Daily Prelims Notes 6 September 2020
- September 6, 2020
- Posted by: OptimizeIAS Team
- Category: DPN
Table Of Contents
- Demerit goods and GST compensation
- Bradykinin storm and Cytokine storm
- 13th Amendment
- CT value and covid testing
- Index patient
- Forex reserve
1. Demerit goods and GST compensation
Subject: Economy
Context:
A maximum of 15 per cent cess on GST rate of 28 per cent are levied on luxury goods and aerated drinks which will help create a corpus for compensating states for any loss of revenue from GST implementation
Concept:
- In economics, a demerit good is a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves.
- It is over-consumed if left to market forces. Examples of demerit goods include tobacco, alcoholic beverages, recreational drugs, gambling, junk food.
- Because of the nature of these goods, governments often levy taxes on these goods (specifically, sin taxes), in some cases regulating or banning consumption or advertisement of these goods.
Compensation cess
- Compensation cess was introduced as relief for States for the loss of revenues arising from the implementation of GST.
- States, in lieu of giving up their powers to collect taxes on goods and services after local levies were subsumed under the GST, were guaranteed a 14 per cent tax revenue growth in the first five years after GST implementation by the Central government.
- States’ tax revenue as of FY16 is considered as the base year for the calculation of this 14 per cent growth.
- Any shortfall against it is supposed to be compensated by the Centre using the funds specifically collected as compensation cess.
- Compensation cess is levied on five products considered to be ‘sin’ or luxury goods like SUV, pan masala, cigrattes.
- The collected compensation cess flows into the Consolidated Fund of India, and then transferred to the Public Account of India, where a GST compensation cess account has been created.
- States are compensated bi-monthly from the accumulated funds in this account.
2. Bradykinin storm and Cytokine storm
Subject: Science and tech
Context:
A supercomputer’s recent analysis of data on the contents collected earlier from the lungs of patients with the COVID-19 infection has showed that a phenomenon called a ‘bradykinin storm’
Concept:
- Scientists are still trying to understand the causes for the rapid deterioration in some patients with COVID-19.
- While the cytokine storm is able to explain certain aspects of what goes wrong, doctors treating patients are often foxed by the severity with which the SARS-CoV-2 virus seems to affect some people.
Bradykinin storm
- Bradykinin is a compound that is related to pain sensation and lowering blood pressure in the human body.
- According to the researchers, SARS-CoV-2 uses a human enzyme called ACE2 like a ‘Trojan Horse’ to sneak into the cells of its host.
- ACE2 lowers blood pressure in the human body and works against another enzyme known as ACE (which has the opposite effect).
- The analyses further found that the virus caused the levels of ACE to fall in the lungs, and consequently pushed up the levels of ACE2.
- As a chain reaction, this increases the levels of the molecule bradykinin in the cells, causing a bradykinin storm. Bradykinin causes the blood vessels to expand and become leaky, leading to swelling of the surrounding tissue.
- In addition, the levels of a substance called hyaluronic acid, which can absorb more than 1,000 times its own weight in water to form a hydrogel, increased.
- In effect, the bradykinin storm-induced leakage of fluid into the lungs combined with the excess hyaluronic acid would likely result in a Jello-like substance that is preventing oxygen uptake and carbon dioxide in the lungs of severely affected COVID-19 patients.
Cytokine storm
- An immune reaction triggered by the body to fight an infection is known as a cytokine storm when it turns severe.
- The body releases too many cytokines, proteins that are involved in immunomodulation, into the blood too quickly.
- While normally they regulate immune responses, in this case they cause harm and can even cause death.
- Experts have noticed a violent cytokine storm in several individuals who are critical with COVID infection.
- These cytokines dilate blood vessels, increase the temperature and heartbeat, besides throwing blood clots in the system, and suppressing oxygen utilisation.
- If the cytokine flow is high and continues without cessation, the body’s own immune response will lead to hypoxia, insufficient oxygen to the body, multi organ failure and death. Experts say it is not the virus that kills; rather, the cytokine storm.
Subject: IR
Context:
After November 2019 presidential polls and the August 2020 general election in Sri Lanka, the spotlight has fallen on two key legislations in Sri Lanka’s Constitution.
Concept:
- The sharp focus is the 13th Amendment passed in 1987, which mandates a measure of power devolution to the provincial councils established to govern the island’s nine provinces.
- It is an outcome of the Indo-Lanka Accord of July 1987, signed by the then Indian Prime Minister Rajiv Gandhi and Sri Lankan President J.R. Jayawardene, in an attempt to resolve Sri Lanka’s ethnic conflict that had aggravated into a full-fledged civil war, between the armed forces and the Liberation Tigers of Tamil Eelam, which led the struggle for Tamils’ self-determination and sought a separate state.
- The 13th Amendment, which led to the creation of Provincial Councils, assured a power sharing arrangement to enable all nine provinces in the country, including Sinhala majority areas, to self-govern.
- Subjects such as education, health, agriculture, housing, land and police are devolved to the provincial administrations, but because of restrictions on financial powers and overriding powers given to the President, the provincial administrations have not made much headway.
- In particular, the provisions relating to police and land have never been implemented.
- The 13th Amendment carries considerable baggage from the country’s civil war years. It was opposed vociferously by both Sinhala nationalist parties and the LTTE.
- The former thought it was too much power to share, while the Tigers deemed it too little
Subject: Science and tech
Context:
Currently in India, RT-PCR tests can tell if a person is infected with novel coronavirus or not. It does not reveal the amount of virus (viral load in scientific parlance) present in the person.
Concept:
- The PCR test amplifies the genetic material from coronavirus through multiple cycles.
- Since coronavirus has RNA, it is first converted into DNA, and each cycle of amplification doubles the amount of DNA.
- If there is just one DNA molecule to start with, the amount of DNA after 30 cycles of amplification will be 230 (2 raised to 30) times, or one billion molecules.
- If there is more genetic material to begin with, then fewer cycles of amplification would be sufficient to detect the DNA.
- While the cycle threshold (Ct) value can be suggestive of the amount of virus in an infected person, there is no reliable way of correlating the Ct value with COVID-19 disease severity or infectiousness.
- The Ct (cycle threshold) is defined as the number of cycles required for the fluorescent signal to cross the threshold (ie exceeds background level).
- Ct levels are inversely proportional to the amount of target nucleic acid in the sample (ie the lower the Ct level the greater the amount of target nucleic acid in the sample)
Subject: Science and tech
Context:
With the Central government issuing the Unlock 4 guidelines that will allow many activities that attract large crowds to gather outside the containment zones. So there is heightened risk of a surge in coronavirus cases.
Concept:
- An individual affected with the first known case of an infectious disease or genetically transmitted condition or mutation in a population, region, or family is called index patient.
Subject: Economy
Context:
Reserve Bank of India (RBI) data showed India’s foreign exchange (forex) reserves surged by $3.883 billion to touch a lifetime high of $541.431 billion in the week ended August 28.
Concept:
- Forex reserves are external assets in the form of gold, SDRs (special drawing rights of the IMF) and foreign currency assets (capital inflows to the capital markets, FDI and external commercial borrowings) accumulated by India and controlled by the RBI.
- The major reason for the rise in forex reserves is the rise in investment in foreign portfolio investors in Indian stocks and foreign direct investments (FDIs). Foreign investors have acquired stakes in several Indian companies over the past several months.
- There is also fall in crude oil prices which brought down the oil import bill, saving precious foreign exchange. Similarly, overseas remittances and foreign travels have fallen steeply.
Significance of rising forex reserves:
- The rising forex reserves give comfort to the government and the RBI in managing India’s external and internal financial issues at a time of major contraction in economic growth.
- It serves as a cushion in the event of a crisis on the economic front, and is enough to cover the import bill of the country for a year.
- The rising reserves have also helped the rupee to strengthen against the dollar. The foreign exchange reserves to GDP ratio is around 15 per cent.
- Reserves will provide a level of confidence to markets that a country can meet its external obligations, demonstrate the backing of domestic currency by external assets, assist the government in meeting its foreign exchange needs and external debt obligations and maintain a reserve for national disasters or emergencies.
Role of RBI
- The Reserve Bank functions as the custodian and manager of forex reserves, and operates within the overall policy framework agreed upon with the government.
- The RBI allocates the dollars for specific purposes. For example, under the Liberalised Remittances Scheme, individuals are allowed to remit up to $250,000 every year.
- The RBI uses its forex kitty for the orderly movement of the rupee. It sells the dollar when the rupee weakens and buys the dollar when the rupee strengthens. Of late, the RBI has been buying dollars from the market to shore up the forex reserves.
- The RBI Act, 1934 provides the overarching legal framework for deployment of reserves in different foreign currency assets and gold within the broad parameters of currencies, instruments, issuers and counter parties.
- As much as 64 per cent of the foreign currency reserves are held in securities like Treasury bills of foreign countries, mainly the US; 28 per cent is deposited in foreign central banks; and 7.4 per cent is deposited in commercial banks abroad, according to RBI data.
- The return on India’s forex reserves kept in foreign central banks and commercial banks is negligible