GS Analyst: Daily Current Affairs

India and China have made significant progress in their diplomatic relations by agreeing to resume the Kailash Mansarovar Yatra, restore direct flights, and ease visa restrictions. The two countries also agreed to restart discussions on cooperation related to trans-border rivers and the sharing of hydrological data, which China had previously withheld. The upcoming year will also see enhanced efforts in public diplomacy as both nations commemorate the 75th anniversary of diplomatic ties. 

Key-Points of Agreement

• Kailash Mansarovar Yatra to Resume: India and China have agreed to restart the Kailash Mansarovar Yatra, which is a pilgrimage that Indian devotees undertake to visit the sacred site in Tibet. This is an important decision for the Hindu community in India.
• Restoration of Direct Flights and Easing Visa Restrictions: Both sides also decided to restore direct flights between India and China, which were disrupted due to the pandemic and other issues. Additionally, visa restrictions will be eased, facilitating travel between the two countries.
• Hydrological Data Sharing Resumed: China had previously withheld important hydrological data about rivers that flow across the border into India, notably data on the Brahmaputra River. The two countries have now agreed to resume sharing this data, addressing concerns in India about China’s construction of a hydropower project on the Brahmaputra in South Tibet.
  • India and China do not have an agreement for sharing of water of transboundary rivers.
  • The two nations had in 2002 and 2005 inked two MoUs, creating frameworks for China to share with India hydrological information during monsoon seasons on Yarlung Tsangpo (Brahmaputra/ Siang) and Langqên Tsangpo (Sutlej) respectively.
  • The two MoUs could not be renewed after they expired – one on Sutlej in 2020 and the other on Brahmaputra in 2023 – due to the strains in ties over the military stand-off along the LAC.

Background (Border Tensions and Clashes in Galwan Valley (2020)) 

• In June 2020, the relationship between India and China escalated when violent clashes occurred between Indian and Chinese soldiers in Galwan Valley, located along the Line of Actual Control (LAC) in Ladakh.
  • This resulted in the deaths of 20 Indian soldiers, and China reported the deaths of four of its soldiers. Following these clashes, both countries deployed thousands of troops and heavy artillery along the LAC.
• Since the Galwan clash, India and China have held multiple rounds of military and diplomatic talks to ease the tension along their shared border.
• In October 2023, the two countries reached an agreement on a patrolling arrangement, which led to disengagement in certain areas of eastern Ladakh.
• Recent Developments and Stability: India and China have reached a significant agreement to restore patrolling rights to each in the Depsang Plains and Demchok region, these are areas where the problems are called legacy issues, predating the 2020 Chinese incursions.

Uttarakhand becomes India's first state to implement a Uniform Civil Code, aiming for equal rights in marriage and inheritance, amid political controversy.

What is UCC (Uniform Civil Code)?

• UCC (Uniform Civil Code) refers to a single set of laws that applies uniformly to all citizens of a country, regardless of their religion, caste, or community.
• The idea is to replace personal laws, which are based on religion, with common laws for important issues like marriage, divorce, inheritance, and adoption.
• Goa is the only other state of the country that already had a common civil code, introduced when it used to be a Portuguese colony.
• Key Features of UCC:
  • Uniformity: It seeks to ensure that all citizens are treated equally under the law, no matter their religious beliefs or practices.
  • Equality for Women: A major aim of UCC is to ensure equal rights for women, especially in areas like inheritance, divorce, and alimony, where different communities may have varying laws.
  • Abolishing Discriminatory Practices: UCC aims to eliminate practices seen as discriminatory or outdated, such as polygamy, child marriage, and triple talaq (instant divorce in some Muslim communities).
  • Common Laws: It would replace personal laws (laws specific to religions like Hindu law, Muslim law, Christian law, etc.) with a common set of laws governing the mentioned personal matters.
• The UCC applies to all residents of Uttarakhand, except Scheduled Tribes and protected authority-empowered persons and communities.

Background in India:

• Directive Principle of State Policy: The Indian Constitution includes a directive to eventually bring in a UCC for all citizens (Article 44). However, this has not yet been implemented fully.
• Debate: The UCC has been a topic of debate in India for years.
  • Positive aspects: It will promote national integration, equality, and justice.
  • Negative aspects: It could undermine religious freedom and the cultural identity of different groups.

The government had earlier planned to privatize (sell off) many state-owned companies to reduce its role in business and promote private sector growth. However, the government is now investing billions in reviving these state-run firms due to slow progress in privatization and growing political and public resistance.

What is Privatization?

• Privatization is the process where the government sells or transfers ownership of state-owned enterprises (SOEs) to private players.
• In India, this process aims to improve efficiency, reduce fiscal deficits, and encourage private sector growth.
• India went for privatization in the historic reforms budget of 1991, also known as 'New Economic Policy or LPG policy'.
• Since the 1991 economic liberalization, India has gradually shifted towards privatization, especially after the fiscal crisis.
  • The government has sold stakes in several PSUs to reduce the financial burden on the state, increase competition, and improve efficiency.

Why Privatization Was Initially a Key Focus?

• Reducing Fiscal Deficit: One of the primary reasons for privatization was to address India’s fiscal deficit. The sale of stakes in public enterprises could generate revenue for the government, which could then be used to finance other priorities, including infrastructure projects and welfare schemes.
• Reducing Subsidy Burden: Many state-owned enterprises, particularly in sectors like energy, are heavily subsidized. Privatizing these firms was seen as a way to cut down on these subsidies and make the sector more self-sustaining.
• Improved Management: Government-run companies often face problems such as inefficiency, poor management, and slow decision-making. The belief was that private players, driven by profit motives and better management practices, would improve the overall performance of these firms, leading to greater productivity and profitability.
• Boosting Competition: Privatization is believed to introduce competition into sectors that were previously dominated by state-owned monopolies. This competition could enhance service quality, reduce costs, and foster innovation.
• Reducing Government’s Burden: The government would no longer need to directly manage loss-making PSUs. By offloading these enterprises to the private sector, the state could focus more on its core functions such as governance, infrastructure development, and public welfare.

Challenges and Setbacks:

• Employee Unions: Privatization often faces stiff resistance from the employee unions of public sector enterprises, who fear job losses or changes in working conditions.
• Opposition Parties: Political opposition has also been a significant hurdle.
• Land and Asset Issues: The process of selling state-owned companies often gets stuck in complex legal and bureaucratic hurdles, especially when it comes to land acquisition or the valuation of state-owned assets.
• Failed Sales: Several privatization attempts have failed due to lack of buyer interest, unfavorable market conditions, or disagreement over terms.
• Public Sentiment and National Security Concerns: Many people are uncomfortable with the idea of privatizing strategic sectors such as defense, power, and telecommunications. Privatization in these sectors may raise concerns over national security, especially when foreign companies are involved in the bidding process.

The regulation of Artificial Intelligence (AI) has become a major global challenge. Countries are trying to find ways to oversee AI development while ensuring that it doesn't harm innovation. Leaders from various nations will meet in Paris on February 10, 2024, for the AI Action Summit, which is an effort to discuss how AI can be developed and governed for the benefit of all.

What is Paris AI Summit?

• The Paris AI Summit is a significant event that will be held in Paris on February 10, 2024.
• This Summit is aimed at discussing the future of Artificial Intelligence (AI), its regulation, governance, and the global framework required to ensure its safe and responsible development.
• The summit is an initiative led by French President Emmanuel Macron, and Indian Prime Minister Narendra Modi.
• Prime Minister Narendra Modiis set to co-chair the Paris Summit.
• Previous AI Summits: This summit builds on two previous AI-focused meetings:
  • The AI Safety Summit in Bletchley Park (2023), UK: Focused on addressing existential risks posed by AI and resulted in the Bletchley Declaration on AI Safety, which was signed by 25 countries, including the US and China.
  • The Seoul Summit (2024): This summit, smaller in scale, focused on voluntary commitments made by AI companies to develop AI responsibly and transparently.

A glacier lake outburst flood in Sikkim devastated the Teesta-3 hydropower dam, killing at least 100 people. Fourteen months after the disaster, an expert committee of the Environment Ministry recommended rebuilding the dam, with improvements in its design and safety systems.

What Happened (Background)?

• The Sikkim Urja Limited-run Teesta Stage-3 dam (Teesta III hydroelectric project), one of the biggest hydropower dams in India with 1,200 MW electricity generation capacity, was entirely wiped out by last year’s devastating glacial lake outburst flood (GLOF). 
• The GLOF was triggered by an ice avalanche at South Lhonak Lake, leading to severe floods.
• The Teesta-3 dam collapsed due to the failure to open the flood gates in time during the flood.
• This resulted in a massive outflow of water, debris, and muck.
• Although the power equipment was largely intact, the structural failure led to the loss of life and damage to the surrounding areas.
• The government and the project developers, Sikkim Urja Limited (SUL), have now proposed to reconstruct the dam with a stronger design and an enhanced early warning system.

Key Issues and Concerns:

• Environmental Risks: The region where the Teesta-III dam is located is prone to floods and landslides. Local communities had warned about the risks, but the project still went ahead.
  • Glacial lakes in the Himalayas are growing due to climate change, increasing the risk of such floods.
• Questionable Financing: Financial institutions like banks and development agencies funded the dam despite knowing the risks. This raises the question of whether these institutions considered the environmental dangers when deciding to invest.
• Lack of Accountability: Financial institutions, insurance companies, and investors have not been held responsible for the damage caused by their investments. Public money has been used, but there’s no accountability for the risks taken.
• Environmental Impact of Hydropower Projects: Despite causing environmental harm, hydropower projects are often labeled as "green" energy projects, which critics say ignores the ecological damage and displacement they cause.

A recent study in Jharsuguda, Odisha, has highlighted the harmful effects of coal mining dust on local vegetation. The research, using satellite data, shows how dust from open-cast coal mining harms plant growth and carbon absorption.

What is Coal Dust?

• Coal dust is a fine particulate matter produced during mining activities, such as blasting rocks, drilling, and transporting coal. It settles on nearby vegetation, affecting their ability to function.
• Impact of Coal Dust on Vegetation:
  • Reduced Carbon Absorption: Dust blocks the pores (stomata) on plant leaves, preventing effective absorption of carbon dioxide, which impacts photosynthesis.
    • Plants with 1 gram of dust absorb 2-3 grams less carbon per square meter of area.
  • Temperature Regulation Disruption: Dust prevents plants from releasing water vapor, causing them to overheat and impair photosynthesis, leading to stunted growth or plant death.

The Olive Ridley turtles, an endangered species, skipped mass nesting at the Rushikulya river mouth in Odisha’s Ganjam district in 2024. Experts now predict a larger number of Olive Ridley turtles will lay eggs there in 2025.

Olive Ridley Turtles (Lepidochelys olivacea)

• Size: 62-70 cm in length; weight 35-45 kg
• Habitat: Found in the warm waters of the Pacific, Atlantic, and Indian oceans
• Diet: Omnivorous (feeds on both plants and animals)
• Behavior: Known for mass nesting (arribada) where thousands of females nest together on the same beach
• Conservation Status: Vulnerable (IUCN Red List), Schedule 1 (Wildlife Protection Act, 1972), Appendix I (CITES)
• Mass Nesting Locations: Major nesting sites for Olive Ridley turtles in Odisha include:
  • Rushikulya river mouth (Ganjam district)
  • Gahirmatha (Kendrapara district) – world’s largest rookery
  • Deve river mouth (Puri district)

The recently released Fiscal Health Index by Niti Aayog highlights the improvement in debt-to-GDP ratios for states following the pandemic, while also addressing concerns regarding fiscal health disparities among states. The index provides a comprehensive framework to assess and compare state finances.

Current State of Debt and Fiscal Health

• Improvement in Debt to GDP Ratio: Post-pandemic, state governments have made progress in improving their debt-to-GDP ratios, which surged during the pandemic. The ratio has decreased from 31% in 2021 to 28.5% in 2024, indicating fiscal consolidation and better fiscal management.
• Regional Disparities in Debt Ratios: However, there is significant variation across states, with Odisha and Gujarat maintaining low debt-to-GSDP ratios of 16.3% and 17.9%, respectively, while states like Punjab exhibit high ratios, reaching 46.6%. This disparity emphasizes the need for a better framework for fiscal assessment.
• Niti Aayog's Fiscal Health Index: To address these concerns, Niti Aayog has developed a Fiscal Health Index to assess states' fiscal health across five sub-indices: fiscal prudence, debt sustainability, revenue mobilization, quality of spending, and overall debt index. The framework helps identify areas for improvement and track progress across states.

Challenges and Risks to State Finances

• Concerns Over Debt Sustainability: Despite improvements, the debt levels of several states still exceed the limits suggested by the FRBM review committee, posing risks to debt sustainability. States like West Bengal and Punjab are particularly at risk, with rising debt-to-GSDP ratios.
• Key Issues for Indebted States: Loss-making power distribution companies, unplanned expenditure on "freebies," and the realization of fiscal guarantees remain major risks, especially for highly indebted states. These factors further contribute to fiscal stress and undermine long-term sustainability.
• Urgency for Fiscal Reforms: The report stresses the need for urgent fiscal reforms and targeted interventions to address these issues. High persistent deficits and varied fiscal performance among states highlight the importance of developing time-bound roadmaps for reducing debt levels, particularly for states with high debt burdens.

Conclusion and Recommendations

• Time-Bound Debt Reduction Plans: To ensure sustainable fiscal health, it is crucial for states, especially those with high debt levels, to develop detailed, time-bound plans to reduce debt and address fiscal risks. The Fiscal Health Index can serve as a tool to guide these efforts and track progress over time.
• Need for Targeted Interventions: The Niti Aayog's framework can help identify key fiscal challenges in individual states and recommend targeted interventions, contributing to better fiscal governance and long-term stability for the states with fiscal stress.
• Collaboration for Fiscal Prudence: For effective implementation of these reforms, collaboration among the central government, state governments, and financial institutions is essential. It will help in enhancing fiscal prudence and ensuring that fiscal health improves across all states.

Practice Question:

Q. Analyze the fiscal health of Indian states post-pandemic, focusing on regional disparities in debt-to-GDP ratios. Discuss the significance of the Fiscal Health Index introduced by Niti Aayog and its potential role in promoting fiscal reforms and sustainability across states.

The Union Budget for FY26 is crucial as it comes at a time when India is under pressure to meet its climate commitments. With the country facing extreme weather events and a target to reach net-zero emissions by 2030, this Budget must take decisive action in addressing both climate adaptation and mitigation.

Key Budget Priorities for Climate Action

• Accelerating Green Energy Transition: The Budget must address gaps in the implementation of the PM Surya Ghar Muft Bijli Yojana, particularly focusing on innovative financing models such as the Renewable Energy Service Company (RESCO) model. This would help in reducing upfront costs for lower-income households.
• Expansion of PLI for Solar Module Supply Chain: To meet the rising demand for solar energy, the Budget should expand the Production-Linked Incentive (PLI) scheme across the solar module supply chain, boosting domestic manufacturing and reducing the high costs of domestically produced panels.
• Harnessing Railway Infrastructure for Renewable Energy: The Indian Railways offers a unique opportunity to generate renewable energy through solar and wind installations on its vast land banks and track corridors. The Budget should incentivize public-private partnerships to unlock this potential for clean energy generation.

Addressing Global Climate Challenges and Economic Competitiveness

• Carbon Border Adjustment Mechanism (CBAM) and MSME Support: With the European Union’s CBAM taking effect in 2026, India’s exports face carbon levies. The Budget should establish a 'Climate Action Fund' to help MSMEs decarbonize and comply with the CBAM, ensuring that India’s export competitiveness is maintained.
• Transition to a Circular Economy: The Budget should incentivize investments in recycling and refurbishment technologies by providing tax benefits and accelerated depreciation. A dedicated sovereign green bond framework for circular economy infrastructure could significantly boost economic gains while reducing emissions.
• Strengthening Climate Resilience through Insurance: India’s low insurance penetration needs urgent attention. The Budget could offer tax deductions for insurers on income from climate-linked policies and advocate for lower GST on premiums for insurance products focused on climate resilience and disaster protection.

Strengthening Climate Finance and Institutional Infrastructure

• Building Green Finance Infrastructure: The Budget should allocate funds to establish the necessary institutional and technical infrastructure to implement a climate finance taxonomy. This would help align India’s financial market with global sustainability metrics and improve investor confidence.
• Differential Tax Treatment for Green Investments: The Budget should introduce differential tax treatments for investments that align with green finance criteria, incentivizing private sector investments in climate-friendly projects.
• Classifying Government Expenditure for Climate Commitments: The Budget should categorize government spending in alignment with green criteria, ensuring that fiscal allocations contribute towards achieving India’s net-zero targets and climate resilience goals.

Practice Question:

Q. Critically analyze the role of the Union Budget in promoting climate action and ensuring economic resilience in India. Discuss the key policy measures that should be prioritized to accelerate India’s transition to a green economy.

In October 2023, a glacial flood devastated four districts of Sikkim, resulting in over 40 deaths and the destruction of a 60-meter-high dam of the Teesta-III hydropower project. A year later, the Environment Ministry’s Expert Appraisal Committee (EAC) approved a proposal for a new 118-meter-high dam, raising concerns about the safety, design approval, and local consultation regarding the project.

Concerns Regarding the New Dam Proposal

• Lack of Safety Clearances: The approval for the new dam by the EAC has raised alarms due to the lack of clearance from key safety authorities like the Central Water Commission, Geological Survey, and Central Soil and Materials Research Station. The project's design has yet to be properly vetted for its safety, leaving critical questions unanswered.
• Failure to Address Local Concerns: The proposal has not undergone a public hearing, which is essential for ensuring that the concerns of the local population are taken into account. Local opposition to such projects due to their environmental and social impact underscores the need for proper consultations.
• Unresolved Safety Concerns Post-Disaster: The EAC approved the new dam despite concerns about its ability to withstand potential glacial lake floods and the force of floodwaters. Given the region’s vulnerability to natural disasters, the hasty approval raises questions about whether enough safeguards are in place to prevent a recurrence of the 2023 disaster.

History and Environmental Implications of the Project

• Ecological and Safety Concerns of Teesta III: The Teesta-III hydropower project has faced ongoing criticism since its inception, primarily due to its environmental impact on the Eastern Himalayas, an area prone to natural disasters. Concerns regarding its safety, particularly in the event of earthquakes, landslides, and climate change-induced flooding, have been raised by hydrologists and environmentalists.
• Impact on Local Communities and Ecosystem: The project’s construction involves significant alteration of the region’s natural landscape, including mountains, forests, and rivers. This has led to opposition from local communities who are concerned about the long-term ecological consequences of such infrastructure projects.
• Disastrous Track Record of Teesta III: The Teesta-III project has experienced significant delays and cost overruns, taking over 12 years to complete and exceeding its budget by more than two-and-a-half times. The failure of the dam in 2023 highlighted the shortcomings of the project, proving early assessments wrong regarding the risks posed by glacial lake floods.

Recommendations and Conclusion

• Stringent Safety Measures for Mountain Infrastructure: Given the vulnerability of infrastructure in mountainous regions, especially those located near rivers and water bodies, it is essential that such projects adhere to the highest safety standards. The failure of the Teesta-III dam demonstrates the need for more rigorous assessments of risks like glacial lake floods.
• Caution in Approving Future Projects: The Environment Ministry must ensure that the lessons learned from the 2023 flood are applied before approving further developments. A cautious and well-considered approach is necessary to prevent future disasters and safeguard both the local population and the environment.
• Thorough Evaluation and Public Consultation: Before moving forward with the Teesta-III dam or any similar projects, thorough safety evaluations and public hearings must be conducted to ensure that all potential risks are accounted for and that the concerns of local communities are addressed.

Practice Question:

Q. Examine the safety concerns surrounding the Teesta-III hydropower project and the recent approval for the construction of a new dam in its place. Discuss the importance of stringent safety measures and public consultation in the context of infrastructure projects in disaster-prone regions like the Eastern Himalayas.