Daily Prelims Notes 2 February 2022

Daily Prelims Notes

2 February 2021

Table Of Contents

1. KEY HIGHLIGHTS OF THE BUDGET
2. CAPEX
3. DIGITAL RUPEE
4. DIGITAL LEARNING
5. 5G TECHNOLOGY
6. HEALTHCARE BUDGET
7. VENTURE CAPITAL & PRIVATE EQUITY
8. INCLUSIVE GROWTH
9. PM Gatishakti Initiative for Inclusive Growth
10. DEFICIT CROPS
11. Atmanirbhar Bharat Rojgar Yojana
12. Centre for Processing Accelerated Corporate Exit (C-PACE)
13. Finance Minister moots ₹19,500-cr. push for solar manufacturing
14. Resource allocation
15. Digitisation of land records
16. Chemical-free Natural Farming
17. Cryptocurrency tax

1. KEY HIGHLIGHTS OF THE BUDGET

TOPIC: Economy

Context- The Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman tabled the Union Budget 2022-23 in Parliament.

Concept-

The key highlights of the budget are as follows:

• India’s economic growth estimated at 9.2% to be the highest among all large economies.
• 60 lakh new jobs to be created under the productivity linked incentive scheme in 14 sectors.
• PLI Schemes have the potential to create an additional production of Rs 30 lakh crore.
• Entering Amrit Kaal, the 25 year long lead up to India @100, the budget provides impetus for growth along four priorities:
  • PM GatiShakti
  • Inclusive Development
  • Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and Climate Action.
  • Financing of investments

2. CAPEX

TOPIC: Economy

Context – FM Nirmala Sitharaman plans 25% jump in outlay for capital expenditure at ₹7.5-lakh cr

Concept –

• The central theme of the Budget 2022-23 was investment in infrastructure, and development.
• Sitharaman announced capital expenditure at ₹7.5-lakh crore. That’s about 2.9 per cent of GDP.
• Together with grant-in-aid to States, the effective capital expenditure for 2022-23 is projected to be about 4.1 per cent of GDP. The nominal GDP growth assumption of

What is Capital Expenditure-?

• Capital expenditure (Capex) is the money spent by the government on the development of machinery, equipment, building, health facilities, education, etc.
• Capital expenditure includes money spent on the following:
  • Acquiring fixed and intangible assets
  • Upgrading an existing asset
  • Repairing an existing asset
  • Repayment of loan

What is the significance of capital expenditure?

• Multiplier effect – Capex has the maximum multiplier effect (change in rupee value of output with respect to a change in rupee value of expenditure). This multiplier effect works through expansion of ancillary industries and services and job creation.
• Labour productivity – On the supply side, Capex can facilitate labour productivity.
• Macroeconomic stabilizer– Capital expenditure is an effective tool for countercyclical fiscal policy and acts as a macroeconomic stabiliser.
• Revenue generation – Capital expenditure leads to the creation of assets are long-term in nature and allow the economy to generate revenue for many years and boost operational efficiency.
• Liability reduction – Along with the creation of assets, repayment of loan is also capital expenditure as it reduces liability.
• Economic growth – Government capex catalyses private investment, increases production capacity thereby speeding up economic growth which in turn creates a lot more jobs.
• Crowding-in of investment: It is a phenomenon that occurs when higher government spending leads to an increase in economic growth and therefore encourages firms to invest due to the presence of more profitable investment opportunities. The crowding-in effect is observed when there is an increase in private investment due to increased public investment, for example, through the construction or improvement of physical infrastructures such as roads, highways, water and sanitation, ports, airports, railways, etc.

What is the status of Government spending on capital expenditure?

• The outlay for capital expenditure in the Union Budget is being stepped up sharply by 35.4 per cent from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23.
• The States cumulatively spend more on capex than the Centre.
• But, the money spent by states is not uniform throughout the year but is bunched up and spent in the last quarter of the fiscal.
• Both the Centre and the States should also focus on the quality of capex.

It is necessary if India has to escape its current moderate pace of economic expansion and post strong double digit GDP growth in a sustained manner in the future.

3. DIGITAL RUPEE

TOPIC: Economy

Context: Finance Minister Nirmala Sitharaman Tuesday announced the launch of the Digital Rupee — a central bank digital currency (CBDC) — 2022-23 onwards.

Concept: 

What is a CBDC?

• CBDC is a legal tender issued by a central bank in a digital form.
• It is similar to a fiat currency issued in paper and is interchangeable with any other fiat currency.

What is the need for CBDC?

• The goal is to provide users with convenience and security of digital as well as the regulated, reserve-backed circulation of the traditional banking system.

Who will launch the CBDC?

• The Reserve Bank of India will launch the CBDC from the upcoming financial year.
• This follows the government’s plans to launch the CBDC that will be backed by blockchain technology.

What does this change for citizens?

• One chief difference will be that a Digital Rupee transaction will be instantaneous as opposed to the current digital payment experience.

4. DIGITAL LEARNING

TOPIC: Education

Context- In her Budget speech, Sitharaman emphasised on strengthening digital modes of learning to aid supplementary teaching and proposed to establish a digital university.

Concept-

• Due to the pandemic-induced closure of schools, children, particularly in rural areas and those from SC and ST communities and other weaker sections, have lost almost two years of formal education.

The key highlights of the budget 2022-23 are as follows:

• ‘One class-One TV channel’ programme of PM eVIDYA to be expanded to 200 TV channels.
• Virtual labs and skilling e-labs to be set up to promote critical thinking skills and simulated learning environment.
• High-quality e-content will be developed for delivery through Digital Teachers.
• Digital University for world-class quality universal education with personalised learning experience to be established.
• Skill Development
• Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched to empower citizens to skill, reskill or upskill through on-line training.
• Startups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-Service (DrAAS).

Advantages of Digital Learning-

5. 5G TECHNOLOGY

TOPIC: Science & Technology

Context- The auctions for the 5G spectrum and the subsequent rollout of the technology is likely to happen in the forthcoming fiscal year said Finance Minister in Budget 2022-23.

Concept-

• Of the 8 per cent adjusted gross revenue payable by private telecom service providers and other telecom licence holders, 5 per cent goes into the USOF, while the rest goes into the central exchequer.
• Further, 5 per cent of the annual collection from the universal service obligation fund (USOF) would be allocated to enable broadband and mobile service proliferation in rural areas.
• The government, however, also pushed the deadline for completion of BharatNet by close to two years to 2025.
• Optical fibres in all villages including remote areas will be awarded under the Bharat- Net Project through PPP.

BHARATNET

• The initial aim of BharatNet, which was started as NOFN, was to connect 2.5 lakh gram panchayats (GPs) with high speed broadband internet by 2014.
• BharatNet is a flagship mission implemented by Bharat Broadband Network Ltd. (BBNL). It is a Special Purpose Vehicle (SPV) set up by the Government of India under the Companies Act, 1956.
• Currently, it is being implemented by the Department of Telecommunication under the Ministry of Communications.
• National Optical Fibre Network (NOFN) was launched in October 2011 and was renamed as Bharat Net Project in 2015.
  • National Optical Fibre Network was envisaged as an information superhighway through the creation of a robust middle-mile infrastructure for reaching broadband connectivity to Gram Panchayats.
• The entire project is being funded by the Universal Service Obligation Fund (USOF), which was set up for improving telecom services in rural and remote areas of the country.

Universal Service Obligation Fund (USOF)

• USOF ensures that there is universal non-discriminatory access to quality ICT (Information and Communications Technology) services at economically efficient prices to people in rural and remote areas.
• It was created under the Ministry of Communications in 2002.
• It is a non-lapsable fund, i.e., the unspent amount under a targeted financial year does not lapse and is accrued for next years’ spending.
• All credits to this fund require parliamentary approval and it has statutory support under Indian Telegraph (Amendment) Act, 2003.

6. HEALTHCARE BUDGET

TOPIC: Economy/Health

Context- The total health expenditure budget in 2022-23 has increased 0.23 per cent to Rs 86,200 crore unlike last year which saw 137 per cent increase in health and wellbeing expenditure.

Concept- 

The key highlights of the budget are as follows:

• An open platform for National Digital Health Ecosystem to be rolled out.
• ‘National Tele Mental Health Programme’ for quality mental health counselling and care services to be launched.
• A network of 23 tele-mental health centres of excellence will be set up, with NIMHANS being the nodal centre and International Institute of Information Technology-Bangalore (IIITB) providing technology support.
• SakshamAnganwadi
• Integrated benefits to women and children through Mission Shakti, Mission Vatsalya, SakshamAnganwadi and Poshan 2.0.
• Two lakh anganwadis to be upgraded to SakshamAnganwadis.

7. VENTURE CAPITAL & PRIVATE EQUITY

TOPIC: Economy

Context- The Union Government has proposed to set up an expert committee to examine and suggest measures to boost venture capital (VC) and private equity (PE) investments.

Concept-

• VCs and PE investors infused more than ₹5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystems.
• The committee will help address issues around coordination among multiple agencies and departments such as the RBI, SEBI, Finance Ministry, DPIIT and Commerce Ministry.

Venture Capital & Private Equity-

• Private equity is capital invested in a company or other entity that is not publicly listed or traded.
• Venture capital is funding given to startups or other young businesses that show potential for long-term growth.

8. INCLUSIVE GROWTH

TOPIC: Economy

Context- The government enunciated in its Budget a blueprint for Amritkaal, hinged on futuristic and inclusive economic growth.

Concept-

• Inclusive growth means economic growth that creates employment opportunities and helps in reducing poverty.
• It means having access to essential services in health and education by the poor. It includes providing equality of opportunity, empowering people through education and skill development.
• It also encompasses a growth process that is environment friendly growth, aims for good governance and helps in creation of a gender sensitive society.
• As per OECD (Organisation for Economic Co-operation and Development), inclusive growth is economic growth that is distributed fairly across society and creates opportunities for all.

Components of Economic Growth-

9. PM Gatishakti Initiative for Inclusive Growth

TOPIC: Economy

Context- Budget 2022-23 launched PM Gatishakti Initiative to boost infrastructure and logistics sector.

Concept-

• The National Master Plan aims to massively upgrade India’s infrastructure;
• This will not just support near-term growth but will enhance the competitiveness of the Indian industry.
• The seven engines that drive PM GatiShakti are:
  • Roads,
  • Railways,
  • Airports,
  • Ports,
  • Mass Transport,
  • Waterways
  • Logistics Infrastructure.
• The scope of PM GatiShakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency.

Road Transport

• National Highways Network to be expanded by 25000 Km in 2022-23.
• Rs 20000 Crore to be mobilized for National Highways Network expansion.

Multimodal Logistics Parks

• Contracts to be awarded through PPP mode in 2022-23 for implementation of Multimodal Logistics Parks at four locations.

Railways

• One Station One Product concept to help local businesses & supply chains.
• 2000 Km of railway network to be brought under Kavach, the indigenous world class technology and capacity augmentation in 2022-23.
• 400 new generation Vande Bharat Trains to be manufactured during the next three years.
• 100 PM GatiShakti Cargo terminals for multimodal logistics to be developed during the next three years.

Parvatmala

• National Ropeways Development Program, Parvatmala to be taken up on PPP mode.
• Contracts to be awarded in 2022-23 for 8 ropeway projects of 60 Km length.

10. DEFICIT CROPS

TOPIC: Agriculture

Context- There is emphasis in the Budget on diversification towards high value agriculture, as also deficitagri-commodities.

Stepping of the Budget into smart agriculture is further galvanised by supplementing production technology with digital technology. ‘Kisan Drones’ will take care of the plurality of issues all along the value chain.

Concept- 

Dryland Agriculture in India:

• India has 143 million ha of its geographical area under cropping, out of which 113 m ha has the potential to be irrigated, thus, 30 m ha are rainfed agriculture, even if the full potential of irrigation has been utilised.
• Presently, India has 93 m ha (recent data = 100 m ha) under irrigation. Thus, 43 m ha are under rainfed conditions.
• Dryland agriculture (Deficit Cropping) refers to the region or the type of farming which is operated in sub humid to arid conditions with inefficient hydrology, lack of irrigation facilities, complete dependency on monsoon rainfall and reflecting a typical cropping pattern of coarse grains millets and oilseeds, pulses, cotton etc.

Difference between Rainfed and Dryland agriculture

Need for Deficit Crops in India

• India has 1/3rd of its geographical area is under humid conditions, while 2/3rd is sub humid or arid conditions. Thus, deficit crops occupies larger land than the wet agriculture.
• It supports 40% of the population and occupies 66% of land. The ratio needs to be rectified, by increasing the productivity of these region.
• Dryland agriculture is based on the industrial crops e.g. cotton, groundnut, oilseeds, pulses, tobacco. For development of agro processing industries and to make Indian Agriculture more export- oriented, greater emphasis on deficit crops is inevitable.
• Hardy and nutritious cropseg. Jowar, bajra, ragi, pulses, oilseeds, cottonseeds, sunflower, safflower. Thus, the nutrition / malnutrition problems in poor areas can be fought with the help of dryland agriculture.
• It involves cash cropping, E.g. Jatropha cultivation can reduce the magnitude of petroleum crisis since liquid produced by it can be added to petroleum products without reducing the efficiency.
• Deficit crops have the potential to produce fodder and cattle feed. Thus, it can help in white revolution. Also, here the pasture lands are more extensive and cattle breeds have greater per-capital yield.

Some other methods to reduce water usage in Agriculture

• System of Rice Intensification (SRI) has been adopted by several farmers especially in Bihar and Andhra Pradesh as a water-conserving method of paddy cultivation. The technique needs a bigger push from the Centre to make it a universal concept.
• Conservation techniques like zero-tillage, raised-bed planting, precision farming and drip or sprinkler irrigation have shown good results in soil and water conservation but needs further improvement in technology for wider acceptance.
• Organic and nature based farming: Studies have shown that organic farming conserves water by requiring less water in irrigation and also helps in improving water-storage capacity of soil by improving its health.

11. Atmanirbhar Bharat Rojgar Yojana

Topic: Government schemes

In news:

The expenditure on the Atmanirbhar Bharat Rojgar Yojana (ABRY), aimed at encouraging job creation, and on the ongoing creation of a national database of unorganised workers, was proposed to be increased in the Union Budget for 2022-23.

About:

Atmanirbhar Bharat Rojgar Yojana:

Atmanirbhar Bharat RojgarYojana (ABRY) aims to boost employment in formal sector andincentivize creation of new employment opportunities during the Covid recovery phase underAtmanirbhar Bharat Package 3.0.

Salient features of the Scheme:

• Government of India will provide subsidy for two years in respect of new employees engaged on or after 1st October, 2020 and upto 30th June, 2021.
• Government of India will pay both 12% employees’ contribution and 12% employers’ contribution i.e., 24% of wages towards Employees’ Provident Fund (EPF) in respect of new employees in establishments employing upto 1000 employees for two years.
• Government of India will pay only employees’ share of EPF contribution i.e. 12% of wages in respect of new employees in establishments employing more than 1000 employee for two years.
• An employee drawing monthly wage of less than Rs. 15000/- who was not working in any establishment registered with the Employees’ Provident Fund Organisation (EPFO) before 1st October, 2020 and did not have a Universal Account Number or EPF Member account number prior to 1stOctober 2020 will be eligible for the benefit.
• Any EPF member possessing Universal Account Number (UAN) drawing monthly wage of less than Rs. 15000/- who made exit from employment during Covid pandemic from 01.03.2020 to 30.09.2020 and did not join employment in any EPF covered establishment up to 30.09.2020 will also be eligible to avail benefit.

e-Shram portal:

• Under the scheme, the government pays the employees’ share of Employees’ Provident Fund for new members with a salary of under ₹15,000 a month.
• In the Budget, the Ministry’son going project to register unorganised sector workers through the e-Shram portal was given an increased outlay from ₹150 crore in 2021-22 to ₹500 crore in 2022-23.

12. Centre for Processing Accelerated Corporate Exit (C-PACE)

Topic: Economy

In news:

• The Union Budget 2022-23 has proposed to establish the Centre for Processing Accelerated Corporate Exit (C-PACE) for speedy winding- up of companies.
• The finance minister proposed that the Centre for Processing Accelerated Corporate Exit (C-PACE) with process re-engineering, will be established to facilitate and speed up the voluntary winding-up of these companies from the currently required 2 years to less than 6 months.
• “Several information technology-based systems have been established for accelerated registration of new companies.

13. Finance Minister moots ₹19,500-cr. push for solar manufacturing

Topic: Economy

In news:

• The Centre has said it is committed to “facilitate” domestic manufacturing for the solar energy sector by looking to add 2,80,000 MW of installed capacity by 2030.
• To this end, Finance Minister said the government envisioned an “additional allocation” of ₹19,500 crore as a “production- linked incentive” for manufacturing solar modules.
• As part of this, India would increase its non-fossil energy capacity to 5,00,000 MW by 2030 and meet 50% of its energy requirements from renewable energy by 2030.
• “This strategy opens up huge employment opportunities and will take the country on a sustainable development path.
• The Central Electricity Authority in its latest assessment has said as of early November, solar accounted for 11.8% of the installed capacity and had increased from 11.3% from four months ago.
• In the run-up to COP-26, the U.S. and India agreed to collaborate towards installing 4,50,000 MW of renewable energy by 2030.
• India’s installed power capacity is projected to be 4,76,000 MW by 2021-22 and is expected to rise to at least 8,17,000 MW by 2030.

Solar energy in India:

• India’s current installed solar power capacity, is 97 MW which is 34% of total renewable energy sources i.e, 75055.92 MW
• India facing problems in fulfilling its energy demand, solar energy can play an important role in providing energy security.
• With its pollution free nature, virtually inexhaustible supply and global distribution, solar energy is very attractive energy resource.
• India’s Intended Nationally Determined Contributions (INDC’s) commitment includes 100 GW of solar power out of 175 GW renewable energy by 2022.

14. Resource allocation

Topic: Economy

In news:

• Ministry of Culture allocated over Rs 3,000 crore
• A third of the total outlay, at Rs 1080.34 crore, has been allocated to the Archaeological Survey of India (ASI), which protects and conserves more than 3,600 monuments across the country.
• A third of the total outlay, at Rs 1080.34 crore has been allocated to the Archaeological Survey of India (ASI), which protects and conserves more than 3,600 monuments across the country.
• This remains almost the same as last year, at Rs 1042 crore.
• The Ministry’s flagship schemes, which include Kala Sanskriti Vikas Yojana, Development of Museums, International Cooperation, Centenary and Anniversary Celebration scheme and Development of Libraries and Archives, has recorded an outlay of Rs 532.55 crore, while the funds allocated for the promotion of Indian languages have seen a significant drop this year, from above Rs 400 crore till last year, to Rs 250 crore for 2022-2023.

Several proposals mooted by the Ministry are also under consideration:

• These include an increase in the outlay for Kala Sanskriti Vikas Yojana to Rs 994.32 cr over a period of five years (2021-26).
• Enhancing the pension for old artists from Rs. 4000 a month to Rs 6000 per month.
• Promoting the Guru-Shishya Parampara through increased financial assistance of up to Rs 15,000 for the gurus, and up to Rs 10,000 for the shishya.

About:

Archaeological Survey of India (ASI):

• ASI, under the Ministry of Culture, is the premier organization for the archaeological research and protection of the cultural heritage of the nation.
• It administers more than 3650 ancient monuments, archaeological sites and remains of national importance.
• Its activities include carrying out surveys of antiquarian remains, exploration and excavation of archaeological sites, conservation and maintenance of protected monuments etc.
• It was founded in 1861 by Alexander Cunningham- the first Director-General of ASI. Alexander Cunningham is also known as the “Father of Indian Archaeology”.

15. Digitisation of land records

Topic: Government schemes

In news:

• The Centre has focused on digitisation of land records through its scheme Digital India Land Record Modernisation Programme (DILRMP).
• According to the Department of Land Records, over 90 per cent of land records have been digitised across 24 states.
• The linkage of National Generic Document Registration System (NGDRS) with the ‘One-Nation One-Registration Software’ will be promoted as an option for uniform registration process and “anywhere registration of deeds & documents”.
• States will be encouraged to adopt Unique Land Parcel Identification Number to facilitate IT-based management of records.
• The facility for transliteration of land records across any of the Schedule VIII languages will also be rolled out.

About:

• For modernization of land records system in the country, a modified programme, , the National Land Records Modernization Programme (NLRMP), now renamed as Digital India Land Records Modernization Programme (DILRMP), has been formulated.
• Two Centrally sponsored schemes of Computerization of Land Records (CLR) and Strengthening of Revenue Administration and updating of Land Records (SRA&ULR) were merged.

16. Chemical-free Natural Farming

Context: In her budget speech, FM said that chemical-free farming will be promoted throughout the country, starting with fields within a 5-km wide corridor along the Ganga River.

Natural vs Organic Farming

Advantages of Natural Farming

• Protect soil and environmental quality.
• Natural farming has a smaller carbon footprint.
• Conserves and builds soil health.
• Replenishes natural ecosystems for cleaner water and air, all without toxic pesticide residues. Advantages of organic farming
• Reduces pesticide and chemical residues in soil.
• Efficient use of resources.
• Minimizes the external cost of farming.
• More nutritional value compared to conventionally grown products.
• Tastes better than non-organic food.
• Healthier animals
• Safe guard’s natural flora, fauna and natural habitat.
• Soil and the environment is a public good

17. Cryptocurrency tax

Finance Minister Nirmala Sitharaman in her Budget 2022 has announced a flat 30 percent taxation on income from crypto and digital assets.

Has the government imposed a tax on digital currency and made it legal?

FM’s announcement led to several people wondering as to whether the Finance Minister has indicated towards legalisation of Cryptocurrency in India. The answer is not a simple YES or NO.

In her post Budget press conference, the Finance Minister had categorically said that anything to be called a “Currency” must have the sovereign backing by the Reserve Bank of India. So, she added that what we call a crypto-currency is actually a crypto-asset and not a Currency. FM further asserted that the term Crypto-currency is not a correct term.

However, since the income upon these would be taxed, the indication is that these will be legalised as Assets class and not as currency.