PM IAS FEB 23 EDITORIAL ANALYSIS

Editorial 1: India can become a biodiversity champion

Introduction:

• The sum and variation of our biological wealth, known as biodiversity, is essential to the future of this planet. The importance of our planet’s biodiversity was strongly articulated at the United Nations Biodiversity Conference (CBD) in Montreal, Canada. In December 2022, 188 country representatives adopted an agreement to “halt and reverse” biodiversity loss by conserving 30% of the world’s land and 30% of the world’s oceans by 2030, known as the 30×30 pledge.

India as a biodiversity champion

• India currently hosts 17% of the planet’s human population and 17% of the global area in biodiversity hotspots, placing it at the helm to guide the planet in becoming biodiversity champions.

1. In response to this call, the Union Budget 2023 mentioned “Green Growth” as one of the seven priorities or Saptarishis that will guide the country in its ‘Amrit kaal’ of next 25 years. The emphasis on green growth is welcome news for India’s biological wealth as the country is facing serious losses of natural assets such as soils, land, water, and biodiversity.
2. The National Mission for a Green India aka Green India Mission (GIM), one of the 8 missions under National Action Plan on Climate Change (NAPCC), aims to increase forest cover on degraded lands and protect existing forested lands.
3. Green Credit Programme has the objective to “incentivize environmentally sustainable and responsive actions by companies, individuals and local bodies”.
4. Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI) is particularly significant because of the extraordinary importance of mangroves and coastal ecosystems in mitigating climate change.
5. Prime Minister Programme for Restoration, Awareness, Nourishment, and Amelioration of Mother Earth (PM-PRANAM) for reducing inputs of synthetic fertilizers and pesticides is critical for sustaining our agriculture.
6. Amrit Dharohar scheme directly mentions our biological wealth and is expected to “encourage optimal use of wetlands, and enhance biodiversity, carbon stock, eco-tourism opportunities and income generation for local communities”.

The recent intervention by the Ministry of Environment, Forest and Climate Change to stop the draining of Haiderpur, a Ramsar wetland in Uttar Pradesh, to safeguard migratory waterfowl is encouraging. Indian government has notified as many as 75 Ramsar sites (wetlands of international importance) by end of 2022.

Way forward: Science-based biodiversity conservation:

• Science-based and inclusive monitoring programmes are critical not only for the success of these efforts but also for documentation and distillation of lessons learnt for replication, nationally as well as globally.

1. New missions and programmes should effectively use modern concepts of sustainability and valuation of ecosystems that consider ecological, cultural, and sociological aspects of our biological wealth.
2. With clear system boundaries, prioritisation of the benefits to ‘resource people’, and fund-services (rather than stock-flows) as the economic foundation for generating value has enormous potential for multiple sustainable bio-economies.
3. The future of our wetland ecosystems will depend on how we are able to sustain ecological flows through reduction in water use in key sectors such as agriculture by encouraging changes to less-water intensive crops such as millets.
4. Investments in water recycling in urban areas using a combination of grey and blue-green infrastructure is recommended.
5. Implementation of Green India Mission should focus on ecological restoration rather than tree plantation and choose sites where it can contribute to ecological connectivity in landscapes fragmented by linear infrastructure.
6. Site selection should also be carefully considered for the mangrove initiative with a greater emphasis on diversity of mangrove species with retention of the integrity of coastal mud-flats and salt pans themselves, as they too are important for biodiversity.
7. Local community involvement: Finally, each of these efforts must be inclusive of local and nomadic communities where these initiatives will be implemented. Traditional knowledge and practices of these communities should be integrated into the implementation plans.
8. Each programme should include significant educational and research funding to critically appraise and bring awareness to India’s biological wealth.

Conclusion:

• National Mission on Biodiversity and Human Wellbeing, already approved by the Prime Minister’s Science, Technology, and Innovation Advisory Council (PM-STIAC), is going to be launched by the government. This mission seeks to harness the power of interdisciplinary knowledge — for greening India and its economy, to restore and enrich our natural capital for the well-being of our people, and to position India as a global leader in applied biodiversity science.

---

Editorial 2: Vostro accounts and how they facilitate trade

Context:

• Last week, government officials informed that 20 Russian banks have opened Special Rupee Vostro Accounts (SRVA) with partner banks in India. All major domestic banks have listed their nodal officers to sort out issues faced by exporters under the arrangement.

About Vostro account

• A vostro account is an account that domestic banks hold for foreign banks in the former’s domestic currency, in this case, the rupee. Domestic banks use it to provide international banking services to their clients who have global banking needs.
• It is an integral offshoot of correspondent banking that entails a bank (or an intermediary) to facilitate wire transfer, conduct business transactions, accept deposits and gather documents on behalf of the other bank. It helps domestic banks gain wider access to foreign financial markets and serve international clients without having to be physically present abroad.

About SRVA arrangement

• The SRVA is an additional arrangement to the existing system that uses freely convertible currencies and works as a complimentary system. For perspective, freely convertible currencies refer to currencies permitted by rules and regulations of the concerned country to be converted to major reserve currencies (like U.S. dollar or pound sterling) and for which a fairly active market exists for dealings against major currencies. The existing systems thus require maintaining balances and position in such currencies.
• The framework entails three important components:

1. Invoicing entails that all exports and imports must be denominated and invoiced in INR.
2. Exchange rate between the currencies of the trading partner countries would be market-determined.
3. Final settlement also takes place in Indian National Rupee (INR).

• The authorised domestic dealer banks (those authorised to deal in foreign currencies) are required to open SRVA accounts for correspondent banks of the partner trading country.
• Domestic importers are required to make payment (in INR) into the SRVA account of the correspondent bank against the invoices for supply of goods or services from the overseas seller/supplier.
• Similarly, domestic exporters are to be paid the export proceeds (in INR) from the balances in the designated account of the correspondent bank of the partner country.
• All reporting of cross-border transactions are to be done in accordance with the extant guidelines under the Foreign Exchange Management Act (FEMA), 1999.

The eligibility criteria of banks

• Banks from partner countries are required to approach an authorised domestic dealer bank for opening the SRVA. The domestic bank would then seek approval from the apex banking regulator providing details of the arrangement.
• It would be the responsibility of the domestic banks to ensure that the correspondent bank is not from a country mentioned in the updated Financial Action Task Force (FATF) Public Statement on High Risk & Non-Co-operative jurisdictions. Domestic banks must also put forth for perusal, financial parameters pertaining to the corresponding bank.
• Authorised banks can open multiple SRV accounts for different banks from the same country. Further, balances in the account can be repatriated in freely convertible currency and/or currency of the beneficiary partner country depending on the underlying transaction, that is, for which the account was credited.

Way forward:

• The Economic Survey (2022-23) had argued that the framework could largely reduce the “net demand for forex, US dollar in particular, for the settlement of current account related trade flows”. It added that the framework would also reduce the need for holding foreign exchange reserves and dependence on foreign currencies, making the country less vulnerable to external shocks.
• Indian exporters could get advance payments in INR from overseas clients and in the long-term promote INR as an international currency once the rupee settlement mechanism gains traction, the survey argued.
• As per the Bureau for International Settlement, USD was the most dominant vehicle currency accounting for 88% of all trades. The INR accounted for 1.6%.

Conclusion:

• SRVA or opening of vostro accounts will provide international banking services to their clients who have global banking needs, and so is a welcome step.