The President of the United Nations General Assembly recently highlighted the issue of commodity dependence.

About Commodity dependence

• A country is dependent on the export of commodities (or “commodity-dependent”) when its merchandise exports are heavily concentrated on primary commodities (like crude oil, coal, iron ore, etc.). 
• The source of commodity dependence can be linked to a country’s persistent or structural conditions, such as its resource endowment and factor composition, institutional framework, geographic situation, history among other factors.

Issues with Commodity dependence

• Exposes countries to shocks: Dependence can leave an economy highly exposed to shocks, such as the COVID-19 pandemic, and price swings in international markets.
• Linked to lower human well-being: In 2021, 29 out of the 32 countries with low HDI scores were commodity dependent. 
• More vulnerable to climate change: More than 60% of the world’s small island developing states – on the front lines of the climate crisis – are commodity-dependent.
• Profound social consequences: E.g., mining industry-dependent countries engage in trade but most of the benefits go to capital owners rather than the workers.

Way Ahead

• Developing a Diversification Strategy, promoting education and Skill Development, garnering support for commodity-dependent countries and encouraging strong national political will.

RBI set eligibility criteria for Small Finance Banks (SFB) to transit into universal banking under on-tap licensing. 

• Universal banks (UBs) are banks that offer a wide range of financial services, beyond commercial banking and investment banking, such as insurance. 
  • Until now, SFBs were allowed to primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections
• On-tap licensing: It was introduced in 2016 to allow banks to apply for banking licenses with the RBI throughout the year. 
  • Prior to this, banking licenses were granted upon invitation of applications by RBI to prospective players.

Eligibility for SFBs to transitioning into UBs

• Net Worth: SFBs must have a minimum net worth of Rs 1,000 crore. 
• Status: SFBs must be scheduled banks with a satisfactory track record of performance for a minimum of 5 years.
• Financial Health:
  • Profitability: Should have net profits in the last two Financial Years.
  • Asset Quality: Gross non-performing assets (G-NPA) and net NPA (N-NPA) must be less than or equal to 3% and 1%, respectively, over the last two FYs. 
• Stock Listing: Shares must be listed on a recognized stock exchange.
• Promoter Requirements: No addition of new promoters or changes to existing promoters are permitted during the transition.
  • No changes are allowed to the promoter shareholding dilution plan previously approved by the RBI.
• Preference: SFBs with a diversified loan portfolio will be preferred. 

Report, released by Global Trade Research Initiative (GTRI), assesses impact of international disruptions and domestic hurdles and reviews market shifts in trade performances.

• Report also highlights varied impact of Free Trade Agreements (FTAs) on India’s global trade dynamics.

About FTAs

• FTAs are treaties between two or more countries to reduce or eliminate certain barriers to trade and investment, and to facilitate stronger trade and commercial ties between participating countries.
• It can cover areas such as trade in goods, services, intellectual property rights (IPRs), etc.

Key findings of the report on India’s FTAs

• India's merchandise imports from FTA partners grew by ~38% whereas exports grew by just ~14.5%.
• FTA with Asean (signed in 2010), saw growth in imports at a faster pace than exports.
• Overall, India ranked 17^th globally in merchandise exports whereas it is ranked 8^th in merchandise imports.

Issues with India’s FTAs

• Lower FTA utilisation: India’s FTA utilization remains low at around 25%, as against 70-80% for developed countries.
• Higher compliance cost: Due to complex certification processes and rules of origin.
• Non-tariff barriers (NTBs): Persistence of stringent standards, sanitary and phytosanitary measures and technical barriers by partner countries like Japan.
• Limited awareness: Inadequate promotion and outreach activities about of FTA benefits among exporters.

The Centre has extended AEO status to the gem and jewellery sector.

About AEO program

• It is under the aegis of the World Customs Organization (WCO) SAFE Framework.
• Aims to enhance international supply chain security and facilitate movement of legitimate goods.
• It is in sync with the commitments made under the World Trade Organisation trade facilitation agreement.
• It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principle stakeholders of the international supply chain.

State Bank of India has become the first trading-cum-clearing member at IIBX.

• Bullion refers to physical gold and silver of high purity that is often kept in form of bars, ingots, or coins.

About IIBX

• Established at GIFT International Financial Services Centre (IFSC), Gandhinagar, Gujarat in 2022.
• Regulated by IFSC Authority (IFSCA).
• Promoted by India’s leading market infrastructure institutions like National Stock Exchange, Multi Commodity Exchange of India etc.
• Benefits
  • Gateway to import bullion into India.
  • Provide world class bullion exchange ecosystem to promote bullion trading, investment in bullion financial products and vaulting facilities in IFSCs.

Recently, India VIX surged above the critical threshold of 21, indicating heightened volatility in India’s stock market.

About India VIX

• It is a measure of the amount by which an underlying Index is expected to fluctuate, in the near term (30 calendar days).
  • Higher the India VIX values, higher the expected volatility and vice-versa.
• It is based on index option prices of NIFTY.
• Uses computation methodology of Chicago Board of Options Exchange (CBOE).
  • CBOE was first to introduce a volatility index for US markets in 1993.

CBDT Notifies CII For Financial Year 2024- 25 for calculating long-term capital gains (LTCG). 

• LTCG is the profit arising from the sale of a capital asset (i.e., Stocks, Bonds, jewellery, buildings, etc.)  held for a duration of 12 to 36 months (based on the asset type)

About CII

• CII is notified under the Income-tax Act (1961) every year. 
• It is used by taxpayers to compute gains arising out of sale of capital assets after adjusting for inflation.

This Economic theory was popularised by British economist John Maynard Keynes.

About PoT

• A rise in individuals’ savings, by reducing the amount of money spent on goods and services, can cause a fall in overall savings and investments.
• It  believes that higher savings is bad for the wider economy and an economy can grow only by boosting consumer spending.

Criticisms of PoT

• It ignores the potential for saved income to be lent out by banks.
• It also ignores the potential of inflation and deflation in an economy.

The United Nations (UN) appointed panel on Critical Energy Transition Minerals. 

• The Panel aims to bring all stakeholders across the entire critical energy transition minerals value chain to develop a set of global common and voluntary principles for energy transition.
  • It will address issues relating to equity, transparency, investment, sustainability and human rights.
• The panel comprises Government and intergovernmental actors including the European Union, African Union, Australia, Indonesia, Colombia, India, etc.
• Critical Energy Transition Minerals are essential components in many of today’s rapidly growing clean energy technologies, from wind turbines and solar panels to electric vehicles.
  •  E.g. copper, lithium, nickel, cobalt etc.

Challenges/Issues related to Critical Energy Transition Minerals

• Geographical concentration: Few countries have major reserves; it may exacerbate geopolitical tensions and supply chain disruption. 
  • E.g. Lithium triangle- consists of Argentina, Chile and Bolivia
• Unsustainable Mining and processing: It can lead to water pollution, destruction of ecosystems, etc., and human rights issues (such as child labour). 
• Growing Demand: Mismatch in demand and supply. 
  • According to the International Energy Agency, demand of critical mineral is set to grow by three and a half times by 2030.

The Department of Consumer Affairs has issued a warning against drip pricing.

About Drip Pricing

• It is a pricing technique in which firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process.
• It is used as a tactic to attract customers into initiating the purchasing process
• It has been identified as a dark pattern under Guidelines for Prevention and Regulation of Dark Patterns, 2023. 
  • A Dark pattern refers to practices adopted by online platforms that mislead people into paying for items or services they did not intend to do originally.

Travel & Tourism Development Index (TTDI), 2024 was released by the World Economic Forum (WEF).

About TTDI, 2024

• TTDI measures the set of factors and policies that enable the sustainable and resilient development of Travel and Tourism.
• It is the second edition of an index that evolved from the Travel & Tourism Competitiveness Index (TTCI) series.
  • TTCI is flagship index of WEF that has been in production since 2007.
• India's rank improved to 39 in 2024 from 54 in 2021.

The Airports Authority of India (AAI) has started work on ISHAN (Indian Single Sky Harmonized Air Traffic Management) Initiative. 

About ISHAN

• It involves Combining India's four Flight Information Regions (FIRs) into a single system overseen from Nagpur.
  • Currently, Indian airspace is divided into 4 FIRs i.e.  Mumbai, Kolkata, Delhi, Chennai, and a sub-FIR in Guwahati, each managed separately.
• Unifying these FIRs under a single authority in Nagpur is projected to improve efficiency, safety, and seamlessness in air traffic operations.