12th February, 2018-IAS Current Affairs
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‘Three new Eel species found in Bay of Bengal’
(GS3: Conservation of Environment)
Issue: Scientists have discovered three new species of eel along the northern Bay of Bengal coast in the past few months.
Eels are found mostly at the bottom of rivers and seas. Across the world about 1,000 species of eels have been identified. In India, the number is around 125. For species belonging to the family Muraenidae, referred commonly as Moray eels, there are records of about 200 species of which more than 30 species are found in India. With these new discoveries, the Bay of Bengal coast has yielded at least five new species of eel.
‘National health protection scheme
(GS2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation)
Issue: The National Health Protection Scheme announced in this year’s budget has committed itself to providing coverage up to ₹5 lakh per family per year for secondary and tertiary care hospitalization for 10 crore poor families, with approximately 50 crore people as beneficiaries.
Some of the crucial issues in this programme include:
- An analysis of the National Sample Survey (NSS) 71st round (2014) unit record data for “Social Consumption in India: Health” shows that only 11.3% of the bottom 40% (10.5% covered by government insurance) population has any insurance coverage as against 17.9% for the top 60% (14.3% covered by government insurance). In other words, just to bring the entire 40% of the population under health insurance is a huge task, with fiscal implications.
- With ₹5 lakh coverage then the premium which needs to be paid would be much higher than the government’s estimate.
- over and above the money needed for insurance premium, adequate medical infrastructure needs to be created for the scheme to work
- Reimbursement as a percentage of medical cost of hospitalisation in government schemes is abysmally low, especially for the bottom 40% of the population. Only 4.5% of total hospitalisation expenses are reimbursed to the bottom 40% and 11.9% for the entire population.
- The percentage of hospitalisation cost reimbursed is low for health insurance schemes and most of them only cover hospitalized treatment. Generally, a majority of health insurance schemes do not cover the cost of a non-hospitalized outpatient visit.
- A sudden expansion of the government-funded insurance market may aggravate the problem of hospital-induced demand for medical care such as an unnecessary hospital stay, diagnostic tests and surgeries unless supply-side conditions are improved and the entire health sector brought under regulation.
- If the government is serious about providing health care to even the bottom 40% of the population, it should not only increase its current budgetary allocation substantially but also strengthen the health infrastructure at all levels which includes a strong regulatory mechanism.
(GS2: Bilateral relations)
Issue: Prime Minister Narendra Modi announced several new agreements with his UAE counter-part during his recent visit to the Arab country
History of India-UAE ties
India and United Arab Emirates (UAE) enjoy strong bonds of friendship based on age-old cultural, religious and economic ties between the two nations. The relationship flourished after the accession of H.H. Sheikh Zayed Bin Sultan Al Nahyan as the Ruler of Abu Dhabi in 1966 and subsequently with the creation of the UAE Federation in 1971. Both countries soon established diplomatic relations in 1972 with UAE Embassy in India opening in 1972 and Indian Embassy in UAE opening in 1973. Since then, both sides have made sincere efforts to improve relations in all fields.
- High level strategic visits from both sides
- Facilitation of institutional investors in infrastructure
- Cooperation in renewable energy
- Cooperation in combating cyber crimes
- Cultural exchange
- Skill development
- Currency swaps
- Trade is around $52 billion dollars
- India is UAE’s third largest trading partner
- Major exports are: petroleum products, precious stones
- Food items
- Engineering and machine products
- International day of Yoga is being celebrated every year on June 20th in UAE
- UAE is also home to 2.8 million Indian expatriates
Major initiatives agreed to by the countries during Prime Minister Modi’s visit
- To hold a bilateral naval exercise
- Strategic partnership in counter-terrorism efforts
- Making common cause against international terrorism
- Two sides resolved to continue working together towards adoption of ‘Comprehensive Convention on International Terrorism’
- Partnership on the cyberspace
- Concession for ONGC in oil fields of UAE
(GS3: Indian economy and issues relating to planning, mobilization of resources, growth, development and employment)
Issue: For India to launch bold new schemes, it needs to clean up its finances first- pare down debt, save on interest payouts, reduce pensions and subsidies and raise asset creation
What is Fiscal Deficit?
A fiscal deficit occurs when a government’s total expenditures exceed the revenue that it generates, excluding money from borrowings. A fiscal deficit is regarded by some as a positive economic event. For example, economist John Maynard Keynes believed that deficits help countries climb out of economic recession. On the other hand, fiscal conservatives feel that governments should avoid deficits in favor of a balanced budget policy. Budget 2018-19 has proposed amending FRBM act to achieve the target of 3% Fiscal deficit from 2018 to march 2021
Reasons for not preferring high rates of Fiscal deficit
- When the government’s Fiscal Deficit is large, it implies that government has to borrow heavily. This means that the demand for loans will rise in the market, causing interest rates to go up. As interest rate rise, the cost of borrowing for private firms goes up.
- Borrowing from foreign sources can be costly due to high interest rates. It will also lead to appreciation of Indian rupee, this leads to our exports becoming expensive in the world market
- Appreciation of Indian rupee will make servicing imports costlier
Laying before both Houses of Parliament, along with the annual Budget in each financial year the following statements of fiscal policy:
(a) Medium-term Fiscal Policy Statement;
(b) Fiscal Policy Strategy statement and;
(c) Macro-economic Framework Statement.
- The Medium-term Fiscal– Policy Statement shall set-forth a three-year rolling target for prescribed fiscal indicators with specification of underlying assumptions.
Besides, the Medium-term Fiscal Policy Statement shall include an assessment of sustainability relating to:
(i) The balance between revenue receipts and revenue expenditures; and
(ii) The use of capital receipts including market borrowings for generating productive assets.
- The Fiscal Policy Strategy Statement shall, inter alia, contain:
(a) the policies of the Central Government for the ensuing financial year relating to taxation, expenditure, market borrowings and other liabilities, lending and investments, pricing of administered goods and services, securities and description of other activities, such as, underwriting and guarantees which have potential budgetary implications;
(b) The strategic priorities of the Central Government for the ensuing financial year in the fiscal area;
(c) The key fiscal measures and rationale for any major deviation in fiscal measures pertaining to taxation, subsidy, expenditure, administered pricing and borrowings;
(d) An evaluation as to how the current policies of the Central Government are in conformity with the fiscal management principles set out in Fiscal Policy Strategy Statement and the objectives set out in the Medium-term Fiscal Policy Statement.
- The Central Government shall take appropriate measures to eliminate the revenue deficit, bring down the fiscal deficit and build up adequate revenue surplus and in particular shall:
- Prohibition of direct borrowings by the Central Government from the Reserve Bank of India after three years except by way of advances to meet temporary cash needs in certain circumstances.
- Central Government to take suitable measures to ensure greater transparency in fiscal operations and to minimization of, as far as practicable, secrecy in the preparation of the annual budget.
- Quarterly review of the trends in receipts and expenditures in relation to the budget by the Finance Minister and placing the outcome of such reviews before both Houses of Parliament.
- The Central Government to cut expenditure authorizations in a proportionate manner, while protecting the “charged” expenditure, whenever there is a shortfall of revenue or excess of expenditure over specified targets.
- Finance Minister to make a statement in both Houses of Parliament explaining any deviation in meeting the obligations cast on the Central Government under this Act and the remedial measures the Central Government proposes to take.
- Relaxation from deficit reduction targets to deal with unforeseen demands on the finances of the Central Government on account of national security or natural calamities of national dimension.
Inflation and Index of Industrial production
(GS3: Indian Economy)
Issue: ‘Consumer Price Index’ (CPI), a measure of retail inflation, fell to 5.07% in January from 5.21% in December while ‘Index of Industrial Production’ (IIP), a measure of manufacturing activity, stood at 7.1% in December as compared to 8.8% in November
What is CPI?
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. CPI (Urban) and CPI (Rural) are new indices in the group of Consumer price index and has a wider coverage of population. These indices are compiled by Central Statistical Organization
What is IIP?
The Index of Industrial Production (IIP) is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time. The IIP index is computed and published by the Central Statistical Organization (CSO) on a monthly basis. IIP figures are calculated considering 2004-05 as base year.
- IIP is a composite indicator that measures the growth rate of industry groups classified under,
- Broad sectors, namely, Mining, Manufacturing and Electricity
- Use-based sectors, namely Basic Goods, Capital Goods and Intermediate Goods