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GS Paper: GS3

  • Pre-Pack IBC resolution

    pre-pack

    India introduced the pre-packaged insolvency resolution process (PPIRP) in April 2021, as an alternative resolution process for micro, small and medium enterprises (MSMEs). However, it has only two cases admitted under it so far.

    What is the Insolvency and Bankruptcy Code (IBC)?

    • The IBC was enacted in 2016 to simplify insolvency and bankruptcy proceedings, safeguard interests of all stakeholders (the firm, employees, debtors and especially creditors), and resolve non-performing assets.
    • From a ‘debtor in possession’ regime, it was a shift to a ‘creditor in control’ one.
    • IBC provides for a time-bound process for resolving insolvencies.
    • The Insolvency and Bankruptcy Board of India (IBBI) is the regulator implementing the code and overseeing the functioning of stakeholders.
    • The IBBI last week allowed payment of performance-linked incentives to resolution professionals.

    What are Pre-packs?

    • A pre-pack is the resolution of the debt of a distressed company through an agreement between secured creditors and investors instead of a public bidding process.
    • This system of insolvency proceedings has become an increasingly popular mechanism for insolvency resolution in the UK and Europe over the past decade.
    • Under the pre-pack system, financial creditors will agree to terms with a potential investor and seek approval of the resolution plan from the National Company Law Tribunal (NCLT).
    • The approval of a minimum of 66 percent of financial creditors that are unrelated to the corporate debtor would be required before a resolution plan is submitted to the NCLT.
    • Further NCLTs are also required to either accept or reject any application for a pre-pack insolvency proceeding before considering a petition for a corporate insolvency resolution process (CIRP).

    How does it work?

    • Unlike the CIRP, an informal understanding is reached with creditors before the application is filed.
    • PPIRP begins only after 66% of financial creditors approve the proposal and the name of resolution professional.
    • Debt resolution agreement between financial creditor and a potential investor is arrived at in consultation with the corporate debtor for which subsequent approval of the resolution plan is sought from the NCLT.

    What were the objectives behind introducing PPIRP?

    • MSMEs greatly contribute to the economy, and employ a wide section of the population.
    • The pandemic severely impacted their operations.
    • This alternative insolvency resolution process was designed to ensure quicker, cost-effective and value-maximizing outcomes for all.

    What is the progress in PPIRP so far?

    • Only two insolvency cases have been initiated under PPIRP since it was introduced.
    • The poor response has been attributed to the hesitancy on the part of financial institutions.
    • In the case of CIRP, the haircut involved is a last resort, against a voluntary one in case of PPIRP.
    • Data shows that between December 2016 and June 2022, a total of 5,636 CIRPs commenced, of which 3,637 have been closed.

    Does PPIRP defeat the purpose of IBC?

    • The IBC’s objective is to facilitate exit from failed units so that capital can be reallocated to better ones.
    • However, banks are not comfortable initiating PPIRP due to voluntary haircuts.
    • There is a fear that such a decision might be scrutinized later.
    • This means capital will remain locked up in failed units, defeating the purpose of IBC.
    • Voluntary haircuts mean fewer resources from the winding-up process and greater scope for corrupt practices.

     

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  • Explained: Lumpy Skin Disease in India

    lumpy

    The Mumbai Police have ordered the prohibition of cattle transportation in the city to prevent the spread of the lumpy skin disease (LSD).

    What is the Lumpy Skin Disease?

    • Lumpy skin disease is caused by the lumpy skin disease virus (LSDV), which belongs to the genus capripoxvirus, a part of the poxviridae family.
    • Smallpox and monkeypox viruses are also a part of the same family.
    • The LSDV shares antigenic similarities with the sheeppox virus (SPPV) and the goatpox virus (GTPV) or is similar in the immune response to those viruses.

    How does it spread?

    • It is not a zoonotic virus, meaning the disease cannot spread to humans.
    • It is a contagious vector-borne disease spread by vectors like mosquitoes, some biting flies, and ticks and usually affects host animals like cows and water buffaloes.
    • Infected animals shed the virus through oral and nasal secretions which may contaminate common feeding and water troughs.
    • Thus, the disease can either spread through direct contact with the vectors or through contaminated fodder and water.
    • Studies have also shown that it can spread through animal semen during artificial insemination.

    How does it affect the animal?

    • LSD affects the lymph nodes of the infected animal, causing the nodes to enlarge and appear like lumps on the skin, which is where it derives its name from.
    • The cutaneous nodules, 2–5 cm in diameter, appear on the infected cattle’s head, neck, limbs, udder, genitalia, and perineum.
    • The nodules may later turn into ulcers and eventually develop scabs over the skin.
    • The other symptoms include high fever, sharp drop in milk yield, discharge from the eyes and nose, salivation, loss of appetite, depression, damaged hides, wasting of animals, infertility and abortions.

    Do it kills the animal?

    • The incubation period or the time between infection and symptoms is about 28 days according to the FAO, and 4 to 14 days according to some other estimates.
    • The morbidity of the disease varies between two to 45% and mortality or rate of date is less than 10%.
    • However, the reported mortality of the current outbreak in India is up to 15%, particularly in cases being reported in the western part (Rajasthan) of the country.

    What is the geographical distribution and how did it spread to India?

    • The disease was first observed in Zambia in 1929.
    • Subsequently it got spread to most African countries, followed by West Asia, Southeastern Europe, and Central Asia, and more recently spreading to South Asia and China in 2019.
    • As per the FAO, the LSD disease is currently endemic in several countries across Africa, parts of the West Asia (Iraq, Saudi Arabia, Syrian Arab Republic), and Turkey.

    Lumpy in India

    • The spread in South Asia first affected Bangladesh in July 2019 and then reached India in August that year, with initial cases being detected in Odisha and West Bengal.
    • The long porous borders between India, Nepal and Bangladesh allow for a significant amount of bilateral and informal animal trade, including cattle and buffaloes.
    • This may have contributed to the spread of LSD in July-August 2019 between Bangladesh and India.
    • While the 2019 outbreak later subsided, the recent spread in India began in June this year.

    Is it safe to consume the milk of affected cattle?

    • Studies say that it has not been possible to ascertain the presence of viable and infectious LSDV virus in milk derived from the infected animal.
    • However, that a large portion of the milk in Asia is processed after collection and is either pasteurised or boiled or dried in order to make milk powder.
    • This process ensures that the virus is inactivated or destroyed.

    Economic implications of Lumpy on Dairy Sector

    • Milk reduction: Lumpy leads to reduced milk production as the animal becomes weak and also loses appetite due to mouth ulceration.
    • Animal wasting: The income losses can also be due to poor growth, reduced draught power capacity and reproductive problems associated with abortions, infertility and lack of semen for artificial insemination.
    • Impact of trade ban: Movement and trade bans after infection also put an economic strain on the whole value chain.

    Why India is at higher risk?

    • India is the world’s largest milk producer at about 210 million tonnes annually.
    • India also has the largest headcount of bovines
    • In Rajasthan, which is witnessing the worst impact of LSD, it has led to reduced milk production, which lessened by about three to six lakh litres a day.
    • Reports indicate that milk production has also gone down in Punjab owing to the spread of the disease.
    • According to FAO, the disease threatens the livelihoods of smaller poultry farmers significantly.
    • Notably, farmers in Uttar Pradesh and Punjab have incurred losses due to cattle deaths and are seeking compensation from their State governments.

    How bad is the current spread in India?

    • Lumpy has infected over 16 lakh cattle in 197 districts as of September 11.
    • Of the nearly 75,000 cattle that the disease has killed, more than 50,000 deaths, mostly cows, have been reported from Rajasthan.

    Remedies available in India

    • The Union Ministry of Fisheries, Animal Husbandry and Dairying informed that the ‘Goat Pox Vaccine’ is very effective against LSD.
    • It is being used across affected States to contain the spread.

    Way forward

    The FAO has suggested a set of spread-control measures for LSD, which involves:

    • Vaccination of susceptible populations with more than 80% coverage
    • Movement control of bovine animals and quarantining
    • Implementing biosecurity through vector control by sanitising sheds and spraying insecticides
    • Strengthening active and passive surveillance
    • Spreading awareness on risk mitigation among all stakeholders involved, and
    • Creating large protection and surveillance zones and vaccination zones

     

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  • What is the PM PRANAM Scheme?

    In order to reduce the use of chemical fertilisers by incentivising states, the Union government plans to introduce a new scheme – PM PRANAM, which stands for PM Promotion of Alternate Nutrients for Agriculture Management Yojana.

    What is the PM PRANAM scheme?

    • The proposed scheme intends to reduce the subsidy burden on chemical fertilisers.
    • This burden if uneased, is expected to increase to Rs 2.25 lakh crore in 2022-2023, which is 39% higher than the previous year’s figure of Rs 1.62 lakh crore.
    • The scheme will not have a separate budget and will be financed by the “savings of existing fertiliser subsidy” under schemes run by the Department of fertilisers.

    Subsidies under the PRANAM

    • Further, 50% subsidy savings will be passed on as a grant to the state that saves the money and that 70% of the grant provided under the scheme can be used for asset creation related to technological adoption of alternate fertilisers.
    • It would create alternate fertiliser production units at village, block and district levels.
    • The remaining 30% grant money can be used for incentivising farmers, panchayats, farmer producer organisations and self-help groups that are involved in the reduction of fertiliser use and awareness generation.
    • The government will compare a state’s increase or reduction in urea in a year, to its average consumption of urea during the last three years.

    How much fertiliser does India require?

    • The kharif season (June-October) is critical for India’s food security, accounting for nearly half the year’s production of foodgrains, one-third of pulses and approximately two-thirds of oilseeds.
    • A sizable amount of fertiliser is required for this season.
    • The Department of Agriculture and Farmers Welfare assesses the requirement of fertilisers each year before the start of the cropping season, and informs the Ministry of Chemical and fertilisers to ensure the supply.
    • The amount of fertiliser required varies each month according to demand, which is based on the time of crop sowing, which also varies from region to region.
    • For example, the demand for urea peaks during June-August period, but is relatively low in March and April, and the government uses these two months to prepare for an adequate amount of fertiliser for the kharif season.

    Why is the scheme being introduced?

    • Due to increased demand for fertiliser in the country over the past 5 years, the overall expenditure by the government on subsidy has also increased.
    • The final figure of fertiliser subsidy touched Rs 1.62 lakh crore in 2021-22.
    • The total requirement of four fertilisers — Urea, DAP (Di-ammonium Phosphate), MOP (Muriate of potash), NPKS (Nitrogen, Phosphorus and Potassium) — increased by 21% between 2017-2018 and 2021-2022, from 528.86 lakh metric tonnes (LMT) to 640.27 LMT.
    • PM PRANAM, which seeks to reduce the use of chemical fertiliser, will likely reduce the burden on the exchequer.
    • The proposed scheme is also in line with the government’s focus on promoting the balanced use of fertilisers or alternative fertilisers in the last few years.

    Try this PYQ:

    Q.What are the advantages of fertigation in agriculture? (CSP 2020)

    1.Controlling the alkalinity of irrigation water is possible.
    2.Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
    3.Increased availability of nutrients to plants is possible.
    4.Reduction in the leaching of chemical nutrients is possible.

    Select the correct answer using the code given below:
    (a) 1, 2 and 3 only

    (b) 1,2 and 4 only

    (c) 1,3 and 4 only

    (d) 2, 3 and 4 only

     

    [wpdiscuz-feedback id=”5sbme0lwks” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • High Inflation in India

    inflation Context

    • It seems that inflation may hover around 7 per cent despite RBI’s tightening of monetary policy in the months to come.

    What is a simple definition for inflation?

    • Inflation is an increase in the level of prices of the goods and services that households buy. It is measured as the rate of change of those prices. Typically, prices rise over time, but prices can also fall (a situation called deflation).

    Inflation Rate

    • Inflation Rate is the percentage change in the price level from the previous period. If a normal basket of goods was priced at Rupee 100 last year and the same basket of goods now cost Rupee 120, then the rate of inflation this year is 20%.
    • Inflation Rate= {(Price in year 2 – Price in year 1)/ Price in year 1} *100

    inflationTypes of Inflation

    Creeping Inflation

    • Creeping or mild inflation is when prices rise 3% a year or less. This kind of mild inflation makes consumers expect that prices will keep going up. That boosts demand. Consumers buy now to beat higher future prices. That’s how mild inflation drives economic expansion.

    Walking Inflation

    • This type of strong, or pernicious, inflation is between 3-10% a year. It is harmful to the economy because it heats up economic growth too fast. People start to buy more than they need, just to avoid tomorrow’s much higher prices. This drives demand even further so that suppliers can’t keep up. More important, neither can wages. As a result, common goods and services are priced out of the reach of most people.

    Galloping Inflation

    • When inflation rises to 10% or more, it wreaks absolute havoc on the economy. Money loses value so fast that business and employee income can’t keep up with costs and prices. Foreign investors avoid the country, depriving it of needed capital. The economy becomes unstable, and government leaders lose credibility. Galloping inflation must be prevented at all costs.

    Hyperinflation

    • Hyperinflation is when prices skyrocket more than 50% a month. It is very rare. In fact, most examples of hyperinflation have occurred only when governments printed money to pay for wars. Examples of hyperinflation include Germanyin the 1920s, Zimbabwe in the 2000s, and Venezuela in the 2010s. The last time America experienced hyperinflation was during its civil war.

    Core Inflation

    • The core inflation rate measures rising prices in everything except food and energy. That’s because gas prices tend to escalate now and then. Higher gas costs increase the price of food and anything else that has large transportation costs.

     

    Consumer Price Index

    • CPI is used to monitor changes in the cost of living over time. When the CPI rises, the average Indian family has to spend more on goods and services to maintain the same standard of living. The economic term used to define such a rising prices of goods and services is Inflation.

    Whole sale Price Index

    • WPI is used to monitor the cost of goods and services bought by producer and firms rather than final consumers. The WPI inflation captures price changes at the factory/wholesale level.

    GDP Deflator

    • Another important measure of calculating standard of living of people is GDP Deflator. GDP Deflator is the ratio of nominal GDP to real GDP. The nominal GDP is measured at the current prices whereas the real GDP is measured at the base year prices. Therefore, GDP Deflator reflects the current level of prices relative to prices in a base year. Example, In India the base year of calculating deflator is 2011-12.

    inflationFactors fuelling inflation in India

    • Falling rupee: Inflation is here to stay because it has much to do with the decline in value of the rupee that has fallen to its lowest, which makes imports of oil and gas more expensive.
    • Ukraine crisis: The war in Ukraine has the same effect and pushes the price of some food items upward.
    • Poor inflation management: With inflation, as measured by the consumer price index, in August going back to 7 per cent, and the wholesale price index coming in at 12.4 per cent, one thing is clear India is not out of the woods on inflation management.

    Rising inflation have these implications

    • Impact on the poor: This upsurge of inflation is affecting the poor more because some of the commodities whose prices are increasing the most represent a larger fraction of the budget of the most vulnerable sections of society.
    • Rising inequality: As a result, inequalities which were already on the rise are increasing further. Recently, the State of Inequality in India report showed that an Indian making Rs 3 lakh a year belonged to the top 10 per cent of the country’s wage earners. 
    • Inequality in healthcare: India’s spending on healthcare is among the lowest in the world. Decent level of healthcare is available only to the ones who can afford it because of increasing out-of-pocket expenditure the payment made directly by individuals for the health service, not covered under any financial protection scheme. Overall, these out-of-pocket expenses on healthcare are 60 per cent of the total expenditure on public health in India, which is one of the highest in the world.

     

    inflationNeed for bold steps on three fronts to tackle inflation

    • Unless bold and innovative steps are taken at least on three fronts, GDP growth and inflation both are likely to be in the range of 6.5 to 7.5 per cent in 2022-23.

    1] Tightening of loose monetary policy: The Reserve Bank of India (RBI) is mandated to keep inflation at 4 per cent, plus-minus 2 per cent.

    • The RBI has already started the process of tightening monetary policy by raising the repo rate, albeit a bit late.
    • It is expected that by the end of 2022-3, the repo rate will be at least 5.5 per cent, if not more.
    • It will still stay below the likely inflation rate and therefore depositors will still lose the real value of their money in banks with negative real interest rates.
    • That only reflects an inbuilt bias in the system — in favour of entrepreneurs in the name of growth and against depositors, which ultimately results in increasing inequality in the system.

    2] Prudent fiscal policy: Fiscal policy has been running loose in the wake of Covid-19 that saw the fiscal deficit of the Union government soar to more than 9 per cent in 2020-21 and 6.7 per cent in 2021-22, but now needs to be tightened.

    • Government needs to reduce its fiscal deficit to less than 5 per cent, never mind the FRMB Act’s advice to bring it to 3 per cent of GDP.
    • However, it is difficult to achieve when enhanced food and fertiliser subsidies, and cuts in duties of petrol and diesel will cost the government at least Rs 3 trillion more than what was provisioned in the budget.

    3] Rational trade policy: Export restrictions/bans go beyond agri-commodities, even to iron ore and steel, etc. in the name of taming inflation.

    • But abrupt export bans are poor trade policy and reflect only the panic-stricken face of the government.
    • A more mature approach to filter exports would be through a gradual process of minimum export prices and transparent export duties for short periods of time, rather than abrupt bans, if at all these are desperately needed to favour consumers.

    Conclusion

    • Though the government is opting for market-based economics, currently, India needs a mixed solution that comprises price stability via government channels and subsidies.

    Mains question

    Q.What are the fuelling factors for inflation? Discuss what steps should be taken to tackle inflation.

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  • China blocks listing of Lashkar ‘commander’ Sajid Mir at UNSC

    1267 list

    For the third time in three months, China blocked a joint India-US attempt to put a Pakistan-based terrorist on the UN Security Council’s 1267 list.

    What is the UNSC 1267 list?

    • The UNSC resolution 1267 was adopted unanimously on 15 October 1999.
    • It came to force in 1999, and strengthened after the September, 2001 attacks.
    • It is now known as the Da’esh and Al Qaeda Sanctions Committee.

    What is UNSC 1267 committee?

    • It comprises all permanent and non-permanent members of the United Nations Security Council (UNSC).
    • The 1267 list of terrorists is a global list, with a UNSC stamp.
    • It is one of the most important and active UN subsidiary bodies working on efforts to combat terrorism, particularly in relation to Al Qaeda and the Islamic State group.
    • It discusses UN efforts to limit the movement of terrorists, especially those related to travel bans, the freezing of assets and arms embargoes for terrorism.

    How is the listing done?

    (1) Submission of Proposal

    • Any member state can submit a proposal for listing an individual, group, or entity.
    • The proposal must include acts or activities indicating the proposed individual/group/entity had participated in the financing, planning, facilitating, preparing, or perpetrating of acts or activities linked to the said organizations.

    (2) Actual decision

    • Decisions on listing and de-listing are adopted by consensus.
    • The proposal is sent to all the members, and if no member objects within five working days, the proposal is adopted.
    • An “objection” means rejection for the proposal.

    (3) Putting and resolving ‘Technical Holds’

    • Any member of the Committee may also put a “technical hold” on the proposal and ask for more information from the proposing member state.
    • During this time, other members may also place their own holds.
    • The matter remains on the “pending” list of the Committee.
    • Pending issues must be resolved in six months, but the member state that has placed the hold may ask for an additional three months.
    • At the end of this period, if an objection is not placed, the matter is considered approved.

    Why is India furious this time?

    • Recently PM Modi and Xi Jinping attended the Shanghai Cooperation Organisation (SCO) summit in Samarkand.
    • The grouping had agreed to take strong and consolidated action against terrorism in the region.
    • Despite this, China has exposed its double standards on the issue of terrorism for consistently stopping the listing of Pakistan-based terrorists.
    • This is again very surprising movement by China by putting a ‘Technical Hold’.

    Here is a timeline of how China disrupts the global efforts against terrorism:

    • 2009: After the 26/11 Mumbai attacks, India moved an independent terror designation proposal against Masood Azhar but China blocked the move.
    • 2016: After seven years, India proposes listing of Masood Azhar as a global terrorist and is supported by the US, the UK and France. China blocks the move again.
    • 2017: The trio moves a third proposal only to be blocked by China again.
    • 2019: After the attacks on the CRPF personnel in J-K’s Pulwama, India calls 25 envoys of different countries to highlight the role Islamabad plays in funding, promoting and strengthening global terrorism. India moves the fourth proposal demanding Masood Azhar’s listing. China lifted its technical hold.
    • June 2022: China blocked a proposal by India and the US to list Pakistan-based terrorist Abdul Rehman Makki as a ‘Global Terrorist’
    • August 2022: China blocks India-US joint proposal to list Jaish-e-Mohammad (JeM) deputy chief Abdul Rauf Azhar as UNSC designated terrorist.

    Conclusion

    • China’s actions expose its double speak and double standards when it comes to the international community’s shared battle against terrorism.
    • This clearly depicts its care for its vassal state Pakistan.

    Back2Basics: United Nations Security Council

    • The UNSC is one of the six principal organs of the United Nations and is charged with the maintenance of international peace and security.
    • Its powers include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action through Security Council resolutions.
    • It is the only UN body with the authority to issue binding resolutions to member states.
    • The Security Council consists of fifteen members. Russia, the United Kingdom, France, China, and the United States—serve as the body’s five permanent members (P5).
    • These permanent members can veto any substantive Security Council resolution, including those on the admission of new member states or candidates for Secretary-General.
    • The Security Council also has 10 non-permanent members, elected on a regional basis to serve two-year terms. The body’s presidency rotates monthly among its members.

     

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  • Why Should India choose manufacturing over services?

    ManufacturingContext

    • Manufacturing can create higher productivity jobs.

    What is service sector?

    • The service sector, also known as the tertiary sector, is the third tier in the three-sector economy. Instead of product production, this sector produces services maintenance and repairs, training, or consulting. Examples of service sector jobs include housekeeping, tours, nursing, and teaching.

    What is called manufacturing sector?

    • Manufacturing is the making of goods by hand or by machine that upon completion the business sells to a customer. Items used in manufacture may be raw materials or component parts of a larger product. The manufacturing usually happens on a large-scale production line of machinery and skilled labor.

    ManufacturingShould India focus on manufacturing over services?

    • Services sector failed to create more jobs: So far, in services, we have certainly developed some advantage and we are doing rather well. Services’ share of the economy has gone up to over 50% of the GDP. However, this sector has not been able to create enough jobs in a commensurate manner. The result is that agriculture still continues to sustain nearly half of India’s workforce, which means that 15% of GDP is supporting some 45% of the workforce.
    • Manufacturing can provide productive jobs: We need more productive job opportunities for the workforce to shift away from agriculture. We need to focus attention on the manufacturing sector because of the direct and indirect jobs that it can create.
    • Empirical fact: It is an empirical fact that manufacturing of all productive sectors has the highest backward and forward linkages.
    • Significant potential: So, all together, there is significant potential for the manufacturing sector to create higher productivity jobs for people stuck in agricultural activities. That is the future for India.

    ManufacturingWhat is PLI Scheme?

    • As the name suggests, the scheme provides incentives to companies for enhancing their domestic manufacturing apart from focusing on reducing import bills and improving the cost competitiveness of local goods.
    • PLI scheme offers incentives on incremental sales for products manufactured in India.
    • The scheme for respective sectors has to be implemented by the concerned ministries and departments.

    Criteria laid for the scheme

    • Eligibility criteria for businesses under the PLI scheme vary based on the sector approved under the scheme.
    • For instance, the eligibility for telecom units is subject to the achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods.
    • The minimum investment threshold for MSME is Rs 10 crore and Rs 100 crores for others.
    • Under food processing, SMEs and others must hold over 50 per cent of the stock of their subsidiaries, if any.
    • On the other hand, for businesses under pharmaceuticals, the project has to be a green-field project while the net worth of the company should not be less than 30 per cent of the total committed investment.

    What are the incentives offered?

    • An incentive of 4-6 per cent was offered last year on mobile and electronic components manufacturers such as resistors, transistors, diodes, etc.
    • Similarly, 10 percent incentives were offered for six years (FY22-27) of the scheme for the food processing industry.
    • For white goods too, the incentive of 4-6 per cent on incremental sales of goods manufactured in India for a period of five years was offered to companies engaged in the manufacturing of air conditioners and LED lights.

    Benefits of PLI

    • The scheme has a direct employment generation potential of over 2,00,000 jobs over 5 years.
    • It would lead to large scale electronics manufacturing in the country and open tremendous employment opportunities. Indirect employment will be about 3 times of direct employment as per industry estimates.
    • Thus, the total employment potential of the scheme is approximately 8,00,000.

    Conclusion

    • In order to integrate India as a pivotal part of this modern economy, there is a strong need to step up our manufacturing capabilities.

    Mains question

    Q.Should India focus on manufacturing over services for job creation? Discuss the role Production Linked Incentive Scheme could play in boosting manufacturing in India.

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  • What are the Big Seven Cats?

    We often get confused to differentiate between Cheetah/Bagh/Sher/Puli. The cheetah, which is being re-introduced to India from Africa, is not to be confused with the leopard, which too has spots that look somewhat similar.

    How are all Big Cats differentiated?

    [A] Genus Panthera

    • This is the genus of large wild cats that can roar but can’t purr.
    • Among them, the lion, the leopard, and the jaguar are more closely related, while the other strand has the tiger and the snow leopard.
    • The snow leopard is an exception to the rest of the group in that it can’t roar.

    (1) Tiger (Panthera Tigris)

    Size: 75-300 kg | IUCN status : Endangered

    • Jim Corbett’s “large-hearted gentleman with boundless courage”, the solitary and strongly territorial tiger is the largest of all wild cats and also the earliest Panthera member to exist.
    • Primarily a forest animal, they range from the Siberian taiga to the Sunderban delta.
    • The national animal of India, Bangladesh, Malaysia, and South Korea, the tiger was voted the world’s favourite animal ahead of the dog in a 2004 Animal Planet global online poll.

    (2) Lion (Panthera Leo

    Size: 100-250 kg | IUCN status: Vulnerable

    • Native to Africa and Asia, the lion is the most social cat, and lives in groups called prides.
    • They prefer open forests such as scrubland, and adult males have a prominent mane.
    • The lion is arguably the most widely recognised animal symbol in human culture — be it the Ashoka pillar in Sarnath, the main entrance to Buckingham Palace, or the 20th Century Fox and MGM logo.

    (3) Jaguar (Panthera Onca)

    Size: 50-110 kg | IUCN status: Near Threatened

    • The largest cat in the Americas, the Jaguar has the strongest bite force of all wild cats, enabling it to bite directly through the skull of its prey.
    • Melanistic (black) Jaguars are common and are often called black panthers.
    • Jaguar was a powerful motif in the Mayan and Aztec civilisations.

    (4) Leopard (Panthera Pardus)

    Size: 30-90 kg | IUCN status: Vulnerable

    • Similar in appearance to the Jaguar with a rosette patterned coat, the leopard was described by Jim Corbett as “the most beautiful of all animals” for its “grace of movement and beauty of colouring”.
    • The most adaptable of all big cats, they occupy diverse habitats at all altitudes across Africa and Asia.
    • Like black jaguars, melanistic leopards are called black panthers.
    • In some African cultures, leopards are considered to be better hunters than lions.

    (5) Snow leopard (Panthera Uncia)

    Size: 25-55 kg | IUCN status : Vulnerable

    • The ghost of the mountains, this smokey-grey cat lives above the snow line in Central and South Asia.
    • The most elusive of all big cats, it cannot roar, and has the longest tail of them all — which comes in handy for balance while hunting along the cliffs, and also gives warmth when wrapped around the body.
    • The snow leopard is the state animal of Ladakh and Himachal Pradesh.

    [B] Genus Puma

    • Closely related to the domestic cat, this genus has only one extant species, the cougar.

    Cougar (Puma concolor)

    Size: 40-100 kg | IUCN status: Least Concern

    • The cougar is the second-largest cat in the Americas. (The Jaguar is the largest.)
    • Cougars are also called ‘mountain lion’ and ‘panther’ across their range from the Canadian Yukon to the Southern Andes.
    • Concolor is latin for “of uniform colour”. The Incas designed the city of Cusco in the shape of a cougar.

    [C] Genus Acinonyx

    • This is a unique genus within the cat family, with only one living member, the cheetah.

    Cheetah (Acinonyx jubatus)

    Size: 20-70 kg | IUCN status: Vulnerable

    • The fastest land mammal, the cheetah is the only cat without retractable claws — the grip helps it accelerate faster than any sports car (0-100 km/hr in 3 seconds).
    • Cheetahs are not aggressive towards humans, and they have been tamed since the Sumerian era.
    • They don’t breed well in captivity — picky females play hard to get.
    • Cheetahs are not really big, and they hunt during the day to avoid competing with other big cats.

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  • National Logistics Policy

    logistics

    The government will announce the National Logistics Policy (NLP) this week, aiming to bring down logistics costs and address challenges plaguing importers and exporters.

    What is Logistics?

    • Logistics refers to the overall process of managing how resources are acquired, stored, and transported to their final destination.
    • It involves identifying prospective distributors and suppliers and determining their effectiveness and accessibility.

    Why need a logistics policy?

    logistics

    • Organizing and consolidating the sector: India’s logistics sector is largely unorganized and fragmented.
    • Reducing logistics cost: This is why the country’s logistics costs are as high as 14-15% of the GDP, against 7-8% in developed nations such as the Singapore and the US, who leverage it to boost exports. The NLP aims to bring down India’s logistics cost to 8% in the next five years.
    • Preventing waste of perishable items: As per some estimates in India, about 16% of agri-production is wasted at different stages of the supply chain.
    • Warehousing development: Moreover, due to factors such as limited capacity and availability of warehouses, the cost of transaction increases.
    • Multi-modal integration: The new policy is going about simplification, technology and will have a multimodal approach that will combine rail, water, and air — all modes of transport.

    What role will technology play?

    • Advanced analytics: The NLP will aim to harness technologies such as AI and blockchain. It aims to create a data analytics centre for driving greater transparency and continuous monitoring of key logistics metrics.
    • Single window portal: Under NLP, a portal will be created, where service providers such as warehousing providers, shipping experts, transporters, customs brokers, and various governmental agencies will be unified.

    Will it boost cooperation between ministries?

    • Unifying multiple departments: Currently, the logistics value chain is managed by several ministries—road transport and highways, shipping, railways, and civil aviation.
    • Single-point clearances: Agencies like the Central Drug Standard Control Organization and the Food Safety and Standard Authority of India provide clearances.
    • Nationwide integration: The NLP could enhance their integration at the central level.

    What about reducing the carbon footprint?

    • Energy-efficient transportation: The draft logistics policy lays emphasis on the shift to more energy-efficient means of transportation, as well as the use of greener fuels which could reduce the supply chain’s carbon footprint.
    • Vehicular emission reduction: Moreover, the draft policy, released earlier, emphasized creating regulations for controlling vehicular noise, emissions, and wastage.
    • Green warehousing principles: The new logistics policy also aims to incorporate green principles in the functioning of warehouses which contribute to nearly 10% of the logistics costs.

    Will it change India’s commodity transport?

    • Transport of crucial commodities: The proposed policy aims to focus on the transport of crucial commodities such as coal, steel, iron ore, food grains, steel, cement, fruits and vegetables.
    • Creating nationwide clusters: The current logistical network for transporting them is mainly confined to regional clusters.
    • Integrating national supply-chains: The NLP could help establish a link between the place of origin, and destination place and integrate the supply on a national level.
    • Optimum logistics identification: The draft also proposes identification of the right mode of transport for each of these commodities to minimise losses during transport.

     

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  • [pib] Indian Navy participates in Exercise Kakadu hosted by Australia

    INS Satpura and a P8 I Maritime Patrol Aircraft of the Indian Navy reached Darwin in Australia on for participation in the multinational Exercise Kakadu – 2022, hosted by the Royal Australian Navy.

    Exercise KAKADU

    • Exercise KAKADU, which started in 1993, is the premier multilateral regional maritime engagement exercise hosted by the Royal Australian Navy (RAN) and supported by the Australian Air Force.
    • The exercise is held biennially in Darwin and the Northern Australian Exercise Areas (NAXA).
    • It derives its name from Kakadu National Park, which is a protected area in the northern territory of Australia, 171 km south-east of Darwin
    • During the exercise, professional exchanges in harbour and diverse range of activities at sea, including complex surface, sub-surface and air operations would enable sharing of best practices and honing of operational skills.

    India’s presence at the exercise

    • Indian Navy’s participation in KAKADU provides an excellent opportunity to engage with regional partners and undertake multinational maritime activities ranging from constabulary operations to high-end maritime warfare in a combined environment
    • It is aimed at enhancing interoperability and developing of common understanding of procedures for maritime operations gaining importance with the Indo-Pacific narrative.

    Also read:

    [Prelims Spotlight] Important Submarines and Naval Ships

     

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  • Europe heading for Recession

    The Eurozone is almost certainly entering a recession, with surveys showing a deepening cost-of-living crisis and a gloomy outlook that is keeping consumers wary of spending.

    What is Recession?

    • A recession is a significant decline in economic activity that lasts for months or even years.
    • Experts declare a recession when a nation’s economy experiences negative GDP, rising levels of unemployment, falling retail sales, and contracting measures of income and manufacturing for an extended period of time.
    • Recessions are considered an unavoidable part of the business cycle—or the regular cadence of expansion and contraction that occurs in a nation’s economy.

    What causes Recessions?

    These phenomena are some of the main drivers of a recession:

    • A sudden economic shock: An economic shock is a surprise problem that creates serious financial damage. The coronavirus outbreak, which shut down economies worldwide, is a more recent example of a sudden economic shock.
    • Excessive debt: When individuals or businesses take on too much debt, the cost of servicing the debt can grow to the point where they can’t pay their bills. Growing debt defaults and bankruptcies then capsize the economy.
    • Asset bubbles: When investing decisions are driven by emotion, bad economic outcomes aren’t far behind. Investors can become too optimistic during a strong economy.
    • Too much inflation: Inflation is the steady, upward trend in prices over time. Inflation isn’t a bad thing per se, but excessive inflation is a dangerous phenomenon. Central banks control inflation by raising interest rates, and higher interest rates depress economic activity.
    • Too much deflation: While runaway inflation can create a recession, deflation can be even worse. Deflation is when prices decline over time, which causes wages to contract, which further depresses prices. When a deflationary feedback loop gets out of hand, people and business stop spending, which undermines the economy.
    • Technological change: New inventions increase productivity and help the economy over the long term, but there can be short-term periods of adjustment to technological breakthroughs. In the 19th century, there were waves of labour-saving technological improvements.

    What’s the difference between Recession and Depression?

    • Recessions and depressions have similar causes, but the overall impact of a depression is much, much worse.
    • There are greater job losses, higher unemployment and steeper declines in GDP.
    • Most of all, a depression lasts longer—years, not months—and it takes more time for the economy to recover.
    • Economists do not have a set definition or fixed measurements to show what counts as a depression. Suffice to say, all the impacts of a depression are deeper and last longer.
    • In the past century, the US has faced just one depression: The Great Depression.

    The Great Depression

    • The Great Depression started in 1929 and lasted through 1933, although the economy didn’t really recover until World War II, nearly a decade later.
    • During the Great Depression, unemployment rose to 25% and the GDP fell by 30%.
    • It was the most unprecedented economic collapse in modern US history.
    • By way of comparison, the Great Recession was the worst recession since the Great Depression.
    • During the Great Recession, unemployment peaked around 10% and the recession officially lasted from December 2007 to June 2009, about a year and a half.
    • Some economists fear that the coronavirus recession could morph into a depression, depending how long it lasts.

    How long do recessions last?

    • Gulf War Recession (July 1990 to March 1991): At the start of the 1990s, the U.S. went through a short, eight-month recession, partly caused by spiking oil prices during the First Gulf War.
    • The Great Recession (2008-2009): As mentioned, the Great Recession was caused in part by a bubble in the real estate market.
    • Covid-19 Recession: The most recent recession began in February 2020 and lasted only two months, making it the shortest US recession in history.

    Can we predict a recession?

    Given that economic forecasting is uncertain, predicting future recessions is far from easy. However, the following warning signs can give you more time to figure out how to prepare for a recession before it happens:

    • An inverted yield curve: The yield curve is a graph that plots the market value—or the yield—of a range. When long-term yields are lower than short-term yields, it shows that investors are worried about a recession. This phenomenon is known as a yield curve inversion, and it has predicted past recessions.
    • Declines in consumer confidence: Consumer spending is the main driver of the US economy. If surveys show a sustained drop in consumer confidence, it could be a sign of impending trouble for the economy.
    • Drop in the Leading Economic Index (LEI): Published monthly by the Conference Board, the LEI strives to predict future economic trends. It looks at factors like applications for unemployment insurance, new orders for manufacturing and stock market performance.
    • Sudden stock market declines: A large, sudden decline in stock markets could be a sign of a recession coming on, since investors sell off parts and sometimes all of their holdings in anticipation of an economic slowdown.
    • Rising unemployment: It goes without saying that if people are losing their jobs, it’s a bad sign for the economy.

    How does a recession affect individuals?

    • We may lose your job during a recession, as unemployment levels rise. It becomes much harder to find a job replacement since more people are out of work.
    • People who keep their jobs may see cuts to pay and benefits, and struggle to negotiate future pay raises.
    • Investments in stocks, bonds, real estate and other assets can lose money in a recession, reducing your savings and upsetting your plans for retirement.
    • Business owners make fewer sales during a recession, and may even be forced into bankruptcy.
    • With more people unable to pay their bills during a recession, lenders tighten standards for mortgages, car loans, and other types of financing.

     

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