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Distribution: weekly

  • Implications of EU’s new GHG emissions law for Indian industry

    Context

    On July 14, the European Union introduced new legislation, Fit for 55, to cut its GHG emissions by 55 per cent by 2030 and to net-zero by 2050.

    Implications of Fit for 55

    • Legal backing: It turns the EU’s announcement into law, protecting it from the winds of political change.
    • Opportunity for India: It opens new markets for Indian industry, for example for electric vehicles.
    • CBAM: However, it also introduces a potentially adverse policy called the carbon border adjustment mechanism (CBAM).
    • CBAM is meant to discourage consumers from buying carbon-intensive products and encourage producers to invest in cleaner technologies.

    What is CBAM?

    • The EU has had a carbon emission trading system since 2005.
    • With Fit for 55, the EU’s carbon price is likely to go up.
    • High carbon price will make the EU’s domestic products more expensive than imports from countries that do not have such rules.
    • The new CBAM is meant to level the playing field between domestic and imported products.
    • CBAM will require foreign producers to pay for the carbon emitted while manufacturing their products.
    • The adjustment will be applied to energy-intensive products that are widely traded by the EU, such as iron and steel, aluminium, cement, fertiliser, and electricity.

    Why CBAM is a cause for concern for India?

    • India is Europe’s third-largest trading partner, and it does not have its own carbon tax or cap.
    • So, CBAM should be a cause for concern for it.
    • A UNCTAD study predicts that India will lose $1-1.7 billion in exports of energy-intensive products such as steel and aluminium.
    • India’s goods trade with the EU was $74 billion in 2020.

    Way forward for Indian Industry

    • Clean technology partnerships: Indian Industry should enter clean technology partnerships with European industry.
    • Invest in renewables:  Indian companies should invest in more renewable electricity and energy efficiency.
    • Incentivise low-carbon choices: They can adopt science-based targets for emission reduction and internal carbon pricing to incentivise low-carbon choices.
    • Schemes and Government financing: The government can extend the perform-achieve-trade scheme to more industries and provide finance to MSMEs to upgrade to clean technologies.
    • WRI India’s analysis shows that carbon dioxide emissions from the iron and steel industry can be reduced from 900 million tonnes to 500 million tonnes in 2035 through greater electrification, green hydrogen, energy efficiency, and material efficiency.
    • Diversify export: India can try to diversify its exports to other markets and products.

    Consider the question “What is carbon border adjustment mechanism (CBAM) introduced by the EU? What are its implications for Indian industry?” 

    Conclusion

    At present, the CBAM may seem obstructionist. But over the long-term, it can provide regulatory certainty to industry by harmonising carbon prices, and Indian industry can position itself as a strong player in the trade landscape of the future.

    Back2Basics: UNCTAD

    • UNCTAD is a permanent intergovernmental body established by the United Nations General Assembly in 1964.
    • Its headquarters are located in Geneva, Switzerland, and have offices in New York and Addis Ababa.
    • UNCTAD is part of the UN Secretariat.
    • IT report to the UN General Assembly and the Economic and Social Council but have own membership, leadership, and budget.
    • It is also part of the United Nations Development Group.

  • The Caste Census Debate

    The Ministry of Home Affairs has informed that it was decided as a matter of policy not to enumerate caste-wise population other than SCs and STs in Census.

    What kind of caste data is published in the Census?

    • Every Census in independent India from 1951 to 2011 has published data on Scheduled Castes and Scheduled Tribes, but not on other castes.
    • Before that, every Census until 1931 had data on caste.
    • However, in 1941, caste-based data was collected but not published.

    Why is there a demand for caste census?

    • In the absence of such a census, there is no proper estimate for the population of OBCs, various groups within the OBCs, and others.
    • The Mandal Commission estimated the OBC population at 52%, some other estimates have been based on National Sample Survey data.
    • Some political parties make their own estimates in states and Lok Sabha and Assembly seats during elections.

    How often has the demand for a caste census been made?

    • It comes up before almost every Census, as records of debates and questions raised in Parliament show.
    • The demand usually come from among those belonging to Other Backward Classes (OBC) and other deprived sections, while sections from the upper castes oppose the idea.
    • On April 1, the constitutional body National Commission for Backward Classes urged the government to collect data on the population of OBCs “as part of Census of India 2021 exercise”.

    Need for caste census

    • There is a central list of OBCs and a State-specific list of OBCs.
    • Some states do not have a list of OBCs; some States have a list of OBCs and a sub-set called Most Backward Classes.
    • There are certain open-ended categories in the lists such as orphans and destitute children.
    • Names of some castes are found in both the list of Scheduled Castes and the list of OBCs.
    • Scheduled Castes converted to Christianity or Islam are also treated differently in different States.
    • The status of a migrant from one State to another and the status of children of inter-caste marriage, in terms of caste classification, are also vexed questions.”

    Back2Basics: Census of India

    • The decennial Census of India has been conducted 15 times, as of 2011.
    • While it has been undertaken every 10 years, beginning in 1872 under British Viceroy Lord Mayo, the first complete census was taken in 1881.
    • Post-1949, it has been conducted by the Registrar General and Census Commissioner of India under the Ministry of Home Affairs, Government of India.
    • All the censuses since 1951 were conducted under the 1948 Census of India Act.
    • The last census was held in 2011, whilst the next was scheduled to be held in 2021.

  • Telangana’s Rudreswara Temple inscribed as a World Heritage Site

    India’s nomination of Rudreswara Temple, (also known as the Ramappa Temple) at Palampet, Mulugu district, near Warangal in the state of Telangana has been inscribed on UNESCO’s World Heritage list. This would be the 39th site in India.

    Also read:

    [pib] Declaration of World Heritage Sites by UNESCO                 

    Rudreswara Temple

    • The Rudreswara temple was constructed in 1213 AD during the reign of the Kakatiya Empire by Recharla Rudra, a general of Kakatiya king Ganapati Deva.
    • It is also known as the Ramappa temple, after the sculptor who executed the work in the temple for 40 years.
    • The main temple is flanked by the collapsed structures of the Kateshwarayya and Kameshwarayya temples in Palampet, about 220 km from Hyderabad.
    • An inscription dates the temple to 1135 Samvat-Saka on the eighth day of Magha (January 12, 1214).

    Its architecture

    • The temple, known for its exquisite craftsmanship and delicate relief work, is a savvy blend of technical know-how and materials of its time.
    • The foundation is built with the “sandbox technique”, the flooring is granite, and the pillars are basalt.
    • The lower part of the temple is red sandstone while the white gopuram is built with light bricks that reportedly float on water.
    • The temple complexes of Kakatiyas have a distinct style, technology, and decoration exhibiting the influence of the Kakatiyan sculptor.
    • The temple stands on a 6 feet high star-shaped platform with walls, pillars, and ceilings adorned with intricate carvings that attest to the unique skill of the Kakatiyan sculptors.
    • European merchants and travelers were mesmerized by the beauty of the temple and one such traveler had remarked that the temple was the “brightest star in the galaxy of medieval temples of the Deccan”.

    Surviving through ages

    • According to the temple priest, some of the iconography on the temple was damaged during the invasion of Malik Kafur in 1310.
    • Treasure hunters vandalized the rest
    • But the biggest test for the temple was an earthquake in the 17th century (one of the biggest was that of 7.7-8.2-magnitude on June 16, 1819).

    Answer this PYQ in the comment box:

    Q.Which one of the following was a very important seaport in the Kakatiya kingdom? (CSP 2017)

    (a) Kakinada

    (b) Motupalli

    (c) Machilipatnam (Masulipatnam)

    (d) Nelluru

    Back2Basics: UNESCO World Heritage Sites

    • A World Heritage Site is a landmark or area, selected by the UN Educational, Scientific and Cultural Organization (UNESCO) for having cultural, historical, scientific, or other forms of significance, which is legally protected by international treaties.
    • The sites are judged to be important for the collective and preservative interests of humanity.
    • To be selected, a WHS must be an already-classified landmark, unique in some respect as a geographically and historically identifiable place having special cultural or physical significance (such as an ancient ruin or historical structure, building, city, complex, desert, forest, island, lake, monument, mountain, or wilderness area).
    • It may signify a remarkable accomplishment of humanity, and serve as evidence of our intellectual history on the planet.
    • The sites are intended for practical conservation for posterity, which otherwise would be subject to risk from human or animal trespassing, unmonitored/uncontrolled/unrestricted access, or threat from local administrative negligence.
    • The list is maintained by the international World Heritage Program administered by the UNESCO World Heritage Committee, composed of 21 “states parties” that are elected by their General Assembly.

    UNESCO World Heritage Committee

    • The World Heritage Committee selects the sites to be listed as UNESCO World Heritage Sites, including the World Heritage List and the List of World Heritage in Danger.
    • It monitors the state of conservation of the World Heritage properties, defines the use of the World Heritage Fund, and allocates financial assistance upon requests from States Parties.
    • It is composed of 21 states parties that are elected by the General Assembly of States Parties for a four-year term.
    • India is NOT a member of this Committee.

  • Gatekeeper Model to prevent suicides in prisons

    In a bid to prevent suicides triggered by mental health issues in prisons across the country, the National Institute of Mental Health and Neuro Sciences (NIMHANS), Bengaluru, has recommended the “Gatekeeper Model”.

    What is the ‘Gatekeeper Model’?

    • It is a model where selected inmates, trained to identify prisoners at risk of suicide, would refer them to treatment or supportive services.
    • Prisoners with mental disorders will be regularly assessed for the severity of the suicidal risk and also put on regular and supervised medication.
    • To address the prisoner’s mental health needs, the correctional facility would have links to community-based initiatives like the District Mental Health Programme.

    Buddy system

    • The concept of a ‘Buddy System’ — social support through trained prisoners called “buddies” or “listeners” — was found to have a good impact on the well-being of suicidal prisoners.
    • Periodic telephone conversations with friends and family would also foster support.

    Why such a move?

    • Emphasizing the mental health of prisoners, the Ministry said incarcerated people could face many vulnerabilities during the pandemic, which might impact their mental wellbeing.
    • The prison staff was also working under tremendous pressure and faced challenges in performing their duty while safeguarding themselves from contracting the infection.

  • India’s FAANG moment has arrived

    Context

    In the US, the Big Tech FAANG five are Facebook, Apple, Amazon, Netflix and Google (now Alphabet).  Today, in India, Zomato’s stock market debut is a big occasion for India that could pave the path for other online successes.

    Significance for economy

    • It is the first among a host of domestic unicorns to have taken the IPO road, heralding a watershed moment.
    • Boost for startups: It is also also a big leap for our country as a whole, which today boasts of the third largest start-up ecosystem in the world.
    • Creation of online ecosystem: The response to Zomato’s initial public offer (IPO) gave us interesting insights into the robustness of the online economy in a pandemic-stricken world.
    • Help creation of tech-giants: It could alter the composition as well as perception of markets, giving Indian investors a feel of new-generation, tech-heavy, assets-light and agile entrepreneurial growth stories, woven around the consumer internet ecosystem in India.
    • Attracting FDI: With global liquidity at unprecedented levels and tech being the toast of the season, we could be looking at FDI inflows in unforeseen proportion in days to come.
    • The ascent of new-age enterprises like Zomato and Paytm on the Stock Market, followed by likes of Oyo, Ola, Swiggy, Byju’s and even Flipkart could signal the emergence of India’s own FAANG family.

    What sets the tech startups apart?

    • Their reliance on big data and leveraging of ever-evolving technology, while sustaining a two-way connection with clients set them apart.
    • The ‘stickiness’ and the ‘connect’ built over the years through carefully fabricated social layers puts them in the league of giant social media influencers.
    • During the last few decades, two distinctive traits that have the potential to push the boundaries of limitations are the creation of a large talent pool and India’s prowess in software and data (including AI/ML) technology, both on a global scale.

    Conclusion

    As we celebrate 30 years of economic reforms, today’s debut, at least for the markets and the economy, may well be called India’s re-tryst with destiny.

  • Challenging China

    Context

    The Chinese are about to extend their geographical advantage by building a new high-speed rail from Chengdu, running close by and parallel to the Arunachal border, up to Lhasa.

    Manpower and Defence Budget: Comparison with China

    • The Indian army, according to diverse sources, numbers between 12,50,000 and 14,00,000 officers and men.
    • Chinese PLA actually has only 9,75,000 officers and men.
    •  They have downsized their army.
    • China is an aspiring world power that spends $252 billion on its defence budget, as compared to $72.9 billion that India spends.
    • Both countries limit their budget to around 2 per cent of their GDP, which in China’s case is five times our size.

    Why does India need to reduce manpower in defense?

    • Expensive:  A major portion of the budget is spent on manpower, 81 percent of the army budget goes into manpower and maintenance. Gradually, manpower is going to get increasingly expensive.
    • Also, our strategic options get constrained because the army gets 61 percent of the defense budget.
    • We need to downsize the army by 2,00,000 men over five years through retirement and reduced recruitment.
    • The reduction in manpower will save approximately Rs 30,000 crore, which can be equally divided between the three services.

    Way forward: Bigger role to navy and air force

    • We can achieve better conventional deterrence against China by giving bigger roles to the navy and air force.
    • The first step is to accept that we are an asymmetric power and leverage the RMA (Revolution in Military Affairs) so that numerical inferiority is of no consequence.
    • They are invulnerable on land, and their only strategic weakness is their reliance on the Indian Ocean SLOCs (sea lines of communications) for 70 percent of their imported oil.
    • The only guarantee of Chinese non-aggression and good behavior is a well-crafted threat to their oil tankers and a complete naval mastery of the escalation that is bound to follow.
    • India can also leverage the QUAD resources in various ways such as information.
    • Build up the Car Nicobar airfield into a full-fledged airbase.
    • We could negotiate with Oman for the use of the old RAF airbase at Masirah to dominate the Gulf of Hormuz and threaten the Chinese base at Djibouti.

    Conclusion

    China cannot be countered by throwing expensive manpower at the problem, but only by shifting the battlespace to advantageous geography, by a united navy and air force effort, while a technically advanced army holds the Himalayan border.

  • Right to be Forgotten in India

    A TV celebrity has approached the Delhi High Court with a plea saying that his videos, photographs, and articles, etc. be removed from the internet citing his “Right to be Forgotten”.

    What is the plea about?

    • The plea mentions that the posts and videos on the internet related to him have caused the petitioner psychological pain for his diminutive acts.
    • The plea also states that the petitioner’s mistakes in his personal life become and remains in public knowledge for generations to come.
    • Consequently, the values enshrined under Article 21 of the Indian Constitution and the emergent jurisprudential concept of the Right to be Forgotten becomes extremely relevant in the present case.”

    What is the ‘Right to be Forgotten’ in the Indian context?

    • The Right to be Forgotten falls under the purview of an individual’s right to privacy, which is governed by the Personal Data Protection Bill that is yet to be passed by Parliament.
    • In 2017, the Right to Privacy was declared a fundamental right by the Supreme Court in its landmark verdict.

    What does the Personal Data Protection Bill say about this?

    • The Personal Data Protection Bill was introduced in Lok Sabha on December 11, 2019, and it aims to set out provisions meant for the protection of the personal data of individuals.
    • Clause 20 under Chapter V of this draft bill titled “Rights of Data Principal” mentions the “Right to be Forgotten.”
    • It states that the “data principal (the person to whom the data is related) shall have the right to restrict or prevent the continuing disclosure of his personal data by a data fiduciary”.
    • Therefore, broadly, under the Right to be forgotten, users can de-link, limit, delete or correct the disclosure of their personal information held by data fiduciaries.
    • A data fiduciary means any person, including the State, a company, any juristic entity, or any individual who alone or in conjunction with others determines the purpose and means of the processing of personal data.

  • What is National Security Council (NSC)?

    The budgetary allocation for the National Security Council Secretariat (NSCS) increased 10 times from ₹33.17 crores in 2016-17 to ₹333.58 crores in 2017-18.

    National Security Council (NSC)

    • The NSC is an executive government agency tasked with advising the Prime Minister’s Office on matters of national security and strategic interest.
    • It was established by the former PM of India Atal Bihari Vajpayee on 19 November 1998, with Brajesh Mishra as the first National Security Advisor.
    • Prior to the formation of the NSC, these activities were overseen by the Principal Secretary to the preceding Prime Minister.

    Members

    • Besides the NSA the Deputy National Security Advisors, the Ministers of Defence, External Affairs, Home, Finance of the Government of India, and the Vice Chairman of the NITI Aayog are members of the National Security Council.
    • PM can chair the meeting of NSC (for eg – PM chaired the meeting of NSC Post Pulwama to discuss heightened tension with Pakistan).
    • Other members may be invited to attend its monthly meetings, as and when is required.

    Organizational structure

    • The NSC is the apex body of the three-tiered structure of the national security management system in India.
    • The three tiers are the Strategic Policy Group, the National Security Advisory Board, and a secretariat from the Joint Intelligence Committee.

  • [pib] Periodic Labour Force Survey (2019 –2020)

    The Periodic Labour Force Survey (PLFS) Annual Report for July, 2019 to June 2020 was recently released by the National Statistical Office (NSO).

    Periodic Labour Force Survey

    • Considering the importance of the availability of labor force data at more frequent time intervals, National Statistical Office (NSO) launched PLFS in April 2017.
    • The objective of PLFS is primarily twofold:
    1. to estimate the key employment and unemployment indicators (viz. Worker Population Ratio, Labour Force Participation Rate, Unemployment Rate) in the short time interval of three months for the urban areas only in the Current Weekly Status (CWS).
    2. to estimate employment and unemployment indicators in both ‘Usual Status’ and CWS in both rural and urban areas annually.

    Various dimensions of the survey

    The PLFS gives estimates of Key employment and unemployment Indicators:

    • Labour Force Participation Rate (LFPR): LFPR is defined as the percentage of persons in the labor force (i.e. working or seeking or available for work) in the population.
    • Worker Population Ratio (WPR): WPR is defined as the percentage of employed persons in the population.
    • Unemployment Rate (UR): UR is defined as the percentage of persons unemployed among the persons in the labor force.
    • Activity Status- Usual Status: When the activity status is determined on the basis of the reference period of the last 365 days preceding the date of the survey, it is known as the usual activity status of the person.
    • Activity Status- Current Weekly Status (CWS): The activity status determined on the basis of a reference period of the last 7 days preceding the date of the survey is known as the CWS of the person.

    Highlights of the third report

    • The Labour force participation ratio has increased to 40.1% in 2019-20 from 37.5% and 36.9%, respectively, in the last two years.
    • Worker population rate improved to 38.2% in 2019-20 compared with 35.3% in 2018-19 and 34.7% in 2017-18.
    • The unemployment rate fell to 4.8% in 2019-20. In 2018-19, it stood at 5.8% and 6.1% in 2017-18.

  • Challenges in withdrawing stimulus measures

    Context

    Economic-policy discussions increasingly revolve around the question of when and how quickly central banks should pull back the uber-stimulus measures implemented last year in response to the pandemic.

    Why withdrawal is challenging?

    • Uncertainties: Both parts of the question (when and how) call for finely balanced judgment to account for uncertainties that are in play.
    • Policy changes by major central banks can have far-reaching implications for economic and financial well-being, affecting not just those directly involved but also the many nations.
    • To answer the question, an assessment of three current issues is required:
    • The labor market.
    • The surge in inflation.
    • The risk of not being able to recover quickly in the event of a policy mistake.

    Let’s look into these three issues

    1) Labour market puzzle

    • Despite massive demand, the labor market is unable to match unemployed workers to jobs.
    • The situation is particularly stark in the US.
    • Job data for April show that there are a record number of job openings in the US—more than nine million—labor-force participation remains stubbornly low, and unemployment high, compared to pre-pandemic levels.
    • The labor market’s persistent malfunctioning—particularly employers’ struggle to find employees—is likely to lead to higher wage growth, a possibility that fuels concern about the second issue-inflation.

    2) Inflation: Is it transitory or long-lasting?

    • There is a view that the current uptick in inflation will sharply reverse itself.
    • As the year progresses, it is expected that the base effect will wash out together with the supply and demand mismatches.
    • However, there is a possibility of supply bottlenecks, changes in supply chains, and lasting inventory management challenges.

    3) Policy challenges: To act or not to act

    • Policymakers must be mindful of the risks associated with any given course of action—including inaction.
    • In the face of such uncertainty, it is wise to ask not just what could go wrong but also what the consequences of a policy mistake would be.
    • Under the current conditions, a wrong move could have far-reaching, lasting effects.
    • Those favoring a continuation of loose monetary policies argue that central bankers still have tools to overcome inflation should it persist.
    • But as the opponents are quick to point out, those tools have become increasingly ineffective and difficult to calibrate.
    • The risk of inaction (or inertia) in this case may be larger than that of acting early.

    Options with systemically important central banks

    • In the case of the US, economic growth is buoyant, fiscal policy is also extremely expansionary, and businesses and households alike have significant accumulated savings that they will now be spending down.
    • The conditions are now ripe for the Fed to start reducing—gradually and carefully—its bond-buying program from its current rate of $120 billion per month.
    • The European Central Bank, however, is in a different position.
    • While eurozone growth is picking up, the level of financial support is not as strong as in the US, and the private-sector recovery is not as advanced.
    • The hardest case to call in the UK.
    • With growth, fiscal support, and the private sector’s prospects more finely balanced.
    • Other central bankers around the world also have an important role to play.
    • Central bankers elsewhere should be running their own scenario analyses and formulating appropriate response plans.

    Conclusion

    There is nothing wrong with hoping that three systemically important central banks will get to their destination smoothly. But the journey is far from over, and the risk of someone slipping is not negligible.

    Back2Basics: Labour force participation rate

    • The labor force participation rate is a measure of an economy’s active workforce.
    • The formula for the number is the sum of all workers who are employed or actively seeking employment divided by the total noninstitutionalized, civilian working-age population.
    • Used in conjunction with the unemployment numbers, it offers some perspective into the state of the economy.

    Source:

    https://www.financialexpress.com/opinion/withdrawal-symptoms-central-banking-fast-and-slow/2295940/