05 Feb 2023: UPSC Exam Comprehensive News Analysis

B. GS 2 Related

Category: INTERNATIONAL RELATIONS

1. Cooperation in Trilateral Framework

Syllabus: International Agreements & Groupings

Mains: Significance of Multilateral Cooperation for India

Context: India joins UAE, France for trilateral initiatives on various issues.

Introduction:

• India, France and the United Arab Emirates declared their common intent to formalise a “trilateral cooperation initiative” to collaborate on nuclear energy and explore opportunities in the Indian Ocean region.
• Three countries also discussed cooperation in a trilateral framework, to promote compatibility and co-production in the defence sector and in countering infectious diseases.
• A range of trilateral events will be held in the backdrop of the Indian Presidency of the G-20 and UNFCCC COP28 to be held in UAE in November-December 2023.
• The trilateral was first discussed when the three Ministers — Dr. Jaishankar, France’s Catherine Colonna and the UAE’s Abdullah bin Zayed Al Nahyan — had met on the sidelines of the UN General Assembly in New York in September 2022.

Cooperation to fight Climate Change:

• This trilateral cooperation initiative is with a focus on solar and nuclear energy, the fight against climate change and the protection of biodiversity.
• The initiative is expected to act as a platform to bolster cooperation on sustainable projects between the development agencies of the three countries, which will also work to align their economic, technological and social policies with the objectives of the Paris Agreement.
• The three countries also agreed to expand their cooperation through initiatives such as the Mangrove Alliance for Climate led by the UAE and the Indo-Pacific Parks Partnership led by India and France. 
• It was agreed that the three countries should seek to focus on key issues such as single-use plastic pollution, desertification, and food security in the context of the International Year of Millets-2023. 
• The three countries also underlined their keen desire to cooperate in the field of the circular economy under the aegis of India’s Mission LiFE.

Towards ‘One Health’:

• Separately, France, India and the UAE also agreed to increase cooperation in the field of combating diseases and pandemics and joining forces in the field of vaccination.
• In this regard, cooperation in multilateral organisations such as World Health Organization (WHO), Gavi-the Vaccine Alliance, the Global Fund, and Unitaid will be encouraged. 
• Further, the three countries are planning to attempt to identify tangible cooperation on implementing the “One Health” approach, and support the development of local capacities in biomedical innovation and production within developing countries.

Collaboration in Defence Sector:

• Foreign Ministers of three countries also discussed cooperation in a trilateral framework to promote compatibility, joint development and co-production while seeking out avenues for further collaboration and training defence forces of the three countries. 
• The development of trilateral cooperation between relevant academic and research institutions and efforts to promote co-innovation projects,technology transfer, and entrepreneurship will be encouraged. 

Nut Graf: India joins UAE, France for trilateral initiatives on various issues including fight against Climate Change, cooperation in defence sector, combating diseases and pandemics and platform to promote cultural cooperation through a range of joint projects.

E. Editorials

Category: INDIAN ECONOMY

1. Is Govt. on track on fiscal deficit targets?

Syllabus: Government Budgeting.

Mains: Achieving Fiscal Deficit target.

Prelims: Budget 2023-24.

Details:

• The path of relative fiscal prudence is chosen by the government in the Union Budget for 2023-24. 
• The Finance Minister Ms. Nirmala Sitharaman projected a decline in fiscal deficit from 6.4% in FY23 to 5.9% of gross domestic product (GDP) in FY24. 
• It was further said during the budget speech that the government is planning to continue on the path of fiscal consolidation and reach a fiscal deficit below 4.5% by 2025-26. 
• To finance the fiscal deficit in 2023-24 the net market borrowings from dated securities are estimated at around ₹11.8 lakh crore, and the balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at approximately ₹15.4 lakh crore. 

Also read: Finance Fiscal Deficit | India’s Fiscal Policy Framework

Statistical Details:

• The fiscal deficit to GDP is pegged at 5.9% in FY24 in Union Budget 2023-24. This has reduced from 6.4% in 2022-23 (revised estimate) and 6.7% in 2021-22 (actual).
• Revenue Budget:
  • As per the Revised Estimate(RE) of 2022-23 the deficit was 4.1% of GDP.
  • Primary Deficit (Fiscal Deficit minus Interest payments) was 3% of GDP in 2022-23 (RE).
  • The revenue deficit is 2.9% of GDP in the Union Budget 2023-24. Moreover, the primary deficit is pegged at 2.3% of GDP.
• Statistics associated with subsidies:

	2022-23 Budget Estimate (BE)	2022-23 Revised Estimate (RE)	2023-24 Budget Estimate (BE)
Food Subsidy	₹2,06,831 crore	₹2,87,194 crore	₹1,97,350 crore
Fertilizers Subsidy	₹1,05,222 crore	₹2,25,220 crore	₹1,75,100 crore
Petroleum Subsidy		₹9,171 crore	₹2,257 crore

Way Ahead for Growth:

• It should be noted that the interest rate management by the Reserve Bank of India (RBI) is not enough to deal with the inflation, specifically due to supply-side shocks.
• Therefore coordination of both fiscal and monetary policy is crucial for a sustained growth recovery process.
• It should be noted that the high-interest rate regime by the RBI can hurt economic growth. Thus, the fiscal policy should adopt an accommodative stance by focussing on gross capital formation with increased capital spending, particularly infrastructure investment.
• The Budget 2023-24 has proposed to raise the capital expenditure by 3.3.% of GDP. The interest-free loan of ₹1.3 lakh crore for 50 years to States would aid in boosting growth.
• The infrastructure investment has a larger multiplier effect on economic growth and employment.

Also read: Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes]

Fiscal Consolidation:

• Indian Government has not deviated from the path of fiscal consolidation. 
• The medium-term fiscal consolidation framework of the Budget 2023-24 states that it is important to reduce the fiscal deficit-GDP ratio to 4.5% by 2025-26 (from 6.4% currently). 
• The Government of India has kept the fiscal policy “accommodative”, and has adopted capital spending to support economic growth recovery in the current scenario of revenue uncertainties (due to the pandemic, geopolitical risks, supply chain disruptions, energy price volatility, and increasing inflation).
• Notably, the primary mode of financing fiscal deficit in India is through internal market borrowings. It is also financed through securities against small savings, provident funds, and external debt. 
• The Union Budget 2023 has pegged India’s external debt at ₹22,118 crore of the total fiscal deficit of ₹17,86,816 crore in 2023-24 (BE) (around 1%). 
• It is also stated in the Budget that the States will have to maintain a fiscal deficit of 3.5% of GSDP of which 0.5% will be tied to power sector reforms.

Figure: Fiscal Deficit (as a percent of GDP)

Rating Agencies Response:

• According to Moody’s, leveraging buoyant revenues, the Indian government aims to significantly increase infrastructure investment, while cutting personal income taxes, and providing capital support for the oil sector. 
• It further said that these steps are credit positive for renewable energy companies, oil marketing companies, cement and steel producers, and automobile manufacturers.
• However, Moody’s added that it is unlikely to narrow down the fiscal deficit to 4.5% of GDP by FY26.
• Fitch Ratings stated that the slow fiscal consolidation process due to the COVID-19 pandemic could leave public finances exposed in case of a further major economic shock.

Conclusion:

The government is stressing economic growth recovery through capex. The economic growth in turn would strengthen GDP. Moreover,  if the denominator (GDP) expands in the fiscal deficit-GDP ratio, it will reduce the overall fiscal deficit-GDP ratio.

Related Link:  Fiscal Consolidation – Important Policies by The Government

Nut Graf: The Budget 2023-24 has proposed to increase capital expenditure and boost economic growth. The government has thus adopted a fiscal consolidation approach to reach the fiscal deficit target of 4.5% by 2025-26.

Category: ENVIRONMENT AND ECOLOGY

1. Why have mangroves got a Budget push?

Syllabus: Environment and Biodiversity conservation.

Mains: Mangroves and Mangrove plantation proposed in Budget 2023-24.

Prelims: MISHTI.

Context: Mangrove plantation initiative in Union Budget 2023-24.

Details:

• The Union Budget for 2023-24 has proposed Mangrove plantation along the coastline and on saltpan lands under MISHTI (Mangrove Initiative for Shoreline Habitats & Tangible Incomes).

Significance of Mangroves: 

• The salt-tolerant plant communities found in tropical and subtropical intertidal regions are called Mangroves. 
• They are crucial for coastal biodiversity and act as bio-shields against extreme climatic events like floods and cyclones. 
• They are very important because the threat of climate change and frequent tropical storms are increasing at exponential rates.
• Thus planting more mangroves along the coastline of India(7500 km) is a great step in the right direction.

Also read: Mangroves in India – Important Facts, Importance and Conservation of Mangroves [ UPSC GS-I]

Background Details:

• According to the ‘State of World Mangroves 2022’ report by the Global Mangrove Alliance, the total mangrove cover of the world is around 147000 sq km (14.7 million hectares).
• The report further highlights that mangroves hold up to four times more the amount of carbon than other ecosystems. It was explicitly mentioned that “the loss of even 1% of remaining mangroves could lead to the loss of 0.23 gigatons of CO2 equivalent, equal to over 520 million barrels of oil.”
• As per the Indian State of Forest Report (IFSR) 2021, India has nearly 4992 sq km (0.49 million hectares) of mangroves. 
• In India, Mangroves are distributed across 9 States and 3 Union Territories with West Bengal having the highest mangrove cover of 2114 sq km. 
• The IFSR report also showed that the mangrove cover in India has increased from 4046 sq km in 1987 to 4992 sq km in 2021. 
• However, the mangrove ecosystem in India is facing challenges due to the rising population in coastal areas and the increasing demand for land, timber, fodder, fuel-wood, and other non-wood forest products like fisheries. 
• The tree species in mangrove forests/ecosystems are categorized into:
  • True mangroves: They display morphological adaptations like pneumatophores, vivipary or crypto vivipary germination, and salt-secreting cells. There are 42 true mangrove species in India.
  • Mangroves associates: The species that exist side by side with the true mangroves. There are 68 mangrove associate species in India.

Challenges to Wetland Ecosystem:

• One of the biggest threats to the mangrove ecosystem is the aquaculture or fisheries along the coast that obstructs the tidal flow. For instance, in Sunderbans (the largest mangrove forest in India) several instances of clearing the mangrove forest for aquaculture has been witnessed.
• Land reclamation for agriculture and industries along the coastline also impacts the mangrove ecosystem.
• Discharge of untreated domestic and industrial effluents hampers the natural inter-tidal flow along the coast and obstructs the mixing of freshwater and saline water, which is important for the formation of the mangrove forest.

Mangrove plantation initiative:

• MISHTI will be implemented through the convergence of various schemes like MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme), CAMPA (Compensatory Afforestation Fund Management and Planning Authority) Fund, and other sources. 
• It would further require extensive cooperation from local communities. 
• It is found that the survival rate of mangrove seed plantation and saplings is 50% and 60% respectively. Moreover, it takes three years for a new plant to stabilize. Thus a contract-based one-time plantation under MGNREGS and CAMPA might not work efficiently without the local communities taking ownership of the forests. 
• Moreover, MISHTI is in line with India’s Nationally Determined Contributions of creating an additional carbon sink of 2.5-3 billion tonnes of carbon dioxide (CO2) equivalent by 2030.
• Additionally, India also joined the Mangrove Alliance for Climate at COP27.

Also read: Mangrove Alliance for Climate (MAC), UNFCCC COP27 [UPSC Environment Notes]

Related Link: PIB Summary & Analysis for UPSC IAS Exam for 8th Nov 2022

Nut Graf: Mangrove Ecosystem is crucial for environment and biodiversity. However, it is under extreme pressure due to the rising population and increasing demand for land. In this direction, the government of India has involved the mangrove restoration in the Budget of 2023-24 through an initiative called MISHTI. 

Q1. Consider the following statements regarding appointment of judges in the Supreme 
Court of India: (Level – Easy)

Q2. Which of the following will be soon named the world’s first heritage University? 
(Level – Moderate)

Q3. Consider the following statements with regards to Antrix: (Level – Moderate)

Q4. Which amongst the following is the official state bird of Rajasthan?(Level–Easy)

Q5. The term “two-state solution” is sometimes mentioned in the news in the context 
of the affairs of (Level – Easy)

I. UPSC Mains Practice Questions

1. Discuss the impact of a high fiscal deficit on the nation’s economy? Can it also have a positive impact in some situations? Elaborate. (250 words; 15 marks)(GS-3; Economics)
2. What makes mangroves such an important part of our efforts against climate change? Is the Government of India taking enough steps for their preservation? (250 words; 15 marks)(GS-3; Environment)