9 PM Daily Current Affairs Brief – February 24, 2021

Good evening dear reader

Here is our 9pm current affairs brief for you today

Rise of excise duty on petrol and fiscal stance of the government

Source: The Hindu 

Syllabus: GS 3 – Indian Economy and issues relating to planning, mobilization of resources, Growth, Development, and Employment.

Synopsis: The rise in excise duty on petrol is in contradiction with the fiscal stance adopted by the government in the Economic Survey 2020-21. The new fiscal stance requires the government to borrow more instead of increasing taxes.

Background:

• The COVID-19 has brutally impacted the economy due to which the fiscal deficit has risen to 9.5%. This is 2.7 times higher than the expected 3.5% fiscal deficit. 
• Further, there is a drastic fall in receipts of revised budgetary estimates in comparison to original estimates.
• Thus, the government increased excise duty on Petrol and Diesel. It resulted in an increase in the prices of petrol and diesel for the consumer.
• However, a rise of Rs. 94000 crore rise was observed in estimates of excise duty. 
• This is the traditional approach that calls for increasing taxes rather than borrowing to improve the economic situation of the country.

Rationale behind such move:

1. An increase in sales tax/ excise duty can be fruitful in improving revenue collection.
2. This occurs as demand for products like petrol, diesel, tobacco, etc. is inelastic (not changing significantly with a change in price).
3. Further, a rising fiscal deficit is not desired. The Fiscal Responsibility and Budget Management Act (FRBM) restricts its rise to 3.5%.
4. It is believed that fiscal deficit automatically transforms into government debt. Such high debts coupled with their interests can create a debt trap. It is a situation where present borrowings keep increasing to repay past borrowings and service charges.
5. This in turn reduces the scope of spending on judicious activities and also decreases the creditworthiness of the government.

However, rising excise duty didn’t prove to be fruitful.

Impact of rising excise duties:

• Revenue from an increase in duty could not compensate for the shortfall in other revenue resources. Thus, the fiscal deficit has increased to 9.5%.
• Further, these duties have been increased on final and intermediate goods which would increase the inflation level in the future.
• The estimation of a 7.7% output decline simply means loss of employment. This along with rising price levels would enhance inequalities in society. 

What is the New approach given by Economic Survey?

1. The survey of 2020-21 calls for adopting the approach of Professor Olivier Blanchard who has given a counter view to FRBM act. As per him, debt-financed fiscal spending can increase growth.
2. It may not necessarily reduce the inequalities but can definitely help in the overall growth of the economy.
3. Professor’s approach doesn’t focus on increasing the tax on the rich to augment expenditure and reduce inequalities.
4. Further government’s fiscal expenditure has a stronger multiplier impact during recessions compared to booms. This happens as:
   • When the economy is in a boom, the private sector is willing to borrow more. But it may get crowded out if interest rates are increased due to more government borrowings.
   • When the economy is in recession, the private sector is unwilling to borrow due to uncertain long-term expectations. Higher government borrowings in this situation are desired for boosting the confidence of the private sector.
5. The adoption strategy requires the GDP growth rate to be higher than the sovereign rate of interest. It would prevent the creation of a future debt trap. 
6. The survey pointed out that India’s average interest rate and growth rate over the last 25 years (leaving out FY 2020-21) have been 8.8% and 12.8% respectively. This satisfies Blanchard’s condition. 

As the condition got satisfied, it is difficult to ascertain why the government deviated from the recommendations of the economic survey. The only reasonable argument could be higher interest rates than the growth rate in 2020-21.

Frequent transfer of public servants affect public administration

Source- The Hindu

Syllabus- GS 2 – Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Synopsis- Frequent transfers of public servants ultimately affect their morale, performance, and also the public administration.

Introduction-

• An analysis of the executive record (ER) sheets of thousands of IAS officers reveals that the frequent transfers in service are normal.
• But, frequent transfers have an adverse impact on their morale. This will lead to a decline in productivity and efficacy.
• Few examples of frequent transfer of public servants
  • IAS Ashok Khemka has been transferred more than 50 times.
  • Pradeep Kasni has been transferred 65 times.

Why frequent transfers happening?

Frequent transfers happen due to two major reasons. Such as,

1. Interference of local politicians in public policy.
2. Transfer guidelines have been undermined by the State governments. The 2nd ARC also highlighted this issue.

What are the impacts of frequent transfer of public servants?

• The officer is not getting the proper time to focus on the developmental needs of the area.
  • For Example- the Shopian district in Jammu and Kashmir for the last 14 years witnessed the transfer of 13 Deputy Commissioners. Among them, two officials were transferred within 25 days of their posting. So the public servants not able to frame proper long-term developmental policies.
• Frequent transfers affect the functioning of public administration and demoralize the bureaucracy.
• The Hota Committee report on 2004 also highlighted a few impacts. Such as
  • Frequent transfers will create a lag in the implementation of government policies. As the new public official has to know the status of the project, challenges in a particular area, etc.
  • Further, frequent transfers will result in the wastage of public resources. This is due to inadequate supervision of the program and large-scale corruption.
• Above all, transfers can create administrative favoritism among the public servants and create divisions among civil servants.

Way forward

The government has to frame an efficient transfer policy. This will preserve the fundamental principles of civil services such as neutrality, impartiality, and anonymity.

Delhi Court’s ruling on Disha Ravi Toolkit case

Source- Indian Express

Syllabus – GS 2 – Indian Constitution—historical underpinnings, evolution, features, amendments, significant provisions, and basic structure.

Synopsis – Delhi court grants bail to Disha Ravi in its ruling in the tool kit case. It termed evidence produced by Delhi police as inappropriate.

Introduction-

• Delhi Court granted bail to climate activist Disha Ravi, arrested in the Greta Thunberg ‘toolkit’ case.
• Delhi Police arrested her on charges of sedition and criminal conspiracy in the Greta toolkit case.

Key takeaways from Court’s ruling-

• The Delhi court dismissed the claims as Delhi police failed to show any evidence.
• On criminal conspiracy, the Court noted that mere assumption is not sufficient. It should be backed by evidence.
  • The judge stated that only interaction with people of doubtful credentials is not an offence.
• On sedition, the court cited Kedar Nath case (1962) that actual violence or incitement to violence should be associated with words.
• Moreover, the Court negated the state’s “global conspiracy” claims and stated that the fundamental right to freedom of speech and expression “includes the right to seek a global audience”. Also, “there are no geographical barriers on communication” as long as it is “under the four corners of the law.”

What is the Toolkit case?

Toolkit- A document created to explain any issue which provides information on what one needs to do to address the issue.

• Toolkit includes information about petitions, details about protests, and mass movements.
• It also provides a roadmap of how to take forward the protest and what can be done, when and how.

Disha Ravi Toolkit case-

• Delhi police reported that Ravi was the editor of a Google doc (called a toolkit) related to farmer’s protest.
• Police alleged her that she started a WhatsApp Group to make the Toolkit doc in collaboration with a pro-Khalistani organization to spread disaffection against the Indian state.
• She was charged with Section 120B [Criminal conspiracy], along with Sections 124A (sedition) and Section 153A (Promoting enmity between different groups on grounds of religion, race, place of birth, residence, language, etc., and doing acts prejudicial to maintenance of harmony) of IPC.
  

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How to become Petroleum Independent?

Source: click here

Syllabus: GS- 3

Synopsis: India first needs to manage the demand for petroleum products, before expanding and diversifying the energy supply.

How government can reduce dependence on petroleum?

There are many things that the government can and should do to reduce dependence on petroleum.

1. First, the government should introduce a zero-emissions vehicle (ZEV) program. It requires all vehicle manufacturers to produce a definite number of electric vehicles. ZEV programs are present in China, South Korea, and Canada, etc.
2. Second, the government should strengthen fuel efficiency requirements for new passenger cars and commercial vehicles. Two-wheelers are not subject to any fuel efficiency standards even when they consume two-third of the petrol used in India.
   • A target of 50% reduction in fuel consumption by 2-wheelers may result in innovations, such as increasing efficiency of internal combustion engine (ICE) efficiency and increase in electric driven two-wheelers.
3. Third, similar steps should be applied to the passenger vehicle and heavy-duty commercial vehicle. Consumers who switch to electric vehicles will save even more money as electricity is cheaper compared to petrol and diesel.

What are the steps taken by the government?

1. The National Electric Mobility Mission Plan (NEMMP) was launched. However, the NEMMP mainly focused on hybrid electric vehicles and most incentives went towards subsidizing mild hybrids instead of electric vehicles.
2. Heavy-duty vehicles, which consume nearly 60% diesel, are now subject to fuel efficiency standards.
3. The Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme now focuses largely on electric vehicles.
   • The FAME scheme focuses on two- and three-wheelers, taxis, and buses. It should be extended to all passenger cars, commercial vehicles, and to agricultural tractors.
4. Introducing complementary policies like stepping up investments in charging infrastructure is essential. The GST rates for all passenger vehicles could be made proportional to their fuel efficiency level.

Conclusion

• Adopting strict fuel efficiency standards and a ZEV program by 2024 can result in India’s petroleum demand peaking by 2030. By that, the government can save money for the consumer while enhancing long-term energy security by wielding the regulatory tools at its disposal.
• Thus, it is time for India to adopt stringent fuel efficiency standards and a zero-emissions vehicle program.

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