Weekly Current Affairs (1st to 7th December 2024) Part - 2 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

BRICS Nations Explore Alternatives to US Dollar

Why in News?

• At the 16th BRICS summit in October 2024, the BRICS countries engaged in discussions regarding increasing the use of local currencies in trade or potentially creating a new BRICS currency. This initiative aims to reduce reliance on the US dollar. In response, US President-elect Donald Trump warned that BRICS nations could face 100% import tariffs if they support a currency intended to replace the US dollar as the global reserve currency. This situation has intensified discussions about reducing dollar dependence and the establishment of a multipolar financial system.

Key Takeaways

• BRICS nations are exploring alternative currencies to mitigate reliance on the US dollar.
• Discussions include the potential for a unified BRICS currency to facilitate trade among member countries.
• US President-elect Trump has threatened 100% tariffs on BRICS imports if dollar alternatives are pursued.

Additional Details

• Reducing Transaction Costs: Trading in local currencies eliminates the need for intermediary foreign currencies, thereby lowering transaction costs and enhancing trade efficiency among BRICS nations.
• Dominance of the Dollar: Currently, the US dollar dominates over 90% of global trade and is central to international reserves. Heavy reliance on the dollar exposes countries to US monetary policies, leading to potential economic instability.
• Many BRICS countries, especially from the Global South, often face challenges in accessing major currencies like the dollar, which complicates their ability to import goods, repay debts, and engage in international trade.
• Political Motivations: Countries are motivated to explore local currencies to lessen the impact of US financial sanctions, as seen in the cases of Russia and Iran being blocked from the SWIFT network.
• Geopolitical Reasons: Nations like Brazil, Russia, and India are advocating for greater autonomy from US influence by promoting currencies like the yuan and ruble, or contemplating a unified BRICS currency.

The shift towards alternative currencies aims to foster growth in local markets and enhance intra-BRICS trade.

What are the Potential Risks of Moving Away from the US Dollar?

• Chinese Domination: A reduction in reliance on the US dollar could lead to increased Chinese economic dominance, particularly with the yuan's expanded use in international trade.
• Implementation Challenges: The adoption of a BRICS currency or local currencies faces significant hurdles, as evidenced by complications in India-Russia trade due to banking concerns over US sanctions.
• Liquidity Issues: The US dollar is highly liquid and widely accepted, whereas alternatives may not have the same liquidity, complicating international transactions.
• Volatility and Exchange Rate Risks: Transitioning away from the dollar may cause increased exchange rate volatility, particularly for nations with less established financial markets, creating economic uncertainties.

What are the Potential Impacts of a 100% US Tariff on BRICS Imports?

• Impact on Global Trade: Such tariffs could compel BRICS countries to deepen intra-bloc trade, accelerating the process of de-dollarization and leading to a rise in non-traditional reserve currencies.
• Impact on the US: A blanket 100% tariff could adversely affect the US economy by increasing import costs, potentially shifting trade routes and leading to higher prices for American consumers.
• BRICS nations might retaliate with their own tariffs on US goods, escalating trade tensions and altering global trade dynamics.

Way Forward

• India’s Balanced Diplomacy: India should engage diplomatically with the US, clarifying that diversifying trade mechanisms is aimed at financial stability rather than being an anti-dollar initiative.
• Digital Payment Solutions: Developing a reliable digital payment system is crucial for balancing currency demand and ensuring the success of local currency trade.
• Incremental Progress: A gradual approach should be taken, starting with limited trade in local currencies while building the necessary infrastructure and confidence.

In conclusion, the BRICS nations' exploration of alternatives to the US dollar presents both opportunities and challenges. As they seek to reshape global finance, careful consideration of the potential impacts and strategic approaches will be essential for navigating this transition.

International Debt Report 2024

Why in News?

• The recently released "International Debt Report 2024" by the World Bank reveals a significant worsening of the debt crisis faced by developing nations. The year 2023 marked the highest levels of debt servicing in the last two decades, primarily driven by escalating interest rates and various economic challenges. Additionally, a UNCTAD report titled "A World of Debt 2024: A Growing Burden to Global Prosperity," published earlier in June 2024, highlighted the severe global debt crisis affecting the entire world.

Key Takeaways

• The total external debt of Low- and Middle-Income countries (LMICs) soared to a record USD 8.8 trillion by the end of 2023, an increase of 8% since 2020.
• Debt servicing costs reached a record USD 1.4 trillion in 2023, with interest payments surging by 33% to USD 406 billion.
• Interest rates on loans from official creditors doubled to over 4%, with private creditors reaching 6%, marking the highest levels in 15 years.
• IDA-eligible countries experienced substantial financial strain, with debt servicing costs reaching USD 96.2 billion in 2023.

Additional Details

• Rising Debt Levels: The external debt for IDA-eligible countries increased nearly 18%, hitting USD 1.1 trillion. The IDA, established in 1960, provides concessional loans and grants to the world's poorest nations.
• Impact on Development: The rise in interest payments has severely limited investments in crucial sectors such as health, education, and environmental sustainability, worsening existing developmental challenges.
• Global Public Debt: Projected to reach USD 315 trillion in 2024, global debt encompasses borrowings by households, businesses, and governments, driven by factors like the Covid-19 pandemic and rising commodity prices.
• Debt Management Initiatives: Programs like the Debt Management and Financial Analysis System (DMFAS) and the Heavily Indebted Poor Countries (HIPC) Initiative are aimed at improving debt management practices and providing necessary relief for the poorest nations.

The "International Debt Report 2024" underscores the critical challenges that developing nations face in managing their debt. With rising debt levels and servicing costs, there is an urgent need for multilateral support and improved transparency in debt management to foster sustainable economic development. As these countries grapple with financial pressures, the role of international financial institutions becomes increasingly vital in balancing debt obligations with essential developmental needs.

69th Mahaparinirvan Diwas of Dr. Ambedkar

Why in News?

• The 69th Mahaparinirvan Diwas was observed on December 6 to honor the death anniversary of Bharat Ratna Dr. Bhimrao Ramji Ambedkar, the chief architect of the Indian Constitution and a prominent advocate for social justice. This day commemorates Dr. Ambedkar's enduring legacy, underscoring his significant contributions to social reform, justice, and equality.

Key Takeaways

• Dr. Ambedkar was a champion for the rights of Dalits, women, and laborers.
• He initiated affirmative action policies to uplift marginalized communities.
• Dr. Ambedkar played a crucial role in drafting the Indian Constitution.
• He advocated for social equality and justice throughout his life.

Additional Details

• Champion of the Oppressed: Dr. Ambedkar dedicated his life to combating caste-based discrimination and promoting social equality for marginalized groups.
• Empowerment Initiatives: He advocated for reservations in education and employment through constitutional provisions like Articles 15(4) and 16(4), aimed at rectifying historical injustices.
• Founding Organizations: Dr. Ambedkar established the Bahishkrit Hitkarini Sabha in 1923 to promote education and improve the socio-economic conditions of outcast communities.
• Media Advocacy: He launched the newspaper Mooknayaka to provide a voice for the oppressed and challenge societal inequalities.
• Landmark Movements: Dr. Ambedkar led significant movements like the Mahad Satyagraha for equal access to public water resources and the Kalaram Temple entry movement to dismantle caste-based restrictions in religious spaces.

Contributions to Constitution Making

• Chairman of the Drafting Committee: As the head of the committee in 1947, Dr. Ambedkar was instrumental in crafting the world’s largest written Constitution, adopted in 1949.
• Fundamental Rights: He played a key role in drafting Part III of the Constitution, ensuring rights such as equality before law and protection against discrimination.
• Reservation Provisions: Through Articles 15(4) and 16(4), he ensured that marginalized communities received representation in education and employment.
• Article 32: Known as the "soul of the Constitution," this article allows citizens to seek justice in higher courts, emphasizing the protection of constitutional rights.
• Parliamentary Democracy: Dr. Ambedkar advocated for a parliamentary system that promotes accountability and transparency.
• Federal Structure: He conceptualized a dual polity to balance power between central and state governments.
• Directive Principles of State Policy: Envisioned as a guide for creating a welfare state, these principles remain critical in Indian policymaking.

Contributions to Nation Building

• Economic Framework: His academic work influenced the establishment of the Finance Commission of India and laid the groundwork for the Reserve Bank of India Act, 1934.
• Infrastructure Vision: Dr. Ambedkar supported major infrastructure projects like the Damodar Valley Project and the Hirakud Dam, contributing to sustainable development.
• Employment Reforms: He established Employment Exchanges to improve job placement systems across the country.
• Social and Economic Justice: Advocated for inclusive policies that address economic disparities and integrate social justice into governance.

Dr. Ambedkar's contributions to nation-building through economic development, infrastructure projects, and social justice initiatives, alongside his pivotal role in shaping the Indian Constitution, continue to resonate in contemporary India.

80-Pillar Assembly Hall of Kumhrar and Mauryan Architecture

Why in News?

• The Archaeological Survey of India (ASI) has begun efforts to excavate the remains of an 80-pillar assembly hall located at the Mauryan archaeological site of Kumhrar, Patna. This initiative is expected to renew global interest in the Mauryan Empire and highlight its contributions to art and architecture.

Key Takeaways

• The 80-Pillar Assembly Hall is linked to the Mauryan Empire (321–185 BCE), one of ancient India's most significant dynasties.
• Emperor Ashoka (268–232 BCE) is believed to have convened the Third Buddhist Council in this hall, which was crucial for the unification of the Buddhist community and the propagation of Dhamma.
• The site emphasizes Pataliputra's role as a political and cultural center of the Mauryan Empire.

Additional Details

• Architectural Significance: The hall featured 80 sandstone pillars that supported a wooden roof and floor, demonstrating the advanced engineering of the Mauryan period.
• Excavation History:
  • First Excavation (1912–1915): Discovered one intact pillar along with 80 pits for other pillars and evidence of destruction by fire.
  • Second Excavation (1961–1965): Uncovered four additional pillars.
• Preservation challenges include rising water levels that led to partial submergence of the site, prompting conservation measures.
• The ASI is currently working to uncover the site due to improved water levels and renewed interest in Mauryan heritage.

The ASI plans to initially expose 6–7 pillars to study humidity and groundwater impacts, with future assessments to determine the full reopening of the site while balancing preservation needs with public access.

Key Highlights of Mauryan Art and Architecture

• Architectural Types: Mauryan architecture is divided into Court Art (for political and religious purposes) and Popular Art (accessible to the public).

Mauryan Court Art

• Palaces: Praised by Greek historian Megasthenes and Chinese traveler Fa Hien, the palaces were influenced by Achaemenid designs and primarily constructed of wood.
• Pillars: Tall and monolithic, made of finely polished sandstone, influenced by Achaemenian pillars. Ashoka's pillars often featured animal capitals and inscriptions in multiple languages.
• Stupas: Characterized by cylindrical drums and hemispherical mounds, the most notable stupa is the Sanchi Stupa in Madhya Pradesh.

Mauryan Popular Art

• Cave Architecture: Caves served as viharas for Jain and Buddhist monks, exemplified by the Barabar Caves.
• Sculptures: Yaksha and Yakshi figures were widespread, significant in Jainism, Hinduism, and Buddhism.
• Pottery: Known as Northern Black Polished Ware (NBPW), distinguished by its lustrous black finish.

Mains Question:

• Discuss the contributions of Mauryan architecture to India’s cultural heritage.

Anna Chakra and SCAN for Reforming PDS System

Why in News?

• Recently, the Union Minister of Consumer Affairs, Food and Public Distribution and New & Renewable Energy launched “Anna Chakra” and the SCAN (Subsidy Claim Application for NFSA) portal. This initiative aims to modernize India's Public Distribution System (PDS), thereby enhancing the efficiency of the PDS supply chain and streamlining the subsidy claim process, which will benefit millions of citizens reliant on food security programs.

Key Takeaways

• Launch of Anna Chakra and SCAN portals to modernize PDS.
• Enhancement of supply chain efficiency and subsidy claims.
• Collaboration with World Food Programme and IIT-Delhi.

Additional Details

About Anna Chakra: Anna Chakra is a pioneering tool for optimizing the PDS supply chain in India. It employs advanced algorithms to identify optimal routes for the transportation of food grains.

Key Features:

• Enhanced Efficiency: Achieves annual savings of Rs 250 crores through reduced fuel consumption and logistics costs.
• Environmental Sustainability: Reduces transportation distance by 15-50%, minimizing emissions.
• Wide Coverage: Benefits approximately 4.37 lakh Fair Price Shops (FPS) and 6,700 warehouses.
• Seamless Integration: Linked with Railways' Freight Operations Information System and integrated with the PM Gati Shakti platform.
• About SCAN System: This portal modernizes PDS operations for states under the National Food Security Act (NFSA) 2013, enhancing fund utilization and reducing leakages.
• Unified Platform: Provides a single-window system for states to submit subsidy claims.
• Automated Workflow: Ensures end-to-end automation for subsidy release and settlement.
• Rule-Based Mechanism: Expedites claim scrutiny and approval by the Department of Food and Public Distribution.

The Public Distribution System (PDS) is an essential Indian food security initiative aimed at addressing food scarcity by providing food grains at affordable prices. Established under the National Food Security Act (NFSA) 2013, it ensures food security for nearly two-thirds of India’s population based on Census 2011 data. The PDS is managed jointly by the Central and State/UT Governments, with the Central Government overseeing procurement and logistics, while State Governments handle local distribution.

Evolution of PDS

• Originated during World War II as a wartime rationing measure.
• Expanded in the 1960s due to food shortages, leading to the establishment of the Agriculture Prices Commission.
• Became a universal scheme in the 1970s, with the Revamped Public Distribution System (RPDS) launched in 1992 to enhance reach in remote areas.
• The Targeted Public Distribution System (TPDS) was introduced in 1997 to categorize beneficiaries.
• Antyodaya Anna Yojana (AAY) launched in 2000 to focus on the poorest families.

What Initiatives Have Been Taken to Reform the PDS System in India?

• One Nation One Ration Card (ONORC): Enables portability of ration cards across India, allowing access to subsidized food from any FPS.
• Universal PDS: Tamil Nadu's initiative where every household is entitled to subsidized food grains.
• Technology Related PDS Reforms:
  • SMART-PDS Scheme: Approved for 2023-2026 to maintain and upgrade technology.
  • Computerized Fair Price Shops: Implementation of Point of Sale (POS) machines to enhance transparency.
  • Aadhaar and Direct Benefit Transfer (DBT): Improved beneficiary identification and cash transfers.
  • GPS and SMS Monitoring: Used for tracking food grain distribution and notifying citizens.

What are the Challenges Related to PDS?

• Identification of Beneficiaries: Significant inclusion and exclusion errors exist, with many eligible households overlooked.
• Corruption and Leakages: Widespread corruption leads to diversion of food grains, resulting in significant economic losses.
• Storage and Distribution: Insufficient storage facilities cause wastage and inefficiencies in distribution.
• Quality of Food Grains: Inconsistent quality of distributed food grains does not meet nutritional needs.

Way Forward

• End-to-End Digitalization & Monitoring: Implement blockchain and IoT for supply chain tracking and real-time stock updates.
• Portable Benefits & Migration Support: Strengthen interstate coordination and facilitate registration for seasonal migrants.
• Storage Infrastructure Modernization: Upgrade to modern silos and promote public-private partnerships for infrastructure development.
• Nutritional Security: Convert select FPS into nutrition hubs and introduce nutrition vouchers for vulnerable groups.

Mains Question: 

• What is the Public Distribution System (PDS)? Why is it essential for India, and what reforms have been implemented to enhance its efficiency?

Including Non-Mineralised Areas in Mining Leases

Why in News?

• Recently, the Centre has permitted state governments to incorporate non-mineralised areas within existing mining leases for the purpose of dumping mine waste and overburden. This decision aims to streamline operations and address challenges faced by the mining industry. The Ministry of Mines clarified that under the Mines and Minerals (Development and Regulation) Act, 1957, non-mineralised areas designated for ancillary activities like waste disposal can be included in a mining lease. This interpretation is supported by the Mines Act, 1952, and Rule 57 of the Mineral Concession Rules, 2016, which allow for the inclusion of ancillary zones within lease areas.

Key Takeaways

• The inclusion of non-mineralised areas is aimed at improving operational efficiency in mining.
• This move aligns with the Supreme Court's 2014 ruling against dumping waste outside valid lease areas.
• State governments can allocate contiguous non-mineralised areas for waste management.
• Safeguards are in place to prevent illegal mineral extraction in these areas.

Additional Details

• Supreme Court Rulings: In a landmark 1989 case, it was ruled that mining regulation primarily falls under the Centre's authority, though states can collect royalties.
• Overturning of Previous Verdict: In July 2024, the Court ruled in favor of states' authority to tax mineral rights, modifying the earlier 1989 judgment.
• Implications of Recent Inclusion: The inclusion allows for safe management of overburden and optimizes land use without needing separate auctions.
• States are required to consult the Indian Bureau of Mines (IBM) to ensure proper verification and prevent illegal activities.

This recent policy change is expected to facilitate sustainable growth in the mining sector by alleviating operational hurdles and enhancing the management of resources.

What is the Mines and Minerals (Development and Regulation) Act, 1957?

• Pivotal Legislation: This Act governs India’s mining sector with a focus on development, conservation, and transparency.
• Initial Objectives: Aimed to promote mining while conserving resources and regulating concessions effectively.
• 2015 Amendment: Introduced reforms such as the Auction Method for transparency and the establishment of the District Mineral Foundation (DMF).
• 2021 Amendment: Defined captive and merchant mines; ensured that private-sector mineral concessions are granted through auctions.
• 2023 Amendment: Aimed at enhancing the exploration of critical minerals and reducing import dependence, promoting participation from the private sector.

Overall, the Mines and Minerals (Development and Regulation) Act, 1957 plays a crucial role in regulating India's mining sector, with amendments reflecting the evolving needs of the industry and the economy.

India Lags In Leveraging China+1 Strategy

Why in News?

• The recently released NITI Aayog Trade Watch report highlights India’s trade prospects, challenges, and growth potential, especially in light of the US-China trade conflict and the 'China Plus One' strategy. It stated that India has had limited success so far in capitalizing on the 'China Plus One' strategy adopted by multinational companies to diversify and de-risk their supply chains.

Key Takeaways

• India faces competitive disadvantages and regulatory challenges compared to other Southeast Asian countries.
• Slow pace in negotiating Free Trade Agreements (FTAs) has put India at a disadvantage.
• Geopolitical tensions create both opportunities and uncertainties for India's trade strategies.
• Infrastructure issues and high logistics costs limit India's attractiveness to foreign investors.
• India's large domestic market and demographic advantages present significant growth potential.

Additional Details

• Competitive Disadvantages: Countries like Vietnam and Thailand have attracted multinational corporations due to cheaper labor, simplified tax laws, and lower tariffs, unlike India’s complex regulations and higher labor costs.
• Free Trade Agreements (FTAs): South Asian countries have been more proactive in signing FTAs, helping them to expand their export shares. India's slower pace in negotiating FTAs has hindered its trade growth.
• Geopolitical Tensions: While geopolitical tensions offer India the chance to become a neutral alternative, they also create uncertainties that complicate trade strategies.
• Supply Chain Disruptions: Although there are opportunities due to fragmented supply chains resulting from US export controls and tariffs on China, India's poor infrastructure and high logistics costs have limited its ability to attract foreign investment.
• Carbon Tax Risks: The EU's Carbon Border Adjustment Mechanism (CBAM) may increase costs for India's iron and steel exports, making them less competitive.

India's journey to capture the 'China Plus One' opportunity has been marked by various challenges. However, with strategic investments in infrastructure, regulatory reforms, and a focus on innovation, India can enhance its position as a viable alternative in the global supply chain landscape. The potential for economic growth is significant, but it requires proactive measures to turn challenges into opportunities.

Questions for Consideration:

• What is the 'China Plus One' strategy, and what are the opportunities and challenges it presents for India?