Daily Prelims Notes 30 June 2020

June 30, 2020
Posted by: OptimizeIAS Team
Category: DPN

Table Of Contents

Subject: Polity

Context:

India government has banned 59 apps originating from China by invoking its power under Section 69A of the Information Technology Act

Concept:

Reason

Ministry of Electronics and Information Technology (MeitY) said it had received many complaints including several reports about misuse of some mobile apps available on Android and iOS platforms for stealing and surreptitiously transmitting users’ data in an unauthorised manner to servers which have locations outside India.
It also received many representations raising concerns from citizens regarding security of data and risk to privacy relating to operation of certain apps.
The compilation of collected data, its mining and profiling by elements hostile to national security and defence of India, which ultimately impinges upon the sovereignty and integrity of India

Section 69A of IT act

Power to issue directions for blocking for public access of any information through any computer resource
Central Government or any of its officers specially authorized by it if satisfied that it is necessary or expedient so to do, in the interest of sovereignty and integrity of India, defence of India, security of the State, friendly relations with foreign States or public order or for preventing incitement to the commission of any cognizable offence relating to above, it may by order, direct any agency of the Government or intermediary to block for access by the public or cause to be blocked for access by the public any information generated, transmitted, received, stored or hosted in any computer resource.

2. Expenditure Management measure

Subject: Economy

Context:

Ministry of finance has disallowed the automatic carry forward of unspent money by various ministries and departments over the next month or quarter.
It also decided that order restricting overall quarterly expenditure of certain ministries and departments to 15-20% of their budgeted amounts in the first quarter of this fiscal, will continue through the second quarter.

Concept:

A decline in direct and goods and services tax collections further stressed the government’s revenue at a time the economy is headed toward its first full-year contraction in four decades.
The government has reprioritised its spending in the current fiscal due to the Covid-19 outbreak with focus on minimising spending on things that have low multiplier effect on the economy, and cutting dependency on items with high import intensity
The ministry, in April, had classified government departments into three categories and tightened their spending for the April-June period, barring for those fighting the outbreak.
The ministries or departments under category ‘C’ such as petrochemicals, coal, commerce, telecommunications, among others, could spend only 15% of budget estimate for the current year, while those in category ‘B’ such as fertilizers, posts, defence services can spend only 20%.
No curbs were placed for departments under category ‘A’ that include agriculture, ayurveda, pharmaceuticals, civil aviation, rural development, among others.
These restrictions will now continue for the quarter ending September.

3. Equalization levy

Subject: Economy

Context:

Just one week left to pay first installment of the equalisation levy on e-Commerce companies.

Concept:

Equalization Levy was introduced in India in 2016-2017, with the intention of taxing the digital transactions i.e. the income accruing to foreign e-commerce companies from India.
Equalization Levy is a direct tax, which is withheld at the time of payment by the service recipient.
The two conditions to be met to be liable to equalization levy:
The payment should be made to a non-resident service provider;
The annual payment made to one service provider exceeds Rs. 1, 00,000 in one financial year.
The following services covered:
Online advertisement
Any provision for digital advertising space or facilities/ service for the purpose of online advertisement;
Currently the applicable rate of tax is 6% of the gross consideration to be paid.

4. Open Market Operation and Operation twist

Subject:Economy

Context:

Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for ₹10,000 crores each on July 02, 2020

Concept:

OMO

Open market operations are the sale and purchase of government securities and treasury bills by RBI or the central bank of the country.
The objective of OMO is to regulate the money supply in the economy.
When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.
RBI carries out the OMO through commercial banks and does not directly deal with the public.

Operation twist:

The tool essentially aims at changing the shape of the yield curve (hence the name — twist) through simultaneous buying and selling of long- and short-term government bonds.
The intent is to moderate high long-term interest rates in the market and bring them closer to the repo rate.

Why needed?

The RBI said it will buy long-dated government securities maturing between May-2027 and December 2033. On the other hand it will sell securities that mature between October 2020 and April 2021.
The sale of short-term securities will push up the short-term rate.
Experts say the move is necessary because the present market conditions in India have made investors/customers hesitant in making long-term investments or availing long-term loans.
It may be noted that high market yields on long-term government securities often send interest rates on long-term loans soaring. This can affect customers seeking long term loans for vehicles, real estate, and other long-term borrowings.
As the central bank buys more long-term security and sells off short term bonds, the bond yield -the return an investor gets on his holding – comes down significantly.
Since long-term bond yield (10-year government securities) is a key market interest rate, lower rates can help people avail more long-term loans. It also helps in bringing down overall borrowing costs for the government.

History of Operation Twist:

In 1961, the John F Kennedy administration proposed a solution to revive the weak economy through lower longer-term interest rates while keeping short-term interest rates unchanged. This initiative is now known as ‘Operation Twist’ which was employed by the US Fed.

Yield Curve:

A yield curve is a graph of interest rate on all government bonds ranging from the short-term debt (one month) to long-term debt (could be high as 30 years).
Typically, the short term bond has lower interest rate compared with the long-term bond reflecting the higher perceived risk of the latter. Hence a graph of the interest rate of the short-term bond and longer-term will be an increasing line chart. This in technical parlance is called an upward sloping curve.

5. Global Financial Stability Report

Subject: Report

Context:

IMF on recent update of Global Financial Stability Report said financial conditions have eased but insolvencies loom large.

Concept:

Findings

Risk asset prices have rebounded following the precipitous fall early in the year, while benchmark interest rates have declined, leading to an overall easing of financial conditions.
Swift and bold actions by central banks aimed at addressing severe market stress have boosted market sentiment, including in emerging markets, where asset purchases have been deployed in a number of countries for the first time, helping bring about the easing in financial conditions.
Amid huge uncertainties, a disconnect between financial markets and the evolution of the real economy has emerged, a vulnerability that could pose a threat to the recovery should investor risk appetite fade.
Other financial system vulnerabilities may be crystallized by the COVID-19 pandemic. High levels of debt may become unmanageable for some borrowers, and the losses resulting from insolvencies could test bank resilience in some countries.
Some emerging and frontier market economies are facing refinancing risks, and market access has dried up for some countries.
Authorities, while continuing to support the real economy, need to closely monitor financial vulnerabilities and safeguard financial stability.

6. Kharif cropping season

Subject: Geography

Context:

There is massive increase in planted acreage for various kharif season crops as of June 26, compared with the same time last year according to ‘All India Crop Situation’ report of the Agriculture Ministry.

Concept:

Despite the Covid-19 crisis, farmers have so far planted an impressive 316 lakh hectare, which is more than double of 154 lakh ha planted during the corresponding period last year and higher than the average 187 lakh ha in past five years, according to the Agriculture Ministry.
Kharif crops are grown with the onset of monsoon in different parts of the country and these are harvested in September-October.
Important crops grown during this season are paddy, maize, jowar, bajra, tur (arhar), moong, urad, cotton, jute, groundnut and soyabean

7. PMFME scheme

Subject: Schemes

Context:

Centre has launched aRs 10,000 crore scheme for micro enterprises

Concept:

Pradhan MantriFormalisation of Micro Food Enterprises (PM FME) aims to bring in new technology, apart from affordable credit to help small entrepreneurs penetrate new markets.
Objectives:

Increase in access to finance by micro food processing units.
Increase in revenues of target enterprises.
Enhanced compliance with food quality and safety standards.
Strengthening capacities of support systems.
Transition from the unorganized sector to the formal sector.
Special focus on women entrepreneurs and Aspirational districts.
Encourage Waste to Wealth activities.
Focus on minor forest produce in Tribal Districts.

Salient features:

Centrally Sponsored Scheme. Expenditure to be shared by Government of India and States at 60:40.
2,00,000 micro-enterprises are to be assisted with credit linked subsidy.
Scheme will be implemented over a 5 year period from 2020-21 to 2024-25.
Cluster approach.
Focus on perishables.

One District One Product

The Scheme adopts One District One Product (ODODP) approachto reap benefit of scale in terms of procurement of inputs, availing common services and marketing of products.
The States would identify food product for a district keeping in view the existing clusters and availability of raw material.
The ODOP product could be a perishable produce based product or cereal based products or a food product widely produced in a district and their allied sectors.
Preference would be given to those producing ODOP products. However, units producing other products would also be supported.
Support for common infrastructure and branding & marketing would be for ODOP products.

8. Anti-Dumping duty and countervailing

Subject: Economy

Context:

Department of Pharmaceuticals has written to domestic medical devices manufacturers to report on unfair trade practices in exporting market.

Concept:

An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. Dumping is a process where a company exports a product at a price lower than the price it normally charges in its own home market. For protection, many countries impose stiff duties on products they believe are being dumped in their national market, undercutting local businesses and markets.
Countervailing Duties (CVDs) are tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country. CVDs are meant to level the playing field between domestic producers of a product and foreign producers of the same product who can afford to sell it at a lower price because of the subsidy they receive from their government.

Director General of Trade Remedies

The Directorate General of Trade Remedies (earlier known as Directorate General of Anti-dumping and Allied Duties) was named in May 2018 as an integrated single window agency for providing comprehensive and swift trade defence mechanism in India.
Earlier, the Directorate General of Anti-dumping and Allied Duties (DGAD) dealt with anti-dumping and CVD cases, Directorate General of Safeguards (DGS) dealt with safeguard measures and DGFT dealt with quantitative restriction (QR) safeguards.
The DGTR brings DGAD, DGS and Safeguards (QR) functions of DGFT into its fold by merging them into one single national entity.
DGTR now deals with Anti-dumping, CVD and Safeguard measures.
It also provides trade defence support to our domestic industry and exporters in dealing with increasing instances of trade remedy investigations instituted against them by other countries. DGTR provides a level playing field to the domestic industry against the adverse impact of the unfair trade practices like dumping and actionable subsidies from any exporting country, by using Trade Remedial methods under relevant framework of WTO arrangements, Customs Tariff Act & Rules and other relevant laws and International agreements, in a transparent and time bound manner.
DGTR functions as an attached office of Department of Commerce, Ministry of Commerce and Industry.

9. Middle East quartet

Subject:IR

Context:

The United Nations (UN) Secretary-General has announced that the UN is unable to convene the Middle East Quartet to discuss the potential Israeli plan to annex large parts of the occupied West Bank.
The Office of High Commissioner for Human Rights described the annexation of occupied territory as a serious violation of the Charter of the United Nations and the Geneva Conventions

Concept:

The Quartet, set up in 2002, consists of the United Nations, the European Union, the United States and Russia.
Its mandate is to help mediate Middle East peace negotiations and to support Palestinian economic development and institution-building in preparation for eventual statehood.
It meets regularly at the level of the Quartet Principals (United Nations Secretary General, United States Secretary of State, Foreign Minister of Russia, and High Representative of the European Union for Foreign Affairs and Security Policy) and the Quartet Special Envoys.

UN Charter and Geneva Convention

The Geneva Conventions and their Additional Protocols are international treaties that contain the most important rules limiting the barbarity of war.
They protect people who do not take part in the fighting (civilians, medics, aid workers) and those who can no longer fight (wounded, sick and shipwrecked troops, prisoners of war).
The Conventions and their Protocols call for measures to be taken to prevent or put an end to all breaches. They contain stringent rules to deal with what are known as “grave breaches”. Those responsible for grave breaches must be sought, tried or extradited, whatever nationality they may hold.
The 1949 Geneva Conventions: The First Geneva Convention protects wounded and sick soldiers on land during war.
The Second Geneva Convention protects wounded, sick and shipwrecked military personnel at sea during war.
The Third Geneva Convention applies to prisoners of war
The Fourth Geneva Convention protects civilians, including those in occupied territory.

10. World Bank STARS project

Subject: Scheme

Context:

World Bank approved $500 million project to better education quality in 6 states

Concept:

The project, named STARS (Strengthening Teaching-Learning and Results for States Program), will be implemented through the SamagraShikshaAbhiyan, the flagship central scheme, in partnership with Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Odisha and Rajasthan.
STARS will help improve learning assessment systems, strengthen classroom instruction, and remediation, facilitate school-to-work transition, and strengthen governance and decentralized management.
STARS will support India’s renewed focus on addressing the ‘learning outcome’ challenge and help students better prepare for the jobs of the future – through a series of reform initiatives.

11. National data Sharing and Accessibility policy 2012

Subject: Polity

Context:

Pandemic has exposed the unsatisfactory state of India’s data collection and processing. It was highlighted by the recent upward revisions to the COVID-19 death toll in some States.

Concept:

The objective of this policy is to facilitate the access to Government of India owned shareable data and information in both human readable and machine readable forms through a network all over the country
The National Data Sharing and Accessibility Policy will apply to all data and information created, generated, collected and archived using public funds provided by Government of India directly or through authorized agencies by various Ministries/Departments/Organizations/Agencies and Autonomous bodies.
The policy envisages three types of access to data: open, registered and restricted.

12. Kholongchuu Project

Subject:IR

Context:

India signed a concession agreement with Bhutan for the 600 MW Kholongchhu Hydroelectric Project in the virtual presence of external affairs minister.

Concept:

The 600 MW run-of-the-river project is located on the lower course of the Kholongchhu River in Eastern Bhutan.
It will be implemented by Kholongchhu Hydro Energy Limited, a Joint Venture lunched between Druk Green Power Corporation (DGPC) of Bhutan and Satluj Jal Vidyut Nigam Limited (SJVNL) of India.
With this, four hydroelectric projects of bilateral cooperation (336 MW Chukha HEP, 60 MW Kurichhu HEP, 1020 MW Tala HEP and 720 MW Mangdechhu HEP), totaling over 2100 MW, are already operational in Bhutan.
Both India and Bhutan emphasized the importance of hydro power development as an important pillar of mutually beneficial bilateral economic cooperation.

13. Plasma Bank

Subject: Science and tech

Context:

Delhi is going to set up Plasma bank first-of-its-kind initiative in the entire country

Concept:

Similar to blood banks, where blood is extracted and stored for those who might be in need, the idea is to extract and store plasma from people who have recovered from Covid-19and give it to someone suffering from the disease. Plasma Therapy already covered.

14. Dada Bhai Naroji

Subject: History

Context:

Dadabhai Naroji is commemorated on his death anniversary

Concept:

He is “Grand Old Man of India” because one of the first leaders who stirred national consciousness in the country.
In 1865 and 1866, Naoroji helped found the London Indian Society and the East India Association respectively. The two organisations sought to bring nationalist Indians and sympathetic Britons on one platform.
In 1885, Naoroji became a vice-president of the Bombay Presidency Association, was nominated to the Bombay legislative council by Governor Lord Reay, and helped form the Indian National Congress.
Dadabhai Naoroji was among the key proponents of the ‘Drain Theory’, disseminating it in his 1901 book ‘Poverty and Un-British Rule in India’.
Naoroji argued that imperial Britain was draining away India’s wealth to itself through exploitative economic policies, including India’s rule by foreigners; the heavy financial burden of the British civil and military apparatus in India; the exploitation of the country due to free trade; non-Indians taking away the money that they earned in India; and the interest that India paid on its public debt held in Britain.
He served as the first Indian member of the British parliament.
He was Congress president thrice, in 1886, 1893, and 1906.