Tag: India-Russia Trade Gap and Rupee Internationalisation Efforts

UPSC DAILY CURRENT AFFAIRS (15TH JULY, 2024) India-Russia Trade Gap and Rupee Internationalisation Efforts Syllabus: GS2/International Relations Context In recent years, India has emerged as a significant buyer of Russian oil that was triggered by Western sanctions after its invasion of Ukraine. As a consequence, Russia began offering its crude oil at discounted rates, and created a trade gap with India. About the India-Russia Trade: Current Landscape Trade Deficit and Oil Imports: India’s bilateral trade with Russia has been characterised by a significant trade deficit. In the fiscal year 2022-23, India’s imports from Russia were valued at nearly $41.5 billion, while exports to Russia amounted to just $2.8 billion. It has left Russian oil companies and banks holding billions of rupees in their Indian bank accounts—a pile of cash they are struggling to utilise effectively. Russia’s Role as an Oil Supplier: Russia has emerged as a crucial supplier of crude oil to India. In fact, it surpassed Saudi Arabia to become the second-largest exporter of crude oil to India in FY23. Rupee Conundrum Traditionally, trade between countries is conducted in major global currencies like the US Dollar or the Euro. However, geopolitical tensions and sanctions have complicated matters. The US, EU, and UK have restricted several Russian banks’ access to the SWIFT system (Society for Worldwide Interbank Financial Telecommunication), which hampers their ability to conduct international transactions. As a result, finding an alternative currency for India-Russia trade has become crucial. To circumvent Western payment systems blocked by sanctions, Indian importers have been paying for Russian oil and other commodities primarily in Indian rupees. However, this approach poses challenges for Russian entities. The rupee is not fully convertible, making it difficult for them to repatriate these rupees. Essentially, Russia finds itself with a wealth of rupees but limited avenues to use them internationally. Yuan Proposal Amidst this backdrop, there has been pressure from Russian oil suppliers to settle trade in Chinese Yuan. However, India has resisted this move due to long standing political differences with China. Instead, India prefers using United Arab Emirates Dirhams for settling trade. The rupee, despite being India’s national currency, faces limitations in international trade due to its partial convertibility and recent depreciation. Why is the widening trade gap with Russia benefiting the Yuan?– China’s Export Opportunities in Russia: Amid Western sanctions and companies exiting the Russian market, China has actively seized export opportunities in Russia.a. Unlike India, which faces challenges in its trade with Russia, Chinese exports to Russia have grown significantly.– Trade Volume Statistics: In 2023, two-way trade between China and Russia reached a record $240 billion.a. Chinese shipments to Russia surged by 47% year-on-year, totaling $111 billion.b. Imports from Russia increased by 13% to $129 billion.c. Notably, Chinese exports outpaced imports of Russian oil.– Balanced Trade and Domestic Currency Use: The balanced trade relationship between China and Russia has fostered the use of domestic currency.a. The Russian government has reported that 95% of trade between the two countries occurs in their respective domestic currencies.– Yuan’s Popularity in Russia: Surprisingly, the Chinese yuan (CNY) has become highly sought-after in the Russian stock market.a. It even surpasses the mighty US dollar in popularity.b. As a result, Russian oil exports are now requesting payments from Indian refineries in Chinese currency.– Restricted Use of the Rupee: In contrast, the Indian rupee (INR) has not gained similar traction in Russia.a. Its use remains limited in bilateral trade. Rupee Internationalisation Efforts Slow Progress: India has been negotiating with Russia to settle trade in Indian rupees. However, progress has been sluggish, along with other concerns like currency depreciation and a lack of awareness among traders about local currency facilities. Despite this, both countries recognize the need to explore alternatives to the dominant global currencies. Proposed Rupee-Ruble Mechanism: One potential solution is the establishment of a dedicated payment mechanism using the rupee and the Russian ruble. By bypassing Western sanctions and using their national currencies, India and Russia aim to enhance bilateral trade. It could facilitate smoother transactions and reduce dependence on external currencies. Ambitious Goals: India and Russia have set ambitious targets to boost bilateral trade to over $100 billion by 2030. Achieving this goal will require reinvigorating investments, exploring energy cooperation, and leveraging their respective currencies for trade. Reducing Dollar Dependence: India recognizes the need to reduce reliance on the US dollar in international trade. However, geopolitical tensions with China have prevented India from fully embracing the Yuan as an alternative settlement currency. RBI’s Circular and Trade Settlement: In July 2022, the Reserve Bank of India (RBI) took a step toward promoting the rupee’s internationalisation. It allowed an additional arrangement for settling trade using the rupee, aiming to facilitate bilateral transactions. Trade Invoicing and International Currency Status: The FY23 Economic Survey highlights a crucial prerequisite for any currency to become international: increased usage for trade invoicing. Currently, the US dollar dominates global forex turnover, accounting for a whopping 88%. In contrast, the rupee’s share is a modest 1.6%. 4% Threshold: The BIS Triennial Central Bank Survey 2022 provides a benchmark. If the rupee’s turnover rises to match the share of non-US, non-Euro currencies (which stands at 4%), it could gain recognition as an international currency. Conclusion and Way Forward India’s trade ties with Russia are multifaceted, extending beyond oil to defence imports and longstanding political and security cooperation. As both nations grapple with payment mechanisms, finding a sustainable solution is crucial. Whether it’s through innovative financial instruments or diplomatic negotiations, resolving the rupee challenge will be pivotal for India’s economic growth and the rupee’s journey toward internationalisation India needs seamless trade mechanisms to boost exports and enhance the rupee’s international standing. Settling trade in Yuan could potentially harm the rupee’s global aspirations. Therefore, policymakers are carefully navigating this delicate balance between trade pragmatism and currency sovereignty. Maharashtra Special Public Security Bill: Curbing Naxalism in Urban Areas Syllabus: GS3/Security; Left Wing Extremism Context Recently, Maharashtra introduced the Maharashtra Special Public Security (MSPC) Bill, 2024, aimed to deal with the ‘increasing presence of Naxalism in urban centres’. About Naxalism, a left-wing extremist movement, has long been associated with rural and forested regions. Naxal affected areas in India are known as the ‘Red Corridor’. Naxalites seek to overthrow the State through violent means, and openly proclaim lack of faith in the democratic means of ballot and adhere to the violence as a means of achieving their ends. Causes of Naxalism include marginalisation, support base like landless, share-croppers, agricultural labour, harijans and tribals, Forest Management and Livelihood of Tribal, and Lack of Development. Naxalites possess challenges that include vulnerability to external threats, impediments to economic development, additional expenses on internal security, and adverse impact on governance, and service delivery. However, its presence has also extended to urban centres, posing unique challenges for law enforcement agencies. Maharashtra Special Public Security (MSPC) Bill, 2024 Target Audience: It specifically targets individuals in urban areas who are involved in activities related to Naxalism, which includes those who spread Naxal ideology, recruit new members, and provide logistical support (such as supplying arms) to Naxal groups. Frontal Organisations: The Bill acknowledges that Naxalism is not confined to remote regions; it has infiltrated urban areas through Naxal frontal organisations. These organisations offer safe havens and logistical support to armed Naxal cadres. The bill aims to control the unlawful activities of such groups through legal means. Increased Powers for Law Enforcement: If enacted, the MSPC Bill would empower law enforcement agencies to take more decisive action against Naxalism in urban centres. It seeks to strengthen their ability to combat Naxal activities, disrupt networks, and prevent violence. What are the main provisions of the proposed law? The Bill gives the government the power to declare any suspect ‘organisation’ as an ‘unlawful organisation’. It prescribes four offences for which an individual can be punished: for being a member of an unlawful organisation; when not a member, for raising funds for an unlawful organisation for managing or assisting in managing an unlawful organisation and, for committing an ‘unlawful activity’. Offences and Penalties These four offences carry jail terms of up to two years to seven years, along with fines ranging from up to Rs 2 lakh to Rs 5 lakh. The offence relating to committing an unlawful activity carries the toughest punishment: imprisonment of seven years and a fine of Rs 5 lakh. Offences under the proposed law are cognizable, which means arrests can be made without a warrant, and non-bailable. Legal Provisions Against Naxalism Before the MSPC Bill, law enforcement agencies relied on various legal provisions to address Naxalism: Bharatiya Nyaya Sanhita (BNS): Prior to it, agencies used Sections like 153A of the Indian Penal Code (IPC) to tackle Naxal-related offences. Under BNS, this charge is now listed as Section 196. UAPA and the MSPC Bill Both the UAPA and the MSPC Bill prescribe similar procedures for making such a declaration. Under the UAPA, a Tribunal headed by a judge of a High Court confirms the declaration made by the state. In the MSPC Bill, an advisory board consisting of ‘three persons who have been or are qualified to be’ a judge of an HC are tasked with carrying out the confirmation process. Additionally, Special laws like the Unlawful Activities (Prevention) Act (UAPA) grant agencies extended time (180 days) to file chargesheets and make securing bail more challenging. Amendments to UAPA: In 2019, the UAPA Act was amended, granting investigating agencies broader powers. However, these amendments were criticised for being overly stringent and “draconian” in nature. Criticisms and Debates Civil society members have raised concerns about several aspects of the bill. At least seven sections are considered vague or grant overriding powers to the state machinery. Critics argue that these provisions go beyond the stated objective of curbing Naxalism and could potentially be misused. The balance between security measures and safeguarding civil liberties remains a point of contention. Conclusion The MSPC Bill aims to tackle Naxalism in urban areas by empowering law enforcement agencies. Curbing Naxalism in urban areas requires a multifaceted approach—one that balances security imperatives with respect for individual rights. As the MSPC Bill undergoes scrutiny and debate, it’s essential to find a middle ground that effectively tackles extremism while upholding democratic values. Integrated Ombudsman Scheme Syllabus: GS3/Economy Context Recently, the Madras High Court upheld the Constitutional validity of the Reserve Bank of India – Integrated Ombudsman Scheme (RBI-IOS) 2021, and ruled that the advocates cannot represent complainants before the RBI Ombudsman. About the Integrated Ombudsman Scheme (2021) It brings together three previously separate ombudsman schemes under a unified framework. By integrating these schemes, the RBI aims to simplify the process for consumers, enhance efficiency, and ensure consistent and fair resolution of complaints. It’s a step toward strengthening consumer rights and holding financial entities accountable. Three Schemes Banking Ombudsman Scheme (2006): Focused on addressing complaints related to banking services. Ombudsman Scheme for Non-Banking Financial Companies (NBFCs) (2018): Geared toward resolving grievances related to NBFCs. Ombudsman Scheme for Digital Transactions (2019): Specifically designed for complaints arising from digital payment services. Key Features One Nation, One Ombudsman: The RBI has adopted this approach, making the ombudsman mechanism jurisdiction-neutral. No longer do complainants need to figure out which specific scheme to approach—the integrated scheme covers all grounds. Deficiency in Service: The scheme defines “deficiency in service” as the basis for filing a complaint. It provides a clear list of exclusions, ensuring that complaints are not rejected arbitrarily. Centralised Processing: A Centralised Receipt and Processing Centre has been set up at RBI’s Chandigarh office. It handles both physical and email complaints in any language. Principal Nodal Officer: The responsibility of representing the regulated entity and furnishing information lies with the Principal Nodal Officer (usually a General Manager in a Public Sector Bank or equivalent). No Right to Appeal for Regulated Entities: If an ombudsman issues an award against a regulated entity due to unsatisfactory or delayed information/documents, the entity cannot appeal. Appellate Authority: The Executive Director-in-charge of the Consumer Education and Protection Department at RBI serves as the Appellate Authority under the scheme. Air pollution Harms Pollinators more than Pests Syllabus: GS3/ Environment In Context As per the study, air pollution disproportionately harms beneficial insects like bees and wasps compared to crop-destroying pests. Key Findings Unequal Impact: Pollinators, including bees, experienced a 39% decline in foraging efficiency when exposed to elevated air pollution. However, pests like aphids remained largely unaffected. Scent Disruption: Air pollutants alter or mask chemical signals that beneficial insects use for crucial activities like finding food and mates, while pests rely more on direct contact or visual cues. Foraging Most Affected: Among various behaviors studied, the ability to find food was the most severely impaired by air pollution, declining by one-third on average. Ozone as Culprit: Ozone is identified as the most detrimental pollutant, harming beneficial insects even at low levels below current air quality standards. Implications The decline in beneficial insects, especially pollinators, could negatively impact crop yields and food security. Disruptions to insect populations can have cascading effects on entire ecosystems, affecting biodiversity and ecological balance. Way Ahead The findings underscore the need for stricter air quality regulations, especially considering the sensitivity of beneficial insects to even low levels of pollution. Puja Khedkar Controversy Syllabus: GS4/ Ethics In Context Puja Khedkar, a probationary IAS officer, is in controversy over her alleged misuse of power as a civil servant. About Similarly controversy, regarding Abhishek Singh, 2010 batch former IAS officer for allegedly using a fake disability certificate to qualify for the exam came into picture. These incidents not only raise question marks on the selection process of recruitment agencies but also ponder on the need to overhaul the selection process. Ethical Issues The Puja Khedkar controversy raises several ethical issues concerning public service and the conduct of civil servants: Abuse of Power and Privilege: Khedkar allegedly demanded and received special treatment and privileges not entitled to a trainee officer, such as a separate office, official car, and unauthorized use of a beacon. This raises questions about fairness, equity, and the responsible use of public resources. Integrity and Honesty: There are allegations that Khedkar misrepresented her disability status to gain an advantage in the civil services examination. If true, this would be a severe breach of integrity and a violation of the trust placed in civil servants. Nepotism and Undue Influence: Khedkar’s father, a retired administrative officer, allegedly pressured officials to fulfill his daughter’s demands. This raises concerns about nepotism, favoritism, and the misuse of personal connections for undue advantage. Accountability and Transparency: The controversy highlights the need for greater accountability and transparency in the recruitment and training of civil servants. It raises questions about the effectiveness of existing mechanisms to ensure that only deserving candidates are selected and that they adhere to high ethical standards. Public Trust and Confidence: The actions of Khedkar, if proven true, have eroded public trust and confidence in the civil services. This is detrimental to the functioning of a democratic society, where citizens rely on civil servants to act in the public interest with integrity and impartiality. FACTS IN NEWS Ratna Bhandar of Puri Jagannath Temple Syllabus: GS1/Art and Culture Context Recently, the Ratna Bhandar, the sacred treasury of 12th-century Shree Jagannath Temple, Puri was opened after 46 years after years of legal battles, controversies and debates. About the Ratna Bhandar of Shree Jagannath Temple It comprises two chambers: the Bhitar Bhandar (Inner Treasury) and the Bahar Bhandar (Outer Treasury). It isn’t just a repository of wealth; it’s a testament to the unwavering faith of countless devotees. These chambers safeguard a collection of rare and precious items—donated over centuries by devotees and kings—to Lord Jagannath. Jagannath Puri Temple (aka Yamanika Tirtha) It was built in the 12th Century AD by King Anatavarman Chodaganga Deva of the Eastern Ganga Dynasty, and is currently located in Odisha. It is one of the Dhammas (Holiest of the holy place) out of four Dhammas that is Puri, Dwarika, Badrinath & Rameswar, in India. It was called the ‘White Pagoda’ and is a part of Char Dham pilgrimages (Badrinath, Dwaraka, Puri, Rameswaram). According to the Hindu beliefs, the power of ‘Yama’, the god of death, has been nullified in Puri due to the presence of Lord Jagannath, popularly known as Lord Krishna. Architecture The entire temple complex is enclosed within two concentric walls, the Kuruma Bheda (Inner wall) and the Meghnad Pachira (Wall), built on Kalingan Architecture. Four Gates: Eastern ‘Singhadwara’ (main gate), Southern ‘Ashwadwara’, Western ‘Vyaghra Dwara’ and Northern ‘Hastidwara’. Nilachakra (or the Blue wheel) perched on top of the temple is made of eight metals or Ashtadhatu. The Aruna stambha– the 33 ft monolith structure pillar in front of the Singhadwar or the main entrance of the temple was originally located at the Sun Temple, Konark. Tirzepatide Syllabus: GS2/ Health In News Recently, an expert committee of India’s drug regulator approved the drug Tirzepatide. About In 2017, the US Food and Drugs Administration (FDA) approved Ozempic, with the active ingredient semaglutide, to manage type 2 diabetes. Soon, doctors saw an interesting side-effect — weight loss. In November 2023, Eli Lilly, another US pharma major, got FDA approval for the drug Zepbound to treat obesity. Zepbound contain tirzepatide as the active ingredient. The FDA has approved semaglutide and tirzepatide for chronic weight management in adults. These drugs can be prescribed to those who are obese (with a body mass index of over 30), or overweight (with a BMI between 27 and 30), and have at least one other health condition related to their weight (such as high blood pressure, high cholesterol, or type 2 diabetes). Semaglutide and tirzepatide are polypeptides, small proteins that boost the levels of naturally-occurring hormones in the body, including that of glucagon-like-peptide 1 (GLP-1), which control weight through the brain and digestive tract. Side effects of the drug are nausea, diarrhoea, vomiting, constipation and in rare cases risk of thyroid tumours. FishMIP Project Syllabus: GS3/Fisheries; Impact of Climate Change Context Recently, the Food and Agriculture Organization of the United Nations (FAO) has predicted that exploitable fish biomass could decline by 30% or more by century-end if emissions remain high. About the Fisheries and Marine Ecosystem Model Intercomparison Project (FishMIP) It was officially launched in 2013, provides knowledge to industry and governments to support effective planning for adaptive and resilient seafood sectors under climate change. In 2024, FishMIP2.0 was established to increase the reliability of modelling projections and to answer a broader set of policy-related questions relevant to food security and marine resource management, with climate change remaining the overarching theme. It is armed with state-of-the-art numerical models, trying to unravel the mysteries of our oceans and their inhabitants. It uses an ensemble modelling approach, combining results from multiple ecosystem models. Global and Regional Projections: FishMIP provides future projections of ocean biomass at both global and regional scales. Climate Mitigation Matters: The projections show that strong climate mitigation—essentially reducing greenhouse gas emissions—can significantly reduce losses in fish biomass. High-Emissions Scenario: Global warming could reach 3 – 4°C by the end of the century. Fish biomass faces steep declines—more than 10% in many regions. Some countries could see losses of 30 percent or more. Low-Emissions Scenario: Global warming stays within 1.5 – 2°C. Changes stabilise—some regions even see no decline or just a minor one. Impacts Peru: Under the high-emissions scenario, Peru’s fish biomass could plummet by 37.3%. China: China’s Exclusive Economic Zone faces a 30.9% decline under the same scenario. Injection Borewells Syllabus: GS3/Conservation of Natural Resources Context Recently, Citizens adopted the injection borewells to meet growing water needs of Visakhapatnam in Andhra Pradesh. About the Injection Borewells These are a smart solution to combat water scarcity and recharge groundwater. These borewells utilise rainwater by channelling it into deep layers of the earth. Working Rainwater Capture: Injection borewells capture rainwater from large open spaces, terraces, and other surfaces. Unique Technology: They employ a unique technology that filters and recharges pure rainwater. Deep Recharge: The water is pumped into underground layers, replenishing the aquifers. Significance Rising Water Demand: As cities expand and populations grow, the demand for water increases. Visakhapatnam and Hyderabad’s IT Corridor are using this technique to meet their water demand. Groundwater Depletion: Traditional borewells struggle to keep up with this demand, leading to declining groundwater levels. Year-Round Recharge: Unlike surface water sources that depend on seasonal rains, injection borewells can recharge groundwater even after the rainy season. Cost-Effective: Groundwater recharge through injection borewells is less expensive than relying solely on surface water. Soil Erosion Reduction: By directing rainwater underground, these borewells also help prevent soil erosion. Margin Trading Syllabus: GS3/ Economy In News The National Stock Exchange (NSE) removed 1,010 stocks from its list of eligible stocks for margin trading. About Margin trading involves using borrowed funds to purchase securities, with the goal of earning a profit from the price movement. This strategy allows investors to increase their potential returns, but it also amplifies losses if the market moves against them. The ‘Buy Now Pay Later’ process in margin trade financing (MTF) allows investors to buy shares for a fraction of the current price. The rest of the money is paid by the broker in exchange for an interest, like a loan. Vulture Conservation & Sathyamangalam Tiger Reserves (STR) Syllabus: GS3/ Environment, Species in News In Context A study on the awareness of vulture conservation across the species’ key habitats in Mudumalai (MTR) and Sathyamangalam Tiger Reserves (STR), has shown that communities have yet to fully realise “vulture-safe” practices in raising livestock and the importance of the birds to the region. Vulture Population In India Declining Status: Since the 1990s, the number of vultures has been steadily declining. Three severely endangered species of vultures—the Oriental white-backed, long-billed, and slender-billed vultures saw a sharp decline in population between the 1990s and 2007, when 99% of the species vanished. Red-headed vultures, who are critically endangered, saw a 91% fall in population while Egyptian vultures saw an 80% decline. Threats: Diclofenac and other vulture-toxic non-steroidal anti-inflammatory medicines (NSAIDs). Role of Vultures in Ecology As carcasses eaters, vultures are the key to a built-in infection-control system. Presence of acid in their stomach is potent enough to kill the pathogens. Thus, the chain of the infection is broken. Scavengers like vultures do their part of keeping the ecosystem clean and balanced by eating rotten animal remains. The wonder is that vultures avoid contracting the disease despite eating contaminated carcasses. Initiatives for Conservation The Vulture Conservation Breeding Programme was developed by the Bombay Natural History Society (BNHS) and the Central Zoo Authority (CZA). The MoEFCC released the Action plan for Vulture Conservation 2006 with the Drugs Controller General of India banning the veterinary use of diclofenac in the same year. Vulture Action Plan 2025 Eight locations around the nation, including two in Uttar Pradesh, where vulture populations were still present, are participating in the Vulture Safe Zone program. Four Vulture Conservation Breeding Centres (VCBCs) established by Bombay Natural History Society (BNHS) at Pinjore in Haryana, Bhopal in Madhya Pradesh, Rani in Assam, and Rajabhatkhawa in West Bengal are involved in conservation breeding of vultures. Sathyamangalam Tiger Reserve (STR)– Located in the Erode district of Tamil Nadu.– Declared a tiger reserve in 2013.– Contiguous with Mudumalai Tiger Reserve (TN), Biligiri Rangaswamy Temple Tiger Reserve (BRT), and Bandipur Tiger Reserve (Karnataka).– Serves as a crucial link between the Eastern and Western Ghats. Dogfish shark Squalus Hima Syllabus: GS3/ Species in News In News Scientists from the Zoological Survey of India (ZSI) have discovered a new species of deep-water dogfish shark, named Squalus Hima, off the coast of Kerala in the Arabian Sea. About Squalus Hima is distinguished from other species by specific characteristics, including the number of precaudal vertebrae, total vertebrae, teeth count, trunk and head heights, fin structure, and fin color. Species from the genus Squalus, along with Centrophorus, are harvested for their liver oil, which is rich in squalene. Squalene is a highly sought-after substance used in high-end cosmetic and anticancer products.

Tag: India-Russia Trade Gap and Rupee Internationalisation Efforts

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