Daily Prelims Notes 2 February 2024

Daily Prelims Notes

2 February 2024

Table Of Contents

1. raises Lakhpati Didi scheme target
2. Biden administration notifies U.S. Congress of 31 MQ­9B UAV sale to India
3. Tax buoyancy helps Centre align with its fiscal consolidation roadmap
4. Interim Budget 2024: Food, fertilizer, fuel subsidy bill to fall to 5-year low
5. Bilateral Investment Treaties (BITs)
6. Big leap in Space Defence Technology: Green Propulsion System, developed under DRDO’s Technology Development Fund, successfully demonstrates in-orbit functionality
7. Cabinet approves extension of Animal Husbandry Infrastructure Development Fund
8. Union Budget 2024-25: New initiative to boost Blue Economy 2.0 Announced
9. Nearly 400 Ethiopians have died of starvation

1. Govt. raises Lakhpati Didi scheme target

Subject: Schemes

Sec: Vulnerable section

Context:

• Finance Minister Nirmala Sitharaman, while presenting the interim Budget for 2024­-25, said the target for training ‘Lakhpati Didi’ would be increased from the existing 2 crore to 3 crore.

Key Facts:

• Eighty-three lakh self-help groups with 9 crore women are transforming the rural socio-economic landscape with empowerment and self­-reliance.

Lakhpati Didi Scheme:

• It was announced by the Prime Minister in his Independence Day speech on August 15, 2023.
• Objective: To encourage women to start micro-enterprises within their villages.
• Under the Lakhpati Didi Initiative, the government aims to train two crore women.
• The programme is aimed at training women in self-help groups (SHGs) so that they can earn a sustainable income of at least Rs 1 lakh per annum per household. 
• The initiative has been initiated by DAY-NRLM, wherein each SHG household is encouraged to take up multiple livelihood activities coupled with value chain interventions, resulting in a sustainable income of Rs 1 lakh or more per year.
• Under this scheme, women will be trained in various skills, such as plumbing, LED bulb making, drone operation and repair, and tailoring and weaving.
• After completing the training, women will be provided with opportunities to earn income using their skills.
• The ministry of rural development is adopting a whole-of-government approach for maximum impact through convergence to transform the rural economy with the enabling of ‘Lakhpati Didis’.

2. Biden administration notifies U.S. Congress of 31 MQ­9B UAV sale to India

Subject: Science and tech

Sec: Defence

Context:

• The U.S. Congress formally notified of the possible sale of 31 MQ­9B high­ altitude  long endurance armed Unmanned Aerial Vehicles(UAV) to India at an estimated $3.99 billion.

3. Tax buoyancy helps Centre align with its fiscal consolidation roadmap

Subject: Economy

Sec: Fiscal Policy

Context:

• The strong growth in tax revenues reflects the high tax buoyancy, which works out to be 1.2 in the revised estimates for financial year 2023-24 as against 1.0 in FY23.
• For 2024-25, the tax buoyancy is seen at 1.1.

Trends in the budget:

Direct taxes:

• Direct tax revenues have shown a sharp surge, with income tax seen overshooting the Budget estimate for this financial year by 13.5 per cent
• The Securities Transaction Tax (STT) revenue was seen exceeding the budget estimate by 15.8 per cent.
• For the next financial year, direct tax collections, which include income tax and corporate tax, are estimated to rise 13.1 per cent to Rs 21.99 lakh crore.
• Direct tax revenues are estimated to grow 17.2 percent year-on-year to Rs 19.45 lakh crore in the current financial year 2023-24.
• The income tax collections in 2023-24 have shown a sharp pickup and are expected to exceed the Budget estimate by Rs 1.2 lakh crore.
• Corporate tax collections have been maintained at the Budget estimate level of Rs 9.23 lakh crore.
• Income tax revenues are seen exceeding corporate tax collections, even though they had been budgeted at a lower level than corporate tax revenue in the Budget estimates for 2023-24.
• Securities Transaction Tax, which is levied on traded securities on bourses, is estimated to increase to Rs 32,000 crore in the revised estimates of 2023-24, an increase of 27.6 percent from the actual revenue in 2022-23.
• For 2024-25, STT revenues are estimated to rise to Rs 36,000 crore.
• The government’s gross tax revenue is estimated to grow 11.5 percent to Rs 38.31 lakh crore in the next financial year.
• The Centre’s net tax revenues are estimated to grow by nearly 12 percent to Rs 26.02 lakh crore in 2024-25.
• Over the past few years, the government’s revenue collections, especially tax collections, have turned out to be better than budgeted.
• The budgeted tax revenue buoyancy for FY24 was 1.07x, but as per FY24 revised estimates, it came in at 1.19x.

Indirect taxes:

• On the indirect taxes side, Central Goods and Services Tax (CGST) collections are estimated to grow 13 per cent to Rs 9.18 lakh crore in 2024-25.
• Overall, the indirect tax collections, which include customs, excise duties and GST (including compensation cess), are expected to yield Rs 16.22 lakh crore to the government in 2024-25.
• In the current financial year, the revised estimate for customs and excise duty collections have been lowered to Rs 2.19 lakh crore and Rs 3.08 lakh crore, respectively, while GST collections (including compensation cess) are estimated at the budgeted level of Rs 9.57 lakh crore.

About Tax Buoyancy:

• It refers to the responsiveness of tax revenue growth to changes in GDP. 
• When a tax is buoyant, its revenue increases without increasing the tax rate.
• A similar looking concept is tax elasticity which refers to changes in tax revenue in response to changes in tax rate.
• Tax buoyancy depends mainly on
  • Size of the tax base
  • Tax administration regime
  • Reasonableness and simplicity of the tax rates
  • Wealth creation

4. Interim Budget 2024: Food, fertilizer, fuel subsidy bill to fall to 5-year low

Subject: Economy

Sec: Fiscal Policy

Context:

• The Centre’s subsidy bill on the ‘3 Fs’ ie food, fertilizer and fuel , is slated to fall to a five-year-low of Rs 3,81,175 crore in 2024-25, as per the Interim Budget

More on news:

• There are two main drivers for the decline.
• The first is the discontinuation of the free, additional 5-kg monthly grain allocation to the 80 crore-plus public distribution system (PDS) beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana.
• The second driver for the Centre’s lower subsidy outgo is fertilizer. 

Food subsidies:

• The food subsidy is being projected at Rs 2,05,250 crore for 2024-25.
• The extra rice or wheat is over and above the regular 5 kg/person/month PDS quota under the National Food Security Act which was given during the post-Covid period from April 2020 to December 2022.
• That ended effective from the last calendar year.
• This is down from the revised estimate (RE) of Rs 2,13,332 crore for this fiscal, Rs 2,72,802 crore for 2022-23 and Rs 2,88,969 crore for 2021-22.
•  Annual grain offtake through the PDS and other schemes falling to 64-65 million tonnes (mt) in 2023-24 (as against 92.9 mt in 2020-21, 105.6 mt in 2021-22 and 92.7 mt in 2022-23).
• The government’s procurement as well as stocks in godowns also declining (translating into reduced carrying cost of buffer beyond operational requirements)

Fertilizer subsidy:

• The fertilizer subsidy fell to Rs 188,894 crore in 2023-24 and is budgeted even lower at Rs 1,64,000 crore for the coming fiscal.
• The second driver for the Centre’s lower subsidy outgo is fertilizer.
• This bill soared to a record Rs 2,51,339 crore in 2022-23, following Russia’s invasion of Ukraine in February 2022 that led to skyrocketing international prices of fertilizers and raw materials.

Fuel subsidies:

• It touched Rs 96,880 crore in 2012-13 and Rs 85,378 crore in 2013-14.
• The petroleum subsidy fell subsequently with benign global crude prices and the present-day government limiting it only to sale of LPG cylinders and providing connections to poor/low-income households.
• Retail prices of diesel and petrol have not been revised since they were last cut on May 22, 2022.
• This has pushed up petroleum subsidy to Rs 12,000 crore levels in the current as well as ensuing fiscal.

5. Bilateral Investment Treaties (BITs)

Subject: Economy

Sec: External Sector 

Context: 

• Finance Minister Nirmala Sitharaman during her Interim Budget speech said that India is negotiating BITs with trade partners to boost the inflow of foreign direct investments (FDI).

More on news:

• A relook at BITs comes at a time when India is pursuing economic integration with western nations such as the United Kingdom (UK) and the European Union through free trade agreements and investment treaties.
• For encouraging sustained foreign investment there is a need to  negotiate various  bilateral investment treaties with our foreign partners which will be  in the spirit of ‘first develop India’
• The FDI inflow during 2014-23 was $596 billion marking a golden era. 
• That is twice the inflow during 2005-14

About Bilateral Investment Treaties (BITs):

• Bilateral investment Treaties (BITs) or Bilateral Investment Protection Agreements (BIPAs) are agreements between two countries for the reciprocal promotion and protection of investments in each other’s territories by individuals and companies situated in either State.
• They provide treaty based protection to foreign investment.
• The BITs are thus bilateral agreements by countries to protect the investment by each country’s investors in the other country. Though they are signed by governments, their beneficiaries are business entities.
• India has inked 86 such bilateral treaties, the latest being with Brazil in 2020.
• However, there have been many cases of the penalty awarded by an International Dispute Settlement (ISDS) tribunal served against India.
• This led to a review of the BITs and in 2016 India launched the Model BIT.
• It aims to act as a base for negotiating new BITs with other States, as well as for re-negotiation of the existing ones.
• Main reason for bringing the Model BIT was the constant suing of the country by foreign firms. India was one of the most sued countries during 2015 and 2016.

BITs in India:

• BITs had dipped as a number of trade partners were against India’s insistence on favoring ‘exhaustion of local remedies’ clause in the model BIT. 
• This clause  stressed on resolving investment-related legal disputes locally before going to international arbitration. 
• According to the World Bank’s ‘Ease of Doing Business 2020’ report, India ranked 163 out of 190 countries in ease of enforcing contracts and  taking 1,445 days and 31 per cent of the claim value for dispute resolution.
• Before the 2015 regime  India had BITs with 83 countries or regions but India suspended BITs with 68 countries/regions with a request to re-negotiate based on the model 2016 BIT.
• Foreign direct investment (FDI) equity inflows in India declined 24 per cent to $20.48 billion in April-September 2023.
• The total FDI which includes equity inflows, reinvested earnings and other capital had contracted 15.5 per cent to $32.9 billion during the period under review against $38.94 billion in April-June 2022.

6. Big leap in Space Defence Technology: Green Propulsion System, developed under DRDO’s Technology Development Fund, successfully demonstrates in-orbit functionality

Subject: Science and tech

Sec: Defence

Context:

• A Green Propulsion System developed under the Technology Development Fund (TDF) scheme of DRDO  has been  successfully demonstrated in-orbit functionality on a payload launched by PSLV C-58 mission.

More on news:

• This project 1N Class Green Monopropellant thruster for altitude control and orbit keeping of micro satellites was sanctioned to a Bengaluru-based start-up Bellatrix Aerospace Pvt Ltd (Development Agency).
• The Telemetry Data from PSLV Orbital Experimental Module (POEM) at ISRO Telemetry, Tracking and Command Network (ISTRAC), Bengaluru has been validated with ground level solution and is found to have exceeded all performance parameters.

Features of the technology:

• This innovative technology has resulted in a non-toxic and environment-friendly propulsion system for low orbit space. 
• The system consists of indigenously-developed Propellant, Fill and Drain Valves, Latch Valve, Solenoid Valve, Catalyst Bed, Drive Electronics, etc. 
• It is ideal for space missions with high thrust requirements.
• The complete project has been carried out by the Development Agency under guidance of Project Monitoring & Mentoring Group of DRDO. 
• It has demonstrated pulsed mode and steady state firing in vacuum, passivation of residual propellant in outer space, propellant realization and establishing of filling procedure under the TDF.

About  Technology Development Fund (TDF):

• Technology Development Fund (TDF) has been established to promote self-reliance in Defence Technology as a part of the ‘Make in India’ initiative. 
• It is a programme of the Ministry of Defence. 
• This programme is executed by the Defence Research & Development Organisation (DRDO) to meet the requirements of the Tri-Services, Defence Production and DRDO.
• The Scheme encourages participation of public/private industries, especially MSMEs and startups, so as to create an ecosystem for enhancing cutting edge technology capability in the defense sector.

About POEM:

• The PSLV Orbital Experimental Module(POEM) is a platform that will help perform in-orbit experiments using the final, and otherwise discarded, stage of ISRO’s Polar Satellite Launch Vehicle (PSLV).
• The PSLV is a four-stage rocket where the first three spent stages fall back into the ocean, and the final stage (PS4) after launching the satellite into orbit ends up as space junk.
• POEM has a dedicated Navigation Guidance and Control (NGC) system for attitude stabilization, which stands for controlling the orientation of any aerospace vehicle within permitted limits.
• POEM will derive its power from solar panels mounted around the PS4 tank, and a Li-Ion battery.

7. Cabinet approves extension of Animal Husbandry Infrastructure Development Fund

Subject: Schemes

Sec: Agri

Context:

• The Union Cabinet chaired by Prime Minister Shri Narendra Modi approved the continuation of the Animal Husbandry Infrastructure Development Fund (AHIDF) for another three years up to 2025-26.

More on news:

• The Animal Husbandry Infrastructure Development Fund (AHIDF) to be implemented under Infrastructure Development Fund (IDF) with an outlay of Rs.29,610.25 crore for another three years up to 2025-26.

About Animal Husbandry Infrastructure Development Fund (AHIDF):

• The scheme will incentivize investments for
  • Dairy processing and product diversification, 
  • Meat processing and product diversification, 
  • Animal Feed Plant, 
  • Breed multiplication farm, 
  • Animal Waste to Wealth Management (Agri-waste management) and 
  • Veterinary vaccine and drug production facilities.
• Government of India will provide 3% interest subvention for 8 years including two years of moratorium for loan up to 90% from the scheduled bank and National Cooperative Development Corporation (NCDC), NABARD and NDDB. 
• The eligible entities are individuals, Private Companies, FPO, MSME, Section 8 companies.
• Now the Dairy Cooperatives will also avail benefits for modernization, strengthening of the dairy plants.

Objectives:

• To help increase milk and meat processing capacity and product diversification thereby providing greater access for unorganized rural milk and meat producers to organized milk and meat markets.
• To make available increased price realization for the producer.
• To make available quality milk and meat products for the domestic consumer.
• To fulfill the objective of protein enriched quality food requirement of the growing population of the country and prevent malnutrition in one of the highest malnourished children population in the world.
• Develop entrepreneurship and generate employment.
• To promote exports and increase the export contribution in the milk and meat sector.
• To make available quality concentrated animals feed to the cattle, buffalo, sheep, goat, pig and poultry to provide balanced ration at affordable prices.

Benefits of the scheme:

• The scheme will be a channel towards employment generation directly and indirectly to 35 lakh people through entrepreneurship development and aims for wealth creation in the livestock sector.
• The AHIDF has benefited directly /indirectly approximately 15 lakh farmers. 

8. Union Budget 2024-25: New initiative to boost Blue Economy 2.0 Announced

Subject: Economy

Sec: National economy

Context:

• The interim budget speech by Union Finance Minister Nirmala Sitharaman emphasized support for Blue Economy 2.0 through a new scheme aimed at coastal aquaculture, mariculture, and adaptation measures for climate change.

Details:

• Despite the lack of detailed budget allocation or specific activities, this initiative is seen as a positive step for the livelihoods of 14 million people involved in fisheries along India’s 7,500 km coastline.
• However, there are concerns about potential maladaptation, as highlighted by the IPCC, which could inadvertently increase vulnerability to climate change.
• The speech highlighted the need for effective adaptation measures beyond previous efforts, which have sometimes failed to reduce vulnerability to sea-level rise and extreme weather events, particularly in Odisha.
• Recommended measures include indigenous seaweed cultivation, artificial reefs, and beach sand dune stabilization to protect coastlines and support local livelihoods.
• Seaweed cultivation, particularly of indigenous species, is promoted for its environmental benefits and potential as a source of proteins for cosmetic production.

Blue economy:

• The term Blue Economy refers to an economy based on preservation, and regeneration of the marine environment while sustainably promoting human growth and development. The scope of the blue economy was realized by Gunter Pauli in “The Blue Economy: 10 years, 100 innovations, 100 million jobs”.
  • In a blue economy, the focus would be on preserving marine health as much as it would be on human growth.
  • It would also include bosting marine trade and opportunities.
  • Other areas of a blue economy would be tourism, renewable energy, the development of fisheries, etc.

Significance of Blue Economy:

• The oceans cover three-quarters of the earth’s surface. They contain 97% of the earth’s water. Also, they represent 99% of the living area on the planet Earth. This is one of the reasons why the blue economy is significant.
• Oceans help derive 3-5% of the world’s GDP. So, a blue economy would promote growth in the maritime sector.
• Oceans help in maintaining biodiversity and keeping the planet cool. They even absorb 30% of global carbon dioxide emissions.
• Many income generation modes have been ruled out through sustainable use of the oceans, which can greatly boost economic growth.

Source: DTE

9. Nearly 400 Ethiopians have died of starvation

Subject: IR

Sec: Places in news

Context:

• The Ethiopian national ombudsman has reported nearly 400 starvation deaths in the Tigray and Amhara regions, acknowledging hunger-related fatalities amidst a backdrop of drought and the aftermath of a civil war that concluded 14 months ago.

Details:

• The slow pace of aid distribution is compounded by logistical and technical challenges, including the introduction of new systems like GPS trackers for food trucks and QR codes for ration cards, which have faced implementation difficulties.
• The pause in food aid by the U.N. and the U.S. last year, due to a large-scale theft scheme, significantly exacerbated hunger levels. 
• The recent conflict in Tigray, which resulted in significant casualties and displacement, has led to accusations against the Ethiopian government of using starvation as a method of warfare.
• The current crisis threatens to mirror the catastrophic famine of the mid-1980s unless immediate action is taken to scale up the aid response, despite federal government denials of a widespread hunger crisis.

Tigray war:

• The Tigray War was an armed conflict that lasted from 3 November 2020 to 3 November 2022.
• The war was primarily fought in the Tigray Region of Ethiopia between forces allied to the Ethiopian federal government and Eritrea on one side, and the Tigray People’s Liberation Front (TPLF) on the other.

Source: Afrcianews