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DAILY CURRENT AFFAIRS, 22 MAY 2026

MINIMUM SUPPORT PRICE

 
 

1. Context

 The Iran crisis-induced supply shock in fertilisers and a below-normal monsoon may give a boost to bajra, moong and other pulses. MSP procurement by the government can also help.

2. What is the Minimum Support Price (MSP)?

 
  • MSP is the minimum price a farmer must pay for their food grains as guaranteed by the government. They are recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs.
  • The CACP submits its recommendations to the government in the form of Price Policy Reports every year.
  • After considering the report and views of the state governments and also keeping in view the overall demand and supply situation in the country, the central government takes the final decision.
  • The Food Corporation of India (FCI) is the nodal agency for procurement along with State agencies, at the beginning of the sowing season.
The minimum support price (MSP) is set for 22 crops every year. They include:
  • 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, and barley)
  • 5 pulses (chana, tur/arhar, moong, urad, and Masur)
  • 7 oilseeds (rapeseed-mustard, groundnut, soya bean, sunflower, sesamum, safflower, and Enigerseed) and
  • 4 commercial crops (sugarcane, cotton, copra, and raw jute).

3. How MSP is Calculated?

  • MSP, presently, is based on a formula of 1.5 times the production costs.
  • The CACP projects three kinds of production costs for every crop, both at state and all-India average levels.
  • A2 covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
  • A2+FL includes A2 plus an imputed value of unpaid family labour.
  • C2: Estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.
  • Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land, as recommended by the National Commission for Farmers.

4. The issue with the calculation of MSP

  • To calculate MSP, the government uses A2+FL cost. The criticism of A2+FL is that it doesn’t cover all costs and that a more representative measure, C2, needs to be used.
  • For example, in the 2017-18 rabi season, CACP data shows that C2 for wheat was 54% higher than A2+FL.
  • The Swaminathan Commission also stated that the MSP should be based on the comprehensive cost of production, which is the C2 method.

5. Key Points about the Farmer's Demand

  • After the recent decision to repeal three contentious farm laws, protesting farmer unions are now pressing for their demand of the legalization of the Minimum Support Price (MSP).
  • They want a legal guarantee for the MSP, which at present is just an indicative or a desired price.
  • Legalising MSPs would put the government under a legal obligation to buy every grain of the crops for which MSPs have been announced.
  • At present, the PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns and to promote zero-budget agriculture which would reduce the cost of production.
  • The entire issue of enforcing MSP legally is a tricky, complicated, and multidimensional one, involving lots of factors.
  • Core demand: MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce. This would mean a 34% increase in the latest MSP for paddy and a 13% increase for wheat. MSP should also be extended to fruit and vegetable farmers who have been excluded from benefits so far.

6. The rationale behind the demand for legislation of MSP

  • Farmers receive less than MSP: In most crops grown across much of India, the prices received by farmers, especially during harvest time, are well below the officially declared MSPs. And since MSPs have no statutory backing, they cannot demand these as a matter of right.
  • Limited procurement by the Govt: Also, the actual procurement at MSP by the Govt. is confined to only about a third of wheat and rice crops (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds. According to the Shanta Kumar Committee’s 2015 report, only 6% of the farm households sell wheat and rice to the government at the MSP rates.

7. Challenges associated with MSP

  • Protest by Farmers: Farm unions have been protesting for more than six months on Delhi's outskirts, demanding legislation to guarantee MSP for all farmers for all crops and a repeal of three contentious farm reform laws.
  • MSP and Inflation: When announcing the MSP, inflation should be taken into account. But often the price is not increased up to the mark. For example, this time MSP for Maize has not even considered inflation then how it will benefit farmers! Also, frequent increases in the MSPs can lead to inflation too.
  • High Input Costs: The input costs have been rising faster than sale prices, squeezing the meagre income of the small farmers and driving them into debt.
  • Lack of Mechanism: No mechanism guarantees that every farmer can get at least the MSP as the floor price in the market. So proper mechanisms need to be fixed for all times to come.
  • Restriction in Europe: Even after producing surplus grains, every year a huge portion of these grains gets rotten. This is due to the restrictions under WTO norms, that grain stocks with the FCI (being heavily subsidized due to MSP) cannot be exported.
 
For Prelims: Minimum Support Price, Rabi Crops, WTO, Commission for Agricultural Costs and Prices (CACP), Cabinet Committee on Economic Affairs, Food Corporation of India
For Mains:
1. Explain the concept of Minimum Support Price (MSP) in India. How is MSP determined, and what is its role in ensuring fair prices for agricultural produce? (250 Words)
 
 
Previous Year Questions
 
1. Consider the following statements: (UPSC CSE 2020)
1. In the case of all cereals, pulses, and oil seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
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: D
 
2. Which of the following factors/policies were affecting the price of rice in India in the recent past? (UPSC CSE, 2020)
(1) Minimum Support Price

(2) Government’s trading
(3) Government’s stockpiling
(4) Consumer subsidies
Select the correct answer using the code given below:
(a) 1, 2 and 4 only

(b) 1, 3 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
 
Answer: D
 
3. In India, which of the following can be considered as public investment in agriculture? (UPSC GS1, 2020)
(1) Fixing Minimum Support Price for agricultural produce of all crops

(2) Computerization of Primary Agricultural Credit Societies
(3) Social Capital development
(4) Free electricity supply to farmers
(5) Waiver of agricultural loans by the banking system
(6) Setting up of cold storage facilities by the governments.
In India, which of the following can be considered as public investment in agriculture?
Select the correct answer using the code given below:
(a) 1, 2 and 5 only

(b) 1, 3, 4 and 5 only
(c) 2, 3 and 6 only
(d) 1, 2, 3, 4, 5 and 6
 
Answer: C
 
4. The Fair and Remunerative Price (FRP) of sugarcane is approved by the (UPSC CSE, 2015)
(a) Cabinet Committee on Economic Affairs

(b) Commission for Agricultural Costs and Prices
(c) Directorate of Marketing and Inspection, Ministry of Agriculture
(d) Agricultural Produce Market Committee
 
Answer: A
 
 

CENSUS

1. Context

The Supreme Court on Wednesday said there was nothing wrong in the government of the day ascertaining caste as part of the nationwide Census exercise.

2. History of Census

  • India had conducted the Census every 10 years since 1881, but in 2020, the decennial exercise for Census 2021 had to be postponed due to the pandemic.
  • Though the government has not announced fresh dates for the Census, the groundwork is being laid and details are emerging about some of the features.
  • It will be the first digital Census allowing citizens to "self-enumerate". The NPR (National Population Register) has been made compulsory for citizens who want to exercise the right to fill out the Census form on their own rather than through government enumerators.
  • For this, the Office of the Registrar General of India (RGI) has designed a "self-enumeration, Aadhaar or mobile number will be mandatorily collected.

3. Status of the Census exercise

  • A January 2 notification extending the deadline for freezing administrative boundaries in States until June 30 has ruled out the exercise at least till September.
  • As preparation and training take at least three months, the Census will have to be pushed to next year.
  • Around 30 lakh government officials will be assigned as enumerators and each will have the task to collect the details of 650-800 people through both online and offline modes, covering an estimated population of 135 crore people.
  • The Lok Sabha election is due in April-May 2024 and it is unlikely that the Census will be carried out before that since the same workforce will be dedicated to the elections.
  • The completion of both phases of the Census will take at least 11 months, even if done at an accelerated pace from October 1.

4. Holding up the Census

  • One reason which is holding up the exercise is the amendments proposed to the Registration of Births and Deaths Act, of 1969.
  • The government wants to have a centralised register of births and deaths that can be used to update the population register, electoral register, Aadhaar, ration card, passport and driving license databases.
  • The centrally stored data will be updated in real-time without a human interface leading to addition and deletion from electoral rolls when an individual turns 18 and after an individual's death respectively.
  • A Bill to link the births and deaths registered with the population register and others are expected to be tabled in the next session of Parliament.

5.  NPR

  • The NPR, unlike the Census, is a comprehensive identity database of every "usual resident" in the country and the data proposed to be collected at the family level can be shared with States and other government departments.
  • Though Census also collects similar information, the Census Act of 1948 bars sharing any individual's data with the State or Centre and only aggregate data at the administrative level can be released.
  • According to Citizenship Rules 2003 under the Citizenship Act, 1955, NPR is the first step towards a compilation of the National Register of Indian Citizens (NRIC/NRC).
  • Assam is the only State where an NRC has been compiled based on the directions of the Supreme Court, with the final draft of Assam's NRC excluding 19 lakhs of the 3.29 crores applicants.
  •  Assam Government has rejected the NRC in its current form and demanded re-verification of 30 per cent of names included in the NRC in areas bordering Bangladesh and 10 per cent in the remaining State.
  • In 2020, the NPR was opposed by several State governments such as West Bengal, Kerala, Rajasthan, Odisha, Bihar, Andhra Pradesh, Telangana, Punjab and Chhattisgarh and Civil Society Organisations due to its link with the proposed NRC as it might leave many people stateless for want of legacy documents.
  • There are apprehensions that the Citizenship Amendment Act 9 (CAA), 2019 allows citizenship based on religion to six undocumented religious communities from Pakistan, Afghanistan and Bangladesh who entered India on or before December 31, 2014, will benefit non-Muslims excluded from the proposed citizens' register, while excluded.
  • Muslims will have to prove their citizenship. The government has denied that the CAA and NRC are linked and there are currently any plans to compile a countrywide NRC.

5.1. The current status of NPR

  • The NPR was first collected in 2010 when the Congres government was in power at the Centre.
  • It was updated in 2015 and already has details of 119 crore residents.
  • In March 2020, the Ministry of Home Affairs (MHA) amended the Census Rules framed in 1990 to capture and store the Census data in an electronic form and enabled self-enumeration by respondents.
  • The NPR is scheduled to be updated with the first phase of Census 2021.
  • For this phase (house listing and household phase), 31 questions have been notified, while for the population enumeration, the second and main phase 28 questions have been finalised but are yet to be notified.
  • The NPR is expected to collect details on 21 parameters of all family members, up from 14 questions in 2010 and 2015.
  • The Sub-heads include passport number, relationship to head of the family, whether divorced/ widowed or separated, mother tongue if non-worker, cultivator, labourer, government employee, daily wage earner among others.
  • The form also has a column on Aadhar, mobile phone, Voter ID and driver's licence.
  • Though the government has claimed that the NPR form has not been finalised yet, the sample form is part of the Census of India 2021 Handbook for Principal/District Census Officers and Charge Officers in 2021.
  • The NPR has retained contentious questions such as "mother tongue, place of birth of father and mother and last place of residence", possible indicators to determine inclusion in the Citizenship register.
  • The questions were opposed by the State governments of West Bengal, Kerala, Rajasthan and Odisha in 2020.
  • The final set of questions of both the phases and NPR was asked during a pre-test exercise in 2019 in 76 districts in 36 States and Union Territories covering a population of more than 26 lakhs.

6. Expected expenditure for Census

  • The initial draft was prepared by the office of the Registrar General of India and circulated to key Ministries and the Prime Minister's Office called for the conduct of Census 2021 at a cost of ₹9, 275 crores and not the NPR.
  • The draft Expenditure Finance Committee (EFC) not was then revised and a financial provision of ₹4, 442.15 crores for updating the NPR was added on the directions of the MHA "subsequently".
  • The proposal was cleared on August 16, 2019, and it received the  Union Cabinet's nod on December 24, 2019.
  • It was decided that the enumerator engaged for Census would also collect details for NPR.
  • The Covid-19 pandemic struck in March 2020 and since then both exercises are on hold.
  • Now, the NPR has been made compulsory if citizens want to exercise the right to fill out the Census form on their own.
  • The deleted Handbook said that it is "mandatory for every usual resident of India to register in the NPR".
  • Census is also mandatory and giving false information is a punishable offence.
For Prelims: NPR, CAA, Census, Covid-19, Expenditure Finance Committee, Registrar General of India, Registration of Births and Deaths Act, of 1969, The Treatise on Indian Censuses Since 1981, Assam, 
For Mains:
1. How can citizens file Census details online? Explain the norms being laid down and discuss the reasons for National Population Register being made compulsory for those who want to fill out the form digitally. (250 Words)
 
 
Previous Year Questions
 
Prelims:
 
1. Consider the following statements: (UPSC 2009)
1. Between Census 1951 and Census 2001, the density of the population of India has increased more than three times.
2. Between Census 1951 and Census 2001, the annual growth rate (exponential) of the population of India has doubled.
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: D
 
2. In the context of vaccines manufactured to prevent COVID-19 pandemic, consider the following statements: (UPSC 2022)
1. The Serum Institute of India produced COVID-19 vaccine named Covishield using mRNA platform.
2. Sputnik V vaccine is manufactured using vector based platform.
3. COVAXIN is an inactivated pathogen based vaccine.
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
 
Answer: B
 
3. Sinovac given for Covid-19 is a  (UPPSC Combined State Exam 2022)
A. Protein sub-unit
B. Non-replicating viral vector
C. Whole virus vaccine
D. mRNA vaccine
 
Answer: C
 
4. Along with the Budget, the Finance Minister also places other documents before the Parliament which Include "The Macro Economic Framework Statement". The aforesaid document is presented because this is mandated by (UPSC 2020) 
A. Long-standing parliamentary convention
B. Article 112 and Article 110 (1) of the Constitution of India
C. Article 113 of the Constitution of India
D. Provisions of the Fiscal Responsibility and Budget Management Act, 2003
Answer: D
 
5. Who is the Census Commissioner of India in 2021? (ICAR Technician 2022)
A. Dr Vivek Joshi
B. Dr C Chandramouli
C. Shri Sailesh
D. DK Sikri
 
Answer: A
 
6. The Registration of Birth and Death Act came into force in the year _____. (UPSSSC Junior Assistant 2020) 
A. 1964      B. 1969    C.  1972        D.1981
 
Answer: B
 
7. Consider the following States: (UPSC 2022)
1. Andhra Pradesh
2. Kerala
3. Himachal Pradesh
4. Tripura
How many of the above are generally known as tea-producing States?
A. Only one State
B. Only two States
C. Only three States
D. All four States
 
Answer: C
 
8. Consider the following rivers (UPSC 2014) 
1. Barak
2. Lohit
3. Subansiri
Which of the above flows/flow through Arunachal Pradesh? 
A. 1 only    B.2 and 3 only     C. 1 and 3 only      D. 1, 2 and 3
Answer: B
 
Mains:
1. Two parallel run schemes of the Government, viz the Adhaar Card and NPR, one as voluntary and the other as compulsory, have led to debates at national levels and also litigations. On merits, discuss whether or not both schemes need run concurrently. Analyse the potential of the schemes to achieve developmental benefits and equitable growth. (UPSC 2014)
 
Source: The Hindu
 
 

INDIA-UAE

 
 
1. Context
Deepening bilateral relations amid the crisis in West Asia, India and the UAE signed a slew of pacts Friday including a framework for a strategic defence partnership, storage of 30 million barrels in Indian strategic petroleum reserves, supply of LPG and a ship repair cluster in Gujarat’s Vadinar.
 
 
2. India and UAE
ndia and the United Arab Emirates (UAE) have historically enjoyed friendly and cooperative relations, which have strengthened over time. The relationship encompasses various areas such as trade and investment, defense and security, energy cooperation, cultural exchanges, and people-to-people contacts.
Here are some key points about the India-UAE relations:
  1. Economic Relations: The UAE is India's third-largest trading partner and one of the major investors in India. Bilateral trade between the two countries has been growing steadily, with a focus on sectors like energy, information technology, pharmaceuticals, textiles, and agriculture. The UAE is also a significant source of remittances for India due to the large Indian diaspora residing in the UAE.

  2. Investment: The UAE has made substantial investments in India across sectors such as infrastructure, real estate, hospitality, logistics, and renewable energy. The Abu Dhabi Investment Authority (ADIA) and the Dubai-based DP World are prominent examples of UAE investments in India.

  3. Energy Cooperation: The UAE is a crucial source of energy for India. The Abu Dhabi National Oil Company (ADNOC) supplies crude oil to Indian refineries, and both countries have explored opportunities for collaboration in the energy sector, including renewable energy projects.

  4. Defense and Security: India and the UAE have enhanced cooperation in defense and security matters. They conduct joint military exercises, exchange intelligence, and cooperate in countering terrorism and maritime security. The UAE has also supported India's efforts to combat terrorism and extradite wanted individuals.

  5. Strategic Partnership: In 2015, India and the UAE elevated their bilateral relationship to a "Comprehensive Strategic Partnership." This designation reflects the deepening ties and shared interests between the two countries.

  6. Cultural Exchanges and People-to-People Contacts: There is a significant Indian community in the UAE, comprising professionals, skilled workers, and businesspeople. Both countries have encouraged cultural exchanges, tourism, and educational cooperation to strengthen people-to-people contacts and promote mutual understanding.

  7. Diplomatic Engagements: High-level visits between India and the UAE have been frequent, reflecting the importance both countries attach to the relationship. The leaders of both countries have engaged in regular dialogues to enhance bilateral cooperation and address common challenges.

3. Why UAE is important to India?

The United Arab Emirates (UAE) holds significant importance to India for several reasons:

  1. Economic Relations: The UAE is one of India's major trading partners and a significant source of investment. Bilateral trade between the two countries has been growing steadily, with the UAE being India's third-largest trading partner. The UAE's investments in India span various sectors, including infrastructure, real estate, hospitality, logistics, and renewable energy. This economic partnership contributes to India's economic growth and development.

  2. Energy Security: The UAE is an important source of energy for India. It supplies crude oil to Indian refineries, helping to meet India's energy needs. Ensuring a stable and reliable energy supply is crucial for India's growing economy, and the UAE plays a significant role in fulfilling India's energy requirements.

  3. Indian Diaspora: The UAE is home to a large Indian diaspora, comprising professionals, skilled workers, and businesspeople. The Indian community in the UAE plays a vital role in strengthening people-to-people ties and contributing to the UAE's economy through their work and remittances. The UAE's favorable policies towards the Indian community and its contributions have fostered a sense of goodwill and mutual understanding between the two countries.

  4. Defense and Security Cooperation: India and the UAE have been strengthening their defense and security cooperation in recent years. They conduct joint military exercises, share intelligence, and collaborate in countering terrorism and ensuring maritime security. The UAE's support to India's counter-terrorism efforts and extradition of wanted individuals have been crucial in addressing shared security concerns.

  5. Strategic Location: The UAE's geographic location at the crossroads of Asia, Europe, and Africa makes it an important hub for trade, connectivity, and investment. Its modern infrastructure, world-class ports, and air connectivity make it an attractive destination for Indian businesses looking to expand their reach globally. The UAE's strategic location serves as a gateway for India's trade with the Middle East, North Africa, and beyond.

  6. Cultural Exchanges and Tourism: The UAE and India have fostered cultural exchanges and tourism, facilitating people-to-people contacts and enhancing mutual understanding. Millions of Indians visit the UAE for business, tourism, and religious purposes, strengthening the cultural and social ties between the two countries.

  7. Diplomatic Engagements: India and the UAE maintain regular high-level engagements, with frequent visits by leaders and officials from both sides. These interactions help in deepening bilateral relations, addressing common challenges, and exploring new avenues of cooperation..

4. Way forward
Overall, the UAE's economic significance, energy cooperation, large Indian diaspora, defense collaboration, strategic location, cultural exchanges, and diplomatic engagements make it an important partner for India across various spheres. The two countries continue to strengthen their relationship for mutual benefit and shared prosperity.
 
For Prelims: India-UAE, Global food security, G20, I2U2, Public Distribution System, POSHAN Abhiyaan, Covid, Conflict and Climate, Comprehensive Economic Partnership Agreement, 
For Mains: 
1. Discuss India's role in ensuring global food security during the pandemic and post-pandemic times. (250 Words)
 
Previous Year Questions
 
1. With reference to the international trade of India at present, which of the following statements is/are correct? (UPSC 2020) 
1. India's merchandise exports are less than its merchandise imports.
2. India's imports of iron and steel, chemicals, fertilizers, and machinery have decreased in recent years.
3. India's exports of services are more than its imports of services.
4. India suffers from an overall trade/current deficit.
Select the correct answer using the code given below:
A. 1 and 2 only       B.  2 and 4 only      C. 3 only        D.  1, 3 and 4 only
 
Answer: D
 

2. Consider the following countries: (UPSC 2018)

  1. Australia
  2. Canada
  3. China
  4. India
  5. Japan
  6. USA

Which of the above are among the ‘free-trade partners’ of ASEAN?

(a) 1, 2, 4 and 5     (b) 3, 4, 5 and 6      (c) 1, 3, 4 and 5     (d) 2, 3, 4 and 6

Answer: C

3. The term ‘Regional Comprehensive Economic Partnership’ often appears in the news in the context of the affairs of a group of countries known as (UPSC 2016)

(a) G20           (b) ASEAN          (c) SCO         (d) SAARC

Answer: B

4. The area known as ‘Golan Heights’ sometimes appears in the news in the context of the events related to ( UPSC 2015)

(a) Central Asia   (b) Middle East   (c) South-East Asia    (d) Central Africa

Answer: B

5. Which of the following are the objectives of ‘National Nutrition Mission’? (UPSC 2017)

  1. To create awareness relating to malnutrition among pregnant women and lactating mothers.
  2. To reduce the incidence of anaemia among young children, adolescent girls and women.
  3. To promote the consumption of millets, coarse cereals and unpolished rice.
  4. To promote the consumption of poultry eggs.

Select the correct answer using the code given below:

(a) 1 and 2 only    (b) 1, 2 and 3 only    (c) 1, 2 and 4 only    (d) 3 and 4 only

Answer: A

Source: indianexpress
 
 

SOUTHWEST MONSOON

 
 
1. Context
 
The southwest monsoon is expected to advance into Kerala on May 26, the India Meteorological Department (IMD) said on Friday. The “normal” date for the monsoon’s advent over the State is June 1.
 
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
 
 
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
 
 
 
For Prelims: Indian and World Geography
For Mains: GS-I, GS-III: Important Geophysical phenomena and environment
 
 
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)
  • The duration of the monsoon indeed decreases from southern India to northern India. The southern part of India experiences the monsoon earlier and for a longer duration compared to the northern part.
  • The amount of annual rainfall in the northern plains of India decreases from east to west. The eastern part of the northern plains receives more rainfall compared to the western part, largely due to the influence of the Bay of Bengal branch of the Southwest Monsoon.
 
 
Source: The Hindu
 
 

RETAIL INFLATION

 

1. Context

Retail inflation quickened to a 13-month high of 3.5% in April 2026, although still coming in lower than what was expected by most economists. The price rise was largely driven by higher food inflation as well as higher prices at restaurants as they passed on higher fuel prices to consumers.

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

 

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)
 
 
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)
  1. Bank rate
  2. Open Market Operations
  3. Public debt
  4. Public revenue

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
 
 
Source: The Hindu
 
 

SOLID WASTE MANAGEMENT (SWM)

 
 
1. Context

The Solid Waste Management Rules, 2026, disregard federalism and embody a technocratic vision of environmental governance, insufficiently attentive to ground realities; as framed, they risk producing blurred accountability, unproductive compliance work, and paper reporting rather than cleaner cities and villages

 
2. Urban Local Bodies (ULBs)

Urban Local Bodies (ULBs) are institutions of local self-governance that manage the affairs of urban areas, such as cities and towns. They play a crucial role in the administration and development of urban areas. ULBs are established to ensure efficient delivery of civic amenities and services to urban residents. Here are the key aspects of Urban Local Bodies:

  • Types of Urban Local Bodies:

    • Municipal Corporations: These are established in larger urban areas with significant populations and are responsible for providing a wide range of services. They have a Mayor, a municipal commissioner, and elected representatives. Examples include the Municipal Corporation of Greater Mumbai and the Delhi Municipal Corporation.
    • Municipal Councils: These are set up in medium-sized urban areas. They provide a narrower range of services compared to municipal corporations and are headed by a Chairperson. Examples include the Mysore City Municipal Council.
    • Nagar Panchayats: These are found in smaller urban areas or transitional areas that are in the process of becoming urbanized. They are smaller than municipal councils and serve as a basic unit of local governance.
Urban Local Bodies (ULBs) levy user fees or SWM cess as per the provisions of Solid Waste Management Rules, 2016. According to these guidelines, ULBs must collect user fees/cess for SWM services provisions provided. ULBs typically charge about ₹30-50 per month as SWM cess, which is collected along with property tax. ULBs are now considering revising these rates and imposing higher charges on bulk waste generators to meet a portion of the costs incurred in providing SWM services
 
3. What are the Charges?
  • Providing Solid Waste Management (SWM) services is a complex and resource-intensive task. Urban Local Bodies (ULBs) typically allocate around 80% of their workforce and up to 50% of their annual budgets to deliver SWM services to city residents.
  • In a city like Bangalore, each urban resident generates approximately 0.6 kg of waste per day, amounting to 0.2 tonnes per person annually. Overall, Bangalore produces about 5,000 tonnes of solid waste daily. Managing this volume requires around 5,000 door-to-door waste collection vehicles, 600 compactors, and roughly 20,000 sanitation workers (Paurakarmikas).
  • SWM services consist of four main components: collection, transportation, processing, and disposal. ULBs often combine collection and transportation into one package, and processing and disposal into another. Collection and transportation are particularly resource and labor-intensive, consuming about 85-90% of the SWM budget, while only 10-15% is allocated to processing and disposal of waste
4. Solid Waste Mechanism in India
 

Solid Waste Management (SWM) in India involves a systematic approach to managing the collection, transportation, processing, and disposal of waste generated in urban areas. Here is an overview of the SWM mechanism in India:

Regulatory Framework

India's SWM practices are governed by several key regulations:

  • Municipal Solid Waste Management Rules, 2016: These rules provide comprehensive guidelines for urban local bodies (ULBs) on managing solid waste, emphasizing segregation at source, decentralized processing, and safe disposal.
  • Plastic Waste Management Rules, 2016: These rules regulate the use, manufacture, and recycling of plastic products.
  • Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016: These rules address the management and handling of hazardous waste.

Components of SWM

Collection

  • Door-to-Door Collection: ULBs often implement door-to-door waste collection systems to ensure all household waste is collected efficiently.
  • Segregation at Source: Residents are encouraged to segregate waste into biodegradable (wet) and non-biodegradable (dry) categories.
  • Community Bins and Collection Points: Strategically placed bins and collection points are used in areas where door-to-door collection is not feasible.

Transportation

  • Primary Collection Vehicles: These include handcarts, auto tippers, and tricycles used for door-to-door collection.
  • Secondary Collection Vehicles: Larger vehicles like compactors and trucks transport waste from collection points to processing facilities.

Processing

  • Composting: Biodegradable waste is processed into compost, which can be used as organic fertilizer.
  • Vermiculture: Organic waste is converted into vermicompost using earthworms.
  • Recycling: Dry waste such as plastics, paper, and metals are sorted and sent to recycling units.

Disposal

  • Sanitary Landfills: Engineered landfills are designed to safely dispose of residual waste while minimizing environmental impact.
  • Waste-to-Energy Plants: These facilities convert non-recyclable waste into energy through incineration or other processes.
5. Government Initiatives 
  • Swachh Bharat Mission (Clean India Mission): Launched in 2014, this mission aims to achieve universal sanitation coverage and promote cleanliness, including effective SWM.
  • Smart Cities Mission: Focuses on sustainable and inclusive development, including modernizing urban infrastructure for better SWM.
  • Atal Mission for Rejuvenation and Urban Transformation (AMRUT): Aims to provide basic services (e.g., water supply, sewerage) to households and build amenities in cities, promoting sustainable urban development, including SWM
6. What are the challenges?
 
  • Solid waste in Indian cities comprises approximately 55-60% wet biodegradable material and 40-45% non-biodegradable material.
  • Only about 1-2% of the dry waste is recyclable, with the majority being non-recyclable and non-biodegradable.
  • While 55% of the wet waste has the potential to be converted into organic compost or biogas, the actual yield is as low as 10-12%, making these processes financially unfeasible.
  • Typically, the operational revenue from waste processing facilities covers only 35-40% of operational expenses, with the remainder subsidized by Urban Local Bodies (ULBs).
  • In addition to financial constraints, ULBs encounter several challenges in Solid Waste Management (SWM) services.
  • These include managing open dumping sites and drains, preventing littering, dealing with seasonal variations in waste generation, and conducting sweeping operations.
  • Disposing of non-compostable and non-recyclable dry waste, such as single-use plastics, textile waste, and inert materials, is costly because these materials must be transported to cement factories or waste-to-energy projects located 400-500 km from cities.
  • In large cities like Bangalore, about 15% of the budget is allocated to SWM—around ₹1,643 crore out of a total ₹11,163 crore budget—while the revenue from SWM services is minimal, at approximately ₹20 lakh per year.
  • Smaller cities may spend up to 50% of their budgets on SWM but also generate negligible revenue. As a result, ULBs impose an SWM cess to cover a portion of these costs
7.Way Forward
 
Although collection and transportation of waste generate no revenue, several strategies can reduce overall expenditure on SWM and lower user charges. These are segregation of waste at source, reducing single-use plastic, decentralised composting initiatives, Information, Education and Awareness (IEC) to prevent open littering, and asking bulk waste generators to process their own waste.
 
 
 
Source: The Hindu
 
 

FREE TRADE AGREEMENT 

1. Context

While hailing the India-European Union (EU) Free Trade Agreement (FTA) as creating a joint market comprising one quarter of global Gross Domestic Product (GDP), the EU’s ambassador to India Hervé Delphin also struck a note of caution over regulatory hurdles and “unfinished business” that could overshadow the benefits of the deal.
 

2. About the Free Trade Agreement

  • A Free Trade Agreement (FTA) is an agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs, quotas, and subsidies.
  • FTAs can also include provisions on other issues, such as investment, intellectual property, and labour standards.
  • The goal of an FTA is to promote trade and economic growth between the signatory countries.
  • By reducing or eliminating trade barriers, FTAs can make it easier for businesses to export their goods and services to other countries, which can lead to increased production, employment, and innovation.

3. Types of Free Trade Agreement

  • Bilateral Free Trade Agreement (BFTA) involves two countries, aiming to promote trade and eliminate tariffs on goods and services between them.  It establishes a direct trade relationship, allowing for a more focused and tailored agreement between the two nations.
  • Multilateral Free Trade Agreement (MFTA) Involving three or more countries, an MFTA seeks to create a comprehensive trade bloc, promoting economic integration on a larger scale. It requires coordination among multiple parties, addressing diverse economic interests and fostering a broader regional economic landscape.
  • Regional Free Trade Agreement (RFTA) involves countries within a specific geographic region, aiming to enhance economic cooperation and integration within that particular area. It focuses on addressing regional economic challenges and fostering collaboration among neighbouring nations.
  • Preferential Trade Agreement (PTA) involves a reciprocal reduction of tariffs and trade barriers between participating countries, granting preferential treatment to each other's goods and services. It allows countries to enjoy trading advantages with specific partners while maintaining autonomy in their trade policies with non-participating nations.
  • Comprehensive Economic Partnership Agreement (CEPA) is a broad and advanced form of FTA that goes beyond traditional trade barriers, encompassing various economic aspects such as investment, intellectual property, and services. It aims for a more comprehensive economic partnership, encouraging deeper integration and collaboration between participating countries.
  • Customs Union While not strictly an FTA, a Customs Union involves the elimination of tariffs among member countries and the establishment of a common external tariff against non-member nations. It goes beyond standard FTAs by harmonizing external trade policies, creating a unified approach to trade with the rest of the world.
  • Free Trade Area (FTA) with Trade in Goods (TIG) and Trade in Services (TIS): Some FTAs specifically emphasize either trade in goods or trade in services, tailoring the agreement to the specific economic strengths and priorities of the participating countries. This approach allows nations to focus on areas where they have a comparative advantage, fostering specialization and efficiency.

4. India's Free Trade Agreements

India is a member of several free trade agreements (FTAs) and is currently negotiating others.  India's FTAs have helped to reduce trade barriers and promote trade and economic growth. They have also helped to attract foreign investment and create jobs. 

  • The South Asian Free Trade Agreement (SAFTA) was signed in 1995 by the seven countries of the South Asian Association for Regional Cooperation (SAARC). SAFTA aims to reduce or eliminate tariffs on trade between the member countries.
  • The India-Bangladesh FTA was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Sri Lanka FTA was signed in 1999 and came into force in 2000. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-ASEAN Free Trade Agreement was signed in 2002 and came into force in 2010. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Korea Comprehensive Economic Partnership Agreement (CEPA) was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Japan Comprehensive Economic Partnership Agreement(CEPA) was signed in 2022 and came into effect in 2023. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-UAE Comprehensive Partnership Agreement (CEPA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
  • The India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) was signed in 2010 and aims to enhance economic ties by addressing trade in goods and services, as well as investment and other areas of economic cooperation.
  • The India-Thailand Free Trade Agreement was signed in 2003 and focuses on reducing tariffs and promoting trade in goods and services between India and Thailand.
  • The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has been operational since 2005, this agreement covers trade in goods and services, as well as investment and intellectual property.
  • The India-Nepal Trade Treaty While not a comprehensive FTA, India and Nepal have a trade treaty that facilitates the exchange of goods between the two countries.
  • The India-Chile Preferential Trade Agreement was signed in 2006 and aims to enhance economic cooperation and reduce tariffs on certain products traded between India and Chile.

5India - UK Free Trade Agreement

5.1. Background

  • Both countries have agreed to avoid sensitive issues in the negotiations.
  • The interim (early harvest agreement) aims to achieve up to 65 per cent coverage for goods and up to 40 per cent coverage for services.
  • By the time the final agreement is inked, the coverage for goods is expected to go up to "90 plus a percentage" of goods.
  • India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade.
  • While the commencement of negotiations does mark a step forward in the otherwise rigid stance adopted and when it comes to trade liberalisation, experts point to impediments and the potential for legal challenges going ahead.

5.2. GATT (General Agreement on Trade and Tariffs)

  • The exception to the rule is full-scale FTAs, subject to some conditions.
  • One rider, incorporated in Article XXIV.8 (b) of GATT, stipulates that a deal should aim to eliminate customs duties and other trade barriers on "Substantially all the trade" between the WTO member countries that are signatories to an FTA.
  • For this Agreement, a free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
  • It is often beneficial to negotiate the entire deal together, as an early harvest deal may reduce the incentive for one side to work towards a full FTA.
  • These agreements are not just about goods and services but also issues like investment.
  • If you are trying to weigh the costs and benefits, it is always better to have the larger picture in front of you.
  • In the case of the early harvest agreement inked with Thailand, automobile industry associations had complained that relaxations extended to Bangkok in the early harvest had reduced the incentive for Thailand to work towards a full FTA.
  • Early harvest agreements may serve the function of keeping trading partners interested as they promise some benefits without long delays, as India becomes known for long-drawn negotiations for FTAs.
  • Government emphasis on interim agreements may be tactical so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.
 
For Prelims: Free Trade Agreement, India-U.K, Bilateral Free Trade Agreement, G-20 Summit, Agenda 2030, Covid-19 Pandemic, SAARC, General Agreement on Trade and Tariffs, Comprehensive Economic Partnership Agreement, Multilateral Free Trade Agreement, Regional Free Trade Agreement, Preferential Trade Agreement, Customs Union, 
For Mains: 
1. Evaluate the potential impact of the India-UK FTA on the Indian economy, considering both positive and negative aspects (250 Words)
2. Critically evaluate the significance of Free Trade Agreements (FTAs) in promoting trade and economic growth, considering their potential benefits and drawbacks. (250 Words)
 
 
Previous Year Questions
 
1. Consider the following countries:
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the free-trade partners' of ASEAN? (UPSC 2018)
A. 1, 2, 4 and 5          B.  3, 4, 5 and 6      C.  1, 3, 4 and 5       D.  2, 3, 4 and 6
 
Answer: C
 

2. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC 2018)

(a) Industrial output fails to keep pace with agricultural output.
(b) Agricultural output fails to keep pace with industrial output.
(c) Poverty and unemployment increase.
(d) Imports grow faster than exports.

Answer: C

3. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)

  1. Development of infrastructure facilities.
  2. Promotion of investment from foreign sources.
  3. Promotion of exports of services only.

Which of the above are the objectives of this Act?

(a) 1 and 2 only     (b) 3 only         (c) 2 and 3 only           (d) 1, 2 and 3

Answer: A

4. A “closed economy” is an economy in which (UPSC 2011)

(a) the money supply is fully controlled
(b) deficit financing takes place
(c) only exports take place
(d) neither exports nor imports take place

Answer: D

5. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022)
1. It is an initiative endorsed by the G20 together with the Paris Club.
2. It is an initiative to support Low Income Countries with unsustainable debt.
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: C
 
 Source: The Hindu

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