27 June 2024

• Governance: India placed in the "regular follow-up" category at the FATF plenary in Singapore (26-28 June 2024). The best possible outcome for a mutual evaluation.
• Economy: India's foreign exchange reserves rose 816 million US dollars to 653.711 billion US dollars for the week ending 21 June.
• Wildlife: South Africa's Rhisotope Project: radioactive isotopes inserted into rhino horns to deter poaching.
• NEET-UG crisis: ongoing controversy over alleged paper leaks and irregularities in the national medical entrance exam.

GS area: International Relations, Economy, Governance

The Financial Action Task Force plenary meeting in Singapore (26-28 June 2024) placed India in the "regular follow-up" category following its mutual evaluation.

• FATF: the Financial Action Task Force is an intergovernmental body established in 1989 at the G7 Summit in Paris. It sets international standards to combat money laundering, terrorism financing and proliferation financing.
• Expanded mandate: FATF extended its mandate to terrorism financing after the September 2001 attacks.
• India's membership: India became a full FATF member in 2010. There are currently 37 member jurisdictions plus the European Commission.
• Mutual evaluation process: FATF evaluates member countries on the effectiveness of their anti-money laundering (AML) and counter-terrorism financing (CTF) systems. A team of experts assesses legal frameworks, supervisory bodies, law enforcement and international cooperation.
• Four follow-up categories: Regular Follow-up (best), Enhanced Follow-up, two worse categories, and the blacklist and greylist for non-compliant jurisdictions.
• Significance of "Regular Follow-up": India joins a small group of countries with the highest compliance ratings. This strengthens India's international financial credibility and reduces scrutiny of Indian financial flows.
• FATF Blacklist (High-Risk Jurisdictions): North Korea, Iran and Myanmar. Countries on the blacklist face the most severe counter-measures.
• FATF Greylist (Jurisdictions under increased monitoring): currently includes Pakistan, among others. Greylist status increases the cost and difficulty of cross-border financial transactions.

Static linkage: international relations, economy, governance.

GS area: Economy

India's foreign exchange reserves reached 653.711 billion US dollars for the week ending 21 June 2024, up 816 million US dollars in one week.

• Forex reserves composition: foreign currency assets (the largest component), gold reserves, Special Drawing Rights (SDRs) with the IMF, and India's reserve tranche position at the IMF.
• SDRs: Special Drawing Rights are an international reserve asset created by the IMF to supplement member countries' official reserves. Their value is based on a basket of five currencies: US dollar, Euro, Chinese yuan, Japanese yen and British pound.
• Importance of reserves: forex reserves provide a buffer against currency volatility, facilitate import payments, signal creditworthiness to international investors, and allow central bank intervention in the currency market.
• Import cover: India's reserves provide approximately 10 months of import cover, well above the internationally recommended 3 months.
• RBI's intervention role: the RBI buys or sells foreign currency in the market to prevent excessive volatility in the rupee exchange rate. It does not target a specific exchange rate level but smooths out volatility.
• FEMA: the Foreign Exchange Management Act 1999 governs cross-border capital flows. Unlike the older FERA (which treated violations as criminal), FEMA treats most violations as civil offences.

Static linkage: economy.

GS area: Governance, Social Justice, Ethics

The National Eligibility cum Entrance Test (Undergraduate) 2024 controversy involved alleged paper leaks, grace marks irregularities, and subsequent exam cancellations.

• NEET-UG: the single national entrance test for admission to undergraduate medical (MBBS, BDS) and AYUSH courses across all colleges. Conducted by the National Testing Agency (NTA).
• Allegations: the question paper was allegedly leaked in Bihar and Rajasthan before the exam date. Additionally, grace marks were awarded irregularly to about 1,500 candidates, raising their scores artificially.
• NTA: the National Testing Agency was established in 2017 as an autonomous body under the Ministry of Education to conduct entrance examinations.
• Supreme Court intervention: the Supreme Court took cognisance of petitions challenging the exam's integrity. It directed re-tests for grace-mark beneficiaries.
• CBI investigation: the Central Bureau of Investigation was directed to investigate the paper leak allegations.
• Ethical dimensions: the controversy raises issues of fairness, corruption in public examinations, systemic failure of oversight, and impact on lakhs of students who prepared honestly.
• NET-NEET as systemic failure: UGC-NET was also cancelled in June 2024 citing a data security concern. Both failures together pointed to structural problems in India's examination governance.

Static linkage: governance, social justice, ethics.

GS area: Environment, Biodiversity, Science and Technology

South Africa's Rhisotope Project inserts radioactive isotopes into rhino horns to deter poaching and poisoning.

• Concept: small amounts of radioactive material are drilled into the base of a living rhino's horn under anaesthesia. The horn remains in the animal. The radiation is low enough to be safe for the animal and most ecosystem organisms.
• Deterrence mechanism: the radioactive horn will trigger radiation detectors at airports, ports and border crossings. This makes smuggling the horn much harder.
• Poisoning deterrence: if the horn is ground into powder and consumed (as traditional medicine), the consumer would ingest the radioactive material. This is intended as an additional deterrent.
• Duration: the radioactive material lasts approximately five years.
• African rhinoceros: two species in Africa: White Rhinoceros (Southern: Near Threatened; Northern: Critically Endangered, functionally extinct) and Black Rhinoceros (Critically Endangered).
• Indian context: India's one-horned rhinoceros (Rhinoceros unicornis) is listed as Vulnerable by IUCN. Kaziranga National Park in Assam houses approximately 2,600 (over two-thirds of the global population).

Static linkage: environment, biodiversity, science and technology.

GS area: Economy

India's current account and capital account dynamics were discussed as the new government prepared its first Budget.

• Current account deficit (CAD): India typically runs a CAD because it imports more than it exports (merchandise). Services exports (IT, tourism) partially offset this. FY 2023-24 CAD was approximately 1.2 per cent of GDP, a manageable level.
• Capital account surplus: India attracts Foreign Direct Investment, Foreign Portfolio Investment and remittances, which finance the CAD.
• Remittances (FY 2023-24): India received approximately 125 billion US dollars. This is the largest remittance receipt in the world.
• India's trade deficit: merchandise imports exceeded merchandise exports by approximately 238 billion US dollars in FY 2023-24. Petroleum, gold and electronic goods are the biggest import items.
• Gold imports: India imported approximately 35 billion US dollars of gold in FY 2023-24, driven by jewellery demand and investment.
• Electronics imports: India's electronics import bill exceeds 50 billion US dollars annually, a key motivation for the Production Linked Incentive (PLI) scheme for electronics.

Static linkage: economy.

GS area: Economy, Science and Technology

India's first underground coal gasification (UCG) pilot project in Jharkhand was formally initiated by the Ministry of Coal.

• UCG process: underground coal is converted into a combustible gas (syngas) in situ, without physical mining. Controlled amounts of air or oxygen are injected into a coal seam; the coal partially oxidises and produces a mixture of hydrogen, methane, carbon monoxide and carbon dioxide.
• Products: the syngas can be used for power generation, or processed into methanol, ammonia (fertiliser feedstock) or hydrogen fuel.
• India's coal reserves: India has the world's fourth-largest coal reserves. However, much of the coal is deep underground and uneconomical to mine conventionally. UCG could unlock these reserves.
• National Coal Gasification Mission: targets producing 100 million tonnes of syngas by 2030.
• Environmental concerns: UCG risks groundwater contamination if the gasification chamber is not properly sealed. Monitoring is essential.
• 100% FDI: India permits 100 per cent FDI in coal mining through the automatic route.

Static linkage: economy, science and technology.

• UP-PRAGATI Accelerator Programme: a partnership involving the 2030 Water Resources Group and Bill and Melinda Gates Foundation targeting the promotion of Direct Seeded Rice (DSR) on 250,000 hectares over five years in Uttar Pradesh.
• Srikakulam (Andhra Pradesh): historically significant coastal city with Buddhist, Jain and Hindu heritage sites including Salihundam (a Buddhist site where Buddhism spread to Indonesia/Sumatra), Srikurmam temple, and Arasavalli sun temple.