Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Issues with India's GDP data
Context
There are three major reasons why the GDP data, and hence any narrative of economic recovery based on it, are questionable.
Background
- The NSO released the current GDP series in 2015, using 2011-12 as its base year.
- Some have argued that the problem in the new series is the real growth rate. This is debatable.
- Scholars have pointed to measurement problems, both in the nominal and real GDP growth rates.
Three issues with the GDP data, and narrative of economic recovery based on it
[1] Double deflation problem
- The new series entailed a shift from a volume-based measurement system to one based on nominal values, thereby making the deflator problem more critical.
- Simply put, the NSO calculates real GDP by gathering nominal GDP data in rupees and then deflating this data using various price indices.
- The nominal data needs to be deflated twice: Once for outputs and once for inputs.
- But the NSO — almost uniquely amongst G20 countries — deflates the nominal data only once.
- It does not deflate the value of inputs.
- To see why this is a problem, consider what happens when the price of imported oil goes down.
- In that case, input costs will fall and the profits recorded by Indian firms will rise.
- This increase in profits is merely the result of a fall in input prices, so it needs to be deflated away.
- But the NSO doesn’t deflate away the increase in profits.
- Since the cost of inputs is measured by the WPI (wholesale price index), a crude measure of the overestimation caused by the absence of “double deflation” is given by the gap between the WPI and the CPI (consumer price index).
- In the 2014-2017 period, oil prices plunged, causing the WPI to fall sharply relative to the CPI.
- This meant that real growth was probably overstated.
- In the last few months, the exact opposite has been happening. WPI inflation is soaring.
- The rapid increase in the WPI relative to the CPI is imparting an upward bias to the deflator.
[2] Sectoral weight not updated
- When it calculates GDP, it takes a sample of activity in each sector, then aggregates the figures by using sectoral weights.
- To make sure that the weights are reasonably accurate, the NSO normally updates them once a decade.
- It has now been more than 10 years since the weights were changed, and there are no signs of a base year revision.
- As a result, the sectoral weights are still based on the structure of the economy in 2010-11, when in particular the information technology sector was much smaller.
[3] Measurement of unorganised sector
- Measurement of the unorganised sector has always been difficult in India.
- Once in a while, the NSO undertakes a survey to measure the size of the sector.
- In the meantime, it simply assumes that the sector has been growing at the same rate as the organised sector.
- However, starting in 2016 the unorganised sector has been disproportionately impacted by a series of shocks.
- In 2018, the NBFC sector reported serious problems, which in turn impacted unorganised sector firms since they were heavily dependent on NBFCs for funds.
- From 2020 onwards, the pandemic has impacted the unorganised sector more than the organised sector enterprises.
- Despite these shocks, the NSO does not seem to have made any adjustments to its methodology for estimating the growth of the unorganised sector.
Consider the question “Elaborate the issues with India’s GDP data. Suggest the way forward.”
Conclusion
There are serious problems with India’s GDP data. Any analysis of recovery or growth forecast based on this data must be taken with a handful of salt.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Read the attached story
Mains level: WTO reforms
China’s status as a ‘developing country’ at the World Trade Organization (WTO) has become a contentious issue with a number of countries raising concerns.
Defining a country’s ‘Development’
- There are no WTO definitions of “developed” or “developing” countries.
- Developing countries in the WTO are designated on the basis of self-selection although this is not necessarily automatically accepted in all WTO bodies.
- The WTO however recognizes as least-developed countries (LDCs) those countries which have been designated as such by the United Nations.
Benefits of ‘Developing Country’ tag
- Special and differential treatment: Certain WTO agreements give developing countries special rights through ‘special and differential treatment’ (S&DT) provisions.
- Preferential treatment: The classification also allows other countries to offer preferential treatment.
- Longer timeframe for pacts: WTO can grant developing countries longer timeframes to implement the agreements and even commitments to raise trading opportunities for such countries.
Issues with Chinese ‘Developing Country’ status
- China has become an upper-middle-income country according to the World Bank.
- It involves in unfair trade practices such as preferential treatment for state enterprises, data restrictions and inadequate enforcement of intellectual property rights.
How has China responded?
- China has consistently maintained that it is the “world’s largest developing economy”.
- It has recently indicated that it may be willing to forego many benefits of being a developing country.
What are the benefits of LDC classification?
- The WTO recognizes LDCs relying on a classification by the UN based on criteria that is reviewed every three years. LDCs are often exempted from certain provisions of WTO pacts.
- Bangladesh, currently classified as an LDC, receives zero duty, zero quota access for almost all exports to the EU.
- It is, however, set to graduate from the LDC status in 2026 as its per capita GDP has risen sharply surpassing that of India in FY21.
Try this question from CS Mains 2018:
Q.What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India?
Reference: https://www.civilsdaily.com/sansad-tv-perspective-wto-reforms/
(Aspirants need not write whole answers. Just a quick summary with keywords would suffice.)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CAA
Mains level: Issues with CAA
The Ministry of Home Affairs (MHA) has sought another extension from parliamentary committees to frame the rules of the Citizenship (Amendment) Act (CAA), 2019.
What is Citizenship Amendment Act (CAA), 2019?
- The act is sought to amend the Citizenship Act, 1955 to make Hindu, Sikh, Buddhist, Jain, Parsi, and Christian illegal migrants from Afghanistan, Bangladesh, and Pakistan, eligible for citizenship of India.
- In other words, it intends to make it easier for non-Muslim immigrants from India’s three Muslim-majority neighbours to become citizens of India.
- Under The Citizenship Act, 1955, one of the requirements for citizenship by naturalization is that the applicant must have resided in India during the last 12 months, as well as for 11 of the previous 14 years.
- The amendment relaxes the second requirement from 11 years to 6 years as a specific condition for applicants belonging to these six religions, and the aforementioned three countries.
- It exempts the members of the six communities from any criminal case under the Foreigners Act, 1946 and the Passport Act, 1920 if they entered India before December 31, 2014.
Key feature: Defining illegal migrants
- Illegal migrants cannot become Indian citizens in accordance with the present laws.
- Under the CAA, an illegal migrant is a foreigner who: (i) enters the country without valid travel documents like a passport and visa, or (ii) enters with valid documents, but stays beyond the permitted time period.
- Illegal migrants may be put in jail or deported under the Foreigners Act, 1946 and The Passport (Entry into India) Act, 1920.
Exceptions
- The Bill provides that illegal migrants who fulfil four conditions will not be treated as illegal migrants under the Act. The conditions are:
- they are Hindus, Sikhs, Buddhists, Jains, Parsis or Christians;
- they are from Afghanistan, Bangladesh or Pakistan;
- they entered India on or before December 31, 2014;
- they are not in certain tribal areas of Assam, Meghalaya, Mizoram, or Tripura included in the Sixth Schedule to the Constitution, or areas under the “Inner Line” permit, i.e., Arunachal Pradesh, Mizoram, and Nagaland.
Controversy with the Act
- Country of Origin: The Act classifies migrants based on their country of origin to include only Afghanistan, Pakistan and Bangladesh.
- Other religious minorities ignored: It is unclear why illegal migrants from only six specified religious minorities have been included in the Act.
- Defiance of purpose: India shares a border with Myanmar, which has had a history of persecution of a religious minority, the Rohingya Muslims.
- Date of Entry: It is also unclear why there is a differential treatment of migrants based on their date of entry into India, i.e., whether they entered India before or after December 31, 2014.
Way forward
- India is a constitutional democracy with a basic structure that assures a secure and spacious home for all Indians.
- Being partitioned on religious grounds, India has to undertake a balancing act for protecting the religious minorities in its neighbourhood.
- These minorities are under constant threat of persecution and vandalism.
- India needs to balance the civilization duties to protect those who are prosecuted in the neighbourhood.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Darvaza Gas Crater, TAPI gas pipeline
Mains level: Not Much
Turkmenistan President has ordered experts to find a way to extinguish a fire in a huge natural gas crater, the Darvaza gas crater also known as the ‘Gateway to Hell’.
Darvaza Gas Crater
- Located in the Karakum desert, 260 kilometres away from Turkmenistan’s capital, Ashgabat, the crater has been burning for the last 50 years.
- The crater is 69 metres wide and 30 metres deep.
- While the details of the origin of the crater are contested but it has been said that the crater was created in 1971 during a Soviet drilling operation.
- In 1971, Soviet geologists were drilling for oil in the Karakum desert when they hit a pocket of natural gas by mistake, which caused the earth to collapse and ended up forming three huge sinkholes.
Why is it flamed?
- This pocket of natural gas contained methane, hence to stop that methane from leaking into the atmosphere, the scientists lit it with fire, assuming the gas present in the pit would burn out within a few weeks.
- The scientists seemed to have misjudged the amount of gas present in the pit, because the crater has been on fire for five decades now.
A popular tourist attraction
- The crater has become a significant tourist attraction in Turkmenistan.
- In 2018, the country’s president officially renamed it as the “Shining of Karakum”.
Why did Turkmenistan order to extinguish it?
- Calling it a human-made crater, it has negative effects on both environment and the health of the people living nearby.
- It also ends up losing valuable natural resources for which could fetch significant profits.
How harmful are methane leaks?
- Methane is the primary contributor to the formation of ground-level ozone, a hazardous air pollutant and greenhouse gas, exposure to which causes 1 million premature deaths every year.
- Methane is also a powerful greenhouse gas. Over a 20-year period, it is 80 times more potent at warming than carbon dioxide.
Back2Basics: TAPI Gas Pipeline
- The Turkmenistan–Afghanistan–Pakistan–India (TAPI) Pipeline is a natural gas pipeline being developed with the participation of the Asian Development Bank.
- It will be a 1,814km trans-country natural gas pipeline running across four countries.
- It will transport natural gas from the Galkynysh Gas Field in Turkmenistan through Afghanistan into Pakistan and then to India.
- The plan for the TAPI project was originally conceived in the 1990s to generate revenue from Turkmenistan’s gas reserves by exporting natural gas via Afghanistan to Pakistan and India.
- Construction on the project started in Turkmenistan on 13 December 2015, work on the Afghan section began in February 2018, and work on the Pakistani section was planned to commence in December 2018.
- Presently, the construction work has been stalled due to terror activities of Taliban in Afghanistan since few years.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Red Sanders
Mains level: Illegal trade
Red Sanders (Red Sandalwood) has fallen back into the ‘endangered’ category in the International Union for Conservation of Nature’s (IUCN) Red List.
A recently released and trending Telugu movie plot provides a fictional account of red sandal smuggling.
About Red Sanders
- The species, Pterocarpus santalinus, is an Indian endemic tree species, with a restricted geographical range in the Eastern Ghats.
- It is endemic to a distinct tract of forests in Andhra Pradesh.
- It is mainly found in Chittoor, Kadapa, Nandhyal, Nellore, Prakasam districts of Andhra Pradesh.
- It was classified as ‘near threatened’ in 2018 and has now joined the ‘endangered’ list once again in 2021.
- It is listed under Appendix II of CITES and is banned from international trade.
Status of legal protection in India
- The Union Environment Ministry had decided to keep Red Sanders (red sandalwood) OUT of the Schedule VI of Wild Life Protection Act, 1972, arguing that this would discourage the cultivation of the rare plant species.
- Schedule VI regulates and restricts the cultivation, possession, and sale of a rare plant species.
Significance of listing
- It was a moment of celebration when the species was lifted off from the endangered category for the first time since 1997.
- Over the last three generations, the species has experienced a population decline of 50-80 percent.
- It is also scheduled in appendix II of the CITES and Wildlife Protection Act.
Threats to this species
- Red Sanders are known for their rich hue and therapeutic properties, are high in demand across Asia, particularly in China and Japan.
- They are used in cosmetics and medicinal products as well as for making furniture, woodcraft and musical instruments.
- Its popularity can be gauged from the fact that a tonne of Red Sanders costs anything between Rs 50 lakh to Rs 1 crore in the international market.
Try this question from CSP 2016:
Q.With reference to ‘Red Sanders’, sometimes seen in the news, consider the following statements:
- It is a tree species found in a part of South India.
- It is one of the most important trees in the tropical rain forest areas of South India.
Which of the above statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Post your answers here.
Back2Basics: Red List Categories of IUCN
Species are classified by the IUCN Red List into nine groups specified through criteria such as rate of decline, population size, area of geographic distribution, and degree of population and distribution fragmentation. They are:
- Extinct (EX) – beyond reasonable doubt that the species is no longer extant.
- Extinct in the wild (EW) – survives only in captivity, cultivation and/or outside native range, as presumed after exhaustive surveys.
- Critically endangered (CR) – in a particularly and extremely critical state.
- Endangered (EN) – very high risk of extinction in the wild, meets any of criteria A to E for Endangered.
- Vulnerable (VU) – meets one of the 5 red list criteria and thus considered to be at high risk of unnatural (human-caused) extinction without further human intervention.
- Near threatened (NT) – close to being at high risk of extinction in the near future.
- Least concern (LC) – unlikely to become extinct in the near future.
- Data deficient (DD)
- Not evaluated (NE)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Various air pollutants
Mains level: NAAQ standards
Delhi and most of the other non-attainment cities under the National Clean Air Programme (NCAP) have shown only a marginal improvement, said a new analysis released.
About NCAP
- The NCAP was implemented across India in 2019 to reduce particulate matter levels in 132 cities by 20-30% in 2024.
- Cities are declared non-attainment if they consistently fail to meet the National Ambient Air Quality Standards (NAAQS) over a five-year period.
What are NAAQ standards?
- The mandate provided to the Central Pollution Control Board (CPCB) under the Air (Prevention and Control of Pollution) Act empowers it to set standards for the quality of air.
- Hence the current National Ambient Air Quality Standards were notified in November 2009 by the CPCB.
- Prior to this, India had set Air Quality standards in 1994, and this was later revised in 1998.
- The 2009 standards further lowered the maximum permissible limits for pollutants and made the standards uniform across the nation.
- Earlier, less stringent standards were prescribed for industrial zones as compared to residential areas.
Pollutants covered:
- Sulphur Dioxide (SO2)
- Nitrogen Dioxide (NO2),
- Particulate Matter (size less than 10 µm) or PM 10
- Particulate Matter (size less than 2.5 µm) or PM2.5
- Ozone (O3)
- Carbon Monoxide (CO)
- Ammonia (NH3)
(Air Pollutants that most of us NEVER heard of:)
- Lead
- Benzene (C6H6)
- Benzo(a)Pyrene (BaP)
- Arsenic(As)
- Nickel (Ni)
Source: Arthpaedia
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Samba Cultivation
Mains level: NA
Around four lakh more acres have been brought under the Crop Insurance Scheme for the Samba Cultivation season of 2021-22 in Tamil Nadu.
What is Samba Cultivation?
- It is a Tamil name for paddy cultivation season.
- Other paddy seasons in Tamil Nadu include:
- Kuruvai: June-July
- Samba: August
- Late Samba / Thaladi: September- October
- Navarai: December- January
Back2Basics: Major crop seasons
(1) Kharif Crop
- Kharif crops, monsoon crops, or autumn crops are cultivated and harvested in the monsoon season.
- The farmers sow seeds at the beginning of the monsoon season and harvest them at the end of the season. i.e., between September and October.
- Kharif crops need a lot of water and hot weather for proper growth.
- Examples: Rice, Maize, Millet, Soybean, Arhar, Cotton. etc.
(2) Rabi Crop
- Rabi means spring in Arabic. Crops grown in the winter season [October to December] and harvested in the spring season [Aril-May] are called Rabi crops.
- These crops require a warm climate for germination and maturation of seeds and need a cold environment for their growth.
- Rain in winter spoils the Rabi crop but is good for the Kharif crop.
- Examples: Wheat, Gram, Barley, Peas, Oats, Chickpea, Linseed, Mustard, etc.
(3) Zaid Crop
- Zaid crops are grown between Kharif and Rabi Seasons, i.e., between March to June.
- They require warm, dry weather as a vital growth period and longer day length for flowering.
- Zaid crop is significant for farmers as it gives fast cash to the farmers and is also known as gap-filler between two chief crops, Kharif and Rabi.
- Examples: Cucumber, Pumpkin, Bitter gourd, Watermelon, Muskmelon, Sugarcane, Groundnut, Pulses, etc.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Model BIT
Mains level: Paper 3- Reviev of BITs
Context
The report of the Standing Committee on External Affairs on ‘India and bilateral investment treaties (BITs)’ was presented to Parliament last month.
Factor’s that necessitated the review of India’s BITs
- Investor’s started suing India frequently: Since 2011, when India lost its first investment treaty claim in White Industries v. India, foreign investors have sued India around 20 times for alleged BIT breaches.
- This made India the 10th most frequent respondent-state globally in terms of investor-state dispute settlement (ISDS) claims from 1987 to 2019 (UNCTAD).
- Adoption of new Model BIT: India adopted a new Model BIT in 2016, which marked a significant departure from its previous treaty practice.
- Negotiating new BITs: India is in the process of negotiating new investment deals (separately or as part of free trade agreements) with important countries such as Australia and the U.K.
Recommendations of the Committee
- 1] Speed of the existing negotiations: India has signed very few investment treaties after the adoption of the Model BIT.
- It recommends that India expedite the existing negotiations and conclude the agreements at the earliest because a delay might adversely impact foreign investment.
- 2] Sign more BIT’s in core sector: The committee recommends that India should sign more BITs in core or priority sectors to attract FDI.
- Generally, BITs are not signed for specific sectors.
- It will require an overhauling of India’s extant treaty practice that focuses on safeguarding certain kinds of regulatory measures from ISDS claims rather than limiting BITs to specific sectors.
- 3] Fine-tune Model BIT: Model BIT gives precedence to the state’s regulatory interests over the rights of foreign investors.
- The Model BIT should be recalibrated keeping two factors in mind:
- a) tightening the language of the existing provisions to circumscribe the discretion of ISDS arbitral tribunals.
- b) striking a balance between the goals of investment protection and the state’s right to adopt bonafide regulatory measures for public welfare.
- 4] Improve the capacity of government officials: The committee recommends bolstering the capacity of government officials in the area of investment treaty arbitration.
- While the government has taken some steps in this direction through a few training workshops, more needs to be done.
- What is needed is an institutionalised mechanism for capacity-building through the involvement of public and private universities.
- The government should also consider establishing chairs in universities to foster research and teaching activities in international investment law.
Need to improve poor governance
- A very large proportion of ISDS claims against India is due to poor governance.
- This includes changing laws retroactively which led to Vodafone and Cairn suing India.
- Annulling agreement in the wake of imagined scam which resulted in taking away S-band satellite spectrum from Devas.
- The judiciary’s fragility in getting its act together (sitting on the White Industries case for enforcement of its commercial award for years).
Suggestions
- The Committee could have emphasised on greater regulatory coherence, policy stability, and robust governance structures to avoid ISDS claims.
- The government should promptly assemble an expert team to review the Model BIT.
Consider the question “India is one of the most frequent respondent-state globally in terms of investor-state dispute settlement (ISDS) claims. In context of this, examine the reasons for such frequent disputes and suggest the way forward.”
Conclusion
The committee’s report on India’s BITs have novel suggestions, but it is lacking in several aspects.
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Back2Basics: ISDS mechanism
- Investor-state dispute settlement (ISDS) is a mechanism in a free trade agreement (FTA) or investment treaty that provides foreign investors, with the right to access an international tribunal to resolve investment disputes.
- ISDS promotes investor confidence and can protect against sovereign or political risk.
- If a country does not uphold its investment obligations, an investor can have their claim determined by an independent arbitral tribunal, usually comprising three arbitrators.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Centrality of Central Asian region for India
Context
When Prime Minister Narendra Modi hosts the five Central Asia leaders at the Republic Day Parade on January 26, it will send a strong signal — of the new prominence of the Central Asian region in India’s security calculations.
Why India needs effective continental policy
- Factors intensifying geopolitical competition: China’s assertive rise, withdrawal of forces of the United States/North Atlantic Treaty Organization (NATO) from Afghanistan, the rise of Islamic fundamentalist forces, the changing dynamics of the historic stabilising role of Russia (most recently in Kazakhstan) and related multilateral mechanisms — the Shanghai Cooperation Organization (SCO), the Collective Security Treaty Organisation, and the Eurasian Economic Union — have all set the stage for a sharpening of the geopolitical competition on the Eurasian landmass.
- Progress in ties: India’s continental strategy, in which the Central Asian region is an indispensable link, has progressed intermittently over the past two decades — promoting connectivity, incipient defence and security cooperation, enhancing India’s soft power and boosting trade and investment.
- It is laudable, but as is now apparent, it is insufficient to address the broader geopolitical challenges engulfing the region.
- To meet this challenge, evolving an effective continental strategy for India will be a complex and long-term exercise.
Leveraging maritime power
- India’s maritime vision and ambitions have grown dramatically during the past decade, symbolised by its National Maritime Strategy, the Security and Growth for All in the Region (SAGAR) and major initiatives relating to the Indo-Pacific and the Quad, in which maritime security figures prominently.
- It was also a response to the dramatic rise of China as a military power.
- Importance: Maritime security is important to keeping sea lanes open for trade, commerce and freedom of navigation, resisting Chinese territorial aggrandisement in the South China Sea and elsewhere, and helping littoral states resist Chinese bullying tactics in interstate relations.
- However, maritime security and associated dimensions of naval power are not sufficient instruments of statecraft as India seeks diplomatic and security constructs to strengthen deterrence against Chinese unilateral actions and the emergence of a unipolar Asia.
- Bulwarks against Chinese maritime expansionist gains are relatively easier to build and its gains easier to reverse than the long-term strategic gains that China hopes to secure on continental Eurasia.
- Centrality of Central Asia: Like Association of Southeast Asian Nations (ASEAN) centrality is key to the Indo-Pacific, centrality of the Central Asian states should be key for Eurasia.
Challenges for India
1] Connectivity challenge
- Connectivity means nothing when access is denied through persistent neighbouring state hostility contrary to the canons of international law.
- India has been subject for over five decades to a land embargo by Pakistan that has few parallels in relations between two states that are technically not at war.
- Lack of alternative route: Difficulties have arisen in operationalising an alternative route — the International North-South Transport Corridor on account of the U.S.’s hostile attitude towards Iran.
- With the recent Afghan developments, India’s physical connectivity challenges with Eurasia have only become harder.
- The marginalisation of India on the Eurasian continent in terms of connectivity must be reversed.
2] India must be aware of the limitations of the US
- The ongoing U.S.-Russia confrontation relating to Ukraine, Russian opposition to future NATO expansion and the broader questions of European security including on the issue of new deployment of intermediate-range missiles, following the demise of the Intermediate-Range Nuclear Forces (INF) treaty will have profound consequences for Eurasian security.
- The U.S. would be severely stretched if it wanted to simultaneously increase its force levels in Europe and the Indo-Pacific.
- A major conflict — if it erupts in Central Europe, pitting Russia, Ukraine and some European states — will stall any hopes of a substantial U.S. military pivot to the Indo-Pacific.
- India should be cognisant of the limitations of geography, obvious gaps between strategic ambition and capacity but also the inherently different standpoints of how major maritime powers view critical questions of continental security.
- India is unique as no other peer country has the same severity of challenges on both the continental and maritime dimensions.
Way forward for India
- India would need to acquire strategic vision and deploy the necessary resources to pursue our continental interests without ignoring our interests in the maritime domain.
- This will require a more assertive push for our continental rights — namely that of transit and access, working with our partners in Central Asia, with Iran and Russia, and a more proactive engagement with economic and security agendas ranging from the SCO, Eurasian Economic Union (EAEU) and the Collective Security Treaty Organization (CSTO).
- Striking the right balance between continental and maritime security would be the best guarantor of our long-term security interests.
Conclusion
India will need to define its own parameters of continental and maritime security consistent with its own interests. In doing so, at a time of major geopolitical change, maintaining our capacity for independent thought and action will help our diplomacy and statecraft navigate the difficult landscape and the choppy waters that lie ahead.
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