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News 1: ADB pares India FY23 GDP growth forecast to 7%, from 7.5%
Background:
- The lender also raised its inflation projection for India for this year to 6.7% and widened the current account deficit (CAD) estimate to 3.8% of GDP.
- The ADB sees the CAD narrowing to 2.1% of GDP in 2023-24, while inflation is anticipated to slow to 5.8% as demand pressures from strengthening economic activity are seen offset by easing supply bottlenecks.
Case of India:
- India’s first-quarter growth of 13.5% reflected strong growth in services, but GDP growth forecasts were being revised downward as price pressures were expected to adversely impact domestic consumption and sluggish global demand and elevated oil prices would likely be a drag on net exports, the bank said. The ADB pegs FY24 growth at 7.2%.
- Observing that inflation had turned out to be more persistent than expected, and led to a sharp tightening in monetary policy, the ADB said price gains were eroding consumers’ purchasing power. “Sticky core inflation will adversely impact spending over the next two years if wages fail to adjust,” it warned.
- “Subsidised fertiliser and gas, the free food distribution programme, and the excise duty cuts will help offset some of the effects of high inflation on consumers, but the tax on packaged food products will likely be a burden on consumers already dealing with rising inflation,” the ADB noted in its update.
Asian Development Bank:
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- Established: 1966
- Headquarter: Manila, Philippines
- Members: 68 members (49 are from Asia and Pacific and 19 are from outside)
- The Asian Development Bank (ADB) envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty in the region.
- ADB is an official United Nations Observer
- Type: Multilateral development bank
Voting:
- The ADB was modeled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions.
- As of 31 December 2020, Japan and the United States each holds the largest proportion of shares at 15.571%. China holds 6.429%, India holds 6.317%, and Australia holds 5.773%
Mission and Function:
- ADB assists its members, and partners, by providing loans, technical assistance, grants, and equity investments to promote social and economic development.
- ADB maximizes the development impact of its assistance by facilitating policy dialogues, providing advisory services, and mobilizing financial resources through co-financing operations that tap official, commercial, and export credit sources.
- The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific and non-regional developed countries.
News 2: Bank GNPAs may hit decadal low of 4% in FY24: Crisil Ratings
Background:
- The gross non-performing assets (GNPAs) of banks is expected to improve 90 basis points (bps) to 5% this fiscal year-on-year, and another 100 bps to a decadal low of 4% by March 31, 2024 , riding on post-pandemic economic recovery and higher credit growth, Crisil Ratings said.
- The asset quality of the banking sector would also benefit from the proposed sale of NPAs to the National Asset Reconstruction Company Ltd. (NARCL), it said.
NARCL:
- NARCL has been incorporated under the Companies Act and will work as an asset reconstruction company.
- NARCL will pick up bad loans above a certain threshold from banks and would aim to sell them to prospective buyers of distressed debt.
- NARCL will be responsible for valuing bad loans to determine at what price they would be sold and would provide government receipts to banks as it takes on non-performing assets from their books.
- State owned banks will hold 51% stake, while FIs or debt management companies will hold 49%.
Non-performing assets:
- An asset becomes non-performing when it ceases to generate income for the bank.
- A non-performing asset (NPA) is a loan or an advance where.
- interest and/ or instalment of principal remains overdue for a period of more than 90 days in respect of a term loan,
- the account remains ‘out of order’, in respect of an Overdraft/Cash Credit (OD/CC),
- the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
- the instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops,
- the instalment of principal or interest thereon remains overdue for one crop season for long duration crops,
- the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of the Reserve Bank of India (Securitization of Standard Assets) Directions, 2021.
- in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.
News 3: With ₹19,500-crore PLI plan, sun shines on solar cell units
Background:
- The Cabinet on Wednesday cleared a ₹19,500-crore production-linked incentive (PLI) scheme to incentivise manufacture of domestic solar cell modules to reduce the industry’s reliance on Chinese-made panels.
PLI scheme to incentivize manufacture of domestic modules:
- Bidders for projects will be given PLI to set up and run manufacturing facilities that will span the entire production cycle of modules from making the polysilicon cells, ingots, wafers and panels to assembling modules that are used to produce electricity.
- Officials from the Ministry of New and Renewable Energy, estimate manufacturing capacity worth 65,000 MW of fully and partially integrated solar PV modules to be installed over five years.
- The bulk of the allocation, of nearly ₹12,000 crore, is to incentivise the setting up of integrated manufacturing facilities because there is no installed capacity in India to manufacture polysilicone and wafers (the raw material for solar panels).
- This would bring in a direct investment of around ₹94,000 crore, directly employ about 1, 95,000 persons and indirectly around 7, 80,000 persons.
- It would save India close to ₹1.37 trillion in imports.
- India has committed, as part of climate commitments, to a target of installing 5, 00,000 MW of electricity capacity from non-fossil fuel-based sources by 2030 and this translates to 280,000 MW to 300,000 MW from solar electricity alone.
Reason for PLI scheme for domestic manufacture of solar pv cells:
- Large imports of solar PV panels pose risks in supply-chain resilience and have strategic security challenges considering the electronic nature of the value chain.
- It will also incentivize domestic and global players to build large scale PV capacity in India and help India leapfrog in capturing the global value chains for solar PV manufacturing.
Production Linked Incentive scheme:
- The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in the following 10 key sectors for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
- The PLI scheme will be implemented by the concerned ministries/departments and will be within the overall financial limits prescribed. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet.
- The PLI scheme across these 10 key specific sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain.
PLI in 10 sectors:
- Advance Chemistry cell battery, Electronic/Technology products, Automobiles and auto components, pharmaceutical drugs, Telecom and networking products, Textile products, Food products, High efficiency solar PV modules, White Goods and speciality steel.
News 4: ISRO successfully tests hybrid propulsion system, to aid future technologies
Background:
- The Indian Space Research Organisation (ISRO) said on Wednesday that it successfully demonstrated a hybrid propulsion system that used a solid fuel and liquid oxidiser.
- The hybrid system is more efficient, “greener” and safer to handle, and paves the way for new propulsion technologies for future missions.
ISRO:
- Formed: 1969
- Founder: Vikram Sarabhai
- Type: Premier space agency of India under Department of Space
- ISRO is India’s primary agency for performing tasks related to space-based applications, space exploration, and the development of related technologies.
- ISRO is one of six government space agencies in the world which possess full launch capabilities, deploy cryogenic engines, launch extraterrestrial missions, and operate large fleets of artificial satellites.
- India decided to go to space when Indian National Committee for Space Research (INCOSPAR) was set up by the Government of India in 1962.
- With the visionary Dr Vikram Sarabhai at its helm, INCOSPAR set up the Thumba Equatorial Rocket Launching Station (TERLS) in Thiruvananthapuram for upper atmospheric research.
- ISRO maintains one of the largest fleet of communication satellites (INSAT) and remote sensing (IRS) satellites, that cater to the ever-growing demand for fast and reliable communication and earth observation respectively.
- ISRO develops and delivers application specific satellite products and tools to the Nation: broadcasts, communications, weather forecasts, disaster management tools, Geographic Information Systems, cartography, navigation, telemedicine, dedicated distance education satellites being some of them.
News 5: Assam and Mizoram to set up panels to study border sectors
Background:
Assam and Mizoram are in the process of forming regional committees to study the disputed sectors along the 164.6 km border between them.
Assam CM Himanta Biswa Sarma made the announcement after meeting his Mizoram counterpart Zoramthanga in New Delhi on Wednesday for resolving the four-decade-old boundary issue.
Assam – Mizoram Border dispute:
The boundary between present-day Assam and Mizoram, 165 km long today, dates back to the colonial era, when Mizoram was known as Lushai Hills, a district of Assam.
The dispute stems from a notification of 1875 that differentiated the Lushai Hills from the plains of Cachar, and another of 1933, that demarcates a boundary between the Lushai Hills and Manipur.
Mizo leaders have argued in the past against the demarcation notified in 1933 because Mizo society was not consulted. MZP’s Vanlaltana said the Assam government follows the 1933 demarcation, and that was the point of conflict.
News 6: Non-communicable diseases led to 66% of deaths in India in 2019: WHO
Background:
- Every two seconds, one person under the age of 70 dies of a non-communicable disease (NCD) with 86 per cent of those deaths occurring in low- and middle-income countries.
- In India, 66 per cent of total deaths were due to NCDs in 2019, a new WHO report: ‘Invisible numbers – the true scale of non-communicable diseases’ stated.
Statistics:
- Over 60.46 lakh people died due to NCDs in India in 2019, according to the report.
- The report further revealed that there was a 22 per cent probability of death between the age of 30 and 70 due to any type of non-communicable disease, including cardiovascular diseases, cancer, diabetes or chronic obstructive pulmonary disease.
- Over 25.66 lakh deaths in 2019 in the country were due to cardiovascular diseases while 11.46 lakh deaths were due to chronic respiratory diseases.
- Cancer led to 9.20 lakh deaths while 3.49 lakh deaths in the country were attributed to diabetes.
- Diabetes is one of the most common non-communicable diseases and reduction in risk factors will help not only in preventing diabetes, but also hypertension, heart disease and even several forms of cancers.
- One in 28 deaths – 2.0 million people a year – is due to diabetes.
- As per the report, more than 95 per cent of diabetes cases globally are of type 2 diabetes.
- Addressing major risk factors that lead to these diseases – tobacco use, unhealthy diet, harmful use of alcohol, physical inactivity and air pollution – could prevent or delay significant ill health and a large number of deaths from many NCDs, according to the report.
- The report also stated that Covid-19 highlighted the links between NCDs and infectious disease, with serious impacts on NCD care. In the early months of the pandemic, 75 per cent of countries reported disruption to essential NCD services.
- In 2022, only a handful of countries were on track to meet the Sustainable Development Goal target to reduce early deaths from NCDs by a third by 2030.
Other important news
Uighurs (Uyghurs):
- Uighurs are Turkic ethnic group who speak their own language, which is similar to Turkish, and see themselves as culturally and ethnically close to Central Asian nations. They make up less than half of the Xinjiang population.
- The Uyghurs, mostly Muslims, are recognized as native to the Xinjiang Uyghur Autonomous Region in Northwest China.
- The Uyghurs in recent decades have seen a mass migration of Han Chinese (China’s ethnic majority) into Xinjiang, allegedly orchestrated by the state to dilute the minority population there.
Importance of Xinjiang:
- Xinjiang is a mostly desert region and produces about a fifth of the world’s cotton.
- The region is also rich in oil and natural gas and because of its proximity to Central Asia and Europe is seen by Beijing as an important trade link.
PM CARES (Citizens’ Assistance and Relief in Emergency Situations Fund)
- Formed: 2020
- A dedicated fund with the primary objective of dealing with any kind of emergency or distress situation, like posed by the COVID-19 pandemic, and to provide relief to the affected, a public charitable trust under the name of ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)’ was set up.
Constitution of the trust:
- Ex-officio chairman: Prime Minister
- Ex-officio trustees: Minister of Defence, Minister of Home Affairs and Minister of Finance, Government of India
- The Chairperson of the Board of Trustees (Prime Minister) shall have the power to nominate three trustees to the Board of Trustees who shall be eminent persons in the field of research, health, science, social work, law, public administration and philanthropy.
- Any person appointed a Trustee shall act in a pro bono capacity.
Objectives:
- To undertake and support relief or assistance of any kind relating to a public health emergency or any other kind of emergency, calamity or distress, either man-made or natural, including the creation or upgradation of healthcare or pharmaceutical facilities, other necessary infrastructure, funding relevant research or any other type of support.
- To render financial assistance, provide grants of payments of money or take such other steps as may be deemed necessary by the Board of Trustees to the affected population.
- To undertake any other activity, which is not inconsistent with the above Objects.
Shrinkflation:
- Shrink inflation is when a product downsizes its quantity while keeping the price the same. For example, reducing the scoops of ice cream in a container or reducing the number of chips in a packet would count as shrinkflation.
- In other words, shrinkflation occurs when goods shrink in size, but consumers pay the same price. It occurs when manufacturers downsize products to offset higher production costs but keep retail prices same.
- Shrinkflation occurs when materials or ingredients used to make products become more expensive and when there is intense competition in the market. As a result, instead of raising prices, they might just give you less of the product so as to maintain their profit margins.
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.