Daily Prelims Notes 9 January 2024

Daily Prelims Notes

9 January 2024

Table Of Contents

1. Seven products from Odisha get GI tag
2. BILKIS BANO CASE
3. First US lunar lander since 1972 launched: The mission, significance
4. Global warming, sea level rise, ageing flood defence systems: Why European countries have been flooded
5. DRDO counter-drone system ready, handed over to private firms
6. South Korea superconductivity claim revived with new data
7. Individual income inequality fell during FY 2014 – 2022
8. Fake Invoices under GST
9. Inclusion of India’s Fully Accessible Route (FAR) Bonds in Bloomberg Emerging Market Local Currency Index
10. GDP Estimate

1. Seven products from Odisha get GI tag

Subject : Science and Tech

Section: IRP

Context:

• As many as seven items from Odisha received the GI tag by the Chennai-based Geographical Indications Registry on Tuesday.

More on news:

• The new items include the Odisha Khajuri Guda, Dhenkkanal Magji, Similipal Kai Chutney, Nayagarh Kantei Mundi brinjal, Dongria Kondh embroidery shawl, Koraput Kala Jeera rice and the paintings of Lanjia Saora.

About the Items:

Kapda Ganda shawl

• Woven and embroidered by the women of the Dongria Kondh tribe, a particularly vulnerable tribal group (PVTG) in the Niyamgiri hills in Odisha’s Rayagada and Kalahandi districts.
• It is embroidered on an off-white coarse cloth with red, yellow and green coloured threads, with each color holding significance.
• Green symbolizes the mountains and hills, and yellow stands for peace and happiness.
• Red stands as the symbol of blood.
• The motifs in the shawls are mostly lines and triangles, believed to be a reflection of the importance of mountains for the community.
• The shawl is worn by both men and women and the Dongrias give it to their family members as a token of love and affection.

Lanjia Saura Painting

• The painting is one of the oldest tribal art forms and is also known as Idital. 
• The artworks are famous for their beauty, aesthetics, ritualistic association and iconography.
• The art form belongs to the Lanjia Saura community, a PVTG largely residing in the Rayagada district.
• These paintings are in the form of exterior murals painted on the mud walls of homes.
• White paintings figure over a crimson-maroon background.

Koraput Kala Jeera Rice

• The black-coloured rice variety, also known as the ‘Prince of Rice’, is famous for its aroma, taste, texture and nutritional value.
• Tribal farmers of the Koraput region have preserved the rice variety for around 1,000 years.

Similipal Kai chutney

• The chutney made with red weaver ants is a traditional delicacy of the tribals in Odisha’s Mayurbhanj district.
• The ants are found in the forests of Mayurbhanj, including in the Similipal forests – Asia’s second-largest biosphere. 

Nayagarh Kantei Mundi Brinjal

• Nayagarh Kantei Mundi Brinjal is known for its prickly thorns on the stems and the whole plant.
• The green and round fruits contain more seeds as compared to other genotypes.

Odisha Khajuri Guda

• Odisha’s “Khajuri Guda” or jaggery is a natural sweetener extracted from date palm trees and has its origin in the Gajapati district. 
• The jaggery is prepared in a trapezoidal form called ‘Patali Gur’ and is organic by nature. It is dark brown and has a unique taste.

Dhenkanal Magji

• Dhenkanal Magji is a type of sweet made from cheese from buffalo milk, with distinct characteristics in terms of appearance, taste, flavor, shape, and size.
• It also has unique nutritional values that distinguish it from other cheese-based sweets.

About GI tags:

• Geographical Indications of Goods are defined as that aspect of industrial property which refer to the geographical indication referring to a country or to a place situated therein as being the country or place of origin of that product.
• Under Articles 1 (2) and 10 of the Paris Convention for the Protection of Industrial Property, geographical indications are covered as an element of IPRs.
• They are also covered under Articles 22 to 24 of the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement
• A registered GI tag is valid for 10 years.
• GI tags are provided by the Geographical Indications Registry, located in Chennai, India.
• The registry operates under the Geographical Indications of Goods (Registration and Protection) Act, 1999.
• They are governed by WIPO Agreement on Trade related aspects of Intellectual Property Rights (TRIPS)

2. BILKIS BANO CASE

Subject : Polity

Section: Judiciary

Context:

• THE Supreme  Court had  struck  down the relief granted by the Gujarat government to 11 men who were sentenced to life for the gangrape of Bilkis Bano and murder of her family members during the 2002 riots.

More on news:

• A bench of Justice BV Nagarathna and Justice Ujjal Bhuyan said that Gujarat government’s decision to grant remission to convicts was “an instance of usurpation of jurisdiction and of abuse of discretion”
• The court said the State had  “acted in tandem and was complicit” with the convicts.
• The Supreme Court said that Gujarat was not the “appropriate government” to decide on the remission plea of the 11 men convicted for the “grotesque and diabolical crime driven by communal hatred”. 

Gujrat Remission policy:

• 1992 remission policy allowed prisoners who had served a minimum of 14 years to apply for early release.
• This  policy empowered the state to consider the remaining sentence based on conduct, subject to verification.
• However , the  Supreme Court invalidated the 1992 policy in 2012.
• In response to this , The Gujarat crafted a new policy in 2014, introducing exclusions for specific types of crimes.
• Radheshyam Shah sought remission under the 1992 policy, which did not have post-2014 exclusions.

Legal aspects pertaining to Pardoning:

Constitutional provisions:

• Under Articles 72 and 161 of the Constitution, the President and Governors have the power to pardon, and to suspend, remit, or commute a sentence passed by the courts.

Code of Criminal Procedure (CrPC):

• Chapter XXXII of the CrPC (Sections 432 to 435) outlines the procedures for remission, suspension, and commutation of sentences.
• Since prisons is a state subject, state governments have powers under Section 432 of the Code of Criminal Procedure (CrPC) to remit sentences.
• States set up a Sentence Review Board to exercise the powers under Section 432 of the CrPC.
• Section 433A of the CrPC puts certain restrictions on these powers of remission:
  • Where a sentence of imprisonment for life is imposed on conviction of a person for an offense for which death is one of the punishments provided by law or,
  • Where a sentence of death imposed on a person has been commuted under Section 433 into one of imprisonment for life.

In the above cases, a person shall not be released from prison unless he had served at least fourteen years of imprisonment.

Views of Judiciary:

• The court ruled that remission under Section 432 of the CrPC requires obtaining the judge’s opinion and reasons from the convicting or confirming court, allowing only case-specific, not wholesale, decisions.
• The Supreme Court has held that states cannot exercise the power of remission arbitrarily, and must follow due process.
• In ‘Laxman Naskar v. Union of India’ (2000) the SC laid down five grounds on which remission is considered:

(a) Whether the offense is an individual act of crime that does not affect the society;

(b) Whether there is a chance of the crime being repeated in future;

(c) Whether the convict has lost the potentiality to commit crime;

(d) Whether any purpose is being served in keeping the convict in prison; and

(e) Socio-economic conditions of the convict’s family

Pardoning power of president:

Difference between pardoning power of president and governor

• The President can pardon sentences inflicted by court martial (military courts) while the governor cannot. 
• The President can pardon death sentences while the governor cannot. 

Difference between Parole and Furlough:

The Supreme Court had differentiated  between parole and furlough in  various judgements such as The State of Maharashtra vs. Suresh Panduram (2006) and  State of Haryana and Ors. vs. Mohinder Singh (2000), etc).

Few differences are as follows:

• Parole can be awarded in the case of short-term detention, on the other hand furlough is allowed in the case of long-term detention.
• Parole lasts for one month, on the other hand furlough lasts for a maximum of 14 days.
• Parole is granted by The Divisional Commissioner, on the other hand furlough is granted by Deputy Inspector General Prison .
• A specific reason  is necessary for parole, on the other hand a furlough is intended to break the monotony of imprisonment.
• The term of imprisonment is not included in the computation of the term of parole, whereas it is vice versa in furlough.
• Parole can be granted a number of times whereas there is limitation in the case of furlough.

3. First US lunar lander since 1972 launched: The mission, significance

Subject :Science and Tech

Section: Space tech

In the news:

• A US private company launched a spacecraft carrying NASA’s scientific instruments, aiming to be the first US craft to land on the Moon in 50+ years.

Details

• The Peregrine lander module of the mission, as well as the Vulcan rocket that launched it, have both been built by private space companies in the US.
• As part of NASA’s Commercial Lunar Payload Services (CLPS) initiative, it involves private space companies in the Artemis program for lunar exploration.
  • NASA is working with several American companies to deliver science and
  • technology to the lunar surface through the CLPS initiative.
• The spacecraft was carrying five NASA payloads.
• Instruments onboard will perform various tasks, including water detection and placing a Laser Retroreflector Array for precise measurements.
  • A laser Retroreflector Array is a collection of several mirrors that would allow precision measurements of the distance of other orbiting or landing spacecraft by reflecting light from them. This particular instrument would remain permanently deployed on the Moon’s surface and would act as a marker for distances on the Moon.
• The Artemis program intends to establish a sustainable lunar presence, with plans for crewed missions by 2025 and aims for deep space exploration from the Moon’s surface.
• NASA’s collaboration with private firms, like this launch under CLPS, aims to advance lunar exploration while fostering a commercial space industry.
• Officials expressed excitement about this mission’s potential scientific discoveries and its role in shaping future human exploration endeavours.

Hakuto-R mission:

• Launched in 2023
• A Japanese mission to land on the moon.
• It was not successful.

Source: Indian Express

4. Global warming, sea level rise, ageing flood defence systems: Why European countries have been flooded

Subject: Geography

Section: Atmosphere

In the news:

• Heavy rains have hit France, England, Netherlands and Germany for more than two weeks, causing rivers to burst their banks in many areas, flooding homes and prompting evacuations.
• A combination of factors, including global warming, rising sea levels, and ageing flood defence systems have led to the deluge in the countries.

Details:

• These floods followed Storm Henk‘s recent impact in these areas.
• Flooding has been intensified by three key factors: rising global temperatures, sea level increases, and outdated flood defence systems.

1. Firstly, global warming contributes to more frequent and severe rainfall events. Warmer temperatures lead to increased evaporation, allowing the atmosphere to hold more moisture, resulting in heavier and more prolonged rainfall.
   • El Nino, an abnormal warming in the Pacific Ocean, has also raised ocean temperatures, increasing evaporation and subsequent rainfall.
2. Secondly, rising sea levels prompt rivers to overflow and flood surrounding areas. For instance, in northern France, a 4.4 cm rise in sea levels from 1966 to 2018 likely contributed to recent flooding.
3. Lastly, outdated flood defence systems, particularly in France, failed to manage the influx of water effectively. Additionally, construction on floodplains in France and England disrupts natural drainage routes, causing water to inundate specific areas instead of being absorbed into the soil.

What’s next?

• The forecast indicates worsening conditions ahead. With a warming planet, storms are expected to intensify, leading to heavier rainfall and more frequent extreme weather events like floods.
• Hydrologists project the UK experiencing wetter winters and hotter, drier summers, with periods of intensified rainfall. This ongoing climate change is anticipated to elevate river flows, exacerbating flooding and its impacts on communities, property, and public services.
• To address these challenges, there’s an urgent call to enhance flood defences, implement early warning systems, and bolster resilience measures to manage the aftermath of heavy rainfall.

Places in news:

• Trent River: England
  • The Trent is third in the list of longest rivers in the United Kingdom.
  • Its source is in Staffordshire, on the southern edge of Biddulph Moor.
  • It flows through and drains the North Midlands into the Humber Estuary.
  • The river is known for dramatic flooding after storms and spring snowmelt, which in the past often caused the river to change course.
• Ijsselmeer inland sea: The Netherlands
  • The IJsselmeer, also known as Lake IJssel in English, is a closed-off inland bay in the central Netherlands bordering the provinces of Flevoland, North Holland and Friesland.
  • The river IJssel flows into the IJsselmeer.

Source: Indian Express

5. DRDO counter-drone system ready, handed over to private firms

Subject: Science and Tech

Section: Defence

Context:

• The counter drone system developed by the Defence Research and Development Organisation (DRDO) is ready for production and was already demonstrated to armed services and other internal security agencies with some orders already placed.

More About News

• The DRDO is making drone­ based systems and anti-drone systems based on the requirements of user agencies.
• The DRDO has developed a comprehensive integrated anti-drone system which comprises detection, identification and neutralization of a drone.
• The Transfer of Technology (ToT) for above technologies has been handed over to private industries, including BEL, Adani, Larsen & Toubro(L&T), and Icom.

Technologies under development: 

• DRDO is now focusing on high endurance Unmanned Aerial Vehicles (UAV) while the capability for smaller drones exists with the industry.
• Tapas Medium Altitude Long Endurance (MALE) UAV developed for Intelligence, Surveillance, Target Acquisition and Reconnaissance (ISTAR) application is in the advanced stage of developmental trials.
• Tactical Aerial Platform for Advanced Surveillance(TAPAS) is a Medium Altitude Long Endurance (MALE) unmanned aerial vehicle (UAV).
• Indigenously-developed by: Bengaluru-based Aeronautical Development Establishment.
• It is a multi-mission UAV to carry out the intelligence, surveillance and reconnaissance roles for the three armed forces with an endurance of 24 to 30 hours.
• It uses a Lithium Ion-based battery with indigenous battery management system developed by the DRDO.
• Short range armed UAV Archer is being developed for reconnaissance, surveillance and low intensity conflict and developmental flight trials are under progress.

6. South Korea superconductivity claim revived with new data

Subject : Science and Tech

SECTION: Msc

Context:

• A group of scientists from China and Japan have reported findings that could indicate superconductivity in a controversial material.

About Superconductivity

• Superconductivity occurs when a material offers almost zero resistance to the flow of electric current, enabling energy-efficient electrical appliances and lossless power transmission.
• Superconductors also display fascinating behavior under magnetic fields, enabling technologies like MRI machines and superfast Maglev trains.

Characteristics of Material LK-99

• Apatite Structure: The Korean group utilized copper-substituted lead apatite, a phosphate mineral with unique tetrahedral motifs, to create LK-99.
• Superconducting Behavior: LK-99 displayed essential superconducting properties, with almost zero resistance to current flow and sudden emergence of resistance above a critical current threshold.
• Magnetic Resilience: LK-99 retained superconductivity even under the presence of a magnetic field until reaching a critical threshold.

Meissner Effect: Key Indicator of Superconductivity

• The Meissner effect is a phenomenon where materials expel magnetic fields from their interior upon becoming superconductors.
• Observation in Study: The researchers observed this effect in copper-substituted lead apatite, suggesting potential superconductivity.

Quest for Room-Temperature Superconductors

• Significance: Discovering a material that is superconducting at room temperature and pressure (RTP) has immense scientific and commercial value.
• Applications: RTP superconductors could revolutionize power transmission, medical diagnostics, computing, and more, due to their ability to conduct electricity without loss.

Understanding Hysteresis in Superconductors

• Meissner Effect and DC Current: The Meissner effect is observable with direct current, as alternating current would disrupt the phenomenon.
• Type I and II Superconductors: The study helps distinguish between these types based on how they respond to increasing magnetic field strength.

Challenges and Limitations of the Study

• Small Superconducting Portions: The material’s superconducting sections were small, leading to a low critical magnetic field strength.
• Interference Issues: The presence of cuprous sulphide interfered with molecular structure analysis using X-rays.

Controversies in Superconductivity Research

• Past Controversies: The field has seen several disputes, including claims by Ranga Dias and a South Korean research group, which were later contested.
• Impact of Hype: The lucrative potential of RTP superconductors has sometimes led to premature claims and controversies in the scientific community.

New Study: Methodology and Findings

• Approach: The team synthesized LK-99 samples using advanced techniques and tested for signs of superconductivity beyond specific claims made by previous studies.
• Direct Current Measurements: They conducted hysteresis experiments, applying and removing a magnetic field to observe the material’s response at various temperatures.

7. Individual income inequality fell during FY 2014 – 2022

Subject : Economy

Section: Indian  Economy

The economic research department of the State Bank of India (SBI) has reported a significant decline in individual income inequality in India from fiscal year 2014 to fiscal year 2022. The decline is attributed to a “great migration” at the bottom of the income pyramid.

The Gini coefficient, a measure of income inequality, decreased from 0.472 to 0.402 during this period, based on Income Tax Return (ITR) data.

1. Income Growth: The weighted mean income of individuals increased from ₹3.1 lakh to ₹11.6 lakh during FY14-FY21.
2. Individual ITR Filers: About 36.3% of individual ITR filers in the lowest income group in FY14 moved upward, resulting in a 21.1% increase in their income during FY14-FY21.
3. Income Disparity: The income disparity for individuals earning less than ₹3.5 lakh decreased from 31.8% to 15.8% during FY14-FY21, indicating an increased share of this income group in total income.
4. Top 2.5% Taxpayers: The contribution of the top 2.5% of taxpayers to total income declined from 2.81% to 2.28% during FY14-FY21.
5. MSMEs and Income Patterns: MSMEs (Micro, Small, and Medium Enterprises) showed a change in income patterns, with about 19.5% transitioning to larger categories.
6. Savings and Financial Assets: Post-pandemic, there was a shift from savings channeled into physical assets to financial assets, in line with global trends.
7. Recovery Theory: The report challenges the notion of a K-shaped recovery post-pandemic, emphasizing the complexity of income dynamics.

The following terms refer to different shapes that represent the trajectory of economic recovery over time.

1. Z-Shaped Recovery:
   • In a Z-shaped recovery, the economy experiences a sharp decline followed by a quick and robust recovery.
   • The term suggests that the recovery is so strong that the economy surpasses its previous peak.
2. V-Shaped Recovery:
   • A V-shaped recovery indicates a rapid and robust rebound after a sharp economic decline.
   • The economy bounces back quickly, resembling the upward slope of the letter “V.”
3. U-Shaped Recovery:
   • In a U-shaped recovery, the economy experiences a more gradual decline, followed by a slow and steady recovery.
   • The bottom of the “U” represents a period of stagnation before improvement begins.
4. Elongated U-Shaped Recovery:
   • Similar to a U-shaped recovery, an elongated U-shaped recovery implies a more extended period of economic downturn before a gradual upturn.
5. W-Shaped Recovery:
   • A W-shaped recovery, also known as a double-dip recovery, involves a sharp economic decline, a temporary recovery, another decline, and then a final recovery.
   • The pattern resembles the letter “W.”
6. L-Shaped Recovery:
   • An L-shaped recovery suggests a sharp economic decline followed by a prolonged period of stagnation or slow growth.
   • Unlike a U-shaped recovery, there is no significant upward trajectory, and the economy remains at a lower level.
7. K-Shaped Recovery:
   • A K-shaped recovery refers to divergent paths for different sectors or segments of the economy.
   • While some sectors or groups experience rapid recovery and growth (the upward branch of the “K”), others may continue to decline or stagnate (the downward branch of the “K”).

These recovery shapes are conceptual models used by economists and analysts to describe and predict the overall trajectory of an economy in response to various events or shocks. The actual shape of the recovery depends on factors such as government policies, consumer behavior, global economic conditions, and the nature of the initial shock.

About Lorenz Curve and Gini Coefficient

The Lorenz Curve and Gini Coefficient are tools used to analyse and measure income distribution and inequality within an economy.

1. Lorenz Curve:
   • Developed by Max Lorenz in 1906, the Lorenz Curve is a graphical representation of the distribution of income or wealth in a population.
   • The 45º diagonal line on the graph represents perfect equality, where each segment of the population earns an equal share of the total income. The Lorenz Curve depicts the actual distribution of income, which may deviate from perfect equality.
2. Gini Coefficient:
   • The Gini Coefficient is derived from the Lorenz Curve and quantifies the level of income inequality within a population.
   • It is a single numerical measure that ranges from 0 to 1, where 0 represents perfect equality (everyone has the same income) and 1 represents perfect inequality (one individual has all the income).
   • A lower Gini Coefficient indicates a more equal distribution of income, while a higher coefficient suggests greater income inequality.

In summary, the Lorenz Curve visually represents the distribution of income, while the Gini Coefficient provides a numerical measure of income inequality based on the Lorenz Curve.

8. Fake Invoices under GST

Subject : Economy

Section: Fiscal policy

The Finance Ministry has undertaken a nationwide drive to identify fake firms and detect Goods and Services Tax (GST) evasion.

1. Results of the Drive:
   • Over 29,000 fake firms were identified during the special drive.
   • The detected fake firms were involved in suspected Input Tax Credit (ITC) evasion amounting to ₹44,015 crore.
   • The drive saved ₹4,646 crore, of which ₹3,802 crore was saved by blocking ITC, and ₹844 crore was recovered.
   • A total of 121 arrests have been made in connection with these cases.
2. Special All-India Drive:
   • The drive was initiated on May 16, 2023, and continued for seven months.
   • It aimed to identify non-existent or bogus registrations and the issuance of fake invoices without any underlying supply of goods and services.
   • All Central and State tax administrations participated in the drive.
3. Process of Identifying Fake Firms:
   • GSTN (Goods and Services Tax Network) used detailed data analytics and risk parameters to identify suspicious or fraudulent GSTINs (Goods and Services Tax Identification Numbers).
   • Suspicious GSTINs were shared with the concerned State and Central Tax authorities for verification and necessary action.
4. Measures to Strengthen GST Registration Process:
   • Pilot projects of biometric-based Aadhar authentication at registration were launched in Gujarat, Puducherry, and Andhra Pradesh.
   • Various measures were implemented to curtail tax evasion, including sequential filing of GST returns, system-generated intimation for reconciliation of tax liability gaps, and the use of data analytics and risk parameters for detecting fake ITC.
5. Problem of Fake Invoices:
   • Fake invoices involve the issuance of invoices without any actual supply of goods or services, used fraudulently to avail Input Tax Credit (ITC).
   • Unscrupulous elements misuse identities to obtain fake/bogus GST registration for fraudulent activities, causing revenue loss to the government.

Input Tax Credit (ITC):

• Input Tax Credit (ITC) is a mechanism under the Goods and Services Tax (GST) system that allows businesses to claim a credit for the taxes paid on their purchases, which can be used to offset their tax liability when they make sales.
• It is essentially a credit for the tax paid on inputs used in the production of goods or services.

Objectives and Key Features:

• Objective: The primary objective of ITC is to avoid cascading of taxes. Cascading occurs when taxes are paid on the tax already paid, leading to a higher tax burden.

Key Points for Prelims:

1. GST (Goods and Services Tax): It is a comprehensive indirect tax levied on the supply of goods and services. It has replaced various indirect taxes in India.
2. Composition Scheme: A scheme under GST for small businesses, allowing them to pay tax at a fixed rate based on turnover without claiming ITC.

GSTN (Goods and Services Tax Network):

• GSTN, or the Goods and Services Tax Network, is a non-profit organization that manages the entire IT system of the Goods and Services Tax (GST) portal. It provides the technological infrastructure for the implementation of GST in India.
• GSTN was established to provide a common and shared IT infrastructure to central and state governments, taxpayers, and other stakeholders for the implementation of GST.
• Functioning:
  • GSTN facilitates the real-time flow of information between taxpayers and the GST system. It plays a crucial role in ensuring transparency, efficiency, and accuracy in the GST compliance process.
• Importance:
  • The successful implementation of GST required a robust IT infrastructure, and GSTN plays a pivotal role in providing the necessary technology backbone. It has been instrumental in digitizing and streamlining various processes related to GST compliance.
• Ownership:
  • GSTN is a Government Company and 100% of the shareholding being held by Government (50% with Union Government and 50% jointly with State Governments & UTs) in GSTN.

9. Inclusion of India’s Fully Accessible Route (FAR) Bonds in Bloomberg Emerging Market Local Currency Index

Subject : Economy

Section: External Sector

The Indian government’s Fully Accessible Route (FAR) bonds to be included in Bloomberg EM Local Currency Index.

1. Inclusion Details:
   1. FAR bonds included with an initial weight of 20 per cent of their full market value in September 2024.
   2. Weight increased in 20 per cent increments every month until January 2025.
   3. By January 2025, FAR bonds will be weighted at 100 per cent of their full market value in the indices.
2. Index and Capping:
   1. Upon full inclusion, FAR bonds will be fully capped at 10 per cent within the Bloomberg Emerging Market 10 per cent Country Capped Index.
   2. Indian rupee to become the third-largest currency in the Bloomberg Emerging Market Local Currency Index, following the Chinese Renminbi and the South Korean’s Won.
3. Background:
   1. Reserve Bank of India introduced FAR bonds as securities exempt from foreign investment restrictions in April 2020.
4. Index Composition:
   1. As of November 30, 2023, the index would include 32 Indian securities, representing 99 per cent of a $5.96 trillion index.
5. Market Developments:
   1. India remains excluded from Bloomberg Global Aggregate and related indices.
   2. Bloomberg will continue to monitor related market developments.

Fully Accessible Route (FAR) – Key Points:

• Introduction:
  • The Reserve Bank of India (RBI) has introduced the ‘Fully Accessible Route’ (FAR) from April 1, 2020.
  • This channel allows non-residents to invest in specified government bonds without any restrictions.
• Budget Announcement:
  • The FAR initiative opens certain specified categories of government bonds fully for non-resident investors.
• Investment Ceilings:
  • Under FAR, eligible investors can invest in specified government securities without any investment ceilings.
• Operational Coexistence:
  • FAR operates alongside the existing routes, namely the Medium Term Framework (MTF) and the Voluntary Retention Route (VRR).
• Benefits:
  • Substantially eases access for non-residents to Indian government securities markets.
  • Facilitates inclusion in global bond indices.
  • Attracts stable foreign investment in government bonds.
• Voluntary Retention Route (VRR):
  • VRR is another scheme introduced by the RBI to encourage Foreign Portfolio Investors (FPIs) for long-term investments in Indian debt markets.
  • Provides operational flexibility and exemptions from certain regulatory requirements.
  • Requires a minimum retention period of three years, with FPIs maintaining a minimum of 75% of the allocated amount in India.
  • Investment limits are available on tap and allotted by Clearing Corporation of India Ltd. (CCIL) on a ‘first come first served’ basis.

10. GDP Estimate

Subject : Economy

Section: Indian  Economy and National Income

India’s GDP estimates for the current financial year (2023-24) based on the First Advance Estimates (FAEs) released by the government.

Here are the key points:

GDP Growth Estimate:

• The FAEs project that India’s GDP will grow by 7.3% in the current financial year, slightly faster than the 7.2% growth in the previous year (2022-23).

Basis for Budgeting:

• The FAEs are crucial as they are the last GDP data released before the Union Budget for the upcoming financial year is finalized. They form the basis for budgetary calculations.

Estimation Method:

• The FAEs are indicator-based and compiled using the benchmark-indicator method. Data from the first seven months of the financial year are extrapolated to provide an annual picture.

Significance of FAEs for 2023-24:

• The FAEs for the current year gain significance as they offer the first complete picture of economic growth of the last ten years.

GDP Growth Trend:

• The chart illustrates India’s real GDP in absolute terms and growth rate. By the end of March 2024, India’s GDP is expected to reach almost Rs 172 lakh crore.

Engines of GDP Growth:

• The text outlines the four main engines of GDP growth, including private consumption expenditure, gross fixed capital formation, government final consumption expenditure, and net exports.

Components of GDP Growth:

• It provides insights into how each component, such as private consumption demand, investment spending, government spending, and net exports, contributes to India’s GDP growth.

Comparison of Growth Trends:

• The growth rate in the second term of the government (2019-20 to 2023-24) is compared to the first term (2014-15 to 2018-19), highlighting a lower compounded annual growth rate (CAGR) in the second term.

Net Exports:

• The negative growth rates in net exports suggest that Indians are importing more than exporting. The drag effect from net exports has grown, but there is a mild improvement over the two terms.

Private Consumption Expenditure (C or PCE):

• This represents the total value of goods and services purchased by households in an economy over a specific time period.
• It includes spending on durable goods (e.g., cars, appliances), nondurable goods (e.g., food, clothing), and services (e.g., healthcare, education).
• Private consumption is a crucial driver of economic activity and is often a significant portion of a country’s GDP.

Government Final Consumption Expenditure (G or GFCE):

• This represents the total value of goods and services purchased by the government for direct consumption or for the collective benefit of the community.
• It includes spending on public goods and services such as defense, education, healthcare, and public administration.
• Government consumption expenditure is a component of government spending and contributes to overall economic activity.

Gross Fixed Capital Formation (GFCF):

• GFCF refers to the total value of new and replacement investments in physical assets made by both the private and public sectors within a country during a specific period.
• It includes spending on machinery, equipment, buildings, infrastructure, and other physical assets that contribute to the expansion and improvement of the productive capacity of the economy.
• GFCF is an indicator of the level of investment in an economy and is crucial for sustaining economic growth in the long term.

To calculate GDP using the expenditure approach, the formula is as follows:

GDP=C+I+G+(X−M)

Where:

• C is Private Consumption Expenditure
• I is Gross Fixed Capital Formation
• G is Government Final Consumption Expenditure
• X is Exports of goods and services
• M is Imports of goods and services

These components together represent the total spending in the economy, and GDP is the sum of all these expenditures.

About First Advance Estimates,” “Second Advance Estimates,” and “Provisional Estimates

The terms “First Advance Estimates,” “Second Advance Estimates,” and “Provisional Estimates” are stages in the process of estimating a country’s Gross Domestic Product (GDP) for a specific fiscal year.

These estimates provide insights into the overall economic performance and are crucial for economic planning and policy formulation. Here’s an overview of each stage:

1. First Advance Estimates (FAE):
   • The First Advance Estimates are released early in the financial year, usually in January, by the government.
   • These estimates provide an initial projection of the GDP growth rate and key economic indicators for the ongoing fiscal year.
   • FAE are based on available data for the first few months of the fiscal year, and projections are made for the remaining months.
2. Second Advance Estimates (SAE):
   • The Second Advance Estimates are released later in the financial year, typically in February, following the First Advance Estimates.
   • By this stage, more data for the fiscal year are available, allowing for a more refined and accurate estimation of GDP growth and other economic parameters.
   • SAE provide an updated and improved outlook compared to FAE, incorporating additional economic data.
3. Provisional Estimates:
   • The Provisional Estimates are released towards the end of the fiscal year, usually in May.
   • At this stage, most of the relevant data for the entire fiscal year are available, providing a comprehensive and accurate assessment of economic performance.
   • Provisional Estimates serve as the basis for the finalization of the annual economic accounts.
4. Final Estimates (Actuals):
   • After the end of the fiscal year, the authorities revise and finalize the GDP estimates based on the most complete and accurate data available.
   • These Final Estimates, also referred to as “Actuals,” are typically released after thorough data reconciliation and validation.
   • The Final Estimates provide the official and most accurate figures for the GDP growth rate and other economic indicators for the completed fiscal year.

In summary, the First Advance Estimates provide an early projection, the Second Advance Estimates offer an updated outlook, and the Provisional Estimates present a more comprehensive assessment. The Final Estimates, released later, represent the most accurate figures for the GDP and economic indicators for a specific fiscal year.