02 Feb 2021: UPSC Exam Comprehensive News Analysis

02 Feb 2021 CNA:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
INTERNATIONAL RELATIONS
1. Military seizes power in Myanmar coup
C. GS 3 Related
ECONOMY
1. Recovery vehicle
REVENUES AND EXPENDITURE
1. Tax slabs remain unchanged
2. Stake sale expected to fetch Rs. 1.75 lakh crore
3. Govt. agrees to maintain States’ share in the divisible pool of taxes
4. Stake sale expected to fetch Rs. 1.75 lakh crore
AGRICULTURAL SECTOR
1. Budget sends mixed signals on farm sector
2. 5 fishing harbours to be modernised
3. Budget proposes 10% customs duty on import of cotton
FOOD PROCUREMENT AND DISTRIBUTION
1. Food subsidy budget set at almost Rs. 2.43 lakh crore
MANUFACTURING SECTOR
1. Auto sector welcomes vehicle scrappage policy
2. Textile sector
INFRASTRUCTURE
1. Govt. mulls Rs. 3 lakh-crore plan to revive discoms
2. Government to privatise seven major ports, says Sitharaman
3. Development Finance institution
4. New scheme for public buses: Minister
FINANCIAL SECTOR
1. Centre to amalgamate market laws into single code
HEALTHCARE SECTOR
1. 137% increase in health and well-being spend
GOVERNMENT SCHEMES
1. Water supply, Swachh Bharat 2.0 missions for urban areas
2. Rural India’s lifeline missing in Budget speech
SCIENCE AND TECHNOLOGY
1. Rs. 50,000 cr. for National Research Foundation
SOCIAL SECURITY
1. Portal to collect data on gig workers: govt.
D. GS 4 Related
E. Editorials
ECONOMY
1. Getting back on track
F. Tidbits
G. Prelims Facts
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. Military seizes power in Myanmar coup

Context:

• Myanmar’s military has seized power in Myanmar in a coup against the democratically elected government of Aung San Suu Kyi. Army has declared a state of emergency for a year.

Details:

• Aung San Suu Kyi, other elected leaders have been detained and power has been handed over to military chief Min Aung Hlaing.
• The Army has stated that it had carried out the detentions in response to “election fraud”.
• The coup has come after days of escalating tension between the civilian government and the military that stirred fears of a coup in the aftermath of the election.

India’s stakes:

• India has expressed “deep concern” over developments in Myanmar. However, analysts have pointed out that given India’s stakes in Myanmar, the only option will be to engage, building on its outreach in recent years via the security and defence establishment.
• India’s security relationship with the Myanmar military has become extremely close over the years and it may not want to cut ties with Myanmar.
• Myanmar is vital for India in securing the North East frontiers from insurgent groups.
• A harsh reaction from India, on the lines of that from the U.S., would only benefit China. India also views Myanmar as the “gateway to the East” and ASEAN countries.
• India has cultivated several infrastructure and development projects with Myanmar. These include the India-Myanmar-Thailand trilateral highway and the Kaladan multi-modal transit transport network, as well as a plan for a Special Economic Zone at the Sittwe deep-water port.

C. GS 3 Related

Category: ECONOMY

1. Recovery vehicle

Major provisions:

• The budget aims to increase government expenditure in line with the need for a fiscal stimulus to revive the economy.
• The budget provides a push for infrastructure and healthcare spending, even as it seeks to reduce the fiscal deficit without raising the tax burden.
• While there was no direct support for the middle class, there was some relief as the Budget refrained from levying a COVID-19 cess or surcharge.
• There has not been much in terms of direct relief to some of the sectors and sections worst-affected by the pandemic.
• The budget estimates a real GDP growth of 10%-10.5% in the coming year after the estimated 7.7% decline in 2020-21. The budget hopes to benefit from the multiplier effect of infrastructure spending, which would help spur demand and job creation.
• Proposing a capital expenditure of Rs. 5.54 lakh crore in the current year, 34.5% higher than 2020-21, the budget targets a fiscal deficit of 6.8% of the GDP, with gross market borrowings of about Rs. 12 lakh crore. Achieving disinvestment and non-tax revenue targets will be critical to meet the deficit target.

Category: REVENUES AND EXPENDITURE

1. Tax slabs remain unchanged

Details:

• The Budget seeks to reduce the compliance burden on senior citizens who are of 75 years of age and above.  Such senior citizens having only pension and interest income will be exempted from filing their income tax return.  The paying bank will deduct the necessary tax on their income.
• The Budget proposes to notify rules for removing the hardships of non-resident Indians returning to India on the issue of their accrued incomes in their foreign retirement account.
• A Dispute Resolution Committee has been proposed to reduce the difficulty faced by small taxpayers facing litigation. A National Faceless Income Tax Appellate Tribunal Centre has been proposed.
• To attract foreign investment into the infrastructure sector, the Budget proposes to relax certain conditions relating to prohibition on private funding, restriction on commercial activities and direct investment in infrastructure.  In order to allow funding of infrastructure by the issue of zero-coupon bonds, the Budget proposes to make notified infrastructure debt funds eligible to raise funds by issuing tax-efficient zero-coupon bonds.
• In order to incentivize startups in the country, the budget announced an extension in the eligibility for claiming tax holiday for startups by one more year till 31st March 2022.  In order to incentivize funding of startups, the budget proposed extending the Capital Gains exemption for investment in startups by one more year till 31st March 2022.

Significance: 

• The reforms will help make the tax system more transparent and efficient.
• The tax cuts proposed will help promote investment and employment in the country.

2. Stake sale expected to fetch Rs. 1.75 lakh crore

Details:

• The budget estimates Rs. 1.75 lakh crore from stake sale in public sector companies and financial institutions.
• Out of the total Rs. 1.75 lakh crore, Rs. 1 lakh crore is to come from selling government stake in public sector banks and financial institutions. About Rs. 75,000 crore would come as CPSE disinvestment receipts.
• Under the proposed Disinvestment/Strategic Disinvestment Policy, Government has kept four areas- Atomic energy, Space and Defence; Transport and Telecommunications; Power, Petroleum, Coal and other minerals; and Banking, Insurance and financial services – that are strategic where bare minimum CPSEs will be maintained and rest privatized. In the non-strategic sectors, CPSEs will be privatised, otherwise shall be closed.

3. Govt. agrees to maintain States’ share in the divisible pool of taxes

Details:

• The government has accepted the Fifteenth Finance Commission’s recommendation to maintain the States’ share in the divisible pool of taxes to 41% for the five-year period starting 2021-22, as a sign of its commitment to fiscal federalism.
• The government has also accepted the recommendation of additional revenue deficit grants of ₹94 lakh crore for 17 states, as well as the panel’s suggestion to enhance State’s borrowing ceilings in 2021-22.
• This would allow a normal ceiling of net borrowing for the States at 4% of Gross State Domestic Product (GSDP) for the year 2021-2022. A portion of this ceiling will be earmarked to be spent on incremental capital expenditure. States are expected to reach a fiscal deficit of 3% of GSDP by 2023-24, and maintain that level till 2025-26, as per the Commission’s report.

4. Govt. hopes to cut fiscal deficit to 4.5% by FY26

Details:

• The fiscal deficit for 2020-21 is seen at 9.5%. The original fiscal deficit target for 2020-21 was 3.5%. The fiscal deficit shot up due to the impact of the COVID-19 pandemic — low revenue flows and high government spending.
• The Finance Minister has pegged the fiscal deficit for 2021-22 at 6.8% of the GDP and aims to bring it back below the 4.5% mark by 2025-26.
• The road map for fiscal consolidation includes asset monetisation and divestment of public sector enterprises and also targeting higher tax buoyancy through improved tax compliance.

Category: AGRICULTURAL SECTOR

1. Budget sends mixed signals on farm sector

Details:

• Agriculture Infrastructure Development Cess would be levied on petrol, diesel, gold and other imports, to improve facilities for production, conservation and processing of farm produce.
• APMCs have been allowed to tap into the Rs.1 lakh crore Agriculture Infrastructure Fund (AIF).
• The AIF was created last year, as part of the COVID-19 stimulus package to develop cold chain storage and other post-harvest management infrastructure.
• The outlays for the income support scheme, PM-KISAN and schemes to provide a remunerative price for farm produce, such as PM AASHA and the Price Support Scheme have been slashed.

Significance:

• The Agriculture Infrastructure Development Cess would help ensure the availability of more funds for the development of the crucial forward linkages to the agricultural sector.
• By allowing the APMCs to avail credit from AIF the government seems to be indicating its support for the APMC and MSP based public procurement system.
• The APMCs can avail cheaper loans to help increase the quality of infrastructure.

Concerns:

• The cuts in allocations to schemes such as PM AASHA and the Price Support Scheme may mark the withdrawal of the state assurance for remunerative prices for the farmers.
• The reduced allocation for the PM KISAN scheme may not allow the scheme to reach out to its original target of 14.5 crore households.

2. 5 fishing harbours to be modernised

Details:

• The budget proposes the modernization of 5 fishing harbours. The proposed five major fishing harbours are Kochi, Chennai, Visakhapatnam, Paradip and Petuaghat. Similarly, inland fishing harbours and fish-landing centres along the banks of rivers and waterways would also be taken up going ahead.
• To promote seaweed cultivation, a Multipurpose Seaweed Park would be established in Tamil Nadu.
• The Blue Revolution centrally sponsored schemes have witnessed increased budget allocations.

Significance:

• The increased allocations for the fishery and marine-based sectors would help develop the coastal areas as hubs of economic activity. This would help generate newer employment opportunities and also ensure the welfare of the coastal communities.
• The proposals are a step in the right direction to exploit the potential of the marine resources of India and realize the vision of a blue economy.

3. Budget proposes 10% customs duty on import of cotton

Details:

• A 10% customs duty would be levied on cotton imports and the levy on raw silk and yarn has been increased from 10% to 15%.
• Indian textile mills imported 10 lakh to 12 lakh bales of cotton a year.

Significance:

• The levy on raw cotton imports would increase domestic cotton prices and this could benefit the farmers.

Concerns:

• The increase in domestic cotton prices would have an adverse impact on the entire value addition chain in the textile sector.

Category: FOOD PROCUREMENT AND DISTRIBUTION

1. Food subsidy budget set at almost Rs. 2.43 lakh crore

Details:

• The government would pay Food Corporation of India’s loans and return to budgetary transfers to fund food subsidy bill.
• Given the inadequacy of the budgetary grants to cover the subsidy costs, FCI used to borrow from the NSSF [National Small Savings Fund] at a rate of about 8%. Its outstanding loans are now well over Rs. 2 lakh crore.

Significance:

• This move will help increase transparency, bringing subsidy expenditure back on the government’s books. This will help reflect the government’s debts and current financial state more accurately.
• Also, given that the FCI would not be forced to borrow, the economic cost of procuring and distributing wheat and rice will go down, because the interest burden will be lower. FCI will also be left in better financial shape to face future challenges.

Category: MANUFACTURING SECTOR

1. Auto sector welcomes vehicle scrappage policy

Details:

• The budget has proposed a voluntary vehicle scrappage policy to phase out old and unfit vehicles.
• Vehicles would undergo fitness tests after 20 years in automated fitness centres in the case of personal vehicles (PV), and after 15 years in the case of commercial vehicles (CV).

Significance:

• The policy would help in encouraging fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and the oil import bill.
• The policy would provide an impetus to the automobile sector and the economy at large.
• It will set in motion a circular economy with the subsequent economic and social benefits.

2. Textile sector

Details:

• 7 Mega Investment Textile Parks would be set up over the next three years with plug and play facilities.
• To rationalise duties on raw material inputs for man-made textiles, the Budget proposed to bring nylon chain on a par with polyester and other man-made fibres by reducing the basic customs duty on caprolactam, nylon chips, nylon fibre and yarn to 5%.
• The Amended Technology Upgradation Fund Scheme, handloom development and textile infrastructure have received higher allocations.

Significance:

• The proposed Textile Parks would enable the Indian textile industry to become globally competitive.
• The increased allocation to schemes such as the Production Linked Incentive Scheme would provide an impetus to the textile sector in India.

Category: INFRASTRUCTURE

1. Govt. mulls Rs. 3 lakh-crore plan to revive discoms

Details:

• The budget proposes a Rs. 3.05 lakh-crore scheme, spread over five years, to revive discoms.
• The DISCOMS have been making huge losses and have been cash-strapped. Total outstanding dues of the discoms towards power-generating firms stood at over ₹35 lakh crore as of December.
• The budget also proposes a framework to provide electricity consumers with an option to choose from service providers.
• The Minister also announced a proposal to introduce a National Hydrogen Energy Mission in the next financial year for generating hydrogen from green sources.

Significance:

• The scheme will provide assistance to discoms from infrastructure creation to financial improvements. This will help reform and revamp the power distribution sector scheme.
• The announcements are aimed at ensuring 24-hour power for all as envisaged by the Central government.
• The proposed framework to give consumers alternatives to choose from among more than one Distribution Company will help break the monopolies of distribution companies and will promote competition and efficiency among them. This is in line with the recently enforced consumer rules for the power sector to ensure delivery of services.

2. Government to privatise seven major ports, says Sitharaman

Details:

• Seven major ports will see their operations privatised in the year 2021-2022.
• India has 12 major ports under the control of the Centre. These major ports handle about 60% of its total cargo traffic.
• The budget has announced a subsidy scheme of Rs. 1,624 crore for a period of five years for Indian shipping companies to encourage more merchant ships with Indian flags.
• The Budget also envisages boosting the recycling of ships at Alang in Gujarat.

Significance:

• The proposal to privatize operations at seven major ports is in line with the expectation of better efficiency and use of better technology that would accrue due to private sector involvement.
• The initiative to encourage Indian shipping companies will enable greater training and employment opportunities for Indian seafarers.
• India aspires to grab at least 50% of the global ship-recycling business through the incentives for ship recycling.

3. Development Finance institution

• A new development finance institution is being set up to fund infrastructure projects under the National Infrastructure Pipeline. It will help meet the infrastructure’s long term debt financing needs. The goal is to have a lending portfolio of at least Rs. 5 lakh crore in three years.

Highways Ministry gets Rs. 1,18,101 crore outlay

• The Ministry of Road Transport and Highways has received Rs. 1,18,101 crore in the Union Budget, of which Rs. 1,08,230 crore is for capital expenditure making it the highest-ever outlay for the sector.

‘Record’ allocation of Rs. 1.1 lakh crore for Railways

• The budget has proposed a “record” allocation of Rs. 1.1 lakh crore for Indian Railways, with a capital expenditure outlay of Rs. 2.15 lakh crore for the next financial year.
• The increased allocations would go towards the completion of vital infrastructure projects, capacity-building passenger amenities and safety enhancement.

4. New scheme for public buses: Minister

• The budget has announced a new scheme for augmentation of city bus services and the expansion of and new Metro networks in Kochi, Chennai, Bengaluru, Nagpur and Nashik.
• The scheme will facilitate the deployment of innovative public-private partnership [PPP] models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses.
• Two new Metro technologies — MetroLite and MetroNeo — would be used in tier-2 cities and the peripheral parts of tier-1 cities to provide connectivity at a lower cost compared to conventional Metro systems.

Significance:

• The proposals will act as a major boost to urban transport. The proposals will work towards raising the share of public transport in urban areas.
• This will help reduce congestion in urban areas and lead to better life quality for urban commuters. It will also help reduce air pollution due to vehicular emissions.

Category: FINANCIAL SECTOR

1. Centre to amalgamate market laws into single code

Details:

• The Budget has announced setting up of a Single Security Market Code by consolidating the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007.
• The budget has also proposed to create a permanent institutional framework to govern the corporate bond market.
• To provide protection to investors, the Finance Minister has proposed to introduce an investor charter as a right of all financial investors across all financial products.

Significance:

• According to analysts, this move will improve ease of doing business in the country’s financial markets, cut down compliances, reduce cost and do away with friction between various stakeholders.
• The proposed permanent institutional framework will help instil confidence among participants in the corporate bond market and help in the development of the bond market.

Asset Reconstruction Firm

• An asset reconstruction firm, or ‘bad bank’, would be constituted and be tasked with taking over the bad loans of public sector banks to cope with rising NPAs.
• However, just Rs. 20,000 crore has been earmarked for the recapitalisation of banks in the current budget.

Category: HEALTHCARE SECTOR

1. 137% increase in health and well-being spend

Details:

• The government has proposed an expenditure of around Rs. 2,23,846 crore in the coming year on “health and well being”. This includes Rs. 60,030 crore for drinking water and sanitation, Rs. 35,000 crore for vaccination and Rs. 2,700-crore outlay on nutrition.
• A new Centrally sponsored scheme, PM Atmanirbhar Swasth Bharat Yojana, would be launched on to improve primary, secondary, and tertiary care health systems including urban Health and Wellness Centres, strengthen national institutions like the National Centre for Disease Control, create new institutions like National Institutes of Virology and Bio-Safety Level III laboratories to cater to detection and cure of new and emerging diseases.

Significance:

• The budgetary allocations would mark an increase of 137% as compared to last year. The Budget provides the much-needed fillip to the health sector and is indicative of the efforts to build a stronger and resilient health system.
• The increase in investment in health infrastructure and the focus on strengthening three areas — preventive health, curative health and well-being will aid health security in India.
• The ground-breaking focus on health will provide access to medical care for all in our country, fuel job creation and boost economic momentum.
• The emphasis on the development of public health and health infrastructure in tier 2 and tier 3 cities, remote districts, will aid in making healthcare accessible to all.
• The Budget provides a much-needed fillip to health, sanitation, nutrition and pollution control. These are key elements in promoting the health and well-being of the population in a holistic manner.
• The emphasis on healthcare spending and immunisation, especially on COVID-19 and pneumococcal vaccines, will help India rapidly recover from the pandemic. The initiatives proposed are critical to contain the pandemic, reduce disease burden on the population and the economy.

Concerns:

• India’s R&D expenditure on health formed 0.01% of its GDP, the lowest share among nations. India’s health R&D to GDP ratio was similar to countries such as Namibia, the Philippines and Sri Lanka.

Category: GOVERNMENT SCHEMES

1. Water supply, Swachh Bharat 2.0 missions for urban areas

Details:

• The Jal Jeevan Mission (Urban) aims to provide universal water supply to areas under all the 4,378 urban local bodies with 2.86 crore household tap connections.
• The next phase of the Swachh Bharat Mission (Urban) will be focusing on the management of sludge, liquid waste management. Additionally, it will also focus on source segregation of garbage, reduction in single-use plastic, reduction in air pollution by effectively managing waste from construction and demolition activities and bioremediation of all legacy dump sites.

Significance:

• Clean water, sanitation, and a clean environment are prerequisites to achieving universal health.

2. Rural India’s lifeline missing in Budget speech

Details:

• The allocations for the Mahatma Gandhi National Rural Employment Guarantee Act scheme stood at Rs. 73,000 cr.
• The 2021-22 allocation returns MGNREGA funding to the levels of actual expenditure in 2019-20.

Concerns:

• The MGNREGS often described as the lifeline of rural India during the COVID-19 pandemic and lockdown seems to have been neglected.
• Some experts have warned that rural distress provoked by the pandemic was still continuing, and would require additional funding for the rural jobs scheme.
• The unemployment scenario in rural India, which was at 9% even in December 2020, continues to be serious.

Category: SCIENCE AND TECHNOLOGY

1. Rs. 50,000 cr. for National Research Foundation

Details:

• The budget has earmarked Rs. 50,000 crore over five years for the creation of the National Research Foundation.
• The National Research Foundation (NRF) would act as an umbrella body to fund research across a range of disciplines, from science and technology to humanities.
• The NRF would be an autonomous body and represented by all major research and education bodies.

Significance:

• The NRF will ensure that the overall research ecosystem in the country is strengthened with a focus on identified national priority thrust areas.
• The NRF will also seed and build research capacity at universities and colleges through a formal mechanism of mentoring. This will help catalyse research at universities and colleges.

Category: SOCIAL SECURITY

1. Portal to collect data on gig workers: govt.

• The budget proposes a portal to collect information on gig, building and construction workers.

Significance:

• This information will help formulate welfare schemes like health, housing, skill, insurance, credit and food schemes for migrant workers.
• Also under the labour codes passed by Parliament in 2019 and 2020, social security benefits will extend to gig and platform workers. Minimum wages will apply to all categories of workers and they will all be covered by the Employees State Insurance Corporation.

D. GS 4 Related

Nothing here for today!!!

Q1. Which of the following statement/s is/are correct with respect to the Kaladan 
Multi-Modal Transit Transport project?

Q2. What are the possible benefits of vehicle scrappage policy?

Q3. Which of the following statement/s is are correct with respect to Agriculture
 Infrastructure Fund?

Q4. Which of the following are the criteria considered by the 15th Finance Commission 
in the devolution of funds to the states from the divisible pool of taxes?

Read the previous CNA here.

02 Feb 2021 CNA:- Download PDF Here