9 PM Current Affairs Brief – February 1st, 2020

Economic Survey 2019-20: What it says on stubble burning

News: Economic Survey 2019-20 has said that the number of stubble-burning incidents (61,332) in 2019 were the least in four years. However, the survey highlights agricultural residue burning as a “major concern”.

Facts:

Stubble Burning: It is the practice of intentionally setting fire to residues which remains after the harvest of a crop. It is usually done to clear the field quickly for the next season and to burn off weeds and other pests.

Steps taken

  • The Centre and states of Punjab, Haryana and Uttar Pradesh have declared “zero tolerance policy” on stubble burning.
  • In 2018, the Punjab government drafted an action plan to deal with stubble burning. Under the plan, the state has decided to provide straw management machinery at 80% subsidy to the cooperative societies and other groups and at 50% subsidy to individual farmers.
  • Happy Seeder: It is a tractor-operated machine developed by the Punjab Agricultural University (PAU) in collaboration with Australian Centre for International Agricultural Research (ACIAR). It is used for in-situ management of paddy stubble (straw).
  • Advanced Air Quality Early Warning System: It has been developed by Indian Institute of Tropical Meteorology, Pune, under MoES. The system uses data of stubble burning incidents from the past 15 years to predict the date and place of the next burning.

Recommendations put forward by Economic Survey 2019-2020:

  • Agriculture conservation should be promoted with “low lignocellulosic” crop residues such as rice, wheat and maize.
  • Crop residue-based briquettes to be encouraged
  • Thermal power plants in the vicinity to be encouraged to undertake co-firing of crop residues with coal

Economic Survey 2019-2020: India has become Second Largest Emerging Green Bond Market after China

News: According to Economic Survey 2019-20, India has the Second largest Emerging Green Bond Market after China. India has also joined International Platform on Sustainable Finance (IPSF) in 2019 to scale up the environmentally sustainable investments.

Facts:

Green Bonds:

  • These are fixed-income financial instruments issued for funding of specific projects which have positive environmental and climate benefits.
  • Yes Bank was the first Indian Bank to issue Green Infrastructure Bonds (GIBs) in India in 2015.

Avenues where these funds can be invested:

Securities and Exchange Board of India (SEBI) has allocated eight high-level categories as “green projects”—

  • renewable energy,
  • clean transportation,
  • sustainable water management,
  • climate-change adaptation,
  • energy efficiency,
  • sustainable waste management,
  • sustainable land use,
  • biodiversity conservation

Additional Information:

International Platform on Sustainable Finance (IPSF)

  • Launched in 2019 by Argentina, Canada, Chile, China, India, Kenya, Morocco and the European Union
  • Aim: To scale up the mobilisation of private capital towards environmentally sustainable investments
  • Objectives:
  • promote best practices in environmentally sustainable finance;
  • Identify barriers and opportunities to scale up environmentally sustainable finance internationally;
  • Enhance international coordination on environmentally sustainable finance issues.

Economic Survey 2019-2020: service Sector in India

News: The Economic Survey 2019-2020 has said that the services sector’s significance in the Indian economy has continued to increase.

Facts:

Key Facts:

Contribution of Service Sector to the Indian Economy:

  • 55% of total size of the economy and GVA growth,
  • Two-thirds of total FDI inflows into India
  • 38% of total exports

Performance of India’s Key Services Sub-Sectors:

  1. Information Technology and Business Process Management (IT-BPM) Services: industry size reached about US$ 177 billion in March 2019. IT services constituted 51% of the IT-BPM sector
  2. Tourism: India ranked 22nd in the world in terms of international tourist arrivals in 2018 and accounts for 1.24% of world’s international tourist arrivals
  3. Port and Shipping Services: The shipping turnaround time (a key indicator of efficiency of the ports sector) at ports has almost halved from 4.67 days in 2010-11 to 2.48 days in 2018-19.
  4. Space Sector: India spent about US$ 1.5 billion on space programmes in 2018

Economic Survey 2019-2020: Social Infrastructure, Employment and Human Development

News: The Economic Survey 2019-2020 highlights the government’s commitment towards social wellbeing in India.

Key Highlights:

  • Expenditure on social services by the Centre and States (as a proportion of GDP): Increased from 6.2% in 2014-15 to 7.7% in 2019-20.
  • India’s ranking in Human Development Index: Improved to 129 in 2018 from 130 in 2017. With 1.34 % average annual HDI growth, India is among the fastest improving countries.
  • Total formal employment: increased from 8% in 2011-12 to 9.98% in 2017-18
  • Gender disparity in India’s labour market: widened due to decline in female labour force participation especially in rural areas and around 60% of productive age (15-59) group are engaged in full time domestic duties
  • Housing: About 76.7% of the households in the rural and about 96% in the urban areas had houses of pucca structure.
  • Vaccination: Mission Indradhanush has vaccinated 3.39 crore children and 87.18 lakh pregnant women.

First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, 2018-19

News: The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation has released the First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation for the financial year 2018-19.

Facts:

Key Highlights:

Gross Domestic Product:

  • Nominal GDP or GDP at current prices for the year 2018-19 is estimated as ₹ 189.71 lakh crore representing a growth of 11% during 2018-19.
  • Real GDP or GDP at constant (2011-12) prices for the years 2018-19 stand at ₹ 139.81 lakh showing growth of 6.1% during  2018-19

Nominal Net National Income: At current prices for the year 2018-19 stands at ₹ 167.89 lakh crore showing growth of 10.8% during 2018-19

Gross National Disposable Income: estimated as ₹ 192.63 lakh crore for the year 2018-19 showing a growth of 11.2% for year 2018-19

Saving: Gross saving during 2018-19 is estimated at ₹ 57.13 lakh. The highest contributor to Gross Saving has been the household sector.

Gross Capital Formation: At current prices is estimated at ₹ 61.09 lakh crore for the year 2018-19

Per Capita Net National Income at current prices:  ₹ 1, 26,521 in 2018-19

Consumption Expenditure:

  • Private Final Consumption Expenditure (PFCE) at current prices is estimated at ₹ 112.54 lakh crore for the year 2018-19
  • Government Final Consumption Expenditure (GFCE) at current prices is estimated as ₹ 21.04 lakh crore for the year 2018-19

Economic Survey:Thalinomics

News:The Economic Survey 2019-20 has included a chapter ‘Thalinomics:The economics of a plate of food in India’.

Facts:

About Thalinomics:

  • The Thalinomics is an attempt to quantify what a common person pays for a ‘thali’(plate of food) in India.It assess whether a ‘thali’ has become more or less affordable over the last few years.
  • As per the survey, a vegetarian thali comprises a serving of cereals, ‘sabzi and dal’ and the non-vegetarian thali comprises of cereals, sabzi and a non-vegetarian component.

What did the survey found out?

  • The survey has found that Veg ‘thali’ affordability has improved by 29% and non-veg Thali affordability by 18% during 2006-07 to 2019-20.
  • This means that an average household of five individuals that eats two vegetarian thalis a day gained around Rs 10,887 on average per year while a non-vegetarian household gained Rs 11,787 on average per year.
  • It has also claimed that 2015-16 could be considered as a year when there was a shift in dynamics of thali prices as many reform measures were introduced to enhance agricultural sector.

Economic Survey 2019-20:Ease of Doing Business

News:The Economic Survey has dedicated a chapter on the Ease of Doing Business in India.

Facts:

Key takeaways:

  • In World Bank’s Ease of Business rankings,India has recorded a jump of 14 positions at 63rd rank in 2019 against its rank of 77 in 2018.
  • India’s improved ranking was on the back of reforms such as (a)dealing with construction permits (b)trading across borders and (c)resolving insolvency.
  • The turnaround time of ships in India has also almost halved to 2.48 days in 2018-19 from 4.67 days in 2010-11.
  • However,India still trails in parameters such as Ease of Starting a Business, Registering Property, Paying Taxes and Enforcing Contracts.

Problems in Ease of doing business:

  • According to the survey,Delhi requires 26 licences and approvals to open a restaurant while Bengaluru requires 36 and Mumbai needs 22.
  • On the other hand,China and Singapore require only four licences to open a restaurant.
  • Setting up and operating services or manufacturing business in India face a maze of laws as it has to conform with 6,796 compliance items, which is a tedious and time-consuming task.

Suggestions:

  • Focus on reducing time and cost of starting a business in India, especially in the services sector which faces many regulatory hurdles even for routine business.
  • Increasing digitalisation and seamlessly integrating multiple agencies onto a single digital platform can further reduce procedural inefficiencies in cross-border trade significantly.
  • Streamlining of logistics on Indian seaports needs close inter-ministerial coordination 
  • Map out regulatory and process bottlenecks for tourism and manufacturing and correct them at the central, state or municipal levels.

Economic Survey:A Temasek-like model to put divestment on aggressive track

News:The Economic Survey 2019-20 has proposed a new structure of disinvestment called Temasek-like model to maximise returns from public sector enterprise.

Facts:

About Divestment:

  • Disinvestment is defined as the action of an organisation (or government) selling or liquidating an asset or subsidiary.

Economic Survey on Divestment:

  • The survey examined the realized efficiency gains from privatization in the Indian context and bolsters the case for aggressive disinvestment of CPSEs.
  • It presented an analysis of the before-after performance of 11 CPSEs which underwent strategic disinvestment from 1999-2000 to 2003-04.
  • It found that Financial indicators such as net worth, net profit, return on assets (ROA), return on equity (ROE) of the privatized CPSE’s on an average have improved significantly.

Benefits of divestment:The survey has suggested aggressive disinvestment of CPSEs which will lead to 

  • higher profitability.
  • Promotes efficiency.
  • Increases competitiveness.
  • Promotes professionalism.

About Temasek-like model:

  • Temasek like model is based on the experience of Singapore’s Temasek Holdings Company.
  • Under this model,the government can transfer its stake in the listed CPSEs to a separate corporate entity. 
  • This entity would be managed by an independent board and would be mandated to divest the government stake in these CPSEs over a period of time.
  • This will lend professionalism and autonomy to the disinvestment programme which in turn would improve the economic performance of the CPSEs.

Economic Survey 2019-20:Public Sector Banks(PSBs)

News:The Economic Survey has dedicated an entire chapter to the status of public sector banks and the NPA crisis.

Facts:

Survey on Public Sector Banks:

  • Since 1969,India’s Banking sector has not developed proportionately to the growth in the size of the economy.
  • India will need at least eight banks in the top 100 banks globally to become a $5 trillion economy.Currently,it has only the State Bank of India with 55th rank in the world’s top 100 banks.

Problems in PSB’s:

  • PSBs are inefficient compared to their peer groups on every performance parameter.
  • In 2019,investment for every rupee in PSBs on average,led to the loss of 23 paise while in private banks it led to the gain of 9.6 paise.
  • Credit growth in PSBs has been much lower than Private Banks for the last several years.
  • PSBs enjoy less strategic and operating freedom as compared to private banks.
  • Public Sector Banks are wary of taking risks in lending or in renegotiating bad debt due to fears of harassment under the veil of vigilance investigations.

Solutions:

  • Employee Stock Ownership Plan(ESOP) for the Public Sector Banks(PSBs) employees.
  • Representation on boards proportionate to the blocks held by employees to incentivize employees and align their interests with that of all shareholders of banks.
  • Creating a Public Sector Banking Network(PSBN) similar to GSTN that uses technology to screen and monitor borrowers comprehensively to prevent any build-up of bad loans in the future.

Economic Survey calls for strengthening invisible hand of markets

News:TheEconomic Survey 2020 has illustrated enormous benefits from enabling the invisible hand of the market.

Facts:

Achieving $5 trillion economy:The survey has said that India’s aspiration to become a $5 trillion economy depends critically on:

  • Strengthening the invisible hand of the market.
  • Supporting it with the hand of trust.

About Invisible Hand:

  • The phrase Invisible Hand was introduced by Adam Smith in his book ‘The Wealth of Nations’.
  • It states that unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.
  • In other words,it basically assumes that an economy can work well in a free market scenario where everyone will work for his/her own interest.

Suggestions:The invisible hand needs to be strengthened by promoting pro-business policies to:

  • provide equal opportunities for new entrants, enable fair competition and ease doing business
  • eliminate policies that unnecessarily undermine markets through government intervention
  • enable trade for job creation and 
  • efficiently scaling up the banking sector to be proportionate to the size of the Indian economy.

Economic Survey suggests Chinese formula to create 4 crore jobs by 2025

News:Economic Survey has outlined a strategy on how India can create 4 crore well-paid jobs by 2025 and 8 crore jobs by 2030.

Facts:

Assemble in India for the World:The survey has said that the integration of “assemble in India for the world” with government’s “Make in India” initiative can help: 

  • Create 4 crore well-paid jobs by 2025 and 8 crore jobs by 2030
  • Raise export market share to about 3.5 % by 2025 and 6 % by 2030 and 
  • Exports of network products can provide one-quarter of the increase in value added required for making India a $5 trillion economy by 2025.

Chinese type model:The Survey has suggested a strategy similar to the one used by China to create jobs which is:

  • Specialisation at large scale in labour-intensive sectors especially network products. 
  • Focus on enabling assembling operations at mammoth scale in network products. 
  • Export primarily to markets in rich countries. 
  • Trade policy must be an enabler.

Impact of Trade agreements:The Survey also analyses the impact of India’s trade agreements on overall trade balance:

  • India’s exports increased by 13.4 % for manufactured products and 10.9 % for total merchandise
  • Imports increased by 12.7 % for manufactured products and 8.6 per cent for total merchandise.
  • India gained 0.7 % increase in trade surplus per year for manufactured products and 2.3 % per year for total merchandise.

President Addresses Joint Sitting of Parliament

News:Recently,President of India has addressed the joint sitting of both the Houses of Parliament at the beginning of the Budget Session.

Facts:

About President Address:

  • Article 87 of the constitution provides two instances when the President specially addresses both Houses of Parliament. 
  • The President of India addresses both the Rajya Sabha and the Lok Sabha at the beginning of the first Session after each general election when the reconstituted lower house meets for the first time. 
  • The President also addresses both the houses at the beginning of the first session of each year.

First Constitutional Amendment,1951:

  • Originally,the Constitution had required the President to address both Houses of Parliament at the commencement of every session. 
  • This requirement was changed by the First Amendment to the first session after each general election to the House of the People and at the commencement of the first session of each year.

What is there in the President address?

  • All executive power is vested in the President of India.The Council of Ministers headed by the Prime Minister aids and advises the President who exercises his powers in accordance with such advice.
  • Hence,the President’s speech essentially highlights the government’s policy priorities and plans for the upcoming year.It also provides a broad framework of the government’s agenda and direction.

President to inaugurate 34th Surajkund Mela 

News:President of India will inaugurate the 34th Surajkund International Crafts Mela at Faridabad,Haryana.

Facts:

About Surajkund Crafts Mela:

  • The Mela is organized since 1987 by the Surajkund Mela Authority & Haryana Tourism in collaboration with Union Ministries of Tourism, Textiles, Culture and External Affairs.
  • The Mela showcases the handicrafts, handlooms and cultural fabric of India and is the largest crafts fair in the world.
  • For this year’s mela,partner country in the fair is Uzbekistan and Himachal Pradesh is the theme-state.

Economic Survey 2020: India ranked third in entrepreneurship

News:The Economic Survey has a chapter on “Entrepreneurship and Wealth Creation at the Grassroots”.

Facts:

Key Highlights:

  • As per World Bank,India ranks third globally in the number of new firms created with about 1.24 lakh new entities coming up in 2018.
  • New firm creation in India increased dramatically since 2014 as there was a 12.2 % cumulative annual growth rate of new firms in the formal sector during 2014-18 compared to 3.8 % during 2006-2014.
  • However,a large number of India’s enterprises operate in the informal economy which was not captured in the data.
  • New firm creation in the services sector is significantly higher than that in manufacturing, infrastructure or agriculture.
  • A 10 percent increase in registration of new firms in a district yields a 1.8 % increase in Gross Domestic District Product(GDDP).
  • The overall Entrepreneurial activity is highest in Delhi, Mizoram, Uttar Pradesh, Kerala, Andaman & Nicobar Islands, and Haryana. 
  • The survey also endorses literacy and education as a criteria in fostering local entrepreneurship.
  • For instance,the eastern part of India has the lowest literacy rate of about 59.6% according to the census of 2011.This is also the region in which new firm formation is the lowest. 

Suggestions:

  • Enchanting ease of doing business and implementing flexible labour laws in job-creating sectors can create the maximum number of jobs in districts and thereby in the States. 
  • Literacy, education and physical infrastructure can also foster entrepreneurship and thereby leads to job and wealth creation.

Economic Survey suggests ‘dynamic health index’ for NBFCs to ensure crisis alert 

News:The Economic Survey has suggested the use of a ‘health score’ index for non-banking finance companies(NBFCs).

Facts:

About Health Score Index:

  • The proposed Health Score Index will aim to provide an early warning signs for liquidity crisis in a non-banking finance company(NBFC) to tackle the problem of financial fragility.
  • The Index will use key financing parameters of refinancing risk such as a) Asset Liability Management (ALM) Risk b) Interconnectedness Risk c) Financial and Operating Resilience of an NBFC and d)Over dependence on short-term wholesale funding.
  • The index can range from -100 to +100 with higher scores indicating higher financial stability of the firm/sector.
  • Further,the index can also be used by policy makers to allocate scarce capital to stressed NBFCs in an optimal way to alleviate a liquidity crisis.

Funding National Infra Pipeline would be a ‘challenge’: Economic Survey 2019-20 

News:According to Economic Survey,funding of the Rs 102 lakh crore National infrastructure pipeline(NIP) unveiled by the Indian government would be a challenge.

Facts:

About National infrastructure pipeline(NIP):

  • Government had constituted a task force headed by Secretary, Department of Economic Affairs to draw up a National Infrastructure Pipeline(NIP) from 2019-20 to 2024-25.
  • The task force has unveiled the National Infrastructure Pipeline(NIP) with projects worth ₹102-lakh crore.
  • The private companies will account for 22%-25% of the investments and the balance will come from the Centre and the states in equal proportions.
  • The projects have been classified under two broad categories namely economic infrastructure and social infrastructure for both ease of doing business and ease of living.

Economic Survey on NIP:

  • The pipeline can create well prepared infrastructure projects that will create jobs, improve ease of living and provide equitable infrastructure access to make growth more inclusive,.
  • However,raising funds for the pipeline over the next five years will be a challenge.
  • The survey has indicated that huge investments in infrastructure due to NIP may lead to a high fiscal deficit which may increase bond yield thereby possibly crowding out private investment.
  • Further,the survey has also called for the use of next generation infrastructure which will adopt physical infrastructure and technology like Internet of Things and automation together to maximise the efficiency of physical infrastructure.

Beijing Platform for Action

News:To mark 25 years of the adoption of the Beijing Platform for Action, Ministry of Women & Child Development(MWCD) has organized a National Consultation on the Review of Beijing+25.

Facts:

About Beijing Platform for Action:

  • The Beijing Declaration was a resolution adopted by the United Nations(UN) at the end of the Fourth World Conference on Women on 15 September 1995. 
  • The resolution adopted to promulgate a set of principles concerning the equality of men and women.
  • It covers 12 key critical matters of concern and areas for action considered to represent the main obstacles in women empowerment.
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