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GS Paper: GS3

  • Covid fear and anxiety spread, cash back in favour with public

    Increase in currency with the public

    • During the fortnight ended April 9, currency with the public jumped by Rs 30,191 crore to hit a new high of Rs 27,87,941 crore.
    • In the six-week period between February 27 and April 9, currency with the public rose by Rs 52,928 crore, show RBI data.
    • Experts said the increase in currency with the public is on account of the fear of imposition of lockdowns by state or central governments.

    How currency with public is arrived at

    • According to the RBI, currency with the public is arrived at after deducting the cash with banks from the total currency in circulation.
    • Currency in circulation, which includes notes in circulation, rupee coins, and small coins, refers to cash or currency within a country that is physically used to conduct transactions between consumers and businesses.
    • It effectively means the currency that individuals across the country hold with themselves.

    M3 has gone up

    • Money supply in the economy – or M3 – has gone up over the last couple of months.
    • M3, which includes currency with public, current deposits, savings deposits, and fixed deposits, has increased by 11.3 per cent, or Rs 19.17 lakh crore, to a new high of Rs 189.07 lakh crore as on April 9, 2021.

    B2BASICS

    Measures of Money supply

    1. Reserve Money (M0): It is also known as High-Powered Money, monetary base, base money etc.
      M0 = Currency in Circulation + Bankers’ Deposits with RBI + Other deposits with RBI
      It is the monetary base of economy.
    2. Narrow Money (M1):
      M1 = Currency with public + Demand deposits with the Banking system (current account, saving account) + Other deposits with RBI
    3. M2 = M1 + Savings deposits of post office savings banks
    4. Broad Money (M3)
      M3 = M1 + Time deposits with the banking system
    5. M4 = M3 + All deposits with post office savings banks

  • Cybersecurity norms for payment services

    What prompted RBI to take such step

    • Following a series of data breaches faced by operators including Mobikwik and payment aggregator JusPay, the Reserve Bank of India (RBI) will soon issue cybersecurity norms for payment service providers (PSPs).
    • On cyber frauds, Reserve Bank of India has issued very recently basic guidelines on cyber hygiene and cybersecurity for banks and certain NBFCs,
    • The standards for fintech-driven payment services providers will be similar to these cyber hygiene norms issued recently.
    • the critical challenge for regulators would be to speed up the absorption of fintech without undermining the financial system’s integrity or stability.

    UPI dominated by limited players

    •  There are not too many payment systems in India and the number of players is limited.
    • Two apps provide about 70% of third-party services in the UPI system.
    • The concentration of two or three third-party providers in this retail payments space could give rise to competitive weaknesses. 
    • Therefore, the National Payments Corporation of India (NPCI) had laid down a framework for a more even distribution of share of third-party app providers in the UPI system.

  • Microfinance Institutions

    The article highlights the important role played by the microfinance sector in furthering financial inclusion in India and suggests measures to achieve holistic development of the sector.

    Important role played by microfinance

    • No other form of financial services has had the kind of far-reaching impact, in terms of fostering financial inclusion, as microcredit has.
    • Access to small, collateral-free loans for economically productive purposes has helped transform the lives of millions at the bottom-of-the-pyramid—especially women.
    • Over the past decade, India’s microfinance industry has grown at a compound annual growth rate of 26% to reach ₹2.36 trillion.
    • It has helped 50 million economically vulnerable Indians, 99% of them women, live a life of dignity and financial independence.
    • Assuming that these 50 million people who took a loan to start a small business employed at least one other person, it translates into 50 million additional jobs in the country.
    • This creates a ‘network effect’ that has a social impact at scale.

    Evolution of microfinance industry

    • Recommendations of the Malegam Committee, which became regulations, and practices such as relying on credit bureau data to assess a borrower’s creditworthiness have helped the industry immensely.
    • The vital role that microfinance plays in the last-mile delivery of financial services was acknowledged.
    • Subsequently, eight out of the 10 small finance bank licences granted were also given to microfinance institutions.
    • RBI has sought to undertake a comprehensive review of the sector again, after 10 years, to better align the regulatory framework with the sector’s current realities.

    Steps for development of sector

    • First, Entities should promote financial literacy through group meetings of borrowers.
    • Second, organizations should complement their microcredit operations with social development projects and community-connect initiatives.
    • Third, prospective borrowers’ indebtedness and ability to repay dues should be assessed properly.
    • Fourth, loans must be given only for income-generation purposes.
    • Fifth, every microfinance organization should devote time and resources for capacity building at the grassroots.
    • Sixth, rather than focusing on taking over the existing debt of a borrower, or lending to her further, institutions should focus on bringing new-to-credit customers into the fold.

    Consider the question “How can microcredit stimulate financial inclusion in India? Suggest the measures for the development of microfinance sector in India.”

    Conclusion

    There is much more that we, as a nation, collectively need to do in order to bring a vast population of unbanked and underbanked Indians into the fold of formal financial services.

  • RBI extends Ways and Means credit for States, UTs to Sept

    About Ways and Means credit

    • Simply put, it is a facility for both the Centre and states to borrow from the RBI.
    • WMAs are temporary advances given by the RBI to the government to tide over any mismatch in receipts and payments.
    • Section 17(5) of the RBI Act, 1934 authorises the central bank to lend to the Centre and state governments subject to their being repayable “not later than three months from the date of the making of the advance”.

    Extension of the scheme

    • The RBI decided to continue with the existing interim Ways and Means Advances (WMA) scheme limit of ₹51,560 crore for all States/ UTs shall for six months given the prevalence of COVID-19.
    • Based on the recommendations of the Advisory Committee on WMA to State Governments, 2021 — chaired by Sudhir Shrivastava — the RBI had revised the WMA Scheme of States and Union Territories (UTs).
    • The WMA limit arrived at by the Committee based on total expenditure of States/ UTs, works out to ₹47,010 crore. 

    What RBI said about SDR

    • The RBI further said Special Drawing Facility (SDF) availed by state governments and UTs will continue to be linked to the quantum of their investments in marketable securities issued by the Government of India.
    • The net annual incremental investments in Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF) will continue to be eligible for availing of SDF, without any upper limit.
    • CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India.

  • Brucellosis: Preventive measures launched

    Health and Animal Husbandry teams have launched preventive measures and initiated an epidemiological investigation, after one case of brucellosis, was confirmed in a prisoner.

    • The infection is passed on to humans through the ingestion of unpasteurized milk and milk products or contact with animal secretions.

    Brucellosis:

    • Brucellosis is a bacterial disease that mainly infects cattle, swine, goats, sheep and dogs.
    • Humans can get infected if they come in direct contact with infected animals or by eating or drinking contaminated animal products or by inhaling airborne agents.
    • According to the WHO, most cases of the disease are caused by ingesting unpasteurised milk or cheese from infected goats or sheep.

    Symptoms:

    • Fever, sweats, malaise, anorexia, headache and muscle pain
    • While some signs and symptoms can last for long periods of time, others may never go away.
    • These include recurrent fevers, arthritis, swelling of the testicles and scrotum area, swelling of the heart, neurologic symptoms, chronic fatigue, depression and swelling of the liver or spleen.
    • Human to human transmission of the virus is rare.

  • [pib] Satellite-based real-time monitoring of Himalayan glacial catchments

    Melting of glaciers in Himalaya and GLOFs

    • The Himalayan region is home to the largest ice mass outside of the planet’s Polar Regions.
    • The glaciers in the Himalayas are melting at a faster rate creating new lakes and expanding the existing ones.
    • The rising temperatures and extreme precipitation events make the region increasingly prone to a variety of natural hazards, including devastating glacial lake outburst floods (GLOFs).
    • GLOFs occur when either a natural dam containing a glacial lake bursts or when the lake’s level suddenly increases and overflows its banks, leading to catastrophic downstream destruction.
    • However, the remote, challenging Himalayan terrain and the overall lack of cellular connectivity throughout the region have made the development of early flood warning systems virtually impossible.
    • In their recent work the Scientists point out that the surge of meltwater in mountain streams is most commonly caused by cloud-burst events during the monsoon season (June–July–August) time frame.

    Satelitte-based real-time monitoring

    • Satellite-based real-time monitoring of Himalayan glacial catchments would improve understanding of flood risk in the region and help inform an early flood warning system that could help curb disaster and save human lives, says a recent study.
    • This should be the future strategy to reduce loss of human lives during glacial lake outburst floods (GLOF), said a study carried out by scientists from IIT Kanpur.
    • The IIT Kanpur team suggests that efforts to help mitigate GLOF events in the future should include the creation of a network of satellite-based monitoring stations that could provide in situ and real-time data on GLOF risk.
    • The integration of monitoring devices with satellite networks will not only provide telemetry support in remote locations that lack complete cellular connectivity but will also provide greater connectivity in coverage in the cellular dead zones in extreme topographies such as valleys, cliffs, and steep slopes.

  • [pib] Drone use permission for feasibility study of Covid-19 vaccine delivery

    Conditional drone use exemption for vaccine delivery

    • Ministry of Civil Aviation (MoCA) and Directorate General of Civil Aviation (DGCA) have granted conditional exemption to the Indian Council of Medical Research (ICMR).
    • The exemption is granted for conducting feasibility study of Covid-19 vaccine delivery using drones in collaboration with IIT Kanpur.
    • The permission exemption is valid for a period of one year or until further orders.

    Entities using drone on conditional drone use exemption basis

    • Conditional drone use exemption has been granted to the below entities for said purposes:
    • Nagar Nigam of Dehradun, Haldwani, Haridwar & Rudrapur for preparation of GIS based property database & electronic tax register.
    • West Central Railway, (WCR) Kota for train accident site & maintaining safety & security of the railway assets.
    • West Central Railway, (WCR) Katni for train accident site & maintaining safety & security of the railway assets.
    • Vedanta Ltd. (Cairn Oil & Gas) also received the conditional drone usage exemption for data acquisition for asset inspecting & mapping.

  • Eastern India most vulnerable to climate change, says study

    About the report

    • Published this week, the report on ‘Climate vulnerability assessment for adaptation planning in India using a common framework’ was conducted in 2019-2020 across 29 States.
    • It was part of a capacity building programme under the National Mission on Sustaining the Himalayan Ecosystem and National Mission on Strategic Knowledge for Climate Change.
    • The report was prepared by IISc, IIT-Mandi and IIT-Guwahati.

    Major findings

    • Along with Chhattisgarh in central India, Jharkhand, Mizoram, Odisha, Assam, Bihar, Arunachal Pradesh, and West Bengal are the eight most vulnerable States.
    • These eight most vulnerable States require prioritisation of adaptation interventions.
    • Jharkhand, with the highest vulnerability indices VI of 0.674, topped the list of States most vulnerable to climate change.
    • The major drivers for the vulnerability of all the States included lack of forest area per 1,000 rural population, lack of crop insurance, marginal and small operational land holding, low density of health workers, low participation of women in the workforce, yield variability of food grains, and a high proportion of the population below the poverty line.
    • Tamil Nadu and Kerala are among seven States that are the least vulnerable but there’s more to it meets the eye.
    • However, the vulnerability indices (VIs) for these seven States range from the lowest of 0.419 for Maharashtra to 0.468 for Uttarakhand, which is on the higher side.

  • India-U.S. climate partnership

    Leaders Summit on Climate

    • Leaders Summit on Climate included 40 heads of state and government.
    • At the summit, President of the United State and Indian Prime Minister launched the ‘India-U.S. climate and clean energy Agenda 2030 partnership’. 
    • The goal of the partnership are given below:
    • 1) Mobilise finance and speed clean energy deployment.
    • 2) Demonstrate and scale innovative clean technologies needed to decarbonise sectors, including industry, transportation, power, and buildings.
    • 3) Build capacity to measure, manage, and adapt to the risks of climate-related impacts.

    India’s progress on NDC

    • Despite development challenges, India has taken many bold steps on clean energy, energy efficiency, afforestation and bio-diversity.
    • That is among the few countries whose NDCs are 2-degree-Celsius compatible.
    •  India is targeting a 2030 GDP emissions intensity ( i.e., volume of emissions per unit of GDP) that is 33%-35% below 2005 levels.
    • It also seeks to have 40% of power generated from non-fossil fuel sources by 2030.
    •  India’s per capita carbon footprint is 60% lower than the global average.

  • Global Energy Review 2021 report

    Initial estimates for 2020 energy demand and CO2 emission was released recently in an annual report Global Energy Review by International Energy Agency (IEA).

    https://www.world-nuclear-news.org/BlankSiteASPX/media/WNNImported/mainimagelibrary/corporate%20branded/Global-Energy-Review-2021-(IEA).jpg?ext=.jpg

    • The Global Energy Review is annual update on the latest trends in world energy and CO2 emissions.
    • It covers all the main fuels and technologies, providing insights across regions, economies and countries.

    Highlights of the report:

    • Global energy-related carbon dioxide (CO2) emissions are on course to surgeby 1.5 billion tonnes in 2021 driven by in the resurgence of coal use in the power sector.
      • The second-largest increase in history.
      • This would be the biggest annual rise in emissions since 2010, during the carbon-intensive recovery from the global financial crisis.
    • CO2 emissions will increase by almost five per cent in 2021 to 33 billion tonnes.
      • The key driver is coal demand, which is set to grow by 4.5 per cent, surpassing its 2019 level and approaching its all-time peak from 2014, with the electricity sector accounting for three-quarters of this increase.
    • Global energy demand is set to increase by 4.6 per cent in 2021, led by emerging markets and developing economies, pushing it above its 2019 level.
    • Demand for all fossil fuels is on course to grow significantly in 2021, with both coal and gas set to rise above their 2019 levels.
    • Oil is also rebounding strongly but is expected to stay below its 2019 peak, as the aviation sector remains under pressure.
      • More than 80 per cent of the projected growth in coal demand in 2021 is set to come from Asia, led by China.
    • Electricity generation from renewables is set to leap by over eight per cent in 2021.
    • The biggest contribution to that growth comes from solar and wind.
      • Electricity generation from wind is projected to grow by 275 terawatt-hours, or around 17 per cent, from last year.
      • Electricity generation from solar PV is expected to increase by 145 terawatt-hours, up almost 18 per cent from last year.
      • Their combined output is on track to reach more than 2800 terawatt-hours in 2021.
    • Renewables are set to provide 30 per cent of electricity generationworldwide in 2021.
    • China is expected to account for almost half of the global increase in electricity generation from renewables, followed by the US, the European Union and India.