Archives

(PRELIMS + MAINS FOCUS)

Import embargo on 101 defence items

Part of: GS Mains II and III – Govt policies and initiatives; Defence 

Context: 

• Defence Ministry to impose import embargo (ban or restrictions) on 101 items to boost indigenisation of defence production 

Benefits: 

• Boost indigenisation of defence production 
• Helps India to become self-reliant in defence (#AtmanirbharBharat initiative) 
• Government intends to reach a turnover of $25 billion through indigenously manufactured defence products and also expects to export products worth $5 billion 

Idukki landslip

Part of: GS Prelims and Mains II and III – Natural hazards and disaster; Disaster Management 

Context: 

• Kerala faces floods for third consecutive year. 
• Incessant rain and strong winds swept across several parts of Kerala amid predictions of heavy or very heavy rain in many others. 

Note: Try to know and locate places such as Eravikulam National Park, Nayamakkad tea estate, rivers and major dams present in Kerala. 

Key facts: 

• In India, about 0.42 million sq. km or 12.6% of land area, excluding snow covered area, is prone to landslide hazard.  
• Out of this, 0.18 million sq. km falls in North East Himalaya, including Darjeeling and Sikkim Himalaya; 0.14 million sq. km falls in North West Himalaya (Uttarakhand, Himachal Pradesh and Jammu & Kashmir); 0.09 million sq. km in Western Ghats and Konkan hills (Tamil Nadu, Kerala, Karnataka, Goa and Maharashtra) and 0.01 million sq. km in Eastern Ghats of Aruku area in Andhra Pradesh. 

National Landslide Susceptibility Mapping (NLSM) programme 

Part of: GS Prelims and Mains II and III – Natural hazards and disaster; Disaster Management 

About NLSM 

• Geological Survey of India has launched and undertook a national programme on landslide susceptibility mapping – Macro scale (1:50,000) National Landslide Susceptibility Mapping (NLSM) with an aim to cover the 0.42 million sq. km landslide prone areas of the country. This national programme was formally launched in 2014. 

Aims and Objectives 

• To create a dynamic National Landslide Susceptibility Geodatabase for India 
• To prepare GIS – based seamless Landslide Susceptibility Maps of India on 1:50,000 scale 
• To prepare a nation-wide repository on GIS-based Landslide Inventory 

Scientists find 77 new butterfly species in Matheran 

Part of: GS Prelims and Mains III – Environment and Biodiversity; Conservation; Endangered species 

Context: 

• After a long gap of 125 years, scientists have found 140 are species of butterflies, including 77 new ones, in Matheran.  
• Matheran is an eco­sensitive zone, located in Maharashtra.  
• The Matheran hill railway, also known as Matheran Light Railway (MLR), was inspected by UNESCO world heritage site officials but failed to make it to the list as a World Heritage Site. 

Financial facility under Agriculture Infrastructure Fund 

Part of: GS Prelims and Mains II and III – Govt schemes and initiatives; Agriculture; Infrastructure 

Context:  

• PM Modi launched a new Central Sector Scheme of financing facility under the Agriculture Infrastructure Fund of Rs. 1 Lakh Crore. 

Key pointers: 

• The first sanction of over Rs. 1000 Crore was made to over 2,280 farmer societies. 
• The scheme will support farmers, Primary Agricultural Credit Society (PACS), Farmer Producer Organisation (FPOs), Agri-entrepreneurs, etc. to build community farming assets and post-harvest agriculture infrastructure. 
• It will enable farmers to get greater value for their produce. 
• They will be able to store and sell at higher prices, reduce wastage, and increase processing and value addition. 

Important Value Additions 

About Agriculture Infrastructure Fund: 

• The Agriculture Infrastructure Fund is a medium – long term debt financing facility. 
• It is a facility for investment for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee. 
• The duration of the scheme shall be from FY2020 to FY2029 (10 years). 
• Under the scheme, Rs. 1 Lakh Crore will be provided by banks and financial institutions as loans. 
• The loans will have an interest subvention of 3% per annum and credit guarantee coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for loans up to Rs. 2 Crore. 

Target Beneficiaries: 

• Farmers, PACS, Marketing Cooperative Societies, FPOs, SHGs, Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects. 

About PM-KISAN: 

• The scheme was launched in December 2018 to provide income support by way of a cash benefit to all landholding farmers (subject to certain exclusion criteria). 
• The cash incentive was aimed to enable them to fulfil their agricultural requirements and support their families. 
• Under the scheme, the financial benefit of Rs.6000/- per year is provided to eligible beneficiary farmers in three equal instalments. 
• The amount is directly transferred into the bank accounts of the beneficiaries through direct benefit transfer (DBT) mode. 
• As of July 2019, ₹17,000 crore released to about 8.5 crore farmers under PM-­KISAN plan. 

Indus Waters Treaty

Part of: GS Prelims and Mains II – India and Pakistan relations 

Context: 

• Indus Waters Treaty (IWT) – Signed by India and Pakistan in 1960 
• Under the treaty, India has full use of the three “eastern” rivers (Beas, Ravi, Sutlej), while Pakistan has control over the three “western” rivers (Indus, Chenab, Jhelum), although India is given rights to use these partially as well for certain purposes. 

Pic: IWT 

Do you know? 

• According to the terms of the IWT, India has the right to build RoR projects on the three ‘western’ rivers — the Chenab, Jhelum and Indus — provided it does so without substantially impeding water flow in Pakistan downstream. 

Andaman and Nicobar to be a maritime hub 

Part of: GS Mains III – Infrastructure; Defence; Security 

Context: 

• PM said that Andaman and Nicobar islands region was going to be developed as a “maritime and start-up hub” and highlighted his government’s development initiatives for it. 
• PM to inaugurate a submarine optical fibre cable between Chennai and islands   

Benefits: 

• It helps to turn the islands “digitally independent”. 
• 12 islands of the archipelago have been selected for high­-impact projects with an emphasis on boosting trade of sea­-based, organic and coconut-­based products of the region. 
• It helps the group of islands become an important centre of blue economy. 

eSanjeevani platform 

Part of: Part of: GS Prelims and Mains II – Govt schemes and initiatives; Health  

Context:  

• The Union Minister for Health and Family Welfare presided over a review meeting with States/UTs on the eSanjeevani and eSanjeevani OPD platforms. 
• It was conducted as 1.5 lakh tele-consultations were completed on the tele-medicine service platforms of the Health Ministry. 

Do you know? 

• In a short span of time since its launch in November 2019, tele-consultation by eSanjeevani and eSanjeevani OPD have been implemented by 23 States (which covers 75% of the population) and other States are in the process of rolling it out. 

About eSanjeevani 

• It is a national telemedicine service that offers tele-consultations enabling patient to doctor consultations from the confines of their home, as well as doctor to doctor consultations. 
• This eSanjeevani platform has enabled two types of telemedicine services viz. Doctor-to-Doctor (eSanjeevani) and Patient-to-Doctor (eSanjeevani OPD) Tele-consultations 
• The former is being implemented under the Ayushman Bharat Health and Wellness Centre (AB-HWCs) programme. 
• The telemedicine platform is hosting over 40 online OPDs, more than half of these are speciality OPDs which include Gynaecology, Psychiatry, Dermatology, ENT, Ophthalmology, antiretroviral therapy (ART) for the AIDS/HIV patients, Non-Communicable Disease (NCD) etc. 

(MAINS FOCUS)

ECONOMY/ GOVERNANCE

Topic: General Studies 3

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

The govt and RBI face a trilemma regarding PSBs

Context: Former RBI governor Urjit Patel in his new book Overdraft—Saving the Indian Saver, talks about a trilemma facing the Indian central bank and the government with regards to Public Sector Banking. 

What is the trilemma? 

The government along with RBI cannot hope to achieve below three points at the same time: 

1. Have dominance of government banks (public sector banks) in the banking sector 
2. Retain independent regulation 
3. Adhere to public debt-gross domestic product (GDP) targets.”  

Only two out of the three can be achieved.  

For Example: The government wants the public sector banks (PSBs) to dominate the banking system and at the same time ensure that the public debt doesn’t go up. 

What will happen in such a circumstance? 

• In this scenario, RBI will have to compromise on independent regulation.  
• To dominate the banking system, PSBs will have to increase lending at a fast pace.  
• Eventually, this increased lending will lead to accumulation of bad loans or loans that haven’t been repaid for 90 days or more.  
• Given that the recoveries of bad loans are minimal, the government, as the owner, will have to invest more money into the PSBs to keep them going.  
• If the government puts more money into the PSBs, its expenditure will go up. 
• It will have to borrow more money and the public debt to GDP ratio will substantially rise 

How can public debt to GDP ratio be saved from rising? 

• The central bank will have to dilute some regulations to help the PSBs in not recognizing bad loans. In such a case, the government need not invest in the PSBs immediately.  
• PSBs will have a greater market share and the public debt to GDP ratio will not rise right away.  
• However, the RBI will have to dilute banking regulations. 

What is the issue with RBI diluting norms? 

• When RBI dilutes regulations, banks end up kicking the bad loans can down the road. This postponement leads to a bigger problem, which hits the banks, not immediately, but a few years later.  
• This is precisely how PSBs accumulated peak bad loans of ₹8.96 trillion, as of March 2018.  
• The government then has to recapitalize the banks in the years to come. In the process, it pushes the public debt to GDP ratio up.  
• This is one situation that the government has been trying hard to avoid. 

What is the eventual way out for RBI, govt? 

• The decline in the share of government banks in the banking sector should not be resisted (reduced dominance of PSBs) 
• Current trends broadly suggest that the banking sector is increasingly privatized, by stealth, much like the telecom sector. For Ex: In the last decade, the share of PSBs in overall lending has dropped sharply from 75.1% to 57.5% at present.  
• As PSBs keep losing share, they will cause fewer headaches for the government and the central bank in the decades to come. 

Connecting the dots:

• Liquidity Push and its issues: Click here 
• Twin Balance Sheet Problem 

ECONOMY/ GOVERNANCE 

Topic: General Studies 3

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

Three Steps to Economic Recovery by former PM Manmohan Singh

Context: The slowing Indian economy (GDP grew at 4.2% in the 2019-20) was further devastated by the Pandemic. 

Present Economic Scenario in India 

• The lockdowns and rising public anxiety about the virus led to a sharp deterioration in economic activity in India. 
• Post lifting the lockdown, different parts of the economy are likely to recover from the hit at different speeds.  
• Industrial activity could possibly normalise, especially in manufacturing where controlling the virus might be easier.  
• However, industries in which it is harder — travel or entertainment for example — will still be in a gradual normalisation process, and probably won’t rebound completely until a vaccine is available 

Do You Know? 

• Some economists project India’s real GDP to contract by 4.4% in FY21; this would be the deepest recession India has witnessed since 1980. 
• The global GDP to projected to contract by 3.5% in 2020, which can be considered as deepest recession since at least the Second World War 

How is the present economic shock different from previous crisis (like 1991)? 

• Impacted Whole World: The 1991 crisis was a domestic crisis induced by global factors, but today’s economic situation is unprecedented in its ubiquity, scale and depth 
• Impacts Behavioural Mindset: The fear and scare factor among citizens was not prevalent during any of the previous recessions.  
• Unparalleled Response: The COVID-19 shock also has this unique feature which is the response to the shock itself, that is, the virus control and social distancing measures represent a physical constraint on economic activity. 
• Domestic & Global Economic Recover interlinked: India is much more integrated with the rest of the world now. In this pandemic, the global economy is severely dented and that will be a big cause of concern for India 

What Steps need to be taken to arrest economic crisis? 

Former PM Manmohan Singh provides for ‘three steps’ to stem India’s economic crisis 

1. First, the government should ensure people’s livelihoods are protected and they have spending power through a significant direct cash assistance. 
2. Second, it should make adequate capital available for businesses through government-backed credit guarantee programmes. 
3. Third, it should fix the financial sector through institutional autonomy and processes 

What are the Challenges with the above steps? 

• With tax receipts plummeting, it will be difficult for a cash-strapped government to be able to get the money to fund direct transfers and provide more capital to ailing banks and credit to businesses. 
• In order to overcome the challenge, Former PM Manmohan Singh advices Higher borrowing (from external sources like World Bank & IMF) 
• He says that even if India has to spend an additional 10% of the GDP to cater to the military, health and economic challenges, it must be done. 
•  The problem with higher borrowing is it will increase India’s debt to GDP ratio. Since this is crisis period, former PM says that increase in this ratio will be worth it as it can save lives & boost economic growth 

Is taking loans from global institutions considered a sign of India’s economic weaknesses? 

• In the past (1991 BoP Crisis), taking loans from multilateral institutions like the IMF and World Bank have been taken as signs of India’s economic weaknesses.  
• But now India could borrow from a position of strength, compared to other developing nations 
• This is because India’s track record as a borrower from multilateral institutions is impeccable. Hence borrowing is not a sign of weakness 
• Therefore, Indian government must not be shy of borrowing but it must be prudent on how to use that borrowing 

Conclusion 

The previous crises were macroeconomic crises for which there were proven economic tools. The present crisis has induced fear and uncertainty in society, and monetary policy alone as an economic tool to counter this crisis is proving to be blunt. 

Connecting the dots:

• Direct Monetization of Deficit: Merits & Demerits 

(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) Which of the following statements regarding Landslides is/are INCORRECT? 

1. The size and shape of the detached mass in landslides depends only on the degree of weathering. 
2. The materials involved in landslides are relatively dry. 

Select the correct code: 

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

Q.2) Eravikulam National Park is located in 

1. Tamil Nadu 
2. Kerala 
3. Telangana 
4. Puducherry 

Q.3) Which of the following is/are the part of categories of Priority Sector Lending? 

1. Agriculture infrastructure. 
2. Remote village electrification. 
3. Renewable Energy. 

Codes: 

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

Q.4) Indus Water Treaty is considered to be one of the most successful river water sharing treaties of the World. Which of the following are correct provisions of IWT? 

1. The water of Jhelum and Chenab is allocated to Pakistan and water of Ravi, Beas and Satluj is allocated to India. 
2. India is allowed to use 20% water of Indus. 
3. The Disputes regarding water sharing and breaching of treaty are World Bank. 

Select the code from below: 

1. 1 and 2 
2. 2 and 3 
3. 1 and 3 
4. All of the above 

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

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