BRICS
1. Context
External Affairs Minister S Jaishankar is in Cape Town, South Africa, to attend a meeting of the foreign ministers of BRICS a grouping comprising Brazil, Russia, India, China and South Africa, which is seen as the closest that the ‘Global South’ has come to organising itself as a collective to challenge a western global narrative.
The foreign ministers’ meeting will finalise the agenda for the 15th BRICS summit scheduled to be held in South Africa in August. Two items on the agenda are attracting notice for their potential for a greater geopolitical consolidation of the grouping: a plan to expand the membership of BRICS, and a common currency.
South Africa, which is in the chair this year, is hosting a Friends of BRICS meeting on Friday, with 15 foreign ministers from Africa and the Global South.
2. Multipolarity
- As many as 19 countries are said to be in the queue to join BRICS
- Among the countries that have been mentioned frequently since last year: Argentina, Nicaragua, Mexico, Uruguay, Venezuela from Latin America; Nigeria, Algeria, Egypt, Senegal, Morocco from Africa; Saudi Arabia, the UAE, Türkiye, Syria, Iran from West Asia; Kazakhstan from Central Asia; Bangladesh and Afghanistan from South Asia; and Indonesia and Thailand from South-east Asia
- It is not clear which countries might be admitted, but any expansion can be seen as strengthening the group’s heft as a spokesperson of the developing world
- By admitting some key countries in the list, BRICS could lay claim to representing more than half the world’s population. Significantly, the list includes big oil producers Saudi, Iran, the UAE, Nigeria, and Venezuela.
- There is considerable anti-US sentiment in the world, and all these countries are looking for a grouping where they can use that sentiment to gather together
- There is a lot of appetite for multipolarity, for a platform where countries of the Global South can express their solidarity
3. China in BRICS
- The idea of BRICS came between 2001 and 2003 from then Goldman Sachs chief economist Jim O’Neill, who projected that the four emerging markets of Brazil, Russia, India, and China would be the future economic powerhouses of the world, with South Africa being added later
- While the economic performance of BRICS has been mixed, the war in Ukraine which has brought the West together on the one hand and strengthened the China-Russia partnership on the other has turned it into an aspiring bloc that appears to be challenging the Western geopolitical view
- Significantly, China does not use the word multipolarity instead using “multilateralism” whenever it hits out at “US hegemony”
- The theme of BRICS 2023 is: “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism”
4. India in BRICS
- If India’s presence at the G7 summit in Hiroshima, where Prime Minister Narendra Modi also participated in an informal Quad summit, was seen as a sign of New Delhi’s US tilt, the importance it attaches to the “anti-West” BRICS is an apparent contradiction much like the several others it has negotiated through the last year
- On contrary, India should not be seen as ganging up with an anti-West coalition, India is also part of the Shanghai Cooperation Organisation (SCO), and despite problems, it has relations with Russia, with China
- Some analysts see BRICS as an improbable grouping, with hostiles like India and China unlikely to ever find common ground a situation that could get pronounced as it adds members
5. Common Currency
- The idea of a common currency was proposed by Russia’s President Vladimir Putin at the Beijing BRICS summit last year
- The idea got a cautious reception, with the leaders deciding to set up a committee to study its viability
- The last year of war has seen economies around the world feel the impact of the sanctions on Russia, the resultant spike in energy prices, combined with the rising value of the dollar
- An insulation from the dollar is a tempting proposal, but not all members believe that it is an idea whose time has come
- There are other complications, such as the setting up of a common central bank of member countries that have different economic and political systems and are located on different continents
- An option is for members to trade with each other in their respective currencies — but as the India-Russia example has shown, this is not easy either
- Moscow wants payments in dollars because it does not import enough from India to use rupee payments
6. Significance of BRICS
- BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.
- The BRICS Leaders’ Summit has convened annually. It does not exist in the form of an organisation, but it is an annual summit between the supreme leaders of five nations.
- BRICS is successfully expanding its external relations that were established at the Durban meeting between the five BRICS leaders, the leaders of the African Union and the leaders of eight leading African integration associations.
- BRICS is an important grouping bringing together the major emerging economies from the world, comprising:
- 41% of the world population,
- 24% of the world GDP
- over 16% share in world trade.
- The total combined area of 29.3% of the total land surface of the world
- BRICS countries have been the main engines of global economic growth over the years.
- Over a period of time, BRICS countries have come together to deliberate on important issues under the three pillars:
- political and security,
- economic and financial and
- cultural and people to people exchanges.
- During the Sixth BRICS Summit in Fortaleza (Brazil) in 2014, the leaders signed the Agreement establishing the New Development Bank (NDB - Shanghai, China). They also signed the BRICS Contingent Reserve Arrangement to provide short-term liquidity support to the members.
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7. New Development Bank
- During the Sixth summit of BRICS in Fortaleza (2014), leaders signed an agreement to establish a new bank. New Development Bank was established in 2015 by BRICS Countries.
- New Development Bank aims to ensure that all projects financed by its funds are implemented sustainably and their ESG impacts are assessed, minimised and mitigated during project implementation
- It is headquartered in Shanghai, china
- In 2018, NDB received observer status in United Nations General Assembly
- Each participant will have the vote and no other countries have veto power unlike World Bank
- Bank will mobilise resources for infrastructure and sustainable development projects in BRICS Countries and other economies as well as in developing countries too
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For Prelims: New Development Bank, BRICS
For Mains: 1. BRICS can be the pillar of emerging countries. Discuss the probable changes of BRICS after math of the Russia-Ukraine war (250 words)
2. BRICS gained importance due to US "hegemony". Discuss the Common currency proposed by Russia and associated issues surrounding it with respect to contemporary times (250 Words)
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Previous Year Questions:
1. With reference to a grouping of countries known as BRICS, Consider the following Statements: (UPSC 2014)
1. First Summit of BRICS was held in Rio de Janeiro in 2009
2. South Africa was the last to join the BRICS grouping
Which of the above-given statement is/are true
A. 1 Only B. 2 Only C. Both 1 and 2 D. Neither 1 nor 2
Answer : B
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Source: indianexpress
WORLD'S LITHIUM
1. Context
The news of potentially significant reserves of lithium, an element needed to manufacture batteries used in electric cars and other renewable energy infrastructure in Jammu and Kashmir has been welcomed universally.
This is a boost for national prosperity and security without dismissing concerns about the potential social and environmental impacts.
2. The status of India's lithium industry
- India's electric vehicle (EV) market was valued at $383.5 million in 2021 and is expected to expand to $152.21 billion in 2030.
- India imported 450 million units of lithium batteries valued at $929.26 million (₹ 6, 600 crores) in 2019-2020, which makes the development of the country's domestic lithium reserves a matter of high stakes.
- Scholars have argued the ongoing global transition to low-carbon economies, and the rapid expansion of artificial intelligence (AI) and 5G networks will greatly reshape global and regional geopolitics.
- Access to and control over rare minerals, such as lithium and cobalt, will play a crucial role in these epochal changes.
3. Owner of these minerals
- In July 2013, a three-judge bench of the Supreme Court of India ruled that the owner of the land has rights to everything beneath, "down to the centre of the earth".
- Yet, large areas of land, including forests which make up more than 22 per cent of India's landmass hills, mountains and revenue wasteland are publicly owned.
- The Supreme Court also recalled that the Union government could always ban private actors from mining sensitive minerals, as is already the case with Uranium under the Atomic Energy Act 1962. In today's context, lithium is as important as, if not more than, uranium.
4. Other countries manage lithium reserves
- The stories of two South American countries, Chile and Bolivia which have the largest known reserves of lithium are particularly instructive.
- In Chile, the government has designated lithium as a strategic resource and its development has been made the exclusive prerogative of the state.
- The state has licensed only two companies SQM and Albemarle to produce lithium in the country.
- In April 2023, Chile's announced a new "National Lithium Strategy", which many in the corporate sector took to be a declaration of his intention to nationalise the industry.
- On the contrary, the government would honour existing contracts.
- As a supplement, the new strategy calls for public-private partnerships for future lithium projects, which will allow the state to regulate the environmental impact of lithium mining, distribute the revenue from lithium production more fairly among local communities and promote domestic research into lithium-based green technologies.
- Bolivia's new constitution gave the state "the control and direction over the exploration, exploitation, industrialisation, transport and commercialisation of natural resources".
- It nationalised lithium and adopted a hard line against private and foreign participation.
- This is believed to be one of the factors for the country's failure to produce any lithium at a commercial scale nearly 20 years after the industry was nationalised.
- Bolivia's current president seeks to change that. However, instead of handing over lithium resources to the private sector and wants to join hands with other Latin American countries to design a " lithium policy" that would benefit all their economies.
- Mexico's president also nationalised lithium in February this year, declaring, "Oil and lithium belong to the nation, they belong to the people of Mexico".
- In general, the countries in Latin and South America are thinking through ways and means to pursue a multipronged strategy.
- While the national governments of these countries exercise a significant degree of control, the nature of private-sector participation varies between these countries.
- The actions of these governments are also a response to the mobilisation of Indigenous Peoples in the region who want to hold corporations as well as governments to account.
5. The way forward
- As India explores and develops its lithium reserves, it is notable that the appropriate development of this sector will require a very high level of effectiveness on the part of the Indian state.
- Much of India's mineral wealth is mined from regions with very high levels of poverty, environmental degradation and lax regulation.
- Effective and careful management of the sector should be paramount if India's rare minerals development is to meet its multiple goals of social well-being, environmental safety and national energy security.
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For Prelims: lithium, rare earth elements, electric vehicle, artificial intelligence, 5G networks, Atomic Energy Act 1962, National Lithium Strategy, lithium policy,
For Mains:
1. What has the Supreme Court said about the ownership of land? How big is India’s electric vehicle market? How are the South American countries of Chile and Bolivia managing their lithium reserves? What lies in India’s future concerns the lithium industry? (250 Words)
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Previous Year Questions
1. Which type of battery is used in the recently launched world's first fully electric cargo ship by change? (Delhi Police Constable 2017)
A. Lead Acid
B. Manganese
C. Lithium ion
D. Nickel metal hydride
Answer: C
2. Recently, there has been a concern over the short supply of a group of elements called 'rare earth metals.' Why? (UPSC 2012)
1. China, which is the largest producer of these elements, has imposed some restrictions on their export.
2. Other than China, Australia, Canada and Chile, these elements are not found in any country. 3. Rare earth metals are essential for the manufacture of various kinds of electronic items and there is a growing demand for these elements.
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
Answer: C
3. With reference to India, consider the following statements : (UPSC 2022)
1. Monazite is a source of rare earths.
2. Monazite contains thorium.
3. Monazite occurs naturally in the entire Indian coastal sands in India.
4. In India, Government bodies only can process or export monazite.
Which of the statements given above are correct ?
A. 1, 2 and 3 only B. 1, 2 and 4 only C. 3 and 4 only D. 1, 2, 3 and 4
Answer: B
4. With reference to 'fuel cells' in which hydrogen-rich fuel and oxygen are used to generate electricity, consider the following statements: (UPSC 2015)
1. If pure hydrogen is used as a fuel, the fuel cell emits heat and water as by-products.
2. Fuel cells can be used for powering buildings and not for small devices like laptop computers.
3. Fuel cells produce electricity in the form of Alternating Current (AC)
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
Answer: A
5. 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 Indian Express
US-BANGLADESH VISA TUSSLE
1. Context
On May 24, the U.S. Secretary of State Antony Blinken announced a “new visa policy” which threatens to restrict visas to Bangladeshis who undermine the democratic election process at home. The notification said the restriction would apply to current and former Bangladeshi officials, members of progovernment and opposition political parties, and members of law enforcement, the judiciary, and security services.
2. What does the notification Specify?
The new visa policy specifies that actions that undermine the democratic election process include "rigging, voter intimidation, the use of violence to prevent people from exercising their right to freedoms of association and peaceful assembly, and the use of measures designed to prevent political parties, voters, civil society, or the media from disseminating their views.
3. Relations between US and Bangladesh
- The US is the biggest destination for Bangladesh's garment exports, and Bangladesh is the third largest exporter of garments to the US after China and Vietnam.
- As the industry is the backbone of the country's economic growth, it is seeking a GSP-Plus status with the US and Europe for its readymade garment exports.
- The EU's Generalised Scheme of Preferences Plus (GSP+) gives developing countries a special incentive to pursue sustainable development and good governance, in return for cuts in import duties.
- The US is the top foreign investor in Bangladesh. However, the mutual unhappiness in the US-Bangladesh relationship has been no secret for some years.
- For example, Sheikh Hasina's recent visit to Washington to mark 50 years of diplomatic ties with the US, included no big-ticket meetings.
- The PM of Bangladesh even said in Parliament that the US was seeking regime change in Bangladesh.
- The US government, on the other hand, has conveyed its concern over democratic erosion, and also about the two previous elections in Bangladesh.
4. What is the view of Bangladesh's government and the opposition to the US's new visa policy?
- The opposition in Bangladesh said that The policy will play a supporting role in holding the next polls in a fair and credible manner, The policy will change the diplomatic ties between Bangladesh and the United States.
- The government on the other hand said that the US was seeking regime change in Bangladesh and demanded such visa policies should not be applied arbitrarily in a non-objective manner.
5. Some of the other hurdles
- Prime Minister Hasina has followed a policy of zero tolerance against terrorism and extremism since being sworn to power in 2009.
- She has uprooted insurgents of northeast India who had maintained a base in Bangladesh for decades.
- In that part, Islamist radicals were also consistently targeted by security agencies especially the RAB (Rapid Action Battalion).
- Her actions, however, have drawn criticism from various quarters including the U.S. which has accused Bangladesh of violating human rights and for enforcing the disappearance of around 600 individuals.
- In December 2021, serving and former top officials of the RAB were sanctioned by the U.S. Treasury Department.
- Additionally, Bangladesh maintains a neutral policy on the Ukraine crisis, with Ms. Hasina repeatedly by arguing against interference in the affairs of sovereign countries.
- On the ground, multiple projects indicate strong competition between Dhaka and Moscow.
- Russia is building the first nuclear power project in Rooppur which is expected to be operational later this year.
6. What will be the implications of the US's new visa Policy?
- The US is the biggest destination for Bangladesh's garment exports, and Bangladesh is the third-largest exporter of garments to the US after China and Vietnam. The industry is the backbone of the country's economic growth.
- A (Generalised System of Preference) GSP-Plus status with the US and Europe for its ready-made garment exports is crucial when Bangladesh graduates out of the least developed country category in 2006.
- Bangladesh's government is working hard for this tag. But the new Policy might hamper its recognition.
7. Implications of these developments on India
- The US position on the Bangladesh elections could complicate India's diplomacy in Bangladesh.
- New Delhi, wants Shiekh Hasina - a leader who has acted on its security concerns swiftly, back in Power in Dhaka.
- She is seen as having given away too much - land transit rights to the Northeastern states, a favorable coal power deal to an Adani company, etc., while Bangladesh itself has been awaiting Teessta water for many years.
- Over the last few years. the US and India were seen as acting in tandem in Bangladesh, especially as their security objectives converged.
- The Visa policy is a sign that this may be changing. A Post-Afghanistan US seems more open than India to political change in Dhaka.
- For now, India may prefer to keep silent on the linking of the US visa policy in Bangladesh to free and fair elections in the country.
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For Prelims: Relations between US and Bangladesh, Generalised Scheme of Preferences Plus (GSP+), RAB (Rapid Action Battalion), Teesta River, and visa policy.
For Mains: 1. Discuss the relationship between US and Bangladesh and explain the view of Bangladesh's government and the opposition to the US's new visa policy. What will be the implications of the US’s new visa policy?
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Source: The Hindu
PRIMARY AGRICULTURAL CREDIT SOCIETIES (PACS)
1. Context
Recently, the union cabinet approved the constitution and empowerment of an Inter-Ministerial Committee (IMC) for the facilitation of the "World's largest Grain Storage Plan in the Cooperative Sector" through the convergence of various schemes of the Ministry of Agriculture and Farmers Welfare, Ministry of Consumer Affairs, Food and Public Distribution and Ministry of Food Processing Industries.
2. Key points
- To ensure time-bound and uniform implementation of the Plan in a professional manner, the Ministry of Cooperation will implement a pilot project in at least 10 selected Districts of different states/UTs in the country.
- The Pilot would provide valuable insights into the various regional requirements of the project, the learnings from which will be suitably incorporated for the country-wide implementation of the Plan.
- All efforts should be made to leverage the strength of the cooperatives and transform them into successful and vibrant business enterprises to realize the vision of "Sahakar-se-Samriddhi".
- To take this vision forward, the Ministry of Cooperation has brought out the "World's Largest Grain Storage Plan in Cooperative Sector".
- The plan entails setting up various types of agri-infrastructure, including warehouses, custom hiring centres, processing units etc. at the levels of PACS, Thus transforming them into multipurpose societies.
- Creation and modernization of infrastructure at the level of PACS will reduce food grain wastage by creating sufficient storage capacity, strengthening the food security of the country and enabling farmers to realise better prices for their crops.
- There are more than 1, 00, 000 PACS in the country with a huge member base of more than 13 crore farmers.
- Given the important role played by PACS at the grass root level in transforming the agricultural and rural landscape of the Indian economy and leveraging their deep reach up to the last mile, this initiative has been undertaken to set up decentralized storage capacity at the level of PACS along with other agri infrastructure, which would not only strengthen the food security of the country but would also enable PACS to transform themselves into vibrant economic entities.
3. About Primary Agricultural Credit Societies
- PACS are village-level cooperative credit societies that serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level.
- Credit from the SCBs is transferred to the district central cooperative banks or DCCBs that operate at the district level. The DCCBs work with PACS, which deals directly with farmers.
- Since these are cooperative bodies, individual farmers are members of the PACS and office-bearers are elected from within them.
- A village can have multiple PACS and be involved in short-term lending or what is known as crop loans.
- At the start of the cropping cycle, farmers avail credit to finance their requirement of seeds, fertilisers etc.
- Banks extend this credit at 7 per cent interest, of which 3 per cent is subsidised by the Centre and 2 per cent by the state government. Effectively, farmers avail the crop loans at 2 per cent interest only.
4. Implementation
- An Inter-Ministerial Committee (IMC) will be constituted under the Chairmanship of the Minister of Cooperation with the Minister of Agriculture and Farmers Welfare, Minister of Consumer Affairs, Food and Public Distribution, Minister of Food Processing Industries and Secretaries concerned as members to modify guidelines and implementation methodologies of the schemes of the respective Ministries as and when the need arises, within the approved outlays and prescribed goals, for facilitation of the "World's Largest Grain Storage Plan in Cooperative Sector" by the creation of infrastructure such as godowns, etc, for Agriculture and Allied purpose, at selected "viable PACS".
- The Plan would be implemented by utilizing the available outlays provided under the identified schemes of the respective Ministries.
The following schemes have been identified for convergence under the Plan:
4.1. Ministry of Agriculture and Farmers Welfare
- Agriculture Infrastructure Fund (AIF)
- Agricultural Marketing Infrastructure Scheme (AMI)
- The mission for Integrated Development of Horticulture (MIDH)
- Sub Mission on Agricultural Mechanization (SMAM)
4.2. Ministry of Food Processing Industries
- Pradhan Mantri Formalization of Micro Food Processing Enterprises Scheme (PMFME)
- Pradhan Mantri Kisan Sampada Yojana (PMKSY)
4.3. Ministry of Consumer Affairs, Food and Public Distribution
- Allocation of food grains under the National Food Security Act
- Procurement operations at Minimum Support Price
5. Benefits of the Plan
- The plan is multi-pronged and it aims to address not just the shortage of agricultural storage infrastructure in the country by facilitating the establishment of godowns at the level of PACS, but would also enable PACS to undertake various other activities, viz:
- Functioning as Procurement centres for State Agencies or Food Corporation of India (FCI).
- Serving as Fair Price Shops (FPS)
- Setting up custom hiring centres
- Setting up common processing units, including assaying, sorting and grading units for agricultural produce etc.
- Further, the creation of decentralized storage capacity at the local level would reduce food grain wastage and strengthen the food security of the country.
- By providing various options to the farmers, would prevent the distressed sale of crops, thus enabling the farmers to realise better prices for their produce.
- It would hugely reduce the cost incurred in the transportation of food grains to procurement centres and again transporting the stocks back from warehouses to FPS.
- Through a "whole of Government" approach, the Plan would strengthen PACS by enabling them to diversify their business activities, thus enhancing the incomes of the farmer members as well.
6. Time frame and manner of implementation
- National Level Coordination Committee will be formed within one week of the Cabinet approval.
- Implementation guidelines will be issued within 15 days of the Cabinet approval.
- A portal for the linkage of PACS with Govt. of India and State Governments will be rolled out within 45 days of the Cabinet approval.
- Implementation of the proposal will start within 45 days of the Cabinet approval.
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For Prelims: PACS, Inter-Ministerial Committee, Ministry of Agriculture and Farmers Welfare, Ministry of Consumer Affairs, Food and Public Distribution, Ministry of Food Processing Industries, State Cooperative Banks, district central cooperative banks, National Level Coordination Committee, For Mains:
1. What are Primary Agricultural Credit Societies (PACS)? Discuss the various programmes implemented by the Government to strengthen the Primary Agricultural Credit Societies in the country. (250 Words)
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Previous Year Questions
1. Consider the following statements: (UPSC 2020)
1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: B
2. With reference to organic farming in India, consider the following statements: (UPSC 2018)
1. 'The National Programme for Organic Production' (NPOP) is operated under the guidelines and directions of the Union Ministry of Rural Development.
2. 'The Agricultural and Processed Food Products Export Development Authority' (APEDA) functions as the secretariat for the implementation of NPOP.
3. Sikkim has become India's first fully organic State.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 3 only D. 1,2 and 3
Answer: B
3. With what purpose is the Government of India promoting the concept of "Mega Food Parks"? (UPSC 2011)
1. To provide good infrastructure facilities for the food processing industry.
2. To increase the processing of perishable items and reduce wastage.
3. To provide emerging and eco-friendly food processing technologies to entrepreneurs.
Select the correct answer using the codes given below:
A. 1 only B. 1 and 2 only C. 2 and 3 only D. 1, 2 and 3
Answer: B
4. With reference to “Urban Cooperative Banks" in India, consider the following statements: (UPSC 2021)
1. They are supervised and regulated by local boards set up by the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966
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 only
Answer: B
5. With reference to 'Financial Stability and Development Council', consider the following statements: (UPSC 2016)
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macroprudential supervision of the economy.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 3 only C. 2 and 3 only D. 1, 2 and 3
Answer: C
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Source: PIB
SERVICE SECTOR
1. Context
India's Gross Domestic Product (GDP) clocked a higher-than-expected growth rate of 6.1 percent in January-March 2023, in turn pushing up the growth estimate for the full year 2022-23 to 7.2 percent, according to data released Wednesday by the National Statistical Office (NSO). This is higher than NSO’s advance estimates of 7 percent for 2022-23
The January-March GDP growth reflected a broad-based strengthening of the growth impulse across segments, especially agriculture, and the services sector output, and capital formation appears to be gaining strength on the expenditure side. An area of concern remains the struggling private consumption demand.
2. What is Service Sector?
- The service sector produces intangible goods, more precisely services instead of goods, and according to the U.S. Census Bureau, it comprises various service industries including warehousing and transportation services; information services; securities and other investment services; professional services; waste management; health care and social assistance; and arts, entertainment, and recreation.
- Countries with economies centered around the service sector are considered more advanced than industrial or agricultural economies.
- The service sector is the third sector of the economy, after raw materials production and manufacturing.
- The service sector includes a wide variety of tangible and intangible services from office cleaning to rock concerts to brain surgery.
- The service sector is the largest sector of the global economy in terms of value-added and is especially important in more advanced economies.
3. Understanding service sector
- The service sector, also known as the tertiary sector, is the third tier in the three-sector economy, Instead of product production, this sector produces services maintenance and repairs, training, or consulting.
- Examples of service sector jobs include housekeeping, tours, nursing, and teaching.
- By contrast, individuals employed in the industrial or manufacturing sectors produce tangible goods such as cars, clothes, or equipment.
- Among the countries that place heavy emphasis on the service sector, the United States, the United Kingdom, Australia, and China rank among the top.
- In the United States, the Institute for supply management (ISM) produces a monthly index that details the general state of business activity in the service sector.
- This index is regarded as a metric for the overall economic health of the country because approximately two-thirds of U.S. economic activity occurs in the service sector.
4. Service sector in the three-part economy
- The service or tertiary sector is the third place of a three-part economy.
- The first economic sector, the primary sector, covers the farming, mining, and agricultural business activities in the economy.
- The secondary sector covers manufacturing and business activities that facilitate the production of tangible goods from the raw materials produced by the Primary sector.
- The service sector, though classified as the third economic sector, is responsible for the largest portion of the global economy's business activity.
5. Technology in the Service Sector
- Technology, specifically information technology systems, is shaping the way businesses in the service sector operate.
- Businesses in this sector are rapidly placing more focus on what is becoming known as the Knowledge economy, or the ability to surpass competitors by understanding what target customers want and need, and operate in a way that meets those wants and needs quickly with minimal cost.
- In nearly all industries within the sector, businesses adopt new technology to bolster production, increase speed and efficiency, and cut down on the number of employees required for operation. This cuts down on costs and improves incoming revenue streams.
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For Prelims: Gross Domestic Product (GDP), Service Sector, National Statistical Office (NSO), Institute for supply management (ISM).
For Mains: 1. Discuss the significance of the service sector to India's economy and explain the challenges faced by the service sector in India.
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Source: Investopedia
GREEN DEPOSITS
1. Context
Reserve Bank of India on Tuesday issued detailed guidelines for acceptance of ‘green deposits’ by banks and NBFCs wherein the funds could be used for financing activities like renewable energy, green transport and green buildings
2. Key takeaways
- The Reserve Bank of India issued detailed guidelines for acceptance of ‘green deposits’ by banks and NBFCs wherein the funds could be used for financing activities like renewable energy, green transport and green buildings. Hence, statement 1 is not correct.
- The financial sector can play a pivotal role in mobilising resources and their allocation thereof in green activities/projects
- Climate change has been recognised as one of the most critical challenges and globally, various efforts have been taken to reduce emissions as well as promote sustainability
- The purpose and rationale for the framework are to encourage Regulated Entities (REs) to “offer green deposits to customers, protect the interest of the depositors, aid customers to achieve their sustainability agenda, address greenwashing concerns and help augment the flow of credit to green activities/projects”
- The projects must encourage energy efficiency in resource utilisation, reduce carbon emissions and greenhouse gases, promote climate resilience and/or adaptation and value and improve natural ecosystems and biodiversity
- The projects or activities which are on the list where REs could allocate the proceeds raised through green deposits are renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, and green buildings
- Some of the projects are excluded from the list such as new or existing extraction, production and distribution of fossil fuels; nuclear power generation; and direct waste incineration
- Renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, and green buildings, are among the list of projects/activities where REs could allocate the proceeds raised through green deposits
- RBI has also mentioned about a list of ‘exclusions’ for REs, This includes projects involving new or existing extraction, production and distribution of fossil fuels; nuclear power generation; and direct waste incineration
- Banks and NBFCs will have to put in place a comprehensive board-approved policy on green deposits.
Source: indianexpress
