💥Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Login

GS Paper: GS3

  • Why reforming the system of free food is necessary

    Context

    The release of two new working papers, one from the World Bank and the other from the IMF, has led to a renewed debate on poverty in India.

    A substantial decline in extreme poverty in India

    • Both papers claim that extreme poverty in the country, based on the international definition of $1.90 per capita per day (in purchasing power parity (PPP), has declined substantially.
    • The World Bank paper uses the Consumer Pyramid Household Surveys (CPHS) data to conclude that 10.2 per cent of the country’s population was at extreme poverty levels in 2019.
    • The IMF paper calculates poverty by using the NSO Consumer Expenditure Survey as the base and adjusts it for the direct effect of the massive food grain subsidy given under the National Food Security Act (NFSA, 2013) and PM Garib Kalyan Anna Yojana (PMGKAY) during the pandemic period.
    • It claims that extreme poverty has almost vanished – it was 0.77 per cent in 2019 and 0.86 per cent in 2020.
    • Another estimate of poverty by the NITI Aayog, the multi-dimensional poverty index (MPI), has put Indian poverty at 25 per cent in 2015 based on NFHS data.
    • How MPI is calculated?: This MPI is calculated using twelve key components from areas such as health and nutrition, education and standard of living.

    How much should be the coverage under NFSA, 2013?

    • The offtake of grains under NFSA in FY20 was 56.1 million metric tonnes (MMT).
    • Following the outbreak of Covid-19, the government launched the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in April 2020 to distribute 25 kg cereals per family per month in addition to food transfers under the NFSA.
    •  That catapulted the offtake to 87.5 MMT (under PMGKAY and NFSA) in FY21.
    • The scheme continued in FY22, and the grain offtake touched 93.2 MMT. 

    Issues with the wide coverage

    • A further extension of free food on top of the NFSA allocations was uncalled for.
    • This will strain the fisc, reduce public investments and hamper potential job creation.
    • A look at the size of food freebies will help understand the gravity of this problem.
    • As of April 1, the Food Corporation of India’s wheat and rice stocks stood at 74 MMT against a buffer stock norm of 21 MMT – there is, therefore, an “excess stock” of 53 MMT. 
    • The cost of excess stock: The economic cost of rice, as given by FCI, is Rs 3,7267.6/tonne and that of wheat is Rs 2,6838.4/tonne (2020/21).
    • The value of “excess stocks”, beyond the buffer norm, is, therefore, Rs 1.85 lakh crore — this, despite a total of 72.2 MMT grains distributed for free under the PMGKAY in FY21 and FY22.
    • Ballooning food subsidy: All this results in a ballooning food subsidy for FY 23, it is provisioned at Rs 2.06 lakh crore, for FY 23, it is provisioned at Rs 2.06 lakh crore.
    • But this amount is likely to go beyond Rs 2.8 lakh crore with the continuing distribution of free food under the PMGKAY.
    • This would amount to more than 10 per cent of the Centre’s net tax revenue (after deducting the states’ share).

    Way forward

    • It is all the more important to change the current policy of free food given the massive leakages in the PDS.
    • As per the High-Level Committee on restructuring FCI, leakages were more than 40 per cent based on the NSSO data of 2011.
    • Ground reports suggest that these leakages hover around 30 per cent or so today.
    • Make PDS more targeted: In reforming this system of free food, wisdom lies in going back to the Antyodaya Anna Yojana (AAY).
    • Under AAy, the “antyodaya” households (the most poor category) get more rations (35 kg per household) at a higher subsidy (rice, for instance, at Rs 3/kg and wheat at Rs2/kg).
    • For the remaining below poverty line (BPL) families, the price charged was 50 per cent of the procurement price and for above poverty line families (APL), it was 90 per cent of the procurement price.
    •  This will make PDS more targeted and lead to cost savings.
    • Use of technology: There could be some problems in identifying the poor. However, technology can help overcome this difficulty.
    • Option of cash transfer: This measure should be combined with giving people the option of receiving cash instead of providing grains to targeted beneficiaries.
    • The savings so generated from this reform can be ploughed back as investments in agri-R&D, rural infrastructure (irrigation, roads, markets) and innovations that will help create more jobs and reduce poverty on a sustainable basis.

    Conclusion

    The government needs to bite the bullet and emulate the Vajpayee  government (which had introduced AAY) in using scarce resources more wisely.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • All-India Household Consumer Expenditure Survey

    The All-India Household Consumer Expenditure Survey, usually conducted by the National Statistical Office (NSO) every five years, is set to resume this year after a prolonged break.

    What is the Consumer Expenditure Survey (CES)?

    • The CES is traditionally a quinquennial (recurring every five years) survey conducted by the government’s National Sample Survey Office (NSSO).
    • It is designed to collect information on the consumer spending patterns of households across the country, both urban and rural.
    • Typically, the Survey is conducted between July and June and this year’s exercise is expected to be completed by June 2023.

    Utility of the survey

    • The data gathered in this exercise reveals the average expenditure on goods (food and non-food) and services.
    • It helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.
    • It is used to arrive at estimates of poverty levels in different parts of the country and to review economic indicators such as the GDP, since 2011-12.

    Why need this survey?

    • India has not had any official estimates on per capita household spending.
    • It provides separate data sets for rural and urban parts, and also splice spending patterns for each State and Union Territory, as well as different socio-economic groups.

    What about the previous survey?

    • The survey was last held in 2017-2018.
    • The government announced that it had data quality issues.
    • Hence the results were not released.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Strontium: A Cyber-Espionage Group

    Recently, Microsoft said that it had disrupted cyberattacks from a Russian nation-state hacking group called ‘Strontium’.

    What is Strontium?

    • Strontium, also known as Fancy Bear, Tsar Team, Pawn Storm, Sofacy, Sednit or Advanced Persistent Threat 28 (APT28) group, is a highly active and prolific cyber-espionage group.
    • It is one of the most active APT groups and has been operating since at least the mid-2000s, making it one of the world’s oldest cyber-spy groups.
    • It has access to highly sophisticated tools to conduct spy operations, and has been attacking targets in the US, Europe, Central Asia and West Asia.
    • The group is said to be connected to the GRU, the Russian Armed Forces’ main military intelligence wing.
    • The GRU’s cyber units are believed to have been responsible for several cyberattacks over the years and its unit 26165 is identified as Fancy Bear.

    How does it attack networks?

    • The group deploys diverse malware and malicious tools to breach networks.
    • In the past, it has used X-Tunnel, SPLM (or CHOPSTICK and X-Agent), GAMEFISH and Zebrocy to attack targets.
    • These tools can be used as hooks in system drivers to access local passwords, and can track keystroke, mouse movements, and control webcam and USB drives.
    • APT28 uses spear-phishing (targeted campaigns to gain access to an individual’s account) and zero-day exploits (taking advantage of unknown computer-software vulnerabilities) to target specific individuals and organizations.
    • It has used spear-phishing and sometimes water-holing to steal information, such as account credentials, sensitive communications and documents.
    • A watering hole attack compromises a site that a targeted victim visits to gain access to the victim’s computer and network.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Why are blue straggler stars different from the norm?

    Researchers from the Indian Institute of Astrophysics, Bengaluru have studied the eccentricities of blue straggler stars.

    What are Blue Straggler Stars?

    • A blue straggler is a main-sequence star in an open or globular cluster that is more luminous and bluer than stars at the main sequence turnoff point for the cluster.
    • Blue stragglers were first discovered by Allan Sandage in 1953 while performing photometry of the stars in the globular cluster M3.

    What did the Indian researchers study?

    • Eccentricity is the deviation of a planets’ or stars’ orbit from circularity — the higher the eccentricity, the greater the elliptical orbit.
    • For this, the researchers also made use of the observations by the UVIT instrument (Ultra Violet Imaging Telescope) of ASTROSAT, India’s first science observatory in space.

    (a) Stellar ageing of stars

    • To know what blue stragglers are, it is necessary to understand how stars are classified and their evolution, studied.
    • Our Sun, for example, is what is called a main sequence star, and, given its mass and age, it is expected that once it has converted all its hydrogen into helium, its core will get denser, while outer layers expand.
    • So, it will bloat into a red giant.
    • After this phase, its fuel spent, it will shrink, becoming a smaller, cooling star called a white dwarf star at the end of its life.

    (b) Sequencing of stars

    • To study the behaviour of the star, you could plot a graph of the colour of a star, which is an indication of its surface temperature, against its magnitude, which is related to the total energy given off by it.
    • If you do this for all the stars in a globular cluster, a large number of stars are seen to find a place within a band known as the main sequence.
    • Our Sun is a main sequence star, too, and the expectation is that all main sequence stars follow a pattern of evolution pretty much like our Sun’s fate, which was described earlier.
    • There are a few stars that, just at the stage of their lives, when they are expected to start expanding in size and cooling down, do just the opposite.
    • They grow brighter and hotter and blue in colour, thus standing out from the cooler red stars in their vicinity in the colour-magnitude diagram.
    • Since they lag behind their peers in the evolution, they are called stragglers, more specifically, blue stragglers, because of their hot, blue colour.

    Outcome of the research: Reasons for Blue Stragglers behaviour

    • The puzzle of why a blue straggler is more massive, and energetic than expected may be resolved in several ways.
    • One that these do not belong to the family of stars in the cluster, and hence are not expected to have the group properties.
    • Second, the straggler draws matter from the giant companion and grows more massive, hot and blue, and the red giant ends up as a normal or smaller white dwarf.
    • The third possibility is that the straggler draws matter from a companion star, but that there is a third star that facilitates this process.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Digital Service Tax

    Context

    Over the past four years, 137 countries have engaged intensively with the OECD to find a solution to the tax challenges arising from digitalisation. Like any international agreement, finding a middle ground has been difficult and a series of compromises have been made.

    What makes it difficult to tax the digital economy?

    • Operation across the border: The unique feature of the digital economy is that firms can operate seamlessly across borders and users and their data contribute to their profits.
    • However, this made it harder to tax such an economy.
    • It was not clear how profits were to be pinned down to any jurisdiction.
    • Political issues: Taxing digital economy became a political issue because the largest technology firms are tax residents of developed countries and redefining digital presence as the basis of taxation would potentially allow large markets like India more right to tax.
    • Developing vs. developed countries: Developing countries wanted that profits from digital operations should be fractionally apportioned to markets while developed countries believe that a fraction of residual profit, mainly arising from marketing functions, should be taxed in markets.

     Equalisation levy and DST issue

    • The divergence in developed and developing countries as explained above compelled countries to implement unilateral measures.
    • India was the first country to implement a gross equalisation levy on turnover.
    • This is not covered by tax treaties.
    • So, while the income tax act does not apply to the levy, credit is available for the tax paid by the company in its home country.
    • Similarly, several other countries have announced or implemented a digital services tax (DST).
    • In 2021, India expanded the scope of the equalisation levy.
    • The US initiated the US Trade Representative investigations which found DST to be discriminatory, and then announced retaliatory tariffs.

    Two-pillar approach and issues with its adoption

    • The DSTs encouraged the US to actively participate in finding a consensus-based solution.
    • As talks progressed, the OECD announced that the issue of allocation of taxing rights would be actively considered and adopted a two-pillar approach.
    • Pillar One approach: The first pillar was to define the rules for taxing digital companies.
    • Sovereignty issue: Pillar One was to go beyond digital companies and apply to large companies with annual revenue over € 20 billion. To ensure certainty to taxpayers, the solution will require excessive global coordination.
    • Whether this will undermine sovereignty, remains to be seen.
    • Therefore, it is important to consider if the consensus approach is worth pursuing.
    • EL may still apply to companies not covered by OECD proposal: In fact, the EL may apply to companies that are not covered by the OECD proposal, leaving one to wonder whether it will truly address the tax challenges from digitalisation. 
    • Complications: Corporations that argue in favour of simplicity must also consider the potential benefits from an EL like tax that sets aside the complications of attributing profits to complex functions.
    • The OECD approach creates a fiction of reallocation, where the profits reallocated through Pillar One could in fact be compensated for by taxing back global profits taxed below 15 per cent.

    Conclusion

    As per Pillar One proposal, DSTs will be removed once the OECD approach is ratified in 2023. It is imperative therefore that countries assess the price of compromise.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Indians can now make Payments using UPI in UAE

    Tourists or migrants to the United Arab Emirates (UAE) with Indian bank accounts will be able to make UPI payments at shops, retail establishments and other merchants in the gulf nation.

    What is UPI?

    • Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India (NPCI) facilitating inter-bank transactions.
    • The interface is regulated by the Reserve Bank of India (RBI) and works by instantly transferring funds between two bank accounts on a mobile platform.

    How does the service work?

    • The NPCI and UAE’s Mashreq Bank’s NEOPAY have partnered for this service
    • It will be mandatory for users to have a bank account in India with UPI enabled on it.
    • The users will also need an application, like BHIM, to make UPI payments.

    Will UPI be accepted everywhere in the UAE?

    • Payments using UPI will only be accepted at those merchants and shops which have NEOPAY terminals.

    Does NPCI have other such international arrangements?

    • NPCI’s international arm NIPL have several such arrangements with international financial services providers for its products, including UPI and RuPay cards.
    • Globally, UPI is accepted in Bhutan and Nepal, and is likely to go live in Singapore later this year.
    • In Singapore, a project to link UPI with the city-state’s instant payment system PayNow is being undertaken by the RBI and the Monetary Authority of Singapore.
    • The linkage is targeted for operationalization by July this year.

    Back2Basics: Bharat Interface for Money (BHIM)

    • BHIM is an Indian mobile payment App developed by the National Payments Corporation of India (NPCI), based on the Unified Payments Interface (UPI).
    • Named after B. R. Ambedkar and launched on 30 December 2016 it is intended to facilitate e-payments directly through banks and encourage cashless transactions.
    • The application supports all Indian banks which use UPI, which is built over the Immediate Payment Service (IMPS) infrastructure and allows the user to instantly transfer money between bank accounts of any two parties.
    • It can be used on all mobile devices.

    Answer this PYQ in the comment box:

    Q. With reference to digital payments, consider the following statements:

    1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
    2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

    Which of the statements given above is/ are correct? (CSP 2018)

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

     

    [wpdiscuz-feedback id=”ra78wdcdft” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • UK to issue Open General Export Licence (OGEL) to India

    In the backdrop of the rapid geopolitical turmoil, PM Modi and his British counterpart Boris Johnson agreed on a new and expanded India-UK defence partnership and vowed to seal an ambitious free trade agreement by the end of the year.

    What is the news?

    • The UK is creating an Open General Export Licence (OGEL) for India to reduce bureaucracy and slashing delivery times for defence procurement.
    • It will partner with India on new fighter jet technology as well as in the maritime sphere to detect and respond to threats.

    What is OGEL?

    • The open General Licence is a type of license that is used for the export license that is issued by the government for domestic suppliers.
    • The items that are to be exported in India are categorised into three types. They are prohibited items, restricted items, and freely importable items. These classifications are made based on the nature and use of the products.
    • The application processing and grant of OEGL will be taken care of by the Department of Defence Production. The process will vary for each case.
    • The primary aim of the OEGL is to give a boost to the defence exports of India. This will also improve the ease of doing business and imports and exports.
    • The countries allowed under the OGELs are: Belgium, France, Germany, Japan, South Africa, Spain, Sweden, UK, USA, Canada, Italy, Poland and Mexico.

    Items to be exported

    • The items permitted under OGEL includes components of ammunition & fuse setting device without energetic and explosive material; firing control & related alerting and warning equipment & related system; and body protective items.
    • Complete aircraft or complete unmanned aerial vehicles (UAVs) and any components specially designed or modified for UAVs are excluded under this license.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Special Purpose Acquisition Companies (SPACs)

    The government is reportedly considering a regulatory framework for special purpose acquisition companies (SPACs) to lay the ground for the possible listing of Indian companies through this route in the future.

    What are SPACs?

    • An SPAC, or a blank-cheque company, is an entity specifically set up with the objective of acquiring a firm in a particular sector.
    • They aim to raise money in an initial public offering (IPO) without any operations or revenues.
    • The money that is raised from the public is kept in an escrow account, which can be accessed while making the acquisition.
    • If the acquisition is not made within two years of the IPO, the SPAC is delisted and the money is returned to the investors.
    • While SPACs are essentially shell companies, a key factor that makes them attractive to investors are the people who sponsor them.
    • Globally, prominent celebrities have participated in SPACs.

    Why in news?

    • According to reports, the Company Law Committee was set up in 2019 to make recommendations to boost ease of doing business in India.
    • This committee has made this suggestion regarding SPACs in its report submitted to the government recently.
    • The concept of SPAC has existed for nearly a decade now, and several investors and company promoters have used this route to take their investments public.
    • The vehicle gained momentum in 2020, which was a record year for SPAC deals; this record was broken in 2021.

    Where does India stand?

    • Early last year, renewable energy producer ReNew Power announced an agreement to merge with RMG Acquisition Corp II, a blank-cheque company.
    • This became the first involving an Indian company during the latest boom in SPAC deals.
    • As things stand now, the Indian regulatory framework does not allow the creation of blank cheque companies.
    • The Companies Act, 2013 stipulates that the Registrar of Companies can strike off a company if it does not commence operations within a year of incorporation.

    Risk factors around SPACs

    • The boom in investor firms going for SPACs and then looking for target companies have tilted the scales in favour of investee firms.
    • This has the potential, theoretically, to limit returns for retail investors post-merger.
    • SPACs are mandated to return money to their investors in the event no merger is made within two years.
    • However the fineprint of several SPAC prospectuses shows that certain clauses could potentially prevent investors from getting their monies back.
    • Historically, though, this has not happened yet.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • New research about Jupiter’s moon Europa

    A team of researchers from Stanford University have said that on one of Jupiter’s moons Europa, a prime candidate for life in the solar system might have abundance of water pockets beneath formations called double ridges.

    About Europa

    • Europa is slightly smaller than Earth’s moon and its diameter is about one-quarter that of the Earth.
    • Even though Europa has a very thin oxygen atmosphere, it is considered one of the most promising places in the solar system to find present-day environments that are suitable for life beyond the Earth.
    • It is also believed that underneath Europa’s icy surface the amount of water is twice that on Earth.
    • NASA notes that scientists believe Europa’s ice shell is 15-25 km thick and is floating on an ocean, which is estimated to be 60-150 km deep.
    • Interestingly, while its diameter is less than the Earth’s, Europa probably contains twice the amount of the water in all of the Earth’s oceans.
    • NASA is expected to launch its Europa Clipper in 2024.
    • The module will orbit Jupiter and conduct multiple close flybys to Europa to gather data on the moon’s atmosphere, surface and its interior.

    What is the new finding?

    • It is already known that Europa, whose surface is mostly solid water ice, contains water beneath it.
    • The researchers are now saying that the double ridges – the formations which are most common on Europa’s surface and are similar to those seen on Earth’s Greenland ice sheet .
    • They are formed over shallow pockets of water.

    Significance of the recent findings

    • The central implication is that the shallow water pockets beneath the double ridge increase the potential habitability of the moon.
    • The ice shell, which is potentially miles thick, has been a difficult prospect for scientists to sample.
    • But according to the new evidence, the ice shell is believed to be less of a barrier and more of a dynamic system.
    • This means that the ice shell does not behave like an inert block of ice, but rather undergoes a variety of geological and hydrological processes.
    • This suggests active volcanism and thus a possibility for life.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Russia’s new nuclear missile ‘Sarmat’

    Amidst stiff resistance from Ukraine in the ongoing war and harsh sanctions imposed by the West, Russia went ahead and tested its new Inter Continental Ballistic Missile (ICBM) Sarmat.

    What is Sarmat?

    • The RS-28 Sarmat (NATO name Satan-II) is reported to be able to carry ten or more warheads and decoys
    • It has the capability of firing over either of the earth’s poles with a range of 11,000 to 18,000 km.
    • It is expected to pose a significant challenge to the ground-and-satellite-based radar tracking systems of the western powers, particularly the USA.
    • The ten warheads are Multiple Independently-Targetable Re-entry Vehicles and each has a blast yield of .75 MT.
    • The Sarmat will also be the first Russian missile which can carry smaller hypersonic boost-glide vehicles. These are manoeuvrable and hard to intercept.
    • It is a liquid-fuelled missile as compared to US ICBMs which have moved on to solid fuel systems.

    Who is it named after?

    • The Sarmat is named after nomadic tribes that roamed the steppes of present-day Southern Russia, Ukraine and Kazakhstan in the early medieval period.
    • Sarmatians were highly developed in horsemanship and warfare.
    • It goes on to say that the administrative capabilities and political expertise of Sarmatians contributed to their gaining widespread influence and by the 5th century BC.
    • They held control of the land between the Urals and the Don River.
    • In the 4th century they crossed the Don and conquered the Scythians, replacing them as rulers of almost all of southern Russia by the 2nd century.

    Was Russia known to be developing this missile?

    • It was widely known that Russia was developing a new ICBM to replace its older ones.
    • An announcement in this regard was made by Vladimir Putin in 2018 while making his State of the Nation address to the Federal Assembly.
    • He had stated at the time that the first Regiment fully armed with Sarmat ICBM will be operational by the end of 2022.
    • The deteriorating relations between Russia and the Western Powers is said to have given an impetus to its development.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)