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30 November, 2019

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Paper Topics Subject
GS-II Amit Shah begins meeting on CAB with groups from Northeast
India-Japan to engage in 2+2 dialogue today International Relations
Plea to stay electoral bond scheme
Modi offers $450 mn line of credit to Lanka after talks with Rajapaksa International Relations
GS-III GDP growth plunges to 4.5%, lowest since 2012 Economic Issues
FASTag deadline extended
GS-II :
Amit Shah begins meeting on CAB with groups from Northeast

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

News: As Home Minister Amit Shah began a series of meetings with stakeholders from Northeastern states on the Citizenship Amendment Bill (CAB) , sources said the government may exempt the Northeast states that have the Inner Line Permit (ILP) regime from the CAB. Exemption of such regions in Northeast states which come under the Sixth Schedule of the Constitution is also under consideration.

 

Prelims focus: About key provisions of the CAB, about ILP

Mains focus: challenges in implementation and its impact on the indigenous people of the Northeast

 

What does this imply?

  • This would virtually mean that Arunachal Pradesh, Nagaland and Mizoram may be kept out of the purview of CAB, as well as certain autonomously administered regions in Assam and other states such as Bodo Territorial District Area.

 

About Citizenship Amendment Bill

  • The CAB, which aims to give refugees from Bangladesh, Pakistan and Afghanistan — unless they are Muslim — Indian citizenship, is likely to be introduced in the ongoing session of Parliament.
  • It is also reliably learnt that some safeguards are likely to be given to Northeastern states.
  • However, a few days ago, it was brought out in media that an exemption from this citizenship law will be given only to those states where the Inner Line Permit system is enforced. That means the law will not be applied in the states of Nagaland, Arunachal Pradesh and Mizoram.

 

Concerns of other Northeastern states:

  • Manipur: People believe that if this new law is enacted, there will be huge influx of migrants. So they vociferously demand exemption from this law.

 

  • Twelve non-BJP MPs are also learnt to have met PM Modi and urged him to exclude Northeastern states from the Bill. They have argued that if it comes into effect, tribal populations would be vulnerable to displacement.

 

About Inner Line Permit (ILP):

  • It is an official travel document issued by the Government of India to allow inward travel of an Indian citizen into a protected/restricted area for a limited period.

 

  • The document is an effort by the Government to regulate movement to certain areas located near the international border of India.

 

  • ILP system is currently in operation in Mizoram, Arunachal Pradesh and Nagaland. Manipur had the ILP system but it was abolished in 1950.

 

  • Section 2 of the Bengal Eastern frontier Regulation, 1873 empowers a state government to prescribe ‘Inner line’ to prohibit citizens of India or any class of such citizens going beyond the prescribed line without the pass.
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GS-II : International Relations
India-Japan to engage in 2+2 dialogue today

Syllabus subtopic: Bilateral, regional and global groupings and agreements involving India and/or affecting India's interests

 

News: Ahead of Japanese Prime Minister Shinzo Abe’s visit to India mid-December, India and Japan are going to hold the inaugural meeting of India-Japan Foreign and Defence Ministerial Dialogue (2+2) on Saturday in Delhi.

 

Prelims and Mains focus: about 2+2 dialogue, Quad grouping an its significance, Indo-Japan relations

 

 

About the 2+2 dialogue

  • It is held between the defence and foreign ministers of the two countries.

 

  • So far, only India and the US have the 2+2 ministerial mechanism, although India and Australia also have the 2+2 at the official level.

 

  • With this, India has 2+2 mechanism with all the Quad countries.

 

  • India, Australia, US and Japan have met under the rubric of Quadrilateral since 2017 at the official level, and at the foreign ministers’ level in September this year.

 

  • India and the US 2+2 level dialogue is expected to take place on December 18 in Washington DC this year.

 

Details of the Meeting

  • The 2+2 meeting would provide an opportunity for the two sides to review the status of and exchange further views on strengthening defence and security cooperation between India and Japan so as to provide greater depth to the ‘India-Japan Special Strategic and Global Partnership’.

 

  • The two sides will also exchange views on the situation in the Indo-Pacific region and their respective efforts under India’s ‘Act East Policy’ and Japan’s ‘Free and Open Indo-Pacific Vision’ for achieving their shared objective of peace, prosperity and progress to realise a better future for the people of the two countries and the region.

 

  • This meeting is being held after the decision taken by PM Modi and Japan PM Abe during the 13th India-Japan Annual Summit held in Japan in October 2018 to institute a Foreign and Defence Ministerial Dialogue for further deepening bilateral security and defence cooperation.

 

  • While Defence Minister Rajnath Singh and External Affairs Minister S Jaishankar will head the Indian delegation for 2+2, the Japanese delegation will be led by Foreign Affairs Minister Toshimitsu Motegi and Minister of Defence Taro Kono.

 

 

About the Quad grouping

  • Regional coalition known as the ‘Quad’, the quadrilateral formation includes Japan, India, United States and Australia.

 

  • All four nations find a common ground of being the democratic nations and common interests of unhindered maritime trade and security.

 

  • The idea was first mooted by Japanese Prime Minister Shinzo Abe in 2007. However, the idea couldn’t move ahead with Australia pulling out of it.

 

Significance:

  • Quad is an opportunity for like-minded countries to share notes and collaborate on projects of mutual interest. All four countries share a vision of an open and free Indo-Pacific. Each is involved in development and economic projects as well as in promoting maritime domain awareness and maritime security.

 

  • The Quad grouping is one of the many avenues for interaction among India, Australia, Japan and the US and should not be seen in an exclusive context. Quad should not be seen in any comparative or in an exclusive context.

 

 

Indo-Japan relations:

  • Exchange between Japan and India is said to have begun in the 6th century when Buddhism was introduced to Japan. Indian culture, filtered through Buddhism, has had a great impact on Japanese culture, and this is the source of the Japanese people's sense of closeness to India.

 

  • After World War II, in 1949, Indian Prime Minister Jawaharlal Nehru donated an Indian elephant to the Ueno Zoo in Tokyo. This brought a ray of light into the lives of the Japanese people who still had not recovered from defeat in the war. Japan and India signed a peace treaty and established diplomatic relations on 28th April, 1952. This treaty was one of the first peace treaties Japan signed after World War II.

 

  • Ever since the establishment of diplomatic relations, the two countries have enjoyed cordial relations. In the post World War II period, India's iron ore helped a great deal Japan's recovery from the devastation. Following Japanese Prime Minister Nobusuke Kishi's visit to India in 1957, Japan started providing yen loans to India in 1958, as the first yen loan aid extended by Japanese government.

 

 

Recent relations

  • Prime Minister Yoshiro Mori’s visit to India in August 2000 provided the momentum to strengthen the Japan-India relationship. Mr. Mori and Prime Minister Atal Bihari Vajpayee decided the establishment of "Global Partnership between Japan and India". Since Prime Minister Junichiro Koizumi’s visit to India in April 2005, Japan-India annual summit meetings have been held in respective capitals. When Prime Minister Manmohan Singh visited Japan in December 2006, Japan-India relationship was elevated to the "Global and Strategic Partnership".

 

  • In September 2014, Prime Minister Narendra Modi paid an official visit to Japan and had a summit meeting with Prime Minister Shinzo Abe. They agreed that Japan-India relationship was upgraded to “Special Strategic and Global Partnership.” In December 2015, Prime Minister Abe paid an official visit to India and had a summit meeting with Prime Minister Narendra Modi. The two Prime Ministers resolved to transform the Japan-India Special Strategic and Global Partnership into a deep, broad-based and action-oriented partnership, which reflects a broad convergence of their long-term political, economic and strategic goals. They announced “Japan and India Vision 2025 Special Strategic and Global Partnership Working Together for Peace and Prosperity of the Indo-Pacific Region and the World” a joint statement that would serve as a guide post for the “new era in Japan-India relations.”

 

  • In November 2016, Prime Minister Modi paid an official visit to Japan and had a summit meeting with Prime Minister Abe. Prime Minister Abe stated that this summit meeting was a magnificent meeting that substantially advanced the "new era in Japan-India relations," and he hoped the two countries would lead the prosperity and stability of the Indo-Pacific region as a result of coordinating the vision of a free and open Indo-Pacifi and the "Act East" policy.

 

Cooperation in security fields

  • During Prime Minister Singh’s visit to Japan in October 2008, two leaders issued "the Joint Declaration on Security Cooperation between Japan and India". There are also various frameworks of security and defense dialogue between Japan and India including “2+2” Dialogue, Defense Policy Dialogue, Military-to-Military Talks and Coast Guard-to-Coast Guard cooperation.

 

  • At recent summit meetings, two Prime Ministers reaffirmed their desire to further deepen bilateral security and defense cooperation and institute Foreign and Defense Ministerial Dialogue (2+2), and welcomed the commencement of negotiations on the Acquisition and Cross-Servicing Agreement (ACSA).

 

Economic relations

  • During Prime Minister Modi’s visit to Japan in September 2014, two leaders agreed to set a common goal of doubling Japan's direct investment and the number of Japanese companies in India by 2019, in order to build a win-win relationship through synergies between Modinomics and Abenomics. Prime Minister Abe intended to make an effort to realize 3.5 trillion yen of public and private investment and financing, including Official Development Assistance (ODA), to India over the coming five years. 
    Japan expects India for improving the business environment, including the easing of regulations and the stabilization of the system. India established the “Japan Plus” office in the Ministry of Commerce and Industry in October2014 as a "one-stop" location for resolving problems faced by Japanese companies. Japan and India agreed to set up for 11 candidates of Japanese industrial townships around DMIC and CBIC areas in April 2015. Prime Minister Abe requested India's early decision on introducing special incentive packages in Japanese industrial townships in December 2015 and November 2016.
  • India decided to introduce the Shinkansen system in December 2015, when Prime Minister Abe visited India. The Japan’s Shinkansen system is in a highest class of High-Speed Railway systems around the world in terms of its safety and accuracy. Japan and India confirmed that the General Consultant would start its work in December 2016, the construction work would begin in 2018, and the railway's operation would commence in 2023. 

 

  • India has been the largest recipient of Japanese ODA Loan for the past decades. Delhi Metro is one of the most successful examples of Japanese cooperation through the utilization of ODA. Japan will cooperate on supporting strategic connectivity linking South Asia to Southeast Asia through the synergy between ''Act East'' policy and ''Partnership for Quality Infrastructure.''

 

  • In terms of human resource development in the manufacturing sector in India, Japan announced its cooperation of training 30,000 Indian people over next 10 years in the Japan-India Institute for Manufacturing (JIM), providing Japanese style manufacturing skills and practices, in an effort to enhance India's manufacturing industry base and contribute to “Make in India” and “Skill India” Initiatives. JIM and the Japanese Endowed Courses (JEC) in engineering colleges will be designated by Japanese companies in India, and this is a good example of cooperation between the public and private sectors. In summer 2017, the first four JIMs started in the States of Gujarat, Karnataka, Rajasthan and Tamil Nadu, and the first JEC was established in the State of Andhra Pradesh. Since then, more four JIMs and one JEC have started. Those institutes are also expected to give more Indian students the ambition to study the Japanese language.

Cultural relations

  • The year 2012 marked the 60th Anniversary of the Establishment of Diplomatic Relations between Japan and India. Various cultural events took place both in Japan and in India to promote mutual understanding between the two countries, under the theme of “Resurgent Japan, Vibrant India: New Perspectives, New Exchanges.”

 

  • During the visit of Prime Minister Modi to Japan in November 2016, the two Prime Ministers agreed to mark the year 2017 as the Year of Japan-India Friendly Exchanges to further enhance people-to-people exchanges between Japan and India. The year 2017 also marks the 60th anniversary since the Cultural Agreement came into force in 1957. Various commemorating events are taking place in both countries.

 

 

Bilateral Treaties and Agreements

  • Treaty of Peace (1952)
  • Agreement for Air Service (1956)
  • Cultural Agreement (1957)
  • Agreement of Commerce (1958)
  • Convention for the Avoidance of Double Taxation (1960)
  • Agreement on Cooperation in the field of Science and Technology (1985)
  • Japan-India Comprehensive Economic Partnership Agreement (2011)
  • Agreement between the Government of Japan and the Government of the Republic of India Concerning the Transfer of Defence Equipment and Technology (2015)
  • Agreement between the Government of Japan and the Government of the Republic of India Concerning Security Measures for the Protection of Classified Military Information (2015)
  • Agreement between Japan and the Republic of India on Social Security (2016)
  • Agreement between the Government of Japan and the Government of the Republic of India for Cooperation in the Peaceful Uses of Nuclear Energy
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GS-II :
Plea to stay electoral bond scheme

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

News:  A plea has been filed in the Supreme Court seeking a stay on the implementation of the Electoral Bond Scheme, 2018, saying it has opened the floodgates of unlimited corporate donations to political parties and anonymous financing by Indian and foreign companies that can have serious repercussions on democracy.

 

Prelims and Mains focus: about the electoral bonds scheme, its key features and impact on electoral funding

 

Arguments made in the plea against Electoral bonds

  1. It said that certain amendments made to the Finance Acts of 2017 and 2016, both passed as Money Bills, have facilitated unlimited political donations, legitimising electoral corruption on a huge scale, while at the same time ensuring complete non­transparency in political funding. “The Finance Act of 2017 had introduced the use of electoral bonds which is exempt from disclosure under the Representation of the People Act, 1951, opening doors to unchecked, unknown funding to political parties.

 

  1. The said amendments have also removed the existing cap of 7.5% of net profit in the last three years on campaign donations by companies and have legalised anonymous donations,” said the plea, filed by the Association for Democratic Reforms (ADR) through advocate Prashant Bhushan.

 

  1. It said the use of electoral bonds for political donations was a cause for concern because they were in the nature of bearer bonds and the identity of the donor was kept anonymous.

 

  1. Political parties are not required to disclose the name of the person/entity donating to a party through electoral bonds. Since the bonds are bearer instruments and have to be physically given to the political parties for them to encash, parties will know who is donating to them. It is only the general citizens who will not know who is donating to which party.

 

  1. “Further, it opens up the possibility of companies being brought into existence by unscrupulous elements primarily for routing funds to political parties,” the ADR said.

 

  1. The ADR said that it has already filed a PIL on the issue of corruption and subversion of democracy through illicit and foreign funding of political parties and lack of transparency in the accounts of all political parties

 

About Electoral bonds:

  • Electoral bonds will allow donors to pay political parties using banks as an intermediary.

Key features: Although called a bond, the banking instrument resembling promissory notes will not carry any interest. The electoral bond, which will be a bearer instrument, will not carry the name of the payee and can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.

Eligibility: As per provisions of the Scheme, electoral bonds may be purchased by a citizen of India, or entities incorporated or established in India. A person being an individual can buy electoral bonds, either singly or jointly with other individuals. Only the registered Political Parties which have secured not less than one per cent of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.

Need: The electoral bonds are aimed at rooting out the current system of largely anonymous cash donations made to political parties which lead to the generation of black money in the economy.

 

How will the Bonds help?

  • The previous system of cash donations from anonymous sources is wholly non-transparent. The donor, the donee, the quantum of donations and the nature of expenditure are all undisclosed

 

  • According to government the system of Bonds will encourage political donations of clean money from individuals, companies, HUF, religious groups, charities, etc. After purchasing the bonds, these entities can hand them to political parties of their choice, which must redeem them within the prescribed time.

 

  • Some element of transparency would be introduced in as much as all donors declare in their accounts the amount of bonds that they have purchased and all parties declare the quantum of bonds that they have received.

 

Concerns associated:

  • The move could be misused, given the lack of disclosure requirements for individuals purchasing electoral bonds.

 

  • Electoral bonds make electoral funding even more opaque. It will bring more and more black money into the political system.

 

  • With electoral bonds there can be a legal channel for companies to round-trip their tax haven cash to a political party. If this could be arranged, then a businessman could lobby for a change in policy, and legally funnel a part of the profits accruing from this policy change to the politician or party that brought it about.

 

  • Electoral bonds eliminate the 7.5% cap on company donations which means even loss-making companies can make unlimited donations.

 

  • Companies no longer need to declare the names of the parties to which they have donated so shareholders won’t know where their money has gone.

 

  • They have potential to load the dice heavily in favour of the ruling party as the donor bank and the receiver bank know the identity of the person. But both the banks report to the RBI which, in turn, is subject to the Central government’s will to know.

 

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GS-II : International Relations
Modi offers $450 mn line of credit to Lanka after talks with Rajapaksa

Syllabus subtopic: India and its neighbourhood- relations.

News: PM Modi on Friday offered a credit line of $400 million for infrastructure projects and $50 million for counter terror measures to Sri Lanka during a visit by its new President Gotabaya Rajapaksa.

 

Prelims and Mains focus: key highlights of the meeting, about Indo-Sri Lanka relations, impact of current world geopolitics on Indo- Sri Lanka relations

 

Key takeaways of the meeting:

  1. Rajapaksa announced the release of Indian fishermen’s boats held by Sri Lanka. New Delhi and Colombo also agreed to work closely on matters related to the economy and security amid what is being seen as rising competition between China and the US for influence in the Indian Ocean region.

 

  1. PM Modi said development and peace in the two countries are closely linked and assured Rajapaksa that India was committed to Sri Lanka’s development and security. Security has become even more important in bilateral ties after a series of bombings in luxury hotels and churches by suspected terrorists that killed over 250 people in the island nation in April.

 

  1. Modi also offered cooperation in developing the eastern and northern parts of Sri Lanka that are home to large populations of minority Tamils. PM Modi said the Sri Lankan President shared with him his vision of ethnic harmony.

 

  1. The $400 million credit line offered by New Delhi will go mainly to infrastructure projects.

 

Indo-Sri Lanka relations:    

             

Sri Lanka is India’s closest maritime neighbour and is just 30 nautical miles away from the territorial boundary. India has deep historical and cultural ties with this island nation. In this post, we analyze the areas of co-operation between India and Sri Lanka. You can also learn about the major issues between the two nations

Background of Sri Lanka and History of Civil War

  • Tamils and Sinhalese are the two major ethnic groups In Sri Lanka. Sinhalese eternal conflict with Tamils for power had been gathering strength since before independence.
  • Many Tamils attended English language schools which were the passport to higher education and better employment in the colonial period. And the Tamil-dominated Northern Province had comparatively better facilities in terms of education and employment.
  • Post independence Sinhalese nationalism sought to curb the Tamil presence in education and civil administration. In 1949 Indian Tamil plantation workers disenfranchised, the start of a wave of Sinhalese nationalism which alienates the Tamil people in the region.
  • The passing of the infamous “Sinhalese Only Bill” in 1956 was an another attempt in the same lines.
  • The constitutional provisions in the 1972 Constitution favoring the Sinhalese language and Buddhist religion, along with their educational policies convinced many Tamils that they had been perceived as a marginal community.
  • As a result of open discrimination, in 1976 Liberation Tigers of Tamil Eelam (LTTE) was formed to fight for Tamil rights and in 1983 Civil war started.

India’s role in Civil war and its implications

  • The bilateral relations between India and Sri Lanka deteriorated in 1980’s with a rising of the Tamil militant separatism in Sri Lanka.
  • In 1987 with the objective of improving the ties, Indo-Sri Lankan Accordwas signed between India and Sri Lanka.
  • It proposed a political solution to the Sri Lanka’s conflict by establishing a provincial council system and devolution of power for nine provinces in Sri Lanka. (This is popularly known as The Thirteenth Amendment (13A) to the Constitution of Sri Lanka)
  • India also deployed Indian Peace Keeping Force in Sri Lanka intended to perform a peacekeeping (It is known as Operation Pawan, which ultimately resulted in the assassination of PM Rajiv Gandhi).
  • After two years of constant military engagement, the IPKF was withdrawn as it failed to defeat LTTE.
  • Finally, in 2009, 25 years of violence ended when Sri Lankan government seized the last area controlled by Tamil Tiger rebels. India at that point of agreed to reconstruct the war-torn areas and started many rehabilitation programs.
  • However, the pro-LTTE governments in Tamil Nadu influenced the decisions of Central Government which posed a roadblock in humanitarian assistance in Sri Lanka.
  • Also, the relationship started deteriorating when India voted against Sri Lanka in 2009, 2012 and 2013 at the US-sponsored UNHRC resolution to investigate alleged human rights violations by the state against the Tamil rebels.

Areas of cooperation

  • The People of Indian Origin (PIOs) comprise Sindhis, Gujaratis, Memons, Parsis, Malayalis and Telugu speaking persons who have settled down in Sri Lanka and are engaged in various business ventures.
  • Though their numbers (10,000 approx.) are much lesser as compared to Indian Origin Tamils (IOTs), they are economically prosperous and are well settled. Each of these communities has their own groups which organize festivals and cultural events.
  • The Cultural Cooperation Agreement has been signed between both the countries.
  • The Indian Cultural Centre in Colombo actively promotes awareness of Indian culture by offering classes in Indian music, dance, Hindi, and Yoga. Every year, cultural troops from both countries exchange visits.
  • Buddhism is a connecting link between India and Sri Lanka on religious lines.
  • Education is another important area of cooperation between India and Sri Lanka. India offers scholarship slots annually to deserving Sri Lankan students.
  • Tourism also forms an important link between India and Sri Lanka. India is the largest source of market for Sri Lankan tourism.

 

Trade Relations

  • Sri Lanka is India’s second largest trading partner in SAARC.
  • India and Sri Lanka signed FTA in 1998, which facilitated increased trade relations between the two countries.
  • Sri Lanka has long been a priority destination for direct investment from India. India is among the top four investors in Sri Lanka with cumulative investments of over US$ 1 billion since 2003.
  • Economic and Technological Cooperation Agreement (ETCA): The proposed ETCA between India and Sri Lanka would facilitate trade in services, investments and technological cooperation. With ETCA signed, Indian investments will flow into Sri Lanka to make the island’s production facilities part of the Indian and international value chain.

 

Strategic Issues

  • In the period of low profile relationship between the two nations, SL apparently started favoring China over India.
  • Over the years Chinese funds started flowing, it has started big buck infrastructure projects in the island nation. The presence of China in Sri Lanka increased significantly in the recent years.
  • As part of Maritime Silk Route (MSR) policy, China built two ports, one in Colombo and another in Hambantota.
  • China has also collaborated in satellite launching activities with Supreme SAT (Pvt.), Sri Lanka’s only satellite operator.

 

 India’s efforts to counter China

  • In 2014 India abstained from voting on a UNHRC resolution calling for a probe into alleged war crimes by Sri Lanka. And it helped to revamp the century-old relationship with Sri Lanka. (While Pakistan and China voted against the resolution)
  • In a sign of a closer strategic partnership between Sri Lanka and India, they signed civil nuclear cooperation agreement which is Sri Lanka’s first nuclear partnership with any country.
  • In the wake of China’s economic dominance in the island, India is also entering into Sri Lanka’s mega project business in a big way by focusing on infrastructure development in the Northern and Eastern provinces.
  • India is also planning to build Trincomalee Port. The port is envisioned as an Indian counterweight to Chinese developments at Hambantota Port.

Fishermen Problem

Fishing disputes have been a constant area of concern between the two South Asian neighbors for a long time. Sri Lanka has long expressed concerns about illegal fishing by Indian fishermen within its territorial waters across the Palk Strait. The country regularly arrests Indian fishermen for crossing the International Maritime Boundary Line (IMBL) that demarcates Indian and Sri Lankan waters. India also detains Sri Lankan fishermen for the illegal fishing.

Katchatheevu Island

  • It is an uninhabited island that India ceded to Sri Lanka in 1974 based on a conditional agreement called “Kachchativu island pact”.
  • Later on, Sri Lanka declared Katchatheevu, a sacred land given the presence of a Catholic shrine
  • The central government recognizes Sri Lanka’s sovereignty over the island as per the 1974 accord. But Tamil Nadu claimed that Katchatheevu falls under the Indian territory and Tamil fishermen have traditionally believed that it belongs to them and therefore want to preserve the right to fish there.

Conclusion

India shares a common cultural and security space with the countries in the South Asian region especially Sri Lanka. As a prominent Asian nation with critical national interests in South Asia, India has a special responsibility to ensure peace and stability in its closest neighbourhood. India should shed its big brother image and actively take part to rebuild the war-torn country. India needs the support of Sri Lanka to emerge as a Blue water navy in the Indian Ocean and also in pursuing the permanent membership in United Nations Security Council (UNSC). Therefore, the two countries should recognize the legitimacy of each other’s concerns and operate in a way which is mutually beneficial.

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GS-III : Economic Issues
GDP growth plunges to 4.5%, lowest since 2012

Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

News: Growth in the gross domestic product (GDP) in the July-September quarter hit a 25­quarter low of 4.5%, the government announced on Friday.

 

Prelims and Mains focus: about the recent economic slowdown in the Indian economy, challenges and ways to address them; GDP v/s GVA

 

 

Context:

  • The lowest GDP growth in six years and three months comes as Parliament has been holding day­long discussions on the economic slowdown, with Union Finance Minister Nirmala Sitharaman assuring the Rajya Sabha that the country is not in a recession and may not ever be in one.

 

  • Growth in gross value added (GVA) also dipped to 4.3% in Q2 of 2019­20 from 4.9% in Q1, and 6.9% in the Q2 of last year.

 

 

Performance of various sectors:

  • The manufacturing sector contracted 1% in the second quarter of the current financial year, compared with a robust growth of 6.9% in the same quarter of the previous year. The manufacturing sector saw an overall contraction of 0.2% in the first half (April to September) of the current financial year compared to a growth of 9.4% in the first half of last year.

 

  • The agriculture sector saw growth coming in at 2.1% in second quarter of this year compared with 4.9% in Q2 of last year. The sector grew just 2.1% over the first six months of the year compared with 5% in the first half of the previous year.

 

  • Among the services sectors measured, only the ‘Public Administration, Defence & Other Services’ category saw growth quicken in the second quarter of this year, to 11.6%, compared with 8.6% in the same quarter of the previous year.

 

  • The ‘Financial, Real Estate & Professional Services’ category saw growth slow to 5.8% in Q2 of 2019­20, compared with 7% in Q2 of the previous year.

 

  • Private final consumption expenditure, the closest proxy in the data to a measure of consumption demand, grew 5.06% in the second quarter of this financial year, compared with a growth of 3.14% in the first quarter. However, the growth in the second quarter this year is still significantly lower than the growth of 9.79% recorded in the second quarter of the previous year.

 

  • Gross fixed capital formation (GFCF), which is a measure of the level of investment in the country by both the government and the private sector, grew only 1.02% in the second quarter of this financial year, compared with a growth of 4.04% in the first quarter, and drastically lower than the growth of 11.8% seen in the Q2 of last year.

 

Government’s take on the status of the economy

  • Union Finance Minister Nirmala Sitharaman assured the Rajya Sabha that the country is not in a recession and may not ever be in one.

 

  • The fundamentals of the Indian economy remain strong and GDP growth is expected to pick up from the third quarter of FY 2019­20.

 

  • The International Monetary Fund has projected India’s GDP growth at 6.1% in financial year 2019-20 and 7% in 2020­21 in its October 2019 report.

 

 

 

GDP v/s GVA

GDP

  • Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.

 

  • GDP includes all private and public consumption, government outlays, investments, private inventories, paid-in construction costs and the foreign balance of trade (exports are added, imports are subtracted)

 

  • Thus the components of GDP are (C) plus Investment (I) plus Government Spending (G) plus BOP i.e. Exports minus Imports (X-M)

 

  • GDP is calculated using this standard formula: C + I + G + (X-M).

 

  • GDP is commonly used as an indicator of the economic health of a country, as well as to determine a country's standard of living

 

  • Since the mode of measuring GDP is uniform from country to country, GDP can be used to compare the productivity of various countries

 

GVA

  • The term that is used to denote the net contribution made by a firm is called its value added

 

  • The raw materials that a firm buys from another firm which are completely used up in the process of production are called ‘intermediate goods’.

 

  • Therefore the value added of a firm is, value of production of the firm – value of intermediate goods used by the firm.

 

  • Gross value added (GVA) is defined as the value of output less the value of intermediate consumption.

 

  • Value added represents the contribution of labor and capital to the production process.

 

  • When the value of taxes on products (less subsidies on products) is added, the sum of value added for all resident units gives the value of gross domestic product (GDP).

 

  • Thus, Gross value added (GVA) = GDP + subsidies on products - taxes on products

 

Note: GDP at factor cost = Gross value added (GVA) at factor cost GDP at market price = GDP at factor cost + net indirect taxes (indirect taxes- subsidies) GVA at factor cost = value of output (quantity * price) - value of intermediary consumption.

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GS-III :
FASTag deadline extended

Syllabus subtopic: Science and Technology- developments and their applications and effects in everyday life.  Achievements of Indians in science & technology; indigenization of technology and developing new technology.

News: The government on Friday extended till December 15 the deadline for making FASTag mandatory for toll payments on national highways.

 

Prelims and Mains focus: about FASTag and its advantages, about NHAI

 

Background

  • Earlier, all lanes, except one on each side, at all NHAI toll plazas were to be declared as dedicated FASTag lanes from December 1.

 

  • The National Highways Authority of India, in a statement, said many citizens had not enabled their vehicles with FASTags due to which the decision was deferred till December 15.

 

  • It was earlier decided that any motorist entering the dedicated FASTag lane without the tag would be charged double the toll fee from December 1, but the NHAI made it clear that the “charging of double fee will start from December 15”.

 

 

About NHAI

  • NHAI is an autonomous agency of the Union Government, responsible for management of a network of over 70,000 km of national highways in India.

 

  • It was established through National Highways Authority of India Act, 1988.

 

  • In February 1995, it was formally made an autonomous body.

 

  • It is a nodal agency of the Union Ministry of Road Transport and Highways.

 

  • It is responsible for the development, management, operation and maintenance of National Highways.
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