Daily Current Affairs 21 March 2024 – IAS Current Affairs

Current Affairs 21 March 2024 focuses on the Prelims-Mains perspective. Major events are :

Negative Interest Rates

Source: Business Standard
GS III: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

Overview

1. News in Brief
2. What is Negative Interest Rates?
3. Way Forward

Why in the News?

Japan’s central bank raised its benchmark interest rate Tuesday for the first time in 17 years.

• Ending a longstanding policy of negative rates meant to boost the economy.

News in Brief

• The short-term rate was raised to a range of 0 to 0.1 per cent from minus 0.1 per cent.
• It’s the first rate hike since February 2007.
  The bank had set an inflation target of 2 per cent as an indicator that Japan had finally escaped deflationary tendencies.
• But it had remained cautious about normalizing monetary policy or ending negative borrowing rates, even after data showed inflation at about that rate in recent months.

Why did Japan stop negative interest rates?
Japanese companies have announced relatively robust wage hikes for this year’s round of negotiations with trade unions. Japan had finally escaped deflationary tendencies.

What is Negative Interest Rates?

• Negative interest rates refer to a monetary policy tool used by central banks to stimulate economic activity by charging commercial banks for holding excess reserves.
• In essence, it means that instead of receiving interest on deposits, banks are charged a fee for keeping funds with the central bank.
• This unconventional policy aims to incentivize banks to lend money rather than hoard it, thereby encouraging borrowing, spending, and investment in the broader economy.

Key Facts

• Implementation: Central banks typically implement these rates by setting the interest rate on excess reserves (IOER) below zero, effectively penalizing banks for holding onto excess liquidity.
• Purpose: They are employed during periods of economic weakness or deflationary pressures when conventional monetary policy tools, such as lowering interest rates, are no longer effective.
• Effects on Banks: It can squeeze bank profits by reducing their net interest margins, potentially leading to adverse effects on lending, profitability, and financial stability.
• Impact on Consumers and Businesses: While negative interest rates can incentivize borrowing and spending, they may also discourage saving and investment, leading to concerns about long-term financial sustainability.

Examples of Negative Interest Rates

• European Central Bank (ECB): In response to the Eurozone debt crisis and sluggish economic growth, the ECB introduced negative interest rates in 2014. The policy aimed to encourage banks to lend to businesses and consumers, thereby stimulating economic activity.
• Switzerland: The Swiss National Bank (SNB) implemented this in 2015 to counter deflationary pressures and prevent the Swiss franc from appreciating too sharply. The policy aimed to support exports and economic competitiveness.
• Japan: The Bank of Japan (BOJ) introduced this in 2016 as part of its aggressive monetary stimulus efforts to combat persistent deflation and stimulate economic growth.

Way Forward

• Policy Coordination: Central banks should coordinate their monetary policies with other macroeconomic tools, such as fiscal policy, to ensure a comprehensive and balanced approach to economic stimulus.
• Communication: Central banks should communicate their policy intentions clearly to manage market expectations and minimize uncertainty.
• Evaluation: Regular assessment of the effectiveness and side effects of negative interest rate policies is crucial to adjust strategies and mitigate unintended consequences.
• Exploring Alternatives: Policymakers should explore alternative measures and policy tools to complement or replace negative interest rates, considering their potential limitations and risks.

Solar Waste in India

Source: Indian Express
GS III: Conservation, environmental pollution and degradation, environmental impact assessment

Overview

1. News in Brief
2. Findings of the Study

Why in the News?

India generated about 100 kilotonnes (kt) of solar waste in the financial year (FY) 2022-2023.

News in Brief

• The amount of solar waste produced by the country is expected to reach 600 kt by 2030.
• Enabling a Circular Economy in India’s Solar Industry – Assessing the Solar Waste Quantum, was done by the Ministry of New and Renewable Energy (MNRE).

Findings of the Study

• India’s current installed solar capacity will generate about 340 kt three times more than the present.
• Around 67 per cent of this waste is expected to be produced by five states
  1. Rajasthan
  2. Gujarat
  3. Karnataka
  4. Tamil Nadu
  5. Andhra Pradesh
• By 2050, it will increase to about 19,000 kt and 77 per cent of which will be generated from new capacities.
• Modules contain minerals such as silicon, copper, tellurium, and cadmium — which have been classified as critical minerals for the country’s economic development and national security by the Indian government.
• The 340 kt waste expected to be produced by 2030 would consist of 10 kt of silicon, 12-18 tonnes of silver, and 16 tonnes of cadmium and tellurium.

What are Solar Waste?

• Solar waste refers to the byproducts generated during the manufacturing, installation, and disposal of solar panels and other photovoltaic (PV) systems.
• While solar energy is generally considered clean and sustainable, the production and disposal processes can create environmental challenges.

How is the waste generated?

1. Manufacturing Waste: The production of solar panels involves various materials such as glass, aluminum, silicon, and rare metals like cadmium and gallium. The extraction and processing of these materials can result in waste products and emissions.
2. Installation Waste: During the installation of solar panels, packaging materials, excess wiring, and other components may contribute to waste generation.
3. End-of-Life Waste: Solar panels have a lifespan of around 25-30 years, after which they need to be decommissioned and disposed of. This can lead to significant waste management issues if not handled properly.

Examples for waste

• Manufacturing Waste
  • The manufacturing process of solar panels can generate hazardous waste, including silicon tetrachloride, which is a byproduct of polysilicon production.
  • Improper disposal of this waste can lead to environmental contamination.
• Installation Waste
  • Packaging materials such as cardboard, plastic, and foam are often used to protect solar panels during shipping and installation.
  • If not recycled or disposed of properly, these materials can contribute to pollution.
• End-of-Life Waste
  • As the number of decommissioned solar panels increases, finding sustainable methods for recycling or disposing of them becomes crucial.
  • Without proper management, old solar panels can end up in landfills, posing environmental risks.

How to deal with Solar Waste in India?

• Recycling Initiatives: Encourage the development of recycling facilities dedicated to recovering valuable materials from decommissioned solar panels.
• Regulatory Frameworks: Implement policies and regulations to ensure proper disposal and management of solar waste, including incentives for manufacturers to adopt eco-friendly practices.
• Research and Innovation: Invest in research and development to explore alternative materials and manufacturing processes that reduce the environmental footprint of solar energy systems.

Conclusion

By adopting a comprehensive approach that addresses the entire lifecycle of solar panels, we can minimize the environmental impact of solar waste and maximize the sustainability of renewable energy technologies.

Draft Bill for Gig Workers in Karnataka

Source: The Print
GS II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Overview

1. News in Brief
2. Features of the bill
3. Who are Gig Workers?

Why in the News?

Karnataka will be 2nd state after Rajasthan to have legislation for welfare of gig workers

News in Brief

• Karnataka government is about to propose the Karnataka “Gig Workers (Conditions of Service and Welfare) Bill, 2024,” a new legislation for the welfare of Gig workers.
• The statutory framework for the gig economy in India includes the Code on Social Security (2020), which aims to extend government benefits to gig workers but has not yet been implemented, and the Occupational Safety, Health and Working Conditions (OSH) Code, 2020, which provides various social security benefits such as life and disability coverage, health and maternity benefits, and old-age protection.
• Central government has included gig workers in the social security code that was passed by the Parliament in 2020, it has not been implemented as the government has yet to frame the rules.

Features of the bill

• Income security, ensuring occupational safety and a strong grievance redressal mechanism including imposing penalties on aggregators for violations are among the key provisions the Karnataka government plans to propose in new legislation for the welfare of gig workers.
• The state government is yet to finalise the Karnataka Gig Workers (Conditions of Service and Welfare) Bill, 2024, it has shared a draft with stakeholders during a meeting last week.

Who are Gig Workers?

• Gig workers are individuals who are employed on a transactional basis, either by time or task, enjoying the flexibility to choose their working hours and falling outside the traditional employer-employee relationship.
• They are typically not classified as traditional employees and do not receive benefits such as health insurance, paid leave, or retirement contributions from the companies they work for. Instead, they enjoy flexibility in their work schedules and may have the ability to choose the projects they take on.

Key Facts

• Rise of the Gig Economy: The gig economy has experienced significant growth in recent years, facilitated by advances in technology and the proliferation of digital platforms connecting workers with clients or customers.
• Diverse Occupations: Gig work spans a wide range of industries and occupations, including ride-hailing drivers, delivery couriers, freelance writers, graphic designers, and software developers, among others.
• Global Reach: Gig work is prevalent worldwide, with platforms like Uber, Lyft, Upwork, and Fiverr operating in numerous countries and regions, providing opportunities for workers across borders.
• Income Variability: While gig work offers flexibility, it can also result in income instability due to fluctuations in demand, seasonal trends, or changes in platform policies. Gig workers may experience periods of high earnings followed by periods of financial uncertainty.

Way Forward:

• Regulatory Framework: Develop and implement regulations that strike a balance between flexibility and protection for gig workers, ensuring fair wages, access to benefits, and labor rights.
• Social Safety Nets: Explore alternative models for providing benefits such as healthcare, retirement savings, and unemployment insurance to gig workers, considering their non-traditional employment status.
• Worker Empowerment: Promote initiatives that empower gig workers to advocate for their rights, access training and skill development opportunities, and build solidarity within their communities.
• Platform Accountability: Hold gig economy platforms accountable for their labor practices, data privacy policies, and algorithms that may impact workers’ rights and well-being.

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