Week - 3 (May, 2019) Week - 3 (May, 2019)

WEEK - 3 (MAY, 2019) WEEK - 3 (MAY, 2019) Disclaimer The current affairs articles are segregated from prelims and mains perspective, such separation is maintained in terms of structure of articles. Mains articles have more focus on analysis and prelims articles have more focus on facts. However, this doesn’t mean that Mains articles don’t cover facts and PT articles can’t have analysis. You are suggested to read all of them for all stages of examination. WEEK - 3 (MAY, 2019) CURRENT AFFAIRS ANALYST WEEK-3 (MAY, 2019) CONTENTS Section - A: Mains Current Affairs Area of GS Topics in News Page No. Fiscal Slippage caused by Government Schemes 6 Economy US-China Trade War 9 NSSO Data and MCA21 11 International Generalized System of Preference (GSP) 13 Relations Venezuela Crisis and India 15 Sexual Harassment of Women at Workplace Social Issues 17 (Prevention, Prohibition and Redressal) Act, 2013 Section - B: Prelims Current Affairs Area of GS Topics in News Page No. Index of Industrial Production (IIP) 21 Economy World Customs Organisation (WCO) 22 Environment Coastal Regulation Zone (CRZ) 23 ABHYAS Drone 24 Defence INS Vela 25 Remembering Maharana Pratap, Tagore and 26 Gokhale History Tiwa Tribe and Wanchuwa Festival 27 Ganga Jatara Festival 28 Supreme Court frowns on Foreigners’ Tribunals Polity & Governance 29 Plan Social Issues UK to Fund Anti-slavery Projects 30 Artemis- NASA’s next Moon Mission 30 Science & Tech. Chandrayaan-2 will Carry 14 Indian Payloads 31 WHO for Eliminating Industrially Produced Trans- 32 Miscellaneous fat by 2023 World Red Cross Day, 2019 33 ********** www.iasscore.in 3 WEEK - 3 (MAY, 2019) SECTION: A (MAINS) CURRENT AFFAIRS www.iasscore.in 5 WEEK - 3 (MAY, 2019) FISCAL SLIPPAGE CAUSED BY GOVERNMENT SCHEMES CONTEXT 15th Finance Commission headed by Chairman N.K. Singh held a detailed meeting with Reserve Bank of India (RBI) Governor Shaktikanta Das and deputy governors. The RBI has voiced its concern over government schemes such as income support schemes, Uday scheme (revival package for power distribution companies) and farm loan waivers as such schemes lead to fi scal slippages. The central bank noted that outstanding debt as percentage of GDP had been rising despite moderation in interest payment as percentage of revenue receipts. ABOUT: and pay back lenders by selling bonds. DISCOMs are expected to issue bonds for the remaining 25 Income support schemes: percent of their debt. In the Interim Budget presented in February, the The other objectives of the scheme are: government announced a cash transfer scheme ! Operational improvement (PM-KISAN), for small and marginal farmers with ! Reduction of cost of generation of power landholdings of up to two hectare, of ₹6,000. The ! government had allocated ₹75,000 crore towards Development of Renewable Energy the scheme for fi nancial year 2020. ! Energy effi ciency & conservation Odisha’s Krushak Assistance for Livelihood and Under UDAY, discoms can convert their debt into Income (KALIA), inclusive of landless households, state government bonds, but are required to fulfi l proposes to transfer ₹5000 to every family in every certain conditions - reduce the average aggregate cropping seasons for fi ve seasons. technical and commercial (AT&C) losses to 15%, Telangana’s Rythu Bandhu scheme grants ₹4000 maintain commercial sustainability, and bring per acre per farmer each season to purchase down the gap between average cost of supply agricultural inputs. (ACS) and average revenue realized (ARR) to zero. Jharkhand Mukhya Mantri Krishi Yojna proposes to It is a Centrally Sponsored Scheme. grant ₹5000 per acre per farmer for Kharif crops. The Bhavantar Bhugtan Yojana by the state ANALYSIS: government of Madhya Pradesh transfers the price differential between the crop’s minimum support price Rationale of introducing such schemes: and the selling price, to the benefi ciaries account. The success of already existing income support Congress party in its manifesto for the 2019 Lok schemes of some states like Telangana’s Rythu Sabha elections promises of NYAY (Nyuntam Bandhu, Odisha’s KALIA has inspired the central Aay Yojana). Conceived as a minimum income government to take this scheme at national level. guarantee, the NYAY promises unconditional transfer of ₹72,000 annually to 20 per cent of the The government may be advocating these schemes poorest families for reduction of poverty in the in the face of rural distress and agitations. country. These populist economic measures announced ahead of the general elections shows that the Uday scheme: government is giving unemployment benefi t as bribe to the marginalised sections, including the Ujjwal Discom Assurance Yojana (UDAY) is farmers and the poor to garner more votes. the fi nancial turnaround and revival package for electricity distribution companies of India Impact on Indian economy and society: (DISCOMs) initiated by the Ministry of Power with the intent to fi nd a permanent solution to the poor Positive: fi nancial health and operational effi ciency of India’s ! The income transfer will reduce the inequality debt-ridden power distribution companies. between the rich and the poor. To fund the It allows state governments, which own the support scheme government will increase the DISCOMs, to take over 75 percent of their debt tax percentage, taking out a good amount of 6 www.iasscore.in WEEK - 3 (MAY, 2019) money from the riches and will distribute it to ! On an average, a transfer of $1 resulted in the poor and needy. additional income of $2 — $1 directly and $1 ! With additional amount of money made indirectly, depending on quantum of land that available to the needy, they will spend it on the farmer had. While the smallest farmers meeting their family’s food requirement generated an equal amount in income effect, now with more nutritious and diversifi ed small and medium farmers were able to variety. They will have adequate resources to multiply income faster as they did not have to meet their health expenditure demands. They consume the transfer immediately on account will provide their children with good quality of having existing assets. education. ! In Programa de Apoyo, yet another food aid ! It enables households to afford goods and program, recipients received either cash or food services that are available in the market. It gives equal to about 10 percent of the household people purchasing power to access services in income. the market. ! Food-producing households benefi ted under ! Overall we can say that the standard of living cash transfers by selling their crops at higher of the lower strata of our society will improve. prices and were worse off under in-kind They will be able to maintain a minimum transfers as they were selling their crops at quality of life. lower prices. Negative: Brazil: ! ! Given that the transfer is linked to size of the Bolsa Familia, a direct transfer program has farm holding, it may result in sharpening rural been one of the biggest and used up 0.5 inequality and exclusion of landless farmers percent of Brazil’s GDP annually. from such a subsidy. ! Household consumption increases as the direct ! With food being the largest part of consumption income transfer allows for higher consumption spending across low income segments, an across goods and services. impact on the food economy is appreciable. ! However, this increase in consumption is offset One way this could play out is that demand for by a decrease in investment if higher taxes are basic food items like milk, meat and eggs, as levied to collect the amount transferred. well as fruits and vegetables will rise. This in ! The higher household consumption will cause turn will cause the infl ation to increase. higher imports and lower exports, deteriorating trade balance further. RBI opinion about these measures: It has termed these schemes as “poor fi scal WAY FORWARD: marksmanship”. It says that the outstanding debt as percentage of Cash versus non-cash transfers: GDP has been rising despite moderation in interest ! For goods and services that can be effi ciently payment as percentage of revenue receipts. provided through markets, cash transfers are It has raised concerns that these unemployment always better than transfers in kind. benefi ts to the marginalised sections will stretch ! However, markets are not always effi cient the fi scal position of states. The states’ fi scal for example, in health or education. Such position was stretched due to the UDAY bonds for sectors require non-cash transfers in terms of the power sector. discounted fees. It has fl agged these concerns for a long time Providing the people of country with income fearing the impact of these schemes on infl ation support will only provide them a minimum quality rates. With more available money in the economy of life. A better option is to train and skill them there will be increase in infl ation. with which they will be able to earn much higher and thus will have a good standard of living. Impact of income support scheme on other world economies: So, once the person is skilled, s/he would stand a better chance of earning market-linked wages and Mexico: breaking out of poverty. ! Procampo, one of the cash transfer programs People cannot be kept out of poverty by giving introduced by the Mexican government in 1994 cash. Poverty reduction needs sustainable to negate the impact of the North American livelihoods. And so the problem that public policy Free Trade Agreement (NAFTA) used cultivated needs to and should resolve is: How to supply the crop area as the basis of the cash transfer. appropriate skills imparting infrastructure. www.iasscore.in 7 WEEK - 3 (MAY, 2019) Some people opine that why can’t the poor just sector becomes as rich as Anand Mahindra or work hard; why the government should give Kiran Mazumdar Shaw.

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