Current Affairs Reverse Engineering – CARE (27-05-2024)
| News at a Glance |
| Geography: Cyclone Remal makes landfall; one lakh evacuated in Bengal |
| Science and Technology: How Europe’s AI convention balances innovation and human rights |
| Economy: India in trade deficit with nine of top 10 trading partners in 2023-24 |
| Cost Inflation Index set higher at 363 for FY25 |
| Brazil, Canada, EU urge India to submit timely notifications on sugar subsidies in WTO |
| Environment: The value of attributing extreme events to climate change |
Cyclone Remal makes landfall; one lakh evacuated in Bengal
Source: The Hindu
UPSC Syllabus Relevance: GS 1-Geography, GS 3– Disaster Management
Context: Cyclone Remal has resulted in disruptions in air, rail, and road transportation in Kolkata and other parts of south Bengal
Why in News
- The severe cyclonic storm Remal started its landfall process between Sagar Island in West Bengal and Khepupara in Bangladesh, as it intensified and moved northwards.
Key Highlights
- Prime Minister Narendra Modi chaired a meeting to review response and preparedness for the cyclonic storm, while Chief Minister Mamata Banerjee urged people to stay safe and remain indoors.
- The IMD has predicted a storm surge of about 1 metre above astronomical tide, which is likely to inundate low-lying areas of coastal West Bengal around the time of landfall.
- Issuing a red alert cyclone warning for the State coastline, the India Meteorological Department (IMD) said Remal would have a maximum sustained wind speed of 110-120 kmph, gusting to 135 kmph.
- Fourteen teams of the National Disaster Response Force and teams of the State Disaster Response Force have been deployed in coastal areas.
- The West Bengal administration has evacuated people from low-lying and coastal areas of South 24 Parganas, North 24 Parganas and Purba Medinipur to storm shelters.
- By 3 p.m., over one lakh people were shifted from coastal and vulnerable areas.
About Cyclone Ramal
- Cyclone Remal made a landfall in the early hours of Monday between Sagar Island in West Bengal and Khepupara in Bangladesh.
- The name “Remal”, meaning ‘sand’ in Arabic, was chosen by Oman according to the standard convention of naming tropical cyclones in the region.
- Cyclone Remal, which is expected to generate wind speeds at 110-120 kmph, and gusts at 135 kmph, is a tropical cyclone.
- The National Disaster Management Authority (NDMA) classifies cyclones broadly into two categories: extratropical cyclones and tropical cyclones.
What is a cyclone?
- A cyclone is a large-scale system of air that rotates around the centre of a low-pressure area.
- It is usually accompanied by violent storms and bad weather.
- A cyclone is characterised by inward spiralling winds that rotate anticlockwise in the Northern Hemisphere and clockwise in the Southern Hemisphere, according to the NDMA.
What are extratropical cyclones?
- It is also known as mid-latitude cyclones; extratropical cyclones are those which occur outside of the tropic.
- They have “cold air at their core, and derive their energy from the release of potential energy when cold and warm air masses interact”, according to the US National Oceanic and Atmospheric Administration (NOAA).
- It added that such cyclones always have one or more fronts — a weather system that is the boundary between two different types of air masses.
- One is represented by warm air and the other by cold air — connected to them, and can occur over land or ocean.
What are tropical cyclones?
- Tropical cyclones are those which develop in the regions between the Tropics of Capricorn and Cancer.
- They are the most devastating storms on Earth. Such cyclones develop when thunderstorm activity starts building close to the centre of circulation, and the strongest winds and rain are no longer in a band far from the centre.
- The core of the storm turns warm, and the cyclone gets most of its energy from the latent heat released when water vapour that has evaporated from warm ocean waters condenses into liquid water, the agency added.
- Moreover, warm fronts or cold fronts aren’t associated with tropical cyclones.
- Tropical cyclones have different names depending on their location and strength. For instance, they are known as hurricanes in the Caribbean Sea, the Gulf of Mexico, the North Atlantic Ocean and the eastern and central North Pacific Ocean.
- In the western North Pacific, they are called typhoons.
Naming of a Cyclone
- The World Meteorological Organization (WMO), a United Nations agency with 185 members, and the Economic and Social Commission for Asia and the Pacific (ESCAP), a regional commission under the UN Economic and Social Council, collaborated to boost economic activity in Asia and the Far East.
- To enhance cyclone warning and disaster mitigation in the North Indian Ocean region, the WMO established the Panel on Tropical Cyclones (PTC) in 1972.
- After gathering recommendations from each member, the PTC finalised the list and began naming cyclones in 2004.
- In April 2020, a new list of 169 cyclone names—13 from each of the 13 countries—was released. This list is currently used to name cyclones in the region.
How are the cyclones named?
- The countries sending their proposals need to follow some basic guidelines, which include
- ensuring that the propose name Is neutral regarding (a) politics and political figures, (b) religious beliefs, (c) cultures, and (d) gender.
- Does not offend any population group worldwide.
- Is not excessively rude or cruel.
- Is short, easy to pronounce, and not offensive to any PTC member.
- Is a maximum of eight letters long.
- Comes with its pronunciation and a voice recording.
- Is unique (not used before or after).
- The list of proposed names arranges the countries in alphabetical order and includes all the names they suggested.
- These names are then assigned to cyclones in the region on a rotational basis, regardless of which country proposed them.
| CARE MCQ | UPSC PYQ |
| Q1. Consider the following statements regarding tropical cyclones:
1. A tropical cyclone is a rapid storm that originates only in warm ocean waters and has low pressure in the centre. 2. ‘Eye’ is the central part of the tropical cyclone where violent storms and thunderstorm clouds are present. 3. Strong vertical shear increases the intensity of the tropical cyclone. 4. El Nino events inhibit tropical cyclones in the Atlantic Ocean. Which of the statements given above are not correct?
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Q. In the South Atlantic and South-Eastern Pacific regions in tropical latitudes, cyclone does not originate. What is the reason? (2015)
(a) Sea surface temperatures are low (b) Inter-Tropical Convergence Zone seldom occurs (c) Coriolis force is too weak (d) Absence of land in those regions Ans: (b) |
| Answer 1- C
Explanation:
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Europe’s AI Convention – balances innovation and human rights
Source: The Hindu
UPSC Relevance: GS3- Artificial Intelligence, Science and Technology
Context: Scope of the Framework Convention on Artificial Intelligence and Human Rights, Democracy and the Rule of Law. Difference between a framework convention and a protocol and national security concerns
Why in News
- The global governance of artificial intelligence (AI) is becoming more complex even as countries try to govern AI within their borders in various ways, ranging from acts of law to executive orders.
What is Europe’s AI convention?
- Although there are many ethical guidelines, ‘soft law’ tools, and governance principles enshrined in many documents, none of them are binding or are likely to result in a global treaty.
- There are also no ongoing negotiations for an AI treaty at the global or regional levels anywhere.
- Against this background, the Council of Europe (COE) took a big step by adopting the Framework Convention on Artificial Intelligence and Human Rights, Democracy and the Rule of Law — a.k.a. the ‘AI convention’ — on May 17.
- The COE is an intergovernmental organisation formed in 1949, with 46 members today, including the Holy See, Japan, and the U.S., plus countries of the EU bloc and others.
- The agreement is a comprehensive convention covering AI governance and links to human rights, democracy, and the responsible use of AI.
- The framework convention will be opened for signature in Vilnius, in Lithuania, on September 5.
What is a framework convention?
- A ‘framework convention’ is a legally binding treaty that specifies the broader commitments and objectives under the Convention, and sets mechanisms to achieve them.
- The task of setting specific targets, if required, is left to subsequent agreements.
- Those agreements that are negotiated under the framework convention will be called protocols.
- Similarly, in future, there may be a ‘Protocol on AI Risk’ under Europe’s AI convention.
- The framework convention approach is useful because it allows flexibility even as it encodes the core principles and processes by which the objectives are to be realised.
- Parties to the Convention have the discretion to decide the ways in which to achieve the objectives, depending on their capacities and priorities.
- The AI convention can catalyse the negotiation of similar conventions at the regional level in other places.
- Then again, as the U.S. is also a member of the COE, the convention can indirectly affect AI governance in the U.S. as well, which matters because the country is currently a hotbed of AI innovation.
- A related disadvantage of the AI convention is it could be perceived as being influenced more by European values and norms in technology governance.
How does the text address national security?
- Excepting the private sector from the scope of the convention was a contentious issue, and the text reflects the compromise that had to be struck between two contrasting positions: total exemption for the private sector and no exemption.
- Article 3(b) allows Parties the flexibility in this matter but without allowing them to completely exempt the private sector.
- Further, the exemptions in Articles 3.2, 3.3, and 3.4 are broad and pertain to the protection of national security interests, research, development and testing, and national defence, respectively.
- As a result, military applications of AI are not covered by the AI convention. While this is a matter of concern, it’s a pragmatic move given the lack of consensus on regulating such applications.
- In fact, the exemptions in Articles 3.2 and 3.3 — while broad — don’t completely rule out the convention’s applicability vis-a-vis national security and for testing, respectively.
- Finally, the ‘General Obligations’ in the convention pertain to the protection of human rights (Article 4), the integrity of democratic processes, and respect for the rule of law (Article 5).
- While disinformation and deep fakes haven’t been addressed specifically, Parties to the convention are expected to take steps against them under Article 5 — just as they are expected to assess relating to the use of AI and their mitigation.
- In fact, the convention also indicates (in Article 22) that Parties can go beyond the commitments and obligations specified.
Why do we need the AI convention?
- The right to property is protected as a constitutional right and has even been interpreted to be a human right, a Bench of Justices P.S. Narasimha and Aravind Kumar declared in a judgment.
- It is generally assumed that for a valid acquisition all that is necessary is to possess the power of eminent domain power of the sovereign to acquire property of an individual for public use without consent to acquire, followed by grant of reasonable and fair compensation.
- Compulsory acquisition will still be unconstitutional if proper procedure is not established and followed before depriving a person of his/her right to property.
- The judgment upheld a Calcutta High Court order rejecting an appeal filed by the Kolkata Municipal Corporation defending its acquisition of a private land.
- The court ordered the corporation to pay ₹5 lakh as costs within 60 days.
Why do we need the AI convention?
- The AI convention doesn’t create new and/or substantive human rights specific to AI.
- Instead, it asserts that existing human and fundamental rights that are protected by international and national laws will need to stay protected during the application of AI systems as well.
- The obligations are primarily directed towards governments, which are expected to install effective remedies (Article 14) and procedural safeguards (Article 15).
- In all, the convention takes a comprehensive approach to mitigating risks from the application and use of AI systems for human rights, democracy, and the rule of law.
- There are bound to be many challenges to implementing it, particularly at a time when AI regulation regimes are yet to be fully established and technology continues to outpace law and policy.
- However, the convention itself is the need of the hour because of the balance it codifies between innovation in AI and risks to human rights.
Global Partnership on AI (GPAI)
- Global Partnership on AI (GPAI) is a first-of-its-type initiative for evolving a better understanding of challenges and opportunities around AI.
- It works in collaboration with partners and international organizations, leading experts from industry, civil society, governments, and academia to collaborate to promote the responsible evolution of AI and guide the responsible development and use of AI, grounded in human rights, inclusion, diversity, innovation, and economic growth.
- GPAI will be supported by a Secretariat, to be hosted by Organization for Economic Cooperation and Development (OECD) in Paris, as well as by two Centers of Expertise- one each in Montreal and Paris.
- Membership in GPAI is open to countries, including emerging and developing countries.
- Members are expected to provide funding for the GPAI Secretariat principally through voluntary financial contributions.
| CARE MCQ | UPSC PYQ |
| Q2. Consider the following statements with reference to Global Partnership on Artificial Intelligence (GPIA):
1. GPAI is an international initiative resulting from the fruition of ideas within G7 to promote responsible AI use. 2. India joined GPAI as a founding member. 3. Membership in GPAI is open to all countries. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 |
Q. With the present state of development, Artificial Intelligence an effectively do which of the following? (2020)
1. Bring down electricity consumption in industrial units. 2. Create meaningful short stories and songs. 3. Disease diagnosis. 4. Text-to-Speech Conversion. 5. Wireless transmission of electrical energy. Select the correct answer using the code given below: (a) 1, 2, 3 and 5 only (b) 1, 3 and 4 only (c) 2, 4 and 5 only (d) 1, 2, 3, 4 and 5 Ans: (d) |
| Answer 2 – D
Explanation:
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India in trade deficit with nine of top 10 trading partners in 2023-24
Source: The Hindu Business
UPSC Relevance: GS 3- Balance of payment, Economy
Context: China has emerged as India’s largest trading partner with $118.4 billion of two-way commerce in 2023-24, edging past the US
Why in News
- India has recorded a trade deficit, the difference between imports and exports, with nine of its top 10 trading partners, including China, Russia, Singapore, and Korea, in 2023-24, according to official data.
Key Highlights
- The data showed that the deficit with China, Russia, Korea, and Hong Kong increased in the last fiscal compared to 2022-23, while the trade gap with the UAE, Saudi Arabia, Russia, Indonesia, and Iraq narrowed.
- The trade deficit with China rose to $85 billion, Russia to $57.2 billion, Korea to $14.71 billion and Hong Kong to $12.2 billion in 2023-24 against $83.2 billion, $43 billion, $14.57 billion and $8.38 billion, respectively, in 2022-23.
- China has emerged as India’s largest trading partner with $118.4 billion of two-way commerce in 2023-24, edging past the US.
- The bilateral trade between India, and the US stood at $118.28 billion in 2023-24. Washington was the top trading partner of New Delhi during 2021-22 and 2022-23.
India’s FTA with Countries
- India has a free trade agreement with four of its top trading partners – Singapore, the UAE, Korea and Indonesia (as part of the Asian bloc).
- India has a trade surplus of $36.74 billion with the US in 2023-24. America is one of the few countries with which India has a trade surplus. The surplus is also there with the UK, Belgium, Italy, France and Bangladesh.
- India’s total trade deficit in the last fiscal narrowed to $238.3 billion as against $264.9 billion in the previous fiscal.
Impact of Rising Trade deficit
- According to trade experts, a deficit is not always bad, if a country is importing raw materials or intermediary products to boost manufacturing and exports.
- However, it puts pressure on the domestic currency.
- Economic think tank, Global Trade Research Initiative (GTRI) said, that a bilateral trade deficit with a country isn’t a major issue, unless it makes us overly reliant on that country’s critical supplies.
- However, a rising overall trade deficit is harmful to the economy.
- A rising trade deficit, even from importing raw materials and intermediates, can cause the country’s currency to depreciate, because more foreign currency is needed for imports. This depreciation, makes imports more expensive, worsening the deficit.
- To cover the growing deficit, the country might need to borrow more from foreign lenders, increasing external debt, and this can deplete foreign exchange reserves, and signal economic instability to investors, leading to reduced foreign investment.
- Cutting trade deficit requires boosting exports, reducing unnecessary imports, developing domestic industries, and managing currency and debt levels effectively.
What is trade deficit?
- A trade deficit occurs when a country’s import payments surpass the earnings from its exports.
- This situation arises in international trade when the expenditure on imports exceeds the income generated from export trade.
- It is also known as a negative trade balance.
- It happens when there is a negative net amount or balance in an international transaction account.
- The balance of payments, which keeps track of all economic transactions involving changes in ownership between residents and non-residents, records these interactions.
What causes trade deficit?
- There are multiple factors that can be responsible. One of them is some goods not being produced domestically.
- In that case, they have to be imported. This leads to an imbalance in their trade.
- A weak currency can also be a cause as it makes trade expensive.
| CARE MCQ | UPSC PYQ |
Q3. Consider the following statements:
Which of the statements given above is/are correct?
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Q. In the context of governance, consider the following: (2010)
Which of the above can be used as measures to control the fiscal deficit in India? (a) 1, 2 and 3 (b) 2, 3 and 4 (c) 1, 2 and 4 (d) 3 and 4 only Ans: D |
| Answer 3 B
Explanation
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The value of attributing extreme events to climate change
Source: The Hindu
UPSC Syllabus Relevance: GS 3 – Environment and Ecology
Context: While no formal cost-benefit analysis of an attribution exercise has been reported, many experts have argued that attributions are critical for the ‘loss and damage’ process.
Why in News
- A team of climate scientists reported that heatwaves across Asia, from the west to the southeast, had been rendered nearly 45-times more likely by climate change.
Key highlights
- Just a couple of decades ago, the U.N. Intergovernmental Panel on Climate Change (IPCC) argued that individual weather events could not be attributed to climate change.
- The science has since evolved, albeit with all its attendant uncertainties, and now we regularly hear of researchers having been able to attribute some individual extreme events to climate change.
- Many scientific and data challenges persist in this exercise even as its outcomes are argued to be usable for estimating richer countries’ historic liability of climate-related ‘loss and damage’ and the legal liability of governments and corporations in precipitating adverse events like floods and droughts.
- However, researchers have used a variety of methods to evaluate attributability, which raises questions about whether attribution science is mature enough to be used in courts and multilateral fora.
What is the value of extreme-event attribution?
- While no formal cost-benefit analysis of an attribution exercise has been reported, many experts have argued that attributions are critical for the ‘loss and damage’ (L&D) process.
- L&D doesn’t have a unique definition but its place in climate talks under the U.N. Framework Convention on Climate Change has come a long way in the last decade.
- Economically developing countries, in particular those that are ‘particularly vulnerable’, have demanded the L&D fund to pay for the havoc climate change wreaks within their borders.
- Obviously, the criteria by which ‘particularly vulnerable’ countries are to be identified are crucial.
- For example, India is a developing country in the tropics and is highly vulnerable to climate change’s impacts.
- The developed world is opposed to the idea of being held legally accountable in a court for any extreme events since that could open a floodgate of lawsuits.
How were the Asian heatwaves attributed
- A team of climate scientists called World Weather Attribution (WWA) reported that heatwaves across Asia, from the west to the southeast, had been rendered nearly 45-times more likely by climate change.
- It is worth understanding how these ‘rapid extreme event attributions’ are performed.
- The most important concept is the change in probability: in this case, the climate scientists contrasted the conditions in which the heatwaves occurred against a counterfactual world in which climate change did not happen.
- The conditions that prevail in the counterfactual world depend on the availability of data from our world.
- When there isn’t enough data, the researchers run models for the planet’s climate without increasing greenhouse gas emissions and other anthropogenic forcings.
- Where there was sufficient data, they use trends in the data to compare conditions today with a period from the past in which human effects on the planet were relatively minimal.
- The data are hardly ever sufficient, especially for rainfall, and almost never for extreme rainfall events. Climate models are also notoriously bad at properly capturing normal rainfall and worse at extreme ones.
- Thus, climate scientists need to address these challenges in the process of assigning probability changes to events in the past.
- The climate models are better at capturing temperatures and temperature-related events — but again, only at regional scales, not at very local scales.
How do scientists pick extreme events to attribute?
- Another significant challenge in attribution exercises is how scientists choose the extreme events for which they will perform attribution exercises.
- When evaluating the Asian heatwaves, the WWA scientists used regional scales and different definitions for different regions.
- They also arbitrarily considered daily, three-day or monthly average temperatures for attributing likelihoods.
- Heatwaves can be exacerbated by natural factors such as an El Niño event or human factors like urbanisation and deforestation. There is also a debate as to whether irrigation affects heatwaves as well.
- Further, no weather event will occur in exactly the same form twice in a place, which means an extreme event occurring in that place will likely have no precedent.
- This is why it is easier to reliably attribute heatwaves at the subcontinent scale but not those at the level of particular areas.
- For example, the same analysis can produce different answers to the questions “was the intensity of a heatwave amplified by climate change?” and “was the frequency or return period of a heatwave altered by climate change?”.
- In the WWA report, the scientists used multiple approaches in their attribution exercise to answer the same question, and have added that the differences between them are immaterial.
- It is not clear whether these differences will be perceived to be material in a court of law.
How do extreme events depend on human action?
- The actual impacts of extreme events depend not only on the hazard or the extreme event but also on the vulnerability and the exposure of the population affected. Similarly, the financial consequences are also affected by multiple factors.
- This is not a trivial question, especially if L&D negotiations are to be served reliably by attributions.
- Considering all these challenges, we must take stock of the international finance aspects of adaptation, mitigation, and L&D.
- In particular, governments should consider an agreement on historical responsibilities to fund developing countries and close adaptation gaps, build adaptation capacity, and finance mitigation for the global good.
- The real world is severely resource-constrained. In a counterfactual world, where human, financial, and computational resources are infinite, attribution exercises are a beautiful scientific challenge and could serve as a productive intellectual exercise.
- But in the real world, we need a cost-benefit analysis based on a clear role for attribution in the overall climate action landscape.
| CARE MCQ | UPSC PYQ |
| Q 4. Consider the following statements with reference to ‘loss and damage’ in response to climate change:
1. Article 8 of the Paris Agreement enshrines the role of sustainable development in reducing the risk of loss and damage. 2. Limiting global temperature to close to 1.5°C would substantially reduce projected losses and damages and eliminate them all. 3. The Glasgow Dialogue was established in COP 26 between Parties and stakeholders to discuss the funding arrangements to avert, minimize and address loss and damage. Which of the statements given above is/are correct ? (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 3 only |
Q. With reference to ‘Global Climate Change Alliance’, which of the following statements is/are correct? (2017)
Select the correct answer using the code given below: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3 Ans: (a) |
| Answer 4 C
Explanation
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Cost Inflation Index set higher at 363 for FY25
Source: The Hindu business line
UPSC Syllabus Relevance: GS 3– Inflation, Economy
Context:
- The Central Board of Direct Taxes (CBDT) on May 25 notified the cost inflation index for the current financial year (2024-25).
Why in news
- Long-term capital gain liability on the sale or transfer of any capital asset, such as land, property, trademarks and patents is expected to be lower this year as Cost Inflation Index (CII) for Financial Year 2024-25 has been fixed at 363 as against 348 for Financial Year 2023-24.
Key Highlights
- The index for the following financial year, 2024-25, has been updated to 363, marking an increase of 15 points, which corresponds to an annual inflation rate of approximately 4.3 per cent.
- This is consistent with the retail inflation rate of 4.83 per cent recorded in April 2024.
- Taxpayers usually prefer a higher CII as it allows them to claim larger tax rebates.
- The Cost Inflation Index for FY 2024-25 relevant to AY 2025-26 & subsequent years is 363.
- The CII number for last fiscal was 348 and for 2022-23 financial year it was 331.
About Cost Inflation Index (CII)
- The Cost Inflation Index (CII) is a tool that helps account for this. It’s a number published by the government that reflects the estimated yearly increase in prices.
- This index is particularly useful when calculating capital gains taxes on things like property or stocks.
- By factoring in inflation, the CII helps adjust the original purchase price of an asset to better reflect its real value today.
- This can result in a lower capital gain and potentially lower taxes you have to pay.
Significance of Index
- Cost Inflation Index (CII) is useful to adjust the capital gains for inflation, so that the taxpayers are taxed on real appreciation of the assets and not the gains due to inflation.
- The cost inflation index (CII) is used by taxpayer to compute gains arising out of sale of capital assets after adjusting inflation.
- Taxpayers can use this to calculate gains for long-term capital assets sold during FY 24-25 and reduce the tax liability accordingly.
- Normally, an asset is required to be retained for more than 36 months (24 months for immovable property and unlisted shares, 12 months for listed securities) to qualify as ‘long-term capital gains’.
- Since prices of goods increase over time resulting in a fall in the purchasing power, the CII is used to arrive at the inflation adjusted purchasing price of assets so as to compute taxable long-term capital gains (LTCG) every year.
- It is popularly used to calculate “indexed cost of acquisition”, while calculating capital gains at the time of sale of any capital asset.
Central Board of Direct Taxes (CBDT)
- Central Board of Direct Taxes operates as a statutory authority established by the Central Board of Revenue Act, 1963.
- It forms an integral component of the Department of Revenue within the Ministry of Finance.
- It contributes to the formulation of policies and planning related to direct taxation in India and oversees the enforcement of direct tax laws through the Income Tax Department.
- The Central Board of Direct Taxes (CBDT) is the government institution in charge of enforcing India’s direct tax legislation.
- It is part of the Department of Revenue under the Ministry of Finance. The CBDT was established in 1963, and it has six members: the Chairman, the Deputy Chairman, and four other members.
| CARE MCQ | UPSC PYQ |
Q5. Consider the following statements:
Which of the following statements are correct about CBDT?
|
Q. What does venture capital mean? (2014)
(a) A short-term capital provided to industries (b) A long-term start-up capital provided to new entrepreneurs (c) Funds provided to industries at times of incurring losses (d) Funds provided for replacement and renovation of industries Ans: (b) |
| Answer 5 B
Explanation
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Brazil, Canada, EU urge India to submit timely notifications on sugar subsidies in WTO
Source: PTI News
UPSC Syllabus Relevance: GS 3 – Subsidies, World Trade Organisation, Economy
Context: Brazil, Canada, EU urge India to submit timely notifications on sugar subsidies in WTO
Why in News
- A group of WTO member countries, including Brazil, Canada and the European Union, have urged India to submit timely notifications on sugar subsidies in the World Trade Organisation.
India’s Sugar Subsidies
- The issue came up for discussion during the meeting of the WTO’s agriculture committee on May 23-24 in Geneva.
- A group of WTO member countries, including Brazil, Canada and the European Union are also major sugar exporters like India and they allege that support measures by India distort global sugar trade.
- The Indian government has subsidised sugar exports to the world market since 2014.
- It’s also provided the sugar sector with a host of other support measures, including minimum domestic prices, stock support and subsidised loans.
- The cane price paid to farmers is also set by the Government, irrespective of domestic or world market sugar returns.
- In 2019, Brazil, Australia and Guatemala complained that India’s subsidies to farmers violate world trade rules, leading to sugar overproduction and lower world market prices.
- At the same time, India issued a robust defence of its right to support cane farmers livelihoods.
- More recently, the government admitted that export subsidies must finish by the end of 2023 under its interpretation of WTO rules.
- For the past six months, that hasn’t been a problem as world market sugar prices have been high enough for exports to work with no subsidy.
- The Indian government, though, can’t guarantee that world market sugar prices will be high enough for Indian exports to remain viable.
- The Government has therefore increased its fuel ethanol blend rate to 20% to utilise its excess sucrose.
- To ensure this, the Government has offered incentives to encourage sugar mills to invest in distillation capacity, most notably INR 165b low interest loans.
Examination of domestic support to the sugar sector
- The complainants launched their attack primarily on the basis that India was violating Article 7.2(b) of the Agreement on Agriculture (‘AoA’) by providing domestic support to its sugar sector in excess of the de minimis limit, i.e., 10% of the value of sugar production in a sugar season.
- An interesting threshold issue that arose before the panel was whether India’s system of providing support in the form of Fair Remunerative Prices (‘FRP’) and State Administered Prices (‘SAP’) that were paid by the sugar mills to the sugarcane farmers could be considered ‘market support’ under Annex 3 (Domestic support – Calculation of Aggregate Measurement of Support) to the AoA.
- India argued that there was no question of any support being provided by it since there was no budgetary outlay or revenue foregone by the government or its agents.
- It was argued that it is the sugar mills that procured sugarcane from the farmers and paid the support in the form of FRP and SAP to the farmers.
WTO Rules Against Indian Sugar Subsidies
- The WTO has ruled against India’s sugar subsidies; this probably isn’t very surprising for most people.
- The subsidies were in breach of WTO rules that govern the levels at which nations can subsidize domestic agricultural production.
- We believe India will now appeal the decision, so it still has the right to control and protect the domestic cane and sugar economy.
- They have 60 days to launch an appeal, which will then be stuck the WTO’s appellate body.
- However, this body is unable to act at the moment as it doesn’t have enough sitting members.
- The USA has been blocking new appellate appointments to protest what it sees as WTO over-reach.
| CARE MCQ | UPSC PYQ |
Q6. Consider the following statements:
Which of the statements given above (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 |
Q. With reference to the current trends in the cultivation of sugarcane in India, consider the following statements: (2020)
Which of the statements given above is/are correct? (a) 1 and 2 only (b) 3 only (c) 1 and 4 only (d) 2, 3 and 4 only Ans: (c) |
| Answer 6- D
Explanation
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