IAS Gyan

Daily News Analysis


11th June, 2020

DNA 11TH June


Group of Seven- G7

This editorial deals with G7, its historical background and what it has to offer to India.

Call for expansion of G7

-Recently, the U.S. President proposed the expansion of G7 to G10 or G11, with the inclusion of India, South Korea, Australia and possibly Russia.

-Elaborating this logic, the White House Director of Strategic Communications said the U.S. President wanted to include other countries, including the Five Eyes countries.

-Five Eye is an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom and the United States.

-The U.S. also stressed that the expanded group should talk about the future of China.

China’s objection

A Chinese Ministry of Foreign Affairs official immediately reacted, labelling it as “seeking a clique targeting China”.

G7- A historical background

-The G7 emerged as a restricted club of the rich democracies in the early 1970s.

-The quadrupling of oil prices just after the 1973 Arab-Israeli War, when OPEC imposed an embargo against Canada, Japan, the Netherlands, and the United States, shocked their economies.

-Although the French were spared the embargo, the chill winds of the OPEC action reverberated around the world.

-So, French President invited the Finance Ministers of five of the most developed members of the Organisation for Economic Cooperation and Development, the United States, Germany, Japan, Italy, and the United Kingdom, for an informal discussion on global issues.

-This transformed into a G7 Summit of the heads of government from the following year with the inclusion of Canada in 1976.

-And the European Commission/Community (later Union) joined as a non-enumerated member, a year later.

-On the initiative of U.S. President Bill Clinton and British Prime Minister Tony Blair, the G7 became the G8, with the Russian Federation joining the club in 1998.

-This ended with Russia’s expulsion following the annexation of Crimea in 2014.

Rising share of E7 and declining share of G7 in global GDP

-When constituted, the G7 countries accounted for close to two-thirds of global GDP.

-According to the 2017 report of the accountancy firm, PwC, “The World in 2050”, they now account for less than a third of global GDP on a purchasing power parity (PPP) basis.

-And less than half on market exchange rates (MER) basis.

-The seven largest emerging economies (E7, or “Emerging 7”), comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey, account for over a third of global GDP on purchasing power parity (PPP) terms.

Predictions for India

-India’s economy is already the third largest in the world in PPP terms, even if way behind that of the U.S. and China.

-By 2050, the PwC Report predicts, six of the seven of the world’s best performing economies will be China, India, the United States, Indonesia, Brazil and Russia.

-Two other E7 countries, Mexico and Turkey, also improve their position.

-It projects that India’s GDP will increase to $17 trillion in 2030 and $42 trillion in 2050 in PPP terms, in second place after China, just ahead of the United States.

-This is predicated on India overcoming the challenge of COVID-19, sustaining its reform process and ensuring adequate investments in infrastructure, institutions, governance, education and health.

What are the limitations of G7?

-The success or otherwise of multilateral institutions are judged by the standard of whether or not they have successfully addressed the core global or regional challenges of the time.

-The G7 failed to head off the economic downturn of 2007-08.

-This failure led to the rise of the G20.

-In the short span of its existence, the G20 has provided a degree of confidence, by promoting open markets, and stimulus, preventing a collapse of the global financial system.

-The G7 also failed to address the contemporary issues, such as the COVID-19 pandemic, climate change, the challenge of the Daesh, and the crisis of state collapse in West Asia.

-It had announced its members would phase out all fossil fuels and subsidies, but has not so far announced any plan of action to do so.

-And their coal fired plants emit “twice more CO2 than those of the entire African continent”.

Turmoil in West Asia and failure of Europe:

-Three of the G7 countries, France, Germany, and the U.K., were among the top 10 countries contributing volunteers to the ISIS.

-West Asia is in a greater state of turmoil than at any point of time since the fall of the Ottoman Empire.

-This turmoil has led to a migrant’s crisis.

-Migrant crisis persuaded many countries in Europe to renege on their western liberal values, making the Mediterranean Sea a death trap for people fleeing against fear of persecution and threat to their lives.

Need of new institution to deal with unparalleled challenge:

-The global economy has stalled and COVID-19 will inevitably create widespread distress.

-Nations need dexterity and resilience to cope with the current flux, as also a revival of multilateralism, for they have been seeking national solutions for problems that are unresolvable internally.

-Existing international institutions have proven themselves unequal to these tasks.

-A new mechanism might help in attenuating them.

-It would be ideal to include in it the seven future leading economies, plus Germany, Japan, the U.K., France, Mexico, Turkey, South Korea, and Australia.

- The 2005 ad hoc experiment by Prime Minister Tony Blair in bringing together the G7 and the BRICS countries was a one-off.

Focus of this new institution:

-A new international mechanism will have value only if it focuses on key global issues.

-A related aspect is how to push for observing international law and preventing the retreat from liberal values on which public goods are predicated.

-Global public health and the revival of growth and trade in a sustainable way -that also reduces the inequalities among and within nations- would pose a huge challenge.

India’s priority in new institution

-India would be vitally interested in three:

1) International trade,

2) Climate change,

3) The COVID-19 crisis.

-Second order priorities for India would be cross-cutting issues such as counter-terrorism and counter-proliferation.

-An immediate concern is to ensure effective implementation of the 1975 Biological Weapons Convention.

-And the prevention of any possible cheating by its state parties by the possible creation of new microorganisms or viruses by using recombinant technologies.

-On regional issues, establishing a modus vivendi with Iran would be important to ensure that it does not acquire nuclear weapons and is able to contribute to peace and stability in Afghanistan, the Gulf and West Asia.

-The end state in Afghanistan would also be of interest to India.

-And also the reduction of tensions in the Korean Peninsula and the South China Sea.

Source: https://www.thehindu.com/opinion/lead/an-unravelling-of-the-group-of-seven/article31798577.ece


International Religious Freedom (IRF) Report

Context: The U.S. State Department has released its annual International Religious Freedom (IRF) Report.

More details: The annual Report to Congress on International Religious Freedom, also known as the International Religious Freedom Report, describes the status of religious freedom, government policies violating religious belief and practices of groups, religious denominations and individuals, and U.S. policies promoting religious freedom. The report is a survey of the state of religious freedom across the world.

What are the observations made on Religious freedom in India?

-The report takes note of the change in the status of Jammu and Kashmir, the Citizenship (Amendment) Act (CAA) and the National Register of Citizens (NRC).

-It discusses in detail mob lynchings and anti-conversion laws and related issues.

-Lawmakers failed: The report notes, Issues of religiously inspired mob violence, lynching and communal violence were sometimes denied or ignored by lawmakers.

-It details incidents of “cow vigilantism” and other types of mob violence.

-The report also takes note of the Babri Masjid decision by the Supreme Court and the challenges to the 2018 reversal of a ban on some women entering the Sabarimala temple.


-The report outlines the U.S. engagement with India on the issues.

-USCIRF had, in April, recommended to Secretary of State that the State Department downgrade India’s religious freedom to the lowest grade — ‘Country of Particular Concern (CPC)’. The Secretary of State is not obliged to accept the recommendation.

-It recommended that the Trump administration “impose targeted sanctions on Indian government agencies and officials responsible for severe violations of religious freedom by freezing those individuals’ assets and/ or barring their entry into the United States citing specific religious freedom violations”.

Indian response:

India has said the USCIRF’s “biased and tendentious” comments against the country were “not new”, but that, on this occasion, “its misrepresentation has reached new levels”.

Source: https://www.thehindu.com/news/national/us-religious-freedom-report-takes-note-of-caa-nrc-jk-status/article31798724.ece


Rights issue

Context: Many companies including Reliance Industries Limited, Mahindra finance, Tata Power, Shriram Transport Finance among others plan to raise funds (aggregating to over Rs 10,000 crores) through rights issue amidst the Covid-19 pandemic.

What is rights issue?

-It is an offering of shares made to existing shareholders in proportion to their existing shareholding.

-Companies often offer shares in a rights issue at a discount on the market price.

-Rights issues are used by companies seeking to raise capital without increasing debt.

-Shareholders are not obliged to purchase shares offered in a rights issue.

Why are companies going for rights issue in current times?

-For a rights issue, there is no requirement of shareholders’ meeting and an approval from the board of directors is sufficient and adequate.

-Therefore, the turnaround time for raising this capital is short and is much suited for the current situation unlike other forms that require shareholders’ approval and may take some time to fructify.

-Thus, the rights issue are a more efficient mechanism of raising capital.

What were the temporary relaxations provided in the wake of Covid-19 by SEBI?

-SEBI reduced the eligibility requirement of average market capitalisation of public shareholding from Rs. 250 crores to Rs. 100 crores for a fast track rights issuance.

-It also reduced the minimum subscription requirement from 90 per cent to 75 per cent of the issue size.

-Also, listed entities raising funds upto Rs 25 crores (erstwhile limit was Rs 10 crores) through a rights issue are now not required to file draft offer document with SEBI.

Source: https://indianexpress.com/article/explained/reliance-companies-going-for-rights-issue-covid-19-pandemic-6452544/


GM Seeds

Context: In the current kharif season, farmers would undertake mass sowing of GM seeds for maize, soyabean, mustard brinjal and herbicide tolerant (Ht) cotton, although these are not approved. Therefore, in this regard, Shetkari Sanghatana — a farmers’ union— has announced fresh plans in its agitation for use of genetically modified seeds.

What is the movement about?

-The Sanghatana has announced that this year they are going to undertake large-scale sowing of unapproved GM crops like maize, HtBt cotton, soyabean and brinjal across Maharashtra.

-Farmers who plant such variants will put up boards on their fields proclaiming the GM nature of their crop.

-This action will draw attention to the need for introduction of the latest technology in the fields.

What are genetically modified seeds?

Genetic engineering aims to transcend the genus barrier by introducing an alien gene in the seeds to get the desired effects. The alien gene could be from a plant, an animal or even a soil bacterium.

For example:

-Bt cotton, the only GM crop that is allowed in India, has two alien genes from the soil bacterium Bacillus thuringiensis (Bt) that allows the crop to develop a protein toxic to the common pest pink bollworm.

-HtBt cotton is derived with the insertion of an additional gene, from another soil bacterium, which allows the plant to resist the common herbicide glyphosate.

-In Bt brinjal, a gene allows the plant to resist attacks of fruit and shoot borer.

-In DMH-11 mustard, genetic modification allows cross-pollination in a crop that self-pollinates in nature.

What is the legal position of genetically modified crops in India?

-In India, the Genetic Engineering Appraisal Committee (GEAC) is the apex body that allows for commercial release of GM crops.

-Penalty: Use of the unapproved GM variant can attract a jail term of 5 years and fine of Rs 1 lakh under the Environmental Protection Act, 1989.

Why are farmers supporting GM crops?

Reduced costs: Cost of weeding goes down considerably if farmers grow HtBt cotton and use glyphosate against weeds. In case of Bt brinjal, the cost reduces as the cost of production is reduced by cutting down on the use of pesticides.

Some concerns:

Environmentalists argue that the long-lasting effect of GM crops is yet to be studied and thus they should not be released commercially. Genetic modification, they say, brings about changes that can be harmful to humans in the long run.

Source: https://indianexpress.com/article/explained/gm-seeds-the-debate-and-a-sowing-agitation-6452999/


Daulat Beg Oldie


-The construction of the 255-km long Darbuk-Shyokh-Daulat Beg Oldie (DSDBO) all-weather road is said to be the immediate reason behind the standoff between Indian Army and a Chinese Army along LAC.

-Built by BRO, the road runs almost parallel to the LAC and connects Leh to DBO

-DBO is the northernmost corner of Indian territory in Ladakh, in the area better known in Army parlance as Sub-Sector North.

-It has the world’s highest airstrip, originally built during the 1962 war but abandoned until 2008, when the Indian Air Force (IAF) revived it as one of its many Advanced Landing Grounds (ALGs) along the LAC.

-DBO is less than 10 km west of the LAC at Aksai Chin.

-To the west of DBO is the region where China abuts Pakistan in the Gilgit-Baltistan area, once a part of the erstwhile Kashmir principality.

Operation Desert Chase:

Context: Under this operation, Rajasthan Police arrested two civil defence employees in Jaipur based on Military Intelligence (MI) inputs that they had been passing on sensitive information to Pakistan’s spy agency ISI.

-It was the name of the Anti-espionage operation started by Military Intelligence (MI) in early 2019.

- It successfully culminated in June 2020 with the arrest of two men. Both were arrested under relevant sections of Official Secrets Act, 1923.

Athirappilly hydroelectric project:

Context: The Kerala government has issued a fresh no-objection certificate (NOC) for the state electricity board to proceed with the implementation of the proposed Athirapally hydroelectric project.

Some facts:

It will have an installed capacity of 163 mw.

A dam is proposed to be constructed on the Chalakudy River, a tributary of the Periyar River and originates in the Anamalai region of Tamil Nadu.