Daily Prelims Notes 1 October 2022
- October 1, 2022
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
1 October 2022
Table Of Contents
- General Anil Chauhan (retd.) appointed next Chief of Defence Staff
- The depleting import cover
- Inflation fight RBI hikes repo rate
- 5G Services to be rolled out in India
- Missing Inflation Target
- US Sanctions Indian company
- Putin annexes four Russian army held Ukrainian territories
- International Seed Treaty
Subject : Security
- CDS acts as the permanent Chairman of the Chiefs of Staff Committee which will also have three service chiefs as members.
- His core function will be to foster greater operational synergy between the three service branches of the Indian military and keep inter-service frictions to a minimum.
- He will also head the newly created Department of Military Affairs (DoMA) in the Ministry of Defence.
- The CDS will be the single-point military adviser to the Defence Minister on matters involving all three services and the service chiefs will be obliged to confine their counsel to issues pertaining to their respective services.
- As the head of DoMA, CDS is vested with the authority in prioritising inter-service procurement decisions as Permanent Chairman-Chiefs of Staff Committee.
- The CDS is also vested with the authority to provide directives to the three chiefs.
- However, he does not enjoy any command authority over any of the forces.
- CDS is first among equals, he enjoys the rank of Secretary within the DoD and his powers will be confined to only the revenue budget.
- He will also perform an advisory role in the Nuclear Command Authority (NCA).
- The CDS is a four-star officer selected from among the serving officers of the Indian Armed Forces.
- He will be the single-point military adviser to the government as suggested by the Kargil Review Committee in 1999.
- He is also the Principal Adviser to the Defence Minister.
- The broad mandate of the CDS includes bringing about “jointness” in “operations, logistics, transport, training, support services, communications, repairs and maintenance of the three Services, within three years of the first CDS assuming office”.
- Not eligible to hold any Government office after demitting the office of CDS.
- No private employment without prior approval for a period of five years after demitting the office of CDS.
- The age limit for the CDS’s post is 65 years with no fixed tenure defined
Nuclear Command Authority
- The Nuclear Command Authority (NCA) of India is the authority responsible for command, control and operational decisions regarding India’s nuclear weapons programme.
- The NCA comprised a Political Council and an Executive Council.
- The Political Council was chaired by the Prime Minister and is the sole body which can authorise the use of nuclear weapons.
- The Executive Council, chaired by the National Security Adviser to the Prime Minister, provides inputs for decision making by the NCA and executes the directives given to it by the Political Council.
- The total foreign exchange reserves have steadily fallen from a peak of $642 billion in early September 2021 to $546 billion by the middle of September 2022, the lowest level in around two years.
- In fact, the fall in the reserves have averaged $5 billion in the three recent weeks. This has pulled down the import cover of the foreign exchange reserves from a high of 17.4 months in end March 2021 to 13.1 months in end December 2021. And the recent estimates of the RBI show that the import cover of the foreign exchange reserves has come down to nine months by September 2022.
- This sharp depletion in the import cover of the foreign exchange reserves is a major cause of concern as it can aggravate the vulnerabilities in the external sector. This is all the more so since the United States Federal Reserve has gone for the third consecutive interest rate hike and is pursuing the most rapid tightening of monetary policy since the 1980s. And the import cover of India’s foreign exchange reserves has already gone below the levels during the global financial crisis when it fell from 4 to 10.3 months.
What is Import Cover?
Import Cover measures the number of months of imports that can be covered with foreign exchange reserves available with the central bank of the country. Ten months of import cover is essential for the stability of a currency.
Causes for fall in foreign reserve
- Changes in the exchange rates of the basket of currencies that make up the reserves,
- Intervention of the Reserve Bank of India (RBI) in the foreign exchange markets.
What can be done?
A substantial reduction in both the trade and current account deficits and a significant pickup in the surplus generated in the capital account.
- Foreign investors have been allowed to purchase short-term corporate debt and invest in more government securities.
- It has also hiked bank deposit rates for NRIs and the annual limits for external commercial borrowing by the corporate sector.
- The decision to allow settlement of foreign trade in rupees will also help curb the demand for dollars.
About Baltic Exchange –
- The Baltic Exchange (incorporated as The Baltic Exchange Limited) is a membership organisation for the maritime industry, and freight market information provider for the trading and settlement of physical and derivative contracts.
- It was located at 24–28 St Mary Axe, London, until the building was destroyed by a bomb in 1992, and is now located at 38 St Mary Axe.
- It has further offices in Europe, across Asia, and in the United States.
- BIFFEX, the Baltic International Freight Futures Exchange, was a London-based exchange for trading ocean freight futures contracts with settlement based on the Baltic Freight Index.
Baltic Freight Index
- Baltic Freight Index stands for shipping and trade index which has been created by the Baltic Exchange based in London.
- It is a measure of the cost of transporting various raw materials.
- The Baltic Exchange contacts the shipping brokers directly for assessing price levels for a specific route, product, time and speed.
- Inflation fight – RBI hikes repo rate by 50 bps, RBI Governor blames it on ‘new storm’.
- Policy focus on withdrawal of accommodation, cuts FY23 growth to 7%
- Faced with the challenge of elevated retail inflation and a ‘storm’ arising from the aggressive monetary policy actions of advanced economy central banks, the six-member Monetary Policy Committee (MPC) decided by a majority of 5 to 1 to raise the policy repo rate by 50 basis points as also to remain focussed on withdrawal of accommodation.
- The latest hike, which was widely expected, takes the repo rate to 5.90 per cent from 5.40 per cent. With this, the MPC has cumulatively raised the repo rate by 190 bps (40 bps in May, followed by 50 bps each in the following three meetings) since May.
- In the last two-and-half years, the world has witnessed two major shocks — the Covid-19 pandemic and the conflict in Ukraine.
- Now, we are in the midst of a third major shock, a storm, arising from aggressive monetary policy actions and even more aggressive communications from advanced economy central banks.
- The Governor emphasised that the MPC’s decision continues to be, and will be, guided by domestic factors.
- The decisions are based on the twin objectives of inflation and growth, with primacy being given to price stability, followed by the necessity to keep growth in mind.
- The domestic inflation remains high (hovering around 7 per cent and the RBI expects it to remain elevated at around 6 per cent in the second half of FY23, too), though expected to moderate.
- The RBI has cut the real GDP growth projection for 2022-23 to 7 per cent from 7.2 per cent even as it retained the retail inflation projection at 6.7 per cent in 2022-23.
Subject : Science & technology
Context : Prime Minister Narendra Modi will launch 5G services at the sixth edition of Indian Mobile Congress (IMC 2022) scheduled to be held in Pragati Maidan, New Delhi.
- The telecom giants, including Reliance Jio, Airtel, and Vodafone-Idea took part in the mega auction for spectrum that concluded on August 1 where they bid for a combined value of Rs 1.56 lakh crore.
- Various previous reports suggest that Airtel and Jio will be the front-runners in launching 5G services in India.
- The companies will initially launch 5G in a few cities across the country. This means that not all users will get access to the 5G service this year.
- In order to get 5G connectivity, one must have a 5G-enabled smartphone/ tablet. A report says that 9.7% of smartphones in use in India are 5G-capable.
- A 4G SIM can work in 5G-powered phones, however, you won’t be able to leverage the 5G capabilities to the fullest. To enjoy the 5G network to its maximum potential, one is required to have a 5G SIM with a 5G phone.
About 5G Technology
- 5G is the latest upgrade in the Long-Term Evolution (LTE) mobile broadband networks with reduced latency than 4G.
- 5G technology offers an extremely low latency rate, the delay between the sending and receiving information.
- From 200 milliseconds for 4G, 5G brings it down to 1 millisecond(1ms).
- It works in three bands of the spectrum with their respective pros and cons.
- Low Band Spectrum
- It shows great promise in terms of coverage and speed of internet and data exchange with a maximum speed limited to 100 Mbps (Megabits per second).
- Telcos can use and install it for commercial cellphone users who may not have specific demands for very high-speed internet.
- It may not be optimal for the specialised needs of the industry.
- Mid-Band Spectrum
- It offers higher speeds compared to the low band but has limitations in terms of coverage area and penetration of signals.
- It may be used by industries and specialised factory units for building captive networks that can be moulded into the needs of that particular industry.
- High-Band Spectrum
- It offers the highest speed of all three bands, but has extremely limited coverage and signal penetration strength.
- Internet speeds have been tested to be as high as 20 Gbps (gigabits per second).
- Low Band Spectrum
- Global Status of 5G
- More than governments, global telecom companies have started building 5G networks and rolling it out to their customers on a trial basis.
- Telcos in developed countries like the US and China have already been providing commercial 5G connections to their users.
- South Korean company Samsung started researching 5G technology in 2011 and has taken the lead in building the hardware for 5G networks for several companies.
- It will enable the development, testing and proliferation of 5G technology system components, cross-sectoral use cases, besides setting up the foundation for the development of the “6G Technology landscape” in the country.
- The users will be able to stream videos with multiple camera angles during sports matches or even play immersive video games using VR headsets or other accessories.
- It will also enable a mesh of connected Internet of Things (IoT)-enabled devices and services with zero-fail rate, as in the case of connected cars.
- Healthcare: Healthcare providers can create sensor networks to track patients and share information faster than ever before.
- Public Safety: A vast network and rapid response times mean that public works can respond to incidents and emergencies in seconds rather than minutes, and municipalities can react fast and with reduced costs.
- Autonomous Vehicles: 5G will allow vehicles to communicate between themselves and with infrastructure on the road, improving safety and alerting drivers to travel conditions and performance information.
Subject : Economics
Context : RBI Governor Shaktikanta Das says letter to govt on missing inflation target will not be made public.
- RBI Governor Shaktikanta Das called the communication between the central bank and government privileged and said that the letter that it would be writing for missing inflation targets will not be made public.
- This will be the first time since the onset of the medium-term inflation targeting framework in 2016 that the RBI will be made to explain its actions in a letter.
- Inflation Target: Under Section 45ZA, the Central Government, in consultation with the RBI, determines the inflation target in terms of the Consumer Price Index (CPI), once in five years and notifies it in the Official Gazette. Accordingly, on August 5, 2016, the Central Government notified in the Official Gazette 4 per cent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent. On March 31, 2021, the Central Government retained the inflation target and the tolerance band for the next 5-year period – April 1, 2021 to March 31, 2026.
- Section 45ZB of the RBI Act provides for the constitution of a six-member Monetary Policy Committee (MPC) to determine the policy rate required to achieve the inflation target.
- Failure to Maintain Inflation Target: The Central Government has notified the following as the factors that constitute failure to achieve the inflation target: (a) the average inflation is more than the upper tolerance level of the inflation target for any three consecutive quarters; or (b) the average inflation is less than the lower tolerance level for any three consecutive quarters.
Where the Bank fails to meet the inflation target, it shall set out in a report to the Central Government:
a. the reasons for failure to achieve the inflation target;
b. remedial actions proposed to be taken by the Bank; and
c. an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions.
- The operating framework of monetary policy aims at aligning the operating target – the weighted average call rate (WACR) – with the policy repo rate through proactive liquidity management to facilitate transmission of repo rate changes through the entire financial system, which, in turn, influences aggregate demand – a key determinant of inflation and growth.
Monetary Policy Committee:
- The Monetary Policy Committee is a statutory and institutionalized framework under the Reserve Bank of India Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.
- The Governor of RBI is ex-officio Chairman of the committee.
- The committee comprises six members (including the Chairman) – three officials of the RBI and three external members nominated by the Government of India.
- The government nominees to the MPC will be selected by a Search-cum-Selection Committee under Cabinet Secretary with RBI Governor and Economic Affairs Secretary and three experts in the field of economics or banking or finance or monetary policy as its members.
- Members of the MPC will be appointed for a period of four years and shall not be eligible for reappointment.
- The MPC determines the policy repo rate required to achieve the inflation target.
- The MPC is required to meet at least four times in a year. The quorum for the meeting of the MPC is four members.
- Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
- Each Member of the Monetary Policy Committee writes a statement specifying the reasons for voting in favour of, or against the proposed resolution
- Decisions are taken by majority with the Governor having the casting vote in case of a tie.
- The MPC determines the policy interest rate (repo rate) required to achieve the inflation target (4%).
Subject : International Relations
Context : The US Treasury department had imposed sanctions against a petrochemical company accused of selling Iranian petroleum products.
- The US Treasury department, the sanctions against the companies will continue till Iran returns to full compliance under the JCPOA pact.
Joint Comprehensive Plan of Action (JCPOA), 2015.
- The JCPOA was the result of prolonged negotiations from 2013 and 2015 between Iran and P5+1 (China, France, Russia, the United Kingdom, the United States + Germany).
- Under the deal, Iran agreed to significantly cut its stores of centrifuges, enriched uranium and heavy-water, all key components for nuclear weapons.
- Iran also agreed to implement a protocol that would allow inspectors from the International Atomic Energy Agency (IAEA) to access its nuclear sites to ensure Iran would not be able to develop nuclear weapons in secret.
- While the West agreed to lift sanctions related to Iran’s nuclear proliferation, other sanctions addressing alleged abuses of human rights and Iran’s ballistic missile programme remained in place.
- The US committed to lifting sanctions on oil exports, but continued to restrict financial transactions, which have deterred international trade with Iran.
- Nonetheless, Iran’s economy, after suffering years of recessions, currency depreciation, and inflation, stabilized significantly after the deal took effect, and its exports skyrocketed.
- Israel, America’s closest ally in the Middle East, strongly rejected the deal, and other countries like Iran’s great regional rival Saudi Arabia, complained that they were not involved in the negotiations even though Iran’s nuclear programme posed security risks for every country in the region.
- After Trump abandoned the deal and reinstated banking and oil sanctions, Iran ramped up its nuclear programme in earnest, returning to approximately 97% of its pre-2015 nuclear capabilities.
Subject : International Relations
Context : Russian President Vladimir Putin signed treaties Friday to annex occupied Ukrainian territory, a move the West has blasted as an illegal land-grab. Ukraine’s president countered with a surprise application to join the NATO military alliance.
- Putin’s move and President Volodymyr Zelenskyy’s signing of what he said is an “accelerated” NATO membership application sent the two leaders speeding faster on a collision course that is cranking up fears of a full-blown conflict between Russia and the West.
- The annexed territories are Luhansk, Donetsk, Kherson and Zaporizhzhya. Together all five territories including Crimea, make up around 20 percent of the Ukraine.
How Ukraine become a NATO member?
- The Treaty states that NATO membership is open to any “European state in a position to further the principles of this Treaty and to contribute to the security of the North Atlantic area”. It states that any decision on enlargement must be made “by unanimous agreement”.
North Atlantic Treaty Organization:
- It is an intergovernmental military alliance.
- Established by Washington treaty that was signed on 4 April 1949.
- Headquarters — Brussels, Belgium.
- Headquarters of Allied Command Operations — Mons, Belgium.
- It constitutes a system of collective defence whereby its independent member states agree to mutual defence in response to an attack by any external party.
- Since its founding, the admission of new member states has increased the alliance from the original 12 countries to 30. The most recent member state to be added to NATO was North Macedonia on 27 March 2020.
Theme: Celebrating Guardians of Crop Diversity: towards an inclusive Global Biodiversity Framework
India hosted 9th session of Governing Body meeting (GB-9) of the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA)
- It is a major international agreement to conserve, use and manage plant genetic resources for food and agriculture (PGRFA).
- Background: signed in 2001 in Madrid, and entered into force on June 29, 2004.
- Members: 148 total (147 countries and1 inter-governmental organisation- EU).
- Guarantees food security through the conservation, exchange and sustainable use of the world’s PGRFA.
- The fair and equitable benefit sharing arising from use of PGRFA
- Recognition of farmers’ rights.
- The Treaty ensures that farmers and plant breeders easily access the raw genetic material needed to develop new crop varieties for
- Higher yields
- Resilience to climate change.
- It works in harmony with the Convention on Biological Diversity (CBD).
Key terms associated with the Treaty:
- Digital Sequence Information (DSI)
- Refer to data derived from genetic resources such as nucleic acid sequence data and protein sequence data.
- DSI is an important concept in international legally binding instruments with access and benefit-sharing obligations such as CBD, Antarctic Treaty System, Pandemic Influenza Preparedness Framework etc.
- Multilateral System on Access and Benefit-sharing mechanism (MLS)
- On joining the International Treaty, countries agree to make their genetic diversity and related information about the crops stored in their public gene banks available to all through the Multilateral System (MLS).
- This mechanism offers scientific institutions, farmers, plant breeders and the private sector the opportunity to work with, and potentially improve, the materials stored in gene banks or used in breeding programmes without having to negotiate contracts with individual gene banks.
- It includes 64 of the world’s most important crops. These are crops that together account for 80 percent of all human consumption derived from plants.