Daily Prelims Notes 27 December 2021
- December 29, 2021
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
27 December 2021
Table Of Contents
- Circular Economy through Aluminium
- ‘Electronic Gold Receipt’ (EGR) as Securities
- CPSEs’ Capital Expenditure
- Gross Fixed Capital Formation
- Golan Heights
- Minimum Support Prices (MSP)
- Archbishop Desmond Tutu
- Right to be Forgotten
- Healthcare Access and Quality (HAQ) index
- National Programme for the Health Care for the Elderly
Subject – Economy
Context – According to Ellen McArthur Foundation, the demand for vital raw materials like plastic, concrete, aluminium, and steel will increase four-fold, resulting in worldwide CO2 emission of 649 billion tonnes by 2100.
- A Circular economy would essentially mean moving away from a ‘Take, Make and Dispose of’ model that has seen its time through a linear economy to the ‘7 R’s’ of Sustainability — Rethink, Refuse, Reduce, Repurpose, Reuse, Recycle, and Rot (composting food scraps).
- It extends beyond recyclability, focusing on keeping products as resources at the end of their lifecycle and giving a similar output as its linear counterpart with minimal ecological and environmental impact.
- The ‘7 R’s’ of Sustainability applies to both saving the environment and living a zero-waste life
- Aluminium is one metal that offers the benefits of a circular economy to the industry.
- It can be recycled multiple times without losing any mechanical, physical, or chemical properties.
- As per the World Economic Forum, 75 per cent of the aluminium ever produced is still in use.
- At the same time, according to the latest IAI (International Aluminium Institute) figures, the sector, including primary, secondary, and downstream aluminium producers, contributes roughly 1.1 Gt CO2e or 2 per cent of global emissions.
- Recycling aluminium takes 5 per cent of the electricity required to produce the same quantity of virgin aluminium. Thus, aluminum-in-use should be an integral part of a plan to achieve the planet’s green goals and development ambitions.
- If put through an organised circular economy, it would help reduce CO2 emissions worldwide by up to millions of tonnes a year by 2050.
- Aluminium’s low energy use and emission levels have helped it transform the world.
- Downstream aluminium has efficiently enabled developments in transport: air, road, rail, and sea; food, beverage, and pharmaceutical packaging; construction; electronics; and electricity transmission.
- It has been made possible due to aluminium’s solid yet lightweight properties, something other metals lack. This is why aluminium is also called the green metal making the EV possible.
- Compared to other metals, aluminium alloys boast a high strength-to-weight ratio, provide superior thermal and electric conductivity, and are corrosion resistant.
- Aluminium’s malleability, elasticity, and surface reflectivity help manufacture a wide range of high-quality and sustainable products.
- A NITI Aayog report, backing the need for an aluminium policy, notes that even at low consumption levels, aluminium contributed to 2 per cent of Indian manufacturing GDP.
To know more about Circular Economy, please refer August 2021 DPN.
Subject – Economy
Context – Electronic gold receipts are now ‘securities’, says Finance Ministry
- The Finance Ministry has specified ‘Electronic Gold Receipt’ (EGR) as ‘securities’ under the Securities Contracts (Regulation) Act 1956, paving way for trading of such instruments on any new gold exchanges that may come up in the country.
- This move would also enable trading of EGR in existing exchanges under a separate segment. Like shares, EGRs will be held in demat form and can be converted into physical gold when needed.
- With this move, EGR will have trading, clearing and settlement features akin to any other securities.
- An EGR is an electronic receipt issued on the basis of deposit of underlying physical gold in accordance with the regulations made by SEBI.
- Finance Minister Nirmala Sitharaman had in the 2021-22 budget said that Securities and Exchange Board of India (SEBI) will be the regulator for gold exchanges and that the Warehousing Development and Regulatory Authority would be strengthened to set up the commodity market ecosystem.
- SEBI had in September this year given its nod for setting up a gold exchange wherein the yellow metal will be traded in the form of an EGR.
- SEBI had then said that any recognised stock exchange, existing as well as new, can launch trading in EGRs in a separate segment.
- The denomination for trading of EGRs and conversion of an EGR into gold can be decided by the stock exchanges with the approval of SEBI.
- Host of benefits for the value chain participants as well as for the entire gold market ecosystem such as efficient and transparent price discovery, investment liquidity, assurance in the quality of gold etc.
- The EGR holder can continue to hold the EGRs as long as intended since EGRs will have perpetual validity.
- An EGR holder at his discretion can also withdraw the underlying gold from the vaults upon surrender of such receipts.
- To lower the costs associated with withdrawal of gold from the vaults, SEBI said EGRswill be made “ fungible” and “interoperability between vault managers” will be allowed.
- SEBI has already said that it would regulate vault managers, who will have to register with the market regulator, as an intermediary for providing vaulting services meant for gold deposited to create EGRs.
- The obligations of the vault manager include accepting deposits, storage and safekeeping of gold, creation as well as withdrawal of EGR, grievance redressal and periodic reconciliation of physical gold with the records of depository.
- India is one of the largest consumers of gold with annual demand of about 900 tonnes.
- A SEBI paper put out for public comments had said that EGR trading will attract securities transaction tax and goods and services tax (GST) from the beginning
To know about Securities, please refer December 2021 DPN.
Subject – Economy
Context – At 20%, CPSEs’ capex pace strong, yet below target
- Capital expenditure by large central public-sector entities — companies and undertakings – rose by 19 per cent on year to Rs 3.1 lakh crore in the first eight months of the current financial year.
- In April-November of FY22, the railways was the largest investor by deploying capex of about Rs 93,000 crore or 48 per cent of its annual target of Rs 1.95 lakh crore.
- Capital expenditures are the ones that create some liability/asset for the government. These include loans to public enterprises, loans to States, Union Territories and foreign governments and acquisition of valuables.
- They are long-term investments of huge amount of money for acquiring long-term assets like manufacturing equipment. Such assets acquired provide income-generating value over a period of years.
- Hence, the cost of such assets is recovered through year-by-year depreciation over the productive life of the asset. In essence, the expenditure which is done for initiating current, as well as the future economic benefit, is actually capital expenditure.
Examples of capital expenditures
- Purchase of factory and building.
- Purchase of machine, furniture, motor vehicle, office equipment etc.
- Cost of goodwill, trademarks, patents, copy right, patterns and designs.
- Expenditure on installation of plant and machinery and other office equipment.
- Additions or extension of existing fixed assets.
- Structural improvement or alterations as to fixed assets which increase their life or earning capacity. For example: Conversion of handloom to powerloom.
- Development expenses in case of mines and plantations.
To know about Capital Expenditures and Revenue Expenditures, please refer October 2021 DPN.
Subject – Economy
Context – Gross fixed capital formation rate sees decline in 2020-21
- Gross fixed capital formation (GFCF), which is an indicator of the level of investments in the country, fell by 10.8 percent during the financial year 2020-21 as compared to a rise of 5.4 percent during the previous fiscal.
- Gross fixed capital formation (GFCF) refers to the net increase in physical assets (investment minus disposals). It does not account for the consumption (depreciation) of fixed capital.
- As per RBI, Gross capital formation refers to the ‘aggregate of gross additions to fixed assets (that is fixed capital formation) plus change in stocks during the counting period.’
- Fixed asset refers to the construction, machinery and equipment.
- It is a component of expenditure approach to calculating Gross Domestic Product (GDP).
- GFCF is not a measure of total investment, because only the value of net additions to fixed assets is measured, and all kinds of financial assets, as well as stocks of inventories and other operating costs are excluded.
- GFCF is an indicator for gauging the fixed capital formation. A downward trajectory in gross fixed capital formation would indicate that the fixed capacities are not being ramped up.
Subject – IR
Context – Israel approves plan to double settlers in occupied Golan Heights
- The Golan Heights is a rocky plateau with an area of 1,800km² on the border between Israel and Syria in south-western Syria.
Subject – Agriculture
Context – There is no guarantee farmers’ income will rise as the methodology for estimating cost of production is outdated, defective
- The Centre has been announcing MSP for crops every year for two seasons — kharif and rabi — since 1965, based on the recommendation of the Commission for Agricultural Costs and Prices (CACP).
- Initially, it was announced only for wheat and paddy. Over the years, more crops were added. The MSP is currently offered for 23 crops.
- Historically, the MSP is determined based on the cost of cultivation, input prices, supply and demand of crops, the price level in world markets, etc.
- Although the CACP uses nine different cost concepts (A1, A2, A2+FL, B1, B2, C1, C2, C2* and C3) for estimating the cost of production, the MSP was fixed based on cost A2+FL formula till 2018.
- While the cost C3 includes all the expenses incurred for crop cultivation, A2 covers only the farmer’s out-of-pocket spend on cultivation.
- That is, cost A2+FL (family labour) does not take into account the depreciation cost of farm machinery, the interest on loans, etc. Therefore, the gap between C3 and A2+FL cost is 30-50 per cent for most mandated crops.
- In such a scenario, crop production becomes unprofitable for farmers. So they are demanding MSPs that cover the full cost of production.
- MS Swaminathan headed Farmers’ Commission (2006) recommended that MSPs for crops should be fixed at 50 per cent higher than the cost of production.
- Given the continuous demand from farmers, the government made a historic announcement in Budget 2018-19 that the MSP will be fixed at least one-and-half times the cost of production.
- Since kharif 2018, the MSP is are fixed based on cost A2+FL plus 50 per cent formula.
To know more about MSP, please refer September 2021 DPN.
Subject – Defence and Security
Context – Phishing attacks on central ministry officials get sharper, targeted
- Phishing is a cybercrime in which a target or targets are contacted by email, telephone, or text message.
- This is done by someone posing as a legitimate institution to lure individuals into providing sensitive data such as personally identifiable information, banking and credit card details, and passwords.
- The goal is to trick the email recipient into believing that the message is something they want or need — a request from their bank, for instance, or a note from someone in their company — and to click a link or download an attachment.
- What really distinguishes phishing is the form the message takes: the attackers masquerade as a trusted entity of some kind, often a real or plausibly real person, or a company the victim might do business with.
- It’s one of the oldest types of cyberattacks, dating back to the 1990s, and it’s still one of the most widespread and pernicious, with phishing messages and techniques becoming increasingly sophisticated.
Related Terms –
- Spam is unsolicited email, instant messages, or social media messages. These messages are fairly easy to spot and can be damaging if you open or respond.
- Spear Phishing occurs when criminals obtain information about you from websites or social networking sites, and customize a phishing scheme to you.
- Spoofing describes a criminal who impersonates another individual or organization, with the intent to gather personal or business information.
- Pharming is a malicious website that resembles a legitimate website, used to gather usernames and passwords.
Subject – History
Context – Antiapartheid icon Desmond Tutu dies
- He was a South African Anglican bishop and theologian, known for his work as an anti-apartheid and human rights activist.
- The Archbishop won the Nobel Peace Prize in 1984 for combating white minority rule in South Africa.
- He coined the term “Rainbow Nation” to describe South Africa when Nelson Mandela became the country’s first black President in 1994.
- Former U.S. President Barack Obama, the country’s first black leader, hailed Tutu as a “moral compass”.
Subject – Polity
Context – Centre told the Delhi High Court that the “right to be forgotten” is part of the fundamental right to privacy
- It allows a person to seek deletion of private information from the Internet.
- The concept has found recognition in some jurisdictions abroad, particularly the European Union.
- While the right is not recognised by law in India, courts in recent months have held it to be an intrinsic part of the right to privacy.
Which countries have such laws?
- The EU in 2018 adopted the General Data Protection Regulation (GDPR), Article 17 of which provides for the right to erasure of certain categories of personal data.
- Russia in 2015 enacted a law that allows users to force a search engine to remove links to personal information on grounds of irrelevancy, inaccuracy and violation of law.
- The right to be forgotten is also recognised to some extent in Turkey and Siberia, while courts in Spain and England have ruled on the subject.
What is the position in India?
- Centre told the Delhi High Court that the right to privacy has been recognised as a fundamental right in the K S Puttaswamy judgment (2017) and that the ‘right to be forgotten’ is evolving in India.
- The government said the Personal Data Protection Bill (a Joint Parliamentary Committee’s report on which was tabled on December 16), contains provisions to the doctrine of the ‘right to be forgotten’.
Subject – Governance
Context – As per the 2016 Healthcare Access and Quality Index (HAQ), India improved its HAQ score from 24.7 in 1990 to 41.2 in 2016
- India was ranked 145th among 195 countries on Healthcare Access and Quality (HAQ) index in 2016.
- The index is based on 32 causes of death considered preventable with effective medical care.
- It assigns a 0-100 score to each of the 195 countries and territories assessed.
- The comprehensive index is released by Global Burden of Disease, funded by the Bill and Melinda Gates Foundation.
- India has seen improvement in HAQ since the year 1990. India’s HAQ score 41.2 has improved from 24.7 score in the year 1990.
- India lags way behind its BRICS peers Brazil, Russia, China and South Africa on the HAQ index.
Subject – Governance
Context – Life expectancy in India has risen from 50 (1970-75) to 70 years (2014-18); as a result, the number of elders (those over 60 years) is already 137 million, and expected to increase by 40% to 195 million in 2031, and 300 million by 2050.
- The National Programme for the Health Care for the Elderly (NPHCE) is an articulation of the International and national commitments of the Government as envisaged under the UN Convention on the Rights of Persons with Disabilities (UNCRPD), National Policy on Older Persons (NPOP) adopted by the Government of India in 1999 & Section 20 of “The Maintenance and Welfare of Parents and Senior Citizens Act, 2007” dealing with provisions for medical care of Senior Citizen.
- To provide accessible, affordable, and high-quality long-term, comprehensive and dedicated care services to an Ageing population;
- Creating a new “architecture” for Ageing;
- To build a framework to create an enabling environment for “a Society for all Ages”;
- To promote the concept of Active and Healthy Ageing