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What are White Label ATMs?

atm

The Reserve Bank of India (RBI) has extended the validity of authorization issued to Vakrangee to setup, own and operate White Label ATMs in India.

What is White Label ATM?

Usually ATMs are managed by banks. But White Label ATMs are owned and operated by non-banking entities.
ATMs operated under this business model allow customers to use them for banking transactions regardless of the bank they have an account with.
RBI approved the operation and inclusion of WLA ATM by non-banking organisations under the Payment and Settlement Systems Act of 2007.
It was introduced to expand India’s ATM network, especially in semi-urban and rural areas.

How does it work?

White Label ATM companies work with banking networks to enable bank customers to use banking services like withdrawing funds, paying bills and depositing cash.
White Label ATM (WLA) operators’ charge card-issuing bank fees to provide this facility to the bank’s clients.
The transaction process in White Label ATM operators consists of a lending bank, a sponsor bank that handles settlements and an ATM network provider.
The Sponsor bank provides the cash facility for the White ATM.

Significance of WLA: Financial Inclusion

Financial inclusion is concerned with the availability of financial services and adequate financing to low-income individuals and other vulnerable segments of society.
ATMs promote financial inclusion and provide customers with various banking services at any location and time.

White Label ATM Operators in India

Non-banks set up and operate White ATMs as per the rules laid down by RBI for using ‘other bank’ ATMs.
These ATMs accept all domestic debit cards and offer the first five or three transactions per month free of cost, depending on the location.
Below mentioned are some examples of companies that operate white label ATMs:

Indicash – India’s largest White Label ATM network responsible for ‘uberisation of ATMs.’
India1 Payments (BTI Payments Pvt. Ltd.)
Hitachi Payment Services Pvt. Ltd.
Tata Communications Payment Solutions Ltd.
Vakrangee Limited

Benefits of White Label ATMs

There are many benefits of White Label ATMs:

Customers benefit from White Label ATMs since they eliminate the need to visit a bank branch on a regular basis
ATMs are available 24 hours a day, seven days a week, including holidays
Banks benefit from this because they do not have to maintain a huge staff/office (compared to a system without ATMs). It lowers their branch-operational costs
Financial inclusion of rural, semi-urban, and low-income people
It allowed ATM cards to be issued by any bank that can be used at White Label ATMs
WLA atm also provides mobile recharge, energy bill payments, and other value-added services

Limitations of White Label ATMs

There are also a few limitations of White Label ATMs:

The issue of unsuccessful transactions is a key source of concern. In the event of a dispute, the dispute resolution method will include three entities, namely the WLA operator, the WLA operator’s sponsor bank, and the customer’s bank.
Customers will be discouraged by the cost issue, as they will be obliged to pay a price to use the White Label ATMs, as only a limited number of free transactions are permitted on the WLAs
White label ATMs’ financial viability is questioned because of their low interchange charge and hefty operational expenses
If there is a bank-managed ATM in the same area as a WLA ATM, the White Label ATMs may not be able to generate a profit

Differences Between Brown Label and White Label ATMs

The differences between Brown Label ATM and White Label ATMs are:

Brown Label ATM	White Label ATM
Brown Label ATMs have their hardware and ATM machine leased by a service provider	Non-banking entities own and operate ATMs
The sponsor bank’s brand name appears on the Brown label ATM	There is no bank logo on a white label ATM machine
The RBI is not directly involved. These outsourcing firms are bound by contracts with their respective banks	The RBI is directly involved as white label companies must obtain a license or permission from the RBI in order to conduct business

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February 8, 2023

Bard: Google’s answer to ‘ChatGPT’

bard

Google has finally decided to answer the challenge and threat posed by Microsoft-backed OpenAI and its AI chatbot- ChatGPT.

What is Bard, when can I access it?

Google’s Bard is functioned on LaMDA, the firm’s Language Model for Dialogue Applications system, and has been in development for several years.
It is what Sunder Pichai termed an “experimental conversational AI service”.
Google will be opening it up to trusted testers ahead of making it more widely available to the public in the coming weeks.
It is not yet publicly available.

What is Bard based on?

Bard is built on Transformer technology—which is also the backbone of ChatGPT and other AI bots.
Transformer technology was pioneered by Google and made open-source in 2017.
Transformer technology is a neural network architecture, which is capable of making predictions based on inputs and is primarily used in natural language processing and computer vision technology.
Previously, a Google engineer claimed LaMDA was a ‘sentient’ being with consciousness.

How does it work?

Bard draws on information from the web to provide fresh, high-quality responses.
In short, it will give in-depth, conversational and essay-style answers just like ChatGPT does right now.
It requires significantly less computing power, enabling us to scale to more users, allowing for more feedback.

A user will be able to ask Bard to explain new discoveries from NASA’s James Webb Space Telescope to a 9-year-old, or learn more about the best strikers in football right now, and then get drills to build your skills.

What about its computing power?

Remember running these models also requires significant computing power.
For instance, ChatGPT is powered by Microsoft’s Azure Cloud services.
This also explains why the service often runs into errors at times, because too many people are accessing it.

Key difference between ChatGPT and Google’s Bard

It appears that to take on ChatGPT, Google has an ace up its sleeve: the ability to draw information from the Internet.
Bard draws on information from the web to provide fresh, high-quality responses.
ChatGPT has impressed with its ability to respond to complex queries — though with varying degrees of accuracy — but its biggest shortcoming perhaps is that it cannot access real-time information from the Internet.
ChatGPT’s language model was trained on a vast dataset to generate text based on the input, and the dataset, at the moment, only includes information until 2021.

Is Bard better than ChatGPT?

Bard looks like a limited rollout right now.
Google is looking for a lot of feedback at the moment around Bard, so it is hard to say whether it can answer more questions than ChatGPT.
Google has also not made clear the amount of knowledge that Bard possesses.
For instance, with ChatGPT, we know its knowledge is limited to events till 2021.
Of course, it is based on LaMDA, which has been in the news for a while now.

Why has Google announced Bard right now?

Bard comes as Microsoft is preparing to announce an integration of ChatGPT into its Bing Search engine.
Google might have invented the ‘Transformer’ technology, but it is now being seen as a latecomer to the AI revolution.
ChatGPT in many ways is being called the end of Google Search, given that conversational AI can give long, essay style and sometimes elegant answers to a user’s queries.
Of course, not all of these are correct, but then AI is capable of correcting itself as well and learning from mistakes.

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February 8, 2023

Chinese balloon over the US and India as a Peacemaker
Context
- On 1 February, a high-altitude balloon of Chinese origin was spotted over the US state of Montana, which also houses one of the country’s three active nuclear missile silos. on 4 February, US forces shot down the balloon over the country’s South Carolina coast and are now proceeding to collect some of the debris.
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Balloons for surveillance
- Balloons could prove much cheaper and loiter for extended periods, providing continuous surveillance over targets, unlike satellites based on orbital motion.
How The US responded?
- Initial assessment: The US government officially described it as a surveillance balloon with no immediate military or physical threat but was quick to go back on its initial assessment.
- Incident as a part of Chinese larger troubling pattern: An American view describes the Chinese balloon incident as part of a larger, more troubling pattern.
- China claims as it was civilian airship and unintentionally flown: Despite Chinese claims that the balloon was a harmless civilian airship that had unintentionally flown into US airspace, Secretary of State Antony Blinken cancelled his much-anticipated diplomatic visit to Beijing.
- Issue is a matter of violation of sovereignty: The US has said that the balloon issue is a matter of violation of sovereignty, and, as of 4 February, there are reports of another balloon being spotted over South America that China has admitted is also theirs.
Similar experiments
- US utilising high-altitude balloons: Not just China, the US has also experimented with utilising high-altitude balloons in space for a long time. In July 2022, NASA tested an aerial robotic balloon that would work in tandem with an orbiter to carry out scientific measurements of Venus.
- UK demonstrated in 2022: In August 2022, the UK selected an American company to demonstrate an uncrewed platform for stratospheric communications, intelligence, surveillance and reconnaissance (ISR). The need was for manoeuvrable, long-duration missions capable of locating targets anywhere on earth.
Global geopolitical struggle
- Default mode but with different players: The event if viewed from a historical perspective, the world is back to its default mode, only this time, it has a different set of actors.
- It involves various forms of power, primarily shaped by technology: Notably, there exist also nuclear weapons in the hands of nine powers, unlike during the Cold War era, when the number was confined to five.
- Economic and technological integration is much greater than ever before: Ever since Russia invaded Ukraine in 2022, attempts at desegregating economic and technological fields have not just continued but also gained momentum.
- Camps led by the US and China: Global cooperation is in short supply and is being morphed into a coalition-building exercise ensconced in primarily two camps led by the US and China.
India’s posture in a polarized world
- Benefited from lower cost supplies from China and Russia: Economically, it has maintained trade with China and benefited from lower-cost energy supplies from Russia.
- India’s tilt towards west: After China’s aggression on the northern borders, India has tilted to the West, especially in the maritime and technological arenas.
- Increasingly polarised world challenging India’s foreign policy: But as global tensions grow and confrontations increase, India could find itself under pressure to take sides even when its interests are not under contention. Therefore, there is a need to articulate a foreign policy paper on India’s alignment posture in a world that is becoming increasingly polarised.
- This policy must foster partnerships based on context and not on blocs: India could join hands with the US and its allies in seeking an open and rules-based Indo-Pacific order. It could even partner with China on climate change if there is a congruence of interests.
- Challenge is to avoid being dragged in war: In grand strategic terms, India’s challenge is to avoid being dragged into a World War that must be considered a growing possibility.
India as peacemaker
- Exploring the role of a peace broker
1. What could be at the back of the Indian strategic mind is to play the role of a peace broker and explore every possibility to make it count.
2. This is important because the state of relations between the US and China does not seem to have many prospects for a return to dialogue that can facilitate consensus on bilateral, multilateral and global issues.
3. It is a possibility reflected in the inability of the United Nations to intervene, as the major parties involved are themselves in contention for the position of the stronger superpower.
- India may be getting into a position to make a peacebuilding attempt:
1. A report by a US-based business intelligence consulting firm corroborates this asserts that India may be getting into a position to make a peacebuilding attempt
2. According to this survey, Prime Minister Narendra Modi is among the world’s most popular global leaders. With a 78 per cent approval rating, Modi is far ahead of other contenders.
Conclusion
- It is high time that Indian strategists explore the feasibility of making India a peacemaker. It is a difficult and challenging task that may seem impossible. But there is no reason not to try, as the Prime Minister and the posture of the nation has both internal and external popularity on its side.
February 7, 2023
Urban space for women: India can show the path
Context
- More than half of the population worldwide lives in cities, making urban centres critical to socioeconomic growth and development. However, rampant urbanisation has led to unequal distribution of resources and a lopsided development approach that ignores the specific needs of women. Despite projections of two-thirds of the population living in cities by 2050, urban development remains exclusive of women’s perspectives and needs.
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Gender inequality in cities
- Primary reason: One of the primary reasons behind gender inequality in cities is that modern cities are planned mainly by men and for men, thus sidelining the needs of women.
- Designed assuming that the role of women is confined to household: The cities have been traditionally designed on the premise that a woman’s role is primarily confined to the household, barring their need to access the immediate neighbourhood.
- Patriarchal approach has taken away the Fundamental rights: This patriarchal approach, while shaping the power dynamics between men and women, has also taken away the fundamental right of women to live and thrive in a safe and inclusive outdoor environment.
Role of women and the challenges they face in urban spaces
- Women one of the most vulnerable groups in society: Women, one of the most vulnerable groups in society, face violence in physical and cyber mode, making it difficult for them to access opportunities that come with urbanisation.
- For instance: Due to poorly lit streets and a lack of women-friendly mobility systems, women cannot actively participate in the workforce. Only 27 percent of women participate in the workforce in India as compared to 79 percent of men.
- Male dominated nature of job opportunities available in the cities: Most of them are male-dominated, such as the platform economy jobs of delivery agents and those at vast construction sites, leaving less space for women to intervene.
- Women professionals are burdened with dual work responsibilities: Moreover, with an increase in the number of households in cities, women are devoting most of their time to home and caring work, thus, leaving less time for them to do a job. In this scenario, women professionals are burdened with dual work roles, impacting their physical and mental well-being.
- Discouraged drop outs: Furthermore, the social tendency to discourage urban women from working after marriage has generated a trend of ‘discouraged drop-outs’, leaving them out of the workforce.
- Role in urban planning and governance is abysmally low: Women’s participation in urban planning and governance has been abysmally low. Women hold only 10 percent of the highest ranks globally in architecture and urban planning offices. With women left out of city planning institutions, city planners ignore the needs of women and the challenges they face.
Do you know: The concept of a 15-minute city?
- The concept of a 15-minute city, i.e., where everything needed will be available within a walkable distance of 15 minutes, is attracting the interest of planners even in India.
- However, for stray examples such as Magarpatta, a city in Pune, the concept has failed to move beyond rhetoric.
Focus areas of development
- City society intervention is a prerequisite: The intervention of civil society and policymakers on specific parameters can help build gender-responsive cities that accommodate the concerns of all citizens.
- Building safer cities: Better street lighting, women-friendly transport systems, and behavioural change programmes that help people understand that the onus of safety is not on women but on society as a whole will surely improve women’s access to safer cities.
- For instance: Building technology systems such as the Safetipin app helps women map safe areas and take necessary actions in emergencies by collating a list of important contacts, GPS tracking and so on, thus, trying to make streets safer.
- Changing the attitude and mindset of society at large: Counselling sessions for men, sensitising them about how women feel if a certain social behaviour is practised, can trigger an eventual change in their mindset towards women’s needs.
- Building gender-inclusive jobs: Data suggests that 10 percent increase in women’s workforce participation rate can add US$ 770 million, approximately 18 percent, to India’s GDP. Teaching men to shoulder family responsibilities, making workspaces women-friendly, promoting women to leadership positions, and diversifying the availability of jobs can go a long way in improving the situation.
- Role of women in urban governance: Having women at the top can have a domino effect in society, making other women aspirational of the positions they can reach and the impact they can create.
- For example: Cities like Athena, Bogota, Nairobi, Dakar, and San Francisco that have had female leadership have witnessed greater socio-economic and sustainable development.
- Developing gender-sensitive infrastructure: Globally, one in three women do not have access to safe toilets. Building toilets for women and places to breastfeed and baby changing stations improves the turnout of women on the streets. Improving access to clean water will also improve overall health for women as globally.
Way ahead
- Need a paradigm shift in approaches to policymaking: Including more women in decision-making roles to identify shared concerns and build integrated solutions will need a paradigm shift in approaches to policymaking. This calls for a policy focus on optimum resource allocation and equitable distribution, ensuring easy, safe, and affordable access to all.
- Feminist approach in policymaking: Policymakers need to adopt a feminist approach to urban development.
- Feminist urbanism: Feminist urbanism seeks to understand and integrate the concerns of women and other gender and sexual minorities across caste, class, age differences, disabilities, etc.
- Developing cities on the lines of feminist urbanism: Creating a city on the lines of feminist urbanism refers to constructing compact and mixed-use neighbourhoods, inclusive streets focusing on pedestrian needs and building other critical urban infrastructure.
Conclusion
- Building global partnerships to aid gender mainstreaming in urban spaces can prove fruitful. India has a chance to further this cause as it assumes the G20 presidency. The Urban 20 grouping can bring urban policymakers from the -20 nations to deliberate on women’s rights and evolve gender-inclusive development processes to help cities attain the 2030 agenda for sustainable development holistically.
February 7, 2023
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February 7, 2023
How to crack UPSC with 5hr/day prep? Time management for Working UPSC 2023 & 2024 aspirants | 1-1 Webinar by IRS, Soham sir, AIR 267 [⭐Get Soham sir’s Notes and Timetable]
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February 7, 2023
Budget and the Rural Economy
Context
- Union Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24. Union budgets can be understood in two ways. The first is as a standard accounting exercise of the government’s revenues and expenditures. It is this second aspect that provides insight into the government’s assessment of the challenges facing the economy and ways to overcome them.
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First aspect: standard accounting exercise of the government’s revenues and expenditures
- Projections are less reliable: Over the years, this has ceased to be a good metric with governments failing to spend what is announced in the budget. While the practice of off-budget entries is now no longer relevant, even revenue projections are much less reliable.
- Budget a comprehensive document: However, the budget continues to remain relevant as the most important and perhaps the only comprehensive economic document of the government.
Second aspect: Government’s assessment of the economic challenges and ways to overcome
- Premature to conclude: While the fog of the pandemic has disappeared and the associated supply bottlenecks have eased, it is premature to conclude that the economy has fully recovered.
- Per capita income is low: Per capita incomes in real terms in 2021-22 are still below the 2018-19 levels and the overall growth between 2016-17 and 2021-22 is at its lowest level of 3.7 per cent for any five-year period in the last four decades.
The pandemic effect:
- Economic slowdown: The fact that the economy was slowing down before the pandemic makes it clear that Covid only exacerbated the already fragile economic situation.
- Energy towards managing the pandemic: The structural factors that led to the slowdown remain, as in the last three years the government’s efforts were directed towards managing the pandemic.
- Decline in demand: The most important of these is the decline in demand, both for consumption and investment. Private consumption accounts for almost 60 per cent of the economy and this engine of growth has failed to fire.
- The distress is far more serious in rural areas: Rural wages have stagnated for almost a decade now. Farmers’ incomes have either declined or, at best, stagnated in the last five years.
Critique: Budget and the rural economy
- Withdrawal of expenditure: What has been done is the withdrawal of expenditure on almost every head that mattered for rural economic recovery. With spiraling inflation and even the cushion of free foodgrains having been withdrawn, rural areas are likely to face an uncertain situation.
- The budget for the agricultural sector is lower than the allocation last year: In real terms, the budget has declined by 10 per cent at a time when the agricultural sector is going through its worst crisis. The rise in input costs for both energy and fertilisers is likely to get worse with the withdrawal of the fertiliser subsidy.
- Declined allocation of cash transfer: Even the nominal cash transfer that was provided as part of the PM-Kisan has seen a decline in allocation. But then, this budget is no different from others in the last five years.
- Actual investment in agriculture is declined: Public investment in agriculture declined by 0.6 per cent per annum between 2016-17 and 2020-21, the last year for which data is available. This is a period when the agrarian economy has suffered its worst crisis of profitability.
- Declined budget for non-farm sector: The non-farm sector is now greater in terms of its contribution to the rural economy but has seen a decline in budget allocations.
- For instance: The budget for the Ministry of Rural Development is 13 per cent lower than the revised expenditure last year. The National Rural Employment Guarantee Scheme (MGNREGA) has seen its budget decline in the revised estimates for 2022-23. This is the lowest amount allocated in the last five years compared to actual expenditure on the scheme.
- Only Hosing scheme has seen an increase: The only scheme that has seen an increase in allocation is the rural housing scheme, from an actual spending of Rs 48,422 crore in 2022-23 to Rs 54,487 crore.
Supply-side interventions in demand constrained economy
- Preference for supply-side interventions: The government’s preference for supply-side interventions even when there is excess capacity in a demand-constrained economy. It is this understanding that is reflected in an almost one-third increase in allocation for investment. A bulk of this is in railways and roads a much-needed boost to the infrastructure sector.
- Private sector needs to accompany: But given the small share of public investment, it is unlikely to be sufficient unless it is accompanied by the private sector increasing its investment. Unfortunately, the private sector neither responding to rising public investment nor tax subsidies, as were given in 2019.
- Overall impact: This will have a negligible impact on employment and domestic demand given the low employment elasticity of these investments. Regardless, the increase in investments is welcome.
Conclusion
- The problem with this budget is not accounting but economic policy. This was the last full budget in which government could undertake serious steps to revive the economy. That required prioritising allocations towards reviving consumption demand, spurring private investment and protecting people from the vulnerabilities of high inflation and a slowing economy.
Mains Question

Q. Discuss the impact of pandemic on Indian economy. Highlight governments supply side interventions in demand constrained economy.

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February 7, 2023
[Burning Issue] Indian Budget and Fiscal Deficit
Context
- In the Union Budget for 2023-24, Finance Minister Nirmala Sitharaman chose the path of relative fiscal prudence and projected a decline in fiscal deficit to 5.9% of gross domestic product (GDP) in FY24, compared with 6.4% in FY23.
- Ms. Sitharaman said the government planned to continue on the path of fiscal consolidation and reach a fiscal deficit below 4.5% by 2025-26.
- In this context, this edition of the burning issue will elaborate on the issue of the Fiscal deficit of the Indian government and its roadmap for fiscal consolidation.
What is a Fiscal Deficit?
- Fiscal Deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure.
- A fiscal deficit situation occurs when the government’s expenditure exceeds its income.
- Simply put, it is the amount the government spent beyond its income and is measured as a percentage of the GDP.
- The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 which set targets for the government to reduce fiscal deficits. The Budget 2019-20 has pegged the fiscal deficit for the year 2019-20 at 3.3% of GDP.
Current situation of Fiscal Deficit in India
- Reduced fiscal deficit target: In Union Budget 2023-24, the fiscal deficit to GDP is pegged at 5.9% in FY24. This ratio has declined from 6.4% in 2022-23 (revised estimate) and 6.7% in 2021-22 (actual).
- Reduced revenue deficit: In the revenue budget, the deficit was 4.1% of GDP in 2022-23 (revised estimate). In Union Budget 2023-24, the revenue deficit is 2.9% of GDP. If interest payments are deducted from a fiscal deficit, which is referred to as the primary deficit, it stood at 3% of GDP in 2022-23 (RE).
- The primary deficit, which reflects the current fiscal stance devoid of past interest payment liabilities, is pegged at 2.3% of GDP in Union Budget 2023-24.
- India is ‘fairly’ confident to meet its target to cut its fiscal deficit by nearly 200 basis points to 4.5% of GDP in the next three years, assuming there is no major global economic shock.
- As economic growth continues and the government aims to cut spending on subsidies, the deficit should be able to fall to 4.5% of GDP by 2025/26.
What is fiscal consolidation?
- Fiscal consolidation refers to the ways and means of narrowing the fiscal deficit. A government typically borrows to bridge the deficit. It will then have to allocate a part of its earnings to service the debt.
- The interest burden will increase as the debt increases. In the Budget for FY22, of the total government expenditure of over ₹34.83 lakh crore, more than 8.09 lakh crore (around 20 percent) went towards interest payment.
- Debt is one liability that is difficult to defer and, at the end of the day, the government struggles to find more resources not just for capital expenditure but also for revenue expenditure. In the long run, the uncontrolled fiscal deficit will hurt economic growth.
Is fiscal consolidation legally mandated in India?
- The seeds for fiscal consolidation were sown in 1994 by the then Finance Minister Manmohan Singh. In his budget speech for FY95, he highlighted the need for fiscal discipline and pronounced a policy to end monetizing the deficit.
- As open market borrowings piled up to fund the deficit, Yashwant Sinha in his budget speech for FY01 called for a strong institutional framework to ensure fiscal responsibility. This resulted in the enactment of the ‘Fiscal Responsibility and Budget Management (FRBM) Act, 2003’, which mandated limiting the fiscal deficit to 3 percent of GDP.
What is the government doing to achieve fiscal consolidation?
- The fiscal policy needs to remain “accommodative”: with a focus on gross capital formation in the economy with enhanced capital spending, especially infrastructure investment.
- Enhanced capital spending: In Budget 23-24, capital spending is expected to rise to 3.3% of GDP. Ms. Sitharaman stressed that infrastructure investment has a larger multiplier effect on economic growth and employment. In this context, various schemes such National Monetization Pipeline, Gati Shakti Yojana, etc. have been launched.
- Helping states too: The interest-free loan of ₹1.3 lakh crore for 50 years provided to States should help them spend and boost growth.
- Increased revenue of the government: According to the CGA data for the first eight months of FY23, GoI’s gross tax revenues (GTR) has shown a growth of 15.5% which is just above the nominal GDP growth of 15.4% estimated for the full year of FY23. With this, the GoI’s GTR may be estimated at INR31.3 lakh crore in FY23, exceeding the budgeted magnitude by about INR3.7 lakh crore.
- Reducing subsidies: Two favorable trends relate to the prospect of moderation of global crude prices accompanied by a fall in inflation. This may open up the possibility of reducing some of the relatively large petroleum price-linked subsidies. While the GoI has already committed to an expanded free food grain scheme under PM-GKAY, some of the fertilizer and petroleum subsidies may be reduced.
What are the challenges?
- Less consolidation by states: The states have less fiscal consolidation to do than the central government.
- Committing to High-quality spending: Both have a common challenge to commit to more capex, which is considered high-quality spending as it “crowds in” private investment if done responsibly. And we believe that investment is the only sustainable way to increase the capacity of the economy to grow and create jobs.
- Balancing the capex and fiscal consolidation: For the central government, the challenge is to hold on to its capex push at a time of fiscal consolidation. For the states, the challenge is to start doing more.
Is there a trade-off between fiscal consolidation and growth?
- It is debatable. Many economists have said that speedier economic growth depends on limiting the fiscal deficit. They reason that a high fiscal deficit will increase borrowings and the interest burden would curtail the government’s ability to spend productively. Also, increased government borrowing will crowd out the private sector in the debt market, leading to higher interest rates, which will hurt growth.
- Other economists have argued that fiscal consolidation is not a fiscal compression mechanism, rather it is an expenditure-switching mechanism. The original FRBM Act of 2003, they say, pushed for shifting the expenditure from revenue to capital, which will lay the foundation for higher growth. They argue that the FRBM Amendment Act of 2018 completely dilutes the original Act to become contractionary.
What more can be done? The way forward
- Supporting growth in the short and medium term: Given the relatively lower revenue growth expected in FY24, it may be best to contain the growth of revenue expenditure and continue to emphasize capital expenditure growth as it is associated with higher multipliers.
- Infrastructure expansion should continue: to be the main priority for government expenditure while continuing to encourage Aatmanirbhar Bharat.
- Promote Employment generation: The GoI may also need to signal its priority for employment creation. The sector that suffered the most during COVID-19 was trade, hotels, transport, storage et. al. which is employment intensive. This sector would need to be supported through government programs that generate demand specific to these segments.
- Urban employment schemes: It would also be worthwhile considering whether the rural employment guarantee scheme should be extended to urban areas as has been done by some state governments.
- Raising the tax revenue through formalization: Continued formalization of the economy that raises tax revenues (though “organic” formalization will likely be more sustainable than “forced” formalization).
- Disinvestment of PSUs: A bigger push for disinvestment by selling stakes in public-owned companies, and further tax reforms (in terms of direct taxes and the GST).
Conclusion
- Fiscal consolidation and capital expenditure should go hand in hand. More government spending means more infrastructure building and more chances of growth and employment. However, this spending should be done with a sound fiscal base.
- Thus, careful calibration would be required for limiting revenue expenditure growth in order to retain space for capital expenditure to grow adequately with a view to supporting growth.
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February 7, 2023
Turkey hit by series of powerful Earthquakes: The science behind it
More than 4000 people died and several hundred were injured after a major earthquake of magnitude 7.8 hit south-central Turkey and Northwest Syria.

What is an Earthquake?
- An earthquake is an intense shaking of the ground caused by movement under the earth’s surface.
- It happens when two blocks of the earth suddenly slip past one another.
- This releases stored-up ‘elastic strain’ energy in the form of seismic waves, which spreads through the earth and cause the shaking of the ground.
What exactly causes Earthquakes?
- As we know, the earth’s outermost surface, crust, is fragmented into tectonic plates.
- The edges of the plates are called plate boundaries, which are made up of faults.
- The tectonic plates constantly move at a slow pace, sliding past one another and bumping into each other.
- As the edges of the plates are quite rough, they get stuck with one another while the rest of the plate keeps moving.
- Earthquake occurs when the plate has moved far enough and the edges unstick on one of the faults.
- The location below the earth’s surface where the earthquake starts is called the hypocenter, and the location directly above it on the surface of the earth is called the epicentre.
How prone is Turkey to Earthquakes?
- Turkey and Syria lie in a seismically active region
- The region where the earthquake has struck lies along a well-known seismic fault line called the Anatolia tectonic block that runs through northern, central, and eastern Turkey.
- It is a seismically active zone — though not as active as, say, the Himalayan region which is one of the most dangerous regions in the world from the perspective of earthquakes.
What makes Turkey a hotbed of seismic activity?
- Turkey is frequently shaken by earthquakes. In 2020 itself, it recorded almost 33,000 earthquakes in the region.
- Turkey is located on the Anatolian tectonic plate, which is wedged between the Eurasian and African plates.
- On the north side, the minor Arabian plate further restricts movement.
- One fault line — the North Anatolian fault (NAF) line, the meeting point of the Eurasian and Anatolian tectonic plates — is known to be “particularly devastating”.
- Then there is the East Anatolian fault line, the tectonic boundary between the Anatolian Plate and the northward-moving Arabian Plate.
- It runs 650 kilometers from eastern Turkey and into the Mediterranean.
- In addition to this, the Aegean Sea Plate, located in the eastern Mediterranean Sea under southern Greece and western Turkey, is also a source of seismic activity in the region.
Where was the earthquake epicentered?
- The centre of the earthquake was centred about 33 km from Gaziantep, around 18 km deep.
- Its effect was felt across West Asia, Northern Africa and South Eastern Europe with residents of Lebanon, Cyprus, Greece, Israel and Egypt also reporting tremors.
Aftermath: Many Aftershocks hits the region
- Aftershocks are a sequence of earthquakes that happen after a larger mainshock on a fault.
- Aftershocks occur near the fault zone where the mainshock rupture occurred and are part of the “readjustment process” after the main slip on the fault.
- While they become less frequent with time, although they can continue for days, weeks, months, or even years for a very large mainshock.
Can earthquakes be predicted?
- An accurate prediction of an earthquake requires some sort of a precursory signal from within the earth that indicates a big quake is on the way.
- Moreover, the signal must occur only before large earthquakes so that it doesn’t indicate every small movement within the earth’s surface.
- Currently, there is no equipment to find such precursors, even if they exist.
India offers assistance
- India is among the 45 countries, which have so far offered assistance to Turkey.
- It’s sending search and rescue teams of the National Disaster Relief Force (NDRF) and medical teams along with relief material to the West Asian nation.
February 7, 2023
NASA-ISRO partnership’s NISAR and its Mission
An earth-observation satellite NASA-ISRO Synthetic Aperture Radar (NISAR) jointly developed by NASA and ISRO is all set to be shipped to India later this month for a possible launch in September.

What is NISAR?
- NISAR has been built by space agencies of the US and India under a partnership agreement signed in 2014.
- The 2,800 kilograms satellite consists of both L-band and S-band synthetic aperture radar (SAR) instruments, which makes it a dual-frequency imaging radar satellite.
- While NASA has provided the L-band radar, GPS, a high-capacity solid-state recorder to store data, and a payload data subsystem, ISRO has provided the S-band radar, the GSLV launch system and spacecraft.
- Another important component of the satellite is its large 39-foot stationary antenna reflector.
- Made of a gold-plated wire mesh, the reflector will be used to focus the radar signals emitted and received by the upward-facing feed on the instrument structure.
What is the mission?
- Once launched into space, NISAR will observe subtle changes in Earth’s surfaces, helping researchers better understand the causes and consequences of such phenomena.
- It will spot warning signs of natural disasters, such as volcanic eruptions, earthquakes and landslides.
- The satellite will also measure groundwater levels, track flow rates of glaciers and ice sheets, and monitor the planet’s forest and agricultural regions, which can improve our understanding of carbon exchange.
- By using synthetic aperture radar (SAR), NISAR will produce high-resolution images.
- SAR is capable of penetrating clouds and can collect data day and night regardless of the weather conditions.
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February 7, 2023