CNA 01 Apr 2022:-Download PDF Here
TABLE OF CONTENTS
A. GS 1 Related B. GS 2 Related INTERNATIONAL RELATIONS 1. The rise of the rouble amid the Ukraine invasion SOCIAL JUSTICE 1. The demand for restoring the old pension scheme C. GS 3 Related D. GS 4 Related E. Editorials INTERNATIONAL RELATIONS 1. An opportunity to repolish India-Nepal ties ECONOMY 1. Is the fuel pricing policy problematic? POLITY AND GOVERNANCE 1. This is a criminal attack on privacy F. Prelims Facts 1. Chilika lake’s dolphin population G. Tidbits 1. U.S. Deputy NSA warns India of ‘consequences’ H. UPSC Prelims Practice Questions I. UPSC Mains Practice Questions
A. GS 1 Related
Nothing here for today!!!
B. GS 2 Related
Category: INTERNATIONAL RELATIONS
1. The rise of the rouble amid the Ukraine invasion
Syllabus: Effect of policies and politics of developed and developing countries
Mains: The impact of western sanctions on the Russian rouble and various measures undertaken by the Russian Central Bank to prop up its currency.
Context
The Russian rouble has recovered significantly after a fall in its value following Russia’s invasion of Ukraine despite the range of sanctions imposed by the western countries.
Impact of the Sanctions on the Russian rouble
- The exclusion of various Russian banks from the SWIFT payments signalling system froze the Russian central bank’s foreign reserves held overseas.
- This made it harder for the Russian central bank to use its foreign reserves to increase the value of the Russian currency.
- Several western oil companies such as British Petroleum and Shell also exited Russia due to pressure from their governments.
- Sanctions made it tougher for Russian merchants to export their goods and also made the import of essentials tougher for Russians.
- The price or the value of a currency is determined by the supply and demand for the currency.
- As the Western countries imposed sanctions, it made it tougher for dollars to flow into Russia, either in the form of investments or by the purchase of Russian goods.
- All of these contributed to rouble experiencing a sharp hit.
Russia’s measures that led to the rouble’s sharp recovery
- The Russian central bank played a proactive role in countering the negative trend in the forex market that had caused a fall in the rouble’s value.
- Through capital control mechanisms the central bank was successful in increasing the demand for roubles and reducing the demand for dollars.
- The Bank of Russia directed the Russian energy exporters, who had access to US dollars, to use 80% of their forex holdings to buy roubles.
- The bank also instructed the Russian brokers to not allow outsiders to sell their assets in Russia.
- This prevented the outflow of capital as it could depreciate the value of the rouble as investors sell their roubles to purchase dollars.
- The Russian central bank also increased its benchmark interest rate to 20%.
- This move attracted foreign investment that increased the value of the rouble.
- The peace talks with Ukraine might have also played a role in the rouble’s recovery.
Path ahead
- Capital control measures adopted by the central bank, like the use of dollars earned by selling Russia’s energy reserves to increase the value of the rouble have temporary effects.
- A fall in crude oil prices will reduce the inflow of dollars into Russia and hence will affect the central bank’s ability to increase the value of the rouble.
- Also, these capital control measures further impact the free flow of capital and have serious consequences for Russia’s economic growth, as the investors will be hesitant to invest in economies that hinder the free exit of capital.
- The Russian economy is already struggling because of the exit of foreign businesses and the boycott of the Russian economy by the West and these could further aggravate the situation in Russia.
Nut Graf
The Russian rouble after a fall in its value has surprised all by posting a remarkable recovery. However, the exceptional performance of the rouble does not guarantee that the Russian economy is healthy and back to normal and hence the Russians should tread with caution.
1. The demand for restoring the old pension scheme
Syllabus: Issues relating to development and management of Social Sector/Services relating to Human Resources.
Prelims: Old Pension Scheme and National Pension System
Mains: Key features of old pension scheme and National Pension System. The government’s stand on the pension scheme.
Context
Recently many states and trade unions have been demanding the restoration of the old pension scheme.
Old Pension Scheme
- This scheme guarantees life-long income and post-retirement pension to the employees.
- The amount assured as pension would be equivalent to 50% of the last drawn salary.
- The Government bears the expenditure incurred on the pension.
- The scheme was discontinued in 2004.
National Pension System (NPS)
- The Union government under the then Prime Minister Atal Bihari Vajpayee in 2003, decided to discontinue the old pension scheme and introduced the NPS.
- The scheme applies to all employees joining the Central Government service (except armed forces) after April 1, 2004.
- According to the scheme, employees contribute to their pension corpus from their salaries, with matching contributions from the government.
- The collected funds are invested in schemes through Pension Fund Managers.
- On retirement, employees can withdraw 60% of the corpus fund, which is tax-free and the remaining 40% is invested in annuities, which are taxed.
- The Pension Fund Regulatory and Development Authority (PFRDA) is the regulator for NPS.
The Pension Fund Regulatory and Development Authority (PFRDA)
- PFRDA is a statutory body established under the PFRDA Act in 2013.
- It has been established to oversee the National Pension System (NPS) and regulate India’s pensions sector.
- The aim of PFRDA is to promote old age income security by creating pension funds to safeguard the interest of the subscribers to pension schemes.
- The scheme has two components called Tier I and II accounts.
- A Tier-II account is similar to a savings account that offers flexibility in terms of withdrawal.
- Individuals can withdraw from a Tier-II account at any point, unlike the Tier I account.
- Individuals working in the private sector can also opt for the scheme.
- As of February 28 2022, 2.2 million Central government employees and 5.5 million State government employees have enrolled under the scheme.
To know more about National Pension System (NPS), click on the link.
Changes introduced in 2019
- The union government provided an option to the Central government employees to select the Pension Funds (PFs) and Investment Pattern in their Tier-I account.
- The default pension fund managers are LIC Pension Fund Limited, SBI Pension Funds Pvt. Limited and UTI Retirement Solutions Limited.
Central Government’s stand on restoring Old Pension Scheme
- The government has maintained that restoration of the old system would cause an unnecessary financial burden on the government.
- The Department of Personnel and Training (DoPT) reiterated that currently there are no plans to restore the old pension scheme for Central government civil employees.
- Further, the Finance Ministry ruled out the proposals by a federation of Central and State governments employees saying that the “changes will be financially untenable.”
- A Union Minister also held that the returns being market-linked is a key feature of the NPS and since pension is a long-term product, it helps facilitate the investments to get good returns, despite short term volatility.
- In support of the NPS, the minister further said that the guidelines mentioned by the PFRDA, the skills of the professional Fund Managers and the choice of asset allocation across various classes help in subscriber’s accumulations to grow over the long term.
Nut Graf
As states like Rajasthan and Chattisgarh have announced the restoration of the old pension scheme for their employees, the demand for the old scheme has resonated in other parts of the country. However, the union government has reiterated that the reintroduction of the old scheme is financially not feasible.
C. GS 3 Related
Nothing here for today!!!
D. GS 4 Related
Nothing here for today!!!
E. Editorials
Category: INTERNATIONAL RELATIONS
1. An opportunity to repolish India-Nepal ties
Syllabus: India and its Neighbourhood- Relations.
Mains: Significance of the India-Nepal relationship; Strain in the bilateral ties
Context:
- Nepalese Prime Minister Sher Bahadur Deuba will pay a three-day visit to India from April 1.
- This is the first such visit of a Nepali leader to India in four years.
Significance of the India-Nepal relationship:
- India and Nepal share a unique relationship of friendship and cooperation characterized by open borders and deep-rooted people-to-people contacts of kinship and culture. The bilateral ties are based on the age-old connection of history, culture, tradition and religion.
- Cooperation in water resources primarily concerning the common rivers is one of the most important areas of bilateral relations. A large number of small and large rivers flow from Nepal to India and constitute an important part of the Ganges river basins. These rivers have the potential to become major sources of irrigation and power for Nepal and India.
- India and Nepal have been deeply engaged in the regional and sub-regional frameworks of SAARC, BIMSTEC and BBIN for enhancing cooperation for greater economic integration by harnessing collectively the potentials and complementarities available in the region.
For India:
- Nepal is important for India in the context of its overall strategic interests in the region. It can function as a buffer state between India and China.
- Around 6,00,000 Indians are living/domiciled in Nepal. These include businessmen and traders who have been living in Nepal for a long time, professionals (doctors, engineers, IT personnel) and labourers (including seasonal/migratory in the construction sector).
- Thousands of Nepalis serve in the Indian Army.
- Nepal offers India a viable avenue to import cheap hydropower to meet India’s peak power demands.
For Nepal:
Transit route for landlocked Nepal:
- Nepal shares a border of over 1850 km with five Indian states – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand. Land-locked Nepal relies heavily on India for the transportation of goods and services. Nepal’s access to the sea is through India. Nepal imports a predominant proportion of its requirements from and through India.
Trade and investment:
- The partnership with India in the areas of trade and investment is a matter of utmost importance to Nepal.
- India is Nepal’s largest trading partner. Both the public and private sectors of India have invested in Nepal. Indian firms are among the largest investors in Nepal, accounting for more than 30% of the total approved foreign direct investments.
Nepalese citizens in India:
- Nepalese citizens avail facilities and opportunities on par with Indian citizens in accordance with the provisions of the Treaty. Nearly 8 million Nepalese citizens live and work in India.
Developmental assistance provided by India:
- Government of India’s development assistance to Nepal has been a broad-based programme focusing on the creation of infrastructure at the grass-roots level, under which various projects have been implemented in the areas of infrastructure, health, water resources, education and rural & community development.
India as the first responder for Nepal:
- Following the massive earthquakes in Nepal in April and May 2015, India promptly offered to help hands. India being a neighbour was the first responder during the crisis.
Strain in ties between India and Nepal:
Border blockade:
- In 2015, Nepal promulgated its new Constitution. The Madhesis, the Janajatis and the Tharus protested against this new Constitution and they organized a blockade of the India-Nepal border, leading to an economic and humanitarian crisis in Nepal.
- Madhesis share extensive cross-border ethnic and linguistic links with India.
- The Nepalese government had accused India of aiding and supporting this blockade. This had worsened Nepal’s relationship with India.
Anti-India sentiments in Nepal:
- The previous Nepali Prime Minister, K.P Sharma Oli, known for his pro-China leanings, had claimed India’s interference in Nepali domestic politics and had stirred anti-India sentiments for political gains. This had created an atmosphere of distrust and suspicion between the two countries.
- India’s refusal to accept demonetised bills with the Nepal Rastra Bank worth INR₹7 crore and the long delay in considering the report submitted by the Eminent Persons Group (EPG) have not helped in securing India a better image in Nepal.
- The Eminent Persons Group (EPG) on Nepal-India Relations was constituted in 2016 to look into the totality of India-Nepal relations and suggest measures to further expand and consolidate the close and multifaceted relations between the two countries.
China factor:
- Increasing Chinese presence in Nepal is one of the major concerns for India.
- Nepal’s assent for the “One Belt One Region” (OBOR) initiative of China and the move by China to extend the rail link to its border with Nepal is viewed by India with suspicion.
Border row:
- India’s relationship with Nepal witnessed one of its lowest phases ever in the year 2020 after a bitter border row.
- The bilateral ties came under strain after Indian Defence inaugurated a strategically crucial road connecting the Lipulekh pass with Dharchula in Uttarakhand. Nepal protested the inauguration of the road claiming that it passed through its territory. Later Nepal published a new political map that showed the three Indian territories – Limpiyadhura, Kalapani and Lipulekh – as part of Nepal.
Open border:
- The open border between India and Nepal is giving rise to problems such as the influx of illegal migrants, counterfeit currency entry, drug and human trafficking which can have serious security implications for India.
Geopolitics playing out in Nepal:
- Recently, the Nepalese Parliament ratified a U.S. $500 million grant assistance-Millennium Challenge Corporation (MCC) pact. This move was followed by street protests and social media campaigns purportedly supported by China.
- India is wary about seeing other powers like the U.S. and China active in Nepal.
Recommendations:
- Both sides are expected to make a number of announcements to expand cooperation in select areas during the scheduled visit of the Nepalese Prime Minister. In this direction, the following should be prioritized.
- The power trade agreement needs to be finalized. This agreement should be such that it takes care of the needs of both India and Nepal.
- The trade and transit arrangements in place already need to be made more broad-based and the trade through electronic platforms too needs to be covered. This can provide many new opportunities for businesses on both sides of the border.
- The Bilateral Investment Promotion and Protection Agreement (BIPPA) signed between India and Nepal needs strong political backing within Nepal. The right implementation of the BIPPA would help attract more foreign investments from Indian investors.
Nut Graf
The India-Nepal relationship holds immense significance for both countries in the realm of economy, security and people to people contacts. The scheduled visit of the Nepali Prime Minister to India should be used to address the strains in the relationship, while also expanding cooperation.
1. Is the fuel pricing policy problematic?
Syllabus: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Mains: Fuel pricing policy in India; associated concerns
Context:
- In the context of the steep rise in retail fuel prices and LPG cylinder prices, the article evaluates India’s fuel pricing policy and the concerns associated with it.
Factors contributing to current high prices:
- There has been a squeeze on global oil supplies as the OPEC countries have not been releasing production quotas since COVID-19, and the Ukraine-Russia crisis has curtailed the global supply chains.
- The Rupee has depreciated and the share of energy imports has gone from 70% to current levels of 86%-87%.
- The higher level of excise on transport fuels and higher VAT levies in the States have increased the retail prices of the fuels.
Fuel pricing policy in India:
- India’s fuel pricing regime has evolved over the years.
- In 1995-96, the government thought of moving from an administered price mechanism on a cost-plus basis to market-determined consumer prices for petrol, diesel and other fuels. Based on the Nirmal Singh Committee recommendations full dismantling of oil prices was announced in 2002.
- As the oil prices started moving up in 2004, the then government restored the cost-plus pricing system to ease the burden on consumers. It also subsidised prices for transport fuels, LPG and kerosene through the Oil bonds mechanism which sought to provide for oil marketing companies’ under-recoveries.
- The cooling oil prices in 2015 saw the then government implementing the market price mechanism again. Given that the crude oil prices remained low, it was easy to implement the market price mechanism without giving much discomfort to the consumers.
- Though India officially has a deregulated pricing regime, in recent years, this practice has been put on hold during election campaigns. Hence there has been a stop-and-start approach to price changes despite a free pricing regime.
Concerns with the fuel pricing policy:
- The de-administered pricing regime has witnessed repeated deviations. India has not been able to manage a meaningful de-administered price over a long period of time. This does not augur well for the Indian economy as it renders it vulnerable to global crude price pressures.
- This stop-and-start pricing approach for fuels also adversely affects interest from global investors in the Indian oil and gas sector.
- Notably, the adherence to market administered price policy as the crude oil prices have reached a high does not augur well for economic recovery in India in the post-pandemic phase. If the fuel prices are passed on fully to consumers and industrial users, they will generate adverse economic effects. It will result in high retail inflation which leads to an adverse income effect and thus leads to a subdued consumption expenditure recovery.
Recommendations:
- In the short term, the only quick solution could be a reduction in excise duties or taxes. This will help lessen the burden on the consumers. Though this will have a fiscal cost in the form of reduced tax revenues for the governments, this is necessary to ensure economic recovery.
- In the long run, the governments should diversify their revenue generation from different sectors, moving away from the heavy dependency on the oil sector. India must shed its reliance on easy fuel taxes.
- Also, a strategy for dealing with the vulnerability of the Indian economy to global crude price rises should be developed.
Nut Graf
Given the failure of the current fuel pricing policy and the high risk posed by the rising crude oil prices to India’s economic recovery in the post-pandemic phase, there is a need to revisit India’s fuel pricing policy to help reduce the vulnerability of the Indian economy to global crude price.
1. This is a criminal attack on privacy
Syllabus: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.
This article discusses the major concerns with the proposed Prisoners’ identification Bill. This topic has been previously discussed in the following article.
UPSC Exam Comprehensive News Analysis of 29th March 2022
F. Prelims Facts
1. Chilika lake’s dolphin population
Syllabus: GS 3; Environment, Ecology and Biodiversity
Prelims: Facts about Dolphins found in Chilika Lake
Context
The dolphin population on Odisha’s coast has increased, but the number of Irrawaddy dolphins in Chilika lake has reduced.
Dolphins in Chilika Lake
- Irrawaddy Dolphins
- Irrawaddy dolphins (Orcaella brevirostris) are coastal dolphins that are found in the waters of south and southeast Asia, mainly found in the Mekong, Mahakam (Indonesia) and Irrawaddy (Myanmar) Rivers.
- IUCN Status: Endangered
- Bottlenose Dolphins
- The Indo-Pacific bottlenose dolphin (Tursiops aduncus) is a species of bottlenose dolphin.
- It is found in the waters around India, northern Australia, South China, and the Red Sea.
- IUCN Status: Near Threatened
- Humpback Dolphins
- The Indian Ocean humpback dolphins are native to Asian and African countries like India, Myanmar, Bangladesh, Comoros, Djibouti, Egypt, Mozambique, etc.
- IUCN Status: Endangered
- Striped Dolphins
- Striped dolphins are found in the Pacific, Indian, and Atlantic Oceans and the adjacent seas, including the Mediterranean.
- IUCN Status: Least Concern
- Finless Dolphins
- Neophocaena (commonly known as finless dolphins) is a genus of porpoise native to the Indian and Pacific oceans and the freshwater habitats of the Yangtze River basin in China.
- IUCN Status: Vulnerable
- Spinner Dolphins
- Spinner dolphins are generally seen in the Pacific, Atlantic, and Indian Oceans and also in the Persian Gulf and Red Sea.
- IUCN Status: Data deficient
G. Tidbits
1. U.S. Deputy NSA warns India of ‘consequences’
- The U.S. said that there will be “consequences” for any country, including India, that conduct local currency transactions with Russia’s central bank against its sanctions.
- The U.S. urged all its allies not to take up measures that increase the value of the rouble, and those that attempt to hinder the dollar-based financial system.
- Further, the U.S. held that India must not take “economic advantage” of western sanctions, nor seek to dilute them during the war.
H. UPSC Prelims Practice Questions
Q1. Which of the following Articles in the Directive Principles are based on Gandhian principles?
- Article 40
- Article 43
- Article 46
- Article 47
- Article 49
Options:
- 1, 2, 3 and 4 only
- 2, 3, 4 and 5 only
- 1, 3 and 5 only
- 1, 2, 4 and 5 only
CHECK ANSWERS:-
Answer: a
Explanation:
- Article 49 which aims to protect monuments, places and objects of artistic or historic interest which are declared to be of national importance is regarded to be based on Liberal-Intellectual Principles.
- All the other articles are based on Gandhian principles. Hence option a is correct.
Q2. The constitutional amendment that placed the Tamil Nadu Reservations Act of 1994 in the Ninth Schedule to protect it from judicial review as it provided for 69% of reservation, far exceeding the 50% ceiling is
- 62nd Constitutional Amendment Act
- 68th Constitutional Amendment Act
- 76th Constitutional Amendment Act
- 79th Constitutional Amendment Act
CHECK ANSWERS:-
Answer: c
Explanation:
- The Constitutional 76th (Amendment) Acts 1994 had been passed by the Parliament to accommodate Tamil Nadu Government’s Legislation in the Ninth Schedule to take the legislation out of the ambit of the judicial review, which provided 69 percent reservation for backward classes.
Q3. Consider the following statements:
- Neutrinos are not affected by electromagnetic radiation.
- The operation of the India-based Neutrino Observatory (INO) will have no release of radioactive or toxic substances.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both
- None
CHECK ANSWERS:-
Answer: c
Explanation:
- Statement 1 is correct, Neutrinos are electrically neutral, elementary weakly interacting subatomic particles with half-integer spin. Since the neutrinos are electrically neutral, they are not affected by electromagnetic radiation.
- Statement 2 is correct, The operation of the India-based Neutrino Observatory (INO) will have no release of radioactive or toxic substances.
Q4. With respect to Irrawaddy dolphins, which of the following statements is/are correct?
- The Irrawaddy dolphin is found in three rivers in South and Southeast Asia: the Irrawaddy (Myanmar), the Mahakam (Kalimatan, Indonesia) and the Mekong (Cambodia).
- Its IUCN status is Endangered.
- The Irrawaddy dolphin is included in the Indian Wildlife Protection Act, Schedule I.
Options:
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
CHECK ANSWERS:-
Answer: d
Explanation:
- Statement 1 is correct, The Irrawaddy dolphin is found in three rivers in South and Southeast Asia: the Irrawaddy (Myanmar), the Mahakam (Kalimatan, Indonesia) and the Mekong (Cambodia).
- Statement 2 is correct, Its IUCN status is Endangered.
- Statement 3 is correct, Irrawaddy dolphins are protected under Schedule I of the Indian Wildlife (Protection) Act, 1972.
Q5. Which among the following steps is most likely to be taken at the time of an economic recession?
- Cut in tax rates accompanied by increase in interest rate
- Increase in expenditure on public projects
- Increase in tax rates accompanied by reduction of interest rate
- Reduction of expenditure on public project
CHECK ANSWERS:-
Answer: b
Explanation:
- Increase in expenditure on public projects will help to boost the economy during the period of recession. Hence option b is correct.
I. UPSC Mains Practice Questions
- With a shared history, culture and society, there shouldn’t be many reasons for India and Nepal to not have cordial relations. Discuss. (250 words; 15 marks)[GS-2, International Relations]
- The rise in retail prices of fuel in India is as much because of the complicated pricing structure as it is because of rising global prices of crude oil. Do you agree? (250 words; 15 marks)[GS-3, Economic Development]
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CNA 01 Apr 2022:-Download PDF Here
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