IAS Gyan

Daily News Analysis


16th September, 2019


Explained: How waived loans impact states

Reserve Bank of India shared the report of an Internal Working Group (IWG), which showed impact of farm loan waivers on state finances.

Since 2014-15, many state governments have announced farm loan waivers. This was done for a variety of reasons including relieving distressed farmers struggling with lower incomes in the wake of repeated droughts and demonetisation.

Report findings:

- Between 2014-15 and 2018-19, the total farm loan waiver announced by different state governments was Rs 2.36 trillion. Of this, Rs 1.5 trillion has already been waived.

- The actual waivers peaked in 2017-18 — in the wake of demonetisation and its adverse impact on farm incomes — and amounted to almost 12 per cent of the states’ fiscal deficit.

- It increases state’s fiscal deficit.

- It reduces amount available for lending to private business houses.

- It negatively affects job creation and establishment of new enterprises.

- If fiscal deficit is maintained, state’s essential expenditures are reduced.

- Generally Capital expenditure are reduced which reduces productivity and ability to grow in future.

- It hurts overall economic growth and ruins the credit culture in the country.

- An analysis of State’s budget portrays that state sticks to fiscal deficit and revenue deficit targets but, reduces the capital expenditure.

State’s finances:

- Collectively all the states spend 30% more than the centre amount.

- Borrowing from all the states have reached 86% amount of what centre has borrowed.


- State governments should undertake a holistic review of the agricultural policies and their implementation.

- State governments should evaluate the effectiveness of current subsidy policies with regard to agriculture inputs and credit. Policies should be modified to enhance the overall viability of agriculture in a sustainable manner.

- Loan waivers should be avoided.

Reference: https://indianexpress.com/article/explained/explained-how-waived-loans-impact-states-5997936/


Why WPI inflation remains low?

India's wholesale price inflation remained unchanged at 1.08% in August as inflation for manufactured items fell to 0%, signalling lack of pricing power of producers.

- Many manufactured items saw negative inflation or deflation including vegetable and animal oils, leather and apparel products, paper, rubber, chemicals, steel, basic metals among others.

- Fuel inflation also fell into negative territory.

- Food inflation accelerated to 7.67% in August from 6.15% a month ago.

Inflation: Inflation is Sustained increase in the general price level. It leads to fall in the purchasing power of money. 

Different Indices like WPI (Wholesale Price Index), CPI (Consumer Price Index) measures inflation in India.

WPI (Wholesale Price Index):  WPI is measurement of inflation based on Wholesale prices.

-        Ministry of Commerce and Industry releases it.

-        Headline Inflation is other name for it.

-        It doesn’t include services.

CPI (Consumer Price Inflation):  CPI is measurement of Inflation at retail prices.

-        Central Statistics Office (CSO) releases it.

-        It has basket of Services and Manufacturing goods.

Headline Inflation: It is total inflation in economy. It includes price rise in food, fuel and all other commodities.

Core Inflation: Core inflation does not consider the inflation in food and fuel.

Reference : PIB


Explained: Why twin strikes on Saudi Arabia oil facilities matter worldwide

Houthi rebels from Yemen carried out drone attacks on two major oil facilities in Saudi Arabia, including the world’s biggest petroleum processing facility run by state-owned Saudi Aramco.

- Reuters quoted Aramco as saying the attack has cut output by 5.7 million barrels per day.

- It is close to half of Saudi Arabia’s production and 5% of global supply.

- It will increase the price of crude oil world wide.

- With India importing 80% of its crude oil requirement, any increase in price fuels inflation and negatively affects the balance of payment.

- Saudi Arabia is India’s largest crude oil supplier, rise of any tension in middle east will put Indian energy security in risk.

- India has large presence of diaspora in Middle east, it can witness threat to their security owing to rise in tensions.

Reference : https://indianexpress.com/article/explained/explained-why-twin-strikes-on-saudi-oil-facilities-matter-worldwide-5997941/


Explained: Where can you fly a drone in Delhi? What permissions do you need?

A father and his son, both citizens of the United States, were detained on Saturday for flying a drone fitted with a camera above the high-security zone in Lutyens’s Delhi. It was not immediately clear how big the two Americans’ drone was, and whether it was illegal on account of not having a UIN.

Director General of Civil Aviation (DGCA) guidelines for flying Drones:

- DGCA has identified multiple categories of drones, which can be broadly classified as ‘Nano’ (weighing up to 250 g), ‘Micro’ (more than 250 g but less than 2 kg) and ‘Small and above’ (weighing 2 kg or more).

- Every drone that is bigger than a ‘Nano’ must obtain a unique identification number (UIN) from the aviation regulator (similar to the registration number for a car).

- This number must be displayed on the remotely piloted aircraft.

- A UIN will be issued once, against a fee of Rs 1,000, and will not be issued to a foreign citizen or entity.

- Users of bigger drones will be required to obtain a Unique Air Operator’s Permit (UAOP), similar to a driver’s licence.

- The UIN and UAOP can be obtained from the online platform Digital Sky. The permits will be issued in less than a week.

- All drones other than those in the ‘Nano’ category must meet mandatory equipment requirements such as GPS, anti-collision light, ID plate, radio-frequency identification (RFID) and SIM facilities with software that ensures ‘no-permission, no-takeoff’, among other features.

- Before flying a ‘Small’ or bigger drone, an operator has to file a flight plan, and inform the local police, so that the machine can reach a height of 400 ft or more, and use both controlled and uncontrolled airspace.

- ‘Micro’ drones will be required to submit a flight plan only if using controlled airspace; the operator must, however, inform the local police in all cases. Many drones used for amateur photography fall in this category.

- ‘Nano’ drones will be able to operate freely, without any registration or permit, but their operations will be restricted to 50 ft above the ground, and to uncontrolled airspaces and enclosed premises.

- All those requiring a UAOP must undertake a five-day training programme that will expose them to regulations, basic principles of flight, air traffic control procedures, weather and meteorology, emergency identification and handling, etc.



No Go Zones:

- Drones cannot fly closer than 25 km of international borders, including the Line of Control and Line of Actual Control.

- The area within a 5-km radius of New Delhi’s Vijay Chowk is a no-drone zone.

- Area up to 5 km from the perimeters of the high-traffic airports of Mumbai, Delhi, Chennai, Kolkata, Bengaluru and Hyderabad. For other airports, the no-drone zone extends up to 3 km.

-  A drone can’t be flown within 2 km from the perimeter of strategic locations and vital installations notified by the Ministry of Home Affairs.

Reference : https://indianexpress.com/article/explained/explained-where-can-you-fly-a-drone-in-delhi-what-permissions-do-you-need-5998975/



Engineer’s Day: Sir Visvesvaraya’s contribution to nation building

September 15 is observed as Engineer’s Day in India to mark the birth anniversary of Sir Mokshagundam Visvesvaraya, a civil engineer and statesman.

- His works, “Reconstructing India” and “Planned Economy of India” were published in 1920 and 1934, respectively.

- Visvesvaraya was instrumental in the setting up of the University of Mysore in July 1916, as he was the Dewan of Mysore at the time.

- He believed that the aim of an educational institution should be in line with the “state of the country’s civilisation and of its material prosperity.

- He believed that conditions inside a university should not be very different from the ones a student has to encounter in real life.

- He introduced of the block system of irrigation in the Deccan canals in 1899.

- He solved the problem of the “muddy and discoloured” water in the city of Sukkur located on the banks of the Indus river.

- He invented automatic gates meant to regulate the flow of water in reservoirs, which is patented. The Krishnaraja Sagar Dam in Karnataka was the first to install these gates in the 1920s.