07-December-2024-Daily-Current-Affairs

RBI RETAINS REPO RATE AMID HIGH INFLATION

TOPIC: (GS3) ECONOMY: THE HINDU

The Reserve Bank of India (RBI) has decided to maintain the policy repo rate at 6.5% for the 11th consecutive bi-monthly review. This decision by the Monetary Policy Committee (MPC) comes amid challenges of high inflation and slowing economic growth.

Key Decisions by the RBI

• Repo Rate Unchanged: The policy repo rate remains at 6.5%, with four of six MPC members voting for the status quo. The focus remains on controlling inflation while supporting economic growth.
• Cash Reserve Ratio (CRR) Reduction: CRR for banks has been reduced by 50 basis points, now at 4%. The measure aims to ease tight liquidity conditions and bolster growth.
• Neutral Stance: The MPC retained its ‘neutral’ stance, emphasizing inflation alignment to the 4% target. All members agreed to prioritize price stability alongside growth support.

Economic Indicators

• Inflation Trends: Inflation surged to 6.2% in October 2024, marking a 14-month high. Rising food prices have been a major contributor to recent inflation spikes.
• Growth Projections: Real GDP growth in the July-September quarter dropped to 5.4%, the lowest in seven quarters. The growth forecast for 2024-25 has been downgraded to 6.6% from 7.2%.
• Inflation Forecast: Retail inflation for 2024-25 is now estimated at 4.8%, revised from the earlier 4.5%.

Rationale Behind Decisions

• High inflation has reduced disposable income, dampening private consumption and real GDP growth.
• Despite resilience in the growth outlook, close monitoring is essential given recent slowdowns.
• The reduction in CRR aims to address liquidity challenges while balancing inflation and growth concerns.

How Monetary Policy Committee (MPC) Decide Repo Rate?

• Inflation Trends: The MPC focuses on inflation levels, particularly retail inflation (CPI). It aims to maintain inflation within the target range of 4% (+/- 2%).
• Economic Growth: The growth rate of the economy is a key factor. Slow growth or recession may lead to rate cuts to stimulate the economy. High growth with inflation risks may prompt rate hikes.
• Liquidity Conditions: The availability of money in the banking system is assessed. Tight liquidity might necessitate measures to ease monetary flow, like CRR cuts.
• Global Economic Conditions: Changes in global interest rates, inflation, and economic performance are analysed. For instance, U.S. Federal Reserve actions or global oil prices can influence decisions.

Monetary Policy Committee (MPC)

What is MPC?

• The MPC is a committee formed by the Reserve Bank of India (RBI) to set and review India’s monetary policy.
• Its primary role is to control inflation, ensure price stability, and support economic growth.

When was it Established?

• It was set up in 2016 under the RBI Act, 1934.

Composition

6 Members:

• 3 from the RBI (including the RBI Governor as the Chairperson).
• 3 external members appointed by the Government of India.

Decisions are made by majority vote, and the RBI Governor has the casting vote in case of a tie.

Main Function

• To decide the Repo Rate, which is the key interest rate influencing borrowing and lending in the economy.

Inflation Targeting

• The MPC works to maintain inflation within the target range of 4% (+/- 2%).

Meetings

• The MPC meets at least four times a year, but in practice, it meets every two months.

Conclusion

RBI’s monetary policy highlights the dual challenge of managing inflation while supporting economic growth. The cautious approach reflects the need to stabilize prices and ensure long-term growth sustainability.

Multiple choice question:

1. Consider the following statements regarding Repo Rate and Reverse Repo Rate:

1. Repo Rate is the rate at which the Reserve Bank of India borrows money from commercial banks.
2. Reverse Repo Rate is always higher than the Repo Rate.
3. Both Repo Rate and Reverse Repo Rate are tools used by the RBI to control liquidity in the economy.

Which of the statements given above is/are correct?

1. 1 and 2 only
2. 2 and 3 only
3. 3 only
4. 1, 2, and 3

Answer: C

Explanation:

• Repo Rate is the rate at which the RBI lends money to commercial banks, not borrows from them.
• Reverse Repo Rate is usually lower than the Repo Rate to encourage banks to lend rather than park funds with the RBI.
• Both rates are monetary policy tools used by the RBI to manage liquidity and inflation in the economy.

MGNREGS DELETIONS AND THEIR IMPACT ON RURAL WORKERS

TOPIC: (GS3) ECONOMY: THE HINDU

Recent deletions of job cards have severely impacted workers, leaving many without livelihood opportunities. Issues like Aadhaar-related challenges, delayed wages, and insufficient funding have compounded the hardships faced by rural labourers.

Key Issues with MGNREGS

Job Card Deletions

• A study by Lib Tech revealed that 84.8 lakh workers were removed from MGNREGS between April and September 2023.
• While 45.4 lakh new workers were added, the net deletion stands at 39.3 lakh.
• Workers often remain unaware of why their job cards are deleted, making it difficult to sustain their families.

Aadhaar-Based Payment System (ABPS)

• Since January 2023, ABPS was mandated for all MGNREGS payments.
• To qualify for ABPS, workers must ensure their Aadhaar is linked to job cards, names match records, and bank accounts are Aadhaar-seeded.
• Many workers face difficulties meeting these requirements, leading to job card deletions.

Impact of Digital Transition

• Transitioning to digital systems has created hurdles for workers unfamiliar with technology.
• App-based attendance systems often fail in areas with poor internet connectivity, leading to wage delays or no payments.
• Workers face additional challenges in reapplying for job cards due to lengthy processes and Aadhaar delinking requirements.

Impact on Livelihoods

• Many families solely depend on MGNREGS for income.
• Worker’s report struggling to meet basic needs due to lack of alternative job opportunities.

• The Union Rural Development Ministry denies a connection between Aadhaar-related mandates and job card deletions.
• The government maintains that states are responsible for deletions, not the Centre.

Benefits of MGNREGA

• Employment Generation: Ensures a minimum of 100 days of guaranteed wage employment annually to rural households. Helps reduce seasonal unemployment in rural areas.
• Poverty Alleviation: Provides a source of income to marginalized communities, including Scheduled Castes (SCs), Scheduled Tribes (STs), and women. Reduces economic disparity by uplifting the rural poor.
• Women Empowerment: Promotes gender equality by mandating equal wages for men and women. Enhances women’s participation in the workforce, with over 50% of beneficiaries being women.
• Rural Development: Facilitates the creation of durable assets such as roads, ponds, wells, and irrigation channels, which improve rural infrastructure. Promotes better water conservation and land productivity.
• Social Inclusion: Provides opportunities for vulnerable groups, including differently-abled individuals and senior citizens. Reduces migration to urban areas by providing local employment opportunities.

Conclusion

MGNREGS is a vital safety net for rural households, but recent administrative changes and digital mandates have disrupted its implementation. Addressing issues like job card deletions, internet connectivity, and wage delays is essential to protect the livelihoods of millions of rural workers.

Multiple choice question:

1. Consider the following statements regarding the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

1. MGNREGA guarantees 100 days of employment to rural households, primarily for skilled labour.
2. At least one-third of the beneficiaries under MGNREGA are required to be women.
3. Gram Panchayats are responsible for planning and executing MGNREGA projects, based on local needs.
4. MGNREGA mandates that wages be paid through cash transactions to ensure transparency.

Which of the statements given above is/are correct?

1. 1 and 4 only
2. 2 and 3 only
3. 1, 3, and 4 only
4. 2 and 3 only

Answer: B

Explanation:

 MGNREGA guarantees 100 days of unskilled manual labour to rural households, not skilled labour. The focus is on providing employment to unskilled workers for public works projects.

The Act mandates that at least one-third of the beneficiaries must be women. This is to ensure gender inclusivity and to empower women in rural areas.

The implementation of MGNREGA is decentralized. Gram Panchayats play a central role in the planning, execution, and monitoring of projects, ensuring that the local needs are met and the employment provided is relevant to the community.

MGNREGA wages are not paid in cash. They are paid through Direct Benefit Transfer (DBT) into the bank accounts of beneficiaries to ensure transparency and to reduce corruption. This method also helps in financial inclusion.

NO PLANS FOR DE-DOLLARISATION: RBI GOVERNOR SHAKTIKANTA DAS

TOPIC: (GS3) ECONOMY: THE HINDU

RBI Governor clarified that India has no intentions to pursue de-dollarisation. His remarks come amid global discussions on reducing dependence on the U.S. dollar and a floated idea of a BRICS common currency.

BRICS Currency: Just an idea

• The concept of a BRICS currency was proposed by one of the bloc members.
• No consensus or decision has been reached within BRICS regarding this matter.
• The geographical diversity of BRICS nations poses a significant challenge, unlike the Eurozone, which benefits from geographical proximity and a single currency system.

India’s Stand on De-dollarisation

No Steps for De-dollarisation

• India has not taken any action aimed at reducing reliance on the U.S. dollar.
• The focus remains on de-risking trade rather than challenging the dollar.

Local Currency Agreements

• Agreements with some countries for trade in local currencies aim to reduce risks from currency fluctuations.
• This step is a protective measure, not a move towards de-dollarisation.

Not on the Agenda

• De-dollarisation is not being considered as a goal for India.
• The objective is to ensure stable trade practices without over-reliance on any single currency.

Concerns Over Tariff Wars

• Impact on Trade: Hypothetically, a tariff war could lead to broader consequences, such as currency devaluations or retaliatory tariffs. The effects of such scenarios would depend on the overall global economic balance.
• India’s Preparedness: India’s forex reserves are robust and capable of handling potential spillovers. The RBI is confident about taking necessary actions to maintain stability if required.

Forex Reserve and Trade Stability

• Adequate Forex Reserves: India’s foreign exchange reserves provide a solid buffer against external shocks. The RBI is monitoring global developments and remains confident in dealing with any potential challenges.
• Interest Rate Ceiling on Deposits: Responding to concerns about interest rate ceilings on FCNR (B) deposits, the governor clarified that there is no immediate need for changes to bolster reserves.

Conclusion

India is focused on safeguarding its trade and economic stability rather than pursuing de-dollarisation. The country’s agreements for local currency trade aim to mitigate risks from currency fluctuations. With strong forex reserves and proactive monitoring, India is well-prepared to navigate global economic uncertainties.

Multiple choice question:

1. Consider the following statements regarding de-dollarization:

1. De-dollarization refers to the process of reducing a country’s reliance on the U.S. dollar in its domestic transactions and foreign trade.
2. One of the key benefits of de-dollarization is the reduction in a country’s exposure to exchange rate fluctuations caused by changes in the U.S. dollar value.
3. The BRICS countries have officially adopted a common currency to challenge the hegemony of the U.S. dollar.

Which of the above statements is/are correct?

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2, and 3

Answer: A

Explanation:

De-dollarization is the process of reducing reliance on the U.S. dollar in both domestic transactions and international trade.

By reducing dependency on the U.S. dollar, countries can mitigate risks from fluctuations in its value.

While BRICS countries have discussed the idea of reducing dependence on the U.S. dollar, they have not yet adopted a common currency. No decision has been taken on this matter as of now.

REVIVING INDIA’S MANUFACTURING SECTOR

TOPIC: (GS3) INFRASTRUCTURE: THE HINDU

The recently released Annual Survey of Industries (ASI) 2022-23 highlights a strong recovery in the manufacturing sector, signalling potential for India to become a global manufacturing powerhouse.

Key Insights from ASI 2022-23

Growth in Manufacturing Output and GVA

• Manufacturing output increased by 5%, and Gross Value Added (GVA) grew by 7.3% in 2022-23.
• Key industries like chemicals, metals, food products, and motor vehicles contributed 58% of total manufacturing output.

Challenges of Rising Input Costs

• Input prices surged by 4%, creating a gap between output and GVA growth.
• The dependency on imports for raw materials and intermediates has amplified costs.

PLI Scheme’s Role

• PLI has boosted production in sectors like electronics, pharmaceuticals, and automobiles.
• Expanding the scheme to labour-intensive industries (e.g., textiles, leather) and sunrise sectors (e.g., aerospace) can unlock new growth.

Key Challenges in the Manufacturing Sector

Regional Imbalances

• States like Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Uttar Pradesh dominate manufacturing, contributing 54% of GVA and 55% of employment.
• Other regions need investment and infrastructure development to ensure equitable growth.

MSME Integration

• Micro, Small, and Medium Enterprises (MSMEs) contribute 45% of manufacturing GDP and employ 60 million people.
• Lowering PLI thresholds for MSMEs can enhance their ability to innovate and integrate into supply chains.

Low Women Workforce Participation

• Women’s participation in manufacturing remains low.
• Improved infrastructure (e.g., hostels and childcare facilities) near factories can boost female workforce participation and potentially increase manufacturing output by 9%.

Strategies for Sustainable Growth

• Reducing Input Costs: Simplify tariffs into a three-tier system for raw materials, intermediates, and finished goods to lower production costs.
• Promoting Green Manufacturing: Encourage eco-friendly technologies and invest in R&D for advanced manufacturing.
• State-Level Reforms: Land, labour, and power reforms by states can attract investments and enhance competitiveness.

Conclusion

India’s manufacturing sector is key to achieving its goal of becoming a developed economy by 2047. Sustained reforms, inclusive growth strategies, and leveraging policy initiatives like PLI can help increase manufacturing’s share in GVA to 25%-27% by 2047, driving economic transformation.

SILICA SCARS: ADDRESSING SILICOSIS IN MINE WORKERS

TOPIC: (GS3) ENVIRONMENT: THE HINDU

India’s rapid development has increased mining activities, including the extraction of silica, a vital component of construction materials like sand and stone. Prolonged exposure to silica dust puts mine workers at a high risk of silicosis, a chronic lung disease caused by silica particles lodging in lung tissues.

What is Silicosis?

• A lung disease caused by inhaling silica dust over time.
• Particles get trapped in lung tissues, impairing normal breathing.
• Chronic and irreversible, it affects workers regardless of age.

Magnitude of the Problem

• In 1999, over 8 million people were at high risk of exposure.
• The number has likely increased due to the expansion of mining operations.

Impact on Workers

• Often affects young workers.
• Symptoms are misdiagnosed, delaying proper treatment.

Recent Developments

• National Green Tribunal (NGT) Intervention: Directed the Central Pollution Control Board to frame guidelines for silica mining and washing plants. Urged Uttar Pradesh to establish health-care facilities near mining areas.
• Legislative Framework: Occupational Safety, Health and Working Conditions Code 2020 mandates:
  • Employers to report occupational diseases like silicosis.
  • Free annual health check-ups for workers.
  • Notification of silicosis cases by medical practitioners.

Implementation Gaps

• Employers often fail to report cases, evading legal obligations.
• States lack robust systems to monitor workplace practices.
• Silicosis cases are frequently misdiagnosed as tuberculosis, delaying treatment.

Challenges

• State Inaction: Authorities show limited commitment to enforcing laws. No consistent effort to collect data on silicosis cases.
• Resource Frontier States: Mining dominates economies of states with low literacy and inadequate healthcare. Workers lack awareness and face delays in seeking medical/legal help.
• Worker Exploitation: Poor conditions tolerated due to economic dependence on mining. Exposure to silica worsens without preventive measures.

Way Forward

• Strengthening Implementation: Ensure compliance with existing laws and mandatory reporting. Conduct frequent inspections of mining sites.
• Improved Healthcare Access: Establish specialized clinics near mining areas for early diagnosis and treatment. Train healthcare professionals to correctly identify silicosis.
• Worker Awareness: Educate workers about the risks of silica exposure and their rights. Promote safe workplace practices and use of protective gear.

Conclusion

Addressing silicosis requires stronger enforcement of laws, better healthcare access, and greater worker awareness. Collaborative efforts by the government, industries, and communities are vital to safeguard the health and well-being of mine workers.

GLOBAL STRATEGY FOR RESILIENT DRYLANDS (GSRD)

TOPIC: (GS3) ENVIRONMENT: THE HINDU

The Global Strategy for Resilient Drylands (GSRD) is an initiative by CGIAR to address food security, biodiversity conservation, and resilient livelihoods for people in dryland regions. Launched at COP16, it aims to support 2.7 billion people in Asia and Africa, particularly in arid areas.

• Purpose: The GSRD aims to improve food security, protect biodiversity, and build resilient livelihoods for the 7 billion people living in drylands, especially in Asia and Africa.

• Lead Organizations: The strategy is led by CGIAR centres such as the International Centre for Agricultural Research in the Dry Areas (ICARDA) and the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT).
• Launch Event: It was launched at the 16th Conference of Parties to the United Nations Convention to Combat Desertification (COP16) in Riyadh.
• Consultative Process: The strategy was developed with input from national research organizations, governments, private sector partners, and civil society to meet the unique needs of dryland regions.

About CGIAR

• Establishment: CGIAR was formed in 1971 as a partnership of diverse donors supporting 15 international centres.
• Partnership: CGIAR works with governments, civil society, and businesses worldwide to address agricultural challenges.

Vision of CGIAR

• Goal: The vision is to reduce poverty, hunger, and improve health through sustainable agricultural research, partnerships, and leadership.

CGIAR Objectives

• Food for People: Increase the productivity and production of healthy food for poor communities.
• Environment for People: Protect and sustainably use natural resources and biodiversity to help improve livelihoods, especially in the face of climate change.
• Policies for People: Advocate for policies that will promote agricultural growth and fairness, benefiting poor and disadvantaged groups, particularly rural women.

NATIONAL COUNCIL FOR VOCATIONAL EDUCATION AND TRAINING (NCVET)

TOPIC: (GS3) SCIENCE AND TECHNOLOGY: THE HINDU

The National Council for Vocational Education and Training (NCVET) has been established to regulate and improve the quality of vocational education and training in India. Recently, it recognized IN-SPACe as an Awarding Body (Dual).

About NCVET:

• Established: By the Ministry of Skill Development and Entrepreneurship (MSDE) on December 5, 2018.
• Purpose: To ensure quality in technical and vocational education and training (TVET) in India.
• Function: NCVET took over responsibilities from the National Skill Development Agency (NSDA) and National Council of Vocational Training (NCVT).
• Fully Operational: Since August 1, 2020.
• Role: It serves as the main national regulator, setting standards and creating regulations for vocational education and training.
• Goals:
  • Improve the quality of vocational education and training.
  • Set minimum standards for vocational education institutions.
  • Integrate and improve fragmented regulatory systems.
  • Enhance employability by producing higher-skilled workers for the economy’s growth.

Principal Functions of NCVET:

• Recognize, monitor, and de-recognize Awarding Bodies.
• Recognize, monitor, and de-recognize Assessment Agencies.
• Recognize, monitor, and de-recognize Skill Information Providers.
• Approve qualifications based on set guidelines.
• Establish a system for addressing grievances against recognized bodies.

HORNBILL FESTIVAL

TOPIC: (GS3) ENVIRONMENT: THE HINDU

The Hornbill Festival is Nagaland’s premier cultural event, held annually to showcase the state’s rich heritage and traditions. It takes place every year from December 1 to 10, attracting visitors from across India and around the world.

Key Features of the Hornbill Festival:

• Inception: The festival was first organized in the year 2000.
• Purpose: It aims to foster inter-tribal interaction, promote Nagaland’s heritage, and highlight the state’s cultural diversity.
• Location: Held at the Naga Heritage Village in Kisama, approximately 12 kilometres from Kohima, the capital of Nagaland.
• Cultural Significance: It is called the “Festival of Festivals” because it celebrates the various tribal customs and traditions, blending them with modern elements.
• Organizers: The festival is organized by the State Tourism Department and the Art & Culture Department of Nagaland’s government.
• Tributes to Naga Identity: The festival is named after the Hornbill bird, which holds special significance in the socio-cultural life of the Naga tribes.

Themes and Celebrations:

2024 Theme: The theme for the 2024 Hornbill Festival is “Cultural Connect”, focusing on the unity and cultural richness of Nagaland.

Activities:

• Traditional Sports: The festival features Naga wrestling, traditional archery, and other indigenous sports that are deeply rooted in Naga culture.
• Cultural Performances: There are performances showcasing the traditional dances, songs, and rituals of different tribes.
• Stalls: Food and herbal medicine stalls are set up, offering a taste of Naga cuisine and natural remedies.
• Fashion and Beauty: The festival also includes fashion shows, beauty contests, and other events that combine modern entertainment with cultural elements.
• Musical Events: Musical concerts highlight both traditional and contemporary music from the region.

Special Exhibitions:

• “Naga-Land & People in Archival Mirror”: This special exhibition, organized by the Archives Branch in collaboration with the National Archives of India, offers an in-depth exploration of Nagaland’s history, culture, and people through archival materials.

Conclusion:

The Hornbill Festival is a unique celebration of Nagaland’s vibrant heritage, blending traditional customs with contemporary attractions. Through its activities and exhibitions, it promotes unity among the diverse Naga tribes and invites people to experience the rich cultural legacy of this region.

LAKE-EFFECT SNOW

TOPIC: (GS3) ENVIRONMENT: THE HINDU

Lake-effect snow is a weather phenomenon that causes heavy snow showers in specific areas near large lakes, particularly during the winter months. It primarily affects regions around the Great Lakes in North America.

About Lake-Effect Snow:

• What It Is: Lake-effect snow happens when cold air from the land passes over warmer lake water, causing snow to fall in localized areas.
• Common Location: This type of snow is most common around the Great Lakes, especially during late fall and winter.

Formation Process:

• Cold Air Meets Warm Water: When cold air, often from Canada, moves over the warmer waters of the Great Lakes, moisture and heat are transferred into the air.
• Snow Bands Form: As the warm, moist air rises, it cools, and clouds form, which turn into snow bands. These can drop 2 to 3 inches of snow per hour or more.
• Wind and Topography Influence: The direction and speed of the wind, as well as the land’s shape, can affect how intense and how wide the snow bands are. For example, hills or mountains can increase the snow’s intensity in certain areas.

Lake-effect snow results in heavy snowfall that can be intense but usually limited to specific areas near the lake.