News 1: FM urges World Bank arm IFC to raise lending to India
Background:
- Finance Minister Nirmala Sitharaman has urged the World Bank’s private sector investment arm, the International Finance Corporation (IFC), to increase lending to India to more than $2 billion in the next two years and to $3-3.5 billion over the next three-four years.
World Bank:
- Established: 1945 (Bretton Woods institution)
- Headquarters: Washington DC
- Type: International financial institution
- Members: 189 countries (India is a member)
- The World Bank is the collective name for the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), two of five international organizations owned by the World Bank Group.
- The World Bank provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects.
- Mission:
- End extreme poverty within a generation and boost shared prosperity
- To end extreme poverty, the Bank’s goal is to decrease the percentage of people living with less than $1.90 a day to no more than 3 percent by 2030.
- To promote shared prosperity, the goal is to promote income growth of the bottom 40 percent of the population in each country.
- Reports and Indexes: Ease of Doing business index (Shelved after corruption charges), Human Capital Index, World Development Report
IFC:
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- Established: 1956
- Headquarter: Washington DC
- Type: Development Financial Institution
- Member: 185 countries
- Mission: Advance economic development by encouraging the growth of private enterprise in developing countries.
- IFC is the largest global development institution focused on the private sector in developing countries.
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- IFC, a member of the World Bank Group, advances economic development and improves the lives of people by encouraging the growth of the private sector in developing countries.
- How IFC leads the way in private sector development?
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- Investing in companies through loans, equity investments, debt securities and guarantees.
- Mobilizing capital from other lenders and investors through loan participations, parallel loans and other means.
- Advising businesses and governments to encourage private investment and improve the investment climate.
News 2: No negotiations at the cost of food security
Background:
No negotiation is possible at the cost of food security, Union Agriculture and Farmers Welfare Minister Narendra Singh Tomar said at the ninth session of the governing body of the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) on Monday.
International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA):
- Signed in 2001 and came in force in 2004
Aim of the treaty:
- recognizing the enormous contribution of farmers to the diversity of crops that feed the world;
- establishing a global system to provide farmers, plant breeders and scientists with access to plant genetic materials;
- ensuring that recipients share benefits they derive from the use of these genetic materials with the countries where they have been originated.
- The ITPGRFA was signed during the 31st session of the United Nations Food and Agriculture Organisation (FAO) in Rome in November 2001.
Food and Agriculture Organization:
- Established: 1945
- Headquarter: Rome, Italy
- Type: UN specialized agency
- Aim: Leading international efforts to defeat hunger. Achieve food security for all, Ensuring people have regular access to enough high quality food to lead active, healthy lives
- It helps governments and development agencies coordinate their activities to improve and develop agriculture, forestry, fisheries, and land and water resources.
- It also conducts research, provides technical assistance to projects, operates educational and training programs, and collects data on agricultural output, production, and development.
- Members: 194 countries and the European Union
Programmes:
Codex Alimentarius:
- FAO and the World Health Organization created the Codex Alimentarius Commission in 1961 to develop food standards, guidelines and texts such as codes of practice under the Joint FAO/WHO Food Standards Programme.
- The main aims of the programme are protecting consumer health, ensuring fair trade and promoting co-ordination of all food standards work undertaken by intergovernmental and non-governmental organization.
Globally Important Agricultural Heritage Systems:
- A GIAHS is a living, evolving system of human communities in an intricate relationship with their territory, cultural or agricultural landscape or biophysical and wider social environment.
- Located in specific sites around the world, they sustainably provide multiple goods and services, food and livelihood security for millions of small-scale farmers.
GIAHS in India:
- Koraput traditional agriculture, Odisha
- Kuttanad below sea level farming system, Kerala
The overall goal of the GIAHS Programme is:
- to identify and safeguard Globally Important Agricultural Heritage Systems and their associated landscapes, agricultural biodiversity, knowledge systems and culture.
- Publications: State of the World’s forests, The state of food security and nutrition in the world
News 3: India-Egypt
Background:
- India and Egypt agreed to further develop military cooperation and focus on joint training, defence co-production and maintenance of equipment. This was agreed as Defence Minister Rajnath Singh called on Egyptian President Abdel Fattah Al-Sisi in Cairo on Monday.
- They emphasised the need for coproduction and to discuss specific proposals in that regard, the Defence Ministry said. Mr. Singh is on a two-day visit to Egypt.
India – Egypt cooperation:
- India and Egypt to exchange expertise and best practices in countering the threat of terrorism.
- The two countries are set to sign a Memorandum of Understanding (MoU) on defence cooperation. Egypt has expressed interest in acquiring military platforms from India. Among other things, the Egypt government is considering the indigenous Light Combat Aircraft (LCA) for its fighter requirement. Defence acquisition by Egypt will give a fillip to exports, increase in revenues and Make in India.
- India and Egypt are founding members of Non-Aligned Movement.
- The year 2022 is of particular significance since it marks the 75th anniversary of diplomatic relation between India and Egypt.
- Wheat export from India: Russia-Ukraine conflict has threatened Egypt with a shortage for wheat, 80% of which is imported from Russia and Ukraine. On 14 April 2022, Egyptian Cabinet announced inclusion of India in the list of accredited countries which can supply wheat to Egypt, thus ending a long pending Non-Tariff Barrier.
- Bilateral trade has expanded rapidly in 2021-22, amounting to 7.26 billion registering a 75% increase compared to FY 2020-21. India’s exports to Egypt during this period amounted to US$ 3.74 billion.
News 4: Death penalty: SC moots fair hearing
Background:
- The Supreme Court on Monday referred to a Constitution Bench the question of how to provide accused in death penalty cases a “meaningful, real and effective” hearing of their mitigating circumstances before a trial judge.
- A three-judge Bench led by Chief Justice of India U.U. Lalit said the presentation of mitigating factors by an accused to avoid the “extreme penalty of death” was a “valuable right”.
Death penalty case:
- While the state is given a chance to present aggravating circumstances against the accused throughout the duration of a trial, the accused is given a chance to show mitigating circumstances only after conviction, the court noted.
- “The accused can scarcely be expected to place mitigating circumstances on the record, for the reason that the stage for doing so is after conviction… This places the convict at a hopeless disadvantage, tilting the scales heavily against him,” Justice S. Ravindra Bhat, who authored the verdict, said.
- The three-judge Bench said a uniform approach has to be moulded to afford the accused a fair opportunity to present mitigating circumstances at the trial stage before their crime is declared “rarest of rare” and they are sentenced to death.
- The reference to a larger Bench to examine an issue which has affected the fundamental rights of accused in death penalty cases may signal a move from the top court to veer criminal justice system away from death penalty itself.
- The judgment is significant as it identifies and seeks to resolve a debate on whether the death penalty, though considered a rarest of rare punishment, is being administered casually by the trial courts.
News 5: IBBI amends norms: Maximum value of co, market linked solutions
Background:
- Aiming to provide better market-linked solutions for stressed companies, the Insolvency and Bankruptcy Board of India has amended its regulations to allow sale of one or more assets of an entity undergoing insolvency proceedings, besides other charges.
- The company’s committee of creditors can now examine whether a compromise or an arrangement can be explored for a corporate debtor during the liquidation period.
IBBI (Insolvency and Bankruptcy Board of India):
- Established: 2016 under the Insolvency and Bankruptcy Code, 2016 (Code)
- Headquarter: New Delhi
- It is a key pillar of the ecosystem responsible for implementation of the Code that consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.
- Regulation: It is a unique regulator: regulates a profession as well as processes. It has regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies, Insolvency Professional Entities and Information Utilities.
- It has recently been tasked to promote the development of, and regulate, the working and practices of, insolvency professionals, insolvency professional agencies and information utilities and other institutions, in furtherance of the purposes of the Code.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.