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Subject: Economics

  • Centre hikes LPG Subsidy for Ujjwala Beneficiaries to â‚č300 per Cylinder

    Central Idea

    • The Union Cabinet has approved an increase in the subsidy provided on LPG cylinders under the Ujjwala scheme, raising it from â‚č200 to â‚č300.
    • The subsidy increase applies to up to 12 refills per year for beneficiaries.

    Why such move?

    • The decision to enhance the subsidy comes ahead of crucial Assembly elections in five states: Madhya Pradesh, Rajasthan, Telangana, Chattisgarh, and Mizoram.

    Pradhan Mantri Ujjwala Yojana (PMUY)

    • PMUY, introduced by the Ministry of Petroleum and Natural Gas, aims to provide clean cooking fuel, such as LPG, to rural and disadvantaged households, reducing their reliance on traditional fuels like firewood, coal, and cow dung cakes.
    • Phases of PMUY:
    1. Phase I: Launched on May 1, 2016, with a target to release 8 Crore LPG connections by March 2020, achieving a significant increase in LPG coverage.
    2. Ujjwala 2.0: This phase aimed to release an additional 1 crore LPG connections, a target achieved in January 2022, subsequently expanded to release an additional 60 lakh LPG connections under Ujjwala 2.0.

    Key Features

    • Provides â‚č1600 financial support for each LPG connection to Below Poverty Line (BPL) households.
    • Offers deposit-free LPG connections, including the first refill and a free hotplate for beneficiaries.
    • Benefits for beneficiaries include:
    1. Eligible beneficiaries receive a free LPG connection.
    2. Subsidy on the first six refills of 14.2 kg cylinders or eight refills of 5 kg cylinders.
    3. Option to use EMI facility for stove and first refill costs.
    4. Opportunity to join the PAHAL scheme for direct subsidy transfers to bank accounts.

  • [pib] Positive Indigenisation List (PIL) and Swavlamban 2.0

    Positive Indigenisation List

    Central Idea

    • Defence Minister unveiled the fifth Positive Indigenisation List (PIL) consisting of 98 items to be procured by the armed services from domestic suppliers over specified timelines.
    • Additionally, he launched the Indian Navy’s updated indigenisation roadmap, known as Swavlamban 2.0.

    What is Positive Indigenisation List (PIL)?

    • The Positive Indigenisation List consists of items that can only be procured by the Indian armed forces from domestic manufacturers, including those from the private sector or DPSUs.
    • This move is part of the government’s efforts to reduce the reliance on imported arms and promote indigenous manufacturing of defense equipment.
    • This concept was rolled out in the Defence Acquisition Procedure (DAP) 2020.
    • It emphasizes import substitution of components for major systems, vital platforms, weapon systems, sensors, and munitions that are expected to translate into firm orders within the next five to ten years.

    Items on the Indigenisation List

    • Diverse Range: The PIL includes a wide range of items such as futuristic infantry combat vehicles, articulated all-terrain vehicles, various types of unmanned aerial vehicles, precision kill systems for artillery, test equipment for guided weapon systems, radars, armour plates for helicopter cabins, automated mobile test systems, and more.
    • Strategic Importance: These items are crucial for bolstering the country’s defence capabilities and reducing reliance on foreign sources. They contribute to India’s quest for self-reliance in the defence sector.

    Swavlamban 2.0: Industry Challenges and Initiatives

    • 76 Challenges: At the Swavlamban 2.0 seminar, Defence Minister Singh also launched 76 challenges for industry participants under the 10th Defence India Start-up Challenges (DISC-10) and Innovations for Defence Excellence (iDEX).
    • Global Collaboration: The event marked the launch of two INDUS X challenges, a collaboration between iDEX and the U.S. Department of Defence, showcasing India’s commitment to fostering global partnerships for technological advancement.

    Vision of Self-Reliance

    • Navy’s Commitment: Indian Navy is committed to becoming fully self-reliant by 2047, aligning with India’s 100th Independence anniversary.
    • Strategic Importance: The COVID-19 pandemic and global conflicts have underscored the significance of self-reliance, especially in the defence sector. Dependence on external sources for defence needs is considered a strategic vulnerability that needs to be addressed.
    • Achievements: The Navy’s efforts in promoting indigenous innovation have yielded significant results, including technological agreements, partnerships with MSMEs and start-ups, and an expanding ecosystem of defence suppliers.

    Way forward

    • Future Goals: The Indian Navy has set ambitious targets to develop futuristic technologies in collaboration with domestic MSMEs and start-ups, aligning with its commitment to self-reliance.
    • Expanding Ecosystem: The Navy’s initiatives have brought over 100 new firms into the defence ecosystem, with procurement orders already signed and more in the pipeline.
    • A Strong Bharat: The vision is to build a force that represents a strong and developed Bharat, utilizing unique concepts and capabilities made in India for India.

  • Manufacturing PMI eased to 5-month low

    Central Idea

    • India’s manufacturing sector experienced a slowdown in September, reaching a five-month low, according to the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI).
    • The PMI eased to 57.5 from August’s 58.6. A reading of 50 reflects no change in activity levels.

    Purchasing Managers’ Index (PMI)

    • PMI is an indicator of business activity — both in the manufacturing and services sectors.
    • It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
    • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
    • The PMI is compiled by IHS Markit based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.

    How is the PMI derived?

    • The PMI is derived from a series of qualitative questions.
    • Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.

    How does one read the PMI?

    • A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
    • Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
    • If the figure is higher than the previous month’s then the economy is expanding at a faster rate.
    • If it is lower than the previous month then it is growing at a lower rate.

    Analysis and Outlook

    • Mild Slowdown: The manufacturing industry in India showed mild signs of a slowdown in September, primarily due to a softer increase in new orders, which tempered production growth.
    • Positive Outlook: Despite the slowdown, both demand and output saw significant improvements, and manufacturers maintained a strongly positive outlook for production.
    • Job Creation and Input Stocks: Upbeat forecasts continued to drive job creation efforts and initiatives to replenish input stocks, indicating a favourable trajectory for the Indian manufacturing industry.
    • Concerns: However, the solid increase in output charges, despite easing cost pressures, could limit sales in the coming months, prompting caution.

  • India’s milk crisis

    What’s the news?

    • India, the world’s leading milk producer for decades, faces a concerning dilemma as milk prices soar to all-time highs.

    Central Idea

    • India is grappling with an unprecedented milk crisis, despite accounting for a quarter of global milk production. In 2021–22, the country produced a staggering 221 million tonnes of milk, as reported by the UN Food and Agriculture Organization (FAO). However, the situation on the ground paints a different picture, with milk prices reaching record highs.

    The price surge

    • The Department of Consumer Affairs reveals a sharp 18.08 percent increase in the average retail price of milk over the past two years.
    • A liter of milk, once priced at Rs 49.18 in 2021, now costs upwards of Rs 58. This dramatic price rise, commencing in 2022–23, has been the chief driver of food inflation across the nation, as highlighted by the National Bank for Agriculture and Rural Development (NABARD).

    Underlying factors behind India’s milk crisis

    • Lumpy Skin Disease (LSD):
    • One of the primary factors contributing to the milk crisis is the outbreak of lumpy skin disease (LSD) among cattle and buffaloes.
    • This disease, first reported in Odisha in 2019, has since spread to almost all states in India. Between July 2022 and 2023, more than 3.2 million cattle and buffaloes contracted LSD, with 0.2 million of them succumbing to the disease.
    • LSD has not only caused significant mortality but has also led to a substantial drop in milk production, ranging from 20 to 50 percent, depending on the breed.
    • COVID-19 Pandemic Impact:
    • The COVID-19 pandemic had a severe impact on India’s dairy sector. During the lockdowns, many farmers reduced the size of their herds in response to disrupted milk demand.
    • This exodus of dairy farmers, even during the flush season from October to March, when animals naturally produce more milk, has affected the country’s overall milk production.
    • Fodder Inflation:
    • Dairy farmers who continued their operations despite the pandemic faced an acute shortage of dry fodder in 2022. This shortage was partly caused by a decline in wheat stocks due to an unusually hot March in 2022.
    • As a result, farmers have been grappling with steadily rising fodder prices, affecting both the quantity and quality of the feed provided to their cattle.
    • Changing Preferences:
    • Dairy farmers are increasingly opting for crossbred cows over buffaloes.
    • While buffalo milk typically has a higher fat content (7–10 percent), crossbred cows have a higher milk yield, averaging 8.52 kg per day in 2021–22, compared to a buffalo’s average of 5.96 kg per day.
    • This shift in preference has led to a significant increase in the population of crossbred cows, while the population of female buffalo and indigenous cows has grown at a slower rate.
    • Cost Considerations:
    • Buffaloes tend to be more expensive than cows, with the average cost of a good-breed buffalo ranging from Rs 1.5 lakh to Rs 3 lakh.
    • In cases where dairy farming experiences losses, it becomes challenging for farmers to recover their investments.
    • Additionally, buffaloes have been perceived as less productive compared to cows in certain scenarios, particularly when it comes to maintaining consistent milk production.

    Hidden Crisis: Artificial Insemination

    • Role of Artificial Insemination:
    • Artificial insemination plays a pivotal role in enhancing milk production in India.
    • While the adoption rate of this technology in the country is around 30 percent, it has led to the development of high-yield crossbreeds and improved indigenous breeds.
    • These high-yield animals significantly contribute to the overall growth of the dairy sector.
    • Missed artificial insemination:
    • The COVID-19 pandemic and associated lockdowns and restrictions had a profound impact on the practice of artificial insemination.
    • Between 2020 and 2022, as lockdowns and movement restrictions were imposed, India likely missed conducting approximately 16.84 million artificial insemination.
    • This represents a significant setback in efforts to improve breed productivity.
    • Impact on Milk Production:
    • The missed artificial insemination have had a cascading impact on milk production.
    • Before the pandemic, India was steadily increasing its adoption of artificial insemination, with over 80 million insemination conducted in 2019–20.
    • However, the subsequent drop in insemination numbers means that India potentially missed the chance to add 2.97 million high-yield female cattle to its livestock inventory between 2020 and 2022.
    • Economic Consequences:
    • Each missed artificial insemination results in both milk loss and additional maintenance costs until a successful conception occurs.
    • The estimated loss per missed conception is approximately Rs 7,948.50. This loss quickly accumulates, resulting in a national loss of Rs 824 crore in just the month of April 2020.

    Far-reaching Consequences of India’s Milk Crisis

    • Economic Impact: The sharp rise in milk prices coupled with supply constraints can lead to reduced incomes for dairy farmers, potentially pushing many into financial distress.
    • Food Inflation: As milk and dairy products are dietary staples for a considerable portion of the population, their increased prices can strain household budgets and lead to higher food costs for consumers.
    • Nutrition and Food Security: Milk is a vital source of nutrition, particularly for children. Rising milk prices can reduce access to this nutritious food source for vulnerable populations, potentially affecting the nutritional status and food security of millions.
    • Rural Livelihoods: Dairy farming serves as a primary source of income for numerous rural households in India. The ongoing crisis directly impacts the livelihoods of these families, causing economic instability and necessitating alternative income sources.
    • Agricultural Productivity: Dairy farming often complements crop production, so disruptions in the dairy sector can have ripple effects on overall agricultural performance.
    • Global Trade: As one of the world’s major milk producers, India’s domestic dairy challenges can have implications for the global dairy market. Disruptions in production and trade can impact international dairy prices and trade dynamics.

    Way forward

    • Disease Control: Implement robust disease control measures, including vaccination programs, quarantine protocols, and veterinary support, to prevent the further spread of diseases like lumpy skin disease (LSD) affecting livestock.
    • Fodder Management: Develop strategies to increase fodder production, conservation, and distribution to ensure a consistent supply for dairy cattle and buffaloes, addressing challenges posed by fodder shortages.
    • Artificial Insemination Programs: Renew the focus on artificial insemination programs to recover from the setbacks caused by missed insemination during the pandemic. This includes technology adoption, training for insemination technicians, and incentives for farmers.
    • Genetic Improvement: Continue efforts in genetic improvement through artificial insemination to boost milk production, focusing on enhancing the productivity of high-yield dairy cattle and buffaloes.
    • Price Stabilization: Consider measures to stabilize milk prices, potentially involving price support mechanisms or policies to balance supply and demand.
    • Government Policy Review: Assess and update existing government initiatives in the dairy sector as necessary, making policy adjustments to address evolving challenges faced by dairy farmers.

    Conclusion

    • India’s dairy sector, once a beacon of success, now faces multifaceted challenges that threaten its stability.  As the nation endeavors to restore its dairy glory, policymakers, researchers, and farmers must collaborate to navigate these challenging times and secure the future of India’s dairy industry.

  • India’s rise is the big story. So where’s the FDI?

    What’s the news?

    • The Indian economy grew at 7.8 percent in the first quarter of the ongoing financial year. There is a decline in FDI.

    Central idea

    • Projections by experts, including the RBI and the IMF, indicate a prospective annual growth rate of 6–6.5 percent, reaffirming India’s status as a global growth powerhouse. However, beneath this optimistic narrative lies a concerning trend: foreign direct investment (FDI) in India has been steadily declining.

    India’s growth prospects

    • India is likely to grow at around 6–6.5 percent over the full year.
    • Medium-term assessments, such as those by the IMF, peg growth at roughly 6 percent between 2023 and 2028.
    • This momentum positions India as a formidable player in global growth, potentially rivaling China.
    • Multinationals are increasingly eyeing India as an alternative investment destination, capitalizing on shifting geopolitical dynamics.

    Declining trend in FDI in India

    • FDI Decline: FDI inflows into India have been declining. In the fiscal year 2022–23, FDI stood at $71.3 billion, which marked a 16 percent decrease compared to the previous fiscal year (2021–22). This trend of decline continued in the first four months of the current fiscal year, with a 26 percent drop in FDI inflows compared to the same period the previous year.
    • Equity Flows: A substantial portion of the decline has been in fresh equity flows. Equity flows decreased from approximately $59.6 billion in 2021–22 to around $47.6 billion in 2022–23. In the first four months of the current year, equity flows further plummeted to $13.9 billion, down from $22 billion the previous year.
    • Policy Uncertainty: One possible explanation for the decline in FDI is the presence of policy uncertainty in India. An uncertain business environment, an uneven playing field, and the fear of arbitrary changes to rules and regulations may be acting as deterrents to foreign investors.
    • Trade Agreements: India’s absence from major trading blocks, such as the RCEP agreement, and the lack of trade agreements with entities like the European Union can disadvantage India in the global manufacturing ecosystem. Comprehensive trade agreements with lower tariffs and other benefits can incentivize foreign investment.
    • Comparative Analysis: Despite rising interest rates in developed economies, countries like Vietnam and Indonesia have managed to maintain or increase their FDI inflows.

    Key sectors affected by the decline in FDI

    • Automobile Industry: The decline in FDI has had an impact on the automobile industry in India. This sector plays a crucial role in the country’s manufacturing landscape and contributes significantly to both economic growth and employment.
    • Construction (Infrastructure Activities): Infrastructure development is essential for India’s economic growth. The decline in FDI may slow down construction and infrastructure activities, potentially affecting the country’s development.
    • Metallurgical Industries: Metallurgical industries, which include sectors like steel production, are also mentioned in the article as being affected by the decline in FDI. These industries are vital for various manufacturing processes and contribute to both domestic consumption and exports.

    Areas that India might need to address to reverse this trend

    • FDI Decline in Multiple Sectors: The decline in FDI is not limited to a specific sector but has affected various industries, including technology, the automobile industry, construction, and metallurgical industries. This broad-based decline underscores the need for comprehensive solutions.
    • Navigating Policy Uncertainty: To attract foreign investors, India needs to provide a stable and predictable business environment, reduce regulatory uncertainty, and ensure a level playing field.
    • Global Investment Landscape: India’s FDI decline is notable when compared to countries like Vietnam and Indonesia, which have managed to maintain stable FDI inflows. This highlights the need for India to remain competitive in the global investment landscape.
    • The Trade Agreement Imperative: The absence of India from major trading blocks, such as the RCEP agreement, could be a factor contributing to the FDI decline. India may benefit from pursuing trade agreements that lower trade barriers and enhance market access.

    Conclusion

    • The decline in FDI flows to India raises pertinent questions about the country’s attractiveness as an investment destination. While India’s growth story appears promising, investors seek stability, policy clarity, and access to global trade networks. Addressing these concerns and leveraging India’s potential as a China plus one option requires a comprehensive strategy to reinvigorate FDI inflows and capitalize on its growth prospects.

  • Purchasing Managers’ Index (PMI) reaches 31-month high

    pmi manager

    Central Idea

    • Surge in PMI to 31-month high: The S&P Global India Manufacturing PMI soared to 58.7 in May, the highest level in 31 months.

     

    Service Sector

    The service sector, also known as the tertiary sector, includes a wide range of economic activities that are focused on providing intangible goods and services to customers.

    Some examples of activities that fall under the service sector include:

    1. Hospitality and tourism: This includes activities such as hotels, restaurants, travel agencies, and tour operators.
    2. Retail and wholesale trade: This includes businesses that buy and sell goods, such as supermarkets, department stores, and online retailers.
    3. Financial services: This includes banks, insurance companies, and investment firms.
    4. Professional and business services: This includes activities such as legal services, accounting, consulting, and advertising.
    5. Information and communication technology: This includes activities such as software development, telecommunications, and data processing.
    6. Healthcare and social assistance: This includes activities such as hospitals, clinics, nursing homes, and social services.
    7. Education and training: This includes activities such as schools, colleges, universities, and vocational training.
    8. Transportation and logistics: This includes activities such as shipping, warehousing, and distribution.

    Purchasing Managers’ Index (PMI)

    • PMI is an indicator of business activity — both in the manufacturing and services sectors.
    • The S&P Global India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
    • It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
    • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.

    How is the PMI derived?

    • The PMI is derived from a series of qualitative questions.
    • Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.

    How does one read the PMI?

    • A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
    • Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
    • If the figure is higher than the previous month’s then the economy is expanding at a faster rate. If it is lower than the previous month then it is growing at a lower rate.

    Key insights of recent trend

    • Fastest factory order growth: Factory orders rose at the fastest pace since January 2021.
    • Unprecedented accumulation of inputs: Producers accumulated inputs at an unprecedented pace due to lower costs.
    • Improvement in operating conditions: The index reflects a substantial improvement in operating conditions, with a significant increase from 57.2 in April.
    • Strong growth in order books and exports: Order books grew for the 23rd consecutive month, supported by a rise in export deals.
    • Highest output levels in 28 months: Output levels reached the highest point in 28 months.
    • Increased hiring: Pressure on capacities led firms to increase hiring, reaching a six-month high.

    Reasons behind this rise

    • Rise in selling prices: Producers raised selling prices at a solid and quicker rate in May, the highest in a year.
    • Mild input costs but adjusted charges: Input costs remained historically mild, but producers adjusted their charges due to sustained cost increases and a supportive demand environment.
    • Improved business confidence: Business confidence about growth improved, reaching a five-month high.
    • Public faith in economy: Factors such as publicity and demand resilience contributed to the optimistic outlook.

     

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  • Global dispute settlement, India and appellate review

    What’s the news?

    • The recently concluded G-20 Declaration, among its many commitments, reiterated the need to pursue reform of the World Trade Organization (WTO).

    Central idea

    • Reforming international dispute settlement mechanisms is imperative for global trade and investment stability. The G-20 Declaration emphasizes WTO reform by 2024, yet uncertainties persist in the dispute resolution process, given ongoing US opposition.

    WTO’s Dispute Settlement System: A Crisis Since 2019

    • The WTO’s dispute settlement system, known for its two-tier panel cum appellate body structure, has been in turmoil since 2019 when the United States blocked the appointment of appellate body members.
    • Despite being hailed as the crown jewel of the WTO, this system is currently hamstrung, jeopardizing its ability to issue coherent and predictable rulings.
    • The G-20’s commitment to improving this system is commendable, but uncertainties persist, especially due to the U.S.’s reluctance towards an appellate review process.

    What is Investor-State Dispute Settlement (ISDS)?

    • ISDS is a mechanism used to resolve disputes between foreign investors and host countries’ governments in the context of international investment agreements.
    • It is a ubiquitous component of bilateral investment treaties (BITs).
    • The ISDS today is the principal means to settle international investment law disputes.
    • As of January 1, 2023, 1,257 ISDS cases have been initiated. India has had a chequered history with ISDS, with five adverse awards: four in favor and several pending claims.

    The Role of Appellate Review in International Trade Law

    • An appellate review process is essential at the international level, just as it is in national courts. It acts as a crucial check on the interpretation and application of the law, ensuring consistency.
    • The absence of such a mechanism can lead to inconsistencies and incoherent decisions, as seen in international investment law through ISDS.

    UNCITRAL’s Working Group III

    • Discussions are ongoing at the United Nations Commission on International Trade Law (UNCITRAL) regarding ISDS reforms and the creation of an appellate review mechanism.
    • Key issues include the form of the mechanism, review standards, timeframes, and decision effects. These discussions hold the promise of addressing the current deficiencies in ISDS.

    Benefits of an appellate review mechanism

    • Error Correction: Appellate review corrects legal mistakes in WTO and ISDS decisions, ensuring the accurate application of rules.
    • Consistency and Confidence: It maintains a uniform interpretation of trade and investment laws, promoting stability and predictability. A functional appellate body boosts trust in the WTO, encouraging nations to resolve trade disputes peacefully.
    • Harmonization and Stability: ISDS appellate review aligns diverse treaty interpretations, reducing legal disparities. It also fosters investor-state predictability, attracts investments, and promotes economic growth.
    • Reducing Uncertainty: Appellate review clarifies investment treaty rights and obligations, reducing ambiguity.
    • Credibility: Its presence enhances ISDS credibility, making it more appealing for states and investors.
    • Rule-Based Order: Supporting appellate review aligns with India’s aim for a rule-based global system, fostering international cooperation.

    India’s Position on Appellate Review Mechanisms

    • Support for Appellate Review in ISDS:
    • Although India has not officially articulated its stance, there is a presumption that India is supportive of the idea of an appellate review mechanism in ISDS.
    • This presumption is based on the presence of Article 29 in India’s model Bilateral Investment Treaty (BIT), which appears to endorse the concept of appellate review.
    • Alignment with India’s interests:
    • India is concerned about the inconsistency and incoherence that currently characterize the ISDS system.
    • Supporting an appellate review mechanism is seen as a means to address these concerns and promote greater stability and predictability in international investment law.
    • Relevance to Ongoing Negotiations:
    • India will likely need to take a formal position on this issue during ongoing investment treaty negotiations with the European Union (EU).
    • The EU is advocating for the establishment of an appellate review mechanism for investment disputes, and India’s stance will be crucial in shaping the outcome of these negotiations.
    • Quest for a Rule-Based Global Order:
    • India’s broader objective is to establish a rule-based global order in international trade and investment. Supporting an appellate review mechanism, both in ISDS and within the World Trade Organization (WTO), is seen as a way to achieve this goal.
    • Moreover, India should also advocate for the restoration of the WTO appellate body to ensure a fully functioning dispute settlement system at the WTO.

    Conclusion

    • The G-20’s commitment to revitalizing the WTO’s dispute settlement system and the ongoing discussions on establishing an appellate review mechanism in ISDS are steps in the right direction. India, as a proponent of a rule-based global order, should actively support these reforms to ensure greater confidence among states and investors in international trade and investment law.

  • Dr. M.S. Swaminathan and the Green Revolution: A Transformative Legacy

    Dr. M.S. Swaminathan

    Central Idea

    • Dr. M.S. Swaminathan, the revered agricultural scientist renowned as the “Father of the Green Revolution” in India, passed away at the age of 98.
    • His legacy is deeply interwoven with India’s journey towards achieving food security.

    Who was Dr. M.S. Swaminathan?

    • Civil Services to Agriculture: Although Dr. Swaminathan initially cleared the civil services examination, his heart was set on agriculture. His fascination with farming led him to pivot his career towards agricultural research.
    • The Turning Point: Influenced by the Bengal famine of 1942-43, which he viewed as a consequence of British policies, Dr. Swaminathan chose to study agriculture, particularly genetics and breeding. This decision was instrumental in shaping India’s agricultural landscape.

    Timeline of Dr. M.S. Swaminathan’s remarkable life and contributions:

    Year Milestones
    1925 Born on August 7, 1925, in Kumbakonam, Madras Presidency.
    1940s Pursued higher education in zoology and later completed a Bachelor of Science degree in Agricultural Science.
    1949-1954 Conducted research on combating potato crop parasites during a UNESCO fellowship and earned a PhD from the University of Cambridge.
    1954 Specialized in the genus Solanum and started researching fertilizers and high-yielding wheat varieties.
    1965-70 Collaborated with Dr. Norman Borlaug to develop high-yield semi-dwarf wheat varieties, pioneering the Green Revolution in India.
    1979-1982 Appointed as Director-General of the Indian Council of Agricultural Research and served in various government roles.
    1982 Became Director General of the International Rice Research Institute in the Philippines.
    1987 Awarded the first World Food Prize for his contributions to agriculture.
    2002 Elected as President of the Pugwash Conferences on science and world affairs.
    2004 Appointed as the chair of the National Commission on Farmers, which recommended significant reforms for Indian agriculture.
    2005 Joined the United Nations Millennium Project’s Hunger Task Force and developed targets to combat poverty and hunger.
    2007 Nominated to the Rajya Sabha and presented the Women Farmers’ Entitlements Bill.
    2013 onwards Continued involvement in various initiatives focused on nutrition, internet access, and agricultural institutes worldwide.

     

    Green Revolution: A Game-Changer

    • Revolutionary Change: Dr. Swaminathan’s pioneering work led to the introduction of high-yielding variety seeds, improved irrigation facilities, and fertilizers to farmers in regions like Punjab, Haryana, and western Uttar Pradesh. This transformative period marked the beginning of India’s Green Revolution.
    • Impact on Wheat Production: The Green Revolution witnessed a remarkable increase in wheat production. In 1947, India produced about 6 million tonnes of wheat annually, which soared to about 17 million tonnes between 1964 and 1968, significantly enhancing the nation’s self-sufficiency in food production.

    Swaminathan’s Contribution to the Green Revolution

    Semi-Dwarf Wheat Varieties Aimed to reduce wheat plant height, preventing lodging while maintaining grain yield.
    Collaboration with Norman Borlaug Collaborated with Norman Borlaug to incorporate dwarfing genes into spring wheat varieties suitable for India.
    The Wheat Revolution A collaborative effort starting in 1963, leading to high-yield semi-dwarf wheat varieties.
    Role of HYVs Focused on developing high-yielding varieties of wheat and rice, crucial for combating drought and famine.
    Yield Gap Reduction Targeted increasing productivity on existing farmland through HYVs, mitigating the threat of famine.
    Cytogenetics Expertise Contributions extended to studying chromosomes (cytogenetics), identifying traits like disease resistance.

    Challenges and Ethical Commitments

    • Unintended Consequences: Despite its successes, the Green Revolution faced criticism for benefiting prosperous farmers and causing ecological issues.
    • Dr. Swaminathan’s Advocacy: As the head of the National Commission on Farmers, he advocated for fair Minimum Support Prices for farmers and highlighted concerns related to soil fertility, pesticide use, and water management.

    Legacy and Recognition

    International Accolades – Ramon Magsaysay Award in 1971

    – Albert Einstein World Science Award in 1986

    – UNEP Sasakawa Environment Prize in 1994

    – UNESCO Gandhi Gold Medal in 1999

    – Indira Gandhi Prize for Peace, Disarmament, and Development in 1999

    – Franklin D. Roosevelt Four Freedoms Award in 2000

    – First World Food Prize Laureate in 1987.
    National Awards (India) – Lal Bahadur Shastri National Award

    – Indira Gandhi Prize for Peace, Disarmament, and Development
    Civilian Awards (India) – Padma Shri in 1967

    – Padma Bhushan in 1972

    – Padma Vibhushan in 1989
    Honorary Doctorates – Received over 80 honorary doctorates from universities worldwide
    Civilian Awards (Other Nations) – Honored with civilian awards from nations like the Philippines, France, Cambodia, China
    Fellowships in Scientific Academies – Elected as a fellow in several scientific academies in Russia, Sweden, United States, United Kingdom, Italy, China, Bangladesh

    Back2Basics: Key Terms Explained

    • Hexaploid Wheat: Also known as “bread wheat,” hexaploid wheat contains six sets of chromosomes and is a globally cultivated cereal crop.
    • Carbon Fixation: The process by which crops capture carbon dioxide from the atmosphere and convert it into organic compounds, primarily through photosynthesis.
    • C3 and C4 Pathways: Photosynthetic pathways used by plants for carbon fixation, with C4 being more efficient.
    • C4 Rice Plant: A type of rice that employs the C4 photosynthetic pathway, which Dr. Swaminathan worked on during his tenure at the International Rice Research Institute (IRRI).

  • India’s Current Account Deficit (CAD) Widens: Implications and Outlook

    Central Idea

    • Data released by the Reserve Bank of India (RBI) reveals that India’s Current Account Deficit (CAD) expanded significantly to $9.2 billion, equivalent to 1.1% of GDP, during the April-June quarter.
    • This represents a substantial increase from the preceding three months when it stood at $1.3 billion, or 0.2% of GDP.
    • Contrasting with the year-earlier quarter of fiscal 2022-23, where the CAD was $17.9 billion (2.1% of GDP), the current scenario reflects evolving economic dynamics.

    What is Current Account Deficit (CAD)?

    • A current account is a key component of balance of payments, which is the account of transactions or exchanges made between entities in a country and the rest of the world.
    • This includes a nation’s net trade in products and services, its net earnings on cross border investments including interest and dividends, and its net transfer payments such as remittances and foreign aid.
    • A CAD arises when the value of goods and services imported exceeds the value of exports, while the trade balance refers to the net balance of export and import of goods or merchandise trade.

    Components of Current Account

    Current Account Deficit (CAD) =  Trade Deficit + Net Income + Net Transfers

    (1) Trade Deficit

    • Trade Deficit = Imports – Exports
    • A Country is said to have a trade deficit when it imports more goods and services than it exports.
    • Trade deficit is an economic measure of a negative balance of trade in which a country’s imports exceeds its exports.
    • A trade deficit represents an outflow of domestic currency to foreign markets.

    (2) Net Income

    • Net Income = Income Earned by MNCs from their investments in India.
    • When foreign investment income exceeds the savings of the country’s residents, then the country has net income deficit.
    • This foreign investment can help a country’s economy grow. But if foreign investors worry they won’t get a return in a reasonable amount of time, they will cut off funding.
    • Net income is measured by the following things:
    1. Payments made to foreigners in the form of dividends of domestic stocks.
    2. Interest payments on bonds.
    3. Wages paid to foreigners working in the country.

    (3) Net Transfers

    • In Net Transfers, foreign residents send back money to their home countries. It also includes government grants to foreigners.
    • It Includes Remittances, Gifts, Donation etc

    How does Current Account Transaction takes place?

    • While understanding the Current Account Deficit in detail, it is important to understand what the current account transactions are.
    • Current account transactions are transactions that require foreign currency.
    • Following transactions with from which component these transactions belong to :
    1. Component 1 : Payments connection with Foreign trade – Import & Export
    2. Component 2 : Interest on loans to other countries and Net income from investments in other countries
    3. Component 3 : Remittances for living expenses of parents, spouse and children residing abroad, and Expenses in connection with Foreign travel, Education and Medical care of parents, spouse and children

    What are the reasons for the current account deficit?

    deficit

    • Intensifying geopolitical tensions and supply chain disruptions leading to crude oil and commodity prices soaring globally have been exerting upward pressure on the import bill.
    • A rise in prices of coal, natural gas, fertilizers, and edible oils have added to the pressure on trade deficit.
    • However, with global demand picking up, merchandise exports have also been rising.

    How will a large CAD affect the economy?

    • A large CAD will result in the demand for foreign currency rising, thus leading to depreciation of the home currency.
    • Nations balance CAD by attracting capital inflows and running a surplus in capital accounts through increased foreign direct investments (FDI).
    • However, worsening CAD will put pressure on the inflow under the capital account.
    • Nevertheless, if an increase in the import bill is because of imports for technological upgradation it would help in long-term development.

  • Norman Borlaug Field Award to Indian Researcher

    Norman Borlaug

    Central Idea

    • Swati Nayak, a scientist at the International Rice Research Institute (IRRI) South Asia Regional Centre (ISARC), has been honoured with the Borlaug Field Award by the World Food Prize.
    • She is renowned for her groundbreaking research in developing climate-resilient and nutrition-rich rice varieties.

    Contributions of Dr. Swati Nayak

    Extensive Testing Organized over 10,000 tests, evaluating 500+ seed varieties.
    Climate Resilient Varieties Developed high-yield, biofortified, and nutritionally enhanced rice varieties.
    Small Holder Farmers’ Focus Innovated inbred rice varieties to benefit smallholders.
    Collaborative Efforts Collaborated with national and international organizations.
    Addressing Lifestyle Diseases Advocates for low glycemic index, micronutrient-enriched rice varieties.
    Supporting Better Quality Empowers farmers to produce high-quality seeds for better market positioning.
    Biofortified Foodgrains Promotes affordable bio-fortified rice as a nutritional solution.

     

    Who was Norman Borlaug (1914-2009)?

    Contributions Developed high-yielding, disease-resistant wheat varieties, “Father of the Green Revolution”
    Impact Saved over a billion people from hunger, significantly increased global wheat production
    Awards and Honors Nobel Peace Prize, Presidential Medal of Freedom, Congressional Gold Medal, Padma Vibhushan, and more
    Legacy Laid the foundation for modern agricultural practices, inspired efforts to address global food security

     

    About Borlaug Field Award

    Endowed by Rockefeller Foundation
    Presented by World Food Prize Foundation
    Purpose Recognize outstanding contributions in international agriculture and food production by individuals under 40.
    Award Amount $10,000
    Inspiration Honors Dr. Norman Borlaug’s dedication to fighting global hunger and poverty during his early career in Mexico.
    Establishment Year 2011