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[Mission 2023] INSIGHTS DAILY CURRENT AFFAIRS + PIB SUMMARY 22 June 2022

 

InstaLinks help you think beyond the issue but relevant to the issue from UPSC prelims and Mains exam point of view. These linkages provided in this ‘hint’ format help you frame possible questions in your mind that might arise(or an examiner might imagine) from each current event. InstaLinks also connect every issue to their static or theoretical background. This helps you study a topic holistically and add new dimensions to every current event to help you think analytically

Table of Contents:

 

GS Paper 1:

1. Desert In Tamil Nadu

 

GS Paper 2:

1. The absurdity of the anti-defection law

2. ECI continues to nudge Registered Unrecognized Political Parties (RUPPs) for ensuring due regulatory compliance

 

GS Paper 3:

1. India’s emerging twin deficit problem

2. What is the link between rising food prices and central banks raising interest rates?

 

Content for Mains Enrichment (Ethics/Essay):

1. Janaagraha Centre for Citizenship and Democracy Survey

 

Facts for Prelims:

1. Saavira Kambada Basadi

2. Muni Suvrata Nath

3. Summer Solstice

4. Why the name Tropic of Cancer and Tropic of Capricorn?

5. The judicial validity of the Talaq-e-Hasan mode of divorce

6. Captive Networks

7. India ranks fourth in global gold recycling

8. Multi-modal logistics parks (MMLPs) scheme

9. Pradhan Mantri Aadi Adarsh Gram Yojana

10. NIPUN

11. Hybrid Securities


Desert In Tamil Nadu

Gs Paper-1

Syllabus: Geomorphology:

 

Context:

Recent news has highlighted the desert in Tamil Nadu. It has dunes that are red. The red dunes are called theri in Tamil. They consist of sediments dating back to the Quaternary Period and are made of marine deposits.

Features of the dunes:

  • They have very low water and nutrient retention capacity.
  • The dunes are susceptible to aerodynamic lift.
  • Reason for Red colour: The iron-rich heavy minerals like ilmenite, magnetite, garnet, hypersthene, and rutile present in the soil had undergone leaching by surface water and were then oxidized because of the favourable semi-arid climatic conditions giving them distinct red colour.

Theories behind their formation:

Theory 1: The present-day theris might have been formed by the confinement of beach sand locally, after the regression of the sea. When high-velocity winds from the Western Ghats blew east, they induced migration of sand grains and accumulation of dunes.

Theory 2: Another view is that these are geological formations that appeared in a period of a few hundred years.

Theory 3: The red sand is brought from the surface of a broad belt of red loam in the plains of the Nanguneri region by southwest monsoon winds during May-September.

  • The southwest monsoon winds, after draining the moisture behind the Mahendragiri hill and the Aralvaimozhi gap of the Western Ghats, become dry and strike the plains in the foothills, where vegetation is sparse. This churns red loam and is driven east in huge columns of red sand, till they are met by sea breeze near the coastal tract of Tiruchendur and get deposited there.
  • The sand deposited thus also forms a further obstruction, causing more sand to be deposited and the process goes on. Thus, in the due course of time, a dune is formed.

Aeolian Process: These processes of erosion, transport, and deposit of sediments that are caused by wind at or near the surface of the earth, are called Aeolian processes. They lead to continual sand redistribution.

 

Current Affairs

Source: Down To Earth

/ 22 June CA, Today's Article

The absurdity of the anti-defection law

Gs Paper-2

Syllabus: Parliament and state legislature structure, functioning and conduct of business.

 

Context:

  • In light of the events unfolding in Maharashtra, with the government facing internal dissent from a block of 22 MLAs, the anti-defection law has again come into the spotlight.
  • The events in Puducherry highlight, yet again, the absurdity of the anti-defection law.

 

Anti-defection law:

  • The Tenth Schedule – popularly known as the Anti-Defection Act – was included in the Constitution via the 52nd Amendment Act, 1985 and sets the provisions for disqualification of elected members on the grounds of defection to another political party.
  • It was a response to the toppling of multiple state governments by party-hopping MLAs after the general elections of 1967.
  • However, it allows a group of MP/MLAs to join (i.e. merge with) another political party without inviting the penalty for defection. (At least two-thirds of the members of a party have to be in favour of a “merger” for it to have validity in the eyes of the law).
  • It does not penalize political parties for encouraging or accepting defecting legislators.
  • The decision on questions as to disqualification on the ground of defection is referred to the Chairman or the Speaker of such House, which is subject to ‘Judicial review’.

 

Current Affairs

 

Current Affairs

 

Insta Links

To read more about anti-defection law: click here

 

Practice Questions:

Q. Which of the following is/are grounds for anti-defection?

  1. If a nominated member joins any Political party before six months.
  2. When two-thirds of the members of the party are in favour of the merger.

Select the correct answer using the codes given below:

a. 1 only

b. 2 only

c. Both 1 and 2

d. Neither 1 nor 2

Ans: (d)

 

Q.Anti-defection law undermines representative and parliamentary democracy’. Critically analyze the statement (10M).

Source: The Hindu

/ 22 June CA, Today's Article

ECI continues to nudge Registered Unrecognized Political Parties (RUPPs) for ensuring due regulatory compliance

Gs Paper-2

Syllabus: Functions and responsibilities of various constitutional bodies.

 

Context:

  • The Election Commission of India issued an order to nudge the Registered Unrecognized Political Parties (RUPPs) for ensuring due compliance.
  • Chief Electoral Officers were directed to initiate action for enforcing due compliances by RUPPs for relevant sections 29A and 29C of the RP Act 1951.

 

Registered Unrecognized Political Parties:

  • Either newly registered parties or those which have not secured enough percentage of votes in the assembly or general elections to become a state party, or those which have never contested elections since being registered are considered unrecognized parties.
  • They do not enjoy all the benefits extended to the recognised parties.

 

Recognised Political Party:

National partyState party
Secure at least 6% of the valid vote in an Assembly or a Lok Sabha General Election in any four or more states and won at least 4 seats in a Lok Sabha General Election from any State or StatesSecure at least 6% of the valid vote & win at least 2 seats in an Assembly General Election
Win at least 2% of the total Lok Sabha seats in a Lok Sabha General Election and these seats have to be won from at least 3 statesSecure at least 6% of the valid vote & win at least 1 seat in a Lok Sabha General Election
The party is recognized as a State Party in at least four statesWin at least 3% of the seats or at least 3 seats, whichever is more, in an Assembly General Election
 Win at least 1 out of every 25 seats from a state in a Lok Sabha General Election
 Secure at least 8% of the total valid vote in an Assembly or a Lok Sabha General Election

 

The recognition granted by the Commission to the parties determines their right to certain privileges like allocation of the party symbols, provision of time for political broadcasts on the state-owned television and radio stations and access to electoral rolls.

 

Insta Links:

To read about RPA 1951: click here

To read about the Election Commission of India: click here

 

Practice Questions

Q. Consider the following statements:

  1. To get recognised as a state political party, it should win at least 3% of the seats or at least 3 seats, whichever is more, in an assembly in the General Election.
  2. Unrecognized Political parties enjoy all the benefits extended to the recognised parties.

Which of the statements given above is/are not correct:

a. 1 only

b. 2 only

c. Both 1 and 2

d. Neither 1 nor 2

Ans: (b)

 

Q. Discuss the procedure of recognition of political parties in India (10M)

Source: PIB

/ 22 June CA, Today's Article

India’s emerging twin deficit problem

Gs Paper-3

Syllabus: Government Budgeting

 

Context:

RBI in its ‘Monthly Economic Review’ report highlighted two key areas of concern for the Indian economy: the fiscal deficit and the current account deficit (or CAD).

 

What does the report say?

  • On Fiscal deficit: Fiscal deficit may be high due to cuts in excise duties on diesel and petrol.
  • On Current account deficit
    • Higher import bills may increase CAD: Costlier imports such as crude oil and other commodities will not only widen the CAD but also depreciate the rupee.
      • A weaker rupee will, in turn, make future imports costlier.
    • Pulling out of funds from emerging markets: Rupee can also weaken if, in response to higher interest rates in the western economies especially the US, foreign portfolio investors (FPI) continue to pull out money from the Indian markets, which too will hurt the rupee and further increase CAD.

 

Impact of twin deficit:

Although no cause of worry in the short term, the twin deficit may in the long-term reduce the savings, depreciate the rupee and imbalance the financial investments of the government for social purposes

 

What needs to be done:

  • Trim revenue expenditure (or the money government spends just to meet its daily needs)
  • Rationalizing non-Capex (capital) expenditure to avoid fiscal slippages
  • Use tight monetary policy to achieve fiscal consolidation
  • Import cut of non-essential goods and make exports of Indian goods competitive
  • Reforming the Indian market to make it attractive for FDI and FIIs.

 

Important Terms

Definition of Fiscal deficit: The fiscal deficit is essentially the amount of money that the government has to borrow in any year to fill the gap between its expenditures and revenues.

  • Higher levels of fiscal deficit typically imply the government takes money from the market, thus leaving less money for private sector for its own investment needs (also called crowding out effect)

 

CAD

It has two parts:

  • Trade account (Import and Export of goods): If a country imports more goods than it exports, it is said to have a trade account deficit.
  • Invisible account (Import and export of services)

If the net effect of a trade account and the invisibles account is a deficit, then it is called a current account deficit or CAD. A widening CAD tends to weaken the domestic currency because a CAD implies more dollars (or foreign currencies) are being demanded than rupees.

 

A deficit implies that more money is going out of the country than coming in via the trade of physical goods. Similarly, the same country could be earning a surplus on the invisibles account — that is, it could be exporting more services than importing.

 

Definition of Capex: Capex or capital expenditure essentially refers to money spent towards creating productive assets such as roads, buildings, ports etc. Capex has a much bigger multiplier effect on the overall GDP growth than revenue expenditure.

 

Definition of Stagflation: Stagflation is defined as an economy that is suffering both an increase in inflation and low growth.

Stagflation was initially identified in the 1970s, when an oil shock caused fast inflation and significant unemployment in many industrialised economies.
The latest RBI report also point out that “even as the world was looking at a distinct possibility of widespread stagflation, India was at low risk due to its stabilisation policies.”

 

 

Insta Links

Basics: Types of Deficits

India’s fiscal deficit

 

Practice Questions:


Q. Which one of the following is likely to be the most inflationary in its effects? (UPSC CSE 2021)

  1. Repayment of Public debt.
  2. Borrowing from the public to finance a budget deficit.
  3. Borrowing from the banks to finance a budget deficit.
  4. Creation of new money to finance a budget deficit.

Answer: d

 

Q. There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? (UPSC CSE 2016)

  1. Reducing revenue expenditure
  2. Introducing new welfare schemes
  3. Rationalizing subsidies
  4. Reducing import duty

Select the correct answer using the code given below.

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2, 3 and 4

Answer: C

 

Q. What is twin deficit? Examine as to how India can avoid the twin deficit problem amidst rising commodity prices and subsidy burden.

Q. What is Fiscal Deficit? What are the impacts of Fiscal Deficit on the economy? What are the ways to finance the fiscal deficit? Suggest steps for fiscal consolidation in the light of the Union Budget proposals (15M)

 

Source: Indian Express, Business Standard

/ 22 June CA, Today's Article

What is the link between rising food prices and central banks raising interest rates?

Gs Paper-3

 Syllabus: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.

 

Context:

Last week the US central bank (Fed) announced that it will raise interest rates by 75 basis points (or 0.75 percentage points) to bring down inflation to its target rate of 2% from 9%. However, there is a fear that such as a move may lead to the US going into recession and thus impacting India and the world.

 

This article is also in continuation to the article on 16th June 2022.

What is inflation?

Inflation is the rate at which prices rise. A 2% inflation implies the general price level in April this year was 2% more than what it was in April last year.

  • Inflation rate in India has steadily gone up from close to 4% in September last year to almost 8% in April this year.

 

Why is inflation bad?

  • It makes commodities costly.
  • It essentially erodes the basis on which one makes economic decisions– meaning it reduces the value of money.

 

What is a recession?

A recession is said to occur if an economy contract for two consecutive quarters (a quarter is a period of three months).

On a side note: US president Ronald Reagan (who succeeded Jimmy Carter as the US President in 1981) remarked about the Recession:

“Recession is when your neighbour loses his job. Depression is when you lose yours. And recovery is when Jimmy Carter loses his.”

 

Why is a recession bad?

Recession essentially leads to a low growth rate thereby starting a vicious circle wherein the country experiences low production and high unemployment.

 

Current Affairs

 

 Fed and RBI increasing interest rates may cut inflation to some extent but may not help in reducing food and fuel price-led inflation, but raising interest rates may bring about a recession. Then why are all these central banks still trying to do this? The answer lies in something called “inflation expectations”.

 

What are inflation expectations?

Inflation expectations refer to people’s (or households’ expectation of what the inflation rate will be in the future). And they matter because this expectation is what determines people’s economic behaviour.

  • If people expect higher inflation in the future, they may start purchasing things in present times to be used in future.
  • The net effect of these individual decisions to advance or postpone purchases or ask for higher wages etc. determine the course of a country’s economy.
  • For example, if people expect higher inflation and advance their purchases, all of a sudden there will be a spike in demand, far in excess of the supply, thus causing higher inflation.
  • As such, policymakers try to gauge what is happening to inflation expectations.

 

Impact of Inflation expectation:

  • Reduced investment: Businesses will hold back fresh investment as costs (such as wages) go up. This, in turn, hurts the country’s competitiveness.
  • Increase in Gold Demand: People pull out money from their savings and put it into non-productive assets such as gold. In India’s case, since 98% of all gold demand is met from imports, this essentially implies capital going to other countries.

How raising the interest rate will bring down inflation expectations?

 

  • Inflation expectations tend to be “backwards-looking”: (Households) tend to look at a recent food and fuel prices which are salient items in the average consumption basket and they form their opinion about what inflation would be in the future, say three months or a year from now. If RBI/Fed starts taking preventive measures then households will have confidence that inflation will be controlled in future and thus stabilize ‘inflation expectations’.
  • Dampen demand-side inflation: While high-interest rates may not affect the supply-side inflation, it does dampen the demand for other goods and services (by disincentivizing borrowing (because it is now costlier))
    • It reduces inflation by bringing down demand
    • It gives time for the supply to catch up with the demand.

 

Core argument: Ensuring inflation expectations stay “anchored” is the essential goal for monetary policy. Reducing inflation is a way to achieve that goal and raising interest rates is a way to achieve lower inflation.

 

India’s RBI is also trying to achieve the same goal: keeping inflation expectations anchored. (Target rate is 4-6% in the case of India). But as central banks try to achieve this goal, more interest rate hikes in the coming months are expected, which, in turn, will dampen economic activity all around.

 

Insta Links

Basics: Managing Inflation

Inflation’s Long Shadow

 

Practice Questions:

Q. In India, which one of the following is responsible for maintaining price stability by controlling inflation? (UPSC CSE 2022)

  1. Department of Consumer Affairs
  2. Expenditure Management Commission
  3. Financial Stability and Development Council
  4. Reserve Bank of India

 

Answer: D

 

Q. Which among the following steps is most likely to be taken at the time of an economic recession? (UPSC CSE 2021)

  1. Cut in tax rates accompanied by increase in interest rate.
  2. Increase in expenditure on public projects.
  3. Increase in tax rates accompanied by reduction of interest rate.
  4. Reduction of expenditure on public projects.

Answer: b

 

Q. With reference to Indian economy, demand pull-inflation can be caused/increased by which of the following?

  1. Expansionary policies
  2. Fiscal stimulus
  3. Inflation-indexing wages
  4. Higher – purchasing power
  5. Rising interest rates

Select the correct answer using the codes given below.

  1. 1, 2 and 4 Only
  2. 3, 4 and 5 Only
  3. 1, 2, 3 and 5 Only
  4. 1, 2, 3, 4 and 5

Answer: A

 

Q. If the interest rate is decreased in an economy, it will (UPSC CSE 2014)

(a) decrease the consumption expenditure in the economy

(b) increase the tax collection of the Government

(c) increase the investment expenditure in the economy

(d) increase the total savings in the economy

Answer: C

In the interest rate is decreased, it becomes easier to borrow money at a low-interest rate and therefore individuals/companies will increase their investment expenditure.

 

Q. Inflation further exacerbates inequalities and affects the poor the most. Discuss the policy measures that are needed to ensure that inequalities do not deepen amidst rising inflation. (10M)

Q. Distinguish between demand-pull and cost-push inflation. Examine the factors that are causing inflation in India. What measures are needed to keep inflation under check? (10M)

Sources: Indian express 

/ 22 June CA, Today's Article

Content for Mains Enrichment (Ethics/Essay)

A survey conducted by Janaagraha Centre for Citizenship and Democracy has revealed that:

 

  • Poor’s biggest concern is water: While the middle and upper class mostly lament about traffic congestion, which dominates public discourse, the poor’s biggest concern is access to water. 
  • Poor state of municipal civic participation: It also highlighted that only two in ten people know the name of the last Mayor. A majority of them approached MLAs and MPs, but only 12% approached a councillor for grievance redressal and 88% of the respondents had never met a city councillor.
  • Poor recognition of wards: The survey also revealed more than half of the voters (52%) do not recognize wards as the basic unit of governance, while 87% of the respondents are not aware of ward committees.
/ 22 June CA, Today's Article

Facts for Prelims:

Saavira Kambada Basadi (Thousand Pillars temple)

Context:

The temple is also known as “Chandranatha Temple” since it honours the Tirthankara Chandraprabha, whose eight-foot idol is worshipped in the shrine. It is the most prominent of the 18 Jain temples in Moodubidiri town, Karnataka.

The Basadi was built by the local chieftain, Devaraya Wodeyar in 1430 additions to temples were made in 1962. The shrine has a 50 feet tall monolith manasthambha erected by Karkala Bhairava Queen Nagala Devi.

Muni Suvrata Nath

Context:

Statue of Muni Suvrata Nath 20th Thirthankara has come up at Jainaragutti near Adagur in Hassan taluk, Karnataka. The Kamala peetha (lotus seat) and an image of a tortoise at the base, are about 54-ft tall.

He became a Siddha, a liberated soul which has destroyed all of his karma. Events of the Jaina version of Ramayana are placed at the time of Munisuvratanatha. He lived for over 30,000 years. His chief apostle (gaṇadhara) was sage Malli Svāmi.

Summer Solstice

Context:

Summer Solstice also called as June solstice is the longest day of the year in the Northern Hemisphere and the shortest day in the Southern Hemisphere, it marks the onset of the summer season in the Northern Hemisphere and the winter season in the Southern Hemisphere. On the day of the June solstice, the North Pole is tipped more directly toward the sun, and the South Pole is tipped more directly away from the sun.

 

Why the name Tropic of Cancer and Tropic of Capricorn?

They were named 2000 years ago, during that time the Sun was in the constellation of Capricorn during the winter solstice and Cancer during the summer solstice (hence the names). Now due to the precession of the equinoxes, the Sun is no longer in these constellations during these times, but the names remain.

 The judicial validity of the Talaq-e-Hasan mode of divorce

 

Context:

Public interest litigation (PIL) seeking to invalidate Talaq-e-Hasan, the prescribed Islamic way of a divorce, has been filed in the Supreme Court.

 

PIL seeks to make the prescribed Islamic way of divorce Talaq-e-Hasan unconstitutional as it is violative of Articles 14, 15, 21 and 25 of the Constitution.

Talaq-e-Ahsan:

  • Under this form, a single revocable divorce is made (unlike multiple pronouncements under triple talaq)
  • Following the pronouncement, a woman has to go through iddat or a waiting period of three months.
  • During this period the divorce can be cancelled. However, failure to annul divorce during this period results in it being finalized after which a woman is independent and free to marry another man or stay single, as she may choose.

Talaq-e-Hasan enjoys legal validity in almost all Muslim countries.

Captive Networks

Context:

Telecom service providers and private captive networks are in contention for the upcoming 5G spectrum auction.

Captive networks are public networks that you subscribe to or pay for. Captive networks are also called “subscription” networks. You can find these networks in coffee shops, Internet cafes, hotels, airports, and other public locations

For a business unit: A captive unit is a business unit of a company (subsidiary) functioning offshore as an entity of its own while retaining the work and close operational tie-ups within the parent company.

Talaq-e-Hasan enjoys legal validity in almost all Muslim countries.

India ranks fourth in global gold recycling

Context:

As per World Gold Council (WGC), India has emerged as the fourth largest recycler in the world and the country has recycled 75 tonnes in 2021.

  • Top: China (168 tonnes)
  • India’s gold refining capacity increased by 1,500 tonnes (500%) in 2021
  • Number of formal recycling businesses has increased from less than five in 2013 to 33 in 2021.
    • The scale of unorganised refining has fallen, largely due to the government’s tightening of pollution regulations.
  • India has the potential to emerge as a competitive refining hub if the next phase of bullion market reforms promote responsible sourcing, exports of bars and consistent supply of dore or scrap.
  • Despite being the fourth largest recycler in the world, India recycles little of its own stock of gold — about 8% of the global scrap supply.

Multi-modal logistics parks (MMLPs) scheme

Context:

The government has extended the concession period for the multi-modal logistics parks (MMLPs) scheme from 30 to 45 years, to attract more long-term investment into India’s infrastructure.

  • The government has planned to build 35 such mega freight-and-transport hubs under its flagship Bharatmala scheme, aiming to smoothen freight mobility, improve efficiency and reduce logistics costs.
  • The logistics sector in India has been accorded “infrastructure” status in 2017, facilitating the availability of debt on easier terms and access to external commercial borrowings. India’s logistics costs are at 14% (world average 7-8%). India ranks 44 in the World Bank Logistics Performance Index
  • MMLPs have five key functions:freight aggregation and distribution, multimodal freight transport, integrated storage and warehousing, information technology support, and value-added services.

Pradhan Mantri Aadi Adarsh Gram Yojana

Launched by the Ministry of Tribal Affairs for faster development of tribal villages. It will help in the convergence and coordination of various schemes (similar to Adarsh Gram Yojana). It will also allow convergence with Aspirational district programmes in the tribal districts of the country.

NIPUN ( it is different from NIPUN Bharat under the Ministry of Education)

Context:

Union Minister of Housing and Urban Affairs launched a project named National Initiative for Promoting Upskilling of Nirman workers (NIPUN) for the promotion of Upskilling of 1 lakh Nirman Workers.

  • It comes under MoHUA’s DAY-NULM (National Urban Livelihood Mission)
  • It will train construction workers to access self-employment and skilled wage employment opportunities
  • Implementation will be done by National Skill Development Corporation (under MSDE)
  • Construction is one of the largest employers and contributes about 9% to India’s GDP.

Hybrid Securities

A hybrid security is a single financial security that combines two or more different financial instruments. Hybrid securities are securities that have a combination of debt and equity characteristics. The original hybrid security was preferred stock, representing ownership in a company (like equity) but having fixed payments (like bonds).  E.g., Convertible Bonds


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