RETAIL INFLATION
1. Context
Retail inflation broke a nine-month declining streak in August, quickening to 2.1% from 1.55% in July 2025, according to official data.The inflation in August was marginally higher than the lower bound of the Reserve Bank of India’s (RBI) comfort band of 2-6% for retail inflation
2. What is Inflation?
- It is the rise in prices of goods and services within a particular economy wherein consumers' purchasing power decreases, and the value of the cash holdings erodes.
- In India, the Ministry of Statistics and Programme Implementation (MoSPI) measures inflation.
- Some causes that lead to inflation are demand increases, reduction in supply, demand-supply gap, excess circulation of money, increase in input costs, devaluation of the currency, and rise in wages, among others.
3. Retail Inflation
Consumers often directly buy from retailers. So, the inflation experienced at retail reflects the actual price rise in the country. It also shows the cost of living better. In India, the index that reflects the inflation rate at the retail level is known as Consumer Price Index (CPI). Unlike WPI, CPI includes both goods and services. CPI is used to calculate the Dearness Allowance (DA) for government employees.
4. How Inflation is measured?
- In India, inflation is primarily measured by two main indices- WPI (Wholesale Price Index) and CPI (Consumer Price Index), Which measures Wholesale and retail-level price changes, respectively.
- The CPI calculates the difference in the price of commodities and services such as food, medical care, education, electronics, etc, which Indian consumers buy for use.
- On the other hand, the goods or services sold by businesses to smaller businesses for selling further are captured by the WPI.
- Both WPI (Wholesale Price Index) and CPI (Consumer Price Index) are used to measure inflation in India.
5. What is the Inflation Target?
- Under Section 45ZA, in consultation with the RBI Act, the Central Government determines the inflation target in terms of the Consumer Price Index (CPI), once in five years and notifies it in the Official Gazette.
- Accordingly, on August 5, 2016, the Central Government notified in the Official Gazette 4 percent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016, to March 31, 2021, with the upper tolerance limit of 6 percent and the lower tolerance limit of 2 percent.
- On March 31, 2021, the Central Government retained the inflation target and the tolerance band for the next 5-year period-April 1, 2021 to March 31, 2026.
- Section 45ZB of the RBI Act provides for the constitution of a six-member Monetary Policy Committee (MPC) to determine the policy rate required to achieve the inflation target.
6. Monetary Policy Committee (MPC)
- The MPC is a statutory and institutionalized framework under the RBI Act, of 1934, for maintaining price stability, keeping in mind the objective of growth. It was created in 2016.
- It was created to bring transparency and accountability in deciding monetary policy.
- MPC determines the policy interest rate required to achieve the inflation target.
- The committee comprises six members and Governor RBI acts as an ex-officio chairman. Three members are from RBI and three are selected by the government. The inflation target is to be set once every five years. It is set by the Government of India, in consultation with the Reserve Bank of India.
- The current inflation target is pegged at 4% with -2/+2 tolerance till March 31, 2021.
7. What Caused the drop in Inflation?
- Retail Inflation or price gains based on the Consumer Price Index, slowed to 6.77 % last month, from September's 7.41%, aided by an appreciable deceleration in food price inflation.
- The year-on-year inflation based on the Consumer Food Price Index eased by almost 160 basis points in October, to 7.01%, from the preceding month's 8.60%, helped by a 'decline in prices of vegetables, fruits, pulses and oils, and fats', the Government said.
- With the food and beverages sub-index representing almost 46% of the CPI's weight, the slowdown in food price gains understandably steered overall inflation lower even as price gains in three other essential categories, namely clothing, and footwear, housing, and health remained either little changed from September or quickened.
- Inflation at the Wholesale Prices Level also continued to decelerate, with the headline reading easing into single digits for the first time in 19 months. A favorable base effect along with a distinct cooling in international prices of commodities including crude oil and steel amid gathering uncertainty in advanced economies was largely instrumental in tempering wholesale price gains.
8. Recent Measures by the Government
To soften the prices of edible oils and pulses, tariffs on imported items have been rationalized from time to time. The stock limits on edible oils are also maintained, to avoid hoarding.
The Government has taken trade-related measures on wheat and rice to keep domestic supplies steady and curb the rise in prices.
The impact of these measures is expected to be felt more significantly in the coming months.
For Prelims & Mains
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For Prelims: Inflation, MPC, CPI, WPI, food Inflation, RBI, Headline inflation, Core inflation For Mains:
1. Explain the concept of inflation and its impact on an economy. Discuss the various causes of inflation and the measures that can be taken to control it, with specific reference to India. (250 Words)
2. What are the challenges and opportunities associated with managing inflation in India? Evaluate the effectiveness of recent policy measures in addressing inflationary pressures and maintaining price stability. Suggest strategies for sustainable economic growth while managing inflation risks. (250 Words)
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Previous Year Questions
1. Consider the following statements: (UPSC 2021)
1. The Governor of the Reserve Bank of India (RBI) is appointed by the Central Government.
2. Certain provisions in the Constitution of India give the Central Government the right to issue directions to the RBI in the public interest.
3. The Governor of the RBI draws his natural power from the RBI Act.
Which of the above statements is/are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
2. Concerning the Indian economy, consider the following: (UPSC 2015)
Which of the above is/are component(s) of Monetary Policy? (a) 1 only (b) 2, 3 and 4 (c) 1 and 2 (d) 1, 3 and 4
3. An increase in Bank Rate generally indicates: (UPSC 2013) (a) Market rate of interest is likely to fall.
(b) Central bank is no longer making loans to commercial banks.
(c) Central bank is following an easy money policy.
(d) Central bank is following a tight money policy.
4. Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC 2017) 1. It decides the RBI's benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below: A. 1 only B. 1 and 2 only C. 3 only D. 2 and 3 only 5. Read the following passage and answer the question that follows. Your answers to these items should be based on the passage only.
Policymakers and media have placed the blame for skyrocketing food prices on a variety of factors, including high fuel prices, bad weather in key food producing countries, and the diversion of land to non-food production. Increased emphasis, however, has been placed on a surge in demand for food from the most populous emerging economics. It seems highly probable that mass consumption in these countries could be well poised to create a food crisis.
With reference to the above passage, the following assumptions have been made: (UPSC 2021)
1. Oil producing countries are one of the reasons for high food prices.
2. If there is a food crisis in the world in the near future, it will be in the emerging economies. Which of the above assumptions is/are valid?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
6. India has experienced persistent and high food inflation in the recent past. What could be the reasons? (UPSC 2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
7. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
A. Controlling the inflation in India is the responsibility of the Government of India only
B. The Reserve Bank of India has no role in controlling the inflation
C. Decreased money circulation helps in controlling the inflation
D. Increased money circulation helps in controlling the inflation
8. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
1. The Agreement was signed by all the member countries of the UN and it will go into effect in 2017
2. The Agreement aims to limit greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2°C or even 1.5°C above pre-industrial levels.
3. Developed countries acknowledged their historical responsibility in global warming and committed to donate $ 1000 billion a year from 2020 to help developing countries to cope with climate change.
Select the correct answer using the code given below:
A. 1 and 3 only B. 2 only C. 2 and 3 only D. 1, 2 and 3
Answers: 1-C, 2-C, 3-D, 4-A, 5-D, 6-B, 6-C, 7-B
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Source: The Hindu
VICE PRESIDENT OF INDIA
1. Context
Chandrapuram Ponnusamy Radhakrishnan was sworn in as the 15th Vice-President of India on Friday. President Droupadi Murmu administered the oath of office at the Rashtrapati Bhavan in the presence of several dignitaries.
2. Vice President of India
The Vice President of India is the second-highest constitutional office in the country, following the President. This position plays an important role in the governance and legislative process.
Here's an overview:
- The Vice President serves as the Chairperson of the Council of States (Rajya Sabha) and presides over its sessions.
- They ensure the smooth functioning of the Rajya Sabha, maintain decorum, and decide on points of order
- In case of the resignation, death, removal, or inability of the President to discharge their duties, the Vice President acts as the President until a new President is elected
- The Vice President is elected by an electoral college, consisting of members of both Houses of Parliament (Lok Sabha and Rajya Sabha) through a secret ballot and proportional representation with a single transferable vote.
- Members of State Legislative Assemblies do not participate in this election
Eligibility Criteria:To be eligible for the office of Vice President:
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3. Procedure to Impeach Vice President
- As the second-highest constitutional authority after the President, the Vice President's powers are derived from Article 63 of the Constitution.
- Additionally, Article 64 designates the Vice President as the ex-officio Chairperson of the Rajya Sabha, entrusting the officeholder with dual responsibilities as Vice President and Chairperson of the Upper House.
- The procedure for the removal of the Vice President, who also serves as the Chairperson of the Rajya Sabha, is outlined in Article 67.
- This article specifies that the Vice President's tenure is five years, beginning from the day they assume office. However, they may resign before completing the term by submitting a resignation to the President.
- Moreover, under Article 67(b), the Vice President can be removed if a resolution to that effect is passed by a majority in the Rajya Sabha and subsequently agreed upon by the Lok Sabha. It is stipulated that such a resolution requires a prior notice period of at least 14 days before it can be moved
4. Will the no-confidence motion be taken up?
- It is improbable that the no-confidence motion will be discussed in the House, as the Winter Session of Parliament is set to end on December 20, leaving fewer than 14 days for consideration.
- For example, in 2020, then Rajya Sabha Chairperson M. Venkaiah Naidu rejected a no-confidence motion against Deputy Chairperson Harivansh, citing the requirement of a 14-day notice.
- Even if the motion is brought before the House, it is unlikely to succeed due to the Opposition’s lack of sufficient numbers to ensure its passage. This initiative seems to primarily serve as a symbolic protest against Mr. Dhankhar’s alleged partisan behavior.
- Since it is a constitutional resolution, it does not expire with the prorogation of the session. It can be addressed in the next session of Parliament or during a specially convened session for that purpose
5. Can the Vice President preside over the motion in the Upper House?
- No, the Vice President of India, in their capacity as the Chairperson of the Rajya Sabha, cannot preside over a motion concerning their own removal in the Upper House. This is in line with the principle of natural justice, which prevents an individual from judging a matter in which they have a direct interest.
- In such a scenario, Article 91 of the Constitution provides that the duties of the Chairperson of the Rajya Sabha (the Vice President) will be performed by the Deputy Chairperson.
- If the Deputy Chairperson is unavailable or the office is vacant, any other member of the Rajya Sabha, as determined by the rules of procedure, may preside over the proceedings.
- This ensures impartiality and fairness in handling motions related to the removal of the Vice President
6. Constitutional Provisions of the Vice President of India
| Article | Provision | Details |
| 63 | Office of the Vice President | Establishes the position of the Vice President of India |
| 64 | Vice President as Ex-officio Chairperson of the Rajya Sabha |
1.Serves as the head of the Rajya Sabha.
2.Has no voting rights in the Rajya Sabha except in case of a tie
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| 65 | Acting as President |
1.Takes over as President in the absence of the President.
2.Cannot hold the position of Rajya Sabha Chairperson during this period
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| 66 | Election of the Vice President | Elected by members of both Houses of Parliament through proportional representation and secret ballot |
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Eligibility Criteria:
- Must be a citizen of India.
- Must be at least 35 years old.
- Must be eligible for Rajya Sabha membership.
- Cannot hold a government position
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| 67 | Term of Office and Removal |
1.Serves a five-year term.
2.Can resign or be removed by a resolution passed by both Houses of Parliament
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For Prelims: Vice President of India, President of India
For Mains: GS II - IndianPolity & Governance
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Previous Year Questions
1.Consider the following statements: (UPSC CSE 2013)
Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer (b) Mains 1.Discuss the role of the Vice –Presidents of India as the chairman of the Rajya Sabha. (2022) |
Source: The Hindu
SOUTHWEST MONSOON
1. Context
The southwest monsoon is likely to start withdrawing from northwest India around September 15, the India Meteorological Department (IMD) said on Friday. The primary rain-bearing system usually makes its onset over Kerala by June 1 and covers the entire country by July 8. It starts retreating from northwest India around September 17 and withdraws completely by October 15
2. What is the southwest monsoon?
- The southwest monsoon is a seasonal weather pattern that brings significant rainfall to large parts of South Asia, particularly India, between June and September
- The southwest monsoon typically begins in early June and lasts until late September. It starts with the arrival of the monsoon winds in the southern part of India, usually marked by the onset over the state of Kerala
- The southwest monsoon brings about 70-90% of India’s annual rainfall. The distribution of rainfall varies, with some regions receiving heavy rains, while others may experience scanty showers.
- The Western Ghats, the northeastern states, and the Himalayan foothills typically receive very heavy rainfall.
- The monsoon is critical for the Kharif crop season in India, which includes crops like rice, maize, pulses, and cotton. Adequate and timely monsoon rains are essential for a good harvest
- The monsoon starts retreating from northwestern India in early September and completely withdraws from the Indian subcontinent by mid-October. This phase is also known as the retreating or northeast monsoon
Mechanism:
- High-Pressure Area: During the summer, intense heating of the landmass in the Indian subcontinent creates a low-pressure area over northern India and the Tibetan Plateau.
- Low-Pressure Area: The Indian Ocean remains relatively cooler, creating a high-pressure area.
- Wind Movement: Air moves from the high-pressure area over the ocean to the low-pressure area over the land, carrying moisture from the ocean and resulting in rainfall.
The monsoon trough is an elongated area of low pressure extending from the heat low over Pakistan and northwestern India to the Bay of Bengal. It influences the distribution and intensity of the monsoon rains.
3. What are easterly and westerly winds?
Easterly Winds
- Easterly and westerly winds refer to the direction from which the winds originate
- Easterly winds are winds that blow from the east towards the west
- Easterly winds can affect weather patterns, including the development of tropical storms and cyclones. For instance, easterly waves in the tropics can lead to the formation of tropical cyclones in the Atlantic and Pacific Oceans
Characteristics:
- Trade Winds: One of the most well-known examples of easterly winds are the trade winds. These winds blow from the east towards the west in the tropics, from the subtropical high-pressure areas toward the equatorial low-pressure areas.
- Tropical Regions: In the tropical regions, particularly between 30 degrees north and south of the equator, easterly winds are prevalent. These are crucial for the weather patterns and climatic conditions in these regions.
- Monsoon Winds: During certain seasons, such as the northeast monsoon in India, easterly winds play a significant role. These winds bring dry air from the land towards the ocean during the winter months.
Westerly Winds
- Westerly winds are winds that blow from the west towards the east
- Westerly winds play a significant role in the weather of temperate regions, influencing the climate and the movement of storm systems.
- They are also responsible for carrying warm and moist air from the oceans inland, affecting precipitation patterns in coastal and inland regions.
- The westerlies can affect transoceanic travel and weather prediction due to their influence on the movement of high and low-pressure systems
Characteristics:
- Prevailing Westerlies: These winds are predominant in the mid-latitudes (between 30 and 60 degrees north and south of the equator). They blow from the subtropical high-pressure belts towards the poles.
- Jet Streams: High-altitude westerly winds known as jet streams are important in influencing weather patterns and the movement of weather systems across the globe. They are fast flowing and occur in the upper levels of the atmosphere.
- Polar Front: In the mid-latitudes, the westerlies interact with polar easterlies near the polar front, leading to the development of extratropical cyclones and storms
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4.How does monsoon occur in India?
Monsoons in India occur due to seasonal changes in wind patterns and temperature differences between land and sea.
Here's a concise explanation of the process:
- Differential heating: During summer, the Indian landmass heats up more quickly than the surrounding Indian Ocean.
- Low pressure system: The heated land creates a low-pressure area over the Indian subcontinent.
- Wind direction shift: This low pressure draws in moisture-laden winds from the cooler Indian Ocean towards the land.
- Orographic lift: As these winds encounter geographical features like the Western Ghats or the Himalayas, they are forced to rise.
- Condensation and precipitation: The rising air cools, causing water vapor to condense and form clouds, leading to heavy rainfall.
- Duration: This pattern typically lasts from June to September, bringing the majority of India's annual rainfall.
5.What are the conditions that determine the onset of monsoon?
- The primary driver is the temperature difference between the land and the surrounding sea. During summer, the land heats up faster than the ocean, creating a low-pressure area over the land and a high-pressure area over the ocean. This pressure difference leads to the movement of moist air from the ocean to the land
- Warm sea surface temperatures are crucial as they increase the evaporation rate, contributing to the formation of moist air masses that drive the monsoon rains.
- The monsoon winds, which are part of the larger atmospheric circulation, shift according to the seasonal temperature differences. The southwest monsoon, for instance, is driven by the southwest winds that carry moisture from the Indian Ocean to the Indian subcontinent.
- The geographical features, such as mountain ranges, play a significant role. For example, the Western Ghats in India force moist air to rise, cool, and condense, leading to heavy rainfall on the windward side
- The movement and strength of the high-pressure systems over the oceans and low-pressure systems over the land influence the intensity and timing of the monsoon.
- Phenomena such as El Niño and La Niña can affect the strength and timing of the monsoon. For example, El Niño can lead to weaker monsoons due to altered wind patterns and sea surface temperatures
6.What is the impact of La-Nina and El Nino on monsoon?
La Niña and El Niño, both phases of the El Niño-Southern Oscillation (ENSO) phenomenon, have significant impacts on the monsoon patterns around the world.
Here’s how each affects the monsoon:
El Niño
- El Niño is generally associated with a weaker Indian monsoon. The warming of the central and eastern Pacific Ocean during El Niño tends to disrupt the normal atmospheric circulation patterns, leading to reduced rainfall over the Indian subcontinent.
- The onset of the monsoon can be delayed, and the overall intensity of the rainfall during the monsoon season might be lower than usual
- El Niño often brings drier conditions to Southeast Asia and northern Australia, leading to droughts and reduced rainfall
- Eastern and southern Africa may experience drier conditions as well
La Niña
- La Niña, characterized by cooler-than-average sea surface temperatures in the central and eastern Pacific Ocean, is typically associated with a stronger Indian monsoon. It often leads to increased rainfall over the Indian subcontinent
- The enhanced monsoon can lead to heavier rains and potentially more frequent and intense flooding
- La Niña tends to bring wetter conditions to Southeast Asia and northern Australia, potentially causing heavy rains and flooding
- La Niña can lead to wetter conditions in parts of northern South America
7.Way Forward
The intermittent development of a wind shear zone — where winds move with different velocities and directions — along latitudes 20 ° N between central and peninsular India
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For Prelims: Indian and World Geography
For Mains: GS-I, GS-III: Important Geophysical phenomena and environment
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Previous Year Questions
1.Consider the following statements: (UPSC CSE 2012)
1. The duration of the monsoon decreases from southern India to northern India.
2. The amount of annual rainfall in the northern plains of India decreases from east to west.
Which of the statements given above is/are correct?
A. 1 Only
B. 2 Only
C. Both 1 and 2
D. Neither 1 nor
Answer (C)
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Source: The Hindu
GREAT NICOBAR ISLAND PROJECT
1. Context
Months before seeking a report from the Andaman and Nicobar Islands administration on alleged violations of forest rights while executing the ₹81,000-crore Great Nicobar Islands development and infrastructure project, the Tribal Affairs Ministry had told a Bench of the Calcutta High Court that it should be dropped as a party in a petition that challenged the project’s clearances on the same grounds.
2.What is the Great Nicobar Island Project?
- The Great Nicobar Island Project is a significant infrastructure development initiative undertaken by the Indian government on Great Nicobar Island, part of the Andaman and Nicobar Islands in the Indian Ocean. The project aims to transform the island into a strategic and economic hub.
- A deep-draft international container transshipment terminal is planned to be developed at Galathea Bay. This port is expected to serve as a key shipping hub in the region, facilitating trade and reducing dependency on transshipment ports in other countries
- An international airport is proposed to improve connectivity to the island, both for tourism and strategic purposes. This airport will be capable of handling wide-bodied aircraft and will enhance the island's accessibility
- To support the infrastructure and population growth, a gas- and solar-based power plant will be developed. This plant aims to provide a reliable and sustainable energy source for the island's needs
- A modern township with residential, commercial, and recreational facilities is planned to accommodate the increased population and workforce that the project will attract. This township is expected to have state-of-the-art amenities and infrastructure
Strategic and Economic Importance
- Great Nicobar Island is situated near the Malacca Strait, one of the world's busiest shipping lanes. Developing this island will enhance India's strategic presence in the Indian Ocean Region, particularly in terms of maritime security and trade control
- The project aims to boost the local economy by creating job opportunities and attracting investments. Improved infrastructure and connectivity are expected to stimulate tourism and other economic activities on the island
- Enhancing connectivity through the transhipment port and international airport will integrate Great Nicobar Island more closely with the global and regional trade networks, potentially making it a key logistical and commercial hub
Environmental and Social Considerations
- The project has raised concerns about its potential impact on the island's rich biodiversity and ecosystems. Great Nicobar Island is home to unique flora and fauna, including endangered species. Ensuring sustainable development practices and environmental protection measures will be crucial
- There are concerns about the impact on local communities, particularly indigenous tribes such as the Nicobarese and Shompen. Ensuring that their rights and livelihoods are protected is a key consideration for the project
- The project's emphasis on using renewable energy sources like solar power and promoting eco-friendly practices is an effort to mitigate environmental concerns. However, balancing development with conservation will be an ongoing challenge
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Great Nicobar
Great Nicobar is the largest of the Nicobar Islands, part of the Union Territory of Andaman and Nicobar Islands in India. It is located in the Indian Ocean, near the western entrance of the Malacca Strait, which is a key maritime route for international trade.
Here are some key aspects of Great Nicobar:
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3. Strategic Importance
- The Bay of Bengal and Indian Ocean region are critically important for India's strategic and security interests, especially as the Chinese People’s Liberation Army Navy aims to increase its presence in these waters.
- India is concerned about the buildup of Chinese naval forces at key Indo-Pacific chokepoints, particularly Malacca, Sunda, and Lombok. China's efforts to extend its influence in the area include constructing a military facility on the Coco Islands in Myanmar, located just 55 km north of the Andaman & Nicobar Islands.
- Earlier this year, The Indian Express reported significant upgrades to the military infrastructure on the Andaman & Nicobar Islands.
- This includes modernizing airfields and jetties, creating new logistics and storage facilities, establishing a base for military personnel, and enhancing surveillance capabilities.
- The goal of these upgrades is to support the deployment of more military forces, larger warships, aircraft, missile batteries, and troops.
- Maintaining close surveillance over the area surrounding the archipelago and establishing a strong military presence on Great Nicobar is crucial for India's national security
4. Environmental Concerns
- The proposed infrastructure upgrade has faced opposition due to its potential ecological threat to the islands. Wildlife conservation researchers, anthropologists, scholars, civil society members, and the Congress party have raised concerns about the devastating impact on the Shompen, a particularly vulnerable tribal group (PVTG) of hunter-gatherers, who have an estimated population of a few hundred individuals residing in a tribal reserve on the island.
- Critics claim the project infringes on the rights of the tribal population and will harm the island’s ecology, including the felling of nearly a million trees. There are fears that the port project will damage coral reefs, affecting the local marine ecosystem, and pose a threat to terrestrial species like the Nicobar Megapode bird and leatherback turtles, which nest in the Galathea Bay area.
- A statement by senior Congress leader and former Environment Minister Jairam Ramesh highlighted that the proposed port is in a seismically active zone, which experienced permanent subsidence of about 15 feet during the 2004 tsunami.
- The statement also accused the local administration of insufficiently consulting the Tribal Council of Great and Little Nicobar Islands as required by law.
- In November 2022, the tribal council withdrew a no-objection certificate it had issued for the diversion of about 160 sq km of forest land, citing inadequate information provided to them.
- In April 2023, the Kolkata Bench of the National Green Tribunal (NGT) chose not to interfere with the environmental and forest clearances granted to the project. However, the Tribunal ordered the formation of a high-power committee to review the clearances. There is still no clarity on whether the committee, mainly composed of government representatives, has submitted its report
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For Prelims: National Green Tribunal (NGT), Great Nicobar Island, Coastal Regulation Zones, Turtles, Dolphins, Particularly Vulnerable Tribal Groups (PVTGs), Mangroves, Great Nicobar Biosphere Reserve
For Mains: Significance and Issues Related to Great Nicobar Island Project
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Previous Year Questions
1. Which one of the following pairs of islands is separated from each other by the ‘Ten Degree Channel’? (2014) (a) Andaman and Nicobar Answer (a) 2. Which of the following have coral reefs? (2014)
Select the correct answer using the code given below: (a) 1, 2 and 3 only Answer (a) 3. In which one of the following places is the Shompen tribe found? (2009) (a) Nilgiri Hills Answer (b) |
Source: indianexpress
WHO
1.Context
More than 1 billion people are living with mental health disorders, according to recent data from the World Health Organization (WHO). These conditions include anxiety and depression among others that are taking an immense human and economic toll. The WHO has said that while many countries have bolstered their mental health policies and programmes, greater investment and action are needed globally to scale up services to protect and promote mental well-being
2. About WHO
- The World Health Organization (WHO) was born three years later, when its constitution came into effect on April 7, 1948
- It states that health is a human right that every human being is entitled to, “without distinction of race, religion, political belief, economic or social condition” and that “the health of all peoples is fundamental to the attainment of peace and security.”
- The organization’s headquarters are based in Geneva, Switzerland, with six regional and 150 country offices across the world
- WHO leads global efforts to expand universal health coverage
- They direct and coordinate the world’s response to health emergencies and promote healthier lives from pregnancy care through old age
- WHO’s work remains firmly rooted in the basic human right to health and well-being principles, as outlined in their 1948 Constitution.
- The World Health Assembly is the decision-making body of WHO and is attended by delegations from all Member States
- The Global Health Histories project was established within the WHO headquarters in late 2004 and expanded into the regional offices from 2009 onwards
- An official WHO activity, its mission is based on the principle that understanding the history of health, especially during the last 60 years, helps the global public health community to respond to the challenges of today and help shape a healthier future for everyone, especially those most in need
3. Challenges faced by WHO
3.1. Small Pox
- One of the biggest successes in the WHO’s quest to ensure the global population’s well-being came in 1980, when the organization officially announced it had wiped out a common but deadly centuries-old infectious disease
- Smallpox eradication was a perfect example of when the WHO works best
- During the Cold War, there was wide-reaching agreement across the two blocs that the eradication of smallpox was a goal to be tackled. That’s when the WHO has seen its biggest successes: When members agree on which projects are worthy to be undertaken and how
3.2. Ebola Outbreak
- 2014 Ebola outbreak in Guinea, Liberia and Sierra Leoneoffers an example of a WHO job less well done
- The organization was criticized, among other things, for not reacting swiftly enough to address the epidemic
- There were unrealistic expectations for WHO, with many expecting, to go in force to the affected countries to confront the outbreak
- This is not within the WHO’s mandate. Its role is to guide the response, develop guidance, but not to go into a country to help address a specific health threat
- In fact, the WHO has no authority to take action in a member state unless that member state asks for help
- After the Ebola epidemic from 2014 to 2016, the organization made significant changes to its structure
- Example: It now relies to a lesser degree on national governments for crucial health information, thus lowering the chances of missing the start of another serious disease outbreak
3.3. Malaria Eradication attempt
- The organization’s agreement to give up on trying to eradicate malaria in the 1960s represents another example of what some consider a botched job
- The WHO launched the Global Malaria Eradication Programme (GMEP) in 1955.
- It looked promising, with 15 countries and one territory managing to eradicate the disease
- But there was little to no progress in sub-Saharan Africa under the program, and in many places, failure to sustain GMEP actually led to a resurgence of malaria. In 1969, the program was discontinued
- One reason that the eradication didn’t work, is that malaria isn’t solely a human disease, but has reservoirs in nature. This differentiates it from smallpox
3.4. Covid-19
- Some critics, then-US-President Donald Trump among them, complained at the beginning of the COVID-19 pandemic that the WHO was not doing enough to support member states in their fight against the disease
- But experts like El-Sadr and Gradmann say that it wasn’t the WHO’s job to take action and introduce initiatives at the height of the coronavirus pandemic
- During COVID, the WHO provided data and did administrative work, But initiatives to fight The disease had to come from the individual member states. I don’t think the WHO played a large role in the COVID pandemic
- Members’ national governments were in charge of making decisions on how to best contain the pandemic in their country
Source: WHO, indianexpress
FOREIGN DIRECT INVESTMENT (FDI)
1. Context
In other words, out of the total ₹3,488.5 crore of outward foreign direct investment (FDI) by India in 2024-25, about ₹1,946 crore went to these low tax jurisdictions.In fact, just three of these countries — Singapore (22.6%), Mauritius (10.9%), and the UAE (9.1%) — accounted for more than 40% of India’s outward FDI in 2024-25
2. FDI in India- India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
- Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
- Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
- While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy
3. Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise
Key Aspects:
- FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
- FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
- Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
- FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
- FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.
4.FDI Routes in India
India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed
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Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.
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Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.
4.1. Examples
- Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
- For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
- In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
- Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
- FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
- In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
- In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
- In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route
4.2.Sectors where FDI Prohibited
- FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
- FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
- FDI is not allowed in the lottery business, except for state-run lotteries
- FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
- Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
- While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
- FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate
5. Foreign Portfolio Investors (FPIs)
Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest
Key Aspects:
- FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
- FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
- FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
- FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
- FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.
6.Foreign Portfolio vs. Foreign Direct Investment
| FPI (Foreign Portfolio Investment) | FDI (Foreign Direct Investment) |
| FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses | FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations. |
| FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments. | FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period. |
| FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns. | FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives. |
| FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets | FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure |
| FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI. | FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries |
| FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations. | FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures |
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For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
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Previous Year Questions
1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)
Which one of the following statements best represents an important difference between the two?
A.FII helps bring better management skills and technology, while FDI only brings in capital
B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market
D.FII is considered to the more stable than FDI
Answer (B)
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Source: indianexpress
