In News

The Indian rupee has been witnessing a steady decline this year, losing more than 6% against the U.S. dollar since the beginning of 2022, falling to an all-time low against the U.S. dollar this week.

About the News

• The rupee is currently volatile and touched a series of record lows against the American currency.
  • The rupee depreciated 5 paise to an all-time low of 79.11 against the US dollar amid persistent foreign capital outflows.
• Concerns over economic growth amidst multi-year high inflation, interest rate hikes, persistent foreign funds outflow, high crude oil prices, and volatile domestic equities is plaguing the Indian economy amidst the fall of rupee.
• India’s forex reserves have also dropped below $600 billion, plunging by more than $50 billion since September 3, 2021, when forex reserves stood at an all-time high of $642 billion.
  • The drop in India’s forex reserves is believed to be largely due to steps taken by the Reserve Bank of India to support the rupee.
  • It may also be due to a fall in the dollar value of assets held as reserves by the RBI.

Reasons for the fall in Rupee

• Impact of Fed Rates: Since the beginning of the year, the S. Federal Reserve has been raising its benchmark interest rate causing investors seeking higher returns to pull capital away from emerging markets such as India and back into the U.S.
  • This, in turn, has put pressure on emerging market currencies which have depreciated significantly against the U.S. dollar so far this year.
• CAD: India’s current account deficit (CAD), which measures the gap between the value of imports and exports of goods and services, is expected to hit a 10-year high of 3.3% of gross domestic product in the current financial year.
  • This means that India’s import demand amid rising global oil prices is likely to negatively affect the rupee unless foreign investors pour sufficient capital into the country to fund the deficit.
• Inflation: Consistently higher domestic price inflation in India is also a reason for the consistent decline of the rupee.
  • Higher inflation in India suggests that the RBI has been creating rupees at a faster rate than the U.S. Federal Reserve has been creating dollars.

How Rupee value is determined?

• The value of any currency is determined by demand for the currency as well as its supply.
  • When the supply of a currency increases, its value drops, and when the demand for a currency increase, its value rises.
• In the wider economy, central banks determine the supply of currencies, while the demand for currencies depends on the amount of goods and services produced in the economy.
• In the forex market, the supply of rupees is determined by the demand for imports and various foreign assets.
  • The demand for rupees in the forex market, on the other hand, depends on foreign demand for Indian exports and other domestic assets. For eg., when there is great enthusiasm among foreign investors to invest in India, it can lead to an increase in the supply of dollars in the forex market which in turn causes the rupee’s value to rise against the dollar.

Way Forward

• The rupee is likely to continue to depreciate against the dollar given the significant differences in long-run inflation between India and the U.S.
• The central bank could make greater use of spot market intervention, which would run down central bank reserves or may just opt to let the rupee weaken according to macroeconomic fundamentals.
  • As a matter of policy, the Indian central bank has usually tried to slow down or smoothen, rather than reverse or prevent, the fall in exchange value of the rupee against the U.S. dollar.
  • The aim of the RBI’s policy is to allow the rupee to find its natural value in the market but without undue volatility or causing unnecessary panic among investors.
• The RBI has been trying to rein in domestic consumer price inflation, which hit a 95-month high of 7.8% in April, by raising rates and tightening liquidity.

Sources:

• Explainer | The free fall of the rupee
• Rupee is falling against US dollar but why?
• RBI may need to tweak its forex strategy, allow rupee to weaken

In News

APAC Sustainability Index 2021 has been recently released.

Findings of the report

• Global property consultant, Knight Frank’s APAC Sustainably Led Cities Index rated 36 cities based on urbanisation pressure, climate risk, carbon emissions and government initiatives.
• Singapore, Sydney, Wellington, Perth, and Melbourne were the top five green-rated cities in commercial real estate in the Asia-Pacific region.
• According to statistics provided by the Climate Bonds Initiative (CBI), APAC issued $126 billion in green bonds in 2021, with China issuing the largest amount, USD 68 billion, exceeding the combined value of the other APAC nations.

Findings Specific to India

• Bengaluru led the sustainability index amongst the top Indian cities and is ranked 14^th in the APAC region.
• Bengaluru is the only Indian city to achieve the Gold standard category. Delhi ranked second amongst the Indian cities (ranked 17th in the APAC region) followed by Hyderabad (ranked 18th in the APAC region) and Mumbai (ranked 20th in the APAC region).

• As of now, India is the sixth-largest country in APAC in terms of the total amount of green bonds issued in 2021.
  • India’s Green Bonds issuance increased 523 percent YoY.
  • Green bond issuances that were negatively impacted by the pandemic in 2020 recovered in 2021.
• Reasons for rising Sustainable Development: New market dynamics have propelled the growth of sustainable development in India.
  • The global commitment to carbon neutrality and Net Zero, firmly focused on creating environmentally friendly premises, has led Indian developers to augment their products to meet the requirements.
  • With more and more occupiers demanding for sustainable, green and well standard buildings, we expect these features to become a universal standard, rather than a novelty, in the foreseeable future.

About the Report

• The 2021 Active Capital Asia-Pacific Report - Rising Capital in Uncertain Times aims to provide an insight into how the real estate market in Asia-Pacific performed historically and how it is predicted to play out in 2022, thereby acting as a guide for investors.
• The report also highlights an important theme – Environmental, Social and Governance (ESG) – for investors that are looking to expand their ESG foothold in their portfolios.

Sources:

• Bengaluru ranked 14th in sustainability index for APAC region:

In News

The first “China-Horn of Africa Peace, Governance and Development Conference” was held in Ethiopia recently.

About the News

• The conference had the participation of foreign Ministries from the countries of the Horn that included Kenya, Djibouti, Ethiopia, Sudan, Somalia, South Sudan, and Uganda.
• This is the first timewhere China aims to play a role in the area of security.

Recent Projects between China and countries from the Horn of Africa:

• China, had asserted its three objectives in Africa in early 2022 namely:controlling the pandemic, implementing a Forum on China-Africa Cooperation (FOCAC) outcomes, and upholding common interests while fighting hegemonic politics.
• In the 2021 forum, the entire region of the Horn participated, where four resolutions were adopted:
  • The Dakar Action Plan:
  • Sino-African Declaration on Climate Change:
  • Declaration of the Eighth Ministerial Conference of FOCAC

India’s Concern over China’s presence:

• Dominance in the Indian Ocean:
  • Djibouti that is situated on the north-western edge of the Indian Ocean, could become another of China’s “string of pearls” of military alliancesand assets ringing India, including Bangladesh, Myanmar and Sri Lanka.
  • China has stepped up activity in the Indian Ocean in India’s sphere of influence, which is of a major concern.
• Control over strategically significant Shipping Routes:
  • This is of a major concern as the Indian Ocean shipping lanes carry about 80% of the world’s oil and one-third of the global bulk cargo.
• Major loan provider and infrastructure Developer:
  • China has been expanding its presence in the Indian Ocean, by building ports and other infrastructure in Sri Lanka, Bangladesh and Pakistan.
• One Belt, One Road (OBOR) Initiative:
  • The Indian Ocean forms a part of China’s OBOR Initiative to build a new Silk Route

Source:

• Explained | China’s interventions in the Horn of Africa
• China aspires for strategic influence in the Horn of Africa

Image source:

• Horn of Africa

On July 1, 2017, Goods and Services Tax (GST) was implemented in India. The idea of moving towards GST was first mooted by the then Union Finance Minister in his Budget speech for 2006-07.

The introduction of the Goods and Services Tax (GST) was a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, GST tries to mitigate ill effects of cascading or double taxation in a major way and pave the way for a common national market. Goods and Services Tax Network (GSTN) has been set up by the Government to provide front end services.

Source:

• Brief History Of GST:
• Is GST helping the Indian economy for the better?

• Context:A centralised pay system called PADMA for the Indian Coast Guard (ICG) has been recently launched by Controller General of Defence Accounts. 
• Centralized Payment Systemsin India are Real Time Gross Settlement (RTGS)and National Electronic Funds Transfer (NEFT) systems, both owned and operated by the Reserve Bank. 
• Pay Roll Automation for Disbursement of Monthly Allowances (PADMA),is an automated platform leveraging latest technology which will provide seamless and timely disbursal of pay and allowances to around 15,000 ICG personnel. 
• PADMA has been developed under theaegis of Defence Accounts Department and will be operated by Pay Accounts Office of the ICG in Noida. 
• Launch of PADMA will strengthen theDigital India concept.  
• Also, it is an‘Atmanirbhar Bharat’ initiative as the entire module has been designed and developed by Indian entrepreneurs assisted by domain experts. 

Source: 

• PADMA, the Centralised Pay System for Indian Coast Guard launched
• Centralised pay system for ICG launched

Image source:

• https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSYjvxIgrvZql1cMvXCTxfrO0R2OoJWSofE6g&usqp=CAU

• Context: All 54 Commonwealth members have recently agreed to voluntarily dedicate a ‘living land’ in their respective countries to future generations, in line with the strategy set for the United Nations Decade on Ecosystem Restoration.

• The Living Lands Charter is a non-binding charter that mandates member countries to safeguard global land resourcesand arrest land degradation while acting against climate change, biodiversity loss and towards sustainable management.
• It helps to encapsulate the combined effortto hold the global average temperature increase to 1.5 degrees Celsius.
• The charter aims to achieve climate goals through a mixture of policy influence,financing, technical assistance, governance and sharing knowledge across nations.
• Alongside, it also aims to support member countries to effectively deliver their commitments under the three Rio conventions that include: UN Convention on Biological Diversity, UN Convention to Combat Desertification (UNCCD) and UN Framework Convention on Climate change.

Source:

• Commonwealth adopts ‘Living Lands Charter’ for future generations
• Commonwealth adopts historic Living Lands Charter
• https://thecommonwealth.org/news/commonwealth-adopts-historic-living-lands-charter

Image source:

• Caribbean leaders declare support for “Living Lands Charter”

• Context: The Sawa Lake has been noted to have gone dry recently due to mismanagement by local investors, government neglect and climate change.
• The Sawa Lake is a biodiverse wetland situated near the city of Samawa, south of the capital Baghdad.

• It is an endorheic basin formed over limestone rock and studded with gypsumformations located near River Euphrates.
• This lake has no inlet or outlet, but it draws water from the Euphrates through a system of joint cracks and fissureswhich transport water to aquifers beneath it.
• It is characterized by arid climate and the water level of the lake fluctuatesduring dry and wet seasons.
• Its saline water allows no plant growth in the lake or on its shores.
• It has some religious significance as it is said to have formed on the day the Prophet Muhammad was born in 570 A.D. 
• It is called as “Iraq’s pearl of the south”.
• In2014, Lake Sawa was named a Ramsar site, an international designation for important wetlands.

Source:

• Iraq’s ‘pearl of the south’ Lake Sawa dry amid water crisis
• Iraq's 'pearl of the south' Lake Sawa dry amid water crisis

Image source:

• Iraq’s ‘pearl of the south’ Lake Sawa dry amid water crisis

• Context: Social media giant Meta and Ministry of Tribal Affairs have recently announced to extend their collaboration to launch the second phase of Going Online As Leaders (GOAL) programme.
• The GOAL programme is a mentorship program to the tribal youth through digital mode.
• It will focus on three core areas including Digital Literacy, Life Skills and Leadership and Entrepreneurship.

• The first phase of the program aimed to upskill andempower 5,000 tribal youths.
• All the mentees will be provided with smartphones and Internet access (for one year) by Facebook.
• GOAL 2.0 will focus on digitally empowering 10 lakh tribal youth and women who constitute 6% of the total population in India.
• The programme will also involve Facebook Live sessions in nine languages by master trainers on topics like anti-scamming education, staying safe online, combating misinformation and being a good digital citizen.

Source:

• Meta, Tribal Affairs Ministry launches second phase of GOAL 2.0 to digitally skill tribal youth
• GOAL (Going Online as Leaders)

Image source:

• GOAL (Going Online as Leaders)

Essence: Author uses 5th anniversary of introduction of GST in India as an opportunity to analyze good and not so good experiences of Indian economy with GST. Article expresses satisfaction on the gradual evolution of GST into widespread acceptance, a sharp contrast to its rocky start. At the same time, the article has also emphasized on the concerns from some states and small companies.

Why should you read this article?

• To understand the evolution of GST overtime.
• To understand problems faced by unregulated companies which is leading to them shutting their businesses and loss of employment.

Source:

• Critics are wrong, GST has strengthened federalism:

Essence: Article discusses India’s status on women’s reproductive rights in comparison with western countries. The MTP Act have issues that need to be resolved, such as a lack of access to registered medical practitioners (RMPs), affordability, and societal stigma that results in unsafe abortions. Both the Surrogacy Act and the MTP Act 2021 still have unresolved issues. The situation in India is far from perfect and we should strive for inclusivity, complete bodily autonomy, and reproductive equity.

Why should you read this article?

• To comprehend India's present position on women's reproductive rights in comparison to other western nations.
• Gaining an understanding of the problems with the MTP and Surrogacy Act in India and potential solutions.

Source:

• On reproductive rights, India’s MTP and Surrogacy Acts don’t go far enough:

Background:

• Being born in a Dalit community in India comes with a baggage of discrimination, poverty and illiteracy.
• Reeta Kaushik, from Gorakhpur, Uttar Pradesh, has fought casteism at every turn and even helped others overcome these problems.

About the initiative of Reeta Kaushik

• Born to a rickshaw puller, she has always been a staunch believer of Dr Bhimrao Ambedkar’s vision that only education can lead to the true emancipation of Dalits.
• She has spent her life battling social norms (even to get basic education), her relatives (who forced her to be a child bride) and casteism at every turn.
• She is the first woman in her family to get a formal education and the founder of Samudayik Kalyan Evam Vikas Sansthan (SKVS), which has reached girls in 112 Gram Panchayats across 126 communities in Kushinagar and Gorakhpur.
• Her initiatives—like promoting mainstream education, providing bridge courses for dropouts and skill training—have impacted 25,026 children and youth in the Musahar, Dalit and Muslim communities.
• Additionally, SKVS has helped develop women leaders, addressed hunger, malnutrition, health and sanitation issues in communities.

Source:

• ‘How I Helped Educate Over 25000 Girls After Being Denied an Education Myself’: