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

    Central Idea

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

    What is the Scheduled Tribes List?

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

    Notable Judgements:

    (1) The State of Maharashtra vs. Milind verdict

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

    (2) FCI vs. Jagdish Balaram Bahira

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

    Back2Basics: Scheduled Tribes

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

    How are STs notified?

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

    Status of STs in India

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

     

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  • Misleading food ads and regulations to curtail them

    Central idea: Misleading claims

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

    Regulations for tackling misleading ads and claims

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

    Response of FSSAI

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

    Recent observations in the food advertising ecosystem

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

    Definitions of various terms

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

    Expectations from a consumer’s point of view

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

     

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  • Cyclone Mocha developing in Bay of Bengal

    cyclone

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

    What is a cyclone and how are they formed?

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

    Requirements for a Cyclone to form

    There are six main requirements for tropical cyclogenesis:

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

    How are cyclones named?

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

    Why is it important to name cyclones?

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

     

     

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

    Central Idea

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

    Definition of sovereignty

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

    Sovereignty in India’s Constitution

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

    Relationship of Indian states with the sovereign Union

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

    Provisions attesting to the superior position of the Centre

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

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

     

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  • 2 Days-UPSC Workshop: Mastering 4 Most Important NCERTs for IAS 2024 | Building solid Foundation | Book your FREE seat (Limited entry)

    2 Days-UPSC Workshop: Mastering 4 Most Important NCERTs for IAS 2024 | Building solid Foundation | Book your FREE seat (Limited entry)

    The most important 2-Days Offline Workshop in Pune Branch for UPSC-2024 by Shubham sir and Pravin sir on Mastering NCERTs to master Basic Subjects! Limited entry

    Book your seat FREE | 2-Day UPSC 2024 Offline Workshop with Senior IAS Mentors


    What would be the grave error? The answer is “to exclude NCERTs.” If you want to enjoy UPSC, you must learn to value NCERTs.

    The best place to begin your UPSC preparation is with NCERTs, which are essential for success. They serve as a foundation and can help you comprehend essential and vital issues faster. Is it, nevertheless, important to read all NCERTs? Finding reliable sources for this information may require some effort.

    Alert! Reading NCERTs isn’t enough to lead; you’ll only succeed in the IAS exam if you grasp how to read NCERTs, which 4 books we need to study specifically for mastering the basic subjects like Modern History, Polity Indian Economy, and Geography.

    Shubham sir and Senior IAS Mentor, Pravin sir will take 2 Days of offline Workshop sessions on Mastering 4 Most Important NCERTs for IAS 2024.


    Join Telegram group (https://t.me/CDMaharashtra) by Pravin sir and stay updated with the latest notes, strategy sessions and FREE guidance by senior mentors.


    Day 1: Masterclass on NCERT: Modern History and Polity

    11th May (Thursday) 2023, 7:30 P.M

    Shubham sir, Senior IAS mentor at Civilsdaily will be taking an Offline workshop where he will be practically demonstrating How to build a solid foundation on Modern History and Polity by Mastering the 2 most essential NCERT Books.

    In this enlightening webinar, sir will share:

    1. What are the best 2 to 3 NCERTs to read, to build a solid foundation on Modern History and Polity?
    2. Why are NCERT books considered the cornerstone for preparing all basic subjects?
    3. How to retain conceptual vs factual information in NCERTs.
    4. How to improve bit by bit if you are weak in any subject?
    5. Political Science covers the country’s legal and fundamental aspects, which makes it an extremely important subject. How to & what to cover from NCERTs so that ‘Laxmikant’ becomes easier to read and revise.
    6. NCERT Books provide the most important illustrations. How to read and revise them. How to use them while making notes.

    Don’t miss out on this super important workshop. Register below for a 1-1 LIVE Session


    Day 2: Masterclass on NCERT: Economics and Geography

    12th May (Friday) 2023, 7:30 P.M

    Pravin sir, a senior IAS mentor/faculty at Civilsdaily Pune Branch will take an interactive offline session where he will engage and give a Digital Board Practical demonstration on How to build a solid foundation on Indian Economy and Geography by Mastering 2 most essential NCERT Books.

    What to Expect in the Webinar:

    In this Practical Offline Session, Pravin sir will share:

    • How to utilize NCERT Books? How to improve your reading & analytical skills from NCERTs which are super crucial for UPSC-CSE? Which portion of every NCERT must be utilized for making notes?
    • Best, minimum NCERT materials for UPSC-CSE Preparation. Do’s & Don’t, Understanding the science behind how society works is important, so what are the best 2 to 4 NCERTs to read?
    • For foundational preparation for prelims, students can read & make quick revision notes with the NCERT books, to begin, their history preparation. What are those books that have proven to be highly beneficial in the case of students that come from commerce or science backgrounds?
    • It is critical to understand Indian and global geography. Maps and information about different climatic regions provided in NCERT Geography books help answer many questions about geography. How to learn & what maps/diagrams/footnotes are not to be ignored will also be discussed.
    • The subject of the Indian Economy covers India’s current and past economic aspects, which makes it an important topic. Knowing its fundamentals is crucial for UPSC exams. So, What is to be learned by heart & which NCERTs are fit for the economy will be comprehensively discussed.
    • What is the difference between ‘The Old Version NCERTs & ‘The New Version NCERTs & which subjects, and which versions of NCERTs you should focus on,  this will also be discussed thoroughly in this Ask me anything session. 
    •  The untold secret of ‘how & from where UPSC asks direct questions from NCERTs. How to build command over NCERTs is going to be another crucial point of this awesome session.

    Why Should You Attend?

    Whether you’re taking the test for the first time or repeating it after failing, this offline Workshop at Pune is required viewing for everyone planning to apply for the UPSC 2024. 

    Be sure to take advantage of this important practical workshop/ Register immediately to receive their professional advice on redesigning your UPSC preparation plan!


    CivilsDaily’s FREE Webinar package UPSC 2024

    Post-webinar we will share important PDFs, timetable framework, and notes.

    Other than this a strategy package will be emailed to you.


    What The Hindu opined about Civilsdaily Mentorship

    AIR 65, Pranav, IAS (Serving IAS officer, Gujrat)
    Karishma Nair, AIR 14 was also Sajal sir’s student
    best coaching for upsc in delhi

    The most important Webinar/Workshop for UPSC Preparation 2024 on Mastering NCERTs for 4 Basic Subjects. Limited entry.

  • (Urgent) UPSC prelims 2023 Admit Cards released | Direct link to download inside | FREE resources for UPSC Prelims 2023 based on the Past 3-Year Trend Analysis & most Probable Topics for 2023

    (Urgent) UPSC prelims 2023 Admit Cards released | Direct link to download inside | FREE resources for UPSC Prelims 2023 based on the Past 3-Year Trend Analysis & most Probable Topics for 2023

    Dear students finally D-day has come.

    UPSC has released admit cards for Civil Services (Preliminary) examination, 2023. The exam is scheduled to be held on 28th May (Sunday) 2023.

    Union Public Service Commission activated the UPSC Admit Card 2023 link on May 8, 2023, at upsc.gov.in.

    upsc prelims 2023 admit card
    UPSC Prelims 2023 admit card

    Table of Content:


    For the convenience of applicants who will be taking the prelims exam on May 28th, 2023, the procedures for DOWNLOADING UPSC Hall Ticket 2023 are provided below.

    UPSC Hall Ticket 2023 is a mandatory document that you must bring with you along with other important papers.

    How to Download UPSC Prelims 2023, Admit Card

    1. Visit upsc.gov.in/eadmitcard
    2. Fill in your registration Number or DOB
    3. Verify Your Admit Card Details
    4. Download & Print

    FREE Last Time Study Material for UPSC Prelims 2023

    1. Smart Study Toolkit for 120+ score by Sajal sir

    A game-changing compilation meticulously curated by Sajal sir, Academic Director @ Civilsdaily.

    Free Materials in Smart Study Toolkits

    • Trend Analysis of the PAST 3 Years Prelims Papers Subjectwise
    • Kind & Nature of Questions were asked by UPSC (Based on Basic Books, Conceptual Based, Tikdam Based, and Newspaper Based)
    • Dimensions to cover in each subject and each probable sub-topic
    • Most probable topics and sub-topics for Prelims 2023 based on PYQs analysis.
    Smart study Prelims toolkit prepared by Sajal sir

    These concise, laser-focused notes are designed to provide essential information and boost your knowledge just in time for the big exam. Give your preparation the edge it needs by downloading these invaluable Smart Study Toolkit PDFs today!

    2. Most important topics covered in High Yield Series by Dinesh sir

    High Yield Series is a YouTube video lecture series that targets GS static topics, important lists (like national parks, 54 Tiger Reserves, etc), mapping topics, and concepts with the highest probability of appearing in the exam.
    Immerse yourself in these strategically designed lectures and conquer the most critical aspects of the UPSC syllabus. Don’t miss the chance to level up your preparation with Dinesh sir’s expertise! Check out the playlist below and get ready to make every minute count.

    You can access the PDF of these lectures as well.


    What The Hindu opined about Civilsdaily Mentorship

    AIR 65, Pranav, IAS (Serving IAS officer, Gujrat)
    Karishma Nair, AIR 14 was also Sajal sir’s student
    best coaching for upsc in delhi
  • Moving Beyond COVID-19: Need for Contextual Understanding

    COVID-19

    Central Idea

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

    WHO Announcements on COVID-19

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

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

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

    What lessons were learned from the COVID-19 pandemic?

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

    Way forward

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

    Conclusion

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

    Mains Question

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

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    Also Read:

    Covid is no longer an Emergency: what changes?
  • The Future of the US Dollar As a World Reserve Currency

    US Dollar

    Central Idea

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

    Rise of the dollar: Historical Context

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

    What is the current status of Dollar as forex reserve?

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

    How Dollar maintained its dominance as a reserve currency?

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

    Facts for prelims

    Common Currency or Reciprocal Trading Arrangement?

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

    What are the Factors supporting the US Dollar?

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

    US Dollar

    Challenges facing the US Dollar

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

    Future of the US Dollar

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

    Facts for prelims: Concept box from civilsdaily

    What is mean by closed capital account?

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

    Conclusion

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

    Mains Question

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

    Get an IAS/IPS ranker as your personal mentor for UPSC 2024 | Schedule your FREE session and get the Prelims prep Toolkit!

    Also Read:

    The Rising Demand for De-Dollarisation

     

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