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  • PM’s Development Initiative for North East (PM-DevINE)

    Union Budget 2022-23 provided for a new scheme, Prime Minister’s Development Initiative for North East (PM-DevINE) will be implemented through the North-Eastern Council.

    PM-DevINE

    • It will fund infrastructure, in the spirit of PM GatiShakti, and social development projects based on felt needs of the northeast.
    • This will enable livelihood activities for youth and women, filling the gaps in various sectors.
    • While the Central Ministries may also pose their candidate projects, priority will be given to those posed by the States.

    Some of the projects to be implemented are:

    1. Dedicated Services for the Management of Paediatric and Adult Haemotolymphoid Cancers in North East India, Guwahati
    2. Construction of Aizawl bypass on western side, gap funding for passenger ropeway system for Pelling to Sanga-Choeling in West Sikkim
    3. Gap funding for eco-friendly Ropeway (Cable Car) from Dhapper to Bhaleydhunga in South Sikkim
    4. Pilot project for the construction of Bamboo Link Road at different locations in various districts in Mizoram

     

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  • What is Bomb Cyclone?

    Major cities such as New York and Boston in US are witnessing a “Bomb Cyclone” characterized by the explosive power of rapid drops in atmospheric pressure.

    What is Bomb Cyclone?

    • A bomb cyclone is a large, intense mid-latitude storm that has low pressure at its center, weather fronts and an array of associated weather, from blizzards to severe thunderstorms to heavy precipitation.
    • It becomes a bomb when its central pressure decreases very quickly—by at least 24 millibars in 24 hours.
    • When a cyclone “bombs,” or undergoes bombogenesis, this tells us that it has access to the optimal ingredients for strengthening, such as high amounts of heat, moisture and rising air.

    Why is it called a bomb?

    • Most cyclones don’t intensify rapidly in this way.
    • Bomb cyclones put forecasters on high alert, because they can produce significant harmful impacts.

    Its etymology

    • The word “bombogenesis” is a combination of cyclogenesis, which describes the formation of a cyclone or storm, and bomb, which is, well, pretty self-explanatory.
    • This can happen when a cold air mass collides with a warm air mass, such as air over warm ocean waters.
    • The formation of this rapidly strengthening weather system is a process called bombogenesis, which creates what is known as a bomb cyclone.

    How does it occur?

    • Over the warmer ocean, heat and moisture are abundant.
    • But as cool continental air moves overhead and creates a large difference in temperature, the lower atmosphere becomes unstable and buoyant.
    • Air rises, cools and condenses, forming clouds and precipitation.

    Where does it occur the most?

    • The US coast is one of the regions where bombogenesis is most common.
    • That’s because storms in the mid-latitudes – a temperate zone north of the tropics that includes the entire continental US – draw their energy from large temperature contrasts.
    • Along the US East Coast during winter, there’s a naturally potent thermal contrast between the cool land and the warm Gulf Stream current.

     

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  • Highlights of the Union Budget 2022-23

    The Union Finance Minister has tabled the Union Budget 2022-23 in Parliament today.

    What is Union Budget in India?

    • The Union Budget also referred to as the Annual Financial Statement in Article 112 of the Constitution of India is the annual budget of India.
    • The Government presents it on the first day of February so that it could be materialized before the beginning of new financial year in April.
    • Until 2016 it was presented on the last working day of February by the Finance Minister in Parliament.
    • The budget, which is presented by means of the Finance bill and the Appropriation Bill, has to be passed by Lok Sabha before it can come into effect on 1 April, the start of India’s financial year.

    Components of the Budget

    There are three major components — expenditure, receipts and deficit indicators.

    The budget is generally classified into Revenue Budget and Capital Budget.

    [A] Revenue Budget

    • It includes the government’s revenue receipts and expenditure.
    • There are two kinds of revenue receipts – tax and non-tax revenue.
    • Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens.
    • If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.

    [B] Capital Budget

    • It includes capital receipts and payments of the government.
    • Loans from public, foreign governments and RBI form a major part of the government’s capital receipts.
    • Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc.
    • Fiscal deficit is incurred when the government’s total expenditure exceeds its total revenue. 

    What are fiscal rules and how do they affect policy?

    • Fiscal rules provide specific policy targets on the basis of which fiscal policy is formed.
    • In India’s case, its present fiscal rule is guided by the recommendations of the N.K. Singh Committee Report.
    • Allowing for some deviations under exceptional times, it has three policy targets — maintaining a specific level of debt-GDP ratio (stock target), fiscal deficit-GDP ratio (flow target) and revenue deficit-GDP ratio (composition target). 

    Highlights of the Union Budget 2022-23

    PART A

    Entering Amrit Kaal, the 25 year long lead up to India @100, the budget provides impetus for growth along four priorities:

    1. PM Gati-Shakti
    2. Inclusive Development
    3. Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and Climate Action
    4. Financing of investments

    (1) PM GatiShakti

    The seven engines that drive PM Gati-Shakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure:

    1. National Highways Network to be expanded by 25000 Km in 2022-23
    2. One Station One Product concept to help local businesses & supply chains
    3. 2000 Km of railway network to be brought under Kavach, the indigenous world class technology and capacity augmentation in 2022-23
    4. 400 new generation Vande Bharat Trains to be manufactured during the next three years
    5. National Ropeways Development Program, Parvatmala to be taken up on PPP mode

    (2) Inclusive Development

    Agriculture

    • Grains Procurement
    • NABARD Loans:  To facilitate fund with blended capital to finance startups for agriculture & rural enterprise.
    • Kisan Drones: for crop assessment, digitization of land records, spraying of insecticides and nutrients.
    • Ken Betwa project: 1400 crore outlay for implementation of the Ken – Betwa link project.

    MSME Sector

    • MSME: ECLGS to be extended up to March 2023; Udyam, e-shram, NCS and ASEEM portals to be interlinked
    • Raising and Accelerating MSME performance (RAMP) Program: with outlay of Rs 6000 Crore to be rolled out.

    Skill Development

    • Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal):  It will be launched to empower citizens to skill, reskill or upskill through on-line training.
    • Drone-As-A-Service (DrAAS):  Startups will be promoted to facilitate ‘Drone Shakti’.

    Education

    • ‘One class-One TV channel’ programme of PM eVIDYA: To be expanded to 200 TV channels.
    • Virtual labs: skilling e-labs to be set up to promote critical thinking skills and simulated learning environment.
    • High-quality e-content: It will be developed for delivery through Digital Teachers.
    • Digital University: for world-class quality universal education with personalized learning experience to be established. 

    Health

    • National Digital Health Ecosystem: An open platform to be rolled out.
    • National Tele Mental Health Programme: for quality mental health counseling and care services to be launched
    • Saksham Anganwadi: Integrated benefits to women and children through Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0

    Housing for All

    • Housing for All: Rs. 48,000 crore allocated for completion of 80 lakh houses in 2022-23 under PM Awas Yojana
    • Har Ghar, Nal Se Jal: Rs. 60,000 crore allocated to cover 3.8 crore households in 2022-23 under this

    Prime Minister’s Development Initiative for North-East Region (PM-DevINE)

    •  New scheme PM-DevINE launched to fund infrastructure and social development projects in the North-East.
    • An initial allocation of Rs. 1,500 crore made to enable livelihood activities for youth and women under the scheme.

    Vibrant Villages Programme

    • Vibrant Villages Programme for development of Border villages with sparse population, limited connectivity and infrastructure on the northern border.

    Urban Planning

    • Modernization of building byelaws, Town Planning Schemes (TPS), and Transit Oriented Development (TOD) will be implemented.
    • Battery swapping policy to be brought out for setting up charging stations at scale in urban areas.

    (3) Industrial Sector

    Telecom Sector

    • Scheme for design-led manufacturing to be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.

    Export Promotion

    • Special Economic Zones Act to be replaced with a new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.

    Atmanirbharta in Defence

    • 68% of capital procurement budget earmarked for domestic industry in 2022-23, up from 58% in 2021-22 

    GIFT-IFSC

    • World-class foreign universities and institutions to be allowed in the GIFT City.

    An International Arbitration Centre to be set up for timely settlement of disputes under international jurisprudence

    (4) Energy Transition and Climate Action

    • Five to seven per cent biomass pellets to be co-fired in thermal power plants
    • CO2 savings of 38 MMT annually
    • Extra income to farmers and job opportunities to locals
    • Help avoid stubble burning in agriculture fields
    • Pilot projects to be set up for coal gasification and conversion of coal into chemicals for the industry
    • Financial support to farmers belonging to Scheduled Castes and Scheduled Tribes, who want to take up agro-forestry

    (5) Mobilizing Resources

    • Data Centres and Energy Storage Systems to be given infrastructure status.
    • Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystems
    • Blended funds to be promoted for sunrise sectors
    • Sovereign Green Bonds to be issued for mobilizing resources for green infrastructure.

    Digital Rupee

    • Introduction of Digital Rupee by the Reserve Bank of India starting 2022-23.

    Providing Greater Fiscal Space to States

    • Enhanced outlay for ‘Scheme for Financial Assistance to States for Capital Investment’:

    (6) Fiscal Management

    • Budget Estimates: Rs. 34.83 lakh crore
    • Revised Estimates: Rs. 37.70 lakh crore
    • Total expenditure estimated at Rs. 39.45 lakh crore
    • Total receipts other than borrowings estimated at Rs. 22.84 lakh crore
    • Fiscal deficit in current year: 6.9% of GDP (against 6.8% in Budget Estimates)

    PART B

    DIRECT & INDIRECT TAXES

    (Not necessary)

  • What is UNCITRAL Model for Cross-Border Insolvency?

    The Economic Survey 2021-22 has called for a standardized framework for cross-border insolvency as the Insolvency and Bankruptcy Code (IBC) at present does not have an instrument to restructure firms involving cross-border jurisdictions.

    What is the Insolvency and Bankruptcy Code (IBC)?

    • The IBC, 2016 is the bankruptcy law of India that seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
    • It is a one-stop solution for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement.
    • The code aims to protect the interests of small investors and make the process of doing business less cumbersome.

    Cross-border insolvency proceedings

    • Cross-border insolvency proceedings are relevant for the resolution of distressed companies with assets and liabilities across multiple jurisdictions.
    • A framework for cross border insolvency proceedings allows for:
    1. Location of such a company’s foreign assets
    2. Identification of creditors and their claims
    3. Establishing payment towards claims and
    4. Process for coordination between courts in different countries

    Current status of foreign stakeholders and courts in other jurisdictions under IBC

    • Foreign creditors can make claims against a domestic company.
    • However, the IBC currently does not allow for automatic recognition of any insolvency proceedings in other countries.
    • Current provisions do not allow Indian courts to address the issue of foreign assets of a company being subjected to parallel insolvency proceedings in other jurisdictions.

    What is the UNCITRAL Model?

    • The UNCITRAL model is the most widely accepted legal framework to deal with cross-border insolvency issues.
    • It has been adopted by 49 countries, including the UK, the US, South Africa, South Korea, and Singapore.
    • It is designed to assist States in reforming and modernizing their laws on the arbitral procedure so as to take into account the particular features and needs of international commercial arbitration.

    Key provisions

    This law works on four main principles: access, recognition, cooperation and coordination:

    1. Direct access to foreign insolvency professionals and foreign creditors to participate in or commence domestic insolvency proceedings against a defaulting debtor.
    2. Recognition of foreign proceedings & provision of remedies.
    3. Cooperation between domestic and foreign courts & domestic and foreign insolvency practitioners.
    4. Coordination between two or more concurrent insolvency proceedings in different countries: The main proceeding is determined by the concept of Centre of Main Interest (COMI).

    Implications for India

    • The framework for cross-border insolvency adopted in India may like in the case of some other countries require reciprocity from any country which seeks to have its insolvency proceedings recognised by Indian courts.
    • This would allow Indian proceedings for foreign corporate debtors to be recognised in foreign jurisdictions.

    How is IBC different from the model law?

    • Many countries that adopt the UNCITRAL model law do make certain changes to suit their domestic requirements.
    • The Indian cross-border insolvency framework excludes financial service providers from being subjected to cross-border insolvency proceedings.
    • This is because many countries exempt businesses providing critical financial services, such as banks and insurance companies, from the provisions of cross-border insolvency frameworks.

    Back2Basics: UNCITRAL

    • It is an affiliate organization to the UN made up of business and legal professionals.
    • This group develops model standards and procedures for dealing with issues affecting international business.
    • Perhaps most notably, UNCITRAL promulgated the Convention on International Sale of Goods (CISG).
    • The CISG is a model law commonly used as the governing provisions in contracts between parties from different nations.

     

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  • What is Design Linked Incentive (DLI) Scheme?

    India has invited applications from 100 domestic companies, startups, and small and medium enterprises to become a part of the design-linked incentive (DLI) scheme.

    What is the DLI scheme?

    • Aims to provide financial and infrastructural support to companies setting up fabs or semiconductor making plants in India.
    • It aims to attract existing and global players as it will support their expenditures related to design software, IP rights, development, testing, and deployment.
    • Centre for Development of Advanced Computing (CDAC), a scientific society operating under MeitY, will serve as the nodal agency for the implementation of the DLI scheme.

    Components of the scheme

    It has three components which are

    1. Chip Design infrastructure support: C-DAC will set up the India Chip Centre to host the state-of-the-art design infrastructure (viz. EDA Tools, IP Cores, and support for MPW (Multi Project Wafer fabrication) & post-silicon validation) and facilitate its access to supported companies.
    2. Product Design Linked Incentive: Reimbursement of up to 50% of the eligible expenditure subject to a ceiling of Rs. 15 Crore per application will be provided as financial support to the approved applicants who are engaged in semiconductor design.
    3. Deployment Linked Incentive: An incentive of 6% to 4% of net sales turnover over 5 years subject to a ceiling of Rs. 30 Crore per application will be provided to approved applicants whose semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design are deployed in electronic products.

    Why need such a scheme?

    Ans. Growing semiconductor demand in India

    • The semiconductor industry is growing fast and can reach $1 trillion dollars in this decade. India can grow fast and reach $64 billion by 2026 from $27 billion today.
    • Mobiles, wearables, IT, and industrial components are the leading segments in the Indian semiconductor industry contributing around 80% of the revenues in 2021.
    • The mobile and wearables segment is valued at $13.8 billion and is expected to reach $31.5 billion in 2026.

    A boost to semiconductor manufacturing

    • The sudden surge in demand for chips and semiconductor components has underpinned the need to establish a robust semiconductor ecosystem in India.
    • Several sectors, including auto, telecom, and medical technology suffered due to the unexpected surge leading to the scarcity of chips manufactured by only a few countries.
    • The inception of new companies will help in meeting the demand and supply and encourage innovation in India.

    What are other countries doing to be dominant in the race of chip-making?

    • Currently, semiconductor manufacturing is dominated by companies in the U.S., Japan, South Korea, Taiwan, Israel, and the Netherlands.
    • They are also making efforts in solving the chip shortage problem.
    • The US wants to bring manufacturing back to America and reduce the country’s reliance on a small number of chipmakers based largely in Taiwan and South Korea.
    • These chipmakers produce up to 70% of the world’s semiconductors.

    Challenges in India

    • No incubation: In India, more than 90% of global companies already have their R&D and design centers for semiconductors but never established their fabrication units.
    • Strategic sector: Although India has semiconductor fabs in Mohali and Bangalore, they are purely strategic for defense and space applications only
    • Capital requirement: Setting up fabs is capital intensive and needs investment in the range of $5 billion to $10 billion.
    • Lack of supportive policies: Lack of investments and supportive government policies are some of the challenges to setting up fabs in India.
    • Geopolitical limitations: A combination of capital and the geopolitical situation comes into play to build new fabs.

    Way forward

    • Further incentivization: Schemes like the DLI are crucial to avoid high dependencies on a few countries or companies.
    • Raw material supply: Several gases and minerals which are a part of the global semiconductor supply chain are produced in India.
    • Large talent pool: Availability of highly-skilled engineers for semiconductor manufacturing.

    Conclusion

    • The 21st century will be an era of Digital revolution signifying an increased use of mobile phones and computer devices. This enhanced usage can be met only with a robust availability of semiconductor chips that sustains their functioning. Therefore India needs to focus on the indigenous development of semiconductors in order to realize its digital potential and emerge as a strong power in the present era.

     

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  • President quotes Thirukkural while addressing Parliament

    President Ram Nath Kovind quoted a couplet from Thirukkural while addressing the joint Houses of Parliament for Budget Session.

    What did the President quote?

    • ‘Karka Kasadara Karpavai Kattrapin Nirka Atharku Thaka’ was the couplet chosen by him to reiterate the importance of the New Education Policy.
    • The couplet insists on thorough and flawless learning and adhering to what one has learnt.

    What is Thirukkural?

    • The Tirukkuṟaḷ (meaning ‘sacred verses’), or shortly the Kural, is a classic Tamil language text consisting of 1,330 short couplets, or kurals, of seven words each.
    • The text is divided into three books with aphoristic teachings on virtue (aram), wealth (porul) and love (inbam), respectively.
    • Considered one of the greatest works ever written on ethics and morality, it is known for its universality and secular nature.

    Three major parts of the book

    1. Aram : Book of Virtue (Dharma), dealing with moral values of an individual and essentials of yoga philosophy
    2. Porul : Book of Polity (Artha), dealing with socio-economic values, polity, society and administration
    3. Inbam: Book of Love (Kama), dealing with psychological values and love

    Who authored it and when?

    • Its authorship is traditionally attributed to Valluvar, also known in full as Thiruvalluvar.
    • The text has been dated variously from 300 BCE to 5th century CE.
    • The traditional accounts describe it as the last work of the third Sangam, but linguistic analysis suggests a later date of 450 to 500 CE and that it was composed after the Sangam period.

    Cultural significance of Thirukkural

    • The Kural is traditionally praised with epithets and alternative titles, including “the Tamil Veda” and “the Divine Book.”
    • Written on the foundations of ahimsa, it emphasizes non-violence and moral vegetarianism as virtues for an individual.
    • In addition, it highlights truthfulness, self-restraint, gratitude, hospitality, kindness, goodness, duty, giving, and so forth.
    • It covers a wide range of social and political topics such as king, ministers, taxes, justice, forts, war, greatness of army and soldier’s honor.
    • It emphasizes death sentence for the wicked, agriculture, education, abstinence from alcohol and intoxicants.
    • It also includes chapters on friendship, love, sexual unions, and domestic life.

    Read these quotes and bookmark them. They can be used in essays:

    1. Nothing is impossible for those who act after wise counsel and careful thought.
    2. Real kindness seeks no return.
    3. The only gift is giving to the poor; All else is exchange.
    4. Friendship with the wise gets better with time, as a good book gets better with age.
    5. Worthless are those who injure others vengefully, while those who stoically endure are like stored gold.
    6. Among a man’s many good possessions, A good command of speech has no equal. Prosperity and ruin issue from the power of the tongue. Therefore, guard yourself against thoughtless speech.
    7. A fortress is of no use to cowards.
    8. Even the ignorant may appear very worthy, If they keep silent before the learned.

     

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  • [pib] Sacred Ensembles of the Hoysalas

    The Hoysala Temples of Belur, Halebid and Somnathapura in Karnataka have been finalized as India’s nomination for consideration as World Heritage for the year 2022-2023.

    Sacred Ensembles of the Hoysalas

    • The sacred ensembles of the Hoysalas are extraordinary expressions of spiritual purpose and vehicles of spiritual practice and attainment.
    • The sacred ensembles of the Hoysalas at Belur and Halebid are the finest, most exquisite, and most representative examples of the artistic genius and cultural accomplishments of the Hoysalas remaining today.

     [I] Belur: Chennakeshava Temple Complex

    • The Chennakeshava temple complex was at the center of the old walled town located on the banks of the Yagachi River.
    • The complex itself was walled in a rectangular campus with four rectilinear streets around it for ritual circumambulation of the deity.
    • Construction of the temple commenced in 1117 AD and took a 103 years to complete.
    • The temple was devoted to Vishnu.
    • The richly sculptured exterior of the temple narrate scenes from the life of Vishnu and his reincarnations and the epics, Ramayana, and Mahabharata.
    • However, some of the representations of Shiva are also included.
    • Consecrated on a sacred site, the temple has remained continuously worshipped since its establishment and remains until today as a site of pilgrimage for Vaishnavites.

    [II] Halebid: Hoysaleshwara Temple

    • At the zenith of the Hoysala empire, the capital was shifted from Belur to Halebid that was then known as Dorasamudhra.
    • The Hoysaleshwara temple at Halebidu is the most exemplary architectural ensemble of the Hoysalas extant today.
    • Built in 1121CE during the reign of the Hoysala King, Vishnuvardhana Hoysaleshwara.
    • The temple, dedicated to Shiva, was sponsored and built by wealthy citizens and merchants of Dorasamudra.
    • The temple is most well-known for the more than 240 wall sculptures that run all along the outer wall.
    • Halebid has a walled complex containing of three Jaina basadi (temples) of the Hoysala period as well as a stepped well.

    [III] Somnathpur: Kesava Temple

    • The Keshava temple at Somanathapura is another magnificent Hoysala monument, perhaps the last.
    • This is a breathtakingly beautiful Trikuta Temple dedicated to Lord Krishna in three forms – Janardhana, Keshava and Venugopala.
    • Unfortunately, the main Keshava idol is missing, and the Janardhana and Venugopala idols are damaged.
    • Still this temple is worth a visit just to soak in the artistry and sheer talent of the sculptors who created this magnificent monument to the Divine.

     

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  • Highlights of the Economic Survey 2021-22

    The Union Minister for Finance & Corporate Affairs has presented the Economic Survey 2021-22 in Parliament.

    What is the Economic Survey?

    • The Economic Survey is a report on the state of the economy in the past one year, the key challenges it anticipates, and their possible solutions.
    • One day before the Union budget, the Chief Economic Adviser (CEA) releases the Economic Survey.
    • The document is prepared by the Economic Division of the Department of Economic Affairs (DEA) , Ministry of Finance.
    • Once prepared, the Survey is approved by the Finance Minister.
    • The first survey was presented in 1950-51. Until 1964, the document was presented along with the Budget.

    Why is the Economic Survey significant?

    • The Economic Survey is a crucial document as it provides a detailed, official version of the government’s take on the country’s economic condition.
    • It can also be used to highlight some key areas of focus — for example, in 2018, the survey presented by the then CEA Arvind Subramanian was pink in colour, to stress on gender equality.

    Is it binding on the government?

    • The government is NOT constitutionally bound to present the Economic Survey or to follow the recommendations that are made in it.
    • If the government so chooses, it can reject all suggestions laid out in the document.
    • But while the Centre is not obliged to present the Survey at all, it is tabled because of the significance it holds.

    Highlights of the Economic Survey 2021-22

    [1] State of the Economy

    • Economic growth: Indian economy estimated to grow by 9.2 percent in real terms in 2021-22 (as per first advanced estimates) subsequent to a contraction of 7.3 percent in 2020-21. 
    • GDP growth: GDP projected to grow by 8- 8.5 percent in real terms in 2022-23.  
    • Agriculture and allied sectors: They are expected to grow by 3.9 percent; industry by 11.8 percent and services sector by 8.2 percent in 2021-22.

     [2] Fiscal Developments

    • Revenue receipts: These have gone up by 67.2 percent (YoY) as against an expected growth of 9.6 percent in the 2021-22 Budget Estimates.
    • Gross Tax Revenue: It registered a growth of over 50 percent during April to November, 2021 in YoY terms. 
    • Borrowings: With the enhanced borrowings on account of COVID-19, the Central Government debt has gone up from 49.1 percent of GDP in 2019-20 to 59.3 percent of GDP in 2020-21/

    [3] External Sectors

    • India’s merchandise exports and imports rebounded strongly and surpassed pre-COVID levels during the current financial year.
    • Net capital flows: These were higher at US$ 65.6 billion in the first half of 2021-22, on account of continued inflow of foreign investment, revival in net external commercial borrowings, higher banking capital and additional special drawing rights (SDR) allocation.
    • India’s external debt: It rose to US $ 593.1 billion at end-September 2021, from US $ 556.8 billion a year earlier, reflecting additional SDR allocation by IMF, coupled with higher commercial borrowings.
    • Foreign Exchange Reserves: It touched US $ 633.6 billion in Dec 2021 making India the fourth largest forex reserves holder in the world after China, Japan and Switzerland.

    [4] Monetary Management and Financial Intermediation

    • Repo was maintained: The liquidity in the system remained in surplus. Repo rate was maintained at 4 per cent in 2021-22.
    • GSAP: RBI undertook various measures such as G-Sec Acquisition Programme and Special Long-Term Repo Operations to provide further liquidity.
    • NPAs declined: The Gross Non-Performing Advances ratio of Scheduled Commercial Banks (SCBs) declined from 11.2 per cent at the end of 2017-18 to 6.9 per cent at the end of September, 2021.

    [5] Prices and Inflation

    • Control over food inflation: The decline in retail inflation was led by easing of food inflation. Proactive measures were taken to contain the price rise in pulses and edible oils.
    • Supply constraints eased: Effective supply-side management kept prices of most essential commodities under control during the year.
    • Fuel price reduction: Reduction in central excise and subsequent cuts in Value Added Tax by most States helped ease petrol and diesel prices. 

    [6] Sustainable Development and Climate Change

    • Sustainable development: India’s overall score on the NITI Aayog SDG India Index and Dashboard improved to 66 in 2020-21 from 60 in 2019-20 and 57 in 2018-19.
    • Rise in forest cover: India has the tenth largest forest area in the world. In 2020, India ranked third globally in increasing its forest area during 2010 to 2020. In 2020, the forests covered 24% of India’s total geographical, accounting for 2% of the world’s total forest area.
    • Plastic waste management (PWM): In August 2021, the PWM Amendment Rules, 2021, was notified which is aimed at phasing out single use plastic by 2022.
    • Extended Producer Responsibility for plastic: Draft rules for plastic packaging was notified.
    • Pledge on Net-Zero Emissions: The PM participated at COP-26 in Glasgow. He announced ambitious targets to achieve net-zero by 2070.

    [7] Agriculture and Food Management

    • Minimum Support Price (MSP) policy: It is being used to promote crop diversification.
    • Allied sector growth: Allied sectors including animal husbandry, dairying and fisheries are steadily emerging to be high growth sectors and major drivers of overall growth in agriculture sector.
    • Food security:  Government has further extended the coverage of food security network through schemes like PM Gareeb Kalyan Yojana (PMGKY).
    • Income Support: Timely release of PM-KISAN Funds.

    [8] Industry and Infrastructure:

    • Index of Industrial Production (IIP): It grew at 17.4 percent (YoY) during April-November 2021 as compared to -15.3 percent in April-November 2020.
    • Extent of road construction per day: This has increased substantially in 2020-21 to 36.5 Kms per day from 28 Kms per day in 2019-20 – a rise of 30.4 percent.
    • Production Linked Incentive (PLI) Scheme: It gave a major boost to infrastructure-both physical as well as digital.

    [9] Services Sector

    • Growth despite pandemic: Overall service Sector GVA is expected to grow by 8.2 percent in 2021-22.
    • Opening up of space sector to private players: Major government reform.
    • India becomes start-up hub: India has become 3rd largest start-up ecosystem in the world after US and China.
    • Unicorns in India: 44 Indian start-ups have achieved unicorn status in 2021 taking overall tally of unicorns to 83, most of which are in services sector.

    [10] Social Infrastructure and Employment

    • Universal vaccination: 157.94 crore doses of COVID-19 vaccines administered (as on 16th January 2022).
    • Employment recovery: As per the quarterly Periodic Labour Force Survey (PFLS) data up to March 2021, employment in urban sector affected by pandemic has recovered almost to the pre-pandemic level.
    • Expenditure on social services (health, education and others): This expenditure by Centre and States as a proportion of GDP increased from 6.2 % in 2014-15 to 8.6% in 2021-22.
    • National Family Health Survey-5:
    1. Total Fertility Rate (TFR) came down to 2 in 2019-21 from 2.2 in 2015-16
    2. Infant Mortality Rate (IMR), under-five mortality rate and institutional births have improved in 2019-21 over year 2015-16
    3. Jal Jeevan Mission (JJM): Under this, 83 districts have become ‘Har Ghar Jal’ districts.
    4. Continuance of MGNREGS: Increased allotment of funds to Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) to provide buffer for unorganized labour in rural areas during the pandemic.

  • What is Pegasus Spyware Controversy?

    A New York Times report has claimed that the Indian government had bought the Pegasus Spyware in 2017.

    What is Pegasus?

    • Pegasus is a spyware developed by NSO Group, an Israeli surveillance firm that helps spies hack into phones.
    • In 2019, when WhatsApp sued the firm in a U.S. court, the matter came to light.
    • In July 2021, Amnesty International, along with 13 media outlets across the globe released a report on how the spyware was used to snoop hundreds of individuals, including Indians.
    • While the NSO claims its spyware is sold only to governments, none of the nations have come forward to accept the claims.

    Why is Pegasus so lethal?

    • What makes Pegasus really dangerous is that it spares no aspect of a person’s identity.
    • It makes older techniques of spying seem relatively harmless.
    • It can intercept every call and SMS, read every email and monitor each messaging app.
    • Pegasus can also control the phone’s camera and microphone and has access to the device’s location data.
    • The app advertises that it can carry out “file retrieval”, which means it could access any document that a target might have stored on their phone.

    Dysfunctions created by Pegasus

    • Privacy breach: The very existence of a surveillance system, whether under a provision of law or without it, impacts the right to privacy under Article 21 and the exercise of free speech under Article 19.
    • Curbing Dissent: It reflects a disturbing trend with regard to the use of hacking software against dissidents and adversaries. In 2019 also, Pegasus software was used to hack into HR & Dalit activists.
    • Individual safety: In the absence of privacy, the safety of journalists, especially those whose work criticizes the government, and the personal safety of their sources is jeopardised.
    • Self-Censorship: Consistent fear over espionage may grapple individuals. This may impact their ability to express, receive and discuss such ideas.
    • State-sponsored mass surveillance: The spyware coupled with AI can manipulate digital content in users’ smartphones. This in turn can polarize their opinion by the distant controllers.
    • National security: The potential misuse or proliferation has the same, if not more, ramifications as advanced nuclear technology falling into the wrong hands.

    Snooping in India:  A Legality check

    For Pegasus-like spyware to be used lawfully, the government would have to invoke both the IT Act and the Telegraph Act. Communication surveillance in India takes place primarily under two laws:

    1. Telegraph Act, 1885: It deals with interception of calls.
    2. Information Technology Act, 2000: It was enacted to deal with surveillance of all electronic communication, following the Supreme Court’s intervention in 1996.

    Cyber security safeguards in India

    • National Cyber Security Policy: The policy was developed in 2013 to build secure and resilient cyberspace for India’s citizens and businesses.
    • Indian Computer Emergency Response Team (CERT-In): The CERT-In is responsible for incident responses including analysis, forecasts, and alerts on cybersecurity issues and breaches.
    • Indian Cyber Crime Coordination Centre (I4C): The Central Government has rolled out a scheme for the establishment of the I4C to handle issues related to cybercrime in the country in a comprehensive and coordinated manner.
    • Budapest Convention: There also exists Budapest Convention on Cybercrime. However, India is not a signatory to this convention.

    Issues over government involvement

    • It is worth asking why the government would need to hack phones and install spyware when existing laws already offer impunity for surveillance.
    • In the absence of parliamentary or judicial oversight, electronic surveillance gives the executive the power to influence both the subject of surveillance and all classes of individuals, resulting in a chilling effect on free speech.

    Way forward

    • The security of a device becomes one of the fundamental bedrock of maintaining user trust as society becomes more and more digitized.
    • Constituting an independent high-level inquiry with credible members and experts that can restore confidence and conduct its proceedings transparently.
    • The need for judicial oversight over surveillance systems in general, and judicial investigation into the Pegasus hacking, in particular, is very essential.

    Conclusion

    • We must recognize that national security starts with securing the smartphones of every single Indian by embracing technologies such as encryption rather than deploying spyware.
    • This is a core part of our fundamental right to privacy.
    • This intrusion by spyware is not merely an infringement of the rights of the citizens of the country but also a worrying development for India’s national security apparatus.

     

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  • What is Reverse Repo Normalization?

    In a recent report, the State Bank of India, which is the largest public sector bank in the country, has stated that the stage is set for a reverse repo normalization.

    What is Monetary Policy Normalisation?

    The RBI keeps tweaking the total amount of money in the economy to ensure smooth functioning by two types of policies:

    (I) Loose Monetary Policy

    When the RBI wants to boost economic activity it adopts a so-called “loose monetary policy”.

    There are two parts to such a policy:

    1. RBI injects more money (liquidity) into the economy: It does so by buying government bonds from the market. As the RBI buys these bonds, it pays back money to the bondholders, thus injecting more money into the economy.
    2. RBI also lowers the interest rate: it charges banks when it lends money to them; this rate is called the repo rate. Lower interest rates and more liquidity, together, are expected to boost both consumption and production in the economy.

    (II) Tight Monetary Policy

    • It involves the RBI raising interest rates and sucking liquidity out of the economy by selling bonds (and taking money out of the system).
    • When any central bank finds that a loose monetary policy has started becoming counterproductive in reducing inflation, the central bank “normalizes the policy” by tightening the monetary policy stance.

    What is Reverse Repo?

    • An interest rate that the RBI pays to the commercial banks when they park their excess “liquidity” (money) with the RBI.
    • The reverse repo, thus, is the exact opposite of the repo rate.
    • Under normal a circumstance, that is when the economy is growing at a healthy pace, the repo rate becomes the benchmark interest rate in the economy.
    • That’s because it is the lowest rate of interest at which funds can be borrowed.
    • As such, the repo rate forms the floor interest rate for all other interest rates in the economy — be it the rate you pay for a car loan or a home loan or the interest you earn on your fixed deposit, etc.

    How does Reverse Repo fit into policy normalization?

    • Imagine a scenario where the RBI pumps more and more liquidity into the market but there are no takers of fresh loans.
    • This is because the banks are unwilling to lend or because there is no genuine demand for new loans in the economy.
    • In such a scenario, the action shifts from repo rate to reverse repo rate because banks are no longer interested in borrowing money from the RBI.
    • Rather they are more interested in parking their excess liquidity with the RBI. And that is how the reverse repo becomes the actual benchmark interest rate in the economy.

    What does reverse repo normalization mean?

    • Simply put, it means the reverse repo rates will go up.
    • Over the past few months, in the face of rising inflation, several central banks across the world have either increased interest rates or signaled that they would do so soon.
    • In India, too, it is expected that the RBI will raise the repo rate.
    • But before that, it is expected that the RBI will raise the reverse repo rate and reduce the gap between the two rates.
    • In the immediate aftermath of Covid, RBI had increased this gap.

    Implications of such policy

    • Incentivize commercial banks to park excess funds with RBI, thus sucking some liquidity out of the system.
    • The next step would be raising the repo rate.
    • This process of normalization, which is aimed at curbing inflation, will not only reduce excess liquidity but also result in higher interest rates across the board in the Indian economy.
    • This will help reduce the demand for money among consumers (since it would make more sense to just keep the money in the bank) and make it costlier for businesses to borrow fresh loans.

    Try this PYQ from CSP 2020:

    Q.If the RBI decides to adopt an expansionist monetary policy, which of the following it would NOT do?

    1. Cut and optimize the statutory liquidity ratio
    2. Increase the Marginal Standing Facility Rate
    3. Cut the Bank Rate and Repo Rate

    Select the correct answer using the code given below:

    (a) 1 and 2 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

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