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  • Indian Economic Growth Prospects: A Comprehensive Analysis

    Growth

    Central Idea

    • India has had an established track record of high growth, with an average annual GDP growth of 6.6% in the decade leading up to the Covid-19 pandemic. In fiscal 2023, India is seen growing at 7%, making it the fastest-growing large economy. But with an imminent global slowdown and the full manifestation of the lagged impact of interest rate hikes since May 2022, the economy is expected to decelerate and grow at 6% in fiscal 2024.

    Indian economic growth prospects

    • Growth accounting: Growth accounting provides a useful framework to analyse medium-term prospects by decomposing their drivers into the contribution of capital, labour and efficiency.
    • Economic growth next five years: Indian economy expected to grow at 6.8 per cent per year for the next five years with 52 per cent of it from capital, 38 per cent from efficiency and 10 per cent from labour.
    • Changing growth model: The growth model is changing to an infrastructure and manufacturing-driven one.
    • Capital spending: The Union Budget has raised capital spending by almost a third in high-multiplier infrastructure segments. But such support to capex will moderate in the years to come, given fiscal consolidation pressures.
    • Investment ratio: Investment as a percentage of GDP has already touched a decadal high of 34 per cent in fiscal 2023. So far, the onus to lift the investment ratio has been shouldered by the government. The contribution of the private sector to investments is set to improve, primed as it is with healthier balance sheets, cash reserves and low leverage.
    • Contribution of productivity to growth: The creation of physical and digital infrastructure in conjunction with efficiency-enhancing reforms will raise the contribution of productivity to growth. The economy is expected to continue seeing efficiency gains from reforms such as GST and Insolvency and Bankruptcy Code (IBC).

    What is holding back a swift and broad-based lift in private investments?

    • Economic uncertainty, primarily, and geopolitical events to a lesser extent.
    • Sustainability challenge looms for the manufacturing sector as manufacturing and infrastructure growth are carbon-intensive.
    • Low-quality skilling of the workforce is holding back its contribution to growth.
    • Quality and the skilling of the workforce
    • Falling labour force participation of women

    What is holding back in Labour’s contribution to growth?

    • Labour’s contribution to growth is likely to be low not because India does not have sufficient people in the working-age group, this cohort is 67 per cent of the population and is set to expand by 100 million over the next decade. It is the quality and skilling of the workforce that is holding it back.

    Why private investment is essential for Indian economic growth?

    • Capital formation: Private investment helps in creating capital formation, which is essential for economic growth. It helps in building infrastructure, creating jobs, and generating income, which in turn drives consumer spending and boosts economic growth.
    • Innovation: Private investment is often associated with innovation and technological advancements. Companies that invest in research and development (R&D) can develop new products and processes that can boost productivity and create new markets. This, in turn, can lead to increased profits and more investment in R&D, creating a virtuous cycle of innovation and growth.
    • Employment: Private investment creates jobs, which is critical for economic growth and development. When companies invest in new projects or expand their operations, they often need to hire additional workers, which reduces unemployment and boosts consumer spending.
    • Foreign investment: Private investment is also an important driver of foreign investment. When companies invest in India, they often bring new technology, skills, and expertise that can help boost local industries and drive economic growth.
    • Tax revenue: Private investment can also help increase tax revenues, which can be used by the government to fund public goods and services such as education, healthcare, and infrastructure.

    Steps taken by the government to encourage private investment

    • Investment-Friendly Policies: The Indian government has launched several investment-friendly policies, such as Make in India, Start-up India, and Digital India, to encourage private investment in the country.
    • Infrastructure Development: The government is investing heavily in infrastructure development, including roads, railways, airports, and ports, to create a conducive environment for private investment.
    • Tax Reforms: The Indian government has implemented several tax reforms, such as the Goods and Services Tax (GST), to simplify the tax structure and make it more investor-friendly.
    • FDI Liberalization: The government has liberalized foreign direct investment (FDI) norms in several sectors, including defense, insurance, and retail, to attract more foreign investment.
    • Insolvency and Bankruptcy Code (IBC): The government has implemented the Insolvency and Bankruptcy Code (IBC), which has made it easier for businesses to exit, and has increased investor confidence in the Indian economy.
    • Production Linked Incentives (PLI): The government has launched the Production Linked Incentives (PLI) scheme to encourage manufacturing in India and make it more competitive globally.
    • Easing of Business Regulations: The Indian government has eased several business regulations to improve the ease of doing business in the country and attract more private investment.
    • Skill Development: The government has launched several initiatives, such as Skill India and Pradhan Mantri Kaushal Vikas Yojana, to develop the skills of the Indian workforce and make it more attractive to investors.

    Facts for prelims: Steps taken by the government to encourage labour force participation of women

    Initiatives

    Description
    Maternity Benefit Programme A scheme to provide financial assistance to pregnant women and lactating mothers for their health and nutrition needs.
    Pradhan Mantri Ujjwala Yojana A scheme to provide LPG connections to women from Below Poverty Line households.
    National Urban Livelihood Mission A programme to provide self-employment opportunities and skill development training to urban poor women.
    National Rural Livelihood Mission A scheme to provide self-employment opportunities and skill development training to rural women.
    Mahila E-Haat A digital platform to provide a market for women entrepreneurs to sell their products online.
    Beti Bachao Beti Padhao A campaign to address the declining child sex ratio and to promote education among girls.
    Sukanya Samriddhi Yojana A savings scheme for the girl child to ensure their education and marriage expenses are taken care of.

     Way ahead

    • Focus on green transition: As the manufacturing and infrastructure growth are carbon-intensive, so it’s important to have a significant and simultaneous focus on green transition. Having a high sustainability quotient can only embellish India’s credentials as a production destination.
    • For instance: Research suggests that between fiscals 2023 and 2027, over 15 per cent of India’s capex could be towards green initiatives involving renewable energy, transportation, altering the fuel mix, and green hydrogen. In the fragmented geopolitical milieu, which is shifting towards supply-chain diversification and friend shoring, India can attract foreign investments.
    • Enhancing labour force participation of women: The labour force participation of women is falling. This will have to be reversed through employment policies and investing in the health and education of women.
    • For instance: According to a World Bank report in 2018, India could add 1.5 percentage points to its GDP growth by improving the participation of women in its workforce.

    Growth

    Conclusion

    • India is going to become a $5 trillion economy by fiscal 2029, given the current growth dynamics. However, the impact of climate risk mitigation will be felt across revenue, commodity prices, export markets, and capital spending. To win the growth marathon, India’s focus must be sharp on the drivers of pace.

    Mains Question

    Q. Highlight India’s growth prospects in the next five years? Discuss the significance of private investment for economic growth and enlist factors that holding back the private investment.

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  • 20th Apr 23 | Prelims Daily with Previous Year Questions

    20th Apr 23 | Prelims Daily with Previous Year Questions

    [WpProQuiz 1331]

    [WpProQuiz_toplist 1331]

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  • Nikaalo Prelims Spotlight || Important Keywords in the Survey and Budget


    Dear Aspirants,

    This Spotlight is a part of our Mission Nikaalo Prelims-2023.

    You can check the broad timetable of Nikaalo Prelims here

    Session Details

    YouTube LIVE with Parth sir – 7 PM  – Prelims Spotlight Session

    Evening 04 PM  – Daily Mini Tests

    Join our Official telegram channel for Study material and Daily Sessions Here

    20th Apr 2023

    Important Keywords in the Survey and Budget

    Refer to economic survey session

    https://www.civilsdaily.com/50-key-words-from-economic-survey-2023-that-are-important-for-upsc-2023-prelims-and-mains-free-session-by-sajal-sir-link-inside/

  • [Sansad TV] Mudda Aapka: North East Development

    [Sansad TV] Mudda Aapka: North East Development

    Context

    • Prime Minister visited Assam and inaugurated AIIMS Guwahati the first AIIMS in the northeastern states.
    • He also inaugurated three new medical colleges and laid the foundation stones for a bridge, the beautification of Rang Ghar, and the Assam Advanced Health Care Innovation Institute.
    • He witnessed a Mega Bihu dance performance attempting to create a new Guinness World Record.

    North East India: A Backgrounder

    north east
    • The Northeast region of India comprises eight states- Assam, Nagaland, Manipur, Arunachal Pradesh, Mizoram, Tripura and Sikkim.
    • According to 2011 census this 3.78% of country’s population resides in this region.
    • It also comprises approx. 7.98% of country’s area including 5,483 Km of India’s international borders.
    • These eight states also constitute 3.37% of country’s total agriculture land holding and 34.5% of the total bamboo bearing area in the country.

    Various associated issues

    [A] Security

    (i) Leftist insurgency

    • The Maoist rebellion in Northeast India is at present in its ‘latent phase’. It basically involves arms dumps and identification of local militant elements.
    • However, these days, militancy and extortion has become an organised activity in the region and is one of the major sources of funds for the militants.

    (ii) Drug smuggling

    • Golden Triangle comprises of the regions of Thailand, Laos, and Myanmar it has been one of the largest opium-producing areas of the world since the 1950s.
    • Drugs produced there enters into India through Mizoram, Manipur, and Nagaland from Bhamo, Lashio, and Mandalay in Myanmar.
    • Moreh (Manipur), Champai (Mizoram), Dimapur (Nagaland), and Guwahati (Assam) have become the nucleus of drug trafficking industry in India’s northeast.

    [B] Developmental issue: Connectivity with mainland

    • The NER is connected to mainland India only through a narrow stretch of land (about 22 km wide) in West Bengal called the ‘Siliguri Corridor’, sometimes known as the “Chicken’s Neck”.
    • Except for this narrow Siliguri Corridor, the entire northeastern part of the country is bound by international borders.

    [C] Sovereignty threats

    • Neighbouring countries like China and Myanmar are accused of promoting insurgency in the region.
    • China’s claim on Arunachal Pradesh and its water diversion plans on the Yarlung Tsangpo in Tibet are creating a public perception in the northeast that China is a threat to India.
    • This has created positive influences on the minds of the insurgents.

    [D] Sub-national aspirations

    • The region is populated by a number of different communities, with diverse cultures, languages and customs.
    • It is also marked by difficult terrain, backward areas, and limited connectivity. This area was known for the active presence of a number of militant groups.

    Key issues:

    1. Demands for autonomy: This demand arose in Tripura and Manipur which compromised the state of Assam. This majorly arose when the non-Assamese political leaders felt that the Assamese was forcibly imposed upon them.

    2. Secessionist Movement: The Mizo hills area in Mizoram never felt that they were under the British therefore after independence they did not consider themselves as part of India. Several campaigns started to be independent states.

    3. Movements against outsiders: This issue has taken place in several states of the Northeast. The Assam movement was such a movement against outsiders because they suspected that there were huge numbers of illegal migrants from Bangladesh.

    Root causes of turmoil in NE

    • Colonial past: The connection between the NER and the rest of India is relatively recent, dating back to 1826 with the signing the Treaty of Yandaboo.
    • No historical ties: It was when Burma ceded Assam, Manipur, Jaintia hills, Tripura and Cachar to the British at the end of the First Anglo-Burmese War.
    • Heavy militarization and AFSPA: Even under the British, the region was mostly seen as providing a ‘buffer zone’ from Burma and China. This perspective continued after independence leading to heavy militarization.
    • Abrupt integration: The integration of NER into the rest of the country was ‘abrupt’, with no prior history. The states were integrated and demarcated into ad hoc units for administrative convenience.
    • Political disconnect: The participation of the northeastern state governments in any development activity is nearly non-existent. Politics for them has merely left to Tribal Affairs.
    • Local aspirations: The region’s own politics or the political aspirations of fragmented tribes were marginalised within the larger political discourse.
    • Others: Inflation is another fuel to the turmoil. Distribution is mostly road-based and disruptions in movement, particularly during the six-month-long rainy season, causes sporadic fuel scarcity in the hill States.

    Opportunities in the NER

    [A] Tourism

    • NE Region of India has immense resource potential to develop tourism.
    • Assam is the leading state in terms of overall inflow of tourists’ in the region while Sikkim proves to be preferred destination of foreign tourists.
    • The region offers enchanting visits for tourists interested in wild life, religious, cultural and ethnic tourism, river cruises, golf and a host of others.

    [B] Emerging market

    • The North East is a fast-growing market with untapped opportunities for investment, trade and tourism.
    • It has the potential to become a nodal point of India’s growth story.
    • It is abundantly endowed with natural resources, mineral and forest wealth, diverse flora and fauna and fertile land for cultivation of exotic fruits and vegetables.

    [C] Agricultural Potential

    • Traditionally, the North East is known for tea, but it could also offer plantation and export opportunities for a wide range of crops including oil palm.
    • Similarly, the region has about 50 species of bamboo, 14 varieties of bananas and 17 varieties of citrus fruits.
    • North-Eastern states also have a huge production of fruits such as pineapples and oranges.

    [D] Rich mineral resources

    • The Northeast region of India has an abundant mineral comprising chiefly of limestone, coal, natural oil and gas, uranium, feldspar, and others.
    • The total hydrocarbon deposits (oil and gas) accounts for 20% of the total India.

    [E] Gateway to the East

    • The NE region is a vantage entry point to south-eastern Asian markets.
    • Given its location, the Northeast assumes the role of bridging the space between mainland India and other Southeast Asian nations.
    • Taking this idea forward, the government decided to focus more on improving its relation with ASEAN and the East Asian countries.
    • It was also aimed at eliminating the insurgency problem in the NE once and for all by way of opening up the region to Southeast Asia.

    Connectivity in the region

    (A) Road

    • Under Bharatmala Pariyojana (BMP) roads stretches aggregating to about 5301 km in NER have been approved for improvement.
    • Out of this, 3246 km road length has been approved for development of Economic Corridors in the North East.
    • Under Pradhan Mantri Gram Sadak Yojana, road length of 20,708 km has been already constructed.
    • Other major development include construction of bridges of over the Brahmaputra to narrow down distances.

    (B) Railway

    • There are plans to provide a railway link for the NE states through 20 major railway projects, encompassing 13 new lines with a length of nearly 2,624 kms.
    • The Murkongselek (Assam) and Pasighat rail project is already under implementation.
    • The most important of them is 378-km Bhalukpong (West Kameng, Arunachal)-Tenga (Arunachal)-Tawang (Arunachal) rail connectivity that will reach a height of 10,000 ft to the Tibet border.

    (C) Air connectivity

    • The Pakyong Airport in Sikkim is the first greenfield airport in Northeast India. It is situated around 30 kilometers from Gangtok.
    • The launch of the UDAN regional air connectivity scheme (2016) saw a number of new air links in the region.
    • The most important of them is Pasighat (2018), the first-ever commercial air link to Arunachal.

    (D) Digital connectivity

    • Telecom Commission has approved a comprehensive strategy to implement BharatNet in North East Region (NER).
    • Under this strategy, 4240 Gram Panchayats (GPs) in the North-East are to be connected by broadband and by satellite connectivity.

    Way forward

    (i) Infrastructure and connectivity

    • These are two basic requirements essential for economic development of a region.
    • The need for infrastructure becomes more acute for hilly and mountainous areas that are on one hand difficult to traverse and on the other hand tend to be sparsely populated.
    • Thus, there is a need for heavy investments in infrastructure development.

    (ii) Timely completion of projects

    • Most North Eastern States are resource-starved and it is vital that funds are properly accounted for.  
    • In addition, projects that are retained and put on priority lists raise the expectations of the people.
    • This further contributes towards deficits in confidence of the people upon the Central Government.

    (iii) Single nodal agency

    • Another challenge is that there are multiple bodies and agencies like the NEC, DoNER and the recently created North East Forum.
    • There is a need for clarity on the roles between these bodies and budgets need to be allocated to the States.
    • Flexibility should be allowed for the State governments for utilization of these allocations.

    (iv) Tourism

    • Tourism is one of the alternatives that can play a pivotal role in the socio-economic development of the NER.
    • The challenge lies in making the region accessible to the tourists from mainland India and other countries.
    • Sense of integration can be imbibed through various projects such as Dekho Apna Desh etc. among the NE youth.

    Conclusion

    • It is evident fact that, for a long time, the North East was a neglected and forgotten part of the country.
    • The region has great potential to develop not just as a self, sustaining economic unit of India but also contribute to the success story of the country.

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  • Centre gives nod for National Quantum Mission (NQM)

    quantum

    Central idea: The Union Cabinet has approved the National Quantum Mission (NQM) with a budget of ₹6,003 crore. The mission aims to fund research and development in quantum computing technology and associated applications.

    What is Quantum Computing?

    Explanation
    What is it? A type of computing that uses quantum-mechanical phenomena to perform operations on data.
    Qubits Quantum bits, which can be 0, 1, or both simultaneously (a superposition of 0 and 1).
    Computational speed It can perform certain calculations much faster than traditional computing, especially for complex algorithms and large amounts of data.
    Entanglement The use of entanglement allows quantum computing to process multiple pieces of data simultaneously, further increasing computational power.
    Research Governments, universities, and private companies around the world are researching quantum computing.
    Challenges Building practical quantum computers is a major challenge due to the fragility of qubits and the difficulty of controlling and measuring them accurately.
    Development stage Quantum computing is still in its early stages of development.

     

    National Quantum Mission (NQM)

    Mission duration 2023-2031
    Total cost Rs. 6,003.65 crore
    Leading Department Department of Science and Technology (DST)
    Supporting departments Other government departments
    Focus Development of physical qubit-based quantum computers
    Applications Healthcare and diagnostics, defense, energy, and data security
    India’s positioning Among the top six nations involved in quantum research and development

     

    Key focus areas

    (1) Thematic Hubs

    • The mission will be structured around four broad themes:
    1. Quantum Computing,
    2. Quantum Communication,
    3. Quantum Sensing and Metrology, and
    4. Quantum Material and Devices.
    • Thematic hubs will be established at research institutes and R&D centres already working in the field.
    • The effort is to create an ecosystem that favours quantum technology development in the country.

    (2) Satellite-based Communication

    • One of the key areas of focus for the NQM will be the development of satellite-based secure communication between ground stations and receivers located within a 3,000 km range over the first three years.
    • NQM will lay communication lines using Quantum Key Distribution over 2,000 km for satellite-based communication within Indian cities.
    • Tests will be conducted in the coming years for long-distance quantum communication, especially with other countries.

    (3) Quantum Computing

    • The mission will focus on developing quantum computers (qubit) with physical qubit capacities ranging between 50 – 1000 qubits, developed over the next eight years.
    • The development of computers up to 50 physical qubits will take three years.
    • 50 – 100 physical qubits will be developed in five years, and computers up to 1000 physical qubits will be developed in eight years.

    Applications

    • The mission would have a wide range of applications, including in healthcare and diagnostics, defense, energy, and data security.
    • Quantum technologies are expected to be far more powerful than traditional computing systems and capable of performing the most complex problems in a highly secure manner.

    Various challenges

    • Sub-zero temperatures: Current prototype systems require extremely cold (close to -273 C) conditions to work, along with developing the materials capable of such computations.
    • Still evolving: Quantum computers are still a work in progress globally, and no one has built a practical computer that can actually work and solve meaningful problems.
    • No global breakthrough: IBM, D-Wave of Canada or China’s Zuchongzhi 2.1, all of whom have prototype systems, have not built a quantum computer that can solve a problem that anybody cares about.

    Conclusion

    • The NQM represents a significant step forward for India’s research and development efforts in the quantum technology sector.
    • By focusing on the development of quantum computers and related technologies, the country is positioning itself as a key player in this field, with wide-ranging applications across multiple sectors.

     

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  • India’s population to edge ahead of China’s by mid-2023: UN

    population

    Central idea: India is set to overtake China as the world’s most populous country by mid-2023, according to data released by the United Nations.

    State of World Population Report

    • The report is an annual report published by the United Nations Population Fund (UNFPA), which provides a global overview of population trends and issues.
    • The report covers a wide range of topics related to the population, such as fertility, mortality, migration, family planning, and gender equality.
    • It also includes analysis and recommendations for policymakers and governments to address population challenges and promote sustainable development.
    • The report is widely regarded as a key reference for researchers, policymakers, and international organizations working on population and development issues.

    population

    Highlights of the 2023 report

    Facts

    Data
    World Population (2022) 8 billion
    Most populous regions Eastern and Southeastern Asia, Central and Southern Asia
    World Population Growth Rate (since 2020) Less than 1%
    Fertility Rate (replacement level) 2.1 children per woman
    Population aged 65 years or above (2050) 16%
    Persons aged 65 years and above (2050) More than double that of 5-year-olds and same as 12-year-olds
    Regions with fertility rate at or below 2.1 60%
    Top countries accounting for global population increase by 2050 DR Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, Philippines, Tanzania

     

    Population anxieties in India

    Facts
    India’s population India is now the most populous country in the world, having overtaken China in population, with 1,428.6 million people.
    Age distribution 68% of India’s population belongs to the 15-64 years category, and 26% in the 10-24 years group, making India one of the youngest countries in the world.
    Fertility rate National Family Health 5 Survey (2019-21) found that India attained a Total Fertility Rate of 2.0 for the first time, less than the replacement level of 2.1, falling from 2.2 in NFHS 4 (2015-16).
    Life expectancy Life expectancy for men in India is 71 years, the same as the global life expectancy, while it is marginally lower for women at 74 years.
    Population growth India’s population growth rate has decreased from 2.3% in 1972 to less than 1% now.
    Demographic dividend With 68% of its population as youth, and working population, India could have one of the largest workforces in the world, giving it a global advantage.

     

    Way forward

    The UNFPA report strongly recommended that governments introduce policies with gender equality and rights at their heart to address changing demographics. These recommendations include:

    • Parental leave programs: Introducing parental leave programs that provide paid leave to both mothers and fathers after the birth or adoption of a child. This can help promote gender equality in the workplace and support families in raising children.
    • Child tax credits: Providing tax credits or financial support to families with children to help them meet the costs of raising children. This can help address child poverty and support families in providing for their children’s basic needs.
    • Policies to promote gender equality at workplace: Implementing policies and practices that promote gender equality in the workplace, such as equal pay for equal work, flexible work arrangements, and anti-discrimination policies.
    • Universal access to sexual and reproductive health and rights: Ensuring that all people have access to comprehensive sexual and reproductive health services, including family planning, maternal health services, etc. This can help prevent unintended pregnancies, reduce maternal mortality, and promote the health and well-being of individuals and families.

     

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  • Windfall Tax back on local crude oil

    windfall

    The government has revised a windfall tax on domestically-produced crude oil. According to an official notification, the windfall tax rate of Rs 6,400 per tonne.

    What is a Windfall Tax?

    • Windfall taxes are designed to tax the profits a company derives from an external, sometimes unprecedented event — for instance, the energy price-rise as a result of the Russia-Ukraine conflict.
    • These are profits that cannot be attributed to something the firm actively did, like an investment strategy or an expansion of business.
    • The US Congressional Research Service (CRS) defines a windfall as an “unearned, unanticipated gain in income through no additional effort or expense”.
    • One area where such taxes have routinely been discussed is oil markets, where price fluctuation leads to volatile or erratic profits for the industry.

    Features of Windfall Tax

    • Imposed on unanticipated and unearned gains: Windfall tax is imposed on the profits or gains that a company earns from external events or factors beyond their control, which they did not actively seek or pursue.
    • One-time tax: It is typically imposed as a one-time tax retrospectively, over and above the normal rates of tax, and is not a regular or ongoing tax.
    • Imposed on specific sectors or industries: Windfall taxes are usually imposed on specific sectors or industries where there is a significant increase in profits due to external factors such as price fluctuations, supply disruptions, or changes in regulations.
    • Rationale for imposition: The imposition of windfall taxes is based on the rationale of redistributing unexpected gains, funding social welfare schemes, and creating a supplementary revenue stream for the government.
    • Design problems: Introducing windfall taxes may suffer from design problems, given their expedient and political nature.
    • Potential impact on investment: Windfall taxes may lead to uncertainty in the market and negatively impact future investment, as companies may feel uncertain about investing in a sector with an unstable tax regime.

    When did India introduce this?

    • In July 2022, India announced a windfall tax on domestic crude oil producers who it believed were reaping the benefits of the high oil prices.
    • It also imposed an additional excise levy on diesel, petrol and air turbine fuel (ATF) exports.
    • Also, India’s case was different from other countries, as it was still importing discounted Russian oil.

    How is it levied?

    • Governments typically levy this as a one-off tax retrospectively over and above the normal rates of tax.
    • The Central government has introduced a windfall profit tax of ₹23,250 per tonne on domestic crude oil production, which was subsequently revised fortnightly four times so far.
    • The latest revision was on August 31, when it was hiked to ₹13,300 per tonne from ₹13,000.

    Reasons for re-introduction

    • There have been varying rationales for governments worldwide to introduce windfall taxes like:
    1. Redistribution of unexpected gains when high prices benefit producers at the expense of consumers,
    2. Funding social welfare schemes, and
    3. Supplementary revenue stream for the government

    Issues with imposing such taxes

    • Design problems: Windfall taxes may suffer from design problems, given their expedient and political nature. There is also the issue of determining what constitutes true windfall profits and who should be taxed, which raises questions about the threshold for exemption of smaller companies.
    • Potential impact on investment: Windfall taxes may lead to uncertainty in the market and negatively impact future investment, as companies may feel uncertain about investing in a sector with an unstable tax regime.
    • Internalization of potential taxes: Introducing a temporary windfall profit tax may reduce future investment since prospective investors may internalize the likelihood of potential taxes when making investment decisions.
    • Threshold for exemption of smaller companies: Determining the threshold for exemption of smaller companies raises questions about which companies should be taxed and what level of profit is normal or excessive.
    • Difficulty in determining true windfall profits: There is also the issue of determining what constitutes true windfall profits, as it may be challenging to differentiate between profits attributable to external events versus those attributable to a company’s active investment strategy or business expansion.

     

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  • How Web3 differs from Web2?

    web

    Central idea: The article discusses the key features of Web3, including its decentralized nature, peer-to-peer transactions, and greater control over data and digital assets for users.

    What is Web3?

    • Web3, also known as Web 3.0, is the next generation of the World Wide Web that emphasizes decentralization, security, and user privacy.
    • It is essentially a vision of the internet where users have more control over their data, identities, and online interactions.
    • It is built on blockchain technology, which enables peer-to-peer transactions without the need for intermediaries such as banks, governments, or other third parties.
    • This decentralized approach to the web allows for greater transparency and trust, as well as more secure and private transactions.
    • Web3 technologies include blockchain platforms like Ethereum, IPFS (InterPlanetary File System) for distributed file storage, decentralized identity systems like uPort, and decentralized marketplaces like OpenBazaar.

    Features of Web 3

    Feature

    Web3

    Web2

    Centralisation

    		 Decentralised Centralised

    Intermediaries

    		 Peer-to-peer Rely on intermediaries

    Data ownership and control

    		 Users have control Large corporations have control

     

    Challenges for Web3:

    Challenge

    Scalability

    		 Current blockchain infrastructure can only handle a limited number of transactions per second.

    User Adoption

    		 Despite being around for over a decade, blockchain technology is still relatively unknown to the general public.

    Interoperability

    		 Web3 is being developed by different organisations, each with their own unique vision for the technology, leading to challenges in integration.

    Complexity

    		 Technical expertise is required to use and understand Web3, which may be a barrier for some users.

     

    Examples of Web3 use:

    Use

    Cryptocurrencies

    		 Built on blockchain technology, cryptocurrencies enable secure, decentralised transactions without the need for intermediaries.

    Decentralised Finance

    		 Aims to build a new financial system on top of blockchain technology. DeFi applications enable users to borrow, lend, and trade crypto.

    Decentralised storage

    		 Used to create decentralised social networks and develop decentralised identity verification systems.

     

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  • Repeating radio signal detected from nearby Exoplanet YZ Ceti b

    ceti

    Central idea: Astronomers have detected a repeating radio signal from the YZ Ceti exoplanet that suggests the presence of a magnetic field around it.

    What is YZ Ceti b?

    • YZ Ceti b is an earth-sized exoplanet (a planet that orbits a star other than our sun).
    • It is located barely 12 light-years from Earth, and it rotates around a small red dwarf star called YZ Ceti.

    How was the discovery made?

    • The researchers had to make multiple rounds of observations before they could detect the radio signals from the star YZ Ceti, which seemed to match the orbital period of the planet YZ Ceti b.
    • From this, they deduced that the signals were a result of the interaction between the planet’s magnetic field and the star.

    Why does the magnetic field matter?

    • Intense bursts of energy from the YZ Ceti star-exoplanet exchange produce spectacular auroral lights, similar to the energy surges from the sun that disrupt telecommunications on earth.
    • The radio waves confirmed the existence of an exoplanetary magnetic field.
    • This can only be produced if the exoplanet orbits very close to its parent star and has its own magnetic field to influence the stellar wind and generate the signals.

    What’s the implication for YZ Ceti b?

    • The small orbit of YZ Ceti b indicates that the planet takes just a couple of earth days to circle its star.
    • Nearly half of all the stars visible in the sky could potentially harbor rocky, earth-sized planets in habitable orbits around them.
    • Astronomers indicated that the possibility of the existence of a magnetic field on the Earth-like exoplanet, called YZ Ceti b, probably hints at the habitability of life on that planet.

    How common are such magnetic fields?

    • Planetary scientists have never been able to identify magnetic fields on smaller, rocky exoplanets until now.
    • The survival of a planet’s atmosphere may depend on its having, or not having, a strong magnetic field, since the field protects its atmosphere from being eroded by the charged particles blowing in from its star.

     

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  • 19th Apr 23 | Nikaalo Prelims- Mini Test 16 (Organs of United Nations & Important Current Affairs Developments)

    19th Apr 23 | Nikaalo Prelims- Mini Test 16 (Organs of United Nations & Important Current Affairs Developments)

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