Current Affairs for UPSC IAS Exam – 01 April 2021 | Legacy IAS Academy

Contents

1. WEF’s Global Gender Gap Report
2. India’s EAM to attend ‘Heart of Asia’ conference
3. Pakistan allows import of cotton, sugar from India
4. 4% inflation target retained for 2021-26 RBI’s rate panel

WEF’S GLOBAL GENDER GAP REPORT

Context:

According to the Global Gender Gap Report 2021 released by the World Economic Forum, South Asia incidentally is one of the worst performing regions, followed only by the Middle East and northern Africa.

Relevance:

GS-II: Social Justice (Issues Related to Women and Children, Governance and Government Policies, Issues Arising Out of Design & Implementation of Policies)

Dimensions of the Article:

1. About the Global Gender Gap Report
2. About World Economic Forum (WEF)
3. Highlights of the Global Gender Gap report 2021
4. India’s Gender Gap according to the Global Gender Gap Report

About the Global Gender Gap Report

• The Global Gender Gap Report is published by the World Economic Forum and The Global Gender Gap Index is an index designed to measure gender equality.
• The index is designed to “measure gender-based gaps in access to resources and opportunities in countries rather than the actual levels of the available resources and opportunities in those countries.” Therefore, it is not necessarily true that highly developed countries should have higher scores.
• The methodology used to determine index scores is designed in such a way as to count situations in which men are disadvantaged relative to women as “equal”. (Gender imbalances to the advantage of women do not affect the score.). Over the Index, the highest possible score is 1 (equality) and the lowest possible score is 0 (inequality) – To put it more simply: women could be better off in all areas and still the index would deem that country perfectly equal.

The report’s Gender Gap Index ranks countries according to calculated gender gap between women and men in four key areas to gauge the state of gender equality in a country:

1. Health,
2. Education,
3. Economy and
4. Politics

About World Economic Forum (WEF)

• The World Economic Forum is the International Organization for Public-Private Cooperation.
• It was established in 1971 as a not-for-profit foundation and is headquartered in Geneva, Switzerland. It is independent, impartial and not tied to any special interests.
• The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance.

Major reports published by WEF:

1. Energy Transition Index.
2. Global Competitiveness Report.
3. Global IT Report (WEF along with INSEAD, and Cornell University)
4. Global Gender Gap Report.
5. Global Risk Report.
6. Global Travel and Tourism Report.

Highlights of the Global Gender Gap report 2021

• India has fallen 28 places in the World Economic Forum’s Global Gender Gap Report 2021 and is now ranked 140 among 156 countries.
• India is now one of the worst performers in South Asia, trailing behind neighbours Bangladesh, Nepal, Bhutan, Sri Lanka and Myanmar.
• South Asia incidentally is one of the worst performing regions, followed only by the Middle East and northern Africa.
• In South Asia, Bangladesh ranked 65, Nepal 106, Pakistan 153, Afghanistan 156, Bhutan 130 and Sri Lanka 116.
• The countries with the largest gender gaps in economic participation include Iran, India, Pakistan, Syria, Yemen, Iraq, and Afghanistan.
• Bangladesh is the only country where more women have held head-of-state positions than men in the past 50 years.

India’s Gender Gap according to the Global Gender Gap Report

• India has declined on the political empowerment index as well by 13.5 percentage points, and a decline in the number of women ministers, from more than 20% in 2019 to less than 10% in 2021. However, it has still performed relatively well compared to other countries, ranking at 51 in women’s participation in politics.
• In the index of education attainment, India has been ranked at 114.
• The estimated earned income of women in India is only one-fifth of men’s, which puts the country among the bottom 10 globally on the Economic Participation indicator of gender gap. The report notes that the economic participation gender gap actually widened in India by 3% this year.
• India has fared the worst in Health and Survival index, ranking at 155. (The only country to have fared worse is China.)
• The report says that the skewed sex ratio in India can be attributed to norms of son preference and gender-biased prenatal sex-selective practices.
• China and India together account for about 90 to 95% of the estimated 1.2 to 1.5 million missing female births annually worldwide due to gender-biased prenatal sex selective practices.

-Source: Indian Express

INDIA’S EAM TO ATTEND ‘HEART OF ASIA’ CONFERENCE

Context:

Indian External Affairs Minister shared India’s perspectives on the peace process in the war-torn country in the 9th Heart of Asia-Istanbul Process (HoA-IP) ministerial conference held at Tajikistan.

Relevance:

GS-II: International Relations (India and its neighborhood, Foreign Policies and conferences affecting India’s interests)

Dimensions of the Article:

1. About the Heart of Asia-Istanbul Process (HoA-IP)
2. Intra-Afghan Negotiations (IAN)
3. India’s Stand:

About the Heart of Asia-Istanbul Process (HoA-IP)

• The Heart of Asia-Istanbul Process (HoA-IP) was founded in November, 2011 in Istanbul, Turkey. India is a participating country.
• It provides a platform for sincere and results-oriented regional cooperation by placing Afghanistan at its center, in recognition of the fact that a secure and stable Afghanistan is vital to the prosperity of the Heart of Asia region.
• This platform was established to address the shared challenges and interests of Afghanistan and its neighbors and regional partners.
• The Heart of Asia comprises 15 participating countries, 17 supporting countries, and 12 supporting regional and international organizations.
• It provides a platform for sincere and results-oriented regional cooperation by placing Afghanistan at its center, in recognition of the fact that a secure and stable Afghanistan is vital to the prosperity of the Heart of Asia region.
• This platform was established to address the shared challenges and interests of Afghanistan and its neighbors and regional partners.
• The Heart of Asia comprises 15 participating countries, 17 supporting countries, and 12 supporting regional and international organizations.
• Since its inception the process has become a cardinal element in regional cooperation and has created a platform for Afghanistan’s near and extended neighbors, international supporters and organizations to engage in constructive dialogue and to address the existing and emerging regional challenges through regional cooperation with Afghanistan at its core.

Intra-Afghan Negotiations (IAN)

• It refers to the talks between the Afghan government and Taliban insurgents with the goal of bringing an end to nearly two decades of a conflict that has laid waste to the country and killed tens of thousands of combatants and civilians.
• The participants of intra-Afghan negotiations will discuss the date and modalities of a permanent and comprehensive ceasefire, including agreement over the future political roadmap of Afghanistan.
• The negotiations will cover a variety of issues, including the rights of women, free speech, and changes to the country’s constitution.
• The talks would also lay out the fate of tens of thousands of Taliban fighters as well as the heavily armed militias belonging to Afghanistan’s warlords who have amassed wealth and power since the Taliban were ousted from power in 2001.

India’s Stand:

• India believes any peace process must be Afghan-led, Afghan-owned and Afghan-controlled, has to respect the national sovereignty and territorial integrity of Afghanistan and preserve the progress made in the establishment of a democratic Islamic Republic in Afghanistan.
• The interests of minorities, women and vulnerable sections of society must be preserved and the issue of violence across the country and its neighbourhood has to be effectively addressed.

Click Here to read more about the India-Afghanistan Relations and Indian investments in Afghanistan

-Source: The Hindu

PAKISTAN ALLOWS IMPORT OF COTTON, SUGAR FROM INDIA

Context:

Partially reversing a 2018 decision to suspend all trade with India, Pakistan announced that it would allow the import of cotton and sugar from across the border.

Relevance:

GS-II: Social Justice (Issues Related to Women, Governance and Government Policies, Issues Arising Out of Design & Implementation of Policies)

Dimensions of the Article:

1. Background to Pakistan’s Trade Ban
2. India-Pakistan Trade Before Ban
3. Major Products Traded between India and Pakistan
4. Why did Pakistan remove the trade ban with India?
5. What is the impact of Pakistan’s decision to remove trade ban?

Background to Pakistan’s Trade Ban

• Pakistan’s decision to suspend bilateral trade with India in August 2019 was a fallout of the constitutional changes in Jammu and Kashmir.
• However, an underlying reason for suspending trade was the 200% tariff imposed by India on Pakistani imports earlier that year after India revoked Pakistan’s Most Favoured Nation (MFN) status in the aftermath of the Pulwama terrorist attack.
• India’s exports to Pakistan dropped nearly 60% to USD 816.62 million, and its imports fell 97% to USD 13.97 million in 2019-20.

India-Pakistan Trade Before Ban

• Over the years, India has had a trade surplus with Pakistan, with much less imports than exports and trade has always been linked to politics.
• India’s exports to Pakistan fell around 16% to USD 1.82 billion in 2016-17 as compared to 2015-16 after relations deteriorated in the aftermath of the Uri terror attack and the Indian Army’s surgical strikes on militant launchpads in Pakistan-occupied Kashmir in 2016.
• Despite continuing tensions, trade between the two countries grew marginally in subsequent years.

Major Products Traded between India and Pakistan

• Pakistan was among India’s top 50 trade partners in 2018-19, but was pushed out of the list in 2019-20.
• It had been anticipated that a trade ban between the countries would affect Pakistan more, since it relied heavily on India for key raw materials for its textiles and pharmaceuticals industries.
• In 2018-19, cotton and organic chemicals accounted for around half of Indian export to Pakistan.
• Other major items included plastic, tanning/dyeing extracts, and nuclear reactors, boilers, machinery, and mechanical appliances.
• After the ban, imports of many items fell drastically, while cotton imports stopped altogether.
• The only increase has been in pharmaceutical products. Pakistan has so far imported drug products and organic chemicals to ensure sufficient supplies of medicines during the Covid-19 pandemic.
• India’s major imports from Pakistan in 2018-19 were mineral fuels and oils, edible fruits and nuts, salt, sulphur, stone and plastering materials, ores, slag and ash and raw hides and leather.

Why did Pakistan remove the trade ban with India?

• Pakistan decided to lift the ban on cotton imports as there is a shortage in raw material for Pakistan’s textile sector, which has suffered due to low domestic yields of cotton.
• Cotton and sugar imports from countries like the USA and Brazil are costlier and take longer to arrive.
• The decision on sugar was dictated by high demand and high domestic prices.
• The decision to import from India is a measure to stabilize the market prices.

What is the impact of Pakistan’s decision to remove trade ban?

• The decision by Pakistan to allow trade in the selected items will gradually lead to restoration of normalcy in India-Pakistan trade.
• This might be a good time for India to explore a reduction in its 200% import duties on products that its industries can benefit from.
• The move by Pakistan has raised hopes for further measures besides the granting of sports related visas by India after a gap of three years, scheduling a much-delayed meeting of the Indus Water Commissioners in Delhi, peace at the Line of Control (LoC) after more than 5,000 ceasefire violations, as well as the exchange of salutary messages between Indian and Pakistan Prime Ministers.

-Source: The Hindu

4% INFLATION TARGET RETAINED FOR 2021-26 RBI’S RATE PANEL

Context:

The Government of India has decided to retain the inflation target of 4%, with a tolerance band of +/- 2 percentage points for the Monetary Policy Committee of the Reserve Bank of India (RBI) for 2021-2026.

Relevance:

GS-II: Social Justice (Issues Related to Women, Governance and Government Policies, Issues Arising Out of Design & Implementation of Policies)

Dimensions of the Article:

1. India’s decision regarding maintenance of Inflation rate at 4%
2. Monetary Policy Committee (MPC)
3. How does the MPC target inflation?
4. How is Inflation Controlled?
5. What is Inflation targeting?
6. How is Inflation Targeting done?
   • Advantages of Inflation Targeting
   • Disadvantages of Inflation Targeting

India’s decision regarding maintenance of Inflation rate at 4%

• In 2016 itself, the central government mandated he RBI to keep the retail inflation at 4% with a margin of 2% on either side for a five-year period (i.e., till March 2021) to control the price rise.
• The central bank and the government agreed in 2015 on a policy framework that stipulated a primary objective of ensuring price stability while keeping in mind the objective of growth.
• The Flexible Inflation Target (FIT) was adopted in 2016. The Reserve Bank of India Act, 1934 was amended to provide a statutory basis for a FTI framework.
• The amended Act provides for the inflation target to be set by the Government, in consultation with the RBI, once every five years.
• Now, the inflation target for the period 1st April, 2021 to 31st March, 2026 under the Reserve Bank of India Act 1934 has been kept at the same level as was for previous 5 years.

Monetary Policy Committee (MPC)

• The Monetary Policy Committee of India is responsible for fixing the benchmark interest rate in India.
• The meetings of the Monetary Policy Committee are held at least 4 times a year and it publishes its decisions after each such meeting.
• The committee comprises six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India.
• They need to observe a “silent period” seven days before and after the rate decision for “utmost confidentiality”.
• The Governor of Reserve Bank of India is the chairperson ex officio of the committee.
• The Reserve Bank of India Act, 1934 was amended by Finance Act (India), 2016 to constitute MPC which will bring more transparency and accountability in fixing India’s Monetary Policy.
• The monetary policy are published after every meeting with each member explaining his opinions.
• The committee is answerable to the Government of India if the inflation exceeds the range prescribed for three consecutive months.
• Key decisions pertaining to benchmark interest rates used to be taken by the Governor of Reserve Bank of India alone prior to the establishment of the committee.
• The Governor of RBI is appointed and can be disqualified by the Government anytime.

How does the MPC target inflation?

• Every two months, the Reserve Bank’s MPC has a review meeting where they discuss the likely inflation and growth estimates over the coming months.
• Based on this review, the MPC targets inflation using the policy rate, or the repo rate. When inflation is higher than the inflation target set by the central bank, then the MPC must increase the repo rate. On the other hand, when the actual inflation is lower than the target, the MPC could decrease the repo rate. The
• MPC looks at consumer price inflation (CPI) as the inflation target that it must keep between 2% and 6%.

How is Inflation Controlled?

There are broadly two ways of controlling inflation in an economy:

1. Monetary measures and
2. Fiscal measures

Monetary Measures

• The most important and commonly used method to control inflation is monetary policy of the Central Bank (RBI in India).
• Most central banks use high interest rates as the traditional way to fight or prevent inflation.

Monetary measures used to control inflation include:

1. Bank Rate Policy
2. Cash Reserve Ratio and
3. Open Market Operations.

Fiscal Measures

• Fiscal measures to control inflation include taxation, government expenditure and public borrowings.
• The government can also take some protectionist measures (such as banning the export of essential items such as pulses, cereals and oils to support the domestic consumption, encourage imports by lowering duties on import items etc.).

What is Inflation targeting?

Inflation targeting is basically a monetary policy system wherein the central bank of a country (RBI in India) has a specific target inflation rate for the medium-term and publicizes this rate.

How is Inflation Targeting done?

• Inflation targeting is done by raising or lowering interest rates based on above-target or below-target inflation, respectively.
• The conventional wisdom is that raising interest rates usually cools the economy to rein in inflation; lowering interest rates usually accelerates the economy, thereby boosting inflation.

Advantages of Inflation Targeting

• Inflation targeting allows monetary policy to “focus on domestic considerations and to respond to shocks to the domestic economy”, which is not possible under a fixed-exchange-rate system.
• Transparency is another key benefit of inflation targeting. Central banks in developed countries that have successfully implemented inflation targeting tend to “maintain regular channels of communication with the public”.
• An explicit numerical inflation target increases a central bank’s accountability, and thus it is less likely that the central bank falls prey to the time-inconsistency trap. This accountability is especially significant because even countries with weak institutions can build public support for an independent central bank.

Disadvantages of Inflation Targeting

• There is a propensity of inflation targeting to neglect output shocks by focusing solely on the price level.
• Leading economists argue that inflation targeting would maintain or enhance the transparency associated with a system based on stated targets, while restoring the balance missing from a monetary policy based solely on the goal of price stability, thus neglecting other factors of an economy as well.

-Source: The Hindu