GS PAPER: II

Red Sea Crisis

Why in the news?

• India’s crude oil imports from Iraq touched a 21-month high in January as refiners turned to West Asia to replace volumes from the United States (US).
• The oil supply from Washington remains disrupted due to the spurt in freight rates in view of the Red Sea crisis.

India –US Oil supply deal

• The US has been among India’s top-five crude suppliers for some time now, with domestic refiners buying an average of 205,000 barrels per day (bpd) of crude in 2023.
  • • However, in the first month of 2024, Indian refiners did not receive any US crude.
• Indian buyers had a mixed January when robust domestic demand and an almost complete lack of refinery turnarounds were sapped by panic buying as the Red Sea disruptions complicated the country’s import options.
• With freight from the Atlantic Basin being prohibitively expensive again, Indian refiners needed to turn towards options closer to home.

Oil cargoes from West

• Unlike US crude cargoes, oil cargoes from West Asia to India usually do not cross the Red Sea’s Bab el-Mandeb strait — where most of the attacks on commercial vessels have been concentrated — and pass through the Strait of Hormuz instead.
• India’s oil imports from Iraq — New Delhi’s second-largest source of crude — in January stood at 1.19 million bpd, up by a fourth from December volumes and the highest since April 2022. 
• The disruption in supplies of US crude led to a boost in India’s oil imports from another West Asian nation, the United Arab Emirates (UAE). Oil imports from the UAE in January jumped nearly 81 per cent over December levels to around 326,500 bpd. Abu Dhabi is India’s fourth-largest supplier of crude oil.
• Crude imports from Saudi Arabia — India’s third-largest supplier — stood at 690,172 bpd in January, a tad lower than December’s 706,759 bpd. In all, Indian refiners imported a total of 4.81 million bpd of crude in January, 9.3 per cent higher than December.
• Oil imports from Russia — currently India’s largest supplier of oil — in January stood at 1.53 million bpd, 5.6 per cent higher from the previous month.

Security situation in the Red Sea region

• A number of cargo ships have come under attack from Yemen’s Houthi rebels around the Bab el-Mandeb strait, which leads to the Red Sea and Suez Canal, forming the shortest, albeit narrow, route to the Mediterranean Sea and beyond from the Arab Peninsula, North-East Africa, and the Arabian Sea.
• The route is seen as an important artery of global goods and energy supplies. The Houthis have so far claimed that they are targeting vessels with links to Israel and its allies in view of the ongoing military offensive in Gaza.
• The security situation in the Red Sea region has forced a number of major shipping lines and Western oil companies to shun the route and instead take the much longer route around Africa via the Cape of Good Hope.
  • Higher risk premiums and longer voyages have hit the movement of goods between Asia & Europe, and Asia & North America in terms of significantly higher freight rates.

GS PAPER – III

RBI monetary policy

Why in the news?

• The Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC), which is scheduled to meet from February 6 to 8, is likely to keep the repo rate – its key policy rate – unchanged for the sixth consecutive time at 6.5 per cent to meet the 4 per cent consumer price-based inflation (CPI) target.
• The committee is also likely to retain the monetary policy stance as ‘withdrawal of accommodation’.

Expectation with upcoming monetary policy

• The rate-setting panel of the RBI is expected to keep the repo rate – the rate at which RBI lends money to banks to meet their short-term funding needs — steady at 6.5 per cent in the policy decision which will be announced on February 8.
• If the RBI maintains the status quo in the upcoming policy, it would mark one full year of the repo rate remaining steady at 6.5 per cent.
• The central bank last increased the repo rate by 25 basis points (bps) on February 8, 2023, to 6.5 per cent. One basis point is one-hundredth of a percentage point.
• The central bank is also likely to maintain the monetary policy stance as a withdrawal of accommodation.
• The RBI’s monetary policy will be announced a few days after the US Federal Reserve announced its monetary policy decision in which it left the benchmark interest rates unchanged at 5.25 per cent – 5.5 per cent and suggested that there was no hurry to change rates. Markets earlier anticipated that the US central bank may start cutting interest rates from March this year.
• A few economists expect the RBI to announce some liquidity measures to ease the tight liquidity condition in the banking system.
• The upcoming RBI policy is expected to give some guidance on liquidity. Currently, the gap between incremental credit and deposit in FYTD (financial year till date) 2024 stands at Rs 3.6 lakh crore.
• Thus, near term pressure on liquidity cannot be ruled out unless RBI comes up with some measures to improve the durable liquidity of the system.
• Liquidity conditions have remained tight in the banking system for some time due to lower government spending, higher tax outflows and slower bank deposit growth. On January 24, the liquidity deficit hit a record high of Rs 3.46 lakh crore.

Repo rate will remain unchanged

• The RBI has been maintaining that its aim is to bring CPI inflation to 4 per cent, and until that is achieved on a sustainable basis, its focus will be to remain disinflationary.
• In December, CPI inflation, or retail inflation, surged to a four-month high of 5.69 per cent in December driven by higher prices of food items such as pulses, spices, fruits and vegetables.
• In November 2023, CPI inflation stood at 5.55 per cent. Although headline inflation has come within the 2-6 per cent band set by the government for the RBI, it still remains above the 4 per cent target.
• RBI has projected CPI inflation at 5.4 per cent for FY24, with Q3 at 5.6 per cent and Q4 at 5.2 per cent.
• We maintain our view that the RBI MPC will keep the policy rate unchanged at the February 8 policy meeting at 6.50 per cent, sound optimistic on growth, recognize the sharp fiscal consolidation in the interim budget, and reiterate the commitment to the 4 per cent headline inflation target.
• For FY24, the RBI’s real GDP growth forecast is 7 per cent. A recent report by the finance ministry said that the country’s economy is likely to grow at over 7 per cent in the coming years and is expected to become the third-largest economy in the world in the next three years, with a GDP of $5 trillion.
• High frequency data in Q4 (October-December quarter) of the calendar year (CY) 2023 shows improvement in investment activity and survey data has remained strong with both services and manufacturing PMIs remaining well above 50.

What happens to lending rates if the repo rate is unchanged?

• With the RBI expected to leave the repo rate unchanged at 6.5 per cent, all external benchmark lending rates (EBLR) that are linked to the repo rate will not rise.
• It will again give relief to borrowers as their equated monthly instalments (EMIs) will not increase.
• However, lenders may raise interest rates on loans that are linked to the marginal cost of fund-based lending rate (MCLR), where the full transmission of 250 bps hike in the repo rate between May 2022 and February 2023 has not happened.
• In response to the 250 bps hike in the policy repo rate, banks have increased their EBLRs by a similar magnitude, while the one-year median MCLR increased by 155 bps during the period May 2022–December 2023.
• Concomitantly, the weighted average lending rate (WALR) on fresh and outstanding rupee loans increased by 183 bps and 108 bps, respectively, from May 2022-November 2023.

GS PAPER – II

66th Grammys Award

Why in news?

• For an eight-track album created during Covid by exchanging files on email by Shakti — the Indo-jazz super group comprising ace percussionist Ustad Zakir Hussain, British guitarist John Mclaughlin, kanjira player V Selvaganesh, violinist Ganesh Rajagopalan and vocalist Shankar Mahadevan — has won the Grammy for the Best Global Music Album at the 66th Grammys .

About Grammy Awards

• Popularly known as Grammy Award, it is originally named Gramophone Award,  presented annually in the United States by the National Academy of Recording Arts & Sciences (NARAS; commonly called the Recording Academy) to honour artistes in the music industry for their exceptional work in a year.
• It was started in 1959 to respect the performers for the year 1958. Once it was made, the committee decided to call it Grammy as a tribute to Emile Berliner’s gramophone.

Categories

• The “General Field” are four awards that are not restricted by genre:
• Album of the Year
• Record of the Year
• Song of the Year
• Best New Artiste 
• Winners are selected from more than 25 fields, which cover such genres as pop, rock, rap, R&B, country, reggae, classical, gospel, and jazz, as well as production and postproduction work, including packaging and album notes. The honorees receive a golden statuette of a gramophone.

GS PAPER – II

Public Examinations (Prevention of Unfair Means) Bill, 2024

Why in news?

• A bill to curb cheating and other unfair means in various public examinations introduced in Loksabha.
• The Public Examinations (Prevention of Unfair Means) Bill, 2024, moved by the ministry of personnel, public grievances and pensions mentions the kinds of unfair means in examinations that are punishable by law once enacted, and the punishment for the offences.

Objective of the bill:

• The objective of the Bill is to bring greater transparency, fairness and credibility to the public examination systems.
• To reassure the youth that their sincere and genuine efforts will be fairly rewarded and their future is safe.
• “The Bill is aimed at effectively and legally deterring persons, organised groups or institutions that indulge in various unfair means and adversely impact the public examination systems for monetary or wrongful gains.

Offences under the bill

• Question paper or answer key leaks
• Participation in collusion with others to effect question paper or answer key leaks
• Accessing or taking possession of question paper or an Optical Mark Recognition (OMR) response sheet without authority
• Providing solution to one or more questions by any unauthorised person during a public examination
• Directly or indirectly assisting the candidate in any manner unauthorisedly in the public examination
• Tampering with answer sheets including OMR response sheets
• Altering the assessment except to correct a bona fide error without any authority
• Wilful violation of norms or standards set up by the central government for conduct of a public examination on its own or through its agency
• Tampering with any document necessary for short-listing of candidates or finalising the merit or rank of a candidate in a public examination
• Deliberate violation of security measures to facilitate unfair means in conduct of a public examination
• Tampering with the computer network or a computer resource or a computer system
• Manipulation in seating arrangements, allocation of dates and shifts for the candidates to facilitate adopting unfair means in examinations
• Threatening the life, liberty or wrongfully restraining persons associated with the public examination authority or the service provider or any authorised agency of the Government; or obstructing the conduct of a public examination
• Creation of fake website to cheat or for monetary gain.
• Conduct of fake examination, issuance of fake admits cards or offer letters to cheat or for monetary gain.

Examinations covered by the law

• Any examination conducted by the Union Public Service Commission (UPSC).
• Staff Selection Commission (SSC)
• Railway Recruitment Boards (RRB)
• Institute of Banking Personnel Selection
• Ministries or Departments of the Central Government and their attached and subordinate offices for recruitment of staff
• National Testing Agency or other authority as may be notified by the Central Government, will be covered under this anti-cheating bill.

Punishment for offences

• According to the draft bill, all the offences will be cognizable, non-bailable and non-compoundable.
• Any individual or persons found guilty of unfair means and offences will be punished with imprisonment for a term not less than three years, which may extend to five years and with fine up to ten lakh rupees.
• In case of default of payment of fine, an additional punishment of imprisonment shall be imposed, as per the provisions of the Bharatiya Nyaya Sanhita, 2023.
• The law entails that the service provider shall also be liable to be punished with imposition of a fine up to one crore rupees and proportionate cost of examination shall also be recovered from such service provider and he/she shall also be barred from being assigned with any responsibility for the conduct of any public examination for a period of four years.
• If an investigation finds the offence under this act has been committed with the consent or connivance of any director, senior management or the persons in-charge of the service provider firm, the guilty person shall be liable for imprisonment for a term not less than three years but which may extend to ten years and with fine of one crore rupees.
• In case of default of payment of fine, an additional punishment of imprisonment shall be imposed as per the provisions of the Bharatiya Nyaya Sanhita, 2023.
• Provided that until the Bharatiya Nyaya Sanhita, 2023 is brought into force, the provisions of the Indian Penal Code shall be applicable in place of the said Act.
• The bill states that if a person or a group of individuals including the examination service provider are found guilty of organised crime, the punishment amounts to a minimum of five years of imprisonment which may extend to ten years. The guilty will be slapped with a minimum fine of 1 crore.

GS PAPER – II

Withdrawal of Indian troops from Maldives

Why in news?

• President Mohamed Muizzu said the first group of Indian military personnel will be sent back from the island nation before March 10, while the remaining Indian troops manning two aviation platforms will be withdrawn by May 10.
• In his maiden address to Parliament, Muizzu, widely seen as a pro-China leader, said he believes a large majority of Maldivians support his administration with the expectation that they will remove foreign military presence from the country, and recover the lost oceanic territory.
• He said his administration will not allow any State agreements that may compromise the country’s sovereignty, 

What is role of military personnel there?

• Currently, Indian military personnel are in the Maldives primarily to operate two helicopters and an aircraft that have carried out hundreds of medical evacuations and humanitarian missions.
• The Indian platforms have been providing humanitarian and medical evacuation services to the people of the Maldives for the last few years.
• Muizzu said his administration would not do anything that could in any way compromise the nation’s sovereignty.

Why decision was taken?

• Soon after taking oath as the President of Maldives on November 17, Muizzu formally requested India to withdraw 88 military personnel from his country by March 15, saying the Maldivian people have given him a “strong mandate” to make this request to New Delhi.
• Diplomatic discussions with other nations that the President can conduct are ongoing. We have officially requested India to remove its troops stationed in the Maldives. Deliberations on this issue are ongoing.
• The only “workable solution” for continued operation of Indian platforms turned out to be replacing them with Indian civilian personnel and Maldivian defence personnel who are trained in operating the three platforms.
• Around 80 Indian military personnel are stationed in the Maldives to operate these platforms.
• On January 14, after the first meeting of the core group, the Maldives government had set a March 15 deadline for India to withdraw its military personnel from the country.
• Sources said the two sides worked to enable continued operation of these three platforms which are the lifeline of Maldives medical emergency services.
• This withdrawal of Indian military personnel is being seen as Maldives President Mohamed Muizzu able to have his way on the ‘India Out’ plank on which he rode to power last year.

Why situation escalated?

• Soon after taking oath as the President in November, Muizzu, widely seen as a pro-China leader, had formally requested India to withdraw its military personnel from his country, saying the Maldivian people had given him a “strong mandate” to make this request to New Delhi.
• Muizzu won the presidential election, ousting Ibrahim Mohamed Solih, after promising to remove Indian military presence from the Maldives.
• Barely a month after asking India to withdraw its military personnel, the Muizzu government also announced that it would not renew the previous government’s agreement with India on a hydrographic survey of Maldivian waters.
• Last month, after he returned from his five-day state visit to China, Muizzu indirectly hit out at India while addressing the media at the airport. Without naming any country, he said: “We may be small, but that doesn’t give you the licence to bully us.”
• Before visiting China, and Dubai for COP28, Muizzu had chosen Turkey as his first foreign destination. This was a departure from the tradition of Maldivian Presidents choosing India as their first overseas stop after entering office.