General Studies Paper 2

Context:

• China and Russia unveiled a partnership “without limits” and with no “forbidden areas” in Feb 2022. Russia and China had a strategic partnership for a long time. The Beijing declaration did lay out a solid basis for jointly confronting the West.

What were the Russian calculations for invading Ukraine?

• Putin had hoped that his military offensive would lead to quick collapse of the regime in Ukraine and occupation of Ukraine. This will impact the European security order.
• It will deeply divide Europe and fracture the US-led trans-Atlantic security system. After the US withdrawal from Afghanistan, occupation of Ukraine will further undermine the credibility of the US as a global power.
• Putin’s victory in Europe would have had a dramatic impact on Asia. It would have weakened US alliances in Asia and boosted China’s ambition to radically reshape its periphery. China would have used force for unification with Taiwan.

How has the Ukraine war played out?

• Ukraine’s determination has prevented the quick collapse of the regime in Kyiv. It has helped to mobilise massive military assistance from the Western world.
• Putin is locked in a stalemate. He has lost nearly 50% of the territory Russia gained in eastern Ukraine during the early phase of the invasion.
• Russia’s military material and manpower losses have been immense. Moscow faces a harsh regime of Western economic sanctions.

What are the geostrategic implications of the Sino-Russia alliance and Ukraine war?

• Putin and Xi have facilitated the Western unity under American leadership. The Ukraine invasion has also allowed the US to put simultaneous pressure on both China and Russia.
• In Europe, the Ukraine war has helped the US to galvanize and expand NATO.
• The Russian invasion has also triggered the fear of Chinese territorial expansionism in Asia. This has led to the strengthening of US bilateral alliances with Australia and Japan. The US has significantly raised its military and political support for Taiwan.
• The Sino-Russian alliance and the Ukraine war have seen Germany and Japan joining the battle against Moscow and Beijing.
• Japan and Germany happen to be the world’s third and fourth largest economies. Their mobilisation significantly alters the so-called “balance of powers”between the West and the Moscow-Beijing axis.
• Both Berlin and Tokyo are now committed to raising their defence spending to deal with the security challenges from Moscow and Beijing.
• Washington is limiting the influence of Russia and China in Eurasia by bringing its alliances and partnerships in Europe and Asia closer.
• Leaders of America’s Asian allies joined for the first time a NATO summit last June in Madrid. NATO has promised to take a greater interest in shaping the Indo-Pacific balance of power.
• There is a growing prospect that Moscow will become more beholden to Beijing after Putin’s military misadventure in Ukraine. Beijing is unlikely to abandon Moscow. A weakened Putin will remain a valuable asset for Xi even as Beijing seeks to limit some of the new Western hostility to China.

How is it impacting India?

• China can increase the military pressure on the disputed border with India.
• Delhi depends on Russian military supplies to cope with the PLA challenge and Moscow is now a junior partner to Beijing. This is certainly not a good situation for India.
• Dependence on Russian arms has severely constrained India’s position on Ukraine. It has cast a shadow over Delhi’s engagement with Europe and the US. It is now the biggest constraint on India’s freedom of action.
• India is facing the prospect of a unipolar Asia dominated by a rising and assertive China. So. it has turned to the US and its allies to restore the regional balance of power.
• The transition has become more urgent and complicated by the new Sino-Russian alliance Ukraine war.

General Studies Paper 3

Context:

• Recently, the Union Minister for Finance tabled the Economic Survey 2022-23 highlighting the outlook for India’s growth, inflation and unemployment in the coming years.

About

• The Economic Survey of India suggests that the economy has recovered from the Covid disruption and is poised for sustained robust growth in the rest of the decade.
• The Survey attributes the recovery to wide-ranging structural and governance reforms that have strengthened the economy’s fundamentals and increased its efficiency.
• The Indian economy is expected to grow at its potential similar to the growth experience after 2003, but the growth outlook is unlikely to be much above 6%.
• The growth rate in India has become increasingly capital-intensive, leading to a lower labor force participation rate and widespread joblessness, which acts as a drag on economic growth.
• India’s population is growing with a large youth bulge, high levels of poverty, and malnourished children, which requires faster growth to satisfy the growing population
• The survey cautions that a growth rate of 6% may not create enough jobs to meet the demand from the growing population.

What is the Economic Survey?

• The Economic Survey has its roots in the British colonial era, with the first survey being presented in 1950-51.
• The Economic Survey of India is an annual document presented to the Parliament by the Ministry of Finance.
• It reviews the performance of the Indian economy in the previous financial year and presents the outlook for the next year.
• It is prepared by the Economic Division of the Department of Economic Affairs(DEA) of the Ministry of Finance and is not governed by any specific act or legislation.
• The comments or policy solutions contained in the Survey are not binding on the government.

Major Findings of the Survey

• State of the Economy 2022-23:
  • The Indian economy is staging a broad-based recovery across sectors after recovering from pandemic-induced contraction, Russian-Ukraine conflict and inflation.
  • India’s GDP growth is expected to remain robust and in the range of 6-6.8 % in Financial Year 2023-24, but detailed some downside risks, such as low demand for exports, sustained monetary tightening, etc.
• Inflation:
  • The RBI projects headline inflation at 6.8% in FY23, outside its comfort zone of 2% to 6%, but the Survey is optimistic about the inflation levels and trajectory.
  • Steps taken by government to control inflation included:
    • Phase wise reduction in export duty of petrol and diesel
    • Import duty on major inputs were brought to zero
    • Prohibition on the export of wheat products under HS Code 1101 and
    • Imposition of export duty on rice.
  • External Sector:
    • Merchandise exports were US$ 332.8 billion for April-December 2022.
    • India diversified its markets and increased its exports to Brazil, South Africa and Saudi Arabia.
    • To increase its market size and ensure better penetration, in 2022, Comprehensive Economic Partnership Agreement (CEPA)with UAE.
    • The Economic Cooperation and Trade Agreement (ECTA)with Australia came into force.
    • India is the largest recipient of remittances in the world receiving US$ 100 bn in 2022.
    • Remittances are the second largest major source of external financing after service export.
  • Agriculture & Food Management:
    • Private investment in agriculture has increased to 9.3% in 2020-21.
    • Free foodgrains to about 81.4 crore beneficiaries is being provided under the National Food Security Act for one year from January 1, 2023.
  • Services:
    • The services sector is expected to grow at 9.1% in FY23, as against 8.4% (YoY) in FY22.
    • India was among the top ten services exporting countries in 2021, with its share in world commercial services exports increasing from 3 per cent in 2015 to 4 per cent in 2021.
  • Digital Infrastructure:
    • Unified Payment Interface (UPI)-based transactions grew in value (121 per cent) and volume (115 per cent) terms, between 2019-22, paving the way for its international adoption.
    • More than 98 per cent of the total telephone subscribers are connected wirelessly.
    • The overall tele-density in India stood at 84.8 per cent in March 2022.
  • Physical Infrastructure:
    • National Logistics Policy envisions developing an integrated, cost-efficient, resilient logistics ecosystem in the country for accelerated and inclusive growth.
    • Inland Vessels Act 2021replaced the 100-year-old Act to ensure hassle free movement of Vessels promoting Inland Water Transport.
  • Climate Change and Environment:
    • India declared the Net Zero Pledge to achieve net zero emissions goal by 2070.
    • India achieved its target of 40 per cent installed electric capacity from non-fossil fuels ahead of 2030.
    • A mass movement LIFE (Lifestyle for Environment) was launched.
    • Sovereign Green Bond Framework (SGrBs) was issued in November 2022.
    • National Green Hydrogen Mission launched to enable India to be energy independent by 2047.
  • Unemployment:
    • Employment levels have risen in the current financial year, with job creation appearing to move into a higher orbit. The urban unemployment rate for people aged 15 years and above declined from 9.8% to 7.2%.
  • Implications for India’s economy:
    • The Survey suggests that India’s economy has recovered from the Covid disruption and is poised for sustained robust growth which will be higher than for almost all major economies.
  • Reference to 2003:
    • The Survey argues that the situation in 2023 is similar to 2003, when the Indian economy was poised for growth.
  • Likelihood:
    • India’s potential growth rate is unlikely to rise much above 6% in the next few years.

Importance of Economic Survey

• Provides an overview of the current state of the economy:The Survey gives an overview of the performance of the Indian economy in the current financial year, including GDP growth rate, inflation, the balance of payments, and other key macroeconomic indicators.
• Identifies key economic challenges: The Survey identifies key challenges facing the Indian economy and provides insights into how they can be addressed which is crucial for policymakers, who use this information to formulate their economic policies.
• Offers policy recommendations: The Survey provides policy recommendations to the government on how to address economic challenges and promote economic growth and development. This is important for businesses and investors, who can use these recommendations to plan their investments and strategies.
• Guides future economic policies: It provides a roadmap for future economic policies, including a projection of GDP growth, inflation, and other key macroeconomic indicators.
• Supports data-driven decision making: The Survey provides a comprehensive and in-depth analysis of the Indian economy, including data and evidence-based insights.

Limitations of Economic survey

• Data Availability: The lack of reliable data sources and the delay in the release of official data can pose challenges for the preparation of the survey.
• Forecasting: Predicting the future state of the economy can be challenging, especially in an environment of economic volatility and uncertainty.
• Representation of Diverse Sectors: The Indian economy is diverse and multi-faceted, and the survey must be comprehensive enough to represent the varying sectors and their interlinkages.
• Balancing Policy Recommendations with Objectivity: The Economic Survey is expected to be both policy-oriented and objective in its analysis which is challenging as it requires a delicate balance between providing policy recommendations and retaining its independence.
• Addressing Political Pressures: The Economic Survey is a political document, and it must be prepared in such a way that it aligns with the government’s political objectives while also remaining credible and objective.
• Managing Expectations: The Survey is widely read and analyzed, and managing public expectations about its contents can be challenging.

Way forward:

• Well-researched policy ideas of economic survey serve as an intellectual public good by triggering a debate and forcing policy influencers to think about these issues.
• With much global uncertainty in corporate investment and precarious asset markets, the emphasis on public capital expenditure to boost the economy is prudent and wise.
• The Economic Survey is the only medium in the country for a rigorous, thoughtful and nuanced discussion of new economic ideas.

• India-UAE Comprehensive Economic Partnership Agreement (CEPA) is the first deep and full free trade Agreement (FTA) signed by India with any country in the past decade.
  • It officially entered into force in May 2022.
  • It covers Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement etc.
  • India has already signed a CEPA with Japan and South Korea.

Significance of CEPA

• Expected to increase total value of bilateral trade in goods to over US$100 billion and trade in services to over US$ 15 billion within five years.
• Eliminated duties for 90% of India’s exports to UAE, covering sectors such as gems and jewellery, textiles, leather, etc.
• Exports benefiting from India-UAE free trade pact accounted for about 60% of India’s total non-oil shipments to UAE.

India- UAE relations

• UAE is India’s third largest trading partner after United States and China and second-largest export destination.
• UAE has highest number of Indian diasporas contributing high remittances to India.
• UAE’s Nayif-1 nanosatellite has successfully been launched into space by ISRO.

Type of Trade Agreements

Free Trade Agreement (FTA):

• A free trade agreement is an agreement in which two or more countries agree to provide preferential trade terms, tariff concession etc. to the partner country.
• India has negotiated FTA with many countries e.g. Sri Lanka and various trading blocs as well e.g. ASEAN.

Preferential Trade Agreement (PTA):

• In this type of agreement, two or more partners give preferential right of entry to certain products. This is done by reducing duties on an agreed number of tariff lines.
• Tariffs may even be reduced to zero for some products even in a PTA. India signed a PTA with Afghanistan.

Comprehensive Economic Partnership Agreement (CEPA):

• Partnership agreement or cooperation agreement are more comprehensive than an FTA.
• CEPA covers negotiation on the trade in services and investment, and other areas of economic partnership.
• India has signed CEPAs with UAE, South Korea and Japan.

Comprehensive Economic Cooperation Agreement (CECA):

• CECA generally covers negotiation on trade tariff and TRQ (Tariff Rate Quotas) rates only. It is not as comprehensive as CEPA. India has signed CECA with Malaysia.

General Studies Paper 3

Context:

• Agronomists deliberated on the potential of Millet revolution in India.

Key Takeaways:

• Millets have special nutritive and agronomic properties (high in protein, dietary fiber, micronutrients, antioxidants and drought-resistant)
• In recent years, there has been a decline in area under millet cultivation with production of sorghum and pearl millet has fallen/stagnated, while production of other millets has declined.
• As per S. Swaminathan Research Foundation, there is need to preserve crop diversity, increase production/consumption, enhance farm incomes
• Previously, Food and Agriculture Organization of the United Nations has declared 2023 as “International Year of Millets” post the proposal for it by India.

Millets in India:

• Millets are a group of small-seeded cereal crops that are widely grown in India for their high nutritional value and drought tolerance.
• Indian millets are drought tolerant and mostly grown in arid and semi-arid regions of India.
• They are small-seeded grasses belonging to the botanical family Poaceae and are known as “coarse cereals” or “cereals of the poor”.
• In India, there are two groups of millets grown viz.,
  • Major – sorghum, pearl millet, finger millet
  • Minor – foxtail, little millet, kodo, proso, barnyard millet
• Historically, millets have been an important staple food in rural India mainly as a kharif crop,especially in the semi-arid regions where other crops may not be able to grow well.

Key data on Millets in India:

• In 2019-20, the total offtake of cereals through the Public Distribution System and the Integrated Child Development Scheme was around 54 million tonnes, 20% replacement by millet would require procurement of 10.8 million tonnes
• Total production of nutri-cereals in 2019-20 was7 million tonnes, the majority being maize
• Millets are procured in only a few states and central stocks are small (33 million tonnes of rice, 31 million tonnes of wheat, 4 lakh tonnes of nutri-cereals)
• During 2018-19, three millet crops bajra (3.67%), jowar (2.13%), and ragi(0.48%) accounted for about 7 per cent of the gross cropped area in the country.
• India is a top 5 exporter of millets, exported $64.28 million in 2021-2022 alone.

Advantages of Millets

• High in nutrient content: Millets are rich in fiber, vitamins, minerals, and antioxidants, making them a nutritious food choice.
• Gluten-free: Many people with celiac disease or gluten intolerance can safely consume millets as they are naturally gluten-free.
• Promotes weight loss: Millets have a low glycemic index, meaning they are slowly digested and absorbed, which helps regulate appetite and prevent overeating.
• Supports cardiovascular health: Millets are rich in magnesium and polyunsaturated fatty acids, which help to lower blood pressure and reduce the risk of heart disease.
• Increases energy levels: Millets are a good source of carbohydrates, providing a steady source of energy throughout the day.
• Supports digestive health: Millets are high in fiber, which promotes bowel regularity and can help alleviate symptoms of constipation.
• Suitable for multiple diets: Millets are suitable for various diets, including vegan, vegetarian, and gluten-free diets.
• Adaptable and drought-resistant: Millets are highly adaptable to different growing conditions and are resistant to drought, making them a valuable food source in regions with unreliable water supply.
• Supports farmers: The cultivation of millets is beneficial to small-scale farmers as they are relatively easy to grow and require low inputs, which results in lower costs and higher profitability

Challenges of Millets

• Low demand and consumption: Millets are not as popular as rice and wheat, leading to low demand and consumption.
• Lack of processing facilities: Processing and value-addition is limited, which affects the marketability and profitability of millets.
• Low investment in research and development: There is a lack of investment in research and development of millets, leading to limited information on their cultivation, storage, and utilization.
• Inadequate storage and transportation infrastructure: Inadequate storage and transportation facilities lead to post-harvest losses and difficulty in reaching markets.
• Limited marketing and branding: Millets lack proper marketing and branding, making them less attractive to consumers.
• Competition from cheaper imports: Cheaper imports of grains like wheat and corn often displace millets in the market.
• Poor awareness: Limited awareness about the nutritional and health benefits of millets among consumers and farmers is a challenge

Steps taken by Government to promote Millets:

• National Food Security Mission: Launched in 2007, the National Food Security Mission aims to increase the production of rice, wheat, and pulses in India to meet the growing food demand of the country’s population.
• National Mission on Oilseeds and Oil Palm: This mission was launched in 2010 to increase the production of oilseeds and oil palm in India, in order to improve the livelihoods of farmers and enhance the availability of oil for domestic consumption.
• National Bamboo Mission: Launched in 2006, the National Bamboo Mission aims to promote the cultivation and use of bamboo in India. It provides support for the development of the bamboo industry, including research and development, marketing, and infrastructure development.
• National Mission on Sustainable Agriculture: Launched in 2010, the National Mission on Sustainable Agriculture aims to make Indian agriculture more sustainable, productive, and profitable. This mission focuses on improving the soil health, water management, and cropping practices in Indian agriculture.
• National Mission for Sustainable Livelihoods: Launched in 2011, the mission aims to provide sustainable livelihoods to the rural poor in India. This mission focuses on enhancing the livelihoods of the rural poor through skill development, job creation, and micro-enterprise development.
• Rashtriya Krishi Vikas Yojana:Launched in 2007, it is a central sector scheme aimed at improving the productivity of agriculture in India by providing financial support for the development of irrigation, soil and water conservation, and other infrastructure in the agriculture sector.

Way forward:

• Encouraging and supporting farmers to adopt millet cultivation through subsidies and better market access
• Promoting millet based value-added products to increase demand and profitability
• Improving millet seed quality and distribution through government and private initiatives
• Offering training and extension services to farmers on the latest millet cultivation techniques
• Enhancing research and development efforts to improve the yield and quality of millet crops
• Improving storage and transportation facilities to reduce post-harvest losses
• Promoting intercropping with millets to increase farm efficiency and income
• Encouraging partnerships between farmers, processors, and retailers to create a sustainable millet value chain
• Encouraging international collaborations to share best practices and knowledge in millet production and marketing.

General Studies Paper 2

Context:

• Recently, the “Draft Citizen’s Policy for Urban Agriculture in Delhi” was submitted to the Delhi government by Delhi-based research non-profit People’s Resource Centre.

More about the Policy

• Aim: The policy aims to provide a holistic framework for urban farming.
• Urban Agriculture in Delhi:
  • Some 60 percent of Delhi’s demand for meat is fulfilled by city-grown produce, as is 25 percent of its milk and 15 percent of its vegetable needs.
  • Yet policies on land use and farming in the National Capital do not acknowledge the role of cultivation and distribution of food in urban areas, says the draft policy.
• Recommendations:
  • It recommends building on existing practices, promoting residential and community farming through rooftop and kitchen gardens, allocating vacant land for agricultural use, creating a market, developing policies for animal rearing and spreading awareness.

Significance

• Food security:
  • Issues like rapid urbanisation, population explosion and climate change increases the risk of food shortage.
  • These recommendations are crucial to ensure food security for urban communities. This benefit has long been highlighted in arguments for urban farming.
• Fulfilling nutrition demand:
  • 2010 report by M S Swaminathan Research Foundation, Chennai, notes that 50 percent of women and children in urban areas are anaemic due to lack of adequate nutrition.
  • The study also recommends urban agriculture.
• Poverty alleviation:
  • Globally, in 2020, the UN Food and Agriculture Organization acknowledged that urban and periurban farming can contribute to local food and nutritional needs, enable jobs and reduce poverty.

Initiatives in India

• In India, urban farming has seen some traction across states, prompting governments to introduce small-scale initiatives to promote the practice.
• Pune:
  • In 2008, Pune’s civic administration launched a city farming project to train and encourage people to take up farming on allocated land.
• Kerala:
  • State of Kerala had been food dependent until 2012 after which the state government launched a vegetable development programme to encourage gardening in houses, schools, government and private institutions.
  • It also offered subsidy and support for eco-friendly inputs, irrigation, compost and biogas plants.
  • According to Kerala State Planning Board, vegetable production rose from 825,000 tonnes in 2011-12 to 1.3 million tonnes in 2014-15.
• Tamil Nadu:
  • Similarly, in 2014, the Tamil Nadu government introduced a “do-it-yourself” kit for city dwellers to grow vegetables on rooftops, houses and apartment buildings under its Urban Horticulture Development Scheme.
• Bihar:
  • Since 2021, Bihar encourages terrace gardening in five smart cities through subsidy for input cost.

Challenges

• Lack of policy:
  • While such initiatives are welcome, their impact cannot be expected to be widespread without a strong policy for urban farming.
  • For instance, Pune’s 2008 initiative failed to take off due to poor interest from people and the government.
• Lack of recognition:
  • Even the recently released draft Master Plan of Delhi for 2041, does not acknowledge the role of the practice.
    • It aims to divide 8,000 hectares of land along the Yamuna into two sub-zones and restrict human activity or settlement in areas directly adjacent to the river.
    • However, several communities on the floodplains practise urban farming.
    • According to critics, if this draft master plan comes into practice, informal settlements like Chilla Khadar and Bela Estate will lose the agricultural land,
  • Lack of parallel benefits:
    • Farmers cannot avail benefits under any agricultural schemes such as crop insurance.
  • Issue of rapid development:
    • Rapid development is also a hindrance in continuing with existing practics.

Suggestions & way ahead

• Practicing innovative techniques like Hydroponics:
  • Studies show that excessive use of chemical fertilisers and pesticides in urban farms can lower produce and soil quality.
  • However, urban farmers believe such hurdles can be overcome with innovative techniques.
    • Hydroponics, a method of soilless farming that uses nutrient solutions to sustain plants, offers a cleaner approach.
    • Compared to commercial farming, hydroponics requires 90 per cent lesser water, which can be reused.
    • Although such initiatives are still niche and at a nascent stage, one can grow more plants in the space given.
  • Small-scale farming – cushion in crisis:
    • Kitchen gardening or small-scale community farming cannot sustain the large population, but can act as a cushion to protect urban residents from inflation, vulnerabilities of weather or crises such as COVID-19.
    • Even though, such innovations, cannot match the scale of rural agriculture, before more villages become urban, early interventions can result in a sustainable system.
  • Recognition & funding:
    • There is a need to bring in more institutional clarity and also multi-disciplinary expertise to solve such challenges.
    • To promote urban farming, governments must recognise informal practices and link them with agricultural schemes.

General Studies Paper 3

Context:

The Union budget 2023 presents an opportunity for our visionary government to amp up its efforts towards making our MSMEs competitive and self-reliant.

MSME Sector In India 

• About:
  • Micro, Small and Medium Enterprises (MSME), are small-sized business enterprises defined in terms of their investment.
• Significance of the sector:
  • Contribution to GDP:
    • In India, the sector has gained significant importance due to its contribution to the Gross Domestic Product (GDP)of the country and exports.
  • Contribution in Development: 
    • The Micro Small and Medium Enterprises (MSMEs) sector is a major contributor to the socioeconomic development of the country.
    • The sector has also contributed immensely with respect to entrepreneurship development, especially in semi-urban and rural areas of India.
  • Resilience in disruptions:
    • Despite concerns of a looming global recession, supply disruptions and the Russia-Ukraine war, India has stood out as a bright spot, growing faster than most major emerging markets.
    • The 3 crore micro, small and medium enterprises which account for 30 per cent of GDP and employ nearly 11 crore people have demonstrated this spirit of resilience.
    • With sales in several industries across the MSME sector reaching 90 percent of pre-pandemic levels, India’s small businesses are scripting a turnaround.

Challenges Faced by MSME Sector in India

• Mounting NPAs of MSMEs:
  • According to the RBI, bad loans of MSMEs now account for 9.6 per cent of gross advances of Rs 17.33 lakh crore as against 8.2 per cent in 2020.
  • The MSME sector was among the most pandemic-afflicted sectors.
    • Thousands of MSMEs either shut down or became sick after the government announced a nationwide strict lockdown.
  • Non-availability/Delays of Funds:
    • Mounting losses and debts, non-availability of proper financial help and delays from the government, reluctance from the banks for the funding, etc.
    • MSMEs in India typically rely on NBFCs for their financing needs, which in itself has been enduring a liquidity crunch since September 2018.
  • Lack of Formalization:
    • Almost 86% of the manufacturing MSMEs operating in the country are unregistered. Out of the 6.3 crore MSMEs, only about 1.1 crores are registered with the Goods and Services Tax (GST) regime and the number of income tax filers are even less.

Government initiatives for MSMEs in India:

• Pradhan Mantri MUDRA Yojana (PMMY):
  • Under PMMY loans are provided up to Rs. 10 Lakh through Member Lending Institutions (MLIs) viz; Banks, Non-Banking Financial Companies (NBFCs), Micro Financial Institutions (MFIs), other financial intermediaries, in three categories namely, ‘Shishu’, ‘Kishore’ and ‘Tarun’ which signifies the stage of growth or development and funding needs of the borrowers.
    • Shishu:covering loans up to Rs. 50,000/-
    • Kishore: covering loans above Rs. 50,000/- and up to Rs. 5 lakh
    • Tarun: covering loans above Rs. 5 lakh and up to Rs. 10 lakh
  • Objectives: 
    • To signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur and also provide a reference point for the next phase of graduation/growth.
  • Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): 
    • This scheme provides collateral-free credit to micro and small enterprises through a credit guarantee mechanism.
  • Stand Up India: 
    • The scheme provides financial assistance to scheduled caste (SC), scheduled tribe (ST) and women entrepreneurs for setting up new enterprises.
  • Harmonizing value chain: 
    • Government to focus on integrating India’s value chains with the rest of the world and creating logistics that are easier and faster is crucial to make it easier for international companies to include India in their value chains.
  • Quality assurance: 
    • Government to focus on creating Quality as the most important factor in the success story of India through steps including- setting global benchmarks, harmonizing Indian standards with global standards, and consumers becoming more demanding of quality.
  • Comprehensive Economic Partnership Agreement (CEPA): 
    • It will help MSMEs of both India and the UAE to leverage the benefits of the District as an export hub initiative of the government.
    • Under this initiative, every district for its unique products and identify the speciality of districts by knowing which district exports which products.
    • This initiative is expected to help in promoting local products and in turn, boost the local economy.

Suggestions 

• Three key parameters that are vital for the success of MSMEs include: 
  • Financial stability,
  • Availability of skilled labour in MSME clusters, and
  • Market competitiveness of their products to achieve import substitution as well as exports.
• Market-oriented strategy:
  • With a self-reliant India vision, it is highly important to improve the competitiveness of MSMEs through an inclusive market-oriented strategy.
  • To remain relevant in the market, MSMEs need to be adaptable with changing markets and variable demand scenarios.
    • Ensuring the capacity and availability of raw materials to MSMEs is also crucial.
  • Quality enhancement & automation:
    • There is a need to improve the capability of Indian MSMEs to supply quality products.
    • MSMEs could be introduced to low-cost automation techniques, which work in tandem with the human workforce.
  • Branding:
    • Branding and advocacy will also be needed to leverage the positive connotations associated with certain Indian products and assess negative connotations that can be removed.
  • Lowering GST rates:
    • From meeting fixed expenses such as electricity, rent and employee wages to investing in future growth, adequate working capital is a must for small businesses.
    • By lowering GST rates on input services availed by online sellers, the government will not only shore up their finances but also give a leg-up to their digitisation journey.
      • There is also a need to expedite GST relaxation for small online businesses.

Way ahead

• The MSME (micro, small and medium enterprise) sector in India can play a significant role in achieving the vision of a self-reliant India. Suggest ways to revamp the sector.

General Studies Paper 2

Context: 

• The government will soon kick off the process to set up the 16th Finance Commission, with the Finance Ministry likely to notify the terms of reference (ToR) of the constitutional body.

Background:

• The 15th Finance Commission(FFC chaired by NK Singh) was set up in (November 2017) with a mandate to make recommendations for the five-year period from 2020-21.
  • The Commission is usually granted about two years to deliberate on its terms of reference, consult States and frame its recommendations.
  • The government should ideally have its report by October 2025to consider it in time for Budget 2026-27, where it will have to place its action taken report on the Commission’s report.
• Despite the Constitution’s mandate to establish an FC every five years, breaking the trend, the 15th FC’s term was extended by a year, ending in 2025–2026.
• In late 2019, the Commission was asked to give a standalone report for 2020-21and another report for an extended five-year period till 2025-26.
• Since the FFC report covered six years(instead of five), the next FC must be selected this year.
• The last time an FC was granted a six-year time frame was for the 9th FC, formed in June 1987.
• The 10th FC was still constituted in June 1992within the five-year deadline specified by Article 280 of the Constitution, which has not been the case this time.

The first step towards establishing 16th FC:

• While the ToR (Terms of Reference) for the 16th FC will be worked out after internal government deliberations steered by the Finance Ministry, the appointment of an Officer on Special Duty to drive the process.
• This officer typically becomes the member-secretary of the Commission, once it is constituted.

The key challenges for the 16th FC:

• The co-existence of another permanent constitutional body – the GST Council.
  • The Council’s decisions on tax rate changes could alter the revenue calculations made by the FC for sharing fiscal resources.
• The government usually accepts recommendations on States’ share of tax devolution and the trajectory for fiscal targets and ignores most other suggestions. For instance,
  • The government ignored the FFC’s suggestion of creating a Fiscal Council where the Centre and States collectively work out India’s macro-fiscal management challenges.
  • The government has accepted the FFC’s recommendation to set up a non-lapsable fund for internal security and defence ‘in principle’, but its implementation still has to be worked out.

Way ahead:

• A recourse mechanism can be put in place for the Commission to revisit its numbers due to the GST Council’s decisions.
• The governments must rise beyond politics to deliberate and implement FC’s recommendations, which are sound in terms of policy and economics.

General Studies Paper 2

Context:

Pakistan Prime Minister has expressed the desire for a diplomatic handshake from across the border.

India-Pakistan Relations:

• With the partition of British India, two separate nations, India and Pakistan were formed.
• Since the very beginning, the immediate violent partition, wars, terrorist attacks and various territorial disputes overshadowed the connection.

Indus Water Treaty(IWT):

• IWTis a water-distribution treaty between India and Pakistan, brokered by the World Bank (WB), to use the water available in the Indus River and its tributaries.
• It was signed in Karachi in 1960 by then-Indian PM Jawaharlal Nehru and then-Pakistani president Ayub Khan.
• The Treaty gives control over the waters of the three “eastern rivers” – the Beas, Ravi and Sutlej (BRS)- to India.
• Control over the waters of the three “western rivers” – the Indus, Chenab and Jhelum -has been given to Pakistan.
• India has about 20% of the total water carried by the Indus system while Pakistan has 80%.
• The treaty allows India to use the western river waters for limited irrigation use and unlimited non-consumptive use for such applications as power generation.
• India has the right to generate hydroelectricity through run-of-the-river (RoR) projects on the western rivers which, subject to specific criteria for design and operation, is unrestricted.
• The dispute redressal mechanism provided under the IWT is a graded 3-level mechanism.
• Under the IWT, whenever India plans to start a project, it has to inform Pakistan.
• The concerns have to be cleared at the levels of the Indus Commissioners → Neutral Expert → Court of Arbitration, in a graded manner.

Issue of hydroelectric projects:

• Pakistan has reiterated desire for third-party mediation
• India has reinforced to revisit the Indus Water Treaty (IWT).

India’s stand:

• India claimed that the “intransigence” of Pakistan had made the communication channels over shared waters defunct.
• India: Due to the “Material breach” of the agreement, it would like to “update the Treaty.
• India has given a 90-day notice to Pakistan.
  • It has opened space, both legally and politically for:
    • discussing
    • debating
    • interpreting
    • analyzing the fault lines of water diplomacy of both countries.
  • Parliamentary standing committee report(2021): It suggested renegotiating the Treaty.

India’s stand on treaty:

• India has adopted the moderate approach of not terminating but modifying the IWT.
• India has attributed the “material breach”to Pakistan’s unilateral decision to approach the Permanent Court of Arbitration
  • It bypassed the mandate of Indus Commissioners.
  • India boycotted this hearing.
• India claims. Pakistan has violated the dispute settlement mechanisms, as mandated by Articles 8 and 9 of the Treaty.
• Article 8 specifies the roles and responsibilities of the Permanent Indus Commission — a regular channel of communication for matters relating to the implementation of the Treaty.
• Article 9: for addressing any difference or dispute that might emerge between the two countries.

Article 9 of treaty:

• It offers a graded pathway to address any issue related to the implementation or interpretation of the IWT.
• It provides for the appointment of a neutral expert in case there is a lack of consensus among the Commissioners.
• If the neutral expert believes that the difference should be treated as a dispute, it can be referred to the Court of Arbitration.
• The Commission has to report the facts to the two governments.
• The report must state:
  • Points of concord in the Commission
  • The views of each Commissioner on these issues
  • Mention the issues of disagreement.
• Only after receiving a report can either of the governments address the issue bilaterally or through the Court of Arbitration.

International laws:

• Article 60 of the Vienna Convention on the Laws of the Treaties: A party can criticize an agreement and give notice of its intention to terminate it if the other party violates its fundamental provisions.

Contest in projects:

• Kishanganga Hydel Power Project (Neelam in Pakistan):
  • The Court of Arbitration gave a partial award on the project.
  • It upholded India’s right to divert water for the project.
  • The Court refused to set a bar on the release of water, as demanded by Pakistan.
  • It restrained KHEPfrom environmental considerations.
• Ratle project on the Chenab River:
  • On Grounds of design and violations of the IWT.
  • The project was delayed but work resumed on it in 2019.
  • Pakistan asked the World Bank to establish a Court of Arbitration to look into the project.
  • The Bank has started a parallel process for appointing a neutral expert.
  • India objected to this process, claiming it was a unilateral move.

Way Forward

• The significance of the “material breach” and calls for terminating the Treaty should be seen in context of article 9 of treaty.
• The practice of diplomacy and the use of law for explaining and justifying government actions are equally important.
  • The reasoning put forward by India and Pakistan requires scrutiny.
• Ecological and economic concerns are also important to understand the diplomatic fault lines
• Pakistan has shown a penchant for third-party mediation, arguing that this could be the best route for overcoming the impasse in the relations between the two countries.
• Technically-negotiated agreements are only partial solutions and can put incremental strains on trans boundary rivers and their ecosystems for years.
• The two countries should use bilateral dispute settlement mechanisms to discuss the sustainable uses of water resources.
• Article 7 of treaty: It talks about future cooperation — discussing and broadening transboundary governance issues in holistic terms.
  • It could be the starting point for any potential diplomatic handshake.

General Studies Paper 2

Context:

• Recently, UN General Assembly (UNGA) President Csaba Korosi stated that the UNSC does not reflect today’s realities.
• About the UNGA President:
  • Csaba Korosi is a Hungarian diplomat currently serving as President of the 77th UNGA.
  • Korosi is recently on his bilateral visit to India.
    • It is his first bilateral visit to any country since he assumed his role as President of the UN General Assembly in September 2022.
  • Opinion on UNSC reforms:
    • UNGA President stated that the UN Security Council does not reflect today’s realities, is paralysed and unable to discharge its basic function of maintaining international peace and security when one of its permanent members has attacked its neighbour.
    • Reasons cited: 
      • According to him, the Security Council cannot discharge its basic function as one of the permanent members of the Security Council attacked its neighbour.
      • The Security Council should be the body to take action against the aggression. But because of the veto power, the Security Council cannot act.
    • Push for reforms:
      • He stated that there is a push from a growing number of member nations to reform the powerful UN organ.
    • Background:
      • Russia, a veto-wielding permanent member of the UN, attacked Ukraine in February 2022.
      • Russia has vetoed UNSC resolutions on Ukraine.
      • Russia also voted against a resolution in the UNGA which called on countries not to recognise the four regions of Ukraine that Russia has claimed.

United Nations Security Council (UNSC)

• About:

• It is one of the UN’s six main organs and is aimed at maintaining international peace and security.
• It held its first session on 17th January 1946 in Westminster, London.
• Headquarters: New York City.
• Membership: The Council is composed of 15 Members:
  • Permanent members with veto power: 
    • China, France, Russia, the United Kingdom and the United States.
  • More than 50 United Nations Member States have never been Members of the Security Council.

• UNSC elections:

• Each year the General Assembly elects five non-permanent members (out of 10 in total) for a two-year term.
• The 10 non-permanent seats are distributed on a regional basis as follows:
  • Five for African and Asian States.
  • One for the Eastern European States.
  • Two for the Latin American and Caribbean States;
  • Two for Western European and other States
• To be elected to the Council, candidate countries need a two-thirds majority of ballots of the Member States that are present and voting in the Assembly.
• The UNSC elections were traditionally held in the General Assembly Hall with each of the 193 member states casting its vote in a secret ballot.

UN Reforms

• Demand of reform:

• Reform of the United Nations Security Council (UNSC) encompasses five key issues: 
  • Categories of membership,
  • The question of the veto held by the five permanent members,
  • Regional representation,
  • The size of an enlarged Council and its working methods, and
  • The Security Council-General Assembly relationship.

• Why?

• Changing world order:
  • In the 77-year-old history of the UN, the composition of the Security Council has been altered only once.
    • e., In 1963 when the General Assembly decided to expand the Council from 11 to 15 members, with the addition of four non-permanent seats.
  • Since then, the world has changed. The geopolitical relations in the world have altered, the economic responsibilities in the world in countries have also changed.
• Equitable World Order: 
  • There is a need for a more equitable world in order to uphold the principles of democracy at the global level.
• Inclusivity: 
  • Developing countries like the African countries, need to be made stakeholders in the multilateral institutions and involved in the decision-making process.
• Mitigation of New Threats: 
  • With rising protectionism, increased incidents of terrorism and the threat of climate change, the multilateral system must become more resilient and responsive.

• How?
  • Any reform of the Security Council would require the agreement of at least two-thirds of UN member states in a vote in the General Assembly and must be ratified by two-thirds of Member States.
  • All of the permanent members of the UNSC (which have veto rights) must also agree.
• Challenges:
  • Lack of Political Will: 
    • Although there is a general agreement towards change in the system, different countries have different perceptions of the requirement for change.
  • Coffee Club: 
    • It is an informal group comprising 40-odd member states, mostly middle-sized states who oppose bigger regional powers grabbing permanent seats, has been instrumental in holding back reforms to the United Nations Security Council over the past six years.
  • Chinese Opposition: 
    • China being a permanent member blocks the growth of India becoming a Permanent Member.

General Studies Paper 1

Context:

• Justice G. Rohini commission for the sub-categorisation of other backward classes (OBCs) received 14th extension from the President.

Background

• The Justice Rohini Commission was constituted under Article 340 of the Constitution.
• In 2008, the Supreme Court directed the central government to exclude the creamy layer (advanced sections) among the OBCs.
• The Kalelkar Commission, set up in 1953, was the first to identify backward classes other than the Scheduled Castes (SCs) and Scheduled Tribes (STs) at the national level.
• The Mandal Commission Report, 1980estimated the OBC population at 52% and classified 1,257 communities as backward.
  • It recommended increasing the existing quotas, which were only for SC/ST, from 22.5% to 49.5% to include the OBCs.

What is the Sub-Categorisation Process?

• Identification of Dominant Caste: The Commission identified a small group of dominant caste groups that were crowding out a large number of communities from the 27% OBC quota.
• Division of OBC communities: The commission decided to divide all OBC communities into four broad categories, with the largest quota going to the group that has been historically deprived of OBC quota due to crowding out by dominant OBC groups.

Need for Sub-Categorisation

• Larger benefits to small Groups: Rich and dominant sections occupy a major chunk of reservations among OBCs.
• Earlier Recommendations: NCBC recommended sub-categorisation in 2011, which was supported by the standing committee.
• Supreme Court Intervention: In Ashoka Kumar Thakur vs UOI, 2008 case the Court categorically reiterated its prior stand that “Creamy Layer”should be excluded from the ambit of reservation policy and private institutions are also not to be included.

Challenges faced in Sub-Categorisation

• Absence of Data for the population of various communities to compare with their representation in jobs and admissions.
• Political Issue: Sub-Categorisation will lead to discontent among dominant OBC groups. Regional parties oppose this as seen in Andhra Pradesh when an attempt to provide sub-quotas for OBCs was stalled by courts on the ground that a religion-based quota is not permitted.
• Vote-Bank politics over the prioritisation of caste-based categorisation over income-based differentiation to identify reservation beneficiaries.

Reasons for Current Extension

• The Bihar government is in the middle of its caste-based survey.
• The Uttar Pradesh government is conducting a new survey to assess the need for OBC reservation in its local body elections.
• States like Madhya Pradesh and Maharashtra are also looking to form panels to implement OBC reservations in local body polls.
• The Rohini Commission panel said that they are currently finalising the compilation of the report.

National Commission for Backward Classes(NCBC)

• NCBC is a constitutional body given the prestigious status after the 102nd amendment 2018 under Article 338B of the Indian Constitution.
• The Commission is authorised to investigate and monitor all matters relating to the safeguards provided for the socially and educationally backward classes under this Constitution or under any other law.