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  • Foreign Policy Watch: India-China

    Study on China dams brings the Brahmaputra into focus

    A new study highlighting the impact of China’s dams on the Mekong River has raised fresh questions on whether dams being built on other rivers that originate in China, such as the Brahmaputra, may similarly impact countries downstream.

    Make a note of:

    1) Tributaries of R. Brahmaputra

    2) Countries swept by R. Mekong

    3) Mekong-Ganga Cooperation (reminds us seeing R. Mekong)

    China’s dams on the Mekong River

    • The Mekong flows from China to Myanmar, Laos, Thailand, Cambodia and Vietnam.
    • The Mekong River Commission, which comprises Cambodia, Laos, Thailand, and Vietnam, has said more scientific evidence was needed to establish whether dams caused a 2019 drought.
    • While China’s southwestern Yunnan province which usually has above-average rainfall, there was “severe lack of water in the lower Mekong.

    Mekong dams raise some questions

    • The Mekong study was not conclusive on the question of how China’s dams had affected the quantity of flows.
    • To state that the basin had less water because of activities in China alone is misleading, mainly because that only considers the water flowing into the lower basin at one station in Thailand.
    • The study did not consider other dams and water-use along the course of the river.
    • The lower basin isn’t entirely dependent on flows from China but also receives water from tributaries in all four countries, which the study did not account for.

    Concerns for India

    • India does not have a water-sharing agreement with China, but both sides share hydrological data.
    • India has long expressed concerns over dam-building on the Brahmaptura.
    • In 2015, China operationalised its first hydropower project at Zangmu, while three other dams at Dagu, Jiexu and Jiacha are being developed.
    • India need to raise the issue of river waters in the Brahmaputra with China, as that appears to be the only methodology to ensure what happened on Mekong does not happen on Brahmaputra.

    A management problem

    • The dams are not likely to impact the quantity of the Brahmaputra’s flows because they are only storing water for power generation.
    • Moreover, the Brahmaputra is not entirely dependent on upstream flows and an estimated 35% of its basin is in India.
    • However, India concerns more about activity in China affecting quality, ecological balance, and flood management.
  • India’s Bid to a Permanent Seat at United Nations

    India’s Permanent Mission to the United Nations

    Syed Akbaruddin, a fiery spokesperson, who is credited with effectively presenting India’s position on a range of crucial issues at the UN headquarters in New York for the last several years, has retired. A 1985-batch IFS officer T S Tirumurti, currently serving as Secretary in the Ministry of External Affairs will succeed him.

    Permanent Missions to the United Nations

    • The Permanent Mission is the diplomatic mission that every member state deputies to the UN, and is headed by a Permanent Representative, who is also referred to as the “UN ambassador”.
    • Article 1 (7) of the Vienna Convention on the Representation of States provides for a permanent mission.
    • UN Permanent Representatives are assigned to the UN headquarters in New York City, and can also be appointed to other UN offices in Geneva, Vienna, and Nairobi.
    • The Mission in New York is housed in a 27-story building designed by the noted architect Charles Correa in 1993 and is decorated with MF Hussain paintings.

    The Indian Permanent Mission at the UN

    • According to the website of the Permanent Mission of India in New York, there are currently eight Indians in senior leadership positions at the UN at the levels of Under-Secretary-General and Assistant Secretary-General.
    • The first Indian delegates at the UN included statesman Arcot Ramasamy Mudaliar, and freedom fighters Hansa Mehta, Vijayalakshmi Pandit, and Lakshmi Menon.
    • Mehta and Pandit were among the 15 women members of the Indian Constituent Assembly.
    • India was among the select members of the United Nations that signed the United Nations Declaration at Washington on January 1, 1942.
    • India also participated in the historic UN Conference of International Organization at San Francisco from April 25 to June 26, 1945.
  • Modern Indian History-Events and Personalities

    Why May 1 is observed as Labour Day?

    Today (May 1) is May Day, also known as International Workers’ Day and as Labour Day in different parts of the world. It is an occasion that commemorates the contributions of workers and the historic labour movement.

    Personality based history question in the UPSC CSE prelims is on the way to become the new normal. Kindly note all such phenomena in the news which tend to invoke some aspects of the modern Indian history. You can find all such news here.

    The Haymarket incident

    • While observed as an ancient northern hemisphere spring festival, May 1 became associated with the labour movement in the late 19th century, after trade unions and socialist groups designated it as a day in support of workers.
    • It was decided to do so in memory of the Haymarket affair of 1886, in Chicago in the United States, in which a peaceful rally in support of workers led to a violent clash with the police, leading to the deaths of 4 civilians and 7 police officers.
    • Many of the agitationists, who were protesting workers’ rights violations, straining work hours, poor working conditions, low wages and child labour, were arrested and served terms of life imprisonment, death sentences, etc., and those who died were hailed as “Haymarket Martyrs”.
    • The incident is believed to have given the workers’ movement a great impetus.

    Linked to the Russian Revolution

    • In 1889, The Second Communist International, an organisation created by socialist and labour parties, declared that May 1 would be commemorated as International Workers’ Day from then on.
    • Finally, in 1916, the US began to recognise eight-hour work timings after years of protests and uprisings.
    • In 1904, the International Socialist Congress at Amsterdam called on to demonstrate energetically on the First of May for the legal establishment of the 8-hour day.
    • After the Russian Revolution in 1917, the celebration was embraced by the Soviet Union and the Eastern bloc nations during the Cold War– becoming a national holiday in many of them.
    • Parades were a part of the celebration– the one at Moscow’s Red Square was attended by top Communists leaders and displayed Soviet military might.

    Indian Case

    • In India, May Day was first celebrated on May 1, 1923, after the Labour Kisan Party of Hindustan initiated and Comrade Singaravelar (Singaravelu Chettiar) helmed the celebrations.
    • Chettiar was known for being one of the leaders of Self Respect Movement in the Madras Presidency and for his fight for the rights of backward classes.
    • In one of his meetings, Chettiar passed a resolution stating the government should allow everybody a national holiday on Labour Day.
  • ISRO Missions and Discoveries

    [pib] Earth’s Magnetosphere and its dynamics

    Scientists at the Indian Institute of Geomagnetism (IIG) have developed a generalized one-dimensional fluid simulation code capable of studying a wide spectrum of coherent electric field structures of earth’s magnetosphere which can be useful in the planning of future space missions.

    The newscard talks of not so new phenomenon but a basic terminology of space sciences. Kindly make a note of what the Magnotesphere is, how it is formed, role of solar winds, Geodynamo etc.

    Earth’s Magnetosphere

    • The magnetosphere is the region of space surrounding Earth where the dominant magnetic field is the magnetic field of Earth, rather than the magnetic field of interplanetary space.
    • It is generated by the interaction of the solar wind with Earth’s magnetic field.

    Features of the Earth’s magnetosphere

    1) Bow shock,

    2) Magnetosheath,

    3) Magnetopause,

    4) Northern tail lobe,

    5) Southern tail lobe,

    6) Plasmasphere,

    7) Solar wind.

    How is it formed?

    • Sun is the major source of plasma deposition in space around the Earth. Sun forces some of its plasma towards the earth in the form of the solar wind.
    • The speed of this wind varies between 300 to 1500 km/s, which carries with it solar magnetic field, called as Interplanetary Magnetic Field (IMF).
    • The magnetic field is generated by electric currents due to the motion of convection currents of a mixture of molten iron and nickel in the Earth’s outer core.
    • These convection currents are caused by heat escaping from the core, a natural process called a geodynamo.

    Why study the magnetosphere?

    • The Earth’s magnetosphere is a vast region which has a finite number of satellites hurtling through this realm.
    • The morphology of the plasma processes around the satellite can be understood quite well.
    • However, when they leave the observational domain of one satellite to enter into another, a vast blind arena is created.
    • How the morphology of these processes changes over space and time can be ideally deciphered only through computer simulations.

    Outcome of the study

    • Almost 99% of matter in the universe is in the form of plasma, Earth’s magnetosphere, too, contains this material and the plasma.
    • They have the ability to hamper the working of a number of satellites that have been placed in orbit in the magnetospheric region.

    Significance

    • Apart from the well being of these expensive satellites, the academic understanding of this region is quite essential to comprehend the cosmos in its entirety.
    • The study will help advance the knowledge of plasma waves, instabilities, and coherent effects associated with wave-particle interactions that are useful in planning of future space missions.
    • It can also lead to precisely controlled fusion laboratory experiments for ever-expanding energy needs of humanity.
  • GI(Geographical Indicator) Tags

    GI tag to Manipur black rice, Gorakhpur terracotta and Kovilpatti kadalai mittai

    Chak-Hao, the black rice of Manipur and the Gorakhpur terracotta and the Kovilpatti kadalai mittai of Tamil Nadu have bagged the Geogrphical Indication (GI) tag.

    Must read: GI Tags in news for 2020 Prelims

    Chak-Hao

    • Chak-Hao, the scented glutinous rice which has been in cultivation in Manipur over centuries.
    • It is characterized by its special aroma. It is normally eaten during community feasts and is served as Chak-Hao kheer.
    • The application for Chak-Hao was filed by the Consortium of Producers of Chak-Hao (Black Rice), Manipur and was facilitated by the Department of Agriculture.
    • Chak-Hao has also been used by traditional medical practitioners as part of traditional medicine.
    • According to the GI application filed, this rice takes the longest cooking time of 40-45 minutes due to the presence of a fibrous bran layer and higher crude fibre content.
    • At present, the traditional system of Chak-Hao cultivation is practised in some pockets of Manipur.
    • Direct sowing of pre-soaked seeds and also transplantation of rice seedlings raised in nurseries in puddled fields are widely practised in the State’s wetlands.

    Gorakhpur terracotta

    • The terracotta work of Gorakhpur is a centuries-old traditional art form, where the potters make various animal figures like, horses, elephants, camel, goat, ox, etc. with hand-applied ornamentation.
    • The application was filed by Laxmi Terracotta Murtikala Kendra in Uttar Pradesh.
    • Some of the major products of craftsmanship include the Hauda elephants, Mahawatdar horse, deer, camel, five-faced Ganesha, singled-faced Ganesha, elephant table, chandeliers, hanging bells etc.
    • The entire work is done with bare hands and artisans use natural colour, which stays fast for a long time.
    • There are more than 1,000 varieties of terracotta work designed by the local craftsmen.
    • The craftsmen are mainly spread over the villages of Aurangabad, Bharwalia, Langadi Gularia, Budhadih, Amawa, Ekla etc. in Bhathat and Padri Bazar, Belwa Raipur, Jungle Ekla No-1, Jungle Ekla No-2 in Chargawan block of Gorakhpur.

    Kovilpatti kadalai mittai

    • It is a candy made of peanuts held together with glistening syrup, and topped with wisps of grated coconut dyed pink, green and yellow.
    • It is made using all natural ingredients such as the traditional and special ‘vellam’ (jaggery) and groundnuts and water from the river Thamirabarani is used in the production, which enhances the taste naturally.
    • It is manufactured in Kovilpatti and adjacent towns and villages in Thoothukudi district.
    • It is produced by using both groundnuts and jaggery (organic jaggery), in carefully selected quantities from selected specific locations in Tamil Nadu.

    Back2Basics: Geographical Indications in India

    • A Geographical Indication is used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Such a name conveys an assurance of quality and distinctiveness which is essentially attributable to its origin in that defined geographical locality.
    • This tag is valid for a period of 10 years following which it can be renewed.
    • Recently the Union Minister of Commerce and Industry has launched the logo and tagline for the Geographical Indications (GI) of India.
    • The first product to get a GI tag in India was the Darjeeling tea in 2004.
    • The Geographical Indications of Goods (Registration and Protection) Act, 1999 (GI Act) is a sui generis Act for protection of GI in India.
    • India, as a member of the WTO enacted the Act to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights
    • Geographical Indications protection is granted through the TRIPS Agreement
  • Festivals, Dances, Theatre, Literature, Art in News

    Festival in news: Chithirai Festival

    For the first time, in place of Madurai’s Chithirai Festival, a simple celestial union is set to take place that will be streamed online.

    Match the pair based question can be asked from festivals as such. Recently, the following festivals were in the news: Ambubachi Mela, Thrisoor Puram, Meru Jatara, Nagoba Jatara etc.

    Chithirai Festival

    • Chithirai Festival or Chithirai Thiruvizha is an annual celebration celebrated in the city of Madurai during the month of April.
    • It is celebrated during the Tamil month of Chithirai.
    • It lasts for one month of which the first 15 days mark the celebrations of the coronation of Goddess Meenakshi and the Marriage of Lord Sundareswara and Goddess Meenakshi.
    • The next 15 days mark the celebrations of the Journey of Lord Alagar from Kallazhagar temple in Alagar Koyil to Madurai.

    About Meenakshi Temple

    • The ancient city of Madurai, more than 2,500 years old, was built by the Pandyan king, Kulashekarar, in the 6th century B.C.
    • But the reign of the Nayaks marks the golden period of Madurai when art, architecture and learning flourished expansively.
    • The most beautiful buildings in the city including its most famous landmark, the Meenakshi temple, were built during the Nayak rule.
    • Located in the heart of the city, the Meenakshi-Sundareshwarar temple is dedicated to goddess Meenakshi, the consort of lord Shiva.
    • The sculpted pillars are adorned with the exquisite murals that celebrate the ethereal beauty of princess Meenakshi and the scenes of her wedding with Lord Shiva.
    • The pillars depict scenes from the wedding of Meenakshi and Sundareswarar. There are 985 richly carved pillars here and each one surpasses the other in beauty.
  • Foreign Policy Watch: India-Afghanistan

    Afghan peace and India’s elbow room

    The article discusses India’s exclusion from the Afghan peace process. As India seeks to fight back its exclusion there are certain issues that need to be addressed. India’s reluctance to enter into talks with the Taliban in one such issue, which needs a rethink. And there are several areas in which India needs to continue working like-the goodwill in Afghanistan, participation in assistance work, bringing together the major leaders in that country.

    India left out of the meeting on peace in Afghanistan

    • Earlier this month, the United Nations Secretariat held a meeting of what it calls the “6+2+1” group on regional efforts to support peace in Afghanistan.
    • The group includes six neighbouring countries: China, Iran, Pakistan, Tajikistan, Turkmenistan and Uzbekistan; global players the United States and Russia, and Afghanistan itself.
    • India was conspicuous by its absence from the meeting on April 16, given its historical and strategic ties with Afghanistan.
    • This has not happened for the first time, India was left out form talks similarly in 2001 and 2010.
    • In both 2001 and 2010, however, India fought back its exclusion
    • At the Bonn agreement of 2010, India played a major role in Northern Alliance accepting Hamid Karzai as the Chairman of the interim arrangement that replaced the Taliban regime.
    • After the 2010 conference, New Delhi redoubled its efforts with Kabul, and in 2011 India signed the historic Strategic Partnership Agreement, which was Afghanistan’s first such agreement with any country.

    Reasons for not inviting India

    • In 2020, the reason given for keeping India out of regional discussions on Afghanistan was ostensibly that it holds no “boundary” with Afghanistan.
    • But in fact, it is because New Delhi has never announced its support for the U.S.-Taliban peace process.
    • As planners in South Block now consider their next steps in Afghanistan, they must fight back against the idea that any lasting solution in Afghanistan can be discussed without India in the room, while also studying the reasons for such exclusions.

    Following are the issues that Indian must consider and act on as it seeks to fight back its exclusion from the peace talks.

    India’s position on Afghan-led peace process and reality

    • India’s resistance to publicly talking to the Taliban has made it an awkward interlocutor at any table.
    • Its position that only an Afghan-led, Afghan-owned, and Afghan-controlled process can be allowed is a principled one but has no takers.
    • The Ashraf Ghani government does not lead, own or control the reconciliation process today, comprising the U.S.-Taliban negotiation for an American troops withdrawal, and intra-Afghan talks on power-sharing.
    • The U.S.-Taliban peace deal means that the Taliban, will become more potent as the U.S. withdraws soldiers from the country.
    • Taliban will hold more sway in the inter-Afghan process as well, as the U.S. withdraws funding for the government in Kabul.

    Two effects of India’s position

    • New Delhi’s decision to put all its eggs in the Ghani basket has had a two-fold effect:
    • 1) Its voice in the reconciliation process has been limited.
    • 2) It has weakened India’s position with other leaders of the deeply divided democratic setup in Kabul such as the former chief executive Abdullah Abdullah.

    India should not let its diplomatic strength weaken

    • India painstakingly built up its presence inside Afghanistan since 2001.
    • This presence is being threatened anew by terror groups such as the Islamic State Khorasan Province (ISKP).
    • ISKP is believed to be backed by Pakistan’s establishment.
    • Intercepts showed that the brutal attack, in March, that killed 25 at a gurudwara in Kabul was meant for the embassy in Kabul.
    • The government cleared out both of its consulates this month.
    • While the government has said that the novel coronavirus pandemic prompted its decision to clear out both consulates.
    • The truth is that a full security reassessment is under way for them.
    • Either way, India’s diplomatic strength in Afghanistan should not appear to be in retreat just when it is needed the most.

    Goodwill in Afghanistan and damage caused due to CAA

    • The government must also consider the damage done to the vast reservoir of goodwill India enjoys in Afghanistan because of recent events in the country, especially the controversy over the Citizenship (Amendment) Act.
    • The building blocks of that goodwill are India’s assistance in infrastructure projects, health care, education, trade and food security, and also in the liberal access to Afghans to study, train and work in India.
    • Above all, it is India’s example as a pluralistic, inclusive democracy that inspires many.
    • Afghanistan’s majority-Muslim citizens have felt cut out of the move to offer fast track citizenship to only Afghan minorities.
    • The damage was also done by reports of anti-Muslim rhetoric and incidents of violence in India.

    Regain upper hand in the narrative in Afghanistan

    • While many of these are problems of perception, New Delhi must move swiftly to regain the upper hand in the narrative in Afghanistan.
    • India has provided the assistance of more than $3 billion in projects.
    • Bilateral trade is about $1 billion.
    • A $20 billion projected development expenditure of an alternate route through Chabahar.
    • And support to the Afghan National Army, bureaucrats, doctors and other professionals for training in India should assure it a leading position in Afghanistan’s regional formulation.
    • Three major projects along with hundreds of small development projects (of schools, hospitals and water projects) have cemented that position in Afghan hearts nationwide, regardless of Pakistan’s attempts to undermine that position, particularly in the South.
    • The three major projects include 1) the Afghan Parliament, 2) the Zaranj-Delaram Highway, 3)the Afghanistan-India Friendship Dam (Salma dam).

     Pursue opportunities to fulfil its role in the peace efforts

    • India must also pursue opportunities to fulfil its role in the peace efforts in Afghanistan, starting with efforts to bridge the Ghani-Abdullah divide.
    • India could also play role in bringing together other major leaders with whom India has built ties for decades.
    • It would be an utter tragedy if the Taliban were to enter the government in Kabul as the U.S. deal envisages, to find the opposing front collapse as it did in 1996.
    • An understanding between Iran and the U.S. on Afghanistan is necessary for a lasting peace as well, and India could play a mediatory part, as it did in order for the Chabahar project.

    Return of the Taliban has several implications for India. In 2013, the UPSC asked a question related to developments in Afghanistan against the backdrop of the proposed withdrawal of the International Security Assistance Force. Similarly, a question based on the latest development can be asked, for ex-“The return of Taliban after the US-Taliban deal in Afghanistan is fraught with major security implications for the countries in the region. Examine in the light of the fact that India is faced with a plethora of challenges and needs to safeguard its own strategic interests.”

    Use UN call for peace to put hostilities with Pakistan on hold

    • Finally, New Delhi should use the United Nations’s call for a pause in conflicts during the novel coronavirus pandemic, to ensure a hold on hostilities with Pakistan.
    • This will be even more difficult than it sounds given the abyss that bilateral relations have fallen into in the past year over Kashmir.

    Conclusion

    It would be a mistake, at this point, to tie all India’s support in only to Kabul or the Ghani government; the government must strive to endure that its aid and assistance is broad-based, particularly during the novel coronavirus pandemic to centres outside the capital, even if some lie in areas held by the Taliban.

  • Coronavirus – Economic Issues

    It is time to design clear rules for departure from accepted norms of fiscal prudence

    This editorial spells out the size of the stimulus package that would be required to restart the economy. It also discusses the possible sources that the government could tap to raise the revenue. Such huge expenditure is likely to result in the huge fiscal deficit which would necessitate that the stimulus is time-bound and transparent.

    Prospects of substantially negative growth

    • Arvind Subramanian has likened the current economic situation to a “pralay (deluge)”.
    • A deluge in which the government should spend more than even what it ought to in a rainy day.
    • India, the former chief economic adviser said that India must plan for a “substantially negative” growth this year that might require an additional fiscal expenditure of Rs 10 lakh crore.
    • Corporate indebtedness was already high before the lockdown.
    • Insolvency cases will mount further.
    • Even companies facing no significant cash flow issues wouldn’t invest in uncertain public health as well as the demand-constrained environment.
    • Banks, too, aren’t going to lend, no matter how much liquidity the Reserve Bank of India (RBI) may infuse.
    • The burden of non-performing assets, which is set to get heavier in the coming months, makes it impossible for them to finance an economic recovery.
    • Last, but not the least, are faced with layoffs and pay cuts, they would rather save and will be afraid to spend.

    Importance of government spending in the current situation

    • Under the circumstances, the onus for ensuring that the wheels of the economy start moving lies on the government.
    • There’s no guarantee of it happening even with all lockdown restrictions being lifted.
    • Without somebody to spend, the economy is in real danger of contraction, which will, in turn, worsen the problem of businesses going bust, joblessness and loan defaults that can spread to the entire financial services industry.

    No “3F” constraints and risk of deflationary shocks

    • The one consolation today is that India is not saddled with its traditional “3F” constraints — food, fuel and foreign exchange — which were triggers for inflation and balance of payments crises.
    • On the contrary, public foodgrain stocks are at an all-time high, global oil prices have crashed and there is no run on the rupee, unlike during the “taper tantrum” period of May-August 2013.
    • Risk of deflationary shock: The risks, if at all, are tilted more towards demand-side “deflationary shocks” than supply-side inflation concerns.

    How will the government manage the resources?

    • The finances of both the Centre and states are in a mess, with receipts from tax and non-tax sources hardly covering even existing expenditures.
    • But governments enjoy sovereign borrowing powers that allow fund-raising at rates below that of triple A-rated instruments issued by private corporates, more so in the present risk-averse scenario.
    • Also, there is the option of deficit financing (“printing money”) through the RBI subscribing to primary auctions of government securities.
    • There are, of course, costs in such powers being exercised.
    • Past precedents — whether the issuance of ad hoc Treasury Bills to the RBI prior to April 1997 or the stimulus package post the 2008 global financial crisis — do not inspire confidence.

    A question based on the stimulus package and its consequences can be framed, for ex- “Do you agree with the view that a stimulus package by the government to restart the economy is necessary? What are the options with the government to raise the money for such a package? What could the consequences of such a package on the economy in the future?”

    Conclusion

    This is the time to design clear rules for departure from accepted norms of fiscal prudence. Any stimulus has to be transparent and time-bound.

  • Coronavirus – Economic Issues

    Ease legal constraints on fiscal expenditure

    The article discusses the two legal provisions that need to be changed in order to provide a fiscal stimulus of the size that could save the economy from collapse. Other major concern after the package would be the inflationary pressure resulting from government spending.

    The urgency of the fiscal package by the Centre

    • The longer the Centre dithers over a big-bang fiscal package to counter the adverse economic fallout of covid-19, the closer it risks pushing India’s economy to the precipice of disaster.
    • The nationwide lockdown has more or less paralysed commercial activity, our exit path looks dreadfully long-winded, and the distress being seen right now could just be an early sign of what is to come.
    • The suffering of citizens will likely expand once the shutdown’s second-order effects, which operate with a lag, begin to kick in.
    • Estimates of ₹10 trillion needed by way of fiscal relief, once seen as too much by some, could yet turn out to be too little.
    • Either way, preparatory work in terms of legal enablers should be done alongside the arithmetic

    Legal constraints in the way of the stimulus programme

    • There are two major constraints that we need to be relieved of—if only temporarily—for a stimulus programme to take shape.
    • The first is the Fiscal Responsibility and Budget Management (FRBM) Act of 2003.
    • And the second is the amendment done in 2016 of the Reserve Bank of India Act to give legislative cover to a flexible inflation-targeting framework that set our central bank the task of keeping India’s retail price index within a certain band.
    • Both of these were aimed at long-term economic stability but made no allowance for a robust fiscal response to the kind of crisis we now face.
    • It would be best if these were tweaked appropriately by a special session of Parliament.
    • If not, then ordinances should be issued to suspend specific restrictions for a while.

    Projections of fiscal deficit

    • Under the budget presented in February, the Centre’s fiscal deficit for 2020-21 was projected at 3.5% of gross domestic product (GDP).
    • This included a half percentage point deviation from the FRBM glide path allowed by the law’s contingency clause.
    • Total expenditure was placed at a little over ₹30.4 trillion, and receipts at ₹22.4 trillion-plus.
    • With tax revenues and asset-sale realizations expected to fall short, the fiscal gap could widen to about ₹10 trillion even without any extra spending.
    • Drastic cuts in expenditure could save some money, but even if a heavy axe is wielded on expenses, the government’s deficit this year would have to exceed twice the legal limit for a stimulus that saves the economy from collapse.
    • If this turns out to be a year of negative growth, as some fear, effecting a revival will only get harder.
    • For pre-emptive action, the government should use its parliamentary clout to permit a limitless deficit for 2020-21.

    A question based on the limits placed by the FRBM Act and the changes brought by the amendment to the RBI Act which mandated RBI with managing the inflation could be asked by the UPSC.

    Prospects of inflationary pressure and RBI’s mandate

    • An effort to spend our way out of an economic morass could prove inflationary if too much cash ends up chasing too few goods and services.
    • As we have undergone both demand and supply shocks, opinion is divided on whether prices will go haywire.
    • This risk would depend on how much cash gets pumped around at what point in time and the pace at which supplies are restored.
    • In other words, the inflation outlook is highly uncertain.
    • But should prices threaten to rise, it would be counterproductive of the central bank to tamp them down by tightening credit.
    • As of now, RBI’s mandate is to keep inflation at 4%, with a tolerance band of 2% on either side.
    • This target is valid till March 2021, but needs to be reviewed right away to let the central bank focus on growth.
    • The acceptable range could be widened and the time limit to achieve the goal lengthened as a special reprieve.

    Conclusion

    A few tweaks of the law must go alongside calculations of a stimulus package designed to relieve economic distress. The government should act on these quickly to save the day.

  • Coronavirus – Health and Governance Issues

    Spanish Plan for Phased Easing of Lockdown

    • Spain’s Prime Minister has presented a four-phase lockdown exit strategy for the country.
    • It’s imperative for India to learn from global examples for easing lockdown without doing away with health concerns.

    With the nearing end of nationwide lockdown, various exit strategies are being discussed for a smooth restart.

    Spain’s exit strategy

    • The opening up of the lockdown will begin with phase 0 throughout Spain, except for a few islands that will already be in phase 1 by then.
    • A week later, provinces will enter phase 1, which will last for two weeks and the remaining phases will also last for two weeks each.
    • In total, the de-escalation will take at least six weeks to be complete.

    Phase 0: The preparation phase

    • De-escalations in this phase include opening up of takeaway facilities at restaurants and opening up of some other establishments such as hair salons.
    • From May 2, individuals will be able to go out for a walk or to exercise alone or with people they stay with. In this phase, professional athletes will be able to access individual training sessions.
    • Children aged 14 years or younger have been allowed to go out for walks from April 26.

    Phase 1: The initial phase

    • Begins on May 11. Small businesses will be allowed to open under strict security measures.
    • For instance, gyms can open for people who want to train individually and by appointment.
    • Further, hotels and tourist accommodations will be allowed to open, excluding the common areas and with certain restrictions in place.
    • Places of worship will also be allowed to open, limiting their capacity to one-third. Owners of terrace bars can open their establishments but with 30 per cent capacity.
    • In this phase, some degree of social contact with a limited number of people may also be allowed, subject to what the conditions are then.

    Phase 2: The intermediate phase

    • Begins on May 25.Will include the resumption of hunting and sport fishing, and the opening of cinemas and auditorium theatres at one-third of their capacity.
    • Visits to monuments and cultural facilities, such as exhibition halls and conference rooms, will resume with one-third occupancy.
    • Cultural shows will be allowed with less than 50 people in closed spaces. In the outdoors, shows and events can be held with less than 400 people provided they are seated.
    • All places of worship will have to limit their capacity to 50 per cent.

    Phase 3: The advanced phase

    • Begins on June 8 and provided the situation is under control, general mobility will be made more flexible.
    • Wearing masks will be recommended when people venture outside, especially on public transport. In commercial settings, capacities will be restricted to 50 per cent.
    • Beaches may also open in this phase. The movement of people into other provinces or islands is restricted until the de-escalation process is complete.

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