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  • India coal imports surge to 162 MT in FY23

    Central Idea

    • India’s coal imports increased by 30% to 162.46 million tonnes in the 2022-23 financial year compared to 124.99 MT in the previous year, according to a report.
    • The report was released by mjunction, a B2B e-commerce platform that is a joint venture between Steel Authority of India (SAIL) and Tata Steel.

    India’s coal production and consumption

    • India is among the top five coal-producing countries in the world.
    • Despite being a major producer, India also imports coal to meet some of its demand.
    • India is a significant consumer of coal, which is used for power generation and industrial processes.

    Import of Coking Coal

    • Coking Coal: The import of coking coal rose by 5.44% to 54.46 MT over 51.65 MT in FY22, as per the report by mjunction. Coking coal is a key raw material used in steel making.
    • Non-coking coal: In March 2023, non-coking coal import stood at 13.88 MT against 12.61 MT in the same month last year.
    • Other imports: The total imports of various types of coal like anthracite, pulverised coal injection (PCI coal), met coke and pet coke, along with coking and non-coking coal, were at 249.06 MT in FY23, up from 200.71 MT in FY22, a rise of over 24%.

    Key inferences from this

    • The high demand for steam coal in India and the weakening of seaborne prices led to increased volumes during March.
    • This trend might continue in the coming months due to above-normal average temperatures expected during the summer.

    Why does India import coal?

    India imports coal primarily due to the following reasons:

    • Lack of good quality coal: India’s domestic coal reserves have limitations in terms of quality, and the country does not have sufficient reserves of good quality coking coal, which is used in steelmaking and allied industries. Therefore, India imports coal to compensate for the lack of good quality coal.
    • Growing energy demand: India’s energy demand is continuously increasing due to population growth and rapid urbanization. Coal is a significant contributor to India’s energy mix, and the country needs to import coal to meet its growing energy demand.
    • Infrastructure constraints: India’s domestic coal production is limited due to various factors such as geological constraints, land acquisition issues, and environmental regulations. Moreover, India’s domestic coal transport infrastructure is insufficient, and many power plants are located far away from the coal mines, making imports a more viable option.
    • Better quality and cost-effectiveness: Importing coal from other countries can sometimes be more cost-effective than producing it domestically, especially when the quality of imported coal is better than domestic coal.

     

    Key terminologies

    Coking coal: a type of coal that is used in the production of steel.

    Anthracite: a hard and compact type of coal that has a high carbon content.

    Pulverised coal injection (PCI coal): a method of injecting pulverized coal into a blast furnace to improve the efficiency of the iron-making process.

    Met coke: a type of coke made by heating coal in the absence of air, which is used as a fuel in blast furnaces to produce iron.

    Pet coke: a carbon-rich solid material that is derived from oil refining. It is used as a fuel in industrial processes.

     

    Try this PYQ from CSP 2012:

    Despite having large reserves of coal, why does India import millions of tonnes of coal?

    1. It is the policy of India to save its own coal reserves for the future, and import them from other countries for the present use.
    2. Most of the power plants in India are coal-based and they are not able to get sufficient supplies of coal from within the country.
    3. Steel companies need a large quantity of coking coal which has to be imported.

    Which of the statements given above is/are correct?       

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

    [wpdiscuz-feedback id=”qekagebaxt” question=”Please leave a feedback on this” opened=”1″]Post your answers here[/wpdiscuz-feedback]

     

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  • RBI’s gold reserves rise to 794.64 tonne

    Central Idea: The RBI has increased its gold reserves by 34.22 tonnes YoY to reach 794.64 tonnes at the end of March 2023, according to the central bank’s data.

    What are Gold Reserves?

    • Gold reserves refer to the physical gold holdings that a central bank or a country holds as a part of its foreign exchange reserves.
    • Central banks may acquire gold reserves through various means, including purchases from other central banks, international organizations, or commercial banks, and from domestic production or importation.
    • Gold reserves are typically held in the form of gold bars, which are stored in secure vaults or depositories.

    Why Gold?

    • Gold is considered a safe-haven asset and has been historically used to back a country’s currency.
    • Holding gold reserves is seen as a way to hedge against inflation, currency fluctuations, and other economic uncertainties.

    Significance of Gold Reserves

    • Economic stability: Gold reserves are often seen as a symbol of economic stability and confidence, especially during times of financial crisis or uncertainty. Holding gold reserves can help central banks to maintain the stability of their currency and the economy.
    • Diversification: Gold is considered a safe-haven asset and can provide diversification to a country’s foreign exchange reserves portfolio. Diversification helps to reduce the risks associated with any single asset class.
    • Hedge against inflation: Gold is considered an inflation hedge as its value tends to increase during times of high inflation or when the value of a currency is depreciating. Holding gold reserves can help to protect the purchasing power of a country’s currency.
    • International transactions: Gold reserves can be used as collateral for loans and international transactions. Countries can also use gold reserves to settle international debts.
    • Confidence-building: The level of a country’s gold reserves can be an indicator of the country’s financial strength and stability. High levels of gold reserves can help to build confidence among investors and other countries.

    Breakdown of RBI’s gold reserves

    • Total: As of March-end 2023, the RBI held 794.64 metric tonnes of gold, including gold deposits of 56.32 metric tonnes.
    • Domestic and abroad: Out of the total gold reserves, 437.22 metric tonnes of gold is held overseas in safe custody with the Bank of England and the Bank of International Settlements (BIS), while 301.10 metric tonnes of gold is held domestically.

    How much do these gold reserves value?

    • In value terms (USD), the share of gold in the total foreign exchange reserves increased from about 7.06% as of September-end 2022 to about 7.81% as of March-end 2023, as per the RBI’s report.
    • During the half-year period, the reserves increased from $532.66 billion as of September-end 2022 to $578.45 billion as of March-end 2023.

     

    New terminologies

    Foreign currency assets (FCA): a component of forex reserves that includes major traded currencies held by the central bank of a country.

    Special drawing rights (SDRs): an international reserve asset created by the International Monetary Fund (IMF) to supplement member countries’ official reserves.

    Reserve tranche position: a component of IMF’s financial accounts that represents a country’s reserve position in the organization.

    Back2Basics: Foreign Exchange (Forex) Reserve

    • Foreign exchange reserves are important assets held by the central bank in foreign currencies as reserves.
    • They are commonly used to support the exchange rate and set monetary policy.
    • In India’s case, foreign reserves include Gold, Dollars, and the IMF’s quota for Special Drawing Rights.
    • Most of the reserves are usually held in US dollars, given the currency’s importance in the international financial and trading system.
    • Some central banks keep reserves in Euros, British pounds, Japanese yen, or Chinese yuan, in addition to their US dollar reserves.

    India’s forex reserves cover:

    1. Foreign Currency Assets (FCAs)
    2. Special Drawing Rights (SDRs)
    3. Gold Reserves
    4. Reserve position with the International Monetary Fund (IMF)

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  • India’s delayed implementation of mandatory Drug Recall Law

    Central Idea

    • Abbot published a public notice in newspapers, alerting people about a mislabelled batch of medicine that it had inadvertently shipped to the market.
    • Such recalls take place regularly in the US but it is uncommon in India for domestic or foreign pharmaceutical companies to recall substandard or mislabelled drugs.

    Recall of Medicines: India story

    India has been mulling the creation of a mandatory recall law for substandard drugs since 1976.

    • Drugs Consultative Committee (DCC) meeting in 1976: Resolved to have greater cooperation between state drug controllers to recall and destroy drugs that failed tests.
    • DCC meetings in 1989, 1996, 1998, 2004, 2007, and 2011: Issue of recalls came up but resulted in no amendments to the Drugs & Cosmetics Act.
    • CDSCO proposes draft recall guidelines in 2012: National regulator lacks power to convert guidelines into binding law
    • DCC and Drugs Technical Advisory Board meetings in 2016 and 2018-2019: Issue of recalls resurfaces but India still lacks a recall law, 46 years on.

    Why there is no concrete law in India?

    • Complex drug regulatory issues: The Drug Regulation Section of the Union health ministry is not equipped to tackle complex drug regulatory issues.
    • Multiple agencies: India has highly fragmented regulatory structure, with each state having its own drug regulator.
    • Exposing the loopholes: India’s drug regulators are aware that a mandatory drug recall system, will bring to public attention the poor state of affairs in India’s pharmaceutical industry.
    • Evading accountability: The delay in implementing a recall law exposes the lack of accountability and interest in protecting public health.

    Consequences of delay

    • Drug failure hazard: Dozens of drugs fail random testing in government laboratories every month.
    • Substandard quality: The lack of a mandatory recall law means substandard drugs, even those with dangerous consequences for consumers, can circulate in the market.
    • Public health crisis: People, including children, are likely dying or suffering from adverse health events because substandard drugs are not swiftly removed from the market.

    Reasons behind

    The lack of a mandatory recall law in India can be attributed to various factors, including-

    1. Lack of expertise
    2. Apathy
    3. Vested interests in enabling the growth of the pharmaceutical industry.

    Way forward

    • Implementation of a mandatory drug recall law: The Indian government can take steps to implement a mandatory drug recall law. This law should have teeth to hold pharmaceutical companies accountable for their products.
    • Centralization of regulatory powers: To create an effective recall mechanism, the responsibility of recalling drugs has to be centralized, with one authority that has the legal power to hold companies liable for failures to recall drugs from across the country, and further, to also search and seize batches of failed medicine.
    • Streamlining of regulatory processes: The Indian government can take steps to streamline regulatory processes to reduce the time taken for approvals and ensure that drugs are tested thoroughly before they enter the market.
    • Capacity building of regulatory bodies: The Drug Regulation Section of the Union health ministry should be equipped with the necessary resources, expertise and mandate to tackle complex drug regulatory issues.
    • Encouragement of ethical pharmaceutical companies: The Indian government can encourage ethical pharmaceutical companies by providing incentives to companies that comply with regulatory standards, penalizing those that do not, and promoting transparency in drug pricing.

     

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  • Manipur Riots: CJI questions HC’s power over ST List

    Central Idea

    • The Chief Justice of India has questioned why a 23-year-old Constitution Bench judgment was not shown to the Manipur High Court, which directed the state government to consider the inclusion of Meetei/Meitei community in the Scheduled Tribe list.
    • The Chief Justice observed that a High Court does not have the power to direct changes in the Scheduled Tribes List, as it is a Presidential power to designate a Scheduled Caste or Scheduled Tribe.

    What is the Scheduled Tribes List?

    • Article 342(1) of the Constitution states that it is entirely the President’s power to designate a Scheduled Caste or Scheduled Tribe.
    • It is not open to State governments, courts, tribunals, or any other authority to modify, amend or alter the list of Scheduled Tribes specified in the notification issued under clause (1) of Article 342.
    • A notification issued under clause (1) of Article 342 can be amended only by law to be made by Parliament.

    Notable Judgements:

    (1) The State of Maharashtra vs. Milind verdict

    • The five-judge Constitution Bench in State of Maharashtra versus Milind, in November 2000, held that a notification issued under clause (1) of Article 342, specifying Scheduled Tribes, can be amended only by law to be made by Parliament.
    • Any tribe or tribal community or part of or group within any tribe can be included or excluded from the list of Scheduled Tribes only by Parliament by law and by no other authority.

    (2) FCI vs. Jagdish Balaram Bahira

    • The settled law in the Milind verdict was referred to by a July 2017 judgment authored by Justice Chandrachud for a three-judge Bench of the Supreme Court in CMD, FCI versus Jagdish Balaram Bahira to note that the Presidential Order under Article 342 regarding Scheduled Tribes was always “final”.

    Back2Basics: Scheduled Tribes

    • The term ‘Scheduled Tribes’ first appeared in the Constitution of India.
    • Article 366 (25) defined scheduled tribes as “such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be Scheduled Tribes for the purposes of this constitution”.
    • Article 342 prescribes procedures to be followed in the matter of specification of scheduled tribes.
    • Among the tribal groups, several have adapted to modern life but there are tribal groups who are more vulnerable.
    • The Dhebar Commission (1973) created a separate category “Primitive Tribal Groups (PTGs)” which was renamed in 2006 as “Particularly Vulnerable Tribal Groups (PVTGs)”.

    How are STs notified?

    • The first specification of Scheduled Tribes in relation to a particular State/ Union Territory is by a notified order of the President, after consultation with the State governments concerned.
    • These orders can be modified subsequently only through an Act of Parliament.

    Status of STs in India

    • The Census 2011 has revealed that there are said to be 705 ethnic groups notified as Scheduled Tribes (STs).
    • Over 10 crore Indians are notified as STs, of which 1.04 crore live in urban areas.
    • The STs constitute 8.6% of the population and 11.3% of the rural population.

     

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  • Misleading food ads and regulations to curtail them

    Central idea: Misleading claims

    • FSSAI flagged 32 cases of food business operators (FBOs) making misleading claims and advertisements in contravention of the Food Safety and Standards (Advertisements & Claims) Regulations, 2018.
    • The cumulative count of such offences has shot up to 170 in the last six months.
    • FBOs urged to avoid making unscientific and exaggerated claims for larger consumer interest.

    Regulations for tackling misleading ads and claims

    • Regulations include-
    1. FSSAI’s Food Safety and Standards (Advertisements & Claims) Regulations, 2018
    2. CCPA’s regulations, and Cable Television Network Rules, 1994.
    • FSSAI seeks truthful, unambiguous, meaningful, and scientifically substantiated claims.
    • Claims suggesting suitability for prevention, alleviation, treatment, or cure of a disease, disorder, or particular psychological condition prohibited unless permitted under the regulations of the FSS Act, 2006.

    Response of FSSAI

    • Scrutinized products in categories such as health supplements, organic products, fast-moving consumer goods (FMCG) products, and staples endorsing certain health and product claims.
    • Alleged violators include manufacturers and/or marketers of nutraceutical products, refined oils, pulses, flours, millet products, and ghee.
    • Cases referred to concerned licensing authorities to issue notices and withdraw the misleading claims or scientifically substantiate them.
    • Failure to comply would invite penalties of up to Rs 10 lakh, suspension, or cancellation of licenses for repeated offenses.

    Recent observations in the food advertising ecosystem

    • Non-disclosure: Close to 788 ads processed against food advertising, about 299 related to non-disclosure by food influencers, and 490+ ads found to be misleading.
    • Fairly violative sector: Violations across different food categories and food.

    Definitions of various terms

    • Natural food product: A single food derived from a recognized natural source with no additives or chemicals.
    • Fresh: This reference is allowed only for products not processed except washing, peeling, chilling, trimming, cutting, or low-dose irradiation.
    • Pure: It is used for single-ingredient foods with nothing added and devoid of all avoidable contamination.

    Expectations from a consumer’s point of view

    • Clinical data: Companies need to provide clinical data about the outcomes pertaining to the control group, the administered group, and the observed period of the claimed outcomes.
    • Interpretable ads: Advertisements need to be modified in a way a consumer can interpret.

     

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  • Cyclone Mocha developing in Bay of Bengal

    cyclone

    Central Idea: The Indian Meteorological Department (IMD) has warned of a developing cyclonic or low-pressure area in the Bay of Bengal. It would be named Cyclone Mocha (pronounced ‘Mokha’).

    What is a cyclone and how are they formed?

    • A cyclone is a low-pressure system that forms over warm waters.
    • Warm seas present ripe conditions for the development and strengthening of cyclones.
    • The air rises and blows in an anticlockwise direction around the low in the northern hemisphere and in a clockwise direction in the southern hemisphere.
    • As warm air rises and cools, water vapour condenses to form clouds and this can lead to rains.
    • Cyclones can cause significant impacts on life and property, including storm surge, flooding, extreme winds, tornadoes and lightning.

    Requirements for a Cyclone to form

    There are six main requirements for tropical cyclogenesis:

    1. Sufficiently warm sea surface temperatures
    2. Atmospheric instability
    3. High humidity in the lower to middle levels of the troposphere
    4. Enough Coriolis force to develop a low-pressure centre
    5. A pre-existing low-level focus or disturbance
    6. Low vertical wind shear

    How are cyclones named?

    • Cyclones that form in every ocean basin across the world are named by the regional specialized meteorological centres (RSMCs) and Tropical Cyclone Warning Centres (TCWCs).
    • The IMD names the cyclones developing over the north Indian Ocean after following a standard procedure.
    • In 2000, a group of nations called WMO/ESCAP decided to start naming cyclones in the region.
    • After each country sent in suggestions, the WMO/ESCAP Panel on Tropical Cyclones (PTC) finalized the list.
    • This cyclone will be named Mocha (Mokha), a name suggested by Yemen after the Red Sea port city, which is known to have introduced coffee to the world over 500 years ago.

    Why is it important to name cyclones?

    • Adopting names for cyclones makes it easier for people to remember, as opposed to numbers and technical terms.
    • It’s easier and less confusing to say “Cyclone Titli” than remember the storm’s number or its longitude and latitude.
    • Apart from the general public, it also helps the scientific community, the media, disaster managers etc.
    • With a name, it is also easy to identify individual cyclones, create awareness of its development, rapidly disseminate warnings to increase community preparedness etc.

     

     

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  • What does the Constitution say about the sovereignty of India?

    Central Idea

    • The article revolves around the issue of a political party filing a complaint against a politician of foreign origin with the Election Commission of India (ECI).
    • She had allegedly been advocating the secession of Karnataka from India in her election speeches.

    Definition of sovereignty

    • Sovereignty is the idea of having supreme authority over a defined territory.
    • In Western philosophy, the concept is used to describe the supremacy of the state over the people being governed.
    • The state has a legitimate claim to sovereignty in exchange for providing protection to its citizens, keeping society cohesive and at peace, and controlling law and order.

    Sovereignty in India’s Constitution

    • The word sovereignty appears in the beginning of the Preamble to the Constitution of India as the first attribute of the independent republic of India.
    • Its placement as the first among the core principles of the republic underlines its importance in the Constitution.
    • Sovereignty is invoked in the Indian Constitution to “declare the ultimate sovereignty of the people of India and that the Constitution rests on their authority.”
    • It is mentioned in the Constitution under Fundamental Duties, and citizens have a duty to uphold and protect the sovereignty, unity, and integrity of India.

    Relationship of Indian states with the sovereign Union

    • The Indian political system is described as “quasi-federal.”
    • India is a Union of States, and the component units have no freedom to secede or break away from it.
    • The Indian setup is more unitary in nature than the federal one, and the central government has more powers than the states.
    • The choice of a unitary bias that the Constitution makers made was possibly rooted in the difficulty of getting around 600 princely states to accede to India.

    Provisions attesting to the superior position of the Centre

    • The States in India need not be consulted in the matter of amendment to the bulk of the Constitution.
    • Governors in states are appointed “during the pleasure” of the President and are seen as representatives of the Union in the States.
    • The Sixteenth Amendment of 1963 laid down that even the advocacy of succession under Article 19 (1) will not be protected under law in the name of Freedom of Speech as directed under Article 19 (2).
    • The right to alter the boundaries of states and to create new states lies with Parliament alone.
    • The Constitution offers no guarantee to the States against their territorial integrity without their consent since it was not a result of an ‘agreement’ between the States.

    These provisions demonstrate the superior position of the Centre in the Indian political system.

     

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  • Moving Beyond COVID-19: Need for Contextual Understanding

    COVID-19

    Central Idea

    • COVID-19 has transitioned from a population-level challenge to more of an individual health concern, and it is time for India to shift gears and apply the lessons learned from the pandemic.

    WHO Announcements on COVID-19

    • On January 30, 2020, COVID-19 was announced as a public health emergency of international concern.
    • On May 5, 2023, WHO declared that COVID-19 was no longer a public health emergency of international concern.

    Issues of misinformation during the second wave of COVID-19 in India

    • False claims about a third wave affecting children: In April-May 2021, there was a COVID-19 misinformation blitzkrieg that a third wave in India would affect children, leading to children being repeatedly asked to wear masks and deprived of schooling and learning.
    • Lack of scientific evidence: School closure and making masks mandatory for schoolchildren had their origin in nearly identical challenges of actions not being supported by scientific evidence.
    • Influencers’ impact on public discourse: Social media influencers, not necessarily subject experts, were shaping the public discourse, which was not effectively addressed by governments.
    • Disparate viewpoints: Disparate viewpoints existed among experts and influencers living in India and abroad, with the latter making more definitive and stronger arguments for school closure and mask wearing for children in India.
    • Failure to consider local context: The sub-groups of super-specialists and those staying abroad failed to factor in the local context while coming up with their opinions.
    • Dogmatic stands of self-proclaimed experts: Self-proclaimed experts and influencers have adopted a dogmatic stand and have been selectively and conveniently using emerging evidence and published literature to support their stand, often misguiding gullible followers.
    • COVID-foreverers: A group of disparate individuals and social media groups keep insisting on the enforcement of restrictions such as universal masking at ‘the drop of the hat’, often on frivolous grounds.

    What lessons were learned from the COVID-19 pandemic?

    • The importance of preparedness: The pandemic highlighted the importance of being prepared for future outbreaks and the need for robust public health infrastructure.
    • The role of misinformation: The pandemic showed how misinformation can spread rapidly and have serious consequences, highlighting the need for better education and awareness to combat misinformation.
    • The importance of local context: The pandemic demonstrated the importance of factoring in local context when making policy decisions, as different regions and countries may face different challenges and require different interventions.
    • The danger of dogmatic thinking: The pandemic showed how dogmatic thinking can be dangerous, and the need for an open-minded and evidence-based approach to decision-making.
    • The importance of nuance and context in epidemiology: The pandemic highlighted the need for nuanced understanding of epidemiology, and the importance of taking into account the broader context when interpreting scientific studies.
    • The need for a shift in focus: With COVID-19 transitioning from a population-level challenge to more of an individual health concern, there is a need to shift the focus from COVID-19 fixation to tackling other pressing health challenges.
    • The importance of integrating COVID-19 response with general health services: The pandemic showed the need for integration of COVID-19 response with general health services, and the importance of a balanced approach to public health.

    Way forward

    • Formal training courses on the principles and practice of epidemiology should be offered by the government to prepare India for more nuanced responses to outbreaks and epidemics and to curb misinformation.
    • The government needs to integrate the COVID-19 response to general health services.
    • India’s response to surges, outbreaks, and epidemics (of any infectious disease and not just COVID-19) should be guided by a nuanced understanding of epidemiology and not unduly derailed by social media influencers.
    • Schools should not be closed for a COVID-19 uptick, and wearing masks in order to attend school should never again be made mandatory, as children were never at risk from moderate to severe COVID-19.
    • It is time to drop the COVID-19 fixation and move on to tackle other more pressing health challenges in the country.

    Conclusion

    • The COVID-19 pandemic has presented numerous challenges and lessons for India and the world. The issues of misinformation and lack of context-based policy interventions have been major obstacles in effectively tackling the pandemic. It is time to apply the lessons learned and shift focus to other pressing health challenges while being prepared to respond to future outbreaks and epidemics with a nuanced understanding of epidemiology.

    Mains Question

    Q. During the COVID-19 pandemic, how did misinformation pose a significant challenge? Discuss what lessons have we learned from it?

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    Also Read:

    Covid is no longer an Emergency: what changes?

  • The Future of the US Dollar As a World Reserve Currency

    US Dollar

    Central Idea

    • The status of the US dollar as the world reserve currency has been a topic of speculation, especially as China, India, and Russia explore alternative currencies for international trade. However, the demise of the dollar as the world reserve currency is unlikely to happen anytime soon.

    Rise of the dollar: Historical Context

    • The rise of the dollar as the world’s preferred currency aligns with the rise of the US as one of the world’s strongest economies with a deep financial system and stable government.
    • Though the position of the dollar has been challenged over time by the Great Britain Pound, the euro, and other currencies, the dollar has maintained its dominance.

    What is the current status of Dollar as forex reserve?

    • According to reports from the International Monetary Fund, the dollar’s share of foreign exchange reserves has fallen over time from 80% in the 1970s to about 60% in 2022.
    • The euro has made up for about 20% of the remaining 40% room created by this fall.
    • Smaller currencies such as the Australian and Canadian dollars, Swedish krona, and South Korean won have claimed their share in the portfolios of various countries’ foreign exchange reserves making up most of the remaining gap of 20%, with Chinese currency taking up the rest.

    How Dollar maintained its dominance as a reserve currency?

    • The strength of the U.S. economy: The U.S. has one of the world’s strongest economies, with a deep financial system and a stable government. This has contributed to the popularity of the dollar as a preferred currency for international trade and as a reserve currency.
    • Demand for dollar-denominated assets: Many countries hold U.S. government debt as a hedge against currency fluctuations affecting the valuation of their reserves. Additionally, many currencies are pegged to the U.S. dollar and some countries use the dollar as their own currency. This has meant that a huge proportion of U.S. dollars reside outside the U.S.
    • The dollar premium: The U.S. government debt is in high demand worldwide, which allows it to issue debt at the lowest interest rate. This relaxes the fiscal constraint substantially, boosting the debt-issuing government’s capacity to borrow more without having to deal with the negative effects of such borrowing on the domestic economy. This phenomenon is often referred to as the dollar premium.
    • No serious competition: Although the position of the dollar as the world currency has been challenged from time to time by other currencies, no currency has emerged as a serious contender. The only serious competitor at this point is the euro, which stands second but at quite a distance.

    Facts for prelims

    Common Currency or Reciprocal Trading Arrangement?

    • A common currency or reciprocal trading arrangement refers to an agreement between two or more countries to use a common currency or to trade with each other using their own currencies without the involvement of a third-party currency, such as the US dollar.
    • The purpose of such an arrangement is to increase trade among the participating countries and reduce the reliance on a single currency for international transactions.
    • The idea of a common currency or reciprocal trading arrangement has been discussed among various countries, including China, India, and Russia, as an alternative to the US dollar-dominated international financial system.

    What are the Factors supporting the US Dollar?

    • Status as Reserve Currency: The US Dollar is still the world’s most dominant reserve currency, which means that central banks and governments around the world hold significant quantities of it as part of their foreign exchange reserves.
    • Large Financial Market: The US has one of the largest and most liquid financial markets in the world, which makes it an attractive destination for foreign investment.
    • Safe Haven Status: The US Dollar is often seen as a safe haven during times of global economic uncertainty, due to the perceived stability of the US economy and political system.
    • Demand for US Treasury Bonds: The US government issues Treasury bonds, which are widely held by foreign governments and investors as a low-risk investment.
    • Petrodollars: The US Dollar is used as the currency of choice for global oil trading, which means that countries that buy oil from the OPEC countries must hold US Dollars to pay for it. This leads to a constant demand for US Dollars.
    • Military and Political Influence: The US has a significant military and political influence on the world stage, which gives it leverage in global trade negotiations and financial institutions such as the IMF and World Bank.

    US Dollar

    Challenges facing the US Dollar

    • Increased global competition: As more countries try to shift away from the US dollar, there is increased competition from other currencies such as the euro, the Chinese renminbi, and even cryptocurrencies. This could potentially reduce the demand for the US dollar.
    • Rising US debt levels: The US has been running persistent budget deficits and adding to its national debt for many years. This could lead to inflation and a loss of confidence in the US dollar, particularly if investors begin to worry about the US government’s ability to service its debt.
    • Geopolitical risks: Political tensions and instability around the world could also undermine the US dollar’s status as the world’s reserve currency. For example, sanctions imposed by the US on other countries could prompt them to look for alternatives to the US dollar in international trade.
    • Emerging technologies: The rise of digital currencies and blockchain technology could challenge the dominance of traditional currencies, including the US dollar. If cryptocurrencies become more widely accepted, they could potentially weaken demand for the US dollar as a global reserve currency.

    Future of the US Dollar

    • Despite the challenges, the US dollar is likely to remain the dominant reserve currency for the foreseeable future due to its widespread use in international trade, its deep and liquid financial markets, and its historical stability.
    • The euro and other currencies may continue to gain ground, but are unlikely to displace the dollar anytime soon.
    • The growing use of digital currencies, such as Bitcoin, may also pose a challenge to the traditional reserve currency system in the future, but it remains to be seen how this will play out.

    Facts for prelims: Concept box from civilsdaily

    What is mean by closed capital account?

    • A closed capital account is a situation where a country has restrictions on the flow of capital in and out of its borders. This means that the government regulates and limits the movement of funds across its borders.
    • Closed capital accounts are often implemented to protect the domestic economy from external shocks and to maintain the stability of the local currency.
    • China, for example, has a relatively closed capital account as it imposes strict controls on capital inflows and outflows.

    Conclusion

    • The run of the US dollar as an international reserve currency is far from over. The only serious contender at this point is the euro, which stands second but at quite a distance. The possibility of the Chinese currency or any other common currency becoming a serious contender is thin and distant at this point. The current system may not be optimal and should be improved, but expecting a common currency between China, India, and Russia or any such reciprocal trading arrangement to replace the US dollar would be an exaggeration.

    Mains Question

    Q. The status of the US dollar as the world reserve currency has been a topic of speculation, especially as China, India, and Russia explore alternative currencies for international trade. In this light discuss the challenges faced by US dollar and viability of reciprocal trading arrangements.

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    Also Read:

    The Rising Demand for De-Dollarisation

     

  • The Maoist Insurgency: Challenges and The Way Forward

    Insurgency

    Central Idea

    • The recent ambush of the convoy in Chhattisgarh’s Dantewada district resulting in the deaths of 10 personnel of the District Reserve Guards (DRG) highlights that the Maoist insurgency remains a significant threat in India. The Home Minister has repeatedly given the impression that the end of the Maoist problem is near, but history has shown otherwise.

    What is mean by Insurgency?

    • Insurgency refers to a violent uprising against the established government or authority of a country, typically carried out by a group of individuals or an organization that seeks to challenge the existing political, economic, or social order.
    • It often involves armed conflict, sabotage, and other forms of violence aimed at destabilizing the government or seizing power.
    • The ultimate goal of an insurgency is to overthrow the existing government and establish a new political system that is more in line with the insurgents’ ideology or goals

    Rise of Insurgency India

    • The Communist Party of India (Marxist) split in 1967, with a section of the party rejecting the electoral path and advocating for armed struggle to overthrow the Indian state.
    • The Naxalbari uprising in West Bengal in 1967, where a group of peasants led by Charu Majumdar and Kanu Sanyal revolted against the local landlords and police. The uprising was brutally crushed by the state, but it gave birth to the Naxalite movement.
    • The formation of the Communist Party of India (Marxist-Leninist) in 1969, which became the political front of the Naxalite movement.
    • The formation of the People’s War Group in Andhra Pradesh in 1980, which became one of the most active Naxalite groups in the country.
    • The merger of the People’s War Group with the Maoist Communist Centre in 2004, to form the Communist Party of India (Maoist), which is the largest Naxalite group in India today.
    • The expansion of the Naxalite movement from West Bengal and Andhra Pradesh to other states, including Chhattisgarh, Jharkhand, Bihar, Odisha, and Maharashtra, among others.
    • The violent attacks by Naxalites on the state and central police forces, government officials, politicians, and civilians, resulting in the loss of thousands of lives over the years.

    Facts for prelims

    District Reserve Guards (DRG)

    • District Reserve Guards (DRG) is a special unit of the police force in some Indian states, primarily in Chhattisgarh, that is trained and equipped to combat Naxalite and Maoist insurgency.
    • DRG personnel are typically drawn from local tribal communities and are familiar with the local terrain, which makes them effective in fighting the insurgency.
    • They are provided with specialized training in guerrilla warfare, jungle warfare, and use of modern weaponry.
    • The DRG is often at the forefront of anti-Naxalite operations and is considered a vital component of the Indian government’s efforts to counter the Maoist insurgency in the country.

    What are the flaws in the anti-Naxal strategy?

    1. Outsourcing operations to central armed police forces:
    • In most states, there is a tendency to outsource the operations against Naxals to the central armed police forces.
    • This strategy is flawed because unless the local police, who know the language and terrain, take the lead in anti-Naxal operations, the problem would linger.
    1. Imposed development paradigm:
    • The development paradigm pursued since independence has always been imposed on the tribal communities and has been insensitive to their needs and concerns. As a result, government plans have ended up in destroying their social organization, cultural identity, and resource base and generated multiple conflicts.
    • The tribals want schools and hospitals, but they neither need nor want capital-intensive plants or factories, which are inevitably accompanied by deforestation and displacement.
    1. Insensitivity towards tribal communities:
    • The development paradigm pursued since independence has always been imposed on the tribal communities and has been insensitive to their needs and concerns. As a result, government plans have ended up destroying their social organization, cultural identity, and resource base and generated multiple conflicts.
    1. Lack of an overall strategic plan:
    • There is no overall strategic plan against the Naxals. States have been carrying out anti-Naxal drives according to their individual understanding.
    • Territorial domination is essential, and security forces are able to achieve that, but that should be followed by the administrative apparatus establishing its network in the affected areas.
    1. Absence of peace talks:
    • The government should seriously think of applying the healing touch. If it can have peace talks with the Nagas and several other insurgent outfits in the Northeast, there is no reason why it should not take the initiative to have a dialogue with the Maoist leadership. This would not be seen as a sign of weakness on the contrary, it would be taken as a magnanimous gesture.

    The way ahead to address the Naxal insurgency in India

    • Multi-pronged approach: The government should adopt a multi-pronged approach to address the Naxal problem that includes development initiatives, security measures, and dialogue with the Naxal leadership.
    • Focus on development: The government should focus on development initiatives in Naxal-affected areas that are tailored to meet the needs of the local population. This includes building infrastructure like schools, hospitals, and roads, creating employment opportunities, and addressing land rights issues.
    • Empowering local police: The state police should be empowered to take the lead in anti-Naxal operations as they have a better understanding of the local language and terrain.
    • Humanitarian approach: The government should adopt a humanitarian approach in dealing with the problem. The use of excessive force should be avoided, and care should be taken to ensure that the local population is not adversely affected.
    • Dialogue with Naxal leadership: The government should initiate a dialogue with the Naxal leadership to address their grievances and concerns. This would help in building trust and confidence between the two sides and pave the way for a peaceful resolution of the problem.
    • Coordination among states: The states should coordinate their efforts to address the Naxal problem. The sharing of intelligence, resources, and best practices would go a long way in addressing the issue.
    • Strengthening of institutions: The government should strengthen institutions like the police, judiciary, and administrative machinery to ensure that they are better equipped to deal with the problem.
    • Long-term vision: A long-term vision should be adopted to address the Naxal problem. This requires sustained efforts over a period of time to ensure that the problem is effectively tackled.

    Conclusion

    • India’s Maoist insurgency problem is not one that can be solved by just law and order enforcement. It is crucial to address the underlying social and economic aspects of the problem. The government should acknowledge the flaws in its anti-Naxal strategy and undertake a comprehensive approach to solve the problem. It must ensure that the local police take the lead in anti-Naxal operations, and the development policies must be sensitive to the needs and concerns of the tribal communities. Initiating peace talks with the Maoist leadership could also go a long way in resolving the issue.

    Mains Question

    Q. The recent events of violent attacks on security forces highlights that the Maoist insurgency remains a significant threat in India. In light of this discuss what are the flaws in anti-Naxal strategy and what is needed to address the Naxal insurgency in India?

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    Also Read:

    Village Defence Guards (VDG): A sense of security and confidence