RBI’s Repatriation of Gold from UK to India

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Why in the News?

The Reserve Bank of India (RBI) recently brought back over 100 tonnes of gold from the UK to its vaults. This is the biggest gold transfer since the early 1990s and shows the RBI's changing strategy for managing its gold reserves.

How Much Gold Does RBI Have?

Gold Stock:

The Reserve Bank of India Act of 1934 provides the legal guidelines for how the RBI manages its reserves, including foreign currency assets and gold. By the end of March 2024, the RBI held 822.10 tonnes of gold.

Of this, 408.31 tonnes were stored in India, while 413.79 tonnes were kept with foreign institutions such as the Bank of England and the Bank for International Settlements (BIS). As of April 2024, the value of gold in India's forex reserves was USD 54.4 billion out of a total reserve of USD 648.562 billion.

History of Gold Purchasing:

According to the World Gold Council, the RBI is one of the top five central banks buying gold. During the global financial crisis in 2009, the RBI purchased 200 tonnes of gold. More recently, it bought 65.11 tonnes in FY 2022, 34.22 tonnes in FY 2023, and 19 tonnes in FY 2024.

Why did the RBI Decide to Move the Gold Back to India?

Protection Against Inflation:

• Gold holds its value well when inflation is high. Unlike currencies that can lose purchasing power, gold's historical performance suggests it can even increase in value during inflationary times. This means the RBI can potentially earn good returns even in tough economic situations.

Hedge Against Geopolitical Uncertainty:

• The current geopolitical climate, such as the Russia-Ukraine war and the resulting sanctions on Russia, may have prompted the RBI to move its assets to domestic control. Gold is considered a haven during such uncertainties, protecting against geopolitical risks.

Diversification and Liquidity:

• Including gold in its reserves helps the RBI diversify its foreign exchange holdings. Gold is a secure and liquid asset, meaning it can be easily bought and sold on the international market at a clear price. This gives the RBI flexibility and more options for managing its reserves.

Strength and Confidence:

• Having a significant amount of gold shows India's strong economic growth and ability to protect its financial assets, boosting confidence in the stability of the Indian economy. This is a marked improvement from the 1991 economic crisis when India had to pledge its gold reserves for foreign currency.

 

Storage Charges:

• By bringing the gold back to India, the RBI eliminates the storage costs paid to the Bank of England.

What is the Significance of Gold in the Economy?

Limited Supply & Intrinsic Value:

• Gold has a limited supply due to geological constraints, unlike currencies that central banks can print. This scarcity, along with its unique physical properties and historical importance, gives gold intrinsic value.

Hedge Against Inflation:

• Gold has historically held its value well during inflation. A 2023 World Gold Council study found a positive correlation between gold prices and US inflation over the past 50 years, making gold an effective hedge against inflation.

Diversification & Stability:

• Gold helps diversify a country's foreign reserves, reducing reliance on a single currency and providing stability during economic challenges. Holding gold reserves also signals confidence in a country's economy to international investors.

Jewelry & Cultural Significance:

• The demand for gold jewelry remains strong worldwide, especially in regions like India and China. Additionally, gold's cultural significance in many societies further boosts its value and demand.

Conclusion

The RBI's decision to bring over 100 tonnes of gold back from the UK to its domestic vaults is a major strategic step. It shows the bank's focus on improving logistical efficiency, diversifying storage, and its confidence in the stability of the Indian economy.

This move aligns with global trends, as central banks aim to enhance the security of their foreign exchange reserves in uncertain times.

 

 

Rise of Minilateralism

Why in the News?

Recently, increasing Chinese aggression in the Indo-Pacific region has led to the formation of the Squad, underscoring the growing importance of “minilateralism.” The Squad is a multilateral group consisting of the US, Japan, Australia, and the Philippines.

What is Minilateralism?

About:

Minilaterals are informal, targeted initiatives designed to address specific threats, contingencies, or security issues with a small number of states (usually three or four) sharing common interests.

These arrangements focus on specific purposes rather than broad inclusivity and do not have permanent or formal institutional structures. Outcomes and commitments within minilaterals are non-binding and voluntary, relying on the willingness of participating states.

Reasons for the Rise of Minilateralism:

• Evolving Global Order: The changing nature of threats and the evolving global order have challenged the effectiveness of multilateral frameworks in resolving local conflicts and issues.
• US Leadership and Multipolar World: Inconsistent US global leadership and the rise of a multipolar world, coupled with geopolitical rivalry between the US and China, have exposed weaknesses in multilateral organizations.

For instance, the UN Security Council's permanent membership reflects outdated power structures and has been ineffective.

• Global Institutions Struggling: Global institutions like the World Trade Organization (WTO) have had difficulties reaching consensus on complex issues due to diverse memberships and conflicting priorities.
• Regional Variations in Global Problems: Minilateral organizations can tailor solutions to the needs of a smaller group facing a particular challenge.
• Advances in Technology: Improvements in information and communications technology have facilitated the growth of minilaterals. Informal communication methods have made it easier for states to engage in flexible and targeted cooperation.
• Impact of Covid-19: The fallout of the Covid-19 pandemic has driven the emergence of strategic minilaterals focused on various issues, including supply chain resilience. For example, India set up an electronic platform to help member countries of the South Asian Association for Regional Cooperation (SAARC) fight the pandemic.

Contrast with Multilateralism:

• Multilateralism: Involves formal efforts by three or more states to build trust and avoid conflict through the institutionalization and observation of rules and norms for a common vision of regional or international order. Examples include the World Trade Organization (WTO), which emphasizes broad and inclusive participation.
• Minilateralism: Focuses on more specific, urgent issues with flexible, ad-hoc coalitions, such as the Quad for Indo-Pacific security and economic concerns.

Contrast with Regional Organizations:

• Minilateralism: Addresses urgent, specific issues with flexible, ad-hoc coalitions.
• Regional Organizations: Address a broad range of issues, including economic integration and security, through structured and formal cooperation, such as the European Union (EU).

What are the Advantages of Minilaterals?

Minilaterals allow countries with shared interests and values to bypass stagnant frameworks and resolve common concerns. For example, the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA) was created even though SAARC failed to facilitate a similar initiative.

Advantages of Minilaterals:

Flexible and Modular Approach: Minilaterals provide a flexible, modular approach to international cooperation. They can be quickly formed to address specific issues without the extensive formalities of multilateral frameworks.

Trade Agreements: This flexibility is evident in trade agreements like the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), which were concluded as minilateral agreements.

Rapid Decision-Making: The voluntary and non-binding nature of minilaterals allows for rapid decision-making and adaptation to changing circumstances.

Strategic Alliances and Regional Security:

• Issue-Specific Partnerships: Minilaterals facilitate the creation of issue-specific partnerships and strategic alliances, especially in regions like the Indo-Pacific.
• Examples: The Quadrilateral Security Dialogue (Quad) and the Trilateral Cooperation and Oversight Group (TCOG) effectively address regional security concerns more effectively than larger, more formal organizations.

Disaster Response:

Prompt Assistance: Regional multilateral forums can quickly assist affected nations in case of disasters.

Example: India sent the Indian Naval Ship (INS) Kesari, carrying food and medical assistance, to countries in the southern Indian Ocean to help with the COVID-19 pandemic as part of the Mission Sagar initiative.

What are the Issues Associated With Minilateralism?

Minilaterals can have drawbacks that include forum shopping, undermining critical international organizations, and reducing accountability in global governance.

Drawbacks of Minilaterals:

• Forum Shopping: Minilaterals may lead to forum shopping, where countries choose the most favorable platform, undermining critical international organizations.
• Reduced Enforcement of Norms: By promoting voluntary commitments instead of legally binding ones, minilaterals may weaken the enforcement of international norms and standards.
• Impact on Multilateral Engagement: Preference for minilaterals may reduce countries' incentive to engage with multilateral frameworks, affecting the relevance and effectiveness of organizations like the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF).
• Dependency on Leadership and Political Will: Minilateral success often depends on leadership, political will, and bilateral relations among members. Changes in leadership or strained relations can derail minilateral initiatives, as seen with the initial failure of the Quad due to leadership changes in Japan and Australia.
• Negative Impacts on Non-Members: Minilateral alliances may have negative impacts on countries not part of the negotiations, reducing their incentive to engage with existing multilateral efforts. For example, the focus on plurilateral initiatives in the Doha trade negotiations hindered broader multilateral progress.

Way Forward

Integration with Multilaterals:

Minilateralism should complement rather than undermine the work of larger multilateral organizations. For example, in climate action, minilateralism can foster cooperation on renewable energy technologies and involve sub-national and non-governmental actors to develop innovative solutions.

The International Solar Alliance (ISA) serves as an example, promoting increased deployment of solar energy technologies.

Forward-Looking Perspectives:

A forward-looking approach is crucial to understanding how minilaterals will impact security and strategic outcomes in various regions. Ensuring plurality and diversity in minilateral institutions can accommodate different groupings' needs and address issues of shared interest.

For example, India's Security and Growth for All in the Region (SAGAR) initiative aims to deepen economic and security cooperation with maritime neighbors and assist in building their maritime security capabilities.

Clear Objectives:

To maximize effectiveness, minilateralism should establish clear, measurable objectives. This approach enhances their role as a diplomatic tool and streamlines negotiations before multilateral platforms.

Adaptation to Evolving Security Landscape:

The rise of the 'Squad' and similar minilateral groupings reflects a strategic adaptation to the changing security landscape in the Indo-Pacific. These initiatives signify a proactive approach to addressing regional security challenges.

 

QS World University Rankings 2025

Why in the News?

Recently, the latest QS World University Rankings for 2025 were released, showing significant improvements for Indian universities and notable global standings.

What are the Key Highlights of the Rankings?

About QS World University Rankings:

QS Quacquarelli Symonds (QS) provides data, expertise, and solutions for the global higher education sector. For the 2025 QS World University Rankings, QS analyzed 17 million research papers, 176 million citations, data from 5,600 institutions worldwide, and insights from 175,798 academics and 105,476 employers.

Top Global Institutes:

Massachusetts Institute of Technology (MIT): Maintained its position as the best institute globally for the 13th consecutive year.

Imperial College London: Improved from sixth to second place.

Harvard University and University of Oxford: Jointly held the third rank.

Regional Highlights:

• ETH Zurich: Maintained its position as the top institution in Continental Europe for the 17th year.
• Asia: The National University of Singapore (NUS) retained its prominent position, ranking eighth globally.

India’s Position:

• With 46 universities, India ranks as the seventh most represented globally and the third in Asia, following Japan (49 universities) and China (71 universities).
• 61% of Indian universities improved their rankings, with IIT Bombay securing the top spot in India.
• Citations per Faculty indicator shows strong performance for India, scoring 37.8, surpassing the global average of 23.5.

Research and Collaboration:

• India performs well in Citations per Faculty but lags in the International Faculty Ratio and International Student Ratio, indicating the need for greater international collaboration.

Top Indian Institutes:

• IIT Bombay: Leading in India climbed from 149th in 2024 to 118th in 2025.
• IIT Delhi: Achieved the second position in India, moving up 47 ranks from 197th to 150th.
• IIT Indore: The only Indian institute that declined in ranking, dropping from 454th to 477th.

New Entries:

• Symbiosis International (Deemed University): Entered the top 20, ranked between 641 and 650 globally.