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  • Domestic politics and its influence on foreign policy

    The article examines the issue of intervention in domestic politics by the external powers and the practical utilities of principles of non-intervention in the internal matters of neighbouring countries.

    Political turmoil in Nepal and India’s reaction

    • Nepal has been going through political crisis for some days now.
    • India’s reluctance to be drawn into the political turmoil in Kathmandu has drawn much attention.
    • India’s refusal is in contrast to Beijing’s active effort to preserve the unity of the ruling communist party in Kathmandu.

    The principles of sovereignty and non-intervention and its violations

    • India and China always insist that other countries should stop interfering in their respective internal affairs.
    • But big nations always intervene in other nations but fend off potential threats to their own sovereignty.
    • That does not prevent others from messing with India and Beijing.
    • Intervention is part of international life; all powers — big and small — frequently violate the principle of sovereignty.
    • The concept of national sovereignty was never absolute.
    • Big nations tend to intervene more, and the smaller ones find ways to manage this through the politics of balancing against their large neighbours.

    Analysing the causes of external interventions

    • The pressure for external intervention often comes from major domestic constituencies within.
    • For example, the conflict between Sinhala majority and Tamil minority in Sri Lanka produces political pressure on Delhi to intervene in Sri Lanka.
    • The demand sometimes comes from outside.
    • In Nepal, for example, elite competition sees different factions trying to mobilise external powers.
    • In recent years, we have also seen the intense interaction between domestic power struggles and external powers like India and China.
    • The Maldives is one example.

    Factors responsible for intervention

    • Given the nature of South Asia’s political geography, very few problems can be isolated within the territories of nations.
    • There is also the tension between the shared cultural identity in the subcontinent.
    • There is also the determination of the smaller nations to define a contemporary identity independent of India.
    • The bitter legacies of Partition leave the domestic political dynamics of Bangladesh, India and Pakistan tied together.
    • India’s relations with its smaller neighbours are also burdened by the legacy of India’s past hegemony and the emerging challenges to it.

    What should be India’s regional policy?

    • India can neither stand apart nor jump into every domestic conflict within the neighbourhood.
    • It is always about political judgement about specific situations.
    • Active and direct intervention in the domestic politics of neighbours must be a prudent exception rather than the rule in India’s regional diplomacy.

    Conclusion

    The subcontinent has historically been an integrated geopolitical space with a shared civilisational heritage. Equally true is the reality of multiple contemporary sovereignties within South Asia. In dealing with these twin realities, the principles guiding India’s engagement should be based on  “mutual respect and mutual sensitivity”.

  • India’s Bid to a Permanent Seat at United Nations

    Explained: India at United Nations Security Council

    India is back as a non-permanent member on the United Nations Security Council.

    Q.What objective India should pursue in its stint at the UNSC? What challenges India will face in achieving these objectives?

    India at the UNSC

    Take a look at its seven previous terms, and what its agenda will be amid events concerning China, Pakistan and the US:

    1. In 1950-51, India, as President of UNSC, presided over the adoption of resolutions calling for the cessation of hostilities during the Korean War and for assistance to the Republic of Korea.
    2. In 1967-68, India co-sponsored Resolution 238 extending mandate of UN mission in Cyprus.
    3. In 1972-73, India pushed strongly for admission of Bangladesh into the UN. The resolution was not adopted because of a veto by a permanent member.
    4. In 1977-78, India was a strong voice for Africa in the UNSC and spoke against apartheid. Then External Affairs Minister Atal Bihari Vajpayee spoke in UNSC for Namibia’s independence in 1978.
    5. In 1984-85, India was a leading voice in UNSC for resolution of conflicts in the Middle East, especially Palestine and Lebanon.
    6. In 1991-92, PM P V Narasimha Rao participated in the first-ever summit-level meeting of the UNSC and spoke on its role in the maintenance of peace and security.
    7. In 2011-2012, India was a strong voice for developing world, peacekeeping, counter-terrorism and Africa. The first statement on Syria was during India’s Presidency at the UNSC.

    India’s diverse role-play

    • India played an active role in discussions on all issues related to international peace and security.
    • It included several new challenges which the UNSC was called upon to deal with in Afghanistan, Cote d’Ivoire, Iraq, Libya, South Sudan, Syria and Yemen.
    • In view of the threat posed to international trade and security by piracy off the coast of Somalia, India promoted international cooperation against the pirates.
    • At India’s initiative, the UNSC mandated international cooperation for release of hostages taken by pirates as well as for prosecution of those taking hostages and those aiding and abetting these acts.
    • India also worked for enhancing international cooperation in counter-terrorism, prevention of the proliferation of weapons of mass destruction to non-state actors, and the strengthening of UN peacekeeping efforts.

    Issues at UNSC: The politics within

    • The seven previous terms have given Indian diplomats the experience of how diplomacy is conducted at the multilateral setting.
    • There have been instances where permanent members would like the non-permanent members to be “cooperative”, and no stand in the way of major resolutions.
    • Most non-permanent members get influenced by the P-5 members. They did not wish to irritate the permanent members and were keen to be perceived by them as ‘cooperative’.
    • This was precisely how the permanent members would like the non-permanent members to behave.

    Walk-alone moves by India

    • The Indians took P5 work more seriously and consequently had to fight a lonely battle.
    • This was the time when the Gulf War erupted and India voted in favour of the US-sponsored resolution in April 1991.
    • India’s vote was dictated by pragmatic considerations.
    • The US had made it clear to India that failure to support the resolution would make it very difficult for them to help India in the World Bank and the IMF.
    • Back then, India was going through a severe balance-of-payment crisis and needed funds from these organisations.
    • Also, India needed the US on its side, if and when the Kashmir issue came up.

    Twenty years later, when India again became a non-permanent member at the UNSC, it was stronger economically but still had to negotiate politics within the Council.

    Ugly faces of the council

    • Most professional diplomats shed their innocence before they arrive at the horse-shoe table around which the Security Council meets.
    • In the real world of foreign and security policy, decision-makers are invariably confronted by cruel choices that are equally problematic and come in various shades.
    • Practitioners are acutely conscious that it is only diplomacy’s outward packaging that dwells in a commitment to a higher moral purpose.
    • The shameless pursuit of narrowly defined interests is most often the motivation and seldom raises eyebrows in the world of multilateral diplomacy.

    Issues before India

    (A) Long slated UN reforms

    • New Delhi has said it is essential that the Security Council is expanded in both the permanent and non-permanent categories.
    • It says India is eminently suited for permanent UNSC membership by any objective criteria, such as population, territorial size, GDP, economic potential and ongoing contributions to UN activities.

    (B) Terrorism

    • The international effort against terrorism is a key priority for India in the UN.
    • With the objective of providing a comprehensive legal framework to combat terrorism, India took the initiative to pilot a draft Comprehensive Convention on International Terrorism (CCIT) in 1996.
    • A text of the Convention is being negotiated in the 6th Committee of the UN General Assembly.
    • India worked closely to ensure the listing of Pakistan-based terrorist Masood Azhar under the UNSC’s 1267 Sanctions Committee (May 2019) concerning al-Qaida and ISIS terrorists.

    (C) China challenge

    • India is entering the UNSC at a time when Beijing is asserting itself at the global stage much more vigorously than ever.
    • It heads at least six UN organisations — and has challenged the global rules.
    • China’s aggressive behaviour in the Indo-Pacific, as well as the India-China border, has been visible in all of 2020, and New Delhi will have to think on its feet to counter Beijing.
    • At Pakistan’s behest, China has tried to raise the issue of Kashmir at the UNSC — but has not found much support.
    • There is some discussion among the strategic community in New Delhi on raising the issues of Taiwan, Hong Kong and Tibet at the UNSC.

    Conclusion

    • India will weigh the pros and cons with partners on what steps to take in this direction.
    • But, the polarizing politics inside India gives a window of opportunity to its rivals and opens up the possibility of criticism — especially on human rights issues.

    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.
    • 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.
  • Parliament – Sessions, Procedures, Motions, Committees etc

    SC says it intends to stay farm laws

    The Supreme Court has intended to stay the implementation of the controversial agricultural laws while proposing to form an independent committee chaired by a former CJI to resolve the stand-off between the protesting farmers and the Union government.

    Q.The judicial systems in India and the UK seem to be converging as well as diverging in recent times. Highlight the key points of convergence and divergence between the two nations in terms of their judicial practices. (150W, CS Mains 2020)

    Halting the farm laws

    • The Parliament’s power to legislate, drawn from Article 254(1) of the Constitution, can only be restricted if the law violates the Constitution.
    • How the Supreme Court operationalizes its suggestion to stay the operation of the three farm laws and open fresh talks via a committee will be evident.
    • The Supreme Court has previously set up committees, delegating some of its powers to the members to implement or oversee a law or an order of the court.
    • A line of precedents shows that courts have been very cautious while passing interim orders to stay laws passed by the Legislature.

    Narrow grounds

    The implementation of a law can be halted on two narrow grounds:

    • The first ground is legislative competence, that is, if the court finds that the Parliament has no power to legislate on a subject matter.
    • The other two grounds are if the law violates fundamental rights or any other provisions of the Constitution respectively.

    Various precedents

    • In matters involving the constitutionality of any legislation, courts should be extremely loath to pass an interim order,” a Supreme Court bench had said in 2013 ruling on the validity of the Cigarettes and Other Tobacco Products Regulation Act, 2003.
    • At the time of final adjudication, the court can strike down the statute if found ultra vires of the Constitution.
    • Even in 2019, the Supreme Court refused to stay amendments made in 2018 to the SCs and STs Atrocities Prevention Act saying that a law made by Parliament cannot be stayed.
    • The court also refused to stay the Citizenship Amendment Act, 2019, which was also challenged after it drew protests across the country.

    NJAC and Aadhaar Case

    • Even strongly contested legislation such as the National Judicial Appointments Commission (NJAC) and Aadhaar was not stayed by the Supreme Court.
    • They were, instead, stalled by the government for the duration of the protracted legal battles in court.
    • While the NJAC Act, which contemplated a significant role for the executive in judicial appointments, was struck down as being violative of the basic structure, the SC upheld the Aadhaar Act.

    What are the issues with the suspension?

    • The court’s action, at first sight, is a violation of separation of powers.
    • It also gives the misleading impression that a distributive conflict can be resolved by technical or judicial means.
    • It is also not a court’s job to mediate a political dispute.
    • Its job is to determine unconstitutionality or illegality.
    • Even in suspending laws there needs to be some prima facie case that these lapses might have taken place.
    • It has set a new precedent for putting on hold laws passed by Parliament without substantive hearings on the content of the laws.
    • Also in appointing the committee, the court has violated the first rule of mediation: The mediators must be acceptable to all parties and appointed in consultation with them.

    Conclusion

    The Supreme Court order has given the government a setback while not addressing the concerns of the protesting farmers. The court needs to consider these facts and mend its implications.

  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    PM-KISAN payout wrongly made to ineligible beneficiaries

    PM-KISAN payments worth ₹1,364 crores have been wrongly made to more than 20 lakh ineligible beneficiaries and income tax payer farmers.

    Try this PYQ:

    Q.Under the Kisan Credit Card Scheme, short-term credit support is given to farmers for which of the following purposes? (CSP 2020)

    1. Working capital for maintenance of farm assets
    2. Purchase of combine harvesters, tractors and mini trucks
    3. Consumption requirements of farm households
    4. Construction of family house and setting up of village cold storage facility
    5. Construction of family house and setting up of village cold storage facility

    Select the correct answer using the code given below:

    (a) 1,2 and 5 only

    (b) 1,3 and 4 only

    (c) 2,3,4 and 5 only

    (d) 1, 2, 3 and 4

    PM-KISAN

    • The Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan Yojana) is a government scheme through which, all small and marginal farmers will get up to Rs 6,000 per year as minimum income support.
    • Under the PM-KISAN scheme, all landholding farmers’ families shall be provided with the financial benefit of Rs. 6000 per annum per family payable in three equal instalments of Rs. 2000 each, every four months.
    • The definition of the family for the scheme is husband, wife, and minor children.
    • State Government and UT administration will identify the farmer families which are eligible for support as per scheme guidelines.
    • The fund will be directly transferred to the bank accounts of the beneficiaries.

    Why in news?

    • When it was launched just before the general election in 2019, it was meant to cover only small and marginal farmers who owned less than two hectares.
    • Later that year, large farmers were included in the scheme as the government removed land size criteria.

    Certain exclusions

    • However, certain exclusions remained.
    • If any member of a farming family paid income tax, received a monthly pension above ₹10,000, held a constitutional position, or was a serving or retired government employee, they were not eligible for the scheme.
    • Professionals and institutional landholders were also excluded.

    Who are NOT eligible for PM-KISAN?

    The following categories of beneficiaries of higher economic status shall not be eligible for benefit under the scheme.

    • All Institutional Landholders.

    Farmer families that belong to one or more of the following categories:

    • Former and present holders of constitutional posts
    • Former and present Ministers/ State Ministers and former/present Members of Lok Sabha/ Rajya Sabha/ State Legislative Assemblies/ State Legislative Councils, former and present Mayors of Municipal Corporations, former and present Chairpersons of District Panchayats.
    • All serving or retired officers and employees of Central/ State Government Ministries
    • All superannuated/retired pensioners whose monthly pension is Rs.10,000/-or more. (Excluding Multi-Tasking Staff / Class IV/Group D employees) of the above category
    • All Persons who paid Income Tax in the last assessment year
    • Professionals like Doctors, Engineers, Lawyers, Chartered Accountants, and Architects registered with Professional bodies and carrying out the profession by undertaking practices.

    Note: It is not so easy to remember all such exclusions. But one must be able to recognize them by applying pure logic and thumb rule. This can be well understood from the PYQ given.

  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    India’s burden of heart diseases

    According to the Global Burden of Disease, nearly a quarter (24.8 per cent) of all deaths in India is due to cardiovascular diseases (CVDs).

    The fastest-growing economy has some perils. In this newscard, you will get to see how CVDs are a legacy of economic growth.

    Global Burden of Disease (GBD) Report

    • The GBD is a comprehensive regional and global research program of disease burden that assesses mortality and disability from major diseases, injuries, and risk factors.
    • GBD is a collaboration of over 3600 researchers from 145 countries.
    • It is based out of the Institute for Health Metrics and Evaluation (IHME) at the University of Washington and funded by the Bill and Melinda Gates Foundation.

    Indian burden of CVDs

    • About a third of the senior citizens have been diagnosed with hypertension, 5.2% with chronic heart disease and 2.7% with stroke
    • Even an analysis of the medical certification of cause of death (MCCD) reports points to an increase in the proportion of deaths due to CVD. It went from 20.4 per cent in 1990 to 27.1 per cent in 2004.
    • According to MCCD report, 2018, CVDs accounted for more than half (57%) of the total deaths in the age group of 25–69 years.
    • Case fatality due to CVD in low-income countries, including India, appears to be much higher than in middle and high-income countries.
    • In India, for example, the mean age at which people get the first myocardial infarction is 53 years, which is about 10 years earlier than their counterparts in developed countries.
    • About a third (32 per cent) of the senior citizens have been diagnosed with hypertension, 5.2 per cent were diagnosed with chronic heart disease and 2.7 per cent with stroke.

    Women are more vulnerable

    • Numerous studies have also pointed out that CVD remains the number-one threat to women’s health as more women than men die annually due to these diseases.
    • A Harvard study shows low high-density lipoproteins and high triglycerides appear are the main factors that increase the chances of death from cardiovascular disease in women over age 65.
    • As per the LASI report, gender differences were evident in cross-state variations.
    • CVD among men was higher in Kerala (45 per cent), Goa (44 per cent), Andaman and Nicobar (41 per cent) and lower in Chhattisgarh (15 per cent), Meghalaya (16 per cent), Nagaland (17 per cent).

    Why CVDs are prevalent in India?

    • Epidemiological evidence suggests that CVD is associated with behavioural factors such as smoking, alcohol use, low physical activity, and insufficient vegetable and fruit intake.
    • In the Indian context, poverty, maternal malnutrition, and early life changes enhance an individual’s risk of CVDs.
    • Rural to urban migration that happens in distress leads to over-crowded and unclean environments in urban slums.
    • Problems of inadequate housing, indoor pollution, infectious diseases, inappropriate diet, stress and smoking crop up as a result.

    Need of the hour

    • CVD-risk prevention is one of the important priorities among India’s sustainable development goals.
    • In an earlier estimate, WHO had said with India’s present CVD burden, the country would lose $237 billion from the loss of productivity and spending on healthcare over 10 years (2005–2015).
    • This is because the diseases affect the country’s working population.

    Way ahead

    • The government should devise an approach that can improve the efficiency of care and health system preparedness to curb the CVD epidemic currently sweeping India.
    • Attempts in direction to preserve the traditional lifestyle are also necessary.
  • Coal and Mining Sector

    New Single-window Clearance for Coal Mines

    The Union government has announced a new online single window clearance portal for the coal sector to speed up the operationalization of coal mines.

    Try this PYQ:

    Q.Consider the following statements:

    1. In India, State Governments do not have the power to auction non -coal mines.
    2. Andhra Pradesh and Jharkhand do not have goldmines.
    3. Rajasthan has iron ore mines.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 3 only

    What is a single-window clearance portal?

    • A single window clearance portal is aimed at allowing successful bidders for coal blocks to be able to obtain all required clearances.
    • It includes environmental and forest clearances, from a single portal with progress monitoring, instead of having to go to multiple authorities.
    • The portal should allow successful bidders to operationalize coal mines more quickly.
    • The Parivesh mechanism for forest and environment-related clearances would likely be merged into this mechanism.

    Why need such a portal?

    • Presently, about 19 major approvals or clearances are required before starting the coal mine in the country.
    • In the absence of a unified platform for grant of clearances, companies were required to approach different departments, leading to delay in operationalization.

    How will the portal help?

    • Industry sources said that the sector has long sought a single-window clearance system to help with quicker operationalization.
    • Obtaining the requisite clearances was taking over 2-3 years for successful bidders in many cases.
    • Some coal blocks auctioned as far back as 2015 has still not been operationalised due to delays in obtaining required clearances.

    Must read:

    [Burning Issue] The Mineral Laws (Amendment) Bill, 2020

  • Wildlife Conservation Efforts

    Management Effectiveness Evaluation of Protected Areas

    Minister for Environment, Forest and Climate Change has released Management Effectiveness Evaluation (MEE) of 146 national parks and wildlife sanctuaries in the country.

    Map the protected areas mentioned in the newscard in your Atlas.

    MEE Survey

    • MEE is a very important document that provides valuable guidance on various aspects of wildlife and protected area expand MEE of Marine Protected Areas.
    • In order to assess the efficacy of Protected Areas, evaluation of management effectiveness was required.
    • MEE has emerged as a key tool for PA managers and is increasingly being used by governments and international bodies to understand the strengths and weaknesses of the protected area management systems.
    • The results of the present assessment are encouraging with an overall mean MEE score of 62.01% which is higher than the global mean of 56%.
    • With this round of evaluation, MoEFCC successfully completed one full cycle of evaluating all terrestrial National Parks and Wildlife Sanctuaries of the country from 2006 to 2019.

    India has systematically designated its Protected Areas in four legal categories — National Parks, Wildlife Sanctuaries, Conservation Reserves and Community Reserves under the Wildlife (Protection) Act, 1972.

    Areas surveyed

    • Under the WP 1972 Act, India has 903 formally designated Protected Areas with total coverage of 1,65,012.6 square km.
    • Among these are 101 National Parks, 553 Wildlife Sanctuaries, 86 Conservation Reserves and 163 Community Reserves.
    • For the survey, 146 National Parks and Wildlife Sanctuaries across 29 states and Union territories were evaluated.

    Highlights of the MEE

    • Tirthan Wildlife Sanctuary and Great Himalayan National Park in Himachal Pradesh have performed the best among the surveyed protected areas.
    • The Turtle Wildlife Sanctuary in Uttar Pradesh was the worst performer in the survey.
  • Coastal Zones Management and Regulations

    Coastal Regulation Zone (CRZ) Rules

    Few illegal apartment complexes in Maradu, Kerala, were razed as ordered by the Supreme Court for breaching Coastal Regulation Zone (CRZ) norms. The court had called the illegal constructions a “colossal loss” to the environment.

    What are CRZ norms?

    • In India, the CRZ Rules govern human and industrial activity close to the coastline, in order to protect the fragile ecosystems near the sea.
    • They restrict certain kinds of activities — like large constructions, setting up of new industries, storage or disposal of hazardous material, mining, reclamation and bunding — within a certain distance from the coastline.
    • After the passing of the Environment Protection Act in 1986, CRZ Rules were first framed in 1991.
    • After these were found to be restrictive, the Centre notified new Rules in 2011, which also included exemptions for the construction of the Navi Mumbai airport and for projects of the Department of Atomic Energy.
    • In 2018, fresh Rules were issued, which aimed to remove certain restrictions on building, streamlined the clearance process, and aimed to encourage tourism in coastal areas.
    • While the CRZ Rules are made by the Union environment ministry, implementation is to be ensured by state governments through their Coastal Zone Management Authorities.

    Where do they apply?

    • In all Rules, the regulation zone has been defined as the area up to 500 m from the high-tide line.
    • The restrictions depend on criteria such as the population of the area, the ecological sensitivity, the distance from the shore, and whether the area had been designated as a natural park or wildlife zone.
    • The latest Rules have a no-development zone of 20 m for all islands close to the mainland coast, and for all backwater islands in the mainland.

    Back2Basics

    https://www.civilsdaily.com/news/coastal-regulation-zone-how-rules-for-building-along-coast-have-evolved/

  • Electric and Hybrid Cars – FAME, National Electric Mobility Mission, etc.

    Progression to electric vehicles: Challenges and opportunities for India

    Article highlight India’s preparedness for the faster adoption of electric vehicles and steps taken by the government in this direction.

    Why electric mobility matters for India

    • It is important for India because such vehicles are sustainable and profitable in the long term.
    • Reducing dependence on crude oil will save the government money, reduce carbon emissions, and build domestic energy independence.
    • India’s transition to electric vehicles will allow us to fine-tune our infrastructure.
    • This will also influence India’s foreign policy as our energy security dependence will shift from West Asia to Latin America.
    • India imported 228.6 MT of crude oil worth $120 billion in 2018–19, which made it the third-largest oil importer in the world in terms of value.

    Government policies

    •  Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles and its updated (Fame 2) version, the government has allocated $1.3 billion in incentives.
    • A proposal for a $4.6 billion subsidy for battery makers has also been proposed by the NITI Aayog.
    • These policies are embedded with the vision to have 30% electric vehicles plying the roads by 2030.

    Developing domestic  battery manufacturing capacity

    • At present, India’s lithium-ion battery demand is fulfilled by imports from China, Vietnam, and Hong Kong.
    • In the last two years, India’s lithium imports have tripled from $384 mn to $1.2 bn.
    • With its policy intervention to support battery manufacturers by supplying lithium and cobalt, this industry is more likely to grow domestically to support India’s goal to switch to electric mobility.
    • In 2019, NALCO, Hindustan Copper Limited (HCL) and Mineral Exploration Corporation Ltd (MECL) formally signed a joint venture agreement to form Khanij Bidesh India Limited (KABIL) to scout for strategic mineral assets like lithium and cobalt abroad for commercial use and for supplying to meet the domestic requirement for battery manufacturers.
    • Developing domestic battery manufacturing capacity may fundamentally change India’s relationship with resource-rich Latin America as the government plans to buy overseas lithium reserves.
    • In Latin America, most of the production comes from Argentina, Chile, and Bolivia which holds about 80% of the explored lithium of the world.
    • Currently, India’s biggest trading partners in Latin America are Brazil, Mexico, and Venezuela, and majority of trade is concentrated on crude oil which includes 14%-20% of India’s total crude oil imports.
    • This may soon shift to lithium and cobalt.

    Conclusion

    The Indian government’s initiation to take the front seat in electric mobility and preemptive action to send a high-level delegation to have a precise understanding of the availability of lithium and possibilities of joint ventures will supply domestic markets and drive international markets.

  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    India’s New Deal moment

    The article explains the opportunity presented by the budget to steer the economy out of the uncertain territory.

    3 characteristics of India’s economic recovery

    • First, India has broken the link between virus proliferation and mobility earlier and more successfully than many countries.
    • Second, the employment rate gradually improved till September but has weakened since then, even as the economy has progressively opened up.
    • CMIE’s labour market survey still reveals 18 million fewer employed (about 5 per cent of the total employed) compared to pre-pandemic levels.
    • A third phenomenon is large firms have endured the crisis better and are gaining market share at the expense of smaller firms.
    • To the extent there is a migration of activity from the informal/SME firms to larger firms, tax collections and Sensex/Nifty earnings should get a boost, even holding the economic pie constant.
    • Greater scale and formalisation undoubtedly augur well for medium-term productivity but could increase near-term labour market frictions and boost pricing power.

    Increased prospects of K-shaped recovery

    • Above 3 factors increases prospects of a K-shaped recovery from COVID, a phenomenon playing out globally.
    • Households at the top of the pyramid are likely to have seen their incomes largely protected, and savings rates increased.
    • Meanwhile, households at the bottom are likely to have witnessed permanent hits to jobs and incomes.

    3 Implications of K-shaped recovery

    • 1) What we are currently witnessing is pent-up demand from the upper-income households.
    • However, households at the bottom have experienced a permanent loss of income in the forms of jobs and wage cuts, this will be a recurring drag on demand, if the labour market does not heal faster.
    • 2) To the extent that COVID has triggered an effective income transfer from the poor to the rich, this will be demand-impeding in the steady state.
    • This is explianed by the fact that marginal propensity to consume at the bottom is higher than that at the top, just as the marginal propensity to import at the top is higher than at the bottom.
    • 3) If COVID-19 reduces competition or increases the inequality of incomes and opportunities, it could impinge on trend growth in developing economies by hurting productivity and tightening political economy constraints.

    Factors that need to be considered to decide the policy response

    • Policy need to look beyond the next few quarters and anticipate the state of the macro economy post this expression of pent-up demand.
    • The key factor is wheather private sector starts re-investing and re-hiring.
    • With manufacturing utilisation rates below 70 per cent pre-COVID, an investment revival, in turn, will depend crucially on the
    • Exports should benefit from strengthening global growth as the world gets progressively vaccinated and more US fiscal stimulus.

    Upcoming budget: India’s New Deal moment

    • It’s against this backdrop that the upcoming budget presents India with its New Deal moment.
    • Given the prevailing demand uncertainties, the budget represents an opportune moment for the Centre, in conjunction with the states, to embark on a large physical and social infrastructure push.
    • This will simultaneously boost near-term aggregate demand, crowd in private investment, create jobs to soak up the unemployed, and improve the economy’s external competitiveness.
    • Job creation, health and education, in turn, will be a start to help mitigate COVID-induced inequalities.

    How to finance the investment?

    • Gradual near-term consolidation coupled with a credible medium-term fiscal plan will be key to anchoring the bond market and underscoring an adherence to macro stability.
    • How then can public investment increase meaningfully if the headline deficit (projected above 11 per cent of GDP) must come down?
    • Public investment could be increased only if the public investment push is financed by aggressive asset sales-strategic sales, disinvestment, land and infrastructure monetisation.
    • In this manner, expenditure to GDP can actually rise next year — generating an expansionary fiscal impulse to the economy — while automatic stabilisers are used to reduce the headline fiscal deficit.

    Conclusion

    India’s faster-than-expected rebound is very encouraging. But given labour market pressures and prospects of a K-shaped recovery around the world, the economy will need to be carefully nurtured and stoked. The budget presents a crucial opportunity to make a big down payment towards this end.

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