9 PM Daily Current Affairs Brief – July 12th, 2022

Current Affairs Compilations for UPSC IAS Prelims 2022

Mains Oriented Articles

GS Paper 1

• India in 2023: The challenge and opportunity of being the most populous country

GS Paper 2

• Suman Bery writes: NITI Aayog’s role in ensuring collaboration between states and centre
• Saving Sri Lanka
• C Raja Mohan writes: India’s new West Asia approach is a welcome break with past diffidence
• The new ‘normal’ of political splits and shifts

GS Paper 3

• The scam faultline is damaging Indian banking
• Nano urea potential
• Safety in the sky – The DGCA should have no tolerance for laxity among airlines seeking to cut corners
• ONDC is the disruption Indian commerce needs
• The pandemic-flagged need for a new fiscal framework
• 70,000 Startups & The Helping Hand of Sarkar

Prelims Oriented Articles (Factly)

• Ghana reports first-ever suspected cases of Marburg virus disease
• Service Charge: The new guidelines to prevent unfair trade practices
• Oncolytic Virotherapy(OV): ‘Next-gen’ cancer therapy can kill tumours without harming healthy cells
• World Population Prospects(WPP) Report: UN population report explained: A look at the trends, projections and implication
• The search for dark matter
• Epstein Barr Virus(EBV): Connecting the dots between virus infection and progress of brain cancer
• PM unveils National Emblem cast on the roof of the new Parliament Building

Mains Oriented Articles

GS Paper 1

India in 2023: The challenge and opportunity of being the most populous country

News: The United Nations Population Division (UNPD) released a new set of population projections on July 11, World Population Day. These projections show that India will become the most populous country in 2023, earlier than the year 2027, as expected.

What is the reason for such an advanced projection?

According to the UNPD, a sustained total fertility rate of 2.1 is necessary for a country to achieve population stability. The latest National Family Health Survey puts this figure at 2. In other words, India is on course to achieving population stability if it maintains this rate in the next few years.

However, India will overtake China because China’s fertility is lower than anticipated. Following years of stringent population control, in 2016, China relaxed its one-child policy to allow two children. Then, in 2021, it was further relaxed to allow a third child.

However, Chinese couples seem to have adjusted to life with a single child, and the Total Fertility Rate (TFR) in China is barely 1.16.

What are the challenges associated with the increasing population?

For the next 25 years, globally, one in five working-age persons will live in India. However, a sizeable working-age population does not mean many workers.

Low women participation: The size of India’s labour force is constrained by the absence of women from the workforce. The absence of women in factories, the transportation sector and skilled blue-collar work is huge.

Only about 30% of women aged 15 and above are employed either in wage work on family farms and businesses.

Population distribution between states: With fertility transition beginning in southern states and slowly spreading to central India, future workers will come from the central part of the country.

Challenges in interstate migration: With industrial growth concentrated in coastal regions and the bulk of India’s workers coming from central areas, India will also need to figure out how to deal with interstate migration.

Changing inter-generational relations: In 2047, a large proportion of the Indian population will be of working ages. However, after 2050, the older population will rise sharply; by 2100, about 30 per cent of the Indian population will be 65 and above.

This will make it difficult for Indian parents to rely on their traditional mode of survival, living with one or more sons.

What should be done?

Firstly, with declining fertility and rising education, many Indian women would like to work if they can find suitable jobs. Making occupations female-friendly is essential if India needs to reap a gender dividend.

Secondly, the youth will have to be equipped with skills that are indispensable to the knowledge economy. India needs to ensure that the education system in central India is improved so that they can create a proper workforce.

Thirdly, India needs better policies to integrate and support migrant workers in their new homes if India wants to adjust to changing demographic realities.

Fourthly, India must develop more robust systems of old-age support. This should include a combination of private savings, public social security programmes and an increase in retirement age, allowing the older population to be economically active for a longer time.

In addition, since most of the elderly will be women, India will also need to increase women’s control over family’s savings, land and residence.

GS Paper 2

Suman Bery writes: NITI Aayog’s role in ensuring collaboration between states and centre

Context: The Vice-Chairman of NITI Aayog lists out seven propositions centered around his understanding of NITI Aayog’s role in enhancing alignment between the Centre and states.

How has NITI Aayog helped in improving federalism?

Since its inception in 2015, NITI Aayog has been instrumental in promoting competitive and cooperative federalism.

– NITI Aayog organises the annual meeting of the Governing Council (GC) under the leadership of the PM. It brings together chief ministers/Lieutenant-governors of the states/UTs to discuss inter-sectoral, inter-departmental and federal issues. The aim is to accelerate the implementation of the National Development Agenda.

How can NITI Aayog help improve alignment b/w Centre and States?

States must identify their strengths: States are the Indian economy’s growth drivers. They control urban governance, agriculture, power distribution, land records modernisation, labour law simplification and pollution control.

– For India to remain one of the fastest-growing major economies, states must identify their strengths. NITI Aayog must ensure productive engagement and dialogue with the states to develop a growth roadmap.

Income convergence across states: Despite country-wide economic growth, the less developed Indian states are not catching up.

– NITI Aayog must address this crucial issue through improved governance structures, adequate financial development and infrastructure.

Performance on social indicators is a sound metric for assessing a state’s performance. Social outcomes are de-linked from income in several states. Mizoram’s performance on the Infant Mortality Rate (IMR) is one example. Despite being a middle-income state, its IMR is the lowest at 3 deaths per 1,000 live births, whereas the national average is 28.

– NITI Aayog has developed several social sector indices and dashboards for effectively tracking and monitoring outcomes. Regular monitoring and performance evaluation will incentivize states to achieve better social outcomes.

Growth at the grassroots: We must focus on ensuring that growth originates from the grassroots, while addressing significant inter-state and inter-district variations. The PM launched the Aspirational Districts Programme (ADP) to address these challenges through data-driven, outcome-based governance. While lauding the ADP during the conference, the PM emphasized the need to convert the Aspirational Districts into “inspirational districts”.

– NITI Aayog must focus on guiding state governments in replicating the ADP template at the block level and for districts not categorised as aspirational.

Better managed urbanisation is crucial. Cities face challenges such as affordable housing, water supply and waste management. Further, there is a need to tap into resources other than government budgets, such as monetising land assets and engaging private capital in service delivery.

– Efforts to empower and make large urban local bodies atmanirbhar are the needs of the hour.

Sharing of best practices: Several best practices are already being implemented by states across India. NITI Aayog must act as an intermediary between the Centre and states to ensure cross-sharing of these best practices, insights and perspectives.

– Some areas that merit particular focus are the use of advanced technology using blockchain and AI, development of social registry and reducing compliance burden etc.

Conversation around climate change challenge: The world has so far witnessed two models of development— the Industrial Revolution and the rise of East Asia. Both depended on cheap, fossil-fuel energy. India aspires to grow equally fast but is now subject to a carbon constraint.

At the state level, it is critical to understand how the challenges facing states might be affected by decarbonisation, both with regard to mitigation and adaptation.

India needs to continue its national debate around this challenge. Using its convening power, NITI Aayog is well-positioned to generate such a conversation and guide states to catalyse climate action.

Saving Sri Lanka

Context: The prevailing economic crisis in Sri Lanka, pre-crisis problems and how can India help in improving the situation.

Problems with Sri Lanka

Sri Lanka has been a South Asian epitome for many decades on Human Development Indicators (HDI). Health, education have been at near-European levels.

Average income has been above the rest of the subcontinent – with a pre-crisis per-capita income nearly double that of India.

But there were always problems in the island nation.

– Sri Lanka received IMF bailouts 16 times since 1965.

– There hasn’t been a single decade since the 1960s when Lanka did not receive at least 2 IMF bailouts.

– With time, size of the bailouts has gone up, but essential bug has persisted.

– During this time, Lanka has endured civil war, political instability and long periods of presumptively “liberal, tolerant” governments – but frequency of bailouts needed didn’t change.

What led to present economic crisis in Sri Lanka?

First, the lack of domestic savings to fund government debt and the lack of stable capital flows to fund the shortage of dollars created every year with a persistent CAD.

Second, since the 1960s, Lanka has depended on multilateral borrowings to finance its Current Account Deficit (CAD) as well as undertake key development projects.

Third, lack of a development bank infrastructure and local savings meant that the bulk of Lanka’s famed HDI achievements came to be funded by the likes of World Bank.

Fourth, despite large concessional foreign loan flows, Lanka had to periodically resort to IMF bailouts in order to bridge its foreign exchange deficits.

Fifth, aided by the optimism around the end of the civil war, Lanka started issuing International Sovereign Bonds (ISBs).

– By 2019 short-tenure ISBs became nearly 50% of government borrowings.

– ISBs, in the absence of drastic improvement in government finances and/or ability to raise local savings, need to be refinanced by raising further ISBs. All of this, in a country that has struggled to raise any meaningful non-debt capital inflows over the years, is close to a casino musical chair game.

Sixth, Loans by China: Belt and Road Initiative (BRI) loans fund large infrastructure projects (often unviable, like the Hambantota port) where bulk of the funding is to Chinese contractors executing the project.

This has resulted in a project with little cash flows, limited benefit to the local economy, but a funding liability of the Lanka government.

Seventh, the last and the final reason was likely the sudden wholesale switch to organic farming.

Why such a crisis isn’t possible in India?

India issues zero ISBs, and has negligible dependence on foreign flows to fund its budget.

As a large, sophisticated economy, it attracts enough non-debt capital flows to fund its CAD.

It has a world-class regulatory framework to manage external risks.

Way forward

Short term

Humanitarian suffering and a political vacuum must be avoided.

Money to pay for immediate and essential imports must be found, and New Delhi must support a peaceful transfer of power.

Long term

Sri Lanka’s debt, as currently structured, if unsustainable, will need to be restructured. This is critical as it will set precedents for other sovereign debt restructuring that appears inevitable, from Ghana to Laos.

India’s role

India must now take up a leadership role in addressing Lanka’s problems, without waiting for the global community.

Also, Sri Lanka is small compared to most Indian states, and so a bailout cost will not be prohibitive. Plus, bailing out a fundamentally productive neighbouring country is clearly in the national interest.

There was talk of the outgoing prime minister convening a conference of the country’s creditors, including India, Japan, and China. Such a meeting should certainly go ahead even if the current prime minister himself is not around to conduct it.

C Raja Mohan writes: India’s new West Asia approach is a welcome break with past diffidence

News: The first summit of a new forum known as I2U2 is expected to take place soon during Joe Biden’s visit to Israel.

About I2U2

The forum was launched in 2021. It brings together four countries, namely, India, Israel, the United Arab Emirates and the United States.

How is this forum important for India, in terms of relationship with the Middle East Region?

The I2U2 sets the stage for a new and dynamic phase in India’s relations with the Middle East. The US bet that India can contribute significantly to peace and prosperity in the Middle East region.

It indicates India’s new trends in its Middle East policy since 2014 because India is now ready to engage with those countries with which India had traditionally kept a safe political distance from in the Middle Eastern Region.

India’s relations with the Middle-Eastern Countries and the US

India-Israel Relations

Although India was one of the first countries to recognise Israel in 1950, India did not establish full diplomatic relations with it. For example, India has hosted the Israeli PM in 2003, and there were no prime ministerial visits in either direction during the decade-long period of 2004-14.

India feared that an open engagement with Israel might complicate its relations with the Arab partners.

India-Arab World Relations

Traditionally, India preferred to engage with the republics in the Arab world. However, in the 1970s, India’s ties to the monarchies improved because they became the main source of hydrocarbons, the main destination for Indian labor exports, and a major source of hard currency remittances.

However, despite improvement in India’s economic engagement with the Arab world, India remained wary of engagement with the monarchies in the Arab World as India believed that they were pro-Pakistan.

No Indian PM visited Saudi Arabia between 1982 and 2010 and UAE between 1981 and 2015.

The US

India has opposed its policies in the region undertaken in the name of promoting an “area of peace”. Therefore, I2U2 marks a big break from the anti-Western tradition in India’s approach to the region.

What developments made India to join the new forum?

India-Israel

India is engaging with Israel because various Muslim countries are improving ties with Israel. For example

(1) Turkey, now a champion of political Islam, had diplomatic ties with Israel since the year 1949.

(2) Egypt normalised its relation with Israel in 1980.

The UAE, Bahrain, Sudan and Morocco set up formal ties with Israel in 2020 Under the (3) Abrahamic accords, promoted by the Trump Administration.

India-Arab World

India is also deepening its ties with the Arab world. For example, PM Modi, while on his first visit to Israel in 2018, also became the first Indian PM to visit Palestine.

Since 2014, India has transformed its relations with the Gulf Kingdoms, especially the UAE and Saudi-Arabia based on a personal rapport of the Indian PM and without a reference to Pakistan.

India has negotiated a free trade agreement with the UAE. The UAE has also backed India’s 2019 constitutional changes in Kashmir and is ready to invest in India’s Union Territory of Jammu & Kashmir.

India-the US

India has increased its engagement with the US in the Indo-Pacific through the Quad in recent years.

India is participating in the West Asian Quad. This has brought India in line with other major powers– including Europe, China, and Russia which are trying and engaging with all parties in the region.

The new ‘normal’ of political splits and shifts

News: Recently, the States of Maharashtra and Madhya Pradesh have seen splits in the ruling party. Subsequently, there has been realignment of legislators which inaugurated new governments.

Trends of splits and switches in India

Splits and switches are commonplace in legislatures across the globe. India has also witnessed at least three distinct waves. These were:

(1) In the latter half of the 1960s, there were a number of free movement of legislators across political parties which led to quick turnover of governments in India.

(2) In late 1980s, the anti-defection law was enacted to end the menace and regulate the behaviour of legislators. The law discouraged individual movement and incentivised a collective movement of legislators (mass defection). This happened because the law legitimized the defection of a specific number of legislators.

(3) Since 2014, there have been a number of splits and switches aimed to establish the governments. For example, such happenings were seen in Arunachal Pradesh (2016), Bihar (2017), Karnataka (2019), Madhya Pradesh (2020), and Maharashtra (2022).

What are the problematic aspects with the third phase of the splits and switches in India?

There is no respect for the basic rules of the game.  The dominant parties are promoting splits and shifts.

The dominant parties have weaponized the anti-defection law and institutions. For example, these are used to intervene in the internal working of the opposition parties, etc.

Furthermore, legislators are also switching their support even if it does not lead to the making or maintenance of governments.

What are the associated issues?

It could have repercussions in terms of government formation, maintenance, and termination. Therefore, it is immoral and damages the foundations of representative democracy in India.

First, switchers violate the trust of those who voted in their favour on certain grounds.

Second, if it is assumed that voters vote for parties and not candidates, then it makes it difficult for voters to hold party governments accountable for their actions during elections.

Why do legislators split from and switch parties without fearing the negative connotations?

First of all, the notion of political parties is not static, it has changed with time and transformed. For example, Parties constantly adapt new modes to sustain and find success for themselves.

Today’s parties are not classical mass parties, which rise from societal movements and are internally democratic and share a common goal encompassing different dimensions of societal life.

Today’s parties are centralised vote-getting machines which primarily work to ensure the return of political leaders to office. They are working without internal democracy. There is lack of link with the society and mass organization. It is the central leadership that counts and matters. All party activities begin and end with elections.

In this model, the traditional campaign modes have been replaced by new forms of communication and campaign methods. For example, paid professionals are hired to frame strategies, run campaigns and distribute tickets. Therefore, traditional voter bases like labour etc. don’t form the backbone of parties and linkage between parties and the grassroots.

The voters see elected representatives or parties from the perspective of a supplier of goods and services. Therefore, the elected representatives are expected to be in government or at least close to the government. Therefore, the MLAs/MPs switch parties, and defections are not punished by voters.

GS Paper 3

The scam faultline is damaging Indian banking

News: The NPAs in banks incur mainly due to bad loans and scams. This affects the entire banking ecosystem. After the DHFL case, ABG Shipyard Limited of Surat had taken a loan of about ₹23,000 crores in a fake manner this year.

There are many examples of bank scams in India. For instance, the Nirav Modi and Mehul Choksi scam involving the Punjab National Bank, the case of businessman Vijay Mallya involves nearly 13 banks, the IDBI Bank fraud, and the R.P. Info Systems Bank scam to name just a few.

How do bad loans and scams impact the banking system?

Data by the Reserve Bank of India (RBI) show that around 34% of scams in the banking industry account for inside work and poor lending practices and the involvement of junior and mid-level management.

The RBI data also show that one of the fundamental problems in the development of banking is the rising bank scams and the costs consequently forced on the framework.

Frauds in the banking industry can be grouped under four classifications: ‘Management’, ‘Outsider’, ‘Insider’ and ‘Insider and Outsider’ (jointly). However, all scams are the result of operational failures.

According to the RBI data, corporate loans account for nearly 70% of these bad loans. On the other hand, retail loans, including car loans, home loans and personal loans, account for only 4%.

In a Global Banking Fraud survey, the KPMG highlighted that the issue is not just for India alone; it is a worldwide issue.

What are the NPA Projections?

According to the Financial Stability Report released by the RBI in December 2021, the gross NPAs of banks will be rising from 6.9% in September 2021 to 8.1% of total assets by September 2022 (under a baseline scenario) and to 9.5% under a severe stress scenario.

A study by the Indian Institute of Management Bangalore has shown that poor bank corporate governance is the cause behind rising bank scams and NPAs.

What is the impact of NPA on customers?

The banking system of any country is the backbone of its economy. Excessive losses to banks affect every person in the country because the amounts deposited in banks belong to the citizens of the country.

A high NPA also reduces the net interest margin of banks besides increasing their operating cost; these banks meet this cost by increasing the convenience fee from their small customers on a day-to-day basis.

What should be done to improve India’s banking system?

Ensure proper audit: The regulation and the control of chartered accountants is a very important step to reducing NPAs. There is also an urgent need to tighten the internal and external audit systems of banks.

Cautious approach: a) Banks should be cautious while lending to Indian companies that have taken huge loans abroad, b) Public sector banks should set up an internal rating agency for rigorous evaluation of large projects before sanctioning loans, c) There is a need to implement an effective Management Information System (MIS) to monitor early warning signals about business projects.

Use technology: Financial fraud can be reduced to a great extent by the use of artificial intelligence (AI) to monitor financial transactions.

Improve loan recovery process: India has to improve its loan recovery processes and establish an early warning system in the post-disbursement phase. Banks need to carry out fraud risk assessments every quarter.

Nano urea potential

News: The Union Minister for Chemicals and Fertilizers recently stated that India may not need to import urea after 2025, as domestic production of conventional urea and nano liquid urea supplies may be sufficient to meet the country’s demand.

Why India needs to reduce import dependence of fertilizers?

Currently, the global prices of Urea have soared to new highs and its availability has dwindled due to the Russian-Ukraine conflict and export cuts by China and other countries.

The international urea prices are currently ruling at their highest level since the 2008 food and financial crisis. So are, in fact, the prices of phosphatic and potassic fertilisers, for which the country’s reliance on imports is even higher than that for urea.

Due to India’s import dependence wrt Urea and phospatic and potassic fertilisers, India has to bear a huge subsidy burden. The fertiliser subsidy in the current fiscal year is projected to exceed Rs 2.5 trillion, surpassing last fiscal year’s record of Rs 1.62 trillion by a big margin.

Efforts for Urea self-sufficiency

Self-sufficiency in urea has been on the cards ever since the introduction of the new urea policy in 2015. The policy focussed on a) maximising domestic output, b) promoting energy efficiency in urea manufacturing, and c) reviving the defunct fertiliser plants.

What is nano urea?

Nano-Urea is a new-generation urea, which condenses one bag equivalent of urea into a tiny bottle of 500 ml liquid. It has further speeded up the march towards shedding reliance on imports of Urea.

The cooperative sector fertiliser giant, IFFCO, must be given due credit for pioneering and promoting nano-urea technology, which has already proved its worth as a game-changer.

How can Nano-Urea help India become an exporter of Urea?

The production capacity of nano urea is likely to increase from the present 50 million bottles (each containing 500 ml liquid) to over 440 million bottles with the commissioning of the under-construction nano urea plants.

Moreover, the resurrected fertiliser plants at Ramagundam, Talcher, Gorakhpur, Sindri and Barauni, and a few new ones at other sites are also expected to begin producing to their full capacity.

Hence, many analysts believe that India should now be looking forward to exporting urea rather than importing it, by capitalising on its huge nano urea production potential.

The breakthrough in nano-technology has also opened up opportunities for the production of nano di-ammonium phosphate (DAP), which is the second-largest in consumption and highly import-dependent farm input.

This product, currently in advanced stages of development, is expected to bring down the cost of DAP by half.

With such developments being on the horizon, India may well be on the cusp of transmuting from a bulk importer to a net exporter of plant nutrients.

What are the advantages offered by nano products?

The significance of these innovations goes far beyond alleviating import-dependence for fertilisers. They offer multiple advantages, like:

– Cost reduction and supply augmentation

– Improvement in fertiliser-use efficiency

– Rise in farmers’ income.

– Enhanced nutrient consumption by plants: Studies have shown that while nutrient consumption by plants (nutrient-use efficiency) is only 25-30% in the case of conventional fertilisers, it rises to 90% for nano products. This helps  in pushing up crop yields perceptibly.

– Additionally, the use of nano urea and DAP helps reduce the soil, air, and water pollution attributable to chemical fertilisers.

Safety in the sky – The DGCA should have no tolerance for laxity among airlines seeking to cut corners

News: Recent incidents in Indian aviation have raised concerns about air passenger safety. These incidents cover bird hits, cracked windshields, component failures, engine compressor surges and blade failures, flight diversions, mid-air engine shutdowns, and a case of severe turbulence in the monsoon.

With most of them affecting one airline, SpiceJet. The Directorate General of Civil Aviation(DGCA) has pointed out a ‘degradation of safety margins’, ‘poor internal oversight’ and ‘inadequate maintenance actions’ in aircraft.

What is the performance of aviation safety in India?

According to Ministry of Civil Aviation data, there were 5,268 aircraft movements in the domestic sector. It has even cited an average of 30 such episodes a day.

According to DGCA’s Annual Safety Review in 2020, under ‘Deficient maintenance’ (the objective is to improve the maintenance of Indian registered aircraft), for a target of 2.16 for incidents involving component/system failure per 10,000 flight hours, the achieved performance is 2.39. Similarly, under the number of maintenance errors per 10,000 flight hours, for a target of 1.43, the performance is 1.46.

What should be done to improve aviation safety?

In an ideal ecosystem, issues with safety would be analysed in terms of the rate of occurrence using tiered categorisation, with the goal of reducing to the minimum level.

With passenger numbers climbing back to pre-COVID-19 levels, the entry of new airlines, and the existing players indicating aggressive fleet expansion plans, the DGCA should have no tolerance for airlines seeking to cut corners in passenger safety.

ONDC is the disruption Indian commerce needs

News: Currently, Indian cities are seeing a pilot run of the Open Network for Digital Commerce (ONDC) which is aimed to make headway towards democratizing e-commerce.

What are the advantages of the ONDC?

It offers an opportunity to medium and small retailers to adopt digit tools and expand beyond the limits of brick-and-mortar sales.

It removes the need of the small sellers to register on multiple platforms, removes fear of predatory pricing and the risk of losing visibility to brands which are owned or favoured by the platform itself.

It would provide a level playing field between small businesses and big brands at the e-commerce platform as it will be inclusive in nature. The smallest seller in the ONDC ecosystem will be offered as much opportunity to sell products as available to large players.

It aims to provide access to e-commerce platforms, to small manufacturers and suppliers so that they can create their own brands.

The framework may help create several new vertical marketplaces, with players catering to specific or niche segments of customers.

New opportunities will be provided to local players (say in the Tier-II+ cities). For example, imagine a homegrown health and beauty brand collaborating with a small retailer in Madhya Pradesh that deals in forest-based products like mahua, honey, amla, or ashwagandha.

How can the small businesses signing up for the ONDC, create their brands?

They should set standards, maintain the quality of products and services, test products and read markets.

Firms like Mensa and Upscalio could help small businesses create digital brands, optimize product distribution and integrate their operations with the large supply chains.

The small business can tie up with the fast-moving consumer goods (FMCG) companies like Marico and Tata Consumer Products. They procure raw materials or processed goods from smaller players, and help them with quality assurance, standardization and other aspects of branding along the way.

Way Forward

In order to become successful, the ONDC needs players of various stripes to build on it. For example, a greater number of sellers from smaller cities should embrace digital technology.

The ONDC should help in integrating businesses to create niche products, provide brand consultants or investors and facilitate hand-hold support of FMCG companies to smaller players.

The pandemic-flagged need for a new fiscal framework

News: In recent years, there has been suspension of fiscal rules across the globe due to the global financial crisis (GFC).

What were the causes behind suspension of the fiscal rules?

The costs of dealing with the pandemic has raised global government and private debt to record-high levels.

The GFC crisis has been compounded by the Russia-Ukraine conflict in the year 2022.

What are the traditional government approaches in the fiscal management domain?

Fiscal architecture: It involves a fiscal strategy, supported by fiscal institutions such as an accountable and efficient public financial management system (PFM).

Fiscal rules: There has been advocacy for well-designed and implemented numerical fiscal rules. These rules help strengthen the credibility of an administration’s commitment to fiscal sustainability.

What were the issues in the numerical fiscal rules approach?

India adopted numerical fiscal rules in 2003. However, there was pre-covid evidence that demonstrated that numerical fiscal rules did not prevent a large debt build-up over time. Therefore, the rigid numerical fiscal rules did more harm than good.

Thus, it prompted modification of existing rules and revamping of escape clauses. Therefore, the Centre updated the Fiscal Responsibility and Budget Management (FRBM) Act in 2018 and adopted multiple fiscal indicators as targets.

What are the issues with India’s new fiscal rule regime?

The fiscal rules have been effectively circumvented by off-budget fiscal operations, inconsistent budget classification and accounting standards. In addition, there have been improper use of public accounts for budgetary purposes in India.

Definitions of key targets, such as ‘fiscal deficit’ or ‘public debt’, vary across state governments and the Centre.

Though the PFM system was strengthened. But it has been able to meet only a fraction of best practice standards. It cannot check misclassification of accounts for compliance.

Way forward

India needs to develop a system which mandates fiscal sustainability through institutional framework. The institutions should also be allowed to take judgement in the times of crisis.

For example, fiscal responsibility principles should not be time-bound, but must allow the government to manage shocks. This can be done through three key steps:

(1) Instead of adopting numerical fiscal rules, the government should adopt the principles of fiscal responsibility. Such a model has been adopted by New Zealand, Australia and the UK.

(2) Various stands, criteria, procedures and methods should be established. This should be devised in a manner that ensures that standards are being met.

(3) There must be institutions to do surveillance and to determine ex-post compliance with the fiscal responsibility principle.

In a post-pandemic framework, overall, India needs to improve the quality and efficiency of public spending and financial management across all levels of government.

(A) The New Zealand Model –Principles-Based Fiscal Strategy

(1) NZ has enacted ‘the fiscal strategy act’, which requires adherence to the standards and principles of responsible fiscal management. For example, a medium-to-long-term fiscal sustainability report etc.

(2) The government publishes an annual fiscal strategy explaining how its annual fiscal plan is consistent with the standards set out in the law etc.

(3) It ensures transparent public reporting at regular frequency. Further, a periodic public review of the government’s fiscal plans is done by the Parliament and independent fiscal institutions.

(B) In doing this, India should move toward a new principles-based fiscal strategy, rather than returning to a fiscal framework based on rigid numerical fiscal targets.

70,000 Startups & The Helping Hand of Sarkar

News: In recent periods, the government has released a detailed ‘Start-up India Action Plan’, to support and empower start-ups in the country.

About the Start-up India action plan

It includes 19 action points focussing on three different categories as given below

(a) handholding support to entrepreneurs/start-ups;

(b) creating funding support and incentivisation mechanisms for start-ups; and

(c) supporting industry academia partnerships and providing necessary incubation support for start-ups.

Status of Start-ups ecosystem in India

Today, India ranks at the third place in the global start-up ecosystem

The sector is also growing at an annual rate of 12-15%. In 2014, the number of start-ups were not more than 400. However, the number of start-ups has jumped to a whopping number of 70,000 in 2022.

Around 102 start-ups have risen into the $1 billion-plus valuation club.

Why start-ups are significant?

They contribute to generating wealth and employment in the country.

They propel innovation and technological development across key development sectors.

What were the factors that have led to high growth in the start-ups sector in India?

There has been an enabling environment that has led to a vibrant startup movement across the country.

The Union government launched ‘Start-up India Stand-up India’ in 2015.

The government unlocked the space sector and opened it up to private players.

The start-ups have been receiving funding without any interruptions. For example, even the Covid pandemic, could not impact funding

The Department of science and technology (DST) reshaped the start-up culture in the country. It launched the Technology Business Incubator (TBI) having a network of more than 160 incubators.

The DST also set up the Seed Support System in the TBIs for providing much needed early-stage funding to start-ups.

Under the National Initiative for Developing and Harnessing Innovations (NIDHI) TBI programme, 105 incubators have been set up across the country, over the last five years.

What are the noteworthy contributions of DST’s programme on innovation and entrepreneurship?

The TBI network identified and supported start-ups during the pandemic period.

The network of incubators has supported more than 12,000 start-ups which include 1,500-plus women-led start-ups. These start-ups have filed more than 900 patents and produced more than 1,15,000 new jobs.

Service Tax exemption to both incubators and incubatee.

Permission to hold equity by DST-supported incubators (not for profit legal entities) i.e., converting government grants to equity subscription.

CSR funding for incubators.

First government agency to

– offer programmes in PPP mode for scouting and supporting innovation and start-ups:

– partner and create Sebi-registered PPP innovation fund.

– bilaterally and multilaterally partner with international government and multilateral agencies respectively, for innovation and entrepreneurship development.

It has pioneered in training and capacity building of incubation managers with exposure to global best practices.

The TBIs were first to get support from multilateral international developmental agencies like UNDP, infoDev etc.

Way Forward

India’s vibrant and mutually supplementing start-ups ecosystem should be seen as a role model for the rest of the world.

Prelims Oriented Articles (Factly)

Ghana reports first-ever suspected cases of Marburg virus disease

Source: The post is based on the article “Ghana reports first-ever suspected cases of Marburg virus disease” published in Down To Earth on 11th July 2022.

What is the News?

Ghana has reported its first-ever suspected cases of Marburg Virus Disease.

What is Marburg Virus Disease?

Marburg virus disease(MVD) is a severe disease in humans caused by Marburg marburgvirus(MARV). 

The virus belongs to the same family(Filoviridae family) as the Ebola virus.

Origin: The disease was first identified in 1967 in Germany’s Marburg and Frankfurt and Serbia’s Belgrade following two large outbreaks.

Vector: Fruit bats are the key carriers of the disease. It typically infects humans following prolonged exposure to mines or caves inhabited by Rousettus bat colonies. 

Transmission: Human-to-human transmission takes place through direct contact with the blood, secretions, organs or other bodily fluids of infected people. Surfaces and materials contaminated with these fluids are other vital sources. Its incubation period ranges from two days to three weeks. 

Symptoms: High fever, severe headache and severe malaise accompanied by muscle aches and pains are some common symptoms of the disease. 

Fatality Rate: Marburg is potentially very harmful and deadly. Case fatality rates in past outbreaks have ranged from 24% to 88%.

Treatment: There are no specific vaccines or antiviral treatments to treat the disease. However, chances of survival improve significantly with the help of rehydration with oral or intravenous fluids and targeted symptom treatment.

Service Charge: The new guidelines to prevent unfair trade practices

Source: The post is based on the article “The new guidelines to prevent unfair trade practices” published in The Hindu on 12th July 2022.

What is the News?

The Central Consumer Protection Authority(CCPA) has announced five guidelines to prevent unfair trade practices and to protect consumer interests regarding the levy of service charges in hotels and restaurants. 

What is CCPA?

The CCPA was established in 2020 under The Consumer Protection Act, 2019 to promote, protect and enforce the rights of consumers as a class and to investigate, prosecute and punish violators.

The CCPA has issued these guidelines under section 18 of the CPA, 2019 to protect, promote and most importantly enforce the rights of the consumers and prevent violation of their rights under the Act.

What is Service Charge?

A service charge is a tip or a direct transaction between the customer and the restaurant staff, specifically the wait staff. It is a fee collected to pay for services associated with the purchase of a primary product or service. 

It is collected by hospitality sectors and food and beverage industries as a fee for serving customers.

What do the CCPA’s guidelines on service charges say?

The CCPA has issued five major guidelines regarding the levy of service charges. These guidelines are:

– No hotel or restaurant shall add a service charge automatically or by default in the bill;

– Service charge shall not be collected from consumers by any other name;

– No hotel or restaurant shall force a consumer to pay the service charge and shall clearly inform the consumer that the service charge is voluntary, optional, and at the consumer’s discretion;

– No restriction on entry or provision of services based on the collection of service charge shall be imposed on consumers; and

– Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.

What is the redressal mechanism for consumers?

​​If any consumer finds that a hotel or restaurant is levying a service charge in violation of these guidelines, they may 1) request the concerned hotel or restaurant to remove the service charge from the bill or 2) may lodge a complaint on the National Consumer Helpline(NCH) which works as an alternate dispute redressal mechanism at the pre-litigation level by calling 1915 or 3) through the NCH mobile app. 

Oncolytic Virotherapy(OV): ‘Next-gen’ cancer therapy can kill tumours without harming healthy cells

Source: The post is based on the article “’Next-gen’ cancer therapy can kill tumours without harming healthy cells” published in Economic Times on 7th July 2022.

What is the News?

Researchers in the US have developed a novel strategy in Oncolytic Virotherapy(OV) to improve a cancer therapy that can kill tumour cells while leaving nearby healthy tissues intact.

What is Oncolytic Virotherapy(OV)?

Oncolytic viruses can kill cancer cells while leaving nearby healthy cells and tissues intact.

In oncolytic virotherapy, the treatment exerts its influence by activating an antitumor immune response made of immune cells such as Natural Killer(NK) cells.

However, sometimes those natural killers limit the oncolytic viruses and so despite the exciting development in the OV field in recent years, there is room for improvement to tackle some limitations, including the relatively weak therapeutic activity and lack of means for effective systemic delivery.

What have the researchers developed?

Researchers have developed a novel strategy that not only can prevent Natural Killer(NK) cells from clearing the administered oncolytic virus but also goes one step further by guiding them to attack tumour cells. This is done by deleting the region of the gene which shows to activates the signalling pathway that enables the virus to replicate in normal cells.

World Population Prospects(WPP) Report: UN population report explained: A look at the trends, projections and implication

Source: The post is based on the article “UN population report explained: A look at the trends, projections and implication” published in Indian Express on 12th July 2022.

What is the News?

The United Nations(UN) has released the World Population Prospects(WPP) Report 2022.

What is the World Population Prospects(WPP) Report?

Published by: Population Division of the UN has been publishing the WPP in a biennial cycle since 1951.

Purpose: To provide an overview of global population trends focusing on the period from 1950 to 2050 and present a summary of key demographic prospects during the second half of the present century.

What are the key highlights from the report?

Global findings

World Population: The world’s population could grow to around 8.5 billion in 2030 and 9.7 billion in 2050, before reaching a peak of around 10.4 billion people during the 2080s. The population is expected to remain at that level until 2100. 

Slowest Growth rate: G​​lobal population is growing at its slowest rate since 1950, having fallen to less than 1% in 2020.

Fertility Rate: Fertility has fallen markedly in recent decades for many countries. Currently, two-thirds of the global population lives in a country or area where lifetime fertility is below 2.1 births per woman.

Impact of Covid-19: The COVID-19 pandemic has had an effect on population change: global life expectancy at birth fell to 71 years in 2021 (down from 72.9 in 2019).

Growth Concentrated in Eight Countries: More than half of the projected increase in the global population up to 2050 will be concentrated in eight countries: the Democratic Republic of the Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and the United Republic of Tanzania.

Older Population: The population of older persons is increasing both in numbers and as a share of the total: The share of the global population aged 65 years or above is projected to rise from 10% in 2022 to 16% in 2050.

Increase Working Age Population: A sustained drop in fertility has led to an increased concentration of the population at working ages (between 25 and 64 years), creating an opportunity for accelerated economic growth per capita.

International Migrants: Around ten countries experienced a net outflow of more than 1 million migrants between 2010 and 2021.

Findings related to India

India’s Population: India is projected to surpass China as the world’s most populous country in 2023.

– Currently, India’s population stands at 1.412 billion in 2022 compared to China’s 1.426 billion.

– India which will surpass China as the world’s most populous nation by 2023 is projected to have a population of 1.688 billion in 2050 which will be way ahead of China’s 1.317 billion people by the middle of the century.

The search for dark matter

Source: The post is based on the article “The search for dark matter” published in The Hindu on 12th July 2022.

What is the News?

Physicists working with the world’s biggest dark-matter detector—in the United States known as LUX-ZEPLIN (LZ) have released their first results.

What is Dark Matter?

All interactions in the universe are a result of four fundamental forces acting on particles– strong nuclear force, weak nuclear force, electromagnetic force and gravitation. 

Dark matter is made up of particles that do not have a charge — which means they do not interact through electromagnetic interactions.

So, these are particles that are “dark”, namely because they do not emit light which is an electromagnetic phenomenon and “matter” because they possess mass like normal matter and hence interact through gravity.

Note: Many physicists strongly believe that the entire visible part of the universe forms only 5% of all matter in it. They believe the rest is made up of dark matter and dark energy. 

How do scientists know that Dark Matter exists?

There is strong indirect evidence for dark matter and this evidence is reflected at various levels:

Firstly, Rotation of Galaxies: Consider the rotation of galaxies. If one looks at stars all the way from the centre of any galaxy to its rim, the way the velocities of the observed stars change may be plotted. 

– There is a marked difference between the observed plot of star speeds and the calculated value as one moves from the inner part of the galaxy towards its rim. 

– Now if one assumes there is a certain fraction of matter which exerts a gravitational pull on the rest of the stars in the galaxy, for it cannot be seen in any other way and recalculate the plot, it fits in with the observed value. This means that there is a definite amount of dark matter in the galaxy.

Secondly, the Bullet cluster of galaxies: The Bullet cluster is formed through the merging of two galaxy clusters. Physicists found from their calculations that the way these mergers took place could not be fully explained if we believed that the visible universe was all that existed. Therefore, there should be something like dark matter as well as an estimate of how much dark matter there should be in the universe.

What are the candidates for Dark Matter particles?

The neutrino would have been an excellent candidate if it had been more massive. However, being too light, it doesn’t fit. 

Candidates for dark matter are hypothetical particles such as axions, sterile neutrinos, weakly interacting massive particles(WIMPs), supersymmetric particles, geons or primordial black holes.

Epstein Barr Virus(EBV): Connecting the dots between virus infection and progress of brain cancer

Source: The post is based on the article “Connecting the dots between virus infection and progress of brain cancer” published in PIB on 11th July 2022.

What is the News?

Scientists have found that the cancer-causing virus Epstein Barr Virus(EBV) can infect the neuronal cells and drive various changes leading to diseases of the central nervous system as well as brain cancer.

What is Epstein Barr Virus(EBV)?

The EBV virus has been found to be widely present in the human population. 

It usually does not cause any harm, but the virus gets reactivated inside the body in some unusual conditions like immunological stress or immunocompetence. 

This may further lead to various complications like a type of blood cancer called Burkitt’s lymphoma, stomach cancer, multiple sclerosis and so on. 

Earlier studies provided links to EBV involvement in various neurodegenerative diseases. However, how this virus can affect the cells of the brain and manipulate them is still unexplored.

What have the scientists found out?

Scientists have found that Epstein Barr Virus(EBV) can infect neuronal cells and drive various changes in biomolecules such as fatty acids, carbohydrates and protein components leading to diseases of the central nervous system as well as brain cancer.

What is the significance of these findings?

This research work aids in the understanding of EBV-mediated biomolecular changes in the various compartments of the central nervous system leading to a better understanding of nervous system diseases.

PM unveils National Emblem cast on the roof of the new Parliament Building

Source: The post is based on the article “PM unveils National Emblem cast on the roof of the new Parliament Building” published in PIB on 11th July 2022.

What is the News?

The Prime Minister has unveiled the National Emblem cast on the roof of the New Parliament Building.

About National Emblem on New Parliament Building

The National Emblem is made of bronze with a total weight of 9500 Kg and is 6.5 m in height. It has been cast at the top of the Central Foyer of the New Parliament Building. 

A supporting structure of steel weighing around 6500 Kg has been constructed to support the Emblem.

Note: This new Parliament Building is part of the Central Vista Project which also includes a joint central secretariat, revamp of the Rajpath, a new Prime Minister’s residence, a new Prime Minister’s Office, and a new Vice-President’s enclave.

What is the National Emblem of India?

The National Emblem is an adaptation from the Sarnath Lion Capital of Ashoka which is preserved in the Sarnath Museum. 

The Lion Capital has four lions mounted back-to-back on a circular abacus. The frieze of the abacus is adorned with sculptures in high relief of an elephant, a galloping horse, a bull and a lion separated by intervening Dharma Chakras.

The words ‘Satyameva Jayate’ from Mundaka Upanishad, meaning ‘Truth Alone Triumphs’, are inscribed below the abacus in the Devanagari script.

The emblem of India was adopted on January 26, 1950 – the same day when the constitution of India came into force.