Current News - Indian Economy - Organizations
Recently, the Pension Fund Regulatory and Development Authority (PFRDA) announced that pension funds will be allowed to invest in sovereign green bonds (SGrBs).
- Timing of Issuance: The government is expected to issue sovereign green bonds in the second half of the current financial year.
- Implications for Retail Investors: The PFRDA's decision holds significant implications for retail investors, offering them an opportunity to align their pension contributions with their values and support environment-related projects.
- Definition of Sovereign Green Bonds: Sovereign Green Bonds, also known as Green Bonds, are government-issued bonds specifically used to fund environment-related projects.
- They offer sovereign-guaranteed returns and are dedicated to financing green initiatives.
- Benefits for Pension Funds: By including sovereign green bonds in their investment portfolios, pension funds can achieve greater diversification, spreading risk across various asset classes, and promoting sustainable investments aligned with environmental, social, and governance (ESG) principles.
- Promoting Sustainable Investments: With retail investors becoming increasingly conscious of the environmental impact of their investments, the option to invest in sovereign green bonds allows them to support projects that promote sustainability, renewable energy, and environmental protection.
- On 15th June, 2020, India joined the Global Partnership on Artificial Intelligence (GPAI), as one of the founding members to jointly work towards an ethical, human centric development and use of AI.
About Global Partnership on Artificial Intelligence
- GPAI is the first worldwide initiative for better comprehension of the issues and potential around AI utilising the experience and diversity of participating countries.
- It was first officially proposed by France and Canada at the Biarritz G7 Summit in August of 2019.
- GPAI will look to close the gap between theory and practice on AI by leveraging cutting-edge research and applied action on AI-related objectives.
- As a part of GPAI, participating nations will consider experimentation to create a controlled setting in which AI systems can be easily tested, and scaled-up, as needed.
- The GPAI will comprise of four working groups each centred on responsible AI, the future of work, data governance, and commercialisation and innovation.
- This multi-stakeholder global coalition includes Australia, Canada, the European Union, France, Germany, Italy, Japan, Korea, Mexico, New Zealand, Singapore, Slovenia, the United Kingdom and the United States.
Role of OECD
- Organization for Economic Cooperation and Development (OECD) will host Secretariat of the new Global Partnership on AI (GPAI) in Paris, along with two Centers of Expertise – one each in Montreal and Paris.
- OECD will enable the GPAI to create a strong relationship between policy development and technical discussion on AI, by applying OECD’s established expertise on AI policy as illustrated by its leadership on establishing the very first global standard for trustworthy AI – the OECD Principles on Artificial Intelligence.
Benefits for India
- India is a founding member of GPAI and is expected to play a critical role in expanding the responsible utilisation of artificial intelligence for the world.
- India has recently been very active in boosting National AI Strategy by putting in action committees and National AI Portal to bring the impact of the technology across various economic sectors like agriculture, healthcare, education, manufacturing, finance and telecommunication.
- In the past, the Indian Government has come forward with an AI policy draft and stated its willingness to build an ecosystem in the nation that focuses on a fast shift from the research and development (R&D) phase to the deployment and operation phase for AI systems.
- By working with other global nations, India will be a beneficiary of AI innovation and standardisation that are needed for this technology.
- The initiative will help towards bridging the hiatus between theory and practice, and bolstering usage of AI in cutting-edge research for inclusive growth in the country.
- The 11th BRICS Summit took place from 13th -14th November 2019 in Brasilia, Brazil, held under the theme - Economic Growth for an Innovative Future.
- Brasilia Declaration was adopted by the BRICS member countries.
Major Highlights of Summit
- The Summit focused on the following priorities:
- Strengthening of the cooperation in Science, technology and innovation
- Enhancement of the cooperation on digital economy
- Invigoration of the cooperation on the fight against transnational crime, especially against organized crime, money laundry and drug traffic
- Encouragement to the rapprochement between the New Development Bank (NDB) and the BRICS Business Council.
- Need to Reform Multilateral Organisations: BRICS countries called for an urgent need to strengthen and reform the United Nations and other multilateral organisations, including the WTO and the IMF, to address the significant challenges being faced by the developing countries.
- Obligation to Multilateralism: BRICS is committed to multilateralism, cooperation of sovereign states to maintain peace and security, advance sustainable development and ensure the promotion and protection of human rights and fundamental freedoms for all and build a brighter shared future for the international community.
- Wider Role for Member Countries: Emphasizing on their commitment to shape a more fair, just, equitable and representative multipolar international order, the leaders underlined the imperative that international organisations be fully driven by member states and promote the interests of all.
Main Highlights of Brasilia Declaration
Global Trade Governance
Investment And Finance
India proposed the following actions during the 11th BRICS Summit-
- Coalition for Disaster Resilient Infrastructure Initiative: India requested BRICS countries and NDB to join Coalition for Disaster Resilient Infrastructure initiative.
- First Meeting of BRICS Water Ministers: Emphasizing the need of sustainable water management and sanitation, India proposed to hold the first meeting of BRICS Water Ministers in India.
- Coalition in Health Field: Recalling about the recent Fit India Movement started in India, PM stressed to increase contacts and exchanges between the BRICS in the field of fitness and health.
- Mutual Social Security Agreement: India suggested that the five countries together should also consider a Mutual Social Security Agreement, a move that would provide benefits of detachment, totalisation and portability to employees of the five nations.
Role of BRICS in the International Order
Important Global Pillar:
- What makes BRICS important is the fact that with over 40 percent of the world’s population in its fold, the combined output of these countries constitutes more than 20 percent of the world GDP. This means, the BRICS economies collectively have evolved into a strong economic force as reflected in the increasing share of BRICS in the world GDP, making it an important pillar of global order.
- What led to the relevance of BRICS in international order was the financial crisis of 2008, which raised skepticism and concerns over the dollar-dominated monetary system.The establishment of a New Development Bank is a part of general efforts on the part of the BRICS group to promote international development and reflects their understanding of where the priorities lie when it comes to promoting development.Such initiatives will open up to the developing world new resources, experiences, and an understanding of the priorities of emerging powers.
Role in International Peace and Security:
- All BRICS countries are key UN members when it comes to maintaining international peace and security. Most of them make valuable contributions to UN peacekeeping operations by providing troops, training, or voting for supportive mandates. Besides peace operations, BRICS members consider the UN to be the most legitimate institution for adopting collective action for restoring and keeping peace such as preventive deployments and post-conflict peace-building.
- In August, 2019, USA formally withdrew from Intermediate-Range Nuclear Forces (INF) which mandated the United States and the Soviet Union to eliminate and permanently forswear all of their nuclear and conventional ground-launched ballistic and cruise missiles.The decision has the potential to incite new armsrace. Here comes the relevance of BRICs, which can play a significant role in assuring world peace by playing an active role in dispute resolution, maintaining peace and stability.
Role in Poverty Reduction and Development:
- Despite recession at the global level, BRICS countries accelerated economic growth, drove millions out of poverty and reducing international inequalities.The BRICS nations are leaders within their own regions and surrounded by a cluster of smaller neighbours. This also provides significant opportunities for the smaller neighbours to benefit from external growth and development.
- Since its inception, BRICS has played a vital role both in practical as well as ideational terms in reforming the global financial system as well as in the norm setting processes with in world politics.
- Looking ahead to the next decade, the BRICS countries, as an emerging international actor representing emerging and developing countries, will need to participate in global governance on the international stage with new cooperation structures and concepts.
- BRICS is marching towards the next "golden decade," and science, technology and innovation are among the most important areas of cooperation. In order to achieve more success, it is necessary to take the following measures:
- First of all, BRICS needs to identify the most important areas for cooperation. As science, technology and innovation cover many aspects related to the fourth industrial revolution as well as to a nation's economy, society and even military, it is better for BRICS to promote cooperation in the critical areas such as computer chips, fifth generation (5G) wireless technology and artificial intelligence (AI).
- Secondly, in the process of cooperation, the principle of mutual consultation, contribution and shared benefits should be upheld. Only by adhering to this principle can BRICS nations make good use of their comparative advantages to keep up the momentum of cooperation and eliminate the barriers for technology transfers among themselves.
- Thirdly, the financial issue needs to be dealt with in a proper way. R&D in the fields of science, technology and innovation is capital-intensive and requires significant funding. Therefore, the New Development Bank should set up an R&D fund to provide financial support for scientific and technological innovation cooperation among the BRICS countries.
- Last but not least, BRICS should adopt an inclusive and open attitude towards other emerging economies. On the one hand, R&D is a trans-border activity; while on the other, many emerging economies outside of BRICS have progressed to a very high level in the fields of science, technology and innovation. So it is also essential for BRICS to start cooperating with non-BRICS countries.
- Recently, South Korea decided not to seek special treatment reserved for developing countries by the World Trade Organization (WTO) in future negotiations given its enhanced global economic status.
- South Korea, Asia's fourth-largest economy, has maintained its developing country status as a member of the WTO since the body's creation in 1995, mainly to guard its agriculture industry.
- In July, 2019, USA accused developing countries, particularly China and India, of unfairly benefitting from their “developing country" status under the World Trade Organization (WTO) regime which permits such countries special and differential treatment (or S&D in WTO parlance).
- USA asked the WTO to define how it designates developing-country status, a move apparently aimed at singling out countries like which are getting lenient treatment under the global trade rules.
- The US has proposed that the WTO strip countries of developing-country status if they meet the following criteria-
- being members of the Group of 20 advanced economies
- being members of the Organisation for Economic Cooperation and Development (OECD)
- being high-income countries as classified by the World Bank
- taking up at least 0.5 percent of total global trade.
Impact of South Korea’s Decision
- The decision is likely to put pressure on countries like China and India which are enjoying the WTO’s developing country status, to reconsider and change their status in the WTO.
Definition of Developing Country
- In the WTO, developing countries are entitled to “special and differential treatment” set out in 155 rules. It was introduced as a mechanism to offer some respite to poor countries while they try to adjust to a new global trade order marked by lower barriers to trade.
- However, none of those rules define what a “developing country” is. Members announce for themselves whether they are “developed” or “developing” countries.
- However, other members can challenge the decision of a member to make use of provisions available to developing countries.
- As many as two-thirds of the 164 members of the WTO have classified themselves as developing countries.
- The WTO deals with the special needs of developing countries in three ways:
- The WTO agreements contain special provisions on developing countries. These provisions are referred to as “Special and Differential Treatment” (S&D) provisions.
- The Committee on Trade and Development is the main body focusing on work in this area in the WTO, with some others dealing with specific topics such as trade and debt, and technology transfer
- The WTO Secretariat provides technical assistance (mainly training of various kinds) for developing countries.
Special and Differential (S&D) Treatment Provisions
Advantages under Developing Status
- Under the global trade rules, developing countries claim entitlement to longer timeframe for the imposition of safeguards, generous transition periods, softer tariff cuts, procedural advantages for WTO disputes and the ability to avail themselves of certain export subsidies. For ex. developing countries such as India and China can seek to delay the implementation of these WTO agreements owing to their disadvantaged economic status.
- Developing countries are allowed to provide considerably larger input subsidies and minimum price support (they can offer product-specific farm subsidies up to 10% of the value of production, against 5% for developed countries, although the latter enjoy other flexibilities).
- Further, these countries will continue to provide indirect export subsidies, covering internal transport and marketing, until 2023, five years after the deadline for elimination of all forms of export subsidies.
- Developing countries can continue to impose tariffs and quotas on goods and services in order to limit imports and promote domestic producers who may otherwise be affected adversely by imports that are lower in price or better in quality. For ex., India subsidises agriculture heavily in the name of food security in order to protect its farmers.
- While the developing country status was supposed to help poor countries ease gradually into a more globalised world economy, it has had other unintended effects.
- Even many developed economies such as Singapore and Hong Kong which have per capita income levels higher than the U.S., have made use of the provision to classify themselves as growing economies.
- When the wealthiest economies claim developing-country status, they harm not only other developed economies but also economies that truly require special and differential treatment. Such disregard for adherence to the WTO rules, including the likely disregard of any future rules, cannot continue to go unchecked.
- The WTO is in desperate need of reform, without which the WTO will be unable to address the needs of workers and businesses or the challenges posed by the modern global economy.
UN experts on 19 June, reported credible evidence to link Saudi Crown Prince Mohammed bin Salman (MBS) to the murder of journalist Jamal Khashoggi.
Relevance of the News: The news highlights criminal conspiracy by Saudi Arabia to suppress media activism pursued by Jamal Khashoggi.
Details of the Report:
- The allegation regarding Prince Mohammed’s possible direct role in Khashoggi’s execution was detailed in a new report by the UN special rapporteur on extra-judicial, summary or arbitrary executions.
- The special rapporteur asked UN Secretary General Antonio Guterres to initiate a formal international criminal investigation into the case and also called for initiating sanctions on Prince’s foreign assets.
- Although there is no evidence of who ordered the killing but persons directly implicated in the killing report to the MBS.
- The report places responsibility of Khashoggi’s murder on the state of Saudi Ariabia and asks for further investigation of high-level Saudi officials.
- The report finds half-hearted attempts by the Saudi officials in investigation of the crime and cites evidence of forensic cleaning of the crime scene by Saudi officials which amounts to obstructing of justice by Saudi Arabia.
Murder of Jamal Khashoggi:
- Khashoggi was a Washington Post journalist and was a critic of Prince Mohammed.
- He was murdered at the Saudi consulate in Istanbul, Turkey on October 2, 2019 and his body has not been found yet.
- Saudi Arabia has blamed rogue agents for the murder of Khashoggi and Saudi prosecutors have absolved the Crown Prince from any involvement.
Why is it in News?
The Prime Minister took part in the annual Shanghai Cooperation Organisation (SCO) Summit on 14th June, 2019, that was held at Bishkek, Kyrgyzstan.
Relevance of the News:
SCO is an important regional grouping for India’s interests and PM’s statement highlights India’s expectations from SCO members and the group’s functioning.
Minutes of the Meeting:
- Prime Minister Narendra Modi undermined unilateralism and trade protectionism pursued by some countries and reflected by US-China trade rivalry and called for a rules-based, anti-discriminatory and all inclusive WTO-centred multilateral trading system.
- SCO members agreed that global politics and economy remains turbulent and tense, and the process of economic globalisation is being hindered by the growing unilateral protectionist policies.
- India expressed its commitment towards ensuring a favourable environment for the economic cooperation between the SCO member countries.
Shanghai Cooperation Organisation (SCO):
- It is a permanent intergovernmental international organisation, created in 2002 in Shanghai. SCO was preceded by the Shanghai Five mechanism.
- It has two permanent bodies:
- SCO Secretariat based in Beijing.
- Executive Committee of the Regional Anti-Terrorist Structure (RATS) based in Tashkent.
- Membership: SCO comprises eight permanent member states, namely Kazakhstan, China, Kyrgyz Republic, Russia, Tajikistan, Uzbekistan and two countries India and Pakistan joined as permanent members in 2017.
Objectives of SCO:
- Strengthen relations among member states.
- Promote cooperation in political affairs, trade, scientific, cultural, energy, transportation, tourism spheres, and environmental protection.
- Safeguard regional peace, security, and stability.
- Create a democratic, equitable international political and economic order.
Why is it in News?
- Geneva based Human Rights Council’s (HRC) Special Rapporteurs recently submitted a note to the government asking about steps taken on addressing the alleged human rights violations in Jammu and Kashmir which were highlighted by a June 2018 report of the UN Office of the High Commissioner of Human Rights (OHCHR).
The UN Report:
- The UN report was released along with another report which was released by two NGOs on the alleged cases of torture which was endorsed by a former UN Special Rapporteur.
- As per UN officials, India is in contravention of several conventions it has committed to, including a “Standing Invitation” signed in 2011 to all special rapporteurs to visit India and more than 20 such visit requests, including to Jammu and Kashmir, are pending at present.
- India has rejected all the claims made by the UN OHCHR’s report on the ‘Situation of Human Rights in Kashmir’ calling it biased. It is the first-ever such report on Jammu and Kashmir.
- Indian Permanent Mission to the UN in Geneva replied to the OHCHR that India does not intend to engage further with these Special Rapporteurs on the issue whom it accused of individual prejudice.
Report by the NGOs:
Association of Parents of Disappeared Persons (APDP) and the J&K Coalition of Civil Society (JKCCS) released a report ‘Torture: Indian State’s Instrument of Control in J&K’ which highlights the following:
- Nearly 70% of torture victims in J&K were civilians (not militants) and 11% died during or as a result of torture.
- The cases included incidents of electrocution, ‘water-boarding’ and sexual torture, which the government has repeatedly denied.
Why is it in News?
The Delhi High Court has directed that the United Nations Organization (UNO) is not a State under Article 12 of the Constitution of India and is not compliant to its jurisdiction under Article 226 of the Constitution.
Section 86 of Civil Procedure Code, 1908:
- Under section 86 of the CrPC, 1908 a foreign State may be sued in any Court with the consent of the Central government.
- A former UNO employee who was sentenced to 97 months imprisonment for misconduct maintains that the rightful process was not followed by the UNO in the trial and sought the permission of Ministry of External Affairs to initiate legal action against the UNO under section 86 of Civil Procedure Code, 1908.
- However, the Ministry replied that the consent of the Government of India is not needed to open a legal suit against UNO as it is not a foreign state and is only an Internal Organization.
Immunity to UNO:
- As per the Ministry, the UNO and its officials enjoy immunity under the United Nations (Privileges and Immunities) Act, 1947.
- As per Section 2 of Article II of the Schedule of Act, 1947, UNO has immunity from every form of legal process except in any case where it has expressly waived its immunity.
- The immunity granted is all comprehensive and applicability of any national law is subject to the waiver of the immunity by UNO.
- In the present case the UNO has not waived its immunity and hence the national laws cannot be applied in this case.
Why is it in News?
The executive secretary of the Comprehensive Test Ban Treaty Organization (CTBTO) has invited India to be an observer in the CTBT.
How could India benefit by being an Observer?
- Being an observer, India could gain access to data from the International Monitoring System. This system can detect even small nuclear explosions using seismology, hydro-acoustics, infra-sound and radionuclide technology.
- This quality of data would aid India in earthquake monitoring and other civil and scientific applications like gas exploration.
- Pakistan too, is an observer at the CTBTO and being an observer does not change a country’s status with respect to the CTBT.
- India has always considered the CTBT to be a flawed agreement. Ratification of CTBT by non-nuclear nations neither poses any threat to the nuclear nations nor does it lay any framework for nuclear disarmament.
- CTBT can be credible if it lays down disarmament timeline which should be ratified by all parties. Currently, the US and China have only signed the agreement but not ratified it.
Comprehensive Test Ban Treaty (CTBT):
- CTBT bans nuclear explosions worldwide or anywhere else- in the atmosphere, underwater and underground.
- It makes it very tough for nations to develop nuclear bombs initially, or for nations that already have them, to make more powerful bombs. It also averts the huge destruction caused by radioactivity from nuclear explosions to humans, animals and plants.
- It remains unenforced as 44 specific nuclear technology holder countries must sign and ratify before the CTBT can enter into force. Of these, eight are still missing: China, Egypt, India, Iran, Israel, North Korea, Pakistan and the USA. India, North Korea and Pakistan have yet to sign the CTBT.
Comprehensive Test Ban Treaty Organisation (CTBTO):
- It is an organization based in Vienna which was founded in 1996. The CTBTO’s main tasks are the promotion of the Treaty and the build-up of the verification regime so that it is operational when the Treaty enters into force.
- CTBTO manages over 300 stations in 89 countries have been built to monitor for signs of nuclear explosions around the globe and round the clock.
- The International Monitoring System (IMS) of CTBTO monitors the Earth’s crust, atmosphere and the oceans to look for traces of radioactivity. It produces data that is useful in applications like disaster early warning, scientific research on the Earth’s inner structures, climate change or meteors.
Why is it in News?
- Pakistan has reached an agreement with the IMF to receive $6 billion over the next three years to meet its foreign debt obligations.
- The loan would act as the 13th bailout since the late 1980s from the IMF, which is going through a BOP crisis prompted by high fiscal and CAD and diminishing foreign exchange reserves.
- Pakistan has agreed to some of the structural changes as part of the agreement as wanted by the IMF like lining up expenditure with resources, improving the functioning of loss-making state-owned enterprises, curtail the subsidies etc.
- The structural reforms mandated by the package could result in increase in prices of goods and utilities like gas and electricity, more increase in fuel prices and further devaluation of rupee.
About Lending by the IMF:
- IMF loans are meant to help member countries tackle balance of payments problems, stabilize their economies, and restore sustainable economic growth.
- The IMF is not a development bank i.e. unlike the World Bank, it does not finance projects.
- As a condition for lending, the IMF and the government agree on a program of policies targeted at accomplishing specific, quantified objectives in support of the overall objectives of the authorities' economic program. For example, the nation may obligate to fiscal or foreign exchange reserve targets.
- In 1991, India was granted loan by IMF after it promised to launch several structural reforms in the coming years. The recent economic reforms of 1990s in India are said to have been introduced at the instance of the IMF-World Bank.