Category: Economics

A full-day event called “National Conclave on Technical Textiles – Protech” was recently hosted by the Ministry of Textiles in collaboration with the Northern India Textile Research Association (NITRA) and the Indian Technical Textile Association (ITTA).

Technical Textiles

• Technical textiles are textile items that are produced more for their usability and functionality than for their aesthetic appeal.
• Agrotech, Oekotech, Buildtech, Meditech, Geotech, Clothtech, Mobiltech, Hometech, Sportstech, Indutech, Protech, and Packtech are the twelve major categories into which these items can be divided.

Technical Textiles Mission in India

• To capitalise on the phenomenal growth rate of the industry, the Ministry of Textiles launched NTTM in order to raise the degree of technical textile penetration in India.
• The annual average growth rate (AAGR) of the Indian technical textiles sector is 12%, which is three times the global average of 4%.
• The mission’s objective is to establish India as a world leader in technical textiles.

Components of the Mission

• Research, Innovation and Development
• Promotion and Market Development
• Export Promotion
• Education, Training, Skill Development

Implementation: The four-year NTTM implementation phase, which runs from FY 2020–21 to FY 2023–24, has been approved. The mission will cost INR 1480 Cr in total.

Goal

The Mission aims to increase the domestic market for technology textiles to $40–50 billion by 2024, with an average annual growth rate of 15-20%.

Today’s context makes the application of technology to financial inclusion relevant because it paves the way for inclusive growth by assisting the downtrodden segments of society.

Importance;

• Financial inclusion is defined as the provision of practical and reasonably priced financial goods and services, such as payments, transactions, savings, credit, and insurance, to both individuals and businesses in a sustainable and morally upstanding manner.
• Social mobility is made possible through financial inclusion, which is crucial since it promotes it. These tools support communities and empower people, which can benefit in fostering economic progress.
• Additional financial services: Account holders are also more likely to use credit and insurance to start and grow businesses, put money into their own or their children’s health or education, manage risk, and bounce back from financial setbacks, all of which can improve their overall quality of life.

Challenges;

• Inactive bank accounts: Almost 80% of Indians have a bank account, yet nearly 18% (81.38 million) of those accounts are inactive and have “zero balances.” Additionally, up to 38% of accounts are inactive, meaning there haven’t been any deposits or withdrawals in the last year, showing that many Indians are still not completely incorporated into the formal banking system.
• Poor communications infrastructure: India still lacks a reliable broadband internet connection and a strong communications infrastructure. Although technology has advanced at ever-increasing rates, the gap has grown wider due to the country as a whole’s incapacity to adopt new breakthroughs.
• More than 310 million people in India require a basic cell phone, making it difficult for the country to connect its residents to the internet. Due to this, account holders are unable to get important information, such as specifics on account transactions.
• Increasing reliance on local agents: Financial institutions must also be more eager to convey signals for small-scale transactions. These elements have caused a growing reliance for local agents.

Correlation between Technology, Digital division and Financial inclusion

• The digital divide between urban and rural areas, which predominate in India, is clear. Only 14.9 percent of rural homes have internet connectivity, compared to 42 percent of families in metropolitan areas, and only 4.4 rural families have computers, compared to 14.4 percent of urban households. In contrast to metropolitan areas, where internet connectivity is available to 37 percent of adults, just 13 percent of adults live in rural areas.
• Rural areas with high interest rates: Particularly, such gaps are linked to many financial aspects, starting with small-time lenders charging high interest rates, which are typical in rural areas. Problems with credit access still exist. More rural locations have not yet been reached by government programmes that would effectively increase credit availability.
• Lack of knowledge about online loans: People discover that there should be more possibilities for online loans from reputable financial institutions or digital lending. Additionally, due to complex banking procedures like requiring identity documents and keeping a certain balance in an account, rural clients need assistance accessing potential financial services.
• Limited access to computer and communication technologies is another factor contributing to the digital divide. Fewer people in India can afford the equipment required to access digital information.
• A single national strategy is challenging since people in different parts of India speak distinct mother tongues, adding to the difficulty of delivering diverse content. Additionally, there are too many state-to-state differences in the proportion of people who have access to computers or who are proficient enough to use the internet. Therefore, a general strategy cannot be used across the board.
• Financial illiteracy prevents Indian citizens from maximizing technological interventions. Adult illiteracy rates are about 266 million. Financial inclusion has been significantly hampered by the lack of financial literacy, and many financial cybercrimes have increased in tandem with rural residents’ growing mistrust of technology. As a result, adoption rates have been lower than expected while cybercrime rates have increased by 6% in the same year.
• Data privacy issues: Because Personal Identifiable Information (PII) guidelines are not strictly enforced and followed, a lot of data is easily accessible to many different parties, which raises serious data privacy issues.

@the-end

Every aspect of life is impacted by the digital divide, including literacy, wellbeing, mobility, security, and access to financial services, among other things. Therefore, the emphasis must shift from straightforward economic growth to equitable and inclusive growth for a rapidly developing country like India.

To enable export-import transactions based on the rupee, the RBI has authorised Russian banks to open exclusive Vostro accounts.

Why?

The majority of Russian banks are seeking for alternatives after being locked out of SWIFT, the messaging platform used to handle and authenticate international payments.

India and a number of other nations also desire a solution so that trade may resume.

Currently, direct rupee-ruble commerce is being investigated between India and Russia.

In this case, Nostro and Vostro might be useful.

About Vostro Account

• An account that a correspondent bank manages on another bank’s behalf is known as a Vostro account.
• A vostro account implies that it is “your account” because the Latin word vostro means “your”
• An illustration of one of these accounts is the HSBC Vostro account held by SBI in India.
• The banks are in a principal-agent relationship and functioning in a fiduciary capacity.
• A financial middleman in the transactions they are a part of is the correspondent foreign bank.
• On behalf of the domestic bank, the foreign bank serves as an agent, carrying out tasks like carrying out wire transfers, performing foreign exchange, enabling deposits, enabling withdrawals, and speeding up international trade.
• It is most frequently used to settle foreign exchanges or international trade.
• As per the instructions given by the RBI in India, no interest will be paid on the kept vostro account.
• Only when an overdraft facility has been properly approved may it be used.

Nostro and Loro Accounts

Vostro and Nostro accounts are frequently mistaken for one another.

Although the discussion is essentially about the same story, the viewpoint from which it is seen important.

A vostro account represents the viewpoint of the correspondent foreign bank, whereas a nostro account represents the viewpoint of the domestic bank.

While nostro accounts are kept in foreign currency, vostro accounts are kept in the local currency.

In contrast to nostro and vostro, which involve bilateral correspondence, a loro account is a current account that is maintained by one domestic bank for another domestic bank in the form of a third party account.

Uses

• Small domestic banks can use this account to economically access the resources and services of a bigger overseas bank.
• allows one to provide a customer with international banking solutions without having to create a bank location there.
• It cuts down on the time needed for fund transfers.
• Statement reconciliation can be improved by using closely watched nostro accounts.

In contrast to the minimum consensus forecast of 3.5%, the SBI has estimated a reduced current account deficit for this fiscal year of 3%, citing increased software exports, remittances, and a likely $5 billion increase in foreign exchange reserves from swap arrangements.

Current Account Transactions

It’s crucial to comprehend the current account transactions in order to fully comprehend the current account deficit.

Transactions involving current accounts demand foreign currency.

transactions that follow, together with which component they are a part of:

Component 1 : Payments connection with Foreign trade – Import & Export

Component 2 : Interest on loans to other countries and Net income from investments in other countries

Component 3 : Expenses associated with foreign travel, education, and medical care for parents, spouses, and children as well as remittances for the living costs of parents, spouses, and children who are living abroad.

SBI’s take

• The largest influence on CAD comes from oil imports, which account for up to 30% of the nation’s import bills.
• The CAD is affected by every $10 increase in petroleum prices by a factor of 40 bps, whereas the same increase in fuel inflation is 50 bps and causes a 23 bps drop in growth.
• In the June quarter, robust remittances and software exports reduced CAD by 60 basis points (bps).
• As swap transactions reverse, the currency reserves, which have fallen from $642 billion in September 2021 to approximately $531 billion last week, are anticipated to increase by $5 billion.

India just took a giant step toward the future of mass transit as the Prime Minister officially opened the most current Vande Bharat train. A new age of quicker, safer, and more comfortable rail travel for passengers is anticipated with the introduction of the new Vande Bharat Express trains, also known as Vande Bharat 2.0.

Vande Bharat 2.0?

Despite sharing the same name, the third train in the Vande Bharat series has been given the moniker “Vande Bharat 2.0” due to some improvements over its forerunners.

Notable upgrades in 2.0

• Greater speed and lighter weight: This train accelerates to its top speed of 160 km/h in 129 seconds, almost 16 seconds quicker than its predecessor. This is due to the fact that this train needs to travel about a mile less to reach its top speed because it weighs 392 tonnes, which is 38 tonnes less than the previous train.

• Riding Index Has Been Improved: It now has a riding index (lower the better) of 3.26 at 180 km/h, down from 3.87 previously. Its riding index is 3.26 at a standard speed of 115 km/h, which is higher than the preceding vehicle’s 3.62 at the same pace. Riding index, to put it simply, is a method of measuring how secure and at ease a passenger is when riding a train.

• Automated anti-collision system “Kavach” installed: The new train has the automatic anti-collision system Kavach installed, a feature that the earlier trains lacked.

• enhanced safety attributes: Disaster lights are equipped with coaches, and their battery backup has grown from the previous one’s hour. There are now eight flatform-side cameras on the outside, up from four.

• Passenger-guard communication system: Coaches have a system for passenger-guard communication that includes an automatic voice recording feature.

• Making it more resistant to flooding: The new trainset is higher and is now protected from floods up to 650 mm, an increase from 400 mm.

• Better network performance and higher-quality audiovisual streaming: Another recent addition is a centralised coach monitoring system, which uses CCTV cameras and an internal network that can handle data at a rate of one gigabyte per second.

• Air purification system: The internal air is filtered using a photo catalytic ultra violet air purification system with a UV lamp that, according to the Railways, renders 99 percent of germs inactive. Earlier trainsets lacked this technology.

• Onboard infotainment: It also has a wifi-enabled onboard infotainment system and the LCD display in each coach is now 32 inches, up from the 24-inch screen.

@the-end

The Vande Bharat train would give passengers a ‘aviation-like travelling experience’, but it would be even quieter than an aeroplane, as attested by the Prime Minister, according to a senior railway official, who proudly described its ‘superior’ qualities. But in order to accomplish the goal, these superior features require superior and resilient infrastructure.

The final framework for India’s sovereign green bonds has been approved by the union minister of finance and corporate affairs.

Key features;

• It outlines the responsibilities of the Indian government as an issuer of green bonds.
• All sovereign green bonds that the Indian government issues are covered by the Framework.
• The performance of the eligible projects is not a requirement for the payment of principal or interest on the issuances made under this Framework.
• Core components as outlined by ICMA (International Capital Market Association)
• Utilization of funds
• Evaluation and selection of projects
• Management of funds

Categories of the Green Bonds

The designation of a project as “green” is based on the following ideas:

• Promotes climate resilience and/or adaptation;
• Promotes energy efficiency in resource usage;
• Lowers carbon emissions and greenhouse gas emissions;
• Values and enhances natural ecosystems and biodiversity, especially in accordance with SDG principles

Based on above, there are nine categories of these bonds.

1. Renewable energy
2. Energy efficiency
3. Clean transportation
4. Climate change adaptation
5. Sustainable water and waste management
6. Pollution prevention and control
7. Green buildings
8. Sustainable management of living natural resources and land use
9. Terrestrial and aquatic biodiversity conservation

Constitution of the Green Finance Working Committee (GFWC)

The Chief Economic Adviser and representatives from the implementing agencies serve as the leadership of the GFWC, which was established to supervise and approve important decisions regarding the issuing of sovereign green bonds.

Commitments and Stated Policies: India

Taking into account its need for development, India adopted an ambitious Nationally Determined Contribution (NDC) under the Paris Agreement.

Panchamrit of India’s climate action;

• Reach 500GW of non-fossil energy capacity by 2030.
• Source 50% of its energy needs from renewable sources by 2030.
• Cut projected carbon emissions by 1 billion tonnes from now to 2030.
• Reduce the economy’s carbon intensity by 45% from 2005 levels by 2030.
• Achieving net zero emissions by 2070 as the goal.

The inclusion of “Shahtoosh” guard hair, which is sourced from endangered Tibetan antelopes, has led to many of the export consignments of Pashmina shawl traders being flagged for the purpose of “obsolete testing techniques,” they claim.

Shahtoosh, on the other hand, is the fine undercoat fibre obtained from the Tibetan Antelope, known locally as ‘Chiru’, a species living mainly in the northern parts of the Changthang Plateau in Tibet.  

About Pashmina

• A premium variety of Cashmere wool called Pashmina. In Kashmir, it was initially weaved into textiles.
• The wool is produced by a variety of cashmere goat species, including the Changthangi or Kashmir Pashmina goat, which is native to sections of Himachal Pradesh, the Ladakh region, and the Changthang Plateau in Tibet.
• In Kashmir and Nepal, this fabric is frequently used to make shawls known as Shahmina; these shawls are hand spun and weaved from the incredibly fine cashmere fibre.
• The Changpa people are regarded as traditional pashmina wool producers.
• An Indian Standard for the identification, marking, and labelling of Pashmina items with GI tags has been published by the Bureau of Indian Standards (BIS) to attest to the textile’s purity.

Pashmina Goat

• A unique breed of goat native to the high-altitude areas of Ladakh in Jammu and Kashmir is the Changthangi or Pashmina goat.
• They are raised for the extremely fine cashmere wool that was previously made into pashmina. The hand-spun textiles were originally woven in Kashmir.
• The Kashmir Pashmina wool, the world’s finest cashmere with a fibre thickness ranging from 12 to 15 microns, comes from the Changthangi goat, which also has a thick undercoat that is known for its wariness.
• In the Changthang region of Greater Ladakh, nomadic communities known as the Changpa typically domesticate and rear these goats.
• The Changthang, Leh, and Ladakh regions’ economies have been revived by the Changthangi goats.