13-Feb-2024

#GS3 –01. Farmer Unrest across the world

Farmers from several member-nations of the European Union (EU)—Belgium,Bulgaria, France, Germany, Hungary, Italy, Poland and Spain—invaded cities with their tractors,burning tyres, dumping manure, raiding super markets, blocking access to ports and highways and choking city centres. They are protesting subsidy cuts, high energy prices, cheap grain imports from Ukraine, beef imports from Latin America, growing clout of big agribusiness and climate policies limiting the use of chemical inputs. It is a profitability crisis—due to higher farming costs and low produce prices.

Farmers in India want better crop prices. Import of cheap edible oil and pulses have hit farmer earnings. Steps to keep food prices low,such as a ban on export of cereals, sugar and onion, lowered incomes over the past year.Farmers also bore the brunt of climate shocks like heat waves, dry spells,and excess rains which damaged crops and affected yields. So,a part from a law on MSP, farmers are demanding higher import duties, changes to the existing crop insurance scheme,better quality of seeds, a debt waiver and social security benefits like pension.
– Commentary in News
Key Terms/Issues : MSP, Agri Emissions

#GS2 — 02. Employment Data

The unemployment rate in urban areas fell to 6.5% in the three months to December, down from 7.2% in the same period of 2022. In urban areas, male LFPR increased to 74.1% (from 73.3%), and female LFPR to 25% (from 22.3%).
The worker-to-population ratio (WPR) in urban areas increased to 46.6% during the October-December 2023 quarter, up from 44.7% in the same period of the previous year. For males, WPR increased from 68.6% to 69.8% and for females from 20.2% to 22.9% .
–MoSPI
Key Terms/Issues : LFPR, WPR

#GS3–#GS2 03. Saudi for energy transition

Saudi Arabia’s U-turn on Its oil capacity expansion plans was because of the energy transition. It aims to reach net zero emissions by 2060, with state owned oil company Aramco targeting Net zero emissions from its own operations by 2050.
– Saudi Energy Minister
Note : Under cuts agreed by the Organization of the Petroleum Exporting Countries and allies Led by Russia, together known As OPEC+,Saudi oil production Is about 3 million bpd below its 12 million bpd maximum sustainable capacity,making it the world’s biggest holder of spare capacity.

Key Terms/Issues : OPEC+, Net Zero

#Essay – 04. Politics

The political problem of mankind is to combine three things: Economic efficiency, social justice and individual liberty.
–John Maynard Keynes
Key Terms/Issues : Economic Efficiency, Social Justice, Individual Liberty

#GS3 – 05. Investment in India

When the Government spends big on infrastructure, it crowds in private investment. Construction means more business for sectors like steel,cement, capital goods,etc, thus leading to a virtuous circle of economic activity.

A large chunk of funding is coming from internal resources,as the debt market and banking system don’t show sharp up trends. Foreign loans are being relied upon,but have a preponderance of finance companies, especially state-owned. And a substantial amount is being used for refinancing. There needs to be a major consumption push to get in more capital investment.
– BoB Chief Economist Madan Sabnavis
Key Terms/Issues : Crowding in

#GS3 –06. Mini Bank Crisis in USA

Three mid-size US banks suddenly failed around March 2023. The most prominent was Silicon Valley Bank (SVB), which became the second-largest bank failure in US history (after Washington Mutual in 2008). Roughly 90% of the deposits at SVB were uninsured, and uninsured deposits are prone to runs. Making matters worse,SVB had invested significant sums in long-term bonds, the market value of which fell as interest rates rose. When SVB sold some of these holdings to raise funds, the unrealized losses embedded in its bond portfolio started coming to light. A failed equity offering then triggered a classic bank run.

It is not good for capitalism when those who knowingly take risks—bankers and uninsured depositors, in this case— pay no price when a risk materializes. Despite sweeping banking reforms over the past 15 years, the authorities have once again shown that they are willing to bail out market players if enough of them have taken the same risk.“Too big to fail” was bad enough, but now we have “too many to fail.” The mini-crisis of March 2023 was much more than a footnote in banking history. We cannot afford to bury it.
-Ex-RBI Governor Raghuram Rajan

#GS2 –07. India-Vietnam, Tarrifs and Competitiveness

If India wants to build a robust computer and electronics manufacturing industry, it needs to shift focus, fast. Instead of concentrating on its domestic market,it should become regionally competitive and export-driven. That would mean recognizing that Vietnam, not China, is its biggest rival

Many countries, including the US,Japan, and Australia—all fellow members of the Quad security grouping—want the world’s most-populous nation to succeed for reasons that boil down to one simple hope: To build a viable alternative to China.Through this lens, all sides view a rising Indian industrial base as a win-win. New Delhi should take the advice to properly open its markets as being genuine rather than mere self-interest.
India stands out among peers in implementing higher import taxes, which motivate companies to set up in the country to supply local consumers, but also makes them less competitive in the export market. for more than 85% of the tariff categories within electronics,India’s duties are higher than each of China, Mexico, Thailand and Vietnam. The clearest signal the government can give to show foreign investors that India is ready for business is to eliminate tariffs.