IAS UPSC Prelims and Mains Exam – 11th July 2020

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(PRELIMS + MAINS FOCUS)

World Population Day

Part of: GS- Prelims and GS-1: Society 

In News:  

• Every year, 11th July is celebrated as the World Population Day 
• Theme for 2020: How to safeguard the health and rights of women and girls amid the Covid-19 pandemic 
• It was established by the then-Governing Council of the UN Development Programme in 1989, an outgrowth of the interest generated by the “Day of Five Billion” which was observed on 11 July 1987 

Value Addition 

• Current estimates indicate that roughly 83 million people are being added to the world’s population every year. 
•  India has just 2% of the world’s landmass and 16% of the global population.  
• Although the Total Fertility Rate (TFR) is declining in India, poorer states like Bihar (3.2), Uttar Pradesh (3.0), Rajasthan (2.6) and Jharkhand (2.5) still have TFRs above the national average of 2.2. 
• Total Fertility Rate (TFR) is the average number of children born to women during their reproductive years. For the population to remain stable, an overall total fertility rate of 2.1 is needed. 

ASEEM portal 

Part of: GS- Prelims and GS-3: Economy; GS-2: Governance 

In News:  

• Ministry of Skill Development and Entrepreneurship (MSDE) has launched ‘Aatamanirbhar Skilled Employee Employer Mapping (ASEEM)’ portal to help skilled people find sustainable livelihood opportunities. 

Key Takeaways 

• ASEEM portal will provide employers a platform to assess the availability of skilled workforce and formulate their hiring plans. 
• The portal will map details of workers based on regions and local industry demands and will bridge demand-supply gap of skilled workforce across sectors. 
• The Artificial Intelligence-based platform will also provide real-time granular information by identifying relevant skilling requirements and employment prospects.  
• Also available as an application (app), it consists of three IT based interfaces: 

• Employer Portal: Employer onboarding, demand aggregation, candidate selection. 
• Dashboard: Reports, trends, analytics, and highlight gaps. 
• Candidate Application: Create & track candidate profile, share job suggestions. 

Rewa solar power project 

Part of: GS- Prelims and GS-3: Infrastructure, Energy 

In News 

• The 750- megawatt Rewa solar Power Plant in Madhya Pradesh was dedicated to the nation by Prime Minister Narendra Modi 

Key Takeaways 

• The plant consists of three solar power generating units that are located on a 500-hectare plot of land inside a 1,500-hectare solar park 
• The solar plant was set up by the Rewa Ultra Mega Solar Limited, a joint venture between Madhya Pradesh Urja Vikas Nigam Limited and the Centre’s Solar Energy Corporation of India (SECI).  
• This project will reduce carbon emission equivalent to approx. 15 lakh ton of CO2 per year, which is equivalent to planting 26 million trees. 

Do You Know? 

• The process of reverse auction in bidding for projects was tried for first time in India for this project 
• It has a purchase rate of 2.97 rupees per unit, which is the lowest rate till date. 
• International Finance Corporation, a World Bank group company, has invested close to $440 million or Rs 2,800 crore in the project 
• Bhadla Solar Park in Jodhpur district in Rajasthan has a capacity of 2,245 MW and Pavagada Solar Park in Tumkur district, Karnataka has a capacity of 2,050 MW 

(MAINS FOCUS)

BUDGET/ ECONOMY/ GOVERNANCE 

Topic: General Studies 2 and 3:

• Statutory, regulatory and various quasi-judicial bodies
• Government Budgeting

Do we need a fiscal council?

Context: Former RBI Governor D. Subbarao gives his opinion on whether Fiscal Council is needed or not 

The government needs to borrow and spend more now in order  

• To support vulnerable households  
• Engineer economic recovery 

Challenges with respect to increasing borrowings 

• A steep rise in debt will jeopardise medium-term growth prospects 
• Loss of inter-generational equity: Increased borrowing increases interest burden on future generation and reduces their capability to borrow 
• Possible downgrading of Sovereign ratings which may lead to slowdown of foreign investments in country 
• Inflation in near term 
• Loss of market confidence due to government’s fiscal irresponsibility 

How to increase borrowing while still retaining market confidence? 

• Government has to come out with a credible plan for fiscal consolidation post-COVID-19 in order to retain market confidence.  
• The government can signal its virtue by establishing some new institutional mechanism for enforcing fiscal discipline, such as for example a fiscal council 

About Fiscal Council 

• It was first recommended by the 13th Finance Commission and was subsequently endorsed by the 14th Finance Commission and then by FRBM (Fiscal Responsibility and Budget Management) Review Committee headed by N.K. Singh. 
• Fiscal council, at its core, is a permanent agency with a mandate to independently assess the government’s fiscal plans and projections against parameters of macroeconomic sustainability 
• It will then put out its findings in the public domain.  
• Such an open scrutiny will keep the government on the straight and narrow path of fiscal virtue and hold it to account for any default. 

• It will give an independent and expert assessment of the government’s fiscal stance, and thereby aid an informed debate in Parliament.  

What will be the mandate/functions of Fiscal Council? 

The fiscal council’s mandate will include 

• Making multi-year fiscal projections, preparing fiscal sustainability analysis 

• Providing an independent assessment of the Central government’s fiscal performance and compliance with fiscal rules 
• Recommending suitable changes to fiscal strategy to ensure consistency of the annual financial statement  
• Taking steps to improve quality of fiscal data 
• Producing an annual fiscal strategy report which will be released publicly. 

Challenges w.r.t to Fiscal Council 

1. Lack of Political will leading to Chronic fiscal irresponsibility

• Back in 2003 when FRBM was enshrined into law, it was thought of as the magic cure for fiscal ills.  
• The FRBM enjoins the government to conform to pre-set fiscal targets, and in the event of failure to do so, to explain the reasons for deviation 
• The government is also required to submit to Parliament a ‘Fiscal Policy Strategy Statement’ (FPSS) to demonstrate the credibility of its fiscal stance 

• However, there is lack of in-depth discussion in Parliament on fiscal stance and the submission of the FPSS often passes off without even much notice. 

2. Its working may create confusion

• Fiscal council will give macroeconomic forecasts which the Finance Ministry is expected to use for the budget, and if the Ministry decides to differ from those estimates, it is required to explain why it has differed. 
• Besides, forcing the Finance Ministry to use someone else’s estimates will dilute its accountability.  

• If the estimates go wrong, Finance Ministry will simply shift the blame to the fiscal council. 

3. Duplication of Work

• As of now, both the Central Statistics Office (CSO) and RBI give forecasts of growth and other macroeconomic variables, questions will be raised about need for Fiscal Council’s projections 
• Another argument made in support of a fiscal council is that it will act as watchdog & prevent the government from gaming the fiscal rules through creative accounting. 

• However, there is already an institutional mechanism in form of CAG to do the job of auditing & fiscal watchdog of government spending 

Way Ahead- Starting with small steps 

• A week before the scheduled budget presentation, let the CAG, a constitutional authority, appoint a three-member committee for a five-week duration with a limited mandate of scrutinising the budget after it is presented to Parliament 
• The committee will scrutinise government’s fiscal stance and the integrity of the numbers, and give out a public report 

• The CAG’s office will provide the secretarial and logistic support to the committee from within its resources.  
• The Finance Ministry, the RBI, the CSO and the Niti Aayog will each depute an officer to serve in the secretariat.  
• The committee will be wound up after submitting its report 

Connecting the dots 

• N.K. Singh Committee recommendations 

ECONOMY /GOVERNANCE 

Topic: General Studies 3:

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

Developmental Approach to take on China

Context: There is need to get industrial policy right, so as to take on China in Post-COVID world 

India’s developmental approach post 1991 

• Development has been service sector-led and has undermined manufacturing 
• At the same time, China has made rapid strides in manufacturing that has resulted in an uneven balance between the two 

Consequences 

• The share of manufacturing in GDP and employment has stagnated since economic reforms began in 1991 and manufacturing employment actually fell after 2014. 
• China has developed capacities across a wide spectrum in applied engineering and chemical processes and has attempted to capture global markets. 
• India on the other hand is stuck with various low-end services, the scope for which is rapidly declining. 
• The annual trade-deficit between the two countries, of over $50 billion 

Why the present India-China trade balance is unsustainable? 

• Most Indian exports are raw materials or in that genre (low-tech and low employment, like ores, rare earths, chemicals), while the imports are in manufacturing (high-tech) 
• Such a trade pattern inevitably results in unequal terms of trade in time  
• Even in areas where India has some competence, critical inputs are imported from China. For instance 

• Pharmaceuticals (68% dependence on China, for active ingredients)  

• Auto-industry (15-20% dependence on China for electricals, electronics and fuel injection) 

• A sustained current account deficit has led India to multilaterals for loans even for undertaking earthworks, and then use the foreign exchange to balance the current account.  
• High imports from China also leads exporting meaningful jobs to China. 

What should India do to rectify the trade balance with China? 

• India’s approach to development has to change in favour of manufacturing if a total surrender is to be forestalled. 
• Also, there has to be a near ban on imports of low-end products and consumer goods from China. Up to 3,000 imported (Chinese) items (toys, watches, plastic products) could be substituted by local supplies. 
• There would be short-term financial losses to consumers, traders and domestic manufacturers for up to 2-3 years by not being able to import inexpensive goods from China, but this will gradually reduce 
• Lower imports from China would also imply better overall terms of trade and therefore, stabilisation of the rupee, resulting in lower rupee value of petroleum products 

Isn’t the above approach equivalent to import-substitution model of yesteryears? 

• There is a clear difference between strengthening local companies to become globally competitive (proposed) and companies producing under license for captive markets (earlier) 
• Earlier, local industries could not grow in size due to controls, now they can 
• Earlier, they were psychologically not prepared to face international markets, now they are. 

• Also, the approach proposed here is not to fully substitute imports but to reduce unnecessary imports for saving foreign exchange and jobs, along with weaving the Indian industry into the international division of labour. 

Way Ahead 

• Government and industry need to work closely and create mutual trust for promoting industries through tariffs, subsidies, land and labour law easing, infrastructure, etc.  
• Approaches to gain economies of scale need to be put in place to overcome India’s shortcoming of having 66 million MSMEs. A “one-state/district-one product approach” can bring together SMEs to form a single giant unit. 

• Need to invest heavily in targeted R&D, for which private-public sector partnership is essential. Expenditure on R&D should rise 3-4 times from 0.7% of GDP at present. 
• Investment in education, training, and human capital formation should rise from the current 3% to 6% of GDP, with greater industry-based training, focus on quality, and emphasis on STEM. 
• Contain brain-drain out of India (from top engineering and medical colleges) to foreign shores. Partnerships with the best universities in the West is one approach to provide quality education here. 

Connecting the dots 

• Atmanirbhar Bharat Abhiyan 
• Make in India – Critical Analysis 

(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) World Population Day is celebrated on 

1. 9th July
2. 10th July
3. 11th July
4. 12th July

Q.2) Which of the following are the determinants of Total Fertility Rate (TFR) as per the National Family Health Survey (NFHS)?

1. Education 
2. Contraceptive usage
3. Religion 
4. Income/wealth 

Select the correct answer using the codes given below: 

1. 1, 2 and 3
2. 1, 3 and 4
3. 1, 2, 3 and 4
4. 1 and 3 only

Q.3) ASEEM portal was recently launched by –

1. Ministry of Skill Development and Entrepreneurship  
2. Ministry of Home Affairs 
3. Ministry of Social Justice and Empowerment  
4. Minsitry of Rural Development 

Q.4) India’s National Solar Mission is covered under National Action Plan Climate Change. Which of the following statements are correct regarding India’s National Solar Mission?

1. The target is to achieve 100 GW solar power capacity till 2022.
2. The target comprises of rooftop projects as well as through large and medium scale Grid connected Solar Power Projects.
3. Under National Solar Mission, Indian Railways plans to commission 1000MW solar power plants across its networks.

Choose the appropriate option from code given below: 

1. 1 and 2
2. 2 and 3
3. 1 and 3
4.  1,2 and 3

ANSWERS FOR 10th July 2020 TEST YOUR KNOWLEDGE (TYK)

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