IAS UPSC Prelims and Mains Exam – 08th February 2019
RBI cuts rates to spur growth
Part of: GS Prelims and Mains Paper III – Indian Economy, issues related to growth, mobilization of resources, etc.; Macro economy: Banking, Monetary Policy
- RBI cuts ‘repo rate’ by 25 basis points to 6.25% in a bid to revive economic growth.
- The move will enable banks to lower their lending rates.
- The RBI also simultaneously changed the stance of the policy to ‘neutral’ from ‘calibrated tightening,’ which indicates that the central bank remains ready to move in either direction based on incoming data.
What is Repo rate?
- Repo rate is the rate at which the central bank (RBI) lends money to commercial banks in the event of any shortfall of funds.
- Repo rate is used by monetary authorities to control inflation.
- RBI increases the repo rate during inflation and decreases it during deflation.
What happens when RBI decreases repo rate?
- In order to cure depression and lack of effective demand, central bank decreases repo rates and lends to commercial banks at a reduced rate.
- Because of reduced rates, commercial banks can acquire funds at a lower cost and in order to acquire new consumers and markets they pass their benefit of lower cost to consumers by decreasing their prime lending rates on loans and advances.
- Since, lending rates are reduced by banks, credit is cheap and this induces people to venture in new business activities and purchase of capital goods leading to increased demand for capital goods and increased employment rates.
Do you know?
RBI’s various policy stances with regard to policy rates
- Accommodative stance means RBI may reduce the policy rates to increase the money supply in the economy.
- Under this stance, policy rates normally decrease.
- Usually, this policy is adopted when there is slowdown in the economy.
- Neutral stance means the RBI would have the flexibility to either increase or decrease the policy rates by taking into account the macroeconomic conditions.
- Under this stance, key policy rates would move in either direction.
- Usually, this policy is adopted when the inflation rate is stable.
Calibrated Tightening stance
- Calibrated Tightening stance means the RBI would either keep the rates constant or increase the rates.
- Under this stance, key policy rates either remain unchanged or increase. Decrease in policy rates is ruled out.
- Usually, this policy is adopted when there are concerns of higher rate of inflation.
Guru Padmasambhava (also known as second Buddha): Founder of Tibetan BuddhismPart of: GS Prelims I – Indian Art and Culture; Ancient History
- Odisha Chief Minister unveiled a 19-foot-high statue of Guru Padmasambhava at Jirang in Gajapati district, Odisha.
- Padmasambhava, also known as Guru Rinpoche, is considered to be the founder of Tibetan Buddhism.
- The statue is placed in the middle of ‘Padma Sarovar’, a large tank near Padmasambhava Mahavihara, the largest Buddhist monastery in eastern India.
- The Dalai Lama had inaugurated this monastery in 2010. Tibetan refugees settled in this region over six decades ago.
- Historians claim that Guru Padmasambhava, also known as second Buddha, was born and brought up in Odisha before he left for Tibet.
- An International Conference on 8th century Himalayan sage Guru Padmasambhava was held in New Delhi.
- The conference was organised as part of events to commemorate 50-years of formalization of diplomatic ties between India and Bhutan.
- There is an image or painting of the Guru Padmasambhava in every Bhutanese home or temple.
- Guru Padmasambhava is also considered to be the founder of Nyingma tradition, oldest of the four major schools of Tibetan Buddhism.
E-cigarettes or Electronic Nicotine Delivery Systems Part of: Mains GS Paper II- Government interventions; Health issue In news:
- E-cigarettes, which dispense nicotine by heating a liquid, are a controversial subject.
- Even though their aerosols are thought to contain fewer carcinogens than cigarette smoke, experts are divided about their safety.
- India’s Union Ministry of Health and Family Welfare favours a ban, and has advised all States to clamp down on the sales and manufacture of these products.
- The evidence so far indicates that e-cigarettes are safer than combustible cigarettes.
- Because they heat a liquid to generate a nicotine-containing aerosol, instead of burning tobacco, they do not produce toxic tars.
- However, that doesn’t mean they are completely safe.
- At high temperatures, e-cigarettes produce carcinogens such as formaldehyde, although these are fewer in number compared to regular cigarettes. They also increase the odds of lung disease and myocardial infarction, but to a lesser extent than normal cigarettes do.
India to eliminate TB by 2025Part of: Mains GS Paper II- Government interventions; Role of NGOs; Health issue Key pointers:
- Prime Minister had said India will fully eliminate tuberculosis by 2025, a good five years ahead of the global deadline of 2030.
- The Delhi End TB Summit was organised by the Ministry of Health and Family Welfare jointly with the WHO’s South-East Asia Region Office and international coalition Stop TB Partnership.
- India is also implementing the National Strategic Plan for TB elimination that is backed by Rs. 12,000 crore in funding for the next three years to ensure every TB patient in the country has access to quality diagnosis, treatment and support.
- The new strategic plan adopts a multi-pronged approach which aims to detect all TB patients, with an emphasis on reaching patients seeking care from private providers and undiagnosed cases in high-risk populations.
- NGOs working to eliminate tuberculosis have urged the government to ensure that the National Strategic Plan for 2017-2025 is fully funded and effectively implemented to eliminate tuberculosis.
- Several NGOs and stakeholders, including TB survivors, have urged the Global Fund to Fight AIDS, TB and Malaria, and donor countries to invest substantially in communities to create a person-centred, rights-based and gender-sensitive response to TB.
Examples of some NGOs –
- TB Mukt Vahini-Bihar
- Stop TB Partnership, Geneva
- Global Coalition of TB Activists; Rainbow TB Forum, Tamil Nadu
- Journalists against TB, Bengaluru
Kerala to get country’s 2nd longest rail tunnel
- The 9.02-km tunnel, mooted by Konkan Railway Corporation Ltd (KRCL) from near the Balaramapuram station on the Kanyakumari-Thiruvananthapuram railway line, will be the second longest railway tunnel in the country.
- The rail tunnel has been proposed to connect the upcoming Vizhinjam International Multipurpose Deepwater Seaport to the railway network.
- The 11.26-km Pir Panjal rail tunnel, connecting Banihal and Hillar Shahabad, is the longest.
TOPIC: General studies 3
- Economic Development – Indian Economy and Issues relating to growth and development – Different indicators used to measure growth
- Inclusive growth and issues arising from it.
- Conservation, environmental pollution and degradation, environmental impact assessment
3 Key Indices and India’s performance
The below editorial provides assessment of changes since 2014 in three indices for India.
- ‘Ease of Doing Business’ (EDB)
- ‘Human Development’ (HDI) and
- ‘Environmental Performance’ (EPI)
Significance of these indices:
- The above 3 indices are published by separate international bodies and are used to rank the world’s countries according to their performance in the related sphere.
- Rankings reveal the level of attainment and they convey how far a country is from the global frontier.
‘Ease of Doing Business’ (EDB)
- EDB is an indicator put out by the World Bank
- It is meant mainly as an index of the effect of government regulations on running a business.
- It is also meant to reflect the extent of property rights in a society.
- A country’s ranking is based on the extent to which government regulations facilitate the following: starting a business, obtaining construction permits, getting an electricity connection, registering property, accessing credit, protection of investors, paying taxes, trading across borders, enforcement of contracts and resolving insolvency.
India’s EDB performance
- India’s improvement is considerable. From a rank of 134 in 2014, India’s rank improved to 77 in 2018.
- India is in the top 50% among 190 countries.
- The position is not spectacular but the improvement is.
- World Bank’s Chief Economist, a Nobel Laureate, had recently alleged that the past political bias may have crept into the ranking of countries. Many critics argue that India’s ranking is not reflecting reality.
- The bigger problem with EDB is that it measures the effect of government regulations alone. Ease of doing business is dependent upon other factors too.
- EDB should take into account the availability of ‘producer services’, with electricity, water supply and waste management etc. This infrastructure has not improved much in India in the last five years. (There is no data available on infrastructural investment after the demise of Planning Commission)
Human Development Index (HDI)
- It is the result of a rare India-Pakistan collaboration in the global discourse on public policy, having been devised by Amartya Sen and Mahbub ul Haq for the United Nations Development Programme.
- The Human Development Index (HDI) is a statistical tool used to measure a country's overall achievement in its social and economic dimensions.
- The social and economic dimensions of a country are based on the health of people, their level of education attainment and their standard of living.
- It is published by the United Nations Development Program (UNDP).
The HDI is the composite measure of every country’s attainment in three basic dimensions:
- Income: Standard Of Living measured by the gross national income (GNI) per capita
- Health: measured by the life expectancy at birth
- Education levels: calculated by mean years of education among the adult population and the expected years of schooling for children.
India’s HDI performance
- India’s ranking has not altered since 2014.
- India was ranked 130 in 2014, and has remained in the same place out of 185 countries in 2018.
- India’s HDI ranking has not improved despite it being the world’s fastest growing major economy in recent years. (This reveals is that an economy can grow fast without much progress in human development.)
- India’s HDI position in the bottom third of countries points to how much it needs to progress to earn the label ‘the world’s largest democracy’.
- Experts argue that human development is measured by averaging just a small set of simple indicators of health, education and living standards. Development is about much more than income.
- It looks at the health and education achievements in a population, but not about the ‘quality’ of development.
Environmental Performance Index (EPI)
- EPI is a biennial report by Yale and Columbia Universities along with the World Economic Forum.
- The report ranks 180 countries on 24 performance indicators. It is spread across 10 categories covering environmental health and ecosystem vitality.
- The issue categories are air quality, water and sanitation, water resources, agriculture, forests, fisheries, biodiversity and habitat, and climate and energy.
- India is among the bottom 5 countries on the index, at 177th place (2018). This is a drop of 36 points from 141 in 2016.
- The country is today among the worst performing on the environmental front and its ranking has worsened over the past five years. (155 in 2014)
We now have indicators of the progress India has made in the past five years in the three crucial spheres of business, human development and the natural environment.
The government has aggressively pursued an improvement in the business environment. This appears to have yielded fruit in terms of an improvement in the EDB index.
However, at a time when it has been the fastest growing economy in the world, India’s rank on human development has remained unchanged and on environmental performance has slipped close to the last place.
The current government has marginally lowered health and education expenditure as a share of national income and distinctly lowered environmental standards. (For instance, Coastal Regulation Zone Notification of 2018 which allows construction and tourism development on land earlier considered inviolable due to its ecological value.)
“Ill fares the land where wealth accumulates and nature frays.”
Connecting the dots:
- Essay – “Ill fares the land where wealth accumulates, but the social and natural environment suffer.”
- India ranks 177 out of 180 in Environmental Performance Index. Examine the factors and reasons responsible for such poor performance. Also suggest measures in order to improve its environmental standards.
TOPIC: General studies 2
- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
- Effect of policies and politics of developed and developing countries on India’s interests.
INF and Arms Race
- THE INTERMEDIATE-RANGE NUCLEAR FORCES TREATY (INF) has been a pillar of arms control for over 30 years. But in recent years it has been crumbling.
- On October 20th U.S. President Donald Trump announced that he intended to withdraw America from the treaty and build up missiles until Russia, believed to be cheating on the pact, and China, which never signed it, “came to their senses”.
- On February 1st the U.S. pulled the plug, after Russia failed to meet a deadline to come into compliance with the treaty.
Do you know?
- The INF treaty, which has its origins in the Euromissile crisis of the late 1970s and early 1980s, prohibited not only the erstwhile Soviet and American missiles but also the flight-testing, development and deployment of all ground-based missiles—both nuclear and conventional— with ranges between 500 to 5,500 kms.
- Almost 3,000 existing weapons were destroyed, with the Soviet Union getting rid of twice as many.
China seems to be the most impacted
- China criticised the U.S.’s decision to walk out of the landmark Intermediate-Range Nuclear Forces (INF) treaty.
- The Chinese expect that the Americans will now reinforce their tactical missiles, both nuclear and conventional, in Guam, a large military base in Micronesia, at the heart of the S. deterrent in the Pacific.
- It is also expected that the Americans will pack other U.S. bases in the Pacific, especially those in Okinawa — a string of islands in the East China Sea that belong to Japan — with intermediate range missiles.
By doing so, the U.S. would be able to virtually box in the movement of Chinese naval ships in the West Pacific, especially by safeguarding strategic gateways to the open sea, such as the Miyako Strait in Japan.
Currently, the Americans have no answer to China’s mid-range missiles. China’s mid-range missiles have been tailored to destroy U.S. aircraft carriers even at a distance of 1,450 km. China has weapons which can deliver a strike on Guam too.
U.S. was at some point likely to propose a fresh arms control dialogue, sharply focusing on China’s mid-range missiles. A new treaty was expected to seek termination of the Chinese challenge to Washington’s military dominance in the West Pacific.
With America withdrawing from the Intermediate-Range Nuclear Forces Treaty, China would have no choice but to beef up its conventional deterrence by developing hypersonic missiles and next generation strategic bombers, which can smash into targets at five times the speed of sound.
By taking the miscalculated step of walking out of the INF treaty, the U.S. may have dragged China, as well as Russia, into a new and unpredictable arms race, with the potential of destabilising the Indo-Pacific.
Connecting the dots:
- By walking out of the INF treaty, the U.S. has dragged China and Russia into a new arms race. Do you agree? Comment.
- U.S.’s exit from a Cold War-era treaty could trigger a 3-way arms race. Discuss.
(TEST YOUR KNOWLEDGE)
Model questions: (You can now post your answers in comment section)
- Featured Comments and comments Up-voted by IASbaba are the “correct answers”.
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- United Nations Development Programme (UNDP)
- International Labour Organisation (ILO)
- World Economic Forum (WEF)
- None of the above
Q.2) Which of the following is correct about ‘Repo Rate’?
- It is the rate charged by the central bank for lending funds to commercial banks.
- It is the rate at which scheduled banks can borrow funds overnight from RBI against government securities.
- It is the rate at which banks lend funds to RBI.
- It is the rate at which RBI borrows from its clients generally against government securities.
Q.3) Consider the following statements:
- When Repo Rate increases, borrowing from RBI becomes more expensive.
- Increase in Reverse Repo decreases the liquidity in the market.
- Reverse Repo is fixed .5 percent points more than Repo.
- 1 and 2
- 2 and 3
- 1 and 3
- All of the above
Q.4) Consider the following statements with regard to Guru Padmasambhava:
- He is also known as second Buddha, was born and brought up in Odisha.
- He is also known as Guru Rinpoche and is considered to be the founder of Tibetan Buddhism.
- He is considered to be the founder of Nyingma tradition, oldest of the four major schools of Tibetan Buddhism.
- 1 and 2 only
- 2 only
- 2 and 3 only
- 1, 2 and 3
Q.5) NIKSHAY is a –
- Complete Supply Chain Management System of various drugs, sutures and surgical items
- Web based solution for monitoring of TB patients
- Centralized Blood Bank Management System
- None of the above
Q.6) Consider the following with regard to Multi-drug-resistant tuberculosis (MDR-TB)
- Tuberculosis (TB) is caused by Virus
- MDR-TB is a type of tuberculosis which is unresponsive to at least two of the first line of anti-TB drugs isoniazid and rifampicin
- Bedaquiline is a medication used in the treatment of MDR-TB
- 2 only
- 2 and 3
- 1 and 3
- 1, 2 and 3
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