Syllabus

• Prelims & Mains – Economy

Context: The fall in household savings has been at the heart of recent debates in India. The decline in household savings is brought about by a drastic reduction in net financial savings as the household net financial savings to GDP ratio attained a four-decade low.The sharp reduction in household net financial savings in 2022-23 has been associated with an overall fall in household savings despite marginal recovery in physical savings.

Background:-

• The net financial savings of the household is the difference between its gross financial savings and borrowing. The gross financial savings of a household is the extent to which its financial assets change during a period. The financial assets of households typically comprise bank deposits, currency and financial investments in mutual funds, pension funds, etc.
• Though household borrowing includes credit from non-bank financial corporations and housing corporations, the bulk of the borrowing comprises credit from commercial banks.

Key Takeaways

In general, there are at least three distinct factors that can potentially bring about a reduction in household net financial savings:

• First, households typically finance their additional consumption expenditure by increasing their borrowing or depleting their gross financial savings. By financing higher consumption expenditure at any given level of disposable income, lower net financial savings provide stimulus for aggregate demand and output in this case.
• Secondly, when households finance higher tangible (physical) investment by increasing their borrowing or depleting their gross financial savings. The reduction in net financial savings in this case stimulates aggregate demand and output through the investment channel.
• Third, when interest payment of a household increases say due to higher interest rates, households can meet the increased burden through borrowing or through depleting gross financial savings thereby inducing a reduction in net financial savings.
• The first factor hardly played any role in the sharp reduction in gross financial savings in 2022-23 as the consumption to GDP ratio remained largely unchanged between 2021-22 (60.95%) and 2022-23 (60.93%).
• The second factor played only a limited role. While the gross financial savings to GDP ratio declined by 3 percentage points (7.3% to 5.3%) in 2022-23, household physical investment to GDP ratio increased only by 0.3 percentage point (12.6% to 12.9%) during the same period. Though higher borrowing is partly financed by interest income from financial assets, it can be largely attributed to higher interest payments of the household in the recent period.
• The share of household borrowing in household (disposable) income registered a sharp spike in 2022-23.

Implication of higher debt burden

The rise in household debt burden has two concerns for the macroeconomy.

• The first concern is about debt repayment and financial fragility. Since the repayment capacity depends on the income flow, a key criterion for evaluating a household’s debt sustainability is the difference between interest rate and the income growth rate.
• On the flip side, the interest payments from the households are the interest income of the financial sector. If households fail to meet their debt repayment commitments, then it reduces the income of the financial sector and deteriorates their balance sheets, which in turn can have a cascading effect on the macroeconomy if the latter responds by reducing their credit disbursement to the non-financial sector.
• The second concern pertains to the implication on consumption demand. Over and above disposable income, the consumption expenditure of the household can be affected by their wealth, debt, and interest rate. Reduction in household wealth can lead to lower consumption expenditure as households may attempt to preserve their wealth position by increasing their savings.
• Higher household debt can also reduce consumption expenditure in at least two ways. First, if higher household leverage is perceived as an indicator of higher default risk, then it may induce banks to indulge in credit rationing and reduce the credit disbursement. The consequent reduction in credit disbursement can adversely affect consumption. Second, higher debt can reduce consumption expenditure by increasing the interest burden, not to mention the effect of higher interest rates on consumption expenditure.

Source: Hindu

Syllabus

• Prelims & Mains – Current Event

Context: The British parliament is set to finally approve a divisive law this week to pave the way for asylum seekers to be deported to Rwanda, but further legal hurdles could yet hold up or derail one of Prime Minister Rishi Sunak’s key policies.

Background:

• The Prime Minister Rishi Sunak belongs to the Conservative Party.He has invested huge political capital in the Rwanda scheme whose success or failure might be crucial to his political party.He has promised that this scheme will stop migrants arriving without permission in the country.

‘About the Rwanda Plan’

• Under a five-year agreement, the government said some asylum seekers arriving in the UK would besent to Rwanda, to have their claims processed there.
• If successful, they could be granted refugee status and allowed to stay. If not, they could apply to settle in Rwanda on other grounds, or seek asylum in another “safe third country”.No asylum seeker would be able to apply to return to the UK.
• Under the policy, anyone “entering the UK illegally” after 1 January 2022 could be sent to Rwanda, with no limit on numbers.
• Ministers have argued the plan would deter people from arriving in the UK on small boats across the English Channel.
• No asylum seeker has yet been sent to Rwanda – a small landlocked country central Africa – 4,000 miles (6,500km) from the UK.
• The first flight was scheduled to go in June 2022, butwas cancelled after legal challenges.Prime Minister Rishi Sunak has repeatedly said flights will take off by spring but refused to specify a date.

What was the Supreme Court ruling and is Rwanda safe?

• In November 2023, the UK Supreme Courtruled unanimously that the Rwanda scheme was unlawful.
• It said genuine refugees would be at risk of being returned to their home countries, where they could face harm.
• This breachesthe European Convention on Human Rights (ECHR), which prohibits torture and inhuman treatment. The UK is a signatory to the ECHR.
• Theruling also cited concerns about Rwanda’s poor human-rights record, and its past treatment of refugees.
• Judges said that in 2021, the UK government had itself criticised Rwanda over “extrajudicial killings, deaths in custody, enforced disappearances and torture”.
• They also highlighted a 2018 incident, when Rwandan police opened fire on protesting refugees.

What is in the Rwanda bill?

• After the Supreme Court ruling, the government introduced a bill tomake clear in UK law that Rwanda is a safe country.
• The legislation – which must be approved by both Houses of Parliament – orders the courts to disregard key sections of the Human Rights Act, in an attempt to sidestep the Supreme Court’s judgement.
• It also compels the courts to disregard other British laws or international rules – such as the international Refugee Convention – which stand in the way of deportations to Rwanda.

Source: BBC

Syllabus

• Prelims & Mains – Security

Context: Senior IPS officer Nalin Prabhat has been appointed as the Director-General of National Security Guard (NSG).

Background:

• The NSG plays a pivotal role in protecting India from terrorist threats and maintaining security during critical situations.

About NATIONAL SECURITY GUARD (NSG):

• The National Security Guard (NSG), commonly known as the “Black Cats,” is a specialized counter-terrorism unit in India.
• It operates under the Ministry of Home Affairs.
• It was established on October 16, 1984, following the Operation Blue Star.

Mission and Vision:

• Mission: To train, equip, and maintain a special force capable of swiftly and effectively combating terrorism, living up to its motto: “Sarvatra Sarvottam Suraksha” (Everywhere and Always Supreme Security).
• Vision: To be a world-class “zero error force.”

Role and Functions:

• The NSG is a federal contingency deployment force that handles various critical tasks:
• Anti-hijack operations: Responding to hijacking threats.
• Rescue operations: Providing assistance during crises.
• Tough support: Backing up Central Para Military forces.

Composition:

• The NSG comprises officers and personnel from the Central Armed Police Forces, Indian Army, and State Police Forces.

Source: Indian Express

Syllabus

• Prelims – Current Event

Context: Russian peacekeepers have initiated their withdrawal from Nagorno-Karabakh as Azerbaijan regains control, sparking tension and potential further conflicts.

Background:

• This process signifies the departure of Russian troops from the region, where they have served as peacekeepers since the end of the 2020 war.

About NAGORNO-KARABAKH REGION :

• Nagorno-Karabakh is a region of conflict between Azerbaijan and Armenia.
• The historical and territorial disputes surrounding this mountainous area have led to decades of tension, military clashes, and wars.
• The region’s status remains unresolved, and it continues to be a point of contention in the South Caucasus.

Geographical Context:

• Nagorno-Karabakh is a mountainous, land-locked region within the boundaries of Azerbaijan, predominantly populated by ethnic Armenians.
• Nagorno-Karabakh region covers the southeastern stretch of the Lesser Caucasus Mountain range.
• Although it does not directly border Armenia, it is connected to Armenia through the Lachin corridor, a mountain pass controlled by Russian peacekeeping forces in Nagorno-Karabakh.

Source: Hindu

Syllabus

• Prelims – Current Event

Context: The Union Consumer Affairs Ministry asked the Food Safety and Standards Authority of India (FSSAI) to initiate “appropriate action” against the Nestle group for allegedly selling baby products with high sugar content in India.

Background:

• The violations are primarily found in Asian, African, and Latin American countries, while in developed nations like the United Kingdom and Germany, these products remain sugar-free.

About FOOD SAFETY AND STANDARDS AUTHORITY OF INDIA (FSSAI) :

• Food Safety and Standards Authority of India (FSSAI) is an autonomous statutory body established under the Food Safety and Standards Act, 2006.
• It operates under the Ministry of Health & Family Welfare, Government of India, with its headquarters in Delhi.
• The FSS Act, 2006 consolidated various acts & orders related to food safety previously handled by different Ministries and Departments.

Functions:

• Framing regulations for food safety standards and guidelines.
• Granting food safety licenses and certification for food businesses.
• Laying down procedures for food testing laboratories.
• Advising the government on policy-making.
• Collecting data on food contaminants and managing risks.
• Creating a national information network on food safety.
• Promoting awareness about food safety and standards.

Legislative Framework:

• The FSS Act aims to establish a single reference point for all matters relating to food safety and standards.
• It established FSSAI and State Food Safety Authorities for each state.
• The Food Safety and Standards Rules, 2011, provide for the Food Safety Appellate Tribunal and the Registrar of the Appellate Tribunal.

Recent Development:

• In May 2023, FSSAI established a committee to examine issues relating to nutraceuticals and highly processed foods, focusing on sustainable standards and reducing adulteration.

Source: Hindu

Previous Year Question

Q)Consider the following statements:

1. The Food Safety and Standards Act, 2006 replaced the Prevention of Food Adulteration Act, 1954.
2. The Food Safety and Standards Authority of India (FSSAI) is under the charge of Director General of Health Services in the Union Ministry of Health and Family Welfare.

Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Syllabus

• Prelims & Mains – Judiciary

Context: The Prime Minister inaugurated the Diamond Jubilee celebration of the Supreme Court of India at the Supreme Court auditorium in Delhi on January 28th, 2024.

Background:

• The Prime Minister said that the makers of the Indian constitution saw the dream of a free India based on freedom, equality and justice and the Supreme Court has continuously tried to preserve these principles.

The Supreme Court:

• According to Article 124(1) of the Indian Constitution, the Supreme Court of India must have a Chief Justice of India (CJI) and a maximum of seven additional justices unless Parliament specifies a higher number through a statute. Currently, the Supreme Court comprises the Chief Justice and 33 other Judges.
• The Supreme Court’s powers and jurisdiction are outlined in Articles 124 to 147 of the Indian Constitution.

Key Features of the Supreme Court of India:

• The Supreme Court is the highest appeal court is also known as the apex court of India and even the last resort, where the citizens of India can seek justice if they are not satisfied with the judgment of the High Court.
• As per Article 143 of the Constitution, the SC can advise the President of India that is related to the question of law, and the nature of the matter is associated with public importance.
• The Court resolves disputes between the Union and the states and between different states (Article 131).
• The Supreme Court reviews laws and actions of the executive to ensure they comply with the Constitution.
• The Court protects the fundamental rights of citizens by issuing writs and orders (Article 32).
• The Court can take up cases on its own or on behalf of the public interest. In some matters, the Supreme Court also acts on its own and can pass suo moto.

Issues/Challenges Faced by Supreme Court:

• As of 2023, there were over 80,439 cases pending in the Supreme Court alone.
• Judicial Activism vs. Judicial Restraint debate revolves around the appropriate role of the judiciary in policy-making and governance.
• The Law Commission of India’s 230th Report highlighted a concern about potential favouritism in the appointment of judges to the High Court and Supreme Court, impacting the impartiality and fairness of the judicial system.
• The judiciary and executive have faced rising conflicts, marked by delays in judicial appointments, the tribunalisation of justice, and public criticism of the executive during COVID-19.
• There have been concerns about the public perception of the judiciary, including issues related to transparency, accountability, and judicial independence.

Way Forward:

• Implementing case management systems and leveraging technology for e-filing, video conferencing, and virtual hearings can help reduce case backlog and improve efficiency.
• Implementing judicial reforms, such as increasing the number of judges, improving infrastructure,
• and filling up vacancies promptly, can help address the backlog and ensure timely justice delivery.
• Transparency in the appointment of judges and making judgments more accessible to the public can help improve public trust in the judiciary
• Ensuring that the judiciary is free from undue influence and interference from the executive or other branches of government can help maintain the integrity of the judicial system.

Source: PIB

Q1.) With reference to the Food Safety and Standards Authority of India (FSSAI), consider the following statements:

1. It is an autonomous statutory body established under the Food Safety and Standards Act, 2006.
2. It operates under the Ministry of Health & Family Welfare, Government of India.

Which of the statements given above is/are not correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q2.) Nagorno-Karabakh region, recently seen in news is related to

1. Israel – Hamas war
2. Russia – Ukraine war
3. Azerbaijan- Armenia conflict
4. China – Philippines territorial dispute

Q3.) With reference to the National Security Guard (NSG), consider the following statements:

1. The National Security Guard (NSG) is a specialized counter-terrorism unit in India.
2. It operates under the Ministry of Defence.
3. The NSG comprises officers and personnel from the Central Armed Police Forces, Indian Army, and State Police Forces.

How many of the statement given above are not correct?

1. Only one
2. Only two
3. All three
4. None

Comment the answers to the above questions in the comment section below!!

ANSWERS FOR ’  22nd April  2024 – Daily Practice MCQs’ will be updated along with tomorrow’s Daily Current Affairs.st

Q.1) – a

Q.2) – d

Q.3) – c