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31-01-2023

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Key takeaways from IMF’s latest World Economic Outlook update

GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.


The International Monetary Fund (IMF)slightly raised its 2023 global growth forecast in its JanuaryWorld Economic Outlook (WEO) report, due to "positive surprises and greater resilience in many economies". The WEO is released twice a year in April and October, with updates in January and July.




IMF

  • The IMF is an international organization that promotes international monetary cooperation, trade and economic growth.
  • Established in 1944 at the Bretton Woods Conference.
  • Headquarters:Washington D.C.
  • India is a founding member of the IMF and has been a member since its inception.

  • Main functions:
  • To provide financial assistance to member countries facing balance of payments difficulties
  • Promote international monetary cooperation, and 
  • Provide policy advice and technical assistance to its members.
  • Governed by: A Board of Governors, with each member country having representation through a governor.
  • Board of Governors is responsible for setting the overall policies and direction of the organization.
  • Headed by: A Managing Director who is responsible for the day-to-day operations of the organization.
  • He is appointed by the Board of Governors.
  • The IMF's 24 Executive Directors, who represent the IMF's 190-member countries, play a key role in the decision-making process of the organization. 
  • Each member country is grouped together with other countries to form a constituency, with each constituency represented by an Executive Director
  • The size and composition of constituencies are reviewed periodically to ensure they reflect changes in the global economy.
  • Executive Directors serve as the main point of contact between the IMF and their constituent member countries and are responsible for representing their views in IMF discussions and decision-making processes. 
  • They also play a role in overseeing the work of the IMF staff and its departments.
  • Financial resources:Provided by its member countries, primarily through quotas that are reviewed periodically.
  • The IMF has faced criticism for its role in imposing austerity measures on countries receiving financial assistance, and for its perceived bias towards developed countries.
  • Special Drawing Rights (SDR):The IMF created a reserve asset called the SDR in 1969 to supplement its member countries' official reserves.
  • The SDR is used as a unit of account by the IMF and also serves as a potential source of funding for its member countries.
  • Voting Rights: Each member country has a certain number of votes, determined by its financial commitment to the organization, known as its quota.
  • Larger quotas generally correspond to more votes.
  • Decisions are typically made by a supermajority of 85% of total voting power, with some key decisions requiring a higher threshold.
  • The distribution of voting power in the IMF is reviewed periodically, with changes aimed at reflecting shifts in the global economy.
  • Important reports of IMF: The World Economic Outlook (WEO), Global Financial Stability Report (GFSR), Fiscal Reports on the Observance of Standards and Codes (ROSC), etc.



Key takeaways from the latest update of the Report

  • The IMF forecasted in Oct 2022 that global growth will slow from 3.4% in 2022 to 2.7% in 2023.
  • However, in Jan 2023 update, it ruled out a global recession, projecting 2.9% global growth in 2023 and a rise to 3.1% in 2024. 
  • The estimate for 2022 and the forecast for 2023 have increased by 0.2% due to "positive surprises and greater-than-expected resilience in numerous economies".
  • China, US, Russia, Germany, and Italy are some of the economies with higher 2023 GDP forecasts, but UK saw a 1% reduction in its 2023 GDP.


Global inflation has peaked but relief will be slow

  • Inflation is expected to have peaked in 2022 and will slowly fall in 2023 and 2024. 
  • 84% of countries are expected to have lower headline inflation in 2023 than 2022. 
  • Global inflation will decrease from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, still higher than pre-pandemic levels. 
  • Slowing inflation is due to monetary tightening and falling commodity prices. 
  • Advanced economies are expected to have 4.6% inflation in 2023 and emerging economies will have 8.1% inflation.


India will stay the world’s fastest growing major economy in 2023 and 2024

  • The IMF's growth outlook for India remains unchanged from Oct 2022. 
  • India's growth will decline from 6.8% in 2022 to 6.1% in 2023 and then pick up to 6.8% in 2024 with strong domestic demand despite external challenges. 
  • India will remain the fastest growing major economy in 2023 and 2024, with a growth rate higher than China's (5.4% in 2023 and 4.5% in 2024).


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Fact File


‘Green comet’ appearing close to Earth after 50,000 years: What is it and when can you see it?

A recently discovered green comet is expected to be visible, as it makes its closest approach to Earth in nearly 50,000 years, estimated to occur on February 2.

Green Comet

  • The Oort cloud, a distant region of outer space that surrounds our sun, is believed to be the origin of the recently discovered green comet.
  • The Oort cloud is thought to be a large, spherical region that is home to numerous small objects such as comets and asteroids. 
  • NASA describes it as "the most distant region of our solar system" and "the home of comets."

Why green?

  • The recently discovered green comet is green in color because of its composition and the path it moves in. 
  • Comets are frozen, rocky or gas-filled objects that are remnants of the formation of the solar system. 
  • As they get close to the sun, they heat up and emit gasesand dust that form a glowing head. 
  • The remains of dust following this burning up, from a distance, look like a trail of light to humans on Earth. 
  • The green glow on this comet is thought to come from the presence of diatomic carbon in the head of the comet, which emits green light when excited by ultraviolet rays in solar radiation.


Is the green comet rare?

  • The green comet is a type of long-period comet, which takes more than 200 years to orbit the Sun. 
  • These comets are not easily spotted because of their highly elliptical orbits. The comet will return to the Oort cloud and will not be visible again for roughly 50,000 years. 
  • While this may seem rare, it's not uncommon for comets to reappear near Earth only after many years due to their orbits.
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Fact File


Ramcharitmanas of Tulsidas, and criticism of the holy book

  • Recently, the Education Minister of Biharstated that the Ramcharitmanas promotes animosity in society and suggested that the epic poem along with the Manusmriti and Bunch of Thoughts by M. S. Golwalkar should be set on fire.

The Ramcharitmanas

  • The Ramcharitmanas was written in the 16th century in the Awadhi language primarily spoken in the districts of LucknowPrayagraj, and Ayodhya
  • It consists of seven chapters that narrate the story of Lord Ram from birth to his reign as King of Ayodhya and is based on the epic Ramayana by sage Valmiki.
  • It is considered to be a text that promotes values such as righteousness, devotion, and duty.
  • It is considered a sacred book in the Indo-Gangetic region and one of the world's most widely read holy books.
  • In the Hindi speaking region, the term "Ramayan" often refers to the Ramcharitmanas.


Goswami Tulsidas

  • Goswami Tulsidas, formerly known as Ram Bola Dubey, was a 16thcentury Indian poet and saint who was born in Rajapur, now located in Banda district near the Yamuna river
  • He wrote "TheRamcharitmanas" while residing in Varanasi, along the banks of the Ganges River. 
  • He was a poet, philosopher and a reformer who sought to bring Hinduism to the masses and make it accessible to people from all walks of life.
  • During the reign of Emperor Akbar, Tulsidas is thought to have had connections with Abdurrahim Khan-e-Khanan, the son of Akbar's commander Bairam Khan, and it is speculated that they may have exchanged poems.


Rashtrapati Bhavan’s Mughal Gardens renamed as Amrit Udyan: A brief history

  • The Mughal Gardens at the Rashtrapati Bhavan in Delhi have been renamed. 
  • These gardens were inspired by the Persian charbagh style and feature rectilinear layoutsuse of waterways, and fountains.
  • The Mughals had a fondness for gardens, as noted in Babur Nama by Babur who preferred the Persian charbagh style. 
  • Charbagh gardens symbolized an earthly paradise, where humans and nature coexisted in harmony, and were designed with rectilinear layouts divided into four equal sections.
  • The Mughal Gardens, found across their former territories, including Humanyun's Tombin Delhi and Nishat Bagh in Srinagar, were defined by their use of waterways to divide the garden into quadrants, and often featured fountains symbolizing life's cycle.


The Mughal Gardens at Rashtrapati bhavan

  • In 1911, the British shifted the Indian capital from Calcutta to Delhi and built a new city, New Delhi, as the seat of their power. 
  • Sir Edwin Lutyens was tasked with designing the Viceroy's House on Raisina Hill, which included a large garden in the rear. 
  • The design combined classical European architecturewith Indian styles and created a unique aesthetic that still defines Lutyens' Delhi.
  • Initially, the garden was to have a traditional British design, but the wife of the then Viceroy urged for a Mughal-style inspired by the book "Gardens of the Great Mughals" and visits to Mughal gardens in Lahore and Srinagar.


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