26 May 2020: UPSC Exam Comprehensive News Analysis

26 May 2020 CNA:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
ART AND CULTURE
1. Karnataka govt. takes efforts to solve mystery over birthplace of Purandara Dasa
B. GS 2 Related
INTERNATIONAL RELATIONS
1. Deliberations on to end LAC tensions
2. China warns U.S. of retaliation if punished for Hong Kong law
C. GS 3 Related
ENVIRONMENT AND ECOLOGY
1. With wheat harvest over, Punjab registers spike in stubble burning
ECONOMY
1. ILO urges PM not to dilute labour laws
DISASTER MANAGEMENT
1. Bengal, Odisha get promised ₹1,500 cr.
D. GS 4 Related
E. Editorials
ECONOMY
1. The problem with the liquidity push
2. A well-balanced stimulus package
INTERNATIONAL RELATIONS
1. Moving beyond geopolitics
F. Prelims Facts
1. Puntius sanctus
2. Heatwave sweeps North India
G. Tidbits
1. Crude processing sees biggest drop since 2003
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

2. China warns U.S. of retaliation if punished for Hong Kong law

Context:

China has threatened counter-measures against the U.S. if it was punished for plans to impose a sedition law on Hong Kong. Hong Kong has become the latest flashpoint in soaring tensions between the world’s two super powers which China has likened to “the brink of a new Cold War”.

Background:

  • China has introduced a proposal to impose a security law in Hong Kong to suppress the semi-autonomous city’s pro-democracy movement.
  • Beijing plans to pass a new security law for Hong Kong that bans treason, subversion and sedition after months of massive, often-violent pro-democracy protests in 2019.
  • The business hub’s security chief hailed it as a new tool that would defeat “terrorism”.

Details:

  • Beijing portrays the city’s protests as a foreign-backed plot to destabilise the motherland and says other nations have no right to interfere in how the international business hub is run.
  • Protesters say they are motivated by years of Beijing chipping away at the city’s freedoms since it was handed back to China by Britain in 1997.
  • Hong Kong enjoys liberties unseen on the mainland, as well as its own legal system and trade status.

Hong Kong’s Concerns:

  • Of particular concern is a provision allowing Chinese security agents to operate in Hong Kong, with fears it could spark a crackdown on those voicing dissent against China’s communist rulers.
  • The proposed law would also bypass Hong Kong’s own legislature.

U.S. sanctions:

  • Meanwhile, in a separate development that signals rising tensions between China and the U.S., Beijing vowed to shield a Chinese government institute and eight companies sanctioned by the U.S. over alleged human rights violations in the restive Xinjiang region, where China is accused of mass repression of mostly Muslim minorities.
  • The U.S. Department of Commerce announced the sanctions saying they were triggered by human rights abuses against Uighurs and other minority groups in Xinjiang in China’s far northwest.
  • Beijing urged Washington to reverse the decision, saying the Commerce Department had stretched the concept of national security to meddle in China’s affairs and harm China’s interests.

This issue has been covered in 23rd May 2020 and 25th May 2020 Comprehensive News analysis.

Category: ECONOMY

1. ILO urges PM not to dilute labour laws

Context:

The International Labour Organisation (ILO) has informed trade unions of India that its Director-General has expressed concern and urged the Prime Minister to send a clear message to the Central and State governments to uphold international labour laws after the recent dilution of laws by some States.

Background:

  • A group of 10 Central trade unions had written to the ILO in Geneva, seeking its intervention to protect workers’ rights and international labour standards.
  • They sent the representation to the ILO after Uttar Pradesh, Madhya Pradesh, Gujarat and some other States either suspended a large number of labour laws for two-three years or diluted them in an attempt to woo industry in the midst of the COVID-19 pandemic.

This issue has been covered in 9th May 2020 Comprehensive News Analysis. Click here to read.

Category: DISASTER MANAGEMENT

1. Bengal, Odisha get promised ₹1,500 cr.

Context:

  • Relief of ₹1,000 crore and ₹500 crore have been released to West Bengal and Odisha, respectively, in the wake of the damage and destruction caused by Cyclone Amphan.
  • The relief amount has been disbursed from the National Disaster Response Fund (NDRF).

Cyclone Amphan has been covered in 22nd May 2020 Comprehensive News Analysis. Click here to read.

E. Editorials

Category: ECONOMY

1. The problem with the liquidity push

Context:

  • The author of the article analyzes the post-COVID-19 relief and recovery package announced by the government.

Concerns:

  • The author expresses concerns over the measures announced by the RBI and the government.

Meagre resource allocation:

  • The economic stimulus package provides little by way of additional budgetary resources to halt and reverse the economic and social collapse that the pandemic has triggered.
  • Estimates by economists place the additional fiscal allocation implicit in the proposals at around 1% of the GDP as against the 10% claimed by the government.

Reliance on liquidity measures:

  • The relief-cum-stimulus package relies heavily on measures aimed at addressing the liquidity crunch.
  • The thrust is to get the Reserve Bank of India (RBI) and other public financial institutions to infuse liquidity and increase lending by the financial system to address the liquidity crunch.
    • In economy, liquidity refers to ease of access to cash.
    • The financial intermediaries being enlisted for the task of transmitting liquidity are the banks, with NBFCs constituting the lower tier.
  • The author argues that this approach marks a one-dimensional approach as against the multi-dimensional approach required at the moment.

Targeted long term repo operations:

  • The RBI had launched the special and ‘targeted’ long term repo operations (TLTROs), allowing banks to access liquidity at the repo rate to lend to specified clients. The repo or policy interest rate has been cut by more than a percentage point to 4%.
  • The TLTROs call for investment of the cheaper capital in higher quality investment grade corporate bonds, commercial paper, and non-convertible debentures.
    • The easy funding has allowed big businesses to access cheap capital to substitute for past high-cost debt or finance ongoing projects without proportionate benefits for the smaller businesses.
    • There is very little evidence to show that the announced measures would be able to trigger new investments as envisaged by the package.
  • The second round of TLTROs was aimed at easing the liquidity crunch in the NBFCs.
    • The NBFCs were finding it difficult to roll over the short-term debt they had incurred to finance longer term projects, including lending to small and medium businesses, housing and real estate.
    • The measure announced failed to incentivize the banks into lending to the NBFCs, because of lack of confidence in the NBFCs’ financial viability.

COVID-19 Package Measures:

COVID-19 package liquidity measures:

  • Building on the initial liquidity infusion efforts from the RBI, the COVID-19 package identified more intermediaries (such as the Small Industries Development Bank of India, the National Bank for Agriculture and Rural Development, and the National Housing Bank) that could refinance lending by the banks to different sections, with targeted lending amounts.
  • The government has offered partial or full credit guarantees in case of defaults to incentivize the banks and other intermediaries into lending to small borrowers.
  • The government also sought to persuade the RBI to lend directly to NBFCs against their paper.

Limitations:

  • The author argues that the measures sought under the package would not work during this crisis.
    • The measures may not lead to additional or new investment.
    • The compression of demand resulting from the loss of employment and incomes would be considerable. Faced with sluggish demand, firms are unlikely to meet past and current payments commitments and help the revival effort.

Fiscal conservatism:

  • The administration seems to be focussed on maintaining healthy fiscal numbers.
  • The spending by the fiscally conservative government would fall sharply because of a collapse in revenue collections.
  • The government has been reluctant with respect to even the contingent liabilities that do not immediately affect the fiscal deficit.

Disposable income:

  • Several measures have been announced to help increase the disposable income of different sections.
    • Advance access to savings like provident fund contributions, lower tax deduction at source, reduced provident fund contributions and moratoriums on debt service payments are some of the announced measures.
    • These measures are expected to provide access to cash inflows and reduce cash outflows and induce agents to meet overdue payments or spend to enhance the incomes of others.
  • The author argues that the announced measures are marginal in scope and only temporarily help increase the disposable income.

Sustainability:

  • The sought measures only envisage a supply side push from the monetary policy initiatives.
  • Given the circumstances, the liquidity push would only culminate in eventual default, as borrowers use the debt to just stay afloat in the absence of new revenues. The measures are only likely to intensify the crisis, rather than resolve it.

Way forward:

  • The author argues for higher government support in the form of new and additional transfers to people in cash and kind, and measures such as wage subsidies, equity support and spending on employment programmes.
  • The above measures would require debt financed spending by the government, with borrowing at low interest rates from the central bank or a “monetisation” of the deficit.

2. A well-balanced stimulus package

Context:

  • The author of the article, the current Vice Chairman of the NITI Aayog argues in favour of the economic stimulus package.

Details:

  • The author argues that the stimulus package is a well-balanced and bold package that will help revive economic activity in India.

Limitations of a developing economy:

  • The author argues that developed countries, like the U.S. bestowed with unlimited resources, have the luxury to issue debt without any thought of its consequences on their macroeconomic balances.
  • India does not have these many degrees of freedom. Cognisant of its constraints and compulsions, the government has come up with its stimulus package.

Structural reforms:

  • The announced measures aim to convert this crisis into an opportunity by implementing bold structural reforms, which have been pending for a while.

Substantial amount:

  • The size of the stimulus being around 10% of the GDP compares favourably with packages announced by other emerging economies.

Lifting demand and supply:

  • The stimulus package effectively addresses both the supply and demand side of the economy as against concerns expressed by some sections, of the package being heavily focussed on reviving only supply.

Demand creation:

  • Several measures have been announced to lift the sagging demand in the economy.
  • As against the conventional argument, that increasing the cash in hand of consumers is the sole means for reversing the declining demand in the economy, the additional credit lines provided to micro, small and medium enterprises or to street vendors or to farmers (additional credit of Rs. 2 trillion) will contribute to the strengthening of aggregate demand in the economy.
    • The total effective demand is made up of demand for consumption, investment and intermediate goods.
  • Measures announced for ramping up consumption demand directly include:
    • Rs.1.73 lakh crore for improving the incomes and welfare of the most vulnerable, including the 20 crore female Jan Dhan account holders who will be receiving money directly into their bank accounts.
    • The reduction of TDS and TCS by 25% would lead to Rs. 50,000 crore additional incomes in the hands of the people.
    • Rs.40,000 crore additional allocation for MNREGA will provide jobs to the migrant labourers returning to their villages from metros and cities.
  • These measures will trigger demand, which could trigger recovery in economic activity.

Supply stabilization:

  • The package has guaranteed the survival of existing production capacities and laid strong grounds for attracting fresh investment to bolster growth.

Agriculture:

  • The government declared agriculture and all related activities as essential services immediately upon announcing the lockdown. This permitted the successful harvesting and efficient procurement of the critical Rabi crop. Procurement operations also pumped in Rs. 78,000 crore into the crucial sector.
  • The measures aimed at aiding the farmers will help ensure the nation’s food security.
  • Indian farmers will get the much-needed freedom, flexibility and financial strength to propel India’s economic recovery in the post-COVID-19 period.

Addressing liquidity crunch:

  • The governmental measures will help prevent the liquidity crunch from converting to insolvencies and bankruptcies.
    • Moratorium measures have been announced for businesses for their debt servicing obligations to commercial banks.
    • Additional credit line of Rs. 3 trillion has been given to MSMEs without any fresh collateral.
    • New equity fund for MSMEs via the Rs. 50,000 crore fund of funds.
    • Rs.90,000 crore credit package has been extended to state electricity utilities to enable them to clear their dues to private sector power producers.

Higher self-reliance:

  • The measures would significantly help improve the ecosystem for private producers and investors, both in agriculture and manufacturing.
    • The liberalization of regulations like the Essential Commodities Act, 1955 and liberalisation in the defence production sector will help India achieve higher self-reliance in this strategic sector and also emerge as an exporter.
    • The opening up of business opportunity to the private businesses via the Public Sector Enterprise Policy will help revive investment sentiments.
  • The stimulus package will help the Indian firms operate in an ecosystem that will help them become ‘Glocal’, thereby helping Indian brands command a larger share in the global markets and participate successfully in global value chains.

Category: INTERNATIONAL RELATIONS

1. Moving beyond geopolitics

Context:

  • The authors of the article analyze the trends in the domain of technology and data, and evaluate the scenario in a post-COVID phase.

Significance of technology and data:

  • National governments, policymakers and healthcare researchers are using technology and data to plan and improve economic activities, social development and treat deadly diseases.

Recent trends:

Interdependence between technology and geopolitics:

  • Issues relating to technologies such as biotechnology, genetic engineering and information technology will have a long-term impact on geopolitics.
  • Technology and data are becoming inherently geopolitical.
    • Proper data related to the COVID-19 outbreak were not shared in time, and that is why there is so much anger towards the World Health Organization and China.
    • The nature of technology and data has placed tech giants such as Google, Facebook and Amazon in a commanding position. Given their global reach, governments are becoming increasingly dependent on them.
    • Tech giants are taking a leading role in geopolitics, at times playing on their own and sometimes as proxies of nation states to influence policymaking and national regulations.
      • The U.S.-China trade war, the position of governments on Huawei 5G technology, and Facebook’s attempt to implement internet.org are a few examples.

Changing idea of privacy:

  • The pandemic has brought a change in perception on issues like privacy.
  • During the current pandemic, people across the globe have accepted the idea of their live locations being traced and shared with governments. In India, more than 90 million people have downloaded Aarogya Setu despite concerns raised with respect to the right to privacy.

Concerns:

Increasing restrictions on data:

  • Restrictions on the flow of data have increased significantly in the recent past.
    • World over, data protection laws, requirements of data localisation, laws related to weakening of encryption keys and data retention requirements are increasing.

Lack of proper framework:

  • The proposed frameworks on data are not interoperable between different jurisdictions and only focus on protection of personal data and privacy and give little thought to the broader impact of data on mobility and social aspects.
    • Data protection frameworks such as the General Data Protection Regulation of the EU and the CLOUD Act of the U.S. are aimed at putting users in control of their data. But they have issues relating to data localisation, cross-border flow of information and issue of data sharing.
  • The global body, UN has also not succeeded in bringing consensus in the preparation of an acceptable framework.

Way forward:

Sharing data:

  • In the post-COVID world, countries and tech giants should be obligated to share data in the larger interest of mankind.
  • The unprecedented amount of data being collected by tech giants need to be used towards the welfare of society.

Privacy aspects:

  • The current human rights framework cannot be extrapolated to human rights in the digital and biological domain. The current concept of privacy may require significant change.
  • There is a need to distinguish individual data from large global data sets.

Need for a framework:

  • In the post-COVID-19 world, the need for digital equity will require frameworks relating to governance of technology and data that look beyond geopolitical considerations.
  • With data flow set to become more important over time, we need government regulations and standard and inter-operable frameworks to govern issues and address risks emerging from these technological innovations.
  • The framework must focus on leveraging data to solve problems and ensure consistency, interoperability, privacy and security.

F. Prelims Facts

1. Puntius sanctus

What’s in News?

A new species of small freshwater fish of the family Cyprinidae has been discovered. It was encountered in a small waterbody in Velankanni, Tamil Nadu.

Details:

  • The silver-hued fish has been named Puntius sanctus.
  • Puntius sanctus grows only to a length of 7 cm.
  • It is used both as food and as an aquarium draw.
  • They are purely freshwater fishes.
  • Its physical characteristics include a protractible mouth, a pair of maxillary barbels (a sensory organ near the snout), 24-25 lateral line scales and 10 pre-dorsal scales.

2. Heatwave sweeps North India

What’s in News?

Several parts of north India reeled under an intense heatwave with many districts in Rajasthan, Haryana, Uttar Pradesh, Madhya Pradesh posting temperatures over 45 degrees Celsius or five degrees above what is normal.

Details:

  • The India Meteorological Department had forecast “heatwave to severe heatwave conditions” over northwest, central and adjoining peninsular India for most of the week along with heavy rain over northeast India.
    • Churu in Rajasthan registered 47° C.
    • Prayagraj in Uttar Pradesh recorded 46° C.
  • The heat was due to dry northwesterly winds prevailing over northwest and central India.
  • High summer temperatures in North India are one of the factors important for drawing in the monsoon rain into Kerala.

Heat waves:

The World Meteorological Organization defines a heat wave as five or more consecutive days during which the daily maximum temperature exceeds the average maximum temperature by five degrees Celsius.  If the maximum temperature of the affected region continues to be more than 45° C consecutively for two days, it will be declared a heat wave affected area.

Read more about Heat Waves.

G. Tidbits

1. Crude processing sees biggest drop since 2003

What’s in News?

India’s crude oil processing in April 2020 slumped by 28.8% from a year earlier, its biggest drop since at least 2003.

  • The lockdown and travel curbs aimed at stemming the spread of COVID-19 has forced people to stay home, cutting India’s fuel demand by 45.8% in April 2020.
  • Falling demand led Indian refiners and gas importers to declare ‘force majeure’ on imports.
  • Refiners, struggling to store oil and products, had to sell some oil to the central government, which used it to fill strategic storage.

H. UPSC Prelims Practice Questions

Q1. Consider the following statements with respect to Purandara Dasa:
  1. He is a contemporary of Kanakadasa.
  2. Kaginele Adi Keshava was his pen name.
  3. He is known as the “Pitamaha of Carnatic Music”.

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

  1. 1 only
  2. 1 and 2 only
  3. 1 and 3 only
  4. 1, 2 and 3
See
Answer
Q2. Consider the following statements with respect to National Disaster Response 
Fund (NDRF):
  1. It comes under the Public Accounts of the Government of India under “Reserve Funds not bearing interest”.
  2. National Calamity Contingency Fund (NCCF) was renamed as National Disaster Response Fund (NDRF) with the enactment of the Disaster Management Act.
  3. A National Calamity Contingency Duty is levied to finance the NDRF.

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

  1. 1 only
  2. 1 and 2 only
  3. 1, 2 and 3
  4. 2 and 3 only
See
Answer
Q3. Consider the following statements with respect to International Labour 
Organisation:
  1. It was established by the Treaty of Versailles in 1919.
  2. It is the only tripartite U.N. agency.
  3. It received the Nobel Peace Prize in 1969.
  4. India is a founding member of the ILO and also a permanent member of the ILO Governing Body since 1922.

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

  1. 2, 3 and 4 only
  2. 1, 3 and 4 only
  3. 1 and 2 only
  4. 1, 2, 3 and 4
See
Answer
Q4. Which of the following countries form the Quadrilateral Security Dialogue 
(QSD) or Quad?
  1. United States
  2. China
  3. Japan
  4. Russia
  5. Australia
  6. India

Choose the correct option:

  1. 1, 3, 5 and 6 only
  2. 1, 3, 4 and 5 only
  3. 2, 4, 5 and 6 only
  4. 1, 4, 5 and 6 only
See
Answer

I. UPSC Mains Practice Questions

  1. Technology and data are becoming inherently geopolitical. Evaluate the concerns associated with such a development. (10 marks, 150 words)
  2. Atma Nirbhar Bharat Abhiyan economic stimulus package effectively addresses both the supply and demand side of the economy. Comment. (10 marks, 150 words)

Read the previous CNA here.

26 May 2020 CNA:- Download PDF Here

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