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Here are the topics covered for 9th October 2023:
Table of Content
- GS-1:Ken-Betwa River Linking
- GS-2:Israel Palestine conflict
- GS-3:Tightrope walk, MENA Climate Week 2023
- Facts for Prelims: Open Market Operations, Long-term Repo Operations
Ken-Betwa River Linking
Context:
- In a recent meeting chaired by the Ministry of Jal Shakti, the Ken-Betwa Link Project (KBLP) was emphasized as the central project of the national government and deemed as essential for ensuring water security and fostering socio-economic development in the Bundelkhand region.
About the River Linking Project:
- The Government of India introduced the National Perspective Plan (NPP) for Water Resources Development in 1980, consisting of two main components: Peninsular Rivers Development and Himalayan Rivers Development. Detailed features of these components are provided in Annexure I.
- In the NPP\’s two components, there are a total of 30 identified link projects, with 14 in the Himalayan Rivers Development Component and 16 in the Peninsular Rivers Development Component.
- The National Water Development Agency (NWDA) is responsible for river interlinking under the NPP.
What is the Ken-Betwa Link?
- The Ken-Betwa Link Project (KBLP) is the river interlinking project that aims to transfer surplus water from the Ken River in Madhya Pradesh (MP) to Betwa in Uttar Pradesh (UP) to irrigate the drought-prone Bundelkhand region.
- It will also produce 103 MW of hydropower and will supply drinking water to nearly 6 million people.
- The project involves building a 77-metre tall and a 2-km wide Dhaudhan dam (within Panna Tiger Reserve) and a 230-km canal.
Potential benefits of River Linking:
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- The project seeks to address water scarcity in the drought-prone Bundelkhand region by transferring surplus water from the Ken River to the Betwa River basin.
- The project could help mitigate floods by regulating the flow of water between the two river basins, reducing the risk of downstream flooding during heavy rainfall.
- Hydropower generation and drinking water supply.
Key concerns related to the River Linking Project:
- The project\’s dam could harm the Panna Tiger Reserve and disrupt ecosystems.
- Altered river flows may impact aquatic life and downstream areas. Dams can trap sediment, altering riverbed dynamics.
- Local communities may be displaced, requiring proper resettlement.
- Reduced water availability downstream can affect agriculture and livelihoods.
- Managing interstate conflicts over water sharing and benefits is a challenge.
Way ahead
- Comprehensive planning is vital for successful river-linking projects, involving detailed feasibility, environmental, and social impact assessments.
- Minimize impacts on ecosystems, wildlife, and biodiversity by integrating environmental safeguards and conservation measures into project planning and execution.
- Engage with local communities, stakeholders, and experts through public consultations for transparency, addressing concerns, and gaining support.
- Continuous monitoring and evaluation are vital to achieve intended benefits and mitigate negative impacts promptly.
- Public awareness campaigns educate about river linking project benefits and challenges, fostering understanding and support.
Israel Palestine conflict
Context:
- Israel announced a state of war in response to a barrage of rockets fired by Palestinian militants into southern and central Israel.
- This attack was a coordinated effort, involving both gunmen breaching security barriers and a sustained rocket assault originating from Gaza.
About:
- The origins of this conflict can be traced to the late 19th and early 20th centuries when nationalist movements emerged among both Jewish and Arab communities in the region.
- Gaza, under the control of Hamas, has consistently been a hotspot for conflict, witnessing sporadic episodes of violence involving Palestinian militants and the Israeli military.
- Hamas, the largest Palestinian militant Islamist organization, also functions as one of the two prominent political parties in the area.
Why in news?
- In the ongoing Israel-Palestine conflict, Israel has declared a state of war and authorized substantial measures in response to an unexpected attack by Hamas. The death toll has surpassed 1,100 individuals since the Palestinian militant group Hamas initiated a massive surprise assault on Israel, involving a barrage of rockets and a large-scale ground invasion.
- Israeli security forces were actively engaged in search operations for Palestinian militants near the southern city of Ashkelon on October 8, 2023. The conflict escalated significantly, with a reported minimum of 40 casualties in Israel during clashes with Palestinian militants on October 7, as stated by the Magen David Adom emergency medical services.
- In reaction to this situation, Israel initiated airstrikes on Gaza, marking one of the deadliest attacks in decades. Hamas fighters had conducted a rampage through Israeli towns, resulting in the deaths of 700 individuals and the abduction of dozens more. The escalating violence presented a substantial risk of a major new conflict in the West Asia region.
- The airstrikes were directed at various locations, including residential buildings, tunnels, a mosque, and the residences of Hamas officials in Gaza, leading to the loss of over 400 lives, among them 20 children. Prime Minister Benjamin Netanyahu pledged to pursue \”significant retribution for this tragic day\” in response to these events.
To move forward:
- Immediate Ceasefire: Priority is an immediate ceasefire to protect civilian lives.
- International Mediation: Involvement of international mediators like the UN to facilitate peace talks.
- Diplomatic Efforts: Both sides must commit to meaningful negotiations, addressing core issues.
- Humanitarian Aid: Provide aid to affected populations for basic needs and medical care.
- Reconstruction: Support post-conflict rebuilding efforts.
- Address Root Causes: Tackle economic, political, and historical grievances.
- Engage Regional Players: Regional powers can play a constructive role.
In conclusion, the conflict is complex, but dialogue, negotiation, and international cooperation are essential for a just and lasting resolution, bringing peace and stability to the region.
Tightrope walk
Context:
- RBI\’s Decision to Keep Rates Unchanged Reflects Worries Over Sluggish Economic Growth.
- The recent decision by the RBI\’s Monetary Policy Committee (MPC) to keep interest rates unchanged, despite acknowledging the significant risk posed by \”high inflation\” to macroeconomic stability, signals a complex predicament faced by monetary authorities.
Key points:
- The decision made by the RBI\’s Monetary Policy Committee (MPC) to keep interest rates unchanged, despite the central bank\’s warning about the significant threat posed by \’high inflation\’ to macroeconomic stability, is a clear indication that monetary authorities are facing a challenging dilemma.
- Following a relatively benign first quarter, during which headline retail inflation averaged 4.63%, slightly above the RBI\’s projection of 4.6%, the price increases measured by the Consumer Price Index (CPI) spiked notably in the last quarter, with July and August recording rates of 7.44% and 6.83%, respectively.
- In an implicit recognition of its misjudgment regarding inflation trends, the MPC recently revised its projection for average second-quarter inflation upward by 20 basis points, shifting it from the August forecast of 6.2% to 6.4%.
- Even this revised projection may seem overly optimistic unless the headline inflation figure significantly drops to below 5% in September to validate the RBI\’s outlook. Currently, the MPC is pinning its hopes on the recent reduction in domestic LPG prices and a decrease in vegetable prices to provide some short-term relief from inflationary pressures.
- Governor Shaktikanta Das emphasized the RBI\’s readiness to employ Open Market Operations by selling securities to remove excess funds from the system if there are concerns that liquidity might be rising to a level that could undermine the overall monetary policy stance.
- The RBI\’s reluctance to follow through and raise interest rates further, despite reiterating the threat to overall economic stability arising from unanchored inflation expectations, indicates an unspoken worry that the momentum of economic growth remains somewhat fragile.
- Recent discussions regarding the credibility of the NSO\’s economic growth estimates and concerns that the methodology used to report 7.8% real GDP growth in the first quarter might have led to an overestimation must be considered alongside increased caution among economic forecasters regarding India\’s GDP growth prospects for the current fiscal year.
- Mr. Das acknowledged weaknesses in India\’s goods exports and the inconsistent monsoon, which has also resulted in reduced sowing of crucial oilseeds and pulses during the kharif season, posing significant risks to the RBI\’s projection of 6.5% GDP growth in FY24.
- Furthermore, with the rupee already depreciating by approximately 0.7% since the last policy meeting in August, the RBI also faces the additional risk of importing inflation and exacerbating vulnerabilities in the external sector if it refrains from raising interest rates.
Way forward:
- The RBI\’s decision to maintain interest rates amid rising inflation reflects the challenge of balancing inflation control and supporting economic growth. Debates over growth estimates, GDP concerns, weak exports, and erratic monsoons further complicate the situation.
- The depreciation of the rupee adds to these concerns, potentially leading to imported inflation and external sector vulnerabilities.
- The RBI must strike a careful balance to address challenges. Their use of tools like Open Market Operations reflects their commitment to monetary policy stability.
- The RBI\’s decision emphasizes a balanced approach to price stability and sustainable economic growth in India.
MENA Climate Week 2023
Context:
- India and Saudi Arabia signed an MoU during the MENA Climate Week in Riyadh, covering Electrical Interconnections, Green and Clean Hydrogen, and Supply Chains.
About the MOU:
The Memorandum of Understanding (MoU) seeks to create a broad framework for collaboration between the two nations in several key areas:
- Electrical Interconnection: The agreement aims to facilitate cooperation in electrical interconnection, enabling the exchange of electricity, particularly during peak demand periods and emergencies.
- Green Hydrogen and Renewable Energy: The MoU also focuses on joint efforts in producing green and clean hydrogen, as well as promoting renewable energy projects.
- Supply Chain Resilience: Both countries are committed to establishing resilient supply chains for essential materials, ensuring secure and reliable access.
- Furthermore, the agreement includes provisions for organizing Business-to-Business (B2B) Summits and regular interactions between companies from both nations. These events will help in establishing comprehensive supply and value chains within the energy sector and enhancing cooperation in various energy-related endeavors.
The Middle East and North Africa Climate Week (MENACW)
- It is an annual event that brings together leaders from governments, businesses, international organizations, and civil society to explore ways to reduce greenhouse gas emissions while adapting to the mounting fallout from the climate crisis.
- Hosted by the government of the Kingdom of Saudi Arabia in the city of Riyadh, MENA Climate Week 2023 will take place from 8-12 October 2023.
- MENACW 2023 is organized into four systems-based tracks, each focusing on specific themes:
- Energy systems and industry
- Cities, urban and rural settlements, infrastructure and transport
- Land, ocean, food and water
- Societies, health, livelihoods, and economies
- MENACW 2023 is organized by the United Nations Framework Convention on Climate Change (UNFCCC), United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP), and the World Bank, with support from the Islamic Development Bank, the International Renewable Energy Agency (IRENA), the United Nations Economic and Social Commission for Western Asia (ESCWA) and the League of Arab States.
MENA Climate Week is part of the global effort to address climate change and achieve the goals set out in international agreements like the Paris Agreement. It recognizes the unique challenges and opportunities faced by countries in the MENA region, including issues related to water scarcity, extreme temperatures, and vulnerability to sea-level rise, and aims to foster collaboration and sustainable solutions to these challenges.
Facts for Prelims
Open Market Operations
- The RBI uses Open market operations (OMOs) in order to adjust the rupee liquidity conditions in the market on a durable basis.
- When the Reserve Bank feels that there is excess liquidity in the market, it resorts to the sale of government securities, thereby sucking out the rupee liquidity.
- Similarly, when the liquidity conditions are tight, the central bank buys securities from the market, thereby releasing liquidity into the market.
- It\’s used as a tool to rein in inflation and money supply in the system. However, when liquidity is sucked out, it can lead to a spike in bond yields as the RBI will release more government securities into the market, and bond buyers demand more interest rates on these securities.
- OMOs serve as a quantitative monetary policy tool utilized by a country\’s central bank to manage and regulate the overall money supply within the economy.
Long-term Repo Operations
- Within the framework of Long-term Repo Operations (LTRO), the Reserve Bank of India (RBI) will carry out term repos with one-year and three-year maturities, with sizes adjusted as necessary, amounting to a total of Rs 1 lakh crore, all at the existing repo rate.
- When banks access long-term funds at more favorable rates, their overall cost of funds diminishes. Consequently, they can lower interest rates for borrowers.
- LTRO serves as a means for the RBI to ensure that banks reduce their Marginal Cost of Funds-Based Lending Rate (MCLR) without having to reduce policy rates.
The primary objectives of LTRO:
- Provide Confidence to Banks: LTRO aims to instill confidence in banks by assuring them of the availability of stable liquidity at a reasonable cost compared to prevailing market conditions.
- Facilitate Smooth Maturity Transformation: LTRO is designed to facilitate and encourage banks in the process of maturity transformation, where they effectively convert short-term sources of funding, like deposits from savers, into longer-term borrowings, such as mortgages. This process helps increase the flow of credit to productive sectors of the economy.
