Note4Students
From UPSC perspective, the following things are important :
Prelims level: PM-KISAN
Mains level: Not Much
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)
- Working capital for maintenance of farm assets
- Purchase of combine harvesters, tractors and mini trucks
- Consumption requirements of farm households
- Construction of family house and setting up of village cold storage facility
- 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.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Global Burden of Disease (GBD) Report
Mains level: Not Much
According to the Global Burden of Disease, nearly a quarter (24.8 per cent) of all deaths in India is due to cardiovascular diseases (CVDs).
The fastest-growing economy has some perils. In this newscard, you will get to see how CVDs are a legacy of economic growth.
Global Burden of Disease (GBD) Report
- The GBD is a comprehensive regional and global research program of disease burden that assesses mortality and disability from major diseases, injuries, and risk factors.
- GBD is a collaboration of over 3600 researchers from 145 countries.
- It is based out of the Institute for Health Metrics and Evaluation (IHME) at the University of Washington and funded by the Bill and Melinda Gates Foundation.
Indian burden of CVDs
- About a third of the senior citizens have been diagnosed with hypertension, 5.2% with chronic heart disease and 2.7% with stroke
- Even an analysis of the medical certification of cause of death (MCCD) reports points to an increase in the proportion of deaths due to CVD. It went from 20.4 per cent in 1990 to 27.1 per cent in 2004.
- According to MCCD report, 2018, CVDs accounted for more than half (57%) of the total deaths in the age group of 25–69 years.
- Case fatality due to CVD in low-income countries, including India, appears to be much higher than in middle and high-income countries.
- In India, for example, the mean age at which people get the first myocardial infarction is 53 years, which is about 10 years earlier than their counterparts in developed countries.
- About a third (32 per cent) of the senior citizens have been diagnosed with hypertension, 5.2 per cent were diagnosed with chronic heart disease and 2.7 per cent with stroke.
Women are more vulnerable
- Numerous studies have also pointed out that CVD remains the number-one threat to women’s health as more women than men die annually due to these diseases.
- A Harvard study shows low high-density lipoproteins and high triglycerides appear are the main factors that increase the chances of death from cardiovascular disease in women over age 65.
- As per the LASI report, gender differences were evident in cross-state variations.
- CVD among men was higher in Kerala (45 per cent), Goa (44 per cent), Andaman and Nicobar (41 per cent) and lower in Chhattisgarh (15 per cent), Meghalaya (16 per cent), Nagaland (17 per cent).
Why CVDs are prevalent in India?
- Epidemiological evidence suggests that CVD is associated with behavioural factors such as smoking, alcohol use, low physical activity, and insufficient vegetable and fruit intake.
- In the Indian context, poverty, maternal malnutrition, and early life changes enhance an individual’s risk of CVDs.
- Rural to urban migration that happens in distress leads to over-crowded and unclean environments in urban slums.
- Problems of inadequate housing, indoor pollution, infectious diseases, inappropriate diet, stress and smoking crop up as a result.
Need of the hour
- CVD-risk prevention is one of the important priorities among India’s sustainable development goals.
- In an earlier estimate, WHO had said with India’s present CVD burden, the country would lose $237 billion from the loss of productivity and spending on healthcare over 10 years (2005–2015).
- This is because the diseases affect the country’s working population.
Way ahead
- The government should devise an approach that can improve the efficiency of care and health system preparedness to curb the CVD epidemic currently sweeping India.
- Attempts in direction to preserve the traditional lifestyle are also necessary.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Coal bidding in India
Mains level: Coal mining and legal hurdles
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:
- In India, State Governments do not have the power to auction non -coal mines.
- Andhra Pradesh and Jharkhand do not have goldmines.
- 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
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MEE Survey
Mains level: Not Much
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.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: CRZ norms
Mains level: Coastal conservation in India
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
Coastal Regulation Zone: How rules for building along coast have evolved
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Lithium ion battery
Mains level: Paper 3- Adoption of e-vehicles and challenges
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.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Marginal propensity to consume
Mains level: Paper 3- Economic recovery and 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.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Taper tantrum
Mains level: Paper 3- Challenges ahead for the RBI in withdrawing expansionary policy measures
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.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Quantum Technology
Mains level: NM-QTA
The detailed project report for a National Mission on Quantum Technology and Applications (NM-QTA) has been drawn out and finalised.
Q.Discuss various applications of quantum technology for strategic and economic development.
Story so far
- In last year’s budget session, it was proposed that ₹8,000 crores be set aside to develop quantum science and technology.
- The detailed project report is now ready and in the next couple of months, this mission might get approval.
- Recognising the importance of quantum technology, the Department of Science and Technology has also initiated a programme called QuEST to explore the possibilities and engage with the researchers.
About NM-QTA
- The mission will function under the Department of Science & Technology (DST).
- It will be able to address the ever-increasing technological requirements of society and take into account the international technology trends.
- The mission will help prepare next-generation skilled manpower, boost translational research and also encourage entrepreneurship and start-up ecosystem development.
Why need such a mission?
- Quantum technologies are rapidly developing globally with hugely disruptive potential.
- The range of quantum technologies is expected to be one of the major technology disruptions that will change the entire paradigm of computation, communication and encryption.
- It is perceived that the countries who achieve an edge in this emerging field will have a greater advantage in garnering multifold economic growth and dominant leadership role.
- It has become imperative both for government and industries to be prepared to develop these emerging and disruptive changes.
- It will establish standards to be applied to all research and help stimulate a pipeline to support research and applications well into the future.
Recent applications
- Recently, DRDO has successfully demonstrated communication between its two labs using Quantum Key Distribution (QKD) technology.
- In June 2020, China demonstrated quantum communication technology using the satellite Micius, by conducting a secret conference between two ground stations about 1,120 km apart.
- They used the satellite not to transmit the entire communication, but to simultaneously send a pair of secret keys to the two ground stations.
- Other potential applications include secure communication, fast computers that established quantum supremacy, sensors and quantum-inspired devices.
Back2Basics: Quantum Technology
- Quantum Technology is based on the principles of quantum theory, which explains the nature of energy and matter on the atomic and subatomic level.
- It concerns the control and manipulation of quantum systems, with the goal of achieving information processing beyond the limits of the classical world.
- Its principles will be used for engineering solutions to extremely complex problems in computing, communications, sensing, chemistry, cryptography, imaging and mechanics.
- This key ability makes quantum computers extremely powerful compared to conventional computers when solving certain kinds of problems like finding prime factors of large numbers and searching for large databases.
What is Quantum Mechanics?
- It is a fundamental theory in physics which describes nature at the smallest – including atomic and subatomic – scales.
- At the scale of atoms and electrons, many of the equations of classical mechanics, which describe how things move at everyday sizes and speeds, cease to be useful.
- In classical mechanics, objects exist in a specific place at a specific time.
- However, in quantum mechanics, objects instead exist in a haze of probability; they have a certain chance of being at point A, another chance of being at point B and so on.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PIDF Scheme
Mains level: Digital banking facilitation measures
The RBI has announced operational guidelines to create digital payments acceptance infrastructure across Tier III to Tier VI regions in India.
Possible prelims question:
Q. Which of the following is the major aim of Payments Infrastructure Development Fund (PIDF) recently created by the Reserve Bank of India (RBI)?
a) Promotion of UPI payments
b) Deploying Points of Sale (PoS) infrastructure
c) Creation of digital wallets
d) All of the above
PIDF Scheme
- The scheme was first announced in June last year to encourage fintech companies and banks to deploy point of sale (PoS) infrastructure across the country to improve the penetration of card-based and other digital payments.
- The primary beneficiaries will be merchants providing essential services, such as transport and hospitality, government payments, fuel pumps, healthcare facilities, and groceries.
- Amid the rapid rise in the volume of payments through the UPI network, the RBI is taking steps to further widen the use of digital payments in the country.
- The fund will be operational for three years from January 1, 2021, and would help subsidise banks and non-banks for the deployment of payments, subject to them achieving specific targets.
Why need PIDF?
- Over the years, the payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc.
- To provide further fillip to the digitization of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in under-served areas.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Various graphs of economic recovery
Mains level: Economic recovery amid coronavirus pandemic
The prospects of a K-shaped economic recovery from COVID are increasing both in India and across the world.
What is K-Shaped Recovery?
- A K-shaped recovery occurs when, following a recession, different parts of the economy recover at different rates, times, or magnitudes.
- This is in contrast to an even, uniform recovery across sectors, industries, or groups of people.
- A K-shaped recovery leads to changes in the structure of the economy or the broader society as economic outcomes and relations are fundamentally changed before and after the recession.
- This type of recovery is called K-shaped because the path of different parts of the economy when charted together may diverge, resembling the two arms of the Roman letter “K.”
Try these PYQs:
Q.Economic growth in country X will necessarily have to occur if
(a) There is technical progress in the world economy
(b) There is population growth in X
(c) There is capital formation in X
(d) The volume of trade grows in the world economy
Q. Economic growth is usually coupled with
(a) Deflation
(b) Inflation
(c) Stagflation
(d) Hyperinflation
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 explained 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 whether 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 demand dynamics
- 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.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Black Holes, Recoils
Mains level: Black holes and gravitation waves
A supermassive black hole, which is estimated to weigh up to 100 billion times the mass of the Sun, is seemingly missing, leaving astronomers perplexed.
Try this PYQ:
Q.Recently, scientists observed the merger of giant ‘blackholes’ billions of light-years away from the Earth. What is the significance of this observation?
(a) ‘Higgs boson particles’ were detected.
(b) ‘Gravitational waves’ were detected.
(c) Possibility of inter-galactic space travel through ‘wormhole’ was confirmed.
(d) It enabled scientists to understand ‘singularity’.
The ‘missing’ black hole
- The black hole is supposed to be located in Abell 2261, an enormous galaxy cluster that is about 2.7 billion light-years away from our planet.
- So, when we look at a celestial object, we are looking at how it appeared that long ago in the past.
- At 2.7 billion light-years away, the Abell galaxy is at an overwhelmingly large distance away from us.
What could have happened?
- Every large galaxy in the universe has a supermassive black hole at its centre, whose mass is millions or billions of times that of the Sun, says NASA.
- The black hole at the centre of our galaxy– the Milky Way– is called Sagittarius A*, and is 26,000 light-years away from Earth.
- Scientists have been using data gathered in 1999 and 2004 to look for the centre of the Abell galaxy, but have so far been unable to find its black hole.
- A reason for this could be that Abell’s black hole has been ejected from the centre of the galaxy.
Recoil of Black Holes
- When two black holes merge, they release what is known as gravitational waves– invisible ripples travelling at the speed of light, which squeeze and stretch anything in their path.
- As per the theory of gravitational waves, during such a merger, when the amount of waves generated in one direction is stronger than another, the new big black hole can be sent away from the centre of the galaxy into the opposite direction.
- This is known as a “recoiling” black hole.
- So far, though, scientists are yet to find definitive evidence for recoiling black holes and are still to discover whether supermassive black holes can merge and release gravitational waves.
- As of now, only mergers of significantly smaller black holes have been verified.
Why it is significant?
- The researchers assert that this may have happened because of the merging of two smaller galaxies to form Abell– a process in which both of their black holes merged to form an even bigger black hole.
- If this hypothesis turns out to be true, it would mean a major breakthrough in astronomy.
Back2Basics:
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Meteor terminology
Mains level: Study of asteroids and meteors
An asteroid which made its landfall in Mukundpura village near Jaipur has been named after the same village and is under the study of Geological Survey of India, Kolkata.
Try this question from CSP 2014:
Q.What is a coma, in the content of astronomy?
(a) Bright half of material on the comet
(b) Long tail of dust
(c) Two asteroids orbiting each other
(d) Two planets orbiting each other
Mukundpura CM2
- The meteorite named Mukundpura CM2 was classified to be a carbonaceous chondrite.
- This is a type of stony meteorite, considered the most primitive meteorite and a remnant of the first solid bodies to accrete in the solar system.
- The composition of carbonaceous chondrites is also similar to the Sun.
- Chondrites are silicate-droplet-bearing meteorites, and this Mukundpura chondrite is the fifth carbonaceous meteorite known to fall in India.
Why it is important to study meteorites?
- Meteorites are representative of asteroids.
- Asteroids are the remnant debris of the inner solar system formation process and thus offer the formation history or the building blocks of the planets.
- Therefore, by studying meteorites in the laboratory and asteroids by exploration and sample return mission we try to reconstruct the activity of early solar system events.
- Also, asteroids are often rich in volatiles and other minerals and can be exploited for future planetary exploration.
Do you know?
Meteorites are broadly classified into three groups – stony (silicate-rich), iron (Fe–Ni alloy), and stony-iron (mixed silicate–iron alloy).
Details of its study
- The study revealed that Mukundpura CM2 had experienced varying degrees of alteration during the impact.
- Some minerals like forsterite and FeO olivine, calcium aluminium rich inclusion (CAI) minerals escaped alteration.
- Few magnetites, sulphides and calcites were also found.
- Detailed spectroscopic studies revealed that the meteorite had very high (about 90%) phyllosilicate minerals comprising both magnesium and iron.
- Further X-ray studies showed it also had aluminium complexes.
Relevance to asteroids
- The results of the Mukundpura CM2 study are relevant to the surface composition of near-Earth asteroids Ryugu and Bennu.
- In October 2020, NASA’s OSIRIS-REx mission collected samples from Bennu and is expected to return in September 2023.
- Last month, Japan’s Hayabusa-2 mission landed on Earth with samples from Ryugu.
Back2Basics:
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Lithium ion batteries and their significance
Mains level: Lithium reserves in India
Alongside a move to tap into the global lithium value chain, India has initiated a concerted domestic exploration in Karnataka’s Mandya district.
Lithium reserves in Karnataka
- Preliminary surveys by the Atomic Minerals Directorate for Exploration and Research (AMD), an arm of the Department of Atomic Energy has carried out the exploration.
- AMD is carrying out surface and sub-surface exploration for lithium in potential geological domains of the country.
- Their research has shown the presence of 1,600 tonnes of lithium resources in the igneous rocks of the Marlagalla-Allapatna region of Karnataka’s Mandya district.
Must read:
Global producers of lithium
- Australia and Chile have swapped positions as the world’s leading lithium-producing country over the past decade. In 2019, the world’s Top 5 lithium producers were:
- Australia – 52.9% of global production
- Chile – 21.5%
- China – 9.7%
- Argentina – 8.3%
- Zimbabwe – 2.1%
- The U.S. ranked 7th with 1.2% of the world’s lithium production.
In 2019, the world’s Top 5 lithium reserves by country were:
-
Chile – 55.5% of the world’s total
-
Australia – 18.1%
-
Argentina – 11.0%
-
China – 6.5%
-
U.S. – 4.1%
Why is the exploration significant?
- India currently imports all its lithium needs.
- The find in Mandya is extremely small in quantitative terms, but it marks some initial success in the attempt to domestically mine the silver-white metal by way of hard-rock extraction of the ore.
- The domestic exploration push comes at a time when India has stepped up its economic offensive against China, a major source of lithium-ion energy storage products being imported into the country.
- The Marlagalla-Allapatna area is seen as among the most promising geological domains for potential exploration for lithium and other rare metals.
What lies ahead?
- India is seen as a late mover in attempts to enter the lithium value chain, coming at a time when EVs are predicted to be a sector ripe for disruption.
- 2021 is likely to be an inflexion point for battery technology – with several potential improvements to the li-ion technology, and alternatives to this tried-and-tested formulation in advanced stages of commercialization.
Back2Basic: Li-Ion battery
- Whittingham developed the first functional lithium-ion battery in 1976, Goodenough brought in a major improvement in 1980, while Yoshino made the first practical-use lithium-ion battery in 1985.
- Commercially manufactured lithium-ion batteries, based on what Yoshino had developed, made their first appearance in 1991.
Its’ working
- Batteries convert chemical energy into electricity.
- A battery comprises two electrodes, a positive cathode and a negative anode, which is separated by a liquid chemical, called an electrolyte, which is capable of carrying charged particles.
- The two electrodes are connected through an electrical circuit.
- When the circuit is on, electrons travel from the negative anode towards the positive cathode, thus generating an electric current, while positively charged ions move through the electrolyte.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Family Health Survey
Mains level: Paper 2- Problems of malnutrition and issues with it
The article suggests the ways to deal with the menace of malnutrition in the country.
Findings of the first phase of NFHS-5
- Recently, the first phase of the NFHS-5 survey was published.
- The deteriorating nutrition and anaemia indicators, especially among children is a cause for concern.
- More deterioration in nutrition indicators following the COVID-19 pandemic is feared in the next phase of NFHS-5.
- This deterioration would be on account of loss of livelihoods, reduced food consumption among the poor and disruption of government nutrition programmes.
Challenges
- Unlike a disease outbreak there may not be any popular demand to address malnutrition — the public, by and large, does not have adequate information about the damage malnutrition causes.
- Hence, in the Indian context, it becomes the responsibility of the government/civil society to first provide information and awareness to the community about malnutrition.
Steps to be taken
- The government should examine the current nutrition-related programmes, and analysing why they are not able to reduce malnutrition faster.
- Additional interventions could be introduced in pockets, identified as high-burden districts.
- There should be different norms and more intensive interventions within the ICDS for these chronically malnourished pockets.
- We need to know if the National Nutrition Policy 1993 is still operational.
- If not, it seems that we are attempting to address this problem without a policy framework or plan of action.
Addressing the root cause of malnutrition in India
The following three deficits are the root cause of malnutrition in India.
1) Dietary deficit
- There is a large dietary deficit among at least 40 per cent of our population of all age groups, shown in— the National Nutrition Monitoring Bureau’s Third Repeat Survey (2012), NFHS 4, 2015-16, the NNMB Technical Report Number 27, 2017.
- Our current interventions are not being able to bridge this protein-calorie-micronutrient deficit.
- The NHHS-4 and NFHS-5 surveys reveal an acute dietary deficit among infants below two years, and considerable stunting and wasting of infants below six months.
- Unless this maternal/infant dietary deficit is addressed, we will not see rapid improvement in our nutritional indicators.
2) Information deficit at household level
- We do not have a national IEC (information, education and communication) programme that reaches targeted households to bring about the required behavioural change regarding some basic but critical facts.
- For example, IEC tells about the importance of balanced diets in low-income household budgets, proper maternal, child and adolescent nutrition and healthcare.
3) Inequitable market conditions
- The largest deficit, which is a major cause of dietary deficiency and India’s chronic malnutrition, pertains to inequitable market conditions.
- Such market conditions deny affordable and energy-fortified food to children, adolescents and adults in lower-income families.
- The market has stacks of expensive fortified energy food and beverages for higher income groups, but nothing affordable for low-income groups.
Conclusion
Raising the diet of our people from subsistence level to higher levels of nourishment by overcoming the triple deficit is the only way to improve the nutritional indicators of our population — amongst children, adolescents and adults.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Social sector expenditure as percentage of GDP
Mains level: Paper 2- Need to invest more in the social sector in the post pandemic world
The article highlights the need for more focus on the social sector in the post-Covid society and suggest ways to do the same.
Why focus on social sector
- No country has progressed without investing in the social sector.
- India is committed to achieving the Sustainable Development Goals (SDGs) by 2030, and social sector development is important in reaching them.
- Progress in this sector has intrinsic (for its own sake) and instrumental (for higher growth) value.
- It is needed even to build a $5 trillion economy faster.
India’s social sector expenditure
- India’s progress in the social sector has been much slower compared to its GDP growth.
- In the social sector expenditure, the share of education as a percentage of GDP has been stagnant around 2.8-3 per cent during 2014-15 to 2019-20.
- In the case of health, the expenditure as a percentage of GDP increased from 1.2 per cent to 1.5 per cent.
- This is lower than the required 2-3 per cent of GDP.
- An increase in health expenditure is also important to take care of the present and future pandemics.
- There are supply side problems regarding the health infrastructure.
- It is essential to have a huge increase in public expenditure on health and provide accessible, affordable and quality health coverage to all.
Following are some key issues in the social sector India needs to focus on.
1) The problem of undernutrition
- The NFHS-5 report shows that malnutrition level has reduced marginally in a few states and has worsened in some other states between 2015-16 and 2019-20.
- We can’t have a society with 35 per cent of our children suffering from malnutrition.
- Apart from undernutrition, obesity seems to be increasing in both rural and urban areas.
- There is a need to raise allocations for ICDS and other nutrition programmes.
- The determinants of nutrition are agriculture, health, women’s empowerment, including maternal and child practices, social protection, nutrition education, sanitation and drinking water.
- The Poshan Abhiyan is a good programme, but has to cover all these determinants with a multi-pronged approach to reduce undernutrition.
2) Quality education
- Quality education is key for raising human development.
- The pandemic has enhanced inequalities in education and has revealed the widening digital gap.
- Equality of opportunity in terms of quality education is the key for raising human development and for reducing inequalities in the labour market.
- Several committees have recommended that public expenditure on education should be at 6 per cent of GDP.
3) Social safety nets
- It is known that migrant workers were the most affected during the pandemic and that they do not have any safety nets.
- There is a need to have safety nets like an employment guarantee scheme for the urban poor and facilities for migrants.
- Similarly in rural areas, allocations to MGNREGA have to be increased because of the reverse migration.
4) Programs for vulnerable section need to be continued
- The government has done well in providing cooking gas through Ujjwala Yojana and electricity through Saubhagya Yojana, introducing programmes such as Swachh Bharat Abhiyan and initiatives for housing, financial inclusion and providing loans to the self-employed.
- These programmes have helped the vulnerable sections, particularly women.
- Another initiative of the government was to facilitate direct benefit transfers (DBT) for welfare schemes.
- These initiatives have to be continued.
Way forward
- The government should give more focus to the social sector with better policies and implementation.
- It has to work closely with the states in revitalising the social sector as major expenditures particularly on health and education are met by them.
- The 15th Finance Commission also seems to have mentioned that health expenditure should be increased to 2.1 per cent of GDP.
- The Commission may also suggest some incentives for states to increase health expenditure.
- Both Centre and states should have a five-year vision on the social sector.
Consider the question “No country has progressed without investing in the social sector. In the post pandemic world India needs to chart the plan to invest more in the sector. In light of this, examine the challenges in the social sector and suggest the ways to deal with them.
Conclusion
India, aspiring to be a global power, should have a harmonious and inclusive social sector development. This is also important for achieving the SDGs, reducing inequalities and building a $5 trillion economy faster.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Idea of universal basic income
Mains level: Paper 2- Remuneration to women for domestic work and issues with it
Recently, a political party promised salaries to housewives as a part of its electoral campaign in Tamil Nadu. This led to the debate on the issue. The article deals with the issue.
Salary for housework: Historical background
- Demand for wages against housework was first raised at the third National Women’s Liberation conference in Manchester, England.
- In 2012, the then minister for Women and Child development announced that the government was considering mandating a salary for housework to wives, from husbands.
- The purpose, once again, was to empower women financially and help them live with dignity.
Recognising the value of unpaid domestic work
- Time-use data from 2019 gathered by the National Sample Survey Organisation revealed that only about a quarter of men and boys above six years engaged in unpaid household chores, compared to over four-fifths of women.
- Every day, an average Indian male spends 1.5 hours per day in unpaid domestic work, compared to about five hours by a female.
- Housework demands effort and sacrifice, 365 days a year, 24/7.
Issues with paying for domestic work
- Asking men to pay for wives’ domestic work could further enhance their sense of entitlement.
- It may also put the additional onus on women to perform.
- There is a risk of formalising the patriarchal Indian family where the position of men stems from their being “providers” in the relationship.
Way forward
- Despite a legal provision, equal inheritance rights continue to be elusive for a majority of women.
- More than creating a new provision of salary for housework, we need to strengthen awareness, implementation and utilisation of other existing provisions.
- Starting from the right to reside in the marital home, to streedhan and haq meher, to coparcenary and inheritance rights as daughters and to basic services, free legal aid and maintenance in instances of violence and divorce.
- Women should be helped to reach their full potential through quality education, access and opportunities of work, gender-sensitive and harassment-free workplaces and attitudinal and behaviour change within families to make household chores more participative.
Conclusion
Just like we do not want women to commodify their reproductive services because of their inherently exploitative nature — we have, therefore, banned commercial surrogacy in the country — let us not allow commodification of housework and personal care.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Telecom Spectrum
Mains level: Read the attached story
In the spectrum auctions scheduled to begin on March 1this year, the government plans to sell spectrum for 4G in the 700, 800, 900, 1,800, 2,100, 2,300, and 2,500 MHz frequency bands.
Q.What are the various challenges faced by India’s telecom before the upgradation to 5G technology?
What is Spectrum?
- Devices such as cellphones and wireline telephones require signals to connect from one end to another.
- These signals are carried on airwaves, which must be sent at designated frequencies to avoid any kind of interference.
- The Union government owns all the publicly available assets within the geographical boundaries of the country, which also include airwaves.
- With the expansion in the number of cellphones, wireline telephone and internet users, the need to provide more space for the signals arise from time to time.
Spectrum allocations
- Spectrum refers to the invisible radio frequencies that wireless signals travel over. The frequencies we use for wireless are only a portion of what is called the electromagnetic spectrum.
- To sell these assets to companies willing to set up the required infrastructure to transport these waves from one end to another, the central government through the DoT auctions these airwaves from time to time.
- These airwaves called spectrum is subdivided into bands which have varying frequencies.
- All these airwaves are sold for a certain period of time, after which their validity lapses, which is generally set at 20 years.
Why is spectrum being auctioned now?
- The last spectrum auctions were held in 2016 when the government offered 2,354.55 MHz at a reserve price of Rs 5.60 lakh crore.
- Although the government managed to sell only 965 MHz – or about 40 per cent of the spectrum that was put up for sale.
- The need for a new spectrum auction has arisen because the validity of the airwaves bought by companies is set to expire in 2021.
How is the spectrum priced?
- The reserve price of all these bands together has been fixed at Rs 3.92 lakh crore.
- Depending on the demand from various companies, the price of the airwaves may go higher, but cannot go below the reserve price.
How will the payment plan work?
- As part of the deferred payment plan, bidders for the sub-1 GHz bands of 700, 800 and 900 MHz can opt to pay 25 per cent of the bid amount now, and the rest later.
- In the above-1 GHz bands of 1,800, 2,100, 2,300, and 2,500 MHz frequency bands, bidders will have to pay 50 per cent upfront, and can then opt to pay the rest in equated annual instalments.
- The successful bidders will, however, have to pay 3 per cent of Adjusted Gross Revenue (AGR) as spectrum usage charges, excluding wireline services.
Who is likely to bid for the spectrum?
- All major private telecom players in India are eligible contenders to buy additional spectrum to support the number of users on their network.
- Apart from these three, new companies, including foreign companies, are also eligible to bid for the airwaves.
- Foreign companies, however, will have to either set up a branch in India and register as an Indian company or tie-up with an Indian company to be able to retain the airwaves after winning them.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: First Advance Estimates
Mains level: India's GDP related issues
The Ministry of Statistics and Programme Implementation released the First Advance Estimates (FAE) for the current financial year.
What do estimates show?
- According to MoSPI, India’s gross domestic product (GDP) — the total value of all final goods and services produced within the country in one financial year — will contract by 7.7 per cent in 2020-21.
- The first advance estimates of GDP, obtained by extrapolation of seven months’ data, are released early to help officers in the Finance Ministry and other departments in framing the broad contours of Union Budget 2021-22.
What are the First Advance Estimates of GDP?
- For any financial year, the MoSPI provides regular estimates of GDP. The first such instance is through the FAE.
- The FAE for any particular financial year is typically presented on January 7th.
- Their significance lies in the fact that they are the GDP estimates that the Union Finance Ministry uses to decide the next financial year’s budget allocations.
- The FAE will be quickly updated as more information becomes available.
- On February 26th, MoSPI will come out with the Second Advance Estimates of GDP for the current year.
How is the FAE arrived at before the end of the concerned financial year?
- The FAE are derived by extrapolating the available data. (Hope you remember Newtons’ interpolation and extrapolation from XII std.)
- According to the MoSPI, the approach for compiling the Advance Estimates is based on Benchmark-Indicator method.
- The sector-wise estimates are obtained by extrapolating indicators such as-
- Index of Industrial Production (IIP) of the first 7 months of the financial year
- Financial performance of listed companies in the private corporate sector available up to quarter ending September 2020
- The 1st Advance Estimates of crop production,
- The accounts of central & state governments,
- Information on indicators like deposits & credits, passenger and freight earnings of Railways, passengers and cargo handled by civil aviation, cargo handled at major seaports, sales of commercial vehicles, etc., available for first 8 months of the financial year.
How is the data extrapolated?
- In the past, extrapolation for indicators such as the IIP was done by dividing the cumulative value for the first 7 months of the current financial year by average of the ratio of the cumulative value of the first 7 months to the annual value of past years.
- So if the annual value of a variable was twice that of the value in the first 7 months in the previous years then for the current year as well the annual value is assumed to be double that of the first 7 months.
- However, this year, because of the pandemic there were wide fluctuations in the monthly data. Moreover, there was a significant drop, especially in the first quarter, on many counts.
- That is why the usual projection techniques would not have yielded robust results.
- As such, MoSPI has tweaked the ratios for most variables.
What are the key takeaways from the First Advance Estimates for 2020-21?
There are 7 key takeaways.
#1 GDP Growth Rate:
- In the context of recent history, the 7.7 per cent contraction in GDP is a sharp one considering that India has registered an average annual GDP growth rate of 6.8 per cent since the start of economic liberalisation in 1992-93.
#2 Absolute level of real GDP:
- At Rs 134.4 lakh crore, India’s real GDP — that is, GDP without the influence of inflation — in 2020-21 will be lower than the 2018-19 level.
- In other words, from the start of the next financial year, India would first have to raise its GDP back to the level it was at in 2019-20 (Rs 143.7 lakh crore).
#3 Per Capita GDP:
- While the GDP provides an all-India aggregate, per capita GDP is a better variable if one wants to understand how an average India has been impacted.
- India’s per capita GDP will fall to Rs 99, 155 in 2020-21.
- In fact, while the overall real GDP will fall by 7.7 per cent, per capita real GDP will fall by 8.7 per cent.
#4 Absolute level of real Gross Value Added (or GVA):
- The GVA provides a picture of the economy from the supply side.
- It maps the value-added by different sectors of the economy such as agriculture, industry and services. In other words, GVA provides a proxy for the income earned by people involved in the various sectors.
- This fiscal, at Rs 123.4 lakh crore, India’s real GVA level, too, will fall below the 2018-19 level.
#5 Absolute level of Private Final Consumption Expenditure (PFCE):
- India’s overall GDP can be divided into four main sections. The biggest demand for goods and services comes from private individuals trying to satisfy their consumption needs.
- Typically this would include all the things — be it toothpaste or a car — that you and your family members buy in their private individual capacity.
- This demand is called PFCE and it constitutes over 56 per cent of the total GDP.
#6 Per capita PFCE:
- Just like per capita GDP, the per capita PFCE is also a relevant metric as it shows how much does an average Indian spend in his/her private capacity.
- Typically, with rising incomes standards, such consumption levels also rise.
- However, at Rs 55,609, per capita, PFCE will fall below the 2017-18 level.
#7 Absolute level of Gross Fixed Capital Formation (GFCF):
- The second biggest component of GDP is called GFCF and it measures all the expenditures on goods and services that businesses and firms make as they invest in their productive capacity.
- So if a firm buys computers and software to increase the overall productivity then it will be counted under GFCF.
- This type of demand accounts for close to 28 per cent of India’s GDP. Taken together, private demand and business demand account for almost 85 per cent of all GDP.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Insects as bioindicators
Mains level: Not Much
This newscard is an excerpt from the original article published in the DownToEarth. It talks about the ecological importance of insects.
Try this PYQ:
Q.Consider the following:
- Birds
- Dust blowing
- Rain
- Wind blowing
Which of the above spread plant diseases?
(a) 1 and 3 only
(b) 3 and 4 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4
Various threats to insects
- Insects are increasingly susceptible to extinction due to increasing climate crisis.
- They form the basal part of the food pyramid and impact our agriculture ecosystems as well as human health.
- Their extinction can have a cascading effect on the upper levels of the food pyramid.
- Rampant and indiscriminate use of chemicals in commercial agricultural practices, mainly monocropping systems, has been taking a toll on insects in the vicinity of farmlands and plantations.
- While everyone is talking about sustainability in agriculture, the role of insects has largely been ignored.
A few common insects whose existence is taken for granted and their ecological relevance are:
(1) Butterflies
- They are important pollinators like bees.
- Species diversity and density of butterfly indicate a good diversity of plants in an area. Several types of butterflies have specific host plants.
- Climate change, forest degradation, habitat loss, unavailability of hosts and nectar plant species are among major reasons for a decline in butterfly population.
- This leads to loss of plants species that depend on the butterflies for pollination.
- Backyard gardening and growing host plants in public spaces are important strategies to conserve butterfly species.
(2) Dragonflies
- They are one of the most widely recognised insects, need clean aquatic systems and are hence a good indicator of the health of local aquatic systems.
- These, along with damselflies, are well-known biological predators with both larvae and adults acting as natural bio-control agents.
- They are highly sensitive to changes in their habitats and are declining due to increasing habitat loss, anthropogenic activities, pollutants, climate change and rapid urbanisation.
- For their conservation, use of chemical fertilizers and pesticides has to be prohibited or minimized in agriculture systems.
(3) Grasshoppers
- They feed on different plants and can cause serious damage to economic crops.
- However, in a biodiversity-rich region, they are an important component of the food chain, being an important food source for many birds.
- Grasshoppers and insects such as crickets are often consumed by people as they are rich in protein.
(4) Ants
- They are in the most abundance. Ants act as scavengers/decomposers by feeding on organic wastes and other dead animals.
- Ants also aerate the soil.
- Heavy use of chemicals in agriculture causes harm to ants.
(5) Wild honey bees
- They play a major role in the pollination of forest species affecting cross-pollination and maintenance of variability within species.
- Wild honey is also a food source for humans and many wild animals.
- When forest covers are lost, wild bees tend to migrate to newer areas where they may or may not adapt.
- With the possibility of commercial apiaries, wild bees need to be left alone and honey tapping from wild hives discouraged.
- This can help sustain the natural processed of pollination among forest species and maintain diversity in plants conventionally propagated through seeds.
(6) Rainbow leaf beetles
- They are found in forests, woodlands and mountain grasslands.
- They mostly depend on leaves and flowers of some specific plant family like Apocynaceae.
- These are listed as endangered species in International Union for Conservation of Nature from 1994.
- The species is also known to be poisonous to its predators for they feed on dogbane that contains poisonous cardenolides.
(7) Fireflies
- They are a good indicator of a healthy environment, especially a good aquatic system. They avoid regions with chemical toxicity.
- They are good pollinators and natural pest control agents in several ecosystems.
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