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GS Paper: GS3-12.Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

  • [pib] Indian Chemical Council wins 2024 OPCW-The Hague Award

    Why in the News?

    The Indian Chemical Council (ICC) was honored with the prestigious Organisation for the Prohibition of Chemical Weapons (OPCW), The Hague Award during the 29th Session of the Conference of the States Parties.

    Significance of the OPCW-The Hague Award

    • Purpose: The award recognizes contributions to advancing the goals of the Chemical Weapons Convention (CWC), focusing on chemical safety, disarmament, and global security.
      • This year, the award was given to the Indian Chemical Council (ICC), the first chemical industry body to receive it, for its role in promoting chemical safety and CWC compliance.
    • Global Impact: The award emphasizes ICC’s work in collaboration with international bodies and advocacy for sustainable practices in chemical security.
    • Legacy: The OPCW, which won the Nobel Peace Prize in 2013, continues to honor impactful organizations and individuals contributing to the global disarmament agenda.

     

    What is the Chemical Weapons Convention (CWC)?

    Details
    What is it? • CWC bans the development, use, and stockpiling of chemical weapons and mandates their destruction.
    • Genesis: Negotiations began in 1980.
    • Established: Opened for signature on January 13, 1993, and entered into force on April 29, 1997.
    • More comprehensive than the 1925 Geneva Protocol, which only banned the use of chemical weapons.
    Structure and Functions • Conference of States Parties (CSP): The main decision-making body, meeting annually.
    • Executive Council: 41-member body overseeing CWC implementation.
    • Technical Secretariat: Provides support for verification and compliance.
    • Verification: Inspects facilities and ensures compliance with the treaty.
    Membership criteria and members • Open to all nations: Any state can join if it meets requirements.
    • 193 States-Parties: Includes most nations.
    • Non-Signatories: Egypt, North Korea, and South Sudan have neither signed nor ratified the CWC.
    Functioning Arm • Organization for the Prohibition of Chemical Weapons (OPCW) implements the CWC, headquartered in The Hague.
    • Role: Oversees the destruction of chemical weapons and ensures treaty compliance.
    • Inspection: Conducts inspections of chemical facilities worldwide.
    • Awards: The OPCW won the Nobel Peace Prize in 2013 for its efforts in chemical weapons elimination.

     

    PYQ:

    [2016] With reference to ‘Organization for the Prohibition of Chemical Weapons (OPCW)’, consider the following statements:

    1. It is an organization of the European Union in working relation with NATO and WHO.
    2. It monitors the chemical industry to prevent new weapons from emerging.
    3. It provides assistance and protection to States (Parties) against chemical weapons threats. Which of the statements given above is/are correct?

    (a) 1 only
    (b) 2 and 3 only
    (c) 1 and 3 only
    (d) 1, 2 and 3

  • Why India’s trade deficit is not necessarily a weakness?

    Why in the News?

    India’s ongoing trade deficit, where imports exceed exports, is often viewed as a sign of weakness in Indian manufacturing.

    What is the nature of India’s trade deficit?

    • Trade Deficit in Goods: As of October 2024, India recorded a merchandise trade deficit of $27.1 billion, which narrowed from $31.5 billion in the same month the previous year.
    • Net Exporter of Services: India has established itself as a significant player in the global services market, with services exports constituting a substantial portion of its overall trade.
      • In FY 2023-24, India’s services exports amounted to approximately $309 billion, contributing significantly to offsetting the goods trade deficit
    • Foreign Capital Inflows: The trade deficit is often viewed positively as it correlates with India’s ability to attract foreign investment.
      • For instance, India’s current account deficit was about 1.1% of GDP in June 2024, indicating that capital inflows are necessary to balance this outflow.
    • Current Account Balance: The current account deficit (CAD) reached approximately $9.7 billion in the April-June 2024 quarter, reflecting the need for capital inflows to support economic growth and stability.
      • India’s current account deficit has been maintained at around 2% of GDP, which is generally considered manageable within the context of its economic growth and investment strategies.

    Why do we hold reserves?

    • Cushion Against Economic Shocks: Reserves are held as a safeguard against potential economic disruptions, such as sudden spikes in oil prices that could worsen the current account deficit.
    • For Cost Management: While holding reserves incurs costs (e.g., lower returns on reserves compared to returns on foreign investments), they are essential for maintaining economic stability and investor confidence.
    • Optimal Level of Reserves: India aims to maintain adequate reserves without excessive accumulation. This involves balancing the need for emergency funds against the costs associated with holding those reserves.

    What are the Steps taken by the Government? 

    • Make in India Initiative: Launched in 2014, this initiative aims to boost domestic manufacturing by encouraging both foreign and domestic companies to manufacture their products in India.
      • It focuses on sectors such as electronics, automobiles, and pharmaceuticals to increase production capabilities, reduce dependency on imports, and enhance export competitiveness.
    • Production-Linked Incentive (PLI) Scheme: Introduced in 2020, the PLI scheme provides financial incentives to manufacturers across various sectors, including electronics, textiles, and pharmaceuticals.
      • This program is designed to attract investments, promote local manufacturing, and increase exports by enhancing the global competitiveness of Indian products.

    What strategies can mitigate the effects of the trade deficit? (Way forward)

    • Boosting Domestic Demand: Encouraging greater domestic consumption can help increase manufacturing output. Rising domestic demand can lead to higher production levels without necessarily increasing imports.
    • Enhancing Export Competitiveness: Focusing on sectors where India has a comparative advantage, such as pharmaceuticals and automobiles, can help increase export volumes and reduce the trade deficit.
    • Diversifying Import Sources: Reducing reliance on specific countries for imports (e.g., crude oil) by diversifying sources can help stabilize import costs and mitigate fluctuations in global prices.
    • Investing in Manufacturing Capabilities: Strengthening domestic manufacturing through policies supporting local industries can reduce import dependency and enhance export capacity.

    Mains PYQ:

    Q Craze for gold in India has led to a surge in the import of gold in recent years and put pressure on the balance of payments and the external value of the rupee. In view of this, examine the merits of the Gold Monetization scheme. (UPSC IAS/2015)

  • Are CSR contributions to agriculture properly tracked?

    Why in the News?

    Ten years ago, India became the first country to legally mandate Corporate Social Responsibility (CSR). The section 135 of the Companies Act 2013 establishes the rules governing CSR. 

    • According to the National CSR Portal, ₹1.84 lakh crore in CSR funds was disbursed between 2014 and 2023.

    About CSR: 

    Corporate Social Responsibility (CSR) is a business practice where companies contribute to social, economic, and environmental betterment, addressing societal needs alongside their profit-making objectives.

    • In India, the minimum percentage of a company’s net profit that must be spent on corporate social responsibility (CSR) is 2%.

    Sectoral division of CSR: 

    • Education: Receives the highest CSR share (33%-40%) for building schools, scholarships, infrastructure, and vocational training.
    • Health Care: Allocates 20%-30% of CSR funds to hospitals, health camps, sanitation, and disease prevention.
    • Environmental Sustainability: Accounts for 5%-10% of CSR funds, with projects in biodiversity conservation, waste management, and renewable energy.

    CSR’s Role in Agriculture

    • Claims 10%-15% of CSR funds, targeting infrastructure, agricultural practices, and livelihood support.
    • Since the enactment of the Companies Act in 2013, which mandates CSR spending, a total of Rs 1.84 lakh crore has been disbursed in CSR funds from 2014 to 2023. 
      • These funds have increasingly targeted sustainability initiatives within agriculture, with 23% of surveyed companies prioritizing “environment and sustainability” in their CSR activities.
    • Over 90.8% of farmers involved in CSR programs reported improvements in income or risk reduction due to these initiatives.  

    How much of an impact does Agriculture have on India’s GDP? 

    • Agriculture contributes approximately 15% to 18.2% of India’s GDP, reflecting a decline from 35% in 1990-91 due to rapid growth in the industrial and service sectors. The average annual growth rate of the agricultural sector has been around 4% over the last five years. (acc to pib data)
    • Agriculture remains crucial for employment, providing livelihoods for about 42% of the population, which is significantly higher than the global average of 25%.

    What are the key requirements to improve agricultural sustainability?

    • Investment in Infrastructure: There is a pressing need for capital investment in infrastructure development, including irrigation systems, cold storage, and transportation networks to reduce post-harvest losses and improve market access.
    • Technological Advancements: Adoption of modern agricultural practices and technologies is essential. This includes better seed varieties, efficient irrigation methods, and sustainable farming techniques to enhance productivity.
    • Environmental Sustainability Initiatives: Projects focusing on water conservation, energy-efficient irrigation, and agroforestry are critical for maintaining ecological balance while improving agricultural output.

    What hinders CSR’s potential for agriculture?

    • Lack of Clear Reporting Mechanisms: One of the main obstacles is the absence of robust frameworks to track and categorize CSR funding specifically directed towards agricultural initiatives. Current reporting practices do not emphasize agriculture-related CSR activities adequately.
    • Diverse Allocation Categories: CSR activities can fall under multiple categories (e.g., gender equality, and environmental sustainability), making it difficult to isolate funds specifically aimed at agricultural sustainability. This lack of specificity hampers effective monitoring and impact assessment.
    • Need for Distinct Sector Identification: To maximize CSR contributions to agriculture, it is crucial to identify agriculture as a distinct sector within CSR activities. This would streamline funding processes and enhance transparency and accountability in how funds are utilized for agricultural development.

    Way forward: 

    • Establish Agriculture as a Separate CSR Category: Need to create a distinct sector for agriculture in CSR reporting to streamline funding, improve transparency, and enable targeted monitoring of agriculture-focused initiatives.
    • Implement Comprehensive Reporting Frameworks: The government should develop robust mechanisms for tracking CSR funds specifically allocated to agricultural projects, ensuring clear categorization and facilitating better impact assessments.

    Mains PYQ:

    Q With a consideration towards the strategy of inclusive growth, the new Companies Bill, 2013 has indirectly made CSR a mandatory obligation. Discuss the challenges expected in its implementation in right earnest. Also discuss other provisions in the Bill and their implications. (UPSC IAS/2013)

  • Forging a future of Self-sufficiency and Economic Resilience 

    Why in the News?

    Chhattisgarh, with its cultural richness and natural resources, is starting an industrial path with the 2024-29 policy.

    • This plan is part of “Amritkaal: Chhattisgarh Vision@2047” to grow self-sufficient.

    CASE STUDY: “Amritkaal: Chhattisgarh Vision@2047

    • This policy introduces special provisions for marginalized groups, including surrendered Naxals, women, and the third-gender community. This inclusivity aims to empower these groups socio-economically.
    • Specific packages are designed to support entrepreneurship among these communities through training and financial assistance, facilitating their integration into mainstream society.
    • The ‘Amritkaal’ policy classifies development areas into three groups based on their industrialization levels, ensuring that incentives are targeted towards backward areas to promote balanced growth across the state.
      • Focus on Sustainable Industries: There is a strong emphasis on promoting pollution-free industries, particularly in electric vehicle manufacturing and environmentally friendly products, ensuring sustainable growth.
      • Support for Start-ups: A dedicated fund of ₹50 crore has been allocated to support start-ups, encouraging innovation and entrepreneurship throughout the state.

    What strategies can be implemented to enhance economic resilience in communities?

    • For Targeted Training Programs: Implementing skill development initiatives tailored for marginalized groups can help them acquire the necessary skills for self-employment and entrepreneurship.
    • For Financial Assistance and Subsidies: Providing subsidized loans and financial incentives can lower barriers for starting new businesses, especially for women and the third-gender community.
    • For Establishment of Industrial Corridors: Developing industrial corridors can enhance connectivity and create a conducive environment for industries to thrive, leading to job creation and economic diversification.

    How does self-sufficiency contribute to overall economic stability?

    • Reduced Dependency: Self-sufficiency allows communities to rely less on external resources, making them more resilient to economic shocks and fluctuations in global markets.
    • Local Job Creation: By fostering local industries and entrepreneurship, self-sufficiency contributes to job creation within communities, enhancing overall economic stability.
    • Sustainable Growth: Emphasizing sustainable practices ensures that economic growth does not come at the expense of environmental degradation, promoting long-term stability.

    What role do various stakeholders play in fostering economic resilience?

    • Government: The government plays a crucial role by formulating policies that provide incentives and support for industrial development. It also facilitates training programs and infrastructure development.
    • Local Businesses and Entrepreneurs: Local businesses contribute by creating jobs and stimulating the economy. Entrepreneurs drive innovation and respond effectively to local market needs.
    • Community Organizations: NGOs and community organizations can assist in identifying the needs of marginalized groups and facilitate access to resources such as training and financial assistance.

    Way forward: 

    • Integrated Community Development Programs: Establish comprehensive programs that unite training, financial assistance, and mentorship specifically for marginalized groups.
    • Public-Private Partnerships for Infrastructure Development: Encourage collaboration between the government and private sector to develop industrial corridors and infrastructure that facilitate economic activities.

    Mains PYQ:

    Q Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)

  • Airports where pilots could fear to land

    Why in the News?

    • The October 25, 2024, incident where a Qatar Airways Boeing 787’s landing gear sank into a collapsed ramp at Doha underscores the importance of runway safety concerns.
    • Similar risks exist in Chennai Airport’s expansion plans and the greenfield project at Parandur, where soil stability and structural integrity are critical issues that must not be overlooked.

    Background 

    • The Chennai airport expansion, initially proposed in 2007, faced design and safety issues, including unsuitable soil for a parallel runway and violations in bridge construction standards, raising concerns about infrastructure reliability and potential flooding risks in future projects.

    What are the specific challenges and risks pilots face when landing at these airports?

    • Runway Integrity: Pilots may encounter challenges if the runway or taxiways have structural weaknesses or are poorly designed, such as in the case of Doha, where the ground beneath collapsed under the aircraft’s weight.
    • Crosswinds and Weather Conditions: Airports located near water bodies or in regions with extreme weather may present challenges during landing, such as turbulence from crosswinds or sudden weather changes, increasing the risk of hard landings or runway excursions.
    • Ground Handling: The condition of the ground infrastructure, including taxiways and ramps, is critical. Pilots must be cautious of soft spots or areas not properly constructed to withstand aircraft weight, which can lead to accidents.
    • Limited Runway Width and Length: Airports with insufficient runway dimensions may restrict landing and takeoff performance for larger aircraft, posing risks during adverse conditions where longer stopping distances are required.
    • Inadequate Visual Aids: Poorly designed lighting and navigational aids can impair a pilot’s ability to assess runway conditions, especially in low visibility scenarios.
    • Safety Compliance: Non-compliance with international aviation standards during the design and construction phases may lead to operational hazards that pilots must navigate.

    How do airport design and infrastructure impact aviation safety?

    • Structural Reliability: The strength and reliability of runway surfaces directly affect safety. Insufficient ground support may lead to structural failures under heavy loads, as seen in the Doha incident.
    • Drainage Systems: Effective drainage systems are vital for preventing water accumulation on runways, which can lead to hydroplaning and loss of control during landings.
    • Environmental Considerations: The placement of airports in flood-prone areas without adequate flood management strategies can compromise safety during heavy rainfall, as experienced in Chennai.
    • Design Standards: Compliance with International Civil Aviation Organization (ICAO) standards is crucial for ensuring that airports are capable of safely accommodating various aircraft types.
    • Construction Quality: The choice of construction materials and techniques directly impacts the longevity and safety of airport infrastructure. Cost-cutting measures may lead to substandard designs.

    What measures are being taken to enhance pilot training and operational procedures at these high-risk airports? (Way forward) 

    • Enhanced Simulation Training: Pilots receive advanced simulation training to handle specific challenges associated with landing at high-risk airports, including crosswind landings and emergencies on compromised runways.
    • Regular Safety Audits: Conduct audits and inspections of airport facilities and infrastructure to ensure compliance with safety standards and identify potential hazards.
    • Real-time Weather Updates: Implementation of systems that provide pilots with real-time updates on weather conditions and runway status, helping them make informed decisions during landings.
    • Collaboration with Engineers: Continuous collaboration between pilots and airport engineers during the planning and construction phases to address potential safety issues upfront.
    • Training on Emergency Protocols: Training programs that include scenarios specific to airports with known risks, ensuring pilots are prepared for emergencies related to runway or taxiway failures.

    Mains PYQ: 

    Q Examine the development of Airports in India through joint ventures under Public – Private Partnership (PPP) model. What are the challenges faced by the authorities in this regard. (2017)

  • [pib] Pradhan Mantri Mudra Yojana (PMMY)

    mudra

    Why in the News?

    • The Centre has doubled the limit of Mudra loan amount under the PMMY to Rs 20 lakh from Rs 10 lakh under a new ‘Tarun Plus’ category to promote entrepreneurship in the country.
      • This higher loan limit is available to entrepreneurs who have previously taken and successfully repaid loans under the existing ‘Tarun’ category.

    About Pradhan Mantri Mudra Yojana (PMMY):

    Details
    Launch  Launched on April 8, 2015, by Prime Minister.
    Objective
    • To provide financial assistance and support to non-corporate, non-farm small and micro-entrepreneurs through collateral-free loans.
    • Non-corporate, non-farm small and micro-entrepreneurs are individuals or entities that operate small-scale businesses outside the corporate and agricultural sectors. 
    • These include self-employed workers, small retail shops, artisans, repair services, and other informal sector businesses, often with limited capital and workforce.
    Recent Update Loan limit increased from Rs 10 lakh to Rs 20 lakh under the new Tarun Plus category, announced in July 2024.
    Loan Categories • Shishu: Loans up to Rs 50,000
    • Kishore: Loans between Rs 50,000 and Rs 5 lakh
    • Tarun: Loans between Rs 5 lakh and Rs 10 lakh
    • Tarun Plus: Loans between Rs 10 lakh and Rs 20 lakh
    Loan Performance (2023-24) • 66.8 million Loans sanctioned totaling Rs 5.4 trillion.
    • Over 487.8 million loans worth Rs 29.79 trillion sanctioned since launch.
    NPA Statistics • NPA of public sector banks under Mudra loans decreased to 3.4% in FY24, down from 4.77% in 2020-21.
    • Gross NPA for scheduled commercial banks at 2.8% as of March 2024.
    Target Beneficiaries Aims to empower women, minorities, and marginalized communities by facilitating easy access to credit.
    Technological Intervention
    • MUDRA Card: An innovative credit product that offers an overdraft facility and can be used like a debit card for transactions.
    • MUDRA MITRA App: A mobile application providing information about MUDRA and its schemes, guiding loan seekers to approach banks for availing loans.

     

    PYQ:

    [2016] Pradhan Mantri MUDRA Yojana is aimed at:

    (a) Bringing the small entrepreneurs into formal financial system.

    (b) Providing loans to poor farmers for cultivating particular crops.

    (c) Providing pension to old and destitute persons.

    (d) Funding the voluntary organizations involved in the promotion of skill development and employment generation.

  • Sustainability science for FMCGs

    Why in the News?

    India’s Anusandhan National Research Foundation and the BioE3 policy promote academia-industry collaboration, driving the bioeconomy for economic growth, sustainability, and climate action commitment.

    What is BioE3 policy? 

    The BioE3 policy aims to transform chemical industries into sustainable bio-based models, promoting biotechnology to drive economic growth, protect the environment, and create jobs, supporting India’s sustainable development and climate goals.

    Primary Environmental impacts associated with FMCG production and consumption:

    • Resource Depletion: The production of FMCGs often requires significant natural resources, such as water, energy, and raw materials. For example, palm oil, widely used in food and personal care products, leads to deforestation when forests are cleared for plantations.
    • Greenhouse Gas Emissions: The manufacturing and distribution of FMCGs contribute to greenhouse gas emissions at multiple stages, from sourcing raw materials to production processes and transportation.
    • Waste Generation: FMCGs, especially those with single-use packaging (e.g., plastics), generate a considerable amount of waste, which ends up in landfills or the ocean, causing environmental pollution.
    • Water Pollution: The production and use of FMCGs, such as soaps, detergents, and other chemicals, can lead to water pollution through the discharge of untreated wastewater containing harmful substances.
    • Loss of Biodiversity: The agricultural practices used to source raw materials like palm oil can lead to habitat destruction, thereby threatening biodiversity. Monoculture farming and deforestation disrupt ecosystems and endanger wildlife.

    How can FMCG companies implement sustainable practices across their supply chains?

    • Companies should adopt responsible sourcing policies, such as using certified sustainable palm oil and other raw materials that adhere to ‘No Deforestation, No Peat’ policies.
    • Implementing energy-efficient processes, switching to renewable energy sources, and optimizing logistics to reduce emissions can minimize the carbon footprint across the supply chain.
    • Emphasizing recycling, reusing materials, and developing biodegradable or compostable packaging can help reduce waste and resource depletion.
    • The integration of bio-based or synthetic alternatives to traditional materials can also be beneficial.
    • Companies should implement measures to reduce water usage in manufacturing and treat wastewater to prevent water pollution.
    • Working with smallholder farmers to implement regenerative agricultural practices can help restore soil health, improve biodiversity, and support sustainable livelihoods.

    What metrics should be used to measure the effectiveness of sustainability initiatives in FMCGs?

    • Carbon Footprint Reduction: Tracking greenhouse gas emissions across the supply chain and setting targets for reducing Scope 1, 2, and 3 emissions.
    • Sustainable Sourcing Percentage: Measuring the proportion of raw materials sourced sustainably, such as certified palm oil or recycled materials.
    • Waste Reduction and Recycling Rates: Monitoring the volume of waste generated, the amount sent to landfills, and the recycling rate of packaging materials.
    • Water Usage and Pollution Levels: Tracking water consumption in production and measuring the quality of wastewater discharged to ensure compliance with environmental standards.
    • Biodiversity Impact: Assessing the effect of sourcing practices on ecosystems and tracking initiatives to protect or restore biodiversity.
    • Product Sustainability Index: Developing a sustainability index for products that takes into account their entire life cycle, from raw material extraction to end-of-life disposal.

    Way forward: 

    • Strengthen Collaboration and Innovation: Foster partnerships between academia, industry, and government to drive research and development of sustainable alternatives to traditional materials, such as palm oil, and implement innovative practices throughout the FMCG supply chain.
    • Implement Comprehensive Sustainability Frameworks: Establish regulatory frameworks that incentivize sustainable practices, including mandatory reporting on sustainability metrics, eco-labelling for products, and support for circular economy initiatives to minimize waste and resource depletion.

  • Fair Trade 

    Why in the News?

    In preparation for the 29th edition of the COP in Baku, Azerbaijan, next month, there is renewed momentum within government circles to expedite the transition of Indian industry to carbon markets.

    What is meant by the Carbon Trade Policy?

    • It is a market-based approach to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
    • It sets a quantitative limit on emissions, by allowing member countries with lower emissions to sell rights to emit carbon to higher-emitting entities, promoting cost-effective carbon reduction.

    Why India must develop a transparent Carbon Trade Policy?

    • A clear and transparent policy will boost investor confidence, attracting both domestic and foreign investments in green technologies and carbon-reduction projects.
    • Establishing robust verification and reporting mechanisms will enhance the integrity of carbon credits, preventing issues like double counting and greenwashing, and fostering trust among stakeholders.
    • A transparent policy will help align India’s efforts with global climate commitments, enabling effective tracking of emissions reductions and promoting sustainable economic growth.

    How effective is ‘Fair Trade’ in achieving its Goals?

    • Promotion of Sustainable Practices: Just as Fair Trade supports environmentally sustainable agriculture practices, carbon markets incentivize companies to adopt greener technologies and reduce emissions. Both aim to create a more sustainable future.
    • Empowerment of Stakeholders: Fair Trade empowers marginalized producers by providing fair prices and market access, similar to how carbon markets can benefit developing countries like India by enabling them to sell carbon credits generated from emissions reductions.
    • Economic Benefits: Fair Trade aims to create economic stability for producers, while carbon markets can generate revenue for countries that invest in carbon-reduction projects, creating a financial incentive for participating in emissions trading.
    • Global Impact Awareness: Both Fair Trade and carbon markets raise awareness about global issues—Fair Trade regarding trade equity and carbon markets regarding climate change, fostering a sense of responsibility among consumers and companies.

    What are the limitations and challenges facing Fair Trade certification?

    • Certification Costs: The financial burden of obtaining Fair Trade certification can be a significant barrier for small producers. Similarly, transitioning to carbon markets may involve high initial costs for companies to implement the necessary technologies and processes.
    • Market Accessibility: Fair Trade products may not have guaranteed market access, mirroring potential challenges in carbon markets where the demand for carbon credits may fluctuate based on regulations and market conditions.
    • Complex Standards: Just as Fair Trade certification has varying standards, the guidelines under Article 6 of the Paris Agreement can also lead to confusion about which carbon-reduction activities are eligible for trading.

    How can consumers effectively support Fair Trade initiatives?

    • Support Certified Products: Consumers can choose Fair Trade products, which, like carbon credits, require a conscious decision to support ethical and sustainable practices.
    • Educate and Advocate: Just as consumers can promote Fair Trade awareness, they can also advocate for transparent carbon markets and support policies that foster sustainable practices.
    • Engagement with Companies: Consumers can encourage businesses to participate in Fair Trade and carbon markets by demanding accountability and sustainability in their supply chains.
    • Community Participation: Involvement in local Fair Trade events can parallel participation in climate action initiatives, such as local carbon offset programs or sustainability projects, thereby supporting both movements.
    • Utilizing Social Media: Consumers can leverage social media to share information about Fair Trade and carbon markets, helping to amplify their importance and drive consumer engagement.

    Way forward: 

    • Strengthen Certification Accessibility: Lower the cost and simplify the certification process to make Fair Trade more accessible for small-scale producers, boosting their participation and benefits.
    • Enhance Consumer Education: Increase awareness campaigns about the impact of Fair Trade, encouraging more people to support certified products and promoting ethical consumption habits.

  • Spotlighting the work of the Economics Nobel winners

    Why in the News?

    • This year’s Nobel Prize in Economics, officially known as the Sveriges Riksbank Prize in Economic Sciences, was awarded to Daron Acemoglu, Simon Johnson, and James Robinson (AJR).  
    • AJR have highlighted the importance of institutions in development, but critics argue that this approach tends to favour Western liberal models over other institutional frameworks.

    Why Do Some Nations Succeed While Others Fail?

    • Role of Institutions: The economic success or failure of nations can often be traced back to the nature of their institutions. 
      • Inclusive institutions encourage economic activity by providing secure property rights, legal frameworks, and political systems that incentivize growth. 
      • In contrast, extractive institutions concentrate wealth and power in the hands of a few, leading to economic stagnation and social inequality.
    • Historical Path Dependence: Countries that experienced inclusive economic institutions early in their development tend to be more prosperous, while those with a history of extractive institutions face significant barriers to growth. Historical events shape the trajectory of institutional development and influence current outcomes.

    What Is the Impact of Historical Institutions on Current Economic Outcomes?

    • Colonial Legacy: Institutions established during colonialism, especially extractive ones, have long-lasting impacts. Areas with landlord-based land tenure systems or direct colonial rule have struggled with lower agricultural productivity, fewer social services, and weaker infrastructure.
    • Natural Experiment Evidence: AJR’s research used historical data, such as differences in settler mortality, to show that regions colonized by Europeans with high mortality rates ended up with extractive institutions that still negatively affect growth today.
    • Long-Term Development Patterns: The effects of historical institutions persist, shaping economic development, social structures, and governance even after countries gain independence or transition to new political systems.

    Why do critics argue that this approach tends to favour Western liberal models over other institutional frameworks?

    • Historical Bias: Critics argue that AJR’s approach overlooks the diverse paths of development, favoring Western institutions while underestimating non-Western experiences and historical complexities.
    • Western Norms as Universal: The framework tends to present Western liberal institutions as ideal models, disregarding how other systems might effectively function in different cultural and socio-political contexts.

    Why Are Inclusive Institutions Not More Widely Adopted?

    • Conflict of Interests: Powerful groups with control over resources have incentives to maintain extractive institutions to protect their wealth and power, resisting changes that would lead to a fairer distribution of economic benefits.
    • Collective Action Challenges: Reforming extractive institutions requires solving collective action problems where diverse groups must agree on new rules that may threaten the established elite’s interests.
    • Path Dependency: Historical conditions can create institutional inertia, making it challenging to shift from extractive to inclusive frameworks due to deep-rooted social, political, and economic norms.

    Way forward: 

    • Strengthen Inclusive Institutions: Focus on legal and policy reforms that secure property rights, ensure fair governance, and promote transparent decision-making, encouraging broad-based economic participation and growth.
    • Empower Marginalized Groups: Implement policies that reduce power concentration by supporting grassroots movements, enhancing education access, and providing economic opportunities to disadvantaged communities to overcome historical inequalities.

  • HAL becomes 14th Maharatna Company in India

    Why in the News?

    The Centre has upgraded the status of PSU Hindustan Aeronautics Ltd (HAL) as Maharatna Company (from earlier Navratna Status).

    About Hindustan Aeronautics Limited (HAL): Key Facts

    • HAL was founded in 1940 in Bangalore as Hindustan Aircraft Limited, merging with Aeronautics India Limited in 1964 to become HAL.
    • It is a state-owned company under the Ministry of Defence.
    • Headquarters are in Bengaluru, Karnataka.
    • Operates 20 production and R&D centers across India, including Bangalore, Nashik, Koraput, and Lucknow.
    • Focuses on design, development, manufacture, and maintenance of aircraft, helicopters, engines, avionics, and aerospace equipment.
    • Produces fighter aircraft like Tejas LCA, Sukhoi Su-30MKI, Jaguar, and Hawk.
      • Manufactures helicopters including Dhruv ALH, Rudra, Cheetah, Chetak, and LCH.
    • Collaborates with Boeing, Airbus, Rosoboronexport, and Safran on aircraft production and tech transfer.
    • Listed on BSE and NSE in 2018, allowing public investment.
    • Expanded exports, supplying aircraft and helicopter parts to countries like Vietnam, Mauritius, and Ecuador.
      • Recent projects include AMCA, IMRH, and Tejas Mk2, boosting India’s indigenous defense capabilities.

    About Maharatna Companies 

    Details
    What is it? • Recognition granted to select Public Sector Undertakings (PSUs) in India.
    • Provides greater financial and operational autonomy compared to Navratna and Miniratna PSUs.
    Eligibility • Annual Turnover: Over ₹25,000 crore in the last three years.
    • Net Worth: More than ₹15,000 crore over the last three years.
    • Net Profit: Minimum of ₹5,000 crore for three consecutive years.
    • Must have significant global operations or international presence.
    Autonomy • Can invest up to ₹5,000 crore or 15% of their net worth in a single project without government approval.
    • Authorized to make equity investments for strategic resources or collaborations in India and abroad.
    Purpose • Aims to foster more flexibility in operations and encourage expansion, especially in international markets.
    • Helps companies to become global players.
    Examples • Indian Oil Corporation (IOC)
    • Bharat Petroleum Corporation Limited (BPCL)
    • Steel Authority of India Limited (SAIL)
    • Oil and Natural Gas Corporation (ONGC)
    Significance • Enhances the ability of PSUs to compete globally.
    • Allows quicker decision-making and reduces bureaucratic hurdles.
    • Promotes growth and competitiveness in the international arena.

    Benefits of Maharatna Status for HAL

    • HAL can now invest up to ₹5,000 crore (from earlier ₹1000 cr) or 15% of its net worth (whichever is applicable) in a single project without needing government approval.
    • As a Maharatna company, HAL has the freedom to engage in mergers, acquisitions, and strategic investments, both domestically and internationally.

    PYQ:

    [2011] Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?

    1. The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt.

    2. The Government no longer intends to retain the management control of the CPSEs.

    Which of the statements given above is/ are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2