Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- G-7 and India
Context
The meeting of G7 leaders that concluded in Bavaria was attended by India as an observer.
About G7
- The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
- It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
- Initially, it was formed as an effort by the US and its allies to discuss economic issues.
- The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
- It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
- Canada joined the group in 1976, and the European Union began attending in 1977.
- The G7 is trying hard not to be yesterday’s club.
- It is still a powerful grouping, with seven of its members in the top 10 economies of the world, three of them permanent members of the UNSC.
Important outcomes of the G7 meeting
- Statement on support for Ukraine: A standalone G7 Statement on Support for Ukraine was issued.
- There was an unconditional commitment that the grouping will provide financial, humanitarian, military and diplomatic support and stand with Ukraine for as long as it takes.
- Russia was also warned that any use of chemical, biological and nuclear weapons would be met with severe consequences.
- Further intensification of sanctions against Russia was contemplated.
- Tough language on China: Significantly, the G7 final communique has tough language on China as well.
- It says there is no legal basis for China’s expansive maritime claims in the South China Sea, it calls on China to press Russia to withdraw troops from Ukraine and expresses grave concern about the country’s human rights situation.
- It calls on China to respect universal human rights and fundamental freedoms in both Tibet and Xinjiang, highlighting the issue of forced labour in the latter.
Significance of India’s observer status
- The fact is that even the G7 knows its clout has declined compared to, say, 20 years ago.
- That explains the move to invite key G20 countries as observers to its summits.
- As for India, its importance lies in the undeniable truth that no global problem can be seriously tackled without New Delhi’s involvement.
- For India, G7 summits have always been an invaluable opportunity to exchange views not just in a plurilateral format but also in the bilateral meetings on the margins of the main meetings.
- 2 statements: India has lent its name to two statements issued by the G7. One is titled “Resilient Democracies Statement” and the other is “Joining Forces to Accelerate Clean and Just Transition towards Climate Neutrality”.
- The first statement talks of democracies as reliable partners seeking to promote a rules-based international order and supporting democracy worldwide including through electoral assistance.
- The other statement to which India is a signatory is the one on clean and just transition towards carbon neutrality.
Conclusion
India’s participation in this meeting as an observer serves to advance its foreign and security policy objectives and will keep it in good stead when it assumes the G20 presidency in December.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Horn of Africa Region
Mains level: Geostrategic significance of HOA
China recently held the first China-Horn of Africa Peace, Governance and Development Conference.
Why in news?
- China has been investing across the African continent throughout the last decade.
- The conference held in Ethiopia witnessed the participation of foreign ministries from the following countries of the Horn: Kenya, Djibouti, Ethiopia, Sudan, Somalia, South Sudan, and Uganda.
Major objectives
- No doubt that china predates small nations with debt-trapping the countries.
- It focuses on increasing the infrastructural investments in African countries and converting them to security assets.
- It asserted three objectives in Africa:
- Controlling the pandemic
- Implementing a Forum on China-Africa Cooperation (FOCAC) outcomes, and
- Upholding common interests while fighting hegemonic politics
What is FOCAC?
- The FOCAC promotes China’s role in the infrastructural and societal development of the Horn.
- In the 2021 forum, the entire region of the Horn participated and four resolutions were adopted:
- Dakar Action Plan
- China-Africa Cooperation Vision 2035
- Sino-African Declaration on Climate Change
- Declaration of the Eighth Ministerial Conference of FOCAC
How has China garnered goodwill in HOA?
- HOA have benefited from China’s vaccine diplomacy.
- Beijing has also initiated the “2035 vision for China-Africa cooperation”; it aims to transform the health sector, alleviate poverty, promote trade and investments, and expand digital innovation.
- The vision also focuses on green development, capacity building, improving people-to-people exchanges and facilitating peace and security in the continent.
What are China’s primary interests/investments in the Horn of Africa?
China’s interests are related to four major areas: infrastructural projects, financial assistance, natural resources and maritime interests.
(1) Infrastructure
- Looking at Chinese investments in infrastructure, one of its landmark projects was fully funding the $200 million African Union headquarters in Addis Ababa.
- It has also made significant investments in railways; it is building the Addis-Djibouti railway line connecting the land-locked country with Eritrean ports in the Red Sea.
- China has also invested in the Mombasa-Nairobi rail link in Kenya, and has already delivered on railway projects in Sudan.
- It also has a viable military hardware market in Ethiopia and has built over 80 infrastructural projects in Somalia, including hospitals, roads, schools and stadiums.
(2) Debts and ‘assistances’
- With respect to financial assistance, Ethiopia, is one of the top five African recipients of Chinese investments, and also has a debt of almost $14 billion.
- China accounts for 67% of Kenya’s bilateral debt.
- In 2022, China promised to provide $15.7 million assistance to Eritrea.
(3) Mineral explorations
- The third major Chinese interest in Africa is the presence of natural resources — oil and coal. Beijing has invested $400 million in Mombasa’s oil terminal.
- China is also interested in minerals such as gold, iron-ore, precious stones, chemicals, oil and natural gas in Ethiopia.
- South Sudan, a source for petroleum products, has had continued Beijing investment in the industry since the latter’s initial entry in 1995.
(4) Maritime interest
- China’s first and only military base outside its mainland is in Djibouti.
- During his visit in early 2022, Wang hinted at China’s willingness to develop Eritrea’s coast which would connect to China’s investments in land-locked Ethiopia.
- The US has speculated that China wishes to build another military base in Kenya and Tanzania, thereby increasing its military presence in the region.
Has the Horn of Africa been welcoming of China’s presence?
- Africa has been keen on interacting with China.
- Despite the wariness surrounding China’s projects in Africa, the governments have mostly been welcoming.
- When conflict broke out in Tigray in November 2020, Addis Ababa appreciated Beijing for respecting Ethiopia’s sovereignty.
- In December 2021, Kenya defended Chinese projects in the country; President Uhuru Kenyatta maintained that China-Africa partnership was mutually beneficial.
- Similarly, in May 2022, the East African Community (EAC) welcomed Chinese investors to work in East Africa for the prosperity of the people.
Beijing’s principle of non-intervention
- Peace and stability is a mutual requirements for China and Africa.
- For Africa, Chinese investments could lead to stable environments which could help the countries achieve their peace and development objectives.
- For China, conflict in the region comes at a heavy cost.
- In Ethiopia. when the conflict broke out, over 600 Chinese nationals, working on different projects, were evacuated, putting several investments at risk.
- From a trading perspective, the region plays a significant role in achieving the objectives of the China-Africa Cooperation Vision 2035.
Why is HOA important?
- In the last decade, the region lying between Suez Canal and the Seychelles has emerged as a new geopolitical hotspot.
- It has factors like impressive economic growth of regional countries, emergence of new security threats, and the ensuing major power rivalry driving the strategic trajectory of the region.
- The straits of Bab el-Mandeb, which lies at the heart of this region, connects the energy-rich Middle East to Europe and, along with the Suez Canal, is considered a jugular vein for global trade.
Indian footprints in the region
- India has been paying greater attention to the region but still lags behind China.
- India has bolstered defence cooperation with Oman and France (which holds territories in the Southwestern Indian Ocean).
- It has signed logistics support agreements with these countries to ensure greater naval access in the region.
- Reportedly, India was in talks with Japan to grant access to Indian naval vessels at the Japanese base in Djibouti.
- India has also sought to open a military base in the Seychelles and plans to further enhance its naval presence in the Western Indian Ocean.
These efforts are directed to increase Indian leverage and limit Chinese influence in the region.
Lessons for India
- China’s move towards peace in Africa indicates a shift in its principle of non-intervention.
- It is China’s message that its presence in the continent has a larger objective and is not likely to be limited to the Horn of Africa.
- This includes an aim to project itself as a global leader and boost its international status.
- Further, the recent developments imply that China is focussing on a multifaceted growth in the continent for the long run.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: India-UAE Relations
PM Modi expressed gratitude to President of the United Arab Emirates Sheikh Mohamed bin Zayed (MBZ) al Nahyan for taking great care of 3.5 million Indian community in the UAE during the pandemic.
India- UAE Relations: A backgrounder
- The relation has greatly flourished especially after the accession of H. H. Sheikh Zayed Bin Sultan Al Nahyan, as the ruler of Abu Dhabi in 1966.
- The greater push has been achieved in bilateral relations when the visit of Indian PM’s to the UAE in August 2015.
- It marked the beginning of a new strategic partnership between the two countries.
- Further, the Crown Prince was invited in January 2017 as the chief guest at India’s Republic Day celebrations.
- In 2017 the two sides signed the agreement on Comprehensive Strategic Partnership (CSP).
Significance of ties
- Indian Diaspora in UAE: Around 3 million Indians are living harmoniously in the UAE.
- UAE – A willing partner: As India seeks to enhance economic engagement and deepen security cooperation with the Gulf, it finds a willing partner in the UAE.
- India being a natural partner: UAE’s ‘Look East’ find partners for its economic growth and with security concerns emanating from turmoil in West Asia and growing threat from terrorism.
- Investments: UAE has a special place due to its business-friendly atmosphere, willingness to invest in the Indian economy.
- India’s West Asia policy: The UAE occupies a key place in India’s West Asia policy. The high-level visit from both sides has given a new impetus to this partnership.
Why UAE is tilting toward India?
- Turmoil in West Asia: Geopolitical conditions as Iran is threatening continuously to close the Strait of Hormuz in case there is a conflict with Saudi Arabia or US.
- Disappointment from Pakistan: UAE saw Pakistan as a partner and incorporated a deep economic and security relationship with it. But in the present day, Pakistan does not seem to be of much help to UAE.
- India as a market: India is an important destination for oil and energy purchase. UAE also recognizes exhaustible nature of its fossil fuel reserves.
- Returns on investment: UAE’s massive sovereign wealth funds can act as a great resource in the development of infrastructure in India.
- Addressing Terrorism: There has been a rising convergence between India and UAE on the terror issue and both the countries talked of the need to combat terror groups without any discrimination.
- Lack of regional consensus: Countries like Syria, Iraq, Libya and Yemen are suffering from violent conflicts. The Gulf Cooperation Council (GCC) has not produced expected results.
Economic Significance of the UAE
- UAE, due to its strategic location, has emerged as an important economic centre in the world.
- In recent years, the UAE, through its ‘Vision 2021’, has sought to diversify its economy and reduce its dependency on oil.
- Although the UAE has diversified its economy, the hydrocarbon sector remains very important followed by services and manufacturing.
- Within services, financial services, wholesale and retail trade, and real estate and business services are the main contributors.
India-UAE trade and investment ties
- India is UAE’s third largest trade partner after China and the United States.
- The UAE accounts for 8 percent of India’s oil imports and was fifth largest supplier of crude oil to India.
- The aim is to boost bilateral merchandise trade to above U.S.$100 billion and services trade to U.S.$15 billion in five years.
- As we are witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.
- The UAE’s investment in India is estimated to be around U.S.$11.67 billion, which makes it the ninth biggest investor in India.
Advanced technology and the knowledge economy
(1) Technology
- In 2018, India and UAE signed a MoU to generate an estimated $20 billion in the span of a decade.
- The Emirates have stepped up efforts to invest in the development of the knowledge economy by expanding the “golden visa”.
- Space is a new arena in which India and the UAE have collaborated through the work of the UAE Space Agency (UAESA) and the Indian Space Research Organization (ISRO).
- Space cooperation between India and the UAE gained quick momentum during PM Modi’s visit to the Emirates in 2015.
- The two countries are likely to work together on Emirates’ ‘Red planet Mission’.
(2) Security and Defence Cooperation
- Another significant pillar of India-UAE ties is reflected in their growing cooperation in security and defense sector.
- With the spread of radicalism in Gulf and South Asia, India looks to enhance security cooperation with UAE to counter terrorist threats and combat radicalization.
- ‘Desert Eagle II’, a ten day air combat exercise, was held between the air forces of India and UAE.
Way Forward
(1) Needs to ensure the execution of the investment projects with the required expertise
- Potential areas to enhance bilateral trade include defence trade, food and agricultural products as well as automobiles.
- Indian companies with expertise in renewable energy sector can invest in UAE.
- In defence sector, there is a need to further enhance cooperation through joint training programmes.
(2) Manifold Benefits of India-UAE Trade Agreements
- With India’s newfound strength in exports, a trade agreement with an important country such as the UAE would help sustain the growth momentum.
- As we are witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.
(3) Improving the relations with the GCC
- As part of the GCC, the UAE has strong economic ties with Saudi Arabia, Kuwait, Bahrain, and Oman and shares a common market and customs union with these nations.
- This FTA with the UAE will pave the way for India to enter the UAE’s strategic location, and have relatively easy access to the Africa market and its various trade partners.
- This can help India to become a part of that supply chain especially in handlooms, handicrafts, textiles and pharma.
(4) Solving the issue of UAE’s Non-Tariff Barriers (NTBs)
- The UAE tariff structure is bound with the GCC (applied average tariff rate is 5%), therefore, the scope of addressing Non-Tariff Barriers (NTBs) becomes very important.
- The reflection of NTBs can be seen through Non-Tariff Measures (NTMs) mostly covered by Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT).
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NATO
Mains level: Read the attached story
Turkey has agreed to support Finland and Sweden joining the NATO military alliance after weeks of angering partners by insisting it would veto the Scandinavian countries’ accession.
What is NATO?
- NATO is a military alliance established by the North Atlantic Treaty (also called the Washington Treaty) of April 4, 1949.
- It sought to create a counterweight to Soviet armies stationed in Central and Eastern Europe after World War II.
- Its original members were Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States.
- NATO has spread a web of partners, namely Egypt, Israel, Sweden, Austria, Switzerland and Finland.
Expansion of NATO: Transforming Europe
- The war in Ukraine has already changed the geopolitics of Europe and the world.
- The admission of Finland and Sweden to NATO would bring about a transformation in the continent’s security map by giving NATO a contiguous long frontier in western Russia.
- Finland and Russia share a 1,300-km border — and doubling it from the present 1,200 km, parts of it in northern Norway, Latvia and Estonia, and Poland and Lithuania.
- In addition, Sweden’s island of Gotland in the middle of the Baltic Sea would give NATO a strategic advantage.
- Furthermore, when Sweden and Finland join NATO, the Baltic Sea — Russia’s gateway to the North Sea and the Atlantic Ocean — would be ringed entirely by NATO members.
Why Nordic countries are willing to join NATO?
- Although the debate over joining NATO was ongoing in both countries for nearly three decades, Russia’s annexation of Crimea pushed both towards NATO’s “open door” policy.
- Still, there was little political consensus in either country, especially in Sweden where the Social Democrats have long been against the idea.
- However, February 24 changed everything the date on which Russia invaded Ukraine.
A knee jerk reaction?
- If Putin’s invasion of Ukraine was meant to deter NATO’s eastward expansion, the war has had the opposite effect.
- If admitted, Sweden and Finland will become its 31st and 32nd members.
Russian response
- Back in March, Russia had evoked a threatening response to take retaliatory measures by stationing its nuclear and hypersonic weapons close to the Baltic Sea.
- Russia denounced the problems with Finland and Sweden but the NATO’s expansion at the expense of these countries does not pose a direct threat to us.
- But the expansion of military infrastructure into this territory will certainly provoke their response, warned Mr Putin.
- Sweden had already said it would not allow NATO bases or nuclear weapons on its territory.
Hurdles for Finland, Sweden
- At the moment the main obstacle to their applications in Turkey, a member since 1952 and which has NATO’s second-largest army after the US.
- Turkish president Erdogan has objected to their applications on the ground that the two countries had provided safe haven to the leaders of the Kurdish group PKK.
- Many Kurdish and other exiles have found refuge in Sweden over the past decades.
- PKK is an armed movement fighting for a separate Kurdistan, comprising Kurdish areas in Turkey, Iraq, Iran and Syria.
- Neither of these countries have a clear, open attitude towards terrorist organisation.
What could Turkey gain?
- Turkey is expected to seek to negotiate a compromise deal to seek action on Kurdish groups.
- Erdogan could also seek to use Sweden and Finland’s membership to wrest concessions from the United States and other allies.
- Turkey wants to return to the US-led F-35 fighter jet program — a project it was kicked out of following its purchase of Russian S-400 missile defense systems.
- Alternatively, Turkey is looking to purchase a new batch of F-16 fighter jets and upgrade its existing fleet.
How does this affect Turkey’s image in the West?
- Turkey is reinforcing an image that is blocking the alliance’s expansion for its own profit.
- It also risks damaging the credit it had earned by supplying Ukraine with the Bayraktar TB2 armed drones that became an effective weapon against Russian forces.
Is Turkey trying to appease Russia?
- Turkey has built close relations with both Russia and Ukraine and has been trying to balance its ties with both.
- It has refused to join sanctions against Russia — while supporting Ukraine with the drones that helped deny Russia air superiority.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: GST Council
Mains level: Read the attached story
The 47th meeting of the Goods and Services Tax Council began in Chandigarh, almost marking five years of the tax system coming into effect on July 1, 2017.
What is the GST Council?
- The GST regime came into force after the Constitutional (122nd Amendment) Bill was passed by both Houses of Parliament in 2016.
- More than 15 Indian states then ratified it in their state Assemblies, after which the President gave his assent.
- The GST Council – a joint forum of the Centre and the states — was set up by the President as per Article 279A (1) of the amended Constitution.
- The members of the Council include the Union Finance Minister (chairperson), the Union Minister of State (Finance) from the Centre.
- Each state can nominate a minister in-charge of finance or taxation or any other minister as a member.
Why was the Council set up?
- The Council, according to Article 279, is meant to “make recommendations to the Union and the states on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws”.
- It also decides on various rate slabs of GST.
- For instance, an interim report by a panel of ministers has suggested imposing 28 per cent GST on casinos, online gaming and horse racing.
- A decision on this will be taken at the Council meeting.
What has changed this time?
- The ongoing meeting is the first since a decision of the Supreme Court in May this year, which stated recommendations of the GST Council are not binding.
- The court said Article 246A of the Constitution gives both Parliament and state legislatures “simultaneous” power to legislate on GST .
- Recommendations of the Council are the product of a collaborative dialogue involving the Union and States.
- This was hailed by some states, such as Kerala and Tamil Nadu, who believe states can be more flexible in accepting the recommendations as suited to them.
Agenda in this meet
- The council’s meeting is also likely to focus on the issue of extension of the GST compensation regime beyond June 2022.
- This was a special mechanism by which states were assured that their revenues would not be affected by the new GST system.
- Some states are already demanding that the compensation be continued.
- Earlier, the Council had agreed to extend the levy of compensation cess till 2026, but only for repayment of the borrowings made in the aftermath of the pandemic to provide compensation to states.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Living Lands Charter
Mains level: Land degradation
All 54 Commonwealth members have agreed to voluntarily dedicate a ‘living land’ in their respective countries to future generations, in line with the strategy set for the UN Decade on Ecosystem Restoration.
Living Lands Charter
- The non-binding mandates that member countries will safeguard global land resources and arrest land degradation while acting against climate change, biodiversity loss and sustainable management.
- It helps to encapsulate the combined effort to hold the global average temperature increase to 1.5 degrees Celsius, said Commonwealth Secretary-General Patricia Scotland.
- The document came after nearly two years of intense consultation, engagement and negotiation with member countries at UN Rio Convention.
Key objectives
- Leaders and their representatives noted with concern in the charter the alarming decline in the health and productivity of global land resources.
- It aimed to support member countries to effectively deliver their commitments under the three Rio conventions:
- UN Convention on Biological Diversity
- UN Convention to Combat Desertification (UNCCD)
- UN Framework Convention on Climate Change
Major outcomes
- The attendees also underlined the principle of “critical guardianship” provided by indigenous peoples and local communities in protecting land and vital ecosystem services.
- The agreement was released along with a final wide-ranging communiqué by leaders, including on specific items on climate change.
- Country heads underscored in it that the “urgent threat of climate change” exacerbates existing vulnerabilities and presents a significant threat to COVID-19 recovery efforts.
Try this PYQ from CSP 2012:
Q.Consider the following statements:
- The Commonwealth has no charter, treaty or constitution
- All the territories/countries once under the British Empire (jurisdiction/rule/mandate) automatically joined the Commonwealth as its members
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Post your answers here.
Back2Basics: Commonwealth of Nations
- The Commonwealth of Nations is an intergovernmental organisation of 53 member states that are mostly former territories of the British Empire.
- It dates back to the first half of the 20th century with the decolonization of the British Empire through increased self-governance of its territories.
- It was originally created as the British Commonwealth of Nation through the Balfour Declaration at the 1926 Imperial Conference, and formalized by the UK through the Statute of Westminster in 1931.
- The current body was formally constituted by the London Declaration in 1949, which modernized the community, and established the member states as “free and equal”.
- The symbol of this free association is Queen Elizabeth II, who is the Head of the Commonwealth.
- The Queen is head of state of 16 member states, known as the Commonwealth realms, while 32 other members are republics and five others have different monarchs.
- Member has no legal obligations to one another. Instead, they are united by language, history, culture and their shared values of democracy, human rights and the rule of law.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Challenges ahead for tech startups
Context
The startup ecosystem which has been in overdrive for the past few years — propelled by a combination of factors, but largely, by the era of cheap money — is now showing signs of weakness.
Factors that helped fuel the tech startups
- With the combination of accelerated financial inclusion (bank accounts), ease of identification (Aadhaar) and connectivity (mobile phones) it was said that it is ultimately a bet on the Indian consumer, and the economy, not on government regulations/policies.
- Low-interest rates: In the era of cheap money and negative real interest rates, uncomfortable questions over the true market size and profitability were swept under the rug.
- Growth fuelled by cash burn: High cash burn rates were the norm as both startups and investors sought growth by subsidising the customer.
What is going wrong?
- Lack of profitability: Among the startups that have gone public in recent times, Paytm’s losses stood at Rs 2,396 crore in 2021-22, while for Zomato and PB Fintech (PolicyBazaar) losses were Rs 1,222 crore and Rs 832 crore respectively.
- Drying-up of investment: Sure, investors will continue to pour money.
- Some early age start-ups will continue to be funded, as will some of the more mature ones.
- But investors are likely to be more circumspect in their dealings.
- Impact on valuation: There are also reports of startups in diverse markets, ranging from Ola to OYO, planning to raise funds at lower valuations.
- Among those who have gone public in recent times, most are trading much below their listing price.
- Tighter financial conditions, a re-rating of the market, will impact both fundraising efforts and valuations.
Lack of discretionary spending capacity
- Many numbers were given as indicators of the size of the market or TAM (the total addressable market).
- Smartphone users: One such number thrown around is the smartphone users in the country — some have pegged this at 500 million.
- UPI transactions: The transactions routed through the UPI platform — in May there were almost six billion transactions worth Rs 10 trillion.
- Bank account holders: We have the near universality of bank accounts.
- But in reality, for most of these startups, the market or even the potential market is just a fraction of this.
- There aren’t that many consumers with significant discretionary spending capacity, and those with the capacity aren’t increasing their spending as these companies would hope.
- No increase in spending: What is equally worrying is the complete absence of any increase in spending by even these consumers who would have the capacity to spend more.
- While more consumers are on-board digital payment platforms — Paytm has about 70 million monthly transacting users — these numbers suggest that when it comes to consumers with considerable discretionary spending, the size of the market shrivels considerably.
Conclusion
Tech startups are about to witness a tough time ahead. Some startups will survive this period. Many may not. And changes in the dynamics of private markets will also have a bearing on public markets.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- E-commerce regulation issue
Context
The proliferation of a wide range of e-commerce platforms has created convenience and increased consumer choice. However, these platforms also have given rise to several concerns as well.
What is e-commerce ?
- Electronic commerce or e-commerce is a business model that lets firms and individuals buy and sell things over the Internet.
- Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.
- India’s e-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51%, the highest in the world.
- The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest e-commerce market in the world by 2034.
Advantages of e-Commerce
- The process of e-commerce enables sellers to come closer to customers that lead to increased productivity and perfect competition. The customer can also choose between different sellers and buy the most relevant products as per requirements, preferences, and budget. Moreover, customers now have access to virtual stores 24/7.
- e-Commerce also leads to significant transaction cost reduction for consumers.
- e-commerce has emerged as one of the fast-growing trade channels available for the cross-border trade of goods and services.
- It provides a wider reach and reception across the global market,with minimum investments. It enables sellers to sell to a global audience and also customers to make a global choice. Geographical boundaries and challenges are eradicated/drastically reduced.
- Through direct interaction with final customers, this e-commerce process cuts the product distribution chain to a significant extent. A direct and transparent channel between the producer or service provider and the final customer is made. This way products and services that are created to cater to the individual preferences of the target audience.
- Customers can easily locate products since e-commerce can be one store set up for all the customers’ business needs
- Ease of doing business: It makes starting, managing business easy and simple.
- The growth in the e-commerce sector can boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.
Issues created by the e-commerce sites
- Predatory pricing: These companies resort to predatory pricing to acquire customers even as they suffer persistent financial losses.
- SEBI is rightly revisiting the valuation norms of such companies looking to list on the stock exchange.
- Exclusionary practice: They take away choice from suppliers and consumers.
- This, in the long run, can be viewed as an exclusionary practice that eliminates other players from the market.
- Lack of level playing field: While neutrality is the fundamental basis of a marketplace and a level playing field is in the fitness of things, claims of outfits such as Flipkart or Amazon to be a marketplace for a wide variety of sellers can be questioned.
- A few select sellers, who are generally affiliated with the platform, reap the benefits of greater visibility and better terms of trade — reduced commissions and platform-funded discounts.
- Undue advantage to associated companies: The associate companies are prominent sellers on their platform.
- It is alleged that undue advantage is given while recommending or listing these products.
- Cartelisation: Online travel aggregators are often accused of cartelisation.
- Information asymmetry: The aggregators gather shopping habits, consumer preferences, and other personal data.
- The platforms are accused of using this data to create and improve their own products and services, taking away business from other sellers on their platform.
- They capitalise on this data and information about other brands to launch competing products on their marketplace.
- This information asymmetry is exploited by the aggregators to devour organisations they promise to support.
- Problems in dispute resolution mechanism: Another issue often noticed is the lack of a fair and transparent dispute resolution mechanism for sellers on these platforms.
- Delayed payments, unreasonable charges, and hidden fees are common occurrences.
- Unreasonable and one-sided contracts allow travel aggregators to have a disparity clause (in the rates) which allows them to offer rooms at a much cheaper rate but bars the hotels from doing so.
Impact of the e-commerce
- The online aggregator platforms have also damaged large segments of small and medium businesses through their dominant position and the malpractices this position allows them to indulge in.
- The ultimate loss bearer is the consumer who will have a reduced bargaining position.
Way forward
- Comprehensive rules: It is time that a set of comprehensive rules and regulations is put together.
- These regulations need to be inclusive, should eliminate the conflicts of interest inherent in current market practices, and prevent any anti-competitive practices.
- Model agreement: A model agreement that is fair and allows a level playing field between the aggregators and their business partners should be implemented.
- Learning from EU act: There is a lot to learn from the Digital Markets Act of the EU that seeks to address unfair practices by these gatekeepers.
- Need for dispute resolution mechanism: Strong and quick grievance redressal and dispute resolution mechanisms should be established.
- Punitive penalties: The rules should allow for punitive penalties for unfair practices.
- Fair competition rules: Market dominance and subsequent invoking of fair competition rules should be triggered at the level of micro-markets and for product segments.
Conclusion
The nature of our success in dealing with this change will lie in the ways in which we deal with the concerns of all players.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Kihoto Collohan Case
Mains level: Political conundrum in states over defection
As the political battle in Maharashtra moves to the Supreme Court, the role and powers of the Deputy Speaker are in focus.
In the context of the crisis, references have been made to the landmark judgment in ‘Kihoto Hollohan vs Zachillhu And Others’ (1992).
What is the ‘Kihoto Hollohan’ case?
- A constitutional challenge to the Tenth Schedule was mounted, which was settled by the apex court in ‘Kihoto Hollohan’.
- The principal question before the Supreme Court in the case was whether the powerful role given to the Speaker violated the doctrine of basic structure.
- In this judgment, the Supreme Court upheld the sweeping discretion available to the Speaker in deciding cases of disqualification of MLAs.
- The Supreme Court laid down the doctrine of basic principle in its landmark judgment in ‘Kesavananda Bharati vs State Of Kerala’ (1973).
What does the Tenth Schedule of the Constitution say?
- The Tenth Schedule was inserted in the Constitution by the Constitution (Fifty-Second Amendment) Act, 1985.
- It provides for the disqualification of Members of Parliament and state legislatures who defect.
- It describes the Speaker’s sweeping discretionary powers to make decisions on case of defection.
What did the Supreme Court rule in ‘Kihoto Hollohan’?
- The petitioners in ‘Kihoto Hollohan’ argued whether it was fair that the Speaker should have such broad powers, given that there is always a reasonable likelihood of bias.
- The majority judgment authored by Justices M N Venkatachaliah and K Jayachandra Reddy answered this question in the affirmative. It read-
- The Speakers/Chairmen hold a pivotal position in the scheme of Parliamentary democracy and are guardians of the rights and privileges of the House.
- They are expected to and do take far reaching decisions in the Parliamentary democracy.
- Vestiture of power to adjudicate questions under the Tenth Schedule in them should not be considered exceptionable.
- The provisions were “salutory and intended to strengthen the fabric of Indian Parliamentary democracy by curbing unprincipled and unethical political defections.”
What was the dissenting opinion?
- Justices Lalit Mohan Sharma and J S Verma dissented and took a different view.
- The tenure of the Speaker, who is the authority in the Tenth Schedule to decide this dispute, is dependent on the continuous support of the majority in the House.
- Therefore, he does not satisfy the requirement of such an independent adjudicatory authority.
- They advocated for an independent adjudicatory machinery for resolving disputes relating to the competence of Members of the House,
- This is envisaged as an attribute of the democratic system which is a basic feature of our Constitution.
What about the role of the Deputy Speaker?
- Article 93 of the Constitution mentions the positions of the Speaker and Deputy Speaker of the House of the People (Lok Sabha), and Article 178 contains the corresponding position for Speaker and Deputy Speaker of the Legislative Assembly of a state.
- Maharashtra has been without a Speaker since February 2021, and Deputy has been carrying out the responsibilities of the position.
- Article 95(1) says: “While the office of Speaker is vacant, the duties of the office shall be performed by the Deputy Speaker”.
- In general, the Deputy Speaker has the same powers as the Speaker when presiding over a sitting of the House.
- All references to the Speaker in the Rules are deemed to be references to the Deputy Speaker when he presides.
Try this PYQ:
Q.Which one of the following Schedules of the Constitution of India contains provisions regarding anti-defection?
(a) Second Schedule
(b) Fifth Schedule
(c) Eighth Schedule
(d) Tenth Schedule
Post your answers here.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Regulation of Gig Economy
A NITI Aayog report has identified that is expected to grow to 2.35 crore by 2029-30.
Do you know?
According to a study released by NITI Aayog, the number of gig workers in India is estimated to be 77 lakh in 2020-21. Isn’t it too low to imagine? Seems like there is huge under-reporting.
What is the Gig Economy?
- In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees.
- A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career. e.g Employee models of Uber, Ola, Swiggy etc
- In this economy, tech-enabled platforms connect the consumer to the gig worker to hire services on a short-term basis.
- Gig workers include self-employed, freelancers, independent contributors and part-time workers.
Where does gig culture exist in Indian Economy?
- Sectors such as media, real estate, legal, hospitality, technology-help, management, medicine, allied and education are already operating in gig culture.
- The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.
Key Drivers for Gig Economy
- Unconventional work approach by millennials: Hectic lifestyles of employees in private sectors have created a negative perception of full-time employment among millennials.
- Emergence of a start-up culture: The start-up ecosystem in India has been developing rapidly. For start-ups, hiring full-time employees leads to high fixed costs and therefore, contractual freelancers are hired for non-core activities.
- MNCs are hiring contractual employees: MNCs are adopting flexi-hiring options, especially for niche projects, to reduce operational expenses after the pandemic.
- Rise in freelancing platforms: Rise in freelancing platforms has also aided in the development of the gig economy.
- Business Models: Gig employees work on various compensation models such as fixed-fee (decided during contract initiation), time & effort, actual unit of work delivered and quality of outcome.
- Impact of Covid-19: Many laid-off employees are focusing on developing skills to avail freelance job opportunities and become a part of this burgeoning economy.
Why is Gig Economy preferred by workers?
- Profit through multiple work: One can work on freelancing as well as work full-time somewhere else.
- Women empowerment: It is very beneficial for womenwho work on this concept when they cannot continue their work or take a break from career due to marriage or child birth.
- Leisure and dependency: Retired peoplecan stay active after retirement as this will keep them engaged away from loneliness and depression and can earn as well on their own.
- Flexibility and diversity to the workers: It offers flexibility when workers can work according to their convenience and schedule rather than routine like in full-time jobs.
- Work from home: The travel costs and energy to travel to the workplace is reduced.
Why is Gig Economy preferred by Employers?
- Efficiency, efficacy and productivity of workers in the gig economy are much more than that of a stable full-time job.
- More rconomical for employers-when employment givers can’t afford to hire full-time workers, they hire people for specific projects and pay them.
- Start-up companies and entrepreneurs – who do not have big financial space – can grow only if they can leverage the services of contract employees or freelancers.
- In a gig economy, businesses save resources in terms of benefits, office space and training.
- Competition and efficiency among workers is improved.
Challenges faced in Gig economy
- No perks and benefits: There are no labour welfare emoluments like pension, gratuity, etc. for the workers.
- Job insecurity: Gig workers may face unfair termination. They may also attain minimum wages and less paid leave.
- No legal protection: Workers do not have the bargaining power to negotiate a fair deal with their employers.
- Unionization of workers will be difficult.
- Confidentiality of documents etc. of the workplace is not guaranteed
- Urban nature: The gig economy is not accessible for people in many rural areas where internet connectivity and electricity is unavailable.
New classification by NITI Aayog: Platform vs. Non-platform Workers
- The NITI Aayog report broadly classifies gig workers into platform and non-platform-based workers.
- The consequent platformisation of work has given rise to a new classification of labour — platform labour — falling outside of the purview of the traditional dichotomy of formal and informal labour.
- While platform workers are those whose work is based on online software applications or digital platforms.
- Non-platform gig workers are generally casual wage workers and own-account workers in the conventional sectors, working part-time or full time.
Recommendations made by NITI Aayog
- The NITI Aayog has recommended steps to provide social security, including paid leave, occupational disease and accident insurance, support during irregularity of work and pension plans for the country’s gig workforce.
- It has also recommended introducing a ‘Platform India initiative’ on the lines of the ‘Startup India initiative’.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Di-ammonium fertilisers
Mains level: Paper 3- Reducing the cost of fertiliser imports
Context
The global prices of urea, DAP, MOP, phosphoric acid, ammonia and LNG have soared by two to two-and-a-half times in the last year
Resource richness of Indian agriculture
- No country has as much area under farming as India.
- Land under cultivation: At 169.3 million hectares (mh) in 2019, its land used for crop cultivation was higher than that of the US (160.4 mh), China (135.7 mh), Russia (123.4 mh) or Brazil (63.5 mh).
- Ample water: With its perennial Himalayan rivers and average annual rainfall of nearly 1,200 mm – against Russia’s 475 mm, China’s 650 mm and the US’s 750 mm – India has no dearth of land, water and sunshine to sustain vibrant agriculture.
- But there’s one resource in which the country is short and heavily import-dependent — mineral fertilisers.
India’s important dependence
- In 2021-22, India imported 10.16 million tonnes (mt) of urea, 5.86 mt of di-ammonium phosphate (DAP) and 2.91 mt of muriate of potash (MOP).
- Import value: In value terms, imports of all fertilisers touched an all-time high of $12.77 billion last fiscal.
- In 2021-22, India also produced 25.07 mt of urea, 4.22 mt of DAP, 8.33 mt of complex fertilisers (containing nitrogen-N, phosphorus-P, potassium-K and sulphur-S in different ratios) and 5.33 mt of single super phosphate (SSP).
- Import of raw material: The intermediates or raw materials for the manufacture of these fertilisers were substantially imported.
- Total value of fertiliser imports: The total value of fertiliser imports by India, inclusive of inputs used in domestic production, was a whopping $24.3 billion in 2021-22.
Two costs involved in import
- 1] Foreign exchange outgo for import: The first is foreign exchange outgo:
- Imports are mostly from the following countries:
- Urea: Imported from China, Oman, UAE and Egypt
- DAP: Imported from China, Saudi Arabia and Morocco.
- MOP: Imported from Belarus, Canada, Russia, Israel and Jordan.
- LNG: Imported from Qatar, US, UAE and Nigeria.
- Ammonia: Morocco, Jordan, Senegal and Tunisia (phosphoric acid); Saudi Arabia and Qatar.
- Rock phosphate: Jordan, Morocco, Egypt and Togo.
- 2] Fiscal cost: The second cost is fiscal.
- Fertilisers are not only imported but also sold at subsidised prices.
- The difference is paid as a subsidy by the government.
- That bill was Rs 1,53,658.11 crore or $20.6 billion in 2021-22 and projected at Rs 2,50,000 crore ($32 billion) this fiscal.
- Unsustainably high costs: Both costs are unsustainably high to bear for a mineral resource-poor country.
Suggestions
1] Reduce consumption of high-analysis fertilisers
- There is a need to cap or even reduce consumption of high-analysis fertilisers – particularly urea (46 per cent N content), DAP (18 per cent N and 46 per cent P) and MOP (60 per cent).
- Incorporate urease and inhibition compounds in urea: This can be done by incorporating urease and nitrification inhibition compounds in urea.
- These are basically chemicals that slow down the rate at which urea is hydrolysed and nitrified (which increases leaching).
- By reducing ammonia volatilisation and nitrate leaching, more nitrogen is made available to the crop, enabling farmers to harvest the same yields with a lesser number of urea bags.
- Liquid nano-urea: Together with products such as liquid “nano urea” –it is possible to achieve a 20 per cent or more drop in urea consumption from the present 34-35 mt levels.
- Liquid nano-urea with their ultra-small particle size is conducive to easier absorption by the plants than with bulk fertilisers, translating into higher nitrogen use efficiency.
2] Promote the sale of SSP and complex fertilisers
- A second route is by promoting sales of SSP (containing 16 per cent P and 11 per cent S) and complex fertilisers such as “20:20:0:13” and “10:26:26”.
- Restrict DAP use: DAP use should be restricted mainly to paddy and wheat; other crops don’t require fertilisers with 46 per cent P content.
- India can also import more rock phosphate to make SSP directly or it can be converted into “weak” phosphoric acid
- The latter, having only about 29 per cent P (compared to 52-54 per cent in normal “strong” merchant-grade phosphoric acid), is good enough for manufacturing “20:20:0:13”, “10:26:26” and other low-analysis complex fertilisers.
3] Incorporate MOP into complexes
- As regards MOP, roughly three-fourths of the imported material is now applied directly and only the balance is sold after incorporating into complexes.
- It should be the other way around.
- India, to re-emphasise, needs to wean its farmers away from all high-analysis fertilisers.
4] Use of NPKS complexes and indigenous sources
- The moment to use more NPKS complexes and SSP, is already happening.
- It requires a concerted push, alongside popularising high nutrient use-efficient water-soluble fertilisers (potassium nitrate, potassium sulphate, calcium nitrate, etc).
- Exploiting alternative indigenous sources needs to be considered (for example, potash derived from molasses-based distillery spent-wash and from seaweed extract).
5] Revise nutrient application recommendations
- Farmers need to know what is a suitable substitute for DAP and which NPK complex or organic manure can bring down their urea application from 2.5 to 1.5 bags per acre.
- It calls for agriculture departments and universities not just to revisit their existing crop-wise nutrient application recommendations, but disseminating this information to farmers on a campaign mode.
Conclusion
The costs associated with the use of fertilisers are unsustainably high to bear for a mineral resource-poor country such as India. We need to act on the measures to reduce our import dependence.
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Back2Basics: High-analysis fertilisers
- Fertilizers that have more than 30% total available nutrients are called high analysis fertilizers, whereas those with less than 30% total available nutrients are called low analysis fertilizers.
- A 15-15-15 is a high analysis fertilizer; a 5-10-10 is a low analysis fertilizer, and a 10-10-10 is right on the borderline.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Partners in the Blue Pacific (PBP) initiative
Mains level: Countering projects against Chinese predatory expansion
To reinforce its Indo-Pacific strategy, the US – along with Australia, New Zealand, UK and Japan – announced a new Partners in Blue Pacific (PBP) initiative.
What is Partners in the Blue Pacific (PBP) initiative?
- The PBP is a five-nation “informal mechanism” to support Pacific islands and to boost diplomatic, economic ties in the region.
- It speaks of enhancing “prosperity, resilience, and security” in the Pacific through closer cooperation.
- It simply means that through the PBP, these counties — together and individually — will direct more resources here to counter China’s aggressive outreach.
- The initiative members have also declared that they will “elevate Pacific regionalism”, and forge stronger ties with the Pacific Islands Forum.
- The areas where PBP aims to enhance cooperation include “climate crisis, connectivity and transportation, maritime security and protection, health, prosperity, and education”.
How is China trying to transform its ties in the Pacific?
- As China signed a security pact with Solomon Islands in April, the deal flagged serious concerns about the Chinese military getting a base in the southern Pacific.
- This is very close to the US island territory of Guam, and right next to Australia and New Zealand.
- The deal, which boosted Beijing’s quest to dominate crucial shipping lanes criss-crossing the region, rattled the US and its allies.
- It also triggered urgent moves to counter China’s growing Pacific ambition amid a power vacuum fuelled by apparent lack of US attention.
What is being done by the US and its allies to counter China?
- Before launching the PBP this month, the US and its partners started the Indo-Pacific Economic Framework for Prosperity (IPEF).
- Away from the Pacific, the G7 on Monday (June 27) announced a plan — Partnership for Global Infrastructure and Investment (PGII) — to rival China’s BRI.
- It promises to raise $600 billion to fund development projects in low and middle-income countries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Road safety issues in India
The World Bank has approved a $250 million loan to support the Government of India’s road safety programme for seven States.
Programme for Road Safety
- Under this, a single accident reporting number will be set up to better manage post-crash events.
- It will be implemented in the States of Andhra Pradesh, Gujarat, Odisha, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal.
- The $250 million variable spread loan from the International Bank for Reconstruction and Development (IBRD) has a maturity of 18 years, with a grace period of 5.5 years.
- The project will also establish a national harmonised crash database system in order to analyse accidents and use that to construct better and safer roads.
- The project will also provide incentives to States to leverage private funding through public private partnership (PPP) concessions and pilot initiatives.
Road accidents in India: Key takeaways
- The report ‘Road Accidents in India 2020’ released by the Union ministry of road transport and highways (MoRTH) provides for key stats.
- India has only 1% of the world’s vehicles but 11% of the global deaths from road accidents occur in India.
- About 450,000 accidents take place in India annually, of which 150,000 people die.
- There are 53 road accidents in the country every hour and one death every four minutes.
Why are there so many road fatalities in India alone?
- Weak enforcement of traffic laws: People hardly oblige to traffic rules and find easier to bribe policemen rather than paying hefty challans.
- Speeding issue: More accidents on the highways have been attributed to higher vehicle speeds and higher volume of traffic on these roads.
- Engineering bottlenecks: Issues such as gaps in the median on the national highways, untreated intersections, and missing crash barriers are some of the biggest engineering issues.
- Behavioural issue: Driver violations such as wrong-side driving, wrong lane usage by heavy vehicles, and mass violation of traffic lights, intoxication are the biggest behavioural issues.
- Lack of Golden hour treatment: Lack of rapid trauma care on highways leads to such high fatalities.
Imbibing road safety: Way forward
- Road safety education
- Better road design, maintenance and warning signage
- Crackdown on driving under influence of alcohol and drugs
- Strict enforcement of traffic rules
- Encouraging better road behaviour
- Ensuring road worthiness of a vehicle
- Better first aid and paramedic care
Do you know?
The ‘golden hour’ has been defined as ‘the time period lasting one hour following a traumatic injury during which there is the highest likelihood of preventing death by providing prompt medical care.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Small saving schemes
Mains level: Read the attached story
Economists expect the Centre to raise the interest rates paid on small savings schemes for the July to September 2022 quarter.
Small Savings Scheme
- Small Savings Schemes are a set of savings instruments managed by the central government with an aim to encourage citizens to save regularly irrespective of their age.
- They are popular as they provide returns higher than bank fixed deposits, sovereign guarantee and tax benefits.
How is it managed?
- Since 2016, the Finance Ministry has been reviewing the interest rates on small savings schemes on a quarterly basis.
- All deposits received under various schemes are pooled in the National Small Savings Fund.
- The money in the fund is used by the Centre to finance its fiscal deficit.
What are the different saving schemes?
The schemes can be grouped under three heads –
- Post office deposits
- Savings certificates and
- Social security schemes
(1) Post Office Deposits
- Under this we have the savings deposit, recurring deposit and time deposits with 1, 2, 3 and 5 year maturities and the monthly income account.
- The savings account currently pays an interest of 4% per annum and can be opened individually or jointly with an initial investment of Rs 500.
- The recurring deposit that pays 5.8% a year compounded quarterly matures after 60 months from the date of opening.
- It allows investors to save on a monthly basis with a minimum deposit of Rs 100 per month.
- Investments under the 5-year time deposit up to Rs 1.5 lakh further qualifies for benefit under section 80C of Income Tax Act.
(2) Savings Certificates
- Under this, we have the National Savings Certificate and the Kisan Vikas Patra.
- The National Savings Certificate pays interest at a rate of 6.8% per annum upon maturity after 5 years. The interest that is earned is reinvested into the scheme every year automatically.
- The NSC also qualifies for tax saving under Section 80C of the income tax act.
- The Kisan Vikas Patra, which is open to everyone, doubles your one-time investment at the end of 124 months signifying a return of 6.9% compounded annually.
- The minimum investment amount is Rs 1000 while there is no upper limit.
(3) Social security schemes
- In the third head of social security schemes, there is Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme.
a. Public Provident Fund
- The Public Provident Fund is a popular saving option for long term goals like retirement.
- It pays 7.1% a year and qualifies for tax benefit under Section 80C of the Income Tax Act.
- Upon maturity of the account after 15 years, it can be extended indefinitely in blocks of 5 years.
- The accumulated amount and interest earned are exempt from tax at the time of withdrawal.
b. Sukanya Samriddhi Account
- The Sukanya Samriddhi Account was launched in 2015 under the Beti Bachao Beti Padhao campaign exclusively for a girl child.
- The account can be opened in the name of a girl child below the age of 10 years.
- The scheme guarantees a return of 7.6% per annum and is eligible for tax benefit under Section 80C of the Income Tax Act.
- The tenure of the deposit is 21 years from the date of opening of the account and a maximum of Rs 1.5 lakh can be invested in a year.
c. Senior Citizen Savings Account
- And finally, the 5-year Senior Citizen Savings Account can be opened by anyone who is over 60 years to age.
- It carries an interest of 7.4% per annum payable quarterly and qualifies for Section 80C tax benefit.
- These time-tested and safe modes of investments don’t offer quick returns, but are safer when compared to market-linked schemes.
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From UPSC perspective, the following things are important :
Prelims level: PGI-D
Mains level: Not Much
The Ministry of Education has released the Performance Grading Index for Districts (PGI-D) for 2019 which studied 83 indicators grouped in six categories.
What is PGI-D?
- The 83-indicator-based PGI for District (PGI-D) has been designed to grade the performance of all districts in school education.
- The data is filled by districts through an online portal.
- The indicator-wise PGI score shows the areas where a district needs to improve.
- The PGI-D structure comprises a total weightage of 600 points across 83 indicators.
- They are grouped under 6 categories, viz., Outcomes, Effective Classroom Transaction, Infrastructure Facilities & Students’ Entitlements, School Safety & Child Protection, Digital Learning, and Governance Process.
- These categories are outcomes, effective classroom transaction, infrastructure facilities and student’s entitlements, school safety and child protection, digital learning and governance process.
How does the grading scale works?
- The PGI-D grades the districts into 10 grades with the highest achievable grade being ‘Daksh’, which is for districts scoring more than 90% of the total points in that category or overall.
- ‘Utkarsh’ category is for districts with score between 81-90%, followed by ‘Ati-Uttam’ (71-80%), ‘Uttam’ (61-70%), ‘Prachesta-I’ (51-60%), ‘Prachesta-II’ (41-50%) and ‘Pracheshta III’ (31-40%).
- The lowest grade in PGI-D is called ‘Akanshi-3’ which is for scores up to 10% of the total points.
Performance of the states
- Rajasthan’s Sikar is the top performer, followed by Jhunjhunu and Jaipur.
- The other States whose districts have performed best are Punjab with 14 districts in ‘Ati-uttam’ grade (scoring 71-80% on a scale of 100).
- It followed by Gujarat and Kerala with each having 13 districts in this category.
- However, there are 12 States and UTs which do not have even a single district in the ‘Ati-uttam’ and ‘Uttam’ categories and these include seven of the eight States from the North East region.
Significance
- The PGI-D will reflect the relative performance of all the districts on a uniform scale which encourages them to perform better.
- It is expected to help the state education departments to identify gaps at the district level and improve their performance in a decentralized manner.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: G7, G12, G20
Mains level: Read the attached story
The Jammu and Kashmir administration has constituted a committee to coordinate with the delegates of G-20 countries scheduled to participate in a meeting to be held in the Union Territory (UT) next year.
Why such move?
- The participation of the delegates from G-20 countries will be a major boost to the efforts of the Centre to project the situation in J&K as normal.
- This is especially after J&K’s special constitutional position was ended in 2019.
What is G-20?
- Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.
- Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.
- To tackle the problems or address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits.
- In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.
- The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.
Aims and objectives
- The Group was formed with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
- The forum aims to pre-empt the balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.
- It seeks to address issues that go beyond the responsibilities of any one organization.
Members of G20
The members of the G20 consist of 19 individual countries plus the European Union (EU).
- The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.
- The European Union is represented by the European Commission and by the European Central Bank.
Its significance
- G20 is a major international grouping that brings together 19 of the world’s major economies and the European Union.
- Its members account for more than 80% of global GDP, 75% of trade and 60% of population.
India and G20
- India has been a member of the G20 since its inception in 1999.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Tenth schedule
Mains level: Paper 2- Anti-defection law
Context
The political crisis in Maharashtra has brought focus back on the anti-defection law. By all accounts, the law has failed to shore up the stability of elected governments.
About Anti-defection law
- The Anti-Defection Law under the Tenth Schedule of the Constitution punishes MPs/ MLAs for defecting from their party by taking away their membership of the legislature.
- It gives the Speaker of the legislature the power to decide the outcome of defection proceedings.
- It was added to the Constitution through the Fifty-Second (Amendment) Act, 1985 when Rajiv Gandhi was PM.
- The law applies to both Parliament and state assemblies.
How provisions of the law are being thwarted?
- There are many ways to thwart provisions of the law:
- The Speaker can sit on the defection pleas for the term of the assembly;
- The beneficiary party can facilitate accretion of defectors to hit the magic two-thirds threshold.
- The voters don’t seem to care about punishing the defectors either.
Is an amendment to the law a solution?
- Some have thus argued that the way forward is to amend the anti-defection law to fill these lacunae by mandating time-bound decisions by the Speaker and disqualifying defectors from standing for the next election as well.
- These proposed amendments like the original law want to consolidate power without necessarily putting in the requisite politics.
Why amendment to the law will not solve the problem
- Politicians are adept at subverting institutional processes for their own ends and there are many possibilities for payoff for defectors outside of elected office alone.
- Moreover, politics has a rich history of exercise of power by proxy and the disqualified representative may simply choose to have a family member stand in their stead.
- The anti-defection law and proposed amendments approach the issue of defections from the prism of denying power to the defector, a framing which repeatedly comes up short in the face of a bigger and/or more punitive power.
Way forward
- Parties need to project power: Within this framework, if political parties want to resist defections, they must be able to project (imminent) power themselves.
- Parties need to address organisational issues: At the same time, political parties must address organizational and ideological infirmities which have made them susceptible to mass defections in the first place.
- Ideological clarity: Political parties need ideological clarity and the ability to attract individuals with a sense of purpose and not love for power alone.
- This ideological depth if reflected in the party organization and its political programs will give members the ability to withstand lean periods of power.
- Inner-party democracy: Political parties are failing to create intra-party forums where grievances can be expressed and resolved on an ongoing basis.
- Internal mechanisms for inner-party democracy – from elections to deliberative forums – are ultimately at the discretion of the party leadership.
- Scrap anti-defection law: Scrapping the anti-defection law would provide some institutional leverage to express intra-party dissidence and while it may be more chaotic in the short-term would lead to greater stability and political strength in the long-term.
- Contributed to polarisation: The anti-defection law has undermined not just the very principle of representation but has also contributed to polarization in our country by making it impossible to construct a majority on any issue outside of party affiliation.
- Avoid ceding political power to the judiciary: Political parties are repeatedly giving primacy to legal instead of political battles since these issues inevitably end up in court.
- This repeated ceding of political power to the judiciary is a serious deviation from the democratic paradigm and must be checked.
Conclusion
Anti-defection law has failed to prevent the defections and subsequent toppings of the several state government. Scrapping it could provide leverage to express intra-party dissidence.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: UNCLOS
Mains level: Paper 2- India-Vietnam defence ties
Context
The two countries recently deepened bilateral cooperation with the signing of the Joint Vision Statement on India-Vietnam Defence Partnership towards 2030 during the recent visit of Defence Minister Rajnath Singh to Vietnam.
About the Joint Vision Statement
- India and Vietnam Wednesday signed a Joint Vision Statement on India-Vietnam Defence Partnership towards 2030, “which will significantly enhance the scope and scale of existing defence cooperation”.
- Boosting the scale and scope of defence cooperation: The Joint Vision Statement is aimed at boosting the scope and scale of the existing defence cooperation between the two nations.
- Mutual logistic support: The two sides also signed a Memorandum of Understanding (MoU) on mutual logistics support.
- Elevating CSP: This is the first agreement of its kind that Hanoi has entered into with any other country and elevates the standing of Comprehensive Strategic Partnership (CSP) which Hanoi shares with New Delhi since 2016 (along with only Russia and China).
Enhanced maritime cooperation
- Both countries find convergence in their approaches towards the maintenance of stability and security of the Indo-Pacific.
- This approach has translated into diplomatic and political support in the context of developments within the region and manifested in the form of tangible and functional cooperation instruments — the most vital being bilateral defence partnership.
- Because of the volume of maritime trade that passes through sea lanes of communication in the Indo-Pacific and potential as well as estimated energy reserves in these waters, maritime cooperation between countries in the region have expanded exponentially.
Emphasis on the cooperative mechanism
- The enhanced geostrategic prominence and attendant uncertainties vis-à-vis China’s expanding and often abrasive footprints in the Indo-Pacific have resulted in an overall increase in emphasis on cooperative mechanisms and frameworks across the region.
- Defence partnership between the two countries has been growing steadily following the signing of the Defence Protocol in 2000 and today covers extensive navy-to-navy cooperation.
Dealing with Chinese transgression
- Vietnam has and continues to be one of the most vocal countries with respect to China’s periodic transgressions in the South China Sea.
- Freedom of navigation: In India, Vietnam has found an equally uncompromising partner when it comes to the question of violations of freedom of navigation and threats to sovereign maritime territorial rights as enshrined under international maritime law.
- New Delhi has supported Vietnam’s position in the South China Sea with respect to Beijing’s destabilising actions and coercive tactics backing by reiterating the irrefutability of the UNCLOS.
- India has also not backed down from continuing ONGC Videsh Ltd (OVL)’s oil exploration project in Block 128 (which is within Hanoi’s EEZ) despite China’s protests.
- Emphasis on naval diplomacy: It is also in the last few years that Vietnam has augmented its emphasis on naval diplomacy and strengthened its ties with the US alongside the extension of its engagement with India and other ASEAN members.
- Despite the fact that the China factor has provided impetus to the solidification of ties, it is also important to consider that mutual cooperation is not driven solely by it.
- Support in the rubric of Indo-Pacific: Both countries have expanded areas of collaboration and are supportive of each other’s individual and multilateral involvements within the rubric of the Indo-Pacific.
Conclusion
Convergences between New Delhi and Hanoi has naturally found expression in bilateral relations and the two countries are poised to develop their partnership further in the coming years.
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Back2Basics: About UNCLOS
- UNCLOS is sometimes referred to as the Law of the Sea Convention or the Law of the Sea treaty.
- It came into operation and became effective from 16th November 1982.
- It defines the rights and responsibilities of nations with respect to their use of the world’s oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources.
- It has created three new institutions on the international scene :
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- International Tribunal for the Law of the Sea,
- International Seabed Authority
- Commission on the Limits of the Continental Shelf
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Indian Tricolor
Mains level: Honor of our national flag and national anthem
The Centre has reached out to manufacturers and e-commerce sites to boost the availability of the Tricolour, according to officials aware of the programme.
Why in news?
- The Centre is set to launch a large-scale campaign to encourage Indians to fly the National Fag at their homes to mark the 75th Independence Day.
- The aim of the campaign was to inspire people, rather than carry out a distribution drive.
How is it made possible?
- In order to facilitate the campaign, the Union Home Ministry had last year amended the Flag Code, which earlier only allowed hand-woven or hand-spun flags to be made.
- It has now allowed flags to be polyester and machine-made.
Do you know?
Earlier, the display of the national flag was governed by the provisions of The Emblems and Names (Prevention of Improper Use) Act, 1950 and the Prevention of Insults to National Honour Act, 1971.
What is the Flag Code of India?
- The Flag Code of India is a set of laws, practices and conventions that apply to the display of the national flag of India.
- The Code took effect from 26 January 2002 and superseded the “Flag Code-India” as it existed earlier.
- It permits the unrestricted display of the tricolour, consistent with the honour and dignity of the flag.
The Flag Code of India has been divided into three parts:-
- First Part: General Description of the National Flag.
- Second Part: Display of the National Flag by members of public, private Organisations & educational institutions etc.
- Third Part: Display of National Flag by Union or State Governments and their organisations and agencies.
Disposing of the national flag
- A/c to the Flag Code, such paper flags are not to be discarded or thrown on the ground after the event.
- Such flags are to be disposed of, in private, consistent with the dignity of the flag.
Hoisting the national flag is a fundamental right
- The bench headed by Chief Justice of India V. N. Khare said that under Article 19(1)(a) of the Constitution of India, citizens had the fundamental right to fly the national flag on their premises throughout the year.
- However, it provided that the premises do not undermine the dignity of the national flag.
About Prevention of Insults to National Honour Act
- The law, enacted on December 23, 1971, penalizes the desecration of or insult to Indian national symbols, such as the National Flag, the Constitution, the National Anthem, and the Indian map, as well as contempt of the Constitution of India.
- Section 2 of the Act deals with insults to the Indian National Flag and the Constitution of India.
Do you know?
Article 51 ‘A’ contained in Part IV A i.e. Fundamental Duties asks:
To abide by the constitution and respect its ideals and institutions, the National Flag and the National Anthem in clause (a).
Back2Basics: Story of our National Flag
(1) Public display for the first time
- Arguably the first national flag of India is said to have been hoisted on August 7, 1906, in Kolkata at the Parsee Bagan Square (Green Park).
- It comprised three horizontal stripes of red, yellow and green, with Vande Mataram written in the middle.
- Believed to have been designed by freedom activists Sachindra Prasad Bose and Hemchandra Kanungo, the red stripe on the flag had symbols of the sun and a crescent moon, and the green strip had eight half-open lotuses.
(2) In Germany
- In 1907, Madame Cama and her group of exiled revolutionaries hoisted an Indian flag in Germany in 1907 — this was the first Indian flag to be hoisted in a foreign land.
(3) During the Home Rule Movement
- In 1917, Dr Annie Besant and Lokmanya Tilak adopted a new flag as part of the Home Rule Movement.
- It had five alternate red and four green horizontal stripes, and seven stars in the saptarishi configuration.
- A white crescent and star occupied one top corner, and the other had Union Jack.
(4) Final version by Pingali Venkayya
- The design of the present-day Indian tricolour is largely attributed to Pingali Venkayya, an Indian freedom fighter.
- He reportedly first met Mahatma Gandhi in South Africa during the second Anglo-Boer War (1899-1902), when he was posted there as part of the British Indian Army.
- Years of research went into designing the national flag. In 1916, he even published a book with possible designs of Indian flags.
- At the All India Congress Committee in Bezwada in 1921, Venkayya again met Gandhi and proposed a basic design of the flag, consisting of two red and green bands to symbolise the two major communities, Hindus and Muslims.
(5) During Constituent Assembly
- On July 22, 1947, when members of the Constituent Assembly of India, the first item on the agenda was reportedly a motion by Pandit Nehru, about adopting a national flag for free India.
- It was proposed that “the National Flag of India shall be horizontal tricolour of deep saffron (Kesari), white and dark green in equal proportion.”
- The white band was to have a wheel in navy blue (the charkha being replaced by the chakra), which appears on the abacus of the Sarnath Lion Capital of Ashoka.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Current account deficit
Mains level: Read the attached story
The data for the country’s current account balance for the fourth quarter of FY 2021-22 shows a decrease in the deficit to 1.5% of gross domestic product (GDP) from 2.6% of GDP in Q3 FY 2021-22.
What is Current Account Deficit (CAD)?
- A current account is a key component of balance of payments, which is the account of transactions or exchanges made between entities in a country and the rest of the world.
- This includes a nation’s net trade in products and services, its net earnings on cross border investments including interest and dividends, and its net transfer payments such as remittances and foreign aid.
- A CAD arises when the value of goods and services imported exceeds the value of exports, while the trade balance refers to the net balance of export and import of goods or merchandise trade.
Components of Current Account
Current Account Deficit (CAD) =
Trade Deficit + Net Income + Net Transfers
(1) Trade Deficit
- Trade Deficit = Imports – Exports
- A Country is said to have a trade deficit when it imports more goods and services than it exports.
- Trade deficit is an economic measure of a negative balance of trade in which a country’s imports exceeds its exports.
- A trade deficit represents an outflow of domestic currency to foreign markets.
(2) Net Income
- Net Income = Income Earned by MNCs from their investments in India.
- When foreign investment income exceeds the savings of the country’s residents, then the country has net income deficit.
- This foreign investment can help a country’s economy grow. But if foreign investors worry they won’t get a return in a reasonable amount of time, they will cut off funding.
- Net income is measured by the following things:
- Payments made to foreigners in the form of dividends of domestic stocks.
- Interest payments on bonds.
- Wages paid to foreigners working in the country.
(3) Net Transfers
- In Net Transfers, foreign residents send back money to their home countries. It also includes government grants to foreigners.
- It Includes Remittances, Gifts, Donation etc
How does Current Account Transaction takes place?
- While understanding the Current Account Deficit in detail, it is important to understand what the current account transactions are.
- Current account transactions are transactions that require foreign currency.
- Following transactions with from which component these transactions belong to :
- Component 1 : Payments connection with Foreign trade – Import & Export
- Component 2 : Interest on loans to other countries and Net income from investments in other countries
- Component 3 : Remittances for living expenses of parents, spouse and children residing abroad, and Expenses in connection with Foreign travel, Education and Medical care of parents, spouse and children
What has been the recent trend?
- In Q4 FY 2021-22, CAD improved to 1.5% of GDP or $13.4 billion from 2.6% of GDP in Q3 FY 2021-22 ($22.2 billion).
- The difference between the value of goods imported and exported fell to $54.48 million in Q4FY 2021-22 from $59.75 million in Q3 FY2021-22.
- However, based on robust performance by computer and business services, net service receipts rose both sequentially and on a year-on-year basis.
- Remittances by Indians abroad also rose.
What are the reasons for the current account deficit?
- Intensifying geopolitical tensions and supply chain disruptions leading to crude oil and commodity prices soaring globally have been exerting upward pressure on the import bill.
- A rise in prices of coal, natural gas, fertilizers, and edible oils have added to the pressure on trade deficit.
- However, with global demand picking up, merchandise exports have also been rising.
How will a large CAD affect the economy?
- A large CAD will result in demand for foreign currency rising, thus leading to depreciation of the home currency.
- Nations balance CAD by attracting capital inflows and running a surplus in capital accounts through increased foreign direct investments (FDI).
- However, worsening CAD will put pressure on inflow under the capital account.
- Nevertheless, if an increase in the import bill is because of imports for technological upgradation it would help in long-term development.
Should a widening CAD worry policymakers?
- Data shows the trade deficit widened to $24.29 billion in May 2022 from $6.53 billion a year ago.
- Merchandise exports in May 2022 rose by 20.55% over May 2021, while merchandise imports rose by 62.83%.
- However, if increasing imports is accompanied by an expansion in industrial production, it is a sign of economic development.
- Immediately after the covid-19 lockdown, after a long time, the country experienced a current account surplus.
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