UPSC Daily Current Affairs- January 30, 2022 | Current Affairs: Daily, Weekly & Monthly - CLAT PDF Download

Reining in the Subsidy Bill?

UPSC Syllabus: Mains – GS Paper III – Economy
Sub Theme: Changes in spending on subsidy, causes and way ahead| UPSC

After falling for several years, the food and fertiliser subsidy outlay has reversed the trend since 2020-21, thanks to additional allocation, higher food procurement amid Covid-19, and rising global fertiliser prices.
Between 2015-16 and 2019-20, the aggregate outlay on the two fell, both in absolute terms (from Rs 211,834 crore to Rs 189,813 crore) and as a share of the Centre’s total expenditure (from 11.8% to 7.1%). A further drop, to Rs 186,879 crore and 6.1%, was projected in the Budget for 2020-21 presented on February 1, 2020. This was before Covid-19 struck.
That declining trend has, however, since completely reversed. The combined food and fertiliser subsidy bill in the revised estimates for 2020-21 was a massive Rs 556,565 crore, representing 16.1% of the Centre’s entire Budget. While the budget estimates for 2021-22 stood lower, they are still way above the trend till 2019-20.

There are Two Reasons for The Reversal.

Coming clean

• The first has to do with the Centre, until last year, not providing fully for the subsidy, arising from the Food Corporation of India (FCI) and fertiliser firms selling grains/nutrients at below cost to public distribution system (PDS) consumers/farmers.
• In the case of food, the Centre wasn’t wholly funding the difference between the FCI’s economic cost – what it incurs in procuring, handling, transporting, distributing and storing grain – and its average issue price, multiplied by the quantities sold. To bridge the gap, FCI had to borrow heavily, especially from the National Small Savings Fund (NSSF). These loans were availed at interest rates ranging from 7.4% to 8.8% per annum.
• FCI’s borrowings from NSSF in 2019-20, at Rs 110,000 crore, exceeded the food subsidy of Rs 108,688 crore provided through the Budget. The same goes for fertilisers, where the industry was owed Rs 48,000 crore of subsidy dues at the start of 2020-21. The budgeted subsidy of Rs 71,309 crore fell short of the requirement of about Rs 85,000 crore just for 2020-21, exclusive of arrears.
• But in the revised estimates for 2021-22, Finance Minister Nirmala Sitharaman allocated an additional Rs 3,69,687 crore towards food and fertiliser subsidy. As a result, all outstanding NSSF loans to FCI got repaid and the fertiliser subsidy dues cleared at one go. This exercise of coming clean — the Centre owning up its expenditures, rather than transferring to the balance sheets of FCI and fertiliser companies — also meant a huge one-time spike in the subsidy bill.

Covid and After

• The second source of overshooting has been Covid (in respect of food subsidy) and soaring international prices (vis-à-vis fertilisers).
• In 2020-21, a record 93.11 million tonnes (mt) of rice and wheat was sold through the PDS, compared to 62.19 mt, 65.91 mt and 60.37 mt in the preceding three fiscals. Government agencies also procured 103.53 mt of the two cereals from the 2020-21 crop, surpassing the previous high of 90.82 mt in 2019-20, 78.53 mt in 2018-19 and 73.97 mt in 2017-18.
• Simply put, the post-Covid crisis led the Centre to not only distribute, but also procure, unprecedented quantities of grain. The PDS —more so, the 5 kg of free grain per person per month given under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), apart from the regular 5 kg quota of wheat or rice at Rs 2 and Rs 3/kg, respectively — became the government’s preeminent social safety net programme, both during and after the lockdown.
• The 5 kg extra grain provision under PMGKAY was implemented for eight months (April-November 2020, until the Bihar elections) in 2020-21. In the current fiscal, it was restarted in May 2021 and has been extended until March 2022, when polls in Uttar Pradesh and four other states also get over. With PDS grain offtake already at 74.55 mt in April-December 2021, and three months to go, the total quantum of subsidised/free sales looks set to top 100 mt, a new high. Government officials have further indicated that PMGKAY alone will cost Rs 1.47 lakh crore this fiscal, with the revised food subsidy bill at around Rs 3.7 lakh crore, as against the budgeted Rs 242,836 crore.
• A similar overshooting, despite no pending past dues, is expected in fertiliser subsidy. The primary reason is global prices. Urea imports into India are taking place now at $900-1,000 per tonne (cost plus freight) and di-ammonium phosphate at $900, while ruling at $300 and $400 respective levels a year ago. Prices of MOP (muriate of potash), too, have surged over this period, from $230 to $600 per tonne. So have that of imported inputs: phosphoric acid ($689 to $1,330), ammonia ($300 to $900), rock phosphate ($100 to $200) and sulphur ($150 to $300).
• Following the surge in international prices, the Centre last month secured Parliament’s approval for an additional Rs 58,430 crore towards fertiliser subsidy through a supplementary demand for grants. Rating firm ICRA Limited pegs the revised fertiliser subsidy figure for 2021-22 at Rs 1.40 lakh crore-plus, up from the budgeted Rs 79,530 crore.

The Road Ahead

• The overshooting of the food and fertiliser subsidy by roughly Rs 1.9 lakh crore in 2021-22, in spite of no carry forward from previous years, would raise the hackles of fiscal hawks. This is particularly when 10-year Indian government bond yields — a barometer for interest rates in the economy — have climbed from 5.96% to 6.62% in the last one year.
• The hawks can derive some comfort, though, from no blockbuster elections being scheduled for 2022-23: The political imperative for extending PMGKAY may not be as great for Gujarat and Himachal Pradesh as for UP and Bihar. Also, the current Omicron wave doesn’t seem presenting a threat calling for intense lockdowns like those in 2020-21 and 2021-22. It is realistic, then, to expect a lower food subsidy outgo in 2022-23. The same cannot be said for fertiliser subsidy, where there is no certainty with regard to international prices.
• Many economists would, of course, want more substantive measures to rein in subsidy. These include hiking PDS issue prices, capping grain procurement, decontrolling urea and providing a fixed per-tonne nutrient-based subsidy similar to that for other fertilisers. But such far-reaching reforms may be easier in the first three than the last two years of a government’s term — irrespective of the results of the Assembly elections.

Padma award and the recipient’s consent

UPSC Syllabus: Prelims| Current Event of National and International Importance
Sub Theme: Padma Awards, Eligibility and Nomination| | UPSC

Context: The Padma awards are announced every year on the eve of Republic Day.

• As many as 128 people ranging from veteran politicians, businessmen, scientists and doctors to artists and ordinary people engaged in public service were announced to have been selected for conferment of Padma awards this year.
• While most accepted the awards gracefully, former West Bengal CM Buddhadeb Bhattacharjee refused to accept it.

What are Padma Awards?

They are the highest civilian honour of India after the Bharat Ratna.
Instituted in 1954 along with Bharat Ratna.

• The awards are given in three categories: Padma Vibhushan (for exceptional and distinguished service), Padma Bhushan (distinguished service of higher order) and Padma Shri (distinguished service).
• The award seeks to recognise achievements in all fields of activities or disciplines where an element of public service is involved.

Limitations and Exceptions

• The awardees do not get any cash reward but a certificate signed by the President apart from a medallion which they can wear at public and government functions.
• The awards are, however, not a conferment of title and the awardees are expected to not use them as prefix or suffix to their names.
• A Padma awardee can be given a higher award only after five years of the conferment of the earlier award.
• Not more than 120 awards can be given in a year but this does not include posthumous awards or awards given to NRIs and foreigners.

Eligibility

All persons without distinction of race, occupation, position or sex are eligible for these awards. However, government servants including those working with PSUs, except doctors and scientists, are not eligible for these awards.

• The award is given for “special services” and not just for “long service”. “It should not be merely excellence in a particular field, but the criteria has to be ‘excellence plus’.

Who Nominates the Awardees?

• Any citizen of India can nominate a potential recipient.
• One can even nominate one’s own self.
• All nominations are to be done online where a form is to be filled along with details of the person or the organisation being nominated.
• An 800-word essay detailing the work done by the potential awardee is also to be submitted for the nomination to be considered.

Who selects the awardees?

All nominations received for Padma awards are placed before the Padma Awards Committee, which is constituted by the Prime Minister every year.

• The Padma Awards Committee is headed by the Cabinet Secretary and includes Home Secretary, Secretary to the President and four to six eminent persons as members.
• The recommendations of the committee are submitted to the Prime Minister and the President of India for approval.

Is the recipient’s consent sought?

There is no provision for seeking a written or formal consent of the recipient before announcement of the award. However, before the announcement, every recipient receives a call from the Ministry of Home Affairs informing him or her about the selection. In case the recipient expresses a desire to be excluded from the award list, the name is removed.

ISRO’s SSLV, a small satellite launcher with big prospects ahead 

UPSC Syllabus: Mains – GS Paper III – Science and tech
Sub Theme: Need and benefits of SSLV | UPSC

• ISRO’s indigenous new launch rockets, called the Small Satellite Launch Vehicle (SSLV), is likely to have its much-delayed, maiden development flight this April. Here’s what we know about it
• ISRO’s indigenous new launch rockets, called the Small Satellite Launch Vehicle (SSLV-D1 Micro SAT), will have its much-delayed, maiden development flight this April.
• The SSLV is intended to cater to a market for the launch of small satellites into low earth orbits which has emerged in recent years on account of the need for developing countries, private corporations, and universities for small satellites.
• The SSLV can carry satellites weighing up to 500 kg to a low earth orbit while the tried and tested PSLV can launch satellites weighing in the range of 1000 kg.
• “The SSLV is the smallest vehicle at 110-ton mass at ISRO. It will take only 72 hours to integrate, unlike the 70 days taken now for a launch vehicle. Only six people will be required to do the job, instead of 60 people. The entire job will be done in a very short time and the cost will be only around Rs 30 crore. It will be an on-demand vehicle.
• The former chairman Sivan said in an industry meeting that year that about 15 to 20 SSLVs would be required every year to meet the national demand alone.
• SSLV is perfectly suited for launching multiple microsatellites at a time and supports multiple orbital drop-offs.
• The development and manufacture of the SSLV are expected to create greater synergy between the space sector and private Indian industries – a key aim of the space ministry.
• One of the aims of the newly-created ISRO commercial arm, New Space India Limited (NSIL), is to use research and development carried out by ISRO over the years for commercial purposes through Indian industry partners.
• There are more than 500 industries contributing to ISRO programs at present, and more than half of the project budget outlay for space programs flows to these industries.

Scientists Spot a Blinking Star’s ‘Totally Unexpected’ Behaviour

UPSC Syllabus: Prelims| Science & Tech| 

Sub Theme: Pulsars, neutron stars and magnetars| UPSC

Context: Scientists have detected what appears to be an incredibly dense star behaving unlike anything else ever seen – and suspect it might be a type of exotic astrophysical objects whose existence has been only hypothesized until now.

• It may be the first known example of what is called an ”ultra-long period magnetar,”
• This is a variety of neutron star
• Neutron star – They are the compact collapsed core of a massive star that exploded as a supernova – that is highly magnetised and rotates relatively slowly.
• Magnetars are neutron star with a much stronger magnetic field than ordinary neutron stars.
• Pulsars- They are fast-spinning neutron star objects that appear from Earth to be blinking on and off within milliseconds or seconds.

India-Gulf Defence Cooperation

UPSC Syllabus: Mains–  GS Paper 2| International relations|
Sub Theme: Reasons for growing cooperation| UPSC

Context:

• After a gap of three years, India and Oman are set to hold a meeting of the Joint Military Cooperation Committee (JMMC) during the visit of Mohammed Nasser Al Zaabi, Secretary General, Ministry of Defence of Oman.
• The JMCC is the highest forum of engagement between India and Oman in the field of defence that evaluates and provides guidance to the overall framework of defence exchanges between the two sides.

India-Oman Defence Cooperation

• Oman is the first GCC country with whom India established robust defence cooperation.
• Oman’s geostrategic location at the mouth of the Persian Gulf and the Arabian Sea makes it invaluable for guarding the Sea Lines of Communication in the Indian Ocean.
• India and Oman have been cooperating in anti-piracy operations for a long time.
• Oman has provided access to the Indian Navy at its Duqm Port for logistics. It has enabled India to enhance its naval activity in the Indian Ocean Region.
• A number of Omani cadets have been trained in India’s National Defence Academy.
• India and Oman conduct exercises involving all branches of the forces. Oman is the only country in the Gulf region with which all the three services of India conduct regular bilateral exercises.

Ex: AL-Nagah (Joint military exercises)
Naseem-Al-Bahr (Biennial joint Naval exercise)

• Oman also actively participates in the Indian Ocean Naval Symposium (IONS).

India’s defence cooperation is not only confined to its age-old defence partner Oman but the last decade has witnessed a growing defence cooperation between India and other major powers of Gulf like Saudi Arabia and UAE.

Reasons for Growing India-Gulf Defence Cooperation

Investment in India’s Defence Manufacturing

• India, Saudi Arabia and the UAE are among the top global importers of defence equipment in the world. Under programmes like Make in India and Atmanirbhar Bharat, India has focused on developing an indigenous defence industry to reduce its dependence on imports and has also been wooing Gulf investors to invest in the budding Indian defence industry. In this regard, the Gulf not only provides a potentially vibrant market for Indian defence equipment but also provides an opportunity for joint ventures and investments in the defence field.

Regional threats to the Gulf Powers

Several regional developments have contributed to India and the Gulf countries advancing defence and security ties.

• Rise of global terrorist organisations in the region
• Regional tensions due to the Iranian nuclear programme and Tehran supporting armed militia waging proxy wars in the neighbourhood.
• Interference of Turkey in Arab affairs taking advantage of the internal disputes among the Gulf Cooperation Council (GCC) countries.

These factors have led the Gulf Arab countries to seek options beyond US to enhance their security preparedness.