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UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly PDF Download

Table of contents
GS-I
What did the MHA say?
What is National Population Register (NPR)?
Why NPR is under fire?
How are NRIC and NPR related?
How NPR is different from Census?
GS-II
What else?
What was the 103rd Amendment?
Quota available to EWS
On what basis was the quota challenged?
Key arguments by the Judges
What about the 50% ceiling on quotas?
How the judiciary deviated from its earlier judgments?
What is the EWS Quota?
Broad issues with EWS quota
Way forward
What is the case?
Invoking Article 21
What rules say?
Distinct features of the Surrogacy (Regulation) Act, 2021
Eligibility criteria for surrogate mother:
GS-III
Context
In September, Finance Minister Nirmala Sitharaman was anguished that industry was holding back from investing in manufacturing despite a significant cut in corporate tax rates in 2019.
Analyzing the corporate Investment since the pandemic
What is The current consumer’s demand situation?
Statistic on demand and investment
Conclusion

GS-I


National Tribal Dance Festival 2022


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

Chhattisgarh celebrates its 23rd State Foundation Day on 1st November 2022 and as a part of the celebrations, Raipur will host the 3rd National Tribal Dance Festival. The National Tribal Dance Festival will be celebrated from 1st November 2022 to 3rd November 2022.

About National Tribal Dance Festival:

  • National Tribal Dance Festival is one of Chhattisgarh’s grand festivals which celebrates diverse tribal communities and their culture not just in India but from across the globe.
  • It is organised under the Tourism and Culture Department of Chhattisgarh.
  • This festival aims to unite the tribal communities and provides an opportunity to educate about their rich culture for all.
  • The first National Tribal Dance Festival was organised in 2019 and second in 2021.
  • Men and women perform some dances exclusively, while in some performances men and women dance together.
  • In the National Tribal Dance Festival, tribal dance groups from all states and union territories of India will be taking part.
  • The highlights of the National Tribal Dance Festival will be the other countries including Mongolia, Tongo, Russia, Indonesia, Maldives, and Mozambique participating in the event.
  • About 1500 tribal artists will take part in the event of which 1400 will be from India and 100 will be from other countries.
  • The festival will have several competitions in two categories and prizes worth ₹20 lakh will be given to the winners.
  • The award includes cash prizes of ₹5 lakh, ₹3 lakh, and ₹2 lakh to the first, second, and third winners respectively.

Source: The Hindu 

MHA annual report underlines need to update NPR


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

The Home Ministry in its latest annual report has underlined the need to update the National Population Register (NPR) database across the country, except Assam.

What did the MHA say?

  • The report said the NPR is prepared under various provisions of the Citizenship Rules, 2003, framed under the Citizenship Act, 1955.
  • In 2015, a few fields such as name, gender, date and place of birth, place of residence and father’s and mother’s name were updated and Aadhaar, mobile and ration card numbers were collected.
  • To incorporate the changes due to birth, death and migration, the MHA pressed the need to update it again.

What is National Population Register (NPR)?

  • The NPR is a Register of usual residents of the country.
  • It is being prepared at the local (Village/sub-Town), sub-District, District, State and National level.
  • This is carried under provisions of the Citizenship Act 1955 and the Citizenship Rules, 2003 (Registration of Citizens and issue of National Identity Cards).
  • It is mandatory for every usual resident of India to register in the NPR.
  • A usual resident is defined for the purposes of NPR as a person who has resided in a local area for the past 6 months or more or a person who intends to reside in that area for the next 6 months or more.
  • Why NPR is under fire?

  • Though NPR was first compiled in 2010 and updated in 2015, the new questions were part of a trial exercise involving 30 lakh respondents in September 2019.
  • The exercise has perceived the first step toward the compilation of the National Register of Indian Citizens (NRIC) according to Citizenship Rules, 2003.
  • Out of the NPR, a set of all usual residents of India, the government proposes to create a database of “citizens of India”.
  • Thus, the “National Register of Indian Citizens” (NRIC) is a sub-set of the NPR.
  • The NRIC will be prepared at the local, sub-district, district and State levels after verifying the citizenship status of the residents.
  • The rules say the particulars of every family and individual found in the Population Register shall be verified and scrutinized by the Local Registrar.
  • How NPR is different from Census?

  • The census involves a detailed questionnaire — there were 29 items to be filled up in the 2011 census.
  • They are aimed at eliciting the particulars of every person, including age, sex, marital status, children, occupation, birthplace, mother tongue, religion, disability and whether they belonged to any SC or ST.
  • On the other hand, the NPR collects basic demographic data and biometric particulars.
  • While the census is legally backed by the Census Act, 1948, the NPR is a mechanism outlined in a set of rules framed under the Citizenship Act, 1955.

Source: Indian Express

GS-II


Supreme Court, in a majority verdict, upholds the EWS Quota


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

A Constitution Bench of the Supreme Court, in a 3:2 majority decision, upheld the validity of the 103rd Constitutional Amendment, which provides 10% reservation in government jobs and educational institutions to the Economically Weaker Sections (EWS) of society.

What else?

  • The judgment excludes the “poorest of poor” among Scheduled Castes (SC), Scheduled Tribes (ST), Socially and Educationally Backward Classes (SEBC) and Other Backward Classes (OBC) from its scope.

What was the 103rd Amendment?

  • The 103rd Amendment inserted Articles 15(6) and 16(6) in the Constitution to provide up to 10 per cent reservation to the economically weaker sections (EWS) among non-OBC and non-SC/ST sections .
  • In other words, the amendment had changed the Constitution and introduced a quota for the poor among the so-called ‘forward castes’ or ‘general category’.
  • Quota available to EWS

  • The quota is available in:
  • Admissions to higher educational institutions and
  • Initial recruitment in central government jobs
  • The amendment also empowered state governments to provide reservation on the basis of economic backwardness.

On what basis was the quota challenged?

  • Violation of Basic Structure
  • Violation of basic structure: Essentially, the challenge was based on the argument that the 103rd amendment violated the “basic structure” of the Constitution.
  • Socially disadvantage: The primary argument in this case stemmed from the view that the special protections guaranteed to socially disadvantaged groups is part of the basic structure.
  • Sole economic criterion: The 103rd Amendment departs from this by promising special protections on the sole basis of economic status.

Key arguments by the Judges

  • Majority Opinion
    • Three judges, Justices Dinesh Maheshwari, Bela Trivedi, and S B Pardiwala, have upheld the validity of the 103rd amendment.
  • Justice Dinesh Maheshwari: He has ruled that reservation based only on economic criteria does not violate the basic structure of the Constitution, and that the exclusion of classes covered in Article 15(4) and 16(4) — that is OBCs and SC/STs — in the 103rd amendment does not damage the basic structure.
  • Justice Bela Trivedi: She has concurred with Justice Maheshwari. She ruled that treating EWS as a separate class would be a reasonable classification, and that treating unequals equally would violate the principle of equality under the Constitution.
  • Justice Trivedi: He said that 75 years after independence, it was time to revisit the system of reservation in the larger interest of society.
  • Justice S B Pardiwala: He concurred with Justice Maheshwari and Justice Trivedi. He observed that “Reservation is not an end, it is means, it should not be allowed to become a vested interest.

Minority (Dissenting) Opinion

  • Justice Bhat: He has ruled that while reservation on economic criteria is per se not violative of the Constitution, excluding SC/ST/OBC from the purview of EWS is violative of basic structure. He has struck down Articles 15(6) and 16(6) for being discriminatory and violative of the equality code.
  • CJI Lalit: He said he concurs entirely with the judgment of Justice Bhat.

What about the 50% ceiling on quotas?

  • The judgment appears to have struck down the ceiling of 50%.
  • Justice Maheshwari said that reservations for EWS does not violate basic structure on account of 50% ceiling limit because ceiling limit is not inflexible.
  • How the judiciary deviated from its earlier judgments?

  • However, the dissenting opinion says that permitting breach of 50% would result in compartmentalization, and the rule of right to equality will become right to reservations.
  • The apex court has repeatedly underlined the 50% ceiling on reservations imposed by the landmark Indra Sawhney judgment of 1992.
  • On that basis, attempts by a number of states have been struck down.
  • Several of those issues can now be reopened. Now states can rebel with their populist moves to provide reservations to some communities. Ex. Nomadic Tribes case in Maharashtra.

What is the EWS Quota?

  • The EWS criteria for employment and admission was notified on January 31, 2019 by the Department of Personnel and Training (DoPT) based on the 103rd Amendment.
  • Under the 2019 notification, a person who was not covered under the scheme of reservation for SCs, STs, and OBCs, and whose family had a gross annual income below Rs 8 lakh, was to be identified as EWS.
  • The notification specified what constituted “income”, and excluded some persons from the EWS category if their families possessed certain specified assets.
  • Broad issues with EWS quota

    • Reduction within general category: The EWS quota remains a controversy as its critics say it reduces the size of the open category, besides breaching the 50% limit on the total reservation.
    • Arbitrariness over income limit: The court has been intrigued by the income limit being fixed at ₹8 lakh per year. It is the same figure for excluding the ‘creamy layer’ from OBC reservation benefits.
    • Socio-economic backwardness: A crucial difference is that those in the general category, to whom the EWS quota is applicable, do not suffer from social or educational backwardness, unlike those classified as the OBC.
    • Metropolitan criteria: There are other questions as to whether any exercise was undertaken to derive the exceptions such as why the flat criterion does not differentiate between metropolitan and non-metropolitan areas.
    • OBC-like criteria: The question the court has raised is when the OBC category is socially and educationally backward and, therefore, has additional impediments to overcome.
    • Not based on relevant data: In line with the Supreme Court’s known position that any reservation or norms for exclusion should be based on relevant data.
    • Breaches reservation cap: There is a cap of 50% on reservation as ruled in the Indira Sawhney Case. The principle of balancing equality ordains reservation.

Way forward

  • Preserving the merit: We cannot rule out the sorry state of economic backwardness hampering merit in our country.
  • Rational criteria: There has to be collective wisdom to define and measure the economic weakness of certain sections of society in order to shape the concept of economic justice.
  • Judicial guidance: Judicial interpretation will pave the wave forward for deciding the criterion for EWS Quota.
  • Targetted beneficiaries. The center needs to resort to more rational criteria for deciding the targeted beneficiary of this reservation system. Caste Census data can be useful in this regard.
  • Income study: The per capita income or GDP or the difference in purchasing power in the rural and urban areas, should be taken into account while a single income limit was formulated for the whole country.

Source: The Hindu

Centre opposes petition in HC against provisions of Surrogacy Law


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

The Centre has opposed before the Delhi HC a petition challenging certain provisions of the surrogacy laws, including the Assisted Reproductive Technology (Regulation) Act, 2021, and the Surrogacy (Regulation) Act, 2021.

What is the case?

  • The provisions challenged includes the exclusion of a single man and a married woman having a child from the benefit of surrogacy as a reproductive choice.
  • It challenged the ban on commercial surrogacy.
  • In their plea, the petitioners have stated that commercial surrogacy is the only option available to them.

Invoking Article 21

  • The personal decision of a single person about the birth of a baby through surrogacy, that is, the right of reproductive autonomy is a facet of the right to privacy guaranteed under Article 21 of the Constitution.
  • Thus, the right affecting a decision to bear or beget a child through surrogacy cannot be taken away, the petition said.

What rules say?

  • Under the Surrogacy (Regulation) Act, 2021, a married couple can opt for surrogacy only on medical grounds.
  • The law defines a couple as a married Indian “man and woman” and also prescribes an age-criteria with the woman being in the age of 23 years to 50 years and the man between 26 years to 55 years.
  • The couple should not have a child of their own.
  • Though the law allows single women to resort to surrogacy, she has to be a widow or a divorcee between the age of 35 and 45 years.
  • The law does not allow single men to go for surrogacy.

Distinct features of the Surrogacy (Regulation) Act, 2021

  • Definition of surrogacy: It defines surrogacy as a practice where a woman gives birth to a child for an intending couple with the intention to hand over the child after the birth to the intending couple.
  • Regulation of surrogacy: It prohibits commercial surrogacy, but allows altruistic surrogacy which involves no monetary compensation to the surrogate mother other than the medical expenses and insurance.
  • Purposes for which surrogacy is permitted: Surrogacy is permitted when it is: (i) for intending couples who suffer from proven infertility; (ii) altruistic; (iii) not for commercial purposes; (iv) not for producing children for sale, prostitution or other forms of exploitation; and (v) for any condition or disease specified through regulations.
  • Eligibility criteria: The intending couple should have a ‘certificate of essentiality’ and a ‘certificate of eligibility’ issued by the appropriate authority ex. District Medical Board.

Eligibility criteria for surrogate mother:

  • To obtain a certificate of eligibility from the appropriate authority, the surrogate mother has to be:
  • A close relative of the intending couple;
  • A married woman having a child of her own;
  • 25 to 35 years old;
  • A surrogate only once in her lifetime; and
  • Possess a certificate of medical and psychological fitness for surrogacy.
  • Further, the surrogate mother cannot provide her own gametes for surrogacy.

Source: The Hindu

GS-III


Apis karinjodian


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

A new species of endemic honeybee has been discovered after a gap of more than 200 years. The new species has been named Apis karinjodian and given the common name Indian black honeybee.

  • The new find has increased the species of honeybees in the world to 11.
  • Molecular analysis of mitochondrial DNA was also carried out and molecular sequence data available in the public open database NCBI-GenBank also helped confirm the species status of the new honeybee.

About:

  • The Indian black honeybee, ranges from the central Western Ghats and Nilgiris to the southern Western Ghats, covering the States of Goa, Karnataka, Kerala and parts of Tamil Nadu.
  • The last honeybee described from India was Apis indica in 1798 by Fabricius. It was not considered a valid species till now.
  • The research team restored the status of Apis indica based on a new measure for species discrimination in honeybees termed ‘Radio-Medial Index (RMI).
  • Apis karinjodian has evolved from Apis cerana morphotypes that got acclimatised to the hot and humid environment of the Western Ghats.
  • Till date, only a single species, Apis cerana was noted across the plains of central and southern India and Sri Lanka as a ‘fairly uniform population’ in the Indian subcontinent.
  • IUCN status: near threatened

Significance:

  • The research has given a new direction to apiculture in the country by proving that it has three species of cavity nesting honey bees viz., Apis indica, Apis cerana, and Apis karinjodian, the last being visibly dark in appearance.
  • The ability of the Indian black honeybee to produce higher quantities of honey, which is thicker in consistency, opens up new avenues for increasing honey production.

Source: The Hindu

COP14 of Ramsar Convention on Wetlands


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

The 14th Meeting of the Conference of the Contracting Parties (COP14) to the Ramsar Convention on Wetlands began to discuss the state of wetlands globally.

  • Agenda items include waterbird population estimatesRamsar Convention criterialists of wetlands of international importance and conservation of small wetlands.
  • The agenda includes a draft resolution by China to host an international mangrove centre which is cosponsored by Cambodia and Madagascar; which will serve as the Secretariat and technical service platform for international mangrove cooperation in the framework of the Ramsar Convention.

Mangroves in China:

  • China Mangrove Conservation and Restoration Strategy Research Project in 2020 was China’s first research report to comprehensively assess the state of mangroves in the country.
  • Mangrove forests in China are growing in the northern edge of the global mangrove distribution. Limited by the low temperature, China has less mangrove species compared with other Southeast Asian countries.
  • Mangroves in China were distributed in the provinces of Hainan, Guangdong, Guangxi, Fujian, Zhejiang, as well as Hong Kong, Macao and Taiwan. All these areas are located in the extreme tropical south of the country.
  • Mangrove area in China had decreased sharply to 22,000 hectares in 2000, only 45 per cent that of the early 1950s.

About Mangroves:

  • Mangroves are a group of halophyte trees and shrubs that live in the coastal intertidal zone, in dense thickets or forests along tidal estuaries, in salt marshes, and on muddy coasts – they can tolerate salt.
  • Mangroves are typically tropical in nature than temperate because they cannot withstand freezing temperatures. Indonesia alone contains between 26% and 29% of the entire global mangrove stock.
  • These trees grow in areas with low-oxygen soil, where slow-moving waters allow fine sediments to accumulate.
  • They have a dense tangle of prop roots —i.e., exposed supporting roots that make the trees appear to be standing on stilts above the water. This intricate root system:-
  • allows the trees to handle the daily rise and fall of tides, which means that most mangroves get flooded at least twice per day.
  • Filter salt out of sea water, stay upright in soft, waterlogged soils and give them access to oxygen and nutrients.
  • slows the movement of tidal waters, causing sediments to settle out of the water and build up the muddy bottom.
  • stabilize the coastline, reducing erosion from storm surges, currents, waves, and tides.
  • makes these forests attractive to fish and other organisms seeking food and shelter from predators.
  • Its flowers are pale yellow in colour.

Significance of Mangroves:

  • Biodiversity – Home to an incredible array of species, mangroves are biodiversity hotspots. They provide nesting and breeding habitat for fish and shellfish, migratory birds, and sea turtles. An estimated 80% of the global fish catch relies on mangrove forests either directly or indirectly.
  • Livelihoods – fishers and farmers depend on these natural environments to provide healthy fisheries from which to fish, and healthy land on which to farm.
  • Water quality – Mangroves are essential to maintaining water quality. With their dense network of roots and surrounding vegetation, they filter and trap sediments, heavy metals, and other pollutants. This ability to retain sediments flowing from upstream prevents contamination of downstream waterways and protects sensitive habitat like coral reefs and sea grass beds below.
  • Coastal defence – Mangroves are the first line of defence for coastal communities. They stabilize shorelines by slowing erosion and provide communities from increased storm surge, flooding, and hurricanes. In 2003, it was estimated that a quarter of the world’s population lived within 100 kilometres of the coast and at 100 meters of sea level. Robust mangrove forests are natural protection for communities vulnerable both to sea level rise and the more intense and frequent weather events caused by climate change
  • Carbon storage –Cover just 0.1% of the planet’s surface but store up to 10x more carbon per hectare than terrestrial forests. This means that conserving and restoring mangroves is essential to fighting climate change, the warming of the global climate fuelled by increased carbon emissions, that is already having disastrous effects on communities worldwide.
  • Materials – In addition to consuming fish and shellfish from the mangroves, communities have historically used mangrove wood and other extracts for both building and medicinal purposes. Their potential as a source for novel biological materials, such as antibacterial compounds and pest-resistance genes, remains largely undiscovered.
  • Sustainable development – Intact and healthy mangrove forests have an  potential for sustainable revenue-generating initiatives including ecotourism, sport fishing, and other recreational activities.

About Ramsar Convention:

  • The Convention on Wetlands is the intergovernmental treaty that provides the framework for the conservation and wise use of wetlands and their resources.
  • The Convention was adopted in the Iranian city of Ramsar in 1971 and came into force in 1975. Since then, almost 90% of UN member states have acceded to become “Contracting Parties”.
  • Aim: International mangrove cooperation mechanism aims for technical exchanges, collaborative research, education and training, and pilot projects on conservation and restoration, to protect mangrove biodiversity and coastal blue carbon ecosystems, enhance mangrove ecosystem services and resilience to climate change.
  • The Convention uses a broad definition of wetlands. It includes all lakes and rivers, underground aquifers, swamps and marshes, wet grasslands, peatlands, oases, estuaries, deltas and tidal flats, mangroves and other coastal areas, coral reefs, and all human-made sites such as fish ponds, rice paddies, reservoirs and salt pans.
  • A Ramsar site is a wetland of international importance under the Ramsar Convention
  • Criteria: One of the nine criteria must be fulfilled to be the Ramsar Site.
  • Criterion 1: If it contains a representative, rare, or unique example of a natural or near-natural wetland type found within the appropriate biogeographic region.
  • Criterion 2: If it supports vulnerable, endangered, or critically endangered species or threatened ecological communities
  • Criterion 3: If it supports populations of plant and/or animal species important for maintaining the biological diversity of a particular biogeographic region.
  • Criterion 4: If it supports plant and/or animal species at a critical stage in their life cycles, or provides refuge during adverse conditions.
  • Criterion 5: If it regularly supports 20,000 or more waterbirds.
  • Criterion 6: If it regularly supports 1% of the individuals in a population of one species or subspecies of waterbird.
  • Criterion 7: If it supports a significant proportion of indigenous fish subspecies, species or families, life-history stages, species interactions and/or populations that are representative of wetland benefits and/or values and thereby contributes to global biological diversity.
  • Criterion 8: If it is an important source of food for fishes, spawning ground, nursery and/or migration path on which fish stocks, either within the wetland or elsewhere, depend.
  • Criterion 9: If it regularly supports 1% of the individuals in a population of one species or subspecies of wetland-dependent non avian animal species.

Source: DownToEarth

Inflation


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

 The UN Food and Agricultural Organisation’s (FAO) Food Price Index fell.

  • This marks the seventh successive month of decline in the index.

About:

  • FPI is a weighted average of world prices of a basket of food commodities over a base period value, taken at 100 for 2014-16
  • The dip in the FPI has been despite the cereals sub-index posting an increase. Global wheat and maize prices rose on the back on uncertainties relating to exports from Ukraine.
  • Food items have a 45.86 per cent weight in the official consumer price index.
  • Global food prices coming off from their highs reduces the risks of imported inflation, which was seen particularly in edible oils.
  • These have remained elevated, mainly on account of extended southwest monsoon rains damaging the harvest-ready kharif crops in many parts of the country
  • The same excess rains have, however, helped fill dam reservoirs and recharge groundwater aquifers that should favour the rabi (winter-spring) crops now being planted.
  • Early indications — based on improved soil moisture as well as fertiliser availability — point to a substantial increase in the area being sown under wheat, mustard, chickpea, red lentils, field pea, maize, potato, onion, garlic, cumin, coriander and other crops that are harvested from March.

Source: Indian Express

Declining Consumer Demand and Reluctant Investors


UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

Context

In September, Finance Minister Nirmala Sitharaman was anguished that industry was holding back from investing in manufacturing despite a significant cut in corporate tax rates in 2019.

  • Analyzing the corporate Investment since the pandemic

  • Less investment is not the result of losses: The slowdown in corporate investment did not happen because companies were making losses.
  • More profit but less investments by corporates: In fact, private companies, boosted by considerable tax cuts, made windfall profits. A State Bank of India analysis shows that tax cuts contributed 19% to the top line of companies during the pandemic. But this did not result in increased investments.
  • Dividends to shareholders: Before the pandemic, instead of investing in themselves, companies chose to reward shareholders with higher dividends.
  • Investment in equity and debt instead of Infrastructure: During the pandemic, they did not use the profits for paying out dividends; they retained a big chunk of the profits. However, instead of investing in buildings, plants and machinery, they invested in equity shares and debt instruments.
  • Corporate cited the slowdown in demand as reason for less investment: So, both before and after the outbreak, they shied away from capital investments. The hesitancy to invest can be explained by a slowdown in the demand side of the economy.
  • Corporates didn’t invest in long term returns sectors: Consumer demand started to decline the year before the pandemic and worsened after the COVID19 outbreak. This forced companies to use the increased profits to decrease their debts, pay dividends and invest in financial instruments instead of increasing productivity by making capital investments.

What is The current consumer’s demand situation?

  • Average Consumer sentiment index: Private companies invest when they are able to estimate profits, and that comes from demand. The Centre for Monitoring Indian Economy’s (CMIE) consumer sentiment index is still below pre-pandemic levels but is far higher than what was seen 12-18 months ago.
  • Buoyant Aggregate demand: RBI’s Monetary policy report dated September 30 says, Data for Q2 (ended Sept) indicate that aggregate demand remained buoyant, supported by the ongoing recovery in private consumption and investment demand. It shows that seasonally adjusted capacity utilization rose to 74.3% in Q1 the highest in the last three years.
  • High household savings: Along with household savings intentions remaining high, might hold the key to the investment cycle kicking in.

Statistic on demand and investment

  • New investment projects: The new investment projects announced as a % of GDP, since FY18, the share has remained below the 5% mark, compared to over 9% between FY05 and FY22.
  • Collection of corporate tax decreased: Corporate tax and income tax collected in India as a % of GDP after the cut in 2019, the share of corporate tax declined dramatically, while the share of income tax gradually increased.
  • Double burden on tax payers: The shift in tax burden from the corporates to the people came at a time of job losses and reduced income levels. This pushed more people into poverty
  • Corporate profit increased after tax cut: Profit after tax earned by non-financial private companies in ₹ trillion after the tax cut, the profits of these companies rose to ₹4-5 trillion in the last two financial years from ₹1-2 trillion in many of the previous periods.
  • Increase and decrease in dividend to shareholders: Dividends paid by non-financial private companies as a share of profits earned after tax, Payouts to shareholders surged in FY20, the year before the pandemic, but reduced in the following years.
  • Profit retention increased: Retained profits as a % of profit after tax surged to 63% in FY22 the highest in a decade (limited companies were analyzed in FY22, so data are provisional).
  • Profits are invested in equities: In FY21, the debt-to-equity ratio came down to 0.86 the lowest in at least three decades. In FY22 (provisional data), it came down further to 0.71.
  • Year on year decline in capital investment: Year on year change in the investments of non-financial private companies in fixed assets such as buildings, plants, machinery, transport and infrastructure have declined in recent years. But the year on year change in investments in financial instruments such as equity, debt and mutual funds have surged.

Conclusion

Corporates are holding their pockets in hope of demand rise in future. However, this affects the post-pandemic recovery of economy. IMF and RBI was right to revise their growth forecast this year. Unequal recovery of economy have certainly affected the income levels of middle class. Government has taken a lot of step on supply side (corporate side and banking reform) but no intervention in revival of demand.

Source: Indian Express

The document UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly is a part of the UPSC Course Current Affairs & Hindu Analysis: Daily, Weekly & Monthly.
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UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily

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UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily

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UPSC Daily Current Affairs- 8th November 2022 | Current Affairs & Hindu Analysis: Daily

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