Exam View: India and the US; Challenges of the “Old Washington Consensus”; New challenges of America’s economic policy; The five-fold policy framework solution of the US.

Context: In the geoeconomics domain, there is growing convergence of interests between India and the US. A model less driven by market fundamentalism presents an opportunity for India.

Background: India and the US

• India and the US are to step-up their engagement
  • At the G7 summit in Hiroshima
  • At the Quad summit in Canberra, and
  • At bilateral visits to Washington and Paris in June and July
• The US National Security Adviser outlined a set of policy initiatives to pursue the geoeconomics contest with China.
  • The security czar talking about US economic policy is interesting because traditionally, the worlds of economics and geopolitics have tended to be exclusive.
  • Washington’s effort to integrate the two is driven by China’s massive and simultaneous challenges on both the geopolitical and geo-economics fronts.
• Some are dubbing these initiatives of the US as efforts to build a “New Washington Consensus”. Several challenges have arisen from the old Washington Consensus.

Challenges of the “Old Washington Consensus”

• The conviction that the “markets know best” approach.
  • It has led to the hollowing out of the US industrial base.
  • The US is not dismissing the importance of the markets but argues that in the name of oversimplified market efficiency, entire supply chains of strategic goods, along with the industries and jobs that made them, moved overseas.
• The notion that “all growth was good growth”.
  • This led to the privileging of some sectors like finance while other essential sectors, like semiconductors and infrastructure, atrophied.
• The old assumption “that economic integration would make nations more responsible and open, and that the global order would be more peaceful and cooperative”.
  • China’s admission into the WTO in 2001 was based on bringing countries into the rules-based order.
  • There have been several problems triggered by the integration of a “large non-market economy” like China into the WTO.
    • Economic integration didn’t stop China from expanding its military ambitions in the region.

New challenges of America’s economic policy

• The urgent need for a “just and efficient transition” to green economic growth and
• The political imperative of reducing economic inequality at home that has undermined American democracy.

The five-fold policy framework solution of the US

• Return to industrial policy.
  • It was the hallmark of US economic development historically but dismissed by economic neoliberalism in the last few decades.
  • Over the last couple of years, the US has restored the role of the state in pumping investments into semiconductor production and promoting the development and deployment of green technologies.
• Develop a joint effort with US allies and partners, including India.
  • The goal is a strong, resilient, and leading-edge techno-industrial base that the United States and its like-minded partners, established and emerging economies alike, can invest in and rely upon together.
• Look beyond traditional trade policies.
  • There have been criticisms that the US-proposed Indo-Pacific Economic Framework is not a free trade agreement.
  • The US does not want to merely focus on tariff reduction but also on developing diversified and resilient supply chains, promoting clean energy transition, and ensuring trust in the massive infrastructure that supports the rapidly expanding global digital economy.
• Mobilise trillions in investment into emerging economies.
  • This involves offering an alternative to China’s Belt and Road Initiative, addressing the global debt crisis, and reforming multilateral development banks.
• Develop a new set of export controls on sensitive technology that will limit national security threats from China and other rivals.

The common themes in the economic strategies are many. These include China’s geoeconomics challenge, the dangers of dogmatic commitment to globalization, the need for industrial policy to develop national manufacturing, technological cooperation among like-minded partners, building resilient supply chains, addressing the economic concerns of the Global South, and reforming the global financial institutions.

Source:

https://indianexpress.com/article/opinion/columns/c-raja-mohan-delhi-washington-consensus-g7-summit-modi-hiroshima-biden-8613222/

In News: Recently, United Nations marks 75 years since displacement of 700,000 Palestinians

About

Palestinians were displaced because of the establishment of the state of Israel in 1948. The displacement occurred during the Arab-Israeli war that followed Israel’s declaration of independence. It is also known as Nakba.

Historical Background

• Zionist movement: The late 19th century saw the emergence of the Zionist movement, which aimed to establish a Jewish homeland in Palestine. Zionist leaders sought to address the historical persecution of Jews in Europe and promote the idea of a Jewish national identity.
• Balfour Declaration: In 1917, during World War I, the British government issued the Balfour Declaration, expressing support for the establishment of a "national home for the Jewish people" in Palestine. This declaration fuelled Zionist aspirations, while raising concerns among the Arab population regarding their own national aspirations.
• United Nations Partition Plan (1947): In 1947 United Nations proposed a partition plan to divide Palestine into separate Jewish and Arab states, with Jerusalem placed under international administration. The plan was accepted by Jewish leaders but rejected by Arab leaders, who saw it as unfair and a violation of their rights to self-determination.
• Israeli Independence and Arab-Israeli War (1948-1949): In 1948 Jewish leaders declared the establishment of the State of Israel. Arab states, including Egypt, Jordan, Syria, Lebanon, and Iraq, opposed the establishment of Israel and launched a military intervention. This conflict, known as the Arab-Israeli War or War of Independence, resulted in the displacement of hundreds of thousands of Palestinians, both during the fighting and in subsequent years.
• Six-Day War and Occupied Territories (1967): In 1967, tensions between Israel and its Arab neighbours escalated, leading to the Six-Day War. Israel achieved a swift and decisive victory, capturing the Sinai Peninsula, the Gaza Strip, the West Bank (including East Jerusalem), and the Golan Heights. This war marked a significant turning point in the conflict, as Israel's control over these territories and the subsequent occupation of Palestinian lands further complicated the issue.
• Oslo Accords and Peace Process (1990s): In the 1990s, Israeli and Palestinian leaders engaged in a series of negotiations known as the Oslo Accords, aimed at reaching a comprehensive peace agreement. These agreements established the Palestinian Authority and led to limited self-governance for Palestinians in certain areas of the West Bank and Gaza Strip. However, the peace process faced numerous obstacles and did not result in a final resolution of the conflict.

The status of Palestinian refugees remains a significant and unresolved issue. According to the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), there are approximately 6 million registered Palestinian refugees. Many of them continue to live in refugee camps in the West Bank, Gaza Strip, Jordan, Lebanon, and Syria. At present, Israel occupies the West Bank and East Jerusalem, with the construction of Israeli settlements and separation barriers impacting Palestinian territories.

https://www.aljazeera.com/news/2023/5/15/the-nakba-five-palestinian-towns-massacred-75-years-ago

In News: The US has proposed that advance notices of tariff changes and export restrictions be considered by the 14 member-nations of the Indo-Pacific Economic Framework for Prosperity (IPEF).

About the IPEF:

• IPEF is a U.S.-led economic grouping comprising 14 partners which represent 40% of global GDP and 28% of global goods and services trade. It includes India, Australia, Indonesia, Japan, Korea etc.
• IPEF is based on 4 pillars namely Trade; Supply Chains; Clean Energy, Decarbonization, and Infrastructure; and Tax and Anti-Corruption.
• Under the supply chain tract, the US has proposed that IPEF members should give advance notices before changing their import tariff or putting restrictions on exports.

Pros and Cons of advance notice:

• Pros:
  • Eliminates surprises, gives time for adjustment and minimises losses of trading partners
  • Prevent disruption of global macroeconomic indicators due to export restrictions as witnessed during Covid and Ukraine War.
• Cons:
  • Disruptions and opportunities for extracting undue gains will emerge.
  • It might also expose the country putting tariffs and restrictions to pressure from fellow members of the IPEF.
  • It limits the powers of member-countries to pursue an independent tariff policy to manage local shortages or gluts.

India’s concern:

• Taxation and regulation of trade is a sovereign right and every country decides independently how its taxation policy is conducted.
• Such an exercise could amount to a violation of the WTO rules as well as a possible loss of policy elbowroom to the government.

Source: https://www.financialexpress.com/economy/explainer-ipefs-advance-tariff-notice-proposal/3089070/

In News: Cybercriminals have exploited vulnerabilities of Aadhaar-enabled Payment System (AePS), by using silicone thumbs to operate biometric POS devices and biometric ATMs to drain users’ bank accounts.

About AePS:

• Aadhaar-enabled Payment Services (AePS) is a bank-led model which allows online financial transactions at Point-of-Sale (PoS) and Micro ATMs through the business correspondent of any bank using Aadhaar authentication.
• It was taken up by the National Payments Corporation of India (NPCI), a joint initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
• The model removes the need for OTPs, bank account details, and other financial details. It allows fund transfers using only bank name, Aadhaar number, & fingerprint captured during Aadhaar enrolment.

Vulnerabilities of AePS:

• AePS does not require any activation, with the only requirement being that the user’s bank account should be linked with their Aadhaar number.
• Data breaches in Aadhaar have been reported in 2018, 2019, and 2022, but UIDAI has denied any such breach. However Aadhaar numbers are readily available in the form of photocopies, and soft copies, which are targeted by criminals.
• Lack of Transaction Notifications to the AePS victims from banks regarding unauthorised transactions

Measures to prevent AePS fraud:

• Lock the Aadhaar information using the UIDAI website or mobile app.
• UIDAI has also implemented a new two-factor authentication mechanism that uses a machine-learning-based security system, combining finger minutiae and finger image capture to check the liveness of a fingerprint.
• Awareness and education programmes for safe and secure usage of Aadhaar details.

Source:

https://www.thehindu.com/sci-tech/technology/explained-gaps-aadhaar-enabled-payment-system-aeps-abused-cybercriminals/article66842275.ece

In News: The government has decided to halt its plan to introduce a cross-border insolvency regime that would have integrated India with several other markets that have adopted a harmonised debt resolution regime for companies with assets spread across multiple markets.

About Cross Border Insolvency:

• Cross-border insolvency typically occurs when a debtor has operations or creditors in multiple countries, and there is a need for coordination and cooperation among different courts and stakeholders to achieve an efficient and fair resolution.
• United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, 1997, is a widely accepted legal framework to deal with cross-border insolvency issues.
• Benefits of Cross-border insolvency regime:
  • It would enable creditors in India to pursue overseas assets of Indian debtors as part of the debt resolution process.
  • It will help foreign branches of Indian banks to recover their dues in India.
  • It will also bring overseas assets of a domestic corporate debtor into consideration of insolvency resolution in India and will avoid delays in resolution of stressed assets.
• India halted the adoption of cross-border insolvency, based on the fact that only around 50 countries have adopted the UN model of cross-border insolvency, and many of them have stringent restrictions in place.
• Government’s current priorities are:
  • Making larger corporations eligible for an informal debt resolution scheme currently available only to small businesses.
  • New regime for handling insolvency of group companies.
  • Special provisions for the real estate sector.
  • Reducing delays in the admission of cases and in approving rescue plans
  • Checking inappropriate transactions by the management of a defaulting company during its period of distress.

Source:

https://www.livemint.com/news/india/foreign-lenders-of-indian-businesses-face-longer-wait-for-cross-border-insolvency-regime-as-government-prioritises-domestic-debt-resolution-11684087440089.html

In News: New Drugs Donanemab and Lecanemab shows promising results for Alzheimer's treatment.

About Alzheimer disease:

• Alzheimer's disease is a progressive neurodegenerative disorder which in most common form is known as dementia affecting memory, thinking, and behavior, leading to a decline in cognitive abilities.
• Its symptoms include memory loss, confusion, difficulty in problem-solving, personality changes, and impaired judgment.
• Although the exact cause of Alzheimer's disease is unknown, but age, genetics, and lifestyle factors are believed to contribute.
• It typically develops in older adults with Amyloid plaques and neurofibrillary tangles in the brain being the characteristic hallmarks of the disease.
• The disease progresses in stages, starting with mild memory loss and gradually worsening over time.
• There is currently no cure for Alzheimer's disease, but treatments aim to manage symptoms and slow progression.
• Supportive care, including cognitive stimulation, therapy, and medication, can help improve quality of life for individuals with Alzheimer's.
• It is in this regard, trials results of two drugs viz., Donanemab and Lecanemab have demonstrated a promising result of 27% decrease in cognitive decline which will help to slow down the progression of disease.

https://indianexpress.com/article/explained/explained-health/new-alzheimer-drugs-donanemab-lecanemab-comparison-8596341/

In News: Understanding the Transformer used in the Machine Learning model that powers ChatGPT

About Transformers in Machine Learning:

• Transformers are a type of machine learning model used for various tasks, such as natural language processing and computer vision e.g., ChatGPT.
• They were introduced in a 2017 paper titled "Attention Is All You Need" by Google researchers.
• They revolutionized machine learning by replacing hand-crafted features with a self-learned feature
• The key component of transformers is the attention mechanism, which allows the model to focus on relevant parts of the input which helps them to excel in tasks like machine translation, text summarization, image classification, and more.
• Transformers consist of an encoder and a decoder, with the encoder converting the input into a numerical representation and the decoder generating the output.
• Transformers can handle long sequences more effectively than previous models, making them suitable for tasks requiring context understanding.
• Large-scale transformer models, known as LLMs (large language models), have been developed with billions or trillions of parameters.
• Despite their successes, evaluating and ensuring the robustness of transformer models are ongoing research areas.
• In the aftermath of AI boom, factors such as ethical considerations, such as privacy and bias, need to be addressed when deploying transformer models.
• Overall, Transformers holds significant potential for positive impacts in various domains, including healthcare, education, and agriculture.

https://www.thehindu.com/sci-tech/science/transformer-machine-learning-model-chatgpt-explained/article66829325.ece

In News: Experts deliberate on idea of land reclamation in the context of rising sea levels.

About Land Reclamation:

• Land reclamation is the process of creating new land by filling or draining areas of water, typically in coastal regions.
• It has been practiced for centuries to control flooding, expand agricultural land, and create space for urban development and industries.
• Methods of Land reclamation includes:
  • Traditional methods which involves building dikes, diverting streams, and depositing soil and stone to gradually raise the land above sea level.
  • Hydraulic reclamation is another method where dredged soil mixed with water is used to fill the reclamation site.
• In recent years, land reclamation has become a global phenomenon, particularly in rapidly growing urban centers in East Asia, the Middle East, and West Africa.
• Major reclamation projects now involve constructing offshore concrete barrier walls and filling them with sand, earth, clay, or rock.
• China leads the world in land reclamation, with cities like Shanghai, Singapore, and Incheon reclaiming vast areas for development.
• Reclaimed land is often used for luxury residential, commercial, and industrial purposes to cater to the growing urbanization and globalized economy.
• However, land reclamation projects face environmental challenges and risks, including the threat of rising sea levels, storm surges, and land subsidence.
• Many reclaimed areas are at high risk of flooding, especially in low-lying coastal regions, and may not be adequately prepared for future sea level rise.
• The environmental impact of land reclamation includes the destruction of coastal habitats like marshes, swamps, and mangrove forests.
• Reclamation projects often rely on sand, which can lead to the depletion of marine and river ecosystems when extracted in large quantities.
• The cost, engineering challenges, and long-term maintenance required for land reclamation projects raise questions about their economic, social, and ecological sustainability.
• Overall, there is a need to balance between development, environmental conservation, and the well-being of coastal communities before evaluating the merits of land reclamation.

https://indianexpress.com/article/explained/explained-climate/sea-levels-rise-land-reclamation-8610074/

Why in news? Recently, Minister of Defence said that concept of non-kinetic warfare has highlighted need for advanced technology in the defence sector.

About:

• Non-kinetic warfare generally refers to action against an adversary without a direct conventional military action.
• It comprises possibilities such as information warfare, cyber warfare, psychological operations, electromagnetic offensives and cryptographic warfare.
• Cutting-edge technologies and defence research are closely linked to each other.

https://indianexpress.com/article/india/defence-minister-rajnath-singh-warfare-advanced-technology-8610918/

Why in news? According to a New Study, “Thawing Permafrost poses an environmental threat to thousands of sites with legacy industrial contamination”, thawing of Permafrost may result in the spread of toxic substances in the Arctic Region.

About:

• Permafrost is essentially any ground that stays frozen — 0 degree Celsius or lower — for at least two years
• These permanently frozen grounds are often found in Arctic regions such as Greenland, Alaska (the United States), Canada, Russia and Eastern Europe.
• According to the National Aeronautics and Space Administration (NASA), permafrost is composed of “a combination of soil, rocks and sand that are held together by ice.
• The soil and ice in permafrost stay frozen all year long.
• However, although the ground remains perennially frozen, permafrost regions aren’t always covered with snow.

https://indianexpress.com/article/explained/explained-climate/thawing-permafrost-cause-industrial-pollution-arctic-new-study-says-8610772/

Why in news? Recently, The Union government has announced that it has prepared a Model Prisons Act to replace the current 130-year-old law i.e., Prisons Act, 1894.

About:

• In India, prisons and the ‘persons detained therein’ are a state subject.
• The Prisons Act 1894 mainly focuses on keeping the criminals in custody and enforcement of discipline and order in Prisons. There is no provision for reform and rehabilitation of prisoners in this Act.

Model Prisons Act 2023:

• It is expected to serve as a guiding document for states for adoption in their jurisdiction. This is done in order to shift the focus of incarceration from retributive deterrence to reform and rehabilitation.
• Salient Features of the Model Prison Act 2023:
  • Provisions of punishment for prisoners and jail staff for use of prohibited items such as mobile phones in jails.
  • Establishment and management of high security jails, open jail (open and semi-open).
  • Provisions for protecting society from the criminal activities of hardened criminals and habitual offenders.
  • Providing legal aid to prisoners, parole, furlough and premature release to incentivize good conduct.
  • Security assessment and segregation of prisoners, individual sentence planning; grievance redressal, prison development board, attitudinal change towards prisoners and provision of separate accommodation for women prisoners, transgender, etc.
  • There are provisions for use of technology in prison administration with a view to bring transparency in prison administration, provision for videoconferencing with courts, scientific and technological interventions in prisons, etc.

https://indianexpress.com/article/india/with-focus-on-rehabilitation-centre-prepares-new-prisons-act-to-replace-pre-independence-law-8606522/

Why in news? Recently, Bangladesh has decided to withdraw extra security provided to top diplomats from India, the United States, the United Kingdom, and Saudi Arabia, deeming it discriminatory and unnecessary due to the country's well-controlled law and order situation.

About:

• The Convention was adopted on 14th April 1961 by the United Nations Conference on Diplomatic Intercourse and Immunities held in Vienna, Austria.
• India has ratified the convention.
• It entered into force on April 24, 1964, and is nearly universally ratified, with Palau and South Sudan being the exceptions.
• This international treaty establishes the framework for diplomatic relations between independent countries.
• The convention grants diplomatic agents and missions’ various privileges and immunities to ensure their effective performance and protection from undue interference by the host state.
• It makes provision for withdrawal of a mission – which may take place on grounds of economic or physical security – and for breach of diplomatic relations which may occur in response to abuse of immunity or severe deterioration in relations between sending and receiving States.

More Information:

• Article 22 of the convention emphasizes the inviolability of the mission premises, with the receiving state having the duty to protect them against any intrusion or damage.
• Furthermore, Article 29 highlights the inviolability of the person of a diplomatic agent, with the receiving state being obligated to treat them with respect and prevent any attack on their person, freedom, or dignity.
• The convention also grants diplomatic agents’ immunity from criminal jurisdiction.
• However, it also mandates that diplomatic agents respect the laws and regulations of the receiving state and refrain from interfering in its internal affairs.
• These provisions ensure the security and functioning of diplomatic missions and personnel.

https://theprint.in/world/bangladesh-withdraws-extra-security-protection-for-foreign-envoys/1576989/

Why in news? Recently, the Serum Institute of India and Panacea Biotec have applied to the ICMR’s call for Expression of Interest for collaborative Phase-III clinical trials for an India's first dengue vaccine.

About:

• Phase-III trials are conducted to evaluate the efficacy, safety, and immunogenicity of the tetravalent dengue vaccine candidate developed by Indian manufacturers.

Dengue

• Dengue is a mosquito-borne tropical disease caused by the dengue virus (Genus Flavivirus), transmitted by several species of female mosquito within the genus Aedes, principally Aedes aegypti.
• This mosquito also transmits chikungunya, yellow fever and Zika infection.
• Dengue virus disease poses a substantial health burden globally, with India reporting 2 to 2.5 lakh cases annually.
• The World Health Organization (WHO) has recognized dengue as one of the top ten global health threats.
• Presently, there is no specific treatment for dengue, underscoring the urgent need for effective vaccines.

https://www.thehindu.com/news/national/dengue-vaccine-india-moves-closer-to-getting-its-first-indigenous-vaccine/article66857827.ece

Why in news? Recently, On the occasion of Sikkim's Statehood Day, Prime Minister extended his greetings to the people of Sikkim.

About:

• Sikkim is a state located in the northeastern part of India.
• Sikkim has gained international recognition for being the first fully organic state in India.
• Sikkim is bordered by the Tibet Autonomous Region of China to the north and northeast, by Bhutan to the southeast, by the Indian state of West Bengal to the south, and by Nepal to the west.
• Mount Kanchenjunga, India’s highest peak and the world’s third highest mountain lies in Sikkim.
• The Kanchenjunga National Park (established in 1977), near the peak is among the largest of India’s high-elevation conservation areas.
  • This park was designated a World Heritage Site in 2016 under the ‘mixed’ category (sites containing elements of both natural and cultural significance).
• Sikkim is drained by the Teesta River and its tributaries such as the Rangit, Lhonak, Talung and Lachung.
  • Teesta river is a tributary of the Brahmaputra River.
• Major communities: Nepalis, Bhutias, Lepchas, and Limbus.

Sikkim's Statehood Day

• It is celebrated annually on May 16; this day marks the acknowledgment of Sikkim's integration with India and it was established as the 22nd state of the country in 1975 by the 36th Constitutional Amendment Act.

https://pib.gov.in/PressReleseDetailm.aspx?PRID=1924546