RBI’s Pause On Repo Rate Hike: Concerns Over Inflation And Global Pressures Remain

 In light of ongoing rate increases by significant central banks including the US Federal Reserve (Fed) and European Central Bank (ECB), as well as concerns about domestic inflation, the RBI has chosen not to raise the repo rate. However, if new data indicate increased inflation risks, this move might just represent a break in the cycle of rate hikes.

The RBI’s choice to postpone rate increases

The RBI chose to take a break from rate hikes because it believes that since May 2022, money market rates have actually increased more than the repo rate by 250 basis points.

The key reason behind the MPC decision is the expectation of a decline in inflation to 5.2% in the current fiscal, driven by a healthy rabi crop, normal monsoon, moderating international commodity prices, and the impact of rate hikes.

The RBI acknowledges the upside risks and stated its readiness to fight any unexpected rise in inflation.

Impact on GDP growth

The RBI expects GDP growth to slow to 6% from 7% this fiscal as slowing global growth, domestic interest rates, and messy geopolitics bite.

Slowing global growth will be net negative for India’s exports, and the growing dependence on commodity exports makes India more vulnerable to global growth volatility.

Fiscal 2024 will, therefore, test the resilience of India’s domestic demand amid rising interest rates.

Reasons for the expected cooling of consumer inflation

Fuel inflation expected to reduce: Fuel inflation is expected to reduce to 3% from a high of over 10% in the current fiscal because some easing of crude oil prices is likely as global growth slows down.

Decline in core inflation: Slowing domestic growth will ease core inflation from very sticky levels of over 6% last fiscal to 5.5% in the current one. However, the decline in core inflation will be limited as input cost pressures have not dissipated. To protect their margins, firms will continue to pass on input costs to end-consumer. Services inflation will also continue to exert pressure as the rotation of consumption demand from goods to services continues.

Moderate food inflation: Food inflation, which has a high weightage in the Consumer Price Index and has driven headline inflation in the past, is projected to moderate to slightly below 5%, assuming a normal monsoon. However, food inflation has always been volatile and carries upside risks largely because of climate-related factors affecting agriculture output and prices.

How slowing global growth will have a negative impact on India’s exports?

The impact of the growth slowdown in the US and Europe is deeper than the recovery in China: The US and Europe have a combined GDP that is twice that of China. Therefore, the impact of the growth slowdown in the US and Europe will be deeper than the recovery in China. This will have a negative impact on India’s exports to the US and Europe.

India’s exports to the US and Europe are more than to China by a factor of six: India exports more to the US and Europe than to China by a factor of six. Therefore, the negative impact of the growth slowdown in the US and Europe will be felt more by India than by China.

India’s growing dependence on commodity exports makes it more vulnerable to global growth volatility: India’s exports of petroleum products and steel are growing, and this makes India more vulnerable to global growth volatility. As global growth slows down, demand for commodities is likely to decline, which will have a negative impact on India’s exports.

External vulnerabilities

India’s external vulnerability is expected to decline with a narrower current account deficit (CAD) and modest short-term external debt.

The CAD is expected to narrow to 2% of GDP this fiscal from an estimated 2.5% last fiscal.

India-Bhutan Relationship Built On Faith and Mutual trust

The excellent connection between India and Bhutan has played a significant role in maintaining the peace and security of the area. The recent trip to India by Bhutan’s King Jigme Khesar Namgyel Wangchuck has as its main goal strengthening bilateral ties between the two nations. The Bhutan-China boundary negotiations, which have gathered steam recently, were the visit’s unspoken component, though.

Outstanding India-Bhutan Relations

Strategic and special relationship: With a border of more than 600 kilometres, India and Bhutan have a particular and strategic connection. Since India’s independence, the relationship has grown stronger, acting as a barrier between China and India.

India is Bhutan’s largest development partner: The relationship is not limited to rhetoric but extends to an institutional and economic framework. India is Bhutan’s largest development partner, and Bhutan is India’s biggest trade partner in the region.

Hydroelectricity, a crucial factor: Hydroelectricity has become the biggest revenue earner of Bhutan, and India buys power generated in Bhutan. It makes Bhutan the country with the highest per capita income in South Asia today.

Historical and theological relations: Bhutan is a Buddhist theocracy, monarchy, and modern state. The relationship between India and Bhutan is special from a historical, theological, strategic, and economic perspective.

Bhutan-China Boundary Talks

Considerable progress but no decision yet: Before the King’s visit to India, Bhutanese Prime Minister Lotay Tshering had said in an interview that Bhutan and China have made considerable progress on demarcating border lines. Bhutan has been having talks with China on the boundary question for years, and there has been no decision yet.

There will be adjustment of territory: Bhutan and China are adopting a modern methodology to draw boundary lines on the ground, and there may be some adjustment of territory as a result of that.

India’s strategic interests: India’s strategic interests are involved in the boundary talks between Bhutan and China. China has been seeking a toehold in Bhutan for decades. Bhutan is fully conscious of India’s strategic needs.

Trijunction: Where Bhutan decides its boundary with China (to the west) is of exceptional relevance to India because that is a trijunction of the three countries.

India’s Strategic Interests

No compromise on national security: India will not talk about Bhutan-China negotiations publicly; however, when it comes to India’s national security, there will be no compromise.

Siliguri corridor: Doklam plateau overlooks the Chumbi Valley, which overlooks the chicken’s neck (Siliguri corridor). India says this not because Bhutan is threatening its cooperation with India on this front, but to send a message to China that we will draw a line here in conformity with our national interest.

Why India needs Bhutan?

Strategic location: Bhutan is strategically located between India and China, which makes it an important buffer state for India. Bhutan’s strategic location ensures India’s security and helps in maintaining regional stability.

Water resources: Bhutan is the source of several rivers that flow into India, including the Brahmaputra, the Sankosh, and the Manas. India needs access to these rivers for irrigation, hydroelectric power generation, and other purposes. India has helped Bhutan in developing its hydropower potential and has signed several agreements for the purchase of hydropower from Bhutan.

Trade and economic ties: India is Bhutan’s largest trading partner, and Bhutan relies heavily on India for its imports and exports. India provides Bhutan with various economic assistance and has helped Bhutan in its development process.

Cultural and historical ties: India and Bhutan share a common cultural heritage and have historical ties dating back centuries. India has helped Bhutan preserve its cultural heritage and has supported Bhutan in its efforts to promote tourism.

Why Bhutan needs India?

Security: Bhutan does not have a large army, and India provides security assistance to Bhutan. India has helped Bhutan in building its border infrastructure and has helped in the development of the Bhutanese army.

Economic ties: India is Bhutan’s largest trading partner, and Bhutan relies heavily on India for its imports and exports. India provides economic assistance to Bhutan, and Indian companies have invested in various sectors in Bhutan.

Infrastructure: India has helped Bhutan in building its infrastructure, including roads, airports, and telecommunication networks. India has also helped Bhutan in developing its hydropower potential, and several hydropower projects in Bhutan have been built with Indian assistance.

Education and healthcare: India has helped Bhutan in the field of education and healthcare. Many Bhutanese students study in India, and India provides scholarships and grants to Bhutanese students. India has also helped Bhutan in building hospitals and providing medical assistance.

Cultural and historical ties: Bhutan and India share a common cultural heritage and have historical ties dating back centuries. India has helped Bhutan in preserving its cultural heritage and has supported Bhutan in its efforts to promote tourism.

Future of India-Bhutan Relations

The Bhutan-India relationship has survived because of spiritual underpinnings, geography, economy, and connectivity, all of which strengthen the relationship.

India and Bhutan have survived mainly because it was built on mutual trust, which means Bhutan has equally driven the relationship. India should pursue this relationship with trust and complete faith.

India must reach out to the new generation in Bhutan, which is being influenced by social media negativity and wrong information about India.

Union Cabinet gives nod to Indian Space Policy, 2023

The Union Cabinet has approved the Indian Space Policy, 2023.

Indian Space Policy, 2023

It aims to enhance the role of the Department of Space, boost the activities of ISRO missions, and encourage participation from research, academia, startups, and industry.

Salient features

(1) Outlining roles and responsibilities

The Indian Space Policy, 2023 outlines the roles and responsibilities of various organizations in the space sector.

The policy includes the responsibilities of ISRO, NewSpace India Limited, and private sector entities.

This clarity in roles will help in the efficient functioning of the components set up in recent times.

(2) Multistakeholder participation

The policy aims to boost the space sector by enhancing the role of the Department of Space and encouraging participation from research, academia, startups, and industry.

This will help in the development of the space segment and create more opportunities for the private sector.

(3) Boosting ISRO Missions

The Indian Space Policy, 2023 aims to boost the activities of ISRO missions.

This will help ISRO achieve its objectives more efficiently and effectively.

It will also help in the development of new technologies and innovative solutions.

(4) Involvement of Private Sector

The Policy, 2023 recognizes the importance of the private sector in the development of the space sector.

It encourages the involvement of private sector entities in various aspects of the space segment.

This will create more opportunities for the private sector and help in the growth of the Indian space industry.

(5) Research and development

The policy aims to involve research, academia, and startups in the development of the space sector.

This will help in the development of new technologies, innovative solutions, and talent pool.

It will also help in the growth of the Indian space industry and create more opportunities for research and development in the sector.

Bidri Crafts

Shah Rasheed Ahmed Quadri, a bidri craftsman from Karnataka, has received the coveted Padma Shri Award.

Crafts by Bidri

A traditional type of handicraft that has its roots in Bidar, Karnataka, is known as bidri pottery.

It entails creating metal goods using a distinctive method that incorporates zinc and copper.

it’s past

The origins of bidri porcelain can be found in the fourteenth century.

During the Bahmani Sultans’ rule, it was brought to Bidar by Persian artisans.

It was introduced to Bidar by Persian artisans during the reign of the Bahmani Sultans.

The craft flourished under the patronage of the Mughal emperors, and it became a symbol of wealth and status.

Crafting process

The process of making Bidri ware involves several stages. First, a mould is made of the object to be crafted.

Next, the object is cast in an alloy of zinc and copper.

The cast object is then filed and polished to remove any rough edges.

The design is then etched onto the surface of the object using a sharp chisel.

The etched areas are then filled with a blackened paste made from a mixture of copper sulphate and mud.

Finally, the object is polished again to remove any excess paste and to create a smooth finish.

Designs and motifs

Bidriware is known for its intricate designs and motifs, which are often inspired by nature, Islamic art, and Persian calligraphy.

Common motifs include flowers, leaves, and geometric patterns.

Many pieces also feature verses from the Quran or other Islamic texts.

Recognition and awards

Bidri ware has received several awards and recognition for its craftsmanship and cultural significance.

In 2006, it was awarded the Geographical Indication status by the Indian government, which recognizes its unique origin and traditional crafting techniques.

Bidriware has also been recognized by UNESCO as an Intangible Cultural Heritage of Humanity.

 

Open-Source Seeds Movement

The idea of open-source software is discussed, along with how it compares to open-source seeds.

To safeguard users’ rights and stop code theft, Richard Stallman founded the General Public License (GPL) and led the Free Software Movement.

For generations, farmers have innovated and shared seeds without being subject to intellectual property rights (IPR) claims.

Background: Rights of Plant Breeders

Plant breeders’ rights (PBR) gives breeders and creators of new varieties exclusive rights.

The rights of farmers were restricted under this system.

In relation to plant types, the TRIPS agreement established a global IPR regime.

Farmers’ rights were limited under this regime.

The TRIPS agreement established a global IPR regime over plant varieties.

The consolidation of the seed sector raised concerns about the freedom to innovate.

Forms of IPR Protection in Agriculture

There are now two forms of IPR protection in agriculture: PBR and patents.

Together, they restrict farmers’ rights and the freedom to develop new varieties.

The use of genetically modified seeds and IP claims triggered many problems, including State intervention on Bt cotton seeds in India.

The decline of public sector breeding and the dominance of the private sector in the seed sector increased the need for alternatives.

What are Open Source Seeds?

The success of open-source software inspired a solution for seeds.

In 1999, a Canadian plant breeder named T.E. Michaels suggested an approach to seeds based on the principles of open-source software.

In 2012, Jack Kloppenburg launched the Open Source Seeds Initiative (OSSI) in Wisconsin.

Agrecol launched another initiative in Europe, and similar programs have come up worldwide.

Open Source Seeds Initiatives in India

In India, the Hyderabad-based Centre for Sustainable Agriculture (CSA), part of the Apna Beej Network, developed a model incorporated into an agreement between CSA and the recipient of the seed/germplasm.

CSA’s Open Source Seeds Initiative uses a contracts approach similar to Agrecol’s strategy.

The number of seed firms using open-source models and the crop varieties and seeds made available thereunder is small but growing.

India is yet to test and adopt it widely.

Potential Applications of Open-Source Seeds

Open-source principles can help promote farmer-led participatory plant-breeding exercises.

Traditional varieties often lack uniformity and aren’t of excellent quality, but open-source principles can facilitate testing, improvisation, and adoption.

Open-source principles can be used in farmer-led seed conservation and distribution systems.

The government and other stakeholders can consider adopting this approach to more widely adopt traditional varieties.