INDIA-RUSSIA
1. Context
Prime Minister Narendra Modi will be in Russia to meet President Vladimir Putin on Monday and Tuesday. The two leaders have met a total 16 times since Modi became Prime Minister, but not since Russia invaded Ukraine in February 2022, provoking wide-ranging Western sanctions
2. How is Indo-Russia Relations?
- India and Russia have traditionally enjoyed a close relationship, characterized by cooperation across political, security, economic, and cultural spheres, it's important to avoid oversimplification. Examining the relationship through a nuanced lens reveals a more complex story.
- The India-Russia partnership boasts a strong foundation, cemented by the "Declaration on the India-Russia Strategic Partnership" in 2000 and rooted in Cold War-era ties between India and the Soviet Union. This historical depth and shared strategic interests continue to hold value for both nations.
- However, the post-Cold War landscape has introduced new complexities. Russia's close links with China and Pakistan, both considered geopolitical rivals of India, have caused friction. Additionally, India's diversifying foreign policy and growing engagement with the West create further strains.
- The COVID-19 pandemic and Russia's invasion of Ukraine have further complicated the picture. While India has maintained a neutral stance on the Ukraine war, it faces increasing pressure to condemn Russia. This adds to the growing perception of a potential "downfall" in relations.
- Instead of painting a solely negative picture, it's crucial to recognize the multifaceted nature of the relationship. Areas of cooperation still exist, particularly in defence, energy, and space exploration. Moreover, public opinion in India largely remains supportive of the partnership, highlighting its continued relevance despite the challenges.
3. Important Areas of Cooperation
- The highest institutionalized dialogue mechanism in the strategic partnership between India and Russia is the Annual Summit meeting between the Prime Minister of India and the President of the Russian Federation.
- Prime Minister Narendra Modi and President Vladimir Putin held their first informal Summit in Sochi, Russia, in 2018.
- In 2019, President Putin awarded PM Narendra Modi Russia’s highest state decoration, The Order of St Andrew the Apostle, for his distinguished contribution to the development of a privileged strategic partnership between Russia and India.
- Two Inter-Governmental Commissions – on Trade, Economic, Scientific, Technological, and Cultural Cooperation (IRIGC-TEC) and Military-Technical Cooperation (IRIGC-MTC) – meet annually.
- India-Russia military-technical cooperation has evolved from a buyer-seller framework to joint research, development, and production of advanced defence technologies.
- Joint military programs include the BrahMos cruise missile, 5th generation fighter jet, Sukhoi Su-30MKI, Ilyushin/HAL Tactical Transport Aircraft, KA-226T twin-engine utility helicopters, and some frigates.
- India has acquired military hardware from Russia, including the S-400 Triumf, Kamov Ka-226 (made in India under Make in India), T-90S Bhishma, INS Vikramaditya aircraft carrier, and submarines.
- Russia is a crucial partner for India in peaceful nuclear energy use, with cooperation in the Kudankulam Nuclear Power Plant (KKNPP) in India and the Rooppur Nuclear Power Project in Bangladesh.
- Cooperation in outer space includes satellite launches, the GLONASS navigation system, and joint activities in the field of the Human Spaceflight Programme.
- Institutional mechanisms for bilateral Science and Technology cooperation include the Working Group on Science and Technology, the Integrated Long-Term Programme (ILTP), and the Basic Science Cooperation Programme.
- Cultural ties involve the teaching of Hindi and other Indian languages in Russian institutions, as well as the promotion of Indian dance, music, yoga, and Ayurveda in Russia.
4. India's Significance for Russia
- The border tensions in eastern Ladakh marked a turning point in India-China relations, highlighting the potential role of Russia in defusing such conflicts. Russia organized a trilateral meeting among the foreign ministers of Russia, India, and China, signalling a diplomatic effort to address the situation in the Galwan Valley.
- Beyond traditional cooperation in weapons, hydrocarbons, nuclear energy, and diamonds, new avenues for economic engagement are emerging. Sectors like mining, agro-industrial activities, and high technology (robotics, nanotech, and biotech) are expected to play a significant role. India's expanding footprint in the Russian Far East and the Arctic is set to boost connectivity projects.
- India and Russia are collaborating to address challenges in Afghanistan, emphasizing the need for the early finalization of the Comprehensive Convention on International Terrorism to strengthen their collective efforts against terrorism.
- Russia lends support to India's aspirations for permanent membership in a reformed United Nations Security Council and membership in the Nuclear Suppliers Group, reflecting shared interests in global governance.
- Russia has been a major arms exporter to India, even though its share in India's arms imports declined by over 50% in the last five years compared to the previous period (2011–2015). Over the past two decades, India has imported arms and weapons worth USD 35 billion from Russia, according to the Stockholm International Peace Research Institute, underscoring the enduring defence partnership between the two countries.
5. Russia's Significance for India
Strategic Partner
- Military Powerhouse: Russia provides crucial access to advanced weapons and military technology, vital for India's security interests against regional rivals like China and Pakistan.
- Nuclear Fuel Supplier: Russia is a key source of nuclear fuel for India's growing nuclear power program, ensuring energy security and independence.
- Political Ally: Russia supports India's position on key issues like Kashmir and UN reform, offering diplomatic backing and counterbalancing Western pressure.
- Counterbalance to the West: Russia's partnership helps India diversify its foreign relations and hedge against Western dominance, promoting a multipolar global order.
Economic Partner
- Trade and Investment: Bilateral trade is growing, though below potential. Both nations aim to increase it significantly, offering mutual economic benefits.
- Emerging Areas of Cooperation: New sectors like mining, agro-industrial, and high technology (robotics, nanotech, biotech) hold promising potential for collaboration and economic growth.
- Connectivity Projects: India's participation in Russia's Arctic and Far East development initiatives can open up new avenues for trade and resource access.
Security Collaborator
- Joint counter-terrorism efforts: Both nations face similar threats and collaborate on intelligence sharing, training, and operations to combat terrorism.
- Afghanistan crisis: Both have concerns about the situation in Afghanistan and cooperate to promote stability and prevent the resurgence of extremist groups.
- Space Exploration: Collaborative projects in satellite launches, navigation systems, and human spaceflight programs strengthen scientific and technological advancements.
6. Trade Between India and Russia
India-Russia Trade Relations
- The two countries intend to increase bilateral investment to US$50 billion and bilateral trade to US$30 billion by 2025.
- Bilateral trade during FY 2020 amounted to USD 8.1 billion.
- From 2013 to 2016 there was a major decline in the trade percentage between the two countries. However, it increased from 2017 onwards and a constant increase was noticed in 2018 and 2019 as well.
Increasing Dependency on Russian Oil Imports
- India's oil imports have shifted significantly towards Russia, surpassing traditional suppliers such as Saudi Arabia and Iraq.
- Russia's geopolitical situation, including Western sanctions following the military operation in Ukraine, has prompted Moscow to offer steep discounts on its crude oil, finding a ready market in India.
- India, unlike Western countries, has chosen not to impose formal sanctions on Russia, leading to a nearly 13-fold increase in crude oil imports from Russia in 2022-23, reaching over $31 billion.
Payment Challenges and Geopolitical Ramifications
- India faces difficulties in paying for Russian oil due to breaching the $60 per barrel price cap set by the US and European nations, as Russia offers lower discounts on its crude.
- Using currencies like the Chinese yuan for payments raises geopolitical concerns due to strained ties with Beijing.
- Western sanctions have limited Russia's access to the global secure interbank system (SWIFT), making it challenging for Indian exporters to receive payments for goods already shipped to Russia.
The Rupee-Rouble Mechanism and Trade Deficit Concerns
- Negotiations between India and Russia to reactivate the rupee-rouble trade arrangement, an alternative payment mechanism, have faced obstacles.
- Concerns over the rouble's convertibility and volatility, along with India's ballooning trade deficit, have hindered the implementation of the rupee-rouble payment mechanism.
- India's trade deficit with Russia reached $43 billion in 2022-23, leading to significant amounts of Indian rupees in Russian banks that cannot be utilized for Russia's war efforts.
De-Dollarisation Efforts and Alternative Payment Methods
- The US sanctions have prompted countries to explore de-dollarisation, replacing the US dollar as the global reserve currency.
- India has released a roadmap for the internationalization of the Indian rupee to enhance its acceptance globally.
- Indian refiners have settled non-dollar payments for Russian oil using currencies like the Chinese yuan and the UAE dirham.
7. Challenges and Uncertainties
Geopolitical
- Ukraine War: Russia's invasion of Ukraine has strained its relations with the West, potentially impacting India's ties with both nations. India's neutral stance faces increasing pressure to condemn Russia, creating a delicate balancing act.
- China's Shadow: Russia's close relationship with China, India's geopolitical rival, creates friction and uncertainty. While Russia played a mediating role in the Ladakh border tensions, its alignment with China raises concerns for India's security interests.
- Diversifying Foreign Policy: India's growing engagement with the US and other Western powers could further complicate the relationship with Russia, potentially leading to strategic competition and conflicting interests.
Economic
- Trade below potential: Bilateral trade between India and Russia remains below its potential, despite ambitious goals to increase it significantly. This could be due to factors like infrastructure limitations, lack of diversification, and competition from other trading partners.
- Investment gaps: While both countries desire increased investment, attracting Russian investment to India remains a challenge. This could be due to concerns about regulatory hurdles, bureaucratic complexities, and competition from other investment destinations.
- Energy dependence: India's reliance on Russia for critical resources like nuclear fuel and military equipment creates vulnerability to potential disruptions in supply or price fluctuations. Diversifying energy sources and arms imports is a long-term goal, but comes with its own challenges.
Strategic
- Shifting military landscape: India's efforts to diversify its arms imports and develop its own defence capabilities could gradually reduce its dependence on Russian military technology. This could potentially weaken the strategic partnership in the long run.
- Differing priorities: While both nations share some strategic interests, their priorities may not always align perfectly. This could lead to disagreements on issues like regional security, international sanctions, or global governance.
- Domestic politics: Internal political dynamics in both countries can also impact the relationship. Changes in leadership or shifts in public opinion could lead to changes in priorities or policies, potentially creating uncertainty and instability.
8. The Way Forward
Indo-Russia relations are a complex tapestry woven with historical ties, strategic interests, and evolving geopolitical realities. While facing challenges, the partnership holds significant value for both sides and is likely to continue adapting to the changing global landscape.
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For Prelims: India-Russia, Kudankulam Nuclear Power Plant, Cold War, Russia-Ukraine War, Covid-19 Pandemic For Mains: 1. Discuss the challenges and opportunities for increasing bilateral trade and investment between India and Russia. What specific initiatives can be undertaken to overcome existing obstacles and achieve the set goals? (250 Words)
2. Critically evaluate the impact of Russia's invasion of Ukraine on its relations with India, considering both geopolitical implications and domestic public opinion. (250 Words)
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Previous Year Questions
1. Recently, India signed a deal known as ‘Action Plan for Prioritization and Implementation of Cooperation Areas in the Nuclear Field’ with which of the following countries? (UPSC 2019) (a) Japan Answer: B 2. Consider the following pairs: (UPSC 2014) Region often in news Country 1. Chechnya Russian Federation 2. Darfur Mali 3. Swat Valley Iraq Which of the above pair is/are correctly matched? A. 1 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3 Answers: 1-B, 2-A Mains1. What is the significance of Indo-US defence deals over Indo-Russian defence deals? Discuss with reference to stability in the Indo-Pacific region. (UPSC 2020) |
Source: The Indian Express
WILDFIRES
1. Context
Smoke from raging wildfires has once again darkened the skies over the Arctic. It is the third time in the past five years that high intensity fires have erupted in the region, Europe’s Copernicus Climate Change Service (C3S) said last week.
2. About Wildfires
- Wildfires, also referred to as bushfires, vegetation fires, or forest fires, epitomize the uncontrolled and non-prescribed combustion of plants within natural environments like forests, grasslands, brushlands, or tundras.
- These fires, ignited by various factors, consume natural fuels and propagate based on prevailing environmental conditions such as wind patterns and terrain features.
- Three pivotal elements must converge for a wildfire to thrive: Fuel, Oxygen, and a Heat source.
2.1. Origins and Causes
Natural Causes: Many wildfires stem from natural triggers, with lightning strikes being a prominent initiator. These lightning-induced fires often ignite trees, yet the subsequent rainfall tends to douse the flames, minimizing damage. Elevated atmospheric temperatures and aridity, characterized by low humidity levels, create propitious conditions for fire ignition and spread.
Man-made Causes: Human activities constitute a significant driver of forest fires. Fires ignite when a fire source be it an exposed flame, a discarded cigarette or bidi, an electric spark, or any ignition source interacts with inflammable materials. Such anthropogenic incidents can swiftly transform into destructive conflagrations.
2.2. Classification
Surface Fires: wildfires can primarily manifest as surface fires, advancing across the forest floor's surface layer, encompassing senescent leaves, twigs, and parched grass. The propagating flames embrace the surface litter, leading to a rapid spread.
Underground Fires: Underground fires, are characterized by low intensity, smoulder within the organic matter beneath the surface and the forest floor's litter. Often concealed, these fires extend several meters below the ground, challenging detection and control efforts. These covert fires, lingering for months, inflict substantial harm to vegetative cover.
Ground Fires: Ground fires, infiltrating the sub-surface organic fuels, transcend boundaries, involving duff layers beneath forest stands, Arctic tundra, taiga, and organic soils of swamps or bogs. The distinction between underground and ground fires isn't clear-cut, as smouldering underground fires can metamorphose into ground fires. These fires ravage the herbaceous growth on the forest floor alongside decaying organic layers, potentially annihilating vegetation. Ground fires simmer below the surface via smouldering combustion, frequently sparked by surface fires.
Image Source: CNN
2.3. Impact
Wildfires can have a significant impact on ecosystems. They can destroy vegetation, kill wildlife, and pollute the air and water. However, they can also have some positive effects, such as clearing out deadwood and creating new growth opportunities.
2.3.1. Negative impacts of wildfires
Loss of vegetation: Wildfires can destroy large areas of vegetation, which can have a cascading effect on the entire ecosystem. For example, the loss of trees can lead to erosion, which can pollute waterways and damage downstream ecosystems.
Death of wildlife: Wildfires can kill animals directly through burns or smoke inhalation. They can also indirectly kill animals by destroying their food sources or habitat.
Air and water pollution: wildfires can release harmful pollutants into the air and water. These pollutants can cause respiratory problems in humans and animals, and they can also contaminate drinking water.
2.3.2. Positive Impacts of Wildfires
Clearing out deadwood: wildfires can clear out deadwood, which can help to prevent the spread of larger fires in the future. Deadwood is also a fire hazard, as it can dry out and catch fire easily.
Creating new growth opportunities: wildfires can create new growth opportunities for plants and animals. For example, some plants need fire to germinate their seeds. Fire can also remove competition from older plants, allowing younger plants to grow.
Reducing the risk of pests and diseases: wildfires can help to reduce the risk of pests and diseases by killing off infested trees. This can help to protect healthy trees and prevent the spread of pests and diseases to other areas.
3. The Historical Significance of Maui and Lahaina
- Maui is a popular tourist destination known for its beautiful beaches and lush rainforests.
- Lahaina was the capital of the Hawaiian kingdom from 1820 to 1845.
- The town is home to many historical landmarks, including the Waiola Church, which was built in 1832.
- The fires have caused extensive damage to Lahaina, including the destruction of many historic buildings.
4. Reasons for the Fires in Hawaii Been So Devastating
The fires have been so devastating due to a combination of factors, including:
Dry weather: The island of Maui has been in a drought for several months, which has created ideal conditions for wildfires to spread.
Strong winds: Hurricane Dora passed south of the islands this week, which created strong winds that fanned the flames.
Invasive plant species: Invasive plant species, such as fireweed, have spread rapidly across the island, making it easier for fires to start and spread.
Climate change: Climate change is making the Earth's climate warmer and drier, which is creating more favourable conditions for wildfires to occur.
5. Measures that can be taken to prevent wildfires
Create firebreaks: Firebreaks are strips of land that have been cleared of vegetation and are used to stop the spread of fire. They can be created by clearing trees, shrubs, and other vegetation, or by plowing the land.
Educate the public about fire safety: People should be educated about fire safety in forests, including how to prevent fires and how to stay safe if a fire occurs.
Use fire permits: In many areas, it is required to obtain a fire permit before lighting a fire in the forest. This helps to ensure that fires are only lit in safe areas and that they are properly extinguished.
Monitor weather conditions: Forest officials should monitor weather conditions and issue warnings when there is a high risk of fire. This allows people to take steps to protect themselves and their property.
Maintain fire equipment: Fire equipment, such as fire trucks and water hoses, should be maintained in working order so that they can be used to fight fires quickly and effectively.
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For Prelims: Wildfires, Hawaii, USA, climate change, soil degradation, vegetation,
For Mains:
1. Explain the causes and factors that contribute to the severity of wildfires. Discuss the positive and negative impacts of wildfires on ecosystems. (250 Words)
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Previous Year Questions
1. Comprehension (SSC CHSL 2020)
Direction: In the following passage some words have been deleted. Fill in the blanks with the help of the alternatives given. Select the most appropriate option for each blank. Forest fire always (1) ______ by one of two reasons-naturally caused or human-caused. Natural fire is generally (2) ______ by lightning, with a very small percentage (3) ______ by spontaneous combustion of dry fuel such as sawdust and leaves. (4) ______, human-caused fire can happen (5) ______ any number of reasons.
Select the most appropriate option for blank No. 1.
A. takes up B. happens C. causes D. creates
Answer: B
2. Match List - I with List - II and select the correct answer from the codes given below the lists: (UPSC CAPF 2015)
List - I (Volcano type) List – II (Location)
A. Shield Volcano 1. Indonesia
B. Composite Volcano 2. India
C. Caldera 3. Hawaii
D. Flood Basalt Provinces 4. Phillippines
1. A-2, B-4, C-1, D-3
2. A-2, B-1, C-4, D-3
3. A-3, B-1, C-4, D-2
4. A-3, B-4, C-1, D-2
Answer: 4
3. Recently, the USA decided to support India's membership in multilateral export control regimes called the "Australia Group" and the "Wassenaar Arrangement". What is the difference between them? (UPSC 2011)
1. The Australia Group is an informal arrangement which aims to allow exporting countries to minimize the risk of assisting chemical and biological weapons proliferation, whereas the Wassenaar Arrangement is a formal group under the OECD holding identical objectives.
2. The Australia Group comprises predominantly of Asian, African and North American countries, whereas the member countries of Wassenaar Arrangement are predominantly from the European Union and American continents.
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: D
4. In India, the problem of soil erosion is associated with which of the following? (UPSC 2014)
1. Terrace cultivation
2. Deforestation
3. Tropical climate
Select the correct answer using the code given below.
A. 1 and 2 only B. 2 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
5. The vegetation of savannah consists of grassland with scattered small trees, but extensive areas have no trees. The forest development in such areas is generally kept in check by one or more or a combination of some conditions. Which of the following are such conditions? (UPSC 2021)
1. Burrowing animals and termites
2. Fire
3. Grazing herbivores
4. Seasonal rainfall
5. Soil properties
Select the correct answer using the code given below.
A. 1 and 2 B. 4 and 5 C, 2, 3 and 4 D. 1, 3 and 5
Answer: C
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Source: The Indian Express
INFLATION
1. Context
The government must consider building a buffer stock not just of rice and wheat, but even pulses, oilseeds, sugar, skimmed milk powder (SMP) and staple vegetables.
2. What is Inflation?
- It is the rise in prices of goods and services within a particular economy wherein consumers' purchasing power decreases, and the value of the cash holdings erodes.
- In India, the Ministry of Statistics and Programme Implementation (MoSPI) measures inflation.
- Some causes that lead to inflation are demand increases, reduction in supply, demand-supply gap, excess circulation of money, increase in input costs, devaluation of the currency, and rise in wages, among others.
3. How is Food Inflation measured in India?
Food inflation in India is measured using various indices and indicators. The primary indices used to measure food inflation in India include the Consumer Price Index (CPI) and the Wholesale Price Index (WPI). Both indices provide insights into the overall price movements of goods and services, including food items, but they differ in terms of their coverage and methodology.
Consumer Price Index (CPI)
- The CPI is a key indicator used by the Government of India and the Reserve Bank of India (RBI) to monitor inflation, including food inflation.
- The CPI measures the average change over time in the prices paid by urban and rural consumers for a basket of goods and services, including food items, housing, clothing, transportation, and more.
- Within the CPI, food and beverages form a significant component, and food inflation is specifically derived from the changes in food prices within the CPI basket.
- The CPI is released monthly by the Central Statistics Office (CSO) under the Ministry of Statistics and Programme Implementation.
Wholesale Price Index (WPI)
- The WPI is another important index that tracks price changes at the wholesale level for a selected group of commodities, including food products, manufactured goods, fuel, and more.
- The WPI measures price changes from the perspective of producers and wholesalers, providing insights into inflationary pressures in the production and distribution stages.
- Food articles, such as cereals, pulses, vegetables, fruits, and edible oils, are included in the WPI basket for monitoring food inflation.
- The WPI is released weekly by the Office of Economic Adviser under the Ministry of Commerce and Industry.
In addition to these indices, other indicators such as the Food Sub-Index within the CPI and specific price indices for essential food items (like vegetables, pulses, and cereals) are also used to gauge food inflation more accurately. The RBI closely monitors food inflation trends as part of its monetary policy framework to make informed decisions regarding interest rates and economic stability. Overall, the combination of CPI, WPI, and specific food-related indices provides a comprehensive assessment of food inflation in India.
4. Headline and Core Inflation
Inflation is a key economic indicator that measures the rate at which prices of goods and services rise over time. In India, two important measures of inflation are headline inflation and core inflation.
- Headline Inflation: Headline inflation refers to the overall rate of inflation in an economy, taking into account the price changes across all goods and services included in the consumer basket. It reflects the broad-based movement in prices, including food, fuel, housing, transportation, and other essential and non-essential items. Headline inflation is typically measured using indices such as the Consumer Price Index (CPI) and the Wholesale Price Index (WPI). Fluctuations in headline inflation can be influenced by various factors, including changes in global commodity prices, government policies, supply chain disruptions, and demand-side pressures.
- Core Inflation: Core inflation, on the other hand, excludes volatile items such as food and energy from the basket of goods used to calculate inflation. By excluding these volatile components, core inflation provides a more stable measure of underlying inflationary trends in the economy. Core inflation is often considered a better gauge of long-term inflationary pressures and helps policymakers in making informed decisions regarding monetary policy. The Reserve Bank of India (RBI), for example, closely monitors core inflation to assess the underlying inflationary trends and formulate appropriate monetary policy responses.
Understanding the distinction between headline and core inflation is essential for policymakers, businesses, and consumers alike. While headline inflation provides a comprehensive view of overall price movements, core inflation offers insights into the underlying inflationary pressures, helping to distinguish between temporary fluctuations and sustained inflation trends. By closely monitoring both measures of inflation, policymakers can effectively manage inflationary risks and maintain price stability, contributing to sustainable economic growth and stability.
5. Monetary Policy Committee (MPC)
The Monetary Policy Committee (MPC) is a crucial institutional framework established by the Reserve Bank of India (RBI) to formulate and implement monetary policy decisions in India.
Role
- Formulating Monetary Policy: The primary role of the MPC is to formulate and implement monetary policy in India. This includes setting the key policy interest rates, such as the repo rate, reverse repo rate, and marginal standing facility (MSF) rate, to achieve the objectives of price stability and economic growth.
- Targeting Inflation: The MPC's main objective is to maintain price stability, which is primarily achieved by targeting a specific inflation rate. In India, the RBI has adopted a flexible inflation targeting framework, where the MPC aims to keep the Consumer Price Index (CPI) inflation within a specified target range over the medium term. Currently, the inflation target is set at 4% with a tolerance band of +/- 2%.
- Evaluating Economic Conditions: The MPC assesses various economic indicators, such as GDP growth, inflation expectations, fiscal policy measures, global economic developments, and financial market conditions, to make informed decisions about monetary policy.
- Communication: The MPC communicates its monetary policy decisions, rationale, and outlook for the economy through periodic press releases, statements, and the publication of meeting minutes. This transparency enhances predictability and credibility in monetary policy.
Composition
- Members: The MPC consists of six members, including three members nominated by the Government of India and three members from the Reserve Bank of India. The Governor of the RBI serves as the ex-officio Chairperson of the MPC.
- Appointment: The members of the MPC are appointed by the Central Government based on their expertise and experience in economics, banking, finance, or related fields. The RBI Governor and Deputy Governor (in charge of monetary policy) are automatic members of the MPC.
- Voting Rights: Each member of the MPC, including the RBI Governor, has one vote in the decision-making process. Decisions are made by a majority vote, with the Governor having the casting vote in case of a tie.
- Terms: Members of the MPC serve fixed terms, typically for four years, with eligibility for reappointment. This ensures continuity and stability in monetary policy formulation.
6. The Way Forward
By implementing the measures and fostering collaborative efforts among policymakers, regulators, and stakeholders, India can effectively manage inflationary pressures, maintain price stability, and promote sustainable economic growth and development.
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For Prelims: Inflation, MPC, CPI, WPI, food Inflation, RBI, Headline inflation, Core inflation For Mains:
1. Explain the concept of inflation and its impact on an economy. Discuss the various causes of inflation and the measures that can be taken to control it, with specific reference to India. (250 Words)
2. What are the challenges and opportunities associated with managing inflation in India? Evaluate the effectiveness of recent policy measures in addressing inflationary pressures and maintaining price stability. Suggest strategies for sustainable economic growth while managing inflation risks. (250 Words)
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Previous Year Questions
1. Consider the following statements: (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
2. Concerning the Indian economy, consider the following: (UPSC 2015)
Which of the above is/are component(s) of Monetary Policy? (a) 1 only (b) 2, 3 and 4 (c) 1 and 2 (d) 1, 3 and 4
3. An increase in Bank Rate generally indicates: (UPSC 2013) (a) Market rate of interest is likely to fall.
(b) Central bank is no longer making loans to commercial banks.
(c) Central bank is following an easy money policy.
(d) Central bank is following a tight money policy.
4. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC 2017) 1. It decides the RBI's benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below: A. 1 only B. 1 and 2 only C. 3 only D. 2 and 3 only 5. 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
6. 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
7. 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
8. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
1. The Agreement was signed by all the member countries of the UN and it will go into effect in 2017
2. The Agreement aims to limit greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2°C or even 1.5°C above pre-industrial levels.
3. Developed countries acknowledged their historical responsibility in global warming and committed to donate $ 1000 billion a year from 2020 to help developing countries to cope with climate change.
Select the correct answer using the code given below:
A. 1 and 3 only B. 2 only C. 2 and 3 only D. 1, 2 and 3
Answers: 1-C, 2-C, 3-D, 4-A, 5-D, 6-B, 6-C, 7-B
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Source: The Indian Express
INDUS WATER TREATY
1. Context
Recognising climate change as a common vulnerability, and shifting focus from mere river management to holistic basin management that prioritises sustainability would re-establish the treaty as a bright spot in the countries’ relations
2. The dispute over the hydel projects
- The notice appears to be a fallout of a longstanding dispute over two hydroelectric power projects that India is constructing one on the Kishanganga river, a tributary of Jhelum and the other on the Chenab.
- Pakistan has raised objections to these projects and dispute resolution mechanisms under the Treaty have been invoked multiple times. But a full resolution has not been reached.
- In 2015, Pakistan asked that a Neutral Expert should be appointed to examine its technical objections to the Kishanganga and Ratle HEPs.
- But the following year, Pakistan unilaterally retracted this request and proposed that a Court of Arbitration should adjudicate its objections.
- In August 2016, Pakistan approached the World Bank, which brokered the 1960 Treaty, seeking the constitution of a Court of Arbitration under the relevant dispute redressal provisions of the Treaty.
| Instead of responding to Pakistan's request for a Court of Arbitration, India moved a separate application asking for the appointment of a Neutral Expert, which is a lower level of dispute resolution provided in the Treaty. |
- India argued that Pakistan's request for a Court of Arbitration violated the graded mechanism of dispute resolution in the Treaty.
- In between, a significant event happened that had consequences for the Treaty.
- A Pakistan-backed terror attack on Uri in September 2016 prompted calls within India to walk out of the Indus Waters Treaty, which allows a significantly bigger share of the six river glasses of water to Pakistan.
- The Prime Minister had famously said that blood and water could not flow together and India has suspended routine bi-annual talks between the Indus Commissioners of the two countries.
3. Applications moved by Pakistan and India
- The World Bank, the third party to the Treaty and the acknowledged arbiter of disputes were, meanwhile faced with a unique situation of having received two separate requests for the same dispute.
- New Delhi feels that the World Bank is just a facilitator and has a limited role.
- On December 12, 2016, the World Bank announced a "pause" in the separate processes initiated by India and Pakistan under the Indus Waters Treaty to allow the two countries to consider alternative ways to resolve their disagreements.
- The regular meetings of Indus Waters Commissioners resumed in 2017 and India tried to use these to find mutually agreeable solutions between 2017 and 2022.
- Pakistan refused to discuss these issues at these meetings.
- At Pakistan's continued insistence, the World Bank, in March last year, initiated actions on the requests of both India and Pakistan.
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On March 31, 2022, the World Bank decided to resume the process of appointing a Neutral Expert and a Chairman for the Court of Arbitration.
In October last year, the Bank named Michel Lino as the Neutral Expert and Prof. Sean Murphy as Chairman of the Court of Arbitration.
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- They will carry out their duties in their capacity as subject matter experts and independently of any other appointments they may currently hold.
- On October 19, 2022, the Ministry of External Affairs said, " We have noted the World Bank's announcement to concurrently appoint a Neutral Expert and a Chair of the Court of Arbitration in the ongoing matter related to the Kishanganga and Ratle projects".
- Recognising the World Bank's admission in its announcement that "carrying out two processes concurrently poses practical and legal challenges".
- India would assess the matter that "India believes that the implementation of the Indus Water Treaty must be in the letter and spirit of the Treaty".
- Such parallel consideration of the same issues is not provided for in any provisions of the Treaty and India has been repeatedly citing the possibility of the two processes delivering contradictory rulings, which could lead to an unprecedented and legally untenable situation, which is unforeseen in Treaty provisions.
4. Dispute redressal mechanism
- The dispute redressal mechanism provided under Article IX of the IWT is graded.
- It's a 3-level mechanism.
- So, whenever India plans to start a project, under the Indus Water Treaty, it has to inform Pakistan that it is planning to build a project.
- Pakistan might oppose it and ask for more details. That would mean there is a question and in case there is a question, that question has to be clarified between the two sides at the level of the Indus Commissioners.
- If that difference is not resolved by them, then the level is raised. The question then becomes a difference.
- That difference is to be resolved by another set mechanism, which is the Natural Expert.
- It is at this stage that the World Bank comes into the picture.
- In case the Neutral Expert says that they are not able to resolve the difference or that the issue needs an interpretation of the Treaty, then that difference becomes a dispute.
It then goes to the third stage the Court of Arbitration. - To Sum up, it's a very graded and sequential mechanism first Commissioner, then the Neutral Expert and only then the Court of Arbitration.
5. India's notice and its implications
- While the immediate provocation for the modification is to address the issue of two parallel mechanisms, at this point, the implications of India's notice for modifying the treaty are not very clear.
- Article XII (3) of the Treaty that India has invoked is not a dispute redressal mechanism.
- It is in effect, a provision to amend the Treaty.
- However, an amendment or modification can happen only through a "duly ratified Treaty concluded for that purpose between the two governments".
- Pakistan is under no obligation to agree to India's proposal.
- As of now, it is not clear what happens if Pakistan does not respond to India's notice within 90 days.
| The next provision in the Treaty, Article XII (4), provides for the termination of the Treaty through a similar process " a duly ratified Treaty concluded for that the purpose between the two governments". |
- India has not spelt out exactly what it wants to be modified in the Treaty.
- But over the last few years, especially since the Uri attack, there has been a growing demand in India to use the Indus Waters Treaty as a strategic tool, considering that India has the natural advantage of being the upper riparian state.
- India has not fully utilized its rights over the waters of the three east-flowing rivers Ravi, Beas and Sutlej over which India has full control under the Treaty.
It has also not adequately utilized the limited rights over the three west-flowing rivers Indus, Chenab and Jhelum which are meant for Pakistan. - Following the Uri attack, India established a high-level task force to exploit the full potential of the Indus Waters Treaty.
- Accordingly, India has been working to start several big and small hydroelectric projects that had either been stalled or were in the planning stages.
For Prelims & Mains
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For Prelims: Indus water treaty, World Bank, India and Pakistan, Ravi, Jhelum, Sutlej, Beas, Chennab, Court of Arbitration, Uri attack, Neutral Expert, hydel projects,
For Mains:
1. What is Indus Water Treaty and discuss India's recent notice and its implications (250 Words)
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Source: The Indian Express
COP28
1. Context
We are back to where we had left off during COP28. In the recently concluded Bonn talks, a precursor to COP29 (to be held in Baku in November), there was no consensus regarding resource transfer for climate change
2. About COP28
- COP28, or the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), was a major international event held in Dubai, United Arab Emirates, from November 30th to December 12th, 2023.
- It brought together representatives from nearly 200 countries to discuss and negotiate ways to address climate change.
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The main purpose was to conduct a Global Stocktake, a comprehensive assessment of where the world stands in its fight against climate change and what needs to be done to meet our goals.
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It aimed to spur more ambitious climate action, especially before 2030, a crucial decade for keeping global warming under control.
3. High Stakes for COP28
- Anticipation surrounded COP28 as it was viewed as a crucial opportunity, perhaps the final one, to ensure global efforts align with the critical 1.5-degree Celsius warming threshold.
- The primary focus of COP28 was the execution of a Global Stocktake, a comprehensive evaluation determining the world's progress in the fight against climate change and outlining additional measures required to meet climate objectives.
- Mandated by the Paris Agreement, the Global Stocktake is slated to be conducted periodically, with the first one in 2023 and subsequent assessments every five years.
- The urgency of COP28 was heightened by the backdrop of escalating global warming, with 2023 already confirmed as the hottest year on record.
- Throughout the year, multiple months witnessed the establishment of new temperature records, with over 80 days surpassing temperatures at least 1.5 degrees Celsius higher than pre-industrial times.
- Despite these alarming indicators, assessments consistently indicated that global efforts were falling short, and the 1.5-degree target was slipping away.
- COP28 was therefore expected to leverage the Global Stocktake as a catalyst for more ambitious climate actions, especially in the critical timeframe leading up to 2030.
4. Disappointing Outcomes of COP28
Regrettably, COP28 fell short of expectations, particularly in terms of expediting immediate climate action. The final agreement lacked substantial provisions to accelerate efforts in the short term.
Fossil Fuel Phase-Out
- The most contentious issue at COP28 revolved around the phased reduction of fossil fuels a topic that led to a prolonged deadlock.
- The acknowledgement of the role of fossil fuels in contributing to global warming, a departure from previous COP decisions, was a significant but overdue development.
- The final agreement, after extensive deliberations, urged countries to contribute to the "transition away" from fossil fuels to achieve net-zero emissions by 2050.
- Notably absent were specific timelines and targets. The absence of the explicit term "fossil fuel phase-out" disappointed some nations, though its inclusion would likely yield a similar impact without defined timelines.
- While curtailing the production and consumption of fossil fuels is a crucial measure in the 2050 timeframe, the lack of immediate actions raised concerns about the effectiveness of the agreement in the near term.
Tripling of Renewable Energy
- An anticipated outcome, the COP28 agreement focused on a pivotal measure with potential emissions reductions by 2030.
- Countries were called upon to contribute to the tripling of the global installed capacity of renewable energy, coupled with doubling annual improvements in energy efficiency.
- These combined efforts could prevent the emission of approximately 7 billion tonnes of carbon dioxide equivalent by 2030 surpassing the cumulative impact of all other ongoing climate actions.
- While this tripling is a global target, the specifics of how individual nations would achieve this ambitious goal remain unclear.
Phase-Down of Coal
- Despite coal's status as a fossil fuel, separate attention was given to its phase-down in the COP28 agreement, building upon the precedent set at the Glasgow conference in 2021.
- Initial proposals aimed to mandate that new coal-fired power plants include carbon capture and storage facilities, but strong resistance from countries like India, China, and South Africa led to its abandonment.
- The final agreement restated the language from Glasgow without providing details on how this phase-down would be measured or against what baseline.
- The inclusion of coal as a distinct consideration reflects the continued challenges in reaching a consensus on coal-related policies at the global level.
Methane Emission Cuts
- The COP28 agreement addresses the imperative of "accelerating and substantially reducing non-carbon-dioxide emissions globally, particularly methane emissions by 2030."
- Methane, constituting nearly 25% of all emissions and possessing about 80 times the warming potency of CO2, offers significant benefits if curtailed.
- However, strong opposition, notably from countries like India, arises due to the major agricultural and livestock sources of methane.
- The agreement, possibly in consideration of these concerns, refrains from specifying targets for methane emission cuts by 2030.
- It's noteworthy that a voluntary commitment made by approximately 100 countries in Glasgow in 2021 to reduce methane emissions by 30% by 2030 remains unmentioned in COP28.
Loss and Damage Fund
- A pivotal outcome for poor and vulnerable nations, COP28 operationalized the Loss and Damage Fund, which was initially decided upon in Sharm el-Sheikh the previous year.
- Unlike its dormant status before COP28, the fund saw tangible progress on the opening day of the conference, with various countries, including the host UAE, making funding commitments.
- By the conference's conclusion, commitments totalling around US$ 800 million had been secured.
- This financial support aims to aid countries in recovering from climate-induced disasters, representing a significant step toward assisting those most affected by the adverse impacts of climate change.
Global Goal on Adaptation
- The Global Goal of Adaptation emerged as a significant stride awaited by developing nations.
- Historically, adaptation efforts have not received commensurate attention and resources compared to mitigation activities, primarily due to their localized nature and benefits. Adaptation endeavours are often confined to specific regions.
- Recognizing the need for a global framework, the Glasgow conference initiated a two-year work programme to outline the contours of a comprehensive adaptation framework.
- This effort led to the identification of common adaptation goals crucial for the entire world.
- These encompassed mitigating climate-induced water scarcity, fostering climate resilience in food and agricultural systems, enhancing resilience in supply chains and distribution, and fortifying defences against climate-induced health impacts.
5. The Way Forward
COP28 officially embraced the adaptation framework, signifying a pivotal step forward. However, challenges persist, particularly in defining indicators to measure progress for each global goal. Notably, the adaptation agreement currently lacks financial provisions, necessitating continued collaborative efforts among countries to strengthen it in the years ahead. The commitment to this framework underscores the growing recognition of the imperative to address and bolster global adaptation efforts.
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For Prelims: COP28, United Nations Framework Convention on Climate Change, Paris Agreement, Fossil Fuel, Loss and Damage Fund, carbon dioxide, Methane, Glasgow conference
For Mains:
1. Examine the key outcomes of COP28, focusing on the measures aimed at transitioning away from fossil fuels and mitigating methane emissions. Assess the effectiveness of the agreements in catalyzing immediate climate actions. (250 Words)
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Previous Year Questions 1. The UN Framework Convention on Climate Change (UNFCCC) has announced which country to host the 28th Conference of the Parties (COP28) in 2023? (SSC CGL 2023) A. UAE B. US C. UK D. Russia
2. The United Nations Framework Convention on Climate Change (UNFCCC) is an international treaty drawn at (UPSC 2010) A. United Nations Conference on the Human Environment, Stockholm, 1972 B. UN Conference on Environment and Development, Rio de Janeiro, 1992 C. World Summit on Sustainable Development, Johannesburg, 2002 D. UN Climate Change Conference Copenhagen, 2009
3. UNFCCC (United Nations Framework Convention on Climate Change) entered into from - (Sr. Teacher Gr II NON-TSP G.K. 2018) A. 21 March 1994 B. 5 June 1992 C. 12 May 1991 D. 5 June 1993
4. The 'Paris Agreement' adopted in Conference of the Parties (COP 21) in December 2015 will be effective provided the document is signed by: (UPSC CAPF 2016) A. 51 UNFCCC parties accounting for at least 51% of global greenhouse gas emission
B. 51 UNFCCC parties accounting for at least 55% of global greenhouse gas emission
C. 55 UNFCCC parties accounting for at least 55% of global greenhouse gas emission
D. 75 UNFCCC parties accounting for at least 51% of global greeenhouse gas emission
5. The term ‘Intended Nationally Determined Contributions’ is sometimes seen in the news in the context of (UPSC 2016) (a) pledges made by the European countries to rehabilitate refugees from the war-affected Middle East
6. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
Select the correct answer using the code given below. (a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3 Answers: 1-A, 2-B, 3-A, 4-C, 5-B, 6-B Mains1. ‘Climate change’ is a global problem. How India will be affected by climate change? How Himalayan and coastal states of India will be affected by climate change? (UPSC 2017) 2. Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (UPSC 2021) |
Source: The Indian Express
