29-Feb-2024

#GS2 01. WTO Dispute Resolution Mechanism

India pressed for the revival of the World Trade Organization’s (WTO’s) appellate body, which has remained defunct for over four years after the US refused to approve its members. India also pitched for effective formalization of the on going in formal dispute settlement reform discussions among WTO members.

– Commerce Ministry

#GS2 – 02. India’s Social Sector Spending

India’s social sectors pending deficit could increase to ₹15 trillion by fiscal year 2028, below the Niti Aayog’s recommended spending threshold of 13% of gross domestic product (GDP).
India’s social sector spending in FY23 was around ₹23 trillion ($ 280 billion), accounting for 8.3% of GDP.

Inequalities persist in India despite strong GDP growth, a burgeoning middle-class, and a goal to become a $5-trillion economy by FY25. Despite robust growth over the last five years in social sectors pending, India still falls 4.7% short of Niti Aayog’s annual social funding target.

InFY23,member countries of the Organization of Economic Co-operation and Development (OECD), and Brazil, Russia, India, China, and South Africa (Brics) nations reported significantly higher spending rates of 24% and 11%, respectively (FY22 numbers).

However, India has not been able to keep pace with its OECD and Brics counterparts due to mode rate growth in corporate social responsibility (CSR) and donations from high-net-worth individuals (HNIs) or affluents, despite a growing donor pool.

– India Philanthropy Report

#GS3 03. India’s Retail Market

India’s retail market is poised for transformative growth, with projections indicating a leap to an impressive $ 2 trillion within the next decade, up from $820 billion in 2023.

Since 2010, when the market was valued at $250 billion, India’s retail sector has surged by over 200%,driven by a burgeoning middle class and the entry of major international fashion and food chains.

Over the next decade, the market is expected to grow 9-10%.

– Commentary in News

#GS3 — 04.Climate Risk Disclosure

Financial institutions, including banks and large non-bank financiers, should disclose climate change risks. Such disclosures should be integrated into the lender’s financial Results or statements on its website. While existing norms man date lenders to disclose material risks as part of their Pillar 3 disclosures, RBI suggested that the disclosures should comprise governance, strategy, risk management, and targets across four thematic areas.

climate change is one of the most significant risks confronting lenders today, and the proposals are part of the draft disclosure frame work on climate-related financial risks. The proposed norms will apply to scheduled commercial banks, excluding local area banks, payments banks, and regional Rural banks.

It would also apply to tier-IV primary urban co-operative banks, and all-India financial institutions such as Exim Bank, Nabard, and Sidbi, as well a stop and upper layer non-banking financial companies (NBFCs).

-RBI

Key Terms/Issues : Climate Risk Disclosure

#GS1 — 05. Importance of traditional sectors

It seems that over the past decade or so, a whole host of traditional sectors have been written off by investors. Newspapers, linear television, thermal power, anything related to the internal combustion engine, offline travel agents—the list is long.

However, in the real world, many of them are still ubiquitous. Take India’s newspaper circulation, for example. It has remained intact over the past decade. Over 75% of electricity consumed in India is still generated from thermal plants and over 99% of all vehicles on Indian roads still have internal combustion engines.

The price of uranium over the past year or so is a case in point. After the Fukushima accident in 2011, investors wrote off nuclear power. A decade of under-investment in uranium mining followed, accompanied by investor apathy. Geopolitical events of the last couple of years, however, have re-awakened the world to the inevitability of nuclear power as a source of clean energy. After languishing for years, the price of uranium has almost doubled in the last year.

Investors should evaluate the forgotten stars of yesteryear.

– Commentary in News

#GS2 06. India’s Consumption Patterns

Between 2011-12 and 2022-23, nominal average monthly per capita expenditure (MPCE) increased at a compounded annual growth rate (CAGR) of 9.2% and 8.5% in rural and urban India, respectively. The numbers stand at 9.4% and 8.6% if the imputed impact of social welfare schemes (excluding education and health) are considered. But in real terms, average MPCE increased by 3.1% and 3.3%, respectively, and only at 2.7% each if welfare benefits are included. In both nominal and real terms, these growth rates are lower than in the period between the two earlier surveys. Importantly, while a rural-urban per capita consumption chasm is reducing, the rural share in overall spending is declining.

There has been a notable change in the orientation of government expenditure that has buttressed its supply-side credentials through a scorching capex-spending programme with a CAGR of 31% over the years 2020-21 to 2023-24 and an interim budget allocation for 2024-25 that’s 17% higher than the previous year’s expenditure.

In a changed global context of muscular industrial policies, India’s policy toolkit too favours specific but sizeable sectoral interventions such as production-linked incentives, direct subsidies for semiconductors, etc, as part of the ‘Make in India’ and Atmanirbhar Bharat themes. One can argue that budget interventions have been sector-specific in the past too. However, they leaned more towards consumption earlier.