9 PM Daily Current Affairs Brief – July 29th, 2023

Mains Oriented Articles

GS PAPER - 1

Mussoorie Misery

Source– The post is based on the article “Mussoorie Misery” published in “The Times of India” on 29th July 2023.

Syllabus: GS1- Geography

Relevance: Issues related to Himalayan ecosystem

News- NGT has ordered the Dhami government to follow 19 recommendations for saving Mussoorie from destruction by construction and tourism.

What are some of the recommendations of NGT?

Regulate the number of tourists and charge them.

Use these funds for waste management and for monitoring various construction activities.

What are the issues faced by tourist places in the Himalayas?

In 2001, a study revealed that Mussoorie had reached its carrying capacity. Despite this finding, tourist arrivals surged by 255% between 2000 and 2019.

To accommodate the rising number of tourists, mountains are continuously being blasted without adequate consideration of the impact on hydrology.

This approach does not benefit tourists. It makes their journeys unappealing and unsafe. Tourists are exposed to polluted air, traffic jams, and the risk of life-threatening landslides.

The warnings issued by the Mishra committee in 1976 regarding the vulnerabilities in the local areas have not been heeded.

For more readings on MIshra committee– https://timesofindia.indiatimes.com/city/dehradun/joshimath-sinking-panel-had-warned-50-years-ago/articleshow/96608800.cms

GS PAPER - 2

Manipur internet shutdowns: Forgetting the lessons from Kashmir

Source: The post is based on the article “Manipur internet shutdowns: Forgetting the lessons from Kashmir” published in “The Indian express” on 29th July 2023.

Syllabus: GS2- fundamental rights & Important aspects of governance, transparency and accountability,

News: In this article author discusses how the Manipur government’s internet shutdown harms citizens by limiting their fundamental rights to expression and information, deepening the digital divide, and causing economic losses, and criticizes India’s frequent use of internet shutdowns, comparing it to past incidents like in Jammu and Kashmir.

What are the impacts of internet shutdown in Manipur?

Limited Access: Over 90% of users, especially in rural areas, rely on mobile internet which remains suspended.

Digital Divide: The majority can’t access the internet, while a small urban section can, deepening inequalities.

Economic Losses: Past shutdowns in India caused significant economic losses, e.g., Kashmir’s 2019 blockade resulted in over five lakh unemployed people.

Decreased Information Flow: People can’t share or verify information due to the social media ban.

Surveillance Concerns: Internet access is tied to MAC Address binding, static IPs, and a ban on VPNs, enabling greater monitoring.

Violation of Rights: The restrictions infringe on rights to free expression, freedom of assembly, and privacy.

Economic Costs: Internet shutdowns lead to financial damage. In 2023, estimated losses reached Rs 2,091 crore in India.

Informal Sector Impact: The unorganized sector, often unreported, is hit hard, affecting sections like women more.

What is the judicial view on internet shutdown?

Fundamental Rights: The Supreme Court recognized the right to free expression and privacy through the internet as fundamental.

Limitations: Rights can only be limited in a reasonable and proportionate manner.

Anuradha Bhasin Judgment: Shutdowns violate fundamental rights. They must be proportional, reasonable, necessary, and the least restrictive.

No Indefinite Ban: Internet shutdowns can never be indefinite.

Court Intervention: The gradual lifting of suspensions in Jammu and Kashmir came after a court intervention.

State Accountability: Shutdowns often imposed by state authorities must be accountable.

A new national foundation and the ease of doing research

Source: The post is based on the article “A new national foundation and the ease of doing research” published in “The Indian express” on 29th July 2023.

Syllabus: GS2- Issues relating to development and management of Social Sector/Services relating to Education.

News: Recently, the Union Cabinet approved a bill that paves the way for the establishment of the National Research Foundation (NRF). The foundation will have a corpus of Rs 50,000 crore and will be presented in Parliament during the Monsoon Session.

About National Research Foundation (NRF):

The NRF is a proposed initiative by the Indian government to enhance research and development in the country.

What are the areas of concerned?

Ease of Research: India should simplify research processes. There is a need to reduce bureaucratic restrictions and unfavorable financial policies.

Functioning and Structure: It’s unclear how the board and the executive council will handle the vast responsibilities of the NRF.

Financial Autonomy: The NRF needs flexibility in managing its finances.

Coordination: Ensuring synergy among existing research funding institutions is crucial.

Implementation: The challenge of translating the broad objectives of the NRF into actionable results.

Prolific In Pacific: Small islands, big powers & an Indo-French option

Source: The post is based on the article “Prolific In Pacific: Small islands, big powers & an Indo-French option” published in “Times of India” on 29th July 2023.

Syllabus: GS2- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

News: The author discusses how France’s strong presence in the Indo-Pacific can partner with India’s interests and ties in the region to offer an alternative to China’s influence, benefiting development, security, and regional balance.

About French territories within the Indo-Pacific

France has the second-largest maritime domain in the world.

Seven of its 13 overseas territories are in the Indo-Pacific.

An example is Clipperton Island in the north Pacific.

This island gives France an Exclusive Economic Zone as big as Sweden.

1.6 million French citizens live in these Indo-Pacific territories.

France’s presence in the region offers a different perspective on the China threat.

How will India benefit from France’s presence in the Indo-Pacific?

France’s presence in the Indo-Pacific can help balance China’s growing influence.

France and India’s similar approach towards the region synchronizes well for collaborations.

India can enhance its engagement with Pacific islands without forcing them to choose sides.

France’s historical links with the Pacific islands and Indian diaspora in nations like Fiji can be leveraged.

Together, they can offer an alternative to China’s development practices, especially in infrastructure, healthcare, and IT.

Strong India-France defence relations could bolster regional security.

The two countries could jointly respond to security threats if needed.

Needless move – On ED Director Tenure Extension

Source– The post is based on the article “Needless move” published in “The Hindu” on 29th July 2023.

Syllabus: GS2- Statutory, Regulatory bodies

Relevance: Issues related to external trade

News- The SC in his order allowed Sanjay Kumar Mishra, head of the Enforcement Directorate, to continue till September 15 at the Centre’s request.

Court has invoked “larger national interest” to allow him to go on up to September 15.

What are the arguments presented by the central government to extend the tenure of ED director?

As per the government, his leadership is necessary for the country to demonstrate that its framework is effective to combat money laundering and terrorist financing during a review by the FATF. 

FATF uses a mutual evaluation system. It is currently conducting a comprehensive assessment of India’s measures. This review is expected to continue until June 2024.

The extension is required to ensure that the country’s agencies and institutions are adequately prepared for an on-site visit by an FATF delegation.

Why is government reasoning flawed?

The Enforcement Directorate may play a crucial role in preparing the country’s presentation for countering money laundering. But, it is hard to believe that the entire process relies solely on one individual.

Additionally, multiple agencies and authorities are involved in formulating the country’s policies on money laundering and terrorism financing.

The claim that not extending Mr. Mishra’s tenure might lead to a “negative image” is difficult to comprehend. India’s reputation will be evaluated based on its laws, systems, and adherence to global standards, not solely on who prepared the report.

Turning the tide on brain drain

Source: The post is based on an article “Turning the tide on brain drain” published in Business Standard on 29^th July 2023.

Syllabus: GS 2 – Indian Diaspora

Relevance: reasons behind Indian citizens migrating abroad

News: The article discusses the causes behind Indians going overseas and the actions required to retain them in India.

What are the key highlights of the data regarding people moving abroad?

Around 32 million Indians prefer to live in other countries. Around 18 million have gained citizenship abroad, while 14 million are non-resident Indians (NRIs).

Over half of every batch of Indian Institute of Technology (IIT) graduates end up overseas. Even large corporations are establishing themselves abroad.

What are the concerns with this migration?

The 32 million people, which is roughly 2.2 per cent of India’s population, represent a significant opportunity cost for the country.

Their remittances have contributed to a growth in the GDP of India. However, if they lived and worked here, they might have added several multiples of that to GDP.

There are also young people looking to move abroad every year, whose skills and earning capacity will be lost if the brain drain continues.

What are the reasons for migration?

Lack of Opportunity: There is a lack of opportunity in India for highly educated people, businesses, research and for professionals.

Weakness of Indian passport: Obtaining visas for First World countries is a challenging process for Indian citizens. Hence, there has been a rush for golden visas and for 10-year US visas as alternative options.

Moreover, Indian passports also leads to difficulties for Indian passport holders in accessing various countries.

Tax and License Regime: A lot of requirements need to be fulfilled before setting up a business in India. Similarly, managing tax filing and accounting are also challenging in India.

Further, contractual issues in India are known for their slow resolution, and cross-border transactions add to the complexities.

Must Read: What are the implications of Emigration of India’s brightest youth?

What measures can be adopted to control migration?

First, India currently has a low ratio of domestic investment in research, both from government budgets and private institutions

Therefore, there is a need to promote research institutions and high-tech businesses in the country to create opportunities for highly educated individuals in India. There is also a need for relaxing investment rules and providing tax breaks for R&D initiatives.

Second, simplifying tax processes and paperwork in India would benefit not only new entrepreneurs but also existing businesses already operating within India.

Charting the path for the Sixteenth Finance Commission

Source– The post is based on the article “Charting the path for the Sixteenth Finance Commission” published in the “The Hindu” on 29th July 2023.

Syllabus: GS2- Constitutional bodies. GS3- Government budgeting

Relevance: Finance Commission

News- The Sixteenth Finance Commission is due to be set up shortly.

What are the issues that should be taken into consideration by the 16th Finance Commission?

Share of states-

The Fourteenth Finance Commission increased the share of States in the divisible pool of central taxes from 32% to 42%. When the number of States in India was reduced to 28, this share was revised to 41%.

The Center was able to handle this situation due to the withdrawal of Planning Commission grants following the abolition of the Planning Commission.

Centre is facing fiscal imbalances. So, there is no strong case for proposing any additional increase in the States’ share of central taxes.

Role of non-shareable cesses and surcharges-

Between the fiscal years 2020-21 and 2023-24, the effective share of States in the Center’s gross tax revenues averaged approximately 31%. It was notably lower than the previous share of nearly 35% observed during 2015-16 to 2019-20.

This decline was primarily attributed to a significant increase in the share of cesses and surcharges.

It increased to 18.5% of the Center’s Gross Tax Revenues during 2020-21 to 2023-24 from 12.8% during 2015-16 to 2019-20. During the period of the Thirteenth Finance Commission, this share was merely 9.6%.

One possible recommendation could be imposing an upper limit of 10% for the share of cesses and surcharges as a percentage of the Center’s GTR.

If this proportion exceeds 10%, the share of States should be increased accordingly. The Sixteenth Finance Commission, using the most recent data, could refine this formula to make it more effective.

Per capita income criteria– The share of individual States in the Centre’s divisible pool of taxes is determined by a set of indicators. Per capita income is one of the criteria.

Per capita income is the distance of a State’s per capita income from a benchmark. It is usually determined by average per capita income of the top three States.

This criterion ensures relatively larger shares for relatively lower income States. At present, it has the highest weight of 45%. Many of the richer States want a lower weight for this criterion.

It is essential to give proper consideration to the requirements of the lower-income States. These States will have a greater contribution to India’s ‘demographic dividend’ in the future.

One approach could involve maintaining the weight of the distance criterion at its current level or even reducing it to 40%.

However, to address the needs of the economically disadvantaged States, it might be beneficial to make some upward adjustments in the resources allocated to them through grants.

Equalisation provision– It is essential to give priority to equalising the provision of education and health services in the overall framework of resource transfers.

Resource allocation to individual States could be guided by the equalisation principle, by utilising a limited number of criteria such as population, area, and distance. This approach could be complemented by an appropriate system of grants.

The equalisation principle aligns with both equity and efficiency and has been successfully implemented in federations like Canada and Australia.

Debt burden of centre and states–

Combined debt-GDP ratio of central and State governments had peaked at 89.8% in 2020-21. Centre’s debt-GDP ratio is 58.7%, and it is 31%.for states.

These numbers are showing improvements. But, still above the corresponding FRBM norms of 40% and 20%. The 2018 amendment to the Centre’s FRBM needs to be re-examined.

A few State governments have relatively larger debt and fiscal deficit numbers relative to their GSDPs.

There is proliferation of subsidies and the re-introduction of the old pension scheme in States However, the financing sources for these subsidies and the resulting fiscal burdens are not clearly identified.

What reforms can be suggested by the 16th Finance Commission?

A loan council can be set up. It was recommended by the Twelfth Finance Commission. It should keep a watch on the loan magnitudes and profiles of the central and State governments.

It needs to thoroughly investigate the issue of non-merit subsidies. The Finance Commission should take a firm stance on States adhering to fiscal deficit limits.

It can offer incentives to States that maintain fiscal discipline and penalties for those exceeding the fiscal deficit limits.

GS PAPER - 3

Express View on Centre’s grain policy: Rice and fall

Source: The post is based on the article “Express View on Centre’s grain policy: Rice and fall” published in “The Indian express” on 29th July 2023.

Syllabus: GS3- Issues of buffer stocks and food security;

News: The Indian government is concerned about potential grain shortages due to possible El Niño effects on crops. It is leading them to reduce grain distribution to ensure enough for public welfare, stop exports, and halt sales to distilleries, especially with upcoming 2024 elections.

What are the government initiatives to counter potential grain shortages in India?

Restored PDS Quota: The government has returned the Public Distribution System (PDS) grain quota to its original 5 kg/person/month.

Banned Exports: Between May 2022 and the present month, exports of wheat and all non-parboiled non-basmati rice have been prohibited.

Stopped Rice Sales to Distilleries: The Food Corporation of India (FCI) has ceased selling rice to distilleries for ethanol production.

Discontinued OMSS Supply: Over a month ago, the government stopped supplying FCI grain to states under the Open Market Sale Scheme (OMSS).

Stocks in Public Warehouses: The government is concerned about the grain stocks in public warehouses.

Priority to PDS: The government is focusing on ensuring enough stocks for the PDS to support poor and vulnerable families.

Elections in 2024: With upcoming national elections, the government is being cautious about grain availability.

Semicon India 2023: How government’s support and will built the semiconductor industry

Source: The post is based on the article “Semicon India 2023: How government’s support and will built the semiconductor industry” published in “The Indian express” on 29th July 2023.

Syllabus: GS3- Effects of liberalisation on the economy, changes in industrial policy and their effects on industrial growth.

News: In this article author discusses India’s past missed opportunities in the semiconductor industry and highlights the current government’s efforts, through the India Semiconductor Mission (ISM), to develop a domestic semiconductor ecosystem, attract global investments, and position India as a leading player in the global semiconductor market.

What are the government’s initiatives to support the domestic semiconductor ecosystem?

India Semiconductor Mission (ISM): Launched in December 2021 to boost the domestic industry.

Fiscal Support: Committed unprecedented fiscal incentives to attract global interest.

Regulatory Assistance: Offering regulatory support to facilitate industry growth.

Design Linked Incentive (DLI): Supporting startups through incentives tied to semiconductor design.

Semiconductor Complex Limited (SCL) Revival: Approved modernization of SCL in Chandigarh, turning it into a chip manufacturing unit.

International Collaborations: Signed agreements with the US and Japan for cooperation on semiconductor development, manufacturing, and research.

Micron’s Proposal Approval: Sanctioned Micron’s proposal to set up semiconductor packaging and testing in India.

Fiscal Incentives: Providing competitive fiscal benefits to rival major global economies.

Strengthening the Value Chain: Impetus given across the value chain, from design to final assembly and testing.

Strategic Vision: Demonstrating clear understanding and commitment to the semiconductor industry’s importance.

Why does India need a robust domestic semiconductor ecosystem?

Economic Boost: Enhances economic growth and job creation.

Reduced Dependence: Decreases reliance on semiconductor imports.

Resilience: Protects domestic industries from global supply chain disruptions.

National Security: Safeguards “digital sovereignty” in today’s digital age.

Global Attraction: Draws investments from leading semiconductor companies worldwide.

Strategic Positioning: Places India as a leader in the global semiconductor value chain.

Policy Leverage: Allows India to set its terms in global trade and tech agreements.

Innovation Drive: Encourages research, design, and talent development in tech fields.

Sustainability: Opportunities to pioneer green technologies in manufacturing.

Competitive Edge: India can compete with major economies by offering favorable incentives.

Catalyst for Other Sectors: Powers growth in electronics, computing, and other industries.

Why did India miss the previous opportunities in the field of semiconductors?

The Fairchild Semiconductor fab opportunity was missed in the 60s.

Bureaucratic hurdles deterred global semiconductor companies in the mid-2000s.

India didn’t secure Intel’s expansion in the late 2000s, which went to Vietnam.

Bharat Electronics Ltd (BEL) couldn’t achieve the needed volume or state-of-the-art technology.

India’s VLSI plant in Chandigarh, which began before Taiwan’s industry, shut down after a 1989 fire and wasn’t promptly reopened.

Lack of strategic vision and consistent policy hindered progress.

What should be done?

Consistent Policy Interventions: Address past policy failures and create a clear, strategic vision.

Enhance Infrastructure: Modernize facilities like the Semiconductor Complex Limited in Chandigarh.

Secure Global Collaborations: Deepen ties with countries like the US and Japan for tech cooperation.

Drive Investment: Approve proposals like Micron’s to attract more global semiconductor businesses.

Promote Green Manufacturing: sustainable semiconductor manufacturing achieved through innovations and investments in green technologies, efficient water and resource usage, reduced factory emissions, and contributing to communities and society.

Support Startups: Extend support through initiatives like the Design Linked Incentive (DLI) scheme.

Strengthen the Entire Value Chain: From semiconductor design to final assembly and testing.

Utilize Fiscal Incentives: Provide competitive incentives to attract global and domestic investors.

Engage Global Giants: Show India’s commitment and clarity to entice industry-leading semiconductor companies.

Mercury rising

Source– The post is based on the article “Mercury rising” published in  “The Hindu” on 29th July 2023.

Syllabus: GS3- Environment

Relevance: Issues related to climate change

News- The United Nations Secretary-General, António Guterres, this week reiterated the consequences of the climate catastrophe that has spread globally. The earth had passed from a warming phase into an “era of global boiling”.

How climate change is leading to extreme weather patterns?

July is set to be the hottest month in the last 12,000 years.  As per Scientists from the WMO and the European Commission’s Copernicus Climate Change Service, conditions in July were “rather remarkable and unprecedented”.

Average July temperature has been 16.95° Celsius. It is 0.2° C warmer than in July 2019.

Ocean temperatures are increasing and the Central Equatorial Pacific Ocean is transitioning from La Niña to El Niño conditions. So, it was widely anticipated that temperatures would be warmer than in the last three years.

But, the distribution and impact of the recorded 16.95°C temperature was unexpected. It resulted in extreme weather events such as northwest China experiencing temperatures as high as 52°C, wildfires breaking out in Greece.

The unusually heavy rains in north and western India were influenced by the warm air increasing the atmosphere’s capacity to hold moisture. This led to intense, short torrential bursts of rain, floods and significant devastation.

How can climate change be tackled effectively?

As per UN secretary General, there is a need for dramatic, immediate climate action.

The world’s largest economies should adopt more ambitious emission cuts.

How will these events impact India?

There will be greater pressure on India for greenhouse gas mitigation responsibilities. This could mean advancing its net zero commitments from 2070 to 2050, and generating fossil-free electricity by 2040.

How World Bank group can scale climate finance

Source: The post is based on the article “How World Bank group can scale climate finance” published in Business Standard on 29^th July 2023.

Syllabus: GS 3 – Environment

Relevance: measures needed by World Bank in scaling climate finance.

News: The World Bank has faced criticism for its insufficient efforts in addressing climate change. However, transforming the Bank into the world’s leading institution for climate-related initiatives presents challenges.

What are the challenges present?

The Bank’s governance is heavily influenced by the US and Europe, and the main shareholders are reluctant to offer significant new contributions to increase the Bank’s capital.

What measures can be taken by the Bank to tackle global carbon emission?

There is a need to focus on the largest emitters because the top 35 global emitters account for around 90% of yearly greenhouse gas emissions.

Hence, the World Bank needs to raise more capital from its current borrowers who are among the top global polluters, to address mitigation challenges.

However, this shift in focus could be seen as diverting from the Bank’s primary mission of poverty eradication.

How can the World Bank mobilize more capital for climate related activities as well as for poverty eradication?

The Bank needs increased contributions from Global North to the International Development Association (IDA) for providing adaptation finance to the poorest nations.

The Bank should simultaneously focus on supporting 20 of its current borrowing countries (excluding China and Russia), which are among the world’s top 35 emitters.

These countries require additional funding to facilitate their respective energy transitions.

However, one of the barriers to achieving the climate agenda with the bank is the International Bank for Reconstruction and Development’s (IBRD) rating-agency regulations on leverage levels.

Therefore, implementing a shift from loans to guarantees could have served the purpose; however, it has also been hindered by staff resistance.

Hence, IBRD may not be the best organization to scale up the Bank’s climate ambition. Two other agencies of the Bank are better suited for the task.

Which agencies are suited for the Bank’s climate agenda?

Multilateral Investment Guarantee Agency (MIGA): It makes much more economical use of shareholders’ capital compared to IBRD. For instance, it makes good use of shareholders’ money by underwriting $17 in guarantees for every $1 in equity.

It could stretch its capital even further by employing credit enhancement and partial guarantee products and being more open to risk.

Hence, the Bank should focus on increasing MIGA’s risk and expanding its capitalization instead of prioritizing IBRD to mobilize climate finance.

International Finance Corporation (IFC): It could raise third-party equity financing at scale without straining its own balance sheet by expanding its asset management business.

IFC Asset Management Company manages 13 funds with modest assets of only $10 billion. It has the potential to scale up this business to handle hundreds of billions of dollars.

IFC has the capability to raise third-party equity capital from global insurance companies, pension funds, and sovereign funds. It can efficiently manage a large pool of assets with modest contributions from its own balance sheet.

Thus, IFC should strive to become a leading equity fund manager and fund-of-funds manager, specifically for climate mitigation investments in emerging markets.

Prelims Oriented Articles (Factly)

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