20 September 2024 : PIB Summary For UPSC

1. Shri Piyush Goyal chairs inter-ministerial meeting to address rising freight cost and shipping delays

(Source – https://pib.gov.in/PressReleseDetail.aspx?PRID=2056726 )

Topic: GS3 – Indian Economy – Infrastructure – Ports

Context

The Indian government, addressing exporters’ concerns, held an inter-ministerial meeting led by Shri Piyush Goyal to resolve rising freight costs, container shortages, and port congestion. Key decisions aim to improve container availability, expedite cargo clearances, and reduce shipping costs.

Rising Freight Costs

• Geopolitical Factors: Recent global tensions, such as the Red Sea Crisis, Houthi operations, and ongoing wars, have led to a significant increase in shipping costs. Disruptions in international trade have resulted in price hikes for freight services.
• Increased Operational Costs: Shipping companies have increased their fees due to higher fuel costs, longer turnaround times, and limited availability of containers.
• Impact on Exporters: Exporters are facing increased costs of transporting goods, leading to reduced profit margins and making Indian goods less competitive in the global market.

Shipping Delays

• Port Congestion: Major Indian ports, including Jawaharlal Nehru Port Authority (JNPA), are experiencing congestion due to an increase in cargo volume and limited handling capacity.
• Turnaround Time: Delays in clearing and processing cargo have further led to extended shipping timelines. In some cases, cargo is stuck for weeks, causing delays in international deliveries.
• Simultaneous Container Scanning: To address delays, simultaneous scanning of containers has been introduced at JNPA, aiming to speed up the customs clearance process.

Shortage & Non-Availability of Containers

• Global Supply Chain Disruption: The pandemic, coupled with geopolitical tensions, has disrupted the global supply of shipping containers. India, like other countries, is facing a shortage of empty containers.
• Container Storage Initiatives: To ease this problem, the Container Corporation of India (CONCOR) has allowed storage of empty containers for 90 days free of cost at JNPA, helping to ease supply issues and reduce congestion at ports.

Congestion at Ports

• Increased Cargo Volumes: Indian ports are handling a higher volume of cargo due to increased demand for exports, leading to bottlenecks and congestion.
• Port Capacity Enhancement: The Ministry of Ports, Shipping, and Waterways has increased port capacities by 2.3 million Twenty-foot Equivalent Units (TEUs), and steps are being taken to minimise traffic delays around key ports like JNPA.
• Additional Measures: The Shipping Corporation of India is acquiring five new container ships and enhancing cargo handling capacity to address congestion and shortages.

Practice Question:  Discuss the impact of rising freight costs, container shortages, and port congestion on India’s export sector. Evaluate the steps taken by the Indian government to address these challenges and their potential effectiveness.  (250 Words /15 marks)

2. FATF   lauds India’s efforts to implement measures to tackle illicit finance including money laundering and terror funding

(Source – https://pib.gov.in/PressReleseDetail.aspx?PRID=2056773 )

Topic: GS3 – Internal Security – Role of external state and non-state actors.

Context

India has been placed in the highest rating category, “regular follow-up,” by the Financial Action Task Force (FATF), recognizing its strong efforts in combating money laundering and terrorist financing. This highlights India’s robust compliance with international financial security standards.

Observations by FATF:

• AML/CFT Framework: India has implemented a robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) framework that is effective and compliant with FATF Recommendations.
• Financial Intelligence Usage: Indian authorities make efficient use of financial intelligence, both domestically and internationally, to combat illicit financial flows.
• Financial Inclusion: Significant strides in financial inclusion, more than doubling bank account holders, promote financial transparency and enhance AML/CFT efforts.
• International Cooperation: India has shown positive results in international cooperation, particularly in asset recovery and applying targeted financial sanctions for proliferation financing.
• Risk Understanding: There is a comprehensive understanding of money laundering, terrorism, and proliferation financing risks by Indian authorities, particularly in the financial sector, but further coordination across stakeholders is needed.
• Complex Financial Investigations: India has demonstrated the ability to conduct intricate financial investigations linked to terrorist financing, though it needs to focus on concluding prosecutions and sanctioning terrorist financiers.
• Outreach to Non-Profit Sector: India needs to strengthen its outreach to non-profit organisations to mitigate the risk of terrorist financing in line with a risk-based approach.
• Politically Exposed Persons (PEPs): Financial institutions have enhanced measures to monitor PEPs, though coverage of domestic PEPs and supervision of the non-financial sector need improvement.
• Sector-Specific Improvements: India is urged to improve restrictions on cash transactions in the precious metals and stones sector, considering its significance.

Financial Action Task Force (FATF)

Established: 1989, by G7 countries to combat money laundering, expanded later to include terrorist financing and other illicit financial activities. Headquarters: Paris, France. Objective: To set global standards for Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) and monitor compliance. Members: 40 members, including countries and regional organisations like the EU FATF Recommendations: 40 recommendations that serve as a framework for countries to strengthen financial systems against money laundering and terror financing. Black & Grey Lists: FATF issues blacklists and grey lists for countries with insufficient AML/CFT measures.

PYQ: Analyse the complexity and intensity of terrorism, its causes, linkages and obnoxious nexus. Also suggest measures required to be taken to eradicate the menace of terrorism. (250 words/15m) (UPSC CSE (M) GS-3 2021)

Practice Question:  Discuss the impact of India’s efforts in combating money laundering and terrorist financing as recognized by the Financial Action Task Force (FATF). What are the challenges India still faces, and what measures can be adopted to address them? (250 Words /15 marks)