Welcome to TARUN IAS – Your Daily News Analysis for UPSC/IAS Exam Preparation!
Stay informed with relevant current affairs from trusted sources like The Hindu, Indian Express, PIB, and more. Our daily news analysis includes Prelims Facts and Important Editorials presented in a concise and bulletised format. Get free daily updates up to 4 P.M. (except Sundays). Don’t miss the Daily Revision Quiz to reinforce your knowledge. Good luck!
Here are the topics covered for 3rd November 2023:
GS-3: Slowing Economic Momentum, Carbon Border Adjustment Mechanism (CBAM), Convergence of Wildlife Crime, Windfall tax
Facts for Prelims: QR Code, Unity Mall
Slowing Economic Momentum
- The latest economic data, which includes the official Index of Eight Core Industries for September and S&P Global’s Purchasing Managers’ Index (PMI) for the manufacturing sector in October, indicate a noticeable slowdown in economic momentum.
- The provisional figures released by the government for key infrastructure industries, such as cement, coal, steel, and electricity, reveal a significant drop in year-on-year production growth, with September seeing only an 8.1% increase compared to the 12.5% pace in August.
- This decline in growth affected all sectors except fertilizers, which experienced a slight increase in growth due to farmers stocking up on this agricultural input ahead of the rabi season.
- Additionally, heavy rainfall during the final month of the southwest monsoon season resulted in a 13% surplus in precipitation for September, contributing to reduced demand and output in cement, electricity, and steel.
- Sequentially, production contracted across all eight sectors, with an overall 4.8% decline from August.
- However, there is a silver lining in the data concerning coal production, as the year-on-year growth only slightly decreased to a robust 16.1% pace in September, down from August’s 17.9%.
- Independently, the more recent survey-based manufacturing PMI data for October supports concerns that the broader economic momentum may be slipping due to a lack of traction.
- The S&P Global India Manufacturing PMI, when seasonally adjusted, indicates that sectoral growth hit an eight-month low in October, primarily due to weakening demand, especially for consumer goods.
- New orders at factories grew at the slowest rate in a year, with international sales also losing steam. What’s even more concerning is that less than 4% of the approximately 400 surveyed companies reported adding staff, which has led to a slowdown in job creation in the manufacturing sector, the slowest since April.
- Input cost inflation has accelerated, but factory-gate inflation has increased at a considerably slower pace, suggesting that producers have been unable to pass on higher costs to consumers due to uncertain demand.
- Business confidence has dipped to a five-month low, with panellists citing rising inflation expectations as the primary factor expected to negatively impact demand and production growth over the next year.
- The advance estimates for lower kharif output, signalling reduced agricultural production, further add to concerns as rural incomes are likely to suffer.
- In conclusion, policymakers face the challenging task of addressing both slowing economic growth and persistent inflation, which threaten the stability and well-being of the Indian economy.
Carbon Border Adjustment Mechanism (CBAM)
- The European Union’s proposed Carbon Tax on imports, also known as the Carbon Border Adjustment Mechanism (CBAM), has been met with mixed reactions from around the world. Some countries, such as India, have called the tax “unfair” and “ill-conceived,” while others, such as France, have defended it as a necessary step to reduce global carbon emissions.
Carbon Border Adjustment Mechanism (CBAM)
- The CBAM is a proposed tax on imports of goods into the EU from countries with less stringent carbon pricing policies. The tax is designed to level the playing field between European producers and their foreign competitors, who may be able to produce goods at a lower cost due to lower carbon costs.
- The CBAM is expected to apply to a range of goods, including steel, cement, aluminium, fertilizers, electricity, and hydrogen.
- The tax would be calculated based on the embedded carbon emissions of the goods, which are the emissions that were produced during the manufacturing process.
- The CBAM is expected to have a significant impact on Indian exporters, as India is one of the world’s largest exporters of goods to the EU.
- The Indian government has estimated that the CBAM could cost Indian exporters up to $10 billion per year.
- The Indian government has criticized the CBAM as being unfair and discriminatory. The government argues that the tax is a protectionist measure that is designed to shield European producers from competition.
- The government has also argued that the tax will disproportionately burden developing countries, such as India, which are unable to afford high carbon prices.
- In response to the CBAM, the Indian government has announced plans to impose its own carbon tax on imports. The government has said that the tax will be designed to offset the impact of the CBAM on Indian exporters.
- The CBAM is a complex issue, and there is no easy answer to the question of whether it is a fair or effective policy.
- However, it is clear that the tax is a significant development in the global effort to reduce carbon emissions.
- The Indian government’s response to the CBAM is likely to have a significant impact on the outcome of the negotiations on the tax which is likely to have a major impact on global trade and the global economy.
Convergence of Wildlife Crime
- The Wildlife Justice Commission (WJC), a non-profit organization dedicated to combating organized crime, has recently published a report titled “Convergence of Wildlife Crime with Other Forms of Organised Crime: A 2023 Review.”
Key Highlights of the Report:
- This report serves as a follow-up to their initial report from 2021, which highlighted 12 case studies illustrating the links between wildlife trafficking and various other criminal activities, including human trafficking, fraud, migrant smuggling, illicit drugs, corruption, and money laundering.
- Notably, this new report introduces the environmental crime of illegal sand mining for the first time.
Convergence of Wildlife Crime and Organized Crime:
- The report uncovers significant connections between wildlife trafficking and various forms of organized crime. These connections include activities like protection rackets, extortion, murder, money laundering, illicit drugs, tax evasion, and corruption.
- Illegal Sand Mining: For the first time, the report identifies illegal sand mining as an environmental crime. Sand, a fundamental raw material and one of the most widely used resources globally in the production of concrete, asphalt, and glass, is exploited in massive quantities, but its extraction is often poorly regulated in many countries.
- Environmental Impact of Sand Mining: Indiscriminate sand mining has severe consequences, including erosion, which negatively affects communities and their livelihoods. It also impacts aquifers, storm surge protection, deltas, freshwater and marine fisheries, land use, and biodiversity.
- Involvement of Violent Sand Mafias: The report emphasizes that illegal sand mining operations are often organized and operated by violent sand mafias.
- It highlights instances of individuals, including journalists, activists, and government officials, who have been killed for opposing illegal sand mining, not only in India but also in countries like Indonesia, Kenya, Gambia, South Africa, and Mexico.
- In addition to the 12 case studies from 2021, the report introduces three new cases from Southeast Asia, Africa, and Central America. These cases illustrate various forms of convergence between wildlife trafficking and other organized crimes, such as corruption, poaching, money laundering, and drug trafficking.
- Organized crime activities involve actions conducted by members of a gang or syndicate with the aim of gaining financial or other advantages. Types of organized crime include activities such as racketeering, drug trafficking, human trafficking, money laundering, and cybercrime.
- Organized crime operates covertly and exploits weaknesses in law enforcement and regulations.
Legal Position in India on Organized Crime:
- India lacks a specific national law to address organized crime. Existing laws like the National Security Act, of 1980, and the Narcotic Drugs and Psychotropic Substances Act, of 1985, are insufficient as they primarily target individuals and not criminal groups or enterprises.
- Several states in India have enacted their own laws to combat organized crime, such as the Gujarat Control of Organised Crime Act, of 2015, the Karnataka Control of Organised Crime Act, 2000, and the Uttar Pradesh Control of Organised Crime Act, 2017.
- India is also a signatory to several international conventions and treaties, including the United Nations Convention against Transnational Organized Crime (UNTOC), the United Nations Convention against Corruption (UNCAC), and engagement with the United Nations Office On Drugs and Crime (UNODC).
- The WJC’s report sheds light on the alarming convergence between wildlife crime and organized crime, revealing how these illicit activities intertwine and pose significant challenges to law enforcement and environmental preservation.
- Moreover, the report’s recognition of illegal sand mining as an environmental crime underscores the urgent need to address this issue due to its far-reaching environmental impacts.
- It is imperative for governments, law enforcement agencies, and policymakers to take heed of these findings and consider effective strategies to combat the interconnected challenges of wildlife trafficking, organized crime, and environmental degradation.
A windfall tax is a tax imposed by the government on specific industries that experience unexpected and above-average profits, typically due to external factors beyond the control of the company. This tax is designed to capture some of the excess profits generated by these companies and redistribute them to the public.
Notable points regarding the windfall tax:
- The Indian government’s decision to hike the windfall tax on crude oil and cut the levy on diesel exports. This decision was made in response to the sharp rise in global oil prices, which has led to windfall profits for oil companies.
- The Indian government is using the windfall tax revenue to help offset the rising cost of fuel for consumers.
- The Indian government hiked the windfall tax on crude oil from Rs 6,700 per tonne to Rs 9,800 per tonne and cut the windfall tax on diesel exports from Rs 4 per litre to Rs 2 per litre.
- The Indian government has collected around Rs 40,000 crore in windfall tax revenue since July 2022.
Pros & Cons of Windfall tax:
- Windfall taxes are often controversial, with some arguing that they are unfair to businesses and that they can discourage investment. However, others argue that windfall taxes are a necessary tool to ensure that the public benefits from unexpected profits generated by private companies.
- In the case of India, the windfall tax on crude oil is particularly justified. The sharp rise in global oil prices has been caused by a number of factors beyond the control of Indian oil companies, such as the war in Ukraine and the sanctions imposed on Russia.
- As a result, Indian oil companies have made windfall profits, while Indian consumers have been forced to pay higher prices for fuel.
- The Indian government’s decision to cut the windfall tax on diesel exports is also a welcome step. This will help to make Indian diesel more competitive in the global market and boost India’s export earnings.
- The concept of a windfall tax serves as a mechanism for governments to address situations where specific industries experience extraordinary profits due to factors beyond their control. It is a way for the government to balance the scales and collect additional revenue when industries unexpectedly benefit from external events.
Fact for Prelims:
- A QR (Quick Response) code, is a type of two-dimensional matrix barcode that can store various types of data, such as alphanumeric text, website URLs, contact information, and more.
- QR codes work by using a pattern of black and white squares to encode data. When a QR code is scanned, the scanner decodes the pattern of squares to reveal the data that is stored in the code.
- It was invented in 1994 by the Japanese company Denso Wave, primarily for the purpose of tracking and labelling automobile parts.
- QR codes are used in a wide variety of applications, including Marketing and advertising, Product packaging, Payment processing, Event ticketing, and Access control.
- The Unity Mall, a government initiative, will promote economic development, offer recreational spaces, boost tourism, and celebrate India’s rich culture.
- It serves as a marketplace for local products, including One District One Products and GI Products.
- Each state will have a Unity Mall, ideally in the state capital.
- The purpose is to foster national unity, support Make in India and Atma Nirbhar Bharat, empower local artisans, create jobs, and aid economic growth.
- Each Unity Mall will feature a shop for each state to showcase their GI-tagged products and One District One Product offerings, thereby showcasing the unique offerings of every region.