23 July 2021: UPSC Exam Comprehensive News Analysis

CNA 23rd July 2021:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. ‘HC appointments an ongoing process’
C. GS 3 Related
ENVIRONMENT AND ECOLOGY
1. Analysis by NGO reveals microplastics in Ganga
ECONOMY
1. RBI plans digital currency pilots soon
D. GS 4 Related
E. Editorials
POLITY AND GOVERNANCE
1. Limits of cooperation
ECONOMY
1. Will the new e-commerce rules really favour consumers?
F. Prelims Facts
1. Govt. portal for children orphaned by COVID-19
G. Tidbits
1. Inflation situation very alarming: Basu
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

Category: ECONOMY

1. RBI plans digital currency pilots soon

Context:

  • RBI Deputy Governor has stated that the Reserve Bank of India may soon conduct pilot projects to assess the viability of using digital currency to make wholesale and retail payments to help calibrate its strategy for introducing a full-scale central bank digital currency (CBDC).

Background:

Central bank digital currency (CBDC):

  • A central bank digital currency (CBDC) uses an electronic record or digital token to represent the virtual form of a fiat currency of a particular nation (or region). Hence they are also sometimes referred to as digital fiat currencies or digital base money.
  • A CBDC is essentially a legal tender issued by the central bank. It has the same functional capabilities as a fiat currency and is considered exchangeable in nature with said fiat currency in a one-to-one form. The only notable difference is the form it takes, i.e., a digital form.
  • CBDC would coexist with cash and existing digital payment methods.
  • The present concept of CBDCs was directly inspired by Bitcoin, but a CBDC is different from virtual currency and cryptocurrency, which are not issued by a state and lack the legal tender status declared by the government. A CBDC is centralized; it is issued and regulated by the competent monetary authority of the country.
  • The growing popularity of cryptocurrencies like Bitcoin and Ethereum poses a possible threat to the traditional banking system. Also, cryptocurrencies are associated with a lot of concerns.

For more information on the concerns associated with cryptocurrencies, refer to the following article:

UPSC Comprehensive News Analysis of 13th June 2021

  • The government’s inability to control the growth and influence of such cryptocurrencies has lead to many leading central banks across the globe working on or contemplating launching their own versions of cryptocurrencies.
  • More than 80% of central banks are looking at digital currencies.
    • China’s digital RMB was the first digital currency to be issued by a major economy.
    • European Central Bank has stated that it will soon begin a 24-month “investigation phase” towards the goal of creation of a digital euro by 2025.

Measures taken in India:

  • A high-level inter-ministerial committee set up by the Finance Ministry had recommended the introduction of a CBDC with the requisite changes in the legal framework including the RBI Act.

Significance:

Reduce cost of currency management:

  • The use of an official digital currency will reduce cash usage in the economy.
  • Thus official digital currency would reduce the cost of currency management (cost of printing, transporting and storing paper currency) in a country like India characterized by a fairly high currency-to-GDP ratio.

Expedite real-time payments:

  • An official digital currency will enable real-time payments without any inter-bank settlement.
  • Transacting with CBDC would thus be an instantaneous process as the need for inter-bank settlement would disappear.

Ease foreign trade transaction:

  • The adoption of a CBDC will help speed up foreign trade transactions between countries. The CBDC will also enable a cheaper and more real-time globalisation of payment systems, without the need for any intermediary or the risks of dollar-rupee transactions.

Alternate to the volatile cryptocurrencies:

  • The digital currency, which will be backed by the sovereign, will help protect people from the market volatility of private cryptocurrencies.

Category: ECONOMY

1. Will the new e-commerce rules really favour consumers?

Context:

  • The Union Ministry of Consumer Affairs, Food and Public Distribution’s proposed amendments to the Consumer Protection (e-commerce) Rules, 2020.

Details:

  • The main amendments include:
    • Appointment of a Chief Compliance Officer and a Resident Grievance Officer
    • Provisions of fallback liability
    • Registration of e-commerce entities
    • Ban on flash sales.

For detailed information on this topic refer to the following article:

UPSC Comprehensive News Analysis of 22nd June 2021

Concerns:

  • Despite claims by the central government that these amendments are an effort to rein in unfair trade practices adopted by e-commerce companies and intend to take care of the interests of consumers, the article argues that the intended rules would do more harm than good in the long run.
    • The regulation seems more of an effort to regulate the hold of dominant foreign entities in the sector and to push the government’s ‘Make in India’ initiative and favour small and medium scale enterprises, all under the veil of consumer protection. This kind of protectionism will only harm the domestic Indian firms in the long run.
    • The move to involve all goods and services bought or sold over a digital or electronic network under the scope of the rules may lead to the issue of overlapping jurisdictions.
    • The new rules seem to be creating an extra layer of bureaucracy over and above the already existing provisions for resolution of customer complaints. This will impact the functioning of the platforms.
    • The provisions on fallback liability are going to increase costs for e-commerce. This could have a detrimental impact on the livelihood opportunities of a large number of gig workers in the e-commerce sector.

Significance:

  • The measures taken to regulate monopolist tendencies in the sector are welcome. The provisions on deep discounting and flash sales are welcome as they help mitigate the possibility of long term monopoly in the sector and concerns associated with it.

Recommendations:

  • Rather than employing the new Consumer Protection (e-commerce) Rules to regulate the platform entities, the already existing regulations and systems should be used in this direction.
    • The regulation of dominant firms should actually come within the ambit of the Competition Commission of India.
    • The issue of data privacy should be addressed by a suitable data protection law.

F. Prelims Facts

1. Govt. portal for children orphaned by COVID-19

PM CARES for children:

  • The scheme under the PM CARES fund was meant for children who have lost both parents or the lone surviving parent or a legal guardian or an adoptive parent due to COVID-19.
  • PM CARES for Children envisages support and empowerment of COVID affected children.
    • Such children to get a monthly stipend once they turn 18 and a fund of Rs 10 lakh when they turn 23 from PM CARES
    • Free education to be ensured for such children
    • The children will be assisted to get an education loan for higher education & PM CARES will pay interest on the loan
    • The children will get free health insurance of Rs 5 lakh under Ayushman Bharat till 18 years & premium will be paid by PM CARES

Context:

  • The central government has introduced a web portal through which anyone can share the details of a child orphaned by COVID-19 and help the child claim benefits under the PM CARES for children scheme.

G. Tidbits

1. Inflation situation very alarming: Basu

  • Former World Bank chief economist Kaushik Basu has expressed concerns over the alarmingly high wholesale price-based inflation in India which is currently at a 30-year high.
  • The economist though brushed aside fears of hyperinflation, has warned that if retail inflation follows wholesale prices, it might lead to an “inflationary crisis” in India.
  • The economist has called for the intertwining of monetary policy and fiscal policy to address the high inflation rates.

H. UPSC Prelims Practice Questions

Q1. PRAGYATA guidelines issued by the government of India refer to a set of guidelines issued 
for:
  1. Protection of women at workplace.
  2. Provision of shelter, rehabilitation and care to children orphaned due to COVID-19.
  3. Promotion of traditional indigenous practices in agriculture.
  4. Planning and implementation of Digital Education.
CHECK ANSWERS:-

Answer: d

Explanation:

PRAGYATA guidelines issued by the government of India refer to a set of guidelines issued for the planning and implementation of Digital Education.

Read more on PRAGYATA: Guidelines on Digital Education released by HRD Ministry

Q2. Which of the given statements is/are INCORRECT?
  1. The 97th Constitutional amendment act dealt with the issues related to the effective management of co-operative societies in the country.
  2. The Parliament alone can enact laws with regard to cooperative societies including multi-State co-operative societies.
  3. The subject “co-operative societies” falls in the concurrent list.

Options:

  1. 1 and 3 only
  2. 2 and 3 only
  3. 2 only
  4. None of the above
CHECK ANSWERS:-

Answer: b

Explanation:

  • The 97th Constitutional amendment act dealt with the issues related to the effective management of co-operative societies in the country.
  • Only the states can enact laws with regard to cooperative societies.
  • The subject “co-operative societies” is enumerated in Entry 32 of the State List of the Seventh Schedule of the Constitution.
Q3. Which of the given statements is/are correct?
  1. As money supply in the economy falls the interest rate also has the tendency to fall.
  2. An expansionary monetary policy is implemented by lowering key interest rates.
  3. The policy interest rate required to achieve the inflation target is decided by the Reserve Bank of India.

Options:

  1. 2 only
  2. 2 and 3 only
  3. 1 and 2 only
  4. 1, 2 and 3
CHECK ANSWERS:-

Answer: a

Explanation:

  • As money supply in the economy falls the interest rate also has the tendency to rise.
  • An expansionary monetary policy is implemented by lowering key interest rates.
  • The policy interest rate required to achieve the inflation target is decided by the Monetary Policy Committee.
Q4. The Democracy Index is published by
  1. World Bank
  2. Reporters Without Borders
  3. Economist Intelligence Unit (EIU)
  4. Varieties of Democracy (V-Dem) Institute
CHECK ANSWERS:-

Answer: c

Explanation:

  • The Democracy Index is published by Economist Intelligence Unit (EIU).
  • There is a range of 60 indicators within the five categories on which the Democracy Index is based. Five indicators:
    1. Electoral Process and Pluralism
    2. The Functioning of the Government
    3. Political Participation
    4. Political Culture
    5. Civil Liberties

Read more on Democracy Index 2020.

Q5. Consider the following pairs of Terms sometimes seen in news vs Context/Topic: (UPSC 2018)
  1. Belle II experiment: Artificial Intelligence
  2. Blockchain technology: Digital/ Cryptocurrency
  3. CRISPR — Cas9: Particle Physics

Which of the pairs given above is/are correctly matched?

  1. 1 and 3 only
  2. 2 only
  3. 2 and 3 only
  4. 1, 2 and 3
CHECK ANSWERS:-

Answer: b

Explanation:

  • The Belle II experiment conducted in Japan dealt with particle physics.
  • Digital/Cryptocurrency is based on blockchain technology.
  • CRISPR-Cas9 is a genome-editing tool.

I. UPSC Mains Practice Questions

  1. Reforms in the cooperative sector should not be at the cost of federal principles. Explain the statement in reference to the recent Supreme Court judgment on cooperative Societies. (10 Marks, 150 Words) [GS-2, Polity and Governance]
  2. Microplastics pollution in the Ganga River may accumulate up the food chain, potentially impacting whole ecosystems. Discuss. (10 Marks, 150 Words) [GS-3, Environment and Ecology]

Read the previous CNA here.

CNA 23rd July 2021:- Download PDF Here

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