9 PM Daily Current Affairs Brief – February 14th, 2022

Mains Oriented Articles

GS Paper 2

• A dipping graph in occupational safety and health
• Mass jailing of undertrials must end
• The era of combative federalism
• Pragmatism, not jingoism will help India deal with China
• Ukraine Crisis and India: On Kyiv, Sit On The Fence

GS Paper 3

• India’s semiconductor dream
• A Blueprint to Revive Farming
• GST has been a win-win taxation regime for the Centre and states
• For Climate smart agriculture
• Why Union Budget is not good in environmental terms

Prelims Oriented Articles (Factly)

• What does rising public debt mean for the economy 
• Supreme Court examines allegations of rampant misuse of PMLA
• Undertrials comprise 75% of India’s prison population, most in a decade
• e-Rupi limit hike to promote offline digital payment push
• Explained: The importance of the EOS-04 launch, ISRO’s first of 2022
• Centre extends Police modernization Scheme
• Union Minister for Social Justice & Empowerment launches “SMILE” scheme
• Police – Training, Modernisation and Reforms Report: Make police plaints authority free from cops: House panel
• Explained: Why are states worried about high capex in Budget 2022?

Mains Oriented Articles

GS Paper 2

A dipping graph in occupational safety and health

News: Recently, the Safe in India (SII) released CRUSHED 2021, which shows a grim reality of occupational safety and health in the auto sector.

This article says that there is a need for a comprehensive review of labour inspection and the labour statistical system in India, as the Government is in the process of framing the Vision@2047 document for the Labour Ministry.

Why there is need to review labour laws?

First, industrial accidents occur frequently, but only major accidents are reported. Occupational safety and health (OSH) have not received due attention from law-makers and even trade unions in India.

Second, it is not clear why the Labour Bureau has not considered expanding the scope of statistics on injuries by adding sectors such as plantations, construction, the service sector, etc.

Third, data produced is not representative of the situation in India because several major States default in the provision of data. For example, during 2013-14, several major States such as Delhi, Gujarat, Kerala, Odisha, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal defaulted.

This makes the data reporting volatile. The fluctuations of data on industrial injuries published by the Labour Bureau shows that reported figures for fatal injuries for all-India is less by around 40%-50%.

Fourth, even if States send their data to the Labour Bureau, the States’ data are more likely to suffer from underreporting. For example, the SSI’s report shows massive under-reporting of industrial injuries occurring in Haryana.

Fifth, major States such as Maharashtra (38.93%), Gujarat (57.52%), Tamil Nadu (58.33%), and Bihar (47.62%) has poor employment rates of inspectors. In 2019, there was one inspector for every 487 registered factories and 0.04 inspector per 1,000 workers. It reveals that inspectors are over-burdened.

Hence, the inspection rate has declined from 36.23% during 2008-11 to 34.65% during 2012-2015 and further to 24.76%. The inspection rates fell in almost all the States over the last 12 years.

It shows that the factory inspectorates are less in number, and they are inadequately equipped to conduct inspections. Also, to an extent, inspector raj is a myth cultivated by powerful industry groups.

Sixth, the low conviction rate and less penalty do not act as deterrent. The conviction rates for 2015-2019 stood at 61.39% and the average fine per conviction was ₹12,231. Also, the penal system has low efficiency as the percentage of decided cases out of total cases is 15.74% during 2015-19.

What are two major issues associated with the current legal and labour policy aspects?

First, mindless liberalisation of the inspection system does not promote sound labour market governance.

Second, simplifying the annual returns and self-certification systems has weakened the already poorly placed labour statistical system. For instance, low reporting by firms to State labour departments and the Labour Bureau.

What is the way forward?

First, OSH is a human and labour right. Hence, there should be a strong monitoring mechanism and comprehensive database to frame corrective actions and policies.

Second, India has ratified International Labour Organization (ILO) conventions, the Labour Inspection Convention, 1947 (C081) and Labour Statistics Convention, 1985 (C160). The defects mentioned above violate the conventions. Hence, the labour codes, especially the OSH Code should be reviewed.

Mass jailing of undertrials must end

News: Overcrowded prisons have felt the devastating impact and led to a humanitarian crisis.

What is the condition in jail during pandemic timings?

It has been seen jail has been overcrowded. Prisons instituted their own lockdown rules by quarantining “fresh” admissions, creating quarantine zones, suspending jail manuals, prohibiting visitors, etc. Even after this, the struggle has been there to stop the spread of the virus and many have died.

Prisons have not completed vaccination programmes and conditions have worsened as occupancy rates increase. Court visits are suspended. Lawyers cannot visit their clients in person. Prison visits have stopped, even if families and visitors are vaccinated and follow Covid-appropriate behaviour.

What are the reasons for the overcrowding of jails?

According to the experts, the main reason behind that is the mass imprisonment of pre-trial prisoners. There is a 31.8% increase in the confinement of under trial prisoners and a 40.1% increase in imprisonment of detenues from 2015 to 2020. The prison statistics of 2020 show that more than 70% of under trial prisoners are from marginalized classes, castes, religions, and genders.

What does the data show about jail conditions? 

The 2020 Prison Statistics report reveals that the release of convicts has declined by 41.2 %, and of undertrials has declined by 19.6 % in 2020 as compared to 2019. Also, the number of undertrial prisoners increased by 11.7 %, and the number of detenues increased by 11.4 % in 2020.

Violation of law: The pandemic saw the creation of new dockets which were mainly related to violations of “lockdown law” under section 188 of the IPC.  In 2019, there were 29,469 cases registered under this section. In 2020, this increased to a staggering 6,12,179 cases. Other laws were also used, including local laws, leading to 16,43,690 more cases being registered in 2020 as compared to 2019.

Custodial deaths: It has increased by 7% in 2020. There is an increase in unnatural deaths, which include suicides, accidents, and murders in prisons, by 18.1%. There is no information on why 56 inmates died in 2020. These figures prove that the lockdown rules in prisons increase custodial violence and disease.

What did the Supreme Court do to control the situation?

In 2020, SC issued directions to set up high-powered committees (HPCs) in each state to decongest prisons, considering the covid situation. According to the court, the state is must consider the health and right to life of both the prison inmates and the police personnel working”. However, most HPCs did not adopt this classification and nor were they gender-sensitive.

For example, Delhi HPC directed that pregnant undertrials or mothers with children will be released on interim bail for three months. But, the HPC did not talk about the period of the trimester. The Delhi HPC did not honor the UN’s Bangkok Rules which state that “non-custodial means should be preferred for pregnant women during the pre-trial phase”.

What should be the way forward?

– Both governments and courts should adopt a public health and gender-sensitive approach.

– Bureaucratic approach of the HPCs should be reviewed.

The era of combative federalism

News: Over the last few years, Indian federalism has shifted from cooperative to combative federalism.

What are the incidents related to combative federalism?

IAS cadre rules: Proposed amendments to Indian administrative service rules 1954 has triggered conflict between the center and states. As per the amendments, the government of India will deny states any consent for handing over civil servants for central deposition. So, this was opposed by Tamil Nadu, Kerala and a few other states.

Dismissal of Uttrakhand government:  Uttarakhand government was dismissed under Article 356 by the President proclamation

Governor’s office: In 2016, the Governor of Arunachal Pradesh advanced assembly elections, which led to political crisis and the President rule. The Supreme Court intervened by holding the governor’s discretion does not extend to powers conferred under article 174. The governor cannot summon the house, determine its legislative agenda or address the assembly without consulting the chief minister or the speaker.

Rajasthan: Governor refused to summon a session, which was desired by the Council of Ministers.

National capital territory: The question of control between the governor’s office and the Chief Minister reached the Supreme Court in 2018. The court held that the power of the governor to differ from the Delhi government is only limited to exceptional matters like land, police and public order.

West Bengal: WB’s Chief Secretary was summoned to Delhi after Prime Minister’s visit. West Bengal’s reluctance lead to disciplinary proceedings against the Chief Secretary. This led to litigation which is still pending before Delhi High Court.

What are the other conflicts, that highlights combative federalism?

The Center has used central investigative agencies to coerce governments and ministers and leaders. CBI’s attempted arrest of the Kolkata commissioner of police without a warrant in 2019 led to such conflicts.

The death of Sushant Singh Rajput and the conflict between Mumbai police, Bihar police and CBI led to another court battle. There have been other instances of government using customs, national investigation agency and enforcement directorate like in Kerala gold smuggling case.

What should be the way forward?

Combative federalism is against the spirit of the Constitution. The Constitution advocates cooperation and collaboration between the centre and states. As was stated by Supreme Court in Ajit Mohan V. legislative assembly, NCT of Delhi and others (2021), for a system to work well central government and state governments have to work hand-in-hand or at least walk side-by-side for better governance.

Cooperative federalism is required to negotiate, discuss and resolve the pending conflicts to ensure good governance.

Pragmatism, not jingoism will help India deal with China

News: The Ladakh conflict opened up the discussion on India China border issue. The government maintains that ‘no Indian territory has been occupied by China’. But the satellite imagery, expert views suggest Chinese encroachment on Indian land.

India’s defeat in the Sino-India war of 1962 and later skirmishes between India and China led to huge mistrust. Yet, the disputed boundary remains undemarcated and unmarked for 60 long years.

What are the concerns for India?

Efforts by politicians and diplomats to de-link the border issue from the rest of the Sino-Indian relationship appear to be a negligent attitude to resolve LAC.
Freshly built Chinese enclaves and renamed towns located in Arunachal is a matter of concern. Indian troops are unable to access previously patrolling points in Ladakh.

Chinese old tactics of salami-slicing territory and disdain for International laws should be taken as matters of serious concern, and India shouldn’t be complacent in hoping to resolve the dispute with time.

What should be the way forward?

First, India can learn from the past and follow the “quid pro quo” proposed by Zhou Enlai. He proposed China would recognise the McMahon Line in exchange for India making certain adjustments in the west.

Second, India can put sustained pressure on China on diplomatic, trade, and psychological fronts and awaits results.

Third, India could threaten China’s Indian Ocean sea lanes via trade war. India’s strategic presence near the Strait of Malacca could be utilized in this regard. The last way out could be to maintain the status quo and engage in sustained military/diplomatic parleys for a positive outcome.

A pragmatic stand to settle international borders peacefully could make India focus further on its nation-building and socio-economic development.

Ukraine Crisis and India: On Kyiv, Sit On The Fence

News: India decided not to comment anything on the Ukraine issue in the Quad foreign ministers’ meeting held in Melbourne, Australia.

What is Russia’s stand on Ukraine?

Russia repeatedly asserts that it seeks recognition that Ukraine will not be accepted as a NATO member. While the USA insists that Russia is going to invade Ukraine. The recently issued Russia-China joint statement suggests that the alliance of Eurasian powers is here to stay. Russia seeks to build its alliance with China to weaken the USA now.

What is India’s stand on the Ukraine crisis?

While abstain voting from UNSC on the Ukraine issue, India advised parties to find a solution considering the security interests of all countries and aimed towards securing long term peace and stability in the region.

But, the ongoing Ukraine crisis has led to experts talking about India’s neutral stance on US and Russia tension.

How do the experts’ view the neutral stand of India?

Some international scholars believe that India cannot hold on to this neutral stand for long. This is incorrect as many successive governments in India, from Jawaharlal Nehru’s to Narendra Modi’s, have repeatedly asserted India’s right to adopt an independent stand based on its national interests without aligning itself with any particular military bloc unless this was necessitated by national interest.

From the 1962 war or the 1971 war or on other occasions, the Indian position has been defined by national interest. India’s independent voice in international affairs is a manifestation of its national self-image

What policy is adopted by India?

According to Foreign Affairs Minister, India is working on the principle of the policy of multi-alignment, depending on context and issue at stake. India’s national interest and national security are linked to maintaining her strategic autonomy, especially in an East-West conflict.

GS Paper 3

India’s semiconductor dream

News: Recently, the government has decided to extend the PLI (Production-Linked Incentive) scheme to encourage semiconductor manufacturing in India.

Why countries are focusing more on manufacturing of semiconductors?

One, the overdependence of the world on East Asia for fab manufacturing, rising price of silicon, China-U.S. trade war and the pandemic has exposed the fragility of the global supply chain of semiconductor manufacturing.

Hence, countries are introducing attractive packages to attract more chip manufacturing. For instance, the U.S. has announced a $50 billion package to create foundries.

Two, the current geopolitical dynamics has changed and semiconductors are at the core of fourth industrial revolution technologies.

What steps has been taken in India?

India has approved a $10 billion package to incentivize the manufacturing of semiconductors. The government has drawn out a list of incentives to get leading international manufacturers to set up their manufacturing unit in India.

Also, the India Electronics and Semiconductor Association is exploring the opportunity to start supplying processed raw materials like minerals and gases to the fab and ATMP (Assembly. Testing, Marking, and Packaging) industry.

This will boost the Indian gas, materials and mines industry and also expand opportunities for semiconductor equipment, spares, and service industry.

What is the scope of Fab manufacturing in India?

First, India has the largest number of chip designers outside of the U.S. For example, Karnataka has over 85 fabless chip design houses of various global companies.

Second, the strong expertise of India semiconductor design professionals in EDA (Electronic Design Automation) tools provides solid ground to move towards manufacturing.

Third, the total demand for semiconductors stands at $24 billion and it is expected to grow to $80-90 billion by 2030. But this demand is for different categories of semiconductors. Hence, there will be need to enter into an agreement with the consumers like automotive manufacturers to ensure that whatever is produced is consumed.

What is the way forward?

First, encourage Indian manufacturers and start-ups to enter and master complex R&D and manufacturing verticals to ensure that Intellectual Property is owned by Indian companies.

Second, since the semiconductor industry is changing fast, there is need to encourage Indian engineeers to set up their design start-ups with government grants and tax incentives.

Three, premier research institutions should also be asked to work aggressively on R&D in chip designing and manufacturing. Also, government must focus on emerging technologies like LiDAR and Phased Array where the entry barrier is low to become atmanirbhar.

Four, the availability of semiconductor grade Ultra Pure Water to the extent of 10 MLD per fab is a key requirement. Also, a conducive environment needs to be created for women to work night shifts along with zero labour disputes.

Five, site for Fab clustering should be chosen on the ability of the location to act as a force multiplier for the development of an ecosystem. There is need to ensure high-quality infrastructure along with uninterrupted power availability connected to two different grids to ensure redundancy.

Read more here: https://forumias.com/blog/semiconductor-manufacturing-in-india-explained-pointwise/

A Blueprint to Revive Farming

News: The recently released Budget 2022-23 has increased the agricultural credit target to Rs 18 lakh crore for 2022-23 from Rs 16.5 lakh crore for the current fiscal, with an allocated subsidy of Rs 20,870 crore.

What is the need to increase Agri-credit?

First, both the budget speech and the Economic Survey 2021-22 recommended crop diversification and inclusion of horticulture, organic farming, dairying and fishing to increase farmers income. But to enable this shift and to improve income through allied sectors, farmers must have access to institutional credit at reasonable rates of interest.

Second, credit is critical for achieving higher farm output. Institutional credit will help delink farmers from non-institutional sources where they borrow at high rates of interest.

Why the huge credit and subsidy will not necessarily help farmers?

One, the volume of credit has grown but its quality and impact on agriculture has deteriorated. Over the years, the growth rate in the agriculture sector has been falling.

It was 6.8 per cent in 2016-17, whereas it is 3.9 per cent in 2021-22. Agricultural credit has become less efficient in delivering growth.

Two, majority of subsidized agri-credit is grabbed by a handful of big farmers and agri-business companies.

According to RBI, the agricultural households with the small landholding get only about 15 per cent of the subsidized loan, but the big farmers get 79 per cent of subsidized loans.

As per the Situation Assessment Survey of Agricultural Households by NSSO, the share of institutional loans increases with an increase in land possessed.

Three, a loose definition of agri-credit has led to the leakage of loans at subsidised rates to large agri-firms. For example, in 2017, 53 per cent of the agriculture credit that NABARD provided to Maharashtra was allocated to Mumbai metro city and suburbs, where there are no agriculturists, only agri-business.

Also, the subsidised credit is being refinanced to small farmers and in the open market at interest rates up to 24 per cent.

What is the way forward?

First, the Working Group on Agriculture Production constituted in 2010 had recommended that credit should be made available at no more than 4 per cent per annum rate of interest.

Second, Institutional development across states should be priority area for equitable and uniform flow of subsidized credit across states.

Three, state governments should work in close coordination with the banking system for the promotion of more Joint Liability Groups (JLGs) as per NABARD guidelines to ensure that formal credit reaches financially-excluded farmers.

Four, state governments should regularly monitor credit flow. Also, a comprehensive list of all farm-related activities should be prepared by the banks in consultation with NABARD, agriculture experts, farmers and administration.

For example, in Haryana the law was amended to provide the recovery of the cooperative loans by leasing out the mortgaged land in place of selling, in the event of default. The Haryana model on agri-credit can be a blueprint for other states.

Fifth, the eligibility criteria for providing agriculture loans should be further simplified, liberalized and the repayment schedule should be according to the farmers’ capacity.

GST has been a win-win taxation regime for the Centre and states

News: Recently, India’s chief economic advisor claimed that GST had led to a faster increase in revenues for states such as Tamil Nadu than the sales tax, which was collected earlier.

How GST is a win-win taxation regime?

First, definitions play a key role in comparisons. The definitional issue is important because the state’s own tax revenues (SOTR) include excise duty on alcohol and value-added tax on petrol and diesel. These are critical for revenues, but have nothing to do with the GST.

For instance, the growth rate of SOTR was 6.7% in 2015 and 2.31% in 2016. And, the growth rates were 9.07% in 2018 and 12.59% in 2019. Therefore, even if these two are compared, the growth rate is higher in years after the introduction of GST.

Second, it does not make economic sense to arbitrarily pick random years and present their compounded annual growth rate (CAGR) to present an argument without considering the prevalent macroeconomic situation.

Third, taxes are levied on the value of goods and services, which makes prices significant. High inflation years typically lead to higher revenue mobilization.

Since 2013, India’s inflation has moderated from double-digit rates to 4-5%. This moderation in inflation has also meant that tax revenues would grow slower than in the past.

Low inflation, high real growth and modest tax growth is good for macroeconomic stability. Considering this structural change in the economy, the revenue growth of GST is better.

Fourth, the data about revenue growth do not include compensation provided to states by the central government. The 14% compensation was decided based on the revenue growth rates in the preceding years, which had experienced higher inflation. As inflation moderated, revenues decreased which resulted in the Union government compensating states. It imposed an additional cost on the Centre.

Most important, during the pandemic, most states introduced lockdown-like restrictions but then also they were assured of their revenues because of the Centre’s commitment under GST regime.

What are the existing challenges with GST?

One, the revenue-neutral rate was 15% but due to various interventions by different state finance ministers, the weighted average rate has fallen to 11%. Also, these interventions have added too many exemptions.

Two, there are close to nine effective GST rates, which has added to the complexity of the taxation structure. States are also responsible for complex GST rates. Because, the tax is the responsibility of the GST Council, not the central government and the Council comprises the finance ministers of states also.

Three, states during lockdown have shown lack of caution while implementing ad hoc restrictions on economic activity or towards improving GST compliance.

What is the way forward?

First, though there are complexities, but GST represents an improvement over the older taxation system. GST has shown improvement in terms of revenues and efficiency. Hence, the new taxation regime should not be politicized.

Second, India’s former chief economic advisor had extensively reviewed GST to document the issues and has proposed simplification so as to further build on the gains derived from the implementation of GST.

For Climate smart agriculture

News: India has set a carbon neutrality target for the year 2070 at the CoP26 in Glasgow. Union Budget for 2022-23 has also listed climate action and energy transition as one of the four main priorities for the country in the coming decades.  

Although agriculture has been a major contributor to climate change problem, yet the budget fails to have sufficient provisions to combat it.  

What has been agriculture sector’s contribution to the climate change issue? 

Agriculture contributes 73% of the country’s methane emissions, and India is the world’s third-largest emitter of methane. 

Agriculture sector also emits huge amount of carbon-dioxide equivalent, and rice cultivation is the third-highest source (17.5 per cent) of GHG emissions in Indian agriculture. 

According to the Sixth Assessment Report IPCC 2021, paddy fields are anthropogenic sources of atmospheric nitrous oxide and methane, which are up to 200 times more powerful than carbon dioxide in driving temperature increase in 20 years. 

What are the causes for agriculture sector’s increasing contribution to climate change in India? 

The environmental damage due to agriculture is mainly the result of the following:

– Various kinds of subsidies on urea: These subsidies also lead to an excessive production of wheat and rice in the country, which leads to record stock in country’s central pool. For example: Rice stocks with the Food Corporation of India (FCI) are seven times the buffer norms for rice. All this does not just reflect inefficient use of scarce capital, but also leads to release of excessive amount of greenhouse gases (GHG).

– Canal irrigation and power for irrigation

– Minimum support prices (MSP) and procurement policies concentrated on a few states and largely on two crops, rice, and wheat.  

What has been Govt’s announcement for sustainable agriculture in the budget? 

The budget mentions chemical-free natural farming in a 5 km wide corridor along the river Ganga, support for millets, and increased domestic production of oilseeds and kisan drones.

Although these are positive steps, but they don’t assure that the environmental damage already done by the sector can be undone.

What are the additional steps required? 

GHG Inventories: India does not report nitrous oxide emissions in its national GHG inventories. When methods like intermittent flooding are applied to reduce methane emissions it is assumed that they will lead to a decrease in overall emissions but on the contrary they increase nitrous oxide emissions which goes unaccounted.  

Emissions due to other factors like application of fertilisers, energy operations like harvesting, transportation are also not accounted for in the GHG emissions. There is need for including these to get a wholistic picture of agriculture sector’s emissions. 

Carbon tax: According to the IMF, the world needs a carbon tax of $75 per tonne by 2030 to reduce emissions to a level consistent with a 2^oC warming target. India does not have an explicit carbon-price yet, but many countries have begun to implement carbon pricing. Introduction of an indicative carbon pricing can incentivise green growth. 

Water security: The Economic Survey 2021-22 points out that the country is over-exploiting its groundwater, primarily due to paddy cultivation. This calls for revisiting policies to subsidise power and fertilisers, MSP and procurement and reorient them towards minimising GHG emissions.  

Awareness: Farmer groups and the private sector can be mobilised to develop carbon markets in agriculture by rewarding them for improving farming practices to lower GHG emissions. 

Why Union Budget is not good in environmental terms

News: Indian government at Glasgow CoP26 has set targets like achieving Net zero carbon emissions by 2070 and Reduction of one billion carbon emissions by 2021 to 2030, etc.

However, the recent budget does not have provisions that would help it achieve these. 

What are the issues in the present Budget wrt environment conservation? 

Reduced budgetary allocation: Union budget of this year has reduced the budgetary allocation for the statutory body Commission for Air Quality Management (CAQM), National Clean Air Programme, statutory and autonomous bodies under environment ministry.  

Budget allocation for Climate Action Plan is also very low for controlling any kind of natural calamity. 

Budget of the National Coastal Mission has also been reduced, which is responsible for the protection of coastal areas from natural disasters. This will leave these areas more exposed to natural disasters. 

Budget has announced the Gati Shakti project worth Rs one lakh crore for developing infrastructure in the country. According to Land Conflict Watch (a data research agency), the expansion of infrastructure projects often cause severe damage to the environment.  

Budget has also announced huge sum of allocation for the project connecting the Ken and Betwa rivers. Environmentalists are wary that it may damage the natural environment. There is also an apprehension that it may increases the incidence of floods. This is due to the fact that a river or stream flows naturally in a certain direction and if an attempt is made to change it, after some time it returns to its natural course. 

What is the possible impact? 

Reduction in the budget allocation of environmental organisations and regulatory boards will also to neglect of environmental protection measures. 

Prelims Oriented Articles (Factly)

What does rising public debt mean for the economy

Source: This post is based on the article “What does rising public debt mean for the economy” published in Live Mint on 14th Feb 2022.        

What is the news? 

Covid-19 pandemic has resulted in a wider fiscal deficit and higher public debt-to-GDP (gross domestic product) ratio. A higher debt to GDP ratio has many consequences for the economy, apart from this the composition or quality of debt also matters. 

What does public debt- to-GDP ratio mean? 

Public debt-to-GDP ratio is the ratio of what a country owes to what it produces—a measure of the financial leverage of an economy.  

Public debt consists of external debt (which has been borrowed from foreign lenders) and internal debt (like government securities, treasury bills, short-term borrowings).  

How does it reflect the stability of the economy? 

A country which is able to continue paying the interest on its debt i.e. without hampering economic growth and refinancing is considered to be stable.  

According to the recommendations of the N.K. Singh Committee (2016), debt- to-GDP ratio should have been 38.7% for the Centre and 20% for states by 2022-23 (FY23).  

What are current statistics for the debt to GDP ratio? 

The Centre’s debt-to-GDP ratio for FY22 was 59.9%, while budget estimates for FY23 have pegged it at 60.2%. 

How does high debt affect the economy? 

Increasing public debt results in a rise in interest payments burden. This deprives the government of its ability to undertake development and welfare measures.  

Increased public debt could also impact the outlook of rating agencies. 

Inflationary crisis: Widening fiscal deficit creates pressure on market interest rate with the government being a major player. This impacts private firms, thereby increasing per unit cost that is passed on to consumers. This is cost-push inflation. 

Why does the quality of debt also matters? 

The quality of debt is also crucial—i.e. whether it is meant for meeting capital expenditure or revenue expenditure. Capital expenditure supports the developmental process and aids economic growth in the medium to long term.

Revenue expenditure is at the cost of future prospects. 

How then to control public debt? 

 Fiscal Responsibility and Budget Management Act (2003) mandated the government to limit its fiscal deficit to 3% of GDP. That helped in improving interest payment burden, leaving more fiscal space for developmental as well as welfare measures. However, the pandemic led to increased government borrowings. 

Public mindset about freebies needs to change, as what is spent by the government is eventually borne by the taxpayer. 

Supreme Court examines allegations of rampant misuse of PMLA

Source: This post is based on the article “Supreme Court examines allegations of rampant misuse of PMLA” published in The Hindu on 14th Feb 2022.

What is the News?

The Supreme Court will be hearing petitions filed by people complaining about the alleged subversion of the Prevention of Money Laundering Act (PMLA) by the government and the Enforcement Directorate(ED).

Why was the Prevention of Money Laundering Act(PMLA) enacted?

Prevention of Money Laundering Act(PMLA) was enacted in response to India’s global commitment under the Vienna Convention. The primary purpose of the Act was to combat money laundering in India.

Note: Vienna Convention was adopted in 1988. It was the first international instrument to address the issue of proceeds of crime and to require States to establish money laundering as a criminal offence.

What are the petitioners’ complaints against the PMLA Act?

Firstly, the offences in the schedule of the Act are extremely broad and in several cases have absolutely no relation to either narcotics or organised crime.

Secondly, the Enforcement Case Information Report (ECIR) – an equivalent of the FIR – is considered an internal document and not given to the accused. The ED treats itself as an exception to these principles and chooses to register an ECIR on its own whims and fancies.

Thirdly, after the registration of the ECIR, the ED begins to summon accused persons and seeks details of all their financial transactions and of their family members. Throughout this procedure, the accused does not even know the allegation against him, 

Fourthly, the PMLA does not distinguish between an accused and a witness while summoning them. 

Lastly, there is a lack of clarity about ED’s selection of cases to investigate. The investigation under the PMLA can arise only if the commission of the alleged predicate offence has resulted in the generation of proceeds of crime and such proceeds are projected or claimed as untainted property.

Undertrials comprise 75% of India’s prison population, most in a decade

Source: This post is based on the article “Undertrials comprise 75% of India’s prison population, most in a decade” published in TOI on 14th Feb 2022.

What is the News?

National Crime Records Bureau(NCRB) has released data regarding the undertrial prisoners in India.

What are the key findings related to undertrial prisoners in India?

The number of undertrials in prisons has increased sharply in 2020 even as the number of convicts fell.

This has resulted in undertrials accounting for over three-fourths of all those in jail, the highest proportion in at least a decade.

The highest increase in the proportion of undertrials was in Punjab, followed by Haryana.

Kerala had the lowest proportion of undertrials in 2020. But the proportion had increased marginally from 2019.

In 2020, there was also a significant decline in the number of undertrials released on bail compared to 2019. This could be due to lower access to the judiciary in 2020.

However, this pattern does not hold for many other states and large UTs where the undertrial population, as well as the overall prison population, saw an increase in 2020 indicating a denial of access to judicial services because of the pandemic.

Moreover, almost all states saw a significant decrease in the number of court visits as well as visits for medical care because of Covid restrictions. But in states like TN and Kerala, a lot of hearings were held in jails without having to transport the prisoners to courts.

e-Rupi limit hike to promote offline digital payment push

Source: This post is based on the article “e-Rupi limit hike to promote offline digital payment push” published in Livemint on 14th Feb 2022.

What is the News?

Reserve Bank of India(RBI) has increased the e-Rupi voucher limit to Rs 1 Lakh from Rs 10,000.

RBI has also allowed one e-Rupi voucher to be used multiple times until it has been fully redeemed.

What is e-Rupi?

e-Rupi was launched in August 2021. It is a cashless payment product.

​​e-Rupi voucher allows users to redeem it without a card, digital payments app or internet banking access at the merchants accepting UPI e-prepaid vouchers. 

Key Features of e-Rupi

Firstly, unlike other digital payment formats, e-Rupi does not require beneficiaries to have a bank account. 

Secondly, e-Rupi works on basic phones also and hence it can be used by people who do not own smartphones or in places that lack an internet connection, thereby promoting offline payments.

Future of e-Rupi

The e-Rupi could be used for some future linkages, such as between the e-Rupi and the proposed digital currency slated to be issued in fiscal 2023 by RBI.

Explained: The importance of the EOS-04 launch, ISRO’s first of 2022

Source: This post is based on the article “Explained: The importance of the EOS-04 launch, ISRO’s first of 2022” published in Indian Express on 14th Feb 2022.

What is the News?

Indian Space & Research Organization(ISRO) will be launching the EOS-04 Satellite on board the Polar Satellite Launch Vehicle(PSLV-C52).

What is EOS-04?

EOS-04 is the fourth in the series of earth observation satellites.

It is a Radar Imaging Satellite. It weighs about 1710 kg and will be placed in a sun-synchronous polar orbit.

The satellite is designed to provide high-quality images under all weather conditions for applications such as agriculture, forestry and plantations, soil moisture & hydrology, and flood mapping.

The satellite will complement the data from Resourcesat, Cartosat and RISAT-2B series of satellites that are already in orbit.

What about earlier EOS Satellites?

EOS-01: It was launched in 2020. It is in orbit right now. 

EOS-02: It is yet to be launched. It is a microsatellite to be flown on a new launch vehicle called SSLV (Small Satellite Launch Vehicle).

EOS-03: It ended in a failure in August 2021.

What are the other satellites launched with EOS-04?

INSPIREsat-1: It is a student satellite developed by the Thiruvananthapuram-based Indian Institute of Space Science and Technology in collaboration with the University of Colorado in the United States. This satellite will study the dynamics of the upper atmosphere and carries an X-ray spectrometer for studying solar flares.

INS-2TD: It is a technology demonstrator for the first India-Bhutan joint satellite that is scheduled to be launched in March 2022. The INS-2TD has a thermal imaging camera meant for earth observation purposes, like the assessment of land and water surface temperature and identification of forest and tree cover.

How many satellites does India have currently in space?

India currently has 53 operational satellites, of which 21 are earth observation ones and another 21 are communication-based. The other eight are navigation satellites while the remaining three are science satellites.

Centre extends Police modernization Scheme

Source: This post is based on the article “Centre extends Police modernization Scheme” published in The Hindu on 14th Feb 2022.

What is the News?

The government has approved the continuation of the umbrella scheme of Modernisation of Police Forces (MPF). The approval is for the period 2021-22 to 2025-26.

What is the Modernisation of Police Forces (MPF) Scheme?

The Ministry of Home Affairs has been implementing the Scheme for Modernisation of Polices Forces (MPF Scheme) since 1969-70. 

The objective of the scheme:  a) To meet the identified deficiencies in various aspects of police administration and b) To reduce the dependence of the State Governments on the Army and Central Armed Police Forces to control internal security and law and order situation by way of equipping the state police forces adequately and imparting the required training.

Funding Pattern: Under the Scheme, the States are grouped into two categories:

– Category ‘A’ States namely, J&K and 8 North Eastern States including Sikkim will be eligible to receive financial assistance on a 90:10 Centre: State sharing basis. 

– The remaining States will be in Category ‘B’ and will be eligible for financial assistance on a 60:40 Centre: State sharing basis.

Key Features of the Scheme

Firstly, the scheme has provisions for a) internal security, b) law and order, c) adoption of modern technology by Police, d) assisting States for narcotics control and e) strengthening the criminal justice system by developing a robust forensic set-up in the country.

Secondly, it has also earmarked funds for security-related expenditure for the Union Territories of Jammu & Kashmir, insurgency affected the North Eastern States and Left Wing Extremism (LWE) affected areas.

Thirdly, the scheme has allocated funds for raising India Reserve Battalions/Specialised India Reserve Battalions.

Union Minister for Social Justice & Empowerment launches “SMILE” scheme

Sources: This post is based on the article “Union Minister for Social Justice & Empowerment launches “SMILE” scheme” published in PIB on 14th Feb 2022.

What is the News?

The Union Minister for Social Justice & Empowerment has launched the SMILE Scheme.

What is a SMILE Scheme?

SMILE stands for Support for Marginalised Individuals for Livelihood and Enterprise.

Type: It is a Central Sector Scheme.

Aim: To provide welfare and rehabilitation to the Transgender community and the people engaged in the act of begging.

Sub-Schemes of SMILE Scheme

The two sub-schemes of SMILE are: 

Central Sector Scheme for Comprehensive Rehabilitation for Welfare of Transgender Persons

It provides for: 

-Scholarships for Transgender Students studying in IX and till post-graduation to enable them to complete their education. 

-Skill Development and Livelihood under the PM-DAKSH scheme.

-Composite Medical Health and Housing facility in the form of ‘Garima Greh’

-Provision of Transgender Protection Cell in each state will monitor cases of offences and ensure timely registration, investigation and prosecution of offences. 

-Creating a National Portal & Helpline 

Comprehensive Rehabilitation of persons engaged in the act of Begging

It provides for 

-Survey and Identification of beneficiaries shall be carried out by the Implementing Agencies.

-Outreach work will be done to mobilise the persons engaged in begging to avail the services available in the Shelter Homes.

-The shelter homes will facilitate education for children engaged in the act of Begging 

Police – Training, Modernisation and Reforms Report: Make police plaints authority free from cops: House panel

Source: This post is based on the article “Make police plaints authority free from cops: House panel” published in TOI on 14th Feb 2022.

What is the News?

The Parliamentary Panel on Home Affairs has submitted a report in Rajya Sabha titled  ‘Police – Training, Modernisation and Reforms’.

What are the key findings and recommendations of the report?

Police Complaint Authority

Most States and UTs have constituted police complaint authorities at the state and district levels. But most of these are headed by senior police officers. 

However, there exist some exceptions, with Odisha having conferred the functions of police complaint authority on Lokpal and Punjab posting a retired chief secretary-level officer as head of its central police complaint authority.

Recommendation: The report has recommended that a Police Complaint Authority should be independent of the state police and should comprise retired HC judges, ex-bureaucrats and jurists as members, besides having representation of women.

Moreover, the Bureau of Police Research & Development (BPR&D) can assess the effectiveness of the independent police complaint authority in the states by checking whether the complaints against police personnel have gone up or reduced, types of complaints received and action taken.

The shortfall in Police Officers

There is a 21% shortfall in the actual strength of state police forces.

Hence, it has recommended the Centre to advise states to conduct recruitment drives in a mission mode.

Use of Drones

The report has expressed concerns on the use of drones to commit crimes and transport drugs and arms, particularly in Punjab and J&K which share an international border with Pakistan. 

Hence, it has recommended the Centre to create a central pool of anti-drone technology and give states/UTs access to it.

Explained: Why are states worried about high capex in Budget 2022?

Source: This post is based on the article “Explained: Why are states worried about high capex in Budget 2022?” published in Indian Express on 14th Feb 2022.

What is the News?

States have raised apprehensions about the rise in capital expenditure proposals outlined in the Union Budget 2022-23.

What has the Budget announced on the capital expenditure?

The Budget has proposed an increase in the capital expenditure by 24% to Rs 7.5 lakh crore compared with the revised estimate for 2021-22 at Rs 6.02 lakh crore.

This expenditure increase comes along with an increase in the state borrowing limit to 4% of the GSDP. States have also been allowed to borrow up to Rs 1 lakh crore through 50-year interest-free loans to make capital investments.

The government had also made provision of over Rs 2 lakh crore for states and autonomous bodies towards their capital expenditure.

What are the concerns raised by the States?

Firstly, the increased capital expenditure allocation comes at the cost of a reduction in grants in aid, revenue deficit grants, subsidies for food, fertilizer, fuel and allocation for MGNREGA.

Secondly, so far the money given to states for various schemes was in the form of grants. But the revised estimates have reduced the allocation for grants and schemes, and they have been labelled as interest-free loans. This is a way to keep the revenue deficit in check and show a higher capex.