Daily News Analysis 21st October 2023 (The Hindu)

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Here are the topics covered for  21st October 2023:

GS- 3: China\’s Graphite Export Restrictions, Private Sector Finance for a Sustainable Future ,

Urban Mobility India (UMI) Conference, Household consumption propping up the economy

Facts for Prelims: Regional Rapid Transit System (RRTS), NAMASTE Scheme

China\’s Graphite Export Restrictions

Context:

  • China\’s Ministry of Commerce\’s recent decision to restrict graphite exports, a crucial mineral used in EV battery production, has raised concerns globally.
  • This move comes amid increasing demand for electric vehicles (EVs) worldwide, and it follows the U.S.\’s imposition of export restrictions on semiconductor chips to Chinese companies.

About

  • Graphite, a vital component for lithium-ion batteries, is primarily used in EVs. China, as the largest global producer of graphite, played a significant role in its production. However, these export restrictions raise concerns about potential shortages, affecting EV manufacturers like Tesla, Rivian, and Lucid Motors, as well as traditional automakers venturing into EV production.
  • The export curbs are also likely to have a geopolitical impact. The United States and other countries are seeking to reduce their reliance on China for critical minerals. The Inflation Reduction Act, which was signed into law in the United States last year, provides tax credits for the domestic production of critical minerals.

Implications for India-China Relations:

  • Supply Chain Vulnerabilities: The restrictions highlight the vulnerability of global supply chains heavily reliant on China for critical minerals. India, as a growing player in the EV market, might be concerned about such vulnerabilities, which could impact its ambitions for EV adoption.
  • Bilateral Trade Dynamics: These restrictions could potentially impact trade dynamics between India and China, especially if India becomes more reliant on domestic or alternative sources of graphite.

Way Forward

  • EV manufacturers and countries, including India, should consider diversifying their supply sources for critical minerals. Relying solely on China for these resources may pose long-term risks.
  • India has the potential to become a major producer of graphite. However, India\’s graphite industry is still in its early stages of development. In order to boost domestic graphite production, India will need to invest in the exploration and development of its graphite deposits.

Private Sector Finance for a Sustainable Future

Context:

  • Global leaders, including representatives from the private sector, recently gathered in Paris, united by a common goal: ending the dichotomy between poverty alleviation and environmental conservation.
  • The \”Paris Pact for People and the Planet\” emerged from this commitment, bolstered by India\’s significant involvement in steering the initiative. This transformative commitment was officially recognized in the G20 Leaders Declaration at the historic Delhi Summit.

Unlocking Private Sector Finance for Sustainability:

  • Transforming the financial system for sustainable development is a monumental task. To tackle poverty, climate change, and biodiversity protection, we must shift from handling billions to trillions in global investments. While public sector financing is critical, the role of the private sector is equally vital.
  • Public sector financing alone will not suffice to address the magnitude of these challenges. Private sector funding is the missing piece of the puzzle, and the \”Paris Pact for People and the Planet\” aims to address this gap.

Key Actions for Mobilizing Private Capital:

  • Optimize Climate Funds: Review global climate funds for resource efficiency and enhanced collaboration.
  • Revamp Financial Regulations: Simplify post-2008 financial regulations to encourage investments in developing countries.
  • Engage Credit-Rating Agencies: Include rating agencies in reform agendas to reflect innovative financing schemes and default data.
  • Enhance Green Finance Framework: Align financial systems with the Paris Agreement\’s objectives, fostering trust in private finance for low-carbon projects.
  • Address Debt Vulnerabilities: Address unsustainable debt trajectories in developing countries through debt suspension and climate-resilient clauses.

The Role of India:

  • India, with its economic size and capacity to build bridges within the international community, plays a pivotal role in these endeavours.
  • The Indo-French partnership reflects a force for advancing cohesion in a fragmented world, guided by the spirit of \”vasudhaiva kutumbakam\” – the world is one family.
  • To ensure the success of these initiatives, it is vital to collaborate with India\’s G20 Presidency and provide support to the G20 Brazilian presidency to bring this agenda to fruition. The global financial system must become more efficient and just to address pressing global challenges successfully.

Conclusion:

  • Unlocking private sector finance for the green transition is a collective responsibility. The Paris Pact for People and the Planet, with its focus on the private sector\’s crucial role, emphasizes that eradicating poverty and safeguarding the environment are mutually reinforcing goals.
  • As we embark on this transformative journey, India\’s role in bridging divides and fostering international cooperation is paramount, reflecting the timeless wisdom that the world is one family.

Urban Mobility India (UMI) Conference

Context:

  • Navi Mumbai, Ahmedabad, Lucknow, and Delhi bag awards for excellence in urban transport at the 15th Urban Mobility India (UMI) Conference and Expo.

About the Conference:

  • The 15th Urban Mobility India (UMI) Conference and Expo recently concluded in Kochi, shedding light on the evolving landscape of urban transportation in India.
  • The awards celebrated excellence in various aspects of urban mobility, from sustainable transport systems to intelligent transport infrastructure.
  • Ahmedabad was praised for its sustainable Bus Rapid Transit System (BRTS), while Navi Mumbai was acknowledged for its modernized and sustainable city bus service.
  • The Uttar Pradesh Metro Rail Corporation Ltd. was recognized for its multimodal integration in the Lucknow Metro Rail Project and awarded Chennai for the Best Intelligent Transport System (ITS).

The conference delved into the vision for urban transportation in India by 2047, which will require addressing the challenges brought by rapid urbanization.

  • Enhanced Connectivity: Better connectivity between smaller cities is essential. This would help disperse urbanization, reduce congestion in megacities, and facilitate economic development in regions beyond the major urban centres.
  • Net Zero Emission Transportation: The core of future urban mobility should prioritize net-zero carbon emission modes of transportation. This indicates a shift towards sustainable and environmentally friendly transport solutions.
  • Diversified Transport Modes: The discussion also centred around diversifying transportation modes, moving beyond electric vehicles. Creating metro rail networks tailored to Indian needs and manufacturing metro rail and railway coaches within the country were emphasized. This would not only boost the economy but also ensure a more relevant and cost-effective transportation infrastructure.

Conclusion:

  • The 15th UMI Conference highlighted India\’s progress in urban transportation, emphasizing the significance of sustainable and efficient solutions.
  • Despite challenges from rapid urbanization and environmental concerns, the event promotes better connectivity, sustainability, and diversified transport modes as vital for India\’s urban mobility.
  • It inspires collaboration among urban planners, policymakers, and stakeholders to shape a more sustainable future for Indian cities.

Household consumption propping up the economy

Context:

  • During the recent Monetary Policy Committee (MPC) meeting held in October 2023, controlling inflation and supporting household consumption to boost economic growth were the primary concerns.

Key highlights of the meeting:

  • Since the previous meeting in August, the risks to inflation have slightly increased. factors like a minor rainfall deficit and regional variations in food prices could lead to short-term fluctuations in inflation rather than a sustained increase.
  • On the positive side, consumer confidence has improved, as reflected in surveys conducted by the Reserve Bank of India (RBI). However, the meeting highlighted the importance of considering the household savings data released by the RBI in September.
  • This data indicated that consumers had taken on financial liabilities and reduced their savings to support their consumption. 
  • This willingness to spend at the expense of savings was crucial because it had been household consumption that had been propping up the economy despite challenges like fiscal consolidation, weak external demand, and sluggish capital investment. 
  • RBI Deputy Governor and MPC member reiterated the importance of controlling inflation and emphasized that without price stability, sustained economic growth would be unattainable, and the advantages of a growing Gross Domestic Product and increased employment opportunities would be eroded by the loss of purchasing power.
  • He noted that inflation expectations were not fully anchored and were clouded by uncertainty, as evidenced by the increased variability in households\’ median inflation expectations and the underperformance of business revenues compared to their profits.

Conclusion:

  • The MPC acknowledged the challenge of balancing inflation control and stimulating economic growth through household consumption. Despite rising inflation risks, improved consumer confidence, and reduced savings to support consumption, sustaining economic stability is a priority.
  • The RBI Deputy Governor emphasized the critical role of inflation control while managing uncertainty in inflation expectations. The task ahead is to maintain price stability while capitalizing on household consumption for economic prosperity.

Facts for Prelims:

Regional Rapid Transit System (RRTS)

  • The Regional Rapid Transit System (RRTS) is a high-speed, high-frequency rail-based transit system being developed in the National Capital Region (NCR) of India. 
  • The RRTS is designed to provide fast, reliable, and comfortable commuter services between major cities and towns in the NCR.
  • Delhi-Ghaziabad-Meerut RRTS, The corridor will be 82.15 km long and will have 25 stations. Trains on the corridor will operate at a maximum speed of 180 km/h, reducing the travel time between Delhi and Meerut to less than 60 minutes.
  • The RRTS is a major step forward in the development of a world-class public transportation system in the NCR. The system is expected to provide a safe, reliable, and affordable alternative to private vehicles, and to help reduce pollution and congestion in the region.

NAMASTE Scheme

  • NAMASTE is a Central Sector Scheme jointly undertaken by the Ministry of Housing and Urban Affairs and the Ministry of Social Justice & Empowerment (MoSJE).
  • The scheme aims to eradicate unsafe sewer and septic tank cleaning practices in India, focusing on the following objectives:
    • Zero fatalities in sanitation work.
    • Utilization of skilled workers for all sanitation tasks.
    • Elimination of direct contact with human faecal matter for sanitation workers.
    • Empowerment of sanitation workers through Self Help Groups (SHGs) and sanitation enterprises.
    • Strengthened supervisory and monitoring systems at the national, state, and Urban Local Body (ULB) levels to enforce and oversee safe sanitation work.
    • Increased awareness among sanitation service seekers about engaging registered and skilled sanitation workers.

Key Features

  • Extending health insurance benefits to identified SSWs and their families under the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY).
  • Supporting mechanization and enterprise development by providing funding and subsidies (capital + interest) to sanitation workers for procuring sanitation-related equipment.
  • Conducting extensive awareness campaigns, in collaboration with ULBs and the National Safai Karamcharis Finance & Development Corporation (NSKFDC), to disseminate information about NAMASTE interventions.
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