UPSC Key | Resolve Tibet Act, Thematic funds, India-Russia trade gap and more

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The World

China slams US Bill on Tibet, vows to defend its interests

UPSC Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: GS-II: Effect of policies and politics of developed and developing countries on India’s interests

What’s the ongoing story- China expressed strong opposition on Saturday to a U.S. law signed by President Joe Biden that presses Beijing to resolve a dispute over Tibet’s demands for greater autonomy, vowing to “firmly defend” its interests.

Prerequisites: 

— What is the Promoting a Resolution to the Tibet-China Dispute Act?

— What is the history of the China-Tibet Dispute?

— Map work: Location of Tibet and China.

Key takeaways: 

— Biden signed, into law on Friday the Tibet Dispute Act, which seeks to push Beijing to hold talks with Tibetan leaders, stalled since 2010, to secure a negotiated agreement on the Himalayan region and spur China to address the Tibetan people’s aspirations on their historical, cultural, religious and linguistic identity.

— The law “grossly interferes in China’s domestic affairs, undermines China’s interests, and sends a severely wrong signal to the ‘Tibet independence’ forces,” China’s foreign ministry said.

— Although Washington recognises Tibet as a part of China, the law appears to question that position, analysts say. The U.S. has long supported the rights of the Tibetan people to practice their religion and culture, accusing China of human rights violations in the remote region bordering India.

— Attention has focussed on Tibet-China issues as the Dalai Lama, recuperating from a medical procedure, turned 89 last week. The exiled spiritual leader has said he will clarify questions about his succession around his 90th birthday, while China insists it will choose his successor.

For Your Information: 

— The United States Congress on June 12 passed the Promoting a Resolution to Tibet-China Dispute Act, better known as the Resolve Tibet Act. This act is the third notable piece of legislation that the US has taken regarding Tibet, following the Tibetan Policy Act or TPA (2002), and the Tibetan Policy & Support Act or the TPSA (2020).

— The Resolve Tibet Act authorises the use of funds to counter Chinese disinformation about Tibet “including disinformation about the history of Tibet, the Tibetan people, and Tibetan institutions, including that of the Dalai Lama.”

— The act also challenges the Chinese contention that Tibet has been a part of China since ancient times. It urges China to engage in meaningful and direct dialogue with the Dalai Lama or his representatives, as well as democratically elected leaders of the Tibetan community “without preconditions, to seek a settlement that resolves differences.”

Points to Ponder: 

— What are the provisions of the Resolve Tibet Act? 

— What is China’s stand on Tibet?

— What is India’s Tibet Policy?

— How has the China-Tibet dispute impacted India-China bilateral relations?

Post Read Question:

The Resolve Tibet Act was recently in news. The act is passed by:

(a) China

(b) Nepal

(c) India

(d) United States

Other Important Articles Covering the same topic:

What is the Resolve Tibet Act?

 

Economy

June investment rush: Thematic funds see record net inflows of over Rs 22k cr

UPSC Syllabus:

Preliminary Examination: Economic and Social Development

Mains Examination: GS-III: Indian economy

What’s the ongoing story- Sectoral or thematic funds witnessed record net inflows of over Rs 22,000 crore in June, effectively accounting for around 55 per cent of the total net inflows into equity mutual fund (MF) schemes during the month. 

Prerequisites: 

— Read about equity mutual funds and their types.

— What are thematic funds?

— Know the difference between sectoral and thematic funds.

Key takeaways: 

— Sectoral/thematic funds have become the most popular equity investment category due to growing investor confidence in sectors such as railways, infrastructure, renewables, and energy, driven by favourable government policies and higher capital allocation from both the government and the private sector.

— Sectoral and thematic funds invest in equity and equity-related instruments of a specific sector or theme. Sectoral funds focus on a particular sector of the economy, such as infrastructure, banking, technology, or pharmaceuticals, allocating 80 per cent of their underlying assets to that specific sector. Since these funds concentrate on just one sector, they limit diversification and are therefore riskier. The timing of investments in such funds is important, as sector performance tends to be cyclical. 

— Thematic funds select stocks of companies in industries related to a specific theme, such as infrastructure, service industries, public sector units (PSUs), or multinational companies (MNCs). Since thematic funds also allocate 80 per cent of their underlying assets to sectors related to a specific theme, they tend to be more diversified than sectoral funds, resulting in lower risk.

— According to Gopal Kavalireddi, Vice President of Research at FYERS, the following factors have significantly contributed to the increased interest from investors in sectoral/thematic funds:

1. Positive Trends: Investors are typically drawn to trending sectors that indicate potential for superior returns due to continuous positive news flow or momentum. PSUs/PSBs, along with the defense, shipbuilding, and automotive sectors, have continuously exhibited positive trends.

2. Government Support: Policies and reforms that support the private sector and government capital expenditures in core areas like railways, renewables, infrastructure, and energy, with a planned capex of Rs 21 lakh crore for FY24 and FY25, have boosted investor confidence.

3. New Fund Offerings: New and emerging sectors and themes, such as manufacturing, defense, and special opportunities presented by various Asset Management Companies (AMCs), have attracted interest.

Points to Ponder: 

— What are the risks associated with investing in thematic and sectoral funds?

— What are the benefits of investing in equity mutual funds?

— What is the role of SEBI in the mutual fund industry?

— What are the regulations of SEBI on mutual funds in India?

Post Read Question:

Consider the following statements:

1. Thematic funds invest in equity and equity-related instruments of a specific theme.

2. Thematic funds are less diversified and more riskier.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2 

(d) Neither 1 nor 2

Other Important Articles Covering the same topic:

Equity mutual fund inflows rose by 17%, touched all-time high of Rs 40,600 crore in June: AMFI data

How India-Russia trade gap may threaten rupee internationalisation efforts

UPSC Syllabus:

Preliminary Examination: Current events of national and international importance, economy

Mains Examination: GS-II, GS-III: Effect of policies and politics of developed and developing countries on India’s interests, Indian economy

What’s the ongoing story- In a strategic move to curb its burgeoning oil import bill and reduce dependence on the expensive US dollar, New Delhi aims to bolster bilateral trade with Moscow to $100 billion by 2030. However, the dynamics of India-Russia trade have been skewed since the onset of the Ukraine war in 2022. 

Prerequisites: 

— What is the status of India’s oil imports?

— Which country is the biggest supplier of crude oil to India?

— What is the Internationalisation of the Rupee?

— Map work: Locate bordering countries of Russia, member countries of the Eurasian Economic Union (EEU). (Refer Atlas)

Key takeaways: 

— Russia has rapidly ascended to become India’s top oil supplier, but Indian exports to Russia have struggled, resulting in a $57 billion trade deficit in the bilateral trade worth $66 billion in FY24.

— Unlike India, China has seized the export opportunities emerging in Russia amid crippling Western sanctions and a host of Western companies and banks exiting the war economy. Chinese exports to Russia have actually grown faster than imports of Russian oil. Since trade between the two countries is more balanced compared to India-Russia trade, it has fostered the use of domestic currency. 

— The Russian government has stated that 95 per cent of trade between China and Russia occurs in domestic currency. As a result, the yuan is the most sought-after currency in the Russian stock market, even more popular than the powerful US dollar. Russian oil exports are therefore requesting payments from Indian refineries in Chinese currency, while the use of the rupee has remained restricted.

— The FY23 Economic Survey states that one prerequisite for the emergence of an international currency is that it “needs to be increasingly used for trade invoicing.” According to the BIS Triennial Central Bank Survey 2022, the US dollar is the dominant vehicle currency, accounting for 88 percent of global forex turnover, while the rupee accounts for just 1.6 per cent.

— The survey indicated that if rupee turnover rises to equal the share of non-US, non-Euro currencies in global forex turnover (4 per cent), it will be regarded as an international currency.

— The biggest challenge in boosting Indian exports to Russia has been the reluctance of private banks to facilitate trade with Russia due to fears of Western sanctions. Most private banks have significant business interests in Western countries and multiple branches that could face sanctions imposed by the European Union (EU) and the US.

— To boost trade, during Modi’s visit, both countries decided to eliminate non-tariff and tariff barriers in trade and to initiate negotiations for a trade deal with the Russia-led Eurasian EEU, which could ease the flow of Indian products into the EEU. The EEU consists of five member states: Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia, representing a $5 trillion economy.

For Your Information: 

— Prior to the war in Ukraine, Iraq and Saudi Arabia were the top two suppliers of crude oil to India. But as the West started weaning itself off Russian energy supplies following Moscow’s February 2022 invasion of Ukraine, Russia started offering discounts on its crude and Indian refiners started snapping up the discounted barrels.

Points to Ponder: 

— What are the initiatives taken by India to reduce its dependency on oil imports?

— What are the areas of cooperation between India and Russia?

— What are the challenges faced by India in seizing the export opportunities emerging in Russia?

— How can India internationalise the rupee?

— What are the benefits of the internationalisation of the rupee?

Post Read Question:

Consider the following countries:

1. Russia

2. Iraq

3. Saudi Arabia

What is the correct chronological order of crude oil supplier (in terms of volume from top to bottom) to India?

(a) 3—1—2

(b) 2—1—3

(c) 1—3—2

(d) 1—2—3

Other Important Articles Covering the same topic:

The dramatic transformation of India’s oil trade with Russia, in seven charts

Net direct tax collections surge nearly 20%

UPSC Syllabus:

Preliminary Examination: Economic and Social Development

Mains Examination: GS-III: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.

What’s the ongoing story- Personal income tax collections continue to outpace corporate tax collections, with cumulative net direct tax collections having grown by nearly 20 per cent to Rs 5.74 lakh crore during the April 1-July 11 period of the ongoing financial year (2024-25), the Income Tax Department said in a statement late Friday.

Prerequisites: 

— What is the difference between direct and indirect tax?

— Read about the stock market and its regulation in India.

— Read about the Central Board of Direct Taxes.

Key takeaways: 

—  Personal income tax collections have continued be higher than corporate tax collections, with Securities Transaction Tax (STT) collections more than doubling to Rs 16,634 crore in FY25.

— Direct taxes essentially comprise personal income tax and corporate tax. STT collections, which get counted in overall personal income tax collections, have surged on account of a sharp increase in stock market trading activity. During April 1-July 11 in FY24, STT collections had stood at Rs 7,285 crore.

— Personal income tax collections have risen more than corporate tax collections for the last two financial years. Personal income tax collections accounted for 60 per cent of the total net direct tax collected so far in this fiscal, the data showed.

For Your Information: 

— As the Indian economy grapples with the problem of flagging consumption, policymakers in the government are in favour of rationalising the existing income tax structure, especially at lower income levels.

— According to two government officials The Indian Express spoke with, it is likely that tax rate cuts for those earning less may likely take precedence over freebies or excessive welfare spending given the focus on fiscal consolidation.

— A boost to consumption is being seen as crucial for reviving demand, which in turn is central to restarting the investment cycle, especially rekindling private capital expenditure in consumer-focused sectors, an official explained.

Points to Ponder: 

— What are the issues in India’s taxation system? 

— What initiatives have been taken by the government to boost direct tax collection?

— What are the advantages and disadvantages of the income tax rate cut?

— Why is income tax structure rationalisation preferred over the higher welfare expenditure for increasing disposable income and consumption?

(Thought Process: While welfare spending comes with leakages, a tax rate cut at the lower income levels often leads to higher consumption. It boosts demand, which is critical for kickstarting investment, especially by the private sector, which has remained moribund for years now.)

Post Read Question:

Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India? (UPSC CSE 2021)

(a) Diversion of resources to the purchase of real estate and investment in luxury housing.

(b) Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.

(c) Large donations to political parties and growth of regionalism.

(d) Loss of revenue to the State Exchequer due to tax evasion.

Other Important Articles Covering the same topic:

Govt looks at income tax rate cut to boost demand, trigger private investment

Goyal to hold meetings with G7 ministers in Italy

UPSC Syllabus:

Preliminary Examination: Current events of national and international importance, Economy

Mains Examination: GS-II, GS-III: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests, Economy

What’s the ongoing story- Commerce and Industry Minister Piyush Goyal will hold bilateral meetings at Reggio Calabria in Italy next week with his counterparts from G7 nations and discuss ways to boost trade and investments, an official statement said on Saturday.

Prerequisites: 

— What is the Group of Seven (G7)?

— What is the history of the G7?

— Map work: Check the location of member countries of G7 and EFTA. (Refer Atlas)

Key takeaways: 

— Reggio Calabria is a coastal city in southern Italy. The Group of Seven (G7) industrialised nations are Canada, France, Germany, Italy, Japan, the UK, and the US.

— These meetings aim to explore new avenues for trade and investment, resolve bilateral trade issues, and deepen economic cooperation, it said.

— Goyal will hold these deliberations on the sidelines of the outreach session of the G7 Trade Ministers’ Meeting (July 16-17) in Italy. The visit also assumes significance as India is negotiating a free trade agreement (FTA) with the UK and the European Union (EU).

— Further, the ministry said prior to his visit to Italy, Goyal will be in Switzerland on July 14-15 for business and official meetings with Swiss counterparts. This visit aims to further strengthen the bilateral economic and comprehensive partnership between India and Switzerland, fostering deeper economic ties and mutual growth, it added.

For Your Information: 

— Italy hosted the 50th G7 Summit in Apulia from June 13 to 15, 2024. The high-level convening came against several global concerns, including the ongoing conflict in Gaza, the war in Ukraine, climate disasters, and other emerging challenges. The Indian Prime Minister, Narendra Modi, also participated in the G7 summit. India was invited as an Outreach Country. 

— On March 10, India and the EFTA signed a free trade agreement, under which New Delhi received an investment commitment of USD 100 billion over 15 years from the grouping while allowing several products like Swiss watches, chocolates and cut and polished diamonds at lower or zero duties. The EFTA members are Iceland, Liechtenstein, Norway, and Switzerland.

Points to Ponder: 

— What were the key highlights of the 50th G7 Summit?

— What is the strategic significance of G7 for India?

— What are the challenges to India’s expanding involvement with the G7 countries? 

— Does G7 need to revamp itself to reflect the contemporary world?

Post Read Question:

Consider the following statements:

1. The G-7 does not have a fixed headquarters.

2. The decisions taken by leaders during annual summits are binding.

3. On January 1, 2024, Italy assumed the Presidency of  G7 succeeding Japan.

How many of the statements given above are not correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Other Important Articles Covering the same topic:

UPSC Issue at a Glance | G7 and India: 5 Key Questions You Must Know for Prelims and Mains

 

Express Network

Shah stresses on local jobs to prevent migration from border villages

UPSC Syllabus:

Preliminary Examination: Economic and Social Development

Mains Examination: GS-I, GS-II, GS-III: Society, Government policies and interventions,  Welfare schemes,  Security, Population and Associated Issues, Poverty and Developmental Issues

What’s the ongoing story- Union Home Minister Amit Shah Saturday said that there is a need to provide employment opportunities to the residents of border villages in order to prevent migration.

Prerequisites: 

— What is migration?

— Read about the forms and patterns of migration. 

— What is the Vibrant Villages Programme, which states does it cover, and what are its objectives?

Key takeaways: 

— He said that central armed police forces (CAPFs) and Army deployed in such areas should encourage purchase of local agricultural and handicraft products.

— Reviewing the implementation of the “Vibrant Villages Programme” (VVP), Shah directed all concerned to continue the efforts made by senior ministers and officials in this regard.

For Your Information: 

— The Vibrant Villages programme’s targets are to provide comprehensive development of villages on the border with China and improvement in the quality of life of people living in identified border villages. The development in these villages will help prevent migration, and thus also boost security.

— The Parliamentary Standing Committee in 2018 had pointed towards backwardness, illiteracy, and lack of basic facilities and infrastructure in our border areas. The VVP aims to address all these issues.

— Under this centrally sponsored scheme, 2,967 villages in 46 blocks of 19 districts have been identified for comprehensive development. These villages abut the border in the states of Arunachal Pradesh, Sikkim, Uttarakhand and Himachal Pradesh and the Union Territory of Ladakh. 

Points to Ponder: 

— What causes the internal migration in India?

— What are the impacts of migration?

— What initiatives have been taken by the government with regard to the issue of migration?

— What steps should be taken to tackle the challenges of migration?

Post Read Question:

Discuss the changes in the trends of labour migration within and outside India in the last four decades. (UPSC CSE 2015)

Other Important Articles Covering the same topic:

Amit Shah launches Vibrant Villages Programme in Arunachal: What is this scheme

PM: Media’s natural role is to create discourse by discussing serious issues

UPSC Syllabus:

Preliminary Examination: Current events of national importance

Mains Examination: GS-II, GS-III: Government policies and interventions, Role of media

What’s the ongoing story- Prime Minister Narendra Modi on Saturday said the media’s natural role is to create discourse by discussing serious issues as he inaugurated the Indian Newspaper Society’s secretariat, INS Towers, in Mumbai.

Prerequisites: 

— What is media and its various types?

— Read about the World Press Freedom Index and India’s ranking on it.

— Know about the issue of fake news.

Key takeaways: 

— He said the role of newspapers is crucial in the journey to Viksit Bharat in the next 25 years and appealed to Indian publications to enhance their global presence.

— He said the media is not a mute spectator of the condition of the nations but it plays a major role in changing them.

— Underlining the role of newspapers and magazines in the next 25-year journey to Viksit Bharat, Modi highlighted the media’s role in creating awareness about rights and the potential of the citizenry.

— Modi also spoke on how India has become the leader in digital payments.

Points to Ponder: 

— Why is the media called the fourth pillar of democracy?

— What is the role of the media in society?

— What are the challenges faced by the media in fulfilling its role effectively?

— What measures should be taken to ensure free and impartial media in India?

Post Read Question:

What do you understand by the concept of “freedom of speech and expression”? Does it cover hate speech also? Why do the films in India stand on a slightly different plane from other forms of expression? Discuss. (UPSC CSE 2014)

Other Important Articles Covering the same topic:

This Quote Means: ‘Freedom of the press is a precious privilege that no country can forego’, by Gandhi

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