Weekly Current Affairs 22 November 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

GS2/International Relations

25th Session of the IRIGC-TEC

Why in News?

Recently, the External Affairs Minister of India and Russia's First Deputy Prime Minister co-chaired the session of the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, Technological, and Cultural Cooperation (IRIGC-TEC) in New Delhi. The discussions underscored significant advancements in trade relations between the two countries and strategic collaboration across various sectors.

• Key Highlights of the 25th Session of IRIGC-TEC
• USD 100 Billion Trade Target: India and Russia set an ambitious target to achieve USD 100 billion in trade by 2030, with both nations optimistic about reaching this goal.
• Progress in Trade and Diversification: The two countries have made substantial progress in addressing payment and logistics challenges. Currently, nearly 90% of India-Russia trade is conducted in local or alternative currencies, with the remainder in freely convertible currencies.
• Focus on Trade Diversification: There is a concerted effort to diversify trade to reduce the current trade imbalance, which is heavily influenced by India's significant crude oil imports from Russia.
• Enhancing Connectivity and Talent Mobility: The meeting emphasized the importance of improving connectivity through initiatives like the International North-South Transport Corridor (INSTC), Chennai-Vladivostok Corridor, and the Northern Sea Route. It also focused on enhancing talent mobility and skills development tailored to Russia's needs.
• Future Steps for Economic Cooperation: Working groups were assigned to expedite the finalization of the economic cooperation program leading up to 2030, which includes discussions on market access, services, investments, and technology exchange.
• Key Highlights of India-Russia Trade
• Trade Targets: India and Russia initially aimed to raise bilateral investment to USD 50 billion and bilateral trade to USD 30 billion by 2025. However, for FY 2023-24, bilateral trade reached a historic high of USD 65.70 billion.
• Imports and Exports: India imports oil, petroleum products, fertilizers, minerals, and vegetable oils from Russia, while exporting pharmaceuticals, organic chemicals, and machinery.
• Major Russian Investments in India: Key sectors include oil and gas, petrochemicals, banking, railways, and steel.
• Major Indian Investments in Russia: Focus areas include oil and gas, as well as pharmaceuticals.
• Key Challenges in India-Russia Trade
• Trade Imbalance: India experiences a trade deficit of approximately USD 57 billion with Russia, mainly due to crude oil imports.
• Geopolitical Reasons: India's growing relations with the US and the Quad, especially amid the Ukraine conflict, may limit deeper strategic cooperation with Russia.
• Sanctions and Compliance Issues: Sanctions imposed by Western powers on Russia complicate trade relationships, putting Indian companies in a challenging position.
• Diverse Trade Basket: Although energy trade has surged, efforts to diversify into sectors such as automotive parts and electronics have been slow, limited by Russia's declining international standing.
• Challenges in Connectivity Projects: Projects like the Chennai-Vladivostok Corridor are crucial but face competition from other connectivity routes, which could undermine their effectiveness.
• How are India and Russia Addressing Trade Challenges?
• Special Rupee-Vostro Account Facility: India has introduced this facility to facilitate payments in local currencies, mitigating the impact of international sanctions.
• Free Trade Agreement (FTA) and Investment: Both countries are pursuing an FTA with the Eurasian Economic Union (EEU), which could streamline trade and reduce barriers.
• Facilitating Business Ventures: Russia shows interest in India's Make in India initiative, potentially leading to joint ventures.
• Bilateral Agreements: The signing of an Authorized Economic Operators (AEO) agreement aims to simplify trade processes, benefiting trusted exporters.
• Energy Sector Cooperation: A significant focus is on large-scale energy initiatives, including nuclear, solar, and wind energy developments.
• Russian Business Centre: Located in New Delhi, this center aims to bolster economic ties by facilitating business interactions and providing analytical support.
• Conclusion

India and Russia's complementary economies present a strong foundation for collaboration. As Russia shifts its focus towards Asia and the global landscape evolves into a multipolar order, strengthening bilateral ties will be crucial for mutual benefit.

• Drishti Mains Question:

Analyze the India-Russia trade relations. Discuss the key sectors driving this partnership and the challenges faced in strengthening it.

GS3/Environment

Sustainability Concerns in India’s Agricultural Export Growth

India's significant increase in agricultural exports, particularly of tea and sugar, has played a vital role in its economic development. However, this rapid growth has sparked essential discussions about sustainability issues, focusing on environmental impacts, resource management, and labor conditions.

• What does Sustainability in Agriculture Mean?
• Economic Sustainability: It refers to maintaining long-term productivity while ensuring resources are not overexploited, rather than merely focusing on profitability.
• Ecological Sustainability: This involves the protection of natural ecosystems, minimizing the use of harmful chemicals, and effectively managing water resources to prevent environmental harm.
• Social Sustainability: This entails addressing labor rights, providing fair wages, and ensuring safe working conditions to foster equitable agricultural systems.
• The Lifecycle Approach: Sustainability should be considered throughout the entire lifecycle of agricultural products, from pre-sowing to post-harvest, rather than just during the production phase.
• What are Sustainability Concerns in India’s Agriculture Sector?
• Sustainability Concerns in Tea Production
• Human-Wildlife Conflicts: Approximately 70% of tea plantations are adjacent to forests, leading to frequent conflicts with wildlife, particularly elephants, which can damage crops.
• Chemical Use: The prevalent use of synthetic pesticides, including harmful substances like DDT and Endosulfan, poses health risks and increases chemical residues in tea products.
• Labour Issues: Women make up over half of the tea plantation workforce, facing low wages and hazardous working conditions, with inadequate enforcement of the Plantations Labour Act, 1951.
• Sustainability Concerns in Sugar Industry
• Water Management: Sugarcane cultivation requires 1,500 to 2,000 liters of water per kilogram, straining India's already limited water resources.
• Impact on Biodiversity: The extensive cultivation of sugarcane in Karnataka and Maharashtra has led to biodiversity loss by replacing natural grasslands and savannahs.
• Labour and Working Conditions: Workers in the sugar industry often find themselves in debt cycles, enduring long hours in tough conditions, and rising temperatures worsen their mental and physical health.
• Sustainability Concerns in India's Agricultural Exports
• Supply Chain and Logistics: Inefficiencies in storage and rural cold chain infrastructure result in significant post-harvest losses, which negatively affect export quality and increase costs. In 2022, India faced food losses worth Rs 1.53 lakh crore (USD 18.5 billion).
• Climate Change: Extreme weather events such as droughts, floods, and heatwaves disrupt agricultural production, leading to soil degradation and water scarcity that diminish productivity and impact exports.
• What Needs to Be Done to Address Sustainability Challenges?
• Sustainability in Tea Industry
• Develop climate-resilient tea varieties and promote agroforestry practices to reduce climate risks.
• Ensure farmers receive a fair share of profits through direct market access and premiums for certified products.
• Implement better practices to manage human-wildlife interactions around tea plantations and stricter monitoring of chemical residues for safer production.
• Sustainability in Sugar Industry
• Shift to sustainable irrigation methods like drip irrigation to conserve water, potentially reducing water usage by 40-50%.
• Utilize by-products of sugarcane, such as bagasse for bioenergy and vinasse as fertilizer, to enhance resource efficiency and promote a circular economy.
• Transition sugar mills to biorefineries to generate energy from waste, reducing reliance on non-renewable sources.
• Improve working conditions, wages, and access to healthcare and education for laborers and workers in sugar mills.
• Sustainability in Agricultural Exports
• Promote sustainable crop selection, focusing on resilient crops like millets, which are beneficial for both domestic use and exports.
• Balance domestic needs with export demands to avoid over-reliance on specific commodities and stress on natural resources.
• Enhance supply chain sustainability by fostering collaboration and transparency to integrate sustainability goals effectively.
• Emphasize environmental conservation practices to maintain sustainable production levels without depleting resources, including reduced water usage and organic farming methods.
• Drishti Mains Question:
• How can India achieve sustainable economic growth in agriculture, considering both the need for export-driven growth and the necessity to conserve natural resources?

GS1/Indian Society

Maha Kumbh Mela 2025

The Maha Kumbh Mela 2025, a revered pilgrimage, is scheduled to take place in Prayagraj from January 13 to February 26, 2025. This event is expected to attract millions of pilgrims who seek spiritual cleansing, cultural celebration, and a sense of unity.

• The term 'Kumbh' is derived from 'kumbhak,' which refers to the sacred pitcher that holds the elixir of immortality.

• About the Kumbh Mela:
• The Kumbh Mela is recognized as the largest peaceful gathering of pilgrims worldwide, where attendees bathe in a sacred river.
• This gathering occurs at four principal locations:
• Haridwar, situated on the banks of the Ganges River.
• Ujjain, along the Shipra River.
• Nashik, by the Godavari River (referred to as Dakshin Ganga).
• Prayagraj, at the confluence of the Ganges, Yamuna, and the mythical Saraswati River.
• The Kumbh Mela is celebrated four times over a 12-year cycle.
• Ardh-Kumbh Mela is conducted every six years in Haridwar and Prayagraj.
• The Maagh Kumbh takes place annually in the month of Maagh (January-February).

• Historical Evolution:
• Background: The Maha Kumbh Mela, described by Adi Shankaracharya, has its roots in the Puranas. It narrates the story of gods and demons fighting for the sacred pitcher of Amrit, with Lord Vishnu (as Mohini) securing it from the demons.
• Ancient Origins: The Kumbh Mela began during the Maurya and Gupta periods (4th century BCE to 6th century CE) as small pilgrim gatherings from across the Indian subcontinent, gaining significance as Hinduism flourished, especially under Gupta rulers.
• Medieval Patronage: The event received support from royal families such as the Chola and Vijayanagar empires, as well as the Delhi Sultanate and Mughal Empire. Akbar notably promoted religious tolerance and allowed Naga Sadhus to lead the royal procession to the Mela in 1565.
• Colonial Period: British officials, intrigued by the scale and diversity of the Kumbh Mela, documented the festival during the 19th century. James Prinsep recorded its rituals and socio-religious dynamics.
• Post-Independence Significance: The Kumbh Mela symbolizes national unity and cultural heritage, recognized by UNESCO in 2017 as an intangible cultural heritage of humanity for preserving ancient traditions.

• Kumbh 2019 Achievements:
• Set three Guinness World Records for the largest traffic and crowd management plan.
• Conducted the biggest painting initiative of public sites under the Paint My City scheme.
• Established the largest sanitation and waste disposal mechanism.

• Significance of Kumbh:
• Spiritual Relevance: Bathing at the Triveni Sangam (the confluence of the Ganges, Yamuna, and Sarasvati) is believed to cleanse sins and provide spiritual liberation, or Moksha.
• Cultural Showcase: The Kumbh Mela features devotional kirtans, bhajans, and traditional dances like Kathak, Bharatanatyam, and Kuchipudi, emphasizing themes of spiritual unity and divine love.
• Astrological Timing: The timing of the event is determined by the alignment of the Sun, Moon, and Jupiter, making it particularly auspicious for spiritual practices. If the Kumbh is held when a planet is in Leo, it is termed Simhastha Kumbh.

• Rituals and Activities:
• Shahi Snan (Royal Bath): This ceremonial bath involves a procession of saints and Akharas (spiritual orders) and marks the commencement of the Maha Kumbh Mela. It is also known as 'Rajyogi Snan,' signifying its importance.
• The term 'akhara' comes from 'akhand,' meaning indivisible. Adi Guru Shankaracharya aimed to unify ascetic groups to protect the 'Sanatan' way of life.
• Akharas represent social order, unity, cultural values, and ethics, focusing on spiritual and moral principles such as virtue, self-control, compassion, and religiosity.
• Akharas can be categorized by their favored deity:
• Shaiva Akharas: Worshippers of Lord Shiva.
• Vaishnava Akharas: Followers of Lord Vishnu.
• Udaseen Akharas: Founded by Chandra Dev, son of the first Sikh Guru, Guru Nanak.
• Peshwai Processions: This grand display features traditional parades of Akharas, known as 'Peshwai,' with participants riding elephants, horses, and chariots.
• Spiritual Discourses: The event includes spiritual talks led by esteemed saints and spiritual leaders, alongside a vibrant mix of Indian music, dance, and crafts.

Drishti Mains Question

Discuss how Kumbh Mela reflects India’s cultural diversity and spiritual heritage.

GS2/Governance

Reforming Khap Panchayat

Khap Panchayats have recently garnered attention due to various leaders pushing for progressive reforms aimed at addressing critical social and economic challenges such as unemployment, education, and rural development. There are ongoing efforts to modernize and regulate these councils, integrating them into formal Alternative Dispute Resolution (ADR) systems to enhance governance and accountability.

What is Khap Panchayat?

• About: Khap Panchayats are traditional, community-based councils found mainly in North India, particularly in Haryana and Uttar Pradesh. They serve as informal judicial bodies that emerged centuries ago among kinship groups (Khaps) to tackle social and governance issues within their communities.
• Historical Role: Historically, these councils played a crucial role in maintaining social order in rural areas, providing a forum for conflict resolution within caste hierarchies and operating alongside formal legal systems, prioritizing customary norms.

Issues with Khap Panchayats

• Patriarchal Practices: Khap Panchayats are often linked to gender inequality, enforcing strict social norms that limit women's autonomy.
• Honor Killings: They are notorious for opposing inter-caste and same-gotra marriages, occasionally endorsing severe actions like honor killings.
• Legality Concerns: The decisions made by these councils often clash with constitutional rights, contradicting the principles of personal liberty, equality, and dignity.
• Caste and Social Inequities: Their emphasis on maintaining caste hierarchies perpetuates discrimination and exclusion.

Gender Dynamics and Evolving Roles of Khap Panchayats

• Support for Women Athletes: Some Khap Panchayats have recognized and celebrated successful women athletes, fostering a growing culture of sports participation among women.
• Gender Justice: They have shown support for movements such as the 2023 wrestlers’ protest against sexual harassment, indicating a shift towards gender advocacy.
• Example: Meham Chaubisi, one of the most powerful Khaps in Haryana, is increasingly involved in promoting justice, social change, and addressing women's issues.

What Can Be Done to Make Khap Panchayat a Part of Formal ADR?

• Promote Alternative Dispute Resolution (ADR): Integrate Khap Panchayats into the official ADR framework by legalizing their mediation roles within a structure that aligns with constitutional values.
• Offer Training: Provide training for Khap leaders in mediation and arbitration techniques to enhance their skills for unbiased dispute resolution.
• Legal Regulation: Develop laws that outline the roles and limitations of Khap Panchayat activities, ensuring their decisions comply with Indian laws and human rights.
• Establish Oversight Mechanisms: Create monitoring systems to oversee Khap actions, preventing unconstitutional practices like honor killings or forced marriage annulments.
• Shift Focus to Development: Some Khap leaders are advocating for progressive approaches to tackle social and economic challenges, aiming to modernize the councils.
• Awareness and Accountability: Launch public awareness campaigns to educate communities about the significance of justice and equality, holding Khap Panchayats accountable for actions that undermine these principles.
• Collaboration with Formal Institutions: Encourage partnerships between Khap Panchayats and local governance structures to foster inclusive decision-making processes.
• Involve Judiciary Representatives: Ensure that the decisions made by Khap Panchayats are legally sound by involving judicial representatives in their processes.

Conclusion

While Khap Panchayats are deeply rooted in tradition, they must adapt to become effective instruments of governance. By aligning their practices with constitutional values, promoting community development, and embracing reforms, they can maintain their cultural relevance while positively contributing to rural governance. Transitioning Khaps into ADR entities will necessitate legal regulations, community awareness, and strong oversight to ensure justice, equity, and social harmony.

Drishti Mains Question:

What are the advantages of Alternative Dispute Resolution (ADR)? How can integrating Khap Panchayats into the ADR system help alleviate the burden on India’s judicial system?

GS2/Governance

State Finance Commission

Why in News?

According to the Ministry of Panchayati Raj, all states, except Arunachal Pradesh, have established State Finance Commissions (SFCs). The 15th Finance Commission has expressed serious concerns regarding the delays in the formation of SFCs.

• About State Finance Commissions (SFCs)
  • SFCs are constitutional authorities created by states under Article 243-I of the Indian Constitution.
  • The Governor is mandated to set up an SFC within one year of the enactment of the 73rd Constitutional Amendment Act, 1992, and every five years after that.
• Mandate
  • SFCs primarily recommend how to distribute financial resources between the state government and local bodies, which include Panchayati Raj Institutions (PRIs) and urban local bodies (ULBs).
• Finance Commission on SFCs
  • The 15th Finance Commission urged states to form SFCs, implement their recommendations, and provide an action report to the legislature.
  • It proposed withholding grants to states that fail to comply with these requirements.
• Role of Ministry of Panchayati Raj
  • This ministry is responsible for certifying state compliance with constitutional mandates regarding SFCs before releasing grants for the fiscal years 2024-25 and 2025-26.
• Importance of Appointing SFCs
  • Constitutional Requirement: Establishing SFCs every five years is a constitutional obligation aimed at ensuring the financial health and autonomy of local bodies.
  • Fiscal Devolution: The equitable distribution of state revenues among local entities guarantees a fair allocation of funds, enhancing the financial capacity of local bodies.
  • Enhancing Accountability: By assessing financial needs and recommending efficient resource utilization, SFCs can motivate local governments to improve service delivery and responsiveness to citizens.
  • Addressing Local Needs Directly: Local governance bodies are crucial for daily services such as sanitation, health, education, and infrastructure. Adequate funding and financial autonomy, supported by SFC recommendations, are essential for enhancing service quality.
  • Bridging the Functional and Financial Gap: Local bodies often struggle with unfunded mandates due to insufficient financial resources. SFCs can recommend financial allocations based on responsibilities, ensuring local governments can meet their obligations effectively.
  • Political and Administrative Decentralisation: SFCs play a broader role beyond fiscal recommendations, empowering local elected officials such as municipal councillors and panchayat pradhans.
• Challenges Facing State Finance Commissions (SFCs)
  • Compliance Issues: The Finance Commission (2021-26) noted that only nine states had set up their SFCs, although the deadline for all states was in 2019-20.
  • Lack of Political Will: There is significant resistance among state governments to fully transfer powers and resources to local bodies as intended by the 73rd and 74th constitutional amendments.
  • Resource Deficiencies: SFCs often begin with no organized data, hampering their effectiveness in making informed recommendations.
  • Deficiencies in Expertise: Many SFCs are led by bureaucrats or politicians rather than domain experts or public finance professionals, which undermines the quality and credibility of their recommendations.
  • Opaqueness: States frequently do not present Action Taken Reports (ATRs) in the legislature post-SFC recommendations, which diminishes transparency and accountability.
  • Ignorance of SFC Recommendations: There is a trend of non-compliance with SFC recommendations by state governments, which weakens the SFCs' influence over local fiscal policies.
  • People’s Resistance: Urban local bodies often experience neglect, compounded by low political awareness and limited public participation, which exacerbates the challenges of fiscal decentralization.
• Way Forward
  • Compliance with Constitutional Deadlines: States must establish SFCs every five years as mandated by the constitution, with accountability for those that miss deadlines.
  • Reducing Political Resistance: State governments should recognize the benefits of empowering local governments, which leads to improved services and accountable governance.
  • Involvement of Public Finance Experts: States should ensure SFCs are chaired by economists and finance specialists, not just bureaucrats and politicians, to enhance their effectiveness.
  • Strengthening Local Data Systems: Local bodies should implement modern data systems to facilitate accurate financial reporting, helping SFCs make informed recommendations.
  • Transparency in Implementation: States must present in the legislature their plans and timelines for executing SFC recommendations to foster accountability.
  • Incentive Framework: The Ministry should create a rewards system for states that excel in SFC compliance, encouraging improvements in local governance.

Drishti Mains Question:

Discuss the role of State Finance Commissions (SFCs) in strengthening local governance in India.

GS3/Environment

CSR’s Contributions to Agriculture Sustainability

Why in news?

With increasing contributions, the focus is on how Corporate Social Responsibility (CSR) can support Indian agriculture to become both economically viable and ecologically sustainable.

Why is CSR Needed in Agriculture?

• High Dependence on Agriculture: Nearly 47% of India's population relies on agriculture for their livelihood, significantly higher than the global average of 25%.
• Small and Marginal Farmers: More than 70% of rural households depend on agriculture, with 82% of these farmers categorized as small and marginal.
• Poor Access to Finance: High interest rates and limited access to formal credit systems hinder farmers from acquiring necessary equipment, seeds, and fertilizers, which restricts their growth potential.
• Building Market Linkages: Inadequate rural infrastructure, including poor storage, transport, and irrigation, causes post-harvest losses and weakens market access.
• Environmental Challenges: Unpredictable weather increases crop failures and livestock loss, making agriculture more vulnerable to disasters like floods and droughts.
• Soil Degradation: Overuse of chemical fertilizers and poor irrigation practices have led to soil degradation, diminishing fertility and crop yields.
• Water Scarcity: Scarcity of water poses a significant threat to crop and livestock production, necessitating better irrigation and water management practices.

How CSR Can Help in Agriculture?

• Technological Innovations: CSR initiatives can incorporate advanced technologies such as sensors, drones, GPS, and data analytics into Precision Agriculture, helping farmers optimize irrigation, fertilization, pest management, and crop health.
• Financial Access: Collaboration between companies and financial institutions can provide low-interest loans and subsidies, improving farmers' access to affordable financing.
• Renewable Energy: Encouraging the use of renewable energy sources like solar and wind power can promote environmentally sustainable farming practices.
• Biotechnology and GMOs: CSR can foster the development of biotechnology and GMOs to create crops that are more resilient to pests and diseases, enhancing yields and food security.
• Empowering Farmers: Providing access to knowledge and skills training equips farmers with modern agricultural practices, boosting productivity and reducing risks.
• Improved Market Access: CSR can facilitate market linkages, integrating farmers into value chains and ensuring they receive fair prices for their produce.

What are Challenges in CSR Implementation in Agriculture?

• No Clear Demarcation: CSR activities related to agriculture are often not distinctly defined, leading to ambiguity in their implementation.
• Short-Term Focus: Many CSR programs prioritize short-term results, while agriculture requires sustained, long-term investment for meaningful impact.
• Measurement of Social Impact: Assessing the social impact of CSR initiatives in agriculture is often complex and subjective, particularly in rural areas.
• Not-Aligned with Business Goals: Companies may struggle to align CSR efforts in agriculture with their business strategies, reducing their effectiveness.
• Ignorance of Agriculture: A significant portion of CSR funding is directed towards education and health, with agricultural initiatives receiving less attention.
• Fragmented Approach: CSR initiatives often address isolated agricultural issues without tackling broader challenges such as climate change and market access.
• Lack of Suitable NGOs: Corporations may face difficulties in finding NGOs that align with their CSR objectives in rural areas.
• Disparity in CSR Spending: A large share of CSR funds tends to go to more developed states, leaving less funding for underdeveloped regions.
• Inefficient Allocation: Companies often direct CSR efforts to regions where they have operations, rather than areas with greater needs.

What is CSR?

About: CSR is a corporate practice where companies voluntarily incorporate social, environmental, and ethical considerations into their operations and stakeholder interactions, focusing on areas such as environmental sustainability, poverty alleviation, and healthcare.

India's CSR Mandate: India was the first country to legally mandate CSR under Section 135 of the Companies Act, 2013, with Rs 1.84 lakh crore allocated from 2014 to 2023.

Legislative Framework: The CSR framework in India is governed by the Companies Act, 2013, specifically Schedule VII and the Companies (CSR Policy) Rules, 2014, which set mandatory requirements for certain companies starting in April 2014.

CSR Criteria: CSR provisions apply to companies meeting any of the following criteria in the previous financial year: a net worth over Rs 5 billion, a turnover exceeding Rs 10 billion, or a net profit greater than Rs 50 million. Such companies must allocate at least 2% of their average net profit over the last three years on CSR activities. Newly incorporated companies with less than three years of operations will consider the average net profit available.

National CSR Data Portal: This initiative by the Ministry of Corporate Affairs aims to share CSR-related data and information.

CSR Activities: Companies can include various activities in their CSR policies as detailed in Schedule VII.

Way Forward

• Clearer Definition: Establishing a defined sector for agricultural CSR initiatives will improve resource allocation and ensure funds effectively support agricultural development.
• Financial Inclusion: Providing farmers with access to affordable financial services empowers them to invest in quality inputs, adopt innovative technologies, and strengthen their resilience to environmental challenges.
• Supply Chain Stability: Agriculture is crucial for many industries, including food and pharmaceuticals. Investing in sustainable practices through CSR helps secure the long-term stability of these supply chains.
• Competitive Advantage: Addressing agricultural issues like water conservation and precision farming can lead companies to develop innovative technologies that distinguish them from competitors.
• Alignment with Business Goals: Companies should align their CSR initiatives with their core values, such as food companies supporting agricultural technology firms, benefiting both their business and the sector.
• Equitable Development: Companies should direct CSR efforts towards regions facing agricultural challenges, regardless of their operational presence, to promote more equitable development.

Drishti Mains Question:

Discuss the role of CSR in promoting agricultural sustainability and the challenges faced in its implementation.

GS3/Economy

India's Transition Towards Workforce Formalisation

India is experiencing a significant transformation towards workforce formalization, which is redefining the landscape of job structures, enhancing employment security, and extending social benefits to millions. This shift aims to ensure a broader segment of the population is integrated into social security systems, providing greater economic stability and a more secure future. The Employee’s Provident Fund Organisation (EPFO) plays a pivotal role in this process, facilitating the inclusion of more workers into social security frameworks.

What is Formalization of the Workforce?

Definition: Workforce formalization is an essential step toward creating a fair and robust Indian economy. It empowers workers by improving their social security and working conditions while also strengthening vital economic aspects like productivity, tax compliance, and global competitiveness. Formalization occurs when jobs transition from the informal sector—characterized by small, unregistered businesses and daily wage labor—to the formal sector, where employees benefit from contracts, job security, and various benefits.

• Features:
• Businesses operate within established legal frameworks, ensuring compliance with laws and regulations.
• Increases tax revenues by expanding the tax base and promoting a fair distribution of the tax burden.
• Employees gain access to social security, healthcare, and benefits under labor laws, including minimum wage guarantees, retirement benefits, pensions, and insurance.
• Formal businesses enjoy easier access to financial services and credit from banks and institutions.
• Encourages entrepreneurship, enhances competitiveness, and fosters overall economic growth.

What is Significance of Workforce Formalisation for the Indian Economy?

• Widespread Informal Employment: About 85% of India’s workforce operates in the informal sector, lacking protection under formal labor laws or social security systems. Formalization improves access to social security, healthcare, and pensions, thus reducing vulnerability to economic shocks.
• Accurate Data Collection: Formalization allows for improved data collection on employment trends, facilitating effective policymaking and economic planning.
• Increased Tax Revenue: A formal workforce contributes more to the tax base, enabling the government to finance public services and infrastructure development.
• Reduce Black Money: Enhances transparency, making it more challenging to engage in money laundering and other illegal activities.
• Digital Inclusion: Encourages the adoption of digital tools and technologies, leading to improvements in efficiency and transparency within the workforce.
• Attracts Investment: A formal workforce creates a better operating environment for businesses, attracting both domestic and international investments.

What is EPFO and its Role in India's Workforce Formalization?

About: The EPFO is recognized as one of the largest social security organizations globally, providing a comprehensive range of social security benefits to millions of workers across India. Established under the Employees' Provident Funds & Miscellaneous Provisions Act of 1952, the EPFO manages over 29.88 crore accounts, highlighting its extensive reach and the scale of financial transactions it oversees. The organization operates under the Ministry of Labour & Employment, Government of India.

• Benefits of EPFO: Offers long-term financial security through various schemes including retirement funds, insurance under the Employees' Deposit Linked Insurance (EDLI) Scheme, monthly pensions via the Employees' Pension Scheme (EPS), and allows partial withdrawals for emergencies, education, or home purchases under the EPF Scheme.
• Role of EPFO in Increased Formalization: From 2017 to 2024, over 6.91 crore members joined EPFO, with a record 1.38 crore new members registered in the fiscal year 2022-23. In July 2024 alone, nearly 20 lakh new members were added, indicating a steady increase in registrations. Many members transferred their funds when changing jobs, ensuring continued access to social security benefits. A significant number of new EPFO members are young individuals, many being first-time job seekers, along with an increase in female registrations, reflecting a positive trend towards a more inclusive workforce.

What are the Challenges in Workforce Formalisation in India?

• Cost of Formalisation: MSMEs (Micro, Small, and Medium Enterprises) and small businesses find the process of workforce formalisation costly and cumbersome, as approximately 80-90% of India's workforce is informal. Many small businesses prefer to remain informal to avoid compliance burdens. Simplifying compliance and reducing financial constraints are essential to overcoming this hurdle.
• Seasonal Workforce: Migrant and seasonal workers in sectors like agriculture and construction frequently lack formal contracts due to their transient nature and often do not have the necessary documentation for formalisation.
• Resistance to Change: Workers in the informal sector may resist formalisation due to a preference for flexible work arrangements and a lack of awareness regarding the benefits of formal employment.
• Digital Divide: Limited access to digital tools, particularly in rural areas, hampers formal employment despite advancements like Aadhaar and Unified Payments Interface (UPI).
• Skill Gaps: Informal workers often lack the requisite skills for formal jobs, compounded by a shortage of accessible skill development programs for these individuals.
• Gender Inequality: Women face unique challenges to formal employment, including socio-cultural barriers, inadequate childcare services, and gender bias in the workplace.

Way Forward

• Incentivise Formalisation: Policies should aim to reduce the cost of formalisation and provide incentives for businesses to transition to the formal sector.
• Improve Financial Inclusion: Expanding access to banking services through initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY) and promoting digital payment systems will help integrate more businesses into the formal economy.
• Education and Skill Development: Enhancing access to quality education and vocational training under the Skill India Mission will equip workers with necessary skills for formal employment.
• Promote MSMEs: Strengthening MSMEs through financial support and resources will enhance their competitiveness globally, facilitating formalisation and job creation.
• Targeted Schemes: Implementing specific schemes to formalise tribal workers and ensuring they are included in social security programs like Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.

Conclusion: The journey towards formalization significantly strengthens India's workforce by providing essential job security and a safety net, especially critical during uncertain times such as the Covid-19 pandemic. The increase in EPFO registrations underscores India's progress towards a more organized economy, aiming to ensure a secure and brighter future for millions.

Drishti Mains Question:

Discuss the importance of formalising the Indian economy. How does this transition benefit workers and the country’s economic stability?

GS2/Governance

Conduct Rules for Civil Servants

Recently, Kerala has suspended two IAS officers for violating the All-India Services (Conduct) Rules, 1968. One officer made derogatory comments on social media about a senior colleague, while the other allegedly created a religious WhatsApp group.

What do the All-India Services (Conduct) Rules, 1968 State?

The All-India Services (Conduct) Rules, 1968 establish ethical and professional standards intended to ensure impartiality, integrity, and adherence to constitutional values among IAS, IPS, and Indian Forest Service officers.

• Ethical Standards: Officers are required to demonstrate high ethical standards, integrity, and honesty. They should remain politically neutral, accountable, and transparent in their actions and decisions.
• Supremacy of Constitutional Values: Officers must uphold constitutional values, reflecting their role as public servants dedicated to the nation's legal framework.
• Engagement in Public Media: Officers can engage in public media in a professional capacity, but they are prohibited from criticizing government policies using these platforms.
• Legal and Media Appeals: Officers may seek legal redress or defend their official actions through the court or media, without needing prior government approval.
• General Conduct Clause: Officers must avoid any behavior deemed "unbecoming" of their service, which ensures that they uphold high standards of decorum and professionalism at all times.

What are the Issues with AIS Rules, 1968?

• Lack of Explicit Social Media Guidelines: The current rules do not clearly define officers' communication and conduct on social media, leading to ambiguity and difficulty in setting boundaries for appropriate behavior.
• Unbecoming Conduct Clause: The term "unbecoming of a member of the service" is vague and undefined, resulting in inconsistent enforcement and potential for abuse.
• Power Imbalance in Enforcement: Enforcement of these rules often depends on senior officers, putting junior officers at risk of bias and arbitrary actions by their superiors.

What is the Role of Civil Services in Democracy?

• Policy Formulation: Civil servants contribute technical expertise and practical insights vital for the formulation and determination of public policy.
• Implementation of Policies: They are responsible for executing policies enacted by the legislature, overseeing the practical application of laws and directives.
• Delegated Legislation: Civil servants draft detailed rules and regulations under the framework established by the legislature, ensuring effective implementation of government operations.
• Administrative Adjudication: They possess quasi-judicial powers to resolve cases involving citizens’ rights and obligations, ensuring quick and fair decisions, particularly for vulnerable groups and technical issues.
• Stability and Continuity: Civil servants provide stability and continuity in governance during politically driven changes, ensuring smooth administrative processes despite leadership transitions.
• Guardians of National Ideals: They safeguard the nation’s ideals, values, and beliefs, playing a crucial role in maintaining the social, economic, and political fabric of the country.

Way Forward

• Precise Social Media Guidelines: The rules should clearly outline the boundaries for officers' engagement on social media, enabling responsible communication about government initiatives.
• Clarifying the ‘Unbecoming Conduct’ Clause: The ambiguous term should be clarified with an illustrative list based on past instances where actions were taken under this clause.
• Responsible Anonymity: Reinforcing the need for neutrality and impartiality is crucial, especially in the digital age where visibility often overshadows discretion.
• Judicious Use of Social Media: Officers, particularly younger ones, must be reminded that social media should promote the dignity and impartiality of the civil service, avoiding personal opinions or partisan statements that could compromise their neutrality.

Drishti Mains Question:

How do the All-India Services (Conduct) Rules, 1968 ensure that civil servants maintain ethical standards in their professional conduct?

GS3/Environment

Developments in India’s Maritime Sector

Why in News?

The Ministry of Ports, Shipping and Waterways, in collaboration with the Observer Research Foundation (ORF), organized the inaugural Sagarmanthan: The Great Oceans Dialogue, focusing on significant advancements in India's maritime sector, particularly in maritime logistics, ports, and shipping.

What are the Key Developments in India’s Maritime Sector?

• Chennai-Vladivostok Eastern Maritime Corridor: This corridor became operational at the end of 2023, facilitating cargo transport between India and Far East Russia. It is particularly significant for handling essential imports such as crude oil, food products, and machinery.
• India-Middle East-Europe Economic Corridor (IMEC): Announced at the G20 New Delhi Summit 2023, this corridor extends over 4,800 km, connecting India to the UAE, Saudi Arabia, Jordan, Israel, and several European countries, including Italy, France, and Greece, through a combination of railway and sea routes. India is collaborating with Greece on this initiative.
• Maritime Vision 2047: India aspires to become the leading maritime nation by 2047, aiming for significant improvements in ports, cargo handling, ship ownership, and shipbuilding, alongside necessary reforms. The objective includes enhancing port handling capacity to 10,000 million metric tonnes per annum by 2047.
• Investment in Maritime Infrastructure: A planned investment of Rs 80 lakh crore is earmarked for the maritime sector, targeting key projects such as the Vizhinjam international seaport in Kerala and new mega ports at Vadhavan (Maharashtra) and Galathea Bay (Nicobar Islands). There is also a focus on developing ships powered by eco-friendly fuels like ammonia, hydrogen, and electricity for sustainable operations.
• Port Turnaround Time: Significant improvements have been noted in port turnaround times, which have decreased from over 40 hours to 22 hours, now outperforming countries like the US and Singapore. This metric indicates the time a ship needs to unload, load, and complete necessary operations before being ready for the next voyage.
• Revamped Legislation: Key legislative measures such as the Major Port Authority Act, 2021, National Waterways Act, 2016, Inland Vessel Act, 2021, and the Recycling of Ships Act, 2019 have spurred growth in the ports, waterways, and ship recycling sectors. Upcoming bills, including the Coastal Shipping Bill, 2024, and the Merchant Shipping Bill, 2020, are expected to further enhance coastal shipping, shipbuilding, and recycling initiatives in India.
• Preserving Legacy: A national maritime heritage complex is being constructed at Lothal to revive and celebrate India's historical shipbuilding legacy.

What are the Challenges in India’s Maritime Sector?

• Competition from China: Over a span of less than 70 years, China has established itself as a formidable global maritime power, boasting a substantial navy, coast guard, the largest merchant fleet, and leading ports. Its Belt and Road Initiative (BRI) further enhances its competitive edge in maritime activities.
• Inefficient Port Infrastructure: The modernization of existing ports and the development of new ones have encountered delays, with many goals of the Maritime Agenda 2010-2020 not achieved by 2020. Although port connectivity is a priority of the Sagarmala program, intermodal transportation—especially the integration of ports with inland transport networks—remains insufficiently developed.
• Lack of Private Sector Participation: The Indian maritime economy, especially regarding port-led industrialization, suffers from limited involvement of private enterprises.
• Sustainability Concerns: Maritime trade and port development frequently face environmental challenges, particularly regarding the degradation of coastal ecosystems and the ecological impacts of large infrastructure projects.
• Geopolitical Challenges: Changing geopolitical dynamics and emerging global maritime threats, such as attacks by non-state actors (e.g., the Houthis targeting commercial vessels), pose risks to India's maritime trade.
• Dependence on Foreign Shipbuilding: Despite advancements in domestic shipbuilding capabilities, India continues to rely heavily on foreign technology for shipbuilding and maritime equipment.

Way Forward

• Fast-Tracking Port Modernization: The Sagarmala Programme, aimed at enhancing port-led industrialization, should be accelerated with an emphasis on modernizing domestic shipyards, reducing bureaucratic obstacles, and ensuring timely project execution.
• Incentivizing Private Investment: The government should create more incentives for private sector involvement in the maritime industry through favorable policies, tax incentives, and investment-friendly regulations.
• Promotion of Port-Led Industrialization: India should prioritize the establishment of industrial clusters around ports, leveraging the Make in India initiative.
• Promotion of Green Shipping: Encouraging the use of alternative fuels such as LNG (liquefied natural gas) and renewable energy sources for vessels can significantly lower the carbon footprint associated with maritime trade.
• Multilateral Maritime Cooperation: India should enhance its participation in regional and multilateral security frameworks, such as the Indian Ocean Rim Association (IORA), to promote cooperative maritime security.

Drishti Mains Question:

Examine the recent advancements in India’s maritime sector and analyze how they contribute to strengthening the country's economic growth and strategic partnerships globally.

GS2/Governance

Tribal Development Approaches

Recently, Maori lawmakers in New Zealand staged a haka protest against the Treaty Principles Bill, which seeks to reinterpret the 1840 Treaty of Waitangi. This protest underscored the ongoing debate regarding tribal development policies, focusing on the balance between preserving cultural heritage and modern governance.

• What is Haka?
• The haka is a traditional Maori dance performed by warriors, characterized by chanting, facial expressions, and hand movements, symbolizing Maori identity and resistance.
• The Maori Tribe is the indigenous group that has lived in New Zealand for centuries.
• Haka Protest:
• The haka protest arose in response to the Treaty Principles Bill, which aims to reinterpret the foundational 1840 Treaty of Waitangi that established the relationship between the British Crown and Maori chiefs.
• This bill intends to promote equality for all New Zealanders; however, critics argue it undermines the distinct rights of the Maori as Indigenous people by applying treaty principles universally, thus neglecting their legal protections under the Treaty.
• Approaches to Tribal Development Policy:
• Isolation:
• This approach focuses on protecting Indigenous communities by limiting their interaction with modern society to maintain their cultural and ecological systems.
• Example: The Sentinelese tribe in the Andaman Islands lives in total isolation, safeguarded by strict laws under the Andaman and Nicobar Islands (Protection of Aboriginal Tribes) Act, 1956.
• Benefits:
• Preservation of traditional lifestyles, languages, and knowledge systems.
• Protection from external influences that may exploit their resources or labor.
• Indigenous lands often maintain rich biodiversity due to sustainable practices.
• Challenges:
• Lack of access to healthcare, education, and economic opportunities.
• Exclusion from national development processes.
• Environmental changes can render isolation unsustainable.
• Assimilation:
• This approach seeks to incorporate Indigenous communities into mainstream society to foster a unified national identity, although it risks erasing unique cultural practices.
• Examples: Native American children in the U.S. were placed in boarding schools to "Americanize" them, suppressing their languages and traditions. In Australia, Aboriginal children from the Stolen Generations were forcibly removed from families for assimilation into white culture.
• Benefits:
• Improved access to basic amenities such as education, healthcare, and job opportunities.
• Potentially enhances economic and political representation.
• Challenges:
• Forced assimilation diminishes Indigenous identity, leading to the loss of language, traditions, and spiritual practices.
• Often results in resistance, fostering alienation and distrust between Indigenous peoples and the government.
• Integration:
• This approach seeks to incorporate Indigenous peoples into modern governance while respecting their cultural identity, ensuring their rights and traditions are honored within broader society.
• Example: The Gundjeihmi and Bininj tribes collaborate with the Australian government in managing Kakadu National Park, blending traditional knowledge with contemporary conservation practices.
• Benefits:
• Provides Indigenous peoples with a voice in decision-making processes affecting their communities.
• Recognition of Indigenous rights through governance enhances their ability to protect their lands, traditions, and resources.
• Collaborative frameworks can build trust between Indigenous communities and governments.
• Challenges:
• Despite formal inclusion, Indigenous communities may still face systemic racism and inequality.
• Resistance from governments and industries to cede power or resources to Indigenous authorities.
• India's Approach to Tribal Development Policy:
• Pre-Independence Approach:
• The British implemented an isolationist strategy for tribal areas by designating them as "Excluded" or "Partially Excluded" zones to maintain law and order.
• In 1874, the Scheduled District Act (Act XIV) was enacted in British India, exempting certain areas from regular laws to protect them from exploitation.
• Post-Independence Approach:
• Government policies have aimed at promoting both autonomy and integration for tribal communities.
• Autonomy-focused policies include the Panchayats (Extension to the Scheduled Areas) Act, 1996 (PESA), the Forest Rights Act, 2006, and constitutional protections via the Fifth and Sixth Schedules.
• These measures prioritize the preservation of tribal self-governance, ensuring minimal interference in their cultural and religious practices, while affirming their rights over land and forest resources.
• Integration-oriented policies aim to incorporate tribal populations into the national framework while safeguarding their identity and autonomy, guided by Jawaharlal Nehru's Tribal Panchsheel policy, which emphasizes self-development and respect for tribal rights.
• Recent initiatives include the Pradhan Mantri Particularly Vulnerable Tribal Group (PVTG) Development Mission, Eklavya Model Residential Schools, Pradhan Mantri Van Dhan Yojana, and efforts to eliminate sickle cell anemia.
• Conclusion:
• Striking a balance between preserving Indigenous cultural heritage and modern governance presents a complex challenge. While approaches like isolation, assimilation, and integration each have advantages and disadvantages, recognizing Indigenous rights and safeguarding their culture is crucial for their well-being.
• Both globally and in India, policies that blend autonomy with integration are vital for ensuring the well-being and cultural integrity of tribal populations.
• Drishti Mains Question:
• Q. Analyze the balance between isolation, assimilation, and integration in tribal development policies and their impacts on cultural heritage?
• UPSC Civil Services Examination, Previous Year Questions (PYQs): Analyze the perspectives of Isolation, Assimilation, and Integration in understanding the trajectories of Indian Tribal Development. (2023)

---

GS2/International Relations

PM's Visit to Nigeria, Brazil and Guyana

Why in news?

Recently, the Prime Minister of India embarked on a significant three-nation visit to Nigeria, Brazil, and Guyana. This trip marks an important diplomatic engagement for India, with the Prime Minister first visiting Nigeria after 17 years, participating in the G20 Summit in Brazil, and concluding the tour in Guyana.

• Key Highlights of India-Nigeria Relations:
• Recent Diplomatic Engagement: The Prime Minister's visit to Nigeria in November 2024 was historic, being the first by an Indian PM in nearly two decades. He was honored with Nigeria’s second-highest national award, the Grand Commander of the Order of Niger.
• Historical Ties: India established diplomatic relations with Nigeria in 1958, just prior to Nigeria's independence in 1960, marking the start of a long-standing partnership. The relationship was elevated to a "Strategic Partnership" in 2007.
• Cultural and Educational Exchange: India has significantly contributed to Nigeria's development in education and healthcare, establishing institutions such as the National Defence Academy in Kaduna and the Naval War College in Port Harcourt.
• Economic Engagement: Over 200 Indian companies have invested around USD 27 billion in Nigeria, making India the second-largest employer in the country after the government.
• Developmental Assistance: India has extended developmental assistance to Nigeria through concessional loans amounting to USD 100 million, showcasing its commitment to Nigeria’s socio-economic progress.
• Regional Influence: As Africa's largest country by population and economy, Nigeria plays a crucial role in regional politics and stability.
• Strategic Interests: India aims to strengthen ties with Nigeria to counter China’s growing influence in Africa, recognizing the continent's wealth in critical minerals essential for industries.
• Focus on Common Challenges: Both nations confront shared issues such as terrorism, separatism, piracy, and drug trafficking.
• Cultural Significance: The Indian expatriate community in Nigeria, numbering around 60,000, enhances cultural ties and economic collaboration.
• Opportunities in India-Nigeria Relations:
• Healthcare Cooperation: India is a preferred destination for Nigerian medical tourists due to its affordable healthcare services.
• Defence Collaboration: Nigeria seeks to enhance defence cooperation with India, specifically in training and counter-insurgency efforts against groups like Boko Haram.
• Business and Economic Cooperation: Establishing an India-Nigeria Business Council can help identify new trade and investment opportunities.
• Key Highlights of India-Brazil Relations:
• India and Brazil engaged in discussions during the G20 Summit in Rio de Janeiro, focusing on cooperation in energy, biofuels, defence, agriculture, healthcare, and digital technology.
• India expressed support for Brazil's Global Alliance against Hunger and Poverty initiative and recognized Brazil's leadership during its presidency.
• Brazil emphasized the need for urgent action on global climate issues, particularly ahead of the UNFCCC COP29 talks.
• Brazil supports India's bid for a non-permanent seat on the UNSC for the 2028-2029 term.
• Institutional Engagements: India and Brazil collaborate through various platforms, including BRICS, IBSA, G20, and more, which facilitate discussions on trade, defence, and technology.
• Trade and Investment: Bilateral trade reached USD 15.2 billion in 2022, with India becoming Brazil's fifth-largest trading partner, and significant investments in multiple sectors.
• Defence Cooperation: Established through a 2003 agreement, defence cooperation includes regular meetings and a MoU on Cyber Security signed in 2020.
• Energy Security: A 2020 MoU promotes bioenergy research, with both countries collaborating on ethanol production and blending programs.
• Key Areas of Engagement Between India and Guyana:
• The Prime Minister's visit to Guyana, the first in 56 years, reflects India's renewed focus on the Caribbean and Latin America, supported by ties with the Indian diaspora and the country's burgeoning oil sector.
• Historical and Diplomatic Ties: India established diplomatic presence in Guyana in 1965, which was upgraded in 1968. Guyana reopened its mission in India in 2004.
• Development Cooperation and Technical Assistance: India offers support through the ITEC program and scholarships, with over 600 Guyanese scholars trained in various fields.
• Economic and Trade Relations: Indian companies are exploring opportunities in biofuel and renewable energy sectors, with active engagement in sustainable development initiatives.
• Cultural and People-to-People Ties: Guyana's population includes a significant Indian origin community, enhancing cultural connections through sports and traditional practices like Ayurveda.
• Competition from China: India faces challenges in strengthening ties with Guyana due to China's significant investments under the Belt and Road Initiative, despite local mixed sentiments towards Chinese practices.


---

GS3/Economy

Rising Inflation in India

Why in News?

The Ministry of Statistics & Programme Implementation (MoSPI) has recently announced that the Consumer Price Index (CPI), which indicates retail inflation, has escalated to 6.2% in October 2024. Additionally, the Consumer Food Price Index (CFPI) shows that food inflation increased to 10.87%. This rise represents the highest inflation rate since August 2023, exceeding the Reserve Bank of India's (RBI) upper limit of 6%. Despite a global reduction in inflation rates, India continues to experience significant price pressures, prompting analysts to reevaluate economic forecasts and potential interest rate adjustments.

What Factors have Contributed to High Retail Inflation in India?

• High Food Inflation: The surge in inflation is largely attributed to food prices, which have reached a 15-month peak at 10.8%. Notably, vegetable prices soared by 42%, marking a 57-month high, while fruit prices climbed by 8.4% and pulses increased by 7.4%.
• Core Inflation Uptrend: Core inflation, which excludes food and fuel costs, has also shown an upward trend, indicating ongoing inflationary pressures beyond food items. Costs related to household services are rising, reflecting increased living expenses.
• Global Price Volatility: A significant rise in global edible oil prices, driven by supply chain disruptions and other international market dynamics, has had a direct impact on inflation in India. As a major importer of edible oils, India faces rising domestic costs corresponding to global price hikes.
• Extreme Weather Events: Adverse weather conditions, such as heatwaves, have adversely affected agricultural yields, resulting in supply shortages and increased prices.

What are the Implications of High Retail Inflation on RBI’s Monetary Policy?

• Delay in Interest Rate Cuts: The RBI aims for an inflation target of 4%, with a permissible range of 2% to 6%. With current inflation surpassing this range, immediate cuts to interest rates are not anticipated. Experts suggest that any potential rate reductions may only be considered in 2025 if inflation demonstrates a consistent decrease.
• Focus on Inflation Control: The RBI will maintain its focus on managing inflation to ensure price stability, as unchecked inflation can hinder economic growth and decrease purchasing power. Previously, the RBI projected inflation to reduce to 4.8% in Q3 and 4.2% in Q4 of FY 2024-25, but this outlook now appears uncertain, influencing future interest rate paths.
• RBI’s Policy Dilemma: The RBI faces a challenging situation where it must balance the need to control inflation while avoiding negative impacts on economic growth. Rising food prices and supply chain disruptions complicate policy-making decisions. The RBI may take a cautious stance, opting to wait for inflation to decline before making adjustments to interest rates. Alternatively, it might implement a strict monetary policy, which could stabilize inflation but also affect economic expansion.
• Potential Risks of Unchecked Inflation: The RBI has warned that persistent inflation could adversely affect the real economy, particularly in sectors like industry and exports. If increased input costs are transferred to consumers, there could be a reduction in demand, negatively impacting corporate profits, especially in manufacturing, which relies on stable input prices and profit margins.

What is the Consumer Price Index?

• About: The CPI measures changes in the retail prices of goods and services that households typically purchase for daily use. It serves as an indicator of inflation, with 2012 as the base year.
• Purpose: As a key macroeconomic indicator of inflation, the CPI is used by governments and central banks to target inflation and monitor price stability. It is also utilized to adjust dearness allowances for employees in response to price fluctuations, helping understand the cost of living and purchasing power.

What is the Consumer Food Price Index?

• About: The CFPI specifically tracks inflation based on the price changes of food items within a consumer’s shopping basket. It includes a variety of commonly consumed food items such as cereals, vegetables, fruits, dairy products, meat, and other staples.
• Calculation: Similar to the CPI, the CFPI is calculated on a monthly basis using 2012 as the base year. The Central Statistical Office (CSO) under MOSPI releases the CFPI data for three categories: rural, urban, and combined, on an all-India basis.


Drishti Mains Question:

Examine the implications of high retail inflation on the Reserve Bank of India’s monetary policy.

---

GS3/Environment

Carbon Credits

Why in News?

A recent study published in the Nature journal has revealed that merely 16% of carbon credits lead to genuine reductions in emissions, raising questions about the efficacy of carbon markets. This finding is especially pertinent as the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29) is focusing on new mechanisms for carbon trading, prompting serious discussions regarding the dependability of emissions reduction claims.

What are the Key Highlights of the Study?

• Ineffectiveness of Carbon Credits: The study assessed projects that generated credits equivalent to one billion tonnes of carbon dioxide under the 1997 Kyoto Protocol. It found that only 16% of these credits were associated with actual emissions reductions.
• HFC-23 Abatement Success: Projects aimed at eliminating Hydrofluorocarbon (HFC)-23, a potent greenhouse gas, showed the highest effectiveness, with approximately 68% of credits resulting in genuine emissions cuts.
• Challenges with Other Projects: Projects focused on avoided deforestation achieved only a 25% effectiveness rate. These projects aim to conserve forests to prevent CO2 emissions that would result from deforestation. Additionally, solar cooker deployment projects were even less effective, with a mere 11% of credits leading to actual reductions.
• Flaws in Assessing Additionality: Many projects did not meet the "additionality" requirement, which states that emissions reductions must occur beyond what would happen under standard practices. The study highlighted significant inaccuracies in current assessments, indicating that many credits were issued for reductions that would have occurred regardless of carbon credit revenue, thereby undermining the credibility of emissions claims.
• Need for Robust Mechanisms: These findings underscore the necessity for more effective carbon trading systems under the 2015 Paris Agreement, with anticipated progress in Baku.

Recommendations:

• The study advocates for stricter eligibility criteria and enhanced standards for measuring emission reductions.
• It emphasizes prioritizing projects with a high likelihood of achieving additionality.
• There is a need for robust carbon trading mechanisms that include safeguards to ensure that credits truly reflect real emissions reductions.

What are Carbon Credits?

About:

• Carbon credits, or offsets, signify reductions or removals of carbon emissions, measured in tonnes of carbon dioxide equivalent (tCO2e).
• Introduced in the Kyoto Protocol of 1997, the concept aims to mitigate greenhouse gas (GHG) emissions through trading systems.
• Each carbon credit allows for the emission of one tonne of CO2 or its equivalent.
• Credits are produced by projects that either absorb or reduce carbon emissions and are certified by international organizations such as the Verified Carbon Standard (VCS) and the Gold Standard.


Carbon Markets:

• The carbon markets established under the Paris Agreement aim to create more robust and transparent systems for trading carbon credits while ensuring accountability in emissions reductions.
• According to Article 6 of the Paris Agreement, countries can collaborate by transferring carbon credits from emission-reducing projects to assist others in achieving their climate objectives.

Types of Carbon Markets:

• Compliance Markets: These markets are formed through national or regional emissions trading schemes (ETS), where participants must legally meet established emission reduction targets. They are regulated and include penalties for non-compliance, involving governments, industries, and businesses.
• Voluntary Markets: In these markets, participants—such as companies, municipalities, or regions—engage in carbon trading voluntarily to offset emissions and meet sustainability targets, often as part of corporate social responsibility (CSR) efforts or to enhance their market image.


Benefits of Carbon Credits:

• Projects focusing on forest protection and sustainable land management help preserve vital habitats and promote biodiversity.
• Carbon credits can also facilitate funding for sustainable initiatives.


What are the Concerns Regarding Carbon Credits?

• Non-Adherence to Additionality: Carbon credits should only be awarded for projects that achieve emissions reductions beyond what would naturally occur. The principle of additionality is central to the effectiveness of carbon credits, but the absence of clear additionality guidelines results in credits being awarded to projects that would have reduced emissions anyway, diminishing the carbon market's effectiveness.
• Greenwashing: Some companies utilize carbon credits to present an environmentally responsible image without implementing substantive operational changes, a practice known as greenwashing. This behavior undermines the carbon credit market's credibility and misleads consumers and investors regarding actual environmental impact.
• Market Transparency: The lack of clarity about how carbon credits are created and traded can lead to skepticism about the market's legitimacy. The absence of real-time tracking and independent audits can compromise the integrity of the system, leading to issues such as double-counting of emission reductions.
• Inequitable Access: Developing nations often face challenges in accessing the resources or technology required to participate in carbon credit generation, limiting their ability to benefit from the market and exacerbating inequalities in global climate efforts.

Key Challenges Facing India’s Carbon Credit Market:

• Industry Readiness & Compliance Costs: The costs associated with monitoring and verification systems can be prohibitive for smaller projects in India, particularly for Micro, Small and Medium Enterprises (MSMEs), which contribute around 110 million tonnes of CO2 annually, limiting their engagement in the carbon market.
• Regulatory and Oversight Mechanisms: While India's carbon market is still developing, it requires strong enforcement and alignment with both domestic and international standards to be effective.

Way Forward:

• Strengthen Additionality: Implement strict additionality criteria to ensure that credits represent genuine emissions reductions.
• Ensure transparency through real-time tracking and third-party verification.
• Focus on Proven, High-Impact Projects: Prioritize projects like HFC-23 abatement, which have demonstrated significant emissions reduction effectiveness, and avoid low-impact projects with poor success rates.
• Establish Robust MRV Systems: Invest in scalable monitoring, reporting, and verification (MRV) systems, especially for smaller projects, and collaborate with international standards like VCS or Gold Standard to ensure credibility.
• Align with International Standards: Ensure compliance with Article 6 of the Paris Agreement and incorporate global carbon market standards.
• Provide financial and technical assistance to developing regions to enable effective participation in carbon markets.

Drishti Mains Question:

Evaluate the concept of carbon markets. How do flaws in additionality impact the integrity of carbon credit systems?

---

GS2/International Relations

2nd India-Australia Annual Summit

Why in news?

The Prime Minister of India and the Prime Minister of Australia convened for the 2nd India-Australia Annual Summit on the sidelines of the 2024 Group of 20 (G20) Summit in Rio de Janeiro, Brazil. As the fifth anniversary of the India-Australia Comprehensive Strategic Partnership approaches in 2025, the leaders emphasized notable advancements in various sectors, including climate change, trade, defense, education, and regional collaboration.



What are the Key Highlights of the India-Australia 2nd Annual Summit?

• Renewable Energy Partnership:
  • The India-Australia Renewable Energy Partnership (REP) was established to enhance collaboration in solar energy, green hydrogen, and energy storage.
• Trade and Investments:
  • Both nations are committed to developing a Comprehensive Economic Cooperation Agreement (CECA), building on the successes of the India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA), which resulted in a 40% rise in mutual trade over two years.
  • The Prime Ministers acknowledged the synergy between India's 'Make in India' initiative and Australia's 'Future Made in Australia,' highlighting their potential to foster job creation and economic growth.
  • The extension of the Australia-India Business Exchange (AIBX) program for another four years from July 2024 was welcomed; this program aims to enhance trade and investment by offering market insights and facilitating commercial partnerships.
• Enhanced Mobility:
  • The leaders recognized mobility as essential for economic advancement, welcoming the launch of Australia’s Working Holiday Maker visa program for India in October 2024.
  • They also anticipated the introduction of Australia’s Mobility Arrangement for Talented Early-professionals Scheme (MATES), which aims to facilitate the movement of early professionals and provide access to Australia's industry for India’s top STEM graduates.
• Strategic Collaboration:
  • The leaders agreed to renew the Joint Declaration on Defence and Security Cooperation (JDSC) in 2025, which reflects their strengthened defense partnership and strategic alignment. The JDSC, first established in 2007, focuses on enhancing cooperation in counter-terrorism, disarmament, non-proliferation, and maritime security.
• Regional and Multilateral Cooperation:
  • Both nations reiterated their commitment to a free, open, and inclusive Indo-Pacific, consistent with the United Nations Convention on the Law of the Sea (UNCLOS).
  • They pledged to continue collaboration within the Quad framework, focusing on areas such as pandemic response, cybersecurity, and critical infrastructure.
  • India's upcoming chairmanship of the Indian Ocean Rim Association (IORA) in 2025 was highlighted, showcasing mutual efforts in maritime ecology and sustainable development.
  • Both nations reaffirmed their dedication to supporting Pacific island countries through the Forum for India-Pacific Islands Cooperation (FIPIC) framework.

What is the India-Australia Comprehensive Strategic Partnership?

• About:
  • In June 2020, India and Australia upgraded their relationship from a 'Strategic Partnership' established in 2009 to a 'Comprehensive Strategic Partnership' (CSP) to enhance bilateral ties.
  • This partnership is rooted in mutual trust, shared democratic values, and common interests in regional security, economic growth, and global cooperation.
• Key Features of the CSP:
  • Science, Technology & Research Collaboration:
    • Increased cooperation in medical research, technology advancements, and cybersecurity initiatives.
  • Maritime Cooperation:
    • Joint efforts to maintain a free, open, and inclusive Indo-Pacific, focusing on sustainable maritime resources and combatting illegal fishing activities.
  • Defence:
    • Expansion of military cooperation through joint exercises, such as the "Malabar" exercises, and logistical support agreements like the Mutual Logistics Support Agreement (MLSA) to address common security challenges.
  • Economic Cooperation:
    • Re-engaging in encouraging trade, investment, and collaboration in infrastructure, education, and innovation.
  • Implementation:
    • The CSP includes regular dialogues at multiple levels, including meetings of foreign and defense ministers in a '2+2' format, along with annual summits and ministerial meetings to ensure ongoing cooperation.

What are the Key Milestones in India-Australia Relations?

• Bilateral Trade:
  • India is Australia's largest trading partner, with two-way trade in goods and services valued at USD 49.1 billion in 2023.
• India's Exports to Australia:
  • Key exports include refined petroleum, pearls and gems, jewelry, and made-up textile articles.
• Australia's Exports to India:
  • Major exports consist of coal, copper ores and concentrates, natural gas, non-ferrous/ferrous waste and scrap, and education-related services.
• Civil Nuclear Cooperation:
  • In 2014, India and Australia signed a Civil Nuclear Cooperation Agreement, permitting uranium exports to India, which came into effect in 2015 to support India's peaceful nuclear energy requirements.
• Defence and Security Cooperation:
  • India-Australia defense relations are fortified through joint exercises such as AUSINDEX and Pitch Black, along with initiatives like the 2022 General Rawat Exchange Programme, which is a military exchange program.
• Multilateral Engagement:
  • Both countries actively participate in Quad initiatives, IORA, and the International Solar Alliance (ISA).
  • Australia endorses India’s bid for a permanent seat in the United Nations Security Council and its membership in the Asia-Pacific Economic Cooperation.

Conclusion

India and Australia have made significant strides in enhancing their economic and strategic partnerships, driven by shared democratic principles. Despite challenges such as delays in developing the CECA and evolving regional security dynamics, both nations remain dedicated to deepening their collaboration. With ongoing efforts, they are well-positioned to further strengthen ties in the future.

Drishti Mains Question:

Evaluate the evolution of India-Australia trade relations in the context of shifting global dynamics.

---