FDI inflow & outflow

In News: The foreign direct investment (FDI) in the financial year 2021-22 has touched a “highest-ever” figure of $83.57 billion.

FDI

• FDI or foreign direct investment is the investment made by a foreign entity (individual or firm) into a business based in another country.
• Foreign direct investment is not to be confused with foreign portfolio investment. The two are distinguished by a notion of direct control.

FDI inflow

• Foreign direct investment net inflow is defined as the total value of inward overseas direct investment made by foreign entities, including non-resident investors.
• It is therefore, investment coming into the domestic country or reporting economy.
• Inward foreign direct investments into the domestic country includes all assets and liabilities exchanged between the foreign investors and enterprises based in the domestic country, where the investment is being made.

FDI outflow

• Foreign direct investment net outflow is defined as the total value of outward overseas direct investment made by the residents of the domestic country or reporting economy to businesses based in foreign economies.
• Outward foreign investments includes assets and liabilities exchanged between investors based in a domestic country or reporting economy to foreign businesses based out in different countries. Inward direct investment is also referred to as direct investment abroad.

Key Initiatives

• The steps taken by the Government during the last eight years have borne fruit as is evident from the ever-increasing volumes of FDI inflow being received into the country, setting new records.
• The Government reviews the FDI policy on an ongoing basis and makes significant changes from time to time, to ensure that India remains attractive and investor friendly destination.
• Government has put in place a liberal and transparent policy for FDI, wherein most of the sectors are open to FDI under the automatic route.
• To further liberalise and simplify FDI policy for providing Ease of doing business and attract investments, reforms have been undertaken recently across sectors such as Coal Mining, Contract Manufacturing, Digital Media, Single Brand Retail Trading, Civil Aviation, Defence, Insurance and Telecom.

Guidelines for Safety Assessment of Genome Edited Plants, 2022

In News: The department of biotechnology has notified the guidelines for the safety assessment of genome-edited plants, which is expected to accelerate the genetic improvement of crops in the country.

What is genome editing?

• Genome editing involves the use of technologies that allow genetic material to be added, removed, or altered at particular locations in the genome. Several approaches to genome editing have been developed.
• A well-known one is called CRISPR-Cas9, which is short for clustered regularly interspaced short palindromic repeats and CRISPR-associated protein 9.
• Gene editing can be used to make plants express properties not native to them.
• The conventional breeding technique takes 8–10 years for the development of new agricultural crop varieties, while through genome-editing, the new varieties could be developed in two to three years.
• Genome-edited plants are different from genetically-modified organisms (GMO) technology. Genome editing is a group of technologies that gives scientists the ability to change an organism’s DNA.

What are the new guidelines?

• The new guidelines exempt researchers who use gene-editing technology to modify the genome of the plant from seeking approvals from the Genetic Engineering Appraisal Committee (GEAC), an expert body of the Environment Ministry.
• The guidelines provide a road map for the sustainable use of genome editing technologies and applicable to public and private sector research institutions engaged in research and development and handling of genome edited plants.
• The guidelines define various categories of genome-edited plants and determine regulatory requirements for appropriate categories and provide the regulatory framework and scientific guidance on data requirement in context of development of these crops.
• On the other hand, in the case of GM technology, applicants have to apply to the GEAC, which follows time-consuming testing methods along with states. Till now, cotton is the only GM crop that has been approved for commercial cultivation in the country.

RBIs Dividend Payout

In News: The Reserve Bank of India (RBI) has approved the transfer of ₹30,307 crore as surplus to the Union government for the fiscal year 2021-22

Why does the RBI pay a dividend to the Government?

• As the manager of Government finances, every year, the RBI pays a dividend to Government to help with the Government’s finances from its surplus profit.
• The RBI was founded in 1934 and has been operating according to the Reserve Bank of India Act of 1934.
• Chapter 4, section 47 of the Act, titled “Allocation of Surplus funds” mandates for any profits made by the RBI from its operations to be sent to the Centre.
• Under Section 47 of the RBI Act, “after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds 2 [and for all other matters for which provision is to be made by or under this Act or which] are usually provided for by bankers, the balance of the profits shall be paid to the Central Government.”

How RBI earns profit?

• The RBI earns its profits primarily from the interest it gets from the purchase and sale of government securities, the interest earned from lending to banks and an interest earned on bond holdings earned on open market principles.
• From this amount, the net profit is calculated by subtracting the operation expenditures, and other expenses as stipulated in section 47 of the RBI Act.

OBC Reservation

• GS Paper 2: Governance, Administration and Challenges– Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

OBC Reservation in news

• Recently, the Supreme Court (SC) has allowed Madhya Pradesh to implement 14% reservation for Other Backward Classes (OBCs) and notify the elections for nearly 23,263 local bodies within two weeks.

Jute Packaging Material Act: New Reservations Approved

SC on OBC quota in Madhya Pradesh

• The Supreme Court (SC) had on May 10 ordered the State to proceed with the elections without Other Backward Classes (OBCs) quotas.
• The Supreme Court has since then reassured itself that the State has met the ‘triple test’ criteria it had established in 2010 for OBC reservation in local bodies.
• Triple Test Criteria: The Supreme Court laid down following triple test
  • A commission that undertook contemporaneous empirical inquiry into the nature and implications of the backwardness in the context of local bodies,
  • Break-up of the reservation local body-wise, and
  • Adherence to the 50% ceiling on quotas.

Local Body Reservation in Madhya Pradesh (MP)

• Madhya Pradesh had already provided for reservation for women besides Scheduled Castes and Scheduled Tribes.
• Madhya Pradesh’s proposed quota for OBCs is 14%, which will keep the aggregate within the 50% ceiling- one of the test under triple test criteria.

Associated Issues

• Acceptability of MP commission report: The State has convinced the Court that it had indeed met the triple test, but the validity and accuracy of the commission report remain open to further judicial scrutiny.
• Reservation in Political Sphere: OBC reservation remains a controversial question on which the law is still evolving and public opinion is fractious.
• Suitability of Existing Criteria: The Court has held that the criteria for reservation in job and education, which is social and educational backwardness, need not be applied for reservation in local bodies.
  • The SC said that the Backwardness to be established for political reservation can be of a different nature.

 

Reservation in Politics- Way Forward

• While quotas have proven to be an effective instrument of empowerment and justice, competitive politics around them often leads to a paralysis of politics and governance.
• Making the reservation regime fair, objective, and empirical is a major governance challenge, and the Court’s attempts in that direction is welcome.
• Political parties and governments must act in tandem with the judiciary so that reservation programmes do not turn divisive but serve a development purpose.

OBC Quota: SC upholds OBC quota in NEET

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8th BRICS Environment Ministers Meeting

• GS Paper 2: International Relations- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

8th BRICS Environment Ministers Meeting in News

• Recently, the Union Minister of Environment, Forest and Climate Change, Shri Bhupender Yadav participated in the 8^thBRICS Environment Ministers Meeting.

8th BRICS Environment Ministers Meeting

• About: 8th BRICS Environment Ministers meeting was held virtually under Presidency of People’s Republic of China.
• Theme: The theme of the Meeting was “Foster High-Quality BRICS Partnership, Usher in a New Era for Global Development”.
• Participation: Ministers and delegates from Brazil, Russia and South Africa also participated in the 8th BRICS Environment Ministers.

BRICS- 13th BRICS Summit 2021

India at 8^th BRICS Environment Ministers Meeting

• Role of BRICS Nations: Indian Ministermentioned about the significance and important role of the BRICS Nations while combatting the global environmental and climate change challenges.
  • He stated that BRICS led initiatives should be country-driven and voluntary in approach, and underlined the need for international cooperation and multilateralism.
• Responsibility of Developed Countries: He highlighted historical responsibility of developed countries for-
  • Consuming the carbon budget;
  • Equity at all scales in climate action and sustainable development;
  • Lifestyle and curbing unsustainable consumption, in mitigating climate change;
  • Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC);
  • National circumstances and priorities;
  • Climate Justice; and
  • Fulfilment of commitments made by the Developed Countries on climate finance and transfer of technology.

About BRICS Grouping 

• BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China, and South Africa.
• Background: In 2001, Goldman Sachs’ Jim O’Neill authored a paper called “Building Better Global Economic BRICs”, pointing out that future GDP growth in the world would come from China, India, Russia, and Brazil.
  • Though the paper did not recommend any formal grouping, it said that BRIC economies combined would outstrip the western dominated world order before 2039.
• BRICS Formation: In 2006, leaders of the BRIC countries met on the margins of a G-8 (now called G-7) summit in St. Petersburg, Russia, and BRIC was formalized that year.
  • Shortly afterward, in September 2006, the group was formalized as BRIC during the 1st BRIC Foreign Ministers’ Meeting, which met on the sidelines of the General Debate of the UN Assembly in New York City.
  • First formal summit: took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.
  • South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS.
  • South Africa subsequently attended the Third BRICS Summit in Sanya, China, in 2011.
• BRICS Headquarters: BRICS doesn’t have any headquarter rather all the countries of BRICS have offices dedicated to BRICS in their own nation.
• BRICS Structure: BRICS does not exist in the form of organization, but it is an annual summit between the supreme leaders of five nations.
• BRICS Presidency: The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
  • India had the BRICS Presidency from January 2021.
  • Currently, China has the BRICS Presidency.

13th BRICS Summit 2021

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Bamboo Industry in India 

• GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Bamboo industry in India: Context

• Recently, Ministry of Micro, Small & Medium Enterprises has informed that the government has lifted the “export prohibition” of bamboo charcoal to facilitate optimum utilization of raw bamboo and higher profitability in the Indian bamboo industry.

What is bamboo charcoal?

• All the bamboo charcoal made from bamboo obtained from legal sources are permitted for export subject to proper documentation/certificate of origin proving that the bamboo used for making charcoal has been obtained from legal sources.
• Bamboo charcoal has a huge demand in the international market and lifting of export prohibition by the government will enable the Indian bamboo industry to tap this opportunity and exploit the huge global demand.
• This will also ensure optimum utilisation of bamboo waste and thus contribute to the Prime Minister’s vision of Waste to Wealth.

Issues in bamboo industry

• Indian bamboo industry, at present, is grappling with extremely high input cost owing to inadequate utilization of bamboo.
• In India, bamboo is mostly used in manufacturing of Agarbatti wherein, a maximum of 16% is used for manufacturing of bamboo sticks while the remaining 84% of bamboo is a complete waste.
• As a result, the Bamboo input cost for Round Bamboo Sticks is in the range of Rs 25,000 to Rs 40,000 per MT as against the average Bamboo cost of Rs 4,000 to Rs 5,000 per MT.

Benefits of bamboo

• Ecological benefits
  • It conserves water and hence can show a path for the future in the water-stressed districts of our country.
  • It could perform the function of carbon sequestration (Green House Gases) from the atmosphere and thus reduce global warming.
• Economic benefits
  • It contributes significantly to sustainable development and ensuring food security.
  • It can be used as a food, a wood substitute, building and construction material, making handicrafts and paper or, even can be used in making
  • It creates self-employment for the farmers, hence leading to an increase in farmer’s income.
  • It is part of the rural economy of many developing countries, including India. Due to its multipronged uses, it is often referred to as poor man’s timber.
• Social Benefits
  • It ensures equity among the rural people as it benefits a large section of women and unemployed people.
  • Bamboo, historically, is mostly grown in tribal areas. Using bamboo can help the tribals connect with the mainstream population and hence be a part of inclusive development.

Steps taken by the government to support bamboo cultivation

• National Bamboo Mission was launched in 2007. It emphasised mainly on propagation and cultivation of bamboo. The project, however, had limited success as it did not focus enough on bamboo’s processing, product development and value-addition. Taking into consideration these limitations, a restructured National Bamboo Mission was launched in 2018.
• In 2017, the government passed the Indian Forest (Amendment) Act and relaxed the restrictions on harvesting, transit and trade of bamboo, in non-forest areas.
• The government allocated $200 million in the budget 2018 to support bamboo cultivation, especially in North-Eastern states.
• Subsequently, in September 2019, the Ministry of Commerce “restricted” the import of raw Agarbatti and in June 2020, the Ministry of Finance increased the import duty on round bamboo sticks.

GST Council Meeting

• GS Paper 2: Governance, Administration and Challenges- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

GST Council Meeting in news

• The Supreme Court ruled on Thursday (May 19) that recommendations of the Goods and Services Tax (GST) Council only have persuasive value, and cannot be binding on the Centre and states.
• While the Centre has said that the decision does not bring any change to the already existing framework, some Opposition-ruled states have stated that it would give them greater space to take decisions in the federal structure.

GST Council Case

• SC Order: SC upheld an order by the Gujarat High Court that had quashed the levy of Integrated GST (IGST) on the component of ocean freight paid by a foreign seller to a foreign shipping line, on a reverse charge basis.
• Union of India and Anr versus M/s Mohit Minerals Through Director Case: In its order, Gujarat High Court had quashed the Central notification levying IGST on importers for ocean freight.
  • It held that GST is paid by the supplier, but if the shipping line is located in a non-taxable territory, then GST is payable by the importer, the recipient of service.

The Editorial Analysis- Extending GST Compensation as a Reform Catalyst

Supreme Court’s Observation on Federalism

• Federalism in India is “a dialogue in which the states and the Centre constantly engage in conversations”.
• Although the Constitution confers “the Union with a higher share of power in certain situations to prevent chaos and provide security”, states “can still resist the mandates of the Union by using different forms of political contestation”.
  • The SC Bench said that “It is not imperative that one of the federal units (Centre or states) must always possess a higher share of power over the other units,”
• Equal Legislative power: The court pointed out that Article 246A of the Constitution stipulates that both Parliament and state legislatures have “simultaneous” power to legislate on GST.
  • It said that recommendations of the GST Council “are the product of a collaborative dialogue involving the Union and States”.

GST Council- Key Points 

• Background: The Parliament passed the 101st Amendment Act of 2016 which paved the way for the introduction of the goods and services tax (GST) in the country. The GST Council was established to-
  • To ensure smooth and efficient administration of the GST tax and
  • Cooperation and coordination between the centre and the states.
• About GST Council: The 101^st amendment inserted a new Article 279-A in the Constitution of India. This article empowered the President to constitute a GST Council by an order.
  • Secretariat: located in New Delhi and the Union Revenue Secretary acts as the ex-officio Secretary to the Council.
  • The GST Council is considered as a constitutional federal body where both the centre and the states get due representation.
• Mandate of GST Council: Responsible for making recommendations to the Union and State Government on issues related to Goods and Service Tax.
  • It is the first constitutional federal body vested with powers to take all major decisions relating to GST.
• Vision: To establish the highest standards of the cooperative federation in the functioning of the Council.
• Composition of the Goods and Services Tax (GST) Council: It consists of the following members-
  • Chairperson: The Union Finance Minister
  • The Union Minister of State in charge of Revenue or Finance
  • Ministers in-charge of Finance or Taxation of all the States
    • Vice-chairperson: The members of the Council from the states have to choose one amongst themselves to be the Vice-Chairperson of the Council.
  • Chairperson of the Central Board of Excise and Customs (CBEC): to be included as a permanent invitee (non-voting) to all proceedings of the Council.

Goods and Services Tax (GST) Council

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Naxalism in India 

• GS 3: Role of external state and non-state actors in creating challenges to internal security.

Naxalism in India: Context

• Recently, the Chief Minister of Chhattisgarh announced that the State government was ready for peace talks with the Maoists provided they laid down arms and expressed their faith in the Constitution of India.
• Click here to know about naxalism in India.

Peace talks with maoists: Key points

• In a response to the proposed offer, CPI(Maoist) asked the government to clear its stand on the Maoist’s conditions for creating a conducive atmosphere in which to hold peace talks.
• The party also criticised the government for not implementing the Provisions of Panchayats (Extension to the Scheduled Areas) Act, 1996 in Chhattisgarh.

Demand of Maoists

• A lifting of the ban on their party, the People’s Liberation Guerilla Army (PLGA) and people’s organisations;
• Withdrawal of security forces from camps, and
• The release of jailed leaders in order to participate in the talks
• As the state government have not changed their earlier stance, there has been no progress in conducting peace talks.

Earlier peace talk attempt with Maoists

• In 2010, the then union home minister tried to bring the Maoists to the negotiating table, the Maoists, however, demanded the following for a dialogue with the Union government.
  • Mutual ceasefire and not unilateral ceasefire by the Maoists.
  • For peaceful legal work by the Maoists, lifting of the ban on the party was necessary.
  • The third condition was that the government should adhere to the Constitution and end the illegal murders in the name of encounters, tortures and arrests.
• Before the talk could take place, Azad, a Maoist party representative, was killed in an encounter with the Greyhound commando force of the Andhra Pradesh police on July 2, 2010 and the process of trust building derailed.

Why talks failed?

• Actions by Maoists: Though the Maoists at the peace talks had handed over their weapons to their cadres while leaving the jungles, media pictures of activity by their armed squads made the police uneasy. The Andhra Pradesh Home Minister levelled allegations against the Naxalites about extortion for their meetings and construction of their memorials.
• Government actions: The State government cannot afford the risk of moving out security forces as a pre-condition for initiating peace talks.

Naxalism in India: Recommendations

• The release of jailed Maoist leaders need not be made a pre-condition by the Maoists, as most senior Maoist leaders are at large; there is no senior cadre in Chhattisgarh’s jails.
• Moreover, the Chhattisgarh government has not only withdrawn criminal cases against many tribals but has also ensured expeditious trial of Naxal cases. The government is also hard at work to implement PESA.
• With regard to the third condition, of lifting a ban on the CPI(Maoist), the PLGA and its front organisations, some concessions may be thought of to let the talks happen. Further, it cannot be denied that the Maoists misused the ceasefire during the 2004 peace talks in Andhra Pradesh.
• Therefore, moving forward with the lessons learned, suitable modalities may be worked out if both sides are serious about peace talks.
• Click here to know about government steps to contain naxalism in India.

FDI in India

• GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

India FDI: Context

• Recently, Ministry of Commerce & Industry has informed that India has recorded highest ever annual FDI inflow of USD 83.57 billion in the Financial Year 2021-22.

Highest ever FDI in India: Key points

• In 2014-2015, FDI inflow in India stood at mere 45.15 USD billion as compared to the highest ever annual FDI inflow of USD 83.57 billion reported during the financial year 2021-22.
• It has overtaken last year’s FDI by USD 1.60 billion despite military operation in Ukraine and COVID-19 pandemic.
• India’s FDI inflows have increased 20-fold since FY03-04, when the inflows were USD 4.3 billion only.

FDI in India

• India is rapidly emerging as a preferred country for foreign investments in the manufacturing sector.
• FDI Equity inflow in Manufacturing Sectors have increased by 76% in FY 2021-22 compared to previous FY 2020-21.
• FDI inflow has increased by 23% post-Covid in comparison to FDI inflow reported pre-Covid in India.
• In terms of top investor countries of FDI Equity inflow, ‘Singapore’ is at the apex with 27%, followed by U.S.A (18%) and Mauritius (16%) for the FY 2021-22.
• ‘Computer Software & Hardware’ has emerged as the top recipient sector of FDI Equity inflow during FY 2021-22 with around 25% share followed by Services Sector (12%) and Automobile Industry (12%) respectively.
• Under the sector `Computer Software & Hardware’, the major recipient states of FDI Equity inflow are Karnataka (53%), Delhi (17%) and Maharashtra (17%) during FY 2021-22.
• Karnataka is the top recipient state with 38% share of the total FDI Equity inflow reported during the FY 2021-22 followed by Maharashtra (26%) and Delhi (14%).

FDI in India 2022: Steps taken by the government

• The steps taken by the Government during the last eight years have borne fruit as is evident from the ever-increasing volumes of FDI inflow being received into the country, setting new records.
• The Government reviews the FDI policy on an ongoing basis and makes significant changes from time to time, to ensure that India remains attractive and investor friendly destination.
• Government has put in place a liberal and transparent policy for FDI, wherein most of the sectors are open to FDI under the automatic route.
• To further liberalise and simplify FDI policy for providing Ease of doing business and attract investments, reforms have been undertaken recently across sectors such as Coal Mining, Contract Manufacturing, Digital Media, Single Brand Retail Trading, Civil Aviation, Defence, Insurance and Telecom.

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