CURRENT AFFAIRS
TOPICS
Is the ban on wheat exports good policy?
GS III: issues of buffer stocks and food security
Russia delivers more efficient nuclear fuel for Kudankulam
GS III: Infrastructure: Energy
Fitch upgrades India’s outlook to stable citing ‘rapid’ recovery
GS III: Indian economy and development
Pakistan hopes for relief on FATF sanctions
GS II: global groupings and agreements involving India
Is the ban on wheat exports good policy?
Context:
Recently government of India banned the wheat exports.
Rationale behind the ban:
- Rising food and fuel prices.
- Low yield of wheat due to intensive heat waves.
- Russia’s invasion of Ukraine.
- Supply chain disruptions.
- The global export market is around 200 million tonnes, of which 55 million tonnes are generally from Ukraine and Russia.
- Food security of India and to counter the inflation.
- Procurement: Last year, 44 million tonnes were procured; now we are expecting around 19 million tonnes.
- Production was overestimated at 111 million tonnes; now we may have 99-100 million tonnes
Implications
- The export ban has two effects. It impacts farmers’ incomes as well as the long term credibility of the export policy.
- The situation assessment survey of 201819 shows that farmers’ incomes are low, with only 127 a day from cultivation.
- We have to think of the farmers’ families because they also have expenses, such as health, education and agriculture inputs.
- The more serious issue is the credibility of government policy for our biggest stakeholders — the millions of farmers who need a stable and consistent policy.
- The domestic outcomes of the export ban are worrying, because we had options like a bonus for procurement that could have helped farmers and food security concerns.
- Doubling the farmer income:
- In 2013, farmers were getting ?6,400 and in 201819, that was around ? 7,700 in real terms. That’s a 21% increase in six years, or 3.5% per annum.
- You need 10% growth per year to double farm incomes. Nonfarm income is also needed because cultivation alone is not enough.
This might be the opportunity to double the farmer’s income.
What should have done
- Instead of an export ban, it could have opted for a minimum export price and given a bonus of 250 to 300 to spur more procurement for food security goals.
- What we need is a more cohesive, consistent, stable and predictable agricultural policy, rather than an adhoc, unjustified manner of pressing the panic button.
Russia delivers more efficient nuclear fuel for Kudankulam
CONTEXT:
Rosatom State Corporation of Russia has supplied the first batches of more reliable and cost efficient nuclear fuel over the existing one, the TVS2M nuclear fuel, to India for the Units 1 and 2 of Kudankulam Nuclear Power Plant (KNPP).
TVS2M Advantages
- Once the new TVS2 M fuel is used in the next refuelling, the reactor will start operations with an 18month fuel cycle.
- It means the reactor, which has to be stopped for every 12 months for removing the spent fuel and inserting the fresh fuel bundles and allied maintenance, will have to be stopped for every 18 months
- Reliable and cost efficient
- Vibration resistant
- The new fuel has increased uranium capacity — one TVS2M assembly contains 7.6% more fuel material as compared to the earlier fuel bundles.
- Operation in longer fuel cycles also enhances the economic efficiency of a plant.
- As reactors have to undergo stoppage and refueling less frequently, the power units can produce more electricity.
About the Nuclear Energy:
Nuclear energy comes from splitting atoms in a reactor to heat water into steam, turn a turbine and generate electricity.
- An energy source that has zero emissions. (To fight climate change).
- Provides electricity around-the-clock.
- Energy security of the country.
Disadvantages of Nuclear power
- Nuclear Accidents.
- Chernobyl in 1986 and most recently Fukushima in 2011.
- Gestation period is very high.
- Nuclear wastes.
Fitch upgrades India’s outlook to stable citing ‘rapid’ recovery
Context:
Fitch Ratings raised India’s rating outlook to ‘stable’ from ‘negative’ while affirming the BBB- rating.
Positives
- Rapid economic recovery of India after covid-19.
- Easing of weaknesses in the financial sector by India.
- Despite near term headwinds from the global commodity price shock, Fitch expects robust growth for India relative to similarly rated peers.
- High nominal GDP growth has facilitated a near term reduction in India’s debt to GDP ratio
Negatives
- The credit rating firm has, however, lowered its GDP growth forecast for 202223 from 8.5% projected in March to 7.8% due to the impact of inflation on the growth momentum.
- Public finances remain a credit weakness with the debt ratio.
- Higher subsidies and the excise duty cuts on fuel to offset the surge in consumer prices would cost about 0.8% of GDP.
- This would push the fiscal deficit to 6.8% from the Budget target of 6.4%, despite robust revenues.
About Fitch Rating:
- Fitch Ratings Inc. is an American credit rating agency and is one of the “Big Three credit rating agencies”, the other two being Moody’s and Standard & Poor’s.
- Fitch Ratings’ long-term credit ratings are assigned on an alphabetic scale from ‘AAA’ to ‘D’, first introduced in 1924 and later adopted and licensed by S&P.
- Like S&P, Fitch also uses intermediate +/? modifiers for each category between AA and CCC (e.g., AA+, AA, AA?, A+, A, A?, BBB+, BBB, BBB?, etc.).
- India was given BBB- status (medium-class companies, which are satisfactory at the moment)
Pakistan hopes for relief on FATF sanctions
Pakistan is hoping for some reprieve as the international watchdog Financial Action Task Force (FATF) begins meetings on Monday in Berlin ahead of its plenary session from June 14 to 17.
About FATF:
- An inter-governmental body established in 1989 during the G7 Summit in Paris.
- The FATF Secretariat is housed at the OECD headquarters in Paris.
- FATF has 39 full members, comprising 37 jurisdictions and 2 regional organisations.
- Assesses the strength of a country’s anti-money laundering and anti-terror financing frameworks, however it does not go by individual cases.
- It is a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in various areas.
- Only North Korea and Iran are currently included in the black list.
OBJECTIVE:
- The objectives of FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system
- Since 2000, FATF has maintained the FATF blacklist (formally called the “Call for action”) and the FATF grey list (formally called the “Other monitored jurisdictions”).
- The blacklist has led financial institutions to shift resources and services away from the listed.
- This in turn has motivated domestic economic and political actors in the listed countries to pressure their governments to introduce regulations that are compliant with the FATF.
Pakistan-FATF
- Pakistan’s efforts to investigate and prosecute leaders of UN-designated terror groups in order to counter terror financing will be assessed during the meetings of the Financial Action Task Force (FATF) in Berlin.
- Pakistan is under the grey list, or the list of countries under increased monitoring of FATF.
- Pakistan is expecting a relief because of its efforts in decreasing terrorism.
- For example 9 April (2019) judgement by an anti-terrorism court in Lahore that awarded the Lashkar-e-Tayyaba (LeT) chief Hafiz Saeed, 33 years’ imprisonment in two cases of terror financing that was registered by the Counter Terrorism Department.
- Pakistan had completed 26 of the 27 action items that it was required to do in its 2018 action plan formulated by FATF
UPSC Civil Services Daily Current Affairs 11th June 2022
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