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Type: Explained

These Newscards correspond to the explained section of various newspapers. They become immensely important for both prelims and mains and special attention needs to be paid to them

  • Scripting a new tribal identity

    Why in the news? 

    President of India Droupadi Murmu was being presented a book, Contributions of Tribal Leaders in the Freedom Struggle, at a National Commission for Scheduled Tribes (NCST) event.

    Contributions of Tribal Leaders in the Freedom Struggle

    • Santhal Revolution: Led by Buddhu Bhagat, Joa Bhagat, and Madara Mahato, the Santhal Revolution was a significant tribal uprising against British colonial rule in 1855. The Kols were joined by other tribes like the Hos, Mundas, and Oraons in this struggle
    • Paika Rebellion: The Paika Rebellion in 1817 was a tribal uprising against the British in Odisha. The Paikas were a warrior class who were fighting for their rights and against the exploitation by the British
    • Kol Revolt: The Kol Revolt of 1831-32 was a tribal uprising against the British in Chhattisgarh. The Kols were fighting for their rights over the land and against the exploitation by the British
    • Birsa Munda: Birsa Munda was a tribal leader from Jharkhand who led the Millenarian Movement against the British in the late 19th century. He mobilized the tribal community against the British and forced them to introduce laws protecting the land rights of tribals
    • Rani Gaidinliu: Rani Gaidinliu was a tribal leader from Nagaland who led a revolt against the British in the early 20th century. She was a spiritual leader who fought for the rights of the Nagas and against the exploitation by the British
    • Laxman Naik: Laxman Naik was a tribal leader from Odisha who led a revolt against the British in the early 20th century. He was a farmer who fought for the rights of the farmers and against the exploitation by the British

    Impact of Tribal Revolts during Freedom Struggle: 

    • The tribal revolts during the freedom struggle contributed to the very beginning of the aggression for British Raj. They revolted not against the British but their policy for Indians which were imposed on them without even knowing their culture and its significance. Later this led to the revolt of 1857, which took attention of all over the country

    Conclusion: President Droupadi Murmu received the book “Contributions of Tribal Leaders in the Freedom Struggle” at an NCST event, highlighting significant uprisings like the Santhal, Paika, and Kol revolts, emphasizing tribal resistance against British exploitation, influencing broader Indian agitation.

    Mains PYQ 

    Q Several foreigners made India their homeland and participated in various movements. Analyze their role in the Indian struggle for freedom.(UPSC IAS/2013)

  • A world in disarray, a concern about the future

    Why in the news? 

    Factors such as the lack of globally influential leaders, evolving alliances, economic challenges, and advancements in technology contribute to the current geopolitical landscape.

    Factors behind the concerning current geopolitical landscape

    Growing chaos, an absent leadership

    • Decline of the rules-based international order: The traditional Western-led global order is perceived as dead, leading to increased geopolitical disarray.
    • Rise of new alliance patterns: With the weakening of the West and the ascent of China, new alliances have emerged, but none possess enough strength to maintain global peace.
    • Lack of influential leaders: Leaders like Xi Jinping, Vladimir Putin, and Joe Biden are seen as lacking the ability to sustain peace globally, with many other Western leaders deemed inadequate for the task.
    • Potential for conflict escalation: While shooting wars are limited to certain regions like Ukraine and Gaza, there’s concern about the absence of leaders capable of resolving conflicts peacefully.
    • Stalemate in Ukraine: The situation in Ukraine remains deadlocked, with leaders unwilling to compromise, raising concerns about the possibility of the use of battlefield nuclear weapons.
    • Escalating tensions in West Asia: Israel’s actions, described as those of a “wounded tiger,” are leading to increased casualties in Gaza, while Iran poses a direct threat to Israel, potentially leading to a broader conflict with dire implications.
    • Potential leadership shift in militant Jihadism: There are indications that a resurgent Iran could take over the leadership of militant Jihadism against the West and other perceived “infidels,” further complicating the geopolitical landscape.

    A new set of alliances

    • Great power rivalry appears diminished: The rivalry between the U.S. and China is described as a “shadow play” with little significance beyond proxy conflicts.
    • U.S. setbacks and diminished superpower status: The U.S. is perceived as grappling with hubris following setbacks since Afghanistan in 2020, which has diminished its status as a superpower.
    • Europe’s reliance on NATO and limited influence: Europe’s reliance on NATO for protection from Russia has not translated into significant influence in conflicts like Ukraine, despite significant costs.
    • Emerging China-Russia-Iran axis: The alliance between China, Russia, and Iran poses a challenge to U.S. and Western influence in West Asia, raising questions about their tactics in the region.

    Economic challenges

    • Geopolitics of oil: The China-Russia-Iran axis signals a significant shift in the politics of oil, which is likely to have far-reaching consequences for global stability.
    • Diminished effectiveness of sanctions: Sanctions are seen as losing their impact in the face of changing geopolitical dynamics, potentially leading to a major economic slowdown.

    Advancements in technology 

    • Technology as a disruptor: National security efforts are increasingly focused on protecting vital technologies, with artificial intelligence emerging as a major disruptor in conventional warfare.
    • Rise of smaller nations leveraging AI: Smaller nations are leveraging artificial intelligence to challenge the military dominance of larger powers like the U.S. and China, potentially leveling the playing field.
    • Impact of ISR revolution in warfare: The military intelligence, surveillance, and reconnaissance (ISR) revolution, enabled by drones, aircraft, and space assets, is transforming the battlefield, posing new challenges for military strategies.
    • Nuclear arms race and arms control fraying: Arms control agreements are deteriorating, leading to the development of new nuclear warheads and cruise missiles, raising concerns about a nuclear makeover and potential use of nuclear weapons.

    Conclusion: The breakdown of the rules-based order, inadequate leadership, and the formation of volatile alliances contribute to geopolitical turmoil. Need of robust leadership and coherent strategiesto avoid the conflict escalation in the world.

    Mains PYQ 

    Q (UPSC IAS/2022) (a): Russia and Ukraine war has been going on for the last seven months. Different countries have taken independent stands and actions keeping in view their own national interests. We are all aware that war has its own impact on the different aspects of society, including human tragedy. What are those ethical issues that are crucial to be considered while launching the war and its continuation so far? lllustrate with justification the ethical issues involved in the given state of affairs.

    (b): Write short notes on the following in 30 words each:

    (i) Constitutional morality

    (ii) Conflict of interest

    (iii) Probity in public life

    (iv) Challanges of digitalization

    (v) Devotion to duty

  • Why have private investments dropped? | Explained

    Why in the news? 

    The failure of private investment, as measured by private Gross Fixed Capital Formation (GFCF) as a percentage of gross domestic product (GDP) at current prices, to pick up pace has been one of the major issues plaguing the Indian economy.

    What is GFCF?

    • GFCF refers to the growth in the size of fixed capital in an economy.
    • Fixed capital refers to things such as buildings and machinery, for instance, which require investment to be created.
    • So private GFCF can serve as a rough indicator of how much the private sector in an economy is willing to invest.
    • Overall GFCF also includes capital formation as a result of investment by the government.

    Why does it matter?

    • GFCF matters because fixed capital, by helping workers produce a greater amount of goods and services each year, helps to boost economic growth and improve living standards.
    • In other words, fixed capital is what largely determines the overall output of an economy.

    What is the trend seen in private investment in India?

    • Pre-liberalization (1950s to early 1990s): Private investment remained relatively stable, hovering around or slightly above 10% of GDP. Public investment, however, steadily increased during this period.
    • Liberalization (early 1990s onwards): Economic reforms in the early 1990s improved private sector confidence, leading to a significant uptick in private investment. Public investment, although still significant, began to decline relative to private investment.
    • Post-global financial crisis (late 2000s to present): Private investment continued to grow until the global financial crisis of 2007-08, reaching around 27% of GDP. However, from around 2011-12 onwards, private investment began to decline, hitting a low of 19.6% of GDP in 2020-21.

    Why has private investment fallen?

    • Low private consumption expenditure: Some economists attribute the decline in private investment to low private consumption expenditure. They argue that businesses need confidence in future demand to invest in fixed capital, and boosting consumption expenditure can help stimulate private investment.
    • Structural problems and policy uncertainty: Other economists argue that structural issues and policy uncertainty are core reasons behind the fall in private investment. They point to unfavourable government policies and policy uncertainty as major factors affecting private investment.

    Conclusion: To address the decline in private investment, India needs policies promoting consumer confidence and stable, conducive business environments. Balancing pro-growth fiscal measures with structural reforms can stimulate investment, fostering economic growth and prosperity.

    Mains PYQ 

    Q Explain the meaning of investment in an economy in terms of capital formation. Discuss the factors to be considered while designing a concession agreement between a public entity and private entity.(UPSC IAS/2020)

  • Where India’s trade with Israel and Iran stands, and whether regional tensions could impact it

    Why in the news? 

    Iran’s attack on Israel earlier this week has sparked tensions in the Middle East and beyond. India, which has friendly ties with both the countries, has expressed “serious concerns” about escalation of hostilities.

    India-Israel trade has doubled in the last five years

    • India established diplomatic relations with Israel in 1992. Since then, trade between two countries has been rising significantly, from around $200 million in 1992 (comprising primarily of diamonds), to $10.7 billion (excluding defence) in the Financial Year 2022-23.

    What are the main components of India’s trade with Israel?

    • Based on India’s 8-digit Harmonized System code, under which trade items are classified, the most valued items exported by India to Israel included diesel, diamonds, aviation turbine fuel, radar apparatus, Basmati rice, T-shirts, and wheat.

    Value of India-Iran trade came down in the last five years

    • India’s trade with Iran has seen a contraction in recent years, before an uptick in the FY 2022-23. It increased by 21.77 per cent — from $1.94 billion in 2021-22 to $2.33 billion in 2022-23.

    Israel and Iran do not have significant FDI in India

    • Israel’s FDI in India: Israel’s contribution to Foreign Direct Investment (FDI) in India is relatively low, accounting for just 0.4% of the total FDI inflows between April 2000 and December 2023. FDI from Israel to India amounted to $288 million during this period.
    • Indian Investment in Israel: Conversely, Indian firms have invested more in Israel, with cumulative Overseas Direct Investment (ODI) reaching around US$ 383 million from April 2000 to May 2023.
    • India’s Investment in Iran: India is involved in developing the first phase of the Shahid Beheshti Port at Chabahar in Iran. This initiative aims to enhance India’s connectivity and trade relations with the Middle East and Central Asia.

    How could Middle East tensions impact the Indian economy?

    • Impact on Trade Routes: Tensions in the Middle East, particularly in the Red Sea region, could disrupt crucial trade routes connecting Europe and Asia. Roughly 12 percent of global trade depends on this route, potentially affecting India’s trade.
    • Shipping Disruptions: Yemen-based militants, known as the Houthis, have targeted ships passing through the Red Sea since November 2023, leading to shipping disruptions. This could exacerbate India’s trade problems.
    • Stability Concerns in West Asia: The conflict between Iran and Israel adds to the instability in West Asia, potentially delaying projects like the Middle East-Europe Economic Corridor (IMEC).
    • Impact on Petroleum Prices: While the ongoing conflict may not significantly disrupt crude oil and gas production, shipping disruptions in the Red Sea could lead to higher oil and gas prices. However, the impact on Indian consumers may be minimal as the government could offset price increases by reducing taxes.

    Conclusion: India’s friendly ties with both Israel and Iran provide an opportunity for diplomatic engagement to mitigate the escalation of hostilities in the region. By actively participating in diplomatic efforts to de-escalate tensions and promote dialogue, India can contribute to regional stability and safeguard its economic interests.

    Mains PYQ 

    Q There arose a serious challenge to the Democratic State System between the two World Wars.” Evaluate the statement. (UPSC IAS/2021)

  • The limitations of Ambedkarite Dalit politics today

    Why in the news?

    Organising grand events and celebrations in April to commemorate Babasaheb Ambedkar’s birth anniversary has become a national ritual now.

    Ambedkar’s Vision for Dalit Political Power

    •  Ambedkar envisioned the Dalit-Bahujan mass as the prime claimant of state power, aiming to form a greater social alliance with Adivasis, poor working classes, and agrarian laborers against exploitative orders.

    Historical Significance of Dalit Political Movements 

    • The mid-1990s saw the emergence of powerful Dalit political leadership, such as the Bahujan Samaj Party (BSP) under Kanshi Ram and Mayawati in Uttar Pradesh, as well as leaders like Prakash Ambedkar and Ramdas Athawale in Maharashtra.

    Limitation in Dalit politics today

    • Fragmentation in Dalit Political Legacy: Despite the unity seen in commemorations, there is a growing splintering in Ambedkar’s political legacies, resulting in Dalit political parties becoming passive and relegated forces.
    • Disintegration of Contemporary Ambedkarite Dalit Politics: Current Dalit politics lacks visionary leadership, a strong social base, and effective political strategies to emerge as a crucial player in democratic battles. It has disintegrated into segments.
    • Political Alliances and Vacillations: Dalit parties have sometimes formed alliances with parties like the BJP, despite Ambedkar’s ideologies being fundamentally opposed to Brahmanical and exploitative orders. This has led to criticism and accusations of abandoning core principles.

    Way Forward 

    • Building Stronger Intra-Dalit Unity: Encourage dialogue and collaboration among different Dalit political factions to foster a sense of unity and common purpose.
    • Investing in Leadership Development: Support initiatives aimed at nurturing visionary leadership within the Dalit community.
    • Strengthening Grassroots Mobilization: Focus on building a strong social base by actively engaging with Dalit communities at the grassroots level.

    Mains PYQ 

    Q Debate the issue whether and how contemporary movements for assertion of Dalit identity work towards annihilation of caste.(UPSC IAS/2015)

  • On India’s ‘heat action plans’ | Explained

    Why in the news?

    Come summer, we are used to seeing heat alerts from the India Meteorological Department (IMD) for various parts of India. This year, these alerts began in February itself.

    What is a heatwave?

    • According to the IMD, the definition of a heatwave depends on the physiography of regions.
    • The IMD will declare a heatwave if the maximum temperature recorded at a station is 40 degrees Celsius or more in the plains, 37 degrees Celsius or more in the coast, and 30 degrees Celsius or more in the hills.

    Heat Action Plans (HAPs) to tackle heatwave 

    • Aim: HAPs aim to increase preparedness and lower the adverse impacts of extreme heat by outlining strategies and measures to prepare for, address, and recover from heat waves.
      • The National Disaster Management Authority and IMD are reported to be working with 23 States to develop HAPs.
    • Issue with Database: There is no centralized database on HAPs, but at least 23 HAPs exist at the State and city level, with a few States, such as Odisha and Maharashtra, laying out district-level HAPs.

    Key components of Heat Action Plans (HAPs)  

    Limitation 

    • Challenges related to Determining Heatwaves: While a national threshold is currently used to determine heatwaves, determining them at smaller scales such as states, districts, and cities poses a challenge due to variations in local factors like the urban heat island effect, type of roofing, and proximity to water or green bodies, as well as humidity.
    • Inconsistent Methods and Vulnerability Assessments: The methods used for vulnerability assessments in HAPs are inconsistent because of the diverse physiography of regions
    • Addressing Vulnerable Populations: While HAPs prioritize protecting vulnerable populations, targeted interventions often fail to account for varying needs based on local socio-economic and demographic factors.
    • Resource Allocation and Financing: Implementation of HAPs varies depending on local government priorities and available capacities because at the local level Fund crunch.
    • Integration and Collaboration: HAPs are currently standalone plans with limited finance, highlighting the need for integration with broader action plans promoting urban resilience and climate adaptation to pool resources effectively.

    Way Forward:

    • Determination at Local Scales: Invest in local monitoring systems that capture variations in temperature, humidity, and other relevant factors.
    • Standardizing Methods: Establish guidelines for conducting vulnerability assessments that account for diverse physiography and local context.
    • Tailoring Interventions: Conduct comprehensive community consultations to understand the unique needs of vulnerable populations in different localities.
    • Funding and Resources: Advocate for increased funding for HAPs at the national and local levels through budget allocations, grants, and public-private partnerships.
    • Integration and Collaboration: Establish inter-agency task forces or committees to coordinate HAPs with other relevant initiatives, such as urban planning, public health, and disaster management.

    Mains PYQ 

    Q Climate change’ is a global problem. How India will be affected by climate change? How Himalayan and coastal states of India will be affected by climate change? (UPSC IAS/2017)

  • Hapur verdict, challenging vigilantism

    Why in the news? 

    On 12 March 2024, in a first for Uttar Pradesh, a trial court in Hapur awarded life imprisonment in a case of cow protection-related lynching of a Muslim person.

    • Six years earlier, in June 2018, Qasim Qureshi was lynched to death, and Samiuddin was brutally assaulted, by a Hindu group in the Bajhera Khurd village, under the false accusation of cow slaughter.
    Mob lynching is an act of premeditated extrajudicial killing by a group of people, often targeted against a particular individual or group. Mob lynching is based on some false information, unconfirmed rumours etc.

    Key issues in the investigation as per judgment: 

    • Police Fabrication and Accountability: The court censures the police for fabricating the FIR, creating an alternative narrative of the incident, and failing to collect witness statements and conduct proper investigations. This raises questions about police accountability and their collusion with the accused.
    • Intent and Collusion: The judgment questions the police’s intent and alleges collusion of police personnel and investigating officers in protecting the accused. There are allegations of damaging video evidence and neglecting forensic investigations, highlighting potential corruption or bias within the police force.
    • Failure in Investigation: Despite eyewitnesses approaching officers, the police did not conduct an official identification parade, which aided the accused in securing bail. This failure indicates potential attempts by the police to misdirect the investigation.
    • State’s Role and Vigilante Violence: The conviction highlights the state’s role as not only a participant but also an enabler in the violence. It demonstrates how the state delegates illegal policing to vigilantes, with convictions having little material impact on the state’s involvement.

    Way forward 

    • Need Accountability: Implement strict protocols for filing FIRs and conducting investigations to prevent fabrication of evidence.
    • Need for Fast-track courts: The lynching cases should be tried by fast-track courts with day-to-day hearings. It is important to punish the culprit with stringent punishment and conclusion of the cases within 6 months.
    • Enhancing Investigation: Mandate the conduct of official identification parades in all cases involving serious crimes to facilitate accurate witness identification.
    • Addressing State Complicity: Strengthen legal frameworks to hold state authorities accountable for their role in enabling or condoning vigilante violence.

  • Reforms needed in the voting process | Explained

    Why in the news? 

    The Supreme Court has decided to hear petitions seeking 100% cross-verification of the Voter Verifiable Paper Audit Trail (VVPAT) slips with the vote count as per Electronic Voting Machines (EVMs).

    What is the history of the Voting Process?

    • First two General Elections: In the Elections of 1952 and 1957, a separate box was placed for each candidate with their election symbol. Voters had to drop a blank ballot paper into the box of the candidate whom they wanted to vote for.
    • Third Election: In the third election, the ballot paper with names of candidates and their symbols was introduced with voters putting a stamp on the candidate of their choice.
    • Introduction of EVM in Lok Sabha Elections: In the 2004 general elections to the Lok Sabha, EVMs were used in all 543 constituencies.
    • Global Scenario:
      • Many Western democracies, including England, France, The Netherlands, and the United States, have opted to continue using paper ballots for their National or Federal Elections instead of Electronic Voting Machines (EVMs).
      • Some countries have discontinued the use of EVMs after trials over the past two decades. For example, Germany’s Supreme Court declared the use of EVMs in elections unconstitutional in 2009.

    Significance of EVM: 

    • Prevention of Booth Capturing: EVMs have significantly reduced the likelihood of booth capturing, a practice where unauthorized individuals seize control of polling booths to manipulate votes.
    • Elimination of Invalid Votes: EVMs have effectively eliminated invalid votes, which were a common issue with paper ballots.
    • Environmental Sustainability: With a large electorate size like India’s, which is close to one billion, the use of EVMs contributes to environmental sustainability by reducing the consumption of paper.
    • Administrative Convenience: EVMs provide administrative convenience for polling officers on the day of the poll. They simplify the voting process, making it easier for voters to cast their ballots and for officials to manage polling stations efficiently.

    Limitations on using EVM: 

    • Susceptibility to Hacking Allegations: Despite assurances from electoral authorities, doubts have been raised about the security of EVMs, with concerns that they may be vulnerable to hacking due to their electronic nature.
    • Limited Sample Size for VVPAT Verification: The current practice of verifying the EVM count with Voter Verifiable Paper Audit Trail (VVPAT) slips has a small sample size of only five per assembly constituency/segment.
    • Identification of Polling Behavior: The process of matching EVM counts with VVPAT slips at the booth level allows for the identification of polling behavior by various political parties. This information could potentially be used for profiling voters and intimidation, undermining the secrecy and fairness of the electoral process.

    Way Forward:

    • Enhancing Transparency and Comprehensibility: In a transparent democracy, citizens should be able to understand and verify the election process without requiring specialized technical knowledge.
    • Scientific Sampling for EVM-VVPAT Matching: Rather than a 100% match, the sample for matching the EVM count with VVPAT slips should be determined scientifically, possibly by dividing each state into large regions as suggested by experts.
    • Error Resolution: In case any error is detected, the VVPAT slips for the concerned region should be fully counted, forming the basis for results. This would instill statistically significant confidence in the counting process.

    Mains PYQ 

    Q In the light of recent controversy regarding the use of Electronic Voting Machines (EVM), what are the challenges before the Election Commission of India to ensure the trustworthiness of elections in India?

    Q To enhance the quality of democracy in India the Election Commission of India has proposed electoral reforms in 2016. What are the suggested reforms and how far are they significant to make democracy successful?

  • Centre Directs Gas-Based Power Plants To Begin Operations Amid Rising Summer Demand

    Why in the News? 

    • The Central government has issued directives under Section 11 of the Electricity Act, of 2003 to all gas-based generating stations to ensure Maximum Power Generation.
      • This section empowers the Central/state government to specify the operation of generating stations in extraordinary circumstances.

    Why India Needs Gas-based Plants?

    • Electricity Demand in India: India faces a surge in electricity demand, especially during the upcoming summer season. The government has instructed gas-based power plants to commence operations to address this demand surge.
    • Optimizing Power Availability: The directive aims to optimize power availability from gas-based generating stations during the anticipated high-demand period, similar to measures taken for imported-coal-based power plants.
    • Ideal Transitioning Fuel: Gas-based power plants can be an ideal transition fuel for the shift from coal-based generation to renewable energy in the Indian power sector. They can provide the necessary flexibility and reliability to the grid as the share of renewable energy increases.
    • Targets: The Indian government has set a target of increasing the share of non-fossil fuel, especially renewables, in power generation to 50% by 2030, and gas-based power plants can play a crucial role in achieving this target.

     

    Challenges in building Gas-based Infrastructure:

    • Underutilized Capacity: Despite having considerable capacity, gas-based generating stations remain underutilized, primarily due to commercial considerations.
    • Non-availability of Affordable Fuel: India’s gas-based power plants are either stranded or operating at sub-optimal levels due to the non-availability of affordable fuel
    • Lack of Domestic Gas Supply: The limited domestic gas supply has forced gas-based power producers to depend on LNG to meet their fuel needs, but the high cost of LNG has increased the variable cost of power, making it difficult to schedule in merit order dispatch
    • Dependence on Imports: With barely half of the current gas consumption coming from local production, dependence on gas-based power plants can only be interim and not a long-term solution.

    Initiatives taken by the Government:

    • Setting up biogas plants: The Ministry of New and Renewable Energy, Government of India, launched the Biogas program to set up biogas plants for various applications, including power generation.
    • Use of gas-based power for peaking and balancing: The government will use some gas-based power to meet the country’s peaking and balancing needs during the summer of 2024.
    • Increasing gas-based power generation: The government wants the share of gas-based power to rise to 15% of India’s total installed power generation capacity.

    Way forward:

    • Diversification of fuel sources: Encourage the exploration and development of domestic gas reserves to reduce reliance on imported gas and mitigate price volatility.
    • Investment in infrastructure: Develop infrastructure for transporting gas efficiently across the country to ensure a steady and reliable supply to power plants.
    • Policy support: Provide long-term policy certainty and incentives for investment in gas-based power generation, including tax breaks, subsidies, and assured purchase agreements.

    Mains PYQ 

    Q  Environmental Impact Assessment studies are increasingly undertaken before a project is cleared by the Government. Discuss the environmental impacts of coal-fired thermal plants located at coal pitheads. (UPSC IAS/2014)

  • Why has India allowed FIIs to invest in its Green Bonds? | Explained

    Why in the News? 

    On April 5 the Reserve Bank of India (RBI) greenlighted investments in the country’s Sovereign Green Bonds (SGrBs) by Foreign Institutional Investors (FIIS).

    • These are the investors such as insurance companies, pension funds, and nation-states’ sovereign wealth funds.

    What is the Sovereign Green Bond?

    • It is a type of bond issued by a government to finance projects and expenditures that have a positive environmental impact and are aligned with sustainability goals.
    • These bonds are specifically earmarked for funding green projects, assets, and expenditures that contribute to environmental sustainability and climate objectives.

    Why has India allowed FIIs to invest in its Green Bonds?

    • For attracting Foreign Investments: By allowing FIIs to invest in green bonds, India attracts foreign capital into its green projects.
    • For Widening the Pool of Capital: Allowing FIIs to invest in India’s green projects expands the sources of funding available for the country’s ambitious climate goals, including achieving net zero emissions by 2070 and increasing the share of non-fossil fuel-based energy sources to 50%.
    • For Meeting Climate Commitments: Prime Minister Narendra Modi pledged at COP26 in Glasgow in 2021 to reduce India’s carbon emission by 45% and increase the share of renewable energy in the country’s energy mix.
    • For Diversification of Investments: FIIs are looking to diversify their portfolios and seek opportunities in green investments due to regulatory support, particularly in developed countries.
      • India’s Sovereign Green Bonds Framework (2022), addresses concerns about greenwashing by providing a credible framework for green investments.

    Limitation For Govt. of India:

    • Limited credibility of projects: The absence of specific regulations for green bonds leaves investors unable to assess the financial risk associated with the projects.
    • Higher costs of issuing: The high cost of issuing green bonds in India poses a challenge for the market. Green bonds are initially costly but provide long-term cost savings.
    • Greenwashing may not be resolved: Greenwashing, which is the deceptive promotion of a company’s eco-friendly image, is prevalent in the green bond industry. Some bonds are labeled as “green” despite not meeting the specified criteria.

    Way Forward:

    • Establish Clear Regulations: The government should establish clear and stringent regulations for green bonds, outlining specific criteria for eligible projects.
    • Enhance Project Credibility: Implement mechanisms for independent verification and certification of green projects to ensure their credibility.
    • Lower Issuance Costs: Explore options to reduce the issuance costs of green bonds, such as providing incentives or subsidies to issuers.

    BACK2BASICS:

    About India’s Sovereign Green Bonds Framework:

    • It was first announced in the Union Budget 2022-23, where the proceeds of these green bonds will be issued for mobilizing resources for green infrastructure.
    • It was aimed to mobilize Rs 16,000 crore through the issuance of Green Bonds in the fiscal ending of March 2023.

    How they are issued?

    • The Finance Ministry will, each year, inform the RBI about spending on green projects for which the funds raised through these bonds will be used.
    • Green Bonds will be issued through a Uniform Price Auction (a public sale in which a fixed number of similar things are sold at the same price).

    What is the Eligibility for Repurchase Transactions (Repo)?

    • SGrBs will be eligible for Repurchase Transactions (Repo).
    • SGrBs will also be reckoned as eligible investments for Statutory Liquidity Ratio (SLR)

     

    Mains PYQ 

    Q Explain the purpose of the Green Grid Initiative launched at the World Leaders Summit of the COP26 UN Climate Change Conference in Glasgow in November 2021. When was this idea first floated in the International Solar Alliance (ISA)?