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GS Paper: GS3

  • The ANRF plan has got off on the wrong foot  

    Why in the News? 

    In 2023, the Anusandhan National Research Foundation (ANRF) Bill was passed by both Houses of Parliament, heralding a significant new initiative aimed at promoting and advancing research in India, particularly within the country’s universities and colleges.

    About 2019 National Research Foundation (NRF) Project Report

    • Objective: The 2019 NRF project report emphasized the goal of seeding, growing, and facilitating research in India, particularly within universities and colleges.
    • Aim: The project aimed to create an environment where research could thrive free from bureaucratic constraints, providing a funding boost and fostering collaboration with industry partners.
    • Scope and Structure: NRF will have five major divisions: Sciences, Technology, Social Sciences, Humanities, and Arts
    • Priority: A top priority mentioned in the report was “growing outstanding research cells already existing at State Universities.”

     

    Lack of Industry Representation in India:

    • Governing Bodies Composition: The ANRF Governing Board and Executive Council lack representation from key organizations, such as Central and State universities or colleges.
    • Current Members: Members primarily include Secretaries from various government science departments, directors of top research institutions, and international figures, but not from Indian industry or local academia.
    • Industry and Academia Input: There is a critical need for representatives who understand the practical challenges and bottlenecks of the current university system and have ground-level experience.
    • Diversity Issues: There is minimal representation from the industry and a lack of diversity, with the sole industry representative being an Indian-American based in Silicon Valley and the only woman representative being the Secretary of the DSIR.

    R&D underfunding:

    • Current Funding Levels: India significantly underfunds research and development, allocating less than 1% of GDP to R&D. There is a pressing need to increase this to at least 4% to make Indian innovation globally competitive.
    • Systemic Overhaul: The current funding system requires a significant overhaul to boost research. This includes implementing a robust grant management system, ensuring timely disbursal of funds, and minimizing bureaucratic hurdles at both the funding body and grantee institutions.
    • Grant and Fellowship Disbursal: Timely disbursal of research grants and student fellowships is crucial. The aim should be a quick turnaround time of less than six months between application and fund disbursal to maintain the momentum of research activities.
    • Flexibility in Spending: Researchers need flexibility in spending research funds. The current system’s stringent general financial rules (GFR) and the requirement to use the Government e-marketplace (GeM) portal can hinder efficient resource utilization.
    • Diverse and Competent Leadership: The ANRF should be staffed with diverse representatives from practising natural and social scientists, young entrepreneurs, and women.

    Other steps taken by the Government: 

    • Atal Innovation Mission (AIM): It is a flagship initiative to promote innovation and entrepreneurship in the country. It aims to create an ecosystem for innovation and provide support to startups through incubators, accelerators, and mentorship programs.
    • Impacting Research Innovation and Technology (IMPRINT) Program: IMPRINT is a joint initiative of the Ministry of Education and the Ministry of Science and Technology to promote translational research.
    • Uchhatar Avishkar Yojana (UAY): UAY is a scheme to promote industry-specific need-based research in premier institutions.

     

    Conclusion: The ANRF should actively involve representatives from both Indian industry and academia in its Governing Board and Executive Council. This inclusion will ensure that decision-making processes are informed by practical insights and ground-level experiences.

    Mains PYQ: 

    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)

  • What does the Karnataka Bill promise gig workers?    

    Why in the News?

    The Karnataka government released the draft of the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill, becoming the second Indian state to take such an initiative, following Rajasthan.

    Who are the Gig workers?

    Gig workers are independent contractors, freelancers, or temporary workers who are hired for specific projects or tasks, often through online platforms, rather than being employed in traditional long-term employer-employee relationships.

    Key highlight of the Bill proposed for the welfare of gig workers:

    • Social Security and Welfare Fund: Establishment of a welfare boards, social security and welfare fund for gig workers, funded by a welfare fee on transactions or company turnover, and contributions from the Union and State governments.
    • Grievance Redressal Mechanism: Introduction of a two-level grievance redressal mechanism to address workers’ complaints and ensure transparency in the automated monitoring and decision-making systems used by platforms.
    • Fair Termination Procedures: Requirement for contracts to list exhaustive grounds for termination, with a 14-day prior notice and valid reasons in writing needed before terminating a worker.
    • Payment and Deductions: Mandate weekly payments to workers, with clear communication regarding any payment deductions, and the right for workers to refuse a specified number of gigs per week without adverse consequences.
    • Safe Working Conditions and Contract Transparency: Obligation for aggregators to provide reasonable and safe working conditions, registration of all gig workers, and contracts to be written in simple language with a 14-day notice for any changes, allowing workers to terminate the contract without losing existing entitlements.

    What are the impacts of the labour market in a larger domain, and why are safeguards necessary? 

    • Lack of Basic Rights and Social Security: Gig workers are often classified as “partners” rather than employees, leaving them security outside the purview of labour protection laws and without access to basic rights and social benefits.
    • Arbitrary Terminations and Lack of Grievance Redressal: Instances of arbitrary terminations, blacklisting, and dismissals without hearing the worker’s side are common in the absence of regulatory laws. Automated monitoring and decision-making systems often make these decisions, leaving no room for grievance redressal.
    • Reduced Payments and Exploitation: Over the years, gig workers have faced reduced payments, arbitrary deductions, and exploitation due to the lack of regulatory laws governing the gig economy.
      • The wide gap between the purchasing power of these workers and the affluent consumers they serve raises questions about the long-term sustainability of this model.
    • Need for Transparency and Fair Contracts: The absence of transparency in automated monitoring systems and decision-making by platforms, as well as the lack of fair contracts, has led to the exploitation of gig workers.
      • There is a need for the state to review contract templates and ensure fair contracts with gig workers.
    • Lack of Access to Credit and Skill Development: Gig workers often lack access to credit and skill development opportunities, hindering their growth and formalization.
      • There is a need for enabling platforms to provide these benefits to gig workers.

    State-level and National level Initiatives taken previously: 

    • Code on Social Security, 2020: At the national level, the Code on Social Security, 2020 recognized those who freelance or work under short-term contracts. It mandated employers to provide benefits similar to those of regular employees to gig workers.
    • Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act: Rajasthan became the first state to introduce a bill for the welfare of gig workers in 2023.
      • The bill, which became an Act in September 2023, sought to establish a welfare board and fund for gig workers.
      • However, the Act has gone into cold storage after the changed government in November 2023.
    • Haryana Gig Workers Welfare Board Bill: The bill aims to establish a state-level board dedicated to the social and economic security of gig workers involved in delivering goods, services, and food at doorsteps.

    Case study: 

    • In California (USA), the Proposition 22 ballot measure allows app-based transportation and delivery companies to classify drivers as independent contractors while providing them with some benefits like a health insurance subsidy and minimum earnings guarantee.
    • New York City (USA)  has passed legislation requiring food delivery apps to provide workers with benefits like paid sick leave and minimum pay.

    Way forward: 

    • Unified Legislation: Introduce a comprehensive national-level legal framework specifically addressing the rights and welfare of gig workers. This legislation should encompass social security, fair wages, occupational safety, and grievance redressal mechanisms.
    • Strict Enforcement: Ensure robust enforcement of these laws through dedicated government bodies and regular audits of gig economy platforms. Penalties for non-compliance should be substantial enough to deter exploitative practices.

    Mains PYQ: 

    Q Examine the role of ‘Gig Economy’ in the process of empowerment of women in India. (UPSC IAS/2021)

  • Primary Amoebic Meningoencephalitis (PAM) Cases in Kerala

    Why in the News?

    There have been four cases, including three deaths, of the rare, but fatal brain-eating primary amoebic Meningoencephalitis (PAM) in Kerala in the last two months.

    What is Primary Amoebic Meningoencephalitis (PAM)?

    • PAM is a rare brain infection caused by Naegleria fowleri, a free-living amoeba found in warm freshwater and soil worldwide.
      • An amoeba is a type of cell or unicellular organism with the ability to alter its shape, primarily by extending and retracting pseudopods.
      • Higher temperatures of up to 115°F (46°C) are conducive to its growth and it can survive for short periods in warm environments.
    • The amoeba enters the body through the nose, typically during activities like swimming, and travels to the brain, causing severe damage.
    • PAM is also non-communicable.
    • Symptoms: Headache, fever, nausea, vomiting, stiff neck, confusion, seizures, hallucinations, and coma.
      • According to the US Centers for Disease Control and Prevention (CDC), most people with PAM die within 1 to 18 days after symptoms begin. It usually leads to coma and death after 5 days.

    Diagnosis and Treatment:

    • Currently, there are no established effective treatments for PAM.
    • Diagnosis involves PCR tests of cerebrospinal fluid, though detection can be challenging due to the rarity of PAM.
    • Treatment follows CDC guidelines, including miltefosine, Azithromycin, and Amphotericin B, with miltefosine recently procured by the State Health Department from Germany.
      • Medical interventions typically involve a combination of drugs, including amphotericin B, azithromycin, fluconazole, rifampin, miltefosine, and dexamethasone.

  • Surge in Silver Imports from UAE through Gift City

    Why in the News?

    • India’s majority of silver imports are now handled by few private players from Dubai through the India International Bullion Exchange (IIBX), Gift City.
      • This trend, aimed at reducing import duties by the traders, poses potential long-term revenue losses for India.

    India’s Silver Imports

    • India imported a record 4,172 metric tons of silver in the first four months of 2024, far exceeding the total of 3,625 tons imported in all of 2023.
      • In February 2024 alone, India imported a record 2,295 metric tons of silver, up from 637 tons in January. This represents a 260% increase.
    • The surge in imports has been driven by increasing demand from the Solar panel industry as well as a rise in Speculative Investment, with investors betting on silver outperforming gold.
    • Nearly half of India’s silver imports in 2024 so far have come from the United Arab Emirates (UAE) due to a lower import duty under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
      • India generally imposes a 15% import duty on silver.
      • However, because of the CEPA signed between India and the UAE in 2022, allows private traders to import silver through the India International Bullion Exchange (IIBX) paying 9% duty, and an extra 3% in value-added tax.
    • The government is now concerned about the 647-fold spike in silver imports from the UAE and plans to discuss the issue with Abu Dhabi.
      • The Gift City exchange, while clearing imports from Dubai since December 2023, is under scrutiny for potential violations of these rules compared to imports from other ports.

    About India International Bullion Exchange (IIBX)

    • Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins.
    • The IIBX was announced during the 2020 budget speech by the Finance Minister.
    • It is set up at the International Financial Services Center (IFSC) located in GIFT City, Gandhinagar.
    • It is India’s first bullion exchange, launched on 29 July 2022 in Gujarat.
    • It is the 3rd exchange of its kind in the globe.

    Regulations and Setup:

    • The International Financial Services Centres Authority (Bullion Exchange) Regulations, 2020, were notified in December 2020 specifically for the trading of precious metals, including gold and silver.
    • These regulations encompass the operations of the bullion exchange, Clearing Corporation, depository, and vaults associated with IIBX.

    Operational Framework

    • Previously, India had liberalized gold imports through nominated banks and agencies in the 1990s.
      • With IIBX, eligible qualified jewellers in India can directly import gold.
    • Jewellers need to become trading partners or clients of an existing trading member to participate in the exchange.

    Comparison with Previous Practices

    • Previously, bullion in India was imported under a consignment model by nominated banks and agencies approved by the RBI, which added handling fees and premiums.
    • The introduction of IIBX aims to streamline the supply chain by allowing direct imports through the exchange, potentially reducing costs for traders and consumers alike.

    Recommendations for Addressing Challenges

    • Renegotiation of CEPA Terms: The Global Trade Research Initiative (GTRI) advocates for revising CEPA terms to curb duty arbitrage and enforce stricter checks on value addition claims by Gift City exchange.
    • Enhanced Regulatory Oversight: GTRI proposes limiting silver imports to RBI/DGFT-nominated agencies to mitigate risks associated with mis-declared imports and ensure compliance with CEPA conditions.
    • Investigation and Oversight: There is a call for a thorough investigation into relationships between export and import firms to identify and mitigate conflicts of interest or familial ties that could influence import practices.

    PYQ:

    [2016] What is/are the purpose/purposes of Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?

    1. To bring the idle gold lying with Indian households into the economy.
    2. To promote FDI in the gold and jewellery sector.
    3. To reduce India’s dependence on gold imports.

    Select the correct answer using the code given below:

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

  • DRDO unveils Indigenous Light Tank Zorawar

    Why in the News? 

    The Defence Research and Development Organisation (DRDO) and private company Larsen & Toubro (L&T) unveiled the prototype of the Zorawar light tank.

    Note: 

    • India primarily has T-90S Bhishma and T-72 Ajeya produced under license from Russia.
    • The Future Ready Combat Vehicle (FRCV) program aims to develop and induct next-generation Indigenous main battle tanks to replace the ageing T-72 fleet starting from 2030 onwards

    What is Zorawar Tank?

    • The Zorawar Tank was developed jointly by the DRDO and Larsen & Toubro (L&T).
    • It is an indigenous light tank designed specifically for operations in high-altitude regions like Ladakh and Sikkim.
    • It has been developed under ‘Project Zorawar’, named after General Zorawar Singh of Jammu.
    • Its prototype was unveiled in July 2023, with internal testing completed at L&T’s facility in Gujarat.
    • It has been scheduled for extensive trials in various conditions, including summer, winter, and high-altitude environments, with plans for induction by August 2025.

    Who was General Zorawar Singh (1784–1841)?

    • Zorawar Singh Chandel was a military general of the Dogra Rajput ruler, Gulab Singh of Jammu.
    • He served as the governor (wazir-e-wazarat) of Kishtwar and extended the territories of the kingdom by conquering Ladakh and Baltistan.
    • He also boldly attempted the conquest of Western Tibet (Ngari Khorsum) but was killed in battle of To-yo during the Dogra-Tibetan war.
    • About his legacy of conquests in the Himalayas including Ladakh, Tibet, Baltistan and Skardu as General and Wazir, Zorowar Singh has been referred to as the “Napoleon of India“, and “Conqueror of Ladakh“.

    Operational Capabilities:

    • Designed to operate effectively in extreme weather conditions and at high altitudes (above 15,000 feet) with minimal logistic support.
    • Intended for use in challenging terrains where heavier tanks like T-72 and T-90 face limitations.
    • Includes thermal sights, night-fighting capabilities, and features to reduce visual, sound, heat, and electromagnetic signatures.

    Technical Specifications:

    • Weight: Approximately 25 tons, allowing for air transportation.
    • Armament: Equipped with a 105mm turret from John Cockerill.
    • Firepower: Capable of firing advanced smart munitions and anti-tank guided missiles.
    • Mobility: Agile and manoeuvrable on steep slopes and riverine regions, designed to be amphibious.

    Engine and Power:

    • Initially planned with a German engine, but due to delays, currently powered by a Cummins engine assembled in India.
    • DRDO is concurrently working on developing a new power pack and a 1400 HP engine to enhance performance.

    Various Indigenous Tanks in the Indian Army

    Features
    Vijayanta (1965)
    • First indigenous main battle tank of the Indian Army
    • Based on a licensed design of the Vickers Mk.1 tank
    • Equipped with a 105mm rifled gun
    • Top speed of 52 km/h and range of 201 km
    • Crew of 4 (commander, gunner, loader, driver)
    • Upgrades included an improved fire control system, armour, and engine
    Arjun (2004)
    • India’s first fully Indigenous main battle tank developed by the Combat Vehicles Research and Development Establishment
    • Equipped with a 120mm rifled gun and has top speed of 67 km/h and range of 483 km
    • Crew of 4 (commander, gunner, loader, driver)
    • Features advanced fire control system, composite armor, and NBC protection
    • Arjun Mk-1A variant with improved capabilities entered service in 2022

     

  • India’s Fintech funding plummets amid global slowdown, shows report    

    Why in the news? 

    Despite achieving a significant milestone in H1 2024, the fintech sector has encountered notable funding difficulties.

    What is the Fintech Sector?

    • The fintech sector encompasses technologies and innovations that aim to compete with traditional financial methods in the delivery of financial services. This includes a wide range of applications like mobile banking, online payments, digital lending, and blockchain technology.

    Present Report Insights

    • Funding Decline: The Indian fintech sector recorded $795 million in funding in H1 2024, a decrease of 11% from H2 2023 and 59% from H1 2023.
    • Global Ranking: Despite the decline, the Indian fintech ecosystem ranked among the top three globally funded sectors alongside the US and UK in H1 2024.
    • Major Transactions: Only two funding rounds exceeded $100 million in 2024, with Perfios becoming the only unicorn. Bengaluru led the funding, followed by Mumbai and Pune.
    • Segment Performance: Alternative Lending, RegTech, and BankingTech were the top-performing segments, with Alternative Lending securing $646 million, making up 81% of the total funding.
    • Acquisitions and IPOs: There were six acquisitions and five IPOs in H1 2024, marking significant activity despite the overall funding challenges.

    Significance of Fintech Sector

    • Financial Inclusion: Fintech innovations enhance financial inclusion by providing access to financial services to unbanked and underbanked populations.
    • Economic Growth: The sector contributes significantly to economic growth by fostering innovation, creating jobs, and boosting consumer spending.
    • Efficiency and Transparency: Fintech solutions improve efficiency and transparency in financial transactions, reducing costs and fraud.
    • Support for Startups: The sector offers numerous opportunities for startups, driving entrepreneurship and competition.

    Challenges 

    • Data Security: Fintech companies must implement strong security measures to protect sensitive customer data from cyber-attacks and data breaches. For example, Acko, a leading Indian fintech startup, has faced issues with data breaches in the past, highlighting the importance of robust data security protocols in the industry.
    • Regulatory Compliance: The fintech industry is highly regulated, requiring companies to stay updated on the latest government policies and ensure compliance to avoid penalties. For example, the Reserve Bank of India (RBI) has issued guidelines to protect consumers from predatory lending practices by digital lenders, underscoring the need for fintech firms to navigate the evolving regulatory landscape.
    • Customer Acquisition and Retention: Attracting and retaining customers is critical for fintech firms. For example, BharatPe, a prominent Indian fintech company, has faced challenges in customer retention due to its focus on merchant acquisition.
    • Funding and Investment: Securing adequate funding and investments remains a challenge for many fintech startups.  For example, Paytm, one of India’s largest fintech companies, has faced scrutiny from investors due to its inability to achieve profitability

    How India Can Improve Its Fintech Sector

    • Supportive Regulatory Environment: Create a regulatory framework that encourages innovation while ensuring consumer protection and systemic stability, facilitating a balanced growth of the fintech ecosystem.
    • Infrastructure Development: Invest in digital infrastructure, such as high-speed internet and mobile connectivity, to support the widespread adoption and efficient functioning of fintech applications across the country.
    • Focus on Cybersecurity: Ensure robust cybersecurity measures to protect against fraud and cyber-attacks, building trust among users and maintaining the integrity of fintech services.
    Steps taken by the government: 

    • Regulatory Sandbox: The Securities and Exchange Board of India (SEBI) introduced a framework for regulatory sandbox in 2020 to allow fintech companies to experiment with new products and services in a controlled environment.
    • Digital Personal Data Protection Bill: Introduced in 2022, this bill aims to create a framework for the protection of personal data collected by fintech companies.
    • Guidelines on Digital Lending: In 2022, the Reserve Bank of India (RBI) issued guidelines to protect consumers from predatory lending practices by digital lenders.
    • Promoting Financial Inclusion: The Pradhan Mantri Jan Dhan Yojana (PMJDY) has helped in enrolling over 523.9 million beneficiaries for new bank accounts, enabling fintech startups to reach a large consumer base.
    • Aadhar and UPI: The unique biometric identification system Aadhar and the Unified Payments Interface (UPI) have improved transparency and delivery of financial service

    Conclusion: Fintech companies in India face challenges including data security, regulatory compliance, customer acquisition, and securing investments. Addressing these ensures sustainable growth and trust in a competitive market environment.

    Mains PYQ: 

    Q Has digital illiteracy, particularly in rural areas, coupled with a lack of Information and Communication Technology (ICT) accessibility hindered socio-economic development? Examine with justification. (UPSC IAS/2021)

  • Women get only 7% MSME credit: RBI ED  

    Why in the News?

    • The RBI has highlighted that low labour force participation among women is a significant barrier to financial inclusion and broader economic growth.
      • It pointed out that only 7% of the outstanding loans to micro, small, and medium enterprises (MSMEs) are to women-led businesses.

    Barriers to Financial Inclusion

    • Economic Participation: RBI emphasized that greater participation of women in economic activities is essential for financial inclusion and economic growth.
    • Participation Disparity: Official data shows female labor force participation at 32.8% in FY22, compared to over 77% for men.
    • Credit Disparity: Women-led businesses constitute nearly a fifth of MSMEs, yet they receive only 7% of the outstanding credit to this sector, highlighting a significant disparity.

    Efforts and Challenges in Financial Inclusion

    • Successes: RBI expressed satisfaction with access to financial services, citing the success of the Pradhan Mantri Jan-Dhan Yojana (PMJDY) scheme and social security transfers.
    • Addressing Demand-side Issues: While supply-side challenges have been addressed, demand-side issues still need attention.
    • Structural Barriers: Structural issues such as low levels of capital, labour participation, societal norms restricting women from inheriting property, and limited access to education and training impede women’s financial inclusion.

    Stereotyping and Behavioral Issues

    • Higher Risk Perception: Nigam noted that women borrowers often face stereotyping by financiers, being considered higher risks, leading to higher interest rates, greater insistence on collateral, or outright loan rejections.
    • Behavioural Challenges: He also mentioned behavioural issues among women borrowers, such as being more risk-averse, less confident in negotiating loan terms, and less likely to apply for new loans due to fear of rejection.

    Policy Moves: Priority Sector Lending and Financial Literacy Initiatives

    • Priority Sector Lending (PSL): The PSL mandate has become a viable business model for banks and micro-lenders, but demand-side constraints persist.
    • RBI Initiatives: To address these challenges, the RBI has initiated financial inclusion efforts, including opening 2,400 financial literacy centres at the block level in partnership with nonprofits and requiring lead banks to have a literacy centre in each district.

    Government Schemes:

    Stand Up India Scheme Mudra Yojana Scheme Annapurna Scheme
    Launched April 2016 April 2015 (under PMMY) –
    Objective To promote entrepreneurship among women and SC/ST To provide financial support to non-corporate, non-farm small/micro enterprises To support women entrepreneurs in the food catering business
    Eligibility Women entrepreneurs and SC/ST entrepreneurs above 18 years of age All non-farm enterprises, including women-owned businesses Women entrepreneurs planning to start or expand their food catering business
    Loan Amount INR 10 lakh to INR 1 crore Up to INR 10 lakh, categorized into three types:            

    1. Shishu: Up to INR 50,000           
    2. Kishor: INR 50,001 to INR 5 lakh            
    3. Tarun: INR 5,00,001 to INR 10 lakh
    		 Up to INR 50,000
    Purpose For setting up a greenfield enterprise in manufacturing, services, or trading sectors For business activities in manufacturing, processing, trading, or service sectors For starting or expanding the food catering business
    Repayment Period Up to 7 years with a maximum moratorium period of 18 months – 36 months, including a grace period of 1 month

    About SEHER Program (In News)

    • The Women Entrepreneurship Platform (WEP) and TransUnion CIBIL have launched SEHER, a pioneering credit education program aimed at empowering women entrepreneurs in India.
    • SEHER aims to facilitate their access to financial tools crucial for business growth and employment creation.

  • Indian Government Bonds in JP Morgan index: how much funds could flow into India?   

    Why in the news?

    JP Morgan is including Indian Government Bonds in its emerging markets bond indices starting June 28. This move is expected to attract significant foreign investment, boosting India’s bond market and economic stability.

    What would be India’s weight in the index?

    • India is poised to achieve a maximum weighting of 10% in the GBI-EM Global Diversified Index. This increased allocation is anticipated to attract greater investment from global investors into Indian debt, with analysts projecting monthly inflows of $2-3 billion.

    Benefits of Higher Inflows from the Inclusion of Indian Government Bonds in JP Morgan’s Emerging Markets Bond Indices

    • Increase in Foreign Exchange Reserves: The inflows from foreign investments will directly boost India’s foreign exchange reserves, providing a stronger buffer against external economic shocks.
    • Strengthening the Rupee: The surge in foreign investment will enhance demand for the rupee, leading to its appreciation and contributing to a more stable and robust currency.
    • Enhanced External Financial Management: With increased foreign exchange reserves, India will have greater flexibility and resilience in managing its external financial obligations and mitigating balance of payment issues.
    • Reduction in Borrowing Costs: Higher reserves and a stronger rupee can lead to improved credit ratings and reduced risk premiums, lowering borrowing costs for the government and corporates.
    • Promotion of Economic Confidence: The inflows signify international investor confidence in India’s economic prospects, boosting overall economic sentiment and encouraging further investments.

    What about the impact on inflation as RBI mops up the dollars and releases an equivalent amount in rupees?

    • Liquidity Injection: When the RBI mops up dollars from the market, it releases an equivalent amount of rupees into the financial system. This injection of liquidity can potentially increase the supply of money circulating in the economy.
    • Demand-Pull Inflation: Increased liquidity can stimulate demand for goods and services, potentially leading to demand-pull inflation if the production capacity of the economy does not keep pace with the increased demand.
    • Asset Price Inflation: The influx of liquidity can also inflate asset prices such as real estate and stocks, impacting affordability and potentially creating asset price inflation.
    • Exchange Rate Stability: On the flip side, mopping up dollars can help stabilize the exchange rate by reducing downward pressure on the rupee due to excessive inflows.
    • RBI’s Policy Response: The RBI has various monetary policy tools, such as open market operations, repo rates, and reserve requirements, to manage liquidity and inflationary pressures arising from such inflows. It may use these tools to absorb excess liquidity and stabilize inflation.

    Way forward: 

    • Prudent Monetary Policy Management: The RBI should continue to employ effective monetary policy measures, such as open market operations and repo rate adjustments, to carefully manage liquidity and inflationary pressures stemming from increased foreign inflows.
    • Enhanced Economic Diversification: India should use the influx of foreign investment to diversify its economy further, focusing on infrastructure development, technological advancements, and sustainable growth initiatives to bolster long-term economic resilience and stability.

  • The shape of a five-year climate agenda for India

    Why in the news? 

    The new government’s climate actions will impact all sectors, shaping India’s sustainable economic path, global leadership, and fight for climate finance and justice.

    Initiatives Taken by the Indian Government in the Last Decade and Their Significant Results

    • International Solar Alliance (ISA): Promotes the widespread adoption of solar energy, enhancing global cooperation in renewable energy.
    • Coalition for Disaster Resilient Infrastructure (CDRI): Focuses on building resilient infrastructure to withstand climate-induced disasters.
    •  Net-Zero by 2070: India’s commitment to achieve net-zero emissions by 2070 marks a significant shift towards absolute emission reductions.
    • Enhanced Nationally Determined Contributions (NDCs): Setting ambitious targets for reducing emissions intensity and increasing renewable energy capacity.
    • Indian Emissions Carbon Trading Scheme: Establishing a carbon trading system to incentivize emission reductions and support sustainable economic growth.
    • Significant Growth in Renewable Energy Capacity: Rapid expansion in solar and wind energy installations, contributing to India’s international non-fossil fuel energy targets.
    • Green Development Pact under G-20 Presidency: Integrating green development principles into global economic practices, showcasing India’s leadership in sustainable development.

    How India can enhance it’s Global negotiations wrt Climate change? 

    • Hosting International Climate Summits: India should aim to host a major international climate summit like the United Nations Conference of Parties (COP) in 2028. This would provide a platform to showcase its climate leadership and set ambitious global climate agendas. Successful hosting, akin to its G-20 Presidency, would strengthen India’s influence in global climate policy.
    • Advocacy and Consensus Building: India should start early to build consensus on critical climate issues, such as ending new investments in oil and gas post-2030 and securing significant commitments for adaptation finance. Proactively engaging in dialogues, forming alliances, and addressing concerns of other nations will help India lead negotiations and drive meaningful outcomes.
    • Promoting Equity and Climate Finance: India should continue to emphasize equity in climate action and finance in international forums. Advocating for fair treatment of developing countries and pushing for enhanced climate finance mechanisms will strengthen India’s position as a leader of the Global South.

    Role of Federal Entities in Enhancing Climate Action

    • Collaboration on Long-Term Climate Strategies: Federal entities can work with state governments to develop and implement long-term climate and energy models. Examples include supporting states like Tamil Nadu and Bihar in crafting their net-zero plans.
    • Enhanced Coordination and Policy Alignment: Forming a Centre-State coordination group can ensure better synchronization of climate actions across states. This group can facilitate regular communication and policy alignment while respecting the autonomy of each state.
    • Financial Incentives through the Sixteenth Finance Commission: Federal entities can use financial mechanisms like the Finance Commission to incentivize states for their climate initiatives. This can include grants or additional funding for states that demonstrate significant progress in climate action.
    • Integration of Scientific Capabilities in Policymaking: Encouraging states to incorporate scientific modelling and data analysis into their climate policies. Federal support can enhance the technical capabilities of states, ensuring data-driven and effective climate strategies.
    • Consistent and Accurate Climate Data Management: Developing a unified MRV architecture at the state level to standardize data collection and reporting. This system can help track progress, ensure accountability, and facilitate better policy adjustments based on reliable data.

    The Indian government has taken several initiatives to address climate change, but their effectiveness is still being evaluated:

    • National Action Plan on Climate Change (NAPCC): Launched in 2008, the NAPCC identified eight national missions to promote understanding of climate change, adaptation and mitigation, energy efficiency, and natural resource conservation. While these missions have led to some progress, such as the ambitious targets set under the National Solar Mission, their overall impact is still being assessed.
    • State Action Plans on Climate Change (SAPCCs): Under the NAPCC, states are required to develop their own action plans. As of 2022, 33 states and union territories have prepared their SAPCCs. However, the implementation and monitoring of these plans remain a challenge.
    • Climate change research and knowledge networks: The government has supported various research initiatives and knowledge networks to enhance understanding of climate change impacts and responses. These include the National Network Programmes on Climate Change Modelling, Aerosols, and Coastal Vulnerability. While these networks have generated valuable knowledge, their ability to inform policy and action is still being evaluated

    Conclusion: India should expand its climate targets beyond the power sector to include other key areas such as transportation, industry, and agriculture. Clear and ambitious targets for zero-carbon two- and four-wheelers, as well as other sectors, will drive comprehensive decarbonization efforts.

     

    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)? (UPSC IAS/2021)

  • Reviving Gharials in Kaziranga

    Why in the News?

    In Kaziranga National Park and Tiger Reserve, a lone female gharial has emerged as a significant presence, marking a potential revival for the species in the Brahmaputra River.

    About Kaziranga National Park and Tiger Reserve:

    • Located in the state of Assam, Kaziranga is renowned for its biodiversity and conservation efforts.
    • Established in 1905 as a reserve forest and declared a national park in 1974.
    • Designated as a UNESCO World Heritage Site in 1985 for its unique natural environment and successful conservation of the Great One-Horned Rhinoceros.
    • Kaziranga is home to the highest density of tigers among protected areas in the world.
    • It hosts two-thirds of the world’s Great One-Horned Rhinoceros population, a significant conservation success story.
    • The park spans approximately 430 square kilometers (166 square miles) of grasslands, wetlands, and forests.

    One-Horned Rhinoceros:

    • One–Horned Rhinos: IUCN Red List Status: Vulnerable; CITES: Appendix I ; WPA, 1972: Schedule I.
    • Mainly found in Assam, West Bengal.
    • Assam hosts about 2,640 rhinos across Pobitora WLS, Rajiv Gandhi Orang NP, Kaziranga NP, and Manas NP.

    About Gharial

    • The Gharial is a fish-eating crocodile native to the Indian subcontinent.
    • They are a crucial indicator of clean river water.
    • It is also found in the rainforest biome of Mahanadi in Satkosia Gorge Sanctuary, Odisha.
    • Gharials are ‘Critically Endangered’ in the IUCN Red List of Species.
    • The species is also listed under Schedule I of the Wild Life (Protection) Act, 1972.
    • National Chambal Sanctuary along the river Chambal in Madhya Pradesh is the biggest protected area of the species.

    Recent findings of Gharial in Kaziranga

    • Gharials, distinguished by their long, narrow snouts, were believed to have disappeared from the Brahmaputra by the 1950s.
    • The female gharial, initially spotted in 2021, has grown to nearly adult size, providing hope for their reintroduction into the ecosystem.

    PYQ:

    [2013] Consider the following fauna of India :

    1. Gharial

    2. Leatherback turtle

    3. Swamp deer

    Which of the above is/are endangered?

    (a) 1 and 2 only

    (b) 3 only

    (c) 1, 2 and 3

    (d) None