CURRENT AFFAIRS 05-01-2022
Daily Current Affairs – Topics
- The potential virtuous CAPEX expectations
- Pledge to Stop Nuclear Proliferation
- India: jobless rate and risks to employment
- China Builds Bridge across Pangong Lake
- The new Missions in 2022 like Gaganyaan and others
1. The potential virtuous CAPEX expectations
#GS3-Indian Economy
Context
- As we emerge from the epidemic, economists foresee a potential virtuous capital investments (capex) cycle to kick in globally.
In depth information
Analysts believe the capital investment cycle is set to begin for a variety of reasons.
- Corporates are less leveraged today than they were in 2008.
- More than Rs 1.5 trillion in debt was redeemed by Indian corporations.
- Companies are also more confident in the availability of long-term fiscal and monetary support.
- Increased savings: According to a UBS analysis, households had substantial excess funds built up during Covid – $1.7 trillion in the US and around $300 billion in India.
- Finally, corporations have a significant cash pile — S&P 500 companies’ cash has increased from $1 trillion before the pandemic to $1.5 trillion presently.
Why is India’s capex wave so difficult?
- Falling fixed capital formation rate: India’s fixed capital formation rate has steadily declined from 36% of GDP in 2008 to 26% in 2020.
- The capex growth rate has declined from 7% in 2008 to roughly 2% in 2020 for a group of 718 publicly traded businesses for which data is constantly available since 2005.
- Low return on invested capital: The return on invested capital in FY21 is still low, at 2-3%, compared to returns of 16-18% in 2005-08.
- Land acquisition is difficult, labour regulations have been reluctant to alter, and reform uncertainty has resurfaced with the repeal of farm reform measures.
- Current data is discouraging: According to CMIE data, new projects worth Rs 2.72 lakh crore were launched in the quarter ending in June 2021. For the September 2021 quarter, this dropped to Rs 2.22 lakh crore.
- This is significantly less than the average of Rs 4 lakh crore for new project announcements in 2018 and 2019.
- New projects are also concentrated in fewer industries (power and technology), with the top three accounting for 44% of all new projects declared.
- Low capacity utilisation: At the same time, corporate India’s capacity utilisation is at an all-time low.
- According to the RBI’s latest OBICUS statistics, utilisation levels fell from 83 percent in 2010, when capex was at an all-time high, to 70 percent right before the pandemic, and then to 60 percent in June 2021.
- Capex is financed via new debt or equity offerings, as well as cash on hand. Debt is being repaid by large corporations.
Conclusion
- It’s too early in the cycle to make any confident predictions, but we need additional data to forecast the capex cycle.
2. Pledge to Stop Nuclear Proliferation
#GS2- International Treaties & Agreements
Context
- China, Russia, the United States, the United Kingdom, and France recently committed to halt the spread of nuclear weapons, putting aside mounting West-East tensions to reiterate the objective of a nuclear-free world.
- Because to COVID-19, the statement made following the NPT review was postponed.
In depth information
- The Pledge: We must stop such weapons from spreading further. A nuclear war is unwinnable and should never be conducted.
- As our primary obligations, we must avert nuclear war between nuclear-weapon states and reduce strategic threats.
- For as long as nuclear weapons exist, they should be used to defend the country, discourage aggression, and avert conflict.
- They intend to retain and strengthen their national safeguards against the unintentional or unauthorised use of nuclear weapons.
China’s Position:
- It fueled fears that tensions with the US, particularly over Taiwan, could escalate to conflict.
- China believes Taiwan to be part of its territory and has threatened to annex it in the future, if necessary by force.
Russia’s Position:
- Russia praised the atomic powers’ declaration and expressed hope that it would reduce global tensions.
The purpose of the transfer and the need for it
- At a time when Russia, China, and the West are increasingly at odds, this united stance on a major problem of global security has become a rare.
- With Russia threatening to attack Ukraine and China declaring its willingness to use military force against Taiwan, the situation is becoming increasingly tense.
- The presence of 13,000 nuclear weapons across the world poses a growing threat, with the likelihood of their use being higher than at any time since the Cold War.
- The united statement symbolises a renewed determination to avoid a nuclear disaster in the event of a conflict.
- In 1985, Soviet leader Mikhail Gorbachev and then-US president Ronald Reagan proposed that any nuclear war would be unwinnable, but this was the first time it had been raised by these five powers. It would “help increase mutual trust and replace competition among major powers with coordination and cooperation.”
- It will aid in the reduction of international tensions.
Arguments in favour of avoiding the spread of nuclear weapons
- Nuclear bombs cause catastrophic damage and have long-term radioactive repercussions that affect future generations.
- Humanitarian:
- The character of destruction resulting from the use of nuclear weapons is incompatible with humanity’s spirit.
- Nuclear weapons make no distinction between armed personnel and civilians. Even in times of conflict, unleashing nuclear weapons will result in a large-scale loss of innocent lives and non-combatants, which is ethically unacceptable.
- Economical:
- While nuclear arsenals have reduced research costs, the cost of the system as a whole, as well as its maintenance, might be prohibitively expensive.
- Environmental:
- The radioactive fallout from nuclear power plants is harmful to the environment and has a global impact.
- Proliferation is the possibility that nuclear-weapons-wielding states may build their stockpiles or that new nuclear-weapons-wielding states will emerge to match their adversaries.
- Terrorist threat:
- Terrorists or some renegade elements could utilise large stocks of nuclear weapons to force governments to cave in to their demands.
- Employ in warfare: It’s possible that some countries will use nuclear weapons as a form of preemptive deterrence during times of rising bilateral tensions. This might set off a chain reaction, with the other country retaliating.
It’s associated difficulties
- Security imperatives:
- Nations have a greater proclivity to link nuclear power to developing perceived threats and hence consider their own security imperatives.
- International efforts:
- There has been little progress toward universal nuclear disarmament.
- Nuclear deterrence:
- The most important argument is deterrence. Nuclear weapons supporters argue that they are effective because they dissuade the opponent from making large-scale moves for fear of Mutually Assured Destruction (MAD) if the situation becomes nuclear.
- Scientific and technological advancements:
- Even if complete disarmament were achieved, knowledge of explosive nuclear weapons would continue to exist, and new weapons may be developed at any time.
- Dismantling the Arsenal:
- Dismantling tens of thousands of weapons, accounting for every fissile material and placing it under safeguards, verifying each other’s cuts, and decommissioning dormant military nuclear sites, among other things, would put a strain on scientific and engineering capabilities.
India’s position
- India has always been a proponent of international nuclear disarmament and nonproliferation initiatives.
- In 1988, India presented a detailed proposal to the UN General Assembly Special Session on Disarmament for “full and universal nuclear disarmament.”
- India, as part of the “Group of 21,” proposed a Programme of Action to the Conference on Disarmament in 1996, advocating for the “phased elimination of nuclear weapons.”
- India reaffirmed its support for a Nuclear Weapons Convention that calls for the total elimination of all nuclear weapons in a verifiable and non-discriminatory manner.
- India’s refusal to sign the 1968 “discriminatory” nuclear non-proliferation treaty (NPT) and subsequent conduct of a “peaceful nuclear test” cast doubt on its credibility as a serious proponent of nuclear disarmament. However, India always claims complete disarmament rather than partial disarmament as defined by the NPT.
Next Steps
- For as long as nuclear weapons exist, they should be used to defend the country, discourage aggression, and avert conflict.
- The international community must collaborate with all states to establish a more secure environment for disarmament progress.
- Countries should preserve and strengthen their national safeguards against the unintentional or unauthorised use of nuclear weapons.
- India must continue to fight the current discriminatory non-proliferation order and work toward a more rules-based, legally-backed, and consensus-driven nuclear disarmament regime.
- In addition, India must maintain its status as a responsible nuclear stakeholder.
- India’s nuclear weapons have always been and will always be weapons of last resort, serving only one purpose: deterring its rivals from using nuclear weapons first.
- Simultaneously, the applications and opportunities for peaceful use of nuclear technology must be emphasised.
3. India: jobless rate and risks to employment
#GS3- Indian Economy, Employment issues
Context
- According to data from the Centre for Monitoring Indian Economy, India’s jobless rate reached a four-month high of 7.9%.
In depth information
The most recent fad
- Inflationary trend: Even before economic activity was impacted by the new Covid-19 limits implemented in several jurisdictions, the figures reveal a considerable downward trend.
The most recent unemployment rate
- The unemployment rate has risen to 7.9%. It was 7% the previous year.
- The unemployment rate in cities increased to 9.3% from 8.2%.
- The unemployment rate in rural areas has risen to 7.3 percent, up from 6.4 percent.
- The labour participation rate (LPR) in India is as follows: This has been declining, with the percentage dropping from over 46% in 2016 to just over 40% in 2021.
- The LPR is a measure of how many employable people are working or looking for work in the economy.
- This means that 60% of the employable population is not in the workforce, is not interested in joining, and has dropped out of the labour market.
- In 2020, India’s LPR will be the lowest in South Asia. While Pakistan, Sri Lanka, and Bangladesh went by, India did even worse than Afghanistan, despite the fact that the difference was minor.
- According to the World Inequality Report 2022, India is a “poor and severely unequal country with an affluent elite,” with the lowest 50% of the population owning only 13% of national income in 2021.
Issues
- Impact on jobs in the organised sector:
- Because urban employment is a proxy for higher-paying jobs, a drop in these numbers suggests an impact on higher-paying positions in the organised sector.
- Low consumption levels:
- With Covid-19 cases on the rise under the threat posed by the Omicron version, many governments have imposed further restrictions, affecting economic activity and consumption levels.
- Unless the government can course-correct and create more jobs, none of this bodes good for the economy or the $5-trillion aim established by the government.
- Job security: Indians, on the other hand, are concerned about unemployment, with job security being at the top of their list of concerns.
- The impact of unemployment can be felt by both workers and the national economy, resulting in a ripple effect.
- Unemployment generates financial difficulty for workers, which has an impact on their families, relationships, and communities. When this happens, consumer spending, which is one of an economy’s most important drivers of growth, falls, potentially leading to a recession or even depression if not handled.
a path forward
- India’s demographic dividend was once hailed as the country’s greatest strength.
- Positive feedback: Around 70% of urban Indians say the country is heading in the right way as well.
- A shift in the investing pattern:
- In the early stages of the planning process, a pattern of investment allocation with a high capital-labor ratio was prioritised. As a result, a shift in focus to mass consumer goods industries would result in more jobs being created to absorb the unemployed labour population.
- Encouragement of small businesses over large businesses:
- The employment and output objectives can both be met if more investment is allocated to small businesses rather than large businesses.
- Underemployment in rural areas:
- The Rural Work Programme must be organised. The failure of the Rural Works Program to provide extra work to millions of landless labourers and small and marginal farmers highlights the rural sector’s low priority.
4. China Builds Bridge across Pangong Lake
#GS2-India and its Neighbourhood
Context
- China is currently developing a new bridge on Pangong Tso, which will provide an extra axis for faster force deployment between the north and south banks of the lake, as well as closer to the LAC (Line of Actual Control).
In depth information
- Previously, China’s new land border law took effect on January 1, 2022, at a time when the border conflict in eastern Ladakh remains unresolved and China has lately renamed several locations in Arunachal Pradesh as part of its claim on the Indian state.
- India has been strengthening its border infrastructure as well. The Border Roads Organisation completed about 100 projects in border locations in 2021, the majority of which were near the border with China.
Background:
- Since the military standoff began in May 2020, India and China have worked to repair existing infrastructure as well as construct new roads, bridges, and landing strips along the whole border.
- India outmanoeuvred China to seize the hitherto unoccupied heights of the Kailash Range on the south bank of Pangong Tso lake by the end of August 2020.
- Indian troops took up positions on the peaks nearby, including Magar Hill, Gurung Hill, Rezang La, and Rechin La, allowing them to control the vital Spanggur Gap — which could be used to launch an offensive, as China did in 1962 — as well as a view of the PLA garrison at Moldo.
- In the Fingers area on the north bank, Indian troops had also positioned themselves above the Chinese troops. Shots were fired by both sides during the scramble for the heights, a first in over four decades.
- Throughout the severe winter months, troops from both countries remained on these peaks. One of the key issues that drove China to negotiate a retreat was the magnitude of these locations.
- Both countries agreed to withdraw from the lake’s north bank and from the Kailash Range in the Chushul sub-sector south of Pangong Tso.
Concerning the Pangong Lake Bridge
- The bridge is being built more than 20 kilometres east of Finger 8 on the north bank of the lake — India claims that Finger 8 signifies the LAC.
- The Finger Area, a group of eight cliffs projecting out of the Sirijap mountain, towers over the lake (on the northern bank of Lake).
- The endorheic lake Pangong Tso is 135 kilometres long, with China controlling more than two-thirds of it.
- After the standoff began, various friction spots arose, including the north and south banks of the lake.
- The area had experienced enormous mobilisation before India and China pulled soldiers back from the north and south banks in February 2021, with the two sides even deploying tanks only a few hundred metres apart in some spots.
- The bridge is located in Rutog County, close east of Khurnak Fort, where the PLA (People’s Liberation Army) has frontier bases.
- Khurnak Fort, which was once part of India, has been under Chinese rule since 1958.
- The LAC lies a long way west from Khurnak Fort, with India claiming it at Finger 8 and China claiming it at Finger 4.
Importance for China
- China’s new bridge will enable it to mobilise its forces in this area more quickly, in the hopes of avoiding a repeat of what happened in 2020.
- Infrastructure development: Road widening, bridge construction, new bases, airstrips, advance landing pads, and other projects are taking place across the three sectors of the India-China border, not just in eastern Ladakh.
- The Indian Army would have to factor this into its operational plans now that the Bridge is in Chinese control.
- China has approved a new border law that asks for the country’s border defence to be strengthened, as well as the development of towns and infrastructure near the borders, as well as the conditions under which emergency measures can be enforced in border areas.
- On its map, China renamed 15 locations in Arunachal Pradesh. Despite the fact that the law was not written specifically for India, it has enormous consequences now that the border issue with China has erupted.
Importance for India
- Improving its infrastructure:
- India has been working to improve its border infrastructure as well.
- The Border Roads Organization has completed over 100 projects in border areas, the most of which are near China’s border.
- India is also increasing its monitoring along the whole 3488-kilometer border, as well as constructing additional airstrips and landing grounds.
- India outmanoeuvred China to acquire previously unoccupied heights of the Kailash Range on the south bank of the lake by the end of 2020.
- India is accelerating development on the Nimu-Padam-Darcha axis, which will facilitate troop movement to Ladakh from other regions of the nation.
Next Steps
- Engagement: The militaries of the two countries have been in communication at various levels in order to address the situation.
- A whole-of-nation solution is more appropriate for this challenge than a simply military solution.
5. The new Missions in 2022 like Gaganyaan and others
#GS3- S&T
Context
- Following a relatively quiet year in terms of satellite launches in 2021, the Indian Space Research Organization (ISRO) is preparing for a slew of missions in 2022, including the launch of Gaganyaan’s maiden unmanned mission.
Gaganyaan Mission
- Gaganyaan is a crewed orbital spacecraft that will serve as the foundation for India’s human spaceflight programme (IHSP).
- ISRO launched the IHSP in 2007 with the goal of developing the technology needed to launch crewed orbital spacecraft into low Earth orbit.
- Gaganyaan 1, the first uncrewed mission, is set to launch on a GSLV Mark III rocket no sooner than June 2022.
- ISRO had been testing related technologies for the project, including a Crew Module Atmospheric Re-entry Experiment and a Pad Abort Test.
- After Russia, the United States, and China, India will become the fourth nation to conduct independent human spaceflight if the project is completed in the meantime.
The project’s details
- The spaceship will be able to carry three people, and an updated version will be able to rendezvous and dock with other spacecraft.
- This capsule will circle the Earth at 400 km altitude for up to seven days in its first crewed mission, with a two or three-person crew on board.
- In 2014, this crew module built by Hindustan Aeronautics Limited (HAL) had its first unmanned testing flight.
- Critical human-centric systems and technology including as space-grade food, crew healthcare, radiation measurement and protection, parachutes for the safe recovery of the crew module, and a fire suppression system will be supported by DRDO.
Other missions this year
- Earth Observation Satellites: EOS-4 and EOS-6
- Flights for Crew Escape System of Gaganyaan
- Chandrayaan-03
- Aditya Ll
- XpoSat
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