Recently, the Chief Minister of Andhra Pradesh launched a new programme ‘ReStart’ to support the Micro, Small and Medium Enterprise (MSME) sector in the State.
Key takeaways
The government will spend ₹1,100 crore on revival of the sector.
It is expected to benefit 98,000 units that can provide employment to more than 10 lakh people.
A special fund of ₹200 crore to provide input capital loan to the firms at low interest rates.
The minimum power demand charges for the months of April, May and June, shall be waived off.
The government will purchase around 360 products from the MSMEs.
Payments would be cleared in 45 days.
Skills required by the industries (MSMEs) will be imparted through Skill Development Colleges.
Part of: GS-Prelims and GS-I – Geographical phenomenon
In News:
As per the reports, the magnetic field around the earth, on an average, has lost almost 10% of its strength over the last two centuries.
The magnetic field of the earth protects us from the solar radiation.
Key takeaways
A rapid shrink has been observed in the South Atlantic Anomaly (SAA).
One most speculated reason behind this is that there is a chance that the time for Earth’s pole reversal is approaching.
Pole reversal happens when the north and south magnetic poles flip.
This flip does not occur immediately or suddenly.
It takes place over centuries and while it is taking place, there would be multiple north and south magnetic poles during this period, all around the planet.
This is not the first time for the pole reversal to take place.
These reversals take place roughly every 250,000 years.
This is not going to affect or alarm the general public.
However, It is causing technical difficulties for various satellites and spacecrafts.
As the magnetic field becomes weaker, charged particles from the cosmos can penetrate through to the altitudes at which low-Earth orbiting satellites fly.
Important value additions
South Atlantic Anomaly (SAA)
SAA is a stretch between Africa and South America.
It is an area where the Earth’s inner Van Allen radiation belt comes closest to the Earth’s surface.
The SAA is the near-Earth region where the Earth’s magnetic field is weakest relative to an idealized Earth-centered dipole field.
A Van Allen radiation belt
It is a zone of energetic charged particles, most of which originate from the solar wind, that are captured by and held around a planet by that planet’s magnetic field.
Earth has two such belts and sometimes others may be temporarily created.
The Indian Air Force (IAF) is set to operationalize its squadron called the Number-18 – Flying Bullets with a fleet of the Light Combat Aircraft, LCA Tejas at its Sulur base near Coimbatore.
It will be launched by the Chief of the Air Staff, Air Chief Marshal.
It will be the second Indian Air Force squadron to operate with the modern multi-role light fighter aircraft.
The No.18 Squadron was formed in 1965.
It has the distinction of being the first to land and operate from Srinagar.
It was revived on the 1st April 2020 at the Sulur base.
The LCA Tejas is a tailless, fourth generation, compound delta-wing aircraft developed by the Hindustan Aeronautics Limited.
The supersonic combat aircraft is considered the lightest and the smallest of its kind.
(MAINS FOCUS)
ECONOMY/ GOVERNANCE
Topic: General Studies 3:
Indian Economy and issues relating to planning, mobilization, of resources
Government policies and interventions for development in various sectors
Context: The government’s relief-cum-stimulus amounting to 10% of GDP has relied heavily on measures aimed at pushing credit to economy.
The Liquidity push
In the wake of economic crisis unleashed by COVID-19, Union Government’s agenda of “self-reliant India” has identified land, labour, laws and liquidity as focus areas.
In economic and business parlance, liquidity refers to ease of access to money.
In periods of crisis, individuals, small businesses, firms, financial institutions and even governments tend to experience a liquidity crunch
Relaxing that liquidity crunch is a focus of the government’s crisis-response package.
Why the need for pushing credit?
The thrust is to get RBI and other public financial institutions to infuse liquidity and increase lending by the financial system
This would ensure that businesses big and small, use borrowed funds to lend to others, make pending payments and compensate employees
Also, this would increase the money in the hands of consumers driving demand
Thus, increased liquidity addresses both demand and supply side of economic cycle, reviving demand, investment and expenditure
Enhancing liquidity is thus considered as productive as direct transfers to the poor.
What is the focus area of liquidity transmission?
The main intermediaries being enlisted for the task of transmitting liquidity are the banks, with NBFCs constituting a second tier
Among the first steps taken by the RBI was the launch of special and ‘targeted’ long term repo operations (TLTROs)
First round of such operations, called for investment of the cheaper capital in higher quality investment grade corporate bonds, commercial paper, and non-convertible debentures. This allowed big business access to cheap capital
The second round was geared to saving NBFCs, whose balance sheets were under severe stress even before the COVID-19 strike
The COVID-19 package identified more intermediaries like SIDBI, NABARD, NHB that could increase liquidity in different sectors
Also, in some instances the government offered them partial or full credit guarantees in case their clients defaulted
Challenges with liquidity transmission
Ineffective: There is little evidence to suggest that first round of RBI’s TLTROs aimed toward big business triggered new investment decisions. This is because they used the cheap capital to substitute for past high-cost debt or finance ongoing projects
Practical Challenges: Given the circumstances, the liquidity push, even if partially successful, would only culminate in eventual default, as borrowers use the debt to just stay afloat in the absence of new revenues.
Banks were reluctant about lending to NBFCs/MFI, because of fears that their clients could default in repayments due to weak business cycle. Ex: Franklin Templeton issue
Weak Transmission: Those who can access credit would either not borrow or only do so to protect themselves and not use the funds either to pay their workers or buy and stock inputs, due to grim economic outlook
Medium term issue: Even after the lockdown is lifted, the compression of demand resulting from the loss of employment and incomes would be considerable.
Inadequate Fiscal Measures: Demand decline would be aggravated by the fact that spending by a government would fall sharply because of a collapse in revenue collections.
Way Ahead
New and additional transfers to people in cash and kind
Increased wage subsidies and enhanced spending on employment programmes
Debt financed spending by the government, with borrowing at low interest rates from the central bank or a “monetisation” of the deficit
Connecting the dots:
Taper tantrum by US Fed in the wake of post-2009 financial crisis
Keynesian Economics in the wake of Great Depression
Context: USA has called on India to open a political conversation with the Taliban. There was also a signal from the Taliban that it is eager for a productive relationship with India
Taliban- A brief history
Taliban – considered as Terror organisation in Indian Diplomatic circles- is a conservative religiously orthodox political organisation which uses violence as strategy to achieve its objectives
Taliban which was ousted from power by US in 2001 has been engaged in a civilian war against Afghanistan government (ally of US)
US troops stationed in Afghanistan since 2001 has been losing ground to Taliban and wants an exit from country.
The recent US-Taliban deal has emboldened Taliban and given it an international recognition and legitimacy
India and Taliban
India has historically sided with Northern Alliance- an opposition to Taliban.
Due to Taliban’s close nexus with Pakistan’s ISI, India is strategically opposed to it
Some argue that there is no reason for Delhi to join the international trend to embrace the Taliban, in the wake of US-Taliban deal
They argue that when the Taliban becomes a peaceful entity and joins the quest for a political settlement with Kabul,Delhi should have no objection to direct talks.
Should India have direct talks with Taliban?
The question of Delhi opening a dialogue with the Taliban is a tactical issue focused on when, how and on what terms.
But the Taliban remains an important sub-set of the larger and more strategic Pashtun question that holds the key to India’s enduring interest in Afghanistan
What is India’s interest in Afghanistan?
Promoting a peaceful, independent and a sovereign Afghanistan that is not a subaltern to the Pakistan army.
This ensures a safer regional environment and better prospects for Indian trade to Central Asia & Europe through Afghanistan
What is Pashtun issue in Afghanistan?
The Pashtuns constitute nearly 42 per cent of the population.
The sizeable Afghan minorities include 27 per cent Tajiks, 9 per cent each of Hazaras and Uzbeks.
The Taliban, an essentially Pashtun formation, had brutally crushed the minorities during its brief rule in the late 1990s.
The core of stability in country is reconciling the interests of multiple ethnic groups in Afghanistan especially between Pashtuns and minorities
The problem of constructing internal balance in Afghanistan has been complicated by Pakistan’s meddling, which is driven by unreasonable fear and ambition.
Complicated relationship between Pakistan & Pashtuns – Opens a Strategic space for India
Pashtuns who are majority in Afghanistan (need their support for Pakistan’s influence) are however minority in Pakistan (clashes with Pakistan’s majority)
The Pashtun population is estimated to be around 15 million in Afghanistan and 35 million in Pakistan.
Although Pashtun separatism has long ceased to be a force in Pakistan, Islamabad finds the Pashtun question re-emerge in a different form.
Also, the Taliban has never endorsed the Durand Line as the legitimate border with Pakistan
A stronger Taliban will push Pashtun Nationalism across the border
Conclusion
Delhi can’t escape the complex geopolitics of the Pashtun lands.
That the Taliban wants to talk to India and Pakistan brands Pashtun leaders as Indian agents only underlines Delhi’s enduring salience in Afghanistan.
Also, those calling for direct engagement with the Taliban say that Delhi can’t ignore such an important force in Afghan politics
Connecting the dots:
Operation Enduring Freedom
Rise and decline of ISIS- Role of International Coalition
(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 For which of the following sector has Andhra Pradesh government launched ReStart program?
MSME
Bank
Farmers
Automobile
Q.2 Consider the following statements regarding ReStart program recently launched by the Andhra Pradesh government?
The minimum power demand charges for April, May and June months shall be waived off.
The government will purchase products whose payment will be cleared in 60 days.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Q.3 Consider the following statements with regards to the aircraft Tejas:
It is a Supersonic aircraft.
It is considered as the lightest and the smallest of its kind.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Q.4 Purandara Dasa belonged to which of the following movement?
Bhakti movement
Haridas movement
Dharma Dasi Cult
Mahadevi movement
Q.5 South Atlantic Anomaly is a stretch between which of the following continents?
South America and North America
North America and Africa
Africa and South America
North America and Europe
ANSWERS FOR 25th May 2020 TEST YOUR KNOWLEDGE (TYK)
