Daily Prelims Notes 1 July 2023

July 1, 2023
Posted by: OptimizeIAS Team
Category: DPN

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Daily Prelims Notes

1 July 2023

Table Of Contents

1. How a lithium deal between two companies in France & UK is an opportunity for India’s EV sector

Subject : Geography

Section: Economic geography

Context:

A deal between a French minerals company and a British startup aims to produce enough lithium to run half a million EVs a year, according to media reports.

Details:

Imerys, a Paris-based industrial supplier, acquired 80 per cent of British Lithium, a small private company based in the United Kingdom that’s extracting lithium from Cornwall in southwest England.
Jointly, they will develop a mine that they estimate will ultimately provide enough lithium to produce 20,000 tonnes of lithium carbonate a year.
India, France and the U.K. being part of the Mineral Security Partnership, can establish a trilateral strategic partnership to establish a secure and reliable lithium supply chain.
India’s efforts for the EV sector:
- India has been pushing for indigenous manufacturing of EV batteries to foster an electric mobility ecosystem and achieve 30 per cent electrification of its national fleet by the year 2030.
- India joined the Mineral Security Partnership recently, to secure the supply chain of critical minerals.
- Recently ministry of Mines has released a list of 30 critical minerals.
- The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose from 57.2 in April to 58.7 in May 2023, indicating growth in the country’s manufacturing sector.

Lithium:

Lithium (Li), sometimes also referred to as ‘White gold’ due to its high demand for rechargeable batteries, is a soft and silvery-white metal.
Extraction:
Lithium can be extracted in different ways, depending on the type of the deposit — generally either through solar evaporation of large brine pools, or from hard-rock extraction of the ore.

Uses:

Lithium is an important component of electrochemical cells used in batteries of EVs, Laptops, Mobiles etc.
It is also used in thermonuclear reactions.
It is used to make alloys with aluminium and magnesium, improving their strength and making them lighter.
Magnesium-lithium alloy – for armour plating.
Aluminium-lithium alloys – in aircraft, bicycle frames and high-speed trains.

Major Global Lithium Reserves:

Lithium Triangle: Chile, Argentina, Bolivia.

Lithium Reserves in India:

A preliminary survey showed estimated lithium reserves of 14,100 tonnes in a small patch of land surveyed in Southern Karnataka’s Mandya district.
Other potential sites:
- Mica belts in Rajasthan, Bihar, Andhra Pradesh.
- Pegmatite belts in Odisha and Chhattisgarh.
- Rann of Kutch in Gujrat.

2. Brazil GEF meet: Agreement on new biodiversity conservation fund; to be ratified in August

Subject : Environment

Section: International convention

Context:

The 64th Global Environment Facility’s (GEF) governing board has approved plans to establish a new fund to finance the implementation of the Kunming-Montreal Global Biodiversity Framework adopted in December 2022.

Details:

Council members agreed on the establishment of a new trust fund, called the Global Biodiversity Framework Fund and the programming directions for it.
Nearly 50 per cent of its funds are to be used for biodiversity-related work.
GEF will provide $1.4 billion to support efforts on environmental protection.
The members also agreed to support the new agreement under the United Nations Convention on the Law of the Sea on the conservation and sustainable use of marine biological diversity in areas beyond national jurisdiction.

The proposed fund allocations are as follows:

20 per cent will go to Indigenous Peoples and local communities (IPLC). This is an aspirational goal.
25 per cent will go to GEF agencies and must be enforced.
Allocation of funds to IPLCs would be reviewed two years after ratification in August. Small Island Developing States (SIDS) and Least Developed Countries (LDC) will get 36 per cent and 3 per cent, respectively. This would be reviewed three years after ratification.

What is Kunming-Montreal Global Biodiversity Framework (GBF)?

The 15th Conference of Parties (COP15) to the UN Convention on Biological Diversity (CBD) adopted the Kunming-Montreal Global Biodiversity Framework (GBF) on December 2022.
The framework has 23 targets that the world needs to achieve by 2030.
The countries will monitor and report every five years or less on a large set of indicators related to progress.

What is the BBNJ treaty?

The BBNJ Treaty also called the Treaty of the High Seas, is an international agreement that aims to preserve and sustainably use the marine biodiversity of areas beyond national jurisdiction.
This includes the high seas, which are outside of countries’ exclusive economic zones and make up nearly half of the Earth’s surface.
These areas are currently poorly regulated and only 1% of them are protected.
The High Ambition Coalition on BBNJ was launched in February 2022 to negotiate and achieve a comprehensive and ambitious outcome.

3. Transponders to be installed in sea vessels across India’s coastal areas to protect marine life

Subject : Environment

Section: Places in news

Context:

The central government has approved “a project for the national rollout of vessel communication and support systems including transponders on approximately 100,000 fishing vessels in all coastal states and Union territories of India.

Details:

Transponders are wireless tracking devices that use radio frequencies to operate.
The project has been approved at the request of the Odisha government and in consultation with coastal states and UTs.
The devices will help the vessels avoid sea creatures that suffer injuries coming in contact with boats and fishing trawlers.
Many of them are caught in the fishing nets cast by the trawlers and die.
Identified sites are:
- Gahiramatha in Kendrapara district, Rushikulya river mouth in Ganjam district and Devi river mouth near Astaranga in Puri district in Odisha have been identified as the major mass nesting sites of the Olive Ridley turtles.
Project implementation:
- The project will be implemented under the Pradhan Mantri Matsya Sampad Yojana scheme with 100 per cent government funding on a 60:40 cost-sharing basis between the Centre and state.
Implementing agency:
- The central government has entrusted New Space India Ltd, a central public sector undertaking under the Department of Space, as the implementing agency for the project.

What are the other important initiatives taken to improve India’s coastal security?

An Automatic Identification System (AIS) was made compulsory for all vessels above 20 metres after the 2008 terrorist attacks in Mumbai.
Online ReALCraft (Registration and Licensing of Fishing Craft): Through this, verification and monitoring of a large number of Indian fishing vessels is carried out. This information is available to the Indian Navy and Coast Guard.
Biometric identity cards: These biometric identity cards have been issued to the majority of fishermen. The maritime security agencies through the composite card readers enable biometric verification of the identity of fishing vessel crews at sea.
Indo-Pacific Maritime Domain Awareness (IPMDA) initiative: It was announced by the Quad grouping at the Tokyo summit in 2022. It is a part of overall efforts for Maritime Domain Awareness (MDA) on the high seas.
The initiative will track “dark shipping” and build a “faster, wider, and more accurate maritime picture of near-real-time activities in partners’ waters.” Further, the initiative will also integrate three critical regions in the Indo-Pacific – the Pacific Islands, Southeast Asia, and Indian Ocean Region (IOR).

Pradhan Mantri Matsya Sampada Yojana (PMMSY)

It is a flagship scheme for focused and sustainable development of the fisheries sector in the country with an estimated investment of 20,050 crore for its implementation during 2020-21 to 2024-25 as part of Aatmanirbhar Bharat package.
Ministry: Ministry of Fisheries, Animal Husbandry and Dairying.

Aim:

To bring about a blue revolution through sustainable and responsible development of the fisheries sector in India.
To double the incomes of fishers and fish farmers, reducing post-harvest losses from 20-25% to about 10% and the generation of gainful employment opportunities in the sector.

Implementation:

It is implemented as an umbrella scheme with two separate components namely
Central Sector Scheme:
- The project cost will be borne by the Central government. The entire project/unit cost will be funded by the Government of India (GoI) (i.e., 100% GoI Funding).
Centrally Sponsored Scheme:
- All the sub-components/activities will be implemented by the States/UTs and the cost will be shared between Centre and State.
- North Eastern & Himalayan States: 90% Central share and 10% State share.
- Other States: 60% Central share and 40% State share.
A well-structured implementation framework would be established for the effective planning and implementation of PMMSY.
For optimal outcomes, ‘Cluster or area-based approach’ would be followed with requisite forward and backward linkages and end-to-end solutions.
Approach:
- ‘Cluster or Area based approaches and many new interventions such as fishing vessel insurance, Aquaculture in saline/alkaline areas, Sagar Mitras, FFPOs, Nucleus Breeding Centres, etc.

Achievements:

From 2019–20 to 2021–2022, the Fisheries sector had an incredible growth of 14.3%.
Fish production has increased from 141.64 lakh tonnes in 2019-20 to 161.87 lakh tonnes (provisional) in 2021-22.
The sector achieved all-time high exports of 13.64 lakh tonnes, reaching Rs 57,587 crores (USD 7.76 billion), topped by shrimp exports.

4. Dr. A.P.J. Abdul Kalam Knowledge Centre and Space Museum to be ready in 18 months

Subject : Science and Technology

Section: Space technology

Context:

The Dr. A.P.J. Abdul Kalam Knowledge Centre and Space Museum is expected to be ready in 18 months at Kowdiar in the State capital (Kerala).

Details:

The Centre is jointly promoted by the State government and the Vikram Sarabhai Space Centre (VSSC).
The project, planned on 1.3 acres close to the Kowdiar Palace, was originally conceived in 2016, but was delayed on account of the heritage committee objecting to the initial design.
Contributions of Dr. A.P.J. Abdul Kalam:
- Pioneer in Fiberglass Technology:
  - He was a pioneer in fibreglass technology and led a young team to initiate this effort in ISRO from design, and development leading to the production of composite rocket motor cases.
- Satellite Launch Vehicle (SLV-3):
  - He made a significant contribution as Project Director to develop India’s first indigenous Satellite Launch Vehicle (SLV-3) which successfully injected the Rohini satellite into Near-Earth Orbit in July 1980 and made India an exclusive member of the Space Club.
  - He was responsible for the evolution of ISRO’s launch vehicle programme, particularly the PSLV configuration.
- Indigenous Guided Missiles:
  - After working for two decades in ISRO and mastering launch vehicle technologies, he took up the responsibility of developing Indigenous Guided Missiles at the DRDO.
    - He was the Chief Executive of Integrated Guided Missile Development Programme (IGMDP).
  - He led to the weaponization of strategic missile systems and the Pokhran-II nuclear tests in collaboration with the Department of Atomic Energy, which made India a nuclear weapon State.
- Technology Vision 2020:
  - In 1998, he put forward a countrywide plan called Technology Vision 2020, which he described as a road map for transforming India from a less-developed to a developed society in 20 years.
    - The plan called for, among other measures, increasing agricultural productivity, emphasising technology as a vehicle for economic growth, and widening access to health care and education.
- Medical and Healthcare:
  - APJ Abdul Kalam in collaboration with cardiologist B. Soma Raju designed a cost-effective coronary stent known as ‘Kalam-Raju-Stent’ for coronary heart disease which made healthcare accessible to all.
  - The device led to a reduction of prices of imported coronary stents in India by more than 50%.
- Light Combat Aircraft project:
  - He was deeply involved in the country’s Light Combat Aircraft project.
  - He had been associated with avionics. He also became the first Indian Head of State to fly a fighter plane. His first aeronautical project led him to design India’s first indigenous hovercraft ‘Nandi”.
    - A hovercraft is a vehicle that can travel over land, water, mud and ice by lifting itself off the ground with large blowers that create an air cushion beneath the craft.
- Others:
  - He was passionate about bringing rural prosperity through PURA (Providing Urban Amenities to Rural Areas), in which science and technology have to play a key role.
  - Based on his diverse experience he propagated the concept of a World Knowledge Platform through which the core competencies of organizations and nations can be synergized to innovate and create solutions and products for the challenges of the 21st century.

5. India urges adherence to 2016 ruling favouring the Philippines in the South China Sea

Subject : Geography

Section: Places in news

Context:

India called for adherence to the 2016 arbitration decision in favour of the Philippines, which has been rejected by China.

Details:

The negotiations are continuing between China and the ASEAN bloc for a code of conduct in the South China Sea — which diplomatic sources described as a “complex exercise” involving 11 countries.

Conflict over South China Sea:

The Philippines instituted an arbitration proceeding against China in the Permanent Court of Arbitration under UNCLOS on January 22, 2013.
The court ruled in favour of Manila on July 12, 2016, but this was rejected by China, which had called it “null and void.”
- China does not recognise the ruling and did not participate in the deliberations at The Hague.
China, which claims rights to most of the resource-rich South China Sea up to the nine-dash line, has become more assertive in recent years.

South China Sea:

Location: South China Sea is an arm of the western Pacific Ocean in Southeast Asia. It is south of China, east & south of Vietnam, west of the Philippines and north of the island of Borneo.
- It is connected by Taiwan Strait with the East China Sea and by Luzon Strait with the Philippine Sea.
Bordering states & territories (clockwise from north): the People’s Republic of China, the Republic of China (Taiwan), the Philippines, Malaysia, Brunei, Indonesia, Singapore and Vietnam.
Strategic Importance: This sea holds tremendous strategic importance for its location as it is the connecting link between the Indian Ocean and the Pacific Ocean (Strait of Malacca).
- According to the United Nations Conference on Trade And Development (UNCTAD) one-third of the global shipping passes through it, carrying trillions of trade which makes it a significant geopolitical water body.

Reasons For Dispute in the South China Sea:

Contesting Claims Over Islands:
- The Paracel Islands are claimed by China, Taiwan and Vietnam.
- The Spratly Islands are claimed by China, Taiwan, Vietnam, Brunei and the Philippines.
- The Scarborough Shoal is claimed by the Philippines, China and Taiwan.
China’s Assertion:
- Since 2010, China has been converting uninhabited islets into artificial islets to bring them under UNCLOS (examples would include Haven Reef, Johnson South Reef and Fiery Cross Reef).
- China has been changing the size and structure of the reefs by modifying their physical land features. It has also established airstrips on Parcel and Spratly.
- Chinese fishing fleets are engaged in paramilitary work on behalf of the state rather than the commercial enterprise of fishing.
- The US is very critical of this building of artificial islands and terms these actions of China as building a ‘great wall of sand’.
Other Issues:
- The undefined geographic scope of the South China Sea.
- Disagreement over dispute settlement mechanisms.
- The undefined legal status of the Code of Conduct (COC) adds to it.
- The different histories of distant, largely uninhabited archipelagos of the sea make the matter more complicated and multifaceted.

6. Dark matter: An invisible glue that may not even exist

Subject : Science and Technology

Section: Space technology

Context:

The new Euclid space telescope, set for launch on July 1, will play a key role is the search for Dark matter. Our largest space-based telescope, the James Webb Space Telescope is also on the case.
JWST has released an image of the universe, in which there is an image of Stephan’s Quintet, a group of five galaxies, as they have never been seen before.

About Dark Matter:

Scientists cannot define dark matter with any certainty and it has never been detected, only speculated. But scientists estimate that up to 85% of the matter in the universe could be made of what’s called dark matter.

An accidental discovery of Dark Matter:

In the 19th century, Lord Kelvin, a Scottish-Irish physicist, wanted to estimate the mass of our galaxy, the Milkyway, using data on how fast stars moved around the galaxy’s core.
But Kelvin found discrepancies or anomalies in the data, things which could not be explained and were attributed to “dark bodies” that we cannot see.
The galaxy seems to be rotating much faster than it should, based on estimates.
The theory is that there is an “invisible matter” responsible for the speed at which our galaxy rotates. And that may be true of other galaxies as well.
Stars have been observed to travel at higher-than-estimated speeds, especially at the edges of galaxies.
Astronomers have speculated that stars should have ripped and flown off at the speed with which they are travelling, but they do not.
The only explanation is that there must be some invisible matter (or dark matter) holding the stone in range.

We can’t see dark matter but we may see its effects

The reason we are unable to see or detect this invisible matter is that it does not interact with electromagnetic forces — things like visible light, X-ray or radio waves.
We can, however, observe some of the effects of dark matter through its gravitational force.
But we still want to detect dark matter in its own right. CERN’s Large Hadron Collider can help in detecting dark matter.
A decade ago, experiments at the LHC proved the Standard Model of particle physics by detecting the Higgs boson particle — a particle which itself had long proved to be elusive.
- The Standard Model is the idea that everything in the universe is made of a few fundamental particles and that those are governed by four fundamental forces — the strong nuclear force, the weak nuclear force, the electromagnetic force, and the gravitational force.
The dark matter can’t interact with light or electromagnetism. It can’t interact with the strong force, and it may interact through the weak force that causes radioactivity.

Measuring dark matter by what’s missing:

The Large Hadron Collider smashes particles together to create collisions. The collisions produce debris that gets caught by particle detectors.
We smash the fundamental particles up and they split and spray against the LHC detectors, and if we piece them back together, we should be able to account for all the bits that made those original particles. And if we found something missing (especially mass or energy), that could be an indication of the presence of dark matter.
The Higgs boson interacts with all the other elements that have mass. And so the dark matter must [also] have mass in order to fulfil the effect that we see in the galaxies.

New theories about dark matter:

Some scientists suggest we should think outside of the Standard Model.
One of those scientists is the physicist Mordehai Milgrom.
Milgrom has developed an alternative theory of gravity, one that suggests that gravitational force operates differently at different distances from the core of a galaxy.
While Newton’s theory of gravity explains most large-scale movements in the cosmos, Milgrom’s Modified Newtonian Dynamics suggests that a force acts differently when it is weak, such as at the edge of a galaxy.
Advocates of the theory say it predicts the rotation of galaxies and the speed of the stars better than Newton’s theory.

7. After stock limits, India to import 12 lakh tonnes of tur dal to keep prices in check

Subject: Schemes

Concept :

In order to address the shortage of tur dal and curb its rising prices, the government plans to increase import of the pulse by 35 per cent to 12 lakh tonnes in the current fiscal year, reported news agency PTI.
As per the report, Tur dal (pigeon peas) production has witnessed a decline, with the country producing 30 lakh tonnes in the 2022-23 crop year (July-June), compared to 39 lakh tonnes in the previous year.
Consumers Affairs Secretary also said to check the prices of tur the government has taken several measures, as per the report.
The stock limit imposed on traders, millers, and importers on June 2 has helped bring down the prices of tur.

Tur Dal

Tur dal and Arhar dal both are the same and are commonly known as pigeon peas. The size of Tur dal is small and oval in shape, mostly in a yellow colour.
Tur dal is a dicotyledonous seed that belongs to the legume family. However, Arhar dal comes in a variety of colours such as brown, yellow and variegated.
Arhar dal has been believed to have originated from the geography of India where they are identified as red grams and presently grown in massive amounts throughout subtropics and the tropics of Asia.

Essential Commodities Act 1955

The ECA Act 1955 was legislated at a time when the country was facing a scarcity of foodstuffs due to persistent low levels of foodgrains production.
The country was dependent on imports and assistance (such as wheat import from the US under PL-480) to feed the population.
To prevent hoarding and black marketing of foodstuffs, the Essential Commodities Act was enacted in 1955.
Essential Commodity:
There is no specific definition of essential commodities in the Essential Commodities Act, 1955.
Section 2(A) of the Act states that an “essential commodity” means a commodity specified in the Schedule of the Act.
Legal Jurisdiction:
The Act gives powers to the central government to add or remove a commodity in the Schedule.
The Centre, if it is satisfied that it is necessary to do so in the public interest, can notify an item as essential, in consultation with state governments.
Objective:
The ECA 1955 is used to curb inflation by allowing the Centre to enable control by state governments of trade in a wide variety of commodities.
Impact:
By declaring a commodity as essential, the government can control the production, supply, and distribution of that commodity, and impose a stock limit.

8. Centre invites ideas from public to curb tomato prices

Subject : Schemes

Concept :

The Indian government has launched a ‘Tomato Grand Challenge Hackathon‘ in New Delhi, urging the public to propose creative solutions to combat the escalating tomato prices in recent weeks.

About Tomato Grand Challenge Hackathon

The newly launched contest welcomes participation from various sectors including students, research scholars, teachers, industries, start-ups, and professionals.
Rohit Kumar Singh, emphasized that participants can contribute ideas related to the tomato value chain.
The objective is to ensure affordable prices for consumers while enabling farmers to receive fair value for their produce.
The hackathon has been organized by the Department of Consumer Affairs in collaboration with the Innovation Cell of the Ministry of Education.

Reasons for price rise

The cycle of planting and harvesting seasons and the variation across regions are primarily responsible for price seasonality in tomatoes.
Apart from the normal price seasonality, temporary supply chain disruptions and crop damage due to adverse weather conditions etc. often led to the sudden spike in prices.

9. Dark Patterns

Subject : Science and technology

Section: MSc

Concept:

Centre to issue norms against „dark patterns‟ in online advertisements

About Dark Patterns:

Dark patterns are elements of digital user interface (UI) which are designed to take advantage of inherent psychological biases and lead users towards making certain choices.
In user-centred UI design, the goal of the designer is to maximise usability and enhance a user’s experience of a digital product or service.
It influence users to make choices which maximise the interests of the online service provider (often without the user‟s awareness).
Such patterns are unethical user interface designs that deliberately make your Internet experience harder or even exploit you.
In turn, they benefit the company or platform employing the designs.
By using dark patterns, digital platforms take away a user’s right to full information about the services they are using, and reduce their control over their browsing experience.

Techniques of Dark Patterns:

Misdirection techniques
Misdirection techniques involve visuals or language being used to direct users away from a choice.
For example, an online service provider may make an option that is favourable to the provider more prominent by using a large, colourful button, and the option which is less favourable to the provider less prominent, by using small, grey font placed to the side.

Confirmshaming techniques

Confirmshaming techniques involve users being presented with negatively framed decline options that are used to guide users toward making certain choices which benefit the online service provider.

10. Iran to join Shanghai alliance with China, Russia next week: Lavrov

Subject: International Relations

Section: Groupings

Concept:

Iran is expected to be approved as a member of the Shanghai Cooperation Organization (SCO) in the second week of July 2023.
The SCO is a regional intergovernmental organisation focused on regional security issues, regional terrorism, ethnic separatism and religious extremism.
The SCO has eight member states: China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan, and Uzbekistan. Four observer states—Afghanistan, Belarus, Iran, and Mongolia—are interested in acceding to full membership, and six dialogue partners—Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka, and Turkey—are also involved with the organization.
India and Pakistan joined the SCO in 2017.
Iran has been an observer state of the SCO since 2005, and Belarus has been an observer state since 2015.

SCO –

The SCO is a permanent intergovernmental international organisation. It is a Eurasian political, economic, and security alliance and has been the primary security pillar of the region.
It was established in 2001. It was preceded by the Shanghai Five mechanism.
The Heads of State Council (HSC) is the supreme decision-making body in the SCO. It meets once a year and adopts decisions and guidelines on all important matters of the organisation.
The organisation has two permanent bodies:
- the SCO Secretariat based in Beijing.
- the Executive Committee of the Regional Anti-Terrorist Structure (RATS) based in Tashkent.
Eight member states: India, Kazakhstan, China, Kyrgyzstan, Pakistan, Russia, Tajikistan, and Uzbekistan.
Four observer states: Afghanistan, Belarus, Iran and Mongolia.

11. India’s FY23 external debt rises to $624.7 billion: RBI

Subject : Economy

Section: External Sector

Concept :

The Reserve Bank on Friday said that India’s external debt rose marginally by $5.6 billion to $624.7 billion annually at the end of March 2023, although the debt-GDP ratio declined.
In the same period last year, the external debt stood at $619.1 billion. However, the ratio of external debt to the country’s Gross Domestic Product (GDP) decreased from 20.0 per cent in March 2022 to 18.9 per cent in March 2023.
The RBI also noted that the largest component of India’s external debt was in US dollars, accounting for 54.6 per cent at the end of March 2023, followed by debt denominated in Indian rupees (29.8 per cent), Special Drawing Rights (SDR) (6.1 per cent), yen (5.7 per cent), and the euro (3.2 per cent).
Loans constituted the largest portion of external debt, representing 32.5 per cent of the total, followed by currency and deposits (22.6 per cent), trade credit and advances (19.9 per cent), and debt securities.

Valuation Effect

The RBI also said that valuation gains due to the appreciation of the US dollar compared to the Indian rupee and major currencies such as Yen, SDR, and Euro were placed at $20.6 billion.
Excluding the valuation effect, external debt would have increased by $26.2 billion instead of $5.6 billion at end-March 2023 over end-March 2022.

External Debt in India (Past Year Trends)

External debt is the part of a country’s total debt that was borrowed from foreign lenders, including commercial banks, governments or international financial institutions. Debtors can be individuals, corporations or the government.
External debt to GDP Ratio
External debt as a ratio to GDP fell marginally to 19.9 per cent as at end-March 2022 from 21.2 per cent a year ago. Foreign currency reserves as a ratio to external debt stood slightly lower at 97.8 per cent as at end-March 2022 than 100.6 per cent a year ago.
Long Term Debt
The long-term debt estimated at US$ 499.1 billion, constituted the largest chunk of 80.4 per cent, while the short-term debt, at US$ 121.7 billion, accounted for 19.6 per cent of the total. The short-term trade credit was predominantly in the form of trade credit (96 per cent) financing imports.
Commercial borrowings (CBs), NRIs deposits, short-term trade credit and multilateral loans
Commercial borrowings (CBs), NRIs deposits, short-term trade credit and multilateral loans together accounted for 90 per cent of the total external debt.
While NRI deposits marginally contracted during end-March 2021 and end-March 2022, CBs, short-term trade credit and multilateral loans, on the other hand, expanded during the same period.
The rise in CBs, short-term trade credit and multilateral loans together was significantly larger than the contraction in NRI deposits.
Sovereign External Debt (SED)
As at end-March 2022, sovereign external debt (SED) amounted to US$ 130.7 billion, increasing by 17.1 per cent over the level a year ago, reflecting the additional allocation of SDRs by the IMF during 2021-22. SDRs rose to US$ 22.9 billion from US$ 5.5 billion as at end-March 2021. FPI holding of G-Sec, on the other hand, slid to US$ 19.5 billion from US$ 20.4 billion a year ago.
Sovereign debt is a central government’s debt. It is issued by the national government and can be denominated in both foreign or domestic currency.
Non-sovereign external debt
Non-sovereign external debt, estimated at US$ 490.0 billion as at end-March 2022, posted a growth of 6.1 per cent over the level a year ago.
CBs, NRI deposits, and short-term trade credit accounted for about 95 per cent of non-sovereign debt., The short-term trade credit rose substantially by 20.7 per cent to US$ 117.4 billion as at end-March 2022 on the back of a surge in imports during 2021-22.
Non-sovereign bonds are bonds issued by the local governments such as states, provinces, and cities, and not by the national government. The characteristics of non-sovereign bonds are as follows: Credit rating is usually high as rate of default is low.
Debt Service Ratio
The debt service ratio fell to 5.2 per cent during 2021-22 from 8.2 per cent during 2020-21 due to buoyancy in current receipts and a decline in debt service payments. The debt service payment obligations arising out of the stock of external debt as at end-March 2022 are projected to trend downwards over the coming years.
The debt service ratio is one way of calculating the ability to repay debt.
Cross-Country comparison
In a cross-country perspective, India’s external debt is modest, occupying 23th position globally. In terms of various debt vulnerability indicators.
India’s sustainability was better than the Low-and-Middle Income Countries (LMICs) as a group and vis-à-vis many of them individually.

12. Centre’s ﬁscal deﬁcit at 11.8% of target at May end: CGA

Subject : Economy

Section: Fiscal Policy

Concept :

The central government’s fiscal deficit stood at Rs 2.1 lakh crore or 11.8 per cent of the full-year budget estimates at May-end 2023, according to official data.
The fiscal deficit was 12.3 per cent of 2022-23 budget estimates a year ago.
Fiscal deficit is the difference between the total expenditure and revenue of the government. It is an indication of the total borrowings that are needed by the government.
In actual terms, the deficit was Rs 2,10,287 crore at May-end 2023, as per the data of the Controller General of Accounts (CGA).

Budget Estimates

In the Union Budget, the government aimed to bring down the fiscal deficit during the current financial year 2023-24 to 5.9 per cent of the gross domestic product (GDP).
The deficit was 6.4 per cent of the GDP in 2022-23 against the earlier estimate of 6.71 per cent.
Unveiling the revenue-expenditure data of the Union government for the first two months of 2023-24, CGA said the net tax revenue was Rs 2.78 lakh crore or 11.9 per cent of the BE.
Its total expenditure was Rs 6.25 lakh crore or 13.9 per cent of the estimates presented in the Union Budget for the current fiscal.

About Controller General of Accounts:

Controller General of Accounts (CGA), in the Department of Expenditure, Ministry of Finance, is the Principal Accounting Adviser to Government of India.
It is responsible for establishing and maintaining a technically sound Management Accounting System.
The goal is to provide reliable information that brings transparency in the use and reporting of public funds through an integrated government-wide financial information system.
Accordingly the focus has been on providing client oriented, integrated applications that aim at achieving operational efficiency across streams of public financial management system.

Function:

The Office of CGA prepares monthly and annual analysis of expenditure, revenues, borrowings and various fiscal indicators for the Union Government.
The Annual Appropriation Accounts (Civil) and Union Finance Accounts are submitted to Parliament under Article 150 of the Constitution. Along with these documents, an M.I.S Report titled ‘Accounts at a Glance’ is prepared and circulated to Hon’ble Members of Parliament.

Mandate:

Controller General of Accounts derives his mandate from Article 150 of the Constitution
This statutory mandate as incorporated in the Allocation of Business Rules 1961 brings out the duties and responsibilities of CGA as below:
General principles of Government accounting relating to Union or State Governments and form of accounts, and framing or revision of rules and manuals relating thereto;
Reconciliation of cash balance of Union Government with Reserve Bank in general and, in particular, of Reserve Deposits pertaining to Civil Ministries or Departments;
Overseeing the maintenance of adequate standards of accounting by Central Civil Accounts Offices;
Consolidation of monthly accounts, preparation of review of trends of revenue realization and significant features of expenditure etc and preparation of annual accounts (including Summary, Civil Appropriation Accounts) showing under the respective heads, the annual receipts and disbursements for the purpose of the Union Government;
Administration of Central Treasury Rules and Central Government Account (Receipt and Payment Rules 1983);
Coordination and assistance in the introduction of management accounting system in Civil Ministries or Departments;
Cadre management of Group ‘A’ (Indian Civil Accounts Service) and Group ‘B’ Officers of the Central Civil Accounts Offices;
Matters relating to the Central Civil Accounts staff belonging to Group ‘C’ and ‘D’;
Disbursement of Pension through Public Sector Banks (PSBs) in respect of Central Civil Pensioners, Freedom Fighters, High Court Judges, Ex-M.P.s and Ex-Presidents.

13. RBI penalized credit info companies

Subject : Economy

Section: Monetary Policy

Concept :

The Reserve Bank of India (RBI) recently imposed monetary penalties on four credit bureaus for non-compliance under the Credit Information Companies (Regulation) Act, 2005, and Credit Information Companies Rules, 2006.
Penalties are slapped for their failure to update credit information of borrowers which leads to big problems for bank customers while applying for banking services like loans and credit cards.

Credit Information Company (CIC)

Credit Information Company (CIC) is an independent third-party agency that collects financial data of individuals pertaining to their loans, credit cards and other related information and shares with its members, who generally happen to be banks and other financial institutions.
This data is provided to CICs by their member banks and other financial institutions.
As per the definition, a Credit Information Company:
Needs to be a company that was formed and registered under the Companies Act, 1956
Is granted a Certificate of registration under sub-section (2) of Section 5, of CIC Act, 2005.
Based on the data of the individuals, a Credit Information Company prepares a Credit Information Report and a Credit Score.
Credit history of an individual is classified by a CIC into two categories: Negative data and Positive data.
When an individual applies for a loan/credit with a lender such as a bank or Non-Banking Financial Company etc., the lender contacts their Credit Information Company to get the Credit Score and Credit Information Report of the applicant-borrower.
All the CICs in India are licensed by the Reserve Bank of India (RBI).
CIC Act, 2005 clearly prohibits any company from carrying out the business activity of credit information, without having the Certificate of Registration from RBI.
They are governed by the provisions under Credit Information Companies Regulation Act (CIC Act), 2005 and other RBI regulations and guidelines. This was further followed by Credit Information Companies, Regulations and Rules Act, 2006.
Currently, there are four CICs — Credit Information Bureau (India) Ltd (CIBIL), Equifax Credit Information Services Pvt Ltd, Experian Credit Information Company of India Pvt Ltd and CRIF High Mark Credit Information Services Pvt Ltd.

14. France been engulfed by protests – again

Subject: International Relations

Section: Places in news

Concept:

A surge of protests has swept across France following the shooting of a 17-year-old teenager Nahel M. by police on Tuesday in Nanterre, a working-class town on the western outskirts of Paris.
A few months after it witnessed massive protests over pension reforms, France is on the boil again.
Over the last four days, protests have swept across France following the death of a young man as a result of excessive use of force by the police.
Marseilles, the second-largest city of France after Paris, banned protests on Friday (June 30) in a bid to restore peace.

Marseille

Marseille is situated in the Provence region of southern France, it is located on the coast of the Gulf of Lion, part of the Mediterranean Sea, near the mouth of the Rhône river. Its occupants are called Marseillais.
Marseille is the second most populous city in France.