Syllabus

• Prelims & Mains – ECONOMY

Context: The World bank  projected a decline in investments in Indian economy as captured by Gross Fixed Capital Formation (GFCF).

Background: –

• According to the World Bank, GFCF growth is expected to reduce to 7.8 per cent in FY25, down from 9.0 per cent in FY24. The GFCF growth rate stood at 6.6 per cent in FY23, the data showed.

About Gross Fixed Capital Formation (GFCF)

• Gross Fixed Capital Formation (GFCF) refers to the net investment by an economy in fixed assets such as buildings, machinery, equipment, and infrastructure during a specific period, typically a year.
• It is an important indicator of a country’s economic growth and development as it reflects the level of long-term investments made to improve production capacity.

Definition:

• GFCF represents the total value of a country’s investments in fixed assets minus the depreciation (wear and tear) of existing assets.
• It includes spending on physical assets like factories, roads, bridges, machinery, and technology that are used in the production process.

Components of GFCF:

• Business Investments: Spending by companies on things like buildings, factories, machinery, and technology.
• Government Investments: Government spending on infrastructure such as roads, schools, hospitals, and public utilities.
• Household Investments: Spending by households on durable goods like homes (real estate investments).

Why is GFCF Important?

• Economic Growth: Higher GFCF generally indicates that an economy is investing in future production capacity, which can lead to increased economic output (GDP) over time.
• Productivity and Employment: Investments in new machinery and infrastructure often lead to more efficient production processes, which can improve productivity and create more jobs.
• Improving Living Standards: Investments in infrastructure like roads, power plants, and schools help improve the overall quality of life for people.

GFCF vs. GDP:

• GFCF is a component of Gross Domestic Product (GDP) under the expenditure method, which calculates GDP as the sum of consumption, investment, government spending, and net exports.
• While GDP measures the total economic output, GFCF specifically focuses on the portion of that output dedicated to building long-term assets.

Types of Fixed Assets:

• Tangible Assets: These include physical things like buildings, machinery, and equipment.
• Intangible Assets: Although less common in GFCF, it may also include investments in non-physical assets like patents, software, and research and development.

Source: Swarajya

 Syllabus

• Mains – GS 2 & GS 3

Context: Following the recent devastating landslides in Kerala’s Wayanad district, a critical discussion has arisen about whether subnational entities, like states, can seek compensation through the Loss and Damage Fund (LDF) under the United Nations Framework Convention on Climate Change (UNFCCC).

Background: –

• While the demand for access to LDF by states is justifiable, accessing climate funds is far more complex than it appears.

Loss and Damage Fund (LDF)

• Established: At the 2022 UNFCCC Conference (COP27) in Egypt.
• Purpose: To provide financial support for economic and non-economic losses caused by climate change (e.g., extreme weather events, rising sea levels).
• Oversight: Managed by a Governing Board, with the World Bank serving as the interim trustee.
• Access Mechanisms: Currently being developed, including direct access, small grants, and rapid disbursement options.
• Challenges: Concerns that funds may be slow to disburse, especially for subnational entities and local communities.

India’s Role

• Damage Costs: India incurred over $56 billion in damages from weather-related disasters between 2019 and 2023.
• Focus on Mitigation: India’s National Climate Action Policy prioritizes mitigation over adaptation, leading to limited engagement in Loss and Damage dialogues at COP meetings.
• Need for Legal Framework: A clear legal and policy framework is required to streamline climate finance, especially for adaptation and loss and damage.
• Climate Finance Taxonomy: Introduced in Union Budget 2024, raising hopes for more international climate finance.
• Advocacy: India should push for decentralised fund disbursement methods from the LDF to ensure better access for vulnerable communities.

State-Level Interventions

• State governments often bear the burden of disaster recovery, as seen in Kerala’s Rebuild Kerala Development Programme after the 2018 floods, funded by loans from international institutions.
• International Climate Finance: Plays a critical role in rebuilding infrastructure (e.g., roads, bridges) post-disaster.
• Assessment Gaps: India lacks a standardised method for assessing slow-onset disaster-related damages, which could hinder access to LDF in the future.

Conclusion

• Policy Need: India needs a stronger domestic framework focused on locally led adaptation and clearer guidelines for accessing loss and damage funds to protect vulnerable communities from climate change impacts.

Source: Hindu

 Syllabus

• Mains : GS 2

Context: In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman announced the establishment of a Critical Mineral Mission. In August, the Ministry of Mines held a seminar to outline the mission’s objectives. The government is actively pursuing various strategies to ensure critical mineral security.

Background:

• India have to collaborate with countries which has a significant amount of the world’s known critical mineral reserves.

Indias efforts in critical mineral front

• The Mines and Minerals (Development and Regulation) Amendment Act, 2023 amended the Mines and Minerals (Development and Regulation) Act, 1957, with the aim of strengthening the exploration and extraction of critical minerals.
• The amendment removed 6 minerals from the list of 12 atomic minerals limited to exploration by State agencies (i.e., lithium, beryllium, niobium, titanium, tantalum and zirconium). This opens up opportunities for private sector involvement in their exploration and mining.
• Khanij Bidesh India Limited (KABIL): To engage with mineral-rich countries overseas with a mandate to secure supply of critical minerals, a joint venture of three public sector undertakings, Khanij Bidesh India Limited (KABIL), was founded in 2019.
• Lithium Agreement: In January 2024, KABIL signed its first major agreement for lithium exploration and mining, accessing five blocks in Catamarca province, Argentina.

Africa in India’s Supply Chain

• African Mineral Reserves: Africa holds 30% of the world’s known critical mineral reserves, crucial for India’s Critical Mineral Mission.
• India-Africa Relations: Strong political, economic, and historic ties, including a 3-million-strong Indian diaspora, offer a foundation for collaboration.
• Trade and Investments: In 2022-23, India-Africa bilateral trade totaled $98 billion, with $43 billion from the mining and mineral sectors. India also invests in African energy assets, sourcing 34 million tonnes of oil from the region.
• Opportunities: African countries are shifting to value-added mineral processing, which aligns with India’s goals. For example, Tanzania is developing a multi-metal processing facility, and Zimbabwe and Namibia have banned raw mineral exports.

China Factor

• China’s Influence: China dominates the critical minerals value chain, with significant control over cobalt mining in the Democratic Republic of Congo. This poses economic and security risks for India.

Collaboration Opportunities

• Infrastructure Development: Indian companies have completed projects in 43 African countries, such as transmission lines and hospitals. Strategic infrastructure projects can support critical mineral extraction.
• MoUs with Zambia and Zimbabwe: India has agreements for geological mapping, mineral deposit modeling, and capacity building.
• Training Programs: India’s Indian Technical and Economic Cooperation (ITEC) program has trained 40,000 Africans, providing a pathway to build a critical mineral workforce.

Technology and Startups

• Role of Indian Startups: Innovating tools for mining exploration, ecological impact reduction, and mineral ore beneficiation. These startups offer niche services that African governments can leverage for value addition.

Prioritizing Responsible Practices

• Value Addition: African leaders emphasize the need for value-added processing to transform lives. India’s Critical Mineral Mission should focus on responsible practices amid the geopolitics of the green energy transition.
• Challenges: India’s exploration and processing capacity for critical minerals is still developing. It lacks manufacturing capacity for end-use components and needs to upskill its labor force, especially in battery manufacturing.

Source: Hindu

 Syllabus

• Prelims : CURRENT EVENT

Context: The Union Labour Ministry has cleared a proposal for Centralised Pension Payment System (CPPS) for about 78 lakh pensioners under the Employees’ Pension Scheme, 1995.

Background: –

• The CPPS aims to provide a more efficient, seamless, and user-friendly experience for pensioners.

About Centralised Pension Payment System

• The Centralised Pension Payment System (CPPS) is a new initiative by the Indian government to modernize pension disbursements under the Employees’ Pension Scheme (EPS).
• Unlike the current system, which is as of now decentralised and managed by individual Zonal/Regional Offices of the Employees’ Provident Fund Organisation (EPFO), the new system CPPS will centralise the pension disbursement at a national level.
• The new system enables pension disbursement through any bank, any branch across the country.
• This system is part of the EPFO’s Centralized IT Enabled System (CITES 2.01). The system will enable pensioners to access their pensions without the need for physical verification at bank branches.

Key points about CPPS:

• Nationwide Access: Starting January 1, 2025, pensioners will be able to receive their pensions from any bank, any branch across India.
• No PPO Transfers: Pensioners will no longer need to transfer Pension Payment Orders (PPOs) when moving or changing banks, addressing long-standing issues faced by retirees.
• Immediate Pension Credit: Pensions will be credited immediately upon release, with no need for branch visits for verification.
• Aadhaar-Based Payment System: In the next phase, CPPS will transition to an Aadhaar-based payment system (ABPS), further enhancing efficiency and security.
• The Employees’ Pension Scheme (EPS)
• The Employees’ Pension Scheme (EPS), introduced in 1995, is a social security initiative managed by the Employees’ Provident Fund Organisation (EPFO).

Key details:

• Eligibility: Employees who are members of the EPFO and have completed at least 10 years of service are eligible for EPS benefits. The pension is typically available from the age of 58, with early pension options starting at 50.
• Contributions: Both the employee and employer contribute 12% of the employee’s basic salary and Dearness Allowance (DA) to the EPF. Out of the employer’s contribution, 8.33% goes to the EPS.
• Pension Calculation: The pension amount is calculated based on the average salary of the last 60 months and the total years of service.
• Minimum Pension: The scheme guarantees a minimum monthly pension of ₹1,000, regardless of the contributions made.
• Benefits: EPS provides a fixed income after retirement, disability pension, and family pension in case of the member’s death.

Source: The Hindu

 Syllabus

• Prelims : CURRENT EVENT

Context: The Indian government is set to launch the third phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-III) scheme within the next two months.

Background: –

• FAME-III will continue the momentum from the previous phases, which significantly increased EV sales and industry participation. The scheme is expected to focus on local manufacturing and sustainable growth in the EV sector.

About Faster Adoption and Manufacturing of Electric Vehicles (FAME)

• The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme is a significant part of India’s National Electric Mobility Mission Plan (NEMMP).
• It aims to promote the adoption of electric and hybrid vehicles in the country through incentives and subsidies.

Objectives of FAME:

• Reduce Vehicular Emissions: To decrease pollution from vehicles and improve air quality.
• Promote Electric Mobility: Encourage the use of electric and hybrid vehicles.
• Develop Charging Infrastructure: Establish a widespread network of charging stations.
• Boost Domestic Manufacturing: Support the local manufacturing of electric vehicles and related components.

Phases of FAME:

• FAME-I (2015-2019)
  • Objective: To promote the use of electric and hybrid vehicles.
  • Incentives: Provided subsidies for electric two-wheelers, three-wheelers, four-wheelers, and buses.
  • Impact: Helped in the initial adoption of EVs and raised awareness about their benefits.
• FAME-II (2019-2024)
  • Objective: To expand the scope and scale of FAME-I.
  • Incentives: Focused on public and shared transportation, including electric buses, three-wheelers, and four-wheelers.
  • Infrastructure: Emphasized the development of charging infrastructure.
  • Impact: Significant increase in EV sales and infrastructure development.
• Upcoming FAME-III
  • Objective: To further accelerate EV adoption and local manufacturing.
  • Focus Areas: Likely to include more incentives for local manufacturing, innovation, and sustainable growth in the EV sector.
  • Timeline: Expected to be launched within the next 1-2 months.

Source: IBEF

 Syllabus

• Prelims: CURRENT EVENT

Context: Recently, a P8I aircraft of the Indian Navy has reached France to participate in ‘Exercise Varuna’ with the French Navy.

Background: –

• The P8I Poseidon is a specialized aircraft designed for maritime patrol and reconnaissance missions, playing a crucial role in coastal patrolling, monitoring the seas, anti-submarine warfare, and search-and-rescue missions.

About Exercise Varuna

• Exercise Varuna is an annual bilateral naval exercise between the Indian Navy and the French Navy, reflecting the strategic partnership between India and France.

History and Significance

• Initiation: The exercise began in 1993 and was named ‘Varuna’ in 2001.
• Purpose: It aims to enhance interoperability, improve coordination, and share best practices between the two navies.

Scope and Activities

• Operations: The exercise includes a wide range of naval operations such as cross-deck operations, replenishment-at-sea, minesweeping, anti-submarine warfare, and information sharing.
• Phases: Typically conducted in multiple phases, it involves complex tactical manoeuvres and joint operations.

Recent Edition (2024)

• Location: Held in the Mediterranean Sea from September 2 to September 4, 2024.
• Participants: The Indian Navy deployed the INS Tabar and a P8I Poseidon aircraft, marking the first European deployment of this aircraft.
• Significance: This edition is notable for being the first time in 63 years that an Indian Navy aircraft operated from a French airbase.

Objectives

• Enhancing Cooperation: The exercise aims to foster mutual cooperation for maintaining good order at sea and ensuring maritime security.
• Skill Development: It provides an opportunity for both navies to hone their warfighting skills and improve their operational capabilities.

Source: Hindu

Q1.) Exercise Varuna, recently seen in news is an annual bilateral naval exercise between the India and the

1. Australia
2. France
3. Israel
4. Malaysia

Q2.) With reference to the Faster Adoption and Manufacturing of Electric Vehicles (FAME), consider the following statements:

1. The Faster Adoption and Manufacturing of Electric Vehicles scheme aims to promote the adoption of electric and hybrid vehicles in the country through incentives and subsidies.
2. It is a part of India’s National Electric Mobility Mission Plan (NEMMP).

Which of the statements given above is/are not correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q3.) With reference to the Centralised Pension Payment System (CPPS), consider the following statements:

1. CPPS aims to modernize pension disbursements under the Employees’ Pension Scheme (EPS).
2. Under the CPPS pensioners of the country can receive their pension from any bank, any branch, anywhere in the country.

Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Comment the answers to the above questions in the comment section below!!

ANSWERS FOR ’  6th September 2024 – Daily Practice MCQs’ will be updated along with tomorrow’s Daily Current Affairs

Q.1) –  b

Q.2) – c

Q.3) – a