Government data shows retail inflation drops to a 15-month low of 5.66%. (GS – 3)

• India’s consumer inflation in March was 5.66%, the lowest in 15 months, compared to a rise of 6.44% in February.
• This was the first time in three months that the headline Consumer Price Index came within the 6% limit.
• The Reserve Bank of India’s targeted inflation rate is 4(+/-2)%.
• Food inflation was 4.79% in March, down from 5.95% in February, while core inflation eased to 5.95% from 6.23%.
• To control inflation, the Reserve Bank of India has raised the key lending rate by 250 basis points since May 2022.
• Cereal inflation remained high at 15.27% in March, while milk and milk items grew by 9.31% and vegetable inflation shrunk by 8.51%.
• Rural inflation was at 5.51% and urban inflation was at 5.89% in March.
• Central banks typically raise the repo rate to shrink money supply in the economy to bring prices under control during high inflation.

Saudi Arabia’s quest for strategic autonomy

Context: The Impact of Saudi Arabia’s Changing Foreign Policy on South and Central Asia

Background:

• Saudi Arabia has historically had a foreign policy centered on Iran.
• The nation is now seeking to reach out to old rivals, hold talks with new enemies, and balance between great powers.

How is Saudi foreign policy changing?

• Previously, Saudi Arabia’s foreign policy was primarily driven by hostility towards Iran.
• This led to proxy conflicts across the region.
• However, the nation is now shifting towards an expansionist policy, which could have implications for countries in South Asia and Central Asia.

Implications for South and Central Asia:

• Saudi Arabia is currently India’s fourth-largest trading partner, with over 18% of India’s crude oil imports sourced from the kingdom.
• Given this economic relationship, it is important for India to monitor Saudi Arabia’s changing foreign policy as a benchmark for its own concerns in West Asia.
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Global Influence of Saudi Arabia’s Expansionist Approach:

Saudi Arabia’s Economy:

• Largest economy in the Middle East
• 18th largest economy by nominal GDP and 17th largest by PPP

Saudi’s Recent Diplomatic Moves:

• Normalizing diplomatic ties with Iran after China-mediated talks
• Reports of Russia mediating talks between Saudi Arabia and Syria, potentially leading to Syria re-entering the Arab League
• Saudi-Omani delegation traveling to Yemen to hold talks with Houthi rebels for a permanent ceasefire

Decisive Shift in Policy:

• These moves mark a departure from the policy previously adopted by Crown Prince Muhammad bin Salman

Balancing Between Superpowers:

• Saudi Arabia is trying to balance its relationships with the U.S., Russia, and China
• The U.S. is its largest arms supplier, Russia is its OPEC-Plus partner, and China is a rising superpower in the region
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Reasons for Saudi’s shift:

China’s Mediation Offer:

• China’s offer to mediate between Iran and Saudi Arabia provided the latter with an opportunity to seize the deal.

Iran Remains a Concern:

• Despite the shift, Iran would continue to be a driving factor in Saudi Arabia’s security concerns and strategic calculations.

Shift from Rivalry to Coexistence:

• Saudi Arabia has moved away from a strategy of strategic rivalry and proxy conflicts with Iran to a more tactical approach focused on de-escalation and mutual coexistence.

Implications for the region:

Saudi Arabia’s Challenge:

• The main challenge facing Saudi Arabia is to maintain its autonomy without going too far and causing friction with the United States.

Impacts on India:

Saudi Arabia’s Closeness with China:

• Saudi Arabia’s diplomatic rapprochement with Iran, brokered by China, highlights the renewed pragmatism of the Kingdom and its main trading partner.

Russia and Saudi Arabia: The relationship between Russia and Saudi Arabia has expanded since the launch of the OPEC+ oil production deal in 2016 and King Salman bin Abdulaziz’s historic first visit to Moscow in October 2017.

IMF Lowers India’s Growth Projection To 5.9 Percent For 2023-24

• The IMF has lowered India’s economic growth projection for the current fiscal year to 5.9% from 6.1% earlier.
• IMF also lowered the forecast for the 2024-25 fiscal year to 6.3% from the 6.8% it had predicted earlier this year.
• Despite the decrease in growth rate projections, India is still the fastest-growing economy in the world.
• The IMF growth forecast is lower than projections by the Reserve Bank of India (RBI).
• China’s growth rate is projected to be 5.2% in 2023 and 4.5% in 2024, while its growth rate in 2022 was 3%.
• The global economy appears to be gradually recovering from the pandemic, with China rebounding strongly following the reopening of its economy.
• Global growth will bottom out at 2.8% this year before rising modestly to 3.0% in 2024, according to IMF Chief Economist Pierre-Olivier Gourinchas.
• This year’s economic slowdown is concentrated in advanced economies, especially the euro area and the United Kingdom.
• Despite a downward revision, many emerging market and developing economies are picking up.
• Policymakers need a steady hand and clear communication, and monetary policy should remain focused on bringing inflation down, but be ready to quickly adjust to financial developments.

Union Territory Ladakh to host G20 event in 2023

• Union Territory Ladakh will host a G20 event in April 2023 as part of India’s G20 Presidency.
• India will host over 200 meetings in over 50 cities across 32 different work streams.
• The G20 meeting in Ladakh provides an opportunity to showcase its unique cultural and natural heritage and for branding of new UT Ladakh.
• UT Advisor Umang Narula suggested careful planning of Ladakh-centric narrative to promote its unique culture, cuisine, art, dance forms with a focus on involvement of youth, start-ups, and entrepreneurs.
• Key element of ‘People’s G20’ through various ‘Jan Bhagidari’ initiatives will be underlined, under India’s G20 Presidency.
• Ladakh Divisional Commissioner and G20 Nodal Officer Saugat Biswas presented the action plan for hosting the G20 delegations from tentative dates of 25th to 28th April next year.
• Schools and colleges will organize Indian Presidency’s G20 themes ‘Vasudhaiva Kutumbakam’ or ‘One Earth One Family One Future’ in the run-up to the event.
• The meeting also decided to promote carbon-neutral Ladakh, environmentally friendly living in UT, and the use of e-vehicles during the event.
• Local made items and innovative products shall be presented as souvenir items to the visitors.

Ladakh Principal Secretaries, Dr Pawan Kotwal, Sanjeev Khirwar, ADGP Ladakh SS Khandare, and other senior officials also attended the meeting.

Fishing Industry: India and Sri Lanka Need a Boost

The neglect of the fishing industry by India and Sri Lanka has resulted in an ongoing dispute over fishing rights in the Palk Strait. Developing the fishing industry could help resolve the conflict and boost the economies of both countries.

The Blue Economy

Origin of the Concept

• Gunter Pauli’s book “The Blue Economy: 10 Years, 100 Innovations, 100 Million Jobs” (2010) introduced the Blue Economy concept.
• It aimed to identify 100 of the best nature-inspired technologies that could impact global economies sustainably, while providing basic human needs such as potable water, food, jobs, and shelter.

Inclusive Approach and Objective

• The Blue Economy seeks to integrate Ocean Economy development with principles of social inclusion, environmental sustainability, and innovative, dynamic business models.
• The ultimate objective is to create a sustainable and prosperous future for coastal communities and economies.

Environment-Friendly Maritime Infrastructure

• The Blue Economy aims to create environment-friendly infrastructure in the ocean, allowing for larger cargo consignments to move directly from the mothership to the hinterland.
• This infrastructure will reduce the carbon footprint of marine transportation and promote a cleaner, more sustainable ocean economy.

Indo-Sri Lankan Dispute over Fishing Rights in Palk Strait

Maritime boundary agreement:

• Signed in 1974 and 1976
• Allowed fishermen of both nations to fish in each other’s waters
• Encouraged by the tradition of fishing in each other’s waters

Absence of physical demarcation:

• Lack of physical demarcation of maritime boundaries
• Resulted in Indian fishermen encroaching into Sri Lankan waters during the civil war

Rising conflicts:

• After the end of hostilities, Sri Lankan fishing community sought to reclaim their rights

Conflict with Indian fishers arose

• Sri Lankan Navy intervened, resulting in arrests and even fatal shootings of Indian fishermen

Neglect of the Fishing Industry by India and Sri Lanka

India’s marine fishery:

Dominated by the artisanal sector

Can afford only small sailboats or canoes to fish for subsistence

Lack of investment:

India’s fisheries are being transformed into a commercial enterprise

Lack of investment in deepwater fleet

Most fishing takes place in coastal waters, leading to competition with neighboring countries

Underexploited resources:

Rich resources in India’s Exclusive Economic Zone remain underexploited

Much of the catch from India’s fishing grounds taken away by better-equipped fishing fleets of other Indo-Pacific countries indulging in illegal, unregulated, and unreported fishing

Growing tensions:

Neglect of the fishing industry has resulted in dwindling fish stocks

Rising fuel costs

Growing tensions between India and Sri Lanka

Development of the Fishing Industry

China:

Mobilized its fishing industry to meet rising demand for protein in the Chinese diet

Now a fishery superpower

India:

Needs to invest in a deepwater fleet to exploit rich fishing grounds in its Exclusive Economic Zone

Needs to compete with other countries in the Indo-Pacific region

India must focus on modernization:

Mechanization and modernization of fishing vessels

Developing deep-water fishing fleets

Building a DWF fleet around the mother ship concept

Developing modern fishing harbors

PM Matsya Sampada Yojana – A Scheme to Boost Fisheries Sector in India

PM Matsya Sampada Yojana is a scheme launched by the Government of India in 2020.

The scheme aims to boost the fisheries sector in the country.

The scheme has a total outlay of Rs. 20,050 crores.

The scheme is implemented over a period of five years from 2020-21 to 2024-25.

Key Areas of Intervention

The scheme is focused on four key areas of intervention, which include:

Development of infrastructure and modernization of the fisheries sector.

Fisheries management and regulatory framework.

Fisheries post-harvest operations and value chain.

Aquaculture development.

Development of infrastructure and modernization of the fisheries sector

This involves the creation of new fishing harbors, fish landing centers, cold chain facilities, and other related infrastructure.

The objective is to provide better infrastructure for fishermen to increase their productivity and reduce post-harvest losses.

Fisheries management and regulatory framework

This involves strengthening the regulatory framework for fisheries and aquaculture.

Promoting sustainable fishing practices and conserving marine biodiversity are also key objectives.

Fisheries post-harvest operations and value chain

This involves promoting the processing and value addition of fish and fishery products.

Improving market access for fishermen and fish farmers is also a key objective.

Aquaculture development

This involves promoting the development of inland fisheries and aquaculture.

Creating new fish farms and supporting the adoption of modern technologies for fish farming are also key objectives.

Conclusion

Neglect of the fishing industry by India and Sri Lanka has resulted in an ongoing dispute over fishing rights in the Palk Strait.

Developing the fishing industry could help resolve the conflict and boost the economies of both countries.

The government’s Pradhan Mantri Matsya Sampada Yojana could be used to form an Indo-Sri Lankan Fishing Corporation to provide a huge boost to the fishing industries of both nations and remove an unwanted irritant in bilateral relations.

International Big Cat Alliance (IBCA) launched

The Indian Prime Minister, Narendra Modi, has launched the International Big Cat Alliance (IBCA) during the program for ‘Commemoration of 50 years of Project Tiger’ organized at Karnataka State Open University. The IBCA endeavors to protect and conserve seven major big cats of the world, including tiger, lion, leopard, snow leopard, puma, jaguar, and cheetah, with a range of countries harboring these species being its members.

key points about the Prime Minister’s announcement:

• The Prime Minister stated that India does not believe in the conflict between ecology and economy but rather emphasizes coexistence between the two. He believes that the protection of wildlife is a universal issue that needs to be addressed.
• According to data, the tiger population in India has increased significantly in recent years. The tiger population was 1,411 in 2006, 1,706 in 2010, 2,226 in 2014, 2,967 in 2018, and 3,167 in 2022. The Prime Minister called the success of ‘Project Tiger’ a matter of pride for India and the whole world.

About IBCA

• The IBCA was first proposed by the Prime Minister in July 2019, where he called for an Alliance of Global Leaders to obliterate demand and firmly curb A
• The IBCA aims to protect and conserve the seven major big cats of the world, with a range of countries harboring these species being its members. The alliance will focus on developing scientific protocols, best practices, and technical cooperation to achieve the goal of protecting these magnificent creatures.
• The Sahyadri or Western Ghats have several tribal communities that have worked for wildlife and tigers to flourish, and their contribution to conservation efforts is laudable.
• The Sahyadri or Western Ghats have several tribal communities, that have worked for wildlife and tigers to flourish, and their contribution to conservation efforts is laudable.

Protecting nature is part of the culture:

• India has created an ecosystem for tigers to flourish and has not only saved them but also protected their habitat, which is a global issue.
• India brought cheetahs from Namibia and South Africa, marking the first successful transcontinental translocation of the big cat.
• India’s tiger population has increased by 75% in the last decade, and 75% of the world’s tigers are in India.
• India’s tiger reserve covers 75,000 sq km, providing a safe habitat for tigers to thrive.

About species richness:

• Despite occupying only 2.4% of the world’s land area, India contributes about 8% of the known global diversity.
• India is the largest tiger range country globally, and its elephant population of nearly 30,000 makes it the world’s largest Asiatic elephant range country.
• India is also the world’s largest single-horned rhino country, with a population of nearly 3,000.
• India is the only country that has Asiatic lions, and their population has increased from around 525 in 2015 to 675 in 2020.
• The leopard population in India has increased by 60% in four years.
• India has added over 2,200 sq km of forest and tree cover by 2021, compared to 2019 figures.
• The number of national parks and sanctuaries in India, around which eco-sensitive zones were notified, has increased from 9 to 468 in the past decade.

Zojila Pass connecting Kashmir with Ladakh opened in record 68 days

Zojila Pass, a critical high-altitude pass in the Himalayas, connecting Kashmir with Ladakh, was opened in a record 68 days after heavy snowfall closed it in January. Here are some key points to know about this achievement:

• Zojila Pass is situated at an elevation of 3,528 meters and is a vital link between Kashmir and Ladakh. It is usually closed from October or November until April or May due to heavy snowfall.
• In 2021, the pass remained closed for 110 days, while this year it was closed for 73 days. The Border Roads Organisation (BRO) has been breaking its own records for the past three years in opening the pass earlier than usual.
• The BRO director general, Lt Gen Rajeev Chaudhary, announced that they were able to open the pass in a record 68 days, despite facing the highest snowfall in the last five years.
• The BRO has been focusing on infrastructure and augmenting connectivity to the northern borders with a strategic requirement of minimizing the closure during winters.
• To keep the pass open for traffic until January 6, the BRO initiated measures to ensure the opening, and almost 13,500 vehicles crossed the pass between the end of November 2022 and January 6, 2023.
• Dry weather in the first week of February helped accelerate snow clearance, and widening of the road surface was carried out. Trial convoys of vehicles passed through the Zojila Pass on March 16, ensuring it remained closed for only 68 days.
• Razdan Pass, which provides the only road connectivity between Gurez and Kashmir, was reopened after 58 days, while other important passes at Sadhna, Pharkiyan Gali, and Zamindar Gali remained open throughout the winter.
• The early opening of Zojila and Razdan Passes will facilitate the augmentation of the supply of essential goods and services for the people of Ladakh and Gurez Valley.
• The decision to open the road for civil traffic will be taken by the civil administration after a successful trial movement across the Zojila Pass.

The BRO’s achievement in opening the Zojila Pass in a record 68 days demonstrates their dedication and commitment to maintaining critical infrastructure in challenging Himalayan terrain.

How ‘Project Tiger’ Rescued Indian Tigers

• India’s Tiger Census has shown an increase of 6.74% in the number of tigers in India, from 2,967 in 2018 to 3,167 in 2022.
• The 5th cycle of India’s Tiger Census was released by Prime Minister Narendra Modi during an event in Karnataka’s Mysuru.
• The government’s vision for tiger conservation was also released during ‘Amrit Kaal’, and the International Big Cats Alliance (IBCA) was launched.
• IBCA will focus on the protection and conservation of seven major big cats of the world, including tiger, lion, leopard, snow leopard, puma, jaguar, and cheetah, with membership of the range countries harbouring these species.
• Project Tiger was launched by the Indian Central Government on April 1, 1973, in a bid to promote conservation of the tiger when their population was rapidly declining.
• At the time of independence, there were 40,000 tigers in the country. However, by 1970, they were soon reduced to below 2,000 due to widespread hunting and poaching.
• Two years later, the Indian government conducted its own tiger census and found that there were only 1,800 of them left in the country.
• Project Tiger was established by then-Prime Minister Indira Gandhi to tackle the problem of hunting and poaching, and the Wildlife Protection Act was promulgated in 1972.
• Today, there are 54 tiger reserves across India, spanning 75,000 sq km.
• The current population of tigers in India stands at 3,167, which is a significant increase compared to previous years.
• The goal of Project Tiger is to have a viable and sustainable tiger population in tiger habitats based on a scientifically calculated carrying capacity.

Indian Space Policy, 2023

Objective:

• Enhance the role of the Department of Space
• Boost the activities of ISRO missions
• Encourage participation from research, academia, startups, and industry

Salient features:

Roles and responsibilities:

• Outlines roles of various organizations in the space sector
• Clarity in roles to help efficient functioning of components
• Multistakeholder participation:
• Aims to boost the space sector
• Encourages participation from research, academia, startups, and industry
• Develops the space segment and creates more opportunities for private sector

Boosting ISRO missions:

• Aims to boost the activities of ISRO missions
• Helps achieve ISRO’s objectives more efficiently
• Helps in the development of new technologies and innovative solutions
• Involvement of private sector:
• Recognizes the importance of private sector in space sector development
• Encourages involvement of private sector entities in various aspects of the space segment
• Creates more opportunities for the private sector and helps in the growth of Indian space industry

Research and development:

• Involves research, academia, and startups in space sector development
• Helps in development of new technologies, innovative solutions, and talent pool
• Helps in growth of Indian space industry and creates more opportunities for research and development

Conclusion:

• Comprehensive policy providing clarity in roles and responsibilities of various organizations in the space sector
• Aims to boost the space segment, encourage private sector involvement, and involve research, academia, and startups in sector development
• Helps achieve objectives of ISRO more efficiently and effectively, and creates more opportunities for private sector and research and development in space sector.

RBI’s decision to pause rate hikes amid inflation concerns

• The RBI has decided not to increase the repo rate due to continuing hikes by important central banks like the US Federal Reserve and European Central Bank, and domestic inflation concerns.
• The decision is subject to change if incoming data suggests rising inflation risks.

Assessment of impact of rate hikes on money market rates

• The RBI feels that money market rates have effectively risen more than the 250-basis-point yank in the repo rate since May 2022.
• The RBI has decided to pause and assess the impact of rate hikes.
• Expected decline in inflation and upside risks
• The key reason behind the MPC decision is the expectation of a decline in inflation to 5.2% in the current fiscal year.
• The decline is 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 is ready to fight any unexpected rise in inflation.

Impact on GDP growth

• The RBI expects GDP growth to slow to 6% from 7% this fiscal year.
• Slowing global growth, domestic interest rates, and messy geopolitics are expected to bite.
• Slowing global growth will be a net negative for India’s exports, and the growing dependence on commodity exports makes India more vulnerable to global growth volatility.
• Fiscal 2024 will test the resilience of India’s domestic demand amid rising interest rates.

Reasons for expected cooling of consumer inflation

• Fuel inflation expected to reduce to 3% from a high of over 10% in the current fiscal year due to some easing of crude oil prices as global growth slows down.
• Slowing domestic growth will ease core inflation from very sticky levels of over 6% last fiscal year to 5.5% in the current one.
• However, the decline in core inflation will be limited as input cost pressures have not dissipated.
• 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.
• Food inflation has always been volatile and carries upside risks largely because of climate-related factors affecting agriculture output and prices.

Impact of growth slowdown in US and Europe

• US and Europe have twice the GDP of China
• Slowdown in US and Europe will have a deeper impact than China’s recovery
• This will hurt India’s exports to US and Europe
• India’s exports to US and Europe are more than to China
• India exports more to US and Europe than to China by a factor of six
• Negative impact of growth slowdown in US and Europe will be felt more by India than by China
• India’s growing dependence on commodity exports
• India’s exports of petroleum products and steel are growing
• This makes India more vulnerable to global growth volatility
• As global growth slows down, demand for commodities is likely to decline, which will hurt India’s exports
• External vulnerabilities
• India’s external vulnerability is expected to decline
• Narrower current account deficit and modest short-term external debt
• CAD is expected to narrow to 2% of GDP this fiscal from 2.5% last fiscal

Conclusion

• RBI’s decision to pause rate hikes is driven by expectations of a decline in inflation
• Inflation risks remain and rate hikes could impact GDP growth significantly
• India’s external vulnerabilities are expected to decline, but banking turmoil and elevated debt levels remain a risk
• RBI’s decision to pause rate hikes will be closely watched and further rate hikes may be necessary if inflation risks persist.