[Mission 2024] INSIGHTS DAILY CURRENT AFFAIRS + PIB SUMMARY 21 July 2023

GS Paper 2

 Syllabus: Important International Institutions, agencies and fora – their Structure, Mandate

Source: CGDEV

 Context: An Independent Expert Group (IEG) that was commissioned by the Indian G20 Presidency has released the ‘Strengthening Multilateral Development Banks: The Triple Agenda’ report.

What are Multilateral Development Banks (MDBs)?

• An MDB is an international financial institution consisting of member nations from developed and developing countries.
• MDBs provide loans and grants to member (especially poor/ developing) nations to fund projects that support their social and economic development.

The emergence of MDBs:

• At the end of WWII, delegates from 44 countries met in Bretton Woods (US) to agree upon a series of new rules for international cooperation and reconstruction.
• This led to the creation of the IMF and World Bank Group (WBG) in 1944.
• The WB was responsible for providing financial assistance for the post-war reconstruction and economic development of the less developed countries.
• While the WBG is the oldest and the largest MDB, there are ~15-16 prominent MDBs and Regional development banks (RDBs) today.

The role played by MDGs:

• MDBs have a key role to support the needed reforms and resources.
• They work with governments and the private sector to create the conditions for investment and transformation.
• They are the most effective institutions to provide low-cost, long-maturity financing, to mitigate and share risks (in the most efficient way) faced by private investors.

Challenges faced by MDBs:

• No longer suited to address the emerging global challenges: They lack resources, cultural ethos, methods and will to address the challenges like climate change and pandemics.
• They are in a state of stagnation: Trapped in their procedures, approach and methods of work and resistant to structural changes.
• Therefore, to transform development, the MDBs will have to transform themselves.

Recommendations of the IEG report – Triple agenda to harness the potential of MDBs:

The three elements of this agenda are:

• Adopting a triple mandate of eliminating extreme poverty, boosting shared prosperity, and contributing to global public goods;
• Tripling sustainable lending levels by 2030; and
• Creating a third funding mechanism which would permit flexible and innovative arrangements for purposefully engaging with investors willing to support elements of the MDB agenda.

How can it be achieved?

• Effective implementation of the triple agenda requires important changes in the ways that MDBs operate.
• MDBs must become effective agents in all developing countries for integrating development and climate agendas.
• They must work with governments and the private sector to reduce, share and manage risks and thereby bring down the cost of capital.
• They must change their culture, become more client-responsive, and take more risks.
• Timelines for project preparation should be shrunk and procedures
• They must also increase the scale and nature of their activities.

Way ahead:

• One of the greatest opportunities for transformation is in MDB’s engagement with the private sector.
• The MDB system must become more than the sum of its individual entities. Their strength has come from heterogeneity, which permits innovations in different parts of the system.

Conclusion: While the reform agenda needs to be decisively put on track, there is a need for an independent monitoring group to encourage the full implementation of recommendations and report to G20 on progress.

Insta Links:

Reforming Multilateral Development Banks

Mains Links:

The World Bank and the IMF, collectively known as the Bretton Woods Institutions, are the two inter-governmental pillars supporting the structure of the world’s economic and financial order. Superficially, the World Bank and the IMF exhibit many common characteristics, yet their role, functions and mandate are distinctly different. Elucidate (UPSC 2013)

GS Paper 2

 Syllabus: Government Policies and Investment

Source: UNCTAD

Context: The UNCTAD released a new publication – “Facilitating Investment in the Sustainable Development Goals”.

About the publication: It is part of UNCTAD’s investment advisory series, which provides practical advice and case studies of best policy practices for attracting FDI that contribute to sustainable development.

Highlights of the publication:

• To shore up funding for the UN SDGs, countries need more proactive and tailored services for investors.
• An estimated $4 trillion is required in developing countries annually to achieve the SDGs. This can be made possible through foreign investment.
• The role of the investment promotion agencies (IPAs) can be significant, as they are the focal point for government-wide efforts to facilitate foreign investment.

Investment promotion vs facilitation:

• Investment promotion is meant to attract potential investors that have not yet selected an investment destination.
• Whereas facilitation starts at the pre-establishment phase when an investor shows interest in a location.

Why does investment facilitation matter?

• Investment facilitation aims at making it easier for investors to establish and expand their investments, as well as conduct their day-to-day business in host countries.
• This can happen by providing relevant information, making rules and regulations more transparent and streamlining administrative procedures for investors.

How can IPAs bolster SDG implementation through investment facilitation?

• By ensuring that investment facilitation services are inclusive. This will address the specific needs and opportunities of SDG-related sectors, and specific investor groups.
• When establishing a project, IPAs can assist in filling in the information gap by pointing investors to potential partners and incentive programmes.
• They can forge new partnerships with local governments and national ministries dealing with SDG-related investment opportunities.
• To stay competitive in a digitalised economy post-COVID-19, IPAs have increasingly turned to digital platforms to conduct many of their promotional and facilitation services.

Challenges:

• While sustainable investment continues to grow, such financing remains heavily concentrated in the world’s richest economies.
• Most of it goes to sectors related to climate change adaptation (renewable energy), and far less towards sectors such as health, education, water and sanitation.

Way ahead:

• Developing SDG project pipelines by prioritising sectors where funding is needed the most.
• Defining related targets and preparing relevant investment project profiles.
• There is a need for stronger knowledge management of insights and lessons learned on SDG investment.

Best practice – Invest India:

• The IPA has an online Industrial Land Bank that showcases all available land in several subregions that can be used for development.
• The agency is in the process of aggregating the tool at the national level.

Conclusion: Investment is particularly important for SDGs-related investment, which often requires more proactive and more tailored services for investors than traditional investment.

Insta Links:

India, its SDG pledge goal, and the strategy to apply

Facts for Prelims (FFP)

Source: TH

 Context: For the first time in Rajya Sabha history, women have equal representation in the panel of vice-chairpersons.

Rajya Sabha Chairman Jagdeep Dhankhar nominated four women parliamentarians, making up half of the eight-member panel. Among the newly nominated members is S. Phangnon Konyak (She is the first woman to be elected as a Member of the Rajya Sabha from Nagaland in April 2022 and the second woman from the State to be elected to either House of the Parliament or the State Assembly.)

What is a Panel of Vice-Chairpersons?

The Panel of Vice-Chairpersons in Rajya Sabha is headed by the Deputy Chairman. The members are nominated from the members of the Rajya Sabha by the Chairperson. Its role is to assist in passing bills and ensuring the effective functioning of the government.

In case of the Chairman’s absence, the same duty is delegated and executed by the deputy chairman of the house.

Source: IE

Context: Monsoon Session’s opening was disrupted due to disagreement on the Manipur discussion format. Govt agreed to a short-duration discussion (under Rule 176), but the Opposition demanded the PM’s suo motu statement followed by a discussion under Rule 267.

Recent controversy: The Opposition has expressed concern that none of their notices under Rule 267 are being taken up, even though previous Rajya Sabha Chairmen have allowed such discussions on various subjects.

Source: Economic Times

Context: World Bank President stated that India has shown resilience and emerged stronger from the pandemic compared to other countries. He expressed optimism, as the country’s focus on growth and job creation is crucial in reducing poverty.

• Highlighted the “China+1” opportunity, where companies seek alternative manufacturing sites to diversify supply chains post-Covid and emphasized that India has a three-to-five-year window to capitalize on this opportunity.

India’s advantage lies in its significant percentage of GDP coming from local production, which cushions the impact of global slowdowns caused by trade disruptions. 

Key suggestions given:

• Private capital investments to support global efforts for renewable energy funding, estimating that developing nations will need $1 trillion for the green energy transition.
• The importance of concessional capital, multilateral bank capital, and philanthropy capital to enable blended finance.

Source: TH

 The recent NATO summit held in Vilnius had several key takeaways:

• Ukraine’s Presence: The launch of the NATO-Ukraine Council aimed to engage and support Ukraine.
• New Members: Finland and Sweden’s approval as NATO members showcased the alliance’s commitment to expansion and deterrence against potential threats, including Russia.
• S. Support: U.S. President Joe Biden reaffirmed unwavering support for NATO and Ukraine, contrasting with former President Donald Trump’s stance on the alliance.
• China’s Threat: The summit addressed China’s malicious cyber operations, confrontational rhetoric, and disinformation, recognizing its emerging challenges to Euro-Atlantic security.
• Russia’s Contestation: While the summit discussed potential expansion, Russia launched a drone attack on Kyiv, highlighting the ongoing security contestation in Eurasia.

About NATO: 

Note: Sweden is yet to be included in NATO.

Source: PIB

 Context: The Ministry of Fisheries, Animal Husbandry, and Dairying has launched the “Credit Guarantee Scheme” under the Animal Husbandry Infrastructure Development Fund (AHIDF) to support the rural economy by leveraging Micro, Small & Medium Enterprises (MSMEs) in the Livestock sector.

What is Credit Guarantee Fund?

The Credit Guarantee Fund is a financial mechanism that provides risk mitigation for lending institutions, by lending to individuals or businesses, even without sufficient collateral. If the borrower defaults, the fund reimburses the lending institution for the guaranteed portion of the loan.

The Credit Guarantee Fund Trust, established in March 2021, is India’s first-ever fund trust under the Credit Guarantee Scheme for the agriculture and Animal Husbandry sector. It aims to significantly increase the number of MSMEs benefiting from the AHIDF scheme and strengthen the ecosystem for collateral-free credit from banks.

Features of the Scheme:

Under the scheme, the Department of Animal Husbandry & Dairying has established a Credit Guarantee Fund Trust of Rs. 750.00 crores (under NABARD), which provides credit guarantee coverage of up to 25% for credit facilities extended to MSMEs by eligible lending institutions.

Advantages:

This initiative aims to improve access to finance for underserved livestock entrepreneurs, especially first-generation and underprivileged individuals who lack collateral security.

About AHIDF

It is a Central Sector Scheme launched by the Ministry of Animal Husbandry, Fisheries, and Dairying. Its aim is to encourage investments in dairy and meat processing infrastructure, as well as animal feed plants.

Source: PIB

 Context: Ms Nivruti Rai has been appointed as the Managing Director & CEO of Invest India.

Ms Rai, a recipient of the prestigious Nari Shakti Puraskar, brings a wealth of experience from her 29-year tenure at Intel, where she led Intel India as Country Head for the past seven years.

Invest India (est. 2009), is a non-profit venture under the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India. It serves as the national investment promotion and facilitation agency, targeting specific sectors and fostering partnerships for sustainable investments in India. I

Source: Business Line

 Context: The Indian industry aims to create separate branding for biofortified foods, similar to “organic” products, to enhance their popularity.

• To promote access to nutrient-rich crops, the government is seeking the assistance of the private sector.

About Biofortification:

• Biofortification is a process of enhancing the nutritional content of crops by increasing the levels of essential vitamins and minerals.
• It is a targeted approach to address nutrient deficiencies in populations, particularly in regions where people have limited access to diverse and nutritious diets.

The main objective of biofortification is to improve the nutritional status of vulnerable populations, especially in developing countries where malnutrition and micronutrient deficiencies are prevalent. By enhancing the nutrient content of staple crops, such as rice, wheat, maize, and beans, biofortification aims to provide a sustainable and cost-effective solution to combat malnutrition and related health issues.

Source: TH

 Context: A remarkable fossil discovered in north-eastern China sheds light on the complex interactions between mammals and dinosaurs during the Mesozoic Era, around 125 million years ago.

• The fossil shows a small badger-like mammal called Repenomamus robustus attacking a medium-sized, plant-eating dinosaur named Psittacosaurus lujiatunensis.
• The fossil provides evidence of a smaller mammal preying on a larger dinosaur, challenging the traditional belief that dinosaurs always ate smaller mammals.

The discovery suggests that Mesozoic food webs were more complex than previously thought, with some mammals being active predators rather than just prey. This find also challenges the idea that mammals only scavenged dinosaur carcasses. The interaction between Repenomamus and Psittacosaurus is a unique example of a mammal preying on a dinosaur.

Mapping

Source: IE

 Context: The Surat Diamond Bourse (SDB) is claimed to be the world’s largest office space in a single project, with an area of 66 lakh square feet. The main objective of the SDB is to expand and shift the diamond trading business from Mumbai to Surat, the hub of diamond cutting and polishing, and to provide all diamond-related activities and infrastructure under one roof. Surat is the world’s biggest centre for cutting and polishing, accounting for 90% of the diamonds traded globally.