CURRENT AFFAIRS 10 OCTOBER 2019

CURRENT AFFAIRS

10 OCTOBER 2019

BY SUMIT

1.ModiXi ‘informal summit’ (gs-1,2)

Context: ModiXi ‘informal summit’ to be

held in Chennai from tomorrow

India will focus on building on the Wuhan ‘consensus’ for better ties

Chinese President Xi Jinping will arrive in Chennai on Friday for the second “informal summit” with Prime Minister Narendra Modi on October 1112, New Delhi and Beijing announced on Wednesday. The meeting between the two leaders, which follows the Wuhan summit last April that reset ties, is expected to enhance bilateral cooperation

Lets understand the aspects of ModiXi ‘informal summit’ from the following editorial which was published in the hindu recently….

EDITORIAL: IN SEARCH OF THE WUHAN SPIRIT

The coastal town of Mamallapuram (aka Mahabalipuram) has pipped the sacred city of Varanasi to host the historic informal summit between Prime Minister Narendra Modi and Chinese President Xi Jinping.

The historical Buddhism connection is being capitalised well with statutes of Buddha seen at various vantage points in Mamallapuram, which is getting a major facelift with hundreds of workers toiling round-the-clock to ensure that the town is ready for the historic meeting between October 11 and 13.

Why Mamallapuram is chosen for second Informal Summit between India and China:

If Wuhan was picked by President Xi Jinping as the venue last year to demonstrate China’s economic resilience and might, Mamallapuram is symbolic of India’s ‘soft power’.

Mamallapuram, an important town of the erstwhile Pallava dynasty that ruled this part of south India from 275 CE to 897 CE, is renowned for its architecture, widely admired across the world

Historical connect between Mamallapuram with China:

Historians said that the ancient port town of Mamallapuram was used effectively by the Pallavas to trade with China
More importantly, Buddhist monk Bodhidharma, who was an icon in China, was the third prince of a Pallava king who travelled to China from Kancheepuram via Mamallapuram in 527AD.
He went on to become the 28th patriarch of Buddhism succeeding Prajnatara.
Mamallapuram and the Pallava dynasty are also historically relevant, for the earliest recorded security pact between China and India (in the early 8th century) involved a Pallava king (Rajasimhan, or Narasimha Varma II), from whom the Chinese sought help to counter Tibet, which had by then emerged as a strong power posing a threat to China.

Significance of these informal summits:

Informal meet at Wuhan resulted in invoking of Wuhan Spirit, which sought to reset ties between India and China.
Wuhan Spirit is in line with the five principles of peaceful coexistence (Panchsheel) jointly advocated by China and India in the 1950s. Under Wuhan Spirt
Both countries agreed that they form the “backbone” of economic globalisation, and they should jointly make positive contributions to global peace and development.
The two nations have agreed to cooperate, for the first time ever, on a joint project in Afghanistan.
China has indicated that India’s refusal to join the Belt and Road Initiative will not come in the way of economic cooperation.

Changing relations: Treading with caution:

India also has other reasons to be more optimistic than a year ago because India’s relations with the U.S. have attained a new high.
The Quad (the U.S., India, Japan and Australia) has gained a new lease of life.
China’s Belt and Road Initiative (BRI) has also come under increasing attack, due to debt trap diplomacy (China taking the lease of Sri Lanka’s Hambantota port for 99 years).
India’s relations with Russia have acquired a fresh dimension, incorporating economics alongside a longstanding military relationship.
India’s line of credit to develop Russia’s Far East has fundamentally changed the nature of India-Russia relations.
Due to Trade war, relations between China and the U.S. have sharply deteriorated.
Also, a new triangular relationship of Russia, India and Japan, appears to be altering equations in the East Asian region.

China-Pakistan Axis:

China’s willingness to block any concrete action against Pakistan, its “all-weather friend”, for supporting terrorism has constituted one of the most pressing obstacles in having smooth relations between New Delhi and Beijing.
China believes that India poses one of the few potential challenges to its ambitions of Asian dominance.
Therefore, the primary motivation behind China’s strategic cultivation of Pakistan has been a long-held strategy of entangling India in the subcontinental rivalry.
Beijing has been quite successful in that India-Pakistan hostility has prevented New Delhi’s power and influence spreading beyond its immediate neighbourhood.
Pakistan has fully embraced China as the most important strategic balancer against India.
Pakistan’s historically close relationship with China has deepened in recent years, particularly after the inauguration of China-Pakistan Economic Corridor (CPEC), which is an important component of China’s geo-economic and geopolitical Belt and Road Initiative (BRI).

Conclusion:

The meeting is also likely to help Mamallapuram become a must visit place for Chinese tourists, who mostly visit Bodhgaya.
Informal summits have their use as trust-building exercises.
Doklam and the disputed border between the two countries remains an issue of concern.
The geo-political dynamics have changed in the recent past.
It has been said that this century is Asia’s century, so in the light of this perception, both countries need to focus their energies more on domestic socio-economic development rather than frittering it away militarily.
Hopes raised at the Wuhan Summit that the two countries would jointly work together on an economic project in Afghanistan have proved to be evanescent.
With preparations and proper handling, the forthcoming meet could, on the other hand, provide India’s leaders with a realistic estimate as to where India-China relations are headed

2.IMF,WORLD ECONOMIC OUTLOOK(GS-3)

CONTEXT:Slowdown effects more pronounced in India: IMF

It warns of slower growth for 90% of the world this year

The largest emerging market economies like India are experiencing an even “more pronounced” effect of the global downturn, new International Monetary Fund (IMF) chief Kristalina Georgieva said on Wednesday, warning that the global economy is witnessing “synchronised slowdown” which will result in slower growth for 90% of the world this year. The IMF managing director pointed out that the widespread deceleration meant that growth this year would fall to its lowest rate since the beginning of the decade. She said the World Economic Outlook to be released next week would show downward revisions for 2019 and 2020

IMF:
International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an organization of 189 member countries, each of which has representation on the IMF's executive board in proportion to its financial importance, so that the most powerful countries in the global economy have the most voting power.

Objective

Foster global monetary cooperation
Secure financial stability
Facilitate international trade
Promote high employment and sustainable economic growth
And reduce poverty around the world

Functions

Provides Financial Assistance: To provide financial assistance to member countries with balance of payments problems, the IMF lends money to replenish international reserves, stabilize currencies and strengthen conditions for economic growth. Countries must embark on structural adjustment policies monitored by the IMF.
IMF Surveillance: It oversees the international monetary system and monitors the economic and financial policies of its 189 member countries. As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.
Capacity Development: It provides technical assistance and training to central banks, finance ministries, tax authorities, and other economic institutions. This helps countries raise public revenues, modernize banking systems, develop strong legal frameworks, improve governance, and enhance the reporting of macroeconomic and financial data. It also helps countries to make progress towards the Sustainable Development Goals (SDGs).

Governance

Board of Governors: It consists of one governor and one alternate governor for each member country. Each member country appoints its two governors.
It is responsible for electing or appointing executive directors to the Executive Board.
Approving quota increases, Special Drawing Right allocations,
Admittance of new members, compulsory withdrawal of member,
Amendments to the Articles of Agreement and By-Laws.
Board of Governors is advised by two ministerial committees, the International Monetary and Financial Committee (IMFC) and the Development Committee.
Boards of Governors of the IMF and the World Bank Group normally meet once a year, during the IMF–World Bank Annual Meetings, to discuss the work of their respective institutions.
Ministerial Committees: The Board of Governors is advised by two ministerial committees,
International Monetary and Financial Committee (IMFC): IMFC has 24 members, drawn from the pool of 189 governors, and represents all member countries.
It discusses the management of the international monetary and financial system.
It also discusses proposals by the Executive Board to amend the Articles of Agreement.
And any other matters of common concern affecting the global economy.
Development Committee: is a joint committee(25 members from Board of Governors of IMF & World Bank), tasked with advising the Boards of Governors of the IMF and the World Bank on issues related to economic development in emerging market and developing countries.
It serves as a forum for building intergovernmental consensus on critical development issues.
Executive Board: It is 24-member Executive Board elected by the Board of Governors.
It conducts the daily business of the IMF and exercises the powers delegated to it by the Board of Governors & powers conferred on it by the Articles of Agreement.
It discusses all aspects of the Fund’s work, from the IMF staff's annual health checks of member countries' economies to policy issues relevant to the global economy.
The Board normally makes decisions based on consensus, but sometimes formal votes are taken.
Votes of each member equal the sum of its basic votes (equally distributed among all members) and quota-based votes. A member’s quota determines its voting power.
IMF Management: IMF’s Managing Director is both chairman of the IMF’s Executive Board and head of IMF staff. The Managing Director is appointed by the Executive Board by voting or consensus.

IMF Members: Any other state, whether or not a member of the UN, may become a member of the IMF in accordance with IMF Articles of Agreement and terms prescribed by the Board of Governors.

Membership in the IMF is a prerequisite to membership in the IBRD.
Pay a quota subscription: On joining the IMF, each member country contributes a certain sum of money, called a quota subscription, which is based on the country’s wealth and economic performance (Quota Formula).
It is a weighted average of GDP (weight of 50 percent)
Openness (30 percent),
Economic variability (15 percent),
International reserves (5 percent).
GDP of member country is measured through a blend of GDP—based on market exchange rates (weight of 60 percent) and on PPP exchange rates (40 percent).
Special Drawing Rights (SDRs) is the IMF’s unit of account and not a currency.
The currency value of the SDR is determined by summing the values in U.S. dollars, based on market exchange rates, of a SDR basket of currencies
SDR basket of currencies includes the U.S. dollar, Euro, Japanese yen, pound sterling and the Chinese renminbi (included in 2016).
The SDR currency value is calculated daily (except on IMF holidays or whenever the IMF is closed for business) and the valuation basket is reviewed and adjusted every five years.
Quotas are denominated (expressed) in SDRs.
SDRs represent a claim to currency held by IMF member countries for which they may be exchanged.
Members’ voting power is related directly to their quotas (the amount of money they contribute to the institution).
IMF allows each member country to choose its own method of determining the exchange value of its money. The only requirements are that the member no longer base the value of its currency on gold (which has proved to be too inflexible) and inform other members about precisely how it is determining the currency’s value.

IMF and India

International regulation by IMF in the field of money has certainly contributed towards expansion of international trade. India has, to that extent, benefitted from these fruitful results.
Post-partition period, India had serious balance of payments deficits, particularly with the dollar and other hard currency countries. It was the IMF that came to her rescue.
The Fund granted India loans to meet the financial difficulties arising out of the Indo–Pak conflict of 1965 and 1971.
From the inception of IMF up to March 31, 1971, India purchased foreign currencies of the value of Rs. 817.5 crores from the IMF, and the same have been fully repaid.
Since 1970, the assistance that India, as other member countries of the IMF, can obtain from it has been increased through the setting up of the Special Drawing Rights (SDRs created in 1969).
India had to borrow from the Fund in the wake of the steep rise in the prices of its imports, food, fuel and fertilizers.
In 1981, India was given a massive loan of about Rs. 5,000 crores to overcome foreign exchange crisis resulting from persistent deficit in balance of payments on current account.
India wanted large foreign capital for her various river projects, land reclamation schemes and for the development of communications. Since private foreign capital was not forthcoming, the only practicable method of obtaining the necessary capital was to borrow from the International Bank for Reconstruction and Development (i.e. World Bank).
India has availed of the services of specialists of the IMF for the purpose of assessing the state of the Indian economy. In this way India has had the benefit of independent scrutiny and advice.
The balance of payments position of India having gone utterly out of gear on account of the oil price escalation since October 1973, the IMF has started making available oil facility by setting up a special fund for the purpose.
Early 1990s when foreign exchange reserves – for two weeks’ imports as against the generally accepted 'safe minimum reserves' of three month equivalent — position were terribly unsatisfactory. Government of India's immediate response was to secure an emergency loan of $2.2 billion from the International Monetary Fund by pledging 67 tons of India's gold reserves as collateral security. India promised IMF to launch several structural reforms (like devaluation of Indian currency, reduction in budgetary and fiscal deficit, cut in government expenditure and subsidy, import liberalisation, industrial policy reforms, trade policy reforms, banking reforms, financial sector reforms, privatization of public sector enterprises, etc.) in the coming years.
The foreign reserves started picking up with the onset of the liberalisation policies.
India has occupied a special place in the Board of Directors of the Fund. Thus, India had played a creditable role in determining the policies of the Fund. This has increased the India’s prestige in the international circles.

World Economic Outlook Reports:

A Survey by the IMF staff usually published twice a year. It presents IMF staff economists' analyses of global economic developments during the near and medium term. Chapters give an overview as well as more detailed analysis of the world economy; consider issues affecting industrial countries, developing countries, and economies in transition to market; and address topics of pressing current interest. Annexes, boxes, charts, and an extensive statistical appendix augment the text

3.Chemistry Nobel awarded for development of Li-ion batteries(GS-3)

CONTEXT:The 2019 Nobel Prize for Chemistry has been announced. Three scientists, John Goodenough, Stanley Whittingham and Akira Yoshino, have been jointly awarded the coveted prize for their development of lithium-ion batteries.
In a tweet, the Royal Swedish Academy of Sciences in Stockholm today said the laureates laid the foundation of a wireless and fossil-fuel-free society. Goran Hansson, Secretary-General of the Academy, said, the prize was about a rechargeable world.
John Goodenough of the University of Texas is the oldest laureate ever awarded a Nobel prize. M Stanley Whittingham is from the State University of New York at Binghamton and Akira Yoshino of Asahi Kasei Corporation and Meijo University in Japan

The 2019 #NobelPrize in Chemistry has been awarded to John B. Goodenough, M. Stanley Whittingham and Akira Yoshino “for the development of lithium-ion batteries.” pic.twitter.com/LUKTeFhUbg
— The Nobel Prize (@NobelPrize) October 9, 2019

4. Regional Comprehensive Economic Partnership (RCEP),Data localisation(GS-2,3)

CONTEXT: Data localisation plans hang in the balance
India’s data localisation plans hang in the balance as it will join the other Regional Comprehensive Economic Partnership (RCEP) countries on Thursday in discussing the ecommerce chapter of the RCEP agreement. The meeting will take place in Bangkok from October 1013. If India agrees to the provisions of Chapter 10 on ecommerce, as specifi??ed by most of the other countries, it will mean it won’t be allowed to impose data localisation rules on companies looking to do business in India

Regional Comprehensive Economic Partnership (RCEP):

RCEP is proposed between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand).
RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.
Aim: RCEP aims to boost goods trade by eliminating most tariff and non-tariff barriers — a move that is expected to provide the region’s consumers greater choice of quality products at affordable rates. It also seeks to liberalise investment norms and do away with services trade restrictions.

Why is India concerned?

Greater access to Chinese goods may have impact on the Indian manufacturing sector. India has got massive trade deficit with China. Under these circumstances, India proposed differential market access strategy for China.
There are demands by other RCEP countries for lowering customs duties on a number of products and greater access to the market than India has been willing to provide.

Why India should not miss RCEP?

If India is out of the RCEP, it would make its exports price uncompetitive with other RCEP members’ exports in each RCEP market, and the ensuing export-losses contributing to foreign exchange shortages and the subsequent extent of depreciation of the rupee can only be left to imagination. Some of the sectors that have been identified as potential sources of India’s export growth impulses under RCEP to the tune of approximately $200 billion.

There are more compelling trade and economic reasons for RCEP to become India-led in future, than otherwise. India would get greater market access in other countries not only in terms of goods, but in services and investments also.

Data localisation:

What does Data Localization mean?

Data localization is the act of storing data on any device that is physically present within the borders of a specific country where the data was generated.

Why data localization is necessary for India?

For securing citizen’s data, data privacy, data sovereignty, national security, and economic development of the country.
Recommendations by the RBI, the committee of experts led by Justice BN Srikrishna, the draft ecommerce policy and the draft report of the cloud policy panel show signs of data localisation.
The extensive data collection by technology companies, has allowed them to process and monetize Indian users’ data outside the country. Therefore, to curtail the perils of unregulated and arbitrary use of personal data, data localization is necessary.
Digital technologies like machine learning (ML), artificial intelligence (AI) and Internet of Things (IoT) can generate tremendous value out of various data. It can turn disastrous if not contained within certain boundaries.
With the advent of cloud computing, Indian users’ data is outside the country’s boundaries, leading to a conflict of jurisdiction in case of any dispute.
Data localization is an opportunity for Indian technology companies to evolve an outlook from services to products. International companies will also be looking at the Indian market, and this will benefit the growth of the local ecosystem.
More data centres in India could mean new, power-hungry customers for India’s renewable energy market. That means Data localisation could boost India’s renewable energy.

Policies that imply data localization:

The Srikrishna Committee wants to localise data for law enforcement to have easy access to data, to prevent foreign surveillance, to build an artificial intelligence ecosystem in India, and because undersea cables through which data transfers take place are vulnerable to attacks.
In April, the Reserve Bank of India imposed a hard data localisation mandate on payment systems providers to store payment systems data only in India.
Barring limited exceptions, telecom service providers are not allowed to transfer user information and accounting information outside India.
Goals set in the Draft National Digital Communications Policy 2018, and the Guidelines for Government Departments for Contractual Terms related to Cloud Storage 2017, draft e-commerce policy and the draft report of the cloud policy panel show signs of data localization.

Concerns / Challenges:

Several of the recommendations in including the draft e-commerce policy, falter on a key ground like they gloss over the negative economic impact of data localization. This approach exhibits lack of evidence-based policy making.
Having data in India does not mean that domestic companies will be able to access this data. Localization might aid the growth of the data centre and the cloud computing industry in India, but as matter of wider public policy, such an approach is extremely myopic.
Mandating localization is less of a solution for data protection and might be less relevant to promote e-commerce.
Given the comparative trade advantages enjoyed by one section of Indian industry in this context, mandating a strict data localization regime could be perceived as a restrictive trade barrier and spur retaliatory measures.
There is a possible rise in prices of foreign cloud computing services in case of a data localisation, and its impact on MSMEs as well as start-ups relying on these services.
The possibility of triggering a vicious cycle of data localisation requirements by other countries as a response to India’s possible data localisation will be detrimental for the global data economy.
Growth will be restricted if data cannot be aggregated internationally. Infrastructure in India for efficient data collection and management is lacking.

5.GEMINI system(GS-3)

CONTEXT:GEMINI system to warn Fishermen of danger
It also shows fish catch probability
To avoid communication blackouts that led to 20 fishermen going missing in the aftermath of Cyclone Ockhi in 2017, a slew of government departments, research agencies and private companies have developed GEMINI, a portable receiver linked to ISRO satellites, that is “failproof” and warn fishermen of danger
The Indian National Centre for Ocean Information Services (INCOIS), a Hyderabad institute collaborated with Accord, a private company, to develop a boxshaped receiver that has an antenna and inbuilt battery that can last three to four days, according to a brochure describing the device. GEMINI works on GAGAN, developed by ISRO and the Airports Authority of India, and is an Indiamade global positioning system. It relies on the positioning system of ISRO’s GSAT satellites. Storm alerts When GEMINI is connected to an app, it also lets fishermen know the probability of fish catch in the surrounding seas. “Even now we provide services such as storm alerts and advisories of potential fish catch. However, it’s dependent on the mobile services provided by your phone company,” said Satish Shenoi, director, INCOIS. At RUPEES 9,000 a device, it’s relatively expensive, say offi?? cials, but attempts are on to subsidise it by as much as 90%.

6.Safran(gs-2,3)

Context:Rajnath invites French defence firms to India
Provide attractive business environment, says engine maker Safran

Defence Minister Rajnath Singh on Wednesday made a pitch for the French industry to invest and explore collaborative opportunities in India while French engine manufacturer Safran said that India should provide an attractive business environment and not “terrorise us” with its tax and customs rules. “We want collaboration to modernise our shipyards and defence platforms by infusion of technology. French firms can make India their base for production of defence equipment not only for India’s large market but also for export to other countries,” Mr. Singh said, addressing the Chief Executive Officers (CEOs) of the French defence industry. He is on a twoday visit to France

Safran

Safran S.A. is a French multinational aircraft engine, rocket engine, aerospace-component and defense company. It was formed by a merger between the aircraft and rocket engine manufacturer and aerospace component manufacturer group SNECMA and the security company SAGEM in 2005. In 2018 Safran took control of Zodiac Aerospace, significantly expanding its aircraft equipment activities. Its headquarters are located in Paris. Employing over 91,000 people and generating 21.05 billion euros in sales in 2018, Safran operates in the aircraft propulsion and equipment, space and defense markets. The company is listed on the Euronext stock exchange and is part of the CAC 40 and Euro Stoxx 50 indices

7.Telecom Regulatory Authority of India(TRAI)(gs-2)Context: Jio to charge 6p per minutefor calls to other networksPossible extension of deadline to remove IUC charges cited

More than 350 million customers of Reliance Jio will have to pay interconnect usage charge (IUC) of 6 paise per minute for mobile calls made to other networks, as India’s largest telecom company by number of subscribers plans to recover such charges from its customers. Reliance Industries chairman Mukesh Ambani had originally promised free, unlimited voice calls on the Jio network. IUC is paid by one operator to another, when its customers make outgoing mobile calls to the other operator’s customers. These calls are known as mobile offnet calls. IUC charges are fixed by the Telecom Regulatory Authority of India (TRAI) and currently stand at 6 paise per minute

Telecom Regulatory Authority of India(TRAI)

The Telecom Regulatory Authority of India (TRAI) (set up under TRAI Act of 1997) has come into being as a consequence of opening up of the telecommunication sector to the private operators.

Organisation

TRAI shall have, in addition to its chairman, at least two and at the most six members, all appointed by the Central Government.

• The chairman will be a person who has been a judge of the Supreme Court or Chief Justice of a High Court.

• The members should have special knowledge of, or professional experience in telecom, industry, finance, accountancy, law management and consumer affairs.

• Only those senior or retired Government officers can be appointed as members who have served for at least three years as secretary/additional secretary to Union or State Governments.

• The Chairman holds the post for five years, but members’ term is for five years or sixty-five years of age, whichever comes earlier. The serving government employees have to take retirement before joining as members.

The powers of the TRAI have been considerably diluted by the T (Amendment) Ordinance. 2000. Now Regulation of telecom services is to be done by TRAI and newly set up Telecom Disputes Settlement Apell Tribunal (TDSAT). They will also adjudicate disputes dispose of appeals. protect interests of service providers and consumers to promote and ensure orderly growth of the telecom sector.

The composition of TRAI is also changed to chairman and not more two whole time members and not more than two part-time members to appoint by the Government. The TDSAT has been given the mandate adjudicate disputes

(i) between a licensor and a licensee;

(ii) between two or more service providers;

(iii) between a service provider and a group of consumers.

Any person may approach TDSAT in addition to Central or some or local authority. The chairperson and members of this tribunal are to appointed by the Government of India in consultation with the Chief Justice of India.

Initially the TRAI had to bear with interference and nagging Department of Telecommunication of Government of India which also ha to be an interested party being administrative department for government owned telecom service provides. Now with the Amendment 2000 its and jurisdiction has been considerably diluted. One wonders how efficiently the regulator remains in future.

The TRAI is always at logger-heads with the bosses of Union Telcom Ministry which always is busy working out a strategy to by-pass regulator. The year 2009 has been abuzz with the biggest fraud mi. exchequer-the 2-G spectrum allotment scam. As per latest reports from Comptroller and Auditor General of India. This scam seems to have cost the exchequer of Rs. 1,77,000 crores.

Powers and Functions of TRAI

The Powers and functions of TRAI are mainly on:

• to recommend need and timing of introduction of new service providers and terms and conditions of license to a service provider

• to ensure technical compatibility and inter-connect between different service providers and regulate their revenue sharing arrangements

• to ensure compliance with terms of license and revaluation of the same for non-compliance

• to lay down and ensure time period for providing long-distance and local distance circuits

• to facilitate competition and promote efficiency in operations to promote growth of telecom services;

• to protect consumers’ interest monitor quality of senrices inspect equipment used in networks and make
recommendation about such equipment;

• to maintain register of interconnect agreements and keep it open for inspection and to settle disputes among the
service providers in this respect;

• to give advice to the Government on any matter related to the telecom industry. levy fees and charges for services and, ensure that universal service obligations are complied with; and

• to perform any such other administration and financial function may be entrusted to it by the Central Government.

8.Global Competitiveness Index(gs-3)

Context:India slips 10 places in

global competitiveness index

India is among the worstperforming BRICS nations: WEF

India has moved down 10 places to rank 68th on an annual global competitiveness index, largely due to improvements witnessed by several other economies, while Singapore has replaced the U.S. as the world’s most competitive economy. India, which was ranked 58th in the annual Global Competitiveness Index compiled by Genevabased World Economic Forum (WEF), is among the worstperforming BRICS nations along with Brazil (ranked even lower than India at 71st this year). Announcing its latest index, the WEF said on Wednesday India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable despite the high delinquency rate, which contributes to weakening the soundness of its banking system.

Context: GCI 2019 has been released.

The Global Competitiveness Index (GCI), which was launched in 1979, maps the competitiveness landscape of 141 economies through 103 indicators organised into 12 pillars.

The pillars, which cover broad socio-economic elements are: institutions, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labour market, the financial system, market size, business dynamism and innovation capability.

Performance of India:

Compared to last year, India has moved down 10 places to rank 68th. India was ranked 58th last year.

It is among the worst-performing BRICS nations along with Brazil (ranked even lower than India at 71st this year).

India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable despite the high delinquency rate, which contributes to weakening the soundness of its banking system.

In innovation, India is well ahead of most emerging economies and on par with several advanced economies.

Concerns and way ahead for India:

Major shortcomings: limited ICT (information, communications and technology) adoption, poor health conditions and low healthy life expectancy.

The healthy life expectancy, where India has been ranked 109th out of total the 141 countries surveyed for the index, is one of the shortest outside Africa and significantly below the South Asian average.

With a ratio of female workers to male workers of 0.26, India has been ranked very low at 128th place.

Way ahead for India:

Now, India needs to grow its skills base, while its product market efficiency is undermined by a lack of trade openness and the labour market is characterised by a lack of worker rights’ protections, insufficiently developed active labour market policies and critically low participation of women.

Performance of other countries:

Asia-Pacific is the most competitive region in the world, followed closely by Europe and North America.

The United States may have lost out to Singapore overall, but it remains an innovation powerhouse.

Nordic countries are among the world’s most technologically advanced, innovative and dynamic while also providing better living conditions and social protection.

Global concerns- key observations made by the report:

The world is at a social, environmental and economic tipping point.

Subdued growth, rising inequalities and accelerating climate change provide the context for a backlash against capitalism, globalization, technology, and elites.

There is gridlock in the international governance system and escalating trade and geopolitical tensions are fuelling uncertainty.

This holds back investment and increases the risk of supply shocks: disruptions to global supply chains, sudden price spikes or interruptions in the availability of key resources.

Ten years on from the global financial crisis, the world economy remains locked in a cycle of low or flat productivity growth despite the injection of more than $10 trillion by central banks.

advertisements and promoted content: