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GS Paper: GS3

  • [pib] IAF to induct LCA Tejas

    The Union Cabinet has approved procurement of 73 LCA Tejas Mk-1A fighter aircraft and 10 LCA Tejas Mk-1 Trainer aircraft for Indian Air Force.

    Try this PYQ from CSP 2018:

    Q.What is “Terminal High Altitude Area Defense (THAAD)”, sometimes seen in the news?

    (a) An Israeli radar system

    (b) India’s indigenous anti-missile programme

    (c) An American anti-missile system

    (d) A defence collaboration between Japan and South Korea

    LCA Tejas

    • The Tejas is an Indian single-engine, fourth-generation, multirole light fighter aircraft.
    • It is designed by the Aeronautical Development Agency (ADA) in collaboration with the Aircraft Research and Design Centre (ARDC) of Hindustan Aeronautics Limited (HAL).
    • It came from the Light Combat Aircraft (LCA) programme, which began in the 1980s to replace India’s ageing MiG-21 fighters.
    • The indigenous content of the Tejas was 59.7% by value and 75.5% by a number of lines replaceable units.

    Which are the procured variants?

    • Light Combat Aircraft Mk-1A variant is an indigenously designed, developed and manufactured state-of-the-art modern 4+ generation fighter aircraft.
    • It is the first “Buy (Indian-Indigenously Designed, Developed and Manufactured)” category procurement of combat aircraft.

    Significance

    • Tejas enable IAF to handle repairs or servicing at their base depot so that the turnaround time would get reduced for mission-critical systems.
    • This would enable IAF to sustain the fleet more efficiently and effectively due to the availability of repair infrastructure at respective bases.
    • It will give a further push to Atmanirbhar Bharat initiative and boost indigenization of defence production and the defence industry in the country.

  • PM Fasal Bima Yojana (PMFBY) completes 5 Years of operations

    The Pradhan Mantri Fasal Bima Yojana (PMFBY) has completed 5 Years of successful operations.

    It has become vital these days to remember and recognize every detail of government schemes.

    What is PMFBY?

    • 5 years ago, on 13th January 2016, the GoI took a historic step towards strengthening risk coverage of crops for farmers of India and approved the flagship crop insurance scheme – the PMFBY.
    • The scheme was conceived as a milestone initiative to provide a comprehensive risk solution at the lowest uniform premium across the country for farmers.
    • Premium cost over and above the farmer share is equally subsidized by States and GoI.
    • However, GoI shares 90% of the premium subsidy for the North Eastern States to promote the uptake in the region.
    • The average sum insured per hectare has increased from ₹15,100 during the pre-PMFBY Schemes to ₹40,700 under PMFBY.

    Coverage of Risks and Exclusions:

    Following stages of the crop and risks leading to crop loss are covered under the scheme.

    • Prevented Sowing/ Planting Risk: The insured area is prevented from sowing/ planting due to deficit rainfall or adverse seasonal conditions
    • Standing Crop (Sowing to Harvesting): Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, viz. Drought, Dry spells, Flood, Inundation, Pests and Diseases, Landslides, Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane and Tornado.
    • Post-Harvest Losses: Coverage is available only up to a maximum period of two weeks from harvesting for those crops which are allowed to dry in cut and spread condition in the field after harvesting against specific perils of a cyclone and cyclonic rains and unseasonal rains.
    • Localized Calamities: Loss/ damage resulting from the occurrence of identified localized risks of hailstorm, landslide, and Inundation affecting isolated farms in the notified area.

    Try this question from CSP 2020:

    Q.Under the Kisan Credit Card Scheme, short-term credit support is given to farmers for which of the following purposes? (CSP 2020)

    1. Working capital for maintenance of farm assets
    2. Purchase of combine harvesters, tractors and mini trucks
    3. Consumption requirements of farm households
    4. Construction of family house and setting up of village cold storage facility
    5. Construction of family house and setting up of village cold storage facility

    Select the correct answer using the code given below:

    (a) 1,2 and 5 only

    (b) 1,3 and 4 only

    (c) 2,3,4 and 5 only

    (d) 1, 2, 3 and 4

    Progress till date

    • The Scheme covers over 5.5 crore farmer applications year on year.
    • Till date, claims worth Rs 90,000 crores have already been paid out under the Scheme.
    • Aadhar seeding has helped in speedy claim settlement directly into the farmer accounts.
    • Even during COVID lockdown period, nearly 70 lakh farmers benefitted and claims worth Rs. 8741.30 crores were transferred to the beneficiaries.

  • [pib] Khadi Prakritik Paint – India’s first cow dung paint

    Union Minister for MSMEs has launched an innovative new paint called Khadi Prakritik Paint – India’s first cow dung paint

    It is very unlikely that an MCQ will be asked in Prelims. However one must know this from mains perspective.

    Khadi Prakritik Paint

    • It is developed by Khadi and Village Industries Commission at his residence.
    • The eco-friendly, non-toxic paint, called “Khadi Prakritik Paint” is a first-of-its-kind product, with anti-fungal, anti-bacterial properties.
    • Khadi Prakritik Paint is available in two forms – distemper paint and plastic emulsion paint.
    • The project was conceptualized by Chairman KVIC in March 2020 and later developed by Kumarappa National Handmade Paper Institute, Jaipur (a KVIC unit).
    • The paint is priced at only Rs. 120 per litre for the distemper, and Rs.225 per litre for the emulsion, almost half the price charged by big paint companies.

    A no lesser brand

    • Khadi Prakritik Emulsion paint meets BIS 15489:2013 standards; whereas Khadi Prakritik Distemper paint meets BIS 428:2013 standards.
    • The paint has successfully passed various test parameters such as application of paint, thinning properties, drying time and finish, among others.
    • It dries in less than 4 hours and has a smooth and uniform finish.

    Why makes it competent?

    • Based on cow dung as its main ingredient, the paint is cost-effective and odourless and has been certified by the Bureau of Indian Standards.
    • The paint is free from heavy metals like lead, mercury, chromium, arsenic, cadmium and others.
    • It will be a boost to local manufacturing and will create sustainable local employment through technology transfer.
    • This technology will increase the consumption of cow dung as a raw material for eco-friendly products and will generate additional revenue to farmers and gaushalas.
    • Utilization of cow dung will also clean the environment and prevent clogging of drains.

  • PM-KISAN payout wrongly made to ineligible beneficiaries

    PM-KISAN payments worth ₹1,364 crores have been wrongly made to more than 20 lakh ineligible beneficiaries and income tax payer farmers.

    Try this PYQ:

    Q.Under the Kisan Credit Card Scheme, short-term credit support is given to farmers for which of the following purposes? (CSP 2020)

    1. Working capital for maintenance of farm assets
    2. Purchase of combine harvesters, tractors and mini trucks
    3. Consumption requirements of farm households
    4. Construction of family house and setting up of village cold storage facility
    5. Construction of family house and setting up of village cold storage facility

    Select the correct answer using the code given below:

    (a) 1,2 and 5 only

    (b) 1,3 and 4 only

    (c) 2,3,4 and 5 only

    (d) 1, 2, 3 and 4

    PM-KISAN

    • The Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan Yojana) is a government scheme through which, all small and marginal farmers will get up to Rs 6,000 per year as minimum income support.
    • Under the PM-KISAN scheme, all landholding farmers’ families shall be provided with the financial benefit of Rs. 6000 per annum per family payable in three equal instalments of Rs. 2000 each, every four months.
    • The definition of the family for the scheme is husband, wife, and minor children.
    • State Government and UT administration will identify the farmer families which are eligible for support as per scheme guidelines.
    • The fund will be directly transferred to the bank accounts of the beneficiaries.

    Why in news?

    • When it was launched just before the general election in 2019, it was meant to cover only small and marginal farmers who owned less than two hectares.
    • Later that year, large farmers were included in the scheme as the government removed land size criteria.

    Certain exclusions

    • However, certain exclusions remained.
    • If any member of a farming family paid income tax, received a monthly pension above ₹10,000, held a constitutional position, or was a serving or retired government employee, they were not eligible for the scheme.
    • Professionals and institutional landholders were also excluded.

    Who are NOT eligible for PM-KISAN?

    The following categories of beneficiaries of higher economic status shall not be eligible for benefit under the scheme.

    • All Institutional Landholders.

    Farmer families that belong to one or more of the following categories:

    • Former and present holders of constitutional posts
    • Former and present Ministers/ State Ministers and former/present Members of Lok Sabha/ Rajya Sabha/ State Legislative Assemblies/ State Legislative Councils, former and present Mayors of Municipal Corporations, former and present Chairpersons of District Panchayats.
    • All serving or retired officers and employees of Central/ State Government Ministries
    • All superannuated/retired pensioners whose monthly pension is Rs.10,000/-or more. (Excluding Multi-Tasking Staff / Class IV/Group D employees) of the above category
    • All Persons who paid Income Tax in the last assessment year
    • Professionals like Doctors, Engineers, Lawyers, Chartered Accountants, and Architects registered with Professional bodies and carrying out the profession by undertaking practices.

    Note: It is not so easy to remember all such exclusions. But one must be able to recognize them by applying pure logic and thumb rule. This can be well understood from the PYQ given.

  • New Single-window Clearance for Coal Mines

    The Union government has announced a new online single window clearance portal for the coal sector to speed up the operationalization of coal mines.

    Try this PYQ:

    Q.Consider the following statements:

    1. In India, State Governments do not have the power to auction non -coal mines.
    2. Andhra Pradesh and Jharkhand do not have goldmines.
    3. Rajasthan has iron ore mines.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 2 only

    (c) 1 and 3 only

    (d) 3 only

    What is a single-window clearance portal?

    • A single window clearance portal is aimed at allowing successful bidders for coal blocks to be able to obtain all required clearances.
    • It includes environmental and forest clearances, from a single portal with progress monitoring, instead of having to go to multiple authorities.
    • The portal should allow successful bidders to operationalize coal mines more quickly.
    • The Parivesh mechanism for forest and environment-related clearances would likely be merged into this mechanism.

    Why need such a portal?

    • Presently, about 19 major approvals or clearances are required before starting the coal mine in the country.
    • In the absence of a unified platform for grant of clearances, companies were required to approach different departments, leading to delay in operationalization.

    How will the portal help?

    • Industry sources said that the sector has long sought a single-window clearance system to help with quicker operationalization.
    • Obtaining the requisite clearances was taking over 2-3 years for successful bidders in many cases.
    • Some coal blocks auctioned as far back as 2015 has still not been operationalised due to delays in obtaining required clearances.

    Must read:

    [Burning Issue] The Mineral Laws (Amendment) Bill, 2020

  • Management Effectiveness Evaluation of Protected Areas

    Minister for Environment, Forest and Climate Change has released Management Effectiveness Evaluation (MEE) of 146 national parks and wildlife sanctuaries in the country.

    Map the protected areas mentioned in the newscard in your Atlas.

    MEE Survey

    • MEE is a very important document that provides valuable guidance on various aspects of wildlife and protected area expand MEE of Marine Protected Areas.
    • In order to assess the efficacy of Protected Areas, evaluation of management effectiveness was required.
    • MEE has emerged as a key tool for PA managers and is increasingly being used by governments and international bodies to understand the strengths and weaknesses of the protected area management systems.
    • The results of the present assessment are encouraging with an overall mean MEE score of 62.01% which is higher than the global mean of 56%.
    • With this round of evaluation, MoEFCC successfully completed one full cycle of evaluating all terrestrial National Parks and Wildlife Sanctuaries of the country from 2006 to 2019.

    India has systematically designated its Protected Areas in four legal categories — National Parks, Wildlife Sanctuaries, Conservation Reserves and Community Reserves under the Wildlife (Protection) Act, 1972.

    Areas surveyed

    • Under the WP 1972 Act, India has 903 formally designated Protected Areas with total coverage of 1,65,012.6 square km.
    • Among these are 101 National Parks, 553 Wildlife Sanctuaries, 86 Conservation Reserves and 163 Community Reserves.
    • For the survey, 146 National Parks and Wildlife Sanctuaries across 29 states and Union territories were evaluated.

    Highlights of the MEE

    • Tirthan Wildlife Sanctuary and Great Himalayan National Park in Himachal Pradesh have performed the best among the surveyed protected areas.
    • The Turtle Wildlife Sanctuary in Uttar Pradesh was the worst performer in the survey.

  • Coastal Regulation Zone (CRZ) Rules

    Few illegal apartment complexes in Maradu, Kerala, were razed as ordered by the Supreme Court for breaching Coastal Regulation Zone (CRZ) norms. The court had called the illegal constructions a “colossal loss” to the environment.

    What are CRZ norms?

    • In India, the CRZ Rules govern human and industrial activity close to the coastline, in order to protect the fragile ecosystems near the sea.
    • They restrict certain kinds of activities — like large constructions, setting up of new industries, storage or disposal of hazardous material, mining, reclamation and bunding — within a certain distance from the coastline.
    • After the passing of the Environment Protection Act in 1986, CRZ Rules were first framed in 1991.
    • After these were found to be restrictive, the Centre notified new Rules in 2011, which also included exemptions for the construction of the Navi Mumbai airport and for projects of the Department of Atomic Energy.
    • In 2018, fresh Rules were issued, which aimed to remove certain restrictions on building, streamlined the clearance process, and aimed to encourage tourism in coastal areas.
    • While the CRZ Rules are made by the Union environment ministry, implementation is to be ensured by state governments through their Coastal Zone Management Authorities.

    Where do they apply?

    • In all Rules, the regulation zone has been defined as the area up to 500 m from the high-tide line.
    • The restrictions depend on criteria such as the population of the area, the ecological sensitivity, the distance from the shore, and whether the area had been designated as a natural park or wildlife zone.
    • The latest Rules have a no-development zone of 20 m for all islands close to the mainland coast, and for all backwater islands in the mainland.

    Back2Basics

    https://www.civilsdaily.com/news/coastal-regulation-zone-how-rules-for-building-along-coast-have-evolved/

  • Progression to electric vehicles: Challenges and opportunities for India

    Article highlight India’s preparedness for the faster adoption of electric vehicles and steps taken by the government in this direction.

    Why electric mobility matters for India

    • It is important for India because such vehicles are sustainable and profitable in the long term.
    • Reducing dependence on crude oil will save the government money, reduce carbon emissions, and build domestic energy independence.
    • India’s transition to electric vehicles will allow us to fine-tune our infrastructure.
    • This will also influence India’s foreign policy as our energy security dependence will shift from West Asia to Latin America.
    • India imported 228.6 MT of crude oil worth $120 billion in 2018–19, which made it the third-largest oil importer in the world in terms of value.

    Government policies

    •  Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles and its updated (Fame 2) version, the government has allocated $1.3 billion in incentives.
    • A proposal for a $4.6 billion subsidy for battery makers has also been proposed by the NITI Aayog.
    • These policies are embedded with the vision to have 30% electric vehicles plying the roads by 2030.

    Developing domestic  battery manufacturing capacity

    • At present, India’s lithium-ion battery demand is fulfilled by imports from China, Vietnam, and Hong Kong.
    • In the last two years, India’s lithium imports have tripled from $384 mn to $1.2 bn.
    • With its policy intervention to support battery manufacturers by supplying lithium and cobalt, this industry is more likely to grow domestically to support India’s goal to switch to electric mobility.
    • In 2019, NALCO, Hindustan Copper Limited (HCL) and Mineral Exploration Corporation Ltd (MECL) formally signed a joint venture agreement to form Khanij Bidesh India Limited (KABIL) to scout for strategic mineral assets like lithium and cobalt abroad for commercial use and for supplying to meet the domestic requirement for battery manufacturers.
    • Developing domestic battery manufacturing capacity may fundamentally change India’s relationship with resource-rich Latin America as the government plans to buy overseas lithium reserves.
    • In Latin America, most of the production comes from Argentina, Chile, and Bolivia which holds about 80% of the explored lithium of the world.
    • Currently, India’s biggest trading partners in Latin America are Brazil, Mexico, and Venezuela, and majority of trade is concentrated on crude oil which includes 14%-20% of India’s total crude oil imports.
    • This may soon shift to lithium and cobalt.

    Conclusion

    The Indian government’s initiation to take the front seat in electric mobility and preemptive action to send a high-level delegation to have a precise understanding of the availability of lithium and possibilities of joint ventures will supply domestic markets and drive international markets.

  • India’s New Deal moment

    The article explains the opportunity presented by the budget to steer the economy out of the uncertain territory.

    3 characteristics of India’s economic recovery

    • First, India has broken the link between virus proliferation and mobility earlier and more successfully than many countries.
    • Second, the employment rate gradually improved till September but has weakened since then, even as the economy has progressively opened up.
    • CMIE’s labour market survey still reveals 18 million fewer employed (about 5 per cent of the total employed) compared to pre-pandemic levels.
    • A third phenomenon is large firms have endured the crisis better and are gaining market share at the expense of smaller firms.
    • To the extent there is a migration of activity from the informal/SME firms to larger firms, tax collections and Sensex/Nifty earnings should get a boost, even holding the economic pie constant.
    • Greater scale and formalisation undoubtedly augur well for medium-term productivity but could increase near-term labour market frictions and boost pricing power.

    Increased prospects of K-shaped recovery

    • Above 3 factors increases prospects of a K-shaped recovery from COVID, a phenomenon playing out globally.
    • Households at the top of the pyramid are likely to have seen their incomes largely protected, and savings rates increased.
    • Meanwhile, households at the bottom are likely to have witnessed permanent hits to jobs and incomes.

    3 Implications of K-shaped recovery

    • 1) What we are currently witnessing is pent-up demand from the upper-income households.
    • However, households at the bottom have experienced a permanent loss of income in the forms of jobs and wage cuts, this will be a recurring drag on demand, if the labour market does not heal faster.
    • 2) To the extent that COVID has triggered an effective income transfer from the poor to the rich, this will be demand-impeding in the steady state.
    • This is explianed by the fact that marginal propensity to consume at the bottom is higher than that at the top, just as the marginal propensity to import at the top is higher than at the bottom.
    • 3) If COVID-19 reduces competition or increases the inequality of incomes and opportunities, it could impinge on trend growth in developing economies by hurting productivity and tightening political economy constraints.

    Factors that need to be considered to decide the policy response

    • Policy need to look beyond the next few quarters and anticipate the state of the macro economy post this expression of pent-up demand.
    • The key factor is wheather private sector starts re-investing and re-hiring.
    • With manufacturing utilisation rates below 70 per cent pre-COVID, an investment revival, in turn, will depend crucially on the
    • Exports should benefit from strengthening global growth as the world gets progressively vaccinated and more US fiscal stimulus.

    Upcoming budget: India’s New Deal moment

    • It’s against this backdrop that the upcoming budget presents India with its New Deal moment.
    • Given the prevailing demand uncertainties, the budget represents an opportune moment for the Centre, in conjunction with the states, to embark on a large physical and social infrastructure push.
    • This will simultaneously boost near-term aggregate demand, crowd in private investment, create jobs to soak up the unemployed, and improve the economy’s external competitiveness.
    • Job creation, health and education, in turn, will be a start to help mitigate COVID-induced inequalities.

    How to finance the investment?

    • Gradual near-term consolidation coupled with a credible medium-term fiscal plan will be key to anchoring the bond market and underscoring an adherence to macro stability.
    • How then can public investment increase meaningfully if the headline deficit (projected above 11 per cent of GDP) must come down?
    • Public investment could be increased only if the public investment push is financed by aggressive asset sales-strategic sales, disinvestment, land and infrastructure monetisation.
    • In this manner, expenditure to GDP can actually rise next year — generating an expansionary fiscal impulse to the economy — while automatic stabilisers are used to reduce the headline fiscal deficit.

    Conclusion

    India’s faster-than-expected rebound is very encouraging. But given labour market pressures and prospects of a K-shaped recovery around the world, the economy will need to be carefully nurtured and stoked. The budget presents a crucial opportunity to make a big down payment towards this end.

  • Challenges ahead for the RBI

    With the Indian economy showing green shoots, RBI has to face some fundamental challenges while withdrawing the expansionary measures. 

    Expansionary policy as a response to pandemic

    • To manage the financial pressures unleashed by COVID-19, the RBI unleashed several measures.
    • It reduced policy interest rates aggressively.
    • It released an unprecedented amount of liquidity in the market.
    • It instituted a slew of measures for targeted assistance to, especially distressed sectors.

    Time to roll back the expansionary monetary policy

    • As the Indian economy is showing the signs of recovery, the RBI must be planning for a non-disruptive exit out of the easy money regime.
    • Reversing a crisis-driven expansionary policy has to be a deliberative process, with the timing and sequencing carefully planned.
    • A big lesson of the global financial crisis is that any missteps on the exit path by way of commission, omission, or importantly communication, can be costly in macroeconomic terms.

    Challenges RBI will face on the way out of expansionary monetary policy

    1) Restraining inflation while supporting the recovery

    • Inflation remained above the RBI’s target band for the past several months.
    • According to the RBI’s own estimates, inflation is expected to remain above the band for the next several months.
    • Yet, the MPC, in its recent review, decided against any rate action out of concerns for growth and financial stability.
    • The MPC expects inflation to soften on its own in the weeks ahead.
    • That outcome is not inevitable.
    • Inflation could be pressured upwards by several factors even though there could be some apparent softening purely because of base effects.
    • There is the risk that persistent high inflation expectations would result in food inflation getting more generalised.
    • Core inflation could firm up because of rising input prices.
    • ‘Excessive margins’, among the factors cited by the MPC as one of the causes of high inflation, may not disappear.
    • Equally, there are concerns that the recovery, for all the positive signals, is still fragile. 
    • And there is heightened concern about an aggravated unemployment problem caused by big firms retrenching labour to cut costs.

    2) Impact on savings

    • RBI should also be concerned about the plight of savers who are being shortchanged by low-interest rates at a time of high inflation.
    • Low-interest rates, its impact on inflation and economic recovery taken together make a complex cocktail of dilemmas for the RBI as it seeks to normalise the policy rates.

    3) Withdraw excess liquidity at right time and to avoid ‘taper tantrum’

    • Another related challenge will be to withdraw the ‘excess’ liquidity in good time.
    • Banks are routinely depositing trillions of rupees with the RBI every day, evidencing that all the money that the central bank injected into the system is not doing much good anymore.
    • Every financial crisis can be traced back to mispricing of risk.
    • Mispricing of risk results when there is too much liquidity sloshing around the system for too long.
    • It will drive investors into dodgy ventures and threaten financial stability.
    • As the RBI seeks to guard financial stability by normalising liquidity, it will have to contend with possible market tantrums.
    • The lesson from the taper tantrums in the U.S. is that the RBI will have to manage its communication as carefully as it does the liquidity withdrawal.

    4) Stability of the rupee

    • Next challenge for the RBI will be to restrain the rupee from appreciating out of line with fundamentals.
    • Here, the RBI is confronted with a classic case of ‘the impossible trinity’.
    • The impossible trinity deals with allowing free capital flows while simultaneously maintaining a stable exchange rate and restraining inflation.
    • The current account surplus this year together with massive capital flows has meant an excess of dollars in the system putting upward pressure on already overvalued rupee.
    • The RBI has absorbed nearly $90 billion this fiscal year to prevent exchange rate appreciation and to maintain the competitiveness of the rupee.
    • The RBI’s ability to continue to intervene in the forex market will be constrained by its anxiety about how the resultant liquidity might aggravate inflation and the risk to financial stability.

    Consider the question “What are the challenges ahead for the RBI while winding down the expansionary monetary policy measures that were announced to deal with the economic disruption of caused due to pandemic and subsequent lockdown.

    Conclusion

    It is better to be rough right, as Keynes said, than be precisely wrong. That should be the guiding principle for RBI as it navigates its way out of the crisis driven easy money policy.

    Back2Basics: What is taper tantrum?

    • Taper tantrum refers to the 2013 collective reactionary panic that triggered a spike in U.S. Treasury yields, after investors learned that the Federal Reserve was slowly putting the breaks on its quantitative easing (QE) program.
    • The Fed announced that it would be reducing the pace of its purchases of Treasury bonds, to reduce the amount of money it was feeding into the economy.
    • The ensuing rise in bond yields in reaction to the announcement was referred to as a taper tantrum in financial media.