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GS Paper: GS2

  • What are Social Stock Exchanges?

    The Economic Survey 2021 has backed setting up of Social Stock Exchange in India.

    Q. What are Social Stock Exchanges? Discuss how it will help finance social enterprises in India.

    What are Social Stock Exchanges (SSEs)?

    • An SSE is a platform which allows investors to buy shares in social enterprises vetted by an official exchange.
    • The Union Budget 2019 proposed setting up of first of its kind SSE in India.
    • The SSE will function as a common platform where social enterprises can raise funds from the public.
    • It will function on the lines of major stock exchanges like BSE and NSE. However, the purpose of the Social Stock Exchange will be different – not profit, but social welfare.
    • Under the regulatory ambit of SEBI, a listing of social enterprises and voluntary organizations will be undertaken so that they can raise capital as equity, debt or as units like a mutual fund.

    Why SSEs?

    • India needs massive investments in the coming years to be able to meet the human development goals identified by global bodies like the UN.
    • This can’t be done through government expenditure alone. Private enterprises working in the social sector also need to step up their activities.
    • Currently, social enterprises are very active in India. However, they face challenges in raising funds.
    • One of the biggest hurdles they face is, apparently, the lack of trust from common investors.

    Benefits

    • There is a great opportunity to unlock funds from donors, philanthropic foundations and CSR spenders, in the form of zero-coupon zero principal bonds. These bonds will be listed on the SSE.
    • At first, the SSE could become a repository of social enterprises and impact investors.
    • The registration could be done through a standard process.
    • The SEs could be categorized into different stages such as as- Idea, growth stage and likewise, investors can also be grouped based on the type of investment.

    Development so far

    • The Economic Survey 2021 highlighted the concept of setting up a social stock exchange (SSE) in India.
    • It will be under the regulatory ambit of the Securities and Exchange Board of India (SEBI).
    • SEBI constituted a working group (WG) on social stock exchanges back in September 2019.
    • The WG has outlined its vision and made recommendations, which include the participation of NPOs and for-profit enterprises (FPE) on SSE subject to committing to minimum reporting requirements.

  • Highlights of the Corruption Perception Index, 2020

    The Transparency International (TI)’s corruption perception index (CPI) was recently released for 2020.

    Another set of useful data in news to be noted by aspirants. Such data are essential and need to be memorized. One must note here. Such data recur every year. So it is not a big task to deal with such numbers along with other critical indices.

    About the Corruption Perception Index

    • The index ranks 180 countries and territories by their perceived levels of public sector corruption.
    • It uses a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean.

    Global prospects

    • Denmark and New Zealand top the index, with 88 points. Syria, Somalia and South Sudan come last, with 14, 12 and 12 points, respectively.
    • Nearly half of countries have been stagnant on the index for almost a decade, indicating stalled government efforts to tackle the root causes of corruption.
    • More than two-thirds score below 50.

    India’s performance

    • The CPI score for India is constant this year as well as the previous year’s score.
    • India’s rank is 86 out of 180 nations with a score of 40.
    • It was ranked at 80th position out of 180 countries in 2019 with a score of 41.

    A comparison with neighbours

    • At 40, India’s score is below the average score of the Asia-Pacific region (31 countries) and global average, the CPI 2020 report stated.
    • India’s overall score is also two points less than that of China, which docked at 78th position, with a score of 42.
    • Pakistan, however, scored just 31 points, falling at the 144th position on the index.

    What does it mean for India?

    • India is still very low on corruption Index, the report said, noting that experts feel the CPI does not reflect the actual corruption level in any country.
    • The integrity score determines the corruption situation of a country.

    Recommendations made by TI

    To reduce corruption and better respond to future crises, Transparency International recommends that all governments:

    • Strengthen oversight institutions to ensure resources reach those most in need. Anti-corruption authorities and oversight institutions must have sufficient funds, resources and independence to perform their duties.
    • Ensure open and transparent contracting to combat wrong-doing, identify conflicts of interest and ensure fair pricing.
    • Defend democracy and promote civic space to create the enabling conditions to hold governments accountable.
    • Publish relevant data and guarantee access to information to ensure the public receives easy, accessible, timely and meaningful information.

  • How PFMS is ensuring transformation via digital inclusion

    The article highlights the role played by the Public Financial Management System (PFMS) in promoting the good governance.

    About PFMS

    • With the objective of bringing in transformational accountability and transparency and to further promote good governance, the Indian government envisioned Public Financial Management System (PFMS).
    • PFMS has evolved as an end to end solution for Processing, Monitoring, and reconciling financial flows of Central Govt.
    • Today, PFMS has empowered governance to become more responsive, accountable, and transparent.

    Mandate of PFMS

    • Through Cabinet decision, PFMS has been mandated the following:
    • It acts as a financial management platform for all plan schemes and allows for efficient and effective tracking of fund flow to the lowest level of implementation for the planning scheme of the Government.
    • It is mandated to provide information on fund utilization leading to better monitoring, review, and decision support system to enhance public accountability in the implementation of plan schemes.
    • To result in effectiveness and economy in Public Finance Management through better cash management for Government transparency in public expenditure and real-time information on resource availability and utilization across schemes.

    Achievements of PFMS

    • PFMS can be credited to the transformation of Direct beneficiary transfers space in financial governance in India.
    • An estimated 102 crore DBT transactions were done through PFMS in FY 19-20 amounting to about â‚č2.67 lakh crore.
    • Through efficient use of technology, PFMS is estimated to have saved about â‚č1 lakh crore in direct beneficiary transfers.

    4 Factors that could determine the successful evolution of PFMS in future

    • Agility in terms of Onboarding/Integrating all Govt. accounts: Only after ensuring significant coverage, the true execution of the concept will take place.
    • Effective data management capabilities: PFMS will have to add significant data management capabilities in order to ensure better monitoring/review to deliver on the idea of a decision support system for effective cash management or management of idle float in the system.
    • Constantly upgrading: Adaption to rapid changes in technology is another key area that would call for a considerable amount of focus both in terms of gradation and monitoring.
    • Collaboration with the banking system: Lastly, one of the most critical factors for the successful execution of PFMS is its integration with the banking systems.
    • The Banks and PFMS will have to actively partner to ensure faster coverage/integration of all the Govt. entities.

    Consider the question “Governance in India has long been marred with structural challenges like transparency, lack of accountability and sustainable and inclusive growth. In light of this, discuss the role played by the Public Financial Management System in tackling these challenges.” 

    Conclusion

    The PFMS has revolutionized the ways public finances are managed in the country. With constant improvement and increasing coverage, the scope of PFMS is ever-increasing. Going ahead, PFMS will not only be seen as a tool for managing planned expenditure but will also add new meanings to Direct Beneficiary transfers, data-driven cash management, and e-Governance in India.

  • Foreign Minister suggests way forward for India-China ties

    External Affairs Minister S. Jaishankar has given useful insight on the future of India-China ties amid heating border tensions and has suggested the best way forward.

    Statements made by EAM are major breakthrough in itself. They are the most logical and amply reflect his perfect statesmanship.

    We can imbibe such statements in our answers as they hold extraordinary significance like any gospel.

    Key takeaways from EAM’s speech

    • 2020 was a year of exceptional stress in a relationship profoundly disturbed by the border crisis.
    • China’s actions last year had not only signaled a disregard of commitments to reduce troop levels” but also “a willingness” to breach the peace and tranquillity on the border.
    • For all the disagreements we had, the fact is the border areas still remained fundamentally peaceful with the last incident of a loss of life in 1975, prior to 2020.
    • Until now, India is yet to receive a credible explanation for the change in China’s stance or reasons for its amassing of troops.
    • Any expectation that can be brushed aside and life can carry on undisturbed despite the situation in the border is simply not realistic.

    China’s contentious moves

    • China did a unilateral attempt to redraw the LAC in several areas in eastern Ladakh
    • China’s issuing of stapled visas to Indian citizens from Jammu and Kashmir in 2010
    • Reluctance from China to deal with some of India’s military commands, Beijing had that same year refused to host the Northern Army Commander
    • China’s opposition to India’s membership of the Nuclear Suppliers Group and the U.N. Security Council as a permanent member
    • Blocking of U.N. listings of Pakistani terrorists, and
    • China Pakistan Economic Corridor, a flagship project under China’s Belt and Road Initiative, violating India’s sovereignty

    Gone is the past

    • Both sides had “painstakingly” worked to normalize relations after the post-1962 war freeze and the first prime ministerial visit in 1988.
    • For the border areas, he said, both had agreed a complete and practical set of understandings and agreements focused on border management, while negotiations were being conducted on the boundary dispute.
    • The advancement of ties, he said, was predicated on ensuring that peace and tranquillity were not disturbed, and the LAC was both observed and respected by both sides.
    • For this reason, it was explicitly agreed the two countries would refrain from massing troops on their common border, along with a detailed understanding of handling frictions that would arise.

    No progress over the years

    • Over the years, he said, there was no sign of progress of arriving at a common understanding of the LAC, while there was increasing construction of border infrastructure, especially in the Chinese side.
    • India had made efforts to reduce the considerable infrastructure gap since 2014, including through greater budgetary commitments and border road building.

    Way forward

    The External Affairs Minister suggested “three mutuals” and “eight broad propositions” as a way forward for the relationship.

    #Three mutuals

    Mutual respect, mutual sensitivities and mutual interests are the “determining factors”.

    #Major propositions

    (1) Adhering to commitment

    • The first proposition was that agreements already reached must be adhered to in their entirety, both in letter and in spirit.

    (2) Respect for LAC

    • Both sides also needed to strictly observe and respect the LAC, and any attempt to unilaterally change the status quo was completely unacceptable.

    (3) Maintaining peace and tranquillity

    • Peace and tranquillity in border areas was the basis for the development of the relationship in other domains. If that was disturbed, he said, the rest of the relationship would be too.

    (4) Broader partnership

    • The fourth proposition was that while both remain committed to a multipolar world, they should recognise that a multipolar Asia was one of its essential constituents.

    (5) Reciprocity

    • While each state had its interests, concerns and priorities, sensitivities to them could not be one-sided and relations were reciprocal in nature. As rising powers, neither should ignore the other’s set of aspirations.

    (6) Divergences management

    • While both sides had made a common cause on development and economic issues and common membership of plurilateral groups was a meeting point, there were divergences when it came to interests and aspirations.

    (7) Civilizational ties

    • The last proposition was that as civilizational states, India and China must always take the long view.

    (8) Cooperation and competition

    • Even before the events of 2020, the relationship had reflected a duality of cooperation and competition.

  • [pib] Rajasthan becomes the 5th State to complete ULB reforms

    Rajasthan has become the 5thState in the country to successfully undertake Urban Local Bodies (ULB) reforms stipulated by the Department of Expenditure, Ministry of Finance and has thus become eligible for additional reform linked to borrowing.

    Which are the four other States?

    : They are Andhra Pradesh, Madhya Pradesh, Manipur and Telangana, who have completed ULB reforms.

    Now try this PYQ:

    Q.The Constitution (Seventy-Third Amendment) Act, 1992, which aims at promoting the Panchayati Raj Institutions in the country, provides for which of the following?

    1. Constitution of District Planning Committees.
    2. State Election Commissions to conduct all panchayat elections.
    3. Establishment of State Finance Commissions.

    Select the correct answer using the codes given below:

    (a) Only 1

    (b) 1 and 2 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

    What are the ULB reforms?

    The four citizen-centric areas identified for reforms are:

    1. Implementation of One Nation One Ration Card System
    2. Ease of doing business reform
    3. Urban Local body/ utility reforms
    4. Power Sector reforms.

    The set of reforms stipulated by the Department of Expenditure are:

    (a) The State will notify:

    • Floor rates of property tax in ULBs which are in consonance with the prevailing circle rates (i.e. guideline rates for property transactions) and;
    • Floor rates of user charges in respect of the provision of water supply, drainage, and sewerage which reflect current costs/past inflation.

    (b)   The State will put in place a system of periodic increases in floor rates of property tax/ user charges in line with price increases.

    Why need such reforms?

    • Reforms in ULBs and the urban utility reforms are aimed at the financial strengthening of ULBs to enable them to provide better public health and sanitation services to citizens.
    • Economically rejuvenated ULBs will also be able to create good civic infrastructure.

    Back2Basics: Municipal Governance in India

    • Municipal or local governance refers to the third tier of governance in India, at the level of the municipality or urban local body.
    • Urban Local Bodies (ULBs) are small local bodies that administer or govern a city or a town of a specified population.
    • They are vested with a long list of functions delegated to them by the state governments.
    • These functions broadly relate to public health, welfare, regulatory functions, public safety, public infrastructure works, and development activities.
    • There are several types of Urban Local Bodies in India such as Municipal Corporation, Municipality, Notified Area Committee, Town Area Committee, Special Purpose Agency, Township, Port Trust, Cantonment Board, etc.

    Development through history

    • It has existed since the year 1687, with the formation of Madras Municipal Corporation, and then Calcutta and Bombay Municipal Corporation in 1726.
    • In the early part of the nineteenth century, almost all towns in India had experienced some form of municipal governance.
    • In 1882 the then Viceroy of India, Lord Ripon, known as the Father of Local Self Government, passed a resolution of local self-government which lead to the democratic forms of municipal governance in India.
    • In 1919, a Government of India Act incorporated the need of the resolution and the powers of democratically elected government were formulated.
    • In 1935 another Government of India act brought local government under the preview of the state or provincial government and specific powers were given.

    Changes after the 74th Amendment (1992)

    • It was the 74th amendment to the Constitution that brought constitutional validity to municipal or local governments.
    • Until amendments were made in respective state legislation on an ultra vires (beyond the authority) basis and the state governments were free to extend or control the functional sphere.

  • Myanmar’s Military Coup

    Myanmar’s military staged a coup detaining de facto leader Aung San Suu Kyi and declaring it had taken control of the country for one year under a state of emergency.

    Q.Despite its military coup, Myanmar is the key in linking South Asia to Southeast Asia and the eastern periphery becomes the focal point for New Delhi’s regional outreach. Analyse.

    What is the news?

    • The intervention came with rising tensions between the military, which ruled the country for nearly five decades, and the civilian government over allegations of fraud in November’s elections.
    • The military had signaled its intentions to seize power to settle its claims of irregularities in the polls, which Suu Kyi’s party won easily.

    How was the coup carried out?

    • The military detained the leaders of the governing NLD party and Myanmar’s civilian leadership, including Suu Kyi and President Win Myint, along with various ministers and even the opposition.
    • The military quickly seized control of the country’s infrastructure, suspending most television broadcasts and canceling all domestic and international flights, according to reports.
    • Telephone and internet access was suspended in major cities.
    • The stock market and commercial banks were closed, and long lines were seen outside ATMs in some places.
    • In Yangon, the country’s largest city and former capital, residents ran to markets to stock up on food and other supplies.

    Who is Aung San Suu Kyi?

    • Suu Kyi came to power as state councilor in 2016 after the country’s first fully democratic vote in decades.
    • Her ascension to leadership was seen as a critical moment in the transition of Myanmar, formerly known as Burma, to democracy from military dictatorship.
    • Suu Kyi, the daughter of the country’s independence hero General Aung San, spent more than 15 years under house arrest.
    • Her time in detention made her an international icon, and she was awarded the Nobel Peace Prize in 1991.
    • Since her release, her reputation has been tarnished by her cooperation with the military and her deadly campaign against the Rohingya, a Muslim ethnic minority group.

    India’s response to the takeover

    • India is “deeply concerned” with the return to military rule, which is a repeat of events thirty years ago.
    • It sees only option to engage, building on its outreach in recent years via the security and defence establishment.
    • India seeks a more pragmatic approach, engaging the military while pushing for more freedoms and democracy in Myanmar.

    Various issues concerning India

    • One important reason for the change is that India’s security relationship with the Myanmar military.
    • These days, it has become extremely close, and it would be difficult to “burn bridges” with them given their assistance in securing the North East frontiers from insurgent groups.
    • Apart from strategic concerns, India has cultivated several infrastructure and development projects with Myanmar, which it sees as the “gateway to the East” and ASEAN countries.
    • These include the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-modal transit transport network, as well as a plan for a Special Economic Zone at the Sittwe deep-water port.

  • POCSO Act

    In a recent judgement, Section 7 of POCSO Act was interpreted in a controversial way by the Nagpur Bench of the Bombay High Court. 

    Issue of the definition of sexual assault under POCSO Act

    • Recently, the Nagpur Bench of the Bombay High Court held that skin-to-skin contact is essential to constitute the offence defined under Section 7 of the Protection of Children from Sexual Offences Act, 2012 (POCSO Act).
    • Section 354 of the Indian Penal Code, 1860, which deals with outraging modesty of women and which provides for a lesser sentence, was held to be applicable in such cases.
    • This ruling raises several concerns.
    • The National Commission for Protection of Child Rights had asked the Maharashtra government to appeal this decision in the Supreme Court.
    • The Supreme Court has currently stayed the acquittal of the accused under this judgement.

    Concerns with the judgement

    • The Court held that the stringent nature of punishment provided for the offence required stricter proof and serious allegations.
    • The court said the punishment should be proportionate to the seriousness of the crime.
    • Nevertheless, while adjudging the seriousness of the offence the court has not given consideration to the fact that the victim, a minor, is entitled to greater protection.
    • The major concern is that the interpretation of the court seems to defeat the purpose of the POCSO Act.
    • Section 7 of POCSO defines sexual assault as “Whoever, with sexual intent touches the vagina, penis, anus or breast of the child or makes the child touch the vagina, penis, anus or breast of such person or any other person, or does any other act with sexual intent which involves physical contact without penetration is said to commit sexual assault.”
    •  The court has concluded that the touching of the breast without skin-to-skin contact is not similar to the abovementioned acts and, therefore, does not fall within this definition.
    • The court seems to have followed a rather pedantic approach to reach this conclusion.
    • The fact that the trauma of the child whose breasts were groped through a cloth could be of the same nature and severity as direct touching of the breast is not discussed.
    • And if the trauma is the same, the mere existence of cloth should not affect the applicability of the POCSO Act.

    Legislative history and object of POCSO Act

    POCSO Act

    • The POCSO Act was enacted with the specific intention of protecting children from sexual assault and sexual harassment.
    • It took into consideration the standards prescribed by the Convention on the Rights of the Child adopted by the General Assembly of the United Nations to which the Indian government acceded to on December 11, 1992.
    • The Act acknowledges the special vulnerability of children and that special protection, above and beyond that provided in the IPC, is required when the victim is a child.

    Conclusion

    If such an interpretation is followed, there is a threat that the POCSO Act in itself might become redundant as a wide range of sexually violative activities would be excluded from its ambit due to lack of skin-to-skin contact.

  • President’s address in Parliament

    Many Opposition parties announced their decision to boycott the President’s address to the joint sitting of Parliament at the start of the Budget session in solidarity with the farmers protesting against the three farm laws.

    Try this PYQ:

    Q. The President’s address is one of the most solemn occasions in the Parliamentary calendar. Discuss. Highlight its importance in Parliamentary Democracy.

    President’s address

    • The Constitution gives the President the power to address either House or a joint sitting of the two Houses of Parliament.
    • Article 87 provides two special occasions on which the President addresses a joint sitting. The first is to address the opening session of a new legislature after a general election.
    • The second is to address the first sitting of Parliament each year. A session of a new or continuing legislature cannot begin without fulfilling this requirement.
    • When the Constitution came into force, the President was required to address each session of Parliament.

    In the UK, the history of the monarch addressing the Parliament goes back to the 16th century.  In the US, President Gorge Washington addressed Congress for the first time in 1790.

    History & precedent

    • In India, the practice of the President addressing Parliament can be traced back to the Government of India Act of 1919.
    • This law gave the Governor-General the right of addressing the Legislative Assembly and the Council of State.
    • The law did not have a provision for a joint address but the Governor-General did address the Assembly and the Council together on multiple occasions.
    • There was no address by him to the Constituent Assembly (Legislative) from 1947 to 1950.
    • And after the Constitution came into force, President Rajendra Prasad addressed members of Lok Sabha and Rajya Sabha for the first time on January 31, 1950.

    By the govt, about the govt

    • The President’s speech essentially highlights the government’s policy priorities and plans for the upcoming year. The address provides a broad framework of the government’s agenda and direction.
    • There is no set format for the President’s speech. The Constitution states that the President shall “inform Parliament of the cause of the summons”.

    How it is done in India?

    • The speech that the President reads is the viewpoint of the government and is written by it.
    • Usually, in December, the PM’s Office asks the various ministries to start sending in their inputs for the speech.
    • A message also goes out from the Ministry of Parliamentary Affairs asking ministries to send information about any legislative proposals that need to be included in the President’s address.
    • All this information is aggregated and shaped into a speech, which is then sent to the President. The government uses the President’s address to make policy and legislative announcements.

    Assembly debates on the matter

    • During the making of the Constitution, Prof K T Shah wanted the President’s address to be more specific.
    • He suggested that the language be changed to specify that the President shall inform Parliament “on the general state of the Union including financial proposals, and other particular issues of policy he deems suitable for such address”.
    • His amendment was inspired by the US Constitution, according to which the President gives to Congress information on the State of the Union, and recommend measures as he shall judge necessary.
    • But Shah’s amendment was rejected by the Constituent Assembly.
    • The address of the President follows a general structure in which it highlights the government’s accomplishments from the previous year and sets the broad governance agenda for the coming year.

    Notable addresses till date

    • In 1985 President Giani Zail Singh announced that PM Rajiv Gandhi’s government intended to introduce a new national education policy and the anti-defection law.
    • In 1996, PM Vajpayee’s 13-day government announced its intention of giving statehood to Uttaranchal and Vananchal (Jharkhand) and 33 percent reservation to women in legislatures.
    • During his second stint in 1999, Vajpayee’s government mooted the idea of a fixed term for Lok Sabha and State Vidhan Sabhas.
    • After the devastating tsunami of 2004, PM Manmohan Singh’s government used the President’s Address to announce the creation of a national law for disaster management.

    Procedure & tradition

    • In the days following the President’s address, a motion is moved in the two Houses thanking the President for his address.
    • This is an occasion for MPs in the two Houses to have a broad debate on governance in the country.
    • The PM replies to the motion of thanks in both Houses and responds to the issues raised by MPs.
    • The motion is then put to vote and MPs can express their disagreement by moving amendments to the motion.

    Role of the opposition

    • Opposition MPs have been successful in getting amendments passed to the motion of thanks in Rajya Sabha on five occasions (1980, 1989, 2001, 2015, 2016).
    • They have been less successful in Lok Sabha. For example in 2018, Lok Sabha MPs tabled 845 amendments of which 375 were moved and negated.

    Significance of the address

    • The President’s address is one of the most solemn occasions in the Parliamentary calendar.
    • It is the only occasion in the year when the entire Parliament, i.e. the President, Lok Sabha, and Rajya Sabha come together.
    • The event is associated with ceremony and protocol.
    • The Lok Sabha Secretariat prepares extensively for this annual event.
    • In the past, it used to get 150 yards of red baize cloth from the President’s house for the ceremonial procession.

  • What is EDISON Alliance?

    The World Economic Forum (WEF) has announced the launch of an Essential Digital Infrastructure and Services Network (EDISON) Alliance.

    The peculiarity of name ‘EDISON Alliance’ creates a hotspot here for prelims.  UPSC may either crate confusion over purpose or parent organization. The alliance is yet to take shape completely; hence there is an ambiguity over its members.

    EDISON Alliance

    • Geneva-based World Economic Forum (WEF), which describes itself as an international organization for public-private partnership, will serve as the secretariat and platform for the EDISON Alliance.
    • A wider group of ‘Champions Leaders’ will advise and support the Alliance, the WEF said while announcing the launch.
    • Alliance aims to work towards ensuring global and equitable access to the digital economy.
    • Its prime goal is to ensure an unprecedented level of cross-sectoral collaboration between the technology industry and other critical sectors of the economy, according to the WEF.

    Why need such an alliance?

    • Access to digital technologies has enabled many to work, learn and live during the COVID-19 pandemic.
    • However, the pandemic has exposed and exacerbated existing gaps and inequalities in almost half of the global population.
    • Some 3.6 billion people, remain offline and broadband services are too expensive for 50 percent of the population in developed countries, the WEF said.
    • This hampers access to health, education, and economic inclusion.

  • What is the G20 Common Framework?

    Chad has become the first country to officially request a debt restructuring under a new common framework “G20 Common Framework” introduced by China and other Group of 20 countries last year with the help of the Paris Club.

    What is G20 Common Framework?

    • G20 Common Framework is the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI).
    • It was announced in November 2020 to deal with the issue of unsustainable debts faced by various countries as an impact of COVID-19.

    What is the news?

    • This official request of Chad for debt restructuring under the G20 common framework was notified by the International Monetary Fund (IMF).
    • The creditors will now soon begin discussions on the first test of the new framework.
    • The creditors will also ask China and other private-sector creditors to participate as agreed last year.
    • A new four-year programme of Chad worth about $560 million under the Extended Credit and Extended Fund facilities was announced by IMF.
    • Chad is under high debt like many other African countries.

    Significance of the move

    • This is the first time that a country has requested debt restructuring under the framework and the investors will now look at how the framework can work.
    • Participation in China is also a question. Last year, G20 Common Framework brought non-members of the Paris Club- India, China, and Turkey to join the framework.

    Back2Basics: Paris Club

    • Paris Club is a club or group of officials from major creditor countries.
    • It was established in the year 1956.
    • It aims to find sustainable solutions to the difficulties faced by debtor countries in payments.