NATIONAL GREEN TRIBUNAL
1. Context
2. What is National Green Tribunal (NGT)?
- The National Green Tribunal (NGT) is a specialized judicial body established in India to handle cases related to environmental protection and conservation.
- It was established under the National Green Tribunal Act, of 2010, and its primary objective is to effectively and expeditiously address environmental disputes and promote sustainable development.
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With the establishment of the NGT, India became the third country in the world to set up a specialized environmental tribunal, only after Australia and New Zealand, and the first developing country to do so.
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NGT is mandated to make disposal of applications or appeals finally within 6 months of the filing of the same.
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The NGT has five places of sittings, New Delhi is the Principal place of sitting, and Bhopal, Pune, Kolkata and Chennai are the other four.
3. Structure of the National Green Tribunal (NGT)
- Chairperson: The NGT is headed by a full-time Chairperson who is a retired judge of the Supreme Court of India. The Chairperson is responsible for the overall administration and functioning of the tribunal.
- Judicial Members: The NGT consists of judicial members who are retired judges of either the Supreme Court or a High Court. These members have extensive legal knowledge and experience in handling environmental matters.
- Expert Members: The tribunal also includes expert members who possess expertise in areas such as environmental science, ecology, hydrology, and forestry. These members provide valuable technical insights and guidance in the resolution of environmental disputes.
- The NGT is organized into multiple benches located across different regions of India. These benches are responsible for hearing cases specific to their respective jurisdictions. Each bench is headed by a judicial member and consists of one or more expert members, as required.
4. What are the Important Landmark Judgements of NGT?
The National Green Tribunal (NGT) has delivered several landmark judgments that have had a significant impact on environmental protection and conservation in India. Here are some of the important landmark judgments delivered by the NGT:
- Vardhaman Kaushik v. Union of India (2013): This case dealt with the issue of groundwater depletion due to illegal extraction by industries in Uttar Pradesh. The NGT directed the closure of industries that were extracting groundwater without proper permissions and ordered the payment of compensation for environmental damage caused.
- Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors. (2014): In this case, the NGT ordered the closure of an industrial unit in Gujarat for releasing untreated effluents into a water body, causing pollution and harm to the environment and public health.
- M.C. Mehta v. Union of India (2014): The NGT issued a landmark judgment in this case regarding the pollution of the Yamuna River. It directed several measures to clean and rejuvenate the river, including the establishment of sewage treatment plants and the regulation of industries contributing to pollution.
- Subhash Chandra Sharma v. Union of India (2015): This case focused on the issue of air pollution caused by solid waste burning in open areas. The NGT imposed a ban on burning waste in open spaces and directed municipal authorities to take measures to manage waste effectively.
- Raghu Nath Sharma v. State of Himachal Pradesh (2016): The NGT ordered the closure of illegal hotels and structures in the eco-sensitive Rohtang Pass area of Himachal Pradesh to protect the fragile Himalayan ecosystem.
- Yamuna Muktikaran Abhiyan v. Union of India (2017): This case dealt with the rejuvenation of the Yamuna River and led to the NGT issuing directions to clean and restore the river, including measures to prevent encroachments and pollution.
- M.C. Mehta v. Union of India (2017): The NGT banned the use of disposable plastic in Delhi and the National Capital Region (NCR) and directed authorities to take steps to prevent the use and sale of such plastic.
- Shailesh Singh v. Hotel Holiday Regency (2019): In this case, the NGT imposed heavy fines on a hotel in Shimla, Himachal Pradesh, for causing air pollution by running diesel generators without proper emission control measures.
- Subhash Chandran vs. Tamil Nadu Pollution Control Board (2020): This judgment highlighted the importance of safeguarding coastal areas and wetlands from unauthorized construction and development activities, emphasizing the need for stringent environmental norms.
- In Re: Report by Comptroller and Auditor General of India (2021): The NGT directed the formulation of guidelines for the regulation of groundwater extraction and management to prevent overexploitation and depletion.
5. What is a dissolved oxygen level?
- Dissolved oxygen (DO) level refers to the concentration of oxygen gas (O2) that is dissolved in a liquid, typically water.
- It is a crucial parameter in aquatic ecosystems as it directly affects the survival and well-being of aquatic organisms.
- In natural water bodies like lakes, rivers, and oceans, oxygen dissolves from the atmosphere through processes such as diffusion and aeration.
- Aquatic plants, algae, and phytoplankton also contribute to the production of oxygen through photosynthesis. However, the level of dissolved oxygen can fluctuate based on various factors, including temperature, altitude, water flow, pollution, and organic matter decomposition.
- Dissolved oxygen is essential for aquatic organisms because they rely on it for their respiration process, similar to how animals breathe oxygen from the air.
- Insufficient levels of dissolved oxygen can lead to hypoxia, a condition where organisms are deprived of the oxygen they need to survive. This can result in stress, reduced growth, reproductive issues, and even mortality in aquatic species.
Different species of aquatic organisms have varying tolerance levels for dissolved oxygen. For example:
- Fish and other aquatic animals often require dissolved oxygen levels between 4 to 6 milligrams per liter (mg/L) to thrive.
- Some species of fish, insects, and other aquatic organisms can tolerate lower levels of dissolved oxygen, even below 2 mg/L, while others require higher concentrations.
6. What are chemical oxygen demand and biological oxygen demand?
Chemical Oxygen Demand (COD):
- COD is a measure of the amount of oxygen required to chemically oxidize and break down organic and inorganic substances present in water.
- It provides an indication of the total amount of pollutants that can be chemically oxidized by a strong oxidizing agent. COD is expressed in milligrams per liter (mg/L) of oxygen consumed.
- COD is useful in assessing the overall pollution load in a water sample, including both biodegradable and non-biodegradable substances.
- It is commonly used for industrial wastewater monitoring, as it provides a rapid estimation of the organic content and potential pollution levels. However, COD does not differentiate between different types of pollutants or indicate the potential impact on aquatic life.
Biological Oxygen Demand (BOD):
- BOD measures the amount of dissolved oxygen consumed by microorganisms (bacteria) during the biological degradation of organic matter in water.
- It is a key indicator of the level of biodegradable organic pollutants present in water. BOD is expressed in milligrams per liter (mg/L) of oxygen consumed over a specific time period, usually 5 days (BODâ‚…).
- BOD is particularly important in assessing the impact of organic pollution on aquatic ecosystems.
- High BOD levels indicate that a water body may have a significant amount of organic pollutants, which can lead to oxygen depletion as microorganisms break down the organic matter. This oxygen depletion, known as hypoxia, can harm aquatic organisms and disrupt the ecological balance of the water body.
Comparing BOD and COD:
- BOD primarily measures the biologically degradable organic matter and provides information about the potential impact on aquatic life.
- COD measures both biologically and chemically degradable pollutants, giving an indication of the overall pollution load and oxygen demand.
- BOD is a more specific and ecologically relevant parameter, but it takes longer to determine (5 days), while COD can be measured more quickly.
For Prelims: National Green Tribunal (NGT), National Green Tribunal Act, of 2010, Dissolved oxygen (DO), Chemical Oxygen demand (COD), and Biological Oxygen Demand (BOD).
For Mains: 1. Discuss the significance of Chemical Oxygen Demand (COD) and Biological Oxygen Demand (BOD) as critical indicators for assessing water pollution and quality. (250 Words)
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Previous year Question1. How is the National Green Tribunal (NGT) different from the Central Pollution Control Board (CPCB)? (UPSC 2018)
1. The NGT has been established by an Act whereas the CPCB has been created by the executive order of the Government.
2. The NGT provides environmental justice and helps reduce the burden of litigation in the higher courts whereas the CPCB promotes cleanliness of streams and wells, and aims to improve the quality of air in the country.
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. The National Green Tribunal Act, 2010 was enacted in consonance with which of the following provisions of the Constitution of India? (UPSC 2012)
1. Right of a healthy environment, construed as a part of the Right to life under Article 21
2. Provision of grants for raising the level of administration in the Scheduled Areas for the welfare of Scheduled Tribes under Article 275(1)
3. Powers and functions of Gram Sabha as mentioned under Article 243(A)
Select the correct answer using the codes given below:
A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: A
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WORLD TRADE ORGANISATION (WTO)
1. Context
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.
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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INDIA-NEPAL
India and Nepal share a long and intertwined history, marked by cultural, religious, and economic connections.
- Ancient Ties: The historical connections between the people of India and Nepal date back to ancient times. There have been exchanges of culture, traditions, and religious practices, particularly due to the influence of Hinduism and Buddhism in the region.
- Political Relations: The emergence of powerful kingdoms in the Indian subcontinent, such as the Maurya and Gupta empires, influenced the political landscape of Nepal. Over the centuries, various dynasties ruled both regions, and they often maintained close ties.
- Medieval Period: During the medieval period, both regions witnessed the spread of Islam, and the Mughal Empire's influence in India impacted the political dynamics in Nepal. The rulers of Nepal maintained their autonomy during this period.
- The British Influence: As the British East India Company expanded its influence in the Indian subcontinent, the territories surrounding Nepal were affected. However, Nepal managed to remain independent and maintained its sovereignty.
- Anglo-Nepalese War (1814-1816): The Anglo-Nepalese War took place between the British East India Company and the Kingdom of Nepal. The war concluded with the signing of the Sugauli Treaty in 1815, which defined the boundary between British India and Nepal, establishing the Kali River as the western boundary of Nepal.
- Treaty of Friendship (1950): The Treaty of Peace and Friendship signed in 1950 between India and Nepal is a crucial document that governs their relations. The treaty establishes close ties, including provisions for free movement of people and goods between the two countries.
- Economic Cooperation: Over the years, economic cooperation has played a significant role in India-Nepal relations. Trade, transit facilities, and developmental assistance have been important aspects of their bilateral cooperation.
- Cultural and People-to-People Ties: The cultural affinities between the people of India and Nepal have remained strong. The open border allows for extensive people-to-people interactions, and shared religious practices, especially Hinduism, further contribute to the close bond between the two nations.
- India and Nepal boast robust defence cooperation. India supports Nepal's military modernization through equipment, training, and disaster assistance. Joint exercises like SURYA KIRAN foster collaboration. Since 1950, Chiefs of the Army exchanged honorary ranks, symbolizing the deep bond. Gorkha regiments showcase this connection further.
The India-Nepal border dispute, simmering for decades, continues to be a major point of contention between the two nations. Understanding the complexities of this issue requires delving into its historical roots, contested areas, and ongoing efforts towards resolution.
Tracing the Origins
- Treaty of Sugauli (1816): This treaty between the British East India Company and Nepal defined the initial border, but ambiguities in the document sowed the seeds of future disagreements.
- Kalapani Valley: This strategically located valley at the confluence of the Kali and Mahakali rivers is a major flashpoint. Both India and Nepal claim ownership, each citing historical records and maps.
- Lipulekh Pass: This mountain pass provides access to Kailash Mansarovar, a sacred pilgrimage site for Hindus. India's construction of a road here in 2020 reignited tensions.
- Susta Area: Located in Nepal's Terai region, this fertile land along the Gandak River is another disputed territory.

Impact of the Dispute
- Strained Bilateral Relations: The border issue casts a shadow on the otherwise friendly ties between India and Nepal.
- Local Communities Affected: Uncertain land ownership hampers development projects and impacts the lives of people living along the border.
- Security Concerns: Unresolved territorial claims can potentially pose security risks in the region.
Efforts Towards Resolution
- Joint Technical Level Boundary Working Group (JTLBWG): Established in the 1980s, this group has successfully demarcated most of the border but remains deadlocked on the disputed areas.
- Diplomatic Consultations: Both countries engage in regular talks to find a solution, but progress has been slow.
- Public Discourse: Civil society groups and media in both countries play a role in raising awareness and advocating for peaceful resolution.
Nepal is important to India for various strategic, cultural, economic, and geopolitical reasons. The close relationship between the two countries is rooted in historical, geographical, and sociocultural ties. Here are several reasons why Nepal is significant to India:
- Nepal shares a long and open border with India. This geographical proximity fosters people-to-people connections, facilitates trade, and allows for easy movement of goods and people between the two countries.
- India and Nepal share deep cultural and religious ties, with Hinduism being the predominant religion in both nations. Many Hindu pilgrimage sites, such as Pashupatinath Temple and Lumbini (the birthplace of Lord Buddha), are located in Nepal, attracting pilgrims from India.
- Nepal holds strategic importance for India due to its location between India and China. The geopolitical dynamics of the region make Nepal a crucial player in India's efforts to maintain regional stability and security.
- Several rivers originating in Nepal flow into India, making water resources a significant aspect of the relationship. Cooperation on river management and water-sharing agreements is essential for both countries.
- India and Nepal engage in extensive economic cooperation, including trade and transit agreements. The open border facilitates the movement of goods, contributing to economic integration between the two nations.
- Both countries share concerns related to regional security, including counter-terrorism and the maintenance of peace in the region. Collaboration on security matters is crucial for addressing common challenges.
- The historical relationship between India and Nepal is characterized by mutual respect and support. The Treaty of Peace and Friendship signed in 1950 solidified the close ties and included provisions for economic and security cooperation.
- India and Nepal maintain diplomatic relations at various levels. High-level visits and diplomatic engagements help in addressing bilateral issues and strengthening the overall relationship.
- As both India and China seek to expand their influence in the region, Nepal's strategic position becomes crucial. India aims to maintain strong ties with Nepal to counterbalance any growing influence from other countries, including China.
- Given the shared borders and historical connections, a stable and friendly Nepal is vital for ensuring overall regional stability. India's interests in maintaining peace and harmony in its neighbourhood underscore the importance of a positive relationship with Nepal.
- Balancing Act: Nepal often engages in a delicate balancing act between its two large neighbours, India and China. It seeks to maintain cordial relations with both countries while safeguarding its own interests.
- Infrastructure Projects: China's infrastructure projects in Nepal, particularly under the BRI, have been a source of concern for India. The geopolitical implications of such projects contribute to the complexity of trilateral relations.
- Regional Stability: Stability in Nepal is crucial for both India and China to ensure regional peace and security. The three countries have overlapping interests in maintaining stability in the Himalayan region.
6. India's Neighbourhood First Policy
India's Neighbourhood First Policy is a strategic foreign policy initiative aimed at prioritizing and strengthening relations with its immediate neighbours. This policy, which gained prominence in the early 2000s, seeks to:
- Build friendly and mutually beneficial relationships with all neighbouring countries.
- Engage in active development partnerships through infrastructure projects, economic cooperation, and knowledge sharing.
- Create a stable and secure regional environment conducive to collective growth and prosperity.
- Promote regional cooperation and integration on issues like trade, security, and cultural exchange.
Key Pillars of the Policy
- Consultative and non-reciprocal approach: Engaging neighbours with respect for their sovereignty and prioritizing their needs.
- Focus on outcome-oriented solutions: Delivering tangible benefits through concrete projects and initiatives.
- People-to-people contacts: Fostering cultural exchange, educational opportunities, and tourism to build lasting bonds.
- Security cooperation: Addressing regional security threats through collaboration and joint efforts.
Examples of Implementation
- Boosting trade and investment: Free trade agreements, border trade facilities, and infrastructure development projects.
- Cooperation in energy, water resources, and disaster management: Sharing expertise, technology, and resources for mutual benefit.
- Cultural exchange programs: Promoting understanding and appreciation of each other's traditions and languages.
- Security partnerships: Joint training exercises, intelligence sharing, and border management cooperation.
Challenges and Opportunities
- Internal conflicts and political instability in some neighbouring countries can hinder progress.
- Competition from other major powers like China for influence in the region.
- Building trust and resolving bilateral issues like border disputes require ongoing dialogue and diplomacy.
For Prelims: India, Nepal, China, Kalapani Valley, Treaty of Sugauli, Lipulekh Pass, Susta Area, Treaty of Friendship, Anglo-Nepalese War
For Mains:
1. Discuss the historical ties between India and Nepal, highlighting key milestones and factors shaping their relationship. (250 Words)
2. Assess the key pillars of India's Neighbourhood First Policy. Discuss the challenges and opportunities in its implementation, considering recent developments in India-Nepal relations and regional geopolitics. (250 Words)
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Previous Year Questions
1. Consider the following pairs: (UPSC 2016)
Community sometimes
mentioned in the news In the affairs of
1. Kurd Bangladesh
2. Madhesi Nepal
3. Rohingya Myanmar
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. The Treaty of Sugauli, 1816 was signed between the British and ______ (Bihar Police SI 2019) (SSC CPO 2019)
A. Sikhs B. Gurkhas C. Marathas D. French
3. Lipulekh Pass is in which state of India (SSC CHSL 2020) (OSSC WEO 2022)
A. Assam B. Himachal Pradesh C. Uttarakhand D. Jammu and Kashmir
4. When was the Indo-Bhutan Treaty of Peace and Friendship signed? (UPRVUNL AE EE 4 2021)
A. 1949 B. 1953 C. 1951 D. 1950
Answers: 1-C, 2-B, 3-C, 4-A
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LABOUR FORCE PARTICIPATION RATE (LFPR)
1. Context
2. What is Labour Force Participation Rate (LFPR)?
- The labor force participation rate (LFPR) is a measure that refers to the percentage of the working-age population (typically defined as individuals aged 15 years and above) who are either employed or actively seeking employment.
- It is a commonly used indicator to understand the level of engagement of a country's population in the labor market.
- To calculate the LFPR, the number of individuals in the labor force (which includes both employed and unemployed individuals actively seeking work) is divided by the total working-age population and multiplied by 100 to express it as a percentage.
- The labor force includes people who are currently employed, as well as those who are unemployed but actively looking for work.
- It does not include individuals who are not in the labor force, such as students, retirees, homemakers, or individuals who are not actively seeking employment.
- The LFPR provides insights into the proportion of the population that is economically active, which is important for assessing the level of labor market engagement, estimating potential labor supply, and evaluating changes in workforce dynamics over time.
3. LFPR and Unemployment Rate in India
- Unemployment Rate: The percentage of people who are unemployed and actively seeking work.
- LFPR (Labour Force Participation Rate): The percentage of the working-age population that is either employed or actively seeking employment.
- Importance of Unemployment Rate: Commonly used to assess the stress in the job market.
- India's Unique Situation:
- Low LFPR: India's LFPR has been consistently lower than the global average.
- Falling LFPR: India's LFPR has been declining over time.
4. Significance of LFPR
- Developing Economy Concern: A low and falling LFPR is unfavorable for a developing economy like India.
- Lack of Job Opportunities: Workers may opt out of the labor force due to prolonged unemployment and discouragement.
- The unemployment rate alone is insufficient to gauge India's labor market situation.
- LFPR provides a more comprehensive understanding of labor market engagement and workforce dynamics.
5. Falling LFPR
- India's LFPR has been continuously decreasing since 2016-17.
- Reached its lowest level in 2022-23.
- Despite fast economic growth (e.g., GDP growth of 7.2% in 2022-23), LFPR has been declining.
6. Low Female LFPR
- Female LFPR in India has dropped to just 8.8% in FY23.
- More than 90% of working-age women in India do not actively look for jobs.
- Significantly lower LFPR among women indicates gender-related challenges in accessing and participating in the labor market.
7. Key Observations
- The falling LFPR contradicts the country's economic growth rate.
- Female LFPR is particularly concerning, with a vast majority of women not seeking employment.
- Low LFPR and low female LFPR signify potential issues with job availability, gender inequality, and labor market participation in India.
8. Comparison of Labor Force Participation Rates in India and Other Countries
- CMIE vs. ILO: CMIE's measure of assessing the Labor Force Participation Rate (LFPR) is more stringent than that of the International Labour Organization (ILO).
- India's LFPR: CMIE estimated India's LFPR at 40% for 2022, while the ILO pegged it at 49%. Both measures indicate a low LFPR compared to other countries.
- Higher LFPR in other countries: According to the ILO model, several Latin American and Asian economies have significantly higher LFPRs than India.
- Indonesia had an LFPR of around 67% in 2022, while South Korea and Brazil had rates as high as 63-64%. Argentina, Bangladesh, and the Philippines recorded LFPRs in the range of 58-60%. Sri Lanka had over 51% of its population in the labor force.
- In contrast, India had less than half of its working-age population either employed or actively seeking employment, according to the data.
For Prelims: Centre for Monitoring Indian Economy (CMIE), Labour force participation rate (LFPR), Gross Domestic Product (GDP), International Labour Organisation (ILO), and Unemployment rate.
For Mains: 1. What is Labour Force Participation Rate (LFPR) and discuss the factors that have contributed to the Low LFPR in India? (250 Words)
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Previous year Question
1. Given below are two statements, one is labeled as Assertion (A) and the other as Reason (R). (UPPSC 2019)
Assertion (A): The labour force participation rate is falling sharply in recent years for females in India.
Reason (R): The decline in labour force participation rate is due to improved family income and an increase in education.
Select the correct answer from the codes given below:
Codes:
A. Both (A) and (R) are true and (R) is the correct explanation of (A)
B. Both (A) and (R) are true and (R) is not the correct explanation of (A)
C. (A) is true, but (R) is false
D. (A) is false, but (R) is true
Answer: C
2. Which of the following statements about the employment situation in India according to the periodic Labour Force Survey 2017-18 is/are correct? (UPSC CAPF 2020)
1. Construction sector gave employment to nearly one-tenth of the urban male workforce in India
2. Nearly one-fourth of urban female workers in India were working in the manufacturing sector
3. One-fourth of rural female workers in India were engaged in the agriculture sector
Select the correct answer using the code given below:
A. 2 only
B. 1 and 2 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: B
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VOSTRO ACCOUNTS
1. Context
2. Special Rupee Vostro Accounts (SRVA) Arrangement
- A vostro account is an account that domestic banks hold for foreign banks in the former’s domestic currency, in this case, the rupee.
- Domestic banks use it to provide international banking services to their clients who have global banking needs. It is an integral offshoot of correspondent anking that entails a bank (or an intermediary) to facilitate wire transfer, conduct business transactions, accept deposits and gather documents on behalf of the other bank.
- It helps domestic banks gain wider access to foreign financial markets and serve international clients without having to be physically present abroad.
- The SRVA is an additional arrangement to the existing system that uses freely convertible currencies and works as a complimentary system.
3. Functions of SRVA Accounts
- The framework entails three important components, namely, invoicing, exchange rate and settlement.
- Invoicing entails that all exports and imports must be denominated and invoiced in INR.
- The exchange rate between the currencies of the trading partner countries would be market determined.
- To conclude, the final settlement also takes place in Indian National Rupee (INR).
- The authorised domestic dealer banks (those authorised to deal in foreign currencies) are required to open SRVA accounts for correspondent banks of the partner trading country.
- Domestic importers are required to make payment (in INR) into the SRVA account of the correspondent bank against the invoices for supply of goods or services from the overseas seller/supplier.
- Similarly, domestic exporters are to be paid the export proceeds (in INR) from the balances in the designated account of the correspondent bank of the partner country.
4. Vostro Account
- Vostro word is a Latin word which means, yours.
- Let’s understand from the above example, the same account mentioned in the above example will be called a Vostro account for bank B.
- Vostro account accepts payments on behalf of the account holder’s bank.
- The account is held in a foreign currency.
5. Vostro Account Benefits
- Access international banking services.
- Foreign exchange transactions, withdrawals and deposits.
- Facilitates international trade.
6. Eligibility criteria of the banks
- Banks from partner countries are required to approach an authorised domestic dealer bank for opening the SRVA.
- The domestic bank would then seek approval from the apex banking regulator providing details of the arrangement.
- It would be the responsibility of the domestic banks to ensure that the correspondent bank is not from a country mentioned in the updated Financial Action Task Force (FATF) Public Statement on High Risk & Non-Co-operative jurisdictions.
- Domestic banks must also put forth for perusal, financial parameters pertaining to the corresponding bank.
- Authorised banks can open multiple SRV accounts for different banks from the same country. Further, balances in the account can be repatriated in freely convertible currency and/or currency of the beneficiary partner country depending on the underlying transaction, that is, for which the account was credited.
7. What has the Economic Survey said about this arrangement?
- The Economic Survey (2022-23) had argued that the framework could largely reduce the “net demand for foreign exchange, the U.S. dollar in particular, for the settlement of current account related trade flows”.
- It added that the framework would also reduce the need for holding foreign exchange reserves and dependence on foreign currencies, making the country less vulnerable to external shocks.
For Prelims
For Prelims: Special Rupee Vostro Accounts (SRVA), Vostro Account, Rosbank, Tinkoff Bank, Centro Credit Bank and Credit Bank of Moscow, Exchange rate system, Indian National Rupee (INR). |