Editorials/Opinions Analysis For UPSC 09 August 2023
Contents
- Rising Local Currencies Transform International Trade and Finance
- Enhancing Urban Health Resilience to Climate Events
Rising Local Currencies Transform International Trade and Finance
Context
Over the past few years, it has been increasingly clear how exceptional India has become as a preferred trading partner with a sizable and active market. Through a series of currency swap agreements involving 23 developed and developing countries, this recognition was firmly established. These accords significantly increased credit lines, creating the conditions for efficient transaction payments with India and signalling a significant turning point in the state of the world economy.
Relevance
GS Paper 3 – Indian Economy – International Trade
Mains Question
Evaluate the challenges faced by India and Russia in adopting the Indian rupee for trade settlements during the Ukraine-Russia conflict. Compare these challenges with historical bilateral trade agreements. Suggest strategies to overcome such challenges for a more resilient international economic framework. (250 words)
The Unanticipated Rise of the Indian Rupee in Global Trade
When the conflict between Ukraine and Russia broke out in the early months of 2022, the global equilibrium experienced an unanticipated disruption. The following enactment of sanctions against Russia by the United States and the European Union had a significant impact on the entire world, but it particularly affected India and Russia because of their close economic ties.
The integration of the Indian rupee as a medium of exchange between these two nations was an inventive and unorthodox response to this tremendous obstacle.
Currency Settlement Mechanisms: A Paradigm Shift
- Following these turbulent events, a fresh method of operation was developed to speed up cash settlements between Russia and India.
- The systematic rerouting of transactions through strategically placed Rupee Vostro accounts, under the supervision of approved Indian dealer banks operating inside the purview of Russian financial institutions, was done.
- By giving Indian importers the option to meet their payment obligations in rupees through these specially designated accounts, this clever arrangement created a reliable and viable conduit for facilitating smooth trade-related transactions. Notably, the recompense for even Indian exports to Russia was channelled through the wise use of rupees obtained from corresponding Vostro accounts.
Getting Past Currency Settlement Obstacles: Problems and Solutions
- The persistent and uncompromising trade surplus of Russia was the main source of problems for this innovative arrangement, despite its apparent effectiveness. This agreement faced significant obstacles due to Russia’s reluctance to accumulate sizeable sums of Indian rupees within the Vostro accounts.
- This hesitation was caused by legitimate worries about the rupee’s relative low standing within the global currency hierarchy and its inherent susceptibility to depreciation. With the web of sanctions making it impossible to use traditional global currencies like the dollar and euro, and the ruble’s exchange rate’s volatility adding a further element of uncertainty, creative solutions to these problems developed. Notably, certain payments involving the import of Russian oil were swiftly resolved thanks to the clever use of the Chinese yuan.
Historical Context:
Comparisons with Previous Bilateral Agreements and the Problems They Presented
In particular, in the context of its relations with the Soviet Union, the historical bilateral trade and clearance arrangements initiated by India during the 1950s have a clear resonance with the modern issues arising from this circumstance. These ground-breaking frameworks cleverly tapped into the inherent strength of the Indian rupee, giving it the crucial function of acting as a facilitating channel for speeding up trade and credit-related operations. But even these innovative arrangements were not immune to the ups and downs of difficulties, especially when the Soviet Union started accumulating dependable and significant trade surpluses.
Geo-economic Dynamics: A New Dawn and Its broader Consequences
- As governments in the Southern Hemisphere fiercely strive to promote trade and settlements without being constrained by dependency on the hegemonic currencies of their Northern hemisphere equivalents, the geo-economic landscape is currently poised on the verge of a dramatic shift.
- The convergence of the Indian rupee, Russian ruble, Chinese yuan, UAE dirham, and Indonesian rupiah attests to the widespread and intense desire to carry out transactions in local currencies, thereby reducing their dependence on the domination of globally dominant rivals.
Regional Agreements and the Future: Creating a Path for Advancement
- Recent agreements reached between India and the United Arab Emirates (UAE), as well as the negotiations currently underway with Indonesia, eloquently demonstrate the popularity and momentum of the idea of local currency transactions. The bilateral agreement that was negotiated between India and the UAE has a broad and ambitious scope, covering areas like commerce, remittances, and capital flows.
- Its applicability to the sizeable Indian expatriate community in the UAE, where improved remittance systems serve as a cornerstone, is of special significance. These steps and projects establish a strong precedent, indicating the gradual transition towards a ground-breaking financial architecture that resolutely confronts the long-standing monopoly upheld by Northern currencies and economies.
Conclusion
- In conclusion, the unexpected rise of the Indian rupee as a medium of exchange, fueled by the complex geopolitical dynamics, is a striking example of a paradigm shift of enormous proportions. An emerging financial system is undeniably establishing itself as countries located in the Southern Hemisphere gain impetus in their determination to promote trade and settlements handled through their national currencies.
- The principles of geo-economics and capitalism seem poised to be the forerunners of reshaping the global financial landscape, gradually and methodically eroding the foundation of dependence on the established dominance wielded by Northern currencies, even though this landscape is not without potential difficulties and disparities.
- This emerging and developing environment necessitates a watchful eye as it ushers in a new era that has the potential to produce greater justice and resilience within the complex web of the global economic picture. The beginning of this new period portends the possibility of creating stronger and more egalitarian foundations for the story of the global financial system.
Enhancing Urban Health Resilience to Climate Events
Context
The last monsoon season in India has amply demonstrated the vulnerabilities present in urban households when confronted with the cumulative effects of climate change-related occurrences. The far-reaching effects of these occurrences have caused enormous concern, drawing the attention of policymakers and public alike. From the ominous threat of cyclonic storms to the deluge of floods and the unrelenting downpour of torrential rainfall. While the arduous process of recovery progresses, it is essential to make your way through the maze of obstacles and stay alert to another formidable threat – the looming threat of rampant outbreaks of common water and vector-borne diseases in regions severely affected by the relentless torrent of heavy rains.
Relevance
GS Paper 3 – Issues related to Health, Climate Change
Mains Question
Explain the necessity for proactive planning and systematic adaptation in light of the increasing frequency of climate events and their effects on urban health. Describe how a thorough health system approach can successfully address the issues brought on by climate-induced disasters. In order to increase urban health resilience, emphasise the role of integrated disease surveillance programmes and collaborative efforts. (250 Words)
Urban Vulnerability: A New Issue
It is inevitable that the vulnerabilities of particular demographic segments be amplified in the period of climate change, which is characterised by the increased frequency and heightened intensity of catastrophic climatic occurrences. Urban households, especially those located in urban enclaves like slums and resettlement colonies, stand out among these vulnerable populations as frighteningly inclined to the destruction of climatic shocks. These urban enclaves, which are frequently overrun with marginalised people, are home to a sizeable number of people who struggle with the interrelated problems of poverty, informal work, and the lack of robust social safety nets.
Studying Vulnerability
The conclusions of an intriguing study that was only recently published in the prestigious Indian Journal of Public Health provide a nuanced and moving perspective on the complex dynamics of household vulnerability to climate-related catastrophes. Two important conclusions are highlighted in this landmark study: The risk of contracting diseases like malaria is first and foremost greater for homes with poorer socioeconomic indicators than for those in the countryside, with urban households being more severely at risk. Second, states with a reputation for climate instability have a higher propensity for malaria epidemics to break out. Similar to malaria, dengue fever incidence leans disproportionately in favour of urban areas.
Disease Management and Coordination Challenges
After the violent monsoon season, officials in charge of controlling water- and vector-borne diseases find themselves embroiled in a never-ending struggle to stop the virulent spread of these diseases. A rare convergence of difficulties this year has increased the pressure on these officials significantly. Due to the constant movement of individuals across state lines, effective disease containment necessitates a complex symphony of coordinated initiatives that transcend state boundaries and involve seamless inter-state collaboration. It takes skillful coordination, constant dedication, and careful planning to achieve a harmonious synchronicity in these combined efforts.
A new approach to urban health
The necessity of reviving and strengthening urban primary health-care systems becomes fundamental relevance in view of the increasing unpredictableness and intensity of climate-induced catastrophes to support their innate resilience. These health systems need to be carefully planned and calibrated to address the special needs and vulnerabilities of the frequently ignored urban strata, especially those living in urban slums and peri-urban areas. A truly resilient health system is one that demonstrates the ability to react quickly to emergencies, carefully plan for potential crises, and deftly adapt to the constantly changing landscape of public health requirements.
An increase in funding for urban health
Realising such tremendous resilience requires a seismic increase in public investment, which must be emphasised, especially with a clear focus on metropolitan areas vulnerable to the disruptive effects of climate vagaries. Urban local governments are battling the problem of resource shortage, and the current allocation for primary healthcare is still embarrassingly insufficient. Although the National Urban Health Mission has made remarkable steps towards improving urban primary care, the pace of improvement is still being held back by the challenges associated with money collection. The goal of preparedness and resilience requires the creation of specialised funds that are intended just for fortifying and fortifying the weak urban strongholds. These funds may be pooled from institutional sources like the Finance Commission.
Expanding Cities Beyond: Towns and Beyond
Focusing on fortification is essential not just for cities but also for towns, which should be included in the scope of these defences. The complex interplay of numerous agencies and the enduring and pervasive impact of the private sector define the rich tapestry of urban health governance, which has been prominently highlighted during the grip of the ongoing COVID-19 pandemic. The pandemic’s test case highlights the necessity of increased coordination, knowledge distribution, preventative and therapeutic initiatives, adaptive treatment protocols, and watchful cost control.
Strengthening Information and Monitoring Systems
The scope of a comprehensive strategy necessarily includes the fusion and amplification of information and surveillance systems, with flagship programmes like the Integrated Disease Surveillance Programme calling for thorough universalization. A comprehensive health system approach must take precedence over the traditional framework of vertical disease control programmes due to the complex interplay and intertwined dynamics of the health and climate crises. A versatile cadre of public health professionals adept at bridging the gap between communities and the complicated health system may be developed through the seamless integration of frontline staff across a range of disease management programmes.
Challenges related to resource scarcity and the need for proactive climate adaptation
Operating and navigating in a resource-constrained environment emphasises and underlines the absolute and inevitable demand for forward-looking and imaginative ideas and approaches. Plans, programmes, and management methods must be closely and inextricably linked to the irrefutable and unavoidable reality of climate-induced catastrophes, which are increasing in frequency and severity. This important insight serves to underline and emphasise the importance of proactive planning, groundwork, and systemic adaptation. All of these initiatives work together and in concert to ensure and secure a state of readiness that is not only thorough but also elevated in character, specifically calibrated and fine-tuned to counter and effectively tackle these complex, intricate, and interconnected challenges that we are up against.
Conclusion
Building up urban health resilience is of utmost importance as climate events continue to reorganise the fault lines that make cities vulnerable. This admirable goal must be pursued with significant funding, meticulous planning, seamless coordination, and a paradigm shift away from conventional vertical disease control programmes towards an all-encompassing health system approach. The shifting environment emphasises how urgent it is to adjust public health services to deal with the complex web of climate change and health catastrophes. A proactive approach taken today will unavoidably clear the way for a more adaptive, agile, and resilient urban health infrastructure, ensuring that communities remain strong and well-prepared to manage the changing terrain of a quickly changing world.
