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GS Paper: GS3

  • Rediscovery of Namdapha Flying Squirrel in Arunachal Pradesh

     

    Namdapha Flying Squirrel

    Central Idea

    • The Namdapha flying squirrel, missing for 42 years, has been sighted again in Arunachal Pradesh.
    • This rare species was last documented in 1981 in the Namdapha Tiger Reserve.

    Namdapha Flying Squirrel

    Details
    Species Name Namdapha Flying Squirrel (Biswamoyopterus biswasi)
    Type Arboreal, nocturnal flying squirrel
    Endemic Region Arunachal Pradesh, Northeast India
    Habitat Tall Mesua ferrea jungles, often on hill slopes in the catchment area of the Dihing River, northeastern India
    First Discovery Known from a single specimen collected in Namdapha National Park in 1981
    Physical Description – Reddish, grizzled fur with white above

    – Pale grey crown, orangish patagium, white underparts
    Genus Significance Was the sole member of its genus until the discovery of other species like Biswamoyopterus laoensis (2013) and Biswamoyopterus gaoligongensis (2018)
    Conservation Status IUCN Status: Critically Endangered

    Wildlife Protection Act Status: Schedule I
    Threats Threatened by poaching and possibly habitat destruction

  • [pib] RAMP Programme

    Central Idea

    • Union Minister for MSME launched three sub-schemes under the RAMP (Reforms and Acceleration in MSME Performance) programme.

    About RAMP Programme

    Details
    About World Bank assisted Central Sector Scheme.
    Launch FY 2022-23
    Supported By Ministry of Micro, Small and Medium Enterprises (MoMSME), Government of India.
    Primary Aim – Improve access to market and credit for MSMEs.

    – Strengthen institutions and governance.

    – Enhance Centre-State linkages and partnerships.

    – Address delayed payments and promote greening of MSMEs.
    Key Components – Preparation of Strategic Investment Plans (SIPs) by states/UTs.

    – Apex National MSME Council for monitoring and policy overview.

    Details of the Launched Schemes

    MSME Green Investment and Financing for Transformation Scheme (MSME GIFT Scheme) MSE Scheme for Promotion and Investment in Circular Economy (MSE SPICE Scheme) MSE Scheme on Online Dispute Resolution for Delayed Payments
    Objective To assist MSMEs in adopting green technology. The government’s first scheme to support circular economy projects in the MSME sector. Combines legal support with IT tools and Artificial Intelligence to address delayed payments issues.
    Support Mechanisms Offers interest subvention and credit guarantee support. Aims to achieve zero emissions by 2070 through credit subsidy. Focused on aiding Micro and Small Enterprises.
    Unique Features – Encourages eco-friendly practices in MSMEs.

    – Financial incentives for green technology adoption.

    		 – Promotes sustainable and eco-friendly business models.

    – Supports long-term environmental goals.

    		 – Innovative use of technology for dispute resolution.

    – Aims to streamline payment processes and reduce conflicts.

  • Call for Reform in Sovereign Credit Rating Process  

    Central Idea

    • India’s Chief Economic Adviser, V Anantha Nageswaran, emphasizes the need for reform in the sovereign credit rating process.
    • The aim is to accurately reflect the default risk of developing economies and reduce their funding costs.

    What are Sovereign Credit Ratings?

    • A sovereign credit rating is a measure of a country’s creditworthiness, or its ability to meet its financial obligations.
    • It is an assessment of the credit risk associated with a country’s bonds or other debt securities.
    • The rating is assigned by credit rating agencies such as Standard & Poor’s, Moody’s, and Fitch Ratings.
    • S&P and Fitch rate India ‘BBB-‘ and Moody’s ‘Baa3’, all indicative of the lowest possible investment grade, but with a stable outlook.

    India’s Pursuit of a Credit Rating Upgrade

    • Current Rating: India is at the lowest possible investment grade but is seeking an upgrade due to improved economic metrics post-pandemic.
    • Government Engagement: Continuous efforts are being made to engage with global credit rating agencies for an improved rating.

    Challenges in the Current Rating Methodology

    • Opacity and Impact: CEA points out the opaqueness in rating methodologies and the difficulty in quantifying the impact of qualitative factors.
    • Bandwagon Effects and Biases: The significant presence of qualitative factors leads to cognitive biases and concerns about the credibility of ratings.

    India’s Engagement with Rating Agencies

    • Meetings with Top Agencies: Finance ministry officials have met with representatives from Fitch Ratings, Moody’s Investors Service, and S&P Global Ratings.
    • Current Ratings: While S&P and Fitch rate India at BBB, Moody’s rates it at Baa3 with a stable outlook.

    Parameters and Issues in Sovereign Rating

    • Typical Parameters: Agencies consider factors like growth rate, inflation, government debt, and political stability.
    • Qualitative Component: Over half the ratings are determined by qualitative factors, often non-transparent and perception-based.
    • Dominance in Ratings: Institutional Quality, often measured by World Bank’s Worldwide Governance Indicators (WGIs), is a significant determinant for developing economies.
    • Issues with WGIs: These metrics are non-transparent, perception-based, and may not represent a sovereign’s willingness to pay.

    CEA’s Recommendations  

    • Need for Transparency: Sovereigns are expected to be transparent; similarly, rating agencies should make their processes clear and avoid untenable judgments.
    • Potential Benefits: Enhanced transparency could lead to more reliance on hard data and possible credit rating upgrades for many sovereigns.
    • Access to Private Capital: Improved ratings can help developing countries access private capital crucial for addressing global challenges like climate change.
    • India’s Export Targets: With initiatives like production-linked incentives and Make in India, India aims for a $2 trillion export target by 2030.

    Conclusion

    • Advocacy for Change: Nageswaran’s comments highlight the need for a more equitable and transparent sovereign credit rating process.
    • Broader Implications: Such reforms could not only benefit developing economies like India by reducing funding costs but also contribute to a more accurate and fair global financial system.

  • SAMAR Air Defence System

    samar

    Central Idea

    • In a major success for its in-house design and development efforts, the Indian Air Force has successfully testfired its SAMAR air defence missile system.

    About SAMAR Air Defence System

    Details
    Full Name Surface to Air Missile for Assured Retaliation (SAMAR)
    Type Short-range air-defence system
    Developed By A unit under the IAF’s Maintenance Command
    Range 10–12 km
    Target Low-flying aerial targets
    Speed Missiles operating at a speed range of 2 to 2.5 Mach
    Key Features – Uses existing inventory of Vympel R-73E missiles

    – Twin-turret launch platform

    – Capable of single and salvo modes
    Role in Defence Supplementing IAF’s Akash and SPYDER systems, replacing older systems like Pechora and OSA-AK
    Deployment Not specified

    https://www.hindustantimes.com/videos/world-news/indian-missile-shield-against-potential-threats-from-pak-china-iaf-samar-system-in-action-101702815648038.html

  • India’s defence budgeting and the point of deterrence

    Key Highlights:

    • The Medium Multi-Role Combat Aircraft (MMRCA) program faces challenges, with the purchase of only 36 Rafale jets instead of the required 126, leading to a depleted squadron strength in the Indian Air Force (IAF).
    • The article raises concerns about the impact of budgetary constraints on defense preparedness, especially with India in election mode and potential cuts in the defense budget.
    • Emphasis is placed on the need for a judicious assessment of defense planning and budgeting to address threats on the northern borders and enhance sea power against China.

    Key Challenges:

    • The persistent issue of budget constraints impacting defense procurement and preparedness.
    • The gap between the required and actual squadron strength in the Indian Air Force.
    • Concerns about potential cuts in the defense budget amid electoral priorities.

    Key Terms and Phrases:

    • Medium Multi-Role Combat Aircraft (MMRCA) program
    • Squadron strength
    • Budget constraints
    • Defense preparedness
    • Northern borders
    • Sea power
    • Atmanirbhar Bharat
    • Innovations For Defence Excellence (iDEX)
    • Ordnance Factory Board
    • Negative lists for imports

    Key Quotes and Statements:

    • “Mother of all procurements” – Referring to the MMRCA program with a cost of around $10 billion in 2007.
    • “We will fight with what we have” – General V.P. Malik’s quote during the Kargil conflict.
    • “You go to war with the industrial base you have, not the industrial base you want” – From the War on the Rocks article, emphasizing the importance of the existing industrial base.

    Key Examples and References:

    • The purchase of 36 Rafale jets instead of the required 126 under the MMRCA program.
    • The deficit in squadron strength in the Indian Air Force, currently at an abysmal 32.
    • The Global Innovation Index 2022 highlighting India’s low research and development expenditure.

    Key Facts and Data:

    • India’s defense expenditure as a percentage of central government expenditure has declined from around 16.4% in 2012-13 to 13.3% in 2022-23.
    • The Ministry of Defence requested ₹1,76,346 crore for capital acquisitions in 2023-24, but only ₹1,62,600 crore was allotted, creating a deficit of ₹13,746 crore.
    • China spent $421 billion on research and development in 2022, which is 2.54% of its GDP.

    Critical Analysis:

    • The article underscores the challenges of balancing electoral imperatives and national security priorities in defense budget allocation.
    • It highlights the necessity for a smart balance between imports and indigenous accretions for technological modernization.
    • The concerns raised about the long gestation period for indigenization efforts and the need for sustained momentum in policy-making.

    Way Forward:

    • Emphasizes the importance of bipartisan statesmanship to make defense budgeting election-proof.
    • Calls for a continuum in policy-making and adequate defense budgeting to address national security imperatives.
    • Stresses the need for sustained momentum in the Atmanirbhar Bharat drive and other indigenization efforts.

  • India Tops Global Remittance Inflows in 2023: World Bank Report

    remittance

    Central Idea

    • In 2023, India witnessed the highest remittance inflows globally, amounting to USD 125 billion.
    • The surge was influenced by various factors, including India’s currency agreement with the UAE.

    World Bank’s Analysis on Remittance Growth

    • Report Findings: The World Bank’s report indicates a slowdown in remittance growth in India to 12.4% in 2023, down from 24.4% in 2022.
    • Increased Share in South Asia: India’s share in South Asian remittances is expected to rise to 66% in 2023 from 63% in 2022.

    Global Remittance Scenario

    • Other Leading Countries: Following India, the top remittance-receiving countries are Mexico (USD 67 billion), China (USD 50 billion), the Philippines (USD 40 billion), and Egypt (USD 24 billion).
    • Significance in GDP: In economies like Tajikistan, Tonga, Samoa, Lebanon, and Nicaragua, remittances form a substantial part of the GDP, highlighting their critical economic role.

    Contributing Factors for India

    • Key Drivers: Declining inflation and robust labor markets in high-income countries contributed to increased remittances.
    • Major Sources: Significant remittance flows came from the US, the UK, and Singapore, as well as from the GCC, particularly the UAE.
    • UAE’s Role: The UAE is the second-largest source of remittances to India, accounting for 18% of the total.

    India-UAE Currency Agreement Impact

    • February 2023 Agreement: The agreement to promote local currency use in cross-border transactions and interlink payment systems has boosted remittances.
    • Dirhams and Rupees Usage: The use of dirhams and rupees in transactions is expected to channel more remittances through formal channels.

    Global Remittance Trends

    • Growth in Low- and Middle-Income Countries: Remittances to these countries grew by an estimated 3.8% in 2023.
    • Future Concerns: There is a risk of real income decline for migrants in 2024 due to global inflation and low growth prospects.

  • RBI tightens norms for Alternative Investment Funds (AIFs)

    Central Idea

    • The Reserve Bank of India (RBI) has introduced tighter norms for Regulated Entities (REs) to curb the practice of evergreening loans through investments in Alternative Investment Funds (AIFs).
    • The norms apply to all banks, all India Financial Institutions, and Non-Banking Financial Companies (NBFCs), including Housing Finance Companies.

    About Alternative Investment Funds (AIFs)

    Details
    Definition AIFs are privately pooled investment vehicles established in India, collecting funds from sophisticated investors for investing.
    Regulation Governed by the SEBI (Alternative Investment Funds) Regulations, 2012.
    Formation Can be formed as a company, Limited Liability Partnership (LLP), trust, etc.
    Investor Profile Aimed at high rollers, including domestic and foreign investors in India. Generally favored by institutions and high net worth individuals due to high investment amounts.
    Categories of AIFs Category I: Invests in start-ups, early-stage ventures, SMEs, etc. Includes venture capital funds, angel funds, etc.

    Category II: Includes funds not in Category I/III, like real estate funds, debt funds, etc. No leverage or borrowing except for operational requirements.

    Category III: Employs complex trading strategies, may use leverage. Includes hedge funds, PIPE Funds, etc.
    Fund Structure Category I and II AIFs must be close-ended and have a minimum tenure of three years.

    Category III AIFs can be open-ended or close-ended.

    Background and Regulatory Concerns

    • Investment Practices: REs often invest in units of AIFs as part of their regular investment operations.
    • RBI’s Observations: The RBI noted certain transactions involving AIFs that substituted direct loan exposure with indirect exposure, raising regulatory concerns.

    RBI’s New Guidelines

    • Restriction on Investments: REs are prohibited from investing in any AIF scheme that indirectly or directly has downstream investments in a debtor company of the RE.
    • Mandatory Liquidation: If an AIF scheme, where an RE is already an investor, makes a downstream investment in a debtor company, the RE must liquidate its investment in the scheme within 30 days from the date of such investment by the AIF.
    • Provision for Existing Investments: For existing investments in such schemes, REs have 30 days from the issuance of the circular to liquidate. Failure to do so requires them to make a 100% provision on these investments.
    • Capital Fund Deductions: Investments by REs in subordinated units of any AIF scheme with a ‘priority distribution model’ are subject to full deduction from the RE’s capital funds.

  • Fewer migratory birds in Sultanpur National Park this season

    Sultanpur National Park

    Central Idea

    • The Sultanpur National Park has observed a 20-30% decrease in the number of migratory birds this season, as reported by forest department officials.
    • Estimates show a reduction in bird numbers, with current figures ranging between 8,000 to 10,000, compared to the expected 15,000.

    About Sultanpur National Park

    • Sultanpur NP is located at Sultanpur village on Gurugram-Jhajjar highway, 15 km from Gurugram, Haryana and 50 km from Delhi.
    • It was a bird sanctuary, ideal for birding and bird lookers. Its area covers approximately 142.52 hectares.
    • Migratory birds start arriving in the park in September. Birds use the park as a resting place till the following March-April.
    • During summer and monsoon months the park is inhabited by many local bird species.
    • In April 1971, the Sultanpur Jheel inside the park (an area of 1.21 sq. km.) was accorded Sanctuary status under section 8 of the Punjab Wildlife Preservation Act of 1959.
    • The status of the park was upgraded to National Park in July 1991 under the Wildlife (Protection) Act, 1972.

    Significance of the NP

    • Spanning 1.42 sq km, it is recognized as a national park, wildlife sanctuary, and a Ramsar site since 2021.
    • It is one of the few NPs in the small state of Haryana.
    • Another NP in Haryana is Kalesar National Park.

    Important Fauna at the Park

    • Mammals: Blackbuck, Nilgai, Hog deer, Sambar, Leopard etc.
    • Birds: Siberian Cranes, Greater Flamingo, Demoiselle Crane etc.

    Annual Migratory Patterns

    • Typical Arrival: Migratory birds usually begin arriving in the first week of October.
    • Annual Visitation: By the end of January each year, around 22,000 birds visit Sultanpur Park. However, this year’s numbers are anticipated to be much lower.

    Possible Reasons for Reduced Migration

    • Temperature Changes: Wildlife experts suggests that milder winters in regions like Siberia, Central Asia, and Europe might be influencing migration patterns.
    • Food Availability: If migratory birds continue to find sufficient food in their native regions, they may not feel compelled to migrate.
    • Local Climate Impact: The local temperature at Sultanpur Park has not dropped significantly to align with the birds’ migratory patterns.
    • Effect of Smog: Smog and air pollution could also be contributing factors to the altered migratory behavior.

  • India’s ethanol conundrum

    Resolving India's Ethanol Conundrum - Sugar Asia Magazine

    Central idea 

    The article discusses India’s challenges in achieving its 20% ethanol blending target by 2025, focusing on the transition to grains-based ethanol and potential impacts on food prices. It highlights the trade-offs between renewable energy goals and the risk of uncontrollable food inflation, urging a reconsideration of targets and exploration of alternative energy sources.

    Key Highlights:

    • Renewable Energy Pledge: Over 100 countries commit to tripling global renewable energy capacity by 2030 at COP28 in Dubai.
    • Ethanol Blending in India: Ethanol blended petrol (EBP) in India rose from 1.6% (2013-14) to 11.8% (2022-23), aiming for a 20% target by 2025.
    • Challenges with Ethanol Target: Low sugar stocks and potential sugarcane production shortfall pose challenges to India’s 20% ethanol blending target by 2025.
    • Shift to Grains-based Ethanol: Government explores a transition to grains-based ethanol, emphasizing maize procurement for ethanol distilleries.
    • National Agricultural Cooperative Involvement: Authorization of NAFED and NCCF to procure maize signals a focus on an organized maize-feed supply chain for ethanol.

    Key Challenges:

    • Low Sugar Stocks: Current low sugar stocks impact ethanol production from sugarcane, necessitating a shift to alternative feedstocks like maize.
    • Sugarcane Shortfall: Impending shortfall in sugarcane production poses a challenge to meeting ethanol blending targets.
    • Food-Fuel Trade-off: Transition to grains-based ethanol raises concerns about diverting grains from food production, potentially impacting food prices.
    • Ethanol Price Dynamics: Link between ethanol, crude oil, and corn prices can create market volatility, affecting global food prices.

    Key Terms:

    • Ethanol Blended Petrol (EBP): A fuel blend containing a certain percentage of ethanol mixed with petrol, aimed at reducing fossil fuel usage.
    • National Agricultural Cooperative Marketing Federation of India (NAFED): Cooperative organization involved in agricultural marketing and procurement.
    • Food-Fuel Conflict: The trade-off between using agricultural products for food or fuel production, influencing global food prices.
    • Differential Pricing: Varied pricing mechanisms to incentivize specific inputs or outputs in the production process.

    Key Phrases:

    • Tightrope Walk: India faces a tightrope walk in achieving its ethanol blending target amidst challenges in feedstock availability.
    • Food Inflation Spectre: The transition to grains-based ethanol raises concerns about potential uncontrollable food inflation.

    Key Quotes:

    • “The recent authorization of NAFED and NCCF to procure maize for supplying ethanol distilleries indicates emphasis on this transition…”
    • “By adopting a transition to grains-based ethanol to fast-track the 2025 target achievement, is the government hurtling towards a looming spectre of uncontrollable food inflation?”

    Key Statements:

    • The government considers a major transition towards grains-based ethanol to meet the 20% blending target by 2025.
    • The December 7, 2023, order bans the use of cane juice for ethanol production, addressing challenges related to reduced sugar stocks.

    Critical Analysis:

    • The article critically evaluates the challenges and trade-offs associated with India’s ethanol blending targets, considering the impact on food prices and market dynamics.
    • It questions the potential risks of transitioning to grains-based ethanol, emphasizing the need for a balanced approach to avoid food inflation.

    Way Forward:

    • Reconsidering the ethanol blending target and staggering it to mitigate contradictions is suggested.
    • Advocates for increased investment in public infrastructure, urban design, and renewable energy sources like solar power as alternatives to ethanol dependence.

  • Tax ‘HFSS’ foods, view it as a public health imperative

    LocalCircles Survey: 79% citizens in favour of tax on high fat, sugar and salty (HFSS) foods

    Central idea 

    The article advocates for the immediate implementation of High Fat Sugar Salt (HFSS) taxes in India to tackle health risks, emphasizing their role in encouraging healthier choices, driving industry reformulation, and reducing the economic strain on healthcare. It positions HFSS taxation as a vital public health imperative to address market failures and promote a sustainable food system.

    Key Highlights:

    • Rising Health Risks: High Fat Sugar Salt (HFSS) foods contribute significantly to health issues like obesity, diabetes, and high blood pressure. The global burden of Non-Communicable Diseases (NCDs) in India has surged from 38% in 1990 to 65% in 2019, with 1.2 million deaths annually attributed to dietary risks.
    • Economic Impact: Overweight and obesity’s economic impact in India was estimated at $23 billion in 2017, expected to rise to $480 billion by 2060. The ultra-processed food sector in India grew at a compounded annual growth rate of 13.4% between 2011 and 2021.
    • Global Trend of Taxation: Many countries, including Denmark, France, Hungary, Mexico, South Africa, the UK, and the US, have implemented taxes on HFSS foods to combat obesity. Colombia’s recent “junk food law” serves as a model for other nations.
    • Market Failures and Externalities: The consumption of HFSS foods leads to negative externalities in the form of increased healthcare expenditures, imposing societal costs. Taxes are proposed as a targeted tool to curb detrimental consumption habits, reducing societal burdens.
    • Need for HFSS Tax: The article argues for taxing HFSS due to market failures, negative externalities, and internalities. Unlike sin goods, HFSS taxation aims to incentivize the industry to reformulate products for healthier alternatives and prompt consumers to choose a healthier diet.
    • Designing Effective HFSS Tax: Properly designed HFSS taxes can be non-regressive and fiscally neutral. Differentiated tax rates based on nutritional quality can incentivize product reformulations. The goal is to make healthier alternatives more affordable and accessible.
    • Inconsistencies in GST Rates: Current GST rates on ultra-processed foods do not align with nutritional content. Uniform tax rates overlook variations in sugar, salt, and nutritional impact, limiting their impact on altering consumption patterns.
    • Public Health Imperative: HFSS taxation is positioned not just as an economic or fiscal policy concern but as a public health imperative. Effective taxes, combined with nutrition literacy and food labeling, can combat overweight and obesity, fostering a more sustainable and equitable food system.

    Key Challenges:

    • Resistance from Industry: The food industry may resist HFSS taxes, viewing them as detrimental to profits. Balancing industry interests with public health objectives poses a challenge.
    • Designing Optimal Tax Rates: Determining the right tax rates that effectively deter HFSS consumption without being regressive requires careful consideration and analysis.
    • Consumer Awareness: Ensuring that consumers are aware of the health implications of HFSS foods and understand the purpose of taxes is crucial for the success of such interventions.

    Key Terms/Phrases:

    • HFSS Foods: High Fat Sugar Salt foods, known for their negative impact on health.
    • Negative Externalities: Detrimental effects of HFSS consumption on society, leading to increased healthcare costs.
    • Internalities: Harm caused to individuals due to limited understanding influenced by marketing.
    • Market Failures: Situations where the market does not efficiently allocate resources, leading to suboptimal outcomes.
    • Non-regressive Tax: A tax that does not disproportionately burden lower-income individuals.
    • Nutritional Quality: The nutritional content and health impact of food products.

    Key Quotes:

    • “HFSS taxation in India should not be merely seen as an economic or fiscal policy concern but it deserves to be considered a public health imperative.”
    • “Effectively designed taxes can reap multiple benefits — they can act as a deterrent to consuming HFSS; promote healthier food choices; prompt manufacturers to reformulate foods; improve public health outcomes…”

    Key Statements:

    • “The imperative for taxing HFSS arises from significant market failures associated with their consumption, contributing to negative externalities and internalities.”
    • “HFSS taxation in India should be both non-regressive and fiscally neutral, creating a level-playing field between HFSS and their healthier alternatives.”

    Critical Analysis:

    The article provides a comprehensive overview of the health and economic challenges associated with HFSS consumption in India. It effectively argues for the implementation of HFSS taxes as a public health imperative and highlights the need for well-designed, non-regressive tax policies. The emphasis on creating a fiscal environment that incentivizes healthier choices and product reformulation adds depth to the analysis.

    Way Forward:

    • Collaborative Approach: Engage stakeholders, including the food industry, health professionals, and policymakers, to collaboratively design and implement effective HFSS tax policies.
    • Continuous Evaluation: Regularly assess the impact of HFSS taxes on consumption patterns, health outcomes, and industry practices, making adjustments as needed.
    • Public Awareness Campaigns: Launch campaigns to educate the public about the health risks associated with HFSS foods and the purpose of taxation, fostering informed choices.
    • International Best Practices: Learn from and adapt successful strategies from countries that have effectively implemented HFSS taxes to address obesity and improve public health.
    • Research and Innovation: Encourage research on the nutritional content of food products and innovative ways to reformulate HFSS items for healthier alternatives.