FISCAL CONSOLIDATION
1. Context
The role of the 16th Finance Commission should be to eliminate vertical fiscal imbalance in federal relations. What should it do when revenues are concentrated with the Union government, and the States are burdened with expenditure responsibilities?
2. About fiscal deficit
- A fiscal deficit signifies the disparity between a government's revenue and its expenditure. When a government's spending surpasses its income, it is compelled to resort to borrowing or selling assets to cover the deficit. Taxes constitute the primary revenue source for any government.
- In the fiscal year 2024-25, the government anticipates tax receipts amounting to ₹26.02 lakh crore, contributing to a total projected revenue of ₹30.8 lakh crore. In contrast, the Union government's expected expenditure is estimated at ₹47.66 lakh crore.
- A fiscal surplus occurs when a government's revenue exceeds its expenditure. However, such surpluses are uncommon in contemporary governance. Most governments prioritize maintaining control over the fiscal deficit rather than aiming for a surplus or budgetary balance.
- It is crucial to differentiate between fiscal deficit and national debt. The national debt represents the cumulative amount owed by a government to its lenders at a specific point in time. This debt accrues over years of running fiscal deficits and resorting to borrowing to bridge the financial gaps.
- Fiscal deficit is typically expressed as a percentage of a country's Gross Domestic Product (GDP). This representation aims to gauge the government's ability to repay its lenders. A higher fiscal deficit, relative to GDP, suggests a potentially challenging scenario for lenders to be repaid. Larger economies may sustain higher fiscal deficits in absolute monetary terms.
3. Funding the Fiscal Deficit
- To bridge its fiscal deficit, the government primarily turns to the bond market, where lenders compete to finance the deficit by purchasing government-issued bonds. In the fiscal year 2024-25, the Centre anticipates borrowing a gross sum of ₹14.13 lakh crore from the market, a figure slightly below the earlier projection. The government aims to fund its expenditures through increased Goods and Services Tax (GST) collections in the same period, contrary to economists' expectations of a higher borrowing target.
- Central banks, such as the Reserve Bank of India (RBI), play a significant role in the credit market. While not always directly purchasing government bonds, central banks may acquire them in the secondary market from private lenders who initially bought the bonds. Through 'open market operations,' the RBI creates fresh money, potentially impacting the money supply and contributing to rising prices in the broader economy over time.
- Government bonds are generally considered risk-free, as the government has the ability, in extreme scenarios, to seek assistance from the central bank. This support enables the government to create fresh currency for repaying lenders. Consequently, governments usually find it relatively easy to borrow from the market. However, the challenge lies in the interest rate at which the money is borrowed. Worsening government finances can lead to decreased demand for government bonds, prompting the government to offer higher interest rates to lenders, resulting in elevated borrowing costs.
- Monetary policy plays a pivotal role in determining government borrowing costs. Sharp rises in central bank lending rates, observed post-pandemic, increase the expense for governments to borrow money. This aspect contributes to the government's motivation to curb its fiscal deficit.
4. Significance of Fiscal Deficit
- The fiscal deficit holds significant importance for various reasons, one being its direct correlation with inflation. A persistently high fiscal deficit can lead to increased inflation, as the government resorts to using freshly issued money by the central bank to cover the deficit. Notably, the fiscal deficit peaked at 9.17% of GDP during the pandemic but has since shown improvement, projected to decline to 5.8% currently.
- The level of the fiscal deficit communicates the government's commitment to fiscal discipline to the market. A lower fiscal deficit can enhance the ratings assigned to the government's bonds, signaling prudent financial management. When the government relies more on tax revenues and borrows less, it instills confidence in lenders, thereby reducing the government's borrowing costs.
- A high fiscal deficit can impede the government's ability to manage its overall public debt effectively. Concerns have been raised, with the International Monetary Fund (IMF) cautioning that India's public debt might surpass 100% of GDP in the medium term, despite differing opinions from the Centre. Managing public debt becomes crucial, especially as the government expresses interest in tapping into the international bond market. A lower fiscal deficit can facilitate the government's bond sales overseas, providing access to more affordable credit.
5. Fiscal Challenges in 2024-25
- The Centre outlines ambitious plans to reduce its fiscal deficit to 5.1% of GDP in the fiscal year 2024-25, despite intentions to boost capital expenditure and allocate funds for various programs. Achieving this goal hinges largely on augmenting revenue through increased tax collections. The government anticipates an 11.5% growth in tax collections for the mentioned period.
- To align with fiscal targets, the Centre envisions trimming expenditure in specific areas. A notable adjustment includes a reduction in the fertilizer subsidy, from ₹1.88 lakh crore in 2023-24 to ₹1.64 lakh crore in 2024-25. Similarly, the projected expenditure on food subsidy is slated to decrease from ₹2.12 lakh crore to ₹2.05 lakh crore during the same period.
- While the government aims to balance the budget primarily through elevating tax rates to bolster collections, this approach raises concerns about potential repercussions on economic growth. Heightened taxes can act as a dampener on economic activity. Striking a delicate equilibrium between fiscal discipline and sustaining economic momentum becomes imperative.
- The feasibility of meeting the ambitious fiscal deficit target remains uncertain. Projections are susceptible to inaccuracies, and the government's ability to achieve its fiscal goals may face challenges. Relying solely on raising tax rates poses risks to economic growth, emphasizing the need for a comprehensive and dynamic approach to fiscal management.
6. The Way Forward
India's fiscal consolidation journey in 2024-25 will require careful planning, flexibility, and a commitment to long-term economic well-being. By adopting a balanced and forward-thinking approach, the government can navigate this crucial year and lay the foundation for a sustainable fiscal future.
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For Prelims: Fiscal Consolidation, RBI, International Monetary Fund (IMF), GDP, Monetary Policy
For Mains:
1. Critically evaluate the effectiveness of the Fiscal Responsibility and Budget Management (FRBM) Act in achieving its objectives in the context of India's current fiscal situation. Suggest any necessary modifications or reforms to make the Act more efficient. (250 Words)
2. What are the implications of rising public debt on India's economic stability and long-term growth prospects? Analyze the risks associated with high debt levels and suggest strategies for effective debt management. (250 Words)
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Previous Year Questions
1. With reference to the Indian economy, consider the following statements: (UPSC 2022)
1. An increase in the Nominal Effective Exchange Rate (NEER) indicates the appreciation of the rupee.
2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.
3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.
Which of the above statements are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
2. With reference to Indian economy, consider the following statements: (UPSC 2015) 1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.
Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
3. Consider the following statements: (UPSC 2018)
1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments.
2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
3. As per the Constitution of India, it is mandatory for a State to take the Central Government's consent for raising any loan if the former owes any outstanding liabilities to the latter.
Which of the statements given above is/are correct?
A. 1 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
4. Recently, which one of the following currencies has been proposed to be added to the basket of IMF’s SDR? (UPSC 2016)
A. Rouble
B. Rand
C. Indian Rupee
D. Renminbi
5. Rapid Financing Instruments" and "Rapid Credit Facility" are related to the provisions of lending by which one of the following? (UPSC 2022)
A. Asian Development Bank
B. International Monetary Fund
C. United Nations Environment Programme
D. Finance Initiative World Bank
6. With reference to Indian economy, consider the following statements: (UPSC CSE, 2015)
1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade. 2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 7. A decrease in tax to GDP ratio of a country indicates which of the following? (UPSC CSE, 2015) 1. Slowing economic growth rate 2. Less equitable distribution of national income Select the correct answer using the code given below: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answers: 1-C, 2-B, 3-C, 4-D, 5-B, 6-B, 7-A
Mains
1. Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP? (UPSC 2020) 2. Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015. (UPSC 2021) |
Source: The Hindu
EU'S ARTIFICIAL INTELLIGENCE ACT
1. Context
The United States, the European Union, and the United Kingdom (UK) are expected to sign the Council of Europe’s convention on artificial intelligence (AI), the first “legally binding” international treaty on the use of the revolutionary new technology
2. What is the EU AI Act?
- The AI Act is a proposed European law on artificial intelligence (AI) – the first law on AI by a major regulator anywhere.
- The law assigns applications of AI to three risk categories. First, applications and systems that create an unacceptable risk, such as government-run social scoring of the type used in China, are banned. Second, high-risk applications, such as a CV-scanning tool that ranks job applicants, are subject to specific legal requirements.
- Lastly, applications not explicitly banned or listed as high-risk are largely left unregulated
3. Why should we regulate Artificial Intelligence?
- As artificial intelligence technologies become omnipresent and their algorithms more advanced capable of performing a wide variety of tasks including voice assistance, recommending music, driving cars, detecting cancer, and even deciding whether you get shortlisted for a job the risks and uncertainties associated with them have also ballooned.
- Many AI tools are essentially black boxes, meaning even those who designed them cannot explain what goes on inside them to generate a particular output.
- Complex and unexplainable AI tools have already manifested in wrongful arrests due to AI-enabled facial recognition; discrimination and societal biases seeping into AI outputs; and most recently, in how chatbots based on large language models (LLMs) like Generative Pretrained Transformer3 (GPT3) and 4 can generate versatile, human competitive and genuine looking content, which may be inaccurate or copyrighted material.
4. How was the AI Act formed?
- The legislation was drafted in 2021 to bring transparency, trust, and accountability to AI and create a framework to mitigate risks to the safety, health, fundamental rights, and democratic values of the EU.
- It also aims to address ethical questions and implementation challenges in various sectors ranging from healthcare and education to finance and energy.
- The legislation seeks to strike a balance between promoting “the uptake of AI while mitigating or preventing harms associated with certain uses of the technology”.
- Similar to how the EU’s 2018 General Data Protection Regulation (GDPR) made it an industry leader in the global data protection regime, the AI law aims to “strengthen Europe’s position as a global hub of excellence in AI from the lab to the market” and ensure that AI in Europe respects the 27country bloc’s values and rules.
5. What does the draft document entail?
- The draft of the AI Act broadly defines AI as “software that is developed with one or more of the techniques that can, for a given set of human defined objectives, generate outputs such as content, predictions, recommendations, or decisions influencing the environments they interact with”.
- It identifies AI tools based on machine learning, deep learning, and knowledge as well as logicbased and statistical approaches.
- The Act’s central approach is the classification of AI tech based on the level of risk they pose to the “health and safety or fundamental rights” of a person.
- There are four risk categories in the Act unacceptable, high, limited, and minimal.
- The Act prohibits using technologies in the unacceptable risk category with little exception.
- These include the use of realtime facial and biometric identification systems in public spaces; systems of social scoring of citizens by governments leading to “unjustified and disproportionate detrimental treatment”; subliminal techniques to distort a person’s behavior; and technologies that can exploit vulnerabilities of the young or elderly, or persons with disabilities.
- The Act lays substantial focus on AI in the highrisk category, prescribing several preand postmarket requirements for developers and users of such systems.
- Some systems that fall under this category include biometric identification and categorization of natural persons.
- AI is used in healthcare, education, employment (recruitment), law enforcement, justice delivery systems, and tools that provide access to essential private and public services (including access to financial services such as loan approval systems).
- The Act envisages establishing a EU wide database of highrisk AI systems and setting parameters so that future technologies or those under development can be included if they meet the high risk criteria.
6. What is the recent proposal on general-purpose AI like ChatGPT?
- As recently as February this year, general-purpose AI such as the language model based ChatGPT, used for a plethora of tasks from summarising concepts on the internet to serving up poems, news reports, and even a Colombian court judgment did not feature in the EU lawmakers’ Plans for regulating AI technologies.
- The bloc’s 108page proposal for the AI Act published two years earlier, included only one mention of the word “chatbot.”
- By midApril, however, members of the European Parliament were racing to update those rules to catch up with an explosion of interest in generative AI, which has provoked awe and anxiety since OpenAI unveiled ChatGPT six months ago.
- Lawmakers now target the use of copyrighted material by companies deploying generative AI tools such as OpenAI’s ChatGPT or image generator Midjourney, as these tools train themselves from large sets of text and visual data on the internet.
- They will have to disclose any copyrighted material used to develop their systems.
7. AI Governance in the USA and China
- The rapidly evolving pace of AI development has led to diverging global views on how to regulate these technologies.
- The U.S. currently does not have comprehensive AI regulation and has taken a fairly handsoff approach.
- The Biden administration released a blueprint for an AI Bill of Rights (AIBoR).
- Developed by the White House Office of Science and Technology Policy (OSTP), the AIBoR outlines the harms of AI to economic and civil rights and lays down five principles for mitigating these harms.
- The blueprint, instead of a horizontal approach like the EU endorses a sector specific approach to AI governance, with policy interventions for individual sectors such as health, labor, and education, leaving it to sectoral federal agencies to come out with their plans.
- On the other end of the spectrum, China over the last year came out with some of the world’s first nationally binding regulations targeting specific types of algorithms and AI.
- It enacted a law to regulate recommendation algorithms with a focus on how they disseminate information.
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For Prelims: Artificial Intelligence, Chat GPT, European law on artificial intelligence (AI), large language models (LLMs) like Generative Pretrained Transformer3 (GPT3) and 4 , EU’s 2018 General Data Protection Regulation (GDPR), AI Bill of Rights (AIBoR), and Office of Science and Technology Policy (OSTP).
For Mains: 1. What is the EU AI Act? Discuss Why should we regulate Artificial Intelligence?
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Previous year Question1. With the present state of development, Artificial Intelligence can effectively do which of the following? ( UPSC 2020)1. Bring down electricity consumption in industrial units
2. Create meaningful short stories and songs
3. Disease diagnosis
4. Text-to-Speech Conversion
5. Wireless transmission of electrical energy
Select the correct answer using the code given below:
A. 1, 2, 3, and 5 only
B. 1, 3, and 4 only
C. 2, 4, and 5 only
D. 1, 2, 3, 4 and 5
Answer: B
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Source: The Hindu
LAW COMMISSION
1. Context
The Union government has notified the constitution of the 23rd Law Commission of India with effect from September 1. The commission, which was notified on September 2, will have a three-year term. The tenure of the previous Law Commission chaired by former Karnataka High Court Chief Justice Ritu Raj Awasthi ended on August 31.
2. Law Commission and it's importance
- The Law Commission is an advisory body that is not established by any parliamentary law but is constituted by the Union Ministry of Law and Justice through a gazette notification. Its role is to assist the government in reviewing the functioning of laws, suggest the repeal of outdated legislation, and offer recommendations on issues referred to it by the government.
- The commission is typically led by a retired Supreme Court or High Court judge, with legal scholars serving as members. Current judges may also be appointed, as stated in the notification for the new panel.
- Since Independence, 22 Law Commissions have been appointed, submitting a total of 289 reports to the government. While the government is not required to implement the recommendations, many have led to significant laws, such as the Criminal Procedure Code, 1973, and the Right of Children to Free and Compulsory Education Act, 2009.
- Following recommendations from the 20th Law Commission, the government initiated the process of repealing over 1,500 outdated central laws
3. 23rd Law Commission
- The notification issued by the Law Ministry’s Legal Affairs Department on September 2 states that the panel will include a full-time chairperson, four full-time members (including a member-secretary), up to five part-time members, and the secretaries of the Legal Affairs and Legislative departments as ex officio members.
- The commission’s tenure will last until August 31, 2027. The chairperson and full-time members can be serving judges from the Supreme Court or High Courts, or other experts chosen by the government.
- This was also mentioned in the notifications for the 2020 (22nd) and 2015 (21st) commissions, which were chaired by Justice Awasthi and former Supreme Court judge Justice B S Chauhan, respectively.
- The chairperson and members of the 23rd Law Commission have yet to be appointed, with the Appointments Committee of the Cabinet, led by the Prime Minister, making the final decision. The 22nd Law Commission members were appointed in November 2022, marking the start of their work.
- If a serving judge is appointed, they serve either until retirement or the end of the commission’s term, whichever is earlier, and receive no extra pay beyond their judicial salary. In the case of "other" appointees, the chairperson receives a monthly salary of Rs. 2.50 lakh, while a member earns Rs. 2.25 lakh. The member-secretary must be an officer of the Indian Legal Service at the Secretary level
4. Terms to form a Panel
- The terms of reference for the 23rd Law Commission are largely similar to those of recent commissions. The first three key tasks include: identifying outdated or unnecessary laws that can be repealed; developing a Standard Operating Procedure (SoP) for regularly reviewing existing laws, including simplifying their language and processes; and identifying laws that are out of sync with current economic needs and require amendments.
- Like the 22nd and 21st commissions, the 23rd Law Commission is also tasked with reviewing laws in light of the Directive Principles of State Policy, proposing reforms and suggesting new legislation to implement these principles and achieve the goals outlined in the Constitution's Preamble.
- The Prime Minister's recent call for a "secular civil code" aligns with the Directive Principle that urges the state to work towards a uniform civil code across India. The 22nd Law Commission also examined this issue, but its findings are not publicly known, as its chairperson took office as a Lokpal member in March before the report could be submitted.
- Additionally, the 23rd Law Commission is charged with reviewing laws impacting the poor, conducting post-enactment audits of socio-economic legislation, and improving judicial administration to better address contemporary needs
5.Way Forward
The 22nd Law Commission submitted 11 reports, one of which, in April 2023, recommended retaining Section 124A of the Indian Penal Code, the controversial sedition law. The commission justified its stance by pointing to internal security threats from groups such as Maoists, militants in the Northeast, terrorists in Jammu & Kashmir, and supporters of the Khalistan movement. However, it also suggested specific amendments to the law to "bring about greater clarity" in its application
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For Prelims: Law Commission, Finance Commission
For Mains: GS II - Indian Polity & Governance
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Source: Indianexpress
LOSS AND DAMAGE FUND (LDF)
1. Context
In the wake of the devastating landslides that recently struck Kerala’s Wayanad district, a crucial conversation has emerged around whether subnational entities can seek compensation through the United Nations Framework Convention on Climate Change (UNFCCC)’s Loss and Damage Fund (LDF). While this demand is justifiable, accessing climate funds is far more complex than it appears
2. What is the Loss and Damage Fund?
The Loss and Damage Fund (LDF) was created during the 2022 UNFCCC Conference (COP27) in Egypt to offer financial assistance to areas affected by both economic and non-economic impacts of climate change, including extreme weather and gradual processes like sea-level rise. Managed by a Governing Board, the fund’s distribution of resources is currently supported by the World Bank as an interim trustee. The Board is in the process of establishing systems to facilitate access to the Fund’s resources, such as direct access, small grants, and quick disbursement options. However, concerns remain that, like other climate funds, the LDF may struggle with delays in delivering timely assistance, especially to local communities below the national level
3. India's role in Loss and Damage Fund
- India experienced over $56 billion in damages due to weather-related disasters between 2019 and 2023. However, its National Climate Action Policy and budgets have emphasized mitigation over adaptation efforts.
- This focus has resulted in India's limited involvement in Loss and Damage discussions at COP meetings. Given the high vulnerability of certain regions in India to climate change, more active participation in these discussions could yield significant advantages.
- Domestically, there is an urgent need for a comprehensive legal and policy framework to effectively manage climate finance, particularly in the areas of adaptation and loss and damage, aligning with locally led adaptation principles vital for at-risk communities.
- The inclusion of a climate finance taxonomy in the Union Budget 2024 has raised hopes for increased international climate finance. However, without clear protocols for accessing loss and damage funds, frontline communities remain at risk.
- In international climate negotiations, India should push for more decentralised approaches to disbursing funds from the Loss and Damage Fund, rather than relying on the centralised methods used by other climate funds
4. State Interventions
- Adaptation and loss and damage challenges are most directly experienced by State governments. For example, in Kerala, the State government bore the majority of the financial burden for disaster recovery.
- A significant case is the Rebuild Kerala Development Programme, launched after the August 2018 floods, which was supported by loans from the World Bank and Germany’s KfW Development Bank.
- This highlights the importance of international climate finance in post-disaster recovery efforts. The program concentrated on rebuilding critical infrastructure like roads and bridges that were heavily damaged by the floods.
- However, the lack of a standardized system for conducting thorough assessments of disaster-related damages, especially from slow-onset events, means that important loss and damage needs might remain unrecognized, potentially limiting India’s access to the Loss and Damage Fund (LDF).
- The situation in Wayanad district exemplifies the broader difficulties India faces in accessing and managing climate finance, particularly for loss and damage. Developing a more defined domestic policy that emphasizes locally led adaptation and establishes clear guidelines for accessing loss and damage funds could significantly enhance India's ability to mitigate the effects of climate change
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For Prelims: Loss and Damage Fund (LDF), COP 27
For Mains: GS III - Environment & Ecology
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Previous Year Questions
1.Explain the purpose of the Green Grid Initiative launched at World Leaders Summit of the COP26 UN Climate Change Conference in Glasgow in November, 2021. When was this idea first floated in the International Solar Alliance (ISA)? (2021) 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? (2021) |
Source: The Hindu
GLOBAL SOUTH
1. Context
Prime Minister Narendra Modi, at the inauguration of the Third Voice of Global South Summit (VoGSS), attempted to rebalance the terms of South-South engagement with a new conceptual framework that he described as a “Development Compact”
2. The need for the ‘Global North’ and the ‘Global South
- For a long time in the study of international political systems, the method of categorising countries into broad categories for easier analysis has existed.
- The concepts of ‘East’ and ‘West’ is one example of this, with the Western countries generally signifying greater levels of economic development and prosperity among their people and Eastern countries are considered as being in the process of that transition.
- Another similar categorisation is of First World, Second World and Third World countries, referring to countries associated with the Cold war-era alliances of the US, the USSR, and non-aligned countries, respectively.
- At the centre of these concepts is the World Systems approach introduced by sociologist Immanuel Wallerstein in 1974, emphasising an interconnected perspective of looking at world politics.
- He said there are three major zones of production: core, peripheral and semiperipheral.
- The core zones reap profits, being the owners of cutting-edge technologies in countries like the US or Japan.
- Peripheral zones, on the other hand, engage in less sophisticated production that is more labour-intensive. In the middle are countries like India and Brazil.
3. The need for new terms
- In the Post-Cold War world, the First World/Third World classification was no longer feasible, because when the Communist USSR disintegrated in 1991, most countries had no choice but to ally at some level with the capitalist US the only remaining global superpower.
- Other classifiers have also seen criticism. The East/West binary was seen as often
perpetuating stereotypical thinking about African and Asian countries. - Categorising incredibly diverse countries into a monolith was felt to be too simplistic.
Also, the idea that some countries were ‘developed’ while others were not was thought to be too wide a classification, inadequate for accurately discussing concerns.
| Writing in 2014 from the perspective of his organisation’s philanthropic activities, Bill Gates said of the ‘developing’ tag, “Any category that lumps China and the Democratic Republic of Congo together confuses more than it clarifies. Some so-called developing countries have come so far that it’s fair to say they have developed. A handful of failed states are hardly developing at all. Most countries are somewhere in the middle.” |
4. Importance of Global South
- What sets the terms Global North and South apart are that first, they are arguably more accurate in grouping like countries together, measuring similarly in terms of wealth, indicators of education and healthcare, etc.
- Another commonality between the South countries is that most have a history of colonisation, largely at the hands of European powers.
- Secondly, this classification trains more focus on the Global South. When leaders such as Jaishankar mentioned, they are also pointing to the region’s historical exclusion from prominent international organisations such as the permanent members of the United Nations Security Council.
- As bodies like the UN and the IMF are involved in major decision-making that affects the world in terms of politics, economy and society, the exclusion is seen by these countries as contributing to their slower growth.
- As a result, the idea that the South can together advocate for common causes has
come up, as underlined by the External Affairs Minister.
| Interestingly, when Jaishankar criticised the expectation of India to take a stance on the Ukraine war and rebuke Russia in June this year, China’s state-owned newspaper Global Times praised the comments. This is where the idea of ‘SouthSouth’ cooperation comes in. |
- Why the concept is being reiterated now partly because of the economic emergence of some of these South countries, such as India and China, in the last few decades.
- Many consider the world to now be multipolar rather than one where the US alone dominates international affairs.
- The progress achieved by many Asian countries is also seen as challenging the idea that the North is ideal.
- As Samuel P Huntington wrote in his 1996 book ‘The Class of Civilizations and the Remaking of Global Order, “East Asians attribute their dramatic economic development not to their import of Western culture but rather to their adherence to their own culture.”
5. Criticism of the classification
- Some of the earlier terms’ criticisms apply here, too, such as the argument that the term is too broad.
- In the ongoing debate about North countries paying for funding green energy, having historically contributed to higher carbon emissions, many in the Global North have objected to China and India’s exclusion from this, given their increasing industrialisation.
- There is also the question of whether the South simply aims to replace the North and the positions it occupies, again continuing a cycle in which a few countries accumulate crucial resources.
- Much controversy currently surrounds the question of whether elites of the global South and ‘rising powers’ genuinely have the intention to challenge the dominant structures of global capitalist development.
- In the rise of Asia, the continued neglect of Africa has been questioned as well.
- China is increasingly making inroads here through the Belt and Road Initiative for developing infrastructure.
- But whether that results in a win-win situation for both parties or focuses on profit for only China remains to be seen.
For Prelims & Mains
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For Prelims: G20, Global South, Global North, Cold war, Post-Cold War, UNSC, UN, IMF, Russia and Ukraine War, SouthSouth Cooperation
For Mains:
1. What is Global South? Discuss the significance and impact of Global South in India. (250 Words)
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Previous Year Questions
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For Prelims
1. In which one of the following groups are all the four countries members of G20? (UPSC 2020) (a) Argentina, Mexico, South Africa and Turkey 1. Ans: (a) For Mains
1. “The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization. But the Doha round of negotiations seem doomed due to differences between the developed and the developing countries.” Discuss in the Indian perspective. ( UPSC 2016)
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Source: The Indian Express
