DAILY CURRENT AFFAIRS ANALYSIS

  

28 SEPTEMBER 2022

   

. No.	Topic Name	Prelims/Mains
1.	About the NAVIC Scheme	Prelims & Mains
2.	Details of the New Foreign Trade Policy of India	Prelims & Mains
3.	About the RTI Act	Prelims & Mains
4.	Details of the Inflation	Prelims & Mains

 

1 – About the NAVIC Scheme:

 

GS II

 

Topic  Government Policies and Interventions

 

·       Context:

 

·       India is pressuring tech giants to make smartphones compatible with its in-house navigation system within months, according to two industry sources and government documents seen by Reuters. This alarms businesses like Samsung, Xiaomi, and Apple who worry about increased costs and disruptions as the move necessitates hardware changes.

 

·       Upcoming applications:

 

·       disaster preparedness, fleet management, and vehicle tracking, particularly for the mining and transportation sectors, as well as mobile device compatibility;

·       geodetic data collecting and mapping; accurate time (as in power grids and ATMs).

 

·       The NAVIC:

 

·       The Indian Regional Navigation Satellite System (IRNSS), also known as Navigation in Indian Constellation (NavIC), was developed by the Indian Space Research Organization (ISRO).

·       The IRNSS consists of eight satellites, three of which are in geostationary orbit and five of which are in geosynchronous orbit.

·       Delivering precise position, navigation, and timing services over India and its surroundings is the main objective.

·       It runs over the Indian subcontinent within a 1,500 km radius and is comparable to the well-known and frequently used U.S. Global Positioning System (GPS).

·       It has received certification from the Third Generation Partnership Project (3GPP), a global organisation for coordinating mobile phone standards.

 

·       Source  The Hindu

 

2 – Details of the New Foreign Trade Policy of India:

 

GS III

 

Topic  Indian Economy

 

·       Context:

 

·       The government on Monday decided to prolong the Foreign Trade Strategy 2015–20 by another six months, until March 2023, as opposed to replacing it by a new policy by September 30 as initially intended, citing requests from industry organisations.

 

·       What Is the Meaning of a Foreign Trade Policy?

 

·       The Government of India’s Foreign Trade Policy is made into a binding document by the Foreign Trade Development and Regulation Act of 1992.

·       Since the 1991 economic reforms, when it was reviewed and updated every five years, the FTP has served as the compass for all stakeholders.

·       The basic objective of international trade policy is to encourage trade by reducing transaction and transit costs and timeframes.

·       A FTP lays forth the regulations for foreign trade and reveals the government’s position on a variety of parallel but important policy issues, including, among others, technology flow and intangibles.

 

·       Why is a New Foreign Trade Policy Required?

 

·       India’s position and alignment with flagship programmes like the “Local for Global” and PLI (Production Linked Incentive) schemes, the WTO’s decision to reject India’s export incentive programmes, a long overdue review of the Special Economic Zone (SEZ) scheme, shifting geographic profiles of India’s export basket, and FTA implications must all be made clear.

·       A WTO dispute panel had determined in 2019 that the export incentives offered under the FTP violated India’s WTO agreement.

·       Impact on export-focused businesses: Some ad hoc, disjointed, and inconsistent revisions to the 2015 FTP have had a negative effect on some export-oriented enterprises. This is yet another argument in favour of changing the FTP.

·       The 2015 FTP promoted exports by directly issuing duty-credit coupons in proportion to exports. The maximum export incentives were nevertheless limited by the government to Rs. 20 million for goods in 2020 and Rs. 20 million for services in 2021.

·       The changes to service incentives were also retroactively announced in September 2021, with an April 2019 implementation date.

·       Reduced Spending and Incentives: The annual export incentives known as the Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS), both of which were valued Rs. 51,012 crore, were replaced by the RoDTEP plan incentive, which was worth Rs. 12,454 crore.

·       The remaining Rs. 38,558 crore was put into PLI to help a select few sectors.

·       Infrastructure hiccups: The typical turnaround time for ships in India is roughly three days, while the global average is 24 hours. This is because India’s export infrastructure, including ports, warehouses, and supply chains, has not been effectively improved. Tractor export incentives, which were previously offered at 3%, are now only offered at 0.7%.

·       MSMEs are in trouble since they are crucial to achieving the difficult export targets and account for about 29% of the GDP and 40% of global trade. The surge in input and gasoline prices, however, is having a detrimental impact on the bottom lines of MSMEs.

·       Due to the rising costs of raw materials like plastics and steel, as well as a shortage of shipping containers and labour, MSMEs are having difficulty taking full advantage of the global boom in demand.

 

·       What changes to the New FTP might be made?

 

·       Resolving the Crisis of MSMEs Under the SEIS, incentives ranging from 3–7% of net foreign exchange receipts are provided to Indian service exporters of specified services.

·       Faster GST refunds to international services and a modification to the minimum cap on the amount of net foreign exchange earnings that can be claimed under the scheme are both crucial with the new FTP.

·       The government must also encourage MSMEs in using the export potential in current tariff lines if it hopes to increase the proportion of exporting MSMEs and increase MSME exports by 50% in 2022–2023.

·       Additional Exporter Rewards: The new FTP might be helpful for exporters if the incentives provided to retail and wholesale merchants under the scope of the MSME category are extended to them as well.

·       The new FTP must enable exporters to utilise technology in the context of global trade. This will enable MSMEs to compete on an international scale.

·       Infrastructure Improvement: With the help of a strong and extensive infrastructure network, including warehouses, ports, special economic zones (SEZs), quality testing labs, certification centres, etc., exporters will remain competitive in a cutthroat market.

·       India needs to invest in enhancing its export infrastructure in order to compete with technologically advanced countries like China.

·       Additionally, it needs to adopt modern business practises, which can be accomplished by digitising the export process. Costs will go down, and time will be saved.

·       GST Export Advantages: Because the GST export advantage is now outside the purview of FTP, certain exporter classes have been denied export benefits.

·       So it is vitally important to reduce the gap between the two policies. Furthermore, it is critical that administrative procedures do not impede the efficient distribution of GST refunds.

·       WTO-compliant initiatives This is what the FTP should be designed around. The WTO seeks to deter governments from heavily subsidising exporters in order to ensure that all nations compete on an equal level.

·       Since the Indian government is well aware of the need to comply with WTO requirements, it has already taken significant steps to abolish projects driven by subsidies.

·       More basic work must be done in order to boost exports and ensure that Indian exports remain competitive in the global market.

·       Additional measures Policymakers must immediately widen their field of study to encompass all stakeholders in order to build a thoughtful and directed policy position that directs both the Center and private enterprises for the nation’s economic prosperity.

·       These elements should also include the current paradigm, including the urgent need to replace fuel imports, taking use of improvised logistics, and stimulating entrepreneurial spirit.

·       The new FTP will gradually endeavour to lift export prohibitions, assess the operational and legal framework to reduce transit costs, and create a low-cost operating environment through developed logistics and utility infrastructure. This is due to the pandemic’s significant economic impact.

 

·       Source  The Hindu

 

3 – About the RTI Act:

 

GS II

 

Topic  Government Policies and Interventions

 

·       Context:

 

·       Justice D.Y. Chandrachud had also talked in open court about the opening of a Right to Information (RTI) portal a few days before the Chief Justice’s remarks.

 

·       The 2005 RTI Act:

 

·       This statute specifies how citizens may exercise their right to information.

·       It took the place of the earlier Freedom of Information Act of 2002.

·       The basic right to free expression guaranteed by the Indian Constitution was strengthened by the passage of this law. Due to its inclusion in the Right to Freedom of Expression under Article 19 of the Indian Constitution, RTI is an implied basic right.

 

·       Important Conditions under the RTI Act:

 

·       Under Section 4 of the RTI Act, any public authority is required to make information suo motu available.

·       Section 8 lists exceptions to the RTI Act’s information disclosure mandate (1).

·       Section 8 (2) permits the disclosure of material that is exempt from disclosure under the Official Secrets Act of 1923 if a higher public interest is served.

 

·       The law’s beginnings:

 

·       The RTI Act’s seeds were planted by the Supreme Court.

·       Every public action and every activity that our country’s public authorities engage in in the open must be disclosed to the public.

·       Their freedom of speech-derived right to information.

·       Twelve states passed their own transparency laws prior to the RTI Act’s approval as federal law and implementation in 2005 in response to widespread calls for such a law.

·       Prior to the RTI Act, the Supreme Court claimed that “Voters’ right to know antecedents, including criminal past, of his candidate contesting for MP or MLA election is far more vital and basic for survival of democracy.”

 

 

·       Events that have just happened:

 

·       The RTI Act was updated by the Center for the first time since 2005.

·       The amendments passed by the legislature provide the federal government the power to make rules that would regulate the terms of employment, compensation, and tenure for all commissioners across the country.

·       The J&K RTI Act was repealed once Article 370 was read down.

·       But only if it is effective, RTI access to the Chief Justice of India’s office is required.

 

·       The idea of “governance by the people” requires access to information on matters of public interest.

·       The open discussion of public policy is made possible by the free flow of information on governmental matters, which encourages government accountability.

·       It lays the groundwork for “transparent governance,” the cornerstone of democracy.

 

·       Observations of the Supreme Court:

 

·       The current Chief Justice of India, Sharad Arvind Bobde, recently demanded the establishment of a “filter” to stop “abuse” of the Right to Information (RTI) Act.

·       The Supreme Court has emphasised the importance of transparency under RTI on a few different occasions while also criticising its abuse on other occasions over the years.

 

·       Source  The Hindu

 

4 – Details of the Inflation:

 

GS III

 

Topic  Indian Economy

 

·       Context:

 

·       Last year, La Nia, an unusual cooling of the central and eastern equatorial Pacific Ocean waters that provided abundant rain just before or during harvest, had a negative impact on India’s kharif crop. Five consecutive months of above-average rainfall occurred in the country from September to January, damaging a number of crops, including ready-to-pick items like soyabeans, cotton, pulses, tomatoes, and onions. La Nia’s prolonged influence hasn’t been ruled out this time either; in fact, most global weather forecasters anticipate the present event to persist at least until December. This particular instance, which began in September 2020 and lasted three winters, would be one of the longest ones ever, according to that. Given the steady retreat of the southwest monsoon and the recent heavy rains over Northwest India, one can only hope that the “triple drip” La Nia is reaching its end and that this year won’t wind up like last year.

 

 

 

 

·       What led to the recent increase in inflation in India?

 

·       The inflation problem in India is more complicated than just a “cost-push” issue. Access to liquid assets has been a crucial factor.

·       According to the April Monetary Policy Announcement, liquidity was overextended by an estimated 8.5 lakh crore.

·       When inflation reaches a particular level, it might actually hinder growth. Real-term negative savings rates do not foster economic expansion. If we want to keep inflation under control, we must regulate liquidity and raise interest rates on savings and loans in tandem.

·       Prices for basic metals, mineral oils, and other commodities have grown dramatically as a result of the interruption to the global supply chain caused by the conflict in Russia and Ukraine, which has contributed to the high rate of inflation in March 2022.

·       Retail inflation rose mostly as a result of higher prices for essential commodities including “oils and fats,” “vegetables,” and “protein-rich goods like meat and fish,” though.

·       The price of edible oil increased due to the geopolitical unrest caused by the Russia-Ukraine war, prompting “oils and fats” inflation to increase to 18.79% in March, according to CPI data.

·       From Ukraine, sunflower oil is frequently exported. While the rate of price growth for “meat and fish” was 9.63 percent compared to February 2022, vegetable inflation increased to 11.64% in March.

·       The steep rise in commodity prices worldwide is one of the primary reasons behind India’s high inflation rate. The cost of importing some necessary goods is increasing, which is causing inflation to increase.

 

·       How does India’s increased inflation affect other things?

 

·       Repo Rate: It is projected that interest rates in the banking sector will rise. Loans for a home, a car, and other personal and business loans will likely have higher Equated Monthly Installments (EMIs).

·       Deposit rates, particularly fixed term rates, are anticipated to increase as well.

·       The hike in the repo rate can have an impact on consumption and demand.

·       CRR: The rise in CRR will cause an 87,000 crore rupee drain on the banking sector. As a result, the resources that banks may lend will decrease.

·       It also suggests that the cost of borrowing would go up and that banks’ net interest margins might decline.

·       In regard to the value of such institutions’ interest-bearing assets, the net interest margin is the difference between the interest income earned by a bank or other financial institution and the interest paid to its lenders (such as depositors) (NIM).

 

·       What Challenges Await Those Fighting Rising Inflation?

 

·       In the current situation, it is suggested that if the government absorbs some of the increase in fuel prices, inflation will reduce. There might be a case for reducing the taxes on petroleum items for the obvious reason that one segment of the population shouldn’t be subjected to an arbitrary hardship. The price of food must also be considered.

·       But it would be incorrect to think of it as a magic wand that might stop inflation. If government expenditure is not increased to offset the additional cost brought on by revenue loss, the overall deficit will rise.

·       The borrowing programme will be expanded, necessitating greater liquidity support.

·       Central banks are unable to control interest rates. If you want an interest rate hike to stick, the appropriate measures must be taken to limit liquidity. That outcome will result from the rise in CRR. Without a rise in CRR, open market activities will have to bleed liquidity.

·       In a statement, the governor of the RBI stated that “liquidity circumstances need to be regulated in line with the policy action and attitude to assure their full and effective transmission to the rest of the economy.”

 

·       What actions could be taken to prevent inflation?

 

·       Experts predict that additional fuel duty reductions will be at least Rs 5 per litre.

·       It might bring inflation down by 15 to 20 basis points.

·       It affects power in both direct and indirect ways, and a 1% rise in oil prices (in the Indian basket) might push up the WPI by 8 basis points.

·       Hoarding will reduce the amount of food available.

·       Relax the limits on the import of pulses and oil seeds.

 

·       Imports of food oils require further duty reductions. It was reduced from 19.25 percent to 13.75 percent, though.

 

·       If grain prices are impacted by inflation, be ready to use buffer stock by keeping it on hand.

·       For every 1% increase in WPI primary food expenses, the CPI can increase by 48 basis points.

 

·       Additional actions:

 

·       In order to minimise retail inflation by 40 basis points with a 10% rise in industrial output, demand quicker growth.

·       Remove supply limitations.

·       In order to reduce the burden on low-income households, increase your capacity for revenue generation.

 

·       Source  The Indian Express