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(PRELIMS + MAINS FOCUS)

More details on RBI’s annual report 2019-20

Part of: GS-Prelims and GS-III – Economy

In News:

• Recently, the RBI has released its annual report for 2019-2020.

Key takeaways 

• Temporary prohibition on loan instalments, postponement of interest payments and restructuring initiatives taken by RBI during Covid-19 pandemic have prevented a big spike in NPAs till now.
• Bank credit growth has slowed significantly in 2020 despite the RBI’s efforts to infuse liquidity into the banking system.
• Frauds reported by banks of Rs.1,00,000 and above value have more than doubled (28% increase) in FY 2019-20.  
• The public sector banks accounted for most of these frauds (80%).
• The rural demand fared better than urban areas due to the increased pace of kharif sowing. 
• In Hospitality, hotels and restaurants, airlines and tourism sectors, employment losses are more severe than in other areas.

• Inflation may remain high in the second quarter of 2020-21. 
• Currency notes of ₹2,000 denomination were not printed in 2019-20 and the circulation of these notes have declined over the year. 
• Compared to the previous year, there was an increase in counterfeit notes detected in the denominations of ₹10, ₹50, ₹200 and ₹500. 
• Counterfeit notes detected in the denominations of ₹20, ₹100 and ₹ 2,000 declined.

Suggestions Made by RBI:

• Targeted public investment along with asset monetisation and privatisation of major ports.
• Apex authorities to drive structural reforms and speedier implementation of infra projects.
• Recapitalisation of public sector banks,.
• Deep-seated and wide-ranging reforms to regain losses.

RBI announces special OMO of Rs 20,000 crore

Part of: GS-Prelims and GS-III – Economy

In News:

• The RBI will conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for an aggregate amount of ₹20,000 crore in two tranches.
• It involves purchasing government securities of longer maturities and selling equal amount of securities of shorter maturities.

Important value additions 

 Open market operations 

• It is the sale and purchase of government securities and treasury bills by RBI. 
• Objective: To regulate the money supply in the economy.
• When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market. 
• It sells government securities to suck out liquidity from the system.
• Under OMO, RBI does not directly deal with the public.

Global tourism lost $320 billion in five months: U.N.

Part of: GS-Prelims and GS-III – Economy; Employment

In News:

• According to the United Nations, the global tourism industry has lost $320 billion in exports in the last five months and more than 120 million jobs are  at risk. 

Key takeaways 

• Export revenues from tourism could fall by $910 billion to $1.2 trillion in 2020. 
• It could reduce global GDP by 1.5% to 2.8%.
• Jobs in associated sectors, including food service, that provide employment for 144 million workers worldwide are also at risk.
• Tourism is the third-largest export sector of the global economy, behind fuels and chemicals. 
• It is an emergency situation particularly for many small island developing states and African countries.

Panel to conserve Edakkal caves constituted 

Part of: GS-Prelims and GS-I – Ancient History; Architecture 

In News:

•  A nine-member expert committee has been constituted to conduct a detailed study on the present state of the renowned Edakkal caves on the Ambukuthi hills in Wayanad district, Kerala.
• The neolithic petroglyphs on the cave walls need to be protected from illegal constructions, mining, and urbanisation.
• The Edakkal caves are believed to be camping shelters of the Neolithic community. 

Namath Basai: A unique programme in Kerala

Part of: GS-Prelims and GS-II – Policies and Interventions; Education & GS-I – Society (Tribes)

In News:

• Namath Basai is a unique programme being carried out in Attappady, Kerala. 
• Under it, tribal children are taught in their mother tongue.

Key takeaways 

• The programme is being implemented by the Samagra Shiksha Kerala (SSK).
  • SSK is a programme for the school education sector (pre-school to class 12).
  • Aim: To improve school effectiveness. 
• It offers pre-recorded classes through a YouTube channel. 
• It is available in three tribal languages of the Irula, Muduka and Kurumba tribes.
• It is being introduced in tribal belts of Wayanad and Idukki as well. 
• Classes are offered in the Oorali, Mutuvan and Paniya languages in Idukki. 

Important value additions 

Kurumba Tribe

• Popularly known as: Mala Pulayans, Hill Pulayans and Pamba Pulayans.
• Traditional occupation : Foraging and shifting cultivation. 
• Art of body tattooing.
• Skilled in manufacture of baskets and mats
• Religion: Animism (belief in spirituality of objects, places, and creatures) and Totemism (Worship of any species of plants or animals thought to possess supernatural powers)

Irula or Irular Tribe

• Occupation: Agriculturists
• Grow Paddy, Ragi, dhal, plantains, chillies and turmeric
• Religion: Majority worship Vishnu (Rangaswami and Siva). Some worship the tiger and practice animism.

Mudugars or Muduka tribe

• Have social divisions at kal (clan) level.
• Traditional Occupation: Food gatherers and hunters. 
• Religion: Hinduism (Worship Shiva) 

BRICS 5G Innovation Base

Part of: GS-Prelims and GS-II – International Relations & GS-III – Science and Technology; Artificial Intelligence

In News:

• BRICS 5G innovation base has been proposed by China.
• Objective: To take forward 5G and Artificial Intelligence (AI) cooperation BRICS countries (Brazil, Russia, India, China and South Africa).

Key takeaways 

• Due to ongoing tensions between India and China, India is reluctant to join the programme while other countries are willing to allow China’s participation in their 5G networks.
  • India has made clear that a return to normalcy cannot be possible while tensions along the Line of Actual Control remain unresolved.
  • India has also recently joined the ‘Global Partnership on Artificial Intelligence (GPAI)’ as a founding member.
• Russia has agreed to work with China on 5G.
• In South Africa, Huawei is providing services to provide 5G networks.
• Brazil has allowed participation of Huawei in 5G trials.

Important value additions 

About BRICS

• BRICS is an association of Brazil, Russia, India, China and South Africa.
• All are members of G20.
• Represent over 3.1 billion people, 41% of the world population.
• As of 2018, BRICS have US $40.55 trillion (32% of World’s GDP PPP). 
• Bilateral relations among BRICS nations are conducted on the basis of non-interference, equality, and mutual benefit.
• There are two components that make up the financial architecture of BRICS:
  • New Development Bank (NDB) (BRICS Development Bank) 
  • Contingent Reserve Arrangement (CRA).

(MAINS FOCUS)

SCIENCE & TECH/ INTERNATIONAL/ GOVERNANCE

Topic: General Studies 2,3:

• Effect of policies and politics of developed and developing countries on India’s interests 
• Awareness in the fields of Space

The uncharted territory of outer space

Context: Today, outer space no longer captures our mind space in the way cyberspace does.

Did COVID-19 impact the planned Space activities?

Several space events planned well in advance proceeded even amidst the COVID-19 pandemic, some of which are:

• The launch of missions to Mars by China and the U.S. and UAE’s Mars orbiter mission
• The first astronaut trip to orbit on a commercial enterprise built by Space X
• The completion of the Chinese ‘BeiDou’ satellite navigation system
• The U.S. Space Command 
• Russia conducted a “non-destructive test of a space-based anti-satellite weapon”

How has Space Industry evolved over the years?

• Technology has brought down the Cost: The price tag for reaching low Earth orbit has declined by a factor of 20 in a decade. NASA’s space shuttle cost about $54,500 per kg; now, SpaceX’s Falcon 9 advertises a cost of $2,720 per kg. 
• Increased Market: According to a Bank of America Report, the $350 billion space market today will touch $2.7 trillion by 2050.  In a decade, 80,000 such satellites could be in space compared to less than 3,000 at present

• Increased Participation by Private Players leading to fast paced innovation

• • Starlink, the constellation being constructed by SpaceX to provide global Internet access, plans more than 10,000 mass-produced small satellites in low Earth orbit. 
  • Amazon’s Project Kuiper received U.S. Federal Communications Commission approvals for more than 3,000 micro-satellites. 
  • These missions hope to transcend the digital divide and provide everyone, everywhere access to services such as distance education and telemedicine. 
  • Companies such as Planet, Spire Global and Iceye are using orbital vantage points to collect and analyse data to deliver fresh insights in weather forecasting, global logistics, crop harvesting and disaster response. 

What are the challenges to fulfilling the potential of space?

1. Multilateral framework for Space governance is becoming outdated for present context

• • The Outer Space Treaty of 1967 enshrines the idea that space should be “the province of all mankind” and “not subject to national appropriation by claims of sovereignty”. 
  • The Rescue Agreement, Space Liability Convention, and the Space Registration Convention expanded provisions of the Outer Space Treaty. 
  • Gaps in the Space laws include
    • The Moon Treaty of 1979 was not ratified by major space-faring nations. 
    • Space law does not have a dispute settlement mechanism
    • Space law is silent on collisions and debris 
    • They offer insufficient guidance on interference with others’ space assets.

2. The legal framework of Space laws is state-centric, placing responsibility on states alone

• • However, non-state entities are now in the fray for commercial space exploration and utilisation. 
  • Some states like US are providing frameworks for resource recovery through private enterprises based on the notion that this is not expressly forbidden for non-state actors.
  • Some scholars and governments view this as skirting the principle of national non-appropriation, violating the spirit if not the letter of the existing space law.
  • The lack of alignment of domestic and international normative frameworks risks a damaging free-for-all competition for celestial resources involving actors outside the space framework.

3. Space Arms race and Growing Militarisation

• • States are investing in military space systems for communications, navigation, and reconnaissance purposes, so as to ensure operability of a range of capabilities. 
  • Reliance of militaries on satellite systems means that space assets become potential targets. So investment in technologies that can disrupt or destroy space-based capabilities is under way. 
  • The space arms race is difficult to curb, especially since almost all space technologies have military applications

Way Ahead

• Space legislation is needed for enabling coherence across technical, legal, commercial, diplomatic and defence goals. 
• India’s space vision also needs to address global governance, regulatory and arms control issues. 

Connecting the dots:

• IN-SPACe (Indian National Space Promotion and Authorisation Centre) 
• India’s future space plans – Landing on the Moon; solar observatory; crewed orbital spaceflight mission; and installation of a modular space station in 2030. 

AGRICULTURE / GOVERNANCE/ ECONOMY

Topic: General Studies 2:

• Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. 
• Issues related to direct and indirect farm subsidies and minimum support prices 

Making agricultural market reforms successful

Context: The recent reforms in agriculture and agri-marketing has potential to boost agricultural sector.

Major Policy Changes include

• The removal of restrictions under the Essential Commodities Act (ECA) should help attract private investment in agriculture
• The two new ordinances are expected to enable inter-State trade and promote contract farming, thereby providing a large number of options to farmers

However, there are several difficulties that need to be addressed before the full benefits of these policies are realised. Some of these are

• ‘Time-inconsistency’ problem, or in simple terms, the policy credibility problem. 
• This situation arises when a decision maker’s preferences change over time in such a way that the preferences are inconsistent at different points in time.
• This is relevant in present context because the policy signals are not very clear in the last few years as relates to agricultural marketing, as we will see below.

How has agri-marketing policy changed over years?

1. In 2016, the electronic national agricultural market (e-NAM) was launched 

• • The e-NAM was intended to be a market-based mechanism for efficient price discovery by the farmers. 
  • In the first phase, 585 markets across 16 States and 2 Union Territories were covered. 
  • States needed to amend their respective Agricultural Produce Market Committee (APMC) Acts to put in place three prerequisites for the success of this programme — 
    • a single licence across the State; 
    • a single-point levy of the market fee; 
    • electronic auctioning in all the markets. 
  • Reason for failure of e-Nam: Several States could not or did not carry out these amendments and the e-NAM proved to be far less effective than desired.

2. In September 2018, government launched PM-AASHA

• • Since e-NAM did not yield expected results, the government reverted back to public price support measures through PM-AASHA
  • The main objective of this programme was to provide an assured price to farmers that ensured a return of at least 50% more than the cost of cultivation. 
  • The programme was confined to pulses and oilseeds to limit the fiscal costs, although many other crops, which did not receive the benefits of the MSP-procurement system, also needed this coverage. 
  • Public procurement, deficiency payments and private procurement were the main planks of this programme

• • Reason for uninspiring performance of PM-AASHA 

• • • Only public procurement was carried out in a meaningful way. 
    • Deficiency payments were only implemented on a pilot basis in Madhya Pradesh 
    • Private procurement was not initiated, even on a pilot basis, in any State.
    • Budgetary allocation was meagre: only ₹500 crore have been earmarked in 2020-2021.

3. In 2019, PM-KISAN Yojana

• • The uninspiring performance of PM-AASHA necessitated a more radical and direct approach which evolved in PM-KISAN scheme
  • This programme involved a fixed payment of ₹6,000 per annum to each farm household with a budgetary outlay of ₹75,000 crore. 
  • This programme has worked reasonably well so far with many States topping up the amount at their end. 

Conclusion/ Way Ahead

• The frequent flip-flops in farm policy — from a market-based e-NAM to a public funded PM-AASHA and now back to market-based measures — needs to be avoided as it does not inspire much confidence in the minds of private investor
• Coordination between the Central & State governments, and also among various States becomes crucial for the success of any policy reforms
• Absence or failure of credit and insurance markets may lead a farmer to depend upon the local input dealer or the middleman to meet his/her farming needs. This, in turn, may tie him to these intermediaries and constrain his choice of output markets.
• Restrictions on land leasing in many States leads to inefficient scale of production. Reforms in the output market alone are not sufficient and must be supplemented and complemented with liberalisation of the lease market

Connecting the dots:

• Contract Farming
• Organic Farming

(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 regarding Open Market Operations: 

1. It includes purchase of government securities and treasury bills only.
2. It is an operation taken up by commercial banks independently.
3. The objective of the operation is to regulate the money supply in the economy.

Which of the above are correct?

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

Q.2 Where is Edakkal Caves situated? 

1. Cardamom Hills 
2. Palni Hills 
3. Nilgiri mountains 
4. Ambukuthi Hills

Q.3 Consider the following statements regarding Namath Basai: 

1. The program is being implemented by the Samagra Shiksha Kerala.
2. Under the program the tribal children are taught in their mother tongue. 
3. The languages belong to Irula, Muduka and Kurumba tribes. 

Which of the above are correct?

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

ANSWERS FOR 26th August 2020 TEST YOUR KNOWLEDGE (TYK)

Must Read

About RBI’s annual report:

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About Triple Talaq:

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