GS Analyst: Daily Current Affairs

The escalating discord between Israel and Iran, which has garnered widespread attention due to its potential ramifications on global stability, has multifaceted implications for India.

1: Dimension- Impact on Macroeconomic Stability:

• Expensive Oil: India is the world’s third-largest consumer of crude oil and depends on imports to meet over 85% of its requirements. Given heavy reliance on crude oil imports, any disruption in the supply chain could significantly escalate inflationary pressures.
  • Vulnerable sectors:Automobiles, transportation, aviation, paints, tyres, cement, and chemicals could take the greatest hit.
• Threatened routes:While India does not import any crude from Iran (due to sanctions imposed by the US in 2019), there is a threat that Iran may close the Straits of Hormuz, the main route of transport for crude oil from the Middle East.
• High transportation cost: Higher oil prices not only pose risks to inflation forecasts but also exert a ripple effect on transportation costs, thereby influencing the prices of goods and services.
• Assessment of Inflation Trajectory: While the Wholesale Price Index (WPI) is more susceptible to fluctuations in crude oil prices, the Consumer Price Index (CPI) experiences a relatively smaller uptick.
• Impact on growth: A sustained surge in crude oil prices could also exert a drag on GDP growth due to curtailed consumption and weaker corporate margins.
• Current Account Deficit and Financial Flows: Even a modest increase in crude oil prices could exacerbate the Furthermore, the impact on foreign portfolio investments and remittances from Middle Eastern countries underscores the interconnectedness of geopolitical developments with India's economic fundamentals.

2: Dimension- Growing proximity between India and the Middle East region

• IMEC Project: The Indian government has been actively engaging with stakeholders in the region advocating for initiatives like the India-Middle East-Europe economic corridor.
• Market for emerging gulf industries: Transition of the Gulf economies away from their dependence on hydrocarbons. That shift naturally positions India as an attractive market for the emerging industries in the Gulf countries.
  • Notable in this context is the Gulf countries’ investment in India’s agriculture sector, which plays a crucial role in ensuring the Gulf’s food security.
• Non-oil trade:Exemplifying this shift is the significant boost to non-oil trade between the UAE and India after Joint Comprehensive Economic Partnership Agreement.
• India’s ascent as a global economic powerhouse: Western powers are facilitating the deepening of India’s relationship with the Middle East. It can be seen through IMEC, Quad, I2U2.

Concluding Assessment

The Israel-Iran tensions present a formidable test for India's strategic acumen and resilience in navigating geopolitical complexities. By adopting a pragmatic and forward-looking approach, India can not only mitigate immediate risks but also harness emerging opportunities for long-term growth and stability.

Recent exchanges during the ongoing election campaign have centered on the redistribution of wealth. Additionally, the Supreme Court's establishment of a nine-judge Bench to interpret Directive Principles of State Policy (DPSP) regarding ownership and control of material resources adds complexity to the discourse.

Balance b/w Fundamental Rights and DPSP:

• The Constitution, through its Preamble and Parts III and IV, aims to ensure social and economic justice, liberty, and equality for all citizens. While fundamental rights guarantee liberty and equality, DPSP provides principles for achieving social and economic justice. Notably, Article 39(b) and (c) emphasize the distribution of material resources for the common good and prevention of wealth concentration.
• Originally, the Constitution guaranteed the right to property as a fundamental right. However, amendments were made to accommodate land reforms and public welfare projects, leading to the curtailment of property rights. Landmark judicial decisions, such as Golak Nath and KesavanandaBharati cases, shaped the balance between fundamental rights and DPSP.

Evolution of Economic Policies:

• India's economic policies transitioned from a socialistic model to liberalization, globalization, and privatization in the nineties. This shift aimed to empower market forces, improve efficiency, and foster growth. Notable changes included the repeal of estate duty and wealth tax, along with the introduction of market-oriented reforms.
• Impact of Market-driven Economy: While market-driven reforms have lifted many out of poverty, they have also contributed to growing inequality. Reports indicate significant wealth and income disparities, highlighting the need for inclusive economic policies.
• Judicial Scrutiny: The Supreme Court's decision to interpret whether private resources fall under DPSP underscores the need for clarity on economic policies and resource allocation.

Way Forward: Addressing inequality requires a balanced approach that ensures economic justice for all. While past policies have faced limitations, future strategies should focus on inclusive growth and equitable distribution of resources, aligning with constitutional principles.

A recent study looking into heavy rainfall, baseflow and river floods in Peninsular India has provided new insights into what factors drive flooding in the regions.The study revealed a significant correlation between trends in floods and trends in baseflow in Peninsular India.

About Baseflow:

• Baseflow refers to the portion of streamflow or river discharge that is sustained by groundwater contributions during periods of low precipitation or runoff.
• It represents the groundwater's slow release into streams, rivers, or other water bodies over time.
• Baseflow is typically characterized by a relatively stable flow rate and temperature compared to surface runoff, which tends to fluctuate more rapidly in response to rainfall events.

Every year on May 1, International Labour Day is observed to remember the struggles and sacrifices of the workers and labour movements. 

Brief Background

• On May 1st, 1886, labour unions in the United States initiated a strike advocating for an eight-hour workday. The strike culminated in the tragic events of May 4th, 1886, at Chicago’s Haymarket Square, where a peaceful rally turned violent with a bomb explosion.
• Inspired by the Chicago protests, the decision to commemorate May Day annually was made, following a meeting in Paris in 1889
• In India, on May 1st, 1923, the first May Day celebrations were organised in Chennaiby the Labour Kisan Party of Hindustan, led by Comrade Singaravelar.

Vice President (VP) of India JagdeepDhankhar underlined the need for reforming the Indian arbitration system.

What is Alternative Dispute Resolution?

• Alternative Dispute Resolution (ADR) includes various methods of settling a dispute without getting into the intricacies of the court.
• It is a method where parties try to resolve their disputes privately in front of a third-person expert.
• The decision is binding on the parties like the decision of the court.
• Type of ADR process: Arbitration, Mediation, negotiation, and conciliation
• Arbitration: 
  • It is a quasi-judicial proceeding.
  • In this form of dispute resolution, the parties decide the rules of the process and appoint their own judge (referred to as the ‘arbitrator’), who decides the matter between the parties
  • The decision of the Arbitral Tribunal is referred to as an “Award”and has the same effect as that of an order of the court.
  • Arbitration in India is governed by the Arbitration and Conciliation Act, 1996.
• Issues in the system: Complex, an additional tier in the conventional litigation ladder, lack of trust, inefficiency.

The Union Home Ministry cancelled the registration of various NGOs for alleged violation of various provisions of the Foreign Contribution Regulation Act.

Regulation of Foreign Funding in India

• In India, it is necessary to register with the FCRA to receive foreign funds. The License is granted by the Union Home Ministry.
• Validity: Five years. NGOs are expected to seek renewal within six months of the registration expiring.
• Cancellation:The government can also cancel the FCRA registration of any NGO if it finds that the NGO is in violation of the Act.Once an NGO's registration is terminated, it is ineligible to re-register for 3 years.

The National Bank for Agriculture and Rural Development (NABARD) has commissioned a study to evaluate the impact of Geographical Indication (GI) products, with Symbiosis School of Economics chosen as the research partner.

Key-highlights:

• Objectives of the Study: to assess the benefits accrued to artisans and producers due to the GI tags associated with their products over time.
• Expansion of GI Portfolio: NABARD's support has led to the GI tagging of 144 products to date.
  • Notably, the journey began with PochampallyIkat from Telangana (formerly united Andhra Pradesh).
• Diverse Range of GI Products: Artisans across various regions have embraced the GI registration, showcasing the rich cultural diversity of India. Notable examples include Banaras Brocades and Sarees (Uttar Pradesh), Blue Pottery of Jaipur (Rajasthan), Ilkal Saree (Karnataka), Jalna Sweet Orange (Maharashtra), and NakshiKantha (West Bengal), among others.
• A geographical indication (GI) serves as a mark of origin for products possessing unique qualities or reputations attributable to their specific geographical location.

UK's pharmaceutical giant, has admitted its Covid vaccine, sold under the brand name of Covishield in India, in 'very rare cases' can cause a blood clot-related side effect.

• Thrombotic Thrombocytopenic Syndrome (TTS) is a rare but serious condition.
• TTS is a condition where blood clots (thrombosis) are formed in the brain (cerebral venous sinus thrombosis) or abdomen combined with low levels of platelets (thrombocytopenia), which are necessary for blood clotting.
• Early symptoms: Severe or persistent headaches, blurred vision, shortness of breath, chest pain, swelling in the legs, abdominal pain, easy bruising or tiny blood spots under the skin.

A recent study, by analysing data from the European Southern Observatory (ESO), shows that a little-known planet about 110 light years away, called K2-18b, might resemble a larger version of Earth.

About K2-18B:

• Location: Approximately 110 light-years away from Earth.
• Potential habitability:It orbits its star at a distance where liquid water could exist on its surface.
• K2-18b is very different from Earth. Its dimension is around 2.37 times larger and it has a mass that is approximately 8.92 times greater than our planet. 
• K2-18b orbits a red dwarf star, which is smaller and dimmer than our sun. It completes one orbit in 32.9 days.

China recently launched the inaugural Hangor class submarine for Pakistan, marking the commencement of a significant naval endeavor. This event signals the beginning of Pakistan's acquisition of eight submarines of this class by 2028.

• The Hangor class submarine is an export variant derived from the Chinese Type 039A Yuan class.
• Diesel-Electric Attack Submarine: Characterized by its diesel-electric propulsion system, the Hangor class submarine is designed as an effective platform for conducting offensive operations.
• It is named after the now decommissioned PNS Hangor, which famously sank Indian frigate INS Khukri during the 1971 war.
• Technical Specifications: The Hangor class submarine is equipped with four diesel engines and features an air independent propulsion (AIP) system.
• Counterpart to India's Kalavari Class: Positioned as a direct counterpart to India's Kalavari class submarines, which are based on the French Scorpene-class, the Hangor class underscores Pakistan's strategic focus on maritime defense.
  • While both the Hangor and Kalavari class submarines utilize diesel-electric propulsion, a notable distinction lies in the inclusion of an AIP system in the former. This feature grants the Hangor class enhanced operational flexibility and endurance.