Daily Current affairs 02 February 2019UPSC - Daily Current Affair
- In the interim budget yesterday, a pension scheme called Pradhan Mantri Shram-Yogi Maandhan was announced for workers in the unorganised.
Pradhan Mantri Shram-Yogi Maandhan
- In the interim budget, a pension scheme called Pradhan Mantri Shram-Yogi Maandhan was announced for workers in the unorganised sector with a monthly income of up to Rs. 15,000.
- A sum of Rs. 500 crore has been allocated for the Scheme.
- The unorganised sector has an estimated 42 crore workers including construction labourers, domestic workers, rickshaw-pullers, agricultural labourers etc
- The scheme is expected to benefit 10 crore workers in the next five years, making it one of the largest pension schemes of the world.
- Under the scheme, there will be a nominal monthly deposit by the workers till 60 years of their age and the government will deposit the same amount in their pension account every month.
- For example, an unorganised sector worker joining pension yojana at the age of 29 years will have to contribute only Rs 100 per month till the age of 60 years. A worker joining the pension yojana at 18 years, will have to contribute as little as Rs 55 per month only.
- Under the scheme, the unorganised sector workers can get an assured monthly pension of Rs 3,000 from the age of 60 years.This will provide the workers in the unorganized sector comprehensive social security coverage for their old age.
Due to the monthly income cap of Rs 15,000, many of the urban poor may be left out including domestic workers, especially working in the metros.
Show full text
Section : Social Issues
- In a bid to reduce farmer’s distress, the government, in the Interim Budget 2019, has introduced PM-KISAN, an annual income support scheme for small and marginal farmers.
About Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)
- Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is a structured income support scheme for small and marginal farmers owning less than 2 hectares of land.
- It is a direct cash transfer scheme providing Rs. 6,000 per annum, in three equal installments of Rs. 2,000 each.
- This programme will entail an annual expenditure of Rs 75,000 crore, and will be funded 100 per cent by the Central government..
- It aims to:
- Augment income of the most vulnerable farmers,
- Help meet their emergent needs especially before the harvest season, for procuring seeds, fertitlizers, equipment etc.
- Help reduce agricultural indebtedness
- Enhance rural consumption
Need for PM-KISAN
- According to the latest agriculture census 2015-16, there are 126 million small and marginal farmers (less than 2 hectares of land) in India.
- While they account for 86.2% of all farmers in India, they hold an average holding of just 0.6 hectares each.
- As a result, they cannot generate financially sustainable incomes, raising the agricultural distress in India.
- Recently, lower food inflation and fall in international food prices have also contributed to reduced income levels from farming.
- In order to fight the menace of agriculture distress, various strategies are adopted including minimum support price, agricultural credit, farm loan waiver etc.
- Despite various efforts, agriculture distress has continued raising the need for supplemental income.
- Direct cash transfers through PM-KISAN to the most vulnerable farmers - the small and marginal farmers - can help alleviate some of the distress.
Shortcomings in PM-KISAN
- The major issue raised is that the scheme does not cover landless poor, sharecroppers and tenant farmers.
- As the falling food inflation affects all farmers equally, the scheme does not cover all farmers.
- Though income support can help reduce agricultural indebtedness and distress, the long term approach has to be to bring in marketing reforms to increase farmer incomes as well as generate alternate sources on income and employment.
Show full text
Section : Economics
- The government unveiled its ‘Vision 2030’, a 10-dimensional approach to New India, in the interim budget 2109.
- The Vision 2030 highlights government's 10 dimensions for emerging New India free from grave issues like poverty, malnutrition, illiteracy etc.
Ten dimensions of Vision 2030
1. Physical and social infrastructure
- Physical infrastructure: World class roads, railways, seaports, airports, urban transport, gas, and electric transmission and inland waterways
- Social infrastructure: Quality healthcare, scientifically designed education system, housing for all, healthy environment
2. Digital India
- Digitizing every sector of the economy including government processes and private transactions
- Digital Infrastructure and digital economy of 2030 will be built upon the successes achieved in recent years in digitisation
3. Pollution-free India
- Greater share of renewables in country’s energy basket
- Achieving self reliance in energy needs
- Transport revolution involving Electric Vehicles
4. Rural industrialization
- Technology driven rural economy to generate alternate rural incomes and employment
- Develop grass-roots level clusters, structures and mechanisms encompassing the MSMEs, village industries and start-ups
5. Clean Rivers
- Safe drinking water, micro-irrigation for efficient use of water
6. Development of Coastline
- Scaling up of Sagarmala project
- Development of inland waterways faster
7. Outer skies
- To become launch pad of global satellites with its work horse PSLV
- Manned mission by 2022
8. Satiating Hunger
- Self-sufficiency in food and boosting agricultural exports
- High farm production and productivity will be achieved through modern agricultural practices and value addition
- Boost food-processing sector to connect agriculture and industry
9. Healthy India
- Develop robust public health infrastructure
- Distress free health care and a functional and comprehensive wellness system for all
10. Responsible Bureaucracy
- A proactive, responsive and responsible bureaucracy working with the spirit of ‘Minimum Government Maximum Governance’
Show full text
Section : Polity & Governance
National Parks of Jammu and Kashmir
- Dachigam National Park
- It is located in Srinagar, Jammu and Kashmir..
- The park is best known as the home of the state animal of Jammu and Kashmir: Hangul or Kashmir stag (IUCN status: Critically Endangered species).
- The National Park occupies almost half of the catchment zone of the Dal Lake.
- Salim Ali National Park
- It is located in Srinagar, Jammu and Kashmir.
- Main flora: Mangrove shrubberies
- Imp Fauna: Kashmiri stag, Snow Cock, Serow, Himalayan black bear.
- Hemis National Park
- It is located in Ladakh, Jammu and Kashmir.
- Hemis National Park has the highest number of snow leopards of the world.
- It is the largest National Park of the country.
- The park has parts of Zaskar range and Indus River flows at its boundaries.
- Kishtwar National Park
- It is located in Kishtwar, Jammu and Kashmir.
- The park is bordered by Rinnay River in the north, Great Himalayas in east and Marwa River in the west and Kibar Nala catchments in the southern part.
- This national park was basically made to protect the endangered species of snow leopards.
- Kazinag National Park
- Kazinag National Park is situated in north bank of Jhelum close to Line of Control in Baramulla district of Jammu and Kashmir.
- The park came into existence after two wildlife sanctuaries i.e. Limber and Lachipora were clubbed with Naganari conservation reserve with the support of Wildlife Trust of India in 2007.
- It is home to the Markhor (national animal of Pakistan).
- It is home to 17 different types of butterflies that are unique and endangered.
- Kazinag habitats the largest population of Markhor (IUCN status: near threatened ) and Tragopans (another endangered species of bird )
- It is part of a proposal for a trans-Karakoram peace park with Pakistan.
- In India, Markhor is found only in J&K
- The mining of gypsum close to the Kazinag national park is threat to the wild species.
Show full text
Section : Miscellaneous
Spreading rewards of higher growth
- India's rapid growth also makes it the responsibility of the government to equitably share the rewards of growth.
- The government in the interim budget rewarded middle class tax-payers and announced relief measure for farmers in distress.
- It is also necessary that sharing of growth benefits is done in ways that sustain growth, reduce distortions, and improve capabilities to participate in growth.
Measures for farmers
DBT is a version of negative income tax:
- DBT is one version of negative income tax (where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government).
- A negative income tax was first mooted by famous economist Milton Friedman in the late 1950s.
- The DBT, as presently announced, is a transfer of Rs. 6,000 a year to poor farmers (those cultivating less than 2 acres).
- The target is 12 crore small farmers, and total expenditure therefore is Rs. 75,000 crore a year.
Equitable method compared to raising MSPs:
- The attempt of raising the MSPs to farmers as a way of solving the farmer income problem has not worked.
- By raising the minimum support prices (MSP), as this and previous governments have done, only the rich, upper class farmers are really helped.
- In this sense, direct cash transfer to the poorest is a highly inequitable method.
Direct transfers reduce corruption:
- In the process of food procurement and food distribution via the Food Corporation of India to ration shops, about 50% of the food that is meant to be distributed to the poor and lower middle-class disappears.
- Over the years, this amounted to loss of lakhs of crores of rupees to corruption.
- By introducing a direct benefit transfer (DBT) to the poor farmer, the government has taken the first steps towards dismantling the 40 year old corrupt policy of food procurement and distribution.
JAM trinity ensures smaller expenditure will have large impact:
- Better implementation and reduction in waste brings down costs across the board.
- The JAM (or Jan Dhan-Aadhaar-Mobile) complex is the other major set of reforms that enable a smaller expenditure to have a larger impact on social welfare.
- Jan Dhan bank accounts opened through the country and the Aadhaar data base make a cost-effective Direct Benefit Transfer (DBT) possible for farmers.
Measures for middle class
Tax rebate for middle class:
- Another component of the new Budget is the policy on tax rebates for those earning less than Rs. 5 lakh a year.
- The policy is strictly one of tax rebate, not an increase in exemption limit.
- If an individual earns Rs. 5 lakh, she will have to file a return, state that she is earning Rs. 5 lakh, and owe Rs. 12,500 in taxes.
- This is because there is a 5% tax rate for those earning between Rs. 2.5 and Rs. 5 lakh. This is then adjusted with the rebate of Rs. 12,500 and so she owes zero tax.
Why rebate and not exemption?
- Some suggested that the government could just have just raised the tax exemption limit to Rs. 5 lakh, rather than the rebate.
- But the brilliance of this policy is that more people will get into the tax net.
- As and when their incomes grow, they will also contribute to the tax pool.
Enabled by prudent measures taken over the last few years:
- Many measures over the past few years helped create space for such measures.
- These include painstaking fiscal consolidation (from nearly 7% to 3.3%), tax reform, more efficient delivery of subsidies, and a rise in the share of capital expenditure.
- Widened tax base:
- Demonetisation, the goods and services tax (GST) and other steps towards formalisation increased the tax base, and as a result, tax rates can themselves be cut.
- Tax receipts have grown from 10% of GDP — a level at which they had stagnated since the tax cuts after the global financial crisis — to 12%.
- Although the GST has not yet resulted in a rise in indirect tax ratios above 5.5%, it is likely to do so in the future as it stabilises.
- The common man who bore some of the costs of reform, should now benefit from the success of these.
Will these steps mean irresponsible expenditure?
1 lakh crore expenditure and revenue loss:
- Rough calculations suggest that the government will lose about Rs. 25,000 crore of revenue in 2019-20 by the tax breaks to the middle class.
- So, the total transfer by the government on account of DBT for the poor farmer and the lower middle class worker is approximately Rs. 1 lakh crore.
Can easily be covered by widened tax base and preventing corruption losses:
- The transfers to farmers and tax cuts amount to only 0.4% of GDP this year and are partially funded by a 0.3% rise in tax ratios.
- Large amount of money can also be saved by preventing losses from the operation of the PDS system with the help of DBT.
Will only affect fiscal deficit slightly:
- Well-targeted transfers can be made without destroying fiscal consolidation and creating macroeconomic vulnerabilities.
- India's large size economy can afford to spend larger absolute amounts with only a small rise in deficit ratios and borrowing requirements.
- The current payments to farmers and the tax benefits given will only have a marginal impact on the fiscal deficit.
- Also, over the past few years, inflation is low and food prices are crashing. A slight rise in fiscal deficits to fund transfers to farmers does not threaten macroeconomic stability.
Conclusion - Interim budget is a step towards good practices:
- Economists say that ideally the market (both domestic and international) should set prices.
- The government should achieve its equity objectives through direct benefit transfers (DBT).
- The intent and direction of the Interim Budget is attempting, and beginning, to meet these objectives.
GS Paper III: Economy
Show full text
Section : Editorial Analysis