IAS UPSC Prelims and Mains Exam – 18th May 2020

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(PRELIMS + MAINS FOCUS)

Reforms concerning various sectors of economy announced 

Part of: GS Prelims and GS-III – Economy

In News:

• Recently more reforms concerning various sectors of economy were announced by the Indian Finance Minister. 

Read: First, second and third economic stimulus package 

Key takeaways:

Atomic energy

• Private involvement to be brought into certain areas through PPP mode. 
• Research reactor to be set up in PPP mode for production of medical isotopes which can be used for treatment of cancer and other diseases.
• Irradiation technology facilities for food preservation to be set up in PPP mode, to assist farmers.
• Indian start-ups and tech entrepreneurs will be linked up with nuclear research facilities through tech development-cum-incubation centres. 

Space

• Central government will allow private sector to use ISRO facilities.
• Future projects related to space will be open to the private sector.
• Geo-spatial data policy will be eased to make remote-sensing data more widely available with proper safeguards. 

Power distribution companies (Discoms)

• Discoms in union territories shall be privatised.
• Tariff policy reforms will be introduced to protect consumer rights. 
• Load shedding will be penalised.
• There will be a progressive reduction in cross subsidies (a subsidy granted to a business or activity out of the profits of another business or activity).
• Smart prepaid meters will be set up. 
• Subsidies will be paid by direct benefit transfer.

Civil aviation

• Restrictions will be eased to make civilian flying faster and more efficient. 
• Six more airports are up for auction on PPP basis by Airports Authority of India.
• Additional investment by private players to be invited in 12 airports.
• To make India a global hub for aircraft maintenance, report and overhaul (MRO) hub, the tax regime for MRO ecosystem will be rationalised. 
• This will save maintenance cost for airlines, allow convergence between defence and civil aviation MROs. 
• The target is to grow MRO market in the country from Rs. 800 crore to Rs. 2000 crore over three years.

Ordnance Factory Boards 

• They are being corporatised to improve professional management, transparency and accountability. 
• They will be listed on the stock market but they will not be privatised.
• FDI limit in defence manufacturing under automatic route will be raised from 49% to 74%.

Defence production

• A list of weapons and platforms which will not be allowed for import will be announced.
• They will have to be bought in India. 
• Every year, this list will be increased as capacity to make weapons that meet necessary standards grows. 
• Indigenisation of some imported spares will also be given priority.
• There will be separate budget provision for domestic capital procurement. 
• This will help reduce defence import bill and also encourage domestic manufacturing.

Composite regime for minerals

• Under the regime, 500 mining blocks will be offered through an open and transparent auction process.
• Bauxite and coal blocks will be auctioned jointly.
• Distinction between captive and non-captive mines will be removed to allow transfer of mining leases and sale of surplus unused mineral blocks. 

Reforms in coal sector

• Any private player can bid for a coal block and sell it in the open market. 
• Earlier, only captive consumers with end-use ownership could bid for coal blocks. 
• Almost 50 blocks will be offered immediately. 
• Incentive to convert coal into gas in order to meet environmental needs shall also be provided.
• Coal bed methane extraction will be done through auction.
• Infrastructure development financing of Rs. 50,000 crore will be provided to support 1 billion tonnes of coal from Coal India by 2023-24, plus coal from private blocks.
• Revenue sharing mechanism will be allowed for more coal availability at competitive market prices.

Empowered Group of Secretaries 

• Fast track clearances shall be done through an Empowered Group of Secretaries.
• Incentive schemes to promote new champion sectors shall be introduced. 
• Schemes will also be implemented in States through challenge mode to upgrade infrastructure facilities, connectivity in industrial clusters and to make available land for new investments. 

MGNREGS

• An additional ₹40,000 crore shall be allocated to MGNREGS in addition to the budget estimate of ₹61,000 crore to ensure that workers returning to villages are provided employment, especially in the upcoming monsoon period.

Health infrastructure

• Public expenditure on health will be increased. 
• Investments in grassroots health institutions and wellness centres in rural and urban areas will be increased too.
• All districts shall have infectious diseases blocks which will be set up in their hospitals. 
• Public health labs will be set up in every block.

Education 

• Top 100 universities will be automatically allowed to start online classes from May 30, 2020. 
• The PM e-vidya programme for multi-mode access to digital education will be launched. 
• DIKSHA digital platform will provide e-content and QR coded textbooks for all classes for school education across the country.
• One earmarked TV channel for each class. There will be extensive use of radio, community radio and podcasts.
• Special e-content for visually and hearing impaired children. 

Companies

• In an attempt to give relief to companies defaulting on loans due to the COVID-19 stress, no fresh insolvency will be initiated for one year under the Insolvency and Bankruptcy Code.
• Coronavirus-related debt will be excluded from definition of default.
• Minimum threshold to initiate insolvency proceedings has been raised to ₹1 crore from ₹1 lakh to benefit MSMEs.
• An ordinance will be promulgated to bring this change in IBC.
• Decriminalisation of the Companies Act in violations involving minor technical and procedural defaults such as – shortcoming in CSR reporting, filing defaults, delay in holding AGM, etc.
• Majority of the compoundable offences sections will be shifted to internal adjudication mechanism (IAM). 
• Amendments will be brought through an Ordinance to de-clog the criminal courts and NCLT.
• Companies will be permitted to directly list their securities in permissible foreign jurisdictions. 

Public sector policy

• A new coherent public sector enterprises policy will be formulated to define strategic sectors which will have not more than four PSUs.
• In sectors notified as strategic, at least one public sector enterprise will still be present but private sector will be allowed too. 
• In other sectors, public sector enterprises will be privatised.
• This is being done to minimise wasteful administrative costs. 

Support to the states

• The States’ borrowing limits will be raised from 3% to 5% of State GDP. 
• This increase in borrowing limits is conditional which will be linked to specific reforms such as ‘One Nation, One Ration Card’, ease of doing business, power distribution issues and urban local body revenue. 
• The first 0.5% increase from 3% to 3.5% shall be unconditional.

Important value additions:

Captive Mining 

• It means the mining which is taken out by a company for its own use & it won’t be able to sell it in the market.

Coalbed methane extraction (CBM extraction) 

• It is a method for extracting methane from a coal deposit.

Revenue sharing 

• It is a somewhat flexible concept. 
• It involves sharing operating profits or losses among associated financial actors.
• It can exist as a profit-sharing system that ensures each entity is compensated for its efforts.

(MAINS FOCUS)

GOVERNANCE/ ECONOMY/ AGRICULTURE

Topic: General Studies 2 & 3:

• Government policies and interventions for development in agriculture sector
• Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

A 1991 moment for agriculture

Context: In the wake of COVID-19 induced crisis, Union government announced set of reforms aimed at farm sector.

Did you know?

• 45 per cent of India’s labour force (agricultural) generates only 14 per cent of GDP
• India is the largest exporter of rice in the world and the second-largest producer of both wheat and rice, after China
• The project to double farmers’ incomes by 2022 and the programme to complete 99 irrigation projects by 2019, have had a success rate of less than 50 per cent.

What were the major components of agricultural package announced?

1. Agri-Infrastructure: ₹1-lakh crore fund to finance agriculture infrastructure projects at the farm gate and produce aggregation points

• It will ensure creation of adequate cold-storage facilities
• This would prevent wastage of agri-produce, especially in perishables

2. Effective Fund delivery: These funds are channelled through agricultural cooperatives, farmer producer organisations, rural entrepreneurs and start-ups

• This ensures that benefit & responsibility of fund utilization lies with principal beneficiaries (farmers)

3. Formalisation: A ₹10,000 crore scheme to promote the formalisation of micro food enterprises

• It will assist unorganised enterprises in scaling up food safety standards to earn the products certification and build brand value

4.Amending the Essential Commodities Act (ECA) of 1955

• The legislation helped government cracks down on hoarders and black-marketeers of such commodities (by putting stock limits) to ensure normal supply of goods.
• It is a scarcity era legislation enacted when India was facing famines and droughts, however India is a surplus producer today.
• This law has been abused multiple times which has stifled private investment in agriculture and stunted agri-exports
• The amendments proposed allows for deregulating cereals, pulses, oilseeds, edible oils, onions and potato, encouraging greater participation by private players in the agricultural sector.

5. Agri-Market reforms: Bringing a Central legislation to allow farmers to sell their produce to anyone, outside the APMC mandi yard and having barrier-free inter-state trade.

• It will bring greater competition amongst buyers, lower the mandi fee and commission fee, benefitting both farmers and consumers
• This would provide enhanced marketing freedom for farmers and enable better price realisation.
• Allowing for free inter-state trade could lead to better spatial integration of prices.
• Finally, India will have one common market for agri-produce.

6.Creating a legal framework for contract farming

• It will help farmers take cropping decisions based on forward prices
• This will enable farmers to engage with processors, aggregators, large retailers thus reducing the dependency on APMC monopolies

Challenges ahead

• The package may be more beneficial in the longer term than providing any immediate relief from the lockdown-caused distress in the rural areas.
• Total deregulation for foodgrains has the risk of future inflationary food price spikes
• Agri-market reforms means privileging market forces without necessarily safeguarding food security.
• Building farmer producer organisations (FPOs), based on local commodity interests, is a necessity for empowerment of farmers

Connecting the dots:

• Critically analyse the 1991 economic reforms
• Second Green revolution

GOVERNANCE/ FEDERALISM/ EDUCATION

Topic: General Studies 2 & 3:

• Issues and challenges pertaining to the federal structure 
• Government policies and interventions for development in Education sector

Medical Education: Over-centralisation is harsh

Context: The introduction of National Eligibility-cum-Entrance Test (NEET) has been criticised as excessive state interference in the functioning of Private-unaided and minority medical educational institutions

What Is NEET?

• It is an entrance exam for medical courses like MBBS, BDS, and Post Graduation in both government and private medical colleges. 
• The NTA – National Testing Agency, the regulatory body for NEET UG Exam, conducts it every year in various parts of India. 
• NEET is based on a core curriculum approach, whereby the syllabi of all the school boards have been taken into consideration.

What are the issues with NEET?

• Against Federal Spirit: There are allegations that NEET is infringing upon the state governments’ power to hold admissions in the medical colleges funded by them. 
• Infringes on Autonomy: NEET is an assault on the autonomy of universities and higher education institutions, particularly private, unaided ones
• Against Article 30 and 19(1)(g): This provides right to minority educational institutions to administer themselves. 
• If a minority institution wants additional qualifications over and above the NEET score, denial of such additional and superior qualifications undermines its choice
• Regional Imbalance: Students from some of the state boards(Ex. North East) are at a disadvantage from progressive boards (Ex: Delhi).
• Urban Bias: Students in rural India and those studying in state government-run schools in vernacular medium seem to have a lesser chance of success.
• Lack of Uniformity: There are wide variations with regard to curriculum design and curriculum evaluation among CBSE and State Boards
• Enhances the risk: If a student has to give multiple tests (different state boards/institutions), then the chances of failure in one can be made up in another.
• Credibility Issues: The NEET paper was leaked twice in the last four years; therefore, there is not much confidence in NEET’s fairness and transparency.
• Issue of wrong translation: In the 2018 NEET, as many as 49 questions had errors in Tamil translation 
• Element of Class: Empirical research in the USA on standardised common tests has found that these tests are biased against the poorer and underprivileged sections of population, women and minorities
• Not Comprehensive: Common admission tests cannot measure abilities that are essential for learning such as imagination, curiosity and motivation.

What has been the Supreme Court verdict on NEET?

• In T.M.A. Pai Foundation, SC had held that admission by the management can be by a common entrance test held by “itself or by the State/University
• NEET was initially struck down as unconstitutional in Christian Medical College, Vellore (2013) by a 2:1 majority.
• However, in 2016, the Supreme Court approved the National Eligibility cum Entrance Test(NEET) as a single-level examination

What is the Supreme Court view on Article 30?

Supreme Court itself termed Article 30 as 

• ‘An article of faith’ in Lilly Kurian (1978)
• A ‘sacred obligation’ in Kerala Education Bill (1957)
• ‘The conscience of the nation’ in Ahmedabad St. Xaviers College (1974)
• ‘An absolute right’ in Rev. Sidhajbhai Sabhai And Others (1962) 
• Part of the ‘basic structure’ in Kesavananda Bharati (1973)

Conclusion

However, SC has consistently held that Article 30 is not so absolute as to be above the law and regulations made in the interests of efficiency of instruction, discipline, health, sanitation, morality and public order.

Connecting the dots:

• Joint Entrance Exam and Common Law Admission Test – Critically analyse
• National Medical Commission

(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 Recently, the government announced many reforms in various sectors. Consider the following statements:

1. Future projects related to space will be open to the private sector.
2. Discoms in union territories shall be privatised.

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 Which of the following statements is/are true with regard to the economic package announced by the Central government:

1. Load shedding will be penalised.
2. FDI limit in defence manufacturing under automatic route will be raised from 49% to 74%.

Select the correct code:

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

Q.3 Consider the following statements with regard to the recent reforms announced by the government:

1. Coal bed methane extraction will be done through auction.
2. An Empowered Group of Secretaries will look through fast track clearances.

Which of the above is/are correct?

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

Q.4 Consider the following statements regarding Airports Authority of India :

1. It is an autonomous body.
2. It works with the Ministry of Civil Aviation, Government of India.

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 16th May 2020 TEST YOUR KNOWLEDGE (TYK)

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