Roadmap for Answer Writing Introduction (Brief Explanation of Inflation Targeting) Define inflation targeting as a monetary policy strategy where the central bank sets a specific inflation rate as its goal. Mention its significance in providing economic stability, boosting confidence, and aiding long-term planning ...
Model Answer India's recent proposal for a 'New Orientation for a Reformed Multilateral System (NORMS)' aims to update and reform multilateral institutions to better reflect contemporary geopolitical realities. This initiative is centered around three key pillars: peace and security, development, anRead more
Model Answer
India’s recent proposal for a ‘New Orientation for a Reformed Multilateral System (NORMS)’ aims to update and reform multilateral institutions to better reflect contemporary geopolitical realities. This initiative is centered around three key pillars: peace and security, development, and human rights, with the United Nations as the core entity.
1. Lack of Inclusivity and Representation
The structure of the United Nations Security Council (UNSC) has largely remained unchanged since its inception, resulting in inadequate representation for member states from Latin America, Africa, Asia, and Small Island Developing States. This lack of inclusivity undermines the legitimacy and effectiveness of decisions made by these institutions (Source: UN General Assembly reports).
2. Misuse of Veto Power
The veto power held by the five permanent members of the UNSC has often been criticized for stalling crucial decisions and undermining the council’s governing capacity. This misuse hampers the ability to address urgent global crises effectively (Source: Various international relations analyses).
3. Altered Global Order
The COVID-19 pandemic highlighted the shift in global dynamics, as many nations from the Global South sourced vaccines beyond traditional suppliers. This diversification signifies a departure from the old order, which failed to address emerging global challenges such as food, fertilizer, and fuel security adequately (Source: World Health Organization).
4. Western Dominance in Multilateral Institutions
Institutions like the International Monetary Fund often prioritize Western interests, imposing conditions such as trade liberalization that may not suit developing countries (Source: IMF reports).
5. Procedural Issues and Accountability
Established multilateral organizations often fall short in terms of accountability and transparency. The ambiguous investigation of the origins of COVID-19 by the WHO is a recent example of these procedural shortcomings (Source: WHO statements).
6. Addressing Global Crises
The multitude of contemporary crises—ranging from climate change to geopolitical tensions—requires a representative multilateral architecture. NORMS serves as a framework for a collaborative platform that is agile and capable of addressing these complex challenges effectively (Source: United Nations Framework).
In conclusion, adopting NORMS is essential for fostering a more representative and effective global governance structure that can address the pressing issues of our time.
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Model Answer What is Inflation Targeting? Inflation targeting is a monetary policy framework where a country's central bank commits to maintaining inflation within a specified range. This target is usually expressed as a percentage change in the Consumer Price Index (CPI). The goal of inflation targRead more
Model Answer
What is Inflation Targeting?
Inflation targeting is a monetary policy framework where a country’s central bank commits to maintaining inflation within a specified range. This target is usually expressed as a percentage change in the Consumer Price Index (CPI). The goal of inflation targeting is to create a stable economic environment that encourages long-term planning and investment, promotes lender confidence, and provides a predictable inflation rate, which benefits both public and private entities.
Inflation Targeting Framework in India
India adopted the inflation targeting framework through the Inflation Targeting Agreement of 2015, which was solidified by the Amendment of the RBI Act in 2016. Under this framework, the Reserve Bank of India (RBI) targets a 4% inflation rate, with an upper and lower tolerance band of 2%. The Monetary Policy Committee (MPC), which is responsible for setting interest rates and making monetary policy decisions, follows specific protocols to ensure the inflation target is met.
Key provisions of the RBI Act (2016) include:
Additionally, there is an escape clause in the framework, which allows the RBI to exceed the inflation target under exceptional circumstances, such as during a crisis like the COVID-19 pandemic, where it might lower interest rates to stimulate the economy.
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