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Oil and Gas Sector – HELP, Open Acreage Policy, etc.

Impacts of the Oil Price War

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Pricing mechanism of fuels in India.

Mains level: Paper 3- Implications of oil-price war for India.

Context

A “pass-through effect” of low crude prices is improbable given the constrained fiscal space.

The backdrop to the oil price war

  • Against the backdrop of the covid-19 pandemic and the economic slowdown, Saudi Arabia-led oil cartel OPEC (Organization of the Petroleum Exporting Countries) wanted to curtail oil production by 1.5 million barrels per day.
  • However, as Russia has not agreed to this proposal, Saudi Arabia has declared a price war by reducing the Brent crude oil price from $65 per barrel in end-December 2019 to $33 now.
  • The race to the bottom to this extent by Brent is the first time ever since the 1991 Gulf crisis.

Would it impact India by providing a fiscal dividend?

  • A $20 reduction in Brent oil prices can reduce India’s current account deficit.
  • However, the instability in oil prices is a short-run phenomenon, and India cannot anticipate a prolonged fiscal dividend.
  • Quite contrary to the expectations about a “pass-through effect” of low crude oil prices on consumers, the Government of India (GoI) raised the excise duty on petrol and diesel by `3 per litre.
  • The special excise duty on petrol was hiked by 2 to 8 per litre in the case of petrol and to 4 in the case of diesel.

Fuel price determination in India

  • There has been no “pass-through effect” primarily because the price determination of petrol and diesel in India is not linked to crude oil prices in the international market.
  • Price determination is done through dynamic pricing, termed as “trade parity pricing,” based on the international prices of petrol and diesel (finished products) prevailing in the international markets, and not on crude oil per se.
  • An obvious question here is whether the crude oil prices and the petrol-diesel prices move in tandem in the international market. Not always.
  • Globally, the market mechanism of ad hoc configurations of demand and supply of crude oil is different from the demand-supply dynamics of petrol and diesel, and, in turn, their pricing behaviour will also be distinctly different.
  • The goi fixes the price of petrol and diesel based on dynamic pricing and trade parity pricing by converting the price from dollars to Indian rupees.

Factors affecting fuel prices in India

  • The rupee-dollar exchange rate mechanism also affects the pricing of petrol and diesel.
  • This can offset the benefits India can reap from comparatively lower prices of crude oil in the international market, quoted in dollars.
  • The other components of this pricing formula are: 1.The cost of inland freight marketing costs. 2. Taxes levied by the centre and the state governments. 3. The margins (charged by the oil companies) and (the dealer) commissions.
  • It is, therefore, obvious that low international prices per se do not translate into lower prices for petrol and diesel in India as long as the centre and states levy exorbitant taxes on these products.
  • The interstate variation in the prices of petrol and diesel is also significantly explained by the differentials in taxes imposed.
  • Yet another factor to be borne in our minds is that the effect of international prices on the in-house pricing of petrol and diesel in India is not instantaneous or spontaneous.
  • There is a time lag involved in the pricing process.
  • Even though the goi uses the daily pricing mechanism in the dynamic pricing formula of petrol and diesel, the international prices component enters into the pricing equation as an international “benchmark price” of petrol and diesel.
  • Today’s price in India reflects the average international prices of petrol and diesel of the previous fortnight.
  • However, the fuel prices will not come down in a fortnight’s time.
  • This is because, in the price equation, the international price component is just one among many components, whereas the tax component constitutes a dominant part in the equation.

The Covid-19 factor

  • The covid-19 outbreak has started striking the financial markets and the real sector, and especially investment in the energy sector.
  • So, the lowering of the oil price by Brent cannot help the global economy from recession.
  • Overall, the oil price war can negatively affect the investment decisions in the energy sector and can be a drag on global growth.
  • Due to the covid-19 outbreak, there could be reduced oil-drilling activities in the energy sector, and there will be some cutbacks in demand and, in turn, in the capex energy infrastructure.
  • Analysts have revealed that every $10 fall in oil prices transfers around 0.3% of the global gross domestic product from oil-producing nations to oil-consuming nations.
  • The interest rate strategists are also concerned as the Russian 10-year bond yields reached a record low of 2.56%, and Saudi Arabian government bonds maturing in April 2030 are currently at 2.38%.

Microeconomic policy to tackle oil price war?

  • The US Federal Reserve has lowered the federal funds’ interest rate by 50 basis points (one-half of a percentage point) to 1.25%.
  • The Bank of Canada also reduced the bank rate by 50 basis points to the US level. The stock market indexes fell to the levels of  2008.
  • The 1.25% federal funds rate now is below the 2.5% US inflation rate. However, monetary policy has failed to trigger the economy.
  • As mentioned by the European Central Bank, “targeting” rather than generalised public policy needs to be done.

Conclusion

  • The Reserve Bank of India policy tools may be ineffective now to tackle the slowdown, especially against the backdrop of the worsening of the economy from the effects of covid-19. The re-dominance of fiscal policy by the North Block is what is keenly awaited, for an economic turnaround.

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Issues related to Economic growth

Mind your own economic health

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- What are the essential reforms essential for reshaping the India's economy.

Context

The fragility of the global economy has been exposed twice within the last two decades. In 2008, the collapse of a financial services firm in the US triggered a global financial meltdown. In 2020, the emergence of a novel virus in a food market in Wuhan has done it again.

The global economy and system theory

  • Systems theory: It that systems take various forms. Broadly speaking, there are three types of systems-1. Chaotic systems. 2. Engineered Systems, and 3. Complex self-adaptive systems.
  • As the weather in a storm, chaotic systems are unpredictable and uncontrollable.
  • The global economy is behaving like a chaotic system.
  • Engineered systems, on the other hand, can be controlled quite tightly, like machines.
  • However, they are dull. A nuclear power plant is a well-engineered system. We would want it to do just what it is supposed to and not produce any surprises.
  • In contrast to these systems is the design of nature. It is a complex self-adaptive system. It produces myriad innovations. It evolves. Yet, its fundamental stability is very reassuring.
  • The realisation that mankind’s technologies and engineering marvels are disrupting nature’s stability, has raised alarms about the architecture of global economic governance.
  • More about self-adaptive systems: The architecture of complex self-adaptive systems is formed by essential design principles. One is “permeable boundaries”.
  • The many parts of a complex self-adaptive system have permeable boundaries between themselves. Each part has its integrity. The parts exchange information and energy across their boundaries as required.
  • When there are no boundaries within, or they are too weak, an accident at one end will soon sink the whole ship.

Consequences of boundarylessness within the global financial system

  • The drive for boundarylessness within the global financial system since the 1990s caused the sloshing around of contagion during the global financial crisis in 2008.
  • Whereas global economic growth has undoubtedly been enabled by global supply chains, the vulnerability of economies everywhere to their disruption has become painfully evident with the COVID-19 pandemic.
  • Complex adaptive systems exhibit “fractal-like” shapes. Their parts are complex, combining the same diverse energies that permeate across the whole.
  • Social forces, economic forces, and environmental forces combine within all countries, and in parts within countries too, albeit in different ways.
  • Though the parts are similar to each other, they are not the same. Therefore, the same solutions will not fit all.
  • An insight from systems theory is that global systemic problems such as climate change, persistent economic inequality, among others, will require local systems solutions.

Six reforms for reshaping Indian economy

  • Stress test: Crises create stress tests for the health of systems. The financial crisis of 2008 exposed the fragility of an inter-connected and under-regulated financial system.
  • The COVID-19 pandemic has exposed the architectural weaknesses in the global economy.
  • Instead of worrying too much about the reversal of globalisation, national leaders should now focus on the well-being of their citizens and the health of their own economies.
  • Six reforms are essential for reshaping the Indian economy.
  • First, focus on the provision of universal social security, rather than on the misdirected demand for even more “flexibility” in labour laws
  • Second, respect the “informal” sector which provides the majority of Indians with opportunities to earn incomes, and give it more strength. It is also a great source for practical innovations and widespread entrepreneurship.
  • Third, change the economic paradigm from “trickle-down” to “build up”. Build the internal engine of growth of India’s economy by increasing incomes of India’s citizens.
  • Fourth, strengthen public health services. Medical tourism may put India’s private hospitals on the global map. However, they are not the solution to India’s huge health problems.
  • Fifth, reform and strengthen the public education system. It will contribute greatly to creating a level playing field for all children.
  • Sixth, strengthen local governance in India’s towns and districts to develop and implement local systems solutions. The well-being of Indian citizens will be improved, and India’s economy will be more resilient too.

Conclusion

  • All governments are asking their citizens to increase “social distancing” between themselves to prevent the spread of a health contagion. It would be wise for countries to maintain sufficient “economic distancing” amongst themselves too. They should mind the health of their own economies. Thereby, they will improve the health of the global economy too.

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Coronavirus – Economic Issues

Dressing a wounded economy

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- Measures to mitigate the impact of steps taken to deal with the coronavirus on Indian economy.

Context

There are going to be the economic impact of the actions designed to combat the virus. The two major tools that the government has available before it are monetary policy and fiscal actions.

Impact of virus and additional slowdown

  • The impact of the coronavirus pandemic is now felt by almost every country.
  • First, there are the health effects of the virus.
  • Second is the economic impact of the various actions that have to be taken to combat the virus.
  • The world is experiencing an additional slowdown on top of the contracting tendencies already present and India is no exception.
  • The economic impact on India can be traced through four channels: external demand; domestic demand; supply disruptions, and financial market disturbances.

Impact on export

  • As the economies of the developed countries slow down (some people are even talking of recession), their demand for imports of goods will go down.
  • This lower demand will affect our exports which are even now not doing well.
  • In fact, after six months of negative growth, it was only in January that Indian exports showed positive growth.
  • The extent of decline will depend on how severely the other economies are affected. Not only merchandise exports but also service exports will suffer.
  • Besides these, the IT industry, travel, transport and hotel industries will be affected.

Oil price factor

  • The only redeeming feature in the external sector is the fall in oil prices.
  • India’s oil import bill will come down substantially.
  • But this will affect adversely the oil-exporting countries which absorb Indian labour. Remittances may slow down.

Supply disruption

  • To ward off the spread of the coronavirus, the government has declared a lockdown of the country.
  • As passengers travel less, the transportation industry, road, rail and air, is cutting down schedules, sometimes drastically.
  • This will affect in turn several other sectors closely related to them. The laying off of non-permanent employees has already started.
  • As people, in general, buy less, shops stock less, which in turn affects production.
  • Perhaps retail units will be first to be affected and they will, in turn, transmit this to the production units.
  • One is unable to make an estimate of the reduction in economic activity at this point.
  • If the situation is not reversed soon, there can be a serious decline in the growth rate during 2020-21.
  • Supply disruptions can occur because of the inability to import or procure inputs.
  • The break in supply chains can be severe. It is estimated that nearly 60% of our imports are in the category of ‘intermediate goods’.
  • Imports from countries which are affected by the virus can be a source of concern.
  • The domestic supply chain can also be affected as the inter-State movement of goods has also slowed down.

Financial market issue

  • Financial markets are the ones which respond quickly and irrationally to a pandemic such as the coronavirus pandemic. The entire reaction is based on fear.
  • The stock market in India has collapsed. The indices are at a three-year low.
  • Foreign Portfolio Investors have shown great nervousness and the safe haven doctrine operates.
  • In this process, the value of the rupee in terms of the dollar has also fallen.
  • The stock market decline has a wealth effect and will have an impact on the behaviour of particularly high wealth holders.
  • How does the government deal with this sudden decline in economic activity which has come at a time when the economy is not doing well? The two major tools that are available are monetary policy and fiscal actions.

Two major tools with government- Monetary Policy and Fiscal Action

  • Monetary policy: In a situation like this can only act to stimulate demand by a greater push of liquidity and credit.
  • The policy rate has already been brought down by 135 basis points over the last several months. There is obviously scope for further reduction.
  • But our own history, as well as the experience of other countries, clearly show that beyond a point, a reduction in interest rates does not work.
  • It is the environment of the overall economy that counts. Credit may be available. But there may not be takers.
  • Any substantial reduction of policy rate can also affect savers. Interest is a double-edged sword.
  • What the RBI needs to do? IT needs to go beyond cutting the policy rate.
  • A certain amount of regulatory forbearance is required to make the banks lend.
  • Even commercial banks on their own will have to think in terms of modifying norms they use for inventory holding by production units.
  • Repayments to banks can be delayed and the authorities must be willing to relax the rules.
  • Any relaxation of rules regarding the recognition of non-performing assets has to be across the entire business sector.
  • The authorities must be ready to tighten the rules as soon as the situation improves. This is a temporary relaxation and must be seen as such by banks and borrowers.
  • Fiscal Policy: Fiscal actions have a major role to play. Once again, the ability to play a big role is constrained by the fact that the fiscal position of the government of India is already difficult.
  • Even without the pandemic, the fiscal deficit of the Central government will turn out to be higher than that indicated in the budgets for 2019-20 and 2020-21.
  • Revenues are likely to go down further because of the virus-related slowdown in economic activity.
  • In this context, the ability to undertake big-ticket expenditures is
  • But there are some ‘musts’. The virus has to be fought and brought down. All expenditures to test and to take care of patients must be incurred.
  • Now that private hospitals are allowed to test, the cost of the people going to private hospitals must also be met by the government.
  • The involvement of private hospitals has become necessary. It is mentioned that a test costs ₹4,500. The total cost can be substantial if the numbers to be tested run in the thousands and more.
  • This may sound exaggerated. But we must be prepared so that we avoid the tragedy of Italy.
  • Therefore, the first priority is to mobilise adequate resources to meet all health-related expenditures which includes the supply of accessories such as masks, sanitisers and materials for tests.
  • The challenge is not only fiscal but also organisational.

Mitigating the impact on the job sector

  • Serious concerns have been expressed about people who have been thrown out of employment. These are mostly daily-wage earners and non-permanent/temporary employees.
  • In fact, some of the migrant labour have gone back to home States. We must appeal to the business units to keep even non-permanent workers on their rolls and provide them with a minimal income.
  • Some relief can be thought of by the government for such business units even though this can be misused.
  • However, in general, in the case of sectors such as hospitality and travel, the government can extend relief through deferment of payments of dues to the government.
  • Issues in making cash transfer universal: There is talk of providing cash transfer to individuals. There is already a programme for rural farmers with all the limitations.
  • For a system of cash transfer to be workable, it has to be universal.
  • At this moment when all the energies of the government are required to combat the virus, to institute a system of universal cash transfer will be a diversion of efforts.
  • The burden on the government will depend upon the quantum of per capita cash transfer and the length of the period.
  • The government should advise all business units not to retrench workers and provide some relief to them to maintain the workers.
  • A supplemental income scheme for all the poor can be thought of once the immediate problem is resolved.
  • Provision of food and other essentials must be made available to the affected as is done at the time of floods or drought. States must take the initiative.

Conclusion

The fiscal deficit is bound to go up substantially. The higher borrowing programme will need the support of the RBI if the interest rate is to be kept low. The monetisation of the deficit is inevitable. The strong injection of liquidity will store up problems for the next year. Inflation can flare-up. The government needs to be mindful of this. All the same, the government must not stint and go out in a massive way to combat the virus. This is the government’s first priority.

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Coronavirus – Economic Issues

PM Gareeb Kalyan Scheme

Note4Students

From UPSC perspective, the following things are important :

Prelims level: PM Gareeb Kalyan Scheme

Mains level: Coronovirus outbreak and its mitigation

Union Finance Minister has announced the Pradhan Mantri Garib Kalyan Scheme, under which the government would provide a relief package of Rs 1.7 trillion to the underprivileged, poor and migrant workers affected by a lockdown amid the Covid-19 crisis.

PM Garib Kalyan Scheme

  • PM Gareeb Kalyan scheme is to have two parts — cash transfer and food security.
  • The package aims to take care of the welfare concerns of the poor and migrant workers who have been suffering because of a nationwide lockdown.

Two silos of the scheme

1) PM Gareeb Kalyan Anna Yojana

  • 800 million poor people in the country to get 5 kg of rice/wheat per month free of cost, in addition to the 5 kg they already get.
  • Additionally, each household to get 1 kg of preferred dal for free for the next three months

2) Cash transfer scheme

It has nine sub-parts

  • Farmers: First instalment of the PM-KISAN payment of Rs 2,000 to be frontloaded; move to benefit 87 million
  • MGNREGS: Wage increased from Rs 182 to Rs 202 per day. A wage increase to benefit 50 million families, as there will be about 2000 increase in their income
  • Poor widows, aged, and divyang: Ex-gratia of Rs 1,000 for the next three months, in two instalments. 30 million people to benefit. transfers to be done through direct benefits transfer (DBT)
  • Women with Jan Dhan Yojana accounts: 200 million to benefit from Rs 500 ex-gratia for the next 3 months
  • Beneficiaries of the Ujjwala scheme: 80 million households benefit from the gas cylinders provided under the scheme. These beneficiaries will get free cylinders for three months in view of the disruption the coronavirus lockdown will cause.
  • Women in self-help groups: 6.3 million SHGs get up to Rs 10 lakh collateral-free loans under the Deen Dayal Upadhyaya National Rural Mission scheme. The cap has been doubled to Rs 20 lakh. The move will benefit 70 million households
  • Organised sector workers: Two parts to this. First, the Government of India will pay the EPF contribution of both employee and employer for the next three months. This will be for all those establishments which have up to 100 employees, 90 per cent of whom earn less than Rs 15,000 a month
  • Construction workers: States to be directed to utilise the Rs 31,000 crore welfare fund for building and construction workers for the benefit of 35 million workers in the midst of the coronavirus crisis
  • District mineral fund: State govts. to be urged to utilise this fund for medical screening, medical testing and providing health care services in the wake of the coronavirus crisis

Other initiatives

  • Insurance cover for healthcare workers attending to Covid-19 patients: Rs 50 lakh per person.
  • Two million health workers to benefit from the insurance scheme.
  • In what will benefit 8 million employees and 400,000 establishments, the EPFO regulation will be amended to allow the withdrawal of up to 75 per cent of their corpus as non-refundable advance, or three months’ salary, whichever is less.

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Minimum Support Prices for Agricultural Produce

MSP for Minor Forest Produce Scheme

Note4Students

From UPSC perspective, the following things are important :

Prelims level: MSP for MFP Scheme

Mains level: MSP for MFP Scheme

The Union government’s ‘mechanism for the marketing of minor forest produce (MFP) through minimum support price (MSP) and development of value chain for MFP’ scheme can offer respite to forest-dependent labourers in the wake of novel coronavirus (COVID-19) outbreak, according to experts.

About MSP for MFP Scheme

  • The scheme, launched by the Centre in August 2013, provides fair price for MFP collected by tribals through MSP.
  • It is designed as a social safety net for improvement of livelihood of MFP gatherers by providing them fair price for the MFPs they collect.
  • MFP comprises all non-timber forest produce of plant origin such as bamboo, brush wood, stumps, cane, tussar, cocoons, honey, wax, lac, tendu or kendu leaves, medicinal plants and herbs, roots, tubers, etc, according to the Forest Rights Act, 2006.
  • The Scheme was been implemented in eight States having Schedule areas as listed in the Fifth Schedule of the constitution of India.
  • From November 2016, the scheme is applicable in all States.

Issues in implementation

  • Almost 60-70 per cent income of forest dwellers depends on collection and sale of MFP, according to the tribal affairs ministry.
  • However, the scheme has not been activated because in most cases, states have not given their 25 per cent share.

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Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

‘Contact tracing’

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not Much

Mains level: ‘Contact tracing’ and its significance to control disease outbreaks

As the number of coronavirus cases in India increases, authorities in different states are relying on contact tracing, a concept in epidemiology that involves tracing the number of people an infected person comes in contact with.

The idea behind contact tracing is to stop the outbreak by breaking the transmission chains.

What is Contact Tracing?

  • Contact tracing is not a novel concept and has been used as a method to track cases of the Ebola virus in Africa.
  • It is one of the methods of detecting an outbreak and the number of infected people.
  • In 2014, when the first Ebola cases began to be reported in Sierra Leone, a contact tracing mechanism was devised.
  • According to the Centre for Disease Control (CDC), the system in the district was able to identify 13 Ebola cases, which would have been overlooked otherwise.

Various steps involved

According to WHO contact tracing can be broken down into three steps:

1) Contact identification:

  • This involves identifying the contacts of the infected person by asking about the person’s activities and those of people around them since the onset of illness.
  • In the case of the first positive COVID-19 patient from Chandigarh for instance, a chain of 119 people was traced directly or indirectly to the patient.

2) Contact listing:

  • This means listing all those people who came in contact with the infected person.
  • Efforts should be made to identify every listed contact and to inform them of their contact status, what it means, the actions that will follow, and the importance of receiving early care if they develop symptoms.
  • In some areas across India, authorities are releasing lists of those who are quarantined and are identifying their houses by putting quarantine posters in front of their houses.

3) Contact follow-up:

  • This step involves regular follow-ups with all the contacts to monitor for symptoms and test for signs of infection.

Limitations of Contact Tracing

  • Since everyone has many contacts, contact tracing is useful when there are only a few cases.
  • At this point, in many countries, we have so many cases that everyone would be contacted. This is essentially the lockdown — everybody isolates.
  • However, while a fifth of the world’s population is currently isolated and under lockdown, it may not be feasible to trace contacts of all the infected patients given the scale of the current outbreak.

Way forward

  • While contact tracing is an important step during a disease outbreak, it is insufficient alone in controlling it, requiring other interventions.
  • Rapid and effective contact tracing can reduce the initial number of cases, which would make the outbreak easier to control overall.
  • Effective contact tracing and isolation could contribute to reducing the overall size of an outbreak or bringing it under control over a longer time period.

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Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

Why need a 21-day lockdown period?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: COVID 19

Mains level: Coronovirus outbreak and its mitigation

Amid diverse opinions on nationwide lockdown, there is a public health/epidemiological significance to the 21-day lockdown period announced by PM.

What led PM to impose 21-day lockdown?

  • It seems that rich scientific data has fed this decision to announce a 21-day lockdown period.
  • In fact, 21-day quarantines have been discussed elaborately in the context of Ebola and the calculations are based on the estimated incubation period of the virus in a human host.
  • The 21-day quarantine value is derived from interpretations of outbreak data, past and present, public health experts said.

Median incubation period

  • In epidemiological terms, the logic is that we have arrived at an incubation period of 14 days.
  • Give another week for the residual infection to die out, for the tail end, to be entirely safe, and you arrive at 21 days.
  • This being a new coronavirus, they have estimated that the median incubation period (the time between the entry of the virus to the onset of symptoms/ disease) falls within this period.

Significance

  • This is the most effective way of preventing the spread of the infection from those already infected into the community.
  • In fact, for infections that are transmitted in this manner, this is the one thing to prevent the rapid spread of infection within the community.
  • The lockdown or quarantine also creates some breathing space — to convince people of the seriousness of the situation and build positive public opinion, carry out disinfection of all buildings, vehicles and surfaces, and allows hospitals to prepare themselves for the next phase of operations.

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Banking Sector Reforms

[pib] Capital to Risk Weighted Assets Ratio (CRAR)

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Regional Rural Banks (RRBs), CRAR

Mains level: Recapitalization of RRBs

The Cabinet Committee on Economic Affairs has given its approval for continuation of the process of recapitalization of Regional Rural Banks (RRBs) by providing minimum regulatory capital to RRBs which are unable to maintain minimum Capital to Risk weighted Assets Ratio (CRAR) of 9%, as per the regulatory norms prescribed by the RBI.

What is CRAR?

  • CRAR also known as Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital to its risk.
  • CRAR is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
  • The Basel III norms stipulated a capital to risk-weighted assets of 8%.
  • In India, scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12% as per RBI norms.
  • It is arrived at by dividing the capital of the bank with aggregated risk-weighted assets for credit risk, market risk, and operational risk.
  • RBI tracks CRAR of a bank to ensure that the bank can absorb a reasonable amount of loss and complies with statutory Capital requirements.
  • The higher the CRAR of a bank the better capitalized it is.

Why recapitalize RRBs?

  • RRBs are primarily catering to the credit and banking requirements of agriculture sector and rural areas with focus on small and marginal farmers, micro & small enterprises, rural artisans and weaker sections of the society.
  • A financially stronger and robust RRB with improved CRAR will enable them to meet the credit requirement in the rural areas.
  • As per RBI guidelines, the RRBs have to provide 75% of their total credit under PSL (Priority Sector Lending).
  • In addition, RRBs also provide lending to micro/small enterprises and small entrepreneurs in rural areas.
  • With the recapitalization support to augment CRAR, RRBs would be able to continue their lending to these categories of borrowers under their PSL target, and thus, continue to support rural livelihoods.

Back2Basics

Regional Rural Banks (RRBs)

  • RRBs are Scheduled Commercial Banks operating at regional level in different States of India. They are recognized under the Regional Rural Banks Act, 1976 Act.
  • They have been created with a view of serving primarily the rural areas of India with basic banking and financial services.
  • However, RRBs may have branches set up for urban operations and their area of operation may include urban areas too.
  • The area of operation of RRBs is limited to the area covering one or more districts in the State.

Their functions

RRBs also perform a variety of different functions. RRBs perform various functions in following heads:

  • Providing banking facilities to rural and semi-urban areas
  • Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pensions etc.
  • Providing Para-Banking facilities like locker facilities, debit and credit cards, mobile banking, internet banking, UPI etc.
  • Small financial banks etc.

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Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

[pib] Laser Surface Micro-texturing

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Laser surface micro-texturing

Mains level: NA

International Advanced Centre for Powder Metallurgy & New Materials (ARCI) an autonomous R&D Centre of Dept. of Science and Technology has developed ultrafast laser surface texturing technology, which can improve the fuel efficiency of internal combustion engines.

Laser surface micro-texturing

  • This technology offers precise control of the size, shape and density of micro-surface texture features. This has gained momentum as a way to control friction and wear.
  • In this technology, a pulsating laser beam creates micro-dimples or grooves on the surface of materials in a very controlled manner.
  • Such textures can trap wear debris when operating under dry sliding conditions and sometimes provide effects like enhancing oil supply (lubricant reservoir) which can lower friction coefficients and may enable reduced wear rate.
  • The texture surfaces were created on automotive internal combustion engine components, piston rings and cylinder liners using 100 fs pulse duration laser.
  • The micro dimples of 10-20 μm diameter and about 5-10 μm deep which have been created with laser beams had a regular pattern.

Benefits of micro-texturing

  • The created textures were tested in an engine test rig under different speeds and temperatures of coolant and lubrication oil, and it was observed that there was a 16% reduction in the lube oil consumption with the use of texture on the piston rings.
  • The 10-hour lube oil consumption test shows that the blowby substantially reduced with textured rings.
  • Fabrication of a pattern of micro dimples or grooves on the surface of materials results in a change in surface topography which generates additional hydrodynamic pressure, thereby increasing the load-carrying capacity of the surfaces.
  • Hence these become useful for trapping wear debris when operating under dry sliding conditions and sometimes provide effects like enhancing oil supply (lubricant reservoir) which can lower friction coefficients and may enable reduced wear rate.

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Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

[pib] Bio-fortified wheat variety- MACS 4028

Note4Students

From UPSC perspective, the following things are important :

Prelims level:  MACS 4028

Mains level: Bio-fortification and its benefits

Scientists from Agharkar Research Institute (ARI), Pune, an autonomous institute under the Department of Science & Technology have developed a biofortified durum wheat variety MACS 4028, which shows the high protein content.

 MACS 4028

  • MACS 4028 is a semi-dwarf variety, which matures in 102 days and has shown the superior and stable yielding ability of 19.3 quintals per hectare.
  • It is resistant to stem rust, leaf rust, foliar aphids, root aphids, and brown wheat mite.
  • It has a high protein content of about 14.7%, better nutritional quality having zinc 40.3 ppm, and iron content of 40.3ppm and 46.1ppm respectively, good milling quality and overall acceptability.
  • The MACS 4028 variety is also included by the Krishi Vigyan Kendra (KVK) programme for  UNICEF to alleviate malnutrition.

Back2Basics

Biofortification is the idea of breeding crops to increase their nutritional value. This can be done either through conventional selective breeding, or through genetic engineering.

 

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Communicable and Non-communicable diseases – HIV, Malaria, Cancer, Mental Health, etc.

Home and nation

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 2-Role of administration in 21-day lock-down of country.

Context

A 21-day lockdown is extraordinary. Government, people must come together to ensure that supply chains and social trust must not break.

An unprecedented move

  • A 21-day nationwide lockdown: The way we conduct ourselves in these 21 days will be critical in our fight against the coronavirus.” With these words, Prime Minister announced a measure unprecedented in India’s 72-year-old history.
  • Never have the people of the country been asked to stay within the confines of their homes for this long a period, not even when the country has fought wars.
  • Yet extraordinary times demand extraordinary measures. As the PM underlined, “stringent social distancing and staying within the Lakshman Rekha of our homes is the only prevention against the coronavirus”, the only way to break its transmission cycle.

Challenges and consequences

  • There will be social and economic consequences and the PM did not equivocate on the challenges. He spoke of the vulnerable sections, and, as in last week’s speech, emphasised the imperative to be compassionate.
  • He lauded the frontline workers, doctors, nurses and other healthcare workers, expressed gratitude to safai karamcharis and praised the private sector and civil society.
  • A reworked social compact — more compassionate — will be necessary to confront the challenges posed by the lockdown.
  • It is now up to civil society, government agencies, the healthcare and corporate sectors to take their cues from the PM’s speech and ensure that the burden of fighting the pandemic does not fall too heavily on those at the margins, the migrant and daily wage labourers, the rickshaw pullers and others for whom these 21 days could prove to be the toughest.
  • Centre and state to work together: The Centre and state governments will need to work together, setting aside their political differences, to ensure that there is no shortage of essential commodities and the supply chains are not broken.

Measures to mitigate the impact

  • Earlier in the day, Finance Minister Nirmala Sitharaman had announced a slew of measures that could soften the blow of a 21-day lockdown.
  • The deadline for filing of income taxes for the financial year 2018-19 has been extended, as has the last date for filing GST returns.
  • Sitharaman also announced that the threshold for taking companies through the insolvency and bankruptcy proceedings has been increased from Rs 1 lakh to Rs 1 crore.
  • This will prevent creditors from taking small and medium-sized companies, who may be facing temporary cash flow management issues due to the lockdown, and hence are unable to meet their obligations, through the IBC process.
  • The Centre has also advised state governments to transfer funds to construction workers from the cess fund collected by the labour welfare boards.

Conclusion

As the PM said, “21 days is a long period”. It’s now up to the authorities and the people to own and implement his message — to ensure that not just supply chains, but also social trust, isn’t broken.

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Digital India Initiatives

The Covid-19 crisis could bring the country up to digital speed

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- Application of digitalisation in healthcare and judiciary.

Context

The Covid-19 pandemic gives us a chance to re-evaluate the worth of two major initiatives of the government: demonetization and digitization.

Importance of digitalisation in pandemic

  • The importance of digitization in a pandemic cannot be exaggerated when we are repeatedly told to maintain social distance and work from home in order to avoid infection.
  • Consider how nigh impossible it would be to avoid contact with retail cashiers and point-of-sale (PoS) terminals if we were to use credit cards and cash to pay for our daily necessities.
  • Today, most bill payments have moved online and barring older people, who may prefer to pay their electricity bills at physical counters, digitization is delivering in spades.
  • But digitization is not just about payments and financial transactions. Consider what all will happen as the current lockdown persists across the country.

Application in the judiciary

  • Courts are beginning to use video-conferencing to conduct hearings. It is ironic that something that should have been done years ago to hasten hearings is now being done to prevent infections.
  • India’s judiciary has been resisting technology for as long as one can remember.
  • Witnesses do not have to drag themselves to court every day; they can video-record their statements in advance, and submit themselves to questioning through Skype or other such video-calling apps.
  • When the entire case is recorded, the possibility of judges conducting trials in an unfair way gets substantially reduced, for those at the receiving end of judicial injustice can seek retrials based on video recordings.
  • These recordings will also enable the higher judiciary to figure out who its good judges are, and who adopts dilatory tactics and frequent adjournments, delaying justice.
  • At some point, a judicial appointments commission will have video records of all judges shortlisted for promotions. They will thus know whom to recommend for elevation and whom to sideline. Corruption is also likely to come down.

Application in the healthcare sector

  • In the current Covid-19 crisis, doctors and nurses are putting themselves at huge risk, and so are those handling millions of samples of throat swabs that need to be analysed for the virus
  • Applications: Remote patient examinations, analysis of symptoms with the help of databases and algorithms, and even the basic task of taking down a new patient’s medical history can all be done remotely through a digital app or interface.
  • The doctor will know even before he has met the patient what could be wrong, something she only has to confirm after interacting with the patient.
  • India is spending humongous amounts of money, and so are to-be doctors, to master medical knowledge that doubles every 75 days. In short, by the time your average MBBS doctor completes his or her degree, much of that knowledge could be outdated.
  • He or she has to use technology to update himself or herself, and also rely on databases and artificial intelligence to deliver healthcare without the risk of misdiagnosis.
  • India may be spending too much on training doctors at a cost of millions of rupees per head when a lot of that money could have been spent on technology to deliver competent and lower-cost healthcare.

Conclusion

If we just stop to think where we would have been in this pandemic but for digital technology, we would recognize the importance of going digital. It should make us think of how to convert the Covid-19 disruption into an agenda that brings us up to technological speed in various spheres of human activity.

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Innovations in Biotechnology and Medical Sciences

The race to find a cure for COVID-19

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- Vaccine development and trials.

Context

The world is dealing with an unprecedented and unimaginably serious crisis. Therefore, the speed of vaccine development is crucial.

Speeding up the vaccine development

  • Availability of rationale and information: The race for developing an anti-COVID-19 vaccine has begun. Reasonable scientific rationale and the information needed for vaccine development are available to all stakeholders in academia and industry.
  • Vaccine platforms: A large number of candidate vaccines based on different vaccine platforms, including delivering the virus genetic materials (RNA, DNA) or using synthetic biology to produce key viral proteins, have already been developed.
  • Phase-I safety trials of an experimental vaccine, jointly developed by scientists at the National Institute of Health and at Moderna, a biotechnology company, has already been administered to healthy volunteers for its safety and immunogenicity.
  • The speed with which the experimental vaccine has entered safety trials is unprecedented.
  • Another vaccine jointly developed by China’s Academy of Military Medical Sciences and CanSino Biologics has reportedly been cleared for early-stage clinical trials.
  • Development in India: The Serum Institute of India has also recently announced its readiness to start safety trials following animal experiments.
  • According to a World Health Organization (WHO) report, more than 20 vaccine candidates are in advanced stages of development and will be ready for Phase-I safety trials.
  • However, it is also clear that it will not be possible to roll-out any efficacious vaccine for at least another year.

Questions that need to be answered

  • While these developments are encouraging, several questions will need to be answered for this vaccine development to move further.
  • Triggering immune response safely: Although it is quite evident that humans mount a strong immune response and clear the viral load, the nature of the immune response and how to trigger it safely through vaccination will be key questions to address.
  • Duration of the acquired immunity: How long the acquired immunity in humans will last is another important question to be asked before experimental vaccines move forward.
  • We will need to know this because if the immunity is transient, then humans will be susceptible to reinfections.
  • Ensuring no disease enhancement: Before moving to Phase-II trials in a large number of healthy volunteers, we also have to ensure that the immune response induced by vaccination does not lead to any disease enhancement.

Repurposing the already available drugs

  • Therapeutic interventions, not only for curing severe cases of the disease but also for protecting all front-line healthcare workers, are urgently needed.
  • Using already approved drugs: Since developing new drugs is a complex and lengthy process, scientists and pharmaceutical companies have rushed to investigate and use drugs that have already been approved by regulatory authorities.
  • Using available molecular and structural biology information on the virus, a group of scientists have analysed all interactions of the viral proteins with human proteins that are crucial for the virus to enter human cells and use the host cell machinery to rapidly reproduce itself.
  • Of the nearly 70 short-listed molecules that may interrupt these key interactions, 24 happen to be already approved drugs which can now be tested in laboratory animal models as well as humans.
  • However, the re-purposing of several drugs, alone or in combinations to treat COVID-19 patients, have already been reported.
  • More confusion than hope: There are many success stories of curing patients of COVID-19 doing the rounds in different parts of the world, but these have managed to create more confusion than hope.
  • Without any appropriate controls, careful dosing and safety concerns, such small experiments can only do more harm than good.

Controlled randomised trials

  • Given the urgency of finding a cure, it is absolutely necessary to find out unequivocally what works well and what does not. For that conducting carefully controlled randomised trials is the only way to go.
  • In a welcome move, the WHO has announced clinical trials called the ‘Solidarity Project’.
  • Under this project four drugs or drug, combinations will be tested in many countries around the world.
  • These candidates include the anti-Ebola drug, Remdesivir, Chloroquine, anti-HIV drugs, and the Ritonavir/Lopinavir combination, with or without Interferon-beta.
  • The European counterpart of the trial, Discovery, will conduct these trials in countries including France, Spain, Germany and the U.K.
  • The pharma company Roche has also decided to initiate large, randomised Phase-III trials of its arthritis drug Actemra for its safety and efficacy in adult patients with severe COVID-19 pneumonia.
  • It is complex and tedious to conduct randomised, large multi-centric trials.
  • Quickly getting all the stakeholders together is laudable and underscores the notion that everyone needs to fight the deadly virus together. Hopefully, these trials will lead to tangible drug therapies against COVID-19.

Conclusion

It is most heartening to see scientists in academia and industrial partners coming together to fight a monumental public health crisis. The battle between pathogens and humans will continue but let us hope that we win the present one sooner than later.

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Wetland Conservation

Protecting Peatlands can help attain climate goals

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Peatlands

Mains level: Significance of peatlands

 

Peatlands, which play a crucial role in regulating global climate by acting as carbon sinks, are facing degradation and need to be urgently monitored, according to the FAO. 

What are Peatlands?

  • Peatlands are a type of wetlands that occur in almost every country on Earth, currently covering 3% of the global land surface.
  • The term ‘peatland’ refers to the peat soil and the wetland habitat growing on its surface.
  • They are formed due to the accumulation of partially decomposed plant remains over thousands of years under conditions of water-logging.
  • In these areas, year-round waterlogged conditions slow the process of plant decomposition to such an extent that dead plants accumulate to form peat.
  • Over millennia this material builds up and becomes several metres thick.

Why are peatlands significant?

  • Large amounts of carbon, fixed from the atmosphere into plant tissues through photosynthesis, are locked away in peat soils, representing a valuable global carbon store.
  • Peatlands are highly significant to global efforts to combat climate change, as well as wider sustainable development goals.
  • The protection and restoration of peatlands are vital in the transition towards a low-carbon and circular economy.

1) Better sinks of Carbon

  • Damaged peatlands contribute about 10% of greenhouse gas emissions from the land-use sector.
  • CO2 emissions from drained peatlands are estimated at 1.3 gigatonnes of CO2 This is equivalent to 5.6% of global anthropogenic CO2 emissions.
  • However, at the same time, peatlands are the largest natural terrestrial carbon store. Worldwide, the remaining area of near-natural peatland contains more than 550 gigatonnes of carbon.
  • This represented 42% of all soil carbon and exceeds the carbon stored in all other vegetation types, including the world’s forests. This area sequesters 0.37 gigatonnes of CO2 a year.

2) Vital ecosystem services

  • By regulating water flows, peatlands help minimize the risk of flooding and drought and prevent seawater intrusion.
  • In many parts of the world, peatlands supply food, fibre and other local products that sustain local economies.
  • They also preserve important ecological and archaeological information such as pollen records and human artefacts.
  • Draining peatlands reduces the quality of drinking water due to pollution from dissolved compounds. Damage to peatlands also results in biodiversity loss.

Other benefits

  • Peatlands occur in different climate zones.
  • While in a tropical climate, they can occur in mangroves, in Arctic regions, peatlands are dominated by mosses. Some mangrove species are known to develop peatland soils under them.
  • Besides climate mitigation, peatlands are important for archaeology, as they maintain pollen, seeds and human remains for a long time in their acidic and water-logged conditions.
  • In many countries, pristine peatlands are important for recreation activities. These areas also support livelihood in the form of pastoralism
  • The vegetation growing on pristine peatlands provide different kinds of fibres for construction activities and handicrafts.
  • Many wetland species produce berries, mushrooms and fruits, often economically important to local communities.
  • Peatlands also provide fishing and hunting opportunities. It is also possible to practise paludiculture or wet agriculture on rewetted peatlands.

Various threats

  • Their degradation due to drainage, fire, agricultural use and forestry can trigger the release of the stored carbon in a few decades.
  • Peatlands contain 30 per cent of the world’s soil carbon. When drained, these emit greenhouse gases, contributing up to one gigatonne of emissions per year through oxidation.

Way forward

  • In India, peatlands occupy roughly 320–1,000 square kilometres area.
  • To prevent further degradation, these areas should be urgently mapped and monitored.

With inputs from: https://www.iucn.org/resources/issues-briefs/peatlands-and-climate-change

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International Space Agencies – Missions and Discoveries

Fast Radio Bursts (FRBs)

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Fast Radio Bursts (FRBs)

Mains level: Not Much

 

Researchers from a Canadian space observatory have been recording the periodic radio waves hitting Earth from a neighbouring galaxy from past few years. These radio waves are called Fast Radio Bursts (FRBs).

Fast Radio Bursts (FRBs)

  • FRBs are super intense, millisecond-long bursts of radio waves produced by unidentified sources in the space.
  • Their discovery in 2007 by American astronomer Duncan Lorimer led to the term ‘Lorimer Bursts’.
  • Since then, just a few dozen similar events have been observed in data collected by radio telescopes around the world, building evidence that points to a variety of potential causes.
  • Only a handful of emissions have been traced to specific areas of the sky, indicating sources in other galaxies.
  • The flash of radio waves is incredibly bright if distant, comparable to the power released by hundreds of millions of suns in just a few milliseconds.
  • This intensity suggests powerful objects like black holes and neutron stars could be involved.
  • The events were once considered to be largely transient – they seemed to happen once, without obvious signs of a repeat emission. However, a number of such bursts have been identified since then.

Why are they significant?

  • First noticed in 2018 by the Canadian observatory the waves have created ripples across the globe for one reason — they arrive in a pattern.
  • This gave birth to theories that they could be from an alien civilization.
  • Initially, it was believed that the collision of black holes or neutron stars triggers them.
  • But the discovery of repeating FRBs debunked the theory of colliding objects.

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Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

Kurzarbeit Scheme

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Kurzarbeit Scheme

Mains level: Strategies to prevent job losses during economic fallouts

Amid the all-round disruption caused to the economy by the novel coronavirus outbreak, a concern across the world is the possibility of a loss of jobs. Various governments have unveiled various measures to address such concerns, and one of the most talked-about is Kurzarbeit.

Kurzarbeit Scheme

  • Kurzarbeit is German for “short-work”.
  • The policy provides for a short-time work allowance, called kurzarbeitgeld, which partially compensates for lost earnings during uncertain economic situations.
  • The policy was rolled out during the 2008 economic crisis while its origins date back as far as the early 20th century, before and after World War I.

How it works?

  • When companies face a loss of earnings due to unforeseen economic situations, they often need to cut back on their working hours or send some of their employees’ home.
  • It aims to address workers who are impacted by the loss of income due to shortened work hours during such times.
  • They can apply for short-term work benefits under the scheme, with the government stepping in to pay employees a part of their lost income.

Quantum of payment

  • Payment under Kurzarbeit is calculated on the basis of a net loss of earnings.
  • As per Germany’s Federal Agency for Work, short-time employees generally receive about 60 per cent of the flat-rate net wage.
  • In case there is at least one child in the house of the short-time worker, he/she receives 67 per cent of the flat-rate net wage.

Benefits

  • This scheme helps the companies retain their employees instead of laying them off, and allows the latter to sustain themselves for a period of up to 12 months.

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Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

What is Hantavirus?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Hantavirus

Mains level: Rise in zoonotic diseases and their possible causes

China has reported the death of a person from Yunnan Province who tested positive for the Hantavirus.

What is Hantavirus?

  • The Hantaviruses are a family of viruses spread mainly by rodents. It is contracted by humans from infected rodents.
  • Cases of the Hantavirus in humans occur mostly in rural areas where forests, fields and farms offer suitable habitat for infected rodents.
  • A person can get infected if he/she comes in contact with a rodent that carries the virus.
  • In the US and Canada, for instance, the Hantavirus carried by the deer mouse is responsible for the majority cases of the Hantavirus infection.
  • Like this, there are various other kinds of Hantaviruses that find hosts in rodents, like the white-footed mouse and the cotton rat among others that may lead to infections in humans if transmitted.

Its origin

  • The Hantavirus is not novel and its first case dates back to 1993, according to the US Centre for Disease Control (CDC).
  • In the Americas, the family of viruses is known as ‘New World hantaviruses’.

Symptoms

  • A person infected with the virus may show symptoms within the first to eighth week after they have been exposed to fresh urine, faeces or the saliva of infected rodents.
  • Symptoms may include fever, fatigue, muscle aches, headaches, chills and abdominal problems.
  • Four to ten after being infected, late symptoms of HPS may start to appear, which include coughing and shortness of breath.

Mortality risk

  • It is the cause of Hantavirus pulmonary disease (HPS), a severe respiratory disease. The HPS can be fatal and has a mortality rate of 38 per cent.
  • It remains unclear whether human-to-human transmission of the virus is possible.
  • There have been no reports of human-to-human transmission of Hantavirus in the US.

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Capital Markets: Challenges and Developments

India VIX Index

Note4Students

From UPSC perspective, the following things are important :

Prelims level: India VIX Index

Mains level: Impact of coronovirus outbreak on Economy

The  India VIX Index, an indicator of the volatility of the stock market has been plunging after the outbreak of novel coronavirus.

What is Volatility Index?

  • Volatility Index is a measure of the market’s expectation of volatility over the near term.
  • Volatility is often described as the “rate and magnitude of changes in prices” and in finance often referred to as risk.
  • It is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term, (calculated as annualized volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options.

India VIX Index

  • India VIX is a volatility index based on the NIFTY Index Option prices.
  • From the best bid-ask prices of NIFTY Options contracts, a volatility figure (%) are calculated which indicates the expected market volatility over the next 30 calendar days.
  • “VIX” is a trademark of Chicago Board Options Exchange, Incorporated (“CBOE”) and Standard & Poor’s.
  • The firm has granted a license to NSE to use such mark in the name of the India VIX and for purposes relating to the India VIX.

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Coronavirus – Disease, Medical Sciences Involved & Preventive Measures

Welcome Policy On APIs, Devices

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- Incentive package to promote the API production in India.

Context

It is most welcome that the Centre has announced a `14,000-crore incentive package to boost the manufacture of drugs, especially active pharmaceutical ingredients (API).

What should be the immediate policy focus?

  • Focus on protective gear: The immediate policy focus must be to swiftly overcome shortages of critical protective gear like gowns and face masks, diverting production lines if required.
  • We also need to anticipate and step-up production of vital devices like ventilators.
  •  Provisions in the package: What is proposed now are industrial parks for bulk drugs and APIs, together with a policy for multi-year fiscal benefits. And ditto for parks for the manufacture of medical devices and attendant fiscal incentives.
  • The state governments need to identify 1,000 acres for the parks that are well-integrated with knowledge centres and nationally accredited labs.

What additions need to be made in the package?

  • Public-private partnership: In tandem, the pharmaceuticals package issued on Saturday needs to be followed through, with a forward-looking public-private partnership, to avoid import-dependency in this critical sector.
  • What is envisaged is a set of schemes to reap economies of scale and ready availability of inputs in the production of APIs and medical devices via the cluster approach.

How India became uncompetitive in API?

  • Policy rigidities and price controls: APIs are, of course, bulk drugs that provide medicines with their therapeutic value, and it is unfortunate that since circa 1995, India has become steadily uncompetitive in API production, thanks to a panoply of policy rigidities such as onerous price controls.
  • Export competition from China: Opaque export competition from China has been game-changing indeed: APIs for most medicines are mostly imported.
  • This needs to change, fast. We do need to competitively and efficiently boost output of pharmaceuticals right across the value chain.

Conclusion

The government must understand that manufacture by itself is not enough. The policy must ensure competition and quality, keep prices down.

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Parliament – Sessions, Procedures, Motions, Committees etc

What is Finance Bill?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Finance Bill

Mains level: Finance Bill

The Parliament has passed the Finance Bill 2020 with 40 amendments without any discussion.

Highlights of the Bill

  • Among the important amendments included was one enabling the government to raise additional excise duty on petrol by up to Rs 18 per litre and diesel by up to Rs 12 per litre when required.
  • Amendments enabling the taxation of NRIs’ India-controlled income above Rs 15 lakh, and another extending the DDT exemption to REITs and Infrastructure Investment trusts were passed.
  • The Bill also changes the definition of ‘Resident’, as stipulated under the Income Tax Act.
  • Presently, a person is considered a resident of India, i.e. their global income is taxable in India if they are in the country for more than 182 days a year. This has now been reduced to 120 days.
  • The amendments also include provisions for levying TDS of 1 per cent on e-commerce transactions.

What is a Finance Bill?

  • As per Article 110 of the Constitution, the Finance Bill is a Money Bill.
  • The Finance Bill is a part of the Union Budget, stipulating all the legal amendments required for the changes in taxation proposed by the Finance Minister.
  • This Bill encompasses all amendments required in various laws pertaining to tax, in accordance with the tax proposals made in the Union Budget.
  • The Finance Bill, as a Money Bill, needs to be passed by the Lok Sabha — the lower house of the Parliament. Post the Lok Sabha’s approval, the Finance Bill becomes Finance Act.

Difference between a Money Bill and the Finance Bill

1) Money Bill

  • A Money Bill has to be introduced in the Lok Sabha as per Section 110 of the Constitution. Then, it is transmitted to the Rajya Sabha for its recommendations.
  • The Rajya Sabha has to return the Bill with recommendations in 14 days.
  • However, the Lok Sabha can reject all or some of the recommendations.

2) Finance Bill

  • In a general sense, any Bill that relates to revenue or expenditure is a Financial Bill.
  • The Finance Bill is introduced in Lok Sabha.
  • Rajya Sabha can recommend amendments in the bill. However, the bill has to be passed by the Parliament within 75 days of introduction.

>Types of Finance Bills

Type I

  • Financial Bill Cat-1 is a bill which contains any of the matters specified in Article 110 but does not exclusively deal with such matters.
  • For example- a bill which contains a taxation clause, but does not deal solely with taxation under Article 117 (1), has two features in common with a money bill.
  1. It cannot be introduced in the Rajya Sabha.
  2. It can only be introduced in Lok Sabha with the prior recommendation of the President.(Similarities)
  • But has one feature uncommon that is, not being a Money Bill, the Rajya Sabha has the same power to reject or amend such Financial Bill subject to limitation.

Type II

  • It is a finance bill which merely involves expenditure and does not include any of the matters specified in Article 110.
  • It is an Ordinary Bill and may be initiated in either House and the Rajya Sabha has full power to reject or ament it.
  • It is thus apparent that all Money Bills are Financial Bills but all Financial Bills are not Money Bills.

Who decides the Bill is a Finance Bill?

  • The Speaker of the Lok Sabha is authorised to decide whether the Bill is a Money Bill or not.
  • Also, the Speaker’s decision shall be deemed to be final.

Why Finance Bill is needed?

  • The Union Budget proposes many tax changes for the upcoming financial year, even if not all of those proposed changes find a mention in the Finance Minister’s Budget speech.
  • These proposed changes pertain to several existing laws dealing with various taxes in the country.
  • The Finance Bill seeks to insert amendments into all those laws concerned, without having to bring out a separate amendment law for each of those Acts.
  • For instance, a Union Budget’s proposed tax changes may require amending the various sections of the Income Tax law, Stamp Act, Money Laundering law, etc.
  • The Finance Bill overrides and makes changes in the existing laws wherever required.

What changes can be made via Finance Bill?

  • The most awaited changes in the tax proposals in the Union Budget usually pertain to personal income tax.
  • For taxpayers across the country, the most awaited moment is when the Finance Minister’s speech announces an increase in minimum income threshold, or declares any changes in income tax slabs to make it less costly, or other exemptions.
  • In addition, there might be changes in the rules, procedures, and deadlines for filing tax returns or the payment of tax itself.
  • For instance, there might be a change in the amount of penalty for missing the deadline. Those proposed changes would typically need to be brought in via amending the Income Tax Act.
  • Among other changes, the FM may propose in the Union Budget with regard to the rates or processes for payment or administration of stamp duty levied on various instruments.
  • Such a change would need to be brought in via an amendment to the Stamp Act.
  • Since the introduction of GST, there is no amendment to indirect taxes in the Union Budget, since that is under the purview of the GST Council.

 

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