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DAILY NEWS ANALYSIS

Monthly DNA

27 Jun, 2020

50 Min Read

Extension of Sub-Categorization of OBCs

GS-II : Governance

Extension of Sub-Categorization of OBCs

GS-PAPER-2 OBC

Recently, the Union Cabinet has approved a six-month extension to the commission appointed to examine sub-categorization of Other Backward Classes (OBCs), up to 31st January 2021. The commission is headed by Justice (Retd.) G Rohini. It was constituted under Article 340 of the Constitution with the approval of the President on 2nd October 2017.

It had been constituted to complete the task of sub-categorising 5000-odd castes in the central OBC list so as to ensure more equitable distribution of opportunities in central government jobs and educational institutions.

  • Article 340 deals with the appointment of a commission to investigate the conditions of backward classes.
  • It shall investigate the matters referred them and present a report to the President.
  • The President shall cause a copy of the report so presented together with a memorandum explaining the action taken thereon to be laid before each House of Parliament.

National Commission for Backward Classes

NOW It is a constitutional body established in 1993 under Ministry of Social Justice and Empowerment. It was constituted pursuant to the provisions of the National Commission for Backward Classes Act, 1993.

The 102nd Constitution Amendment Act, 2018 provided constitutional status to the National Commission for Backward Classes (NCBC), which was previously a statutory body.

NCBC has the authority to examine complaints and welfare measures regarding socially and educationally backward classes. In 2015, the National Commission for Backward Classes (NCBC) had recommended that OBCs should be categorized into extremely backward classes, more backward classes and backward classes. The benefits of the reservation in OBCs are being cornered mostly by the dominant OBC groups over the years so there is a need to recognize sub-quotas for the extremely backward classes within the OBCs.

Source: PIB

Directorate of Revenue Intelligence (DRI) - Wild crime

GS-III :

Directorate of Revenue Intelligence (DRI)

It is India's chief anti-smuggling intelligence, investigations and operations agency. It is headed by a Director General of the rank of Special Secretary to the Government of India. It works to secure India's national and economic security by preventing the outright smuggling of contraband such as firearms, gold, narcotics, Fake Indian Currency notes, antiques, wildlife and environmental products.

It is also a part of the following –

  1. Cabinet Secretariat's National Authority Chemical Weapons Convention,
  2. Ministry of Home Affairs/NIA's special wings on Left Wing Extremism Financing,
  3. Various inter-ministerial committees on Terror Financing, Coastal Security,

Recently, DRI has busted a wildlife smuggling syndicate that smuggled different varieties of macaws. Those exotic and highly endangered birds had been smuggled via the Indo-Bangladesh border without any licit documents. The joint operation was carried out in coordination with the Wildlife Crime Control Bureau (WCCB) and the Customs Department at the Kolkata airport.

WCCB – Wild life crime control Board

It a statutory body under the Ministry of Environment, Forest and Climate Change to combat organized wildlife crime. The Wild Life (Protection) Amendment Act, 2006 provisions came operational in the year 2008. UNEP has also awarded WCCB with Asia Environment Enforcement Award, 2018. WCCB is also partnering with United Nations University and CIESIN-Earth Institute at Columbia University through the Wildlife Enforcement Monitoring System Initiative.

Macaws

Macaws are long-tailed, often colorful, New World parrots. They are popular in aviculture or as companion parrots, although there are conservation concerns about several species in the wild.

They are native to Central America and North America (only Mexico), South America, and formerly the Caribbean. Most species are associated with forests, especially rainforests, but others prefer woodland or savannah-like habitats. A macaw's facial feather pattern is as unique as a fingerprint. The largest macaws are the hyacinth, Buffon's (great green) and green-winged macaws. Many of the Macaw species lies between Vulnerable, Endangered or Critically Endangered under IUCN.

Source: TH

Minimum Support Price - Food security

GS-III : Economic Issues Food security, PDS, FCI, Buffer

Minimum Support Price

Paper- GS-3 Food security (PT-M-IV)

The MSP is the rate at which the government buys grains from farmers. The reason behind the idea of MSP is to counter the price volatility of agricultural commodities due to the factors like variation in their supply, lack of market integration and information asymmetry.

The MSP is fixed on the recommendations of the Commission for Agricultural Costs and Prices (CACP) (PT).

Factors taken into consideration for fixing MSP include:

  • Demand and supply,
  • Cost of production (A2 + FL method) Price trends in the market, both domestic and international,
  • Inter-crop price parity,
  • Terms of trade between agriculture and non-agriculture,
  • A minimum of 50% as the margin over the cost of production,
  • Likely implications of MSP on consumers of that product.

The Commission also makes visits to states for on-the-spot assessment of the various constraints that farmers face in marketing their produce, or even raising the productivity levels of their crops. Based on all these inputs, the Commission then finalizes its recommendations, which are then submitted to the government.

The government, in turn, circulates the CACP reports to state governments and concerned Central Ministries for their comments. After receiving the feed-back from them, the Cabinet Committee on Economic Affairs (CCEA) of the Union government takes a final decision on the level of MSPs and other recommendations made by the CACP.

The Food Corporation of India (FCI), the nodal central agency of the Government of India, along with other State Agencies undertakes procurement of crops.

Crops Covered under MSP

  • Government announces minimum support prices (MSPs) for 22 mandated crops and fair and remunerative price (FRP) for sugarcane. The mandated crops are 14 crops of the kharif season, 6 Rabi crops and two other commercial crops.
  • In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of rapeseed/mustard and copra, respectively.

The lists of crops are as follows:

  1. Cereals (7) - paddy, wheat, barley, jowar, bajra, maize and ragi
  2. Pulses (5) - gram, arhar/tur, moong, urad and lentil
  3. Oilseeds (8) - groundnut, rapeseed/mustard, toria, soya bean, sunflower seed, sesame, safflower seed and nigerseed.
  4. Raw cotton.
  5. Raw jute.
  6. Copra
  7. De-husked coconut
  8. Sugarcane (Fair and remunerative price)
  9. Virginia flu-cured (VFC) Tobacco

Recently, Government has declared MSP for mature de husked coconut for the season 2020 at Rs. 2700/- per quintal, thus hiking the MSP by 5.02% from Rs. 2571/- per quintal during season 2019.

Source: PIB

World Drug Report,UNODC

GS-II :

Hardship may push people into making drugs for a living: UNODC

  • The United Nations Office on Drugs and Crime (UNODC), in its 2020 World Drug Report, has highlighted a wide range of possible consequences of the COVID-19 pandemic on illegal drug production, supply and consumption.
  • The report, released on Friday, expressed concern over the adverse impact of the economic hardship caused by the pandemic.
  • This could lead to an increase in the number of people resorting to illicit activities linked to drugs to make a living.
  • As experienced during the 2008 economic crisis, it could result in reductions in drug-related budgets of the governments; overall increase in drug use, with a shift towards cheaper and more harmful drugs.

Diverted focus

  • Some countries, such as Italy, the Niger and countries in Central Asia, have experienced a sharp decrease in drug seizures, amid reports that drug traffickers have diverted their attention to other illegal activities, including cybercrime and trafficking in falsified medicines (in Balkan countries).
  • Other countries, including Morocco and Iran, have reported huge drug seizures, indicating large-scale drug trafficking, while some have reported an increase in interdiction(prohibition) resulting from increased controls.
  • The report, which is in six volumes, said the lockdown could hinder the production and sale of opiates in major producing countries.
  • The key months for the opium harvest in Afghanistan are March to June. This year’s harvest took place during the pandemic.
  • “At the beginning of the harvest, a shortage of poppy lancers was observed in the western and southern provinces of the country, mainly due to the closure of a border crossing with Pakistan. However, women in poppy-growing households appeared to be increasingly engaged in the poppy-lancing process, as did people who lost their jobs due to the COVID-19 crisis,” said the report, adding that the shortage of lancers was eventually overcome.

Supply shortage

  • The decline in international trade resulting from the pandemic could lead to a shortage in the supply of acetic anhydride, a precursor vital to the manufacture of heroin, which is not produced in Afghanistan.
  • “Such a shortage could lead to a reduction in the manufacturing of heroin or push it outside the country or even the region,” it said.
  • In Myanmar, there are indications that this year’s opium harvest, which was concluded before the onset of the pandemic, faces a shortage of buyers possibly due to the restrictions of movement
  • The restrictions are also impeding cocaine production in the short term, but a resurgence is likely in the event of an economic crisis.
  • Drug trafficking by air is likely to be completely disrupted by the restrictions on air travel. There are signs of increased use of maritime routes.

Maritime routes

  • “A recent uptick in heroin seizures in the Indian Ocean could be interpreted as an indication of an increase in the use of maritime routes for trafficking heroin to Europe along the ‘southern route’. If confirmed, the shift ... would indicate a change in the strategy of drug trafficking organisations as a result of the COVID-19 measures,” the report said.
  • While border measures appear to be hindering trafficking in opiates, large shipments of cocaine are still being trafficked but by alternative means, via sea routes.
  • Shipments by mail may also increase. The report said COVID-19 measures were also likely to lead to the stockpiling of drugs.
  • Indications are that the lockdown is increasing demand for cannabis, given that its production often takes place near consumer markets and traffickers.
  • The restrictions also seem to have resulted in increasing cannabis sales over the dark net. An estimated 192 million people used cannabis in 2018, making it the most used drug globally.

Source: TH

Anti-drug plan in 272 vulnerable districts

GS-III :

Centre rolls out anti-drug plan in 272 vulnerable districts

  • An annual anti-drug action plan for 272 vulnerable districts was launched by the Ministry of Social Justice and Empowerment on Friday, the International Day Against Drug Abuse and Illicit Trafficking.
  • The ‘Nasha Mukt Bharat’, or drug-free India campaign will focus not just on institutional support but also on community outreach programmes in the districts identified in coordination with the Narcotics Control Bureau, R. Subrahmanyam, Secretary, Ministry of Social Justice and Empowerment, said at the e-launch.

New strategy

  • “Today, we want to herald a new change in the strategy against drugs. So far, we had been focussed on institutions, but we need to move the focus to work in society at large because the problem is not at the institutional level, it is at the level of society,” he said.
  • It would also launch campaigns in schools and colleges to prevent drug abuse among youth.
  • He said the funding had gone up from? 49 crores in 2017-2018 to? 110 crore in 2019-2020, and ? 260 crores estimated for 2020-2021.
  • Integrated Rehabilitation Centre for Addicts (IRCAs), funded by the Ministry, should reach out to their communities to help those affected by addiction.
  • The plan includes awareness generation programmes, community outreach and identification of drug-dependent populations, focus on treatment facilities and capacity-building for service providers.

Source: TH

World Economic Outlook

GS-II :

World Economic Outlook

WEO is a survey by the IMF that is usually published twice a year in the months of April and October. It analyzes and predicts global economic developments during the near and medium term. In response to the growing demand for more frequent forecast updates, the WEO Update is published in January and July between the two main WEO publications released usually in April and October.

WEO update has projected a sharp contraction of 4.5 % in FY21, a steep drop from its April forecast of a 1.9 per cent expansion, calling it a "historic low" for India. In fact, India faced the sharpest cut in the outlook, a 6.4% (WEO April 2020) point revision due to a more severe fallout of the pandemic than anticipated.

However, India is expected to bounce back in FY22 with a 6 % growth rate. In comparison, emerging markets (EMs) and developing countries saw a 2-percentage point reduction in outlook, while the global outlook was cut by 1.9 percentage points.

Source: IE

IN-SPACe - NSIL

GS-III :

IN-SPACe

Union Government has given approval to Indian National Space Promotion and Authorization Centre (IN-SPACe). It will be the nodal national entity under the Department of Space to drive the building of satellites, rockets, or launch services through the Indian industry. It will provide a level playing field for private companies to use Indian space infrastructure. It will also hand-hold, promote and guide the private industries in space activities through encouraging policies and a friendly regulatory environment

NSIL

New Space India Limited (NSIL) is a Central Public Sector Enterprise of the Government of India. It is Head Quartered in Bangalore. It was established on March 2019 under the administrative control of the Department of Space (DOS), India. The main objective is to scale up industry participation in Indian space programs. NSIL will endeavour to re-orient space activities from a ‘supply driven’ model to a ‘demand driven’ model, thereby ensuring optimum utilization of our space assets.

Source: PIB

Animal Husbandry Infrastructure Development Fund 

GS-III : Economic Issues Animal Husbandry

Animal Husbandry Infrastructure Development Fund

Cabinet Committee on Economic Affairs has given its nod to set up an Rs.15,000 crore Animal Husbandry Infrastructure Development Fund. The fund had been proposed as part of the Aatmanirbhar Bharat. Eligible beneficiaries under the scheme include the following with a minimum 10% margin money contribution by them,

  • Farmer producer organisations,
  • MSMEs,
  • Section 8 companies,
  • Private companies and
  • Individual entrepreneurs

The balance of 90% would be the loan component to be made available by scheduled banks. The Centre will provide a 3% interest subvention to eligible beneficiaries, with a 2-year moratorium period for the principal loan amount and a six-year repayment period after that.

Source: PIB

Co-operative Banks under RBI

GS-III : Economic Issues Banking

Co-operative Banks under RBI

Recently, the Central government approved an ordinance to bring all urban and multi-state co-operative banks under the direct supervision of the RBI (PT). The decision comes after several instances of fraud and serious financial irregularities, including the major scam at the Punjab and Maharashtra Co-operative (PMC) Bank in 2019.

Till now, all the co-operative banks came under dual regulation of the RBI and the Registrar of Co-operative Societies.

Previously, the RBI had no power to draw up an enforceable scheme for the reconstruction of a cooperative bank. However, from now onwards the urban and multi-state co-operative will come under the direct supervision of RBI. The move will empower the RBI to regulate all urban and multi-state co-operative banks on the lines of commercial banks.

Co-operative Banks

  • It is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank.
  • It is distinct from commercial banks.
  • They are broadly classified into Urban and Rural co-operative banks based on their region of operation.
  • They are registered under the Co-operative Societies Act of the State concerned or under the Multi-State Co-operative Societies Act, 2002.
  • The Co-operative banks are also governed by the
  1. Banking Regulations Act, 1949.
  2. Banking Laws (Co-operative Societies) Act, 1955.

Source: PIB

Central Vista Project

GS-I : Art and Culture Architecture

Central Vista Project

Central Vista Committee is chaired by the Central Public Works Department (CPWD) additional director general (works) under the Ministry of Housing and Urban Affairs. Central Vista's proposal for the CPWD is to construct a triangular Parliament building on the 10.5-acre plot adjacent to the existing heritage structure built in the 1920s. The project is estimated to cost? 922 crore.

It is a part of the larger revamps of the entire 3-km Central Vista from Rashtrapati Bhavan to India Gate. It includes constructing a new triangular Parliament opposite the existing heritage structure and building a central secretariat for all Ministries. The existing Parliament building as well north and South Blocks are proposed to be re-purposed as museums. The government’s plan was approved by the Central Vista Committee at a meeting on April 23 with the suggestion that the design be “in sync” with the existing Parliament House.

Delhi Urban Art Commission

It was formed by an Act of Parliament in 1973. It is meant to advise the Centre on matters of preservation, development and maintenance of the aesthetic quality of the capital Delhi’s urban and environmental design. Recently Centre’s proposal to construct a new Parliament building in time for Independence Day 2022 was not approved by the Delhi Urban Art Commission (DUAC).

Source: TH

International Monetary Fund (IMF)

GS-II :

International Monetary Fund (IMF)

Paper-2 I.O Economics

The International Monetary Fund (IMF) is an organization of 189 member countries, each of which has representation on the IMF's executive board in proportion to its financial importance, so that the most powerful countries in the global economy have the most voting power.

Objective

  • Foster global monetary cooperation
  • Secure financial stability
  • Facilitate international trade
  • Promote high employment and sustainable economic growth
  • And reduce poverty around the world

History

  • The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944.
  • The 44 countries at that conference sought to build a framework for economic cooperation to avoid a repetition of the competitive devaluations that had contributed to the Great Depression of the 1930s.
  • Countries were not eligible for membership in the International Bank for Reconstruction and Development (IBRD) unless they were members of the IMF.
  • IMF, as per Bretton Woods agreement to encourage international financial cooperation, introduced a system of convertible currencies at fixed exchange rates, and replaced gold with the U.S. dollar (gold at $35 per ounce) for official reserve.
  • After the Bretton Woods system (system of fixed exchange rates) collapsed in the 1971, the IMF has promoted the system of floating exchange rates. Countries are free to choose their exchange arrangement, meaning that market forces determine the value of currencies relative to one another. This system continues to be in place today.
  • During 1973 oil crisis, IMF estimated that the foreign debts of 100 oil-importing developing countries increased by 150% between 1973 and 1977, complicated further by a worldwide shift to floating exchange rates. IMF administered a new lending program during 1974–1976 called the Oil Facility. Funded by oil-exporting nations and other lenders, it was available to nations suffering from acute problems with their balance of trade due to the rise in oil prices.
  • IMF was one of the key organisations of the international economic system; its design allowed the system to balance the rebuilding of international capitalism with the maximisation of national economic sovereignty and human welfare, also known as embedded liberalism.
  • The IMF played a central role in helping the countries of the former Soviet bloc transition from central planning to market-driven economies.
  • In 1997, a wave of financial crises swept over East Asia, from Thailand to Indonesia to Korea and beyond. The International Monetary Fund created a series of bailouts (rescue packages) for the most-affected economies to enable them to avoid default, tying the packages to currency, banking and financial system reforms.
  • Global Economic Crisis (2008): IMF undertook major initiatives to strengthen surveillance to respond to a more globalized and interconnected world. These initiatives included revamping the legal framework for surveillance to cover spill-overs (when economic policies in one country can affect others), deepening analysis of risks and financial systems, stepping up assessments of members’ external positions, and responding more promptly to concerns of the members.

Functions

  • Provides Financial Assistance: To provide financial assistance to member countries with balance of payments problems, the IMF lends money to replenish international reserves, stabilize currencies and strengthen conditions for economic growth. Countries must embark on structural adjustment policies monitored by the IMF.
  • IMF Surveillance: It oversees the international monetary system and monitors the economic and financial policies of its 189 member countries. As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.
  • Capacity Development: It provides technical assistance and training to central banks, finance ministries, tax authorities, and other economic institutions. This helps countries raise public revenues, modernize banking systems, develop strong legal frameworks, improve governance, and enhance the reporting of macroeconomic and financial data. It also helps countries to make progress towards the Sustainable Development Goals (SDGs).

Governance

  • Board of Governors: It consists of one governor and one alternate governor for each member country. Each member country appoints its two governors.
    • It is responsible for electing or appointing executive directors to the Executive Board.
    • Approving quota increases, Special Drawing Right allocations,
    • Admittance of new members, compulsory withdrawal of member,
    • Amendments to the Articles of Agreement and By-Laws.
    • Board of Governors is advised by two ministerial committees, the International Monetary and Financial Committee (IMFC) and the Development Committee.
    • Boards of Governors of the IMF and the World Bank Group normally meet once a year, during the IMF–World Bank Annual Meetings, to discuss the work of their respective institutions.
  • Ministerial Committees: The Board of Governors is advised by two ministerial committees,
    • International Monetary and Financial Committee (IMFC): IMFC has 24 members, drawn from the pool of 189 governors, and represents all member countries.
      • It discusses the management of the international monetary and financial system.
      • It also discusses proposals by the Executive Board to amend the Articles of Agreement.
      • And any other matters of common concern affecting the global economy.
    • Development Committee: is a joint committee(25 members from Board of Governors of IMF & World Bank), tasked with advising the Boards of Governors of the IMF and the World Bank on issues related to economic development in emerging market and developing countries.
      • It serves as a forum for building intergovernmental consensus on critical development issues.
  • Executive Board: It is 24-member Executive Board elected by the Board of Governors.
    • It conducts the daily business of the IMF and exercises the powers delegated to it by the Board of Governors & powers conferred on it by the Articles of Agreement.
    • It discusses all aspects of the Fund’s work, from the IMF staff's annual health checks of member countries' economies to policy issues relevant to the global economy.
    • The Board normally makes decisions based on consensus, but sometimes formal votes are taken.
    • Votes of each member equal the sum of its basic votes (equally distributed among all members) and quota-based votes. A member’s quota determines its voting power.
  • IMF Management: IMF’s Managing Director is both chairman of the IMF’s Executive Board and head of IMF staff. The Managing Director is appointed by the Executive Board by voting or consensus.
  • IMF Members: Any other state, whether or not a member of the UN, may become a member of the IMF in accordance with IMF Articles of Agreement and terms prescribed by the Board of Governors.
    • Membership in the IMF is a prerequisite to membership in the IBRD.
    • Pay a quota subscription: On joining the IMF, each member country contributes a certain sum of money, called a quota subscription, which is based on the country’s wealth and economic performance (Quota Formula).
      • It is a weighted average of GDP (weight of 50 percent)
      • Openness (30 percent),
      • Economic variability (15 percent),
      • International reserves (5 percent).
      • GDP of member country is measured through a blend of GDP—based on market exchange rates (weight of 60 percent) and on PPP exchange rates (40 percent).

Special Drawing Rights (SDRs) is the IMF’s unit of account and not a currency.

        • The currency value of the SDR is determined by summing the values in U.S. dollars, based on market exchange rates, of a SDR basket of currencies
        • SDR basket of currencies includes the U.S. dollar, Euro, Japanese yen, pound sterling and the Chinese renminbi (included in 2016).
        • The SDR currency value is calculated daily (except on IMF holidays or whenever the IMF is closed for business) and the valuation basket is reviewed and adjusted every five years.
      • Quotas are denominated (expressed) in SDRs.
      • SDRs represent a claim to currency held by IMF member countries for which they may be exchanged.

Members’ voting power is related directly to their quotas (the amount of money they contribute to the institution).

IMF allows each member country to choose its own method of determining the exchange value of its money. The only requirements are that the member no longer base the value of its currency on gold (which has proved to be too inflexible) and inform other members about precisely how it is determining the currency’s value.

IMF and India

  • International regulation by IMF in the field of money has certainly contributed towards expansion of international trade. India has, to that extent, benefitted from these fruitful results.
  • Post-partition period, India had serious balance of payments deficits, particularly with the dollar and other hard currency countries. It was the IMF that came to her rescue.
  • The Fund granted India loans to meet the financial difficulties arising out of the Indo–Pak conflict of 1965 and 1971.
  • From the inception of IMF up to March 31, 1971, India purchased foreign currencies of the value of Rs. 817.5 crores from the IMF, and the same have been fully repaid.
  • Since 1970, the assistance that India, as other member countries of the IMF, can obtain from it has been increased through the setting up of the Special Drawing Rights (SDRs created in 1969).
  • India had to borrow from the Fund in the wake of the steep rise in the prices of its imports, food, fuel and fertilizers.
  • In 1981, India was given a massive loan of about Rs. 5,000 crores to overcome foreign exchange crisis resulting from persistent deficit in balance of payments on current account.
  • India wanted large foreign capital for her various river projects, land reclamation schemes and for the development of communications. Since private foreign capital was not forthcoming, the only practicable method of obtaining the necessary capital was to borrow from the International Bank for Reconstruction and Development (i.e. World Bank).
  • India has availed of the services of specialists of the IMF for the purpose of assessing the state of the Indian economy. In this way India has had the benefit of independent scrutiny and advice.
  • The balance of payments position of India having gone utterly out of gear on account of the oil price escalation since October 1973, the IMF has started making available oil facility by setting up a special fund for the purpose.
  • Early 1990s when foreign exchange reserves – for two weeks’ imports as against the generally accepted 'safe minimum reserves' of three month equivalent — position were terribly unsatisfactory. Government of India's immediate response was to secure an emergency loan of $2.2 billion from the International Monetary Fund by pledging 67 tons of India's gold reserves as collateral security. India promised IMF to launch several structural reforms (like devaluation of Indian currency, reduction in budgetary and fiscal deficit, cut in government expenditure and subsidy, import liberalisation, industrial policy reforms, trade policy reforms, banking reforms, financial sector reforms, privatization of public sector enterprises, etc.) in the coming years.
  • The foreign reserves started picking up with the onset of the liberalisation policies.
  • India has occupied a special place in the Board of Directors of the Fund. Thus, India had played a creditable role in determining the policies of the Fund. This has increased the India’s prestige in the international circles.

Criticism

  • IMF’s governance is an area of contention. For decades, Europe and the United States have guaranteed the helm of the IMF to a European and that of the World Bank to an American. The situation leaves little hope for ascendant emerging economies that, despite modest changes in 2015, do not have as large an IMF voting share as the United States and Europe.
  • Conditions placed on loans are too intrusive and compromise the economic and political sovereignty of the receiving countries. 'Conditionality' refers to more forceful conditions, ones that often turn the loan into a policy tool. These include fiscal and monetary policies, including such issues as banking regulations, government deficits, and pension policy. Many of these changes are simply politically impossible to achieve because they would cause too much domestic opposition.
  • IMF imposed the policies on countries without understanding the distinct characteristics of the countries that made those policies difficult to carry out, unnecessary, or even counter-productive.
  • Policies were imposed all at once, rather than in an appropriate sequence. IMF demands that countries it lends to privatize government services rapidly. It results in a blind faith in the free market that ignores the fact that the ground must be prepared for privatization.

IMF Reforms

  • IMF Quota: a member can borrow up to 200 percent of its quota annually and 600 percent cumulatively. However, access may be higher in exceptional circumstances.
  • IMF quota simply means more voting rights and borrowing permissions under IMF. But it is unfortunate that IMF Quota’s formula is designed in such a way that USA itself has 17.7% quota which is higher than cumulative of several countries. The G7 group contains more than 40% quota where as countries like India & Russia have only 2.5% quota in IMF.
  • Due to discontent with IMF, BRICS countries established a new organization called BRICS bank to reduce the dominance of IMF or World Bank and to consolidate their position in the world as BRICS countries accounts for 1/5th of WORLD GDP and 2/5th of world population.
  • It is almost impossible to make any reform in the current quota system as more than 85% of total votes are required to make it happen. The 85% votes does not cover 85% countries but countries which have 85% of voting power and only USA has voting share of around 17% which makes it impossible to reform quota without consent of developed countries.
  • 2010 Quota Reforms approved by Board of Governors were implemented in 2016 with delay because of reluctance from US Congress as it was affecting its share.
  • Combined quotas (or the capital that the countries contribute) of the IMF increased to a combined SDR 477 billion (about $659 billion) from about SDR 238.5 billion (about $329 billion). It increased 6% quota share for developing countries and reduced same share of developed or over represented countries.
  • More representative Executive Board: 2010 reforms also included an amendment to the Articles of Agreement established an all-elected Executive Board, which facilitates a move to a more representative Executive Board.
  • The 15th General Quota Review (in process) provides an opportunity to assess the appropriate size and composition of the Fund’s resources and to continue the process of governance reforms.

Source: Web

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Sickle Cell Disease It is a blood disorder that arises when both parents have the problem gene and pass it on to their child. If only one parent has the problem gene, then the child will not have symptoms but will have the gene called the ‘sickle cell trait’. With sic

25 June,2020
China, Kashmir and the ghost of August 5

China, Kashmir and the ghost of August 5 By, Happymon Jacob teaches national security at the School of International Studies, Jawaharlal Nehru University, New Delhi Context # What is becoming clear now is that by “inventing” a rhetorical position around the issue of Aksai Chin,

The perils of follow the leader syndrome(Analysis of Disaster Management Act)

The perils of follow the leader syndrome By, Dushyant Dave is Senior Advocate and President, Supreme Court Bar Association of India. The views expressed are personal Context # André Gide, the French writer, once said, “Everything has been said before, but since nobody listens w

Bad to worse: On India-Pakistan ties

Bad to worse: On India-Pakistan ties Context # In another round of tit-for-tat manoeuvres, India, followed by Pakistan, has decided to halve the strength of diplomatic missions in each other’s capital. # The government’s decision, conveyed in a démarche to the Pakistani

Star Formation Nebula White dwarf and Neutron Star or Black Hole

Star Formation Nebula White dwarf and Neutron Star or Black Hole GS- Paper-1 Geography / Geography Optional (PT-Mains-I.V) Outlined below are the many steps involved in a star’s evolution, from its formation in a nebula, to its death as a white dwarf or a neutron star

Sudan warns against escalation in Nile dam dispute

Sudan warns against escalation in Nile dam dispute GS-Paper-2 International issue AFRICA Sudan has warned against escalation and urged further negotiations with Egypt and Ethiopia over the construction of a controversial dam on the Blue Nile river by Addis Ababa. Important points

Assam: Ambubachi Mela - Kamakhya temple

Assam: Ambubachi Mela - Kamakhya temple The annual Ambubachi Mela at the historic Kamakhya temple in Guwahati began. This year, however, the fair is being observed without devotees as only rituals will be performed in the temple till June 25. Kamakhya temple located atop of Nilachal Hills is one

Coal sector reforms

Coal sector reforms GS-PAPER-2 Governance and Energy PT-MAINS-I.V India, being a developing country, coal remains one of the most important indigenous energy resources and the dominant fuel for power generation and many industrial applications. Presently, despite being the world's f

Anti Defection Law

Anti Defection Law Part of: GS-II- Polity (PT-MAINS-PERSONALITY TEST) Recently, some of the sitting MLAs in the Manipur government defected to the opposition creating instability in the state's polity. This politics of defection in Manipur is not unique, there have been some othe

Signalling intent: On Government e-Marketplace

Signalling intent: On Government e-Marketplace New guidelines for the GeM platform # The Centre’s decision to make it mandatory for vendors on the Government e-Marketplace (GeM) procurement platform to specify the country of origin of new products listed by them is on its face of it unex

The many questions about Favipiravir (Analysis of Favipiravir Drug)

The many questions about Favipiravir S.P. Kalantri is Professor of Medicine at the Mahatma Gandhi Institute of Medical Sciences and Medical Superintendent of Kasturba Hospital, Sevagram, Maharashtra; Dinesh Thakur is a public health activist Context # The pandemic has not only exposed the d

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