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Fitch cuts India GDP growth forecast for this fiscal to 6%

Context: Fitch Ratings has lowered its 2023-24 GDP growth forecast for India to 6%, from 6.2%, citing headwinds from elevated inflation and interest rates along with subdued global demand, with the expansion seen quickening to 6.7% in 2024-25, as against the 6.9% projected earlier.

India's GDP Growth Projection

  • India was given default rating at ‘BBB-’ with a stable outlook. It indicates that expectations of default risk are currently low and payment capacity to meet financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.
  • It forecast headline inflation to decline, but remain near the upper end of the Reserve Bank of India’s 2%-6% target band, averaging 5.8% in FY24. 

About Fitch:

Fitch Ratings Inc. is an American credit rating agency and is one of the "Big Three credit rating agencies", the other two being Moody's and Standard & Poor's. It is one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975. 

What Are Credit Rating Agencies?

  • Credit rating agencies (CRAs) evaluate and rate the creditworthiness of debt securities and their issuers, including companies and countries. These agencies assign credit risk ratings to such entities based on quantitative and qualitative analyses. Ratings show the likelihood of a borrower to default or repay a loan with interest.
  • Credit rating services use unique letter codes to depict the default risk and the financial stability of the debt issuer. While these ratings provide risk measures for an entity, investors get to know about its creditworthiness. Besides corporations and nations, these ratings can be for stocks, bonds, mortgage-backed securities, collateralized debt obligations, and credit default swaps.
  • The rating services assign letters to represent the risk of default and financial viability of the debt issuer, based on quantitative, qualitative, and contextual analyses.
  • Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings are the 3 big credit rating agencies, with a combined market share of approximately 95%.
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How Do Credit Rating Agencies Work?

  • Credit rating agencies evaluate and rate companies, nations, governments, or financial instruments. They essentially provide information about the quality of fixed-income securities and debt obligations and their issuers’ ability to repay the principal amount and interests. In short, these credit risk ratings help retail and institutional investors get an idea of the solvency of the borrower and its products. They can decide whether the security in question is worth the investment or just speculation.
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What Do Credit Ratings Say?

  • Credit rating meaning differs with entities and financial instruments, though they evaluate issuers’ credit or default risks and debt obligations. For example, a company can use it to rate its debt securities, while a country can use the same to attract domestic and foreign investments. Ratings for sovereign debts indicate the country’s ability to repay its debt. Also, a sovereign credit rating facilitates access to international financial markets for the government.
  • Similarly, a bank can use it to assess the risk premium on loans. Poorly rated loans have a higher risk premium and higher interest rates. A higher credit rating enables the borrower to obtain loans at a lower interest rate. Credit ratings allow traders to trade fixed-income on the secondary market and influence their interest rates – a higher grade gets a lower interest rate.
  • Credit risk ratings indicate the likelihood of a borrower defaulting on its obligation. While low risk suggests investment, high risk implies speculation. Furthermore, these scores provide an outlook for an issuer or financial product in the future. Also, these scores aid in the development of the financial market and its regulations.

Role Of Credit Rating Agencies

  • The primary role of credit rating services is to assess the credit risks and solvency of structured debt securities and their issuers, i.e., companies and governments. Since they also act as financial intermediaries, there are multiple objectives that they fulfil, such as:
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Credit rating agencies in India:

  • Currently, there are 7 leading Credit Rating Agencies (CRAs) in India, such as CRISIL, ICRA, CARE, Acuite Ratings & Research, Brickwork Ratings India Pvt. Ltd. India Ratings and Research Pvt Ltd, and Infomerics Valuation and Rating Pvt. Ltd. that are authorised by SEBI to assess credit ratings.
  • SEBI (Securities and Exchange Board of India) authorizes and regulates all Credit Rating Agencies (CRAs) in India as per SEBI Regulations, 1999 of the Securities and Exchange Board of India Act, 1992. 

What is the difference between credit rating and credit score?

  • Credit rating involves evaluating the creditworthiness of entities, usually governments and businesses, by credit rating agencies, such as CRISIL, ICRA, CARE, etc. Credit ratings are usually expressed as letter grades. 
  • Whereas, credit scores usually help determine the creditworthiness of individuals and are calculated on the basis of the credit history found in the credit report. 
  • Credit scores are computed by four major credit bureaus in India including TransUnion CIBIL, Equifax, Experian and CRIF Highmark. Credit score is a 3-digit number ranging between 300 to 900, where a score closer to 900 is generally considered to be a good score.

AISHE report and low Muslim participation in higher education

Context: The Ministry of Education, Government of India has released All India Survey on Higher Education (AISHE) 2020-2021. The Ministry has been conducting All India Survey on Higher Education (AISHE) since 2011, covering all higher educational institutions located in Indian Territory and imparting higher education in the country. The survey collects detailed information on different parameters such as student enrollment, teacher’s data, infrastructural information, financial information etc.

Key findings of AISHE 2020-21:

  • The total enrollment in higher education has increased to nearly 4.14 crore in 2020-21 from 3.85 crore in 2019-20.  Since 2014-15, there has been an increase of around 72 Lakh in the enrolment (21%).
  • Higher education's Gross Enrolment Ratio (GER) has also surpassed 27.3%. The GER measures the proportion of adults between the ages of 18 and 23 who are enrolled in college. It was determined using data from the 2011 Census.
  • The Female enrolment has increased to 2.01 crore from 1.88 crore in 2019-20.  There has been an increase of around 44 Lakh (28%) since 2014-15.
  • Female GER has overtaken Male GER since 2017-18. Gender Parity Index (GPI), the ratio of female GER to male GER, has increased from 1 in 2017-18 to 1.05 in 2020-21.
  • There has been a noticeable increase in the enrolment of students from Scheduled Caste (SC), Scheduled Tribe (ST), and Other Backward Classes (OBC) in higher education institutions between 2014–15 and 2020–21. ST students have seen the largest growth, with a nearly 47% increase.

Government universities constitute contribute 73.1% of total enrolment of students. Whereas, private universities account for only 26.3% of the total enrolment.

Declining representation of Muslim minority groups in Higher education:

One contrasting trend observed in the recent AISHE report is the declining representation of Muslims in higher education.  Enrollment of Muslim students dropped by 8 per cent from 2019-20 – that is, by 1,79,147 students. This level of absolute decline has never happened in the recent past for any group. 

Possible reasons:

  • Bias in labour markets: As per Centre for Monitoring Indian Economy (CMIE) report, unemployment rate of Muslims is comparably lower than other religious groups. This data is partly a reflection of some discrimination in the job market. 
  • Barriers to female education: Economic and social backwardness of the minority community and other cultural barriers inhibited participation of Muslim women in higher education. 
  • Violence: Increased violence against Muslims has restricted their spatial mobility and has forced them to withdraw into their shells, a development evident from the ongoing process of ghettoization in almost all Indian cities. 

This increased marginalisation of Muslims in higher education and public employment, which was also reflected in Sachar committee and Ranganath Mishra reports, calls for need to extend affirmative action policies to Muslims.

International trade in Indian Rupee

Context: RBI Governor Shaktikanta Das said the government and the central bank are in discussion with South Asian countries to have cross-border trade in rupee. India had already made similar agreements with Sri Lanka, Russia and Mauritius and in early discussions with UAE to trade non-oil commodities in Indian rupee.

Need for trading in local currencies:

  • Reduce transaction costs: When countries import and export goods and services, they have to make payments in a foreign currency. Since the US dollar is the world’s reserve currency, most of these transactions are settled in dollars.

E.g., If an Indian buyer enters into a transaction with a seller from Germany, the Indian buyer has to first convert his rupees into US dollars. The seller will receive those dollars, which is then converted into euro. 

Here, both the parties involved have to incur the conversion expenses and bear the risk of foreign exchange rate fluctuations.

  • Geo-political shocks: Geo-political tensions often create challenges in seamless trade between the countries.

E.g., Recent Russia-Ukraine war resulted in western sanctions on Russia which created challenges for India to trade with Russia in dollars. 

  • Reduce dependency over foreign currency: Increasing use of Indian rupee for cross-border transactions will not only reduce our dependency over foreign currency but also increases the credibility of rupee in the global market adding weight to Indian economy. 
  • Insulate from external shocks: Reducing dependence on foreign currency makes India less vulnerable to external shocks like mitigating the pain of reversal of capital flows. 

Mechanism of Rupee trade settlement:

Vostro accounts are accounts a bank holds on behalf of another foreign bank. Rupee Vostro accounts keep a foreign entity's holdings in the Indian bank, in Indian rupees. Recently RBI permitted various Indian banks to open 12 special vostro accounts for trade in rupees.

A Rupee Vostro account is used to facilitate international trade transactions in Indian rupee. When an Indian importer wants to make a payment to a foreign trader in rupees, the amount will be credited to this Vostro account, and when an Indian exporter needs to be paid for supplying goods or services, this Vostro account will be deducted, and the amount will be credited to the exporter's account. 

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Challenges with Internationalisation of Indian currency:

  • Unfeasible with all the countries: Countries with whom we run trade deficit may reluctant to use this rupee settlement because the vostro accounts are left with surplus amount.  
  • Hampers independent monetary policy: 
  • Internationalisation of a currency could make simultaneous pursuit of exchange rate stability and autonomous monetary policy challenging.
  • As both residents and non-residents can buy and sell domestic currency denominated financial instruments, internationalisation can limit the ability of the RBI to control domestic money supply and influence interest rates in accordance with the requirements of domestic macroeconomic conditions.

Global financial contagion: Effective internationalisation of a currency would require taking steps towards full convertibility on the capital account, which may put at the India at the risk of global financial contagion.

Rise in RBI’s Gold Reserves

Context: The Reserve Bank of India’s (RBI) gold reserves touched 794.64 metric tonnes in fiscal year 2022-23, an increase of nearly 5% over fiscal 2022, when it held 760.42 metric tonnes of gold.

How Much Gold has RBI Purchased?

  • Between the fiscal year ended June 30, 2019 (the RBI used to follow the July-June accounting year then; this was changed to April-March starting 2020-21) and fiscal 2023, the RBI’s gold reserves swelled by 228.41 tonnes.
  • As on March 31, 2023, the country’s total foreign exchange reserves stood at $578.449 billion, and gold reserves were pegged at $45.2 billion. 
  • In value terms (USD), the share of gold in the total foreign exchange reserves increased from about 7% at the end of March 2022 to about 7.81% at the end of March 2023. It was 7.06% as of end-September 2022.

Reasons for Accumulation of Gold

  • Diversification: Gold is considered a more safe, secure, and liquid asset. It also safeguards returns amid global uncertainty and a rising inflation scenario.
  • Driving factors: Negative interest rates in the past, the weakening of the dollar and growing geopolitical uncertainty.
  • Gold offers long-term store of value and is a high performing asset during the times of crisis as this year was scarred by geopolitical uncertainty and rampant inflation.

Conclusion:

  • As the Central bank buying gold remains robust, there is little to indicate that this will change in the short term.

Buddhism, India’s soft power projection tool

Context: There is much significance to India having hosted a two-day global Buddhist summit in New Delhi (April 20-21), which was organised by the Ministry of Culture in collaboration with the International Buddhist Confederation. The summit saw the participation of key figures from the global Buddhist community, including the Dalai Lama. The summit was a significant opportunity for India to project and connect with the Buddhist population around the world, thereby strengthening the country’s soft power.

Use of Buddhism as a soft power tool:

With its strong historical and cultural ties to Buddhism, India is well-positioned to play a leading role in shaping the discourse around Buddhist issues on the global stage.

  • The Indian government has been actively investing in its Buddhist diplomacy efforts, with a focus on promoting tourism through the development of the “Buddhist tourist circuit”. Additionally, India under PM Modi has made it a point to visit Buddhist sites during his Southeast and East Asian visits. By hosting such a high-profile event, the Indian government hopes to demonstrate its commitment to preserving and promoting Buddhist culture and heritage, as well as strengthening ties with the global Buddhist community
  • Further India’s efforts to position itself as a great power is committed to cooperation rather than coercion and are rooted in its deep historical and cultural ties to the region. The current government’s guiding principles for foreign policy, Panchamrit principles include “Sanskriti Evam Sabhyata” which means cultural and civilizational links, which were highlighted during the Delhi summit
  • India hopes to reinforce its image as a responsible global power committed to peaceful cooperation and regional stability. By laying an emphasis on cultural and civilisational ties, India seeks to promote greater understanding and cooperation between nations and to demonstrate the unique role it can play in shaping the region’s future.

What can be done further?

  • India needs to utilise the reach of Bollywood in promoting its Buddhist heritage. China, with its influence over Hollywood, has completely dominated the narrative around Buddhism through cinema. In contrast, India is behind in this domain; there have not been any efforts made through cinema.
  • India’s G-20 presidency this year could be used to promote Buddhist diplomacy on a bigger scale through various cultural meetings, especially as Buddhist teachings align with the motto of India’s G-20 presidency, ‘One Earth, One Family, One Future’

As Buddha was the first diplomat of peace, his teachings of peace and cooperation in these tough times can become the guiding light of Indian diplomacy on the world stage.

ABOUT SOFT-POWER

DEFINITION: The American political theorist Joseph Nye, who coined the term Soft power, defines it as ‘the ability to get what you want through attraction rather than

coercion.’ Indian External Affairs ministry has also defined the term soft power as ability to influence others through appeal and attraction, using non-coercive means.

INDIAN EFFORTS

India has been exercising a range of soft power resources which have widespread global appeal. These include Indian arts, dances and literature, cuisine, yoga and traditional holistic medicine, Indian cinema and entertainment and sports, historical monuments, India’s democracy, its Constitution, its unity in diversity and its composite cultural ethos, traditional values, unique approaches to contemporary issues such as climate change and environmental preservation, scientific and technological accomplishments and socio economic innovation.

METHODS UNDERTAKEN BY INDIA

  • Role of Culture: India has a rich culture and cultural diplomacy is its expression abroad to foreign audiences in order to facilitate/create long term international influence.
  • Role of Diaspora: India has a large Diaspora in the world with over 31 million including over 13 million NRIs and 18 million PIOs spread across the globe. The presence of an extensive and vibrant Indian Diaspora abroad with their growing political and economic profile has emerged as a unique soft power asset of the country. 
  • The Indian Diaspora has emerged as a major partner in promotion of cultural diplomacy in their respective countries. Enumerating the steps taken to engage the extensive network of Indian Diaspora in furthering India's foreign policy and long term interests, various programmes and has taken several steps from time to time to engage with Indian Diaspora for example Know India Programme, Pravasi Teerth Darshan Yojana, Scholarship Programme for Diaspora Children, Bharat Ko Janiye Quiz, Promotion of Cultural Ties with Diaspora, Pravasi Bharatiya Divas among others.
  • Role of Tourism: The Committee are aware that tourism is a key indicator of a country’s soft power capital. Religious tourism and medical tourism have emerged as areas with immense tourism potential. As an ancient civilization and a land of many religions, India has been cashing on this potential. 
  • Efforts that are being taken: India’s Buddhist Circuit/ Pilgrimage and attract foreign tourist to Buddhist sites in India, the International Buddhist Conclave (IBC) is being organized regularly by the Government. To promote tourism, various efforts have also been made viz, launching of the ‘Incredible India’ campaign Under the Champion Sector Scheme, Marketing & Promotion for Buddhist circuits in overseas markets shall be taken up are some of the schemes that are being undertaken.
  • Role of Parliamentary Democracy: India’s vibrant parliamentary democracy, multi-party-political system and orderly change of Government through regular peaceful elections have significantly enhanced India’s standing and profile globally. India is held in great esteem worldwide as the world’s largest democracy.
  • Role of Yoga: Yoga is the ancient Indian practice of physical and mental well-being. The Committee are pleased to note that The United Nations General Assembly declared 21st June as the International Day of Yoga (IDY). The Ministry of AYUSH is the nodal Ministry for International Day of Yoga celebrations and has been celebrating IDY since last five years at national as well as at international level. 
  • ICCR has established the Indo-Turkmenistan Centre for Yoga and Traditional Medicine in Ashgabat and the India- China Yoga College at Yunnan Minzu University, China.
  • Role of Media and Cinema: The Ministry of Information and Broadcasting through Prasar Bharati, External Services Division of All India Radio, Film Facilitation Office, etc have been playing a prominent role in the projection of India’s soft power and cultural diplomacy. Hindi film industry, popularly known as Bollywood, has emerged as one of the most notable examples of global entertainment emanating from outside the Western world. The Committee are of the strong view that added emphasis needs to be given to the global imprint of our Cinema as an instrument of soft power while taking effective steps to celebrate and popularize our movies abroad, including regional cinema.

CHALLENGES

The Ministry of External Affairs has highlighted four key factors inhibiting effective conduct of India’s soft power and cultural diplomacy

  1. Inadequate budgetary allocation: Non-availability of adequate finances is one of the factors derailing the effective facilitation of India’s soft power projection. Soft power capabilities require capital, both human as well as financial to be effective. A cursory glance at the budgetary allocation to India’s ICCR and Confucius Institutes of China or UKS’s British Council or Germany’s Goethe Institute is testimony to the hurdles in our institutional efficacy
  2. Lack of coordination among multiple institution: There is a need for greater coordination and consultation among multiple institutions, both in the government and private sector, engaged in conduct of cultural and soft power projection. Currently, there is duplication of efforts and resources due to overlapping mandates of several ministries and agencies.
  3. Shortage of skilled manpower: Shortage of skilled, motivated manpower in the Headquarters as well as in Indian Missions/Posts abroad who have the requisite enthusiasm and interest in cultural work.
  4. Lack of clarity about the mandate of ICCR: While ICCR was established some 71 years ago, global situation has witnessed several drastic changes thereafter. Hence, an institutional device conceived some seven decades back needs a relook in the context of its organizational set functionality and efficacy. The Committee recommend that the Ministry should appoint a Study Group firstly to assess the working of ICCR in comparison to British Council, the American Centre and the Confucius Institute etc and later suggest ways to further strengthen ICCR

SOLUTIONS

  • The Committee, therefore, recommend that MEA should conduct a thorough assessment of our soft power potential and devise strategies for optimum utilization of the same in achieving India’s foreign policy objectives on priority basis and apprise the Committee accordingly.
  • The Committee recommend that the MEA should capitalize in multilateral diplomacy channels and abundantly incorporate Track 2 and Track 3 diplomacy in India’s foreign policy strategies.
  • The Committee therefore recommend that the Ministry should take urgent steps firstly to evolve and later adopt National Policy on Cultural Relationship Development across the countries or National Soft Power Policy.
  • The Committee, therefore, recommend that the Government should increase ICCR’s budgetary allocation by at least 20% than what is being provisioned as of now.
  • In view of the urgent need for greater synergy and coordination among the various Ministries/ Departments /agencies involved in India’s soft power and cultural diplomacy, the Committee recommend that the Coordination Committee may be constituted at the earliest.

The Committee, feels that a study could establish the linkages between our soft power and tangible outcomes in the field of diplomacy and hence they fail to comprehend the glaring delay in developing India’s Soft Power Matrix and thus recommends Ministry should have objective metrics for evaluating soft power outcomes through a ‘Soft Power Matrix’ at the earliest.

India’s China strategy needs to be debated

Context: The Chinese policy follows the principle of making headlines on India’s borders. The latest move, in April, saw them “renaming” 11 places in Arunachal Pradesh, which they consider to be “Zangnam” or, in English, “South Tibet”. The announcement was made after approval from the State Council, implying a green light from the very top of the Chinese system.

India-China Relations

  • Ever since the unresolved stand-off at Galwan in June 2020, there has been no serious attempt by Beijing at a resolution, let alone a restoration of the status quo ante, while several instances of further provocation have occurred from the Chinese side. 
  • Another border skirmish in December 2022 in the Tawang area showed that whatever policy the Ministry of External Affairs is masking with its anodyne statements, it is not ensuring deterrence.

India’s Tepid Response

The current response of Indian foreign policy despite of the subsequent reports of incursions seems to be tepid and scholars have identified following reasons for the same:

  • The growing power differential between the two countries act as a deterring force on India taking an aggressive stand against government.
  • Further there is also uncertainty about the strategic actions of major powers such as the U.S. in case of a military stand-off actually takes place between two hostile neighbours.
  • There is a wide military differential capability between the two countries and strategic reports have pointed out that India is not equipped for a major war with China. 
  • There is also pressure from Indian business interests who are anxious to safeguard trade as despite of the rhetoric (under Atmanirbhar Bharat) India’s trade dependence on China has now crossed over $100 billion.
  • Further there is a lack of consensus within the various ministries of the government about the kind of response the Chinese threat merits which is reflected in the non-coherent statements made by different heads of ministries.
  • At last there is a lack of political will within assertive and majoritarian government at the central level which seeks to safeguard its tough image domestically.

This brings us to the question that if India repeating the errors made in its pre-1962 engagement with Communist China? 

  • During 1962, PM Nehru’s vision of India and China as the two major south Asian civilizations led to India being one of the first countries to recognise the Communist government in China and ended up with its softening its line on China’s invasion and occupation of Tibet, its encroachment on India’s borders and its cartographical aggression in the pursuit of Chinese goodwill. 
  • PM Modi’s current policy seems eerily similar to what can be called as Chinese appeasement, and scholars believe that it could end just as badly if not exactly as it did in 1962.
  • Further the Chinese Communist Party has shored up its domestic credibility by valorising its international image. The earlier policy which was anchored in the “peaceful rise” theory, it is now about showing strength, determination, economic might and an unwillingness to compromise on what it sees as its core national interests. 
  • Previously China has always had a fear of being isolated in global affairs but today guided by the geopolitical interest and pragmatism in foreign policy, its assertiveness today is accompanied by diplomatic overtures in Europe, Russia and West Asia, to add an adroit diplomatic gloss to its uncompromising military determination.

Conclusion:

  • When dealing with the Chinese, India must always remember Mark Twain’s observation, that history does not repeat itself, but it often rhymes.
  • The period since Galwan, 2020-23, is not the same as 1949-62, but the same pattern of appeasement and self-denial is ominously emerging.
  • India should not miss an opportunity to loudly and proudly raise matters of its own vital interest by not using a strategy that fractures China’s image by challenging it publicly on its transgressions.

Lack of a drug recall law in India

Context: Despite the rise in substandard drugs, India still lacks a national law on recalling drugs. India has never witnessed domestic or foreign pharmaceutical companies recall substandard or mislabelled drugs in India.

Is there a drug recall law in India?

  • India has been mulling the creation of a mandatory recall law for substandard drugs that have failed to meet quality parameters since 1976, and yet no law exists that mandates such medicine be removed from the market to this day.
  • Consequences when substandard drugs are not recalled: People, including children, are almost certainly dying or suffering from adverse health events because substandard drugs are not swiftly removed from the market. 

Issues plaguing India’s pharmaceutical industry and the drug regulatory mechanism:

India's pharmaceutical industry has been plagued by several issues which include-

  • Weak regulatory framework: India's drug regulatory system is fragmented, with different agencies responsible for different aspects of drug regulation, such as drug approval, quality control, and pricing. This fragmentation often leads to duplication of efforts, delays, and inconsistencies in the regulatory process, making it difficult to ensure the safety and efficacy of drugs. Also, the incompetence of a regulator in one State can lead to adverse effects for patients in other states. 

E.g., Drugs ordered to be recalled by a state drug controller in one State are sometimes found to be on sale in another State. 

  • Lack of accountability: Due to lack of expertise and accountability from bureaucracy and the apathy of pharma companies, the circulation of substandard drugs in the Indian market has been the modus operandi for decades. The awareness in the public that such drugs can have dangerous consequences for consumers, has come recently when the drug failures overseas brought attention to the issue. 
  • Jurisdictional issues: Due to the presence of many regulators, it has become a challenge to enforce the law due to jurisdictional issues.
  • Lack of adequate quality control measures: Since drug manufacturing sector in India is highly fragmented, with a large number of small and medium-sized enterprises (SMEs) producing drugs. Many of these SMEs lack the resources and expertise to implement good manufacturing practices (GMP), resulting in poor quality control and the production of substandard drugs.
  • Prevalence of counterfeit drugs in the market: Counterfeit drugs are often sold at a lower price, making them attractive to consumers who cannot afford genuine drugs. However, intake of such drugs can be ineffective or even dangerous.
  • Issue of drug pricing: India has a complex system of drug pricing, with different pricing mechanisms for different categories of drugs. The lack of a transparent and rational drug pricing system often leads to high prices for essential drugs, making them unaffordable for many patients.
  • Focus on Pharma industry over public health: The government has displayed a greater interest in enabling the growth of the pharmaceutical industry than protecting public health.

Government initiatives to strengthen the regulatory framework for drug recall:

India has taken some measures to strengthen the regulatory framework for drug recall. Some of these measures include:

  • Establishment of the Central Drugs Standard Control Organization (CDSCO): In 2005, the CDSCO was established as the national regulatory body for drugs in India. The CDSCO is responsible for regulating the safety, efficacy, and quality of drugs in the country. In 2012, CDSCO proposed a set of draft recall guidelines, but it did not convert into a binding law.
  • Introduction of the Drugs and Cosmetics (Amendment) Act, 2008: The amendment act provides for the recall of drugs that are found to be substandard, spurious, or not of standard quality. The act also empowers the CDSCO to issue directions for the recall of such drugs.
  • Setting up of a Drug Alert System: The CDSCO has established a Drug Alert System to monitor adverse reactions to drugs and take necessary action to recall drugs that pose a risk to public health.
  • Strengthening of quality control measures: The CDSCO has issued guidelines on good manufacturing practices (GMP) for drugs, and drug manufacturers are required to comply with these guidelines.
  • Collaboration with international regulatory bodies: The CDSCO has signed several memoranda of understanding (MoUs) with international regulatory bodies to strengthen the regulatory framework for drugs. These MoUs provide for cooperation in areas such as information sharing, training, and capacity building.

Way Forward:

India's pharmaceutical industry and drug regulatory mechanism require a multifaceted approach that addresses the challenges, which include:

  • Strengthen regulatory enforcement: CDSCO should be strengthened to ensure that it has the resources and expertise necessary to enforce regulations effectively. This includes increasing the number of inspectors and providing them with appropriate training and equipment.
  • Centralising regulatory processes: To create an effective recall mechanism, the responsibility of recalling drugs has to be centralised, with one Central authority wielding the legal power to hold companies liable for failures to recall drugs from across the country. This would streamline the regulatory framework, simplify the drug approval process, reduce duplication and prevent issues of multiple jurisdictions in the regulatory process.
  • Formulate Public health policy: Central government needs to have a comprehensive and clear public health policy that prioritises public health over profit.
  • Improve quality control measures: The government should take measures to improve quality control measures for drugs. This includes rigorous implementation of good manufacturing practices (GMP) guidelines, providing technical support to SMEs to help them comply with GMP requirements, and strengthening the quality control infrastructure.
  • Increase transparency and accountability: The drug regulatory system needs to be more transparent and accountable to the public. This includes making information on drug approval and recall processes more readily available to the public, and ensuring that regulatory decisions are based on sound scientific evidence.
  • Strengthen international cooperation: The CDSCO should continue to collaborate with international regulatory bodies to share information and best practices and to learn from the experiences of other countries.
  • Promote innovation: There is a need to create an environment that encourages innovation in the pharmaceutical industry. This includes providing incentives for research and development, promoting collaboration between industry and academia, and supporting the development of new technologies. 

Doval in Saudi to discuss US rail link plan for West Asia

Context: National Security Advisor Ajit Doval met his counterparts from the US, Saudi Arabia and the United Arab Emirates to discuss an ambitious proposal being pushed by the White House to link West Asian countries through rail — using Indian expertise — and connect the region to South Asia via sea lanes.

  • The participants discussed the broad contours of the massive joint project to build railway, maritime and road connectivity in the larger region, linking the Indian subcontinent in South Asia with West Asia which the US also calls the Middle East.
  • The idea for the new initiative came up during talks held over the last 18 months in a forum called I2U2, which includes the US, Israel, the UAE and India. The forum was established in late 2021 to discuss strategic infrastructure projects in West Asia.

What is the railway link plan

  • It is among the key initiatives as United States wants to push in the Middle East as China’s influence in the region grows. The Middle East is a key part of China’s Belt and Road vision.
  •  The United states of America, has also proposed the Blue Dot network, is one of the elements in the creation of the connectivity project that will be financially sustainable and viable.
  • For India, China has expanded its sphere of political influence in the West Asian region through what Delhi views as “mission creep” the breakthrough in ties between Saudi Arabia and Iran had caught India unawares.

Benefit of the project:

  • Efficient: Such connectivity will allow for faster movement of the crude and minimise India’s costs in the long term. The connectivity boost will also help India’s eight million citizens who live and work in the Gulf region.
  • Branding: The project will help India build a brand as an infrastructure builder in the railways sector. Boasting a strong rail network at home and buoyed by the success of creating such infrastructure in Sri Lanka, India has the confidence to do it overseas.
  • It wants private companies as well as public sector enterprises to explore the potential economic and infrastructure opportunities in the region. 
  • Countering BRI: This will also have the effect of countering the Chinese Belt and Road project, which has burdened many countries in the region with infrastructure that has limited utility.
  • Alternative Route: The government feels that India’s connectivity to its western neighbours has been limited for long by Pakistan’s blocking of overland transit routes. So, India wants to use shipping routes to reach West Asian ports. 
  • These include Chabahar and Bandar-e-Abbas (Iran), Duqm (Oman), Dubai (UAE), Jeddah (Saudi Arabia) and Kuwait City. Connectivity projects crisscrossing the Gulf and Arab countries, with Indian stakes, open up trading opportunities.
  • Energy security: India is a significant energy consumer from the region plus it will be beneficial for partners in the project like UAE and Saudi Arabia. Prior to pivoting towards Russia in the aftermath of the Ukraine invasion, India was heavily dependent on the region for its energy needs and thus this initiative cab bring focus back on the region.

Conclusion:

The basic plan is to connect South Asia, the Middle East and the US in ways that advance economic technology plus diplomacy and thus India can be the glue which binds the grouping. As New Delhi has steady ties with Washington and the latter sees it as a natural ally to counter the threat of China on the global map.

ABOUT I2U2 

  • The arrangement is far from a non-security mechanism for cooperation on development issues between four countries – I2 – India and Israel, U2 – USA & UAE. 
  • Foreign Ministers of the grouping first met in October 2021 and now the summit signals plans for cooperation have grown, and the US had highlighted that the I2U2 could become for the Gulf region what the Quad for the Indo-Pacific has developed too. 

POSITIVE IMPLICATIONS OF I2U2 FOR INDIA’S  INTEREST 

  • It would fill the gap the United States is leaving in the Middle East. 
  • It has the potential to transform the region's geopolitics and geoeconomics. 
  • The group can deepen its engagement on issues that concern India — trade, energy ties, fighting climate change and enhancing maritime security. 
  • It coincides with stronger relationship that India has with both Israel and the Gulf countries. 
  • It would further deepen India’s cooperation with one of the most important partner UAE. 
  • It strengthens India- US engagement as strategic partners. 
  • It can be effective in countering China economically and politically. 

AREAS OF CONCERNS 

  • Role of other Arabic Gulf powers like Saudi Arabia is yet to be ascertained in this partnership. 
  • An area of concern is that Except India the other three countries are adversaries of Iran. 
  • Causes concerns for India - Iran relations which are collaborating on strategic projects like Chabahar and connect Central Asia policy. 
  • New Quad is yet to clarify its strategic objectives. 
  • US policy towards India has not been very concrete. It created a Parallel AUKUS in the Indo-Pacific. US withdrew from Afghanistan without taking India into confidence. 
  • In this backdrop the US needs to further clarify India’s role in its strategic ambitions in the Middle east. 

WAY FORWARD 

  • New Quad has come at a time when Israel Arab relations are improving, China’s presence in the middle east is increasing and US is withdrawing from the region. 
  • In such a scenario India’s membership of the New Quad in the middle east can be crucial to India’s interest in the peace and stability of the region. 
  • However, there are concerns that India’s membership of the MEQ can have adverse impact on India’s relations with Iran. However, India has carefully been treading a path of pursuing its interests in the region, without taking sides on the existing fault lines. 

Thus, India’s membership of MEQ which has outlined a soft agenda of cooperation seems to be in line with its policy of “non-interference” in the internal affairs, pursuit of strategic autonomy and extension of Bilateralism to Minilaterals.

Raksha Mantri approves the posting of Women Officers of the Territorial Army along the Line of Control

Context: In a major development, the Ministry of Defence, Department of Military Affairs, has approved an amendment to existing cadre management provisions for Women Officers of the Territorial Army (TA).

About Territorial Army

  • The Territorial Army is a part of the Regular Army.
  • Its present role is to relieve the Regular Army from static duties and assist Civil Administration
  1. In dealing with natural calamities and maintenance of essential services in situations where the life of the communities is affected or the security of the Country is threatened and
  2. To provide units for the Regular Army as and when required.

Arguments in favour

Military Readiness: Allowing a mixed-gender force keeps the military strong. The all-volunteer forces are severely troubled by falling retention and recruitment rates. Widening the applicant pool for all jobs guarantees more willing recruits. Women, who choose to become active combat soldiers, are unlikely to shirk their duty by becoming pregnant after a call-up as these women have willingly joined the army.

Effectiveness: The blanket restriction for women limits the ability of commanders in theatre to pick the most capable person for the job.

Tradition: Training will be required to facilitate the integration of women into combat units. Cultures change over time and the masculine subculture can evolve too. Many previously masculine professions have been successfully opened to women over the past century like driving, managing, judging etc.

Modern warfare and public support: In the modern world of combat (Afghanistan, Iraq), all women serving in the military are exposed to “front-line risks”. Support for women serving in the armed forces has not wavered as warfare has changed, a clear sign that the necessity of women serving in combat is recognized.

Cultural Differences & Demographics: Women are more effective in some circumstances than men. Allowing women to serve doubles the talent pool for delicate and sensitive jobs that require interpersonal skills not every soldier has. Having a wider personnel base allows militaries to have the best and most diplomatic soldiers working to end the conflict quickly.

Career advancement: As combat, duty is usually regarded as necessary for promotion to senior officer positions, denying female personnel this experience ensures that very few will ever reach the highest reaches of the military and so further entrenches sexism. Women have to be given the same opportunities as men, in the army in order to have the same opportunities they have to be exposed to the same risks

Arguments in opposition

Physical Ability: While the majority of jobs in the armed forces are open equally to men and women, there are some to which women are just not physically suited. The standards of physical fitness have been set to suit men, and women attempting to reach them will over-stretch themselves.  In addition, combat units engage in activities designed to suit men’s capabilities. Women serving in integrated units will suffer higher injury rates as a result of this.

Efficiency: Some women will be able to meet the required standards, but most will not. While the integration of women into combat is possible for those qualified, the small number versus the additional logistical, regulatory and disciplinary costs associated with integration does not make it a worthwhile move.

Morale & Cohesion: Having women serving in direct combat may hamper mission effectiveness by hurting unit morale and cohesion.

Military readiness: Pregnancy can affect the deployability of a unit when the unit has a disproportionate number of women or is understaffed.

Tradition: Men, especially those likely to enlist, maintain traditional gender roles. In some situations, men may act foolishly to protect women in their combat units. Harassment and resentment of the presence of women in a hyper-masculine military subculture would likely become a problem.

Abuse by Enemy: Both male and female prisoners are at risk of torture and rape, but misogynistic societies may be more willing to abuse woman prisoners.

VTOL loitering munition

Context: The Air Force has received the first indigenously designed and developed loitering munitions.

What is Loitering Munition

  • Named the ALS 50, the munition - also known as a suicide drone - has been developed by Tata Advanced Systems Limited (TASL).
  • The autonomous system is designed for Vertical Take Off and Landing (VTOL) and has successfully demonstrated its capability to carry out precision strikes (less than 2 meters) during trials and tests.
  • These are capable of operating from all kinds of terrain and high-altitude areas and can take down targets at a range of over 50 km, without exposing any personnel to risk.
  • The weapon enables real-time targeting, either by the operator or autonomously and can be scaled up to increase firepower as well as targeting distance.

Significance

  • VTOL capability gives the system the ability to operate in areas where limited space is available, like narrow valleys, fortified mountain positions, small jungle clearings and the decks of warships.
  • Loitering munition can be used to destroy enemy targets that may be beyond line of sight, including high-value targets like command centres and missile launchers, that may be located at a distance.

Farm Exports - The Big Picture

Context: Both agricultural exports from and imports into India have scaled new highs in the fiscal year that ended March 31, 2023. Provisional data from the Department of Commerce shows total farm exports at $53.15 billion and imports at $35.69 billion during 2022-23, surpassing their previous year’s records of $50.24 billion and $32.42 billion respectively.

image 121

Basic driver: Global prices 

  • The UN Food and Agriculture Organization’s Food Price Index (FPI) is a weighted average of world prices of a basket of food commodities over a base period value (2014-16=100) 
  • The FPI had crashed from an average of 119.1 points in 2013-14 to 90 points in 2015-16. As a result, exports sharply fell from $43.25 billion to $32.81 billion between 2013-14 and 2015-16. However, imports continued to rise, bringing down the farm trade surplus from a peak of $27.72 billion in 2013-14 ($21.46 billion net of fertiliser imports) to a low of $8.05 billion by 2016-17.
  • The FPI since then had recovered to 102.5 points by 2020-21, and further to 133 points in 2021-22 and 139.5 points in 2022-23, which made India’s agri-commodities more globally price competitive. This has led to a rise in exports to $41.90 billion, $50.24 billion and $53.15 billion during these three years.

Major export contributors

  • In recent times, India’s agri exports have been powered by three items, i.e. Marine products, rice and sugar.
image 120
  • Marine products: Exports have grown steadily from $5.02 billion in 2013-14 to $8.08 billion in 2022-23. 
  • Rice: Exports have also gone up during this period, from $7.79 billion to $11.14 billion. But it’s been driven by non-basmati rice, with the value of premium-priced basmati shipments actually declining. Basmati exports are mainly to the Persian Gulf countries and, to some extent, the US and UK. Non-basmati shipments are more diversified, with the destinations spread across Asia (Bangladesh, China, Sri Lanka, Malaysia, Vietnam, UAE and Iraq) and Africa (from Senegal, Ivory Coast and Benin to Somalia and Madagascar). It’s non-basmati that has made India the biggest rice exporter, ahead of Thailand.
  • Sugar: The boom in sugar exports has been more recent – from a mere $810.90 million in 2017-18 to $5.77 billion in 2022-23. Indian mills have built markets for both raw sugar (among refineries in Bangladesh, Indonesia, Malaysia, Saudi Arabia and Iraq) and regular plantation whites (in African countries, Afghanistan, Sri Lanka and China). In the process, the country has emerged as the world’s No. 2 exporter after Brazil.

Traditional items that are lagging behind

  • Spices exports: have stagnated since it last jumped from $2.5 billion in 2013-14 to almost $4 billion in 2020-21. The jump was due to chilli, mint products, cumin, turmeric, ginger, coriander, fennel and other seed spices and not due to traditional plantation spices such as pepper and cardamom.
  • Buffalo meat shipments: Never regained their peak of $4.78 billion reached in 2014-15.
  • Raw cotton, guar-gum and oil meals: Exports of the three in 2022-23 were a pale shadow of their highs of 2011-12 ($4.33 billion for cotton) and 2012-13 ($3.92 billion for guar-gum and $3.04 billion for oil meals).
  • Cotton: Cultivation of genetically-modified Bt cotton and high global prices has enabled India to become the world’s top producer (ahead of China) and No. 2 exporter (after the US) of the natural fibre. But with the yield gains from Bt cotton tapering off and the regulatory regime not permitting new gene technologies, the country has turned from a net exporter to an importer of cotton.
  • Guar-gum (a thickening agent used in extraction of shale oil and gas) and oil meal exports rode the global commodity price boom from 2003-04 to 2013-14. They haven’t shown the same buoyancy in the more recent post-Covid boom, partly due to domestic crop shortages – especially in cotton and soybean – not generating adequate surpluses for exports.

Major Import Contributors

  • Unlike exports, India’s imports of farm produce are dominated by a handful of items.
image 119
  • Vegetable Oil: Imports have more than doubled in value terms, from $9.67 billion to $20.84 billion between 2019-20 and 2022-23. In quantity terms, imports have risen from 13.18 million tonnes (mt) in the 2019-20 oil year (November-October) to 14.03 mt in 2021-22. During November-March 2022-23, they have grown further by 23.7% over the same period of the previous oil year. Imports meet roughly 60% of India’s vegetable oil requirements. 
  • Pulses: Import dependence is hardly 10% now in pulses, with the value of imports also coming down from $4.24 billion (6.7 mt) in 2016-17 to $1.94 billion (2.5 mt) in 2022-23.
  • Spices, cashew and cotton: commodities where India has traditionally been a net exporter – have shown a rising imports trend. Spice imports going up are a reflection of reduced price competitiveness (vis-à-vis Vietnam in pepper and Guatemala in pepper), while an outcome of stagnant, if not falling, domestic production in cotton.

What are Risks to Agricultural Trade?

  • International prices: The latest FPI reading of 127.2 points for April 2023 is down from the 159.7 points peak of March 2022 and the 2022-23 average of 139.5 points. This reduction in FPI will reduce the competitiveness of Indian agricultural exports.
  • Domestic inflation: The government had banned wheat exports last May, which was followed by a ban on broken rice exports and the slapping of a 20% duty on all non-parboiled non-basmati shipments in September. Exports of sugar have also stopped since this month’s start.

Conclusion

  • One can expect more curbs on exports – and a further liberalisation of imports – if the ensuing southwest monsoon season delivers subnormal rainfall.

Public records act & RTI Act

Context: Losing of government records is one of the main reasons for denying of RTI Applications. Currently, RTI Act does not have any provisions to deal with lose of public records. In this regard, Public Records Act, 1993 provides a framework for management and administration of public records of central government and its agencies and UT administration and their agencies are treated as public records and need to be properly archived.

Salient Features of Public Records Act, 1993 

This act aims to regulate the management, administration and preservation of public records of Central Government, UT Administrations, PSUs, statutory bodies and corporations, commissions & committees constituted by Central Government or a UT Administration.

Definition of Public Records: Any Document, manuscripts, files, microfilms, microfiche, facsimile copy of a document, reproduction of images embodied in such microfilms, any other material produced by a computer or by any other device created by any records creating agency.

Records Creating Agency: 

  • Any ministry, department or office of Central Government; Offices of any, body wholly or substantially controlled or financed by Central Government; department or office of UT Administration. 
  • Every records creating agency shall nominate one of its officers as records officer to discharge the functions under this act.

Responsibilities of Records Officer:

  • Proper management, maintenance and preservation of public records under his charge.
  • Periodical review of all public records and weeding out public records of ephemeral value
  • Appraisal of public records which are more than 25 years old in consultation with National Archives of India or Archives of UT with a view of retaining public records of permanent value.
  • Destruction of public records in a manner
  • Compilation of  a schedule of retention for public records in consultation with National Archives of India or Archives of UT.
  • Periodical review for downgrading of classified public records 
  • Adoption of such standards, procedures and techniques as may be recommended from time to time by National Archives of India for improvement of record management system and maintenance of security of public records.
  • Compilation of annual indices of public records
  • Compilation of organisational history and annual supplement.
  • Assisting National Archives of India and Archives of UT.
  • Submission of annual report to Director General or head of Archives
  • Transferring of records of any defunct body to National Archives of India or Archives of UT for preservation. 

Power of Central Government: Central Government shall have power to coordinate, regulate and supervise the operations connected with administration, management, preservation, selection, disposal and retirement of public records under this Act. 

  • Director General of Archives to be appointed by Central Government.
  • Head of Archives means a person holdiing the charge of Archives of UT. 

Powers of Director General or head of Archives

Central Government for public records relating to organisations of central government and UT Administration for public records relating to organisations of UT, may by order authorise Director General or head of Archives to carry out the following functions:

  • Supervision, management and control of Archives.
  • Acceptance for deposit of public records of permanent nature after such period 
  • Custody, use and withdrawal of public records.
  • Arrangement, preservation and exhibition of public records.
  • Preparation of inventories, indices, catalogues and other reference media of public records.
  • Analysing, developing, promoting and coordinating the standards, procedures and techniques for improvement of records management system.
  • Ensuring maintenance, arrangement and security of public records in Archives and in the offices of records creating agency.
  • Promoting utilisation of available space and maintenance of equipments for preserving public records.
  • Tendering advice to records creating agencies on the compilation, classification and disposal of records management.
  • Survey and inspection of public records.
  • Organising training programs in various disciplines of Archives administration and records management.
  • Accepting records from any private source.
  • Regulating reports on records management and disposal practices from records officer.
  • Providing authenticated copies of extracts from public records.
  • Destroying or disposal of public records.
  • Obtaining on lease or purchasing or accepting as gift any document of historical or national importance. 

Receipt of records from private sources: National Archives of India or Archives of UT may accept any record of historical or national importance from any private source by way of gift or purchase etc.

Access to Public Records: 

  • All unclassified public records which are more than 30 years old and transferred to National Archives of India or Archives of UT can be mada available to any bona fide research scholar, such to exceptions or restrictions.
  • Any records creating agency may grant to any person access to any public record in its custody, in a manner manner as may be prescribed.

Archival Advisory Board: Central Government to constitute an Archival Advisory Board to be headed by Secretary of Union Ministry of Culture. 

The Archival Advisory Board shall perform the following functions:

  • Advise Central Government and UT Administration on matters concerning administration, management, conservation and use of public records.
  • Lay down guidelines for training of archivists.
  • Give directions for acquisition of records from private custody.
  • Deal with such matters as may be prescribed.

Director General shall have power to lay down norms and standards for courses curricula, assessment and examinations relating to training in archival science and other ancillary subjects. 

Prohibitions under Public Records Act

  • No public record shall be destroyed or disposed except in such manner and conditions as may be prescribed.
  • Prohibition against taking of public records out of India, except without prior approval of Central government. 
  • No record created before the year 1892 shall be destroyed except where in the opinion of Director General or head of Archives, it is so defaced or is in such condition that it cannot be put to any archival use. 
  • Whoever contravenes the above provisions shall be punishable with imprisonment for a term of upto 5 years or with fine (up to Rs 10,000) or both. 
  • No public records bearing security classification shall be transferred to National Archives of India or Archives of UT.

Need to make Public Records Act more effective

  • Currently, Public Records Act, 1993 only applies to Central Government and UT Administration. It does not apply to state governments. State governments have their own acts and often many states also do not have such act. This makes it difficult to deal with the issue to misplaced files.
  • There is a need to make archives easily accessible to researchers on a easier basis for accurate analysis by historians.

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