💥Join UPSC 2027,2028 Mentorship (August Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

GS Paper: GS3

  • [PREMIUM] Views on inflation: A matter of interest

    Why in the News? 

    AAZData released showed that Retail Inflation had edged marginally upward last month.

    What is Inflation?

    • Inflation, as per the definition provided by the International Monetary Fund, represents the pace at which prices rise within a specified timeframe, covering a comprehensive assessment of general price escalations or those about particular goods and services. To measure the inflation there are different types of inflation index.
    • An Inflation Index is a statistical measure used to track changes in the overall price level of goods and services in an economy over a specific period. It quantifies the rate of inflation by comparing the current prices of a selected basket of goods and services to their prices in a base period.

    In India, there are primarily two types of inflation indices used to measure price changes:

    • Consumer Price Index (CPI): The CPI measures changes in the prices paid by urban and rural consumers for a basket of goods and services. It provides insights into inflation experienced by households and is divided into various sub-indices based on categories such as food, fuel, clothing, housing, transportation, medical care, recreation, and education. The Government of India releases multiple CPI indices, including:
    1. CPI for Industrial Workers (CPI-IW)
    2. CPI for Agricultural Labourers (CPI-AL)
    3. CPI for Rural Labourers (CPI-RL)
    4. CPI for Urban Non-Manual Employees (CPI-UNME)
    5. CPI for Rural (CPI-R)
    6. CPI for Urban (CPI-U)
    • Wholesale Price Index (WPI): The WPI tracks changes in the prices of goods at the wholesale level. It includes the prices of commodities traded in bulk such as agricultural products, minerals, crude oil, manufactured products, and electricity. The Office of the Economic Adviser, under the Department for Promotion of Industry and Internal Trade (DPIIT), releases the WPI every month.

    What is Retail Inflation? 

    • Retail inflation, also known as Consumer Price Index (CPI) inflation, tracks the change in retail prices of goods and services that households purchase for their daily consumption. CPI is calculated for a fixed basket of goods and services that may or may not be altered by the government from time to time.
    • How it is Calculated?
      • A representative basket of goods and services is selected to represent the typical consumption patterns of households
      • The cost of the basket of goods and services is calculated for a base period.
      • The CPI is calculated by dividing the cost of the basket in the current period by the cost of the basket in the base period and multiplying by 100.
      • The inflation rate is calculated by comparing the CPI of the current period with the CPI of the base period.

    Key points as per AAZData released by the National Statistical Office:

    • Retail Inflation Data: The National Statistical Office reported that retail inflation in India increased marginally, rising to 5.69% in December from 5.55% in November, primarily driven by higher food inflation
    • Cause of inflation: RBI Governor Shaktikanta Das had anticipated the rise in inflation due to risks in food prices, cautioning about potential second-round effects
    • Food Inflation: The Consumer Food Price Index surged to 9.53% in December, up from 8.7% in November, with notable inflation in cereals, vegetables, pulses, sugar, and spices
    • Industrial Production: The index of industrial production slowed to 2.4% in November, partly due to the base effect, with a 6.4% increase in industrial output for the first eight months of the year (April-November)
    • Monetary Policy Committee (MPC) Actions: The MPC maintained the status quo on rates and stance in the last meeting, focusing on withdrawing accommodation to align inflation with the target of 4%
    • Future Monetary Policy: There are discussions within the MPC about the necessity of an interest rate cut to prevent excessive real interest rates, especially as inflation is projected to moderate in the coming quarters

    Way Forward

    • Monetary Policy Adjustment: The Reserve Bank of India (RBI) could consider implementing a cautious monetary policy stance, possibly by tightening monetary policy through measures such as raising the repo rate. This would help curb inflationary pressures by reducing liquidity in the economy and making borrowing more expensive.
    • Supply-Side Interventions: The government could focus on addressing supply-side constraints in the agricultural sector to mitigate food price inflation. This might involve measures such as improving infrastructure, increasing agricultural productivity, reducing post-harvest losses, and enhancing market efficiency through better distribution networks.
    • Fiscal Policy Support: The government could also provide fiscal support to sectors facing supply-side disruptions or demand constraints, which could help stabilize prices and support economic growth. Targeted fiscal measures, such as subsidies for essential commodities or infrastructure investments, could be considered to address specific challenges contributing to inflation.

    Mains PYQ 

    Q Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss. (UPSC IAS/2022)

    Q Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments. (UPSC IAS/2019)

    Prelims PYQ 

    Consider the following statements:(UPSC IAS/2020)

    1) The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).

    2) The WPI does not capture changes in the prices of services, which CPI does.

    3) Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.

    Which of the statements give above is/are correct?

    a) 1 and 2 only

    b) 2 only

    c) 3 only

    d) 1, 2 and 3

  • SEBI board approves amendment to Mutual Funds rules

    Why in the news?

    • The Securities & Exchange Board of India (SEBI) has recently approved amendments to SEBI (Mutual Funds) Regulations, 1996, aimed at enhancing the regulatory framework for Asset Management Companies (AMCs).
      • These amendments mandate AMCs to establish institutional mechanisms to deter potential market abuse, including front-running, following recent instances observed by the market regulator.

    What are Mutual Funds?

    • A mutual fund is a pool of money managed by a professional Fund Manager.
    • It is a trust that collects money from a number of investors who share a common investment objective and invests the same in equities, bonds, money market instruments and/or other securities.
    • And the income / gains generated from this collective investment is distributed proportionately amongst the investors after deducting applicable expenses and levies, by calculating a scheme’s “Net Asset Value” or NAV.
    • SEBI regulates mutual funds through the SEBI (Mutual Funds) Regulations, 1996.

    Categories of Mutual Funds:

    1. An actively managed fund is a mutual fund scheme in which the fund manager “actively” manages the portfolio and continuously monitors the fund’s portfolio, deciding on which stocks to buy/sell/hold and when, using his/her professional judgement, backed by analytical research.
    2. A passively managed fund, by contrast, simply follows a market index, i.e., in a passive fund , the fund manager remains inactive or passive inasmuch as, he/she does not use his/her judgement or discretion to decide as to which stocks to buy/sell/hold , but simply replicates / tracks the scheme’s benchmark index in exactly the same proportion.

    Fund Structure

    • Mutual funds in India operate under a three-tier structure, comprising the
    1. Asset Management Company (AMC),
    2. Trustees, and
    3. Custodians.
    • The AMC manages the fund’s investments, the Trustees oversee the operations, and the Custodians safeguard the fund’s assets.

    Key highlights of the recent update:

    • Institutional Mechanism: AMCs are required to implement enhanced surveillance systems, internal controls, and escalation processes to identify and address specific types of misconduct, such as front-running, insider trading, and misuse of sensitive information.
    • Whistleblower Mechanism: To foster transparency, AMCs are mandated to have a whistleblower mechanism.
    • Recording of Communication: SEBI has exempted face-to-face interactions during market hours from the requirement of recording all communication by dealers and fund managers. This exemption will be effective upon the implementation of the institutional mechanism by AMCs.
    • Prudential Norms for Passive Schemes: SEBI has streamlined prudential norms for passive schemes, allowing equity passive schemes to invest up to the weightage of constituents in the underlying index, subject to a 35% cap on investment in sponsor group companies.

    PYQ:

    [2014] What does venture capital mean?

    (a) A short-term capital provided to industries

    (b) A long-term start-up capital provided to new entrepreneurs

    (c) Funds provided to industries at times of incurring losses

    (d) Funds provided for replacement and renovation of industries

  • Chunk of India’s forests ‘missing’ after 27-year-delay to file reports | Analysis

    Why in the news?

    SC ordered MoEFCC to upload State Expert Committee reports on unclassed forests due to concerns over the Forest (Conservation) Act Amendment 2023 constitutionality, impacting protection and potential diversion of these forests.

    What are unclassed forests?

    • Unclassed forests, also known as deemed forests, are forest areas that may belong to various entities such as government bodies (forests, revenue departments, railways), communities, or private owners. However, these forest areas have not been officially notified as forests.
    • The State Expert Committees (SECs) were tasked with identifying all such unclassed forests across the country (referring to Forest Working Plans and Land Revenue Records).
    • Additionally, SECs were required to physically identify any land patches that exhibit characteristics of forests, as per the dictionary meaning of forests, irrespective of their ownership status.

    What are the present issues?

    1. The missing forests in SECs 
    • Undermined the previous judgment: MoEFCC informed a Parliamentary Committee that SECs had identified unclassed forests, aligning with the proposed Forest (Conservation) Act Amendment, despite earlier criticism that the law undermined the Godavarman judgment.
      • However, an RTI application revealed that MoEFCC claimed not to have the SEC reports, raising questions about its assurance to the Parliamentary Committee.
    • Lack of verified data: Following a Supreme Court order, MoEFCC uploaded the SEC reports, but they showed a lack of verifiable data on the identification, status, and location of unclassed forests.
    • States not constituted SECs: Seven states and Union Territories, including Goa, Haryana, and Tamil Nadu, hadn’t constituted SECs, while others hadn’t fully complied with Supreme Court directives.
    • Non-traceable Forest: Ladakh formed an SEC only after the dissolution of Jammu & Kashmir, and Puducherry’s report was declared “not traceable”, further highlighting inconsistencies in the process.
    1. Disagreement with FSI data 
    • Insufficient timeline: Many states argue that the one-month timeline provided by the Supreme Court was insufficient for comprehensive work due to the voluminous nature of the task.
    • Relied on Existing data: Instead of conducting ground-truthing, physical cadastral surveys, and demarcation of unclassed forest lands, most states relied on existing data from forest and revenue departments. Some states, like Manipur and Sikkim, simply quoted figures from the Forest Survey of India (FSI).
    • Question on Data: The reliability of data is questioned, with Haryana’s report lacking clarity on data sources and creation dates. Only nine states provided the extent of unclassed forests, while others focused on different types of forest areas specified in the order.
    1. Lack of clarity in the Reports:
    • Failed to specify the geographic locations: Most states and UTs failed to specify the geographic locations of forests in their SEC reports, rendering the information provided largely unhelpful for accurate identification and protection.
      • But Tripura was an exception, providing Khaitan numbers for forest areas beyond those officially recorded, but the classification of land remained unclear.
    • Lack of on-ground verification: SEC is lagging that on-ground verification may have led to the widespread destruction of forests that should have been identified and protected nearly three decades ago.
      • Instances like Kerala’s SEC excluding ecologically significant areas like Pallivasal unreserve and Chinnakanal unreserve, critical for wildlife corridors and conservation, showcase the lack of diligence in identifying and protecting vital forest areas.

    Suggested Measures:

    • Extended Timeline: Provide states with a more realistic timeline to conduct comprehensive surveys and data verification, considering the voluminous nature of the task and the need for accuracy.
    • Ground Truthing and Surveys: Mandate states to conduct ground-truthing, physical cadastral surveys, and demarcation of unclassed forest lands to ensure accurate identification and mapping of forest areas.
    • Data Verification: Implement mechanisms for verifying and cross-referencing data obtained from various sources, such as forest and revenue departments and the Forest Survey of India, to ensure reliability and consistency.

    Main PYQ: 

    Q Examine the status of forest resources of India and its resultant impact on climate change.(UPSC IAS/2020)

  • The poultry industry needs urgent reforms

    Why in the news?

    The current outbreak of H5N1 was a disaster waiting to happen, as experts have been sounding alarm bells on the unsafe conditions at industrial livestock production for more than 10 years now.

    Scale of spreading H5N1 virus:

    • Global Spread of H5N1 in humans: The H5N1 virus has spread globally, affecting various species including humans, polar bears in the Arctic, and seals and seagulls in Antarctica.
    • In India Spread of H5N1 in humans:  The first H5N1 patient was reported in Maharashtra in 2006. An outbreak in December 2020 and early 2021 spread across 15 States
    • Human Fatality Rate: As per WHO, the fatality rate for H5N1 among humans is estimated at 52%, with 463 deaths recorded since 2003 out of 888 diagnosed cases.
    • Transmission from Birds and Contaminated Environments: Almost all human infections with H5N1 are linked to close contact with infected birds or contaminated environments, emphasizing the importance of biosecurity measures.
    • Spread in other species: This pathogen has crossed many species barriers, causing mortality among the polar bears in the Arctic and seals and seagulls in Antarctica.

    Causes for the spread of H5N1 (avian influenza or bird flu) infection:

    • Contact with infected birds: Humans can contract H5N1 if they come into direct contact with the body fluids, such as saliva, respiratory droplets, or feces, of infected birds.
    • Poultry Trade and Movement: The transportation and trade of infected poultry, poultry products, and crowded live poultry markets provide an environment for the virus to spread between birds and potentially to humans.
    • Antibiotic Resistance: The 269th Law Commission of India Report in 2017 highlighted evidence from the Tata Memorial Centre regarding the use of non-therapeutic antibiotics in poultry farming, leading to antibiotic resistance due to unhygienic living conditions.
    • Environmental Factors: Factors like proximity to bodies of water, reduced rainfall, and presence near major highways have been associated with increased risk of H5N1 outbreaks. These environmental conditions may facilitate the spread of the virus.

    Regulation: The Central Pollution Control Board (CPCB) has classified poultry units with more than 5,000 birds as a polluting industry that requires compliance and regulatory consent to establish and operate.

    Way Forward:

    • Draft Rules for Welfare: The Law Commission 269th recommended a set of draft rules for the welfare of chickens in the meat and egg industries, aligning with existing laws and international best practices for animal care, waste management, and antibiotic use.
    • Weaknesses in Draft Rules: The Draft Rules for the egg industry released by the Ministry of Agriculture and Farmers’ Welfare in 2019 were criticized for being weak and tokenistic, failing to meet the recommendations of the Law Commission.
    • Need for Oversight and Enforcement: Given the reclassification of the poultry industry as a highly polluting ‘orange category’ industry by the Central Pollution Control Board (CPCB), strict oversight for compliance and enforcement of environmental regulations is essential.

    Mains PYQ:

    Q What is the basic principle behind vaccine development? How do vaccines work? What approaches were adopted by the Indian vaccine manufacturers to produce COVID-19 vaccines? (UPSC IAS/2022)

  • The rising share of Personal Income Tax and Indirect Tax is a concern

    Why in the news?

    Recent data show that Personal Income Tax Collections have increased, while collections from Corporate Taxes have reduced.

    The present context of the rising share of Personal Income Tax and Indirect Tax:

    • Shift in Tax Composition: The data illustrates a significant shift in the composition of tax revenue, with personal income tax forming a larger share compared to corporate tax. This trend is accentuated by the sharp decline in corporate tax following the 2019 tax cuts.
    • Progressive vs. Regressive Taxation: Direct taxes, such as personal income tax, are considered progressive as they are based on income levels, whereas indirect taxes, like GST, are regressive, impacting all consumers uniformly regardless of their income.
      • The increasing share of indirect taxes implies a heavier burden on lower-income individuals.
    • Trend in Tax Composition: Chart 2 demonstrates a historical trend where indirect taxes had been decreasing since the 1980s, whereas direct taxes were on the rise. However, recent years have witnessed a reversal of this trend, with indirect taxes increasing and direct taxes declining.
    • International Comparison: Comparisons with BRICS economies indicate that India’s effective personal income tax rate is among the highest. This implies that Indian taxpayers may face relatively higher tax rates compared to individuals in other emerging economies.

    Concerns due to rising share of Personal Income Tax and Indirect Tax:

    • Impact on Middle and Lower Income Groups: The rising share of personal income tax and indirect taxes places a greater burden on poorer citizens and the middle class. This is particularly concerning as the majority of personal income tax filers fall within the ₹1 lakh-₹5 lakh annual income bracket, indicating that middle-income earners are disproportionately affected.
    • Comparison with BRICS Economies: Data comparisons with BRICS economies reveal that India’s effective personal income tax rate is among the highest. This suggests that individuals in India may be facing relatively higher tax rates compared to their counterparts in other emerging economies.
    • Concern for Equity and Economic Stability: The data underscores a growing concern regarding the equitable distribution of the tax burden. The heavier reliance on personal income tax and indirect taxes may exacerbate income inequality and strain the finances of middle and lower-income households.

    Way Forward:

    • Progressive Tax Reforms: Implementing progressive tax reforms can help alleviate the burden on middle and lower-income groups. This could involve revising tax brackets and rates to ensure that higher-income individuals contribute proportionally more to tax revenue.
    • Enhanced Direct Tax Compliance: Improving direct tax compliance measures, such as increasing tax enforcement efforts and reducing tax evasion loopholes, can help enhance revenue collection from high-income individuals and corporations.

    Mains PYQ 

    Q What is the meaning of the term ‘tax expenditure’? Taking housing sector as an example, discuss how it influences the budgetary policies of the government. (UPSC IAS/2013)

  • RBI’s New Guidelines for Asset Reconstruction Companies (ARCs)

    Why in the news?

    The RBI has introduced updated guidelines for Asset Reconstruction Companies (ARCs) through a master direction, effective from April 24, 2024.

    What is an Asset Reconstruction Company (ARC)?

    Description
    About ARC is a special financial institution that acquires debtors from banks at a mutually agreed value and attempts to recover the debts or associated securities.
    Regulation
    • ARCs are registered under the RBI.
    • Regulated under the SARFAESI Act, 2002 (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act).
    Objective ARCs take over a portion of the bank’s non-performing assets (NPAs) and engage in asset reconstruction or securitization, aiming to recover the debts.
    Functions
    • Asset Reconstruction: Acquisition of bank loans or other credit facilities for realization.
    • Securitization: Acquisition of financial assets by issuing security receipts.
    Foreign Investment 100% FDI allowed in ARCs under the automatic route.
    Limitiations
    • ARCs are prohibited from undertaking lending activities.
    • They can only engage in securitization and reconstruction activities.
    Working
    • Bank with NPA agrees to sell it to ARC at a mutually agreed value.
    • ARC transfers assets to trusts under SARFAESI Act.
    • Upfront payment made to bank, rest through Security Receipts.
    • Recovery proceeds shared between ARC and bank.
    Security Receipts Issued to Qualified Institutional Buyers (QIBs) for raising funds to acquire financial assets.
    Significance
    • Banks can clean up their balance sheets and focus on core banking activities.
    • Provides a mechanism for resolution of NPAs and debt recovery.

    What are the new guidelines laid out by the RBI?

    • Enhanced Capital Requirements:
        • Minimum Capital Requirement Increase: ARCs are now mandated to maintain a minimum capital requirement of Rs 300 crore, a significant increase from the previous Rs 100 crore stipulation established on October 11, 2022.
        • Transition Period for Compliance: Existing ARCs are granted a transition period to reach the revised Net Owned Fund (NOF) threshold of Rs 300 crore by March 31, 2026.
        • Interim Requirement: However, by March 31, 2024, ARCs must possess a minimum capital of Rs 200 crore to comply with the new directives.
    • Supervisory Actions for Non-Compliance:
        • ARCs failing to meet the prescribed capital thresholds will face supervisory action, potentially including restrictions on undertaking additional business until compliance is achieved.
    • Expanded Role for Well-Capitalized ARCs:
      • Empowerment of Well-Capitalized ARCs: ARCs with a minimum NOF of Rs 1000 crore are empowered to act as resolution applicants in distressed asset scenarios.
      • Investment Opportunities: These ARCs are permitted to deploy funds in government securities, scheduled commercial bank deposits, and institutions like SIDBI and NABARD, subject to RBI specifications. Additionally, they can invest in short-term instruments such as money market mutual funds, certificates of deposit, and corporate bonds commercial papers.
      • Investment Cap: Investments in short-term instruments are capped at 10% of the NOF to mitigate risk exposure.

    PYQ:

    [2018] With reference to the governance of public sector banking in India, consider the following statements:

    1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
    2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • [pib] Critical Minerals Summit

    Why in the news?

    The Ministry of Mines has organized a pivotal summit in New Delhi aimed at fostering collaboration, sharing knowledge, and driving innovation in Critical Mineral beneficiation and processing.

    What are Critical Minerals?

    • Critical Minerals are indispensable for economic development and national security, with their scarcity or concentration in specific regions posing potential supply chain vulnerabilities.
    • The declaration and identification of Critical Minerals is an ongoing process, influenced by technological advancements, market dynamics, and geopolitical factors.

    Critical Minerals in India:

    • India has identified 30 Critical Minerals (July 2023) based on factors like disruption potential, import reliance, and cross-sectoral usage.
      • Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, Rare Earth Elements, Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium.

    Critical Minerals

    Global Perspective:

    Various nations have outlined their lists of Critical Minerals based on unique circumstances:

    • The US recognizes 50 minerals critical for national security and economic development.
    • Japan has identified 31 minerals crucial for its economy.
    • The UK, EU, and Canada have their respective lists, reflecting their strategic priorities.

    India became the 14th member of the Mineral Security Partnership (MSP) in June 2023. 

    • MSP seeks to bolster critical minerals supply chains to support economic prosperity and climate objectives.
    • It seeks to ensure that critical minerals are produced, processed and recycled by catalyzing investments from governments and private sector across the full value chain.
    • Members: The other member countries are United States, Australia, Canada, Finland, France, Germany, Italy, Japan, Norway, the Republic of Korea, Sweden, the United Kingdom and the European Commission.

    Note: Copper, gold and silver are not on the list of minerals under MSP (Wiki).

    Various Government Initiatives:

    • MMDR Act Amendment (2023):   24 minerals were designated as critical and strategic under the Mines and Minerals (Development and Regulation) Act.
    • National Mineral Policy (2019): The updated policy emphasizes the exploration and exploitation of Critical Minerals to harness India’s mineral potential effectively.
    • Khanij Bidesh India Ltd (KABIL): A joint venture comprising National Aluminium Company Ltd (NALCO), Hindustan Copper Ltd (HCL), and Mineral Exploration Corporation Ltd (MECL), KABIL aims to secure a consistent supply of Critical Minerals by acquiring and developing assets overseas.
    • Indian Rare Earths Limited (IREL): It is a PSU that plays a significant role in the research and production of rare earth minerals.

    India’s Critical Mineral Imports:

    • Lithium Imports: In FY23, India imported 2,145 tonnes of lithium carbonate and lithium oxide, costing Rs 732 crore.
    • Nickel and Copper Imports: The country imported 32,000 tonnes of unwrought nickel and 1.2 million tonnes of copper ore, costing Rs 6,549 crore and Rs 27,374 crore, respectively.
    • Import Dependence: India relies entirely on imports for lithium and nickel, and 93% for copper.

    Country-wise dependence:

    1. China: India heavily relies on China for the import of critical minerals like lithium, cobalt, nickel, and graphite.
    2. Australia: India is actively engaged with Australia for acquiring mineral assets, particularly lithium and cobalt, to secure its supply chain for critical minerals.
    3. Argentina, Bolivia, and Chile: India is engaging with these countries, known for their reserves of battery metals like lithium and cobalt, to diversify its sources for critical minerals.

     

    PYQ:

    [2019] With reference to the management of minor minerals in India, consider the following statements:

    1. Sand is a ‘minor mineral’ according to the prevailing law in the country.
    2. State governments have the power to grant mining leases of minor minerals, but the powers regarding the formation of rules related to the grant of minor minerals lie with the Central Government.
    3. State Governments have the power to frame rules to prevent illegal mining of minor minerals.

    Which of the statements given above is/are correct?

    (a) 1 and 3

    (b) 2 and 3

    (c) 3 only

    (d) 1, 2 and 3

  • [pib] Launching of LSAM 20 (Yard 130)  

    Why in the News?

    The Indian Navy has inducted the ‘Ammunition Cum Torpedo Cum Missile Barge, LSAM 20 (Yard 130) into its fleet.

    What is LSAM 20?

    • LSAM 20 (Yard 130) is the Ammunition Cum Torpedo Cum Missile Barge (Storage) inducted by the Indian Navy.  (built by MSME Shipyard, M/s Suryadipta Projects Pvt Ltd, Thane).
    • LSAM 20 facilitates transportation, embarkation, and disembarkation of articles/ammunition to IN Ships.
    • These Barges are indigenously designed and built under relevant Naval Rules and Regulations of the Indian Register of Shipping.

    Objective 

    • A Torpedo Cum Missile Barge is a specialized vessel used by the Indian Navy to transport various types of ammunition, torpedoes, and missiles to operational areas.
    • These barges play a crucial role in providing logistical support to naval vessels by ensuring the uninterrupted transportation of essential military supplies. 

    PYQ:

    [2016] Which one of the following is the best description of ‘INS Astradharini’, that was in the news recently?

    (a) Amphibious warfare ship

    (b) Nuclear-powered submarine

    (c) Torpedo launch and recovery vessel

    (d) Nuclear-powered aircraft carrier

  • Towards a Green Growth: On the RBI and a Green Taxonomy

    Why in the news?

    Extreme weather conditions may pose a risk to inflation, along with prolonged geopolitical tensions that could keep crude oil prices volatile, the Reserve Bank’s April Bulletin said on April 23.

    RBI’s Monetary Policy Report on the impact of climate shock and extreme weather events on food inflation:

    • Effects of Food Inflation: The report highlights the significance of extreme weather events and climate shocks in affecting not only food inflation but also the broader impact on the natural Rate of Interest and Financial Stability.
    • Broader Economic Impact: Climate shocks and extreme weather events are mentioned to have a broader impact on the economy’s financial stability, indicating that disruptions in food production and supply chains due to these events can lead to inflationary pressures beyond just the food sector.
    • Use of Economic Modeling: The report mentions the utilization of a New-Keynesian model incorporating a physical climate risk damage function to estimate the macroeconomic impact of climate change. This likely includes projections on how climate shocks affect food production and subsequently food inflation.
    • Warning on Long-Term Output Reduction: The report warns that without climate mitigation policies, the long-term economic output could be lower by around 9% by 2050. This suggests that climate shocks and extreme weather events could have lasting effects on food production and inflation.
    • Potential for Inflation Hysteresis: There’s a warning about the potential for inflation hysteresis to become entrenched, which could lead to a de-anchoring of inflation expectations. This implies that persistent disruptions caused by climate shocks could lead to sustained increases in food inflation.

    Way Forward:

    • Need Investment in Climate Resilience: Governments and businesses can invest in climate-resilient agriculture practices and infrastructure to mitigate the adverse effects of extreme weather events on food production.
    • Need Diversification of Food Sources: Diversifying food sources can help reduce reliance on regions prone to climate-related disruptions. This could involve promoting local food production, supporting small-scale farmers, and investing in alternative food production methods such as vertical farming or hydroponics.

    Mains PYQ 

    Q What policy instruments were deployed to contain the great economic depression?

  • [PREMIUM] An Overview of the Digitalization in Indian Economy

    Why in the news?

    As per RBI findings, India’s core digital economy saw a rise from constituting 8.5% of GVA in 2019 to 12.5% in 2023, marking a growth rate of 15.6% over the span of 2019-2023.

    What is digitisation?

    • Digitization refers to the process of converting information, data, or physical objects into digital format. Digitization enables information to be stored, accessed, and manipulated electronically, often leading to increased efficiency, accessibility, and flexibility compared to traditional analog methods.

    Origin in World 

    • The origin of digitalization can be traced back to the late 19th century when Herman Hollerith developed a punch card system for tabulating data.
    • Alan Turing’s theoretical work on computation in the early 20th century laid the foundation for the development of the first electronic computers in the 1940s, which were pivotal in digitizing various forms of information.

    Origin in India 

    • Late 20th century: The origins of digitalization in India can be traced back to the late 20th century, with the advent of personal computers and the internet.
    • Early 2000s:The government’s concerted efforts to drive digital transformation in the country began in the early 2000s with the launch of the National e-Governance Plan (NeGP) in 2006
    • 2015: The NeGP aimed to make government services available to citizens electronically by improving online infrastructure and connectivity. This laid the foundation for the more comprehensive “Digital India” initiative, which was launched by Prime Minister Narendra Modi in 2015

    Status of Digitalization in the Indian Economy

    • Enhancement of E-Governance: The Digital India initiative has brought about substantial enhancements in e-governance services. Programs such as e-visas and the Digital Locker system have effectively modernized government services, leading to a reduction in paperwork and greater accessibility for citizens.
    • E-Commerce market: India’s e-commerce market is expected to reach $200 billion by 2026. Major players like Flipkart and Amazon have expanded their reach, with the COVID-19 pandemic accelerating online shopping adoption.
    • Digital transaction: The BHIM (Bharat Interface for Money) app, utilizing the Unified Payments Interface (UPI), has garnered immense popularity, enabling secure peer-to-peer transactions. By August 2023, UPI had processed more than 10 billion monthly transactions, amounting to INR 18 trillion ($204.77 billion).
    • Startup Ecosystem in India: India’s rapidly growing startup ecosystem currently encompasses 110 unicorns valued at $347 billion, featuring prominent companies such as Paytm, Ola, and Zomato. These unicorns exemplify India’s prowess as a technology-driven entrepreneurial center.
    • Digital Financial Inclusion: Digital financial services, propelled by programs such as Jan Dhan Yojana, have advanced financial inclusion by facilitating the opening of millions of bank accounts for those previously excluded from or underrepresented in the banking system.
    • Surge in Broadband and Internet Usage: India has experienced a notable surge in broadband adoption, boasting 825 million mobile broadband subscribers as of July 2023. This uptick has resulted in heightened data consumption and escalated online engagement, especially among Generation Z.

    Key challenges related to digitalisation in India:

    • Lack of skills: Rapid technological change increase the demand of skilled workforce. Only 42% of India’s workforce possesses digital skills, highlighting the need for digital literacy and upskilling.
    • Regulatory challenges: For businesses, especially startups, grappling with intricate digital regulations, e-commerce taxation, and intellectual property matters continues to present significant challenges.
    • Privacy issues:The surge in digital transactions and data exchange has sparked notable concerns regarding privacy and data security. These concerns are being tackled by the Personal Data Protection Bill, which introduces regulatory intricacies.
    • Cybersecurity: As digitization increases, the risk of cyber threats and attacks grows. India faced 91 lakh cybersecurity incidents in 2022, ranking third globally in the average cost of data breaches.
    • Digital Divide: Despite advancements, there remains a digital gap, with rural areas experiencing restricted internet and technology accessibility, resulting in approximately 50% of the population being offline.

    Measures to address these challenges:

    • Digital Skills Development: Implement comprehensive digital literacy programs to enhance the skills of the workforce.
    • Regulatory Simplification:Streamline digital regulations, especially for startups, to reduce complexities and facilitate smoother operations.Provide guidance and support to businesses on e-commerce taxation and intellectual property matters.
    • Privacy and Data Security: Enforce the Personal Data Protection Bill to address privacy concerns and ensure data security.Enhance awareness campaigns to educate the public about data privacy and protection measures.
    • Cybersecurity Measures: Strengthen cybersecurity infrastructure to combat the increasing cyber threats and attacks.Invest in advanced cybersecurity technologies and training programs to build a resilient defense system.
    • Closing the Digital Divide:Expand digital infrastructure in rural areas to improve internet and technology accessibility.

     Steps taken by government:

    • Cybersecurity Framework: Enhance cybersecurity infrastructure and awareness, emphasizing collaboration between government agencies and the private sector under National Cyber Security Policy of 2021.
    • Data Protection Laws: Enacted data protection laws and regulations, like the Digital Personal Data Protection Act, of 2023, to ensure privacy and responsible data handling.
    • Expansion of Broadband : Accelerate efforts to expand broadband connectivity in rural and remote areas, leveraging public-private partnerships like the BharatNet project.
    • Digital initiative: Comprehensive digital literacy initiatives targeting both urban and rural communities, exemplified by programs like the Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA).

    Conclusion: 

    Need to Implement widespread digital literacy programs to equip individuals with the necessary skills to navigate the digital landscape and emphasize upskilling and reskilling initiatives to meet the demands of rapid technological advancements.Encourage collaboration between the government and the private sector to drive digitization initiatives.

     

    Mains PYQ

    Q Implementation of Information and Communication Technology (ICT) based projects/programmes usually suffers in terms of certain vital factors. Identify these factors and suggest measures for their effective implementation. (UPSC IAS/2019)

    Q Has digital illiteracy, particularly in rural areas, coupled with lack of Information and Communication Technology (ICT) accessibility hindered socio-economic development? Examine with justification.(UPSC IAS/2021)