The Hindu Editorial Analysis- 27th November 2025

Fighting the Fire

Why is it News?

COP30 aimed to shift the narrative by emphasising implementation. 

Introduction

The 30th Conference of the Parties (COP) in Belem, Brazil, marked a significant milestone, being a decade since the Paris Agreement was established. This event highlighted the urgent need to limit global warming to 1.5°C. As the world grapples with rising temperatures, the challenges of fossil-fuel dependence, climate finance, and the necessity for a fair transition to clean energy and resilient development remain critical.

COP30: Context and Symbolism

• The conference took place in Belem, Brazil, selected for its proximity to the Amazon rainforest, symbolising the vital role of this ecosystem in global climate health.
• The event marked ten years since the Paris Agreement, which was signed by 195 countries with the goal of keeping global warming below 2°C, with an ideal limit of 1.5°C.
• Notably, 2024 was projected to be the first year when global temperatures would exceed 1.5°C, although such breaches would need to occur repeatedly for it to be considered the new normal.

Progress and Persistent Challenges

Over the past decade, COPs have been instrumental in steering nations away from their reliance on fossil fuels. Key focus areas have included:

• Responsibility-sharing: Addressing how different countries share the burden of climate action.
• Climate finance: Ensuring adequate funding for climate initiatives, especially in developing nations.
• Loss and damage: Recognising and addressing the damages already incurred due to climate change.

A positive shift is observed as many nations, including the United States, now acknowledge that renewable energy is the future. However, the main challenge remains: how to transform economies towards renewable energy while ensuring growth and competitiveness.

Global Climate Politics

Within the realm of global climate politics, two broad blocs have emerged:

• Developed nations are advocating for strict timelines to phase out fossil fuels.
• Developing nations and petro-states are calling for increased financial support, more flexible pathways for transition, and are resistant to rigid targets.

This divide is a significant factor contributing to negotiation deadlocks during COP discussions.

Highlights of the Brazil COP

• Shift to Implementation: Brazil aimed to redirect the focus towards practical implementation of climate agreements, highlighting the importance of multilateral efforts and mutirão, which means collective action.
• Impact of U.S. Absence: The absence of the United States weakened the developed bloc, potentially facilitating more flexible negotiations.
• Emphasis on Adaptation and Just Transition: There was a stronger emphasis on adaptation strategies and ensuring a just transition for affected communities, highlighting the need for practical climate resilience measures and financial commitments.
• India's Position: India supported the focus on issues pertinent to developing countries but did not update its Nationally Determined Contributions (NDCs) during the conference.
• COP's Role: Despite the slow pace of progress and the challenges of rising pollution and climate denial, COP remains a crucial collective mechanism for humanity to avert deeper climate crises.

Conclusion

 The COP30 in Brazil, despite the slow progress and significant divides between developed and developing nations, reinforced the importance of multilateralism, adaptation, and a just transition in addressing climate change. As the impacts of climate change accelerate, global cooperation is essential to prevent further ecological damage and secure a sustainable, climate-resilient future for all.

Limited RoomWhy is it News?

To ensure greater stability of the rupee, India needs to reduce its heavy reliance on oil imports.

Introduction

• The recent 7% depreciation of the Indian rupee is due to a combination of global and domestic factors, similar to previous instances of rupee weakening.
• Despite having strong foreign exchange reserves, the rupee is facing volatility because of sharp changes in oil imports and a widening current-account deficit.
• Although inflation is currently low, allowing the Reserve Bank of India (RBI) to manage the situation, achieving long-term stability requires strategic reforms in energy security and trade policy.

Context and Comparison of Rupee Depreciation

• The rupee has weakened by about 7% from late November 2024 to the present, declining from ₹83.4/$ to approximately ₹89.2/$.
• This decline is not unusual; for instance, in 2018, the rupee fell by 11-12%.
• The relevance of this comparison lies in the fact that the current political and trade environment is reminiscent of the 2018 period.

Global Context and Historical Parallels

• In 2018, during the presidency of Donald Trump in the United States:
• A strong U.S. dollar, rising U.S. interest rates, and trade tensions exerted pressure on emerging-market currencies, including the rupee.
• In response, the Reserve Bank of India (RBI) implemented its first longer-term currency swap as a liquidity measure.
• In 2019, a $5-billion, three-year dollar/rupee swap was completed.
• In February 2025, a $10-billion buy-sell swap was conducted to provide long-term rupee liquidity during periods of global stress.

Significance of Currency Swaps

• Central banks utilize currency swaps to:
• Provide liquidity to banks, strengthen foreign exchange reserves, and prevent disorderly depreciation when the dollar strengthens or capital flows reverse.
• Under India's managed-float exchange rate regime, the RBI cannot fix the exchange rate but can smooth out volatility.

Domestic and External Pressure Factors

• The recent sharp decline of the rupee is influenced by:
• A widening current-account deficit, increased bullion imports as a safe-haven measure, and high U.S. tariffs on exporters, prompting them to defend their competitiveness.
• From November to the present, the RBI has sold approximately $50 billion in foreign exchange to stabilize the rupee, yet depreciation has persisted.

Strengths and Stabilizing Elements

• Foreign exchange reserves remain robust, around $693 billion.
• Retail inflation has significantly decreased, with the Consumer Price Index (CPI) inflation at 0.25% in October 2025, well below the target range of 2%-6%.
• This low inflation provides the RBI with the flexibility to tolerate modest depreciation without resorting to aggressive interest rate hikes.

Oil Dependence and Inflationary Risks

• As India transitions from importing cheaper Russian crude oil to more expensive U.S. imports, the weaker rupee may contribute to higher oil-driven inflation.
• Crude oil constitutes over 20% of India's imports in FY25, posing an inflationary risk.

Policy Priorities Beyond Monetary Stabilization

• Relying solely on monetary tools is insufficient to address structural vulnerabilities.
• India must urgently reduce its dependence on oil by:
• Accelerating the electrification of transport and diversifying energy sources.

Trade Policy Necessities

• India's trade strategy should be coherent rather than a patchwork of bilateral agreements.
• Current agreements with Japan, the UAE, and ASEAN have negatively impacted India's trade balance.
• A reevaluation of the trade framework is crucial for long-term macroeconomic stability.

Conclusion

• While the RBI can help manage short-term volatility, the long-term resilience of the rupee depends on addressing structural weaknesses.
• Reducing oil dependence, speeding up electrification, and developing a coherent trade strategy are vital for protecting the economy from external shocks.
• With strong reserves and low inflation, India has the capacity to take action, but these reforms must be pursued with clarity, urgency, and a long-term perspective.