Prelims Objective Practice Questions

(I.) Who among the following first mooted the idea of deficit financing?
a) Adam Smith
b) Milton Friedman
c) John Maynard Keynes
d) Alfred Marshall

(II.) The term ‘Kostak rate’ sometimes seen in news, is related to
a) Gross Domestic Product
b) Minimum Support Price (MSP)
c) Initial Public Offer (IPO)
d) Money Market

• What is the Kostak rate?
  It relates to an IPO application. So, the rate at which an investor buys an IPO application before the listing is termed the Kostak rate.

(III.) The postures of the Chowk and the Tribhanga are associated with
a) Sattriya
b) Manipuri
c) Kathak
d) Odissi
Note :-
1.) The chowk is a position imitating a square – a very masculine stance with the weight of the body equally the Chowk and the Tribhanga balanced.
2.) The Tribhanga is a very feminine stance where the body is deflected at the neck, torso and the knees.

Prelims Specific Facts

1.) NITI Aayog Launches Report on India’s Gig and Platform Economy :-

• NITI Aayog has launched a report titled ‘India’s Booming Gig and Platform Economy’.
  
  • What is India’s Booming Gig and Platform Economy Report?
    Released by: Niti Aayog
    Purpose: The report is a first-of-its-kind study that presents comprehensive perspectives and recommendations on the gig–platform economy in India.
    
  • What are the key highlights from the report?
    Definition: The report defines a gig worker as “someone who engages in income-earning activities outside of a traditional employer-employee relationship, as well as in the informal sector”.
    
  • Classification of Gig Workers: Gig workers can be broadly classified into the platform and non-platform workers. Platform workers are those whose work is based on online software apps or digital platforms while non-platform gig workers are generally casual wage workers, working part-time or full-time.
    • Gig Workers in India: In 2020–21, 77 lakh (7.7 million) workers were engaged in the gig economy.
    • They constituted 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India.
    • The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029–30. Gig workers are expected to form 6.7% of the non-agricultural workforce or 4.1% of the total livelihood in India by 2029–30.
    • At present, about 47% of the gig work is in medium-skilled jobs, about 22% in high skilled and about 31% in low-skilled jobs. The trend shows the concentration of workers in medium skills is gradually declining and that of the low skilled and high skilled is increasing.
      
  • What are the recommendations of the report?
    • Undertake a separate enumeration exercise to estimate the size of the gig economy and identify the characteristic features of gig workers.
    • During official enumerations (PLFS, NSS or otherwise), collect information to identify gig workers. This could include questions on the nature of the contract between worker and job creator, use of technology in work etc.
      
  • Introduce a ‘Platform India initiative’ on the lines of the ‘Startup India initiative’, built on the pillars of accelerating platformization by simplification and handholding, funding support and incentives, skill development, and social financial inclusion.
  • Self-employed individuals engaged in the business of selling regional and rural cuisine, and street food may also be linked to platforms so that they can sell their products to wider markets in towns and cities.
  • Other recommendations include gender sensitisation and accessibility awareness programmes for workers and their families, and extending social security for gig and platform workers in India.

2.) Oceans Great Dying 2.0: Mass extinction haunts oceans:-

• Scientists warn of imminent mass extinction of marine species similar to one that happened 250 million years ago during the Permian Era.
  
  • What is the Permian Era?
    • The Permian era is a period spanning 298.9 million-252.2 million years ago. This was a time before the dinosaurs ruled the planet. Global ocean temperatures were 10 degrees higher than today. Oxygen levels were 80% lower.
    • During this period, land masses collided to form the supercontinent Pangaea. The supercontinent was arid; only a few parts received rainfall round the year.
    • But towards the end of the era, a series of volcanic eruptions occurred in central Siberia, injecting massive amounts of greenhouse gases(GHG) into the atmosphere.
    • The change in climate after the volcanic eruptions was a death knell for the flourishing and diverse life forms.
    • Many long-lived lineages vanished. Roughly 96% of marine species and 70% of land species went extinct. Hence, the scientists refer to this period as the ‘Great Dying’.
      
  • Why are scientists warning of Great Dying 2.0?
    • Scientists have warned of Great Dying 2.0 because climate change that happened at the end of the Permian era is similar to the one that is unfolding now.
    • They have said that if emissions continue to climb and temperatures reach around 4.9 degrees Celsius by the end of this century, close to about 40% of marine genera could perish by 2300 and 8% by 2100.

3.) The Department of School Education and Literacy (DoSE and L), Ministry of Education (MoE) has released the Performance Grading Index for Districts (PGI-D) for 2018-19 and 2019-20.

• What is the Performance Grading Index for Districts (PGI-D)?
  • Aim: To assess the performance of the school education system at the District level by creating an index for comprehensive analysis.
  • Parameters: The index comprises a total weightage of 600 points across 83 indicators which are grouped under 6 categories:
    1. Outcomes
    2. Effective Classroom Transaction,
    3. Infrastructure Facilities & Student’s Entitlements
    4. School Safety & Child Protection
    5. Digital Learning and
    6. Governance Process.
  • Categorisation of Districts: The index grades the districts into ten grades: Highest achievable Grade is Daksh which is for Districts scoring more than 90% of the total points in that category or overall. The lowest grade in PGI-D is called Akanshi-3 which is for scores upto10% of the total points.
  • Significance: The index is expected to help the state education departments to identify gaps at the district level and improve their performance in a decentralized manner.
  • No district achieved the ‘Daksh’ rating in both years.
  • Three districts from Rajasthan have scored more than 80% in school education performance and achieved the ‘Utkarsh’ grade which is the second highest grade.
  • Other observations made by the report Schools across India performed poorly under the category of digital learning.
  • Around 61% of districts of the country had very little exposure to digital learning due to limited availability of computers, Internet facilities and teachers trained to handle technological tools in schools.

4.) Floor Test

• What is S.R Bommai vs Union of India case?
  • S.R. Bommai was the Chief Minister of the Janata Dal government in Karnataka.
  • His government was dismissed on April 21, 1989 under Article 356 of the Constitution and President’s Rule was imposed.
  • The dismissal was on grounds that the Bommai government had lost majority following large-scale defections engineered.
    
• What is the judgement of Supreme Court in this regard?
  • Supreme Court issued the historic order, which in a way put an end to the arbitrary dismissal of State governments under Article 356 by spelling out restrictions.
  • The verdict concluded that the power of the President to dismiss a State government is not absolute.
  • The verdict said the President should exercise the power only after his proclamation (imposing his/her rule) is approved by both Houses of Parliament.
  • Till then, the Court said, the President can only suspend the Legislative Assembly by suspending the provisions of Constitution relating to the Legislative Assembly.
    
• What is the significance of this judgment?
  • The case become one of the most cited whenever hung Assemblies were returned and parties scrambled to form a government.
  • The case put an end to the arbitrary dismissal of State governments by a hostile Central government.
  • The verdict ruled that the floor of the Assembly is the only forum that should test the majority of the government of the day, and not the subjective opinion of the Governor.
  • SC issues ordered which stated that, if the Presidential proclamation is not approved by the Parliament then,
  • Both Houses of Parliament disapprove or do not approve the Proclamation, the Proclamation lapses at the end of the two-month period. In such a case, the government which was dismissed revives.
  • The Legislative Assembly, which may have been kept in suspended animation gets reactivated.
  • Also the Court made it amply clear that a Presidential Proclamation under Article 356 is subject to judicial review.

Editorial of the Day

Remembering the ‘Plan Man’ of India

• June 29, is national ‘Statistics Day’, in ‘recognition of the contributions made by Prof. Prasanta Chandra Mahalanobis’, the ‘Plan Man’ of India. It is also his birthday.
• It was P.C. Mahalanobis, who established a strong statistical culture in India and nourished it diligently through his lifelong edeavours.
• P.C. Mahalanobis is of utmost importance as various kinds of concerns regarding data collection, its publication, and data quality have emerged in recent years.
• Mahalanobis established the Statistical Laboratory within the Baker Laboratory at Presidency College.
• In 1993, Mahalanobis founded Sankhya, the Indian Journal of Statistics.
• Second Five year plan was a plan of Socialism, was based upon the idea of P.C Mahalanobis.
  

Explainer of the Day

1.) Bring the sine back on government jobs

• In 2019, an Indian citizen died of suicide every hour due to joblessness, poverty or bankruptcy, according to the National Crime Records Bureau.
• For those employed in government, the situation is not much better. In May 2022, Haryana terminated the services of over 2,000 contractual health workers (nurses, sweepers, security guards, paramedical staff) who had been hired during the pandemic.
• The problem is two-fold. First, vacancies in the government are not being filled at a sufficient pace. There were over 60 lakh vacancies in the government across all levels in July, 2021.
• The government has sought to push for recruitment of 10 lakh people in a mission-mode over 1.5 years. However, this would fall short of the size of the problem. We need greater ambition on this front. Second, where vacancies are being filled, they are notably skewed to wards contractual jobs.
• In 2013, the Supreme Court ruled that a contractual employee for a government department was not a government servant. If most government employees have contractual terms, will a public ethos continue to exist?.
• Instead of expanding contractual employment, we should seek to bolster public services. For the past few decades, we have been under-investing in public goods – as witnessed by the COVID-19 crisis, our healthcare system simply does not have the capacity to provide adequate health care support to citizens under nor mal conditions, let alone a pandemic.
• Job opportunities
  • Consider renewable power generation. There is significant potential for job creation (for example, in rooftop solar power generation, manufacturing of solar panel modules and end use servicing). Meanwhile, on the waste management front, there is significant scope for expanding waste water treatment capacity, with the building and management of treatment plants for sewer waste and faecal sludge treatment plants leading to generation of jobs. Encouraging solid waste treatment practices (such as dry waste collection, micro-com posting) could create about 300 jobs per year in a city municipal corporation. A push for adopting electric vehicles and encouraging green mobility would require significant man power, leading to the generation of ‘green jobs’.
  • Government jobs have lost their shine. We need to attract talent to the government. Rather than downsizing or simply avoiding the cost of pensions and benefits, one should right size government. Our public services require more doctors, teachers, engineers, and fewer data entry clerks. Reforms advocated by the Administrative Reforms Commission should be our initial step.

2.) China’s interventions in the Horn of Africa

• China has been investing across the African continent throughout the last decade. While the emphasis has been on investments and raw materials, it took a new turn on June 20, with the first “China-Horn of Africa Peace, Governance and Development Conference.”
• This is the first time China aims ”to play a role in the area of security”. The conference held in Ethiopia witnessed the participation of foreign Ministries from the following countries of the Horn: Kenya, Djibouti, Ethiopia, Sudan, Somalia, South Sudan, and Uganda.
• Forum on China-Africa Cooperation (FOCAC)– The FOCAC promotes China’s role in the infrastructural and societal development of The Horn. In the 2021 forum, the entire region of the Horn participated and four resolutions were adopted: the Dakar Action Plan, the China-Africa Cooperation Vision 2035, the Sino-African Declaration on Climate Change and the Declaration of the Eighth Ministerial Conference of FOCAC.
• Beijing has also initiated the “2035 vision for China-Africa cooperation”; it aims to transform the health sector, alleviate poverty, promote trade and investments, and expand digital innovation. The vision also focuses on green development, capacity building, improving people-to-people exchanges and facilitating peace and security in the continent.
• What are China’s primary interests/investments in the Horn of Africa?
  • China’s interests are related to four major areas: infrastructural projects, financial assistance, natural resources and maritime interests. Looking at Chinese investments in infrastructure, one of its landmark projects was fully funding the $200 million African Union headquarters in Addis Ababa. It has also made significant investments in railways; it is building the Addis-Djibouti railway line connecting the land-locked country with Eritrean ports in the Red Sea. China has also invested in the Mombasa-Nairobi rail link in Kenya.
  • China is also interested in minerals such as gold, iron-ore, precious stones, chemicals, oil and natural gas in Ethiopia. South Sudan, a source for petroleum products, has had continued Beijing investment in the industry since the latter’s initial entry in 1995.
  • China’s first and only military base outside its mainland is in Djibouti.

3.) The G7 plan to counter the Belt and Road initiative

• On June 26, U.S. President Joe Biden along with his G7 allies unveiled the ambitious Partnership for Global Infrastructure and Investment (PGII), announcing the collective mobilisation of $600 billion by 2027 to deliver “game-changing” and “transparent” infrastructure projects to developing and middle-income countries. The PGII is being seen as the G7’s counter to China’s multi-trillion dollar Belt and Road Initiative (BRI) to build connectivity, infrastructure, and trade projects in Asia, Europe, Africa, and Latin America.
  
• What is the PGII?
  • The West has been sceptical of the BRI, since it was launched in 2013 by President Xi Jinping.
  • The U.S., along with G7 partners the U.K., Japan, France, Canada, Germany, Italy, and the European Union (EU), had in 2021 announced the launch of the Build Back Better World (B3W) with the aim of narrowing the $40 trillion infrastructure gap in the developing world. PGII is therefore, a relaunch of Mr. Biden’s B3W plan.
• What kind of projects will the PGII undertake?
  • All PGII projects will be driven by “four priority pillars that will define the second half of the 21^st century”.
    • First, the G7 grouping aims to tackle the climate crisis and ensure global energy security through clean energy supply chains.
    • Second, the projects will focus on bolstering digital information and communications technology (ICT) networks facilitating technologies such as 5G and 6G internet connectivity and cyber security.
    • Third, the projects aim to advance gender equality and equity, and lastly, to build and upgrade global health infrastructure.
• How does it compare to China’s BRI?
  • The Belt and Road project was started to revive connectivity, trade, and infrastructure along what was China’s ancient Silk Road. China had announced a two-pronged approach of building a Silk Road Economic Belt on Land and a maritime 21^st century Silk Road. The project initially aimed to strengthen connectivity with Southeast Asia but later expanded to South and Central Asia, Africa, Europe, and Latin America, with Mr. Xi saying it would “break the bottleneck in Asian connectivity”.
  • The G7 meanwhile has specifically touted the PGII as a values-based plan to help underfunded low and middle-income countries meet their infrastructure needs.

4.) GST reform needs a new grand bargain

• The Centre and the States of India struck a grand bargain resulting in the launch of the GST era. The States gave up their right to collect sales tax and sundry taxes, and the Centre gave up excise and services tax. The consent of the States was secured by a promise of reimbursing any shortfall in tax revenues for a period of five years. However, as the economy battles a pandemic and recession, it seems that the States have been told that they are on their own to meet shortfall in revenues.
• This is wrong on many counts-
  • First, the States do not have recourse to multiple options that the centre has – First, the States do not have recourse to multiple options that the centre has, such as issue of a sovereign bond (in dollars or rupees) or a loan against public sector unit shares from the Reserve Bank of India.
  • Second, the Centre can anyway command much lower rates of borrowing from the markets – Second, the Centre can anyway command much lower rates of borrowing from the markets as compared to the States.
  • Third, in terms of aggregate public sector borrowing, it does not matter for the debt markets whether it is the States or the Centre that is increasing their indebtedness – Third, in terms of aggregate public sector borrowing, it does not matter for the debt markets, nor the rating agencies, whether it is the States or the Centre that is increasing their indebtedness.
  • Fourth, fighting this recession through increased fiscal stimulus is the Centre’s Domain – Fourth, fighting this recession through increased fiscal stimulus is basically the job of macroeconomic stabilisation, which is the Centre’s domain.
  • Fifth this causes a serious dent in the trust built up between the Centre and States – Fifth, and most importantly, breaking this important promise, using the alibi of the COVID-19 pandemic causes a serious dent in the trust built up between The Centre and States.
• Kautilya too would have advised the sovereign against reneging on the promised bailout, as fulfilling the obligation helps build trust with Sub-sovereigns.
• It is clear that the design needs a radical overhaul. Just tinkering with the compensation mechanism, or frequently changing rate slabs, or pushing more goods in the “sin tax” cess category, to earn revenue that is not shareable with the States, is not the way forward. What we instead need is a Grand Bargain 2.0.
• GST is a destination-based consumption tax, which must include all goods and services with very few exceptions, such as food and medicine. That widening of the tax base itself will allow us to go back to the original recommendation of a standard rate of 12%, to be fixed for at least a Five-year period. A comparison with Australia which also coincidentally shares its GST anniversary with India, is apt. For the past two decades their GST rate has been constant at 10%. Of course India’s single rate of 12% has to cover petrol, diesel, electricity, transport and real estate as well. Some extra elbow room for the States’ revenue autonomy is obtained by allowing the States non VATable surcharges on a small list of “sin” goods such as liquor, tobacco, polluting goods such as sport utility vehicles, and industrial fuels such as diesel, aviation turbine fuel and coal. A low moderate single rate of 12% encourages Better compliance, reduces the need to do arbitrary classification and discretion, reduces litigation and will lead to buoyancy in collection.
• Third tier of government This new grand bargain must recognise the increasing importance of the third tier of government. Even after 28 years of the 73^rd and 74^th Amendments, the local governments do not have the promised transfer of funds, functions and functionaries. These local bodies face increased responsibility of providing government services especially in view of increased urbanisation and decentralisation. Of the 12% GST, 10% should be equally shared between the States and the Centre, and 2% must be earmarked exclusively for the urban and rural local bodies, which ensures some basic revenue autonomy to them.
• GST consumption tax paid by every citizen establishes a tighter link between the governed and the government. The quality of governance improves as also, the tax base is better aligned with responsibilities of various tiers of government.
• This fresh approach also calls for an overhaul of the interstate GST and the administration of the e-way bill.
• The current system is too complex and burdensome. We also need to zero rate exports. GST is a crucial and long-term structural reform which can address the fiscal needs of the future, strike the right and desired balance to achieve co-operative federalism and also lead to enhanced economic growth.