News & Editorial Analysis 13 March 2023
The Hindu News Analysis
1 – Demonetisation:
GS III Topic Indian Economy
the removal of cash or other valuables by the central bank for use as the nation’s legal tender. These currencies are either discarded or placed in banks where they are exchanged for new ones.
Governments in several countries throughout the world have implemented this strict measure to curb the use of black money and currency note counterfeiting. While some countries sadly fell short of their demonetization goals, others succeeded. Let’s examine the countries that went through demonetisation and the challenges they faced.
The UK applied the decimal system as follows in 1971: The decimal system was implemented by the British in 1971, which was the most significant alteration to their monetary system in more than a thousand years. Under this arrangement, a pound was split into 100 pence. As a result of three years of awareness-raising and instructional efforts, the decimalization of British currency was a success.
In 1984, the government of Muhammadu Buhari in Nigeria banned old notes and introduced a new currency. However, the debt-ridden country was unable to adjust when inflation started, and the economy collapsed.
Ghana is another country in Africa that had demonetisation in 1982. Ghana stopped printing the 50 cedi note to prevent tax fraud and drain the country’s reserves. Nationalists consequently started to support the black market and make investments in tangible goods, severely weakening the economy.
The Zimbabwean government shifted from using the Zimbabwe dollar to using the US dollar in 2015. Prior to this, Zimbabwe had a currency denomination of 100 trillion Zimbabwean dollars. The Reserve Bank of Zimbabwe has formally replaced the various currency system with the RTGS Dollar, a new Zimbabwean dollar.
In 1987, the military government of Myanmar invalidated 80% of the Myanmar kyat to prohibit illicit trade and black market activity. Demonetisation caused severe economic upheaval because there were no provisions for exchanging the cancelled denominations. There were widespread protests, which resulted in the horrific killing of nearly a thousand people.
The 1991 Monetary Reform in the Soviet Union:
In 1991, Mikhail Gorbachev decided to stop issuing the 50 and 100 ruble bills. It was also referred to as the Pavlov Reform in honour of the late former finance minister Valentin Pavlov. The economy collapsed as a result of this change, which also contributed to the dissolution of the Soviet Union.
The Australian government was the first to deploy polymer-based plastic notes in 1992. In an effort to combat black money and improve security, Australia conducted Demonetisation in 1996, replacing all paper currency with plastic money. The switchover occurred smoothly and had no detrimental repercussions on the economy because polymer-based notes had been in use for four years.
Pakistan’s central bank decided in 2016 to phase out banknotes of earlier designs and gave the general public six years to convert their currency in an effort to curb illegal money. Because everyone was made aware of the change, there was no controversy during the procedure. The central bank’s field staff, however, would continue to accept notes with an older design until December 31, 2021.
It refers to a decision by the government or the RBI to revoke a currency note’s status as legal tender. As long as a currency note hasn’t been demonetized, recalled, or otherwise revoked, its value is guaranteed by the RBI, making it typically acceptable for use as legal tender. Central banks all around the world have a programme whereby old currency notes are returned and new currency notes with stronger security features are introduced in order to tackle the problem of counterfeit money.
According to the government, the following reasons are why demonetization was implemented in this case:
to counter the threat posed by the shadow economy, black market, and parallel economy.
We want to reduce cash transactions, fight corruption, and eventually move to cashless transactions because currency circulation in India is intimately tied to corruption.
to counter the threat of fake currency.
to prevent terrorism funding or support from being done with the money.
This is the only other time since independence that the policy known as “Demonetization” has been announced (even before Independence Demonetization was done in 1946).
When the administration of Morarji Desai demonetized the Rs. 500, Rs. 1000, and Rs. 10000 notes in 1978, it was the last time this was done. A CBDT analysis that looked at this measure claims.
It was a fruitless endeavour because just 15% of the high value bills were swapped.
The rest of the information was never made public out of concern for severe punishment from the authorities. Transferring and receiving large denomination banknotes was prohibited under the High Denomination Bank Notes (Demonetization) Act of 1978, and any violations—including falsified declarations made by depositors and others—were subject to a fine or a three-year prison term.
Demonetization may not be the best solution, the report claims, as the majority of black money was held in the form of jewellery, bullion, and benami assets. This proposal would only increase the price because more currency notes would need to be made. It may also be detrimental to the financial logistics.
Threats like black money can be somewhat controlled.
Terrorism financing, the use of unexplained money for illegal activities, and other problems will worsen.
The fake currency that undermines the real economy will be eliminated.
More credit demand and lower loan interest rates could result from increased deposit mobilisation at banks.
Black money raises hidden demand, hence inflation will be somewhat under control.
The administration also seeks to improve revenue collection (eg- by taxing exorbitant IT rates over certain deposits, the tax collection in other forms will also increase, etc).
Real estate is one of the primary means by which people generate illicit revenue. It is anticipated that as a result of this action, real estate market rates may plateau or moderate.
A big step has been made by the government toward a cashless world.
The truthful workers will be rewarded in such a situation.
Since elections are frequently associated with the production and transfer of black money, it will be detrimental to the funding of elections through questionable means.
This will, it is hoped, lessen the fiscal deficit of the government.
Cons of demonetization:
Black money is not totally stored in cash because it is mostly produced as a result of tax fraud and corruption. Furthermore, the measures merely deal with the effect and not the underlying problem. This strategy does not deal with the underlying reasons of black money, despite the fact that it can reduce its use.
The demand for the new currencies has suddenly skyrocketed.
People are afraid (already we have seen the case wherein people have looted fair price shop in MP, Cash Carrying companies seeking higher insurance, etc). Already, consumer money hoarding brought on by the panic has further reduced market liquidity.
Traders and small company owners are encountering difficulties.
The illegal market for the brand-new bills and coins is growing.
Institutions like banks, hospitals, and other businesses are under a lot of strain.
Another area that is worrying is the probable fall in rural demand as a result of the restricted use of cash. Experts also predict impacts on agricultural production and the SME sector (the economy was expected to perform well as there was an expectation of a good rabi crop after two bad monsoons but a prominent economist, Pronab Sen has said that demonetization is akin to third bad monsoon year as it will have an impact on agricultural production, but the more dangerous situation is this having a spillover effect on to fertilizer, tractor sectors).
2 – European Union:
GS II Topic International Relations
The European Union, which consists of 27 countries, operates as a single economic and political entity.
19 of these countries use the euro as their official currency. Eight EU countries—Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden—do not use the euro.
The EU was founded with the aim of creating a single political organisation for all of Europe in order to stop decades of conflict between European nations, which culminated in World War II and devastated most of the continent.
The EU has established an internal single market by creating a uniform set of rules that are applicable in all member states when all members agree to operate as one.
What objectives does the EU want to accomplish?
Encourage peace, morality, and the welfare of all EU citizens.
Offer freedom, safety, and justice regardless of national boundaries.
Environmental protection, a market economy that is competitive and offers full employment and social advancement, as well as sustainable development built on a foundation of price stability and balanced economic growth
combat social isolation and discrimination.
Encourage technological and scientific developments.
Boost the territorial, social, and economic integration and solidarity of the EU’s member states.
Be mindful of its language and cultural distinctiveness.
Create a currency based on the euro: an economic and monetary union.
What led to the formation of the EU?
Extreme nationalism decimated the continent following World War II, and European unity was seen as a solution.
At the University of Zurich in Switzerland in 1946, Winston Churchill went a step further and argued for the establishment of a United States of Europe.
According to the terms of the Treaty of Paris (1951), the European Coal and Steel Community (ECSC) was founded in 1952 by the six countries collectively known as the Six (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands) in order to cede some of their sovereignty by combining their coal and steel production into a single market.
As part of the Paris Treaty, the European Court of Justice was also established in 1952. (referred to until 2009 as the “Court of Justice of the European Communities”).
The Euratom Treaty (1957) established the European Atomic Energy Community (EAEC or Euratom), a global organisation with the initial objective of developing nuclear energy, dispersing it to its member states, and selling the excess to non-member states in order to establish a specialised market for nuclear power in Europe.
Its members are the same as those of the European Union, and it is governed by the European Commission (EC) and Council, functioning under the authority of the European Court of Justice.
3 – Millets Production:
GS III Topic Indian Agriculture
Millets were one of the first crops to be domesticated. The Indus valley people began eating millets around 3,000 BC, and India is where many of the varieties of millets that are cultivated today originally came from.
Millets are still the main source of nutrition for more than 500 million people in Asia and Africa. Today, millets are grown in more than 130 countries. The most common millet crop grown worldwide is sorghum (jowar). The top jowar producers are the United States, China, Australia, India, Argentina, Nigeria, and Sudan. Bajra is a crucial millet crop that is extensively grown in India and certain African countries.
Benefits of millets:
Nutritional Security: more affordable and healthful. For instance, ragi, which has the largest calcium and iron content, might aid in the fight against the high prevalence of anaemia.
These crops are recognised for being hardy and drought-resistant due to their climate resilience. They require a lot less water than rice and wheat because they are frequently grown in rain-fed areas.
Low input costs for financial security.
In relation to Health: Because millets are gluten-free and have a low glycemic index, they can help with a variety of lifestyle and health conditions, such as diabetes and obesity (glucose level).
Millets have antioxidant and anti-aging properties.
It is said that millets are “nutrition powerhouses.” 2018 saw millets classified as “Nutritional Cereals” by the Agriculture Ministry.
more desirable Because gluten makes meals softer and more appealing, wheat is a staple food.
For instance, the National Food Security Act promotes the consumption of wheat and rice.
lack of understanding about Millet’s benefits.
Even though coarse grains are included in the NFSA’s definition of “foodgrains” in Section 2(5), they are rarely distributed as part of PDS.
MSP difficulties: Only Jawar, Bajra, and Ragi are subject to the minimum support price set by the government (MSP).
Reduced Consumption According to the most recent NSSO household consumption expenditure survey, which is older than ten years, less than 10% of rural and urban households reported eating millets.
Lack of price incentives, input subsidies, and changing consumer preferences are additional challenges.
Efforts in India:
Due to their “high nutritive content” and “anti-diabetic qualities,” millets were named “Nutri-Cereals” by the government in 2018.
2018 is the “National Year of Millets.”
The MSP of Millets has increased.
The government’s POSHAN Abhiyan and public distribution system include millets (PDS).
(As part of the Mission for National Food Security) The millet mission is to increase farm-gate processing and provide farmers more clout through the use of FPOs.
Kerala’s Department of Agriculture: Millet’s Startup Innovation Challenge for its Village Program.
a contest where the theme was “India’s Wealth, Millets for Health”
Additional millets-related projects:
The “Millet Food Festival” in the SCO was proposed by India.
4 – Bhima Koregaon War Memorial:
GS I Topic Indian Culture
About the Battle:
In Bhima Koregaon, a neighbourhood of Pune with a significant historical Dalit link, on January 1, 1818, Peshwa soldiers and British troops fought in warfare.
The primarily Dalit British army engaged the upper caste-heavy Peshwa army. The British army defeated the Peshwa army.
The result was seen as a victory over caste-based discrimination and prejudice. The Peshwas were renowned for victimising and persecuting Mahar dalits. Dalits gained a moral victory in their struggle against caste-based oppression, discrimination, and sense of identity with the win against the Peshwas.
But the British approach of “divide and rule” created a number of rifts in Indian society, some of which are still observable today in the form of extreme caste and religious prejudice that must be repressed while keeping in mind the principles of the Constitution.
The Dalits are linked to Bhima Koregaon for what reason?
Mahar Dalits formed up a large percentage of the Company army, hence the fight has come to symbolise Dalit pride. Because the Peshwas, who were Brahmins, were perceived as oppressors of Dalits, the victory of the Mahar warriors over the Peshwa troops is seen as a Dalit statement.
The memorial obelisk there that had been built on January 1st, 1927, was visited by B.R. Ambedkar. Along with more than a dozen Mahar fighters, it lists the names of those who have passed away. They were Untouchables called Mahars who took part in the Battle of Koregaon.
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The Hindu Editorial Analysis
How The G20 Evolved:
India’s election to lead the G20 for the 18th time heralds the start of a new era.
Every year, the G20 summit brings together leaders from the countries with the largest and fastest-growing economies. It is an advisory group rather than a forum founded on treaties, hence its conclusions are recommendations to the members themselves.
Members of G 20:
Among the nations covered on this list are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States, and the European Union.
It has two tracks:
All meetings with central bank governors and their G20 deputies are part of the finance track. Throughout the year, they meet often to discuss issues like macroeconomic coordination, financial inclusion, global taxes, and investment. They also talk about fiscal and financial matters.
The Sherpa track focuses on more broad subjects like trade, agriculture, health, energy, the environment, and the digital economy. Other topics include political engagement, fighting corruption, development, and energy.
The Sherpa is the person who creates, oversees, and implements the ideas and recommendations on behalf of the head of each G20 country. Sherpas finish all required preparations before leaders make decisions.
Objectivity of the G20:
G20 members include approximately:
80 percent of global GDP
- 75% of global trade
- Two-thirds of the world’s population.
The G-20 “Troika”:
The rotating three-member committee of the immediately prior, current, and following presidencies was created because there is no permanent G20 secretariat to ensure continuity in the agenda. For the first time, the Troika will include representatives from the three rising market economies of Brazil, India, and Indonesia.
Every December, a G20 country from a rotating zone takes up the presidency for a year. The G20’s leader is picked from a different regional group of countries.
India has assumed the G20 leadership as the country marks 75 years of independence and rises to the fifth-largest economy in the world. With the declared objective of showcasing its rich cultural past and economic power to the outside world, it is thus setting a precedent by holding more than 200 sessions in more than 50 locations around the country as opposed to limiting itself to a small number of major cities.
History of G 20:
It was acknowledged after the 1997–1998 Asian Financial Crisis that important emerging market countries needed to be included in discussions concerning the global financial system. The G20 Finance Ministers and Central Bank Governors conference was therefore established in 1999 by the G7 finance ministers. Protectionist measures weren’t allowed to come back, the Bretton Woods institutions were improved, trade and investment were boosted, and other topics were considered.
During the 2008 Financial Crisis, the necessity for fresh political consensus building was acknowledged all across the world. It was decided that the G20 leaders will meet once a year going forward.
G-20 summits now include a broader variety of themes, including the political, strategic, and security challenges that the world and its member countries are currently facing. The development of consensus and policy solutions among industrialised nations was the aim of discussions on issues including global financial governance, anti-corruption, and financing of terrorism.
Alterations within the G20:
The next turning point happened in 2010, when South Korea was in charge of the G20 and development issues became a primary priority. Over the next years, other working groups were created as the Sherpa Track’s mission expanded.
Despite the U.S.-China trade war and disagreements on a variety of issues, including climate change, the G20 managed to survive the storm in 2017. For the first time, the G20 recorded a Leader’s Declaration, with 19 members approving of the agenda and one member objecting.
From the perspective of global governance, the inability to come to an agreement symbolised the notion that no one country is more superior than the rest of the group, even though it may have set a bad precedent.
Adaptability, restoration, and applicability of Covid-19:
The COVID-19 pandemic once again demonstrated the importance of the G20 summit by highlighting the need for a unified approach to weather the storm and recover resiliently in 2020. The G20 leaders created a series of urgent policies and measures in response to the outbreak to protect people and the global economy. The subsequent Italian and Indonesian presidencies prioritised the fight against the disease.
The current pandemic outbreak in China, the ongoing food and energy crisis caused by the raging Russia-Ukraine conflict, the effects of climate change, and the global recession caused by persistent inflation have made reaching consensus on a variety of global issues during the Indian presidency challenging.
Under the appropriate theme of “Vasudhaiva Kutumbakam,” India is committed to highlighting the notion that the world is a family and that the need for joint action has never been more important (or “One Earth, One Family, One Future”).
In the current atmosphere of multilateral fragilities and opportunities, the G20 is maybe the only inclusive meeting that can set the agenda for international peace and harmony.
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The Indian Express Editorial Analysis
One of the agreements agreed during this year’s “historic” COP27 climate change summit in Egypt was the establishment of a fund to assist developing countries in recovering from climate-related disasters.
Even though the decision undoubtedly satiated a long-standing demand of the developing countries, there was little else in the Sharm el-Sheikh meeting’s final resolution that could be viewed as a partially adequate response to what, according to science, is an extremely serious global climate emergency.
The annual climate meeting has underwhelmed in the past, though, so this is nothing new. COPs have underperformed greatly, especially those from the past 15 years.
The framework of the Paris Agreement, which requests that each nation submit what it deems to be its best effort, can only lead to a less-than-ideal outcome.
Future temperatures will rise by more than 1.5 degrees Celsius:
Now it is almost certain that the 1.5 degree Celsius goal will not be met.
The Sharm el-Sheikh accord acknowledges that in order to retain the prospect of avoiding global warming to 1.5 degrees Celsius over pre-industrial levels, global greenhouse gas emissions must be reduced by at least 43% from 2019 levels by 2030.
The reduction hasn’t started yet, which is the problem. In actuality, greenhouse gas emissions continue to rise. The yet-to-be-determined emissions for 2021 are anticipated to surpass those for 2019 and create a new record.
The World Meteorological Organization (WMO) projects that 2022 will be 1.15 degrees Celsius warmer than pre-industrial times.
It may have been even hotter if not for the extraordinarily long-lasting La Nina phase, which is currently in its third year. With temperatures 1.28 degrees Celsius greater than during pre-industrial times, the year 2016 broke the record for warmth.
There is a 50% chance that the 1.5 degree Celsius warming threshold may be momentarily crossed in the next five years, according to a WMO assessment.
One of the five years after 2016 was also almost guaranteed to be warmer than the others (93% chance).
Additionally, the IPCC papers have demonstrated that the question wasn’t whether temperatures will climb by more than 1.5 degrees Celsius. It almost certainly will, but whether the world will respond adequately to recover from it after a few years is the real question.
Not all is lost, though:
The world that is 1.5 degrees Celsius warmer would not be that different from the one we already live in, despite the horrifying imagery it frequently inspires. Nothing that would happen back then isn’t happening right now.
Naturally, it is anticipated that as temperatures continue to rise, extreme weather events will occur more frequently and with greater intensity. However, the 1.5 degree Celsius barrier by itself is not a special trigger. The 2-degree Celsius cutoff is also not acceptable.
The effects of climate change are being mitigated by making every attempt to limit temperature increases.
In fact, according to recent research, even at the current rates of warming, a number of crucial climate tipping points may already have been achieved or are about to do so.
This could lead to the crossing of other tipping points and the onset of potentially unpredictable, irreversible, and self-sustaining changes in the earth’s climate system.
The grim scenarios result from our inability to cut greenhouse gas emissions in a timely manner. Frequently, the emphasis on this failure obscures the improvements in global adjustment.
Over the past ten years, there have been fewer fatalities brought on by climate change-related disasters, mostly as a result of early warning systems, quick responses, and relief activities.
Disasters caused by the climate:
According to the WMO Atlas of Mortality and Economic Losses from Weather, Climate, and Water Extremes, whose most recent edition was released last year, the number of global climate- or weather-related disasters increased from 711 incidents in the 1970-1979 decade to 3,165 incidents in the 2010-2019 period, an almost five-fold increase.
However, there was a sharp decline in fatalities, which dropped from over 556,000 in the 1970s to only about 185,000 in the previous decade, a reduction of almost 70%.
Economic losses increased from roughly 175 billion USD in the 1970s to over 1.4 trillion USD in the 2010s due to an increase in the frequency of catastrophes as well as an increase in the value of the assets and infrastructure.
For instance, the number of deaths from heat waves and cyclones has fallen by approximately 90% over the past ten years thanks to efficient early warning systems and quick reaction.
Even while it may be difficult to forecast landslides, avalanches, and cloudbursts, their consequences can still be lessened by taking precautions in high-risk locations.
The problem is that only around 50% of people on the planet have access to early warning or quick reaction systems.
In actuality, almost 90% of all deaths from weather- and climate-related disasters occurred between 1970 and 2019 in developing countries.
Comprehensive early warning system:
Because of this, the most significant news to come out of COP27 may be the recent WMO initiative to extend early warning coverage to all countries within the next five years.
The programme will likely only cost roughly 3.1 billion USD in total, which is a relatively little quantity of money in light of climate change. Estimates indicate that this investment will help save one to two lives while preventing losses of between 3 and 16 billion USD annually.
Similar effort has been initiated by the Coalition for Disaster Resilient Infrastructure (CDRI), a global organisation backed by India that focuses on enhancing early warning systems in small island states.
Rich nations, who are more focused on getting all countries to reduce their emissions, have not given these adaptation measures nearly enough attention. The root causes are obvious.
The majority of adaptation efforts would need to be done in underdeveloped regions since they are better able than developing nations to adapt to the changes.
In addition, unlike carbon reductions, the benefits of adaptation are regional rather than global. Less than 20% of the money that developing countries asked be put toward adaptation in order to support climate action has actually happened.
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