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Subject: Economics

  • South Asia, India risk squandering demographic dividend: World Bank

    Why in the News? 

    Recently, the ‘Job for Resilience Report’ was published by the World Bank. The Report talks about how the South Asia region including India is not making use of its demographic dividend.

    • The pace of job creation in the region fell well short of the growth in the working-age population, even as it projected a strong 6.0-6.1% growth for 2024-25 for the region in its South Asia region.’

    Main findings in this report:

    The South Asia’s labor markets as Emerging markets and developing economies: 

    • Declining employment ratio: South Asia’s employment weakened from 2000–23, despite a 6% post-pandemic surge. While most EMDEs remained stable, South Asia declined by 2%, with varied changes within.
    • Low employment ratios: Except for Nepal, South Asian countries have employment ratios significantly lower than other EMDEs, with South Asia’s ratio at 59%, notably lower than the 70% average elsewhere in 2023.
    • Employment weakness for men and women: In South Asia, men’s employment ratios declined over two decades, compared with other EMDEs. Women’s ratios, persistently low and half those elsewhere, primarily contribute to South Asia’s lower overall employment rates.
    • A missing engine of growth: In the 2010s, South Asia experienced a surge in labor productivity growth, which later declined below the EMDE average from 2020–23. Unlike other EMDEs, South Asia’s output growth relied heavily on labor productivity growth and working-age population expansion. However, declining employment ratios hampered output growth.

    Report on Indian Scenario:

    • Trends in employment and labor productivity: India’s employment growth in the 2010s was weak but rebounded post-pandemic. The employment ratio declined significantly until 2022 but partially recovered by 3 percentage points in 2023.
    • Migrant workers:  In India, Migrant workers returned to rural areas, and emigration from rural areas slowed, during the pandemic.5 India has the region’s second-largest share of workers in agriculture (44 per cent) after Nepal.
    • Employment composition: India’s industrial employment grows with public investments, eased labor regulations, and contract labor. The services sector, led by IT, BPO, and healthcare, thrives on a skilled workforce and digital infrastructure, limiting opportunities for unskilled labor.

    Measures to address the challenges highlighted in the Report: 

    • Skill Development Programs: Implementing extensive skill development programs to equip the workforce with the necessary skills demanded by the evolving job market, focusing on both technical and soft skills.
    • Labour Market Reforms: Continuously reviewing and refining labor regulations to strike a balance between protecting workers’ rights and fostering a conducive environment for job creation and investment.
    • Promotion of Inclusive Growth: Implementing policies aimed at promoting inclusive growth, particularly focusing on increasing women’s participation in the workforce through measures like affordable childcare, flexible work arrangements, and addressing cultural barriers.
    • Investment in Infrastructure: Continued investment in infrastructure development to facilitate the growth of industries and services, creating more employment opportunities, particularly in rural areas.
    • Enhancing Productivity: Implementing measures to enhance productivity across sectors through technological advancements, innovation, and efficient resource allocation.

    Conclusion: World Bank warns South Asia, including India, risks wasting demographic dividend due to declining employment ratios and low productivity growth. Urgent measures needed: skill development, labor reforms, inclusive growth promotion, infrastructure investment, and productivity enhancement.

    With inputs from:

    https://openknowledge.worldbank.org/server/api/core/bitstreams/4ec19c2d-65fd-4523-8020-338f0cb98523/content

  • Let’s make ₹ a global currency: PM to RBI

    Why in the news? 

    PM Modi asked the RBI to prepare a 10-year strategy to make the Indian rupee a globally “accessible and acceptable” currency and to meet the credit needs of every segment of the country

    What is Global Currency?

    A global currency refers to a single currency that is used by every country in the world. This concept involves all nations adopting the same currency for international trade and transactions

    What are the major challenges for India to make Rupeea a Global Currency?

    • Economic Stability: The Indian economy would need to demonstrate consistent stability and growth to inspire confidence among international investors and users of the currency.  
    • Liquidity in Financial Market Development:  These markets need to be deep and liquid to accommodate large volumes of international transactions denominated in INR.
    • Capital Controls: India currently has restrictions on capital flows in and out of the country. These would need to be eased to facilitate international trade and investment denominated in INR.
    • Legal and Regulatory Framework: There would need to be robust legal and regulatory frameworks in place to govern the use of the INR in international transactions, including clearing and settlement systems, as well as dispute resolution mechanisms.
    • International/ Investors Acceptance: Convincing other countries, businesses, and individuals to adopt the INR as a global currency would require concerted diplomatic efforts, as well as initiatives to promote its use in international trade and finance.
    • Currency Convertibility: Full convertibility of the INR would be necessary for it to become a global currency.

    Indian Efforts to Make Rupee a Global Currency:

    • RBI’s Roadmap for Rupee Internationalization: The RBI has published a report outlining a roadmap for the internationalization of the Rupee. This roadmap recommends actions such as including the Rupee in the Special Drawing Rights (SDR) basket, promoting its use in trade invoicing and settlement, facilitating its use in offshore markets, and developing financial products denominated in Rupees.
    • Promoting Use of Local Currencies for Cross-Border Transactions: India has been engaging in agreements with countries like the UAE to promote the use of local currencies, including the Rupee, for cross-border transactions.

    Way Forward:

    • Need for Transactions in Rupee: To be an accepted International Currency, the Indian rupee is to be freely used in transactions by residents and non-residents and as a reserve currency for global trade.
    • Need to increase the Exports: Indian Trades need to be promoted beyond the Asian region.  All export and import transactions need to be invoiced in Indian rupees.
    • Reducing the Constraints: Legal and Regulatory frameworks need to be freed to attract investors for their business profits without hampering security concerns.

    https://www.hindustantimes.com/india-news/lets-make-a-global-currency-pm-to-rbi-101711996093588.html

    https://theprint.in/opinion/indian-rupee-can-become-global-reserve-currency-but-modi-govt-must-bring-reforms-for-that/1738000/

  • 90 years of the Reserve Bank of India (RBI)

    Why in the news?

    Recently, the RBI celebrated its 90th year in Mumbai, marking a significant milestone.

    Dr. Ambedkar’s Role in the Establishment of RBI:

    • Dr. B.R. Ambedkar’s contributions were particularly notable during the Hilton Young Commission discussions in 1926, where he presented his recommendations based on his book “The Problem of the Rupee – Its Origin and Its Solution.”
    • These discussions laid the foundation for the establishment of the RBI on April 1, 1935.

    About Reserve Bank of India (RBI)

    • The RBI is the central bank and monetary authority of India.
    • It was established on April 1, 1935, under the Reserve Bank of India Act, 1934.
    • Its idea was incepted from the recommendations of the Hilton Young Commission.
    • Sir Osborne Arkell Smith, an Australian, served as the inaugural Governor.
    • He was succeeded by Sir C D Deshmukh, the first Indian to hold the position.
    • It is a centralized institution for India to effectively regulate its monetary and credit policies.
    • RBI had its initial headquarters in Kolkata, later moving permanently to Mumbai in 1937.
    • Initially, the RBI operated as a privately owned entity until its full nationalization in 1949.

    Functions and Initiatives:

    • Monetary Authority: The RBI controls the supply of money in the economy to stabilize exchange rates, maintain a healthy balance of payment, and control inflation.
    • Issuer of Currency: Sole authority to issue currency and combat circulation of counterfeit notes.
    • Banker to the Government: Acts as a banker to both the Central and State governments, providing short-term credit and financial advisory services.
    • Lender of Last Resort: Provides emergency liquidity assistance to banks during crises.
    • Custodian of Foreign Exchange Reserves: Manages foreign exchange reserves and administers the Foreign Exchange Management Act, 1999 (FEMA).
    • Regulator and Supervisor of Payment and Settlement Systems: Oversees payment and settlement systems in the country, ensuring efficiency and security.
    • Credit Control and Developmental Role: Promotes credit availability to productive sectors and fosters financial infrastructure development.

    Transformative Reforms initiated by the RBI

    • Green Revolution (1960s-1970s): Supported agricultural growth through credit facilities and rural credit accessibility enhancements.
    • Banks Nationalization (1969): Aimed at aligning banking sector objectives with national policy goals.
    • Priority Sector Lending (1972): Ensures timely credit flow to key sectors of the economy.
    • Economic Liberalization (1991): Opened up the economy to global markets, fostering market-oriented growth.
    • Unified Payment Interface (UPI), 2016: Enabled seamless and instant transactions across India.
    • Inflation Targeting Framework, 2016: Set inflation targets to guide monetary policy decisions.
    • Bharat Bill Payment System (BBPS), 2019: Launched an integrated bill payment system for customer convenience.
    • Aadhar-based eKYC (2019): Streamlined customer authentication processes for financial institutions.
    • Emergency Credit Line Guarantee Scheme (ECLGS), 2020: Provided credit assistance to SMEs affected by the COVID-19 pandemic.
    • Central Bank Digital Currency (2022): RBI is actively exploring the issuance of a CBDC known as e₹ (digital Rupee).
    • Cryptocurrency Regulation (2022): RBI has maintained a consistent stance against cryptocurrencies, advocating for an outright ban on them (after China and El Salvador imposed the complete ban). In 2020, the Supreme Court of India removed the ban on cryptocurrencies imposed by RBI.
    • Payment Vision 2025 Document (2023): The goals and vision of the RBI, are categorised in the Payments Vision 2025 documents into five anchor goalposts – Integrity, Inclusion, Innovation, Institutionalisation and Internationalisation.

     

    PYQ:

    2012:

    The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following?

    1.    Banks retain their deposits with the RBI.

    2.    The RBI lends funds to the commercial banks in times of need.

    3.    The RBI advises the commercial banks on monetary matters.

    Select the correct answer using the codes given below:

    (a) 2 and 3 only

    (b) 1 and 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    2013: Consider the following statements: ​

    1.    The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.​

    2.    Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in public interest.​

    3.    The Governor of the RBI draws his power from the RBI Act.​

    Which of the above statements are correct?​

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

  • Paradip Port: India’s Leading Major Port in Cargo Handling

    Why in the news?

    Paradip Port in Odisha has made history by becoming India’s largest major port in terms of cargo volumes, surpassing Deendayal Port Authority in Gujarat during FY24.

    About Paradip Port

    • Paradip Port is situated at the confluence of the Mahanadi River and the Bay of Bengal in the Jagatsinghpur district of Odisha.
    • It has a natural deep-water harbor, allowing it to accommodate large vessels and handle bulk cargo efficiently.
    • The port was commissioned in 1966 to serve as a gateway for the maritime trade of eastern India.
    • Paradip Port Trust, a statutory body under the Major Port Trusts Act, 1963, manages and operates the port.

    Key Features of the Port

    • Infrastructure: It is equipped with modern facilities for handling a variety of cargo, including dry bulk, liquid bulk, containerized cargo, and general cargo.
    • Deep-Draft Port: The port has extensive berthing facilities and cargo-handling equipment capable of handling millions of tonnes of cargo annually.
    • Strategic Importance: Paradip Port serves as a vital link for the export and import trade of eastern and central India, contributing significantly to the region’s economic development.
    • Connectivity: The port is well-connected to major cities and industrial centers in Odisha and neighbouring states through road and rail networks.

    Key Feats Achieved

    • Cargo Throughput: Paradip Port achieved a record-breaking cargo throughput of 145.38 million metric tonnes (MMT) in FY2023-24, surpassing Deendayal Port.
    • Coastal Shipping Traffic: The port recorded the highest-ever coastal shipping traffic of 59.19 million metric tonnes, showcasing a growth of 1.30% over the previous year.
    • Thermal Coal Handling: Thermal coal shipping reached 43.97 million metric tonnes, marking a growth of 4.02% over the previous year.
    • Revenue Growth: Operating revenue crossed Rs 2,300 crore in FY24, reflecting a notable increase of 14.30% compared to the previous fiscal.

    Driving Factors of this Success

    • Enhanced Operational Efficiency: Mechanised coal handling plant operations were optimized, resulting in the highest handling of thermal coal at 27.12 million tonnes.
    • Productivity Improvement: Paradip Port improved berth productivity to 33,014 MT, the highest among all ports, showcasing a growth of 6.33% over the previous financial year.
    • Rake Handling and Ship Movements: The port handled 21,665 rakes and 2,710 ships during FY24, registering significant year-on-year growth in both metrics.

    Future Prospects

    • Capacity Expansion: With a current capacity of 289 million tonnes, Paradip Port is poised to exceed 300 million tonnes capacity in the next 3 years with the commissioning of the Western Dock project.
    • Strategic Location: Located near a mineral-rich hinterland, Paradip Port remains a strategic asset for India’s maritime trade and economic growth.

    PYQ:

    2017:

    What is the importance of developing Chabahar Port by India?

    (a) India’s trade with African countries will enormously increase.

    (b) India’s relations with oil-producing Arab countries will be strengthened.

    (c) India will not depend on Pakistan for access to Afghanistan and Central Asia.

    (d) Pakistan will facilitate and protect the installation of a gas pipeline between Iraq and India.

     

    Practice MCQ:

    It is situated at the confluence of the Mahanadi River and the Bay of Bengal. It has a natural deep-water harbor, allowing it to accommodate large vessels and handle bulk cargo efficiently.

    Which sea port in Odisha is being talked about by the above description?

    (a) Haldia

    (b) Gopalpur

    (c) Belikeri

    (d) Paradip

  • SEBI unveils SCORES 2.0 to Strengthen Investor Redressal

    Why in the news?

    The Securities and Exchange Board of India (SEBI) unveiled the upgraded version of the SEBI Complaint Redress System (SCORES 2.0) marking a significant advancement in the investor complaint redressal mechanism in the securities market.

    About Securities and Exchange Board of India (SEBI)

     

    • SEBI is the regulatory authority overseeing India’s securities and commodity markets.
    • Established in 1988 as a non-statutory body, SEBI was granted statutory powers with the enactment of the SEBI Act 1992 by the Indian Parliament.
    • It operates under the purview of the Ministry of Finance.
    • SEBI’s structure includes a chairman nominated by the GoI, members from the Union Finance Ministry, the Reserve Bank of India, and others.
    • Its headquarters is in Mumbai, with regional offices in Ahmedabad, Kolkata, Chennai, and Delhi.

    What is SCORES 2.0?

    • SCORES 2.0 refers to the upgraded version of the SEBI Complaint Redress System (SCORES) launched by the Securities and Exchange Board of India (SEBI).
    • SCORES is an online platform designed to facilitate the lodging and resolution of complaints by investors in the securities market.
    • Complaints can be lodged for any issues covered under the:
    1. SEBI Act, 1992
    2. Securities Contract Regulation Act, 1956
    3. Depositories Act, 1966
    4. Companies Act, 2013

    Complaints on SCORES 2.0 can be launched against:

    1. Listed companies / registrar & transfer agents
    2. Brokers / stock exchanges
    3. Depository participants / depository
    4. Mutual funds
    5. Portfolio Managers
    6. Other entities (KYC Collective investment scheme, Merchant banker, Credit rating, Foreign institutional investor etc.)

    Features of SCORES 2.0:

    1. Reduced Timelines: SCORES 2.0 implements reduced and standardized timelines for addressing investor grievances, ensuring a maximum redressal period of 21 calendar days from the date of complaint receipt.
    2. Auto-Routing and Escalation: The new version incorporates an auto-routing mechanism to swiftly direct complaints to the relevant regulated entity. Additionally, it introduces a two-tier review process, with complaints undergoing review first by the designated body and subsequently by SEBI if investors remain dissatisfied with the resolution provided.
    3. Integration with KYC Database: SCORES 2.0 is seamlessly integrated with the KYC Registration Agency database, streamlining the registration process for investors onto the platform.
    4. Enhanced Efficiency: Through features such as auto-routing, auto-escalation, and stricter monitoring protocols, SCORES 2.0 aims to enhance the efficiency and effectiveness of the investor complaint redressal process.

    Significance of SCORES 2.0

    • Improved Regulatory Oversight: By introducing stricter timelines and oversight mechanisms, SEBI aims to enhance regulatory efficiency and transparency, fostering a more accountable and responsive market ecosystem.
    • Technological Advancements: The integration of advanced technological features, such as auto-routing and KYC database linkage, reflects SEBI’s proactive approach towards harnessing digital innovations to modernize regulatory processes and services.

    PYQ:

    2013:

    The product diversification of financial institutions and insurance companies, resulting in overlapping of products and services strengthens the case for the merger of the two regulatory agencies, namely SEBI and IRDA. Justify.

     

    Practice MCQ:

    Consider the following statements about the SCORES 2.0 Platform recently launched by the Securities and Exchange Board of India (SEBI):

    1.    It is an online platform designed to facilitate the lodging and resolution of complaints by investors in the securities market.

    2.    It addresses complaints pertaining to the SEBI Act, 1992 only.

    3.    It ensures a maximum redressal period of 21 calendar days.

    How many of the above statements is/are correct?

    (a) One

    (b) Two

    (c) Three

    (d) None
  • [2 April 2024] The Hindu Op-ed: The PMLA — a law that has lost its way

    [2 April 2024] The Hindu Op-ed: The PMLA — a law that has lost its way

    PYQ Relevance:Mains: 

    Q) Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels. (UPSC CSE/2021) 

    Q) Analyze the complexity and intensity of terrorism, its causes, linkages and obnoxious nexus. Also suggest measures required to be taken to eradicate the menace of terrorism. (UPSC CSE/2021) 

    Q) Money laundering poses a serious security threat to a country’s economic sovereignty. What is its significance for India and what steps are required to be taken to control this menace?  (UPSC CSE/2013) 

    Note4Students: 

    Prelims: Polity; Prevention of Money Laundering Act  of 2002;

    Mains: Polity; Internal Security; Prevention of Money Laundering Act  of 2002;

    Mentor comments: The Enormous volume of black money generated through International Drug Trafficking poses a grave threat to our Indian economy as well as many other countries too. We all are awared that the black money is generated through the flourishing of the drug trade and then it is  integrated with the legitimate and domestic economy that can destabilize the world and endanger the integrity and sovereignty of various Nations. Hence, today we are going to discuss some major ongoing issue which is aligned with same context – the issue with the Prevention of Money Laundering Act  of 2002.

    Let’s learn. 

    —

    Why in the News?

    The Prevention of Money Laundering Act (2002),  includes a large number of offenses in its schedule that have nothing to do with the original purpose of this law. So, there is an urgent need to have an effective law with the rising of newer challenges in Drug Money Laundering offenses.

    The Background of the Law:

    • Since the mid-1980s, there has been global concern over the proceeds of criminal activities such as drug trafficking being ‘laundered’ or used in financing terrorism. 
    • The UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances adopted in the Vienna Convention (1988) was the first treaty that called upon nations to adopt domestic laws to combat drug trafficking. As part of these laws, countries were asked to prohibit the conversion or transfer of property gained through dealing in narcotics to conceal its illicit origin. 
    • The Financial Action Task Force (FATF) was established at the G-7 Summit in Paris in 1989 in response to mounting concern over money laundering. The Task Force made recommendations from time to time to strengthen laws on the subject. 
    • The UN Convention against Transnational Organized Crime of 2000 (Palermo Convention) also advocated legislative and other measures to combat organized crime, and specifically called for ‘criminalizing the laundering of proceeds of crime’

    About the Prevention of Money Laundering Act (PMLA), 2002:

    • Enactment of PMLA in India:
      • Article 253: This gave the Union Parliament the exclusive power to make laws for any part of India’s territory to implement any treaty, agreement or convention involving one or more countries.
      • Seventh Schedule: Item 13 (Communication which is subject to provisions in List I and III) in the Union list of the Seventh Schedule of the Constitution is specific on this point. 
    • It was enacted in January 2003 and seeks to combat money laundering in India under three major domains:
      • Preventing and controlling Money Laundering
      • Confiscating and seizing the property obtained from the laundered money
      • Issues that are directly connected with Money Laundering in India.
    • Section 3 of the PMLA defines the offense of money laundering as whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of the offense of money-laundering.
    • The Act was amended by the Prevention of Money Laundering (Amendment) Act, 2009 and by the Prevention of Money Laundering (Amendment) Act, 2012. Recently, the PMLA was amended through the Finance Act, 2015, Finance Act, 2018 and Finance Act, 2019.

    Why PMLA has lost its way? 

    • Draconian Nature: The provisions contained are now being used in other scheduled offenses too without mitigating their rigor. 
    • Redundant Law: The various amendments made in this Act at different times bloated the schedule offenses which now contain such offenses that are either ordinary offenses listed in the IPC or for which there are special laws in force.
      • For Example, the Prevention of Corruption Act, 1988 which is aimed at curbing corruption among public servants. This Act was added to the schedule of offenses in 2009. The PMLA now applies with all its rigor to public servants also. Thus, a public servant charged with corruption and a hard-core drug trafficker are treated alike.
    • Non-aligned with Fundamental Principles: A very disturbing thing about the PMLA is that an accused under this law is presumed to be guilty until proven innocent. A fundamental principle of Anglo-Saxon jurisprudence is that a person is presumed innocent until proven guilty. 
    • Stringent Bail Provisions: An accused will be denied bail by the entire hierarchy of courts because the bail provision contained in section 45 of the PMLA says that a judge can give bail only when he is satisfied that the accused is innocent. 
    • Legislative vs. Judiciary Nexus: The bail provision is invested with a lot of political significance in present-day India. The Act originally aimed to curb the laundering of black money and to save the economy from being destabilized. But the less serious offenses are also under purview of PMLA. The learned judges nearly said that the inclusion of a particular offense in the schedule comes within the domain of the legislative policy.
    Judicial Stand on the Bail Provisions:

    Gudikanti Narasimhulu And Ors vs Public Prosecutor (1978): The judicial perspective on bail was laid out by Justice V.R. Krishna Iyer (Andhra Pradesh HC) where it said that “Personal liberty is deprived when bail is refused, which is too precious value of our constitutional system recognized under Article 21”.

    Nikesh Tarachand Shah vs Union of India (2018): The PMLA Act (Section 45) was held unconstitutional by a two-judge Bench of the Supreme Court of India as it was violating Article 14 and Article 21.  

    Vijay Madanlal Choudhary vs Union of India (2022): Parliament, with great alacrity, restored this provision with certain amendments which was upheld by a three-judge Bench headed by Justice A.M. Khanwilkar in 2022. The top court held that this provision is reasonable and has a direct nexus with the purposes and objects of the PMLA Act. 

  • Solar surge: Moving away from imported solar panels

    Why in the news? 

    The government is finally bringing into effect the policy of an Approved list of Models and Manufacturers (ALMM) that will discourage solar power project developers from relying on imported panels. 

    About Approved Models and Manufacturers of Solar Photovoltaic Modules Order, 2019:

    • Aim: To boost domestic manufacturing of solar panels by registering only those made with domestically manufactured cells, wafers, and polysilicon.
    • Compulsory Registration: The order mandates compulsory registration for solar PV module and cell manufacturers, ensuring they meet certain quality and production standards.
    • Lists: LIST-I for solar PV modules and LIST-II for solar PV cells.
      • Only listed models and manufacturers in these lists are considered approved for use in various government projects and schemes.
    • Eligibility Criteria: To be included in the lists, manufacturers must undergo inspections and meet specific criteria set by the National Institute of Solar Energy (NISE) to ensure the products are genuinely manufactured and not imported.
    • This order ensures the reliability of solar PV products used in installations, promotes domestic manufacturing, and aligns with the government’s initiatives for renewable energy adoption and energy security.

    Efforts made by the Government to promote domestic Solar Manufacturing:

    • Import Restrictions: The creation of the Approved Models and Manufacturers list was aimed at restricting imports from China, which dominates a significant portion of the global solar supply market.
    • Ambitious Renewable Energy Targets: India aims to source about 500 GW of its electricity from non-fossil fuel sources by 2030, with at least 280 GW coming from solar power. This necessitates adding at least 40 GW of solar capacity annually until 2030. So there is need to focus on indegenous solar project

    Challenges ahead:

    • Unrealistic Targets: Despite ambitious targets, India’s solar capacity additions have been relatively low in recent years, attributed in part to the COVID-19 pandemic. The country aims to ramp up installations to between 25 GW and 40 GW annually.
    • Reliance on Imports: A significant fraction of India’s solar installations is met by imports, which affects domestic panel manufacturers who must pay for government certification but lose orders to cheaper Chinese panels. For example surge in Solar panel import in  FY 24 around $1,136.28 million  from FY23 imports $943.53 million

    Conclusion: India’s ALMM policy aims to boost domestic solar manufacturing, aligning with ambitious renewable energy targets. Address challenges like meeting targets and reducing reliance on imports through strategic planning and support.

    Mains PYQ 

    Q Describe the benefits of deriving electric energy from sunlight in contrast to conventional energy generation. What are the initiatives offered by our government for this purpose? (UPSC IAS/2020)

    https://economictimes.indiatimes.com/industry/renewables/how-india-became-a-frontrunner-in-the-global-renewable-energy-market/articleshow/100271905.cms?from=mdr

    https://mnre.gov.in/approved-list-of-models-and-manufacturers-almm/

    https://pib.gov.in/PressReleasePage.aspx?PRID=1944075

    https://energy.economictimes.indiatimes.com/news/renewable/indias-solar-panel-imports-set-to-remain-higher-in-fy24/106217488#:~:text=During%20the%20initial%20six%20months,million%2C%20according%20to%20Eninrac%20Consulting

  • UNCTAD Report Highlights Shifts in India’s Trade Relations

    What is the news?

    • The United Nations Conference on Trade and Development (UNCTAD) Global Trade Report revealed an evolving trade landscape for India, marked by increased reliance on China and the European Union (EU).

    About UNCTAD

    • UNCTAD is a permanent intergovernmental body established by the United Nations General Assembly in 1964.
    • It is part of the UN Secretariat.
    • The UNCTAD Conference ordinarily meets once in four years.
    • It reports to the UNGA and the Economic and Social Council, but has its own membership, leadership and budget.
    • It is also a part of the United Nations Development Group.
    • It supports developing countries to access the benefits of a globalized economy more fairly and effectively.
    • Reports published by the UNCTAD are-
    1. Trade and Development Report
    2. World Investment Report
    3. Technology and Innovation Report
    4. Digital Economy Report

    Membership:

    • UNCTAD’s membership consists of all 195 member states of the United Nations.
    • India is an active member. The second UNCTAD Conference took place in New Delhi, India in 1968.

    Key Highlights of the Report:

    1. Key Findings on India
    • Trade Trends: India’s trade dependence on China and the EU rose by 1.2%, while reliance on Saudi Arabia declined by 0.6%.
    • Factors: This shift occurred amidst supply chain disruptions caused by the pandemic and the Russia-Ukraine conflict, leading to record-high food and fuel prices.
    • Policy Measures: Despite efforts to reduce dependency on China through initiatives like the Production-Linked Incentive (PLI) scheme and Quality Control Orders (QCOs), India’s trade relations with China strengthened.
    1. Insights from the Report
    • Stable Proximity: Geographical proximity of international trade remained relatively constant, indicating minimal near-shoring or far-shoring trends.
    • Political Proximity: However, there was a noticeable rise in the political proximity of trade, favouring countries with similar geopolitical stances.
    • Concentration of Trade: Global trade increasingly favored major trade relationships, although this trend softened towards the end of 2023.
    • Sectoral Trends: Most sectors experienced a decline in trade value, except for pharmaceuticals, transportation equipment, and electric cars.
    • Global Forecast: Global merchandise trade is expected to contract by 5% in 2023, with services trade projected to gain 8%.
    1. Impact of Russia-Ukraine Conflict
    • Shifts in Trade: The ongoing conflict led to a surge in Russia’s trade dependence on China by 7.1% while decreasing reliance on the EU by 5.3%.
    • Oil Trade: Russian oil shifted from the EU to China and India, with China becoming a significant trade partner for Russia.
    • US Trade Dynamics: The US managed to reduce reliance on China by 1.2% in 2023, while increasing dependence on the EU and Mexico.

    PYQ:

    The Global Infrastructure Facility is a/an: (2017)

    (a) ASEAN initiative to upgrade infrastructure in Asia and financed by credit from the Asian Development Bank.

    (b) World Bank collaboration that facilitates the preparation and structuring of complex infrastructure Public-Private Partnerships (PPPs) to enable mobilization of private sector and institutional investor capital.

    (c) Collaboration among the major banks of the world working with the OECD and focused on expanding the set of infrastructure projects that have the potential to mobilize private investment.

    (d) UNCTAD-funded initiative that seeks to finance and facilitate infrastructure development in the world.

     

    Practice MCQ:

    With reference to the United Nations Conference on Trade and Development (UNCTAD), consider the following statements:

    1. It is a permanent intergovernmental body established by the United Nations General Assembly.

    2. It is part of the UN Secretariat.

    3. India has never hosted the UNCTAD Conference.

    How many of the above statements is/are correct?

    (a) One

    (b) Two

    (c) Three

    (d) None

  • Tamil Nadu accounts for 30% of India’s electronics exports

    Why in the news? 

    Nearly 40% of India’s smartphone shipments over the past two fiscal years originated from a single district Kancheepuram.

    Context 

    • In FY23, Tamil Nadu emerged as India’s foremost exporter of electronic goods, contributing 30% to the country’s total electronic goods exports in FY24.
    • Historically, the state lagged behind Uttar Pradesh and Karnataka in this sector until FY22.
    • However, in recent years, Tamil Nadu has experienced consistent growth in electronic goods exports, unlike other states where figures have either declined or remained static.

     Chart 1 shows the electronic goods exported from Tamil Nadu in $ billion, year-wise.

    • Between April 2023 and January 2024, Tamil Nadu exported electronic goods valued at over $7.4 billion.

    Chart 2 shows the exports of electronic goods of the top five States in India in $ billion, year-wise

    • In FY24, Tamil Nadu’s exports exceeded the combined exports of Uttar Pradesh and Karnataka, which totaled $6.7 billion during that period.
    • Uttar Pradesh and Karnataka were ranked second and third, respectively, in terms of electronic goods exports.
    • Gujarat and Maharashtra, also among the top five exporting states, have experienced stagnant growth in recent years.

    Chart 3 shows the commodity wise share in total exports from India for FY24 (till February) in $ billion

    • Engineering goods were the dominant category of exports from India during the specified period, with a total value of $98 billion.
    • Petroleum products followed closely behind, with exports valued at $78 billion.
    • Gems and jewellery constituted another significant export category, with a total export value of $30 billion.
    • Electronics goods were also notable, although they ranked lower compared to other categories, with exports totaling $25 billion. In FY18, electronics goods were not among the top 10 most exported commodities from India.

     Biggest markets

    • Top most importor of India’s Electronic goods: The United States and the United Arab Emirates (UAE) are the largest markets for India’s electronic goods export. In FY24 (up to February), the U.S. accounted for approximately 35% of India’s electronic goods exports, amounting to $8.7 billion, while the UAE accounted for 12% with $3 billion.
    • Other countries share:The Netherlands and the United Kingdom (U.K.) each held a share of about 5% in India’s electronic goods exports.
    • The primary destination : Since FY21, the United States has consistently been the primary destination for India’s electronics exports, with its share increasing significantly in recent years.

    Conclusion

    Tamil Nadu’s emergence as a key electronics exporter, with 30% of India’s exports, is highlighted. Kancheepuram district’s significant role, alongside Tamil Nadu’s surpassing of Uttar Pradesh and Karnataka, underscores its growth in electronic goods exports.

     

    Mains PYQ

    Q  Can the strategy of regional-resource based manufacturing help in promoting employment in India? (UPSC IAS/2019) 

    Q Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports.(UPSC IAS/2017)

  • Recently Awarded GI Tags

    Why in the news?

    What is a GI Tag?

    • A GI is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Nodal Agency: Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry
    • India, as a member of the World Trade Organization (WTO), enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 w.e.f. September 2003.
    • GIs have been defined under Article 22 (1) of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
    • The tag stands valid for 10 years and can be renewed.

    Various GI Tags Awarded:

    Details
    Bihu Dhol (Assam) Traditional drum used during Bihu festivals
    Jaapi (Assam) Bamboo headgear worn in rural Assam
    Sarthebari metal craft (Assam) Traditional metal craft producing utensils and artifacts
    Mishing handloom products (Assam) Handwoven textiles including shawls and sarees
    Asharikandi terracotta craft (Assam) Terracotta pottery and decorative items
    Pani Meteka craft (Assam) Brass and copper utensils adorned with intricate designs
    Bodo Dokhona (Assam) Traditional attire of Bodo women
    Bodo Eri silk (Assam) Silk fabric produced from eri silkworms, known for its soft texture and eco-friendly production
    Bodo Jwmgra (Assam) Traditional scarf worn by Bodo community members
    Bodo Gamsa (Assam) Traditional dress of Bodo men
    Bodo Thorkha (Assam) Traditional musical instrument made from bamboo or wood
    Bodo Sifung (Assam) Long flute used in traditional Bodo music
    Banaras Thandai (Uttar Pradesh) Traditional drink made from milk, nuts, seeds, and spices
    Banaras Tabla (Uttar Pradesh) Pair of drums used in classical Indian music
    Banaras Shehnai (Uttar Pradesh) Traditional wind instrument used in Indian classical music
    Banaras Lal Bharwamirch (Uttar Pradesh) Red chili grown in the Banaras region
    Banaras Lal Peda (Uttar Pradesh) Popular Indian sweet made from condensed milk and sugar
    Pachra-Rignai (Tripura) Traditional dress worn by women, consisting of a wrap-around skirt and blouse
    Matabari Peda (Tripura) Sweet delicacy made from condensed milk, sugar, and ghee
    Garo Textile weaving (Meghalaya) Traditional weaving craft practiced by the Garo tribe
    Lyrnai Pottery (Meghalaya) Traditional pottery making characterized by unique designs and techniques
    Chubitchi (Meghalaya) Traditional dish made with meat, local herbs, and spices

     

    PYQ:

    Which of the following has/have been accorded ‘Geographical Indication’ status? (2015)

    1.    Banaras Brocades and Sarees

    2.    Rajasthani Daal-Bati-Churma

    3.    Tirupathi Laddu

    Select the correct answer using the codes given below:

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 only 3 only

    (d) 1, 2 and 3

     

    India enacted The Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations to (2016):

    (a) ILO

    (b) IMF

    (c) UNCTAD

    (d) WTO

     

    Practice MCQ:

    Consider the following statements about the Geographical Indications (GI) Tag:

    1.    The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry is the nodal agency for GI.

    2.    A GI tag stands valid for 10 years and cannot be renewed.

    Which of the given statements is/are correct?

    (a) Only 1

    (b) Only 2

    (c) Both 1 and 2

    (d) Neither 1 nor 2