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Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

The April-June quarter GDP numbers indicated at 20.1 per cent growth

Note4Students

From UPSC perspective, the following things are important :

Prelims level : GVA and GDP

Mains level : Paper 3- How to sustain economic recovery

Context

The April-June quarter GDP numbers indicated at 20.1 per cent growth.

Making sense of the numbers

  • The higher GDP growth was driven by high indirect tax collections, largely GST.
  • The more representative measure of economic activity, gross value added (GVA), grew by 18.8 per cent.
  • GDP is derived by adding indirect tax collections, net of subsidy payouts, to GVA.
  • These numbers are over a base quarter that had contracted sharply due to the lockdowns during the first Covid wave last year.
  • The revival of manufacturing GVA was the most robust, with mining and electricity growth somewhat moderate.
  • The overall and sector-specific activity levels need to be evaluated vis-à-vis the corresponding thresholds of (the pre-pandemic) first quarter of 2019-20.
  • Agriculture grew at 4.5 per cent, with cereals, pulses and oilseeds output at all-time highs.
  • As could be expected, the services sector remained vulnerable, with activity even softer than expected.
  • Steel and cement output growth — proxies for construction activity — were also quite robust in the quarter.
  • Demand and expenditure: Private consumption was up 19.3 per cent while investment was at 55.3 per cent.
  • Government consumption was lower by 4.8 per cent.
  • Export: Net exports are typically in deficit, but the gap was much lower in the first quarter.

How to sustain recovery: way forward

  • Looking beyond the first quarter, the set of high-frequency economic signals suggest a strong recovery in July and August.
  •  But, how can this recovery over the rest of the year and beyond be sustained, and even accelerated?
  • Sustaining 3 growth drivers: The three distinct potential growth drivers — consumption, investment and exports — will need to be effectively sustained by policy initiatives over the next couple of years.
  • Government spending: Centre’s revenues and expenditures during April-July this year suggest that it has significant room to increase spending.
  • National Monetisation Plan will open up further fiscal space to increase spending, in particular, on capex.
  • Credit support to stressed segment: mid-and small-sized enterprises will take some time to restore their pre-pandemic operational levels.
  • An increase in the flow of credit, from banks, NBFCs and markets, particularly to these stressed segments, is a priority, as a supplement to state spending.
  • Opportunity for exports: Global inventories are low and depending on the progression of the pandemic relaxations across geographies, are likely to provide opportunities for Indian exports to fill some of these gaps.
  • Reforms: Multiple reform initiatives, tax and other incentives are in the process of implementation.
  • These need to be accelerated in coordination with states to enable an environment of steady, high growth in the medium term.

Challenges

  • Global central banks’ are signalling the imminent normalisation of ultra-loose monetary policy.
  • The resulting increase in financial sector volatility will have spillover effects on emerging markets, including India.
  • To keep the process smooth, it is crucial to raise India’s potential growth so that the economic recovery does not rapidly close the output gap, thereby preventing a surge in inflationary pressures.

Conclusion

There is a limited window of opportunity for India to leverage the current ongoing realignment of global supply chains and progressively onboard both manufacturing and services entities.

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Hydel projects in Ganga-Himalayan basin

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Main Central Thrust

Mains level : Paper 3- Rethinking the hydroelectric projects in Himalayas

Context

The affidavit filed recently by the Ministry of Environment, Forest and Climate Change (MoEFCC) in an ongoing matter in the Supreme Court of India has recommended the construction of seven partially constructed hydroelectric projects in the Uttarakhand Himalaya.

Background

  • After the Kedarnath tragedy of 2013, an expert body (EB-I) was constituted to investigate whether the hydro-power projects in the State of Uttarakhand was linked to the disaster.
  •  In its findings, EB-I said there was a “direct and indirect impact” of these dams in aggravating the disaster.
  • The Ministry formed another expert body (EB-II; B.P. Das committee) whose mandate has been to pave the way for all projects through some design change modifications
  • This affidavit, dated August 17, reveals that the government is inclined towards construction of 26 other projects, as in the recommendation of the expert body (EB-II; B.P. Das committee). 
  • Ministry’s own observations and admissions given in its earlier affidavit dated May 5, 2014 admitted that hydroelectric projects did aggravate the 2013 flood.

Concerns

  • Sustainability: The sustainability of the dams in the long term is highly questionable as hydropower solely relies on the excess availability of water.
  • Temperatures across the region are projected to rise by about 1°C to 2°C on average by 2050.
  • Retreating glaciers and the alternating phases of floods and drought will impact the seasonal flows of rivers.
  • Sediment hotspots: The most crucial aspect is the existence of sediment hotspot paraglacial zones, which at the time of a cloud burst, contribute huge amounts of debris and silt in the river.
  • The flash floods in these Himalayan valleys do not carry water alone; they also carry a massive quantity of debris.
  • This was pointed out by EB-II alongside its recommendation not build any projects beyond 2,000 metres or north of the MCT, or the Main Central Thrust (it is a major geological fault).
  • Externalities:  Though hydropower is renewable source, there are contentious externalities associated with the construction of dams such as social displacement, ecological impacts, environmental and technological risks.
  • Climate change: these projects exacerbate ecological vulnerability, in a region that is already in a precarious state.
  • The intense anthropogenic activities associated with the proliferation of hydroelectric projects in these precarious regions accelerate the intensity of flash floods, avalanches, and landslides.
  • Failure of mountain slopes: The construction and maintenance of an extensive network of underground tunnels carrying water to the powerhouses contribute to the failure of mountain slopes.
  • Aggravating the disaster: The Rishi Ganga tragedy and the disasters of 2012 (flashfloods), 2013 are examples of how hydroelectric projects which come in the way of high-velocity flows aggravate a disaster and should be treated as a warning against such projects.

Conclusion

Considering the environmental and cultural significance of these areas, it is imperative that the Government refrains from the construction of hydroelectric projects and declares the upper reaches of all the headstreams of the Ganga as eco-sensitive zones. It must allow the river to flow unfettered and free.

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Back2Basics: Main Central Thrust (MCT)

  • The Main Central Thrust is a major geological fault where the Indian Plate has pushed under the Eurasian Plate along the Himalaya.
  • The fault slopes down to the north and is exposed on the surface in a NW-SE direction (strike).
  • It is a thrust fault that continues along 2200 km of the Himalaya mountain belt

Issues related to Economic growth

How to unleash the entrepreneurial power of 1.3 billion Indians

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SEZ Act

Mains level : Paper 3- Learning from the success of IT industry in India

Context

Last Independence Day, the PM announced that 15,000 of our current 69,000+ employer compliances and 6000+ filings have been identified for removal.

Why India is a development economics outlier?

  • Software industry despite being low-income country: Few models predict a $2,500 per-capita income country with five million people writing software and internet data costs per GB at 3 percent of US levels.
  • Digital identity: In India there are1.2 billion people empowered with paperless digital identity verification.
  • Digital economy: India also witnesses 3.5 billion real-time monthly digital payments.
  • Attraction for Investment: $10 billion in private equity raised in July, and a $3 trillion public market capitalization.
  • Harvard’s Ricardo Hausman believes, the only sustained predictor of sustained economic success is economic complexity and suggests that India’s prosperity is less than our economic complexity would predict.

India’s software industry

  • Our software industry is an oasis of high productivity — 0.8 per cent of India’s workers generate 8 percent of GDP.
  • The mandatory global digital literacy program and digital investment super-cycle sparked by Covid will double our software employment in five years.
  • Our software industry’s talent, alumni, and global engagement — 50,000 tech startups that have raised over $90 billion since 2014 from 500+ institutional investors.
  • India’s software services industry and tech startups are each estimated to be worth about $400 billion today which is expected to grow to $1 trillion by 2025.

Why did India’s manufacturing sector fail to perform while its software industry flourished?

  • One of the reasons is the different regulatory thought worlds of the Software Technology Parks India rules of 1991 (STPI) and the Special Economic Zones Act of 2005 (SEZ).
  • STPI’s genius was simplicity. It allowed rebadging existing assets, embraced trust over suspicion, and adopted self-reporting that was largely paperless, presence less, and cashless.
  • SEZs largely replicated the regulatory cholesterol and distrust that has made India unfavorable for employment-intensive industries.

Way forward

  • Productivity: Raising per-capita needs high productivity manufacturing and domestic services firms that disrupt our low-level equilibrium of labor handicapped without capital and capital handicapped without labor.
  • Opportunities for India: Until recently, China’s tech industry seemed unstoppable — half of their 160 unicorns operate in AI, big data, and robotics. But this is changing.
  • Over 50 recent regulatory actions against China’s tech industry have already cost investors over $1 trillion.
  • This offers an opportunity for India due to its attractiveness to factories, multinationals, startups, venture capital, and pension funds.
  • Replicate regulatory trust and simplicity offered to the technology industry to other sectors: India’s global soft power by reaching revenue and valuation possibilities that felt unimaginable — have come before physical infrastructure, farm employment reduction, and higher women’s labor force participation.
  • Massifying our prosperity needs massive formal, non-farm job creation.
  • Creating the productive firms that will offer these jobs to our young needs replicating the regulatory trust and simplicity that our technology industry enjoys in the rest of our economy.

Conclusion

Imagine India@100 if we cut regulatory cholesterol today and spent the next 25 years unleashing the entrepreneurial energies of 1.3 billion Indians — 65 percent of whom are below 35 years old.

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Parliament – Sessions, Procedures, Motions, Committees etc

Deputy Speaker for Lok Sabha

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Speaker and Dy Speaker

Mains level : Appointment of Constitutional posts

With the Delhi High Court asking the Central government to explain its stand on a petition that claimed to keep the post of Deputy Speaker of the Lok Sabha vacant is a violation of Article 93 of the Constitution, the issue is once again in the spotlight.

Article 93: The Speaker and Deputy Speaker of the House of the People The House of the People shall, as soon as may be, choose two members of the House to be respectively Speaker and Deputy Speaker thereof and, so often as the office of Speaker or Deputy Speaker becomes vacant, the House shall choose another member to be Speaker or Deputy Speaker, as the case may be …

Speaker and Dy Speaker of the Lok Sabha

[A] Speaker

  • The Speaker of the Lok Sabha is the presiding officer and the highest authority of the Lok Sabha (House of the People), the lower house of the Parliament.
  • Newly elected Members of Parliament from the Lok Sabha elect the Speaker among themselves.
  • The Speaker should be someone who understands Lok Sabha functions and it should be someone accepted among the ruling and opposition parties.
  • MPs propose a name to the Pro tem speaker. These names are notified to the President of India. The President through their aide Secretary-General notifies the election date.
  • If only one name is proposed, the Speaker is elected without any formal vote. However, if more than one nomination is received, a division (vote) is called.
  • MPs vote for their candidate on such date notified by President. The successful candidate is elected as Speaker of the Lok Sabha until the next general election

Power and Functions

On the order of precedence, the Speaker of Lok Sabha ranks sixth, along with the Chief Justice of India.

  • Conduct of Business: The Speaker of the Lok Sabha conducts the business in house. They maintain discipline and decorum in the house and can punish a member for unruly behavior by suspending them. Further, all comments and speeches made by members of the House are addressed to the Speaker.
  • Decisions on Money Bill: He/she decides whether a bill is a money bill or not.
  • Various motions: They also permit the moving of various kinds of motions and resolutions such as a motion of no confidence, the motion of adjournment, motion of censure and calling attention notice as per the rules.
  • Decision of agenda: The Speaker decides on the agenda to be taken up for discussion during the meeting. The date of election of the Speaker is fixed by the President.
  • Joint sitting: The Speaker also presides over the joint sitting of both houses of the Parliament of India. The Speaker also has a casting vote in the event of a tie.

[B] Deputy Speaker

  • The Deputy Speaker of the Lok Sabha is not subordinate to the speaker of Lok Sabha; is responsible for the Lok Sabha and is the second-highest-ranking legislative officer of the Lok Sabha.
  • He/ She acts as the presiding officer in case of leave of absence caused by death or illness of the Speaker of the Lok Sabha.
  • It is by convention that the position of Deputy Speaker is offered to the opposition party in India.

Try answering this PYQ:

Regarding the office of the Lok Sabha Speaker, consider the following statements:

  1. He/she holds the office during the pleasure of the President.
  2. He/she need not be a member of the house at the time of his/her election but has to become a member of the house within six months from the date of his/her election.
  3. if he/she intends to resign, the letter of his/her resignation has to be addressed to the Deputy speaker.

Which of the statement(s) given above is/are correct?

(a) 1 and 2

(b) Only 3

(c) 1, 2 and 3

(d) None of these

 

Post your answers here.

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Foreign Policy Watch: India-Afghanistan

What is Durand Line?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Durand Line

Mains level : Afghan refugee crisis

With the Taliban’s seize of Kabul, a huge exodus of Afghan refugees and asylum seekers is outpouring into Pakistan along the Durand Line.

Durand Line

  • The Durand Line is a legacy of the 19th century Great Game between the Russian and British empires in which Afghanistan was used as a buffer by the British against feared Russian expansionism to its east.
  • The agreement demarcating what became known as the Durand Line was signed on November 12, 1893, between the British civil servant Henry Mortimer Durand and Amir Abdur Rahman, then the Afghan ruler.
  • Abdur Rahman became king in 1880, two years after the end of the Second Afghan War in which the British took control of several areas that were part of the Afghan kingdom.
  • He was essentially a British puppet.
  • His agreement with Durand demarcated the limits of his and British India’s “spheres of influence” on the Afghan “frontier” with India.
  • The line stretches from the border with China to Afghanistan’s border with Iran.

An illogical separation

  • In reality, the line cut through Pashtun tribal areas, leaving villages, families, and land divided between the two “spheres of influence”.
  • It has been described as a “line of hatred”, arbitrary, illogical, cruel, and trickery on the Pashtuns.
  • Some historians believe it was a ploy to divide the Pashtuns so that the British could keep control over them easily.
  • It also put on the British side the strategic Khyber Pass.

Cross-border tensions at Durand Line

  • With independence in 1947, Pakistan inherited the Durand Line, and with it also the Pashtun rejection of the line, and Afghanistan’s refusal to recognize it.
  • Afghanistan was the only country to vote against Pakistan joining the United Nations in 1947.
  • ‘Pashtunistan’ — an independent country of the Pashtuns — was a demand made by Khan Abdul Ghaffar Khan at the time of Partition, although he later resigned himself to the reality of Partition.
  • The proximity of the ‘Frontier Gandhi’ to India was a point of tension between the two countries almost immediately.
  • The fear of Indian support to Pashtun nationalism haunts Pakistan to date and is embedded in its Afghan policy.

Pakistani support against the Pashtuns

  • Pakistan’s creation and support for the Taliban are seen by some as a move to obliterate ethnic Pashtun nationalism with an Islamic identity.
  • But it did not work out the way Pakistan had planned.
  • When the Taliban seized power in Kabul the first time, they rejected the Durand Line.
  • They also strengthened Pashtun identity with an Islamic radicalism to produce the Tehreek-e-Taliban Pakistan, whose terrorist attacks since 2007 left the country shaken.

Try answering this PYQ:

Consider the following pairs

Towns sometimes mentioned         Country in news

  1. Aleppo                        — Syria
  2. Kirkuk                         — Yemen
  3. Mosul                          — Palestine
  4. Mazar-i-sharif             — Afghanistan

Which of the pairs given above are correctly matched?

(a) 1 and 2

(b) 1 and 4

(c) 2 and 3

(d) 3 and 4

 

Post your answers here.

Tax Reforms

Taxing interest on Provident Fund

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Provident Fund

Mains level : Need for taxing PF

Following its Budget announcement in February, the Finance Ministry has now notified the rules for taxing interest income on contributions made to the Employees’ Provident Fund (EPF) beyond Rs 2.5 lakh (for private-sector employees) and Rs 5 lakh (for government sector employees).

What is Provident Fund?

  • Provident Fund is a government-managed retirement savings scheme for employees, who can contribute a part of their savings towards their pension fund, every month.
  • These monthly savings get accumulated every month and can be accessed as a lump sum amount at the time of retirement, or end of employment.
  • Since the provident fund money consists of a large chunk of savings, it can be used to grow your retirement corpus easily.

Types of provident funds

There are mainly three different types of PFs, which are as follows:

  1. General provident fund: It is a type of PF which is maintained by governmental bodies, including local authorities, the Railways, and other such bodies. Thus, these types of PFs are mainly defined by government bodies.
  2. Recognized provident fund: It is the one that applies to all privately-owned organizations that contain more than 20 employees. Moreover, holding a rightful claim to the PF associated with your organization, you will be given a UAN or Universal Account Number. This enables you to transfer your PF funds from one employer to another whenever you move from one occupation to another.
  3. Public provident fund: It is defined by the voluntary nature of investment on the part of the employee. The PPF is also associated with a minimum deposit of Rs. 50 and a maximum amount of Rs. 1.5 lakhs. The PPF has a lock-in period of 15 years.

What is the tax on EPF contributions?

  • In February, the Budget proposed that tax exemption will not be available on interest income on PF contributions exceeding Rs 2.5 lakh in a year.
  • Although this has been a concern for salaried individuals contributing to EPF, it will impact only those who contribute more than Rs 2.5 lakh in a year.
  • It will not affect their existing corpus or the aggregate annual interest on that.
  • In March, the government proposed to double the cap on contribution from Rs 2.5 lakh to Rs 5 lakh for tax-exempt interest income where there is no contribution by the employer.
  • With this, the government provided relief for contributions made to the General Provident Fund that is available only to government employees and there is no contribution by the employer.

Why tax the PF?

  • There have been instances where some employees are contributing huge amounts to these funds and are getting the benefit of tax exemption at all stages — contribution, interest accumulation, and withdrawal.
  • With an aim to exclude high net-worth individuals (HNIs) from the benefit of high tax-free interest income on their large contributions, the government has proposed to impose a threshold limit for tax exemption.
  • This will be applicable for all contributions beginning April 1, 2021.

How will it get taxed?

  • For an individual in the higher tax bracket of 30%, the interest income on contribution above Rs 2.5 lakh would get taxed at the same marginal tax rate.
  • What this means is that if an individual contributes Rs 3 lakh every year to the provident fund (including the voluntary PF contribution) then the interest on his contribution above Rs 2.5 lakh —that is, Rs 50,000 — will be taxed.
  • So, the interest income of Rs 4,250 (8.5% on Rs 50,000) will be taxed at the marginal rate. If the individual falls in the 30% tax bracket, he/ she will have to pay a tax of Rs 1,325.
  • For an individual contributing Rs 12 lakh in a year, the tax will be applicable on interest income on Rs 9.5 lakh (Rs 12 lakh minus Rs 2.5 lakh). In this case, the tax liability would amount to Rs 25,200.

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ISRO Missions and Discoveries

[pib] Formation of Blue Straggler

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Blue Stragglers

Mains level : Not Much

Carrying out the first-ever comprehensive analysis of blue stragglers, Indian researchers found that half of the blue stragglers in their sample are formed through mass transfer from a close binary companion star.

What are Blue Stragglers?

  • 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.
  • The most likely explanation is that blue stragglers are the result of stars that come too close to another star or similar mass object and collide.
  • The newly-formed star has thus a higher mass and occupies a position on the HR diagram which would be populated by genuinely young stars.
  • One-third of them are likely formed through collisions of 2 stars, and the remaining are formed through interactions of more than 2 stars.

How are they formed?

  • A bunch of stars born at the same time from the same cloud form a star cluster.
  • As time passes, each star evolves differently depending on its mass.
  • The most massive and bright stars evolve and move off the main sequence creating a bend in their track, known as the turnoff.
  • Stars above this bend or brighter and hotter stars are not expected in a cluster, as they leave the main sequence to become red giants.
  • But in 1953, Allan Sandage found that some stars seem to be hotter than the turnoff of the parent cluster.

Behind the nomenclature

  • Initially, these blue stars still straggling above the turnoff were not part of these clusters.
  • However, later studies confirmed that these stars are indeed cluster members, and they were termed “Blue Stragglers”.
  • The only probable way these stars can still be present in these clusters is if they have somehow acquired extra mass along the way while on the main sequence.
  • Confirming the mechanisms of the mass gain required a study using a large sample of blue-straggler stars and estimates of the mass they have gained.

What have Indian researchers found?

  • Research showed that these stars are primarily present in the older and massive star clusters. And due to their large mass, they are segregated towards the centre of the clusters.
  • The researchers compared the mass of the blue stragglers to the mass of the turnoff stars (which are the most massive ‘normal’ stars in the cluster) and predicted the formation mechanisms.
  • The study will help improve understanding of these stellar systems to uncover exciting results in studies of large stellar populations, including galaxies.
  • Following these findings, the researchers are conducting detailed analyses of individual blue stragglers in the catalog to obtain their stellar properties.

Wildlife Conservation Efforts

Behler Turtle Conservation Award

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Species mentioned, Turtle Survival Alliance (TSA)

Mains level : NA

Indian biologist Shailendra Singh has been awarded the Behler Turtle Conservation Award for bringing three critically endangered turtle conservation species back from the brink of extinction.

Behler Turtle Conservation Award

  • The Award is a major annual international award honoring excellence in the field of tortoise and freshwater turtle conservation and biology, and leadership in the chelonian conservation and biology community.
  • It is co-presented by the Turtle Survival Alliance (TSA), the IUCN/SSC Tortoise and Freshwater Turtle Specialist Group (TFTSG) among others.
  • It is widely considered the “Nobel Prize” of turtle conservation and biology.

Citation for the 2021 Award

  • For some species, such as the Red-crowned Roofed Turtle (Batagur kachuga), Northern River Terrapin (Batagur Baska), and Black Softshell Turtle (Nilssonia nigricans) Dr. Singh and his team’s efforts are the last hope for their wild survival in the country.
  • In just 15 years, there are few individuals that have made such monumental contributions to turtle conservation.

Turtles in India

  • The Northern River Terrapin (Batagur Baska) is being conserved at the Sunderbans; the Red-crowned Roofed Turtle (Batagur kachuga) at Chambal; and the Black Softshell Turtle (Nilssonia nigricans) at different temples in Assam.
  • These critically endangered turtles are being conserved as a part of TSA India’s research, conservation breeding and education programme in different parts of the country.
  • There are 29 species of freshwater turtles and tortoises in the country.

About Turtle Survival Alliance (TSA)

  • The TSA was formed in 2001 as an International Union for Conservation of Nature (IUCN) partnership for sustainable captive management of freshwater turtles and tortoises.
  • This alliance arose in response to the rampant and unsustainable harvest of Asian turtle populations to supply Chinese markets, a situation known as the Asian Turtle Crisis.

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