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Here are the topics covered for 07 September 2023: ASEAN is a key pillar of ‘The Act East Policy, G20 Meeting and Key Agendas, How Unemployment is Measured?, India drops tariffs on U.S. lentils, almonds, Viability Gap Funding (VGF)for battery energy storage gets govt. Nod, India-UK FTA, Viability Gap Funding, Short-lived nuclei, Sanatana Dharma, Blocking blacklisting of terrorists smacks of doublespeak: India.
Table of Contents:
- ASEAN is a key pillar of ‘The Act East Policy
- G20 Meeting and Key Agendas.
- How Unemployment is Measured?
- India drops tariffs on U.S. lentils, almonds
- Viability Gap Funding (VGF)for battery energy storage gets govt. Nod
- India-UK FTA
Facts for Prelims:
- Viability Gap Funding
- Short-lived nuclei.
- Sanatana Dharma
- Blocking blacklisting of terrorists smacks of doublespeak: India
ASEAN is a key pillar of ‘The Act East Policy
Context: PM Modi left for Indonesia for the 20th India-ASEAN and the 18th East Asia Summit in Jakarta.
About Act East Policy:
- In 2014 PM Modi Addressing the East Asia Summit turned India’s Look East Policy into Act East .
- The Act East Policy is meant to serve the main purposes of stronger trade and business ties with Southeast East Asia and other Indo-Pacific countries and to create development opportunities for the North East States of India. Commerce, Culture, and connectivity – the three Cs- are therefore the pillars of India’s current Act East Policy.
- India’s approach to the region has matured into a broader strategic engagement – with the ASEAN and its related frameworks like the ARF, EAS, and ADMM+ and also with countries further East, including Japan, South Korea, Australia, and the Pacific islands.
- Security is one of the very important diensions of India’s act east .
ASEAN and India Engagement:
- Range of economic and strategic issues, including trade and investment, connectivity, energy, culture, people-to-people contacts, and maritime security.
- The comprehensive strategic partnership was an agreement between India and ASEAN countries.
- In 2012 the relationship was upgraded into a strategic partnership.
- India actively participates in several regional forums of ASEAN such as the East Asia Summit (EAS) and ASEAN regional forum.
East Asia Forum (EAS):
- ASEAN member countries started the East Asia Summit in 2005.
- It was proposed for the first time by the Malaysian PM Mahathir Mohammad.
- It was formed to discuss key political, economic, and security-related issues.
- This year PM Modi will attend the summit and key agendas for discussion are issues of importance to the region, including food and energy security, environment, health, and digital transformation”.
- It comprises 10 ASEAN members and 8 dialogue partners.
- India is a founding member and in the 2019 Bangkok summit, India unveiled India’s Indo-Pacific Ocean Initiative.
Current Status of India-ASEAN Relationship:
- The details of this cooperation are outlined in the latest Plan of Action to Implement the ASEAN-India Partnership for Peace, Progress, and Shared Prosperity (2021-2025).
- After beginning in 2002, became a Strategic Partner in 2012, and in 2015, it formally set up a Mission to ASEAN to deepen its engagement with ASEAN.
- Various connectivity projects such as the India-Myanmar-Thailand Trilateral Highway, and the Kaladan Multimodal Project, increase maritime and air connectivity.
- NW-2 (Dhubri-Sadiya stretch of river Brahmaputra) and NW-16 (river Barak) & Indo-Bangladesh Protocol to increase connectivity.
- Chattogram and Mongla Ports of Bangladesh for movement of goods to and from India.
G20 Meeting and Key Agendas.
India’s G20 presidency has the potential to:
- Establish a worldwide model for regulating crypto assets.
- Initiate reforms in multilateral development banks, potentially unlocking $200 billion in additional financing over eight years.
- Address emerging global challenges and promote financial inclusion.
The anticipated outcomes, pending G20 leader approval at the upcoming New Delhi summit, involve:
- Strengthening countries’ ability to grasp the proposed two-pillar framework for taxing multinational corporations and global tech giants
- Enabling urban administrations worldwide to fund city development initiatives.
- Nations are exploring the use of information exchanged via tax treaties for purposes other than taxation.
Regarding cryptocurrency regulation:
- Effective regulation requires collaboration among multiple countries
- India, in consultation with the IMF and the Financial Stability Board, has developed a roadmap for cryptocurrency regulation.
- Specific attention has been given to the risks that emerging markets and developing economies face with virtual assets.
On multilateral development bank reforms:
- A global expert group under India’s G20 presidency will submit a second report with reform recommendations next month
- These recommendations will be discussed at the World Bank and IMF annual meetings in Marrakesh
On financial inclusion:
- India has been appointed as the co-chair of the Global Partnership for Financial Inclusion until
- The focus is on implementing a Financial Inclusion Action Plan using digital public infrastructure, recognized by G20 members as vital for inclusive growth and sustainable development.
- The inception of G20: The G20 was founded in 1999 after the Asian financial crisis as a forum for the Finance Ministers and Central Bank Governors to discuss global economic and financial issues.
- Elevation to Leader’s Level: The G20 was upgraded to the level of Heads of State/Government in the wake of the global economic and financial crisis of 2007, and, in 2009, was designated the “premier forum for international economic cooperation.
- The G20 Summit is held annually, under the leadership of a rotating Presidency.
- The G20 initially focused largely on broad macroeconomic issues, but it has since expanded its agenda to inter-alia including trade, sustainable development, health, agriculture, energy, environment, climate change, and anti-corruption.
How G-20 Works:
- It steers the Presidency of the G-20 agenda for a year and hosts a summit. It consists of 2 parallel tracks, the Finance Track which is led by the Central Bank governor and Finance Minister, and the Sherpa Track led by the Sherpas after the Finance Track.
Troika of G-20 Group for 2023
India drops tariffs on U.S. lentils, almonds
- Context: During the June Visit of PM Modi India-US decided to resolve 6 six bilateral trade disputes.
More about the news:
- Effective September 6, India removed retaliatory customs tariffs on select American goods like almonds and lentils.
- Tariff hikes on specific S. products, including walnuts, almonds, and apples, are being rolled back.
- Import duties on almond shipments to India will revert to ₹35 per kg for in-shell and ₹100 per kg for kernels.
- Previously, India had increased tariff rates to ₹41 per kg for in-shell and ₹120 per kg for kernels.
In June 2019, India raised import duties on 28 U.S. products as a response to increased U.S. customs duties on specific steel and aluminum items.
- The U.S. initiated higher customs duties.
- India responded with increased duties on 28 American products. On September 5, the Finance Ministry made changes:
- Some of these tariff increases were dropped
- This decision was based on the “public interest
How Unemployment is Measured?
The measurement and definition of unemployment is very important for a country like India.
- In 2017, India’s unemployment rate hit a record high of 6.1%, according to the Periodic Labour Force Survey (PLFS). By 2021-22, it had dropped to 1%, though still higher than some developed nations.
- During this time, the U.S. saw unemployment rates fluctuate between 5% in July 2022 and 3.7% in July 2023.
- The Indian economy is more informal and the US economy is more industrialized.
Defining the Unemployment:
According to the ILO, unemployment entails:
- Being jobless.
- Being ready for employment.
- Actively searching for work.
- An individual not seeking a new job after losing one is not considered unemployed by this definition.
- The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force. It can decrease when an economy doesn’t create sufficient jobs or when people choose not to actively seek employment.
- In the U.S., in 2019, the employment-to-population ratio (EPR) was 60.8%, with a 7% unemployment rate. In 2022, the EPR dropped to 60%, yet the unemployment rate decreased to 3.6%. This happened because many people left the labor force.
What is the Labor Force?
- The labor force comprises the employed and the unemployed. Those who neither work nor seek employment, like students and unpaid domestic workers, are categorized as outside the labor force.
Measuring the Unemployment Rate in India:
- In a 2009-10 survey by the NSSO, 33.3% of rural women and 27.2% of urban women aged 15 and above, involved in domestic work, expressed a desire to work if opportunities were provided within their households.
- Out of the rural female population aged 15+, 18.8% expressed willingness to work within their households. The labor force participation rate for rural women was 26.5% that year.
- These women aren’t counted as unemployed since they’re not actively seeking jobs. In developing economies, a definition of unemployment based on active job searching may underestimate the actual situation.
- The lower threshold for considering someone employed is why rural areas often have lower unemployment rates than urban areas, especially in agrarian economies.
- In agrarian settings, people may have access to family farms or casual agricultural work, increasing their chances of finding some form of employment compared to urban areas.
- These definitions may “underestimate” unemployment but were primarily designed to assess the extent of the informal economy.
- The Centre for Monitoring the Indian Economy categorizes individuals based on their activities on the day before the interview.
- Their approach results in a higher estimated unemployment rate.
- However, it leads to lower labor force participation rates.
- This is because, in the informal economy, the likelihood of having worked on any single day is lower compared to longer periods, like a week or a year.
- The March 2020 lockdown had a significant impact on the Indian economy. However, this impact was not immediately reflected in the PLFS unemployment rates, which cover a period from July of one year to June of the next. The lockdown’s effects were observed in the 2020-21 PLFS, but during both 2019-20 and 2020-21, unemployment rates, measured by UPSS and CWS standards, decreased.
The CWS criterion, with a shorter reference period, would indicate higher unemployment rates.
- CWS focuses on short-term unemployment and may show a spike during the lockdown period.
- If those affected by the lockdown found jobs quickly, CWS rates might not remain high for subsequent periods.
- When averaging data across the year, the CWS rate for the entire year could appear lower due to the variation in unemployment throughout different periods.
Observing Table 2
- Urban CWS unemployment rates show a peak during the lockdown quarter.
- These rates decline in the following quarters.
- Over the entire year, CWS unemployment does not exhibit the same sharp increase.
- Unemployment is becoming a crucial factor in upcoming elections.
- To address it effectively, it’s vital to grasp how it’s defined and measured in a developing economy.
Fintech and Governance
Context: RBI has asked fintech firms to focus more on improving governance and three critical areas such as three critical aspects of customer centricity, governance, and selfregulation.
More in News: What fin-techs need to do?
- FinTech firms need to form a Self Regulatory Organisation (SRO) within a year for better corporate governance.
- avoiding customer harassment simplified customer girvances through grievance redressal mechanisms.
What is Fintech?
- The term “fintech company” describes any business that uses technology to modify, enhance, or automate financial services for businesses or consumers. Some examples include mobile banking and peer-to-peer payment services.
- India is amongst the fastest growing Fintech markets in the world. Indian FinTech industry’s market size is $ 50 Bn in 2021 and is estimated at ~$ 150 Bn by 2025.
Issues associated with Fintecs:
- Cyber attack risk.
- Data breach and misuse of it
- Mushrooming illegal loan apps based in foreign-based leads to concern of data breach, unethical business practices levying of exorbitant interest rates, and harsh recovery practices.
What safeguards need to be taken?
Emphasizing the importance of responsible innovation, the RBI Governor stated the following:
- Innovations must be accompanied by prudential safeguards
- Regulated entities should operate within the boundaries defined by licensing conditions.
- Entities should engage only in activities permitted by regulations.
- FinTech companies can display a commitment to transparency, accountability, and responsible decision-making by:
- Establishing clear governance structures
- Creating an effective self-regulatory framework.
Context: Recently British PM’s statement regarding the signing of FTA will be a forward-looking and modern trade deal in the coming times to achieve the target of doubling trade by 2030.
- IPR: Here do not want to give away life-saving generic drugs in India and it is considered the main issue between India UK trade deal.
- Rules of Origin: ROO mainly aims to determine the origin country of any product and is constantly becoming a hurdle to sign an FTA. India wants strict rules of origin to prohibit other countries from taking advantage of the trade deal.
- Digital Trade: India still has laws related to digital trade and data protection in a nascent stage so it does not want to make any commitment under the FTA.
- Labor and Environment: The negotiations on this front added for the first time hence rules shall not be unfavorable against any country, especially India.
- UK wants more strict laws on IPR, free cross-border data flow and rules against data localization, liberal laws on the rule of origin, and commitments under the environment and labor.
Current Trade Status between India:
- Total trade in goods and services (exports plus imports) between the UK and India was £36.3 billion in the four quarters to the end of Q1 2023, an increase of 34.2% or £9.2 billion in current prices from the four quarters to the end of Q1 2022. Of this £36.3 billion.
- India was the UK’s 12th largest trading partner in the four quarters to the end of Q1 2023 accounting for 2.1% of total UK trade
Facts for Prelims:
Viability Gap Funding (VGF)for battery energy storage gets govt. nod
- Recently government approved (VGF) for the development of Battery Energy Storage Systems (BESS).
What is VGF?
- It is a financial grant given to support projects that are economically justified but not financially viable.
- The program will support a batteryenergy storage capacity of 4,000 megawatts hours, to be developed by 2030-31.
- Finding of 9600 crore with budgetary support of 3760 crore.
Finally, physicists have a way to ‘see’ inside short-lived nuclei
Around 150 years ago, scientists Ernest Rutherford, Hans Geiger, and Ernest Marsden:
- Exposed thin gold foil to radiation.
- Discovered that every atom has a concentrated, dense center.
- This center contains its mass and positive charge.
Researchers at Japan’s RIKEN Nishina Center for Accelerator-Based Science have achieved a significant advancement:
- They developed a setup capable of using electron scattering to peer inside unstable nuclei.
- This technology allows them to examine nuclei that do not naturally exist.
The SCRIT advantage:
- Electrons were accelerated in a particle accelerator
- They were collided with uranium carbide.
- Resulted in a stream of cesium-137 ions with a 30-year half-life.
Sanatana Dharma Controversy
Context: Recent remarks on Sanatan Dharma by the Tamil Nadu Minister sparked controversy.
About Sanatan Dharma:
- Sanatan Dharma is a Sanskrit term that can be loosely translated as “eternal religion”.
- Mythologist and author Devdutt Pattanaik, that the word “Sanatan”, meaning eternal, does not appear in the Vedas.
- Sanatana Dharma talks about the Vedas and the Supreme One, and also about the ways to reach Him.
- It believes in certain traits such as atma, moksha, repeated birth, and the belief that God alone can liberate us.
- All jivatmas are born due to their karma, and what they face in life is a result of their karma.
- Every atma must resort to a way to reach God. God Himself has given us many choices in this respect.
- Various ways shown to reach God are karma yoga, bhakti yoga gnana yoga, or Saranagati, to reach Him.
Blocking blacklisting of terrorists smacks of doublespeak: India
- India advocated for blocking evidence-based global terrorists without providing justifications is uncalledfor and “smacks of doublespeak.
India Raised a Question on UNSC:
- “The working methods of the UNSC Sanctions Committees continue to dent the credibility of the UN Security Council.
- Stressed that the working methods of Sanctions Committees must emphasize transparency.