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  • India’s Bid to a Permanent Seat at United Nations

    Opportunity for India to push for reforms at the UN

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Various UN bodies

    Mains level: Paper 2- Opportunity for India to push for institutional changes at the UN

    The article analyses the changing geopolitical context against the background of the pandemic. China has been facing some challenges at the UN of late. Multilateralism faces an unprecedented crisis. This context provides an opportunity for India to push for reforms in international institutions. 

    China facing difficulty in elections to UN bodies

    • Recently, India besting China in the elections for a seat on the UN’s Commission on the Status of Women (CSW).
    • Soon after the CSW vote, it lost another election, this time to tiny Samoa for a seat on the UN Statistical Commission.
    • And a couple of days ago, it just about managed to get elected to the UN High Rights Council, coming fourth out of five contestants for four vacancies.
    • Earlier, China’s candidate had lost to a Singaporean in the race for DG World Intellectual Property Organization.

    China’s strengths

    • Taking advantage of its position as a member of the P-5 and as a huge aid giver, China made itself invincible in UN elections.
    • It won among others, the top positions at the Food and Agriculture Organization (FAO), the UN Industrial Development Organization (UNIDO), the International Telecommunication Union (ITU) and the International Civil Aviation Organization (ICAO).

    Historical background on China’s rise at the UN

    • World War II saw strong U.S.-China collaboration against the Japanese, including U.S. operations conducted from India.
    • Their bilateral ties saw the U.S. include the Chinese in a group of the most important countries for ensuring world peace post- World War II, along with the U.S., the USSR and the U.K.
    • This enlarged into the P-5, with France being added by the UK at the San Francisco conference held in 1945 where the UN charter was finalised.
    • The pure multilateralism of the League of Nations was thus infused with a multipolarity, with the U.S. as the sheet anchor.

    Challenges to multilateralism and the need for reform in the international institutions

    • Multilateralism is under stress due to COVID-19 pandemic and a certain disenchantment with globalisation.
    • At the root is the rise of China and its challenge to U.S. global hegemony.
    • But in the current scenario multilateralism backed by strong multipolarity in the need of the hour.
    • This demands institutional reform in the UN Security Council (UNSC) and at the Bretton Woods Institutions.
    • In this context, it is good that recently India, Germany, Japan and Brazil (G-4) have sought to refocus the UN on UNSC reform.
    • As proponents of reform, they must remain focused and determined even if these changes do not happen easily or come soon.
    • This is also the way forward for India which is not yet in the front row.

    Way forward

    • Earlier in the year, India was elected as a non-permanent member of the UNSC for a two-year term.
    • India will also host the BRICS Summit next year and G-20 Summit in 2022.
    • These are openings for India in collaborating the world in critical areas that require global cooperation especially climate change, pandemics and counter-terrorism.
    • India also needs to invest in the UN with increased financial contributions in line with its share of the world economy and by placing its people in key multilateral positions.

    Consider the question “The UN, which came into existence in different time fails to take into account the realities of the changing world. In light of this, examine the basis of India’s claim to a permanent seat at the UN. What are the challenges to India’s claim.”

    Conclusion

    Against the backdrop of pandemic and subsequent pushback against China at the UN, it is also an opportune moment for India and a Reformed Multilateralism.

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  • Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

    Nudge towards formalisation of MSMEs

    op-ed snap | Economics | 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: Criteria for MSMEs

    Mains level: Paper 3- Formalisation of MSMEs

    The lack of formalisation has several implications for MSMEs. Registering them could help them in various ways. The article deals with the issue of formalisation.

    Please read the link shared below for issues related to MSME

    The missing large in MSMEs

    Steps taken by Government to Formalize MSME

    • UAM: In 2015, the government notified the Udyog Aadhaar Memorandum (UAM), an online filing system for MSMEs.
    • As of January, 86 lakh MSMEs had registered on the UAM portal.
    • In 2016, the government notified rules under which MSMEs had to furnish information relating to their enterprises, online, in an MSME databank.
    • As of January, only 1.6 lakh units registered on it.
    • A new process of classification and registration for small businesses took off on July 1 called as “Udyam”.
    • As of October 1, the MSME ministry has confirmed that only 7 lakh registrations have taken place using the new system.Nudge by the government
    • In an attempt to nudge more enterprises to become lifetime Udyam, the government has integrated the system with the Trade Receivables Electronic Discounting System (TReDS) and the Government e-Marketplace (GeM).
    • In its updated Priority Sector Lending (PSL) guidelines, the RBI has established that for the purposes of PSL, MSMEs will be identified as per the gazette notification laying down the new process of classification and registration.

    Addressing the concerns

    • While the Udyam initiative holds more promise, it is important to assess if this will be detrimental to accessing formal finance.
    • To this end, the government and RBI should consider whether the registration requirement can be exempted for units with investment and turnover that falls in the lower end of the criteria.
    • In 2018, the International Finance Corporation estimated that the overall supply of finance from formal sources met only one-third of the credit demand of the MSME sector.
    • Enabling strategies such as PSL could provide a fillip to priority sectors including MSMEs which require increased formal financing.

    Conclusion

    The costs of formalisation and compliance are high and onerous in many states in India. In such an ecosystem, there are perverse incentives to remaining small and informal. Governments’ efforts towards formalisation should be directed towards addressing these issues.

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  • Coronavirus – Health and Governance Issues

    Growing salience of multilateralism

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India,Important International Institutions

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Need for multilateralism

    Multilateralism faces several challenges at the time when it is needed the most. The article highlights the need for more of it in the face of global challenges.

    Lack of international collaboration to deal with Covid

    • As COVID-19 recognises no boundaries, one would have expected that countries with technological and financial capabilities, would agree to pool their resources together to work on an effective and affordable anti-virus vaccine.
    • Instead, there are several parallel national efforts underway even as the World Health Organization (WHO) has put together a Covax alliance for the same purpose.
    •  Active collaboration would have enhanced our collective ability to overcome what has become a public health-cum-economic crisis.
    • But we live in an era when nationalist urges, fuelled by a political opportunism, diminish the appeal of international cooperation.
    • The post-pandemic world will have the awful dilemma of global integration without solidarity.

    Trends in the global order that suggests the need for multilateralims

    1) Global food crisis

    • The World Food Program has been awarded this year’s Noble Peace Prize.
    • The award is sending a message to the world — that we need multilateralism as an expression of international solidarity.
    • According to the WFP, 132 million more people could become malnourished as a consequence of the pandemic.
    • To the 690 million people who go to bed each night on an empty stomach, perhaps another 100 million or more will be added.
    • The Nobel Prize to the WFP will hopefully nudge our collective conscience to come together and relieve this looming humanitarian crisis.

    2) Despite issues, U.N. is still important

    • The United Nations is at the centre of multilateral institutions and processes and kept alive the notion of international solidarity and cooperation.
    • But it suffers from several disabilities due to the fault of its most powerful member countries.
    • They have deprived the UN of resources.
    • They have resisted efforts to institute long-overdue reforms.
    • Its structure no longer reflects the changes in power equations that have taken place and country such as India continues to be denied permanent membership of the Security Council.
    • And yet, the UN is now an essential part of the fabric of international relations for two reasons:
    • 1) The salience of global issues has expanded.
    • 2) The need for multilateral approaches in finding solutions has greatly increased.

    3) Multilateral institutions have become platform for contestation

    • In the network of multilateral institutions, several belong to the UN system, others are inter-governmental, still others may be non-governmental of a hybrid character.
    • This network performs two important tasks:
    • 1) Enable governance in areas which require coordination among nation-states.
    • 2) Set norms to regulate the behaviour of states so as to avoid conflict and to ensure both equitable burden-sharing and, equally, a fair distribution of benefits.
    • While there are multilateral institutions they have become platforms for contestations among their member states.
    • There is recognition of the need to cooperate but this is seen as a compulsion rather than desirable.

    4) Globalisation driven by technology will remain here

    • Globalisation may have stalled, but as we become increasingly digitised, there will be more, not less, globalisation.
    • The pandemic has triggered galloping globalisation in the digital economy.
    • Globalisation is driven by technology and as long as the technology remains the key driver of economic growth, there is no escape from globalisation.
    • In the contemporary world, the line separating the domestic from the external has become increasingly blurred.
    • In tackling domestic challenges deeper external engagement is often indispensable. This is certainly true of climate change.
    • The pandemic originated in a third country but soon raged across national borders.
    • If there had been a robust and truly global early warning system, perhaps it could have been contained.

    5) Interconnectedness of challenges

    • We must also take into account the inter-connectedness among various challenges, for example, food, energy and water security are inter-linked with strong feedback loops.
    • Enhancing food security may lead to diminished water and energy security.
    • It may also have collateral impact on health security.
    •  It is in recognition of these inter-connections that the international community agreed on a set of Sustainable Development Goals (SDGs).
    • The SDGs are cross-domain but also cross-national in character, and hence demand greater multilateral cooperation in order to succeed.

    6) Need for more democratic world

    • The lack of cooperation from even a single state may frustrate success in tackling a global challenge.
    • A fresh pandemic may erupt in any remote corner of the world and spread throughout the globe.
    • Prevention cannot be achieved through coercion, only through cooperation. It is only multilateralism that makes this possible.

    Conclusion

    It is a paradox that precisely at a time when the salience of cross-national and global challenges has significantly increased, nation-states are less willing to cooperate and collaborate in tackling them. So, there is a need for more of multilateralism to deal with the issues of global level.

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  • Monetary Policy Committee Notifications

    The RBI tunes in to the economy

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Inflation targeting mechanism

    Mains level: Paper 3- Issues with the inflation targeting mechanism of the RBI

    The article analyses the recent changes signalled by the RBI in its policymaking.

    Changes in the economic policymaking

    • Recently the U.S. Fed declared that the Fed will not let inflation stand in the way of maximising employment.
    • The reason for this was that the Phillips Curve, the relationship between inflation and unemployment, may no longer hold in the U.S. economy.
    • This is significant, given that the Anglo-American economics has been dominated by Phillips Curve.

    Why there was need for change in inflation targeting

    • Data show that the model that currently guides India’s inflation control strategy may be quite irrelevant.
    • This is seen in the recent behaviour of inflation.
    • We know that output contracted by more than 23% in the first quarter of this year.
    • Despite this staggering decline the inflation rate did not change,
    • This was contrary to experience that inflation reflects an ‘over heating’ economy, one growing too fast in relation to its potential.
    • This view represents the RBI’s official understanding of inflation, and presumably forms the basis of its policy of inflation targeting.
    • It was endorsed by the Government of India when it legislated the modern monetary policy framework to enable the RBI to pursue inflation targeting.
    • If the Phillips Curve, which the RBI’s approach internalises, exists, inflation should have decreased as India’s economy contracted during the lockdown.
    • The current inflation targeting mechanism had been imagined with developing economies in mind.
    • Inflation targeting mechanism is based on the idea that food prices are an important determinant of inflation along with imported inflation.
    • Accordingly, a macroeconomic contraction need not lower inflation.

    Role of food prices in India

    • A recent working paper of the RBI’s research department suggested that a more eclectic model than the one that underlies inflation targeting does a better job of forecasting inflation in India.
    • This model accepts a role for food prices, a possibility that is missed when embracing economic models developed in the western hemisphere, where food prices have stopped trending upwards over half a century ago.

    Conclusion

    The RBI shifting away from its rigid inflation targeting policy is in tune with the time and signals that the central bank is finally alive to India’s economy.

    Back2Basics: What is Philips Curve?

    • The Phillips curve is an economic concept, stating that inflation and unemployment have a stable and inverse relationship.
    • The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment.
    • However, the original concept has been somewhat disproven empirically due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment.

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  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    Feasibility of Export Driven Growth for India

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Export led growth

    Mains level: Paper 3- Contribution of export in the growth

    To aim for achieving high growth rate by focusing only on the domestic consumption and domestic demand could result in failure. The article argues for the focus on export to achieve the objective of growth.

    Domestic-demand led growth and its limitations

    • The debate in India has focused on domestic-demand led growth.
    • But there is no known model of domestic demand/consumption-led growth, anywhere that has delivered quick, sustained, and high rates of economic growth for developing countries.
    • India’s GDP growth of over 6 per cent after 1991 was associated with real export growth of about 11 per cent.
    • Moreover, domestic-demand led growth requires more public spending, tax cuts, private investment, and/or financial sector reforms: which is not feasible in the present context due to pandemic.
    • Consumption growth will be limited by the fact that household debt has grown rapidly in the last few years.
    • Consumption now can grow only if incomes grow.
    • Government spending could be a short run option, but COVID has limited that possibility.

    Why India should not follow advanced countries’ fiscal policies

    • India’s interest rates are not at zero and are unlikely to be so because of persistent inflation.
    • India’s borrowing is still considered risky which is reflected in ratings.
    • The favourable interest rate-growth differential that supports expansionary policy in the advanced countries is absent in India.
    • India may well have scope for expansionary fiscal policy in the short run but not as a medium run growth strategy.

    Why India should focus on export

    • Given all the above factors, India does not have the luxury of abandoning export orientation because the alternatives are so limited.
    • India’s market is too small to sustain any kind of serious import substitution strategy.
    • Small size of the market makes it difficult to offer investors the domestic market as bait and incentivising them to export.
    • India’s big, unexploited opportunities are in unskilled labour exports.
    • India is vastly under-exporting relative to its labour force.
    • Because China’s wages are rising as it has become richer, it has vacated about $140 billion in exports in unskilled-labour intensive sectors.
    • Post-COVID, the move of investors away from China will probably accelerate to hedge against supply chain disruptions.
    • India did not take advantage of the first China opportunity, now, a second opportunity stemming from geo-politics should be seized by India.
    • As India contemplates atmanirbharta, two deeper advantages of export orientation are always worth remembering.
    • 1) Foreign demand will always be bigger than domestic demand for any country.
    • 2) If domestic producers are competitive internationally, they will be competitive domestically and domestic consumers and firms will also benefit.

    Why openness of ecnonomy is important

    • Exploiting this opportunity in unskilled exports requires more not less openness.
    • To be internationally competitive, many parts and components have to be imported from so many different sources.
    • One indicator is the foreign or import contribution to exports.
    • China and Vietnam at the time of their export boom in textiles and clothing suggests that exports were highly dependent on imports (between 40 and 45 per cent).
    • In contrast, India’s import share is about 16 per cent.
    • Achieving Chinese and Vietnamese levels of success will therefore require greater imports and openness.

     Way forward

    • Export success will require genuine easing of costs of trading and doing business in India.
    • In the case of clothing, a key policy change in India will be to eliminate tariffs on all inputs. 
    • It will also require signing free trade agreements with Europe that still impose high duties on India’s clothing export, while Bangladeshi and Vietnamese exports which enjoy preferential access to world markets.

    Consider the question “As India contemplates atmanirbharta, we should not forget that export dynamism is essential for the rapid and sustained high economic growth. Comment.”

    Conclusion

    In sum, resisting the misleading allure of the domestic market, India should zealously boost export performance and deploy all means to achieve that. Pursuing rapid export growth in manufacturing and services should be an obsession with self-evident justification.

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  • Foreign Policy Watch: India-China

    Four lessons for the Quad from Asia’s history and geopolitics

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: The Quad

    Mains level: Paper 2- Fourth factors the Quad must consider about Asia

    The article highlights the 4 issues related to the history and geopolitics of Asian that the Quad members should pay attention to while formulating the future course of action. 

    The 4 factors

    If the Quad is to prosper as a geopolitical construct, it would do well to heed four lessons drawn from the long arc of Asia’s history and geopolitics.

    1) Lack of existence of Indo-Pacific system

    • There has never been Indo-Pacific system ever since the rise of the port-based kingdoms of Indochina in the first half of the second millennium.
    •  There were two Asian systems — an Indian Ocean system and an East Asian system — with intricate sub-regional balances.
    • The effort by a U.S. to artificially manufacture to combine the Indo and the Pacific into a unitary system is unlikely to succeed.

    2) Lack of peaceful existence dominated by any power

    • The Indo-Pacific region possesses no prior experience of long period of peace, prosperity and stability engineered from its maritime fringes.
    • Rather, dynamic long cycles of Chinese influence radiating outwards have alternated with sharp periods of turmoil.
    • The of ASEAN-centred multilateralism is more in tune with regional tradition and historical circumstance.
    • For their part, the Indo-Pacific’s ‘flanking powers’, India and Japan, have never balanced Chinese power throughout their illustrious histories.

    3) India must use its leverage judiciously

    •  The sea lines of communication constitute the important links connecting Indian Ocean to the Western Pacific.
    • It is also a valuable arena of leverage vis-à-vis Chinese shipping and resource flows.
    • This leverage must be wielded judiciously on India’s terms, not on the Quad’s terms.
    • The Quad, after all, has little to offer materially with regard to New Delhi’s continental two-front dilemma.
    • However, ceding this chokepoint leverage will invite overwhelming Chinese pressure against the full range of India’s South Asian interests — to which the other Quad members possess neither will nor desire to answer.

    4) Check on China’s India Ocean Ambitions

    •  The Quad has a valuable role to play as a check on China’s Indian Ocean ambitions.
    • India must develop ingrained habits of interoperable cooperation with its Quad partners.
    • This interoperable cooperation could pre-emptively dissuade China from mounting a naval challenge in its backyard.

    Conclusion

    The Quad must consider these factors while formulating the future course of action.

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  • Banking Sector Reforms

    Dilution of efficiency based principles and its implications for finacial markets

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Bond markets, SLR

    Mains level: Paper 3- Issues with the financial markets in India

    The article discusses the themes of the recently published books by Viral Acharya and Urjit Patel. Both the books deal with the issues with the financial markets in India

    Context

    • Two recently published books by Viral Acharya and Urjit Patel throws light on the issues with India’s finance market and role of RBI and the government.

    Importance of financial markets

    • Banks along with bond and equity markets oversee the matching of savers with borrowers.
    • Without financial markets, businesses would be restricted to investing out of retained earnings alone.
    • The financial markets have to satisfy the return appetites of savers while minimising their risk exposure.

    Undue preference to fiscal interest of the government

    • A major theme of Acharya’s book is the rampant subjugation of the financial and monetary infrastructure to the fiscal interests of the government.
    • Consider, for example, the conduct of monetary policy.
    • Since bank assets are marked to market, cuts in interest rates induce treasury gains for banks that effectively recapitalises them.
    • Consequently, rate cuts are preferred by governments needing to inject capital into public sector banks (PSBs).
    • For the same reasons, liquidity injections, which raise bond prices, are preferred to liquidity absorptions.
    • Fiscal compulsions of government can induce liquidity policies that have the opposite effect on the rate-setting by the MPC.
    • This contradiction is further complicated by the fact that the RBI is also the debt management agency for the government.
    • As a debt management agency, RBI’s key tasks is to sell government bonds at the highest possible price.
    • Pressures for regulatory forbearance in recognising NPAs often arise from the government wanting to avoid having to recapitalise PSBs.
    • The sameexplains the fact that stock exchanges in India having a 30-day disclosure norm for registered borrowers who default on their bank loans.
    • The standard in developed capital markets is immediate disclosure.
    • But that would induce an overnight rating downgrade of the concerned borrower thereby triggering additional capital provisioning needs for the lending bank.

    Conflict in government owning the PSBs

    • Patel’s book deals with conflicts inherent in the state owning the banks that control about three-fourth of total banking assets in India.
    • The primary problem with PSBs is that governments have used them as tools for macroeconomic management.
    • PSBs are regularly used for resource mobilisation to finance fiscal deficits.
    • The government often announces credit policies rather than having the banks allocate credit based on risk-return management criteria.
    • PSBs are the favoured instrument for meeting employment targets, supporting farmers through loan write-offs, etc.

    What are the implications of government owning PSBs

    • This kind of state interface naturally induces extreme levels of moral hazard in the behaviour of both debtors and creditors.
    • PSBs are not incentivised to exercise due diligence since they expect regulatory forbearance and recapitalisation in the event of rising NPAs.
    • The dilution of efficiency-based principles for banking has implications for all borrowers.
    • Creditworthy borrowers pay the risk premia to cover the riskiness due to unhealthy borrowers.
    • The worsening risk pool of borrowers is partly to blame for the fact that long term borrowing rates have remained stubbornly high despite repeated rate cuts by the MPC over the past 18 months.

    3 Problems and 3 Reforms

    Problems

    • There are three obvious problems with the existing architecture.
    • The first is the state ownership of banks.
    • The second is the chronically high fiscal deficit run by the consolidated public sector.
    • The third is the widespread perception that market regulators work under close government direction. 

    Reforms

    • Dealing with this will require, at a minimum, three reforms.
    • First, there has to be a wholehearted attempt at privatisation of PSBs.
    • Second, the RBI needs to be relieved of its public debt management role.
    • Third, the RBI has to be empowered to act independently of the government.

    Conclusion

    The growth of firms, which is a key driver of productivity and growth, requires well-functioning financial markets. India has a lot of work to do.

    Back2Basics: How cuts in interest rates induce treasury gains for banks?

    • Falling rates across the debt markets increase the demand for instruments that pay higher interest.
    • At this stage, prices of bonds which banks had bought when interest rates were high rise.
    • Hence, the value of government securities that banks have bought for the SLR requirement rises.
    • This increases profits as banks record the market value of these securities in their books.
    • Under this process, called marking to market, organisations record profits/losses in their books on a daily basis without actually booking any profit or loss.
    • So, more SLR bonds the bank holds, the higher its mark-to-market profit.
    • The other reasons bank profits rise when interest rates fall are pick-up in growth as companies borrow at lower rates as well as improvement in liquidity.

    Source:-

    https://www.businesstoday.in/moneytoday/banking/banks-to-make-huge-treasury-gains-on-bonds-on-rbi-rate-cut/story/193552.html

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  • Innovations in Biotechnology and Medical Sciences

    Need for guidelines for gene-editing research in India

    op-ed snap | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: CRISPR-Cas9

    Mains level: Paper 3- CRISPR-Cas9-Important tool in gene editing

    The Nobel Prize in Chemistry for 2020 has been awarded for the discovery of CRISPR Cas9. The two scientists have pioneered the use of CRISPR  – Cas9 (CRISPR-associated protein 9) system as a gene-editing tool.

    Background of discovery of CRISPR

    • In 1987a group of Japanese researchers observed an unusual homologous DNA sequence bearing direct repeats with spacing in a eubacterial gene.
    • In subsequent years CRISPR was discovered and showed to be a bacterial adaptive immune system and to act on DNA targets.
    • A notable discovery on the use of CRISPR as a gene-editing tool was by a Lithuanian biochemist, Virginijus Šikšnys, in 2012.
    • Šikšnys showed that Cas9 could cut purified DNA in a test tube, the same discovery for which both Charpentier and Doudna were given the credit.
    • Thus, the exclusion of Siksnys from this year’s Nobel is going to raise discussions.

    Issue of gene-edited babies

    • The world was alarmed by such a mission in 2018 when Chinese scientist edited genes in human embryos using the CRISPR-Cas9 system which resulted in the birth of twin girls.
    • The incident became known as the case of the first gene-edited babies of the world.
    • Following the incident, the World Health Organization formed a panel of gene-editing experts.
    • The expert panel suggested a central registry of all human genome editing research in order to create an open and transparent database of ongoing work.

    Guidelines and regulations in India

    • In India, several rules, guidelines, and policies are notified under the Environment Protection Act, 1986 to regulate genetically modified organisms.
    • The above Act and the National Ethical Guidelines for Biomedical and Health Research involving human participants, 2017, by the Indian Council of Medical Research (ICMR), and the Biomedical and Health Research Regulation Bill implies regulation of the gene-editing process.
    • This is especially so in the usage of its language “modification, deletion or removal of parts of heritable material”.
    • However, there is no explicit mention of the term gene editing.

    Consider the question “What is CRISPR-Cas9? How it helps in the gene-editing? What are the concerns with use of it for gene-editing?”

    Conclusion

    It is time that India came up with a specific law to ban germline editing and put out guidelines for conducting gene-editing research giving rise to modified organisms.

    Back2Basics: What is CRISPR?

    • CRISPRs: “CRISPR” stands for “clusters of regularly interspaced short palindromic repeats.”
    • It is a specialized region of DNA with two distinct characteristics: the presence of nucleotide repeats and spacers.
    • Repeated sequences of nucleotides — the building blocks of DNA — are distributed throughout a CRISPR region.
    • Spacers are bits of DNA that are interspersed among these repeated sequences.
    • In the case of bacteria, the spacers are taken from viruses that previously attacked the organism.
    • They serve as a bank of memories, which enables bacteria to recognize the viruses and fight off future attacks.

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  • Air Pollution

    Towards cleaner air in Delhi

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3- Delhi air-pollution issue

    The article suggests the three-pronged strategy to deal with the emission from transportation and highlights the importance of coordination at various level to deal with the issue of pollution.

    Anti-pollution campaign in Delhi

    • With air pollution returning to pre-COVID levels, the Delhi administration has launched a major anti-pollution campaign this month.
    • The campaign is focused on cutting the deadly smoke from thermal plants and brick kilns in the National Capital Region as well as on chemical treatment of stubble burning from nearby States.

    Abating emission from transportation

    • Delhi’s long-term solution will depend importantly also on abating emissions from transportation.
    • Delhi needs a 65% reduction to meet the national standards for PM2.5.
    • Vehicles, including trucks and two-wheelers, contribute 20%-40% of the PM2.5 concentrations.
    • Tackling vehicle emissions would be one part of the agenda, as in comparable situations in Bangkok, Beijing, and Mexico City.

    Three-part action to combat emissions from transportation

    • A three-part action comprises emissions standards, public transport, and electric vehicles.

    1) Stricter enforcement of emission controls

    • Two-wheelers and three-wheelers were as important as cars and lorries in Beijing’s experience.
    • Bangkok ramped up inspection and maintenance to cut emissions.
    • The first order of business is to implement the national standards.

    2) Strengthening public transport

    • Bus Rapid Transit (BRT)  around the world show how the sizeable investment cost is more than offset by the benefits, and that financing pays off.
    • Delhi has lessons from its BRT experience in designating better BRT lanes, improving the ticketing system and synchronising with the Metro.
    • The Supreme Court’s ruling to increase Delhi’s bus fleet and align it with the Metro network must be carried out.
    • The ‘odd-even’ number plate policy can help, but the system should reduce exemptions, allow a longer implementation period, and complement it with other measures.

    3) Adoption of electric vehicle: A long term solution

    •  Subsidies and investment will be needed to ensure that EVs are used to a meaningful scale.
    • The Delhi government’s three-year policy aims to make EVs account for a quarter of the new vehicles registered in the capital by 2024.
    • EVs will gain from purchase incentives, scrappage benefits on older vehicles, loans at favourable interest and a waiver of road taxes.

    Need for coordination at various level

    • Transport solutions need to be one part of pollution abatement that includes industry and agriculture.
    • Delhi’s own actions will not work if the pollution from neighbouring States is not addressed head on.
    • Technical solutions need to be underpinned by coordination and transparency across Central, State, and local governments.
    • Public opinion matters.
    • Citizen participation and the media are vital for sharing the message on pollution and health, using data such as those from the Central Pollution Control Board.

    Conclusion

    • It is a matter of prioritising people’s health and a brighter future. Once the pandemic is over, Delhi must not stumble into yet another public health emergency. The time to act is now.

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  • RBI Notifications

    Economic recovery and its discontents

    op-ed snap | Economics | Mains Paper 3: Government Budgeting

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: LTRO, Bonds

    Mains level: Paper 30- Measures by the RBI to assure the Government bond holders

    The article highlights the measures taken by the RBI in the recent MPC meeting to assure the buyers of the Government bonds and ensuring the policy rate transmission.

    Dealing with the rate transmission issue and why it matters

    • The gap between the repo rate and the average lending rate of banks is at a record high.
    • So, the RBI and the MPC focused on improving rate transmission.
    • This gap can be broken up into two parts:
    • The first is the gap between the RBI-set repo rate and the rate at which the government of India borrows (the GSec yield).
    • It is also called the “term premium” can be influenced by the RBI’s actions.
    • The second is the gap between the GSec yield and the rate at which individuals or private firms borrow.
    • This gap reflects risk aversion in the financial system and a lack of capacity.
    • The RBI has avoided directly influencing the term premium, perhaps to maintain its credibility and independence, staying clear of accusations that it is financing the government’s fiscal deficit.
    • However, unless the rate at which the government borrows comes down borrowing costs for the whole economy will stay elevated.

    Challenge of Balance-of-Payment surplus (i.e. excess dollars)

    • Over the past few months, the country’s foreign currency reserves have been growing at an unprecedented rapid pace.
    • This means that India is getting far more dollars than it needs. Three factors are responsible for this.
    • 1) Some short-term factors responsible are weak imports and a faster normalisation of exports.
    • 2) There have also been structural shifts in India’s economic policy which point to a persistent BoP surplus.
    • In addition to low energy prices, policies supporting Atmanirbhar Bharat mean lower imports and the push towards making India a participant in global value chains mean higher exports.
    • 3) At the same time, India’s capital account is being opened up: The special-category government of India bonds, for example.

    Why BoP surplus is opportunity

    • When the excess dollar inflows turn into a deluge, as they have over the past six months, the supply of rupees in the domestic economy also becomes excessive.
    • If the RBI can direct this surplus into government bonds, it can maintain its independence and credibility, and at the same time achieve its target of rate transmission.

    Measures by the RBI to assure the bond market

    • The buyers of government bonds need to feel reassured of not getting hurt by the volatility in bond prices.
    • When bond prices rise, the yields fall, and vice versa.
    • Banks parking trillions of rupees with the RBI at 3.35 per cent overnight would earn nearly 6 per cent if they bought government bonds.
    • That they did not was because they were afraid of the bond prices falling, which would offset the gains from higher rates.
    • The increase in the Hold-To-Maturity limits by the RBI  by one year to March 2022, has assured the banks that they need not fear booking interim losses if bond prices are volatile.
    • The announcement that the RBI would purchase state and central government bonds on the market (even if in small sizes) would provide further comfort.
    • The change in assessment of inflation should help buyers of government bonds take the risk.
    • Banks or other bond investors that refrained from purchasing government bonds because they felt the RBI would increase interest rates at some point to comply with its legal mandate, would be reassured by this clear communication.
    • The targeted refinancing operations (TLTRO) should help bring down borrowing rates in the targeted industries.

    Conclusion

    Economic challenges may persist for the foreseeable future. The economic scars of the last six months are likely to take time to heal. The RBI and the MPC, which have been proactive, creative and accommodative so far, may have to stay so for a while longer.

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