02 Feb 2022: UPSC Exam Comprehensive News Analysis

CNA 02 Feb 2022:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
C. GS 3 Related
ECONOMY
1. Union Budget 2022-23
D. GS 4 Related
E. Editorials
ECONOMY
1. A bold effort at public investment-led growth
POLITY AND GOVERNANCE
1. A betrayal of the social sector when it needs help
HEALTH
1. A Budget that sends mixed signals on health
F. Prelims Facts
G. Tidbits
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

C. GS 3 Related

Category: ECONOMY

1. Union Budget 2022-23

Syllabus: Government budgeting

Prelims: Macroeconomic indicators – values and trends; New initiatives announced in the various sectors

Mains: Main pillars of the budget

Four priorities as per the budget speech:

• PM GatiShakti
• Inclusive Development
• Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action
• Financing of Investments

Macroeconomic indicators:

Revenue and Expenditure:

Image source: PIB

Image source: The Hindu

Growth estimates:

• India’s economic growth in the current year is estimated to be 9.2 per cent, the highest among all large economies.

Capital expenditure:

• The outlay for capital expenditure has been stepped up sharply by 35.4 per cent from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23.  This investment taken together with the provision made for the creation of capital assets through Grants-in-Aid to States, the ‘Effective Capital Expenditure’ of the Central Government is estimated at Rs 10.68 lakh crore in 2022-23, which will be about 4.1 per cent of GDP.

Deficit:

• The revised Fiscal Deficit in the current year is estimated at 6.9 per cent of GDP.
• The Fiscal Deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation to reach a fiscal deficit level below 4.5 per cent by 2025-26.

Image source: PIB

Infrastructure sector:

• The Budget acknowledged the importance of ramping up infrastructure in India for economic growth and sustainable development.
• The Budget identified the PM Gati Shakti programme — which envisages coordinated planning across Ministries and States for the development of infrastructure — as one of the four key pillars of the Budget.
• The focus will be on planning, financing including through innovative ways, use of technology, and speedier implementation. The touchstone of the Master Plan [under PM Gati Shakti] will be world-class modern infrastructure and logistics synergy among different modes of movement — both of people and goods — and location of projects. This will help raise productivity and accelerate economic growth and development.

Roadways:

• The allocation for the Ministry of Road Transport and Highways has seen a 68% increase in the Union Budget 2023.
• PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods.
• The National Highways network will be expanded by 25,000 km in 2022-23 and Rs 20,000 crore will be mobilized through innovative ways of financing to complement the public resources.
• Of the 35 multi-modal logistics parks the government plans across the country, four will be awarded in the next fiscal.

Railways:

• The Union Budget has proposed a record budgetary allocation of ₹1.37 lakh crore for the Indian Railways, with a capital expenditure outlay of over ₹2.45 lakh crore for the upcoming financial year.
• ‘One Station-One Product’ concept will be popularized at Railway stations to help local businesses & supply chains.
• Around 2,000 km of railway network will be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23.
• 400 new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed and manufactured.
• 100 PM GatiShakti Cargo Terminals for multimodal logistics facilities will be set up during the next three years.

Urban planning and development:

• The Budget speech acknowledged a “business as usual” approach towards urban planning would not work and a paradigm shift was needed since half the population of the country would be living in urban areas by 2047, making orderly urban development critically important.
• A high-level panel to give recommendations on urban planning and development would be set up. The panel would comprise urban planners, urban economists and institutions who will make recommendations on policies, capacity-building, planning, implementation and governance.
• For developing India specific knowledge in urban planning and design, and to deliver certified training in these areas, up to five existing academic institutions in different regions will be designated as centres of excellence.
• The Budget also proposed the modernisation of building bye-laws, town planning schemes and transit-oriented development.

Telecommunications:

• Required spectrum auctions will be conducted in 2022 to facilitate the rollout of 5G mobile services within 2022- 23 by private telecom providers.  This will go a long way in enabling growth and generating employment opportunities.
• A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.

National Ropeways Development plan:

• The National Ropeways Development Program, Parvatmala would be taken up on PPP mode. Contracts for 8 ropeway projects of 60 km length would be awarded in 2022-23.

Agriculture sector:

Budget allocation:

• Budget allocations for agriculture and allied activities have remained almost flat. The sector’s share in the overall Budget allocations fell from 3.92% in 2021-22 to 3.84%.

Chemical-free natural farming:

• Chemical-free Natural Farming will be promoted throughout the country, with a focus on farmers’ lands in 5-km wide corridors along river Ganga, at the first stage.
• The government is also aiming at integrating the chemical-free approach into a long-term policy by including it in the agricultural education curriculum.
• The Centre has sanctioned support for converting four lakh additional hectares of farmland in eight States to use the method. These schemes were sanctioned for financial support under the Paramparagat Krishi Vikas Yojana scheme, meant to promote organic farming and soil health, Vedic farming, ZBNF and a host of other traditional methods.

Use of technology in agriculture:

• There has been an abundance of digital farming references in the Union Budget speech.
• Use of ‘Kisan Drones’ will be promoted for crop assessment, digitization of land records, spraying of insecticides, and nutrients. The expansion of technology focus from just tractors and agri-machinery to ‘kisan drones’ shows rising interest in the application of IOT in the sector.
• This will go a long way in helping Indian farmers reap the benefits of technological advancements.

Encouraging start-ups in the sector:

• The Budget proposed the launch of a fund to finance agricultural start-ups.
• The fund with blended capital, raised under the co-investment model, would be facilitated through NABARD. This would help finance start-ups for agriculture and rural enterprise.
• The government envisages the delivery of digital and hi-tech services to farmers with the involvement of public sector research and extension institutions along with private agri-tech players and stakeholders of the agri-value chain, in a PPP [public-private partnership] mode.

Mainstreaming millets:

• The government has announced support for post-harvest value addition, enhancing domestic consumption, and for branding millet products nationally and internationally.
  • 2023 had been previously announced as the International Year of Millets.

Miscellaneous:

• To reduce dependence on the import of oilseeds, a rationalised and comprehensive scheme to increase domestic production of oilseeds will be implemented.

MSME sector:

• The Emergency Credit Line Guarantee Scheme (ECLGS) working towards providing much-needed credit to more than 130 lakh MSMEs to help them mitigate the adverse impact of the pandemic will be extended up to March 2023. The Guarantee cover on ECLGS will be extended to a total cover of Rs 5 lakh crore, with the additional amount of around 50,000 Crore being earmarked exclusively for the hospitality and related enterprises.
• The Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will have more infusion of funds. This will facilitate additional credit of Rs 2 lakh crore for Micro and Small Enterprises.
• Raising and Accelerating MSME Performance (RAMP) programme with an outlay of Rs 6,000 crore over 5 years will be rolled out to make the MSME sector more resilient, competitive and efficient.
• Udyam, e-Shram, NCS and ASEEM portals will be interlinked and their scope will be widened.

Education:

• Recognizing the impact of the COVID-19 pandemic on the educational sector, the government has announced a slew of measures to impart supplementary teaching and to build a resilient mechanism for education delivery.

Digital Education:

• The government aims to develop high-quality e-content in all spoken languages for delivery via the internet, mobile phones, TV and radio through digital teachers; and to create a mechanism to equip teachers with digital tools.
• ‘One class-one TV channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels and this will enable all states to provide supplementary education in regional languages for classes 1-12.
• A Digital University will be established to provide access to students across the country for world-class quality universal education with a personalised learning experience at their doorsteps. This will be made available in different Indian languages and ICT formats. The digital university will be built on a networked hub and spoke model, and will have collaborations with the best institutions in the country.

Skilling and vocational training:

• The Budget announced the launch of the DESH-stack E-portal. It is envisaged as a digital ecosystem for skilling and livelihood where citizens can skill, reskill or upskill through online training.
• 750 virtual labs in science and mathematics and 75 skilling E-labs for simulated learning environment to be set up.

Upgrading anganwadis:

• Two lakh anganwadis across the country will be upgraded. New-generation anganwadis with better infrastructure and audio-visual aids and providing an improved environment for early child development will be the focus.

Health:

• There has been a 16% hike in healthcare sector allocation. However, the ₹83,000-crore outlay is almost equal to last year’s actual spend.
• The Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PMABHIM) has seen a substantial increase in budgetary allocation. A scheme to improve pandemic preparedness via research and development as well as strengthen “bio security” has received an increased allocation.

Digital health ecosystem:

• Under Ayushman Bharat Digital Mission, an open platform for the National Digital Health Ecosystem will be rolled out and it will consist of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities.

Tele-mental health programme:

• Recognizing the mental health problems accentuated by the pandemic, a ‘National Tele Mental Health Programme’ will be launched for better access to quality mental health counselling and care services. This will include a network of 23 tele-mental health centres of excellence.
• Given the shortage of mental health professionals, especially in rural areas, telemedicine would greatly enhance accessibility for patients requiring psychiatric help.

AYUSH mission:

• Cost-effective Ayush services under the National Ayush Mission (NAM) received a major boost in the Budget. The increased allocation for NAM will help to upgrade hospitals and dispensaries, support the cultivation of medicinal plants and in other areas, including an increase in the export of value-added items of medicinal plants.

Defence sector:

• The Government aims to reduce imports and promote AtmaNirbharta in defence equipment.
• 68 per cent of the capital procurement budget will be earmarked for the domestic industry in 2022-23, up from 58 per cent in 2021-22.
• Defence R&D will be opened up for industry, startups and academia with 25 per cent of the defence R&D budget earmarked.

North East development:

• Keeping in mind the special developmental needs of the Northeastern states of India, a new scheme, Prime Minister’s Development Initiative for NorthEast, PM-DevINE, will be implemented through the North-Eastern Council to fund infrastructure and social development projects.
• An initial allocation of Rs 1500 crore will enable livelihood activities for youth and women and fill the gaps in various sectors.

Banking sector and digital economy:

• In 2022, 100 per cent of 5 lakh post offices will come on the core banking system enabling financial inclusion. This will be helpful, especially for farmers and senior citizens in rural areas, enabling interoperability and financial inclusion.
• The government has proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner.
• The Government proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23 for a more efficient and cheaper currency management system. It will give a boost to the digital economy.

Transition to carbon-neutral economy:

• To facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of  Rs 19,500 crore for Production Linked Incentive for manufacture of high-efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.
• The Budget emphasizes circular economy transition to increase productivity and opportunities in new businesses and jobs.
• The budget makes proposals to use 5 to 7% biomass pellets in thermal power plants. It also proposes four pilot projects for coal gasification and conversion of coal into other useful chemicals.
• Sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.
• Battery swap policy will be formulated for electric vehicles. This can substantially decrease the turnaround time at EV charging stations.

Ease of doing business:

• Reforms in Customs Administration of Special Economic Zones will be undertaken, and it shall henceforth be fully IT-driven and function on the Customs National Portal with a focus on higher facilitation and with only risk-based checks.
• Necessary amendments in the Insolvency and Bankruptcy Code will be carried out to enhance the efficacy of the resolution process and facilitate cross border insolvency resolution.
• The centre for processing accelerated corporate exit (C-PACE) with process re-engineering will be established to facilitate and speed up the voluntary winding up of companies from the currently required 2 years to less than 6 months.
• Startups will be promoted to facilitate ‘Drone Shakti” and for Drone-As-A-Service.

Ease of living:

• Issuance of chip-embedded e-passports.
• Border villages with a sparse population, limited connectivity and infrastructure on the northern border will be covered under the new vibrant villages programme. This will involve the construction of village infrastructure, housing, roads, renewable energy and support for livelihood generation.
• The budget emphasizes digitisation of manual processes and interventions, integration of central and state-level systems through IT bridges, a single point of access for all citizen-centric services and standardization and removal of overlapping compliances.

Tax policy:

• The Union Budget 2022-23, while continuing with the declared policy of a stable and predictable tax regime, intends to bring more reforms that will take ahead the vision to establish a trustworthy tax regime that can further simplify the tax system, promote voluntary compliance by taxpayers, and reduce litigation.

Direct Tax:

• On the Direct Tax side, the budget allows taxpayers to file updated income tax returns within 2 years for correcting errors. This will enable the assessee to declare the income that he/she may have missed out earlier while filing her return. It is an affirmative step in the direction of voluntary tax compliance.
• The budget provides tax relief to persons with disability.
• As an incentive for startups, the period of incorporation of eligible startups has been extended by one more year.
• Income from the transfer of virtual assets will be taxed at 30%.

Category: POLITY AND GOVERNANCE

1. A betrayal of the social sector when it needs help

Syllabus: Issues relating to development and management of Social Sector

Mains: Government spending on the social sector; Concerns with Budget Allocation for Social Sector 

Context: 

• The pandemic over the last two years has had a severe impact on the health, education and food security of the poor and informal sector workers. It was expected that the current Budget would see an expansion in government spending on the social sector.

Social Sector Spending in India: 

• The World Social Protection Report 2020-22 by the International Labour Organization shows that the spending on social protection (excluding health) in India is 1.4% of the GDP, while the average for low-middle income countries is 2.5%. 
• Budgets on health and education have also been low, much below the desirable levels of 3% and 6% of the GDP. 

Impact of Pandemic on Social Sector in India: 

• India continues to rank poorly in various global indices that reflect the quality of life, human capital or human development in the country.
  • Such as the Human Development Index (rank 131 out of 189 countries) and the Global Hunger Index (rank 101 out of 116 countries). 
• Oxfam’s ‘Inequality Kills’ report establishes that the recovery in economic growth in India is K-shaped, meaning that the incomes of the poorer sections of the society are decreasing, while those of the richer sections are increasing. 
• As this trend has been exacerbated by the pandemic, the country has been experiencing increasing inequality over the last couple of decades. 
• Further, the period after 2016 has also seen stagnant real wages and increasing unemployment.

Concerns with Budget Allocation for Social Sector 

• Conservative View: The Budget seems to have prioritized meeting its fiscal deficit targets rather than using this opportunity to signal a path of employment-centred and inclusive growth.
• A Complete Disconnect: The government announced an expansion of the ‘one class, one TV channel’ scheme. This is a complete disconnect with the situation on the ground where school infrastructure needs upgrading and teacher vacancies need to be filled. 
• Reduced Allocation for PM Poshan: After a grand announcement rechristening the school mid-day meal scheme as PM Poshan, the allocation for the scheme has been reduced this year.
• Less Increment in Health Budget: In the midst of a pandemic, the overall budget for the Department of Health and Family Welfare has only miserably risen.
• No expansion of Food subsidy under PMGKAY: The food subsidy (BE) for 2022-23 is only enough to cover the regular NFSA entitlements. The indication is that there is no plan to extend the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
• Less Focus on Social Welfare Schemes: Budgets for important schemes such as Saksham Anganwadi, maternity entitlements and social security pensions are around the same as the allocations for last year. 

Conclusion: 

Greater spending on the social sector can contribute to improvements in human development outcomes, provide a cushion to people during the current economic crisis and also contribute to boosting private consumption demand which in turn can have a positive multiplier effect on the economy. This continued negligence does not bode well for inclusive development in India.

1. A Budget that sends mixed signals on health

Syllabus: Issues relating to development and management relating to Health.

Mains: Critical Evaluation of Budget 2022-23 Allocation for Health Sector

Context: 

The total health expenditure in the budget in 2022-23 has increased 0.23 percent which is seen as a signal of a shift to a post-pandemic phase by the government.

Health Sector Spending: 

• The Budget of 2021 expanded the conventional definition of health by including water, sanitation, nutrition and air pollution control. 
• The Economic Survey 2021-22 reported that expenditure on health reached 2.1% of GDP with an annual increment of 0.4% in the last two years. 
• Recent increases represent both the redefined accounting categories and the COVID-19-related attention to augmented health services.

Image source: Business Standard

Budget 2022-23 Allocation for Health Sector

Arguments in Favour 

• An open platform for the National Digital Health Ecosystem to be rolled out.
• ‘National Tele Mental Health Programme’ for quality mental health counselling and care services to be launched.
• A network of 23 tele-mental health centres of excellence will be set up.
• The Pradhan Mantri Swasthya Suraksha Yojana, which focuses on the expansion of tertiary care facilities, has been allocated a 35.1% increase.
• Government should be appreciated for providing tax relief to differently-abled persons, whose parents or guardians have crossed the age of 60 years.

Arguments Against

• For the health programmes themselves, there has been less than anticipated increase. 
• The National Health Mission received a 7.4% increase over the money expended last year. 
• The allocation for the Pradhan Mantri Jan Arogya Yojana (PMJAY) stays unchanged.
• The Health Infrastructure Mission allocation seems to fall short of ambition. 
• The Department of Health Research sees an increase of only 3.9% given the continuing need for COVID-19 research and development of new vaccines. 
• The Digital Health Mission has an allocation of ₹200 crores. Given the potential and promised services under that mission, the allocation appears sub-optimal. 
• If there is a resurgence of COVID-19 due to a new threatening variant, a special package may be needed. At present, that does not appear to be highly probable.
• Reduced allocation for COVID-19 vaccines paves the way for the private sector to be the principal source for providing additional vaccines to those who may seek it.

Way Forward 

• There is a need to galvanize the Urban Health Mission which has moved slowly thus far. 
• A number of rural and urban Health and Wellness Centres needs to be established and activated with staff, equipment and supplies. 
• While some of it will come from the infrastructure mission, the requirement of trained human resources calls for higher investment.
• There is also a need for health systems and implementation research to support the effective delivery of national health programmes.
• Development and evaluation of appropriate and affordable health technologies too would be in keeping with the spirit of Atma Nirbhar.
• Mental health services must extend even to those who are not digitally enabled. That requires strengthened primary care services everywhere.

Q1. Which of the following ministries is the nodal agency for observing ‘Azadi ka Amrit 
Mahotsav’ celebrations?

Q2. Consider the following statements with regards to Alternate Minimum Tax:

Q3. Consider the following statements with regards to Cess & Surcharge:

Q4. Consider the following statements with regards to International Financial Services 
Centre (IFSC):

Q5. Rajya Sabha has equal powers with Lok Sabha in

CNA 02 Feb 2022:- Download PDF Here