Weekly Current Affairs (22nd to 31st August 2023) Part - 2 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

15th BRICS Summit

Context: The 15th BRICS summit hosted by South Africa in Johannesburg, holds significant importance against the backdrop of geopolitical changes and global economic dynamics.

• Notably, this summit marks the first in-person gathering since 2019 due to the Covid -19 pandemic.
• The theme for the 15th BRICS Summit is “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development and Inclusive Multilateralism”.

What are the Key Highlights of the 15th BRICS Summit?

BRICS Expansion:

• BRICS marked its 15th summit by expanding its membership from five to eleven countries, reflecting a concerted effort to enhance its global standing.
• Egypt, Iran, Saudi Arabia, UAE, Ethiopia, and Argentina joined the BRICS fold, amplifying the group's representation across the Middle East, Africa, and South America.
• Full membership will take effect on January 1, 2024.
• The original BRIC members had two things in common: large economies, and high potential growth rates.
• The expanded BRICS-11 is a less coherent group; some are going through crises, and others are thriving. This could signal an expansion of the agenda beyond economics.

India's Stakes in the BRICS Summit:

• The summit is important for India, as it is the first in-person meeting since the India-China military standoff at the Line of Actual Control.
• After the bilateral talks between the Prime Minister (PM) of India and President of China, both nations have agreed to step up efforts for the disengagement of troops and de-escalation of tensions along the LAC.
• India played a key role in drafting membership criteria and promoting strategic partnerships among new entrants.
• India leverages BRICS to expand its network of allies and enhance its geopolitical influence.
• India sees BRICS as a "non-western" rather than an "anti-western" group, emphasizing the platform's diversity of perspectives.
• India aims to enhance cooperation with China and Russia for the Leader's declaration.
• The Indian PM proposed to establish a BRICS space exploration consortium to advance cooperation in the field of space technology and research.
• India called for BRICS collaboration under the International Big Cat Alliance in protecting the endangered big cats that live in their countries .

Geopolitical Context and Significance:

• The summit gains new importance as it follows the Russian invasion of Ukraine in 2022, impacting global stability and security.
• BRICS discussions are perceived to carry a "counter-western" perspective.
• Amidst attempts to "isolate" Russia over the Ukraine conflict, BRICS deliberations gain importance.

United Nations Reform:

• India and other BRICS members support comprehensive reform of the United Nations, including the Security Council, to make it more democratic, representative, effective and efficient.

Climate Change:

• BRICS members agreed to address the challenges posed by climate change while also ensuring a just, affordable and sustainable transition to a low-carbon and low-emission economy.
• The five nations called on developed countries to lead by example and support developing countries towards such transitions.
• BRICS nations opposed trade barriers imposed by certain developed countries under the pretext of tackling climate change.

What is BRICS?

About:

• BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China, and South Africa.
• In 2001, the British Economist Jim O’Neill coined the term BRIC to describe the four emerging economies of Brazil, Russia, India, and China.
• The grouping was formalized during the first meeting of BRIC Foreign Ministers in 2006.
• South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS.

Share of BRICS:

• The BRICS brings together five of the largest developing countries of the world, representing 41% of the global population, 24% of the global GDP and 16 % of the global trade.

Chairmanship:

• The chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
• India hosted the chair for the 2021 BRICS Summit.

Initiatives of the BRICS:

• New Development Bank: During the Sixth BRICS Summit in Fortaleza (Brazil) in 2014, the leaders signed the Agreement establishing the New Development Bank (NDB - Shanghai, China). It has so far approved 70 infrastructure and sustainable development projects worth.
• Contingent Reserve Arrangement: In 2014, the BRICS governments had signed a treaty on the setting up of the contingent reserve arrangement The arrangement is aimed at forestalling short-term balance of payments pressures, providing mutual support and strengthening the financial stability of the BRICS nations.
• Customs Agreements: Customs agreements were signed to coordinate and ease trade transport between BRICS countries
• Launched of Remote Sensing Satellite: In August 2021, the five space agencies signed an agreement on the Cooperation on BRICS Remote Sensing Satellite Constellation.

The constellation is made up of six existing satellites: Gaofen-6 and Ziyuan III 02, both developed by China, CBERS-4, jointly developed by Brazil and China, Kanopus-V type, developed by Russia, and Resourcesat-2 and 2A, both developed by India.

Scientific Authenticity of Nano Liquid Urea

Context: Recently, an opinion paper published in the journal "Plant and Soil" has raised concerns about the scientific validity of Nano Liquid Urea produced by the Indian Farmers and Fertiliser Cooperative (IFFCO).

• The paper questions the claims made about the efficacy and benefits of the product, emphasizing the need for rigorous scientific scrutiny before launching nano fertilizers into the market.

What is Liquid Nano Urea?

About:

• It is urea in the form of a nanoparticle. It is a nutrient (liquid) to provide nitrogen to plants as an alternative to the conventional urea.
• Urea is a chemical nitrogen fertilizer, white in colour, which artificially provides nitrogen, a major nutrient required by plants.
• It is developed to replace conventional urea and it can curtail the requirement of the same by at least 50%.
• It contains 40,000 mg/L of nitrogen in a 500 ml bottle which is equivalent to the impact of nitrogen nutrient provided by one bag of conventional urea.

Developed At:

• It has been indigenously developed at Nano Biotechnology Research Centre, Kalol, Gujrat in line with Atmanirbhar Bharat and Atmanirbhar Krishi.
• India is dependent on imports to meet its urea requirements.

Significance:

• Liquid Nano Urea has been found effective and efficient for plant nutrition which increases production with improved nutritional quality.
• It can boost a balanced nutrition program by reducing the excess use of Urea application in the soil and make the crops stronger, healthier and protect them from the lodging effect.
• It has a positive impact on the quality of underground water, a very significant reduction in global warming with an impact on climate change and sustainable development.

What is the Background?

• IFFCO had asserted that a small quantity of nano liquid urea could replace a substantial amount of conventional urea.
• The central government and IFFCO have ambitious plans to expand nano urea production and export.
• The researchers express concerns about the potential consequences of these plans, as exaggerated claims could lead to severe yield losses, impacting food security and farmer livelihoods.

What are the Concerns Raised By the Paper?

Discrepancy Between Claims and Outcomes:

• Nano liquid urea was introduced as a promising alternative to traditional granular urea.
• Nano liquid urea has failed to deliver noticeable results in the field. Farmers using the fertiliser have experienced increased input costs without corresponding improvements in crop yield.
• This highlights the discrepancy between product claims and real-world outcomes.

Environmental Concerns:

• While IFFCO advertised nano urea as environmentally friendly, the paper finds no scientific basis for this claim.
• It emphasizes that nitrogen, a vital compound for crop growth, has been linked to numerous environmental issues such as Climate Change, Ocean Acidification, and Ozone Depletion.

What are the Recommendations of the Study?

• The study underscores the need to address excess nitrogen due to its adverse impact on the environment.
• The opinion paper highlights the importance of transparent and rigorous scientific evaluation before introducing novel agricultural technologies.
• With implications for food security, farmers' livelihoods, and the environment, this controversy underscores the need for responsible innovation and evidence-based decision-making in the agricultural sector.

What is Indian Farmers Fertilizer Cooperative Limited?

About:

• It is one of India's biggest cooperative societies which is wholly owned by Indian Cooperatives.
• Founded in 1967 with just 57 cooperatives, today it is an amalgamation of over 36,000 Indian Cooperatives with diversified business interests ranging from General Insurance to Rural Telecom apart from its core business of manufacturing and selling fertilizers.

Objective:

• To enable Indian farmers to prosper through timely supply of reliable, high quality agricultural inputs and services in an environmentally sustainable manner and to undertake other activities to improve their welfare.

Conclusion

• The Nano Liquid Urea controversy underscores the necessity for transparency, and responsible innovation in the agricultural sector.
• Striking a balance between technological advancements and environmental sustainability is vital for the well-being of farmers, Food Security, and the planet.

Concerns Over Consuming Ultra-Processed Food

Context: Recently, a report released by World Health Organization (WHO) and the Indian Council for Research on International Economic Relations found that India’s Ultra-Processed Food Sector grew at a Compound Annual Growth Rate (CAGR) of 13.37 % in retail sales value from 2011 to 2021.

What is Ultra Processed Food?

About:

• Processed food usually has salt, sugar and fat added to it. Food is considered ultra-processed if five or more ingredients have been added to the original product.
• These other ingredients are usually flavour and taste enhancers, emulsifiers and colours, and all of them are meant to improve shelf life and taste or make the food convenient to eat.
• For instance, atta in raw form is unprocessed. Dalia, with salt and sugar added, is processed food. If we make cookies out of atta and add a lot of other things, it is ultra-processed.

Concerns:

• Salt, sugar and fat are commonly added to all processed food. Such foods are not healthy to consume regularly or in large quantities.
• They can cause obesity, hypertension, cardiac issues and lifestyle diseases. The artificial chemicals added to ultra-processed food have a negative impact on gut health.
• Any imbalance in gut health can lead to a host of problems, from neurological issues and stress to mood swings and obesity.
• Most ultra-processed foods use taste enhancers, so people automatically get addicted to them.
• On top of that, the natural food is broken down to such an extent that it gets absorbed very quickly by the body.
• The effect of high doses of simple sugar is that the body releases insulin, which makes you feel hungry and want to eat more food. That is why we say sugar is addictive.

What are the Key Highlights of the Report?

Temporary Disruption and Rebounded:

• The Covid-19 Pandemic caused a temporary disruption, causing the annual growth rate of the Indian ultra-processed food sector to plummet from 12.65% in 2019 to 5.50% in 2020.
• However, the sector rebounded remarkably, with an 11.29% growth recorded in 2020-2021.

Dominant Categories and Sales Volume:

• The most popular ultra-processed food categories include chocolate and sugar confectionery, salty snacks, beverages, ready-made and convenient foods, and breakfast cereals.
• In terms of retail sales volume from 2011 to 2021, beverages held the highest share, followed by chocolate and sugar confectionery and ready-made and convenience foods.

Health Consciousness and Changing Consumption Patterns:

• Health-conscious consumers shifted away from carbonated sugar-sweetened beverages to fruit and vegetable juices during the pandemic, potentially due to their perceived immune-boosting properties.
• However, these alternative beverages may also contain high levels of free sugars.

What are the Recommendations?

Stricter Advertising and Marketing Regulations:

• The report underscores the necessity for stricter advertising and marketing regulations, particularly concerning products like sweet biscuits that are popular among children.
• The high salt content in salty snacks poses risks to consumers' health, making it crucial to address through regulations.

Clear Definition of High Fat Sugar Salt (HFSS) Foods:

• The Food Safety and Standards Authority of India (FSSAI) should collaborate with stakeholders to establish a clear definition of High Fat Sugar Salt (HFSS) foods.
• Linking the tax structure with the definition of HFSS foods through the GST Council can incentivize healthier and reformulated options by imposing higher taxes on products exceeding recommended levels of fat, sugar, and salt.

Comprehensive National Nutrition Policy:

• There is a need for a robust national nutrition policy addressing both under- and over-nutrition, with well-defined objectives and targets, after thorough consultations with stakeholders.
• Existing policies like Saksham Anganwadi and Poshan 2.0 lack comprehensive coverage of overnutrition and diet-related diseases.

Nutritional Transition and Long-Term Goals:

• The report calls for a shift towards a healthier lifestyle, emphasizing the importance of reducing the consumption of ultra-processed foods and increasing the intake of whole grains.
• Low intake of whole grains has been identified as a primary dietary risk factor for noncommunicable diseases in India.

Stalled Real Estate Projects in India

Context: Recently, a committee chaired by former National Institution for Transforming India (NITI Aayog) CEO Amitabh Kant, formed by the Ministry of Housing and Urban Affairs (MoHUA), has put forward a series of recommendations to address the issue of stalled legacy real estate projects in India.

• The committee's formation was recommended by the Central Advisory Council under the Real Estate (Regulation and Development) Act, 2016.
• According to the Indian Banks’ Association, more than 4.12 lakh “stressed dwelling units” exist across India, of which around 2.4 lakh units are located in the National Capital Region (NCR), mainly in Noida and Greater Noida.

What are the Key Recommendations?

Model Package for Stalled Projects:

• Introduction of a "model package" designed for stalled projects in specific regions, starting with Noida and Greater Noida.
• Other states are encouraged to develop similar packages tailored to their respective stalled projects.

The key components of the model package may include:

Zero Period:

• The concept of a "zero period" that takes into account disruptions caused by factors like the Covid-19 pandemic and court orders.
• During this period, developers would be exempted from interest and penalty payments, acknowledging the unforeseen challenges that led to project delays.

Partial Surrender Policy:

• Inclusion of a partial surrender policy within the model package.
• Developers were granted the option to surrender a portion of the land associated with the project.
• Aims to offer flexibility in project planning and execution while optimizing resource utilization.

Subsidized Interest Rates:

• Suggestion of a "subsidized interest rates or guarantee scheme" similar to those benefiting the MSME sector.
• Designed to incentivize financial institutions to provide funding for stalled real estate projects.
• Aims to improve liquidity and funding access for developers struggling with stalled projects.

Establishment of a "Guarantee Fund":

• Proposal for the creation of a dedicated "guarantee fund" analogous to the one established for the MSME sector.
• Aimed at enhancing financial support and investor confidence in the real estate sector.
• The MoHUA is tasked with drafting the fund scheme and forwarding it to the Ministry of Finance.

Expansion of Fast-Track NCLT Benches:

• The committee has also suggested the creation of five additional fast-track benches at the National Company Law Tribunal (NCLT) so that all pending Insolvency and Bankruptcy Code (IBC) real estate cases can be disposed of on a “priority basis”.

Real Estate (Regulation and Development) Act, 2016:

Real Estate Regulatory Authorities (RERAs):

• The Act establishes RERAs in each state, serving as regulatory bodies and dispute resolution forums.

Mandatory Registration:

• All real estate projects with a minimum plot size of 500 sq.mt or eight apartments must be registered with RERAs before launch. This aims to enhance transparency in project marketing and execution.

Transparency and Database:

• RERAs maintain a public database of registered projects on their websites. This includes project details, registration status, and ongoing progress, providing transparency to buyers.

Funds Management:

• Promoters are required to deposit 70% of the collected funds in a separate escrow account for the specific project's construction and land costs, preventing fund diversion.

Time-Bound Adjudication:

• Appellate Tribunals are mandated to adjudicate cases within 60 days, while Regulatory Authorities must resolve complaints in the same timeframe, ensuring faster dispute resolution.

What are the Challenges Related to Stalled Real Estate Projects in India?

Funding Shortages:

• Lack of timely funding due to high-interest rates and strict lending norms.
• Reduced cash flows and revenues from low demand in the real estate market.
• Difficulty in securing funds from alternative sources like private equity or foreign investors.
• Results in project delays, cost overruns, compromised quality, and dissatisfaction.

Regulatory Complexities:

• The multiplicity of regulations and approvals at central, state, and local levels.
• Time and cost escalations, uncertainty, litigation, and barriers to entry.

Legal Disputes:

• Boundary disputes affecting land ownership and sovereignty.
• Land acquisition and compensation conflicts with stakeholders.
• Project disruptions, damages, judicial interventions, and trust issues.

Market Slowdowns:

• Economic downturns affect buyer’s purchasing power.
• Disruption due to the Covid-19 pandemic and lockdowns.
• Policy changes create market uncertainty.
• Resulting in low demand, unsold units, falling prices, and reduced investments.

Way Forward

• Exploring innovative financing models, such as real estate investment trusts (REITs), and peer-to-peer lending, can provide an alternative source of funding. These models can democratize investment and inject capital into projects.
• Incorporate sustainable and green building practices to attract environmentally conscious buyers and investors. These designs not only resonate with modern preferences but also lead to long-term cost savings.
• Leverage the potential of Public–private partnership (PPPs) to revitalize stalled projects. Collaborating with government entities can provide access to land, infrastructure, and regulatory support.
• Repurpose stalled projects into multifunctional spaces. Transform vacant buildings into creative hubs, cultural centers, or community spaces that thrive on versatility.
• Develop regulations that adapt to changing market conditions and technologies. This flexibility prevents projects from becoming outdated due to evolving trends and demands.

Inflation And Current Outlook of Indian Economy

Context: July 2023 witnessed a notable increase in Retail Inflation, reaching 7.44%, creating Goldilocks scenario for India, making investors and savers uncertain about the economic situation.

• A Goldilocks Scenario describes an ideal state for an economy whereby the economy is not expanding or contracting by too much. A Goldilocks economy has steady economic growth, preventing a recession, but not so much growth that inflation rises by too much.

What is the Current Economic Scenario of India and Projections?

GDP Projection:

• The projected GDP (Gross Domestic Product) growth for 2023-24 is 6.5%, while the benchmark Sensex index stands currently at 65,000 points.
• However, if inflation remains high, it could affect returns on stock market investments.
• Gold and bank deposit rates, on the other hand, are expected to remain stable in the coming months.

Inflation Projection:

• The Reserve Bank of India (RBI) anticipates inflation to stay above 5% until the first quarter of 2024-25, potentially reaching 6.2% in the current quarter (July-Sept) 2023, exceeding the RBI's comfort level of 4%.

Food Price Pressures:

• Food prices are expected to remain elevated for a few more months. July's data reveals a surge in vegetable prices (37.3%), along with inflation in cereals, pulses (both 13%), spices (21.6%), and milk (8.3%).
• It is expected that government interventions and fresh crop arrivals will eventually ease this pressure.

Interest Rates and Monetary Policy:

• Due to the higher inflation projections, the possibility of a rate cut has been postponed to the next Fiscal Year (2024-25).
• The Monetary Policy Committee (MPC) is likely to maintain policy rates in the upcoming meeting, with the first rate cut potentially occurring in the following fiscal year.

Market Outlook:

• Despite inflation and high interest rates, India's market has performed well.
• Supported by strong earnings prospects and stable macro conditions, India has outperformed other markets.

What is the Impact of Such Rising Inflation on the Indian Economy?

Impact on Markets:

• When inflation is high, stock prices are undervalued, and the value of gold increases. Rising inflation reduces purchasing power, leading to lower real earnings.
• Additionally, higher inflation results in higher Interest Rates, affecting the cost of equity.
• The RBI's series of repo rate hikes since April 2022 has contributed to an overall increase in lending rates, affecting various types of loans.

Income Redistribution:

• Inflation can impact different groups within society unevenly. Creditors may lose out, as the value of the money they receive from debtors decreases.
• Conversely, debtors could benefit by repaying loans with money that is worth less than when they borrowed it.

International Competitiveness:

• High inflation in one country can lead to a decrease in its international competitiveness. If domestic prices rise faster than those in trading partner countries, the country's exports may become less attractive on the global market.

Wage-Price Spiral:

• Inflation can sometimes trigger a cycle of rising wages and prices. Workers demand higher wages to keep up with rising costs, and businesses pass on those higher costs to consumers in the form of higher prices. This cycle can perpetuate inflation.

Way Forward

• Given the concerns about rising inflation, the government and the RBI need to work together to manage inflationary pressures. This could involve targeted measures to stabilize food prices, improve Supply Chain efficiency, and maintain a cautious monetary policy.
• The government should focus on maintaining a balanced budget, reducing unnecessary expenditure, and boosting revenue generation through reforms and measures that promote economic growth.
• The RBI should continue to adopt a vigilant and data-driven monetary policy approach. This may involve adjusting interest rates to manage inflation while also considering the impact on economic growth.