DAILY CURRENT AFFAIRS (NOVEMBER 03, 2022)

INDIAN POLITY AND GOVERNANCE

1. PAHARI ETHNIC COMMUNITY ADDED TO SCHEDULED TRIBES LIST OF JAMMU AND KASHMIR

THE CONTEXT: National Commission for Scheduled Tribes (NCST) has cleared the way for the inclusion of the ‘Pahari ethnic group’ in the Scheduled Tribes list of the UT of Jammu and Kashmir.

THE EXPLANATION:

  • The proposal green-lit by the commission also called for the inclusion of the “Paddari tribe”, “Koli” and “Gadda Brahman” communities to be included in the ST list of J&K.
  • Currently, Jammu and Kashmir have 12 communities that have been notified as STs.

Resentment of Gujjars and Bakarwals:

  • Pir Panjal valley is also home to Gujjars and Bakarwals, and the possibility of inclusion of Paharis in the ST list has been looked at as diluting their share of benefits.

Scheduled Tribes in India

  • The term ‘Scheduled Tribes’ first appeared in the Constitution of India. Article 366 (25) defined scheduled tribes as “such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be Scheduled Tribes for the purposes of this constitution”.
  • Article 342, which is reproduced below, prescribes the procedure to be followed in the matter of specification of scheduled tribes.
  • The tribal population of the country, as per the 2011 census, is 10.43 crore, constituting 8.6% of the total population.
  • 97% live in rural areas and 10.03% in urban areas.
  • The decadal population growth of the tribal from Census 2001 to 2011 has been 23.66% against the 17.69% of the entire population.
  • The sex ratio for the overall population is 940 females per 1000 males and that of Scheduled Tribes is 990 females per thousand males.

What is the Process of Inclusion in the ST List?

  • The process to include tribes in the ST list begins with a recommendation from the respective State governments, which is then sent to the Tribal Affairs Ministry, which reviews and sends them to the Registrar General of India for approval.
  • This is followed by the National Commission for Scheduled Tribes’ approval before the list is sent to the Cabinet for a final decision.

What will be the Benefits of Inclusion in the ST List?

  • The move will enable members of the communities newly listed in the revised list of Scheduled Tribes to derive benefits meant for STs under the existing schemes of the government.
  • Some of the major benefits include post-matric scholarship, overseas scholarship, and national fellowship, besides education, concessional loans from the National Scheduled Tribes Finance and Development Corporation, and hostels for students.
  • In addition, they will also be entitled to the benefits of reservation in services and admission to educational institutions as per government policy.

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

2. SHRINKAGE OF RHINO HORNS DUE TO THE IMPACT OF HUNTING: STUDY

THE CONTEXT: According to a study, published in the latest edition of People and Nature by the British Ecological Society, the horns of rhinoceroses may have become smaller over time from the impact of hunting.

THE EXPLANATION:

  • The horns of rhinoceroses may have become smaller over time due to the impact of hunting, according to a recent study which used an interesting research approach—analysing artwork and photographs of the animal spanning more than five centuries.
  • Rhinos have long been hunted for their horns, which are highly valued in some cultures. The five surviving rhino species are still threatened by habitat loss and hunting. The study found that the rate of decline in horn length was highest in the critically endangered Sumatran rhino and lowest in the white rhino of Africa, which is the most commonly found species both in the wild and in captivity.
  • This observation follows patterns seen in other animals, such as tusk size in elephants and horn length in wild sheep, which have been driven down by directional selection due to trophy hunting.

VALUE ADDITION:

The Greater One-horned Rhinoceros:

  • The greater one-horned rhino (or “Indian rhino”) is the largest of the rhino species.
  • It is identified by a single black horn and a grey-brown hide with skin folds.
  • It is one of the five species of Rhinos.

The other four species are:

  1. White rhino: It is native to northern and southern Africa
  2. Black rhino: It is native to eastern and southern Africa
  3. Javan rhino: It is also known as Sunda rhino or lesser one-horned rhino
  4. Sumatran rhino: Critically Endangered species of rhino

Habitat:

  • Greater one-horned rhinos are grazers. When not grazing on land, they like to immerse themselves in water, where they also graze on aquatic plants.
  • This species of rhino is commonly found in Nepal, Bhutan, Pakistan and in Assam, India.

Protection Status:

  • IUCN Red List: Vulnerable
  • CITES: Appendix I
  • Wildlife Protection Act, 1972: Schedule I

3. THE FIRST ‘THE INTERNATIONAL DAY FOR BIOSPHERE RESERVES’

THE CONTEXT: Following the decision of the 41st session of the General Conference, November 3 is the International Day for Biosphere Reserves. The year 2022 will also see the end of the celebration of the 50th anniversary of the MAB Programme.

THE EXPLANATION:

  • The purpose of the International Day for Biosphere Reserves (November 3) is to provide, on an annual basis, a wake-up call on the sustainable development approach to modern life and the leading and exemplary role that the World Network of Biosphere Reserves (WNBR) can play in this regard.
  • Encompassing all types of ecosystems and sometimes urban areas, the WNBR has a global presence, comprising 724 sites, 21 of which are transboundary sites, in 131 countries. More than 260 million people have their home in a biosphere reserve. Altogether, these sites protect about 5% of the earth’s surface, or more than 7 million km², an expanse roughly equal to the size of Australia. Every year, an increasing number of sites join the WNBR, and more and more countries will ultimately pursue the objectives and goals of the MAB Programme.
  • The Man and the Biosphere (MAB) Programme, launched in 1971, is UNESCO’s oldest intergovernmental scientific programme and it is celebrating its 50th anniversary in 2021 and 2022. The MAB Programme and the biosphere reserve model have, over the past 50 years, become an international example of sustainable territorial development and highlight UNESCO’s and the MAB’s commitment to the global biodiversity agenda and the Sustainable Development Goals.

VALUE ADDITION:

World Network of Biosphere Reserves (WNBR):

  • The World Network of Biosphere Reserves of the MAB Programme consists of a dynamic and interactive network of sites of excellence.
  • It fosters the harmonious integration of people and nature for sustainable development through participatory dialogue; knowledge sharing; poverty reduction and human well-being improvements; respect for cultural values and society’s ability to cope with change – thus contributing to the 2030 Agenda and the Sustainable Development Goals (SDGs).
  • Accordingly, the Network is one of the main international tools to develop and implement sustainable development approaches in a wide array of contexts.

The World Network of Biosphere Reserves promotes North-South and South-South collaboration and represents a unique tool for international co-operation through sharing knowledge, exchanging experiences, building capacity and promoting best practices.

List Of Biosphere Reserves In India (Part of MAB):

  1. Nilgiri, Tamil Nadu-Kerala (First to be Included)
  2. Gulf of Mannar, Tamil Nadu
  3. Sundarban, West Bengal
  4. Nanda Devi, Uttrakhand
  5. Nokrek, Meghalaya
  6. Pachmarhi, Madhya Pradesh
  7. Similipal, Odisha
  8. Achanakmar-Amarkantak, Madhya Pradesh-Chhattisgarh
  9. Great Nicobar, Andaman & Nicobar Island
  10. Agasthyamala, Karnataka-Tamil Nadu-Kerala
  11. Khangchendzonga, Sikkim
  12. Panna, Madhya Pradesh

ECONOMIC DEVELOPMENTS

4. ONE NATION, ONE ITR FORM? HOW WILL CBDT’S NEW PROPOSAL HELP TAXPAYERS?

THE CONTEXT: The Central Board of Direct Taxes (CBDT) has proposed a single income tax return (ITR) form for all taxpayers. A draft form has been released, to which all stakeholders can provide inputs up to December 15, 2022.

THE EXPLANATION:

How many kinds of ITR forms are there now?

There are seven kinds of ITR forms, which are used by different categories of taxpayers. They are as follows:

  • ITR Form 1, called ‘Sahaj’, is for small and medium taxpayers. Sahaj forms can be filed by individuals who have an income up to Rs 50 lakh, with earnings from salary, one house property/ other sources (interest etc).
  • ITR-2 is filed by people with income from residential property.
  • ITR-3 is intended for people who have income as profits from business/ profession
  • ITR-4 (Sugam) is, like ITR-1 (Sahaj), a simple forms, and can be filed by individuals, Hindu Undivided Families (HUFs) and firms with total income up to Rs 50 lakh from business and profession.
  • ITR-5 and 6 are for limited liability partnerships (LLPs) and businesses respectively.
  • ITR-7 is filed by trusts and non-profit organisations.

What is the change that has been proposed?

  • According to the proposal, all taxpayers, barring trusts and non-profit organisations (ITR-7), will be able to use a common ITR form, which will include a separate head for disclosure of income from virtual digital assets.
  • “According to CBDT, the proposed draft ITR proposes to introduce a common ITR by merging all the existing returns of income except ITR-7”.

According to the CBDT, the proposed ITR form would be customised for taxpayers with applicable schedules, based on certain questions answered by them. Once the common ITR form is notified, after taking into account the inputs received from stakeholders, the online utility will be released by the Income Tax department. “In such a utility, a customised ITR containing only the applicable questions and schedules will be available to the taxpayer”.

SCIENCE AND TECHNOLOGY

5. THE CREEPY SMILE OF SUN

THE CONTEXT: Recently, NASA shared an image of the sun seemingly ‘smiling’. Captured by the NASA Solar Dynamics Observatory, the image has dark patches on the sun’s surface resembling eyes and a smile.

THE EXPLANATION:

NASA explained that the patches are called coronal holes, which can be seen in ultraviolet light but are typically invisible to our eyes.

What are coronal holes?

  • According to NASA, these are regions on the sun’s surface from where fast solar wind gushes out into space. Because they contain little solar material, they have lower temperatures and thus appear much darker than their surroundings. Here, the magnetic field is open to interplanetary space, sending solar material out in a high-speed stream of solar wind. Coronal holes can last between a few weeks to months.
  • The holes are not a unique phenomenon, appearing throughout the sun’s approximately 11-year solar cycle. They can last much longer during solar minimum – a period of time when activity on the Sun is substantially diminished.

SIGNIFICANCE:

  • “These ‘coronal holes’ are important to understanding the space environment around the earth through which our technology and astronauts travel,” NASA had said in 2016 when coronal holes covering “six-eight per cent of the total solar surface” were spotted.
  • While it is unclear what causes coronal holes, they correlate to areas on the sun where magnetic fields soar up and away, without looping back down to the surface as they do elsewhere. “Scientists study these fast solar wind streams because they sometimes interact with earth’s magnetic field, creating what’s called a geomagnetic storm, which can expose satellites to radiation and interfere with communications signals”.

6. PLANET KILLER ASTEROID

THE CONTEXT: A team of astronomers has discovered three massive near-Earth asteroids hiding in the glare of the Sun. Of these, one called 2022 AP7 is believed to be the largest planet killer-sized asteroid to be spotted in nearly a decade and is “potentially hazardous” to Earth.

THE EXPLANATION:

  • According to a study published in The Astronomical Journal, the three asteroids are from a group that is found within the orbits of Earth and Venus. However, they are tough to spot as the brightness of the Sun shields them from telescope observations.

How did they spot the asteroids?

  • The astronomers conducted their observation during twilight hours — a brief but favourable 10-minute window every night. They used a Dark Energy Camera at the Cerro Tololo Inter-American Observatory in Chile.
  • With the high-tech camera, a programme of the US’ National Science Foundation’s (NSF’s) NOIRLAB, they were able to capture large swathes of the sky with immense sensitivity. The camera was originally built to carry out a Dark Energy Survey, conducted by the US Department of Energy and the NSF between 2013 and 2019.
  • Apart from dealing with the glare of the Sun, the astronomers also had to tackle another major issue — since the asteroids are close to the horizon, they are blurred and distorted by the Earth’s atmosphere.

Is there an immediate threat to Earth?

  • According to reports, at present, the asteroid only crosses the Earth’s orbit while it is on the opposite side of the Sun i.e., when the Sun comes between the Earth and the asteroid. This will continue for several centuries as it takes the asteroid about five years to orbit the sun.
  • An asteroid of this size could have a “devastating impact”, Sheppard said, as the Earth’s atmosphere would be inundated with dust and pollutants for years, preventing sunlight from entering.
  • Over time, its orbital movement will slowly evolve to be more in sync with Earth’s. As of now, however, Sheppard has said it will “stay well away from Earth”.

VALUE ADDITION:

Asteroids

  • Asteroids are small, airless rocky worlds revolving around the sun that are too small to be called planets. They are also known as planetoids or minor planets.
  • In total, the mass of all the asteroids is less than that of Earth’s moon. But despite their size, asteroids can be dangerous. Many have hit Earth in the past, and more will crash into our planet in the future.

What are the Differences between an Asteroid, Comet, Meteoroid, Meteor and Meteorite?

  • Asteroid : A relatively small, inactive, rocky body orbiting the Sun.
  • Comet: A relatively small, at times active, object whose ices can vaporize in sunlight forming an atmosphere (coma) of dust and gas and, sometimes, a tail of dust and/or gas.
  • Meteoroid: A small particle from a comet or asteroid orbiting the Sun.
  • Meteor: The light phenomena which results when a meteoroid enters the Earth’s atmosphere and vaporizes; a shooting star.
  • Meteorite: A meteoroid that survives its passage through the Earth’s atmosphere and lands upon the Earth’s surface.

THE PRELIMS PRACTICE QUESTION

QUESTION OF THE DAY

Q1. Which of the following are critically endangered species of Rhino according to IUCN Red Data book?

  1. Greater one-horned Rhino
  2. Sumatran Rhino
  3. Javan Rhino

Select the correct answer using the code given below:

a) 1 and 2 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2 and 3

Answer: B

Explanation:

Five species of Rhino in the world:

  1. Sumatran Rhino: The Sumatran rhino has been on earth longer than any other living mammal. IUCN status- Critically endangered.
  2. Javan Rhino: The Javan rhino is possibly the rarest large mammal on earth. IUCN status- Critically endangered.
  3. Black Rhino: Black rhinos are the smaller of the two African species.
  4. Greater one-horned Rhino: Greater one-horned rhinos are semi-aquatic and often take up residence in swamps, forests and riversides. IUCN status- Vulnerable
  5. White Rhino: The White rhino is also known as the Square-lipped rhino. There are two subspecies of White rhino:
  • Southern: Ceratotherium simum simum approximately between 19,666 and 21,085 individuals exist. The Southern white rhino can be found mostly in South Africa, with smaller translocated populations found in Kenya, Namibia and Zimbabwe.
  • Northern: Ceratotherium simum cottoni (only two animals remain). The Northern White Rhino is critically endangered. The sub-species was declared extinct in the wild in 2008, and there are only two individuals remaining in Ol Pejeta Conservancy in Kenya.



TOPIC : RISING FOREX RESERVES- A BOON OR BANE?

THE CONTEXT: As per the data released by the RBI on 4th June 2021, India’s foreign exchange reserves have crossed the milestone $600 billion marks for the first time in the country’s history. As per the data released by the RBI on 16th July, 2021 forex reserves rose to a record $612.73 billion with which India becomes the 4th largest forex reserves holder globally. A rise in forex is mainly due to a rise in Foreign Currency Assets (FCA).

MORE ON THE NEWS:

  • Currently, China has the largest reserves followed by Japan and Switzerland. India has overtaken Russia to become the fourth largest country with foreign exchange reserves.
    1. China – $3,349 Billion
    2. Japan – $1,376 Billion
    3. Switzerland – $1,074 Billion
    4. India – $612.73 Billion
    5. Russia – $597.40 Billion
  • To increase the foreign exchange reserves, the Government of India has taken many initiatives like Aatma-Nirbhar Bharat. The government also has started schemes like Duty Exemption Scheme, Remission of Duty or Taxes on Export Product (RoDTEP), Nirvik (Niryat Rin Vikas Yojana) scheme, etc. Apart from these schemes, India is one of the top countries that attracted the highest amount of Foreign Direct Investment.
  • Although our foreign exchange reserves have been increasing continuously for the last three decades, the growth has become faster than ever in the last 18 months.
  • Compared with 1991, when India faced a situation of acute shortage of foreign exchange, such that our reserves were not enough to pay for imports of even seven days, today the situation is such that our foreign exchange reserves are enough to pay for 18 months of imports.

ALL YOU NEED TO KNOW: FOREX RESERVES

WHAT ARE FOREX RESERVES?

  • Forex reserves are external assets in the form of gold, SDRs, and foreign currency assets accumulated by India and controlled by the Reserve Bank of India.
  • Reserve Bank of India Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves.
  • RBI accumulates foreign currency reserves by purchasing from authorized dealers in open market operations.

THE COMPONENTS OF FOREX RESERVES

  • The Forex reserves of India consist of four categories:
    1. Foreign Currency Assets(capital inflows to the capital markets, FDI, and external commercial borrowings)
    2. Gold
    3. Special Drawing Rights (SDRs of IMF)
    4. Reserve Tranche Position

SIGNIFICANCE OF FOREX RESERVES

  • The IMF says official foreign exchange reserves are held in support of a range of objectives like supporting and maintaining confidence in the policies for monetary and exchange rate management including the capacity to intervene in support of the national or union currency.
  • It will also limit external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is curtailed.

WHAT DOES THE RBI DO WITH THE FOREX RESERVES?

  • The RBI functions as the custodian and manager of forex reserves and operates within the overall policy framework agreed upon with the government.
  • The RBI allocates the dollars for specific purposes. For example, under the Liberalized Remittances Scheme, individuals are allowed to remit up to $250,000 every year.
  • The RBI uses its forex kitty for the orderly movement of the rupee. It sells the dollar when the rupee weakens and buys the dollar when the rupee strengthens.

WHERE ARE INDIA’S FOREX RESERVES KEPT?

  • The RBI Act, 1934 provides the overarching legal framework for the deployment of reserves in different foreign currency assets and gold within the broad parameters of currencies, instruments, issuers, and counterparties.
  • As much as 64 percent of the foreign currency reserves are held in the securities like Treasury bills of foreign countries, mainly the US.
  • 28 percent is deposited in foreign central banks and 7.4 percent is also deposited in commercial banks abroad.

IS THERE A COST INVOLVED IN MAINTAINING FOREX RESERVES?

  • The return on India’s forex reserves kept in foreign central banks and commercial banks is negligible.
  • While the RBI has not divulged the return on forex investment, analysts say it could be around one percent, or even less than that, considering the fall in interest rates in the US and Eurozone.

WHY IS FOREX RISING DESPITE THE SLOWDOWN IN THE ECONOMY?

RISE IN FPI AND FII

  • The major reason for the rise in FOREX reserves is the rise in investment in foreign portfolio investors in Indian stocks and foreign direct investments (FDIs). For example, last year- Reliance Industries subsidiary -Jio Platforms – has witnessed a series of foreign investments totaling 97,000 crores.

CRASH IN OIL PRICES

  • The fall in crude oil prices has brought down the oil import bill, saving the foreign exchange.

FALL IN OVERSEAS REMITTANCES AND FOREIGN TRAVEL

  • Overseas remittances and foreign travels have fallen steeply, down 61 percent in April from $12.87 billion.

WHAT WE CAN DO WITH EXCESS RESERVES

ACQUIRING STAKES IN DEVELOPED COUNTRY FIRMS

  • While keeping the forex reserves in the treasury is costly for the country with low interests in it, countries need to use the funds to acquire stakes in firms of developed countries to increase profit.

SETTING UP FUNDS

  • The recent surge in reserves is mostly a result of speculative capital inflows on the capital account. Rather than ‘sovereign wealth’, these inflows are ‘liabilities’ and are therefore vulnerable to sudden outflows by foreign investors amid an increase in domestic or global risk aversion. These funds such as Stabilisation funds or Pension funds can help the economy during outflow.

USING AS A TOOL OF INTERNATIONAL POLITICS

  • The US bonds have been used by China for a long time as a tool for achieving its interests concerning the US. India too needs to learn and use it for favorable terms in trade and solving challenges such as Pakistan.

GROWTH AND DEVELOPMENT OF NATIONS

  • The forex reserves can be utilized for reaching the SDG goals given that an adequate amount of funds are maintained for any unforeseen circumstance.

ISSUES RELATED TO RISING FOREX RESERVES

  • According to the former RBI Governor YV Reddy, there are some differences among academics on the direct as well as indirect costs and benefits of the level of forex reserves, from the point of view of macro-economic policy, financial stability, and fiscal or quasi-fiscal impact.
  • China’s foreign exchange reserves increased mostly thanks to a balance of payments (BOP) surplus of China with most of their trading partners. To some extent, they also grew due to foreign direct investment. Whereas in India’s case, the increases in India’s foreign exchange reserves are mainly due to foreign direct investment (FDI) and foreign portfolio/ institutional investment (FPI). Generally, our balance of payments remains in huge deficit.
  • Economists agree that the best option as a source of foreign exchange is the balance of payments surplus.
  • Even if the foreign exchange is obtained through investment in the stock markets, then also it has many side effects like-
  • It causes volatility not only in the stock markets but also in the exchange rate. Its result can be ominous for the country.
  • The country has to pay a heavy price for this inflow of foreign exchange as these investors take back the huge profits to their countries of origin even as the value of their assets keeps increasing.
  • While foreign institutional investors have invested a total of $281 billion in India to date, the total valuation of their assets has reached $607 billion as of March 31, 2021. They can sell their $607 billion worth of shares and bonds and go back at any moment and all our foreign exchange reserves can run out in a jiffy. That is why portfolio investment is also called ‘hot money”.
  • Foreign investment, foreign loans are taken by private companies, and remittances by Indians are all important for increasing foreign exchange reserves. But not all these sources have a similar effect on the reserves.
  • Remittances by Indians normally do not have any repayment obligations and generally, all these amounts remain in India forever.
  • Foreign investors (Both foreign direct investors or portfolio investors) repatriate huge amounts of money. In the last ten years (2010-11 to 2019-20), these foreign investors have withdrawn $390 billion, in the form of dividends, royalties, technical fees, interest, and salaries and this amount has been increasing year after year.
  • There is no stability in portfolio investment. It is not possible to estimate how much foreign exchange the portfolio investors will bring in and when they will withdraw. Their volatility affects the exchange rate, causing huge losses. Not only this, these investors cause huge volatility in the stock markets as well.

SHOULD FOREX RESERVES FINANCE STIMULUS TO THE INDIAN ECONOMY?

YES 

  • The sufficiency of forex reserves is sometimes measured by how many months’ worth of imports a country can afford. While forex reserves amounting to import cover of six months is considered sufficient by the RBI, India import cover is enough to sustain imports up to 18 months.
  • In case of a credit shock, India can mitigate any balance of payment crisis, as there are sufficient arrangements for foreign exchange reserves in the form of a credit line from the IMF and many Central bank liquidity swap agreements with countries like Japan.
  • As there is a lack of considerable space both on the monetary and fiscal front to support economic growth, part of the country’s forex reserves can be used for stimulating the economy.
  • Economist has theorized that holding high forex reserves are unnecessary. Not using them for mega-projects (like financing infrastructure projects) are lost opportunities.

NO

  • In the future oil prices might increase further. With the rise of 1$ per barrel of crude oil prices, India has to additionally pay nearly Rs 15000 crore. Given this, India should deter using forex reserves for providing economic stimulus.
  • The rise in current forex reserves is due to the massive inflow of FIIs. However, FIIs by their nature are investments based on speculation. Therefore, the current surge in forex reserves should not be treated as permanent nature.
  • High forex reserves also help India to maintain its global rating, especially in the context of falling GDP growth rate. The depletion in forex reserves may harm these ratings, which in turn may reduce foreign investment inflows into India.
  • RBI has been fundamentally using India’s foreign exchange to ensure rupee stability. Given the fluctuation in the Indian rupee vis-a-vis the dollar, the Indian rupee has become one of Asia’s worst currencies. Thus, RBI will need enough forex reserves to maintain the stability of the Indian Rupee.
  • An economic stimulus is ineffective without structural reforms. Even using forex reserves would not resolve all the challenges facing Indian infrastructure development.

WAY FORWARD:

  • Over-reliance on forex reserves to provide economic stimulus may prove to be dangerous for the economic stability of the Indian economy.
  • Foreign investors are repatriating huge profits from India while the country’s returns from these foreign exchange reserves are very negligible. Avenues will have to be found for gainful use of foreign exchange reserves beyond a limit.
  • Since there’s continuously the fear that these outside organization speculators may take off with their “hot money” anytime. In this respect, an arrangement of a ‘lock-in period’ can be forced on them. On the off chance that they still need to require their cashback, at that point an arrangement can too be made to levy tax on them. This charge was recommended by an economist named James Tobin; subsequently, it is additionally called ‘Tobin Tax’.

CONCLUSION: Over-reliance on forex reserves is problematic; not using them is a lost opportunity. If the government intends to use forex reserves as an emergency fund, it should ensure that they do not shrink just when they are most needed. Apart from it, there is a need for separate attention to carry out structural reforms that can pull out the Indian economy from a persistent slowdown.