IAS UPSC Prelims and Mains Exam – 9th April 2020

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(PRELIMS + MAINS FOCUS)

Food Corporation of India directed to provide grains to NGOs

Part of: GS Prelims and GS – II – Role of NGOs; GS-III – Marketing of agricultural produce

In News:

• The Government has directed Food Corporation of India to provide wheat and rice to NGOs.
• The food grains will be provided at the Open Market Sale Scheme (OMSS) rates without going through the e-auction process.

Key takeaways:

• FCI has network of more than 2000 godowns in the country.
• Large network of godowns will ensure smooth supply of food grains to these organisations in this hour of crisis posed by COVID-19. 
• It will help relief camps in their philanthropic work of feeding poor and migrant workers.

Important value additions:

The Food Corporation of India (FCI)

• It was setup under the Food Corporation’s Act 1964.
• The objectives are:

• • Effective price support operations to safeguard the interests of the farmers.
  • Distributing foodgrains throughout the country for Public Distribution system.
  • Maintaining satisfactory level of buffer stocks to ensure National Food Security.
• Since its inception, FCI has played a significant role in maintaining food security in the country.

Open Market Sale Scheme (OMSS) 

• It refers to selling of foodgrains by Government/Government agencies at predetermined (decided in advance) prices in the open market from time to time.

States asked to invoke Essential Commodities Act, 1955

Part of: GS Prelims and GS-II – Polity & Governance

In News:

• States are asked to invoke Essential Commodities (EC) Act, 1955 by the Ministry of Home Affairs to maintaining smooth supply of essential items at fair prices in the country.
• The measures include fixing of stock limits, capping of prices, enhancing production, etc.

Key takeaways:

• States can now notify orders under the EC Act, 1955 without prior agreement from the Central Government up to June 30, 2020.
• Offences under EC Act are criminal offences and may result in imprisonment of 7 years or fine or both. 
• Offenders can also be booked under the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980.

Important value additions:

Essential Commodities (EC) Act, 1955

• It is an act of Parliament of India. 
• It was established to prevent hoarding of the essential commodities and to ensure their timely delivery so that the normal life does not get affected. 
• This includes foodstuff, drugs, fuel (petroleum products) etc.

Funding for developing nasal passage gel approved 

Part of: GS Prelims and GS-II – Health; GS – III – Science and Technology

In News:

• Department of Science and Technology (DST) has approved funding for Department of Biosciences and Bioengineering, IIT Bombay. 
• The team from the department shall develop a gel that can be applied to nasal passage. 

• It will capture and inactivate novel corona virus, the causative agent of COVID-19.

• This solution will ensure the safety of health workers. 
• It can lead to reduction in community transmission of COVID-19. 

Biofortified carrot variety benefits local farmers 

Part of: GS Prelims and GS – III – Science and Technology  

In News:

• Madhuban Gajar, a biofortified carrot variety, developed by a farmer scientist has benefited hundreds of farmers in Gujarat.
• The carrot has high β-carotene (beta-carotene) and iron content. 

Key takeaways:

• The variety is being cultivated in Gujarat, Maharashtra, Rajasthan, West Bengal, Uttar Pradesh since the last three years.
• The Madhuvan Gajar is used for various value-added products. 
• It was developed by Shri Vallabhhai Vasrambhai Marvaniyawas. 
• He has received a National Award (2017) and a Padma Shri (2019) for his extraordinary work. 

Important value additions:

Biofortification 

• It means breeding crops to increase their nutritional value. 
• This can be done either through conventional selective breeding, or through genetic engineering.

Image source: http://nif.org.in/Innovationofday/madhuvan-gajar-a-high-nutritious-carrot-vareity/6 

(MAINS FOCUS)

POLITY/WELFARE

Topic: General Studies 2:

• Separation of powers between various organs
• Good Governance
• Welfare/Developmental issues

MPLADS: Members of Parliament Local Area Development Scheme

Context: The Union Cabinet approved a 30% cut in the salaries of all Members of Parliament and a two-year suspension of MPLAD scheme so that the amount saved can go to the Consolidated Fund of India (CFI) to fight COVID-19.

What is MPLADS Scheme or Sansad Nidhi Yojana?

• It is a central sector scheme for MPs to recommend works of developmental nature in their constituencies
• It was launched in December, 1993
• The emphasis is on creating durable community assets based on locally felt needs.
• Parent Body: Ministry of Statistics and Programme Implementation (MOSPI) 
• The funds – Rs. 5 crore/annum/MP – under the scheme are non-lapsable.
• Funds are released in the form of grants in-aid directly to the district authorities.
• MPs have only recommendatory role and the district authority is empowered to examine the eligibility of works, select the implementing agencies and monitor it.

Criticism of the scheme

• Against the separation of powers: It allows individual legislators to encroach on executive role of planning & implementation works
• Promotes Patronage Politics: MPLADS gives scope for MPs to utilise the funds as a source of patronage that they can dispense at will. 
• Inefficiency: Gap between recommendation made by MPs and implementation by the district administration
• Unused Funds: Some members do not utilise their full entitlement 
• Weak monitoring of the scheme has led to allegations of misuse & corruption

Views about the scheme

• Judiciary: The Supreme Court has upheld the scheme but called for a robust accountability regime
• Second ARC: It recommended its abrogation altogether, highlighting the problems of the legislator stepping into the shoes of the executive

Why MPLADS was suspended for two years?

• It frees up financial resources of about ₹7,900 crore
• It will boost the funding available for the COVID-19 fight 
• The funds can be spent on boosting the health infrastructure needed to combat the pandemic.
• Judicious usage of Funds: Money will now go into CFI and will be spent based on an assessment of the varying needs in different regions of India.

Challenges ahead due the suspension of scheme

• Political discontent: Funding under the scheme was source of much goodwill for elected representatives.
• Centralising tendency: The step undermines the decentralised manner of funding local area development
• There are dangers that allocations of freed up funds can be discriminatory.

Connecting the dots:

• Parliamentary System – Merits and Challenges
• Other instances where there is breach of Separation of Power

ECONOMY

Topic: General Studies 3:

• Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. 

Financing the Pandemic rescue package

When COVID-19 cases began to increase, the Government of India (GoI) announced a 21-day national lockdown and a ₹1.7-lakh crore rescue package.

Challenges

• There are expectations of further such packages (aimed at businesses & middle class) and the challenges of financing these relief measures.
• Also, the financing strategy should be to raise long-term funds at cost effective rates, with flexible repayment terms.

How can government fund its relief packages?

• Utilizing the availability of unused resources in the state disaster relief fund to the tune of ₹60,000 crore
• Issuing of GDP-linked bonds
  • Indian rupee denominated 25-year GDP-linked bonds that are callable from, say, the fifth year
  • The interest on a GDP-linked bond is correlated to the GDP growth rate and is subject to a cap
  • The issuer, the GoI, is liable to pay a lower coupon during years of slower growth and vice-versa. 
  • Precedence: Costa Rica, Bulgaria and Bosnia-Herzegovina issued such GDP-linked bonds in the 1990s, from whose experience India could learn
  • Prerequisite: Publishing reliable and timely GDP data

• Utilizing the resources of Public Sector Enterprises(PSEs)

• • Paying dues to GoI: The 15 largest non-financial central PSEs (CPSEs) owe the government ₹25,904 crore as of end-March 2019
  • Using cash and bank deposits of these 15 CPSEs (₹64,253 crore) that is in excess of their operating requirements, to increase dividend to government
  • Monetization of non-core assets of these CPSEs as they generally yield 200 basis points lower than the returns on their core businesses. 
  • Forming Public sector bank holding company (‘Holdco’) along the lines of Singapore’s Temasek Holdings to enable PSEs to monetise their non-core assets at remunerative prices
  • Securitization of ₹30,168 crore loans that CPSEs have extended to employees, vendors and associates – to ensure that associated businesses remain liquid

Pic Source: The Hindu

Should government also tap the RBI resources?

• RBI has allocated ₹1 lakh crore to carry out long-term repo operations and has reduced the repo rates by 75 basis points to 4.4% to help banks augment their liquidity in the wake of pandemic
• Government already enjoys handsome dividends pay-outs by RBI
  • During the five years ending on June 30, 2019, the RBI paid the GoI 100% of its net disposable income
  • In FY2019 dividends from RBI more than trebled to ₹1.76 lakh crore from ₹50,000 crore in FY2018. 
• The Bimal Jalan panel constituted in 2019 to review the RBI’s economic capital framework opined that:
  • The RBI may pay interim dividends only under exceptional circumstances 
  • The unrealised gains in the valuation of RBI’s assets ought to be used as risk buffers against market risks and may not be paid as dividends
• Therefore, it is in India’s self-interest to allow a robust and independent RBI to defend the financial sector’s stability

Conclusion

The GoI may finance the COVID-19 rescue package by issuing GDP-linked bonds, tapping PSEs’ excess liquidity and monetising non-core assets

Connecting the dots:

• Different types of Investment Models
• Impact on the disinvestment plans of GoI

(TEST YOUR KNOWLEDGE)

Model questions: (You can now post your answers in comment section)

Note: 

• Correct answers of today’s questions will be provided in next day’s DNA section. Kindly refer to it and update your answers. 

• Comments Up-voted by IASbaba are also the “correct answers”.

Q.1 Consider the following statements:

1. Essential Commodities (EC) Act was established to prevent hoarding of the essential commodities. 
2. Recently the states are being asked by the Government of India to invoke EC Act amidst COVID-19 pandemic.

Which of the above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q.2 Consider the following statements regarding Food Corporation of India:

1. It will provide major food grains to NGOs at the Open Market Sale Scheme (OMSS) rates.
2. It plays major role in ensuring food security in India.

Which of the above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q.3 The nasal passage gel is being developed by which of the following?

1. IIT Bombay 
2. Department of Science and Technology 
3. Indian Council of Medical Research 
4. Ministry of Health and welfare

Q.4 Consider the following statements:

1. Madhuban gajar is a biofortified tomato variety.
2. It is high in beta-carotene.

Which of the above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

ANSWERS FOR 8th April 2020 TEST YOUR KNOWLEDGE (TYK)

Must Read

About impact of lockdown on domestic violence:

The Hindu

About COVID-19 lockdown and religious congregations:

The Indian Express

About need for decentralization of powers to fight COVID-19: 

The Hindu