Current Affairs 09 September 2024

CONTENTS

1. Gulf Cooperation Council
2. India’s Transition from Maize Exporter to Importer
3. Widespread Vulnerability: Over 85% of Indian Districts Face Severe Climate Risks
4. India Surpasses China in MSCI Emerging Markets Investable Market Index
5. OpenAI Set to Unveil Advanced AI Model “Project Strawberry”
6. New Policy to Extend Lifespan of National Highways Through White-Topping
7. Madeira River

Gulf Cooperation Council

Context:

External Affairs Minister arrived in Saudi Arabia’s capital, Riyadh, to attend the First India-Gulf Cooperation Council (GCC) Foreign Ministers’ Meeting.

Relevance:

GS II: International Relations

Dimensions of the Article:

1. Gulf Cooperation Council (GCC) Overview
2. India-GCC Relationships Overview

Gulf Cooperation Council (GCC) Overview

• The Gulf Cooperation Council is a strategic and economic alliance consisting of six Arabian Peninsula nations: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
• Formed in 1981, the GCC fosters economic, security, cultural, and social collaboration among these member states.
• An annual summit is convened to deliberate on cooperative strategies and regional issues.

Importance of GCC for India

• Energy Assurance
  • GCC states control nearly half of the globe’s oil reserves, making them crucial for energy security.
  • Suppliers from the GCC are responsible for approximately 34% of India’s oil imports.
• Economic Engagement
  • The GCC region is diversifying its economic activities to include tourism, construction, and finance, providing new avenues for trade and investment for nations like India.
• Indian Diaspora Influence
  • Approximately 8.9 million Indians reside in the Middle East, significantly influencing remittances, with about 30% of India’s foreign remittances originating from this region.
• Strategic Positioning
  • Positioned along the critical Persian Gulf, GCC nations play a pivotal role in global trade routes.
  • Both India and the GCC are aligned in their pursuit of regional political stability and security.

India-GCC Relationships Overview

• The Gulf Cooperation Council (GCC), lying directly across the Arabian Sea, stands as a key regional ally and a significant economic partner for India.
• Notably, the GCC has become a principal trading and investment partner for India, enhancing both economic and strategic ties.

Diplomatic Engagements

• India participated in its inaugural political dialogue with the GCC alongside the United Nations General Assembly in 2003.
• In September 2022, India and the GCC reinforced their commitment through an MoU facilitating yearly dialogues between India’s External Affairs Minister and the rotating GCC presidency, enhancing bilateral communications.

Economic Interactions

• The fiscal year 2023-24 saw India-GCC trade reaching USD 161.59 billion, with Indian exports at USD 56.3 billion and imports at USD 105.3 billion.
• Economic ties have deepened, particularly influenced by the surge in oil imports due to global market fluctuations and post-pandemic recovery.

Trade Agreements

• A pivotal Framework Agreement signed in August 2004 aims to bolster economic cooperation, setting the stage for the ongoing negotiations of a comprehensive India-GCC Free Trade Agreement, potentially invigorated by the recent India-UAE FTA.

Energy Collaborations

• The GCC accounts for 35% of India’s oil and 70% of gas imports, underscoring critical energy dependencies.
• India is expanding its Strategic Petroleum Reserve (SPR) initiative, with active interest and potential collaboration from GCC member states.

Diaspora and Financial Contributions

• Approximately 8.9 million Indians reside in the GCC, making up about 66% of the overseas Indian community.
• Remittances from the GCC constitute a significant portion of India’s inward financial transfers, though there has been a decline from over 50% in 2016-17 to around 30% in 2020-21.

-Source: Indian Express

India’s Transition from Maize Exporter to Importer

Context:

India’s recent drive to boost ethanol production using corn has seen the country transition from being one of Asia’s leading maize exporters to becoming a net importer. This pivot is profoundly affecting local industries dependent on corn and is reshaping the global maize supply chain dynamics.

Relevance:

GS III: Agriculture

Dimensions of the Article:

1. India’s Transition to Net Maize Importer
2. Local Industry Impact from Increased Maize Imports
3. Global Effects of India’s Maize Importation
4. About Maize

India’s Transition to Net Maize Importer

• Ethanol Policy Impact: India’s strategic increase in ethanol content to 20% by 2025-26 has surged maize demand for ethanol production.
• Biofuel Policy Support: The 2018 National Policy on Biofuels enhances maize and grain-based ethanol production to fulfill increased demands.
• Climate Influence on Crop Selection: Recent droughts have led to reduced sugarcane usage for ethanol, shifting focus towards maize.
• Production Expansion: In 2023-24, India’s maize production was 34.6 million tonnes, with ambitions to double this to close the supply-demand gap.
• Shift Impacting Agriculture: Utilizing maize for ethanol production has led to India’s first significant maize imports in many years.

Local Industry Impact from Increased Maize Imports

• Primary Industry Consumers: India’s poultry and starch sectors, traditionally major maize consumers, now compete with ethanol producers for resources.
• Economic Pressures: Enhanced maize demand elevates local prices above international levels, straining poultry industries reliant on maize.
• Feed Cost Crisis: Rising costs account for a substantial portion of production expenses, pushing poultry businesses towards financial hardship.
• Calls for Regulatory Changes: The All India Poultry Breeders Association advocates for removing import duties on genetically modified maize to reduce feed costs.
• Agricultural Adjustments: Farmers increase maize planting to capitalize on high prices, though small-scale farms must adjust production based on market fluctuations.

Global Effects of India’s Maize Importation

• Export to Import Shift: Historically a major maize exporter, India now imports primarily from Myanmar and Ukraine, impacting global prices.
• Market Reactions: Increased demand in India boosts maize prices globally, altering traditional trade patterns.
• Supply Chain Shifts: Traditional maize importers from India now seek supplies from South America and the USA due to inflated Indian maize prices.

Strategies to Boost Maize Production

• Tailored Agricultural Enhancements: India’s varied agricultural zones necessitate specific innovations to boost maize yields.
• Biotech Adoption for Resilience: Introducing biotech traits resistant to pests like the fall armyworm and planting high-yield hybrids could significantly improve productivity.
• Water-Efficient Crop Alternatives: Shifting from water-intensive crops like rice to maize could conserve resources and enhance output, particularly in regions like Punjab, Haryana, and Western UP.
• Supportive Policies for Growth: Implementing supportive measures such as reasonable Minimum Support Prices (MSP) and assured procurement through mega cooperatives could stimulate extensive maize cultivation.
• Biofuel and Food Security Synergy: Producing distiller’s dried grains with soluble (DDGS) from ethanol aligns with the E20 ethanol blending target, fostering a sustainable cycle of food, feed, and fuel production.

About Maize

• Known as Zea mays L., maize is celebrated as the “queen of cereals” for its high yield potential.
• It is a major global grain contributor, with the United States leading as the top producer renowned for its high productivity levels.
• Employed across multiple sectors, maize is integral in the production of food, animal feed, and various industrial products.
• It prospers in a diverse array of soil types, from loamy sand to clay loam, preferably with good drainage, high organic content, and neutral pH.
• Productivity is best in areas free from poor drainage and high salinity.
• Optimal growth occurs with annual rainfall ranging from 50 to 100 centimeters.
• Cultivated during the Kharif, Rabi, and Spring seasons, with Kharif crops generally yielding less due to rainfed conditions and related stresses.
• As of December 2023, India is ranked as the fifth largest producer and the fourteenth largest exporter of maize globally for the year 2022.
• Despite year-round cultivation possibilities, a strong seed network, and good seaport access, domestic demand heavily impacts its export capacity.
• Primary Producing Regions: Major maize-producing states include Karnataka, Madhya Pradesh, Bihar, Tamil Nadu, Telangana, Maharashtra, and Andhra Pradesh.

-Source: The Hindu

Widespread Vulnerability: Over 85% of Indian Districts Face Severe Climate Risks

Context:

More than 85% of districts in India are exposed to extreme climate events such as floods, droughts and cyclones, according to a new study.

Relevance:

GS III: Disaster Management

Dimensions of the Article:

1. Overview of India’s Climate Crisis
2. Evolving Climate Risk Profile
3. Enhancing Resilience through Advanced Technology
4. Strategic Conclusions for Addressing Climate Crisis

Overview of India’s Climate Crisis

• India faces a significant increase in climate-related extremes, affecting over 85% of its districts which are now prone to floods, droughts, cyclones, and heatwaves.
• Recent research by IPE-Global and ESRI-India reveals that 45% of districts are undergoing drastic changes in their climatic patterns, with areas formerly affected by floods now experiencing droughts and vice versa.
• The report underscores the necessity for immediate climate action to address these escalating issues.

Intensifying Climate Disruptions

• Historical Data Analysis: A pentad-decadal analysis covering the period from 1973 to 2023 has identified significant nonlinear trends in climate conditions at the district level, including:
  • Drought Events: Doubling of agricultural and meteorological drought occurrences.
  • Cyclone Events: Fourfold increase in cyclone events.
  • Flood Frequency: Substantial increase in floods, particularly in the eastern, northeastern, and southern regions of India.
• Recent Trends: The last decade alone has seen a fivefold increase in the frequency and intensity of these climate extremes.

Evolving Climate Risk Profile

• Rapid Changes in Risk Factors: Over 60% of districts in states such as Bihar, Andhra Pradesh, Odisha, Gujarat, Rajasthan, and Assam now face simultaneous multiple extreme climate events.
• Contributing Factors: Increased greenhouse gas emissions, unchecked urbanization, and other human activities are aggravating these risks.
• Population Impact: Predictions indicate that by 2036, over 1.47 billion Indians will encounter severe climate risks, necessitating detailed risk assessments to protect vital sectors like agriculture and infrastructure.
• Land Use and Environmental Shifts:
  • Significant Land Use Changes: There has been a 65% change in land use and land cover in climate hotspots, driven by adverse anthropogenic interventions such as deforestation and mangrove destruction.

Emerging Patterns of Climate Variability

• Trend Reversals: An alarming swapping of climate patterns is noted in over 45% of districts, with regions previously known for frequent floods now seeing increased droughts and vice versa.
• Regional Impact: Particularly, southern states including Andhra Pradesh, Tamil Nadu, and Karnataka are experiencing increased instances of drought, highlighting a shift in regional climate behaviors.

Enhancing Resilience through Advanced Technology

• The study underlines the importance of Geographic Information Systems (GIS) in bolstering climate resilience, utilizing comprehensive spatial analysis tools.
• GIS technologies allow for the integration of various data sources, offering detailed geographical insights into climate-related risks.
• Climate Risk Observatory (CRO): This tool is proposed to assist stakeholders in identifying sector-specific impacts, aiding in the formulation of effective adaptation strategies.
• Infrastructure Climate Fund (ICF) Endorsement: The report advocates for the ICF to drive ongoing investments in resilient infrastructure, prioritizing risk management and community-driven climate responses.

Strategic Conclusions for Addressing Climate Crisis

• Complex Challenges of India’s Climate: Acknowledges the complexity of India’s climate issues, emphasizing the urgency for localized solutions.
• Local-Level Risk Assessments: Highlighted by the IPE-Global and Esri study, there’s a crucial need for meticulous risk assessments tailored to local conditions.
• Proposal for Climate Resilience Funds: Suggests the establishment of funds dedicated to enhancing both adaptation and mitigation efforts.
• Global Leadership through Local Cooperation: Encourages substantial investments and collaborative efforts to position India at the forefront of global climate resilience initiatives, transforming risks into sustainable growth opportunities.

-Source: Indian Express

India Surpasses China in MSCI Emerging Markets Investable Market Index

Context:

India has recently surpassed China in terms of weight within the MSCI Emerging Markets Investable Market Index (IMI), marking a significant milestone as it becomes the largest country by weight in this index for the first time. However, China continues to lead in the MSCI Emerging Market Standard Index. The MSCI EM IMI is comprehensive, covering around 99% of the free float-adjusted market capitalization and includes a broad range of company sizes from 24 emerging market countries, encompassing over 3,355 constituents.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. Why India Continues to Attract Global Investors
2. Persistent Challenges and Risks
3. India’s Ascendancy in Global Markets: An Analytical Overview

Why India Continues to Attract Global Investors

Overview of India’s Economic Growth

• Over the past decade, India has transitioned from a “fragile 5” economy to the world’s fifth-largest economy.
• The Indian stock market has risen by 46% in three years, surpassing global equities’ average of 20% and notably outperforming other emerging markets.
• This substantial growth has captivated global attention, leading investors to wonder about the potential opportunities and challenges in navigating India’s dynamic market landscape.

Drivers of Indian Market Success

• Labor Force Dynamics
  • India’s labor market is a cornerstone for potential manufacturing boom, expected to absorb over 38 million workers by 2040, transitioning from China and other developed nations.
• Capital Investments
  • India anticipates $1.7 trillion in infrastructure investments by 2030, strategically positioning itself to attract significant capital inflows amidst global supply chain diversifications due to geopolitical tensions.
• Economic Growth and Fiscal Strategy
  • Governmental emphasis on robust economic growth and infrastructural investment is aimed at sustaining rapid developmental pace and reducing fiscal deficits.
• Political Stability and Global Shifts
  • Political stability in recent years has bolstered India’s appeal to investors, further supported by a shift in global investment trends away from China due to geopolitical frictions.

Persistent Challenges and Risks

• Productivity and Reform Needs
  • While India offers favorable conditions for economic progress, advancing productivity through educational reforms and skills enhancement is crucial, especially as a significant portion of the workforce transitions from primary to secondary sectors.
• Urbanization and Business Climate
  • Enhancing urban infrastructure and streamlining bureaucratic processes are essential to match the urbanization pace of global competitors like China.
• Inflation Concerns
  • Rising inflation poses immediate economic risks, potentially prompting stricter monetary policies and affecting overall market stability.
• Geopolitical Uncertainties
  • Ongoing international conflicts and regional instabilities pose threats to trade and economic stability.
• Environmental Impact
  • Challenges posed by global warming and climate change are significant, impacting agricultural productivity and overall environmental sustainability, with far-reaching consequences for future investments.

India’s Ascendancy in Global Markets: An Analytical Overview

Enhanced Global Investment Focus

• The increasing prominence of India in the MSCI Emerging Markets (EM) Index has garnered heightened global investor interest, advantageous for India’s financial market.
• As India surpasses China as the primary element of the MSCI EM IMI Index, it is set to draw substantial foreign portfolio investments.

India’s Evolving Role in Global Portfolios

• India has transitioned from being just a minor fluctuation in global portfolios to a significant entity that demands attention.
• Consequently, global investors are increasingly compelled to invest in Indian exchange-traded funds (ETFs) or directly engage in the Indian stock market.

Increased International Market Participation

• There is an anticipated rise in international involvement in India’s markets over the upcoming months, bolstered by its enhanced index stature.

Potential Risks to Monitor

• Although a growing index stature typically signifies positive trends, it can also indicate potential market overenthusiasm, reminiscent of prior occurrences with China.
• Despite these concerns, India’s current situation reflects robust economic fundamentals marked by an extensive market cap and an uptick in corporate earnings, presenting optimistic prospects.

-Source: Indian Express

OpenAI Set to Unveil Advanced AI Model “Project Strawberry”

Context:

OpenAI is gearing up to release its most sophisticated artificial intelligence model yet, codenamed Project Strawberry. The launch is scheduled to occur between September and November 2024, marking a significant advancement in AI capabilities.

Relevance:

Facts for Prelims

Project Strawberry Overview

• Integration Plans: Project Strawberry is anticipated to be a part of the forthcoming ChatGPT-5, enhancing OpenAI’s chatbot functionalities.
• Development Goal: Originally known as Project Q*, this initiative aims to develop Artificial General Intelligence (AGI), which emulates human-like cognitive capabilities.

Functional Capabilities

• Problem Solving: Demonstrates proficiency in tackling intricate puzzles and executing complex cognitive tasks.
• Mathematical Operations: Known for its enhanced efficiency in solving math problems, surpassing its predecessors.
• Research Autonomy: Expected to independently conduct online research.

Strategic Role in AI Evolution

• Data Synthesis: Essential in creating top-tier synthetic data for subsequent models, notably aiding Project Orion.
• Project Orion Synergy: Engineered to surpass GPT-4’s performance, Project Orion benefits from integrating elements of Project Strawberry, aiming to minimize errors and hallucinations, setting a new standard in AI accuracy and reliability.

-Source: The Hindu

New Policy to Extend Lifespan of National Highways Through White-Topping

Context:

The Union government is in the process of formulating a policy designed to reinforce and extend the lifespan of aging national highways. This initiative will employ a technique known as white-topping, which provides a durable and sustainable solution for roadway maintenance.

Relevance:

Facts for Prelims

Enhancements in National Highway Infrastructure

• Authority Overview: The National Highways Authority of India (NHAI), established by the NHAI Act of 1988 and operating under the Ministry of Road Transport and Highways, is dedicated to the continuous improvement of national highways.
• Project Supervision: NHAI manages the National Highways Development Project (NHDP) among various other initiatives to enhance the country’s highway network spanning approximately 146,000 kilometers.
• White-Topping Method: White-topping involves applying a 100-200 mm thick layer of cement concrete, either bonded or unbonded, over existing bituminous roads. This method is utilized for the rehabilitation and structural strengthening of roads.
• Benefits of Cement Concrete: Composed of cement, water, aggregates, and sometimes additives, cement concrete is prized for its robustness, longevity, and adaptability in constructing infrastructure like roads and bridges.
• Environmental and Safety Advantages:
  • Fuel Efficiency: Concrete surfaces lead to lower fuel consumption by vehicles due to their smoother finish.
  • Emission Reduction: Utilizing concrete for road surfaces helps in cutting down carbon emissions and countering the urban heat island effect.
  • Enhanced Safety: The reflective properties of concrete improve road visibility, enhancing vehicle light reflection which boosts nighttime safety.
  • Energy Efficiency: The reflective nature of concrete also reduces the need for external lighting, conserving energy.

-Source: Times of India

Madeira River

Context:

Residents near the Madeira River in the Amazon are facing unprecedented challenges as water levels drop to historic lows amid a severe drought.

Relevance:

Facts for Prelims

Madeira River

• The Madeira River, a significant tributary of the Amazon River, originates from the confluence of the Mamoré and Beni rivers in Villa Bella, Bolivia.
• It marks a 100 km (approximately 60 miles) boundary between Bolivia and Brazil as it flows northward.
• The river belongs to the expansive Madeira Basin, which covers roughly 1,300,000 square kilometers—about 19% of the Amazon Basin’s total area.
• This basin spans across Bolivia (50%), Brazil (40%), and a small portion in Peru (10%).
• The Madeira River is integral to the Amazon Basin’s hydrology, playing a pivotal role in the regional ecosystem.
• It supports a diverse array of flora and fauna across Bolivia and Brazil, highlighting its environmental significance.
• This river is essential for biodiversity, water transport, and ecological balance in the area.

-Source: The Hindu