Note4Students
From UPSC perspective, the following things are important :
Prelims level: Pradhan Mantri Poshan Shakti Nirman
Mains level: Paper 2- Low allocation for social sector
Context
India continues to rank poorly in various global indices that reflect the quality of life, human capital or human development in the country. In this context, it was expected that the current Budget would see an expansion in government spending on the social sector.
Need for greater spending on social sector
- In Human Development Index, India ranks 131 out of 189 countries and on the Global Hunger Index, it ranks 101 out of 116 countries.
- The pandemic over the last two years has had a severe impact on the health, education and food security of the poor and informal sector workers.
- The country has been experiencing increasing inequality over the last couple of decades.
Marginal increase in allocation for school education
- In the budget, the government announced that it will expand its ‘one class, oneTVchannel’ scheme instead of announcing enhanced allocations for schools the government announced that it will expand its ‘one class, oneTVchannel’ scheme instead of announcing enhanced allocations for schools so that they can reopen with vigour.
- The budget for school education at ₹63,449 crore is a slight improvement over last year’s ₹54,873 crore (2021-22 budget estimates, BE) and a mere increase of 6% in nominal terms compared to 2020-21 BE of ₹59,845 crore.
- After rechristening the school mid-day meal scheme as Pradhan Mantri Poshan Shakti Nirman, simply called PM Poshan, the allocation for the scheme has reduced from ₹11,500 crore last year to ₹10,233 crore this year.
Low allocation for health
- Despite repeated statements about strengthening the public health system, the overall budget for the Department of Health and Family Welfare at ₹83,000 crore has gone up by only 16% over the BE for 2021-22 and by less than ₹1,000 crore compared to the RE for 2021-22, which is ₹82,921 crore.
- However, by including water and sanitation in the budget for health, there is an increase being shown in health spending as a proportion of GDP.
- Also, even though the budget for the Jal Jeevan Mission has increased from ₹50,000 crore to ₹60,000 crore, only 44% of the allocated funds to the Department of Water and Sanitation for 2021-22 has been spent as on end December 2021.
No indication of plan to extend the PMGKAY
- 60% of the population are covered by ration cards currently under the National Food Security Act.
- Those who were eligible benefited from the additional free foodgrains that they have been given under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
- However, the food subsidy (BE) for 2022-23 at ₹2.06 lakh crore is only enough to cover the regular NFSA entitlements.
- The indication is that there is no plan to extend the PMGKAY.
- The food subsidy RE for 2021-22 is ₹2.86 lakh crore.
Other schemes
- Budgets for important schemes such as Saksham Anganwadi, maternity entitlements and social security pensions are around the same as the allocations for last year.
- The allocation for MGNREGA at ₹73,000 crore also does not reflect the increased demand for work or thethe pending wages of ₹21,000 crore.
Continued negligence
- The resources allocated for crucial government schemes in the fields of health, education, nutrition, and social protection have remained stagnant or show negligent increase.
- In fact, the budgets for these schemes have been declining in real terms since 2015.
- The World Social Protection Report 2020-22, brought out by the International Labour Organization, shows that the spending on social protection (excluding health) in India is 1.4% of the GDP, while the average for low-middle income countries is 2.5%.
Conclusion
This continued negligence does not bode well for inclusive development in India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CBDC, Cryptocurrency
Mains level: Digital Rupee: Prospects and challenges
The Union Finance Minister has announced the launch of the Digital Rupee — a central bank digital currency (CBDC) — 2022-23 onwards.
Who will launch the CBDC?
- The Reserve Bank of India will launch the CBDC in the upcoming financial year.
- This follows the government’s plans to launch the CBDC that will be backed by blockchain technology.
What is a CBDC?
- CBDC is a legal tender issued by a central bank in a digital form.
- It is similar to a fiat currency issued in paper and is interchangeable with any other fiat currency.
- One chief difference will be that a Digital Rupee transaction will be instantaneous as opposed to the current digital payment experience.
Features of CBDC
- High-security instrument: CBDC is a high-security digital instrument; like paper banknotes, it is a means of payment, a unit of account, and a store of value.
- Uniquely identifiable: And like paper currency, each unit is uniquely identifiable to prevent counterfeit.
- Liability of central bank: It is a liability of the central bank just as physical currency is.
- Transferability: It’s a digital bearer instrument that can be stored, transferred, and transmitted by all kinds of digital payment systems and services.
What is the need for CBDC?
- Online transactions: India is a leader in digital payments, but cash remains dominant for small-value transactions.
- High currency in circulation: India has a fairly high currency-to-GDP ratio.
- Cost of currency management: An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.
- The growth of cryptocurrencies such as Bitcoin, Ethereum, etc has raised challenges to fiat currencies.
Key benefits offered
- Faster system: CBDC can definitely increase the transmission of money from central banks to commercial banks and end customers much faster than the present system.
- Financial inclusion: Specific use cases, like financial inclusion, can also be covered by CBDC that can benefit millions of citizens who need money and are currently unbanked or banked with limited banking services
- Monetary policy facilitation: The move to bring out a CBDC could significantly improve monetary policy development in India.
- Making of a regional currency: In the cross-border payments domain, India can take a lead by leveraging digital Rupee especially in countries such as Bhutan, Saudia Arabia, and Singapore where NPCI has existing arrangements.
Why is CBDC preferred over Cryptocurrency?
- Sovereign guarantee: Cryptocurrencies pose risks to consumers. They do not have any sovereign guarantee and hence are not legal tender.
- Market volatility: Their speculative nature also makes them highly volatile. For instance, the value of Bitcoin fell from USD 20,000 in December 2017 to USD 3,800 in November 2018.
- Risk in security: A user loses access to their cryptocurrency if they lose their private key (unlike traditional digital banking accounts, this password cannot be reset).
- Malware threats: In some cases, these private keys are stored by technical service providers (cryptocurrency exchanges or wallets), which are prone to malware or hacking.
- Money laundering: Cryptocurrencies are more vulnerable to criminal activity and money laundering. They provide greater anonymity than other payment methods since the public keys engaging in a transaction cannot be directly linked to an individual.
- Regulatory bypass: A central bank cannot regulate the supply of cryptocurrencies in the economy. This could pose a risk to the financial stability of the country if their use becomes widespread.
- Power consumption: Since validating transactions is energy-intensive, it may have adverse consequences for the country’s energy security (the total electricity use of bitcoin mining, in 2018, was equivalent to that of mid-sized economies such as Switzerland).
Way forward
- The launch of CBDCs may not be a smooth affair and still requires more clarity in India. There are still a lot of misconceptions about the concept of digital currency in the country.
- The effectiveness of CBDCs will depend on aspects such as privacy design and programmability.
- There is a huge opportunity for India to take a lead globally via a large-scale rollout and adoption of digital currencies.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SEZs, Baba Kalyani Committee
Mains level: SEZ and export promotion
The government has proposed to replace the existing law governing Special Economic Zones (SEZs) with new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.
Why amend SEZ Act, 2005?
- Units in SEZs used to enjoy 100% income tax exemption on export income for the first five years, 50% for the next five years, and 50% of the ploughed back export profit for another five years.
- SEZs now have started losing their sheen after the imposition of minimum alternate tax and the introduction of a sunset clause for the removal of tax incentives.
- The new act will cover all large existing and new industrial enclaves to optimally utilize the available infrastructure and enhance the competitiveness of exports.
- The government will also undertake reforms in customs administration of SEZs with a view to promote ease of doing business.
What are SEZs?
- A Special Economic Zone (SEZ) is an area in which the business and trade laws are different from the rest of the country.
- SEZs are located within a country’s national borders, and their aims include increasing trade balance, employment, increased investment, job creation, and effective administration.
- To encourage businesses to set up in the zone, financial policies are introduced.
- These policies typically encompass investing, taxation, trading, quotas, customs, and labor regulations.
- Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.
SEZs in India
- The SEZ policy in India first came into inception on April 1, 2000.
- The prime objective was to enhance foreign investment and provide an internationally competitive and hassle-free environment for exports.
- The idea was to promote exports from the country and realize the need for a level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally.
- Subsequently, the SEZ Act 2005, was enacted to provide the umbrella legal framework, covering all important legal and regulatory aspects of SEZ development as well as for units operating in SEZs.
Who can set up SEZs? Can foreign companies set up SEZs?
- Any private/public/joint sector or state government or its agencies can set up an SEZ.
- Yes, a foreign agency can set up SEZs in India.
What is the role of state governments in establishing SEZs?
- A representative of the state government, who is a member of the inter-ministerial committee on private SEZ, is consulted while considering the proposal.
- Before recommending any proposals to the ministry of commerce and industry (department of commerce), the states must satisfy themselves that they are in a position to supply basic inputs like water, electricity, etc.
Are SEZs controlled by the government?
- In all SEZs, the statutory functions are controlled by the government.
- The government also controls the operation and maintenance function in the central government-controlled SEZs. The rest of the operations and maintenance are privatized.
Are SEZs exempt from labor laws?
- Normal labor laws are applicable to SEZs, which are enforced by the respective state governments.
- The state governments have been requested to simplify the procedures/returns and for the introduction of a single-window clearance mechanism by delegating appropriate powers to development commissioners of SEZs.
Who monitors the functioning of the units in SEZ?
- The performance of the SEZ units is monitored by a unit approval committee consisting of a development commissioner, custom, and representative of the state government on an annual basis.
What are the special features for business units that come to the zone?
- Business units that set up establishments in an SEZ would be entitled to a package of incentives and a simplified operating environment.
- Besides, no license is required for imports, including second-hand machinery.
How do SEZs help a country’s economy?
- SEZs play a key role in the rapid economic development of a country.
- In the early 1990s, it helped China and there were hopes that the establishment in India of similar export-processing zones could offer similar benefits – provided, however, that the zones offered attractive enough concessions.
- Traditionally the biggest deterrents to foreign investment in India have been high tariffs and taxes, red-tapism, and strict labor laws.
- To date, these restrictions have ensured that India has been unable to compete with China’s massively successful light-industrial export machine.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PM-DevINE
Mains level: Infra push for NE region
Union Budget 2022-23 provided for a new scheme, Prime Minister’s Development Initiative for North East (PM-DevINE) will be implemented through the North-Eastern Council.
PM-DevINE
- It will fund infrastructure, in the spirit of PM GatiShakti, and social development projects based on felt needs of the northeast.
- This will enable livelihood activities for youth and women, filling the gaps in various sectors.
- While the Central Ministries may also pose their candidate projects, priority will be given to those posed by the States.
Some of the projects to be implemented are:
- Dedicated Services for the Management of Paediatric and Adult Haemotolymphoid Cancers in North East India, Guwahati
- Construction of Aizawl bypass on western side, gap funding for passenger ropeway system for Pelling to Sanga-Choeling in West Sikkim
- Gap funding for eco-friendly Ropeway (Cable Car) from Dhapper to Bhaleydhunga in South Sikkim
- Pilot project for the construction of Bamboo Link Road at different locations in various districts in Mizoram
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Bomb Cyclone, Bombogenesis
Mains level: Not Much
Major cities such as New York and Boston in US are witnessing a “Bomb Cyclone” characterized by the explosive power of rapid drops in atmospheric pressure.
What is Bomb Cyclone?
- A bomb cyclone is a large, intense mid-latitude storm that has low pressure at its center, weather fronts and an array of associated weather, from blizzards to severe thunderstorms to heavy precipitation.
- It becomes a bomb when its central pressure decreases very quickly—by at least 24 millibars in 24 hours.
- When a cyclone “bombs,” or undergoes bombogenesis, this tells us that it has access to the optimal ingredients for strengthening, such as high amounts of heat, moisture and rising air.
Why is it called a bomb?
- Most cyclones don’t intensify rapidly in this way.
- Bomb cyclones put forecasters on high alert, because they can produce significant harmful impacts.
Its etymology
- The word “bombogenesis” is a combination of cyclogenesis, which describes the formation of a cyclone or storm, and bomb, which is, well, pretty self-explanatory.
- This can happen when a cold air mass collides with a warm air mass, such as air over warm ocean waters.
- The formation of this rapidly strengthening weather system is a process called bombogenesis, which creates what is known as a bomb cyclone.
How does it occur?
- Over the warmer ocean, heat and moisture are abundant.
- But as cool continental air moves overhead and creates a large difference in temperature, the lower atmosphere becomes unstable and buoyant.
- Air rises, cools and condenses, forming clouds and precipitation.
Where does it occur the most?
- The US coast is one of the regions where bombogenesis is most common.
- That’s because storms in the mid-latitudes – a temperate zone north of the tropics that includes the entire continental US – draw their energy from large temperature contrasts.
- Along the US East Coast during winter, there’s a naturally potent thermal contrast between the cool land and the warm Gulf Stream current.
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