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  • Economics Nobel for work on Role of Banks during Financial Crisis

    nobel

    The Nobel Prize for Economics in 2022 was awarded to Ben S Bernanke, Douglas W Diamond and Philip H Dybvig for research on banks and financial crises.

    Do you know?

    • The economics prize is not one of the original five awards created in the 1895 will of industrialist and dynamite inventor Alfred Nobel.
    • It was established by Sweden’s central bank and first awarded in 1969, its full and formal name being the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

    Why was the Nobel given to these three scholars?

    • The research of the three laureates has helped us understand the role of banks in the economy, particularly during financial crises.
    • Their research shows why avoiding a bank collapse is very important for the economy.

    Which bank did these scholars study?

    • In 1656, the then-king of Sweden approved the foundation of Sweden’s first bank, the Stockholms Banco, which also became the first bank to issue banknotes in Europe.
    • However, Banco over-issued notes leading to its liquidation in 1667.
    • In 1668, the Swedish Nobles decided to found the Riksens Standers Bank, which was later renamed as Sveriges Riksbank in 1867.
    • In 1968, on its tercentenary, the Sveriges Riksbank decided to award the economics prize in memory of Alfred Nobel.
    • The award itself was the result of an ongoing crisis and conflict between the central bank and the government.
    • The purpose of mentioning this history is to highlight how failures are central to banks.
    • Banks have failed ever since they were created.

    What does Ben Bernanke say about banking crises?

    • In the 1930s, the world economy faced a serious economic contraction called the Great Depression.
    • For many years, it was thought the Great Depression was due to a lack of policy stimulus.
    • The economist John Maynard Keynes had argued that monetary policy was ineffective in such crises as interest rates could not go lower than zero percent, and one needed a large fiscal stimulus.
    • Milton Friedman argued that central banks could create money even when interest rates were zero by buying assets, thereby increasing the money supply.

    Reasons behind the crisis

    • Bernanke said that while a lack of policy stimulus explains the contraction, it does not explain why the Great Depression continued for such a long time.
    • The economic contraction had led to a large number of bank failures.
    • His argument was that it was this large-scale failure of banks which prolonged the crisis.
    • Banks were not in a position to channel loans towards productive activities, leading to the crisis becoming more severe in the US.

    How is bank failure attributed to the financial crisis?

    • Banks have special insights into companies, and when a bank fails, all this information is lost.
    • A failed banking system takes many years to repair and the economy performs very poorly in this period.
    • This explains why the Great Depression became such a prolonged crisis.
    • Bernanke drew his analysis from a deep understanding of economic and monetary history.
    • This prize also shows the importance of history, which is becoming rarer in economic research.

    What are Diamond’s and Dybvig’s insights into banking crises?

    • Bernanke explained what happens when banks fail. But Diamond and Dybvig explained why banks fail.
    • In joint research, hence called the Diamond-Dybvig model, they explain that banks fail when depositors rush for their money.
    • In their model, banks are seen as financial intermediaries that intermediate funds from depositors to loan seekers.
    • The deposits are for shorter durations whereas loans are typically given for longer durations (technically called the maturity transformation function of banks).
    • The banks are seen as entities that help savers meet investors, and by channeling loans towards good projects, banks help an economy grow.

    How bank failure is related to depositors?

    • Banks are prone to runs by depositors.
    • In their research, they show that once there is a rumor about a bank’s weakness, it spreads like wildfire, causing a bank run, when depositors literally run for their funds to the bank.
    • As banks lend most of the funds towards long-term projects, the loans cannot be recalled easily to repay the depositors.
    • If the rumor is not addressed, it leads to eventual bank failure.

    Is it Nobel-worthy?

    • While many know this is basically how banks fail, the prize-winning duo formalized the model.
    • They also presented a solution for bank failures via deposit insurance, which was also introduced before their research.
    • In 1933, the US was the first country to adopt deposit insurance, followed by India in 1962.
    • Both adopted deposit insurance after a significant number of banks failed in these countries.

    What does the prize mean for Indian banking?

    • India has been facing sporadic banking crises from 2013 where few banks failed.
    • Bernanke’s research shows how once a crisis starts, it can prolong not just banking problems but also lower economic growth over time.
    • Diamond-Dybvig’s research shows how the weak performance of individual banks like the Punjab and Maharashtra Urban Cooperative Bank and Yes Bank lead to runs.
    • Such banks need to be bailed out by the government.
    • There was also the case of ICICI bank which faced a run in 2008 based on rumours, but the run was stalled by the central bank by issuing a notification assuring the sound health of the bank.

    You must know this!

    • Economist and former Reserve Bank of India (RBI) chief Raghuram Rajan seemed to have missed out on the award.
    • He is a leading scholar on banking and has written many research papers with this year’s awardee, Douglass Diamond.
    • The Nobel committee has cited 12 of his research papers, which are a significant contribution to the field of banking.

     

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  • India’s Space economy

    India’s space economy is likely to be worth nearly $13 billion by 2025, with the satellite launch services segment set to witness the fastest growth due to increasing private participation.

    About the report

    • The report is released by the Indian Space Association (ISpA) and Ernst & Young.
    • It says that the growing demand for smaller satellites is set to boost satellite manufacturing in the country.
    • It will attract global start-ups in the sector to help incubate space tech companies to India.

    Key highlights

    • India’s space economy was pegged at $9.6 billion in 2020 and is expected to touch $12.8 billion by 2025.
    • In dollar terms, the satellite services and applications segment would be the largest with a turnover of $4.6 billion by 2025, followed by the ground segment at $4 billion.
    • Satellite manufacturing stands at $3.2 billion and launch services at $1 billion.
    • The launch services segment was pegged at $600 million in 2020 and is projected to grow at a compound annual growth rate of 13 percent to reach $1 billion by 2025.

    Key drivers of this demand

    • India has of over 100 space tech start-ups with investments in the segment touching $68 million in 2021.
    • The availability of low-cost satellite launch vehicles coupled with mass production will lead to demand from customers around the world.
    • Several companies are utilising cutting-edge technologies to develop innovative launch solutions in India.

    Where does India stand in the global space market?

    • As per SpaceTech Analytics, India is the sixth-largest player in the industry internationally having 3.6% of the world’s space-tech companies (as of 2021).
    • US holds the leader’s spot housing 56.4% of all companies in the space-tech ecosystem.
    • Other major players include UK (6.5%), Canada (5.3%), China (4.7%) and Germany (4.1%).
    • The Indian Space Industry was valued at $7 billion in 2019 and aspires to grow to $50 billion by 2024.

    Why does India matter in the global space-tech market?

    • The country’s standout feature is its cost-effectiveness.
    • India holds the distinction of being the first country to have reached the Mars’ orbit in its first attempt and at $75 million — way cheaper than Western standards.

    Future prospects of India’s private ‘Space’

    Ans. India may lead in space junk management

    • Almost 60-odd start-ups had registered with the Indian Space Research Organisation (ISRO) this year.
    • A majority of them were dealing in projects related to space debris management.
    • As space becomes more congested with satellites, the technology would thus help in managing ‘space junk’ (debris of old spacecraft and satellites).

    How is the private sector’s involvement regulated in India?

    • In June 2020, the Union government announced reforms in the space sector enabling more private players to provide end-to-end services.
    • The central idea was to bring forth a predictable policy and regulatory environment for them and additionally provide access to ISRO facilities and assets to improve their capacities.

    (1) Establishment of IN-SPACe

    • An announcement for the establishment of the Indian National Space Promotion and Authorisation Centre (IN-SPACe) was made.
    • It was mandated the task of promoting, authorising and licensing private players to carry out space activities.
    • As an oversight and regulatory body, it is responsible for devising mechanisms to offer sharing of technology, expertise, and facilities free of cost to promote non-government private entities (NGPEs).
    • IN-SPACe’s Monitoring and Promotion Directorate oversees NGPE’s activities as per prescribed regulations and reports back in case any corrective actions or resolutions are required.
    • ISRO shares its expertise in matters pertaining to quality and reliability protocols, documentation, and testing procedure through IN-SPACe’s ‘interface mechanism’.

    (2) Establishment of NSIL

    • Additionally, constituted in March 2019, New Space India Ltd (NSIL), is mandated to transfer the matured technologies developed by the ISRO to Indian industries.
    • All of them are under the purview of the Ministry of Defence.
    • Private sector’s involvement in the long term, as with other commercial sectors, is believed to help spur investment and expertise in the realm which is capital-intensive and demands high technology.

    Where does India lack?

    Ans. Undisputedly, it is the finances

    • The US and Canada were the highest receivers of space-related investment in 2021.
    • The US’s space budget was $41 billion in 2021, $23.3 billion of which was focused on NASA.
    • India’s total budgetary allocation for FY2022-23 towards the Department of Space was â‚č13,700 crore ($172 million).
    • Further, as per Tracxn data, funding into the sector’s start-ups (in India) nearly tripled to $67.2 million on a year-over-year basis in 2021.

     

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  • Boosting India’s Cotton Production

    IndiaContext

    • Cotton, one of the most important crops, has a strategic role in India’s international agriculture play. India is the world’s third-largest exporter of cotton and the second-largest exporter of textiles, therefore, also contributing significantly to the country’s economy.

    All you need to know about the Cotton crop

    • Rainfall and Temperature: Sensitive to timing of rainfall and rainfall during harvest might lead to crop failure. Temperature required is around 20-30 degree c., while rainfall is about 75-100cm.
    • Soil: Black soil ideally suited for cotton cultivation as it is rich in lime.cotton is vulnerable to pest attack.
    • Humidity: Cotton cultivation requires more than 200 frost free days. Humidity during harvest is harmful.
    • Oilcake: The cotton seeds are crushed for oil and the oilcake is an important animal fodder and also used as farm manure.

    India

    What is the Present status of cotton in India?

    • India holds a 4% share of the U.S.$840 billion global textile and apparel market
    • India has been successful in developing backward links, with the aid of the Technical Upgradation Fund Scheme (TUFS), in the cotton and technical textiles industry.
    • However, India is yet to move into man-made fibres as factories still operate in a seasonal fashion.
    • Areas of cotton cultivation are Gujrat, Maharashtra, Telangana, Punjab, etc.

    Do you know?

    The latest archaeological discovery in Mehrgarh puts the dating of early cotton cultivation and the use of cotton to 5000 BCE. The Indus Valley civilization started cultivating cotton by 3000 BCE. Cotton was mentioned in Hindu hymns in 1500 BCE.

    IndiaWhat are the voluntary sustainable standards (VSS) in cotton?

    • Voluntary Sustainability Standards (VSS):  Voluntary Sustainability Standards (VSS), which encapsulate certification schemes, labelling programmes, and private standards. The major VSS that are dominant in the sustainable cotton value chain today include Better Cotton Initiative (BCI), Organic Cotton, Fair trade Cotton, and Cotton Made in Africa.
    • To achieve sustainable Goal: The global textile supply chain is undergoing a paradigm shift; it is pursuing environmental and social upgradation to meet the sustainability requirements imposed by global textile and home furnishing retailers, so as to mitigate the adverse impacts of climate change on cotton farmers and cotton cultivation.

    What are the benefits of VSS for India?

    • Enhance position in global cotton supply: Adapting to VSS is clearly beneficial for India. On the one hand, it will help it remain globally competitive in the cotton supply chain and strengthen its position in the export market, while on the other, it will help meet India’s SDG commitments.
    • Takes India a step closer towards sustainable farming: India has made considerable progress in its transition towards a more sustainable cotton farming ecosystem. The total cotton area under VSS has reached 1.5 million hectares, contributing to 24 percent of the global VSS cotton area.
    • Increases organic production of cotton: With approximately 0.2 million hectares of area for production, it is the largest producer of organic cotton, accounting for 50 percent of global organic cotton production, and the second-largest producer of ‘Better Cotton’, accounting for 16.5 percent of total Better Cotton production covering an area of 1.5 million hectares.
    • Higher yeild: According to the BCI’s 2020 Impact Report for India, Better Cotton farmers have 9 percent higher yields and 18 percent higher profit than conventional farmers.
    • Eco friendly production:The Thinkstep report 2018 on the Life Cycle Assessment of VSS Cotton conducted in Madhya Pradesh revealed a reduction of 50 percent in climate change impact, 59 percent in blue water consumption, 84 percent in ecotoxicity, and 100 percent eutrophication in organic over conventional cotton.
    • To achieve SDG Targets: The VSS cotton growth story in India has already demonstrated its contribution towards the achievement of SDG targets for Zero Hunger (Goal 2), Clean Water and Sanitation (Goal 6), Responsible Consumption and Production (Goal 12), Life on Land (Goal 15), and Climate Action (Goal 16).
    • NITI Aayog’s Assessment: VSS cotton delivers real, measurable outcomes according to priority indicators as outlined by NITI Aayog which maps India’s SDG goals. These indicators include changes in the extent of water bodies, improving groundwater withdrawal against availability, and rationalising nitrogen fertiliser.

    IndiaConclusion

    • India must scale up the VSS while aligning it with its SDG commitments since VSS in cotton ensures a better production system, sourcing methods, and consumption patterns while also influencing the lives of hundreds of millions.

    Mains Question

    Q. What are the Voluntary Sustainable Standards (VSS)? Cotton production can be boosted in India using VSS method. Elaborate.

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  • India’s Dark Sky Reserve

    Dark Sky ReserveContext

    • The union territory of Ladakh will host India’s first Dark Sky Reserve which will be set up in Hanle area in the next three months. The Dark Sky Reserve is being built as part of Ladakh’s high-altitude Changthang Wildlife Sanctuary.

    What is Dark Sky Reserve (DSR)?

    • Definition of Dark Sky Reserve: The International Dark Sky Association (IDSA) defines an international dark sky reserve (IDSR) as “a public or private land of substantial size (at least 700 kmÂČ, or about 173,000 acres) possessing an exceptional or distinguished quality of starry nights and nocturnal environment, and that is specifically protected for its scientific, natural, educational, cultural heritage, and/or public enjoyment.

    What is Core Area of Dark Sky Reserve?

    • A dark sky reserve requires a “core” area that has clear sky without any light pollution, which can enable telescopes to see the sky in its natural darkness.

    Dark Sky Reserve

    Why Ladakh is chosen as ideal location for DSR?

    • Ladakh is ideal for long-term observatories and dark-sky sites because of its large arid area, high elevation, and sparse population, extreme cold and minimum temperature drops to minus 40 degree celcius.
    • The Changthang wildlife Sanctuary, the DSR site is situated around 4,500 metres above sea level, which makes it a perfect host for telescopes.

    Who is managing India’s DSR?

    • The Department of Science and Technology and Indian Institute of Astrophysics (IIA) in Bengaluru are providing support for the facility. The IIA already manages the Indian Astronomical Observatory (IAO) complex in Hanle, Ladakh.

    What are the International standards for DSR?

    • International Dark Sky Association’s Recognition: The IDSA recognizes and accredits dark-sky areas worldwide, in three categories. The Mont MĂ©gantic Observatory in Quebec is the first such site to be recognized (in 2007) as an International Dark Sky Reserve.
    • Categorical Certification: Individuals or groups can nominate a site for certification to the International Dark Sky Association (IDSA). There are five designated categories, namely International Dark Sky parks, communities, reserves, sanctuaries and Urban Night Sky Places.
    • Global Recognition: The certification process is similar to that of a site being awarded the UNESCO World Heritage Site tag or getting recognised as a Biosphere Reserve. Between 2001 and January 2022, there have been 195 sites recognised as International Dark Sky Places globally, the IDSA said.
    • Dark Sky Park: IDSA recognized Natural Bridges National Monument in Utah as the world’s first International Dark Sky Park.
    • Dark Sky Sanctuary: In 2015, the IDSA introduced the term “Dark Sky Sanctuary” and designated the Elqui Valley of northern Chile as the world’s first International Dark Sky Sanctuary. The Gabriela Mistral Dark Sky Sanctuary is named after a Chilean poet.

    Dark Sky ReserveWhat is India’s objective with DSR?

    • To promote AstroTourism: The primary objective of the proposed Dark Sky Reserve is to promote astronomy tourism in a sustainable and environment-friendly manner. Scientific methods will be used here to preserve the night sky from ever-increasing light pollution.
    • To offer clear skies for observations: With metros, cities and peripheral areas experiencing light pollution and remaining constantly lit up, there are diminishing areas that offer a view of clear skies on cloudless nights.
    • For training purpose: In the pilot phase, the Indian Institute of Astrophysics (IIA),has procured ten small and easy-to-handle telescopes and light-reflecting shields. IIA’s scientists and outreach experts will identify locals and train them to use these telescopes.
    • Sky gazing and a boost for village economy: This will include basic sky gazing, identification of constellations, and locating the pole star, among others. These telescopes will be installed at the homestays, which is a popular option for tourist accommodation in Ladakh.

    Dark Sky ReserveConclusion

    • The Dark Sky Reserve is likely to boost Astro tourism in India where there has been no such reserve. Once set up, the reserve will be the highest-located site in the country for infrared, gamma-ray, and optical telescopes.

    Mains Question

    Q. What are the Dark Sky Reserves? How DRS will help in astronomical research and observations in India?

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  • Stubble burning in Punjab at 3-year low

    stubble

    Though early days, the number of crop fires reported out of Punjab are at a three-year low, suggest data from the Indian Agricultural Research Institute (IARI) that tracks such fires via satellite.

    What is Stubble Burning?

    • Stubble (parali) burning is a method of removing paddy crop residues from the field to sow wheat from the last week of September to November.
    • It is usually required in areas that use the combined harvesting method which leaves crop residue behind.
    • This practice mostly carried out in Punjab, Haryana and UP contributes solely to the grave winter pollution in the national capital.

    Emissions from stubble burning

    • The process of burning farm residue is one of the major causes of air pollution in parts of north India, deteriorating the air quality.
    • Stubble burning is a significant source of carbon dioxide (CO2), volatile organic compounds (VOCs), nitrogen oxides (NOx) and hydrocarbons (HC).

    Despite emissions, why do farmers burn stubble?

    • Crop residue burning is practised by the farmers to prepare the land for the next cultivation.
    • The major reason behind the stubble burning is the short time available between rice harvesting and sowing of wheat as delay in sowing wheat affects the wheat crop.
    • Between the harvesting of the paddy crop and the sowing of the next crop, there is only a two to three weeks’ time window is left.
    • Even though farmers are aware that the burning of straw is harmful to health, they do not have alternatives for utilizing them effectively.
    • The farmers are ill-equipped to deal with waste because they cannot afford the new technology that is available to handle the waste material.
    • Therefore, stubble burning is considered one of the cheapest methods to clean the field after the harvesting season.

    Impact of stubble burning

    • Air Pollution: Stubble burning emits toxic pollutants in the atmosphere containing harmful gases like Carbon Monoxide (CO), methane (CH4), carcinogenic polycyclic aromatic hydrocarbons, volatile organic compounds (VOC). These pollutants disperse in the surroundings and eventually affect air quality and people’s health by forming a thick blanket of smog. Along with vehicular emissions, it affects the Air Quality Index (AQI) in the national capital and NCR.
    • Soil degradation: Soil becomes less fertile and its nutrients are destroyed when the husk is burned on the ground. Organic content of soil is completely destroyed. Stubble burning generates heat that penetrates into the soil, causing an increase in erosion, loss of useful microbes and moisture.

    Alternative solutions

    • Power generation: The available paddy straw can be effectively used for power generation, which will go a long way towards overcoming the problem of disposal of crop residues and power deficit in the region.
    • In-situ decomposition: Suitable machinery for collection, chopping and in situ incorporation of straw is required. We can use Pusa Biodecomposer, Biomethanation etc.
    • Organic manuring: Convert the removed residues into enriched organic manure through composting.

    Conclusion

    • Unless financial assistance is to be provided by the Centre for boosting farm mechanization, it is difficult to completely stop stubble burning.
    • States need to make alternative arrangements for the consumption of paddy straw into the soil as per the directions of the NGT.

     

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  • Aatmanirbhar in defence production: Where does India stand?

    India ranks fourth among 12 Indo-Pacific nations in self-reliant arms production capabilities, according to a study released this month by the Stockholm International Peace Research Institute (SIPRI).

    Study on Defence production

    • China tops the list, Japan is second, South Korea is in third place, and Pakistan is at number 8.
    • The study, which measures self-reliance until 2020, is based on three indicators of self-reliance in each country:
    1. Arms procurement — imports, licensed and domestic production as a proportion of the government’s total procurement of major conventional arms;
    2. Arms industry — the study presents the five largest arms companies in each country, where data are available, ranked by sales of arms and military services in 2020 to both domestic and export customers;
    3. Uncrewed maritime vehicles, the sea equivalent of drones — covering both uncrewed surface vehicles (USVs) and uncrewed underwater vehicles (UUVs), meant to provide a qualitative understanding of how countries are engaging domestic research institutes and firms to produce such cutting edge systems.

    How has China progressed?

    • China was the world’s fifth largest arms importer in 2016-20.
    • Its self-reliance policies, and its high economic growth in that period meant that the Chinese arms industry now increasingly fulfils the requirements of the People’s Liberation Army (PLA).
    • Its high volume of imports in absolute terms accounts for only 8 per cent of total procurement for the period, the lowest share for any of the 12 governments studied in this report.

    Why is India still lagging behind?

    • India is ranked as the second-largest importer of arms for its armed forces in 2016-20.
    • India is highly dependent on imports of complete foreign major arms, including many produced under licence or as components for its domestic production.
    • Of India’s total volume of procurement in 2016–20, 84 per cent was of foreign origin.
    • Domestic arms companies provide only 16 per cent of its total procurement.

    Steps taken by the Centre to boost defence production

    • Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
    • Lines of Credit: Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product.
    • Policy boost: The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
    • Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.
    • Defence Industrial Corridors: The government has also announced 2 dedicated Corridors in the States of TN and UP to act as clusters of defence manufacturing that leverage existing infrastructure, and human capital.
    • Long-term vision: The vision of the government is to achieve a turnover of $25 bn including export of $5 bn in Aerospace and Defence goods and services by 2025.
    • Push for self-reliance: The govt has identified the Defence and Aerospace sector as a focus area for the ‘Aatmanirbhar Bharat’ or Self-Reliant India initiative.

    Issues retarding defence indigenization

    • Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
    • Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
    • Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
    • Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
    • ‘Unease’ in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
    • Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
    • Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
    • FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.
    • R&D Lacunae: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
    • Lack of skills: There is a lack of engineering and research capability in our institutions. It again leads us back to the need for a stronger industry-academia interface.

    Way forward

    • Reducing import dependence: India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as the largest importer to Saudi Arabia, says 2019 SIPRI report.
    • Security Imperative: Indigenization in defence is critical to national security also. It keeps intact the technological expertise and encourages spin-off technologies and innovation that often stem from it.
    • Economic boost: Indigenization in defence can help create a large industry which also includes small manufacturers.
    • Employment generation: Defence manufacturing will lead to the generation of satellite industries that in turn will pave the way for a generation of employment opportunities.

     

     

     

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  • Moonlighting: Overemployment or Underpayment

    MoonlightingContext

    • In July, Kotak Securities said in a study that at least 60% of 400 employees surveyed said they themselves had, or knew someone who had engaged in moonlighting.

    What is mean by moonlighting?

    • Moonlighting is a state where employees work for remuneration with entities other than their employers. It is not defined in any of the statutes in India. However, there are enactments that deal with double employment.

    MoonlightingHow does it affect companies and what are latest examples?

    • Wipro: According to Wipro CEO, there is a lot of chatter about people moonlighting in the tech industry. This is cheating plain and simple. The company sacked 300 employees following the discovery that they were working for rival firms on the side, leading to conflict of interest.
    • Infosys: Infosys has warned staff against moonlighting, saying it could lead to termination.
    • Effect of WFH: Another software firm DXC Technologies said that moonlighting by employees was a challenge for employers but that wouldn’t affect its WFH (work from home) policy that has worked well for both the firm and its staff.
    • Moonlighting policy: Swiggy announced a moonlighting policy’ that allows employees to pursue their passion for economic interests alongside their fulltime employment.”

    MoonlightingWhat is the Legal status of moonlighting?

    • Factory act: Section 60 of the Factories Act deals with restriction on double employment stating that “No adult worker shall be required or allowed to work in any factory on any day on which he has already been working in any other factory, save in such circumstances as may be prescribed. However, this enactment is applicable only to employees working in factories.
    • The Tamil Nadu Shops & Establishments Act, 1947: There are State enactments which deal with employment of persons working in offices, banks, shops, etc. In Tamil Nadu, it is termed as The Tamil Nadu Shops & Establishments Act, 1947. However, there is no provision wherein dealing with dual employment.
    • Glaxo Laboratories (I) Limited vs Labour Court, Meerut and others: The apex court held that “The employer has hardly any extra territorial jurisdiction. He is not the custodian of general law and order situation or the Guru or mentor of his workmen for their well-regulated cultural advancement. If the power to regulate the behaviour of the workmen outside the duty hours and at any place wherever they may be was conferred upon the employer, contract of service may be reduced to contract of slavery.” This case was not specifically about moonlighting but the court’s observation gives us an idea as to how the law may view such cases.

    MoonlightingWay forward

    • More earning: The Minister of State for Skill Development and Entrepreneurship, and Electronics and IT, said that employers should not to suppress employees who want to monetise, develop and demonstrate but also urged employees not to violate their agreements with employers.
    • Working hours: Moonlighting is subject to law of the land. The sphere of employment cannot be extended by the employer beyond working hours and outside his place of employment.
    • Socialistic view: The Courts of law in India dealing with employment are Writ Courts and Labour Courts, which exercise jurisdiction based on equity or fairness. Therefore, the Courts may lean in favour of the employee unless the contravention of the employee has led to serious prejudice and loss to the employer

    Conclusion

    • Employees are not the slaves of employers. What they do beyond the working hours is none of the business of employer unless it affects company financially or causes substantial damage to business. Government should bring the legal statute to regulate moonlighting and prevent the unjustified punishment of employees.

    Mains Question

    Q. What is moonlighting? Why employees do moonlighting? Discuss the legal framework about moonlighting in India.

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  • India’s Rice Exports and food Insecurity

    ExportsContext

    • On August 8, India banned the exports of broken rice and imposed a 20 per cent duty on the exports of various grades of rice amid high cereal inflation and uncertainties with respect to domestic supply.

    Background

    • This is surely not the first time an attempt is being made to ban wheat and rice exports.
    • It was also done in 2007-08, in the wake of the global financial crisis.
    • Perhaps government will also impose stocking limits on traders for a host of commodities, suspend futures trading in food items, and even conduct income tax raids on traders of food.

    Exports

    What is the current status of rice in India?

    • World’s largest rice exporter: India has exported more than 20 MT of rice worth a record $9. 6 billion to more than 150 countries in 2021-22.It has been the world’s largest rice exporter of the grain in the last decade and has a share of around 44% global trade.
    • Likely to fall in production: India’s rice production is likely to decline by 6 per cent t to 104.99 million tonnes in the kharif season due to a fall in paddy acreage amidst rainfall deficit in key producing states, including Jharkhand, Madhya Pradesh and West Bengal.
    • Kharif season: Sowing in the kharif season begins with the onset of the southwest monsoon from June and harvesting from October onwards .About 85 per cent of India’s total production comes from this season.
    • Deficient rainfall: West Bengal, the biggest rice producer amongst states, has received deficient rainfall in 15 of its 23 districts, raising the likelihood of crop loss. Uttar Pradesh, the second biggest producer of rice has received 42% less rainfall than benchmark. The rainfall deficiency in the other eastern states Bihar (-34%) and Jharkhand (-48%).
    • Depleting stocks: There are concerns about rice stocks with the Food Corporation of India (FCI) depleting to a 10-year low level by April, 2023 year, if the free ration scheme is extended to the second half of the financial year. The government may have to impose some curbs on rice exports though minimum export price or an export tax if the scheme is extended.

    Why India’s rice export ban is cause for worry?

    • Thin world rice market and the impact on prices: Given that 90 per cent of production is consumed domestically, As a result, any small change in exports and imports has an enormous impact on prices, especially if it leads to panic buying of food grains by rich countries.
    • Limited Import option: The stakes are higher as it is India’s largest agricultural crop. Unlike with wheat, the options for import in rice due to any production shortfall are limited, when India’s own share in the global trade of the cereal is more than 40%.
    • Affect the credibility: The export uncertainties will affect the credibility of Indian exporters, create a disincentive for future exports, and will enable buyers to shift towards other major rice-exporting countries.
    • Affect a section of farmers: Though Indian farmers in general lack market access, and hence do not take advantage of high market prices, the fall in prices may adversely affect a section of farmers who hope to get a better price for their produce through exports. The exporters who face the burden of the unfeasibility of exports may pass it on to farmers in the form of lower prices during procurement.
    • Affect low-income and low middle-income Countries: India’s export restrictions will adversely affect several low-income and low-middle-income countries like Bangladesh, Senegal, Nepal and Benin, which are among the largest importers of Indian rice.
    • Domestic prices and to safeguard food security: Frequent changes in export policies undoubtedly have long-term ramifications on domestic prices

    Exports

    What are the Issues in India’s rice export strategy?

    • Highest ever volume: India exported the highest-ever volume of 21 million metric tonnes (MMT) of rice in 2021-22 (FY22) in a global market of about 51.3 MMT, which amounts to about 41 per cent of global exports.
    • Reduced price: Such large volumes of rice exports brought down global prices of rice by about 23 per cent in March (YoY), when all other cereal prices, be it wheat or maize, were going up substantially in global markets. In fact, in FY22, the unit value of exports of common rice was just $354/tonne, which was lower than the minimum support price (MSP) of rice.
    • Below MSP buying or leakage from PMGKAY: This meant that rice exporters were either buying rice (paddy) from farmers and millersat below the MSP or that quite a substantial part of rice was given free under the PM Garib Kalyan Ann Yojana (PMGKAY) was being siphoned away for exports at prices below MSP.
    • Artificial competitive advantage: Free electricity for irrigation in several states, most notably Punjab, and highly subsidised fertilisers, especially urea, create an artificial competitive advantage for Indian rice in global markets.

    Problems with India’s rice cultivation

    • Lower yield: India’s rice yield is lower than the world average. However, India’s yield is better than Thailand and Pakistan but worse than Vietnam, China and the US.
    • Higher cost of cultivation and price support: The cost of cultivation in India is also increasing, and hence there will be a need for a higher MSP to make production remunerative. This will exacerbate the pressure to re-think its price-support-backed food security mechanism.
    • Water-intensive nature: India’s rice production likely to fall amidst the shortfall of rainfall in major rice producing states and increasing salinity of soil because of over usage of water. The water-intensive nature of rice cultivation, along with frequent export restrictions will adversely affect the long-run sustainability of rice production. In India, around 49 per cent of rice cultivation depends on groundwater which is depleting rapidly.

    ExportsWhat is the link between Rice cultivation and groundwater depletion?

    • Ground water depletion: In India, around 49 per cent of rice cultivation depends on groundwater which is depleting rapidly.
    • Food and Agriculture Organization (FAO) data: As per the latest data available from the Food and Agriculture Organization (FAO), agricultural water withdrawal as a percentage of total available renewable water resources has increased from 26.7 per cent in 1993 to 36 per cent in 2022.
    • Virtual water trade (VWT): Rice exports are leading to an indirect export of water to other countries a phenomenon known as virtual water trade (VWT). The relative per capita water availability in India is lower than a majority of its major importing countries. The other major exporters of rice, such as Thailand and Vietnam, also have better per capita water availability in comparison to India.
    • Renewable water resources: Out of 133 countries in which India has positive net rice exports, only 39 countries have relatively lower per capita renewable water resources. Out of these 39 countries, 12 countries are high-income countries with the ability to buy food at a higher price.

    Conclusion

    • Depletion of groundwater resources and rising cost of cultivation may threaten rice production in the future. Adequate water saving measures in the form of widespread adoption of water saving practices like System of Rice Intensification (SRI) need to be taken to keep input requirements, costs and production sustainable.

    Mains question

    Q.As many developing countries depend on Indian rice, rice export restrictions have raised food security concerns in the global market. In this context discuss the causes and effects of India’s restrictions on rice export.

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  • NOPEC: the US bill to pressure the OPEC+ oil group

    nopec

    US legislation NOPEC which could open members of oil producing group OPEC+ to antitrust lawsuits has emerged as a possible tool to tackle high fuel prices.

    What is NOPEC?

    • NOPEC stands for No Oil Producing and Exporting Cartels (NOPEC).
    • It is a bill to protect US consumers and businesses from engineered oil spikes.
    • But some analysts warn that implementing it could also have some dangerous unintended consequences.

    Why such a move by the US?

    • OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, agreed to steep production cuts, curbing supply in an already tight market.
    • After the decision, the US decided to reduce the group’s control over energy prices.

    Key feature of the NOPEC bill

    • The bipartisan NOPEC bill would tweak US antitrust law to revoke the sovereign immunity that has protected OPEC+ members and their national oil companies from lawsuits.
    • If signed into law, the US attorney general would gain the option to sue the oil cartel or its members, such as Saudi Arabia, in federal court.
    • It is unclear exactly how a federal court could enforce judicial antitrust decisions against a foreign nation.

    Is such bill effective?

    • Previous versions of the NOPEC bill have failed amid resistance by oil industry groups, including the top US oil lobby groups.
    • Saudi Arabia has rebuffed repeated lobbying during visits by Biden officials not to cut production.
    • Instead, OPEC+ has agreed to cut output by the most since the start of the COVID-19 pandemic.

    Implications of NOPEC

    • NOPEC more or less is a knee-jerk reaction from the US against oil hegemony of the OPEC+.
    • If passed into law, it could lead to unintended blowback.
    • In 2019, for example, Saudi Arabia threatened to sell its oil in currencies other than the dollar if Washington passed a version of the NOPEC bill.
    • There is a possibility that other countries could take similar action on the US for withholding agricultural output to support domestic farming, for example.

     

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  • Vyommitra Humanoid to undergo pre-flight tests

    vyommitra

    Vyommitra, the humanoid designed and developed by the ISRO to fly aboard unmanned test missions ahead of the Gaganyaan human space-flight mission, is undergoing pre-flight ground tests at the ISRO Inertial Systems Unit (IISU).

    Vyommitra

    • The AI-based robotic system is developed at a robotics lab at the Vikram Sarabhai Space Centre (VSSC) at Thumba, Thiruvananthapuram.
    • Vyommitra will be used for an unmanned flight of ISRO’s GSLV III rocket in December 2020, which, along with a second unmanned flight in July 2021.
    • This will serve as the test of ISRO’s preparedness for its maiden manned space mission, Gaganyaan, being targeted for 2022 to mark 75 years of India’s independence.

    Functions of the humanoid

    • Vyommitra, equipped with a head, two arms and a torso, is built to mimic crew activity inside the crew module of Gaganyaan.
    • Attaining launch and orbital postures, responding to the environment, generating warnings, replacing carbon dioxide canisters, and operating switches, monitoring of the crew module, receiving voice commands, and responding via speech (bilingual) are among the functions listed.
    • It will have a human-like face, with lips synchronized for movement to mimic speech.
    • Once it is fully developed, Vyommitra will be able to use the equipment on board the spacecraft’s crew module, like safety mechanisms and switches, as well as receive and act on commands sent from ground stations.

    What is the recent development?

    • The IISU has successfully integrated it with a computer “brain”, which enables it to “read” control panels aboard the unmanned test flights and communicate with the ISRO ground stations.
    • It has a certain level of intelligence.
    • It is intended to operate and read the display panels and communicate back to ground station using its own voice.

    Back2Basics: Gaganyaan Mission

    • Gaganyaan is crewed orbital spacecraft intended to be the formative spacecraft of the Indian Human Spaceflight Programme (IHSP).
    • The IHSP was initiated in 2007 by ISRO to develop the technology needed to launch crewed orbital spacecraft into low Earth orbit.
    • ISRO had been working on related technologies and it performed a Crew Module Atmospheric Re-entry Experiment and a Pad Abort Test for the mission.
    • If completed in meantime, India will become the fourth nation to conduct independent human spaceflight after Russia, US, and China.

     

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