02 Jan 2024: UPSC Exam Comprehensive News Analysis

02 Jan 2024 CNA
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A. GS 1 Related
B. GS 2 Related
C. GS 3 Related
ECONOMY
1. India’s 1991 crisis & RBI Governor’s role
D. GS 4 Related
E. Editorials
INTERNATIONAL RELATIONS
1. India - South Korea Defence Cooperation
F. Prelims Facts
1. Radiocarbon dating
G. Tidbits
1. INCOIS
2. XPoSat
3. India-Pak agreement on nuclear installations
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

A. GS 1 Related

Nothing here for today!!!

B. GS 2 Related

Nothing here for today!!!

C. GS 3 Related

Category: ECONOMY

1. India’s 1991 crisis & RBI Governor’s role

Syllabus: Effects of liberalisation on the economy (post-1991 changes), changes in industrial policy and their effects on industrial growth.

Mains: Balance of Payments Crisis of 1991 and the Economic Reforms.

Prelims: About Balance of Payments Crisis of 1991

Context:

S Venkitaramanan, former RBI Governor, passed away. His pivotal role during India’s 1990-91 balance of payments crisis, employing gold pledging and import compression, shaped the nation’s economic trajectory.

Introduction

• S. Venkitaramanan, the former Governor of the Reserve Bank of India (RBI) from December 1990 to December 1992, recently passed away. His tenure witnessed pivotal moments in India’s economic history, highlighting his role as a statesman dedicated to the country’s welfare.

Balance of Payments Crisis (1990-91)

• In the late 1990s, India faced a severe balance of payments crisis due to reduced remittances and increased oil prices after the invasion of Kuwait.
• The RBI, under Venkitaramanan’s leadership, played a crucial role by pledging India’s gold to secure hard currency loans. This move helped India meet external payment obligations and avoid default.
• Gold was sold and pledged, raising funds, and contributing to economic stability during a challenging period.

Economic Reforms and Import Compression

• S Venkitaramanan initiated a program of import compression, increasing cash margins on imports to address the balance of payments crisis.
• The cash margin was raised fourfold between October 1990 and April 1991, coupled with other measures to control imports.
• This strategy, implemented before the economic reforms of 1991, significantly reduced the current account deficit from 3 percent of GDP in 1990-91 to 0.3 percent in 1991-92.

Role in Navigating the Crisis

• The RBI’s official history acknowledges Venkitaramanan’s leadership during the troubled times, describing the crisis as “successfully resolved.”
• The immediate improvement in the balance of payments, largely attributed to import compression, laid the groundwork for subsequent economic reforms.

Post-Crisis Economic Reforms

• After overcoming the balance of payments crisis, Venkitaramanan’s contributions were overshadowed by the economic reforms led by Dr. Manmohan Singh’s government.
• The focus on economic restructuring and the rupee devaluation became more visible, relegating the earlier efforts to relative obscurity.

Legacy and Openness

• Venkitaramanan’s legacy includes his openness to diverse opinions. He invited economists, including critics, to discuss measures taken during the balance of payments crisis.
• His commitment to intellectual resources led to the establishment of the Development Research Group within the RBI, fostering interaction between economists and the central bank.

NutGraf: S. Venkitaramanan, the late RBI Governor, navigated India through the 1990-91 balance of payments crisis by pledging gold and implementing import compression, laying the foundation for subsequent economic reforms.

D. GS 4 Related

Nothing here for today!!!

F. Prelims Facts

G. Tidbits

2. XPoSat

• ISRO launched PSLV-C58 X-Ray Polarimeter Satellite (XPoSat) mission from Satish Dhawan Space Centre.
• XPoSat is the second X-ray polarimetry mission globally, following NASA’s Imaging X-ray Polarimetry Explorer (IXPE).
• First dedicated scientific satellite by ISRO for space-based polarisation measurements of X-ray emissions from celestial sources.
• Carries two payloads: POLIX (Polarimeter Instrument in X-rays) developed by Raman Research Institute and XSPECT (X-ray Spectroscopy and Timing) by Space Astronomy Group of URSC, Bengaluru.
• During the mission, the PSLV Orbital Experimental Module-3 (POEM-3) experiment was also executed.
• Launch also includes 10 payloads developed by startups, educational institutions, and ISRO centres.
• Significant payload includes ISRO Fuel cell Power System (FCPS) with potential applications in India’s proposed space station by 2035.
• ISRO Chairman S. Somanath announced 2024 as the year of Gaganyaan readiness, with two more test flights planned for the Flight Test Vehicle Abort Mission (TV-D) followed by unmanned flights.

3. India-Pak agreement on nuclear installations

• India and Pakistan exchanged lists of their nuclear installations on January 1, 2024.
• The annual practice was initiated in 1992 under a bilateral pact prohibiting attacks on each other’s atomic facilities.
• This agreement was signed on December 31, 1988, and came into force on January 27, 1991.
• The agreement mandates informing each other of nuclear installations and facilities covered under the agreement every New Year.
• This is the 33rd consecutive exchange of lists, with the first one taking place on January 1, 1992.
• Exchange occurs amid strained ties between the two countries over the Kashmir issue and cross-border terrorism.

H. UPSC Prelims Practice Questions

Q1. ISRO has recently declared that 2024 is going to be the ‘Year of Gaganyaan’. 
What does this mean?

1. ISRO has confirmed it will be launching its first manned space flight by March 2024.
2. In 2024, ISRO will be sending a few Indian astronauts to space via manned missions of other countries.
3. ISRO will be testing out various critical technologies and fine-tune them for the upcoming human space flight programme.
4. None of the above.

CHECK ANSWERS:-

Answer: c

Explanation: 

• The Chairman of ISRO, S Somanath, has designated 2024 as the ‘Year of Gaganyaan’.
• Gaganyaan is India’s first human spaceflight programme.
• ISRO aims to conduct crucial technology tests in 2024 to prepare for the upcoming Gaganyaan mission. 
• The Gaganyaan mission was initiated with the TV-D1, also known as the abort mission, and was successfully carried out in October 2023. 
• The series includes a total of four missions, and ISRO plans to execute at least two more in the year 2024.

Q2. Consider the following statements:

1. The Production Linked Incentive Scheme (PLI) was conceived to scale up domestic manufacturing capability.
2. It applies only to mobile manufacturing and automobile sectors.
3. It can lead to the creation of jobs and as well as reduce import dependency.

How many of these statements is/are correct?

1. Only one
2. Only two
3. All three
4. None

CHECK ANSWERS:-

Answer: b

Explanation: 

• The PLI initiative was designed with the aim of expanding domestic manufacturing capacity, fostering increased import substitution, and generating employment. 
• While initially focused on three sectors—mobile and allied component manufacturing, electrical component manufacturing, and medical devices—the scheme was later expanded to encompass 14 sectors.

Q3. ‘Simplified Certification Scheme’ of the Department of Telecommunications 
is aimed at –

1. Making spectrum auctions more transparent and simple
2. Introducing Satellite Internet to India
3. Promoting ease of doing business
4. Encouraging emissions reduction in the telecom sector

CHECK ANSWERS:-

Answer: c

Explanation: 

• The Department of Telecommunications’ Simplified Certification Scheme (SCS) seeks to enhance the business environment by streamlining the certification process. 
• Its objective is to shorten the certification duration from 8 weeks to just 2 weeks, thereby promoting a more business-friendly atmosphere.

Q4. Consider the following statements:

1. The Logistics Performance Index (LPI) Report is published by the World Bank.
2. In the 2023 report, India has reached 22nd rank in the International Shipment category as against 44th rank in 2014.
3. According to the report, Indian Ports “Turn Around Time” has become better than the USA, Australia and Singapore.

How many of these statements is/are correct?

1. Only one
2. Only two 
3. All three
4. None

CHECK ANSWERS:-

Answer: c

Explanation: 

• The World Bank releases the Logistics Performance Index (LPI) Report, and in the 2023 edition, India achieved the 22nd position in the International Shipment category, a significant improvement from its 44th rank in 2014. 
• As per the report, Indian Ports exhibit a “Turn Around Time” of 0.9 days, surpassing that of the USA (15. days), Australia (1.7 days), and Singapore (1.0 days).
• Furthermore, the average container dwell time in India has decreased to 3 days, contrasting with the 4 days seen in countries like the UAE and South Africa, 7 days in the USA, and 10 days in Germany, demonstrating a commendable efficiency.

Q5. Consider the following statements:

The ‘Stability and Growth Pact’ of the European Union is a treaty that 

1. limits the levels of the budgetary deficit of the countries of the European Union 
2. makes the countries of the European Union to share their infrastructure facilities 
3. enables the countries of the European Union to share their technologies

How many of the above statements are correct?

1. Only one
2. Only two 
3. All three
4. None

CHECK ANSWERS:-

Answer: a

Explanation: 

• The Stability and Growth Pact (SGP) is a binding diplomatic agreement among European Union (EU) member states.
• It sets up a fiscal framework designed to uphold fiscal discipline and stability across its member nations. 
• Originating in 1997, the pact was established in response to worries regarding elevated government deficits and public debt levels within the Eurozone. 
• Its primary objective is to forestall member countries from amassing disproportionate deficits and public debt, as such accumulation could pose a potential threat to the stability of the shared currency and the overall economic well-being of the EU.