WORLD PRESS FREEDOM INDEX
1. Context
India's ranking in the recently released World Press Freedom Index -161 out of 180, is alarming, especially considering its status as the world's largest democracy. While there was a slight improvement in rank, it's not due to progress but rather due to declines in press freedom in other countries
2. What is the World Press Freedom Index?
- The World Press Freedom Index is an annual report published by Reporters Without Borders (RSF) that evaluates the level of press freedom in countries around the world.
- The report measures the level of freedom that journalists, media outlets, and netizens have in each country to gather and disseminate news and information, without fear of censorship, retaliation, or violence.
- The World Press Freedom Index ranks 180 countries based on a variety of factors, including media independence, pluralism, legal framework, transparency, and the safety of journalists.
- The report aims to raise awareness about the importance of press freedom and hold governments accountable for violations of this fundamental right.
- The World Press Freedom Index has been published annually since 2002 and has become an important tool for researchers, journalists, and policymakers to monitor the state of press freedom around the world.
3. What is the ranking of India in the World Press Freedom Index?
- According to the latest Reporters Without Borders (RSF) report, India's ranking in the World Press Freedom Index has dropped to 161 out of 180 countries, down from its previous rank of 150 in 2022.
- This suggests that Press freedom in India has faced significant challenges and restrictions, as journalists and media outlets are increasingly facing censorship, legal harassment, and violence.
- In contrast, Pakistan has improved its ranking, moving up to 150 from last year's 157th rank, indicating a relatively better situation for media freedom in the country.
- Similarly, Sri Lanka has made significant progress, moving up to 135th position this year from 146th in 2022.
- It is worth noting that Norway, Ireland, and Denmark hold the top three positions in the press freedom ranking, indicating a favorable environment for press freedom in these countries.
- In contrast, Vietnam, China, and North Korea occupy the bottom three positions, reflecting severe restrictions on media freedom and human rights abuses in these countries.
4. India's Performance
- India's position has been consistently falling in the index since 2016 when it was ranked 133.
- The reasons behind the fall in the ranking are the increased violence against journalists and a politically partisan media.
- The other Phenomenon that dangerously restricts the free flow of information is the acquisition of media outlets by oligarchs who maintain close ties with political leaders.
- The organization asserts that many journalists in India are forced to censor themselves due to extreme pressure.
5. What is Reporters without Borders?
- Reporters Without Borders or Reporters Sans Frontiers (in French) is a global media watchdog headquartered in Paris, France, and it publishes a yearly report on press freedom in countries across the world.
- Founded in 1985 and RSF is at the forefront of the defence and promotion of freedom of information.
- Recognized as a public interest organization in France since 1995, RSF has consultative status with the United Nations, UNESCO, the Council of Europe, and the International Organization of Francophonie (OIF).
6. How does it measure Press Freedom?
- Press freedom is defined as the ability of journalists as individuals and collectives to select, produce, and disseminate news in the public interest independent of political, economic, legal, and social interference and in the absence of threats to their physical and mental safety.
- The index then compares levels of press freedom globally based on this definition.
It develops a score between 0 (for the worst possible performance in terms of securing press freedom) and 100 (the best possible score). - This year, Norway scored 95.18 at the first position, North Korea at 21.72 and India scored 36.62. A score below 70 falls under the ‘problematic’ category.
- A tally of abuses against media and journalists in connection with their work, arrived at by monitoring and analyzing news stories on journalists being imprisoned or killed.
- A qualitative analysis of the situation in each country or territory based on the responses of “press freedom specialists”, including journalists, researchers, academics, and human rights defenders, to an RSF questionnaire available in 24 languages. These include Arabic, Chinese, English, Hindi, Spanish, etc.
7. What does the 2023 report say about press freedom globally?
- The index states in 2023 that "the environment for journalism is bad in seven out of ten countries, and satisfactory in only three out of ten.
- It also highlighted concerns of propaganda fake news, further heightened given the rise of artificial intelligence technology.
- Programs like Midourney, which can create life-like images based on a simple text prompt, were mentioned in this context.
- North Korea (180th), China (179th), Vietnam (178th), Myanmar (173rd)- Asia's one-party regimes and dictatorships are the ones that constrict journalism the most, with leaders tightening their totalitarian stranglehold on the public discourse, it states, terming China as the world's biggest jailer of journalists and press freedom advocates.
8. Constitutional Provisions
- The Supreme Court in Romesh Thappar vs. the state of Madras, 1950 observed that freedom of the press lay at the foundation of all democratic organizations.
- It is guaranteed under the freedom of speech and expression under Article 19, which deals with the 'Protection of certain rights regarding freedom of speech, etc.
- Freedom of the press is not expressly protected by the Indian legal system but it is impliedly protected under Article 19(1) (a) of the constitution.
- The freedom of the press is also not absolute.
| For Prelims: World Press Freedom Index, Reporters without Borders, United Nations, UNESCO, the Council of Europe, and the International Organization of Francophonie (OIF), Article 19 (1) (a), and freedom of speech and expression. |
Source: The Indian Express
JYOTI RAO PHULE
1. Context
Jyotiba Phule was born on April 11, 1827, in the Mali caste, a community traditionally occupied with gardening and floristry
2. Childhood & Early Life
- Jyotirao Govindrao Phule was born in the Satara district of Maharastra in 1827. His father, Govindrao was a vegetable vendor at Poona
- Jyotirao's family belonged to the 'mali' caste and their original title was ‘Gorhay’. Malis was considered an inferior caste by the Brahmins and was shunned socially. Jyotirao's father and uncles served as florists, so the family came to be known as `Phule'. Jyotirao's mother passed away when he was just nine months old
- In 1841, Jyotirao got admission in the Scottish Mission's High School, Poona, and completed his education in 1847. There, he met Sadashiv Ballal Govande, a Brahmin, who remained his close friend throughout his life. At the age of just thirteen years, Jyotirao was married to Savitribai
3. Social Movements
- In 1848, an incident sparked off Jyotiba’s quest against the social injustice of caste discrimination and incited a social revolution in the Indian society
- Jyotirao was invited to attend the wedding of one of his friends who belonged to an upper-cast Brahmin family. But at the wedding, the relatives of the bridegroom insulted and abused Jyotiba when they came to know about his origins
- Jyotirao left the ceremony and made up his mind to challenge the prevailing caste system and social restrictions
- He believed that the enlightenment of the women and lower caste people was the only solution to combat the social evils
4. Efforts towards Women Education
- Jyotiba’s quest for providing women and girls with right to education was supported by his wife Savitribai Phule. One of the few literate women of the time, Savitribai was taught to read and write by her husband Jyotirao
- In 1851, Jyotiba established a girls' school and asked his wife to teach the girls in the school. Later, he opened two more schools for girls and an indigenous school for the lower castes, especially for the Mahars and Mangs
- Jyotiba realised the pathetic conditions of widows and established an ashram for young widows and eventually became an advocate of the idea of Widow Remarriage
- Female infanticide was a common occurrence and so was child marriage, with children sometimes being married to men much older
- These women often became widows before they even hit puberty and were left without any family support. Jyotiba was pained by their plight and established an orphanage in 1854 to shelter these unfortunate souls from perishing at society’s cruel hands
5. Efforts towards Elimination and Caste Discrimination
- Jyotirao attacked the orthodox Brahmins and other upper castes and termed them as "hypocrites". He campaigned against the authoritarianism of the upper caste people and urged the "peasants" and "proletariat" to defy the restrictions imposed upon them
- He opened his home to people from all castes and backgrounds. He was a believer in gender equality and he exemplified his beliefs by involving his wife in all his social reform activities
- He believed that religious icons like Rama are implemented by the Brahmin as a means for subjugating the lower caste
- The orthodox Brahmins of the society were furious at the activities of Jyotirao. They blamed him for vitiating the norms and regulations of the society
- Many accused him of acting on behalf of the Christian Missionaries. But Jyotirao was firm and decided to continue the movement. Interestingly, Jyotirao was supported by some Brahmin friends who extended their support to make the movement successful
6. Satya Sodhak Samaj
- In 1873, Jyotiba Phule formed the Satya Shodhak Samaj (Society of Seekers of Truth)
- He undertook a systematic deconstruction of existing beliefs and history, only to reconstruct an equality promoting version. Jyotirao vehemently condemned the Vedas, the ancient holy scriptures of the Hindus
- He traced the history of Brahmanism through several other ancient texts and held the Brahmins responsible for framing the exploitative and inhuman laws in order to maintain their social superiority by suppressing the "shudras" and “atishudras” in the society
- The purpose of the Satya Shodhak Samaj was to decontaminate the society from caste discrimination and liberate the oppressed lower-caste people from the stigmas inflicted by the Brahmins
- Jyotirao Phule was the first person to coin the term ‘Dalits’ to apply to all people considered lower caste and untouchables by the Brahmins
- Membership to the Samaj was open to all irrespective of caste and class. Some written records suggest that they even welcomed participation of Jews as members of the Samaj and by 1876 the 'Satya Shodhak Samaj' boasted of 316 members
- In 1868, Jyotirao decided to construct a common bathing tank outside his house to exhibit his embracing attitude towards all human beings and wished to dine with everyone, regardless of their caste
7. Literary Works
Jyotiba had penned a number of literary articles and books in his lifetime and most were based on his ideology of social reforms like the ‘Shetkarayacha Aasud’
He also penned some stories like ‘Tritiya Ratna’, ‘Brahmananche Kasab’, ‘Ishara’
He wrote dramas like ‘Satsar’ Ank 1 and 2, which were enacted under his directives to spread awareness against social injustice
He also wrote books for the Satyashodhak Samaj that dealt with history of Brahminism and outlined Puja protocols that the lower caste people were not allowed to learn
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For Prelims: Jyotirao phule, Satya Sodhak Samaj, Savitrabhai phule
For Mains: 1. Explain the Contributions of Jyoti rao phule towards Women Upliftment. Discuss the efforts for Caste Discrimination (250 Words)
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Previous Year Questions:
1.Satya Shodhak Samaj organized ( UPSC 2016)
A. a movement for upliftment of tribals in Bihar Answer (C) |
Source: Cultureindia.net
WOMEN'S EMPLOYMENT
1. Context
2. Women's Participation in the Labour Force
- In the recently released India Employment Report for 2024 by the Institute for Human Development and the International Labour Organization, a significant focus is placed on the participation of women in the labour force.
- Despite improvements in key metrics, such as the Labour Force Participation Rate (LFPR), the female LFPR remains considerably lower compared to their male counterparts.
- In 2023, while the male LFPR stood at 78.5, the female LFPR was recorded at a mere 37. This gap is stark when compared to the global average female LFPR of 49, according to World Bank data.
- The report notes a consistent decline in female LFPR since 2000, touching a low of 24.5 in 2019, before showing slight increments, particularly in rural areas. However, the authors emphasize that despite these marginal improvements, employment conditions for women continue to be challenging.
- The light on the trend points out that the rise in female labour force participation has predominantly occurred in rural areas and has been primarily driven by self-employment, often characterized by unpaid work. This uptick in participation can be attributed to economic distress preceding the COVID-19 pandemic and the pandemic itself.
- While various hypotheses exist regarding the causes of this trend, such as improvements in measuring women's work and increased non-farm employment for men leading to women substituting in agriculture definitive evidence on the exact cause(s) remains elusive.
3. Women's Employment Trends
- The India Employment Report underscores that women play a significant role in the surge of self-employment and unpaid family work.
- According to the report, nearly two-thirds of the newly generated employment post-2019 consists of self-employed individuals, with women comprising a significant portion of unpaid family workers within this category.
- Concurrently, the proportion of regular employment, which had been on a steady incline since 2000, started to decline after 2018.
- Additionally, the global rate of youth not engaged in employment, education, or training has consistently been highest in South Asia, averaging 29.2% between 2010 and 2019, according to the International Labour Organization (ILO).
- India mirrors this trend, with a notable portion of its youth falling into this category, particularly among young women, surpassing the rates for young men.
4. Factors Contributing to Low Women's Participation in the Labor Force
- Various economists and women's rights experts highlight a multitude of barriers that hinder women's participation in the workforce. These obstacles range from a dearth of job opportunities and the burden of caregiving responsibilities, including household chores and cooking, to inadequate wages, patriarchal attitudes, and safety concerns.
- The Disastrous Economic Fallout of the COVID-19 Pandemic in India," discusses the significant decline in women's labour participation from 2004 to 2018.
- A portion of this decline to increased involvement in education, particularly among the 15 to 19 age group.
- However, as participation rates dropped across all age groups, a broader phenomenon globally of women being pushed out of employment due to a scarcity of paid work.
- The decline in women's LFPR can be attributed to both supply and demand-side factors. On the demand side, India's growth trajectory has not been sufficiently job-intensive.
- Coupled with societal norms that confine women to caregiving roles and limit their mobility, this restricts their ability to pursue available opportunities.
- Moreover, concerns regarding public safety and transportation constraints further constrain women to seek employment within proximity to their homes, limiting their options.
- The various factors influence the supply and demand for female labour. These factors include women's ability to balance paid work and family obligations, decisions related to education and childcare, technological advancements, legal frameworks, and societal norms.
- The women's choices have historically been constrained by marital status and responsibilities for household and family, a trend observed not only in the U.S. but also in many other countries, including India.
5. Addressing the Challenges
- Economists emphasize the necessity for interventions on both the demand and supply sides of the labour market.
- The importance of policies geared towards promoting labour-intensive sectors, encompassing both manufacturing and higher-productivity services.
- A critical need for public investments in safety and transportation infrastructure, along with affordable child and elderly care services.
- These interventions are crucial in enabling women to participate in the workforce beyond their household responsibilities and to access better-paying employment opportunities.
- By implementing such measures, societies can foster an environment where women can fully engage in the labour market and contribute to economic growth and development.
6. The Way Forward
By implementing a comprehensive approach that addresses both the demand and supply sides of the labour market, societies can pave the way for meaningful progress in enhancing women's employment opportunities. Empowering women to fully participate in the labour force not only contributes to economic growth and development but also fosters greater social inclusion and gender equality.
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For Prelims: Women Empowerment, India Employment Report, Institute for Human Development, the International Labour Organization, Labour Force Participation Rate, the Workforce Participation Rate
For Mains:
1. The COVID-19 pandemic has disproportionately impacted women's employment globally. Discuss the specific challenges faced by women in India's labour market due to the pandemic. How can the government design policies to promote women's workforce re-entry in the post-pandemic era? (250 words)
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Previous Year Questions
1.Which of the following statements about the employment situation in India according to periodic Labour Force Survey 2017-18 is/are correct? (UPSC CAPF 2020)
1. Construction sector gave employment to nearly one-tenth of the urban male workforce in India
2. Nearly one-fourth of urban female workers in India were working in the manufacturing sector
3. One-fourth of rural female workers in India were engaged in the agriculture sector
Select the correct answer using the code given below:
A. 1 Only
B. 1 and 2 Only
C. 1 and 3 Only
D. 1, 2 and 3
Answer (B)
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Source: The Hindu
MONETARY POLICY COMMITTEE (MPC)
1. Context
The Reserve Bank of India’s Monetary Policy Committee (MPC) reduced the repo rate by 25 basis points (bps) to 6 per cent Wednesday while the growth forecast for the current fiscal (FY2026) was lowered to 6.5 per cent from 6.7 per cent amid uncertainties arising from trade wars following the reciprocal tariffs announced by the US.
2. What is Monetary policy?
Monetary policy refers to the actions and strategies undertaken by a country's central bank to control and regulate the supply of money, credit availability, and interest rates in an economy. Its primary goal is to achieve specific economic objectives, such as price stability, full employment, and sustainable economic growth.
Central banks use various tools to implement monetary policy, including:
Interest Rates: Adjusting the interest rates at which banks lend to each other (known as the federal funds rate in the United States) influences borrowing and spending in the economy.
Open Market Operations: Buying or selling government securities in the open market to regulate the money supply. When a central bank buys securities, it injects money into the system, and when it sells them, it reduces the money supply.
Reserve Requirements: Mandating the amount of reserves banks must hold, affecting their ability to lend money.
By influencing the availability and cost of money, central banks aim to stabilize prices, control inflation, encourage or discourage borrowing and spending, and promote economic growth. However, the effectiveness of monetary policy can be influenced by various factors such as global economic conditions, fiscal policies, and market expectations.
3.What is the primary objective of the monetary policy?
The primary objective of monetary policy typically revolves around maintaining price stability or controlling inflation within an economy. Central banks often set an inflation target, aiming to keep it at a moderate and steady level. Stable prices help in fostering confidence in the economy, encouraging investment, and ensuring that the value of money remains relatively constant over time.
However, while controlling inflation is often the primary goal, central banks might also consider other objectives, such as:
Full Employment: Some central banks have a secondary objective of supporting maximum employment or reducing unemployment rates.
Economic Growth: Encouraging sustainable economic growth by managing interest rates and credit availability to stimulate or cool down economic activity.
Exchange Rate Stability: In some cases, maintaining stable exchange rates might be an important consideration, especially for countries with open economies heavily reliant on international trade.
These additional objectives can vary depending on the economic conditions, priorities of the government, and the central bank's mandate. Nonetheless, ensuring price stability is typically the fundamental goal of most monetary policies, as it forms the basis for a healthy and growing economy.
4. Monetary Policy Committee (MPC)
- In line with the amended RBI Act, 1934, Section 45ZB grants authority to the central government to establish a six-member Monetary Policy Committee (MPC) responsible for determining the policy interest rate aimed at achieving the inflation target.
- The inaugural MPC was formed on September 29, 2016. Section 45ZB stipulates that "the Monetary Policy Committee will ascertain the Policy Rate necessary to meet the inflation target" and that "the decisions made by the Monetary Policy Committee will be obligatory for the Bank."
- According to Section 45ZB, the MPC comprises the RBI Governor as the ex officio chairperson, the Deputy Governor overseeing monetary policy, a Bank official nominated by the Central Board, and three individuals appointed by the central government.
- The individuals chosen by the central government must possess "capabilities, ethical standing, expertise, and experience in economics, banking, finance, or monetary policy" (Section 45ZC)
5.Monetary Policy Committe and Inflation
- The Monetary Policy Committee (MPC) plays a crucial role in managing inflation through its decisions on the policy interest rate.
- When inflation is too high, the MPC might decide to increase the policy interest rate. This action aims to make borrowing more expensive, which can reduce spending and investment in the economy.
- As a result, it could help decrease demand for goods and services, potentially curbing inflation.
- Conversely, when inflation is too low or the economy needs a boost, the MPC might decrease the policy interest rate.
- This move makes borrowing cheaper, encouraging businesses and individuals to spend and invest more, thus stimulating economic activity and potentially raising inflation closer to the target level.
- The MPC's goal is to use the policy interest rate as a tool to steer inflation toward a target set by the government or central bank.
- By monitoring economic indicators and assessing the current and expected inflation levels, the MPC makes informed decisions to maintain price stability within the economy
6. Way forward
With more than half of the current financial year witnessing positive developments in the economy, the full financial year should conclude as projected with a strong growth performance and macroeconomic stability. Yet risks on the downside persist. Inflation is one of them that has kept both the government and the RBI on high alert. Financial flows in the external sector also need constant monitoring as they impact the value of rupee and the balance of payments. A fuller transmission of the monetary policy may also temper domestic demand
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For Prelims: Economic and Social Development
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
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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
Answer: C
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 Answer: C 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. Answer: (d) 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 Answer: A |
Source: Indianexpress
CABINET COMMITTEES
1. Context
The Cabinet Committee on Security (CCS), chaired by Prime Minister Narendra Modi, on Wednesday cleared a proposal to procure 26 naval variants of Rafale fighter jets from France at a cost of around `64,000 crore for deployment on board aircraft carrier INS Vikrant
2. What are the various Cabinet committees?
- After the Union Cabinet is sworn in and ministerial portfolios are assigned, the next step involves establishing the high-profile Cabinet committees.
- These committees are formed by the Prime Minister and comprise selected Cabinet members who are delegated specific roles. The Prime Minister has the authority to adjust the number of committees and modify their assigned functions as needed.
- Each committee typically consists of three to eight members, predominantly Cabinet ministers. Occasionally, non-Cabinet ministers may also participate as members or special invitees. When the Prime Minister serves on a committee, he assumes the role of its chairperson.
- These committees deliberate on issues, develop proposals for Cabinet consideration, and make decisions on matters within their purview. The Cabinet retains the authority to review these decisions.
- During the Manmohan Singh government, there were up to 12 Cabinet committees in addition to numerous Groups of Ministers (GoMs) and Empowered Groups of Ministers (EGoMs)
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How Many Committees are Present right now?
Currently, there are eight Cabinet committees: the Appointments Committee of the Cabinet, Cabinet Committee on Economic Affairs, Cabinet Committee on Political Affairs, Cabinet Committee on Investment and Growth, Cabinet Committee on Security, Cabinet Committee on Parliamentary Affairs, Cabinet Committee on Employment & Skill Development, and Cabinet Committee on Accommodation.
The committees focusing on investment and employment were introduced by the Modi government in 2019. Except for the Cabinet Committee on Accommodation and Cabinet Committee on Parliamentary Affairs, all committees are chaired by the Prime Minister
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3. Significance of Cabinet Committees
- Led by the Prime Minister, the Cabinet Committee on Security (CCS) includes the Ministers of Finance, Defence, Home Affairs, and External Affairs as its members.
- It oversees discussions, appointments within national security bodies, and major decisions concerning national security, defence spending, and related policy matters. In addition to defence issues, the CCS also addresses law and order, internal security, and foreign policy matters related to security, including considerations involving atomic energy.
- Given its crucial role, there is an expectation that the BJP will resist pressure from allies such as the TDP and JDU to relinquish any of these significant portfolios.
- With all current CCS members—Rajnath Singh, Amit Shah, Nirmala Sitharaman, and S Jaishankar—regularly attending informal meetings at the Prime Minister's residence, there is widespread anticipation of continuity within the CCS in Modi's second term
4. Coalition Government and Cabinet Committees (CCs)
- In a coalition government, where multiple political parties come together to form a government, the composition and functioning of Cabinet Committees (CCs) can be influenced by the dynamics of coalition politics
- One notable instance occurred during the transition from Atal Bihari Vajpayee's tenure as Prime Minister to the H D Deve Gowda government in 1996.
- Deve Gowda, then Chief Minister of Karnataka, assumed office as Prime Minister on June 1. Mulayam Singh Yadav from the Samajwadi Party was appointed Defence Minister, P Chidambaram, who had established the Tamil Maanila Congress earlier that year, took on the role of Finance Minister, and Indrajit Gupta of the CPI became Home Minister.
- In 2001, during Vajpayee's leadership of the NDA government, George Fernandes, founder of the Samata Party, was appointed Defence Minister and held the position for three years.
- As Defence Minister during the BJP-led governments of Atal Bihari Vajpayee's second and third terms (1998–2004), Fernandes oversaw significant events such as the Kargil War and the nuclear tests conducted at Pokhra
5. Way Forward
Overall, in a coalition government, Cabinet Committees play a crucial role in managing and balancing the interests of coalition partners while addressing national priorities. Effective coordination and communication among coalition members are essential for the smooth functioning of CCs and the government as a whole
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For Prelims: Cabinet Committees, Ethics Committes
For Mains: GSII- Cabinet Committees and thier Significance
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Previous Year Questions
1.Read the following statements related to Cabinet Committees and choose the correct option : (CGPSC Civil Service 2020 Official Paper 1)
Statement I : Cabinet Committees are not mentioned in the Constitution
Statement II : Cabinet Committees are set up by the Prime Minister according to the exigencies of the time and requirements of the situation
Statement III : If Prime Minister is the member of Committee, he may not necessarily be the Chairman of Committee
Statement IV : Parliamentary Affairs Committee is chaired by the Prime Minister
A.All statements are true
B.Statements I, II and III are true, but Statement IV is false
C.Statements II, III and IV are true, but Statement I is false
D.Statements I and II are true, but Statements III and IV are false
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Source: Indianexpress
TARIFFS
1. Context
US President Donald Trump´s flipflop on reciprocal tariffs coupledd with heightened market volatility is delaying major acquisitions in India as potentiall buyers are seeking more time for due diligence.
2. What is a Tariff?
- Most countries are limited by their natural resources and ability to produce certain goods and services.
- They trade with other countries to get what their population needs and demands. However, trade isn't always conducted in an amenable manner between trading partners.
- Policies, geopolitics, competition, and many other factors can make trading partners unhappy. One of the ways governments deal with trading partners they disagree with is through tariffs.
- A tariff is a tax imposed by one country on the goods and services imported from another country to influence it, raise revenues, or protect competitive advantages.
3. Key Take Aways
- Governments impose tariffs to raise revenue, protect domestic industries, or exert political leverage over another country.
- Tariffs often result in unwanted side effects, such as higher consumer prices.
- Tariffs have a long and contentious history, and the debate over whether they represent good or bad policy still rages.
4. History of Tariffs
4.1 Pre Modern Europe
- In pre-modern Europe, a nation's wealth was believed to consist of fixed, tangible assets, such as gold, silver, land, and other physical resources.
- Trade was seen as a Zero-sum game that resulted in either a clear net loss or a clear net gain of wealth.
- If a country imported more than it exported, a resource, mainly gold, would flow abroad, thereby draining its wealth. Cross-border trade was viewed with suspicion, and countries preferred to acquire colonies with which they could establish exclusive trading relationships rather than trading with each other.
- This system, known as mercantilism, relied heavily on tariffs and even outright bans on trade. The colonizing country, which saw itself as competing with other colonizers, would import raw materials from its colonies, which were generally barred from selling their raw materials elsewhere.
- The colonizing country would convert the materials into manufactured wares, which it would sell back to the colonies. High tariffs and other barriers were implemented to ensure that colonies only purchased manufactured goods from their home countries.
4.2 Late 19th and early 20th Centuries
- Relatively free trade enjoyed a heyday in the late 19th and early 20th centuries when the idea took hold that international commerce had made large-scale wars between nations so expensive and counterproductive that they were obsolete.
- World War I proved that idea wrong, and nationalist approaches to trade, including high tariffs, dominated until the end of World War II.
- From that point on, free trade enjoyed a 50-year resurgence, culminating in the creation in 1995 of the World Trade Organisation (WTO), which acts as an international forum for settling disputes and laying down ground rules.
- Free trade agreements, such as the North American Free Trade Agreement (NAFTA) now known as the United States-Mexico-Canada Agreement (USMCA) and the European Union (EU), also proliferated.
4.3 In the 21st Century
- Skepticism of this model sometimes labeled neoliberalism by critics who tie it to 19th-century liberal arguments in favor of free trade grew, however, and Britain in 2016 voted to leave the European Union.
- That same year Donald Trump won the U.S. presidential election on a platform that included a call for tariffs on Chinese and Mexican imports, which he implemented when he took office.
- Critics of tariff-free multilateral trade deals, who come from both ends of the political spectrum, argue that they erode national sovereignty and encourage a race to the bottom regarding wages, worker protections, and product quality and standards.
- Meanwhile, the defenders of such deals counter that tariffs lead to trade wars, hurt consumers, and hamper innovation.
5. Understanding Tariffs
- Tariffs are used to restrict imports. Simply put, they increase the price of goods and services purchased from another country, making them less attractive to domestic consumers.
- A key point to understand is that a tariff affects the exporting country because consumers in the country that imposed the tariff might shy away from imports due to the price increase. However, if the consumer still chooses the imported product, then the tariff has essentially raised the cost to the consumer in another country.
There are two types of tariffs:
- A specific tariff is levied as a fixed fee based on the type of item, such as a $500 tariff on a car.
- An ad-valorem tariff is levied based on the item's value, such as 5% of an import's value.
6. Why Government Imposes Tariffs?
Governments may impose tariffs for several reasons
6.1 Raise Revenues
Tariffs can be used to raise revenues for governments. This kind of tariff is called a revenue tariff and is not designed to restrict imports. For instance, in 2018 and 2019, President Donald Trump and his administration imposed tariffs on many items to rebalance the trade deficit. In the fiscal year 2019, customs duties received were $18 billion. In FY 2020, duties received were $21 billion.
6.2 Protect Domestic Industries
Governments can use tariffs to benefit particular industries, often doing so to protect companies and jobs. For example, in May 2022, President Joe Biden proposed a 25% ad valorem tariff on steel articles from all countries except Canada, Mexico, and the United Kingdom (the U.K. has a quota of an aggregate of 500,000 metric tons it can trade with the U.S.). This proclamation reopens the trade of specific items with the U.K. while taking measures to protect domestic U.S. steel manufacturing and production jobs.
6.3 Protect Domestic Consumers
By making foreign-produced goods more expensive, tariffs can make domestically-produced alternatives seem more attractive. Some products made in countries with fewer regulations can harm consumers, such as a product coated in lead-based paint. Tariffs can make these products so expensive that consumers won't buy them.
6.4 Protect National Interests
Tariffs can also be used as an extension of foreign policy as their imposition on a trading partner's main exports may be used to exert economic leverage. For example, when Russia invaded Ukraine, much of the world protested by boycotting Russian goods or imposing sanctions. In April 2022, President Joe Biden suspended normal trade with Russia. In June, he raised the tariff on Russian imports not prohibited by the April suspension to 35%.
7. Advantages of Tariffs
- Produce revenues: As discussed, tariffs provide a government a chance to bring in more money. This can relieve some of the tax burdens felt by a county's citizens and help the government to reduce deficits.
- Open negotiations: Tariffs can be used by countries to open negotiations for trade or other issues. Each side can use tariffs to help them create economic policies and talk with trade partners.
- Support a nation's goals: One of the most popular uses for tariffs is to use them to ensure domestic products receive preference within a country to support businesses and the economy.
- Make a market predictable: Tariffs can help stabilize a market and make prices predictable.
8. Disadvantages of Tariffs
- Create issues between governments: Many nations use tariffs to punish or discourage actions they disapprove of. Unfortunately, doing this can create tensions between two countries and lead to more problems.
- Initiate trade wars: A typical response for a country with tariffs imposed on it is to respond similarly, creating a trade war in which neither country benefits from the other.
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For Prelims: Tariffs, Zero-sum game, Cross-border trade, World Trade Organisation (WTO), North American Free Trade Agreement (NAFTA), United States-Mexico-Canada Agreement (USMCA), and the European Union (EU). For Mains: 1. What is a Tariff and explain why government imposes tariffs. Discuss the advantages and disadvantages associated with Tariffs. (250 Words). |
Source: Investopedia
FREE TRADE AGREEMENT
1. Context
India should reconsider negotiatinga comprehensivee free trade agreement (FTA) with the US as it could pose challenges to domestic sectors like agriculture,, automobiles and pharmaceuticals, think tank Global Trade Research Initiative (GTRI)
2. About the Free Trade Agreement
- A Free Trade Agreement (FTA) is an agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs, quotas, and subsidies.
- FTAs can also include provisions on other issues, such as investment, intellectual property, and labour standards.
- The goal of an FTA is to promote trade and economic growth between the signatory countries.
- By reducing or eliminating trade barriers, FTAs can make it easier for businesses to export their goods and services to other countries, which can lead to increased production, employment, and innovation.
3. Types of Free Trade Agreement
- Bilateral Free Trade Agreement (BFTA) involves two countries, aiming to promote trade and eliminate tariffs on goods and services between them. It establishes a direct trade relationship, allowing for a more focused and tailored agreement between the two nations.
- Multilateral Free Trade Agreement (MFTA) Involving three or more countries, an MFTA seeks to create a comprehensive trade bloc, promoting economic integration on a larger scale. It requires coordination among multiple parties, addressing diverse economic interests and fostering a broader regional economic landscape.
- Regional Free Trade Agreement (RFTA) involves countries within a specific geographic region, aiming to enhance economic cooperation and integration within that particular area. It focuses on addressing regional economic challenges and fostering collaboration among neighbouring nations.
- Preferential Trade Agreement (PTA) involves a reciprocal reduction of tariffs and trade barriers between participating countries, granting preferential treatment to each other's goods and services. It allows countries to enjoy trading advantages with specific partners while maintaining autonomy in their trade policies with non-participating nations.
- Comprehensive Economic Partnership Agreement (CEPA) is a broad and advanced form of FTA that goes beyond traditional trade barriers, encompassing various economic aspects such as investment, intellectual property, and services. It aims for a more comprehensive economic partnership, encouraging deeper integration and collaboration between participating countries.
- Customs Union While not strictly an FTA, a Customs Union involves the elimination of tariffs among member countries and the establishment of a common external tariff against non-member nations. It goes beyond standard FTAs by harmonizing external trade policies, creating a unified approach to trade with the rest of the world.
- Free Trade Area (FTA) with Trade in Goods (TIG) and Trade in Services (TIS): Some FTAs specifically emphasize either trade in goods or trade in services, tailoring the agreement to the specific economic strengths and priorities of the participating countries. This approach allows nations to focus on areas where they have a comparative advantage, fostering specialization and efficiency.
4. India's Free Trade Agreements
India is a member of several free trade agreements (FTAs) and is currently negotiating others. India's FTAs have helped to reduce trade barriers and promote trade and economic growth. They have also helped to attract foreign investment and create jobs.
- The South Asian Free Trade Agreement (SAFTA) was signed in 1995 by the seven countries of the South Asian Association for Regional Cooperation (SAARC). SAFTA aims to reduce or eliminate tariffs on trade between the member countries.
- The India-Bangladesh FTA was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Sri Lanka FTA was signed in 1999 and came into force in 2000. It is a comprehensive FTA that covers goods, services, and investments.
- The India-ASEAN Free Trade Agreement was signed in 2002 and came into force in 2010. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Korea Comprehensive Economic Partnership Agreement (CEPA) was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Japan Comprehensive Economic Partnership Agreement(CEPA) was signed in 2022 and came into effect in 2023. It is a comprehensive FTA that covers goods, services, and investments.
- The India-UAE Comprehensive Partnership Agreement (CEPA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) was signed in 2010 and aims to enhance economic ties by addressing trade in goods and services, as well as investment and other areas of economic cooperation.
- The India-Thailand Free Trade Agreement was signed in 2003 and focuses on reducing tariffs and promoting trade in goods and services between India and Thailand.
- The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has been operational since 2005, this agreement covers trade in goods and services, as well as investment and intellectual property.
- The India-Nepal Trade Treaty While not a comprehensive FTA, India and Nepal have a trade treaty that facilitates the exchange of goods between the two countries.
- The India-Chile Preferential Trade Agreement was signed in 2006 and aims to enhance economic cooperation and reduce tariffs on certain products traded between India and Chile.
5. India - UK Free Trade Agreement
5.1. Background
- Both countries have agreed to avoid sensitive issues in the negotiations.
- The interim (early harvest agreement) aims to achieve up to 65 per cent coverage for goods and up to 40 per cent coverage for services.
- By the time the final agreement is inked, the coverage for goods is expected to go up to "90 plus a percentage" of goods.
- India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade.
- While the commencement of negotiations does mark a step forward in the otherwise rigid stance adopted and when it comes to trade liberalisation, experts point to impediments and the potential for legal challenges going ahead.
5.2. GATT (General Agreement on Trade and Tariffs)
- The exception to the rule is full-scale FTAs, subject to some conditions.
- One rider, incorporated in Article XXIV.8 (b) of GATT, stipulates that a deal should aim to eliminate customs duties and other trade barriers on "Substantially all the trade" between the WTO member countries that are signatories to an FTA.
- For this Agreement, a free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
- It is often beneficial to negotiate the entire deal together, as an early harvest deal may reduce the incentive for one side to work towards a full FTA.
- These agreements are not just about goods and services but also issues like investment.
- If you are trying to weigh the costs and benefits, it is always better to have the larger picture in front of you.
- In the case of the early harvest agreement inked with Thailand, automobile industry associations had complained that relaxations extended to Bangkok in the early harvest had reduced the incentive for Thailand to work towards a full FTA.
- Early harvest agreements may serve the function of keeping trading partners interested as they promise some benefits without long delays, as India becomes known for long-drawn negotiations for FTAs.
- Government emphasis on interim agreements may be tactical so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.
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For Prelims: Free Trade Agreement, India-U.K, Bilateral Free Trade Agreement, G-20 Summit, Agenda 2030, Covid-19 Pandemic, SAARC, General Agreement on Trade and Tariffs, Comprehensive Economic Partnership Agreement, Multilateral Free Trade Agreement, Regional Free Trade Agreement, Preferential Trade Agreement, Customs Union,
For Mains:
1. Evaluate the potential impact of the India-UK FTA on the Indian economy, considering both positive and negative aspects (250 Words)
2. Critically evaluate the significance of Free Trade Agreements (FTAs) in promoting trade and economic growth, considering their potential benefits and drawbacks. (250 Words)
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Previous Year Questions
1. Consider the following countries:
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the free-trade partners' of ASEAN? (UPSC 2018)
A. 1, 2, 4 and 5 B. 3, 4, 5 and 6 C. 1, 3, 4 and 5 D. 2, 3, 4 and 6
Answer: C
2. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC 2018) (a) Industrial output fails to keep pace with agricultural output. Answer: C 3. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)
Which of the above are the objectives of this Act? (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: A 4. A “closed economy” is an economy in which (UPSC 2011) (a) the money supply is fully controlled Answer: D 5. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022)
1. It is an initiative endorsed by the G20 together with the Paris Club. 2. It is an initiative to support Low Income Countries with unsustainable debt. 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: C
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Source: The Hindu
RETAIL INFLATION
1. Context
Underlying US inflation cooled broadly in March, indicating some relief for consumerss prior to widespread tariffs that risk contributing to price pressures. The consumer price index, excluding often volatile food and energy costs, increased 0.1 per cent from February, the least in nine months, according to Bureau of Labor Statistics data
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. Retail Inflation
Consumers often directly buy from retailers. So, the inflation experienced at retail reflects the actual price rise in the country. It also shows the cost of living better. In India, the index that reflects the inflation rate at the retail level is known as Consumer Price Index (CPI). Unlike WPI, CPI includes both goods and services. CPI is used to calculate the Dearness Allowance (DA) for government employees.
4. How Inflation is measured?
- In India, inflation is primarily measured by two main indices- WPI (Wholesale Price Index) and CPI (Consumer Price Index), Which measures Wholesale and retail-level price changes, respectively.
- The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics, etc, which Indian consumers buy for use.
- On the other hand, the goods or services sold by businesses to smaller businesses for selling further are captured by the WPI.
- Both WPI (Wholesale Price Index) and CPI (Consumer Price Index) are used to measure inflation in India.
5. What is the Inflation Target?
- Under Section 45ZA, in consultation with the RBI Act, the Central Government determines the inflation target in terms of the Consumer Price Index (CPI), once in five years and notifies it in the Official Gazette.
- Accordingly, on August 5, 2016, the Central Government notified in the Official Gazette 4 percent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016, to March 31, 2021, with the upper tolerance limit of 6 percent and the lower tolerance limit of 2 percent.
- On March 31, 2021, the Central Government retained the inflation target and the tolerance band for the next 5-year period-April 1, 2021 to March 31, 2026.
- Section 45ZB of the RBI Act provides for the constitution of a six-member Monetary Policy Committee (MPC) to determine the policy rate required to achieve the inflation target.
6. Monetary Policy Committee (MPC)
- The MPC is a statutory and institutionalized framework under the RBI Act, of 1934, for maintaining price stability, keeping in mind the objective of growth. It was created in 2016.
- It was created to bring transparency and accountability in deciding monetary policy.
- MPC determines the policy interest rate required to achieve the inflation target.
- The committee comprises six members and Governor RBI acts as an ex-officio chairman. Three members are from RBI and three are selected by the government. The inflation target is to be set once every five years. It is set by the Government of India, in consultation with the Reserve Bank of India.
- The current inflation target is pegged at 4% with -2/+2 tolerance till March 31, 2021.
7. What Caused the drop in Inflation?
- Retail Inflation or price gains based on the Consumer Price Index, slowed to 6.77 % last month, from September's 7.41%, aided by an appreciable deceleration in food price inflation.
- The year-on-year inflation based on the Consumer Food Price Index eased by almost 160 basis points in October, to 7.01%, from the preceding month's 8.60%, helped by a 'decline in prices of vegetables, fruits, pulses and oils, and fats', the Government said.
- With the food and beverages sub-index representing almost 46% of the CPI's weight, the slowdown in food price gains understandably steered overall inflation lower even as price gains in three other essential categories, namely clothing, and footwear, housing, and health remained either little changed from September or quickened.
- Inflation at the Wholesale Prices Level also continued to decelerate, with the headline reading easing into single digits for the first time in 19 months. A favorable base effect along with a distinct cooling in international prices of commodities including crude oil and steel amid gathering uncertainty in advanced economies was largely instrumental in tempering wholesale price gains.
8. Recent Measures by the Government
To soften the prices of edible oils and pulses, tariffs on imported items have been rationalized from time to time. The stock limits on edible oils are also maintained, to avoid hoarding.
The Government has taken trade-related measures on wheat and rice to keep domestic supplies steady and curb the rise in prices.
The impact of these measures is expected to be felt more significantly in the coming months.
For Prelims & Mains
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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 Hindu
