[Mission 2023] INSIGHTS DAILY CURRENT AFFAIRS + PIB SUMMARY 5 December 2022

GS Paper 2

Syllabus: Social Justice/ Governance

Source: Financial express

 Context: Five key social sector departments – health, women and child development, rural development and panchayat raj, education, and housing and urban affairs – have joined the PM Gati Shakti Scheme, aimed at cutting India’s logistical costs

• Implementing agency: DPIIT (Department for promotion of Industry and Internal Trade) of the commerce and industry ministry.

 How Gati Shakti will improve the functioning of these social sector departments:

• Improved Planning of the projects
• Improved coordination among departments e.g., concerned departments can upload their GIS data (Geographic Information System) to be shared among other departments.
• Improved monitoring of projects
• Improved evaluation of the impact of the projects.

Insta Curious

 Insta Links

PM GatiShakti — National Master Plan

Mains Links

Q. Gati Shakti will ensure integrated planning and implementation of infrastructure projects in the coming years, with a focus on expediting works on the ground, saving costs and creating jobs. Discuss. (250 Words) (UPSC Mains 2022)

GS Paper 3

Syllabus: Indian Economy

Source: Indian Express

Context: As per the latest data by CAG (titled ‘Union and State Finances at A Glance’ for 2019-20), expenditure on the pension has emerged as one of the major components of the Committed Expenditure of the Centre and states in recent years.

• Committed expenditure on revenue account mainly consisted of interest payments, expenditure on salaries, pensions and subsidies.
• If the Committed Expenditure is higher, it means that the government has lesser flexibility to determine the purpose for which revenue expenditure is to be incurred.

What does the report say:

• Expenditure on the ‘salary and wages’ of the Centre and three states – including Gujarat, Karnataka and West Bengal – during 2019-20.
• The Centre’s total Committed Expenditure accounted for 37 per cent of its total revenue expenditure of Rs 26.15 lakh crore in 2019-20
  • 67 per cent on Interest Payment and Servicing of Debt
  • 19 per cent on expenditure on Pensions and Salary
  • 14 per cent Wages
• Centre’s pension bill was 132 per cent of its expenditure on salary and wages in 2019-20

Conclusion:

The recent political move of going back to the old pension scheme by some of the state governments such as Jharkhand, and Himachal Pradesh may aggravate the fiscal imbalance of the states.

Insta Links

• Utilize fiscal room to ramp up capital spending
• Five states need to take steps to stabilise debt levels: RBI
• Centre-State Relation

Prelims Links

Mains Links

Q. Increasing fiscal deficit of states is a cause of worry and there is a considerable need to focus on state government finances. Analyze. (250 words)

GS Paper3/GS Paper 2

Syllabus: Indian Economy/ Internal Relations

Source: Indian Express, The Hindu

Context: Western countries, G7 and European Union have agreed to cap the price of Russia’s oil exports (to $60 per barrel) in an attempt to limit the fossil fuel earnings that support Russia’s budget, its military and the invasion of Ukraine.

What is the price cap?

A price-cap regulation is a form of economic regulation that establishes an upper limit on the prices that a utility provider can charge.

Impact of the price cap:

• Increase volatility in the Oil market: The price cap could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy
• Hurt Russia’s Finance: The price cap is meant to hurt Russia’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.
• Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap.

Impact on India:

• Buyers in India might not go along with the cap
• Russia or China or India could try to set up their own insurance providers to replace those barred by U.S., U.K. and Europe.

Counter-measures by Russia:

Experts say a $60 cap will not have much impact on Russia’s finances. Russia (the world’s No. 2 oil producer) has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western countries shunned it even before the EU ban.

• Russia has said it will not observe a cap and will halt deliveries to countries that do.
• Fear of Black Marketing: Russia also could sell oil off the books by using “dark fleet” tankers with obscure ownership

Conclusion:

Experts view that the $60 cap is way too high. A $30 cap would “give Russia the financial crisis”. But “$60 is better than not agreeing at all”

Insta Links:

Prelims link:

1. What is a Price cap?
2. Balance of Payments
3. Balance of trade
4. About Petrodollar System

Mains Link:

Q. Policymakers have little control over the dollar and crude oil. It is impossible to take a call on how these prices will move. Explain.

 GS Paper 3

Syllabus: Indian Economy and related issues

Source: IE 

Direction: The article discusses UPI and the latest NPCI rules, which affect both major and small payment apps.

Context: The National Payments Corporation of India (NPCI) has extended the deadline for platforms using UPI to meet its 30% market share cap by two years.

Background: The NPCI’s market cap rules limit any single payments app from processing more than 30% of UPI transactions in a month.

About Unified Payments Interface (UPI):

• • UPI is a technology that consolidates various bank accounts into a single mobile app (of any participating bank) –
    • Providing an instant real-time payment system,
    • Allowing users to transfer money across multiple bank accounts without revealing details of one’s bank account to the other party.
  • It was launched by the NPCI in 2016 in conjunction with the Reserve Bank of India (RBI) and the Indian Banks Association (IBA).

Features and benefits of UPI:

Performance of UPI:

• • The UPI transaction value for the month of October (2022) touched a new high at Rs 12.11 lakh crore, with the transaction count touching 7.3 billion.
  • According to the RBI’s Payment Vision 2025, UPI is expected to register an average annualised growth of 50%.

Why this extension? Taking into account the current usage and future potential of UPI, other existing and new participants (banks and non-banks) have adequate time to upscale their consumer outreach for the growth of UPI and achieve overall market equilibrium.

Impact of this move:

• • The 30% limit will deny UPI payment services to millions of Indians, undermining the spectacular development narrative of Indian digital payments.
  • It recognizes that existing and new UPI firms must commit more time, effort, and money to expand their own UPI market share.

Who will benefit and who will suffer from the extension?

• Beneficiaries: PhonePe and Google Pay, which currently command a majority (80%) of the UPI market share.
• Sufferers: Paytm (market – 15%), WhatsApp Pay and other market players.

Insta Links:

UPI

Mains Links:

Q. What is the Unified Payments Interface (UPI)? What are its advantages over other cashless transaction methods? Why is UPI significant to the Indian economy?

Prelims Links:

GS Paper 3

Syllabus: Indian Economy and related issues

Source: IE

 Direction: The article discusses the current digital lending ecosystem, the need to regulate it, RBI guidelines and confusion regarding it.

 Context: Two months after the RBI issued guidelines on digital lending, Banks, non-banking financial companies (NBFCs) and fintech players are still awaiting clarity on many aspects, including the FLDG system.

First Loss Default Guarantee (FLDG): It is a lending model between a fintech and a regulated entity in which a third party guarantees to compensate up to a certain percentage of default in a loan portfolio of the regulated entities (REs – banks or NBFCs).

 Digital lending:

• It involves giving and recovering loans through web platforms or mobile apps by digital lenders.
• Lending Service Providers (LSPs) are engaged by the REs to carry out some functions of RE in connection with lenders’ functions on digital platforms.
  • These LSPs may be engaged in customer acquisition, underwriting support, recovery of loans, etc.
• According to the RBI, as many as 600 out of 1100 lending apps currently available are illegal apps and stringent norms for digital lenders, including separate legislation to prevent illegal digital lending activities, are the need of the hour. 

The guidelines on digital lending:

• The RE will have to –
  • Disclose upfront the rate charged to the borrower of a digital loan,
  • Ensure that borrowers are aware of the products and
  • Capture the economic profile of the borrowers before offering the loans.
• On FLDG, RBI advised the RE to follow directions on securitisation, especially, synthetic securitisation.
  • In synthetic securitisation, a bank buys credit protection on a portfolio of loans from an investor.
  • This means that if a loan in the portfolio defaults, the investor reimburses the bank for losses on loans in the portfolio up to a certain amount, which is the amount invested.
• The RBI asked regulated entities like banks to ensure that LSP and Digital Lending App (DLA) comply with the guidelines.

 Significance of the guidelines: They aimed at protecting customers from unethical business practices, such as mis-selling, breach of data privacy, unfair business conduct and charging of exorbitant interest rates.

Why is there so much confusion?

• Guidelines are very stringent as far as the data storage, confidentiality, role and responsibility of digital partners are concerned.
• For example, REs should ensure that LSPs or DLAs engaged by them do not store the personal information of borrowers except for some basic minimal data.

Insta Links:

RBI: Digital Lending Rules

GS Paper 3

Syllabus: Environment Conservation

Source: DTE

 Direction: The article highlights some of the effective ways to limit plastic pollution and India’s efforts in this direction.

Context: The first session of the Intergovernmental Negotiating Committee (INC-1) concluded in Uruguay.

Background:

• The INC-1 was convened and managed by the United Nations Environment Programme (UNEP).
• The INC-1 came after a landmark resolution was endorsed at the United Nations Environment Assembly (UNEA), calling for the international legally binding instrument to promote sustainable production and consumption of plastics.
• According to the OECD, global plastic production was 460 million tonnes (Mt) in 2019 (234 Mt in 2000) and during the same period, plastic waste doubled to 353 Mt from 156 Mt.

Extracts from the outcome document titled “Summary of plastic pollution science”:

• Recognised the links between plastic, human health and environmental health.
• Endorsed the Centre for Science and Environment (CSE)’s position that plastic pollution is rooted in the material’s life cycle – an offshoot of the linear take-make-dispose economy.
• Current trends need to be replaced by a circular economy (CE) – a model of production and consumption, which involves reusing, repairing, refurbishing and recycling existing materials and products for as long as possible.

4 strategic goals that can guide the transition to a circular economy:

• Reduce the size of the problem by eliminating and substituting plastic items.
• Ensure that plastic products are designed to be circular.
• Close the loop of plastics in the economy.
• Manage plastics that cannot be reused or recycled in an environmentally responsible manner.

Plastic Waste in India:

• The majority of plastic used in India today is for packaging and its production (the majority of which is single-use that may or may not be recyclable) is increasing each year.
• According to the Union Minister of Environment, over 34 lakh tonnes of plastic waste were generated in India in 2019-20, which has doubled in the last 5 years.
• As a result, the government has notified the Plastic Waste Management Rules, 2016, which for the first time provided for Extended Producer Responsibility (EPR).
  • Under this, producers, importers and brand owners have been made responsible for collecting waste generated by their products.
• What more needs to be done to tackle plastic pollution in the country?
  • Strengthening India’s plastic waste production, consumption and recycling inventory;
  • Making brands disclose the number of plastics produced, collected, recycled and burnt each year;
  • Integrating the informal sector into the formal value chain for plastic management;
  • Designing product packaging with the ‘end-of-life’ stage in mind.

Insta Links:

 Beating plastic pollution

Effects of plastics on the environment

Mains Links:

Q. We need to slow the flow of plastic at its source, but we also need to improve the way we manage our plastic waste. Examine.