Daily Prelims Notes 3 January 2025

Daily Prelims Notes

3 January 2025

Table Of Contents

1. Proposed Safeguard Duty on Steel Imports
2. Government Constitutes Panel to Revise Wholesale Price Index (WPI)
3. Households’ Balance Sheet Stress Exhibits K-Shaped Dynamics: Nomura
4. Why has Trump called the Panama treaty ‘foolish’?
5. 27 Europe-bound migrants die as boats capsize off Tunisia
6. Sivagiri row: what is the outrage about?
7. Supreme Court questions petition alleging ‘favouritism’ in legal profession
8. Injectable Hydrogel: A Breakthrough in Targeted Cancer Treatment
9. Obesity: The Silent Epidemic of Non-Communicable Diseases

1. Proposed Safeguard Duty on Steel Imports

Sub: Eco

Sec: External sector

Context and Background:

Proposed Safeguard Duty: The Directorate General of Trade Remedies (DGTR) initiated an investigation into steel imports, targeting “Non-Alloy and Alloy Steel Flat Products.”

Objective: To address concerns raised by domestic players about a significant increase in imports affecting local industry competitiveness.

Stakeholders: Key players filed applications under the Customs Tariff Act, 1975, seeking the safeguard duty.

GTRI’s Critique of the Probe

The Global Trade Research Initiative (GTRI) identified technical flaws in the safeguard investigation:

• Minimal Import Surges: Focus on products with negligible import growth.
• Inappropriate Tools: Misapplication of global safeguard principles.

Industry Concerns and Opposition

• MSME Engineering Sector:
  • Additional duties could make domestic products uncompetitive globally.
  • Challenges: Liquidity constraints and high domestic steel prices.
• Emphasized the adverse impact on exports and the broader economy.

Steel Industry Data (2019-20 to 2023-24)

• Crude Steel Production: Increased from 109.14 MT to 144.04 MT.
• Consumption: Rose from 100.17 MT to 136.25 MT.
• Import Dependency:
  • FY24: India met 94% of steel demand domestically, with imports accounting for only 6%.

Global Perspective

• Excess Capacity: Nations like China, Japan, and South Korea face surplus due to slowing demand, leading to increased exports.
• Trade Agreements:
  • Most imports are from FTA partners or China.
  • GTRI recommends FTA-specific safeguards and anti-dumping measures targeting China.

Safeguard Measures Defined

• Aim to provide a level-playing field for domestic players in case of a sudden surge in imports.

Safeguard Measures under WTO:

• Anti-Dumping Duty: Imposed when a foreign company exports a product at a price lower than its home market value, to protect local industries from unfair competition.
• Countervailing Duty: Imposed to counteract subsidies given by foreign governments to their exporters, which distort trade.
• Quotas: Limits the quantity of a particular product that can be imported during a set period.
• Tariffs: Taxes on imported goods to protect domestic industries or raise revenue.

2. Government Constitutes Panel to Revise Wholesale Price Index (WPI)

Sub: Eco

Sec: Inflation and unemployment

Context and Objective

• Purpose: To revise the Wholesale Price Index (WPI) base year from 2011-12 to 2022-23 to reflect structural economic changes.
• Broader Goal: Transition from WPI to a Producers’ Price Index (PPI) for enhanced price tracking and reliability.

Composition of the Panel

• Chairperson:
  • Ramesh Chand, NITI Aayog Member.
• Members (18):
  • Officials from Ministries of Statistics, Finance, Petroleum and Natural Gas, Agriculture, and Consumer Affairs and representatives from RBI and GST Network.

Terms of Reference

• Base Year Revision:
  • Update WPI’s constituents and base year to 2022-23.
• Review Price Collection:
  • Analyze and suggest improvements in the price data collection system.
• Producers’ Price Index (PPI):
  • Develop a new PPI methodology and presentation formats.
  • Recommend a roadmap for transition from WPI to PPI.
• Enhance Reliability:
  • Suggest improvements for greater accuracy and reliability of both indices.
• Flexibility to Co-Opt Experts:
  • Panel chairman may include additional experts/agencies as needed.

Significance of Transition to PPI

• Global Best Practices: Align with international standards for price indices.
• Better Representation: PPI captures producers’ input costs more accurately than WPI.
• Policy Relevance: Enhanced decision-making in economic policy and inflation tracking.

Wholesale Price Index (WPI)

The WPI represents the price level of goods at the wholesale stage, i.e., before they reach consumers. It is used as an indicator of inflation in some economies. 

WPI in India:

• Published by: Office of Economic Adviser, Ministry of Commerce and Industry.
• Current Base Year: 2011-12, implemented in 2017.
• Major Components:
• Primary Articles:
  • Subdivided into:
    • Food Articles.
    • Non-Food Articles (e.g., oilseeds, minerals, crude petroleum).
• Fuel & Power: Includes prices of petrol, diesel, and LPG.
• Manufactured Goods: Largest basket, including textiles, chemicals, cement, metals, sugar, etc.
• WPI Food Index: Tracks food articles and food products within the Primary and Manufactured Products categories.

Producer Price Index (PPI)

Measures wholesale prices from the producers’ perspective, capturing price changes at various production stages before the goods reach the consumer. 

Key Features:

• Captures inflation as experienced by businesses.
• Tracks price changes for raw materials, intermediate goods, and final goods.

CPI vs. WPI

• WPI, tracks inflation at the producer level and CPI captures changes in prices levels at the consumer level.
• WPI does not capture changes in the prices of services, which CPI does.

3. Households’ Balance Sheet Stress Exhibits K-Shaped Dynamics: Nomura

Sub: Eco

Sec: National Economy and National Income

Context: Nomura economists remarked household stress in India has also turned K-shaped

What is K-Shaped Stress?

It is rise in retail debt driven by consumption loans while asset-creating loans have a shrinking share

India’s household stress is bifurcated:

• Subprime Borrowers: Increasing consumption loans.
• Affluent Borrowers: Focused on asset-creating loans.
• Rising Debt:
  • Household debt now at 43% of GDP, up from 35% in March 2020.

Observations by Nomura Economists

• Retail Credit Trends:
  • Consumption loans dominate among subprime borrowers.
  • 60% of personal loan borrowers already hold more than three active loans.
• Macroprudential Tightening:
  • Retail credit growth has slowed due to RBI interventions.
• Cyclical Slowdown:
  • Evidence aligns with weak income levels and K-shaped urban consumption demand.

Concerns Highlighted by RBI

• Rising Write-offs:
  • Significant increase in unsecured retail credit write-offs and delinquency rates, especially in the microfinance sector.
• GNPA (Gross Non-Performing Assets):
  • Current GNPA ratio at a multi-year low of 2.6%.
  • Stress tests predict it may rise to 3% by 2025-26 under baseline growth and inflation scenarios. 

Implications of K-Shaped Stress

• Uneven Borrowing Patterns:
  • Subprime borrowers increasing high-risk, unsecured loans.
  • Wealthier groups leveraging for asset purchases, creating an uneven financial landscape.
• Financial Stability Risks:
  • Rising household debt and stress may undermine economic stability.

Recommendations and Observations

• Tighter Monitoring:
  • Focus on consumption-driven loans and delinquency trends.
• Policy Intervention:
  • Address disparities in urban consumption patterns and income levels.

The K-shaped trajectory underscores the growing divergence in financial health among Indian households, raising concerns over economic resilience and inclusivity. 

4. Why has Trump called the Panama treaty ‘foolish’?

Sub : IR

Sec: Places in news

Context:

• US President-elect Donald Trump threatened to demand the return of the Panama Canal to the United States, calling the 1999 transfer treaty “foolish.”
• He cited concerns over high transit fees for US vessels and Panama’s increasing ties with China as the main reasons for his dissatisfaction.

Trump’s concerns:

• High Transit Fees: The Panama Canal Authority (ACP) increased fees for US vessels in 2023 as Lakes Gatun and Alhajuela experienced severe drought which led to reduced capacity for canal operations.
• Chinese Influence: In 2017, Panama became the first Latin American country to sign onto China’s Belt and Road Initiative (BRI). Since then, Chinese investment has surged in Panama.

About Panama Canal:

• The Panama Canal is an 80-kilometer-long artificial waterway connecting the Atlantic and Pacific Oceans. It cuts across the narrowest point of the Isthmus of Panama.
• The canal is a key part of global maritime transportation, allowing ships to travel between the Atlantic and Pacific Oceans without going around Cape Horn.
• Approximately 6% of global maritime trade passing through the canal.
• The canal was completed in 1914 and the US controlled it until December 31, 1999.
• The canal was handed over to Panama in 1999 under the Torrijos-Carter Treaties.

The Torrijos-Carter Treaties (1977):

1. Panama Canal Treaty: This treaty abolished the Panama Canal Zone and transferred full control of the canal to Panama.
2. Permanent Neutrality Treaty: This treaty declared the Panama Canal as neutral, open to ships from all countries. It also gave the US the right to defend the neutrality of the canal and priority passage in military emergencies.

5. 27 Europe-bound migrants die as boats capsize off Tunisia

Sub : IR

Sec: Places in news

Context:

• 27 migrants, including women and children, tragically died after two boats capsized off the coast of central Tunisia. The migrants were from sub-Saharan African countries, and they were attempting to cross the Mediterranean Sea to reach Europe.
• The bodies of the deceased were found near the Kerkennah Islands, which are located off the coast of the city of Sfax, Tunisia.

The Mediterranean Crossing:

• Each year, tens of thousands of migrants attempt the hazardous Mediterranean crossing for better economic opportunities or to escape violence and poverty in their home countries.
• Tunisia is a key departure point for irregular mi grants seeking to reach Europe with Italy, whose island of Lampedusa is only 150 kilometres from Tunisia, often their first port of call.
• The journey is fraught with danger due to the unpredictable weather, overcrowded boats, and inadequate safety measures.

6. Sivagiri row: what is the outrage about?

Sub: History

Sec:  Personality

Context:

• Kerala Chief Minister Pinarayi Vijayan used the inaugural event of the 92nd Sivagiri pilgrimage at Varkala to slam what he saw as attempts to appropriate social reformer Sree Narayana Guru into the Sanatana Dharma fold.
• In his opinion, the attempt to portray Sree Narayana Guru as a champion of Sanatana Dharma ran counter to the renaissance leader’s humanist message and his work to eradicate casteist oppression.
• He also called for the abolition of the regressive practice where men are required to remove their shirts before entering temples.

Importance of Sivagiri Madhom:

• Sivagiri Madhom, established by Sree Narayana Guru, holds great cultural and religious significance in Kerala, especially for the Ezhava community.
• The Guru’s efforts in the late 19th century to challenge caste discrimination, including the consecration of a Siva idol for all castes to worship, laid the foundation for social reform.

Political Context:

• The Ezhava community constitutes about 23% of Kerala’s population.
• Sivagiri Madhom has consistently maintained a politically neutral stance, trying to distance itself from any political party or ideology.
• However, the BJP has been making a concerted effort to gain ground in Kerala, particularly by attracting the Ezhava community.

Sree Narayana Guru:

• Sree Narayana Guru (1856–1928) was a prominent social reformer, philosopher, and spiritual leader from Kerala.
• He belonged to the Ezhava community, considered an oppressed caste in the caste hierarchy prevalent in Kerala at the time.
• Guru opposed the superstitious practices and ritualism prevalent in temples, which were often controlled by upper-caste Brahmins.
• Sree Narayana Guru’s philosophy, “One Caste, One God, One Religion for mankind,” aimed at eradicating caste-based oppression.
• He also founded the Sree Narayana Dharma Paripalana Yogam (SNDP Yogam) in 1903, which focused on the social and educational upliftment of oppressed castes.
• One of his most significant acts was the consecration of a Shiva idol at Aruvippuram, a place near Thiruvananthapuram, in 1888, challenging the Brahminical control over religious rites.

7. Supreme Court questions petition alleging ‘favouritism’ in legal profession

Sub : Polity

Sec: Judiciary

Context :- The Supreme Court challenged the assertions made by petitioner-advocate Mathews Nedumpara that relatives of judges and powerful personalities get an easy and early pass to ‘senior advocate’ designation, creating a “small cabal” of the privileged in the legal profession.

What the petition said?

• The petition urged the court to “abolish the senior designation system and the Collegium system to redeem the judiciary from elitism and a culture of privilege”.
• The petitioner argues that the designation process violates fundamental principles of equality and fairness, as enshrined in Articles 14, 19, and 21 of the Constitution of India.

Legal Basis for Designation of Senior Advocates

The designation of senior advocates is governed by:

1. Sections 16 and 23(5) of the Advocates Act, 1961: These sections outline the criteria and procedure for recognizing advocates as senior advocates.
2. Supreme Court Rules, 2013: These rules further elaborate on the rights, privileges, and obligations of senior advocates.

Privileges of Senior Advocates

• A distinctive dress code.
• Preferential treatment in court proceedings.
• Enhanced professional status and opportunities.
• Pre-Audience over the advocates under section 23(5) of the act.

Restrictions imposed on a Senior Advocate

• A senior advocate is not permitted to appear without an Advocate-on-record or any junior.
• He/she is refrained from drafting pleadings or affidavits before any court or authority mentioned under Section 30 of the act.
• He/she shall not accept directly from a client any brief or instructions to appear in any Court.

Previous such petitions and court’s verdict

Indira Jaising Case:- India’s first woman Senior Advocate Indira Jaising filed a petition in SC challenging the existing process of designation.
Court’s verdict:- Apex Court decided to lay down guidelines for itself and all High Courts on the process of designating senior advocates.

8. Injectable Hydrogel: A Breakthrough in Targeted Cancer Treatment

Sub : Sci

Sec: Health

Why in News

• Indian researchers from IIT-Guwahati and the Bose Institute, Kolkata, have developed an innovative injectable hydrogel designed for localized cancer treatment.

About Injectable Hydrogel:

• The hydrogel is an advanced polymer-based material that serves as a stable reservoir for anti-cancer drugs.
• How It Works: It releases the drugs in a controlled manner, targeting only cancerous cells while sparing healthy tissues from harmful side effects.
• Made from ultra-short peptides that remain insoluble in biological fluids, ensuring localized action.
• Reacts to elevated glutathione (GSH) levels, a molecule abundant in tumour cells, releasing drugs only where needed.
• Water-based, mimicking living tissues, making it ideal for biomedical applications.
• The hydrogel’s design allows it to interact harmoniously with the biological environment, providing targeted therapy.
• While the current focus is on breast cancer, the hydrogel’s adaptability could extend its use to other cancer types.

What is Hydrogel?

• Made of polymers that form a three-dimensional network.
• Contains hydrophilic (water-attracting) components, allowing it to absorb and retain significant amounts of water or biological fluids.
• Soft and flexible, closely mimicking the mechanical properties of living tissues.
• Can be engineered to remain stable or degrade over time, depending on the application.
• Biocompatible and non-toxic, making it ideal for medical uses.
• Used in drug delivery systems, tissue engineering, wound dressings, and implants.
• Can respond to environmental changes like pH, temperature, or specific molecules.
• Found in diapers (superabsorbent polymers), agriculture (soil hydration), and cosmetics (moisturizers and gel-based products).

9. Obesity: The Silent Epidemic of Non-Communicable Diseases

Sub: Sci

Sec: Health

Why in News

• Obesity has emerged as a global epidemic, significantly contributing to the rising prevalence of non-communicable diseases (NCDs) like diabetes, hypertension, and cardiovascular diseases. India, with its unique obesity trends and increasing childhood obesity, is grappling with the socio-economic and health consequences of this condition.

About Obesity:

• A chronic disease characterized by excessive fat deposits impairing health.
• Criteria: Diagnosed using Body Mass Index (BMI):
  • Overweight: BMI > 25 kg/m²
  • Obesity: BMI > 30 kg/m²
  • For Asia-Pacific regions, obesity starts at BMI > 25 kg/m² (WHO).
• Global Statistics: Adult obesity has doubled since 1990, while adolescent obesity has quadrupled.
• The Indian Context: 13% of Indians are obese, higher than many middle-income countries. India ranks third globally in obesity prevalence, after China and the USA.
• Variants of Obesity in India:
  • Normal Weight Obesity: High body fat despite normal BMI.
  • Sarcopenic Obesity: High BMI or waist circumference with muscle mass loss.
  • TOFI (Thin Outside Fat Inside): Increased waist circumference with normal weight; 65% prevalence among men and women.
• Health Impacts: High rates of diabetes, hypertension, and cardiovascular diseases.
• India ranks second globally for obese children.
• Global Death Toll: Overweight and obesity cause 3.4 million deaths annually.

About Body Mass Index (BMI):

• It is a simple calculation that uses a person’s weight and height to estimate body fat.
• It is calculated as weight in kilograms divided by height in meters squared (kg/m²).
• BMI is commonly used to classify individuals into categories: underweight, normal weight, overweight, and obese.
• However, it does not differentiate between fat, muscle, or water, making it less accurate in predicting overall health risks like diabetes or cardiovascular diseases.

About Diabetes:

• Diabetes is a chronic disease that occurs either when the pancreas does not produce enough insulin or when the body cannot effectively use the insulin it produces.
• Insulin is a hormone that regulates blood glucose.
• Hyperglycaemia, also called raised blood glucose or raised blood sugar, is a common effect of uncontrolled diabetes and over time leads to serious damage to many of the body’s systems, especially the nerves and blood vessels.

Difference Between Type 1 and Type 2 Diabetes