The Hindu Editorial Vocabulary 29th April 2024

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The Hindu Vocab On The RBI Green Taxonomy

The RBI must assess the impact of climate change on economic stability

A notable feature of the Reserve Bank of India’s (RBI’s) latest Monetary Policy Report (included in its April Bulletin) is the primacy given to “extreme weather events” and “climate shocks” affecting not only food inflation but also likely having a broader impact (a powerful effect that something, especially something new, has on a situation or person) on the natural rate of interest, thereby influencing the economy’s financial stability (a situation in which something is not likely to move or change). Natural, or neutral, rate of interest refers to the central bank’s monetary policy lever, which allows it to maintain maximum economic output, while keeping a check on inflation. The report mentions a “New-Keynesian model that incorporates a physical climate risk damage function” being used to estimate the “counterfactual macroeconomic impact of climate change vis-à-vis a no climate change scenario”. The report’s authors go on to warn that the “long-term (economic) output” could be lower by around 9% by 2050 in the absence of any climate mitigation (the act of reducing how harmful, unpleasant, or bad something is) policies. They ominously add that ‘if inflation hysteresis gets entrenched, it may lead to a de-anchoring of inflation expectations, and the undermining (to make someone less confident, less powerful, or less likely to succeed, or to make something weaker, often gradually) of the central bank’s credibility would warrant higher interest rates to curb inflation, leading to greater output loss’.

Beginning with its July 2022 discussion paper on ‘climate risk and sustainable finance’, the RBI has made incremental progress to address the transition to a green economy, even while admitting that India requires over $17 trillion to achieve its net zero ambitions by 2070. Its peers in advanced economies, most notably the European Central Bank, have aided the formulation of a green taxonomy for the entire Eurozone’s economic value chain. A green taxonomy is a framework (a supporting structure around which something can be built) to assess the sustainability (the quality of being able to continue over a period of time) credentials and possible ranking of an economic activity. The RBI and the Finance Ministry could take inspiration from the developing world, especially the ASEAN region, where a layered green taxonomy as a living document keeps getting updated with sectoral views of possible sustainable trajectories. While the issuance of ₹16,000 crore worth of Sovereign Green Bonds and expanding the resource pool by allowing Foreign Institutional Investors to participate in future green government securities are welcome steps, the RBI must undertake a thorough-going assessment (to judge or decide the amount, value, quality, or importance of something) on the quantitative and qualitative impact on economic and financial stability due to climate change. It must encourage administrative consultation to begin populating a layered green taxonomy that is reflective of India’s fragmented (consisting of several separate parts) developmental trajectories. The effort should be to mitigate (to make something less harmful, unpleasant, or bad) the transitional (belonging or relating to a change, or the process of change, from one form or type to another) risks to the financial system as the economy moves towards a sustainable future.

The Hindu Editorial Vocabulary Wordlist 29th April 2024

Boost your word power with the Hindu Editorial Vocabulary 29th April 2024. Know the contextual meanings of difficult words.

• Impact: A powerful effect that something, especially something new, has on a situation or person.
• Stability: A situation in which something is not likely to move or change.
• Mitigation: The act of reducing how harmful, unpleasant, or bad something is.
• Undermining: To make someone less confident, less powerful, or less likely to succeed, or to make something weaker, often gradually.
• Framework: A supporting structure around which something can be built.
• Sustainability: The quality of being able to continue over a period of time.
• Fragmented: Consisting of several separate parts.
• Assessment: To judge or decide the amount, value, quality, or importance of something.
• Mitigate: To make something less harmful, unpleasant, or bad.
• Transitional: Belonging or relating to a change, or the process of change, from one form or type to another.

The Hindu Vocab Master 29th April with Synonyms & Antonyms

Know synonyms and antonyms of difficult words in Hindu Vocab Master on 29th April 2024.

Difficult Words	Synonyms & Antonyms
Impact	Synonyms: Shock, Brunt Antonyms: Peace, Ease
Stability	Synonyms: Balance, Cohesion Antonyms: Instability, Doubt
Mitigation	Synonyms: Moderation, Cure Antonyms: Increase
Undermining	Synonyms: Subversion, Overthrow Antonyms: Creation
Framework	Synonyms: Scheme, Plan Antonyms: Disorder, Disorganization
Sustainability	Synonyms: Viable, Continuous Antonyms: Untenable
Fragmented	Synonyms: Busted, Collapsed Antonyms: Repaired, Broken
Assessment	Synonyms: Appraisal, Estimate Antonyms: Guess
Mitigate	Synonyms: Allay, Alleviate Antonyms: Increase, Extend
Transitional	Synonyms: Fickle, Fluctuating Antonyms: Calm, Constant