the universe including objects that were too cold to emit visible light.
- Apart from enabling researchers to see distant cold objects, Spitzer could also see through large amounts of gas using infrared wavelengths to find objects that may otherwise have been invisible to human beings.
- These included exoplanets, brown dwarfs and cold matter found in the space between stars.
- Spitzer was originally built to last for a minimum of 2.5 years, but it lasted in the “cold” phase for over 5.5 years. On May 15, 2009 the coolant was finally depleted and the “warm mission” began.
Major discoveries
- Spitzer also studied some of the most distant galaxies ever detected.
- The light from these galaxies reached us after traveling for billions of years, enabling scientists “to see those objects as they were long, long ago”.
- Hubble and Spitzer in 2016 identified and studied the most distant galaxy ever observed.
- Using these two telescopes, scientists were able to see a bright infant galaxy as it was over 13.4 billion years ago, roughly 400 million years after the Big Bang, when the universe was less than 5% of its current age.
- It assisted in the discovery of planets beyond our solar system, including the detection of seven Earth-size exo-planets orbiting the star TRAPPIST-1.
- Three of its seven planets were located in the “habitable zone,” where the temperature might be right for liquid water to exist on the planets’ surfaces.
Other landmarks
- Spitzer has logged over 106,000 hours of observation time.
- Thousands of scientists around the world have utilized Spitzer data in their studies, and Spitzer data is cited in more than 8,000 published papers.
- Spitzer’s primary mission ended up lasting 5.5 years, during which time the spacecraft operated in a “cold phase,” with a supply of liquid helium cooling three onboard instruments to just above absolute zero.
- The cooling system reduced excess heat from the instruments themselves that could contaminate their observations.
- This gave Spitzer very high sensitivity for “cold” objects.
- In July 2009, after Spitzer’s helium supply ran out, the spacecraft entered a so-called “warm phase.”
- Spitzer’s main instrument, called the Infrared Array Camera (IRAC), has four cameras, two of which continue to operate in the warm phase with the same sensitivity they maintained during the cold phase.
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