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[op-ed of the day] A shot at economic logic

Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Scope of African Continental Free Trade Agreement (AfCFTA) for India


Note- Op-ed of the day is the most important editorial of the day. Aspirants should try to cover at least this editorial on a daily basis to have command over most important issues in news. It will help in enhancing and enriching the content in mains answers. Please do not miss at any cost.

CONTEXT

The 12th Extra-Ordinary Summit of the African Union (AU) which concluded on July 8 at Niamey, the capital of the Niger Republic, saw 54 of 55 of its member states signing the African Continental Free Trade Agreement (AfCFTA) for goods and services. If taken to its logical conclusion, this audacious project would eventually create an African Common Market of 1.2 billion people and a GDP of over $3.4 billion — the metrics are comparable to India’s. The AfCFTA would be world’s largest FTA, and in a world dependent on African markets and commodities, it would have global impact.

Challenges 

However, there are three main reasons to be sceptical about the viability of the AfCFTA.

  1. Largely ineffective
  • First, the African Union (founded as the Organisation of African Unity in 1963) has been largely ineffective in dealing with the continent’s myriad problems such as decolonisation, underdevelopment, Islamic terrorism and the Arab Spring.
  • The AU’s grand plans, including the Muammar Qadhafi-funded Africa Unity project, have been spectacular flops.
  • It is, therefore, natural to take the AfCFTA, the AU’s most ambitious project so far, with a ladleful of salt.

2. Weak Economies

  • Second, serious political, organisational and logistical challenges to the AfCFTA notwithstanding, the national economies in Africa are generally weak with a low manufacturing base.
  • They also lack competitiveness and mutual complementarity.
  • Only a sixth of Africa’s current total trade is within the continent.

3. Countercyclical to the global trends

  • Third, the AfCFTA seems to be countercyclical to the ongoing global protectionist trends as seen in the U.S.-China trade conflict, Brexit and the stalemates at the World Trade Organisation and the United Nations Conference on Trade and Development.
  • World trade is likely to grow only by 2.6% in 2019, a quarter of last year’s figure.
  • Commodity prices are stagnant and globalisation is often being reversed.

Reasons for optimism

  • Collective self-reliance –  Given the strong global headwinds including a cooling Chinese ardour for Africa, greater collective self-reliance through African economic integration makes eminent sense.
  • Regional economic blocks – Further, the AfCFTA can build upon the experience of the continent’s five regional economic blocks.
  •  Extensive road map – While the AU Commission is not famous for efficient planning, it has prepared an extensive road map towards the AfCFTA with preliminary work on steps such as incremental tariff reduction, elimination of non-tariff barriers, supply chains and dispute settlement.
  • Moreover, vigorous “informal” trade across porous national borders is already a fact of African life.
  • A surge in consumer base – Looking into the future, a recent UN projection showed that nearly half the world’s population growth between now and 2050 would come from sub-Saharan Africa, the population of which would double to nearly two billion. This surge in consumer base would make the proposed AfCFTA even more important.

From the Indian angle

  • Africa is already an important economic partner for India with total annual merchandise trade estimated at $70 billion or nearly a tenth of our global trade.
  • India is Africa’s third largest trading partner.
  • While India’s global exports have been largely stagnant, those to Africa have surged. For instance, exports to Nigeria in 2018-19 grew by over 33% over the previous year.
  • Africa still has unfulfilled demand for Indian commodities, especially foodstuff, finished products (automobiles, pharmaceuticals, consumer goods) and services such as IT/IT-Enabled Service, health care and education, skilling, expertise in management and banking, financial services and insurance.

Ways to engage more with Africa

  • Co-production – While local manufactured items and services may ultimately compete with Indian exports, Indian firms can co-produce them in Africa.
  • New Avenues – If handled in a proactive manner, the AfCFTA is likely to open new opportunities for Indian stakeholders in fast-moving consumer goods manufacturing, connectivity projects and the creation of a financial backbone. India donated $15 million to Niger to fund the Niamey AU Summit.
  • Help the AU Commission – As the next step, New Delhi can help the AU Commission prepare the requisite architecture, such as common external tariffs, competition policy, intellectual property rights, and natural persons’ movement.
  • African transnational corporations  – It can also identify various African transnational corporations which are destined to play a greater role in a future continental common market and engage with them strategically.
  • Indian Diaspora – The cross-linkages of a three million strong Indian diaspora spread across Africa can also be very valuable.
  • Finally, once the AfCFTA is accepted as beneficial game changer, the African elite could perhaps contemplate crossing another Rubicon: an India-African FTA.

Conclusion

Before Africa was “discovered” by the West, it had a thriving overland trade. Large camel caravans ferried commodities such as ivory, gold, mineral salt, precious stones and slaves across prosperous trading centres such as Timbuktu, Ghana, Kano, Burnu, Agadez, Edo, Zinder, Ghat, Addis Ababa, Dar es Salaam and Cairo. Subsequent colonialism and mercantilism destroyed internal trade routes, replacing them with an ecosystem in which Africans had better links with their foreign “mentors” than among themselves. By the AfCFTA, the Africans are only trying to correct this historic distortion.

Foreign Policy Watch: India-Africa

[op-ed snap] Diluting the code

Mains Paper 3 : Mobilization Of Resources |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : impact of NCLAT's latest Judgement


CONTEXT

Last week, the National Company Law Appellate Tribunal (NCLAT) approved the resolution plan filed by ArcelorMittal for Essar Steel. But the two-member bench of the appellate tribunal modified the manner in which the proceeds from the sale would be distributed. Earlier, the resolution plan had proposed to pay financial creditors 92.5 per cent of their dues. But as per the order, both financial and operational creditors will recover 60.7 per cent each of their admitted claims.

Consequences of judgement

  • The judgement, which, in effect, places operational creditors at par with secured financial creditors at the time of settling claims, is likely to have far reaching consequences.
  • Under the Insolvency and Bankruptcy Code (IBC), Section 53 deals with the distribution of proceeds from the liquidation of assets.
  • It lists the hierarchy in which various claims against the firm would be settled. Under this waterfall mechanism, after the costs associated with the insolvency resolution process and liquidation are settled, dues owed to secured creditors and workmen have to be settled first.
  • This is followed by discharging dues of employees, unsecured creditors and governments, in this particular order.
  • After these claims have been settled, the balance is to be distributed among preference and equity shareholders, in that order.
  • Thus the structure draws a clear distinction between the claims of secured creditors and operational creditors in the liquidation process, with the former having the first right.

The distinction drawn by case

  • However, the judgement draws a distinction between claim settlement in the resolution and liquidation process.
  • It notes that as the case is not about “distribution of assets from the proceeds of sale of liquidation… the resolution applicant cannot take advantage of Section 53 for the purpose of determination of the manner in which distribution of the proposed upfront amount is to be made in favour of one or other stakeholders”

Conclusion

  • The consequences of this order stretch beyond this particular case.
  • To argue that claims of financial creditors can be treated at par with operational creditors would muddy the waters as it loses sight of the basic distinction between secured and unsecured creditors.
  • In fact, in its judgement on the constitutionality of the IBC earlier this year, the Supreme Court had justified the difference between financial and operational creditors, making a critical distinction between financial debts which are secured and operational debts which are unsecured.

 

Insolvency and Bankruptcy Code

Explained: Where to plant a trillion trees to save planet Earth?

Mains Paper 1 : Climatic Change |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Reforestation and its role as carbon sink


News

Forests as CO2 sink

  • Trees, which absorb carbon dioxide, are a natural sink for the gas emitted into the atmosphere.
  • According to a study trees absorb about 25% of the CO2 released into the atmosphere by the burning of fossil fuels, while the oceans absorb another 25%.
  • The half that remains in the atmosphere contributes to global warming.

Reforestation to curb global warming

  • Restoration of forests has long been seen as a potential measure to combat climate change.
  • What has so far been unclear, however, is how much of this tree cover might be actually possible in the existing conditions on the planet.

No more a vague idea

  • The latest special report by the Intergovernmental Panel on Climate Change (IPCC) suggests that an increase of 1 billion hectares of forest will be necessary to limit global warming to 1.5°C by 2050.
  • Now, researchers have quantified how much land around the world is available for reforestation, as well as the extent of carbon emissions these would prevent from being released into the atmosphere.
  • The new forests planted, once mature, could store 205 billion tonnes of carbon, the researchers calculated.

How much land needs to be reforested?

  • The study, by researchers with the Crowther Lab of ETH Zurich University has been published in the journal Science.
  • On the basis of nearly 80,000 images from around the world, they calculated that around 0.9 billion hectares of land would be suitable for reforestation.
  • If an area of 0.9 billion hectares is indeed reforested, the researchers calculated, it could ultimately capture two-thirds of human-made carbon emissions.
  • The estimated land excludes cities or agricultural areas from the total restoration potential as these areas are needed for human life.

Land available

  • Earth’s continuous tree cover is currently 2.8 billion hectares, and the researchers calculated that the land available could support 4.4 billion hectares, or an additional 1.6 billion hectares.
  • Out of this, 0.9 billion hectares — an area the size of the US — fulfil the criterion of not being used by humans.
  • That is about two-thirds of the 300 billion tonnes of carbon that has been released into the atmosphere as a result of human activity since the industrial age.

Land available in India

  • In India, there is room for an estimated 9.93 million extra hectares of forest.
  • India’s existing forest cover makes up 7,08,273 sq km (about 70.83 million hectares) and tree cover another 93,815 sq km (9.38 million hectares), according to the MoEFCCs ‘State of Forest Report 2017’.
  • The study found that the six countries with the greatest reforestation potential are Russia (151 million hectares); the US (103 million hectares); Canada (78.4 million hectares); Australia (58 million hectares); Brazil (49.7 million hectares); and China (40.2 million hectares).
Climate Change Impact on India and World – International Reports, Key Observations, etc.

Black Gold

Mains Paper 3 : Achievements Of Indians In S&T |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Black Gold

Mains level : Special features of the new material


News

  • Using gold nanoparticles Indian scientists have developed a new material called “black gold”, which can potentially be used for applications ranging from solar energy harvesting to desalinating seawater, according to a study.

Black Gold

  • To develop the material, the team from Mumbai-based Tata Institute of Fundamental Research (TIFR) rearranged size and gaps between gold nanoparticles.
  • It has unique properties such as capacity to absorb light and carbon dioxide (CO2).
  • Gold does not have these properties therefore ‘black gold’ is being called a new material.
  • In appearance it is black, hence the name ‘black gold’, according to the findings published in Chemical Science
  • The researchers varied inter-particle distance between gold nanoparticles using a cycle-by-cycle growth approach by optimizing the nucleation-growth step.
  • They used dendritic fibrous nanosilica, whose fibers were used as the deposition site for gold nanoparticles.

Features of Black Gold

  • One of the most fascinating properties of the new material is its ability to absorb the entire visible and near-infrared region of solar light.
  • It does so because of inter-particle plasmonic coupling as well as heterogeneity in nanoparticles size.
  • Black gold could also act as a catalyst and could convert CO2 into methane at atmospheric pressure and temperature using solar energy.
  • If we develop an artificial tree with leaves made out of back gold, it can perform artificial photosynthesis, capturing carbon dioxide and converting it into fuel and other useful chemicals.
  • The efficiency of conversion of CO2 into fuel, at present, is low but researchers believe it could be improved in future.
  • The material can be used as a nano-heater to covert seawater into potable water with good efficiency, the researchers said.
Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

Utkarsh 2022

Mains Paper 2 : Governance, Transparency & Accountability, Citizens Charters |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Utkarsh 2022

Mains level : RBI Regulations


News

Utkarsh 2022

  • The Reserve Bank of India (RBI) board has finalised a three- year roadmap to improve regulation and supervision, among other functions of the central bank.
  • This medium term strategy — named Utkarsh 2022 — is in line with the global central banks’ plan to strengthen the regulatory and supervisory mechanism.
  • Worldwide, all central banks strengthen the regulatory and supervisory mechanism; everybody is formulating a long-term plan and a medium-term plan.
  • So, the RBI has also decided it will formulate a programme to outline what is to be achieved in the next three years.
  • While around a dozen areas were identified by the committee, some board members felt that areas could be filtered and lesser number of areas can be identified for implementation in the next three years.

Why such move?

  • The idea is that the central bank plays a proactive role and takes preemptive action to avoid any crisis.
  • We are very much aware of the IL&FS debt default issue and the crisis of confidence the non-banking financial sector faced in the aftermath.
RBI Notifications

Generic Drugs

Mains Paper 2 : Health & Education |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Generic Drugs

Mains level : Healthcare in India


News

  • The Central Government is considering amendments to the Drugs and Cosmetic Rules, 1945 to ensure that registered medical practitioners dispense only generic medicines.

What are generic drugs?

  • A generic drug is a pharmaceutical drug that contains the same chemical substance as a drug that was originally protected by patents.
  • Generic drugs are allowed for sale after the patents on the original drugs expire.
  • Because the active chemical substance is the same, the medical profile of generics is believed to be equivalent in performance.
  • A generic drug has the same active pharmaceutical ingredient (API) as the original, but it may differ in some characteristics such as the manufacturing process, formulation, excipients, color, taste, and packaging.

Prescribing generic drugs

  • The matter was recently brought before the Drugs Consultative Committee (DCC) of the Central Drugs Standard Control Organisation (CDSCO).
  • A proposal attempts that registered medical practitioners can supply different categories of medicines including vaccines to their patients under the exemption provided, with certain conditions, under Schedule K of the Drugs and Cosmetics Rules, 1945.
  • As of now there are no specified types of medicines which can be supplied by doctors to their patients.
  • It is now proposed that registered medical practitioners shall supply generic medicines only and physicians samples shall be supplied free of cost.

Issues with generic drugs

  • The main concern is to offer the best medicines which are most effective so medical professionals should not be forced to prescribe in a particular manner.
  • The government has to ensure easy availability, unclogged supply chain, and strict quality control of generic medicines.
  • It also has to ensure availability and effectiveness also of generic medicines.

Way forward

  • The government should keep strict price control on medicines and ensure that the highest quality medicines are given to the patients.
  • All laws, checks and balances should be directed at giving the best possible treatment at the best cost.
Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

[pib] Coffee Table Book for partnership between India and the UN World Food Programme

Mains Paper 2 : Health & Education |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : World Food Programme, Coffee Table Book

Mains level : Not Much


News

  • Union Minister of Agriculture and Farmers’ Welfare has launched a Coffee Table Book today to commemorate five decades of partnership between the Ministry and the UN World Food Programme towards addressing food and nutritional security in India.

Coffee Table Book

  • The Book showcases key milestones achieved by the Government of India in its efforts to make the nation free from hunger and malnutrition and WFP’s role in this endeavour.
  • Some of the major turning points in India’s journey towards food and nutrition security captured in the book include the Green Revolution, the White revolution, improvements in livestock and dairy development and digitization of food safety nets.

About World Food Programme

  • The World Food Programme (WFP) is the food-assistance branch of the United Nations.
  • It is the world’s largest humanitarian organization addressing hunger and promoting food security.
  • According to the WFP, it provides food assistance to an average of 91.4 million people in 83 countries each year.
  • From its headquarters in Rome and from more than 80 country offices around the world, the WFP works to help people who cannot produce or obtain enough food for themselves and their families.
  • It is a member of the United Nations Development Group and part of its executive committee.
Hunger and Nutrition Issues – GHI, GNI, etc.