Rajasthan

Appearance

World Economy ​

Syllabus ​

  • Global Economic issues and trends: Role of World Bank, IMF & WTO.
  • Sustainable Development and Climate Change.

Global Economic Issues ​

Major issues of the global economy include-

  1. Tariff War
  2. Trade Protectionism
  3. Trade War
  4. De-Dollarization
  5. Crude Oil Prices
  6. Global Conflict (Ukraine, Israel-Palestine conflict)
  7. Second Great Depression
  8. Climate Change
  9. Inflation
  10. Global Supply Chains

The current global economy is facing polycrisis. (World Economic Outlook-2025)

  1. Tariff War: Reciprocal tariff war (by Trump) has pushed the world into recession leading to - dumping of products, weaponization of rare minerals (by China), geopolitical polarization, collapse of global value chains and the potential end of globalization.
  2. Trade Protectionism: Under this, restrictions on imports are imposed to help domestic industries, which increases the demand for domestic goods and services. The purpose of this protectionism is to strengthen the domestic economy. For example, the USA has been promoting protectionist policies since 2018-19.
    • Protectionist policies - They become negative in the long run, they slow down growth rate, degrade product quality and lead to unemployment (retrenchment).
  3. De-Dollarization - With the aim of reducing US economic dominance, efforts are being made by economies like India, China, Russia, Brazil through de-dollarization i.e. increasing the acceptance of other currencies in place of the dollar.
  4. Second Great Depression - The Corona pandemic has created the most terrible situation after the 1929 global economic crisis, where the unemployment rate is at the highest level. Due to which not only economic but also social, policy making and political stability is being affected.
  5. US-China Trade War - The increase in tariff rates on Chinese imports by the US has increased the threat of dumping in India, especially in the steel and aluminium sectors. Due to which there is a possibility of decline in the Indian currency.
  6. Global Supply Chains - The cross-border movement of goods, services and information – have been impacted by COVID-19, which has been exacerbated by recent geopolitical crises, leading to global imbalances in demand and supply, leading to rising inflation.
  1. The world's average growth rate will be 3 percent sequentially. (World Economic Outlook Report 2025)
  2. The average economic growth rate of developed economies will be 1.5 percent, while the average growth rate of developing and emerging economies will be 5.2 percent.
  3. The debt/GDP ratio (global) has reached 100 percent.
  4. Global inflation was 7 percent in the year 2024, which will reduce to 3.5 percent in 2025.
  5. Growth rate will remain slow due to strict monetary policies as most of the world's central banks have controlled liquidity to fight inflation.
  6. Climate crisis – Heat waves, forest fires, floods, earthquakes, cyclones are causing large-scale economic and human losses.
  7. World economy will be negatively affected due to other factors such as - geopolitical conflict (Russia-Ukraine, Israel-Palestine conflict), natural resource crisis, cyber crime, social polarization.
  8. Slow pace of global reforms.

Measures to strengthen the global economy:

  1. To improve the administrative and business environment of multilateral financial institutions (WB, IMF, WTO).
  2. A sustainable funding system that can increase investment in development, research, health care, cyber security.
  3. To improve monetary policy management to tackle inflation in developing countries and deflation in the Eurozone.
  4. According to UNCTAD, 'globalisation, reduction of trade barriers and promotion of private investment' are required, beyond protectionist policies.

WORLD BANK ​

  • A conference was held in Brettonwood city of United States of America in 1944 with the aim of establishing a global permanent financial system.
  • The objective of this conference was to encourage economic cooperation between the countries after the Second World War so that the history of the Great Depression after the First World War is not repeated.
  • In this conference it was decided to establish 3 organizations.
    1. World bank (IBRD)
    2. IMF
    3. ITO
  • ITO was not established due to lack of US Senate approval.
  • The World Bank and the IMF are called the Brettonwood Twins.

World bank group : There are five institutions in this group

  1. IBRD (International Bank for Reconstruction and Development)

  2. IDA (International Development Association)

  3. IFC (International Finance Corporation)

  4. MIGA (Multilateral Investment Guarantee Agency)

  5. ICSID (International Centre for Settlement of Investment Disputes)

    IBRD and IDA jointly called world bank.

1. IBRD

  • Established- 1944
  • Headquarters – Washington DC
  • Member - 189
  • Founder - J.M. Keynes, Harry Dexter White
  • Current President – Ajay Banga (American citizen)
  • Senior Vice President - Indermit Gill
  • CFO & MD - Anshula Kant
  • Priorities:
    1. People (Mamta Murthy - People Vice President)
    2. Prosperity
    3. Planet
    4. Infrastructure
    5. Digital
  • The President of the World bank is usually an American citizen while the Head of the IMF is usually a European citizen.
  • Member countries are its shareholders.
  • India is the seventh largest shareholder in World bank (IBRD) with 2.91 percent voting rights.

Functions:

  1. Provides long-term loans for reconstruction and developmental activities with very low interest rates (1.55% per annum). Developmental activities like physical and social basic health services, women empowerment, promotion of sustainable development etc.
  2. Encourages mutual cooperation among member countries.
  3. Encourages member countries to implement economic reforms.
  4. Plays the role of economic advisor.
  5. Reviews the global economy and provides advice for improvement.

2. IDA

  • Established – 1960
  • It provides financial assistance to developing and underdeveloped countries.
  • This loan is provided at very low interest rates and for a long period.
  • Sometimes grants are also given, this is called soft loan window of the World Bank.
  • India has been the biggest beneficiary IDA.

3. IFC

  • Established – 1956
  • It is the commercial branch/private branch of the World Bank Group which provides loans to the private sector at commercial rates and also provides technical and financial advice.

4. MIGA

  • Established 1988
  • Objective – To encourage investment in politically unstable countries.
  • It provides insurance to investments against political risk.

5. ICSID

  • Established – 1966
  • In this, investment related disputes are settled.
  • India is not a member of ICSID.

Structure of the World Bank MD = Managing Director (Anshula Kant) BOG = All the countries of the World Bank are its members. The Finance Minister or Bank Governor of every country is its member. BOD = Board of Directors is 4. IBRD, IDA, IFC, MIGA one for each. There are a total of 25 members in each board of directors. They are appointed by BOG.

Membership of the World Bank.

  • Membership is granted under the ‘IBRD Articles of Agreement'.
  • To become a member of the World Bank, any country must first join the International Monetary Fund (IMF).
  • Membership in IDA, IFC and MIGA depends on membership in the IBRD.

Major Reports Published by the World Bank

  1. Ease of Doing Business Report (Discontinued in 2019-20)
  2. World Economic Outlook Report
  3. World Development Report
  4. World Development Indicators
  5. Poverty and Shared Prosperity Statement (PSPR)
  6. Policy Research Report
  7. International Debt Statistics
  8. Commodity Market Outlook - April 2025, commodity prices will be the lowest in this decade.

World Development Report 2025

  • Released - April 2025
  • Theme - Voluntary and mandatory standards
  • This report emphasizes how standards, both voluntary and mandatory, can be available as a tool for development.
  • Features:
    • Setting and improving standards in the economy, society, environment and government.
    • Defining standards as codified solutions.

Schemes run by the World Bank in India -

  1. Atal Bujal Yojna
  2. Skill India Mission
  3. Swachh Bharat Mission
  4. Pradhan Mantri Gram Sadak Yojana
  5. National Rural Livelihood Mission

Schemes being run by the World Bank in Rajasthan -

  1. Rajasthan Agricultural Competitive Project
  2. Rajasthan State Highway Development Project Phase 1 and 2
  3. Rajasthan Public Finance Management Scheme
  • World Bank's Anti-Racism Charter - Passed in September 2021, which has a total of 10 principles.

World Bank and India

  1. India has been a founding member of the World Bank (IBRD and IDA).
  2. India receives the highest loan and grant from IDA (91 billion dollars so far).
  3. Financial assistance was provided to India by the World Bank for the vaccination campaign during the Covid pandemic.
  4. Recently, “India Development Report-2024” was released by WB, in which emphasis has been laid on renewable energy, green economy, harnessing the power of data.
  5. Collaboration is being done for various highway development projects, agriculture sector and financial management projects in Rajasthan.

Problems of the World Bank

  1. Capital shortage – problem of shortage of capital for allocating loans to developing countries (fiscal cuts by USA).
  2. Developing countries are lagging behind in the problem of proper representation and shareholding of new economic powers (India, China).
  3. Relevance in the global economy (formation of AIIB, New Development Bank)
  4. Relaxation in resolving problems of member countries through bureaucratic system.

Reforms in the World Bank:

  1. Restructuring of shareholding and voting power of member countries so that the rights of developing countries can be increased.
  2. The President of the World Bank should be selected through a non-discriminatory system.
  3. Procedural improvement in loan distribution is necessary.
  4. Reforming those provisions of the Center for Settlement of Investment Disputes (ICSID) which violate national sovereignty. (For this reason India is not a member of ICSID.)

INTERNATIONAL MONETARY FUND (IMF) ​

  • Established – July, 1944
  • Headquarters – Washington DC
  • Member - 191
  • 191st country - Liechtenstein (2024)
  • Managing Director – Kristalina Georgieva (Bulgaria)

Main Functions:

  1. To provide assistance to member countries in times of balance of payments crisis (if sufficient foreign exchange is not available to repay the imports - BOP (Balance of Payment))
  2. Helps simplify international payments.
  3. Encourages cooperation in monetary policy of member countries.
  4. Maintaining stability in exchange rates.
  5. Keeps an eye on the international economy. For this the following report is issued. (A) World Economic Outlook- Economic activities, employment, inflation, debt (B) Global Financial Stability Report- This is a half yearly report
    • Theme - Enhancing Resilience amid Uncertainty
    • Geopolitical uncertainties lead to increased political risk. (C) Fiscal Monitor Report – To deal with fiscal challenges. Released - April, 2025 Theme - A Critical Juncture Among Policy Shifts Global growth rate will remain at 3% India's 2025-26 GDP growth forecast is 6.3% It is released twice a year. (April and October)

Structure of IMF - The structure of IMF is 3 tier.

  1. Board of Governor: This is the highest decision making body in the IMF. The governors and finance ministers of the central banks of the member countries participate in it.
  2. Executive Directors: There are a total of 25 executive directors in the IMF. In which Dr. Surjeet Bhalla is from the Indian side. Day-to-day decisions are taken by them.
  3. Managing Director: He is the head of the IMF staff. Represents IMF at global level forums. Tenure – 5 years. There are four deputy managing directors, one of whom is Geeta Gopinath.
  • The IMF has 18 departments.

Membership of the IMF

  • Any country can become a member of the IMF.
  • For this, membership of the World Bank is mandatory.
  • Membership application is presented to the Board of Governors.

Quota System

  • The role of member countries in the IMF is determined by the quota system.
  • Quota is determined on the basis of 4 factors.
    1. GDP- weight 50%
    2. Openness of the economy – weightage 30%
    3. Dynamics of Economy – Weightage 15%
    4. Foreign exchange reserves – weightage 5%

Three types of roles are determined by the quota system.

1. Contribution -

  • It determines how much resources a country has to contribute to the IMF.
  • 25% of the money has to be deposited in hard currency or gold which is called Reserve Tranche.
  • HARD CURRENCY – Currencies that are accepted for global payments. Like - $, € (euro), Pound
  • 75% of the money has to be deposited in domestic currency.
  • Currently India is the 8th largest quota holder.
  • 14th Quota Review – implemented in 2016 in which India's quota was increased to 2.76%.
  • 15th Quota Review – There is no change in quota.
  • 16th Quota Review - The process has started.

2. Vote Value

  • The country which has higher quota also has higher vote value. Highest vote value – USA (about 17%)
  • To take a decision in the Board of Governors, 85% votes are required, that is, no decision can be taken without the consent of the USA.
  • India's voting percentage is 2.63 percent.

3. Debt Capacity

  • 200% of the quota can be borrowed in 1 year. The total loan cannot exceed 600% of the quota.
  • For obtaining loan, conditions like 1. LPG improvement 2. Reduction in fiscal deficit are kept.

4. Special Drawing Rights

  1. These are international reserve assets. (Currently 660 Billion SDR Or 943 Billion US $)
  2. It is used for sovereign payments.
  3. SDRs are allocated by IMF to help in the foreign exchange reserves of member countries.
  4. SDR started in 1969. SDR is also called paper gold.
  5. Initially the value of 1 SDR 1SDR = 1$ = 0.88 gm gold
  6. Currently the value of 1 SDR is calculated on the basis of 5 currencies-
    1. US Dollar
    2. Euro
    3. Chinese Renminbi
    4. Japanese Yen
    5. British Pound

IMF loan structure Two types of loans are provided by IMF (1) Non-concessional loan (2) Concessional loan

(1) Non-concessional loan – It is available at market based interest rates. All IMF members have access to financial aid through the General Resources Account (GRA). Non-Concessional loan- Stand-by Arrangement (SBA), Extended Fund Facility (EFF), Flexible Credit Line (FCL), Short-term Liquidity Line (SLL)

(2) Concessional Loans – Assistance is provided to low income countries (LICs) at zero interest rates through the Poverty Reduction and Development Trust (PGTF).

  • Extended Credit Facility (ECF): Payment in case of prolonged balance of payments problem
  • Standby Credit Facility (SCF) – Short-term payments due to policy lapses
  • Rapid Credit Facility (RCF): Lump sum disbursement

IMF problems

  1. Biased structural framework - Under which developed countries have more voting and quota rights.
  2. Violation of sovereignty - IMF's lending conditions violate the political and economic sovereignty of nations.
  3. Excessive support to the capitalist system
  4. Pressure on developing countries to implement reforms and policies in one go instead of sequentially.
  5. Due to dictatorial attitude, emergence of alternative institutions such as BRICS Contingent Reserve Arrangement (CRA).

IMF reforms-

  1. Selection of chief should be merit based (governance reform)
  2. Eliminating USA's veto power (17 percent voting quota) in decision making.
  3. Immediately implement the results of the review policy for quota determination.
  4. To increase the decision-making role of developing and developed countries. (Changes in internal administrative laws).

WORLD TRADE ORGANIZATION (WTO) ​

  • Established – January 1, 1995 (Marrakesh Agreement, Arthur Declaration)
  • Headquarters – Geneva
  • Members – 166 (165th - Comoros, 166th - Timor-Leste)

Work:

  1. The main function of WTO is to promote world trade. (98 percent of trade to the world)
  2. WTO provides a rules based, transparent and multilateral trading system.
  3. WTO provides non-discriminatory treatment to the markets of member countries in the form of national treatment and most favored nation.
  4. To remove tariff and non-tariff barriers to trade.
    • Tariff Barrier – Import duty and export duty
    • Non-tariff barriers – license requirements, quality standards, quotas, rule of origin, negative list, customs rules.
  5. Monitoring national trade policies
  • Before WTO, an organization called GATT existed. GATT - General Agreement Trade and Tariff
  • This agreement was made in 1947 and came into force in 1948.

Difference between GATT and WTO

GATTWTO
1. There was general agreementWTO is a legal institution and its powers come from the Marrakesh Treaty (Morocco).
2. Its decisions are not binding.Its decisions are binding.
3. It was limited to trade in goods.It relates to goods as well as services, investments, intellectual property etc.

Structure of WTO – It has a three-tier structure-

1. Ministerial Conference (MC):

  • It is the highest decision making body, the commerce ministers of the member countries participate in it.
  • Till now this conference has been organized 12 times, the 12th ministerial conference was held in Geneva (Switzerland) in 2022.
  • The first conference was held in Singapore in 1996.
  • Doha Conference - 2001 (4th)
  • Bali Conference - 2013 (9th)
  • Nairobi Conference – 2015 (10th)
  • Buenos Aires Conference – 2017 (11th)
  • Geneva - 2022 (12th)
  • Abu Dhabi - 2024

2. General Council: There are two main institutions in it.

  1. Trade Policy Review Body
  2. Dispute settlement body – Trade related complaints are resolved by member countries. Under this, an appellate body is formed. Seven members are elected as judges for four years. Its decisions are binding. Due to the ban on appointment of new judges by America, the Supreme Court is not able to function. As a result of this crisis, 23 WTO countries have formed a temporary mechanism 'Multiparty Internal Arbitration (MPIA)'. Other councils -
    1. Commodity Trade Council
    2. Service Trade Council
    3. Intellectual Property Rights Council Presently India's representative in the Council is- Brijendra Navnit.

3. Director General:

  • He is the head of the WTO's headquarters.
  • Tenure – 4 years
  • may be reappointed
  • Current Director General – Ngozi Okonjo-Iweala (First woman and first African Director General)

WTO Reports - It mainly releases three reports.

  1. World Trade Report-2024: Estimated decline of 2.2% in world trade.
  2. Annual Reports:
  3. International Trade Statistics

Major Principles Of WTO

  1. Most Favored Nation (MFN)-A member country of the WTO grants the status of MFN to other member countries. If any trade facility is given to a country having MFN status, then that facility is automatically given to another country having MFN status. This status is given to provide non-discriminatory market access.

  2. Principle of national treatment – Treating foreigners and locals equally. There should not be any kind of discrimination between a domestic company and a foreign company. Imported and locally produced goods should be treated equally – Less After entry of foreign goods into the market.

  3. Special and Differential Treatment (SDT) with Developing Countries-

    1. Developing countries are given more time to complete the agreements.
    2. There is a special provision relating to less developed countries. (LDC)
    3. Measures to increase trade opportunities for these countries.

Main agreements of WTO -

1. Agreement on Agriculture (AOA):

  • This agreement was made in 1994. In this agreement, subsidies were considered to be market distorting.

  • To implement market based agricultural trade.

  • Reduction in domestic support to agriculture. Subsidy was divided into 3 categories.

    (1). AMBER BOX :

    • In this, those subsidies were kept which are dependent on production, that is, as production increases, the amount of subsidy also increases.
    • This was considered to be the most distorting of the market.
    • This subsidy cannot be given more than a certain limit.
    • Fixed limit - 5% of the average agricultural production of 1986-87 of developed countries and 10% of the average agricultural production of 1986-87 of developing countries was fixed.
    • To implement this, developed countries were given 6 years and developing countries were given 10 years from 1994. Example – Fertilizer subsidy, MSP, electricity subsidy.

    (2). BLUE BOX :

    • It contains those subsidies which distort the market to a limited extent.
    • This subsidy is not based on production.
    • These should also be stopped but its quantity and time limit were not determined. Example - Kisan Samman Nidhi

    (3). GREEN BOX:

    • In this, those subsidies are kept which encourage research in the agricultural sector. No limit was imposed on such subsidies.

Major agricultural disputes:

  1. In the Doha Round of 2001, there was a dispute between developed and developing countries, developing countries objected that most of their subsidies were kept under Amber Box while the subsidies of developed countries were kept in Blue Box/Green Box. While determining the subsidy limit in the Amber Box, developed countries were given a higher limit, while developing countries were given a lower limit.

  2. Food Security Controversy- National Food Security act was imposed by India in 2013. Under it 67% of India's population was given the right to food. That is, grains will be distributed by the government at cheaper rates.

    • For this, large quantity agri product purchases will be made by the government, that is, large quantity purchases will be made from farmers, that is, MSP subsidy will be given to the farmers. This subsidy was violating the amber box limits, hence it was challenged in WTO. India's argument in this was that this purchase is being done to provide food security to the poor people. Its purpose is not to distort world trade.
    • This was discussed in the Bali conference in 2013. India was given a peace clause arrangement. Initially for 4 years and extended at the Nairobi Conference in 2015 until the matter is resolved.
    • Peace clause means that India's food security program cannot be challenged in WTO. This case is called the case of Public Stockholding.

2. NON Agriculture Market Access (NAMA)

  • Developed countries demanded that tariff barriers on non-agricultural products should be reduced.
  • A SWISS FORMULA was given for this. SWISS FORMULA Tnew = (A x Told) / (A + Told) A = maximum fee Told = old fee Tnew = new charge

3. Intellectual Property Rights TRIPS :

  • The wealth that has been developed by the human brain is called intellectual wealth.
  • Developed countries allege that intellectual property rights are not respected in developing countries.
  • Intellectual property rights such as Patent
  • There are two types of Patents-
    1. Process Patent
    2. Product Patent
  • Initially only process patents were recognized by developing countries.
  • But after 2005, product patents were also recognized.
    • In India, patent is given for 20 years.
  • That means the patent holder will have a monopoly in the market for 20 years. No one else can make this product.
  • Intellectual property rights are recognized in WTO, for this TRIPS (Trade Related aspects of Intellectual property Rights) agreement was made.
  • It recognizes all types of intellectual property rights.
    • Like - Patent, Industrial design, GI-tag, Trade Mark, Copyrights
  • The TRIPS Agreement does not allow Evergreening. Evergreening – Frequent renewal of patent. Main controversy related to this in India - GLIVEC
  • The TRIPS Agreement allows Compulsory License. This is an exception under which generic medicines can be manufactured even during the patent period. A related case in India is Nexavar.

4. GATS:

  • General Agreement on Trade in Services
  • In WTO, services are divided into 4 categories-
    1. MODE-1: Those services which are provided in another country while living in one country. Ex. - BPO Call Center
    2. MODE-2: Those services which are consumed in another country. Ex. - Tourism.
    3. MODE-3: Investments made in the service sector are kept in this category. Ex. - Hotel, Banking, Insurance, Telecom
    4. Mode-4: Human resources are kept under this. Ex. – Doctor, Engineer
  • Developed countries want simpler rules for Mode-3 services while developing countries want simpler rules for Mode-4 services. That means there should be no problem with visa.

5. TRIMS : Trade Related Investment Measures

  • The main objective of this agreement is to promote investment. Under this, an important principle is- Principle of national treatment – There should be no discrimination between a domestic company and a foreign company.
  • The dispute over solar energy between India and the USA is linked to the principle of national behaviour.

6. Agreement on Textile and Cloths (ATC)

  • Multifiber Arrangement (1974) Under this, each country was allowed to determine the quota of other countries for the textile industry.
  • In 2005 it was replaced by the Agreement on Textile and Clothes. Under which the quota was abolished.

7. ANTI DUMPING DUTY (ADD):

  • If a product is sold in the foreign market at a price lower than the domestic market price then this process is called dumping. Main objectives of dumping:
    1. Establishing a monopoly on the foreign market.
    2. Disposal of excess production
    3. Earning foreign exchange.
  • WTO considers the process of dumping unfair i.e. the importing country can impose anti dumping duty to stop dumping.
  • In India, it is recommended by the Ministry of Commerce and imposed by the Finance Ministry.

8. Countervailing Duty (CVD):

  • If a country gives subsidy to domestic producers, which reduces the price of the products, then countervailing duty is imposed by the importing country to overcome the effect of subsidy.

9. Special Safe Guard Mechanism (SSM):

  • If agricultural imports in a country increase so much that domestic farmers start incurring losses, then the government can impose taxes to stop such imports.
  • This system is called SSM.

10. Sanitary and Phytosanitary Measures (SPS):

  • Sets forth necessary regulations for food safety and animal and plant health standards.
  • Allows countries to line up their own standards
  • If a consumable item is imported into a country and the importing country feels that consumption of the item may have a negative impact on its people, animals and environment. Then such products can be banned. Ex.
    • Indian generic and generic medicines were banned in Europe.
    • Indian Basmati rice was banned in China.

11. Most Favored Nation (MFN)

  • A WTO member country grants MFN status to other member countries.
  • If a trade facility is given to a country having MFN status, then that facility is automatically given to another country having MFN status.
  • This status is given to provide non-discriminatory market access.
  • In 1996, India gave status to Pakistan but Pakistan did not give any such status to India.
  • India withdrew this status from Pakistan after the Pulwama attacks.
  • Regional agreements are an exception to the MFN concept.

Major Regional Agreement-

(1) Preferential Trade Agreement (PTA)

  • The countries between which this agreement is made are given preference over other countries. Ex. South Asian Preferential Trade Agreement (SAPTA) It came into force in 1995. There is less duty on import.

(2) Free Trade Agreement (FTA)

  • Free trade is conducted between the countries between which this agreement is made.
  • Negative List – Goods that are placed in the negative list are kept out of a free trade agreement.
  • If the negative list is too large then the free trade agreement is not very effective i.e. it is a non-tariff barrier.

Rule of Origin

  • The benefit of a free trade agreement is given only to those goods whose certain percentage is produced in the country with which the free trade agreement has been signed.
  • For example, if a free trade agreement is made between India and Nepal and the Rule of Origin is also applicable, then it means that only those goods will get the benefit of the free trade agreement, more than 35% of which are produced in Nepal.
  • If the Rule of Origin is rigid then the free trade agreement is not very effective.

(3) Comprehensive Economic Partnership Agreement (CEPA)

  • Along with goods, services are also included in this arrangement between the member countries. Like-India Japan CEPA

(4) Custom Union

  • Under this, uniform import-export policies (custom duty) is used among the member countries. Ex.- ASEAN Custom Union

(5) Common Market

  • Under this, Same policies are used for production and trade among the member countries. Like- Mercosur Agreement

(6) Economic Union

  • Monetary policy also becomes the same; the domestic currency is abandoned and a single currency is adopted. Like - European Union

12. Trade Facilitation Agreement (TFA)

  • Applicable - 2017
  • Objective – To simplify customs rules for cross border movement of products. To facilitate trade by improving customs, bureaucracy and formalities.

13. Information Technology Agreement (PTA)

  • To reduce all taxes and duties on information technology products to zero.
  • Established - July 1997 India's ITA dispute - complaint by European Union, Japan, Taiwan against India India has imposed tax on import of ICT equipment (mobiles etc.) which is in violation of India's trade rules. Its decision came against India. India will appeal against this in DSB.

Buenos Aires Conference: 2017

  • This conference was unsuccessful because there was dispute between developed and developing countries.
  • Developed countries wanted to discuss some new issues e.g. Fisheries subsidy, e-commerce etc. But developing countries wanted to resolve the Doha Round issues first.

Geneva Package 2022

  • The 12th Ministerial Conference of India was held in Geneva, Switzerland from 12-17 June 2022.
  • A brief summary of the agreements reached in this conference (known as the Geneva Package) is as follows:-
    1. Fisheries Subsidies: To stop harmful fisheries subsidies and protect global fish stocks, global rules have been set that require immediate end of subsidies to developed countries and reduction of subsidies to developing countries.
    2. Waiver on TRIPS - Keeping in mind the use of compulsory license for the production and export of Covid 19 vaccine, exemption was given under TRIPS. Its aim is to deal with this epidemic and other epidemics.
    3. Food Security: World Food Program (WFP) : WFP will work to deal with the food crisis in the world. Humanitarian food purchases are exempt from export restrictions or prohibitions. WTO member countries will not impose restrictions on food exported to WFP.
    4. Moratorium on e-commerce: There has been a customs ban on e-commerce since 1998. India and other developing countries demand that these restrictions be relaxed. It has been agreed to maintain the current status of no customs duty on electronic commerce until the next conference (Abu Dhabi in February 2024).
    5. Public Stockholding (Peace Clause): This arrangement related to India's food security will continue. Its solution will be found in the next ministerial conference.

Outcome of 13th Ministerial Conference

  • Venue - Abu Dhabi (2024)
    1. Two new members join WTO (Comoros, Timor Leste)
    2. Decided to renew e-commerce moratorium till MC14 or 31 March 2026. (India was against it.)
    3. Agreement on Fisheries Subsidies (AFS) - preventing harmful fisheries subsidies
    4. Re-establishing DSB system
    5. Dialogue held on plastic pollution and environmentally sustainable plastic trade. (An initiative of 78 countries)
    6. 48 countries submitted report on progress towards fossil fuel subsidy reform.
    7. Decided to improve the use of Special and Differential Treatment (S&DT) provisions for developing and least developed countries (LDC) countries.

Cairns Group: A group of agricultural exporting countries that advocate liberalization of agricultural trade. It was formed in Cairns, Australia, just before the start of the Uruguay Round in 1986. It includes 19 countries. Mercosur Group: A common market of South American countries. There are four member countries in it.

Importance of WTO

  1. 85 percent of the world's population and 95 percent of business take place in the WTO member countries.
  2. The market related rules of India made world trade and supply chain transparent.
  3. WTO adopted the principles of non-discrimination - (1) Most Favored Nation (2) Principle of National Treatment
  4. Special provisions were made for developing and developed countries.
  5. Global cooperation on agriculture, services, investment and intellectual property and effective use of trade dispute settlement mechanisms.

Major problems of WTO

  1. Poor Dispute Settlement Mechanism :- A ban on the appointment of new judges to the Appellate Body of the WTO's dispute settlement mechanism by the USA.
  2. Consensus based decision making process often creates obstacles in negotiations.
  3. There is no definite eligibility for developing country status. Recently, there is controversy due to China getting the status of developing country in WTO.
  4. WTO's strategy on emerging issues of the 21st century like climate change, Sustainable Development Goals, gender issues, classification of agricultural subsidies etc. lacks relevance.
  5. Recently, the relevance of WTO has weakened due to the protectionist policies adopted by the USA.
  6. The increasing number of free trade agreements and regional trade agreements has raised questions about the effectiveness of the WTO.

Ways to improve WTO

  1. To create a reliable dispute settlement mechanism that should be transparent and reliable.
  2. To establish transparency in the functioning of WTO to improve its credibility and legitimacy.
  3. To resolve various issues like fishery subsidy, e-commerce duty policy, agricultural subsidy, public storage etc. as per the 21st century.
  4. Institutional Reforms - There has been a demand for the formation of an executive committee to improve the decision making process in WTO.
  5. Due importance should be given to the economic interests and ideas of small countries.

Importance of WTO

  1. WTO member states represent 85 percent population and 95 percent trade of the world.
  2. The market related rules of WTO made world trade and supply chain transparent.
  3. WTO adopted the principles of non-discrimination - (1) Most Favoured Nation (2) Principle of National Treatment, that have increased global trade.
  4. Special provisions have been made for developing and developed countries.
  5. Global cooperation on agriculture, services, investment and intellectual property and effective use of trade dispute settlement mechanisms.

WTO and India

  1. India has been a founding member of both GATT and WTO.
  2. WTO (Uruguay Round of Talks) has made an important contribution in the development of India's service sector.
  3. India has been continuously demanding resolution of WTO's issues related to public stockholding (agricultural products) and agricultural subsidies.
  4. India is in favor of expanding the protection of Geographical Indications (GI Tag) to a higher level such as Basmati rice, turmeric, neem, Darjeeling tea, Alphonso mango.
  5. India is against inclusion of non-trade issues in WTO.

Sustainable Development ​

Sustainable Development

  • This is the concept of development in which our needs are fulfilled without compromising the needs of the present human community and future generations. (Prof-Brundtland)

Sustainable Development Goals

  1. No poverty
  2. Zero hunger
  3. Good health and well-being
  4. Quality education
  5. Gender equality
  6. Clean water and sanitation
  7. Affordable and clean energy
  8. Decent work and economic growth
  9. Industry, innovation and infrastructure
  10. Reduced inequalities
  11. Sustainable cities and communities
  12. Responsible consumption & production
  13. Climate action
  14. Life below water
  15. Life on land
  16. Peace, justice, and strong institutions
  17. Partnerships for the goals
  • Millennium Development Goals 8 goals declared by UNO which were operational till 2000-2015.
    1. End hunger and poverty
    2. To promote primary education
    3. Gender equality
    4. Reducing infant mortality rate
    5. Improvement in maternal health
    6. Ending AIDS, Malaria
    7. Environmental protection
    8. Interrelationships for global development

Financing for Sustainable Development

  1. Green Bonds - Through these, funds are raised for investment in sustainable projects and climate friendly projects. For this, Sovereign Green Bond (short-term and long-term) was announced in Budget 2022-23, under which RBI has raised Rs 6000 crore.
  2. Corporate Accountability Reporting (CAR)
  3. Green Social Impact Bond (since 2017)
  4. Corporate Social Responsibility (CSR)

17 Sustainable Development Goals

  • 169 associated Targets
  • Effective from 1 January, 2016
  • 193 countries participated in the meeting.
  • The core mantra of the Global Agenda for 2030 is the principle of universality – “Leaving no one behind".
  • There are 248 global indicators framework to measure the goals.
  • The SDGs are not legally binding.
  • The SDG Summit held in September 2019 declared the remaining 10 years as the Decade of Action.
  • For this, an appeal was made for action on 3 levels-
    • Global action
    • Local action
    • People action
  • Key dimensions at the heart of Agenda 2030 - 5Ps
    1. PEACE
    2. PLANET
    3. PEOPLE
    4. PROSPERITY
    5. PARTNERSHIP

Core principles of SDGs:

  • Universality
  • Leaving no one behind
  • Interconnectedness and Inseparability
  • Inclusiveness
  • Multi-stakeholder Involvement

India's commitment to sustainable development

  1. Voluntary National Reviews are submitted by India to the UN which detail progress towards achieving the SDGs.
  2. National Indicator Framework has been prepared by NITI Aayog for monitoring SDGs.
  3. SDG Urban Dashboard
  4. SDG India Index is released by NITI Aayog- States are scored from 0-100 and divided into 4 categories. Index released by NITI Aayog-
YearGoalsIndicatorsIndia ScoreRajasthan Score
20181362
2019161006057
2020-21161156660
2023-24161137167

2023-24Best State- Kerala, Uttarakhand (both having same score – 79) Lowest position- Bihar

  • As per Goal - Best

    IndiaRajasthan
    Affordable and Clean Energy - Score 96Affordable and Clean Energy - Score 100

  • Worst-

    IndiaRajasthan
    Zero Hunger - Score 49Gender Equality – Score 52

Rajasthan's commitment1. Institutional Nodal Department - Planning Department ↓ Cell - Directorate of Statistics and Programme Implementation ↓ State Level SDG Implementation Committee - Chairperson - Chief Secretary ↓ 8 Sectoral Working Groups - For implementation ↓ District Level SDG Implementation Committee - Chairperson - District Collector (Constituted in all 33 districts)

2. Publication: 4 editions of the Rajasthan SDG Status Report has been released to share the state's progress on SDG goals.

Efforts made for SDGs:

  1. Efforts made by Rajasthan to achieve SDGs
  2. District Indicator Framework
  3. SDG Implementation Centre
  4. Mapping of departments and schemes
  5. District Level Implementation and Monitoring Committee
  6. Mapping with budget provisions
  7. State Level Implementation and Monitoring Committee
  8. Orientation Workshops Training
  9. Status Reports
  10. State Indicator Framework

Rajasthan SDG Status Report - 2024 (Ver5.0)

  • The fifth and current edition of Rajasthan SDG Index is built on 95 indicators
  • Covers 14 goals.
  • Implementation - Directorate of Economics and Statistics
  • Released - 2024
  • Top districts
    1. Jhunjhunu (66.44)
    2. Nagaur (63.98)
    3. Sikar (63.59)
  • Lower districts
    1. Jaisalmer (50.63)
    2. Banswara (53.04)
YearScore
202056
202150
202257
202360
202467
  • Front Runner Category - One district of the state
  • Performer Category - 32 districts of the state
  • Rajasthan's highest score in Goal-7 (Affordable and Clean Energy) - 100
  • Rajasthan's lowest score in Goal-5 (Gender Equality) - 52
  • Rajasthan's overall score improved from 60 in 2023 to 67 in 2024.

Climate Change ​

Major decisions taken at COP 29 (Baku, Azerbaijan) (1) Global Stocktake Text (GST text) is a periodic review mechanism. Global Stocktake Text aims to limit global temperature rise to 1.5 degree Celsius. (2) Carbon Market Agreement - To promote carbon trade among countries under Article 6 of Paris Agreement. (3) Climate Finance – to be launched with at least 300 billion US dollars per year. (4) Global Methane Pledge - 30% reduction in methane emissions by 2030, finance of 500 million dollars for this. (India is not a signatory of it) (5) To obtain climate finance of 1.3 trillion dollars per year from public and private sources. (6) Baku Harmoniya Climate Initiative for Farmers - for agricultural finance. (7) Baku Action Plan - for local people. (8) Lima Work Programme Extension - for gender equality in climate programs. (Since 2014)

CMA 6 - Meeting of the Parties to Paris Agreement

  • The decision making body within the UNFCCC on climate change.
  • It was named as "Finance COP".
  • Objective - To determine the ‘New Collective Quantified Goal' (NCQG) on climate change.

India at COP 29: Baku (1) India's efforts for disaster resilient infrastructure. (2) Co-chaired the LeadIT Summit with Sweden. (3) Support for disaster resilient finance and funding for small island nations. (4) India opposed the $300 billion funding, calling it inadequate.

2. India's Updated NDC (Nationally Determined Contributions) -

  • India's updated NDC was released on August 26, 2022. Earlier in 2015, NDC was released with 8 goals. According to Article 4 of the Paris Agreement 2015, every country will update its NDC in 5 years.
  • Following are the updates in NDC of India-
    1. To reduce the emissions intensity of GDP by 45 percent by 2030 from the 2005 levels.
    2. To achieve 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.
    3. To create additional carbon sink of 2.5-3 billion tonnes of CO2 by the year 2030.
    4. LIFE (Adopting a lifestyle for the environment) to combat climate change.
    5. Adopting climate friendly path for economic development.
    6. Increasing investment in sectors sensitive to climate change (agriculture, coastal areas, Himalayan region).
    7. Raising funds from developed countries for the above mentioned activities.
    8. To promote R&D in climate technology.

3. National Action Plan on Climate Change (NAPCC) - In the year 2008, India released the National Action Plan on Climate Change whose objective is to achieve the goal of sustainable development in the context of climate change. Under the National Action Plan on Climate Change, eight national missions were run which are as follows-

  1. National Solar Mission - This mission is being run by the Ministry of New and Renewable Energy. Under this mission, Jawaharlal Nehru National Solar Mission was launched in January 2010. The objective of which is to generate 100 GW solar energy. The current installed capacity is 60 GW.
  2. National Mission for Enhanced Energy Efficiency - This mission was launched by the Ministry of Power in 2009. Under the mission, a target has been set to save energy up to 10,000 MW by the year 2020, for which Perform, Achieve & Trade (PAT) Scheme was implemented.
  3. National Mission for a Green India - It was launched in 2014 whose objective is to conserve, renew and increase the forest area of India's decreasing forest area. In the next 10 years, the tree/forest cover is to be increased by 10 million hectares of land, including increase in forest and tree cover in 5 million hectares and improve the quality of forest cover in another 5 million hectares.
  4. National Mission on Sustainable Habitat: Run by - Ministry of Housing and Urban Affairs. Its objective is to ensure energy saving reforms in buildings, solid waste management and public transport. Under which projects like Atal Bhujal Mission, Swachh Bharat Mission, Smart City, Metro Rail are going on.
  5. National Water Mission – This mission was launched in 2011 by the Ministry of Jal Shakti. Under this 'Catch the Rain' 2022 campaign is going on.
  6. National Mission on Sustainable Agriculture (NMSA) – It is run by the Ministry of Agriculture and Farmers Welfare. Its objective is to develop crop varieties adapted to climate change.
  7. National Mission for Sustaining the Himalayan Ecosystem – This mission is being run by the Ministry of Science and Technology since 2014. The objective of this mission is to protect the glaciers and mountain ecosystem of the Himalayas. For this, Inter University Association has been formed.
  8. National Mission on Strategic Knowledge for Climate Change - 12 Centres of Excellence have been established for better understanding of climate science.

4. Long Term - Low Emission Development Strategy (LT-LEDS)

  • Introduced by India at COP 27. This is the practical implementation of India's call for "climate justice." Features of LT-LEDS
    1. The rapid expansion of green hydrogen production, increasing electrolyser manufacturing capacity in the country, and three-fold increase in nuclear capacity by 2032.
    2. Increasing ethanol blending to 20 percent by 2025-26 and promoting the use of electric vehicles.
    3. Effective smart city development including focus on green building, solid and liquid waste management.
    4. Reducing the use of fossil fuels.
    5. To make 'Aatmanirbhar Bharat' and 'Make in India' effective.

5. International Initiatives by India on Climate Change:

A. International Solar Alliance (ISA)

  • It is an inter-governmental organization which includes 110 countries. Under which- (1) World Solar Bank – for financing solar projects and (2) One Sun One World One Grid (OWOSOG) initiative was established.

B. Coalition for Disaster Resilient Infrastructure (CDRI)

  • In September 2019, Coalition for Disaster Resilient Infrastructure was launched by India and UK. At present it has 31 countries and 6 international organizations as members.
  • The objective of this Coalition is to combat natural disasters (storms, floods and earthquakes) caused by climate.

C. Leadership Group for Industry Transition (LeadIT)

  • Launched by India and Sweden in September 2019.
  • Its objective is to drastically reduce carbon emissions in the future for heavy industries.

D. Lifestyle for the Environment (LIFE) Movement

  • Launch - 2021, Glasgow COP26
  • Objective - To adopt a lifestyle that is in harmony with the environment.
  • A term given by India in COP-26 which is related to making the lifestyle of human community sensitive due to climate change.

6. Climate Risk Insurance - To provide protection against loss of livelihood from natural disasters.

  • Ex- - In agriculture sector - Pradhan Mantri Fasal Bima Yojana (PMFBY)

7. Climate Change Action Programme (CCAP)

  • A central sector scheme which was launched in 2019 and will run till 2025-26.
  • Under this scheme, steps like FAME India, Ujala Yojana, Biofuels Policy, Energy Conservation Building Code, have been taken.
  • It consists of 8 components including-
    1. National Action Plan on Climate Change (NAPCC)
    2. State Action Plan on Climate Change (SAPCC)
    3. Climate Change studies
    4. National Carbonaceous Aerosols Programme (NCAP)
    5. Ecological Observations
    6. International negotiations
    7. Capacity building

8. National Adaptation Fund for Climate Change (NAFCC)

  • It operates in 27 states since 2015 and deals with agriculture, forestry, water and ecosystem.
  • Through this fund, assistance is being provided to those states and union territories which are not getting help from any other scheme to face the adverse effects of climate change.

9. Green Climate Fund

  • It is a global fund established by developing countries to reduce greenhouse gas emissions to prevent climate change.
  • It was established in 2010 by 194 countries under the UNFCCC.

10. Global Environment Facility

  • It was established at the Rio (Earth) Conference of 1992.
  • Its objective is to provide assistance to developing countries towards resolving environmental problems.

11. Green Credit Programme (GCP) (2023)- Voluntary efforts towards environmental protection Tree plantation on wasteland

12. Ek Ped Maa Ke Naam - From June 5, 2024 Target = Planting 80 crore trees

13. National Adaptation Plan (NAP) - Under preparation.

  • Ministry - Ministry of Environment, Forest and Climate Change
  • Adaptation in Agriculture:
  • Adaptation in Urban Areas
  • Adaptation in Coastal Areas - MISHTI Scheme (from 2023-28) 9 coastal states 4 Union Territories
  • Adaptation Actions for Water Management-