DAILY CURRENT AFFAIRS IAS | UPSC Prelims and Mains Exam – 8th August 2024

 Syllabus

• Mains – GS 3

Context: The government recently introduced a bill in Parliament to amend the Disaster Management Act of 2005.

Background:-

• It proposes to make important changes in the Act, aimed mainly at improving the operational efficiencies in responding to a natural disaster.

Background and Importance of the DM Act

• Enactment Context: The Disaster Management (DM) Act was enacted following the 2004 tsunami, with initial ideas stemming from the 1998 Odisha super cyclone.
• Institutional Framework: The Act established:
  • National Disaster Management Authority (NDMA)
  • State Disaster Management Authorities (SDMAs)
  • National Disaster Response Force (NDRF)
  • National Institute of Disaster Management (NIDM)
• The Act was followed by a National Disaster Management Policy in 2009 and a National Disaster Management Plan in 2016. The framework has been effective in saving lives, providing relief, rescue, and rehabilitation services.
• Climate Change: Increasing natural disasters have made agencies such as NDMA more important than ever, requiring the assignment of greater responsibilities and resources.

Proposed Amendments in the Bill:

• Urban Disaster Management Authorities: The disaster management structure already extends to the district level, with district disaster management authorities in operation. However, the Bill acknowledges the unique needs of large metropolitan cities, which often encompass multiple districts. So the bill proposes:
  • Creation of Urban Disaster Management Authorities in all state capitals and cities with a municipal corporation to be headed by municipal commissioner for unified city-level disaster management.
• State Disaster Response Force (SDRF): While most states have disaster response forces modeled after the NDRF over the years, the 2005 Act does not mandate the creation of an SDRF. In the 2024 bill :
  • Mandatory for every state to establish and maintain an SDRF, addressing current inconsistencies in size and capacity.
• National Crisis Management Committee (NCMC):
  • Legal status granted to the NCMC, headed by the Cabinet Secretary, to handle disasters with serious or national ramifications.
• Enhanced Role of NDMA:
  • NDMA to periodically assess disaster risks, including emerging threats.
  • Creation and maintenance of a national disaster database.
  • SDMAs to establish state-level disaster databases.
• Compensation Guidelines:
  • NDMA to recommend minimum relief standards and compensation for loss of life, property, and livelihoods.
• Clarification on Man-made Disasters:
  • Exclusion of law-and-order situations from the definition of man-made disasters.
• Day to day functioning of NDMA:
  • Amendment allows the chairperson or vice-chairperson to designate a member OF NDMA for day-to-day functioning, legitimizing the currently vacant vice-chairperson role.
• Unaddressed Issues in the bill:
  • Elevation of NDMA: Suggestion to elevate NDMA to a government department or ministry for enhanced coordination and authority.
  • Leadership and Political Support: The post of vice-chairperson has been vacant for about a decade. There is a need for vice-chairperson to provide leadership and political heft necessary to deal with states and other central government agencies.
  • Administrative and Financial Powers: NDMA’s lack of direct administrative financial powers causes inefficiencies.Routing every small decision through the Home Ministry is an inefficient and time-consuming process.
  • Staffing: NDMA is under-staffed at the top, with only three members instead of the previous six to seven, affecting disaster management.

Source: Indian Express

 Syllabus

• Prelims & Mains – SOCIAL ISSUES

Context: Insurance companies have increased premiums on health and life policies this year, and with the 18% GST, insurance has become less affordable for many people.

Background:

• Opposition leaders, including Rahul Gandhi, recently protested, demanding the withdrawal of GST on life and health insurance premiums.

What is the GST on health and life insurance premiums?

• GST replaced all indirect taxes like service tax and cess from July 1, 2017. Currently, GST on health and life insurance policies is fixed at 18%.
• Since GST encapsulates service tax, which applies to the insurance industry, its introduction has resulted in an increase in premium amounts.
• Prior to GST, life insurance premiums were subject to 15% service taxes, comprising Basic Service Tax, Swachh Bharat cess, and Krishi Kalyan cess. The increase from 15% to 18% impacted the policyholders — by raising their premiums amounts.
• This, along with medical inflation, which was estimated to be 14% towards the end of last year — has made buying medical insurance difficult for many people. Same is the case with term insurance policies.
• The government acknowledged recently that representations had been received asking for an exemption or reduction in the rate of GST on life and health insurance.

Rationale for Imposing GST on Insurance Premiums:

• GST applies to all insurance policies as they are considered services, and policyholders must pay tax on their premiums.
• This tax is a significant revenue source for the government, generating Rs 21,256 crore over the last three financial years and an additional Rs 3,274 crore from health policy renewals.
• Insurance policies allow certain tax deductions under the Income Tax Act, 1961. Sections 80C and 80D are particularly popular.
  • Section 80C: Allows deductions of up to Rs 1.5 lakh on the overall insurance premium, including GST.
  • Section 80D: Offers additional deductions if customers opt for a medical rider with their life insurance policies.
• There is no guarantee that insurers will pass on the benefit to customers even if government reduces GST.

Argument for withdrawing the GST on the premium

• Main issue is the large increases in premium on health insurance policies.
• Renewal rate of policies is alarmingly declining due to frequent premium hikes.
• GST on insurance in India is the highest in the world — and that the situation needs to be addressed in order to attain insurance regulator IRDAI’s goal of “Insurance for All by 2047

Source: Indian Express

 Syllabus

• Prelims – ECONOMY

Context:  Major fintech companies, including Google Pay, PhonePe, Amazon Pay, Cred, and Mobikwik are looking to join the Reserve Bank of India’s (RBI) digital currency project by allowing their users to transact in e-rupee via Unified Payments Interface (UPI).

Background:

• Initially, only banks were allowed to offer e-rupee transactions, but the RBI has now opened the project to payment firms to increase transaction volumes and user engagement.

About e – rupee

• The e-rupee, or digital rupee, is a digital currency issued by the Reserve Bank of India (RBI).
• It was launched on a pilot basis in December 2022.
• It is available entirely in electronic form and does not leave computer network.

Types:

• Retail e-Rupee: Intended for general public use, allowing individuals to make everyday transactions.
• Wholesale e-Rupee: Designed for financial institutions to facilitate interbank transactions and other large-scale financial activities.

Features:

• Legal Tender: The e-rupee is like banknotes issued by the RBI and is a legal tender that can be used to make transactions. The only difference is that they can only be transacted online.
• Non-Interest Bearing: The digital rupee in users wallets does not attract interest payments from the central bank.
• Conversion: Deposits held in banks can be converted into digital rupees and vice versa for ease of use.

Objectives:

• Efficiency: Aims to enhance the efficiency and security of transactions.
• Accessibility: Provides an additional option for using money, especially in a digital format.

Implementation

• Initially offered by a select group of public and private banks in a few major cities.
• Usage: Can be used for both person-to-person and person-to-merchant transactions.

Significance:

• Modernization: Represents a step towards modernizing India’s financial system.
• Adoption: With fintech companies joining the initiative, the adoption rate is expected to increase further.

Source: Hindu

 Syllabus

• Prelims – CURRENT EVENT

Context: The PARIVESH portal, meant to assist in the effective delivery of various environmental clearances, has now crossed the milestone of 50,000 clearances, the government said recently

Background:

• According to the government, the average time taken for receiving an Environmental Impact Assessment clearance(EC) has been reduced from 105 days to double digits in 2023-2024, while the average time for receiving an Forest clearance (FC) has been reduced to 150 days.

About PARIVESH portal :

• The PARIVESH portal (Pro-Active and Responsive facilitation by Interactive, Virtuous and Environmental Single-window Hub) is an initiative by the Ministry of Environment, Forest and Climate Change (MoEFCC), Government of India.
• It serves as a comprehensive online platform for the submission, monitoring, and tracking of various environmental, forest, wildlife, and Coastal Regulation Zone (CRZ) clearances required for different projects in India.

Key Features of PARIVESH:

• Single-Window Clearance: PARIVESH provides a single-window solution for obtaining multiple environmental clearances, making the process more streamlined and efficient.
• Online Submission and Tracking: Project proponents can submit their proposals online and track the status of their applications in real-time. This ensures transparency and reduces delays.
• Role-Based Access: The portal offers role-based access to different stakeholders, including project proponents, citizens, and government officials, ensuring that each user can interact with the system according to their specific needs.
• Automated Processes: The portal leverages emerging technologies such as GIS and advanced data analytics to automate various processes, facilitating quicker and more effective decision-making without compromising environmental safeguards.
• Interactive Features: Users can interact with scrutiny officers, receive online clearance letters, and get alerts in case of delays beyond the stipulated time for processing applications.
• User-Friendly Interface: The portal is designed to be user-friendly, with features like online mailers, alerts, and a comprehensive helpdesk to assist users in navigating the system.

Source: The Print

 Syllabus

• Prelims – ECONOMY

Context: Recently, major stock markets across the world experienced their sharpest decline in decades and the yen carry trade was one reason behind this decline.

Background:

• The yen carry trade is a classic example of how interconnected global financial markets are, and how changes in one country’s monetary policy can have widespread effects.

About Yen carry trade

• A carry trade is a trading strategy that involves borrowing at a low-interest rate and investing in an asset that provides a higher rate of return.
• It typically involves borrowing in a low-interest rate currency and converting the borrowed amount into another currency.
• The proceeds are generally deposited in the second currency if it offers a higher interest rate.
• Alternatively, the proceeds could be deployed into assets such as stocks, commodities, bonds, or real estate denominated in the second currency.

Yen Carry Trade:

• The Japanese yen is one of the most widely used currencies for carry trades.
• In a yen carry trade, investors, including retail Japanese investors, borrow at a low interest rate at home and purchase assets in another country with higher returns, such as overseas equities and bonds.
• The yen has been popular for carry trades because Japan has maintained a zero-interest rate policy for over two decades. The idea behind low interest rates is to stimulate economic activity.
• For instance, such low interest rates incentivize investors to borrow cheaply in yen and invest in other countries (such as Brazil, Mexico, India, and even the US) to earn better returns. These carry trades are called yen carry trades.

Recent Developments:

• Interest Rate Increase: The Bank of Japan recently raised its interest rate to 0.25%, causing the yen to strengthen.
• Investor Reaction: As the yen appreciated, investors who had borrowed yen were forced to sell their higher-yielding assets to repay their loans, leading to a sell-off in global markets.

Source: Business Standard

 Syllabus

• Prelims – CURRENT EVENT

Context: Researchers at MACS Agharkar Research Institute, under the Department of Science and Technology, have isolated and described the first indigenous methanotroph cultures in India.

Background:

• The discovery of native methane-eating bacteria in the country’s rice fields and wetlands offers a promising natural solution to mitigate climate change and combat greenhouse gases

About methanotrophs :

• Methanotrophs, also known as methanophiles, are fascinating microorganisms that metabolize methane as their primary source of carbon and energy.
• They can be either bacteria or archaea and are capable of growing in both aerobic (with oxygen) and anaerobic (without oxygen) conditions.

Key Characteristics:

• Metabolism: Methanotrophs utilize methane, converting it into formaldehyde, which is then used to produce energy or assimilated into biomass.
• Habitat: These organisms are commonly found in environments where methane is produced, such as wetlands, soils, marshes, rice paddies, landfills, and aquatic systems like lakes and oceans.
• Environmental Role: Methanotrophs play a crucial role in reducing methane emissions to the atmosphere, thereby helping mitigate global warming

Applications:

• Environmental: Methanotrophs are being explored for their potential in bioremediation and wastewater treatment, where they can help reduce methane emissions.
• Biotechnology: They are also being studied for their ability to convert methane into valuable bioproducts, such as biofuels and bioplastics.

Source: PIB

Q1.) With reference to Methanotrophs, consider the following statements:

1. They play a significant role in the global methane budget, by reducing the amount of methane emitted to the atmosphere.
2. Their habitats include wetlands, soils, marshes, rice paddies, landfills and aquatic systems.

Which of the statements given above is/are correct

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

Q2.) With reference to the carry trade in stock market, consider the following statements:

1. A carry trade is a trading strategy that involves borrowing at a low-interest rate and investing in an asset that provides a higher rate of return.
2. It typically involves borrowing in a low-interest rate currency and converting the borrowed amount into another currency which offers a higher interest rate.

Which of the statements given above is/ are correct?

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

Q3.) With reference to the e-Rupee (Digital Rupee), consider the following statements:

1. The e-rupee is a digital currency issued by the Reserve Bank of India (RBI).
2. It is available entirely in electronic form and does not leave computer network.
3. It can be used for both person-to-person and person-to-merchant transactions.

How many of the statements given above are correct?

1. Only one
2. Only two
3. All three
4. None

Comment the answers to the above questions in the comment section below!!

ANSWERS FOR ’  8th August 2024 – Daily Practice MCQs’ will be updated along with tomorrow’s Daily Current Affairs

Q.1) –  d

Q.2) – b

Q.3) – c