Current Affairs 22 April 2024

CONTENTS

1. Tamil Nadu’s Economic Transformation Driven by Diversification and Industrialization
2. Green Credit Programme
3. IMF’s Global Financial Stability Report 2024 Highlights Risks to Global Financial System
4. Why are Sugary Processed Foods Detrimental to Health?
5. New Genetic Variant Linked to Parkinson’s Disease Discovered by Scientists
6. Bitcoin Halving 
7. Longevity India Initiative

Tamil Nadu’s Economic Transformation Driven by Diversification and Industrialization

Context:

Tamil Nadu’s economic landscape is experiencing a substantial transformation, transitioning from its traditional agricultural base to a more diversified and industrialized economy. This shift is primarily attributed to the rise of cluster capitalists and ‘entrepreneurs from below,’ who are spearheading growth across various industry sectors.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. How diversified and industrialized is the economy of Tamil Nadu?
2. What factors have contributed to the economic transformation of Tamil Nadu?
3. Decentralised Industrialisation Model

How diversified and industrialized is the economy of Tamil Nadu?

Agriculture vs. Industry and Services:

• Tamil Nadu’s farm sector contributes to 12.6% of its Gross Value Added (GVA) and employs 28.9% of the labour force, which is lower than the national average.
• The state has a more industrialized and service-oriented economy compared to the national average.

Diversity in Agriculture:

• The livestock subsector in Tamil Nadu contributes 45.3% to the farm GVA, the highest among all states, showcasing a diversified agriculture sector.

Industry Clusters:

• Tamil Nadu has developed several industry clusters in sectors like textiles, engineering, leather, and food processing.
• For instance, Gujarat has a factory sector contributing to 43.4% of the state’s GVA and engaging 24.6% of its workforce, compared to Tamil Nadu’s 22.7% and 17.9% respectively. However, Gujarat’s economy is less diversified due to a higher share of agriculture in its GVA (15.9%) and workforce (41.8%).

What factors have contributed to the economic transformation of Tamil Nadu?

Role of Medium-Scale Businesses:

• The economic transformation in Tamil Nadu has been primarily driven by medium-scale businesses with turnovers ranging from Rs 100 crore to Rs 5,000 crore.

Decentralized Industrialization:

• Industrialization in Tamil Nadu has been decentralized through the development of various clusters, promoting a diverse and balanced economic landscape.

Cluster Development:

• Cluster development aims to increase productivity and regional efficiency by grouping businesses in specific geographic areas.
• Examples of successful clusters in Tamil Nadu include:
  • Tirupur: Cotton knitwear (employs 800,000 people).
  • Coimbatore: Spinning mills and engineering goods.
  • Sivakasi: Safety matches, firecrackers, and printing.
• These clusters have not only created employment opportunities but also fostered entrepreneurship and innovation.

Shift from Agriculture to Industry:

• Employment creation in cluster towns has reduced the workforce dependency on farming in Tamil Nadu, leading to economic diversification.

Role of Local Entrepreneurs:

• Entrepreneurs from various community backgrounds have significantly contributed to the industrialization and economic development of Tamil Nadu.
• Their involvement has played a crucial role in the state’s transformation and diversification beyond agriculture.

Focus on Social Development:

• High social progress indices resulting from investments in public health and education have likely contributed to Tamil Nadu’s industrialization and economic diversification.
• The state’s emphasis on social development has fostered a conducive environment for economic growth, leading to improved living standards and economic opportunities for its residents.

Decentralised Industrialisation Model

• Decentralisation involves the systematic distribution of powers and functions across different political and economic agents in society.
• It includes both political and economic dimensions such as the decentralisation of decision-making, ownership of means of production, structure of production, and location of production.

Key Features:

• Dispersion of Industrial Activities:
  • Spread of industrial activities across rural and peri-urban areas to reduce dependence on urban centers.
• Promotion of Small and Cottage Industries:
  • Encouragement of small and cottage industries owned and controlled by local communities to foster local entrepreneurship and economic empowerment.
• Emphasis on Labour-Intensive Production:
  • Use of labour-intensive production methods to generate employment opportunities and alleviate rural poverty.
• Utilisation of Local Resources and Skills:
  • Utilisation of local resources and skills to meet local needs and promote sustainable development.
• Interdependence and Self-Sustaining Economic Ecosystem:
  • Interdependence between different village industries to create a self-sustaining economic ecosystem.
• Equalisation of Production and Distribution:
  • Equalisation of production and distribution through the decentralised location of production units.

Benefits:

• Balanced Regional Development:
  • Facilitates balanced regional development and reduces spatial inequalities.
• Inclusive Growth:
  • Promotes inclusive growth by providing economic opportunities to rural communities.
• Resilience to Economic Shocks:
  • Enhances resilience to economic shocks by diversifying industrial activities across regions.
• Community Participation and Ownership:
  • Fosters community participation and ownership in the development process.
• Sustainable Development:
  • Supports sustainable development by utilising local resources efficiently and reducing environmental impacts.

Challenges:

• Limited Technical Capacity:
  • Limited technical capacity can lead to greater inefficiency.
• Increased Costs:
  • Decentralised models may lead to increased costs due to a loss of economies of scale, especially in procurement.
• Skill Gaps:
  • Skilled labour may not be uniformly available across regions in a decentralised model, resulting in skill gaps in certain locations.

-Source: Indian Express

Green Credit Programme

Context:

Recently, the Ministry of Environment Forest and Climate Change(MoEFCC) has clarified that under the Green Credit Program(GCP) primacy must be accorded to restoring ecosystems over merely tree planting.

Relevance:

GS III: Environment and Ecology

Dimensions of the Article:

1. Green Credit Programme
2. Green Credit Rules, 2023: Overview
3. Compensatory Afforestation: Overview

Green Credit Programme:

• The Green Credit Programme introduces a system of incentives, known as “Green Credits,” for activities that have a positive impact on the environment.
• It complements the domestic Carbon Market in India, expanding beyond CO2 emission reductions to incentivize a wider range of sustainable actions.

Objectives:

• The Green Credit System aims to meet various environmental obligations, encouraging companies, individuals, and local bodies to undertake sustainable initiatives.
• Unlike the carbon market’s focus on CO2 emissions, the Green Credit Programme promotes broader environmental goals.

Tradable Credits:

• Green credits earned through sustainable activities will be tradable, allowing participants to sell them on a proposed domestic market platform.
• This creates a market-based approach to incentivize and reward environmentally beneficial actions.

Program Administrator:

• The Indian Council of Forestry Research and Education (ICFRE) will serve as the administrator of the Green Credit Programme.
• ICFRE will develop guidelines, processes, and procedures for the implementation of the programme, ensuring its effectiveness and integrity.

Green Credit Activities:

The programme promotes a range of activities that contribute to environmental sustainability, including:

• Increasing Green Cover: Promoting tree plantation and related activities to enhance the green cover across the country.
• Water Conservation: Encouraging water conservation, water harvesting, and efficient water use, including the treatment and reuse of wastewater.
• Regenerative Agriculture: Promoting natural and regenerative agricultural practices and land restoration to improve productivity, soil health, and the nutritional value of food produced.
• Waste Management: Supporting sustainable waste management practices, including collection, segregation, and treatment.
• Air Pollution Reduction: Encouraging measures to reduce air pollution and other pollution abatement activities.
• Mangrove Conservation: Promoting the conservation and restoration of mangroves, important ecosystems for coastal areas.
• Ecomark Label: Encouraging manufacturers to obtain the “Ecomark” label for their goods and services, signifying their environmental sustainability.
• Sustainable Infrastructure: Encouraging the construction of buildings and infrastructure using sustainable technologies and materials.
• Setting Thresholds and Benchmarks: The Green Credit Programme will establish thresholds and benchmarks for each specific Green Credit activity, ensuring clear standards and targets for participants to achieve.

Green Credit Rules, 2023: Overview

Notification and Legal Basis

• Introduced on 12th October 2023 under the Environment Protection Act of 1986.

Objective

• Establish a mechanism promoting voluntary environmental actions leading to the issuance of green credits.
• Initial focus on voluntary tree plantation on degraded land, waste land, watershed areas, etc., managed by Forest departments.

Implementation of the Green Credit Program (GCP)

Afforestation Financing

• Registered and approved entities can finance afforestation projects in designated degraded forest and wasteland areas.
• Afforestation activities will be executed by State Forest departments.

Green Credit Valuation

• Two years post-planting, each tree undergoes evaluation by the International Council of Forestry Research and Education (ICFRE).
• Each planted tree can potentially earn one ‘green credit’.

Utilization of Green Credits

• Companies that have converted forest land for non-forest uses and removed numerous trees can use green credits to fulfill obligations under India’s compensatory afforestation laws.

Available Land for Green Credit Projects

• 10 States have identified approximately 3,853 hectares of degraded forest land for individuals, groups, and public/private sector units to earn and potentially trade green credits.
  • Chhattisgarh and Madhya Pradesh (MP) together represent about 40% of the available forest land.

Compensatory Afforestation: Overview

Definition

• Compensatory afforestation mandates industries or institutions, permitted to clear forest land for non-forestry purposes,
  • Provide equivalent non-forest land to forest authorities, and
  • Fund afforestation on the provided land.
• Land must ideally be near the cleared forest tracts.
• If unavailable, twice the amount of ‘degraded’ forest land can be used for afforestation.

Additional Compensation

• Companies must compensate for the lost forest ecosystem’s value, known as the ‘net present value’, due to land diversion.

Issues with Compensatory Afforestation and the Green Credit Program (GCP)

Challenges

• Obtaining contiguous non-forest land for compensatory afforestation, particularly in States like Chhattisgarh and Madhya Pradesh with historical land diversions for mining.
• The Compensatory Afforestation Fund, funded by environmental compensation from companies, has substantial unspent funds due to land availability issues.

Green Credit Challenges

• Assigning a monetary value to green credits is problematic.
• Linking green credits to compensatory afforestation activities is complex.

-Source: The Hindu

IMF’s Global Financial Stability Report 2024 Highlights Risks to Global Financial System

Context:

The International Monetary Fund (IMF) has released the Global Financial Stability Report 2024, focusing on ‘The Last Mile: Financial Vulnerabilities and Risks.’ The report cautions about the risks to the global financial system stemming from persistent high inflation, escalating lending in the unregulated credit market, and growing cyber-attacks targeting financial institutions.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. Global Financial Stability Report (GFSR)
2. IMF’s Concerns About Inflation
3. Private Credit Market in India

Global Financial Stability Report (GFSR)

• The GFSR is a semiannual report by the International Monetary Fund (IMF) that evaluates the stability of global financial markets and emerging-market financing.
  • Released twice a year, in April and October.

Key Focus:

• Assesses current market conditions and highlights systemic issues that could threaten financial stability and sustained market access for emerging market borrowers.
• Draws out financial implications of economic imbalances identified by the IMF’s World Economic Outlook.

IMF’s Concerns About Inflation:

• The IMF has noted a rising investor enthusiasm that the fight against high inflation in recent years is nearing its end.
• Contrary to this optimism, the IMF believes that investor expectations of slowing inflation and potential interest rate cuts by central banks may be premature.
• In some major advanced and emerging economies, the decline in inflation seems to have stalled, with recent core inflation rates higher than in previous months.
• Geopolitical risks, such as the ongoing wars in West Asia and Ukraine, could disrupt aggregate supply and drive up prices, possibly preventing central banks from reducing rates soon.

Implications for India:

• Strong fund flows into emerging markets have been driven by optimism over central banks easing interest rates.
• In 2023, India was the second-largest recipient of foreign capital after the U.S.
• If western central banks indicate a long-term high-interest rate policy, it could prompt investors to withdraw from emerging markets like India, increasing pressure on their currencies.
• The Indian rupee has already depreciated, reaching a new low of 83.57 against the U.S. dollar despite likely intervention by the Reserve Bank of India (RBI).
• A significant outflow of capital could further devalue the rupee and impact the country’s financial system.
• In such a scenario, the RBI may defend the rupee by reducing liquidity to raise interest rates, potentially slowing down the economy.

Concerns About the Private Credit Market:

• The IMF has expressed concerns about the growing unregulated private credit market, where non-bank financial institutions lend to corporate borrowers.
• Many borrowers in this private credit market may not be financially robust, with their current earnings often not exceeding their interest costs.

Private Credit Market in India:

• India has witnessed the growth of a small private credit market with the emergence of Alternative Investment Funds (AIFs).
  • These funds lend money to high-risk borrowers not served by traditional banking systems and non-bank financial companies.
  • They have also invested in distressed assets under the Insolvency and Bankruptcy Code (IBC) regime.
• According to SEBI, investments through these funds have more than tripled from ₹1.1 lakh crore in 2018-19 to ₹3.4 lakh crore in 2022-23.
• Both the RBI and SEBI have observed this trend and increased scrutiny over these funds.

-Source: The Hindu

Why are Sugary Processed Foods Detrimental to Health?

Context:

A 100g serving of Bournvita contains 86.7g of carbohydrates, with 49.8g being sugar, out of which 37.4g is added sugar. This means that for every 20g serving of Bournvita, consumers are ingesting about 10g of sugar. The production process of Bournvita involves malting, a technique where grains are converted into sugar. Malting is a process commonly used in the production of beverages like whiskey and malt-based milk drinks. During germination, enzymes in the grains transform their starch into sugar. Roasting these grains enhances the flavor by caramelizing the sugar present.

Relevance:

GS III: Science and Technology

Dimensions of the Article:

1. FSSAI’s Guidelines on Sugar Content
2. Health Risks Associated with Excessive Sugar Consumption
3. Recommendations for FSSAI Guidelines

FSSAI’s Guidelines on Sugar Content

Regulations (2018):

• According to the Food Safety and Standards Authority of India (FSSAI), a product can be labeled as ‘low on sugar’ only if it contains less than 5g of sugar per 100g, qualifying it as ‘healthy.’
• Products that fail to meet this standard but still market themselves as ‘health drinks’ are a matter of concern.
• For instance, consuming four servings of such a product would result in a sugar intake of 40 grams, exceeding the World Health Organization’s daily recommended limit of 25 grams or six teaspoons.
• Many Indian households also add extra sugar to chocolate-powder drinks, further elevating sugar consumption.

Health Risks Associated with Excessive Sugar Consumption:

• Weight Gain: Sugary foods and drinks are calorie-dense but nutrient-poor, leading to excessive calorie intake.
• Chronic Diseases: High sugar intake is associated with an increased risk of chronic conditions like type 2 diabetes, heart disease, and certain cancers.
• Dental Issues: Sugar promotes the growth of harmful mouth bacteria, contributing to tooth decay and cavities.
• Insulin Resistance: Excessive sugar consumption can lead to insulin resistance, heightening the risk of type 2 diabetes.
• Blood Sugar Fluctuations: Rapid spikes and drops in blood sugar levels due to sugar consumption can cause energy level fluctuations and mood swings.
• Liver Overload: Overconsumption of fructose can overload the liver, potentially leading to fatty liver disease and other liver-related issues.
• Addiction: Sugar can be addictive, causing cravings and overconsumption.
• Nutritional Imbalance: Sugar-rich foods can displace nutrient-dense foods in the diet, leading to nutrient deficiencies.
• Inflammation: Excessive sugar intake can contribute to body inflammation, linked to inflammatory conditions and autoimmune diseases.
• Mental Health: Some studies suggest a connection between high sugar intake and increased risk of depression, anxiety, and other mental health disorders.

Recommendations for FSSAI Guidelines:

• FSSAI regulations permit sugar in milk cereal-based foods for infants, with a preference for certain types like lactose and glucose polymers.
• Sucrose and fructose can be added if necessary, but their total content should not exceed 20% of the total carbohydrate content.
  • These guidelines should be reconsidered due to the allowance of sugar in infant foods.
• Clear regulations defining ‘healthy’ and ‘unhealthy’ criteria for all food and beverage products are necessary to guide consumers towards healthier choices.

-Source: The Hindu

New Genetic Variant Linked to Parkinson’s Disease Discovered by Scientists

Context:

Scientists have identified a new genetic variant associated with Parkinson’s disease. This discovery provides insights into the evolutionary origins of various familial forms of parkinsonism and lays the groundwork for a better understanding and treatment of the condition.

Relevance:

GS III: Science and Technology

Dimensions of the Article:

1. Parkinson’s Disease: An Overview
2. Recent Advancements in Understanding Parkinson’s Disease

Parkinson’s Disease: An Overview

Definition and Background:

• Parkinson’s disease (PD) is a progressive neurodegenerative disorder affecting movement, which can lead to immobility and dementia.
• While the disease typically affects older individuals, younger people can also be diagnosed. Men are more commonly affected than women.
• Over the past 25 years, the global prevalence of PD has doubled, with India accounting for approximately 10% of the global burden.

Causes and Pathophysiology:

• The exact cause remains unknown, but it is thought to result from a combination of genetic and environmental factors.
• Parkinson’s is characterized by the loss of dopamine-producing neurons in the brain, causing both motor and non-motor symptoms.

Symptoms:

• Motor Symptoms: Slow movement (bradykinesia), tremors, muscle rigidity, and difficulties with walking and balance.
• Non-Motor Symptoms: Cognitive impairments, mental health issues, sleep disturbances, pain, and sensory problems.

Treatment:

• While there is no cure for Parkinson’s, various therapies can help manage and reduce symptoms.
• The most common medication prescribed is a combination of levodopa and carbidopa, which increases dopamine levels in the brain.
• Other treatments include surgical procedures like deep brain stimulation and rehabilitative therapies.

World Parkinson’s Day:

• Observed annually on 11th April, World Parkinson’s Day aims to raise global awareness and understanding of the disease.

Recent Advancements in Understanding Parkinson’s Disease:

Genetic Research:

• Geneticists and neuroscientists are delving into genetic variations to gain a better understanding of Parkinson’s disease.

Linkage Analysis:

• Focuses on studying rare families with inherited parkinsonism to identify gene mutations associated with the disease.
• A recent breakthrough identified a new genetic variant, RAB32 Ser71Arg, which is linked to Parkinson’s across multiple families worldwide.

Genome-wide Association Studies (GWAS):

• Compares genetic data from Parkinson’s patients with that of healthy individuals to identify genomic locations and genes potentially related to the risk of Parkinson’s.
• GWAS has identified over 92 genomic locations and 350 genes that may be associated with Parkinson’s risk.

-Source: The Hindu

Bitcoin Halving 

Context:

The cryptocurrency community is gearing up for the upcoming Bitcoin halving event, which is likely to be held this weekend.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. Bitcoin Halving: An Overview
2. How Does Bitcoin Halving Occur?
3. Impact on the Crypto Market

Bitcoin Halving: An Overview

• Bitcoin halving refers to an event in the Bitcoin blockchain where the reward for mining new blocks is halved, thereby reducing the rate at which new bitcoins are generated.
• Bitcoin, created by the pseudonymous figure Satoshi Nakamoto, is designed with a finite supply of 21 million tokens.
• The halving process will continue periodically until 2041, at which point all 21 million Bitcoins will have been mined.

How Does Bitcoin Halving Occur?

Blockchain Technology and Mining:

• Blockchain is a decentralized ledger technology that records information in blocks, which are then linked together in a chain.
• Miners use powerful computing resources to solve complex mathematical puzzles, thereby validating transactions and adding new blocks to the blockchain.
• Miners are rewarded with new bitcoins for their efforts in maintaining the network.

Halving Mechanism:

• The Bitcoin protocol is designed to undergo a halving event approximately every four years, or after every 210,000 blocks are added to the blockchain.
• During a halving event, the reward for mining new blocks is reduced by half. This decreases the incentive for mining and slows down the production rate of new bitcoins.

Impact on the Crypto Market:

Scarcity and Price Pressure:

• The reduced rate of new Bitcoin supply due to halving increases its scarcity, potentially leading to upward pressure on its price.
• This increased scarcity may attract new investors to the cryptocurrency market, anticipating potential price appreciation.

Potential Implications:

• The halving event is closely watched by the crypto community and often leads to increased volatility in Bitcoin’s price.
• Historically, Bitcoin has experienced significant price rallies following previous halving events, though past performance is not indicative of future results.

-Source: The Economic Times

Longevity India Initiative

Context:

Recently, the Indian Institute of Science (IISc) launched the Longevity India Initiative.

Relevance:

Facts for Prelims

About Longevity India Initiative

The Longevity India Initiative is a project aimed at extending the human ‘health span’ and addressing challenges related to ageing.

Key Features:

• Focus on Health Span Extension: The initiative aims to prolong the period of healthy living and address age-related health issues.
• Multi-Disciplinary Collaboration: It involves collaboration among researchers from various departments at the Indian Institute of Science (IISc), clinicians, industry partners, philanthropists, and civil society.
• Clinical Study: A large-scale clinical study is underway as part of the initiative, focusing on ageing-related research and interventions.
• Research Objectives: The initiative emphasizes both fundamental and applied research to deepen the understanding of ageing and develop solutions to enhance quality of life.
• Intervention Development: Leveraging advanced research, the initiative aims to develop interventions for more effective management of age-related diseases, with a focus on promoting healthy ageing throughout India.
• Funding Support: Initial grant funding for the initiative has been provided by Prashanth Prakash, Founding Partner of Accel India.

Significance:

• Growing Elderly Population: With India’s elderly population projected to reach 347 million by 2050, the initiative addresses the urgent need to address ageing-related challenges.
• Technological Solutions: It highlights the importance of leveraging technology to provide accessible geriatric healthcare, support the silver economy, and invest in digital systems that cater to ageing populations.

-Source: Business Standards