CURRENT AFFAIRS - 12/09/2023

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CURRENT AFFAIRS – 12/09/2023

CURRENT AFFAIRS – 12/09/2023

On climate crisis and the U.N. Global Stocktake report

(General Studies- Paper III)

Source : The Hindu

The Global Stocktake report was released ahead of the G-20 summit and sets out the challenges faced by major economies regarding climate change.

The report reiterates known information but is intended to guide discussions at the 28th Conference of Parties (COP28) in Dubai in November.
The report serves as an official assessment of countries’ efforts to reduce greenhouse gas (GHG) emissions since the 2015 Paris Agreement.

Key Highlights

The Paris Agreement Goals
- In 2015, signatories to the UN convention on climate change agreed in Paris to limit global emissions to prevent a temperature rise beyond 2°C, with an aspirational goal of limiting it to 1.5°C.
- Current emissions trends indicate that the world is on track to exceed the Paris Agreement’s limits.
Ambitious Emission Reduction Targets
- The report emphasizes the need for increased ambition in climate action and support to achieve global GHG emissions reductions:
  - 43% reduction by 2030
  - 60% reduction by 2035
  - Achieving net-zero CO2 emissions by 2050 globally.
- Existing submissions by countries suggest a significant emissions gap consistent with the 1.5°C goal in 2030.
Transition to Renewable Energy
- To bridge the emissions gap, rapid scaling of renewable energy resources is crucial.
- Fossil fuel sources like coal, oil, and natural gas need to be phased out to achieve climate goals.
G-20’s Role and Challenges
- The G-20 countries collectively account for a significant share of global coal power plants.
- Despite acknowledgments of the climate crisis by world leaders, progress in energy transition has been slow.
Financial Commitments
- The G-20 Leader’s Declaration acknowledges the need for substantial financial commitments:
- $5.8-5.9 trillion for developing countries before 2030.
- $4 trillion per year for clean energy technologies by 2030 to achieve net-zero emissions by 2050.
Additional Measures
- The report highlights the importance of reversing deforestation and promoting electric vehicles for a clean energy economy.
- However, it does not pinpoint individual countries or provide a detailed analysis of shortcomings in countries’ emission reduction approaches.

What is U.N. Global Stocktake report?

The United Nations (U.N.) Global Stocktake report is a crucial assessment tool in the context of international efforts to combat climate change and achieve the goals outlined in the Paris Agreement.

The Global Stocktake is conducted periodically to provide a comprehensive and up-to-date assessment of climate action.
The report compiles data and information submitted by countries, detailing their actions, policies, and progress in reducing GHG emissions.
It assesses whether the collective efforts are on track to meet the goals set in the Paris Agreement, which include limiting global warming to well below 2 degrees Celsius and aiming for a 1.5-degree limit.

Note: Each country that is a signatory to the Paris Agreement is required to submit regular reports detailing their climate actions, emissions data, and progress toward their climate goals.

About Paris Agreement

The origins of the Paris Agreement can be traced back to the United Nations Framework Convention on Climate Change (UNFCCC), established in 1992 during the Earth Summit in Rio de Janeiro, Brazil.
The UNFCCC is a framework treaty that sets the overall framework for addressing climate change and organizing international climate negotiations.
Key Developments Leading to the Paris Agreement:
- Kyoto Protocol:
  - In 1997, the Kyoto Protocol was adopted as an extension of the UNFCCC.
  - It established legally binding emission reduction targets for developed countries, known as “Annex I” countries, for the first commitment period from 2008 to 2012.
- Limitations of the Kyoto Protocol: The Kyoto Protocol had several limitations, including the fact that it did not include binding commitments for major developing countries like China and India.
  - Additionally, it faced challenges with participation and compliance.
- Copenhagen Accord:
  - The 2009 United Nations Climate Change Conference in Copenhagen aimed to create a successor to the Kyoto Protocol.
  - While the conference did not produce a legally binding treaty, it led to the Copenhagen Accord, in which countries made non-binding commitments to address climate change.
- Durban Platform:
  - In 2011, at the United Nations Climate Change Conference in Durban, South Africa, negotiators established the Durban Platform for Enhanced Action.
  - This set the stage for a new climate agreement that would include both developed and developing countries, marking a departure from the Kyoto Protocol’s Annex I/non-Annex I division.
- The Paris Agreement (2015):
  - The Paris Agreement was adopted on December 12, 2015, at the 21st UNFCCC Conference of the Parties (COP 21) in Paris, France.
- Key elements of the Paris Agreement include:
  - Temperature Goals:
    - To limit global warming well below 2 degrees Celsius above pre-industrial levels, with an aim to limit it to 1.5 degrees Celsius.
  - Nationally Determined Contributions (NDCs):
    - Each country sets its own climate action targets and plans, known as NDCs, based on their individual circumstances and capabilities.
  - Transparency and Reporting:
    - Countries are required to regularly report on their emissions and progress in implementing their NDCs, enhancing transparency and accountability.
  - Climate Finance:
    - Developed countries commit to providing financial support to help developing countries mitigate and adapt to climate change.
  - Global Stocktake:
    - A periodic assessment of global progress towards the Paris Agreement’s goals.
The Paris Agreement entered into force on November 4, 2016, after being ratified by a sufficient number of countries.

What is Conference of the Parties (COP)?

The Conference of the Parties, often abbreviated as COP, is the supreme decision-making body of the United Nations Framework Convention on Climate Change (UNFCCC).

The COP meetings are a crucial part of the global climate governance framework.
The primary purpose of the COP meetings is to facilitate discussions and negotiations among the parties to the UNFCCC.
COP meetings are held annually, with each COP representing a new session or iteration of the conference.
The first COP, COP 1, took place in Berlin in 1995, and subsequent COPs have been held in different host countries and regions around the world.

How did a China-based hacking group compromise Microsoft’s cloud security?

(General Studies- Paper III)

Source : The Hindu

In July, Microsoft disclosed that a China-based hacking group known as Storm-0558 had successfully breached U.S. government-linked email accounts.

This incident raised concerns about cybersecurity and espionage activities targeting government officials and organizations.
This article provides detailed insights into the attack, the threat actor (Storm-0558), and the security vulnerabilities that led to the breach.

Key Highlights

Timeline of the Attack
- The attack on email accounts of American government officials was first noticed when customers reported abnormal activity on June 16.
- Microsoft initiated an investigation, revealing that from May 15, Storm-0558 had gained access to email accounts affecting approximately 25 organizations, including government agencies and related customer accounts.
Storm-0558: A China-Based Threat Actor
- Microsoft Threat Intelligence assessed Storm-0558 as a China-based threat actor with espionage objectives.
- The group primarily targets U.S. and European diplomatic, economic, and legislative governing bodies, as well as individuals connected to Taiwan and Uyghur geopolitical interests.
- Storm-0558 had been targeting Microsoft accounts since August 2021, using various methods to gain initial access.
Breach of Microsoft’s Security
- Storm-0558 compromised Microsoft’s cloud security systems by using an acquired MSA key to forge tokens.
- These tokens were used to access Outlook Web Access (OWA), a web-based mail client, and gain access to enterprise email accounts.
- MSA keys are used for authentication token validation.
Understanding Cryptographic Keys
- Cryptographic keys are character strings used in encryption algorithms to secure data.
- In SSL encryption, symmetric and asymmetric encryption methods are employed.
- Symmetric encryption uses the same key for both encryption and decryption, while asymmetric encryption uses separate public and private keys.
Acquisition of MSA Keys by Hackers
- Threat actors acquired MSA keys by compromising a Microsoft engineer’s account.
- The engineer’s account provided access to Microsoft’s network and debugging environment, used for testing and fixing errors in source code.
China’s Response to Attack Reports
- China dismissed Microsoft’s report as “disinformation” and accused the U.S. of conducting cyberattacks on China.
- The Chinese foreign ministry characterized the accusation as an attempt to divert attention from alleged U.S. cyber espionage activities.

Himachal Pradesh gets ground ready for cannabis cultivation

(General Studies- Paper II, III and IV)

Source : The Hindu

The Himachal Pradesh government is considering the legalization of hemp (cannabis) cultivation in the state, a move that has generated optimism among growers for its economic benefits.

However, concerns regarding the potential societal impacts of legalizing cannabis cultivation persist.

Key Highlights

Committee’s Recommendation
- A committee of lawmakers has recommended the cultivation of non-narcotic cannabis for medicinal, industrial, and scientific purposes.
- Hemp, a specific variety of Cannabis sativa, is currently illegal under the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985.
Awaiting State Cabinet Approval
- The state government awaits approval from the State Cabinet before framing a policy on cannabis cultivation.
- The policy aims to align with the provisions of the NDPS Act, 1985, and NDPS Rules, 1989.
Government’s Stance
- State Revenue Minister Jagat Singh Negi, who led the committee, emphasizes the government’s commitment to curbing drug abuse.
- Legalizing cannabis cultivation would be restricted to industrial, medicinal, and scientific use.
- The policy aims to leverage the medicinal properties of cannabis, generate state revenue, and address farmers’ demands to lift the cultivation ban.
Legal Framework
- The NDPS Act of 1985 bans extracting resin and flowers from the cannabis plant but allows cultivation for specific purposes.
- Section 10 (a) (iii) empowers states to make rules regarding cannabis cultivation, production, possession, and more.
- Uttarakhand legalized cannabis cultivation in 2017, and controlled cultivation occurs in Gujarat, Madhya Pradesh, and Uttar Pradesh.
Concerns and Perspectives
- A study indicates that approximately 95% of drug addicts in Himachal Pradesh use cannabis and related products.
- Critics argue that legalizing cannabis cultivation could encourage youth drug abuse and lead to addiction.
- The nexus between illegal producers, suppliers, and politicians might strengthen, exacerbating drug-related issues.
- Legalizing cannabis could have adverse societal effects, including risks of pilferage, psychiatric symptoms, and amotivational syndrome.
- Advocates highlight hemp’s numerous uses, including phytoremediation, industrial applications, and medicinal properties.
Balancing Economic Benefits and Societal Concerns
- The decision to legalize hemp cultivation in Himachal Pradesh is met with mixed reactions.
- While economic benefits and traditional usage are emphasized, concerns about drug abuse, addiction, and illicit trade persist.
- Crafting a comprehensive regulatory framework that addresses these concerns will be essential.

About Cannabis

Cannabis, often referred to as marijuana, is a genus of flowering plants that includes several species, with Cannabis sativa, Cannabis indica, and Cannabis ruderalis being the most well-known.
Cannabis plants are primarily known for their psychoactive properties due to the presence of compounds known as cannabinoids.
Cannabis plants produce various cannabinoids, the most famous of which are delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD).
- THC is primarily responsible for the psychoactive effects of cannabis, while CBD is non-psychoactive and is known for its potential therapeutic benefits.

New currency, next steps

(General Studies- Paper III)

Source : The Indian Express

The regulation or prohibition of cryptocurrencies is a complex and challenging issue for governments worldwide.

There is a need for global collaboration in addressing the risks associated with cryptocurrencies.

Key Highlights

Diverse Global Approaches:
- Countries have adopted diverse strategies regarding cryptocurrencies, ranging from strict regulations to outright bans.
- India’s approach has been inconsistent, with the Reserve Bank of India (RBI) initially banning cryptocurrency transactions, later overturned by the Supreme Court.
- The 2022-23 Union budget introduced a 30% tax on digital asset transfers and a 1% TDS on such transactions.
The Challenge of Enforcement:
- Banning cryptocurrencies is not a straightforward solution, as noted by the IMF-FSB paper.
- Enforcing a ban can be challenging, with crypto activities potentially shifting to more crypto-friendly jurisdictions.
- A ban can also drive cryptocurrency transactions underground, increasing financial integrity risks.
The Role of Regulation:
- The regulation and supervision of licensed or registered crypto-asset issuers and service providers can help address information gaps and enable better monitoring of cross-border activities.
- Implementing Financial Action Task Force anti-money laundering and counter-terrorist financing standards for cryptocurrencies is crucial.
Global Collaboration:
- Finance Minister Nirmala Sitharaman stresses the importance of global collaboration for effective cryptocurrency regulation or banning.
- The G20 Leaders Declaration endorses recommendations from the Financial Stability Board (FSB) and supports a coordinated policy and regulatory framework.
Future Steps:
- Finance ministers and central bank governors of G20 countries plan to convene in October to discuss and advance the recommendations outlined in the IMF-FSB paper.
- Global coordination is deemed necessary due to the transnational nature of cryptocurrencies.

About Cryptocurrency

Cryptocurrencies are digital or virtual currencies that use cryptography for security.
They are decentralized and typically operate on a technology called blockchain, which is a distributed ledger that records all transactions across a network of computers.
Few examples of cryptocurrencies:
- Bitcoin (BTC): The first and most well-known cryptocurrency, created by an anonymous person or group of people using the pseudonym Satoshi Nakamoto.
  - Bitcoin is often referred to as digital gold and is used for various purposes, including as a store of value and a medium of exchange.
- Ethereum (ETH):
  - Known for its smart contract functionality, Ethereum allows developers to build decentralized applications (DApps) on its blockchain.
- Ripple (XRP):
  - Designed for facilitating cross-border payments and remittances, Ripple aims to provide fast and low-cost international money transfers for financial institutions.
- Benefits of Cryptocurrencies:
  - Decentralization:
    - Cryptocurrencies operate on decentralized networks, reducing the control that central authorities like banks and governments have over transactions.
  - Security:
    - Cryptocurrencies use cryptographic techniques to secure transactions, making it extremely difficult for unauthorized parties to manipulate or counterfeit them.
  - Lower Transaction Costs:
    - Traditional financial systems often involve intermediaries and fees.
    - Cryptocurrencies can enable cheaper and faster cross-border transactions.
  - Ownership and Control:
    - Users have more control over their funds and can transact without relying on third-party intermediaries.
  - Concerns Associated with Cryptocurrencies:
    - Volatility:
      - Many cryptocurrencies are highly volatile, with their prices subject to rapid fluctuations.
      - This volatility can make them risky as investment assets and as a means of payment.
    - Regulatory Challenges:
      - Governments and regulatory bodies in various countries have expressed concerns about the lack of oversight and potential for illicit activities such as money laundering and tax evasion.
    - Security Risks:
      - While the underlying blockchain technology is secure, individual users can be vulnerable to hacking, phishing, and other cybersecurity threats.
    - Lack of Consumer Protections:
      - Unlike traditional financial systems, cryptocurrencies may not offer the same level of consumer protection, making it challenging to recover lost or stolen funds.
    - Environmental Impact:
      - The energy-intensive process of mining cryptocurrencies, especially Bitcoin, has raised concerns about its environmental impact due to carbon emissions.
    - Legal and Tax Issues:
      - Cryptocurrency tax regulations can be complex and vary by jurisdiction, leading to potential legal and tax challenges for users.
    - Use in Illegal Activities:
      - Cryptocurrencies have been associated with illegal activities such as ransomware attacks and the purchase of illegal goods and services on the dark web.

G20 declaration on health: Mention of India’s 3 priorities, digital push

(General Studies- Paper II and III)

Source : The Indian Express

India’s G20 presidency focused on three key health priorities, addressing the economic and social disruptions caused by the COVID-19 pandemic.

These priorities aimed to enhance global health resilience and cooperation.
The G20 New Delhi Leaders’ Declaration highlighted the achievements and key points related to these priorities.

Key Highlights

Three Key Health Priorities:
- Building Resilient Health Systems:
  - The first priority was to establish resilient health systems capable of preventing, preparing for, and responding to health emergencies.
  - This included pandemic preparedness.
  - The emphasis was on improving the readiness of healthcare systems to mitigate future health crises.
- Pharmaceutical Sector Cooperation:
  - The second priority focused on strengthening cooperation in the pharmaceutical sector.
  - It aimed to ensure equitable availability and access to vaccines, diagnostics, and therapeutics during pandemics, promoting global health equity.
- Digital Health Innovation:
  - The third priority involved creating a platform for sharing digital health innovations and solutions to achieve better and universal health coverage.
  - Key digital health platforms like CoWIN and e-Sanjeevani were highlighted as examples of India’s commitment to digital health.
- Digital Health Programme – Global Initiative on Digital Health (GIDH):
  - India launched the Global Initiative on Digital Health (GIDH) to share scalable digital health solutions with WHO member states.
  - GIDH comprises four main pillars: an investment tracker, a repository of digital health solutions, knowledge sharing, and an ask tracker to monitor countries’ specific needs.
  - Although a proposed $200-million fund for the digital health program did not achieve consensus, several non-profits pledged support.
  - India offered its digital health platforms, including CoWIN, e-Sanjeevani, and Ayushman Bharat Digital Mission, as digital public goods to other countries.
- Interim Medical Countermeasure Platform:
While there was no agreement on a permanent platform for equitable access to medical countermeasures during pandemics, G20 countries agreed to develop an interim platform.
This interim platform aims to facilitate research and manufacturing of countermeasures until a legally binding pandemic treaty is established.
The platform will be led by an inclusive decision-making arrangement and convened by the WHO.
Integration of Traditional Medicine:
- India advocated for integrating evidence-based traditional medicine practices with modern medicine.
- A global summit on traditional medicine was hosted alongside the health ministers’ meeting.
- The outcome document acknowledged the potential of traditional and complementary medicine practices in public health delivery, provided they are scientifically validated.

About CoWIN and e-Sanjeevani

CoWIN (COVID Vaccine Intelligence Network):
- CoWIN is a digital platform developed by the Indian government to manage and streamline the COVID-19 vaccination drive in the country.
- It allows individuals to register for COVID-19 vaccination, schedule vaccination appointments, and receive digital certificates as proof of vaccination.
- Healthcare workers and administrators use CoWIN to monitor vaccine availability, distribution, and administration in real-time.
e-Sanjeevani:
- e-Sanjeevani is a telemedicine platform introduced in India to provide remote healthcare consultations and services.
- It allows patients to consult with healthcare professionals, including doctors and specialists, through video or audio calls.
- e-Sanjeevani helps bridge the gap between healthcare providers and patients, especially in rural and remote areas, by enabling telemedicine consultations.

Why India’s falling cotton production is a worry?

(General Studies- Paper III)

Source : The Indian Express

Cotton, known for its multiple uses in food, feed, and fiber, holds significant importance in India’s agriculture and textile sector.

However, the cotton industry has faced challenges, particularly related to pest infestations such as the pink bollworm (PBW) infestation

Key Highlights

Cotton’s Versatility:
- Cotton serves as a valuable crop providing food, feed, and fiber.
- Kapas, the raw un-ginned cotton, consists of lint (fiber), seed, and waste components.
- Cottonseed contains 13% oil used for cooking, while the remaining cake is a protein-rich feed for livestock and poultry.
- Cotton dominates India’s textile fiber consumption and ranks third in domestically-produced vegetable oil and second in feed cake/meal production.
The Bt Revolution and Initial Success:
- From 2002, Indian farmers adopted genetically-modified (GM) cotton hybrids with Bacillus thuringiensis (Bt) genes.
- Between 2000-01 and 2013-14, India experienced a significant increase in cotton production, primarily due to Bt (Bacillus thuringiensis) technology.
- Bt cotton hybrids protected against the American bollworm, leading to higher per-hectare lint yields.
- However, the gains started to decline after 2013-14.

Challenges Emerge – The Pink Bollworm (PBW):
- The introduction of Bt cotton initially brought success against pests, but a new challenge arose with the pink bollworm (PBW).
- PBW infestations affected cotton crops and lint quality, causing yield declines.
- Unlike the polyphagous American bollworm, PBW primarily feeds on cotton, making it prone to developing resistance to Bt proteins.
Resistance and Population Growth:
- PBW’s monophagous nature (feeding mainly on cotton) allowed it to develop resistance to Bt proteins.
- Reduced cultivation of non-Bt cotton accelerated the spread of resistant PBW populations.
- The pest’s short life cycle facilitated rapid resistance development.
Controlling PBW – Mating Disruption:
- Traditional insecticides showed limited effectiveness against PBW larvae, which feed on cotton bolls and flowers.
- Mating disruption emerged as an alternative strategy.
- Gossyplure, a synthetic pheromone, attracts male PBW moths, disrupting mating and egg-laying.
- Reduced larvae infestation leads to better cotton yields and quality.
Approved Mating Disruption Products:
- The Central Insecticides Board & Registration Committee approved PBKnot and SPLAT for PBW control.
- PBKnot, a dispenser with Gossyplure, covers a significant area, reducing PBW mating.
- SPLAT-PBW, a flowable emulsion formulation, also delivers Gossyplure.

In Image: PBKnot rope tied on a cotton plant.

Benefits of Mating Disruption:
- Mating disruption technology reduces PBW mating by up to 90%, resulting in higher cotton yields.
- This innovative approach offers sustainable solutions for cotton farming.
The Future of Cotton Farming:
- Cotton cultivation remains vital for millions of smallholders and the textile industry.
- Innovations, including genetic modifications (GM), advanced insecticides, and mating disruption, will play a pivotal role in sustaining cotton production.

Scaling down in nuclear power and space

(General Studies- Paper III)

Source : The Indian Express

India is focusing on the development and promotion of Small Modular Reactors (SMRs) in the civil nuclear sector as a means to support industrial decarbonization and clean energy transition.

The government is positioning India as a potential global leader in SMR technology, and this initiative aligns with the country’s foreign policy objectives.
Technical discussions and policy planning are ongoing to evaluate the feasibility and effectiveness of deploying SMRs in India.

Key Highlights

Collaboration with other countries and indigenous development of SMRs are being explored, with the possibility of involving the private sector and start-ups.
SMRs have a capacity of 30MWe to 300MWe per unit, making them suitable for countries with mid-sized grids and decentralized grid operations.
India’s push for SMRs is gaining momentum and may receive support from countries like the United States, particularly regarding financing and technology dissemination.
Russia and China, two countries leading in SMR development, are encountering challenges in the business aspect.

Private Sector Involvement in Space Technology

India is taking steps to encourage private sector participation in space ventures.
The Indian National Space Promotion and Authorisation Centre (IN-SPACe), a new space regulatory body, has opened the bidding process for the Small Satellite Launch Vehicle (SSLV) program, enabling qualified companies to express their interest.
The SSLV program will be fully privatized, allowing the winning bidder or consortium to take over the entire program.
This move is expected to boost private investment in India’s space sector.
It contrasts with the more limited involvement of the private sector in manufacturing ISRO’s PSLV rockets.

What are Small Modular Reactors (SMRs)?

Small Modular Reactors (SMRs) are a type of advanced nuclear reactor technology designed to be smaller in size and capacity compared to traditional large-scale nuclear reactors.
SMRs are characterized by their reduced power output per unit, typically ranging from 30 megawatts electrical (MWe) to 300 MWe, although there is no strict definition for the size of an SMR.
Key objectives:
- Modularity:
  - SMRs are built in smaller, standardized modules, which can be manufactured in factories and transported to the reactor site for assembly.
- Enhanced Safety:
  - SMRs incorporate advanced safety features and passive cooling systems, making them inherently safer in the event of accidents or malfunctions.
- Flexibility:
  - Due to their smaller size, SMRs can be used in a variety of applications, including electricity generation, district heating, and industrial processes.
- Reduced Environmental Footprint:
  - SMRs produce lower greenhouse gas emissions and require less land area compared to traditional nuclear power plants.
  - They are considered a cleaner and more sustainable energy option.
- Examples of SMRs:
  - NuScale Power: NuScale Power, based in the United States, is one of the leading developers of SMR technology.
    - Their NuScale Power Module is a 77 MWe pressurized water reactor designed to be deployed in groups of up to 12 units, creating a combined capacity of up to 924 MWe.
  - Rolls-Royce: The UK-based engineering company Rolls-Royce is developing the Small Modular Reactor (SMR) concept, known as the Rolls-Royce SMR.
    - It aims to produce reactors with a capacity of around 440 MWe.
  - China National Nuclear Corporation (CNNC): China has been actively pursuing SMR technology, including the High-Temperature Gas-Cooled Reactor (HTGR) and the ACP100.
    - The ACP100 is a 100 MWe pressurized water reactor designed for both electricity generation and heat supply.
  - Russia:
    - Russia has developed and deployed small modular reactors, including the KLT-40 and RITM-200, which are used in icebreakers and floating nuclear power plants.

In Image: an SMR named AkademikLomonosov floating power unit in Russia.

Rise in oil prices and its impact

(General Studies- Paper III)

Source : The Indian Express

Crude oil prices have recently surged to nearly a 10-month high due to several factors, including high demand and supply constraints.

Global benchmark Brent crude breached $90 per barrel for the first time in 2023.
This surge in oil prices is raising concerns about potential impacts on the global economy, inflation, and countries heavily reliant on oil imports, including India.

Key Highlights

Saudi Arabia and Russia Extend Supply Cuts
- Major oil producers Saudi Arabia and Russia surprised the market by announcing an extension of their voluntary supply cuts, totaling 1.3 million barrels per day (bpd), until the end of 2023.
- This extension, beyond market expectations, aims to support crude oil prices by reducing supply.
- These two countries lead efforts among major oil-producing nations to bolster oil prices.
Potential for Further Oil Price Increases
- Analysts and market participants predict that oil prices may continue to rise, with some even suggesting the possibility of Brent crude hitting $100 per barrel.
- Concerns about a supply deficit during the high-demand winter season and indications of deeper production cuts by major oil producers contribute to these expectations.
Impact on India’s Economy and Trade Balance
- India, which depends on imports to meet approximately 87% of its crude oil requirements, is particularly sensitive to rising oil prices.
- High oil prices can lead to inflationary pressures, negatively impact India’s trade balance, and strain foreign exchange reserves, affecting the value of the rupee.
- Additionally, the profitability of sectors with high energy costs may be affected.
Potential Implications for Fuel Pricing in India
- Elevated crude oil prices could further delay a return to market-linked pricing of transportation fuels such as petrol and diesel in India.
- Public sector oil marketing companies have refrained from revising fuel prices since early April 2022 due to concerns about price volatility following geopolitical events.
- If crude oil prices continue to rise, it may become financially unviable for these companies to reduce fuel prices, potentially requiring government support.
Challenges and Limits in Maintaining High Oil Prices
- While major oil producers are extending supply cuts to boost prices, there are limits to how far they can go.
- Sustained high oil prices could lead to global inflation, hinder economic recovery, and accelerate the transition to cleaner energy sources.
- Additionally, it may prompt efforts to bring oil from sanctioned suppliers like Iran and Venezuela back into the market.
Uncertain Future for Oil Prices
- The outlook for oil prices remains uncertain, with different organizations providing varying forecasts for future oil demand.
- Major oil producers believe they can influence prices through coordinated production regulation, but the global economic environment and the transition to cleaner energy sources will play critical roles in determining the future of oil prices.
Impact on Fuel Pricing in India
- The surge in crude oil prices could affect fuel pricing in India. Petrol and diesel prices have not been revised by public sector oil marketing companies since early April 2022.
- While there were expectations of price cuts, the recent rise in crude oil prices may make such cuts unviable for these companies, potentially requiring government support to stabilize fuel prices.
Concerns for the Global Economy
- Rising crude oil prices can have implications for the fragile global economy, adding to inflationary pressures and impacting countries grappling with high inflation.
- Additionally, it may affect trade balances, foreign exchange reserves, currency values, and overall economic health, particularly for countries highly dependent on oil imports.
Sustainability and Transition to Cleaner Fuels
- Sustained high oil prices may incentivize a faster transition to cleaner energy sources, especially in the mobility sector.
- This transition aligns with global efforts to reduce carbon emissions and combat climate change.

Who are the major oil producing countries?

The major oil-producing countries, often referred to as “oil-producing giants” or “top oil producers,” play a significant role in the global oil industry. Some of the major oil producing countries are:

Saudi Arabia:
- Saudi Arabia has long been one of the world’s largest oil producers and exporters.
- It is a key member of the Organization of the Petroleum Exporting Countries (OPEC).
Russia:
- Russia is another major oil producer and one of the world’s leading exporters of crude oil.
- It is not an OPEC member but often collaborates with OPEC countries on production agreements.
United States:
- The United States has experienced significant growth in oil production, particularly from shale oil and tight oil formations.
- It became one of the world’s top oil producers in the early 21st century.
Canada:
- Canada is known for its vast oil sands resources and is a major producer of crude oil, primarily exporting to the United States.
China:
- China is one of the world’s largest oil consumers and has increased its domestic oil production in recent years to meet its growing energy demand.
Iraq:
- Iraq is a notable oil producer in the Middle East and has substantial proven oil reserves.
- It is also an OPEC member.
Iran:
- Iran has significant oil reserves and is an OPEC member, although its oil production and exports have been subject to international sanctions.
United Arab Emirates (UAE):
- The UAE is a prominent oil producer in the Middle East and is a member of OPEC.
Kuwait:
- Kuwait is another key oil producer in the Middle East and an OPEC member.
Venezuela:
- Venezuela possesses significant oil reserves, but its oil industry has faced various challenges, including economic and political instability.
Nigeria: Nigeria is a major oil producer in Africa and is known for its crude oil exports.
Angola: Angola is another African nation with a substantial oil industry, exporting crude oil to global markets.

What is the Partnership for Global Infrastructure Investment (PGII)?

(General Studies- Paper II and III)

Source : The Indian Express

On the sidelines of the G20 Summit in New Delhi, several governments, including India, the United States, Saudi Arabia, the European Union (EU), the UAE, France, Germany, and Italy, signed a Memorandum of Understanding (MoU) to establish the India-Middle East-Europe Economic Corridor (IMEC).

The IMEC is envisioned as a network of transport corridors, including railways and sea lanes, aimed at fostering economic growth by enhancing integration between Asia, the Arabian Gulf, and Europe.

Key Highlights

Background on the Partnership for Global Infrastructure Investment (PGII):
- The IMEC project is part of the Partnership for Global Infrastructure Investment (PGII), which is an initiative led by Western countries to fund infrastructure projects worldwide.
- The PGII serves as an alternative to China’s Belt and Road Initiative (BRI), offering funding for infrastructure development through public and private investments.
- It was first announced during the G7 summit in the UK in June 2021 and officially launched during the G7 summit in Germany in 2022.
Rationale for an Alternative Initiative:
- The PGII was established as a response to China’s BRI, which began in 2013, aiming to revive ancient trade routes and provide loans for infrastructure projects in various countries.
- However, the BRI faced criticism for offering unsustainable debts to recipient countries and potential negative consequences, including environmental degradation and corruption.
- The G7 countries and their partners developed the PGII to provide an alternative mechanism for funding global infrastructure projects with a focus on transparency, climate resilience, and gender equality.
Key Features of the PGII:
- The PGII seeks to mobilize nearly $600 billion from G7 countries by 2027 to fund critical infrastructure projects.
- It focuses on providing loans rather than charity or aid, benefiting both lending and recipient countries.
- Projects funded by the PGII are expected to promote climate change-resilient infrastructure and contribute to gender equality and health infrastructure development.
Challenges and Considerations:
- China’s BRI continues to evolve, with a focus on addressing criticisms, including green initiatives.
- The scale of investments from China remains substantial compared to the G7, and the PGII faces challenges in securing political consensus and private-sector participation.
- PGII’s success may diversify infrastructure options for countries with project requirements, potentially benefiting all parties.
India’s Involvement:
- India is a participant in the PGII and has received investments in its health infrastructure through the U.S. International Development Finance Corporation (DFC).
- India has received over $15 million allocated for projects such as expanding eye clinics and manufacturing women’s hygiene products.
- Additionally, the IMEC project aims to strengthen economic connectivity between India, the Middle East, and Europe.