सत्य खबर बेहतर असर

"Sensex Dips by 1,400 Points, Nifty Tumbles as Inflation, Global Worries Weigh"

Top Countries in AI Preparedness Index

2023-24

Latest News: 04th November 2024, UPSC Preparation

Artificiall Intelligence(AI) is reshaping the global economy. It is reinventing labor markets, industries, and societal dynamics. This transformation brings both opportunities and challenges. The global AI market is expected to grow, with a compound annual growth rate (CAGR) of 36.6% from 2024 to 2030. Advanced economies will experience these changes sooner than emerging markets due to their focus on cognitive-intensive roles.

AI Preparedness Index (AIPI)

The AI Preparedness Index (AIPI) measures a country’s readiness to adopt AI technologies. The index considers four key metrics:

Digital infrastructure
Human capital
Technological innovation
Legal frameworks

The International Monetary Fund (IMF) released the AI Preparedness Index for 2023, ranking countries based on these criteria.

Top Countries Most Prepared for AI

According to the IMF, the top 10 countries most prepared for AI in 2023 are:

Singapore – Score: 0.80
United States
United Kingdom
Germany
France
Canada
Australia
Sweden
Netherlands
Finland

Singapore leads with the highest score, having invested heavily in AI capabilities. It also has the fastest workers in adopting AI skills, according to LinkedIn.

India’s Position in AI Preparedness

India ranks 72nd out of 174 countries, with an AI Preparedness Index rating of 0.49. Despite this lower ranking has the highest percentage of AI users. About 45% of respondents reported using ChatGPT. The country is home to 338 AI startups, indicating a growing interest in AI technologies.

Comparison with Other Emerging Markets

In comparison to India, other emerging markets like Bangladesh and Sri Lanka rank lower. Bangladesh has a score of 0.38 and is ranked 113th. Sri Lanka has a score of 0.43, placing it at 92nd. China, while an emerging market, has a better ranking of 31st with a score of 0.63.

Consumer Awareness of AI

Consumer awareness of AI tools varies globally. In India and the United Arab Emirates, over 90% of consumers are familiar with ChatGPT. Awareness in China and Saudi Arabia exceeds 80%. This high level of awareness indicates a strong interest in AI technologies among consumers in these regions.

Challenges for Advanced Economies

Advanced economies must enhance regulatory frameworks to manage AI’s impact. They need to facilitate labor reallocation to mitigate job displacement. Protecting those negatively affected by AI adoption is crucial.

Focus on Emerging Economies

Emerging markets should prioritize building robust digital infrastructure. They must encourage digital skills development to prepare their workforce for AI integration. This focus will help them leverage AI’s benefits in the future.

AI is transforming economies worldwide. The AI Preparedness Index marks the varying levels of readiness among countries. As AI continues to evolve, understanding these dynamics is essential for effective adaptation and growth.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

"Economic Strain: Weak Corporate Profit Growth Likely in Next Earnings Cycle"

“Economic Recovery at Stake: RBI Governor Highlights Inflation Risks”

Key Highlights

Inflation Concerns: Das noted that inflation has been a persistent issue, influenced by various factors including supply chain disruptions, global commodity prices, and domestic demand. He stressed that any resurgence in inflation could undermine consumer confidence and economic growth.
Monetary Policy Strategy: The RBI is closely monitoring inflation indicators and has implemented measures to ensure price stability. Das affirmed that the central bank will not hesitate to adjust interest rates if necessary to keep inflation in check.
Economic Recovery: While the Indian economy shows signs of recovery, Das warned that sustainable growth is contingent upon controlling inflation. He highlighted the importance of balancing growth and price stability to foster a conducive environment for investment and consumption.
Global Economic Landscape: The RBI Governor acknowledged the challenges posed by global economic conditions, including geopolitical tensions and fluctuations in oil prices. He urged stakeholders to remain vigilant and adaptive to these external factors.
Looking Ahead: Das concluded by reiterating the RBI’s commitment to its dual mandate of promoting economic growth while ensuring price stability. He called for collective efforts from policymakers, businesses, and consumers to navigate the challenges ahead.

Conclusion

Shaktikanta Das’s remarks serve as a reminder of the delicate balance required in economic management. With inflation remaining a critical concern, the RBI's proactive measures will be essential in steering the economy toward a stable and prosperous future.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

“Geopolitical Instability in West Asia Poses Challenges for India’s Economic Aspirations”

Key Highlights from the RBI Article

Domestic Demand Resilience: The RBI pointed out that strong domestic demand is a significant driver of growth. Increased consumer spending, fueled by a recovering job market and rising incomes, has bolstered economic activity across various sectors.
Investment Surge: The article noted a surge in both public and private investments. Government initiatives aimed at infrastructure development and manufacturing have led to increased capital expenditure, which is expected to create jobs and stimulate further economic growth.
Exports and Trade Recovery: Despite global challenges, India’s export sector has shown signs of recovery. The RBI mentioned that strategic partnerships and diversification of trade markets have helped Indian exporters navigate through turbulent international waters.
Inflation Management: The RBI also addressed concerns about inflation, stating that effective monetary policy measures have helped keep inflation under control, thereby fostering a stable economic environment conducive to growth.
Future Projections: Looking ahead, the RBI remains optimistic about India’s growth trajectory, projecting a GDP growth rate of [insert projected percentage] for the upcoming fiscal year. The emphasis on sustainable development and digital transformation is expected to further enhance economic resilience.

Conclusion

The RBI's article reinforces the notion that India's economic fundamentals are strong, driven by a combination of domestic demand, investment, and effective policy measures. As the global economy faces uncertainty, India’s growth outlook appears promising, supported by its robust domestic engines.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

“RBI Projects Strong GDP Growth for India, Citing Investment and Consumer Spending”

Key Highlights from the RBI Article

Domestic Demand Resilience: The RBI pointed out that strong domestic demand is a significant driver of growth. Increased consumer spending, fueled by a recovering job market and rising incomes, has bolstered economic activity across various sectors.
Investment Surge: The article noted a surge in both public and private investments. Government initiatives aimed at infrastructure development and manufacturing have led to increased capital expenditure, which is expected to create jobs and stimulate further economic growth.
Exports and Trade Recovery: Despite global challenges, India’s export sector has shown signs of recovery. The RBI mentioned that strategic partnerships and diversification of trade markets have helped Indian exporters navigate through turbulent international waters.
Inflation Management: The RBI also addressed concerns about inflation, stating that effective monetary policy measures have helped keep inflation under control, thereby fostering a stable economic environment conducive to growth.
Future Projections: Looking ahead, the RBI remains optimistic about India’s growth trajectory, projecting a GDP growth rate of [insert projected percentage] for the upcoming fiscal year. The emphasis on sustainable development and digital transformation is expected to further enhance economic resilience.

Conclusion

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

"Festive Season Boosts Gold Demand: Prices Continue to Climb"

"Domestic Airlines Report Strong Recovery: 6.38% Increase in September Passengers"

"Rising Food Prices Push India's Retail Inflation to 5.49%: Economic Implications"

"India Among Top 3 Most Optimistic Nations as Global South Sees Economic Hope"

"Rupee Declines Against US Dollar as FPI Outflows Weigh on Domestic Mark

India Faces Economic Pressure as August Exports Fall and Trade Deficit Swells to $30 Billion

"Final Call for FPI Beneficial Ownership Disclosure: Deadline Set for September 9"

"India's Forex Reserves Surge by $5.25 Billion to Record High of $689.24 Billion"

"RBI Governor Das: India Poised for 7.5% Growth or Higher Amidst Economic Optimism"

54th GST Council Meeting

Latest News: 12th September 2024, UPSC Preparation

The 54th Goods and Services Tax (GST) Council meeting took place in New Delhi, led by Finance Minister Nirmala Sitharaman. The council focused on adjusting tax rates for essential items, including health insurance, cancer drugs, and snacks.

Major Decisions Made

Group of Ministers (GoM): A special group has been created to review GST rates on health insurance, cancer medicines, and savoury snacks (known as namkeens).

GST Cut on Cancer Drugs: The council proposed reducing the GST from 12% to 5% on specific cancer treatments. This includes expensive drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab.

Impact on Cancer Treatment

The reduction in GST is expected to lower the cost of cancer treatments, which can be very high. India has seen a rise in cancer cases, and this move aims to help reduce the financial stress on patients. Below are some of the current prices of key cancer drugs:

Trastuzumab Deruxtecan: ₹22,300 per vial
Osimertinib: ₹204,000 for 10 tablets
Durvalumab: ₹157,000 per vial

Potential Reductions on Other Goods

Savoury Snacks (Namkeens): The council is considering reducing GST on these snacks from 18% to 12%, with non-fried variants possibly taxed at 5%.

Research Services: Services provided by government bodies, universities, and colleges for research could be exempt from GST.

Increases in GST for Certain Items

Car and Motorcycle Seats: The GST on these items may increase from 18% to 28%.

Helicopter Charters: GST for helicopter charters will stay at 18%, but passenger transport via helicopters will continue to be taxed at 5%.

Changes in Taxpayer Responsibilities

Reverse Charge Mechanism: Updates have been proposed for how taxes are applied on commercial property rentals and metal scrap transactions. In certain cases, the buyer will be responsible for paying the tax.

Interest Waiver: Taxpayers who have pending tax demands from previous years may be eligible for a waiver if they pay by March 31, 2025.

Future Plans

GoM Report on Insurance: The GoM will submit its findings on life and health insurance GST rates by October 2024.

New Invoice System: A new Invoice Management System (IMS) will be introduced to simplify invoicing and reduce errors in input tax credits. A pilot project for B2C (business-to-consumer) e-invoicing will also be launched to improve retail transaction transparency.

This meeting reflects important changes in India’s GST policy. By lowering taxes on key cancer drugs and other essentials, the council aims to ease the financial burden on consumers. However, certain goods and services like car seats may see higher taxes, balancing out the tax reliefs in other areas.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

Renewable Energy Minister Says India Needs Rs 30 Lakh Crore To Meet 50 GW By 2030

‘We will be in a position to export lithium-ion batteries soon’: Nitin Gadkari

India’s growth story intact, polls brought govt expenditure down: RBI governor day after GDP slips to 5-quarter low

Latest News: 09th September 2024, UPSC Preparation

RBI Governor Shaktikanta Das has assured that India's growth story remains robust, despite the GDP slipping to a five-quarter low. He attributed the decline partly to reduced government expenditure following recent elections. Das emphasized that the long-term economic fundamentals are strong, and temporary fluctuations do not undermine the overall growth trajectory.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

India’s Forex Reserves Hit Record High of USD 683.987 Billion

Latest News: 08th September 2024, UPSC Preparation

India’s foreign exchange reserves reached a new record of USD 683.987 billion. This increased by USD 2.299 billion in just one week, continuing an upward trend from the earlier high of USD 681.688 billion.

Growth Trend in 2024

In 2024, India’s reserves have grown by more than USD 60 billion, showing impressive progress, especially compared to a decline of USD 71 billion in 2022. In 2023 alone, the reserves increased by about USD 58 billion, highlighting a positive shift in the country’s economic position.

Components of Forex Reserves

India’s foreign exchange reserves consist of various assets. The largest portion is foreign currency assets (FCA), which have now reached USD 599.037 billion after growing by USD 1.485 billion. In addition to this, gold reserves have also seen an increase, rising by USD 862 million to a total of USD 61.859 billion.

Importance of Forex Reserves

Foreign exchange reserves play a critical role in protecting the domestic economy from global financial shocks. They act as a financial cushion and are currently sufficient to cover around one year of India’s projected imports. This enhances financial stability and provides security during economic uncertainties.

Role of the Reserve Bank of India (RBI)

The Reserve Bank of India (RBI) is responsible for managing these reserves. It intervenes in the foreign exchange market when needed to stabilize the currency and control liquidity. For example, if the market becomes too volatile, the RBI might sell dollars to maintain stability, without targeting a specific exchange rate.

What are Foreign Exchange Reserves?

Foreign exchange reserves are the assets a country’s central bank holds in foreign currencies. These reserves typically include foreign banknotes, government bonds, and treasury bills. Countries like China, Japan, and Switzerland hold the largest reserves globally. Reserves help stabilize a country’s currency, manage exchange rates, and settle international debts. Many countries diversify their reserves by holding gold or even cryptocurrencies. The International Monetary Fund (IMF) monitors these reserves, which are vital for global trade and investment.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

98% Rs 2,000 Notes Returned To RBI, Rs 7,261 Crore Still With Public

Sensex down nearly 900 points, investors lose over Rs 4 lakh crore

Telangana, Tamil Nadu Top in GSDP Growth

Latest News: 05th September 2024, UPSC Preparation

Telangana, Tamil Nadu, and Rajasthan have been recognized as the fastest-growing large states in India by the Ministry of Statistics and Programme Implementation (MoSPI). These states have achieved impressive economic growth, surpassing the national average GDP growth rate of 8.2%. This means their economies are expanding at a faster pace than the country’s overall economic growth.

Key Growth Numbers

Telangana: Telangana’s economy grew by 9.2%, reaching a Gross State Domestic Product (GSDP) of ₹7.9 lakh crore. This is a significant increase, showing that the state’s economy is strong and growing rapidly.

Tamil Nadu: Tamil Nadu’s economy grew by 8.2%, with its GSDP reaching ₹15.7 lakh crore. This makes Tamil Nadu one of the top-performing states in terms of economic growth.

Rajasthan: Rajasthan experienced an 8% growth in its economy, making it the seventh-largest economy in India. This growth indicates a healthy economic environment in the state.

Importance of the Services Sector

The services sector has been a key factor in driving economic growth in these states. The services sector includes industries like healthcare, finance, education, and tourism, which have been performing well and contributing significantly to the states’ economies.

Tamil Nadu: In Tamil Nadu, the services sector contributes 52% to the total Gross Value Added (GVA), which is a measure of the state’s economic output. This sector grew by 9%, helping the state’s overall economy.

Telangana: Telangana’s services sector is even more dominant, accounting for 63% of the total GVA, with an impressive growth rate of 11%. This shows that the services industry is a major driver of Telangana’s economic success.

Maharashtra: Although Maharashtra remains the largest economy in India, its services sector growth was 9%, which is lower compared to the 13% growth seen in the previous fiscal year (FY23). This indicates a slowdown in the services sector’s contribution to Maharashtra’s economy.

Performance in Other Sectors

While the services sector has been a strong performer, the agriculture sector faced challenges in many states due to the El Niño weather phenomenon, which negatively affected crop production and overall agricultural growth.

Tamil Nadu: Despite the challenges in agriculture, Tamil Nadu’s economy was supported by gains in agriculture, construction, and real estate, contributing to its strong growth.

Telangana: Telangana’s growth was boosted by real estate, other services, and a recovery in the manufacturing sector, which had faced difficulties earlier.

Comparing Top States

Telangana, Tamil Nadu, and Rajasthan have shown impressive growth, but Maharashtra still holds its position as the largest economy in India. Gujarat, which was previously ranked as the second-largest economy, is awaiting confirmation of its ranking based on the latest budget estimates. Uttar Pradesh and Karnataka are also close competitors, ranking fourth and fifth in terms of GSDP.

This overview highlights how important the services sector is in driving growth in India’s largest states, while also pointing out the different challenges and successes in agriculture and other sectors.

What is Gross State Domestic Product (GSDP)

GSDP is a measure of a state’s economic performance, similar to how GDP measures a country’s economy. It represents the total value of goods and services produced within a state. GSDP per capita, which divides the GSDP by the population, provides insight into the standard of living in a state. States with higher GSDP tend to attract more investments and have stronger economies. GSDP data is essential for shaping regional policies and can be influenced by factors like population growth, employment rates, natural disasters, and economic changes.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

Navratna Status Granted to NHPC, SJVN, RailTel PSUs

Latest News: 04th September 2024, UPSC Preparation

NHPC, SJVN, and RailTel, three major public sector companies in India, have been given the prestigious “Navratna” status by the Government of India. This makes them the 18th, 19th, and 20th companies to earn this special title. This status is a significant achievement for these companies, giving them more freedom and power to make decisions and expand their operations.

Eligibility Criteria

To be awarded Navratna status, a company must meet specific criteria:

Miniratna-I Status: The company must already have Miniratna-I status, which is a lower level of recognition given to profitable public sector companies.

Excellent Performance: The company must have received an “Excellent” or “Very Good” rating in its performance evaluation (MoU rating) for at least three of the last five years.

Strong Financial Performance: The company must score at least 60 points in six key financial indicators, such as Net Profit, Net Worth, and Earnings Per Share.

Investment Autonomy

With Navratna status, NHPC, SJVN, and RailTel now have more freedom to make investment decisions:

Investment Autonomy: These companies can now invest up to ₹1,000 crore or 15% of their net worth in a single project without needing approval from the government. They can also invest up to 30% of their net worth in a year if it does not exceed the ₹1,000 crore limit.

Expanded Operational Capabilities: The Navratna status also allows these companies to set up subsidiaries abroad, form joint ventures, and restructure their organizations to improve efficiency and performance.

Overview of the Companies

SJVN (Satluj Jal Vidyut Nigam Limited): SJVN, which became a Miniratna in 2008, manages a large portfolio of 56,802 MW across 75 energy projects, including hydroelectric, solar, and wind power.

NHPC (National Hydroelectric Power Corporation): Established in 1975, NHPC is one of India’s leading hydropower companies, with an installed capacity of 7,144.2 MW. The company aims to increase its capacity to 23,000 MW by 2032 and 50,000 MW by 2047, focusing on major projects in northeastern states like Assam and Arunachal Pradesh.

RailTel: In 2000, RailTel provided telecom infrastructure and broadband services in India. The company manages over 55,000 kilometers of optical fiber networks along railway tracks, making it one of the largest telecom infrastructure providers in the country. RailTel also offers Wi-Fi services at railway stations and supports various government initiatives like Smart Cities and e-governance.

The announcement of Navratna’s status has drawn attention to the shares of these companies. However, despite this positive news, the shares of SJVN, NHPC, and RailTel have recently experienced significant declines, with SJVN and NHPC shares down by 18% and RailTel shares down by 21% from their all-time highs.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

Indian MSMEs losing ground as Chinese goods flood market: GTRI

Latest News: 03rd September 2024, UPSC Preparation

The dominance of Chinese imports is displacing local production, as over 90 per cent of the umbrellas, artificial flowers, and human hair articles used in India are sourced from China.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

India’s growth story intact, polls brought govt expenditure down: RBI governor day after GDP slips to 5-quarter low

Latest News: 02nd September 2024, UPSC Preparation

“Going ahead, whatever growth projection we have given for the current FY, which is 7.2%, should be materialised,” Shaktikanta Das said

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

RBI Announces Future Launch of Unified Lending Interface (ULI)

Latest News: 29th August 2024, UPSC Preparation

The Unified Lending Interface (ULI) is a new technology platform that the Reserve Bank of India (RBI) plans to introduce across the country. Its main purpose is to make it easier and faster for people, especially those in rural areas, to get loans. ULI is designed to improve the lending process by lowering costs and speeding up how quickly loans are given out.

Why is ULI Needed?

India has been rapidly growing in terms of digital technology, but when it comes to loans, the information needed to assess a person’s creditworthiness (whether they can pay back a loan) is often scattered across different systems. These systems belong to various government bodies and financial institutions. Because this information is not in one place, it makes the process of getting a loan slow and difficult. ULI is being created to solve this problem by bringing all this information together, making lending faster and smoother.

Key Features of ULI

Easy Information Sharing: ULI will allow for the smooth, consent-based sharing of digital information from various sources, like land records, making it easier to access needed details.

Standardized APIs: The platform will use common software tools (APIs) that allow different systems to work together easily, helping banks and lenders quickly access the information they need.

Less Paperwork: By using digital data, ULI will reduce the amount of paperwork borrowers have to deal with, making it faster and simpler to get loans.

Expected Impact of ULI

ULI is expected to meet the high demand for credit, especially in sectors like agriculture and small businesses (MSMEs). It is seen as an important step in improving India’s digital infrastructure, similar to the success of initiatives like JAM (Jan Dhan, Aadhar, Mobile) and

UPI.

How UPI Paved the Way

The Unified Payments Interface (UPI), launched in 2016, has completely changed how digital payments are made in India. It allows people to make real-time transactions through a single mobile app that connects with multiple banks. UPI has been very successful and has drawn global attention for its efficiency, playing a big role in increasing digital payments in India. Just as UPI transformed digital payments, ULI is set to do the same for the lending process. It will provide a strong framework for delivering loans, empowering borrowers, and helping India’s economy grow.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

Union Cabinet Approves Unified Pension Scheme for Employees

Latest News: 27th August 2024, UPSC Preparation

Indian government will start a new pension system called the Unified Pension Scheme (UPS), on April 1, 2025, after getting approval from the Union Cabinet. This scheme aims to address the dissatisfaction among government employees with the current National Pension Scheme (NPS) and comes at a time when several important Assembly elections are approaching.

What is the National Pension Scheme (NPS)?

The NPS began in 2004, replacing the Old Pension Scheme (OPS). It was designed to create a more sustainable pension system. However, under NPS, pensions are not guaranteed and depend on how well investments in the market perform. Employees contribute to this pension alongside the government, but many are unhappy because the benefits are unpredictable and often lower than expected.

What is the Unified Pension Scheme (UPS)?

The Unified Pension Scheme (UPS) is a pension system in India designed to provide financial security for citizens. Launched in 2019, it combines various existing pension schemes into one unified framework to simplify the process and ensure wider coverage. The UPS is linked to an individual’s Aadhaar number for easy identity verification and enrollment. Under this scheme, both employees and employers contribute to the pension fund, and the government also contributes. It promotes financial inclusion by encouraging digital transactions, making it easier for more people to participate in the economic system.

Key Features of the Unified Pension Scheme (UPS)

Guaranteed Pension: Employees will receive 50% of their average basic pay from their last year of work, with adjustments based on how long they have served.

Minimum Pension Guarantee: Retirees with less than 25 years of service will get at least Rs 10,000 per month as a pension, provided they have worked for at least 10 years.

Family Pension: If the retiree passes away, their immediate family will receive 60% of the last drawn pension.

Inflation Adjustment: Pensions will be adjusted for inflation, based on the All India Consumer Price Index.

Lump Sum Payment at Retirement: Along with the gratuity, retirees will receive a one-time payment calculated from their last drawn pay.

Comparing UPS, NPS, and OPS

OPS: Provides a guaranteed pension based on the last salary, without needing the employee to contribute.

NPS: Funded by both the employee and the government, but does not guarantee returns and depends on the market.

UPS: Combines features of both OPS and NPS, offering guaranteed pensions while still requiring employee contributions.

Who Can Get the UPS?

The UPS is available to all government employees who retired under the NPS since 2004. Employees can choose to switch to UPS only once, and it may also be extended to state government employees.

Financial Impact

Implementing the UPS will cost the government around Rs 6,250 crore initially, plus an additional Rs 800 crore for arrears. The new scheme is designed to be financially responsible while addressing employee complaints, unlike the OPS, which had led to unsustainable pension costs. The introduction of UPS is a major political move, intended to maintain the support of government employees as elections approach. Even though some states may face financial challenges, they might still adopt the UPS due to the influence of the central government’s decision and the electoral context.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

RBI Governor ranked among top 3 global central bankers; Modi lauds Shaktikanta Das

US Approves $52.8 Million Sonobuoy Sale to India

Latest News: 25th August 2024, UPSC Preparation

The United States Secretary of State, Antony Blinken, has given the green light for a possible sale of anti-submarine warfare equipment to India, worth around USD 52.8 million. This move highlights the strong commitment between the US and India to strengthen their relationship, especially in the areas of defence and security.

Details of the Sale

The US Department of Defence, through its Defence Security Cooperation Agency (DSCA), has announced that India has asked to buy various sonobuoys, which are special devices used to detect submarines underwater. The specific types include:

AN/SSQ-53G High Altitude Anti-Submarine Warfare (HAASW) sonobuoys
AN/SSQ-62F HAASW sonobuoys
AN/SSQ-36 sonobuoys

Along with the sonobuoys, the sale will also include technical documents, engineering support, and logistical services to help India use and maintain this equipment.

Strategic Importance

This sale is part of the US’s broader foreign policy and national security goals. It is meant to:

Strengthen the strategic partnership between the US and India.
Improve India’s defence capabilities, especially in the Indo-Pacific and South Asia regions, which are very important for maintaining political stability and economic growth.

Operational Impact

With this new equipment, India will be better equipped to carry out anti-submarine warfare, especially using its MH-60R helicopters. The DSCA is confident that India will be able to smoothly integrate this advanced equipment into its current military systems without any issues.

Regional Stability Concerns

The purpose of this sale is to support stability in the region rather than disrupt it. It is designed to maintain the current military balance, ensuring that the region remains peaceful. The companies expected to be the main contractors for this sale are Sparton Corporation and Undersea Sensor Systems Inc. There haven’t been any reports about additional agreements, known as “offset agreements,” related to this deal. This proposed sale of anti-submarine warfare equipment to India is a significant step in boosting defence relations between the US and India. It reflects the shared interests of both countries in security and strategic cooperation, especially in a world where the geopolitical landscape is rapidly changing.

(NNI / Latest news / Latest news india / India latest news/UPSC Preparation)

Jackson Hole Symposium 2024

Latest News: 24th August 2024, UPSC Preparation

The Jackson Hole Economic Policy Symposium is a yearly event that gathers important people like central bankers, economists, and policymakers from around the world. It is organized by the Federal Reserve Bank of Kansas City. Since it began in 1978, this event has become a key meeting place where big ideas about the global economy and money policies are discussed. People like Ben Bernanke, a former U.S. Federal Reserve Chair, and Mario Draghi, the former President of the European Central Bank, have spoken at this event, making it very influential.

Why the 2024 Symposium is Important

The 2024 symposium, happening from August 22-24, is especially important because it could give us clues about what might happen with interest rates in the future. Jerome Powell, the current Chair of the Federal Reserve, is expected to give a speech that might include hints about whether the Federal Reserve will cut interest rates to help reduce unemployment. Investors are paying close attention because such decisions can greatly affect financial markets around the world.

How the Symposium Impacts Global Markets

What is said at the Jackson Hole Symposium can have a big impact on global financial markets. If the discussions suggest that interest rates will go up (a “hawkish” stance), this could lead to a drop in stock markets. But if the talks hint that interest rates might go down (a “dovish” tone), it could boost the markets. This year, many are looking forward to seeing if there will be any signs of interest rate cuts by the Federal Reserve, as these have been crucial in past market recoveries.The Jackson Hole Economic Policy Symposium is more than just a meeting—it’s a major event that shapes how the global economy is managed. What’s discussed there can set the stage for economic decisions that affect everyone, from big investors to everyday people. That’s why it’s watched so closely by those who care about the economy.

What Happened in 2023

Last year’s symposium in 2023 focused on “Structural Shifts in the Global Economy.” Influential speakers like Jerome Powell and Christine Lagarde, President of the European Central Bank, talked about important issues like how monetary policies (the way central banks manage money supply and interest rates) need to adapt to new economic challenges. Their insights had a real impact on how central banks around the world set their strategies over the past year.

What to Expect in 2024

For its 47th year, the 2024 symposium will explore “Reassessing the Effectiveness and Transmission of Monetary Policy.” This means they’ll be discussing how well past policies have worked, especially those put in place during the pandemic and periods of high inflation. The goal is to learn from these experiences to better understand how to keep economies strong and growing in the future.

The Jackson Hole Economic Policy Symposium is more than just a meeting—it’s a major event that shapes how the global economy is managed. What’s discussed there can set the stage for economic decisions that affect everyone, from big investors to everyday people. That’s why it’s watched so closely by those who care about the economy.

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Use simple words in notices to taxpayers, exercise power judiciously: FM tells taxmen

‘Do not permit creation of shell companies, not a tax haven’: Mauritius regulator on Hindenburg report

Government Finalizes Tender for 1,000 GPUs Under IndiaAI Mission

Latest News: 20th August 2024, UPSC Preparation

The Indian government is pushing forward with the IndiaAI Mission, aiming to build strong AI computing abilities. They have finalized a plan to buy 1,000 graphics processing units (GPUs), which are crucial for helping start-ups, researchers, and public agencies.

Main Goals of the IndiaAI Mission

The mission has a budget of ₹10,370 crore and plans to use more than 10,000 GPUs. The goal is to create AI models with over 100 billion parameters, tailored to work with major Indian languages, especially in areas like healthcare and agriculture. Those who win the contract must provide AI computing time right away: 100 hours immediately, 500 hours within two days, and more than 500 hours within a week. This setup will support the growing demand for AI by making computing resources easier to access.

Details of the Tender

The tender allows groups of companies to bid together, but at least one partner must have an annual income of over ₹100 crore. All bids must ensure that user data stays within India’s borders, following data localization rules. The project will use a public-private partnership model, where the government will cover 50% of the cost to make building the necessary infrastructure more affordable. About ₹4,564 crore will be used specifically for developing this computing infrastructure.

Impact on Start-ups and SMEs

This new computing capacity will make AI resources more available to small and medium enterprises (SMEs) and start-ups, which often find these resources too expensive and hard to get. This move aims to boost innovation and competitiveness in India’s tech sector.

What is AI Computing Capacity?

AI computing power has grown rapidly, with GPUs and TPUs leading the way. For example, in 2021, the world’s largest AI model, OpenAI’s GPT-3, had 175 billion parameters. Training AI models can use up a lot of electricity, but improvements in AI algorithms are making them more efficient. Supercomputers like Fugaku are often used to train AI models, and future advancements like quantum computing could further increase AI’s speed and efficiency.

About the IndiaAI Mission

Launched in 2020, the IndiaAI Mission aims to enhance AI research and innovation, focusing on ethical AI use and collaboration. India is currently third in the world for AI research output. The mission supports start-ups with funding and resources and has established the National AI Portal as a central knowledge hub. It promotes AI in sectors like agriculture, healthcare, and education and works with global groups like the Global Partnership on AI. The mission also aims to train over 1 million AI experts by 2025, boosting the skills of the workforce.

What is Graphics Processing Units (GPUs)?

GPUs were first developed in the late 1990s and revolutionized how images are rendered on screens. NVIDIA’s GeForce 256 is considered the first true GPU. While GPUs are widely known for gaming, they are also vital in AI, cryptocurrency mining, and scientific research. Unlike CPUs, which have fewer cores, GPUs have thousands, allowing them to process many tasks at once. NVIDIA’s CUDA programming model helps developers use GPUs for various tasks. AMD’s Radeon was the first to support Direct3D 11. The term “GPU” was coined by NVIDIA in 1999, highlighting its key role in modern computing.

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Banks woo depositors with special schemes amid contest with markets

According to bank officials, current and savings bank (CASA) deposits declined during the quarter. SBI’s CASA deposits fell to Rs 19.41 lakh crore from Rs 19.14 lakh crore in March 2024.

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The Banking Laws (Amendment) Bill, 2024, introduced by Union Finance Minister Nirmala Sitharaman, brings several important updates to banking regulations in India.

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Banking Laws Amendment Bill 2024

Latest News: 12th August 2024, UPSC Preparation

Minister of State for Finance Pankaj Chaudhary introduced the Banking Laws (Amendment) Bill, 2024, in the Lok Sabha. The purpose of this Bill is to give customers more options and to improve the way banks are governed.

Key Provisions of the Bill

Nominee Options: The Bill allows bank account holders to name up to four nominees for their accounts, instead of just one, as is the current rule.

Definition of ‘Substantial Interest’: The Bill proposes raising the limit for what counts as a ‘substantial interest’ in bank directorships from ₹5 lakh to ₹2 crore. This change reflects how the economy has grown over the past sixty years.

Bank Auditor Remuneration: Banks will have more control over how much they pay their statutory auditors.

Regulatory Reporting Dates: The dates by which banks must report compliance will now be the 15th and last day of each month, making the process more efficient.

Legislative Background

The Bill aims to update several important laws, including:

The Reserve Bank of India Act, 1934
The Banking Regulation Act, 1949
The State Bank of India Act, 1955
The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980

These changes were first mentioned by Finance Minister Nirmala Sitharaman during her 2023-24 Budget speech. They are designed to strengthen how banks are managed and to protect investors.

Controversy and Opposition

However, Congress member Manish Tewari opposed the Bill, arguing that state governments should have the power to make laws about cooperative societies. In response, Finance Minister Sitharaman explained that the Bill is focused on banking regulations and does not intend to interfere with cooperative banks that have banking licenses.

Facts about the Reserve Bank of India Act

The Reserve Bank of India (RBI) was established by the RBI Act in 1934, officially starting on April 1, 1935. Initially, the RBI’s main job was to regulate currency and maintain monetary stability. The Act gives the RBI the authority to issue currency notes (except one-rupee notes) and to manage foreign exchange and inflation through monetary policy. The Act has been amended 60 times to include new financial regulations. The first Governor of the RBI was Osborne Smith. The Act outlines the roles of the central bank in managing India’s economy.

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5th ASEAN-India Trade in Goods Agreement Joint Committee held in Jakarta

Latest News: 8th August 2024, UPSC Preparation

The 5th AITIGA Joint Committee and related meetings took place from July 29 to August 1, 2024, at the ASEAN Secretariat in Jakarta, Indonesia. The goal of these meetings was to strengthen economic cooperation between ASEAN countries and India, emphasizing the importance of the ASEAN-India Trade in Goods Agreement (AITIGA).

Background on AITIGA

AITIGA, established in 2009, aims to make trade easier between ASEAN countries and India by reducing barriers and promoting free trade, thereby strengthening economic ties. The recent meetings focused on reviewing and updating this agreement to fit current trade conditions.

Structure of Recent Meetings

The meeting was co-chaired by Shri Rajesh Agrawal from India’s Department of Commerce and Ms. Mastura Ahmad Mustafa from Malaysia. Delegates from all 10 ASEAN countries and India attended, ensuring that all sides were represented in the trade discussions. Discussions to review AITIGA started in May 2023. The Terms of Reference and Negotiating Structures were established, and negotiations began in February 2024.

Sub-Committees and Their Functions

Eight sub-committees addressed important areas such as:

National Treatment and Market Access
Rules of Origin
Standards, Technical Regulations, and Conformity Assessment Procedures
Sanitary and Phytosanitary Measures
Legal and Institutional Issues
Customs Procedures and Trade Facilitation
Trade Remedies
Economic and Technical Cooperation

Each sub-committee reported their findings to the Joint Committee to guide future discussions.

Bilateral Engagements

During the meetings, the Indian delegation also had bilateral talks with delegates from Malaysia, Singapore, Indonesia, and Vietnam to better understand the issues at hand. At a dinner organized by the Indian Embassy in Jakarta, the delegation spoke with Indian businesses to gather insights and expectations about the AITIGA review, emphasizing the initiative’s goal of achieving practical outcomes for industry stakeholders.

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Lok Sabha Passes Appropriation Bill for Financial Year 2024-25

Latest News: 7th August 2024, UPSC Preparation

On 26th February 2024, the Lok Sabha passed the Appropriation (No. 2) Bill, 2024, allowing the Indian government to withdraw funds from the Consolidated Fund of India for the 2024-25 financial year. This followed discussions on budget allocations for several ministries, especially the Ministry of Fisheries, Animal Husbandry, and Dairying.

Understanding the Appropriation Bill

The Appropriation Bill is an important legislative measure that enables the government to spend money allocated for various expenses within a financial year. This Bill makes it legally possible to transfer the necessary funds for government operations.

Procedure in Lok Sabha

During the session, Speaker Om Birla shortened the discussions and moved the Bill forward at 6 PM after addressing cut motions proposed by members, which were then rejected. Finance Minister Nirmala Sitharaman proposed the Bill for approval, and it was passed shortly after.

Key Ministry Highlights

During the discussions, Minister Rajiv Ranjan Singh talked about the government’s funding initiatives, especially in fisheries and animal husbandry. He highlighted the Modi government’s non-discriminatory approach to state funding, mentioning specific projects in West Bengal, Kerala, and Andhra Pradesh.

Investment in Fisheries Projects

Singh pointed out significant financial allocations, including ₹41.44 crore for West Bengal under the Blue Revolution Project. He also noted that India is the second-largest fishery producer in the world and the top dairy producer.

Fishermen’s Support Initiatives

The government has started various welfare measures for fishermen, including the installation of a transponder by ISRO. This device helps with communication and ensures the safety of fishermen who might cross maritime boundaries.

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Bangladesh political crisis: Indian exporters stare at disruption in goods flow, brace for payment delays

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Mcap of BSE-listed companies jumps to lifetime peak of Rs 462.38 lakh cr

ADB Loans $200 Million for India’s Waste Management Improvement

Latest News: 3rd August 2024, UPSC Preparation

The Asian Development Bank (ADB) has approved a $200 million loan to improve how solid waste and sanitation are handled in 100 cities across India. This project is part of the Swachh Bharat Mission 2.0, which aims to create cleaner cities.

Program Objectives

The funding will be used to improve waste management systems, focusing on better ways to separate, collect, and dispose of waste. The loan was signed by Juhi Mukherjee from the Finance Ministry and Mio Oka, ADB’s Country Director for India.

Infrastructure Development

The money will be used to build and upgrade facilities for handling waste, including:

Bio-methanation plants: These facilities turn organic waste into energy.
Composting plants: These turn organic waste into useful compost for soil.
Managed landfills: Safe places to dispose of waste.
Material recovery facilities: Places where materials from waste are sorted and recycled.
Plastic waste processing centers: Facilities to process and recycle plastic waste.

Climate and Disaster Resilience

The plan will include climate protection, disaster readiness, gender equality, and social fairness in city services. It aims to improve the ability of city management teams to handle waste and sanitation better. The program will encourage cities to learn from each other and work with private companies to improve services.

About Swachh Bharat Mission 2.0

Swachh Bharat Mission 2.0, started in 2021, focuses on making sanitation practices last longer and be more effective. Its goal is to improve how cities handle their waste by encouraging community involvement. The mission supports using scientific ways to process waste, like composting (turning waste into useful compost) and recycling. It also aims to build more public toilets, especially for women. This effort matches the United Nations’ goals for sustainable development and seeks to create overall cleanliness in cities, making urban life better and tackling environmental issues in a meaningful way.

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India aims for $30 Trillion Economy by 2047

Latest News: 1st August 2024, UPSC Preparation

India aims to become a USD 30 trillion economy by 2047, the 100th anniversary of its independence. According to a plan by NITI Aayog, called ‘Vision for Viksit Bharat @ 2047’, the goal is to raise the average income per person to USD 18,000 per year. This plan is designed to help India avoid getting stuck at a middle-income level.

Economic Aspirations

To reach this goal, India needs to grow its economy from the current USD 3.36 trillion to USD 30 trillion, which means it has to grow nine times bigger in the next couple of decades. The average income per person also needs to increase from USD 2,392 to USD 18,000. The report says moving from a middle-income to a high-income country requires a steady annual growth rate of 7-10% for 20-30 years. Only a few countries have managed to maintain such high growth rates consistently.

Defining Viksit Bharat

The idea of Vikshit Bharat means creating a country with high income and advanced social, cultural, technological, and institutional attributes. According to the World Bank, a high-income country has an average annual income per person of more than USD 14,005 (as of 2023). The plan identifies several key challenges, such as improving manufacturing and logistics capabilities and reducing the income gap between rural and urban areas. These improvements are essential for turning the agricultural workforce into a strong industrial workforce.

Collective Efforts

NITI Aayog stresses that achieving this vision requires the participation of the entire nation, not just a few individuals or the government. The document highlights that this is a crucial moment for India, suggesting that the 21st century could be India’s century. Success depends on balancing energy security, accessibility, affordability, and sustainability.

About Viksit Bharat

Vision for Sustainable Growth: ‘Viksit Bharat,’ or ‘Developed India,’ embodies India’s goal for sustainable development by 2047, focusing on reducing poverty, achieving gender equity, and ensuring environmental sustainability.
Urbanization and Smart Planning: With India’s urban population expected to reach 600 million by 2031, smart urban planning is crucial. Key areas of focus include digital innovation and renewable energy.
Skill Development and Economic Self-Reliance: The government prioritizes skill development through initiatives like ‘Skill India’ and promotes local industries via ‘Make in India’ to foster economic independence and growth.
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India only country where petrol, diesel prices declined in last 3 years: Puri

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‘States have unlimited right to tax mineral-rich lands’

Latest News: 27th July 2024, UPSC Preparation

Syllabus: Federalism

Mains: State legislatures to levy taxes on mineral-bearing lands and quarries without restriction by Parliament

Context: In a landmark judgment, a nine-judge Constitution Bench of the Supreme Court, led by Chief Justice D.Y. Chandrachud, affirmed the authority of State legislatures to levy taxes on mineral-bearing lands and quarries without restriction by Parliament. This ruling, delivered with an 8:1 majority, addresses the relationship between federal and state powers regarding taxation and mineral resource management.

Background and Case Details:

Judgment Context:
- The judgment arose from 86 appeals involving various State governments, mining companies, and public sector undertakings.
- The case had its origins in a dispute between India Cements Ltd. and the Tamil Nadu government regarding taxation on mining lands.
Key Legal Arguments:
- Parliament vs. State Powers: The central issue was whether Parliament could restrict State powers to tax mineral-bearing lands under the Mines and Minerals (Development and Regulation) Act (MMDR Act) of 1957.
- Royalty vs. Tax: The court also examined whether royalty payments made by mining leaseholders constituted a tax.

Court’s Verdict and Reasoning:

State Taxation Powers:
- Majority Opinion: The Court held that Parliament cannot limit State legislatures’ power to tax mineral-rich lands. This power derives from Article 246 and Entry 49 of the State List in the Seventh Schedule of the Constitution.
- Chief Justice Chandrachud’s Explanation: The Chief Justice emphasized that any restriction on State taxation powers would impact revenue generation, thereby hindering the States’ ability to fund welfare programs and infrastructure.
Royalty vs. Tax:
- Judgment on Royalty: The Court clarified that royalty paid by mining lessees is a contractual consideration rather than a tax. It is a payment for the right to extract minerals, not a tax on land or resources.
Dissenting Opinion:
- Justice B.V. Nagarathna: Disagreed with the majority on the inclusion of mineral-bearing lands in the definition of ‘lands’ under Entry 49 but concurred that royalty is not a tax.

Constitutional Interpretation:

Article 246 and Entry 49:
- Scope of State Power: The Court confirmed that mineral-bearing lands fall under ‘lands’ as per Entry 49, granting States the power to tax such lands.
Role of Entry 50 and MMDR Act:
- Distinct Subject Matters: The Court held that Entries 50 and 49 cover different areas; Entry 50 relates to mineral development, while Entry 49 pertains to State taxation powers.
- Limits on Federal Power: The MMDR Act cannot impose limitations on State taxation powers since there is no specific constitutional stipulation allowing such restrictions.

Issues

Impact of Restrictions on State Powers:
- Revenue Generation: Any restrictions imposed by Parliament on State taxation powers could significantly affect the ability of State governments to generate revenue.
- Welfare and Development: Reduced revenue from mineral taxes may impede States’ capacity to invest in essential services and infrastructure.
Constitutional Federalism:
- Balance of Power: The case underscores the importance of maintaining a balance between federal and state powers, adhering to principles of federalism and decentralized governance.
Per Capita Income Disparity: States like Chhattisgarh, Jharkhand, and Odisha, despite being rich in minerals, have per capita incomes below the national average, highlighting the need for effective resource taxation.

Significance

Federal Balance:
- Strengthening State Powers: The ruling reinforces the federal balance by affirming States’ rights to tax mineral resources, crucial for state autonomy and fiscal health.
Economic Implications:
- Revenue Assurance: Ensures that States can adequately tax mineral-rich lands, securing revenue essential for development and governance.
Constitutional Clarity:
- Legal Precedent: Provides a clear legal precedent regarding the separation of powers between Parliament and State legislatures in the context of taxation and resource management.

Government Initiatives

Legislative Adjustments:
- Review of MMDR Act: Parliament may need to review and adjust the MMDR Act to align with the constitutional limits defined by the Court’s ruling.
State Revenue Management:
- Policy Formulation: States should develop policies to effectively manage and utilize revenue from mineral taxation, ensuring transparency and accountability.

Solutions

Strengthening State Capacities:
- Enhanced Revenue Management: States should enhance their capacity to manage and utilize mineral taxation revenues for infrastructure and social welfare.
Federal Coordination:
- Inter-Governmental Dialogue: Promote dialogue between Central and State governments to address any potential conflicts and ensure cohesive resource management.
Legal Framework Adjustments:
- Constitutional Amendments: Consider amendments or clarifications in the Constitution or laws to better define the roles and limits of federal and state powers in resource taxation.

Nut Graf: The Supreme Court’s ruling reaffirms the autonomy of State legislatures in taxing mineral-rich lands, aligning with the principles of federalism and ensuring that States retain essential revenue streams for their development.

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WTO pact worries small fisher bodies

Latest News: 19th July 2024, UPSC Preparation

Context: Small-scale fisher organizations from India, Bangladesh, Ecuador, Gambia, and Indonesia have raised concerns over the World Trade Organization (WTO) negotiations on curbing overcapacity and overfishing (OCOF) subsidies. They argue that the comprehensive agreement, once concluded, could have detrimental effects on their livelihoods and the future of indigenous communities worldwide.

Concerns Raised by Small Fisher Bodies:

Special and Differential Treatment: The limited provisions for special and differential treatment in the draft agreement are inadequate for protecting small-scale fishers in developing countries.
National Determination and Definitions: Although the exempted category will be determined nationally, there are challenges in defining activities that exclude small-scale fishers, posing risks of misclassification and potential harm.

Demands and Recommendations:

Removal from WTO Jurisdiction: Small-scale fisher organizations demand that subsidy negotiations be removed from the WTO framework.
Alternative Platform: They propose that negotiations be transferred to the Committee of Fisheries under the Food and Agriculture Organisation (FAO)’s Sub-Committee on Trade, which is better equipped to handle fisheries policy and small-scale fishers’ issues.

Statements from International Organizations:

World Forum of Fisher Peoples and World Forum of Fish Harvesters and Fish Workers: These organizations, representing traditional small-scale fishing communities globally, emphasize that while some exemptions are agreed upon, the definitions and scope need clear articulation to avoid adverse impacts on small-scale fishers.

Significance

Impact on Small-Scale Fishers:

Livelihoods and Sustainability: The agreement could undermine the sustainability and livelihoods of small-scale fishers who rely heavily on subsidies to maintain their operations.
Indigenous Communities: Indigenous fishing communities could face severe disruptions, threatening their traditional way of life and economic stability.

Broader Implications:

Global Fisheries Management: The debate highlights the need for more inclusive and nuanced approaches in global fisheries management, recognizing the unique needs and contributions of small-scale fishers.
Policy Expertise: Involving the FAO’s Sub-Committee on Trade could bring more specialized expertise to the negotiations, ensuring that policies are well-informed and equitable.

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Intergenerational equity as tax devolution criterion

Latest News: 18th July 2024, UPSC Preparation

Concerns Raised by Small Fisher Bodies:

Special and Differential Treatment: The limited provisions for special and differential treatment in the draft agreement are inadequate for protecting small-scale fishers in developing countries.
National Determination and Definitions: Although the exempted category will be determined nationally, there are challenges in defining activities that exclude small-scale fishers, posing risks of misclassification and potential harm.

Demands and Recommendations:

Removal from WTO Jurisdiction: Small-scale fisher organizations demand that subsidy negotiations be removed from the WTO framework.
Alternative Platform: They propose that negotiations be transferred to the Committee of Fisheries under the Food and Agriculture Organisation (FAO)’s Sub-Committee on Trade, which is better equipped to handle fisheries policy and small-scale fishers’ issues.

Statements from International Organizations:

World Forum of Fisher Peoples and World Forum of Fish Harvesters and Fish Workers: These organizations, representing traditional small-scale fishing communities globally, emphasize that while some exemptions are agreed upon, the definitions and scope need clear articulation to avoid adverse impacts on small-scale fishers.

Significance

Impact on Small-Scale Fishers:

Livelihoods and Sustainability: The agreement could undermine the sustainability and livelihoods of small-scale fishers who rely heavily on subsidies to maintain their operations.
Indigenous Communities: Indigenous fishing communities could face severe disruptions, threatening their traditional way of life and economic stability.

Broader Implications:

Global Fisheries Management: The debate highlights the need for more inclusive and nuanced approaches in global fisheries management, recognizing the unique needs and contributions of small-scale fishers.
Policy Expertise: Involving the FAO’s Sub-Committee on Trade could bring more specialized expertise to the negotiations, ensuring that policies are well-informed and equitable.
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What is Fiscal Responsibility and Budget Management Act (FRBM Act)?

Origin and Implementation

The FRBM Act was first suggested by Yashwant Sinha, who was Finance Minister at the time, in 2000. It became law in 2003. It was officially put into place on July 5, 2004, and its goal was to set up a framework for fiscal control to protect macroeconomic stability and long-term economic growth.

Goals and Objectives of the FRBM Act

The Act’s goals are to:

Keep the budget stable.
Promote transparency in government financial operations.
Give the Reserve Bank of India more practical freedom to control inflation.
One of its long-term goals is to ensure the financial load is shared fairly.

Key Features of the FRBM Act

The FRBM Act mandates the presentation of specific documents with the Union Budget:

Medium-term fiscal policy statement.
Macroeconomic framework statement.
Fiscal policy strategy statement.

There is a clear picture of the government’s finances in these papers because they show predictions for important fiscal indicators like revenue and fiscal deficits. The Act lets the government deviate from its fiscal goals in certain situations, like natural disasters or major threats to national security, which gives fiscal policy some freedom.

Challenges and Reforms

The FRBM Act has a very detailed structure, but it has been hard to put into practice, so it has been changed many times over the years. In 2016, the NK Singh Committee looked over the Act and suggested a number of changes, such as making paying down debt the main budget goal.

Making a separate economic council to keep an eye on things.
Making it clear what kinds of deviations from economic goals are okay.
Setting strict rules for how the government can borrow money.

The goal of these suggestions is to make the FRBM Act better at promoting long-term economic growth and security. The FRBBM Act is still very important for India’s economic management because it enforces structured fiscal control and openness. This is especially true now that the global economy is unstable.

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Government to Propose Insurance Act Amendments in Budget Session

Key Amendments Proposed

The proposed changes to the Insurance Act include adding a composite license, changing the capital requirements (differential capital), lowering the solvency standards, giving out captive licenses, changing the rules on investments, setting up a one-time registration system for intermediaries, and letting insurers sell other financial products. The draft bill, which is being prepared for approval by the Cabinet, wants to change the insurance industry so that it is more like the banking sector, which is divided into general banks, small finance banks, and payments banks.

Impact of Composite Licensing

The plan for composite licensing is a big change. The Insurance Regulatory and Development Authority of India (IRDAI) does not allow Indian insurance companies to have a license that would allow them to give both life insurance and other types of insurance, like health or general insurance. With this change, life insurers would be able to give health and general insurance as well. This would make the process easier and allow one insurer to provide more services.

Operational and Economic Benefits

The suggested changes to the laws should not only better protect customers and increase their returns, but they should also make it easier for new companies to enter the market. By making the insurance business more operational and financial efficient, this could help the economy grow and create jobs. With these changes, it should be easier to do business, which should bring more Indian and foreign companies into the insurance market.

Regulatory Background and Public Input

For the insurance business in India, the Insurance Act of 1938 is the most important law. The Insurance Act and the Insurance Regulatory Development Act of 1999 are both being looked at again to make sure they meet the needs of today’s business. In December 2022, the Ministry of Finance asked the public for feedback on the planned changes, highlighting the government’s open approach to changing important economic laws.

Broader Implications for the Insurance Sector

By making it easier for insurers to meet certain capital and liquidity requirements, these changes could lead to the rise of niche insurers that focus on areas that haven’t been well served, like micro-insurance or regional insurance. With these new companies coming into the Indian market, more people from all walks of life and in more places are likely to get insurance. This will have a big effect on the country’s economy. The government wants to make the Indian insurance market more active, responsive, and open to everyone by taking these steps. These goals are in line with the country’s overall economic strategy. (NNI / Latest news / Latest news india / India latest news)

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Nifty hits fresh record high in early trade; Sensex climbs 290 points

GST system reforms panel rejigged

Latest economic news India 14th July 2024

UPSC Preparation

he Indian government plans to expand its EV policy, announced in March, to attract global players and enhance local manufacturing. The revised policy aims to lower costs, boost production, and strengthen the domestic EV ecosystem, fostering sustainable growth and competitiveness.

Introduction: Government’s Consideration for Extending EV Policy

The government is considering expanding its EV policy announced in March to have a retrospective effect.
This policy aims to encourage global players to localize production and invest in the domestic ecosystem.
The revised policy will extend benefits to entities that have already made investments.
The revised policy is expected to be formally announced in August.

The focus of the March Policy:

The March policy aimed to provide access to the latest technology and strengthen the EV ecosystem.
It encouraged healthy competition by achieving higher production volumes, economies of scale, and lower production costs.
The policy mandated that half of the value addition in manufacturing be done domestically within five years.
Import duty on EVs as completely built units (CBUs) with a minimum cost, insurance, and freight (CIF) value of $35,000 was reduced from 70%-100% to 15%.

Need for Investment and Intervention:

A Niti Aayog report in 2022 emphasized the need for viable economics for owning and maintaining EVs.
The report suggested that a sharper decline in costs would accelerate EV adoption.
India faces structural unit cost disadvantages in producing certain cell components, requiring significant capital investment.
Bain & Company’s India EV Report (2023) highlighted after-sales service as a major pain point for EV customers.
Significant investor support is required to realize the $100 billion-plus EV opportunity in India.

Addressing the Paradigm:

The EV policy shares priorities with those in the U.S., China, and Europe, where incentives are provided on a case-by-case basis.
The International Energy Agency’s Global EV Outlook for 2024 pointed out that electric cars are still more expensive than combustion engine equivalents.
Europe and the U.S. meet 20%-30% of their EV battery demands through imports, forming a case for integrated production lines.
According to Dinesh Abrol, policies should focus on building core manufacturing capabilities domestically.
Strengthening domestic players in creating capabilities for critical components is essential for progress.
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Future investments in India’s EV space

Introduction: Government’s Consideration for Extending EV Policy

The government is considering expanding its EV policy announced in March to have a retrospective effect.
This policy aims to encourage global players to localize production and invest in the domestic ecosystem.
The revised policy will extend benefits to entities that have already made investments.
The revised policy is expected to be formally announced in August.

The focus of the March Policy:

The March policy aimed to provide access to the latest technology and strengthen the EV ecosystem.
It encouraged healthy competition by achieving higher production volumes, economies of scale, and lower production costs.
The policy mandated that half of the value addition in manufacturing be done domestically within five years.
Import duty on EVs as completely built units (CBUs) with a minimum cost, insurance, and freight (CIF) value of $35,000 was reduced from 70%-100% to 15%.

Need for Investment and Intervention:

A Niti Aayog report in 2022 emphasized the need for viable economics for owning and maintaining EVs.
The report suggested that a sharper decline in costs would accelerate EV adoption.
India faces structural unit cost disadvantages in producing certain cell components, requiring significant capital investment.
Bain & Company’s India EV Report (2023) highlighted after-sales service as a major pain point for EV customers.
Significant investor support is required to realize the $100 billion-plus EV opportunity in India.

Addressing the Paradigm:

The EV policy shares priorities with those in the U.S., China, and Europe, where incentives are provided on a case-by-case basis.
The International Energy Agency’s Global EV Outlook for 2024 pointed out that electric cars are still more expensive than combustion engine equivalents.
Europe and the U.S. meet 20%-30% of their EV battery demands through imports, forming a case for integrated production lines.
According to Dinesh Abrol, policies should focus on building core manufacturing capabilities domestically.
Strengthening domestic players in creating capabilities for critical components is essential for progress.

First Budget of NDA 3.0

Finance Minister Nirmala Sitharaman is going to give her seventh Union Budget, which will happen during the monsoon months, a time of natural renewal. This event shows that India’s government is stable and strong, and it especially shows how important it is for women to be in charge of making important decisions.

Context and Significance of the Current Budget

The next budget is important because it is the first one under NDA 3.0, which means that policymakers want to make big changes and keep things the same. After getting back on track after the Covid pandemic and global wars, the budget aims to support India’s long-term goal of becoming “Viksit Bharat” by 2047.

Expectations from the Union Budget

This budget cycle plans to focus on policies that will change four major groups in society: the poor (Garib), the young (Yuva), the farmers (Annadata), and the women (Nari). It is expected to strengthen the economic framework that has been weakened by recent events around the world. The Reserve Bank of India says that the financial stability matrix is strong, which suggests that the conditions are good for putting important economic changes into action.

Focus Areas and Strategic Initiatives

The Banking, Financial Services, and Insurance (BFSI) sectors are expected to get better, especially when it comes to digitalization, security, and making services easier for customers to access. Fintech and Non-Banking Financial Companies (NBFCs) are likely to get some good policies in the budget, which will help more people get access to money and encourage new ideas. Micro and small businesses make a big contribution to the GDP. To meet their needs, support systems are planned to make it easier for them to get money and follow the rules.

Challenges in Real Estate and Healthcare

Tax breaks are meant to get the real estate market going again after it has slowed down. They are expected to encourage both building and buying, which will keep prices low. More money could be put into expanding healthcare infrastructure, especially in places that aren’t metropolises. There could also be more pharmaceuticals made in the United States, thanks to new technologies like AI and IoT.

About Union Budget

The Indian Union Budget, which used to be given on the last day of February every year, was moved to February 1st in 2017 to speed up the process of allocating funds.
During the “Halwa ceremony,” which marks the beginning of the budget writing process, officials from the Finance Ministry are locked up to keep things secret.
In 1950, R. K. Shanmukham Chetty introduced India’s first Union Budget as an independent country.
The Budget had a separate Railway Budget until 2016. After that, it was combined for a more unified approach.
Article 112 of the law calls for the Budget, which is also known as the “Annual Financial Statement.”
In 2019, a “bahi-khata,” or ledger, was used instead of the briefcase that was usually used to bring the Budget documents to Parliament.
The process of making the budget starts about six months before it is shown.
The “black budget” of 1973–74, which was led by Indira Gandhi, was named after the fact that it focused on debt.
Its two main parts are the Revenue Budget and the Capital Budget.
The Union Budget has been given by Arun Jaitley the most times in the 21st century.

What is Angel Tax?

The DPIIT has suggested that the unpopular “angel tax” on startups should be gotten rid of. This could be announced in the Union Budget. The DPIIT secretary stated that a proposal to get rid of the tax has been made. The goal is to make it easier for startups to get funding and make them more appealing to investors.

Understanding Angel Tax

Angel tax is a tax that private companies have to pay on raised money that is more than their fair market value. It mostly affects payments from angel investors, which is how the name came about. Section 56(2) VII B of the Income Tax Act put this tax in place. It says that any premium on selling shares to foreign buyers is “income from other sources,” which means it needs to be taxed.

Origins of Angel Tax

The angel tax was included in the 2012 Union Budget by Pranab Mukherjee, who was Finance Minister at the time. Its goal was to stop people from moving money. In April 2018, a big change was made: startups didn’t have to pay this tax if the total investment, including funds from angel investors, didn’t go over 10 crore. However, they still had to get more licenses and valuation certificates.

Rationale Behind DPIIT’s Recommendation for Repeal

This suggestion came from talking with people in the startup environment and industry groups that were constantly worried about how the angel tax would hurt startup funding and growth. The DPIIT has told the finance ministry about these worries and suggested that getting rid of it could help capital formation in the country a lot.

Impact on Startups

Getting rid of the angel tax could greatly help India’s over 141,000 DPIIT-registered startups. It would also make angel investments more attractive and smart financially. Angel tax is currently seen as a turnoff by possible investors because it lowers the amount of money that can be used to grow and reinvest in startups. The Confederation of Indian Industry (CII) and other business groups have been vocal supporters of lowering this tax to help the startup environment.

Current Investment Trends and Challenges

A small drop in startup fundraising efforts was seen in the first half of 2024, which shows that the economy is tough for new tech startups. Also, big drops in the values of well-known startups are a sign of a wider slowdown in funding, which is made worse by investors’ careful views on the world’s markets. Getting rid of the angel tax might help with some of these problems by promoting more robust business activities.

MSMEs need outlays for technology upgrades, to aid in green transition

The growth and sustainability of the MSME sector are pivotal for India’s economic progress. By focusing on technology upgrades, enhancing credit access, extending payment timelines, and supporting green transitions, the government can ensure that MSMEs continue to thrive and contribute significantly to the economy. The upcoming budget must address these areas to fuel growth, generate employment, and promote sustainable development within the MSME sector.

Six Pillars for MSME Growth:

Formalisation and Access to Credit: Ensuring that MSMEs have access to formal financial systems and credit facilities.
Increased Market Access and E-commerce Adoption: Encouraging MSMEs to leverage digital platforms for broader market reach.
Higher Productivity through Modern Technology: Promoting the adoption of advanced technologies to enhance productivity.
Enhanced Skill Levels and Digitalisation: Investing in skill development and digital transformation, particularly in the service sector.
Support to Khadi, Village, and Coir Industry: Aiming to globalize traditional industries.
Empowerment of Women and Artisans: Fostering enterprise creation among women and artisans.

Infrastructure Development:

Sustainable Economic Growth: Prioritizing infrastructure development, especially in industrial clusters, to support the MSME sector and overall economic growth.

Employment Generation:

Export Growth: With exports growing at a CAGR of 8.5% from FY18 to FY24, the target is to reach $2 trillion by FY30, requiring a supportive ecosystem for exporters and MSMEs.
NPA Timeline Extension: Proposing to extend the NPA timeline from 90 days to 180 days to provide relief to struggling MSMEs.

Credit and Financial Support:

Credit Guarantee Scheme: Revamping the Credit Guarantee Scheme for micro and small enterprises in the manufacturing sector.
Interest Equalisation Scheme: Extending the scheme for five years to support exports, along with restoring subvention rates for MSMEs.
Emergency Credit Line Guarantee Scheme: Reintroducing the scheme for MSME exporters for another two years.
Payment Timeline Extension: Extending the timeline for payments to MSME job work to 120 days from the current 45 days.

Policy and Scheme Adjustments:

PLI Scheme for MSMEs: Lowering the investment limit to ₹25 crore and the turnover limit to ₹70 crore under the PLI scheme for the textile and garment sector.
RoDTEP and RoSCTL Schemes: Extending these schemes for another five years to support the textile and garment sector.

Green Transition and R&D:

Climate Change Impact: Providing soft funds for MSMEs to transition to green resources and technologies.
Research and Development: Increasing the weighted tax deduction under Section 35(2AB) to 300% and extending benefits to LLPs, partnership firms, and proprietary firms to incentivize R&D.

Issues

Access to Credit: Limited access to formal credit facilities hampers the growth of MSMEs.
Technological Lag: Many MSMEs lack the necessary technology to compete globally.
Payment Delays: Short payment timelines create cash flow issues for MSMEs.
Climate Change Adaptation: MSMEs need support to adapt to climate change and transition to sustainable practices.

Significance

Economic Growth: Strengthening the MSME sector is crucial for sustainable economic growth and achieving export targets.
Employment Generation: MSMEs are key to generating employment and boosting economic resilience.
Technological Advancement: Investing in technology upgrades will enhance productivity and global competitiveness.
Sustainable Development: Supporting green transitions will ensure the long-term sustainability of MSMEs.

Solutions

Enhanced Credit Access: Implementing measures to improve access to formal credit for MSMEs.
Technology Upgradation: Providing financial and technical support for MSMEs to adopt modern technologies.
Extended Payment Timelines: Adjusting payment timelines to ensure better cash flow management for MSMEs.
Green Transition Funds: Allocating more funds to support MSMEs in transitioning to green technologies and practices.
Incentivizing R&D: Increasing tax incentives for R&D to promote innovation within the MSME sector.