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  • [Prelims Spotlight] Important UN Organizations

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    Important UN Organizations in News

    27 Apr 2022

    United Nation Overview:

    • The United Nations is an international organization founded in 1945.  It is currently made up of 193 Member States.  The mission and work of the United Nations are guided by the purposes and principles contained in its founding Charter.
    • Due to the powers vested in its Charter and its unique international character, the United Nations can take action on the issues confronting humanity in the 21st century, such as peace and security, climate change, sustainable development, human rights, disarmament, terrorism, humanitarian and health emergencies, gender equality, governance, food production, and more.
    • The UN also provides a forum for its members to express their views in the General Assembly, the Security Council, the Economic and Social Council, and other bodies and committees. By enabling dialogue between its members, and by hosting negotiations, the Organization has become a mechanism for governments to find areas of agreement and solve problems together.
    • The main organs of the UN are the General Assembly, the Security Council, the Economic and Social Council, the Trusteeship Council, the International Court of Justice, and the UN Secretariat.  All were established in 1945 when the UN was founded.

    General Assembly

    • The General Assembly is the main deliberative, policymaking and representative organ of the UN. All 193 Member States of the UN are represented in the General Assembly, making it the only UN body with universal representation.
    • Each year, in September, the full UN membership meets in the General Assembly Hall in New York for the annual General Assembly session, and general debate, which many heads of state attend and address. Decisions on important questions, such as those on peace and security, admission of new members and budgetary matters, require a two-thirds majority of the General Assembly.
    • Decisions on other questions are by a simple majority.  The General Assembly, each year, elects a GA President to serve a one-year term of office.

    Security Council

    The Security Council has primary responsibility, under the UN Charter, for the maintenance of international peace and security.  It has 15 Members (5 permanent and 10 non-permanent members). Each Member has one vote. Under the Charter, all Member States are obligated to comply with Council decisions. The Security Council takes the lead in determining the existence of a threat to the peace or act of aggression. It calls upon the parties to a dispute to settle it by peaceful means and recommends methods of adjustment or terms of the settlement. In some cases, the Security Council can resort to imposing sanctions or even authorize the use of force to maintain or restore international peace and security.  The Security Council has a Presidency, which rotates, and changes, every month.

    Economic and Social Council

    The Economic and Social Council is the principal body for coordination, policy review, policy dialogue and recommendations on economic, social and environmental issues, as well as the implementation of internationally agreed development goals. It serves as the central mechanism for activities of the UN system and its specialized agencies in the economic, social and environmental fields, supervising subsidiary and expert bodies.  It has 54 Members, elected by the General Assembly for overlapping three-year terms. It is the United Nations’ central platform for reflection, debate, and innovative thinking on sustainable development.

    Trusteeship Council

    The Trusteeship Council was established in 1945 by the UN Charter, under Chapter XIII, to provide international supervision for 11 Trust Territories that had been placed under the administration of seven Member States, and ensure that adequate steps were taken to prepare the Territories for self-government and independence. By 1994, all Trust Territories had attained self-government or independence.  The Trusteeship Council suspended operation on 1 November 1994. By a resolution adopted on 25 May 1994, the Council amended its rules of procedure to drop the obligation to meet annually and agreed to meet as occasion required — by its decision or the decision of its President, or at the request of a majority of its members or the General Assembly or the Security Council.

    International Court of Justice

    The International Court of Justice is the principal judicial organ of the United Nations. Its seat is at the Peace Palace in the Hague (Netherlands). It is the only one of the six principal organs of the United Nations not located in New York (United States of America). The Court’s role is to settle, in accordance with international law, legal disputes submitted to it by States and to give advisory opinions on legal questions referred to it by authorized United Nations organs and specialized agencies.

    Secretariat

    The Secretariat comprises the Secretary-General and tens of thousands of international UN staff members who carry out the day-to-day work of the UN as mandated by the General Assembly and the Organization’s other principal organs.  The Secretary-General is the chief administrative officer of the Organization, appointed by the General Assembly on the recommendation of the Security Council for a five-year, renewable term. UN staff members are recruited internationally and locally, and work in duty stations and on peacekeeping missions all around the world.  But serving the cause of peace in a violent world is a dangerous occupation. Since the founding of the United Nations, hundreds of brave men and women have given their lives in its service.

    UN Specialized Agencies

    The UN specialized agencies are autonomous organizations working with the United Nations. All were brought into relationship with the UN through negotiated agreements. Some existed before the First World War. Some were associated with the League of Nations. Others were created almost simultaneously with the UN. Others were created by the UN to meet emerging needs.

    FAO

    Headquarters: Rome, Italy

    The Food and Agriculture Organization leads to international efforts to fight hunger. It is both a forum for negotiating agreements between developing and developed countries and a source of technical knowledge and information to aid development.

    ICAO

    Headquarters: Montreal, Canada

    The International Civil Aviation Organization develops standards for global air transport and assists its 192 Member States in sharing the world’s skies to their socio-economic benefit.

    IFAD

    Headquarters: Rome, Italy

    The International Fund for Agricultural Development, since it was created in 1977, has focused exclusively on rural poverty reduction, working with poor rural populations in developing countries to eliminate poverty, hunger and malnutrition; raise their productivity and incomes; and improve the quality of their lives.

    ILO

    Headquarters: Geneva, Switzerland

    The International Labor Organization promotes international labor rights by formulating international standards on the freedom to associate, collective bargaining, the abolition of forced labor, and equality of opportunity and treatment.

    IMF

    Headquarters: Washington, DC, USA

    The International Monetary Fund fosters economic growth and employment by providing temporary financial assistance to countries to help ease balance of payments adjustment and technical assistance. The IMF currently has $28 billion in outstanding loans to 74 nations.

    IMO

    Headquarters: London, United Kingdom

    The International Maritime Organization has created a comprehensive shipping regulatory framework, addressing safety and environmental concerns, legal matters, technical cooperation, security, and efficiency.

    ITU

    Headquarters: Geneva, Switzerland

    The International Telecommunication Union is the United Nations specialized agency for information and communication technologies. It is committed to connecting all the world’s people – wherever they live and whatever their means. Through our work, we protect and support everyone’s fundamental right to communicate

    UNESCO

    Headquarters: Paris, France

    The United Nations Educational, Scientific and Cultural Organization focuses on everything from teacher training to helping improve education worldwide to protecting important historical and cultural sites around the world. UNESCO added 28 new World Heritage Sites this year to the list of irreplaceable treasures that will be protected for today’s travelers and future generations.

    UNIDO

    Headquarters: Vienna, Austria

    The United Nations Industrial Development Organization is the specialized agency of the United Nations that promotes industrial development for poverty reduction, inclusive globalization and environmental sustainability.

    UNWTO

    Headquarters: Madrid, Spain

    The World Tourism Organization is the United Nations agency responsible for the promotion of responsible, sustainable and universally accessible tourism.

    UPU

    Headquarters: Bern, Switzerland

    The Universal Postal Union is the primary forum for cooperation between postal sector players. It helps to ensure a truly universal network of up-to-date products and services.

    WHO

    Headquarters: Geneva, Switzerland

    The World Health Organization is the directing and coordinating authority on international health within the United Nations system. The objective of WHO is the attainment by all peoples of the highest possible level of health. Health, as defined in the WHO Constitution, is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.

    WIPO

    Headquarters: Geneva, Switzerland

    The World Intellectual Property Organization protects intellectual property throughout the world through 23 international treaties.

    WMO

    Headquarters: Geneva, Switzerland

    The World Meteorological Organization facilitates the free international exchange of meteorological data and information and the furtherance of its use in aviation, shipping, security, and agriculture, among other things.

    World Bank

    Headquarters: Washington, DC, USA

    The World Bank focuses on poverty reduction and the improvement of living standards worldwide by providing low-interest loans, interest-free credit, and grants to developing countries for education, health, infrastructure, and communications, among other things. The World Bank works in over 100 countries.

    • International Bank for Reconstruction and Development (IBRD)
    • International Centre for Settlement of Investment Disputes (ICSID)*
    • International Development Association (IDA)
    • International Finance Corporation (IFC)
    • Multilateral Investment Guarantee Agency (MIGA)*

    * International Centre for Settlement of Investment Disputes (ICSID) and Multilateral Investment Guarantee Agency (MIGA) are not specialized agencies in accordance with Articles 57 and 63 of the Charter but are part of the World Bank Group.

    Other Entities and Bodies

    UNAIDS

    Headquarters: Geneva, Switzerland

    The Joint United Nations Programme on HIV/AIDS (UNAIDS) leads and inspires the world to achieve its shared vision of zero new HIV infections, zero discrimination and zero AIDS-related deaths. UNAIDS unites the efforts of 11 UN organizations—UNHCR, UNICEF, WFP, UNDP, UNFPA, UNODC, UN Women, ILO, UNESCO, WHO and the World Bank—and works closely with global and national partners towards ending the AIDS epidemic by 2030 as part of the Sustainable Development Goals.

    UNHCR

    Headquarters: Geneva, Switzerland

    The United Nations High Commissioner for Refugees – UNHCR protects refugees worldwide and facilitates their return home or resettlement.

    UNIDIR

    Headquarters: Geneva, Switzerland

    The United Nations Institute for Disarmament Research is a voluntarily funded autonomous institute within the United Nations. An impartial actor, the Institute generates ideas and promotes action on disarmament and security. UNIDIR brings together states, international organizations, civil society, the private sector and academia to work together—internationally, regionally and locally—to build and implement creative solutions that will benefit all states and peoples.

    UNITAR

    Headquarters: Geneva, Switzerland

    An autonomous UN body established in 1963, the United Nations Institute for Training and Research is a training arm of the United Nations System and has the mandate to enhance the effectiveness of the UN through diplomatic training, and to increase the impact of national actions through public awareness-raising, education and training of public policy officials.

    UNOPS

    Headquarters: Copenhagen, Denmark

    The mission of the United Nations Office for Project Services is to help people build better lives and help countries achieve peace and sustainable development. UNOPS helps the UN, governments and other partners to manage projects, and deliver sustainable infrastructure and procurement in an efficient way.

    UNRWA

    Headquarters: Amman, Jordan

    The United Nations Relief and Works Agency for Palestine Refugees has contributed to the welfare and human development of four generations of Palestine refugees. It’s services encompass education, health care, relief and social services, camp infrastructure and improvement, microfinance and emergency assistance, including in times of armed conflict.  It reports only to the UN General Assembly.

    UNSSC

    Headquarters: Turin, Italy

    The United Nations System Staff College is the learning organization of the United Nations system. It designs and delivers learning programmes for staff of the UN system and its partners. It helps the United Nations become more effective by fostering a common leadership and management culture across the system.

    UN Women

    Headquarters: New York City, USA

    UN Women merges and builds on the important work of four previously distinct parts of the UN system, which focus exclusively on gender equality and women’s empowerment.

    Related Organizations

    CTBTO

    Headquarters: Vienna, Austria

    The Preparatory Commission for the Comprehensive Nuclear-Test-Ban Treaty Organization promotes the Comprehensive Nuclear-Test-Ban Treaty (which is not yet in force) and the build-up of the verification regime so that it is operational when the Treaty enters into force.

    IAEA

    Headquarters: Vienna, Austria

    The International Atomic Energy Agency, is the world’s centre for cooperation in the nuclear field. The Agency works with its Member States and multiple partners worldwide to promote the safe, secure and peaceful use of nuclear technologies.

    IOM

    Headquarters: Geneva, Switzerland

    The International Organization for Migration works to help ensure the orderly and humane management of migration, to promote international cooperation on migration issues, to assist in the search for practical solutions to migration problems and to provide humanitarian assistance to migrants in need, including refugees and internally displaced people.

    OPCW

    Headquarters: The Hague, Netherlands

    The Organisation for the Prohibition of Chemical Weapons is the implementing body of the Chemical Weapons Convention (CWC), which entered into force in 1997. The OPCW Member States work together to achieve a world free of chemical weapons.

    UNFCCC

    Headquarters: Bonn, Germany

    The UNFCCC Secretariat (UN Climate Change) was established in 1992 when countries adopted the United Nations Framework Convention on Climate Change (UNFCCC). With the subsequent adoption of the Kyoto Protocol in 1997 and the Paris Agreement in 2015, Parties to these three agreements have progressively reaffirmed the Secretariat’s role as the United Nations entity tasked with supporting the global response to the threat of climate change.

    WTO

    Headquarters: Geneva, Switzerland

    The World Trade Organization is a forum for governments to negotiate trade agreements and a place where member governments try to sort out the trade problems they face with each other.

  • [Sansad TV] Perspective: Dollar Dominance: Under threat?

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    Context

    As per IMF’s first deputy managing director Gita Gopinath, financial sanctions imposed on Russia threaten to gradually dilute the dominance of the U.S. dollar and could result in a more fragmented international monetary system.

    To understand more on this and related risks to the dominance of the dollar in view of the prevailing global situation and what it means for the international financial market.

    Russia- Ukraine War and USD

    • The Russia-Ukraine conflict conveys no signal of coming to an end or any tendency towards a peaceful settlement.
    • This has disrupted the global supply chain and has caused a major blow to the global economy.
    • The World Bank has reduced its annual global growth forecast for 2022 by nearly a full percentage point, from 4.1% down to 3.2%.
    • The financial sanctions imposed on Russia by the major Western powers have prompted changes in the international financial order driven by USD.
    • The United States has to some extent weaponized the dollar against Russia.
    • Countries are concerned that the money it holds in dollars would be worthless if dollar inflation set in.

    How US Dollar became the global currency?

    • The U.S. dollar has been the world’s dominant currency since the end of World War II.
    • Roughly half of international trade, international loans, and global debt securities are denominated in USD.
    • The USD became the official reserve currency of the world in 1944. The decision was made by a delegation from 44 Allied countries called the Bretton Woods Agreement.
    • Despite the challenges faced by the US economy due to fiscal and external deficits of the 1980s, the dollar’s share of global reserves remained steady and reserves even grew as time progressed.
    • The dominance of the dollar is backed by strong and highly credible institutions, deep markets and the fact that it is freely convertible.
    • Almost 40% of the world’s debt is issued in dollars. As a result, foreign banks need a lot of dollars to conduct business. This became evident during the 2008 financial crisis.

    Implications of USD led inflation

    • The dollar’s role as the world’s “reserve currency” is a cornerstone of the global economy and global finance as well as geopolitics.
    • Most of the transactions are dollar-dominated, currency depreciation is rather unlikely to increase exports.
    • A depreciation in the currency relative to the dollar leads to an increase in the price of imported goods which means high pressures on inflation.

    Challenges to USD

    • In the 1990s the dollar’s role started diminishing and the US became a net debtor to the world.
    • With the emerging global value chains, China’s integration into the world economy has been an impediment to the economic growth of the US.
    • A considerable decline in the dollar’s share can be attributed to the greater use of the Chinese renminbi.
    • It was notified by the IMF official that the dollar’s share of international reserves had fallen from 70% to 60% over a period of time with the growing trading currencies led by the Australian dollar.

    Calls for a one world currency

    • In March 2009, China and Russia called for a new global currency.
    • China is a huge player in world trade, which you might think would make people want to hold a lot of yuan assets.
    • They wanted the world to create a reserve currency that is disconnected from individual nations and is able to remain stable in the long run.
    • They thus want to remove the inherent deficiencies caused by using credit-based national currencies.
    • In the fourth quarter of 2016, the Chinese renminbi became another one of the world’s reserve currencies.
    • China wants its currency to be fully traded on the global foreign exchange markets. It would like the Yuan to replace the dollar as the global currency.

    What lies ahead?

    • For many years, undermining the dollar’s dominance has been the dream of governments that have looked uneasily at US global primacy, and formed coalitions.
    • Some experts also advocate that either China’s or Russia’s threat to the dollar hegemony will remain a fantasy.
    • It is predicted that the sanctions against Russia will not foreshadow the decline of the dollar as the reserve currency.
    • The Russia-Ukraine Conflict will definitely slow down the global economy but will not cause a global recession.

  • The goal of an energy-secure South Asia

    Context

    Given that a 0.46% increase in energy consumption leads to a 1% increase in GDP per capita, electrification not only helps in improving lifestyle but also adds to the aggregate economy by improving the nation’s GDP.

    Widening electricity coverage in South Asian nations

    • The electricity policies of South Asian countries aim at providing electricity to every household.
    • The issues these policies address include generation, transmission, distribution, rural electrification, research and development, environmental issues, energy conservation and human resource training.
    • Bangladesh has achieved 100% electrification recently while Bhutan, the Maldives, and Sri Lanka accomplished this in 2019.
    • For India and Afghanistan, the figures are 94.4% and 97.7%, respectively, while for Pakistan it is 73.91%.
    • Bhutan has the cheapest electricity price in South Asia (U.S.$0.036 per kilowatt hour, or kWh) while India has the highest (U.S.$0.08 per kWh.) 
    • South Asia is reinforcing its transmission and distribution frameworks to cater to growing energy demand not only through the expansion of power grids but also by boosting green energy such as solar power or hydroelectricity.

    Adapting to renewable

    • Geographical differences between these countries call for a different approach depending on resources.
    •  India leads South Asia in adapting to renewable power, with its annual demand for power increasing by 6%.
    • India’s pledge to move 40% of total energy produced to renewable energy is also a big step.
    • Prime Minister Narendra Modi in his ‘net-zero by 2070’ pledge at COP26 in Glasgow asserted India’s target to increase the capacity of renewable energy from 450GW to 500GW by 2030.
    • The region is moving towards green growth and energy as India hosts the International Solar Alliance.
    • South Asia has vast renewable energy resources — hydropower, solar, wind, geothermal and biomass — which can be harnessed for domestic use as well as regional power trade.

    Steps toward SDGs

    • Solar power-driven electrification in rural Bangladesh is a huge step towards Sustainable Development Goal 7.
    • Access to electricity improves infrastructure i.e., SDG 9 (which is “build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”).
    • Energy access helps online education through affordable Internet (SDG 4, or “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all”), more people are employed (SDG 1: “no poverty”), and are able to access tech-based health solutions (SDG 3, or “ensure healthy lives and promote well-being for all at all ages”).

    Regional energy trade

    • The South Asian Association for Regional Cooperation (SAARC) prepared the regional energy cooperation framework in 2014, but its implementation is questionable.
    • Energy trade agreements: There are a number of bilateral and multilateral energy trade agreements such as the India-Nepal petroleum pipeline deal, the India-Bhutan hydroelectric joint venture, the Myanmar-Bangladesh-India gas pipeline, the Bangladesh-Bhutan-India-Nepal (BBIN) sub-regional framework for energy cooperation, and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, rumoured to be extended to Bangladesh.
    • Challenges: ‘South Asia’s regional geopolitics is determined by the conflation of identity, politics, and international borders.
    • The current participation in cross-border projects has been restricted to respective tasks, among Bhutan and India or Nepal and India.
    • It is only now that power-sharing projects among the three nations, Nepal, India, and Bangladesh, have been deemed conceivable.

    Way forward

    • Energy framework: Going forward, resilient energy frameworks are what are needed such as better building-design practices, climate-proof infrastructure, a flexible monitory framework, and an integrated resource plan that supports renewable energy innovation.
    • Public-Private Partnership: Government alone cannot be the provider of reliable and secure energy frameworks, and private sector investment is crucial.

    Conclusion

    While universal coverage can catalyse the region’s economic growth, energy trade must be linked to peace building.

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  • Anchoring inflationary expectations

    Context

    The RBI released the Inflation Expectations Survey of Households (IESH) for March 2022 on April 8. The survey results present interesting behavioural insights for public policy, particularly from a gender perspective.

    Significance of inflation expectations

    • The impact of inflation — the overall increase in the prices in an economy — is felt by everyone.
    • High inflation adversely affects the poor.
    • Individuals, therefore, form expectations about how prices will behave in the future to take precautions.
    • If they anticipate high inflation, they negotiate wages or rents to compensate against a potential fall in their purchasing power.
    • Self-fulfilling: Increased wages increase the cost of production, making expectations self-fulfilling and, therefore, playing a pivotal role in determining inflation.
    • Anchoring inflation expectations: Central banks raise interest rates to ‘anchor’ high inflationary expectations when temporary price shocks, on account of drought or disruption in global supply chains, entail the risk of getting transmitted into actual inflation.

    What shapes inflation expectations of individuals?

    • A recent study carried out by Acunto et al., 2020, validates that what agents frequently purchase, instead of those purchased infrequently, shape their perception of the general level of inflation.
    • Factors shaping individual’s perception: A significant factor shaping perceptions on inflation are the prices that individuals observe in their daily lives, originally posited by Robert Lucas in his seminal Islands model.
    • Therefore, generalising aggregate inflation expectations for making general views of prices in the economy could be misleading.
    • This insight has implications for gender-based differences in anticipating inflation in the future.
    • Existing literature shows that women have higher inflationary expectations compared to men.
    •  However, a new study reveals that it is not the innate characteristics as much as the traditional gender roles that explain this divergence.

    Natural experiments

    • To test its validity, trends of Inflation Expectations Survey of Households (IESH) before and after the lockdown period present itself as a crude ‘natural experiment’.
    • The authors hypothesise that if traditional gender roles are the primary reasons behind the gender inflation expectation gap, then the lockdown-imposed work-from-home (WFH) arrangements or loss of employment should contribute in closing this gap.
    • The logic: during the lockdown, people in urban areas lost jobs or remained at home, taking a relatively equal share in the frequent day-to-day purchases.
    • Two categories of occupations are studied here: homemakers (assumed to be dominated by women) and financial sector employees (assumed to be dominated by men).
    • Looking at the trends of the RBI surveys for the period between March 2018 and March 2020, homemakers report higher inflation expectations than financial sector employees.
    • However, this gap has narrowed over the last two years and has almost converged in March 2022.
    • A possible explanation of closing of the gap could be the gradual ‘experience effect’ of male-dominated financial sector employees.
    • Experience effect, contrary to Rational Expectations Theory that assumes individuals base their decisions on the information available to them, is based on the premise that actual personal experiences shape behaviour more than being informed about the outcome of the event.

    Conclusion

    Focus could be shifted more on the microfoundations — understanding macroeconomic outcomes by studying factors that shape individual behaviour and decision making — for making better policy decisions concerning macroeconomic phenomena.

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  • India, Europe and the Russian complication

    Context

    The re-election of Emmanuel Macron as the president of France on Sunday has sent a sigh of relief across Europe and North America. Delhi too is pleased with the return of Macron, who laid a strong foundation for India’s strategic partnership with France.

    Why France election matters to the regional and domestic order in Europe

    • Unlike the Soviet Union, which sought to shape European politics though left-wing parties, Russia today influences European politics through right-wing parties.
    • Victory for Marine Le Pen, Macron’s opponent, would have dramatically complicated the geopolitics of Europe.
    • Le Pen, like so many other right-wing leaders in Europe, has close ties to Vladimir Putin.
    • Le Pen’s victory would have not only altered France’s international trajectory, but also shaken the EU to its political core.

    Three factors shaping the transformation of India’s ties with Europe

    • Russia’s threat to the regional and domestic order in Europe is among multiple factors shaping Delhi’s intensifying engagement with Brussels.
    • Three major external factors are facilitating the transformation of India’s ties with Europe.

    1] Russian Question

    • For India, a normal relationship between Russia and the West would have been ideal.
    • But Russia’s confrontation with the West comes during India’s rapidly expanding economic and political ties to Europe and America.
    • Delhi might be sentimental about India’s historic Russian connection but it is not going to sacrifice its growing ties to the West on that altar.
    • Russia’s declining economic weight and growing international isolation begins to simplify India’s choices.
    • During the last few weeks, Delhi has insisted that its silence is not an endorsement of Russian aggression.
    • India’s position has continued to evolve.
    • Delhi’s repeated emphasis on respecting the territorial integrity of states is a repudiation of Russia’s unacceptable aggression.
    • Meanwhile, geographic proximity and economic complementarity have tied Europe even more deeply to Russia.
    • The EU’s annual trade with Russia at around $260 billion is massive in comparison to India’s $10 billion.
    • Putin’s reckless invasion of Ukraine has compelled Europe to embark on a costly effort to disconnect from Russia.
    • The war in Ukraine has certainly presented a major near-term problem that needs to be managed by Delhi and Brussels.

    2] China Question

    •  Moscow has been deepening ties with Beijing for more than two decades triggering many anxieties in Delhi.
    •  In February, Putin travelled to Beijing to announce a partnership “without limits”.
    • India has no option but to manage the consequences of the Russian decision.
    • In the last two decades, China has emerged as a great power and now presents a generational challenge for Indian policymakers.
    • That challenge has been made harder by Putin’s alliance with Xi Jinping.
    • As Delhi strives to retain a reasonable relationship with Moscow, Europe emerges as an important partner in letting India cope with the China challenge.
    •  Thanks to the growing problems of doing business with Xi’s China, Beijing’s geopolitical alliance with Moscow, and the rapid deterioration of Sino-US relations, Brussels is ready to invest serious political capital in building purposeful strategic ties with India.

    3] American Question

    • Until recently it appeared that Europe’s calls for “strategic autonomy” from the US were in sync with India’s own worldview.
    • But the Ukraine crisis has underlined the US’s centrality in securing Europe against Russia.
    • In Asia, Chinese assertiveness has brought back the US as a critical factor in shaping peace and security.
    • Washington wants a strong Europe taking greater responsibility for its own security; it would like Delhi to play a larger role in Asia and become a credible provider of regional security.
    • Above all, America wants India and Europe to build stronger ties with each other.

    Conclusion

    For the first time since independence, India’s interests are now aligning with those of Europe. Together, Delhi and Brussels can help reshape Eurasia as well as the Indo-Pacific.

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  • Effective and Efficient: The Insolvency and Bankruptcy Code

    Context

    The performance of the Insolvency and Bankruptcy Code (IBC) has been under intense scrutiny.

    Basis for the criticism of IBC

    • The Code has been mainly criticised on three counts:
    • 1] Delay in resolution: There are inordinate delays in the resolution procedure.
    • 2] Liquidation:  There have been more liquidations than resolutions.
    • 3] Low recovery amount: The recovery amounts under IBC are not substantial, making it more of a talking point than an effective structural reform.

    Is the criticism about the delay justified?

    • Assessing IBC based only on the average time taken to resolve successful cases does a substantial disservice to how much more efficient the IBC is compared to the previous regimes.
    •  It is calculated by taking a simple average of time taken on each completed case.
    • This is one of the metrics used by the Insolvency and Bankruptcy Board of India (IBBI) to compare the IBC regime with the earlier Board of Industrial and Financial Reconstruction (BIFR) regime.
    •  However, the performance of a bankruptcy resolution should ideally be evaluated along at least three dimensions:
    • The average time taken to resolve a case, the fraction of cases resolved within a given timeframe, and the recovery rate conditional on resolution.
    • Focusing on any single parameter may result in a gross under (over) estimation of the IBC’s (BIFR’s) performance.
    • By examining the fraction of cases that are resolved within a specific timeframe, we see that for any fraction of the total cases resolved under each scheme, the IBC took considerably less time than BIFR.
    • Total number of cases solved: Since its inception in 1987, the BIFR has resolved less than 3,500 cases while the IBC, since it was launched in 2016, resolved about 1,178 cases until it was suspended at the onset of the COVID pandemic.
    • Most analyses of IBC’s performance overlook the important fact that many of the legacy BIFR cases were subsumed by IBC, and these were often zombie firms that were kept alive due to massive evergreening of loans between 2008-2015.

    Conclusion

    The bottom line is straightforward: The IBC has significantly outperformed the earlier BIFR regime in terms of the speed of resolution.

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  • 26th April 2022 | Prelims Daily with Previous Year Questions

    [WpProQuiz 981]

    [WpProQuiz_toplist 981]

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  • 26th April 2022 | Nikaalo Prelims- Current Affairs Test 7: January 2022

    [WpProQuiz 980]

    [WpProQuiz_toplist 980]

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  • NITI Aayog’s Draft Battery Swapping Policy

    The NITI Aayog has released a draft battery-swapping policy targeted at electric two- and three-wheelers as the government think tank aims to expedite large-scale adoption of EVs.

    What is Battery Swapping?

    • Battery swapping is a mechanism that involves exchanging discharged batteries for charged ones.
    • This provides the flexibility to charge these batteries separately by de-linking charging and battery usage, and keeps the vehicle in operational mode with negligible downtime.
    • Battery swapping is generally used for smaller vehicles such as two-wheelers and three-wheelers with smaller batteries that are easier to swap, compared to four-wheelers and e-buses, although solutions are emerging for these larger segments as well.

    What is BaaS?

    • Battery-as-a-service (BaaS) is seen as a viable charging alternative.
    • Manufacturers can sell EVs in two forms: Vehicles with fixed or removable batteries and vehicles with batteries on lease.
    • If you buy an electric scooter with battery leasing, you do not pay for the cost of the battery—that makes the initial acquisition almost 40% cheaper.
    • Users can swap drained batteries for a fully charged one at a swap station. The depleted batteries are then charged on or off-site.
    • The advantages of swapping include low downtimes for commercial fleets, reduced space requirements, and lower upfront costs.
    • It is also a viable solution for those who don’t have parking spots at home.

    Draft Battery Swapping Policy: Key Proposals

    • Rationalizing taxes on battery: The draft policy has suggested that the GST Council consider reducing the differential across the tax rates on Lithium-ion batteries and electric vehicle supply equipment. Currently, the tax rate on the former is 18 per cent, and 5 per cent on the latter.
    • Incentivization for swapping enabled vehicles: The policy also proposes to offer the same incentives available to electric vehicles that come pre-equipped with a fixed battery to electric vehicles with swappable batteries. The size of the incentive could be determined based on the kWh (kilowatt hour) rating of the battery and compatible EV.
    • Terms of contracts for battery providers: The government will specify a minimum contract duration for a contract to be signed between EV users and battery providers to ensure they continue to provide battery swapping services after receiving the subsidy.
    • Public battery charging stations: The policy also requires state governments to ensure public battery charging stations are eligible for EV power connections with concessional tariffs. It also proposes to install battery swapping stations at several locations like retail fuel outlets, public parking areas, malls, kirana shops and general stores etc.
    • Tariff rationalization: It also proposes to bring such stations under existing or future time-of-day (ToD) tariff regimes, so that the swappable batteries can be charged during off-peak periods when electricity tariffs are low.
    • Registration ease: Transport Departments and State Transport Authorities will be responsible for easing registration processes for vehicles sold without batteries or for vehicles with battery swapping functionality.
    • Unique identification number (UIN): The policy also proposes to assign a UIN to swappable batteries at the manufacturing stage to help track and monitor them. Similarly, a UIN number will be assigned to each battery swapping station.
    • Locations: The NITI Aayog has proposed that all metropolitan cities with a population of more than 40 lakh will be prioritized for the development of battery swapping networks under the first phase, which is within 1-2 years of the draft policy getting finalized.

    Why hasn’t BaaS taken off yet?

    • Hefty taxes: There are economic and operational constraints. Energy service providers offering swapping solutions have to charge 18% goods and services tax (GST) for swapping, compared to 5% GST on the purchase of an EV.
    • No incentives yet: Additionally, the government’s FAME-II incentives are not offered to vehicles sold with BaaS or swap station operators.
    • Lack of interoperability infrastructure: While these are economic disadvantages compared to direct charging solutions, the lack of a dense and interoperable battery swap infrastructure has also hindered the roll-out.

    Does the draft policy talk about EV safety?

    • To ensure a high level of protection at the electrical interface, a rigorous testing protocol will be adopted, the draft said, to avoid any unwanted temperature rise at the electrical interface.
    • The battery management system, which is a software that controls battery functions, will have to be self-certified and open for testing to check its compatibility with various systems, and capability to meet safety requirements.
    • This particularly assumes significance given the recent incidents of electric two-wheelers bursting into flames.

    Issues with BaaS

    • Standardization of specifications: There is a need for standardization of safety specifications as well as the battery.
    • Safety hazard: Swapping in the various permutations and combinations of batteries at a station where  they  have not been tested for compatibility could lead to safety hazards.
    • Non-competitive nature: Also, mandating only one type of battery to  be eligible for  concessions  would be  disadvantageous  to  many  players.

    Significance of battery swapping

    • High Cost of EVs: An EV, by industry standards, is 1.5-2x costlier than IC Engine counterpart and at least half the cost is from the battery pack.
    • Cost reduction: Many manufacturers are offering batteries separately from a vehicle, reducing the cost. In that case, a fleet owner can buy vehicles without battery and utilize battery swapping.
    • Range Anxiety: Another major reason stopping people from buying EVs is range anxiety, or in simple terms, the fear of battery getting empty without finding a charging station.
    • Inadequate charging infrastructure: Unlike petrol pumps, EV charging stations are rare to spot and that further increases the range anxiety exponentially, especially while going on a road trip.
    • Hazard management: In case of a Swapping Station, one can simply locate a station, go and replace the empty battery with a new one.

     

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  • EU member states agrees on Digital Services Act (DSA)

    The European Parliament and European Union (EU) Member States announced that they had reached a political agreement on the Digital Services Act (DSA).

    What is DSA?

    • DSA is a landmark legislation to force big Internet companies to act against disinformation and illegal and harmful content, and to “provide better protection for Internet users and their fundamental rights”.
    • The Act, which is yet to become law, was proposed by the EU Commission (anti-trust) in December 2020.
    • As defined by the EU Commission, the DSA is “a set of common rules on intermediaries’ obligations and accountability across the single market”.
    • It seeks to ensure higher protection to all EU users, irrespective of their country.
    • The proposed Act will work in conjunction with the EU’s Digital Markets Act (DMA), which was approved last month.

    Whom will the DSA apply?

    • Intermediaries: The DSA will tightly regulate the way intermediaries, especially large platforms such as Google, Facebook, and YouTube, function when it comes to moderating user content.
    • Abusive or illegal content: Instead of letting platforms decide how to deal with abusive or illegal content, the DSA will lay down specific rules and obligations for these companies to follow.
    • Ambit platforms: The legislation brings in its ambit platforms that provide Internet access, domain name registrars, hosting services such as cloud computing and web-hosting services.
    • Very large platforms: But more importantly, very large online platforms (VLOPs) and very large online search engines (VLOSEs) will face “more stringent requirements.”
    • 45 million monthly users-base: Any service with more than 45 million monthly active users in the EU will fall into this category. Those with under 45 million monthly active users in the EU will be exempt from certain new obligations.

    Key features

    A wide range of proposals seeks to ensure that the negative social impact arising from many of the practices followed by the Internet giants is minimised or removed:

    1. Faster removal of illicit content: Online platforms and intermediaries such as Facebook, Google, YouTube, etc will have to add “new procedures for faster removal” of content deemed illegal or harmful. This can vary according to the laws of each EU Member State.
    2. Introduction of Trusted Flaggers: Users will be able to challenge these takedowns as well. Platforms will need to have a clear mechanism to help users flag content that is illegal. Platforms will have to cooperate with “trusted flaggers”.
    3. Imposition of duty of care: Marketplaces such as Amazon will have to “impose a duty of care” on sellers who are using their platform to sell products online. They will have to “collect and display information on the products and services sold in order to ensure that consumers are properly informed.”
    4. Annual audit of big platforms: The DSA adds an obligation for very large digital platforms and services to analyse systemic risks they create and to carry out risk reduction analysis. This audit for platforms like Google and Facebook will need to take place every year.
    5. Promoting independent research: The Act proposes to allow independent vetted researchers to have access to public data from these platforms to carry out studies to understand these risks better.
    6. Ban ‘Dark Patterns’ or “misleading interfaces: The DSA proposes to ban ‘Dark Patterns’ or “misleading interfaces” that are designed to trick users into doing something that they would not agree to otherwise.
    7. Transparency of Algorithms: It also proposes “transparency measures for online platforms on a variety of issues, including on the algorithms used for recommending content or products to users”.
    8. Easy cancellation of subscription: Finally, it says that cancelling a subscription should be as easy as subscribing.
    9. Protection of minors: The law proposes stronger protection for minors, and aims to ban targeted advertising for them based on their personal data.
    10. Crisis mechanism clause: This clause will make it “possible to analyse the impact of the activities of these platforms” on the crisis, and the Commission will decide the appropriate steps to be taken to ensure the fundamental rights of users are not violated.
    11. Others: Companies will have to look at the risk of “dissemination of illegal content”, “adverse effects on fundamental rights”, “manipulation of services having an impact on democratic processes and public security”, “adverse effects on gender-based violence, and on minors and serious consequences for the physical or mental health of users.”

    Bar over Social Media

    • It has been clarified that the platforms and other intermediaries will not be liable for the unlawful behaviour of users.
    • So, they still have ‘safe harbour’ in some sense.
    • However, if the platforms are “aware of illegal acts and fail to remove them, they will be liable for this user behaviour.
    • Small platforms, which remove any illegal content they detect, will not be liable.

    Are there any such rules in India?

    • India last year brought the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
    • These rules make the social media intermediary and its executives liable if the company fails to carry out due diligence.
    • Rule 4 (a) states that significant social media intermediaries — such as Facebook or Google — must appoint a chief compliance officer (CCO), who could be booked if a tweet or post that violates local laws is not removed within the stipulated period.
    • India’s Rules also introduce the need to publish a monthly compliance report.
    • They include a clause on the need to trace the originator of a message — this provision has been challenged by WhatsApp in the Delhi High Court.

     

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