Current Affairs for UPSC IAS Exam – 17 & 18 January 2021

Contents

1. Russia withdraws from Open Skies Treaty
2. K-shaped economic recovery explained
3. Earthquake and Volcano eruption in Indonesia
4. India’s trade with China falls in 2020

RUSSIA WITHDRAWS FROM OPEN SKIES TREATY

Context:

Russia pulled out of the Open Skies Treaty (OST) citing earlier withdrawal of the USA from the treaty.

Relevance:

GS-II: International Relations

Dimensions of the Article:

1. What is Open Skies Treaty (OST)?
2. More about USA and Russia’s withdrawal OST
3. New START Treaty

What is Open Skies Treaty (OST)?

• The Treaty on Open Skies establishes a program of unarmed aerial surveillance flights over the entire territory of its participants.
• The treaty is designed to enhance mutual understanding and confidence by giving all participants, regardless of size, a direct role in gathering information about military forces and activities of concern to them.
• Open Skies is one of the most wide-ranging international efforts to date promoting openness and transparency of military forces and activities.
• The OST aims at building confidence through mutual openness, thus reducing the chances of accidental war.
• Under the treaty, a member State can undertake surveillance on any part of the host nation, with the latter’s consent.
• The information gathered, such as on troop movements, military exercises and missile deployments, has to be shared with all member States.
• The OST, first proposed in the early years of the Cold War, came into effect in 2002 and it allows its 34 signatories to conduct unarmed reconnaissance flights over the territory of treaty countries.
• India is not a member of this treaty.

More about USA and Russia’s withdrawal OST

Reasons for USA Withdrawal

• USA pulled out of the Open Skies Treaty arguing that Russian violations made it untenable for the United States to remain a party.
• The USA had for over a decade accused Russia of non-compliance with OST protocols, blaming Moscow of obstructing surveillance flights on its territory, while misusing its own missions for gathering key tactical data.
• The USA also accused Russia of designating an airfield in the annexed Crimean Peninsula as an Open Skies refueling base as an illegal attempt by Russia to cement its claim to the Ukrainian region.

Reasons for Russia Withdrawal

• According to Russia, provisions of the pact that allows unarmed surveillance flights over member countries had been seriously compromised by the withdrawal of the United States.
• Russia’s departure could adversely impact Washington’s European allies, which rely on OST data to track Russian troop movements in the Baltic region.
• The failure of the Open Skies Treaty follows the demise of another significant arms control accord, the Intermediate-Range Nuclear Forces (INF) Treaty, after both the US and Russia left it in 2019. This treaty aimed at eliminating their stocks of intermediate-range and shorter-range (or “medium-range”) land-based missiles which could carry nuclear warheads.

Arms control tensions have been rising between Moscow and Washington and New START, their last remaining major nuclear arms control treaty, is set to expire in February.

New START Treaty

• The New Strategic Arms Reduction Treaty (New START) pact limits the number of deployed nuclear warheads, missiles and bombers and is due to expire in 2021 unless renewed.
• The treaty limits the US and Russia to a maximum of 1,550 deployed nuclear warheads and 700 deployed missiles and bombers, well below Cold War caps.
• It was signed in 2010 by former US President Barack Obama and then-Russian President Dmitry Medvedev.
• It is one of the key controls on superpower deployment of nuclear weapons.
• US withdrew from the 1987 Intermediate-Range Nuclear Forces Treaty (INF), accusing Moscow of violating the agreement.

-Source: The Hindu

K-SHAPED ECONOMIC RECOVERY EXPLAINED

Context:

Chief India Economist at JP Morgan, states the prospects of a K-shaped recovery from COVID are increasing both in India and across the world.

Relevance:

GS-III: Indian Economy

Dimensions of the Article:

1. Economic Recovery
2. What is a K-shaped recovery?
3. What are the macro implications of a K-shaped recovery?

Economic Recovery

• Economic Recovery is the business cycle stage following a recession that is characterized by a sustained period of improving business activity.
• Normally, during an economic recovery, GDP grows, incomes rise, and unemployment falls and as the economy rebounds.
• Economic recovery can take many forms, which is depicted using alphabetic notations. For example, a Z-shaped recovery, V-shaped recovery, U-shaped recovery, elongated U-shaped recovery, W-shaped recovery, L-shaped recovery and K-shaped recovery.

What is a K-shaped recovery?

• A K-shaped recovery happens when different sections of an economy recover at starkly different rates.
• A K-shaped recovery leads to changes in the structure of the economy or the broader society as economic outcomes and relations are fundamentally changed before and after the recession.
• This type of recovery is called K-shaped because the path of different parts of the economy when charted together may diverge, resembling the two arms of the Roman letter “K.”

What are the macro implications of a K-shaped recovery?

• With the top 10 per cent of India’s households responsible for 25-30 per cent of total consumption, one could argue consumption would get a boost as this pent-up demand expresses itself.
• Upper-income households have benefitted from higher savings for two quarters.
• To the extent that COVID has triggered an effective income transfer from the poor to the rich, this will be demand-impeding because the poor have a higher marginal propensity to consume (i.e., they tend to spend, instead of saving) a much higher proportion of their income.
• If COVID-19 reduces competition or increases the inequality of incomes and opportunities, it could impinge on trend growth in developing economies by hurting productivity and tightening political economy constraints.

-Source: Indian Express

EARTHQUAKE AND VOLCANO ERUPTION IN INDONESIA

Context:

• Volcano Mount Semeru erupted shooting a plume of ash and debris into the sky, however, there were no casualties.
• Recently, buildings were flattened by a powerful earthquake on Indonesia’s Sulawesi island, after the huge tremor killed at least 73 and left thousands homeless.
• Recently, other volcanoes, such as the Merapi volcano (Java) and Sinabung volcano (Sumatra) also erupted.

Relevance:

GS-I: Geography

Dimensions of the Article:

1. Why is Indonesia Disaster-prone?
2. What is the Pacific Ring of Fire?
3. Why so many volcanoes in the Ring of Fire?
4. What is subduction?
5. Semeru Volcano

Why is Indonesia Disaster-prone?

Indonesia experiences frequent seismic and volcanic activity due to its position on the Pacific “Ring of Fire”, where tectonic plates collide.

What is the Pacific Ring of Fire?

• The Ring of Fire, also referred to as the Circum-Pacific Belt, is a path along the Pacific Ocean characterized by active volcanoes and frequent earthquakes.
• It traces boundaries between several tectonic plates—including the Pacific, Cocos, Indian-Australian, Nazca, North American, and Philippine Plates.
• The Ring of Fire is a string of at least 450 active and dormant volcanoes that form a semi-circle, or horse shoe, around the Philippine Sea plate, the Pacific Plate, Juan de Fuca and Cocos plates, and the Nazca Plate.
• There is a lot of seismic activity in the area.
• 90 per cent of all earthquakes strike within the Ring of Fire.

Why so many volcanoes in the Ring of Fire?

• The tectonic plates move non-stop over a layer of partly solid and partly molten rock which is called the Earth’s mantle.
• When the plates collide or move apart, for instance, the Earth moves, literally.
• Mountains, like the Andes in South America and the Rockies in North America, as well as volcanoes have formed through the collision of tectonic plates.
• Many volcanoes in the Ring of Fire were created through a process of subduction. And most of the planet’s subduction zones happen to be located in the Ring of Fire.

What is subduction?

• Subduction happens when tectonic plates shift, and one plate is shoved under another.
• This movement of the ocean floor produces a “mineral transmutation,” which leads to the melting and solidification of magma – that is, the formation of volcanoes.
• Basically, when a “downgoing” oceanic plate is shoved into a hotter mantle plate, it heats up, volatile elements mix, and this produces the magma.
• The magma then rises up through the overlying plate and spurts out at the surface.

Semeru Volcano

• Semeru – also known as “The Great Mountain” – is the highest volcano in Java and one of the most active.
• Semeru volcano is also the part of the Island arcs formed by the subduction of the Indo-Australian plate below Sunda Plate (part of Eurasian Plate). The trench formed here is called Sunda trench whose major section is the Java Trench.

-Source: The Hindu

INDIA’S TRADE WITH CHINA FALLS IN 2020

Context:

India’s trade with China last year fell to the lowest since 2017, with the trade imbalance declining to a five-year low on the back of a slump in India’s imports from China.

Relevance:

GS-III: Indian Economy

Dimensions of the Article:

1. India’s Dependence on China’s trade
2. What did we import from China?
3. Current Situation of India’s trade with China
4. What was exported and Imported?
5. Measures Taken to Reduce Import Dependence on China

India’s Dependence on China’s trade

• China accounted for almost 12% of India’s total imports, and only 3% of India’s total exports. Clearly, we buy more from China than we sell.
• India’s trade deficit with China is a large portion of India’s overall trade deficit.
• Chinese exports into India are entrenched in the supply chain of several sectors.
• There is actually an increase in China’s share in India’s overall imports, because, Chinese businesses were slowly opening up even as India and other countries were under lockdown, hence, the neighbouring country could cater to a lot of cross-border trade.
• While imports are crucial, the latest improvement in India’s exports can also be partly attributed to the increased demand from China.

What did we import from China?

• Engineering goods dominate the import basket from China to India, followed by electronics.
• Another major segment is key raw materials for sectors such as pharmaceuticals and automobiles.

Current Situation of India’s trade with China

• Two-way trade in 2020 between India and China is down by more than 5%, according to new figures from China’s General Administration of Customs (GAC).
• India’s imports from China declined by more than 10% year-on-year and the lowest figure since 2016.
• India’s exports to China, however, rose to the highest figure on record, for the first time crossing the $20 billion-mark and growing 16% last year.
• The trade deficit, a source of friction between India and China, declined to a five year-low.

What was exported and Imported?

• While there was no immediate break-up of the data in 2020, India’s biggest import in 2019 was electrical machinery and equipment followed by organic chemicals and fertilizers.
• India’s top exports to China were iron ore, organic chemicals, cotton and unfinished diamonds.
• The past 12 months saw a surge in demand for iron ore in China with a slew of new infrastructure projects aimed at reviving growth after the COVID-19 slump.

Measures Taken to Reduce Import Dependence on China

• India imposed a ban on more than 100 Chinese apps, amidst border tensions between the two countries in eastern Ladakh, citing security reasons.
• India has increased scrutiny of Chinese investments in many sectors, and is weighing a decision to keep Chinese companies out of 5G trials.
• The government recently put import restrictions on tyres, while also making its prior approval mandatory for foreign investments from countries that share land border with India to curb “opportunistic takeovers” of domestic firms – a move which will restrict FDI from China.
• The Ministry of Commerce and Industry has also identified 12 sectors – food processing, organic farming, iron, aluminium and copper, agro chemicals, electronics, industrial machinery, furniture, leather and shoes, auto parts, textiles, and coveralls, masks, sanitisers and ventilators – to make India a global supplier and cut import bill.
• To cut import dependency on China for APIs (Active Pharmaceutical Ingredients), the government approved a package comprising four schemes to boost domestic production of bulk drugs and medical devices in the country along with their exports.

-Source: The Hindu