24 Mar 2020: UPSC Exam Comprehensive News Analysis

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. SC to go digital to maintain social distancing
2. Lockdown hits NREGA workers hard
HEALTH
1. Preventive drug for healthcare workers cleared
INTERNATIONAL RELATIONS
1. Pompeo in Kabul to break deadlock
C. GS 3 Related
ECONOMY
1. Centre amends law to enable excise duty increase on fuel
2. RBI advances second tranche of OMO
D. GS 4 Related
E. Editorials
ECONOMY
1. A pandemic, an economic blow and the big fix
POLITY AND GOVERNANCE
1. Lockdown and beyond
F. Prelims Facts
1. Yakshagana
G. Tidbits
1. Ayurveda and wellness tourism takes a hit
2. Don’t lay off workers or cut salaries: Ministry
3. Priority sector classification for NBFCs too
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

A. GS 1 Related

Nothing here for today!!!

B. GS 2 Related

Category: POLITY AND GOVERNANCE

1. SC to go digital to maintain social distancing

Context:

The Supreme Court has decided to further restrict its functioning on account of the COVID-19 scare and resort to the digital mode to maintain social distancing and prevent spread of infection.

Details:

• The Supreme Court Bench led by Chief Justice of India Sharad A. Bobde used its extraordinary powers under Article 142 to lift the limitation period for all cases across tribunals and courts in the country until further notice.
• The court premises would be completely shut down.
• Only extremely urgent cases would be taken up by a Bench(es) through a video app.

Article 142:

• Article 142 was introduced in our Constitution to serve the interests of justice.
• Article 142 allows the Supreme Court to pass any order necessary to do “complete justice” in any case.
• “The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it.”
• Article 142 supplements the powers already conferred upon the Supreme Court under the Constitution to guarantee that justice is done and in doing so the Court is not restrained by lack of jurisdiction or authority of law.

C. GS 3 Related

Category: ECONOMY

1. Centre amends law to enable excise duty increase on fuel

Context:

Finance Minister has moved an amendment to the Finance Bill, 2020, to raise the limit up to which the government can raise special excise duty on petrol and diesel to ₹18 per litre and ₹12, respectively.

Details:

• The government had earlier raised excise duty on petrol and diesel by ₹3 per litre each to raise an additional ₹39,000 crore in revenue annually.
• This duty hike included ₹2 a litre increase in special additional excise duty and ₹1 in road and infrastructure cess.
• This hike took the special additional excise duty to the maximum permissible by law — ₹10 in case of petrol and ₹4 in case of diesel.
• Now, through an amendment of the Eighth Schedule of the Finance Act, this limit has been increased to ₹18 per litre in case of petrol and ₹12 in case of diesel.
• However, it was said that it was an enabling provision and no change in excise duty was being done immediately.
• The amendment gives powers to the government to raise the duty by up to ₹8 per litre in petrol and diesel at any time it wishes.

D. GS 4 Related

Nothing here for today!!!

E. Editorials

Category: ECONOMY

1. A pandemic, an economic blow and the big fix

Context:

• The economic impact of the COVID-19 pandemic.

Background:

Global economic impact of the pandemic:

• Pandemics, apart from posing major health risks, also pose economic and social risks. Pandemics have the potential to disrupt economies, and destabilize national security.
• The effect of the strong clampdown measures taken by the various governments to arrest the spread of the coronavirus is being felt across the global economy.
• The shutting down of industries may lead to loss of jobs and subsequently demand in the economy.
  • The number of people who lost their jobs, in just the last two weeks in America is the highest ever weekly job losses recorded in its history.
• There are fears of a global recession given that the two largest economies of the world, China and the U.S. have been affected by the pandemic. The large and developed economies are expected to not merely slow down, but to contract and experience negative growth.
• The economic devastation will be much more painful and longer than the health impact of the pandemic.
• The melt down of the major stock exchange indices is an indication of the uncertainty and fear in the global economy.

Measures being taken by countries:

• The United Kingdom has unveiled the biggest economic recovery package in its history, as an antidote to the imminent economic crisis.
• The United States is finalizing a trillion-dollar economic recovery package.
• Germany has announced unlimited government financing for the disruptions due to the outbreak.
• France, Spain, Italy and the Netherlands have all launched half-a-trillion dollars combined in recovery measures.

Details:

Economic Impact in India:

Job losses:

• There are reports that a third of all restaurants could shut down in the formal sector alone and shed more than 20 lakh jobs, in the coming months.
• The automotive sector which was already hit by slowing demand is shutting down its factories due to the pandemic. This puts at risk the incomes of around a million people employed in the automotive sector.
• The unorganized sector, which constitutes a large proportion of the working population in India, would be the most affected, given the loss of livelihood opportunities and lack of social security measures.

Drop in demand:

• Job losses lead to lesser disposable income in the hands of the people and subsequently, consumption drops and overall demand collapses.

Financial sector crisis:

• When businesses close down, they default on their commercial obligations to their financiers and suppliers. This freezes up credit flow in the economy and also affects related sectors.

Effect on trade:

• Trade constitutes a considerable proportion of the Indian economy. The reduced trade due to stringent clampdown measures would affect the growth in the Indian economy.
• Given the global nature of the crisis, it is not even possible for India to import and export its way to recovery.

Measures taken in India:

• India has set up a task force under the Finance Minister to assess the economic impact of the pandemic and suggest economic recovery measures.

Recovery package for India:

• Given the inevitable economic crisis, it is prudent to take necessary actions immediately. India needs a comprehensive recovery package that will first cushion the economic shock and then help the economy recover.
• The recovery package should focus on the following aspects:
  • Providing a safety net for the most affected sections.
  • Addressing the impending liquidity squeeze in the financial system.
  • Addressing disruptions in the economy and incentivizing the external sector of trade and commerce.

Way forward:

Safety net for the most affected sections:

• About 37% of households depend on casual labour as their major source of income for rural and urban India, and nearly 55% have tenuous regular employment, as per the Periodic Labour Force Survey data for 2017-18.
• The poor will be the worst affected, including informal workers, workers in the gig economy, or those running small businesses for whom social safety nets are not adequately in place.

Direct cash transfer:

• As part of the efforts to provide a safety net for the most affected sections, direct cash transfer option should be considered.
• The destruction of jobs, incomes and consumption can be addressed through a direct cash transfer of 3,000 a month, for six months. This should be provided exclusively to the most vulnerable section of the society.
• Considering only the bottom half of all Indian households, the direct cash transfer would cost nearly 2.2-lakh crore and reach 60 crore beneficiaries, covering agricultural labourers, farmers, daily wage earners, informal sector workers and others.
• This would ensure a sustained income stream for the millions who have lost their incomes and provide them a safety net and a sense of confidence.
• Various existing schemes of the government can be subsumed under the direct cash transfer scheme, to ensure sufficient financial resources to execute the direct cash transfers.
  • The Pradhan Mantri Kisan Samman Nidhi (PM KISAN) programme with a budget of ₹75,000 crore can be subsumed into the direct cash transfer scheme.

Right to work:

• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) must be expanded and restructured into a public works programme, to build much-needed hospitals, clinics, rural roads and other infrastructure. This can be achieved by integrating MGNREGA with the Pradhan Mantri Gram Sadak Yojana and the roads and bridges programme.
• The above three programmes together have a budget of nearly ₹1.5 lakh crore. This must be doubled to ₹3 lakh crore and serve as a true ‘Right to Work’ scheme for every Indian who needs it.

Access to food:

• The Food Corporation of India has sufficient buffers of rice, wheat and unmilled paddy stocks.
• The buffer stocks should be used to provide 10kg rice and wheat to every Indian family, free of cost, through the Public Distribution System.
• The combination, of a basic income of 3,000 rupees a month, a right to work and food grains, will provide a secure safety net for the most vulnerable section of the population.

Addressing the liquidity squeeze in the financial system:

RBI’s role:

• The Reserve Bank of India’s (RBI) announcement of a 1.5-lakh crores liquidity and credit backstop facility is a welcome move and acknowledgment of an imminent liquidity squeeze in the economy.
• The RBI should set up a credit guarantee fund for distressed borrowers for credit rollover and deferred loan obligation.
• RBI must also consider immediately reducing interest rates to spur business activity.

Addressing disruptions in the economy:

• Service sectors like airlines, tourism, hospitality, entertainment and logistics have been disrupted due to the clampdown in place.
  • The government must consider a two-year tax holiday and an appropriate incentive scheme for these sectors that have been devastated.
• Similarly, India’s exports predominantly in textiles and leather which are labour intensive sectors have been disrupted due to the sudden drop in global demand and the restrictions on trade.
  • Sector specific incentive schemes and government support for such critical sectors should be considered.
• COVID-19 testing, treatment, medical equipment and supplies capacity can be expanded through the private sector and can be reimbursed directly for patient care. The testing and treating of at least 20 crore Indians through the private sector will need a 1.5- lakh crore budget. This will also help create a large number of jobs in the private health-care sector, with trickle-down benefits.

Financing the recovery package:

• The total incremental expenditure for the recovery package as discussed, would be between 5-lakh crore to 6-lakh crore for FY2021.
• The States combined incur an expenditure of 40 lakh crore rupees and can share some of the expenditure of the recovery package. Given that post the introduction of Goods and Services Tax (GST), States do not have the fiscal freedom to raise tax revenues on their own, the major responsibility of financing such a recovery package would be on the central government.
• This amount can be funded mainly thorough the reallocation of some of the budgeted capital expenditure, expenditure rationalization, and the savings due to the drop in oil prices.

Reprioritizing expenditure plans:

• The government had budgeted more than 4-lakh crore rupees in capital expenditure for FY2021. Given the extraordinary situation, it is important to reprioritize the expenditure plan in the near term.
• Some part of this budget will have to be allocated to the COVID-19 recovery package.
• Under the given circumstances, some low priority expenditures like the package for the revival of the telecom public sector units can be delayed and the budget for national highways, roads and bridges can be rationalized to reallocate some portion of the planned expenditure to the recovery package.

Expenditure rationalization:

• The 49 ministries in the Union government of India made a demand for grants totalling 30-lakh crore rupees as total expenditure for FY2021.
• The 13 large and important ministries account for as much of the Budget expenditure as the remaining 41 ministries combined. There is ample scope to rationalize expenditure in the less critical 41 ministries to extract some funding for the recovery package.

Savings due to the drop in oil prices:

• Fortunately for India, there has been a dramatic fall in global crude oil prices, from $40 a barrel to an estimated $20 a barrel. This will help India save nearly 2-lakh crore.
• This amount can be used to fund the recovery package or make up for shortfall of tax revenues.

Conclusion:

• India needs an immediate relief package of 5-lakh crore to 6-lakh crore rupees, targeted across all sections of society and sectors of the economy.
• The fiscal deficit of India will rise driven both by increased expenditure by the government and shortfall of revenues from the slowing economy. Hence there are concerns on the possible fiscal implications of a stimulus package of this scale. However, given the impending crisis, this is not the time for fiscal conservatism.
• There is a need to think big, bold and radical to pull the Indian economy out of the inevitable crisis. This is India’s moment for the equivalent of the “New Deal” that U.S. President Franklin Roosevelt launched in America after the Great Depression of 1929. 

For more information on this issue refer:

CNA dated March 21, 2020
Category: POLITY AND GOVERNANCE

1. Lockdown and beyond

Context:

• The lockdown in India to counter the possibility of large-scale transmission of the novel coronavirus.

Details:

Lockdown in India:

• Given the possibility of a public health catastrophe due to large-scale transmission of the novel coronavirus, a national lockdown is in place.
• The goal of the lockdown is to flatten the transmission curve and help a fragile public health system cope with a large number of cases.
• Physical distancing of people has been ensured through a suspension of rail and inter-State bus services, closure of public places, cessation of all non-essential activity and street-level monitoring.
• States are enforcing social distancing through Section 144 of the Criminal Procedure Code, the Epidemic Diseases Act, 1897 and the Indian Penal Code.

Way forward:

• The lockdown is just the first step against the pandemic and there is a need for further steps in the fight against the pandemic.

Addressing essential requirements:

• Given the restrictions in place, the government machinery must now focus on addressing the essential requirements of food, medicines, etc. It must ensure all steps are taken to mitigate the impact on people.
  • Governments must ensure that the most vulnerable classes, economically and socially, including the elderly, have access to essential articles including medicines, close to where they live.
  • Governments must consider providing essential food items to the most affected section of people. This can be done through civil supplies departments, civic workers, and non-governmental organisations.
  • Given the large number of people dependant on casual labour as their major source of income, it is essential for governments to ensure that they get subsistence wages for as long as restrictions last. 

Access to healthcare:

• The first and most effective step against the pandemic must be to shore up the healthcare system and, as the World Health Organization has recommended, create capacity in hospitals for everyone who shows symptoms to access testing facilities.
• Providing full and free testing to all those who need it is critical for effectively controlling the spread.

Public health response:

• There is a need to formulate a public health response for the period beyond the shutdown.
• China, South Korea and Singapore, as WHO points out, adopted a strict shutdown and followed it with testing at the population level to get a grip on infections.
• India needs to get a universally accessible testing system in place to prevent transmission when the lockdown is lifted.

Addressing the weak links:

• In India, a vast number of poor people depend on public healthcare. The polarization of healthcare facilities between the private and public sector does not provide the right framework to channel timely medical services during a pandemic.
• Given the limited capacity of public healthcare services, they will be hard-pressed to provide the requisite support to low-income groups. In the absence of actions to replenish their capacity, they will not be able to cope with the pressures in the longer run.
• This needs to be urgently addressed, in the absence of which the poor will become the weakest link in any effort to contain the virus.
• The experiences of Italy, France, Switzerland and the U.S. highlight that COVID-19 tests and treatment should particularly be available and accessible to people in high-risk groups and from low-income backgrounds.

Involving private sector participation in healthcare:

• Given the limited opportunities to rapidly expand the public health systems in a short frame of time, there is the need to consider involving private sector in the health systems.
• COVID-19 testing, treatment, medical equipment and supplies capacity can be expanded through the private sector.

Combating Misinformation:

• The rise of fake news during the crisis period is a big threat.
  • COVID-19 is already deeply affecting economic activity, and fake videos linking its spread to the meat and poultry sector have led to a low demand for these products and, consequently, large-scale losses.
  • Advocating particular cures or linking the virus to various factors without underlying scientific evidence can cause a lot of damage as such misinformation creates confusion and prevents communities from following instructions from authorities and being united against the threat.
  • Fake news also leads to lowered public morale.
• The government can consider taking action against the circulation of fake news and rumours.
• The public should be more vigilant and must try to make a distinction between scientific information that can support a balanced epidemiological response and misinformation that will adversely affect our efforts.

Economic recovery package:

• Given the economic consequences of the pandemic, there is the urgent need to come out with a suitable economic stimulus package as is being done in other economies.
• This should help address the major disruptions in the economy. A recovery package should ideally include funds transfers during the containment phase of the pandemic, followed by a stimulus to sustain employment.

G. Tidbits

1. Ayurveda and wellness tourism takes a hit

• Rejuvenation therapy and wellness-based Ayurveda that outlived the setbacks Kerala tourism faced during the worst times of Nipah, Ockhi and two consecutive floods in the State has been dealt a crippling blow by COVID-19.
• It is the first time that the deadly virus COVID-19 has hit wellness-based Ayurveda, the Unique Selling Proposition (USP) of Kerala Tourism.

Read more about Nipah

H. UPSC Prelims Practice Questions

Q1. Which of the following is/are correctly matched?

1. Cheraw: Mizoram
2. Yakshagana: Andhra Pradesh
3. Koodiyattam: Kerala

Choose the correct option:

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

See

Q2. Which of these countries do not border Afghanistan?

1. Turkmenistan
2. Kazakhstan
3. Kyrgyzstan
4. Tajikistan

Choose the correct options:

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

See

Q3. Consider the following statements with respect to Raksha Gyan Shakti:

1. It was instituted by the Defence Research and Development Organisation (DRDO).
2. The mission aims to provide a boost to Intellectual Property Rights (IPR) culture in the Indian Defence manufacturing ecosystem.

Which of the given statement/s is/are correct?

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

See

Q4. Consider the following statements with respect to Ram Manohar Lohia:

1. He was the first Secretary of the All India Congress Committee’s (AICC) foreign affairs department.
2. ‘Azad Hind Radio’ was founded by Ram Manohar Lohia.

Which of the given statement/s is/are correct?

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

See