May 2020
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BRICS Summits

BRICS’ fight against COVIDop-ed of the day

Note4Students

From UPSC perspective, the following things are important :

Prelims level : BRICS, NDB.

Mains level : Paper 2- BRICS's potential for coordination on humanitarian assistance and disaster relief .


“BRICS” is an acronym coined by Jim O’Neill in 2001. In the start of the 21st century, BRICS seemed like the future economic powerhouse. Somehow this picture faded a little with time. This article shows the resilience and potential demonstrated by BRICS in times of Covid-19. It throws light on the latest initiatives of BRICS like New Development Bank. Finally what lies in the future for BRICS?

The “I” in BRICS

  • India has reinforced its reputation as a rapidly emerging pharmacy of the world.

  • As the world’s largest producer of hydroxychloroquine, India has exported the drug to many countries like Russia, Brazil, Israel, U.S,  SAARC and Gulf nations.

  • Pharma-alliance: The above developments have set the stage for India to forge an inclusive BRICS-driven pharma alliance, which could also actively explore the production of vaccines.

The “C” in BRICS

  • Despite allegations, China has responded strongly in containing the pandemic, leveraging its position as the workshop of the world.

  • China, using it’s manufacturing capabilities, responded to the disease by providing the “hardware” — masks, gloves, coveralls, shoe covers and testing kits — to hotspots across the globe.

  • Under its Health Silk Road doctrine, the Chinese are reaching out to two of the worst global hotspots, Italy and Iran.

  • China has also rolled out a medical air bridge for Europe.

The “R” in BRICS

  • Despite fighting the virus at home, Russia too has sent its doctors and virologists overseas including an air mission to Italy.

  • At the request of U.S. President Donald Trump, Russia offered help in the form of medical experts and supplies.

The “S” in BRICS

  • South Africa, the current rotating head of the African Union, is engaged in framing a pan-African response to COVID-19.

The “B” in BRICS

  • Only Brazil’s response may need a course correction.

  • In Brazil’s case resistance to breaking the infection chains through travel bans, lockdowns, isolation and testing appear to have led to an infection surge.

Where does the NDB’s model fit in this picture?

  • The New Development Bank of the BRICS has already demonstrated the way forward to allocate financial resources to combat COVID-19.

  • In April, NDB announced that it is going to disburse a $1 billion emergency loan to China, and subsequently to India, South Africa and Brazil.

  • The NDB had the financial heft to provide $10 billion in “crisis-related assistance” to BRICS member countries.

The next step for BRICS –  COORDINATION

  • BRICS has demonstrated their comparative strengths as providers of Humanitarian Assistance and Disaster Relief (HADR).

  • BRICS countries now need to pool and coordinate their efforts, in partnership with the WHO, and Europe and North America, as part of a global assault on the virus.

  • BRICS countries also need to earmark resources and assets to combat a whole range of natural disasters, with special focus on the emerging economies and the global south.

  • The NDB’s financial model demonstrated to address the pandemic, can now become a template to address natural disasters.

Bodies like BRICS have remained the favourite child of UPSC. Be it questions in prelims or mains. A question based on the regional grouping could be asked by the UPSC, for ex- “BRICS nations have proved to be more than merely an economic grouping. In light of the above statement, discuss the Humanitarian Assistance and Disaster Relief (HADR) potential of the BRICS countries.”

Conclusion

BRICS in future can leverage the coordination among them to work on finding the vaccine and also build on the experience gathered from the pandemic to form a disaster response policy in the future.


Back2Basics: BRICS

  • BRICS is the acronym coined for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa.
  • Originally the first four were grouped as “BRIC” (or “the BRICs”), before the induction of South Africa in 2010.
  • The BRICS members are known for their significant influence on regional affairs; all are members of G20.
  • Since 2009, the BRICS nations have met annually at formal summits. China hosted the 9th BRICS summit in Xiamen on September 2017, while Brazil hosted the most recent 11th BRICS summit on 13-14 November 2019.

New Development Bank and the Fortaleza Declaration

  • During the sixth BRICS Summit in Fortaleza (2014), the leaders signed the Agreement establishing the New Development Bank (NDB).
  • In the Fortaleza Declaration, the leaders stressed that the NDB will strengthen cooperation among BRICS and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to collective commitments for achieving the goal of strong, sustainable and balanced growth.
  • The bank was established in July 2015 by the BRICS countries (Brazil, Russia, India, China and South Africa).
  • The aim of the bank is to mobilize funding for infrastructure and sustainable development.
  • Its ownership structure is unique, as the BRICS countries each have an equal share and no country has any veto power.
  • In this sense, the bank is a physical expression of the desire of emerging markets to play a bigger role in global governance.
  • NDB was created to help fill the funding gap in the BRICS economies and was intended to grow its global scope over time.
  • The bank, with its subscribed capital base of US$50bn, is now poised to become a meaningful additional source of long-term finance for infrastructure in its member countries.
Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

From informal to the formal economy: The crooked roadop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Share of informal economy in the country's economy.

Mains level : Paper 3- Huge presence of the informal sector in the Indian economy and ways to formalise it.


The article discusses the issues around the informal workforce in the economy. What are the factors responsible for the high informal sector in India? How is this sector responding in times of COVID? Are there some easy solutions to mainstream the informal sector into our formal economy? These are some of the points one should ponder upon while reading this article.

The vulnerability of the informal workforce

  • Developing countries such as India are economically vulnerable to Covid-19 because of the presence of huge informal workforce.

  • Lack of protection: This vast informal workforce, which has no labour, social or health protection, is woefully ill-equipped to cope with the medical and economic shocks of the virus.

The humongous size of the informal economy in India

  • Share of the informal sector: As per Periodic Labour Force Survey, 2017-18, 90.6 per cent of India’s workforce was informally employed.

  • This estimate includes those who are employed in informal enterprises (unincorporated small or unregistered enterprises).

  • It also includes informal workers in the formal sector (workers in the formal sector who are not provided any social security benefits by employers).

  • Take another example: Between 2004-05 and 2017-18, a period when India witnessed rapid economic growth, the share of the informal workforce witnessed only a marginal decline from 93.2 per cent to 90.6 per cent. 

  • Covid effect: Looking ahead, it is likely that informal employment will increase as workers who lose formal jobs during the COVID crisis try to find or create work (by resorting to self-employment) in the informal economy.

  • Also, formal enterprises are likely to continue hiring informal workers as they seek more flexibility and attempt to cut labour costs to cope with the COVID-19 induced economic uncertainty.

Why is the informal more favourable over the formal?

  • The basic reason: necessity to eke out a subsistence living in the absence of alternative employment opportunities.

  • The ‘not so basic’ reasons: Some self-employed persons choose to be in the informal economy voluntarily to avoid registration or taxation.

  • Many are deterred by the costs of formalisation or don’t see much benefit from formalisation.

  • Finally, the phenomenon of informalisation of wage employment in the formal sector is a consequence of formal firms trying to avoid payroll taxes and employer’s contributions to social security or pensions to reduce labour costs.

Some solution to smoothen the crooked road

  • A multi-pronged and comprehensive approach is needed to facilitate the transition.

  • Labour intensive growth: It requires creating more formal jobs through labour-intensive growth so that informal workers can move to these jobs.

  • Registering and taxing informal enterprises: The Indian experience of compelling informal firms to register and become tax compliant through demonetisation and introduction of GST formalised them only in a legal sense.

  • There is a need for increasing productivity of informal enterprises and incomes of the informal workforce by providing them with technical and business skills, infrastructure services, financial services, enterprise support and training to better compete in the markets.

  • Promoting the path to entrepreneurship in the informal economy.

  • Many informal enterprises would welcome efforts to reduce barriers to registration and related transaction costs as they expect to reap the benefits of formalising.

  • Reducing decent work deficit: This requires protecting informal workers by providing them a social protection floor, ensuring a set of basic working conditions (adequate living wages, limits on hours of work and safe and healthy workplaces).

A direct question based on the issue of the informal sector can be asked by the UPSC, for ex- “There is a humongous presence of the informal sector in the Indian economy. What are the factors responsible for this? Suggest ways to transform the informal sector into the formal sector.”

Conclusion

Questions around the role of government and who bears the onus of protecting workers deserve careful consideration in the backdrop of the rising incidence of informal employment in the formal sector and the growth of the gig economy. It is apparent that in our relentless pursuit of economic growth, we have ignored the voices of India’s informal sector for too long.


Back2Basics: What is the informal economy?

  • An informal economy (informal sector or grey economy) is the part of any economy that is neither taxed nor monitored by any form of government.
  • Although the informal sector makes up a significant portion of the economies in developing countries, it is sometimes stigmatized as troublesome and unmanageable.
  • However, the informal sector provides critical economic opportunities for the poor.
Coronavirus – Economic Issues

Globalisation 2.0 after Covid-19op-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Various economies of the world and their share in the world economy.

Mains level : Paper 3- Impact of pandemic on globalisation.


The article discusses the future of the Globalisation after Covid-19. Globalisation 2.0 which has been dominated by China will see several changes in the post-pandemic world. Investment decisions and Global Value Chains would undergo a paradigm shift. The article is concluded by expressing the hope that pandemic doesn’t end  Globalisation 2.0 but it will certainly usher in the new rules of capitalism.

Globalisation 2.0 and issues with the flow of labour

  • What is Globalisation 2.0? In strictly economic terms, globalisation is about the free movement of capital, goods and labour across national borders.
  • Globalisation 2.0 began in the early 1980s and has lasted for four decades.
  • Under the 2.0 phenomenon, the labour flows were never as free as the movements of capital and goods.
  • This is because one does not necessarily see who produced the goods or capital coming into the borders.
  • But migrants are distinguishable, one can directly observe how ethnically, racially, religiously different they are from the mainstream.

Rise of right-wing politics in the US and UK due to labour flows

  • Labour flows is a major reason for triggering right-wing politics of nativism in present times.
  • Donald Trump directed his political campaign against non-white immigrants, especially Hispanics and Muslims.
  • He criticised businessmen who, in search of lower costs, had made China the destination of their accumulated investments, transferring jobs away from America’s industrial heartland.
  • Thus, his policies to levy higher tariffs to curtail freer trade. These policies made sure that the American corporations bring capital back to the US.
  • In Europe, a similar politics has been led by the UK, though less vociferously.

How China has benefited from Globalisation 2.0?

  • In 1980, China was the 48th largest economy in the world: with GDPs at roughly $200 billion, Indian and Chinese economies were similar in size.
  • In 2018, China, with a GDP of $13.6 trillion, was the second-largest economy in the world, behind the US ($20.5 trillion). But far ahead of Japan ($4.9 trillion), Germany ($4.0 trillion), Britain ($2.8 trillion), France ($2.8 trillion) and India ($2.7 trillion).
  • Not only in terms of GDP, but China had also become the largest trading nation in the world by 2018:
  • Exports: worth $2.5 trillion, substantially ahead of the US ($1.6 trillion).
  • FDI in China: In 2018, China attracted over $203 billion worth of net FDI, much more than India ($42 billion), and second only to the US ($258 billion).

Is COVID-19 a sign of ending Globalisation 2.0?

  • Despite the pure economic logic of how easy it is to manufacture at scale in China, the global leader today are more concerned about the political overtones.
  • Given all the doubts about how China handled the information about the origins of the virus in Wuhan, anger against China in world capitals is evident.
  • Such anger can have impact on the rules of globalisation.
  • Strict regulation of labour laws: We can expect labour flows will now be more strictly regulated than before.
  • Political risks in investment decisions: Western investors will also have to factor in political risks in their investment decision-making.
  • National security concern: New concerns like what if China threatens supply disruptions for critical materials.
  • Instead of chasing lower labour costs, investors will either bring capital back to domestic shores or geographically restructure their supply chains.
  • To summarize it, Globalisation will not end, but it will be pushed into greater retreat. Thus, changing the rules of the BIG game of capitalism.

A question based on the impact of the pandemic on the global trade, issues associated with and opportunities for India could be asked in the Mains Paper 3.

Also the Idea of Globalisation is important from the aspect of paper 1 and Essay. “Globalisation’ vs ‘Nationalism’ was one of the topic in Essay paper in 2009.

Conclusion

For the foreseeable future, economic efficiency, the cornerstone of market-based systems, will not be high on priority. Politics will drive new economic policies, not market-based rationality.

Policy Wise: India’s Power Sector

Global Energy Review 2020, ReportPriority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Global Energy Review, 2020

Mains level : India's emergency demand


Covid-19 is having a ripple effect on the global energy space. Consistent lockdowns have reduced energy demand by almost 30 per cent in India.

Covid-19 shock global energy demand

  • The IEA’s Global Energy Review studies the impacts of the Covid-19 crisis on global energy demand and CO emissions.
  • The projections of energy demand and energy-related emissions for 2020 are based on assumptions that the lockdowns implemented around the world.
  • It projects a 6 per cent fall in energy demand in 2020 — seven times the decline after the 2008 global financial crisis.
  • Electricity demand is set to decline by 5 per cent in 2020, the largest drop since the Great Depression in the 1930s.

Global Energy Demands

  • The countries in full lockdown are experiencing an average decline of 25% in energy demand per week, while in those with a partial lockdown, the fall in energy demand is about 18% per week.
  • Global energy demand declined by 3.8% in the first quarter of 2020 compared to the first quarter of 2019.
  • Further, it is expected that the impact of Covid‑19 on energy demand in 2020 would be more than seven times larger than the impact of the 2008 financial crisis on global energy demand.

Considering the above scenario the global demand of various energy sources can be analysed as given below

   Coal Demand:

  • It has been declined by 8% compared with the first quarter of 2019.
  • The reasons for such decline include, China – a coal-based economy – was the country hardest hit by Covid‑19 in the first quarter and cheap gas and continued growth in renewables elsewhere challenged coal.

Oil Demand:

    • It has declined by 5% in the first quarter, majorly due to curtailment in mobility and aviation, which account for nearly 60% of global oil demand.
    • The report also estimates that the global demand for oil could further drop by 9% on average in 2020, which will return oil consumption to 2012 levels.
  •  Gas Demand:
    • The impact of the pandemic on gas demand has been moderate, at around 2%, as gas-based economies were not strongly affected in the first quarter of 2020.
  •  Renewables Energy Resources Demand:

    • It is the only source that has registered a growth in demand, driven by larger installed capacity.
    • Further, the demand for renewables is expected to rise by 1% by 2020 because of low operating costs and preferential access for many power systems.
  •  Electricity Demand:

    • It has been declined by 20% during periods of full lockdown in several countries.
    • However, the residential demand is outweighed by reductions in commercial and industrial operations.

Indian scenario

  • The declines in electricity and transport demand in India have been among the deepest globally, but the contractions over the full year are likely to be smaller than the global average.
  • The impact of the crisis on energy demand is heavily dependent on the duration and stringency of measures to curb the spread of the virus.
  • At the same time, lockdown measures are driving a major shift towards low-carbon sources of electricity including nuclear, hydropower, wind and solar PV.

Data on renewables

  • After overtaking for the first time ever in 2019, low-carbon sources are set to extend their lead this year to reach 40 per cent of global electricity generation — 6 percentage points ahead of coal.
  • Electricity generation from wind and solar PV continues to increase in 2020, lifted by new projects that were completed in 2019 and early 2020.

Back2Basics: International Energy Agency (IEA)

  • The IEA is an autonomous organisation which works to ensure reliable, affordable and clean energy, headquartered in Paris, France.
  • It was established in the wake of 1973 (set up in 1974) oil crisis after the OPEC cartel had shocked the world with a steep increase in oil prices.
  • India became an associate member of the International Energy Agency in 2017.
Blockchain Technology: Prospects and Challenges

E-Renminbi: China’s Official Digital CurrencyPrelims Only

Note4Students

From UPSC perspective, the following things are important :

Prelims level : e-RMB

Mains level : Cryptocurrency and its feasiblity


China in a significant move has launched a trial of digital yuan in four urban centres of the country for specific services even as the world grapples with the containment of Covid.

What is a cryptocurrency? Discuss how a vibrant cryptocurrency segment could add value to India’s financial sector. (250 W)

Prelims Perspective:-

1. Subtle differences btn digital and virtual currency – e.g. Regulatory issues

2. Which countries have official virtual currency – e.g. Petro of Venezuela

e-RMB

  • It will be the electronic form of the renminbi, with a value equivalent to the paper notes and coins in circulation.
  • The People’s Bank of China, the country’s central bank, will be the sole issuer of the digital yuan, initially offering the digital money to commercial banks and other operators.
  • It will be launched in major cities of Shenzhen, Suzhou and Chengdu, as well as the Xiong’an New Area.
  • It aims to change the financial system in big ways — by cutting costs and making transactions easier, more convenient and more transparent.
  • The public would be able to convert money in their bank accounts to the digital version and make deposits via electronic wallets.

Back2Basics: Cryptocurrency

  • A Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions.
  • It leverages blockchain technology to gain decentralization, transparency, and immutability.
  • The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference.
  • It can be sent directly between two parties via the use of private and public keys.
  • Unlike decentralized cryptocurrencies, such as bitcoin, that allow users to transfer value with no central authority or third party involved, the government-backed digital currency is preferred.

What are Blockchains?

  • Blockchain, sometimes referred to as Distributed Ledger Technology (DLT), makes the history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing.
  • Blockchain consists of three important concepts: blocks, nodes and miners.
  • Nodes can be any kind of electronic device that maintains copies of the blockchain and keeps the network functioning.
  • Miners create new blocks on the chain through a process called mining.
History- Important places, persons in news

Significance of UK labor party’s remarks on KashmirPrelims Only

Note4Students

From UPSC perspective, the following things are important :

Prelims level : India in Labour Party (UK) manifestos

Mains level : Not Much


The UK Labour party’s newly appointed leader Keir Starmer said Kashmir was a bilateral issue for India and Pakistan to resolve peacefully. These remarks were seen as an attempt to re-position his party’s stance on Kashmir and reach out to the Indian community in Britain.

What was the Labour party’s stance before?

  • The party’s relations with the Indian diaspora have been strained, especially after its delegates passed an emergency policy motion in September 2019 criticizing India’s decision to revoke Article 370.
  • It maintained that the people of Kashmir should have self-determination rights.

Why is the Labour Party’s relationship with the Indian diaspora important?

  • Indians are the largest ethnic community in the UK, numbering over 1.5 million people or accounting for over 2.3 per cent of the country’s population.
  • Therefore, they form a significant vote share for any party.
  • In the 2017 general elections, 50 per cent of the Indians living in the UK had voted for Labour.

India in Labour Party (UK) manifestos

Over the years, issues relating to India have found various mention in many election manifestos in the UK:

  • 1945: India’s freedom had been a campaign promise of the Labour party, its manifesto pledging “the advancement of India to responsible self-government”.
  • 1947: The Indian Independence Act, 1947, was passed when Attlee was Prime Minister.
  • 1949: all the Commonwealth Prime Ministers welcomed the free choice of India, Pakistan and Ceylon to join the Commonwealth as full and equal members.
  • 2019: Issue a formal apology for the Jallianwala Bagh massacre.
Wildlife Conservation Efforts

Back in news: International Whaling Commission (IWC)Prelims Only

Note4Students

From UPSC perspective, the following things are important :

Prelims level : International Whaling Commission (IWC)

Mains level : Not Much


Iceland will not be hunting any whales in 2020. Iceland, alongside Norway and Japan, has frequently broken the International Whaling Commission’s 1986 worldwide moratorium, which indefinitely “paused” commercial whaling.

Regarding IWC, we can expect a statement based prelim question asking-

1) If IWC has a UN or any other parent organization

2) If India is a member/observer etc.

About International Whaling Commission (IWC)

  • The IWC is an Inter-Governmental Organisation set up by the terms of the International Convention for the Regulation of Whaling (ICRW) signed in Washington, D.C in 1946.
  • It aims to provide for the proper conservation of whale stocks and thus make possible the orderly development of the whaling industry.
  • The main duty of the IWC is to keep under review and revise as necessary the measures laid down in the Schedule to the Convention which governs the conduct of whaling throughout the world.
  • The body is the first piece of International Environmental Legislation established in 1946.
  • Commercial whaling was banned by the IWC in 1986 after some species were almost driven to extinction.
  • 89 countries have the membership of in IWC and all the member countries are signatories to this convention.
  • India is a member state of the IWC.

Earlier reference

  • Japan has last year withdrawn from the IWC citing domestic reasons.
  • Thus, it resumed commercial whaling after 31 years, meeting a long-cherished goal of its traditionalists.
Wildlife Conservation Efforts

[pib] Sariska Tiger reservePIB

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Sariska Tiger Reserve

Mains level : Not Much


 

The Ministry of Tourism’s Dekho Apna Desh webinar featured a presentation and virtual tour of ‘Destination- Sariska Tiger reserve’.

Tourism and tourist sites carry high stakes for possible prelims questions.  Take time to quickly revise the Swadesh Darshan , PRASHAD Schemes.   Click here for the repository of all such initiatives.

Sariska Tiger Reserve

  • It is located in the Aravalli Hills, 35 km from Alwar, 250 km SW of Delhi and 110 km NE of Jaipur.
  • The former hunting reserve of the Maharaja of Alwar, the Sariska valley is home to a variety of flora and fauna.
  • The park has populations of tigers, leopards, Nilgai, Sambar, chital etc.
  • The place is a paradise for bird lovers as it shelters a large population of Indian peafowl, crested serpent eagles, sand grouse, golden-backed woodpeckers, great Indian horned owls, tree pies, vultures and many others.
  • It is the first reserve in the world with successfully relocated tigers. It is an important biodiversity area in the Northern Aravalli leopard and wildlife corridor.

Features of this episode

  • Alwar is a city dotted with heritage buildings, Forts, tombs and palaces. Some of the important sights not to be missed are Bala Qila, Vijai Mandir Lake Palaces, Fateh Jung ki Gumbad, Moti Doongri etc.
  • The sanctuary is strewn with ruins of ancient temples dating back to the 10th and 11th centuries.
  • Some of the highlights are the ruins of the Kankwari Fort and the 10th-century Neelkanth temples, which have Khajuraho-like carvings as key features.
  • Neelkanth Mahadeva houses the ruins of over 300 Hindu and Jain temples constructed between the 8th and 12th Centuries.
  • Chand Baoli (stepwell) at Abhaneri is enormous with 3500 steep steps built by the Nikhumbha dynasty is one of the largest step-wells in the world.

About DekhoApnaDesh

  • Under this, a series of webinars will showcase the diverse and remarkable history and culture of India through a documentary series on various cities.
  • It will be including various monuments, cuisine, arts, dance forms, natural landscapes, festivals and many other aspects of the rich Indian civilization.
  • The objective of the webinar series is to create awareness about and promote various tourism destinations of India – including the lesser-known destinations and lesser-known facets of popular destinations.
  • The webinar will be available in the public domain through the Ministry’s social media handles- “Incredible India” on Instagram and Facebook.

Back2Basics: Project Tiger

  • Project Tiger is a tiger conservation programme launched in April 1973 by during PM Indira Gandhi’s tenure.
  • It is administered by the National Tiger Conservation Authority.
  • The project aims at ensuring a viable population of Bengal tigers in their natural habitats, protecting them from extinction, and preserving areas of biological importance as a natural heritage forever represented as close as possible the diversity of ecosystems across the distribution of tigers in the country.
  • The project’s task force visualized these tiger reserves as breeding nuclei, from which surplus animals would migrate to adjacent forests.
  • The government has set up a Tiger Protection Force to combat poachers and funded relocation of villagers to minimize human-tiger conflicts.