Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : BRICS
Mains level : Significance of BRICS for India
News
PM has left for Brazil to attend the 11th BRICS Summit.
What is BRICS?
BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.
The BRICS Leaders’ Summit is convened annually. It does not exist in form of organization, but it is an annual summit between the supreme leaders of five nations.
Its inception
On November 30, 2001, Jim O’Neill, a British economist who was then chairman of Goldman Sachs Asset Management, coined the term ‘BRIC’ to describe the four emerging economies of Brazil, Russia, India, and China.
He made a case for BRIC on the basis of econometric analyses projecting that the four economies would individually and collectively occupy far greater economic space and become among the world’s largest economies in the next 50 years or so.
Formation
The grouping was formalized during the first meeting of BRIC Foreign Ministers on the margins of the UNGA in New York in September 2006.
The first BRIC Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.
Members
South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS. South Africa subsequently attended the Third BRICS Summit in Sanya, China, in March 2011.
The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
BRICS now brings together five economies accounting for 42% of the world’s population, 23% of the global GDP and an around 17% share of world trade.
The five BRICS countries are also members of G-20
Where does India stand amongst BRICS?
Eighteen years later, India finds itself as one of the emerging economies in the grouping and beyond, especially
As PM Modi attends the 11th BRICS Summit in Brasilia, his sixth since he assumed office in 2014, it will be the beginning of what New Delhi sees as the “second cycle” of BRICS.
From the Indian perspective, BRICS has emerged the voice of developing countries, or the global south.
As these countries face an aggressive club of developed countries, raising challenges on issues from WTO to climate change, India believes BRICS has to protect the rights of the developing countries.
Also, India has to maintain the balancing act between Russia-China on the one side and the US on the other.
India’s successes
The fact that BRICS has put counter-terrorism on top of the agenda has been a success for India.
That was evident in the BRICS Summit in Xiamen in September 2017, with China as the chair.
The fact that it was achieved, despite the strained ties due to the standoff in Doklam, was a testimony to the value Beijing and New Delhi attach to the outcomes of the grouping.
On the question of multilateralism, India has articulated a vision for strengthening and reforming the multilateral system itself.
When India calls for multilateralism, it is not a call to reinforce the status quo of multilateralism but to reform it since this is what BRICS had originally set out to do.
Conclusion
The Summit will be an opportunity for India to lay the groundwork for hosting the 2021 Summit scheduled in India.
The last Summit took place in Goa in 2016.
India will also be mindful of the fact that the G20 Summit to be hosted in India will take place in 2022, and this will be an opportunity to synergise the two agendas from New Delhi’s lens as well.
South Block views this summit as a potential for cooperation, as the leaders have more in common than their predecessors.
Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : RCEP
Mains level : Implications of India's drop-out from RCEP
News
India decided to drop out of the RCEP agreement, citing its negative effects on “farmers, MSMEs and dairy sector”.
What is the RCEP?
The Regional Comprehensive Economic Partnership (RCEP) is a trade deal that was being negotiated between 16 countries.
They include the 10 ASEAN members and the six countries with which the bloc has free trade agreements (FTAs) — India, Australia, China, Korea, Japan, and New Zealand.
The purpose of the deal is to create an “integrated market” spanning all 16 countries.
This means that it would be easier for the products and services of each of these countries to be available across the entire region.
What makes RCEP special?
The RCEP is billed to be the “largest” regional trading agreement as the countries involved account for almost half of the world’s population, contribute over a quarter of world exports, and make up around 30% of the global GDP.
Negotiations to chart out the details of this deal have been on since 2013, and all participating countries had earlier aimed to finalise it by November 2019.
Outstanding issues where India contradicts
Chinese imports
Key issues that have prevented India from coming on board include “inadequate” protection against surges in imports.
This is a major concern for India, as its industry has voiced fears that cheaper products from China would “flood” the market.
India had been seeking an auto-trigger mechanism that would allow it to raise tariffs on products in instances where imports cross a certain threshold.
India has also not received any credible assurances on its demand for more market access, and its concerns over non-tariff barriers.
Rules of origin criteria
Its concerns on a “possible circumvention” of rules of origin — the criteria used to determine the national source of a product — were also not addressed.
Current provisions in the deal reportedly do not prevent countries from routing, through other countries, products on which India would maintain higher tariffs.
This is anticipated to allow countries like China to pump in more products.
Trade deficit
Despite India already having separate, bilateral FTAs with most RCEP nations, it has recorded trade deficits with these countries.
China India has an over $50 billion trade deficit is one of the major reasons for New Delhi not joining in at this stage.
During negotiations, it was also not able to get a favourable outcome on its demands on the base year that would be used to reduce the tariffs on the products that would be traded as part of the pact.
Protecting domestic industries
Throughout the RCEP negotiations, several sections of the Indian industry have raised concerns over India signing the deal.
They have argued that some domestic sectors may take a hit due to cheaper alternatives from other participant countries.
For instance, the dairy industry was expected to face stiff competition from Australia and New Zealand.
Similarly, steel and textiles sectors have also demanded protection.
Way ahead
As all other RCEP nations have agreed to sign the treaty on the terms negotiated, they will likely try to persuade India to agree to the same.
It remains to be seen whether those efforts ultimately lead.
All RCEP Participating Countries will work together to resolve these outstanding issues in a mutually satisfactory way.
India’s final decision will depend on the satisfactory resolution of these issues.
From UPSC perspective, the following things are important :
Prelims level : WTO
Mains level : India and WTO
News
The WTO’s dispute settlement panel ruled that India’s export subsidy schemes, including the provision for special economic zones, violated core provisions of global trade norms.
A recap of India’s dispute with the US
Last year, the US had taken India to the WTO’s over the issue of export subsidy schemes, claiming that they were hurting American companies.
The US alleged that some subsidy programmes run by the Indian government were giving undue advantage to Indian businesses.
The Trump administration filed a case against India citing a violation of the SCM Agreement as India’s gross national product per capita was over $1,000.
While the government had earlier said that it would phase out the aged export subsidy programmes, no such scrapping has occurred.
It has also come to light that India is already working on rolling out new schemes to replace the old programmes.
Recent WTO ruling
Upholding US’s complaints in the case WTO panel rejected India’s claims that it was exempted from the prohibition on export subsidies.
India had made claims under the special and differential treatment provisions of the WTO’s Agreement on Subsidies & Countervailing Measures (SCM).
The panel further ruled that India is not entitled to provide subsidies depending on export performance and said it’s per capita gross national product crossed $1,000 per annum.
What does it mean?
It is worth noting that under Article 3.1 of the WTO’s SCM agreement, all developing countries with gross per capita of $1,000 per annum for three consecutive years are required to stop all export incentives.
The US had earlier accused India of giving prohibited subsidies to Indian steel producers, pharmaceuticals, chemicals, information technology, textiles and apparel.
While the panel ruled in favour of US and urged India to withdraw the subsidies without delay.
While the panel upheld most of the claims made by the US, it rejected some points pertaining to a subset of exemptions from customs duties and an exemption from excise duties.
Impact of the ruling
Some of the schemes that will be affected by the WTO’s ruling include Merchandise Exports from India Scheme (MEIS), export-oriented units (EOU) scheme.
It will hamper some sector-specific schemes, including Electronics Hardware Technology Parks (EHTP) scheme and Bio-Technology Parks (BTP) scheme, Export Promotion Capital Goods (EPCG) scheme; and duty-free imports for Exporters Scheme.
Under the various schemes, domestic companies are currently receiving billions in subsidies on an annual basis.
Withdrawing the subsidies may have a significant effect on the performance of such companies.
What lies ahead?
The WTO dispute settlement panel has asked India to withdraw the concerned export subsidy schemes within a time period of 90 days from the adoption of the report.
It also asked India to withdraw prohibited subsidies under the EOU/EHTP/BTP schemes, EPCG and MEIS, within a period of 120 days and SEZ scheme within 180 days.
India has a month to appeal against the WTO’s order.
However, India has the right to challenge the ruling before the appellate body of the WTO dispute settlement mechanism with regards to export subsidy schemes.
Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : Universal Postal Union (UPU)
Mains level : India-Pakistan relations in recent times
News
In a unilateral decision, Pakistan has stopped exchange of postal mails with India since August 27.
Pakistan’s decision was taken without any prior notice and is in direct contravention of international norms.
Who regulates postal exchange between one country and another?
The United Nations’ Universal Postal Union (UPU) frames rules for international mail exchange, and fixes rates for international postal services.
The UPU has 192 member-countries and is headquartered in Bern.
Constituted in 1874, the UPU has four units: the Congress, the Council of Administration, the International Bureau, and the Postal Operations Council.
It regulates 6.40 lakh postal outlets worldwide.
India joined the UPU on July 1, 1876 and Pakistan on November 10, 1947.
What has mail exchange between India and Pakistan been like?
Before Pakistan’s move, mailbags were being exchanged almost daily.
With no regular, direct flight connectivity between the two countries, mail was being routed through the Saudi Arabia air route.
In India, all international posts are handled through the 28 Foreign Post Offices, with those in Delhi and Mumbai designated to handle mails for Pakistan.
The mailbags of both countries were exchanged at airports after a customs check.
Other than the UPU, three agreements cover postal exchange between India and Pakistan — Exchange of Value Payable Article, 1948; Exchange of Postal Article, 1974; and International Speed Post Agreement, 1987.
Can one UPU member-country unilaterally stop postal exchange with another?
Under UPU rules, when a country decides to suspend exchange with a country, it must notify the operator of the other country and if possible, the duration for which services is being stopped.
The UPU’s International Bureau too has to be notified.
The International Bureau issued a Convention Manual in 2018, in which Article 17-143 details ‘Steps to be taken in Event of Temporary Suspension and Resumption of Services’.
If services are temporarily suspended, the designated operator concerned must be notified of the fact by telecommunications, indicating, if possible, the probable duration of the suspension of services.
The same procedure shall be applied when the suspended services are resumed,” the Manual reads.
According to the three bilateral agreements between India and Pakistan, too, a prior notice has to be served before suspending services, sources in India Post said.
So, did Pakistan skip the UPU protocol?
India was not given prior notice when Pakistan suspended postal exchange.
Even two months later, India is yet to receive a direct communication.
Pakistan only handed over a copy of an internal order to airline operators, which handed them to Indian representatives.
On August 23, the customs and postal departments of Pakistan issued an internal order stopping postal exchange with India and handed its copy it to airlines.
India is also unaware if Pakistan has notified the UPU about suspension of postal service with India.
Mains Paper 3 : Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : About the index
Mains level : Ease of doing business in India
News
India has improved its score in the World Bank’s global Ease of Doing Business rankings, rising 14 notches to be placed 63rd out of 190 countries on the back of “sustained business reforms”.
About the index
The indicator measures the performance of countries across 10 different dimensions in the 12-month period.
The DBR ranks countries on the basis of Distance to Frontier (DTF), a score that shows the gap of an economy to the global best practice.
The 10 areas of study are: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.
Each country is scored and also ranked ( a comparison ).
The 0-100 score measures any given country’s performance with respect to the best practice across the entire set of countries. A score of zero signifies worst regulatory performance and 100, the best.
The indicator, however, is not necessarily representative of each country.
Important features of India’s performance
The World Bank has recognized India as one of the top 10 improvers for the third consecutive year.
Recovery rate under resolving insolvency has improved significantly from 26.5% to 71.6%.
The time taken for resolving insolvency has also come down significantly from 4.3 years to 1.6 years.
India continues to maintain its first position among South Asian countries. It was 6th in 2014.
What helped India improve?
For 11 countries, two cities were selected to construct the indicator – Delhi and Mumbai in the case of India.
It has further streamlined, in Delhi, the process and reduced the time and cost of obtaining construction permits and improved building quality control by strengthening professional certification requirements.
In addition to this, Mumbai’s streamlining of obtaining building permits has made it faster and less expensive to get a construction permit.
Its efforts to make it easier to trade across borders and resolve insolvency have also helped improve its ranking.
The government’s goal was to be among the top 50 economies by 2020.
What are the problem areas?
India still lags in areas like enforcing contracts and registering property.
It takes 58 days and costs on average 7.8 per cent of a property’s value to register it, longer and at greater cost than among OECD high-income economies.
And it takes 1,445 days for a company to resolve a commercial dispute through a local first-instance court, almost three times the average time in OECD high-income economies.
Global performance
The 10 top ranking countries with respect to the indicator were: New Zealand, Singapore, Hong Kong SAR China, Denmark, Korea, USA, Georgia, United Kingdom, Norway, and Sweden.
China (rank 31, score 77.9) made it to the top 10 list for the second such year.
New Zealand and Somalia retained their 1st and 190th spot respectively.
As far as India’s neighbourhood is concerned, Pakistan carried out the most reforms in the South Asia.
Bangladesh, Sri Lanka, the Maldives and Afghanistan made zero regulatory changes.
South Asian region generally underperforms with regard to enforcing contracts and registering property, as per the Bank.
From UPSC perspective, the following things are important :
Prelims level : Global Wealth Report 2019
Mains level : Income inequality in India
News
The Credit Suisse Group, a Switzerland-based multinational investment bank, has released the 10th edition of its annual Global Wealth Report.
Global Wealth Report 2019
The report typically tracks both the growth and distribution of wealth – in terms of the numbers of millionaires and billionaires.
It tracks the proportion of wealth that they hold – as well as the status of inequality around the world.
How is wealth defined?
Wealth is defined in terms of “net worth” of an individual.
This, in turn, is calculated by adding up the value of financial assets (such as money) and real assets (such as houses) and then subtracting any debts an individual may have.
What are the drivers of the wealth of nations?
1) Size of the population
Several factors can explain why wealth per adult follows a different path in different countries.
For instance, the overall size of the population is one possible factor that drives wealth per adult in the country. For a country with a huge population, in terms of final calculation, this factor reduces the wealth per adult.
But there is a flip side as well. A big population also provides a huge domestic market and this creates more opportunities for economic growth and wealth creation.
2) Saving behaviour
Another important factor is the country’s saving behaviour. A higher savings rate translates into higher wealth. The two variables share a strong positive relationship.
Overall, a percentage point rise in the savings rate raises the growth rate of wealth per adult by 0.13% each year on average.
Thus, for example, household wealth in Poland (with an 18% savings rate) would be expected to be 27% higher in mid-2019 if it had matched the savings rate of Sweden (28%),” states the Credit Suisse report.
3) Level of economic activity
But by far the most important factor in determining the different trends in household wealth among countries is the general level of economic activity as represented by aggregate income, aggregate consumption or GDP.
That’s because the expansion of economic activity increases savings and investment by households and businesses, and raises the value of household-owned assets, both financial and non-financial.
But wealth and GDP do not always move in tandem, cautions the report. This is especially so when asset prices fluctuate markedly as they did during the financial crisis.
Key findings of the report
A key finding of 2019’s report is that China has overtaken the US this year to become “the country with most people in the top 10% of global wealth distribution.
As things stand, just 47 million people – accounting for merely 0.9% of the world’s adult population – owned $158.3 trillion, which is almost 44% of the world’s total wealth.
At the other end of the spectrum are 2.88 billion people – accounting for almost 57% of the world’s adult population – who owned just $6.3 trillion or 1.8% of the world’s wealth.
The other way to look at this distribution of wealth is from the prism of inequality.
The bottom half of wealth holders collectively accounted for less than 1% of total global wealth in mid-2019, while the richest 10% own 82% of global wealth and the top 1% alone own 45%,” states the report.
Indian case
Total wealth in India increased fourfold between 2000 and 2019, reaching $12.6 trillion in 2019, making India the fifth globally in terms of the number of ultra-high net-worth individuals, as per the report.
India has 8.27 lakh adults in the top 1% of global wealth holders – 1.6% share of the global pool .
It is estimated that India has 4,460 adults with wealth of over $50 million and 1,790 that have more than $100 million.
However, the study also found that while the number of wealthy people in India has been on the rise, a larger section of the population has still not been part of the growth in overall wealth.
Inequality persists
While wealth has been rising in India, not everyone has shared in this growth.
There is still considerable wealth poverty, reflected in the fact that 78% of the adult population has wealth below $10,000,” stated the report.
While highlighting the fact that a small fraction of the population — 1.8% of adults — has a net worth of more than $100,000.
Meanwhile, as per the financial major, India is expected to grow its wealth very rapidly and add $4.4 trillion in just five years, reflecting an increase of 43%.
From UPSC perspective, the following things are important :
Prelims level : QS India Ranking 2020
Mains level : State of higher education in India
News
The Quacquarelli Symonds (QS) India Rankings 2020 was recently released.
Top institutions in India
About QS Rankings
The British higher education analysts QS has ranked the higher education institutions in India on the basis eight parameters which have different weightage.
The eight parameters with their weightage are academic reputation (30%), employer reputation (20%), faculty student ratio (20%), staff with PhD (10%), Papers per faculty (10%), citation per paper (5%), international faculty (2.5%) and international students (2.5%).
This is the second time QS has published separate ranking for top institutions in India.
Mains Paper 3 : Money-Laundering & Its Prevention |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : FATF
Mains level : Terror funding
Context
Pakistan escaped for the moment from the black list of the global Financial Action Task Force (FATF) that acts against terror financing in the world.
Implications of the event
It reinforces Delhi’s critics, who believe Pakistan can’t be “isolated” even if its army brazenly violates its international legal commitments on fighting terrorism.
Criticism arises from the fact that the government had mounted a sustained campaign in the last few years to apply the existing international norms against money laundering and terror financing on Pakistan.
FATF listing
It puts countries on notice and seeks time-bound compliance with a range of FATF benchmarks.
If countries fail to comply, they get on to a blacklist that calls on nations to take additional measures against financial transactions involving Pakistan’s jurisdiction.
At the moment, only two countries are on the blacklist — Iran and North Korea.
Pakistan and FATF
Pakistan was first put on the grey list in 2012 but got off it in 2015 when the FATF and its procedures caught India’s serious political interest.
The intense Indian effort resulted in Pakistan being put on the grey list again in 2018.
FATF acknowledged that Pakistan is in full compliance with only five of the 27 benchmarks Islamabad had to address.
The FATF has issued a stern warning to Pakistan that it could get to the black list if there was no progress by February 2020.
Limitations of FATF
There is no guarantee that Pakistan will pay the price four months down the road.
FATF is a multilateral mechanism where bilateral political considerations do impact on the outcomes. Pakistan can thank China, Turkey and Malaysia, whose support helped it escape the black list.
There is nothing to suggest that the Pakistan policies of the three countries might change any time soon.
Positives
India’s effort has generated international pressure on Pakistan Army’s support to cross-border terrorism.
Sustaining the international mobilisation also turns harsh light on China who talks about opposing terrorism and improving ties with India but refuses to walk the talk.
From UPSC perspective, the following things are important :
Prelims level : State of the World’s Children Report 2019
Mains level : Read the attached story
News
UNICEF released its State of the World’s Children report for 2019.
Highlights of the report
The UNICEF report found that one in three children under the age of five years
Around 200 million children worldwide — are either undernourished or overweight.
Children in India
In India, every second child is affected by some form of malnutrition.
The report said 35% of Indian children suffer from stunting due to lack of nutrition, 17% suffer from wasting, 33% are underweight and 2% are overweight.
According to government figures, stunting and wasting among children in the country has reduced by 3.7 per cent and the number of underweight children have reduced by 2.3 per cent from 2016 to 2018.
Other details
One in five children under age 5 has vitamin A deficiency, which is a severe health problem in 20 states.
Every second woman in the country is anaemic, as are 40.5% children.
One in ten children are pre-diabetic.
Indian children are being diagnosed with adult diseases such as hypertension, chronic kidney disease and diabetes.
India’s among its neighbors
Among countries in South Asia, India fares the worst (54%) on prevalence of children under five who are either stunted, wasted or overweight.
Afghanistan and Bangladesh follow at 49% and 46%, respectively. Sri Lanka and the Maldives are the better performing countries in the region, at 28% and 32%, respectively.
India also has the highest burden of deaths among children under five per year, with over 8 lakh deaths in 2018.
It is followed by Nigeria, Pakistan and the Democratic Republic of Congo, at 8.6 lakh, 4.09 lakh and 2.96 lakh deaths per year, respectively.
From UPSC perspective, the following things are important :
Prelims level : GHI
Mains level : Read the attached story
News
The Global Hunger Index 2019 was recently released.
Global Hunger Index (GHI)
The GHI has been brought out almost every year by Welthungerhilfe lately in partnerships with Concern Worldwide since 2000; this year’s report is the 14th one.
The reason for mapping hunger is to ensure that the world achieves “Zero Hunger by 2030” — one of the SDGs laid out by the United Nations.
A low score gets a country a higher ranking and implies a better performance.
It is for this reason that GHI scores are not calculated for certain high-income countries.
Each country’s data are standardised on a 100-point scale and a final score is calculated after giving 33.33% weight each to components 1 and 4, and giving 16.66% weight each to components 2 and 3.
For each country in the list, the GHI looks at four indicators:
Undernourishment (which reflects inadequate food availability): calculated by the share of the population that is undernourished (that is, whose caloric intake is insufficient)
Child Wasting (which reflects acute undernutrition): calculated by the share of children under the age of five who are wasted (that is, those who have low weight for their height)
Child Stunting (which reflects chronic undernutrition): calculated by the share of children under the age of five who are stunted (that is, those who have low height for their age)
Child Mortality (which reflects both inadequate nutrition and unhealthy environment): calculated by the mortality rate of children under the age of five.
India’s performance
The latest GHI has ranked India a lowly 102 among the 117 countries it has mapped.
India is one of the 47 countries that have “serious” levels of hunger.
In 2018, India was pegged at 103 but last year 119 countries were mapped.
So while the rank is one better this year, in reality, India is not better off in comparison to the other countries.
Global scene
On the whole, the 2019 GHI report has found that the number of hungry people has risen from 785 million in 2015 to 822 million.
It further states that “multiple countries have higher hunger levels now than in 2010, and approximately 45 countries are set to fail to achieve ‘low’ levels of hunger by 2030”.
India’s score relative to its neighbors
Among the BRICS grouping, India is ranked the worst, with China at 25 and a score of just 6.5.
Within South Asia, too, India is behind every other country.
Sri Lanka, Nepal, Bangladesh and Pakistan (in that order) are all ahead of India.
Why is India ranked so low on GHI?
There is one category — Child Wasting, that is, children with low weight for their age — where India has worsened.
In other words, the percentage of children under the age of 5 years suffering from wasting has gone up from 16.5 in 2010 to 20.8 now.
Wasting is indicative of acute undernutrition and India is the worst among all countries on this parameter.
India’s child wasting rate is extremely high at 20.8 percent — the highest wasting rate of any country in this report for which data or estimates were available.
From UPSC perspective, the following things are important :
Prelims level : WEO report
Mains level : Economic slowdown in India
News
In the gloomy global economic picture painted by the IMF, India retains its rank as the world’s fastest-growing major economy, tying with China.
Growth projections for India
IMF has projected growth rate of 6.1 per cent for the current fiscal year, despite an almost one per cent cut in the forecast.
The report projected India’s economy to pick up and grow by 7 per cent in the 2020 fiscal year.
The world economy is projected to grow only 3 per cent this year and 3.4 per cent next year amid a “synchronised slowdown”.
IMF’s projected growth rate of 6.1 per cent for 2019-20 is consistent with the Indian Monetary Policy Committee’s forecast.
Mapping the slowdown
India’s economy decelerated due to sector-specific weaknesses in the automobile sector and real estate as well as lingering uncertainty about the health of non-bank financial companies.
It added that corporate and environmental regulatory uncertainty was other factor that weighed on demand.
The global slowdown is due to rising trade barriers, uncertainty surrounding trade and geopolitics, and structural factors, such as low productivity growth and an aging population in developed countries.
Suggestions for India
The IMF suggested that India should use monetary policy and broad-based structural reforms to address cyclical weakness and strengthen confidence.
A credible fiscal consolidation path is needed to bring down India’s elevated public debt over the medium term.
This should be supported by subsidy-spending rationalization and tax-base enhancing measures, said the report.
Other measures it suggested included reducing the public sector’s role in the financial system, reforming the hiring and dismissal regulations that would help incentivise job creation and absorb the country’s large demographic dividend”, and land reforms to expedite infrastructure development.
Crisis looming on Auto Sector
The auto sector is one of the areas seriously affected globally.
Global car sales fell by three per cent last year, while the number of automobile units manufactured declined by 1.7 per cent, in value terms it fell by 2.4 per cent.
The number of auto units produced by China fell by four per cent, its first decline in more than two decades, according to the WEO.
It said the two main reasons for the decline of the auto sector were the removal of tax breaks in China and the rollout of new carbon emission tests in Europe.
The auto industry had a large global footprint and vehicles and related parts are the world’s fifth largest export product, accounting for about 8 percent of global goods exports in 2018.
From UPSC perspective, the following things are important :
Prelims level : CDRI
Mains level : Need for Disaster resilient infrastructure
News
While speaking at the UN Secretary General’s Climate Action Summit PM Modi had announced the launch of the Coalition for Disaster Resilient Infrastructure (CDRI).
CDRI
CDRI is envisaged as an international knowledge platform where countries can collaborate to make their existing and new infrastructure strong enough to withstand natural disasters.
It is the fruition of at least three years of discussions that India has had with more than 40 countries on this subject.
In simple terms, CDRI is an attempt to bring countries together to share and learn from the experiences of one another to protect their key infrastructure — highways, railways, power stations, communication lines, water channels, even housing — against disasters.
Need to protect infrastructure
Many countries, including India, have over the years developed robust disaster management practices that have helped in sharply reducing human casualties in a disaster.
However, the economic costs of a disaster remain huge, mainly due to the damage caused to big infrastructure.
According to a recent estimate by the World Bank, Cyclone Fani, which hit Odisha in May this year, caused damage to the tune of $4 billion.
The losses in the Kerala floods last year could be in excess of $4.4 billion, according to a post-disaster needs assessment report by the state government.
Purpose
The platform is not meant to plan or execute infrastructure projects. Nor is it an agency that will finance infrastructure projects in member countries.
Instead, CDRI will seek to identify and promote best practices, provide access to capacity building, and work towards standardization of designs, processes and regulations relating to infrastructure creation and management.
It would also attempt to identify and estimate the risks to, and from, large infrastructure in the event of different kinds of disasters in member countries.
CDRI hopes to have as its member’s not just countries, but organisations like UN bodies, financial institutions, and other groups working on disaster management.
Moving away with basic infrastructure
Much of the developing world is still building its basic infrastructure.
Many developed countries are also in the process of replacing old infrastructure that has completed their lifetimes.
Future infrastructure needs to take into account the heightened risks arising out of the increased frequency and intensity of extreme weather events and other adverse impacts of climate change.
Even existing infrastructure would need to be retrofitted to make them more resilient.
Disaster-proofing a project would involve changes in design, and use of newer technologies.
These involve additional costs which, however, are only a fraction of the losses that a disaster can bring.
An international forum
Disaster preparedness and infrastructure creation are largely national endeavors.
However, modern infrastructure is also a web of networked systems, not always confined to national boundaries.
There are increasing numbers of trans-national and trans-continental highways and railways; transmission lines carry electricity across countries; assets on a river are shared.
Damage to any one node can have cascading impacts on the entire network, resulting in loss of livelihoods and disruption in economic activity in places far away from the site of a disaster.
To make entire networks resilient is the main thought behind the Indian initiative of CDRI.
Comparison
I. CDRI and Belt Road Initiative
CDRI has sometimes been seen as India’s response to the Belt Road Initiative, China’s ongoing multi-billion-dollar programme to recreate the ancient Silk Route trading links.
China is building massive new land and maritime infrastructure in several countries.
India and some other nations view this as an attempt by China to use its economic and military heft to usurp strategic assets in other countries.
Though the comparisons are not surprising given the competing strategic interests of the two neighbours, the magnitude and purpose of the two initiatives are starkly different.
Unlike BRI, CDRI is not an attempt by India to create or fund infrastructure projects in other countries.
Having said that, international initiatives like these are not without any strategic or diplomatic objective.
II. CDRI and Solar Alliance
A more relevant comparison of CDRI can, however be made with the International Solar Alliance (ISA) that India launched at the climate meeting in Paris in 2015.
ISA, which has evolved into a treaty-based organisation with more than 50 countries already signed up, aims at a collective effort to promote the deployment of solar energy across the world.
Its objective is to mobilise more than $1 trillion into solar power by 2030, and to deploy over 1,000 GW of solar generation capacity in member countries by that time.
India hosts ISA, with its headquarters in Gurgaon. The CDRI secretariat too would be based in New Delhi.
While it is not envisioned to take the shape of a treaty-based organisation, CDRI can be seen as complementing ISA’s efforts.
ISA is about climate change mitigation — deployment of more solar energy would bring down the reliance on fossil fuels, thereby reducing greenhouse gas emissions.
With these two initiatives, India is seeking to obtain a leadership role, globally, in matters related to climate change.
From UPSC perspective, the following things are important :
Prelims level : Nothing much
Mains level : MSME & Self Employment - role in Economy
News
More than two-thirds of total employment in under-developed and developing countries is provided by small economic units as per the latest report – Small Matters.
What the report says
Policymakers must treat these units as a central part of economic and social development strategies worldwide.
It argued that such an approach is a must for low- and middle-income countries where the majority is employed in small economic units.
Link to SDGs
Three of the United Nations’ SDGs depend on employment opportunities — eradicate poverty (SDG 1), full and productive employment and decent work for all (SDG 8) and reduce inequality (SDG 10).
Correlation with the country’s development status
The report says that there’s a negative correlation between countries’ level of per capita GDP and employment share of the self-employed and micro and small enterprises.
The countries in the lowest income level groups have almost 100% self-employment. In these countries, hardly any employment occurs in firms with 50 or more employees.
Self-employment is the highest in South Asia (66%) followed by sub-Saharan Africa (50%) and the Middle East and North Africa (44%), found the report.
Around 85% of workers in India are self-employed or do casual work and 73% of non-agricultural workers in Bangladesh were self-employed.
Other findings of the report
Countries that have more people working in the service sector, have lower employment in the agriculture sector. For example, Niger and Madagascar see agriculture provide 75% of employment and services only 15%.
In developed countries like Ireland, Netherlands and Denmark, hardly 5% of total employment is in the agriculture sector, while 80% is provided by services.
Employment in the agriculture
Most of the employment opportunities fall into the informal category.
Around 95% of agricultural sector employment in South Asia and sub-Saharan Africa is informal.
The contrasting case of developed and developing countries
Europe and Central Asia have the largest share of agricultural employment in the formal sector more than 30%.
In East Asia and the Pacific, it is more than 20%.
In sub-Saharan Africa and South Asia, self-employment alone accounts for more than half of the total agriculture employment.
There is an inversely proportional relationship between countries’ economies and the nature of employment opportunities.
The share of the self-employed in low-income countries is almost five times the share in high-income countries,.
The employment share of micro-enterprises is much higher in low- and lower-middle-income countries than in upper-middle- and high-income countries.
But, the employment in small enterprises (10-49 employees) is more in high-income countries and the employment share of small enterprises is just 3% in low-income countries; but it goes up to 25% in high-income countries.
Conclusion
The report argued that it is important to understand the nature of employment opportunities available in a country to facilitate and improve the quality.
Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : RCEP; ASEAN
Mains level : ASEAN negotiations
News
Commerce Minister is in Bangkok for the eighth RCEP ministerial meeting. The meeting is expected to work out the unresolved issues in the negotiations on the mega trade deal.
What is the RCEP?
It is a trade deal that is currently under negotiation among 16 countries — the 10 member countries of ASEAN and the six countries with which the ASEAN bloc has FTA.
The deal
Negotiations on the details of RCEP have been on since 2013, and all participating countries aim to finalise and sign the deal by November.
What does the RCEP propose?
The purpose of RCEP is to create an “integrated market” spanning all 16 countries, making it easier for products and services of each of these countries to be available across this region.
ASEAN says the deal will provide “a framework aimed at lowering trade barriers and securing improved market access for goods and services for businesses in the region”.
Negotiations
The negotiations are focussed on areas like trade in goods and services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce, and small and medium enterprises.
Why is the RCEP important?
It is billed as the “largest” regional trading agreement ever.
These countries account for almost half of the world’s population, contribute over a quarter of world exports, and makeup around 30% of global GDP.
How have the talks progressed?
Of the 25 chapters in the deal, 21 have been finalised.
Chapters on investment, e-commerce, rules of origin, and trade remedies are yet to be settled.
How does India stand to gain?
Sections of the Indian industry feel that being part of RCEP would allow the country to tap into a huge market if the domestic industry becomes competitive.
Pharmaceuticals and cotton yarn are confident of gains, and the services industry too may have new opportunities.
What are the concerns?
Several industries feel India needs to be mindful of the amount of access it gives to its market.
There is fear that some domestic sectors may be hit by cheaper alternatives from other RCEP countries.
Apprehensions have been expressed that cheaper Chinese products would “flood” India.
Critics are also not confident that India would be able to take advantage of the deal, given its poor track record of extracting benefits from the FTAs with these countries.
India’s trade gap with these countries may widen if it signs the RCEP deal.
Industries like dairy and steel have demanded protection.
The textile industry has already raised concerns about growing competition from neighboring countries.
The bigger players in steel are apprehensive of the potential impact on their businesses.
Makers of finished goods have argued that limiting steel supply to domestic producers through higher import duties will put them at a disadvantage.
From UPSC perspective, the following things are important :
Prelims level : GCI
Mains level : Ease of doing business in India
News
The annual Global Competitiveness Index (GCI) compiled by Geneva-based World Economic Forum (WEF) is released.
Singapore has become the world’s most competitive economy in 2019, pushing the U.S. to the second place. Hong Kong SAR is ranked 3rd, Netherlands is 4th and Switzerland is ranked 5th.
About the GCI
The GCI was launched in 1979, maps the competitiveness landscape of 141 economies through 103 indicators organised into 12 pillars.
India ranked second for shareholder governance
India is ranked also high at 15th place in terms of corporate governance, while it is ranked second globally for shareholder governance.
In terms of the market size, India is ranked third, while it has got the same rank for renewable energy regulation.
Besides, India also punches above its development status when it comes to innovation, which is well ahead of most emerging economies and on par with several advanced economies.
India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable despite the high delinquency rate, which contributes to weakening the soundness of its banking system.
This is largely due to improvements witnessed by several other economies.
India’s declining performance
India has moved down 10 places to rank 68th from 58th on an annual global competitiveness index.
WEF has flagged limited ICT (information, communications and technology) adoption, poor health conditions and low healthy life expectancy.
India is among the worst-performing BRICS nations along with Brazil (ranked even lower than India at 71st this year).
In the overall ranking, India is followed by some of its neighbours including Sri Lanka at 84th place, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th place.
Why?
Low healthy life expectancy
The WEF said the healthy life expectancy, where India has been ranked 109th out of total the 141 countries surveyed for the index, is one of the shortest outside Africa and significantly below the South Asian average.
Improving skill base
Besides, India needs to grow its skills base, while its product market efficiency is undermined by a lack of trade openness.
The labour market is characterized by a lack of worker rights’ protections, insufficiently developed active labour market policies and critically low participation of women.
With a ratio of female workers to male workers of 0.26, India has been ranked very low at 128th place. India is also ranked low at 118th in terms of meritocracy and incentivisation and at 107th place for skills.
Asia-Pacific is most competitive region
The report showed that several economies with strong innovation capability like Korea, Japan and France, or increasing capability, like China, India and Brazil, must improve their talent base and their labour markets.
The presence of many competitive countries in Asia-Pacific makes this region the most competitive in the world, followed closely by Europe and North America.
China is ranked 28th (the highest ranked among the BRICS) while Vietnam is the most improved country in the region this year at 67th place.
From UPSC perspective, the following things are important :
Prelims level : Highlights of the report
Mains level : Economic implications of the Eye impairment
News
The first-ever World Vision Report was recently released by WHO.
Highlights of the report
More than a quarter of the world’s population — some 2.2 billion people — suffer from vision impairment.
The report warned that population ageing would lead to a dramatic increase in the number of people with vision impairment and blindness.
Presbyopia, a condition in which it is difficult to see nearby objects, affects 1.8 billion people. This condition occurs with advancing age.
The common refractive error — myopia (a condition in which it is difficult to see objects at a distance) affects 2.6 billion, with 312 million being under the age of 19 years.
Cataract (65.2 million), age-related macular degeneration (10.4 million), glaucoma (6.9 million), corneal opacities (4.2 million), diabetic retinopathy (3 million), trachoma (2 million), and other causes (37.1 million) are other common vision impairments listed in the report.
Trachoma is caused due to bacterial infection in the eye. Many countries have eliminated it, including India.
India praised
There was praise for India in the report for its National Programme for Control of Blindness (NPCB).
According to the report, in 2016-17, the NPCB provided cataract surgery to a total 6.5 million people in India, achieving a cataract surgical rate of over 6,000 per million population.
During this period, school screening was provided to nearly 32 million children and approximately 750,000 spectacles were distributed, the report said about the NPCB.
Regional and gender distribution
The prevalence of vision impairment in low- and middle-income regions was estimated by the report to be four times higher than in high-income regions
Three Asian regions alone (representing 51% of the world’s population) account for 62 per cent of the estimated 216.6 million vision-impaired people in the world.
South Asia (61.2 million); East Asia (52.9 million); and South-East Asia (20.8 million).
Myopia is the highest in high-income countries of the Asia-Pacific region (53.4 per cent), closely followed by East Asia (51.6 per cent).
Adolescents in urban areas of China and South Korea have reported rates as high as 67 per cent and 97 per cent, respectively.
Why vision matters?
The WHO report said studies had consistently established that vision impairment severely impacted quality of life (QoL) among adult populations.
Besides, vision impairment also caused productivity loss and economic burden.
The economic burden of uncorrected myopia in the regions of East Asia, South Asia and South-East Asia were reported to be more than twice that of other regions and equivalent to more than one per cent of gross domestic product.
Prevention is possible
Out of one billion cases of vision impairment that could have been prevented, 11.9 million suffered from glaucoma, diabetic retinopathy and trachoma that could have been prevented.
The estimated costs of preventing the vision impairment in these 11.9 million would have been $5.8 billion.
This represented a significant missed opportunity in preventing the substantial personal and societal burden associated with vision impairment and blindness.
Various factors
Regarding gender gap, the WHO said no strong association existed between gender and many eye conditions, including glaucoma, age-related macular degeneration, and diabetic retinopathy.
However, rates of cataract and trachomatous trichiasis are higher among women, particularly in low- and middle-income countries,” it clarified.
Incidence of a rural-urban divide does exist.
Rural populations also face greater barriers to accessing eye care due to them having to travel greater distances and poor road quality, among other factors.
Lifestyle differences ensured that unlike cataract, higher rates of childhood myopia were found in urban populations of China and Australia since children living in rural areas spent more time outdoors.
Barriers to eye care
Accessibility to eye care services and high costs particularly for rural populations are the major drivers of vision impairment.
Therefore, the WHO emphasised expanding Universal Healthcare Coverage and making eye care an integral part of it around the world.
Direct costs are key barrier to accessing eye care in high-income countries, particularly for people living in rural areas or those with low socio-economic status.
Affordability to buy lenses or spectacles was a major stumbling block.
The WHO report, as with many other studies, highlighted that there was a gender disparity in accessibility to eye care services, with women standing a lesser chance of availing them.
Lack of trained human resources was another factor pushing these ailments further.
Mains Paper 3 : Social Media Networks & Internal Security |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : Not Much
Mains level : Combating misinformation spread on social media
News
Indian legal demands for online content removal are the fourth highest in the world, according to a report.
India on the top
For the study, the researchers collated all data to find out which governments censor online content the most and which channels are targeted by each government.
India is followed by Russia, Turkey, France, Mexico, Brazil, Germany, Pakistan, the US and the UK in the top 10.
India and Russia are well ahead, accounting for 19.86 and 19.75 percent of the overall number of removal requests (390,764), respectively, Bischoff said.
While India sent 77,620 content removal requests, Russia sent 77,162 requests during the study period.
However, these two countries do not always dominate the top spots across all channels.
Why censorship in India?
The findings come at a time when India is trying to find ways to fight misinformation spread on social media.
According to Twitter records, many content removal demands from the Ministry of Electronics and Information Technology simply cited a violation of Section 69(A) of the Information Technology Act, 2000.
On the hit list: Social media contents
While Facebook received most of the content take down requests from India, Google got it from Russia, Microsoft from China, Twitter from Turkey and Wikimedia from the US.
In fact, a vast majority – more than 90 per cent – of India’s government content removal requests went to Facebook, the findings showed.
From UPSC perspective, the following things are important :
Prelims level : Developing Asia group
Mains level : Urbanization in India
News
The economic outlook update released by the Asian Development Bank (ADB) highlighted that the number of urban inhabitants in ‘Developing Asia’ has increased “almost five-fold since 1970”.
Developing Asia
It refers to a group of 45 countries that are members of the ADB.
World Urbanisation Prospects data
The report, tracking World Urbanisation Prospects data, states that the two-thirds of the nearly 1.5 billion additional city dwellers in the region belonged from India and China.
As such, between 1970 to 2017, the urban population in this bunch of countries grew from 375 million to 1.84 billion.
The region led the global increase in the urban population in this period and accounted for 53 per cent of it.
Low pace of urbanization
The ADB reports states that, notwithstanding the fast growth in urban population, “developing Asia’s urbanisation rate still lagged at 46% in 2017”.
Urbanisation rate means the percentage of the population living in urban areas.
The US achieved the 46 per cent urbanisation mark over a century ago while Japan reached there in the early 1950s. But the US and Japan are far cries at the moment.
Developing Asia’s urbanisation rate in 2017 was lower than the average in other developing economies (which stood at 58 per cent) and the average in the developed economies (which stood at 81 per cent).
India, specifically, has 34 per cent of its population living in urban areas.
Reason: Population rise
Developing Asia urbanized faster than the rest of the world not only in terms of absolute growth, but also in terms of growth rate.
Urban population in this region increased at an average of 3.4 per cent per annum between 1970-2017.
This is much faster than the 2.6 per cent in the rest of the developing world – mainly Africa and Latin America – and 1.0 per cent in the developed world.
From UPSC perspective, the following things are important :
Prelims level : About the ranking
Mains level : Digital competitiveness in India
News
India has advanced four places to 44th position in terms of digital competitiveness in the world.
About the ranking
The Ranking, produced by the IMD World Competitiveness Center, measures the capacity and readiness of 63 nations to adopt and explore digital technologies as a key driver for economic transformation in business, government and wider society.
To evaluate an economy, WDCR examines three factors:
Knowledge: the capacity to understand and learn the new technologies;
Technology: the competence to develop new digital innovations; and
Future readiness: the preparedness for the coming developments.
India’s progress
India rose from 48th place in 2018 to 44th rank this year as the country has improved overall in all factors — knowledge, technology and future readiness — as compared to the previous year’s ranking.
India has made improvement in terms of knowledge and future readiness to adopt and explore digital technologies, according to a global report.
Global scenario
The US was ranked as the world’s most digitally competitive economy, followed by Singapore in the second place.
Sweden was ranked third on the list, followed by Denmark and Switzerland in the 4th and 5th place, respectively.
Others in the list of top-10 most digitally competitive economy include Netherlands in the 6th place, Finland (7th), Hong Kong SAR (8th), Norway (9th) and Republic of Korea (10th).
The largest jump in the overall ranking was registered by China, moving from 30th to 22nd, and Indonesia, from 62nd to 56th.
Mains Paper 2 : Bilateral, Regional and Global Groupings and agreements involving India |
Note4Students
From UPSC perspective, the following things are important :
Prelims level : CARICOM
Mains level : India's realtion with Caribbean countries
News
PM Modi held meeting with the leaders of the CARICOM group of countries on the sidelines of the United Nations General Assembly.
CARICOM
The Caribbean Community (CARICOM or CC) is an organisation of fifteen Caribbean nations and dependencies. The organisation was established in 1973.
They have primary objectives to promote economic integration and cooperation among its members, to ensure that the benefits of integration are equitably shared, and to coordinate foreign policy.
The secretariat headquarters is in Georgetown, Guyana. CARICOM is an official United Nations Observer.
Its major activities involve coordinating economic policies and development planning; devising and instituting special projects for the less-developed countries within its jurisdiction; operating as a regional single market for many of its members (Caricom Single Market); and handling regional trade disputes.
Members
The 15 members of CARICOM include:
Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad & Tobago.
