30 Aug 2020: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: ECONOMY

1. What is the new idea on supply chains?

Context:

• In the light of the COVID-19 pandemic and the subsequent lockdowns and trade tensions between China and the United States having caused bottlenecks in the global supply chains, Japan has mooted the Supply Chain Resilience Initiative (SCRI).

Background:

Pandemic crisis:

• China accounts for around 24% of Japan’s total imports. The bilateral trade also involves the movement of goods as part of the global supply chains from China to Japan.
• When China had to shut down factories in regions hit by the COVID-19 pandemic, this had also impaired economic activity in Japan.

U.S.-China Trade tensions:

• The ongoing U.S.-China trade tensions are a cause of concern for Japan, as Japan’s growth would be affected if the U.S. and China move towards creating their own separate economic zones.
• Recognizing the inherent threat the Japanese government had recently earmarked $2.2 billion to incentivise its companies to move their manufacturing out of China. This was a measures approach to diversification of risk.

Details:

• The Supply Chain Resilience Initiative (SCRI) is proposed as a trilateral approach to trade, with India and Australia. It could also potentially involve other Asian and Pacific Rim nations in the later years.

Supply chain resilience:

• Supply chain resilience is an approach wherein a country instead of being dependent on just one or a few nations has diversified its supply risk across a range of supplying nations.

Need for supply chain resilience:

• Given that the currently some assembly lines are heavily dependent on supplies from one country, the impact on importing nations could be crippling if that source nation stops production for involuntary reasons or due to unanticipated events, or even as a conscious measure of economic coercion.
• Supply Chain resilience could help overcome such risks to the importing countries.

The case for India’s inclusion:

• The long-standing and deepening trade relationship between India and Japan seems to have spurred Japan to include India as a partner for the SCRI.
  • Japan is the fourth-largest investor in India with cumulative foreign direct investments accounting for 7.2% of inflows in the period between 2000-2020.
  • There has been impressive growth in the bilateral trade between India and Japan.
  • Almost 1,400 Japanese companies operate in India.
• Unlike previously, when India would not take any step to overtly antagonise China, currently following the border tensions along the LAC, India may be ready for dialogue on alternative supply chains which indirectly aims to keep China out of such supply chains.
• On the economic front, India comes across as an attractive option for potential investors both as a large market base and as a manufacturing base with low cost labour.

The case for Australia’s inclusion:

• China has been Australia’s largest trading partner accounting for almost 1/3^rd of Australia’s exports, with iron ore, coal and gas being the major export items.
• However relations including trade ties between the Australia and China have been deteriorating over the recent past. Australia’s inclusion marks an attempt to garner Australia’s support in countering China.
  • Australia, Japan and India along with the U.S. are part of the Quadrilateral Security Dialogue, or the Quad.

Challenges for India:

• Given the current high reliance on China, the sudden cut in trade links with China would be impractical.
  • China accounts for a large share of imports into India standing at around 14.5% in 2018.
  • Chinese supplies dominate segments such as pharmaceuticals, automotive parts, electronics, shipping, chemicals and textiles sector of the Indian economy. In electronics, China accounts for 45% of India’s imports.

Way forward for India:

• The Supply Chain Resilience initiative could help realise trade benefits for India.
• In the coming years India should work towards enhancing self-reliance or consider working with exporting nations other than China, to build resilience into the economy’s supply networks.
• Apart from offering tax incentives to companies to attract investments in manufacturing, India will also have to focus efforts on accelerating progress in ease of doing business and in skill building.

F. Tidbits

1. Rain pushes summer crop planting to record

• Good monsoon rainfall has spurred Indian farmers to plant summer crops across a record swathe of 108.2 million hectares (267.4 million acres) farmland. This marks a 7% increase compared to the last year.
  • The major summer crops include rice, corn, cotton, soybeans and sugarcane.
  • Given that nearly half of farmland does not receive irrigation, Monsoon rainfall is significant for Indian agriculture.
• There are hopes that food production will cross the target of 298.32 million tonnes in the 2020-21 year outstripping the previous year’s record output of 295.67 million tonnes.

2. Environmentalists petition PM on Char Dham project

• The Char Dham Project (CP) is an attempt to widen nearly 900 km of hill road to improve access to pilgrimage spots in Uttarakhand.
• A group of 40 scientists, environmentalists and ecologists have written to the Prime Minister demanding a halt to the Char Dham road construction work calling for a sustainable execution of the project keeping in mind the fragile nature of the Himalayan ecosystem.

3. Is COVID-19 intensifying in Rural India?

• Apart from the concern that COVID-19 cases have been growing at a relatively quick pace in the recent past, more worryingly the hotspot of the pandemic seems to have shifted to rural areas where the health infrastructure is fragile.
• The health infrastructure is not equally spread between rural and Urban India. While the rural areas account for around 65% of India’s total population, about 65% of all government hospital beds are in urban areas.
• Only 20% of the total doctors in India are serving in the rural areas.

G. Prelims Facts

1. India pulls out of Kavkaz due to China

• The Kavkaz 2020 is a multilateral military exercise, also referred to as Caucasus-2020.
• It is to be held in Southern Russia.
• India has withdrawn its participation in Kavkaz 2020 exercise.

2. Tree of life

• The African baobab, known as the tree of life, is native to the African continent.
• These long-living species are typically found in dry, hot savannahs of sub-Saharan Africa.
• They have traditionally been valued as sources of food, water, health remedies, medicinal compounds or places of shelter.

3. President presents National Sports Awards

• The Rajiv Gandhi Khel Ratna, officially known as Rajiv Gandhi Khel Ratna Award in Sports and Games, is the highest sporting honour of the Republic of India.
• It is awarded annually by the Ministry of Youth Affairs and Sports.
• This year’s Rajiv Gandhi Khel Ratna awardees:
  • Manika Batra (Table Tennis)
  • Vinesh Phogat (Wrestling)
  • Rani Rampal (Hockey)
  • Mariyappan Thangavelu (Para Athletics)
  • Rohit Sharma (Cricket)

Q 1. Which of the following statement/s is/are correct?

Q 2. Which of the following statement/s is/are correct?

Q 3. The Senkaku islands lie in which of the following?

Q 4. Which of the following are correctly matched?