What’s in today’s article?

• Introduction
• What is the Middle-Income Trap?
• Lessons from Other Economies
• Challenges for India
• Strategies for India’s Transition
• Conclusion

Introduction

• The World Development Report 2024, published by the World Bank, highlights the challenge of the middle-income trap, where countries experience a slowdown in growth as they reach higher income levels.
• The report identifies the 3i approach—investment, infusion, and innovation—as essential strategies for countries aiming to transition from middle-income to high-income status.
• This approach requires dynamic state policies, particularly relevant to India's ambitions for sustainable economic growth.

What is the Middle-Income Trap?

• The middle-income trap refers to the stagnation of per capita income growth when economies reach around 11% of the U.S. per capita income.
• This phenomenon hinders further progress toward high-income status.
• Global Scenario: Over the last 34 years, only 34 middle-income economies have successfully transitioned to high-income levels, emphasizing the difficulty of escaping this trap.

Lessons from Other Economies

• South Korea:
  • State-Driven Growth: South Korea's escape from the middle-income trap was characterized by a strong state intervention model. The government actively directed private sector activities, focusing on export-driven growth.
  • Supportive Policies: Successful companies were rewarded with access to new technologies, while underperforming firms were allowed to fail. This approach ensured that state resources were efficiently allocated.
  • Role of Chaebols: South Korean business conglomerates, or chaebols, became global leaders in innovation due to their emphasis on investment and technology adoption.
• Chile:
  • Natural Resource Focus: Chile’s growth was facilitated through targeted state support for natural resource sectors, such as the salmon industry.
  • Export Strategy: The Chilean government ensured the success of specific export sectors through intervention and support, helping the country to climb up the income ladder.
• European Union’s Role:
  • Most European countries that escaped the middle-income trap benefited from EU membership, which facilitated free movement of capital and labor—advantages that are not available to non-European nations.

Challenges for India

• Global Economic Headwinds:
  • The global economic environment has changed significantly since the time of South Korea’s rapid growth. Today, world export growth has slowed, and protectionism is on the rise, making it difficult for countries like India to access foreign markets.
  • India also faces the challenge of premature deindustrialization, where the contribution of manufacturing to GDP declines at lower levels of income than seen historically.
• Stagnation in the Manufacturing Sector:
  • Despite India's push for industrial growth, the manufacturing sector has struggled to become a robust engine of economic expansion.
  • This has been exacerbated by increased reliance on agricultural employment following the pandemic, reversing earlier progress in structural transformation.
• Income Disparity and Low Wage Growth:
  • While India’s GDP growth has been estimated at around 7% recently, this growth is not reflected in real wage increases.
  • Data from the Periodic Labour Force Survey (PLFS) shows that nominal wage growth has been around 5-7%, barely keeping up with inflation.
  • Low wage growth means that consumption demand remains weak, which could hinder India’s ability to escape the middle-income trap.
• Challenges of Democracy:
  • Unlike South Korea and Chile, whose export-driven growth models were facilitated by authoritarian regimes, India operates within a democratic framework.
  • This makes it crucial to balance state intervention with democratic principles, such as labor rights and freedom of expression.

Strategies for India’s Transition

• Leveraging Investment and Innovation:
  • India needs to focus on enhancing domestic investment and fostering an environment conducive to innovation.
  • This includes supporting startups, tech companies, and research and development.
• Encouraging Responsible Business Practices:
  • For India to follow a path similar to South Korea’s, it is vital to ensure that state support is based on merit and performance rather than political connections.
  • This will ensure efficient allocation of resources and avoid crony capitalism.
• Strengthening the Service Sector:
  • With manufacturing facing challenges, India’s service sector has the potential to be a key driver of growth.
  • It is essential to enhance the productivity and global competitiveness of IT services, healthcare, education, and financial services.
• Inclusive Economic Growth:
  • Addressing income inequality and ensuring that workers share in economic growth is critical.
  • Policies aimed at improving social safety nets and educational opportunities can empower more people to participate in India’s growth story.

Conclusion

• India’s journey towards escaping the middle-income trap is fraught with challenges, from global economic shifts to domestic structural issues.
• However, by adopting a balanced approach that combines state intervention, investment in innovation, and adherence to democratic values, India can chart a path towards sustainable high-income status.
• Examples of countries like South Korea and Chile offer valuable lessons, but India must tailor these lessons to suit its unique economic and political context.

Q1. When was the World Bank established?

The World Bank was established in 1944 to help rebuild Europe and Japan after World War II. Its official name was the International Bank for Reconstruction and Development (IBRD). When it first began operations in 1946, it had 38 members. Today, most of the countries in the world are members.

Q2. What is the meaning of a Developing Country?

According to the UN, a developing country is a country with a relatively low standard of living, undeveloped industrial base, and moderate to low Human Development Index (HDI). This index is a comparative measure of poverty, literacy, education, life expectancy, and other factors for countries worldwide.

Source: Can India escape middle-income trap?

What’s in today’s article?

• Why in News?
• What is ASEAN?
• India’s relationship with ASEAN
• Key highlights of the 21st ASEAN - India Summit
• Joint Statement on Advancing Digital Transformation: Key Highlights

Why in News?

The 21st ASEAN-India Summit, held on 10 October 2024 in Vientiane, Lao PDR, marked a decade of India’s Act East Policy. PM Modi participated for the 11th time, joining ASEAN leaders to assess the ASEAN-India Comprehensive Strategic Partnership and to shape future cooperation.

What is ASEAN?

• About
  • The Association of Southeast Asian Nations (ASEAN) is a regional grouping that aims to promote economic and security cooperation among its ten members: 
    • Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
      • Timor-Leste joined the ASEAN in 2022 as an Observer. ASEAN has agreed in principle to accept Timor-Leste as its 11th member.
  • ASEAN countries have a total population of 662 million people and a combined gross domestic product (GDP) of $3.2 trillion as of 2022.
  • ASEAN has an anthem, a flag and biannual summits (twice a year) with a rotating chairmanship.
• Establishment: 
  • It was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the founding fathers of ASEAN: Indonesia, Malaysia, Philippines, Singapore and Thailand. 
• Aim
  • The motto of ASEAN is “One Vision, One Identity, One Community”.
• Secretariat
  • ASEAN Secretariat is located in Jakarta, Indonesia.

India’s relationship with ASEAN

• ASEAN and Act East Policy
  • ASEAN is central to India’s Act East policy, which focuses on the extended neighbourhood in the Asia-Pacific region.
• India among the dialogue partners
  • India is part of the ASEAN Plus Six grouping, which includes China, Japan, South Korea, New Zealand and Australia as well.
• Trade and Investment
  • In 2010, India-ASEAN FTA in goods were signed. FTA in services were signed in 2014. 
  • India and ASEAN are important trading partners, with ASEAN accounting for 11% of India's global trade. 
  • In 2023-24, bilateral trade between the two sides was $122.67 billion.
    • India has a trade deficit with ASEAN, exporting $41.21 billion worth of merchandise to ASEAN states in 2023-24, while importing $79.67 billion.
• Institutional cooperation
  • India – ASEAN summit-level partnership in 2002;
    • The year 2022 marked 30 years of ASEAN-India relations and it was designated as ASEAN-India Friendship Year.
  • Ties were elevated to a strategic partnership in 2012 and Comprehensive Strategic Partnership in 2022.
  • India and ASEAN have strengthened defence cooperation by the ASEAN Defense Ministers’ Meeting Plus (ADMM+).
  • The first ASEAN-India Maritime Exercise (AIME)was held in 2023.
• Promoting Tourism and People-to-People Ties
  • 2025 designated as ASEAN-India Year of Tourism to boost socio-economic development.
  • Implementation of ASEAN-India Tourism Cooperation Work Plan 2023-2027.

Key highlights of the 21st ASEAN - India Summit

• PM Modi’s Address: Focus on ASEAN Unity and Economic Growth
  • PM Modi reiterated India’s unwavering support for ASEAN Unity, ASEAN Centrality, and the ASEAN Outlook on the Indo-Pacific. 
  • Calling the 21st century the "Asian century," he stressed the importance of India-ASEAN ties in shaping Asia's future. 
  • Key achievements in the last decade include:
    • Doubling of India-ASEAN trade to over USD 130 billion
    • Direct flight connectivity with seven ASEAN nations
    • Fin-tech collaboration and restoration of shared cultural heritage
    • Scholarships for ASEAN youth at Nalanda University
  • PM also highlighted the need for a timely review of the ASEAN-India Free Trade Agreement (AITIGA) to unlock greater economic potential.
• 10-Point Plan for Enhanced Connectivity and Resilience
  • In line with the Chair’s theme of "Enhancing Connectivity and Resilience," PM Modi unveiled a 10-point plan, including:
    • Celebrating 2025 as ASEAN-India Year of Tourism with USD 5 million for joint activities
    • Marking a decade of the Act East Policy with people-centric activities like Youth Summits and Start-up Festivals
    • Organizing the ASEAN-India Women Scientists Conclave
    • Doubling scholarships at Nalanda University and adding new ones at Indian agricultural universities
    • Reviewing the ASEAN-India Trade in Goods Agreement (AITIGA) by 2025
    • Allocating USD 5 million to enhance Disaster Resilience
    • Initiating a Health Ministers’ track to build health resilience
    • Establishing an ASEAN-India Cyber Policy Dialogue
    • Hosting a workshop on Green Hydrogen
    • Launching the ‘Plant a Tree for Mother’ campaign to promote climate resilience
• Future Plan of Action (2026-2030) 
  • Leaders agreed on the creation of a new ASEAN-India Plan of Action (2026-2030) to further the partnership. 
• Two joint statements were adopted
  • Joint Statement on Strengthening ASEAN-India Comprehensive Strategic Partnership for Peace, Stability, and Prosperity in the Indo-Pacific
  • Joint Statement on Advancing Digital Transformation, recognizing India’s role in digital public infrastructure

Joint Statement on Advancing Digital Transformation: Key Highlights

• Strengthening ASEAN-India Partnership
  • The ASEAN member states and India reaffirmed their commitment to deepening the ASEAN-India Comprehensive Strategic Partnership, with a focus on advancing digital transformation and inclusive growth.
• Importance of Digital Public Infrastructure (DPI)
  • India’s contributions to ASEAN Digital Masterplan 2025 and Centers of Excellence in Software Development were appreciated.
• Financial Technology (FinTech) Collaboration
  • The partnership seeks to expand collaboration on FinTech innovations, especially through cross-border payment systems and digital financial solutions.
• Cybersecurity Cooperation
  • Both parties supported the establishment of the ASEAN-India Cyber Policy Dialogue to bolster the resilience and security of digital infrastructure.
• Artificial Intelligence (AI) Collaboration
  • The Joint Statement called for collaboration in AI to develop skills, infrastructure, risk management frameworks, and responsible policies. 
  • Focus areas include upskilling and reskilling the workforce and promoting trustworthy AI systems.
• Capacity Building and Knowledge Sharing
  • Capacity building and knowledge-sharing initiatives will be fostered through regular exchanges, workshops, and training programs under the ASEAN-India Digital Ministers’ Meeting to support digital transformation efforts.
• Sustainable Financing and Investment
  • India and ASEAN agreed to explore innovative financing mechanisms, including public-private partnerships and international funding to support digital initiatives. 
  • The ASEAN-India Fund for Digital Future will initially fund these activities.

Q.1. What was the key focus of PM Modi’s address at the 21st ASEAN-India Summit? 

PM Modi emphasized ASEAN unity, economic growth, and enhancing digital collaboration, with a 10-point plan focused on connectivity, resilience, and future cooperation.

Q.2. How does the ASEAN-India partnership contribute to digital transformation? 

The partnership supports collaboration in financial technology, cybersecurity, and AI, along with capacity building and knowledge sharing, aiming for inclusive digital growth in both regions.

Source: PM Modi unveils 10-point plan to strengthen India-ASEAN relations |MEA | Ministry of External Affairs

What’s in today’s article?

• Why in News?
• About the Antarctic Peninsula
• Key Findings of the Study on Antarctic Peninsula
• What are the Impacts of Increased Vegetation in the Antarctic Peninsula?
• What are the Implications of Rising Temperatures in the Antarctic Peninsula?
• Recommendations to Preserve the Integrity of the Antarctica

Why in News?

• The Antarctic Peninsula, a mountainous region pointing toward South America, is experiencing significant changes due to climate change.
• A recent study has shown that plant cover in this area has increased dramatically over the past few decades, raising concerns about the future of this unique ecosystem.

About the Antarctic Peninsula:

• The Antarctic Peninsula is the northernmost and most accessible part of the Antarctica continent.
• The peninsula’s Antarctic tundra features mountainous landscapes, glaciers and ice shelfs.
• The west coast of the peninsula, the area most commonly explored, has the mildest weather in all of Antarctica, where the warmest month is January with an average temperature of 1 to 2 °C.

Key Findings of the Study on Antarctic Peninsula:

• Rapid increase in vegetation:
  • Research published in Nature Geoscience reveals that vegetation, mainly consisting of mosses and lichen, has expanded significantly.
  • In 1986, plant life covered less than 1 square kilometer, but by 2021, it had grown to nearly 12 square kilometers.
  • This is a remarkable fourteen-fold increase over just 35 years, with more than 30% of this growth occurring between 2016 and 2021.
• Climate change:
  • The Antarctic Peninsula is warming at an alarming rate - five times faster than the global average. The average temperature has risen nearly 3 degrees Celsius since 1950.
  • This rapid warming is linked to extreme weather events, including record-breaking heatwaves.
  • For example, in July 2023, some areas experienced temperatures around 10 degrees Celsius higher than usual.

What are the Impacts of Increased Vegetation?

• Soil and ecosystem changes:
  • Mosses can help create soil in an otherwise barren landscape.
  • This soil formation could make the region more hospitable for invasive species, which may threaten local flora and fauna.
  • The changing landscape is a clear sign of human-induced climate change, even in such a remote area.
• Alteration in Albedo effect:
  • More vegetation could also alter the Antarctic Peninsula's albedo effect, which refers to the ability of surfaces to reflect sunlight.
  • This change can create a feedback loop, further accelerating warming and impacting global climate patterns.

What are the Implications of Rising Temperatures?

• Ice loss:
  • A study from 2019 indicated that the continent has lost 280% more ice mass in the 2000s and 2010s compared to the previous decades.
  • The 2024 sea ice extent was reported to be the second smallest on record, only slightly more than the record low set in 2023.
  • As greenhouse gas emissions continue to rise, the situation is expected to worsen, leading to more vegetation growth and additional ice loss.
• Rising global sea levels: The loss of ice in Antarctica contributes to rising global sea levels, which poses risks for coastal communities worldwide.

Recommendations to Preserve the Integrity of the Antarctica:

• The changes occurring in the Antarctic Peninsula serve as a stark reminder of the impacts of climate change.
• As temperatures rise and vegetation increases, the delicate balance of this unique ecosystem is at risk.
• The consequences of these transformations could have far-reaching effects, not only for Antarctica but for the entire planet.
• Addressing climate change is crucial to mitigate these impacts and preserve the integrity of this remote wilderness.

Q.1. What is the tundra biome?

The tundra is a biome characterised by cold temperatures, short growing seasons, and little to no trees. The tundra biome covers about 10% of Earth's surface. There are three types of tundra: Arctic tundra, alpine tundra, and Antarctic tundra.

Q.2. What is the significance of the Albedo effect?

The albedo effect is a key concept in climate science that explains how the Earth's surface reflects sunlight and how this affects the planet's temperature. It's important because it helps scientists calculate the Earth's energy budget and predict climate change.

Source: As green patch spreads in Antarctica, here’s what is worrying scientists | DTE

What’s in today’s article?

• Why in News?
• What is Bureau of Indian Standards (BIS)? 
• What is National Agriculture Code (NAC)?
• What are Standardized Agriculture Demonstration Farms (SADFs)?

Why in News?

The Bureau of Indian Standards (BIS) has begun the process of formulating a National Agriculture Code (NAC), on the lines of the existing National Building Code and National Electrical Code.

What is Bureau of Indian Standards (BIS)? 

• About
  • BIS is the national standards body of India that sets standards for products and services, and certifies products. 
  • The BIS is a statutory organization that operates under the Ministry of Consumer Affairs, Food and Public Distribution.
    • It was established under the Bureau of Indian Standards Act, 2016.
  • HQ – New Delhi
• Objectives
  • Harmonious development of the activities of standardization, marking and quality certification of goods
  • To provide thrust to standardization and quality control for growth and development of industry on one hand and to meet the needs of consumers on the other.
• Activities
  • The activities of BIS can be broadly grouped under the following heads:
    • Standards formulation - formulates Indian Standards in line with the national priorities for various sectors
    • International activities – India, through BIS, is represented at various international institutions such as International Organization for Standardization (ISO), International Electro-technical Commission (IEC) etc.
      • It is also actively involved in the Regional and Bi-lateral Co-operation Programmes pertaining to standardization, testing, certification, training etc.
      • World Trade Organisation – Technical Barriers to Trade (WTO-TBT) Matters - BIS is the National Enquiry Point for WTO -TBT.
  • Product Certification - Presence of BIS standard mark (popularly known as ISI mark) on a product indicates conformity to the relevant Indian Standard.
  • Hallmarking - Hallmarking of Gold Jewellery was started by BIS in April 2000 to provide third party assurance to consumers on the purity of gold jewellery or its fineness.
  • Laboratory services
  • Training services - National Institute of Training for Standardisation
• Consumer Affairs and Publicity

What is National Agriculture Code (NAC)?

• Background
  • The BIS sets standards for products across economic sectors, including agricultural machinery and inputs like fertilizers and pesticides. 
  • However, significant areas like agricultural practices, micro-irrigation, and water use remain uncovered by BIS standards. 
  • Policymakers have long felt the need for a comprehensive standards framework, which is now being developed by the BIS. 
• About
  • The National Agricultural Code (NAC) will cover the entire agriculture cycle and provide guidance for future standardization. 
  • It will be divided into two parts: 
    • general principles for all crops and 
    • crop-specific standards for paddy, wheat, oilseeds, and pulses. 
  • The NAC aims to guide farmers, agricultural universities, and officials.
• Objective of NAC
  • To develop a national code for agricultural practices that considers agroclimatic zones, crop types, socio-economic diversity, and the entire agrifood value chain.
  • To promote a quality culture in Indian agriculture by providing a reference for policymakers, agricultural departments, and regulators to incorporate NAC provisions into their schemes, policies, or regulations.
  • To serve as a comprehensive guide for farmers for informed decision-making in agricultural practices.
  • To integrate relevant Indian Standards with agricultural recommendations.
  • To address broader aspects such as SMART farming, sustainability, traceability, and documentation.
  • To support capacity-building programs organized by agricultural extension services and civil society organizations.
• Coverage under NAC
  • NAC will extend beyond agriculture machinery standards to encompass all agricultural processes and post-harvest operations, including crop selection, land preparation, sowing, irrigation, soil and plant health management, harvesting, processing, and record-keeping. 
  • It will also set standards for input management like the use of fertilizers, pesticides, and weedicides, as well as for crop storage and traceability. 
  • Importantly, the NAC will address emerging areas such as natural and organic farming, and the use of Internet-of-Things (IoT) in agriculture.
• Proposed timeline
  • The BIS has developed a strategy to standardize agricultural practices by forming working panels, consisting of university professors and R&D organizations, to draft the National Agricultural Code (NAC) across 12-14 identified areas. 
  • The tentative deadline for completing the NAC is October 2025. Afterward, the BIS plans to train farmers on the NAC and its standards. 
  • Universities have been requested to organize these training programs, with the BIS offering financial assistance for their implementation.

What are Standardized Agriculture Demonstration Farms (SADFs)?

• The BIS is setting up 'Standardized Agriculture Demonstration Farms' (SADF) at select agricultural institutes to test and implement agricultural practices and technologies based on Indian Standards. 
• To develop these farms, the BIS plans to sign MoUs with 10 prominent agricultural institutes, two of which have already been signed, including one with Govind Ballabh Pant University of Agriculture and Technology (GBPUAT). 
• The BIS will provide financial assistance for the farms, which will serve as learning sites for officials, farmers, and industry representatives. 
• China has already successfully implemented similar SADFs.

Q.1. What is the National Agriculture Code (NAC) being developed by BIS? 

The NAC is a comprehensive framework designed to standardize agricultural practices across India, covering crop management, sustainability, and emerging areas like natural and organic farming.

Q.2. How will Standardized Agriculture Demonstration Farms (SADFs) help farmers? 

SADFs will serve as experimental sites to test new agricultural practices and technologies, providing a learning platform for farmers, officials, and industry professionals to adopt modern techniques.

Source: What is the National Agriculture Code, currently being formulated by Bureau of Indian Standards | Department of Consumer Affairs | Bureau of Indian Standards