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GS Paper: GS3

  • What is the outlook on the global economy? | Explained

    Why in the news? 

    The International Monetary Fund (IMF) released its latest Global Financial Stability Report warning about the risks to the Global Financial System.

    What is the IMF’s worry about Inflation?

    • Premature Investor Enthusiasm: The IMF believes that investors may be overly optimistic about the end of high inflation and the subsequent lowering of interest rates by central banks. This enthusiasm could be premature.
    • Stalled Inflation: The IMF highlights that inflation may have stalled in some major advanced and emerging economies. Core inflation in the most recent three months has been higher than in the previous three months, indicating a potential slowdown in the decline of inflation.
    • Geopolitical Risks: The IMF warns that geopolitical risks, such as ongoing conflicts in West Asia and Ukraine, could disrupt aggregate supply and lead to higher prices. This could counteract efforts to lower inflation and deter central banks from lowering interest rates.
    • Potential Impact on Central Bank Action: The IMF suggests that if these risks persist, central banks may delay or refrain from lowering interest rates as expected by investors, which could have consequences for asset prices and investor losses.

    How it will impact the Indian Market?

    • Strong Fund Flows: Emerging markets like India have experienced strong inflows of foreign capital, driven by optimism surrounding potential interest rate cuts by central banks.
    • Vulnerability: If central banks in Western countries signal a prolonged period of high interest rates, investors may withdraw funds from emerging markets like India, putting pressure on their currencies.
    • Depreciation of the Indian Rupee: The Indian rupee has already been depreciating, reaching a new low against the U.S. dollar. This trend could continue if capital outflows accelerate.
      • In response to currency depreciation and capital outflows, the RBI may intervene by curbing liquidity and raising interest rates. However, this could slow down the economy.
    • Potential Effects on Financial System: A severe outflow of capital could have implications for India’s financial system, potentially exacerbating the depreciation of the rupee and causing instability.

    Private Credit Market Scenario:

    • The private credit market globally grew to $2.1 trillion last year, indicating its significant size and importance in the financial landscape.
    • The IMF is concerned about the unregulated private credit market, where non-bank financial institutions lend to corporate borrowers. Troubles in this market could potentially affect the broader financial system.
    • India has also witnessed the growth of a small private credit market, particularly with the rise of Alternative Investment Funds (AIFs).

    Conclusion: The IMF’s concerns over premature investor optimism on inflation and risks from geopolitical tensions highlight potential challenges for India’s financial stability. Vigilance over capital flows and regulation of the private credit market are essential safeguards.

    Mains PYQ:

    Q The World Bank and the IMF, collectively known as the Bretton Woods Institutions, are the two inter-governmental pillars supporting the structure of the world’s economic and financial order. Superficially, the World Bank and the IMF exhibit many common characteristics, yet their role, functions and mandate are distinctly different. Elucidate.

  • What are the new Green Credit Programme rules? | Explained

    Why in the news? 

    On April 12, the Environment Ministry issued further guidelines on its Green Credit Programme (GCP)

    What is the Green Credit Programme?

    • The Green Credit Programme is a new market-based instrument in India designed to incentivize individuals, industries, and local bodies for their voluntary environmental actions across different sectors.
    • It is included under the government’s ‘Lifestyle for Environment’ or ‘LiFE’ movement and is a domestic voluntary market mechanism where green credit serves as a singular unit of credit provided for each specified activity.

    Features of the Green Credit Programme:

    • Open-Platform: Participants, including individuals, organizations, and both public and private companies, can invest in these environmental initiatives and receive ‘green credits’ in return. These credits are earned based on the environmental impact of the invested activities.
      • Public sector companies such as Indian Oil, Power Grid Corporation of India, National Thermal Power Corporation, Oil India, Coal India, and National Hydropower Corporation have reportedly registered to invest in the GCP.
    • Set with Priority: The Ministry has prescribed rules for the first initiative under the GCP, focusing on afforestation. Participants can pay for afforestation projects in degraded forest and wasteland areas, with tree planting conducted by State forest departments.
      • The Indian Council of Forestry Research and Education (ICFRE), an autonomous body of the Environment Ministry, is responsible for administering the GCP. They define methodologies to calculate green credits and manage a trading platform for credit exchange.
    • Regional Participation: Thirteen state forest departments have offered 387 land parcels totaling nearly 10,983 hectares of degraded forest land for afforestation projects under the GCP.
    • Enhanced Decision-Making: Successful participants will receive estimates of the costs involved in their chosen afforestation projects, facilitating informed decision-making and planning.

    Why has the GCP stoked controversy?

    • Commodification of Environmental Conservation: Critics argue that the GCP turns environmental conservation into a commodity, potentially undermining the spirit of India’s forest conservation laws.
    • Forest Diversion Concerns: The GCP’s provision for companies to “exchange” green credits for complying with compensatory afforestation requirements raises concerns that it could be exploited by industries seeking to ease forest diversion requirements, particularly in sectors like mining and infrastructure.
    • Ecological Impact: Planting trees as a part of afforestation efforts does not guarantee ecosystem improvement. India’s diverse forest types require specific approaches, and planting the wrong types of trees could lead to the proliferation of invasive species or disrupt sustainable ecosystems.
    • Monoculture Threat: There’s a risk that the GCP may promote the replacement of natural forests with invasive monocultures, potentially harming biodiversity and ecological balance.
    • Carbon Trading Controversy: The GCP allows green credits resulting from carbon storage (e.g., tree planting) to be used for carbon trading. However, the methodology for equating these activities is unclear, raising doubts about the effectiveness and legitimacy of such carbon trading schemes.

    Conclusion: The Green Credit Programme in India, faces criticism for potentially commodifying conservation, raising forest diversion concerns, posing ecological risks like monoculture, and lacking clarity in carbon trading methodologies. So there is a need for rigorous oversight and adaptation.

    Mains PYQ 

    Q Explain the purpose of the Green Grid Initiative launched at World Leaders Summit of the COP26 UN Climate Change Conference in Glasgow in November, 2021. When was this idea first floated in the International Solar Alliance (ISA)?

  • On the fall in Household Savings

    Why in the news? 

    The sharp reduction in Household Net Financial Savings and the rise in Household Debt burden are a cause for concern for growth and economic stability.

    BACK2BASICS:

    What are household financial savings?

    • Household financial savings refer to currency, bank deposits, debt securities, mutual funds, pension funds, insurance, and investments in small savings schemes. The total of these savings is referred to as gross household financial savings.

    What is Household Debt?

    • Household debt is all household liabilities (including non-profit institutions serving households) that require payments of interest or principal by households to creditors at a fixed date in the future.
    • Debt is calculated as the sum of the following liability categories: loans (primarily mortgage loans and consumer credit) and other accounts payable.

     

    What are the present reasons behind the Lower Financial savings?

    • Increased borrowing or reduced gross financial savings are the primary drivers of lower net financial savings.
    • Lower net financial savings due to increased borrowing for consumption or investment can stimulate aggregate demand and output.
    • Higher interest rates can lead to increased interest payments by households, reducing their net financial savings.

    Implication of Higher Debt Burden on the Indian Market: The rise in household debt burden has two concerns for the macroeconomy. 

    • Debt Repayment and Financial Fragility: Household debt sustainability depends on the gap between the interest rate and income growth rate. 
      • Suppose households fail to meet their debt repayment commitments. In that case, it reduces the income of the financial sector and deteriorates their balance sheets, which in turn can have a cascading effect on the macroeconomy.
    • Scheduled Commercial Banks Lending vs. Growth Rate of GNS: The weighted average lending rate registered a sharp rise in the last two years, particularly due to the tight monetary policy stance of the RBI and the sharp rise in the call money rate during this period.
    • Impact on Consumption Demand: Reducing household wealth can lead to lower consumption expenditure as households may attempt to preserve their wealth by increasing their savings.

    • Reduced Higher household debt: Higher household debt can also reduce consumption expenditure in at least two ways.
      • If higher household leverage is perceived as an indicator of higher default risk, then it may induce banks to indulge in credit rationing and reduce credit disbursement. The consequent reduction in credit disbursement can adversely affect consumption.
      • Higher debt can reduce consumption expenditure by increasing the interest burden, not to mention the effect of higher interest rates on consumption expenditure.
    • Low household Financial wealth: Recent trends in the Indian economy indicate a decline in household financial wealth relative to GDP, alongside an increase in household leverage (debt to net worth ratio). 
      • The financial wealth/net worth of the household is the difference between the stock of financial assets and liabilities.

    Macroeconomic Implication:

    • Implications of the Procyclical Leverage: Given that both the flow indicator of liabilities to disposable income and the debt to net worth show an increasing trend, where households are vulnerable.
    • Fall in the Household Savings: The policy mantra of higher interest rates to counter inflation by reducing macroeconomic output and employment can leave households with an increasing level of debt in their balance sheets and potentially push the households into a debt trap.
      • The implications of high-interest rates on debt burden can hurt the consumption of the households and consequently aggregate demand.

    Suggestive measures:

    • Promote sustainable borrowing: Policymakers need to address the growing vulnerabilities of households by implementing measures to promote sustainable borrowing practices and reduce reliance on debt.
    • Prioritizes production and employment: Additionally, the policies aimed at fostering a more balanced economy that prioritizes production and employment alongside financial activities may be necessary to ensure long-term economic stability and growth.

    Conclusion: The change in the composition of the asset side of the household balance sheet towards financial assets indicates some degree of financialization of the economy which moves from a production-based economy to a monetary or financial exchange-based economy making the 5 trillion dollar economy both jobless and fragile. 

    Mains PYQ:

    Q The public expenditure management is a challenge to the Government of India in the context of budgetmaking during the post-liberalization period. Clarify it.(UPSC IAS/2019)

  • Plasma Therapy to Treat Rodenticide Poisoning

    Why in the news?

    • A significant health concern in Tamil Nadu is found through ingestion of Rat poison containing Yellow Phosphorus, leading to liver toxicity.
      • Since December 2017, the team at CMC Vellore introduced Plasma Exchange, (a cost-effective treatment) for acute liver failure caused by rat poison ingestion.

    What is Plasma Therapy (Plasmapheresis)?

    • Plasma exchange, also known as plasmapheresis, is a medical procedure used to treat various conditions by removing and replacing plasma from the blood.
    • During Plasma Exchange, the patient’s blood is circulated through a machine that separates plasma from other blood components, such as red and white blood cells and platelets.

    Working procedure:

    • The plasma, which may contain harmful substances or antibodies, is discarded.
    • The remaining blood components are mixed with replacement plasma or a plasma substitute and returned to the patient’s bloodstream.

    Usage of Plasmapheresis:

    • In Autoimmune diseases: Conditions such as Guillain-Barre syndrome, myasthenia gravis, systemic lupus erythematosus, and certain forms of vasculitis.
    • In Neurological disorders: Conditions such as multiple sclerosis, chronic inflammatory demyelinating polyneuropathy, and certain types of encephalitis.
    • In Toxicological emergencies: Poisoning or overdose with substances such as drugs, chemicals, or toxins that can be removed from the bloodstream through plasma exchange.

    Benefits observed in TN’s Case

    • The treatment significantly improved survival rates, with 63.9% of patients treated in 2022-2023 successfully discharged.
    • Retrospective studies at CMC Vellore demonstrated promising outcomes, with survival rates of 75% among children and 80.2% among adults treated with plasma exchange.

    What is Plasma in Human Blood?

    • Human blood plasma is the liquid component of blood, constituting about 55% of its total volume.
    • It is a pale yellowish fluid that carries various substances throughout the body, including nutrients, hormones, electrolytes, antibodies, and waste products.
    • Plasma plays a crucial role in maintaining homeostasis and transporting essential components to tissues and organs.

    Composition:

    • Water: Approximately 90% of plasma consists of water, making it the primary solvent for carrying dissolved substances.
    • Proteins: Plasma contains a variety of proteins, including albumin, globulins, and fibrinogen. These proteins perform functions such as maintaining osmotic pressure, transporting lipids and hormones, and aiding in blood clotting.
    • Electrolytes: Plasma contains ions such as sodium, potassium, chloride, calcium, and bicarbonate, which help regulate fluid balance, pH, and nerve function.
    • Nutrients: Glucose, amino acids, lipids, and vitamins are transported in plasma and provide energy and building blocks for cells.
    • Waste Products: Metabolic waste products, such as urea, creatinine, and bilirubin, are transported in plasma to be eliminated from the body.
    • Hormones: Hormones produced by endocrine glands are carried in plasma to target tissues, where they regulate various physiological processes.
    • Gases: Oxygen and carbon dioxide are transported in plasma, primarily bound to hemoglobin in red blood cells.

    Functions:

    • Plasma carries nutrients, gases, hormones, and waste products to and from cells throughout the body.
    • Plasma helps regulate fluid balance, electrolyte concentrations, pH, and temperature.
    • Antibodies and immune cells in plasma help defend against pathogens and foreign substances, contributing to the body’s immune response.
    • Plasma proteins such as fibrinogen play a crucial role in blood clotting, helping to stop bleeding and repair damaged blood vessels.
    • Plasma buffers changes in pH by absorbing or releasing hydrogen ions, helping maintain the body’s acid-base balance.

     

    PYQ:

    [2011] A married couple adopted a male child. A few years later, twin boys were born to them. The blood group of the couple is AB positive and 0 negative. The blood group of the three sons is A positive, B positive, and O positive. The blood group of the adopted son is-

    (a) O positive

    (b) A positive

    (c) B positive

    (d) Cannot be determined based on the given data

  • 50 Years of Chipko Movement

    Why in the news?

    The Chipko Movement, initiated in Uttarakhand in early 1973, commemorates its 50th anniversary.

    About Chipko Movement

    • The Chipko Movement originated in the Himalayan region of Uttarakhand (then part of the state of Uttar Pradesh) in India.
    • It was triggered by the deforestation activities carried out by contractors, which threatened the livelihoods of local communities and led to environmental degradation.
    • It is said to be inspired by the Bishnoi community in Rajasthan. The Bishnois are known for their environmentalism. (non-violent resistance)
    • The movement derived its name from the act of villagers hugging trees and physically preventing them from being felled, thereby protecting the forests.
    • The movement was led by local activists, primarily women from rural areas, who played a significant role in its success. Prominent leaders included Sunderlal Bahuguna, Chandi Prasad Bhatt (founded an organization called Dasholi Gram Swarajya Mandal ) and Gaura Devi, among others.
    • Villagers used traditional methods of protest, such as forming circles around trees and tying sacred threads (rakhi) on them to symbolize their unity and commitment to conservation.
    • Recognition: Sunderlal Bahuguna, was awarded the Padma Vibhushan, India’s second-highest civilian award.

    Impact of Chipko Movement

    • It inspired similar movements in different parts of India, such as the Narmada Bachao Andolan, Appiko Movement (Karnataka) and the Silent Valley Movement.
    • It demonstrated the significance of Eco-Feminism and the impact that a non-violent, peaceful and environment-loving community can have.

  • [pib] Net Direct Tax collections exceed 2023-24 target

    Why in the news?

    • India’s net direct tax collections witnessed a remarkable growth of 17.7% in the fiscal year 2023-24, reaching ₹19.58 lakh crore.
      • This performance indicates a strong revenue stream for the government.

    Direct Tax Collections Trends in this Fiscal

    • Notably, Personal Income Taxes (PIT) played a pivotal role in driving the surge, accounting for 53.3% of the total tax kitty, up from 50.06% in the previous year.
    • Conversely, the contribution of corporate taxes dipped to 46.5% from 49.6% in the preceding fiscal.
    • While gross corporate tax collections increased, net tax receipts from Corporates, adjusted for refunds, experienced a slight decline.

    What Is Net of Tax?

    The term net of tax refers to the amount left after adjusting for the effects of taxes. Net of tax can be a consideration in any situation where taxation is involved. In the financial industry, ‘gross’ and ‘net’ are two key terms that refer to before and after paying certain expenses.

    It’s Significance:

    • Individuals and businesses often analyze before and after-tax values to make investment and purchasing decisions.
    • Net tax is also an important part of expense analysis when reviewing annual tax filings and the net income of businesses.

    Types of Direct Taxes:

    • Income Tax: Depending on an individual’s age and earnings, income tax must be paid. Various tax slabs are determined by the Government of India which determines the amount of Income Tax that must be paid.
      • The taxpayer must file Income Tax Returns (ITR) on a yearly basis. Individuals may receive a refund or might have to pay a tax depending on their ITR. Huge penalties are levied in case individuals do not file ITR.
    • Wealth Tax: The tax must be paid on a yearly basis and depends on the ownership of properties and the market value of the property. In case an individual owns a property, wealth tax must be paid and does not depend on whether the property generates an income or not.
      • Corporate taxpayers, Hindu Undivided Families (HUFs), and individuals must pay wealth tax depending on their residential status.
      • Payment of wealth tax is exempt for assets like gold deposit bonds, stock holdings, house property, commercial property that have been rented for more than 300 days, and if the house property is owned for business and professional use.
    • Estate Tax: It is also called an Inheritance Tax and is paid based on the value of the estate or the money that an individual has left after his/her death.
    • Corporate Tax: Domestic companies, apart from shareholders, will have to pay corporate tax. Foreign corporations who make an income in India will also have to pay corporate tax. Income earned via selling assets, technical service fees, dividends, royalties, or interest that is based in India are taxable. The below-mentioned taxes are also included under Corporate Tax:
      • Securities Transaction Tax (STT): The tax must be paid for any income that is earned via taxable security transactions.
      • Dividend Distribution Tax (DDT): In case any domestic companies declare, distribute, or are paid any amounts as dividends by shareholders, DDT is levied on them. However, DDT is not levied on foreign companies.
      • Fringe Benefits Tax: Companies that provide fringe benefits for maids, drivers, etc., Fringe Benefits Tax is levied on them.
      • Minimum Alternate Tax (MAT): For zero-tax companies that have accounts prepared according to the Companies Act, MAT is levied on them.
    • Capital Gains Tax: It is a form of direct tax that is paid due to the income that is earned from the sale of assets or investments. Investments in farms, bonds, shares, businesses, art, and home come under capital assets.
      • Based on its holding period, tax can be classified into long-term and short-term. Any assets, apart from securities, that are sold within 36 months from the time they were acquired come under short-term gains.
      • Long-term assets are levied if any income is generated from the sale of properties that have been held for a duration of more than 36 months.

    PYQ:

    [2014] The sales tax you pay while purchasing a toothpaste is a

    (a) Tax imposed by the Central Government

    (b) Tax imposed by the Central Government but collected by the State Government

    (c) Tax imposed by the State Government but collected by the Central Government

    (d) Tax imposed and collected by the State Government

  • [20 April 2024] The Hindu Op-ed: Scientists and a wish list for the incoming government 

    PYQ Relevance:
    Mains: 
    Q  Scientific research in Indian universities is declining, because a career in science is not as attractive as are business professions, engineering or administration, and the universities are becoming consumer-oriented. Critically comment.(UPSC IAS/2014)

    Q What are the research and developmental achievements in applied biotechnology? How will these achievements help to uplift the poorer sections of the society?(UPSC IAS/2021)

    Mentor comments:With 970 million Indians in the process of exercising their franchise in the ongoing general election, what do scientists look for in the polls? Who do they want to vote for, and what are the fundamental issues they want to see their elected representatives resolve and implement? There are five fundamental issues that scientists want the new government to solve and their elected representatives to pay urgent attention to.

    Why in the news? 

    Supporting science and scientists is essential in India’s quest to become a major economic powerhouse

    Need to Increase spending

    • Increase Government Spending: Government should increase spending on research and development by at least 50% year-over-year for the next five years, aiming for nearly 4% of GDP by the end of the term.
    • Anusandhan National Research Foundation (ANRF): Private sector involvement can be encouraged through initiatives like ANRF, where private players are expected to contribute ₹36,000 crore over five years. Legislative measures and detailed plans should be implemented to ensure private sector participation, possibly through mechanisms like escrow accounts.
    • Infrastructure Improvement: Public sector institutions, including universities and research institutions, require modernization of physical and intellectual infrastructure. This includes upgrading science laboratories in undergraduate colleges, state and central universities, and specialized research institutions.
    • Skilled Workforce Development: Increased funding needs to be complemented with efforts to raise a skilled scientific workforce. This involves not only hiring quality teachers and researchers but also nurturing existing human resources and providing opportunities for skill development.

     Focus on merit

    • Globally accepted standards: Implement globally accepted standards for hiring in educational and research institutions, ensuring transparency, speed, and freedom from external influence. Selection criteria should strictly focus on merit, with competent committees responsible for unbiased decision-making.
    • Timely Appointments: Aim to streamline the hiring process so that it takes at most six months from the time of application to providing appointment letters. This ensures efficiency in recruitment and reduces delays in filling vacant positions.
    • Robust Grant Management System: Establish a robust science grant management system that minimizes red tape in grant submission and expedites the disbursement of grants and student fellowships. Emphasize timely allocation of funds to researchers to facilitate uninterrupted research activities.

    Ensure freedom

    • Freedom of Expression: Scientists require the freedom to speak and write based on evidence, without interference, to foster a culture of open inquiry and knowledge dissemination to flourishing start-up ecosystem is essential for translating academic research into practical innovations that benefit society.
    • Autonomy for Scientists: Provide full autonomy to individual scientists to take leave to establish companies, hire scientific staff without excessive paperwork, and allocate research funds as they see fit.Scientists should have flexibility in decision-making, including the freedom to tra

    Conclusion: Scientists’ demands underscore the critical need for robust support and infrastructure to drive scientific research and innovation in India. By addressing these fundamental issues, the incoming government has the opportunity to foster a vibrant scientific community that contributes significantly to the nation’s economic growth and societal development.

  • Bengaluru Airport bags 2024 Skytrax World Airport Awards

    Why in the news?

    • The Kempegowda International Airport (KIA) in Bengaluru has been honored as the Best Regional Airport in India and South Asia at the esteemed 2024 Skytrax World Airport Awards.
    • Since its inauguration in 2023, KIA Terminal-2 has garnered multiple accolades, including the UNESCO Prix Versailles World’s Most Beautiful Airport

    About Skytrax World Airport Awards

    • The Skytrax World Airport Awards are annual awards, established in 1999 presented by Skytrax, a UK-based consultancy specializing in airline and airport research.
    • Since then, it has become a globally recognized authority in airline and airport research, known for its comprehensive passenger surveys and prestigious awards.
    • These awards are considered one of the most prestigious recognitions in the aviation industry and are often referred to as the “Oscars of the aviation industry.”
      • Various categories of Award: Best Airport, Best Regional Airport, Best Airport Terminal, and Best Airport Staff, among others.

    Evaluation Criteria:

    • Rigorous evaluations of various aspects, including check-in procedures, arrivals, transfers, shopping facilities, security, immigration processes, and departures.
    • Feedback from airport customers of over 100 nationalities across 550 airports worldwide during a seven-month survey period contributed to the assessment.

    Winners of the 2024 Awards

    • Doha’s Hamad International Airport clinched the top spot, dethroning Singapore Changi Airport, which had held the title for 12 consecutive years.
    • Hamad International Airport is praised for its architectural significance and luxurious amenities, covering an area equivalent to 75 football fields.
    • Seoul Incheon Airport secured third place overall and was recognized as the most family-friendly airport.

    Performance of key Indian Airports:

    • Delhi Airport retained its position at 36th place in the overall rankings.
    • Mumbai Airport saw a slight decline, dropping to 95th place from its previous rank of 84.
    • Bengaluru Airport experienced a notable improvement, climbing 10 ranks to 59th place compared to last year’s 69th position.
    • Hyderabad Airport also showed improvement, rising to 61st place from its previous rank of 65th.
    • Goa’s Manohar International Airport secured the 92nd spot in the overall rankings.

  • Vasuki Indicus: 50ft Snake Fossil Found in Gujarat

    Why in the news?

    A fossil unearthed in Gujarat’s Kutch in 2005, initially presumed to belong to a giant crocodile, has been revealed as one of the largest snake ‘Vasuki Indicus’ ever to exist on Earth.

    About Vasuki Indicus

    • ‘Vasuki Indicus’ is the name given by IIT Roorkee Scientists to the fossil specie.
    • The name “Vasuki” derives from the mythological snake depicted often encircling the neck of the Hindu deity Shiva.

    Physical characteristics of Vasuki

    • It is estimated to measure between 11m (36ft) and 15m (49.22ft) in length,
    • It belonged to the extinct Madtsoiidae snake family.
      • Its size could potentially surpass the extinct Titanoboa in size, with its closest relatives identified as Titanoboa and Python.
    • The serpent’s large size indicates it was a slow-moving, ambush predator, akin to an anaconda, as suggested by researchers.
      • Like contemporary pythons and anacondas, Vasuki Indicus presumably employed Constriction (suffocation) as its primary method of prey capture.

    Age and Geological Context:

    • Recovered from the Panandhro Lignite Mine in Kutch, the fossil dates back to the Middle Eocene period, approximately 47 million years ago.
    • Analysis of the well-preserved vertebrae indicates the snake’s existence during a warm geological interval with average temperatures estimated at 28°C.
    • ‘Vasuki’ is believed to represent an extinct relic lineage originating in India, with subsequent India-Asia collision facilitating its dispersal from the subcontinent into North Africa through southern Eurasia.
      • Vasuki thrived during a time when the continents of Africa, India, and South America were amalgamated into a single landmass.

    Significance for India

    • This discovery underscores India’s rich biodiversity.
    • It holds immense potential in unraveling insights into the evolutionary process, continental shifts, and India’s pivotal role in the origin of various species, particularly reptiles.

    Middle Eocene Period

    • It is part of the Cenozoic Era, which began about 66 million years ago and continues to the present day.
    • During the Middle Eocene, the Earth experienced a greenhouse climate, with global temperatures significantly warmer than today.
    • The poles were ice-free, and forests extended into higher latitudes than they do today.
    • The period was characterized by relatively high levels of carbon dioxide in the atmosphere, contributing to the warm climate.
    • The Middle Eocene was a time of significant diversification and evolution of various groups of organisms.
    • Mammals continued to diversify and evolve, with the emergence of early primates, rodents, and hoofed mammals.
    • The period also saw the rise of modern bird groups and the diversification of flowering plants (angiosperms).
    • The Middle Eocene was marked by tectonic activity, including the ongoing separation of continents and the formation of mountain ranges in various parts of the world.
    • For example, the collision of the Indian Plate with the Eurasian Plate during this time led to the uplift of the Himalayas.

     

    PYQ:

    [2020] The word ‘Denisovan’ is sometimes mentioned in media in reference to-

    (a) Fossils of a kind of dinosaurs

    (b) An early human species

    (c) A cave system found in North-East India.

    (d) A geological period in the history of the Indian subcontinent

  • Why have private investments dropped? | Explained

    Why in the news? 

    The failure of private investment, as measured by private Gross Fixed Capital Formation (GFCF) as a percentage of gross domestic product (GDP) at current prices, to pick up pace has been one of the major issues plaguing the Indian economy.

    What is GFCF?

    • GFCF refers to the growth in the size of fixed capital in an economy.
    • Fixed capital refers to things such as buildings and machinery, for instance, which require investment to be created.
    • So private GFCF can serve as a rough indicator of how much the private sector in an economy is willing to invest.
    • Overall GFCF also includes capital formation as a result of investment by the government.

    Why does it matter?

    • GFCF matters because fixed capital, by helping workers produce a greater amount of goods and services each year, helps to boost economic growth and improve living standards.
    • In other words, fixed capital is what largely determines the overall output of an economy.

    What is the trend seen in private investment in India?

    • Pre-liberalization (1950s to early 1990s): Private investment remained relatively stable, hovering around or slightly above 10% of GDP. Public investment, however, steadily increased during this period.
    • Liberalization (early 1990s onwards): Economic reforms in the early 1990s improved private sector confidence, leading to a significant uptick in private investment. Public investment, although still significant, began to decline relative to private investment.
    • Post-global financial crisis (late 2000s to present): Private investment continued to grow until the global financial crisis of 2007-08, reaching around 27% of GDP. However, from around 2011-12 onwards, private investment began to decline, hitting a low of 19.6% of GDP in 2020-21.

    Why has private investment fallen?

    • Low private consumption expenditure: Some economists attribute the decline in private investment to low private consumption expenditure. They argue that businesses need confidence in future demand to invest in fixed capital, and boosting consumption expenditure can help stimulate private investment.
    • Structural problems and policy uncertainty: Other economists argue that structural issues and policy uncertainty are core reasons behind the fall in private investment. They point to unfavourable government policies and policy uncertainty as major factors affecting private investment.

    Conclusion: To address the decline in private investment, India needs policies promoting consumer confidence and stable, conducive business environments. Balancing pro-growth fiscal measures with structural reforms can stimulate investment, fostering economic growth and prosperity.

    Mains PYQ 

    Q Explain the meaning of investment in an economy in terms of capital formation. Discuss the factors to be considered while designing a concession agreement between a public entity and private entity.(UPSC IAS/2020)