60 Days Plan: UPSC IAS Prelims 2019- Economics and Current Affairs (Day 33)

Explanation:

Procyclical fiscal policy implies – governments choosing to increase government spending and reduce taxes during an economic boom, but reduce spending and increase taxes during a recession.

Countercylical fiscal policy implies – reducing spending and raising taxes during a boom period, and increasing spending and cutting taxes during a recession. (opposite of procyclical)

Budget of the Government is divided into Revenue and Capital: Receipts and Expenditure.

Revenue:

Every form of money generation in the nature of income, earnings are revenue for a firm or a government which do not increase financial liabilities of the government, i.e., the tax incomes, non-tax incomes along with foreign grants.

Revenue Receipts:

Revenue receipts of a government are of two kinds—Tax Revenue Receipts and Non-tax Revenue Receipts

Tax Revenue Receipts: This includes all money earned by the government via the different taxes the government collects, i.e., all direct and indirect tax collections.

Non-tax Revenue Receipts

This includes all money earned by the government from sources other than taxes. In India they are:
(i) Profits and dividends which the government gets from its public sector undertakings (PSUs).
(ii) Interests recieved by the government out of all loans forwarded by it, be it inside the country (i.e., internal lending) or outside the country (i.e., external lending). It means this income might be in both domestic and foreign currencies.
(iii) Fiscal services also generate incomes for the government, i.e., currency printing, stamp printing, coinage and medals minting, etc.
(iv) General Services also earn money for the government as the power distribution, irrigation, banking, insurance, community services, etc.
(v) Fees, Penalties and Fines received by the government.
(vi) Grants which the governments receives—it is always external in the case of the Central Government and internal in the case of state governments

Capital Receipts:

All non-revenue receipts of a government are known as capital receipts. Such
receipts are for investment purposes and supposed to be spent on plan-development by a government.

Loan Recovery – lent to states, PSUs, etcs

Borrowings by the government both internal and external borrowings: From banks, RBI, World bank, IMF, etc.

Other receipts like Provident Funds. Postal deposits, Small savings schemes, etc.

Primary deficit = Fiscal deficit – Interest liabilities on previous borrowings.

Option A: is Monetized deficit is the part of the Fiscal deficit which was provided by RBI.

NK Singh committee recommended: Combined debt to GDP ratio of Centre and States to be 60% (40% for Centre and 20% for States) by 2023. Other two options are correct.

All the above come under External Debt. Both Government and Commercial borrowings along with NRI deposits come under External Debt.

Option A: Pump priming – It is the action taken to stimulate an economy, usually during a recessionary period, through government spending and interest rate and tax reductions

Option B: Crowding in: It is defined as a situation where governmental deficits’ spur investment. In this, government spending actually increases a demand for goods. 

Option C: Fiscal Neutrality: It is situation where the net effect of taxation and public spending is neutral: neither stimulating nor dampening.

Option D: Fiscal Drag: It is situation where inflation pushes income into higher tax brackets.

Terms of Reference of Fifteenth Finance Commission:

To examine whether revenue deficit grants be provided at all

To consider the impact of [the] fiscal situation of the Union government of substantially enhanced devolution by the Fourteenth Finance Commission, coupled with continuing imperative of the national development programme including New India 2022.

To look at the conditions that may be imposed by the Central government while providing consent to States when they borrow under Article 293(3).

To propose measurable performance-based incentives to States in respect of a number of areas such as the implementation of flagship schemes, progress towards replacement rate of population growth, a control or lack of it in incurring expenditure on populist measures

Promoting ease of doing business

Twin deficit includes: Fiscal deficit and Current Account Deficit

Money goes into National Small Savings Fund (NSSF) of Public Account of India and is invested in Central and State Government Securities. It is administered by Government of India, Ministry of Finance.

Statement 1 is not correct. It was during the first decade after independence (1951-52) that money
lenders and others had more than 90 % share in rural credit. Currently their relative share has come
down to almost 40 %. To a large extent, they have been replaced by institutional agencies.

Statement 2 is not correct. NABARD does not extend any direct loan to farmers. It extends loans to
cooperatives and commercial banks who offer loans to farmers and others in rural areas.

Entry age should be between 18 to 40 years

The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:-

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units

100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

Exemption from Minimum Alternate Tax (MAT)

Exemption from Central Sales Tax, Exemption from Service Tax and Exemption from State sales tax. These have now subsumed into GST and supplies to SEZs are zero rated under IGST Act, 2017. 

Other levies as imposed by the respective State Governments.  

Single window clearance for Central and State level approvals.

A comprehensive plan – Project Sashakt was announced by the government for the resolution of stressed assets in banking sector.

All the given statements about PM-AASHA are correct.

• Zero Budget Natural farming (ZBNF) is said to be “do nothing farming”.
• It involves the application of nature’s principles in farming.
• It practises no-till, no chemical use in farming.
• Alongside, dispersal of clay seed balls to propagate plants is done.

The key aspects integral to it and which require locally available materials are:

1. seeds treated with cow dung and urine
2. soil rejuvenated with cow dung, cow urine and other local materials to increase microbes
3. cover crops, straw and other organic matter to retain soil moisture and build humus
4. soil aeration for favourable soil conditions

These methods are combined with natural insect management methods when required.

ZBNF is better than Organic Farming:

• Organic agriculture often involves addition of materials required in bulk and have to be purchased.
• These are large amounts of manure, vermicompost and other materials.
• These turn out to be expensive for most small farm holders.

Andhra Pradesh became the first state to implement the ZBNF policy. Hence Statement 3 is wrong.

Statements 2 and 3 are wrong: It has been decided recently that the entire 51% equity held by the Non-Government Institutions in GSTN will be acquired equally by the Centre and the State Governments.

Hence the restructure GSTN will have 100% government ownership equally distributed between the Centre (50%) and the States (50%).

Explanation: A tax haven is a country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment. Tax havens also share limited or no financial information with foreign tax authorities but not necessarily.

Initial Public offering is done in the primary market. The acquired shares in the Initial Public offering can be sold in the Secondary market.

All the given statements are correct.

The Reserve Bank of India (RBI) in consultation with the government of India has set the limits for Ways and Means Advances (WMA) for the first half of the financial year 2019-20 (April 2019 to September 2019) at Rs 75000 crore.

The Reserve Bank of India gives temporary loan facilities to the centre and state governments as a banker to government. This temporary loan facility is called Ways and Means Advances (WMA).

Statement 1 is wrong: The distinction between direct and indirect lending to agriculture has been removed enabling more funds to flow to farm infrastructure such as warehouses, irrigation projects, and even cold storage. Now even bank loans to food and agro processing units will form part of agriculture.

Statement 2 is wrong: The priority sector rulings also apply to foreign banks. However for the banks
with less than 20 branches, total priority sector is 34% of Adjusted Net Bank Credit while it is 40% for other banks.

Jebel Jais is a mountain of the North-Western Hajar range in Ras Al Khaimah, United Arab Emirates and also in the Musandam Governorate of Oman. The summit has an elevation of 1,934 m (6,345 ft). The highest point of this mountain is located on the Omani side, but a secondary hill (in the same mountain) west of this peak is considered the highest point of the United Arab Emirates, at 1,892 m (6,207 ft) above sea level. Since the summit is in the Omani side, Jabal Yibir at 1,527 m (0.949 mi) is the highest peak in the UAE.

Tijuana is the largest city of both Baja California State and the Baja Peninsula (Mexico).

Hajin is a small city in eastern Syria, administratively part of the Deir ez-Zor Governorate, located along the Euphrates River, south of Deir ez-Zor.

The tree line is the edge of the habitat at which trees are capable of growing. It is found at high elevations and high latitudes. Beyond the tree line, trees cannot tolerate the environmental conditions (usually cold temperatures or associated lack of available moisture). The tree line is sometimes distinguished from a lower timberline or forest line, which is the line below which trees form a forest with a closed canopy.

Timberline can climb up as well as climb down. Due to the effects of global warming, the timberline in Canadas Arctic is much higher than it was in the past.

Sometimes, the timberline can be lowered by natural causes such as fire. Other times, the timberline can be lowered by human activity.

Pollution can also lower the timberline. Trees need air, water, and soil to survive. If one of those elements is contaminated, entire groves of trees can die. The copper and nickel smelter on the Kola Peninsula in Russia is one of the largest producers of heavy metals in Europe.

The alpine timberline marks the point where the elevation is too high, and usually too cold, for tree growth.

World Food Programme is the UN agency focused on hunger alleviation and food security. Globally, it responds to emergencies making sure food reaches where it is needed, especially in times of civil strife and natural disasters. In India, WFP has moved from providing direct food aid to providing technical assistance and capacity building services to the Government of India. WFP is focusing on enabling the country’s food-based social safety nets to function more efficiently and effectively in providing food to their target population.

WFP is the largest humanitarian organisation implementing school feeding programmes worldwide and has been doing so for over 50 years. Each year, WFP provides school meals to 18.3 million children across 65 countries, often in the hardest-to-reach areas.

WFP is governed by a 36-member Executive Board. It works closely with its two Rome-based sister organizations, the Food and Agriculture Organization of the United Nations and the International Fund for Agricultural Development. WFP partners with more than 1,000 national and international NGOs to provide food assistance and tackle the underlying causes of hunger.

India Monday signed an ascension pact to the 30-member Trans Regional Maritime Network that will give it an access to the information on ships passing through the Indian Ocean Region.

The multilat (sic) construct comprises 30 countries & is steered by Italy.

The pact will give India the access to information on ships which pass through the Indian Ocean region that will greatly help the security forces in keeping a tab on any suspicious activity,

The Convention on International Transport of Goods Under Cover of TIR Carnets (TIR Convention) is a multilateral treaty to simplify and harmonise the administrative formalities of international road transport.

ENSURE Portal for subsidy payment for activities related to poultry, small ruminants, pigs etc. through Direct Benefit Transfer (DBT). It comes under the Entrepreneurship Development and Employment Generation (EDEG) component of National Livestock Mission and was developed by NABARD.

Kerala accounts for close to 80% of the overall rubber production in the country followed by Tamil Nadu and North-eastern states.

https://www.thehindu.com/news/national/kerala/rubber-goes-for-a-swap/article25808743.ece

Sangeet Natak Akademi has organised a five-day long ‘Putul Parampara — India Puppetry Festival’, to showcase the significance of the country’s traditional folk culture.

“Putul Parampara” is a series focusing on developing the classics of puppetry into the northeastern region.

Puppet dance, popularly known as ‘Putula Nach’, was once the most popular form of entertainment, especially for children, but the folk-culture has struggled against the onslaught of modern popular culture.

It was organised in Tripura.

https://www.business-standard.com/article/news-ians/putul-parampara-india-s-puppetry-festival-begins-in-tripura-118122000845_1.html

Polymetallic nodules (PMN) are also known as manganese nodules. They are potato-shaped, largely porous nodules found in abundance carpeting the sea floor in the deep sea of the world oceans.

https://www.thehindu.com/sci-tech/science/india-plans-deep-dive-for-seabed-minerals/article25711278.ece

The mass extinction, known as the “great dying”, occurred around 252m years ago and marked the end of the Permian geologic period. The study of sediments and fossilized creatures show the event was the single greatest calamity ever to befall life on Earth, eclipsing even the extinction of the dinosaurs 65m years ago.

The Permian–Triassic (P–Tr or P–T) extinction event, colloquially known as the Great Dying, the End-Permian Extinction or the Great Permian Extinction, occurred about 252 Ma (million years) ago, forming the boundary between the Permian and Triassic geologic periods, as well as between the Paleozoic and Mesozoic eras.

https://www.thehindu.com/sci-tech/science/hot-ocean-water-led-to-mass-extinction-study/article25699084.ece

Astronomers have discovered a frozen planet with a mass over three times that of the Earth, orbiting the closest solitary star to the Sun.

Barnard’s star b is the second closest known exoplanet to our Sun. The closest lies just over four light-years from Earth. That exoplanet, Proxima b, orbits around the red dwarf Proxima Centauri.

Barnard’s star b orbits around its host star once every 233 days.