💥UPSC 2027,2028 Mentorship (May Batch) + Access XFactor Notes & Microthemes PDF
Talk to mentor

Civilsdaily

Login

Search results for: “”

  • How policy can bridge the gap

    Context

    India must use the windfall from oil to provide assistance to the most vulnerable to mitigate the impact due to COIVD-19 outbreak.

    Estimates of impact

    • Impact on major economies: Minus 40 per cent, -30 per cent, -22 per cent, and -14 per cent. These are the estimated impacts (at an annualised rate) on the quarterly growth rates of China, the UK, Eurozone, and the US because of the Covid-19 virus.
    • Even excluding China and those that are closely tied to its supply chain — Korea and Taiwan — emerging markets (EM) are expected to go into recession in the first half of 2020, with the second quarter taking the biggest hit at over an 8 per cent quarterly decline.
    • Impact on India: India will not be spared this growth shock. In fact, the economic impact could be deeper and longer in emerging markets where the capacity of public health systems is limited at the best of times.

    Prospects of recovery

    • Sudden stop to economic activity: We also know from the experiences of the countries already infected that the way to control the spread of the virus is through aggressive containment and social distancing that inevitably brings economic activity to a sudden stop.
    • There doesn’t seem to be a middle path. We also know that unlike natural catastrophes like earthquakes, capital stock is not destroyed by the virus.
    • Sharp recovery and conditions: Once the containment period is over and social interaction normalises, there is every reason to believe that activity can recover very sharply.
    • Unless the containment period is long because of capacity constraints in the healthcare system which could turn supply chain disruptions into a long-term problem, or the credit stress created by the lack of earning by households and firms during the sudden stop stymies the recovery.

    India needs to brace itself

    • Unfortunately, India, where the virus still appears to be in the early stage, needs to brace for such a sudden stop.
    • The lockdown could be for an extended period given the already stretched public health system.
    • Impact on urban economy: The swathe of the economy that depends on social interaction — retail sales, entertainment, restaurants, and importantly construction and manufacturing — is very large.
    • Even if one believes that rural areas with relatively low population densities will not be affected much, the impact on urban economic activity could be very large.

    Role of economic policy

    • What is the role of economic policy in such circumstances? It needs to “bridge the gap” between the brutal downturn and the eventual recovery.
    • While public health policies force a sudden stop in the economy to save lives, economic policies need to ensure that the impact from the shutdown is cushioned, incomes of households and firms supported, credit stress is contained, and the recovery is not hamstrung by policy headwinds.
    • This requires policy support to be operated on various fronts.
    • Role of the Central bank: Central banks not only need to cut rates but also need to provide adequate liquidity and extend regulatory forbearance to prevent credit stress and non-performing loans from clogging up the already strained financial system when the economy starts to recover.
    • Role of fiscal policy: The role of fiscal policy is even larger, from direct and indirect tax cuts or postponement to targeted credit support for sectors that are likely to be most affected such as airlines and retail trade.
    • Support to the vulnerable: The key is income support to the most vulnerable: From daily wage earners to SMEs (small and medium enterprises).
    • Using JAM trinity for cash transfer: It is here that the government’s efforts over the last five years make India one of the best-placed economies to deliver such cash transfers.
    • Since 2015, substantial time, effort, and resources have been expended to establish Jan Dhan (bank accounts), Aadhaar and mobile banking (JAM), and Mudra, the programme that dispenses loans to SMEs.
    • The objective of JAM and Mudra is to use Aadhaar as a way of accurately identifying beneficiaries and use mobile banking to digitally and seamlessly transfer cash/subsidies directly to households’ bank accounts and provide loans to SMEs without any leakages.
    • According to government reports, the total number of Jan Dhan accounts stand at around 380 million and 59 million MUDRA loans were sanctioned last year.
    • For a country with a population of 1.3 billion and about 63 million SMEs, even if there are duplicate accounts, JAM and Mudra should be able to cover almost all households and SMEs.
    • With Aadhaar accurately targeting beneficiaries, leakages should be minimised. If there ever was a time that India needed JAM and Mudra it is now.

    Issue of fiscal space and solution

    • Some will argue that India doesn’t have the fiscal space. But it does.
    • Use oil windfall: In the last month or so, the crude oil price has dropped from around $60/bbl to around $30 and is likely to stay at this level given the breakdown in agreement among oil-producing countries and the massive collapse in global demand.
    • If the government simply taxed the oil windfall by raising excise duties, as it did during the 2014-15 oil price collapse, it could potentially raise almost 1 per cent of GDP or a staggering Rs 2.25 trillion.
    • If 50 million households have to be provided assistance because of the shutdown, it comes to about Rs 14,000 per month for three months or about Rs 24,000 a month to half of the 63 million SMEs.
    • And this without even having to increase this year’s budgeted deficit.

    Conclusion

    The government might have other uses for the oil windfall. But if India is forced into lockdown, the economic costs will be very large and the recovery will crucially depend on whether the pilot-light of the economy is kept lit through this period. This critically requires income transfers to vulnerable households and SMEs. India cannot complain that it does not have the fiscal space or the infrastructure to provide it.

  • [Prelims Spotlight] Important Keywords Regarding Budget, Fiscal Policy and Taxation

     

    Prelims Spotlight is a part of “Nikaalo Prelims 2020” module. This open crash course for Prelims 2020 has a private telegram group where PDFs and DDS (Daily Doubt Sessions) are being held. Please click here to register.

    24 March 2020

    Important keywords regarding budget, fiscal policy and taxation

     

    Annual financial statement:

    The Union Budget is the annual financial statement that contains the government’s revenue and expenditure for a fiscal year.

    It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.

    The statement details the revenues from all sources, and expenditure on all activities that the government will undertake for the fiscal year. The fiscal year is calculated from 1 April-31 March.

    Under Article 112 of the Constitution, the government has to present a statement of estimated revenue and expenditure for every fiscal. This statement is called the annual financial statement. This document is divided into three sections: For each of these funds, the central government is required to present a statement of revenue and expenditure.

    1. Consolidated Fund:

    The Consolidated Fund of India, created under Article 266 of the Indian Constitution, includes the revenues received by the government and expenses made by it.

    All the revenue that the government receives through direct (income tax, corporation tax etc.) or indirect tax (Goods and Services Tax or GST) go into the Consolidated Fund of India.

    Revenue from non-tax sources like dividends, profits from the PSUs, and income from general services also contribute to the fund. Recoveries of loans, earnings from disinvestment and repayment of debts issued by the Centre also contribute to the fund.

    However, no money can be withdrawn for meeting expenses until the government gets the approval of the Parliament. Examples of expenditure include wages, salaries and pension of government employees, and other fixed costs. The repayment of debts incurred by the government is also done through the Consolidated Fund of India.

    The Consolidated Fund of India is divided into five parts:

    • Revenue account – receipts,
    • Revenue account – disbursements,
    • Capital account – receipts,
    • Capital account – disbursements, and
    • Disbursements ‘charged’ on the Consolidated Fund of India.

    Disbursements ‘charged’ on the Consolidated Fund of India is a special category within the Consolidated Fund of India which is not put to vote in the Parliament.

    This means whatever comes under this category need to be paid, whether the Budget is passed or not.

    The salary and allowances of the President, speaker and deputy speaker of the Lok Sabha, chairman and deputy chairman of the Rajya Sabha, salaries and allowances of Supreme Court judges, pensions of Supreme Court and High Court judges come under this category.

    2.Contingency fund:

    Like the Consolidated Fund of India, the Contingency Fund of India constitutes a part of the annual financial statement.

    Established under Article 267(1) of the Indian Constitution, the fund is maintained by the ministry of finance on behalf of the President of India.

    As the name suggests, the Contingency Fund of India is an account maintained for meeting expenses during any unforeseen emergencies.

    Parliamentary approval for such unforeseen expenditure is obtained, ex- post-facto, and an equivalent amount is drawn from the Consolidated Fund of India to recoup the Contingency Fund after such ex-post-facto approval.

    3. Public account.

    Article 266 of the Constitution defines the Public Account as being those funds that are received on behalf of the Government of India.

    Money held by the government in a trust — such as in the case of Provident Funds, Small Savings collections, income of government set apart for expenditure on specific objects like road development, primary education, reserve/special Funds, etc — are kept in the Public Account.

    Public Account funds do not belong to the government and have to be finally paid back to the persons and authorities that deposited them.

    Parliamentary authorisation for such payments is not required.

    However, when money is withdrawn from the Consolidated Fund with the approval of Parliament and kept in the Public Account for expenditure for a specific purpose, it is submitted for a vote in Parliament.

    Appropriation bill

    Appropriation Bill is a money bill that allows the government to withdraw funds from the Consolidated Fund of India to meet its expenses during the course of a financial year.

    As per Article 114 of the Constitution, the government can withdraw money from the Consolidated Fund only after receiving approval from Parliament.

    To put it simply, the Finance Bill contains provisions on financing the expenditure of the government, and Appropriation Bill specifies the quantum and purpose for withdrawing money.

    Vote-on-account

    The Constitution says that no money can be withdrawn by the government from the Consolidated Fund of India except under appropriation made by law.

    For that, an appropriation bill is passed during the Budget process.

    However, the appropriation bill may take time to pass through the Parliament and become a law. Meanwhile, the government would need permission to spend even a single penny from April 1 when the new financial year starts.

    Vote on the account is the permission to withdraw money from the Consolidated Fund of India in that period, usually two months.

    Vote on the account is a formality and requires no debate. When elections are scheduled a few months into the new financial year, the government seeks vote on account for four months. Essentially, vote on account is the interim permission of the parliament to the government to spend money.

    Corporation tax:

    Corporation tax is a direct tax imposed on the net income or profit that enterprises make from their businesses. Companies, both public and privately registered in India under the Companies Act 1956, are liable to pay corporation tax. This tax is levied at a specific rate according to the provisions of the Income Tax Act, 1961.

    Fringe benefits tax (FBT):
    The taxation of perquisites – or fringe benefits – provided by an employer to his employees, in addition to the cash salary or wages paid, is fringe benefits tax. It was introduced in Budget 2005-06. The government felt many companies were disguising perquisites such as club facilities as ordinary business expenses, which escaped taxation altogether. Employers have to now pay FBT on a percentage of the expense incurred on such perquisites.

    Direct Tax:

    A direct tax is paid directly by an individual or organization to the imposing entity. A taxpayer, for example, pays direct taxes to the government for different purposes, including real property tax, personal property tax, income tax, or taxes on assets. Direct taxes are based on the ability-to-pay principle. This economic principle states that those who have more resources or earn a higher income should pay more taxes.

    Indirect Tax
    In the case of indirect taxes, the incidence of tax is usually not on the person who pays the tax. These are largely taxes on expenditure and include Customs, excise and service tax.

    Indirect taxes are considered regressive, the burden on the rich and the poor is alike. That is why governments strive to raise a higher proportion of taxes through direct taxes. Moving on, we come to the next important receipt item in the revenue account, non-tax revenue.

    Non-tax revenue:

    Other than taxation being a primary source of income, the government also earns a recurring income, which is called non-tax revenue. While sources of tax revenue are few, the sources of non-tax revenue are many, with the number of collections per source. Although there are many sources of non-tax revenue, the amount per source is much less than that for tax revenue.

    For example, when citizens use services offered by the government, they pay bills, which are categorised as non-tax revenue, as the government provides infrastructure support to implement the services. Non-tax revenue also includes the interest collected by the government on the loans or funds offered to states.

    Grants-in-aid and contributions
    The third receipt item in the revenue account is relatively small grants-in-aid and contributions. These are in the nature of pure transfers to the government without any repayment obligation.
    These include expense incurred on organs of state such as Parliament, judiciary and elections. A substantial amount goes into administering fiscal services such as tax collection. The biggest item is the interest payment on loans taken by the government. Defence and other services like police also get a sizeable share. Having looked at receipts and expenditure on revenue account we come to an important item, the difference between the two, the revenue deficit.

    Revenue deficit:

    Revenue deficit arises when the government’s revenue expenditure exceeds the total revenue receipts.

    Revenue deficit includes those transactions that have a direct impact on a government’s current income and expenditure. This represents that the government’s own earnings are not sufficient to meet the day-to-day operations of its departments. Revenue deficit turns into borrowings when the government spends more than what it earns and has to resort to the external borrowings.

                   Revenue Deficit= Total revenue receipts – Total revenue expenditure.

    Revenue Deficit deals only with the government’s revenue receipts and revenue expenditures.

    Note that revenue receipts are receipts which neither create liability nor lead to a reduction in assets.

    It is further divided into two heads:

    • Receipt from Tax (Direct Tax,  Indirect Tax)
    • Receipts from Non-Tax Revenue

    Revenue Expenditure is referred to as the expenditure that does not result in the creation of assets reduction of liabilities. It is further divided into two types

    • Plan revenue expenditure
    • Non-plan revenue expenditure

    Fiscal Deficit:
    The fiscal deficit is defined as an excess of total budget expenditure over total budget receipts excluding borrowings during a fiscal year. In simple words, it is the amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing. The fiscal deficit is a measure of how much the government needs to borrow from the market to meet its expenditure when its resources are inadequate.

    Primary deficit:

    Primary deficit is defined as a fiscal deficit of current year minus interest payments on previous borrowings.

             Primary deficit= Fiscal deficit – Interest payment on the previous borrowing

    In other words, whereas fiscal deficit indicates borrowing requirement inclusive of interest payment, the primary deficit indicates borrowing requirement exclusive of interest payment (i.e., amount of loan).

    We have seen that borrowing requirement of the government includes not only accumulated debt, but also interest payment on the debt. If we deduct ‘interest payment on debt’ from borrowing, the balance is called the primary deficit.

    Public debt:

    Public debt receipts and public debt disbursals are borrowings and repayments during the year, respectively. The difference is the net accretion to the public debt. Public debt can be split into internal (money borrowed within the country) and external (funds borrowed from non-Indian sources). Internal debt comprises treasury bills, market stabilisation schemes, ways and means advance, and securities against small savings.

    Ways and means advance (WMA):

    One of RBI’s roles is to serve as banker to both central and state governments. In this capacity, RBI provides temporary support to tide over mismatches in their receipts and payments in the form of ways and means advances.

    CESS:
    This is an additional levy on the basic tax liability. Governments resort to cess for meeting specific expenditure.

    Dividend distribution tax:

    A dividend is a return given by a company to its shareholders out of the profits earned by the company in a particular year. Dividend constitutes income in the hands of the shareholders which ideally should be subject to income tax.

    However, the income tax laws in India provided for an exemption of the dividend income received from Indian companies by the investors by levying a tax called the Dividend Distribution Tax (DDT) on the company paying the dividend. This tax has been abolished in the 2020-21 budget.

    FRBM Act 2003:

    The Fiscal Responsibility and Budget Management Act (FRBM Act), 2003, establishes financial discipline to reduce the fiscal deficit.

    What are the objectives of the FRBM Act?

    The FRBM Act aims to introduce transparency in India’s fiscal management systems. The Act’s long-term objective is for India to achieve fiscal stability and to give the Reserve Bank of India (RBI) flexibility to deal with inflation in India. The FRBM Act was enacted to introduce a more equitable distribution of India’s debt over the years.

    Key features of the FRBM Act

    The FRBM Act made it mandatory for the government to place the following along with the Union Budget documents in Parliament annually:

    1. Medium Term Fiscal Policy Statement

    2. Macroeconomic Framework Statement

    3. Fiscal Policy Strategy Statement

    The FRBM Act proposed that revenue deficit, fiscal deficit, tax revenue and the total outstanding liabilities be projected as a percentage of gross domestic product (GDP) in the medium-term fiscal policy statement.

     

  • Not an unfettered right

    Context

    The UN High Commissioner for Human Rights filed an application seeking to intervene as amicus curiae in the pending litigation in the Supreme Court against the Citizenship (Amendment) Act, 2019.

    What are the implications of intervention?

    • Concern over international attention: That the case has attracted the attention of the international human rights agency is a matter of concern for the Indian government.
    • International law principles: The intervention may enable the Supreme Court to read in public international law principles in determining the constitutionality of CAA.
    • Law on concepts of sovereignty: Ultimately, this would assist in laying down the law on concepts of sovereignty in addition to determining the obligations of a nation-state to the international community at large.

    Why the intervention matters?

    • Basis of the application: The application is based on the belief that the High Commissioner’s intervention will provide the Court “with an overview of the international human rights norms and standards with respect to the state’s obligations to provide international protection to persons at risk of persecution in their countries of origin”.
    • This application stands out for a number of reasons.
    • First, this is a voluntary application rather than at the invitation of the Supreme Court.
    • Second, she accepts that India is a state party and signatory to various international conventions including the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Culture Rights which contain important non-discrimination clauses, including on the ground of religion.
    • India’s obligations towards migrants: India is obliged, under international law, to ensure that migrants in its territory or under its jurisdiction receive equal and non-discriminatory treatment regardless of their legal status or the documentations they possess.
    • Locus standi issue raised by India: In response, the External Affairs Ministry argued that “no foreign party has any locus standi on issues pertaining to India’s sovereignty”.
    • The High Commissioner has filed similar amicus curiae briefs on issues of pubic importance before a range of international and national judicial fora.
    • A precedent for future: This intervention, if permitted, would serve as a precedent for a number of future applications. It would also provide an opportunity for the Supreme Court to lay down the law on whether such applications interfere with national sovereignty.

    Sovereignty as responsibility

    • Defining sovereignty: International Court of Justice judge James Crawford defines sovereignty as, among other things, the “capacity to exercise, to the exclusion of other states, state functions on or related to that territory, and includes the capacity to make binding commitments under international law” and states that “such sovereignty is exercisable by the governmental institutions established within the state”.
    • Sovereignty in Indian Constitution: The Preamble to the Constitution lays out the position, wherein the people of India have resolved to constitute the Indian Republic into a sovereign and not just any one authority.
    • As such, the courts (judiciary), the government (executive) and elected legislatures (legislature) are equally sovereign authorities.
    • No one can claim exclusivity over sovereignty. Furthermore, Article 51 (c) of the Constitution directs the state to “foster respect for international law”.

    Responsibility to citizens and the international community

    • Responsibility of political authority: According to the International Commission on Intervention and State Sovereignty, “national political authorities are responsible to the citizens internally and to the international community through the UN”.
    • Constraints on sovereignty: Therefore, it is trite to say that an authority’s right to sovereignty is not unfettered. It is subject to constraints including the responsibility to protect its citizenry and the larger international community.
    • Extending Article 14: Furthermore, Article 14 extends the right to equality to all persons, which is wider than the definition of citizens. Even illegal immigrants shall, consequently, be treated by the government in a manner that ensures equal protection of Indian laws.

    Conclusion

    It is hoped that the Supreme Court will conclude that the intervention is necessary as the Court would benefit from the High Commissioner’s expertise in public international law principles.

  • Picking up the quantum technology baton

    Context

    With the Budget announcement providing direction for the development in quantum technology, the stakeholders need to roll-out the national mission quickly.

    Pushing India into second quantum revolution

    • Budgetary allocation for NM-QTA: In the Budget 2020 speech, Finance Minister Nirmala Sitharaman made a welcome announcement for Indian science — over the next five years she proposed spending ₹8,000 crores (~ $1.2 billion) on a National Mission on Quantum Technologies and Applications.
    • This promises to catapult India into the midst of the second quantum revolution, a major scientific effort that is being pursued by the United States, Europe, China and others.

    Timeline of the development of Quantum Mechanics

    • Science to describe nature on atomic-scale: Quantum mechanics was developed in the early 20th century to describe nature in the small — at the scale of atoms and elementary particles.
    • Foundation for understanding: For over a century it has provided the foundations of our understanding of the physical world, including the interaction of light and matter.
      • It also led to ubiquitous inventions such as lasers and semiconductor transistors.
      • Despite a century of research, the quantum world still remains mysterious and far removed from our experiences based on everyday life.
    • Second revolution: A second revolution is currently underway with the goal of putting our growing understanding of these mysteries to use by actually controlling nature and harnessing the benefits of the weird and wondrous properties of quantum mechanics.
    • Challenge of experimental realisation: One of the most striking of these is the tremendous computing power of quantum computers, whose actual experimental realisation is one of the great challenges of our times.
    • Quantum supremacy: The announcement by Google, in October 2019, where they claimed to have demonstrated the so-called “quantum supremacy”, is one of the first steps towards this goal.

    Applications and challenges

    • Applications: Besides computing, exploring the quantum world promises other dramatic applications including the creation of novel materials, enhanced metrology, secure communication, to name just a few.
      • Some of these are already around the corner.
      • Application in communication: China recently demonstrated secure quantum communication links between terrestrial stations and satellites.
      • Applications in cryptography: Computer scientists are working towards deploying schemes for post-quantum cryptography — clever schemes by which existing computers can keep communication secure even against quantum computers of the future.
      • Exploring fundamental questions: Beyond these applications, some of the deepest foundational questions in physics and computer science are being driven by quantum information science. This includes subjects such as quantum gravity and black holes.
    • The need for collaboration: Pursuing these challenges will require unprecedented collaboration between physicists (both experimentalists and theorists), computer scientists, material scientists and engineers.
    • Challenges on the experimental front: On the experimental front, the challenge lies in harnessing the weird and wonderful properties of quantum superposition and entanglement in a highly controlled manner by building a system composed of carefully designed building blocks called quantum bits or qubits.
      • These qubits tend to be very fragile and lose their “quantumness” if not controlled properly, and a careful choice of materials, design and engineering is required to get them to work.
    • Challenges on the theoretical front: On the theoretical front lies the challenge of creating the algorithms and applications for quantum computers.
      • These projects will also place new demands on classical control hardware as well as software platforms.

    Where India stands

    • India late in starting work on technology: Globally, research in this area is about two decades old, but in India, serious experimental work has been underway for only about five years, and in a handful of locations.
    • What are the constraints on Indian progress in this field? So far we have been plagued by a lack of sufficient resources, high-quality manpower, timeliness and flexibility.
      • Resource and quality manpower problem: The new announcement in the Budget would greatly help fix the resource problem but high-quality manpower is in global demand.
      • In a fast-moving field like this, timeliness is everything — delayed funding by even one year is an enormous hit.
    • A previous programme called Quantum Enabled Science and Technology has just been fully rolled out, more than two years after the call for proposals.
    • Laudable announcement: One has to laud the government’s announcement of this new mission on a massive scale and on a par with similar programmes announced recently by the United States and Europe.

    Limits and way forward

    • But there are some limits that come from how the government must do business with public funds.
    • Role of the private sector: Here, private funding, both via industry and philanthropy, can play an outsized role even with much smaller amounts.
    • For example, unrestricted funds that can be used to attract and retain high-quality manpower and to build international networks — all at short notice — can and will make an enormous difference to the success of this enterprise.
    • Private participation is the effective way: This is the most effective way (as China and Singapore discovered) to catch up scientifically with the international community, while quickly creating a vibrant intellectual environment to help attract top researchers.
    • Connection with industry: Further, connections with the Indian industry from the start would also help quantum technologies become commercialised successfully, allowing the Indian industry to benefit from the quantum revolution.
    • We must encourage industrial houses and strategic philanthropists to take an interest and reach out to Indian institutions with an existing presence in this emerging field.
    • For example, the Tata Institute of Fundamental Research (TIFR), home to India’s first superconducting quantum computing lab, would be delighted to engage.

  • Price Support Mechanism under MSP Operations

    The Centre will spend ₹1,061 crore to reimburse the Cotton Corporation of India (CCI) and its sub-agent in Maharashtra for procuring cotton at the minimum support price in that State since 2014.

    Why Centre reimburses to states?

    In the event of fall in market prices, the Centre intervenes through following schemes-

    Market Intervention Scheme

    • Similar to MSP, there is a Market Intervention Scheme (MIS), which is implemented on the request of State Governments for procurement of perishable and horticultural commodities in the event of fall in market prices.
    • The Scheme is implemented when there is at least 10% increase in production or 10% decrease in the ruling rates over the previous normal year.
    • Proposal of MIS is approved on the specific request of State/UT Government, if the State/UT Government is ready to bear 50% loss (25% in case of North-Eastern States), if any, incurred on its implementation.
    • Under MIS, funds are not allocated to the States.
    • Instead, central share of losses as per the guidelines of MIS is released to the State Governments/UTs, for which MIS has been approved based on specific proposals received from them.

    Price Supports Scheme (PSS)

    • The Department of Agriculture & Cooperation implements the PSS for procurement of oil seeds, pulses and cotton, through NAFED which is the Central nodal agency, at the MSP declared by the government.
    • NAFED undertakes procurement as and when prices fall below the MSP. Procurement under PSS is continued till prices stabilize at or above the MSP.
    • Losses, if any incurred by NAFED in undertaking MSP operations are reimbursed by the central Government.
    • Profit, if any, earned in undertaking MSP operations is credited to the central government.

    Back2Basics

    Minimum Support Price (MSP)

    • MSP is a form of market intervention by the GoI to insure agricultural producers against any sharp fall in farm prices.
    • The MSP are announced at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
    • MSP is price fixed to protect the producer – farmers – against excessive fall in price during bumper production years.
    • In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
    • The minimum support prices are a guarantee price for their produce from the Government.
    • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.

    Methods of calculation

    • In formulating the level of MSP and other non-price measures, the CACP takes into account a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities.
    • The CACP makes use of both micro-level data and aggregates at the level of district, state and the country.
    • Other factors include cost of production, changes in input prices, input-output price parity, trends in market prices, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, international price situation, parity between prices paid and prices received by the farmers and effect on issue prices and implications for subsidy.

    Procurement agencies

    • Food Corporation of India (FCI) is the designated central nodal agency for price support operations for cereals, pulses and oilseeds.
    • Cotton Corporation of India (CCI) is the central nodal agency for undertaking price support operations for Cotton.

  • Stages in a COVID-19 Pandemic

    Over the past few weeks, India has been dreading the possibility that the novel coronavirus outbreak will move to the stage of community transmission.

    What are the stages of a pandemic?

    Stage I

    • In the first stage of a disease epidemic that eventually takes the form of a pandemic sweeping the globe, cases are imported into a country in which the infection did not originate.
    • An infection whose spread is contained within the boundaries of one or a few countries is obviously not a pandemic.

    Stage II

    • The second stage is when the virus starts being transmitted locally.
    • Local transmission means that the source of the infection is from within a particular area and the trajectory the virus has taken from one person to the next is clearly established.

    Stage III

    • The third stage is that of community transmission. It is usually localised.
    • According to the WHO community transmission is evidenced by the inability to relate confirmed cases through chains of transmission for a large number of cases, or by increasing positive tests through sentinel samples.
    • In layman terms, it means that the virus is now circulating in the community, and can infect people with no history either of travel to affected areas or of contact with an infected person.
    • If and when community transmission happens, there might arise the need for a full lockdown because in that situation it is theoretically possible for every person, regardless of where they are from and who they have been in contact with, to spread the disease.

    Stage IV

    • There is also a fourth stage in every pandemic. It is when the disease, COVID-19 in this case, becomes endemic in some countries.
    • The Indian government’s containment plan takes this possibility into account.
    • Among diseases that are currently endemic in India — meaning they occur round the year across the country — are malaria and dengue.

    How does categorising an outbreak in this manner help?

    • The stages of a pandemic are uniform the world over.
    • This is so because, in today’s interconnected world, it is important to have a standardised phraseology that conveys the same thing to every person around the world, and helps countries prepare better.
    • The categorization helps countries take specific actions that are necessary to target just that particular scenario.
    • For example, India imposed travel restrictions to China from very early on as the cases they were all imported from China.
    • Later, as cases started being imported from other European countries, flight and visa restrictions were put in place for those countries.
    • India has now shut itself to individuals coming from all countries — this is because the virus is now confirmed as circulating in at least 177 countries and territories.

    Worldwide, in which stage is the COVID-19 pandemic now?

    • The pandemic has spread to nearly every country on the planet. In most, though, it is in the stage of either imported cases or local transmission.
    • Among the countries where community transmission seems to be operating are China, Italy, Iran, South Korea and Japan.
    • China adopted a graded approach in dealing with the infection but the epicentre, Hubei, was in a state of complete lockdown at the peak of the infection.
    • It something that Italy has now effected in a bid to stop the virus from wreaking more havoc, given the country’s ageing population.

    How long before India enters community transmission?

    • It is totally unpredictable. Some doctors perceive that community transmission is inevitable; other experts feel it may have already happened.
    • There are some reports of one strain having less mortality. If indeed a milder strain has come to India, it could change the course of the epidemic.
    • There is another theory that all the various viruses circulating in South Asia and the generally lower levels of hygiene may give us some immunity.

  • AYUSH Health-Wellness Centres

    What is the news: The Union Cabinet has approved the inclusion of AYUSH Health and Wellness Centre (AYUSH HWC) component of Ayushman Bharat in the National AYUSH Mission (NAM).

    • A total of 12,500 Ayush health and wellness centres throughout the country will be operationalised within a period of five years.
    • The implementation of the proposal will establish a holistic wellness model based on Ayush principles and practices focusing on preventive promotive, curative, rehabilitative and palliative healthcare by integration with the existing public health care system.

    Why such a move?

    • The move is aimed at establishing a holistic wellness model based on AYUSH principles and practices focusing on preventive, promotive, curative, rehabilitative and palliative healthcare by integration with the existing public health care system.
    • The National Health Policy 2017 has advocated mainstreaming the potential of AYUSH systems (Ayurveda, Yoga and Naturopathy, Unani, Siddha, Sows-rigpa and Homoeopathy) within a pluralistic system of Integrative healthcare.
    • The vision of the proposal is to establish a holistic wellness model based on AYUSH principles and practices, to empower masses for ‘self care’ to reduce the disease burden and out of pocket expenditure and to provide informed choice of the needy public.

    What is National AYUSH Mission (NAM)?

    • Department of AYUSH, Ministry of Health and Family Welfare, Government of India has launched National AYUSH Mission (NAM) during 12th Plan for im­plementing through States/UTs.
    • The basic objective of NAM is to promote AYUSH medical systems through cost effective AYUSH services, strengthening of educational systems, facilitate the enforcement of quality control of ASU &H drugs and sustainable availability of ASU & H raw-materials.
    • It envisages flexibility of implementation of the programmes which will lead to substantial participation of the State Governments/UT.
    • The NAM contemplates establishment of a National Mission as well as corresponding Missions in the State level.

  • Can Vitamin C prevent or cure novel Coronavirus infection?

  • The strategy of ‘Shelter in Place’

    What is the news: As India observed a “janata curfew” from 7 am to 9 pm on 22nd March refraining from making any non-essential movements, they are implementing a version of what is referred to, most commonly in the United States, as a “shelter in place” order.

    What exactly is a “Shelter in Place”?

    • In the context of the US, it is not a precise legal term, and its meaning and implications vary.
    • It conveys the broad idea of a set of restrictions being put into place, but follows not set definition.
    • Broadly, “shelter in place” orders everywhere social distancing, which is the key to “flattening the curve”, that is, spreading out the incidence of infection over a longer time so that healthcare systems are not overwhelmed.
    • Ultimately, the intent of the protocols is to decide what people should and shouldn’t do based on a particular threat to the public.

    Indian concept of self-imposed curfew

    • There is no exact definition of a “Janata curfew” — the PM has laid down guidelines for what Indians should not do, and authorities have taken steps to ensure compliance through appeals, advisories, and executive action such as invoking prohibitory orders.
    • In the cities, traders’ associations and housing societies have voluntarily put curbs on themselves in response to the PM’s call.

  • Species in news: Carissa carandas (the Great Hedge of India)

     

    Carissa carandas, a  multi-utility wild berry, whose thorny plant the British had used to build a barrier through India in the 1870s, has a hitherto unknown wilder cousin in Assam, a new study has revealed.

    Carissa carandas

    • The Carissa carandas was also among several thorny plants the British had grown 140 years ago for a 1,100-mile barrier apparently to enforce taxes and stop the smuggling of salt.
    • It has been used as a traditional herbal medicine for a number of ailments such as diarrhoea, anaemia, constipation, indigestion, skin infections and urinary disorders.
    • The leaves have been used as fodder for silkworms while a paste of its pounded roots serves as a fly repellent.
    • It is better known as karonda in Hindi, kalakkai in Tamil, koromcha in Bengali and karja tenga in Assamese, the Carissa kopilii is threatened by the very river it is named after — Kopili in central Assam.
    • The “sun-loving” plant was distributed sparsely, rooted in rocky crevices along the Kopili riverbed at altitudes ranging from 85-600 metres above sea level.

More posts