fbpx

PRESS INFORMATION BUREAU (PIB) IAS UPSC – 25th January to 31st January – 2021

  • IASbaba
  • February 1, 2021
  • 0
IASbaba's Press Information Bureau, UPSC Articles
Print Friendly, PDF & Email

Press Information Bureau (PIB) IAS UPSC – 25th to 31st January, 2021

ARCHIVES

GS-2

National Baseline Geoscience Data Generation Programmes

To expedite exploration activities in the country, Geological Survey of India (GSI), has embarked upon an ambitious scheme to complete some major National level surveys by 2024: 

National Geochemical Mapping (NGCM): It is an all India programme to cover the entire surface area of the country by geochemical sampling. The NGCM work will generate distribution pattern of 62 elements (samples collected at 1km x 1km grid) for use in managing and developing natural resources; for application in environmental, agricultural, human health, other social concerns and to search for hidden mineral deposits.

National Geophysical Mapping (NGPM): The anomaly maps derived from the processed gravity and magnetic data provides all stakeholders a framework to design exploration strategies.

National Aero Geophysical Mapping Program (NAGMP): First of its kind project in the country, its objectives are to delineate concealed, deep seated structure/ litho-units capable of hosting mineralization, delineate extension of the existing mineralized zone and understating of shallow crustal architecture in the context of mineral occurrence. It is for the first time that the multi-sensor aero-geophysical surveys (magnetic gradiometry and spectrometric) are being carried out by adopting such large regional scale survey parameters of 300 m traverse line spacing with aircraft flown at 80 m above ground level.

GSI is also going to adopt sophisticated deep penetration geophysical techniques such as Magneto-Telluric Surveys and Deep Seismic Reflection Surveys (DSRS) in order to define the crustal architecture for deep seated mineral targeting.

GSI has also initiated its flagship initiative of National Geoscience Data Repository (NGDR) for collation of all the geoscience data of the country involving GSI, other national organizations with geoscience as a focused activities, all the state directorate of mines and geology, the academia engaged in research and development in the domain, the CPSEs engaged in exploration and geoscientific pursuits, and private sector agencies working in the domain. It aims at integrating the collected data by GSI and the similar organizations to build a repository on the digital medium entailing multiple user access. 

Significance of these Programmes:

  • The collation, assimilation and integration of the data generated from the above projects and further interpretation will lead to identification of more areas for mineral exploration in the country. 
  • The increased investment in mineral exploration will build a robust pipeline of prospective mineral blocks for auction. This will ensure long-term viability and continuity of mining in the country taking India towards the cherished goal of ‘Atmanirbhar Bharat’. 
  • The data generated through this mapping activity has helped to build up the knowledge database for National Geo-scientific information, which helps in boosting mineral exploration activities, and other earth science related socio-economic activities and programmes.  

Nation celebrates 11th National Voters’ Day

(Topic: Elections)

National Voters’ Day is celebrated all across the country on January 25 every year since 2011, to mark the foundation day of the Election Commission of India, i.e. 25th January 1950. The main purpose of the National Voters Day celebration is to encourage, facilitate and maximize enrolment, especially for new voters.

Theme: ”Making Our Voters Empowered, Vigilant, Safe and Informed”

Background

  • Election Commission of India is a Constitutional Body created under Article 324 of the Constitution of India. 
  • The first Chief Election Commissioner was appointed on 21st March 1950. Since its creation, the Commission was a single member body except for a brief period from 16th October 1989 to 1st January 1990 when it was converted into a three member body. 
  • Subsequently, since 1st October 1993, the Commission has been a three-member body, consisting of the Chief Election Commissioner and two Election Commissioners.
  • The National Voters’ Day celebration was initiated in India in 2011 by the then-President of India, Pratibha Devi Patil, on the 61st foundation day of Election Commission of India.
  • The Constitution (Sixty-First Amendment) Act, 1988 had lowered the threshold voting age from 21 years to 18 years.

Launch of 

Election Commission of India’s Web Radio: ‘Hello Voters’ – an online digital radio service. 

e-EPIC (Electronic Electoral Photo Identity Card) programme: The e-EPIC is a non-editable secure portable document format (PDF) version of the EPIC (approx. 250 KB) which can be downloaded on mobile or in a self-printable form on the computer.

  • A voter can thus store the card on his mobile, upload it on Digi locker or print it and self-laminate it. This is in addition to physical IDs known as PVC EPIC being issued for fresh registration. 
  • The e-EPIC will also have a secured QR code with the serial number, part number, date of poll, etc along with the image of the voter for identification.
  • The e-EPIC initiative would be launched in two phases:-
    • First phase- It will start from From January 25 to 31. Only new voters can apply for the voter-ID card and register their mobile numbers in Form-6 to download the e-EPIC by authenticating their mobile number. The mobile numbers should be unique and not be previously registered. 
    • Second phase- It will start from February 1 and will be open for the general voters. People who have given their mobile numbers (linked one) they can also download their e-EPIC.

India signs Strategic Partnership Agreement with International Energy Agency (IEA)

(Topic: India and International organisations)

The Framework for Strategic Partnership between the International Energy Agency (IEA) members and the Government of India was signed on 27th January, 2021.

Aim: To strengthen mutual trust and cooperation & enhance global energy security, stability and sustainability. This partnership will lead to an extensive exchange of knowledge and would be a stepping stone towards India becoming a full member of the IEA.

The contents of the Strategic partnership will be jointly decided by the IEA Members and India, including 

  • A phased increase in benefits and responsibilities for India as an IEA Strategic partner
  • Building on existing areas of work within Association and the Clean Energy Transitions Programme (CETP), such as Energy Security, Clean & Sustainable Energy, Energy Efficiency, Enhancing petroleum storage capacity in India, Expansion of gas-based economy in India etc.

The IEA Secretariat will be responsible for implementation of the cooperative activities in India and for facilitating discussion between the IEA Members and India to further develop the Strategic Partnership.


World Economic Forum’s Davos Dialogue – Key Highlights

(Topic: India and International organisations)

  • Effective containment of Corona in India has saved the humanity from a very big tragedy – India moved forward with proactive and pro-participation approach and worked on strengthening the COVID specific health infrastructure, trained its human resource to tackle the pandemic and used technology massively in testing and tracking of the cases.
  • Aatamnirbhar Bharat movement is committed to global good and global supply chain – India has maintained economic activity by starting infrastructure projects worth billions of rupees and initiating special schemes for employment. Earlier we focused on saving lives now everyone is focussed on the growth of the country. India’s ambition of self-reliance will strengthen globalism anew and will help in Industry 4.0,
  • India offers a predictable and friendly environment from tax regime to FDI norms
  • Country’s digital profile has been completely transformed – India is working on all the four factors of Industry 4.0- connectivity, automation, artificial intelligence or machine learning and real-time data. India is among the countries where data charges are the cheapest and mobile connectivity and smart phones have reached far and wide. India’s automation design expert pool is vast and the country has made a mark in the field of AI and machine learning. Growing digital infrastructure has made digital solutions everyday part of life in India. Digital Infrastructure has made public service delivery efficient and transparent. India has started a campaign for providing easy access to health care by giving Unique Health ID to its citizens
  • India is focussing on sustainable urbanization with focus on ease of living, ease of doing business and climate sensitive development – This commitment has led to investment of 150 billion dollars were invested in urban India during 2014 to 2020.

Agreement for financial support to STARS project signed between DEA and World Bank

(Topic: India and International organisations)

Agreement for the financial support of the implementation of Strengthening Teaching-Learning and Results for States (STARS) project of Ministry of Education was signed between Department of Economic Affairs (DEA) and World Bank along with Ministry of Education. The total project cost of STARS project is Rs 5718 crore with the financial support of World Bank amounting to US $ 500 million (approximately Rs. 3700 crore) and rest coming as State share from the participating States, over a period of 5 years.

The project covers 6 States viz Himachal Pradesh, Rajasthan, Maharashtra, Madhya Pradesh, Kerala and Odisha. The identified States will be supported for various interventions for improving the quality of education.

The Program envisions improving the overall monitoring and measurement activities in the Indian school education system through interventions in selected states. 

  • STARS will draw on existing structure under Samagra Shiksha with the DoSEL, MoE as the main implementing agency at the national level. 
  • At the State level, the project will be implemented through the integrated State Implementation Society (SIS) for Samagra Shiksha.
  • The proposed World Bank support under STARS is primarily in the form of a results-based financing instrument called Program for Results (PforR). This will ensure major reforms at the State level through a set of disbursement-linked indicators (DLIs). 
  • A State Incentive Grant (SIG) will be used to encourage States to meet desired project outcomes. The SIG matrix has been aligned with the intermediate outcome indicators as per the requirement of PforR instrument. 
  • An independent Verification agency (IVA) will verify each result before disbursement of funds.

STARS project will be instrumental in the implementation of various recommendations of National Education Policy 2020 i.e. 

  • Strengthening Early Childhood Education and Foundational Learning
  • Improving Learning Assessment System
  • ICT-enabled approaches in education
  • Teachers Development
  • Vocational education etc.

GS-3

Climate Adaptation Summit 2021

(Topic: Environment, Climate change)

Initiatives undertaken

  • Targeting 450 gigawatt of renewable energy capacity by 2030
  • Promoting LED lights and saving 38 million tons of carbon-di-oxide emissions annually
  • Restore 26 million hectares of degraded land by 2030
  • Providing clean cooking fuel to 80 million rural households
  • Connecting 64 million households to piped water supply

The International Solar Alliance and the Coalition for Disaster Resilient Infrastructure show the power of global climate partnership.

Solar bank plan in India

  • The steering committee of the International Solar Alliance (ISA) is set to meet shortly to clear the decks for the World Solar Bank (WSB), which is expected to be headquartered in India.
  • The country may become its lead member by taking a 30% stake in it through a $600 million equity commitment.
  • This would be the first multilateral development bank (MDB) headquartered in India and comes even as Beijing has taken the lead in creating the Asian Infrastructure Investment Bank and the New Development Bank (NDB).

PM Modi said in his address, “We have promised ourselves that: We will not just meet our Paris Agreement targets, but exceed them; We will not just arrest environmental degradation but reverse it; and, We will not just create new capacities but make them an agent for global good.”


2021: Year of Indo-French alliance towards a Greener Planet

(Topic: Environment, Climate change)

Objective: To strengthen Indo-French cooperation in sustainable development, increase the effectiveness of actions in favor of global environment protection and give them greater visibility.

India has made significant progress towards climate change action & has already achieved 26% of reduction of emission intensity. As of 2020 the renewable capacity in India stands at 90 GW which includes 36 GW of solar energy & 38 GW of wind energy. India looks forward to strengthen the Indo-French cooperation in sustainable development, increase the effectiveness of actions in favor of the global environment protection and give them greater visibility.

The Indo-French Year of the Environment over the period 2021-2022 would be based on five main themes: 

  • Environmental protection
  • Climate change
  • Biodiversity conservation
  • Sustainable urban development
  • Development of renewable energies and energy efficiency
  • It is also a platform for engaging in discussions on critical areas of collaboration relating to environment and allied areas.

Green tax to be imposed on older vehicles soon

(Topic: Environment, Climate change)

Approval has been granted to the proposal to levy a “Green Tax” on old vehicles which are polluting the environment. The proposal will now go to the states for consultation before it is formally notified.  

Main principles to be followed while levying the Green Tax are:

  • Transport vehicles older than 8 years could be charged Green Tax at the time of renewal of fitness certificate, at the rate of 10 to 25 % of road tax;
  • Personal vehicles to be charged Green Tax at the time of renewal of Registration Certification after 15 years;
  • Public transport vehicles, such as city buses, to be charged lower Green tax;
  • Higher Green tax (50% of Road Tax) for vehicles being registered in highly polluted cities
  • Differential tax, depending on fuel (petrol/diesel) and type of vehicle;
  • Vehicles like strong hybrids, electric vehicles and alternate fuels like CNG, ethanol, LPG etc., to be exempted;
  • Vehicles used in farming, such as tractor, harvestor, tiller etc., to be exempted;
  • Revenue collected from the Green Tax to be kept in a separate account and used for tackling pollution, and for States to set up state of-art facilities for emission monitoring

Benefits of the “Green Tax”:

  • To dissuade people from using vehicles which damage the environment
  • To motivate people to switch to newer, less polluting vehicles
  • Green tax will reduce the pollution level, and make the polluter pay for pollution.

Approval has also been granted on the policy of deregistration and scrapping of vehicles owned by Government department and PSU, which are above 15 years in age. It is to be notified, and will come into effect from 1st April, 2022.

It is estimated that commercial vehicles, which constitute about 5% of the total vehicle fleet , contribute about 65-70% of total vehicular pollution. The older fleet, typically manufactured before the year 2000 constitute less that 1 % of the total fleet but contributes around 15% of total vehicular pollution. These older vehicles pollute 10-25 times more than modern vehicles.


Launch of National Marine Turtle Action Plan

(Topic: Biodiversity, Conservation)

Objective: To have a conservation paradigm for marine mega fauna and marine turtles

Despite the immense economic, ecological and cultural values of marine habitats in India, marine mega fauna species and marine turtles face a wide variety of challenges including stranding and entanglement. Managing such challenging situations requires coordination, action and people’s participation which would help in the long-term conservation of marine species and their habitats.

  • Discusses ways and means  to not only promote inter-sectoral action for conservation but also guide improved coordination amongst the government, civil society and all relevant stakeholders on the response to cases of stranding, entanglement, injury or mortality of marine mammals and also conservation of marine turtles.
  • Actions to be taken for handling stranded animals on shore, stranded or entangled animals in the sea or on a boat, management actions for improved coordination, reducing threats to marine species and their habitats, rehabilitation of degraded habitats, enhancing people’s participation, advance scientific research and exchange of information on marine mammals and marine turtles and their habitats.

Significance

India has rich marine biodiversity along a vast coastline of over 7,500 km. From colorful fish, sharks, including Whale Sharks, turtles and big mammals like whales, dolphins and dugongs to bright corals, marine habitats not only harbor diverse species but also provide resources essential for human wellbeing.

Millions of people depend on these resources ranging from maritime trade and transport, food, mineral resources, cultural traditions, spiritual values and inspiration that draws tourists from around the world.


Successful Maiden Test Launch of Akash-NG Missile

(Topic: Defence Technology)

DRDO conducted the successful maiden launch of Akash-NG (New Generation) Missile from Integrated Test Range off the coast of Odisha.

  • Akash-NG is a new generation Surface to Air Missile meant for use by Indian Air Force with an aim of intercepting high maneuvering low RCS aerial threats.
  • The Akash-NG system has been developed with better deployability compared to other similar systems with canisterized launcher and much smaller ground system footprint.

Prelims-oriented News

PRAGATI

PRAGATI is the multimodal platform for Pro-Active Governance and Timely Implementation involving central and state governments. It enables the PM to discuss the issues with the concerned central and state officials with full information and latest visuals of the ground-level situation.

  • Launched in: 2015
  • Designed by: Prime Minister’s Office (PMO) team with the help of the National Informatics Center (NIC).
  • It is a three-tier system: PMO, Union Government Secretaries, and Chief Secretaries of the States.

Objective

  • Grievance Redressal
  • Programme Implementation
  • Project Monitoring

The PRAGATI platform uses latest technologies such as Digital data management, video-conferencing and geo-spatial technology.

Significance

  • It promotes cooperative federalism
  • It is a robust system for bringing e-transparency and e-accountability with real-time presence and exchange among the key stakeholders
  • It is an innovative project in e-governance and good governance.

125th anniversary celebrations of ‘Prabuddha Bharata’ on 31st Jan

The journal ‘Prabuddha Bharata’ has been an important medium for spreading the message of India’s ancient spiritual wisdom. Its publication was started from Chennai (erstwhile Madras), where it continued to be published for two years, after which it was published from Almora. Later, in April 1899, the place of publication of the Journal was shifted to Advaita Ashrama and it has been continuously published from there since then.

Some of the greatest personalities have left their imprint on the pages of ‘Prabuddha Bharata’ through their writings on Indian culture, spirituality, philosophy, history, psychology, art, and other social issues. Luminaries like Netaji Subhas Chandra Bose, Bal Gangadhar Tilak, Sister Nivedita, Sri Aurobindo, Former President Sarvepalli Radhakrishnan, among others, have contributed to the Journal over the years.

The Advaita Ashrama is working towards making the entire ‘Prabuddha Bharata’ archive available online on its website.

Lala Lajpat Rai 

  • A stalwart of the freedom struggle, Lala Lajpat Rai ranks among India’s most outstanding leaders
  • Born on 28thJanuary 1865 at a small village of Dhudike in district Ferozepur, Punjab, he was a contemporary of great stalwarts including Mahatma Gandhi
  • Popularly known as ‘Punjab Kesari’ or ‘The Lion of Punjab’
  • Founded Servants of the People Society and Punjab National Bank
  • Presided over the first session of the All India Trade Union Congress in 1920, advocated for organized labour as the antidote of capitalism and imperialism.

Key Highlights of Economic Survey 2020-21

Saving Lives and Livelihoods amidst a Once-in-a-Century Crisis

  • India focused on saving lives and livelihoods by its willingness to take short-term pain for long-term gain, at the onset of the COVID-19 pandemic
  • Response stemmed from the humane principle that:
  • Human lives lost cannot be brought back
  • GDP growth will recover from the temporary shock caused by the pandemic

An early, intense lockdown provided a win-win strategy to save lives, and preserve livelihoods via economic recovery in the medium to long-term. Strategy also motivated by the Nobel-Prize winning research by Hansen & Sargent (2001): a policy focused on minimizing losses in a worst-case scenario when uncertainty is very high

  • India’s strategy flattened the curve, pushed the peak to September, 2020. After the September peak, India has been unique in experiencing declining daily cases despite increasing mobility
  • V-shaped recovery, as seen in 7.5% decline in GDP in Q2 and recovery across all key economic indicators vis-à-vis the 23.9% GDP contraction in Q1

COVID pandemic affected both demand and supply:

  • India was the only country to announce structural reforms to expand supply in the medium-long term and avoid long-term damage to productive capacities
  • Calibrated demand side policies to ensure that the accelerator is slowly pushed down only when the brakes on economic activities are being removed

A public investment programme centered around the National Infrastructure Pipeline to accelerate the demand push and further the recovery

Upturn in the economy, avoiding a second wave of infections – a sui generis case in strategic policymaking amidst a once-in-a-century pandemic

State of the Economy in 2020-21: A Macro View

COVID-19 pandemic ensued global economic downturn, the most severe one since the Global Financial Crisis. The lockdowns and social distancing norms brought the already slowing global economy to a standstill. Global economic output estimated to fall by 3.5% in 2020 (IMF January 2021 estimates). Governments and central banks across the globe deployed various policy tools to support their economies such as lowering policy rates, quantitative easing measures, etc.

India adopted a four-pillar strategy of containment, fiscal, financial, and long-term structural reforms:

  • Calibrated fiscal and monetary support was provided, cushioning the vulnerable during the lockdown and boosting consumption and investment while unlocking
  • favourable monetary policy ensured abundant liquidity and immediate relief to debtors while unclogging monetary policy transmission

As per the advance estimates by NSO, India’s GDP is estimated to grow by (-) 7.7% in FY21 – a robust sequential growth of 23.9% in H2: FY21 over H1: FY21

  • India’s real GDP to record a 11.0% growth in FY2021-22 and nominal GDP to grow by 15.4% – the highest since independence:
  • Rebound to be led by low base and continued normalization in economic activities as the rollout of COVID-19 vaccines gathers traction
  • Government consumption and net exports cushioned the growth from diving further down, whereas investment and private consumption pulled it down
  • The recovery in second half of FY2020-21 is expected to be powered by government consumption, estimated to grow at 17% YoY
  • Exports expected to decline by 5.8% and imports by 11.3% in the second half of FY21
  • India expected to have a Current Account Surplus of 2% of GDP in FY21, a historic high after 17 years
  • On supply side, Gross Value Added (GVA) growth pegged at -7.2% in FY21 as against 3.9% in FY20:
  • Agriculture set to cushion the shock of the COVID-19 pandemic on the Indian economy in FY21 with a growth of 3.4%
  • Industry and services estimated to contract by 9.6% and 8.8% respectively during FY21

Agriculture remained the silver lining while contact-based services, manufacturing, construction were hit hardest, and recovering steadily

India remained a preferred investment destination in FY 2020-21 with FDI pouring in amidst global asset shifts towards equities and prospects of quicker recovery in emerging economies:

  • Net FPI inflows recorded an all-time monthly high of US$ 9.8 billion in November 2020, as investors’ risk appetite returned
  • India was the only country among emerging markets to receive equity FII inflows in 2020

Buoyant SENSEX and NIFTY resulted in India’s market-cap to GDP ratio crossing 100% for the first time since October 2010

Softening of CPI inflation recently reflects easing of supply side constraints that affected food inflation

Mild contraction of 0.8% in investment (as measured by Gross Fixed Capital Formation) in 2nd half of FY21, as against 29% drop in 1st half of FY21

Reignited inter and intra state movement and record-high monthly GST collections have marked the unlocking of industrial and commercial activity

The external sector provided an effective cushion to growth with India recording a Current Account Surplus of 3.1% of GDP in the first half of FY21:

  • Strong services exports and weak demand leading to a sharper contraction in imports (merchandise imports contracted by 39.7%) than exports (merchandise exports contracted by 21.2%)
  • Forex reserves increased to a level so as to cover 18 months worth of imports in December 2020
  • External debt as a ratio to GDP increased to 21.6% at end-September 2020 from 20.6% at end-March 2020
  • Ratio of forex reserves to total and short-term debt improved because of the sizable accretion in reserves

V-shaped recovery is underway, as demonstrated by a sustained resurgence in high frequency indicators such as power demand, e-way bills, GST collection, steel consumption, etc.

India became the fastest country to roll-out 10 lakh vaccines in 6 days and also emerged as a leading supplier of the vaccine to neighbouring countries and Brazil

Economy’s homecoming to normalcy brought closer by the initiation of a mega vaccination drive:

  • Hopes of a robust recovery in services sector, consumption, and investment have been rekindled
  • Reforms must go on to enable India realize its potential growth and erase the adverse impact of the pandemic

India’s mature policy response to the ‘once-in-a-century’ crisis provides important lessons for democracies to avoid myopic policy-making and demonstrates benefits of focusing on long-term gains

Does Growth lead to Debt Sustainability? Yes, But Not Vice- Versa!

Growth leads to debt sustainability in the Indian context but not necessarily vice-versa:

  • Debt sustainability depends on the ‘Interest Rate Growth Rate Differential’ (IRGD), i.e., the difference between the interest rate and the growth rate
  • In India, interest rate on debt is less than growth rate – by norm, not by exception

Negative IRGD in India – not due to lower interest rates but much higher growth rates – prompts a debate on fiscal policy, especially during growth slowdowns and economic crises

Growth causes debt to become sustainable in countries with higher growth rates; such clarity about the causal direction is not witnessed in countries with lower growth rates

Fiscal multipliers are disproportionately higher during economic crises than during economic booms        

Active fiscal policy can ensure that the full benefit of reforms is reaped by limiting potential damage to productive capacity

Fiscal policy that provides an impetus to growth will lead to lower debt-to-GDP ratio

Given India’s growth potential, debt sustainability is unlikely to be a problem even in the worst scenarios

Desirable to use counter-cyclical fiscal policy to enable growth during economic downturns

Active, counter-cyclical fiscal policy – not a call for fiscal irresponsibility, but to break the intellectual anchoring that has created an asymmetric bias against fiscal policy

Does India’s Sovereign Credit Rating Reflect Its Fundamentals? No!

The fifth largest economy in the world has never been rated as the lowest rung of the investment grade (BBB-/Baa3) in sovereign credit ratings:

  • Reflecting the economic size and thereby the ability to repay debt, the fifth largest economy has been predominantly rated AAA
  • China and India are the only exceptions to this rule – China was rated A-/A2 in 2005 and now India is rated BBB-/Baa3

India’s sovereign credit ratings do not reflect its fundamentals:

  • A clear outlier amongst countries rated between A+/A1 and BBB-/Baa3 for S&P/ Moody’s, on several parameters
  • Rated significantly lower than mandated by the effect on the sovereign rating of the parameter

Credit ratings map the probability of default and therefore reflect the willingness and ability of borrower to meet its obligations:

  • India’s willingness to pay is unquestionably demonstrated through its zero sovereign default history
  • India’s ability to pay can be gauged by low foreign currency denominated debt and forex reserves

Sovereign credit rating changes for India have no or weak correlation with macroeconomic indicators

India’s fiscal policy should reflect Gurudev Rabindranath Tagore’s sentiment of ‘a mind without fear’

Sovereign credit ratings methodology should be made more transparent, less subjective and better attuned to reflect economies’ fundamentals

Inequality and Growth: Conflict or Convergence?

The relationship between inequality and socio-economic outcomes vis-à-vis economic growth and socio-economic outcomes, is different in India from that in advanced economies.

Both inequality and per-capita income (growth) have similar relationships with socio-economic indicators in India, unlike in advanced economies

Economic growth has a greater impact on poverty alleviation than inequality

India must continue to focus on economic growth to lift the poor out of poverty

Expanding the overall pie – redistribution in a developing economy is feasible only if the size of the economic pie grows

Healthcare takes centre stage, finally!

COVID-19 pandemic emphasized the importance of healthcare sector and its inter-linkages with other sectors – showcased how a health crisis transformed into an economic and social crisis

India’s health infrastructure must be agile so as to respond to pandemics – healthcare policy must not become beholden to ‘saliency bias’

National Health Mission (NHM) played a critical role in mitigating inequity as the access of the poorest to pre-natal/post-natal care and institutional deliveries increased significantly

  • Emphasis on NHM in conjunction with Ayushman Bharat should continue

An increase in public healthcare spending from 1% to 2.5-3% of GDP can decrease the out-of-pocket expenditure from 65% to 35% of overall healthcare spending

regulator for the healthcare sector must be considered given the market failures stemming from information asymmetry

  • Mitigation of information asymmetry will help lower insurance premiums, enable the offering of better products and increase insurance penetration
  • Information utilities that help mitigate the information asymmetry in healthcare sector will be useful in enhancing overall welfare

Telemedicine needs to be harnessed to the fullest by investing in internet connectivity and health infrastructure

Process Reforms

  • India over-regulates the economy resulting in regulations being ineffective even with relatively good compliance with process        
  • The root cause of the problem of overregulation is an approach that attempts to account for every possible outcome
  • Increase in complexity of regulations, intended to reduce discretion, results in even more non-transparent discretion
  • The solution is to simplify regulations and invest in greater supervision which, by definition, implies greater discretion
  • Discretion, however, needs to be balanced with transparency, systems of ex-ante accountability and ex-post resolution mechanisms
  • The above intellectual framework has already informed reforms ranging from labour codes to removal of onerous regulations on the BPO sector

Regulatory Forbearance an emergency medicine, not staple diet!

  • During the Global Financial Crisis, regulatory forbearance helped borrowers tide over temporary hardship
  • Forbearance continued long after the economic recovery, resulting in unintended consequences for the economy
  • Banks exploited the forbearance window for window-dressing their books and misallocated credit, thereby damaging the quality of investment in the economy
  • Forbearance represents emergency medicine that should be discontinued at the first opportunity when the economy exhibits recovery, not a staple diet that gets continued for years
  • To promote judgement amidst uncertainty, ex-post inquests must recognize the role of hindsight bias and not equate unfavourable outcomes to bad judgement or  malafide intent
  • An Asset Quality Review exercise must be conducted immediately after the forbearance is withdrawn
  • The legal infrastructure for the recovery of loans needs to be strengthened de facto

Innovation: Trending Up but Needs Thrust, Especially from the Private Sector

  • India entered the top-50 innovating countries for the first time in 2020 since the inception of the Global Innovation Index in 2007, ranking first in Central and South Asia, and third amongst lower middle-income group economies
  • India’s gross domestic expenditure on R&D (GERD) is lowest amongst top ten economies
  • India’s aspiration must be to compete on innovation with the top ten economies
  • The government sector contributes a disproportionately large share in total GERD at three times the average of top ten economies
  • The business sector’s contribution to GERD, total R&D personnel and researchers is amongst the lowest when compared to top ten economies
  • This situation has prevailed despite higher tax incentives for innovation and access to equity capital
  • India’s business sector needs to significantly ramp up investments in R&D
  • Indian resident’s share in total patents filed in the country must rise from the current 36% which is much below the average of 62% in top ten economies
  • For achieving higher improvement in innovation output, India must focus on improving its performance on institutions and business sophistication innovation inputs

JAY Ho! PM‘JAY’ Adoption and Health outcomes

Pradhan Mantri Jan Arogya Yojana (PM-JAY) – the ambitious program launched by Government of India in 2018 to provide healthcare access to the most vulnerable sections demonstrates strong positive effects on healthcare outcomes in a short time

PM-JAY is being used significantly for high frequency, low cost care such as dialysis and continued during the Covid pandemic and the lockdown.

Causal impact of PM-JAY on health outcomes by undertaking a Difference-in-Difference analysis based on National Family Health Survey (NFHS)-4 (2015-16) and NFHS-5 (2019-20) is following:

  • Enhanced health insurance coverage: The proportion of households that had health insurance increased in Bihar, Assam and Sikkim from 2015-16 to 2019-20 by 89% while it decreased by 12% over the same period in West Bengal
  • Decline in  Infant Mortality rate: from 2015-16 to 2019-20, infant mortality rates declined by 20% for West Bengal and by 28% for the three neighbouring states
  • Decline in under-5 mortality rate: Bengal saw a fall of 20% while, the neighbours witnessed a 27% reduction
  • Modern methods of contraception, female sterilization and pill usage went up by 36%, 22% and 28% respectively in the three neighbouring states while the respective changes for West Bengal were negligible
  • While West Bengal did not witness any significant decline in unmet need for spacing between consecutive kids, the neighbouring three states recorded a 37% fall
  • Various metrics for mother and child care improved more in the three neighbouring states than in West Bengal.

Each of these health effects manifested similarly when we compare all states that implemented PM-JAY versus the states that did not

Overall, the comparison reflects significant improvements in several health outcomes in states that implemented PM-JAY versus those that did not

Bare Necessities

Access to the ‘bare necessities’ has improved across all States in the country in 2018 as compared to 2012

  • It is highest in States such as Kerala, Punjab, Haryana and Gujarat while lowest in Odisha, Jharkhand, West Bengal and Tripura
  • Improvement in each of the five dimensions viz., access to water, housing, sanitation, micro-environment and other facilities
  • Inter-State disparities declined across rural and urban areas as the laggard states have gained relatively more between 2012 and 2018
  • Improved disproportionately more for the poorest households when compared to the richest households across rural and urban areas

Improved access to the ‘bare necessities’ has led to improvements in health indicators such as infant mortality and under-5 mortality rate and also correlates with future improvements in education indicators

Thrust should be given to reduce variation in the access to bare necessities across states, between rural and urban and between income groups

The schemes such as Jal Jeevan Mission, SBM-G, PMAY-G, etc. may design appropriate strategy to reduce these gaps

A Bare Necessities Index (BNI) based on the large annual household survey data can be constructed using suitable indicators and methodology at district level for all/targeted districts to assess the progress on access to bare necessities.

Fiscal Developments

  • India adopted a calibrated approach best suited for a resilient recovery of its economy from COVID-19 pandemic impact, in contrast with a front-loaded large stimulus package adopted by many countries
  • Expenditure policy in 2020-21 initially aimed at supporting the vulnerable sections but was re-oriented to boost overall demand and capital spending, once the lockdown was unwound
  • Monthly GST collections have crossed the Rs. 1 lakh crore mark consecutively for the last 3 months, reaching its highest levels in December 2020 ever since the introduction of GST
  • Reforms in tax administration have begun a process of transparency and accountability and have incentivized tax compliance by enhancing honest tax-payers’ experience
  • Central Government has also taken consistent steps to impart support to the States in the challenging times of the pandemic

External Sector

COVID-19 pandemic led to a sharp decline in global trade, lower commodity prices and tighter external financing conditions with implications for current account balances and currencies of different countries

India’s forex reserves at an all-time high of US$ 586.1 billion as on January 08, 2021, covering about 18 months worth of imports

India experiencing a Current Account Surplus along with robust capital inflows leading to a BoP surplus since Q4 of FY2019-20

Balance on the capital account is buttressed by robust FDI and FPI inflows:

  • Net FDI inflows of US$ 27.5 billion during April-October, 2020: 14.8% higher as compared to first seven months of FY2019-20
  • Net FPI inflows of US$ 28.5 billion during April-December, 2020 as against US$ 12.3 billion in corresponding period of last year

In H1: FY21, steep contraction in merchandise imports and lower outgo for travel services led to:

  • Sharper fall in current payments (by 30.8%) than current receipts (15.1%)
  • Current Account Surplus of US$ 34.7 billion (3.1% of GDP)

India to end with an Annual Current Account Surplus after a period of 17 years

India’s merchandise trade deficit was lower at US$ 57.5 billion in April-December, 2020 as compared to US$ 125.9 billion in the corresponding period last year

In April-December, 2020, merchandise exports contracted by 15.7% to US$ 200.8 billion from US$ 238.3 billion in April-December, 2019:

  • Petroleum, Oil and Lubricants (POL) exports have contributed negatively to export performance during the period under review
  • Non-POL exports turned positive and helped in improving export performance in Q3 of 2020-21
  • Within Non-POL exports, agriculture & allied products, drugs & pharmaceutical and ores & minerals recorded expansion

Total merchandise imports declined by (-) 29.1% to US$ 258.3 billion during April-December, 2020 from US$ 364.2 billion during the same period last year:

  • Sharp decline in POL imports pulled down the overall import growth
  • Imports contracted sharply in Q1 of 2020-21; the pace of contraction eased in subsequent quarters, due to the accelerated positive growth in Gold and Silver imports and narrowing contraction in non-POL, non-Gold & non-Silver imports
  • Fertilizers, vegetable oil, drugs & pharmaceuticals and computer hardware & peripherals have contributed positively to the growth of non-POL, non-Gold & non-Silver imports

Trade balance with China and the US improved as imports slowed

Net services receipts amounting to US$ 41.7 billion remained stable in April-September 2020 as compared with US$ 40.5 billion in corresponding period a year ago.

Resilience of the services sector was primarily driven by software services, which accounted for 49% of total services exports

Net private transfer receipts, mainly representing remittances by Indians employed overseas, totaling US$ 35.8 billion in H1: FY21 declined by 6.7% over the corresponding period of previous year

At end-September 2020, India’s external debt placed at US$ 556.2 billion – a decrease of US$ 2.0 billion (0.4%) as compared to end-March 2020.

Improvement in debt vulnerability indicators:

  • Ratio of forex reserves to total and short-term debt (original and residual)
  • Ratio of short-term debt (original maturity) to the total stock of external debt.
  • Debt service ratio (principal repayment plus interest payment) increased to 9.7% as at end-September 2020, compared to 6.5% as at end-March 2020

Rupee appreciation/depreciation:

  • In terms of 6-currency nominal effective exchange rate (NEER) (trade-based weights), Rupee depreciated by 4.1% in December 2020 over March 2020; appreciated by 2.9% in terms of real effective exchange rate (REER)
  • In terms of 36-currency NEER (trade-based weights), Rupee depreciated by 2.9% in December 2020 over March 2020; appreciated by 2.2% in terms of REER

RBI’s interventions in forex markets ensured financial stability and orderly conditions, controlling the volatility and one-sided appreciation of the Rupee

Initiatives undertaken to promote exports:

  • Production Linked Incentive (PLI) Scheme
  • Remission of Duties and Taxes on Exported Products (RoDTEP)
  • Improvement in logistics infrastructure and digital initiatives

Money Management and Financial Intermediation

Accommodative monetary policy during 2020: repo rate cut by 115 bps since March 2020

Systemic liquidity in FY2020-21 has remained in surplus so far. RBI undertook various conventional and unconventional measures like:

  • Open Market Operations
  • Long Term Repo Operations
  • Targeted Long Term Repo Operations

Gross Non-Performing Assets ratio of Scheduled Commercial Banks decreased from 8.21% at end-March, 2020 to 7.49% at end-September, 2020

The monetary transmission of lower policy rates to deposit and lending rates improved during FY2020-21

NIFTY-50 and BSE SENSEX reached record high closing of 14,644.7 and 49,792.12 respectively on January 20, 2021

The recovery rate for the Scheduled Commercial Banks through IBC (since its inception) has been over 45%

Prices and Inflation

Headline CPI inflation:

  • Averaged 6.6% during April-December, 2020 and stood at 4.6% in December, 2020, mainly driven by rise in food inflation (from 6.7% in 2019-20 to 9.1% during April-December, 2020, owing to build up in vegetable prices)
  • CPI headline and its sub groups witnessed inflation during April-October 2020, driven by substantial increase in price momentum – due to the initial disruptions caused by COVID-19 lockdown
  • Moderated price momentum by November 2020 for most sub groups, coupled with positive base effect helped ease inflation

Rural-urban difference in CPI inflation saw a decline in 2020:

  • Since November 2019, CPI-Urban inflation has closed the gap with CPI-Rural inflation
  • Food inflation has almost converged now
  • Divergence in rural-urban inflation observed in other components of CPI like fuel and light, clothing and footwear, miscellaneous etc.

During April-December, 2019 as well as April-December, 2020-21, the major driver of CPI-C inflation was the food and beverages group:

  • Contribution increased to 59% during April-December, 2020, compared to 53.7% during April-December, 2019  

Thali cost increased between June 2020 and November 2020, however a sharp fall in the month of December reflecting the fall in the prices of many essential food commodities

State-wise trend:

  • CPI-C inflation increased in most of the states in the current year
  • Regional variation persists
  • Inflation ranged from 3.2% to 11% across States/UTs during June-December 2020 compared to (-) 0.3% to 7.6% during the same period last year.

Food inflation driving overall CPI-C inflation due to the relatively more weight of food items in the index.

Steps taken to stabilize prices of food items:

  • Banning of export of onions
  • Imposition of stock limit on onions
  • Easing of restriction on imports of pulses

Gold prices:

  • Sharp spike as investors turned to gold as a safe haven investment amid COVID-19 induced economic uncertainties
  • Compared to other assets, gold had considerably higher returns during FY2020-21

Consistency in import policy warrants attention:

  • Increased dependence on imports of edible oils poses risk of fluctuations in import prices
  • Imports impacting production and prices of domestic edible oil market, coupled with frequent changes in import policy of pulses and edible oils, add to confusion among farmers/producers and delay imports

Sustainable Development and Climate Change

India has taken several proactive steps to mainstream the SDGs into the policies, schemes and programmes

Voluntary National Review (VNR) presented to the United Nations High-Level Political Forum (HLPF) on Sustainable Development

Localisation of SDGs is crucial to any strategy aimed at achieving the goals under the 2030 Agenda

  • Several States/UTs have created institutional structures for implementation of SDGs and also nodal mechanisms within every department and at the district levels for better coordination and convergence

Sustainable development remains core to the development strategy despite the unprecedented COVID-19 pandemic crisis

Eight National Missions under National Action Plan on Climate Change (NAPCC) focussed on the objectives of adaptation, mitigation and preparedness on climate risks

India’s Nationally Determined Contributions (NDC) states that finance is a critical enabler of climate change action

The financing considerations will therefore remain critical especially as the country steps up the targets substantially

The goal of jointly mobilizing US$ 100 billion a year by 2020 for climate financing by the developed countries has remained elusive

The postponement of COP26 to 2021 also gives less time for negotiations and other evidence-based work to inform the post-2025 goal

Despite overall growth in the global bond markets, green bond issuance in the first half of 2020 slowed down from 2019, possibly as a result of the on-going COVID-19 pandemic

International Solar Alliance (ISA) launched two new initiatives – ‘World Solar Bank’ and ‘One Sun One World One Grid Initiative’ – poised to bring about solar energy revolution globally

Agriculture and Food Management

India’s Agricultural (and Allied Activities) sector has shown its resilience amid the adversities of COVID-19 induced lockdowns with a growth of 3.4% at constant prices during 2020-21 (first advance estimate)

The share of Agriculture and Allied Sectors in Gross Value Added (GVA) of the country at current prices is 17.8% for the year 2019-20 (CSO-Provisional Estimates of National Income, 29th May, 2020)

Gross Capital Formation (GCF) relative to GVA showing a fluctuating trend from 17.7 % in 2013-14 to 16.4 % in 2018-19, with a dip to 14.7 % in 2015-16

Total food grain production in the country in the agriculture year 2019-20 (as per Fourth Advance Estimates), is 11.44 million tonnes more than than during 2018-19

The actual agricultural credit flow was ₹13,92,469.81 crores against the target of ₹13,50,000 crores in 2019-20. The target for 2020-21 was ₹15,00,000 crores and a sum of ₹ 9,73,517.80 crores was disbursed till 30th November, 2020:

  • 1.5 crore dairy farmers of milk cooperatives and milk producer companies’ were targeted to provide Kisan Credit Cards (KCC) as part of Prime Minister’s AatmaNirbhar Bharat Package after the budget announcement of  February 2020
  • As of mid January 2021, a total of 44,673 Kisan Credit Cards (KCCs) have been issued to fishers and fish farmers and an additional 4.04 lakh applications from fishers and fish farmers are with the banks at various stages of issuance

The Pradhan Mantri Fasal Bima Yojana covers over 5.5 crore farmer applications year on year

  • Claims worth Rs. 90,000 crore paid, as on 12th January, 2021
  • Speedy claim settlement directly into the farmer accounts through Aadhar linkage
  • 70 lakh farmers benefitted and claims worth Rs. 8741.30 crores were transferred during COVID-19 lock down period

An amount of Rs. 18000 crore have been deposited directly in the bank accounts of 9 crore farmer families of the country in December, 2020 in the 7th installment of financial benefit under the PM-KISAN scheme

Fish production reached an all-time high of 14.16 million metric tons during 2019-20:

  • GVA by the Fisheries sector to the national economy stood at ₹2,12,915 crores constituting 1.24% of the total national GVA and 7.28 % of the agricultural GVA

Food Processing Industries (FPI) sector growing at an Average Annual Growth Rate (AAGR) of around 9.99 % as compared to around 3.12 % in Agriculture and 8.25 % in Manufacturing at 2011-12 prices during the last 5 years ending 2018-19

Pradhan Mantri Garib Kalyan Anna Yojana:

  • 80.96 crore beneficiaries were provided foodgrains above NFSA mandated requirement free of cost till November, 2020.
  • Over 200 LMT of foodgrains were provided amounting to a fiscal outgo of over Rs. 75000 Crores

AatmaNirbhar Bharat Package: 5 kg per person per month for four months (May to August) to approximately 8 crores migrants (excluded under NFSA or state ration card) entailing subsidy of  Rs. 3109 crores approximately

Industry and Infrastructure

A strong V-shaped recovery of economic activity further confirmed by IIP data

The IIP & eight-core index further inched up to pre-COVID levels

The broad-based recovery in the IIP resulted in a growth of (-) 1.9 % in Nov-2020 as compared to a growth of 2.1 % in Nov-2019 and a nadir of (-) 57.3 % in Apr-2020

Further improvement and firming up in industrial activities are foreseen with the Government enhancing capital expenditure, the vaccination drive and the resolute push forward on long pending reform measures

AatmaNirbhar Bharat Abhiyan with a stimulus package worth 15 % of India’s GDP announced

India’s rank in the Ease of Doing Business (EoDB) Index for 2019 has moved upwards to the 63rd position in 2020 from 77th in 2018 as per the Doing Business Report (DBR):

  • India has improved its position in 7 out of 10 indicators
  • Acknowledges India as one of the top 10 improvers, the third time in a row, with an improvement of 67 ranks in three years
  • It is also the highest jump by any large country since 2011

 FDI equity inflows were US$49.98 billion in FY20 as compared to US$44.37 billion during FY19:

  • It is US$30.0 billion for FY21 (up to September-2020)
  • The bulk of FDI equity flow is in the non-manufacturing sector
  • Within the manufacturing sector, industries like automobile, telecommunication, metallurgical, non-conventional energy, chemical (other than fertilizers), food processing, petroleum & natural gas got the bulk of FDI

Government has announced a Production-Linked Incentive (PLI) Scheme in the 10 key sectors under the aegis of AatmaNirbhar Bharat for enhancing India’s manufacturing capabilities and exports:

  • To be implemented by the concerned ministries with an overall expenditure estimated at Rs.1.46 lakh crores and with sector specific financial limits

Services Sector

India’s services sector contracted by nearly 16 % during H1: FY2020-21, during the COVID-19 pandemic mandated lockdown, owing to its contact-intensive nature

Key indicators such as Services Purchasing Managers’ Index, rail freight traffic, and port traffic, are all displaying a V-shaped recovery after a sharp decline during the lockdown

Despite the disruptions being witnessed globally, FDI inflows into India’s services sector grew robustly by 34% Y-o-Y during April-September 2020 to reach US$ 23.6 billion

The services sector accounts for over 54 % of India’s GVA and nearly four-fifths of total FDI inflow into India

The sector’s share in GVA exceeds 50% in 15 out of 33 States and UTs, and is particularly more pronounced (greater than 85%) in Delhi and Chandigarh

Services sector accounts for 48% of total exports, outperforming goods exports in the recent years

The shipping turnaround time at ports has almost halved from 4.67 days in 2010-11 to 2.62 days in 2019-20

The Indian start-up ecosystem has been progressing well amidst the COVID-19 pandemic, being home to 38 unicorns – adding a record number of 12 start-ups to the unicorn list last year

India’s space sector has grown exponentially in the past six decades:

  • Spent about US$ 1.8 billion on space programmes in 2019-20
  • Space ecosystem is undergoing several policy reforms to engage private players and attract innovation and investment

Social Infrastructure, Employment and Human Development

The combined (Centre and States) social sector expenditure as % of GDP has increased in 2020-21 compared to last year.

India’s rank in HDI 2019 was recorded at 131, out of a total 189 countries:

  • India’s GNI per capita (2017 PPP $) has increased from US$ 6,427 in 2018 to US$ 6,681 in 2019
  • Life expectancy at birth improved from 69.4 years in 2018 to 69.7 years in 2019

The access to data network, electronic devices such as computer, laptop, smart phone etc. gained importance due to online learning and remote working during the pandemic

Major proportion of workforce engaged as regular wage/salaried in the urban sector during the period of January 2019-March 2020 (quarterly survey of PLFS)

Government’s incentive to boost employment through AatmaNirbhar Bharat Rozgar Yojana and rationalization and simplification of existing labour codes into 4 codes

Low level of female LFPR in India:

  • Females spending disproportionately more time on unpaid domestic and care giving services to household members as compared to their male counterparts (Time Use Survey, 2019)
  • Need to promote non-discriminatory practices at the workplace like pay and career progression, improve work incentives, including other medical and social security benefits for female workers

Under PMGKP announced in March, 2020, cash transfers of upto Rs.1000 to existing old aged, widowed and disabled beneficiaries under the National Social Assistance Programme (NSAP)

An amount of Rs. 500 each was transferred for three months digitally into bank accounts of the women beneficiaries under PM Jan Dhan Yojana, totalling about Rs. 20.64 crores

Free distribution of gas cylinders to about 8 crore families for three months

Limit of collateral free lending increased from Rs. 10 lakhs to Rs. 20 lakhs for 63 lakh women SHGs which would support 6.85 crore households

Wages under Mahatma Gandhi NREGA increased by Rs.20 from Rs.182 to Rs.202 w.e.f. 1st April, 2020

India’s fight against COVID-19:

  • Initial measures of lockdown, social distancing, travel advisories, practicing hand wash, wearing masks reduced the spread of the disease
  • Country also acquired self-reliance in essential medicines, hand sanitizers, protective equipment including masks, PPE Kits, ventilators, COVID-19 testing and treatment facilities
  • World’s largest COVID-19 vaccination drive commenced on 16th January, 2021 using two indigenously manufactured vaccines

For a dedicated peer group, Motivation & Quick updates, Join our official telegram channel – https://t.me/IASbabaOfficialAccount

Search now.....