Daily Current Affairs : 3rd May 2023

Daily Current Affairs for UPSC CSE

Topics Covered

  1. Dedollarisation
  2. Death penalty methods
  3. U.S. Commission for International Religious Freedom (USCIRF)
  4. National Manufacturing innovation Survey

1 . De-dollarization

Context: The de-dollarization movement is gathering global momentum, with an increasing number of nations from Asia to Europe and Latin America lining up plans to end the greenback’s dominance of global trade and investment flows.

What is de- dollarization?

  • De- dollarisation is a term that refers to the process wherein countries tend to reduce their reliance on the US dollar as a reserve currency, medium of exchange, and also a unit of account. It refers to the replacement of the U.S. dollar by other currencies as the global reserve currency.

What is reserve currency?

  • A reserve currency refers to any currency that is widely used in cross-border transactions and is commonly held as reserves by central banks.
  • After the U.S emerged as an even stronger superpower during the Second World War, the Bretton Woods Agreement of 1944 established the post-war international monetary system, with the U.S. dollar ascending to become the world’s primary reserve currency for international trade.
  • After the establishment of the Bretton Woods system, the US dollar is used as the medium for international trade.
  • The United States Department of the Treasury exercises considerable oversight over the SWIFT financial transfers network, and consequently has a huge sway on the global financial transactions systems, with the ability to impose sanctions on foreign entities and individuals.

The Popularity of U.S dollar

  • U.S. dollar is not forced on anyone to be accepted as a medium of exchange for cross-border transactions because it is widely used in international transactions because people actually prefer to use the American currency over others for various economic reasons.  
  • The global acceptability of the U.S. dollar has primarily been attributed to the popularity of U.S. assets among investors. It should be noted that the U.S. has been running a persistent trade deficit for decades now.  That is, the value of its imports has for a long time exceeded the value of its exports to the rest of the world. The excess dollars that the rest of the world accumulates due to the U.S.’s trade deficit has been invested in U.S. assets such as in debt securities issued by the US government.  

What are the Global efforts towards De- Dollarization?

  • In recent years, several countries and regions have embarked on the path towards de- dollarisation, driven by a combination of geopolitical, economic, and strategic considerations.
  • Notable examples include China, Russia, Brazil and the European Union, each of which has taken steps to reduce their reliance on the US dollar in international transactions and financial markets.
  • Some countries, like China and Russia, have sought to diminish the influence of the US dollar as a means of countering perceived American hegemony and mitigating the impact of US sanctions. Other countries, particularly those in the Eurozone, have pursued de- dollarisation to promote the international use of their currency, the euro, in a bid to enhance their global economic standing and secure greater financial autonomy.

What are the reasons for de dollarisation?

  • Countries have tried to dethrone the dollar as the global reserve currency for many decades now for various reasons.  
  • The U.S. imposed several sanctions that restricted the use of the U.S. dollar to purchase oil and other goods from Russia, and this has been seen by many countries as an attempt to weaponise the dollar. Since international transactions carried out in the U.S. dollar are cleared by American banks, this gives the U.S. government significant power to oversee and control these transactions.
  • Critics of the U.S. dollar believe that the global reserve currency status gives it unfair privileges over other countries, thus justifying de-dollarisation attempts by many countries.
  • It should be noted that when a country’s fiat currency enjoys reserve currency status, it gives the country the power to purchase goods and other assets from the rest of the world by simply creating fresh currency out of thin air.
  • Others point to the expansionary monetary policy adopted by the U.S. Federal Reserve over the decades to argue that this could threaten the U.S. dollar’s status as a global reserve currency.

What are the challenges towards De- dollarization?

  • Firstly, the potential impact on global financial stability warrants careful consideration. As countries reduce their reliance on the US dollar, adjustments in the composition of global reserve assets may lead to shifts in capital flows and changes in asset prices. In the absence of adequate policy coordination and risk management, these fluctuations could create financial instability, particularly in emerging markets and countries with substantial dollar-denominated debt.
  • Secondly, creating a viable alternative to the US dollar presents a formidable challenge. To achieve the requisite degree of stability, liquidity, and acceptability, an alternative reserve currency must be underpinned by a robust economy, deep and liquid financial markets, and sound monetary and fiscal policy frameworks. Currently, no single currency fully meets these criteria, although the euro and the Chinese yuan have made strides in this regard.
  • Thirdly dedollarisation could result in increased volatility in currency exchange rates, particularly during the initial phases of transition. As market participants adjust to the changing landscape and reassess their currency preferences, exchange rate fluctuations could become more pronounced. This, in turn, could impact trade, investment, and capital flows, particularly for countries with less developed financial markets or limited policy tools to manage exchange rate volatility.
  • Lastly, Other currencies that have tried to compete against the U.S. dollar are not as popular as the greenback for carrying out international transactions.
    • For example, a recent attempt by India and Russia to carry out trade between the two countries in Indian rupees rather than in U.S. dollars has hit a roadblock because the value of India’s imports from Russia far outweighs its exports to the country. This left Russia with excess rupees in hand which it was unwilling to spend on Indian goods or assets and led to Russian demands for the settlement of bilateral trade in U.S. dollars.  

What are the advantages of de- dollarization?

  • Diversified risks,
  • Strengthened national currencies,
  • Increased monetary policy independence, and
  • Reduced vulnerability to US sanctions.

What are the disadvantages of de- dollarization?

  • De- dollarization encompasses transition challenges,
  • Potential short-term instability
  • Limited global acceptance of alternative currencies.

2 . Death penalty Methods

Context: The government apprised the Supreme Court that it is considering the formation of a committee to examine the need for a painless and more dignified alternative to death by hanging.

About the News

  • Earlier the court had asked the government to provide data which may give a clue to a more acceptable method of executing prisoners other than death by hanging.
  • The court had indicated to the Centre that it may even direct an alternative method of executing capital punishments if it was proved that there was a more “humane” method of execution which would render death by hanging unconstitutional.

What is Capital Punishment?

  • Capital punishment, also known as the death penalty and formerly called judicial homicide, is the state-sanctioned practice of killing a person as a punishment for a crime, usually following an authorized, rule-governed process to conclude that the person is responsible for violating norms that warrant said punishment.
  • The sentence ordering that an offender be punished in such a manner is known as a death sentence, and the act of carrying out the sentence is known as an execution

What are the methods of death penalty?

  • Beheading- Decapitation or beheading is the total separation of the head from the body. Such an injury is invariably fatal to humans and most other animals, since it deprives the brain of oxygenated blood, while all other organs are deprived of the involuntary functions that are needed for the body to function.
  • Hanging- Hanging is killing a person by suspending them from the neck with a noose or ligature. Hanging has been a common method of capital punishment since the Middle Ages, and is the primary execution method in numerous countries and regions. Notably used by India, Japan, Singapore, Malaysia, Pakistan, and Iran
  • Lethal Injection– Lethal injection is the practice of injecting one or more drugs into a person (typically a barbiturate, paralytic, and potassium solution) for the express purpose of causing rapid death. The main application for this procedure is capital punishment, but the term may also be applied in a broader sense to include euthanasia and other forms of suicide. The drugs cause the person to become unconscious, stops their breathing, and causes a heart arrhythmia, in that order.
  • The lethal injection generally consists of three chemicals: sodium pentotal (an anaesthetic), pancuronium bromide (used to paralyse the prisoner) and potassium chloride (used to stop the heart). It was first used in the United States in 1982, lethal injection has since been adopted by China, Taiwan, Thailand, Guatemala, and Vietnam.
  • Shooting- Execution by shooting is a method of capital punishment in which a person is shot to death by one or more firearms.
  • By a single shot (such as a shot to the back of a head, as in China, Taiwan, Belarus, and Russia before the moratorium).
  • By firing squad (as in Indonesia).
  • Supposedly, by excessively powerful weaponry such as anti-aircraft guns, according to various media sources, practised in North Korea.
  • Electrocution -An electric chair is a device used to execute an individual by electrocution. When used, the condemned person is strapped to a specially built wooden chair and electrocuted through electrodes fastened on the head and leg

3 . U.S. Commission for International Religious Freedom (USCIRF)

Context: A federal U.S. commission has urged the Biden administration to impose targeted sanctions on Indian Government agencies and officials responsible for “severe violations” of religious freedom in the country by freezing their assets.

USCIRF –2023 Annual Report

  • The United States Commission on International Religious Freedom (USCIRF) released its 2023 Annual Report documenting developments during 2022, including significant regression in countries such as Afghanistan, China, Cuba, Iran, Nicaragua, and Russia. USCIRF’s 2023 Annual Report provides recommendations to enhance the U.S. government’s promotion of freedom of religion or belief abroad.

What are the recommendations made by the USCIRF?

  • In its annual report on religious freedom, the USCIRF asked the U.S State Department to designate India as a “country of particular concern” on the status of religious freedom along with several other nations.
  • The U.S. Commission for International Religious Freedom (USCIRF) also recommended to Congress to raise the issue of religious freedom during U.S.-India bilateral meetings and hold hearings on it.
  • The USCIRF has been making similar recommendations to the State Department since 2020, which have not been accepted. The recommendations of USCIRF are not mandatory for the State Department.

India Specific comments in the Report

  • In its India section of the latest report, the USCIRF alleged that in 2022, religious freedom conditions in India continued to worsen.
  • Throughout the year, the Indian Government at the national, State, and local levels promoted and enforced religiously discriminatory policies, including laws targeting religious conversion, interfaith relationships, the wearing of hijabs, and cow slaughter, which negatively impact Muslims, Christians, Sikhs, Dalits, and Adivasis.
  • The national government also continued to suppress critical voices — particularly religious minorities and those advocating on their behalf — including through surveillance, harassment, demolition of property, and detention under the Unlawful Activities Prevention Act (UAPA) and by targeting nongovernmental organisations (NGOs) under the Foreign Contribution Regulation Act (FCRA).

What is the India’s reaction on this Annual Report?

  • The Ministry of External Affairs said that “These comments reflect a severe lack of understanding of India and its constitutional framework, its plurality and its democratic ethos.
  •  India has previously slammed the USCIRF for “misrepresenting” facts. India has also described it as an “organisation of particular concern.”
  • This report is considered as the biased and inaccurate comments on India by the U.S. Commission on International Religious Freedom (USCIRF).

What are the criticism against this report?

  • USCIRF is not a branch of the State Department, or the Executive Branch and its report reflects the importance of religious freedom to the American people.
  • While the report’s recommendations for designations overlap to some extent with the State Department’s lists of countries of particular concern, it is not entirely conclusive.
  • While the USCIRF is predictably attempting to revive its annual case against India for inclusion in the CPC, it does so with a weaker set of data points that are predictably filled with both omission and commission
  • It conveniently lists delays in court cases but conveniently omits the fact that the Assam High Court ordered the implementation of the NRC, not the government.
  • Furthermore, the report fails to acknowledge the cultural and economic significance of cows to Indian villagers, not to mention the constitutional ban on cow slaughter.
  • It conveniently ignores the fact that the bulldozed houses were illegal and notified, and the list of omissions goes on. Astonishingly, the USCIRF fails to mention the beheadings of Hindus and their targeted killings by jihadi Muslims in Kashmir.

What is USCIRF?

  • The United States Commission on International Religious Freedom (USCIRF) is an independent, bipartisan U.S. federal government agency created by the 1998 International Religious Freedom Act (IRFA), as amended.
  • USCIRF monitors the universal right to freedom of religion or belief (FoRB) abroad; makes policy recommendations to the President, Secretary of State, and Congress; and tracks the implementation of these recommendations.

What is Religious Freedom?

  • Inherent in religious freedom is the right to believe or not believe as one’s conscience leads, and live out one’s beliefs openly, peacefully, and without fear.  Freedom of religion or belief is an expansive right that includes the freedoms of thought, conscience, expression, association, and assembly. 

Article 25 to 28 speaks about the Freedom of Religion

Freedom of Religion in India (Art. 25)

  • Article 25 of the Constitution guarantees freedom of religion to all persons in India. It provides that all persons in India, subject to public order, morality, health, and other provisions:
    • Are equally entitled to freedom of conscience, and
    • Have the right to freely profess, practice and propagate religion.
  • It further provides that this article shall not affect any existing law and shall not prevent the state from making any law relating to:
  • Regulation or restriction of any economic, financial, political, or any secular activity associated with religious practice.
  • Providing social welfare and reform.
  • Opening of Hindu religious institutions of public character for all the classes and sections of the Hindus

Freedom to manage religious affairs (Art. 26)

Article 26 (subject to public order, morality, and health) confers a right on every religious denomination or any section of such religious denomination of:

  • Establishing and maintaining institutions for religious and charitable purposes;
  • Managing its affair with regard to religion;
  • Owing and acquiring property (movable and immovable);
  • Administering the property in accordance with the law

Freedom from taxes for promotion of any particular religion (Art. 27)

  • Article 27 of the Constitution prevents a person from being compelled to pay any taxes which are meant for the payment of the costs incurred for the promotion or maintenance of any religion or religious denomination.

Prohibition of religious instruction in the State-aided Institutions (Art. 28)

Article 28 prohibits:

  • Providing religious instructions in any educational institutions that are maintained wholly out of the state funds.
  • The above shall not apply to those educational institutions administered by the states but established under endowment or trust requiring religious instruction to be imparted in such institution.
  • Any person attending state recognized or state-funded educational institution is not required to take part in religious instruction or attend any workshop conducted in such an institution or premises of such educational institution.

5 . National Manufacturing Innovation survey

Context: A survey on the degree of innovation among manufacturing firms found that Karnataka, overall, is the most “innovative” State, followed by Dadra and Nagar Haveli, Daman and Diu (DNH&DD), Telangana, and Tamil Nadu.

About the survey

  • The Department of Science and Technology, released the “National Manufacturing Innovation Survey (NMIS) 2021-22: Summary for Policymakers”
  • “The National Manufacturing Innovation Survey (NMIS) 2021-22 was undertaken by DST as the Government of India has prioritised enhancing the competitiveness of Indian manufacturing and increasing its share in the GDP”.
  • The National Manufacturing Innovation Survey (NMIS) 2021-22 is a joint study by the Department of Science and Technology (DST) and the United Nations Industrial Development Organization (UNIDO) to evaluate the innovation performance of manufacturing firms in India.
  • The NMIS 2021-22 study was conducted as a 2-pronged survey that examined the innovation processes, outcomes, and barriers in manufacturing firms and also studied the innovation ecosystem that affects innovation outcomes in these firms. This study is a follow-up of DST’s first National Innovation Survey held in 2011.
  • The collaborative study by DST-UNIDO allowed a 360-degree approach to measuring manufacturing innovation outcomes, processes, and barriers at the firm level, mapping the contributing processes and interactions and thereby assessing the performance of states, sectors, and firm sizes.

What are the components of the report?

  • The NMIS 2021-22 survey had two specific components: the firm-level survey and the sectorial systems of innovation (SSI) survey.
  • The Firm-level survey captured data related to types of innovations and innovative measures taken by firms, including the process of innovation, access to finance, resources, and information for innovation, besides also recording the factors impacting the innovation activities in a firm. One in four firms was found to have successfully implemented an innovation in the observation period, and over 80% of these firms benefitted significantly in expanding markets and production and reducing costs.
  • The Sectorial System of Innovation survey mapped the manufacturing innovation system and its enabling role in achieving innovations in firms. The SSI study measured the interactions between stakeholders of the innovation ecosystem, relative barriers to innovation, as well as the convergence or divergence of current policy instruments in select five key manufacturing sectors important to the Indian economy – textiles; food & beverage; automotive; pharma; and ICT.
  • A total of 8,087 firms participated in the firm-level survey, while 5,488 firms and non-firms participated in the SSI survey.

What are the significance of the Survey?

  • The survey findings offer wide-ranging insights into the enabling activities and barriers to innovation by firms and has closely evaluated how states and sectors have performed with respect to the manufacturing firms’ ability to produce new products, services and business processes. The detailed analysis of the survey results also provides valuable insights on the innovation ecosystem in India.  
  • These learnings can add significant value to the Make-in-India programme objective, specifically the Production Linked Incentive (PLI) schemes, positioned to boost manufacturing in a variety of sectors, including electronics, pharmaceuticals, and automobiles, that are already yielding results.
  • The NMIS study & findings will contribute to strengthening the baselines to some of capacities and capabilities, opportunities and challenges in the manufacturing value-chains that require immediate attention

What are the findings of the report?

  • According to the report, state of Karnataka is not only the most innovative in its manufacturing sector but also has the highest number of companies in manufacturing that carry out innovations.
  • DST ranked Karnataka, followed by Telangana, Tamil Nadu, Maharashtra, and Haryana as high innovation states. Uttarakhand has the highest score among the hill states, while Dadra and Nagar Haveli and Daman and Diu has the highest score among the UTs
  • It also found that innovation in manufacturing is the lowest in the Northeastern states (excluding Assam), followed by Bihar.
  • Telangana, Karnataka, and Tamil Nadu had the highest share of innovative firms at 46.18% ,39.10% and 31.90%, respectively, with Odisha, Bihar, and Jharkhand reporting the lowest share of such firms at 12.78%, 13.47% and 13.71%, respectively.
  • According to the report, which has carried out its survey across over 8,000 firms in 28 states and 6 Union Territories (UTs), covering manufacturing and related service sector and MSMEs, found that there is a need to increase innovation in manufacturing. It stated that an increase in innovation carried out by firms has resulted in higher sales for them.
  • The report states that only 25.01 per cent of the 8,074 firms surveyed were considered innovative. “They have successfully implemented either new or significantly improved products or processes. The majority of the firms, 73.76 per cent, did not introduce product or business process innovations in this period,’’ the report says.
  • The report mentioned that “It is the large companies that can afford to invest in innovations. In the micro-firms, they simply do not have the capital to invest in innovations of either their products or their processes.

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