Current Affairs 13 December 2022

CONTENTS:

1. India’s Retail Inflation drops below 6%.
2. India and China Face-off along the Line of Actual Control (LAC)
3. Outcomes of Convention on Biological Diversity COP15
4. Governor as the Chancellor of universities

India’s Retail Inflation drops below 6%

Context:

Retail inflation falls below 6% mark for first time in 2022

Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy, Fiscal Policy, Taxation)

Dimensions of the Article:

1. About the Latest inflation data
2. What is Inflation?
3. Types of Inflation based on rate of Increase
4. What is Consumer Price Index (CPI)?

About the Latest inflation data

• Cooling vegetable and edible oil prices drove India’s retail inflation down to 5.88% in November from 6.77% in October, the first time since January this year that consumer prices have risen slower than the 6% tolerance threshold set for the central bank.

• Food price inflation faced by consumers eased to an 11-month low of 4.67% from over 7% in October, but rural consumers faced a greater burden with a 5.2% price rise in food items, compared to just 3.7% for their urban peers.
• Overall rural retail inflation also stayed high at 6.09%.

What is Inflation?

• Inflation refers to the consistent rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc. Inflation measures the average price change in a basket of commodities and services over time.
• A moderate level of inflation is required in the economy to ensure that production is promoted. Excess Inflation is indicative of the decrease in the purchasing power of a unit of a country’s currency. This could ultimately lead to a deceleration in economic growth.
• In India, inflation is primarily measured by two main indices — WPI (Wholesale Price Index) and CPI (Consumer Price Index) which measure wholesale and retail-level price changes, respectively.

Types of Inflation based on rate of Increase

There are four main types of inflation, categorized by their speed. They are creeping, walking, galloping, and hyperinflation.

I. Creeping Inflation

• Creeping or mild inflation is when prices rise 3% a year or less. According to the Federal Reserve, when prices increase 2% or less, it benefits economic growth.
• This kind of mild inflation makes consumers expect that prices will keep going up. That boosts demand. Consumers buy now to beat higher future prices. That’s how mild inflation drives economic expansion.

II. Walking Inflation

• When prices rise by more than 3% but less than 10% per annum (i.e., between 3% and 10% per annum), it is called as Walking Inflation.
• It is harmful to the economy because it heats-up economic growth too fast.
• People start to buy more than they need to avoid tomorrow’s much higher prices. This increased buying drives demand even further so that suppliers can’t keep up and neither can the wages. As a result, common goods and services are priced out of the reach of most people.

III. Galloping Inflation

• When inflation rises to 10% or more (i.e., prices rise by double- or triple-digit inflation rates like 30% or 400% or 999% per annum), it wreaks absolute havoc on the economy. It is also referred as jumping inflation.
• Money loses value so fast that business and employee income can’t keep up with costs and prices.
• Foreign investors avoid the country, depriving it of needed capital. The economy becomes unstable, and government leaders lose credibility.

IV. Hyperinflation

• Hyperinflation refers to a situation where the prices rise at an alarming high rate – i.e., more than 50% a month.
• The prices rise so fast that it becomes very difficult to measure its magnitude. However, in quantitative terms, when prices rise above 1000% per annum (quadruple or four-digit inflation rate), it is termed as Hyperinflation.
• Most examples of hyperinflation occur when governments print money to pay for wars.
• Examples of hyperinflation include Germany in the 1920s, Zimbabwe in the 2000s, and Venezuela in the 2010s.
• During a worst-case scenario of hyperinflation, value of national currency (money) of an affected country reduces almost to zero. Paper money becomes worthless and people start trading either in gold and silver or sometimes even use the old barter system of commerce.

V. Chronic Inflation

• If creeping inflation persist (continues to increase) for a longer period of time then it is often called as Chronic or Secular Inflation.
• Chronic Creeping Inflation can be either Continuous (which remains consistent without any downward movement) or Intermittent (which occurs at regular intervals).
• It is called chronic because if an inflation rate continues to grow for a longer period without any downturn, then it possibly leads to Hyperinflation.
• VI. Moderate Inflation
• Concept of Creeping and Walking inflation clubbed together are called Moderate Inflation.
• When prices rise by less than 10% per annum (single digit inflation rate), it is known as Moderate Inflation.
• It is a stable inflation and not a serious economic problem.
• VII. Running Inflation
• A rapid acceleration in the rate of rising prices is referred as Running Inflation.
• When prices rise by more than 10% per annum, running inflation occurs.
• Though economists have not suggested a fixed range for measuring running inflation, we may consider price rise between 10% to 20% per annum (double digit inflation rate) as a running inflation.

What is Consumer Price Index (CPI)?

• Consumer Price Index (CPI) measures price changes from the perspective of a retail buyer.
• CPI is released by the National Statistical Office (NSO).
• Base Year for CPI is 2012 and the Monetary Policy Committee (MPC) uses CPI data to control inflation.
• The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics etc, which Indian consumers buy for use.
• The CPI has several sub-groups including food and beverages, fuel and light, housing and clothing, bedding and footwear.
• Four types of CPI are as follows:
  • CPI for Industrial Workers (IW).
  • CPI for Agricultural Labourer (AL).
  • CPI for Rural Labourer (RL).
  • CPI (Rural/Urban/Combined).
• Of these, CPI for Industrial Workers (IW), CPI for Agricultural Labourer (AL) and CPI for Rural Labourer (RL) are compiled by the Labour Bureau in the Ministry of Labour and Employment.
• CPI (Rural/Urban/Combined) is compiled by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation.

-Source: The Hindu

India and China Face-off along the Line of Actual Control (LAC)

Context:

Indian and Chinese soldiers suffered “minor injuries” after they were engaged in a face-off along the Line of Actual Control (LAC) in Tawang sector of Arunachal Pradesh on December 9.

Relevance:

GS-II: International Relations (India’s Neighbors, Foreign Policies affecting India’s Interests)

Dimensions of the Article:

1. Key points
2. Chinese claim over Arunachal Pradesh
3. India and Arunachal Pradesh
4. Why Arunachal Pradesh? What is China’s Interest In Arunachal Pradesh?

Key points:

• On December 09, 2022, People’s Liberation Army (PLA) troops contacted the LAC in Tawang sector, which was contested by own troops in a firm and resolute manner.
• This face-off led to minor injuries to a few personnel from both sides.
• Both the sides immediately disengaged from the area and flag meeting was held between the commanders on both sides to restore peace and tranquillity
• This is the first incident of its kind after the June 15, 2020 incident when 20 Indian soldiers were killed and several others were injured in violent clashes with the PLA troops in Ladakh’s Galwan Valley.

Chinese claim over Arunachal Pradesh

• When the new Peoples Republic of China was formed in February 1912 after the abdication of the Qing emperor, the Tibetans asserted their independence.
• They forced the Chinese troops based in Lhasa to return to the mainland-via India. A year later, Tibet declared independence from China.
• In order to ensure that the unrest did not spread to India and assert their boundaries, the ruling British convened a tripartite meeting at Shimla with Tibetan and Chinese delegates to define the border.
• The meeting gave China suzerainty over most of Tibet, and the boundary defined in this treaty was later known as the McMohan line.
• The Chinese Foreign Ministry said that China’s “position on Zangnan or South Tibet, as China refers to Arunachal] region is consistent and clear. We never recognised the so-called Arunachal Pradesh.”

India and Arunachal Pradesh

• Arunachal Pradesh (called South Tibet in China) is a full-fledged state of India.
• India’s sovereignty over the area is internationally recognized and its residents have not shown any inclination to leave India.
• The majority of the international maps acknowledge the area to be an Indian Territory.

• China has some (pre-) historical claims through its ownership of Tibet, but the people and geography primarily favor India.

Why Arunachal Pradesh? What is China’s Interest In Arunachal Pradesh?

• Arunachal Pradesh known as the North East Frontier Agency (NEFA) until 1972, is the largest state in the northeast and shares international borders with to the north and northwest, Bhutan towards the west and Myanmar to the east.
• The state is like a protective shield to the northeast.
• However, China claims Arunachal Pradesh as a part of southern Tibet.
• And while China may lay claim to the entire state, its main interest lies in the district of Tawang, which is in the north-western region of Arunachal and orders Bhutan and Tibet. China’s interest in Tawang could be for tactical reasons as it provides a strategic entry into India’s northeastern region.
• Tawang is a critical point in the corridor between Tibet and Brahmaputra Valley.

Tawang monastery issue

• Besides Tawang also hosts the Tawang Ganden Namgyal Lhatse (Tawang Monastery), which is the second largest monastery of Tibetan Buddhism in the world.
• The monastery was founded by Merag Lodroe Gyamtso in the year 1680-81 to honor the wishes of the 5^th Dalai Lama.
• China claims that the monastery is evidence that the district once belonged to Tibet. They cite historical ties between the Tawang monastery and the Lhasa monastery in Tibet to support their claim over Arunachal.
• This despite the fact that the 1914 Simla convention, which included a Chinese representative on an equal footing with a Tibetan representative, gave birth to the McMahon Line separating Tibet from India in the eastern sector. It clearly defined the frontiers of the boundary between India and Tibet.

Cultural connections and China’s anxieties

• Tawang is an important center of Tibetan Buddhism. There are some tribes in the upper Arunachal region which have cultural connections to the people of Tibet. The Monpa tribal population practices Tibetan Buddhism and are also found in some areas of Tibet.
• According to some experts, China fears that the presence of these ethnic groups in Arunachal could at some stage give rise to a pro-democracy Tibetan movement against Beijing.

Political significance

• When the Dalai Lama escaped Tibet in 1959 amid China crackdown, he entered India through Tawang and stayed in the Tawang monastery for some time.

The Bhutan factor

• If Beijing were to gain control of Arunachal, it would mean that the kingdom of Bhutan would have China as its neighbour on both the western and eastern borders.

Infrastructure investments

• China has already engaged in massive construction of motorable roads to connect strategic points on Bhutan’s western side. According to reports, China wants to extend its roads from Doka La to Gamochin, which is under the guard of the Indian army. China’s efforts to move closer to the Siliguri corridor is a security threat for both India and Bhutan.
• What’s more, China is expanding its network of railway lines in the region which could give its military a huge advantage.

Strategic location of Arunachal Pradesh

• Arunachal’s strategic location Arunachal Pradesh is the closest location for India to target China with missiles. Also, Arunachal is the best location for
• India to deploy a multi-layered air defence system for possible attacks from China. Thus, control over Arunachal will give China a strategic advantage.

Water power

• We all know China has control over India’s water supply to the northeastern region. It has constructed several dams and can use water as a geo-strategic weapon against India by causing flooding or drought in the region.
• The Tsangpo river, which originates in Tibet, flows into India and is called Siang in Arunachal Pradesh before it becomes the Brahmaputra.

The McMahon Line

History behind it

• British India annexed Assam in northeastern India in 1826, by Treaty of Yandabo at the conclusion of the First Anglo-Burmese War (1824–1826). After subsequent Anglo-Burmese Wars, the whole of Burma was annexed giving the British a border with China’s Yunan province.
• In 1913–14, representatives of Britain, China, and Tibet attended a conference in Simla, India and drew up an agreement concerning Tibet’s status and borders. The McMahon Line, a proposed boundary between Tibet and India for the eastern sector, was drawn by British negotiator Henry McMahon on a map attached to the agreement.
• All three representatives initialled the agreement, but Beijing soon objected to the proposed Sino-Tibet boundary and repudiated the agreement, refusing to sign the final map on the ground that Tibet was subordinate to China and had not the power to make treaties.
• Chinese have maintained this position to the present day and also have claimed that Chinese territory extends southward to the base of the Himalayan foothills.
• This frontier controversy with independent India led to the Sino-Indian hostilities of October–November 1962. In that conflict the Chinese forces occupied Indian territory south of the McMahon Line but subsequently withdrew after a cease-fire had been achieved.

India’s stand on McMahon Line

• India believes that when the McMahon Line was established in 1914, Tibet was a weak but independent country, so it has every right to negotiate a border agreement with any country.
• According to India, when the McMahon Line was drawn, Tibet was not ruled by China. Therefore, the McMahon Line is the clear and legal boundary line between India and China.
• Even after the Chinese occupancy over Tibet in 1950, the Tawang region remained an integral part of India.

Current status on the McMahon Line

• India recognizes the McMahon Line and considers it to be the ‘Actual Line of Control (LAC)’ between India and China, while China does not recognize the McMahon Line. China says that the area of the disputed area is 2,000 kilometers while India claims it is 4,000 kilometers.
• This land dispute between India and China is in Tawang (Arunachal Pradesh), which China considers as the Southern part of Tibet. Whereas according to the Shimla Agreement it is a part of the Indian state Arunachal Pradesh.
• Thus, it is clear that China rejects almost every treaty that it had approved before the communist revolution. This is true about the Panchsheel agreement also.

-Source: The Hindu

Outcomes of Convention on Biological Diversity COP15

Context:

The first day of the 15th Conference of Parties (COP15) to the United Nations Convention on Biological Diversity (CBD) in Montreal, Canada, saw the European Union push for increased accountability for biodiversity impacts and sustainable consumption choices.

Relevance:

GS III: Environment and Ecology

Dimensions of the Article:

1. Threatened Species
2. 30×30 Target
3. About the Convention on Biological Diversity

Threatened Species:

• A list of threatened species was released at the 15^th COP to the United Nations Convention on Biological Diversity (CBD) in Montreal, Canada.
• The data shows how overconsumption and unsustainable harvesting can lead to extinction of plants and animals.
• Abalone shellfish:
  • As many as 44 per cent of all abalone shellfish species are now threatened with extinction.
  • They are among the world’s most expensive seafoods and are considered a culinary delicacy.
  • Unsustainable extraction and poaching along with climate change, disease and pollution have put twenty of the world’s 54 abalone species at risk of extinction, according to IUCN.
• The latest assessment by IUCN has also added dugongs and pillar coral to the IUCN Red List.
• Dugong:
  • Dugong populations in east Africa and New Caledonia have entered the IUCN Red List as Critically Endangered and Endangered respectively.
  • However, the IUCN status of the species remains Vulnerable globally.
  • Reasons: Unintentional capture in fishing gear and destruction of their food (sea grass) due to chemical pollution, oil and gas exploration and production, bottom trawling and unauthorised coastal development.

30×30 Target:

• CBD is pushing for a 30×30 Target to protect and conserve at least 30 per cent of land and ocean biodiversity by 2030 to avoid a crisis.
• Disadvantages of 30*30 targets:
  • The goal will oust around 300 million indigenous people from their native lands and forests in the name of conservation.
  • Some 300 million people are at a risk of losing their means of existence and nine per cent of these people live in low- or middle-income countries.
  • They will be restricted from accessing the resources, hunting and practising agriculture.

About the Convention on Biological Diversity

• Biodiversity conservation is a collective responsibility of all nations.
• Convention on Biological Diversity (CBD) is a step towards conserving biological diversity or biodiversity with the involvement of the entire world.
• The Convention on Biological Diversity (a multilateral treaty) was opened for signature at the Earth Summit in Rio de Janeiro in 1992 and entered into effect in 1993.
• The convention called upon all nations to take appropriate measures for conservation of biodiversity and sustainable utilisation of its benefits.
• The Convention has three main goals:
• conservation of biological diversity (or biodiversity);
• sustainable use of its components; and
• fair and equitable sharing of benefits arising from genetic resources.
• It is often seen as the key document regarding sustainable development.
• The Convention is legally binding; countries that join it (‘Parties’) are obliged to implement its provisions.
• 195 UN states and the European Union are parties to the convention.
• All UN member states, with the exception of the United States, have ratified the treaty.

-Source: Down to Earth

Governor as the Chancellor of universities

Context:

Kerala Assembly passes Bill for removing Governor as the Chancellor of universities.

Relevance:

GS-II: Centre-State Relations, Role of Governor, Indian Constitution

Dimensions of the Article:

1. Key points
2. Role of Chancellor in Public Universities
3. Does the Governor have discretion in his capacity as Chancellor?
4. Recent Developments

Key points:

• The Kerala Assembly passed the University Laws (Amendment) Bill to replace the Governor as the Chancellor of universities in the state and appoint eminent academicians in the top post.
• Kerala Law Minister P Rajeev on December 7 introduced an amendment in the assembly where the chancellor can be decided by a three-member committee which includes the Chief Minister, the Leader of the Opposition and the Speaker.
• Chancellor is appointed for a period of five years and the person appointed as chancellor shall be eligible for reappointment of one or more terms. The chancellor may resign his office by an intimation in writing to the government.

Role of Chancellor in Public Universities : 

Through laws of the state legislature, the Governor is designated as the Chancellor of these public universities. The Chancellor functions as the head, and appoints the Vice-Chancellor. Further, the Chancellor can declare invalid any university proceeding which is not per with existing laws. He also presides over the university convocations, conferring honorary degrees. He also presides over the meetings of various university bodies.

Does the Governor have discretion in his capacity as Chancellor?

• In 1997, the SC held that although the Governor is bound by the advice of the state CoM, he not bound by such advice in discharging duty of statutory office (like Chancellor).
• The Sarkaria & Puunchi Commission concurred that in discharging statutory functions, the Governor is not legally bound by the aid & advice of CoM.
• The Sarkaria commission recommended state legislatures to avoid conferring statutory powers on the Governor, which are not envisaged in the Constitution.
• The Puunchi commission observed that the role of Governor as Chancellor may expose the office to controversies and public criticisms. Hence, the role of Governor should be restricted to constitutional provisions

Governor is the edifice of a strong Centre-State relation. Frequent problems with the office of the Governor can weaken the spirit of cooperative federalism. In this regard, it holds better to make the office of the Governor function only on the constitutionally mandated functions, for which he is aided and advised by the state CoM.

Recent Developments:

• Tamil Nadu had passed bills to transfer the power of appointing the Vice-Chancellor from Governor to the State government;
• Maharashtra amended the process to appoint the Vice-Chancellor, mandating a Search Committee to first forward the panel names to the State government, which will then recommend a panel of two names to the Governor for final selection;
• West Bengal has passed a bill to replace the Governor with the CM as the Chancellor of 31 state public universities.

-Source: The Indian Express