24 Mar 2020: UPSC Exam Comprehensive News Analysis

CNA 24 March 2020:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. SC to go digital to maintain social distancing
2. Lockdown hits NREGA workers hard
HEALTH
1. Preventive drug for healthcare workers cleared
INTERNATIONAL RELATIONS
1. Pompeo in Kabul to break deadlock
C. GS 3 Related
ECONOMY
1. Centre amends law to enable excise duty increase on fuel
2. RBI advances second tranche of OMO
D. GS 4 Related
E. Editorials
ECONOMY
1. A pandemic, an economic blow and the big fix
POLITY AND GOVERNANCE
1. Lockdown and beyond
F. Prelims Facts
1. Yakshagana
G. Tidbits
1. Ayurveda and wellness tourism takes a hit
2. Don’t lay off workers or cut salaries: Ministry
3. Priority sector classification for NBFCs too
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

2. Lockdown hits NREGA workers hard

Context:

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme has been officially shut down in at least seven States, while it is effectively closed in many more, as COVID-19 lockdown comes into effect across the country.

Details:

  • Workers’ collectives are demanding relief in the form of wages during the shutdown, payment of pending dues, and extension of the scheme in the next financial year to accommodate more workers and additional days of work.
  • This is critical as thousands of migrant workers stream back to their villages, leaving the cities following the lockdown.
  • Civil society groups have written to the Prime Minister, Finance Minister and senior State officials, demanding an emergency relief package of ₹7,000 a month for all poor households for April and May, 2020.
  • Under MGNREGA, the government is responsible for not providing work. Hence, a Rajasthan State Government official said that unemployment allowance would be paid to those who have already registered for work.
  • The letter, appealing for a ₹3.75 lakh crore emergency package, was sent to State and Central government representatives.
    • It demanded that MGNREGA be expanded beyond 100 days of guaranteed work in 2020-21, with full wages being paid during the lockdown.
    • It also demanded that pending wage and material payments, amounting to ₹8,396 crore must be paid immediately.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

The Mahatma Gandhi National Rural Employment Guarantee Act, earlier known as the National Rural Employment Guarantee Act, was passed on 7th September 2005 to augment employment generation and social security in India. It covers all districts of India except the ones with 100% urban population.

Objectives of MGNREGA:

  • Provide 100 days of guaranteed wage employment to rural unskilled labour.
  • Increase economic security.
  • Decrease migration of labour from rural to urban areas.

Read more about MGNREGA.

Category: HEALTH

1. Preventive drug for healthcare workers cleared

What’s in News?

The National Task Force COVID-19 constituted by Indian Council of Medical Research (ICMR) has recommended the use of hydroxy chloroquine as prophylaxis (treatment given or action taken to prevent disease) for high risk population faced with the SARS-CoV-2.

Details:

  • The ICMR National Task Force said only high risk cases can be placed under chemoprophylaxis with hydroxy chloroquine:
    • The asymptomatic health care workers involved in the care of suspected or confirmed cases of coronavirus (Covid-19)
    • Asymptomatic household contacts of laboratory confirmed cases.
  • The Drug Controller General of India (DCGI) has also approved the protocol recommended by the ICMR National Task Force for restricted use in emergency situation.
  • The drug, however, has not been recommended for prophylaxis in children under 15 years of age.

Note:

  • All asymptomatic contacts of laboratory confirmed cases should remain in home quarantine as per the national guidelines, even if they are on prophylactic therapy.

Category: INTERNATIONAL RELATIONS

1. Pompeo in Kabul to break deadlock

Context:

The U.S. Secretary of State arrived in the Afghan capital to help break a poisonous political deadlock that has further riven the country just as the Taliban is increasing attacks and a rise in COVID-19 cases threatens an already-floundering Afghan peace process.

Concern:

  • The spat between Mr. Abdullah and Mr. Ghani, along with the world’s preoccupation with COVID-19, has sparked fears the window for a peace deal is closing fast.

Background:

Afghanistan has been enmeshed in a political crisis since elections left the country in disarray due to numerous fraud claims that ultimately saw two men claiming the presidency and holding separate inaugurations.

  • Afghanistan’s independent Election Commission had announced that the incumbent President Ashraf Ghani had won a second term.
  • A deal was signed between the U.S. and the Taliban in Doha. This issue has been covered in 2nd March 2020 Comprehensive News Analysis.
  • However, the two rival leaders have sworn themselves in as President at simultaneous ceremonies that were interrupted by at least two blasts. Read more in 10th March 2020 Comprehensive News Analysis.

Details:

  • The visit comes just a day after the Afghan government and the Taliban held their first discussion on prisoner exchanges — a key step in a broader push for peace following a withdrawal deal signed between Washington and the militants.
  • The agreement established a framework for bringing to an end America’s longest war.

2. RBI advances second tranche of OMO

Context:

The Reserve Bank of India (RBI) has advanced its liquidity infusion plan by purchasing government bonds.

Details:

  • The RBI had announced open market operations (OMOs) of ₹30,000 crore in March 2020.
  • On a review of current liquidity and financial conditions, the Reserve Bank has decided to advance the second tranche of purchase of government securities under OMOs.

What is Open Market Operation (OMO)?

  • An Open Market Operation (OMO) is the buying and selling of government securities in the open market, hence the nomenclature.
  • It is done by the central bank in a country (the RBI in India).
  • When the central bank wants to infuse liquidity into the monetary system, it will buy government securities in the open market. This way it provides commercial banks with liquidity.
  • In contrast, when it sells securities, it curbs liquidity. Thus, the central bank indirectly controls the money supply and influences the short-term interest rates.

E. Editorials

Category: ECONOMY

1. A pandemic, an economic blow and the big fix

Context:

  • The economic impact of the COVID-19 pandemic.

Background:

Global economic impact of the pandemic:

  • Pandemics, apart from posing major health risks, also pose economic and social risks. Pandemics have the potential to disrupt economies, and destabilize national security.
  • The effect of the strong clampdown measures taken by the various governments to arrest the spread of the coronavirus is being felt across the global economy.
  • The shutting down of industries may lead to loss of jobs and subsequently demand in the economy.
    • The number of people who lost their jobs, in just the last two weeks in America is the highest ever weekly job losses recorded in its history.
  • There are fears of a global recession given that the two largest economies of the world, China and the U.S. have been affected by the pandemic. The large and developed economies are expected to not merely slow down, but to contract and experience negative growth.
  • The economic devastation will be much more painful and longer than the health impact of the pandemic.
  • The melt down of the major stock exchange indices is an indication of the uncertainty and fear in the global economy.

Measures being taken by countries:

  • The United Kingdom has unveiled the biggest economic recovery package in its history, as an antidote to the imminent economic crisis.
  • The United States is finalizing a trillion-dollar economic recovery package.
  • Germany has announced unlimited government financing for the disruptions due to the outbreak.
  • France, Spain, Italy and the Netherlands have all launched half-a-trillion dollars combined in recovery measures.

Details:

Economic Impact in India:

Job losses:

  • There are reports that a third of all restaurants could shut down in the formal sector alone and shed more than 20 lakh jobs, in the coming months.
  • The automotive sector which was already hit by slowing demand is shutting down its factories due to the pandemic. This puts at risk the incomes of around a million people employed in the automotive sector.
  • The unorganized sector, which constitutes a large proportion of the working population in India, would be the most affected, given the loss of livelihood opportunities and lack of social security measures.

Drop in demand:

  • Job losses lead to lesser disposable income in the hands of the people and subsequently, consumption drops and overall demand collapses.

Financial sector crisis:

  • When businesses close down, they default on their commercial obligations to their financiers and suppliers. This freezes up credit flow in the economy and also affects related sectors.

Effect on trade:

  • Trade constitutes a considerable proportion of the Indian economy. The reduced trade due to stringent clampdown measures would affect the growth in the Indian economy.
  • Given the global nature of the crisis, it is not even possible for India to import and export its way to recovery.

Measures taken in India:

  • India has set up a task force under the Finance Minister to assess the economic impact of the pandemic and suggest economic recovery measures.

Recovery package for India:

  • Given the inevitable economic crisis, it is prudent to take necessary actions immediately. India needs a comprehensive recovery package that will first cushion the economic shock and then help the economy recover.
  • The recovery package should focus on the following aspects:
    • Providing a safety net for the most affected sections.
    • Addressing the impending liquidity squeeze in the financial system.
    • Addressing disruptions in the economy and incentivizing the external sector of trade and commerce.

Way forward:

Safety net for the most affected sections:

  • About 37% of households depend on casual labour as their major source of income for rural and urban India, and nearly 55% have tenuous regular employment, as per the Periodic Labour Force Survey data for 2017-18.
  • The poor will be the worst affected, including informal workers, workers in the gig economy, or those running small businesses for whom social safety nets are not adequately in place.

Direct cash transfer:

  • As part of the efforts to provide a safety net for the most affected sections, direct cash transfer option should be considered.
  • The destruction of jobs, incomes and consumption can be addressed through a direct cash transfer of 3,000 a month, for six months. This should be provided exclusively to the most vulnerable section of the society.
  • Considering only the bottom half of all Indian households, the direct cash transfer would cost nearly 2.2-lakh crore and reach 60 crore beneficiaries, covering agricultural labourers, farmers, daily wage earners, informal sector workers and others.
  • This would ensure a sustained income stream for the millions who have lost their incomes and provide them a safety net and a sense of confidence.
  • Various existing schemes of the government can be subsumed under the direct cash transfer scheme, to ensure sufficient financial resources to execute the direct cash transfers.

Right to work:

  • The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) must be expanded and restructured into a public works programme, to build much-needed hospitals, clinics, rural roads and other infrastructure. This can be achieved by integrating MGNREGA with the Pradhan Mantri Gram Sadak Yojana and the roads and bridges programme.
  • The above three programmes together have a budget of nearly ₹1.5 lakh crore. This must be doubled to ₹3 lakh crore and serve as a true ‘Right to Work’ scheme for every Indian who needs it.

Access to food:

  • The Food Corporation of India has sufficient buffers of rice, wheat and unmilled paddy stocks.
  • The buffer stocks should be used to provide 10kg rice and wheat to every Indian family, free of cost, through the Public Distribution System.
  • The combination, of a basic income of 3,000 rupees a month, a right to work and food grains, will provide a secure safety net for the most vulnerable section of the population.

Addressing the liquidity squeeze in the financial system:

RBI’s role:

  • The Reserve Bank of India’s (RBI) announcement of a 1.5-lakh crores liquidity and credit backstop facility is a welcome move and acknowledgment of an imminent liquidity squeeze in the economy.
  • The RBI should set up a credit guarantee fund for distressed borrowers for credit rollover and deferred loan obligation.
  • RBI must also consider immediately reducing interest rates to spur business activity.

Addressing disruptions in the economy:

  • Service sectors like airlines, tourism, hospitality, entertainment and logistics have been disrupted due to the clampdown in place.
    • The government must consider a two-year tax holiday and an appropriate incentive scheme for these sectors that have been devastated.
  • Similarly, India’s exports predominantly in textiles and leather which are labour intensive sectors have been disrupted due to the sudden drop in global demand and the restrictions on trade.
    • Sector specific incentive schemes and government support for such critical sectors should be considered.
  • COVID-19 testing, treatment, medical equipment and supplies capacity can be expanded through the private sector and can be reimbursed directly for patient care. The testing and treating of at least 20 crore Indians through the private sector will need a 1.5- lakh crore budget. This will also help create a large number of jobs in the private health-care sector, with trickle-down benefits.

Financing the recovery package:

  • The total incremental expenditure for the recovery package as discussed, would be between 5-lakh crore to 6-lakh crore for FY2021.
  • The States combined incur an expenditure of 40 lakh crore rupees and can share some of the expenditure of the recovery package. Given that post the introduction of Goods and Services Tax (GST), States do not have the fiscal freedom to raise tax revenues on their own, the major responsibility of financing such a recovery package would be on the central government.
  • This amount can be funded mainly thorough the reallocation of some of the budgeted capital expenditure, expenditure rationalization, and the savings due to the drop in oil prices.

Reprioritizing expenditure plans:

  • The government had budgeted more than 4-lakh crore rupees in capital expenditure for FY2021. Given the extraordinary situation, it is important to reprioritize the expenditure plan in the near term.
  • Some part of this budget will have to be allocated to the COVID-19 recovery package.
  • Under the given circumstances, some low priority expenditures like the package for the revival of the telecom public sector units can be delayed and the budget for national highways, roads and bridges can be rationalized to reallocate some portion of the planned expenditure to the recovery package.

Expenditure rationalization:

  • The 49 ministries in the Union government of India made a demand for grants totalling 30-lakh crore rupees as total expenditure for FY2021.
  • The 13 large and important ministries account for as much of the Budget expenditure as the remaining 41 ministries combined. There is ample scope to rationalize expenditure in the less critical 41 ministries to extract some funding for the recovery package.

Savings due to the drop in oil prices:

  • Fortunately for India, there has been a dramatic fall in global crude oil prices, from $40 a barrel to an estimated $20 a barrel. This will help India save nearly 2-lakh crore.
  • This amount can be used to fund the recovery package or make up for shortfall of tax revenues.

Conclusion:

  • India needs an immediate relief package of 5-lakh crore to 6-lakh crore rupees, targeted across all sections of society and sectors of the economy.
  • The fiscal deficit of India will rise driven both by increased expenditure by the government and shortfall of revenues from the slowing economy. Hence there are concerns on the possible fiscal implications of a stimulus package of this scale. However, given the impending crisis, this is not the time for fiscal conservatism.
  • There is a need to think big, bold and radical to pull the Indian economy out of the inevitable crisis. This is India’s moment for the equivalent of the “New Deal” that U.S. President Franklin Roosevelt launched in America after the Great Depression of 1929. 

For more information on this issue refer:

CNA dated March 21, 2020
Category: POLITY AND GOVERNANCE

1. Lockdown and beyond

Context:

  • The lockdown in India to counter the possibility of large-scale transmission of the novel coronavirus.

Details:

Lockdown in India:

  • Given the possibility of a public health catastrophe due to large-scale transmission of the novel coronavirus, a national lockdown is in place.
  • The goal of the lockdown is to flatten the transmission curve and help a fragile public health system cope with a large number of cases.
  • Physical distancing of people has been ensured through a suspension of rail and inter-State bus services, closure of public places, cessation of all non-essential activity and street-level monitoring.
  • States are enforcing social distancing through Section 144 of the Criminal Procedure Code, the Epidemic Diseases Act, 1897 and the Indian Penal Code.

Way forward:

  • The lockdown is just the first step against the pandemic and there is a need for further steps in the fight against the pandemic.

Addressing essential requirements:

  • Given the restrictions in place, the government machinery must now focus on addressing the essential requirements of food, medicines, etc. It must ensure all steps are taken to mitigate the impact on people.
    • Governments must ensure that the most vulnerable classes, economically and socially, including the elderly, have access to essential articles including medicines, close to where they live.
    • Governments must consider providing essential food items to the most affected section of people. This can be done through civil supplies departments, civic workers, and non-governmental organisations.
    • Given the large number of people dependant on casual labour as their major source of income, it is essential for governments to ensure that they get subsistence wages for as long as restrictions last. 

Access to healthcare:

  • The first and most effective step against the pandemic must be to shore up the healthcare system and, as the World Health Organization has recommended, create capacity in hospitals for everyone who shows symptoms to access testing facilities.
  • Providing full and free testing to all those who need it is critical for effectively controlling the spread.

Public health response:

  • There is a need to formulate a public health response for the period beyond the shutdown.
  • China, South Korea and Singapore, as WHO points out, adopted a strict shutdown and followed it with testing at the population level to get a grip on infections.
  • India needs to get a universally accessible testing system in place to prevent transmission when the lockdown is lifted.

Addressing the weak links:

  • In India, a vast number of poor people depend on public healthcare. The polarization of healthcare facilities between the private and public sector does not provide the right framework to channel timely medical services during a pandemic.
  • Given the limited capacity of public healthcare services, they will be hard-pressed to provide the requisite support to low-income groups. In the absence of actions to replenish their capacity, they will not be able to cope with the pressures in the longer run.
  • This needs to be urgently addressed, in the absence of which the poor will become the weakest link in any effort to contain the virus.
  • The experiences of Italy, France, Switzerland and the U.S. highlight that COVID-19 tests and treatment should particularly be available and accessible to people in high-risk groups and from low-income backgrounds.

Involving private sector participation in healthcare:

  • Given the limited opportunities to rapidly expand the public health systems in a short frame of time, there is the need to consider involving private sector in the health systems.
  • COVID-19 testing, treatment, medical equipment and supplies capacity can be expanded through the private sector.

Combating Misinformation:

  • The rise of fake news during the crisis period is a big threat.
    • COVID-19 is already deeply affecting economic activity, and fake videos linking its spread to the meat and poultry sector have led to a low demand for these products and, consequently, large-scale losses.
    • Advocating particular cures or linking the virus to various factors without underlying scientific evidence can cause a lot of damage as such misinformation creates confusion and prevents communities from following instructions from authorities and being united against the threat.
    • Fake news also leads to lowered public morale.
  • The government can consider taking action against the circulation of fake news and rumours.
  • The public should be more vigilant and must try to make a distinction between scientific information that can support a balanced epidemiological response and misinformation that will adversely affect our efforts.

Economic recovery package:

  • Given the economic consequences of the pandemic, there is the urgent need to come out with a suitable economic stimulus package as is being done in other economies.
  • This should help address the major disruptions in the economy. A recovery package should ideally include funds transfers during the containment phase of the pandemic, followed by a stimulus to sustain employment.

F. Prelims Facts

1. Yakshagana

What’s in News?

Under the banner ‘Yakshavahini’, a registered trust, more than 900 Yakshagana scripts, including the ones printed in 1905 and 1907, have been digitised and made available online for free.

Yakshagana:

  • Yakshagana is a traditional Indian theatre form.
  • It is believed to be developed in Dakshina Kannada, Udupi, Uttara Kannada, Shimoga and western parts of Chikmagalur districts, in the state of Karnataka and in Kasaragod district in Kerala.
  • This theatre style is mainly found in coastal regions of Karnataka in various forms.
  • Yakshagana combines dance, music, dialogue, costume, make-up, and stage techniques with a unique style and form.
  • It is believed to have evolved from pre-classical music and theatre during the period of the Bhakti movement.
  • Yakshagana is traditionally presented from dusk to dawn.
  • Its stories are drawn from Ramayana, Mahabharata, Bhagavata and other epics from both Hindu and Jain and other ancient Indic traditions.

G. Tidbits

1. Ayurveda and wellness tourism takes a hit

  • Rejuvenation therapy and wellness-based Ayurveda that outlived the setbacks Kerala tourism faced during the worst times of Nipah, Ockhi and two consecutive floods in the State has been dealt a crippling blow by COVID-19.
  • It is the first time that the deadly virus COVID-19 has hit wellness-based Ayurveda, the Unique Selling Proposition (USP) of Kerala Tourism.

Read more about Nipah

2. Don’t lay off workers or cut salaries: Ministry

What’s in News?

The Union Labour and Employment Ministry has been reaching out to employers in the public and private sectors, asking them not to lay off workers or cut salaries due to the ongoing lockdown caused by the COVID-19 outbreak.

Details:

  • The employers have been asked to extend their cooperation by not terminating employees in this challenging situation.
  • The Finance Ministry announced that contractual labour and outsourced staff working for the Central government would be treated as “on duty” and paid as usual with no penalty.
  • Employee Provident Fund Organisation (EPFO) has also issued instructions on timely pension payments.

3. Priority sector classification for NBFCs too

What’s in News?

The RBI has decided to extend priority sector classification for bank loans to Non-bank financial companies (NBFCs) for on-lending for the FY 2020-21.

  • Existing loans disbursed under the on-lending model will continue to be classified under priority sector till the date of repayment or maturity.
  • Bank loans to NBFCs for on-lending would be eligible for classification as priority sector up to March 31, 2020.
  • Credit to NBFCs and HFCs for on-lending will be allowed up to an overall 5% of the bank’s total priority sector lending.

H. UPSC Prelims Practice Questions

Q1. Which of the following is/are correctly matched?
  1. Cheraw: Mizoram
  2. Yakshagana: Andhra Pradesh
  3. Koodiyattam: Kerala

Choose the correct option:

  1. 1 only
  2. 2 only
  3. 1 and 3 only
  4. 2 and 3 only
See
Answer
Q2. Which of these countries do not border Afghanistan?
  1. Turkmenistan
  2. Kazakhstan
  3. Kyrgyzstan
  4. Tajikistan

Choose the correct options:

  1. 2 and 3 only
  2. 1 and 2 only
  3. 1 and 4 only
  4. 2, 3 and 4 only
See
Answer
Q3. Consider the following statements with respect to Raksha Gyan Shakti:
  1. It was instituted by the Defence Research and Development Organisation (DRDO).
  2. The mission aims to provide a boost to Intellectual Property Rights (IPR) culture in the Indian Defence manufacturing ecosystem.

Which of the given statement/s is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
See
Answer
Q4. Consider the following statements with respect to Ram Manohar Lohia:
  1. He was the first Secretary of the All India Congress Committee’s (AICC) foreign affairs department.
  2. ‘Azad Hind Radio’ was founded by Ram Manohar Lohia.

Which of the given statement/s is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
See
Answer

I. UPSC Mains Practice Questions

  1. What could be the economic challenges posed by the COVID-19 pandemic to India? Discuss what should be the focus areas and necessary actions for an economic recovery package for India and discuss the challenges associated with it. (15 marks, 250 words)
  2. The current lockdown in place is just the first step against the pandemic and there is a need for further steps in the fight against the COVID-19 pandemic. Comment. (10 marks, 150 words)

Read the previous CNA here.

CNA 24 March 2020:- Download PDF Here

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