The Triple Agenda for Strengthening Multilateral Development Banks (MDBs)

Syllabus: Important International Institutions, agencies and fora – their Structure, Mandate

In News

An Independent Expert Group (IEG) commissioned by the Indian G20 Presidency has released the ‘Strengthening Multilateral Development Banks: The Triple Agenda’ report.

Understanding Multilateral Development Banks (MDBs)

• MDBs are international financial institutions comprising member nations from both developed and developing countries. 
• Their primary objective is to extend loans and grants to member nations, particularly those in need of support, to finance projects that promote social and economic development.

The Emergence of MDBs: Bretton Woods Conference

• Following the conclusion of World War II, representatives from 44 countries convened in Bretton Woods, United States, to establish new rules for international cooperation and reconstruction. 
• This historic meeting led to the creation of the International Monetary Fund (IMF) and the World Bank Group (WBG) in 1944. 
• The World Bank was tasked with providing financial assistance for post-war reconstruction and the economic development of less developed countries. 
• Today, the WBG remains the oldest and largest MDB, while there are approximately 15-16 other prominent MDBs and Regional Development Banks (RDBs) in existence.

The Role Played by MDBs

• MDBs play a crucial role in supporting essential reforms and providing resources. 
• They collaborate with governments and the private sector to create favorable conditions for investment and transformative initiatives. 
• MDBs are particularly effective in offering low-cost, long-term financing and sharing risks with private investors in an efficient manner.

Challenges Faced by MDBs

• However, MDBs are currently confronted with several challenges. They find themselves ill-equipped to address emerging global challenges such as climate change and pandemics due to limited resources, cultural barriers, and resistant methodologies. 
• Furthermore, they seem stuck in a state of stagnation, adhering to outdated procedures and approaches, which hinder their ability to adapt to necessary structural changes.

Recommendations of the IEG Report – Triple Agenda to Harness the Potential of MDBs

The IEG report proposes a transformative Triple Agenda for MDBs, centered around three essential elements:

• Adopting a triple mandate that focuses on eliminating extreme poverty, promoting shared prosperity, and contributing to global public goods.
• Tripling sustainable lending levels by 2030, thereby amplifying the impact of MDBs’ efforts.
• Creating a third funding mechanism to facilitate flexible and innovative arrangements for engaging with investors who support the MDB agenda.

Achieving the Triple Agenda

To effectively implement this ambitious Triple Agenda, significant changes must be made to the operating mechanisms of MDBs. These changes include:

• Becoming proactive agents for integrating development and climate agendas in all developing countries.
• Collaborating with governments and the private sector to reduce, share, and manage risks, leading to reduced capital costs.
• Embracing a client-responsive culture and taking calculated risks to drive positive outcomes.
• Streamlining project preparation timelines and procedures for enhanced efficiency.
• Expanding the scale and nature of their activities to have a more significant impact.

Way Ahead: Engaging with the Private Sector

A pivotal opportunity for transformation lies in the MDBs’ engagement with the private sector. By leveraging the diverse strengths of individual entities within the MDB system, innovative solutions can be harnessed and incorporated effectively.

Conclusion: Monitoring Group for Implementation

While the path towards the reform agenda is clear, independent monitoring will be essential to ensure the full implementation of recommendations. To this end, an independent monitoring group should oversee progress and report to the G20, thus maintaining transparency and accountability in the strengthening of Multilateral Development Banks.

Mains Question

The World Bank and the IMF, collectively known as the Bretton Woods Institutions, are the two inter-governmental pillars supporting the structure of the world’s economic and financial order. Superficially, the World Bank and the IMF exhibit many common characteristics, yet their role, functions and mandate are distinctly different. Elucidate (UPSC 2013)

Facilitating Investment in the Sustainable Development Goals

Syllabus: Government Policies and Investment

In News

The UNCTAD has recently published a new report titled “Facilitating Investment in the Sustainable Development Goals.”

This publication is part of UNCTAD’s investment advisory series, aimed at offering practical guidance and showcasing best policy practices to attract Foreign Direct Investment (FDI) that align with sustainable development objectives.

Key points from the publication include:

• Countries must adopt more proactive and tailored approaches to attract investors in order to secure funding for the UN SDGs.
• Meeting the Sustainable Development Goals requires a substantial annual investment of around $4 trillion in developing nations, a goal that can be facilitated through foreign investment.
• Investment Promotion Agencies (IPAs) play a vital role as the central focus for government-wide efforts to facilitate and encourage foreign investment.

Investment Promotion vs. Facilitation:

• Investment promotion aims to attract potential investors who have not yet decided on an investment destination. 
• On the other hand, facilitation comes into play during the pre-establishment phase when an investor expresses interest in a particular location.

The Significance of Investment Facilitation:

• Investment facilitation plays a crucial role in simplifying the process for investors to establish and expand their investments while conducting day-to-day business in host countries. 
• This involves providing relevant information, increasing transparency in rules and regulations, and streamlining administrative procedures for investors.

How IPAs Can Enhance SDG Implementation through Investment Facilitation:

• Inclusive Services: IPAs can enhance SDG implementation by ensuring that their investment facilitation services address the specific needs and opportunities of SDG-related sectors and target various investor groups.
• Information Assistance: During project establishment, IPAs can bridge the information gap by directing investors to potential partners and incentive programs.
• Building Partnerships: IPAs can forge new partnerships with local governments and national ministries that deal with SDG-related investment opportunities.
• Embracing Digitalization: To remain competitive in a digitalized post-COVID-19 economy, IPAs have increasingly adopted digital platforms to conduct promotional and facilitation services.

Challenges:

• Despite the growth of sustainable investment, a significant portion of such financing remains concentrated in the world’s wealthiest economies. 
• Most of this investment is directed towards climate change adaptation sectors, such as renewable energy, with considerably fewer resources allocated to critical areas like health, education, water, and sanitation.

Way ahead:

Exemplary Approach – Invest India:

Invest India, the Investment Promotion Agency (IPA), demonstrates a best practice through its online Industrial Land Bank. This innovative tool displays all available land in various subregions, facilitating development opportunities for investors. Currently, the agency is working on aggregating this tool at the national level, enhancing its effectiveness further.

In Conclusion:

Investment plays a pivotal role, especially in SDGs-related initiatives, where it demands more proactive and personalized services for investors compared to conventional investment projects.

Panel of Vice-Chairpersons

In News

• A historic milestone has been achieved in the Rajya Sabha as, for the first time ever, women now hold equal representation in the panel of vice-chairpersons. 
• Rajya Sabha Chairman, Jagdeep Dhankhar, nominated four women parliamentarians, constituting half of the eight-member panel. 
• Among the newly appointed members is S. Phangnon Konyak, who made history by becoming the first woman from Nagaland to be elected as a Member of the Rajya Sabha in April 2022.
  • She is also the second woman from the State to be elected to either the Parliament or the State Assembly.

The Panel of Vice-Chairpersons in the Rajya Sabha is led by the Deputy Chairman and consists of members nominated from among the Rajya Sabha members by the Chairperson. Its primary role is to assist in the legislative process, particularly in the passage of bills, and to ensure the effective functioning of the government.

In the absence of the Chairman, the duties are delegated to and carried out by the Deputy Chairman of the house.

Rule 267 Vs Rule 176 of the Rajya Sabha  

In News

The commencement of the Monsoon Session faced disturbances as there was a disagreement over the format of the discussion on Manipur. While the government consented to a brief discussion under Rule 176, the Opposition insisted on the Prime Minister delivering a suo motu statement, followed by a discussion under Rule 267.

Rule 267	Rule 176
The purpose of suspending the application of any rule related to the day’s listed business is to enable a discussion on an urgent matter of public importance.	The objective is to permit a brief discussion, limited to a maximum of two-and-a-half hours, on a matter of urgent public importance.
Under Rule 267, an Opposition member has the option to provide notice, seeking the suspension of all listed businesses for the day to address an urgent matter. If the Chairman grants consent and the motion is approved, the Rajya Sabha can set aside its regular business and allocate time to discuss the pressing issue.	In order to request a short-duration discussion, a member must submit written notice to the Secretary-General, along with the support of at least two other members, specifying the particular matter they wish to address. Subsequently, the Chairman, in consultation with the Leader of the Council, will schedule a date and time for the short-duration discussion.
The discussion has the authority to halt all scheduled businesses, providing ample time for a comprehensive and thorough debate.	The discussion is constrained by a specific time limit of two-and-a-half hours.
There is no necessity for any formal motion or voting.	There is no need for any formal motion or voting process.
Addressing the situation in Manipur and other pressing matters of public importance.	Deliberating on the escalating prices of essential commodities, border issues with China, and other related topics.

In a recent controversy, the Opposition has raised concerns about their notices under Rule 267 not being addressed, despite previous Rajya Sabha Chairmen having allowed discussions on various subjects through this rule.

India has a 3–5-year China+1 window

In News

The President of the World Bank praised India’s remarkable resilience in the face of the pandemic, stating that the country has emerged stronger than many others. He expressed optimism about India’s future, particularly due to its strong emphasis on economic growth and job creation, which he believes will play a crucial role in reducing poverty.

• During his address, he also highlighted the “China+1” opportunity, where companies are actively seeking alternative manufacturing sites to diversify their supply chains post-Covid.
  • He emphasized that India has a favorable window of three to five years to take advantage of this opportunity.

One of India’s key advantages is its significant percentage of GDP derived from local production, which acts as a buffer against global slowdowns caused by trade disruptions.

• In order to foster sustainable development and combat climate change, the President suggested encouraging private capital investments to support renewable energy funding on a global scale. He estimated that developing nations would require around $1 trillion for a successful transition to green energy.
• Furthermore, he emphasized the importance of concessional capital, multilateral bank capital, and philanthropy capital to enable blended finance, facilitating investments in various sectors and promoting inclusive growth in the region.

NATO summit

In News

The recent NATO summit in Vilnius yielded several significant outcomes:

• NATO-Ukraine Council: The summit marked the establishment of the NATO-Ukraine Council, signifying NATO’s commitment to engaging and assisting Ukraine during these challenging times.
• New NATO Members: Finland and Sweden received approval as new NATO members, demonstrating the alliance’s dedication to expanding its reach and ensuring deterrence against potential threats, including Russia.
• Strong U.S. Support: U.S. President Joe Biden reiterated the unwavering support of the United States for NATO and Ukraine, in stark contrast to the stance taken by former President Donald Trump regarding the alliance.
• Addressing China’s Threat: The summit addressed the concerning issue of China’s malicious cyber operations, confrontational rhetoric, and disinformation campaigns, recognizing the emerging challenges posed by China to Euro-Atlantic security.
• Russia’s Provocation: Despite discussions about potential expansion, Russia’s drone attack on Kyiv during the summit served as a stark reminder of the ongoing security contestation in Eurasia.

About NATO

The North Atlantic Treaty Organization, established in 1949 with its headquarters in Brussels, Belgium, is an intergovernmental military alliance comprising 31 member states, including 29 European nations and two North American countries. Finland is one of the member states of this alliance.

• Founding Members – Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States
• Article 5 – A key provision of the NATO treaty states that an attack on one member is an attack on all members. It has been invoked only once after the 9/11 terrorist attacks in the United States. However, NATO’s protection does not extend to members’ civil wars or internal coups.
• Alliances – Euro-Atlantic Partnership Council (EAPC), Mediterranean Dialogue, Istanbul Cooperation Initiative (ICI)

Note: Sweden is yet to be included in NATO.

Credit Guarantee Scheme for Livestock Sector

In News

The Ministry of Fisheries, Animal Husbandry, and Dairying has introduced the “Credit Guarantee Scheme” as part of the Animal Husbandry Infrastructure Development Fund (AHIDF) to bolster the rural economy by supporting Micro, Small & Medium Enterprises (MSMEs) in the Livestock sector.

What is Credit Guarantee Fund?

The Credit Guarantee Fund is a financial mechanism designed to mitigate risks for lending institutions when providing loans to individuals or businesses, even in the absence of sufficient collateral. In case of borrower default, the fund steps in to reimburse the lending institution for the guaranteed portion of the loan.

• Established in March 2021, the Credit Guarantee Fund Trust marks India’s first-ever fund trust operating under the Credit Guarantee Scheme for the agriculture and Animal Husbandry sector. 
• Its primary objective is to significantly increase the number of MSMEs benefiting from the AHIDF scheme and foster an ecosystem for collateral-free credit from banks.

Features of the Scheme

Key features of the scheme include the establishment of a Credit Guarantee Fund Trust with a corpus of Rs. 750.00 crores (under NABARD), which provides credit guarantee coverage of up to 25% for credit facilities extended to MSMEs by eligible lending institutions.

Advantages

The initiative holds several advantages, primarily aiming to enhance access to finance for underserved livestock entrepreneurs, especially first-generation and underprivileged individuals who lack collateral security.

About AHIDF

AHIDF, a Central Sector Scheme launched by the Ministry of Animal Husbandry, Fisheries, and Dairying, serves to promote investments in dairy and meat processing infrastructure, as well as animal feed plants.

Invest India

In News

Ms. Nivruti Rai, a distinguished awardee of the esteemed Nari Shakti Puraskar, has assumed the role of Managing Director & CEO at Invest India.

Drawing from her extensive 29-year journey with Intel, where she notably held the position of Country Head for Intel India over the past seven years, Ms. Rai brings a wealth of experience to her new leadership role.

Established in 2009, Invest India operates as a non-profit venture under the Department for Promotion of Industry and Internal Trade, which falls under the Ministry of Commerce and Industry, Government of India. As the national investment promotion and facilitation agency, Invest India focuses on targeted sectors and actively fosters partnerships to encourage sustainable investments in India.

Biofortified foods

In News

The Indian industry is looking to establish distinct branding for biofortified foods, akin to how “organic” products are marketed, with the goal of increasing their popularity.

• In order to make nutrient-rich crops more accessible, the government is enlisting the support of the private sector.

About Biofortification

Biofortification involves enhancing the nutritional value of crops by increasing the levels of essential vitamins and minerals. 

• This targeted approach addresses nutrient deficiencies in populations, especially in regions where access to diverse and nutritious diets is limited.

The primary objective of biofortification is to elevate the nutritional well-being of vulnerable populations, particularly in developing countries where malnutrition and micronutrient deficiencies are prevalent. By enriching staple crops like rice, wheat, maize, and beans, biofortification aims to offer a sustainable and cost-effective solution to combat malnutrition and its associated health issues.

Surat

In News

The Surat Diamond Bourse (SDB) boasts the distinction of being the world’s largest office space within a single project, covering an impressive area of 66 lakh square feet. The primary aim behind the SDB’s establishment is to facilitate the expansion and relocation of the diamond trading business from Mumbai to Surat, which serves as the central hub for diamond cutting and polishing. This ambitious project seeks to centralize all diamond-related activities and provide essential infrastructure under one roof. Surat holds the prestigious title of being the world’s largest center for cutting and polishing, responsible for a remarkable 90% of the global diamond trade.

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