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6th February 2023

G7 and EU announce price cap on Russian diesel


The European Union (EU) has joined the United States and the United Kingdom in banning imports of Russian diesel and other refined oil products. 

Price cap:

  • A price cap is simply a process for establishing rates or prices that will be charged for a particular good or service.
  • In some instances, there are governmental organizations that determine price regulation. One example is in the rates that may be charged for household utilities, such as water and electricity.


About the move:
  • The price cap on Russian refined fuel.
  • The ban on refined fuels — in particular, diesel with its wide industrial and domestic usage — has pushed the market into uncertainty amid historically low diesel stocks in Europe.
  • Background:
  • The oil products embargo comes two months after a similar ban on Russian crude oil brought in by sea — both announced in June 2022 as part of the EU’s sixth sanctions package against Russia in response to Russia invasion of Ukraine.
  • The crude oil embargo and the oil price cap which came into effect on December 5 passed off without any major disruption.

Significance of European Union and G7 Countries:

  • The Group of Seven (G7) is an inter-governmental political grouping consisting of Canada, France, Germany, Italy, Japan, the UK and the US.
  • G-7 members comprising Canada, France, Germany, Italy, Japan, UK and the US currently represent close to 45% of the global GDP and more than 10% of the world's population.
  • EU is a political and Economic Union (EU) of 27 member states which are located primarily in Europe.
  • EU policies aim to ensure the free movement of people, goods, services and capital within the internal market.
  • It enacts legislation in justice and home affairs.

Impact on diesel prices:

  • The sanction could lead to major disruptions in diesel-reliant industries such as transportation and agriculture, with fuel price rises further undermining the fight against inflation.
  • The perceived disruption is already driving up diesel prices.
  • While the situation has improved in recent months due to a mild winter, diesel stocks remained Low.
  • An increase in shipping costs as supplies would now need to come from regions further afield, higher production costs in countries such as the
  • The EU relied on Russia for nearly half its diesel needs before Russia’s invasion of Ukraine on February 24, 2022.
  • That share dropped over the past year but remained significant with EU members buying in excess of 200 million barrels of diesel last year.

Demand-supply mismatches:

  • The ban has left the EU with a void of about 600,000 barrels of diesel and related oil products per day,
  • This gap that the EU intends to plug with increased supplies from the Middle East, Asia and the US.
  • The large refineries such as the Al-Zour plant in Kuwait and the Jazan refinery in Saudi Arabia has increased its production and dependence over them by EU.
  • Additionally, Germany has inked a deal with UAE’s Abu Dhabi National Oil Co that would see the oil firm provide 250,000 tons of diesel a month in 2023.

Impact on India:

  • Increase in diesel exports: India’s diesel exports to Europe have soared since the invasion as refiners take advantage of low feedstock costs thanks to steeply discounted Russian crude and high diesel prices.

China’s move:

  • China has raised its first batch of 2023 export quotas for diesel and other refined oil products.
  • The move is expected to keep its diesel exports at record levels, which could potentially help push barrels from other producers westward into Europe.

What would be the impact of the diesel price cap?

  • The European Union (EU) and the Group of Seven (G7) industrialized countries, agreed to set a $100 (€91) per barrel price cap on Russian diesel and a $45 per barrel cap on discounted products like fuel oil.
  • The price cap is meant to ensure that Russian diesel and other oil products can still be sold to third countries and prevent any massive spike in prices following the EU ban.
  • The mechanism would allow European insurance and shipping firms to continue offering their services to shippers carrying Russian oil products to other regions as long as the fuel is purchased at or below an agreed cap level.
  • The oil products price cap would have minimal impact on Russian refining crude runs and distillate exports.

Major Oil reserves around the world:


Trilateral Cooperative initiative


India, France and the United Arab Emirates declared their common intent to formalise a “Trilateral Cooperative initiative” to collaborate on nuclear energy and explore opportunities in the Indian Ocean region.

About the initiative:
  • Background: The trilateral was first discussed when the three foreign Ministers had met on the sidelines of the UN General Assembly in New York in September 2022.
  • All the three countries agreed to work together in the field of solar and nuclear energy, climate change and biodiversity.
  • Objective: It will serve as a forum to promote the design and execution of cooperation projects in the fields of energy, with a focus on solar and nuclear energy, as well as in the fight against climate change and the protection of biodiversity, particularly in the Indian Ocean region.
  • The countries have also agreed to cooperate in defence preparation and in countering infectious diseases.
  • Following the alliance, multilateral organizations such as World Health Organization (WHO), Gavi-the Vaccine Alliance, the Global Fund, and Unitaid will be encouraged.
  • The three countries will also attempt to identify tangible cooperation on implementing the “One Health” approach, and support the development of local capacities in biomedical innovation and production within developing countries.

A range of trilateral events will be held in the backdrop of the Indian Presidency of the G20 here and COP28 to be held in UAE in November-December 2023.

India-UAE relations:

  • India and UAE have entered into a Free Trade Agreement (FTA) by signing the CEPA in February, 2022.
  • This agreement will boost bilateral trade between the two countries and benefit both the economies.

Significance of UAE:

  • UAE is the third largest trading partnerof India after China and USA.
  • The UAE has established itself as a major economic hubnot just in the Middle East/West Asia region, but also globally.
  • As a part of Gulf Cooperation Council,UAE can help in finalising the FTA between Indian and the GCC.
  • India-UAE relations have become a focal point of India's Extended Neighbourhood and Look West policies in the region.This deal will further boost the relation between the two countries.

India’s Extended Neighbourhood

  • In 2004 the Indian government affirmed that “the concept” of an “extended neighbourhood for India” included the region from the Suez Canal to the South China Sea and includes within it West Asia, the Gulf, Central Asia, South East Asia, East Asia, the Asia Pacific and the Indian Ocean Region.
  • Look West Policy: In the year 2005, the government of India launched its Look West Policy which focused on India improving its relations with West Asian countries.
  • The three main axes of India’s Look West Policy are- The Arab Gulf countries, Israel and Iran.

India-France relations:

  • India and France share a dynamic and multifaceted relationship.
  • Both countries signed a strategic partnership agreement in 1998.
  • Frequent interactions at the highest political levels, comprehensive defence cooperation and dynamic cultural linkages have further contributed to maturing the partnership.
  • Convergence of their views on multi-polar world order and their belief in multilateralism for addressing international challenges help them in developing greater political synergy at the global level.
  • India and France have been expanding their relationship amid changing regional and global dynamics.
  • France has been termed by India as its “Gateway to Europe”.


  • Defence cooperation is a crucial aspect of India-France strategic partnership. 
  • There has been regular exchange of visits at the level of Services Chiefs between India and France. 
  • Both countries have regular defence exercises such as Shakti - Army, Varuna - Navy and Garuda -Air Force. 
  • India and France signed the Joint Strategic Vision of India-France Cooperation in the Indian Ocean Region.
  • France has also been supplier to India’s armoury. This includes India buying 36 Rafale fighters from France.
  • India and France are also participants of Project-75 which would help India acquire Scorpene class submarines.

Guaranteed Pension Scheme (GPS) of Andhra Pradesh


Amid the rejection of four states on new pension system, there are discussions about a new model, which has been proposed by the YSR Jagan Mohan Reddy in Andhra Pradesh named as Guaranteed Pension scheme (GPS).

About Guaranteed Pension scheme:
  • Under GPS, employees can get a guaranteed pension of 33% of their last drawn salary if they contribute 10% of their basic salary every month which is matched by a 10% contribution by the state government.
  • And if, they can get a guaranteed pension of 40 per cent of their last drawn salary, if they are willing to contribute a higher 14 per cent of their salary every month, which will be matched by 14 per cent government contribution.
  • It combines the elements of both the Old Pension System (defined benefit) and the New Pension Scheme (defined contribution). In doing so, it seeks ‘defined contribution’ from employees every month and offers two options of ‘defined benefit’.

How does the Pension system work in India?

  • All pension plans in India provide guaranteed maturity benefits. This is the reason why pension plans in India are also known as guaranteed pension plans.
  • The maturity benefits are generally the fund value or 101% of the Premium paid, whichever is higher.

Old pension Scheme (OPS):

New Pension Scheme

The OPS is an assured inflation-indexed monthly family pension till you (and your spouse) live(s). The OPS level is

Linked to the last pay pensioner drew.

The NPS is a retirement saving scheme to secure the life of an individual financially after retirement.

What are the issues associated with NPS?

  • The NPS is a corpusfrom which you can draw a pension after retirement. Its value is determined by the market prices in which the corpus is invested.
  • One of the issues with the NPS is the amount of monthly pension you would draw (for the same contribution during service) with three hypothetical market rates of return is significantly lower for NPS.
  • Secondly, it is dependent on the vagaries of the market prices of equity/bonds in which the corpus is invested. To be sure, the markets do not crash often and in the long run, they go up rather than down.
  • If there is a crash, the downside has to be absorbed by the retirees.

 According to a 2008 OECD study, the global financial crisis had wiped a total of $5 trillion off the value of private pension funds in rich countries compared to the start of the year 2022.

Four-point formula on Kashmir issue


Pakistan’s former President General Pervez Musharraf visited India at Agra Summit held in 2001 during the Atal Bihari Vajpayee government, was considered one of the most important meetings between Indian and Pakistani leaders in recent history.

  • Musharraf travelled to Agra for the summit with Prime Minister Atal Bihari Vajpayee.
  • There was some forward movement on the first day.
  • At a 90-minute one-on-one session, the two leaders discussed the Kashmir issue, cross-border terrorism, nuclear risk reduction, the release of prisoners of war, and commercial ties.
  • Musharraf proposed a “four-point solution” for the Kashmir dispute.
  • Recently, it has been reported that, he died in Dubai.

What was the Four-point formula for Kashmir issue?

  • Demilitarisation or phased withdrawal of troops:
    • Millions of troops, on both sides of the Line of Control (LoC), are stationed in Kashmir.
    • According to Musharraf, both India and Pakistan would have scaled back its troops in the region for a lasting peace.
    • Whether this would be gradual, phased withdrawal or not had to be worked out by the two sides.
  • There will be no change of borders of Kashmir: However, people of Jammu & Kashmir will be allowed to move freely across the Line of Control (LoC).
    • The LoC is effectively a ceasefire line, which both sides accepted in the Shimla Agreement of 1972.
    • However, neither India nor Pakistan accepts it as the International Border. Both nations claim all of Kashmir.
    • If Musharraf’s plan were to be accepted, India would have to accept Pakistan’s sovereignty over Pakistan Occupied Kashmir (which Pakistan refers to as its province of Azad Kashmir) and in return, Pakistan would accept Indian suzerainty over the part of Jammu and Kashmir on India’s side of the LoC.
    • The ceasefire line would then become the International Border and both sides would give up claims over the other half of Kashmir.
    • However, the people of Jammu and Kashmir would be allowed to move freely to the other half of the region.
  • Self-governance without independence:
    • Pakistan has long been an advocate of what it calls ‘Kashmiri self-determination’ but Musharraf was willing to give that up in favour of a greater measure of autonomy.
    • Vajpayee would likely not have too many objections with this clause of the agreement because the Indian Constitution already allows autonomy for J&K under Article 370.
  • A joint supervision mechanism in Jammu and Kashmir involving India, Pakistan and Kashmir:
    • Musharraf’s decision to include local Kashmiri leadership in the supervision mechanism would have given him a greater chance at selling a potential Musharraf-Vajpayee accord to the people back home in Pakistan.

India’s response to the idea:

  • There aroused certain differences to 4 point formula on part of India.
  • India Prime Minister Manmohan Singh, however, excluded any consideration of such proposals by emphasizing that the state of Jammu and Kashmir is an integral part of India and there would be no redrawing of the international boundaries or rearrangement of regions that would blow of communal dimensions.
  • The Indian claim over the whole area of Jammu and Kashmir, including Pakistani administered Kashmir, was repeated in March 2006 by the Indian government s official protest over the proposed construction of the Bhasha dam in the territory which comes under the Pakistani controlled part of Kashmir.
  • The doctrine of open borders or soft borders was explained by Manmohan Singh as” making LoC a porous border so that there could be free flow of ideas and people between the two parts of Kashmir which will, according to him, one day make LoC irrelevant.”
  • Demilitarization is also not agreeable for India because they consider it as their domestic security related issue.
  • Apart from differences over demilitarization, major obstacle in making LoC beside the point is that India considers this decision should be the eventual solution of the Kashmir dispute whereas Pakistan considers this as one of the very important confidence-building measure.
  • Accepting LoC as ultimate solution to the issue means Pakistan completely gives up its case on Kashmir.

Just Energy Transition Partnership (JET-P)


 After South Africa, Indonesia, and Vietnam, India is considered the next candidate for a JET-Partnership. India’s G-20 presidency could potentially be an opportune moment to forge a deal.

Just Energy Transition Partnership (JET-P) is emerging as the key mechanism for multilateral financing by developed countries to support an energy transition in developing countries.

  • The partnership has taken on particular significance following the insertion of the phrase ‘phase-down’ of coal in the Glasgow Pact.
  • However, India must develop a coherent domestic just energy transition (JET) strategy in order to negotiate a financing deal that addresses its unique set of socio-economic challenges.

Energy transitions and developing countries:

  • Energy transitions could give rise to intra-generational, intergenerational, and spatial equity concerns.
  • Transitions affect near-term fossil-dependent jobs, disrupt forms of future energy access, shrink state’s capacity to spend on welfare programmes, and thus exacerbate existing economic inequities between coal and other regions.
  • Existing JET-P deals pay limited attention to intra-generational inequity, such as job losses resulting from a coal phase-down.
  • However, among the three JET-P deals signed so far, only South Africa’s deal mentions a ‘just’ component — funding reskilling and alternative employment opportunities in the coal mining regions to be financed as part of the initial $8.5 billion mobilisation.
  • The other two JET-Ps (Indonesia and Vietnam) are focused on mitigation finance for sector-specific transitions.

India and energy transition:

  • India’s transition requires significant simultaneous growth in energy demand.
  • The Central Electricity Authority projects a near doubling of electricity demand by 2030.
  • A country that is likely to multiply its energy demand requires adequate supply from a diverse mix of sources. India cannot afford to put its development on hold while decarbonising.

India’s commitments:

  • India has signalled a commitment to clean energy with ambitious targets like 500GW of non-fossil, including 450 GW renewable energy (RE) capacity addition and 43% RE purchase obligation by 2030.
  • These targets are supported through complementary policy and legislative mandates (Energy Conservation (Amendment) Act), missions (National Green Hydrogen Mission), fiscal incentives (production-linked incentives) and market mechanisms (upcoming national carbon market).
  • These interventions show India’s serious efforts at energy transition, but additional supplementary measures are needed for a coherent JET strategy.

Short News Article

Art and Culture

World’s first living heritage university

Visva-Bharati University is going to get the ‘heritage’ tag from UNESCO to take the distinction of world’s first living heritage university.


  • It was founded by Rabindranath Tagore in 1921.
  • It was named after Nobel Laureate Rabindranath Tagore until Visva-Bharati Society was registered as an organisation in May 1922.
  • Until Independence, it was a college and the institution was given the status of Central University in 1951 through a central Act.
  • Its first vice-chancellor was Rathindranath Tagore, the son of Rabindranath Tagore, and the second vice-chancellor was grandfather of another Nobel Laureate economist Amartya Sen.


  • In 1922, Visva-Bharati was inaugurated as a Centre for Culture with exploration into the arts, language, humanities, music.
  • It also served as institutes for Hindi studies (Hindi Bhavan), Sino-Asian studies (Cheena Bhavan), centre for humanities (Vidya Bhavan), institute of fine arts (Kala Bhavan), and music (Sangit Bhavan).

Art and Culture

Veteran singer Vani Jairam died

Veteran playback singer Vani Jairam, who sang over 10,000 songs across several Indian languages, died at 77.


  • Born on November 30, 1945 in Vellore.
  • She was trained as Carnatic music and later learnt Hindustani classical music as well.
  • The singer had lent her voice to several songs across 19 languages which included Tamil, Hindi, Telugu, Malayalam, Marathi, Odiya and Bengali.
  • Her big break in films came with the Hindi film Guddi in 1971, where she sang three songs for composer Vasant Desai.
  • Famous versions: Hum ko mann ki shakthi dena 

Awards and Achievements:

  • She also received the National Award thrice .
  • The Government of India, last month, announced that Jairam, who completed 50 years as a playback singer in 2021, would receive the Padma Bhushan award, the third-highest civilian award, for her contribution to music.

Science and Technology

North star and significance

The Vice President and Rajya Sabha Chairman Jagdeep Dhankhar during the Parliament’s sitting stated that Parliament is the “north star” of democracy.

About North Star:

  • ‘Polaris’, also known as the North Star or the Pole Star, is a very bright star (around 2500 times more luminous than our sun) placed less than 1° away from the north celestial pole.
  • Its position and brightness have made humans use it for navigation since late antiquity.
  • It is a part of the constellation ‘Ursa Minor’ and is around 323 light-years away from Earth.
  • Polaris seems to have been first charted by the Roman mathematician and astronomer Ptolemy, who lived from about 85 to 165 B.C.
  • While there does exist some evidence pointing at how the star was used for navigation in late antiquity, it is during the ‘Age of Exploration’ that it becomes such a central part of human history.

Does the Northern Star “change”?

  • However, during the reign of Julius Caesar (46-44 BC), there was no constant North Star. 
  • This is due to the fact that the northern celestial pole changes over time.
  • If you picture a line connecting Earth’s North and South Poles as the axis around which Earth rotates, that axis is slowly moving in its own circle.
  • By the end of the 21st century, the celestial pole will move away from the Polaris – humans will need to identify a new ‘North Star’.


Great Indian Bustard

Despite a Supreme Court order directing that low-voltage power lines go underground, no significant steps has been taken by power companies and State governments to comply with guidelines to save Indian bustard, according to the report.


  • The Great Indian Bustard (Ardeotis nigriceps), is a bustard native to the Indian subcontinent. Bustards are large terrestrial birds found in dry grasslands and steppe regions.
  • It is also known as the Indian Bustard; it is among the heaviest flying birds in existence.
  • It is the State bird of Rajasthan and is considered India’s most critically endangered bird.
  • It is considered the flagship grassland species, representing the health of the grassland ecology.
  • The GIB is now found in a small number only in western Rajasthan, while Gujarat claims to have a few females left in its Banni Grassland Reserve.
  • Population: As per the last count of the GIB in 2018, there were around 127 birds in the Desert National Park or the DNP in Rajasthan.

Protection Status:

  • International Union for Conservation of Nature Red List: Critically Endangered
  • Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES): Appendix I
  • Convention on Migratory Species (CMS): Appendix I
  • Wildlife (Protection) Act, 1972: Schedule 1


The tax gambit


  • The hike in tax-free ceiling under the new income-tax system to ?7 lakh from ?5 lakh will lower tax rates for those who give up existing tax exemptions. 

Concerns on tax move:

  • Effect on middle-class: The effect on savings pattern can bring difficulties for middle-class as they do not save enough to avail the tax exemptions and end up paying higher rates.
  • Lack of social security: There is varying arithmetic to determine at what levels of income and savings taxpayers should consider switching to the new “default” regime.
  • Drop in Investments: The savings rate may hit investments and would affect lower income earners.

Policy without consideration:

  • Of adequate financial literacy: India’s literacy and financial literacy levels mean many taxpayers cannot deem the right mix of consumption and savings, leave alone directing savings into an appropriate medley of safe as well as inflation-beating investments.
  • Youth amongst 7 lakh slab: There comes most of the youth of the country under this regime of taxation and can impact the savings.
  • Unaware of market regime: There is a demand-supply mismatch, which is difficult for a consumer to understand and accordingly invest.
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