Note4Students
From UPSC perspective, the following things are important :
Prelims level: G-7 countries
Mains level: Paper 2- Relevance of G-7
The article highlights the challenges associated with the globalisation and important role G-7 can play in dealing with these challenges.
The context that makes this G-7 Summit significant
- The most significant expectation of the summit is that it will help determine the shape of globalisation.
- There has been much discussion of the possibility of the G-7 pushing for global coordination on minimum corporate taxation.
- The summit also seeks to redefine the broader relationship between states and markets in three ways.
Redefining the relationship between states and market in 3 ways
1) States reasserting the control over markets
- States are reasserting control over the terms on which markets operate.
- The idea of Neoliberalism did convey the idea that states should follow where the market leads, or step in only where there is a market failure.
- However, this account of the relationship between states and markets had four harmful consequences.
- 1) It provided a misleading picture of what makes economies vibrant.
- 2) It led to a sense of loss of collective control over our economic future.
- 3) It led to great inequality.
- 4) In some fields like technology, it created new forms of corporate power.
- To reverse some of these consequences, some coordination at the global level on taxation, or treatment of technology monopolies etc is required.
2) Global interdependence cannot be managed without global public goods
- At one level the global roles of the G-7 or even the G-20 were something like the political steering committee for global capitalism.
- Their most useful political roles were during the financial crisis, when global financial coordination was required.
- But there was relatively little attention to the systemic vulnerabilities that globalisation might create.
- These could be vulnerabilities because of the way supply chains were distributed, or those that arose from the creation of winners and losers within globalisation.
- Most importantly, there was short shrift given to global public goods like health.
- The Covid crisis has reminded us of all of these vulnerabilities.
- The commitment of G-7 to provide one billion vaccine doses is a welcome step.
- But whether this crisis-driven commitment will translate into an enduring and just framework for providing global public goods on health and environment remains to be seen.
3) Geopolitical context
- There are two geopolitical “cold wars” that cast a shadow on the G-7.
- The first involves China.
- In the context of rising geopolitical tensions with China, greater coordination and unity of purpose amongst the G-7 will become more important.
- The second is a threat of authoritarian disruption.
- Greater global disarray strengthens the possibility of giving political support to these political tendencies.
- It is important, therefore, to demonstrate that the G-7 countries are part of a functional democratic civilisation.
Challenges ahead
- Despite the directional changes, many of the central distributive conflicts that beset globalisation are likely to continue.
- The talk of global public goods works only in a context where the advanced economies are at the receiving end.
- Take the G-7 proposal for the coordination of taxation.
- In principle, this is not a bad idea, if it can close off tax havens and prevent a global race to the bottom.
- However, it is sobering to read the Tax Justice Network’s “The State of Tax Justice Report” 2020.
- According to this report, the United States, Netherlands and United Kingdom are three of the top five countries (along with Cayman Islands and Luxembourg) responsible for tax losses inflicted on other countries.
- The US, Switzerland, Singapore and Hong Kong are amongst the highest on the Financial Secrecy Index.
- So, the visible corporate tax rate, or taxing at point of sales, may just be the window dressing the global tax problem that allows countries to hold onto their privileges.
- Similarly, on climate change. There is a lot of encouraging talk of ambitious targets, investment-led transformations.
- Intelligently done, this might be for the good.
- But it could also repeat the familiar pattern of regulation serving to preserve the dominance of advanced economies.
- There is also, in the talk of a new global economic order, the curious absence of discussions on finance.
- But if one is looking at potential sources of vulnerability, the ability to create winners and losers, and possible threats to global resilience, then regulation and coordination of global finance deserve more attention.
Consider the question “What are the vulnerabilities associated with globalisation. Suggest the solutions to deal with these vulnerabilities.”
Conclusion
If the G-7 wants to truly exercise more leadership, it will have to convince the world that all its wonderful new principles, resilience, inclusion, global public goods, are not simply ruses to serve only the interests of the developed world.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Heritage trees
Mains level: Read the attached story
The Maharashtra government will make amendments to the Maharashtra (Urban Areas) Protection and Preservation of Trees Act of 1975, to introduce provisions for the protection of ‘heritage trees’.
What are Heritage Trees?
- Under the proposed amendment, a tree with an estimated age of 50 years or more shall be defined as a heritage tree.
- It may belong to specific species, which will be notified from time to time.
- Experts believe that in addition to the age, the state climate change department should also consider a tree’s rarity, its botanical, historical, religious, mythological and cultural importance in defining a heritage tree.
- The local Tree Authority will have to ensure tree census to be carried out every five years along with counting of heritage trees
How is the age of the tree determined?
- The most common method of determining the age of the tree is Dendrochronology – or tree-ring dating also called growth rings.
- Each year, roughly a tree adds to its girth, the new growth is called a tree ring. By counting the rings of a tree, the age can be determined.
- However, the process is invasive. To analyse the rings, core samples are extracted using a borer that’s screwed into the tree and pulled out, bringing with it a straw-size sample of wood.
- The hole in the tree is then sealed to prevent disease.
Why was the concept of heritage tree introduced?
- A heritage tree will get special protection.
- Crucially, the tree’s age will determine the number of trees to be planted as part of the compensatory plantation – that is anyone cutting a heritage tree will need to plant trees in the same numbers as the cut tree’s age.
- According to the current Compensatory Plantation in the state, one sapling has to be planted for each tree that is cut.
- In Mumbai, as per the Tree Authority set up in 1976, to help in regulating the felling of trees and providing for the planting of an adequate number of new trees, the compensation ratios are 1:3.
Changes with the amendment
- As per the amendment, the number of trees planted will be equal to the age of the heritage tree that is cut.
- For instance, if a 52-year-old tree is to be felled, then the party felling the tree will have to plant 52 trees in compensation, with each compensatory tree at least 6-8 ft in height at the time of planting.
- The organization planting the compensation trees will also have to ensure the survival of the plantation for seven years and geo-tag the trees.
- Such plantations can be carried out either in the same plot or a common amenity plot.
- Through the introduction of a heritage tree, the state environment wants to discourage the cutting of heritage trees.
- The amendment has the fine for illegal felling of trees from a maximum of Rs 5,000 to Rs 1 lakh per tree.
What is the economic value of the tree?
- In case compensatory plantation is not possible, the tree feller has to pay compensation for the economic valuation of the trees being felled.
- While the state government has not defined the economic value of the tree, experts say that the amount of oxygen that a tree releases into the environment should determine its economic value.
- A realistic assessment of the economic value of a tree, which may be permitted to fell, concerning its value to the environment and its longevity, about factors such as:
the production of oxygen and carbon sequestration, soil conservation, protection of flora/fauna, its role in habitat and ecosystem integrity and any other ecologically relevant factor, distinct from timber/wood
Tree Authority formation
- The amendments also make room for the formation of the Maharashtra State Tree Authority and also tree authority in local civic bodies and councils.
- The Tree Authority is tasked with “increasing the tree cover in urban areas and protecting the existing ones.” Experts shall be a part of the local tree authority.
- Their knowledge and expertise will form the basis of decisions taken up by the authority.
- A proposal to cut more than 200 trees of age 5 years or more, will be referred to the state tree authority.
- The local TA will have to ensure that the project is not sub-divided into smaller parts to keep the number of trees below the defined threshold.
- Ensure preparation of a tree plan and should aspire over the years to have 33 percent green belt in their area.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Master Plan 2041 for Delhi
The Delhi Development Authority gave its preliminary approval to the draft Master Plan for Delhi 2041.
What is the Master Plan 2041 for Delhi?
- The draft of the Master Plan seeks to “foster a sustainable, liveable and vibrant Delhi by 2041”.
- It includes analysis, recommendations, and proposals keeping in mind the population, economy, housing, transportation, community facilities, and land use.
- The current master plan of Delhi — Master Plan 2021 — expires this year.
- The first volume is an introduction, providing an overview of Delhi in present times, its global and regional positioning, estimates of population, and projections for 2041.
- The draft MPD presents a plan for the city for the next 20 years.
What are the main focus areas of the master plan?
- In the housing sector, it talks about incentivizing rented accommodation by inviting private players and government agencies to invest more, keeping in mind the large migrant population.
- It addresses parking problems and suggests a ‘user pays principle, which means users of all personal motor vehicles, except for non-motorized ones, have to pay for authorized parking facilities, spaces and streets.
How does the master plan tackle environmental pollution?
- The draft plan aims to minimize vehicular pollution through key strategies, including a switch to greener fuels for public transport and the adoption of mixed-use of transit-oriented development (also known as TOD).
- It also addresses improving the quality of water, which is taken from the Yamuna river as well as various lakes, natural drains and baolis.
- The draft lays a clear boundary of the buffer zone near the Yamuna river and explores how to develop it.
- As per the plan, a green buffer of 300-metre width shall be maintained wherever feasible along the entire edge of the river.
How is it different from the 2021 Master Plan?
- The world has gone through a drastic change due to the pandemic, and the growing population has led to shrinking spaces and unemployment.
- The 2041 plan aims to develop common community spaces to provide refuge spots, common kitchens and quarantine space in an emergency.
- To improve the nighttime economy, the plan focuses on cultural festivals, bus entertainment, metro, sports facilities, and retail stores included in Delhi Development Authority (DDA)’s Night Life Circuit plan.
- It also proposes to reduce vulnerability to airborne epidemics through decentralized workspaces, mandatory creation of open areas, better habitat design and green-rated developments to reduce dependence on mechanical ventilation systems.
What challenges will its implementation face?
- The master plan on paper looks like a perfect document for the city’s progress.
- However, when the implementing agencies try to replicate it on the ground, they face challenges like confrontation from political wings, lack of resources and funds, corruption in different departments, lack of political and bureaucratic will and multiplicity of agencies.
- For instance, despite talks of increasing surface parking, removing junk vehicles, imposing fines for dumping debris, garbage burning, and segregation of waste, a lot of these things could never be implemented.
- In some cases like, increasing parking or increasing its charges, there is resistance from politicians due to vote-bank politics. In other cases, lack of funds and improper implementation mar the projects.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: EnVision Mission
Mains level: Interplanetary missions
Following NASA’s footsteps, the European Space Agency (ESA) announced that it has selected EnVision as its next orbiter that will visit Venus sometime in the 2030s.
Last week, NASA selected two missions to the planet Venus, Earth’s nearest neighbour. The missions called DAVINCI+ and VERITAS have been selected based on their potential for scientific value and the feasibility of their development plans.
What is EnVision?
- EnVision is an ESA-led mission with contributions from NASA. It is likely to be launched sometime in the 2030s.
- The earliest launch opportunity for EnVision is 2031, followed by 2032 and 2033.
- Once launched on an Ariane 6 rocket, the spacecraft will take about 15 months to reach Venus and will take 16 more months to achieve orbit circularization.
- The spacecraft will carry a range of instruments to study the planet’s atmosphere and surface, monitor trace gases in the atmosphere and analyses its surface composition.
What are other such missions?
- EnVision will follow another ESA-led mission to Venus called ‘Venus Express’ (2005-2014) that focused on atmospheric research and pointed to volcanic hotspots on the planet’s surface.
- Other than this, Japan’s Akatsuki spacecraft has also been studying the planet’s atmosphere since 2015.
Why are scientists interested in studying Venus?
- At the core of the ESA’s mission is the question of how Earth and Venus evolved so differently from each other considering that they are roughly of the same size and composition.
- Venus is the hottest planet in the solar system because of the heat that is trapped by its thick cloud cover.
- Last year, a team of scientists reported that they had found phosphine gas (a chemical produced only through biological processes) in the atmosphere of Venus.
- This triggered excitement in the scientific community that some life forms might be supported by the planet.
- But the existence of life on the planet is nearly impossible given the high temperatures of Venus and its acidic atmosphere.
Back2Basics: Venus Planet
- For those on Earth, Venus is the second-brightest object in the sky after the moon.
- It appears bright because of its thick cloud cover that reflects and scatters light.
- But while Venus, which is the second closest planet to the Sun, is called the Earth’s twin because of their similar sizes, the two planets have significant differences between them.
- For one, the planet’s thick atmosphere traps heat and is the reason that it is the hottest planet in the solar system, despite coming after Mercury, the closest planet to the Sun.
- Surface temperatures on Venus can go up to 471 degrees Celsius, which is hot enough to melt lead.
- Further, Venus moves forward on its orbit around the Sun but spins backwards around its axis slowly.
- This means on Venus the Sun rises in the west and sets in the East.
- One day on Venus is equivalent to 243 Earth days because of its backward spinning, opposite to that of the Earth’s and most other planets.
- Venus also does not have a moon and no rings.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Content delivery network (CDN)
Mains level: Need for data localization
Several big websites around the world went down for about half an hour because of a major issue with the content delivery network (CDN) of American cloud computing services provider Fastly.
Global internet outage: Which websites were affected?
- com, Reddit, Twitch, Spotify, Pinterest, Stack Overflow, GitHub, gov.uk, Hulu, HBO Max, Quora, PayPal, Vimeo and Shopify are some of the big names.
- Prominent news websites impacted were the Financial Times, the Guardian, the New York Times, CNN, and Verge, to name some.
- Most users would have seen a 503 error when trying to access these websites, indicating that the browser was not able to access the server.
What is Fastly?
- Fastly is a cloud computing services provider, which offers CDN, edge computing, cloud storage services.
- All of its geographies, including the three stations it has in India — Chennai, Mumbai and New Delhi — were suffering from “Degraded Performance”.
Answer this PYQ from CSP 2018:
Q.The terms ‘WannaCry, Petya, Eternal Blue’ sometimes mentioned news recently are related to
(a) Exoplanets
(b) Crypto currency
(c) Cyber attacks
(d) Mini satellites
What is a CDN?
- A CDN refers to a geographically distributed group of servers that work together to provide fast delivery of Internet content.
- They house content close to the telecom service providers’ networks.
- Majority of web traffic across the world today is routed through CDNs.
- Platforms such as Netflix, Facebook, Amazon — ones with large quantities of data held in global libraries — host their geographically relevant content closer to where that content is to be consumed.
- This ensures the end customer is able to access the content faster.
- Another reason companies rely on these CDNs is to help protect their sites against traffic spikes, distributed denial of service (DDOS) attacks, etc.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Aspirational Districts Programme
Mains level: Success of the ADP
In an independent appraisal report released today, United Nations Development Programme (UNDP) India has lauded the Aspirational Districts Programme (ADP) as a very successful model of local area development.
Aspirational Districts Programme
- Launched in January 2018, the ‘Transformation of Aspirational Districts’ initiative aims to remove this heterogeneity through a mass movement to quickly and effectively transform these districts.
- The broad contours of the programme are Convergence (of Central & State Schemes), Collaboration (of Central, State level ‘Prabhari’ Officers & District Collectors), and Competition among districts driven by a spirit of mass Movement.
- With States as the main drivers, this program will focus on the strength of each district, identify low-hanging fruits for immediate improvement, measure progress, and rank districts.
Selection of districts
- A total of 117 Aspirational districts have been identified by NITI Aayog based upon composite indicators.
- These include Health & Nutrition, Education, Agriculture & Water Resources, Financial Inclusion and Skill Development and Basic Infrastructure which have an impact on Human Development Index.
Weightage has been accorded to these districts as below:
- Health & Nutrition (30%)
- Education (30%)
- Agriculture & Water Resources (20%)
- Financial Inclusion & Skill Development (10%)
- Basic Infrastructure (10%)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Sub-Mission on Agricultural Mechanization (SMAM)
Mains level: Need for Agricultural Mechanization
To empower the farmers through the Sub-Mission on Agricultural Mechanization (SMAM) scheme, the government has released funds for various activities of Farm Mechanization.
Sub-Mission on Agricultural Mechanization (SMAM)
- The Agri ministry has launched this mission in 2014-15 with the objectives of increasing the reach of farm mechanization to small and marginal farmers and to the regions & difficult areas where farm power availability is low.
- Under this scheme, it has been proposed to established Village Level farm Machinery Bank (VLFMB), Custom Hiring Centres (CHC) and High Tech Hubs (HTH) in order to facilitate easy availability of farm implements and machinery for hire by farmers.
Why need such a scheme?
- Agricultural Mechanization plays a vital role in optimizing the use of land, water energy resources, manpower and other inputs like seeds, fertilizers, pesticides etc to maximize the productivity of the available cultivable area and make agriculture a more profitable and attractive profession for rural youth.
- It is one of the key drivers for the sustainable development of the agriculture sector.
- Sustainable Agriculture mechanization growth will require appropriate and precision agricultural machinery adequately supported by the latest technology.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Aerosol Nucleation
Mains level: Air pollution
Scientists tracing the concentration, size and evolution of aerosol particles smaller than 3 nanometers at an urban location in India have found the frequent formation of sub-3nm aerosol particles in the atmosphere.
What is Aerosol Nucleation?
- The formation of small molecular clusters of sub-3nm size is technically called aerosol nucleation, and subsequent growth of these newly formed clusters to the large sizes is called atmospheric new particle formation (NPF).
- NPF occurs everywhere in the terrestrial troposphere, and therefore it is a large source of aerosol numbers to the atmosphere.
- Though extensively studied globally using field observations, laboratory experiments and modelling approach, it is largely unexplored in India.
What has the new research found?
- The research showed that a pool of sub-3nm particles is often present in the atmosphere, but how fast these clusters grow depends on various factors.
- The scientists observed that only half of these events showed newly formed molecular clusters growing past 10 nm size.
- Thus particle size distributions display a conventional banana-shaped aerosol growth, which is indicative of regional NPF event.
Role of Sulphur
- The team found a strong positive correlation between sub-3nm particle concentrations and sulphuric acid concentrations, confirming the potential role of sulfuric acid in the formation of sub-3nm particles.
- While NPF often starts with sulphuric acid in the atmosphere, sulphuric acid alone fails to explain observed particle formation and growth rates in the atmosphere.
- Other vapours such as ammonia, amines and organics play a crucial role in the growth of newly formed particles.
- This has critical importance as a major fraction of these newly formed particles can reach to sizes of cloud condensation nuclei where they have climatic impacts.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Sustainability pressure on companies
The article discusses the three undercurrents that are pushing companies to adopt more sustainable business models.
Demand for sustainable business practices
- Companies across the world are facing pressure to adopt sustainable business practices.
- In a global first, a judicial court in the Netherlands has invoked the principles of human rights obligations of companies to rule that the Royal Dutch Shell will have to further accelerate its targeted reduction in greenhouse gas (GHG) emission.
- The shareholders of Chevron forced upon the management a resolution to set strict emission targets from the products that it sells.
- The German cabinet approved a law that requires all coal-fired plants to close down much earlier than the target date set only eighteen months ago.
- In India, the SEBI came out with a new set of Business Responsibility and Sustainability Reporting (BRSR).
- BRSR will be mandatory for the top 1,000 companies from the next year.
Three factors driving the change
1) Investors’ pull
- Workers saving for their pension do not want their investments to go to companies whose tailings-dam can burst and cause hundreds of death in Brazil.
- Investors also realise the long-term business risk of companies if sustainability isn’t a focus.
2) Governments’/regulators’ push
- In 2021, the US announced that it will cut emissions by over 50% by 2030.
- Japan has almost doubled its 2030 targets.
- The UK has now announced a target to cut 40-45% by the same time, from the earlier goal of a 30%-cut.
- China has announced that its emissions will peak by 2030, and by 2060, it would have net zero emissions.
- India is expected by the global community to announce net-zero by 2050.
- All of these have huge implications not only for hydrocarbon companies but across multiple sectors.
- Banking regulators are asking banks to include climate in the risk assessment of the companies they lend to.
- Insurance and pension regulators are raising similar questions in their sector.
3) Measurement/reporting
- When sustainability debates picked up, many organisations like CDP, CDSB, PRI, GRI, TCFD, IMP, IIRC, SASB, etc, sprang up to fulfill the need for sustainability reporting.
- Often, these worked at cross purposes and in competition with each other, leading to ‘greenwashing’ and other malpractices and creating confusion in the minds of investors.
- But, the realisation that the investors need a set of comparable and verifiable reporting formats has gathered momentum in the past one year.
- The last excuse to avoid focus on sustainable business practices will also wither away.
Consider the question “Financial capital is just one of the multiple capitals a successful company must possess. This brings sustainability into the focus. In light of this, discuss the factors that are forcing the companies to factor in the sustainability in their business models.”
Conclusion
The decades-old debate on environmental damage and sustainability is now reaching a decisive phase. Companies need to factor in the sustainability aspect in their profit calculus to remain relevant in changing world.
Source:
https://www.financialexpress.com/opinion/the-sustainability-heat-on-companies/2268494/
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Tax buoyancy
Mains level: Paper 3- Dealing with the challenge of Covid second wave
The article takes an overview of the fiscal and monetary challenges posed by the second covid wave and suggest ensuring the availability of liquidity.
GDP projections need to be re-examined
- According to NSO’s provisional estimates for 2020-21, the annual contraction in real GDP turned out to be 7.3 per cent.
- The erstwhile GDP growth projections for 2021-22 are being re-examined to take into account the adverse impact of the second wave of the pandemic.
- The RBI has revised down its 2021-22 real GDP growth forecast to 9.5 per cent.
- Some other recent estimates (ICRA) indicate the feasibility of a 9 per cent growth.
- It is also important to consider nominal GDP growth for 2021-22 since that would be a critical determinant of fiscal prospects.
- In the light of supply-side and cost-push pressures, the RBI has projected CPI inflation at 5.1 per cent.
- The nominal GDP growth may be projected at 13.4 per cent, that is, 1 percentage point lower than Centre’s budget assumption of 14.4 per cent.
Fiscal aggregates
- The Controller General of Accounts’ data indicate a gross tax revenues (GTR) of Rs 20.2 lakh crore and net tax revenue of Rs 14.2 lakh crore for 2020-21.
- The likely growth in GTR for 2021-22 may be derived by applying a buoyancy of 0.9.
- This gives a tax revenue growth of 12 per cent, translating that to projected gross and net tax revenues for 2021-22 would mean Rs 22.7 lakh crore and Rs 15.8 lakh crore respectively.
- This implies some additional net tax revenues to the Centre amounting to Rs 0.35 lakh crore as compared to the budgeted magnitudes.
- The main expected shortfall may still be in non-tax revenues and non-debt capital receipts.
- According to the CGA numbers, their 2020-21 levels are respectively Rs 2.1 lakh crore and Rs 0.57 lakh crore.
- Applying a growth rate of 15 per cent on these, a shortfall in 2021-22 to the tune of Rs 1.3 lakh crore may arise in non-tax revenues and non-debt capital receipts.
So, how much would be the Fiscal Deficit?
- The growth rates of non-tax revenues and and non-debt capital receipts average to a little lower than 15 per cent during the five years preceding 2020-21.
- In any case, the large budgeted growth of 304 per cent in non-debt capital receipts for 2021-22 seems quite unlikely because of the challenges posed by the second wave.
- Taking into account RBI’s recently announced dividend of Rs 0.99 lakh crore to the Centre, the main shortfall may be in non-debt capital receipts.
- Together, the overall shortfall in total non-debt receipts may be limited to about Rs 0.9 lakh crore, or 0.4 per cent of estimated nominal GDP.
- This indicates that a slippage, if any, in the budgeted fiscal deficit of 6.7 per cent of GDP, as revised in view of the recently released GDP data, could be a limited one.
Way forward: Prioritise three heads
- First, an increase in the provision for income support measures for the vulnerable rural and urban population.
- Second, in light of the recent decision, the budgeted expenditure on vaccination of Rs 0.35 lakh crore ought to be augmented, at the very least, doubled.
- Third, additional capital expenditure for select sectors, particularly healthcare, should also be provided for.
- Together these additional expenditures would amount to Rs 1.7 lakh crore, about 0.8 per cent of the estimated nominal GDP.
- Thus, we need to plan for a fiscal deficit of about 7.9 per cent of GDP.
Borrowing programme would need RBIs support
- The Centre has announced borrowings of Rs 1.6 lakh crore to meet the shortfall in the GST compensation cess.
- Given the higher fiscal deficit, it would need to add to its borrowing programme another Rs 2.6 lakh crore, taking the total borrowing, including GST compensation, to about Rs 16.3 lakh crore, from Rs 12.05 lakh crore now.
- Borrowing by states would be in addition to this.
- The net result will be an unprecedented borrowing programme by the Centre which may require RBI’s support.
- RBI is injecting liquidity into the system through various channels.
- Banks have sufficient liquidity to subscribe to new debt.
- This is indirect monetisation of debt.
- This is not new, but the scale is much higher.
- Direct monetisation is best avoided.
- The success of the borrowing programme of the Centre depends on the support provided by the RBI.
- The support need not be direct.
- It can be indirect as is currently happening. RBI is injecting liquidity into the system in a big way.
- Despite this, the money multiplier is low.
- This may be attributed to two reasons: Low credit expansion and larger leakage in the form of currency.
- The potential for money supply growth is large.
- The discussion in the monetary policy statement on inflation is focused entirely on supply availability and bottlenecks in the distribution of commodities.
- The output gap is certainly relevant.
- But equally relevant in an analysis of inflation is liquidity in the system, and its impact on output and prices with lags.
- The injection of liquidity has its limits.
Conclusion
With higher expenditure, financed through borrowings, the impact of liquidity expansion on inflation needs to be monitored.
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From UPSC perspective, the following things are important :
Prelims level: GST Council
Mains level: Paper 3- Issues with special treatment to states contributing more to GST pool
The article highlights the issues with the demand for special treatment of states with higher contribution to GST pool.
Debate on GST
- The issue of GST concessions on COVID relief has brought into focus the structural flaws in the GST structure.
- In this process, the structure and design of GST — essentially a tax on consumption — is being questioned.
- The issue of “rich” states versus “poor” ones, the decision-making process in the GST Council, and the representation of various states in the Council have also come into the focus.
Why States should be treated equally in GST Council
1) Consensus on GST
- The structure and design of GST and its basic features, as enshrined in the 101st Constitution Amendment Act, were unanimously adopted and endorsed by Parliament.
- The broader and finer points of the law, were thoroughly discussed and debated and recommended by the GST Council after a complete consensus.
- These were further debated and approved by not only Parliament but also by each of the state legislatures.
- There was complete consensus even on the issue of delegated legislation — something unheard of in a federal environment.
2) Equality of all states
- In this process of consensus building, no state was accorded even the slightest of special privilege.
- That is why the consensus surrounding GST was unprecedented whether in India or any other federation.
- Therefore, arguing for special treatment of some states is a dangerous idea, particularly in governance, and more so in a welfare state.
- For, this would open the gates for elitist arguments such as special rights for bigger taxpayers, unequal voting rights in elections and preferential treatment for a select few.
3) Issues with greater contribution to GST revenue pool
- It is not correct to argue that the GST collected in a state represents the revenue of that particular state for, under the GST mechanism, the tax deposited by a taxpayer in a state is a function of largely the value of supplies made by such taxpayer.
- Approximately 50 per cent at the aggregate level and much higher at the state level of such values are of an inter-state nature.
- In other words, most supplies made from any producing state are consumed elsewhere and the revenue in such a situation naturally and rightfully accrues to the destination state.
4) No transfers based on a formula
- It is equally fallacious to argue that under GST, most of the revenue is collected by the Union and is transferred to the states on the basis of some formula.
- The quantum of IGST revenue that is settled to any state is directly related to the returns filed in that state and the cross utilisation of credit exhibited in such returns; part of this settlement also comprises tax on supplies destined to that state, as exhibited in the returns of such suppliers.
- There is no “formula” as such for “transfer” of revenue collected by the Centre. Instead, such “transfers” are directly relatable to the consumption (whether intermediate or final) in any state.
5) Locational or geographical advantage
- There is another dimension to the higher revenue collection in a few states.
- One may note that such states enjoy locational or geographical advantages, being mostly coastal and immensely suited to the needs of trade and distribution as also manufacturing.
- Also, the disadvantage to such states on account of lower availability of certain vital minerals like coal and iron ore was undone by the principle of freight equalisation resorted to in the years following Independence.
- This contributed, in no small measure, to the development of such states.
6) Unequal transfers of Central receipts
- The argument of unequal transfers of central receipts also does not hold water, either in India or in any other federation.
- As is well known, such transfers are intended for correcting horizontal fiscal imbalances in a federation.
Conclusion
We should thus concentrate on carrying forward the glorious traditions of perhaps the only institution of co-operative federalism that we have been able to build so far.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Crop Insurance Scheme
Mains level: PMFBY succes and failures
Maharashtra CM has urged the Prime Minister for state-wide implementation of the ‘Beed model’ of the crop insurance scheme Pradhan Mantri Fasal Bhima Yojana (PMFBY).
Consider this question:
Q.Payouts released often exceed the premium collected in PMFBY. Discuss this limitation of the PMFBY where insurance firms refuse to bid in drought prone regions.
What is PMFBY?
- Launched in 2016, the flagship PMFBY insures farm losses against inclement weather events.
- Farmers pay 1.5-2% of the premium with the rest borne by the state and central governments.
- It is a central scheme implemented by state agriculture departments as per central guidelines.
- For farmers, the low rate of premium and relatively decent coverage make the scheme attractive.
- Prior to 2020, the scheme was optional for farmers who did not have loans pending, but mandatory for loanee farmers.
- Since 2020, it has been optional for all farmers. In Maharashtra, over the years, more non-loanee farmers have enrolled, although it was optional for them.
Issues faced in Maharashtra
- Voices were raised in Maharashtra about the need to change the scheme.
- Delay in claim settlement, failure to recognize localized weather events, and stringent conditions for claims were among the concerns. Another complaint was about alleged profiteering by insurance companies.
- For Maharashtra, where farmers predominantly depend of monsoon rains to water their crops, the scheme soon turned out to be non-profitable for insurance companies given the high payments they had to make.
- Payouts were close to or exceeded the premium collected in some years, leading to losses to insurance companies.
What is Beed model the state government wants implemented?
- Located in the drought-prone Marathwada region, the district of Beed presents a challenge for any insurance company.
- During the 2020 kharif season, tenders for implementation did not attract any bids. So, the state Agriculture Department decided to tweak the guidelines for the district.
- The state-run Indian Agricultural Insurance Company implemented the scheme.
- Under the new guidelines, the insurance company provided a cover of 110% of the premium collected, with caveats.
- If the compensation exceeded the cover provided, the state government would pay the bridge amount.
- If the compensation was less than the premium collected, the insurance company would keep 20% of the amount as handling charges and reimburse the rest to the state government.
Greater role for States
- In a normal season where farmers report minimal losses, the state government is expected to get back money that can form a corpus to fund the scheme for the following year.
- However, the state government would have to bear the financial liability in case of losses due to extreme weather events.
Why is the government pushing for it for the entire state?
- The reason why Maharashtra is pushing for this scheme is that in most years, the claims-to-premium ratio is low with the premium being paid to the company.
- In the Beed model, the profit of the company is expected to reduce and the state government would access another source of funds.
- The reimbursed amount can lead to lower provisioning by the state for the following year, or help in financing the paying the bridge amount in case of a year of crop loss.
- For farmers, however, this model does not have any direct benefit.
Challenges ahead
- The chances of the model being implemented for the present Kharif season appear slim.
- Questions remain on how the state government is going to raise the excess amount, and how the reimbursed amount would be administered.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: G7
Mains level: Read the attached story
At the invitation of UK PM, PM Modi will participate in the Outreach Sessions of the G7 Summit this week.
Note the members of G7 and G20. UPSC may puzzle you asking which G20 nation isn’t a member of G7.
The Group of 7
- The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
- It is an intergovernmental organization that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
- Initially, it was formed as an effort by the US and its allies to discuss economic issues.
- The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
- It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
- Canada joined the group in 1976, and the European Union began attending in 1977.
Evolution of the G-7
- When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
- And it was a cosy club for tackling issues such as the response to oil shocks.
- Now it accounts for about 40% of global gdp.
- Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader g20.
- The G-7 became the G-8 in 1997 when Russia was invited to join.
- In 2014, Russia was debarred after it took over Crimea.
Agenda of G-7 this year
- The UK currently holds the presidency of the G7 and has invited India, along with Australia, Republic of Korea and South Africa, as guest countries for the Summit.
- The meetings will be held in hybrid mode.
- The theme for the summit is ‘Build Back Better’ and the UK has outlined four priority areas for its presidency:
- leading the global recovery from coronavirus while strengthening resilience against future pandemics;
- promoting future prosperity by championing free and fair trade;
- tackling climate change and preserving the planet’s biodiversity; and
- championing shared values and open societies.
Is India attending it for the first time?
- Since 2014, this is the second time PM Modi will be participating in a G7 meeting.
- India had been invited by the G7 French Presidency in 2019 to the Biarritz Summit as a “Goodwill Partner” and the PM participated in the Sessions on ‘Climate, Biodiversity and Oceans’ and ‘Digital Transformation’.
- During Prime Minister Manmohan Singh’s UPA rule, India attended the G8 five times.
- Russia was indefinitely suspended in March 2014 after the annexation of Crimea, reducing the count of the G8.
What to watch out for at this G-7 summit?
- This will be President Biden’s first visit to Europe, where he will signal his key message “America is back”.
- He has flown down to the UK, where he will meet British Prime Minister Boris Johnson, Queen Elizabeth II and other allies at the G7 summit.
- He’ll continue on to a NATO conclave in Brussels on June 14, before his conversation with Russian President Vladimir Putin in Geneva two days later.
- This sequencing of events has been done to coordinate Washington’s moves of consultations with allies before meeting the Russian President.
- This ties in well with the US President’s initial foray into multilateralism — he held the first summit of leaders of “the Quad” — Australia, India, Japan and the US.
- This was aimed at increasing vaccine production and aligning their positions toward Beijing.
Why is this meeting important?
- The US-Russia relations are going through a rough patch — some analysts even refer to it as possibly their nadir since the end of the Cold War.
- Interestingly, the venue of the Biden-Putin meeting — Geneva — is the place where then US President Ronald Reagan held his first meeting with Soviet Union’s Mikhail Gorbachev in 1985.
- The key element that is making Washington take the important step of engaging with Moscow to contain the damage in their bilateral ties is that the US wants to focus on its strategic rival, China.
What’s in it for India?
- India has long called for reforming global institutions and groupings to reflect modern-day geopolitical realities.
- Trumps’ offer to expand G7 fitted into New Delhi’s idea of being part of the global high table.
- With an assertive China looming, the US is calling all like-minded countries to partner in dealing with Beijing.
- If Biden and Johnson want to take the leap forward and constitute a global democratic alliance of 10-11 countries, it will be an important signal.
- India is likely to get vaccines from the US — both directly as well as through COVAX. Initial estimates suggest India will get about 2 to 3 million vaccines in the first tranche.
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From UPSC perspective, the following things are important :
Prelims level: Breach of Privilege
Mains level: Parliamentary privileges
An MP has filed a breach of privilege motion against the Lakshadweep Administrator for denying him permission to visit the islands, preventing him from meeting his cadre and people of the island.
Breach of Privilege
- The powers, privileges and immunities of either House of the Indian Parliament and of its Members and committees are laid down in Article 105 of the Constitution.
- Article 194 deals with the powers, privileges and immunities of the State Legislatures, their Members and their committees.
- Parliamentary privilege refers to the right and immunity enjoyed by legislatures, in which legislators are granted protection against civil or criminal liability for actions done or statements made in the course of their legislative duties.
Answer this PYQ in the comment box:
Q.With reference to the Parliament of India, which of the following Parliamentary Committees scrutinizes and reports to the House whether the powers to make regulations, rules, sub-rules, by-laws etc. conferred by the constitution of delegated by the Parliament are being properly exercised by the Executive within the scope of such delegation?
(a) Committee on Government Assurances
(b) Committee on Subordinate Legislation
(c) Rules Committee
(d) Business Advisory Committee
What constitutes a breach of this privilege?
- While the Constitution has accorded special privileges and powers to parliamentarians and legislators to maintain the dignity and authority of the Houses, these powers and privileges are not codified.
- Thus, there are no clear, notified rules to decide what constitutes a breach of privilege, and the punishment it attracts.
- Any act that obstructs or impedes either House of the state legislature in performing its functions, or which obstructs or impedes any Member or Officer of such House in the discharge of his duty, or has a tendency, directly or indirectly, to produce such results is treated as a breach of privilege.
- It is a breach of privilege and contempt to print or publish libel reflecting on the character or proceedings of the House or its Committees or on any member of the House for or relating to his character or conduct as a legislator.
Procedure followed in cases of an alleged breach
- The Legislative Assembly Speaker or Legislative Council Chairman constitutes a Privileges Committee consisting of 15 members in the Assembly and 11 members in the Council.
- The members to the committee which has quasi-judicial powers are nominated based on the party strength in the Houses.
- The Speaker or Chairman first decides on the motions.
- If the privilege and contempt are found prima facie, then the Speaker or Chairman will forward it to the Privileges Committee by following the due procedure.
- At present, there is no Privileges Committee in either House of the state legislature.
- The Committee will seek an explanation from all the concerned, will conduct an inquiry and will make a recommendation based on the findings to the state legislature for its consideration.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Atlantic Charter
US President Joe Biden and British Prime Minister Boris Johnson seeks to sign a new Atlantic Charter.
What is Atlantic Charter?
- The Atlantic Charter was a statement issued on 14 August 1941 that set out American and British goals for the world after the end of World War II.
- The charter’s adherents signed the Declaration by United Nations on 1 January 1942, which was the basis for the modern United Nations.
- The charter inspired several other international agreements and events that followed the end of the war.
- The dismantling of the British Empire, the formation of NATO, and the General Agreement on Tariffs and Trade (GATT) all derived from the Atlantic Charter.
Why sign new charter?
- At their meeting, the two leaders plan to sign what they’re calling a new Atlantic Charter, pledging to “defend the principles, values, and institutions of democracy and open societies.”
- US hopes to reassure European allies that the US had shed the transactional tendencies of Donald Trump’s term and is a reliable partner again.
- The US staunchly opposed the Brexit movement, the British exodus from the European Union that Mr. Johnson championed, and has expressed great concern with the future of Northern Ireland.
- Biden once called the British leader a “physical and emotional clone” of Trump.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CHIME Telescope, Fast Radio Bursts
Mains level: NA
Scientists with the Canadian Hydrogen Intensity Mapping Experiment (CHIME) Collaboration have assembled the largest collection of fast radio bursts (FRBs) in the telescope’s first FRB catalog.
CHIME Telescope
- CHIME is an interferometric radio telescope at the Dominion Radio Astrophysical Observatory in British Columbia, Canada.
- It consists of four antennas consisting of 100 x 20-meter cylindrical parabolic reflectors with 1024 dual-polarization radio receivers suspended on support above them.
- The telescope receives radio signals each day from half of the sky as the Earth rotates.
- While most radio astronomy is done by swiveling a large dish to focus light from different parts of the sky, CHIME stares, motionless, at the sky, and focuses incoming signals using a correlator.
- This is a powerful digital signal processor that can work through huge amounts of data, at a rate of about seven terrabytes per second, equivalent to a few percent of the world’s Internet traffic.
What are FRBs?
- FRBs are oddly bright flashes of light, registering in the radio band of the electromagnetic spectrum, which blaze for a few milliseconds before vanishing without a trace.
- These brief and mysterious beacons have been spotted in various and distant parts of the universe, as well as in our own galaxy.
- Their origins are unknown and their appearance is highly unpredictable.
- But the advent of the CHIME project has nearly quadrupled the number of fast radio bursts discovered to date.
- With more observations, astronomers hope soon to pin down the extreme origins of these curiously bright signals.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: AISHE Survey
Mains level: Read the attached story
Union Education Minister has announced the release of the report of All India Survey on Higher Education (AISHE) 2019-20.
This newscard provides useful data about the state of higher education in India on various parameters. Such data should not be missed while substantiating any point in answer writing.
About AISHE
- AISHE was established by the Ministry of HRD for conducting an annual web-based survey, thereby portraying the status of higher education in the country.
- The survey is conducted for all educational institutions in India on many categories like teachers, student enrolment, programs, examination results, education finance, and infrastructure.
- This survey is used to make informed policy decisions and research for the development of the education sector.
- This Report provides key performance indicators on the current status of Higher education in the country.
Highlights of the 2019-20 Report
(1) Total Enrolment
(2) Gross Enrolment Ratio
(3) Gender Parity Index (GPI)
- GPI in Higher Education in 2019-20 is 1.01 against 1.00 in 2018-19 indicating an improvement in the relative access to higher education for females of eligible age group compared to males.
(4) Pupil-Teacher Ratio
- TPR in Higher Education in 2019-20 is 26. In 2019-20: Universities: 1,043(2%); Colleges: 42,343(77%) and stand-alone institutions: 11,779(21%).
(5) Enrolment in higher education
- 38 crore Students enrolled in programs at under-graduate and post-graduate levels.
- Out of these, nearly 85% of the students (2.85 crore) were enrolled in the six major disciplines such as Humanities, Science, Commerce, Engineering & Technology, Medical Science and IT & Computer.
(6) Doctorate pursuance
- The number of students pursuing PhD in 2019-20 is 2.03 lakh against 1.17 lakh in 2014-15.
(7) Total number of teachers
- The Total Number of Teachers stands at 15,03,156 comprising of 57.5% male and 42.5% female.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Freight transport in India
Mains level: NA
NITI Aayog, RMI and RMI India’s new report, Fast Tracking Freight in India: A Roadmap for Clean and Cost-Effective Goods Transport, presents key opportunities for India to reduce its logistics costs.
Freight transport in India
- Freight transportation is a critical backbone of India’s growing economy, and now more than ever, it’s important to make this transport system more cost-effective, efficient, and cleaner.
- Due to the rising demand for goods and services, freight transport demand is expected to grow rapidly in the future.
- While freight transport is essential to economic development, it is plagued by high logistics costs and contributes to rising CO2 emissions and air pollution in cities.
Highlights of the Roadmap
- According to the report, India has the potential to:
- Reduce its logistics cost by 4% of GDP
- Achieve 10 gigatonnes of cumulative CO2 emissions savings between 2020 and 2050
- Reduce nitrogen oxide (NOx) and particulate matter (PM) emissions by 35% and 28%, respectively, until 2050
- The report outlines solutions for the freight sector related to policy, technology, market, business models, and infrastructure development.
Various recommendations
- The recommendations include increasing the rail network’s capacity, promoting intermodal transport, improving warehousing and trucking practices, policy measures and pilot projects for clean technology adoption, and stricter fuel economy standards.
- When successfully deployed at scale, the proposed solutions can help India establish itself as a leader in logistics innovation and efficiency in the Asia–Pacific region and beyond.
Transforming the system
- As India’s freight activity grows five-fold by 2050 and about 400 million citizens move to cities, a whole system transformation can help uplift the freight sector.
- This transformation will be defined by tapping into opportunities such as efficient rail-based transport, the optimization of logistics and supply chains, and a shift to electric and other clean-fuel vehicles.
- These solutions can help India save ₹311 lakh crore cumulatively over the next three decades.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Hindu Kush Himalayas
Mains level: Melting of glaciers
Up to two billion people in southeast Asia can face food and water shortages even as the Hindu Kush Himalayan (HKH) mountain ranges lose up to two-thirds of its ice by 2100, a United Nations-backed research flagged.
Hindu Kush Himalayas
- The HKH region, often referred to as the ‘Third Pole’, is spread over 3,500 square kilometers across eight countries including India, Nepal, and China.
- The range forms the western section of the Hindu Kush Himalayan Region (HKH) and is the westernmost extension of the Pamir Mountains, the Karakoram, and the Himalayas.
- It divides the valley of the Amu Darya (the ancient Oxus) to the north from the Indus River valley to the south.
- It contains the world’s third-largest storage of frozen water after the Antarctica and Arctic.
- Over 240 million people live in the region’s mountains; 1.7 billion live in the river basins downstream, while food grown in these basins reaches three billion people.
Continuous warming
- HKH region continues to warm through 21st century even if the world was able to limit global warming at the agreed 1.5 degrees Celsius.
- Another study published in 2019 on the ice thickness of glaciers had estimated that glaciers in the HKH may contain 27 percent less ice than previously suggested.
- The HKH region lies downwind from some of the most heavily polluted places on Earth. This threatens agriculture, climate as well as monsoon patterns.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Need for investment in public healthcare in South Asia
The article contrasts the public healthcare system in South Asian countries with that of their Southeast Asian peers and highlights the shortcomings.
Subpar public healthcare system
- Super spreader events, a fragile health infrastructure neglected for decades, citizens not following health protocols, and logistical mismanagement were the factors responsible for the destruction in the second Covid-19 wave.
- What has exacerbated the situation is a subpar public healthcare system running on a meagre contribution of a little over 1% of India’s Gross Domestic Product (GDP).
- While the private medical sector is booming, the public healthcare sector has been operating at a pitiful 0.08 doctors per 1,000 people, World Health Organization’s (WHO) prescribed standard ois1:1000.
- India has only half a bed available for every 1,000 people, which is a deficient figure even for normal days.
- Bangladesh and Pakistan fare no better, with a bed to patient ratio of 0.8 and 0.6, respectively, and a doctor availability of less than one for every 1,000 people.
- While ideally, out-of-pocket expenditure should not surpass 15% to 20% of the total health expenditure, for India, Bangladesh and Pakistan, this figure stands at an appalling 62.67%, 73.87% and 56.24%, respectively.
Lack of investment in healthcare
- Major public sector investments by the ‘big three’ of South Asia, i.e., India, Pakistan, and Bangladesh, are towards infrastructure and defence, with health taking a backseat.
- While India has the world’s third-largest military expenditure, its health budget is the fourth-lowest.
- Indian government in this year’s budget highlighted an increase of 137% in health and well-being expenditure, a closer look reveals a mismatch between facts and figures.
- In Pakistan, even amidst the pandemic, the defence budget was increased while the spending on health remained around $151 million.
- Not too far behind is Bangladesh, with decades of underfunding culminating in a crumbling public healthcare system.
- Major public sector investments by the ‘big three’ of South Asia, i.e., India, Pakistan, and Bangladesh, are towards infrastructure and defence, with health taking a backseat.
- A quick look at pre-pandemic sectoral allocations explains the chronically low status of human development indicators in the three countries.
Learning from Southeast Asia
- Southeast Asia has prioritised investments in healthcare systems while broadening equitable access through universal health coverage schemes.
- Vietnam’s preventive measures focused on investments in disease surveillance and emergency response mechanisms.
- Even countries like Laos and Cambodia are making a constant effort towards improving the healthcare ecosystem.
- All have done much better than their South Asian peers.
Conclusion
Learning from the devastation unleashed by the pandemic, South Asian countries must step up investment in their public healthcare sectors to make them sustainable, up to date and pro-poor; most importantly, the system should not turn its back on citizens.
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