Current Affairs

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Sri Lankan President is on India Visit

Context: After sweeping Presidential and Parliamentary elections, Sri Lankan President Dissanayake is on his maiden visit to India. He met the Indian Prime Minister and has requested to continue its grants assistance to Sri Lanka and help it tide over its economic problems.

Relevance of the topic:

Prelims: Location of Katchatheevu Island. 

Mains: India and its Neighbourhood relations- India & Srilanka. 

Key Takeaways from the Visit

  • Security: Two leaders discussed various issues including regional security, digital infrastructure, connectivity, and energy projects, as well as the Tamil issue and rights of fishermen.
    • It is to be noted that India has often raised concern about Chinese ships berthing in Sri Lankan ports. 
  • Financial Assistance: India announced it would convert loans given to Sri Lanka into grants for railway signalling systems and the Kankesanthurai port and extended a $20.66 million grant to settle payment for projects already completed, which had originally been signed under a ‘Letter of Credit’ or loan. 
  • Energy Security: The two countries agreed to continue their partnership on energy projects, including connecting to a common grid, an India-Sri Lanka “multi-product pipeline” with UAE support, LNG supplies, and completing the Sampur coal power project.
  • Training and Capacity Building: India agreed to train 1,500 Sri Lankan civil servants over five years and to explore further training programs in various sectors.
  • Cooperation in Education and Technology:  Both leaders agreed to expand collaboration in research and development in sectors such as agriculture, aquaculture, digital economy, health and other areas of mutual interest and cooperation between Start-up India and Information Communication Technology Agency of Sri Lanka (ICTA), for mentorship for Sri Lankan start-ups.
  • Provincial Elections: PM Modi also requested Mr. Dissanayake to fulfil their commitment towards fully implementing the Constitution of Sri Lanka and conducting the Provincial Council Elections.
  • Cooperation at Multilateral forums: President Dissanayake has requested India to support Sri Lanka’s bid to join the extended BRICS grouping of emerging economies and for India’s intervention on the United Nations Commission on the Limits of the Continental Shelf (UNCLCS) for the establishment of the outer limits of the continental shelf beyond Exclusive Economic Zone, which Sri Lanka has asked for.

Significance of Sri Lanka for India: 

  • Strategic: India and Sri Lanka share membership in SAARC, BIMSTEC and IORA.
    • Sri Lanka is also important for India in its ambitions to become a net security provider in the Indian ocean.
    • Pursuing Strong ties with Sri Lanka is an integral part of India’s Neighborhood first policy.
  • Trade and Investment: Sri Lanka is one of India’s largest trading partners in South Asia. India in turn is Sri Lanka’s largest trade partner globally. Exports from India to Sri Lanka in 2016 were US$ 3.83 billion.
    • Sri Lanka also provides investment opportunities for Indian Infrastructure companies. E.g., Colombo port west terminal project.
    • India and Sri Lanka entered into a Free trade agreement in 2000. The two countries are negotiating the Economic and Technology Co-operation Agreement (ETCA).
    • Debt relief: India played a key role in Sri Lanka debt relied on deals from the IMF.
    • Digital Payments: Agreement to operationalize UPI-based digital payments for enhancing trade and transactions between businesses and common people.
    • Digital Public Infrastructure: Leverage India’s Digital Public Infrastructure in accordance with Sri Lanka’s requirements.
  • Connectivity: Transshipment ports of Sri Lankan like Colombo and Hambantota handle huge cargo that comes to India, since India did not fully develop a transshipment port in the southern Coast.
    • Maritime Connectivity: Cooperation in developing ports and logistics at Colombo, Trincomalee, and Kankesanthurai to consolidate regional logistics and shipping. o Development Focus: Ports and logistics development at Colombo, Trincomalee, and Kankesanthurai.
    • Maritime Security Cooperation: Inauguration of the Maritime Rescue Coordination Centre (MRCC) to enhance maritime security, with installations across Sri Lanka’s coastline.
    • Trade, Economic, and Financial Connectivity: Operationalise UPI-based digital payments to enhance trade and transactions.
    • People-to-People Connectivity.
  • Energy and Power Connectivity:
    • Power Grid Interconnection: Plan to establish a high-capacity power grid interconnection for electricity trade between Sri Lanka and other regional countries. 
    • Undersea Transmission Line: Ongoing project for a USD 1.2 billion undersea transmission line linking Sri Lanka’s power grid with India to ensure energy security.
  • Tourism: Huge scope for religious tourism (Buddhist tourism) and medical tourism (Sri Lankan patients frequently visit Chennai for medical treatment) 

Issue and Challenges in Relationship:

  • Ethnic issues: The long drawn ethnic conflicts and human rights violation of Tamils, lack of proper rehabilitation and insufficient devolution of powers (Under 13th Amendment act) to the northern Tamil provinces strained the relation between the two countries.
  • UNHRC resolution: India voted against Sri Lanka in UNHRC resolutions in the past (2012 & 2013).
  • Fishermen issues: Sri Lankan fishermen object to Indians using bottom trawlers and fishing illegally along their coast, which often leads to arrests of the Indians. The dispute status of Kachateevu islands is still not resolved.
  • Growing trust deficit:
    • Scrapping of Indian infrastructure projects like Colombo east container terminal project at a time when China is increasing its investments in the same Colombo port city.
    • India’s passive response to Sri Lanka’s request for a debt repayment waiver for 3 years and a separate currency swap for $1 billion to help with the economic crisis.
  • China factor:
    • Recently, Sri Lanka gave approval to the Chinese funded ‘Colombo port city’ with some autonomy.
    • China has developed the Hambantota port which was later leased to it for a period of 99 years.
    • Sri Lanka has already endorsed the Belt & Road Initiative of China.
    • India has often raised concern about Chinese ships berthing in Sri Lankan ports.

Katchatheevu Island Issue

  1. Geographical Location: A 285-acre island located within the maritime boundary line of Sri Lanka. Proximity to India and Sri Lanka: Situated 33 km off the Indian coast to the northeast of Rameswaram in Tamil Nadu and southwest of Sri Lanka’s Delft Island. 
image 108
  1. Historical Control and Ownership:
    • Ramanad Kingdom: The island was historically under the control of Ramanad Raja, a zamindari in Ramanathapuram in the Madras Presidency during British rule (1795 to 1803).
  2. Disputed Claims
    • India and Sri Lanka's Claims: Both countries have been claiming Katchatheevu since at least 1921, following a survey that placed the island within Sri Lanka’s boundaries.
    • Contestation by British Indian Delegation: The British Indian delegation contested Sri Lanka's claim, citing the historical ownership of the Ramanad kingdom.
  3. 1974 Agreement
    • Indira Gandhi’s Tenure: In 1974, during Indira Gandhi's tenure as Prime Minister, India and Sri Lanka signed an agreement that transferred Katchatheevu to Sri Lanka.
    • Fishermen's Rights: The agreement allowed Indian fishermen "access to Katchatheevu for rest, drying of nets, and participation in the annual St. Anthony’s festival."
    • Lack of Clarity on Fishing Rights: The agreement did not specify the fishing rights of Indian fishermen, leaving a critical issue unresolved.

Constitutionalism in India 

Context: Ongoing winter session of parliament has seen speeches from various political parties highlighting the importance of constitutionalism and constitution as a living document. In this context, let us understand these concepts.

Relevance of the Topic: Essay and Mains: Key aspects of Constitutionalism in India. 

What is Constitutionalism?

  • Constitutionalism in India refers to the principle that government authority is derived from and limited by a constitution, which serves as the supreme law of the land. 
  • It ensures that power is exercised within a framework that protects individual rights and liberties, thereby preventing arbitrary governance.
According to Douglas Greenberg, “Constitutionalism is a commitment to limitations on ordinary political power, it revolves around a political process which overlaps with democracy in seeking to balance state power and individual and collective rights, it draws on cultural and historical contexts from which it emanates, and it resides in public consciousness.”

Constitutionalism can be of Positive and Negative nature:

  • Negative Constitutionalism: Views constitutions as a way to limit the state's political power. This model treats the arbitrary powers of state as a threat to liberty of citizens and views constitutionalism as a way to mitigate that threat.
  • Positive Constitutionalism: Views constitutions as a way to make the state's political power effective. This model acknowledges the need for constitutional structures to guard against abuses of power, but also focuses on creating an effective and competent institution that works for the good of its people (welfare state).
    • According to Professor M.P. Singh if a constitution ignores accommodation and respect for diversity and plurality in a society then it fails to meet the requirement of constitutionalism.

Furthermore, merely having a written Constitution is no guarantee for Constitutionalism, even Nazi Germany had a constitution but that does not mean that it adhered to the philosophy of Constitutionalism be it a negative or positive aspect of it. 

Supreme Court of India has made the following observations in this context:

  • SR Chaudhari vs State of Punjab: “Mere existence of a constitution, by itself, does not ensure constitutionalism. What is important is the political traditions of the people and its spirit and determination to work out its constitutional salvation through the chosen system of its political organisation.”
    • Unless primacy to democratic policies and individual rights is not given, Constitutionalism cannot survive. 
    • Subtle assaults to individual rights, especially freedom of Speech and Expression and Privacy, such as sedition laws, surveillance laws, undermine Constitutionalism.
  • RC Poudyal vs UOI: “Mere existence of a constitution, by itself, does not ensure constitutionalism or a constitutional culture. It is the political maturity and traditions of people that give meaning to a constitution which otherwise would merely embody the political hopes and ideals”.

Key aspects of Constitutionalism in India:

  • State by Constitution: Indian constitution delineates the character and structure of the Indian State. The powers and extent of the Indian State are limited by the Constitution. E.g., Separation of power, federal structure etc. 
  • Rule of Law: Constitutionalism emphasises the rule of law, meaning that all actions taken by the state must be grounded in law. This principle is fundamental to maintaining order and justice within society.
  • Fundamental Rights: The rights act as the safeguard against arbitrary state actions. In IR Coelho vs state of TN, S.C. reaffirmed that Fundamental Rights form part of Basic Structure of Indian Constitution.   
  • Written Constitution: Written Constitution provides for a limited government with powers divided among the three organs of the government.
  • Separation of Power:  In NCT of Delhi VS UOI, The court observed: Constitutionalism lies in the distribution of power among state organs, ensuring reciprocal controls and cooperation.
  • Judicial Review: The Supreme Court upholds constitutionalism through its power of judicial review. It has the authority to invalidate laws and executive actions that violate basic structure, thereby protecting citizens' rights.
  • Democratic Framework: Democratic framework which includes regular elections and equal participation in governance also contributes to constitutionalism. This ensures that the government remains accountable to the people.
Constitutionalism in India 

Indian Constitution as a Living Document:

Almost like a living being, the Indian Constitution keeps responding to the circumstances arising from time to time, thus showing flexibility, adaptability, and accommodation towards social changes.

  • Role of Judiciary: Judiciary has played an important role in not only saving the essence of the Constitution but also in its evolution.
    • Basic structure Doctrine: Propounded in the famous Kesavananda Bharati Case, 1973 it restricts the Parliament from altering the essential features of the Constitution or what the Supreme Court termed as the Basic Structure. Basic structure includes various Constitutional ideals such as secularism, rule of law, federalism etc.
  • Judicial Activism: The courts have brought transformative changes through a broad reading of our Constitution. For example, the Supreme Court in its landmark judgment in Justice Puttaswamy case recognised Right to Privacy as a part of Fundamental Rights under Article 21. 
Constitution rights

Indian Trade Deficit at record $37 Billion

Context: The Ministry of Commerce and Industry has released the goods trade deficit data of November 2024. India's goods trade deficit widened to record $37.84 billion. 

Relevance of the topic:

Prelims: Prelims consist of conceptual and factual questions based upon Current and Capital Account Deficit. 

Mains: Analysis on Current Account Deficit (CAD) and its impacts on Nation's Economy. 

Major Highlights:

  • The reason for the high goods deficit is credited to the rise in the gold import which accounted for 20% of the import bills.  
  • The widening trade deficit has raised concerns about its impact on India’s current account deficit (CAD) and the value of the rupee. Economists predict that the current account deficit could widen to 1.4% of GDP, up from the earlier estimate of 1%.
image 105

Implications of High Current Account Deficit:

  • Currency Depreciation: A high CAD results in increased demand for foreign currency to pay for imports. This results in depreciation of Rupee. 
  • Foreign Exchange Reserve Depletion: A high CAD increases demand for foreign currency, thus leading to depletion of forex reserves. The Central bank used the forex reserves to finance the deficit and stabilise the currency. Example; India’s forex reserves declined by $50 billion in recent months due to market interventions. 
  • Increased debt liabilities due to disadvantageous situations in the exchange rate. 
  • Shakes investors confidence over the economy, as the high CAD may degrade the credit rating due to enhanced debt liabilities. 
  • Imported Inflation: Currency depreciation, as a result of high CAD, leads to increase in the price of imported goods. This results in imported inflation, especially in goods like fuel and edible oil.  

Way Forward to bridge the Current Account Deficit: 

  • Boosting export competitiveness by improving infrastructure, reducing production cost and diversifying the export basket.
    • Example: Germany and South Korea model to enhance export competitiveness by promoting infrastructure and skills of labour. 
  • Import substitution by promoting the domestic goods and facilitating the local manufacturer.
    • Example: Atmanirbhar Bharat initiative to promote local manufacturing.  
  • Encouraging the service exports (IT, finance, health services) to balance the goods import in India. 
  • Reducing crude oil import by promoting the alternate energy sources like e-vehicles, solar power, wind energy etc.
    • Example: FAME initiative of government of India. 
  • Conclude Trade agreements to reduce tariffs and promote hassle free trade with partner nations.
    • Example: Diplomatic efforts to conclude EFTA and FTA with the UK. 

Conclusion: India can reduce the current account deficit by comprehensive and multidimensional strategy by combining efforts like, boosting exports in IT, attracting FDI, promoting tourism and reducing reliance on energy imports. Also, learnings from the best practices of Germany, China, Vietnam and Singapore can provide impetus to the target of India to reduce CAD. 

UNCCD COP16 ends without Drought Deal

Context: The 16th COP (COP 16) to the United Nations Convention to Combat Desertification (UNCCD) has recently ended in Saudi Arabia’s capital Riyadh. The negotiators failed to produce a binding protocol or an agreement on how to respond to drought. Droughts are projected to affect 75% of the world’s population by 2050. 

Relevance of the Topic: Prelims: Key facts about United Nations Convention to Combat Desertification (UNCCD). 

About United Nations Convention to Combat Desertification (UNCCD)

  • UNCCD was established in 1994 with an aim to protect and restore land and ensure a safer, just, and sustainable future. 
  • It is the only legally binding international framework set up to address desertification, land degradation and drought. 
  • There are 197 Parties to the Convention (including 196 countries and the European Union). 
  • The Convention unites governments, scientists, policymakers, the private sector and communities to combat desertification and promote land restoration.

Regions of Implementation:

  • UNCCD addresses specifically the arid, semi-arid and dry sub-humid areas, known as the drylands, where some of the most vulnerable ecosystems and peoples can be found.
  • The implementation of the UNCCD is organised around five regional implementation annexes. 
  • Five world regions have the important job of deciding how to implement the UNCCD: 
  1. Africa
  2. Asia
  3. Latin America and the Caribbean (LAC)
  4. Northern Mediterranean
  5. Central and Eastern Europe.  

Governance Structure of UNCCD: 

UNCCD has a number of governing bodies: 

  • The Conference of Parties (COP):
    • Established by the Convention as the supreme decision-making body.
    • COP is mandated to review reports from member countries on their Land Degradation Neutrality (LDN) efforts and make recommendations. 
    • It also has the power to make amendments to the Convention or to adopt new annexes (documents which specify how the Convention will be implemented).
  • The Committee on Science and Technology (CST) - was established as a subsidiary body of the COP to provide information and advice on scientific and technological matters.
  • The Committee for the Review of the Implementation of the Convention (CRIC) - was established as a subsidiary body to the COP to assist it in regularly reviewing the implementation of the Convention.
  • Intergovernmental Working Groups (IWG) - are established by the COP to assess specific issues, such as effective policy and implementation measures for drought and the evaluation of the Strategic Framework.

Land Degradation Neutrality (LDN):

  • It is a state whereby the amount and quality of land resources, necessary to support ecosystem functions, and services and enhance food security, remains stable or increases within specified temporal and spatial scales and ecosystems.

Land Degradation Neutrality Fund (LDN Fund):

  • Land Degradation Neutrality Fund (LDN Fund) was launched at the 13th Conference of the Parties (COP13) to the United Nations Convention to Combat Desertification (UNCCD) in Ordos, China in 2017. 

About LDN Fund:

  • LDN fund is a first-of-its-kind investment vehicle leveraging public money to raise private capital for sustainable land management and landscape restoration activities worldwide.
  • It will be independent of the UN and will be managed by a private-sector investment management firm.
  • It will invest in bankable projects on land rehabilitation and sustainable land management worldwide, including:
    • Sustainable agriculture, sustainable livestock management
    • Agro-forestry, sustainable forestry
    • Renewable energy, infrastructure development, and eco-tourism.

The Global Mechanism: 

  • It was established in 1994 to facilitate the mobilisation of financial resources to implement the Convention (UNCCD) and address desertification, land degradation and drought.  
  • As an operational arm of the Convention, the GM provides advisory services countries that request guidance on how to implement the Convention. This includes advice on how to: 
  • set National land degradation neutrality targets. 
  • develop and scale up large projects that transform lives and livelihoods. 
  • develop National drought plans. 
- In 2015, the GM supported the creation of the LDN Fund
- The GM also works with the countries from the Sahel region to mobilize more than USD 16 billion for the Great Green Wall. 

As the dynamics of land, climate and biodiversity are intimately connected, UNCCD collaborates closely with the other two Rio Conventions- United Nations Convention on Biological Diversity (UNCBD) and The United Nations Framework Convention on Climate Change (UNFCCC), to meet these complex challenges with an integrated approach and the best possible use of natural resources. 

Ustad Zakir Hussain

Context: Tabla maestro and one of the greatest Cultural ambassadors of India, Ustad Zakir Hussain, passed away at the age of 73 in the US. He is known to take Indian classical music to the global stage.

Relevance of the Topic: Prelims: Important facts about Zakir Hussain; Hindustani Classical Music. 

About Zakir Hussain

Ustad Zakir Hussain
  • He was the son of table maestro Ustad Alla Rakha.
  • He was known for incredible speed, dexterity, and creativity, mesmerising audiences across cultures and making him one of the greatest musicians of all time. 
  • Specialisation: Hindustani Classical Music, Jazz and fusion.
  • He lent his musical genius to many Bollywood movies such as Parasmani, Muhafiz, Mr and Mrs Iyer, Parzania and Manto.
  • Awards:
    • Government of India's Sangeet Natak Akademi Award in 1990, Sangeet Natak Akademi Fellowship (Ratna Sadsyata) in 2018.
    • United States’s National Heritage Fellowship, the highest award given to traditional artists and musicians. 
    • He has won four Grammy awards.
  • Biography: Zakir Hussain: A Life in Music written by Nasreen Munni Kabir.

About Hindustani Classical Music

  • Hindustani Classical Music draws inspiration from Rigveda, Yajurvedic chants and Natya Shastra (gives information on scales, melodic forms, tala and musical instruments). 
  • Key texts in Hindustani Music:
    • Brihaddesi by Matanga compiled between 8th-9th century AD.
    • Sangeeta Ratankara written by Sarangadeva (13th century AD) 
  • Tala System: Tala is the cyclic arrangement of time units which is central to Hindustani Classical Music.  
  • Two broad categories of Musical forms: 
    • Anibaddha Sangeet: Free-flowing music, not restricted by meaningful words and tala. Its finest form is the alap.
    • Nibaddha Sangeet: Structured compositions with tala and lyrics, such as Dhrupad and Khayal. Prabhandha is a specific type of Nibaddha.
      • Of all known prabandhas, Jayadeva’s (12th century) compositions are best known. His significant work was Gita Govinda, and his songs are ashtapadis (each song has eight couplets).

Main styles of singing in Hindustani Music:

There are 10 main styles of singing in Hindustani music like the Dhrupad, Dhamar, Hori, Khayal, Tappa, Chaturang, Ragasagar, Tarana, Sargam and Thumri.

  • Dhrupad: Oldest surviving classical style of Hindustani vocal music. It refers to both the poetry's verse structure and the manner in which it is sung. In the mediaeval era, dhrupad rose to prominence as the primary singing style.
    • Baba Gopal Das, Swami Haridas, and Tansen (who was regarded as one of the Navaratna or nine gems of the Mughal court) were supported by Akbar.
    • Man Singh Tomar, the Maharaja of Gwalior was responsible for the enormous vogue of Dhrupad. Bean and Pakhwaj were associated with Dhrupad.
  • Khyal: It means the idea or imagination is a Persian term. As it allows for more improvisation, this style is well-liked by artists. It is built on a collection of brief songs with two to eight lines. Khyal composition is typically also referred to as a Bandish.
    • The origin of this style was accredited to Amir Khusaru (13th century). It attained its maturity at the hands of Niyamat Khan Sadarang and Adarang of the 18th century.
      • Amir Khusrau is believed to have invented the sitar and the tabla and is said to have introduced new ragas.
      • There are Gharanas in Khayal which are schools of singing founded or developed by various individuals or patrons such as king or nobility. Important gharanas are Gwalior gharana (oldest), Agra gharana (founded by Khuda Baksh) and Jaipur gharana (directly took off from Dhrupad), Rampur Saheswan gharana (Uttar Pradesh).
  • Thumri and Tappa: Thumri is a love song whereas Tappa consists of the song uttered in a fast note pattern.
  • Tarana Style: In this style, the rhythm plays a very crucial role and uses many words that are sung at a fast tempo. The origin of this style was also accredited to Amir Khusaru.

Credit Guarantee Scheme for e-NWR based Pledge Financing

Context: Central Government launched a Credit Guarantee Scheme which provides a corpus of Rs 1,000-crore for post-harvest finance availed by farmers against electronic negotiable warehouse receipts (e-NWRs). 

Relevance of the topic:

Prelims: Salient Features of the scheme; Electronic-Negotiable Warehouse Receipt (e-NWR). 

Mains: Benefits of the scheme

What are Credit Guarantee Schemes?

  • Credit Guarantee refers to a situation where the loan to the applicant is backed by a party without the need for any external collateral or third-party guarantee. 
  • Here, the loan sanctioned by the member lending institution is backed by the scheme which provides the guarantee cover for a large portion of the loan amount.

Electronic-Negotiable Warehouse Receipts (e-NWR):

  • The negotiable warehouse receipt (NWR) system, launched in 2011, allows transfer of ownership of a commodity stored in a warehouse without having to deliver it physically.
  • An e-NWR is available only in electronic form. These receipts are issued in negotiable form, making them eligible as collateral.
  • Warehousing Development and Regulatory Authority (WDRA) regulates the entire operation under NWR.

About Credit Guarantee Scheme for e-NWR based Pledge Financing:

  • Objective: To help farmers easily access post-harvest loans by leveraging electronic warehouse receipts. 
  • Total Corpus: Rs. 1000 Crores
  • Coverage: Loans up to Rs. 75 lakhs for agricultural purpose; up to Rs. 200 Lakhs for non-agricultural purpose.
  • Eligible Institutions: All scheduled banks and all cooperative banks. 
  • Eligible Borrowers: Small and Marginal Farmers, Women, SC/ST/PwD Farmers, other farmers, MSMEs, Traders, FPOs and Farmer cooperatives.
  • Risks covered: Credit and warehouseman risks. 
  • Guarantee coverage: 
    • 85% for loans up to Rs. 3 Lakhs. 
    • 80% for loan between Rs. 3 to 75 lakhs for small and marginal farmers/ women/ SC/ ST/ PwD
    • 75% for other borrowers.

Benefits of the Scheme:

  • Increase post-harvest lending: Currently, post-harvest lending stands at Rs. 40,000 crore out of total agricultural lending of Rs 21 lakh. Lending against e-NWRs is just Rs 4000 crore.
  • Improved Trust for Banks: It addresses the default arising out of both Credit risk and Warehouseman risk.
  • Access to Vulnerable Section: The scheme majorly focuses on Small and Marginal Farmers, Women, SC, ST and Divyangjan (PwD) farmers with a minimal guarantee fee.
  • Avoid distress selling by farmers: Currently, farmers are compelled to sell their produce even if the price crashes, to get money to invest in the next cycle of crops. As this scheme takes off, farmers can submit their produce and get issued e-NWRs which will act as collateral for banks to issue required loans. Farmers can sell their produce when the price goes up.

Pakistan's Economic Crisis and IMF Bailout

Context: The World Bank has cancelled the $500 million loan of Pakistan for the clean energy programme due to unfulfilled conditions, including revisions to a China-Pakistan Economic Corridor agreement. It has intensified the economic crisis in Pakistan. 

Relevance of the topic:

Prelims: Key facts about the International Monetary Fund (IMF). 

Mains: Detailed analysis on impacts of IMF bailout on Nation's economy. 

Major Highlights:

  • The past few years have been challenging for Pakistan's economic stability. Political turmoil and miscalculated potential of Chinese investments in projects like China Pakistan Economic Corridor has left the nation under debt burden. 
  • In September 2023, the nation received a $7 billion IMF bailout package on stringent conditions like,
    • Stopping further reliance on Chinese investments. 
    • Bringing retail, agriculture and export sectors into normal tax regime by imposing tax hikes and abolishing exemptions. 
  • Tax hikes, accompanied with the high inflation rates and rising unemployment is leading the youth to switch to other professionally stable destinations.  

About IMF Bailouts

  • The International Monetary Fund (IMF) is an international organisation established under the Bretton Woods Agreement. 
  • Core functions of IMF:
    • To monitor global and national economic trends to ensure financial stability. 
    • Provides financial assistance to nations in the Balance of Payment crisis.
    • Provides technical assistance and training to improve governance, tax systems, and economic policies. 
    • Funded through contributions (quotas) from member nations based on their GDP, openness, economic variability and international reserves. 
  • IMF bailout is financial assistance in conditions of severe economic distress, such as currency collapse, debt default, or balance of payment crisis.
    • Recent IMF bailouts Pakistan (2023), Sri Lanka, Argentina and Greece. 
  • Structural Adjustment Programs are the pre-conditions imposed by the IMF to stabilize the economic condition of a nation in order to recover the bailout package amount. It may consist of any or all of the below measures:
    • Reducing government spending (Austerity measures)
    • Privatising state-owned enterprises
    • Liberalising trade and foreign exchange policies
    • Increasing taxes or removing subsidies. 
image 104

Criticism of IMF Bailouts:

  • Austerity measures can worsen the poverty and inequality situation in the nation. 
  • Sovereignty concerns as the countries lose control over key economic decisions. 
  • Short-term focus on debt repayment overshadows long-term growth and stability targets. 
  • Dependency on IMF assistance without resolving the root cause of the economic crisis, perpetuates economic fragility. E.g., Pakistan’s repeated reliance on IMF assistance instead of resolving root causes like state-sponsored terrorism, law and order fallouts and debt driven economy, contribute to its economic instability. 

Conclusion: Despite criticism, IMF bailouts play a crucial role in preventing economic collapse, stabilising the financial system, and fostering confidence among international investors. However, success depends on effective reform implementation and careful consideration of social impacts. 

Gujarat Port City Project

Context: Drawing inspiration from international port-cities such as Rotterdam, Dubai, and Antwerp, Gujarat government is revisiting a decade-old idea of building India’s first greenfield port-city spread over 500 sq km. It targets completion by 2047 with a cumulative investment of ₹1.5 lakh crores.

Relevance of the topic:

Prelims: Key facts about Gujarat port-city project; Major Ports in India. 

Mains: Development of Port-Cities: Benefits & Challenges. 

What are Port-City Projects? 

  • A port-city project refers to a development initiative that focuses on integration and expansion of ports with the surrounding urban areas, enhancing the relationship between the port infrastructure and the city. 
  • These projects aim to address both the economic and social aspects of port operations while improving the urban environment.

About Gujarat’s Port-City Project:

  • Led by: Gujarat Maritime Board.
  • Aim: Build a massive port, capable of handling 500 million tonnes per annum (MTPA), integrate port-related industries, marine activities, residential complexes, and recreational activities. 
  • The 500 sq. km greenfield venture will have port facilities, industries, residences, and leisure options.
  • Four sites have been shortlisted for the planned port-city based on key factors such as proximity to deepwater access, availability of waterfront space, connectivity to robust road and rail networks, and potential to support sustainable industrial growth. These are Porbandar, Bhavnagar, Surat, and Valsad.

Major Ports In India

  • India has 13 major ports and more than 175 non-major ones. The major ports carry about 70% of the total volume of cargo handled by ports. 
  • Currently, Gujarat accounts for 66% of the cargo handled by non-major ports in India, followed by Andhra Pradesh (14%) and Maharashtra (9%).
Major Ports In India

Benefits associated with development of Port-Cities:

  • Boost to Maritime Trade and Logistics:
    • Port-city projects can enhance port capacities to handle larger vessels and more cargo. This strengthens India’s position in global trade.
    • Improved port infrastructure, coupled with enhanced road, rail, and air connectivity, can streamline supply chains and lower transportation costs.
  • Job Creation and Economic Diversification:
    • Port-city projects create numerous jobs in construction, logistics, port operations, and urban development. 
    • Growth of ancillary sectors like warehousing, packaging, and IT services also contributes to job creation.
  • Attract FDI: 
    • Modernised ports and integrated urban spaces are attractive to foreign investors.
    • They can also boost development of Special Economic Zones (SEZs).
  • Development of Coastal and Hinterland Regions:
    • By transforming underdeveloped coastal zones into thriving economic centers, port-city projects can foster balanced regional development. 
  • Promote Sustainable Urban Development:
    • Green spaces, renewable energy systems, and eco-friendly construction practices can help India meet its environmental goals while simultaneously boosting its economy by positioning the country as a leader in green development.
  • Boost to Tourism and Hospitality Industry: Tap into potential of Cruise & Coastal tourism.
  • Improved Global Competitiveness: Port cities can serve as key regional trade hubs, enhancing India’s standing in global trade. 

Challenges:

Implementing port-city projects in India involves various challenges, ranging from logistical and regulatory issues to social and environmental concerns.

  • Land related Issues: Land scarcity and disputes, high land costs, dense population and India’s complex land acquisition laws can lead to legal battles and delays. 
  • Environmental Concerns: Port-city projects bring with them the risks of coastal degradation and Marine & Coastal pollution. 
  • Congestion and Inefficiency: Many of India’s existing ports have limited capacity to handle large volumes of goods. Upgrading or modernising these facilities and connecting them to the city can be a complex and costly process.
  • Coordination between stakeholders: Including port authorities, urban development agencies, environmental bodies, and local communities can be difficult, especially when different levels of government have conflicting interests or priorities.
  • Public-Private Partnerships (PPP) challenges: PPPs face challenges such as mismatched expectations, delays in decision-making, and difficulty in attracting private sector investment
  • Social and Community Impacts: Displacement of local communities and associated social resistance, inadequate stakeholder engagement can be of concern.

Addressing these issues requires comprehensive planning, strong governance, collaboration between multiple stakeholders, and innovative approaches to ensure the successful integration of port infrastructure with urban development. Overcoming these challenges is critical for realising the full potential of port-city projects and fostering sustainable economic growth in India.

One Candidate Multiple Constituency

Context: After the recent recommendations of the Ram Nath Kovind Panel for Simultaneous Elections, there is a debate around various other aspects of electoral reforms. One of the issues is candidates contesting from multiple constituencies popularly called as One Candidate Multiple Constituency (OCMC). 

Relevance of the Topic: Mains: One Candidate Multiple Constituency: Benefits & Challenges. 

Background: 

  • The Constitution of India provides for regular elections every five years to the legislative assembly and the lower house of Parliament. 
  • The Constitution, other than providing for the Election Commission of India (ECI), has empowered Parliament to regulate the manner of conducting the elections. 
  • The Representation of the People Act 1951 deals with the issue of ‘contesting from multiple constituencies.’
    • Until 1996, there was no limit on the number of constituencies a candidate could contest. This resulted in candidates contesting from multiple constituencies. This necessitated by-elections frequently.

Advantages of Contesting Multiple Constituencies (OCMC):

  • Safety net for candidates: Contesting from multiple constituencies allows candidates to secure at least one win in tightly contested areas. This strategy is particularly beneficial in elections where outcomes are uncertain and elections are closely fought, providing a backup option if they lose in one constituency.
  • Leadership Continuity: OCMC can ensure the continuity of leadership within a party in case important leaders lose elections. This helps maintain party stability and leadership presence.
  • Demonstrating popularity and influence: By contesting from multiple seats, a candidate can showcase their popularity across different regions, enhancing their image as a leader with wide support. This also helps parties project strength and attract more voters by demonstrating their ability to contest effectively in various areas.
  • Strategic Vote Division: Contesting from multiple constituencies can strategically divide the opposition's votes, increasing the chances of winning in each constituency. This tactic can strengthen a party’s overall electoral performance by creating a ripple effect that may benefit candidates in surrounding areas.
  • Political Message: Leaders contesting from various constituencies can amplify their political message and visibility, leveraging their popularity to engage with a broader electorate. This approach can help reinforce a party's narrative and mobilise support more effectively.
  • Flexibility in Leadership Transitions:
    • OCMC provides flexibility for political parties during leadership transitions or when a leader is unable to secure a seat. For example, Pushkar Singh Dhami, the CM of Uttarakhand, faced a similar situation where he contested multiple seats to ensure his party's leadership remained intact despite electoral challenges.

Challenges Involved:

  • Financial burden on Taxpayers: The administrative costs for Lok Sabha elections are borne by the central government, while state elections are funded by state governments. The estimated cost for the 2024 general election is ₹6,931 crore.
    • If a candidate wins from two constituencies, the additional cost for holding a by-election can reach around ₹130 crore per instance.
  • Favoring ruling parties: By-elections generally favor ruling parties due to their ability to mobilize resources and provide patronage. This creates an uneven playing field against opposition parties, undermining democratic fairness.
  • Repeated financial strain on defeated candidates: Candidates who lose must bear the financial burden of campaigning again in by-elections if their opponent vacates a seat they won. This can strain party resources and discourage competitive politics.
  • Undermining democratic principles: The practice of contesting multiple seats can prioritize candidates' interests over voters' needs, contradicting the democratic ideal that elections should serve the public.
  • Against freedom of speech and expression: OCMC goes against the fundamental right to freedom of speech and expression of citizens. A petition filed in 2023 (Ashwini Kumar Upadhyay vs Union of India) argued that when people elect a representative, they trust that person to be their voice. Contesting multiple constituencies, winning them, and vacating one for a by-election violates Article 19(1)(a) of the Constitution.
  • Voter confusion: The practice leads to voter confusion and apathy, as seen in Wayanad when Rahul Gandhi vacated his seat after winning in 2024; voter turnout dropped significantly in subsequent by-elections compared to general elections.
  • International examples: While countries like Pakistan, Bangladesh continue OCMC, this practice has been phased out in mature democracies like the UK and other European democracies to ensure democratic integrity.

Since the challenges and misuse of OCMC outweighs the benefits, following reforms are recommended:

  • Amendment of Section 33(7) of RPA 1951: A recommendation has been made to amend this section of the Representation of the People Act (RPA) 1951 to prohibit candidates from contesting multiple constituencies for the same office. The Election Commission of India (ECI) has consistently recommended this ban since 2004, the law commission in its 255th report has also recommended the same.
  • Recover cost for by-elections: Implementing a system where the candidate who vacates a seat after winning must bear the full cost of conducting a by-election could discourage simultaneous contests.
  • Delay in by-elections: Proposing that by-elections be held after a year instead of within six months could allow voters more time to make informed decisions and provide defeated candidates with an opportunity to prepare for future contests.

Thus, if “one person, one vote” is the core democratic principle for voters, it is time to enforce “one candidate, one constituency” for candidates to implement the next step in electoral reforms.

Idiopathic Pulmonary Fibrosis

Context: Recently, renowned musician Ustad Zakir Hussain passed away following complications with idiopathic pulmonary fibrosis.

Relevance of the Topic: Prelims: Key facts about Idiopathic Pulmonary Fibrosis. 

What is Idiopathic Pulmonary Fibrosis?

  • It is a chronic, progressive lung disease characterised by scarring (fibrosis) of the lung tissue, leading to irreversible loss of lung function. The exact cause of IPF is unknown, so it is termed idiopathic.
  • In case of a healthy lung, the oxygen easily passes through the walls of the air sacs (alveoli) and goes into the capillaries, and eventually the bloodstream. In IPF, the fibrosis thickens and stiffens the lungs, reducing their ability to expand and take in oxygen.
    • IPF specifically targets the interstitium (the tissue surrounding the air sacs). As a result, the alveoli walls get thicker, which makes it difficult for the oxygen to move into the bloodstream.
    • Over time, this leads to persistent breathlessness, fatigue, and reduced quality of life.  
  • Symptoms: Shortness of breath, prolonged dry cough, pain in joints and muscles, fatigue and weight loss. 
alveoli in pylmonary
gas excgange with alveoli

What are the risk factors for IPF?

The exact cause of IPF is unknown, however, there are several factors that come into the play when considering the risk an individual is under to get IPF:

  • Age: Older people (over age 50, generally 60-70) are at a higher risk of developing idiopathic pulmonary fibrosis.
  • Lifestyle: Smoking habit, prolonged exposure to dust, wood, or metal particles may increase the risk. 
  • Gender: More common in men than women.
  • Family history and genes: The genes a person inherits might make it more likely for them to develop IPF, especially if the genes carry mutations. E.g., mutation in gene MUC5B (which makes a mucus protein that helps clear harmful substances, like bacteria, from the lungs) increases the risk of IPF.

Treatment for IPF:

  • There is no cure for IPF, at present. However, medicines and other treatments (oxygen therapy and ventilator support) might help slow down the lung damage. 
  • Lung transplant might be an option, however, it can cause major complications, such as infection or rejection of the new organ by the body. 

Written off Assets of the Banks

Context: According to the Reserve Bank of India (RBI), the Banks have written off loans worth Rs 10 lakh crores in the last 5 years leading to fall in NPA to 12-year low of 2.8%. However, Banks have recovered only 18% of the written off loans. Banks were unable to recover 82% of the remaining loans despite adopting various recovery measures.

Relevance of the Topic: Prelims: Key concepts- Non-Performing Asset; Wilful Default; Diversion and Siphoning of Loans; Writing off loans. 

Non-Performing Asset (NPA): 

  • A loan is categorised as NPA if it is due for a period of more than 90 days. Depending upon the due period, the NPAs are categorized as under:
    • Sub-Standard Assets: >90 days and less than 1 year. 
    • Doubtful Assets: greater than 1 year. 
    • Lost Assets: loss has been identified by the bank or RBI.

RBI’s Concept of Wilful Default:

Person/company defaults on loan repayment: 

  • Despite having the capacity to repay loans.
  • Diverts the loan for some other purpose. E.g., Kingfisher Airlines owned by Vijay Mallya diverted the loans for other related businesses such as Kingfisher Calendar and Formula 1 racing Team.
  • Siphoning of funds. E.g., Nirav Modi took loans for business operations but used the loans for personal purposes.
  • Sell off the collateral without the knowledge of the Bank.

What is the difference between Diversion and Siphoning of Loans?

  • In case of “Diversion of Loans”, loans are used for related businesses. However, in case of “Siphoning”, loans are used for unrelated businesses or personal purposes.

Recovery Measures:

image 100

Why do Banks write-off loans?

  • The Bank removes the written off loan from its balance sheet and reports the amount as a loss. Hence, the Banks can show lower profits and hence reduce their tax liability. 
  • E.g., Let's say, the Bank has total profits worth Rs 1000 crores and written off loans worth Rs 100 crores. Then the Net profits (Profits- Written off loans) of the Bank would be Rs 900 crores. Thus, the Bank would be required to pay tax on Rs 900 crores (and not Rs 1000 crores).

Recent controversy over RBI's Framework for Compromise Settlement and Technical Write-offs (2023)

  • Under this framework, Banks can undertake compromise settlements or technical write-offs of loans of wilful/fraud defaulters. Further, the RBI also allowed wilful defaulters or a company involved in fraud to get fresh loans after 12 months of executing a compromise settlement.
  • It is considered to be a detrimental step as it only rewards wilful/fraud defaulters but also sends a wrong message to the honest borrowers who strive to meet their financial obligations.

Santa Ana winds drive Wildfire

Context: The coastal town of Malibu in California, the US is presently gripped in wildfires. The wildfires in the region are becoming more frequent and the wildfire season has lengthened, attributed to two major reasons- Santa Ana winds and Climate change.

Relevance of the Topic: Prelims: Geophysical Phenomenon- Santa Ana Winds

What are Santa Ana Winds?

  • Santa Anas are dry, warm (often hot) local winds that blow westward through Southern California, toward the coast.
  • The winds are usually seasonal, and typically occur between October and March and peak in December.
  • Santa Ana winds are driven by differences in the atmospheric pressure.
    • Santa Ana winds blow when high pressure builds over the Great Basin (area between the Rocky Mountains and Sierra Nevada) and the pressure is low over California’s coast. 
    • The difference in pressure triggers the movement of powerful winds from the Basin’s inland deserts, east and north of Southern California, over the mountains toward the Pacific Ocean. 
    • As they flow downwards and cross desserts, they become very dry, warm, and gain speed. 
  • Impact: The lack of humidity in Santa Ana winds dries out vegetation, making it highly inflammable. The wind also fan the flames and help spread them.
image 98
santa ana winds

Role of Climate Change

  • Wildfire season in California has lengthened in recent years in the past two decades and the yearly peak has shifted from August to July.
  • The wildfires have also become more intense in the past few years.
    • Five of the 10 largest California wildfires (over 20 years) occurred in 2020 alone.
  • Rise in global temperatures over the years has led to warmer springs and summers, and early spring snow melts. Such conditions cumulatively cause longer and more intense dry seasons, putting more moisture stress on vegetation. As a result, forests have become more vulnerable to fires.

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