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DAILY CURRENT AFFAIRS, 10 JULY 2024

GOODS AND SERVICE TAX (GST)

 
 
1. Context
 
The economic loss, particularly to the informal sector owing to the cumulative impact of macroeconomic shocks since 2016, including the demonetisation of high-value currency notes, the roll-out of the Goods and Services Tax (GST) and the COVID-19 pandemic, is estimated at 4.3% of GDP in 2022-23 or ₹11.3 lakh crore
 
2. What is the Goods and Services Tax (GST)?
  • The Goods and Services Tax (GST) is a value-added tax levied on the supply of goods and services at each stage of the production and distribution chain. It is a comprehensive indirect tax that aims to replace multiple indirect taxes imposed by the central and state governments in India.
  • GST is designed to simplify the tax structure, eliminate the cascading effect of taxes, and create a unified national market. Under the GST system, both goods and services are taxed at multiple rates based on the nature of the product or service. The tax is collected at each stage of the supply chain, and businesses are allowed to claim a credit for the taxes paid on their inputs.
  • The GST system in India came into effect on July 1, 2017, replacing a complex tax structure that included central excise duty, service tax, and state-level taxes like VAT (Value Added Tax), among others. The GST Council, consisting of representatives from the central and state governments, is responsible for making decisions on various aspects of GST, including tax rates and rules.
  • GST is intended to create a more transparent and efficient tax system, reduce tax evasion, and promote economic growth by fostering a seamless flow of goods and services across the country. It has a significant impact on businesses, as they need to comply with the new tax regulations and maintain detailed records of their transactions for GST filing

3.Goods and Services Tax (GST) and 101st Amendment Act, 2016

The Goods and Services Tax (GST) in India was introduced through the 101st Amendment Act of 2016. This constitutional amendment was a crucial step in the implementation of GST, which aimed to create a unified and comprehensive indirect tax system across the country.

Here are some key points related to the 101st Amendment Act and GST:

 

  • The 101st Amendment Act was enacted to amend the Constitution of India to pave the way for the introduction of the Goods and Services Tax.
  • It added a new article, Article 246A, which confers concurrent powers to both the central and state governments to levy and collect GST
  • The amendment led to the creation of the GST Council, a constitutional body consisting of representatives from the central and state governments. The council is responsible for making recommendations on GST rates, exemptions, and other related issues
  • The amendment introduced a dual GST structure, where both the central government and the state governments have the power to levy and collect GST on the supply of goods and services
  • For inter-state transactions, the 101st Amendment Act provides that the central government would levy and collect the Integrated Goods and Services Tax (IGST), which would be a sum total of the central and state GST
  • The amendment also included a provision for compensating states for any revenue loss they might incur due to the implementation of GST for a period of five years
The 101st Amendment Act was a critical legislative step that provided the constitutional framework for the implementation of GST in India. It addressed the need for a unified tax system, simplifying the tax structure and promoting a common market across the country. The subsequent establishment of the GST Council has played a pivotal role in the ongoing management and evolution of the GST system in India
 
4. What are the different types of Goods and Services Tax (GST)?

In India, the Goods and Services Tax (GST) is structured into different tax rates based on the nature of the goods and services. As of my last knowledge update in January 2022, the GST rates are divided into multiple slabs. It's important to note that tax rates may be subject to changes, and new amendments could have been introduced since then. As of my last update, the GST rates are as follows:

  • Nil Rate:

    • Some goods and services are categorized under the nil rate, meaning they attract a 0% GST. This implies that no tax is levied on the supply of these goods or services.

  • 5% Rate:

    • This is a lower rate, applicable to essential goods such as certain food items, medical supplies, and other basic necessities.

  • 12% Rate:

    • Goods and services falling in this category attract a 12% GST rate. Items such as mobile phones, processed foods, and certain services fall under this slab.

  • 18% Rate:

    • A higher rate of 18% is applicable to goods and services such as electronic items, capital goods, and various services.

  • 28% Rate:

    • The highest GST rate of 28% is applied to luxury items, automobiles, and certain goods and services that are considered non-essential or fall into the luxury category.

  • Compensation Cess:

    • In addition to the above rates, some specific goods attract a compensation cess, which is levied to compensate the states for any revenue loss during the transition to GST. This is often applied to items like tobacco and luxury cars.

  • Zero Rate:

    • Certain categories of goods and services may be specified as "zero-rated," which means they are effectively taxed at 0%. This is different from the nil rate, as it allows businesses to claim input tax credit on inputs, capital goods, and input services.

  • Exempt Supplies:

    • Some goods and services may be exempt from GST altogether. This means that they are not subject to any GST, and businesses cannot claim input tax credit on related inputs
 
5.Central GST (CGST), State GST (SGST), Union territory GST (UTGST) and Integrated GST (IGST)
 
 
Subject Central GST (CGST) State GST (SGST) Union Territory GST (UTGST) Integrated GST (IGST)
Levied by Central Government Respective State Governments Union Territory Administrations Central Government (on inter-state transactions)
Applicability On intra-state supplies (within the same state) On intra-state supplies (within the same state) On intra-union territory supplies (within the same union territory) On inter-state supplies (across states or union territories)
Rate Determination Determined by the Central Government Determined by the Respective State Government Determined by the Union Territory Administration IGST rate is a sum of CGST and SGST rates
Revenue Collection Collected by the Central Government Collected by the Respective State Government Collected by the Union Territory Administration Collected by the Central Government (on inter-state transactions)
Utilization of Revenue Shared between Central and State Governments Retained by the Respective State Government Retained by the Union Territory Administration Shared between Central and State Governments
Purpose Part of the dual GST structure, meant to cover central taxes Part of the dual GST structure, meant to cover state taxes Applicable in union territories for intra-territory supplies Applied to regulate and tax inter-state supplies
Input Tax Credit (ITC) ITC available for CGST paid on inputs and services ITC available for SGST paid on inputs and services ITC available for UTGST paid on inputs and services ITC available for both CGST and SGST paid on inputs
Tax Jurisdiction Applies within a particular state Applies within a particular state Applies within a particular union territory Applies to transactions across states and union territories
GSTN Portal for Filing Returns Central GSTN portal State-specific GSTN portals UTGSTN portal Integrated GSTN portal
 
 
6.What are the benefits of Goods and Services Tax (GST) in India?
 
The Goods and Services Tax (GST) in India was implemented with the aim of bringing about significant reforms in the indirect tax structure. Several benefits have been associated with the introduction of GST.
 
Here are some key advantages:
 
  • GST replaced multiple indirect taxes levied by the central and state governments, simplifying the tax structure. This streamlined system reduces the complexity of compliance for businesses
  • GST eliminates the cascading effect of taxes, where taxes are levied on top of other taxes. With a seamless credit mechanism, businesses can claim input tax credit on the taxes paid on their purchases, leading to a more transparent and efficient system
  • GST has facilitated the creation of a common national market by harmonizing tax rates and regulations across states. This has reduced trade barriers and promoted the free flow of goods and services throughout the country
  • The GST system has incorporated technology-driven processes, including electronic filing and real-time reporting, making it harder for businesses to evade taxes. This has contributed to increased tax compliance
  • The input tax credit mechanism under GST benefits manufacturers, as they can claim credits for taxes paid on raw materials and input services. This has a positive impact on the cost of production and enhances the competitiveness of Indian goods in the international market
  • GST brings transparency to the taxation system. The online filing of returns and the availability of transaction-level data make it easier for tax authorities to monitor and track transactions, reducing the scope for corruption
  • GST has replaced a complex system of filing multiple tax returns with a more straightforward mechanism. Businesses now need to file fewer returns, reducing the compliance burden
  • The implementation of GST has contributed to an improvement in the ease of doing business in India. The unified tax system has made it simpler for businesses to operate across states and has reduced the paperwork and bureaucratic hurdles associated with tax compliance
  • GST has led to the harmonization of tax rates across states and union territories, minimizing the tax rate disparities that existed earlier. This creates a more predictable tax environment for businesses
7.Goods and Services Tax (GST)-Issues and Challenge
 
  • Despite the intention to simplify the tax structure, the multi-tiered rate system (0%, 5%, 12%, 18%, and 28%) and the inclusion of cess on certain goods have introduced complexity. The classification of goods and services under different tax slabs can be challenging, leading to disputes and confusion
  • The successful implementation of GST relies heavily on technology. Issues such as technical glitches on the GSTN (Goods and Services Tax Network) portal, especially during the initial phases, have caused difficulties for businesses in filing returns and complying with regulations
  • The compliance requirements for businesses under GST, including multiple returns filing, have been perceived as burdensome. Smaller businesses, in particular, may find it challenging to adapt to the new system and comply with the various provisions
  • The transition from the previous tax regime to GST posed challenges, especially for businesses in terms of understanding the new tax structure, reconfiguring accounting systems, and ensuring a smooth transition of credits from the old tax system to the GST system
  • The classification of certain goods and services into specific tax slabs has been a source of contention. Ambiguities in classification have led to disputes and litigations, with businesses seeking clarity on the applicable tax rates
  • The implementation of GST has increased compliance costs for businesses due to the need for sophisticated IT infrastructure, the hiring of tax professionals, and efforts to ensure accurate reporting and filing
  • Challenges related to availing and matching input tax credits have been reported. Timely matching of credits and resolving discrepancies can be cumbersome, leading to concerns about the seamless flow of credit across the supply chain
  • The anti-profiteering provisions were introduced to ensure that businesses pass on the benefits of reduced tax rates to consumers. However, the implementation of anti-profiteering measures has been criticized for its complexity and potential for disputes
  • The periodic changes in the GST return filing system have created challenges for businesses in adapting their processes. Delays and complexities in return filing can affect working capital management
8.Goods and Services Tax Council (GST Council)
 
The Goods and Services Tax Council (GST Council) is a constitutional body in India that makes recommendations on the Goods and Services Tax (GST). It was established under the Constitution (122nd Amendment) Act, 2016, which introduced the GST in India

The GST Council consists of the following members:

  • The Union Finance Minister, who is the Chairperson of the Council.
  • The Union Minister of State in charge of revenue or any other Minister of State nominated by the Union Government.
  • One Minister from each state, nominated by the Governor of that state.
  • The Chief Secretary of each state, ex-officio.
  • If the President, on the recommendation of the Council, so directs, one representative of each Union territory which has a legislature, to be nominated by the Lieutenant Governor of that Union territory.
  • Three to seven members (other than Ministers) to be nominated by the Union Government, of whom at least one member shall be from the field of economics and another from the field of chartered accountancy, legal affairs or public finance
9. Way forward
 
It's important to note that the composition and structure of the GST Council may evolve over time, and there might have been changes since my last update in January 2022. To obtain the latest and most accurate information about the GST Council and its members, it is recommended to refer to official government sources or recent announcements by the relevant authorities

 

For Prelims: Economic and Social Development and Indian Polity and Governance
For Mains: General Studies II: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein

General Studies III: Inclusive growth and issues arising from it
 
 
Previous Year Questions
 
1.Which of the following are true of the Goods and Services Tax (GST) introduced in India in recent times? (UGC Paper II 2020)
A. It is a destination tax
B. It benefits producing states more
C. It benefits consuming states more
D. It is a progressive taxation
E. It is an umbrella tax to improve ease of doing business
Choose the most appropriate answer from the options given below:
A.B, D and E only
B.A, C and D only
C.A, D and E only
D.A, C and E only
Answer (D)
 
Source: Indianexpress
 

HIGH SEAS TREATY

1. Context

India has decided to sign and ratify the High Seas Treaty, a global agreement for conservation and protection of biodiversity in the oceans, that is often compared to the 2015 Paris Agreement in its reach and impact

2. What is High Seas Treaty?

  • Since 2017, an Inter-Governmental Conference established by the United Nations General Assembly has been negotiating an agreement under UNCLOS that would allow for more effective management and protection of the high seas.
  • This internationally legally binding instrument is often referred to as the Biodiversity in Areas Beyond National Jurisdiction Treaty, or "BBNJ treaty".
  • This treaty focuses on four main areas namely Conservation and sustainable use of marine biological diversity in ABNJ including marine genetic resources, Area-based management tools, including marine protected areas, Environmental-impact assessments, and Capacity building and the transfer of marine technology.
  • The draft agreement of the High Seas Treaty recognizes the need to address biodiversity loss and the degradation of ecosystems of the ocean. It places 30% of the world's oceans into protected areas, puts more money into marine conservation, and covers access to and use of marine genetic resources as per the United Nations.
  • An important negotiating point, and source of tension during the talks, was developing countries' access to benefits reaped from the commercialization of resources (especially genetic resources) extracted from the ocean. The treaty has agreed to set up an access and benefit-sharing committee to frame guidelines.

3. What are the High Seas?

  • Parts of the sea that are not included in the territorial waters or the internal waters of a country is known as the High seas, according to the 1958 Geneva Convention on the High Seas.
  • No country is responsible for the management and protection of resources on the high seas.
  • The high seas are some of the most biologically productive in the world teeming with plankton and home to ocean giants like predatory fish, whales, and sharks.
  • The seabed sequesters tremendous amounts of carbon and the ocean volume traps heat, slowing the effects of climate change on land and in the atmosphere dramatically.
  • High seas begin at the borders of the country's EEZ, which extends up to 370km from the coastlines.
  • However, up until today, just 1% of these high seas waters have been adequately safeguarded.

4. Significance of High Seas

  • The high seas account for more than 60% of the world’s ocean area and cover about half of the Earth’s surface, which makes them a hub of marine life.
  • They are home to around 2.7 lakh known species, many of which are yet to be discovered. The high seas are fundamental to human survival and well­being.
  • These oceans absorb heat from the atmosphere, are affected by phenomena like El Nino, and are also undergoing acidification all of which endanger marine flora and fauna.
  • Several thousand marine species are at risk of extinction by 2100 if current warming and acidification trends continue.
  • Anthropogenic pressures on the high seas include seabed mining, noise pollution, chemical spills, and fires, disposal of untreated waste (including antibiotics), overfishing, the introduction of invasive species, and coastal pollution.
  • Despite the alarming situation, the high seas remain one of the least ­protected areas, with only about 1% of them under protection.

5. About BBJN

  • The BBJN(Biodiversity of Areas Beyond National Jurisdiction) Treaty also known as the "Treaty of the High Seas", is an international agreement on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction, currently under negotiation at the United Nations.
  • This new instrument is being developed within the framework of the UNCLOS, the main international agreement governing human activities at sea.
  • It will achieve a more holistic management of high seas activities, which should better balance the conservation and sustainable use of marine resources.
  • BBJN encompasses the high seas, beyond the exclusive economic zones or national waters of countries.

Previous year Question

1. Concerning the United Nations Convention on the Law of Sea, consider the following statements: ( UPSC 2022)

  1. A coastal state has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from a baseline determined by the convention.
  2. Ships of all states, whether coastal or landlocked, enjoy the right of innocent passage through the territorial sea.
  3. The Exclusive Economic Zone shall not extend beyond 200 nautical miles from the baseline from which the breadth of the territorial sea is measured.

Which of the statements given above is correct?

A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer : D

For Prelims & Mains

For Prelims: UN high seas, UN high seas treaty, UNCLOS,  Biodiversity of Areas Beyond National Jurisdiction (BBJN), Exclusive Economic Zone, Territorial Waters.
For Mains: 1. Discuss the significance of the Treaty of High Seas and explain how to save our high seas from overfishing and pollution.
Source: The Hindu
 

MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE ACT (MGNREGA)

1. Context

Most economists agree that a lack of good-quality jobs, particularly for India’s burgeoning young population, is one of the urgent priorities to address. It is also generally perceived that in the recent elections, joblessness was a critical issue
 

2. About the National Level Monitoring (NLM) report

  • The National Level Monitoring (NLM) report is a study conducted by the Ministry of Rural Development (MoRD) to assess the implementation of various rural development programs in India.
  • The report is based on field visits and interviews with stakeholders at the grassroots level.
  • The NLM report is an important tool for the government to identify areas where improvement is needed and track rural development programs' progress.
  • The report also provides valuable insights into the challenges faced by rural communities and the impact of government interventions.

The NLM report typically identifies the following areas:

  • The coverage of rural development programs
  • The quality of implementation of rural development programs
  • The impact of rural development programs on the lives of rural people

The NLM report also provides recommendations to the government on improving the implementation of rural development programs and making them more effective.

 

3. The findings of the NLM report

  • In 2017-18, the NLM report found that the quality of construction of 87% of the verified works under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was satisfactory. However, the report also found that only 139 out of 301 districts had seven registers maintained satisfactorily.
  • In 2018-19, the NLM report found that the job cards, an important document that records entitlements received under MGNREGA, were not regularly updated in many districts. The report also found that there were significant delays in payments to workers.
  • In 2019-20, the NLM report found that the Pradhan Mantri Awaas Yojana - Gramin (PMAY-G) program was facing challenges due to a shortage of construction materials and skilled labour. The report also found that there were delays in the processing of applications and the release of funds.
  • The NLM report for 2020-21 found that the coverage of rural development programs had improved significantly in recent years. However, the report also found that there was still a need to improve the quality of implementation of these programs.
  • The NLM report for 2021-22 found that the impact of rural development programs on the lives of rural people had been positive overall. However, the report also found that there were still some disparities in the impact of these programs across different regions and social groups.
 

4. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a social welfare program that guarantees 100 days of unskilled manual wage employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work. The Act was enacted by the Government of India in 2005 and came into force on February 2, 2006.

4.1. Mandate and Goals

  • The mandate of MGNREGA is to provide employment and ensure food security for rural households.
  • The scheme also aims to strengthen natural resource management, create durable assets, improve rural infrastructure, and promote social equity.
  • The goals of MGNREGA are to Reduce rural poverty, Increase employment opportunities, Improve food security, Create durable assets, Improve rural infrastructure and Promote social equity. 

4.2. Core Objectives 

  •  The primary goal of MGNREGA is to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.
  • The program aims to reduce poverty and distress by offering employment opportunities, especially during seasons of agricultural unemployment.
  • MGNREGA encourages the creation of productive and durable assets such as water conservation structures, rural infrastructure, and land development. These assets not only improve rural livelihoods but also contribute to sustainable development.
  • The Act promotes gender equality by ensuring that at least one-third of the beneficiaries are women and that their participation in the workforce is actively encouraged.

4.3. Key Stakeholders 

  • Rural households are the primary beneficiaries and participants in the MGNREGA scheme.
  • Gram Panchayats play a pivotal role in implementing the program at the grassroots level. They are responsible for planning, execution, and monitoring of MGNREGA projects within their jurisdiction.
  • The central government provides the funds and sets the broad guidelines, while the state governments are responsible for the program's effective implementation.
  • The DPC is responsible for the overall coordination and monitoring of MGNREGA activities within a district.
  • Rural labourers, both skilled and unskilled, participate in MGNREGA projects and directly benefit from the program.

4.4. Role of Gram Sabha and Gram Panchayat

  • The Gram Sabha is the village assembly consisting of all registered voters in a village. Its role in MGNREGA includes discussing and approving the annual development plan, ensuring transparency in project selection, and conducting social audits to monitor program implementation.
  • The Gram Panchayat is responsible for planning, approving, executing, and monitoring MGNREGA projects within its jurisdiction. It also maintains records of employment provided, ensures timely wage payments, and conducts social audits. The Panchayat is accountable for the effective utilization of MGNREGA funds.

4.5. Issues with MGNREGA

  •  Delayed wage payments to labourers have been a persistent issue, affecting the livelihoods of beneficiaries.
  •  There have been cases of corruption and leakages in the implementation of MGNREGA projects, leading to suboptimal outcomes.
  • Administrative inefficiencies, complex procedures, and bureaucratic hurdles have hampered program delivery.
  • Some argue that the quality and effectiveness of assets created under MGNREGA projects have been variable and not always aligned with the intended goals.
  • Not all eligible rural households are provided 100 days of guaranteed employment, which can limit the program's impact.
  • Adequate budget allocation to meet the program's demands and inflation-adjusted wages remains a concern.

5. Conclusion

MGNREGA has made a positive impact on the lives of rural people, particularly in terms of employment opportunities and the creation of durable assets. It remains a crucial tool in India's efforts to promote rural development, reduce poverty, and achieve social equity. Addressing the identified issues will be critical in ensuring the continued success and effectiveness of the program in the years to come.

 

For Prelims: MGNREGA, National Level Monitoring (NLM) report, Ministry of Rural Development, rural development, Pradhan Mantri Awaas Yojana - Gramin (PMAY-G), 
For Mains: 
1. Evaluate the importance of the Mahatma Gandhi National Rural Employment Guarantee Act in the context of rural development and food security in India. How does MGNREGA contribute to sustainable development and rural infrastructure improvement? (250 Words)
 
 
 
Previous Year Questions
 
Prelims

1. Among the following who are eligible to benefit from the “Mahatma Gandhi National Rural Employment Guarantee Act”? (UPSC 2011)

(a) Adult members of only the scheduled caste and scheduled tribe households
(b) Adult members of below poverty line (BPL) households
(c) Adult members of households of all backward communities
(d) Adult members of any household

Answer: D

2. The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development Initiative with UNDP support covers which of the following? (UPSC 2012)

  1. Deprivation of education, health, assets and services at household level
  2. Purchasing power parity at national level
  3. Extent of budget deficit and GDP growth rate at national level

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

3. Which of the following grants/grant direct credit assistance to rural households? (UPSC 2013)

  1. Regional Rural Banks
  2. National Bank for Agriculture and Rural Development
  3. Land Development Banks

Select the correct answer using the codes given below:

(a) 1 and 2 only         (b) 2 only                     (c) 1 and 3 only                (d) 1, 2 and 3

Answer: C

4. How does the National Rural Livelihood Mission seek to improve livelihood options of rural poor? (UPSC 2012)

  1. By setting up a large number of new manufacturing industries and agribusiness centres in rural areas
  2. By strengthening ‘self-help groups’ and providing skill development
  3. By supplying seeds, fertilisers, diesel pump-sets and micro-irrigation equipment free of cost to farmers

Select the correct answer using the codes given below:

(a) 1 and 2 only          (b) 2 only                        (c) 1 and 3 only              (d) 1, 2 and 3

Answer: B 

5. Under the Pradhan Mantri Awaas Yojana-Gramin (PMAY-G), the ratio of the cost of unit assistance to be shared between the Central and State Governments is: (MP Patwari 2017)

A. 60:40 in plain areas and 90:10 for North Eastern and the Himalayan States
B. 70:30 in plain areas and 80:20 for North Eastern and the Himalayan States
C. 50:50 in plain areas and 70:30 for North Eastern and the Himalayan States
D. 75:25 in Plain areas and 85:15 for North Eastern and the Himalayan States
 
Answer: A
 
Mains
 
1. The basis of providing urban amenities in rural areas (PURA) is rooted in establishing connectivity. Comment (UPSC 2013)
 
Source: indianexpress
 

INDIA-RUSSIA

 
 
1. Context
 
 
In the inaugural bilateral visit of his third term and his first to Russia since it invaded Ukraine in February 2022, Prime Minister Narendra Modi landed in Moscow Monday with a clear message that New Delhi sought to “play a supportive role for a peaceful and stable region” and both sides were committed to deepening their “special and privileged strategic partnership” in “futuristic areas” of co-operation
 

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.

 

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)
 
 
 
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
(b) Russia
(c) The United Kingdom
(d) The United States of America

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

Mains

1. 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

 

HURRICANE

 
 
1. Context
Hurricane Beryl became the earliest storm on record during the Atlantic hurricane season to have reached the highest Category 5 classification.
 
2. What is a hurricane?
  • A hurricane is a powerful tropical cyclone characterized by a low-pressure center, thunderstorms, and strong winds that rotate around the center (also known as the eye)
  • Hurricanes form over warm ocean waters near the equator. The warm, moist air rises, causing an area of low pressure beneath it. As this air rises and cools, it condenses into clouds and storms. The Earth's rotation causes the storm system to spin, and if the conditions are right, it can develop into a hurricane
  • Hurricanes, or tropical storms, form over warm ocean waters near the equator. When the warm, moist air from the ocean surface rises upward, a lower air pressure area is formed below. Air from surrounding areas with higher air pressure rushes into this low pressure area, eventually rising, after it also becomes warm and moist
  • As warm, moist air rises, it cools down, and the water in the air forms clouds and thunderstorms. This whole system of clouds and winds gains strength and momentum using the ocean’s heat, and the water that evaporates from its surface. Storm systems with wind speeds of 119 kmph and above are classified as hurricanes

Structure:

  • Eye: The calm center of the hurricane with clear skies and light winds.
  • Eye Wall: Surrounding the eye, it contains the most intense winds and heaviest rains.
  • Rain Bands: Bands of heavy rain that spiral outward from the eye wall.

Classification: Hurricanes are classified by their wind speeds using the Saffir-Simpson Hurricane Wind Scale:

  • Category 1: 74-95 mph (119-153 km/h)
  • Category 2: 96-110 mph (154-177 km/h)
  • Category 3: 111-129 mph (178-208 km/h)
  • Category 4: 130-156 mph (209-251 km/h)
  • Category 5: 157 mph or higher (252 km/h or higher)
 
3. What is the difference between hurricanes and typhoons?
 

Hurricanes and typhoons are essentially the same weather phenomenon - intense tropical cyclones. The main difference is the location where they occur:

  1. Hurricanes form in the Atlantic Ocean and the northeastern Pacific Ocean.
  2. Typhoons develop in the northwestern Pacific Ocean.

Both are characterized by strong winds, heavy rainfall, and potential storm surges. The same type of storm in the Indian Ocean and South Pacific is called a cyclone

 

Subject Hurricanes Typhoons
Definition Intense tropical cyclones Intense tropical cyclones
Location Atlantic Ocean and northeastern Pacific Ocean Northwestern Pacific Ocean
Wind Speed Strong winds Strong winds
Rainfall Heavy Heavy
 
4.What causes the Hurricane?
 

Hurricanes are caused by a interplay of atmospheric and oceanic conditions. Here are the key factors that lead to hurricane formation:

    • Warm ocean water: Temperatures of at least 26.5°C (80°F) to a depth of about 50 meters.
    • Moist air: High humidity in the lower and middle levels of the troposphere.
    • Unstable atmosphere: Allowing for rising air to continue to rise.
    • Distance from the equator: At least 300 miles north or south, for the Coriolis effect to influence rotation.
    • Pre-existing weather disturbance: Such as a tropical wave or low-pressure system.
    • Low wind shear: Minimal change in wind speed or direction with height.
    • Upper-level high pressure: To help with the outflow at the top of the storm.
 
5. How does climate change impact extreme weather events?

Climate change has a significant impact on extreme weather events. Here's an overview of the key effects:

    • Increased frequency and intensity:
      • More frequent heatwaves
      • Stronger hurricanes and tropical storms
      • More intense rainfall events
    • Changes in patterns:
      • Shifting precipitation patterns
      • Longer dry spells in some regions
      • Extended wildfire seasons
    • Sea level rise:
      • Increased coastal flooding
      • More damaging storm surges
    • Temperature extremes:
      • Higher maximum temperatures
      • More frequent record-breaking heat events
    • Ecosystem disruption:
      • Changes in animal migration patterns
      • Shifts in plant blooming seasons
    • Melting ice and snow:
      • Reduced snow cover
      • Faster glacier melting
      • Thawing permafrost
    • Ocean impacts:
      • Ocean acidification
      • Coral bleaching events
    • Economic and social consequences:
      • Increased damage to infrastructure
      • Agricultural disruptions
      • Potential for climate-related migration
6. Way Forward
Scientists are still debating over how exactly climate change impacts hurricanes. There is agreement, however, that at the very least, climate change makes hurricanes more prone to rapid intensification — where maximum wind speeds increase very quickly
 
 
 
For Prelims: General issues on Environmental Ecology, Biodiversity and Climate Change- that do not require subject specialisation
For Mains: GS-I, GS-III: Geography, Conservation, environmental pollution and degradation, environmental impact assessment
 
Source: Indianexpress
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