INSURANCE REGULATORY DEVELOPMENT AUTHORITY OF INDIA (IRDAI)
1. Context
The Insurance Regulatory and Development Authority of India (IRDAI) has removed the age limit for purchasing health insurance policies, with effect from April 1 2024.
2. Insurance Regulatory Development Authority of India (IRDAI)
- The Insurance Regulatory and Development Authority of India or the IRDAI is the apex body responsible for the regulation and development of the insurance industry in India.
- It is an autonomous body.
- It was established by an act of Parliament known as the Insurance Regulatory and Development Authority Act, of 1999. Hence, it is a statutory body.
3. IRDA Functions
- Its primary purpose is to protect the rights of the policyholders in India.
- It gives the registration certificate to insurance companies in the country.
- It also engages in the renewal, modification, cancellation, etc. of this registration.
- It also creates regulations to protect policyholders interests in India.
4. What does the new IRDAI rule say?
- IRDAI has asked insurance companies, including life and non-life, to fix an overall cap on commission to agents, brokers, and other intermediaries, giving more flexibility to insurers in managing their expenses.
- This means the regulator has replaced the earlier cap on different commission payments to various types of intermediaries with an overall board-approved cap which should be within the allowed expenses.
5. What is the Objective?
The rationale of the regulation is to enable and provide flexibility to the insurers, both life and general insurers to manage their expenses within the overall limits based on their gross written premium to optimally utilize their resources for enhancing benefits to policyholders.
6. How will this move benefit insurance companies and agents?
- The insurance sector participants have welcomed the change in the regulation and termed it a major reform.
- They said the removal of the cap on commission payments will positively impact the sector.
- Currently, the limit of EOM in the general insurance business is 30 percent, and in health insurance is 35 percent.
- The insurance companies are paying insurance intermediaries a commission of 15 percent of the total premium business they are bringing in.
- The new regulation has removed the cap. However, the overall limit of EOM will remain.
- With the new regulations, an insurance company can pay a higher commission to an agent if the business brought in is good and claim-free.
- The liberty to give a commission to an agent is left to the company.
- The new norms will facilitate greater product innovation and the development of new product distribution models and lead to more customer-centric operations.
- It will also increase insurance penetration and provide flexibility to insurers in managing their expenses. Overall, it will smoothen adherence to compliance norms.
7. What benefit will consumers get?
- Post the changes in regulations, insurance agents are likely to be more interested in selling insurance products and explaining policy details to consumers beforehand.
- The claim ratio of these agents will also be better.
- When claim outgoes are within the overall manageable limit, an insurance company may not increase the premium, which will be beneficial for consumers.
- This move will also help in increasing insurance penetration as agents will get higher commissions.
- IRDAI said the regulation will come into force from April 1, 2023, and will remain in force for a period of three years thereafter.
8. What do Expenses of Mangement mean?
- Expenses of Management (EOM) include all expenses in the nature of operation expenses of general or health Insurance business and commission to the insurance agents or insurance intermediaries.
- It also includes commission and expenses on reinsurance inward, which are charged to the revenue account.
For Prelims
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For Prelims: Insurance Regulatory Development Authority of India (IRDAI), Insurance Regulatory and Development Authority Act, of 1999, and Expenses of Management (EOM).
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Source: The Indian Express
Previous year Question
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1. The Insurance Regulatory and Development Authority (IRDA) Act was passed in the year? (TNPSC Group -1, 2014)
A. 1986
B. 1991
C. 1999
D. 2005
Answer: B
2. IRDAI has set up a panel under whose chairmanship to examine the need for standard cyber liability insurance product? (CGPSC Civil service 2020)
A. Pravin Kutumbe
B. P. Umesh
C. K. Ganesh
D. T. L. Alamelu
Answer: B
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GREEN CREDIT PROGRAMME
1. Context
On April 12 2024, the Environment Ministry issued further guidelines on its Green Credit Programme (GCP), two months after it had prescribed rules governing the first initiative, afforestation. Modifying the rules, an official said, will prioritise the restoration of ecosystems over mere planting of trees.
2. About Green Credit programme
- According to a notification issued by the Environment Ministry, the Green Credit programme encourages private sector industries and companies as well as other entities to meet their existing obligations, stemming from other legal frameworks, by taking actions which are able to converge with activities relevant to generating or buying Green Credits.
- The main objectives of the Green Credit Programme (GCP) are to create a market-based mechanism for providing incentives in the form of Green Credits to individuals, farmer producer organisations, cooperatives, forestry enterprises, sustainable agriculture enterprises, urban and rural local bodies, private sectors, industries and organisations for environment positive actions.
- Green Credits will arise from a range of sectors and entities, ranging from small-scale ones such as individuals, farmer producer organisations, cooperatives, forestry enterprises and sustainable agriculture enterprises to those being developed at the level of urban and rural local bodies, private sectors, industries and organisation
- Green Credits will be tradable outcomes and will act as incentives. In the beginning, Green Credits will be made available to individuals and entities, engaged in selected activities and who undertake environmental interventions
These Green Credits will be made available for trading on a domestic market platform
3. Activities under Green Credit Programme
By ‘green credit’, the government means a singular unit of an incentive provided for a specified activity, delivering a positive impact on the environment.
The activities include:
1. Tree plantation-based green credit: To promote activities for increasing the green cover across the country through tree plantation and related activities
2. Water-based green credit: To promote water conservation, water harvesting and water use efficiency / savings, including treatment and reuse of wastewater
3. Sustainable agriculture-based green credit: To promote natural and regenerative agricultural practices and land restoration to improve productivity, soil health and nutritional value of food produced
4. Waste management-based green credit: To promote sustainable and improved practices for waste management, including collection, segregation and treatment
5. Air pollution reduction-based green credit: To promote measures for reducing air pollution and other pollution abatement activities
6. Mangrove conservation and restoration-based green credit: To promote measures for conservation and restoration of mangroves
7. Ecomark-based green credit: To encourage manufacturers to obtain ‘Ecomark’ label for their goods and services
8. Sustainable building and infrastructure-based green credit: To encourage the construction of buildings and other infrastructure using sustainable technologies and materials
Through the programme, thresholds and benchmarks will be developed for each green credit activity
4. Administration of GCP
- The Indian Council of Forestry Research and Education shall be the administrator of the programme.
- The institute will develop guidelines, processes and procedures for implementation of the programme and develop methodologies and standards, registration process and associated measurement, reporting and verification mechanisms
- The green credits will be tradable and those earning it will be able to put these credits up for sale on a proposed domestic market platform
5. Way forward
It was first announced by Union Finance Minister Nirmala Sitharaman in the 2023-24 budget with a view to leverage a competitive market-based approach and incentivise voluntary environmental actions of various stakeholders
It also raises serious questions about how rigour of monitoring will be maintained and who should take the responsibility for pollution reduction and biodiversity savings, she added.
She also pointed out that the capacity that will have to be built to monitor these systems and prevent fraud will use resources that could have been diverted to more transformational pollution control and biodiversity protection efforts, regulated and mandated by the government.
Source: DownToEarth
RENEWABLE ENERGY
1. Context
At a recent speech, the United Nations Climate Change Executive Secretary Simon Stiell said the “next two years are essential in saving our planet.” Record-breaking heat, shortage of water, and other environmental issues are regular headlines in the context of the need to achieve development, increase employment, and reduce poverty and inequality, among others. Yet, the linkages between the pathways of development, sustainability, and climate change mitigation are far from well-understood
2. Why use Renewable energy
- Today we primarily use fossil fuels to heat and power our homes and fuel our cars.
- It’s convenient to use coal, oil, and natural gas for meeting our energy needs, but we have a limited supply of these fuels on Earth.
- We’re using them much more rapidly than they are being created. Eventually, they will run out.
- And because of safety concerns and waste disposal problems, the United States will retire much of its nuclear capacity by 2020.
- In the meantime, the nation’s energy needs are expected to grow by 33 per cent during the next 20 years.
- Renewable energy can help fill the gap
- Even if we had an unlimited supply of fossil fuels, using renewable energy is better for the environment.
- We often call renewable energy technologies “clean” or “green” because they produce few if any pollutants.
- Burning fossil fuels, however, sends greenhouse gases into the atmosphere, trapping the sun’s heat and contributing to global warming.
- Climate scientists generally agree that the Earth’s average temperature has risen in the past century.
- If this trend continues, sea levels will rise, and scientists predict that floods, heat waves, droughts, and other extreme weather conditions could occur more often.
- Other pollutants are released into the air, soil, and water when fossil fuels are burned.
- These pollutants take a dramatic toll on the environment—and humans.
- Air pollution contributes to diseases like asthma.
- Acid rain from sulfur dioxide and nitrogen oxides harms plants and fish. Nitrogen oxides also contribute to smog.
- Renewable energy will also help us develop energy independence and security.
- Replacing some of our petroleum with fuels made from plant matter, for example, could save money and strengthen our energy security.
- Renewable energy is plentiful, and the technologies are improving all the time.
- There are many ways to use renewable energy.
- Most of us already use renewable energy in our daily lives.
2.1.Hydropower
- Hydropower is our most mature and largest source of renewable power, producing about 10 per cent of the nation’s electricity.
- Existing hydropower capacity is about 77,000 megawatts (MW). Hydropower plants convert the energy in flowing water into electricity.
- The most common form of hydropower uses a dam on a river to retain a large reservoir of water. Water is released through turbines to generate power.
- “Run of the river” systems, however, divert water from the river and direct it through a pipeline to a turbine.
- Hydropower plants produce no air emissions but can affect water quality and wildlife habitats.
2.2.Bioenergy
- Bioenergy is the energy derived from biomass (organic matter), such as plants. If you’ve ever burned wood in a fireplace or campfire, you’ve used bioenergy.
- But we don’t get all of our biomass resources directly from trees or other plants.
- Many industries, such as those involved in construction or the processing of agricultural products, can create large quantities of unused or residual biomass, which can serve as a bioenergy source.
2.3.Geothermal Energy
- The Earth’s core, 4,000 miles below the surface, can reach temperatures of 9000° F.
- This heat—geothermal energy—flows outward from the core, heating the surrounding area, which can form underground reservoirs of hot water and steam.
- These reservoirs can be tapped for a variety of uses, such as to generate electricity or heat buildings.
- By using geothermal heat pumps (GHPs), we can even take advantage of the shallow ground’s stable temperature for heating and cooling buildings.
2.4.Solar Energy
- Solar technologies tap directly into the infinite power of the sun and use that energy to produce heat, light, and power.
2.5. Wind Energy
- For hundreds of years, people have used windmills to harness the wind’s energy.
- Today’s wind turbines, which operate differently from windmills, are a much more efficient technology.
- Wind turbine technology may look simple: the wind spins turbine blades around a central hub; the hub is connected to a shaft, which powers a generator to make electricity.
- However, turbines are highly sophisticated power systems that capture the wind’s energy using new blade designs or airfoils.
- Modern, mechanical drive systems, combined with advanced generators, convert that energy into electricity.
- Wind turbines that provide electricity to the utility grid range in size from 50 kW to 6
- Wind energy has been the fastest growing source of energy since 1990.
2.6.Ocean Energy
- The ocean can produce two types of energy: thermal energy from the sun’s heat, and mechanical energy from the tides and waves.
- Ocean thermal energy can be used for many applications, including electricity generation.
- Electricity conversion systems use either the warm surface water or boil the seawater to turn a turbine, which activates a generator.
- The electricity conversion of both tidal and wave energy usually involves mechanical devices.
- A dam is typically used to convert tidal energy into electricity by forcing the water through turbines and activating a generator.
- Meanwhile, wave energy uses mechanical power to directly activate a generator or to transfer to a working fluid, water, or air, which then drives a turbine/generator.
2.7.Hydrogen
- Hydrogen is high in energy, yet its use as a fuel produces water as the only emission.
- Hydrogen is the universe’s most abundant element and also its simplest.
- A hydrogen atom consists of only one proton and one electron.
- Despite its abundance and simplicity, it doesn’t occur naturally as a gas on the Earth.
- Today, industry produces more than 4 trillion cubic feet of hydrogen annually.
- Most of this hydrogen is produced through a process called reforming, which involves the application of heat to separate hydrogen from carbon. Researchers are developing highly efficient, advanced reformers to produce hydrogen from natural gas for what’s called Proton Exchange Membrane fuel cells.
3. Steps were taken by the government to promote Renewable energy
The Indian renewable energy sector is the fourth most attractive renewable energy market in the world. India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020.
3.1.Distribution of prominent renewable energy Hubs
- Rajasthan
- Gujarat
- Andhra Pradesh
- Karnataka
- Telangana
- Tamil Nadu
3.2.Steps taken
- Permitting Foreign Direct Investment (FDI) up to 100 per cent under the automatic route,
- Waiver of Inter-State Transmission System (ISTS) charges for inter-state sale of solar and wind power for projects to be commissioned by 30th June 2025,
- Declaration of trajectory for Renewable Purchase Obligation (RPO) up to the year 2022,
- Setting up of Ultra Mega Renewable Energy Parks to provide land and transmission to RE developers on a plug-and-play basis,
- Schemes such as Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM), Solar Rooftop Phase II, 12000 MW CPSU Scheme Phase II, etc,
- Laying of new transmission lines and creating new sub-station capacity under the Green Energy Corridor Scheme for evacuation of renewable power,
- Setting up of Project Development Cell for attracting and facilitating investments,
- Standard Bidding Guidelines for tariff-based competitive bidding process for procurement of Power from Grid Connected Solar PV and Wind Projects.
4. Employment Generation
- Deployment of large-scale renewable energy (RE) has the potential to create numerous employment opportunities in rural India in the coming decades. By 2030, it is projected that the clean-energy sectors could provide jobs for around one million individuals in the country.
- However, the expansion of RE may have significant impacts on communities reliant on the land, involving changes in land use, modifications to ecosystems, shifts in livelihoods, and overall effects on land productivity.
- As India progresses in scaling up RE, striking a balance between these interests may result in project commissioning delays, contributing to a waning interest among developers in RE tenders.
- In 2020, wind developers, facing setbacks such as delays in land allocation, sought to terminate power-purchase agreements for approximately 565 MW wind capacity signed with the Solar Energy Corporation of India (SECI), prompting a decline in developers' enthusiasm for RE projects. Commissioning delays not only pose substantial financial risks but also jeopardize the reputation of RE developers.
- In the pursuit of responsible RE deployment and the enhancement of communities in and around project sites, many developers actively support local development activities and community-led programs through corporate social responsibility (CSR) initiatives.
- As an illustration, Tata Power Solar has established integrated vocational training programs for women and youth in multiple project sites.
- Given the pivotal role of project developers in interacting with communities during land acquisition, construction, and operational phases, they play a crucial role in driving responsible practices. Additionally, regulators and investors prioritize assessing the responsible practices of new projects.
- To encourage all developers to contribute to the rapidly growing RE ecosystem and promote responsible practices, two essential prerequisites need to be addressed
5. Way forward
The push for responsible energy is not to create new barriers for developers but is with the benefit of hindsight, that energy projects have externalities that must be addressed at the outset before they become entrenched. Responsible RE will strengthen the renewable ecosystem in India, and address roadblocks in siting, public acceptance and find the right synergy between energy security, society and the environment
Source: The Hindu
WORLD TRADE ORGANISATION (WTO)
1. Context
World Trade Organization (WTO) commemorated the conclusion of Uruguay Round of trade negotiations 30 years back, when 123 countries entered into an agreement at Marrakech, Morocco to establish the WTO from January 1, 1995. ´They created a new global public good: one committed to using trade to raise people´s living standards, create jobs, and promote sustainable development´, said the WTO DirectorGeneral Ngozi OkonjoIweala, in a brief statement to mark the anniversary.
2. What is WTO?
- The World Trade Organization is the only international organization that deals with the rules of trade between countries.
- The WTO officially commenced in 1995 under the Marrakesh Agreement signed by 124 nations, replacing the General Agreement on Tariffs and Trade (GATT).
- Currently, it has 164 members and 23 observer governments (like Iran, Iraq, Bhutan, Libya, etc).
- According to its rules, all decisions are taken through consensus and any member can exercise a veto.
- It aims to promote free trade, which is done through trade agreements that are discussed and signed by the member states.
- The WTO also provides a forum for countries to negotiate trade rules and settle economic disputes between them.
3. What is WTO's Ministerial Conference?
- The Ministerial Conference is the WTO’s top decision-making body and usually meets every two years.
- All members of the WTO are involved in the Ministerial Conference and they can take decisions on all matters covered under any multilateral trade agreements.
- The WTO’s 12th Ministerial Conference was held in Geneva from 12-17 June.
- It was supposed to end on 15 June, but with intensifying negotiations, the conference was extended by two days.
4. Key takeaways from the meeting
4.1 Curtailing harmful fishing subsidies
- The WTO passed a multilateral agreement that would curb ‘harmful’ subsidies on illegal, unreported, and unregulated fishing for the next four years, to better protect global fish stocks.
- Since 2001, member states have been negotiating the banning of subsidies that promote overfishing.
- The current agreement, which establishes new trading rules, is the second multilateral agreement in WTO history.
- India and other developing countries were able to win some concessions in this agreement.
4.2 Global food security
- Members agreed to a binding decision to exempt food purchased by the UN's World Food Programme (WFP) for humanitarian purposes, from any export restrictions.
- In light of the global food shortages and rising prices caused by the war between Ukraine and Russia, the group's members issued a declaration on the importance of trade in global food security and that they would avoid bans on food exports.
- However, countries would be allowed to restrict food supplies to ensure domestic food security needs.
- India's key demand to allow it to export food from its public stockholdings to other countries will reportedly be discussed in the next Ministerial Conference in 2023.
4.3 E-Commerce transactions
- Members agreed to continue the long-standing moratorium on customs duties on e-commerce transmissions.
- It will be continued until the subsequent Ministerial Conference or until March 31, 2024, depending on whichever comes first.
4.4 Covid-19 vaccine production
- WTO members agreed to temporarily waive intellectual property patents on Covid19 vaccines without the consent of the patent holder for 5 years so that they can more easily manufacture them domestically.
- The current agreement is a watered-down version of the original proposal made by India and South Africa in 2020.
- They had wanted broader intellectual property waivers on vaccines, treatments, and tests.
- Rich pharmaceutical companies had strongly opposed this, arguing that IPs do not restrict access to Covid vaccines and that the removal of patent protections gives researchers that quickly produced life-saving vaccines, a negative message.
- The waiver agreed upon by the WTO was criticized by advocacy groups for being narrow in scope, as it did not cover all medical tools like diagnostics and treatments.
5. Significance of the Recent Agreements
- The fisheries agreement is of immense significance as it is the first time that members agreed with environmental sustainability at its heart.
- It will also help in the protection of the livelihoods of the 260 million people who depend directly or indirectly on marine fisheries. It is only the second multilateral agreement on global trade rules struck in its 27-year history.
- Second, the exemption of WFP's food from tariffs is vital for promoting global food security, especially in light of the global food shortages and rising prices caused by the war between Ukraine and Russia.
- Third, the temporary waiver will contribute to ongoing efforts to concentrate and diversify vaccine manufacturing capacity so that a crisis in one region does not leave others cut off.
6. Issues surrounding WTO
6.1 The burden for Poor countries
- The WTO rules include many Non-trade subjects as well. The subjects like environment, labor standards, fossil fuel subsidies, plastic pollution, and transparency in government procurement have been brought into the fold of the WTO.
- This is expected to raise costs for the poor and developing countries and impact the competitiveness of their goods.
- For instance, a poor country exporting cotton shirts must first meet high environmental standards at home. This will only raise costs and cut exports from poor countries.
6.2 Trade wars
- The US administration imposed steep tariffs in January 2018 on China alleging IP violations.
- In December 2019 the US also blocked the appointment of new nominees to WTO’s appellate body. This has paralyzed the WTO as a judge and enforcer of global trade rules.
6.3 Lack of consensus
- The developed nations’ game plan is to put the old obligations on the back burner and push the WTO to form rules on new areas like e-commerce.
- It is an area where the US firms have a clear edge.
- Most WTO member countries want them to first deliver on the agreed issues like reduction in agriculture subsidies.
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For Prelims: General Agreement on Tariffs and Trade (GATT), Marrakesh Agreement, World Trade Organisation (WTO), 12th Ministerial Conference of WTO, and UN's World Food Programme (WFP).
For Mains: 1. What have been the recent issue related to dispute settlement at WTO? Have the policies at WTO worked against the interest of emerging economies like India?(250 Words)
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Previous year Questions1. In the context of which of the following do you sometimes find the terms 'amber box, blue box, and green box' in the news? (UPSC 2016)
A. WTO affairs
B. SAARC affairs
C. UNFCCC affairs
D. India-EU negotiations on FTA
Answer: A
2. In the context of the affairs which of the following is the phrase "Special Safeguard Mechanisms" mentioned in the news frequently? (UPSC 2010)
A. United Nations Environment Program
B. World Trade Organization Agreement
C. ASEAN-India Free Trade
D. G-20 Summits
Answer: B
3. Consider the following statements: (UPSC 2017)
1. India has ratified the Trade Facilitation Agreement (TFA) of the WTO.
2. TFA is a part of WTO's Bali Ministerial Package of 2013.
3. TFA came into force in January 2016
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: A
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Source: The Indian Express
SUGAR PROCESSED FOOD
1. Context
In recent days, attention has once again shifted towards the elevated sugar levels found in flavoured malt-based milk powders and baby food products. Government agencies are cautioning against labelling such items as "healthy" and have criticized what they claim to be deceptive marketing strategies, highlighting the excessive use of added sugar.
2. What is Sugar Processed Food
Sugar-processed food refers to food products that have undergone processing methods involving the addition of sugar or the use of ingredients containing sugar. These added sugars can come in many forms, including
- Table sugar (sucrose) is the most common type of added sugar and is often used in baking, processed foods, and beverages.
- High-fructose corn syrup (HFCS) is a common sweetener derived from corn starch, often used in processed foods and beverages due to its lower cost compared to sugar.
- Fruit juice concentrates While containing some vitamins and minerals from fruit, these concentrates are often high in sugar.
- A variety of syrups like brown rice syrup, malt syrup, and agave nectar are also added sugars.
The key aspects of sugar-processed foods
- These foods have been altered from their natural state through methods like milling, refining, and preservation. This can affect the overall nutritional content.
- Sugars are purposefully incorporated during processing to enhance flavour, texture, or shelf life.
- Excessive consumption of sugar-processed foods can contribute to various health problems, including obesity, type 2 diabetes, heart disease, and certain cancers.
Examples of Sugar-Processed Foods
- Sugary drinks (sodas, sports drinks, fruit juices)
- Packaged baked goods (cookies, cakes, pastries)
- Sweetened breakfast cereals
- Candy
- Yogurt (especially flavoured varieties)
- Canned fruit (packed in syrup)
- Condiments (ketchup, salad dressings)
- Processed meats (often contain added sugars for flavour)
3. Misleading "Health" Labels
- The practice of branding malt-based sugary milk products, such as Bournvita, as 'healthy' beverages raises significant concerns due to their high sugar content and potential health implications.
- A closer examination of these products, like Bournvita, reveals alarming figures: 86.7g of carbohydrates per 100g, with 49.8g attributed to sugar content. Notably, 37.4g of these sugars consist of sucrose or added sugar.
- For every recommended serving of 20g of chocolate powder, consumers unwittingly ingest nearly 10g of total sugar.
- Additionally, the malting process, integral to the production of malt-based beverages, contributes to the sugar content. This process, originally employed in the production of single malt whiskey, involves germinating cereals, followed by drying, roasting, and powdering.
- During germination, starch in grains breaks down into sugar through the action of enzymes like amylase.
- Subsequent roasting caramelises the sugars, enhancing flavour. Maltose, a sugar derived from this process, consists of two bonded glucose units.
- Furthermore, apart from added sugars, chocolate powders often contain maltodextrin, liquid glucose, and maltose generated from the malting process of cereals. This complex composition underscores the misleading nature of branding such products as 'healthy' drinks, necessitating greater transparency in labelling and consumer education regarding their nutritional content and potential health risks.
4. FSSAI's Position on Sugar Content
5. Controversy Surrounding Baby Food
- The controversy over baby food has intensified with revelations about the sugar content in products like Nestlé's Wheat Apple Cherry baby cereal, marketed under the Cerelac brand in India.
- Analysis of the ingredients shows that it contains 24 grams of total sugars per 100 grams, derived from sources such as milk solids, maltodextrin, and dextrose.
- The recommended daily intake for children aged one to two years is twelve scoops or 100 grams, resulting in a daily sugar consumption of 24 grams per child.
- Experts argue that this practice is harmful as it exposes infants to excessive sugar at a crucial stage of development.
- Babies are accustomed to the natural sweetness of breast milk, primarily lactose, which is less sweet.
- Transitioning to complementary foods containing added sugars can strain the pancreas, leading to excess insulin production, and potentially predisposing the child to diabetes and obesity in the future.
- Furthermore, adding ingredients like maltodextrin, aimed at enhancing flavour and texture, poses additional risks.
- Maltodextrin, a white starchy powder, has a higher glycemic index (GI) than table sugar, causing rapid spikes in blood sugar levels.
- Excess sugar intake can also lead to the conversion of sugars into triglycerides, a form of fat stored in the liver, contributing to fatty liver and insulin resistance, which are precursors to diabetes.
- The gravity of the situation is underscored by the increasing prevalence of diabetes in India, affecting an estimated 101.3 million people, as highlighted in a study co-published by the Indian Council of Medical Research.
- This controversy highlights the urgent need for stricter regulations and heightened awareness regarding the nutritional content of baby food products to safeguard infant health and well-being.
6. Effectiveness of FSSAI Probe in Curtailing Misleading Labels
- An FSSAI probe may not be sufficient to curb the practice of misleading labels, as evidenced by recent developments concerning high fat, sugar, and salt (HFSS) food regulations.
- In September 2022, the FSSAI released a draft notification defining HFSS food as processed products with elevated levels of saturated fat, total sugar, or sodium.
- The notification aimed to guide front-of-pack labelling to warn consumers about such products.
- However, the effectiveness of this regulation remains uncertain due to its open-ended nature regarding the requirement for companies to declare fat, sugar, and salt content on the packaging.
- Additionally, while the FSSAI proposed the use of 'health rating stars' instead of warning labels, critics argue that such ratings may be misleading for consumers. The warning labels are more transparent and informative for consumers compared to health stars.
- This highlights the need for more stringent regulations and clearer guidelines to ensure that consumers are adequately informed about the nutritional content of food products.
- Merely relying on FSSAI probes may not suffice to address the pervasive issue of misleading labelling practices, necessitating broader regulatory reforms and greater transparency in food labelling standards.
7. Addressing Misleading Food Labeling and Promotion
Addressing the pervasive issue of misleading food labelling and promotion requires comprehensive regulatory reforms and robust enforcement measures.
- Review existing regulations, such as the Food Safety and Standards (Foods for Infant Nutrition) Regulations, 2019, to reassess allowances for sugar in complementary foods. Clear guidelines should be established to limit added sugars and promote healthier carbohydrate sources.
- Develop comprehensive regulations to define what constitutes 'healthy' and 'unhealthy' foods and beverages. These standards should encompass all products and provide clear criteria for labelling and marketing.
- Ensure the effective implementation of front-of-pack labelling regulations, including those addressing high-fat, sugar, and salt (HFSS) foods. Stakeholder feedback should be incorporated to finalize and enforce these regulations.
- Crackdown on misleading marketing practices, particularly in promoting infant foods. Enforce existing regulations, such as the Infant Milk Substitutes Act, to prohibit unauthorized advertisements and curb the influence of social media influencers promoting baby food.
- Enhance transparency in food labelling and advertising by holding companies accountable for accurate and informative communication. Regular monitoring and enforcement actions should be undertaken to ensure compliance with regulations.
- Collaborate with public and private stakeholders to promote healthy eating habits, especially among vulnerable populations like children. Encourage partnerships between corporations and government agencies to support nutrition programs without compromising public health goals.
8. The Way Forward
By taking these proactive measures, regulatory authorities can safeguard consumer health and well-being, promote informed food choices, and create a more transparent and trustworthy food market environment.
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Previous Year Questions
1. Read the following passage and answer the question that follows. Your answers to these items should be based on the passage only.
Policymakers and media have placed the blame for skyrocketing food prices on a variety of factors, including high fuel prices, bad weather in key food producing countries, and the diversion of land to non-food production. Increased emphasis, however, has been placed on a surge in demand for food from the most populous emerging economics. It seems highly probable that mass consumption in these countries could be well poised to create a food crisis.
With reference to the above passage, the following assumptions have been made: (UPSC 2021)
1. Oil producing countries are one of the reasons for high food prices.
2. If there is a food crisis in the world in the near future, it will be in the emerging economies.
Which of the above assumptions is/are valid?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
2. India has experienced persistent and high food inflation in the recent past. What could be the reasons? (UPSC 2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
3. Consider the following crops of India: (UPSC 2012)
1. Groundnut
2. Sesamum
3. Pearl millet
Which of the above is/are predominantly rainfed crop/crops?
A. 1 and 2 only B. 2 and 3 only C. 3 only D. 1, 2 and 3
4. Among the following, which one is the least water-efficient crop? (UPSC 2021) A. Sugarcane B. Sunflower C. Pearl millet D. Red gram 5. With reference to 'Initiative for Nutritional Security through Intensive Millets Promotion, which of the following statements is/are correct? (UPSC 2016)
1. This initiative aims to demonstrate the improved production and post-harvest technologies and to demonstrate value addition techniques, in an integrated manner, with a cluster approach.
2. Poor, small, marginal and tribal farmers have a larger stake in this scheme.
3. An important objective of the scheme is to encourage farmers of commercial crops to shift to millet cultivation by offering them free kits of critical inputs of nutrients and micro-irrigation equipment.
Select the correct answer using the code given below.
A. 1 only B. 2 and 3 only C. 1 and 2 only D. 1, 2 and 3
6. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
A. Controlling the inflation in India is the responsibility of the Government of India only
B. The Reserve Bank of India has no role in controlling the inflation
C. Decreased money circulation helps in controlling the inflation
D. Increased money circulation helps in controlling the inflation
7. With reference to India, consider the following statements: (UPSC 2010)
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles.
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
8. Consider the following statements: (UPSC 2020)
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 only C. 3 only D. 1, 2 and 3
9. Which one of the following most appropriately describes the nature of Green Revolution of the late sixties of 20th century? (BPSC CCE 2015)
A.Intensive cultivation of green vegetable
B.Intensive agriculture district programme
C.High-yielding varieties programme
D.Seed-Fertilizer-Water technology
E.None of the above/More than one of the above
Answers: 1-D, 2-B, 3-D, 4-A, 5- C, 6-C, 7- C, 8-A , 9-E
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Source: The Hindu
FINANCIAL STABILITY REPORT
1. Context
3. IMF's Concerns Regarding Inflation
- The International Monetary Fund (IMF) has expressed growing concerns over investor optimism regarding the imminent end of the battle against high inflation.
- Investors have been driving up the values of financial assets, such as stocks, in recent months, speculating that central banks will soon initiate interest rate cuts as inflation abates.
- Typically, central banks aim to reduce interest rates by injecting more funds into the economy when inflation decreases, to stimulate economic growth.
- Although interest rates remain unchanged, investors interpret declining inflation as a signal for forthcoming monetary easing, prompting them to invest in financial assets in anticipation of increased demand once interest rates are lowered. Consequently, asset prices have surged in the present.
- However, the IMF cautions that investor optimism regarding decelerating inflation and potential central bank rate cuts may be premature.
- The organization has observed that inflation decline has likely halted in some major advanced and emerging economies, where recent core inflation rates have exceeded those of previous periods.
- Additionally, the IMF highlights geopolitical risks, such as ongoing conflicts in regions like West Asia and Ukraine, which could disrupt aggregate supply and fuel inflationary pressures.
- These factors, the IMF asserts, might deter central banks from implementing rate cuts shortly.
- Should these risks persist, the IMF warns that investors, who have been driving asset prices upward in anticipation of monetary easing, may reconsider their positions. This shift in sentiment could trigger a significant market correction, leading to substantial losses for many investors.
4. Implications for India Amidst Global Developments
- The International Monetary Fund (IMF) highlights the robust inflow of funds into emerging markets, driven by optimism surrounding potential interest rate cuts by central banks.
- India, in particular, emerged as the second-largest recipient of foreign capital in the calendar year 2023, trailing only behind the United States, as reported by Elara Capital.
- However, this scenario could swiftly change if Western central banks signal a prolonged period of elevated interest rates.
- Such indications might prompt investors to withdraw capital from emerging markets like India, exerting downward pressure on their currencies.
- Already, the Indian rupee has experienced depreciation, hitting a new low of 83.57 against the U.S. dollar last week, despite likely intervention by the Reserve Bank of India (RBI).
- A significant capital outflow, should Western central banks refrain from lowering interest rates, could exacerbate the rupee's depreciation and pose challenges to India's financial stability.
- In response, the RBI is expected to defend the rupee by tightening liquidity to raise interest rates, potentially slowing down the economy in the process.
5. Concerns Surrounding the Private Credit Market
- The International Monetary Fund (IMF) has underscored the burgeoning unregulated private credit market, where non-bank financial institutions extend loans to corporate borrowers, as a looming concern with potential ramifications for the broader financial system.
- Global figures reveal that the private credit market ballooned to $2.1 trillion last year.
- Among the entities participating in this market are institutional investors such as pension funds and insurance companies, attracted by the prospect of higher returns compared to conventional investments.
- Simultaneously, borrowers find recourse in this market for accessing long-term funds that might not be readily available through other channels.
- However, the IMF raises red flags regarding the financial stability of borrowers within the private credit market, noting that many lack sufficient earnings to cover even their interest expenses.
- Moreover, since these loans are seldom traded in open, liquid markets like other securities, accurately assessing the associated risks becomes challenging for investors.
- Consequently, private credit assets tend to experience smaller markdowns in their mark-to-market value during periods of market stress.
- In contrast, in highly liquid markets where securities are traded frequently, the real risk behind a loan is promptly and accurately priced in by investors.
- Despite these concerns, institutional investors might willingly accept the risk in exchange for higher returns.
- India has also witnessed the emergence of a nascent private credit market, propelled by the ascent of Alternative Investment Funds (AIFs).
- These funds extend credit to high-risk borrowers typically overlooked by traditional banks and non-bank financial institutions.
- Additionally, they have ventured into distressed assets, leveraging the opportunities presented by the Insolvency and Bankruptcy Code regime.
- Regulatory bodies like the Securities and Exchange Board of India (SEBI) have observed a significant uptick in investments through these funds, which have more than tripled from ₹1.1 lakh crore in 2018-19 to ₹3.4 lakh crore in 2022-23.
- Both the Reserve Bank of India (RBI) and SEBI have intensified scrutiny over these funds, recognizing the need for heightened regulatory oversight.
6. Conclusion
The IMF's report emphasizes the importance of global cooperation and effective communication between policymakers, financial institutions, and investors. By taking proactive measures to address the identified risks, a more stable and sustainable financial future can be secured.
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For Prelims: IMF, Global Financial Report, SEBI, RBI, Alternative Investment Funds, Cyber-attacks
For Mains:
1. Discuss the growing significance of the private credit market in India. What are the potential risks associated with this market, and how can these risks be mitigated? (250 Words)
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Previous Year Questions
1. Recently, which one of the following currencies has been proposed to be added to the basket of IMF’s SDR? (UPSC 2016)
A. Rouble
B. Rand
C. Indian Rupee
D. Renminbi
Answer: D
2. Rapid Financing Instruments" and "Rapid Credit Facility" are related to the provisions of lending by which one of the following? (UPSC 2022)
A. Asian Development Bank
B. International Monetary Fund
C. United Nations Environment Programme
D. Finance Initiative World Bank
Answers: 1-D, 2- B
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Source: The Hindu
