13 May 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related
B. GS2 Related
INTERNATIONAL RELATIONS
1. Vice President Visit to South American Countries
HEALTH
1. International Nurses Day (IND)
C. GS3 Related
ECONOMY
1. Why is the rupee in a free fall?
ENVIRONMENT
1. Bengal Florican/ Bengal Bustard
D. GS4 Related
E. Editorials
F. Prelims Fact
G. UPSC Prelims Practice Questions
H. UPSC Mains Practice Questions 

A. GS1 Related

B. GS2 Related

• Vice President M Venkaiah Naidu is on a five-day visit to South America’s Guatemala, Peru and Panama.

Objectives

• China has been aggressively expanding its presence in Panama and Peru and India has very limited influence over these two countries. So the tour is to re-assert India’s influence.

Details

• Guatemala has supported India’s permanent membership of the United Nation’s Security Council, however, without veto right. It also has strained relations with both China and Pakistan.
• The tour to Panama is significant because of growing engagement between China and Panama. The country also has the highest presence of Indian diaspora of 15,000.
• As part of his visit to Peru, the Vice-President will be participating in celebration of 55 years of diplomatic relations between the two countries.

• It is an international day celebrated around the world on 12 May of each year, to mark the contributions nurses make to society.
• In 1974, 12 May was chosen to celebrate the day as it is the anniversary of the birth of Florence Nightingale, the founder of modern nursing.

Details

• At present, there are 1.7 nurses per 1,000 people in India, and the world average is 2.5 nurses.
• The services and dedication of Indian nurses are recognized all over the world, especially in the Gulf region where they are employed in a large number.

C. GS3 Related

Context

• The rupee fell against the U.S. dollar by a little over 2.5% in April, and 4.3% since the beginning of the year, making it the worst-performing Asian currency.
• The rupee, however, is not the only currency to face depreciation. Other emerging economies like Indonesia, Argentina, Mexico and Turkey have seen a fall in their currencies. So the rupee’s fall is part of a sell-off across emerging markets.

Prime reason

• After nearly four years of subdued and benign oil prices and the consequent improvement in the country’s terms of trade, India once again faces its age-old vulnerability to high cost of oil import.
• U.S. dollar seems to be on a cyclical recovery path against other major currencies on the relative strength of the U.S. economy.
• Going by its 36-country trade-weighted real exchange rate index, the rupee is currently overvalued by more than 17% relative to 2005.
  • This highlights the structurally higher inflation in India not just in relation to the U.S., but vis-a-vis all its major trading partners and competitors as well.

Tight monetary policy of U.S. Federal Reserve

The U.S. Federal Reserve is expected to tighten its monetary policy stance in the coming months and years by taking steps towards slowing down the growth in U.S. money supply. This is considered the most likely reason for the sell-off.

• A slowdown in U.S. money supply growth affects the value of other currencies in two ways.
• For one, interest rates in the U.S. will begin to rise as the Fed’s demand for various assets begins to drop.
  • The yield on 10-year U.S. Treasury Bonds has already risen to 3% from around 2% last year, amid the Fed’s increasingly hawkish monetary stance.
  • This causes a rush among investors to sell their assets in other parts of the world and invest the money in the U.S., where they could earn higher returns. The consequent flow of capital from the emerging markets to the U.S. increases selling pressure on emerging market currencies and buying pressure on the dollar.
• Secondly, as the Fed begins to tighten money supply, the availability of dollars in the global market is likely to turn scarce, compared to other currencies.
• Both these factors affect the price at which traders, who try to speculate on future retail demand, are willing to buy the dollar using other currencies.

Import and export

• While the country’s imports relative to its GDP is now much lower than the peak level reached in 2012-13, the performance of exports continues to be lacklustre.
  • In the financial year 2013-14, exports were 17.2% of GDP and by the financial year 2016-17, the ratio fell to 12.4% of GDP.
• In the traditional areas of exports, such as garments and textiles, where India was second only to China, the country now occupies third position in textiles and fifth position in garments.
  • The case of garments exports is interesting as in 2000 the share of clothing exports as a percentage of total global clothing exports of Bangladesh, Vietnam and India was 2.6%, 0.9% and 3% respectively.
  • By 2016, while India’s share of global clothing exports has increased marginally to 4%, Bangladesh has improved its share to 6.4% and Vietnam’s share is a stellar 5.5%.

This is a pointer to India’s inability to gain market share in a global business which is consolidating among the top ten countries.

Manufacturing- Comparison with china

• Despite the claims of ‘Make in India’, India does not yet figure among the top ten exporters of manufactured goods.
• China now exports manufactured goods worth $2 trillion (almost equal to India’s GDP) and its share of global exports of manufactured goods increased from 4.7% in 2000 to 17.9% in 2016.
• The other worrisome trend is the rapid growth in imports of electronic goods, which was $3.4 billion in 2011-12 and $42 billion in 2016-17 — a massive 12-fold increase in five years.
• There is a distinct possibility that imports of electronic imports, mostly from China, will surpass oil imports in the near future.

Service sector issues

• The silver lining in India’s current account in the past has been the export of services export.
• Indian IT services companies, which followed a low-cost global delivery model with success in the past, have not succeeded so far in graduating to the new world of artificial intelligence, machine learning and robotics.
• Growing trade protectionism in the West will certainly slow down the growth of exports of IT and IT-enabled services, unless Indian companies move up the value chain.
• Tourism and transfers from migrant workers in the Gulf have remained robust.

• It is a bustard species native to the Indian subcontinent, Cambodia and Vietnam.
• IUCN: Critically Endangered

Details

Fewer than 1,000 adult Bengal floricans remain in the world in two, very fragmented populations.

• One of them is in the grasslands of the terai which spans across Nepal and Indian states such as Uttar Pradesh.
• The other is the South East Asian population which occurs in Cambodia and perhaps adjacent southern Vietnam.

Habitat

• Bengal floricans live in open tall grassland habitats with scattered bushes.
• During the monsoon (the non-breeding season), the birds had far larger home ranges.
  • They moved out of protected grasslands and into low-intensity agricultural fields along large rivers – which were interspersed with grasslands, had no roads and very few people – to escape the floods common during this time.

D. GS4 Related

E. Editorials

F. Prelims Fact

G. Practice Questions for UPSC Prelims Exam

Question 1. Which of the following countries are part of Andean Community?

Question 2. Consider the following statements:

Question 3. Tropic of Capricorn passes through

Question 4. Consider the following matches:

Question 5. Consider the following statements with reference to racial groups:

H. UPSC Mains Practice Questions

Also, check previous Daily News Analysis