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GS Paper: GS3

  • India’s First Seaplane Project

    The first of the five seaplane services in Gujarat, connecting Sabarmati River in Ahmedabad to the Statue of Unity in Kevadia in Narmada district, will be inaugurated on October 31

    India’s first seaplane

    • A seaplane is a fixed-winged aeroplane designed for taking off and landing on water. It offers the public the speed of an aeroplane with the utility of a boat.
    • The first seaplane project of the country is part of a directive of the Union Ministry of Civil Aviation.
    • As per the directive, the Airports Authority of India (AAI) requested state governments of Gujarat, Assam, Andhra Pradesh and Telangana and the administration of Andaman & Nicobar to propose potential locations for setting up water aerodromes to boost the tourism sector.

    Where will the seaplane connect?

    • In Kevadia, the proposed Terminal will be spread over 0.51 acres in the premises of the Sardar Sarovar Narmada Nigam Ltd., located in the Panchmuli lake (Dyke 3) of the Sardar Sarovar Dam at Limdi village.
    • It is approximately 90 km from Vadodara, 150 km from Surat and 200 km from Ahmedabad — with an aerial distance of 74.6km from Vadodara airport.

    What impact will it have on the environment?

    • The water aerodrome is not a listed project/activity in the Schedule to the Environmental Impact Assessment Notification, 2006 and its amendments.
    • However, the activities proposed under the water aerodrome project may have a similar type of impact as that of an airport.
    • There has to be a bathymetric and hydrographic survey by Inland Waterways Authority of India (IWAI).
    • During seaplane operations, there will be turbulence created in the water while takeoff and landing of seaplanes. This will lead to more operation process i.e. mixing of oxygen in the water.
    • This will have a positive impact on the aquatic ecosystem near seaplane operations increasing oxygen content and decreasing carbon content in this system.

  • Places in news: Mullaperiyar Dam

    The Mullaperiyar dam has recently turned 125.

    Try this PYQ:

    Q. What is common to the places known as Aliyar, Isapur and Kangsabati?

    (a) Recently discovered uranium deposits

    (b) Tropical rain forests

    (c) Underground cave systems

    (d) Water reservoirs

    Mullaperiyar Dam

    • It is a masonry gravity dam on the Periyar River in the Indian state of Kerala.
    • It is located 881 m above mean sea level, on the Cardamom Hills of the Western Ghats in Thekkady, Idukki District of Kerala.
    • It was constructed between 1887 and 1895 by John Pennycuick and also reached in an agreement to divert water eastwards to the Madras Presidency area (present-day Tamil Nadu).
    • Pennycuick is widely worshipped as a hero by farmers in the four districts of southern Tamil Nadu, where water from the dam meets the drinking water needs and irrigates thousands of hectares.

    Why is the dam special?

    • The dam was constructed surmounting many odds, with malaria and thick jungles taking a toll on workers. It was a huge challenge before him to construct the dam and divert the river course.
    • Pennycuick sowed the seeds of river interlinking to bring barren and rain-starved areas under cultivation.
    • To fund dam construction, gold ornaments were donated by Chettiar families and farmers in Cumbom valley also gave their meagre savings to Pennycuick.
    • Pennycuick even sold his ancestral property in Britain and spent the amount for completing the works of the dam when the expenses exceeded the allotted funds.
    • The British government endowed him with the ‘Companion of Star of India’, a high civilian honour. He died on March 9, 1911, at Frimley in Britain.

  • What are Hybrid Funds?

    This newscard is an excerpt from an originally FAQ published in TH.

    Try this PYQ:

    Q.Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?

    (a) Certificate of Deposit

    (b) Commercial Paper

    (c) Promissory Note

    (d) Participatory Note

    Hybrid Fund

    • A hybrid fund is one that invests in both equity and bonds. So, such funds ought to help investors with their asset allocation decision.
    • This refers to how you allocate your annual savings between equity and bond investments.
    • Suppose you are unsure of the proportion of equity and bond investments to have in your portfolio.
    • By investing in a hybrid fund, you could outsource your asset allocation decision to the manager of the fund, so the argument goes.
    • The issue is that each goal you pursue requires different asset allocation. For instance, the asset allocation for your child’s education portfolio must be different from your retirement portfolio.
    • Hybrid funds cannot consider your individual goal requirement as it is a collective investment vehicle.

    Tax efficiency of the fund

    • Based on current tax laws, a hybrid fund that holds 65% or more in equity is considered as an equity fund.
    • So, if you redeem your units in such hybrid funds after a holding period of more than 12 months, you have to pay long-term capital gains tax of 10%.
    • If a hybrid fund holds less than 65% in equity, you have to pay 20% capital gains tax with indexation if you sell your units after a holding period of more than 36 months.

    Back2Basics: Stocks vs. Bonds vs. Equity

    • A stock represents a collection of shares in a company which is entitled to receive a fixed amount of dividend at the end of the relevant financial year which are mostly called Equity of the company.
    • Bonds term is associated with debt raised by the company from outsiders which carry a fixed ratio of return each year and can be earned as they are generally for a fixed period of time.
    • Bonds are actually loans that are secured by a specific physical asset.
    • It highlights the amount of debt taken with a promise to pay the principal amount in the future and periodically offering them the yields at a pre-decided percentage.
    • Equity is ownership of assets that may have debts or other liabilities attached to them. Equity is measured for accounting purposes by subtracting liabilities from the value of an asset.

  • ZSI lists Skinks of India

    Celebrating skinks, Zoological Survey of India has listed 62 species.

    Try this PYQ:

    Q.With reference to India’s Biodiversity, Ceylon frogmouth, Coppersmith barbet, Gray-chinned minivet and White-throated redstart are-

    (a) Birds

    (b) Primates

    (c) Reptiles

    (d) Amphibians

    What are Skinks?

    • Skinks are lizards belonging to the family Scincidae, a family in the infraorder Scincomorpha.
    • With long bodies, relatively small or no legs, no pronounced neck and glossy scales, skinks are common reptiles around homes.
    • Although they are common reptiles and have a prominent role in maintaining ecosystems, not much is known about their breeding habits, and ecology because identification of the species can be confusing.

    Certain notions about them

    • Skinks are highly alert, agile and fast-moving and actively forage for a variety of insects and small invertebrates.
    • The reduced limbs of certain skink species or the complete lack of them make their slithering movements resemble those of snakes, leading people to have the incorrect notion that they are venomous.
    • This results in several of these harmless creatures being killed.

    ZSI study on Skinks

    • A recent publication by the Zoological Survey of India (ZSI) reveals that India is home to 62 species of skinks and says about 57% of all the skinks found in India (33 species) are endemic.
    • Sepsophis (with one species)and Barkudia (with two species) are limbless skinks found in the hills and coastal plains of the eastern coast.
    • Barkudia insularisis believed to be found only in the Barkud Island in Chilka lake in Odisha. Barkudia melanosticta is endemic to Visakhapatnam.
    • Sepsophis punctatus is endemic to the northern part of Eastern Ghats.
    • Five species of Kaestlea (blue-tailed ground skinks) are endemic to the Western Ghats and four species of Ristella (Cat skinks) also endemic to the southern part of Western Ghats.

  • Farm Bills latest step in sequential freeing up of farm sector

    The recently passed agri bills seek to expand the choices and opportunities available with the farmers and will help in increasing their income.

    Diversified product segment

    • The Minimum Support Price (MSP) evolved as a mechanism to guard farmers against supply and demand shocks in the cereals segment. 
    •  Now, however, farmers and agricultural producers have diversified their product segments, cereals no longer dominate production.
    • In the last decade itself, India has witnessed tremendous change in the GVA composition of the agri-sector.
    • The share of crops has decreased from 65.4% in 2011-12 to 55.3% in 2018-19, projected to further fall to 45.6% in 2024-25.
    •  In the same period, value add of livestock and fishing & aquaculture is steadily increasing, as are the total value outputs of sub-segments like horticulture, milk and meat.
    • With differentiated production strategies that are less reliant on cereals and more on other segments, farmers are accruing better incomes.
    • By diversifying their produce, they are moving away from one-crop risks.

    Government schemes and policies

    • Keeping farmers dependent on subsidies and restricted by APMCs, and acts like the Essential Commodities Act wasn’t in the nation’s long-term interests.
    • Recognising this, the government has been making sequential changes in the system.
    • It started with the introduction of the National Agriculture Market (e-NAM) to facilitate online trading of agri-produce.
    • Then PM-KISAN was introduced to provide minimum income support to nine crore marginal farmers, at Rs 6,000 annually.
    • The KISAN credit card with an allotment of a total of Rs 2 lakh crore credit to maintain larger workforces and implements during harvest season is helping farmers plan and organise their harvests better.
    • The Rs 1 lakh crore Agri Infrastructure Fund as part of Atmanirbhar Bharat Abhiyan will help by the creation of agri-infrastructure.

    Need for structural changes

    • The government recently passed three agri-bills, these are:-
    • 1) The Farmers’ Produce Trade and Commerce Bill.
    • 2) Farmers Agreement on Price Assurance and Farm Services Bill.
    • 3) Essential Commodities (Amendment) Bill.
    • They enable farmers the freedom to diversify their crops and produce, which reduces mono-crop dependence and increases income avenues.
    • They can also now sell their produce anywhere, to the highest bidder across the country.
    • The farmers are no longer are they required to go to the mandis where they are subject to middlemen and layers of bureaucracy.
    • Contract farming enable farmers them to boost the value-add of their products via contracts and assured procurement by the food processing industries.
    • Retaining the MSP system means the government is underwriting the whole network for certain crops to ensure farmers receive assured income for those crops.

    Focusing on the export market

    • The passage of agri bills gives India the long-awaited opportunity to orient its agriculture sector towards export markets.
    • By catering to just the Indian economy, the exposure is hardly $3 trillion ; instead, export-orientation caters to an $82 trillion global economy —a 27x expansion.
    • India’s agri exports in 2018 were at $38.5 billion.
    • India can comfortably triple this by providing infrastructure for grading, sorting, and supply chain distribution.

    Conclusion

    The farm Bills are liberating farmers at a pivotal juncture, the nation and farmers have a generational opportunity here to break out of a 70-year sectoral stagnation and aim bigger.

    Source:-

    https://www.financialexpress.com/opinion/agri-reforms-farm-bills-latest-step-in-sequential-freeing-up-of-farm-sector/2107611/

  • National Authority of Ship Recycling (NASR)

    The Central government has notified the Director-General of Shipping as the national authority for recycling of ships under the Recycling of Ships Act, 2019.

    The ‘Hong Kong Convention’ is the odd man out here. Read more about the convention at:

    https://www.civilsdaily.com/news/pib-hong-kong-international-convention-for-safe-recycling-of-ships-2009/

    About NASR

    • The national authority of ship recycling will be set up in Gandhinagar, Gujarat.
    • The location of the office will benefit the ship recycling yard owners situated in Alang, Gujarat which is home to the largest ship recycling industry in the world.
    • DG Shipping is authorized to administer, supervise and monitor all activities relating to ship recycling in the country.
    • DG Shipping will oversee the sustainable development of the ship recycling industry, monitoring the compliance to environment-friendly norms and safety and health measures for the stakeholders.
    • DG Shipping will be the final authority for the various approvals required by the ship-recycling yard owners and state governments.

    Recycling of Ships Act, 2019

    • Under the Ship Recycling Act, 2019, India has acceded to the ‘Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships’.
    • This was adopted by the International Maritime Organization (IMO).
    • DG Shipping is a representative of India in the IMO and all the conventions of IMO are being enforced by DG Shipping.

  • Nudge towards formalisation of MSMEs

    The lack of formalisation has several implications for MSMEs. Registering them could help them in various ways. The article deals with the issue of formalisation.

    Please read the link shared below for issues related to MSME

    The missing large in MSMEs

    Steps taken by Government to Formalize MSME

    • UAM: In 2015, the government notified the Udyog Aadhaar Memorandum (UAM), an online filing system for MSMEs.
    • As of January, 86 lakh MSMEs had registered on the UAM portal.
    • In 2016, the government notified rules under which MSMEs had to furnish information relating to their enterprises, online, in an MSME databank.
    • As of January, only 1.6 lakh units registered on it.
    • A new process of classification and registration for small businesses took off on July 1 called as “Udyam”.
    • As of October 1, the MSME ministry has confirmed that only 7 lakh registrations have taken place using the new system.Nudge by the government
    • In an attempt to nudge more enterprises to become lifetime Udyam, the government has integrated the system with the Trade Receivables Electronic Discounting System (TReDS) and the Government e-Marketplace (GeM).
    • In its updated Priority Sector Lending (PSL) guidelines, the RBI has established that for the purposes of PSL, MSMEs will be identified as per the gazette notification laying down the new process of classification and registration.

    Addressing the concerns

    • While the Udyam initiative holds more promise, it is important to assess if this will be detrimental to accessing formal finance.
    • To this end, the government and RBI should consider whether the registration requirement can be exempted for units with investment and turnover that falls in the lower end of the criteria.
    • In 2018, the International Finance Corporation estimated that the overall supply of finance from formal sources met only one-third of the credit demand of the MSME sector.
    • Enabling strategies such as PSL could provide a fillip to priority sectors including MSMEs which require increased formal financing.

    Conclusion

    The costs of formalisation and compliance are high and onerous in many states in India. In such an ecosystem, there are perverse incentives to remaining small and informal. Governments’ efforts towards formalisation should be directed towards addressing these issues.

  • Comparison between India- Bangladesh per capita GDP

    In IMF’s latest Economic Outlook, Bangladesh has overtaken India in GDP per capita. This has caught everyone’s attention.

    Do you know?

    • In the 2019 edition of Transparency International’s rankings, Bangladesh ranks a low 146 out of 198 countries (India is at 80th rank; a lower rank is worse off).
    • In the latest gender parity rankings, out of 154 countries mapped for it, Bangladesh is in the top 50 while India languishes at 112.

    Bangladesh surpasses India

    • Typically, countries are compared on the basis of GDP growth rate, or on absolute GDP.
    • For the most part since Independence, on both these counts, India’s economy has been better than Bangladesh’s.
    • This can be seen from Charts 1 and 2 that map GDP growth rates and absolute GDP — India’s economy has mostly been over 10 times the size of Bangladesh, and grown faster every year.
    • However, per capita income also involves another variable — the overall population — and is arrived at by dividing the total GDP by the total population.

    What made India lag behind?

    There are three reasons why India’s per capita income has fallen below Bangladesh this year:

    • The first thing to note is that Bangladesh’s economy has been clocking rapid GDP growth rates since 2004.
    • Secondly, over the same 15-year period, India’s population grew faster (around 21%) than Bangladesh’s population (just under 18%).
    • Lastly, the most immediate factor was the relative impact of Covid-19 on the two economies in 2020. While India’s GDP is set to reduce by 10%, Bangladesh’s is expected to grow by almost 4%.

    How has Bangladesh managed to grow so fast and so robustly?

    • Freshly start: In the initial years of its independence with Pakistan, Bangladesh struggled to grow fast. However, moving away from Pakistan also gave the country a chance to start afresh on its economic and political identity.
    • Diverse labour participation: As such, its labour laws were not as stringent and its economy increasingly involved women in its labour force. This can be seen in higher female participation in the labour force.
    • Textile boom: A key driver of growth was the garment industry where women workers gave Bangladesh the edge to corner the global export markets from which China retreated.
    • Less dependence on Agriculture: It also helps that the structure of Bangladesh’s economy is such that its GDP is led by the industrial sector, followed by the services sector. Both of these sectors create a lot of jobs and are more remunerative than agriculture.
    • Better social capital: Bangladesh improved a lot on several social and political metrics such as health, sanitation, financial inclusion, and women’s political representation.

    Retaining the lead

    • The IMF’s projections show that India is likely to grow faster next year and in all likelihood again surge ahead.
    • But, given Bangladesh’s lower population growth and faster economic growth, India and Bangladesh are likely to be neck and neck for the foreseeable future in terms of per capita income.

  • The Human Cost of Disasters Report (2000-2019)

    The UN Office for Disaster Risk Reduction (UNDRR) recently published its report titled “The Human Cost of Disasters”.

    The report holds much significance for prelims as well as mains. Just for the sake of information, we must be aware of the report.

    Highlights of the report

    • 7,348 major disaster events had occurred between 2000 and 2019, claiming 1.23 lives, affecting 4.2 billion people and costing the global economy some $2.97 trillion.
    • Of this, China (577 events) and the US (467 events) reported the highest number of disaster events followed by India (321 events).
    • Climate change is to be blamed for the doubling of natural disasters in the past 20 years says the report.
    • There had also been an increase in geophysical events like earthquakes and tsunamis that are not related to climate but are particularly deadly.

    Back2Basics: UN Office for Disaster Risk Reduction

    • The UNDRR was established in 1999 as a dedicated secretariat to facilitate the implementation of the International Strategy for Disaster Reduction (ISDR).
    • It is headquartered in Geneva, Switzerland.
    • It is mandated to serve as the focal point in the UN system for the coordination of disaster reduction and to ensure synergies among the disaster reduction activities.
    • It has a vision to substantially reduce disaster risk and losses for a sustainable future with the mandate to act as the custodian of the Sendai Framework to which India is a signatory.

  • Next Generation Treasury Application (NGTA)

    In a bid to improve its functioning, the RBI has decided to move to the Next Generation Treasury Application (NGTA) for managing the country’s foreign exchange and gold reserves.

    Aspirants must make a note here:

    1.Authority managing FOREX in India

    2.Components of FOREX

    3.IMF’s SDRs

    4.Emergency use of FOREX

    What is NGTA?

    • The NGTA, according to the RBI, would be a web-based application providing scalability, manoeuvrability and flexibility to introduce new products and securities, besides supporting multi-currency transactions and settlements.
    • It would be supporting various transactions in asset classes like Fixed Income (FI), Forex (FX), Money Market (MM) and Gold.
    • It would be used for managing the foreign exchange reserves in a more efficient way, mitigate risk, achieve operational efficiencies, dealing in various asset classes and reporting.

    Objectives of NGTA

    The objectives of the proposed system include:

    • dealing in various asset classes (like Fixed Income Securities, Forex, Money Market, Gold);
    • portfolio management; workflow management; reserve management;
    • integration with various third-party and in-house systems; and dashboards, reports, widgets.

    Features of NGTA

    • The NGTA shall automatically fetch all the relevant details of a security/contract from a trading platform.
    • It shall support all internationally accepted conventions pertaining today count, interest computation, holiday logic, shut period-dividend, ex-dividend, cash flows, and odd coupon.
    • With respect to transactions in gold, the NGTA shall support purchase, sale, deposit (including rollover and premature withdrawal).
    • On maturity of a gold deposit, there can be exact, under or over delivery.

    Back2Basics: Forex Reserves

    • Reserve Bank of India Act and the Foreign Exchange Management Act, 1999 set the legal provisions for governing the foreign exchange reserves.
    • RBI accumulates foreign currency reserves by purchasing from authorized dealers in open market operations.
    • The Forex reserves of India consist of below four categories:
    1. Foreign Currency Assets
    2. Gold
    3. Special Drawing Rights (SDRs)
    4. Reserve Tranche Position
    • The IMF says official Forex reserves are held in support of a range of objectives like supporting and maintaining confidence in the policies for monetary and exchange rate management including the capacity to intervene in support of the national or union currency.
    • It will also limit external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is curtailed.