Topics To be covered

❖Discussed ‘peace formula’ with India, says

Ukraine Foreign Minister
❖Bonds, big money and an imperfect
democracy
❖A balancing act
❖‘GeM may offer works contracts’
Page 1 GS2 International Relations
❖ India and Ukraine engaged in discussions regarding a
'peace formula' for the conflict between Russia and
Ukraine.
❖ Ukrainian Foreign Minister Dmytro Kuleba visited India
and highlighted the need for energizing India-Ukraine
relations with new projects.
❖ Mr. Kuleba described the Russian campaign against
Ukraine as a "full-scale war" during his interactions with
Indian officials.
❖ Specific attention was given to the peace formula and its
implementation during the official interaction between
Mr. Kuleba and External Affairs Minister S. Jaishankar.
❖ India has maintained contact with both Ukraine and
Russia, along with other stakeholders, since the beginning
of the crisis.
 India – Ukraine Relations
Diplomatic Relations:

❖ Recognition: India swiftly recognized the Republic of Ukraine as a sovereign

independent country in December 1991, following the dissolution of the Soviet Union.
❖ Establishment of Missions: The Embassy of India in Kyiv was established in May 1992,
reciprocated by Ukraine opening its Mission in New Delhi in February 1993.
❖ Areas of Cooperation: India and Ukraine foster warm and friendly relations,
collaborating in diverse fields such as Education, Mutual Legal Assistance, and Outer
Space cooperation.

Defence Relations:

❖ Source of Military Technology: Since its independence, Ukraine has served as a vital
source of military technology and equipment for India.
❖ R-27 Missiles: Notably, Ukraine manufactures the R-27 air-to-air missiles utilized by the
Indian Air Force (IAF) on its SU-30MKI fighters.
❖ Mutual Supply of Weapons: Presently, India reciprocates by supplying weapons to
Ukraine, aiming to bolster defense cooperation between the two nations.
India – Ukraine Relations
Trade:

❖ Export Destination: India stands as Ukraine’s largest export destination in the Asia-Pacific region and
the fifth-largest overall.
❖ Pharmaceutical Dominance: Pharmaceuticals constitute a significant portion of Indian exports to
Ukraine, reflecting a robust trade relationship between the two countries.

Culture:

❖ Promotion of Indian Dances: Over 30 Ukrainian cultural associations/groups actively promote Indian
dances across the country.
❖ Indian Student Presence: Ukraine hosts approximately 18,000 Indian students, primarily in the field
of medicine, showcasing a vibrant educational exchange between the nations.

Challenges:

❖ Russia-Ukraine Rift: Tensions between Russia and Ukraine, notably exacerbated by the annexation of
the Crimean Peninsula in 2014, pose a potential dilemma for India.
❖ Military Equipment Overhaul: Recent objections from Russia regarding Ukraine's overhaul of
military equipment, originally built and sold by Russia, highlight brewing tensions in the region.
❖ IAF Collaboration: The Indian Air Force's ongoing collaboration with Ukraine to overhaul its fleet of
AN-32s raises concerns amid escalating tensions between Russia and Ukraine.
Page 6 GS3 Economics
❖ The fiscal deficit of the Indian government has increased significantly from about
₹11 lakh crore in January to ₹15 lakh crore by the end of February.
❖ This represents a rise from 63.6% to 86.5% of the revised target of ₹17.3 lakh crore
within 29 days.
❖ Last year, the fiscal deficit target was ₹17.55 lakh crore, and by February, it stood at
82.6% of the target, with a rise of ₹2.3 lakh crore.
❖ Factors contributing to the February deficit spurt include the transfer of around
₹2.15 lakh crore to states through tax devolution, compared to ₹1.4 lakh crore last
year, and an increase in capital expenditure from ₹47,600 crore to ₹84,400 crore.
 Important Points
Understanding Fiscal Deficit

❖ Fiscal deficit is a key economic indicator that signifies the disparity between a government's expenditure
and revenue. It reflects the financial health of a country and plays a crucial role in determining its
economic trajectory for the upcoming fiscal year. Essentially, when a country's expenditure surpasses its
revenue, it enters a state of fiscal deficit.

Types of Deficits

Revenue Deficit: This occurs when a government's total expenditure exceeds its revenue receipts. It indicates
a shortfall in meeting day-to-day expenses, often prompting the government to resort to borrowing or
imposing additional taxes to bridge the gap.

Fiscal Deficit: A fiscal deficit arises when a country spends more money than it earns. It is closely monitored
during budget deliberations as it can impact various economic factors such as growth, price stability, and
inflation. Prolonged fiscal deficits may lead to a downgrade in the country's credit rating compared to its
international peers.

Primary Deficit: This refers to the borrowing undertaken by the government to cover the interest payments
on its existing debt. A reduction in the primary deficit signifies an improvement in the fiscal health of the
country.
Impact of Fiscal Deficit on the
Economy
Economists perceive the fiscal deficit to have two primary effects on the economy:

❖ Boost to Economic Growth: Fiscal deficits are believed to stimulate a sluggish economy by injecting more money
into circulation. This provides businesses with opportunities to expand, generate revenue, and contribute to
government coffers, thereby reducing the fiscal deficit.

❖ Inflationary Pressures: Prolonged fiscal deficits indicate a government's inability to manage its growing
expenditure, potentially leading to inflationary pressures. Rising commodity prices and increased production costs
can result from excessive borrowing to offset the deficit.
Page 6 GS2 Polity ❖ The electoral bonds scheme, intended to curb the financing of
elections with black money, has been declared unconstitutional by
the Supreme Court of India.
❖ However, the scheme did not bring any significant change to the
way politics is conducted in India, as elections continue to be
financed with illegal funds.
❖ There exists a significant gap between the professed principles of
democracy and the actual practices in Indian politics.
❖ Politics in India is largely hollowed out, with elected leaders often
serving the interests of those who finance their elections rather than
representing the interests of their constituents.
❖ The gap between professed and actual practices undermines
democracy, as government increasingly serves vested interests rather
than the people.
Important Points
❖ The prevalence of a top-down model of development results
in resources being preempted by the elite, exacerbating
disparities and marginalizing vulnerable sections of society.
❖ The generation of black income through illegal means is
systematic and requires complicity from policymakers and
the executive.
❖ Weak accountability among government personnel and a
prevalent feudal mindset further weaken democracy.
❖ Elections in India often rely on factors like caste,
community, and region rather than candidates' performance,
with large sums of money being spent on vote-buying and
mobilization efforts.
❖ The electoral bonds scheme, despite its intentions, facilitated
the flow of funds to political parties for various purposes
beyond elections, including favoritism, escape from
prosecution, and investment for future benefits.
Page 11 GS3 Economics
❖ Expansion Plans for Government eMarketplace (GeM): GeM, an
online platform for public procurement, aims to extend its services
to include work contracts for construction and building projects.

❖ Transparent Monitoring Mechanism: GeM plans to introduce a

transparent monitoring mechanism to assess the progress of work
contracts bid out through the platform.

❖ Broader Reboot of GeM: The expansion of GeM's services is part

of a broader reboot of the platform, which already facilitates critical
defense procurements and services like aircraft chartering and
printing of election-related material.
Important Points
Revamp of Online Interface: GeM intends to revamp its online interface to adopt an
open Application Programming Interface (API) architecture. This will enable departments,
states, and local bodies to create customized micro-procurement portals with multi-lingual
interfaces and flexibilities for local rules.

Rapid Growth: GeM has witnessed rapid growth in procurement activities, with the total
gross merchandise value exceeding ₹4 lakh crore this year, double the amount recorded in
the previous fiscal year.

Benefits of Including Work Contracts: Including work contracts on GeM would

streamline the tendering process, allow contractors from different regions to bid for
projects, and enable online monitoring of project progress.

Efficient Payment System: GeM plans to implement milestone-linked payments released

electronically, eliminating the need for contractors to pursue officials for payments.

Post-Contract Management Features: GeM also aims to incorporate post-contract

management features to enhance efficiency and transparency in project execution.
About GeM
❖ GeM facilitates online procurement of common use Goods
& Services required by various Government Departments /
Organisations / PSUs.
❖ The initiative was launched in August 2016, by the Ministry
of Commerce and Industry, Government of India.
❖ It provides the tools of e-bidding, reverse e-auction and
demand aggregation to facilitate the government users,
achieve the best value for their money and aims to enhance
transparency, efficiency and speed in public procurement.
❖ Note: Public procurement refers to the process by which
governments and state-owned enterprises purchase goods
and services from the private sector.

❖ Public procurement amounts to 15-20% of a India’s GDP

and therefore an efficiently run public procurement process
is critical to our nation’s economy.
Prelims Bytes
❖ Indian Navy ships Sumedha and Trishul
intercepted and freed a hijacked Iranian
fishing vessel (FV), AlKambar.
❖ Two Indian Navy ships, INS Sumedha
and INS Trishul, deployed in the Arabian
Sea for maritime security operations,
intercepted Al-Kambar following inputs of
a potential piracy incident.
❖ This incident is part of a series of piracy
incidents in the Arabian Sea and off the
coast of Somalia in recent months.
Mains Questions
1."Discuss the evolving dynamics of India-Ukraine relations in the
context of defense cooperation, trade, and cultural exchanges. (150
words)

1.Analyzing the concept of fiscal deficit and its implications on the

economy, critically examine the factors contributing to India's fiscal
deficit trajectory in recent years.(150 Words)