News 1: Issues with the FinTech Industry
- Reserve Bank of India (RBI) Governor Shaktikanta Das on Tuesday flagged concerns related to digital lending including a spate of complaints regarding usurious interest rates, unethical recovery practices and data privacy issues and emphasized the need for the fintech industry to focus on governance, business conduct, regulatory compliance and risk mitigation to ensure that customers were protected even as their needs were served.
Digital lending and privacy:
- RBI mandated digital lending platforms to disclose the names of the banks/ NBFCs upfront on whose behalf they were providing credit.
- The regulatory norms aim to balance customer protection and business conduct on the one hand and support innovation on the other
- Innovations must be responsible, enhances the efficiency and resiliency of the financial system while benefitting the consumers.
- Robust internal product and service assurance frameworks, together with fair and transparent governance, would go a long way to safeguard the interests of customers and ensure long-term sustainability of the fintech entities themselves.
Fintech:
- The term Fintech (Financial Technology) refers to technology-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated material effect on the provision of financial services.
- As per EY Fintech Adoption Index, 2017, India ranks 2nd in terms of fintech adoption.
Benefits of Fintech:
- Designing suitable financial products that cater to specific needs of the financially excluded population
- Digital onboarding and boosting the quantum of investments
- Improves the quality of traditional financial institutions by increasing efficiency and productivity
- Ease of convenience and reduced costs is the power of fintech
Risks related to fintech:
- Systemic risks may arise due to unsustainable credit growth, increased interconnectedness, Development of new activities beyond the supervisory framework
- Data confidentiality and customer protection
- Financial risks manifested by lower profitability
- Cross border legal and regulatory issues might affect the performance
News 2: RBI lifts PCA restriction on Central Bank of India
Background:
- The Reserve Bank of India (RBI) has decided to take Central Bank of India out of the Prompt Corrective Action (PCA) restrictions subject to certain conditions and continuous monitoring.
Prompt Corrective Action:
- Prompt Corrective Action or PCA is a framework under which financial institutions with weak financial metrics are put under watch by the RBI.
- It can be applied to both RBI and NBFCs
- The central bank will track three indicators
- Capital To Risk-Weighted Assets Ratio (CRAR) – It is bank’s available capital expressed as a percentage of a bank’s risk-weighted credit exposures.
- Tier I leverage ratio – It is the relationship between a banking organization’s core capital and its total assets.
- Net Non-Performing Assets (NNPAS) Including Non-Performing Investments (NPIS). NPA are loans for which the principal or interest payment remained overdue for a period of over 90 days
News 3: Southwest monsoon begins early withdrawal in Rajasthan
Background:
- September 30 is considered the final day of the season for the entire country; while India has recorded 7% more rainfall than normal, the southern peninsula and central parts have had the bulk of the excess at 29% and 33%, respectively.
- The withdrawal of the monsoon was based on meteorological conditions such as an anti-cyclonic circulation (dry air that is the opposite of a cyclone), the absence of rain in the past five days and the water vapour imagery indicating dry weather conditions over the region.
Retreating monsoon and October Heat:
- During October-November, with the apparent movement of the sun towards the south, the monsoon trough or the low-pressure trough over the northern plains becomes weaker. This is gradually replaced by a high-pressure system.
- The southwest monsoon winds weaken and start withdrawing gradually. By the beginning of October, the monsoon withdraws from the Northern Plains.
- The months of October-November form a period of transition from hot rainy season to dry winter conditions.
- The retreat of the monsoon is marked by clear skies and a rise in temperature.
- While day temperatures are high, nights are cool and pleasant. The land is still moist. Owing to the conditions of high temperature and humidity, the weather becomes rather oppressive during the day. This is commonly known as ‘October heat’.
- In the second half of October, the mercury begins to fall rapidly in northern India.
- The low-pressure conditions, over northwestern India, get transferred to the Bay of Bengal by early November. This shift is associated with the occurrence of cyclonic depressions, which originate over the Andaman Sea.
- These cyclones generally cross the eastern coasts of India cause heavy and widespread rain. These tropical cyclones are often very destructive. The thickly populated deltas of the Godavari, the Krishna, and the Kaveri are frequently struck by cyclones, which cause great damage to life and property. Sometimes, these cyclones arrive at the coasts of Orissa, West Bengal, and Bangladesh. The bulk of the rainfall of the Coromandel Coast is derived from depressions and cyclones.
News 4: China remains formidable challenge, says Navy chief
Background:
- China remains a formidable challenge and has increased its presence not only along India’s land borders, but also in the maritime domain by leveraging anti-piracy operations to normalise its naval presence in the Indian Ocean Region (IOR)
Presence of Chinese Navy:
- The Navy chief noted that China had maintained continuous presence in the IOR since 2008 using anti-piracy operations “as the reason”.
- China now had a base in Djibouti and was also involved in the development of various ports in the IOR, Sri Lanka, Myanmar, Pakistan and many other countries.
News 5: The ‘triple dip’ La Niña, and its likely impact in India
Background:
- La Niña refers to the ENSO phase in which sea-surface temperatures are cooler than normal. Continuance of La Niña into 2023 is not bad news from the Indian standpoint, but it is not the same for other regions.
- The ongoing La Niña phase of the equatorial Pacific Ocean has just been predicted to persist for at least another six months, making it one of the longest ever La Niña episodes in recorded history. It is also only the third episode since 1950 to stretch into a third year.
La Nina and El Nino:
- The periodic warming and cooling of surface waters in the equatorial Pacific Ocean — a phenomenon described as El Niño Southern Oscillations, or ENSO — is known to trigger widespread changes in atmospheric conditions, and has a major influence on global weather patterns, including the Indian monsoon.
- La Niña refers to the ENSO phase in which sea-surface temperatures are cooler than normal. The warmer phase is known as El Niño.
- El Niño and La Niña episodes typically last for about nine months to a year.
- They usually develop in the March-June period and are the strongest during winter (November-January in the northern hemisphere), before weakening or dissipating by March or April of next year.
- The current La Niña episode has already surpassed that in length. Having started in September 2020, it has prevailed for the last 24 months, and looks set to continue for another six months, and has thus been classified as a ‘triple dip’ La Niña.
- El Niño episodes occur more frequently and are usually associated with more impactful weather events. La Niña, on the other hand, has a longer run.
- That is why multi-year La Niña events, those that continue for more than 12 months, are quite common. An El Niño is more likely to be a single-year event.
- Prolonged La Niña events in those instances could be explained by the fact that the amount of accumulated heat in the oceans was higher, and therefore took a longer time to dissipate.
Likely impact:
- In the Indian context, La Niña is associated with good rainfall during the monsoon season. This is the opposite of El Niño which is known to suppress monsoon rainfall. Thus, a continued spell of La Niña could lead to expectation of another year of good, or normal, rainfall during the monsoon.
- But, even though powerful, ENSO condition is only one of the several factors affecting monsoon rainfall in India. There is no one-on-one correlation between the ENSO condition and the amount of rainfall. Also, the influence of ENSO is at a macro level. There are wide variations in rainfall at the local level, which are getting exacerbated by climate change. The continuance of La Niña further into 2023 is not bad news from the Indian standpoint.
- In most parts of the United States, for example, La Niña is associated with very dry winters. In Australia and Indonesia, and generally in the tropical region, La Niña is expected to bring more rainfall.
- The widespread drought in the United States and flooding in eastern Australia this year could have been a result of the prolonged La Niña. The excessive rainfall in Pakistan, which is experiencing its worst flooding disaster, can also be blamed in part on La Niña.
- In its latest bulletin, the World Meteorological Organization (WMO) said the worsening drought in the Horn of Africa and southern United States carried the “hallmarks of La Niña”, as did the “above average rainfall in southeast Asia and Australasia”. It said that the persistence of La Niña was most likely to result in a worsening of the drought in Africa.
Climate change link:
- The occurrences of El Niño or La Niña are not very regular. Sometimes they emerge every two years, at other times there has been a gap of even seven years. Historical records do not go very far in the past.
- As a result, the natural variability of ENSO is not understood very clearly. And when the natural variability itself is not clear, the influence of global warming is difficult to quantify.
- There have been suggestions that climate change is increasing the frequency and intensity of El Niño and La Niña episodes, but the question is not entirely settled.
- A part of the reason is the fact that trade winds play a very important role in triggering ENSO events. And the changes in the strength of trade winds are not easily explained by global warming.
- During La Niña years, the colder surfaces allow the oceans to absorb more heat from the atmosphere. Consequently, the air temperatures tend to go down, producing a cooling effect.
- However, as pointed out by the WMO, this is not enough to reverse or neutralize the impacts of global warming.
News 6: Nutrition rating stars set to appear soon on food pack labels
Background:
- The Food Safety and Standards Authority of India (FSSAI), the country’s apex food regulator, has released draft notification for front-of-pack labelling to discourage consumers from buying packaged food high in sugar, salt, and fat, which will require pre-packaged food to carry a star graphic — ranging for 0 to 5 — next to the brand name.
- Like the star-rating system for energy efficiency of electronic products, the ‘Indian Nutrition Rating (INR)’ will see the unhealthiest food items carry a 0-star rating and the healthiest carry a 5-star rating.
Draft notification:
- As per the draft notification, items will be given scores based on contribution of energy and content of saturated fat, sugar, sodium, fruit and vegetables (FV), nuts, legumes, and millets (NLM), dietary fibre, and protein per 100 gm of solid or 100 ml liquid foods. Solid food with a score of more than 25 will be given 0.5 stars, and those with a score less than – (minus)11 will get 5 stars.
- Although not mandatory, the notification stated that food businesses may add interpretive information next to the star-rating logo, giving details of energy, sugar, saturated fat, and salt content.
- To generate the star-rating logo for the product, food businesses have to submit nutritional profiles of the products concerned on FSSAI’s FoSCoS (Food Safety Compliance System) portal.
- Food such as milk and milk products, whey, butter oil, ghee, vegetable oil and fat, fresh and frozen fruit and vegetables, fresh and frozen meat, egg, fish, flour, and sweeteners will not have to display the star rating.
- Carbonated beverages without any energy or sugar will also not be eligible for declaring the rating, according to the notification.
FSSAI:
- Ministry: Ministry of Health and Family Welfare
- Type: Statutory body established under the Food Safety and Standards Act, 2006
- FSSAI is responsible for protecting and promoting public health through the regulation and supervision of food safety.
Objective:
- Lay down science-based standards for articles on food
- To regulate the manufacture, storage, distribution, import, and sale of food
- To facilitate the safety of food
Powers of FSSAI:
- Framing of regulations to lay down food safety standards
- Laying down guidelines for accreditation of laboratories for food testing
- Providing scientific advice and technical support to the Central Government
- Contributing to the development of international technical standards in food
- Collecting and collating data regarding food consumption, contamination, emerging risks, etc.
- Disseminating information and promoting awareness about food safety and nutrition in India.
The FSS Act took 7 older acts into one umbrella.
- Prevention of Food Adulteration Act, 1954
- Fruit Products Order, 1955
- Meat Food Products Order, 1973
- Vegetable Oil Products (Control) Order, 1947
- Edible Oils Packaging (Regulation) Order 1988
- Solvent Extracted Oil, De- Oiled Meal and Edible Flour (Control) Order, 1967
- Milk and Milk Products Order, 1992
Eat Right India movement:
- FSSAI has embarked on a large-scale effort to transform the country’s food system in order to ensure safe, healthy and sustainable food for all Indians through the ‘Eat Right India’ movement.
- The tagline ‘Sahi Bhojan. Behtar Jeevan’, thus, forms the foundation of this movement.
- Eat Right India adopts a judicious mix of regulatory, capacity building, collaborative and empowerment approaches to ensure that our food is good both for the people and the planet. Further, it builds on the collective action of all stakeholders – the government, food businesses, civil society organizations, experts and professionals, development agencies and citizens at large.
- Eat Right India is aligned to the National Health Policy 2017 with its focus on preventive and promotive healthcare and flagship programmes like Ayushman Bharat, POSHAN Abhiyaan, Anemia Mukt Bharat and Swacch Bharat Mission.
Other important news
Sambar deer
- Conservation status: Vulnerable
- Distribution: Native to Indian subcontinent and southeast asia but has been introduced in Australia, New Zealand and United States
- Decline in population: Populations have declined substantially due to severe hunting, local insurgency, and industrial exploitation of habitat.
- State animal: Sambar is state animal of Odisha
Chital deer:
- Conservation status: Least concern
- Distribution: Native to Indian subcontinent
- Males are larger than females, and antlers are present only on males
Recent Posts
The United Nations has shaped so much of global co-operation and regulation that we wouldn’t recognise our world today without the UN’s pervasive role in it. So many small details of our lives – such as postage and copyright laws – are subject to international co-operation nurtured by the UN.
In its 75th year, however, the UN is in a difficult moment as the world faces climate crisis, a global pandemic, great power competition, trade wars, economic depression and a wider breakdown in international co-operation.
Still, the UN has faced tough times before – over many decades during the Cold War, the Security Council was crippled by deep tensions between the US and the Soviet Union. The UN is not as sidelined or divided today as it was then. However, as the relationship between China and the US sours, the achievements of global co-operation are being eroded.
The way in which people speak about the UN often implies a level of coherence and bureaucratic independence that the UN rarely possesses. A failure of the UN is normally better understood as a failure of international co-operation.
We see this recently in the UN’s inability to deal with crises from the ethnic cleansing of the Rohingya Muslims in Myanmar, to civil conflict in Syria, and the failure of the Security Council to adopt a COVID-19 resolution calling for ceasefires in conflict zones and a co-operative international response to the pandemic.
The UN administration is not primarily to blame for these failures; rather, the problem is the great powers – in the case of COVID-19, China and the US – refusing to co-operate.
Where states fail to agree, the UN is powerless to act.
Marking the 75th anniversary of the official formation of the UN, when 50 founding nations signed the UN Charter on June 26, 1945, we look at some of its key triumphs and resounding failures.
Five successes
1. Peacekeeping
The United Nations was created with the goal of being a collective security organisation. The UN Charter establishes that the use of force is only lawful either in self-defence or if authorised by the UN Security Council. The Security Council’s five permanent members, being China, US, UK, Russia and France, can veto any such resolution.
The UN’s consistent role in seeking to manage conflict is one of its greatest successes.
A key component of this role is peacekeeping. The UN under its second secretary-general, the Swedish statesman Dag Hammarskjöld – who was posthumously awarded the Nobel Peace prize after he died in a suspicious plane crash – created the concept of peacekeeping. Hammarskjöld was responding to the 1956 Suez Crisis, in which the US opposed the invasion of Egypt by its allies Israel, France and the UK.
UN peacekeeping missions involve the use of impartial and armed UN forces, drawn from member states, to stabilise fragile situations. “The essence of peacekeeping is the use of soldiers as a catalyst for peace rather than as the instruments of war,” said then UN Secretary-General Javier Pérez de Cuéllar, when the forces won the 1988 Nobel Peace Prize following missions in conflict zones in the Middle East, Africa, Asia, Central America and Europe.
However, peacekeeping also counts among the UN’s major failures.
2. Law of the Sea
Negotiated between 1973 and 1982, the UN Convention on the Law of the Sea (UNCLOS) set up the current international law of the seas. It defines states’ rights and creates concepts such as exclusive economic zones, as well as procedures for the settling of disputes, new arrangements for governing deep sea bed mining, and importantly, new provisions for the protection of marine resources and ocean conservation.
Mostly, countries have abided by the convention. There are various disputes that China has over the East and South China Seas which present a conflict between power and law, in that although UNCLOS creates mechanisms for resolving disputes, a powerful state isn’t necessarily going to submit to those mechanisms.
Secondly, on the conservation front, although UNCLOS is a huge step forward, it has failed to adequately protect oceans that are outside any state’s control. Ocean ecosystems have been dramatically transformed through overfishing. This is an ecological catastrophe that UNCLOS has slowed, but failed to address comprehensively.
3. Decolonisation
The idea of racial equality and of a people’s right to self-determination was discussed in the wake of World War I and rejected. After World War II, however, those principles were endorsed within the UN system, and the Trusteeship Council, which monitored the process of decolonisation, was one of the initial bodies of the UN.
Although many national independence movements only won liberation through bloody conflicts, the UN has overseen a process of decolonisation that has transformed international politics. In 1945, around one third of the world’s population lived under colonial rule. Today, there are less than 2 million people living in colonies.
When it comes to the world’s First Nations, however, the UN generally has done little to address their concerns, aside from the non-binding UN Declaration on the Rights of Indigenous Peoples of 2007.
4. Human rights
The Human Rights Declaration of 1948 for the first time set out fundamental human rights to be universally protected, recognising that the “inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world”.
Since 1948, 10 human rights treaties have been adopted – including conventions on the rights of children and migrant workers, and against torture and discrimination based on gender and race – each monitored by its own committee of independent experts.
The language of human rights has created a new framework for thinking about the relationship between the individual, the state and the international system. Although some people would prefer that political movements focus on ‘liberation’ rather than ‘rights’, the idea of human rights has made the individual person a focus of national and international attention.
5. Free trade
Depending on your politics, you might view the World Trade Organisation as a huge success, or a huge failure.
The WTO creates a near-binding system of international trade law with a clear and efficient dispute resolution process.
The majority Australian consensus is that the WTO is a success because it has been good for Australian famers especially, through its winding back of subsidies and tariffs.
However, the WTO enabled an era of globalisation which is now politically controversial.
Recently, the US has sought to disrupt the system. In addition to the trade war with China, the Trump Administration has also refused to appoint tribunal members to the WTO’s Appellate Body, so it has crippled the dispute resolution process. Of course, the Trump Administration is not the first to take issue with China’s trade strategies, which include subsidises for ‘State Owned Enterprises’ and demands that foreign firms transfer intellectual property in exchange for market access.
The existence of the UN has created a forum where nations can discuss new problems, and climate change is one of them. The Intergovernmental Panel on Climate Change (IPCC) was set up in 1988 to assess climate science and provide policymakers with assessments and options. In 1992, the UN Framework Convention on Climate Change created a permanent forum for negotiations.
However, despite an international scientific body in the IPCC, and 165 signatory nations to the climate treaty, global greenhouse gas emissions have continued to increase.
Under the Paris Agreement, even if every country meets its greenhouse gas emission targets we are still on track for ‘dangerous warming’. Yet, no major country is even on track to meet its targets; while emissions will probably decline this year as a result of COVID-19, atmospheric concentrations of greenhouse gases will still increase.
This illustrates a core conundrum of the UN in that it opens the possibility of global cooperation, but is unable to constrain states from pursuing their narrowly conceived self-interests. Deep co-operation remains challenging.
Five failures of the UN
1. Peacekeeping
During the Bosnian War, Dutch peacekeeping forces stationed in the town of Srebrenica, declared a ‘safe area’ by the UN in 1993, failed in 1995 to stop the massacre of more than 8000 Muslim men and boys by Bosnian Serb forces. This is one of the most widely discussed examples of the failures of international peacekeeping operations.
On the massacre’s 10th anniversary, then UN Secretary General Kofi Annan wrote that the UN had “made serious errors of judgement, rooted in a philosophy of impartiality”, contributing to a mass murder that would “haunt our history forever”.
If you look at some of the other infamous failures of peacekeeping missions – in places such as Rwanda, Somalia and Angola – it is the limited powers given to peacekeeping operations that have resulted in those failures.
2. The invasion of Iraq
The invasion of Iraq by the US in 2003, which was unlawful and without Security Council authorisation, reflects the fact that the UN is has very limited capacity to constrain the actions of great powers.
The Security Council designers created the veto power so that any of the five permanent members could reject a Council resolution, so in that way it is programmed to fail when a great power really wants to do something that the international community generally condemns.
In the case of the Iraq invasion, the US didn’t veto a resolution, but rather sought authorisation that it did not get. The UN, if you go by the idea of collective security, should have responded by defending Iraq against this unlawful use of force.
The invasion proved a humanitarian disaster with the loss of more than 400,000 lives, and many believe that it led to the emergence of the terrorist Islamic State.
3. Refugee crises
The UN brokered the 1951 Refugee Convention to address the plight of people displaced in Europe due to World War II; years later, the 1967 Protocol removed time and geographical restrictions so that the Convention can now apply universally (although many countries in Asia have refused to sign it, owing in part to its Eurocentric origins).
Despite these treaties, and the work of the UN High Commission for Refugees, there is somewhere between 30 and 40 million refugees, many of them, such as many Palestinians, living for decades outside their homelands. This is in addition to more than 40 million people displaced within their own countries.
While for a long time refugee numbers were reducing, in recent years, particularly driven by the Syrian conflict, there have been increases in the number of people being displaced.
During the COVID-19 crisis, boatloads of Rohingya refugees were turned away by port after port. This tragedy has echoes of pre-World War II when ships of Jewish refugees fleeing Nazi Germany were refused entry by multiple countries.
And as a catastrophe of a different kind looms, there is no international framework in place for responding to people who will be displaced by rising seas and other effects of climate change.
4. Conflicts without end
Across the world, there is a shopping list of unresolved civil conflicts and disputed territories.
Palestine and Kashmir are two of the longest-running failures of the UN to resolve disputed lands. More recent, ongoing conflicts include the civil wars in Syria and Yemen.
The common denominator of unresolved conflicts is either division among the great powers, or a lack of international interest due to the geopolitical stakes not being sufficiently high. For instance, the inaction during the Rwandan civil war in the 1990s was not due to a division among great powers, but rather a lack of political will to engage.
In Syria, by contrast, Russia and the US have opposing interests and back opposing sides: Russia backs the government of the Syrian dictator Bashar al-Assad, whereas the US does not.
5. Acting like it’s 1945
The UN is increasingly out of step with the reality of geopolitics today.
The permanent members of the Security Council reflect the division of power internationally at the end of World War II. The continuing exclusion of Germany, Japan, and rising powers such as India and Indonesia, reflects the failure to reflect the changing balance of power.
Also, bodies such as the IMF and the World Bank, which are part of the UN system, continue to be dominated by the West. In response, China has created potential rival institutions such as the Asian Infrastructure Investment Bank.
Western domination of UN institutions undermines their credibility. However, a more fundamental problem is that institutions designed in 1945 are a poor fit with the systemic global challenges – of which climate change is foremost – that we face today.