UPSC MAY 03 IMPORTANT NEWS ANALYSIS

Economics of India’s Population Growth

In News

• The annual State of World Population report 2023 by the UN Population Fund (UNFPA) stated that India’s population is expected to surpass that of China by the middle of this year at the latest.

History of India’s population

Period	Population estimate	Remarks
1871	255 million	1st Census Data
1947	343 million	At the time of Independence
2023	1426 million	India becomes most populous

Population vs Economic development

• Starting point of this debate is Thomas Malthus’ argument in 1798.
  • Malthusianism is the theory that population growth is potentially exponential while the growth of the food supply or other resources is linear, which eventually reduces living standards to the point of triggering a population decline. This event, called a Malthusian catastrophe.
  • Since then, however, the world population has grown eight times to reach 8 billion.
• During the 1950s and 60s, “the general view of economists was that high birth rates and rapid population growth in poor countries would divert scarce capital away from savings and investment, thereby placing a drag on economic development.
• However, between the 1970s and 1990s, several studies “failed to detect a robust relationship between national population growth rates and per capita income growth”
• The global view reverted in the 1990s when researchers again found a clear “negative association between population growth and economic performance”.
  • During this time, World was also introduced to the concept of “demographic dividend” i.e., high economic growth when there is a bulge in the working-age population (roughly speaking, population between 15 and 65 years).

In Indian Context

• Opportunities for India:
  • Theory of demographic transition suggests that population growth is linked to overall levels of economic development as more people are able to produce more goods.
  • The rising young population (>66 % population in 15-59 age) provides India with a great opportunity for growth, peppered with the possibility of path-breaking innovation.
  • India’s population heterogeneity ensures that this window of demographic dividend becomes available at different times in different States.
  • Farming and industry will be able to benefit from economies of scale.
  • It will lead to higher tax revenues which can be spent on public goods, such as health care and environmental projects.
  • The size of the population is intimately connected to the global power dynamics shaping the relationship between nations and regions.
• Issues with population:
  • The increase in the working-age population may lead to rising unemployment, fueling economic and social risks. 
  • High population growth also affects the faster depletion of resources.
  • The 65+ category is going to grow quite fast i.e., increase from 8.6% now to 13% by 2030.
  • If India is unable to reap demographic dividend, it will become a demographic disaster.

Lessons for India  

• India’s fertility rate (the number of children per woman) is already below the replacement rate of 2.1 but the population will peak by 2064.
• The bigger challenge now is to figure out how to best use India’s demographic dividend because despite China growing at remarkably high over the past four decades it may become old before becoming rich.
• Countries like Singapore, Taiwan and South Korea have already shown us how demographic dividend can be reaped to achieve incredible economic growth by:
  • Increasing women’s participation in the workforce. As of 2022,29.4 % of women were working or looking for work, down from 34.1% in 2003-04.
  • Investing more in children and adolescents, particularly in nutrition and learning during early childhood.
  • A greater focus needs to be on transitioning from secondary education to universal skilling and entrepreneurship, as done in South Korea.
  • Health investments – Evidence suggests that better health facilitates improved economic production.
  • Making reproductive healthcare services accessible on a rights-based approach. We need to provide universal access to high-quality primary healthcare.
  • India needs to address the diversity between States. Southern States, which are advanced in demographic transition, already have a higher percentage of older people.
  • A new federal approach to governance reforms for demographic dividend will need to be put in place for policy coordination between States on various emerging population issues such as migration, ageing, skilling, female workforce participation and urbanization.

Conclusion

• India has a window of opportunity to reap the benefits of demographic dividend until 2040s otherwise it could become demographic liability or demographic disaster.

Source: TH

UPSC MAY 03 IMPORTANT NEWS ANALYSIS

India hands over two naval vessels for Maldives

In News

• Continuing India’s capacity-building assistance in the Indian Ocean Region (IOR), the Defence Minister recently handed over a Fast Patrol Vessel (FPV) and a Landing Craft Assault ship to the Maldives National Defence Forces (MNDF).
  • The FPV, capable of coastal and offshore surveillance at high speeds, was commissioned as MNDF Coast Guard ship Huravee.

About

• Challenges & cooperation:
  • The Defence Minister called for collaborative efforts to deal with common challenges faced by IOR, including climate change and sustainable exploitation of maritime resources. 
  • He also called for enhanced cooperation among nations in the IOR to address the common challenges faced by the region and identified sustainable exploitation of resources and climate change as the most important common challenges faced by the region.
• Significance:
  • In recent years, India has significantly scaled up assistance towards capacity building and capability enhancement for Indian Ocean littoral states and countries in the IOR.
  • The handing of the two platforms as a symbol of the shared commitment of India and the Maldives towards peace and security in the IOR. 

Significance of Indian Ocean region

• Trade & commerce:
  • The Indian Ocean region enjoys a privileged location at the crossroads of global trade, connecting the major engines of the international economy in the Northern Atlantic and Asia-Pacific. 
• Natural resources:
  • Indian Ocean is rich in natural resources. 
  • Fishing:
    • Forty per cent of the world’s offshore oil production takes place in the Indian Ocean basin. Fishing in the Indian Ocean now accounts for almost 15 per cent of the world’s total.
  • Mineral resources:
    • Mineral resources are equally important, with nodules containing nickel, cobalt, and iron, and massive sulphide deposits of manganese, copper, iron, zinc, silver, and gold present in sizeable quantities on the sea bed. I
    • ndian Ocean coastal sediments are also important sources of titanium, zirconium, tin, zinc, and copper. 
    • Additionally, various rare earth elements are present, even if their extraction is not always commercially feasible.
• Strategic importance for India:
  • The Indian Ocean holds particular importance for India, as the littoral’s most populous country. 
  • Indeed, for the rest of the Ocean’s littoral states, and even those outside the region, India’s leadership role will be important in determining the strategic future. 

India – Maldives Relations

• Historical:
  • India and Maldives share ethnic, linguistic, cultural, religious and commercial links.
  • India was among the first to recognize the Maldives after its independence in 1965 and later established its mission at Male in 1972.
  • They officially and amicably decided their maritime boundary in 1976.
• Political Relations:
  • Both nations are founding members of the South Asian Association for Regional Cooperation (SAARC), the South Asian Economic Union and signatories to the South Asia Free Trade Agreement. 
  • They have consistently supported each other in multilateral areas such as the UN, the Commonwealth, the NAM, and the SAARC.
  • The Memorandums of Understanding (Mou) signed between both the countries covers areas such as hydrography, health, passenger and cargo services by sea, capacity building in customs and civil service training.
• Strategic Importance:
  • The Maldives holds strategic importance for India under the government’s ‘Neighbourhood First’ policy due to its location in the Indian Ocean. 
  • In the Indian Ocean, the Maldives archipelago comprising 1,200 coral islands lies next to key shipping lanes which ensure uninterrupted energy supplies to countries like China, Japan, and India.
  • Both nations are working together to counter China’s presence in the Indian Ocean Region(IOR). 
• Trade and Economy:
  • India and Maldives signed a trade agreement in 1981, which provides for the export of essential commodities.
  • Under the bilateral agreement, India provides essential food items like rice, wheat flour, sugar, dal, onion, potato and eggs and construction material such as sand and stone aggregates to the Maldives on favourable terms.
  • India and Maldives signed the $800 million Line of Credit Agreement in March 2019, for assisting the Maldives to achieve sustainable social and economic development. 
  • India has a positive Balance of Trade with the Maldives.
• Development Assistance Programme:
  • India has helped the Maldives in many diverse areas to bolster the development of the Maldives e.g.
    • Indira Gandhi Memorial Hospital, Maldives Institute of Technical Education (now called the Maldives Polytechnic), 
    • India-Maldives Faculty of Hospitality & Tourism Studies, 
    • Technology Adoption Programme in Education Sector in the Maldives,  
    • A port on Gulhifalhu, airport redevelopment at Hanimaadhoo, and a hospital and a cricket stadium in Hulhumale etc.
• India’s crucial help to the Maldives:
  • Operation Cactus: 
    • It was an attempt by a group of Maldivians led by Abdullah Luthufi and assisted by armed mercenaries of a Tamil secessionist organisation from Sri Lanka, the People’s Liberation Organisation of Tamil Eelam (PLOTE), to overthrow the government in the island republic of Maldives on 3rd November 1988. 
    • The coup failed due to the intervention of the Indian Army, whose military operations efforts were code-named Operation Cactus.
  • The Maldives urged India for help following the collapse of the island’s only water treatment plant, India helped by sending its heavy-lift transporters like C-17 Globemaster III, II-76 carrying bottled water.
  • Operation Neer: 
    • It was initiated by the Indian government to help the Maldives after a major fire broke out at the Male Water and Sewerage Company.
• Diaspora:
  • There are 25,000 Indian nationals living in the Maldives (the second largest expatriate community).
  • The proximity of location and improvements in air connectivity in recent years has led to a very substantial increase in the number of Indians visiting the Maldives for tourism and business. 
  • India is a preferred destination for Maldivians for education, medical treatment, recreation, and business.
• Defence:
  • A technical agreement on sharing ‘White Shipping Information between the Indian Navy and the Maldives National Defence Force was also signed, enabling the exchange of prior information on the movement of commercial, non-military vessels.
  • India has adopted a very flexible and accommodating approach in meeting Maldivian requirements of defence training and equipment.
  • Ekuverin is a joint military exercise between India and Maldives.
• Pivot role in the SAGAR Initiative of India: 
  • The Maldives is key to India’s ambition to become a regional maritime security provider.
  • Anti-Piracy and Anti-Terror operations can also be carried out with Maldives’ help.

De-dollarisation

In News

• There’s a growing trend of countries sidestepping the US dollar (de-dollarisation) and choosing to use their own local currencies for bilateral trade.

What is de-dollarisation?

• De-dollarisation is a term that refers to the process whereby countries tend to reduce their reliance on the US dollar as a reserve currency, medium of exchange, and also a unit of account. 

Why is the US dollar used so widely? 

• Dominance of Dollar: After World War II, the US dollar replaced the British pound as the dominating currency worldwide. In 1944, the Bretton Woods Agreement established the dollar as the world’s reserve currency. The original Bretton Woods Agreement is dead, but the dollar remains the international reserve currency.
• Trade deficit of US:  U.S. has been running a persistent trade deficit for decades now (in fact the last time the U.S. ran a trade surplus was way back in 1975). The excess dollars that the rest of the world accumulates due to the U.S. ‘s trade deficit has been invested in U.S. assets such as in debt securities issued by the US government. 
• Popularity of U.S. assets among investors: The high level of trust that global investors have in the U.S. financial markets, perhaps owing to the ‘rule of law’ in the U.S., is considered to be a major reason why investors prefer to invest in U.S. assets.

What is Reserve Currency?

• Reserve currencies are foreign currencies held by central banks and other monetary authorities to facilitate international transactions, stabilize exchange rates, and bolster financial confidence.
• These currencies are typically characterized by their stability, liquidity, and wide acceptance in global markets, which make them attractive for holding and conducting international transactions.
• A reserve currency is also used by central banks to prepare for international debt obligations and to influence their domestic exchange rate.

Global Efforts Towards Dedollarization

• In recent years, several countries and regions have embarked on the path towards dedollarization, driven by a combination of geopolitical, economic, and strategic considerations. 
• Notable examples include China, Russia, Brazil and the European Union, each of which has taken steps to reduce their reliance on the US dollar in international transactions and financial markets.

Why are de-dollarisation attempts being made? 

• Sanctions by U.S.: The U.S. imposed several sanctions that restricted the use of the U.S. dollar to purchase oil and other goods from Russia, and this has been seen by many countries as an attempt to weaponise the dollar. 
• Power to control transactions by U.S.: Since international transactions carried out in the U.S. dollar are cleared by American banks, this gives the U.S. government significant power to oversee and control these transactions. 
• To end U.S Hegemony: Some countries, like China and Russia, have sought to diminish the influence of the US dollar as a means of countering perceived American hegemony and mitigating the impact of US sanctions. 
• To Promote their own currency: Other countries, particularly those in the Eurozone, have pursued dedollarisation to promote the international use of their currency, the euro, in a bid to enhance their global economic standing and secure greater financial autonomy.

Challenges Towards Dedollarisation

• Threat to Global Financial Stability: As countries reduce their reliance on the US dollar, adjustments in the composition of global reserve assets may lead to shifts in capital flows and changes in asset prices. In the absence of adequate policy coordination and risk management, these fluctuations could create financial instability.
• Alternative currency: Creating a viable alternative to the US dollar presents a formidable challenge. To achieve the requisite degree of stability, liquidity, and acceptability, an alternative reserve currency must be underpinned by a robust economy, deep and liquid financial markets, and sound monetary and fiscal policy frameworks. Currently, no single currency fully meets these criteria, although the euro and the Chinese yuan have made strides in this regard. 
• Increased volatility in Exchange rates: Dedollarisation could result in increased volatility in currency exchange rates, particularly during the initial phases of transition. This, in turn, could impact trade, investment, and capital flows, particularly for countries with less developed financial markets or limited policy tools to manage exchange rate volatility. 

Should India Focus on De-dollarisation?

• Benefits: It could reduce the vulnerability to fluctuations in US monetary policy and enhance monetary autonomy, enabling them to better tailor policy actions to the domestic economic conditions. 
  • Moreover, the diversification of reserve currencies could provide a buffer against currency fluctuations and capital flow reversals, reducing the likelihood of financial crises and improving overall financial stability.
• Challenges: As developing countries transition away from the US dollar, they may face heightened exchange rate volatility, which could impact trade, investment, and capital flows.
  • Additionally, the development of deep and liquid domestic financial markets – a prerequisite for currency internationalisation – could prove to be a formidable challenge for countries with less developed financial systems. 
  • Furthermore, the potential costs associated with the transition, such as adjustments to existing trade and financial arrangements, may be significant and could strain limited resources.

Way Ahead

• In light of these considerations, developing countries like India should adopt a prudent and measured approach towards dedollarisation. Policymakers must strike a delicate balance between the potential benefits of reducing reliance on the US dollar and the risks and costs associated with such a transition. 
• While dedollarisation presents opportunities for a more diversified and resilient global financial system, it also poses significant challenges that must be carefully managed to ensure the preservation of global financial stability and sustained economic growth.
• Developing countries such as India must carefully weigh the potential benefits and risks associated with this transition.

CU-Chayan Portal

In News

• The University Grants Commission (UGC) has launched CU– Chayan, a unified faculty recruitment portal for Central universities.
  • The UGC has developed this portal to create an enabling environment for both universities and the applicants.

Significance

• The portal would cater to the needs of all the stakeholders in the teachers’ recruitment process.
• The portal will provide a common platform for listing of vacancies, advertisements and jobs across all Central Universities. 
• The portal makes the recruitment process completely online starting from application to screening, with alerts to all the users of the portal.

About University Grants Commission (UGC)It came into existence in 1953 and became a statutory Organization of the Government of India by an Act of Parliament in 1956.Functions: Coordination, determination and maintenance of standards of teaching, examination and research in university education.

Vivad se Vishwas Scheme

In News

• The Ministry of Finance has launched the scheme, “Vivad se Vishwas I – Relief to MSMEs”.

More about News

• The scheme was announced in the Union Budget 2023-24.

• 95 % of the forfeited amount relating to performance security, bid security and liquidated damages forfeited/ deducted during the COVID-19 pandemic will be returned to MSMEs.
• In case any firm has been debarred only due to default in execution of such contracts, such debarment shall also be revoked.
• Government e-Marketplace (GeM) has developed a dedicated web-page for implementation of this scheme.  Eligible claims shall be processed only through GeM.

Government e-Marketplace (GeM)It is a one-stop National Public Procurement Portal to facilitate online procurement of common use Goods & Services required by various Central and State Government Departments / Organisations /Public Sector Undertakings ( PSUs).It provides the tools of e-bidding, reverse e-auction and demand aggregation to facilitate the government users, achieve the best value for their money.It aims to enhance transparency, efficiency and speed in public procurement.

Vivad Se Vishwas scheme The Vivad Se Vishwas scheme was announced under Union Budget 2020 to reduce ongoing legal disputes under direct taxation.Around 150,000 cases were resolved with the recovery of about 54 percent of the amount under litigation. The scheme started in March 2020, and closed on March 31, 2021.

Black Tiger (Melanistic Royal Bengal Tiger)

In News

• A rare melanistic royal Bengal tiger, popularly known as black tiger, was found dead in the Simlipal National Park.
  • The population of black tigers in Similipal is very limited (eight tigers as per theTiger Status Report 2018). The death can affect the breeding of tigers in the region.

Black Tigers

• About: 
  • They are a rare color variant of the tiger and are not a distinct species or geographic subspecies.
  • The melanistic royal Bengal tigers are distinctive because of the colour of their fur. Their white fur is caused by a lack of the pigment pheomelanin.
• Reasons of Melanistic Nature: 
  • The black tigers are mutants; they are Bengal tigers with a single base mutation in the gene Transmembrane Aminopeptidase Q (Taqpep).
  • Melanistic tigers tend to grow faster and are said to be heavier.
  • The main cause of the rare mutation is genetic drift. Due to this geographic isolation, genetically related individuals have been mating with each other for many generations in Similipal, leading to inbreeding.
• Black tigers outside of Similipal:
  • They exist at the Nandankanan Zoological Park in Bhubaneswar, Ranchi Zoo and Chennai’s Arignar Anna Zoological Park, where they were born in captivity.
  • Genetic tracing proved that these captive-born tigers shared a common ancestry with Similipal tigers.

Simlipal National Park

• About:
  • It is one of the largest biospheres in India. It is a national park and a tiger reserve (designated under project Tiger in 1973).
  • It derives its name from ‘Simul’ (silk cotton) tree.
  • It was declared a biosphere reserve by the Government of India in June 1994.
  • UNESCO added this National Park to its list of Biosphere Reserves in May 2009. 
  • Simlipal has the world’s highest rate of black tiger sightings in the world. 
• Location:
  • Northern part of Orissa’s Mayurbhanj district. 
  • It lies within two biogeographical regions: the Mahanadian east coastal region of the Oriental realm and the Chhotanagpur biotic province of the Deccan peninsular zone.

J Slab Track System

In News

• Japan to train 1,000 Indian engineers before transfer of bullet train technology.

About

• Indian engineers will be trained by Japanese experts before starting work on the High-Speed Rail Track system for Mumbai Ahmedabad High Speed Rail corridor (MAHSR).
• The bullet train being built between Mumbai and Ahmedabad will use the ballastless Slab Track system (popularly known as J Slab track system) as used in Japanese Shinkansen high speed railways.

What is the J Slab Track System?

• A ballastless track or slab track is a type of railway track infrastructure in which the traditional elastic combination of ties/sleepers and ballast is replaced by a rigid construction of concrete.  
• Slab Track was invented and has evolved in Japan and now the term is synonymous with High Speed Track. 

How did it came into use? 

• The first HSR in Japan i.e. The Tokaido Shinkansen began operational in 1964 between Tokyo and Shin-Osaka. Conventional ballasted track structure was adopted in Tokaido Shinkansen. 
• Track geometry of conventional ballasted tracks used to disturb frequently with the increase in traffic density. Due to the problem of disturbance of track geometry coupled with reduction in time available for maintenance and labour shortage, the need was felt to introduce a low maintenance track. 

Significance

• Performance of Slab Track is better for High Speed Railway compared to ballasted track due to its higher flexural stiffness and it is because of this that the forces in Slab Track are distributed over a larger area and deflections are considerably less compared to ballasted track. This ultimately results in lesser maintenance requirements in Slab Track structure.
• Although initial construction cost of Slab Track is higher compared to ballasted track, the difference is compensated within a few years of operation because of less maintenance and labour requirements in Slab Track. 
• Slab Track structure is particularly advantageous in case of viaduct and tunnel due to its lighter and sleek structure.

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