Daily Prelims Notes 19 June 2024

Daily Prelims Notes

19 June 2024

1. Himachal Pradesh Forest Fires

Sub: Environment

Sec: Ecosystem

• Since April 15, 2024, there have been 1,684 forest fires in Himachal Pradesh. These fires have damaged 17,471 hectares of forest land.
• From 2001 to 2023, H.P. lost 957 hectares of tree cover from fires and 4.37 thousand hectares from other causes.

What is a Forest Fire?

• Wildfire, also called forest, bush or vegetation fire, can be described as any uncontrolled and non-prescribed combustion or burning of plants in a natural setting such as a forest, grassland, brushland or tundra.

Forest Fires in India: Statistics

• Forest Fires in India: According to the biennial India State of Forest Report (ISFR) 2019 published by the Forest Survey of India (FSI), more than 36% of India’s forest cover was prone to frequent fires.
  • About 4% of the forest cover was ‘extremely prone’ to fire, and another 6% was ‘very highly’ fire-prone.
• Vulnerable States: The eleven main states with frequent occurrence of forest fires in recent times are:
  • Andhra Pradesh, Assam, Chhattisgarh, Himachal Pradesh, Mizoram, Madhya Pradesh, Maharashtra, Odisha, Telangana Uttar Pradesh and Uttarakhand.
• Forest Fire Vulnerability Across Ecosystems: According to the FSI, severe fires break out in dry deciduous forests, while evergreen, semi-evergreen, and montane temperate forests are comparatively less prone to fires.
• The forests of Northeast India, Odisha, Maharashtra, Jharkhand, Chhattisgarh, and Uttarakhand are the most vulnerable to fires during the November to June period.
• Triggering Factors: 
  • Human activities trigger 95% of forest fires in India, such as burning agricultural practices, deforestation, firewood burning etc.
  • Drought and higher temperatures further aggravate the risk of forest fire.
• Forest Fire Season in India: November to June is considered to be forest fire season in India especially from February onward as summer approaches.
  • April-May are usually the worst fire months across the country.
• Forest Fire Situation in 2024: During March 2024, the highest number of forest fires were reported from Mizoram (3,738), Manipur (1,702), Himachal Pradesh (1684), Assam (1,652), Meghalaya (1,252), and Maharashtra (1,215), as per FSI data.

Causes of Forest Fires:

• Occur during pre-monsoon summer due to moisture stress and depletion of snowmelt water.
• Rainstorms in the pre-monsoon season are critical; less moisture increases fire impact.
• Human activities like unattended campfires and discarded cigarettes.
• Faulty forestry practices and a utilitarian perspective towards forests, excluding community participation.
• Fires emit pollutants like black carbon, contributing to glacier melt and regional climate change.

Historical Transformation of Himalayan Forests:

• Over two centuries, Himalayan forests have been transformed, starting with railway construction in the 1850s.
• British exploitation of forests for railway construction led to the loss of customary rights and deforestation.
• Deodar and Chir pine trees were extensively used for timber and resin.
• Banj oak forests, which retain moisture, were replaced by commercially valuable Chir pines.
• Currently, 17.8% of H.P.’s 37,033 sq km forest area is covered with Chir pines, which are prone to fires.

Recommendations:

• Democratisation of Forests:
  • Include local communities in forest management.
  • Restore traditional forest rights for fuel, timber, and fodder extraction.
  • Align with Schedule V of the Indian Constitution requiring community assent for development activities.
• Forest Management:
  • Develop mixed forestry and reduce pine tree dominance.
  • Integrate scientific and community knowledge for participatory management.
  • Implement check dams and revive water springs.
  • Establish environmental services at the village level.
  • Seek financial assistance and disaster mitigation funds from the 16th Finance Commission.

Source: TH

2. Catalytic boost for cheaper biodiesel production

Sub: Environment

Sec: Int Conventions

Development of Cost-Effective Water-Repellent Catalyst for Biodiesel Production:

• Scientists from Assam, Odisha, China, and the UK have developed a water-repellent catalyst to reduce the cost of producing environmentally friendly biodiesel.
• The research on the “spherical superhydrophobic activated carbon catalyst” has been published in Advanced Functional Materials.

Research Team:

• Arpita Das, Kangkana Saikia, Samuel Lalthazuala Rokhum (NIT Silchar, Assam)
• Chandrakanta Guchhait, Bimalendu Adhikari (NIT Rourkela, Odisha)
• Da Shi (University of Cambridge, UK)
• Hu Li (Guizhou University, China)

Key Features of the Catalyst:

• The catalyst mimics the water-repelling properties of lotus leaves, preventing the poisoning of active sites by water produced during biodiesel production.
• It is derived from biomass (cellulose), making it eco-friendly, abundant, and affordable.
• It is highly robust and can withstand the water by-product, enhancing its effectiveness and reusability.

Biodiesel:

• Biodiesel is a liquid fuel produced from vegetable oils and animal fats through transesterification.
• It is used as a replacement or as a blending with petroleum-based diesel in various combinations such as B5, B20, B100, etc.
• B20 (commonly used due to cost-effectiveness, low emissions and compatibility with conventional engines) is a blend containing 20% biodiesel and 80% petroleum diesel.
• B100 (less commonly used) is a pure biodiesel.

Impact on Biodiesel Production:

• The novel catalyst significantly reduces the cost of biodiesel production.
• Current biodiesel costs in India are around ₹100 ($1.2) per litre; the new catalyst can reduce this to approximately 37 cents per litre.
• This makes biodiesel a more cost-effective and sustainable energy source compared to diesel, which costs at least ₹87 per litre in India.

Significance:

• The catalyst improves the efficiency and cost-effectiveness of the biodiesel production process.
• It supports broader adoption of biodiesel, contributing to a greener future.
• The green synthesis strategy offers a sustainable method for biomass waste disposal and enhances the utility of biochar as an alternative to graphene and carbon nanotubes.

Source: TH

3. EU Environmental Council adopts nature restoration law in historic win for continent’s environment

Sub: Environment

Sec: Int Conventions

Context:

• The EU Environmental Council adopted the Nature Restoration Law (NRL) on June 17, 2024, marking a significant environmental milestone for Europe.

Details:

• The law was endorsed by 20 member states, representing 66.07% of the EU population.
• The regulation will be published in the EU’s Official Journal, becoming directly applicable across all member states, with a review set for 2033 to assess its impacts on agriculture, fisheries, forestry, and broader socio-economic effects.
• The #RestoreNature coalition (BirdLife Europe, ClientEarth, EEB, WWF EU) praised the law, calling for immediate implementation by member states.

Nature Restoration Law (NRL): Purpose and Goals

• Proposed by the European Commission on June 22, 2022, under the EU biodiversity strategy for 2030 and the European Green Deal.
• Over 80% of European habitats are currently in poor condition, prompting the need for this regulation to not just preserve but actively restore nature.
• The NRL aims to restore nature, addressing the decline in biodiversity and ecosystem health.
• By 2030, member states must implement measures to restore at least 20% of the EU’s land and sea areas.
• All European ecosystems in need of restoration must be restored by 2050.

Covered Ecosystems:

• The NRL targets a wide range of ecosystems, including terrestrial, coastal, freshwater, forests, agricultural, urban, wetlands, grasslands, rivers, lakes, marine ecosystems, seagrass, sponge, and coral beds.

Specific Measures and Targets:

• Measures to reverse the decline of pollinators by 2030.
• Increase in grassland butterflies, organic carbon in cropland mineral soils, and agricultural land with high-diversity features.
• Increase in forest bird populations and no net loss of urban green spaces and tree canopy cover by 2030.
• Restoration of drained peatlands and planting of at least three billion additional trees by 2030.
• Removal of human-made barriers to achieve at least 25,000 km of free-flowing rivers by 2030.

Source: DTE

4. World Crocodile Day 2024: In 50th year of India’s saurian conservation, one of its architects worried for Bhitarkanika

Sub: Environment

Sec: Species in news

Crocodile Conservation Project:

• India launched the Crocodile Conservation Project in 1975 in Odisha’s Bhitarkanika National Park, former hunting grounds of the Kanika princely state.
• The project aimed to protect crocodiles’ natural habitat and revive their population through captive breeding.
• Notable contributors included Sudhakar Kar, known as Odisha’s ‘Crocodile Man,’ and Australian herpetologist HR Bustard.
• Conservation efforts began with breeding and rearing centres for saltwater crocodiles, muggers, and gharials in 34 locations across India, including Bhitarkanika.
• In 1975, Bhitarkanika had only 95 saltwater crocodiles. Today, the population has grown to 1,811.

Current Issues:

• The human-crocodile conflict in Bhitarkanika is a growing concern. Locals have been warned not to enter water bodies inhabited by estuarine crocodiles.
• Forest officials have erected barricades around 120 river ghats to prevent crocodile attacks.
• Since 2014, crocodile attacks have led to 50 deaths, influencing local politics, with villagers expressing dissatisfaction with incumbent politicians for inadequate safety measures.

Crocodile:

• Crocodiles are known for their semi-aquatic lifestyle and are found in various freshwater habitats, including rivers, lakes, marshes, and estuaries.
• The three crocodiles of India, the Saltwater Crocodile, Mugger Crocodile, and Gharial, are listed as Least Concern, Vulnerable, and Critically Endangered respectively on the IUCN Red List of Threatened Species.

Estuarine or Saltwater Crocodile (Crocodylus porosus)

IUCN Red List Status: Least Concern

• Saltwater crocodiles are found in coastal regions and estuaries across Southeast Asia, Northern Australia, and the Indian subcontinent.
• In India, the Saltwater Croc is primarily found in the mangrove habitats of the Sundarbans in West Bengal, the Bhitarkanika Wildlife Sanctuary in Odisha, and the Andaman and Nicobar Islands.
• Among the largest living croc species, adult saltwater crocodiles can reach lengths of up to 7 meters (23 feet).
• They are known for their ability to inhabit both saltwater and freshwater habitats and are proficient swimmers.

Mugger or Marsh Crocodile (Crocodylus palustris)

IUCN Red List Status: Vulnerable

• Muggers have a broader distribution, ranging from parts of Iran to the Indian subcontinent.
• Muggers are found in various freshwater habitats, including rivers, lakes, and marshes. They are distributed across different states in India, such as Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh, Maharashtra, and others.
• Muggers are smaller compared to saltwater crocs, with adult lengths typically ranging from 3 to 4 meters (9.8 to 13.1 feet).
• Muggers are well-adapted to freshwater environments and are known to be more tolerant of different water conditions than saltwater crocs.
• Medium-sized crocodiles (max. length of 4-5m) with the broadest snout of any living Crocodylus species, Mugger Crocodiles are hole-nesting species, with egg-laying taking place during the dry season.

Gharial (Gavialis gangeticus)

IUCN Red List Status: Critically Endangered

• The Gharial derives its name from a bulbous knob-like bump on the snout of breeding males that resembles a ghara, which in Hindi means an earthen pot.
• The bulbous snout makes them the only crocodile species on the planet with a visible difference between males and females.
• Largely piscivorous, their long, slender snout and rows of sharp teeth make them efficient fish catchers.
• Adults are dark olive or brownish olive in colour, while the juveniles are greyish brown with five irregular bands on the upper body and nine on the tail.
• Once a common sight within the subcontinent’s riverine ecosystems, local gharial populations have declined by 98 per cent since the 1940s, with fewer than 250 adult gharials remaining in the wild in 2006.
• Concerted conservation efforts have since borne fruit, with a recent survey by the Wildlife Trust of India (WTI) reporting 1,255 gharials in the Chambal River alone.

Source: DTE

PREDICTED MORE THAN 60 Qs in Prelims 2024

See more: https://optimizeias.com/wp-content/uploads/2024/06/UPSC-2024-PREDICTION_LAQSHYA.pdf

5. Union Tribal Affairs Minister Shri Jual Oram to preside over the National Conclave on Awareness Generation on Sickle Cell Disease

Sub: Science and tech

Sec: Public Health

Context:

• On the occasion of World Sickle Cell Day, Union Tribal Affairs Minister Shri Jual Oram presided over the National Conclave on Awareness Generation on Sickle Cell Disease, in New Delhi.

More on news:

• On 29th August 2023, the Union Minister of Tribal Affairs launched the ‘Awareness Campaign and Training of Trainers’ as part of the ‘Mission for Elimination of Sickle Cell Anaemia’. 
• The programme envisages training of grassroot level functionaries so as to create awareness in this direction among the masses, especially in tribal regions.

What is Sickle cell Disease?

• Sickle cell disease (SCD) is a chronic single gene disorder causing a debilitating systemic syndrome characterized by chronic anemia, acute painful episodes, organ infarction and chronic organ damage and by a significant reduction in life expectancy.
• It is characterized by a modification in the shape of the red blood cell from a smooth, donut-shape into a crescent or half-moon shape.
• These cells lack plasticity and can block small blood vessels, impairing blood flow. 
• This condition leads to shortened red blood cell survival, and subsequent anemia, often called sickle-cell anemia.
• SCD refers to a group of inherited blood disorders, wherein a genetic mutation causes abnormal hemoglobin to clump together, causing the red blood cells to turn sickle shaped. 
• These sickle-shaped cells cause blockages in the blood flow, which can lead to anemia, pain, infections and other severe complications.
• Individuals with sickle cell trait carry only one defective gene and typically live normal lives, but they can pass the gene to their children.
• Therefore, it is advisable for all adults and newborns to undergo a medical screening for sickle cell disease and sickle cell trait.

National Sickle Cell Anaemia Elimination Mission:

• The National Sickle Cell Anaemia Elimination Mission is a sub mission of National Health Mission, wherein the Ministry of Tribal Affairs has a pivotal role to play in raising awareness and producing counseling material about this debilitating disease, with special emphasis on tribal areas.
• The Government of India embarked on the ‘Mission for Elimination of SCD by 2047’, with Prime Minister Shri Narendra Modi launching the National Sickle Cell Anaemia Elimination Mission from Shahdol, Madhya Pradesh on 1st July, 2023.
• The mission entails awareness creation, universal screening of 7 crore people in the age group of 0-40 years in the affected tribal areas. 
• The programme is being carried out in a mission mode for screening, prevention, and management of sickle cell anemia in all tribal and other high prevalent areas States/UTs of India.
• The focus is on tribal dominated districts of 17 states with higher prevalence of the disease. 
• About 1 in 86 births among Scheduled Tribe (ST) population have SCD, the prevalence being higher in Central, Western and Southern India.
• It is predominantly prevalent in Jharkhand, Maharashtra, Madhya Pradesh, Chhattisgarh, western Odisha, eastern Gujarat and in pockets of the Nilgiri Hills in north Tamil Nadu and Kerala. 

6. US Supreme Court preserves access to abortion pill

Sub: Science and tech

Sec: Public Health

Context:

• The US Supreme Court on Thursday rejected a petition by anti-abortion groups seeking to undo the Food and Drug Administration’s (FDA) approval of a commonly available abortion pill, called mifepristone.

More on news:

• In a unanimous ruling, authored by Justice Brett M Kavanaugh — the court held that as the petitioners lacked a direct stake in the dispute, they could not sue the FDA.
• The development has come nearly two years after the apex court of the US overturned Roe v. Wade, which effectively repealed a federal right to abortion.

What was the case?

• In 2022, four pro-life medical associations, as well as several individual doctors, sued the FDA in the US District Court for the Northern District of Texas. 
• The petitioners had challenged the FDA’s approval of mifepristone and the changes the federal agency made in the pill’s conditions of use — the modification broadened mifepristone’s distribution through mail and telemedicine (the provision of remote clinical services).
• In April 2023, federal court held that the FDA’s approval of the drug should be suspended, removing mifepristone from the market.
• An appeals court in New Orleans overturned this ruling partially to the extent that it invalidated the FDA’s approval of the pill.
• It also imposed restrictions on the pill’s distribution, including prohibiting sending the medication by mail or being prescribed by telemedicine.

What is mifepristone?

• Mifepristone is part of the two-drug regimen used for medical abortion. 
• A patient first takes mifepristone to induce an abortion and then misoprostol to empty the uterus.
• While mifepristone blocks progesterone — a hormone that supports menstruation and maintaining a pregnancy — misoprostol triggers uterine contractions, causing the body to expel the pregnancy as in a miscarriage.
• The regimen was approved for use up to 10 weeks of pregnancy by the FDA in 2000.
• Studies have found the pill to be safe, and years of research have shown that serious complications are rare.

What did the court rule?

• To reject the petition by the anti-abortion groups and individual doctors, the Supreme Court cited the “personal stake requirement” laid down in one of its 1982 judgments. 
• The personal stake requirement basically means that the party seeking relief has to have a “personal stake in the outcome of the controversy.
• The appellant should show that they have suffered or been threatened with some distinct and palpable injury. 
• There must also be some causal connection between the appellant’s asserted injury and the defendant’s challenged action.
• It said the plaintiffs could not show any harm suffered from mifepristone’s availability.

Abortion law in India:

• India’s Medical Termination of Pregnancy Act 1971 allows abortion up to 24 weeks, post which termination is permitted only if a board of doctors attests that continued pregnancy presents a risk to the woman’s life or if there are foetal abnormalities.
• In ‘X v NCT case 2022’ Supreme Court declared that ‘it is the woman alone who has the right over her body’ and is the ‘ultimate decision-maker’ in deciding if she wants an abortion.
• The court also said that “continuing with an unwanted pregnancy has an adverse impact on the pregnant woman’s mental health and can be a ground for abortion”.
• The Court eventually decided that the mental health grounds for abortion did not extend beyond 24 weeks of gestation.
• However in this case, there is a conflict between foetal right to life against women’s right to autonomy.

7. Does H5N1 pose a threat for humans?

Sub: Science and tech

Sec: Public Health

Context:

• The highly pathogenic avian influenza (HPAI) H5N1 strain has been affecting cattle across several States in the U.S., and for the first time, three cases of human infection in dairy farm workers were also reported.

More on news:

• The districts of Alappuzha, Kottayam and Pathanamthitta in Kerala, where water bodies, migratory birds, fowls and integrated farms form part of the ecosystem, have reported H5N1 outbreaks in 19 places since April.
• The death of crows in large numbers in Alappuzha, and subsequent confirmation of the H5N1 virus in their carcasses have given rise to concerns that the virus could spread far and wide.
• According to the WHO, between 2003 and April 1, 2024, close to 900 human infections of H5N1 have been reported from 23 countries, of which, more than half were fatal. 
• Even though the risk of human infections from H5N1 is still perceived to be low, this can change rapidly as the virus spreads to more animals, especially cows or domestic mice, which have closer contact with humans.
• In districts like Alappuzha where waterfowls, chicken, dairy cows and humans share the same environment, the opportunities for human infections should be perceived as high.

What is the H5N1 virus?

• Influenza A virus subtype H5N1 (A/H5N1) is a subtype of the influenza A virus, which causes influenza (flu), predominantly in birds.
• It is enzootic (maintained in the population) in many bird populations, and also panzootic (affecting animals of many species over a wide area).
• A/H5N1 virus can also infect mammals (including humans) that have been exposed to infected birds; in these cases, symptoms are frequently severe or fatal.
• Ever since it emerged in 1996, H5N1 has resulted in the mass killing of billions of wild birds as well as fowls.
• According to scientists, the virus lacks changes that would make it better adapted to transmit between people and therefore, the risk to human health remains low.
• The potential for influenza viruses to rapidly evolve and the wide geographic spread of H5N1 signals that more human infections should be expected.

What is the level of risk to humans?

• The virus seems to spread from birds/animals to humans who may be closely interacting with these, without adequate personal protection.

What are the symptoms of H5N1?

• The common symptoms of H5N1 are similar to those of influenza-A illnesses, including respiratory difficulties, fever, cough, sore throat and pneumonia, all of which can potentially worsen, especially in those who are immunocompromised or have underlying conditions.
• In the U.S, Conjunctivitis or pink eye was the only symptom that was reported in one of the farm workers who was infected.
• As of now, in Kerala, as only the poultry has been found affected in all outbreaks, the strategy adopted for containment is the mass culling of birds within a certain radius of the reported infection.
• The incident of the mass death of crows has now changed the equation, as it is possible that the infection may have been taken by the crows beyond the current surveillance zone.

What are the necessary precautions?

• People should avoid unprotected exposure to infected birds or animals or their contaminated environments. 
• If at all one has been exposed to a possible H5N1-contaminated environment, they should monitor themselves for new respiratory illness symptoms, including conjunctivitis for 10 days and seek proper medical advice.
• It would be better to ensure that people use only pasteurized milk and poultry meat and eggs should be well-cooked to prevent any possible food-borne transmission of H5N1.
• Kerala has taken ‘One Health’ beyond the conceptual framework and the project is currently being implemented as part of the World Bank-aided ‘Rebuild Kerala’ project in four districts — Alappuzha, Pathanamthitta, Kottayam, and Idukki.

What is One Health Approach?

• One Health is a concept that promotes collaboration across various sectors to address health, productivity, and conservation challenges, particularly relevant to India due to its diverse wildlife, large livestock populations, and dense human population.

8. Ancient genomes reveal legacies of human sacrifice and medieval epidemics

Sub: Science and tech

Sec: Biotech

Context:

• In a recent scientific report published in Nature, a team of archaeologists and scientists from Germany, Mexico, Spain, the U.K., and the U.S. sequenced genetic material obtained from the human remains.

More on news:

• Scientists have used archaeogenetics and evolutionary medicine to bring to light some of the inner lives and beliefs of the Mayan people.
• People’s practice of burying human remains throughout modern history echoes diverse cultural, spiritual, and social beliefs, and is often considered to be a line in the sands of time between modern and ancient humans.
• They read the results along with bio-archaeological evidence collected at the site to launch an extensive investigation of the remains of 64 sub-adults from the Sacred Cenote and compared them to modern-day individuals of Mayan origin.

Key findings of the study:

• Their studies revealed that all sub-adults in the cenote were genetically male and closely related to each other.
• The findings go against 20th century colonial accounts that claimed young women had been sacrificed here.
• The study also identified two pairs of monozygotic twins among the remains. 
• Twins held significance in Mayan spiritual life and were linked to the underworld.
• The researchers also used isotopic studies to establish that all the related individuals in the cenote had similar diets, suggesting they all belonged to the same household.
• The similarities also suggested they were selected for a specific purpose.
• It is widely believed the Mayans organized ritual sacrifices to ensure the bountiful growth of maize and to appease rain gods.

Benefits of the study:

• By comparing the ancient and the modern genomes from Mexico, the researchers found evidence of positive selection in genes related to immunity, especially those associated with resistance to enteric fever caused by Salmonella enterica Paratyphi C, a pathogen serotype previously identified with the 16th century cocoliztli epidemic in Mexico.
• The study of the ancient genomes and their modern counterparts allows us to resolve old mysteries, dispel old hypotheses, and gain new insights from the past to light the way for the future.

Practice of Burying:

• Researchers have recorded the practice of burying since the time of our now-extinct Neanderthal ancestors. 
• The oldest intentional modern human burial dates to more than 100,000 years ago, in a cave in Israel.
• This timeline overlaps with the discovery of the skeletal remains of a roughly three-year-old child buried in Kenya some 80,000 years ago.
• Burial practices evolved with advancing human civilisations, with the construction of elaborate mausoleums.
• The pyramids of Egypt were monumental tombs for the pharaohs; the Mughal emperor Shah Jahan commissioned the Taj Mahal in Agra as a mausoleum for his wife.
• These structures reflect an enduring human desire to honor the dead and remember them.

Ancient Mayan genomes:

• Chichén Itzá is an ancient Mayan city located in modern-day Mexico. 
• It is known for its grand architecture and iconic ceremonial temples, built around 800-1000 AD. 
• The temples are also infamous for having been the site of human sacrifices made as ritual offerings, and have been under constant archaeological investigation for more than a century.
• The offerings were deposited in an enormous sinkhole or a subterranean cistern called the ‘Sacred Cenote’. 
• In Mayan culture, these subterranean features were often associated with water and rain.
• The Sacred Cenote in Chichén Itzá holds the skeletal remains of more than 200 ritually sacrificed individuals, many of them children or adolescents.

9. Summary of FDI Trends and Challenges in India (FY24)

Sub: Economy

Sec: External Sector

• Net FDI Inflows:
  • Net FDI inflows on capital account fell to $10.6 billion in FY 24 from $ 28 bn in FY 23, a 62% decline from the previous fiscal year, marking the lowest level since 2007.
  • If net repatriation of income by foreign companies ($53 billion) is included, the retained amount by foreign companies is very minimal.
• Gross FDI Inflows and Repatriation:
  • Gross FDI inflows were $70.9 billion in FY24.
  • Foreign companies repatriated or disinvested $44.4 billion (63% of gross FDI).
• Outbound Investments:
  • Indian companies made outbound investments worth $16 billion.
• Growth in Profits and Dividend Payouts:
  • FDI companies experienced a 45.2% growth in net profit to $32.4 billion in FY24.
  • Similar growth was observed in dividend payouts in 2023.
• Repatriation Trends:
  • FDI repatriation (capital account) increased from $9.8 billion in FY14 to $44 billion in FY24.
  • Net repatriation of incomes by MNCs from India is rising faster, with an estimated $53 billion in FY24.
  • Overall, MNCs repatriated $97 billion (capital and net income) in FY24, $27 billion higher than gross FDI flows.
• Decline in Net FDI and FPI Flows:
  • Net FDI at $10.6 billion in FY24 is a 13-year low and 59% lower than the FY21 peak of $44 billion.
  • Foreign Portfolio Investment (FPI) flows have been negative or flat in five of the last eight years, with $35 billion in FY24.

Reasons for Decline in FDI

• Global Trade Protectionism:
  • Rising protectionism since the Global Financial Crisis (2008) and intensification during the US-China trade war (2018) have led to a decline in global FDI flows.
  • FDI inflows as a percentage of global GDP fell to 1.3% in 2023, the lowest since 1996.
• Impact of Trade Conflicts:
  • Renewed US-China trade conflicts and increased tariffs on Chinese imports have exacerbated the situation.
  • Global trade liberalization phases saw higher growth in India’s trade, but recent protectionism has decelerated trade growth significantly.
• Sectoral Concentration of FDI:
  • FDI inflows in India are concentrated in a few sectors such as IT, trading, and non-conventional energy.
  • The concentration of the top nine sectors in FDI inflows rose from 49% in FY17 to 70% in FY24.
  • Manufacturing sector’s share in FDI inflows has declined to 30%.

Future Outlook and Recommendations

• Opportunistic Foreign Capital Flows:
  • Foreign capital flows are increasingly becoming opportunistic due to recurring global trade conflicts.
• Reviving Domestic Economy:
  • India needs to revive domestic savings and demand to stimulate private capital expenditure, employment, export competitiveness, and overall productivity.
• Selective Gains from China+1 Theme:
  • Only a few sectors like electric equipment, general machinery, auto parts, semiconductors, and apparel can sustain gains from the China+1 strategy.

This above-mentioned analysis highlights the challenges India faces in attracting and retaining foreign direct investment amidst global trade shifts and protectionism.

The emphasis on the need for domestic economic revival and strategic focus on specific sectors aligns with the broader goal of achieving sustainable economic growth.

Components of FDI Inflows into India (FY23 vs FY24)

• Net FDI (b – c):
  • FY23: $28 billion
  • FY24: $10.6 billion
• FDI to India (b1 – b2):
  • FY23: $42 billion
  • FY24: $26.5 billion
  • Gross FDI inflows (b1):
    • FY23: $71.4 billion
  • Repatriation/disinvestment (b2):
    • FY23: $29.3 billion
    • FY24: $44.4 billion
  • FDI by India (c1 – c2):
    • FY23: $14 billion
    • FY24: $16 billion
    • Gross FDI outflows (c1):
      • FY23: $17.9 billion
      • FY24: $19.6 billion
    • Repatriation/disinvestment (c2):
      • FY23: $3.9 billion
      • FY24: $3.6 billion

10. Highlights of Direct Tax Collections

Sub: Economy

Sec: Fiscal Policy

The latest data on India’s direct tax collections for the first quarter of the fiscal year 2024-25 (ending June 17, 2024) highlights significant trends in both personal income tax (PIT) and corporate income tax (CIT).

• Overall Growth:
  • Net direct tax collections increased by 21% year-on-year, reaching approximately ₹4.63 lakh crore by June 17, 2024, up from ₹3.82 lakh crore in the same period last year.
• Personal Income Tax (PIT) and Securities Transaction Tax (STT):
  • PIT and STT contributed a significant 60.7% of the total net direct tax receipts.
  • This indicates a growing reliance on personal income and securities transaction taxes compared to corporate taxes.
• Corporate Income Tax (CIT):
  • The share of corporate taxes in the total net direct tax receipts has declined to 39.1%.
  • This marks a notable shift from previous years where corporate taxes constituted a larger portion of the direct tax revenue.
• Comparison with Previous Fiscal Year (FY24):
  • In FY24, net direct tax collections saw a 17.7% increase, totaling ₹19.58 lakh crore.
  • The share of PIT in the total net direct taxes rose to 53.3%, up from 50.1% the previous year.
  • Conversely, the share of CIT declined to 46.5%, down from 49.6%.
• Advance Tax Collections:
  • Advance tax collections for the current year grew by 27.3%, amounting to ₹1,48,823 crore.
  • Out of this, ₹1,14,353 crore was paid as CIT and ₹34,470 crore as PIT.
• Gross Tax Collections:
  • Before accounting for refunds, gross direct tax collections increased by 22.2%, reaching approximately ₹5.16 lakh crore by June 17, 2024, compared to ₹4.22 lakh crore in the same period last year.
  • Gross CIT collections were ₹2.26 lakh crore, while PIT and STT collections were ₹2,88,993 crore.
• Tax Deducted at Source (TDS):
  • TDS yielded ₹3,24,787 crore among the minor heads of tax receipts.

Analysis and Implications

• Shift in Tax Structure:
  • The increasing share of PIT and STT indicates a broadening of the tax base with more individuals and transactions being brought under the tax net.
  • The decline in the share of CIT suggests either a slower growth in corporate profits or a shift in the tax policy focus towards indirect taxes and personal income.
• Policy Implications:
  • The government may need to consider measures to stimulate corporate growth and profitability to balance the tax structure.
  • Encouraging corporate investments and providing incentives for business expansion could help in increasing CIT contributions.
• Economic Implications:
  • Higher PIT and STT collections reflect a positive trend in personal incomes and stock market activities, which are essential indicators of economic health.
  • The significant growth in advance tax collections indicates strong revenue expectations from both individuals and corporations.

Conclusion

The data indicates a robust growth in India’s direct tax collections driven primarily by PIT and STT.

The declining share of CIT highlights a potential area of focus for policymakers to ensure balanced and sustainable tax revenue growth. The government may need to explore strategies to boost corporate profitability and investments to maintain a healthy and diverse tax base.