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

    Coordinated strategy between government and RBI

    | Economics | Mains Paper 3: Indian Economy

    The article analyses the relation between the response of fiscal authority and monetary authority to get the maximum payoff in the normal circumstance. But the pandemic would require different approach.

    Coordination between monetary and fiscal authority in India

    • Coordination between monetary and fiscal authorities has been a thorny issue globally in recent years.
    • If there is perfect coordination between the monetary and fiscal policy then there should be statistically significant negative correlation between the two. 
    • In the Indian context, for the 30-year period till FY2020, relation between the change in the consolidated fiscal deficit and the change in the growth rate of broad money reveals no coordination, substantiating the dominance of fiscal over monetary policy.
    •  Non-coordination between the two in India is also constrained by several policy targets and fewer instruments.

    Optimal combination of monetary and fiscal strategy

    • Both the government and the RBI have two options between them — either a contraction or an expansion.
    • Thus, we effectively have four policy options, and each of the options will have a particular benefit.
    • Our endeavour is to find out which policy option can result in a Nash Equilibrium.
    • A Nash equilibrium occurs when neither the government nor the RBI can increase its benefit by unilaterally changing its action.
    • The payoff scenarios are hypothesised as benefits accruing to the government and the RBI separately when they are deciding on either of the policy options: Contraction or expansion.
    •  The government favour an expansionary policy and gets maximum payoffs from a fiscal expansion, either with monetary expansion or contraction.
    • The monetary authority ideally wants to contract the economy to fight inflation and gets maximum payoffs from a monetary contraction.

    So, what is optimal combination of fiscal and monetary strategy

    •  If the RBI opts for monetary expansion, the government also opts for expansion as the payoff is higher.
    • But this will compel the RBI to then opt for contraction, since that gives it a higher payoff.
    • Knowing this, the government’s best strategy will be then an expansion — so the outcome will always be a fiscal expansion with a simultaneous monetary contraction.
    •  This is the only Nash equilibrium for this game.

    Responding to the pandemic

    • The current pandemic is resulting in behavioural changes of individuals in terms of risk-taking.
    • In the Indian context too, there are behavioural changes in terms of risk-taking.
    • Many of the current companies were also born during the financial crisis, like Uber (2009), Microsoft (1975), Disney (1923), General Motors (1908) and General Electric (1890).
    • Echoing such “procedural rationality” in the current unprecedented circumstances, we thus believe fiscal expansion and monetary expansion is the desirable outcome.

    Conclusion

    The RBI has been largely successful in communicating to the market about its intentions and we now expect the government to manage expectations with coordinated communication and leave matters of financing the fiscal deficit, through measures like monetisation, to the RBI.

    B2BASICS

    NASH EQUILBRIUM

    Simply put, it is a situation where no player can increase his payoff by deviating alone (from the situation). That is,it is a situation where both players are involved in mutual best replies.

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  • Foreign Policy Watch: India-United States

    Finding alternative to non-alignment

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    The article analyses role of non-alignment in India’s foreign policy and India’s struggle to find the alternative to the non-alignment.

    Background

    • Non-alignment was a policy fashioned during the Cold War, to retain the autonomy of policy between two politico-military blocs.
    • The Non-Aligned Movement (NAM) provided a platform for newly independent developing nations to join together to protect this autonomy.
    • NAM campaigned for de-colonisation, universal nuclear disarmament and against apartheid.
    • After the end of the Cold War, the NAM countries were able to diversify their network of relationships across the erstwhile east-west divide.

    Non-alignment and India’s foreign policy in the present context

    • For a few years now, non-alignment has not been projected by our policymakers as a tenet of India’s foreign policy.
    • India has not yet found a universally accepted alternative to the non-alignment yet.
    • “Strategic autonomy” as an alternative soon acquired a connotation similar to non-alignment, with an anti-U.S. tint.
    •  Multi-alignment has not found universal favour, since it may convey the impression of opportunism, whereas we seek strategic convergences.
    • Seeking issue-based partnerships or coalitions is a description that has not stuck.
    • “Advancing prosperity and influence” was a description External Affairs minister settled for, to describe the aspirations that our network of international partnerships seeks to further.

    Role of geography and politics

    • Two major imperatives flow from India’s geography-1) economic and security interests in the Indo-Pacific space. 2) the strategic importance of the continental landmass to its north and west.
    • The Indo-Pacific has inspired the Act East policy of bilateral and multilateral engagements in Southeast Asia and East Asia and the Pacific.
    • Shared India-U.S. interests in dealing with the challenge from China in the maritime domain have been a strategic underpinning of the bilateral partnership since the early 2000s.

    Issues in India’s engagement with the U.S.

    • In the immediate-term, Indian and U.S. perspectives are less convergent in India’s continental neighbourhood.
    • Connectivity and cooperation with Afghanistan and Central Asia need engagement with Iran and Russia, as well as with the Russia-China dynamics in the region.
    • Russia extends to the Eurasian landmass bordering India’s near and extended neighbourhood.
    • A close Russia-China partnership should move India to broad-base relations with Russia.
    • A strong stake in relations with India could reinforce Russia’s reluctance to be a junior partner of China.
    • As the U.S. confronts the challenge to its dominance from China, classical balance of power considerations would dictate accommodation with Russia.
    •  U.S. should see ties with India as a joint venture not an alliance in which they could pursue shared objectives to mutual benefit and accept that differences of perspectives will have to be addressed.
    • This template could have wider applicability for bilateral relations in today’s world order, which former could be described as militarily unipolar, economically multipolar and politically confused. 
    • The U.S. could acknowledge that India’s development of trade routes through Iran which could provide it route to Afghanistan and Central Asia, bypassing Pakistan and Russia, respectively.

    Consider the question “India has not been able to find an alternative to NAM which has been described as the basic tenet of India’s foreign policy. Discuss.”

    Conclusion

    India should find the alternative to the non-alignment which accommodate its interest in relations with the U.S. at the same time allow it “strategic autonomy”.

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  • Electoral Reforms In India

    Making the local governance strong

    op-ed snap | Polity | Mains Paper 2: Parliament & State Legislatures

    The article analyses the issues faced by democracy in India and suggests the way out in the form of strong local governments.

    Issues being faced by Indian democracy

    1. Issue of use of money power

    • Around the world, electoral democracies face the issues of funding political parties and elections.
    • Money is required to win elections legitimately, even when people are not bribed to vote, which is illegitimate.
    • Communications with citizens can be very expensive.
    • Advertisements have to be paid for as well as teams of professionals for managing social media.
    • The race to raise more money for legitimate electioneering purposes can corrupt the process of funding parties and elections.
    • Solutions are not easy because the right to free speech cannot be denied.

    2.Issues with deliberations by the representatives

    • Debates within India’s Parliament hardly inspire citizens’ confidence in their representatives’ ability to govern the country.
    • The problem in electoral democracies is also in the conduct of their deliberations when they come together.
    • This problem is not due to the quality of the individuals, it is inherent in the design of the process for electing representatives.
    • Representatives of the people must be chosen by smaller electorates within geographical constituencies.
    • But when they meet together in the national chamber, they are expected to govern the whole country.
    • They must shed the interest of their constituency and consider what will be best for the whole country.
    • Constituency favouring leads to challenges for equitable solutions for sharing of river waters, and to railway stations.
    • Electing good representatives to Assemblies is not enough to ensure good decisions will be made.

    3.Role of political parties: Lack of inner democracies

    • Function of parties: Political parties in electoral democracies provide a solution to the problem of creating an alignment of views among representatives from hundreds of constituencies around the country.
    • A party’s point of view on fundamental matters can unite many.
    •  However, when there are too many parties and too many contradictory points of view to be accommodated within a coalition, governance can break down.
    • Therefore, political parties are not evil.
    • However, when political parties are not internally democratic, they become a source to amass power and wealth, and democratic nations suffer.

    So, should we adopt direct form of democracy

    • For the reason stated above, it has become very difficult in representative democracies to arrive at good and fair decisions for the governance of a large state or country.
    • New Internet technologies make adoption of direct form of democracy possible.
    • But, if all voters have not understood what is at stake, they cannot decide well this is what happened in hasty Brexit referendum.

    Way Forward

    1.Need for the strong local governance

    • Complex issues, where many interests collide, must be resolved by reason, not settled by the numbers.
    •  Hence there is no alternative to good local governance, wherein citizens manage their local affairs democratically.
    • One-size solutions devised by experts at the centre cannot fit all.
    • Local systems solutions are essential to solve global systemic problems of environmental sustainability and inclusive growth.

    2.Funding and Intra-Party Democracy related reforms

    • Electoral funding must be cleaned up, and democracy within political parties improved to make representative democracy work better.
    • This will require big changes to entrenched systems.
    • Citizens must appreciate that they have to be the source of solutions, and not become only the source of problems.
    • Citizens must learn to listen to each other’s perspectives in their villages and in their urban neighbourhoods.

    What are the challenges the electoral process in India faces? Suggest the solution to the issues democracy in India faces.

    Conclusion

    Since India’s Independence 73 years ago when the power of government was transferred from a centre in London to a centre in Delhi, strong local governance remains the unfinished agenda to make India’s democracy strong and deep.

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  • Water Management – Institutional Reforms, Conservation Efforts, etc.

    Green-Blue Infrastructure Policy

    States | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    The Delhi Development Authority (DDA) is holding public consultations for the preparation of the Master Plan for Delhi 2041 with special focus on water bodies and the land.

    Try this question:      

    Q.Urban water resources management is an uphill task for Indian cities. Discuss.

    What is Green-Blue infrastructure?

    • ‘Blue’ infrastructure refers to water bodies like rivers, canals, ponds, wetlands, floodplains, and water treatment facilities; while ‘Green’ stands for trees, lawns, hedgerows, parks, fields, and forests.
    • The concept refers to urban planning where water bodies and land are interdependent, and grow with the help of each other while offering environmental and social benefits.

    How does DDA plan to go ahead with it?

    • In the first stage, the DDA plans to deal with the multiplicity of agencies, which because of the special nature of the state, has plagued it for several years.
    • DDA wants the first map out the issues of jurisdiction, work being done by different agencies on drains and the areas around them.
    • Thereafter, a comprehensive policy will be drawn up, which would then act as the common direction for all agencies.

    Why such a policy?

    • Delhi has around 50 big drains (blue areas) managed by different agencies, and due to their poor condition and encroachment, the land around (green areas) has also been affected.
    • DDA, along with other agencies, will integrate them and remove all sources of pollution by checking the outfall of untreated wastewater as well as the removal of existing pollutants.
    • A mix of mechanized and natural systems may be adopted, and dumping of solid wastes in any of these sites will be strictly prohibited by local bodies, through the imposition of penalties.

    Major features

    • The land around these drains, carrying stormwater, will be declared as special buffer projects.
    • The network of connected green spaces would be developed in the form of green mobility circuits of pedestrian and cycling paths.
    • It will be developed along the drains to serve functional as well as leisure trips.

    Challenges ahead

    • The biggest challenge is the multiplicity of agencies.
    • Secondly, cleaning of water bodies and drains has been a challenge for agencies in Delhi for years now.

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  • Poverty Eradication – Definition, Debates, etc.

    [pib] Global Indices to Drive Reforms and Growth (GIRG) Exercise

    DOMR | Governance | Mains Paper 2: Poverty & Hunger

    NITI Aayog as the nodal agency has been assigned the responsibility of leveraging the monitoring mechanism of the Global Multidimensional Poverty Index (MPI) to drive reforms.

    Try this PYQ:

    Q.In a given year in India, official poverty lines are higher in some states than in others because (CSP 2019):

    (a) Poverty rates vary from State to State

    (b) Price levels vary from State to State

    (c) Gross State Product varies from State to State

    (d) Quality of public distribution varies from State to State

    GIRG Exercise

    • Global MPI is part of GoI’s decision to monitor the performance of the country in 29 select Global Indices.
    • The objective of the exercise is to fulfil the need to measure and monitor India’s performance on various important social and economic parameters.
    • It would enable the utilization of these Indices as tools for self-improvement; bring about reforms in policies, while improving last-mile implementation of government schemes.
    • As the Nodal agency for the MPI, NITI Aayog has constituted a Multidimensional Poverty Index Coordination Committee (MPICC).

    About Global MPI

    • Global MPI is an international measure of multidimensional poverty covering 107 developing countries.
    • It was first developed in 2010 by Oxford Poverty and Human Development Initiative (OPHI) and the UN Development Programme (UNDP) for UNDP’s Human Development Reports.
    • It is computed by scoring each surveyed household on 10 parameters based on -nutrition, child mortality, and years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing and household assets.
    • It utilizes the National Family Health Survey (NFHS) which is conducted under the aegis of the Ministry of Health and Family Welfare (MoHFW) and International Institute for Population Sciences (IIPS).

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  • Modern Indian History-Events and Personalities

    [pib] Heritage of Punjab

    PIB | History | Mains Paper 1: Arts & Culture

    The Ministry of Tourism’s DekhoApnaDesh Webinar series titled “Punjab- A historic perspective” has recently gone live.

    Try this PYQ:

    Q.Rivers that passes through Himachal Pradesh are: (CSP 2012)

    (a) Beas and Chenab only

    (b) Beas and Ravi only

    (c) Chenab, Ravi, and Satluj only

    (d) Beas, Chenab, Ravi, Satluj, and Yamuna

    Heritage of Punjab

    • Punjab means ‘the land of Five Waters’ referring to the rivers Jhelum, Chenab, Ravi, Sutlej, and Beas.
    • Much of the Frontier was occupied by Maharaja Ranjit Singh also known as Sher-e-Punjab in the early 19th century and then taken over by the East India Company when it annexed Punjab in 1849.
    • The state is divided into three parts- Majha, Doaba and Malwa.
    • It’s many festivals–Teej, Lohri, Basant Panchami, Baisakhi and Hola Mahalla to name some are celebrations that mirror the farming ethos.
    • Historically, Punjab has played host to a number of ethnicities, including the Aryans, Persians, Greeks, Afghans and Mongols, thus bestowed with a rich tangible heritage.
    • The southeastern city of Punjab, Patiala was once a princely state established under Baba Ala Singh, a Jat Sikh chieftain. He laid the foundation of the fort and now, is located in the region around Qila Mubarak or the Fortunate Castle.
    • Important tourist attractions are Kali Temple, Baradari Garden, Sheesh Mahal, Gurudwara Dukh Niwaran Sahib, Qila Mubarak complex etc.

    Holy shrines

    • The most sacred of Sikh shrines, the Golden Temple, is a major pilgrimage destination for devotees from around the world, as well as, an ever-increasing popular tourist attraction.
    • Construction of the Amrit Sarovar (pool of nectar) was initiated by Guru Amar Das, the third Guru, in 1570 and was completed by Guru Ram Das, the fourth Guru.
    • His successor, Guru Arjan Dev began work on the building after inviting Mian Mir, the Sufi saint, to lay its foundation stone in 1588.
    • Three years later, the Harimandar Sahib, or Darbar Sahib got completed.
    • In step with Sikhism’s basic tenet of universal brotherhood and all-inclusive ethos, the Golden Temple can be accessed from all directions.

    Legend of Banda Bahadur

    • The city of Fatehgarh Sahib is of special significance to Sikhs. The word “Fatehgarh”, means “Town of Victory”.
    • It is so-called because, in 1710, Sikhs under the leadership of Baba Banda Singh Bahadur conquered the area and destroyed the Mughal fort.
    • Banda Bahadur announced the establishment of the Sikh rule in the city and an end to the tyranny of the Mughal rule which had spread terror and injustice.

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  • Coronavirus – Health and Governance Issues

    Financing economic recovery

    op-ed snap | International Relations | : International Institutions

    The article analyses the issue of socioeconomic disruption caused by the pandemic and response by regionally coordinated response to it.

    Context

    • With continued lockdown measures and restricted borders, countries in Asia and the Pacific have been experiencing sharp drops in foreign exchange inflows due to declines in export earnings, remittances, tourism and FDI.

    Financing 3 key areas by the U.N.

    • The United Nations is contributing through a global initiative, Financing for Development in the Era of COVID-19 and Beyond.
    • The initiative aims at comprehensive financing strategy to safeguard the Sustainable Development Goals.
    • Governments are united to ensure that adequate financial resources are available to steer an inclusive, sustainable and resilient post-COVID-19 recovery.
    • In the Asia-Pacific region, several countries have already adopted financing plans in following three key areas.
    • 1) To address the challenge of diminished fiscal space and debt vulnerability 2) To ensure sustainable recovery, consistent with the ambitions of the Paris Agreement and the 2030 Agenda 3) To harness the potential of regional cooperation in support of financing for development.

    Regional Conversation series by ESCAP

    • The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has recently launched its first-ever Regional Conversation Series on Building Back Better.
    • In this series ministers, decision-makers, private sectors and heads of international agencies participate.
    • Their participation results in sharing of collective insights on sharing pathways to resilient recovery from health pandemic and economic collapse.

    Debt Service Suspension initiative

    • To manage high levels of debt distress global initiatives like the Debt Service Suspension initiative is timely.
    • Central banks can continue to keep the balance of supporting the economy and maintaining financial stability.
    • This further involves enhancing tax reforms and improving debt management capacities, while using limited fiscal space to invest in priority sectors.
    • Exploring sustainability-oriented bonds and innovative financing instruments options such as debt swaps for SDG investment should be explored further.
    • Policy paradigm must mainstream affordable, accessible and green infrastructure standards.
    • We should also scale up the use of digital technology and innovative applications.
    • The financing support of micro, small and medium-sized enterprises must go hand in hand with these national job-rich recovery strategies.

    Role of regional cooperation

    • Regionally coordinated financing policies can restart trade, reorganise supply chains and revitalise sustainable tourism in a safe manner.
    • Across Asia and the Pacific, governments must pool financial resources to create regional investment funds.
    • Role of egional cooperation platforms to ensure  all countries receive an equitable number of doses of the vaccine is essential.

    Conclusion

    Through ESCAP, we can scale these efforts across the region, working closely with our member states, the private sector and innovators to build a collective financing response to mobilise the necessary additional resources.

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  • Indian Missile Program Updates

    Hypersonic Technology Demonstrator Vehicle (HSTDV)

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    The DRDO has successfully demonstrated the hypersonic air-breathing scramjet technology with the flight test of the Hypersonic Technology Demonstration Vehicle (HSTDV).

    Take note of close dissimilarities between Ramjet and Scramjet engines.

    About HSTDV

    • HSTDV is an unmanned scramjet vehicle with a capability to travel at six times the speed of sound.
    • The scramjets are a variant of a category of jet engines called the air-breathing engines.
    • The ability of engines to handle airflows of speeds in multiples of the speed of sound gives it a capability of operating at those speeds.
    • Hypersonic speeds are those which are five times or more than the speed of sound.
    • The unit tested by the DRDO can achieve upto six times the speed of sound or Mach 6, which is well over 7000 km per hour or around two km per second.

    Its development

    • The DRDO started on the development of the engine in the early 2010s.
    • The ISRO has also worked on the development of the technology and has successfully tested a system in 2016. DRDO too has conducted a test of this system in June 2019.
    • The special project of the DRDO consisted of contributions from its multiple facilities including the Pune headquartered Armament and Combat Engineering Cluster.

    Back2Basics: Ramjet V. Scramjet

    • A ramjet is a form of air-breathing jet engine that uses the vehicle’s forward motion to compress incoming air for combustion without a rotating compressor.
    • Fuel is injected in the combustion chamber where it mixes with the hot compressed air and ignites.
    • A ramjet-powered vehicle requires an assisted take-off like a rocket assist to accelerate it to a speed where it begins to produce thrust.
    • Ramjets work most efficiently at supersonic speeds around Mach 3 (three times the speed of sound) and can operate up to speeds of Mach 6.
    • However, the ramjet efficiency starts to drop when the vehicle reaches hypersonic speeds.
    • A scramjet engine is an improvement over the ramjet engine as it efficiently operates at hypersonic speeds and allows supersonic combustion. Thus it is known as Supersonic Combustion Ramjet or Scramjet.

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  • Modern Indian History-Events and Personalities

    In news: Malabar Rebellion

    Prelims Only | | Mains Paper 1: Modern Indian History

    A report submitted to the Indian Council of Historical Research (ICHR) in 2016 has termed the Malabar Rebellion leaders as ‘rioters’.

    Try this question from CSP 2015:

    Q. Which amongst the following provided a common factor for a tribal insurrection in India in the 19th century?

    (a) Introduction of a new system of land revenue and taxation- of tribal products

    (b) Influence of foreign religious missionaries in tribal areas

    (c) Rise of a large number of money lenders, traders and revenue farmers as middlemen in tribal areas

    (d) The complete disruption of the old agrarian order of the tribal communities

    What is the Malabar Rebellion?

    • The Malabar Rebellion in 1921 started as resistance against the British colonial rule and the feudal system in southern Malabar but ended in communal violence between Hindus and Muslims.
    • There were a series of clashes between Mappila peasantry and their landlords, supported by the British, throughout the 19th and early 20th centuries.
    • It began as a reaction against a heavy-handed crackdown on the Khilafat Movement, a campaign in defence of the Ottoman Caliphate by the British authorities in the Eranad and Valluvanad taluks of Malabar.
    • The Mappilas attacked and took control of police stations, British government offices, courts and government treasuries.

    Why is it contentious?

    • It largely took the shape of guerrilla-type attacks on janmis (feudal landlords, who were mostly upper-caste Hindus) and the police and troops.
    • Mappilas had been among the victims of oppressive agrarian relations protected by the British.
    • But the political mobilization in the region in the aftermath of the Khilafat agitation and Gandhi’s non-cooperation struggle served as an opportunity for an extremist section to invoke a religious idiom to express their suffering.
    • There were excesses on both sides — rebels and government troops. Incidents of murder, looting and forced conversion led many to discredit the uprising as a manifestation of religious bigotry.
    • Moderate Khilafat leaders lamented that the rebellion had alienated the Hindu sympathy.

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  • Foreign Policy Watch: India-China

    Chushul Valley and its Significance

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

    The Chushul sub-sector has come into focus in the standoff between the Indian and PLA troops.

    Tap to read more about Himalayan River System

    What is the Chushul Valley?

    • The Chushul sub-sector lies south of Pangong Tso in eastern Ladakh.
    • It comprises high, broken mountains and heights of Thatung, Black Top, Helmet Top, Gurung Hill, and Magger Hill besides passes such as Rezang La and Reqin La, the Spanggur Gap, and the Chushul valley.
    • Situated at a height of over 13,000 feet close to the LAC, the Chushul Valley has a vital airstrip that played an important role even during the 1962 War with China.

    What is its strategic importance to India?

    • Chushul is one among the five Border Personnel Meeting points between the Indian Army and the People’s Liberation Army of China.
    • It enjoys tremendous strategic and tactical importance because of its location and terrain, which make it a centre for logistics deployment.
    • This sector has plains that are a couple of km wide, where mechanized forces, including tanks, can be deployed. Its airstrip and connectivity by road to Leh add to its operational advantages.
    • Indian troops have now secured the ridgeline in this sub-sector that allows them to dominate the Chushul bowl on the Indian side, and Moldo sector on the Chinese side.
    • They also have a clear sight of the almost 2-km-wide Spanggur gap, which the Chinese used in the past to launch attacks on this sector in the 1962 War.

    How is Chushul important to China?

    • Simply put, Chushul is the gateway to Leh. If China enters the Chushul, it can launch its operations for Leh.
    • After the initial attacks, including on the Galwan valley by the Chinese in October 1962, the PLA troops prepared to attack Chushul airfield and the valley to get direct access to Leh.
    • However, just before the attacks were launched, the area was reinforced by the 114 Brigade in November 1962, which also had under its command two troops of armour and some artillery.

    What are the challenges in this area?

    • An immediate challenge is of a flare-up as troops of the two countries are deployed within a distance of 800 to 1,000 metres of each other at Black Top and Reqin La.
    • Logistics also pose a major challenge. There is a need to carry water and food to the top which soldiers cannot do.
    • The harsh winter that lasts for eight months of the year poses a big challenge.
    • It is very difficult to dig in and make shelters on the ridgeline. The temperature falls to minus 30 degrees Celsius, and there are frequent snowstorms.

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