GROSS DOMESTIC PRODUCT (GDP)
There are three primary ways to calculate GDP:
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Production Approach (GDP by Production): This approach calculates GDP by adding up the value-added at each stage of production. It involves summing up the value of all final goods and services produced in an economy.
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Income Approach (GDP by Income): This approach calculates GDP by summing up all the incomes earned in an economy, including wages, rents, interests, and profits. The idea is that all the income generated in an economy must ultimately be spent on purchasing goods and services.
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Expenditure Approach (GDP by Expenditure): This approach calculates GDP by summing up all the expenditures made on final goods and services. It includes consumption by households, investments by businesses, government spending, and net exports (exports minus imports).
3. Measuring GDP
GDP can be measured in three different ways:
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Nominal GDP: This is the raw GDP figure without adjusting for inflation. It reflects the total value of goods and services produced at current prices.
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Real GDP: Real GDP adjusts the nominal GDP for inflation, allowing for a more accurate comparison of economic performance over time. It represents the value of goods and services produced using constant prices from a specific base year.
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GDP per capita: This is the GDP divided by the population of a country. It provides a per-person measure of economic output and can be useful for comparing the relative economic well-being of different countries.
The GDP is a useful measure of economic health, but it has some limitations. For example, it does not take into account the distribution of income in an economy. It also does not take into account the quality of goods and services produced.
Despite its limitations, the GDP is a widely used measure of economic health. It is used by economists, policymakers, and businesses to track the performance of an economy and to make decisions about economic policy
4. Gross Value Added (GVA)
Gross Value Added (GVA) is a closely related concept to Gross Domestic Product (GDP) and is used to measure the economic value generated by various economic activities within a country. GVA represents the value of goods and services produced in an economy minus the value of inputs (such as raw materials and intermediate goods) used in production. It's a way to measure the contribution of each individual sector or industry to the overall economy.
GVA can be calculated using the production approach, similar to one of the methods used to calculate GDP. The formula for calculating GVA is as follows:
GVA = Output Value - Intermediate Consumption
Where:
- Output Value: The total value of goods and services produced by an industry or sector.
- Intermediate Consumption: The value of inputs used in the production process, including raw materials, energy, and other intermediate goods.
Gross Domestic Product (GDP) and Gross National Product (GNP) are both important economic indicators used to measure the size and health of an economy, but they focus on slightly different aspects of economic activity and include different factors. Here are the key differences between GDP and GNP:
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Definition and Scope:
- GDP: GDP measures the total value of all goods and services produced within a country's borders, regardless of whether the production is done by domestic or foreign entities. It only considers economic activities that take place within the country.
- GNP: GNP measures the total value of all goods and services produced by a country's residents, whether they are located within the country's borders or abroad. It takes into account the production of residents, both domestically and internationally.
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Foreign Income and Payments:
- GDP: GDP does not consider the income earned by residents of a country from their economic activities abroad, nor does it account for payments made to foreigners working within the country.
- GNP: GNP includes the income earned by a country's residents from their investments and activities abroad, minus the income earned by foreign residents from their investments within the country.
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Net Factor Income from Abroad:
- GDP: GDP does not account for net factor income from abroad, which is the difference between income earned by domestic residents abroad and income earned by foreign residents domestically.
- GNP: GNP includes net factor income from abroad as part of its calculation.
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Foreign Direct Investment:
- GDP: GDP does not directly consider foreign direct investment (FDI) flowing into or out of a country.
- GNP: GNP considers the impact of FDI on the income of a country's residents, both from investments made within the country and from investments made by residents abroad.
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Measurement Approach:
- GDP: GDP can be calculated using three different approaches: production, income, and expenditure approaches.
- GNP: GNP is primarily calculated using the income approach, as it focuses on the income earned by residents from their economic activities.
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For Prelims: GDP, GVA, FDI, GNP
For Mains: 1.Discuss the recent trends and challenges in India's GDP growth
2.Examine the role of the service sector in India's GDP growth
3.Compare and contrast the growth trajectories of India's GDP and GNP
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Previous Year Questions
1.With reference to Indian economy, consider the following statements: (UPSC CSE, 2015)
1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade. 2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer (b)
2.A decrease in tax to GDP ratio of a country indicates which of the following? (UPSC CSE, 2015) 1. Slowing economic growth rate 2. Less equitable distribution of national income Select the correct answer using the code given below: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer (a)
Previous year UPSC Mains Question Covering similar theme: Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP? (UPSC CSE GS3, 2020) Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015. (UPSC CSE GS3, 2021) |
GREENWASHING
1. Context
Earlier in December 2023, the United Kingdom’s ad regulator banned advertisements from Air France, Lufthansa, and Etihad for allegedly misleading consumers regarding the environmental impact of air travel.
This isn’t the first time that airlines have come under fire for false advertising about their sustainability efforts and accused of ‘greenwashing’. On Tuesday (December 19), a case filed against Dutch airlines KLM for alleged greenwashing through one of their advertising campaigns went to trial in Amsterdam
2. What is Greenwashing?
- Greenwashing is a deceptive marketing or public relations strategy used by companies and organizations to create a false impression of being environmentally friendly or sustainable.
- It involves presenting misleading or exaggerated claims about the environmental benefits of a product, service, or the company as a whole.
- The term "greenwashing" is a play on the words "green" (associated with environmental friendliness) and "whitewashing" (referring to covering up flaws or negative aspects).
- The purpose of greenwashing is to appeal to environmentally conscious consumers, create a positive public image, and potentially gain a competitive advantage over competitors without making substantial efforts to be genuinely eco-friendly.
Greenwashing can take various forms, including:
- Misleading Labels: Companies may use misleading labels or certifications that imply a product is environmentally friendly, but the claims are not backed by credible evidence or certifications.
- Vague Claims: Using vague language or buzzwords like "eco-friendly," "natural," or "green" without providing specific details or evidence to support the claims.
- Selective Information: Highlighting one minor positive aspect of a product or operation while ignoring its overall negative impact on the environment.
- Irrelevant Information: Emphasizing a small, insignificant green effort to distract from more significant environmental issues related to the company's practices.
- Green Packaging: Focusing on eco-friendly packaging while the product itself or the company's overall practices are harmful to the environment.
- Distraction from Other Issues: Using environmental initiatives to divert attention from other problems the company may be facing, such as labor abuses or ethical controversies.
Greenwashing can be harmful as it misleads consumers, making them believe they are supporting environmentally responsible companies when, in reality, their actions may have little to no positive impact on the environment. This practice also undermines the efforts of genuinely eco-friendly businesses, as it creates skepticism and cynicism among consumers.
3. How Greenwashing Works?
- Greenwashing works by manipulating public perception and creating a false image of environmental responsibility without making substantial efforts to be truly eco-friendly.
- It involves various strategies and tactics that are designed to appeal to environmentally conscious consumers, improve the company's reputation, and potentially increase sales or market share.
Here's how greenwashing typically works:
- Misleading Claims: Companies make unsubstantiated or vague claims about their products, services, or practices being environmentally friendly without providing evidence or data to support these assertions.
- Cherry-Picking Information: Greenwashing often involves highlighting a minor environmental initiative while downplaying or ignoring other aspects of the company's operations that may have a more significant negative impact on the environment.
- Using Ambiguous Language: Companies may use green buzzwords like "eco-friendly," "sustainable," "natural," or "green" without providing specific details on how these claims are justified.
- False Certifications and Labels: Greenwashing may involve using misleading certifications or labels that imply a product is eco-friendly when, in reality, the certification lacks credibility or is not related to the product's environmental impact.
- Irrelevant Emphasis: Companies might focus on environmentally friendly packaging or insignificant changes while overlooking the overall environmental impact of the product or the company's practices.
4. What are the examples of Greenwashing?
- Fast Fashion: Clothing brands may claim to be environmentally friendly or sustainable but continue to produce low-quality, cheaply made clothes that contribute to excessive waste and pollution.
- Bottled Water: Some bottled water companies market their products as "eco-friendly" due to their lightweight packaging or use of recycled materials, but the environmental impact of single-use plastic bottles remains significant.
- Oil and Gas Companies: Fossil fuel companies may promote their investments in renewable energy projects while downplaying their core business's contribution to climate change and environmental degradation.
- Deforestation Initiatives: Companies involved in deforestation may launch token tree-planting campaigns to create a perception of environmental responsibility while ignoring the far-reaching impact of deforestation on ecosystems.
- Transportation: Automobile manufacturers may advertise their electric or hybrid vehicles as environmentally friendly, but the overall environmental impact of vehicle production and disposal is often not fully disclosed.
5. Why Greenwashing is a Problem?
Greenwashing is a significant problem for several reasons:
- Misleads Consumers: Greenwashing deceives consumers into believing that products or services are more environmentally friendly than they actually are. As a result, consumers may make purchasing decisions based on false information, leading to unintended environmental consequences.
- Undermines Trust: Greenwashing erodes trust between companies and consumers. When companies make false or exaggerated claims, it creates skepticism and cynicism among consumers, making it challenging for genuinely sustainable businesses to gain credibility.
- Diverts Attention: Greenwashing can distract consumers, policymakers, and stakeholders from addressing real environmental issues. Instead of focusing on real solutions and efforts towards sustainability, attention, and resources may be directed towards superficial or ineffective green initiatives.
- Slows Down Progress: By promoting greenwashing, companies may delay or avoid making genuine efforts towards sustainability. This hinders progress in creating a more environmentally responsible business environment and addressing pressing environmental challenges.
- Discourages Genuine Sustainability: Companies that engage in greenwashing may undermine the efforts of genuinely sustainable businesses. When consumers feel deceived, they might become less willing to support and pay a premium for truly eco-friendly products or services.
- Neglects Social Responsibility: Greenwashing often diverts attention from other important corporate social responsibility issues, such as fair labor practices, ethical sourcing, or community engagement, leading to an incomplete approach to responsible business conduct.
6. Way Forward
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For Prelims: Greenwashing, Forest (Conservation) Amendment Bill, 2023, Eco-Friendly, The Forest (Conservation) Act, 1980.
For Mains: 1. Assess the concept of greenwashing in the context of business practices and its implications on environmental sustainability. Discuss how misleading environmental claims by companies affect consumer choices and influence the perception of corporate responsibility. (250 words).
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Previous year Questions
1. Which one of the following best describes the term "greenwashing"? (UPSC 2022)
A. Conveying a false impression that a company's products are eco-friendly and environmentally sound
B. Non-inclusion of ecological/environmental costs in the Annual Financial Statements of a country
C. Ignoring the disastrous ecological consequences while undertaking infrastructure development
D. Making mandatory provisions for environmental costs in a government project/programme
Answer: A
2. Regarding "carbon credits", which one of the following statements is not correct? (UPSC 2011)
(a)The carbon credit system was ratified in conjunction with the Kyoto Protocol
(b) Carbon credits are awarded to countries or groups that have reduced greenhouse gases below their emission quota.
(c) The goal of the carbon credit system is to limit the increase of carbon dioxide emissions.
(d) Carbon credits are traded at a price fixed from time to time by the United Nations Environmental Programme.
Answer: d
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VOLCANOES
The Marapi volcano, located in West Sumatra, Indonesia, is part of the Pacific Ring of Fire. The Ring of Fire is a horseshoe-shaped area in the Pacific Ocean basin where a large number of earthquakes and volcanic eruptions occur. It's characterized by active tectonic plate boundaries, including subduction zones, where one tectonic plate is forced beneath another.
Marapi is one of Indonesia's most active volcanoes and stands about 2,891 meters (9,485 feet) tall. It's situated near the city of Bukittinggi and has a history of frequent eruptions. While some of its eruptions have been relatively small and non-explosive, it has occasionally produced more significant eruptions with ash plumes and pyroclastic flows.
The region surrounding Marapi and much of Indonesia, in general, is part of the Pacific Ring of Fire due to the complex tectonic activity in the area. The Indo-Australian Plate is subducting beneath the Eurasian Plate, leading to seismic and volcanic activity along the Sumatran Fault and other associated fault lines.
The Pacific Ring of Fire is known for its high seismic and volcanic activity, housing a majority of the world's active volcanoes and experiencing a large number of earthquakes. This area's geological dynamics make it prone to geological hazards, but it also provides valuable insights into plate tectonics and volcanic activity for scientific research
3. Volcanoes and Volcanic Landforms
Volcanoes are natural features on Earth's surface that form when magma (molten rock beneath the Earth's crust) erupts through openings or vents. The erupted materials, including lava, ash, gases, and pyroclastic flows, accumulate around the vent, building up and forming various volcanic landforms. Here are some key volcanic landforms:
Shield Volcanoes: These are broad, gently sloping volcanoes characterized by their low viscosity lava, which flows easily. They're built up by numerous eruptions of thin, runny lava. Examples include Mauna Loa in Hawaii and the Galápagos Islands' volcanoes.
Stratovolcanoes (Composite Volcanoes): These are steep-sided, conical volcanoes built by multiple layers of lava, ash, and volcanic rocks. They are often associated with explosive eruptions due to their viscous lava. Famous examples include Mount St. Helens in the United States, Mount Fuji in Japan, and Mount Vesuvius in Italy.
Cinder Cone Volcanoes: These are small, steep-sided volcanoes formed from ejected lava fragments that pile up around the vent. They usually have a bowl-shaped crater at the summit. Paricutin in Mexico is a well-known cinder cone volcano.
Calderas: These are large, basin-shaped depressions formed after massive eruptions, where the volcano's summit collapses into the emptied magma chamber. Crater Lake in Oregon, USA, is a prime example of a caldera.
Lava Plateaus: These are vast flat areas created by successive lava flows that cover large areas of land. The Deccan Plateau in India and the Columbia River Plateau in the United States are examples of lava plateaus.
Volcanic Islands: Many islands around the world, like Hawaii, Japan, and the Philippines, were formed by volcanic activity. These islands were created as volcanoes erupted underwater and gradually built up above sea level.
Volcanic Craters: Formed at the summit of some volcanoes, these bowl-shaped depressions are created either by explosions or the collapse of the volcano's summit following an eruption.
Volcanic landforms vary based on factors like the type of eruption, the composition of the lava, and the frequency of eruptions. They contribute significantly to the Earth's landscape and often provide fertile soils and valuable resources, while also posing risks to nearby populations due to potential eruptions and associated hazards
4. Types of Volcanoes
Volcanoes come in various types, each formed by different eruptive processes and materials. Here are the main types of volcanoes:
Shield Volcanoes: These volcanoes have broad, gentle slopes due to the relatively fluid lava (low viscosity) they produce. Eruptions from shield volcanoes tend to be non-explosive and result in the flowing of lava over large distances. Examples include Mauna Loa and Mauna Kea in Hawaii.
Stratovolcanoes (Composite Volcanoes): Stratovolcanoes are tall, steep-sided cones formed by alternating layers of lava, ash, and volcanic rocks. They often produce explosive eruptions due to the higher viscosity of their lava. Mount St. Helens in the United States and Mount Fuji in Japan are examples of stratovolcanoes.
Cinder Cone Volcanoes: These small, steep-sided volcanoes are formed from the accumulation of pyroclastic material (such as ash, cinders, and volcanic rocks) ejected during eruptions. They usually have a bowl-shaped crater at the summit. Paricutin in Mexico is a famous cinder cone volcano.
Lava Domes: Lava domes are created by the slow extrusion of highly viscous lava. They form rounded mounds often found within the craters of larger volcanoes. Lava domes, such as Mount St. Helens' post-eruption dome, can be highly unstable and prone to collapse.
Complex Volcanoes: These are composite volcanoes that exhibit multiple vents and overlapping cones. They're formed by the accumulation of materials from various eruptions over time. Mount Rainier in the United States is an example of a complex volcano.
Submarine Volcanoes: Found underwater, these volcanoes create seamounts or volcanic islands. They can form chains, like the Hawaiian-Emperor seamount chain, as tectonic plates move over hotspots beneath the Earth's crust.
Supervolcanoes: These are rare but extremely powerful volcanoes capable of producing colossal eruptions. They form immense calderas after catastrophic explosions that empty the magma chamber. Yellowstone Caldera in the United States is an example of a supervolcano
5. Relation among Plate Tectonics, Volcanoes and Earthquake
Plate tectonics, volcanoes, and earthquakes are interconnected and are all part of the Earth's dynamic processes.
Plate Tectonics: The Earth's lithosphere (the outermost layer) is divided into several large and small plates that float on the semi-fluid asthenosphere beneath them. These plates are in constant motion, driven by forces like mantle convection, and this movement is known as plate tectonics.
Volcanoes: Volcanoes are closely associated with plate boundaries, where tectonic plates interact. There are three primary types of plate boundaries:
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Divergent Boundaries: At divergent boundaries, plates move away from each other. Magma from the mantle rises to fill the gap, solidifies, and creates new crust. This process forms mid-ocean ridges, where underwater volcanoes and volcanic activity occur.
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Convergent Boundaries: At convergent boundaries, plates move toward each other. When an oceanic plate collides with a continental plate or another oceanic plate, the denser oceanic plate sinks beneath the lighter plate in a process called subduction. The sinking plate melts as it descends into the mantle, leading to the formation of magma that rises to the surface, resulting in explosive volcanoes. Examples include the Andes and the Cascades.
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Transform Boundaries: At transform boundaries, plates slide past each other horizontally. While these boundaries are not associated with volcanic activity directly, the stress buildup and release along these boundaries often cause earthquakes.
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Thus, the movement and interaction of tectonic plates at plate boundaries create conditions conducive to both volcanic eruptions and seismic activity (earthquakes). The locations and types of volcanoes and earthquakes are influenced by the specific plate boundary and the nature of the plate movement at that boundary. Overall, plate tectonics serve as the underlying mechanism that connects the occurrence of volcanoes and earthquakes on Earth
6. How can volcanic eruptions affect the environment and natural ecosystem?
Volcanic eruptions can have significant impacts on the environment and natural ecosystems in several ways:
Air Quality: Eruptions release gases such as sulfur dioxide, carbon dioxide, hydrogen sulfide, and others. These gases can contribute to air pollution, leading to acid rain formation, smog, and the potential for respiratory issues in humans and animals.
Climate Effects: Volcanic ash and gases can reach the upper atmosphere, where sulfur dioxide reacts with water vapor to form sulfuric acid aerosols. These aerosols can reflect sunlight, leading to a cooling effect on the Earth's surface. However, this effect is temporary and can be followed by a period of warming due to greenhouse gases emitted during the eruption.
Ash Fallout: Volcanic ash can blanket large areas, affecting vegetation by blocking sunlight, damaging crops, and contaminating water sources. Heavy ashfall can collapse roofs, disrupt transportation, and damage infrastructure.
Lahars and Mudflows: Eruptions can melt snow and ice on a volcano's slopes, generating lahars (volcanic mudflows) that carry debris, ash, and rocks downslope, potentially devastating nearby communities and ecosystems.
Ecosystem Disturbance: Volcanic eruptions can destroy habitats, vegetation, and animal populations. However, some ecosystems are adapted to volcanic activity and may even benefit from the nutrient-rich volcanic soils that support new growth over time.
Water Contamination: Ash and volcanic materials can contaminate water sources, affecting aquatic life and making water unsafe for consumption.
Global Effects: Major volcanic eruptions, especially so-called "supervolcano" eruptions, can release vast amounts of ash and gases into the atmosphere, potentially leading to short-term global climate effects, including temperature drops and altered weather patterns
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For Prelims: Indian and World Geography-Physical, Social, Economic Geography of India and the World
For Mains: General Studies I: Important Geophysical phenomena such as earthquakes, Tsunami, Volcanic activity, cyclone etc., geographical features and their location-changes in critical geographical features and in flora and fauna and the effects of such changes
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NON PERFORMING ASSET (NPA)
A Non-Performing Asset (NPA) refers to a classification used by financial institutions, primarily banks, to categorize loans or advances that are in default or are in arrears on scheduled payments of principal or interest. In simpler terms, when a borrower fails to make interest or principal payments for a certain period of time, typically 90 days or more past the due date, the loan is classified as a non-performing asset.
NPAs are detrimental to banks and financial institutions as they indicate a risk of default and can lead to financial losses. These assets can hamper the lender's ability to generate income through interest and can also impact their capital adequacy and liquidity.
Financial institutions employ various strategies to manage and recover NPAs, such as restructuring loans, loan recovery processes, selling off bad debts to asset reconstruction companies, or writing off the non-recoverable amount from their books
3. NPA (Non-Performing Assets) –Classifications
Non-performing assets (NPAs) are classified based on the period for which the loan remains overdue and the likelihood of recovery. The classifications typically involve three categories:
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Substandard Assets: These are assets that have remained non-performing for less than or equal to 12 months. They are characterized by the bank or financial institution experiencing a potential loss if full repayment occurs. Substandard assets have a higher risk of turning into bad loans.
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Doubtful Assets: These assets have remained in the non-performing category for more than 12 months. There is a significant risk associated with these assets, where the full repayment of the loan is highly uncertain. However, there might still be some potential, albeit remote, for recovery.
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Loss Assets: When the assets' loss has been identified by the bank or financial institution or an external auditor, and these assets have very little chance of recovery, they are classified as loss assets. These assets are considered uncollectible and of such little value that their continuance as assets is not warranted, and the entire outstanding balance is written off.
These classifications are crucial for banks and financial institutions to assess the health of their loan portfolios and take appropriate measures to manage and mitigate risks associated with NPAs
Bank fraud and Non-Performing Assets (NPAs) are two distinct issues in the banking sector, although they can sometimes be interconnected.
Bank Fraud: Bank fraud involves deliberate deception or dishonest actions carried out by individuals or groups, intending to gain an unfair or unlawful advantage, causing financial loss to the bank or its customers. Fraud can take various forms, such as embezzlement, forgery, loan fraud, identity theft, money laundering, or manipulating financial statements. It's essentially a criminal act involving deceit, misrepresentation, or illegal activities that lead to financial losses for the bank.
Non-Performing Assets (NPAs): NPAs refer to loans or advances that have stopped generating income for the bank because the borrower has defaulted on repayment. When a borrower fails to pay interest or principal for a specified period, typically 90 days or more, the loan is classified as an NPA. NPAs can arise due to various reasons such as economic downturns, borrower insolvency, mismanagement, or inadequate risk assessment by the lending institution.
While these issues are distinct, there can be situations where bank fraud contributes to the creation of NPAs. For instance, if a fraudulent loan is issued based on false documents or misrepresented information, it might result in the borrower defaulting on payments, eventually turning the loan into an NPA
5. What are the impacts of Non-Performing Assets (NPA)
Non-Performing Assets (NPAs) can have significant impacts on banks, the economy, and the overall financial ecosystem.
Here are some of the key effects:
- NPAs erode a bank's profitability as they stop generating income through interest payments. This affects the bank's ability to lend further and impacts its overall financial health. A high level of NPAs can weaken a bank's capital base, affecting its ability to absorb losses and maintain stability
- Banks with high NPAs become cautious about lending, especially to risky sectors or borrowers, leading to a credit crunch. This restricted lending can hamper economic growth as businesses and individuals find it challenging to secure credit for expansion or investment
- High NPAs can dent depositor and investor confidence in the banking system. Customers might withdraw deposits or shift to more stable institutions, causing liquidity issues for the affected bank
- NPAs can have broader economic repercussions. When banks face financial strain due to NPAs, their ability to support economic growth through lending diminishes. This can affect employment, investments, and overall economic development
- Regulators monitor and impose stricter norms on banks with high levels of NPAs to ensure financial stability. Banks might face regulatory penalties or restrictions, impacting their operations and growth prospects
- Banks might need additional capital infusion to cover the losses arising from NPAs. This can strain the bank's resources or necessitate seeking external funding, impacting shareholders and overall financial planning
Controlling Non-Performing Assets (NPAs) is crucial for the financial health of banks and the stability of the financial system. Several measures can be implemented to manage and control NPAs effectively:
Prudent Lending Practices: Implementing robust credit appraisal and risk assessment mechanisms before disbursing loans can prevent potential NPAs. Thoroughly evaluating borrower creditworthiness, financial stability, and collateral can mitigate risks.
Early Detection and Monitoring: Early identification of potential NPAs is crucial. Banks should closely monitor repayment schedules and intervene at the first signs of distress. Timely action can prevent assets from slipping into the NPA category.
Loan Restructuring and Rescheduling: Offering viable borrowers alternative repayment structures can help them meet their obligations. Loan restructuring involves altering repayment terms, interest rates, or extending the tenure to make repayments more manageable.
Asset Quality Review (AQR): Conducting regular asset quality reviews helps in identifying stressed assets early on. This enables banks to take proactive measures to prevent assets from turning into NPAs.
Asset Reconstruction Companies (ARCs): Collaborating with ARCs allows banks to transfer NPAs to specialized entities that focus on recovering these assets. It helps banks clean up their balance sheets and concentrate on core operations.
Strengthening Recovery Mechanisms: Banks should have robust recovery mechanisms in place, including legal recourse and debt recovery tribunals, to expedite the recovery of NPAs. Effective recovery minimizes losses for the bank.
Loan Recovery through Securitization and Asset Sale: Selling NPAs to other entities or securitizing them can provide liquidity and reduce the burden on banks. However, this should be balanced with ensuring fair value realization.
Prudential Norms and Regulatory Compliance: Adhering to prudential norms set by regulatory authorities helps in maintaining healthy asset quality. Compliance with regulations ensures timely recognition and provisioning for NPAs.
Debt Recovery Tribunals (DRTs) and SARFAESI Act: Utilizing legal mechanisms like DRTs and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act expedites the recovery process and acts as a deterrent against defaulting borrowers
7. Way forward
Implementing these measures collectively and consistently can aid in controlling NPAs, maintaining a healthy loan portfolio, and preserving the stability of the banking sector.
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For Prelims: Current events of Economy in Indian Scenario, RBI measurement to Control Non Performing Assets (NPAs) For Mains: General Studies III: Non Performing Asset (NPAs), Bad Bank |
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Previous Year Questions 1.Consider the following statements: Non-performing assets (NPAs) decline in value when (UPSC ESE 2018) 1. Demand revives in the economy. 2. Capacity utilization increases. 3. Capacity utilization, though substantive, is yet sub-optimal. 4. Capacity utilization decreases consequently upon merger of unit. Which of the above statements are correct? A.1, 3 and 4 only B.1, 2 and 4 only C.1, 2 and 3 only D.1, 2, 3 and 4 Answer (C) |
Source: Indianexpress
FASTER ADOPTION AND MANUFACTURING OF (HYBRID &) ELECTRICAL VEHICLES (FAME-II)
- The total fund requirement for this scheme is Rs. 10,000 crores over three years from 2019-20 to 2021-22.
- The scheme with a total outlay of Rs 10000 Crores over the period of three years will be implemented with effect from 1st April 2019.
- This scheme is the expanded version of the present scheme titled 'FAME India1 which was launched on 1st April 2015, with a total outlay of Rs. 895 crores
- The FAME India scheme has been successful in promoting the adoption of electric and hybrid vehicles in India.
- In the first phase of the scheme, over 1.5 lakh (150,000) electric vehicles were sold. In the second phase, the sale of electric vehicles is expected to increase significantly.
- The FAME India scheme is one of the government of India's initiatives to promote clean energy and reduce pollution.
- The scheme is expected to help India achieve its target of 30% electric vehicle sales by 2030
3.Key features of FAME India Phase II
- The scheme provides financial incentives for the purchase of electric and hybrid vehicles, including:
- Demand Incentive - This is a one-time incentive given to the buyer of an electric or hybrid vehicle. The amount of the incentive depends on the type of vehicle and its battery capacity.
- Production Linked Incentive (PLI) - This is an incentive given to manufacturers of electric vehicles and components. The incentive is based on the number of vehicles and components manufactured.
- The scheme also provides incentives for the development of charging infrastructure, including:
- Infrastructure Development Charge (IDC) - This is a one-time incentive given to the developer of a charging station. The amount of the incentive depends on the capacity of the charging station.
- Fast Charging Corridors - This is an incentive given to the developer of a network of fast charging stations. The incentive is based on the number of stations and their capacity.
- The scheme also provides incentives for research and development in the field of electric vehicles, including:
- R&D Subsidy - This is an incentive given to companies that are developing new technologies for electric vehicles. The incentive is based on the amount of research and development expenditure incurred.
- The FAME India scheme has had a positive impact on the adoption of electric vehicles in India. In the first phase of the scheme, over 1.5 lakh (150,000) electric vehicles were sold. In the second phase, the sale of electric vehicles is expected to increase significantly.
- The FAME India scheme has also helped to create jobs in the electric vehicle manufacturing and charging infrastructure sectors. According to a study by the National Institute of Electric Vehicles, the FAME India scheme has created over 100,000 jobs in the electric vehicle sector.
- The FAME India scheme is expected to help India achieve its target of 30% electric vehicle sales by 2030
- The government of India is working to address these challenges. For example, the government is providing subsidies to reduce the cost of electric vehicles. The government is also working to increase the number of charging stations in the country
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Previous Year Questions
1. Choose the correct option regarding FAME Scheme?
A.To promote the manufacturing of electric and hybrid vehicle technology
B.FAME stands for Faster adoption and Manufacturing of Hybrid and Electric vehicles
C.FAME India is part of the National Electric mobility Mission Plan
D. All of the above
Answer -D
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INDIA's REFUGEE POLICY
Recently, The European Union agreed on new rules designed to share the cost and work of hosting migrants more evenly and limit the number of people coming in. Representatives of the European Parliament and EU governments reached an accord after all-night talks on EU laws collectively called the New Pact on Migration and Asylum that should start taking effect next year.
2. What is India’s Refugee Policy?
India does not have a specific, comprehensive refugee policy. Instead, the treatment of refugees and asylum seekers in India is governed by a combination of domestic laws, international principles, and ad-hoc arrangements.
The key aspects of India's approach to refugees
- India follows a non-refoulement policy, which means that it does not forcibly return refugees to a country where they face persecution or serious harm. This principle is in line with international norms.
- India has historically provided refuge to various communities facing persecution, such as Tibetans, Sri Lankan Tamils, Afghans, and more. However, these arrangements have often been ad hoc, and there is no overarching legal framework specifically designed for the protection of refugees.
- Refugees in India do not have a specific legal status. The treatment of refugees falls under the provisions of the Foreigners Act, 1946, and the Registration of Foreigners Act, 1939. These laws do not distinguish between economic migrants, asylum seekers, or refugees.
- Some refugee communities, such as Tibetan refugees, have been living in India for an extended period. They are often accommodated in settlements and enjoy a degree of autonomy within those settlements.
- Refugees in India typically have access to basic services such as education and healthcare. However, their rights and entitlements are not clearly defined by law.
- One of the criticisms of India's approach is the absence of a comprehensive legal framework specifically addressing refugees. The lack of such a framework can lead to uncertainty regarding the rights and obligations of refugees and the responsibilities of the Indian government.
- While India provides de facto asylum to many refugees, there is no formalized asylum procedure and asylum seekers often face challenges in navigating the system.
3. What is an Asylum?
- Asylum is the protection granted by a state to a person who is seeking refuge from persecution in their home country due to their race, religion, nationality, political belief, or membership in a particular social group.
- Individuals seeking asylum must apply to the host country and present evidence of their persecution. The host country then determines whether the individual meets the criteria for asylum and grants them protection if they qualify.
- Asylees are granted basic human rights and access to essential services like healthcare and education in the host country. They may also be eligible for work authorization and eventually permanent residency.
4. Who is Migrant and Refugee?
Migrant
- A migrant is a person who moves from one country to another to settle permanently. Unlike refugees, migrants generally do not face persecution in their home country and may move for economic reasons, family reunification, or other personal motivations.
- There are different types of migrants, including economic migrants, skilled workers, family members, and environmental migrants.
- The rights of migrants vary depending on their status and the laws of the host country. Generally, they have basic human rights but may not be entitled to the same level of protection as refugees.
Refugee
- A refugee is a person who has fled their home country due to a well-founded fear of persecution and is unable or unwilling to return. The reasons for persecution can be similar to those for asylum seekers, but refugees are already outside their home country.
- Refugees are entitled to international protection under the 1951 Refugee Convention, which guarantees their basic human rights and prohibits their return to a country where they would face persecution.
- Refugees have the right to asylum, access to basic necessities, and the opportunity to integrate into their host country.
5. Difference between Asylum, Migrant and Refugee
- While both refugees and asylum seekers may leave their home country due to difficult circumstances, refugees have already experienced persecution, while asylum seekers fear it.
- Refugees are already outside their home country, while asylum seekers are still in their home country or are in transit.
- Both refugees and asylum seekers have rights under international law, but refugees have additional protections due to their status.
6. What is the Global Refugee Forum (GRF)?
The Global Refugee Forum (GRF) is a non-binding, international platform established under the auspices of the United Nations High Commissioner for Refugees (UNHCR).
Its main objective is to:
- Mobilize international cooperation and support for refugees and host communities.
- Share best practices and innovative solutions for refugee protection and integration.
- Increase burden and responsibility-sharing among states in addressing the global refugee crisis.
Key Features of the GRF
- Held every four years, the first GRF took place in Geneva in December 2019 and the second in December 2023.
- Brings together governments, international and regional organizations, civil society, refugees themselves, the private sector, and other stakeholders.
- Prioritizes finding durable solutions for refugees, such as voluntary return, local integration, or resettlement in third countries.
- Aims to generate concrete pledges and commitments from participating actors, including financial contributions, technical assistance, and policy changes.
Significance of the GRF
- The GRF brings together diverse actors to address a complex global issue, fostering collaboration and preventing fragmented responses.
- The forum elevates the issue of refugees on the international agenda and encourages governments to prioritize refugee protection.
- The GRF aims to secure concrete pledges from various stakeholders to address urgent needs and gaps in refugee assistance.
- The forum encourages sharing of best practices and identifying new approaches to refugee management and integration.
Challenges and Future of the GRF
- Converting pledges into concrete actions remains a challenge, requiring strong accountability mechanisms and follow-up processes.
- The forum primarily focuses on responding to existing refugee crises, but addressing the root causes of displacement would ultimately be more effective.
- Ensuring meaningful participation of all stakeholders, including refugees themselves, is crucial for effective and equitable solutions.
7. EU Pact on Migration and Asylum
The EU Pact on Migration and Asylum is a set of policies and regulations aimed at reforming the European Union's migration and asylum system. It was adopted in December 2023 after extensive negotiations between EU member states and the European Parliament.
Key Objectives of the Pact
- The Pact aims to address the uneven distribution of asylum seekers and refugees across EU countries by promoting burden-sharing and solidarity.
- The Pact proposes measures to strengthen border controls, combat human trafficking, and improve cooperation with third countries on migration management.
- The Pact seeks to streamline asylum processes to ensure quicker decisions and reduce backlogs.
- The Pact emphasizes the importance of integrating refugees into EU societies and facilitating their resettlement within the EU.
Key Elements of the Pact
- A voluntary mechanism for sharing the responsibility of hosting asylum seekers and refugees among EU member states based on a set of criteria like population, GDP, and unemployment.
- Increased investment in border control technologies and cooperation with third countries to prevent irregular migration.
- Establishes a standard procedure for identifying non-EU nationals upon arrival to prevent them from moving freely within the Schengen area.
- Aims to streamline the asylum process by setting time limits for decisions and introducing faster procedures for manifestly unfounded claims.
- Strengthens the system for returning irregular migrants to their countries of origin.
Controversies and Concerns
- Critics argue that the Pact focuses too heavily on border control and detention, potentially undermining refugee protection and human rights.
- Concerns exist about the voluntary nature of the solidarity mechanism and whether it will be effective in achieving burden-sharing.
- Some provisions, such as the faster procedures for unfounded claims, raise concerns about potential discrimination against certain groups of asylum seekers.
8. The 1951 Refugee Convention and its 1967 Protocol in relation to India
India is not a signatory to the 1951 Refugee Convention or its 1967 Protocol. The 1951 Refugee Convention, adopted after World War II, and its 1967 Protocol, removed geographical and temporal restrictions, establishing a universal framework for the protection of refugees.
The key principles of these international instruments include
- The 1951 Convention defines a refugee as someone who is outside their country of nationality or habitual residence and is unable or unwilling to return due to a well-founded fear of persecution based on race, religion, nationality, membership in a particular social group, or political opinion.
- The principle of non-refoulement, central to the Convention, prohibits the expulsion or return of a refugee to a territory where their life or freedom would be threatened on account of their race, religion, nationality, membership in a particular social group, or political opinion.
- The Convention outlines the rights and obligations of refugees, including the right to work, education, and access to public assistance.
- The Convention emphasizes international cooperation and burden-sharing among states to address the global refugee crisis.
9. The Way Forward
India's stance on the 1951 Convention and its Protocol is rooted in its historical approach to international agreements, emphasizing national sovereignty and non-interference in internal affairs. While India has not formally adopted the Convention, it has maintained a pragmatic and humanitarian approach to refugees, often providing them with de facto asylum.
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For Prelims: European Union, India's refugee policy, Foreigners Act, 1946, the Registration of Foreigners Act, 1939, Asylum, Global Refugee Forum For Mains: 1. Critically analyze the absence of a comprehensive refugee law in India. Does this hinder effective refugee protection and management? How can India overcome these challenges while balancing national interests with international obligations? (250 Words)
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Previous Year Questions
1. Consider the following pairs: (UPSC 2016) Community sometimes In the affairs of mentioned in the news
Which of the pairs given above is/are correctly matched? (a) 1 and 2 (b) 2 only (c) 2 and 3 (d) 3 only
2. With reference to India, consider the following statements: (UPSC 2021) 1. There is only one citizenship and one domicile.
2. A citizen by birth only can become the Head of State.
3. A foreigner once granted the citizenship cannot be deprived of it under any circumstances. Which of the statements given above is/are correct?
A. 1 only B. 2 only C. 1 and 3 D. 2 and 3 Answers:1-C, 2- A
2. Consider the following statements: (UPSC 2022) 1. Bidibidi is a large refugee settlement in north-western Kenya. 2. Some people who fled from South Sudan civil war live in Bidibidi. 3. Some people who fled from civil war in Somalia live in Dadaab refugee complex in Kenya. Which of the statements given above is/are correct? A. 1 and 2 B. 2 only C. 2 and 3 D. 3 only Answer: C Mains 1. How does illegal transborder migration pose a threat to India’s security? Discuss the strategies to curb this, bringing out the factors which give impetus to such migration. (UPSC 2014) |
POST OFFICE BILL 2023
2. The Post Office Bill, 2023
The Post Office Bill, 2023, aims to modernize India's postal services by replacing the outdated Indian Post Office Act, 1898. This bill seeks to enhance the efficiency and effectiveness of India Post by introducing several significant changes.
The Post Office Bill of 2023 introduces several key features related to the interception and management of postal articles.
- The bill allows for the interception of postal articles under certain specified grounds. These grounds include concerns related to the security of the state, friendly relations with foreign states, public order, emergencies, public safety, or contravention of the provisions of the Bill or other laws.
- An officer-in-charge appointed by the Union government is granted the authority to "intercept, open, or detain" any postal article based on the aforementioned grounds. Additionally, the government has the discretion to dispose of such intercepted items as it deems appropriate.
- The Union government, through notification, can empower any officer of the Post Office to deliver a postal article suspected of containing prohibited items to the customs authority or any other specified authority.
- The Bill exempts the Post Office from incurring any liability related to its services. It specifies that no officer shall be held liable unless the officer has acted fraudulently or willfully caused any loss, delay, or misdelivery of service.
- The Bill does not outline specific offences and penalties, except for one provision. Amounts not paid by a user for postal services will be recoverable as arrears of land revenue. Notably, the Jan Vishwas (Amendment of Provisions) Act, 2023, removed offences and penalties such as theft, misappropriation, or destruction of postal articles, which were originally present in the 1898 Act.
3. Concerns regarding the Post Office Bill of 2023
- The Bill infringes on the fundamental right to privacy and the potential misuse of interception powers in the name of security, citing recent alerts from a global tech company about state-sponsored hacking attempts on mobile devices.
- The absence of guidelines in the Bill, contending that it encourages state surveillance and the legislation, without clear provisions, violates constitutional articles, including Articles 14, 19(1)(a), and Article 21. The risk of compromising citizens' privacy without safeguards preventing officers from leaking intercepted postal contents.
- The Bill for suffering from a "Big Brother syndrome," and grants the government extensive monitoring powers over citizens.
- The Bill lacks clarity on the grounds for interception. For instance, it does not define what qualifies as an 'emergency,' a basis for interception under Section 9(i) of the Bill. The vagueness of the clause, states that it provides unbridled powers to authorities without specifying selection procedures for empowered officers.
- The Bill fails to provide a grievance redressal mechanism for citizens. Despite relieving post officers of liability, the legislation does not require the government to inform citizens about interceptions, preventing them from raising concerns or contesting such actions.
- The history of the current Post Office Bill can be traced back to the provisions related to interception in the Indian Post Office (Amendment) Bill of 1986.
- Before this, the 1898 Act allowed interception on the grounds of 'public emergency,' similar to the 'emergency' ground in the current Bill.
- The Law Commission of India, in its 38th report, noted that the term 'emergency' was not explicitly defined and provided a broad basis for interception.
- The Commission highlighted that the undefined term could not serve as a reasonable ground for the suspension of fundamental rights under Article 19(1) of the Constitution.
- It recommended legislative amendments to align interception laws with constitutional principles, leading to the enactment of the Telegraph (Amendment) Act of 1981.
- The Indian Post Office (Amendment) Bill of 1986 included provisions empowering the Union Government, State Government, or any authorized officer to 'intercept or detain' postal articles on various grounds, including public safety, sovereignty, and integrity of India, security of the state, friendly relations with foreign states, public order, prevention of incitement to the commission of any offence, or in the event of a public emergency.
- Despite being passed by both Houses, the Bill faced an unusual situation when then President Zail Singh neither assented to it nor returned it to Parliament for reconsideration.
- With the legislation in a state of limbo, it was eventually withdrawn by the Vajpayee government in 2002.
- The current Post Office Bill of 2023 builds upon these historical precedents and introduces new provisions related to interception, with a focus on national security and public order.
- However, concerns have been raised by various members of the opposition regarding privacy, lack of guidelines, and potential abuse of powers, prompting debates and discussions in the Parliament.
PUCL vs. Union of India (1996)
- This case challenged the constitutionality of warrantless telephonic interception under Section 5(2) of the Telegraph Act.
- The Supreme Court recognized the right to privacy and its infringement by telephone tapping.
- The court established safeguards against arbitrary surveillance, emphasizing the need for a fair and just procedure to regulate interception powers.
Justice KS Puttaswamy vs. Union of India (2017)
- This landmark judgment declared the right to privacy as a fundamental right for all Indians.
- The court established a six-point test for any state measure that interferes with privacy:
- Legality (authorized by statute)
- Legitimate goal (proper purpose)
- Suitability (meaningful steps towards achieving the purpose)
- Necessity (least rights-restrictive measure)
- Proportionality (minimal impact on individual rights)
- Procedural safeguards (preventing abuse)
- Notably, the court warned against using "national security" as a blanket excuse for bypassing legal procedures and safeguards.
Pegasus Spyware Scandal
- The Supreme Court expressed concern regarding the use of Pegasus spyware, highlighting the need for transparency and accountability.
- The court emphasized that national security cannot justify unchecked intrusion into individual privacy.
6. Implications for the Post Office Bill
- The Post Office Bill's broad interception powers raise concerns regarding the Puttaswamy test and its six-point framework.
- The lack of defined terms like "emergency" and unclear procedural safeguards could potentially lead to arbitrary and disproportionate infringements on privacy.
- The Supreme Court's rulings emphasize the need for a balanced approach that protects national security while adhering to fundamental rights and legal procedures.
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For Prelims: Post Office Bill, 2023, Indian Post Office Act 1898, Article 14, Article 19(1)(a), Article 21, Jan Vishwas (Amendment of Provisions) Act, 2023, Indian Post Office (Amendment) Bill of 1986, KS Puttaswamy vs. Union of India (2017), Telegraph Act, PUCL vs. Union of India
For Mains:
1. The Post Office Bill 2023, introduced several changes to modernize the postal service. Discuss the potential benefits and challenges of these changes for the future of India's postal system. (250 words)
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