Syllabus: General Studies Paper 3

Context:

Recently, India’s central bank released several key documents that further shed light on the challenges faced by the Indian economy as well as the RBI.

Challenges faced by the RBI:

• The economic disruption caused by the Covid-19 pandemic has brought growth concerns to the top of Indian monetary policy makers’ priority list, and relegated the inflation goal to a secondary position.
• In the wake of global anthropological shock Covid-19, a sharp slowdown in economic growth and employment prospects is evident in the Indian economy.
• In this context, Reserve Bank of India’s role in ensuring economic stability, growth and development through effective monetary policy assumes more importance than ever.
• RBI’s job involves balancing short-term as well as long-term growth, ensuring economic growth while meeting the inflation targets. 

Easy Money policy today could lead to high interest rates in the economy tomorrow:

• Easy money is when the RBI allows cash to build up within the banking system—as this lowers interest rates and makes it easier for banks and lenders to loan money.
• Easy money is a representation of how the RBI can stimulate the economy using monetary policy.
• The central bank looks to create easy money when it wants to lower unemployment and boost economic growth, but a major side effect of doing so is inflation.
• When money is easy (i.e., cheaper) to borrow, it can stimulate spending, investment, and economic growth.
• If easy money persists for too long, however, it can lead to high inflation.
• Too much easy money can cause the economy to overheat. It can incentivize over-investment in projects with poor outlooks. Discourages saving since interest rates on deposit accounts are low.

Ill-effects of rising Inflation:

Inflation encourages current consumption (buy goods and services now before prices rise) and discourages savings.

• People with savings suffer in times of inflation as the purchasing power of their savings decreases as price levels rise.
• The real rate of interest (nominal rate less the inflation rate) is reduced in times of inflation.
• Real interest rates may be negative if inflation rate is greater than the interest rate. If so the purchasing power of savings declines. This discourages savings.
• People who have borrowed money benefit as the real value of loans decreases as price levels rise (loans are easier to repay in the future as prices and income rise over time).

Borrowers benefit as inflation reduces the real value (the purchasing power) of the money they owe.

People who have borrowed money benefit as the real value of loans decreases as price levels rise (loans are easier to repay in the future as prices and income rise over time).

• Inflation, the steady rise of prices for goods and services over a period, has many effects, good and bad.
• Inflation erodes purchasing power or how much of something can be purchased with currency.
• Because inflation erodes the value of cash, it encourages consumers to spend and stock up on items that are slower to lose value.
• It lowers the cost of borrowing and reduces unemployment.

Recent review by RBI Monetary Policy Committee:

• Inflationary pressures are being closely and continuously monitored. The MPC is conscious of its objective of anchoring inflation expectations.
• The outlook for aggregate demand is improving, but still weak and overcast by the pandemic. There is a large amount of slack in the economy, with output below its pre-pandemic level.
• The current assessment is that the inflationary pressures during Q1:2021-22 are largely driven by adverse supply shocks which are expected to be transitory.
• While the Government has taken certain steps to ease supply constraints, concerted efforts in this direction are necessary to restore supply-demand balance.
• The nascent and hesitant recovery needs to be nurtured through fiscal, monetary and sectoral policy levers.

Syllabus– General Studies 3(economy)

Context

• After raising questions over the benefits flowing to India from the Free Trade Agreements (FTAs) it had signed, and choosing to opt out of the Regional Comprehensive Economic Partnership (RCEP) trade agreement, the Union commerce minister in his recent comments has suggested that the government is re-orienting its foreign trade policy.

Background

• The series of tariff hikes since 2014 marked an abrupt reversal of the decades-long policy of lowering tariff barriers.
• Coupled with the advocacy of Atma Nirbharta, it seemed to suggest that the country was turning its back on the enormous benefits flowing from free trade.

Syllabus– General Studies 2(polity)

Context

• For the first time ever, the Supreme Court Collegium led by the Chief Justice of India (CJI) recommended/selected as many as nine persons at one go to be appointed to the apex court.

Background

• The selection of judges for appointment to the higher courts, particularly the top court is a complex exercise.
• After the Collegium came into existence, much to the consternation of political class, the selection of suitable judges has become most arduous in as much as the members of the Collegium have to take extra care to ensure that the process of selection remains transparent and the suitability of the persons selected attracts the highest level of approbation.
• Article 142 (1) contains the concept of ‘complete justice’ in any cause or matter which the Supreme Court is enjoined to deliver upon.
  • The citizens of the country look up to the Supreme Court for complete justice. So, while selecting a judge to adorn the Bench, the fundamental consideration should be his/her ability to do complete justice.
  • The Supreme Court has gone into this fundamental normative matrix in which the whole exercise of selection of judges is performed.
• In the Supreme Court Advocates-on-Record Association and Another vs Union of India (1993), the Court spelt out the parameters within which to accomplish the task of selecting candidates for appointment to the higher judiciary.
  • The most crucial consideration is the merit of the candidates. The merit is the ability of the judge to deliver complete justice.

Syllabus– General Studies 1(history) 

Context

Recently, a political leader claimed that the Moplah rebellion, also known as the Mappila riots, of 1921 was one of the first manifestations of the Taliban mindset in India.

About Moplahs/Mappilas

• The name Mappilla is given to Malayali-speaking Muslims who reside along the entire length of the Malabar Coast of northern Kerala.
• By 1921, the Moplahs formed the largest and fastest-growing community in Malabar. With a population of one million, 32% of that of Malabar as a whole, the Moplahs were concentrated in South Malabar.

Background:

• In the sixteenth century when Portuguese traders arrived on the Malabar coast, they noted the Mappilas to be a mercantile community concentrated in urban centres and fairly segregated from the local Hindu population.
• However, with the rise in Portuguese commercial power, the Mappilas found themselves a competitor and increasingly started moving inland in search of new economic opportunities.
• The shifting of the Mappilas led to a clash of religious identities both with the local Hindu population and the Portuguese.

About The Revolt:

• Fuelled by the fiery speeches by Muslim religious leaders and anti-British sentiments, the Mopillahs launched a violent rebellion. Numerous acts of violence were reported and a series of persecutions were committed both against the British and the Hindu landlords.
• While there are some who call it a case of religious fanaticism, there are others who look at it as an instance of struggle against British authority, and then there are others who perceive the Malabar rebellion to be a peasant revolt against unfair practices of the landlords.
• While historians continue to debate on the matter, the broad consensus on the episode notes it to have started off as a struggle against political power, which later took on a communal color.
• Most of the landlords were Namboodiri Brahmins while most of the tenants were Mapillah Muslims.
• The riots led to the mass killings of over 10,000 Hindus, raping of women, forced religious conversions, destruction or damage of nearly 300 temples, loot and arson of properties worth crores of rupees and burning of houses belonging to the Hindus.

Causes:

• The trigger of the uprising came from the Non-Cooperation Movement launched by the Congress in 1920 along with the Khilafat agitation. The anti-British sentiment fuelled by these agitations affected the Muslim Mapillahs.
• The British had introduced new tenancy laws that tremendously favoured the landlords known as Janmis and instituted a far more exploitative system for peasants than before.
• The new laws deprived the peasants of all guaranteed rights to the land, share in the produce they earlier got and in effect rendered them landless.

Controversial film projects on the rebellion

• In 1988, a Malayalam film titled ‘1921’ was made based on the theme. With superstar Mammootty in the lead role, the film, directed by I V Sasi, won laurels. The protagonist had been a member of the brigade of Variyamkunnath Kunjahammed Haji, a prominent Muslim leader of the uprising. 
  • However, last year, when young film director Aashiq Abu announced a new project based on the Haji, the Sangh Parivar felt it was glorifying a Muslim leader in the massacre of Hindus. 
  • The BJP wanted the film dropped as the party felt it was a “jihadi version” of history. The Parivar side retorted with BJP leader and filmmaker Ali Akbar announcing another project, “to expose the true face of the uprising”. The BJP leader wanted to highlight the killing of Hindus, who were not ready to change religion.

Syllabus: General Studies Paper 2

Context:

The fall of Kabul in the wake of the American withdrawal from Afghanistan will prove to be a defining moment for the region and the future shape of its geopolitics.

Historical Perspective:

• The geopolitics depends on the Taliban’s actual conduct both domestically as well as on the southern and western Asian geopolitical partners.
• An axis of regional powers such as China, Pakistan, Russia, and the Taliban, has already started filling the power vacuum and shaping the contours of the region’s geopolitics based on their individual and common interests.
• These countries harbour deep anti-American feelings in varying degrees which will further shrink the American influence in the Eurasian heartland.
• The post-American power vacuum in the region will be primarily advantageous to China and its grand strategic plans for the region. Beijing will further strengthen its efforts to bring every country in the region, except India, on the Chinese Belt and Road Initiative bandwagon.
• The bigger challenge for India though would be a near-certain increase in terrorism and extremism in the region. The U.S. presence in Afghanistan, international pressure on the Taliban and Financial Action Task Force worries in Pakistan had a relatively moderating effect on the region’s terror ecosystem.

Impact of US withdrawal from Afghanistan on the Region:

Afghanistan: Advantage Taliban & Instability

• Biden’s announcement has removed all incentives for the Taliban to agree for a dialogue with the Afghan government
• Blinken Proposal dead: The proposal by US Secretary of State Anthony Blinken in March 2021 is now almost certainly dead in the water. It included 
  • A 90-day ceasefire
  • Talks under the auspices of the UN for a consensus plan for Afghanistan among the US, Russia, China, Pakistan, Iran and India
  • A meeting in Turkey between the Taliban and Afghan government towards an “inclusive” interim government
  • An agreement on the foundational principles of the future political order and for a permanent ceasefire.
• The possibility of the Taliban being able to strike a peace deal with the Afghan government is low, as the Taliban believe that they can triumph militarily.
• IS and other terrorist groups have gained a foothold in Afghanistan. Therefore, the consequences of a hasty and irresponsible withdrawal from Afghanistan could be dangerous not only for Afghanistan but also for the region and the world
• There is deep apprehension of a return to the 1990s, although there is also a view that the Taliban too have changed over 25 years, and would not want to alienate the international community as they did when they ruled Afghanistan during 1996-01.
• By announcing an unconditional pullout, the US has accepted the Taliban’s main demand. Now the international community expects the Taliban to join the political process. There is no excuse to continue the war

Pakistan: Friendly Power & Burden of Chaos

• The Taliban are a creation of the Pakistani security establishment. After the US invasion of Afghanistan, they removed themselves to safe havens in Pakistan territory, and the Taliban High Council operated from Quetta in Balochistan. 
• For Pakistan, the Taliban capture of Afghanistan would finally bring a friendly force in power in Kabul after 20 years and India (which had friendly relations with Afghani govt.) would be cut to size.
• But a US withdrawal also means Pakistan will need to shoulder the entire burden of the chaos that experts predict. 
• Civil war is not ruled out and with it, the flow of refugees into Pakistan once again, even as the country struggles with refugees from the first Afghan war.

• The Taliban are not a monolith, and have recently shown streaks of independence from Pakistan. It has to guard against instability in Afghanistan from spilling over the border.

India: Time to be Wary

• India was on the outer edges of the Trump drive to exit Afghanistan that culminated in the Doha Accord, and was a reluctant supporter of the “intra-Afghan talks” between the Taliban and Afghan government. 
• When the Biden Administration came in, India was hopeful of a US reset.
• The Blinken proposal gave India a role, by recognising it as a regional stakeholder, but this proposal seems to have no future.
• Another concern would be India-focused militants such as Laskhar- e-Toiba and Jaish-e-Mohamed, which the Indian security establishment already believes to have relocated in large numbers to Afghanistan

Syllabus: General Studies paper 3

Context: 

India recently decided to ratify a key amendment to the 1989 ozone-saving Montreal Protocol negotiated five years ago. 

About the Kigali Amendment:

• It is named after the Rwandan capital where it was negotiated, enabling the phase-out of hydrofluorocarbons, a set of chemicals notorious for their capacity to warm the planet.
• In 2016, countries agreed to include HFCs in the list of controlled substances under Montreal Protocol and decided on a schedule for its phase-down. 
  • Before the middle of this century, current HFC use has to be curtailed by at least 85 per cent. 
  • Countries have different timelines to do this. India has to achieve this target by 2047 while the developed countries have to do it by 2036. 
  • China and some other countries have a target of 2045.
• While the reductions for the rich countries have to begin immediately, India, and some other countries, have to begin cutting their HFC use only from 2031.
• The 2016 amendment was seen as one of the most important breakthroughs in the global efforts to fight climate change, because; 
  • The HFCs, a set of 19 gases used extensively in the air-conditioning and refrigerant industry, are known to be hundreds, even thousands, of times more potent than carbon dioxide in their ability to cause global warming. 
  • According to the UN Environment Programme (UNEP), the average global warming potential of 22 of the most used HFCs is about 2,500 times that of carbon dioxide.
• It is estimated that a complete phase-out of HFCs by 2050 would prevent about 0.5 degrees Celsius rise in global temperatures by the end of this century.
• This important instrument, therefore, is crucial to achieving the target of restraining the increase in global temperatures to 2 degrees Celsius from pre-industrial times. 
• As pointed out by a recent report of the Intergovernmental Panel on Climate Change (IPCC), the average temperatures of the planet have already risen by about 1.1 degrees Celsius.

The reason behind ratifying the amendments:

• It comes close on the heels of similar decisions by the United States and China, the world’s largest producers and consumers of HFCs. 
• According to a recent factsheet issued by Natural Resources Defense Council (NRDC), a US-based environmental organisation, and The Energy and Resources Institute (TERI), 
  • 122 countries had ratified the Kigali Amendment by the end of July.
• Under the Kigali amendment, the United States, China and India are in a separate group of countries, with different time schedules to phase out their HFCs and replace them with climate-friendly alternatives. 
• India has to reduce its HFC use by 80 per cent by the year 2047, while China and the United States have to achieve the same target by the years 2045 and 2034 respectively.

More in the news:

• India recently stated that it will draw up a national strategy for the phase-down of HFCs by the year 2023 in “consultation with all industry stakeholders”. 
• It said that existing domestic laws that govern the implementation of the Montreal Protocol would be amended by the middle of 2024 to facilitate the HFC phase-down. 
• India’s reductions have to begin only after 2028.

Concern with Montreal Protocol

• With global warming emerging as one of the biggest global challenges in the new millennium, the use of HFCs came under the scanner. 
  • HFCs still form a small part of the total greenhouse gas emissions, but with air-conditioning demand showing a significant increase, especially in countries like India, their use is rising at about 8% every year. 
  • If left unabated, their contribution to annual greenhouse gas emissions is expected to reach up to 19% by 2050.
• Because HFCs were not ozone-depleting, they have not controlled substances under the Montreal Protocol. 
• They were part of the problematic greenhouse gases whose emissions sought to be curtailed through climate change instruments such as the Kyoto Protocol of 1997 and the 2015 Paris Agreement. 

Benefits of Montreal Protocol:

• But the Montreal Protocol has been a far more effective and successful agreement than the climate change instruments. 
  • It has already resulted in the phase-out of 98.6% of ozone-depleting substances. 
  • The remaining 1.4% is the HCFCs that are in the process of being transitioned. 
  • Accordingly, it was decided to use the Montreal Protocol to phase out HFCs as well, rather than leave them at the mercy of climate change agreements.

Syllabus– General Studies 3(economy) 

Context

•  The lack of frequent and up-to-date economic indicators makes it hard to track India’s large informal sector, which employs around 80 per cent of the labour force and produces about 50% of GDP.

Background

• Ignoring problems in the informal sector can be costly as it can lead to job and wage losses, higher inflation and even risk the livelihood of migrant workers. 
• For instance, following demonetisation, a disproportionately higher number of jobs were created in rural India which isn’t positive it might seem as wages are 2.5 times lower than in urban India. 
  • As a result, overall wage levels and GDP declined over the next few years.
• Informal sector workers suffered far more from the national lockdown in 2020 than their formal sector counterparts. 
• With an inadequate safety net, there were painful accounts of displaced informal workers trying to get back to their rural homes.
• Such disruptions can be inflationary too. India was one of the few countries with high inflation throughout pandemic-stricken 2020. 
  • Some of this is likely to be associated with the disruption in informal firms, who in normal times are very active in the production of essential goods like food and textiles.

Furthermore

• Of the 384 million employed in the informal sector, half work in agriculture, living mostly in rural India, and the other half are in non-agricultural sectors. 
  • Of those, about half live in rural India and the remaining in urban areas. Each of these groups have fared differently through the pandemic.
• The fortunes of those in the formal sector, who make up 20% of the workforce, have been relatively good. Through the pandemic, large and listed firms have done better than smaller firms. 
• The salaries of individuals working at these larger listed firms have also held up relatively better, though they are lower than the pre-pandemic trend. These individuals may also have benefitted from buoyant stock markets.

Impact on India

• The urban affluent class led the rise in demand post the first Covid-19 wave in 2020 by buying consumer durables like furniture, electronics, cars and even houses. These items are generally not purchased year after year. As vaccinations are rolled out, these consumers may instead switch from spending on goods to services.
• Over the longer term, the prospects for this group will depend on the progress of policy reforms and economic growth, which are the leading drivers of real wages.
• The prospects for the 40% in the informal agricultural sector have been surprisingly resilient too. Rural wages have held up well over the pandemic, led by good monsoons, an exemption to the food trade from the various lockdowns, and more recently, higher agricultural exports. Higher government spending in various social welfare schemes has also helped.
• Longer-term consumption will depend on agricultural reforms which will help diversify income sources and raise agricultural productivity.
• The 40% in the informal non-agricultural sector is the most worrying. These workers are most vulnerable as they have borne the brunt of the economic disruption that the pandemic has unleashed.
• Several surveys over this time also show a rise in urban unemployment and self-employment, with the latter category seeing the highest earnings loss.

Syllabus– General Studies 2(polity) 

Context

• The disturbing scenes that we have witnessed in several state assemblies were sadly repeated in this year’s Monsoon Session of Parliament. 
  • Over the last two decades, paralysing Parliament has become the standard operating procedure of every Opposition party.

Historical Background

• Our Constitution, after extensive debate, adopted the Westminster model of governance. 
• Members of Parliament were granted the same powers, privileges and immunities that were enjoyed by the House of Commons. 
• In the Lok Sabha, as in the United Kingdom, the Speaker is the supreme authority; he has vast powers and it is his primary duty to ensure the orderly conduct of the business of the House. 
• Every textbook of constitutional law points out the two essential qualities of a Speaker: Independence and impartiality.
• GV Mavalankar, the first Speaker, observed: “Once a person is elected Speaker, he is expected to be above parties, above politics. In other words, he belongs to all the members or belongs to none”. 
• Pandit Nehru referred to the Speaker as “the symbol of the nation’s freedom and liberty” and emphasised that Speakers should be men of “outstanding ability and impartiality”. 
• MN Kaul and SL Shakdher, in their book Practice and Procedure of Parliament, refer to him as the conscience and guardian of the House. As the principal spokesperson of the Lok Sabha, the Speaker represents its collective voice.

• The decline in the functioning of India’s Parliament — and state assemblies as well — is caused by one primary reason: The lack of independence and impartiality of the Speaker.

Speaker’s role

• It is the Speaker’s duty to decide what issues will be taken up for discussion. 
• He has the sole discretion to permit an adjournment motion to be tabled or to admit a calling attention notice, if the issue is of urgent public importance. 
  • In the latter case, the minister has to make a statement or ask for time to make a statement later. 
• Indeed, the supremacy of Parliament is emphasised by Article 75(3) of the Constitution: “The Council of Ministers shall be collectively responsible to the House of the People”.

Context:

The Plastic Waste Management Amendment Rules notified by the Centre acknowledge the gravity of pollution caused by plastic articles of everyday use, particularly those that have no utility beyond a few minutes or hours.

Plastic waste problem around the globe:

Pollution due to single use plastic items has become an important environmental challenge confronting all countries.

• Only nine percent of the plastic waste produced between 1950 and 2015 was recycled globally, according to a study by researchers from the University of California, Santa Barbara, and others.
• Out of the nine per cent, only 10 per cent was recycled more than once; 12 per cent was incinerated, and 79 per cent ended up in landfills or oceans and other water bodies.
• As much as 3.3 million metric tonnes of plastic waste was generated in India in 2018-19, according to the Central Pollution Control Board (CPCB) report 2018-19.
• This roughly translated to 9,200 tonnes a day (TPD). The total municipal solid waste generation is 55-65 million tonnes; plastic waste is approximately 5-6 per cent of the total solid waste generated in the country.
• Currently, the Plastic Waste Management Rules, 2016, prohibits manufacture, import, stocking, distribution, sale and use of carry bags and plastic sheets less than 50 microns in thickness in the country.
• The Prime Minister of India was also conferred the “champions of the earth” award by the United Nations Environment Programme (UNEP) in 2018 for pledging to eliminate all single-use plastic by 2022.

India is committed to take action for mitigation of pollution caused by littered Single Use Plastics.

Syllabus– General Studies 3(economy) 

Context

A major stumbling block faced by Indian farmers pertains to the lack of affordable good quality feed and fodder for livestock. 

More on news

• A study by the Indian Grassland and Fodder Research Institute has observed that for every 100 kg of feed required, India is short of 23.4 kg of dry fodder, 11.24 kg of green fodder, and 28.9 kg of concentrate feed. 
  • This is one of the chief reasons why Indian livestock’s milk productivity is 20%-60% lower than the global average. 
• The significance of the Sub-Mission on Fodder and Feed recently announced by the Indian government is underscored by the fact that livestock is the major source of cash income for about 13 crore marginal farmers and is an insurance in the event of crop failure. 
• The lack of good quality feed and fodder impacts the productivity levels of cattle. 
• As about 200 million Indians are involved in dairy and livestock farming, the scheme is important from the perspective of poverty alleviation.

The Revised National Livestock Mission

• When the National Livestock Mission was launched in 2014, it focused on supporting farmers in producing fodder from non-forest wasteland/grassland, and cultivation of coarse grains. 
  • However, this model could not sustain fodder availability due to lack of backward and forward linkages in the value chain. 
  • Therefore, the Mission has been revised to make the programme focus primarily on assistance towards seed production and the development of feed and fodder entrepreneurs. 
• It now provides for 50% direct capital subsidy to the beneficiaries under the feed and fodder entrepreneurship programme and 100% subsidy on fodder seed production to identified beneficiaries.
• The Sub-Mission on Fodder and Feed intends to create a network of entrepreneurs who will make silage (the hub) and sell them directly to the farmers (the spoke). 
• It is premised on the idea that the funding of the hub will lead to the development of the spoke. 
• The large-scale production of silage will bring down the input cost for farmers since silage is much cheaper than concentrate feed. 
• Studies have indicated that by growing fodder crops one can earn ₹1.60 by investing ₹1 as compared to ₹1.20 in the case of common cereals like wheat and rice. 
• Private entrepreneurs, self-help groups, farmer producer organisations, dairy cooperative societies, and Section 8 companies (NGOs) can avail themselves of the benefits under this scheme. 
• The scheme will provide 50% capital subsidy up to ₹50 lakh towards project cost to the beneficiary for infrastructure development and for procuring machinery for value addition in feed such as hay/silage/total mixed ration. 
• The scheme can be used for covering the cost of infrastructure/machinery such as bailing units, harvester, chaff cutter, sheds, etc. 
• The revised scheme has been designed with the objectives of increasing productivity, reducing input costs, and doing away with middlemen (who usually take a huge cut).

Concerns:

• A major challenge in the feed sector emanates from the fact that good quality green fodder is only available for about three months during the year. So, the ideal solution would be to ferment green fodder and convert it into silage. 
• Hence, under the fodder entrepreneurship programme, farmers will receive subsidies and incentives to create a consistent supply chain of feed throughout the year.