A shortage of inputs, especially semiconductor chips, has made India-based car manufactures and premium bike makers curtail production across categories.
Do you know?
Electronic parts and components today account for 40% of the cost of a new internal combustion engine car, up from less than 20% two decades ago.
Chip famine
The trigger point was the beginning of the Covid-19 pandemic and the subsequent lockdowns across the world that forced shut crucial chip-making facilities in countries including Japan, South Korea, China and the US.
A key feature in a chip shortage is that it almost always causes cascading effects, given that the first one creates pent-up demand that becomes the cause for the follow-up famine.
Why such famine?
The COVID-19 pandemic caused disruptions in supply chains and logistics.
This is coupled with a 13% increase in global demand for PCs owing to some countries’ shift to a stay-at-home economy.
This has impacted the availability of key chips necessary for the manufacturing of a broad range of electronics being a necessary component of every industry.
What is the impact of the chip famine?
Consumers of semiconductor chips, which are mainly car manufacturers and consumer electronics manufactures, have not been receiving enough of this crucial input to continue production.
There were two reasons for this: a steady decline in input prices and improvements in the processing power of chips.
The number of transistors mounted in IC circuit chips has doubled every two years.
Notably, the increase in chip consumption over the last decade is also partly attributable to the rising contribution of electronic components in a car’s bill of materials.
How have vehicle makers responded?
Supply constraints are learned to have caused some output issues at notable Indian auto firms.
In addition to delaying vehicle deliveries, some companies have reportedly started discarding features and high-end electronic capabilities on a temporary basis.
The high-powered selection committee headed by the Prime Minister has finalized some names for the post of CBI director.
Try answering this:
Q.Why the CBI is called “a caged parrot speaking in its master’s voice”? Critically comment.
Central Bureau of Investigation
The CBI is the premier investigating agency of India operating under the jurisdiction of the Ministry of Personnel, Public Grievances and Pensions.
It was originally set up to investigate bribery and governmental corruption.
In 1965 it received expanded jurisdiction to investigate breaches of central laws enforceable by the Government of India, multi-state organized crime, multi-agency or international cases.
The agency has been known to investigate several economic crimes, special crimes, cases of corruption, and other cases.
CBI is exempted from the provisions of the Right to Information Act. CBI is India’s officially designated single point of contact for liaison with Interpol.
Its composition
The CBI is headed by a Director, an IPS officer with a rank of Director General of Police.
The director is selected by a high-profile committee constituted under The Delhi Special Police Establishment (DSPE) Act, 1946 as amended through The Lokpal and Lokayuktas Act, 2013, and has a two-year term.
The Appointment Committee consists of:
Prime Minister – Chairperson
Leader of Opposition of Loksabha or the Leader of the single largest opposition party in the Lok Sabha, if the former is not present due to lack of mandated strength in the Lok Sabha – member
Chief Justice of India or a Supreme Court Judge recommended by the Chief Justice – member
Jurisdiction, powers and restrictions
The legal powers of investigation of the CBI are derived from the DSPE Act 1946, which confers powers, duties, privileges and liabilities on the Delhi Special Police Establishment (CBI) and officers of the UTs.
The central government may extend to any area (except UTs) the powers and jurisdiction of the CBI for investigation, subject to the consent of the government of the concerned state.
Members of the CBI at or above the rank of sub-inspector may be considered officers in charge of police stations.
Under the DSPE Act, the CBI can investigate only with notification by the central government.
Relationship with state police
The CBI was originally constituted under the DSPE Act, to operate within the territory of Delhi.
As policing and law is a subject that falls within state powers under the structure of Indian federalism, the CBI needs prior consent from other state governments in order to conduct investigations within their territory.
This consent can be in the form of a ‘general consent’ under Section 6 of the DSPE Act, which remains in operation for all investigations.
Once consent is granted, the CBI can investigate economic, corruption, and special crimes (including national security, drugs and narcotics, etc.)
Most Indian states had granted general consent to the CBI to investigate crimes within their territory.
However, as of 2020, several states have withdrawn their ‘general consent’ for the CBI to operate, and require special consent to be granted on a case-to-case basis.
Issues with CBI
In 2013, Judge of the Supreme Court of India (and later CJI) R. M. Lodha criticized the CBI for being a “caged parrot speaking in its master’s voice”.
This was due to its excessive political interference irrespective of which party happened to be in power.
Hallmarking of Gold Jewellery is set to begin from 15th June 2021.
What is Hallmark Gold?
The process of certifying the purity and fineness of gold is called hallmarking.
Bureau of Indian Standards, the National Standards Body of India, is responsible for hallmarking gold as well as silver jewellery under the BIS Act.
If you see the BIS hallmark on the gold jewellery/gold coin, it means it conforms to a set of standards laid by the BIS. Hallmarking gives consumers assurance regarding the purity of the gold they bought.
That is, if you are buying hallmarked 18K gold jewellery, it will actually mean that 18/24 parts are gold and the rest is alloy.
At present, only 30% of Indian Gold Jewellery is hallmarked.
Here are the four components one must look at the time of buying gold (they are mentioned in the laser engraving of a hallmark seal):
BIS Hallmark: Indicates that its purity is verified in one of its licensed laboratories
Purity in carat and fineness (corresponding to given caratage KT)
22K916 (91.6% Purity)
18K750 (75% Purity)
14K585 (58.5% Purity)
Assaying & Hallmarking Centre’s mark
Jeweler’s unique identification mark
Answer this PYQ from CSP 2017 in the comment box
Q.Consider the following statements:
1. The Standard Mark of the Bureau of Indian Standards (BIS) is mandatory for automotive tyres and tubes.
2. AGMARK is a quality Certification Mark issued by the Food and Agriculture Organisation (FAO).
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
Why need hallmark?
Hallmarking will enable Consumers/Jewellery buyers to make the right choice and save them from any unnecessary confusion while buying gold.
It will enhance the credibility of gold Jewelry and Customer satisfaction through third-party assurance for the marked purity/fineness of gold, consumer protection.
This step will also help to develop India as a leading gold market center in the World.
Indian scientists have estimated the three-dimensional distribution of molecular and atomic hydrogen in a nearby galaxy which can help lead to clues to the star formation processes and the evolution of the galaxy.
Study on Hydrogen distribution
Galaxies like the one we reside in, the Milky Way, consist of discs containing stars, molecular and atomic hydrogen, and helium.
The molecular hydrogen gas collapses on itself in distinct pockets, forming stars, its temperature was found to be low –close to 10 kelvin, or -263 ºC, and thickness is about 60 to 240 light-years.
The atomic hydrogen extends both above and below the discs.
Indian scientists have estimated that molecular hydrogen extends farther from the disc in both directions, up to about 3000 light-years.
This gaseous component is warmer than the one straddling the disc and has comparatively lesser densities, thus escaping earlier observations.
They called it the ‘diffuse’ component of the molecular disc.
Answer this PYQ in the comment box:
Q. Which one of the following sets of elements was primarily responsible for the origin of life on the Earth?
(a) Hydrogen, Oxygen, Sodium
(b) Carbon, Hydrogen, Nitrogen
(c) Oxygen, Calcium, Phosphorous
(d) Carbon, Hydrogen, Potassium
Why does this study matter?
The molecular hydrogen gas converts to individual stars under the pull of gravity, thus holding clues to the star formation processes and the evolution of the galaxy.
If a significant part of the gas extends beyond the thin disc of a few hundred light-years, it may explain why astronomers also observe stars at a few thousand light-years perpendicular to the galactic disc.
In a major boost to the export of GI-certified products, the season’s first consignment of Shahi Litchi from Bihar was exported to the United Kingdom by the air route.
India is the second-largest producer of litchi (Litchi chin) in the world, after China.
The translucent, flavored aril or edible flesh of the litchi is popular as a table fruit in India, while in China and Japan it is preferred in dried or canned form.
Shahi litchi was the fourth agricultural product to get GI certification from Bihar in 2018, after Jardalu mango, Katarni rice, and Magahi paan.
GI registration for Shahi Litchi is held with the Muzaffarpur-based Litchi Growers Association of Bihar.
Muzzafarpur, Vaishali, Samastipur, Champaran, Begusarai districts and adjoining areas of Bihar have favorable climate for growing Shahi Litchi.
Back2Basics: Geographical Indication (GI)
The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
Union Minister of Finance and Corporate Affairs recently commemorated the 12th Annual Day of the Competition Commission of India (CCI).
Competition Commission of India
CCI is the competition regulator in India.
It is a statutory body responsible for enforcing The Competition Act, 2002 and promoting competition throughout India and preventing activities that have an appreciable adverse effect on competition in India.
It was established on 14 October 2003. It became fully functional in May 2009.
Its establishment
The idea of CCI was conceived and introduced in the form of The Competition Act, 2002 by the Vajpayee government.
A need was felt to promote competition and private enterprise especially in the light of 1991 Indian economic liberalization.
The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows the philosophy of modern competition laws.
The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises, and regulates combinations (acquisition, acquiring of control, and Merger and acquisition), which causes or likely to cause an appreciable adverse effect on competition within India.
Pandemic hit hard the lives, livelihood and the economy. It has also worsened income inequality. The article deals with the issues of impacts of pandemic and suggests ways to revive growth the deal with income inequality.
Need to address growth and inequality issue
The second wave of the pandemic is spreading to rural areas also.
It is known that rural areas have poor health infrastructure.
Similar to the first wave, inequalities are also increasing during the second wave.
The country has to address the issue of rising inequalities for achieving higher sustainable growth and the well-being of a larger population.
According to the State of Working in India 2021 report of the Azim Premji University, the pandemic would push 230 million people into poverty.
CMIE data shows a decline in incomes and rising unemployment during the second wave.
U-shaped impact: The recent RBI Bulletin says that the impact of the second wave appears to be U-shaped.
In the well of the U are the most vulnerable — blue collar groups who have to risk exposure for a living and for rest of society to survive.
K-shaped recovery and rising inequality
The recovery seemed to be K-shaped during the first wave.
The share of wages declined as compared to that of profits.
A large part of the corporate sector managed the pandemic with many listed companies recording higher profits.
On the other hand, the informal workers including daily wage labourers, migrants, MSMEs etc. suffered a lot with loss of incomes and employment.
The recovery post the second wave is also likely to be K-shaped with rising inequalities.
Policies needed for higher growth and reduction in inequality
1) Vaccination and healthcare facilities
An aggressive vaccination programme and improving the healthcare facilities in both rural and urban areas is needed.
Reducing the health crisis can lead to an economic revival.
Vaccine inequality between urban and rural areas has to be reduced.
The crisis can be used as an opportunity to create universal healthcare facilities for all, particularly rural areas.
Other states can learn from Kerala on building health infrastructure.
2) Investment in infrastructure
The budget offered some good announcements relating to capital investment in infrastructure.
The Development Financial Institution (DFI) for funding long-term infrastructure projects is being established.
This can revive employment and reduce inequalities.
The government has to fast track infra investment.
3) Safety net for vulnerable
The informal workers and other vulnerable sections including MSMEs have been dealt back-to-back blows due to the first and second waves.
A majority of workers have experienced a loss of earnings.
Therefore, the government has to provide safety nets in the form of free food grains for six more months, expand work offered under MGNREGA in both rural and urban areas.
The government also need to undertake a cash transfer to provide minimum basic income.
Policies for growth
Focus on demand: On economic growth, the RBI Bulletin says that the biggest toll of the second wave is in terms of a demand shock as aggregate supply is less impacted.
Investment: In the medium term, the investment rate has to be increased from the present 30 per cent of GDP to 35 per cent and 40 per cent of GDP for higher growth and job creation.
Export: It is one of the main engines of growth and employment creation.
There is positive news on exports as the global economy is reviving.
Protectionist trade policy: In recent years India’s trade policy has become more protectionist and the country has to reduce import tariff rates.
Role of fiscal policy: In the near term, fiscal policy has to play a more important role in achieving the objectives of growth, jobs and equity by expanding the fiscal space by restructuring expenditure, widening the tax base and increasing non-tax revenue.
Consider the question “Two waves of the Covid pandemic have worsened the inequality. India has to address the issue of rising inequalities for achieving higher sustainable growth and the well-being of a larger population. Suggest the policies that India should follow for higher growth and reduction in inequality.”
Conclusion
Vaccination, expansion in rural healthcare and cash transfers should be part of the strategy to boost demand and address inequalities.
The Israeli–Palestinian conflict is one of the world’s most enduring hostilities, with the Israeli occupation of the West Bank and the Gaza Strip reaching 53 years. Various attempts have been made to resolve the conflict as part of the Israeli–Palestinian peace process.
British Palestine & Jew Migration
The British, after the First World War, established a colony in Palestine maintaining that they would rule the area until the Palestinians were ready to govern themselves. This was called Mandatory Palestine as it was according to the League of Nations mandate.
Even before this time, there was a massive influx of Jews from Europe into Palestine in the hope of creating their homeland after being expelled from it for centuries.
Meanwhile, in the 1920s and 1930s, the Jewish population in Palestine increased by hundreds of thousands, facilitated by the British (who were honouring the Balfour Declaration).
During this time, tensions between the growing Jewish communities and the Arabs were increasing.
In 1936, the Palestinian Arabs revolted against the British as a result of the Palestinian Arabs viewing themselves increasingly as a nation.
This revolt was suppressed by the British with help from Jewish militias.
After the revolt, however, the British issued a white paper that limited Jewish immigration into Palestine and called for the establishment of a joint Jewish-Arab state in Palestine within ten years.
During the course of World War II, many Jews escaping Europe from the Holocaust were brought to Palestine illegally (because of the immigration limit) by Jewish organisations. Tensions escalated and the British handed over the problem to the newly established United Nations.
In 1947, the UN voted to establish separate Palestinian and Jewish states in the region dividing Palestine. This plan was rejected by the Arabs.
Background of the Israel Palestine conflict
Following the Declaration of the Establishment of the State of Israel on 14 May 1948, the Arab League decided to intervene on behalf of Palestinian Arabs, marching their forces into former British Palestine, beginning the main phase of the 1948 Arab–Israeli War.
1948 Arab Israel War
The overall fighting, leading to around 15,000 casualties, resulted in cease-fire and armistice agreements of 1949, with Israel holding much of the former Mandate territory, Jordan occupying and later annexing the West Bank and Egypt taking over the Gaza Strip, where the All-Palestine Government was declared by the Arab League on 22 September 1948.
Through the 1950s, Jordan and Egypt supported the Palestinian Fedayeen militants’ cross-border attacks into Israel, while Israel carried out reprisal operations in the host countries.
Over the following years, tensions rose in the region, particularly between Israel and Egypt, Jordan, and Syria. Following the 1956 Suez Crisis and Israel’s invasion of the Sinai Peninsula, Egypt, Jordan, and Syria signed mutual defense pacts in anticipation of a possible mobilization of Israel troops.
The 1956 Suez Crisis resulted in a short-term Israeli occupation of the Gaza Strip and exile of the All-Palestine Government, which was later restored with Israeli withdrawal.
The All-Palestine Government was completely abandoned by Egypt in 1959 and was officially merged into the United Arab Republic, to the detriment of the Palestinian national movement. Gaza Strip then was put under the authority of the Egyptian military administrator, making it a de facto military occupation.
In 1964, however, a new organization, the Palestine Liberation Organization (PLO), was established by Yasser Arafat.[29] It immediately won the support of most Arab League governments and was granted a seat in the Arab League.
1967 Six day War
The 1967 Six-Day War exerted a significant effect upon Palestinian nationalism, as Israel gained military control of the West Bank from Jordan and the Gaza Strip from Egypt.
The PLO was unable to establish any control on the ground and established its headquarters in Jordan, home to hundreds of thousands of Palestinians, and supported the Jordanian army during the War of Attrition, which included the Battle of Karameh.
However, the Palestinian base in Jordan collapsed with the Jordanian–Palestinian civil war in 1970. The PLO defeat by the Jordanians caused most of the Palestinian militants to relocate to South Lebanon, where they soon took over large areas, creating the so-called “Fatahland”.
Camp David Accords 1978
1) The Camp David Accords were a pair of political agreements signed by Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin on 17 September 1978.
2) The Camp David Accords established the so framework for peace in the Middle East and brought about the end of simmering conflict between Egypt and Israel.
3) They also called for the creation of Palestinian state in the area known as Gaza and on the West Bank of river Jordan.
4) However since the Palestinians were not represented at the talks, the resulting agreement was not formally recognized by the United Nations.
In 1982, following an assassination attempt on one of its diplomats by Palestinians, the Israeli government decided to take sides in the Lebanese Civil War and the 1982 Lebanon War commenced. The initial results for Israel were successful. Most Palestinian militants were defeated within several weeks, Beirut was captured, and the PLO headquarters were evacuated to Tunisia in June by Yasser Arafat’s decision.
First Intifada: The tension between Israel and Palestine escalated with Israel’s increased settlement in West Bank and Gaza Strip. Palestinians living in the West Bank and the Gaza Strip fomented the riots begun in 1987, known as the first intifada.
Second Intifada (2000-05): In 2000, a more violent Palestine Uprising started and a large number of civilians died on both sides. This is known as the second intifada. As a defensive measure, Israel constructed a West Bank Barrier along West Bank to separate Israel and Palestine settlements.
Road Map for Peace
1993 OSLO Accord: The Oslo Accords are a pair of peace agreements between the Government of Israel and the Palestine Liberation Organization (PLO
1) Oslo 1 Accord: It was officially called the Declaration of Principles on Interim Self-Government Arrangements. It was signed in Washington, D.C., in 1993.
The accords called for the withdrawal of Israeli forces from parts of the Gaza Strip and West Bank, and affirmed a Palestinian right of self-government within those areas through the creation of a Palestinian Interim Self-Government Authority.
Palestinian rule was to last for a five-year interim period during which “permanent status negotiations” would commence in order to reach a final agreement.
Israel was to grant interim self-government to the Palestinians in phases.
Along with the principles, the two groups signed Letters of Mutual Recognition—the Israeli government recognized the PLO as the legitimate representative of the Palestinian people, while the PLO recognized the right of the state of Israel to exist and renounced terrorism as well as other violence, and its desire for the destruction of the Israeli state.
In order that the Palestinians govern themselves according to democratic principles, free and general political elections would be held for the council.
Jurisdiction of the Palestinian Council would cover the West Bank and Gaza Strip, except for issues that would be finalized in the permanent status negotiations. The two sides viewed the West Bank and Gaza as a single territorial unit.
The five-year transitional period would commence with Israeli withdrawal from the Gaza Strip and Jericho area. There would be a transfer of authority from the Israel Defense Forces to the authorized Palestinians, concerning education and culture, health, social welfare, direct taxation, and tourism. The council would establish a strong police force, while Israel would continue to carry the responsibility for defending against external threats.
2) Oslo 2 Accord: It was called The Interim Agreement on the West Bank and the Gaza Strip and was signed on the 28th September, 1995 in Taba (Egypt).
Oslo I also set the agenda for the follow-up agreement that became known as Oslo II, which would include discussion of the future governance of the city of Jerusalem (both sides claim it as their respective capital) as well as issues concerning borders, security and the rights, if any, of Israeli settlers in the West Bank.
A protocol for free elections for Palestinian Authority leadership was also established.
Oslo II, which was signed two years later, gave the Palestinian Authority, which oversees Gaza and the West Bank, limited control over part of the region, while allowing Israel to annex much of the West Bank, and established parameters for economic and political cooperation between the two sides.
As part of the treaty, both sides were prohibited from inciting violence or conflict against the other.
Israel was to collects taxes from Palestinians who work in Israel but live in the Occupied Territories, distributing the revenue to the Palestinian Authority.
Israel was also to oversee the trade of goods and services into and out of Gaza and the West Bank.
3) Aftermath of the Oslo Accords
Unfortunately, any momentum gained from the ratification of the Oslo Accords was short-lived.
In 1998, Palestinian officials accused Israel of not following through on the troop withdrawals from Gaza and Hebron called for in the Oslo Accords.
After initially slowing down settlement construction in the West Bank, at the request of the United States, the building of new Israeli housing in the region began in earnest again in the early 2000s.
Conversely, critics of the Accords said that Palestinian violence against Israeli citizens increased in their aftermath, coinciding with the increasing power of the Palestinian Authority.
These critics felt that the Palestinian Authority was failing to adequately police Gaza and the West Bank, and identify and prosecute suspected terrorists.
With these disagreements providing the backdrop, negotiators from both sides reconvened, once again at Camp David, with the hope of following up on the Oslo Accords with a comprehensive peace treaty.
In September 2000, Palestinian militants declared a “Second Intifada,” calling for increased violence against Israelis after Sharon, who as prime minister visited the Temple Mount—a site sacred to both Jews and Muslims.
Camp David Accord 2000
The 2000 Camp David Summit was a summit meeting at Camp David between United States president Bill Clinton, Israeli prime minister Ehud Barak and Palestinian Authority chairman Yasser Arafat. The summit took place between 11 and 25 July 2000.
Barak put forward the following as “bases for negotiation”, a non-militarized Palestinian state split into 3–4 parts containing 87–92% of the West Bank including only parts of East Jerusalem, and the entire Gaza Strip.
The offer also included that 69 Jewish settlements (which comprise 85% of the West Bank’s Jewish settlers) would be ceded to Israel, no right of return to Israel, no sovereignty over the Temple Mount or any core East Jerusalem neighbourhoods, and continued Israel control over the Jordan Valley.
Arafat rejected this offer. According to the Palestinian negotiators the offer did not remove many of the elements of the Israeli occupation regarding land, security, settlements, and Jerusalem.
Taba Summit (2001)
The Israeli negotiation team presented a new map at the Taba Summit in Taba, Egypt in January 2001. The proposition removed the “temporarily Israeli controlled” areas, and the Palestinian side accepted this as a basis for further negotiation.
The sides declare that they have never been closer to reaching an agreement and it is thus our shared belief that the remaining gaps could be bridged with the resumption of negotiations following the Israeli elections.
The following month the Likud party candidate Ariel Sharon defeated Ehud Barak in the Israeli elections and was elected as Israeli prime minister on 7 February 2001. Sharon’s new government chose not to resume the high-level talks.
Arab Peace Initiative
The Arab Peace Initiative was first proposed by Crown Prince Abdullah of Saudi Arabia at the Beirut Summit (2002). The peace initiative is a proposed solution to the Arab–Israeli conflict as a whole, and the Israeli–Palestinian conflict in particular.
The initiative was initially published on 28 March 2002, at the Beirut Summit, and agreed upon again in 2007 in the Riyadh Summit.
Unlike the Road Map for Peace, it spelled out “final-solution” borders based explicitly on the UN borders established before the 1967 Six-Day War. It offered full normalization of relations with Israel, in exchange for the withdrawal of its forces from all the occupied territories, including the Golan Heights, to recognize “an independent Palestinian state with East Jerusalem as its capital” in the West Bank and Gaza Strip, as well as a “just solution” for the Palestinian refugees.
The Israeli government has expressed reservations on ‘red line,’ issues such as the Palestinian refugee problem, homeland security concerns, and the nature of Jerusalem.
What led to Recent Crash
In October 2020, an Israeli court ruled that several Palestinian families living in Sheikh Jarrah—a neighborhood in East Jerusalem—were to be evicted by May 2021 with their land handed over to Jewish families.
In February 2021, several Palestinian families from Sheikh Jarrah filed an appeal to the court ruling and prompted protests around the appeal hearings, the ongoing legal battle around property ownership, and demanding an end to the forcible displacement of Palestinians from their homes in Jerusalem.
In late April 2021, Palestinians began demonstrating in the streets of Jerusalem to protest the pending evictions and residents of Sheikh Jarrah—along with other activists—began to host nightly sit-ins. In early May, after a court ruled in favor of the evictions, the protests expanded with Israeli police deploying force against demonstrators.
On May 7, following weeks of daily demonstrations and rising tensions between protesters, Israeli settlers, and police during the month of Ramadan, violence broke out at the al-Aqsa Mosque compound in Jerusalem, with Israeli police using stun grenades, rubber bullets, and water cannons in a clash with protestors that left hundreds of Palestinians wounded.
On May 10, after several consecutive days of violence throughout Jerusalem and the use of lethal and nonlethal force by Israeli police, Hamas, the militant group which governs Gaza, and other Palestinian militant groups launched hundreds of rockets into Israeli territory.
Israel responded with air strikes and later artillery bombardments against targets in Gaza, including launching several air strikes that killed more than twenty Palestinians. While claiming to target Hamas, other militants, and their infrastructure—including tunnels and rocket launchers—Israel has expanded its aerial campaign and struck targets including residential buildings, media headquarters, and refugee and healthcare facilities.
Rival claims over Jerusalem
Both Israel and Palestine have declared Jerusalem their capital.
In July 1980, the Israeli Parliament passed the Jerusalem Law declaring it the country’s capital.
Palestinians declared Jerusalem the capital of the putative state of Palestine by a law passed by the Palestinian Authority in 2000.
The 1988 Palestinian Declaration of Independence also declared Jerusalem as the capital.
For the present, the Palestinian Authority has its headquarters in Ramallah.
Hamas and Fatah
In 1987, Hamas (Islamic Militant group) for the liberation of Palestine through Jihad came into existence. It refused to recognize Israel as a country. It has received support from Iran and Syria.
On the other hand, Fatah, a faction of PLO under Yasser Arafat received support from Western nations.
(Palestinians run for cover from tear gas during clashes with Israeli security forces near the border between Israel and the Gaza)
What is happening in GAZA
Gaza is a densely populated strip of land that is mostly surrounded by Israel and peopled almost exclusively by Palestinians. Israel used to have a military presence, but withdrew unilaterally in 2005. It’s currently under Israeli blockade.
Egypt controlled Gaza until 1967, when Israel occupied it (along with the West Bank) in the Six-Day War.
Until 2005, Israeli military authorities controlled Gaza in the same way they control the West Bank, and Jews were permitted to settle there. In 2005, then–Israeli Prime Minister Ariel Sharon pulled out Israeli troops and settlers unilaterally.
Gaza is governed by the Islamist group Hamas, which formed in 1987 as a militant “resistance” group against Israel and won political power in a 2006 US-based election.
Hamas’s takeover of Gaza prompted an Israeli blockade of the flow of commercial goods into Gaza, on the grounds that Hamas could use those goods to make weapons to be used against Israel.
Israel has eased the blockade over time, but the cutoff of basic supplies like fuel still does significant humanitarian harm by cutting off access to electricity, food, and medicine.
Hamas and other Gaza-based militants have fired thousands of rockets from the territory at Israeli targets.
Israel has launched a number of military operations in Gaza, including an air campaign and ground invasion in late 2008 and early 2009, a major bombing campaign in 2012, and another air/ground assault in the summer of 2014.
International Scenario
Stand of USA
For decades, the U.S. has played a partisan role in the Israeli-Palestinian conflict.
It became involved shortly after World War II, joining the United Kingdom in a 1946 inquiry that recommended one hundred thousand Holocaust survivors relocate to Palestine, which would be neither a Jewish nor an Arab state.
The United States then became the first country to recognize Israel as a sovereign nation in 1948.
Shortly after the 1967 war, Israel began building settlements in some of the territories it had seized. For years, the United States officially condemned these settlements—branding them an obstacle to peace—but avoided outright calling them illegal to avoid the possibility that Israel would face international sanctions.
After the failed 2000 Camp David summit, Washington never made any meaningful attempt to push the Israelis to accept the two-state proposal.
The 2007 Annapolis conference was a failure too. The previous U.S. administration launched a peace bid which also collapsed at an early stage.
In 2018, the Trump administration canceled funding for the UN Relief and Works Agency, which provides aid to Palestinian refugees, and relocated the U.S. embassy from Tel Aviv to Jerusalem, a reversal of a longstanding U.S. policy. The decision to move the U.S. embassy was met with applause from the Israeli leadership but was condemned by Palestinian leaders and others in the Middle East and Europe.
Biden has said he will continue the nearly two decades of , which calls for separate Israeli and Palestinian states with borders resembling those that existed before the 1967 war; this territory includes the Gaza Strip, the West Bank, and parts of East Jerusalem.
Stand of Arab Countries
a) EGYPT
Egypt wants a unified Palestinian leadership. Therefore, it invests a lot in supporting a Palestinian reconciliation.
Egypt wants Gaza, the branches of Hamas and Fatah in Gaza, and other forces in Gaza, to have a bigger say in the Palestinian decision-making process.
Egypt wants to eradicate terror cells in Sinai.
Egypt wants Hamas to be less dependent (at least) on Iran, Turkey and Qatar. The Saudis and the Emiratis concur, and they can fund Gaza.
b) Turkey
In December 1987, Turkey had already declared support for the Palestinians’ right to self-determination. It described Israeli policy in the Gaza Strip as “state-sponsored terrorism”
The Turkish government’s condemnation of the 2008–2009 Israel–Gaza conflict strained relations between the two countries.
c) Syria
Syria announced its complete support to Palestine after the 1948 Arab–Israeli War broke out, and had sent troops to fight against newly-formed Israel Defense Forces
Syria also joined the Six-Day War hoping to expel Israeli Army in order to restore Palestinian state, in which ended with a complete failure.
d) Lebanon
Lebanon did take a formal part in the 1948 Arab-Israeli War against Israel, but Lebanon was the first Arab league nation to signal a desire for an armistice treaty with Israel in 1949.
Israel also supported the secessionist Free Lebanon State during 1979-1984 and its successor South Lebanon Army.
In all Lebanon has maintained a pro Israeli stance.
e) Jordan
Jordan was not a member of the United Nations when the vote on the United Nations Partition Plan for Palestine was taken in November 1947, but following the establishment of the state of Israel on 14 May 1948, Jordan, then known as Transjordan, was one of the Arab League countries that invaded the former Palestinian Mandate territory precipitating the 1948 Arab–Israeli War.
By war’s end, Jordan was in control of the West Bank and East Jerusalem (including the Old City). It expelled its Jewish population, and formally annexed the territories in 1950.
Promoting peace between Israel and the Palestinian Authority is a major priority for Jordan. It supports U.S. efforts to mediate a final settlement, which it believes should be based on the 2002 Arab Peace Initiative, proposed by Saudi Arabia.
f) Saudi Arabia
Israel and Saudi Arabia do not have any official diplomatic relations.
Saudi Arabia played an active role in attempting to bring the Palestinians towards a self-governing condition which would permit negotiations with Israel. It has done so primarily by trying to mend the schism between Fatah and Hamas, most notably when King Abdullah invited the two factions to negotiations in Mecca resulting in the Mecca Agreement of 7 February 2007. The agreement soon failed, but Saudi Arabia has continued to support a national unity government for the Palestinians, and strongly opposed the war in Gaza in early 2009.
3) Stand of India
India was one of the few countries to oppose the UN’s partition plan in November 1947, echoing its own experience during independence a Few Months Earlier.
In the decades that followed, the Indian political leadership actively supported the Palestinian cause and withheld full diplomatic relations with Israel.
India recognised Israel in 1950 but it is also the first non-Arab country to recognise Palestine Liberation Organisation (PLO) as the sole representative of the Palestinian. India is also one of the first countries to recognise the statehood of Palestine in 1988.
In 2014, India favoured UNHRC’s resolution to probe Israel’s human rights violations in Gaza. Despite supporting the probe, India abstained from voting against Israel in UNHRC IN 2015.
As a part of Link West Policy, India has de-hyphenated its relationship with Israel and Palestine in 2018 to treat both the countries mutually independent and exclusive.
In June 2019, India voted in favour of a decision introduced by Israel in the UN Economic and Social Council (ECOSOC) that objected to granting consultative status to a Palestinian non-governmental organization
Way Forward
Though not a shining example, Israel can learn a lesson from its neighbour, Lebanon. The sectarian model of power sharing, where Christians, Shias, Sunnis, Druze, Armenians etc. are offered government positions demographically, did help enable Lebanon transition to some degree of stability after the civil war ended in 1990.
There must be change in leadership in both the countries. Leaders are that are ready mentally and physically for a truce must be brought to power.
To start a peace process following steps must be taken:
Israel must end settlement expansion beyond the wall.
Easing restrictions on Gaza
Redesignating parts of the West Bank currently falling under full Israeli administration (Area C) as areas that fall under partial or full Palestinian administration (Areas B or A)
Removing impediments to Palestinian economic development
Ending home demolitions and other forms of collective punishment
Removing impediments to Palestinian elections in East Jerusalem, the West Bank and Gaza
Alleviating restrictions on movement and access
Gradually releasing Palestinian prisoners
Allowing the reopening of Palestinian institutions, such as the Orient House, in East Jerusalem
The article highlights the challenges the second Covid wave poses to India’s path to fiscal consolidation.
Recalibration to growth projection due to second Covid wave
The growth projections of different national and international agencies and the fiscal projections of Centre’s 2021-22 Budget require recalibration.
The International Monetary Fund (IMF) had forecast real GDP growth for 2021-22 at 12.5%.
The Reserve Bank of India (RBI) had forecast real GDP growth for 2021-22 at 10.5%.
The Ministry of Finance’s Economic Survey had forecast real GDP growth for 2021-22 at 11.0%.
Growth rate of 8.7% to keep GDP at same level as in 2019-20
Moody’s has recently projected India’s GDP growth in 2021-22 at 9.3%.
Benchmark growth rate: 9.3% is close to the benchmark growth rate of 8.7% which would keep India’s GDP at 2011-12 prices at the same level as in 2019-20.
This level of growth may be achieved based on the assumption that the economy normalises in the second half of the fiscal year.
The 2019-20 real GDP was ₹145.7-lakh crore at 2011-12 prices.
It fell to ₹134.1-lakh crore in 2020-21, implying a contraction of minus 8.0%.
At 8.7% real growth, the nominal GDP growth would be close to 13.5%, assuming an inflation rate of 4.5%.
This would be lower than the nominal growth of 14.4% assumed in the Union Budget.
At 13.5% growth, the estimated GDP for 2021-22 is ₹222.4-lakh crore at current prices.
Impact: This will lead to a lowering of tax and non-tax revenues and an increase in the fiscal deficit as compared to the budgeted magnitudes.
How much the gross tax revenue would be impacted?
The budgeted gross and net tax revenues for 2021-22 were ₹22.2-lakh crore and ₹15.4-lakh crore, respectively.
The assumed buoyancy for the Centre’s gross tax revenues (GTR) was 1.2.
If, however, the buoyancy of 1.2 proves optimistic and instead a buoyancy of 0.9, which is the average buoyancy of the five years preceding the COVID-19 year, is applied, the nominal growth of GTR would be 12.2%.
This would lead to the Centre’s GTR of about ₹21.3-lakh crore.
The corresponding shortfall in the Centre’s net tax revenues is estimated to be about ₹0.6 lakh crore.
The budgeted magnitudes for non-tax revenues and non-debt capital receipts at ₹2.4-lakh crore and ₹1.9-lakh crore, respectively, may also prove to be optimistic.
In these cases, the budgeted growth rates were 15.4% and 304.3%, respectively.
The excessively high growth for the non-debt capital receipts was premised on implementing an ambitious asset monetisation and disinvestment programme.
Together with the tax revenue shortfall of nearly 0.6 lakh crore, the total shortfall on the receipts side may be about ₹2.1-lakh crore.
Impact on fiscal deficit estimates
Two factors will affect the fiscal deficit estimate of 6.76% of GDP in 2021-22.
First, there would be a change in the budgeted nominal GDP growth.
Second, there would be a shortfall in the receipts from tax, non-tax and non-debt sources.
Together, these two factors may lead to a slippage in fiscal deficit which may be close to 7.7% of GDP in 2021-22 if total expenditures are kept at the budgeted levels.
This would call for revising the fiscal road map again.
Protecting total expenditures at the budgeted level is, however, important given the need to support the economy in these challenging time.
Vaccination policy and role of Central government
Positive externalities: COVID-19 vaccination is characterised by strong inter-State positive externalities, making it primarily the responsibility of the central government.
The entire vaccination bill should be borne by the central government.
If the central government is the single agency for vaccine procurement, the economies of scale and the Centre’s bargaining power would keep the average vaccine price low.
The central government may transfer the vaccines rather than the money that it has budgeted for transfer.
Some of the smaller States may find procuring vaccines through a global tender to be quite challenging.
Conclusion
Protecting total expenditures at the budgeted level and mass vaccination are important in India’s pandemic situation.
Back2basics: Tax buoyancy
There is a strong connection between the government’s tax revenue earnings and economic growth.
Tax buoyancy explains this relationship between the changes in government’s tax revenue growth and the changes in GDP.
It refers to the responsiveness of tax revenue growth to changes in GDP.
When a tax is buoyant, its revenue increases without increasing the tax rate.
In 2007-08, everything was fine for the economy, GDP growth rate was nearly 9 per cent.
Tax revenue of the government, especially, that of direct taxes registered a growth rate of 45 per cent in 2007-08.
We can say that the tax buoyancy was five (45/9).
What is tax elasticity?
It refers to changes in tax revenue in response to changes in tax rate.
For example, how tax revenue changes if the government reduces corporate income tax from 30 per cent to 25 per cent indicate tax elasticity.
