Note4Students
From UPSC perspective, the following things are important :
Prelims level: China-Myanmar Economic Corridor
Mains level: Belt and Road Initiative
Central Idea
- In a significant move towards expanding the Belt and Road Initiative (BRI) in South Asia, China has expressed its commitment to prioritize the extension of the China-Myanmar Economic Corridor (CMEC) to Sri Lanka.
What is CMEC?
|
Details |
| Geographical Scope |
Connects China’s Yunnan Province with Mandalay, Kyaukphyu SEZ on the Bay of Bengal, and Yangon in Myanmar. |
| Strategic Importance |
Provides China an alternative to the Strait of Malacca for trade and energy transport. Offers a shorter, more secure route to the Middle East and Africa. |
| Infrastructure |
Involves building roads, railways, ports, and industrial zones. Key projects include the development of the Kyaukphyu deep-sea port. |
| Economic Impact on Myanmar |
Promises infrastructure development, foreign investment, and job creation in Myanmar. Raises concerns about debt sustainability, environmental impact, and displacement of local communities. |
| Political and Security Challenges |
The corridor passes through politically sensitive and conflict-prone areas in Myanmar, posing challenges to its implementation and stability. |
Expanding the Economic Corridor
- China’s Strategic Priority: State Councillor Shen Yiqin emphasized that China is making the extension of the CMEC to Sri Lanka a strategic priority.
- Free Trade Agreement Acceleration: Both nations affirmed their commitment to expediting the implementation of the China-Sri Lanka Free Trade Agreement, reinforcing their economic partnership.
Significance of CMEC in BRI
- CMEC’s Emergence: CMEC is the latest addition to the six land corridors within the Belt and Road Initiative, gaining prominence over the stalled Bangladesh-China India Myanmar (BCIM) corridor.
- South Asian Perspective: India and Bhutan remain outside the BRI framework, while countries like Sri Lanka are enthusiastic participants, poised for a more substantial economic contribution in the second phase of the initiative.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Global Talent Competitiveness Index (GTCI)
Mains level: NA
Central Idea
- India’s ranking in the Global Talent Competitiveness Index (GTCI) has significantly declined from 83 a decade ago to 103 in the latest report released this month.
- India now finds itself positioned between Algeria (ranked 102) and Guatemala (ranked 104), all classified as lower-middle-income countries.
About Global Talent Competitiveness Index (GTCI)
- The GTCI ranks 134 countries based on their ability to grow, attract, and retain talent.
- It is released by INSEAD, a partner and sponsor of the United Nation’s Sustainable Development Goals (SDGs)Davos, Switzerland recently.
- INSEAD is one of the world’s leading and largest graduate business schools with locations all over the world and alliances with top institutions.
- The report ranks countries based on 6 pillars:
- enable
- attract
- grow
- retain talent
- vocation and technical skills
- global knowledge skills
India’s Ranking and Comparisons
- Rank 103: India’s current rank is well below the median score of the countries assessed in the GTCI.
- BRICS Nations: India’s performance in the GTCI is the weakest among the BRICS countries. China leads the group at rank 40, followed by Russia at 52, South Africa at 68, and Brazil at 69.
- Top Three Countries: These are Singapore, Switzerland, and the United States.
- Skills Mismatch: India faces an increased skills mismatch and difficulties in finding skilled employees, resulting in its low rankings in the ‘Employability’ and ‘Vocational and Technical Skills’ categories.
- Best-Performing Area: India’s best-performing area in the GTCI is “Global Knowledge Skills,” driven by innovation and software development, contributing to its 69th position in the “Talent Impact” sub-pillar.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Free Trade Agreement
Mains level: NA
Central Idea
- External Affairs Minister recent discussions with British PM have put the India-UK Free Trade Agreement (FTA) at the forefront of bilateral negotiations.
Why does this FTA matter?
- The FTA, when finalized, is expected to not only enhance economic ties between India and the UK but also serve as a blueprint for similar agreements with India’s second-largest trading partner, the European Union (EU).
What is Free Trade Agreement (FTA)?
- A Free Trade Agreement (FTA) is a legally binding trade pact between two or more countries or regions that aims to reduce or eliminate barriers to trade and promote economic cooperation.
- FTAs are designed to facilitate the exchange of goods and services across borders by reducing or eliminating tariffs (import taxes), quotas, and various non-tariff barriers, such as regulations and licensing requirements.
- These agreements are negotiated to create a more open and competitive trade environment, fostering economic growth and prosperity among the participating nations.
India’s considerations and UK
- Economic Integration: India is reorienting its trade strategy, moving away from previous trade deals that widened deficits with East Asian countries. Instead, it’s focusing on strengthening economic integration with Western and African nations.
- Reducing Dependence on China: The disruption of global supply chains during the pandemic exposed the risks of overreliance on China. Western countries, including Australia and the UK, are now seeking a ‘China-plus one’ approach in trade.
- RCEP Exit: India’s exit from the China-dominated Regional Comprehensive Economic Partnership (RCEP) further underscores its desire to bolster trade ties with the UK, EU, Australia, and others as a counterbalance to China’s influence.
Brexit Influence and UK’s Perspective
- Crucial for UK: A trade deal with India holds significant importance for the UK, especially as it faces a challenging election in early 2025. Concerns that fueled the Brexit vote have made the UK cautious about offering work permits to Indian service sector workers under the FTA.
- Market Compensation: Despite Brexit uncertainties, the vast Indian market provides London with an opportunity to offset the loss of access to the European Single Market.
Benefits for India and the UK
- India’s Gains: Indian labour-intensive sectors like apparel and gems & jewellery have struggled with declining market share. A trade deal could potentially level the playing field with competitors like Bangladesh. However, it may have repercussions on Least Developed Countries.
- UK’s Advantages: Past trade deals have shown that eliminating duties doesn’t guarantee export growth. Reduction of tariffs on British exports like cars, whisky, and wines could provide deeper access to Indian markets.
- Tariff Disparity: The average tariff on Indian imports to the UK is 4.2%, while the average tariff in India on goods from the UK is 14.6%, highlighting the potential for tariff alignment.
Addressing Non-Tariff Barriers (NTBs)
- Modern FTA Scope: FTA negotiations could focus on eliminating non-tariff barriers (NTBs), which have historically hindered exports. NTBs often involve regulations, standards, testing, certification, or reshipment inspections, especially in agriculture and manufacturing.
- Conformity Assessments: Indian agricultural exporters often face strict limits on contaminants, and Indian products face rejections due to conformity assessments and technical requirements.
Carbon Tax and Impact
- The UK, akin to the EU, is considering a carbon border adjustment mechanism (CBAM) that imposes a carbon tax on certain imports based on emissions.
- This move may affect India’s exports, even with reduced tariffs, particularly in sectors like cement, chemicals, steel, and power generation.
Conclusion
- The India-UK Free Trade Agreement represents a strategic shift in India’s trade policy, emphasizing Western and African integration while mitigating dependence on China.
- For the UK, it offers a chance to compensate for Brexit-related losses and strengthen ties with a significant economic partner.
- Addressing tariff disparities, NTBs, and carbon taxes will be pivotal in shaping the FTA’s impact on both nations’ economies.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: COP28
Mains level: Read the attached story
Central Idea
- The upcoming COP28, scheduled to be held in Dubai from November 30 to December 12, faces the daunting challenge of addressing the urgent climate crisis.
- Despite decades of negotiations, current global commitments to combat climate change are deemed insufficient.
- With temperatures rising at an alarming rate, the need for substantial action has never been more critical.
What is COP?
- The word ‘COP’ is an acronym for ‘Conference of the Parties. The ‘parties’ are the governments around the world that have signed the UN Framework Convention on Climate Change (UNFCCC), a treaty agreed upon in 1994.
- Every year, the COP is hosted by a different nation and the first such COP meeting – ‘COP1’ – took place in Germany in 1995.
- The conferences are attended by world leaders, negotiators, and ministers, and also by representatives from civil society, business, international organisations, and the media.
- The last COP-27 edition convened in Sharm el-Sheikh, Egypt with the theme “Together for Implementation” and to renew and extend the agreements reached in the historic Paris Agreement.
Climate Action So Far: Crisis and Inadequate Responses
- Rising Temperatures: 2023 is poised to become the warmest year ever recorded, with monthly warming records continually broken.
- Response Lag: Global efforts to combat climate change have not kept pace with the rapid temperature increase.
- Assessment: Recent reports indicate that current climate action plans, even in an optimistic scenario, would only achieve a 2% reduction in emissions by 2030, far from the 43% reduction recommended by the Intergovernmental Panel on Climate Change (IPCC) to limit warming to 1.5 degrees Celsius.
- Financial Gap: Despite increasing climate risks, financial resources allocated for adaptation measures in developing countries are insufficient, with a vast disparity between the required and actual funding.
Expectations from COP28
COP28 aims to address these pressing climate challenges and achieve significant outcomes:
(1) Tripling of Renewable Energy:
- Objective: Triple the global installed capacity of renewable energy by 2030, resulting in 70% of electricity generation from renewables.
- Potential: This initiative could reduce 7 billion tonnes of carbon dioxide equivalent emissions by 2030, making it a substantial step toward emission reduction.
- Support: The proposal has garnered endorsement from G20 countries and explicit support from 60 others.
(2) Delivery of $100 Billion:
- Background: Developed countries pledged to mobilize $100 billion annually in climate finance from 2020, a commitment that remains unfulfilled.
- Progress: Developed nations are expected to claim fulfillment of this promise at COP28, though it remains inadequate compared to the trillions required for climate action.
- Challenge: The greater challenge lies in negotiating additional funding beyond the $100 billion annually, commencing from next year.
(3) Funding for Loss and Damage:
- Fund Creation: The establishment of a loss and damage fund, designed to assist countries affected by climate change impacts, was a notable outcome of the previous climate meeting in Egypt.
- Funding Flow: COP28 is expected to witness financial contributions to the loss and damage fund, signaling progress in addressing concerns, especially for small island nations.
(4) Global Stocktake:
- Mandate: As per the Paris Agreement (2015), COP28 will present findings from the first global stocktake exercise. This assessment evaluates countries’ progress in combating climate change and outlines necessary actions for the next five years.
- Informing Action: The stocktake findings will inform discussions and actions during the conference, providing a roadmap for more effective climate action.
(5) Phase-down of Fossil Fuels:
- Challenge: Controversial debates on the scheduled phase-down or phase-out of fossil fuels, particularly coal, persist among nations.
- Contentious Issue: Resolving the disagreement over fossil fuel reduction is expected to be a complex and unresolved matter at COP28.
Conclusion
- COP28, set to be held in Dubai, represents a critical opportunity to address the climate crisis.
- With expectations of tripling renewable energy, fulfillment of $100 billion climate finance commitments, funding for loss and damage, and global stocktake findings, the conference aims to push climate action forward.
- However, the contentious issue of fossil fuel phase-down remains a challenge for the conference.
- The world eagerly anticipates the outcomes and progress toward mitigating climate change.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MSCI EM Index
Mains level: NA
Central Idea
- India’s presence on the MSCI Emerging Markets (EM) Index is set to expand with the inclusion of nine new stocks, effective from 30th November.
- This development will elevate India’s weightage on the index to 16.3%, reaching an all-time high representation of 131 Indian stocks.
What is MSCI EM Index?
- MSCI is a globally recognized index listed on the NYSE.
- It is released and maintained by MSCI Inc., a leading provider of global equity indices, investment analytics, and other financial data and services.
- Its stock indices are closely monitored by global asset managers, hedge funds, banks, corporations, and insurance companies.
- They rely on these indices to allocate funds across global stock markets.
- MSCI indices serve as a foundation for passive investments through exchange-traded funds (ETFs), index funds, and certain fund of funds.
India’s Progress on the EM Index
- Increasing Weight: India’s weightage on the MSCI EM Index has steadily grown, poised to double to 16.3% from four years ago with the upcoming rebalancing.
- Second to China: India ranks second, trailing only China (29.89%), on the EM Index, outperforming countries like Taiwan (15.07%), South Korea (11.78%), and Brazil (5.42%).
- Strong Performance: As an independent entity, India has excelled in generating net returns, boasting a 4.75% return in the year through October compared to MSCI EM’s -2.14%. Over the long term, India has achieved an annualized 8.33% return over ten years versus MSCI EM’s 1.19%.
Inclusion Criteria for Stocks
- Market Capitalization-Based Weightage: Stocks’ weights on the EM index are determined by free-float market capitalization, which represents shares available for foreign investors to trade. Higher market capitalization leads to greater weight and allocation by investors.
- Top Indian Stocks: Prominent Indian stocks on MSCI EM include Reliance Industries (weight 1.34%), ICICI Bank (0.91%), and Infosys (0.87%).
Impact of Increased Representation
- Passive Inflows: Passive foreign trackers are expected to inject $1.5 billion into the nine newly included Indian stocks and other Indian counters with increased weights.
- Stock Rebalancing: MSCI’s adjustments involve increasing the weights of stocks like Zomato, Hindustan Aeronautics, and Jio Financial Services, potentially attracting around $160 million in passive inflows. However, heavyweight stocks like Reliance may experience minor weight reductions.
- Overall FPI Investment: The increase primarily benefits passive trackers, and it may not necessarily lead to a surge in overall foreign portfolio investment (FPI) flows. Nonetheless, it boosts investor sentiment, as passive investments tend to offer higher returns over extended periods due to lower expenses and reduced human error.
- Positive Sentiment: MSCI EM’s positive review of India comes shortly after Morgan Stanley upgraded India to the status of the most preferred emerging market, further enhancing India’s appeal to global
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Financial Action Task Force (FATF)
Mains level: Not Much
Central Idea
- A team from the Financial Action Task Force (FATF) is currently conducting a mutual evaluation in India.
- India’s mutual evaluation report is expected to be discussed during the FATF plenary meeting in June 2024.
About Financial Action Task Force (FATF)
- Foundation: FATF was founded in 1989 through the initiative of the G7 nations.
- Secretariat: The FATF Secretariat is headquartered at the OECD headquarters in Paris, France.
- Plenary Meetings: FATF conducts three Plenary meetings during each of its 12-month rotating presidencies.
- Membership: As of 2019, FATF consists of 37 member jurisdictions.
India’s Engagement with FATF
- Observer Status: India became an Observer at FATF in 2006, marking the beginning of its association with the organization.
- Full Membership: On June 25, 2010, India officially became the 34th country to attain full membership in FATF, signifying its active participation and commitment to the organization’s objectives.
Understanding the Mutual Evaluation Process
- Review Framework: The mutual evaluation process is an essential mechanism through which FATF assesses a country’s legal and institutional framework to combat money laundering and terrorist financing. It also evaluates the country’s implementation of measures to prevent these financial crimes.
- Compliance Assessment: During this process, FATF scrutinizes a country’s adherence to its 40 recommendations regarding anti-money laundering and counter-terrorism financing. It also evaluates the practical effectiveness of these measures.
- Outcome and Rating: The outcome of the mutual evaluation is documented in a report. This report highlights the country’s strengths, identifies weaknesses, and suggests areas for improvement. A rating is assigned based on the level of compliance and effectiveness.
FATF’s Evaluation of India
- Comprehensive Assessment: FATF’s evaluation of India encompasses various aspects, including the nation’s legal framework, regulatory system, law enforcement efforts, and international collaboration.
- Alignment with Global Standards: Central agencies in India have been actively working to ensure that the country’s anti-money laundering and counter-terrorism financing laws align with international standards and that their practical implementation is effective.
Significance of FATF Evaluation
- Report Impact: The evaluation results in a comprehensive report detailing India’s strengths, weaknesses, and areas requiring improvement. This report includes a rating based on compliance and effectiveness.
- Global Anti-Financial Crime Efforts: The mutual evaluation process is a crucial tool in the worldwide fight against money laundering and terrorist financing.
- Financial Implications: The outcome can significantly affect a country’s access to international financial markets and its standing in the global community.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Voice of Global South Summit
Mains level: NA
Central Idea
- Prime Minister will inaugurate the second Voice of Global South Summit. This will be the second Voice of Global South Summit in less than a year hosted by India.
What is the Voice of Global South Summit?
- The VoGS Summit is a Indian initiative that has been designed to provide a common platform for the countries of the Global South to share their perspectives and priorities on several major issues.
- It aims to find out solutions for common challenges faced by developing countries through talks.
- Inspired by PM’s vision, ‘Sabka Saath Sabka Vikas Sabka Vishwas aur Sabka Prayas’, the summit follows India’s philosophy of Vasudhaiva Kutumbakam.
How did the summit start?
- The foundation of this unique initiative was laid considering the recent global developments that have severely impacted the developing world.
- These include events such as Covid pandemic, mounting debt, ongoing Ukraine conflict, and challenges of food, energy security and others.
- Often, the worries of developing countries do not gain adequate attention and space on the global stage.
- The relevant existing platforms have proven to be deficient in handling the challenges and concerns of the developing nations.
About Global South
- Global South refers to countries in Asia, Africa, and South America, while Global North includes countries like the US, Canada, Europe, Russia, Australia, and New Zealand.
- It’s a term used to categorize countries based on economic development and historical factors.
Features of Global South
- Mostly lower-income countries, often with colonial histories.
- Not strictly limited to the Southern Hemisphere; many are in the Northern Hemisphere.
- Used as a value-free alternative to “Third World.”
- Major countries like Brazil, China, India, Indonesia, and Mexico are part of the Global South.
Need for Classification
- Helps describe economic and geopolitical differences.
- Overcomes the limitations of East/West or First/Second/Third World classifications.
- Recognizes the shared history of colonization.
- Acknowledges the emergence of economically powerful South countries.
Indian Context
- India aims to represent the underrepresented Global South in international forums.
- Calls for reform in multilateral institutions like the UNSC, UN, and IMF.
- Emergent economies like India and China seek cooperation with other Global South countries.
- Challenges the dominance of the Global North in international affairs.
Criticism of Classification
- Some find the term too broad and vague.
- Questions about whether elites of the Global South aim to challenge global capitalist structures.
- Concerns about the neglect of Africa in the rise of Asia.
Significance of Global South
- India aims to unite Global South nations to address common concerns.
- Potential for technical and idea exchanges and cooperation in various areas.
- Highlighting shared concerns like energy security and sustainable development.
Challenges for Consolidation
- Debate over climate reparations and exclusion of India and China.
- Impact of the Russia-Ukraine War on Least Developed Countries.
- China’s increasing influence in the Global South through initiatives like the Belt and Road.
Way Forward
- India needs active engagement in regional politics within the Global South.
- Recognize differentiation within the Global South in terms of wealth, needs, and capabilities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Asia-Pacific Economic Cooperation (APEC)
Mains level: Read the attached story
Central Idea
- The Asia-Pacific Economic Cooperation (APEC) Leaders’ Week is currently underway in San Francisco, bringing together leaders from the Asia-Pacific region to discuss pressing economic and trade issues.
- Although India is not an APEC member, is participating at the forum.
Asia-Pacific Economic Cooperation (APEC): An Overview
- Founding: APEC, established in 1989, is a regional economic forum aimed at promoting regional economic integration and greater prosperity in the Asia-Pacific region. It consists of 21 member economies, termed “economies” due to their focus on trade and economic matters.
- Member Economies: APEC’s member economies include Australia, Brunei, New Zealand, Papua New Guinea, Hong Kong (as part of China), the Philippines, Indonesia, Malaysia, Vietnam, Singapore, Thailand, Chinese Taipei (Taiwan), China, Japan, South Korea, Russia, Canada, the United States, Mexico, Peru, and Chile, strategically located around the Pacific Ocean.
APEC’s Role over the Years
- Champion of Free Trade: APEC has consistently advocated for free trade, reduction of trade tariffs, and economic liberalization.
- Seoul Declaration: The 1991 Seoul Declaration marked the establishment of a liberalized free trade area around the Pacific Rim as APEC’s primary objective.
- Economic Impact: APEC initiatives have contributed significantly to the development of a growing middle class in the Asia-Pacific region. APEC economies, comprising 2.9 billion citizens, account for approximately 60 percent of global GDP and 48 percent of global trade as of 2018.
India’s Interest in APEC
- Historical Interest: India expressed interest in joining APEC in 1991, coinciding with the initiation of economic reforms for liberalization and globalization.
- Rationale: India’s interest in APEC is based on its geographical location, the potential size of its economy, and its trade interactions with the Asia-Pacific.
- Challenges: APEC has maintained an informal moratorium on expanding membership, despite India’s interest. The US-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region in 2015 welcomed India’s interest in joining APEC but no formal progress has been made.
Highlights of APEC Summit 2023
- Biden-Xi Meeting: The meeting between US President Biden and China’s President Xi Jinping is a significant highlight. While it may not result in immediate changes in US-China relations, it reflects ongoing high-level engagements.
- Indo-Pacific Economic Framework (IPEF): The summit will focus on progress related to the Indo-Pacific Economic Framework (IPEF), initiated after the US withdrawal from the Trans-Pacific Partnership. Fourteen members, including Fiji and India, are part of the IPEF, with the rest being APEC members.
Conclusion
- The APEC Summit 2023 brings together leaders from the Asia-Pacific region to address economic and trade issues, with the Biden-Xi meeting and discussions on the IPEF among the key highlights.
- Despite India’s historical interest in APEC, membership expansion remains a challenge, underscoring the importance of regional economic forums in shaping global economic policies and partnerships.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 2+2 Dialogues Format
Mains level: Read the attached story
Central Idea
- Indian Defence Minister and External Affairs Minister recently hosted their US counterparts for the fifth annual 2+2 Ministerial Dialogue in New Delhi.
Understanding 2+2 Dialogues
- Purpose: 2+2 dialogues involve the participation of high-level representatives, typically the Ministers of Foreign Affairs and Defence, from two nations. This format aims to expand the scope of dialogue and collaboration between these countries.
- Rationale: Such dialogues enable comprehensive discussions on strategic concerns, mutual sensitivities, and political factors. They facilitate a deeper understanding of each other’s geopolitical perspectives and contribute to the development of stronger, more integrated strategic relationships in an ever-changing global environment.
India’s 2+2 Partners
- United States: The United States is India’s foremost and oldest partner in the 2+2 format. The inaugural 2+2 dialogue took place in September 2018 during the Trump Administration.
- Australia: India engages in 2+2 meetings with Australia, further enhancing bilateral security and defence cooperation.
- Japan: The 2+2 talks with Japan commenced in 2019, with the objective of bolstering strategic depth in security and defence cooperation.
- United Kingdom: In October 2023, India initiated its first 2+2 dialogue with the United Kingdom, signifying the growing importance of this partnership.
- Russia: India and Russia also engage in 2+2 dialogues, fostering a mutually beneficial understanding on various regional and international issues.
Significance of 2+2 Dialogues
- Defence and Strategic Agreements: These dialogues have led to significant bilateral agreements and partnerships. India and the United States, for instance, have signed Troika Pacts like:
- Logistics Exchange Memorandum of Agreement (LEMOA)
- Communications Compatibility and Security Agreement (COMCASA)
- Basic Exchange and Cooperation Agreement (BECA) for deep military cooperation.
- Addressing Regional Concerns: In the face of common regional concerns, such as China’s increasing assertiveness, 2+2 dialogues have become vital mechanisms for India and its partners to align their strategic interests. This includes cooperation within the Quadrilateral Security Dialogue (QUAD) forum with Japan, Australia, and the United States.
- Expanding Traditional Alliances: India also values its 2+2 dialogues with Russia, acknowledging shared worldviews and goals in promoting a multipolar world order.
Conclusion
- India’s participation in 2+2 Ministerial Dialogues with key global partners underscores its commitment to fostering robust and multifaceted strategic relationships.
- These dialogues are pivotal in addressing regional and global challenges, strengthening military cooperation, and promoting shared interests in a dynamic world order.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Loss and Damage Fund (LDF)
Mains level: Read the attached story
Central Idea
- In the escalating climate crisis, the terms “adaptation” and “loss and damage” (L&D) have taken center stage.
- While the concept was embraced at COP 27, recent meetings of the Transitional Committee (TC) to operationalize the fund have encountered major roadblocks.
Birth of the L&D Fund
- Historic Pollution Accountability: The call for affluent nations to acknowledge their historical pollution accountability dates back over 30 years.
- COP 19 Agreement: In 2013, at COP 19 in Warsaw, Poland, member countries formalized the creation of the L&D fund. It aimed to provide financial and technical support to economically developing nations grappling with L&D due to climate change.
- Subsequent Developments: COP 25 introduced the Santiago Network for L&D, and COP 26 established the Glasgow Dialogue on finance for L&D. COP 27 in November 2022 saw the creation of the L&D fund and a Transitional Committee (TC) tasked with operationalizing the fund.
Challenges in Creation of the L&D Fund
- Contentious Issues: TC meetings have grappled with contentious issues such as hosting the fund at the World Bank, the principle of common but differentiated responsibilities (CBDR), climate reparations, and eligibility criteria for developing nations.
- Developed vs. Developing Nations: These disagreements have deepened the divide between developed and developing nations, hampering progress.
Outcome of TC4 and TC5 Meetings
- TC4 Impasse: The fourth meeting of the TC concluded without a consensus on how to operationalize the L&D fund, reflecting divisions on key issues.
- TC5 Draft Recommendations: An impromptu fifth meeting of the TC led to draft recommendations forwarded to COP 28. Developing nations conceded to the fund being hosted by the World Bank temporarily, but developed nations, including the U.S., remained non-committal regarding primary donor status and rejected references to CBDR, equity, and liability in the draft.
- Lack of Clarity: The draft does not specify the fund’s size due to pressure from certain developed nations.
A blow to climate multilateralism
- Erosion of Trust: The outcome underscores a severe trust deficit between affluent and emerging economies concerning historical responsibilities, deepening the rift between wealthy and impoverished nations.
- Failure to Fulfill Commitments: The unwillingness of wealthy nations to fulfill intended commitments undermines global climate negotiations, cooperation, and climate justice.
- Humanitarian Consequences: The watering down of the L&D fund can lead to humanitarian crises, food shortages, displacement, conflict, and exacerbate the suffering of vulnerable communities.
- Economic and Environmental Impact: It also has economic consequences, with potential financial crises and environmental degradation, exacerbating global economic instability.
- Security Implications: Climate-induced instability may lead to security implications as conflicts emerge in vulnerable nations, threatening to spill across borders.
L&D as Part of Climate Justice
- Balancing Adaptation and L&D: Adaptation and L&D are not mutually exclusive but coexist on the continuum of climate resilience.
- Moral and Financial Responsibility: Addressing L&D is a moral and financial responsibility of affluent nations, ensuring climate justice, equity, and solidarity.
- Global Climate Action: Failure to meet these obligations can derail global climate action, adding pressure to future COP talks.
Conclusion
- The protracted impasse surrounding the Loss and Damage fund reflects a troubling lack of consensus and trust between nations, hindering climate justice and cooperation.
- As the world grapples with the consequences of climate change, balancing adaptation and addressing L&D remains paramount.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: IPMDA Initiative, QUAD
Mains level: NA
Central Idea
- The Indo-Pacific Maritime Domain Awareness (IPMDA) initiative, recently unveiled by the Quad grouping (India, Australia, Japan, and the U.S.), underscores a shared commitment to uphold a free, open, inclusive, and rules-based Indo-Pacific.
What is IPMDA Initiative?
- IPMDA Initiative was announced at the Quad Leaders’ Summit in Tokyo, 2022.
- It primarily aims to track dark shipping.
- Dark ships are vessels with their Automatic Identification System (AIS) – a transponder system – switched off so as not to be detectable.
- It focuses on tracking other tactical-level activities: to respond to climate and humanitarian events and to protect their fisheries, which are vital to many Indo-Pacific economies.
Significance of IPMDA for India
- IPMDA represents a substantial effort to bolster security and stability in the Indo-Pacific, a region of paramount global geopolitical significance.
- India’s Navy, currently possessing over 140 ships and submarines, is on course to achieve a formidable fleet of 170 to 180 vessels by 2028.
Lessons from Recent Events
- Recent global events, including the border standoff with China in eastern Ladakh, conflicts in Ukraine, and turmoil in West Asia, underscore the need for resilience and readiness in the face of uncertainties.
- Indian Navy recognizes the importance of integrated joint operations and a holistic approach to national defense, and a well-coordinated defense strategy involving all three Services.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Bletchley Park Declaration
Mains level: Global consensus building on AI Regulation
Central Idea
- The recent AI Safety Summit held at Bletchley Park, the historic site of World War II code-breakers, brought together nations, computer scientists, and tech leaders to address the challenges and opportunities posed by artificial intelligence (AI).
- India, a significant participant alongside countries like the US, UK, and China, played a pivotal role in shaping the global AI governance landscape.
Bletchley Park Declaration
- Global Agreement: The Bletchley Park Declaration aims to establish a shared understanding of the risks and opportunities posed by “frontier AI.”
- Partners: The summit led to a groundbreaking agreement signed by 28 major countries, including India, the US, China, and the European Union.
- Frontier AI Defined: Frontier AI refers to highly advanced generative AI models with potentially dangerous capabilities that can pose significant risks to public safety.
India’s Stance
- Global Action: India emphasized the importance of international cooperation to address AI risks effectively, aligning with the views of other participating nations.
- Prioritizing Safety and Trust: Indian Minister of State for IT, Rajeev Chandrasekhar, highlighted the need to ensure that AI represents safety and trust. India’s perspective has evolved from initially hesitating to regulate AI to actively formulating risk-based regulations.
- Global Framework: India’s PM had earlier called for a global framework on “ethical” AI tools, signalling a shift towards proactive regulation.
Global Opinion on AI Governance
- Diverse Responses: The AI policy response varies across nations. The EU has proposed a comprehensive AI Act, while the UK adopts a “light-touch” approach to foster innovation. The US positions itself between these extremes, focusing on safety and ethics.
- Regulatory Scrutiny: Policymakers worldwide have increased regulatory scrutiny of generative AI tools, prompted by concerns related to privacy, bias, and intellectual property rights.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 1951 Refugee Convention
Mains level: Refugee crisis in the world
Central Idea
- Pakistan’s government has recently implemented an order mandating the expulsion of all foreigners, with a significant impact on Afghan refugees, the largest refugee group in Pakistan.
- This move has raised questions about the fate of Afghan migrants returning to a country facing numerous challenges, including a collapsed economy, natural disasters, food insecurity, and human rights issues under Taliban rule.
Afghan Refugees in Pakistan
- Historical Background: Afghan refugees have sought shelter in Pakistan since the late 1970s, primarily due to the Soviet invasion of Afghanistan in 1979. Subsequently, they fled during the Afghan civil war in the 1990s and the Taliban regime’s rule.
- Afghan Refugee Population: Pakistan is home to over 4 million Afghans, with an estimated 1.7 million lacking proper documentation.
- Deportation Deadline: The government set a deadline of October 31 for illegal migrants to leave Pakistan, after which they would face arrest and expulsion.
- Deportation Process: Hours before the deadline, authorities began rounding up undocumented migrants, demolishing some homes to compel them to leave.
- Border Crossings: Thousands of Afghans crossed into Afghanistan through border crossings, including Torkham and Chaman.
Reasons for Deportation
- Economic Concerns: Pakistan cites economic strain as a key reason for deportation, asserting that undocumented migrants who do not pay taxes strain its limited resources.
- Security Concerns: Authorities claim that Afghan migrants have been involved in terror attacks, street crimes, and organized crimes like drug trafficking. They are accused of participating in attacks against the government and the army.
- Political Timing: The deportation coincides with Pakistan’s caretaker government, insulating it from potential political or electoral repercussions.
Refugee Convention,1951
- The 1951 Convention Relating to the Status of Refugees is one of the cornerstone instruments of refugee protection. It defines who a refugee is and outlines their rights and responsibilities.
- It also provides a non-refoulement principle, which prohibits states from returning refugees to a country where they would face persecution.
- The 1967 Protocol Relating to the Status of Refugees expanded the geographic scope of the 1951 Convention and removed the temporal and geographic limitations, making the Convention universally applicable.
|
Challenges for Returnees
- Uncertain Future: Afghan migrants returning to Afghanistan face an uncertain future amid economic collapse, earthquakes, food shortages, and human rights violations under Taliban rule.
- Education and Employment: Women and girls returning to Afghanistan may be denied education and job opportunities.
- US-Affiliated Migrants: Those who worked for the US before the Taliban’s takeover are particularly vulnerable.
Taliban’s Response
- Criticism and Request for Time: The Taliban has criticized the deportations and asked for more time to prepare for the returnees.
- Humanitarian Efforts: Afghan authorities are establishing temporary camps near the border to provide food, shelter, healthcare, and SIM cards to returnees. The Taliban has expressed a willingness to assist them in finding jobs.
Conclusion
- This deportation is a contentious move driven by economic and security concerns.
- The international community, including the Taliban, is grappling with the challenges posed by this situation, particularly as winter approaches and Afghanistan faces additional hardships.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Carbon Border Adjustment Mechanism (CBAM)
Mains level: Read the attached story
Central Idea
- Commerce and Industry Minister has strongly criticized the European Union’s (EU) proposed Carbon Tax on imports, deeming it “ill-conceived” and warning of potential consequences for the EU’s manufacturing sector.
- He asserted that even if the plan, set to take effect in 2026, proceeds, India will counter it by imposing its own carbon tax.
What is the Carbon Border Adjustment Mechanism (CBAM)?
| Proposed by |
European Union (EU) |
| Purpose |
To reduce carbon emissions from imported goods and prevent competitive disadvantage against countries with weaker environmental regulations |
| Objectives |
Reduce carbon emissions from imported goods
Promote a level playing field between the EU and its trading partners
Protect EU companies that have invested in green technologies |
How does CBAM work?
| Coverage |
Applies to imported goods that are carbon-intensive |
| Integration |
Covered by the EU’s Emissions Trading System (ETS), which currently covers industries like power generation, steel, and cement |
| Implementation |
CBAM taxes would be imposed on the carbon content of imported goods at the border, and the tax rates would be based on the carbon price in the EU ETS |
| Exemptions |
Possible exemptions for countries that have implemented comparable carbon pricing systems |
| Revenue Use |
Revenue generated from CBAM taxes could be used to fund the EU’s climate objectives, such as financing climate-friendly investments and supporting developing countries’ climate efforts |
Who will be affected by CBAM?
|
Details |
| Countries |
Non-EU countries, including India, that export carbon-intensive goods to the EU |
| Items |
Initially covers iron and steel, cement, aluminium, fertilisers, and electric energy production |
| Expansion |
The scope of the CBAM may expand to other sectors in the future |
Advantages offered
- Encourages non-EU countries to adopt more stringent environmental regulations, reducing global carbon emissions.
- Prevents carbon leakage by discouraging companies from relocating to countries with weaker environmental regulations.
- Generates revenue that could be used to support EU climate policies.
Challenges with CBAM
- Difficulty in accurately measuring the carbon emissions of imported goods, especially for countries without comprehensive carbon accounting systems.
- Potential for trade tensions with the EU’s trading partners, especially if other countries implement retaliatory measures.
Consequences for EU Manufacturing
- Auto Sector Impact: The minister suggested that the European auto sector could be one of the first casualties, particularly affecting steel and aluminum usage.
- Opportunity for India: Goyal saw this as an opportunity for India to develop a robust auto sector, leveraging cost advantages in the global market.
India’s Response and Carbon Tax Strategy
- Counteractive Measures: India intends to neutralize the impact of the EU’s carbon tax by imposing its own.
- Investing in Green Energy: Revenue from the Indian carbon tax would be channelled into the country’s green energy transition, which, indirectly, could help exporters transition to cleaner energy and reduce their carbon footprint.
- Negotiations with EU: The government is engaged in dialogues with EU counterparts regarding the levy’s fairness and pricing disparities.
Conclusion
- The EU’s proposed Carbon Tax and India’s counterstrategy highlight the complexities of international trade, environmental concerns, and the potential consequences for various industries.
- India’s strong stance underscores its commitment to safeguarding its economic interests while engaging in constructive negotiations with the EU to ensure a fair and mutually beneficial outcome.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: UNGA Resolutions
Mains level: India's stance on Palestinian War
Central Idea
- The recent United Nations General Assembly (UNGA) vote on a resolution calling for an immediate humanitarian truce in the Israel-Hamas conflict saw India abstaining from the vote.
What are UNGA Resolutions?
|
UNGA Resolutions and Voting |
| What is it? |
Cover diverse global issues, including disarmament, climate change, and humanitarian aid. |
| Types |
Include regular, consensus (adopted without a vote), and procedural resolutions. |
| Who can initiate? |
Originates from member states, UN committees, or regional groups after negotiations and debates. |
| Nature of Enforcement |
Non-binding but hold moral and political influence on member states and UN bodies. |
| Significance |
Shape international norms, public opinion, and state behavior despite lacking legal enforcement. |
| Features of UNGA Resolutions |
Discussed and adopted during annual sessions, with possible special sessions when required. |
| Equal Voting Rights |
Each member state has an equal vote, ensuring equality regardless of size or influence. |
| Majority Requirements |
Typically adopted with a two-thirds majority of present and voting member states (e.g., 128 votes if all 193 are present). |
| Varied Majority Types |
Some require a simple majority, while others, like UN Charter amendments, need a two-thirds majority of all member states. |
| Abstentions |
Member states can abstain, signifying neutrality without supporting or opposing. |
| Challenges and Divisions |
Resolutions may face opposition or receive no votes, leading to international discussions and divisions. |
Resolution over Israel-Hamas War
- The resolution, titled “Protection of civilians and upholding legal and humanitarian obligations,” was proposed by Jordan on behalf of the Arab League and co-sponsored by approximately 40 countries.
- It called for an immediate humanitarian truce, cessation of hostilities, and unhindered humanitarian access to Gaza.
- However, it did not specifically refer to the cowardly terror attacks by Hamas, which resulted in numerous Israeli casualties and hostages.
- Ultimately, the resolution passed with 120 votes in favor, 14 against (including US and UK), and 45 abstentions, with India among the abstaining nations.
India’s Abstinent
- India defended its abstention by citing the absence of “explicit condemnation” of the October 7 terror attacks in Israel in the resolution.
- Since India’s concerns regarding these omissions were not addressed in the final text of the resolution, abstaining was the chosen course of action.
- The government emphasized that there should be no ambiguity when it comes to condemning terrorism and that its position on this matter remains “steadfast and consistent.”
- Key elements of India’s statement include-
- Condemnation of violence, including the October 7 attacks by Hamas.
- Acknowledgement of the humanitarian crisis in Gaza and support for international de-escalation efforts.
- Concern about the security situation and a call for all parties to exercise restraint.
- Reiteration of India’s support for a negotiated two-state solution in the Israel-Palestine issue.
- Encouragement for diplomacy and dialogue to create conditions for peace negotiations.
Why so furore over India’s action?
- India’s abstention differed from its previous vote in favour of a UNGA resolution calling for a ceasefire in Gaza in 2018 and other similar votes in the past.
- Opposition parties in India criticized the government for refusing to take a stronger stand on the humanitarian issue.
- They argued that India’s abstention stood alone among countries in the Global South, South Asia, and BRICS, all of which had voted in favour of the resolution.
Significance of India’s action
- Balanced Position: India’s abstention mirrors its approach to other global conflicts, such as the Russia-Ukraine war, where it seeks to maintain a diplomatic balance between opposing sides.
- Not Legally Binding: Unlike UN Security Council resolutions, UNGA resolutions are not legally binding, meaning that Israel and the US are not obligated to act on it.
- Weight and Moral Authority: Despite its non-binding nature, the resolution carries significant moral weight, with 120 votes in favour signifying support for international law and proportionate use of force.
- India’s Principled Stand: India reiterated its support for a negotiated two-state solution to the Israel-Palestine issue and called for diplomacy and dialogue to resolve the conflict.
Conclusion
- India’s abstention in the recent UN General Assembly vote reflects its balanced and nuanced approach to international conflicts.
- While it has drawn criticism from some quarters, it underscores India’s commitment to principles of diplomacy and its focus on a negotiated resolution to complex global issues.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: ISA, Solar Stocktake
Mains level: Solar Energy Transition
Central Idea
- The International Solar Alliance (ISA), a coalition of 116 member nations committed to advancing global solar technology adoption, is set to unveil its inaugural ‘global solar stock-take report.’
- This initiative is inspired by the United Nations’ inaugural ‘Global Stocktake’ event, slated for Dubai later this year.
About International Solar Alliance (ISA)
- The ISA is an alliance of more than 121 countries, most of them being sunshine countries, which lie either completely or partly between the Tropic of Cancer and the Tropic of Capricorn.
- It is headquartered in Gurugram, India.
- The primary objective of the alliance is to work for efficient exploitation of solar energy to reduce dependence on fossil fuels.
- The alliance is a treaty-based inter-governmental organization.
- The initiative was launched by PM Modi at the India Africa Summit and a meeting of member countries ahead of the 2015 UN Climate Change Conference in Paris in November 2015.
ISA’s Solar Stocktake
- First-Ever Report: The ISA’s ‘solar stocktake’ report marks a historic endeavor, with its release scheduled for mid-November.
- Assessing Progress: The report will comprehensively evaluate the strides made by nations in the adoption of solar energy.
- Global Solar Investment: Notably, investments in solar energy have surged, reaching nearly $300 billion in 2020 and approximately $380 billion in 2022. However, there is significant manufacturing concentration in China.
- Diversifying Solar Manufacturing: The ISA aims to explore strategies for diversifying solar manufacturing beyond China.
ISA’s Commitment to Solar Expansion
- Leadership: The ISA, co-led by India and France, is gearing up for its sixth annual meeting, scheduled in Delhi.
- Africa Solar Focus: One of the ISA’s primary objectives is to expand solar installations in Africa. To facilitate this, the Global Solar Facility (GSF) has been established.
- Global Solar Facility (GSF): The GSF consists of three funds: a payment guarantee fund, an insurance fund to mitigate project risks, and an investment fund for technical assistance.
- Expanding to Other Regions: Following its work in Africa, the ISA aims to extend its efforts to West Asia, Latin America, and the Caribbean.
Global Solar Energy Landscape
- Growing Solar Capacity: As of 2022, global solar photovoltaic installations reached 1,133 gigawatts (GW), with an impressive addition of 191 GW in 2022.
- Chinese Dominance: China, despite not being an ISA member, accounts for nearly a quarter of global solar installations, at around 350 GW. The United States, an ISA member, follows with 111 GW. India, also an ISA member, ranks among the top five countries globally, with 62 GW of solar capacity.
Conclusion
- The ISA’s ‘solar stocktake’ report represents a significant milestone in the global push for solar energy adoption.
- As the world grapples with the imperative to transition to renewable energy sources, this initiative offers insights into progress and challenges.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: United Nations, League of Nations
Mains level: Read the attached story
Central Idea
- On this day in 1945, the United Nations (UN) was established amid a backdrop of global turmoil, emerging from the shadows of two devastating world wars.
- This article traces the birth of the UN, its historical evolution, and highlights both its notable achievements and challenges.
Birth of the UN
- Post-World War Turmoil: Following the devastation of both World War I and World War II, global powers were grappling with the need for a more effective international organization to prevent future conflicts.
- Predecessor: The League of Nations, established in 1919 after World War I, laid the foundation for the UN’s creation but faltered during World War II.
- The Atlantic Charter: In August 1941, US President Franklin D. Roosevelt and UK PM Winston Churchill issued the Atlantic Charter, an affirmation that paved the way for the UN. It articulated shared principles for a better world.
- Birth of the Term ‘UN’: The term ‘UN’ was first coined by President Roosevelt in 1941 to identify the Allied nations against the axis powers.
- Declaration of the UN: On January 1, 1942, representatives of 26 Allied nations gathered in Washington DC to sign the Declaration of the UN, outlining the war objectives of the Allied powers. India, under British colonial rule, was among these nations.
Inception and Charter
- Formation and Ratification: The UN officially came into existence on October 24, 1945, with ratification by 51 nations, including five permanent members (France, Republic of China, Soviet Union, UK, and US).
- General Assembly Inauguration: The first meeting of the General Assembly took place on January 10, 1946.
- UN’s Core Goals: The UN was founded on four key goals: maintaining international peace and security, fostering friendly relations among nations, promoting international cooperation in problem-solving, and coordinating global actions toward common objectives.
Evolution and Impact
- Membership Growth: Initially comprised of 51 member states, the UN’s membership expanded as independence movements and decolonization unfolded. Today, it boasts 193 member countries.
- Broadened Scope: Over 75 years, the UN has tackled numerous global issues, including health, environment, and women’s empowerment.
Achievements of the UN
- Peace and Security: Prevented conflicts, mediated peace agreements, and conducted peacekeeping missions in places like Bosnia and Kosovo.
- Humanitarian Aid: Provided vital aid through agencies like WFP and UNICEF, offering food, shelter, and healthcare during crises.
- Human Rights: Established the Universal Declaration of Human Rights and monitors violations globally through mechanisms like the Human Rights Council.
- Health: Led efforts against diseases like smallpox and HIV/AIDS through WHO, addressing current threats like COVID-19.
- Refugee Support: UNHCR aids refugees and internally displaced persons while advocating for their rights.
- Environmental Advocacy: Raised awareness about climate change, negotiated the Paris Agreement, and promotes sustainability via UNEP.
Failures and Criticisms of the UN
- Genocide Prevention: Failed to prevent genocides like Rwanda and Srebrenica despite early warnings.
- Peacekeeping Challenges: Faced issues like misconduct allegations and difficulties in halting violence in missions like South Sudan.
- Veto Powers: Criticized for Security Council veto powers that hinder action and maintain power imbalances.
- Enforcement Limits: Reliant on member states for enforcement, leading to limited action in cases of non-compliance, as seen in the Iraq War.
- Lack of Representation: Critiqued for underrepresenting Global South countries in key decision-making bodies.
- Neoliberal Influence: Accused of promoting neoliberal economic policies, which can exacerbate inequalities, through associated organizations like the World Bank and IMF.
Future Plan
- 2020 Declaration: In a high-level UN General Assembly meeting commemorating 75 years of the UN, a declaration was adopted outlining goals for the next decade. These include protecting the environment, promoting peace, gender equality, digital cooperation, and sustainable financing.
- Decade of Action: The next ten years, designated as the “decade of action and delivery for sustainable development,” are considered critical for addressing global challenges, especially in the wake of the COVID-19 pandemic.
Conclusion
- The UN, born out of the ashes of conflict, has played a significant role in shaping the world’s course over the past 75 years.
- Its journey has been marked by both notable achievements and formidable challenges.
- As it enters a new decade with a renewed commitment to global betterment, the UN continues to evolve as a pivotal force in promoting international cooperation and addressing humanity’s most pressing issues.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Global Tax Evasion Report
Mains level: Call for tax on billionaires
Central Idea
- The release of the ‘Global Tax Evasion Report’ marks a pivotal moment in the global fight against tax evasion.
- This report serves as a comprehensive analysis of the state of global taxation and its implications.
About Global Tax Evasion Report
- The ‘Global Tax Evasion Report’ is compiled by the EU Tax Observatory, a research institution specializing in international tax matters, established in 2021.
- This inaugural edition of the report is the result of collaborative efforts involving over 100 researchers from across the globe, working alongside tax authorities.
- It represents the first systematic attempt to analyze available data in the field of taxation.
Global Minimum Tax for MNCs
- Established in October 2021 by 136 countries, including India, setting a 15% global minimum tax rate for MNCs.
- Major economies are aiming to discourage multinational companies from shifting profits – and tax revenues – to low-tax countries regardless of where their sales are made.
|
Tax Haven
A tax haven is a foreign country or corporation used to avoid or reduce income taxes, especially by investors from another country. A tax haven is a country or place that has a low rate of tax so that people choose to live there or register companies there in order to avoid paying higher tax in their own countries. |
Key Findings of the GTE Report
The report uncovers the following pivotal findings:
- Reduction in Offshore Tax Evasion: Wealthy individuals’ offshore tax evasion has significantly declined over the past decade, primarily due to the automatic exchange of bank information, resulting in a three-fold reduction in evasion.
- Profit Shifting to Tax Havens: MNCs shifted approximately $1 trillion to tax havens in 2022, accounting for 35% of their global profits. This has led to a substantial loss in global corporate tax revenues, impacting approximately 10% of total collections, with U.S. multinationals playing a prominent role.
- Global Minimum Tax Impact: The expected positive impact of the 15% global minimum tax rate on MNCs has been weakened by various loopholes.
- Low Taxation for Billionaires: Billionaires globally often experience effective tax rates ranging from 0% to 0.5% of their wealth, utilizing shell companies to evade income taxes.
- Aggressive Tax Competition: New forms of aggressive tax competition have emerged, eroding government revenues and exacerbating inequality.
Proposed solutions
- Empowering ‘Automatic Exchange of Bank Information’: Launched in 2017 to combat offshore tax evasion by affluent individuals. Facilitated the sharing of deposit information with foreign tax authorities.
- Global Minimum Tax on Billionaires: Proposes a 2% global minimum tax on billionaires, mirroring the model for MNCs, ensuring minimum tax rates for the wealthiest individuals.
- Strengthening Global Minimum Tax for MNCs: Advocates for reinforcing the global minimum tax for MNCs while eliminating existing loopholes, potentially augmenting global corporate tax revenues by $250 billion annually.
- Fair Allocation of Additional Revenues: Proposes mechanisms for equitable distribution of additional tax revenues generated by these measures among countries.
Conclusion
- The GTE report illuminates substantial progress in curbing tax evasion while underscoring persistent challenges and reform opportunities.
- The proposed solutions aim to foster international collaboration in addressing tax-related issues and promoting fiscal equity on a global scale.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Vienna Convention
Mains level: Not Much
Central Idea
- The India-Canada crisis took a fresh turn as 41 diplomats were withdrawn from the country.
- India insisted that its actions are consistent with the tenets set forth in Article 11.1 of the Vienna Convention on Diplomatic Relations.
What is the Vienna Convention?
- The Vienna Convention on Diplomatic Relations is an international treaty signed by 61 countries in 1961.
- It puts forth a framework for diplomatic interactions between independent nations and aims to ensure the ‘development of friendly relations among nations’.
- At present 193 countries are party to the document including India.
Key Features
|
Explanation |
| Diplomatic Immunity (Articles 29 to 36) |
- Diplomats and their families are granted immunity from the jurisdiction of the host country’s legal system for their official actions.
- Extends to criminal and civil matters and ensures that diplomats cannot be prosecuted or sued in the host country’s courts.
|
| Inviolability of Diplomatic Premises (Articles 22 to 27) |
- Diplomatic premises, such as embassies and consulates, are considered inviolable.
- They cannot be entered or searched by the host country’s authorities without the permission of the sending state.
|
| Non-Interference (Article 41) |
- Diplomatic agents are expected not to interfere in the internal affairs of the host country.
- This principle promotes peaceful coexistence and respectful relations between states.
|
| Protection of Diplomatic Missions (Articles 22 to 27) |
- Host country is responsible for ensuring the security and protection of diplomatic missions and their staff.
- Includes safeguarding the physical premises and preventing any intrusion or damage.
|
| Termination of Diplomatic Relations (Articles 45 to 50) |
- Outlines procedures for the termination of diplomatic relations between states.
- Includes orderly withdrawal of diplomatic personnel and the closure of diplomatic missions.
|
What is Article 11.1 about?
- It deals with the size of international missions within other countries.
- In the absence of a specific agreement as to the size of the mission, the receiving State may require that the size of a mission be kept within limits considered to be reasonable and normal.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Olympic Games
Mains level: Not Much
Central Idea
- Prime Minister Modi recently confirmed India’s formal bid to host the 2036 Olympic Games, raising questions about the financial implications and benefits of hosting this prestigious event.
About Olympics
| Origins |
Began in ancient Greece in 776 BCE in Olympia. |
| Revival |
Revived by Pierre de Coubertin in 1896 in Athens, Greece. |
| Five Rings |
Olympic flag features five interlocking rings representing unity among 5 continents. |
| Olympic Motto |
“Citius, Altius, Fortius” (Faster, Higher, Stronger) reflects the pursuit of excellence. |
| Sports Included |
Features a diverse range of sports, from athletics and swimming to archery and gymnastics. |
| Discontinued Sports |
Some sports, like tug of war and live pigeon shooting, have been removed. |
Selecting the Olympics Host City
- International Olympic Committee (IOC) Decision: The host city is chosen by the International Olympic Committee members through a secret ballot, with the majority vote determining the winner.
- Competition and Diplomacy: Securing the opportunity to host the Olympics involves significant financial resources and diplomatic efforts. Typically, winners are announced 7-8 years before the event.
Cost of Hosting the Olympics
- Expensive Endeavor: Bidding for the Olympics is a costly proposition, with countries spending $50-100 million, even for unsuccessful bids. In case of a successful bid, the expenses can soar into billions of dollars.
- Examples of Expenditure: Tokyo spent $150 million for its failed 2016 bid and even more for the successful 2020 bid. Toronto refrained from bidding due to the $60 million cost for the 2024 bid.
- Infrastructure Investment: Hosting the Olympics entails building stadiums and enhancing infrastructure to accommodate athletes and tourists.
Funding the Olympics Expenses
- Local Government Responsibility: The majority of expenses, especially on infrastructure, are shouldered by the local government and are spread across the country’s budget.
- Borrowing for Cost Overruns: Countries often resort to borrowing to cover cost overruns. The IOC contributes some revenue to the host country, but it constitutes a relatively small amount, e.g., $1.5 billion for Rio De Janeiro in 2016.
Assessing the Worth of Hosting the Olympics
- Benefits of Hosting: Hosting the Olympics elevates a country’s global status, promotes it as an investment and tourist destination.
- Cautions on Overspending: Excessive spending can have dire consequences, as seen with Canada’s 30-year debt from the 1976 Montreal Games, the impact on Greece’s financial crisis after the 2004 Athens Olympics, and Rio’s $900 million bailout request from the Brazilian government.
- Positive Outcomes: In some cases, such as Beijing, hosting the Olympics led to significant GDP growth acceleration, by at least 0.8%.
India’s Prospects
- Favorable Timing: India’s bid aligns well with its status as the world’s most populous and fastest-growing major economy.
- Past Experience: Having previously hosted the 1982 Asian Games and the 2010 Commonwealth Games, India possesses a favorable track record, which the IOC takes into consideration.
- Gujarat’s Bid: Gujarat is contemplating bidding for the 2026 Commonwealth Games, which could further demonstrate India’s hosting capabilities.
- Economic Power: India’s ascent as an economic powerhouse enhances its candidacy’s appeal to other nations.
Conclusion
- While India’s bid to host the 2036 Olympics presents an opportunity to boost its global profile and economic prospects, it is essential to strike a balance between ambition and fiscal prudence.
- The economic implications, positive and negative, of hosting such a monumental event should be carefully evaluated to ensure that the effort and investment yield substantial long-term benefits for the nation.
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