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IMF World Economic Outlook 2023

Theme
The International Monetary Fund (IMF) has recently released its World Economic Outlook for 2023. It provides projections for global economic growth and inflation in the year 2023-24. Let's examine these projections and explore the interesting trends that emerge.

Global Growth Projections

• The IMF has revised its global growth projections from 3.4% to 2.8% for 2023-24.
• Advanced economies, which grew by 2.7% last year, are projected to grow by only 1.3% this year.
• The UK and Germany have the lowest growth projections among advanced economies, at 0.3% and 0.1% respectively.
• India's GDP growth projections have been lowered from 6.1% to 5.9%, but it remains the world's fastest-growing economy.
• Japan is the exception among advanced economies, with a projected growth rate of 1.3% compared to 1.1% last year, indicating resilience amid the global economic slowdown.

Unpacking the IMF’s Projections

• The significant drop in global growth projections highlights the challenges faced by the world economy, particularly in advanced economies.
• The slowdown in advanced economies could negatively impact emerging markets like India, which rely on them for trade and investment.
• The possibility of recession looms for the UK and Germany, which is concerning given their importance in the global market.
• Despite a downward revision, India's growth projections still outpace those of other countries, a remarkable achievement considering the impact of the COVID-19 pandemic and the global economic slowdown.

Inflation projections

• Global inflation is projected to decrease from 8.7% to 7%.
• India's inflation rate is projected to decline from 6.7% to 4.9%.
• The US inflation rate, which was 8% last year, is projected to decrease to 4.5%.
• The Eurozone's inflation rate is expected to fall from 7.3% to 4.7%.
• In the UK and Germany, inflation rates of 9.1% and 8.7% respectively are projected to reduce to 6.8% and 6.2% this year.

Reasons for high inflation

• Last year's high inflation figures in advanced economies are considered hyperinflation due to their large economies.
• During the pandemic, these economies printed and distributed large amounts of money, causing an influx of cash in the market. Consequently, people in these countries are most affected by high inflation.
• Emerging markets fared better due to their more cautious policies during the pandemic, avoiding excessive money printing and keeping inflation relatively under control.

Potential Consequences

If inflation continues to rise and global banks increase interest rates, coupled with entrepreneurs' aversion to borrowing, global growth may dip below 2%. This has only occurred five times since the 1970s and would have severe global repercussions. Additionally, the escalation of the Russia-Ukraine war could exacerbate the situation further.

Effects of income inequality and poverty on society

Theme

Income inequality has become a more pressing issue recently as the gap between the rich and poor continues to widen. While technological advancements have created new job opportunities and industries, they have also led to the loss of many traditional jobs, leaving individuals with lower skills struggling to find well-paying employment. Factors such as tax policies, outsourcing, low minimum wages, and current events like the Russia-Ukraine war, rising oil prices, and high inflation rates also contribute to the problem of income inequality and poverty. Let's explore the consequences of income inequality and poverty on society.

Economic Consequences

• Income inequality can result in reduced consumer spending, which hampers economic growth.
• High poverty rates lead to increased government spending on social programs, causing national debt and budget deficits.
• People with low incomes may find it challenging to access credit, start businesses, or invest in the stock market. This lack of financial opportunities perpetuates income inequality since the wealthy have greater access to resources, allowing them to accumulate even more wealth. Moreover, limited access to credit and investment possibilities restricts economic growth and innovation, as talented individuals from low-income backgrounds may lack the means to pursue their ideas and contribute to society.
• Poverty can create a cycle where individuals lack the resources or skills to escape their impoverished circumstances.

Health Consequences

• Low-income individuals may have limited access to nutritious food, leading to malnutrition, higher obesity rates, and related health issues.
• Poverty-induced stress and uncertainty can contribute to higher rates of mental health problems.
• Individuals with low incomes are more prone to engaging in risky behaviors like substance abuse, which negatively impact their health.
• Income inequality can contribute to higher infant mortality rates and shorter life expectancy among low-income individuals due to reduced access to healthcare, healthy food, and other resources necessary for good health. Studies show that countries with higher income inequality tend to have lower overall life expectancy compared to those with lower levels of income inequality.

Education Consequences

• Poverty creates barriers to accessing quality education, including insufficient school resources and limited access to technology.
• Low-income families may struggle to provide the basic necessities for education, such as school supplies and transportation.
• Students from low-income backgrounds are more likely to drop out of school or achieve lower educational levels.
• Poverty can lead to a generational cycle of poverty. When parents have low education and income levels, it becomes challenging for their children to access education and secure better job opportunities in the future. This perpetuates a cycle of hardship, passing poverty from one generation to the next.

Social Consequences

• Income inequality can cause social tensions and divisions among different socioeconomic groups. High income inequality means that those with higher incomes have more resources and opportunities, leading to resentment and tension between different groups.
• High poverty rates are associated with increased crime rates, as individuals lacking resources may turn to criminal activities to meet their needs. This creates a cycle of poverty and crime that harms communities and weakens social cohesion.
• People with low incomes and limited access to credit are especially vulnerable to unexpected events like natural disasters and family health issues, which can result in homelessness and housing insecurity.
• Moreover, income inequality can contribute to a sense of loss of identity and dignity. When individuals feel undervalued in society, hopelessness and distrust in institutions can arise. This is particularly problematic for those struggling to make ends meet or feeling unable to contribute to society. When people lose their sense of identity and purpose, it can lead to hopelessness and despair, further damaging the social fabric of society.

China-Taiwan crisis

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In April 2023, China carried out extensive military exercises around Taiwan for three days in response to Taiwan President Tsai Ing-wen's meeting with United States House Speaker Kevin McCarthy. Previously, in August 2022, China conducted similar drills following a visit to Taiwan by then US House Speaker Nancy Pelosi.

China-Taiwan Conflict

• China and Taiwan became divided after the civil war in 1949. While Taiwan sees itself as an independent country with a functioning government, a strong military, and active international trade, China insists that Taiwan is an integral part of mainland China based on the 'One China Policy.' Both regions, situated in Asia, hold strategic importance globally in terms of security, trade, and the environment. The Taiwan Strait separates Taiwan from mainland China in the Pacific Ocean.
• Despite the absence of official relations, the US provides Taiwan with advanced weaponry and drones. China argues that this violates the US's commitment to the One China Policy and considers US support for Taiwan a threat to its integrity. Consequently, China conducted military exercises near Taiwan in August 2022 after Nancy Pelosi's visit, and then again in April 2023 following Tsai Ing-wen's meeting with Kevin McCarthy.

Possible consequences on the global economy

The conflict between China and Taiwan has the potential to significantly impact the global economy, akin to the Russia-Ukraine war. The Rhodium Group, an economic consultancy, estimates that if China were to block Taiwan, it could cost the global economy around $2 trillion. Taiwan plays a crucial role in international trade and security.
It hosts major Asian seaports like Kaohsiung Port, which is among the world's most vital ports for handling containers. Additionally, Taiwan is responsible for manufacturing over 60% of the world's semiconductors and over 90% of the most advanced semiconductors. Imposing sanctions on China by other countries in defense of Taiwan would further worsen the negative impact on the global economy.

Way forward

Military conflicts result in loss of life, mass displacement, human rights violations, and adverse effects on the global economy. Therefore, it is imperative for the international community to come together and strive for peace between Taiwan and China.

India-Japan Relations

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India and Japan have a long history of cultural, political, and economic relations. Both countries have rich cultural backgrounds and a strong national identity, which have shaped their relationship. Recently, their ties have grown rapidly, recognizing each other as crucial strategic partners in Asia and globally.

History

India and Japan have had relations since the 6th century AD. They were connected through trade routes and cultural interactions, with Indian Buddhism playing a significant role in shaping Japanese culture. The relationship faced interruptions during World War II when Japan invaded India's neighboring countries. After the war, Japan experienced international isolation, and India became one of the first countries to establish diplomatic relations in 1952.

Importance of India for Japan

India is a valuable market for Japanese businesses. Japanese companies have made significant investments in India, with a target of achieving $3.5 billion in Japanese investments by 2025. India is also an important partner for Japan in regional security, with Japan recognizing India's role in the Indo-Pacific region and supporting its bid for a permanent seat on the UN Security Council. Additionally, India's strategic location, growing economy, and military capabilities make it crucial for Japan to counterbalance China. Both countries share values such as democracy, the rule of law, and freedom of navigation. India's increasing influence in the Indo-Pacific region makes it a key partner for Japan to address China's growing power and assertiveness.
India is also an essential partner for Japan in technology and innovation. The two countries have collaborated in areas such as robotics, AI, and space technology. For instance, they have jointly worked on developing a lunar rover and held workshops on AI and robotics.

Importance of Japan for India

Japan is the largest donor of Official Development Assistance (ODA) to India. Since the 1950s, Japan has provided financial and technical assistance, supporting India's socioeconomic development. Japan is a key partner in infrastructure development within India, participating in various projects like the Delhi-Mumbai Industrial Corridor and the Chennai-Bangalore Industrial Corridor.
Moreover, Japan is a significant trading partner for India, with a target of achieving $50 billion in bilateral trade by 2025. India also views Japan as a crucial partner in maintaining a balance of power in the Indo-Pacific region through defense cooperation, including joint military exercises and technology transfers.

Challenges

To strengthen the economic relationship between India and Japan, further efforts are required. Bilateral trade has increased but remains below its potential. While Japan has invested in Indian projects, many have faced delays due to complex regulations, bureaucratic red tape (excessive rules, procedures, and paperwork), and inconsistent state-level policies.
Japan's Vice Minister has urged the Indian government to provide support in addressing these investment project issues. The growing influence of China in the region is a concern for both countries, as China's territorial claims and military assertiveness in the South China Sea and the East China Sea have heightened tensions. Despite strong cultural ties, enhancing people-to-people connections, including tourism and cultural exchanges, is necessary.

Way forward

• The Indian government should simplify regulations and reduce bureaucratic red tape to improve the ease of doing business in India. This would make it more appealing for Japanese companies to invest in the country. Close collaboration between the Indian government and Japan is crucial to expedite ongoing projects and ensure the smooth execution of new ones.
• India and Japan can counter China's influence through security cooperation, reducing India's economic dependence on China, improving infrastructure connections, and undertaking joint projects in smaller South Asian countries. Information and communications collaborations, including introducing 5G wireless networks, submarine fiber-optic cables, and other technologies from Japanese companies, would help counter China's growing influence in telecommunications and digital infrastructure.
• Additionally, efforts should be focused on enhancing people-to-people ties between India and Japan, promoting tourism, and facilitating cultural exchanges. These steps would strengthen the overall relationship between the two countries.

The Ethics of Artificial Intelligence & Automation

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Open AI launched a new AI model called chatGPT-4 on March 14, 2023. This model can generate text, graphics, and computer code that closely resemble human-like results based on user inputs. However, Open AI has not shared any details about how chatGPT-4 is trained or its underlying code. This has raised concerns about the ethical use of AI and automation and the safety of personal data.

What are the ethics of AI & Automation?

The ethics of AI and automation involve the principles and values that guide the development, use, and deployment of these technologies. As AI and automation become more advanced and prevalent, it is vital to ensure that they are developed and used in an ethical and responsible manner, benefiting society as a whole. The ethical considerations of AI and automation include:

• Privacy: AI should collect and use data in a way that protects individuals' privacy, ensuring that personal information is not misused or mishandled.
• Accountability: As AI becomes more autonomous, it becomes challenging to assign responsibility for its actions. Clear lines of accountability need to be established to ensure responsible and ethical use of these technologies.
• Transparency: The decision-making processes of AI should be transparent and explainable, allowing individuals to understand how decisions are made and enabling them to challenge them if necessary.
• Safety: AI and automation should be designed and deployed in a manner that ensures the safety of individuals and society as a whole.
• Human control: As AI and automation advance, it is important to ensure that they operate under human control, allowing humans to intervene or override decisions when necessary.

How to achieve ethical use of AI & Automation?

• Incorporate ethical considerations into the design process: The design of AI and automation technologies should include ethical considerations. This ensures fairness, equity, and respect for individual privacy and control. Identifying potential biases in algorithms and data used can help align these technologies with societal values and principles.
• Foster collaboration and communication: Collaboration and communication among developers, policymakers, and other stakeholders are essential to ensure the ethical and responsible development and use of AI and automation. Engaging with the public and seeking input on ethical considerations provides developers with a better understanding of the societal impact. Collaboration with policymakers helps establish clear guidelines and standards, ensuring the technologies benefit society.
• Establish clear guidelines and standards: Clear guidelines and standards for the development and use of AI and automation promote ethical and responsible practices. Standards for privacy, accountability, and transparency prevent misuse of personal information and ensure transparent decision-making. Regular updates to these guidelines and standards keep AI and automation in line with societal values.
• Educating consumers: Governments play a crucial role in raising consumer awareness about the potential misuse and threats associated with AI and automation. Educating consumers about the risks of misused AI and biased algorithms, as well as threats to privacy and personal information, empowers them to make informed decisions. Public campaigns, education and training programs, and regulatory measures can achieve this.
• Bringing transparency: Governments can promote transparency by implementing regulations and standards for AI and automation systems. This includes requiring developers to provide documentation on system design, algorithms, and data sources. Additionally, developers can be mandated to implement auditing and monitoring tools to ensure the proper functioning of the system.

How will 2022 shape 2023?

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The year 2022 brought about important events that will greatly influence 2023. From the ongoing conflict between Russia and Ukraine to the passing of Queen Elizabeth II, record inflation, and the Federal Reserve's quick interest rate increases, these events will have direct and indirect effects on the global economy and society. Let's explore the major events of 2022 and their impact on 2023, as well as potential solutions to address these challenges.

Economic impact

• As a result of conflicts, sanctions, and border closures, disrupted supply chains and increased production costs may cause further price hikes for goods and services worldwide.
• During times of economic instability, people tend to prioritize essential needs over non-essential spending, leading to reduced consumer spending. This will slow down economic growth in countries.
• While central banks implement rapid interest rate increases to control inflation, they can also raise borrowing costs for businesses, limiting their ability to invest and expand, potentially causing economic growth to decline.
• The conflict between Russia and Ukraine has resulted in decreased economic activity and growth in surrounding regions, leading to reduced investment, consumer spending, and growth.

Social impact

• War, political instability, and social unrest in many countries have caused widespread human rights violations, displacing numerous people and creating refugee crises.
• The events have negatively affected the mental health of individuals directly or indirectly involved, including refugees, those living in conflict zones, and those impacted by economic instability.
• The influx of refugees in many countries has added pressure to already limited resources.
• The conflict between Russia and Ukraine, the refugee crisis, and government human rights violations are issues that have caused increasing divisions among people, intensifying political polarization.

Political impact

• Political landscapes in the United States and worldwide have shifted conservatively in recent years, partly due to strained diplomatic relations between countries. This shift has resulted in a rise in authoritarianism as citizens adopt a more conservative approach to foreign policy and international relations. Nationalist and isolationist policies have also gained popularity, indicating a trend towards inward-looking political perspectives.
• Political tensions between countries have increased the likelihood of large-scale warfare.
• The USA's use of the dollar as a weapon against Russia has raised concerns in many countries about potential future economic destruction, leading them to pursue de-dollarization. These concerns have been amplified by the Federal Reserve's rapid interest rate hikes.
• The United States' implementation of economic sanctions as a foreign policy tool has caused significant harm to the economies of many nations. Sanctions on countries like Russia, Iran, and Venezuela have resulted in oil market shortages, driving up oil prices and impacting ordinary citizens. This has generated dissatisfaction among people and political tensions, highlighting the adverse effects of economic sanctions on global affairs.

Budget 2023-24

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The Indian government unveiled its budget for the fiscal year 2023-24 on February 1st, 2023. This budget is significant as it sets the course for India's development over the next 25 years as part of the Amrit Kaal vision, aiming to transform the country into a developed nation by 2047. The budget focuses on three key pillars: creating opportunities for citizens, promoting job growth, and ensuring a strong and stable macroeconomic environment.

Highlights

• The Indian economy is projected to grow by 7% in the fiscal year 2022-23, but the growth rate is expected to slightly moderate to 6% to 6.8% in 2023-24, according to the Economic Survey.
• The budget for 2023-24 plans for a total expenditure of Rs 45,03,097 crore, a significant increase from the previous year. Despite this increased spending, the projected fiscal deficit is 5.9% of GDP, lower than the previous year's 6.4%, demonstrating the government's commitment to balanced growth and development.

Agriculture

• Digital Public Infrastructure: The budget aims to develop accessible and inclusive digital infrastructure to provide information and support to farmers.
• Horticulture Clean Plant Program: An allocation of Rs. 2,200 crores will be dedicated to improving the availability of disease-free planting material for high-value horticultural crops.
• Global Hub for Millets: The Indian Institute of Millet Research in Hyderabad will receive support to become a Centre of Excellence, promoting millets as a healthy and sustainable food option.
• Agriculture Credit: A credit of 20 lakh crore will be made available for the animal husbandry, dairy, and fishing sectors.
• Enhanced Storage Capacity: The budget proposes the establishment of widespread storage facilities to enable farmers to sell their crops at the right time, improving their remuneration.
• Agriculture Accelerator Fund: The budget includes the creation of an agriculture accelerator fund to encourage innovative start-ups in rural areas.

Health

• Establishment of Nursing Colleges: The government plans to establish 157 new nursing colleges.
• Research Programme: A new research program will be launched to promote research in the pharmaceutical sector.
• Public-Private Medical Research: Joint public and private medical research will be encouraged through select Indian Council of Medical Research (ICMR) labs.
• Mission to Eliminate Sickle Cell Anaemia: A mission has been initiated to eradicate sickle cell anaemia by 2047.

Education

• Revamped Teacher Training: Teacher training will be overhauled through the District Institutes of Education and Training.
• National Digital Library: A National Digital Library will be established to provide resources for children and adolescents.
• Promotion of Physical Libraries: State governments will be encouraged to set up physical libraries at the panchayat and ward levels.
• Recruitment of Teachers and Support Staff: The central government aims to hire 38,800 teachers and support staff for Eklavya Model Residential Schools, ensuring quality education and improved facilities for tribal students.

Green Growth

• Green Hydrogen Mission: The government launched the Green Hydrogen Mission to transition to a low-carbon economy.
• Annual Production Target: The target is to produce 5 MMT of green hydrogen annually by 2030, utilizing renewable energy sources like wind and solar.
• Battery Energy Storage Systems: Viability Gap Funding will support the development of 4,000 MWH of battery energy storage systems for storing and distributing green hydrogen.
• Renewable Energy Evacuation: An inter-state transmission system will be established to integrate 13 GW of renewable energy from Ladakh to other parts of the country.
• Amrit Dharohar: The Amrit Dharohar initiative aims to conserve wetlands for optimal use over the next three years.

Financial Sector

• Credit Guarantee for Small and Medium Enterprises (SMEs): Additional collateral-free credit guarantee of £200 billion for SMEs.
• National Financial Information Registry: A central repository of financial information to facilitate efficient credit flow.
• Azadi Ka Amrit Mahotsav Mahila Samman Bachat Patra: Introduction of Mahila Samman Savings Certificate (MSSC), a new small savings scheme available for a two-year period until March 2025. This scheme offers a deposit facility of up to £200,000 in the name of women or girls with a fixed interest rate of 7.5% and a partial withdrawal option.
• Senior Citizens Benefits: Increase in maximum deposit limits for the Senior Citizen Savings Scheme and Monthly Income Account Scheme.
• Fiscal Management: Provision of a 50-year interest-free loan to states for capital expenditure, and fiscal deficit allowed at 3.5% of Gross State Domestic Product (GSDP) with 0.5% tied to power sector reforms.

Youth Development

• Skill India International Centres: Establishment of 30 Skill India International Centres across different states to skill the youth for international opportunities.
• Unified Skill India Digital Platform: Creation of a Unified Skill India Digital Platform to enable demand-based formal skilling and link employers, including SMEs, with access to entrepreneurship schemes.
• National Apprenticeship Promotion Scheme: Rollout of Direct Benefit Transfer under a pan-India National Apprenticeship Promotion Scheme to provide stipend support to 4.7 million youth over three years.
• Boosting Tourism: Selection and development of at least 50 destinations through challenge mode as complete packages for domestic and foreign tourists. Sector-specific skilling and entrepreneurship development will be integrated with the 'Dekho Apna Desh' initiative. Tourism infrastructure and amenities will be facilitated in border villages under the Vibrant Villages Programme.
• Unity Mall: Establishment of a Unity Mall in the state capital or the most prominent tourism centre or the financial capital to promote and sell local products such as ODOPs (one district, one product), GI products, and other handicraft products.

Infrastructure and Development

• 5G Services: Setting up 100 labs in engineering institutions for developing applications using 5G services.
• Lab Grown Diamonds: Support for research and development in the emerging sector of lab-grown diamonds through a grant to one IIT.
• Increased Investment Outlay: Increased capital investment outlay to £1 trillion, equivalent to 3.3% of GDP, to drive growth and create jobs.
• Infrastructure Finance Secretariat: Establishment of an Infrastructure Finance Secretariat to enhance opportunities for private investment in infrastructure.

Direct Tax

• No income tax up to £70,000: Individuals with an income of up to £70,000 will not be liable to pay any income tax under the new tax regime.
• Changes in Tax Structure: Simplification of the tax structure in the new personal tax regime, reducing the number of slabs to five and increasing the tax exemption limit to £30,000.
• Reduction in Surcharge Rate: The highest surcharge rate on income above £5 million will be reduced from 37% to 25% under the new regime.
• Enhanced Limits of Presumptive Taxation: Micro Enterprises can avail presumptive taxation up to £3 million, and professionals with cash payments of less than 5% can avail it up to £750,000.
• Concessional Tax Rate for New Cooperatives: New cooperatives commencing manufacturing by 31st March 2024 can benefit from a concessional tax rate of 15%.
• Higher Limit for Cash Deposits and Loans by PACS and PCARDBs: Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) can deposit and lend up to £200,000 per member in cash.
• Increase in TDS Limit: The TDS limit on cash withdrawals is increased to £3 million for cooperative societies.
• Extension of Income Tax Benefits to Start-ups: Extension of the date of incorporation for income tax benefits to start-ups until 31st March 2024.
• Time Limit for Carry Forward of Losses for Start-ups: Extension of the time limit for carrying forward losses on a change of shareholding of start-ups from 7 years of incorporation to 10 years.
• Exemption of Income of Authorities, Boards, and Commissions: Exemption of income tax for authorities, boards, and commissions established by the states and Union in certain sectors.
• Extension of Tax Benefits to Funds Relocating to IFSC, GIFT City: Extension of tax benefits to funds relocating to IFSC, GIFT City until 31st March 2025.

GST

• Composite taxpayers, previously restricted from partnering with e-commerce operators for supplying goods and services, will now be allowed to do so. The amendment removes the restriction for intra-state supply, effective from 1st October 2023.
• The compounding of offences under GST is reduced from the range of 50% to 150% of the tax amount to the range of 25% to 100%. This change aims to provide relief to small taxpayers facing challenges in complying with complex GST laws.
• The minimum threshold of tax amount for launching prosecution under GST is raised from £10 million to £20 million, aiming to reduce litigation and provide relief to small taxpayers.
• Sections 37, 39, 44, and 52 of the CGST Act, 2017 are amended to limit the filing of returns to a maximum period of 3 years from the due date. This change simplifies the GST compliance process and reduces the compliance burden on taxpayers.
• The Customs Act of 1962 is amended to specify a time limit of nine months from the date of filing the application for passing the final order by the Settlement Commission. This amendment is expected to reduce the time taken for resolving customs-related disputes.
• The number of basic customs duty rates on goods, excluding textiles and agriculture, is reduced from 21 to 13. This simplifies the customs duty structure and reduces the compliance burden on taxpayers.

Pakistan’s Economic Crisis

Theme
Pakistan's sovereign credit rating has been downgraded by Fitch, a global rating agency, from CCC+ to CCC-, indicating high financial risks for investors. This downgrade, the second since October 2022, will make it more difficult for Pakistan to attract the investments it desperately needs.

Issues

• High debt: Pakistan's debt-to-GDP ratio stands at 77.8%, approximately $293 billion, which is exceptionally high, and the debt is expected to increase further in the future.
• Lack of reforms: The Pakistani government has been unable to implement necessary reforms due to inadequate regulatory oversight and enforcement, along with weak financial management caused by widespread corruption. As a result, domestic productivity and economic growth have suffered.
• Political instability: The military wields significant power in Pakistan, leading to frequent military interventions in the democratic system. This has sparked widespread protests and social unrest across the country.
• Economic challenges: Pakistan's economic growth was sluggish following the COVID-19 pandemic, and it worsened due to subsequent catastrophic flooding. Now, the country faces high inflation of 27.6% due to factors such as excessive debt, political instability, currency depreciation, and low foreign reserves of $4.3 billion. Consequently, there is a considerable risk of Pakistan defaulting on its debt, similar to Sri Lanka.
• Terrorism: Pakistan has experienced a surge in terrorist attacks by the Pakistan Taliban (TTP) in recent times, compounding the political and economic crisis.

Impact on India

• Pakistan harbors several terrorist groups, and if the country becomes unstable or descends into chaos, there is an increased risk of cross-border terrorism, with militant groups from Pakistan targeting India.
• If Pakistan's economic situation does not improve, India may face an influx of refugees, both legally and illegally. This could pose additional security challenges for Indian security forces.
• The weakening of Pakistan's economy will further enhance China's influence in the country, presenting a challenge for India.
• As a nuclear-armed nation, if Pakistan's government collapses, there is always a threat of militant groups gaining access to nuclear weapons.

Potential Solutions

• The Pakistani government should prioritize improving regulatory oversight and enforcement and tackling corruption within the system.
• To foster stability, Pakistan must increase transparency and accountability in its political system and reduce military intervention in democratic processes. This will be challenging as the Pakistani military is reluctant to relinquish its power.
• Considering Pakistan's low competitiveness ranking, it should implement economic reforms aimed at enhancing domestic productivity, economic growth, and the development of its domestic industry. Expanding exports to attract foreign investments is crucial.
• Efforts to combat terrorism and extremist groups in Pakistan will help stabilize the country and make it more appealing for foreign investment. Additionally, this will contribute to regional peace and reduce the risk of a nuclear attack.
• Pakistan should strive to normalize its relations with India, benefiting not only its economy but also fostering regional growth.

Use of technology in agriculture

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Technology is rapidly changing the agriculture industry. It is revolutionising how farmers grow crops, with advancements like precision agriculture, automation, and robotics. As the global population is projected to reach 9.7 billion by 2050, it becomes crucial to produce more food with limited resources. Let's explore how technology is being employed in agriculture to address various challenges, along with its advantages and difficulties.

Latest developments

• Drones: Equipped with sensors, drones can monitor crop health, assess soil conditions, and detect diseases. This helps farmers make informed decisions about their crops. Additionally, drones can deliver fertiliser, pesticides, and water to crops, enhancing efficiency and reducing costs.
• Robotics: Robotics plays a vital role in agricultural technology. Robots can perform tasks such as planting, weeding, and harvesting, which reduces labour costs and improves productivity. Robotics also minimises human error, which can lead to crop failure.
• Precision Agriculture: Precision agriculture assists farmers in managing crops more effectively. It involves using GPS and other technologies to track soil and crop conditions, as well as water and fertiliser usage. This enables farmers to reduce inputs and maximise yields, leading to cost and resource savings.

Benefits

• The use of technology in agriculture increases efficiency by lowering labour costs and reducing human error.
• Sensors and cameras can monitor crops and identify potential issues like diseases or contamination. This improves crop quality and reduces the risk of foodborne illnesses.
• Technology helps farmers produce more food with fewer resources by optimising inputs and detecting problems early on. This is crucial for feeding a growing global population and increasing crop yields.
• Technology provides farmers with access to market information, weather updates, and other factors affecting their operations. This enables informed decisions about crop selection, harvest timing, and product sales.
• Technology aids in reducing water consumption, as well as the need for pesticides and fertilisers, thereby benefiting the environment in the long term.

Challenges

• Implementing technology in agriculture comes with high costs. Small-scale farmers, especially those with limited financial resources, may find it prohibitive to adopt new technologies.
• Some technologies require significant training or technical expertise to be effectively utilised, posing a challenge for farmers with limited resources or education.
• Certain regions in India lack the necessary infrastructure to support the adoption of new technologies. This includes access to electricity, internet connectivity, and transportation.
• Farming is influenced by external factors like weather, climate, and market demand. Therefore, even with the use of new technologies, farmers may still face challenges in achieving higher yields.

Necklace of Diamonds strategy

What is the Necklace of Diamonds strategy?
The Necklace of Diamonds strategy is India's way of responding to China's String of Pearls strategy. It aims to expand India's military network and influence in the Indo-Pacific and Indian Ocean regions. The strategy involves encircling China by strengthening India's naval presence, establishing military bases, and fostering better relationships with other countries in the area.

What does it contain?

• The strategy involves gaining access to strategically located naval bases and building alliances with neighbouring nations.
• India has secured access to several important ports, such as the Changi Naval Base in Singapore, Sabang Port in Indonesia, Chabahar Port in Iran, and Duqm Port in Oman. It also plans to establish a secure military presence on Assumption Island in Seychelles.
• These ports give India direct access to the Indian Ocean and enhance its ability to respond to potential threats in the region.
• In addition to naval bases, India is also strengthening its relationships with other countries in the region. It has signed agreements with Mongolia to develop a bilateral air corridor, with Japan to establish the Asia-Africa Growth Corridor (AAGC), and with Vietnam to enhance military cooperation.
• India has also visited all five Central Asian countries, resulting in a doubling of trade with the region in just four years.

Opportunities

• The "Necklace of Diamonds" strategy provides several advantages for India, including increased regional competitiveness compared to China.
• By gaining control over crucial shipping lanes and key ports, the strategy enhances India's influence on regional trade and commerce.
• Through partnerships with countries like Singapore, Iran, Seychelles, Indonesia, and Oman, India is building a network of allies who can support its interests and objectives in the region. This strengthens India's bargaining power and its ability to shape regional developments, further boosting its competitiveness.
• The ports in Iran, Seychelles, Indonesia, and Oman offer India access to new trade routes, which can enhance its economic competitiveness.

Challenges

• Negotiating with countries heavily dependent on China's economy presents a challenge for India, as no nation wants to risk conflict with China.
• China's strong military presence in the region makes it difficult for India to establish its dominance.
• The "Necklace of Diamonds" strategy involves multiple countries with different interests, making it challenging to find common ground and ensure smooth implementation. An example of this is India's failure to secure a military base in Seychelles, while China is considering establishing one in the nearby region of Madagascar.
• China has made greater investments in its "string of pearls" strategy compared to India's investments in the "necklace of diamonds."
• To build trust, it is crucial to avoid delays in providing funding for the projects. This was evident in Iran, where the Chabahar-Zahedan railway line project proceeded independently due to funding delays from India.

The rise of Generative AI

Theme
In a groundbreaking event, an AI text generator was involved in a legal ruling for the first time. Colombian Judge Juan Manuel Padilla Garcia utilised the AI tool Chat GPT to ask questions related to the case and incorporated its responses into the final decision, as stated in a court document dated January 30th, 2023. This signifies a momentous occasion, marking the initial documented instance of an AI tool openly recognised for its contribution to a legal judgment.

What is generative AI?

Generative AI refers to a form of artificial intelligence (AI) that can generate fresh and unique data or content through machine learning algorithms. This generated data can encompass text, images, audio, video, code, or synthetic information. The aim of generative AI is to produce outputs that are akin to, or even indistinguishable from, those generated by humans.

Benefits of Generative AI

• Generative AI can automate numerous repetitive tasks that would otherwise necessitate human involvement, thereby freeing up time and resources for other activities.
• It enhances efficiency and speed since generative AI can process and analyse vast amounts of data much faster than humans, generating real-time outputs. This makes it a valuable tool across a wide range of applications.
• Generative AI contributes to improved accuracy and consistency in task execution, reducing the risk of human error and increasing the reliability of outputs.
• By automating certain tasks and minimising the need for human intervention, generative AI helps to reduce costs in various industries.
• Generative AI benefits numerous fields, such as healthcare, robotics, finance, education, and more, due to its advantages. Additionally, it aids in cost reduction, facilitates the creation of new products and services, encourages innovation, and drives economic growth.

Challenges of Generative AI

• As generative AI models become increasingly advanced, they possess the potential to perform tasks previously carried out by humans, including those requiring cognitive abilities like pattern recognition, decision-making, and problem-solving. This may result in significant job losses and economic displacement, reducing the need for human labour in certain industries.
• These models can perform tasks that would traditionally demand human intelligence, diminishing the reliance on human cognition. Consequently, there is a risk of decreased overall cognitive abilities in the population, particularly among young children who may rely more on technology than their own capabilities to accomplish tasks.
• Generative AI is trained using existing datasets to generate results based on them. This introduces the potential for technology to reinforce existing biases and prejudices present in society. When algorithms and models are trained on datasets reflecting the biases and opinions of their creators, these biases can perpetuate within the AI system. This may lead to discriminatory outcomes when deployed in real-world applications.
• Generative AI can be employed to produce false information, such as fabricated text, speech, images, or videos. This becomes especially worrisome in today's era of easy information access and social media, where fake news and misinformation can rapidly spread and result in severe consequences. The ability of generative AI to create convincingly deceptive text, speech, images, or videos means that people may struggle to distinguish between authentic and fake information. This can lead to confusion, misinformation, and a loss of trust in the information presented to them.
• The development and use of generative AI present several regulatory and governance challenges. Questions arise concerning the accountability for the outputs generated by generative AI systems and how to ensure their safe and ethical usage.
• There are also concerns regarding the protection of user privacy and data security within generative AI systems. Furthermore, ensuring transparency and accountability for these systems is a significant consideration.

India-Bangladesh relations

Theme
The India-Bangladesh Friendship Pipeline (IBFPL), a 130km project to export oil from India to Bangladesh, is scheduled to begin in February 2023. The project aims to boost long-term economic growth, strengthen the relationship between the two countries, and address Bangladesh's current fuel crisis.

India-Bangladesh relations

• India supported the East Pakistan Independence movement, which led to Bangladesh gaining independence from Pakistan in 1971.
• India and Bangladesh have signed various agreements to foster relations, including the Memorandum of Understanding on Cooperation in the Peaceful Uses of Nuclear Energy (2011) to ensure the peaceful utilization of nuclear power.
• Both nations have a longstanding history of economic cooperation and enjoy strong ties across various sectors.
• India shares a 4096 km land border with Bangladesh, making it the fifth-largest land border in the world.
• Bangladesh is located south of India's Siliguri Corridor, also known as the "Chicken's Neck," which is a narrow passage just 27 km wide. This corridor serves as a vital link connecting India's northeastern states, and Bangladesh offers an alternative route for trade and commerce, reducing dependence on this vulnerable choke point that China could exploit.
• Bangladesh plays a crucial role in maintaining security and stability in the region, particularly in the fight against terrorism.
• Security cooperation is also vital for Bangladesh as it contributes to regional stability, which is essential for its economic growth and development.
• India is one of Bangladesh's largest suppliers of energy, food, financial assistance, and foreign investments.
• Both countries are members of various international forums, such as the South Asian Association for Regional Cooperation (SAARC), the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), and the Indian Ocean Rim Association for Regional Cooperation (IORA).

Challenges

• India has concerns about Bangladesh's import of Chinese military equipment, including submarines, which affects India's national security.
• Several river disputes exist between India and Bangladesh, particularly concerning the Ganga and Brahmaputra rivers.
• Illegal migration from Bangladesh is a significant concern for India, while Bangladesh does not recognize India's National Register of Citizens (NRC), which lists genuine Indian citizens.
• Delays in the implementation of certain projects committed by India in Bangladesh have created a lack of trust and allowed China to increase its influence in Bangladesh.
• Bangladesh's active participation in China's Belt and Road Initiative (BRI) is a point of concern for India.

Current Development

• In 2021-22, India-Bangladesh trade reached $18.2 billion, making Bangladesh India's largest trading partner in South Asia.
• Bangladesh ranks as the ninth largest export destination for India.
• Approximately 50% of India's health tourism comes from Bangladesh.
• Bangladesh enjoys duty-free access on all tariff lines, except tobacco and alcohol, when trading with India.
• India, in collaboration with Russia, is involved in developing Bangladesh's first nuclear power plant.
• India and Bangladesh have signed multiple agreements on power and Internet services, including the IBFPL project and the Bahrampur-Bheramaram Interconnection, which enables India to supply 500 MW of power to Bangladesh.
• Over the past several years, India has provided around $8 billion in development assistance to Bangladesh.
• Both countries have signed numerous partnership agreements, such as the Framework of Understanding (FOU) on Cooperation in the Hydrocarbon Sector, to enhance collaboration in the hydrocarbon industry.

Way Forward

• Bangladesh is expected to transition from its current status as a Less Developed Country (LDC) to a Developing Country by 2026. This change will end the benefits received from the World Trade Organization (WTO) for LDC status and present an opportunity for India to strengthen economic ties.
• India and Bangladesh signed the Comprehensive Economic Partnership Agreement (CEPA) in 2011, which goes beyond traditional Free Trade Agreements (FTAs) and promotes cooperation in multiple sectors. However, full implementation of this agreement by both countries is still pending, and India should prioritize its completion.
• Diplomatic talks and negotiations should be employed to resolve the various disputes between India and Bangladesh.
• India and Bangladesh should collaborate to complete ongoing projects and develop new ones to enhance connectivity, trade, and tourism between the two countries.

Cyber Warfare

Theme
The All India Institute of Medical Sciences (AIIMS), Delhi, one of India's top medical institutions, experienced a cyber attack on November 23, 2022. The attack affected all their servers and resulted in the complete loss of data, as reported by the Ministry of Health and Family Welfare (MoHFW). There are suspicions of data theft, and it is believed that the cyber attack originated from China.

What is Cyber Warfare?

When a country or military organization carries out a cyber attack against another nation, it is referred to as cyber warfare. This military operation aims to gather intelligence, cause damage, and steal critical information from the targeted nation's computer systems and technologies.

Why Cyberwarfare?

• Countries employ cyber warfare as a means to gain a military advantage over their adversaries by disrupting or damaging their military systems or infrastructure.
• Cyber warfare is highly effective for gathering intelligence on the enemy, including information on their military capabilities, political plans, and other sensitive data.
• Launching a cyber attack incurs significantly lower costs compared to a full-scale military assault.
• The source of a cyber attack is difficult to trace, allowing countries to carry out attacks without the risk of being identified.
• Through a cyber attack, extensive damage can be inflicted on an adversary. For instance, targeting a country's power grid can result in widespread blackouts, attacking the financial system can disrupt financial transactions, and targeting a nuclear plant can lead to a potential meltdown and nuclear disaster.
• Information manipulation and spreading propaganda are also tactics employed in cyber warfare.

How can a country be prepared?

• Countries can enhance their preparedness for cyber attacks by investing in new technologies, research, and development to bolster their resilience.
• Implementing measures such as backup systems and alternative communication networks can enhance the resistance of critical infrastructures against cyber attacks.
• Providing regular training to the workforce is crucial to equip them with the necessary skills for defending against cyber threats.
• Countries should collaborate and share technologies, information, and intelligence to collectively defend against the common threat of cyber attacks.
• Developing cyber forensics capabilities is essential for identifying the origin of cyber attacks, which can aid in holding accountable the responsible country on the global stage.

International Cooperation

• Convention on Cybercrime: Also known as the Budapest Convention, it aims to reduce cybercrime through enhanced cooperation between countries in investigations and prosecutions.
• International Telecommunication Union (ITU): As a specialized agency of the United Nations, ITU provides guidelines and recommendations on cyber security best practices.
  Regional initiatives like the ASEAN Cyber Capacity Programme and the European Union Cybersecurity Agency promote cooperation and support for cyber defense among member countries and partner nations.
• Global Forum on Cyber Expertise: This international platform facilitates cooperation between governments, the private sector, and civil society for sharing expertise and information to improve cyber defense.
• Cyber Security Tech Accord: Over 150 technology companies have voluntarily committed to collaborating on improving cyber security. They share information on cyber threats and technology to build resilient cyber defenses.

Recession

Theme
It is expected that the world will enter a recession in 2023. Several countries are already on the verge of recession. For instance, the UK's GDP contracted, and the Bank of America's strategists warned that the US could fall into a recession in the first quarter of 2023. A survey revealed that 91% of CEOs from top companies anticipate a recession in 2023.

What is a Recession?
A recession is when the production in an economy declines for an extended period, affecting a significant portion of the economy. Recessions usually begin with a substantial decrease in consumer spending across the economy. If not managed carefully and promptly, a recession can have catastrophic effects on an economy and potentially lead to an economic depression.

The present situation

• There is an energy shortage worldwide, with European countries struggling to provide gas and electricity to their citizens for warmth during the winter. Crude oil prices reached a five-year high of $121 per barrel in June 2022 and are projected to remain around $110 per barrel in 2023.
• Inflation in major countries soared to record highs in 2022. In October, the UK experienced its highest inflation rate in 41 years, reaching 11.1%. The Eurozone's inflation rate reached 10.4%, while the USA saw inflation at 9.1%. India had an inflation rate of 6.89%, exceeding the RBI's inflation target of 4%. Many economists predict that strong inflation rates will persist in 2023.
• Job losses are increasing in developing countries, with numerous small businesses and start-ups shutting down due to low or zero demand in the global market, coupled with protectionist policies implemented by many countries. Large companies like Meta, Amazon, and Microsoft are also laying off a significant number of employees.

Cause of the present situation

• The Russia-Ukraine war has been ongoing for ten months and has had devastating effects on the global economy. Ukraine, due to severe damage to its cities and infrastructure, is isolated from the rest of the world, while Russia faces harsh sanctions to prevent it from participating in the global economy. Ukraine was the fourth-largest producer of wheat, accounting for nearly 30% of global wheat trade. Russia was also a major player in the oil export market and a member of OPEC+. The war has resulted in a global shortage of food and energy, further destabilizing the global economy amidst the ongoing COVID pandemic, leading to high inflation in several countries.
• To combat high inflation, the US Federal Reserve is consistently raising interest rates, which strengthens the value of the Dollar. This, in turn, makes it more expensive for other nations to engage in international trade.
• China's strict COVID restrictions have discouraged and disrupted many manufacturing companies operating there, exacerbating disruptions in the global supply chain.
• Climate disasters have also caused significant losses for many countries during these challenging times.

Impact of a possible recession on the world

• Many impoverished countries may suffer from hunger and potential famine as wealthier nations divert most of the resources, such as food, energy, and capital, to meet their own needs.
• There will be a substantial increase in job losses and unemployment rates in many countries.
• Countries will face high levels of external debt.
• The increased cost of living and job losses will push many people worldwide into poverty.

India’s situation

• There is a slim chance of India experiencing a recession. India is able to meet its crude oil demand by sourcing it from Russia, which is offering crude oil at a lower price to a few other countries, including India, due to its isolation from the rest of the world. If the USA enters a recession, it would lower crude oil prices in the market, benefiting India. However, there is still a risk of capital outflow (assets leaving the country) from India, which could cause some harm.
• Similar to other countries, India's export sector may suffer losses due to weak global demand. For example, auto parts makers anticipate muted export growth due to the recessionary environment in the US and EU.

Space tourism

Theme
In July 2022, Dr. Jitendra Singh, the Minister of Science & Technology, stated that the Indian Space Research Organisation (ISRO) is working on the ability to launch people on space tourism flights.

What is Space Tourism?
Space tourism refers to the recreational or leisure travel of humans to space. Its aim is to make space more accessible to individuals who are not astronauts and wish to visit space for non-scientific reasons.

Progress in Space Tourism

• In 2001, Dennis Tito, an American entrepreneur, became the first private individual to travel to space on a Russian Soyuz spacecraft.
• So far, only wealthy individuals have been able to experience space tourism.
• According to US and NASA standards, the Karman Line is considered the boundary of space, but only a few space tourism ventures have managed to cross it.

Opportunities

• The space tourism industry will generate a significant number of job opportunities in India.
• It will foster the establishment of new private businesses and entrepreneurs catering to the industry's needs.
• India has the potential to make space tourism affordable and dependable.
• Advancements in space tourism will contribute to India's self-sufficiency in future space travel endeavors.
• The space tourism industry will also attract substantial foreign direct investments to India.

Challenges

• Space travel requires extensive training as the human body must cope with unusual conditions in space. Passengers may encounter health issues such as motion sickness and disorientation, which can affect vision, cognitive abilities, balance, and motor control.
• There is currently no treaty or well-defined law to protect the rights of space tourists in case of injury during their journey.
• Launching rockets or space shuttles releases a significant amount of pollution. The substantial pollution resulting from the growth of the space tourism sector could overwhelm the planet's capacity to handle it.
• Space travel is highly expensive, limiting access to the wealthy. This raises concerns about public interest and whether the government should allocate tax money to provide luxury exclusively to the rich.

Initiatives

• ISRO's Gaganyaan mission will be India's inaugural human space mission to Low Earth Orbit. ISRO is modifying its cargo carrier GSLV Mark III rocket to ensure its reliability for carrying astronauts. The Gaganyaan mission is yet to be launched.
• IN-SPACe is an independent agency authorized by the Indian government to promote greater private sector participation in the country's space activities.
• The Department of Space (DOS) permits the transfer of mature technologies developed by ISRO to private Indian industries.
• India has signed space cooperation agreements with 60 countries.
• ISRO is collaborating with space organizations from other nations to foster the development of cutting-edge technology.

INS Vikrant

Theme
India launched its first aircraft carrier designed and built in the country, INS Vikrant, on 2nd September 2022. This has strengthened India's naval capabilities and is seen as a significant achievement for self-reliant India.

Significance

• INS Vikrant is India's first domestically designed and manufactured aircraft carrier, which is a major milestone for India's pursuit of self-reliance.
• India has joined the exclusive group of countries, including the U.S., U.K., Russia, France, and China, capable of constructing carriers weighing over 40,000 tonnes.
• INS Vikrant will play a vital role in the Indian Navy's efforts to become a blue water force, projecting its presence in distant seas.
• With the commissioning of INS Vikrant, India now has two operational aircraft carriers, enhancing the country's maritime security.
• The development of a warship involves three components: floating, moving, and combat. The Indian Navy has achieved approximately 90% indigenization in the floating category and about 60% in the moving category.

Steps towards Indigenous Defence Sector

• The Development cum Production Partner Initiative involves the early involvement of industries in the development cycle, reducing the time frame for development and induction.
• The Defence India Startup Challenge supports startups, MSMEs, and innovators in creating prototypes or commercializing products/solutions related to national defence and security.
• The SRIJAN Portal provides information on items that can be indigenized by the private sector.
• The foreign direct investment (FDI) limit has been increased from 49% to 74%.
• The Innovations for Defence Excellence (iDEX) program focuses on self-reliance and indigenization in defence and aerospace.
• The Positive Indigenization List (Defence Procurement Policy) streamlines the procurement of military hardware for the Armed Forces in a systematic and time-bound manner.

Challenges

• Dependency on imports for subsystems and components remains a challenge. In the flight category of warship development, only about 30% indigenization has been achieved, with the rest being imports.
• Growing Chinese influence in the Indian Ocean is a concern.
• The Navy faces cost and time overruns in most production projects, as seen with the delayed induction of INS Vikramaditya, which took over 10 years after its purchase.
• The submarine fleet is outdated and requires improvement.

The Way Forward

• India needs to focus on developing core military technologies indigenously, which will significantly enhance naval capabilities.
• Collaboration between large private industries and medium, small, and micro enterprises (MSMEs) is crucial to achieving self-reliance for the Indian Navy.
• While working towards indigenous equipment, it is important to continue with acquisition programs to meet current operational needs.
• India should also aim to increase exports of Indian defence equipment to other countries.
• Shipyards must continually strive for improvement to meet global standards in terms of quality, productivity, and construction times. This will maximize the value of domestic production and reduce the need for external sources.

US – China relations

Theme
The relationship between the United States and China, as the two most powerful countries today, is important to study. It is a complex bilateral relationship that has seen both tension and cooperation on various issues such as Taiwan, trade, and climate change.

US-China Relations

• Since the formation of the People's Republic of China in 1949, the relationship between the US and China has been complicated. There have been periods of intense tension and periods of friendly exchanges, especially concerning Taiwan, trade, and climate change.
• During the Korean War in the 1950s, China supported North Korea while the US, along with the UN, backed South Korea. In 1954, the Taiwan Strait Crisis occurred, leading the US to threaten China with a nuclear attack in 1955.
• China claims that Taiwan was originally part of its territory, but Taiwan disagrees and argues that it has never been a part of China. In 1979, the US established formal ties with China and recognized the People's Republic of China as the legitimate government, which implies that Taiwan is part of China. Since then, the US has maintained formal relations with China and unofficial relations with Taiwan.
• In 2018, a trade war began between the two largest economies in the world, the US and China. A meeting between top officials from the Biden administration and Chinese officials in March 2021 resulted in deep disagreements and ended without a joint statement.
• In June 2021, the US urged NATO to recognize China as a security threat. China's ambitions and assertive behavior are seen as challenges to the rules-based international order and international security.
• However, despite these tensions, in June 2021, both countries signed a joint statement during the UN climate summit in Glasgow. As the highest emitters of greenhouse gases, they agreed to cooperate in combating climate change, increasing the use of renewable energy, developing regulatory frameworks, and deploying technologies like carbon capture.
• In February 2022, the US boycotted the Winter Olympics in Beijing, citing human rights violations in Xinjiang. Several other countries also chose not to send officials to the games. China criticized the move and accused the US of politicizing sports.
• The Biden administration has maintained certain policies implemented by the previous Trump administration, such as tariffs on Chinese imports and restrictions on companies associated with the Chinese military.
• President Biden has emphasized the need to compete with China by attracting investments in American companies.
• Tensions escalated again with the visit of US speaker Nancy Pelosi to Taiwan in August 2022. China views the visit as a violation of the "one-China policy." In response, China suspended US-China climate talks, cut off some high-level military communication channels, and imposed sanctions on Pelosi.
• China has conducted large-scale military exercises near Taiwan, surpassing the scale of exercises during the Taiwan Strait Crisis in 1996. It has also launched ballistic missiles over the island, with some landing in Japan's exclusive economic zone. Chinese aircraft have crossed the median line between mainland China and Taiwan.

India as a developed country by 2047

Theme
On India's 75th Independence Day, Prime Minister Narendra Modi set an ambitious target for the nation: to become a developed country by its 100th Independence Day in 2047.

What Does it Mean to be a Developed Country?
Countries are classified into different income groups by the World Bank based on their gross national income per capita. While the terms "developed" and "developing" are no longer widely used due to ongoing debates, a developed country generally refers to a high-income economy. However, high income alone does not determine development. Other factors such as the Human Development Index (HDI) score, which is typically 0.8 or above for developed countries, as well as stable economies, decent standards of living, and longer life expectancies are also important indicators.

Comparing India to Developed Countries

In terms of per capita income, India lags far behind developed nations like the USA, UK, Japan, and South Korea, with its income standing at $2200 in 2021. This significant difference indicates that people in developed countries earn much more and have greater purchasing power, enabling them to enjoy a better quality of life, as well as access superior education and healthcare services. India's HDI score of 0.625 also falls short of the 0.800 threshold for high human development.

Challenges Ahead

As of 2022, India falls into the lower-middle-income category according to the World Bank classification. To become a high-income economy, India must first move beyond the upper-middle income status it currently holds. However, the nation faces several challenges, including inflation and high wealth inequality.

Path to Development

• To achieve developed country status, the government needs to prioritize the social and economic development of India through the implementation of appropriate schemes. India's demographic dividend, its young workforce, is projected to peak in 2041. Therefore, the government should focus on maximizing the potential of this demographic advantage by increasing investments in research and development, healthcare, education, and skill development.
• To address wealth inequality and improve the HDI score, the government should enhance spending on public services such as healthcare, education, and transportation.
• Although India has witnessed an increase in foreign investments, these investments have primarily been made in service sectors, resulting in fewer job opportunities. To stimulate economic growth, attract more foreign investment, and create additional employment, the government must significantly boost the manufacturing sector.

India @ 75

Theme
On the 15th of August 2022, India will be celebrating 75 years of independence.

India @ 75 – How far we've come

• When India gained independence in 1947, there was widespread poverty and hunger. Over these 75 years, India has made significant progress in reducing poverty and has emerged as one of the world's fastest-growing economies.
• India has achieved self-sufficiency in food production. The green revolution, which began in the 1960s, has led to a substantial increase in food production. India now even supplies food to other countries.
• In 1947, the majority of the population in India was illiterate. The literacy rate in India was only 18.3% in 1951, but as of 2017-18, it has reached 77.7%. India has also been exporting skilled professionals to many countries.
• In 1947, the average life expectancy of an Indian citizen was around 32 years. By 2022, it had increased to 70.19 years. India now has improved healthcare facilities, advanced treatments, and accessible medicines. Infant and maternal mortality rates have also dropped. Affordable healthcare services have made India a top destination for medical tourism, ranking 10th among the world's top 46 countries in the Medical Tourism Index 2020-21.
• Despite being a diverse country with various religions, languages, and cultures, India has remained united since gaining independence, defying expectations.
• Through policies and welfare schemes, India has made significant progress in reducing caste-based social and economic inequalities.
• Today, women in India enjoy more freedom and opportunities than they did in 1947. The government has implemented various schemes and incentives to promote girls' education and empowerment.
• India has achieved many milestones, including emerging as a technological power, improving the ease of doing business, becoming a top destination for foreign investments, and leading the world in digital transactions.

Way forward

• According to the World Inequality Report 2022, India remains one of the most unequal countries in the world. The report reveals that the top 10% of the population holds 57% of the national income. To address this, India should focus on reducing wealth inequality by investing more in high-quality public services, healthcare, and education.
• Efforts should be made to eliminate violence against women, including domestic abuse. Furthermore, steps should be taken to reduce the gender gap.
• Improvements are needed in the justice delivery system, as nearly 5 crore cases are pending in courts as of 2022. Innocent people are languishing in prison awaiting trial. The government should ensure timely delivery of justice to victims and falsely accused individuals.
• Steps should be taken to enhance the income of farmers and make agriculture a profitable venture.
• India's skill gap contributes to the problem of unemployment. Therefore, the government should revise the school and college curriculum to align with the country's and the world's needs. This will help reduce unemployment rates and address the shortage of skilled workers for companies.

India-Maldives Relations

Theme
In August 2022, Maldives' president, Ibrahim Solih, visited India and expressed the country's commitment to its "India First" policy.

India-Maldives Relations

• India and Maldives are neighbouring countries and have maintained good relations since Maldives gained independence from the British in 1965.
• India has provided assistance to Maldives in various crisis situations, including the 1988 coup attempt, the 2004 tsunami, the 2014 water crisis, and most recently, the Covid pandemic.
• Maldives relies on imports from India for its food security.
• India is investing in infrastructure projects in Maldives.
• Both countries collaborate in combating drug trafficking and terrorism.
• Due to their friendly relations, Maldives has become a popular tourist destination for Indian tourists, benefiting its economy heavily dependent on fisheries and tourism.
• However, there were some disruptions in India-Maldives bilateral relations when the China-leaning Abdulla Yameen became president of Maldives in 2013.
• In 2018, Ibrahim Solih became president of Maldives, and bilateral relations returned to normal.
• In 2020, former Maldivian president Abdulla Yameen initiated the China-backed 'India Out' campaign, spreading misinformation and false propaganda to disrupt bilateral relations. The ruling party and other major parties in Maldives opposed this campaign, and in April 2022, Maldivian President Ibrahim Mohamed Solih banned it.
• During President Ibrahim Solih's visit to India in August 2022, he signed six key agreements to enhance cooperation in capacity building, cyber security, housing, disaster management, and infrastructure development. These agreements further strengthen the mutually beneficial relationship between Maldives and India, and President Solih reiterated Maldives' commitment to its "India First" policy.

India’s Defence exports

Theme
In the financial year 2021-22, India achieved its highest ever defence exports, reaching Rs. 13,000 crores.

Current Status of India's Defence Exports

As of 2021, India ranks 23rd among the world's largest arms exporters, with a modest 0.2% share in the defence exports market. The majority of the market, around 90%, is controlled by ten countries: China, France, Germany, Russia, the United States, Israel, Italy, South Korea, Spain, and Britain.

Significant Defence Export Achievement

India's first major defence export deal, worth Rs. 2800 crores, was signed with the Philippines in January 2022. This landmark agreement strengthens India's ties with the Indo-Pacific region and creates potential opportunities for defence exports to Vietnam, Indonesia, Malaysia, and Thailand.

Boosting the Defence Industry

The defence budget for 2022-23 allocates 25% of research and development (R&D) funds to the private sector, startups, and academia. Additionally, 68% of the capital outlay will be used to procure equipment from domestic defence manufacturing companies. These measures greatly support the domestic defence industry and contribute to India's vision of a self-reliant defence sector (Atmanirbhar Bharat), ultimately leading to increased defence exports.

• Future Targets
  India aims to achieve Rs. 35,000 crores worth of defence exports by 2025.
• Further Steps to Enhance Defence Exports
  To compete with the world's major defence exporters, India should focus on manufacturing high-quality and advanced weapons that are competitively priced.

Establishing Support Contracts

India should also consider establishing lifetime maintenance support contracts with nations that import equipment. This approach is commonly employed by leading defence exporting countries and can enhance India's competitiveness.

Expanding Market Reach

To significantly increase defence exports, India should pursue deals with major arms importers such as Saudi Arabia, Egypt, Australia, and others.

Building Trust and Reliability

Gaining trust is crucial in the defence imports market. India must address any existing loopholes and improve reliability. For instance, in 2015, Ecuador cancelled a contract with Hindustan Aeronautics Limited (HAL) after experiencing malfunctions with the four Dhruv advanced light helicopters purchased from India. This incident highlights the need for increased investment in trial and testing infrastructure as a valuable lesson for India's defence industry.

India – UK relations

Theme
India and the United Kingdom (UK) have had a strong relationship since India gained independence in 1947. Over the years, their partnership has flourished in various areas.

India – UK relations

• In the 1990s, India was the UK's second-largest trading partner. However, by 2021, it had dropped to the 15th position, and the UK became India's 18th largest trading partner.
• In 2021, both countries agreed to an "Enhanced Trade Partnership" (ETP) to boost bilateral trade. They also launched the "Roadmap 2030" initiative, aiming to double their trade by 2030. Additionally, they pledged to collaborate in areas such as trade, defence, cyber security, and combating climate change.
• Since January 2022, India and the UK have been discussing the possibility of a "Free Trade Agreement" (FTA), which could greatly benefit both nations by further enhancing their trade ties.
• Despite the resignation of Boris Johnson as the UK's Prime Minister in July 2022, the change in leadership is not expected to negatively impact the India-UK relationship. There are several reasons for this, including the UK's strong desire to bolster its "Global Britain" ambition, which relies on forging better trade relations with India. Furthermore, the British Indian population in the UK constitutes 1.8%, highlighting the cultural and historical ties between the two countries.
• The UK also plays a significant role as an investor in India, with recent investments of $89 million directed towards supporting the growth of India's renewable energy sector. This demonstrates the UK's commitment to fostering economic cooperation and development between the two nations.

India – Sri Lanka relations

Theme
India and Sri Lanka have had a positive relationship until the 1980s. However, conflicts arose during that time when India intervened in Sri Lanka's civil war to assist the Tamil population. Additionally, tensions grew due to China's increasing influence in Sri Lanka. Another major source of disagreement between the two countries is related to fishing in the waters of the Palk Bay Straits. Indian and Sri Lankan fishermen used to fish there for many years, but conflicts arose after the signing of a maritime boundary agreement in 1976. Indian fishermen are frequently arrested by the Sri Lankan Navy for allegedly entering Sri Lankan waters.

India – Sri Lanka relations

• In 2021, Sri Lanka declared an economic emergency due to various factors such as the negative impact of the pandemic on tourism and the switch to organic farming, which affected agricultural exports. In this difficult situation, India has been supporting Sri Lanka by providing loans, swaps, and aid totaling $4 billion. India is also willing to offer further assistance.
• India's help has contributed to improving the relations between the two countries. Efforts are being made to enhance connectivity, improve transportation facilities, and discuss the implementation of the 'India-Sri Lanka electricity grid interconnection' project. Strengthening trade and cultural ties is also crucial to bringing India and Sri Lanka closer together.

War crimes

Theme
Ukraine is currently investigating more than 30,000 alleged war crimes that occurred during Russia's invasion of Ukraine. In May 2022, a Russian soldier was sentenced to life imprisonment in the first war crimes trial since the invasion.

Points to Discuss about 'War crimes'

• Even in war, there are rules that must be followed. Soldiers are prohibited from attacking civilians and healthcare workers who are not involved in the fighting. Deliberately targeting civilians is considered a war crime.
• The use of certain weapons, such as chemical and biological weapons, is strictly forbidden. Employing such weapons is considered a war crime.
• The rules outlined in the Geneva Convention (1949) and international humanitarian law apply to wartime situations.
• Not only soldiers, but also those in positions of command will be held accountable if they have ordered or ignored war crimes committed by their subordinates.
• Conducting investigations into war crimes and swiftly punishing the culprits can provide justice to the victims' families. It also ensures that evidence and testimonies from witnesses are fresh. Additionally, this serves as a deterrent against future war crimes.
• During Russia's invasion of Ukraine in 2022, many Russian soldiers have been accused of committing war crimes, including intentionally killing civilians, looting, rape, and destroying residential buildings. Ukraine is currently investigating these war crimes and has already sentenced one Russian soldier to life imprisonment for shooting a civilian in the head.
• The International Criminal Court (ICC), an intergovernmental organization, has deployed a team to Ukraine to investigate war crimes. The ICC focuses on investigating and prosecuting serious international crimes, such as war crimes, crimes against humanity, and genocide. Russia withdrew from the ICC in 2016 and is no longer a party to it, so the ICC cannot prosecute individuals from Russia. However, there is another option - the United Nations Security Council (UNSC) can refer non-party countries to the ICC. However, Russia, being a member of the UNSC, can veto such a referral.
• In general, social media platforms remove content that may incite violence. Therefore, it is reported that Facebook, YouTube, and other social media platforms have removed content related to the Ukraine conflict for a valid reason. However, laws should be put in place to store this content separately, as it can serve as evidence for investigating war crimes.

Women in Armed Forces

Theme
In 1888, women were recruited to serve in the Indian Military Nursing Service. It was only in 1992 that women officers were allowed to join the armed forces in non-medical roles, but only as short-service commission (SSC) officers.

Women in Armed Forces

• In 2008, the Centre granted permanent commission to women officers, but only in the Legal and Education corps. However, after the Supreme Court's intervention in 2019, women can now apply for Permanent Commission (PC) in the Army.
• In 2021, thanks to the Supreme Court's intervention, girls were given the opportunity to write the National Defence Academy (NDA) entrance examination for the first time. As a result, 178,000 women have applied for the exam, indicating a growing interest among women to join the armed forces.
• The issue of allowing women in combat roles has been widely debated, not only in India but around the world. Currently, only a few countries permit women to serve in combat roles. However, the Indian Armed Forces have started gradually opening up combat roles for women. The Indian Air Force (IAF) began inducting women as fighter pilots in 2016, and the first batch of women soldiers were included in the Corps of Military Police (CMP) in 2021.
• The situation is slowly changing, but the representation of women in the Indian armed forces remains significantly low. As of February 2021, women make up only 6.5% of the workforce in the Indian Navy, 0.56% in the Army, and 1.08% in the Air Force.
• During the period of 1942 to 1945, when the Indian National Army (INA) was active under the leadership of Subhas Chandra Bose, there existed an all-women regiment in India. It was one of the very few combat regiments composed entirely of women at that time.